Posts Tagged ‘poverty’

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There seems to be a lot of pessimism going around these days. And I’m not referring either to Brexit or the candidates for the U.S. presidency.

The issue is slow economic growth. As I wrote back in February, while there’s a reasonable argument to be made that we would all be better off with less or no growth, capitalism

has a slow-growth problem. And that’s because growth is both a premise and promise of a particularly capitalist way of organizing our economic activities.

Well, that problem continues to be confirmed.

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First, the International Monetary Fund [ht: ja] just announced that, in Italy, current slow growth (of 0.8 percent in 2015 and only 0.3 percent during the first quarter of 2016), on top of the two severe post-2008 recessions (when output fell by almost 10 percent), means that “the economy is not expected to return to its pre-crisis (2007) output peak until the mid-2020s, implying nearly two lost decades.” And, best I can tell, the “two lost decades”—with the resulting unemployment, stagnant wages, high levels of poverty, and growing income inequality—actually represents an optimistic projection. I’m guessing it’s going to be later, perhaps much later.

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Then, there’s the report last week that long-term interest rates hit record lows, which is to say the lowest in the 227-year history of the United States. And while there’s no consensus over the meaning of the record-low rates not just in the United States but in Germany (where rates are now negative) and elsewhere, the “flight to safety” certainly indicates a growing acceptance of a pervasive reality—call it secular stagnation, a Japan-like deflationary spiral, or the continuation of the Second Great Depression—of low (and even negative) price increases and very slow growth.

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Finally, there’s Martin Wolf [ht: bn], in the Financial Times (unfortunately behind a paywall), confirming Robert Gordon’s analysis that we live in “an age of disappointing growth because the technological breakthroughs are relatively narrow.” Basically, their argument is, the U.S. economy has experienced two periods of fast innovation: in 1920-1970 and, at a far slower pace, in 1994-2004. But that growth, based on increases in productivity, may now be over. And, on top of that, what increases there were in overall income during those periods were not evenly shared, especially beginning in the 1970s. And that trend is likely to continue.

Therefore, Wolf concludes,

The view that steady and rapid rises in the standard of living must endure is a pious hope. The tendency to believe that some “structural reforms” will fix this is, similarly, an act of faith. It is essential for policy to promote invention and innovation, so far as it can. But we must not assume an easy return to the long-lost era of dynamism. Meanwhile, the maldistribution of the gains from what growth we have is a growing challenge. These are harsh times.

These are, indeed, harsh times—as long as we stick with the existing way of organizing economic and social life. Its premise and promise are innovation, increases in productivity, and rapid economic growth. But, right now and for the foreseeable future, it simply won’t be able to deliver them.

One possibility, which the IMF recommends for Italy, is to raise the rate of economic growth by engaging in “structural reforms” and thus transferring the costs to those who can least afford to shoulder them. So, the premise of even harsher times—with the promise, however empty, that growth will someday resume.

The other possibility is to realize the existing institutions have run their course, and that alternative ways of organizing economic and social life need to be imagined and created.

That alternative economy—with a different set of presumptions and promises—is really the only way of overcoming harsh times, now and in the future.

Cartoon of the day

Posted: 13 June 2016 in Uncategorized
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Matt Black, “Rainstorm” (York, Pennsylvania, 2015)
[York has a population of 43,718 and 37.1 percent live below the poverty level.]

This and other striking images of poverty in the United States by Matt Black are currently on show in a group exhibition, New Blood, at the Magnum Print Room in London.

Last summer Matt Black left the Central Valley of California, where he lives, to travel 18,000 miles across the US on a road trip that took him through 30 states and 70 of the poorest towns in America. The startling image of a hand resting on a fence post against a barren backdrop was taken in the small town of Allensworth, California, where 54% of the population of 471 people live below the poverty level.

“California always seemed special and unique in terms of how it symbolised promise and progress,” says Black, 45, during a break in shooting landscapes in Idaho, where he’s working on another stage of the same series, Geography of Poverty. “So it seemed somehow symbolic to begin there and travel east, but what has surprised me is the similarities I have encountered as I travelled from one community to another. All these diverse communities are connected, not least in their powerlessness. In the mainstream media, poverty is often looked at in isolation, but it is an American problem. It seems to me that it goes unreported because it does not fit the way America sees itself.”

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Sure, there are lots of gangs. And, it’s true, most homicides in Chicago, where a person is shot every 2 and a half minutes and murdered every 14 hours, are from gunshots.

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But, in the City of Neighborhoods, not everyone is affected equally by gangs and guns. In fact, as the New York Times explains,

Whether exacerbated by gangs or guns. . .Chicago’s killings are happening on familiar turf: Its poor, extremely segregated neighborhoods on the South and West Sides.

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Those segregated neighborhoods also happen to be where rates of unemployment and poverty are highest.

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The more or less inevitable result of creating and perpetuating an urban economy characterized by high rates of unemployment and poverty, in which racial and ethnic minorities are forced to endure much higher rates of unemployment and poverty and are then segregated into a few neighborhoods, is the fact that “the South and West Sides are on par with the world’s most dangerous countries, like Brazil and Venezuela, and have been for many years.”

Thus far in 2016, 1530 Chicagoans have been shot, of whom 1299 have been wounded and 231 have been killed.

And, while on the surface they’ve been assaulted by gangs and guns, too many Chicagoans have actually been wounded or killed by a City of Unequally Unemployed and Impoverished Segregated Neighborhoods.

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