Robots are wealth creators and taxing them is illogical [feedly]

Robots are wealth creators and taxing them is illogical
http://larrysummers.com/2017/03/07/robots-are-wealth-creators-and-taxing-them-is-illogical/

March 5, 2017

Governments can offset lost jobs by investing in education and retraining

I usually agree with Bill Gates on matters of public policy and admire his emphasis on the combined power of markets and technology. But I think he went seriously astray in a recent interview when he proposed, without apparent irony, a tax on robots to cushion worker dislocation and limit inequality.

The Microsoft co-founder is right about the gravity of the problem and need for action, but he is profoundly misguided in his proposed solution – and in ways that point up problems with the current public debate.

First, I cannot see any logic to singling out robots as job destroyers. What about kiosks that dispense aeroplane boarding passes? Word processing programmes that accelerate the production of documents? Mobile banking technologies? Autonomous vehicles? Vaccines that, by preventing disease, destroy jobs in medicine?

There are many kinds of innovation that allow the production of more or better output with less labour input. Why pick on robots? Does Mr Gates think anyone, let alone the US Congress, the Trump administration or a commission comprised of his fellow technocrats, can distinguish labour-saving activities from labour-enhancing ones?

Surely even if experts could draw such distinctions, the ability of the US Internal Revenue Service to administer them is in doubt.

Second, much innovative activity, even of a robot-like variety, involves producing better goods and services rather than simply extracting more output from the same input.

Autonomous vehicles, for example, will probably be safer than ones driven by humans. Robotics already help surgeons perform certain operations better than they can on their own. Online reservation systems are faster and more convenient than travel agents.

Moreover, because of emulation and competition, innovators capture only a small part of the benefit of their innovation. It follows that there is as much a case for subsidising as taxing types of capital that embody innovation.

Third, and perhaps most fundamentally, why tax in ways that reduce the size of the pie rather than ways that assure that the larger pie is well distributed? Imagine that 50 people can produce robots who will do the work of 100. A sufficiently high tax on robots would prevent them from being produced.

Surely it would be better for society to instead enjoy the extra output and establish suitable taxes and transfers to protect displaced workers?

It is hard to see why shrinking the pie, rather than enlarging it as much as possible and then redistributing, is the right way forward.

This last point has long been standard in international trade theory. Indeed, it is common to point out that opening a country up to international trade is just like giving it access to a technology for transforming one good into another. The argument, then, is that since one surely would not regard such a technical change as bad, neither is trade, and so protectionism is bad. Mr Gates' robot tax risks essentially being protectionism against progress.

None of this is to minimise the problem of job destruction and rising inequality (although it is a major paradox that we seem to be seeing unprecedentedly rapid job destruction by machinery while at the same time observing extraordinarily low productivity growth).

Rather, it is to suggest that staving off progress is a poor strategy for helping less-fortunate workers. In addition to difficulties of definition and collateral costs, there is the further problem that in an open world, taxes on technology are likely to drive production offshore rather than create jobs at home.

There are many better approaches. Governments will, however, have to concern themselves with problems of structural joblessness. They likely will need to take a more explicit role in ensuring full employment than has been the practice in the US.

Among other things, this will mean major reforms of education and retraining systems, consideration of targeted wage subsidies for groups with particularly severe employment problems, major investments in infrastructure and, possibly, direct public employment programmes.

This will be a major debate that I suspect will define a large part of the politics of the industrial world over the next decade. Little is certain. But we will do better going forward than backward.

That means making America even greater, not great again. And it means embracing rather than rejecting technological progress.

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Revoking trade deals will not help American middle classes [feedly]

Here is what is annoying about this article to me: Arguing that there was an aggregate gain from  trade, and trade agreements is a no brainer. Of course there are gains from trade. But who got them? The typical worker has got nothing but spit and horseshit from both trade and technology for 40 years. the 1% got it all.

Summers is a genius. You can tell just listening to him speak, which I have on several occasions. Why can't he see this? There's trade. There's technology. Then there's CLASS With very few exceptions, wage and salary workers went nowhere, or down for almost 3 generations. 

Revoking trade deals will not help American middle classes
http://larrysummers.com/2017/02/06/revoking-trade-deals-will-not-help-american-middle-classes/

February 6, 2017

The advent of global supply chains has changed production patterns in the US
 
Trade agreements have been central to American politics for some years. The idea that renegotiating trade agreements will "make America great again" by substantially increasing job creation and economic growth swept Donald Trump into office.

More broadly, the idea that past trade agreements have damaged the American middle class and that the prospective Trans-Pacific Partnership would do further damage is now widely accepted in both major US political parties.

As Senator Daniel Patrick Moynihan once observed, participants in political debate are entitled to their own opinions but not their own facts. The reality is that the impact of trade and globalisation on wages is debatable and could be substantial. But the idea that the US trade agreements of the past generation have impoverished to any significant extent is absurd.

There is a debate to be had about the impact of globalisation on middle class wages and inequality. Increased imports have displaced jobs. Companies have been able to drive harder bargains with workers, particularly in unionised sectors, because of the threat they can outsource. The advent of global supply chains has changed production patterns in the US.

My judgment is that these effects are considerably smaller than the impacts of technological progress. This is based on a variety of economic studies, experience in hypercompetitive Germany and the observation that the proportion of American workers in manufacturing has been steadily declining for 75 years. That said I acknowledge that global trends and new studies show that the impact of trade on wages is much more pronounced than a decade ago.

But an assessment of the impact of trade on wages is very different than an assessment of trade agreements. It is inconceivable that multilateral trade agreements, such as the North American Free Trade Agreement, have had a meaningful impact on US wages and jobs for the simple reason that the US market was almost completely open 40 years ago before entering into any of the controversial agreements.

American tariffs on Mexican goods, for example, averaged about 4 per cent before Nafta came into force. China had what was then called "most favoured nation" trading status with the US before its accession to the World Trade Organization and received the same access as other countries. Before the Korea Free Trade Agreement, US tariffs on Korea averaged a paltry 2.8 per cent.

The irrelevance of trade agreements to import competition becomes obvious when one listens to the main arguments against trade agreements. They rarely, if ever, take the form of saying we are inappropriately taking down US trade barriers.

Rather the naysayers argue that different demands should be made on other countries during negotiations – on issues including intellectual property, labour standards, dispute resolution or exchange rate manipulation. I am sympathetic to the criticisms of TPP, but even if they were all correct they do not justify the conclusion that signing the deal would increase the challenges facing the American middle class.

The reason for the rise in US imports is not reduced trade barriers. Rather it is that emerging markets are indeed emerging. They are growing in their economic potential because of successful economic reforms and greater global integration.

These developments would have occurred with or without US trade pacts, though the agreements have usually been an impetus to reform. Indeed, since the US does very little to reduce trade barriers in our agreements, the impetus to reform is most of what foreign policymakers value in them along with political connection to the US.

The truth too often denied by both sides in this debate is that incremental agreements like TPP have been largely irrelevant to the fate of middle class workers. The real strategic choice Americans face is whether the objective of their policies is to see the economies of the rest of the world grow and prosper. Or, does the US want to keep the rest of the world from threatening it by slowing global growth and walling off products and people?

Framed this way the solution appears obvious. A strategy of returning to the protectionism of the past and seeking to thwart the growth of other nations is untenable and would likely lead to a downward spiral in the global economy. The right approach is to maintain openness while finding ways to help workers at home who are displaced by technical progress, trade or other challenges.

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Trade Deals and Alternative Facts: No Longer Fresh at Project Syndicate [feedly]

Trade Deals and Alternative Facts: No Longer Fresh at Project Syndicate
http://www.bradford-delong.com/2017/03/trade-deals-and-alternative-facts-no-longer-fresh-at-project-syndicate.html

Project Syndicate: Trade Deals and Alternative Facts: BERKELEY – In a long recent Vox essay outlining my thinking about US President Donald Trump's emerging trade policy, I pointed out that a "bad" trade deal such as the North American Free Trade Agreement is responsible for only a vanishingly small fraction of lost US manufacturing jobs over the past 30 years. Just 0.1 percentage points of the 21.4 percentage-point decline in the employment share of manufacturing during this period is attributable to NAFTA, enacted in December 1993.

A half-century ago, the US economy supplied an abundance of manufacturing jobs to a workforce that was well equipped to fill them. Those opportunities have dried up. This is a significant problem: a BIGLY problem. But anyone who claims that the collapse of US manufacturing employment resulted from "bad" trade deals like NAFTA is playing the fool. A BIGLY fool. Read MOAR at Project Syndicate

I had promised Ezra Klein and company 5000 words by late September. I delivered 8000 words in late January. The 8000 words I delivered did only a third of what I had wanted them to. I had wanted to:

1. show the irrelevance of "bad trade deals" in terms of the causes of the problem of loss and lack of opportunity.
2. present what our trade—in fact, our industria—policy should be with respect to manufacturing.
3. explain why the fixation—from both left and right—on "bad trade deals". As I told union executives, members, and lobbyists in large numbers back in 1993: this energy from you is profoundly lacking on all the much more important issues on which we can agree. And I asked why that was…

I failed. Ezra Klein and company published it anyway, at excessive length. I am very grateful to them.

The third remains a mystery to me. The best partial explanation I have seen starts from Ernest Gellner's cruel observation that left-wing academics were gobsmacked by the fact that History had delivered the goods to the wrong address: that political energy and organizing mojo were supposed to focus around class, but instead they focus around nation and ethnicity. Political actors seeking to summon the lightning of populist energy thus find themselves summoning hate of foreigners and aliens, thus supping with the devil without any spoon at all. But I do not find that adequate.

Some of the second was covered in my book with Stephen Cohen, Concrete Economicshttp://amzn.to/2kylcA1: sensible and pragmatic attention to the value of communities of engineering practice and to forward and backward linkages from them should guide industrial policy. The rest is that the United States ought to be acting like a normal rich country: funding the industrialization of the rest of the world via capital export and a trade surplus. It isn't, and it hasn't been since the destructive macroeconomic policies of Ronald Reagan.

I did, however, deliver on the first. The U.S. went from 30% of its nonfarm employees in manufacturing to 12% because of rapid growth in manufacturing productivity and limited demand? The U.S. went from 12% to 9% because of stupid and destructive macro policies—the Reagan deficits, the strong-dollar policy pushed well past its sell-by date, too-tight monetary policy—that diverted it from its proper role as a net exporter of capital and finance to economies that need to be net sinks rather than net sources of the global flow of funds for investment. The U.S. went from 9% to 8.7% because of the extraordinarily rapid rise of China. And the U.S. went from 8.7% to 8.6% of its nonfarm employees in manufacturing because of NAFTA.

As Larry Summers https://www.ft.com/content/f710909f-7f26-399f-a135-e24a91c9063band Barry Eichengreen https://www.ft.com/content/2a01d6c2-de6f-11e6-86ac-f253db7791c6 both observed last week, Donald Trump's policy initiatives, such as they are—or such as we think they are, because far less is clear than usual at this stage in a transition—are as if designed to further reduce employment in manufacturing in America. It is the strong dollar that sends manufacturers the signal that they are not wanted in America. And Trump's tax cuts, his urging the Fed to raise interest rates, and his proposed changes to the tax code will all work to strengthen the dollar.

But, of course, the strength of the dollar will be blamed not on incoherent and counterproductive policies, but on the Chinese. And the Mexicans.

And Trump is not alone. The American political system right now is blaming all, 100%, every piece of that decline from 30% to 8.6%, and every problem that can be laid at its door, on brown people from Mexico.

That is a problem. It is a problem for the United States. It is a problem for the world. It is a BIGLY problem.

Housekeeping:

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Noahopinion: Anti-empiricism is not humility

Noahopinion: Anti-empiricism is not humility

"Faith is the substance of things hoped for, the evidence of things not seen."
- Hebrews 11:1


Empirical economics is taking over the profession. It's very hard to make it in the field these days without doing a hefty amount of empirical work. Lots of job market papers are still theory papers (cough! signaling! cough!), but the number of economists who can make it as pure theorists is shrinking to a rarefied, brilliant sliver.

I see that as a very good thing. That's what natural science looks like - a small number of theory papers, supported by a very large base of applied theory and empirical work. It's the sign of a mature field. I also think it's going to be very important in helping the economics profession recapture some of the public respect that it's lost over the last decade. When people start to see economists as fact-driven scientists grounded in observable reality, rather than mathematical philosophers dispensing Olympian received wisdom, the profession will lose much of its accumulated stigma. And almost every young economist I talk to thinks the same - everyone's excited about new data sources. The kids these days seem to want to know facts about the world, instead of just "organizing their thinking" with models. The future looks bright.

But not everyone is on board. A few older folks, who grew up during econ's Age of Theory, are not so happy about the change. One of these is Russ Roberts, host of the excellent podcast EconTalk. In a recent blog post, Russ explains at length why he thinks the new empirical economics is overrated:

A lot of professional economists...will tell you how many jobs will be lost because of an increase in the minimum wage or that an increase in the minimum wage will create jobs. They will tell you how many jobs have been lost because of increased trade with China and the amount that wages fell for workers with a particular level of education because of that trade... 

[T]here is no simple way to resolve differences in analysis done by professional economists...[T]there is no way of knowing reliably if the consensus reflects the truth...Most economics claims are really not verifiable or replicable... 

I am arguing that the math and science of economic predictions and assessments are nothing like the math and science of space travel. Economics provides the illusion of science, the veneer of mathematical certainty...

He even goes further, and says that empirical economics isn't even really economics at all:

[M]ost of the people I am talking about are not economists. They are really applied statisticians. Economics is primarily a way of organizing one's thinking in considering incentives and costs and the interactions between individuals that we call a market but is really emergent behavior with feedback loops.

Adam Ozimek has a patient and reasonable response to Russ, noting that even when empirical economics doesn't settle questions definitively or provide reliable point estimates, it narrows the scope of debate and rules out obvious wrong answers. That's certainly true. But I want to go further than Adam. The alternative to empiricism in economics is not agnostic humility, but intuitionism - the idea that we can know about the world by thinking about how it works, and that exposure to evidence will only pollute the truths that we divine from our own minds. And that's something I think economists need to avoid.

Consider the minimum wage issue. Suppose that a city like Seattle is considering hiking the minimum wage. How can we - economists, policymakers, and the general public - predict what the effect of the hike will be?

One approach would be to use theory. Basic Econ 101 labor supply-and-demand theory tells us that the effect will depend on the elasticities of labor supply and demand, which have to be estimated empirically. An economic geography theory might predict that the effect will be overcome by the strength of agglomeration effects, and therefore small. A search theory might predict that search frictions will preclude any sort of large short-term effect in labor markets.

How about stylized facts? Russ says that stylized facts are the only things that economists can really "know":

It is useful to know that 40% of the American work force was in agriculture in 1900 and now the number is 2%. It is useful to understand that that transition (which was most faster in the first half of the 20th century than the last half) did not lead to mass unemployment and starvation. There are indeed roughly 5 million fewer manufacturing jobs today than in 2000.

OK. So what do the stylized facts tell us about the minimum wage? Well, they tell us that places that raise the minimum wage don't tend to lose jobs. Look throughout American history. You won't find any cases where there was a big minimum wage hike and the unemployment rate soared. If we rely on stylized facts rather than careful controls and natural experiments, we'd conclude, as minimum wage proponents do, that the minimum wage isn't dangerous.

A third option is to rely on the kind of empirical studies Russ pooh-poohs. Most empirical studies say the short-term impact of the minimum wage on employment is small. 

A fourth option is to rely on casual intuition - not really theory, but a sort of general gestalt idea about how the world works. If we're of a free-market sort of persuasion, our casual intuition would tell us that minimum wage is government interference in the economy, and that this is bound to turn out badly. Russ seems to be advocating for this when he writes that "economics is primarily a way of organizing one's thinking in considering incentives and costs." "Organized thinking" seems like just another term for intuition. 

As I see it, the fourth option is by far the worst of the bunch. Theories can be wrong, stylized facts can be illusions, and empirical studies can lack external validity. But where does casual intuition even come from? It comes from a mix of half-remembered theory, half-remembered stylized facts, received wisdom, personal anecdotal experience, and political ideology. In other words, it's a combination of A) low-quality, adulterated versions of the other approaches, and B) motivated reasoning. 

If we care about accurate predictions, motivated reasoning is our enemy. And why use low-quality, adulterated versions of theory and empirics when you can use the real things?

As I see it, a rational predictor should use a combination of theory and empirics. But theory should also be informed by data - there are lots of theories, and in general they can't all apply to the same situation, so you need evidence to tell you which one(s) to use. So a rational predictor's predictions should always be tied as closely as possible to empirical evidence. Discounting empirical evidence, as Russ does, seems inevitably to lead to the use of casual intuition (or to even worse things, like pure ideology).

Anyway, just in case you were curious, Seattle went ahead and hiked the minimum wage, and whether you measure by stylized facts or carefully controlled empirical studies, any negative effect on employment was small or zero. Of course, if you want, you can say that the empirical studies weren't controlled well enough, and the stylized facts are illusions, and the minimum wage hike must have hurt employment because government intervention always hurts employment la la la I can't hear you, but if you say that, who's going to respect you intellectually?

Now I want to turn to a second claim: the idea that discounting evidence represents "humility". Russ writes:

We economists should be more humble and honest about the reliability and precision of statistical analysis.

John Cochrane, in a blog post praising Russ' post as an exercise in "economic humility", writes:

[L]et's call [Russ' attitude] Hayekian humility. This is the hardest one for so many economists to admit, as we all like to play central planner.

This seems to be a bit of a change from when John wrote that "the stars in their 30s are scraping data off the internet." Or when he himself got famous and respected partly for doing careful empirical studies of asset prices. But anyway.

We'd all like economists to be more humble, right? Sure, count me in. But discounting empirical evidence in favor of "organized thinking" is probably not what most people have in mind when they call for economists to be more humble. 

Which is more humble: To try as hard as you can to assess the facts? Or to throw up your hands and say we'll never know the facts for sure, so we should rely on our own intuition about what people's incentives are? 

Russ writes:

[A]n economist when considering a policy of banning autonomous vehicles...would think about...how such a ban will effect the incentives to discover future innovation that might also people out of work. We would think about how putting more power in Washington would encourage lobbying for protection...These ideas are not rocket science. But they come easily to economists and not so easily to non-economists. Thinking like an economist is very useful.

Does that sound humble to you? To me it sounds like the exact opposite of humility. To say that an economist has special insight into simple ideas sounds to me like the opposite of humility. To say that an economist's intuition can yield an understanding of the incentives governing innovation, or the effect of lobbying, and that checking this intuition against the facts would only pollute the truth it yields, sounds to me like the opposite of humility.

Anyway, one final point. Russ cites an empirical disagreement between David Autor and Jonathan Rothwell over the impact of trade on jobs. He writes:

Is Rothwell correct? I have no idea. Here is what I do know. There is likely to no way of knowing which view is correct with anything close to reliability or certainty.

No! No, Russ, you do not know that there is no way of knowing who's right. How could you possibly know that it's impossible to know something?? You can't prove a negative! This is the argument-from-ignorance fallacy. Just because a matter isn't settled doesn't mean it can't be settled.

But even worse than argument-from-ignorance would be an argument-from-personal-ignorance. It doesn't sound to me like Russ has tried very hard to determine the particulars of the Autor-Rothwell dispute. It doesn't sound like he has read the papers closely, studied and understood the statistical methodology, or done anything other than observing that the two researchers disagree. I don't want to put words in Russ' mouth here, but "two people disagree, so there must be no way to tell who's right" is pretty anti-rational.

Imagine if two researchers did experiments to determine the mass of the electron. The first researcher says the mass is 9.1e-31 kg, and the second says it's 4.6e-31 kg. After hearing these two conflicting results, do you say "Here is what I do know. There is likely no way of knowing the mass of the electron with anything close to reliability or certainty."???

No. That is not what you say. Not if you're rational, at any rate. If you're rational, you might say "Let me take a look at these two experiments and see if one of them got something wrong." Or you might say "I'm going to wait until scientists figure out which one of these two experimenters got something wrong, and defer judgment until then." Or you might even say "I trust one of these labs, since they have a great track record, so I'll tentatively favor their result until more evidence comes out." But what you would not say is "Huh, it must be impossible for physicists to determine the mass of the electron."

So I believe economists can do a lot better than Russ seems to think. They can do better than relying on intuition and throwing up their hands at any empirical disagreement. And by and large, they are doing better. Let's hope that trend continues, and doesn't regress.

--

John Case
Harpers Ferry, WV

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Some details on Trump's proposed EPA cuts*

Some details on Trump's proposed EPA cuts*

Here are some of the EPA program cuts proposed by President Trump: 

--

John Case
Harpers Ferry, WV

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Rubin: Why Hurting the Poor Will Hurt the Economy

Why Hurting the Poor Will Hurt the Economy

Robert E. Rubin, U.S. treasury secretary from 1995 to 1999, is co-chairman of the Council on Foreign Relations.

Not long after I became treasury secretary in 1995, a senior U.S. senator summoned me to Capitol Hill for a meeting. He demanded to know why our department had just opened a community development office, tasked with focusing on poverty, inner-cities and distressed rural areas.

"Treasury's purview is economic policy," the senator said. "What exactly do poverty and social issues have to do with your job?"

The answer to that question has never been more important than it is today: Anti-poverty programs such as Medicaid, the Supplemental Nutrition Assistance Program (SNAP, often called food stamps) and other safety-net programs designed to assist low-income Americans are not only social and moral imperatives — they serve critically important economic purposes.

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To start, these are vital public investments with high rates of return. They improve productivity and reduce social costs caused by crime, malnutrition and poor health. For adults, Medicaid and SNAP better enable effective participation in the workforce.

Roughly 20 percent of U.S. children live in poverty. In the wealthiest country in the world, that's not just a moral outrage — it's a serious detriment to our economic future. For low-income children, Medicaid and SNAP are investments that significantly improve outcomes later in life. For example, one study found that children who received SNAP were less likely to experience stunted growth, heart disease and obesity as adults — and had graduation rates that were 18 percentage points higher. We need to do more, not less, to help these children — by providing early family intervention, better schools and housing, safer neighborhoods and much else.

What's more, these programs serve as "automatic stabilizers" during an economic downturn: In a weak economy, as more people lose income and become eligible for federal benefits, the programs expand, putting more money in more people's pockets. People then spend that money, increasing demand and helping the economy recover.

All this adds up to a clear but underappreciated reality: Anti-poverty programs are an economic imperative. And yet their future is in jeopardy.

The majorities in Congress have advocated capping or "block granting" federal spending on Medicaid and SNAP — and the Trump administration is also expected to pursue a budget that restructures them. Over time, the effect would be major cuts to these programs. The more immediate effect would be to eliminate the programs' ability to automatically adjust to meet increased need, whether from a weakened economy, natural disaster or public-health crises such as the opioid epidemic. Low-income programs that depend on annual appropriations are also at risk if the president and Congress follow through on plans to bring domestic spending to historically low levels.

The threat to these programs is particularly grave this year because of the desire to lower corporate and individual income taxes. Corporate tax cuts and certain structural reforms could increase U.S. competitiveness globally and business investment, economic activity and labor demand, which could, in turn, boost jobs and wages.

But significant cuts to top personal income-tax rates or to capital gains taxes, or the elimination of the estate tax, would disproportionately benefit those at the top, while providing little or no gains for workers or the broader economy. Such rate reductions, on both the personal and corporate side, would also increase fiscal deficits, even after reasonable adjustments for projected economic growth, if unpaid for. There will be tremendous pressure to offset those deficits by cutting anti-poverty programs.

Moreover, the most likely path forward for a tax bill is through "reconciliation," the filibuster-proof legislative process for passing budgetary bills in the Senate. Reconciliation bills must adhere to certain rules, including a requirement that they not add to the deficit in years beyond the next decade. In 2001, Congress circumvented this problem by "sunsetting" the Bush rate cuts. But the majority party in Congress is unlikely to want a major structural overhaul of the tax system to be temporary. That's because such structural reforms require businesses to make long-term organizational and financial changes. All this suggests there will be even greater pressure to make major cuts to programs for the poor.

Even if certain tax changes are economically beneficial on their own, funding them with cuts to anti-poverty programs would be counterproductive. The constructive alternative would be to finance rate cuts by removing or limiting deductions and other tax breaks. But these provisions have strong special-interest support and are unlikely to change much. The threat to anti-poverty programs, which unfortunately have fewer powerful backers, is very real.

In today's political environment, we should be aware of these threats and keep our focus on protecting programs that combat poverty. And, in the years and decades ahead, we need to fight for our nation's economic interests by substantially increasing investments in these programs, especially for children.

Just think of how our economy would benefit if we finally marshaled the will and resources to effectively combat poverty. It would increase the size and productivity of our workforce, including by equipping children for success, and make our economy more resilient through stronger automatic stabilizers.

--

John Case
Harpers Ferry, WV

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Re: [socialist-econ] Re: Some thoughts on International Women's Day

I don't want to reply other than to say that Bernie wasn't on my mind at and you missed my main point. That said, have a good weekend. Sam
 

On Fri, Mar 10, 2017 at 4:40 PM, John Case <jcase4218@gmail.com> wrote:

This is an interesting post. I do not agree with its "politics", which seem to be headed persistently toward some anti-Sanders celestial cornfield. But I won't argue that. 

More interesting is the advance of a notion of class as something too "wide-angled" to remain wedded to economic categories and forces, like Marx's notion, or any of the classical economists for that matter. I submit the most egregious abuses of Marx's complicated legacy have been made by those who decided to take flight from economics -- and thus miscalculated, fantastically at times,  the motions of the real economy in relation to economic policies (including the COSTS of social/political policies and practices not officially called economic.) Flights of folly, Utopia, or fantasy follow: The Stalin "command economy", the Mao "cultural revolution", WZ Foster -- "Build a Soviet America", "industrial concentration", "just make corporations coops", "I can stop war by personally living peacefully", etc, etc.

Now, its true that the term "class" was less misunderstood, less obfuscated, in the 19th century than it is today. Class, however specified in various contexts and histories,  was a category written into the laws of most nations on earth. All nations arising from feudal relations inherited centuries of "class" based culture infusing nearly every aspect of life.  With the emergence of capitalism things got a lot more complicated. New occupations, tools, forms of ownership, property, banking, money, and trade agitated all received class relations from ages before. Capitalism immensely expanded the population living via money income, either as wages and salary, or as capital. Landed wealth began its long relative decline. The economic classes of "capitalists" -- those whose income derives primarily from returns on capital investment, and "wage workers" were the new social classes.

Marx and Engels applied a fairly simple (but from a philosophical foundation of "historical materialism" not so simple) economic formula --  which always seemed to me both a reasonable and dynamic model, and which I will lamely attempt to summarize in a sentence: A person's class is his/her definite relation to a new or historically evolved role in economic production, and reproduction. Class was an active concept in the writings of most classical economists, not just Marx. Class did not only denote "income", but also the likely paths of struggle, survival and opportunity ( or lack of it) for lifetimes and generations. The spread of capitalist relations transformed the overall division of wealth mainly by its ability to grow overall economic wealth an order of magnitude faster than previous economic/social orders. Capitalism is an economic system defined by the circulation of commodities -- things produced deliberately for the purpose of exchange. Key to its development is the ability to come up with a "universal commodity", accepted everywhere for exchange. That commodity is money in any or all its forms: cash, coins, bank notes, stock certificates, bonds, derivatives, precious metals, etc. Marx, and most other economists also thought a legal framework enforcing private property rights was also key. However the rapid growth of capitalist relations in China, which has no private property law, somewhat undermines that thesis. Not all of Marx's predictions (nor those of other classical economists) have come true, and the methodologies of classical economists were necessarily largely analytical -- not data driven and math-modeled like modern economics.. Nonetheless, Marx's famous prediction about the unstoppable spread of capitalist, and cash, relations has stood the full test of time:

Constant revolutionizing of production, uninterrupted disturbance of all social conditions, everlasting uncertainty and agitation distinguish the bourgeois epoch from all earlier ones. All fixed, fast-frozen relations, with their train of ancient and venerable prejudices and opinions, are swept away, all new-formed ones become antiquated before they can ossify. All that is solid melts into air, all that is holy is profaned, and man is at last compelled to face with sober senses his real conditions of life, and his relations with his kind.

No major country was more spared the legacy of European "class" legal frameworks than the United States. The American Revolution was in large measure able to destroy the marked class system of the colonial era. The Civil War completed that process with the abolition of slavery. Democracy and republicanism -- infused throughout the theses of Jefferson and Franklin in the Declaration of Independence, and in the speeches of Abraham Lincoln four score and seven years later -- championed  equality before the law over monarchy and landed privilege, and thus dealt the first great blow against the ancient class and clerical regimes of the world.

Democracy and all its associated struggles throughout US history, have strengthened a national aspiration to rise out of class, to blur and efface intrusions of it into public life, to reward merit over privilege, to despise snobbery in any form, Sexist, racist or otherwise --  as rude, uncivil and arrogant.  

"Yet, she persisted!" -- Turtle Head McConnell's would-be insult to Elizabeth Warren that blew back in his face is a perfect example of behavior that turns sour and fetid in the light of day.. 

"Yet, she persisted" is also a phrase which, ironically, can be said of the term "class" itself under American "classless" capitalism. A division of wealth so sharp and vast as now prevails has only 1914 -- the onset of the 20th Century catastrophes -- for comparison. No matter what occupation you are in, with VERY few exceptions, median income has been flat for 40 years. The principles of shared prosperity of the New Deal era --- as was practiced from WW 2 through 1973 --   have been abandoned. The abandonment has been deliberate and  aggressive by Republicans, while defensive and "with profound disappointment" by Democrats ever since Carter and Clinton's "New Democratic", steady moves toward accommodation with the rise of austerity on the Right. The theses of Thomas Piketty --- that the cycles of capital accumulation in predominantly capitalist economies have GREAT DIFFICULTY averting the very dangerous and destabilizing tendencies of accumulated wealth and accumulated political power feeding on each other --- globally gain more credibility every day.  "Class" is back and now increasingly permeates public discourse.

 This rising inequality documented and analyzed by Piketty and many others takes place alongside a no less dramatic increase in the complexity of the different, diverse, and conflicting relationships with production captured in the phrase "wage worker". Income from both capital and compensation is present in more than half the income tax returns of US wage earners. The "pure" wage worker is not the typical wage worker. Go no further than the huge rise in services relative to manufacturing, or the immense rise of intangible products and consumption, or the massive public sector in most modern economies, or the non-commercial services of retired, student, or other persons not considered part of the workforce. 

Even the term "production", inherited from 19th century's overwhelming association of value with manufactured or mined commodities, is now misleading. Production of economic value -- anything exchanged for money -- is more accurate. This has created new "production relations" which are thus, as long as we don't become dogmatic, or let our feet fly away from the real economy, new class relationships. The rise of "human capital" requirements in many fields, (by "human capital" think mainly education and training)  makes employer -- employee relations necessarily quite different than most historic manufacturing environments. New, fast evolving, divisions of labor and giant economies/technologies of global scale, in particular, have eroded the objective foundations of the 1930's laws legalizing  trade unions. How long before the expression "permanent employee" is gone from memory?

The means of life is obtained by cash in this country. Even informal economies (drugs, guns, etc) are overwhelmingly cash based. Thus there is no social issue, not a single one of the slightest significance, whose resolution does not have an economic price.  That price can be simple, like a bump in the minimum wage; or structural -- like a return to a law that reads "the united states encourages you to join a union"; or structural AND revolutionary, like the abolition of slavery, and the destruction of two social and economic classes: enslaved, and slave owner. All these changes require transfers of wealth. large transfers.

The rise of Trump, Trumpism, and fascist tendencies of every strain is driven by the accumulated -- and still accumulating -- weight of 40 years of scrambling for crumbs at the median and below in the US labor market, while the top is wallowing in wealth. The corruptions predicted by Piketty and others are on full display in the US now. There is an aspect, a part, of US capitalism in its current immense manifestation,  that is either failing, or our institutions are failing to manage, or both. I submit  this reflects new, objective aspects of modern society and its economic organization that neither old left nor old right frameworks are capturing.

For example, I assert above that Bill Clinton made accommodations to austerity. Median income got a blip out of the Clinton era tech boom, but it was not sustained. Austerity was not reversed. The new deal contract, simplified,  --- if capital gets 1% more, labor should too --- was not restored..

But this observation is NOT primarily a criticism of the Clinton presidency. I believe time has shown most critics of Bill Clinton's accommodations tend to stand with their feet firmly planted in mid air. On the war on drugs, on closing down welfare, on roll backs of Johnson or Roosevelt social contract principles, on financial de-regulation -- as evidence of "betrayal" or an "agent of neo-liberalism" -- Clinton argued that you could not win the presidency  and thus halt the rise of Reaganism, without such concessions. Obama's presidency varied this theme  some, but it  was not fundamentally refuted. In addition Clinton's economic liberalization strategy worked in high tech for a while, and loosening investment regulations while paying down debt with surpluses assisted that very important, strategic redirection of capital, despite the crazy abuses of liberalization that banks escaping from the high tech bubble committed.  

Obama was faced with a worse economic crisis than that inherited by Clinton, but adopted a fundamentally similar strategy -- alliances with liberal, high-tech, innovative capital, industries to drive growth out of the Great Recession while still beating off the Reaganite, now more openly fascist and anti-democratic than ever,  Republicans. Yet Obama's economic lift leaves the median worker in no better position than when Clinton left office, despite frankly heroic political efforts to mobilize grass roots forces to counter rising political corruptions of billionaires in the elections.

Both Clinton and Obama are brilliant politicians, IMO. Both also sought the best science and art to address the multi-dimensional emerging challenges -- yet both failed to reverse austerity and the correlated power the mostly right wing billionaires and their growing, not diminishing, stranglehold on political power. Their superior political skills alongside this failure is the best evidence I can think of that the path of accommodation to austerity, even if some modest overall growth can be obtained,  simply cannot work against the drag of entrenched wealth

Bernie Sanders is the first candidate since, Jesse Jackson, and Lyndon Johnson, to consistently call for a return to the New Deal social and economic division of wealth contract. He called it "our revolution". Having some knowledge of Bernie Sanders and his history, I am sure he does not launch a slogan like that without great care and thought, or without deep conviction. We have to consider that Bernie is right. Deeply right. That structural, and perhaps revolutionary-scale, changes and politics are becoming the only remaining options. Our American history has a bounty of both great revolutionaries, and wise statesmanship -- sometimes inhabiting the same person! We will need both traditions in the days and years ahead.

In the wake of the past election, it is difficult to find ANY path to national, popular, or CLASS unity that does not address the 40 year austerity plague. And there is no cure for the austerity plague that does not intervene directly in the billionaire/trillionaire accumulation cycle and its corrupt political consequences for peace and justice. With the erosion of the middle class, middle ground in politics is also eroding.

John Case

On Wed, Mar 8, 2017 at 2:23 PM, moderator <jcase4218@gmail.com> wrote:

Below is the text of Sam's post "Some Thoughts on International Women's Day"

A couple of thoughts that International Women's Day brings to mind. One very brief, the other a bit longer:

* To say that women hold up half the sky (and just about everything else) is a gross understatement. I learned that as a young child, and have come to more deeply appreciate it as a (much) older man.

* The notion that waged work on a "production" site and in the formal sectors of the economy set the parameters for who's in, who's out, and who's on the bubble of the working class – not to mention who has a hand in the production of the economic surplus from which profits and a fresh round of capital investment are derived – is a gendered as well as a racialized and generally exclusionary concept. In earlier centuries, it left large numbers of women as well as slaves of African ancestry, indigenous peoples, and new immigrants outside the category of working class, even though their labor was commonplace, abundant, and essential to capitalism's accumulation, industrialization, and commodification process.

Today, global capitalism continues to rely on such labor, albeit on a much broader scale and in new as well as old forms, to sustain and expand its accumulation process, But in doing so, it makes this truncated and limited notion of class no more serviceable now than it was in previous centuries. This is especially so in the Global South.

Only a wide angled framing and understanding of who constitutes the working class, along with the specific class trajectories, histories, needs, and, not least, capacities, of each constituent group, and especially the historically invisible, uncounted, and subordinate, will provide us with a sturdy basis for unity and thus the grounds for victory against the nasty coalition of the right and alt right that is threatening democracy and everything that is decent and good in our country. In the elections, an exclusivist, racialized, gendered, and nativist concept of class captured the thinking of many white workers, and thus contributed significantly to the election of Trump – a candidate who was proudly, outspokenly, and uniquely misogynist, racist, and xenophobic. This, needless to say, presents the broad democratic movement and the Democratic Party a major challenge, if they hope to congeal a united people's movement and transform a dire situation into a new step down Freedom Road.

On Wednesday, March 8, 2017 at 2:11:58 PM UTC-5, Sam Webb wrote:

A new post on this day of celebration. Hope you enjoy the day. Sam

http://samwebb.org/

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John Case
Harpers Ferry, WV

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