Walkabout

Students in Britain have, once again, walked out to protest tuition fees.

The third and most peaceful mass protests against the government’s higher education plans took place today as thousands of students took to the streets despite the freezing weather.

Large demonstrations took place in Brighton, Birmingham, Bristol, Manchester, Newcastle, Oxford and London, and there were only minor outbreaks of disorder with about two dozen arrests across the country.

Las Vegas has walked over the edge and is now declared to have one of the worst economies in the world.

The Brookings Institution and London School of Economics study ranked Las Vegas fifth from the bottom in a ranking of 150 metropolitan areas, citing a limited economy that relies heavily on tourism and construction.

European capitalists have walked away from their responsibility to create enough jobs. As a result, unemployment is rising to levels not seen in over a decade.

Unemployment in the euro zone rose in October to its highest level in more than 12 years, an official report showed Tuesday, underlining the pressure on governments as they try to reduce spending and bring deficits under control.The seasonally adjusted unemployment rate was 10.1 percent in October, up from 10 percent in September, Eurostat, the statistics agency of the European Union, reported. For the full Union, unemployment was unchanged in October at 9.6 percent, it said, equivalent to about 23.1 million men and women.

While on the road. . .

• I finished reading Sudhir Venkatesh’s Gang Leader for a Day: A Rogue Sociologist Takes to the Streets, an extraordinary ethnography of life and economy in Chicago’s Robert Taylor Home projects. Venkatesh is refreshingly candid about every aspect of his study, from how the crack economy works (for some but not for many others) and how life in the projects doesn’t (at least as the projects were created to “store” the poor population of Chicago) to the hustle of academic work (which brings researchers like Venkatesh much closer to J.T. and the other gang members he studied).

• I was reminded, once again, that mainstream economists have absolutely nothing to offer in terms of fixing the current economic mess. For them, government programs are the problem, not the solution.

“Growth doesn’t come from big federal programs,” says John H. Cochrane of the University of Chicago. “The government didn’t tell us” to create the vast variety of profitable businesses on the Internet, but “it did tell us to buy houses and look what that got us.” . . .

“The fundamentals are there. We have had a financial panic, but in the long run, growth is determined by businesses with great ideas, and we still have plenty of those. Now, it’s perfectly possible we’re in for a miserable decade but only if the government screws it all up, with high tax rates, chaotic tax rates, or if we suffer as a result of the overhang of government debt.”

And then there are the Andrew Caplin’s of the world who believe that the current losers should seek to cater to the rich and provide them “artisanal services.”

• Frank Rich demonstrates, once again, that the United States still has the “best Congress money can buy.”

The Great Depression ended the last comparable Gilded Age, of the 1920s, and brought about major reforms in American government and business. Not so the Great Recession. Last week, as the Fed’s new growth projections downsized hope for significant decline in the unemployment rate, the Commerce Department reported that corporate profits hit a record high. Those profits aren’t trickling down into new jobs or into higher salaries for those not in the executive suites. And the prospect of serious regulation of those at the top of the top — the financial sector — is even more of a fantasy in the new Congress than it was in its predecessor.

• The Irish have taken to the streets to protest against the current austerity plans to repay Europe’s bankers.

The protests centered on a milelong march along the banks of the River Liffey in central Dublin to the General Post Office building on O’Connell Street, the site of the battle between Irish republican rebels and British troops in the Easter Uprising in 1916 — an iconic event that many in Ireland regard as the tipping point in Ireland’s long struggle for independence.

The choice of venue for the protests by the Irish Congress of Trade Unions, coordinating the march through the city, reflected the mood of anger, dismay and recrimination in the wake of the economic shocks of the past 10 days. Those shocks have been the culmination of two years in which the economy has shrunk by about 15 percent, faster than any other European economy.

• Peruvian president Alan Garcia, whose unpopularity rating has risen to 62 percent, concludes that Peruvians are just plain melancholy.

“We are what we are: sad, distrustful. . .We have a natural lack of trust.”

• Mainstream economists, like Oliver Hart and Luigi Zingales, continue to believe that the magic of “the market” will prevent future financial crises.

how do we create an effective early-warning system? And who should determine the appropriate amount of long-term debt and capital? And how do we ensure that clever financial engineering doesn’t sabotage any such requirement? The answer is to delegate these tasks to the market.

In other words, we continue to live in a Mad Max world, and not just in Australia.

Political economy of crisis

Slavoj Žižek explores what the idea of political economy means in terms of understanding the current crises:

One thing is clear: after decades of the welfare state, when cutbacks were relatively limited and came with the promise that things would soon return to normal, we are now entering a period in which a kind of economic state of emergency is becoming permanent, turning into a constant, a way of life. It brings with it the threat of far more savage austerity measures, cuts in benefits, diminishing health and education services and more precarious employment. The left faces the difficult task of emphasising that we are dealing with political economy – that there is nothing “natural” in such a crisis, that the existing global economic system relies on a series of political decisions. Simultaneously it is fully aware that, insofar as we remain within the capitalist system, the violation of its rules effectively causes economic breakdown, since the system obeys a pseudo-natural logic of its own.

The obvious question then is, what can be done politically?

Today, the ruling ideology endeavours to make us accept the “impossibility” of radical change, of abolishing capitalism, of a democracy not reduced to a corrupt parliamentary game, in order to render invisible the antagonism that cuts across capitalist societies. This is why Lacan’s formula for overcoming an ideological impossibility is not “everything is possible”, but “the impossible happens”. . .

Ours is thus the very opposite of the classical early 20th-century situation, in which the left knew what had to be done but had to wait patiently for the proper moment of execution. Today we do not know what we have to do, but we have to act now because the consequence of non-action could be disastrous. We will be forced to live “as if we were free”.

Public art of the day

Dublin [source]

 

Cartoon of the day

Taming Ireland—for the banks

Simon Johnson clearly explains the magnitude of Ireland’s debt crisis and the measures that are being adopted to save the country from default.

They’re not touching the corporate tax rate. They’re not restructuring most of the debt. Neither is part of the anti-crisis policy mix. Why?

The most obvious answer is: Ireland’s European partners do not want this to happen, because it would expose the really bad decisions made by pan-European banks and their regulators over the last decade and create potential fiscal risks in other euro-zone countries. . .

German banks are owed $139 billion, which is 4.2 percent of German G.D.P. British banks are owed $131 billion, or about 5 percent of Great Britain’s G.D.P. French banks are owed $43.5 billion, which is approaching 2 percent of French G.D.P.

But the eye-catching numbers are for Belgium, which is owed $29 billion. In the relatively small Belgian economy, this accounts for around 5 percent of G.D.P.

The fact is, the EU-IMF plan for Ireland involves imposing even more austerity on Irish working people—through cuts in wages and government-financed social programs—in order to save the only stakeholders that matter, European banks.

Explaining corporate profits

Why are businesses so cranky when their profits have rebounded and they’re setting new records?

That’s the question posed by Justin Fox, who does some useful empirical work to try to make sense of secular shifts in the profit share. Here’s what he discovers:

The fact is, the third-quarter 2010 profit share, at 9.46 percent, is slightly below the peak of 9.58 percent in the third-quarter of 2006. But, as Fox explains, it’s still very high by historical standards.

So, what explains this rebound in corporate profits? The neoclassical explanation is that higher profits reflect a higher marginal productivity of capital, since profits are understood to be the “normal” return to capital. The Keynesian explanation, in contrast, is that financial profits are much higher while manufacturing profits are lower, thus reflecting the increasing financialization of the U.S. economy.

What would be a Marxian explanation? To start with, profits are not the same as surplus-value. That’s because surplus-value takes the form of “after-tax corporate profits” as well as distributions of surplus-value in the form of corporate taxes to the state, rents on property, salaries to CEOs and supervisors, and many more. (Yes, Mr. Fox, I’ll be the one to say you might want to read some Capital.)

So, while neoclassical economists will argue that the profit and wage shares of national income are relatively constant (they fluctuate within relatively narrow bands over time), they don’t tell us much about the rate of exploitation—and that’s where you’d have to look to understand the origin of profits. Once that’s done, it becomes possible to explore both where profits are realized, in the profits of enterprises in the financial and nonfinancial sectors as well as in other forms, and how the rate of exploitation has risen over time.

Why, then, are businesses complaining? For two reasons: because they want higher profits and they want to keep a larger share of their higher profits. And they don’t really care about what happens to the rest of the U.S. economy. Now, as against the period of the 1950s and 1960s, the world is really their capitalist oyster.

A day in the life

On my way to Oz, I cease to exist for a day.

But, before that happens, I get to enjoy a day of full-body scans and enhanced pat-downs. . .

Happy Thanksgiving

“Are you unemployed?”