Archive for January, 2014

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Only in America

Posted: 30 January 2014 in Uncategorized
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In a recent (and ongoing) Wall Street Journal poll, more than a third of the respondents have voted in favor of abolishing the minimum wage.

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Special mention

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LAUREN-FEINAUER

Volkswagen has accepted the United Auto Workers’ attempt to unionize its Chattanooga, Tennessee manufacturing plants.

Scott Wilson, a VW spokesman, said: “Volkswagen values the rights of its employees in all locations to representation of their interests.  In the United States, it is only possible to realize this in conjunction with a union.  This is a decision that ultimately lies in the hands of the employees. For this reason, we have begun a dialogue with the U.A.W.”

But Republican politicians, local businesses, and outside right-wing groups are attempting to derail the drive.

Two of Tennessee’s most prominent Republicans, Gov. Bill Haslam and Senator Bob Corker, a former mayor of Chattanooga, have repeatedly voiced concerns that a U.A.W. victory would hurt the plant’s competitiveness and the state’s business climate.

A business-backed group put up a billboard declaring, “Auto Unions Ate Detroit. Next Meal: Chattanooga,” while a prominent anti-union group, the National Right to Work Committee, has brought legal challenges against the U.A.W.’s effort, asserting that VW officials improperly pressured workers to back a union.

In addition, Grover Norquist, the anti-tax crusader, has set up a group, the Center for Worker Freedom, that has fought the U.A.W. on several fronts, partly to prevent the election of labor’s Democratic allies who might increase government spending.

Piketty-gap

Thomas Piketty’s new book, Le capital au XXIe sieĚ€cle (which is supposed to be released soon in English as Capital in the 21st Century), is creating quite a stir. It is the subject of the latest column by Thomas B. Edsall and was recently reviewed by Branco Milanovic [pdf].

In fact, the chart above is taken from Milanovic’s review. It shows the growing gap between (as Piketty defines them) the rate of growth of world production (g) and the rate of return to capital (r) during the nineteenth century and, after the “special period,” from the mid-1970s onward. For Piketty, that gap is the source of growing inequality in both the functional (capital-labor) and size (top 1 percent) distributions of income.

I’ll refrain from further commentary until I’ve had a chance to read the book (which, if all goes well, I’ll probably end up adding to my Topics in Political Economy reading list in the fall). But, I’ll admit, I am both intrigued (by the model and data) and somewhat wary (especially concerning the definition of capital) of Piketty’s approach. Still, given Milanovic’s summary,  Piketty’s methodological reflections alone warrant further attention:

Appropriately for such a wide-ranging book, Piketty closes his book with an essay on the method to be used in economics. He regards economics as a social science (where the emphasis is on “social”) that can flourish only if (i) it asks important, and not trivial, questions (so adieu Freakonomics and randomistas), and (ii) uses empirical and historical methods instead of sterile model-building. These issues have been debated ad nauseum by the economists, and Piketty has nothing new to add to that, except perhaps in a most important way—namely, by showing in his own work how these two desiderata should be combined to create economic works of durable importance.

burden

It’s very hard to keep up with healthcare bills if some or all members of households don’t have health insurance. But even people who have health insurance struggle to pay their bills. That’s both the promise (to expand health insurance) and limitation (private health insurance and healthcare in the United States still impose financial burdens) of Obamacare.

According to a recent study by the National Center for Health Statistics [pdf],

  • Families with a mixture of coverage types within the family and families in which some or all members were uninsured were more likely to have experienced a financial burden of medical care in the past 12 months than were families in which either all members had private insurance or all members had public coverage.
  • Among families in which all members had private insurance or all members had public coverage, approximately 21 percent experienced the financial burden of medical care.
  • Among families in which some members had private insurance and some members had public coverage, 35.8 percent experienced the financial burden of medical care.
  • Among families in which all members were uninsured, 39.7 percent experienced the financial burden of medical care.
  • Among families in which some members were insured and some members were uninsured, fully 46.0 percent experienced the financial burden of medical care.

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Special mention

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You have to give credit to mainstream economists: they’ll do anything to avoid talking about class.

Take the current discussion about inequality. Right now, eyes are clearly focused on two major trends: the share of national income going to the top 1 percent (and therefore the gap between them and the other 99 percent) and the share of profits and wages in national income (and therefore the growing gap between capital and labor). The issues are on the agenda, the data are easily accessible, and the charts are dramatic.

Here’s what the share going to the top 1 percent looks like (from the World Top Incomes Database):

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And here are the profit and wage shares (from FRED, the Economic Research unit of the St. Louis Fed, where blue represents the profit share and red the wage share):

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Clear enough?

But, of course, once you look at inequality through the lens of those two data series, you have to talk about class: about how capital is gaining at the expense of labor, and about how top income earners are getting their share of the surplus created by labor. (There is, of course, a lot more work that needs to be done, in terms of both the data and an analysis of the data, but at least it’s a start.)

Mainstream economists, as it turns out, want us to look elsewhere—not at class but at the effects of anything and everything else. That’s how we get such nonsense as “Marry Your Like: Assortative Mating and Income Inequality,” an NBER working paper by Jeremy Greenwood et al.

Has there been an increase in positive assortative mating? Does assortative mating contribute to household income inequality? Data from the United States Census Bureau suggests there has been a rise in assortative mating. Additionally, assortative mating affects household income inequality. In particular, if matching in 2005 between husbands and wives had been random, instead of the pattern observed in the data, then the Gini coefficient would have fallen from the observed 0.43 to 0.34, so that income inequality would be smaller. Thus, assortative mating is important for income inequality. The high level of married female labor-force participation in 2005 is important for this result.

Fortunately, Kevin Drum has showed how silly and misleading their analysis is. At best, assortative marriage patterns might tell us something about changes in the distribution of income between, say, the the middle fifth and the next quintile up. But that’s it.

Even progressive economists can get distracted in this discussion—as for example when Larry Mishel discusses the “tight link” between the minimum wage and inequality. While, yes, a declining real minimum wage can increase the 50-10 wage gap (the difference between the median and the 10th percentile earner) but that’s not the real source of income inequality in the United States. It does tell us something about inequality among wage-earners—and that can undermine labor as a whole, by lowering the floor and thus leaving all wage-earners in a more desperate position. But, again, that’s it.

Better it seems to me to focus our attention on the real sources of inequality in the United States. And that means we have to face the class questions straight on. Anything else is merely a distraction.

 

For pretty much anyone of my generation Pete Seeger was identified with a long, rich tradition of American protest music—of labor, civil rights, antiwar, and so on. I was fortunate to hear him play and sing on numerous occasions, including a small concert with his family and friends in Connecticut.

But it is also the case that the music of the Left was eventually reduced to folk music and excluded other important traditions, such as classical music. R. D. Davis, in an article published in the journal Rethinking Marxism back in 1988, considered this to be a problem.*

The form of most folk and almost all jazz/pop music does not (cannot) even reflect industrial social relations as we know them, much less make a comment on them. Classical music, or music organized by a trained composer, art music, is more likely to produce an instructional metaphor (and form) with which to examine the foundations of corporate society.

For Davis, Hanns Eisler and Charles Seeger (Pete’s father) represented two radically different approaches to making music for the Left in the 1930s: “intellectual composition versus the folk tradition.” Both were available, both were viable—but the Left (for reasons Davis explores in his article) rejected the former in favor of the latter.

Still, I experienced a moment of national pride when Seeger was joined by Bruce Springsteen to sing all the verses of “This Land Is Your Land,” the Woody Guthrie classic, at Obama’s first inauguration.

 

*R. D. Davis, “Music from the Left,” Rethinking Marxism 1 (Winter 1988): 7-25.

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Special mention

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