Posts Tagged ‘class’

Class myths

Posted: 7 July 2016 in Uncategorized
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As I argued back in May, “American politics has always been about class. And this presidential election is no different.”

Nancy Isenberg agrees that “the 2016 election is about class.” So, she sets out to debunk 5 myths about class in the United States.

Class myth number 1: The working class is white and male.

America has never housed some monolithic entity called the “working class.” As early as 1791, Alexander Hamilton argued that those best suited for factory work were women and children, which became the norm in textile mills until child labor laws were passed in the 20th century. Chinese workers built the Transcontinental Railroad; immigrants labored in the Ohio steel industry; whites and blacks toiled side by side in 20th-century Louisiana sawmills.

Today’s working class is even more diverse. A recent study found that more than half of all Hispanics and African Americans identify as working class. Additionally, about 50 percent of women see themselves as working class. Another report predicted that people of color will make up the majority of the American working class by 2032.

Class myth number 2: Most Americans don’t notice class differences.

The desire to erase class divisions goes all the way back to Benjamin Franklin, who believed that the North American continent would flatten classes into a “happy mediocrity.” . . .

Today, record inequality divides the rich and the poor. Our country’s wealthy “1 percent” takes home 20 percent of all pretax income, double their 1980 share. For most middle-class and lower-income families, income has either stagnated or fallen. In short, Americans have not escaped class hierarchies, but reinvented them generation by generation.

Class myth number 3: Class mobility is uniquely American.

Since America’s founding, its politicians have promised a society unbound by class. . .

But in reality, it’s harder to rise above your class in the United States than in just about any other developed country; economic mobility is much more possible in places like Japan, Germany and Australia.

Class myth number 4: With talent and hard work, you can rise above your class.

It’s a tale as old as Horatio Alger: Anyone can make it in America, no matter their upbringing. As CNN put the notion , “Through hard work and perseverance, even the poorest people can make it to middle class or above.”

But actually, it’s hard to rise above your income level. In cities such as Atlanta, New York and Washington, a child raised in a poor family has a less than 10 percent chance of becoming wealthy in his or her lifetime. It’s not much better in other parts of the country.

Class myth number 5: Class oppression isn’t as significant as racial oppression.

Class power takes many forms. Its enduring force, its ability to project hatred toward the lower classes, was best summed up by two presidents 175 years apart. In 1790, then-Vice President John Adams argued that Americans not only scrambled to get ahead; they needed someone to disparage. “There must be one, indeed, who is the last and lowest of the human species,” he wrote. Lyndon Johnson came to the same conclusion in explaining the racism of poor whites: “If you can convince the lowest white man he’s better than the best colored man, he won’t notice you’re picking his pocket. Hell, give him somebody to look down on, and he’ll empty his pockets for you.”

There is, of course, a lot more that can be said about class in the United States, including the fact that not everything in politics can or should be reduced to class.

However, dispelling some of the significant, oft-repeated myths about class is an important first step in recognizing and eventually eliminating the class problems that affect—and infect—the American polity.

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Clearly, mainstream economists don’t like it when their advice is ignored. But that’s what seems to have happened with Brexit, Britain’s decision to exit the European Union.

In the lead up to the 23 June referendum, 12 Nobel Laureates and 175 U.K.-based mainstream economists launched their version of Project Fear to warn voters about the economic dangers—recession, inflation, falling investment, lower growth, and higher taxes—from deciding against Remain. But the people ignored the dramatic pleas for economic stability on the part of the “high priests of capitalism” and voted instead to Leave.*

Jean Pisani-Ferry sees the result as one example of a much broader “angry attitude toward the bearers of knowledge and expertise”—but one that is specifically aimed at mainstream economists. Why? The presumed expertise of mainstream economists was compromised because they “failed to warn them about the risk of a financial crisis in 2008,” they’re biased toward “mobility of labor across borders, trade openness, and globalization more generally,” and because they “tend to disregard or minimize” the effects of openness on particular classes or communities.

While Pisani-Ferry gives greater weight to the third explanation, the fact is they’re related. The thread running through all three factors is the issue of distribution. Mainstream economists tend to treat the inequalities that are both the cause and consequence of capitalism as either irrelevant (because everyone gets what they deserve) or as exogenous (created outside and independent of the economy itself). Thus, they ignored the role of inequality both in creating the conditions leading up to the crash of 2007-08 and as a consequence of the way the recovery was crafted and took place; and they tend to model and support economic globalization—in people, trade, finances, and much else—as if everyone benefits, rather than seeing winners and losers. Because mainstream economists relegate issues like power and class to (and, in many cases, beyond) the margins, they literally don’t see for themselves or show to others the unequal distributions that are either presumed by capitalism or that follow from capitalist ways of organizing economic and social life.

Neil Irwin, too, has expressed his concern about the rejection of expert opinion with respect to Brexit (and, he adds, the success of Donald Trump’s campaign). And draws much the same lesson: mainstream economists (and, more generally, the members of the economic elite whose views they tend to celebrate) focus their attention on efficiency and economic growth—with respect to issues ranging from rent control to international trade—and not on the unequal outcomes of those policies. Thus, he asks, “what if those gaps between the economic elite and the general public are created not by differences in expertise but in priorities?”

In the end, the problem identified by Pisani-Ferry and Irwin is not really one of economic expertise. It is, rather, a question of priorities and perspectives. Mainstream economists hold one set of theories, according to which capitalist markets lead to (or, at least can, with the appropriate policies, end up with) efficient, dynamic outcomes from which everyone benefits. But other economists—both other academic economists and everyday economists—use different economic theories, many of which highlight the unequal conditions and consequences of capitalist activities and institutions. In other words, each of these groups has a different expertise, informed by a different way of organizing their knowledge about the economy, including the effects of economic practices and policies.

What we’re seeing, then—with Brexit, but also after the most recent financial crash and the uneven recovery, the success of the campaigns of both Trump and Bernie Sanders, not to mention the battles over austerity and much else across Europe and the rest of the world right now—is a widespread challenge to the self-professed expertise of mainstream economists. It’s also a challenge to the economic and social system glorified by mainstream economists and by the elites that both govern and gain from that system.

Those academic and economic elites are clearly worried their opinions, backed up by their presumed expertise, no longer hold sway in the way they once did. And for good reason.

All they have to do is remember the fate of their predecessors who suggested the downtrodden and everyone else who had been marginalized or otherwise beaten down by the system just eat cake.

 

*As Rafael Behr explains, “People had many motives to vote leave, but the most potent elements were resentment of an elite political class, rage at decades of social alienation in large swaths of the country, and a determination to reverse a tide of mass migration. Those forces overwhelmed expert pleas for economic stability.”

 

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Mainstream economics has clearly had a great fall.

Just two days ago, I argued that—after the crash of 2007-08 and, now, Brexit—mainstream economists have had “nothing to offer, either in terms of insight or a path moving forward.” Also recently, Antonio Callari challenged Brad DeLong’s attempt to reduce economics to the mainstream debate between supply-siders and demand-siders and his argument that there’s no room for economists as public intellectuals.

Now, Mark Thoma has stepped forward to explain why it is that “in recent years the public has lost faith the in the economics profession.” And since by the “economics profession” Thoma is essentially referring to mainstream economists, he’s absolutely correct.

One reason for the lack of faith is the failure to predict the Great Recession, but the public’s dismissal of macroeconomists is based upon more than the failure to foresee the dangers the housing bubble posed for the economy. It is also due to false promises about the benefits to the working class from globalization, tax cuts for the wealthy, and trade agreements – promises that were often used to support ideological and political goals or to serve special interests.

Even more, mainstream economists simply don’t have “a solid understanding of the mechanisms that drive the economy.”*

Therefore, in Thoma’s view, economists need to exercise more humility and flexibility:

more humility about what we do and do not know, more willingness to change our minds when the evidence disagrees with our favorite theoretical model, and the willingness to acknowledge disagreement within the profession. But most of all we need to take a strong stand against those inside and outside the profession who misuse economic theory and empirical results for political and ideological purposes.

I’m all in favor of theoretical humility and flexibility. I certainly do not hold to the idea that our processes of producing knowledge can, or even should aim to, give us access to a complete or definitive model of the world. And I’m quite willing to admit—against the pretensions of most mainstream economists—that all we have (and can have) are partial and local and incomplete knowledges, which themselves are always changing.

But, while a good start (given the arrogance and rigidity with which much mainstream economics has been and continues to be produced and disseminated), that’s not enough. The real challenge, it seems to me, is to go beyond that and criticize both the theoretical models utilized by mainstream economists and their self-identified status as scientists who are somehow outside and independent of the world of politics and ideology.

There are, according to all three of us (Callari, Thoma, and myself), good reasons why mainstream economists have fallen in the eyes of the public. And try as they might, it’s doubtful “All the king’s horses and all the king’s men” can or should put mainstream economics back together again.

What’s needed is a fundamentally different way of doing economics and of thinking about the role of economists—economic theories that focus on issues of power and class (instead of relegating them to the margins) and a conception of economists as real public intellectuals (who play “a galvanizing role in the production of public knowledge and policy, where ‘public’ means not just ‘for’ the public, the people, but also ‘of’ and ‘by’ the people”).

I recognize that’s a radically different way of defining economics compared to the mainstream tradition. But, as it turns out, it’s a move Humpty Dumpty himself would have recognized.

“The question is,” said Alice, “whether you can make words mean so many different things.”

“The question is,” said Humpty Dumpty, “which is to be master—that’s all.”

 

*Thoma’s list of issues on which mainstream economists simply don’t have answers includes the following:

  • Why has productivity fallen? Will it stay low in the future?
  • What has caused the decline in labor force participation?
  • How strong is the economy’s self-correction mechanism in recessions, and how does it work?
  • Is there a Phillips curve (i.e. a reliable relationship between inflation, inflation expectations, and unemployment)?
  • How are expectations formed, and do they converge to rational expectations over time?
  • What is more important in the determination of wage and capital shares of income, marginal products or bargaining power and other institutional features of labor markets?
  • What frictions should we focus on? Price and wage stickiness? Financial frictions? Both? How do these frictions vary over the business cycle?
  • How high can the minimum wage be raised before there are significant employment effects?
  • What is the cause of inequality? Is it baked into the capitalist system, or is it the result of political and institutional forces?

And, according to Thomas, “that’s nowhere near a complete list of the things we don’t fully understand. We don’t even agree about what caused the Great Recession.”

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A couple of weeks ago, I discussed a recent study about class and air rage. In the meantime, things have only gotten worse—on the ground.

Most people attempting to fly these days are forced to endure long security lines, all the while knowing that airlines are raking in enormous profits ($25.6 billion last year, a 241-percent increase from 2014) with low fuel costs, lots of additional fees (for baggage, reservation changes, food and drink, and much else), and shoe-horning economy-class passengers into tighter and tighter spaces.

Gail Collins is absolutely right:

The airlines have maximized profits by making travel as miserable as possible. The Boeing Company found a way to cram 14 more seats into its largest twin-engine jetliner by reducing the size of the lavatories. Bloomberg quoted a Boeing official as reporting that “the market reaction has been good — really positive.” We presume the market in question does not involve the actual passengers. . .

Rather than reducing the number of bags in security lines, the airlines would like the government to deal with the problem by adding more workers to screen them. And the perpetually beleaguered Transportation Security Administration is going to spend $34 million to hire more people and pay more overtime this summer. Which, it assured the public, is not really going to solve much of anything.

(Who, you may ask, pays for the security lines anyway? For the most part you the taxpayer do. Also you the passenger pay a special security fee on your tickets. Which Congress tends to grab away from the T.S.A. for use in all-purpose deficit reduction. I know, I know.)

A spokesman for Delta Air Lines, which took in more than $875 million on baggage fees last year, told The Atlanta Journal-Constitution that bowing to the extremely modest Markey-Blumenthal request for a summer suspension of the baggage fee wouldn’t “really help alleviate a lot.” It would also, he said, require a “considerable change to the business model.”

Heaven forfend we mess with the business model.

So, this summer, we can expect more rage not only in the air, as economy-class passengers are forced to put up with physical inequality on airplanes, but even before they get on the plane, knowing the extra fees they pay and the long security lines they’re compelled to endure are part of the airlines’ “business model.”

And that model is not about people, but only about profits.

Joseph Stiglitz usefully explains that there’s more than one theory of the distribution of income. One theory, he writes, focuses on competitive markets (according to which “factors of production” receive their marginal contributions to production, the “just deserts” of capitalism); the other, on power (“including the ability to exercise monopoly control or, in labor markets, to assert authority over workers”).

In the West in the post-World War II era, the liberal school of thought has dominated. Yet, as inequality has widened and concerns about it have grown, the competitive school, viewing individual returns in terms of marginal product, has become increasingly unable to explain how the economy works. So, today, the second school of thought is ascendant.

I think Stiglitz is right: with the obscene levels of inequality we’ve seen emerge over the course of the past four decades, the notion of “just deserts” is being called into question, thereby creating space for other theories of the distribution of income to be recognized.

The only major problem with Stiglitz’s account is he leaves out a third possibility, an approach that combines a focus on markets with power, that is, a class analysis of the distribution of income (which the late Stephen Resnick begins to explain in the lecture above).

According to this class or Marxian theory of the distribution of income, markets are absolutely central to capitalism—on both the input side (e.g., when workers sell their labor power to capitalists) and the output side (when capitalists sell the finished goods to realize their value and capture profits). But so is power: workers are forced to have the freedom to sell their labor to capitalists because it has no use-value for them; and capitalists, who have access to the money to purchase the labor power, do so because they can productively consume it in order to appropriate the surplus-value the workers create.

That’s the first stage of the analysis, when markets and power combine to generate the surplus-value capitalists are able to realize in the form of profits. And that’s under the assumption that markets are competitive, that is, there is no monopoly power. It is literally a different reading of commodity values and profits, and therefore a critique of the idea that capitalist factors of production “get what they deserve.” They don’t, because of the existence of class exploitation.

But what if markets aren’t competitive? What if, for example, there is some kind of monopoly power? Well, it depends on what industry or sector we’re referring to. Let’s take one of the industries mentioned by Stiglitz: health insurance. In the case where employers are purchasing health insurance for their employees (the dominant model in the United States, at least for those with health insurance), those employers are forced to transfer some of the surplus-value they appropriate from their own employees to the insurance oligopolies. As a result, the rate of profit for the insurance companies rises (as their monopoly power increases) and the rate of profit for other employers falls (unless, of course, they can cut some other distribution of their surplus-value).*

The analysis could go on.** My only point is to point out there’s a third possibility in the debate over the distribution of income—a theory that combines markets and power and is focused on the role of class in making sense of the grotesque levels of inequality we’re seeing in the United States today.

And, of course, that third approach has policy implications very different from the others—not to force workers to increase their productivity in order to receive higher wages through the labor market or to hope that decreasing market concentration will make the distribution of income more equal, but instead to attack the problem at its source. That would mean changing both markets and power with the goal of eliminating class exploitation.

 

*This is one of the reasons capitalist employers might support “affordable” healthcare, to raise their rates of profit.

**The analysis of wage or consumer goods would be a bit different. But I don’t have the space to develop that here.

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The other day, in a conversation with a friend (who happens to be an avid reader of this blog), I was asked why I don’t write more about events in Brazil, especially the most recent coup. I explained that, while I have been following events there pretty closely, I simply didn’t have the time to do what I considered the appropriate amount of research to offer an analysis that offered something different from what I’ve been reading.

I did, however, suggest to them that, given the class nature of the coup, the first thing the new government would do would be to set about undoing the legacy of the Workers Party.

Well, as Jonathan Watts reports, that’s exactly what’s happening:

It is just a week since Michel Temer became interim president of Brazil, but his new centre-right administration already has begun scaling back many of the social policies put in place by Workers’ party governments over the previous 13 years.

Moves are under way to soften the definition of slavery, roll back the demarcation of indigenous land, trim housebuilding programs and sell off state assets in airports, utilities and the post office. Newly appointed ministers also are talking of cutting healthcare spending and reducing the cost of the bolsa familia poverty relief system. Four thousand government jobs have been cut. The culture ministry has been subsumed into education.

For the interim government and its supporters, these austerity measures represent sound fiscal management as they attempt to rein in the government’s budget deficit and restore market confidence in Brazil, which has seen its sovereign debt rating downgraded to junk status over the past year.

For critics, however, they represent a shift toward a neoliberal economic policy by the old elite that ousted elected president Dilma Rousseff, who is suspended pending her impeachment trial in the senate.

That, in the end, is what the coup was about: not eliminating corruption (which is how it’s been covered here in the United States) but changing the class content of the policies of the Brazilian government.

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Richard Hofstadter was wrong. American politics has always been about class. And this presidential election is no different.

Don’t get me wrong: American politics has always been about a lot of things (from nativism and racism to foreign entanglements and so-called cultural issues). But Hofstadter’s argument that “American political life has rarely been touched by the most acute varieties of class conflict” is just plain wrong. American politics has also always been about class and class conflict—about the class dimensions of U.S. economy and society, both quantitative and qualitative—including the “most acute varieties,” if by that we mean open and transparent, as against hidden behind other issues and themes.

Already in this campaign, we’re getting another lesson in the class dimensions of American politics.

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Nate Silver, for example, dismisses the idea that Donald Trump’s candidacy is a “working-class” rebellion against Republican elites:

As compared with most Americans, Trump’s voters are better off. The median household income of a Trump voter so far in the primaries is about $72,000, based on estimates derived from exit polls and Census Bureau data. That’s lower than the $91,000 median for Kasich voters. But it’s well above the national median household income of about $56,000. It’s also higher than the median income for Hillary Clinton and Bernie Sanders supporters, which is around $61,000 for both.

While Thomas Frank makes it clear that, although America is still burning seven years after the so-called recovery began, the Democratic party establishment couldn’t care less.

The party’s leadership is largely drawn from a satisfied cohort that has done quite well in the aftermath of the Great Recession. They’ve got a good thing going. Convinced that the country’s ongoing demographic shifts will bring Democratic victory for years to come, they seem to believe the party’s candidates need do nothing differently to harvest future electoral bumper crops. The seeds are already planted. All that is required is patience. . .

In reality, Donald Trump is a bigot of such pungent vileness that the victory of the Democratic candidate this fall is virtually assured. Absent some terrorist attack … or some FBI action on the Clinton email scandal … or some outrageous act of reasonableness by Trump himself, the blowhard is going to lose.

This, in turn, frees the Democratic leadership to do whatever they want, to cast themselves in any role they choose. They do not need to move to “the center” this time. They do not need to come up with some ingenious way to get Wall Street off the hook. They do not need to beat up on working people’s organizations.

That they seem to want to do all these things anyway tells us everything we need to know about who they really are: a party of the high-achieving professional class that is always looking for a way to dismiss the economic concerns of ordinary people.

We already have a pretty good sense about how class politics are going to play out in this campaign: both major-party candidates (and the establishments that line up with them) are going to pretend they’re concerned about the economic issues that worry ordinary people—and then they’ll propose policies and strategies that do nothing whatsoever to resolve those issues.

In other words, they’ll play the class card and then deal from (and for) the top of the deck.