Archive for April, 2016

cbr042516dAPR

Special mention

178729_600 178738_600

Upgrading

Posted: 29 April 2016 in Uncategorized
Tags: ,

Upgrade

It’s time, I suppose, to upgrade this blog—from WordPress’s free version to the premium version (which I’m going to have to pay for).

The only reason I’m doing this is because I’ve run out of storage space. The premium version offers more space to store all the images, charts, and so on I publish with each and every post. (The alternative would be to eliminate the image files, which I’m unwilling to do.) It also allows me to upload videos.

For readers, the only real change you’ll see is the ads that often accompany posts will disappear (not that I ever got a dime for them—it all went to WordPress).

Now, I’m just hoping the transition goes smoothly and I don’t lose any of the existing content. . .

Oops!

Posted: 29 April 2016 in Uncategorized
Tags: , , , , ,

DJIA

Capitalism is, if anything, remarkably unstable.

Yesterday, the Dow Jones Industrial Average dropped more than 200 points (a bit more than 1 percent). And, today, it’s already down more than half that amount—and headed lower.

BT-AI401_EARNS_16U_20160428141209

What’s going on?

Well, for one thing, corporate profits are declining.

U.S. corporate profits, weighed down by the energy slump and slowing global growth, are set to decline for the third straight quarter in the longest slide in earnings since the financial crisis.

Weakness was felt across the board, with executives from Apple Inc. to railroad Norfolk Southern Corp. and snack giant Mondelez International Inc. saying the current quarter remains tough. 3M Co., which makes tapes, filters and insulation for consumer electronics, forecast continued weak demand for that industry. Procter & Gamble Co.reported sales declines in its five business categories despite price increases.

And that’s exactly how capitalism works: corporations got exactly what they wanted in the early years of the recovery—with cheap financing, low wages, and foreign sales, which fueled high profits. And now those same conditions are coming back to bite them. And so they’re deciding to engage in less investment, which is further slowing growth and cutting into profits.

As we know, under capitalism, what goes up must come down—even for capitalists and their profits.

Class war in Britain

Posted: 29 April 2016 in Uncategorized
Tags: , , ,

article-0-0017429E00000258-415_634x440 orgreave_2780189b

A couple of days ago, I linked the 1989 Hillsborough disaster with the earlier attack on the striking Orgreave miners, since both groups were treated as the “enemy within.”

Suzanne Moore just did, too, arguing that the Hillsborough verdict shatters the fantasy that class war doesn’t exist in Britain.

It must be somewhat galling for those in power now to have to accept this ruling, for they do not hide their class contempt either. They have elevated it to actual policy: all schools must be modelled on the schools they went to, but with fewer resources. All hospitals must be run to make a profit. Taxes are for the little people. Those who don’t “get on” have only themselves to blame. An increasing range of theories come into play about why poor people are poor, which is never to do with lack of money but lack of civility. Or perhaps there is something wrong with their actual brains! Imagery of working-class people invariably invokes moral deprivation by showing a tendency to excess.

Social mobility, the supposed solution to all this, only allows the odd person to slip through the net. The middle class must simply hold on. Once there, one is required to be grateful (I am not) or merely chippy (I am). As I strain my ears to hear someone who talks like me on Radio 4 that isn’t in a drama about child abuse, I never know who I am to be grateful to.

Sure, class contempt works both ways, though it is impolite to show it except by gentle humour. Rage is so 1980s. We must not discriminate against the posh apparently, though class doesn’t really exist any more. As more and more people tell us it no longer matters, we see more and more of our creative stars were privately educated, that our leaders come from the same tiny enclave. Retro-feudalism.

This fantasy should be well and truly shattered by the Hillsborough verdict. This was a war crime committed in a war that was not then, nor is now, a figment of our imagination. Class war.

Fast Food Workers Protest For Increased Wages Ahead Of McDonald's Annual Shareholder Meeting

One week ago, the McDonald’s Corporation reported a 35-percent increase in profits (from $811.5 million in the period last year to $1.1 billion) in the quarter that ended 31 March. A few days later, former McDonald’s President and CEO Ed Rensi published an opinion piece in Forbes to explain why raising the minimum wage would be a huge mistake.

Let’s do the math: A typical franchisee sells about $2.6 million worth of burgers, fries, shakes and Happy Meals each year, leaving them with $156,000 in profit. If that franchisee has 15 part-time employees on staff earning minimum wage, a $15 hourly pay requirement eats up three-quarters of their profitability. (In reality, the costs will be much higher, as the company will have to fund raises further up the pay scale.) For some locations, a $15 minimum wage wipes out their entire profit.

Recouping those costs isn’t as simple as raising prices. If it were easy to add big price increases to a meal, it would have already been done without a wage hike to trigger it. In the real world, our industry customers are notoriously sensitive to price increases. (If you’re a McDonald’s regular, there’s a reason you gravitate towards an extra-value meal or the dollar menu.) Instead, franchisees can absorb the cost with a change that customers don’t mind: The substitution of a self-service computer kiosk for a a full-service employee.

What Rensi doesn’t mention is that U.S. taxpayers are subsidizing McDonald’s profits.

As Ken Jacobs reports,

Workers like Terrence Wise, a 35-year-old father who works part-time at McDonald’s and Burger King in Kansas City, Mo., and his fiancée Myosha Johnson, a home care worker, are among millions of families in the U.S. who work an average of 38 hours per week but still rely on public assistance. Wise is paid $8.50 an hour at his McDonald’s job and $9 an hour at Burger King. Johnson is paid just above $10 an hour, even after a decade in her field. Wise and Johnson together rely on $240 a month in food stamps to feed their three kids, a cost borne by taxpayers.

low-wage

In fact, according to a study by Jacobs, Ian Perry, and Jenifer MacGillvary (pdf) for the UC Berkeley Labor Center, 52 percent of fast-food workers make so little that they’re are on some form of public assistance.*

That’s the social cost of McDonald’s (and other fast-food corporations’) private profits.

 

*Note also in the chart above the following observation about nominally non-profit higher education in the United States: “high reliance on public assistance programs among workers isn’t found only in service occupations. Fully one-quarter of part-time college faculty and their families are enrolled in at least one of the public assistance programs analyzed in this report.”

segregation

The United States is characterized by increasing class segregation—as both a condition and consequence of growing inequality.

top 10 percent

We all know that the share of income going to the top 10 percent has steadily increased since the mid-1970s (from an already-high 33.41 percent in 1976 to an astounding 49.85 percent in 2014). That’s because a tiny group at the top has been appropriating a growing surplus and then distributing a large share of it to the other members of the top decile.

Now we know, thanks to recent research by Sean F. Reardon and Kendra Biscoff (pdf), that rising income inequality in the United States has been accompanied by increasing residential segregation by income:

Income segregation has increased over the last four decades, and has continued to increase in recent years. In large metropolitan areas (the 117 metropolitan areas with populations of 500,000 or more), the proportion of families living in neighborhoods with median incomes well above or below the median income of their metropolitan area has grown rapidly since 1970. . .In 1970, only 15% of all families lived in such neighborhoods, while 65% lived in middle‐income neighborhoods. By 2012, over one third (34%) of all families lived in either rich or poor neighborhoods, more than double the percentage in 1970. Over the same time period the proportion living in middle‐income neighborhoods declined from 65% to 40%.

And, they admit, this growing class segregation is not going to be easy to break:

In an era of very high income and wealth inequality, families have very different resources to spend on housing, and the housing market responds to this inequality in ways that exacerbate segregation. Given the importance of neighborhood contexts for children’s opportunities, and for shaping the experiences of the affluent, rising income segregation will likely only further exacerbate the economic inequality that has produced it. This self‐reinforcing cycle—where inequality begets segregation and segregation fosters inequality—will be hard to break.

Let’s call it the vicious cycle of class inequality and segregation.

As Thomas B. Edsall explains, that vicious cycle is both caused and reinforced by fundamental changes in the American social order and political system: from the fact that the increasingly segregated well-to-do have found ways of supporting and taking advantage of key services (health, education, job search and other opportunities) to aid themselves and their own children to the fact that (as Bernie Sanders recently reminded us) the top decile has been able to exercise much more influence over politics and policy (through voting and political donations) than its share of the electorate would suggest.

And, as we’ve seen in recent months, the combination of inequality and segregation has exacerbated tensions within the Democratic Party:

The “truly advantaged” wing of the Democratic Party. . .has provided the Democratic Party with crucial margins of victory where its candidates have prevailed. These upscale Democrats have helped fill the gap left by the departure of white working class voters to the Republican Party.

At the same time, the priorities of the truly advantaged wing — voters with annual incomes in the top quintile, who now make up an estimated 26 percent of the Democratic general election vote — are focused on social and environmental issues: the protection and advancement of women’s rights, reproductive rights, gay and transgender rights and climate change, and less on redistributive economic issues. . .

Sanders’s extraordinary performance to date. . .points to the vulnerability of a liberal alliance in which the economic interests of those on the top — often empowered to make policy — diverge ever more sharply from those in the middle and on the bottom.

As the influence of affluent Democratic voters and donors grows, the leverage of the poor declines.

Meanwhile, the vicious cycle of class inequality and segregation makes the rich richer, everyone else poorer—and the yawning gap between them continues to grow.

mike2may

Special mention

425FatCats 178619_600