Choose your capitalism

Eduardo Porter [ht: sm] is right: this election is all about what kind of capitalism we want.

In trying to reconcile the entrepreneurial spirit that the American brand of capitalism provides with its social costs, American voters must choose between Mitt Romney, the businessman who offers to move the economy forward by making government smaller and more efficient, and President Obama, who offers the government as an agent to assist the less prosperous, to put a thumb on the scale on the side of the have-nots.

What’s amazing is that, given the spectacular failure of the U.S. form of capitalism, the polls are indicating a very close election.

Yet for all the riches we have amassed, by the O.E.C.D.’s calculation, the income of Americans of working age in the middle of the distribution has grown less since the mid-1980s than in virtually every other developed nation. Perhaps unsurprisingly, we suffer from some of the worse social ills known to the industrialized world.

It is not just that income inequality is the most acute of any industrialized country. More American children die before reaching age 19 than in any other rich country in the O.E.C.D. More live in poverty. Many more are obese. When they reach their teenage years, American girls are much more likely to become pregnant and have babies than teenagers anywhere else in the industrial world.

We understand the importance of early childhood development. Yet our public spending on early childhood is the most meager among advanced nations. We value education. Yet our rate of enrolling 3- to 5-year-olds in preschool programs is among the lowest among advanced nations. Our 15-year-olds place 26th out of 38 countries on international tests of mathematical literacy, according to the O.E.C.D. The first nation to understand the value of widespread college education, the United States has dropped from the top to the middle of the pack of our economically advanced peers in terms of college graduation rates.

The American way has produced a high-tech health care system that offers sophisticated cures for those who can afford them, yet is astronomically expensive and poor at combating many run-of-the-mill ailments, and leaves millions uninsured.

Our safety net — to protect the most vulnerable from globalization’s ravages — is threadbare. Where would you rather lose your job to cheap competition from China? In the United States you would lose health care, too — unless you had the money to buy private insurance. If you were the breadwinner in a family of four earning the average wage, benefits would replace only 52 percent of it, even including any extra welfare payments you were entitled to, the O.E.C.D. found. And they would drop to 37 percent of your last wage after two years tops. In Britain, by contrast, you would still receive over 70 percent of your wage for 60 months after you lost your job. And your health care needs would be addressed by the public, universal National Health Service.

A particularly telling statistic speaks of how we deal with social dysfunction: there are 743 Americans in jail for every 100,000. That’s more than in any other country in the world, according to the International Center for Prison Studies. The next country down the list is Rwanda, with 595.

Social ills like obesity and child mortality have, of course, multiple and complex causes. But the battery of dismal statistics suggests, at the very least, a troubling pattern. Yet though we seem to suffer more than our fair share of social ills, by the O.E.C.D.’s calculation our public spending to address them is smaller as a share of the economy than in any other country in the developed world.

Unfortunately, there’s a third option not even on the table in this election: an alternative to capitalism.

Once more on zombie economics

It’s Halloween. So why not spend a little time reading the latest version of zombie economics?

It comes from Casey Mulligan. He’s so hell-bent on criticizing Keynesian economics and attacking government programs to help the poor and unemployed, he doesn’t even mention let alone analyze two of the key causes in creating the Second Great Depression: the rise in inequality and the crisis of the financial sector.

Instead, Mulligan focuses on the “expansion of food-stamp eligibility to enlargement of food-stamp benefits to payment of unemployment bonuses” and blames such programs for “sharply eroding (and, in some cases, fully eliminating) the incentives for workers to seek and retain jobs, and for employers to create jobs or avoid layoffs.”

That’s right: that’s the kind of zombie economics currently being peddled by neoclassical economists like Mulligan.

Cartoon of the day

Special mention

 

Cartoon of the day

Special mention

What poverty and inequality?

These days, right-wing economists are trying to make (and then help one another defend) the argument that poverty and inequality in the United States are merely figments of our imagination.

Mark Thoma thoroughly debunks that argument, particularly the idea promulgated by Kevin Hassett and others that consumption inequality has not increased with income inequality.

After arguing (wrongly) that consumption has kept pace with income, they say it’s only because of the deficit — but it’s not sustainable. So suck it up middle class America, consumption inequality has increased despite the claims of denialists like Hassett, and if they get their way and reduce the social safety net, it will only get worse.

Hassett and company denied that income inequality was growing for years. . ., then when the evidence made it absolutely clear they were wrong (surprise!), they switched to consumption inequality. Recent evidence says they’re wrong about that too.

Cartoon of the day

Special mention

 

The Line

Hunger and austerity in Spain

The effects of austerity policies in Spain are now so severe that, last month in Girona, City Hall decided to place locks on trash bins to prevent people from searching for food in them.

According to a February 2012 report by Cáritas Española, 22 percent of households in Spain are now living under the poverty line. Even more, by the end of 2010, the “tendency of impoverishment” meant that about 41 percent of Spanish households were finding it difficult to maintain a decent standard of living (including the ability to enjoy one week of vacation a year, have access to some kind of meat on a regular basis, maintain an adequate temperature in the home, and cover unpredicted expenditures). At the same time, the ratio between the top and bottom quintiles reached 6.9 by the end of 2010, up from 5.3 in 2007, and by far the largest gap in the European Union.

The desperation in Girona indicates that the effects of austerity on hunger in Spain are even worse today.

Inequality porn

We now live in the age of inequality porn.

Apparently, the lives of the über-rich are illustrated in Chrystia Freeland’s new book, Plutocrats: The Rise of the New Global Super-Rich and the Fall of Everyone Else.

In Freeland’s telling, one crucial factor distinguishes today’s uber-rich from their forebears: They carry a striking sense of entitlement, seeing themselves as people who have constructed their own fortunes, as opposed to aristocrats who inherited their affluence. Freeland calls them the “working rich,” and she makes clear that this is indeed how they see themselves. Given their self conceptions as rugged individualists whose wealth reflects not the accident of birth but their own pluck and savvy, they are of little mind to share their rightful winnings with anyone else — especially not with losers who failed to erect their own fortunes, or government bureaucrats sustained by taxing other people’s loot.

On the other end, we can participate in “slum tourism.”

What is it about the slums that attracts hordes of tourists each year?

Dr Malte Steinbrink at the University of Osnabruck in Germany, says: “We are currently witnessing a tremendous growth in slum tourism worldwide, especially in the global south.”

He notes that the trend started in Victorian London over 150 years ago, when people from the London upper class were curious to see what happened in the East End.

In the global south it is a quite recent phenomenon – starting at the beginning of the 1990s in South Africa after the end of apartheid, when Nelson Mandela was released from prison.

“Tourists came to South Africa and wanted to see the townships and places of the apartheid repression and Mandela’s house – so it began as a niche tourism for tourists with a special political interest,” says Dr Steinbrink.

If we’re going to spend our time looking at all this softcore porn stemming from growing inequality, it’s about time we asked for explicit portrayals of how the über-rich are screwing the poor and everyone else.

City of the little shoulders

Carl Sandburg called Chicago the “city of the big shoulders.” Nowadays, those shoulders are very little.

According to new data from the 2011 American Community Survey, Chicago has a much higher percentage of poor people—including poor children—than the nation as a whole. For example, 23.7 percent of Chicago’s population falls below the poverty line, as against 15.9 percent for the United States. As for children under the age of 5, 34.6 percent of them live in poverty in Chicago compared to 25.8 percent for the country as a whole.

The national data on poverty, especially child poverty, are obscene. Clearly, the situation in Chicago is even worse.