Archive for the ‘Uncategorized’ Category

OLYMPUS DIGITAL CAMERA

I have often argued that neoclassical macroeconomics is obsessed with class—and biased against the working-class—even when class is not explicitly represented in the models. That’s because, as I explained here,

neoclassical economists blame workers and their downwardly rigid wages for creating and maintaining high levels of unemployment. If the labor market is flexible, a fall in the price of labor is presumed to eliminate involuntary unemployment. If it’s not, then other means are necessary, such as austerity policies that raise unemployment, thus creating pressure to decrease nominal (and, with them, real) wages with the promise of eventually restoring full employment.

As it turns out, Mark Thoma also understands that macroeconomic policy has class implications.

Which mistake is more costly – raising rates too soon versus too late – is not just a technical question about which of the two mistakes is easiest for policymakers to reverse. We also need to ask who will be hurt the most if the Fed makes a policy error on one side or the other. If the Fed raises rates too soon, it is working class households who will be hurt the most by the slower recovery of employment. If it raises rates too late allowing a period of elevated inflation, it is largely those who lend money, i.e. the wealthy, who will feel the impact. Thus, one mistake mostly affects working class households who are very vulnerable to negative shocks, while the other hurts those most able to withstand economic problems. . .

Why do we hear so much about the need to raise interest rates now rather than later, or get the deficit under control immediately despite the risks to households who are most vulnerable to an economic downturn? Those who are most in need – those least able to withstand a spell of unemployment or other negative economic events – have the least power in our political system.

With the decline in unions and other institutions that used to give workers a voice in the political process along with rising inequality that gives even more power to those at the top, the problem is getting worse. No wonder policy has been tilted so much in favor of those at the top. Fiscal policy in particular has been far too responsive to the interests of those with political power rather than those in greatest need.

If we are going to be a fair and just society, a society that protects those among us who are the most vulnerable to economic shocks, this needs to change. The necessary change won’t come easily, the entrenched political and economic interests will be difficult to dislodge.

But the current trend of rising inequality in both the economic and political arenas along with the rising economic risks faced by working class households due to globalization, technological change, and a political system that increasingly neglects their interests is not sustainable. If these trends continue unabated, change will come one way or the other. The only question is how.

And, of course, one of those possible changes is for the working-class to abolish class entirely.

Chart of the day

Posted: 1 October 2014 in Uncategorized
Tags: , ,

BlogImage_HealthCareCostsChien_092914

As Yili Chien explains, the increase in health care costs, together with the increase in income inequality, has made health care unaffordable for lower-income groups, enlarging the medical consumption inequality between the rich and poor.

This can be seen in the chart above, which plots the unaffordability percentage for all households in each income quintile over time. The first quintile represents the poorest 20 percent of the population, and the fifth quintile represents the richest 20 percent.

According to Chien,

Clearly, for each given year, the index level is negatively associated with income. It is not surprising that health care is more affordable for high-income households than it is for low-income households. Over time, the unaffordability index of all households showed an upward trend. From 1995 to 2012, the index increased from 11.8 percent to 16.8 percent, showing that the rapidly increasing cost of health care, in fact, burdened more U.S. households.

More importantly, there was a diverging trend of the index between the rich and the poor. The bottom quintile percentage rose from 23.3 percent in 1995 to 32.7 percent in 2012, exhibiting an almost 10-percentage-point surge. Similarly, the second quintile was also heavily affected. The index increased from 15.1 percent to 24.2 percent, also an almost 10-percentage-point escalation.

banksy__follow_your_dreams_by_lar888-d5vpsjd

It just so happens that, in class yesterday (actually, in both courses I’m teaching), I presented Marx’s theory of commodity fetishism. I explained that the first chapter of volume 1 of Capital begins with the common sense of the commodity (common sense, that is, for mainstream economists and for those of who live in a commodity-producing society) and ends with making the commodity strange, by denaturalizing it.

I explained, in particular, that Marx’s notion of the fetishism of commodities—that economic agents need to be characterized by certain notions of “freedom, equality, property, and Bentham” in order for commodity exchange to exist—represented a critique of both mainstream economists (for whom commodity exchange is natural, transcultural and transhistorical) and of Ludwig Feuerbach (for whom commodity fetishism was a false or distorted consciousness). In other words, Marx developed a notion of economic subjectivity that is endogenous, both historical and social, as against notions of a given human nature.

Then, after class, a couple of students stayed behind to talk about they and their classmates felt the pressure to fill out their resumés and craft themselves in order to secure advancement (e.g., in the job market) and not to take risks that might raise questions (e.g., on the part of prospective employers). I felt bad for them.

As it turns out, Paul Verhaeghe [ht: sk] confirms both Marx and the students: the current economic situation is bringing out the worst in us.

the financial crisis illustrated at a macro-social level (for example, in the conflicts between eurozone countries) what a neoliberal meritocracy does to people. Solidarity becomes an expensive luxury and makes way for temporary alliances, the main preoccupation always being to extract more profit from the situation than your competition. Social ties with colleagues weaken, as does emotional commitment to the enterprise or organisation.

Bullying used to be confined to schools; now it is a common feature of the workplace. This is a typical symptom of the impotent venting their frustration on the weak – in psychology it’s known as displaced aggression. There is a buried sense of fear, ranging from performance anxiety to a broader social fear of the threatening other.

Constant evaluations at work cause a decline in autonomy and a growing dependence on external, often shifting, norms. This results in what the sociologist Richard Sennett has aptly described as the “infantilisation of the workers”. Adults display childish outbursts of temper and are jealous about trivialities (“She got a new office chair and I didn’t”), tell white lies, resort to deceit, delight in the downfall of others and cherish petty feelings of revenge. This is the consequence of a system that prevents people from thinking independently and that fails to treat employees as adults.

More important, though, is the serious damage to people’s self-respect. Self-respect largely depends on the recognition that we receive from the other, as thinkers from Hegel to Lacan have shown. Sennett comes to a similar conclusion when he sees the main question for employees these days as being “Who needs me?” For a growing group of people, the answer is: no one.

Our society constantly proclaims that anyone can make it if they just try hard enough, all the while reinforcing privilege and putting increasing pressure on its overstretched and exhausted citizens. An increasing number of people fail, feeling humiliated, guilty and ashamed. We are forever told that we are freer to choose the course of our lives than ever before, but the freedom to choose outside the success narrative is limited. Furthermore, those who fail are deemed to be losers or scroungers, taking advantage of our social security system.

A neoliberal meritocracy would have us believe that success depends on individual effort and talents, meaning responsibility lies entirely with the individual and authorities should give people as much freedom as possible to achieve this goal. For those who believe in the fairytale of unrestricted choice, self-government and self-management are the pre-eminent political messages, especially if they appear to promise freedom. Along with the idea of the perfectible individual, the freedom we perceive ourselves as having in the west is the greatest untruth of this day and age. . .

Our presumed freedom is tied to one central condition: we must be successful – that is, “make” something of ourselves. You don’t need to look far for examples. A highly skilled individual who puts parenting before their career comes in for criticism. A person with a good job who turns down a promotion to invest more time in other things is seen as crazy – unless those other things ensure success. A young woman who wants to become a primary school teacher is told by her parents that she should start off by getting a master’s degree in economics – a primary school teacher, whatever can she be thinking of?

There are constant laments about the so-called loss of norms and values in our culture. Yet our norms and values make up an integral and essential part of our identity. So they cannot be lost, only changed. And that is precisely what has happened: a changed economy reflects changed ethics and brings about changed identity. The current economic system is bringing out the worst in us.

bubble_cartoon_09.30.2014_large

Special mention

154294_600 154320_600

Only in America

Posted: 30 September 2014 in Uncategorized
Tags: , ,

corporations-rule

According to Bloomberg Businessweek [ht: sm],

A political candidate’s firing in Florida offers a reminder of a little-understood fact of American life: Companies have sweeping discretion to effectively regulate what their workers do outside of work, including running for elected office.

That startling reality resurfaced after Marriott Vacations Worldwide came under fire for terminating Viviana Janer, a senior manager who is also the Democratic nominee for a seat on the Osceola County Commission. “I think it’s a stinking maneuver to rob her of her job and rob the voters of their votes,” Democratic Representative Alan Grayson charged this week. Janer says her candidacy is consistent with the company’s support for civic participation; her employer, a time-share company spun off from Marriott International in 2011, says her candidacy threatened a conflict of interest.

In a Sept. 19 termination letter, Marriott Vacations wrote that Janer had been given the choice to either resign from her campaign or resign from her job. “She was given those two options,” confirms Edward Kinney, a vice president for the company, “and she chose not to do either one.” . . .

The First Amendment protects free speech and the right to petition the government, but it only restricts the government from trampling those rights—it doesn’t ban your boss from punishing you for exercising them.

infant mortality

According to the U.S. Centers for Disease Control and Prevention [pdf],

In 2010, the U.S. infant mortality rate was 6.1 infant deaths per 1,000 live births, and the United States ranked 26th in infant mortality among Organisation for Economic Co-operation and Devel­opment countries. After excluding births at less than 24 weeks of gestation to ensure international comparability, the U.S. infant mortality rate was 4.2, still higher than for most European countries and about twice the rates for Finland, Sweden, and Denmark.

Infant mortality is an important indicator of the health of a nation because it is associated with a variety of factors such as maternal health, quality of and access to medical care, socioeconomic conditions, and public health practices.

Clearly, as inequality continues to rise, the health of the United States is not good.

Kos-teaser

Special mention

tumblr_ncmkqz50B21r55d2io1_500 tumblr_ncmjkaTl0V1r55d2io1_1280