Posts Tagged ‘knowledge’

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I won’t attempt to take on Greg Mankiw’s latest defense of the 1 percent. Dean Baker and Paul Krugman have raised most of the relevant issues.

But, in his defense of his defense, Mankiw does make a curious admission: capitalism is fatally flawed.

The admission actually occurs in his textbook [pdf], where Mankiw sends us to read his explanation of who bears responsibility for the most recent financial crisis (hint: it’s half the fault of government, and half Wall Street). Then, he admits that financial crises “do occur from time to time.”

Finally, keep in mind that this financial crisis was not the first one in history. Such events, though fortunately rare, do occur from time to time. Rather than looking for a culprit to blame for this singular event, perhaps we should view speculative excess and its ramifications as an inherent feature of market economies. Policymakers can respond to financial crises as they happen, and they can take steps to reduce the likelihood and severity of such crises, but preventing them entirely may be too much to ask given our current knowledge.

Yes, indeed, “speculative excess and its ramifications” are in fact “an inherent feature” of capitalist economies.* But then, Mankiw adds, “preventing them entirely may be too much to ask given our current knowledge.”

What Mankiw sees as a problem of knowledge is what the rest of us see as a problem of economic institutions. It’s precisely because the economic system is arranged so that a tiny minority at the top is able to continue to capture the surplus that financial crises occur on a regular basis.

What the rest of us know is that defending the 1 percent is precisely what will guarantee more financial crises in the future.

 

*And, for Mankiw, they’re something we simply have to put up with because “for human welfare, growth swamps fluctuations.”

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The other day over lunch, we discussed the issue of growing inequality and economic instability and whether or not the elite is aware of what is going on right now.* Do the members of the political and economic elite know about how dire conditions are for a large part of the population, and then choose not to do anything about it? Or, alternatively, are they so sheltered in their gated communities they are simply ignorant of the forces that are tearing this society apart?

This is the problem, then, of the “unknown knowns,” which Slavoj Žižek defines as “the disavowed beliefs, suppositions, and obscene practices we pretend not to know about, although they form the background of our public values.”

Jonathan Gray [ht: ja] thinks the “acute fragility of our economic system” is one such unknown known, “one of many facts we all know but have decided not to think about.” And he considers this “resolute avoidance of unsettling facts” to be “a deep-seated human trait.”

I’m not convinced. While I don’t pretend to know what the members of the elite think (I’m not a member and I don’t spend time with them), their spokespeople may reveal something about what they’re thinking (or at least what they want to hear). David Brooks is one such example. When he explains away inequality by the “superstar effect” and blames poverty on the bad decisions and character problems of the poor, he is both acknowledging that inequality and poverty are problems to be reckoned with and attempting to defuse them so as to avoid a “primitive zero-sum mentality” that holds “growing affluence for the rich must somehow be causing the immobility of the poor.” Basically, what that means is that policy should focus on providing better opportunities for those at the bottom and, if they don’t take advantage of them—if they remain poor—it’s their own damn fault. There’s not much more that society—including and perhaps especially those at the top—can do for them. I prefer to call that deliberately unknowning a known.**

As for the general (non-elite) public, they seem to have a pretty good idea of what is going on, at least as revealed in recent surveys (e.g., by Gallup and Pew). They know there’s a growing gap between the rich and poor and that’s a bad thing for the society in which we live.

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And they know the nation’s economy is in bad shape, long after the official recovery was declared.

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I don’t see much evidence of unknown knowns there. By and large, people seem to be pretty aware of what is going on, in terms of both inequality and the acute fragility of our economic system.

More important, I don’t see any evidence of a deep-seated, shared human trait to avoid unsettling facts. What I see, instead, is a determined campaign to attempt to unknow what we full well know in order to forestall any kind of fundamental questioning of our current economic institutions.

Perhaps, then, it’s time to stop pretending and acknowledge what we do, in fact, know.

 

*I’ve been having lunch with a colleague and friend once a week, while school is in session, for more than 20 years.

**On the other hand, one way of interpreting the recent stridency about the problems of inequality and economic fragility on the part of some mainstream economists, such as Paul Krugman and Joseph Stiglitz, is that the members of the ruling class don’t appear to be willing to know what is known.

Know this!

Posted: 27 September 2013 in Uncategorized
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WelcomeCreative.800
Richard Florida continues to peddle his story of knowledge workers, the creative class, and urban clustering (about which I have raised questions before, such as here and here).

But economic inequalities have become so glaring and obscene, even Florida has finally come to admit their existence:

The main threats to America’s growth model don’t come from other countries, but from domestic contradictions. The more talented people cluster, the greater the economic returns they produce. But as these clusters of highly educated people form and grow, they tend to push out the middle class, resulting in a ruthless sorting of people and places. As great as its potential may be, this new economic landscape is also notable for its widening fissures.

The cultural, political, and economic gulfs that separate advantaged and disadvantaged people and places go well beyond the wage gap. Knowledge workers benefit from living in neighborhoods with better schools, better amenities, and lower crime rates, while less advantaged groups are sometimes stuck in place, with limited prospects for climbing even one rung up the economic ladder, and insufficient resources to move out of stagnant areas.

And how creative can Florida get, now that he knows about all those poor people clustered into into depressed areas of cities? The best he can do is suggest that poor people get up and move to his “knowledge centers,” where their chances for moving up the ladder will be improved.

Here’s a not particularly creative alternative idea: end poverty!

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Harvard has received quite a battering in recent months.

After the student cheating scandal (and the accompanying investigation scandal), we’ve witnessed the Reinhart-Rogoff error-ridden scandal followed by the Ferguson gay-bashing scandal.

Now, we have the scandal of Jason Richwine’s doctoral dissertation.

All of these scandals involve the production and dissemination of knowledge, and what fascinates me (and a friend with whom I’ve been discussing these issues) is the wide array of arguments that are offered in order to preserve the idea that what happens at Harvard is in fact (to use Louis Althusser’s term) a “knowledge-effect.”*

Consider Zack Beauchamp’s investigation of l’affaire Richwine.

First, of course, Richwine’s dissertation on the genetic intellectual inferiority of immigrants from Latin America must have been legitimate knowledge-work because it was done through the Kennedy School at Harvard and we know that’s a “very serious” place, that has produced “outstanding scholars,” with “kind,” knowledgeable professors (like George Borjas, Richard Zeckhauser, and Christopher “Sandy” Jencks) who, of course, are engaged in their own first-rate knowledge-work.

Second, Richwine successfully went through the “normal” steps for achieving a doctoral degree: courses, comps, prospectus defense, dissertation research, and a dissertation defense. And we all know that each of those steps guarantees that knowledge-work is being done and that, in the end, new knowledge has been created.

Third, Richwine used high-quality (for economists, that is) statistical methods, which are considered impeccable, and therefore the work is unassailable in terms of its economic model. It certainly looks like knowledge, because it is produced by a knowledge-producing machine we call statistics and the econometrician says the work was carefully done and that, in itself, suggests the integrity and validity of the work. And, of course, the statistical techniques and economic model are somehow considered independent of the “other stuff”—the race and IQ connections—such that they stand on their own as criteria of knowledge-production.

So, there we have it, all the pieces that make Richwine’s dissertation resemble of piece of knowledge, to display the appropriate knowledge-effect.

And yet. Richwine is now the Heritage Foundation’s former Senior Policy Analyst in Empirical Studies, because it was politically inconvenient to leave him in his post. But Richwine still has his Ph.D. from Harvard.

While the rest of us are left wondering what it is that constitutes the knowledge-effect that serves as the basis of much contemporary work in the social sciences—which, in the name of “good science,” metes out its rewards and punishments to thousands of scholars whose work is measured according to the scholarly standards set by the Harvards of the world; and which determines the fate of millions of Americans through the public policies suggested by the “best and brightest” whose work is taken as knowledge by think tanks and legislators in Washington.

 

*The knowledge-effect, for those not familiar with the term, was Althusser’s way (e.g., in Reading Capital) of making sense of what Marx called the “mode of appropriation of the world peculiar to knowledge.” Althusser begins with the important distinction between the real-concrete (the real object) and the thought-concrete (the object of knowledge), which is the basis of his critique of all forms of empiricism. He then argues that the criteria for producing knowledge—the knowledge-effect—are internal to the practices of each particular scientific discourse. In this manner, Althusser shifted the terms of discussion, clearly indebted to Foucault’s focus on “epistemes,” from the presumption of an original ground of knowledge (related in one way or another to some real object) to the contemporary mechanisms within specific knowledge practices whereby knowledges are produced and recognized as so many knowledge-effects.

Not longer after I finished my post on the knowledge economy, I decided to open my recently purchased copy of Jacques Rancière’s book, The Philosophy and His Poor.

And there it was, the idea that haunted my scribblings, which Rancière had identified in the history of philosophy:

The order of discourse delimited itself by tracing a circle that excluded from the right to think those who earned their living by the labor of their hands. (p. 203)

That’s exactly the exclusion at work in the idea of the knowledge economy: that a small group is allowed to think (often referred to as the creative class) and to receive high remuneration and social status as a result, and the rest are presumed to work but not to be able to think, and because of their lack of education they receive low wages and a position at the bottom.

So, instead of attending to that exclusion, the presumption is that those at the bottom should aspire to gain more vocational skills and continue to work, with their heads as well as their hands, perhaps now for higher wages.

But, still, workers in the knowledge economy will be excluded from the right to think.

The United States does not have now, nor will it have in the foreseeable future, a knowledge economy.

That’s Alexander Cockburn’s conclusion[ht: ja], based on an analysis of data from the Bureau of Labor Statistics (pdf) conducted by Jack Metzgar. (Here is another useful BLS projection [pdf], whence the chart above.)

Most people are surprised when I tell them that only about 30% of Americans over the age of 25 have bachelor’s degrees.  This is especially true of professional middle-class folks who went to high schools where almost everybody went to college immediately after graduation and whose friends now are almost all college graduates.  But it’s also true of people from working-class and poor backgrounds, who seem to think they are “abnormal” or “below average” because they haven’t graduated from college.  They’re not.  They are, in fact, the ones who are “typical.”

It’s even more surprising, however, when the Bureau of Labor Statistics (BLS) reports that in 2010 only 20% of jobs required a bachelor’s degree, whereas 26% of jobs did not even require a high school diploma, and another 43% required only a high school diploma or equivalent.  And according to the BLS, this isn’t going to change much by 2020, since the overwhelming majority of jobs by then will still require only a high school diploma or less.  What’s more, nearly 3/4ths of “job openings due to growth and replacement needs” over the next 10 years will pay a median wage of less than $35,000 a year, with nearly 30% paying a median of about $20,000 a year (in 2010 dollars).

Put these two sets of numbers together, and it is hard to avoid the conclusion that Americans are over educated for the jobs that we have and are going to have.  It’s hard to imagine why anybody would call us “a knowledge economy.”   It’s also hard to see how “in the 21st century, the best anti-poverty program around is a first-class education,” as President Obama famously said in his 2010 State of the Union Address.

At the top of the list are retail salespersons, who in May 2010 made on average $20,670 a year.

Why, then, all this focus on the growth of the knowledge economy? Metzgar suggests one reason: it’s politically convenient for mainstream politicians, including Obama, to respond to the problems of unemployment, poverty, and inequality by suggesting more educational opportunities rather than increases in wages let alone structural changes in how corporations are organized.

A second reason is the selling of the city and the current fad to promote the “creative class” as the solution to urban decay. Adam Davidson’s gloss on Richard Florida’s idea of small cities that feed the knowledge economy includes a case study of Omaha, Nebraska:

Together, the two fads—for national and urban development based on knowledge—presume and promote a conception of the economy according to which economic value and social health are created by the activities of a small highly educated elite and that the broad mass of people with high-school degrees (or less) deserve their low incomes and economic insecurity. The solution, therefore, is to reorient the world according to the needs of the small creative class and to either ignore the needs of everyone else or to encourage them to acquire the education necessary to join the creative class.

As Metzgar explains,

If we were serious about eliminating poverty or restoring the credibility of the American Dream or simply respecting lifetimes of hard work, we would be debating how to raise wages directly – how to make it easier for workers to organize themselves into unions, how to get the federal minimum wage higher and on a steady inflation-adjusted escalator, whether to require some kind of workers council for all employers, and then legally require that the benefits of productivity growth be shared with workers.  We’d also be discussing how to use a more steeply progressive system of taxation to build a social wage that makes the basics of life – food, housing, mass transit, child care, education, and health care – cheaper for everyone, but most crucially for lower wage workers.

And we have gotten so enamored of thinking things through that the fact that we don’t know anything needs to bother us more. So, yes, it’s true that the average guy on the street doesn’t understand economics, and it’s also true that we don’t understand economics. We just have a more sophisticated lack of understanding than the guy on the street.

Raquel Fernández, “Culture in Economics and the Culture of Economics”

It will come as no surprise to readers that I’m no fan of the work of Hernando de Soto. However, he’s on to something when he argues that, in the lead up to the financial crisis of 2009, a great deal of economic knowledge was destroyed.

Basically, de Soto starts from the presumption that “reliable economic knowledge” is crucial to the functioning of capitalism.

To prevent the breakdown of industrial and commercial progress, hundreds of creative reformers concluded that the world needed a shared set of facts. Knowledge had to be gathered, organized, standardized, recorded, continually updated, and easily accessible—so that all players in the world’s widening markets could, in the words of France’s free-banking champion Charles Coquelin, “pick up the thousands of filaments that businesses are creating between themselves.”

The result was the invention of the first massive “public memory systems” to record and classify—in rule-bound, certified, and publicly accessible registries, titles, balance sheets, and statements of account—all the relevant knowledge available, whether intangible (stocks, commercial paper, deeds, ledgers, contracts, patents, companies, and promissory notes), or tangible (land, buildings, boats, machines, etc.). Knowing who owned and owed, and fixing that information in public records, made it possible for investors to infer value, take risks, and track results. The final product was a revolutionary form of knowledge: “economic facts.”

However, something fundamental changed in the last 20 years or so: North Americans and Europeans destroyed many of those facts.

The very systems that could have provided markets and governments with the means to understand the global financial crisis—and to prevent another one—are being eroded. Governments have allowed shadow markets to develop and reach a size beyond comprehension. Mortgages have been granted and recorded with such inattention that homeowners and banks often don’t know and can’t prove who owns their homes. In a few short decades the West undercut 150 years of legal reforms that made the global economy possible.

As a result, neither bankers nor the bank regulators, much less customers of bank loans or those who purchased simple and complex financial products, had the appropriate “economic facts” about the financial system.

If the destruction of knowledge played a role both in causing the crisis and in creating a weak recovery, we then have to ask what is in capitalism as it developed during the last 20 years allowed this to happen. In particular, what role did the complex interplay between the anarchy and policing of capitalist markets, between private and public knowledge, between creating and shifting risk play in the way knowledge was both organized and destroyed both before and during the financial crisis that begun in the fall of 2008.

What de Soto seems not to understand is that the same capitalist interests that govern the world economy create the conditions in which “arbitrary interests can trump facts and paper swirls out of control.”

Is everything information?

That’s the provocative question posed by John Horgan, in discussing the issues raised by James Gleick’s new book, The Information. I don’t pretend to have an answer to Horgan’s question. Horgan is clearly suspicious of the idea, arguing that matter is more basic than information.

So what’s the problem with saying that everything comes down to information, bits, answers to our queries? First of all, as the physicist Rolf Landauer liked to say, all information is physical—that is, all information is embodied in physical things or processes—but that doesn’t mean that all things physical are reducible to information. The concept of information makes no sense in the absence of something to be informed—that is, a conscious observer capable of choice, or free will (sorry, I can’t help it, free will is an obsession). If all the humans in the world vanished tomorrow, all the information would vanish, too. Lacking minds to surprise and change, books and televisions and computers would be as dumb as stumps and stones. This fact may seem crushingly obvious, but it seems to be overlooked by many information enthusiasts.

As for myself, I’m not inclined to choose matter or information. What I do find interesting about the topic is that it forces us to think about the materiality of information. What I mean by that is the idea that information—or knowledge or culture—is embedded and embodied in material “things,” which allow it to exist beyond any particular person (or mind or consciousness). These things include everything from documents and books to computers and digital networks. They contain information—and thus encode knowledge or culture—in a manner that creates a common body of information, although it is clearly not as always shared as a common. They allow information to be transmitted and transformed, and their materiality is often part of that transformation. And the fact that they embody information deconstructs the time-worn debate between the subjective and objective realms.

We produce information and embody it in things, and the things that embody information produce us as human beings.