Posts Tagged ‘poverty’

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How many of you read Car and Driver magazine?

Not many of you, I presume. But maybe you should. At least the June 2020 issue.

It’s certainly a sign of our obscenely unequal times that a magazine better known for its reviews of foreign supercars and domestic muscle cars and for an editorial policy that courts controversy only when it attacks SUVs (in favor of minivans and cars) highlights the story of Oliver, Jason M. Vaughn’s family’s 260,000-mile Subaru in a piece subtitled “The Fear of Failure.”

Turning the key has become an act of faith. As the engine grumbles to life on this fine southwest Colorado morning, the yellow check-engine light comes on, as it has every day for the past four years, and the same questions swirl in my mind. Is this the day that tiny head-gasket leak turns into a gusher? Is this the day the catalytic converter chokes closed for good? Is this the day that one speck of sand too many works its way into that cracked CV-joint boot, causing it to seize up at some bend in the road and send me spinning into a ravine, not to be discovered until spring?. . .

I intimately know everything wrong with this car. I feel the squishy brakes and the engine straining to get up a hill, and I hear the ominous grinding sounds coming from under the right-front wheel well. But I can’t afford to do anything to ward off those looming disasters.

That’s because Vaughn’s family is like many American households, who don’t have any emergency savings and therefore can’t cover a surprise $400 expense without borrowing money or selling something. Or they can’t come up with the money at all.

Oliver, purchased new in 2004, is also like many other cars on U.S. roads, in being old (at 11.8 years old, the average age of the 278 million vehicles on American highways has never been higher). One reason is because

many Americans—in a time of stagnant wages combined with soaring consumer debt and a high cost of living—can’t afford to replace their old beaters. Or if they can get another vehicle, they’re only able to replace it with another beater.

As for Vaughn, he and his wife were both laid off from their respective, “and not very lucrative jobs,” last year and they can’t afford to keep up on the current maintenance, much less fix all the stuff on the car they’ve been putting off.

That’s why Vaughn identifies so much with Linda Tirado, the author of the 2014 book, Hand to Mouth: Living in Bootstrap America, an account of what it’s like, day after day, to work, eat, shop, raise kids, and keep a roof over your head without enough money. One of the lessons Vaughn highlights is the predicament of the poor working-class:

One of the hardest ironies of all for the working poor is the often unspoken truth that in America, you usually have to already have money to even get an opportunity to make money. And simply moving someplace with better jobs and higher pay isn’t really an option when you’re broke.

To keep Oliver running, Vaughn has taught himself some basic maintenance and repairs (via YouTube videos, of course) and resorted to cheap fixes that betray “more than a twinge of desperation”—all in the hope that the Subaru can last another 100,000 miles. The fact is,

We’ll probably need another 100,000 miles out of Oliver whether we can properly care for him or not.

That makes a lot of sense. It’s exactly the predicament more and more working-class drivers and their cars find themselves in as economic inequality, already grotesque, continues to soar in the United States.

Clearly the problem of inequality is so serious and so widespread that it has forced its way into a Hearst-owned automotive enthusiast magazine, squeezed between articles on the new Porsche 718 Cayman GT4 (price as tested: $118,600) and a golden-wheeled, Kar Tunz-modified Lamborghini Urus (price: $277,904).

Now, tell me, is there a better illustration of what life is like in the United States in the age of inequality?

 

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I cringe when I listen to or watch these interviews. But here it is, with the Real News Network.

The interview was based on my recent blog post, “Economics of poverty, or the poverty of economics.”

I also want to recommend a recent piece by Ingrid Harvold Kvangraven [ht: ms], who argues that

The interventions considered by the Nobel laureates tend to be removed from analyses of power and wider social change. In fact, the Nobel committee specifically gave it to Banerjee, Duflo and Kremer for addressing “smaller, more manageable questions,” rather than big ideas. While such small interventions might generate positive results at the micro-level, they do little to challenge the systems that produce the problems.

For example, rather than challenging the cuts to the school systems that are forced by austerity, the focus of the randomistas directs our attention to absenteeism of teachers, the effects of school meals and the number of teachers in the classroom on learning. Meanwhile, their lack of challenge to the existing economic order is perhaps also precisely one of the secrets to media and donor appeal, and ultimately also their success.

Exactly!

It’s the revenge of neoclassical economics, as reflected in this year’s prize in economics, which focuses attention on poor people’s “bad” decisions and away from the structural causes of poverty.

As I argued the other day on Twitter, it’s like saying the climate crisis will be solved by individuals turning off lights and recycling their garbage. Not bad things to do, certainly. But, together, all those individual efforts make up only 1-2 percent of the solution. The climate crisis cannot be solved unless and until we direct attention to the real, structural causes. Here, I’m thinking not only of the fossil fuel industry, but also the way the rest of contemporary capitalist economies are organized around the use of fossil fuels—in the production of goods and services, cars as well as digital information. Such a system generates enormous profits, which flow to a tiny group at the top, and continues to destroy the commons, where most of us live and work.

It’s that system that needs to be radically transformed. And as long as economists are lauded for focusing on technical issues around the margins and not on the real causes—of Third World poverty, global warming, and much else—the discipline of economics will continue to be impoverished.

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Yesterday, the winners of the 2019 winners of the so-called Nobel Prize in Economics were announced. Abhijit Banerjee, Esther Duflo, and Michael Kremer were recognized for improving “our ability to fight global poverty” and for transforming development economics into “a flourishing field of research” through their experiment-based approach.

The Royal Swedish Academy of Sciences declared:

This year’s Laureates have introduced a new approach to obtaining reliable answers about the best ways to fight global poverty. In brief, it involves dividing this issue into smaller, more manageable, questions–for example, the most effective interventions for improving educational outcomes or child health. They have shown that these smaller, more precise, questions are often best answered via carefully designed experiments among the people who are most affected.

As every year, mainstream economists lined up to laud the choice. Dani Rodrik declared it “a richly deserved recognition.” Richard Thaler, who won the award in 2017 (here’s a link to my analysis), extended his congratulations to the Banerjee, Duflo, and Kremer and to the committee “for making a prize that seemed inevitable happen sooner rather than later.” While Paul Krugman, the 2008 Nobel laureate, refers to it as “a very heartening prize—evidence-based economics with a real social purpose.”

Nothing new there. To a one, mainstream economists always use the occasion of the Nobel Prize to applaud themselves and their shared approach to economic and social analysis—a celebration of private property, free markets, and individual incentives.

What is novel this time around is that the winners include the first woman economist to win the prize (Duflo) and only the third non-white economist (Banerjee).*

But what about the content of their work? I’ve discussed the work of Duflo and Banerjee on numerous occasions on this blog (e.g., here, here, and here).

As it turns out, I’ve written a longer commentary on the “new development economics” as part of a symposium on my book Development and Globalization: A Marxian Class Analysis, which is forthcoming in the journal Rethinking Marxism.

I begin by noting that idea of Banerjee, Duflo, Kremer and the other new development economists is that asking “big questions” (e.g., about whether or not foreign aid works) is less important than the narrower ones concerning which particular development projects should be funded and how such projects should be organized. For this, they propose field experiments and randomized control trials—to design development projects such that people can be “nudged,” with the appropriate incentives, to move to the kinds of behaviors and outcomes presupposed within mainstream economic theory.

Here we are, then, in the aftermath of the Second Great Depression—in the uneven recovery from capitalism’s most severe set of crises since the great depression of the 1930s and, at the same time, a blossoming of interest in and discussion of socialism—and the best mainstream economists have to offer is a combination of big data, field experiments, and random trials. How is that an adequate response to grotesque and still-rising levels of economic inequality (as shown, e.g., by the World Inequality Lab), precarious employment for hundreds of millions of new and older workers (which has been demonstrated by the International Labour Organization), half a billion people projected to still be struggling to survive below the extreme-poverty line by 2030 (according to the World Bank), and the wage share falling in many countries (which even the International Monetary Fund acknowledges) as most of the world’s population are forced to have the freedom to sell their ability to work to a relatively small group of employers for stagnant or falling wages? Or, for that matter, to the reawakening of the rich socialist tradition, both as a critique of capitalism and as a way of imagining and enacting alternative economic and social institutions.

I go on to raise three critical issues concerning the kind of development economics that has been recognized by this year’s Nobel prize. First, the presumption that analytical techniques are neutral and the facts alone can adjudicate the debate between which development projects are successful and which are not is informed by an epistemological essentialism—in particular, a naïve empiricism—that many of us thought to have been effectively challenged and ultimately superseded within contemporary economic and social theory. Clearly, mainstream development economists ignore or reject the idea that different theories have, as both condition and consequence, different techniques of analysis and different sets of facts.

The second point is that class is missing from any of the analytical and policy-related work that is being conducted by mainstream development economists today. At least as a concept that is explicitly discussed and utilized in their research. One might argue that class is lurking in the background—a specter that haunts every attempt to “understand how poor people make decisions,” to design effective anti-poverty programs, to help workers acquire better skills so that they can be rewarded with higher wages, and so on. They are the classes that have been disciplined and punished by the existing set of economic and social institutions, and the worry of course is those institutions have lost their legitimacy precisely because of their uneven class implications. Class tensions may thus be simmering under the surface but that’s different from being overtly discussed and deployed—both theoretically and empirically—to make sense of the ravages of contemporary capitalism. That step remains beyond mainstream development economics.

The third problem is that the new development economists, like their colleagues in other areas of mainstream economics, take as given and homogeneous the subjectivity of both economists and economic agents. Economists (whether their mindset is that of the theoretician, engineer, or plumber) are seen as disinterested experts who consider the “economic problem” (of the “immense accumulation of commodities” by individuals and nations) as a transhistorical and transcultural phenomenon, and whose role is to tell policymakers and poor and working people what projects will and not reach the stated goal. Economic agents, the objects of economic theory and policy, are considered to be rational decision-makers who are attempting (via their saving and spending decisions, their participation in labor markets, and much else) to obtain as many goods and services as possible. Importantly, neither economists nor agents are understood to be constituted—in multiple and changing ways—by the various and contending theories that together comprise the arena of economic discourse.

The Nobel committee has recognized the work of Banerjee, Duflo, and Kremer as already having “helped to alleviate global poverty.” My own view is that it demonstrates, once again, the poverty of mainstream economics.

 

*The only other woman, in the 50-year history of the Nobel Prize in Economics, was Elinor Ostrom (2009), a political scientist; the other non-white winners were Sir Arthur Lewis (1979) and Amartya Sen (1998).

 

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