Posts Tagged ‘history’

wealth-time

Toward the end of the Civil War, former black slaves were ordered to receive “40 acres and a mule.”* Then, a few months later, Andrew Johnson overturned General Sherman’s Order and most of the United States’ 3.9 million former slaves never received any of the promised wealth.

Now, a century and a half later, researchers at the Corporation for Enterprise Development and the Institute for Policy Studies (pdf) have calculated that it would take African-Americans another 228 years (just seventeen years shorter than the actual span of slavery in the United States) to accumulate the same amount of wealth whites had in 2013 if current policies remain in place. (For the average Latino family, it would take 84 years.)

Think about that!*

wealth divide

Over the past three decades, the average wealth of white families has grown by 84 percent, three times as fast as the rate for African-American families and 1.2 times the growth rate for Latino families. In dollar terms, if the past 30 years were to repeat, whites would see their wealth increase by about $18,000 a year on average, while Latino household wealth would increase an average $2,250 a year and wealth for African-Americans would grow by just $750 annually.

forbes

But the problem of wealth is not just a matter of ethnicity or race. Between 1983 and 2013, the top 20 percent of the wealthiest households took 99.4 percent of all wealth gains, with the top 1 percent taking the lion’s share of those gains (40 percent). Meanwhile, the bottom 80 percent of households—white, black, hispanic, and so on—were left with just 0.6 percent of total wealth gain.

And, of course, for the ultra-wealthy group that make up the Forbes 400, things have been even better. Since 1983, this elite group has seen their wealth increase by an average of 736 percent, from $700 million to $5.8 billion. As the authors explain,

the billionaires of the Forbes 400—which includes only two African-Americans and five Latinos—now own more wealth than the entire Black population and one-third of the Latino population, combined. That’s 400 wealthy individuals versus more than 60 million people.

tax benefits

The fact is, wealth-building policies in the United States have long favored the wealthy over typical wage earners, and many of the largest and most powerful of these programs flow through the U.S. tax code. An overwhelming amount of the spending done through the tax code goes to white households at every income level but especially for those (who themselves are overwhelmingly white) at the very top.

Perhaps it’s time then for a new redistributive Order, the contemporary equivalent of 40 acres and a mule for all working-class households in the United States.

 

*And it’s a conservative estimate, since the analysis is based on average, not median, levels of wealth.

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Back in May, in an interview with Grèce Hebdo, French philosopher Alain Badiou was asked about the source of his optimism concerning contemporary social movements, from Nuit Debout to Bernie Sanders, even when they face strategic setbacks:

So you’re continuing to look to communism as a horizon?

Yes, not only do I keep this horizon open but I think it is very important to do so. For if there is no strategic idea then movements undergoing setbacks or recuperation risk having devastating subjective effects. There you risk demobilisation, the thought that ‘well I was young then, I threw myself into this adventure and it didn’t work’. Our thinking has to be that while there are strategic setbacks we will maintain our course despite the sinuosities of History. History does not march in a straight line but in a very tortuous way, and we should not imagine any royal road leading to emancipation. There are reverses, negatives, and that is why we need to have a compass come what may. If we have no compass we end up old and disheartened.

I was thinking about the idea of communism as a horizon as I read (only because a reader [ht: ja] sent me the link) the latest from New York Times columnist David Brooks. He begins by noting that, in the eighteenth century, American Indians rejected colonial society (which “was richer and more advanced”) but many whites were moving the other way, choosing to live within Indian society (which was “more communal”).

Brooks then moves up to the present and notes that there seems to be a new desire for community, at least among Millenials.

Maybe we’re on the cusp of some great cracking. Instead of just paying lip service to community while living for autonomy, I get the sense a lot of people are actually about to make the break and immerse themselves in demanding local community movements. It wouldn’t surprise me if the big change in the coming decades were this: an end to the apotheosis of freedom; more people making the modern equivalent of the Native American leap.

While readers wrap their heads around the idea that Brooks might be a modern-day communist (or at least a communist sympathizer), consider what that means. In many Native American societies, the surplus was created by the direct producers and then managed not privately (as in capitalism), but by the commune (either directly or by a representative of the commune, such as an elder or religious figure). So, in historical communism (which some, especially in the Marxian tradition, refer to as “primitive communism”), there was no exploitation, no “ripping-off” of the producers by “autonomous” individuals who did not participate in creating the surplus.*

And, as it turns out, communism is more than just a horizon: it’s actually being practiced in a wide variety of economic and social settings. One such example are the refugee “squats” [ht: ja] in Greece, an alternative to the government-run camps. Best I can tell, all the work is being conducted collectively, as part of the commune:

There are cleaning teams, cooking teams, security teams, language lessons, art classes, children’s activities, beach outings, translators, Arabic lessons for volunteers and more.

Squats are run without government or major nongovernmental-organization influence and rely on donations and manpower from independent volunteers. Responsibility is divided among the residents. At Dakdouk’s original squat, a “local technical group” is the go-to for all maintenance and IT issues. There are plans to establish a bakery to produce bread en masse for residents and rooftop gardens to provide “for the soul and for the body,” says one group member.

I doubt anyone thought that was how communism would come to be established—among refugees, the most marginalized people in the world today. However, that may be exactly the communist horizon both Badiou and Brooks have in mind: noncapitalist communal activities that provide for both the soul and the body.

 

*Interested readers should consult the pioneering work of Jack Amariglio (e.g., “Subjectivity, Class, and Marx’s “Forms of the Commune’,” Rethinking Marxism, 22:3, 329-344) and Dean Saitta (e.g., “Marxism, Prehistory, and Primitive Communism,” Rethinking Marxism 1:1, 145-168).

 

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Charles Wilbert White, “The Contribution of the Negro to Democracy in America” (1943)

Almost two centuries ago, European (especially French) elites were fearful of the democratic experiment taking place in North America. So, they dispatched Alexis de Toqueville (and Gustave de Beaumont) for a report, under the pretext of examining the U.S. penal system. The result was de Toqueville’s two-volume paean to the principle of equality and the “great democratic revolution [that] is going on among us.”

This year, the United States hosted another visitor, Maina Kiai, the United Nation’s Special Rapporteur on the rights to freedom of peaceful assembly and of association. As Max Bearak [ht: ja] explains, Kiai’s trip “was spurred by growing concerns that despite a Constitution that guarantees broad inalienable rights, the world’s supposed beacon of freedom is often not living up to international standards of equality under law.”

At the end of his trip, Kiai also published his findings, which readers will see is a much more critical analysis of the current state of democracy in America.

Like de Toqueville, Kiai begins with some history:

The United States is an impressive, complex and imposing nation in which to undertake a mission such as this. It is an economic powerhouse, a military superpower, a global engine of technological development, and one of the oldest democracies in the world.

It is also an extremely diverse nation, a nation of indigenous peoples, slaves and immigrants. It is a nation of diverse opinions and views, sometimes so strongly held that it once slid into Civil War. And it is a nation of struggle and resilience, home of one of the 20th Century’s most inspiring moments encapsulated by the Civil Rights Movement.

The experiences with various forms of diversity and complexity have not always been smooth. The country was founded on land stolen from its indigenous Native Americans; its early economic strength was built on race-based slavery against people of African descent; and successive waves of immigrants have faced discrimination, harassment or worse.

Kiai then observes, “America seems to be at a moment where it is struggling to live up to its ideals on a number of important issues, the most critical being racial, social and economic inequality, which are often intertwined.” He is particularly concerned with an issue that de Toqueville himself thought was vital to the practice of American democracy: the freedom of association. “But it is impossible to discuss these rights,” Kiani notes, “without issues of racism pervading the discussions. Racism and the exclusion, persecution and marginalization that come with it, affect the enabling environment for the exercise of association and assembly rights.”

This issue is particularly grave in the African-American community, and understanding its context means looking back at 400 years of slavery. It also means looking at the emergence of the Jim Crow laws that destroyed the achievements of the Reconstruction Era, which emerged at the end of slavery in 1865, and enforced segregation and marginalized the African-American community to a life of misery, poverty and persecution.

It means looking at what happened after Jim Crow laws were dismantled, when old philosophies of exclusion and discrimination were reborn, cloaked in new and euphemistic terms. These may have not been race-based on their face, but they have, intentionally or not, disproportionately targeted African-Americans and other minorities.

The so-called “War on Drugs” is a perfect example. From it, one out of every 15 black men is in currently jail. One out of every 13 African-Americans, meanwhile, has lost their right to vote due to a felony conviction. An aggressive emphasis on street-level “law and order” (or “broken windows” approach) policing combined with wide police discretion means that African-Americans are subjected to systematic police harassment – and sometimes much worse – often for doing nothing more than walking down the street or gathering in a group. Convictions and incarcerations dramatically increased once the “War on Drugs” was set in motion, without a corresponding increase in drug use.

Similarly the crime laws passed under the Bill Clinton administration (1993-2001), including the federal “three strikes” law, implemented aggressively against people of color have contributed to the huge rises in incarceration and exclusion of the black community further fueling discontent and anger.

The effects can often snowball: A minor criminal offense – or even an arrest without substantiated charges – can show up on a background check, making it difficult to find a job, secure a student loan or find a place to live. This marginalization in turn makes it more likely that a person will turn to crime, for lack of any other option, and the vicious cycle continues.

These discriminatory laws and practices need to be seen in the larger context. Wall Street bankers looted billions of dollars through crooked schemes, devastating the finances of millions of Americans and saddling taxpayers with a massive bailout bill. Yet during my mission I did not hear any suggestions of a “War on Wall Street theft.” Instead, criminal justice resources go towards enforcing a different type of law and order, targeting primarily African-Americans and other minorities.

There is justifiable and palpable anger in the black community over these injustices. It needs to be expressed. This is the context that gave birth to the non-violent Black Lives Matter protest movement and the context in which it must be understood.

In discussions with activists, it is clear that “Black Lives Matter” does not mean that other lives—green, purple, blue, white or other color—do not matter. The Black Lives Matter movement is simply a reaffirmation that black lives do in fact matter, in the face of a structure that systematically devalues and destroys them, stretching back hundreds of years. It is not about granting African-Americans special status or privilege. It is about a historically and continuously targeted community seeking to elevate itself to the same level that everyone else enjoys.

But, he explains, “racial inequality is not the only inequality inhibiting the enabling environment for association and assembly rights.”

 Although the United States engineered an admirable recovery following the financial crisis of 2007-08, this rising tide did not lift all boats. Productivity and economic output has grown, but the benefits of these have gone primarily to the wealthiest, as the wages of average people have stagnated. This has exacerbated the problem of inequality across all demographic groups, created more resentment, and more tension; providing more reasons for people to become politically engaged – including by exercising their assembly and association rights.

This inequality has been accelerated by declining union membership in a context of laws and practices which make it difficult for workers to organize, increasing corporate power, and a free market fundamentalist culture that actively discourages unionization. A dysfunctional, polarized Congress that has seemingly lost its tradition of compromise has made things worse.

In short, people have good reason to be angry and frustrated at the moment. And it is at times like these when robust promotion of assembly and association rights are needed most. These rights give people a peaceful avenue to speak out, engage in dialogue with their fellow citizens and authorities, air their grievances and hopefully settle them. They are also a key vehicle for public participation for marginalized groups whose ability to participate in democracy may be otherwise limited by dint of being felons or migrants.

Consider, then, the difference in perspective 185 years have created: The French aristocrat thought American democracy, whose only threat was a tyranny of the majority, promoted general equality among its citizens. Today, however, the U.N. official finds that growing inequality—racial, social, and economic—in America is undermining the practice of democracy, precisely when it is most required for the majority of its “angry and frustrated” citizens.

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Special mention

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I cited Andrew O’Heir’s critical review of Boom Bust Boom, Terry Jones and Theo Kocken’s Monty Pythonesque documentary about the crash of 2007-08 back in March but I hadn’t seen the film itself until last night.

In many ways, I wish I hadn’t.

Oh, sure, there are a couple of good moments. Introducing the work of Hyman Minsky to a larger audience. A cameo by John Cusack, who suggests that economics students should pelt their professors with vegetables and rotten fruit if they continue to parrot the party line. “Maybe urinate on them. That’s what I would do.” And some well-deserved attention to the students in the Post-Crash Economics Society at the University of Manchester.

But otherwise, the film is just not very good. For starters, consider the fact that, after the worst crisis of capitalism since the first Great Depression, only once is capitalism itself even mentioned!

Then, as O’Heir wrote, there’s not a single mention of John Maynard Keynes (who published his General Theory in 1936, in the midst of the earlier depression), let alone Karl Marx (who, along with Friedrich Engels, was writing about capitalism’s crisis tendencies in the middle of the nineteenth century). Since Jones and Kocken decided to make forgetting a central part of their story—especially failing to remember and draw lessons from previous financial crises—they might also have mentioned the deliberate forgetting by mainstream economists and economic policymakers of other economic ideas, now as in the past.

And, in this day and age, it smacks viewers in the face that, as Shane Ferro wrote, “Women and minorities are almost entirely left out of this film—not unlike the way they’ve been left out of financial and economics professions.” The only two expert women the movie manages to feature are Lucy Prebble, a playwright who once wrote a play about the collapse of Enron, and Laurie Santos, a Yale psychology professor who studies how monkeys make decisions. Neither, as it turns out, has a background in economics, or much knowledge of capitalism, its history, or the 2007-08 crash.*

But the worst part of this high-budget, cleverly animated documentary is the actual story Terry and Kocken decided to tell. What it boils down to is this: financial crises have always been with us (at least since Tulip Mania in the 1630s), people tend to make irrational decisions (e.g, by forgetting about previous crises and taking on too much risk), and making irrational decisions is part of our human nature, as determined by evolutionary behavioral psychology (hence the monkeys).

Actually, the film is more confused than that. At one point, it features Minsky (in an animated dialogue with his son)—and, if it had continued in that vein, it would have been able to reveal something about the financial fragility inherent in the regular boom-and-bust cycles of capitalism (since the key actors in Minsky’s approach are capitalist enterprises and banks). But then Minksy is dropped and the filmmakers decide to go in a different direction, with a fanciful discussion of human nature (continuing an approach that, from the beginning, features an undifferentiated “we” who is responsible for speculation, risk-taking, euphoria, forgetting, and so on) and then an attempt to ground human nature in primate behavior (this after criticizing the scientistic pretensions of neoclassical economics).

There’s no attempt to identify the dynamics of a particular economic system, which we usually refer to as capitalism. No attempt to identify particular and differentiated actors and institutions within capitalism, such as bankers, workers, consumers, politicians, enterprises, financial markets, and so on. No references to other countries today, in addition to the United States and the United Kingdom. No mention of the grotesques levels of inequality in the lead-up to the crash, and no discussion of unemployment, poverty, homelessness, and so on after the crash.

Instead, what we are presented with is a succession of financial crises, which in the end are grounded in our singular human nature.

That, to say the least, is not a particularly insightful analysis of the causes and consequences of the crash. And the best the filmmakers and the various talking heads can come up with by way of policies is the need, since human nature can’t be changed, to regulate the financial system (perhaps, at its most adventurous, by restoring Glass-Steagal barriers between commercial and investment banking) to keep “us” from making the same mistakes.

To which we can all respond: “Been there, done that. Now let’s try something that might actually work, beginning with the inherent instabilities of capitalism itself.”

 

*Here’s the list of the contributors: Dan Ariely, Dirk Bezemer, Zvi Bodie, Willem Buiter, John Cassidy, John Cusack, John K. Galbraith, James K. Galbraith, Andy Haldane, Daniel Kahneman, Steve Keen, Stephen Kinsella, Larry Kotlikoff, Paul Krugman, George Magnus, Paul Mason, Perry Mehrling, Hyman P. Minsky, Alan Minsky, Lucy Prebble, Laurie Santos, Robert J. Shiller, Nathan Tankus, Sweder Van Wijnbergen, and Randall Wray.

inequality

This is my own chart—showing the dramatic changes in the average incomes (excluding capital gains) of the top 1 percent compared to those of the bottom 90 percent, expressed as a ratio, from 1920 to 2015—from the World Wealth and Income Database.

Thus, for example, the ratio first peaked in 1928 (when, on average, top 1-percent incomes were 32.7 times those of the average of the bottom 90 percent), eventually decreased to a low in 1972 (of 10.2), then peaked once again in 2012 (with a value of 32.5). As of 2015, the ratio stood at 31.7.

Other charts in this series can be found here, herehere, and here.

Emmanuel Saez, Thomas Piketty, and the rest of the team need to be credited for making their data available. Readers should feel free to use this chart and reproduce it as they wish. . .

Karl Rove

Wall Street Journal columnist Daniel Henninger tries to be witty by referring to the “Trumpen proletariat” and citing Marx’s colorful characterization of the lumpenproletariat in 1850s Paris:

Alongside decayed roués with dubious means of subsistence and of dubious origin, alongside ruined and adventurous offshoots of the bourgeoisie, were vagabonds, discharged soldiers, discharged jailbirds, escaped galley slaves, swindlers, mountebanks, lazzaroni, pickpockets, tricksters, gamblers, maquereaux, brothel keepers, porters, literati, organ grinders, ragpickers, knife grinders, tinkers, beggars—in short, the whole indefinite, disintegrated mass, thrown hither and thither, which the French call la bohème.

He then proceeds to invoke the usual Republican shibboleth of the “culture wars” instead of reading on in The Eighteenth Brumaire of Louis Bonaparte:

This Bonaparte, who constitutes himself chief of the lumpenproletariat, who here alone rediscovers in mass form the interests which he personally pursues, who recognizes in this scum, offal, refuse of all classes the only class upon which he can base himself unconditionally, is the real Bonaparte, the Bonaparte sans phrase. An old, crafty roué, he conceives the historical life of the nations and their performances of state as comedy in the most vulgar sense, as a masquerade in which the grand costumes, words, and postures merely serve to mask the pettiest knavery.

The fact is, Henninger’s party has chosen Trump as George Bush’s successor. And the tragedy that was Bush has now been publicly confirmed—first, in the biography by Jean Edward Smith (“Rarely in the history of the United States has the nation been so ill-served as during the presidency of George W. Bush.”), and then in the Chilcot report (which is even more an indictment of Bush’s war crimes than it is of Tony Blair’s misleading his country into war).

But perhaps the farce today is not just Trump but the choice between him and Hillary Clinton—the former threatening anarchy as the representative of the the party of order, the latter order having saved the party from presumed anarchy (which is how they saw the possibility of democratic socialism). Both will pretend to campaign on behalf of the disenfranchised but that’s only an attempt “to make the lower classes happy within the framework of bourgeois society,” not to actually change the circumstances that leave the lower classes further and further behind the tiny group at the top.

That group of wealthy individuals and large corporations don’t know what to do with Trump, because it seems they can’t control him—but they certainly can live with Clinton, who takes their money and is willing to do their bidding even as her machine calculates the demographics and counts the votes coming from the other classes.

The 2016 presidential campaign will be a grand spectacle but now, even before the conventions, we know who will win. And the rest, including the nation’s growing lumpenproletariat, will be the losers.