Chart of the day

Posted: 1 December 2015 in Uncategorized



The United States is six and a half years into the current “recovery” but little has been recovering except corporate profits and incomes for the 1 percent.

That’s because spending—both consumer spending and business investment—have basically stopped growing. And, within capitalism, when spending slows down, the economy as a whole stops growing and threatens, once again, to falter.

Consumer spending isn’t growing because, face it, most people’s incomes (whether measured in terms of real wages or median incomes) are stagnant. Whatever spending they are doing (e.g., on cars and higher education) is fueled by taking on more and more debt.

What about investment? While profits (especially from domestic sources) continue to grow, corporations are using those profits not for investment, but for other uses, including stock buybacks, mergers and acquisitions, and CEO salaries.

To put it in other words, the surplus is growing but the handful of large corporations that manage to appropriate most of the surplus are using it to reward themselves and their accomplices.

And, for the economy as a whole, that’s a real problem. It may make a lot of sense for each corporation to keep wages low, profits high, and investment spending down—but it makes no sense for the economy as a whole, including their own long-run profitability.

That, as it turns out, is a contradiction that is central to capitalism.


Special mention

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There’s a great deal to recommend in the series on inequality in the United States edited by Josh Marshall, which I mentioned a few weeks ago.

The first two installments are available, on the effects of the decline of labor and the politics of inequality, with two more promised in the weeks ahead, on inequality numbers and Piketty’s best-selling book.

In the first installment, Rich Yeselson examines the role of the U.S. labor movement, first, as the country’s main defense against income inequality (from the New Deals of the 1930s into the 1970s) and then, after “the entire business class of the United States, large and small companies alike, wished to bust American unions and when, given a chance to do so, seized it,” as a weakened and disappearing force in opposing rising inequality. The fact is, even as trade unions have declined in significance in the United States, they have become more integrated (in terms of both gender and race/ethnicity) —perhaps better prepared than before for a resurgence in the years ahead.

John B. Judis, in the second installment, discusses the paradox of Americans’ growing concern about inequality along with their opposition, apart from increased in the minimum wage, to most government-sponsored programs to decrease inequality.

attempts to use government to reduce inequality mean different things to different groups of Americans. Some Americans see these efforts as meeting a great moral challenge, but others see them as surreptitious initiatives designed to get them to subsidize people who either don’t deserve subsidies or who should be subsidized by those who can better afford it.

Both essays offer useful insights into the long U.S. march toward increasing inequality and deserve a full read. I am also looking forward to the final two installments.

However, I have to admit I’m a bit worried about a series that seems to shy away from any extended discussion of capitalism itself. Of course, unions and politics are important in explaining growing inequality in the United States, especially from the mid-1970s onward. But we also need a history of capitalism itself, how it has changed and morphed during that period (in the United States and around the globe), such that it has generated a growing surplus that has been created and appropriated by the boards of directors of large corporations and then distributed to others, both inside and outside those corporations. Without that surplus, that extra value created by workers (in the United States and around the world), there wouldn’t be a growing profit share and a larger concentration of national income by the top 1 percent. That’s the share of income concentrated in the hands of a tiny number of enterprises and households, which they have been able to use to make the distribution of income even more unequal—precisely by attacking unions and distracting the voting public from supporting policies and programs to end the grotesque inequalities they themselves are the victims of.

So, what does capitalism have to do with inequality? As it turns out, everything.

Chart of the day

Posted: 30 November 2015 in Uncategorized
Tags: , ,

cc math

The math behind the chart starts with the “carbon budget“:

Noting that the relationship between the amount of carbon dioxide we put in the atmosphere and the eventual global temperature is “near linear,” the United Nations’ Intergovernmental Panel on Climate Change calculated the maximum amount the world could emit for a one-third, 50 percent or two-thirds chance of keeping warming below two degrees.

The resulting headline: As of 2011, the world had about 1,000 gigatons, or billion metric tons, of carbon dioxide left to emit in order to have a two-thirds or greater chance of staying below two degrees. After that, net emissions must go to zero.

From here you simply do the math. Energy-related carbon dioxide emissions alone were 32.3 gigatons last year, according to the International Energy Agency, and that does not include other sources, such as deforestation. Based on such numbers, the remaining carbon budget is already under 900 gigatons of carbon dioxide. . .

once you take future deforestation and cement-related emissions between now and 2100 into account, the remaining budget is just 650 gigatons of energy-related emissions. That’s about 20 years at current rates — but emissions are still rising. That trend is currently expected to continue out to 2025 or 2030, despite countries’ recent carbon-cutting pledges, in large part because of growing demand for energy in coming decades.

The UNFCCC recently acknowledged that these pledges, on their own, would hold warming to perhaps only 2.7 degrees Celsius — other analyses are still more pessimistic — and, therefore, that much more must be done in Paris and beyond to ensure attainment of the two-degree goal.

And here’s a link to Charles Ferguson’s new film, Time to Choose, which readers can view for the next 48 hours.


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Every time someone like David Leonhardt [ht: ja] writes a review of economic ideas and texts, I realize how narrow their conception of economics truly is—and how, once again, I and many of my friends and colleagues are simply defined out of the discussion.

In the beginning, for Leonhardt, there was Adam Smith. Then, somewhat later, we have the classical liberalism of the Chicago school and the flexible models of Dani Rodrick (who, in his book, refers to Milton Friedman as “one of the twentieth century’s greatest economists”). All three the New York Times writer distinguishes from the contemporary economists Lanny Ebenstein refers as the “utopians working toward and often living in a mythical land, ‘Libertania’”—the contemporary right-wing libertarians.

For writers like Leonhardt, that’s pretty much the beginning and end of economics, the limits of the discipline and of the debate. Everything and everyone else fall outside the walls he and many economists are so intent on erecting and policing.

It’s a view of economic theory focused entirely on markets, as if there are no other ways human beings, now and historically, have organized economic life. It’s a view of economic policy that celebrates markets, with a modicum of government intervention, as if more free-market and more government-regulated forms of capitalism are the limits of the debate of the possible.

That’s the narrow definition of economics that emerges from Ebenstein’s and Rodrick’s books and from Leonhardt’s approving review of those books. Ultimately, it amounts to a call for moderation—in theory and policy—which reduces the relevant debate to one or another version of mainstream (neoclassical and Keynesian) economics.

What Leonhardt and Co. refuse to acknowledge is that mainstream economic theory and policy are what got us into the current mess in the first place, and that mainstream economists have had no answer to the current crises of capitalism—except to impose even more suffering on workers and the vast majority of people in order to attempt to engineer their particular notion of recovery.

In the end, mainstream economists are the real utopians, who imagine that capitalism works (or can be made to work) by being modeled in and through the correct economic theories, which they alone possess.