Public art of the day

The “Gramsci Monument,” by Thomas Hirschhorn and with help from the Dia Art Foundation, opens tomorrow on the grounds of Forest Houses in the South Bronx.

Cartoon of the day

Special mention

Chart of the day

As the Economic Policy Institute explains,

Average CEO compensation was $14.1 million in 2012, using a measure of CEO pay that covers CEOs of the top 350 firms and includes the value of stock options exercised in a given year (“options realized”), up 12.7 percent since 2011 and 37.4 percent since 2009.

What this means over the long term is:

• From 1978 to 2012, CEO compensation measured with options realized increased about 875 percent, a rise more than double stock market growth and substantially greater than the painfully slow 5.4 percent growth in a typical worker’s compensation over the same period.

• Using the same measure of options-realized CEO pay, the CEO-to-worker compensation ratio was 20.1-to-1 in 1965 and 29.0-to-1 in 1978, grew to 122.6-to-1 in 1995, peaked at 383.4-to-1 in 2000, and was 272.9-to-1 in 2012, far higher than it was in the 1960s, 1970s, 1980s, or 1990s.

The bottom line: more and more surplus is being pumped out of the direct producers, and it’s being captured in larger and larger amounts by the Chief Executive Officers of major corporations.

Cartoon of the day

Special mention

Take Back the Economy

I haven’t yet seen a copy of Take Back the Economy: An Ethical Guide for Transforming Our Communities, by J. K. Gibson-Graham, Jenny Cameron, and Stephen Healy. But here’s what a trusted friend wrote:

The book reframes the economy as a site of ethical action, not expert intervention. Not only does it provide a new way of thinking about the economy and our actions within it, it also explores what people are already doing to build ethical economies. The book is accessible and suitable for activists and academics alike.

That’s good enough for me!

Disappearing inequality

What might mainstream economists (sponsored by the American Enterprise Institute) do to perform a disappearing act on the unequal distribution of income in the United States?

Well, they might perform a sleight of hand not unlike what Bruce D. Meyer and James X. Sullivan have been doing for poverty.

First, they might change the definition of income (from flows of value to consumption plus change in net worth). Second, they might change the data set (from the Internal Revenue Service to the Current Population Survey). Third, they might change the base (from tax units to size-adjusted households), what counts as income (to include taxes, transfers, health insurance, and capital gains), and how capital gains are calculated (from taxable realized capital gains to a yearly accrual measure, i.e., the increase or decrease in the value of capital assets in each year regardless of whether that asset was sold for a taxable realized gain). Finally, they might change the relevant time period (looking at the period from 1989 to 2007 instead of starting with 1979).

Well, that’s exactly the disappearing act Philip Armour, Richard V. Burkhauser, Jeff Larrimore [pdf] attempt in their latest paper. What they find, once they make all those changes, is that not only did inequality not increase in the decades preceding the Second Great Depression; it actually decreased during that period.

Here are the figures Thomas B. Edsall uses to illustrate what happens when we go from the standard account (of the Congressional Budget Office) to the Armour et al. version:

 

And voilà, as if by magic, inequality in the United States has been disappeared!

Protest of the day

A national strike against austerity measures by Portuguese labor unions on Thursday shut down many public services.

Cartoon of the day

Special mention

 

Capitalism and violence

Corey Robin, in a second reply to his critics (of his essay “Nietzsche’s Marginal Children,” on which I commented here), further explores the connection between Friedrich von Hayek and Chilean dictator Augusto Pinochet.

In that context, Robin shows how free-market libertarianism stumbles on the relationship between capitalism and violence:

Whether we call it primitive accumulation or the great transformation, we know that the creation of markets often require or are accompanied by a high degree of coercion. This is especially true of markets in labor. Men and women are not born wage laborers ready to contract with capital. Nor do they simply evolve into these positions over time. Wage laborers are often made—and remade—through violence, coercion, and force. Like the labor wars of the Gilded Age or the enclosure riots, Pinochet’s Chile was about the forcible creation, at lightning speed, of new markets in land and labor.

Hayek’s failure to fully come to terms with this reality—his idea of a good “liberal dictator” shows that he was more than aware of it; the fact that so little in his work on rule formation gives warrant to such an idea demonstrates the theoretical impasse in which he found himself—is why his engagement with Pinochet is so important. Not because it shows him to be a bad person but because it reveals the “steel frame,” as Schumpeter called it, of the market order, the unacknowledged relationship between operatic violence and doux commerce.

The argument, I think, is even more general. Yes, we need to remember the labor wars of the Gilded Age, the enclosure riots, and the Chilean dictatorship’s forcible creation of markets. But we also need to recognize the violence involved in forcing people to have the freedom to sell their ability to work every day, around the world, within the “normally functioning” market order.

It’s that dimension of the relationship between capitalism and violence mainstream economists of all stripes refuse to acknowledge.

Protest of the day

Brazilians continue to protest a wide variety of issues, from poor public transportation and widespread corruption to the billions being spent in preparations for the World Cup and the Olympic games, even after the government started taking action to meet the protestors’ demands.

“We don’t need the World Cup,” said Leonardo Fabri, a 19-year-old protester. “We need education, we need better health services, a more humane police.”