Category Archives: Economics

In Race Relations, Altruism Isn’t Enough

Posted on by

Michelle Goldberg of The New York Times says it’s more productive to talk about economic self-interest:

When Heather McGhee was a 25-year-old staffer at Demos, the progressive think tank she would eventually lead, she went to Congress to present findings on shocking increases in individual and family debt.

“Few politicians in Washington knew what it was like to have bill collectors incessantly ringing their phones about balances that kept growing every month,” McGhee writes in her new book, The Sum of Us: What Racism Costs Everyone and How We Can Prosper Together.

Demos’s explanatory attempts failed. . . . For McGhee, the disaster was an education in the limits of research, which is often no match for the brute power of big money. But as she was walking down the hallway of the Russell Senate Office Building, she learned something else.

. . . She heard “the bombastic voice of a man going on about the deadbeats who had babies with multiple women and then declared bankruptcy to dodge the child support.” She doesn’t know whether the man was a Democrat or a Republican, but when she heard him she realized she and her allies might have missed something. They’d thought of debt and bankruptcy primarily as a class issue. Suddenly she understood that for some of her opponents, it was more about race. . . .

McGhee’s book is about the many ways racism has defeated efforts to create a more economically just America. Once the civil rights movement expanded America’s conception of “the public,” white America’s support for public goods collapsed. People of color have suffered the most from the resulting austerity, but it’s made life a lot worse for most white people, too. McGhee’s central metaphor is that of towns and cities that closed their public pools rather than share them with Black people, leaving everyone who couldn’t afford a private pool materially worse off. . . .

McGhee argues that it’s futile to try to address decades of disinvestment in schools, infrastructure, health care and more without talking about racial resentment.

. . . McGhee and her colleagues, she writes, discovered that if you “try to convince anyone but the most committed progressives . . . about big public solutions without addressing race, most will agree … right up until they hear the countermessage that does talk, even implicitly, about race.”

. . . Her work illuminates what’s always seemed to me to be a central contradiction in certain kinds of anti-racist consciousness-raising, which is that many people want more privilege rather than less. You have to have an oddly high opinion of white people to assume that most will react to learning about the advantages of whiteness by wanting to give it up.

“Communicators have to be aware of the mental frameworks of their audience,” McGhee told me. “And for white Americans, the zero-sum is a profound, both deeply embedded and constantly reinforced one.”

This doesn’t mean that the concept of white privilege isn’t useful; obviously it describes something real. . . . “However, I think at this point in our discourse — also when so many white people feel deeply unprivileged — it’s more important to talk about the world we want for everyone.”

So McGhee is trying to shift the focus from how racism benefits white people to how it costs them. Why is student debt so crushing in a country that once had excellent universities that were cheap or even free? Why is American health care such a disaster? Why is our democracy being strangled by minority rule? As the first line of McGhee’s book asks, “Why can’t we have nice things?” Racism is a huge part of the answer.

McGhee describes a “solidarity dividend” gained when people are able to transcend racism. Look at what just happened in Georgia, where the billionaire Kelly Loeffler, in an attempt to keep her Senate seat, waged a nakedly racist campaign against Raphael Warnock, who ran on sending voters $2,000 stimulus checks. He still lost most white people, but won enough to prevail. He did it by appealing to idealism, but also to self-interest.

In the fight for true multiracial democracy, counting on altruism will only get you so far.

The Pandemic’s Economic Pain Hasn’t Been Shared

Posted on by

From The Associated Press:

In a stark sign of the economic inequality that has marked the pandemic recession and recovery, Americans as a whole are now earning the same amount in wages and salaries that they did before the virus struck — even with nearly 9 million fewer people working.

The turnaround in total wages underscores how disproportionately America’s job losses have afflicted workers in lower-income occupations rather than in higher-paying industries, where employees have actually gained jobs as well as income since early last year.

In February 2020, Americans earned $9.66 trillion in wages and salaries, at a seasonally adjusted annual rate, according to the Commerce Department data. By April, after the virus had flattened the U.S. economy, that figure had shrunk by 10%. It then gradually recovered before reaching $9.67 trillion in December, the latest period for which data is available.

Those dollar figures include only wages and salaries that people earned from jobs. They don’t include money that tens of millions of Americans have received from unemployment benefits or the Social Security and other aid that goes to many other households. The figures also don’t include investment income.

A separate measure tracked by the Labor Department shows the same result: Total labor income, excluding government workers, was 0.6% higher in January than it was a year earlier.

That is “pretty remarkable,” given the sharp drop in employment, said Michael Feroli, an economist at JPMorgan Chase.

The figures document that the vanished earnings from 8.9 million Americans who have lost jobs to the pandemic remain less than the combined salaries of new hires and the pay raises that the 150 million Americans who have kept their jobs have received.

The job cuts resulting from the pandemic recession have fallen heavily on lower-income workers across the service sector — from restaurants and hotels to retail stores and entertainment venues. By contrast, tens of millions of higher-income Americans, especially those able to work from home, have managed to keep or acquire jobs and continue to receive pay increases.

“We’ve never seen anything like that before,” said Richard Deitz, a senior economist at the Federal Reserve Bank of New York, referring to the concentration of job losses. “It’s a totally different kind of downturn than we’ve experienced in modern times.”

Of the nearly 10 million jobs that have been eliminated by the pandemic, 40% have been in restaurants, bars, hotels, arts, and entertainment. Retailers have lost nearly 400,000 jobs and many low-paying health care workers, such as nursing home attendants and home health care aides, have also been laid off.

On average, restaurant workers make just below $13 an hour, according to Labor Department data. Retail cashier pay is about the same. That’s less than half the economy-wide average of nearly $30 an hour.

“It tells the story of an economy that has really tanked for the most vulnerable,” said Elise Gould, an economist at the liberal Economic Policy Institute. “It’s shocking how small a dent that has made in the aggregate.”

The figures also underscore the unusually accelerated nature of this recession. . . . “This is one of the worst recessions we’ve ever had — compressed into one-tenth of the time that a normal recession would take,” said Ernie Tedeschi, policy economist at the investment bank Evercore ISI. . . .

The recovery in wages and salaries helps explain why some states haven’t suffered as sharp a drop in tax revenue as many had feared. That is especially true for states that rely on progressive taxes that fall more heavily on the rich. California, for example, said last month that it has a $15 billion budget surplus. Yet many cities are still struggling, and local transit agencies, such as New York City’s subway, have been hammered by the pandemic.

The wage and salary data also helps explain the steady gains in the stock market, which have been led by high-tech companies whose products are being heavily purchased and used by higher-income Americans . . .

This week, the New York Fed released research that underscored how focused the job losses have been. For people making less than $30,000 a year, employment has fallen 14% as of December. For those earning more than $85,000, it has actually risen slightly. For those in-between, employment has fallen 4%. . . .

Some companies have cut wages in this recession, but on the whole the many millions of Americans fortunate enough to keep their jobs have generally received pay raises at largely pre-recession rates. . . .

Unquote.

Another group that must have done relatively well is people who are retired. Social Security payments and pensions have stayed where they were and investment returns have generally been very good.

A Suggestion for Fixing America

Posted on by

Two professors writing for Foreign Policy see a way to simultaneously repair our country’s politics and economics (I’ve left out some of their analysis). Whether or not it succeeded, it wouldn’t hurt:

According to the Brookings Institution, Biden won 509 counties to [the other guy’s] 2,547—that’s over five times as many won by [the Republican]. But here’s the kicker. Biden’s counties constitute 71 percent of the country’s Gross Domestic Product, [the loser’s] less than 30 percent. Surely we must somehow factor this into how we think about why people vote the way they do? How does growth, or the lack thereof, determine elections?

What we see in U.S. politics today is the death and dissolution of a particular social coalition that dominated politics and economics and underwrote social peace for three generations; call it the carbon coalition.

The carbon coalition was an encompassing political coalition, built on a set of agreements negotiated between 1932 and 1950, that distributed the income generated by the industrial economy among groups within society. In the auto and steel industries, the most dynamic of that era, United Auto Workers and General Motors signed the 1950 Treaty of Detroit, which tied pay to productivity. This created a path to prosperity for two generations of workers in manufacturing.

Meanwhile, to bring rural areas into the coalition, the urban middle class paid higher prices for food and accepted permanent agricultural subsidies so that farmers could enjoy higher incomes. These agreements drew together labor, business, and farmers; the North and the South; the Great Plains and the Great Lakes into one settlement. This broadly inclusive distributive coalition in turn softened the sectional and partisan divisions that had roiled U.S. politics almost continuously since the 1890s.

. . . This political coalition was in fact entirely dependent on a particular growth model: an extremely fossil fuel-intensive agro-industrial economy.

It is only a slight exaggeration to suggest that the United States’ postwar economy was a massive machine that transformed oil, coal, and natural gas into income and food. Consider the following: In 1971, automobile production directly and indirectly provided 1 of every 6 jobs in the U.S. economy. Most of these jobs were unionized, or, if not, most workers enjoyed wages and benefits that spilled over from union agreements. Then add to these jobs others created by the interstate highway program, by the oil and gas industry, and by the retail sale of gasoline and the repair and maintenance of automobiles. And then throw in jobs in aviation, shipping, and agriculture, which became increasingly energy intensive due to the use of diesel-fueled equipment and through the use of natural gas to manufacture artificial fertilizer. Finally come jobs in plastics and petrochemicals.

The carbon coalition distributed the income generated by the carbon economy. Elections determined those distributions. That model is now dying and indeed, given climate change, must die. The politics it made possible are dying too.

The carbon economy has been in decline for decades, but the [political effects are only now becoming visible.

The center of economic dynamism and wealth generation in the United States now lies in knowledge-intensive (or at least high-value-added) industries, some of which, like pharmaceuticals, are research intensive and some of which, like various forms of media, are creative.

Although this knowledge economy is diverse, these activities share one overarching commonality: None require (much less depend on) fossil fuels. Indeed, their survival over the long haul depends on successfully switching out of carbon completely. Productivity in these activities doesn’t come from more energy and bigger machines applied to faster assembly lines but from improvements in our ability to manipulate, analyze, and monetize information.

The economy that drives U.S. GDP growth today is already post-carbon. And though many of its activities are energy intensive (server farms consume more than more than 2 percent of the world’s electricity use; financial services consume more electricity than any other industry in New York City), the energy they consume can come as readily from wind and solar as from coal and natural gas. This isn’t the case for the internal combustion engine, for the steel from which its constructed, and for the oil extraction, refining, and distribution systems that support it. Nor is it true for an ammonia plant or for cement or aviation. Farmers cannot substitute solar energy for artificial fertilizer.

The U.S. economy is thus now divided in two: a growing and potentially sustainable post-carbon economy that can adapt to the realities of climate change and a carbon economy in decline that is unsustainable. . . .

Americans no longer live in the same economy.  Rather, they live in two incompatible models of economic growth. Those who remain embedded in the carbon economy quite rationally want to defend and rejuvenate that model. In contrast, those who have found a spot in the post-carbon economy largely embrace the future. . . .

Today, the firms and sectors that make up each of the two growth models fund elections and determine the strategy of their parties.

The post-carbon coalition dominates the Democratic Party. This coalition brings together a West Coast variant composed of high-margin agriculture (think wine), Big Tech, entertainment, and digital and high-end services and an East Coast variant based largely on financial services. These post-carbonites embrace some variant of the Green New Deal, which identifies the climate crisis as the most critical issue the country faces and offers a coherent policy response.

The carbon economy coalition that dominates the Republican Party includes export agriculture, carbon extraction, refinement and production, steel and other declining traditional industrial sectors, as well as low-wage and low productivity services (think Walmart over Accenture). This fragment of the original carbon coalition remains committed to defending and rebooting the carbon economy; this is what “Make America Great Again” means. . . .

The United States’ two coalitions cannot be brought together. Indeed, they are existential threats to each other. And on a population scale, each electoral coalition has more or less the same number of potential voters. As a result, elections are decided by thin margins in a race to the death. . . .

For almost half of U.S. states, the Green New Deal, which is—sotto voce—at the center of Biden’s platform, spells the end of their existing strategies—think fracking, refining, plastics, mining, logging, and so on. And for the other half of the states that support the deal, scaling back its objectives to attract support from the carbon coalition threatens the post-carbon coastal communities. . . .

There is only one way to fix this mess. The post-carbon coalition has to bribe what’s left of [the carbon coalition] to make [a] transition. Non-coastal, largely Republican states must be the epicenter of the green transition and be the recipients of most of the investment. After all, they have the most assets to turn around and the most to lose if they are not compensated. If all they are offered is “you decarbonize/we keep the money,” then all they will give back is more [right-wing radicalism].

There are clear parallels in U.S. history, such as the massive bribe that the urban sector began paying to farmers in 1933 with the Agricultural Adjustment Act and two generations of generous farm bills . . . thereafter. Yet the bribe this time must involve more than a subsidy; it requires exiting the carbon economy. For it to work, green investment must extend well beyond energy capture (solar and wind farms) and downstream into industries that are powered by alternatives. Massive investments in electric vehicle production, for instance, to support a rapid turnover of the U.S. motor vehicle fleet with U.S.-built cars and trucks, are required. . . .

Elections in the United States are not being fought over rival principles and certainly not over median voters. They are contested over which parts of the country will grow and how and who will pay for it. Recognizing this is the first step to fixing the deeper problem of the carbon transition for the good of all Americans.

China On the Rise

Posted on by

The Atlantic has a typically long article about China’s construction of an enormous radio telescope:

original

Almost twice as wide as the dish at America’s Arecibo Observatory, in the Puerto Rican jungle [recently destroyed], the new Chinese dish is the largest in the world, if not the universe. Though it is sensitive enough to detect spy satellites even when they’re not broadcasting, its main uses will be scientific, including an unusual one: The dish is Earth’s first flagship observatory custom-built to listen for a message from an extraterrestrial intelligence.

[It’s] the world’s most sensitive telescope in the part of the radio spectrum that is “classically considered to be the most probable place for an extraterrestrial transmitter”. After the dish is calibrated, it will start scanning large sections of the sky. If such a sign comes down from the heavens during the next decade, China may well hear it first.

If that isn’t enough, they’re planning to put a radio observatory on the dark side of the Moon, where there is even less interference from terrestrial radio waves.

Meanwhile, back on Earth, the Chinese have a “rail-linked urban megastructure” that required the country to pour “more concrete from 2011 to 2013 than America did during the entire 20th century” The country “has already built rail lines in Africa, and it hopes to fire bullet trains into Europe and North America, the latter by way of a tunnel under the Bering Sea”. The author of the article marvels at “smooth, spaceship-white” trains “whooshing by . . . at almost 200 miles an hour”.

China built the world’s fastest supercomputer, has spent heavily on medical research and planted a “great green wall” of forests in its northwest as a last-ditch effort to halt the Gobi Desert’s spread. Now China is bringing its immense resources to bear on the fundamental sciences. The country plans to build an atom smasher that will conjure thousands of “god particles” out of the ether, in the same time it took CERN’s Large Hadron Collider to strain out a handful. It is also eyeing Mars. In the technopoetic idiom of the 21st century, nothing would symbolize China’s rise like a high-definition shot of a Chinese astronaut setting foot on the red planet. Nothing except, perhaps, first contact.

China’s gross domestic product is still only about 2/3 of America’s, but they’ll probably spend more on research and development than we do in the coming decade.

When we saw the Soviet Union as our competition in the 50s and 60s, we got busy. The Soviet Union no longer exists.

Today, there are more than 100 cities in China with populations over one million. China is making its presence known.

Shanghai-Skyline-Night-Big-Bus-Tours-01-2017

Hazardous to Public Health and National Security

Posted on by

Margaret Sullivan, former public editor of The New York Times, now writes about the media for The Washington Post. Today, she unloads on Fox News and suggests a corporate boycott. Her column is called “Fox News is a hazard to our democracy. It’s time to take the fight to the Murdochs”: 

I happened to be watching Fox News on election night when the network startled the political world by calling Arizona for Joe Biden.

It was a weird moment, without the fanfare that usually accompanied the announcement that a state was being put in one column or another. A few hours later, the Associated Press made the same call.

But many other news organizations, including The Washington Post, took days to reach that daring conclusion. For them, Arizona’s vote count simply remained far too close. . . .

And Txxxxworld was enraged. Losing the traditionally red state would make it that much harder to proclaim that the election was so close that it must in fact have been stolen by the Democrats. It would disrupt the Big Lie narrative. Former president Donald Txxxx’s son-in-law, Jared Kushner, even called Fox honcho Rupert Murdoch to complain. But Fox News stood behind the call, which turned out to be correct.

But a lot has changed since then. Last week, two key members of Fox News’s decision desk abruptly departed the network. One was laid off, the other has retired, and some insiders are calling it a “purge.”

Apparently, at a network that specializes in spreading lies, there was a price to pay for getting it right. (“Fox News isn’t a newsgathering organization,” surmised press critic Eric Boehlert, arguing in response to the purge that its White House credentials should be revoked.)

In recent days, Fox has taken a sharp turn toward a more extreme approach as it confronts a post-Txxxx ratings dip — the result of some of its farthest-right viewers moving to outlets such as Newsmax and One America News and some middle-of-the-roaders apparently finding CNN or MSNBC more to their liking.

With profit as the one true religion at Fox, something had to change. Ninety-year-old Rupert Murdoch, according to a number of reports, has stepped in to call the shots directly. Most notably, the network has decided to add an hour of opinion programming to its prime-time offerings. The 7 p.m. hour will no longer be nominally news but straight-up outrage production.

Why? Because that’s where the ratings are.

And in a move that should be shocking but isn’t, one of those who will rotate through the tryouts for that coveted spot will be Maria Bartiromo, whose Txxxx sycophancy during the campaign may well have been unparalleled. She was among those . . . recently forced under threat of a lawsuit to air a video that debunked repeated false claims on her show that corrupt voting software had given millions of Txxxx votes to Biden.

At the same time, Sean Hannity, who likes to blast Biden as “cognitively struggling,” and Tucker Carlson, who tries to sow doubt about the prevalence of White supremacy, have become even more outlandish as they try to gin up anti-Biden rage within their audiences.

Even James Murdoch, while not naming names, blasted the harm that his family’s media empire has done. “The sacking of the Capitol is proof positive that what we thought was dangerous is indeed very much so,” he told the Financial Times. “Those outlets that propagate lies to their audience have unleashed insidious and uncontrollable forces that will be with us for years.”

But it’s his father and his brother, Lachlan, who run Fox, not James.

How to get the Fox News monster under control? I do not believe the government should have any role in regulating what can and can’t be said on the air, although I often hear that proposed. That would be a cure worse than the disease. But let’s not count on the hope that the Fox-controlling Murdochs will develop a conscience.

No, the only answer is to speak the language that the bigwigs at Fox will understand: Ratings. Advertising dollars. Profit.

Corporations that advertise on Fox News [such as Procter & Gamble, Amazon, Kraft Heinz and Verizon] should walk away, and citizens who care about the truth should demand that they do so (in addition to trying to steer their friends and relatives away from the network).

Big companies would never do that, you say? Don’t be so sure.

The Post reported last week that the 147 Republican lawmakers who opposed certification of the presidential election have lost the support of many of their largest corporate backers. General Electric, AT&T, Comcast, Honeywell, PricewaterhouseCoopers, KPMG and Verizon all said they would suspend donations to members of Congress who voted against certifying Joe Biden as president.

This shows, at the very least, that there is a growing understanding that lying to the public matters, that it’s harmful — or “insidious,” in the words of James Murdoch. And that some corporations don’t want to be a part of that.

When you think about Fox News’s role in the 400,000 lives lost to the pandemic and in the disastrous attack of Jan. 6, it’s even fair to call it deadly.

So if reality-based America wants to communicate clearly with Fox News leadership, they’ll have to do it in a language they understand. The language of money.

Unquote.

Sullivan later called attention to an additional point of attack:

Your cable/satellite TV provider pays subscriber fee to carry @foxnews. That cost is passed directly to YOU. Typical household pays #FoxNews $2 per monthh = $20 per year via their cable satellite provider, regardless whether they watch it. DEMAND @comcast @Xfinity #UNFOXMYCABLEBOX.

It wouldn’t hurt if the rich and famous who appear on the Fox Network or rub elbows with the Murdoch clan or serve on their boards of directors began to exert pressure too. Unfortunately, for the most part, such people consistently ignore my suggestions.Â