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Monday, September 10, 2018

Revealing political tour in St Petersburg

A most revealing tour yesterday in St. Petersburg: 1) the "museum of political history"; and 2) a memorialized apartment of Sergei Kirov, a leader of the CPSU and the popular mayor of Leningrad until he was assassinated in 1934. First, tour guides in every subject domain must be examined and relicensed by the state annually. So, the guide scripts and "facts"  are centrally approved.

Second, Lenin has very nearly been, and is being ERASED: example: "He was a German agent, bent upon ceding lands and treasure in WW1, a terrorist who staged a 'coup' to overthrow the "real' revolution led by Kerensky". The smugness and derision of our guide was as thick as a pound of butter on a saltine. 



Third, there was no need for revolution at all, since Tsar Alexander II freed the serfs had he not been assassinated by "terrorists".

Fourth, the Romanovs -- perhaps the most extractive and putrid autocracy in human history -- are raised from their porcelin, marble and golden graves and memorialized with apologies reminiscent of "Gone With the Wind" fables that glossed over the stench of the US Confederacy.

Fifth, Stalin gets a halfway pass, despite his manifest crimes. I am speculating a bit, but the deep, deep pride of the Russian peoples immense sacrifices, and profound victory in WWII cannot be erased, yet, from common memory. Thus Stalin's crimes -- the RED TERROR (this phrase was repeated 30 times in a 3 hour tour, and blamed primarily on the "terrorist Lenin")  are held to just be a feature of "communism",  not Stalin's personal character.

Sixth, for those who think this script was an introduction to a rejection of authoritarianism -- sorry, the word "democracy" was not mentioned once.
A most revealing tour yesterday in St. Petersburg: 1) the "museum of political history"; and 2) a memorialized apartment of Sergei Kirov, a leader of the CPSU and the popular mayor of Leningrad until he was assassinated in 1934. First, tour guides in every subject domain must be examined and relicensed by the state annually. So, the guide scripts and "facts"  are centrally approved.

Second, Lenin has very nearly been, and is being ERASED: example: "He was a German agent, bent upon ceding lands and treasure in WW1, a terrorist who staged a 'coup' to overthrow the "real' revolution led by Kerensky". The smugness and derision of our guide was as thick as a pound of butter on a saltine. 



Third, there was no need for revolution at all, since Tsar Alexander II freed the serfs had he not been assassinated by "terrorists".

Fourth, the Romanovs -- perhaps the most extractive and putrid autocracy in human history -- are raised from their porcelin, marble and golden graves and memorialized with apologies reminiscent of "Gone With the Wind" fables that glossed over the stench of the US Confederacy.

Fifth, Stalin gets a halfway pass, despite his manifest crimes. I am speculating a bit, but the deep, deep pride of the Russian peoples immense sacrifices, and profound victory in WWII cannot be erased, yet, from common memory. Thus Stalin's crimes -- the RED TERROR (this phrase was repeated 30 times in a 3 hour tour, and blamed primarily on the "terrorist Lenin")  are held to just be a feature of "communism",  not Stalin's personal character.

Sixth, for those who think this script was an introduction to a rejection of authoritarianism -- sorry, the word "democracy" was not mentioned once.

Globalization good and bad

Globalization is undermining the "sovereignty" of every nation. Is this good or bad? The laws of uneven development lean towards Bad where relationships are unequal. But also towards good, since the requirements of peace and democratic societies under globalization mandate the rise of internationalism over nationalism, and equity and equality over imperial prerogatives. Nonetheless, the oligarchs of the world, including both the US and Russia, are mounting a fierce resistance. A reckoning of vast scale seems unavoidable.

Globalization good and bad

Wednesday, September 5, 2018

Unions in the 21st Century: A Potent Weapon Against Inequality [feedly]

Unions in the 21st Century: A Potent Weapon Against Inequality
http://cepr.net/publications/op-eds-columns/unions-in-the-21st-century-a-potent-weapon-against-inequality

Dean Baker and Jared Bernstein
The Washington Post, September 3, 2018

See article on original site

The topic of economic inequality can appear complex, with many nuanced causes and outcomes. But while the two of us actively engage in that debate, we also strongly believe that there is one overarching factor that must not be, but often is, overlooked: worker bargaining power. On Labor Day, this problem of the long-term decline in workers' ability to bargain for a fair share of the growth they have helped generate deserves a closer look.

There is, of course, a direct link between less worker clout and the decline in union coverage. In addition to directly empowering workers at the workplace, unions have played a central role in the drive for a wide variety of policy measures to ensure that everyone benefits from prosperity, which is the opposite outcome of rising inequality. This list includes Social Security, Medicare, paid family leave, civil rights legislation, fairer tax policy and higher minimum wages.

This view has been further buttressed by recent research using new data showing a strong connection between union strength and a more equal distribution of income (see figure), a link that makes the sharp decline in union membership over the past four decades particularly disturbing.

bernstein baker labor day 2018Source: Piketty et al., UnionStats

This decline has not been an accident. The right has quite explicitly targeted unions with an array of anti-union policies, the most recent of which have been "right-to-work" laws. These prohibit contracts that require all the workers at a unionized workplace to share in the cost of representation.

The impact of anti-union policy can be seen by the differing experiences of Canada and the United States over this period. While the unionization rate in the United States dropped from roughly 20 percent in the late 1970s to just over 10 percent most recently, unionization rates in Canada have edged down only slightly over this period and still exceed 31 percent.

The fact that unions continue to thrive in a country with a very similar culture and economy indicates that there is nothing inevitable about the decline in unions in the United States. It was deliberate policy.

Given that powerful, vested interests are behind the decline in unions, reversing this decline will be a serious challenge, one that requires worker-friendly policies and new forms of worker representation, such as centralized bargaining. For example, instead of organizing one restaurant at a time, unions must push for collective bargaining rights for restaurant workers across their industry. It also will require reaching out to all types of workers, not just those in construction, factories or lower-paid services.

Two decades ago, we worked together at the Economic Policy Institute (EPI). EPI was and is a great place to work, but we felt it was important for the staff to gain an institutionalized voice. We helped organize a union that affiliated with the International Federation of Professional and Technical Engineers (IFPTE, Local 70).

The process of organizing was interesting, because many of our co-workers at EPI thought of themselves as professionals for whom unions really didn't make much sense. After much discussion, everyone came to agree that a union was a good idea. The vote for the union was unanimous. (We are also pleased to report that management was fully cooperative and happy to respect our decision.)

Since then, Local 70 has organized a number of Washington-based nonprofits. It now has well over 300 members. If some current organizing drives succeed, Local 70, which has since been restructured as the Nonprofit Professional Employees Union (NPEU), will have more than 500 members.

We are well aware that in a labor force of more than 150 million, 500 workers isn't exactly a game-changer. But the journey of 1,000 miles starts with one step. It is essential that unions make inroads into the types of workers organized by NPEU if they are to regain the sort of influence and power they had in prior decades.

Unions will continue to be important in traditional strongholds such as manufacturing and construction. But as the workforce becomes more educated, a powerful union movement will need to include many workers with college and advanced degrees.

If that sounds peculiar, in countries such as Denmark and Sweden, which have a far more equal distribution of income than the United States, more than 70 percent of the workforces are represented by unions. In these countries, it is the norm for people working in white-collar jobs, including many with college degrees, to be represented by unions.

The United States may never approach Scandinavian rates of unionization, but if we are even going to get back to 1970 rates, unions will have to make inroads into new areas. Part of that story has to mean organizing professional workers. On this day in particular, we proudly recall our small contribution to this effort.


Jared Bernstein, a former chief economist to Vice President Joe Biden, is a senior fellow at the Center on Budget and Policy Priorities and author of 'The Reconnection Agenda: Reuniting Growth and Prosperity.'

Dean Baker is senior economist at the Center for Economic and Policy Research.


 -- via my feedly newsfeed

Some thoughts on that new Fed paper everybody’s talking about. [feedly]

Some thoughts on that new Fed paper everybody's talking about.
http://jaredbernsteinblog.com/some-thoughts-on-that-new-fed-paper-everybodys-talking-about/

It's a lovely morning on the back porch, and the mind turns to that new Fed studyeverybody's talking about. It's the one by Erceg et al about monetary policy at moments like this one, with a flat Phillips Curve (PC), u<u*, along with much uncertainty about u* (importantly, I'd argue that uncertainty is asymmetric; the Fed's estimate of u* looks too high). BTW, 'u' is the unemployment rate; 'u*' is the estimate of the "natural rate," the lowest rate associated with stable prices.

I've got a longer, less cryptic piece on this study coming out later this week in WaPo (tomorrow, it's Dean Baker and I celebrating Labor Day with a piece on unions as a potent weapon against inequality). But I wanted to set the table for that piece with a bit of analysis here. The WaPo piece explains any oblique terminology; apologies in advance for any obscurities in what follows.

One reason this piece, which I found to be a thoughtful/useful bit of work, is getting a lot of attention is because its key finding is counterintuitive. Given that unemployment has been well below the Fed's estimate of u* of 4.5% and inflation's (PCE core) just now hitting their 2% target, many of us have argued that the optimal monetary policy is to downweight the unemployment gap and focus on the lack of wage or price inflation.

Consider, e.g., the strong version of this view from EPI's Josh Bivens: "…the definition of labor market slack is wage growth too weak to put upward pressure on the Fed's price inflation target. If this wage growth is not happening, there is labor market slack. So, simply looking at some quantity-side measure of the labor market (say the unemployment rate) and thinking 'hmm, that's low, we must be at full employment" is substituting gut feeling for economic reasoning.'"

In a similar vein, Baker and I have argued that you know you're at full employment when extra demand generates not jobs and real wages, but inflation.

But the Fed study comes to a different conclusion, arguing that even if u* is uncertain, it's "better" to target the employment than the inflation gap. The definition of "better" is key, of course, and the authors are explicit that their definition bakes in their result in ways with which reasonable critics may disagree (more on that in a moment).

The paper does a bunch of macrosimulations of unemployment and inflation outcomes using a set of monetary rules that apply stronger or weaker weights to the employment and inflation gaps. The find that "because monetary policy acts with a lag, waiting for inflation to materialize before reacting is undesirable, particularly when economic conditions are such that outsized deviations of inflation from its target are a plausible outcome."

This is interesting. While camp Bivens sees the combination of the flat PC and overestimated u* as a reason for accommodative monetary policy, their simulations suggest that because of the flat PC, over-weighting the inflation gap will lead to wide and damaging (to demand) swings in monetary policy.

In fact, conditions in the current economy partially drive their result. Suppose the Fed listens to Bivens et al and targets inflation instead of unemployment. Because inflation has long undershot the Fed's 2% target and the PC is so flat, it would take historically very low unemployment to juice inflation. Conversely, suppose some shock to the system…like, um, a trade war…led inflation to spike; then, the authors argue, it would take really high unemployment to bring inflation back down.

The study's simulations thus find that if the Fed weighted up its inflation target relative to its unemployment target, the jobless rate could fall so low or climb so high that it could generate "risks to financial stability and more generally to the sustainability of macroeconomic outcomes."

One way they end up there is by scoring success through a "loss function" that penalizes policy makers for letting the jobless rate fall below u*. But with u* higher than it should be, this approach doles out undeserved penalties for running a hot labor market (when they plug in a u* of 3.7%, upweighting the employment gap looks less favorable; compare Table 3, column F, rows 3 and 6). Their symmetric loss function (being below u* is as bad as being above it) also discounts the extremely valuable benefits of super-tight labor markets to less advantaged workers, a benefit that is especially worth tapping right now given the lack of price pressures. I'd want a loss function to reflect these benefits, one that treats being below u* as preferable to being above it.

As noted, the authors are explicit about this point, and the loss function they use is standard fare. Still, the paper is replete with so many variants, why not add one more? I urge the authors to run the results through a loss function that meets the criteria just noted.

I've got two more objections to the findings.

First, at least as I read it, the paper seems to suggest the Fed is unable to look past inflation perturbations caused by supply shocks. As just noted, the simulations appear to combine this inability with the flat PC to generate sharp, yet unnecessary (because it's a temporary shock, not a shift in demand), accommodation or tightening. But this seems demonstrably wrong, as just recently, Fed statements have included many references to temporary shocks to prices, including energy, cell phone pricing, and Trump's trade mishegos (the latter of which could eventually whack demand).

Also, what about all those years of hard work by Fed officials to anchor expectations? That too leads people to look through temporary shocks and assume stable, long-term prices. (See the bottom panel of their Figure 1 for evidence of well-anchored inflation expectations.)

Second, in numerous places, including the quote above, the paper argues that it's better to be a bit more hawkish to avoid financial instability. This seems like step backwards. Former Chair Yellen and others have been very clear on this point: when we use tighter monetary policy to regulate bubbles in financial markets, we penalize the great many to hold back the reckless few. It is macroprudential policy and Dodd-Frank style regulation that should be the first line of defense against excesses in financial markets.

I get that Powell recently (wisely) argued that, given their far-reaching potential damage, the Fed should put financial excesses high on its watch list. But, if the real economy is not overheating, that doesn't imply that fighting them with higher rates is preferable to regulation, "irrational-exuberance"-style forward guidance, and higher capital buffers.

That said, I strongly recommend the paper to those of us calling for heavier relative targeting of inflation as opposed to employment. It offers some high-calorie food for thought.


 -- via my feedly newsfeed

Where Labor Unions Aren’t Going Away



Where Labor Unions Aren't Going Away

Unons are much stronger in Nordic countries than in the U.S. They're also very different.

By Justin Fox
September 3, 2018, 5:00 AM EDT
This isn't Denmark.  Photographer: Drew Angerer/Getty Images
Justin Fox is a Bloomberg Opinion columnist covering business. He was the editorial director of Harvard Business Review and wrote for Time, Fortune and American Banker. He is the author of "The Myth of the Rational Market."
Read more opinionFollow @foxjust on Twitter

Unions are on the decline in the U.S., and have been for a long time. Last year, only 6.5 percent of private-sector workers in the U.S. belonged to one. (Among public-sector workers the unionization rate was 34.4 percent and has held relatively steady over time, but the public sector's share of the workforce has been shrinking since the 1970s.)

You probably already knew that, more or less. But low and declining union membership is not just an American thing (yes, this chart looks a little squished, but I thought I should have the same scale on all of them to make them easier to compare):

Union Members Are a Shrinking Minority

Percentage of workers who belong to unions

Source: Organization for Economic Cooperation and Development

Administrative data for France, Germany, Japan and the U.K., and Canada through 2015 and the U.S. through 1980, with survey data after that.

So union membership is even lower in France than in the U.S.! As I learned from the National Review's Reihan Salam a few years ago when I first discovered this amazing fact, though, that's kind of misleading. Almost every worker in France is covered by collective bargaining agreements between the country's unions and employers.

But Unions Still Have Some Clout

Percentage of workers with collective bargaining coverage

Source: Organization for Economic Cooperation and Development

Dotted lines represent years with no data.

It is French law that has guaranteed this continued strong role for unions even as membership dwindles, and it seems fair to say that the results have been less than optimal. Even with President Emanuel Macron's recent efforts to increase labor-market flexibility, the French economy remains beset by high labor costs, frequent strikes, a low labor-force participation rate and excruciatingly slow growth.

In Germany, which generally has a better reputation as far as labor-market policies go, unions continue to play a much bigger role than they do in the U.S., but their clout has been on the decline since the 1990s. In the U.K., that decline began in the late 1970s, which happens to be when Margaret Thatcher became prime minister and made breaking the power of unions a top priority. In Canada, the declines in both union membership and collective bargaining representation have been relatively muted, but both did start from a pretty low base.

These statistics offer some support both for those who argue that that the union decline has been inevitable (it's been happening in all the big developed economies, after all) and those who see it as an unfortunate political choice (the timing and the trajectory have differed by country). More backing for the latter argument can be found in the experience of the group of nations with the highest union membership rates in the developed world, the Nordic countries.

It's Different in the Nordic Countries

Percentage of workers who belong to unions.

Source: Organization for Economic Cooperation and Development

Administrative data for Denmark and Finland, and for Norway through 2015 and Sweden through 1986 with survey data after that.

Yes, even Denmark, Finland, Norway and Sweden have seen declines in unionization since the early 1990s, which is when the region experienced its own local version of the financial crisis and deep recession that beset rest of the developed world in 2008 and 2009. But union membership is still really high! (I should note here that Iceland is also a Nordic country and its unionization rate is even higher, at 90.4 percent in 2016, but it's so tiny and its historical data so spotty that I left it off the chart.) The percentage of workers covered by collective bargaining agreements is even higher, and holding somewhat steadier.

The Nordic Difference, Part 2

Percentage of workers with collective bargaining coverage

Source: Organization for Economic Cooperation and Development

Dotted lines represent years with no data.

The thing about unions in the Nordic countries, though, is that they're different from unions in most other countries. I learned this in Denmark in 2007 when a union steward at Lego A/S, which had just announced plans to move a bunch of factory work to Eastern Europe, gave me an impassioned lecture on the positive economic aspects of outsourcing. Unions in Denmark saw (and presumably still see) preserving the competitiveness of Danish industry as a much higher priority than protecting specific jobs. They arrived at this mindset in part because Denmark is a small country trying to succeed in a big, scary world, but also because access to generous unemployment benefits is what leads many (perhaps most) workers in Denmark to join unions in the first place.

Denmark, Finland and Sweden are what are called "Ghent system" countries, where unions administer the unemployment insurance program with help from government subsidies. Norway used to have a Ghent system but abandoned it in 1938. Belgium, where the actual city of Ghent is located, has a "partial Ghent system." In recent years, the link between union membership and unemployment insurance has weakened in the remaining Ghent system countries too, with most union-affiliated insurance providers now formally independent, and scholars from those countries have written lots of papers about the pressures the system is under. But from the perspective of many outside observers it still looks pretty great in the way that it combines continued union strength with a flexible, pragmatic approach to serving workers that seems quite compatible with economic competitiveness.

Interestingly, some of the biggest American fans of this approach in recent years have come from the political center-right. The Atlantic's Jonathan Rauch cited the Ghent system approvingly in making "The Conservative Case for Unions" last year; the Manhattan Institute's Oren Cass did the same in a City Journal article on "More Perfect Unions"; and in their 2008 book, "Grand New Party: How Republicans Can Win the Working Class and Save the American Dream," the aforementioned Reihan Salam and New York Times columnist Ross Douthat advocated "new model unions" that would focus more on providing services and training to members than negotiating with their employers.

Some traditional unions in the U.S. are already responsible for providing pensions, which hasn't been going very well for them lately. The "new model" Freelancers Union, founded in 1995, offers health coverage and other forms of insurance to independent workers, as well as political advocacy. This is an awfully long way from the Nordic system in which unions play a central role not only in providing unemployment insurance but in determining how much money everybody makes. But on Labor Day one can always dream, I guess.

--
John Case
Harpers Ferry, WV
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Setting the Record Straight on Secular Stagnation: Don't get into a knife fight with Larry Summers?

This post takes on Joseph Stiglitz' critique of Summers "secular stagnation" theory as a cover for the Obama administration failure to win a bigger stimulus (public  spending to raise demand) after the 2008 crash. This is really an argument about the rights and wrongs of economic outcomes vs the possibles and impossibles of political  reality. But both of these guys are among the smartest economists around.


*************************************************

Setting the Record Straight on Secular Stagnation

Sep 3, 2018 LAWRENCE H. SUMMERS
Echoing conservatives like John Taylor, the Nobel laureate economist Joseph Stiglitz recently suggested that the concept of secular stagnation was a fatalistic doctrine invented to provide an excuse for poor economic performance during the Obama years. This is simply not right.

CAMBRIDGE – Joseph Stiglitz recently dismissed the relevance of secular stagnation to the American economy, and in the process attacked (without naming me) my work in the administrations of Presidents Bill Clinton and Barack Obama. I am not a disinterested observer, but this is not the first time that I find Stiglitz's policy commentary as weak as his academic theoretical work is strong.


THE MYTH OF SECULAR STAGNATION

Aug 28, 2018 JOSEPH E. STIGLITZargues that the concept was always merely a fig leaf for bad politics and flawed economic policies.

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Stiglitz echoes conservatives like John Taylor in suggesting that secular stagnation was a fatalistic doctrine invented to provide an excuse for poor economic performance during the Obama years. This is simply not right. The theory of secular stagnation, as advanced by Alvin Hansen and echoed by me, holds that, left to its own devices, the private economy may not find its way back to full employment following a sharp contraction, which makes public policy essential. I think this is what Stiglitz believes, so I don't understand his attacks.

In all of my accounts of secular stagnation, I stressed that it was an argument not for any kind of fatalism, but rather for policies to promote demand, especially through fiscal expansion. In 2012, Brad DeLong and I argued that fiscal expansion would likely pay for itself. I also highlighted the role of rising inequality in increasing saving and the role of structural changes toward the demassification of the economy in reducing demand.

What about the policy record? Stiglitz condemns the Obama administration's failure to implement a larger fiscal stimulus policy and suggests that this reflects a failure of economic understanding. He was a signatory to a November 19, 2008 letter also signed by noted progressives James K. Galbraith, Dean Baker, and Larry Mishel calling for a stimulus of $300-$400 billion – less than half of what the Obama administration proposed. So matters were less clear in prospect than in retrospect.

We on the Obama economic team believed that a stimulus of at least $800 billion – and likely more – was desirable, given the gravity of the economic situation. We were told by those on the new president's political team to generate as much validation as possible for a large stimulus because big numbers approaching $1 trillion would generate "sticker shock" in the political system. So we worked to encourage a variety of economists, including Stiglitz, to offer larger estimates of what was appropriate, as reflected in the briefing memo I prepared for Obama.

Despite the incoming president's popularity and an all-out political effort, the Recovery Act passed by the thinnest of margins, with doubts about its ultimate passage lingering until the last moment. I cannot see the basis for the argument that a substantially larger fiscal stimulus was feasible. And the effort to seek a much larger one certainly would have meant more delay at a time when the economy was collapsing – and could have led to the defeat of fiscal expansion. While I wish the political climate had been different, I think Obama made the right choices in approaching fiscal stimulus. It is of course also highly regrettable that after the initial Recovery Act, Congress refused to support a variety of Obama's proposals for infrastructure and targeted tax credits.

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Unrelated to the topic of secular stagnation, Stiglitz takes a swipe at me by saying that Obama turned to "the same individuals bearing culpability for the under-regulation of the economy in its pre-crisis days" and expected them "to fix what they had helped break." I find this a bit rich. Under the auspices of the government-sponsored enterprise (GSE) Fannie Mae, Stiglitz published a paper in 2002 arguing that the chance that the mortgage lender's capital would be depleted was less than one in 500,000, and in 2009 he called for nationalization of the US banking system. So I would expect Stiglitz to be well aware that hindsight is clearer than foresight.

What about the Clinton administration record on financial regulation? With hindsight, it clearly would have been better if we had foreseen the need for legislation like the 2010 Dodd-Frank reforms and had a way to enact it with a Republican-controlled Congress. And certainly we did not foresee the financial crisis that came eight years after we left office. Nor did we anticipate the ways in which credit default swaps would mushroom after 2000. We did, however, advocate for GSE reform and for measures to rein in predatory lending, which, if enacted by Congress, would have done much to forestall the accumulation of risks before 2008.

I have not seen a convincing causal argument linking the repeal of the Glass-Steagall Act and the financial crisis. The observation that most of the institutions involved – Bear Stearns, Lehman Brothers, Fannie Mae, the GSE Freddie Mac, AIG, WaMu, and Wachovia – were not covered by Glass-Steagall calls into question its centrality. Yes, Citi and Bank of America were centrally involved, but the activities that generated major losses were fully permissible under Glass-Steagall. And, in important respects, the repeal of Glass-Steagall actually enabled the resolution of the crisis, by permitting the merger of Bear and JPMorgan Chase and by allowing the US Federal Reserve to open its discount window for Morgan Stanley and Goldman when they otherwise could have been sources of systemic risk.

The other principal attack on the Clinton administration's record targets the deregulation of derivatives in 2000. With the benefit of hindsight, I wish we had not supported this legislation. But, given the extreme deregulatory approach of President George W. Bush's administration, it defies belief to suggest that it would have created major new rules regarding derivatives but for the 2000 act; so I am not sure how consequential our decisions were. It is also important to recall that we pursued the 2000 legislation not because we wanted to deregulate for its own sake, but rather to remove what the career lawyers at the US Treasury, the Fed, and the Securities and Exchange Commission saw as systemic risk arising from legal uncertainty surrounding derivatives contracts.

More important than litigating the past is thinking about the future. Even if we disagree about past political judgements and about the use of the term "secular stagnation," I am glad that an eminent theorist like Stiglitz agrees with what I intended to emphasize in resurrecting that theory: We cannot rely on interest-rate policies to ensure full employment. We must think hard about fiscal policies and structural measures to support sustained and adequate aggregate demand.

--
John Case
Harpers Ferry, WV
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Sunday, September 2, 2018

Skimpy postings for two weeks

Carol and I are on a Baltic Cruise for 2 weeks. Skimpy postings likely from the "boat". Cheers to all. 
John

Saturday, September 1, 2018

Enlighten Radio:The Enlighten Radio Profundity period -- Sept 2 - 17

John Case has sent you a link to a blog:



Blog: Enlighten Radio
Post: The Enlighten Radio Profundity period -- Sept 2 - 17
Link: http://www.enlightenradio.org/2018/09/the-enlighten-radio-profundity-period.html

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Friday, August 31, 2018

The Impact of Higher Temperatures on Economic Growth [feedly]

The Impact of Higher Temperatures on Economic Growth
http://ritholtz.com/2018/08/the-impact-of-higher-temperatures-on-economic-growth/

 -- via my feedly newsfeed

For Whom the Economy Grows [feedly]

Although the subject is the collection of statistics, this is a KEY Component --- breaking 'growth' and wealth and income into their class - based dimensions---in the "more socialism" direction. It enables the complete exposure of where CEOs are raking in the lions share of a firms wealth at the expense of its producers. Such stats give you the ability to tune tax and spending incentives to target problems more effectively. No more money losing, or natural resource blood cursed socialisms, please spare us.

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For Whom the Economy Grows
https://www.nytimes.com/2018/08/30/opinion/economy-gdp-income-inequality.html

"What's in a name?" asked Shakespeare. But hey, I'm an economist, so let me ask a somewhat different question: What's in a number?

Quite a lot, suggest Senators Chuck Schumer and Martin Heinrich. This week they introduced a bill that would direct the Bureau of Economic Analysis, which produces estimates of gross domestic product, to produce estimates telling us who benefits from growth — for example, how much is going to the middle class.

This is a really good idea.

Now, I'm not one of those people who think G.D.P. is a terribly flawed or useless statistic. It's a number we need for many purposes. But on its own it isn't an adequate measure of economic success.

There are a number of reasons this is true, but one key issue is that it tells you only what's happening to average income, which isn't always relevant to how most people live. If Jeff Bezos walks into a bar, the average wealth of the bar's patrons suddenly shoots up to several billion dollars — but none of the non-Bezos drinkers have gotten any richer.


There was a time when asking who benefits from economic growth didn't seem urgent, because income was rising steadily for just about everyone. Since the 1970s, however, the link between overall growth and individual incomes seems to have been broken for many Americans. On one side, wages have stagnated for many; adjusted for inflation, the median male worker earns less now than he did in 1979. On the other side, some have seen their incomes grow much faster than the income of the nation as a whole. Thus C.E.O.s at the largest companies now make 270 times as much as the average worker, up from 27 times as much in 1980.

A similar disconnect between overall growth and individual experience seems to lie behind the public's lack of enthusiasm for the current state of the economy and its disdain for the 2017 tax cut. G.D.P. numbers have been good in recent quarters, but much of the growth has gone to soaring corporate profits, while median real wages have gone nowhere.

But how do facts like these fit into the overall story of economic growth? To answer this question, we need "distributional national accounts" that track how growth is allocated among different segments of the population.

Producing such accounts is hard but not impossible. In fact, the economists Thomas Piketty, Emmanuel Saez and Gabriel Zucman have already produced estimated accounts with considerable detail over the past half century. The main message is one of growth going disproportionately to the top and not shared with the bottom half of the population, but there are also some surprises in the other direction. For example, the middle class, while still lagging, has done better than some common measures indicated thanks to fringe benefits.



But there's a big difference between estimates produced by independent economists and regular reports from the U.S. government, both because the government has the resources to do the job more easily, and because people (and politicians) will pay more attention. That's why the Washington Center for Equitable Growth, a progressive think tank, has been campaigning for something like the Schumer-Heinrich bill.

So why not do this?

Some might argue that creating distributional accounts is tricky, that it requires making some educated guesses about how to pool different sources of information. But that's true of the process used to create existing national accounts, including estimates of G.D.P., too! Economic numbers don't have to be perfect or above all criticism to be extremely useful.

In a reasonable world, then, something like the Schumer-Heinrich bill would become law in the near future. In the real world, of course, the proposal will go nowhere for the time being — because Republicans don't want anyone to know what distributional national accounts might reveal.

By now everyone knows that conservatives routinely yell "socialist!" whenever anyone proposes doing something to help less fortunate members of our society — which is a key reason so many Americans now think favorably of socialism: If guaranteed health care is socialism, bring it on. But the right doesn't just cry foul at any attempt to limit inequality; it does the same thing whenever anyone tries to talk about economic class, or measure how different classes are faring.

My favorite example here is still former senator Rick Santorum, who denounced the term "middle class" as "Marxism talk." But that was just an especially ludicrous version of a general attempt on the right to suppress talk about and research into where the economy's money goes. The G.O.P.'s basic position is that what you don't know can't hurt it.

And to be fair, progressives like the idea of distributional accounts in part because they believe that more knowledge in this area would help their own cause. But here's the thing: Knowledge is objectively better than ignorance. And in modern America, knowing who actually benefits from economic growth is really, truly important. So let's make finding that out, and disseminating the results, part of the government's job.

Follow The New York Times Opinion section on Facebook and Twitter (@NYTopinion), and sign up for the Opinion Today newsletter.

Paul Krugman has been an Opinion columnist since 2000 and is also a Distinguished Professor at the City University of New York Graduate Center. He won the 2008 Nobel Memorial Prize in Economic Sciences for his work on international trade and economic geography. @PaulKrugman
 -- via my feedly newsfeed

Why Transforming the Economy Begins and Ends with Cooperation [feedly]

Why Transforming the Economy Begins and Ends with Cooperation
https://www.nakedcapitalism.com/2018/08/why-transforming-the-economy-begins-and-ends-with-cooperation.html

Why Transforming the Economy Begins and Ends with Cooperation

Posted on August 31, 2018 by 

Yves here. It's not hard to infer that I'm skeptical about what sound like one-idea remedies to complex problems. While Mondragon is a noteworthy exception, I wonder if many successful cooperatives have 150 people or fewer in them. The reason for fixating on that number is that various studies have found that is largest group you can have where everyone knows each other, and accordingly, an function without a formal hierarchy.

By Esteban Kelly,Executive Director of the US Federation of Worker Cooperatives. He is a founder and core trainer with AORTA, a worker co-op that supports organizations fighting for social justice and a solidarity economy through consulting. He has served on numerous boards including the Democracy At Work Institute and the National Cooperative Business Association (NCBA-CLUSA). Originally published atopenDemocracy

"When I heard about the green economy for the first time, a light bulb went off in my head. We can create businesses and jobs for ourselves." That's how co-op worker-owner Tim Hall explains his initial spark of inspiration. Eventually he joined together with other unemployed Boston residents to found CERO(Cooperative Energy, Recycling, and Organics), an award-winning food waste pickup and diversion service. The name is fitting, since "CERO"—which means "zero" in Spanish—seamlessly blends their zero-waste mission with a green jobs strategy of workforce development among low-skilled workers, especially immigrants and people of color.

Cooperatives provide a sustainable and accountable way of providing goods and services—and they can help to transform our economies before it is too late. They promise a tantalizing future of sustainable social enterprise, community control, worker self-management and workplace democracy that places economic decision-making back into the hands of workers and consumers. Could co-ops dislodge capitalism and loosen its chokehold on what feels like every facet of our lives, or will they themselves become co-opted?

At some point in the last 50 years capitalism corralled the power to define everything about how we think about economics. That's one of the benefits baked into being the dominant organizing force of the economy. But the bigger truth is that 'the economy' includes more than the profit-maximizing ethos of capitalism, just as 'democracy' isn't the property of Congress or parliament. In democratic societies (at least in theory) we have elected and accountable representatives for everything from parent-teacher associations and children's sports leagues to the general assemblies where members deliberate with each other in neighborhood associations and union halls.

The same is true for economics, where undemocratic, shareholder-controlled, profit-obsessed enterprises have come to be equated with the concept of business itself—and especially with commerce, money, mission and productivity. Cooperatives are for-profit businesses which operate in virtually every industry. They undergird global commerce, particularly in agriculture, energy, and local banking via credit unions, but instead of maximizing profits for their investors they are driven primarily by the interests of their members–– who may be producers on a farm, the residents of an apartment complex, the consumers of utilities and retail goods, or the workers in a factory. In co-ops the goal is to get a better price for farmers, more affordable housing for residents, higher-quality goods for consumers, and meaningful, healthy, fair-paying jobs for workers.

Is this inherently anti-capitalist? In a way, yes, because co-ops use capital to put people over profit, which inverts the profit-over-people logic of the current global economy. Worker cooperatives may be the most coherent alternative to capitalism as we know it because they put capital at the service of labor rather than the other way around. Some fall short of this ideal of course, and co-ops don't guarantee social justice by themselves (which is why we still need social movements), but the co-op model inherently prioritizes the good of the many over the benefit of the few.

Generally speaking, the cooperative economy is better described as 'a-capitalist' rather than 'anti-capitalist,' because it can prosper in both market economies and socialist economies like Cuba, which currently has about the same number of worker co-opsas the United States. But in its desperation to legitimize and stabilize itself, capitalism is eager to co-opt at least the superficial characteristics of the cooperative economy, much as it has co-opted sustainable business through greenwashingcampaigns over the last 20 years. Throughout the 20th century we have witnessed capitalism absorb cooperative elements into its structures in an attempt to reconstitute itself during its many crises.

At the same time, it's disappointing but necessary to point out that some of the world's largest cooperatives have managed to compete and survive against conventional businesses by mimicking the corporate cultures of late-capitalist firms. Who knew that American household brands like Land O'Lakesand Ocean Spraywere both cooperatives? And when was the last time you were invited to vote in a general membership meeting of your credit union?

What's more important than being 'pro- 'or 'anti-capitalist' is the recognition that cooperatives must figure heavily in any democratic, post-capitalist economy. This matters a great deal now, because while the contradictions and unsustainable nature of capitalism have become glaringly clear, many people struggle to articulate what will replace it. The exception is a rising consensus that cooperatives (along with small independent and family businesses) will replace the capitalist firm as the core non-governmental form of enterprise in the future. Cooperatives are an essential instrument of economic democracy.

But to succeed in this way, co-ops must stay true to the mission and guiding values. Employee-owned cooperatives force us to confront our own desire to do what it takes to live justly, sustainably, and in a participatory, people-centered way. They remove the excuse that the problem is the demands of the shareholder or the red-tape of government bureaucracy or the bullish will of a boss. When we have worker owned and controlled businesses, we must take responsibility for how well we pay ourselves, how connected our businesses are to the community and its needs, and how healthy our own workloads and quality of life truly are.

For as long as cooperatives fight to persist in a ravenous capitalist economy, these challenges will be greater, because a co-op's products and services must rival the quality and price point of deceitful capitalist enterprises which cut corners on safety and the environment, and steal wages from workers in order to maximize benefits for their shareholders. Cooperatives are put on trial time and again because people want to imbue them with some magical or mechanical power to resolve societal problems. In the current context (or perhaps any context) this is impossible, but they do have the potential to be healthy and restorative as in the case of CERO.

The lowest income people in Boston may be on the frontlines of environmental disaster in their city, but Hall and his colleagues have found a way for their communities to become protagonists in creating solutions. Cooperatives put folks like them at the center of the economy, which means that ordinary people can use the power of business to address their needs and guide how change happens, thus helping to fulfill the promise of a democratic economy—not just voting once or twice a year but coming together to solve problems every day. The real question is this: can we as people put our full weight behind a new economic paradigm that is inclusive, inter-dependent, anti-sexist, multi-racial, anti-imperialist and liberatory?

I've spent 20 years as an active member of many different types of cooperative in the US, including the intimate living spaces of over a dozen shared housing co-ops and handling the day-to-day business of two different worker-run cooperatives. What I can tell you is this: by themselves such co-ops aren't going to save us, nor are they going to transform society. But co-ops are an especially effective tool for change. They leverage innovations from the capitalist era of enterprise and turn them into a positive force within the broader spheres of human relationships, responsible resource consumption, and transparent governance and accountability— typically while staying rooted locally and showing concern for the community.

Deep transformation happens at the level of human beings, who then bring their reorientation to the structures in which they participate. Cooperatives are a vehicle to catalyze that change, but they only yoke together the people in the pilot's seat. What ultimately matters is the disposition of the pilots themselves. We are the ones that have to change.

However, what I've also seen during my decades in cooperative communities is that while co-ops might not transform people, the act of cooperation often does. Not overnight, and not evenly for everyone. But the more my co-workers and housemates participated in cooperative processes like facilities maintenance, financial planning, passing a health inspection or some other shared work or act of problem-solving, the more humility, trust, empathy, stewardship and solidarity we each expressed. The habits of hierarchical, capitalist behaviors receded like the tide as we practiced interdependence and cooperation.

What we need are more opportunities to practice, screw up and improve in this way. And with more practice, we can all develop the qualities required to work through conflict and manage operations sensibly and democratically. Cooperation is the key to a new economy.


 -- via my feedly newsfeed

DeLong: This is the most hopeful take on American productivity growth relative stagnation I have seen. I thought it was coheren... [feedly]

Brad Delong i s always up to date on the latest in trying to solve the riddle of low productivity numbers in recent years, especially in the service sector which now accounts for the overwhelming majority of jobs and businesses. Here the blame is placed on MANAGEMENT. True, in a sense, since services management is 90% management of human, not physical capital. Automating human interactions typical of services is progressing but at a slower pace than manufacturing. Plus there is a problem in the value exchange between service provider and consumer that makes the transaction a weak commodity, a poor store of value, and the consumer does not obtain exclusive use as in purchase of a physical commodity. While the provider fixes a price on a service, the value exchanged (labor performed) is NOT homogeneous. The talents, experience, preparation, personality, appearance and reputation of a provider play a bigger and wider role than in, say, a line worker in a hammer factory.

Anyway -- this is an important question in economic policy any serious effort to restructure US capitalism, or corporate governance, or industrial policy must understand and address. 

*************************************************************

This is the most hopeful take on American productivity growth relative stagnation I have seen. I thought it was coheren...
http://www.bradford-delong.com/2018/08/author-_managing-our-way-to-higher-service-sector-productivityhttpshbrorg199707managing-our-way-to-higher-serv.html

This is the most hopeful take on American productivity growth relative stagnation I have seen. I thought it was coherent and might well be right 20 years ago. I think it is coherent and might possibly be right today. But is that just a vain hope?: Michael van Biema and Bruce Greenwald (1997): Managing Our Way to Higher Service-Sector Productivity: "What electricity, railroads, and gasoline power did for the U.S. economy between roughly 1850 and 1970, computer power is widely expected to do for today's information-based service economy...

...But there is increasing concern because improvements in productivity growth are continuing at low levels despite the expenditure of trillions of dollars on information technology. Whereas productivity grew at an annual rate of 3% in the two decades following World War II, it has grown at an annual rate of only about 1% since the beginning of the 1970s. Had the earlier level of productivity growth been sustained, the gross domestic product would now be approximately $11 trillion instead of about $6.5 trillion. That extra $4.5 trillion per year in economic output—which amounts to roughly an additional $18,000 for every man, woman, and child—would be having a profound impact on a wide range of social and economic problems.

What is preventing a productivity revival in the U.S. economy? Clearly, the manufacturing sector cannot be blamed.... Goods-producing activities (such as manufacturing and construction) employed only 19.1% of the labor force in 1992—down from 26.1% in 1979.... Service-producing activities, on the other hand, employed 70% of all U.S. workers in 1992—up from 62.2% in 1979. By 1994, 71.5% of U.S. workers performed service jobs—whether in manufacturing or service organizations—as managers and professionals, salespeople, or technical support staff. Although the service sector's size has grown in the past 20 years, its productivity growth has declined....

Why hasn't productivity grown as fast in the service sector as in the manufacturing sector? Several incomplete explanations have been offered and have resulted, in our view... blame in two places: the ineffectiveness of many U.S. business managers at improving productivity and the inherent complexity of the service sector itself. A management-based approach to improving the service sector's productivity offers hope for a rapid and significant turnaround of the sector's productivity growth rate.... The problem is not a lack of resources; rather, it is that service sector companies operate below their potential and increasingly fail to take advantage of the widely available skills, machines, and technologies. The main reason the service sector has not reached its total potential output is management. If managers were focused energetically and intelligently on putting the existing technologies, labor force, and capital stock to work, rapid productivity growth would follow. To be sure, the management challenges are more severe in the service sector than in the manufacturing sector. However, the high productivity levels attained by leading-edge service companies indicate that attention from management can result in vastly improved performance throughout the service economy...

#shouldread

 -- via my feedly newsfeed

We Need to Talk About the ‘Anthropocene’ [feedly]

The concept of 'anthropocene' -- considering the all around impact of human beings on the "earth system" -- is a good framework idea for considering ways to meet the many challenges facing global civilization. It injects --- tenderly -- the social and economic dimensions into the "climate change" debate. We need to say MORE than this article does, which only teases the reader with the need for structural social change, including changes in capitalism. The latter is the elephant in the room making any of the recommended  technological shifts and associated vast economic investments too doubtful to predict success.

Note that the billionaires, including the oil and gas owners as revelations from Exxon have shown, know full well that climate change will kill millions and cause huge, likely military, upheavals. The military is deep in to  planning for IT -- meaning,  to them, "Yeah, the losers will perish, but  I WILL NOT"  

If you can't fix capitalism --- and the only known way to do it is with "more -- but not too much -- socialism" --- then meeting the challenges will fall short. Market forces alone -- capitalisms -- are utterly indifferent to market failures. There is no correction. They simply collapse and rot. With no supply, demand moves on. Without social protection from "externalities", including those externalities that are themselves consequences of "market forces".

JM Keynes theories about the positive role public spending, money supply, and borrowing can play in correcting some market failures became a standard of economic science, because Roosevelt's New Deal and the second World War (a HUGE spending project) were as close as one gets to a laboratory historical proof of Keynes theory. Critics from the billionaire caucus then resisted Keynes, claiming that "in the long run" markets would correct. Keynes famous reply: "That may, or may not, be true, sir. But, in the long run -- we are all dead".. 

"Not me," says the billionaire.

************************************************

We Need to Talk About the 'Anthropocene'
https://www.globalpolicyjournal.com/blog/31/08/2018/we-need-talk-about-anthropocene

Why is the Anthropocene important? And what does our mass media's presentation of the Anthropocene tell us? Professor Emeritus Leslie Sklair shares his research.

There is an enormous amount of research on how 'climate change' and 'global warming' are being reported in the media all over the world. However, since beginning to study the Anthropocene (the geological concept intended to measure and name human impacts on the Earth System) it seems that while some academics, environmental professionals, and creative artists do engage actively with the Anthropocene, most educated and cultured elites do not. It is also becoming increasingly clear that most people in the world have either never heard of it or if they have, they have no clear idea about it. While climate change is important, it only tells part of the story of the threats to our planet and us.

Why is this important?

The simple answer is most scientists researching human impacts on the Earth System believe the Anthropocene presents credible existential threats to the survival of human life on the planet in the foreseeable future. In 2011, Nobel prize-winner Paul Crutzen (a leading populariser of the term) co-authored an article in Philosophical Transactions of the Royal Society which argued the ultimate drivers of the Anthropocene 'if they continue unabated through this century, may well threaten the viability of contemporary civilization and perhaps even the future existence of Homo sapiens'.

Researching how the Anthropocene is presented in mass media begins to answer my research questions – how likely is it that someone reading the daily news online will come across articles on the Anthropocene, and what will these articles tell them?

The project started in early 2017, and data has been collected from online searches of over 1,000 newspapers, magazines and other media websites from around 100 countries/regions from 2002 (the date of the first recorded articles) to the end of 2017. Media with paywalls and social media were excluded from the study.

The research has come up with some surprising results. Hundreds of Anthropocene articles are actually about events in the creative arts that incorporate Anthropocene references in their titles.  When it comes to the science reporting, it is the so-called 'good Anthropocene' that dominates press coverage, kicking the existential threats to human existence into the long grass.

Three very broad messages (Anthropocene Narratives) have been identified from the media searches:

  1. While posing problems, the Anthropocene is a great opportunity for industry, science and technology, mostly business as usual, and/or casual references to the idea.
  2. The planet and humanity itself are in danger, we cannot ignore the warning signs but if we are clever enough we can save ourselves and the planet with technological fixes, geoengineering, conservation, etc.
  3. We are in great danger, humanity cannot go on living and consuming as we do now, we must change our ways of life radically, for example by bringing capitalism to an end and creating new types of communities.

The first two narratives are often difficult to distinguish, and they have been characterised as versions of the 'good Anthropocene'- supported by a variety of think tanks and foundations, arguing that human ingenuity will minimise the risks posed by the Anthropocene in the various eco-systems that constitute the whole Earth System (climate, oceans, forests, soil, biodiversity, etc.). Relatively few articles advocate radical change to the status quo.

A serious appreciation of the potential dangers of the Anthropocene will provide a useful gateway for relatively uninformed publics into a variety of issues that are ignored or misrepresented by the media. It is understandable that both the science and media establishments, and the business and political interests which underpin them, would tend to lean towards reassurance rather than desperation in portraying the perils of the Anthropocene.

However, this is a high-risk situation, probably not for anyone living at present, possibly not even for their grand-children or their great grand-children, but almost certainly for generations to come. Given the continuing failures of governments and international organizations to act decisively, this is a reality that the media and all citizens need to grasp – the issue of human survival is at stake.

An open source article summarising the project to date can be found here.


 -- via my feedly newsfeed

Thursday, August 30, 2018

YANIS VAROUFAKIS: The Three Tribes of Austerity [feedly]

The Three Tribes of Austerity
https://www.project-syndicate.org/commentary/three-tribes-of-austerity-by-yanis-varoufakis-2018-08

The Three Tribes of Austerity

Aug 30, 2018 YANIS VAROUFAKIS

Austerity prevails in the West because three powerful political tribes champion it. Enemies of big government have coalesced with European social democrats and tax-cutting US Republicans, to create a cartel-based, hierarchical, financialized global economic system.

ATHENS – No policy is as self-defeating during recessionary times as the pursuit of a budget surplus for the purpose of containing public debt – austerity, for short. So, as the world approaches the tenth anniversary of the collapse of Lehman Brothers, it is appropriate to ask why austerity proved so popular with Western political elites following the financial sector's implosion in 2008.


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The economic case against austerity is cut and dried: An economic downturn, by definition, implies shrinking private-sector expenditure. A government that cuts public spending in response to falling tax revenues inadvertently depresses national income (which is the sum of private and public spending) and, inevitably, its own revenues. It thus defeats the original purpose of cutting the deficit.

Clearly, there must be another, non-economic, rationale for supporting austerity. In fact, those favoring austerity are divided among three rather different tribes, each promoting it for its own reasons.

The first, and best known, "austerian" tribe is motivated by the tendency to view the state as no different from a business or a household that must tighten its belt during bad times. Overlooking the crucial interdependence between a government's expenditure and (tax) income (from which businesses and households are blissfully free), they make the erroneous intellectual leap from private parsimony to public austerity. Of course, this is no arbitrary error; it is powerfully motivated by an ideological commitment to small government, which in turn veils a more sinister class interest in redistributing risks and losses to the poor.

A second, less recognized, austerian tribe can be found within European social democracy. To take one towering example, when the 2008 crisis erupted, Germany's finance ministry was in the hands of Peer Steinbrück, a leading member of the Social Democratic Party. Almost immediately, Steinbrück prescribed a dose of austerity as Germany's optimal response to the Great Recession.

Moreover, Steinbrück championed a constitutional amendment that would ban all future German governments from deviating from austerity, no matter how deep the economic downturn. Why, one may ask, would a social democrat turn self-defeating austerity into a constitutional edict during capitalism's worst crisis in decades?


While Steinbrück did not spell it out fully, his underlying message was clear: Even if austerity destroys jobs and hurts ordinary people, it is necessary in order to preserve space for democratic choices. Oddly, it did not occur to him that, at least during a downturn, democratic options are best secured without fiscal tightening, simply by increasing taxes for the rich and social benefits for the poor.Steinbrück delivered his answer in the Bundestag in March 2009. "It's democracy, stupid!" would be an apt summary of his tortured argument. Against a background of failing banks and a mighty recession, he opined that fiscal deficits deny elected politicians "room for maneuver" and rob the electorate of meaningful choices.

The third austerian tribe is American and perhaps the most fascinating of the three. Whereas British Thatcherites and German social democrats practiced austerity in an ill-conceived attempt to eliminate the government's budget deficit, US Republicans neither genuinely care to limit the federal government's budget deficit nor believe that they will succeed in doing so. After winning office on a platform proclaiming their loathing of large government and pledging to "cut it down to size," they proceed to boost the federal budget deficit by enacting large tax cuts for their rich donors. Even though they seem entirely free of the other two tribes' deficit phobia, their aim – to "starve the beast" (the US social welfare system) – is quintessentially austerian.

In this sense, Donald Trump is a Republican in good standing. Aided by the dollar's exorbitant capacity to magnetize buyers of US government debt, he feels certain that the more he boosts the federal budget deficit (via tax giveaways to his ilk), the greater the political pressure on Congress to cut Social Security, Medicare, and other entitlements. Austerity's usual justification (fiscal rectitude and public-debt containment) is jettisoned in order to achieve austerity's deeper, political objective of eliminating support for the many while re-distributing income toward the few.

Meanwhile, independently of establishment politicians' aims and their ideological smokescreens, capitalism has been evolving. The vast majority of economic decisions have long ceased to be shaped by market forces and are now taken within a strictly hierarchical, though fairly loose, hyper-cartel of global corporations. Its managers fix prices, determine quantities, manage expectations, manufacture desires, and collude with politicians to fashion pseudo-markets that subsidize their services. The first casualty was the New Deal-era aim of full employment, which was duly replaced by an obsession with growth.

Later, in the 1990s, as the hyper-cartel became financialized (turning companies like General Motors into large speculative financial corporations that also made some cars), the aim of GDP growth was replaced with that of "financial resilience": ceaseless paper asset inflation for the few and permanent austerity for the many. This brave new world became, naturally, the nurturing environment for the three austerian tribes, each adding its special contribution to the ideological supremacy of austerity's appeal.

Austerity's pervasiveness thus reflects an overarching dynamic that, under the guise of free-market capitalism, is creating a cartel-based, hierarchical, financialized global economic system. It prevails in the West because three powerful political tribes champion it. Enemies of big government (who see austerity as a golden opportunity to shrink it) coalesce with European social democrats (dreaming of more options for when they win government) and tax-cutting Republicans (determined to dismantle America's New Deal once and for all).

The result is not only unnecessary hardship for vast segments of humanity. It also heralds a global doom loop of deepening inequality and chronic instability.


Yanis Varoufakis, a former finance minister of Greece, is Professor of Economics at the University of Athens.
 -- via my feedly newsfeed

China-India rapprochement will benefit entire region [feedly]

China-India rapprochement will benefit entire region
http://www.atimes.com/china-india-rapprochement-will-benefit-entire-region/

Adopting similar stances on free trade, counterterrorism and global issues such as climate change, recently Sino-Indian relations have become more multi-dimensional in nature. Working together on platforms such as BRICS and the Shanghai Cooperation Organization (SCO) has produced a new synergy between the two nations that could prove auspicious for South Asia.

On the world stage also, China and India account for more than a third of the global population and 20% of its gross domestic product. Not only that, they are the biggest, fastest-growing and most populous developing countries, so this is not a minor development.


India has been in the process of a rapprochement with China for the past few months. Bilateral ties have been on an upward trajectory since several high-level visits this year, the most significant of which was Indian Prime Minister Modi's Wuhan summit with Chinese President Xi Jinping.

Having met as many as 15 times in the last four years, the two leaders have developed a good understanding, and attending the SCO Summit in Qingdao, Modi affirmed in his speech, "We have reached a stage where physical and digital connectivity is changing the definition of geography. Therefore, connectivity with our neighborhood and in the SCO region is our priority."

Several factors may have contributed to the new synchronicity in Sino-Indian relations, such as the prevalent US tendency toward protectionism that has affected even its allies such as South Korea and India, forcing the latter to rebalance itself closer to home. Notwithstanding the fact that it is described as a "leading global power and major defense partner of the United States" in the 2017 US National Security Strategy, India is still being hit by trade tariffs, and it is being criticized by Washington for its trade policies.

Another factor is the upcoming election in India, ahead of which Modi has to present a better economic outlook for the next five years. Negotiating a new bilateral Sino-Indian economic agreement, India could also do with some help to boost Modi's Make in India policy.

When he launched the policy in September 2014, the Indian PM pledged to create 100 million new jobs by 2022 and make manufacturing account for around 25% of GDP by 2025. However, according to the World Bank, only 650,000 new jobs had been provided while manufacturing accounted for just 16% of the economy by financial year 2017-18, and economic growth slowed from 7.1% to 5.7%in 2018. Demonetization, inadequate infrastructure and tough labor laws are said to be the reasons behind this failure of "Make in India."

Thus an economically cooperative relationship with China has become a necessity for India. It requires Chinese infrastructure investment to bring back vibrant economic growth and fulfill its dream of becoming an economic and geopolitical powerhouse by 2025.

Having the resources and authority to help build India's industrial foundation, China could enhance its prospects with the Belt and Road Initiative (BRI). Recently, India put together a list of goods that are becoming costlier because of the trade war and which could be exported to China instead of the United States. Increasing exports would also help reduce the US$63 billion trade deficit it has with China, its top trading partner.

Trade value between the two nations reached a high of $84.4 billion recently, and generally there is 20% growth every year. By lowering barriers on some Indian goods, in turn China has also made efforts to address Indian reservations over the trade deficit.

From the foreign-affairs aspect, organizations like the SCO and trade and infrastructure projects like the BRI are binding the region closer in a mutually beneficial equation. Unfortunately, both the South Asian Association for Regional Cooperation (SAARC) and the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) have failed to deliver, and this region needs to find common ground to achieve a better understanding.

At present, South Asia lacks unity and integration, and good relations between the two major powers, China and India, is a good omen. Even as bilateral relations between China and India become more tightly knit, it may be just a matter of time before Pakistan and India also sort out their issues. Playing a supportive role, China could help build bridges, and even if just a modicum of success is achieved, an India-Pakistan-China triangle could ensure the long-term peace and prosperity of South Asia.

Finally, in recent times, India has become the world's largest weapons importer by purchasing 13% of the arms in the world, according to the Stockholm International Peace Research Institute (SIPRI). In the future, those finances could be re-channeled to poverty reduction and economic development if vibrant geo-economic relations are established.

Focusing on preserving global free trade and increasing economic bilateral interaction, Sino-Indian diplomatic and economic ties have immense potential to transform the whole region if they can achieve sustainable, coordinated priorities. -- via my feedly newsfeed

Wednesday, August 29, 2018

SSA Staffing Shortage Hurts Hard-Working Americans [feedly]

SSA Staffing Shortage Hurts Hard-Working Americans
https://www.cbpp.org/blog/ssa-staffing-shortage-hurts-hard-working-americans

The Social Security Administration (SSA) faces a staffing shortage that hurts hard-working Americans trying to access their earned benefits, but a Senate-passed funding bill wouldn't help — and one that the House Appropriations Committee passed would only make things worse. The House bill would cut SSA's administrative budget by 2.5 percent compared to last year, and the Senate's version would provide a paltry 1 percent increase.


 -- via my feedly newsfeed

Xi and PLA could join North Korea’s national day parade [feedly]

I forward this as further evidence that the entire 'concert' arranged for Trump in NK was co-orchestrated with China, and SKs silent support. If so, Trump's arrogance is nowhere better exposed than thinking he could form any real relationship with NK while insulting and attacking China with his divisive gaslighting tactics. It appears convergence with China, not divergence is the emergent trend.


Xi and PLA could join North Korea's national day parade


http://www.atimes.com/article/will-xi-and-pla-join-north-koreas-big-national-day-parade/

peculation is rising that Chinese President Xi Jinping – possibly accompanied by an honor guard of People's Liberation Army troops – will appear alongside local leader Kim Jong Un at a symbolically important parade in Pyongyang next month.

At a time when Washington has unleashed a trade war upon Beijing, while the denuclearization process agreed between Kim and US President Donald Trump in Singapore at their June summit appears to be stalled, the appearance of the Chinese leader – and elite PLA troops – would send a significant cross-Pacific message about Sino-North Korean amity.

September 9 is the 70th anniversary of North Korea's founding, and the day is expected to be marked with a massive parade in Kim Il Sung square. The flagship plaza at the center of Pyongyang was created from the rubble of buildings bombed flat during the Korean War, and is a frequent site for massive military parades.

Chinese state newspapers including the Global Times and Reference News have run stories this week speculating on the size and significance of the big parade. Typically though, neither the Korean Central News Agency nor Korean Central Television – key media organs in one of the world's most opaque states – have dropped any hints about the upcoming muster of military might.

Lack of censorship looks to confirm speculation

Posts hinting that President Xi will visit Pyongyang to review troops alongside Kim have not been pulled from social networking platforms by party censors since related rumors started to swirl last month. Nor has talk that Xi may dispatch PLA honor guards to goose-step shoulder-to-shoulder with their North Korean comrades.

While Xi and Kim had never met before this year due to bilateral tensions sparked by Kim's execution of his uncle Jang Song-taek – who had strong connections in Beijing – and by China's support for international sanctions, they have met three times so far in 2018. The meetings proceeded as part of Kim's unprecedented diplomatic offensive, which has also seen him meet Trump once, and South Korean President Moon Jae-in twice.

The friendship between the two avowedly communist states may be in a process of rejuvenation, but is not new. China's intervention in the Korean War saved the North Korean state from extinction at the hands of US-led UN forces in October 1950.

In 1961, the two signed the Sino-North Korean Mutual Aid and Cooperation Friendship Treaty; its second article calls for mutual defense against external enemies. The treaty has been renewed twice and is up for renegotiation in 2021.

Goose-steppers' paradise, but no ICBM?

The general consensus is that the parade could be considerably larger than one held in February on the anniversary of the Korean People's Army.

Large cavalcades of troops, tanks and artillery on the ground and swarms of war-craft in the air are anticipated, after Kim reportedly ordered the military to put its best foot forward to shore up the morale of North Koreans and cast the image of an invincible army.

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A satellite image of the preparation for the national day parade at the Mirim Parade Training Ground in Pyongyang. Photo: The Stimson Center via Planet Labs, Inc

The Mirim Parade Training Ground in Pyongyang has been a hive of activity, as seen on satellite imagery taken earlier this month, with around 120 military vehicles in formations, including assault tanks, unmanned-aerial-vehicle launchers and six tarp-covered Scud-class transporter-erector-launchers, among others, captured practicing on the facility's roads.

A replica of Kim Il Sung Square, and an expended tent area believed to house and service troops were also visible in these images.

But the Global Times cited the Stimson Center, a Washington-based think tank, as saying that no launchers for intercontinental ballistic missiles were spotted so far.

Cui Zhiying, director of the Shanghai-based Tongji University Korean Peninsula Research Center, told the tabloid that the Hwasong-15 nuclear warhead-capable ICBMs – with a theoretical range covering almost all of the US – would not be showcased this time for the sake of the thaw in ties between Pyongyang and Washington.

However, those ties, over the last week, appear in danger of freezing over once more, following Trump's order to US Secretary of State Mike Pompeo not to travel to Pyongyang last Friday to attend negotiations. Trump cited a lack of progress in North Korea's denuclearization as the reason for his move.

Moon on a mission

Xi, assuming he does appear in Pyongyang, will not be the only high-profile visitor in September. Amid an apparent downturn in relations between Pyongyang and Washington, South Korean President Moon has also announced a summit with Kim in the North Korean capital next month.

While there, Moon's key mission will be an intermediary one. He hopes to reinvigorate the denuclearization process and bring Pyongyang and Washington back onto the same page, South Korean presidential officials say.

However, while the dates for Moon's trip have not yet been released, he is highly unlikely to visit on the 9th – the date when the communist state was founded in contravention to his own, US-backed state in 1948.


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