Tag Archives: Capitalism

Us and Them Again

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As noted in an update to the post below, the Conservative Political Action Conference (CPAC) is having their annual convention, which means leading Republican politicians are getting the chance to express their deepest thoughts. So Senator Rubio of Florida got the opportunity to explain why Franklin Roosevelt had it all wrong — we should be very, very afraid.

Also today, Congressman Paul Ryan highlighted the difference between the right and the left by telling the story of a Wisconsin kid who’d prefer bringing his own lunch to school instead of mooching off the rest of us by getting a lunch at taxpayer expense.

Juliet Lapidos of the New York Times points out Congressman Ryan’s underlying, contradictory assumption:

[Ryan] argued that Americans want to work — every bit as much as the Republican Party wants them to work. “People don’t just want a life of comfort,” he said. “They want a life of dignity. They want a life of self-determination”….

In Mr. Ryan’s view, Americans would rather depend on themselves, or their families, than on the government. And yet, in Mr. Ryan’s view, if these same Americans gain access to government programs, they’ll jump at the chance to abandon their responsibilities, effectively exchanging a “life of dignity” for a “life of comfort.”

That doesn’t make sense. If all or most Americans, like the kid in Wisconsin, want their own lunch rather than a government lunch, then the prospect of a government lunch won’t change their behavior.

Ryan doesn’t notice the contradiction, since he thinks of his fellow citizens as Us and Them. On one hand, there are the honorable, hard-working Americans who hate the idea of getting help from the government (you know who they are). On the other hand, there are the dishonorable, lazy Americans who want nothing more than to live off government handouts (you know who they are too).

This is the same point I tried to make recently in a comment on another blog. There is a strange dichotomy between how Republicans expect poor people and rich people to respond to financial incentives:

— People who are struggling should receive as little financial assistance as possible, because helping them will only discourage them from becoming productive members of society. After all, they’re not really motivated to increase their incomes beyond the bare minimum. In their case, therefore, less income will translate into more work, and more income will translate into less work.

— People who aren’t struggling should receive as much financial assistance as possible, especially in the form of lower taxes, because helping them will encourage them to become even more productive members of society. In their case, more income will translate into more work, while less income will translate into less work!

It isn’t fun at all being poor or unemployed, but Republicans believe that making life as difficult as possible for the economy’s losers will convince them to do better. That’s because they’re not like us. They don’t care about improving their situations and they don’t respond to economic incentives the way normal people do.

Less money for the poor, so they will work harder; more money for the rich, so they will work harder. It makes perfect sense!

(Note: I’m going to try to lay off writing about right-wingers for a while. Maybe I’ll try fashion reporting. Or poetry! “There once was a girl from Nantucket, …”)

Two Pieces of Good News from Washington

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Speaker of the House John Boehner allowed a straightforward “clean vote” on raising the debt ceiling instead of holding the world economy hostage again. Many right-wingers are outraged. Maybe one day Congress will get rid of the debt ceiling altogether, since raising it merely allows the government to borrow money to pay bills Congress has already approved.

Secondly, Janet Yellen testified before Congress for the first time in her new role as chairman of the Federal Reserve. It’s hard to understand why President Obama initially seems to have preferred someone else for the job. There is a nice, clear summary of her testimony from John Cassidy at the New Yorker. This is his conclusion (calling her “dovish” means she’s not an “inflation hawk”, i.e. fighting inflation isn’t her one big priority):

She’s a historic figure. I am not just referring to her gender. I’m talking about her approach to policy making, and the emphasis she puts on creating jobs and reducing unemployment. “Since the financial crisis and the depths of the recession, substantial progress has been made in restoring the economy to health and in strengthening the financial system,” she said toward the end of her prepared remarks. “Still, there is more to do. Too many Americans remain unemployed, inflation remains below our longer-run objective, and the work of making the financial system more robust has not yet been completed.”

It’s been a long time since we’ve had a Fed chief come to office declaring that unemployment is too high, inflation is too low, and that we need to keep those Wall Street bounders in check. (Bernanke ended up saying some of these things, but he didn’t start out saying them.) In a post last year, I suggested that Yellen could be the most dovish Fed boss since … the Great Depression, and I noted that, “if Yellen does take over from Bernanke next February, there’s no reason to doubt that concern for the unemployed will remain her leitmotif.” Nothing she said today was inconsistent with that description.

The Usual Fear Mongering Baloney

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Fox News headline: “ObamaCare could lead to loss of nearly 2.3 million US jobs, report says”.

Speaker of the House John Boehner tweets: “Pres. Obama’s [health care law] expected to destroy 2.3 million jobs”.

What the Congressional Budget Office really said:

CBO estimates that the ACA will reduce the total number of hours worked, on net, by about 1.5 percent to 2.0 percent during the period from 2017 to 2024, almost entirely because workers will choose to supply less labor — given the new taxes and other incentives they will face and the financial benefits some will receive….the largest declines in labor supply will probably occur among lower-wage workers….

The estimated reduction stems almost entirely from a net decline in the amount of labor that workers choose to supply, rather than from a net drop in business’ demand for labor, so it will appear almost entirely as a reduction in labor force participation and in hours worked relative to what have occurred otherwise rather than as an increase in unemployment (that is, more workers seeking, but not finding jobs) or underemployment (such as part-time workers who would prefer to work more hours per week)….

In other words, some people, especially low-wage workers, will decide to work less because of the ACA, mostly because of the benefits they’ll receive.

I don’t know why those who wrote the report believe this will result in fewer hours being worked. In the case of anyone but the self-employed, employers will presumably still want someone to work those hours. As the supply of labor declines, the demand for labor should increase, resulting in rising wages for some workers and job openings for others (and, of course, low wages and unemployment are still two of our major problems). 

You might even argue (incorrectly) that everybody should work as much as possible, because that’s the capitalist way. That’s very different, however, from saying the ACA is going to destroy millions of jobs. 

As usual, Paul Krugman offers thoughtful commentary on the economics and the social impact here and here.

Which Side Are You On?

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Journalist Edward McClelland lays it on the line at Salon in “The ‘Middle Class’ Myth: Here’s Why Wages Are Really So Low Today”.

Some key points:

In the relatively recent past, an “unskilled” worker straight out of high school could get a union job and earn enough to buy a car and rent an apartment.

Workers aren’t simply paid according to their skills. They’re paid based on how much they can get from their employers.

The anti-union movement’s biggest victory hasn’t been the elimination of existing union jobs. It’s been preventing the unionization of other jobs.

Companies claim that low-paid jobs were never meant to support a family or lead to a career, but that’s simply a way to justify paying low wages. And they can do that because they don’t have to deal with unions.

Today’s workers have to stop thinking of themselves as middle-class, just because they don’t work in a factory or they went to college: “Unless you own the business, you’re working class”.

“The smartest people I ever met were guys who ran cranes in the mill…They were smart enough, at least, to get their fair share of the company’s profits.”

It’s an excellent article and not very long. 

While we’re on the subject, Pete Seeger sings “Which Side Are You On?”, written in 1931 by Florence Reece, the wife of a union organizer, during Kentucky’s Harlan County War.

PS – Wikipedia says Florence Reece took the melody from a Baptist hymn. Pete Seeger was only 12 in 1931.

Moe Should Have Watched “The Wire”

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David Simon, the creator of The Wire, spoke recently at a conference in Australia. The Guardian has an edited transcript of his talk here. Some selected paragraphs:

You know if you’ve read Capital or if you’ve got the Cliff Notes, you know that [Marx’s] imaginings of how classical Marxism – of how his logic would work when applied – kind of devolve into such nonsense as the withering away of the state and platitudes like that. But he was really sharp about what goes wrong when capital wins unequivocally, when it gets everything it asks for.

That may be the ultimate tragedy of capitalism in our time, that it has achieved its dominance without regard to a social compact, without being connected to any other metric for human progress.

From this moment forward unless we reverse course, the average human being is worth less on planet Earth. Unless we take stock of the fact that maybe socialism and the socialist impulse has to be addressed again; it has to be married as it was married in the 1930s, the 1940s and even into the 1950s, to the engine that is capitalism.

Mistaking capitalism for a blueprint as to how to build a society strikes me as a really dangerous idea in a bad way. Capitalism is a remarkable engine again for producing wealth. It’s a great tool to have in your toolbox if you’re trying to build a society and have that society advance. You wouldn’t want to go forward at this point without it. But it’s not a blueprint for how to build the just society. There are other metrics besides that quarterly profit report.

And that’s what The Wire was about basically, it was about people who were worth less and who were no longer necessary, as maybe 10 or 15% of my country is no longer necessary to the operation of the economy. It was about them trying to solve, for lack of a better term, an existential crisis. In their irrelevance, their economic irrelevance, they were nonetheless still on the ground occupying this place called Baltimore and they were going to have to endure somehow.

Moe really should have watched The Wire.