Posts Tagged ‘Argentina’

Dollar

The United States is increasingly becoming dollarized. That’s because, for decades now, those at the bottom have been left behind, forced to attempt to get by in ever more precarious conditions.

If you asked mainstream economists what dollarization means, they would immediately define it as a country officially adopting the currency of another for financial transactions. Often, of course, that currency has been the U.S. dollar, as was the case for Ecuador in January 2000. Recently, mainstream economists, such as John Cochrane, have been suggesting that Argentina today should follow the same policy in order to “insulate the private economy from government fiscal troubles.”

While that kind of dollarization comes up in the context of macroeconomic crises, generated by volatile capital flows and other economic shocks beyond the control of traditional monetary authorities, the dollarization I’m referring to here stems from a very different kind of crisis, one that is happening inside the United States.

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According to a new report by the Institute for Local Self-Reliance, the United States now has more dollar stores—including Dollar General, Dollar Tree, and Family Dollar—than Walmart and McDonalds locations combined.

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Moreover,

Alongside aisles lined with clothing and household goods, these small stores offer a narrow selection of processed foods, such as canned peaches and cereal, cookies and frozen waffles.

There are no fresh vegetables, fruits, or meats in most dollar stores. And yet, as limited as their offerings are, dollar stores are now feeding more Americans than Whole Foods is, and they’re multiplying rapidly.

The fact is, both groups of food retailers have grown rapidly in recent years. As of September 2017, Whole Foods operated 470 stores, with 448 stores in 42 states and the District of Columbia (and an additional 13 stores in Canada and 9 in the United Kingdom), up from 275 in 2008—mirroring the rising share of income going to the top 10 percent (the red line in the chart at the top of the post). Dollar stores have grown even more rapidly: Dollar General alone went from 8,362 stores in 2008 to 14,534 in 2017.

That dollarization of the U.S. economy is both a condition and consequence of the relative impoverishment of the bottom 50 percent of Americans, whose share of income (the blue line in the chart) has fallen from 19.4 percent in 1969 to 10.3 percent in 2014 (the last year for which data are available).

As the authors of the report explain, dollar stores are both a symptom of larger economic trends and a cause of additional economic despair. On one hand, they move into impoverished, low-income neighborhoods that have few if any other retail merchants and grocers.

Today the dollar chains are capitalizing on these conditions, much like an invasive species advancing on a compromised ecosystem.

On the other hand, the proliferation of dollar stores are also causing economic distress since “their strategy of saturating communities with multiple outlets is making it impossible for new grocers and other local businesses to take root and grow.”

What we’re seeing in the United States is growth at both ends of the income pyramid. Just over a year ago, Amazon announced that it was buying Whole Foods for just under $14 billion, the retailer’s largest acquisition ever. Clearly, the giant on-line retailer is betting on the continuing rise of inequality, especially the increasing share of income captured by the top 10 percent of Americans, not only for luxury food, but for all the other commodities Amazon sells.*

And the dollar stores? According to Garrick Brown, a researcher with the commercial real estate firm Cushman & Wakefield,

Essentially what the dollar stores are betting on in a large way is that we are going to have a permanent underclass in America. It’s based on the concept that the jobs went away, and the jobs are never coming back, and that things aren’t going to get better in any of these places.

That, unfortunately, is what dollarization means in the United States today.

 

*“Amazon did not just buy Whole Foods grocery stores. It bought 431 upper-income, prime-location distribution nodes for everything it does,” tweeted Dennis Berman, the Wall Street Journal’s financial editor.

 

desaparecidos

Toym Imao, “Desaparecidos (Memorializing Absence, Remembering the Disappeared)” (2015)*

In international human rights law, a “forced disappearance” occurs when a person is secretly abducted or imprisoned by a state or political organization (or by a third party with the authorization, support, or acquiescence of a state or political organization), followed by a refusal to acknowledge the person’s fate and whereabouts, with the intent of placing the victim outside the protection of the law.

The most infamous forced disappearances have occurred in Spain (during and after the Civil War), Chile (after the coup by General Pinochet in 1973), Argentina (during the so-called Dirty War from 1976 to 1983), and the United States (as part of the so-called War on Terror).

Now, Donald Trump’s Council of Economic Advisers (pdf) is attempting to carry out a forced disappearance of poverty.**

The aim of the Council’s report is to make the case for “expanding work requirements among non-disabled working-age adults in social welfare programs.”*** In order to do so, the authors of the report attempt to show that (1) there is a large pool of non-disabled  working-age adults who are currently beneficiaries of the three major non-cash welfare programs (Medicaid, food stamps or the Supplemental Nutrition Assistance Program, and housing assistance) who can and should be put to work, (2) independence or self-sufficiency is undermined by participation in government anti-poverty programs, and (3) government assistance to the poor has become outmoded because poverty itself has virtually disappeared in the United States.

We’ve seen all these moves before. As Jim Tankersley and Margot Sanger-Katz explain, the numbers of adults who are beneficiaries of welfare programs but not working are likely exaggerated. For example:

The Center on Budget and Policy Priorities calculated this year that three-quarters of food stamp recipients work within a year of participating in the program. That report suggests that Americans often use assistance programs as bridges to a new job, after they have lost previous employment.

The administration’s numbers may be particularly exaggerated for Medicaid. Under the Affordable Care Act, many states expanded their Medicaid program in 2014 to include more childless adults whose incomes bring them close to the poverty line. But the report examines adults who were enrolled in Medicaid in 2013, before the expansion, when most adults who were signed up were either pregnant women, the parents of young children or adults with extremely low incomes.

According to the council, about 53 percent of adult, non-disabled Medicaid beneficiaries worked less than 20 hours a week. Using a different set of government data from 2017, the Kaiser Family Foundation estimated that 62 percent of such people had full- or part-time jobs. Another 18 percent lived in a household with another working adult. Council officials say the data set they drew upon, while older, is a better measure than the one Kaiser used.

Then there’s the argument about the extent of poverty in the United States. While the government itself reports that poverty is still a large and persistent problem within the United States (since according to the official definition the poverty rate in 2016 was 12.7 percent, and the rate according to the Supplemental measure was 14 percent), the Council chooses to redefine poverty in terms of consumption (based on the work of, among others, Bruce D. Meyer and James X. Sullivan).

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And, voilà, poverty is disappeared!****

Finally, they invoke the shibboleth that expanded work requirements respect and reinforce “independence” and the “dignity of work.”

Back in 2012, I suggested we need to contest the meaning of dependence:

In particular, why is selling one’s ability to work for a wage or salary any less a form of dependence than receiving some form of government assistance? It certainly is a different kind of dependence—on employers rather than on one’s fellow citizens—and probably a form of dependence that is more arbitrary and capricious—since employers have the freedom to hire people when and where they want, while government assistance is governed by clear rules.

We can also deconstruct the term by turning it around: why is receiving non-cash benefits from the government a form of dependence but cash distributions of the surplus—to large corporations and wealthy individuals—supported by a wide variety of government programs, is not?

As for the so-called dignity of work, I can only repeat what I wrote just a couple of years ago: what advocates of getting people back to work

choose to overlook or ignore is that, in a world in which the majority of people are forced to have the freedom to sell their ability to work to someone else—in which, in short, labor power is a commodity—there’s no necessary honor or dignity in work. It’s a necessity, born of the fact that people need to earn an income to purchase commodities to sustain themselves and to pay off their debts. And the most likely way to earn that income is to sell their ability to work to a small number of other people, their employers, who in turn get to appropriate and do what they will with the profits.

As I see it, the attempt to disappear poverty is actually a thinly disguised effort to discipline and punish the poor and to convert everyone—poor and non-poor workers alike—into a giant machine for producing surplus for the benefit of a tiny group of employers and wealthy individuals.

Perhaps we need to follow the example of the mothers of Argentina’s “desaparecidos,” who 40 years later are challenging the government’s attempt to erase the memory of those terrible years and put the brakes on the continuation of trials. In the case of the poor working-class today in the United States, we need to make sure they and their deteriorating conditions of life are not disappeared and that a real anti-poverty program—a radical change in economic institutions—is enacted.

 

*The forty-three figures in the art installation by Toym Imao represent those left behind by victims of forced disappearance. Empty and hollow, each figure represents a year since Martial Law was declared in the Philippines. Instead of portraits and picture frames, the figures hold empty niches, signifying death, the lack of closure, the emptiness, the hollow feeling, and the gut-wrenching pain those left behind must deal with.

Absence remains an open wound. But despite it, the desaparecidos remain present in our hearts and minds. Despite efforts to eradicate their existence, they will never be forgotten.

**Kevin Hassett (Chair, from the American Enterprise Institute, who was appointed by Trump and approved by the Senate in a 81–16 vote on 12 September 2017), as well as Tomas Philipson and Richard Burkhauser (both appointed by Trump), are the members of the current Council of Economic Advisers.

***Kentucky Governor Matt Bevin offered up his state to approve work requirements for Medicaid benefits. Once Federal Judge James E. Boasberg rejected the Department of Health and Human Services’ approval of Kentucky’s plan, Bevin announced that he would deprive Medicaid patients of dental and vision benefits, effective immediately. The Trump administration has just revived its efforts to let et Kentucky compel hundreds of thousands of poor residents to work or prepare for jobs to qualify for Medicaid.

****This comes just after the United Nations Human Rights Council published the report by Philip Alston, its Special Rapporteur on extreme poverty and human rights, according to whom

The United States is a land of stark contrasts. It is one of the world’s wealthiest societies, a global leader in many areas, and a land of unsurpassed technological and other forms of innovation. Its corporations are global trendsetters, its civil society is vibrant and sophisticated and its higher education system leads the world. But its immense wealth and expertise stand in shocking contrast with the conditions in which vast numbers of its citizens live.

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Today, as they have every year since 1889, workers around the world are celebrating International Workers’ Day.

They marched, for example, in Kuala Lampur and Dhaka (on the left and right above, respectively). And they attempted to march on Istanbul’s Taksim Square (but the government sent police and fired water cannons to stop them).

But workers around the world have also developed a new strategy: to take over the enterprises where they work.

In Turkey [ht: ja], for example, a subset of the 94 workers who were fired in January 2013 from the Kazova Textile factory in Istanbul eventually formed a worker-owned cooperative, Free Kazova. It is now in its third month of operation.

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And, as the Guardian reminds us, many groups of workers in other countries—in Greece, France, Spain, and Argentina—are doing the exact same thing, taking matters into their own hands and showing they can organize and operate enterprises democratically, without the previous bosses and boards of directors.

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Special mention

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Special mention

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predictions

The economists at Goldman Sachs have now come in with their predictions for the 2014 World Cup finals. And, by a wide margin, Brazil are the favorites to win (3-1 over Argentina in the final match).

The problem, of course, is that football is a low-scoring game and, therefore, quite unpredictable. Thus, as the Goldman Sachs team admits, when looking at how their model would have done in predicting the goal difference in each game of the 2010 World Cup finals,

Overall, there is a positive and statistically significant relationship between the actual and predicted outcomes. However, the fit of the relationship is not particularly tight with an r- squared of 0.24, because football is ultimately a pretty random game.

As for me, with only the most informal of statistical analyses (in my head, based on what I know of the various national teams and the history of World Cups), I actually agree with the prediction: a final four of Germany, Spain, Brazil, and Argentina, and Brazil raising the trophy.

Then again, anything can happen. . .

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Richard Fidler [ht: eo] reports that the Bolivian government recently announced that workers will be permitted

to establish “social enterprises” in businesses that are bankrupt, winding up, or unjustifiably closed or abandoned. These enterprises, while private, will be operated by the workers and qualify for government assistance.

The idea of Bolivian workers taking over and running abandoned factories is not unlike the enormously successful movement of “recuperated enterprises” we saw in Argentina in the early 2000s. With one difference, of course: in Argentina, the workers often had to struggle against the government and the courts to take over the abandoned enterprises; in Bolivia, the president of the country is promoting the idea.*

Now take the idea one step further: what if the government—whether in Argentina, Bolivia, or the United States—actually supported the formation of worker-owned enterprises, not just in the case of closed or abandoned factories and offices but in starting enterprises from scratch and even assuming control over parts of existing corporations? That would be an extension of democracy within the economy worth talking about.

 

*Here is a link [pdf] to the Supreme Decree 1754 (in Spanish), which was signed on 7 October 2013.