Posts Tagged ‘youth’

socialism

Every public opinion survey I’ve seen in recent years shows a growing interest in socialism, especially among young people.*

Socialism is an obvious solution to the most pressing economic and social problems threatening the world today, from growing inequality to climate change. But, as I’ve written before, socialism has many different meanings—both what it is or might be, and what it is not.

John Quiggin [ht: ja] suggests that what we need today is not “soft neoliberalism” (what I have referred to as “left neoliberalism,” of the sort that came to be articulated in the trajectory of the U.S. Democratic Party defined by Bill Clinton, Al Gore, Barack Obama, and Hillary Clinton and the Labor Party of Tony Blair and Gordon Brown), much less the tribalist politics of Donald Trump’s Republicans and Teresa May’s Tories, but a radically new vision—what Quiggin refers to as “socialism with a spine.”

I couldn’t agree more. Moreover, Quiggin is right to point out that,

As it is used today, the term socialism does not reflect a well-worked ideology. Rather it conveys an attitude that could be described as “unapologetic social democracy” or, in the US context, “liberalism with a spine”. It’s expressed in support for proposals that break with the cautious incrementalism of the past, and are in some cases frankly utopian: universal basic income, free post-school education, large increases in minimum wages, and so on.

That’s important, but a real alternative needs more than attitude and a grab-bag of policy ideas. After decades in which the focus has been on critiquing neoliberalism, the task of thinking about positive alternatives is urgent, but efforts in this direction are only just beginning.

But I’m not convinced by much of the rest of Quiggin’s argument, which is focused on looking backward to what he considers to be the “social democratic moment of the 50s and 60s” and forwards in terms of “a genuine sharing economy based on the internet and other technological advances.”

The backwards move uncritically celebrates the supposed successes of Keynesian macroeconomic management and, looking forward, narrowly focuses on the possibilities opened up by digital technologies.

While I’m all in favor of articulating a vision of a “genuine sharing economy”—because, if socialism is nothing else, it certainly means, as Jeremy Corbyn put it, “You care for each other, you care for everybody, and everybody cares for everybody else”—I think we can do better than limiting ourselves to Keynesian full employment and the production of information.

We have to remember that the middle of the twentieth century, which turns out to have been a unique period of sustained economic growth and full employment in developed market economies, also meant long hours of drudgery in factories and offices to the benefit of employers, who retained both the interest and means to evade and ultimately overturn the regulations that had been implemented during the first Great Depression. Which of course they did, culminating in the crash of 2007-08. Why would we want to repeat the mistakes of that period?

And, looking forward, the emergence of new digital technologies, by themselves, doesn’t make socialism any more possible than the waves of innovation we’ve witnessed in the past. And focusing on the new technologies just puts the idea of socialism beyond anyone who is not already enamored of digital connectivity and social media—and therefore all but the youngest members of the working-class.

The task, it seems to me, is to articulate a vision of socialism that is predicated not on a nostalgia for the past or the role of a particular set of technologies, but on the persistent and growing gap that exists between the conditions of contemporary life and the possibilities created by existing forms of economic and social organization.

Thus, for example, instead of railing against Wall Street and increasingly concentrated industries, why not imagine the possibilities that capitalism itself has created both to eliminate the need for capitalists and to easily administer large parts of the economy to the benefit of everyone?

By the same token, why not build on the idea that, today, it is increasingly recognized that decent jobs, healthcare, education, and retirement are rights, not privileges, but that those in charge prevent those rights from being fulfilled?

Socialism is born out of that yawning crevasse between reality and promise—by articulating a set of changes in the existing reality that move us closer to that real promise.**

And here I think Quiggin and I may actually be in agreement:

Socialists have always seen short-term political struggles as part of a long-term project of transforming society for the better.

 

*For example, according to the 2016 Gallup Survey, 35 percent of Americans have a positive view of socialism (itself a remarkably high figure, given the Cold War legacy in the United States), which rises to 55 percent for Americans age 18 to 29. And while only 13 percent of Republicans and Republican-leaners have a positive view of socialism, 58 percent of Democrats and Democratic-leaners view socialism in a favorable light.

**To be clear, it’s not just a question of defining socialism; we also need to discuss the strategic issue, of where and how a reborn socialist movement can build a political and social base. As Bill Fletcher explains, with respect to “the growth in interest in socialism, broadly defined, among a large number of people, particularly younger people.”

That is fantastic!  But it is far from clear that they are wedded to a class project, except in a very abstract sense. And that difference is fundamental. It’s not just an ideological question; it is also a strategic question.

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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.

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That’s the way Fatih Guvenen, an economist at the University of Minnesota and one of the authors of a new paper on the decline of the American middle class, characterizes the results of their study.

What the authors found is, first, comparing the cohort that entered the labor market in 1967 to the cohort that entered in 1983, median lifetime income of men declined by 10–19 percent. Thus, for example, in terms of real earnings (deflated by the personal consumption expenditure), the annualized value of median lifetime wage/salary income for male workers declined by $4,400 per year from the 1957 cohort to the 1983 cohort, or $136,400 over the 31-year working period.

For women, median lifetime income increased by 22–33 percent from the 1967 to the 1983 cohort, but these gains were relative to very low lifetime income for the earliest cohort.

Second, they found that inequality in lifetime incomes has increased significantly within each gender group, which is largely attributed to an increase in inequality at young ages. Thus, for example, the median income at age 25 has declined steadily from the 1967 cohort to the 1983 cohort. Moreover, median incomes over the first 10 years in the labor market for more recent cohorts (those that turned 25 in the 2000s) indicate that the trend of declining median lifetime incomes seems likely to continue.

What the results show is that more unequal incomes are not primarily a result of a widening gap between younger and older workers. Even among older workers, typical incomes have been falling while the richest have been enjoying more and more of the economy’s gains. Poorer workers—who tend to be younger—will likely earn more as they get older but they are not going to earn enough to make up the difference.

Yes, indeed, this is a pretty bleak picture.

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Special mention

193070_600 March 18, 2017

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In discussing the textbook treatment of the minimum wage, James Kwak provides a perfect example of how contemporary mainstream economics “can be more misleading than it is helpful.”

Kwak refers to the problem as “economism.”* For me, borrowing from a different tradition, it is a case of “vulgar economics.”

The argument against increasing the minimum wage often relies on what I call “economism”—the misleading application of basic lessons from Economics 101 to real-world problems, creating the illusion of consensus and reducing a complex topic to a simple, open-and-shut case. According to economism, a pair of supply and demand curves proves that a minimum wage increases unemployment and hurts exactly the low-wage workers it is supposed to help. The argument goes like this: Low-skilled labor is bought and sold in a market, just like any good or service, and its price should be set by supply and demand. A minimum wage, however, upsets this happy equilibrium because it sets a price floor in the market for labor. If it is below the natural wage rate, then nothing changes. But if the minimum (say, $7.25 an hour) is above the natural wage (say, $6 per hour), it distorts the market. More people want jobs at $7.25 than at $6, but companies want to hire fewer employees. The result: more unemployment. The people who are still employed are better off, because they are being paid more for the same work; their gain is exactly balanced by their employers’ loss. But society as a whole is worse off, as transactions that would have benefited both buyers and suppliers of labor will not occur because of the minimum wage. These are jobs that someone would have been willing to do for less than $6 per hour and for which some company would have been willing to pay more than $6 per hour. Now those jobs are gone, as well as the goods and services that they would have produced.

That’s exactly the argument presented by Harvard’s Gregory Mankiw in his best-selling textbook Principles of Microeconomics. He uses neoclassical economic theory to distinguish (as in the figure above) a “free labor market,” where the market is in equilibrium and there is full employment, and a “labor market with a binding minimum wage,” where there is a surplus of labor or unemployment. In the latter, at a minimum wage above the equilibrium wage, the quantity demanded of labor (by employers) is less than the quantity supplied of labor (by workers). Thus, in his view,

the minimum wage raises the incomes of those workers who have jobs, but it lowers the incomes of workers who cannot find jobs.

Mankiw then supplements his discussion of the negative effects of the minimum wage by asserting it “has it greatest impact on the market for teenage labor.” Low wages, he argues, are appropriate for such workers because they “are among the least skilled and least experienced members of the labor force.”**

Only after presenting the model of unemployment created by a minimum wage and focusing on teenage workers does Mankiw admit that the minimum wage “is a frequent topic of debate” among economists, who “are about evenly divided on the issue.”***

Nowhere does Mankiw discuss the history of the minimum wage nor the determinants of either the supply of or demand for workers who are forced to have the freedom to sell their ability to work for a wage at or below the minimum wage. He is thus content, like many nineteenth-century economists, to “interpret, systematise and defend in doctrinaire fashion the conceptions of the agents of bourgeois production who are entrapped in bourgeois production relations.”

That is the very definition, in our own time, of vulgar economics.

 

*I hesitate to use Kwak’s term economism because, in my view, it signifies something different: the reduction of all social phenomena, in the first or last instance, to the economy (or some part thereof, such as the relations or forces of production). In other words, economism is an economic determinism—the positing of some kind of economic essence. The irony, of course, is that neoclassical economics represents an essentialism but of a different sort: it reduces all economic and social phenomena to a given human nature. Neoclassical economics is therefore a theoretical humanism.

**Later, he adds that such teenagers are “from middle-class homes working at part-time jobs for extra spending money.” Even less reason, then, to worry about such low-wage workers. According to the Bureau of Labor Statistics, minimum-wage workers do tend to be young. But they’re not just teenagers. In 2015, more than 2.5 million workers in the United States received wages at or below the federal minimum wage (3.3 percent of the labor force), of whom 1.4 million were 25 years or older (2.2 percent of the labor force).

***The 2006 survey Mankiw refers to was conducted only among members of the American Economic Association, the main organization of mainstream economists in the United States. It is interesting that the minimum wage is one of the few issues on which there was no consensus, even among mainstream economists. About 38 percent wanted it increased, while 47 percent wanted it eliminated entirely.

banksy-what-next

Over the course of the next month, millions of high-school and college students will be graduating. And, to judge by the circumstances of other young workers these days, the world that awaits them is pretty dismal.

It’s not their fault. They may be gifted and full of energy but the economic stars are aligned against them. Capitalism is failing them.

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Consider high-school graduates. According to the Economic Policy Institute, the official unemployment rate is 17.9 percent (compared to an overall rate of 5 percent)—and the underemployment rate (which combines official unemployment with workers who would like a full-time job but can only find part-time work and those who are so discouraged they’ve given up even looking for work) is an extraordinary 33.7 percent.

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Even college graduates, whose official unemployment rate is much lower (at 5.6 percent), face a very high underemployment rate (of 12.6 percent). That’s 1 in 8. And that doesn’t even take into consideration college graduates who are forced to have the freedom to take  jobs that don’t even require a college degree (e.g., the young college graduate working as a data-entry clerk).

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And there’s the issue of wages if and when they find a job. The real hourly wages for high-school graduates—both young and overall—are no higher today (at $10.66 and $17.11, respectively) than they were at the beginning of 2000 (when they earned $10.86 and $17.01).

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Again, college graduates are better off than workers with a high-school degree. But their wages, too, have been stagnant for the past decade and a half. Young college graduates today can expect to earn, on average, about $18.53 an hour today compared to $18.39 in early 2000; while all workers with a bachelor’s degree receive $31.40 an hour today, which is only slightly higher than in 2000 (when it was $29.39).

The usual argument one hears is that young people should be encouraged to go to college, after which they’ll face lower unemployment and receive higher wages.

That’s fine. I’m all in favor of increasing the chances and lowering the barriers for young people to study in the nation’s colleges and universities. But for young people, no matter how much education they’ve managed to obtain, current economic arrangements are failing them.

The members of the Class of 2016, no matter how gifted, have every right to be worried about what’s next.

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We already knew that Millenials are “generation screwed.” Now we know, thanks to the latest Harvard Public Opinion Project survey, that the majority (51 percent) does not support capitalism—and even fewer (just 19 percent) identify as capitalists.*

It also seems the members of Generation Y don’t see socialism as the preferred alternative (only 33 percent support it)—but at least those who have participated in Democratic primaries have been voting overwhelmingly for the democratic socialist candidate.

 

*A subsequent survey that included people of all ages found that somewhat older Americans also are skeptical of capitalism. Only among respondents at least 50 years old was the majority in support of capitalism.