Posts Tagged ‘community’

distribution

Liberals have a problem: the kinds of redistribution they advocate and support just doesn’t do a lot to fundamentally alter the profoundly unequal distribution of income in the United States.

Consider the chart above, which illustrates the cash-income effects of the U.S. tax system (with dark colors marking the pre-tax distribution of income and the lighter colors the post-tax distribution). The results are quite meager: in 2014, the share of the top 1 percent (blue lines, measured on the right) was only lowered from 20.2 percent to 17 percent, while the share of the bottom 90 percent (plum lines, measured on the left) rose from 53 percent to just 59.2 percent.

So, even after all the tax-based redistributions are completed, the top 1 percent still ends up with a larger and larger share of income—and the share left over for the bottom 90 percent continues to fall.

All of that political fighting over tax rates and government programs to ameliorate the unequalizing effects of American capitalism and that’s all we end up with.

It should come as no surprise then that Isabel Sawhill [ht: ja] concludes that changing the tax structure, even radically, won’t really change much.

Sawhill’s analysis of both the political hurdles and the limited benefits of progressives’ favorite tax-and-spend schemes is certainly accurate. Existing economic institutions produce such an obscenely unequal distribution of income in the United States that it’s difficult to envision any political feasible changes in the tax structure that will bring down inequality into a region that progressives would consider fair and just.

So, what’s the alternative? Sawhill favors “stakeholder capitalism” (or what others have called “shared capitalism”):

It means paying attention not just to shareholders but also to workers, customers, and the community. It has proven to be a successful strategy for many companies. They have showcased what can be accomplished when the private sector takes greater responsibility for helping workers—whether in the form of profit sharing, training, or providing benefits such as paid leave and flexible hours. The fact is that without such an approach, it will be difficult to achieve broadly based economic growth. It would simply require too much redistribution after the fact. We need instead to test the limits of equalizing the distribution of market incomes before taxes and benefits enter the picture.

And perhaps Sawhill and other American liberals can convince employers to become “high-road,” stakeholder employers instead of taking the “low-road” of the shareholder economy.

Perhaps. But why does Sawhill limit the discussion to the choices existing employers might or might not want to make? Why not open up the discussion to consider other ways of organizing enterprises?*

I’m thinking, for example, of worker cooperatives and other kinds of enterprises owned by workers and the communities in which they live. If we think the existing distribution of income is fundamentally unjust and redistributive efforts are generally limited and ineffective—both of which are arguments that Sawhill herself makes—then why not focus on ways of actually improving the initial distribution without requiring the assent of existing employers?

The advantage of worker- and community-owned enterprises is they include the stakeholders from the very start. The stakeholders are the ones who decide how the firms will be organized, what the workers will be paid, how the surplus funds will be allocated, and so on. And from all the existing examples we have, from Cleveland’s Evergreen to Spain’s Mondragón, the initial distribution of income would be much more equal than anything we’ve seen, not only in the past few decades, but over the entire modern history of the United States.

Then, on top of that, people might want to have a tax-based redistributive scheme—for example, to correct for differences in enterprise success, regional discrepancies, and so on. But such redistribution would be much easier and more effective than anything Sawhill and others envision for the United States today. It just wouldn’t have an enormous mountain of inequality to dismantle.

So, while I agree with Sawhill that “our failure to achieve anything close to broadly based economic growth in the United States is very troubling,” I want to expand the discussion and see a much bigger role for alternatives to capitalism in distributing the rewards to workers and the members of the communities in which they live.

That one change, in the direction of more worker- and community-owned enterprises, can serve as the basis of an economy that would produce an array of incomes that brings us much closer to an initial distribution that many progressives consider fair and just.

 

*As Penn Loh explains,

Too often “the economy” is equated with markets where corporations compete to make profits for the wealthiest 1 percent and the rest work for a wage or salary (or don’t make money at all). . .

When everything that we label “economic” is assumed to be capitalist — transactional and market-driven — then it is no wonder that we run short on imagination.

To escape this “capitalocentrism,” we need to broaden the definition of economy beyond capitalism.

Last year, I was honored to deliver the 9th Annual Wheelright Memorial Lecture at the University of Sydney.

A couple of weeks ago, my longtime friend and collaborator Katherine Gibson presented the 2017 Wheelright Memorial Lecture, “Manufacturing the Future: Cultures of Production for the Anthropocene.”

her work has consistently challenged orthodox and heterodox economics’ primary focus upon the operation of ‘Big-C’ Capitalism. Instead, Gibson has crafted a unique methodological framework she terms ‘participatory action research’, which looks to the diversity of existing community economic arrangements by engaging directly with local subjects.

The method engages with local communities to shed light upon the idiosyncrasies and often non-commercial nature of local modes of provisioning. Rather than accepting the ‘tragedy of the commons’ – the notion of the inevitable degradation of commonly used land and resources – Gibson’s work has revealed the importance of the commons to many existing developmentally diverse communities. She thereby challenges the core tenet of orthodox economics, which prioritises the optimisation of the allocation of scarce resources through facilitating smoothly functioning markets.

fredgraph

Mainstream economists and politicians have answers for everything.

Lose your job? Well, that’s just globalization and technology at work. Not much that can be done about that.

And if you still want a job? Then just move to where the jobs are—and make sure your children go to college in order to prepare themselves for the jobs that will be available in the future.

The fact is, they’re not particularly good answers. And people know it. That’s why working-class voters are questioning business as usual and registering their protest by supporting—in the case of Brexit, the 2016 U.S. presidential election, the 2017 snap election in Britain, and so on—alternative positions and politicians.

On the first point, it’s not simply globalization and technology. Large corporations, which employ most people, are the ones that decide—in the context of a global economy and by developing and adopting new technologies—when and where some jobs will be destroyed and new ones created. They use the surplus they appropriate from their existing workers and utilize it to determine the pattern of job destruction and creation, in order to get even more surplus.

Thus, in April 2017 (according to the data in the chart at the top of the post), employers eliminated 1.6 million jobs in the United States. In January 2009, things were even worse: corporations destroyed 2.6 million jobs across the U.S. economy. Of course, they also create new jobs—often in different companies, industries, regions, and countries. That leaves individual workers with the sole decision of whether or not to chase those jobs, since as a group they have absolutely no say in when or where old jobs are destroyed and new ones created.

What about their children and the advice to go to college? We already know the idea that higher education successfully levels the playing field across students with different backgrounds is a myth (and sending more kids to college doesn’t do much, if anything, to lower inequality).

Now we’re learning that, when states suffer a widespread loss of jobs, the damage extends to the next generation, where college attendance drops among the poorest students.

That’s the conclusion of new research Elizabeth O. Ananat and her coauthors, just published in Science (unfortunately behind a paywall). What they found is that

local job losses can both worsen adolescent mental health and lower academic performance and, thus, can increase income inequality in college attendance, particularly among African-American students and those from the poorest families.

Their argument is that macro-level job losses are best understood as “community-level traumas” that negatively affect the learning ability and the mental health not only of young people who experience job loss within their own families, but also of the other children in states where the destruction of jobs is widespread.

So, the problem can’t be solved by forcing individual workers to have the freedom to chase after jobs and send their children to college. Nor is the predicament confined to the white working-class. In fact, the effects of job losses are similar, but even worse, among African-American youth.

That’s why Ananat argues that

white working class people and African-American working class people are in the same boat due to job destruction. Imagine the policies we could have if folks found common ground over that.

And, I would add, those policies need to go beyond the “active labor market policies”—such as “rigorous job training and active matching of worker skills to employer needs”—the authors, along with mainstream economists and politicians, put forward.*

We also need to reconsider the fact that, within existing economic institutions, employers are the only ones who get to decide when and where jobs are destroyed and created. Giving workers the ability to participate as a group in the decisions about jobs—within existing enterprises and by assisting them to form their own enterprises, would improve their own mental health and that of the members of the wider community.

Such a change would also transform young people’s decisions about whether or not to go to college. It’s not just about jobs in the new economy. It would allow them to demand, as women in Lawrence, Massachusetts did over a century ago, both “bread and roses.”

 

*Policies to help “disadvantaged workers, especially African Americans, Hispanics and rural residents,” also need to go beyond encouraging the Fed to keep interest-rates low. That still leaves job decisions in the hands of employers.

Home alone

Posted: 19 May 2016 in Uncategorized
Tags: , , , ,

o-WEALTHY-facebook

Rich Americans aren’t only getting richer, distancing themselves financially from everyone else. They’re becoming more socially isolated from their fellow Americans, too.

A recent analysis of survey data from more than 100,000 Americans by Emily C. Bianchi and Kathleen D. Vohs finds that the rich spend significantly less time socializing with others and more time alone than low-income Americans. On average, they spend 6.4 fewer evenings per year in social situations. Wealthy people also spend less time with family members and neighbors compared to households with lower incomes—but they spend more time with friends.

It’s possible, of course, that people who put little value on social relationships may spend more time on their careers and accordingly have higher earnings than others. It’s also possible that people choose to interact less with individuals who have a lot of money.

Here’s the authors’ response to those possible limitations of their study (citations omitted):

First, although we reasoned that access to money influences how and with whom people spend their time, we cannot rule out the possibility that how people choose to spend time affects their income. People who put little value on social relationships may invest more in their careers and accordingly earn higher wages than others. Yet, the results showed that income is linked to different types of social engagement, even after accounting for time spent working. This suggests that the findings are not an artifact of discretionary time but instead relate to how people choose to spend that time. In addition, while we reasoned that access to more money affects how and with whom people elect to spend their time, we cannot rule out the possibility that circumstantial differences across incomes may drive the effects. For instance, greater household resources may be negatively associated with proximity to neighbors, thereby creating a structural impediment to social contact. Even so, this possibility could be a manifestation of the desire for social distance rather than a driver of these effects.

Second, our reasoning suggests that people with more financial resources voluntarily configure social worlds that are more autonomous and, when electing to be social, more geared toward friendship than family or community. Yet given that income is negatively associated with compassion and decoding social cues, it is possible that people with more money are less desirable interaction partners. As such, people may be less drawn to more prosperous relationship partners. If so, then the rich may inhabit different social worlds than the poor but for different reasons than our theorizing would suggest. Contrary to this reasoning, we found that income was positively associated with time invested in friendships, the most voluntary of the relationship types we examined. This seems to suggest that people with greater resources are deliberate architects of their social worlds.

In other words, the authors conclude, rich people have chosen to isolate themselves from others, especially family members and neighbors.

The combination of economic and social distance means that, unlike other Americans, rich people find themselves home alone.

Inequality-States

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Yesterday in class, I was forced to discuss a violation of the university’s Honor Code (which students have to study and sign and which, like most such codes, explains to students they can’t steal one another’s work and they can’t plagiarize other sources, whether in print or from the internet). The students’ view was that the Code was there to protect the credibility of their education in the eyes of others and to serve as an incentive to do their own work.

My own view, which I discussed with them, is a bit different: the Code is a condition of their membership and participation in an intellectual community. Basically, it represents a kind of trust in their fellow students (they’ll discuss and debate issues with one another, inside and outside the classroom, and not violate their mutual trust by stealing from one another) and a trust in the ideas that have been developed and disseminated by others (which should serve as the basis of their own thinking, and be appropriately cited).

I was reminded of that discussion when someone [ht: sm] sent me the link to a new piece of research by Jean M. Twenge, W. Keith Campbell, and Nathan Carter, who found that Americans’ trust in others and confidence in social institutions are at their lowest point in over three decades.

“Compared to Americans in the 1970s-2000s, Americans in the last few years are less likely to say they can trust others, and are less likely to believe that institutions such as government, the press, religious organizations, schools, and large corporations are ‘doing a good job,'” explains psychological scientist and lead researcher Jean M. Twenge of San Diego State University.

Twenge and colleagues W. Keith Campbell and Nathan Carter, both of the University of Georgia, found that as income inequality and poverty rose, public trust declined, indicating that socioeconomic factors may play an important role in driving this downward trend in public trust:

“With the rich getting richer and the poor getting poorer, people trust each other less,” says Twenge. “There’s a growing perception that other people are cheating or taking advantage to get ahead, as evidenced, for example, by the ideas around ‘the 1%’ in the Occupy protests.”

Twenge and colleagues were interested in understanding how cultural change over the last 40 years has affected social capital — the cooperative relationships that are critical for maintaining a democratic society – in which public trust plays an important role.

To examine trust over time, the researchers looked at data from two large, nationally representative surveys of people in the US: the General Social Survey of adults (1972-2012) and the Monitoring the Future survey of 12th graders (1976-2012). Together, the surveys included data from nearly 140,000 participants. Both surveys included questions designed to measure trust in other people and questions intended to gauge confidence in large institutions.

The data showed, for example, that while 46% of adult Americans agreed that “most people can be trusted” in 1972-1974, only 33% agreed in 2010-2012. And this finding was mirrored by data from 12th graders – while 32% agreed that “most people can be trusted” in 1976-1978, only 18% did so in 2010-2012.

Confidence in institutions rose and fell in waves, with respondents in both surveys reporting high confidence in institutions in the late 1980s and again in the early 2000s, with confidence then declining to reach its lowest point in the early 2010s.

This decline in confidence applied across various institutions, including the press/news media, medicine, corporations, universities, and Congress. The notable exception was confidence in the military, which increased in both surveys.

After accounting for the year the survey data were collected, the researchers found that institutional confidence seemed to track rising rates of income inequality and poverty.

Clearly, adhering to an Honor Code in the university is pushing back against a trend of growing inequality and declining trust in the larger society.

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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!

What’s the alternative to an economy based on self-interest?

As it turns out, two different proposals to move beyond self-interest, both related to the Occupy Wall Street movement, crossed my desk at the same time.

The first, by Stephen Healy and Boone Shear [ht: gh], is based on the idea that economic relations based on self-interest are only one possibility among many. The problem is,

Ethical values and actions beyond self-interest are understood in our present society to be extra-economic; they are supposed to take place outside the formal economy. It is precisely for this reason that they are frequently dismissed as mere sentimentality. How then do we move ethical values and social commitment to the very core of our economic values? Is this even possible?

Their view is that Occupy Wall Street has given the gift of recognizing economic enterprises that encourage community rather than individualism, which already exist in the midst of an otherwise capitalist economy. They give the examples of the Alliance to Develop Power, Worcester Energy Barn Raisers, and the Valley Alliance of Worker Cooperatives—all in Massachusetts.

Coincidentally, the Pontifical Council for Justice and Peace has elaborated a similar critique of self-interest in the context of the current crises, although its proposals for an alternative economy tend in a more macroeconomic direction.*

The inequalities and distortions of capitalist development are often an expression not only of economic liberalism but also of utilitarian thinking: that is, theoretical and practical approaches according to which what is useful for the individual leads to the good of the community. This saying has a core of truth, but it cannot be ignored that individual utility – even where it is legitimate – does not always favour the common good. In many cases a spirit of solidarity is called for that transcends personal utility for the good of the community.

The Council focuses on reforming the international financial and monetary, based on the idea of creating “some form of global monetary management. . .as a first stage in a longer effort by the global community to steer its institutions towards achieving the common good.”

The criticisms of self-interest by Healy and Shear and by the Pontifical Council for Justice and Peace, while looking to the creation of alternative economic institutions at different levels—in the former case, at the level of individual enterprises; in the latter, at the international level—certainly share a commitment to community and the common good.

They also share a commitment, as expressed by the Council, to “the revolutionary power of ‘forward-looking imagination’ that can perceive the possibilities inscribed in the present and guide people towards a new future.”

* According to E. J. Dionne Jr. [ht: mkb], the Vatican denied that its report was a direct response to the Occupy Wall Street movement. But, as Dionne explains, it’s clear the report got more attention because of the issues raised by the worldwide movement.