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Thursday, January 11, 2018

The American Economics Association

Greetings Socialist Economics readers:

I was fortunate to attend several sessions at this year's American Economics Association annual meeting, held in Philadelphia. The conference is a major international gathering of academic and professional economists of every trend, headliners and aspiring grad students, the famous and some infamous. The workshops and panels address a full menu of topics in the social sciences from the controversial to the highly technical. Vendors of professional services and software offer to help you through the universe(s) of Big Data.

I focused my attention on the panels addressing inequality, innovation and technology impacts on labor, and those devoted to the study of "populism".

Emmanuel Saez chaired and participated in several sessions related to his work on inequality trends across the world. Together with Thomas Piketty and researchers at the Paris School of Economics, Dr Saez has helped gather the most authoritative and comprehensive data and analysis of global trends on inequality. In short, his report is devastating. There is no place, none, where trends do not reflect an INCREASE in inequality. The shares of wealth created by society, nevermind accumulated assets, are being divided between capital and labor even MORE unequally. Its getting worse, not better. This trend ---- the gains of productivity and technology going disproportionately to the rich -- has been an all but static and permanent feature of life for 45 years -- since 1973 in the US. But its global too. The social democracies of the EU, and "socialisms with a Chinese and Vietnamese face" market-socialisms of China and Vietnam have slower RATES of increased inequality, but increased nonetheless. Socialisms of the post-Soviet Russian variety [most industrial and strategic assets are still 90% owned, controlled, or heavily influenced by the state] show some of the worst aggravated inequality trends. If you look at trends affecting the bottom 50% of the world's incomes, only China, Vietnam, India and South Korea show significant growth in working class incomes. It is these nations, and especially China, whose very high growth rates and fairly strong state management policies that have prevented poverty rates from also rising globally. The power of global, and globalized capital -- one should probably say capitalS with a plural -- to play nations off against each other is staggering. There is not yet much light at the end of the tunnel into which this force is taking us.

The Economics of Populism was a theme in several panels where there was considerable controversy. First, there is a weakness in the classless perspective which can't distinguish between 'populist movements' (for example, the Tea Party)  funded by billionaires, and actual grass-roots funded campaigns (Sanders, for example) -- 'economic populism' in Dani Rodrik's vocabulary. Still, while economists and political scientists on the panels had different emphases, two things came through strongly: 1) There is a strong correlation world wide between economic shocks, unemployment, and adverse economic trends with the rise of movements reflecting deep discontent with prevailing norms and institutions. 2) Not every nation experiencing bad economic times responds with 'populism' of any variety -- the loss of confidence in institutions tends to precede the economic shocks, and become  an entrenched corruption. A failing state.

The impact of machines and artificial intelligence on the division of work in society was a third area where nearly unimaginable realms appear within reach --- the release of humanity from hard, dangerous, dehumanizing labors. But nearly all light is clouded by both no less than THREE market failures. 1. The historic tendency of wages and salaries to rise in correlation with rises in productivity -- i.e. workers eventually follow new jobs created in new higher productivity sectors) --  is not 'recently' working as models predict; and 2)the looming sounds of 'externalities' crashing just outside the rooms of the hotel --- the global economy, not to mention outbreaks of war, weather, famine and pestilences like fascism -- are all considered "exogenous" to to 'natural' market forces --yet they more often than not dominate economic headlines...; and 3) the robots promise ultimately to accomplish any repetitive, algorithmic task, physical or mental. That leaves an ever increasing portion of both product and labor devoted to intangibles and services performed directly for each other.  The productivity of both intangibles and services cannot be accurately measured at this time beyond their direct cost -- and with intangibles even that can be very difficult to determine. In this 'model' of an economy -- what happens to all the people, the multitudes upon multitudes who depend on CASH to live!??

No matter where you look for progress, or hope: the billionaires stand in the way.
John Case
Harpers Ferry, WV

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