A New Era in Chicago

The workers who occupied a windows factory in Chicago—first in 2008 (when it was Republic Windows & Doors), and then again earlier this year (when the factory was owned by Serious Energy)—have now formed their own worker-run cooperative: New Era Windows, LLC.

Armando Robles, president of the United Electrical Workers Local 1110, said that the school of struggle the workers went through with both factory occupations helped them win the confidence to take over their factory.

“We learned how to fight against the bosses and now to negotiate contracts with the owners of Republic and Serious Energy, how to negotiate in contract negotiations and how to make escalating actions before going on strike.” . . .

“When we found out nobody is going to buy the company we started this idea [to form a cooperative] and brought it in proactive,” said Robles. “We started having meetings about it.”

The next step for the workers, whose business in now incorporated with the State of Illinois, is to raise the investment money to start the cooperative and buy the machinery from their former employer.

Robles says they are working on getting the money together – about $2 million to purchase the machinery – and have already started building the structure of the cooperative: “we already have a steering committee, we have two treasurers. We will keep doing forward.”

They expect to start producing windows in two or three months, said Robles, and running their unionized cooperative.

Economist of the day

“There is precisely zero chance of austerity working. It is the same as thinking you can escape from gravity by waving your arms up and down. . .Europe’s made a mess of Greece for the past three years. Those responsible will go down as the biggest idiots in the history of economics.”

Yanis Varoufakis

Yes, I probably drink too much coffee. . .

Occupy economics

There is a tremendous need to occupy economics, given the complicity of mainstream economics in creating the current crises and the limited nature of the debate concerning economic alternatives within mainstream political and economic circles in the United States.

One of the most interesting projects to occupy (or reoccupy) economics has been taking place within the Occupy Wall Street movement. Since last fall—first in Zuccotti Park, and now in Union Square, in groups large and small—people have been coming together, within the context of the Occupy University, to discuss a wide range of economic issues and concerns.

We discuss inequality in the US and around the world, who are the 1% and what does it take to get there, what is the relationship between the banks and the Federal reserve, how the financial crisis got going, what’s happening in Europe and “Why can’t I find a good job?”. We also talk about alternatives, from coops and credit unions to open source to what a democratic economy looks like.

The courses in Radical Economics 101 have been organized every Sunday by the committed efforts of Maliha Safri of Drew University and Suresh Naidu of Columbia University. Recently, they’ve been joined by Mark Brenner from Labor Notes.

Let’s chant together: “Tell me what economics looks like! This is what economics looks like!”

I’m late, I’m late. . .

Almost two years ago, I told myself (and the world) that I needed to find a copy of Francis Spufford’s Red Plenty. But I, uh, forgot.

Now, of course, the folks at Crooked Timber are hosting a symposium on Spufford’s novel, and the first four responses—by Kim Stanley Robinson, Antoaneta Dimitrova, George Scialabba, and Cosma Shalizi—have  been published.

Which means I need to find the time to order and read the book, and then to read the symposium on the book. And I’m already late. . .

Cartoon of the day

Special mention

Protest of the day

The “casseroles” (pots and pans) movement in Canada—a phenomenon that first grew out of student protests against an increase in tuition fees earlier this year and escalated in size and media coverage after the passage of Bill 78 brought unprecedented numbers of people to street marches in Montreal and evening rallies of banging pots and pans across Quebec—is now threatening to spread across the country.

“Internal revaluation” in Greece

The economic program proposed for Greece by mainstream politicians and economists is internal devaluation, that is, an austerity plan to make the country “more competitive.”

We now have a translation (from the Greek via Italian into English) of the alternative program being proposed by Syriza [ht: ijsi], the Coalition of the Radical Left. Let’s call it a plan for “internal revaluation.”

The 40 points of the program run from a renegotiation of the debt through tax increases and nationalization of some enterprises (banks and public utilities) to demilitarization and the restoration and extension of protections for labor.

Syriza’s program for internal revaluation is not really all that radical—except when compared to what passes for mainstream economic policy in the midst of the Second Great Depression in Europe and the United States.

Update

Here’s a link to an interview with Yiannis Milios, one of Syriza’s top economic advisers, on BBC’s Hardtalk.

This is how a market is supposed to work—or not

It’s not often that I write admitting the validity of the mainstream story about markets. But the case of the Big Sandy power plant is a good example of how that story is supposed to work. The relative price of coal rises, based on environmental regulations and the declining price of alternative sources of energy, and the owners of Big Sandy decide to switch from coal to natural gas.

The decline is largely because new pollution rules have made coal plants more costly, while a surge in production of natural gas through the process of hydraulic fracturing, known as fracking, has sent gas prices plummeting. Together, the economics of coal have been transformed after a century of dominance in Washington, state capitals and the board rooms of electric utilities.

“The math screams at you to do gas,” said Mr. Morris, whose company is the nation’s largest consumer of coal.

Price-induced substitution among inputs in action!

But then there are all the other parts of the story that are usually missing from the mainstream account. Litigation, lobbying, contributions (to politicians and environmental groups), and advertising by both Big Coal and the natural gas industry. The attempt to pass on the cost of environmental retrofitting to electricity consumers. The negative effects of coal mining on miners and local communities and the negative effects of fracking on a different set of local communities. And so on.

In other words, what the mainstream story misses is perhaps more important than what it captures: poverty and unemployment make it difficult for miners and local landowners to survive without coal or natural gas, while large corporations vie for control over markets and energy policy.

That’s how a market works in the real world.

Art, inequality, and conspicuous investment

source*

I’ve had my criticisms of Adam Davidson’s reporting (such as here and here) but I do think he gets this one just about right:

Art is often valuable precisely because it isn’t a sensible way to make money. And perhaps as a result, it has become even more valuable of late. Benjamin Mandel, an economist at the Federal Reserve Bank of New York, has been studying the art market because, he says, “it’s a great way to study asset price valuations.” Mandel read reports suggesting that the market was growing at an unsustainable clip. For one thing, prices have gone up far faster than global G.D.P.

But then Mandel realized that we had been looking at the market incorrectly. Fine art, he said, is not really part of the overall global economy. Instead, it’s part of the economy of a small subset of the super-superrich, whom some economists call Ultra High Net Worth Individuals, or U.H.N.W.I.’s. And their economy, unlike ours, is booming. In that alternate world, fine art as a percentage of the economy has stayed stable over the last decade, in part because a flood of new U.H.N.W.I.’s in China, India and other developing nations has entered the art-buying market with great enthusiasm. In 2003, the sales at Christie’s Hong Kong totaled $98 million. Last year, they were $836 million.

The art market, in other words, is a proxy for the fate of the superrich themselves. Investors who believe that incomes and wealth will return to a more equitable state should ignore art and put their money into investments that grow alongside the overall economy, like telecoms and steel. For those who believe that the very, very rich will continue to grow at a pace that outstrips the rest of us, it seems like there’s no better investment than art.

In other words, the art market has grown precisely because of the rise in inequality. And, for the super rich, art turns out to be a very good form of—to coin a term—conspicuous investment.

*The chart above is just silly, since—given changing fads and fashions, artists’ whose work is in and out, not to mention the pieces that are bought and then taken off the market (placed in museums or private collections)—there simply can’t be any measure of the value of “investing in art” over such a long period of time.