Sunday, June 27, 2021

Week-end Wrap – Political Economy – June 27, 2021

Week-end Wrap – Political Economy – June 27, 2021

by Tony Wikrent

Strategic Political Economy

THE 50-100 PAY GAP: These 20 Harsh Facts About Income and Wealth Inequality Will Shock You 

[Capital & Main, via Naked Capitalism 6-22-2021]

Fourteen shocking facts on inequality and working Americans
● Worker hourly compensation increased just 17% from 1979 to 2019, while worker productivity increased more than 72% over the same time period.

● Had the income of the bottom 90% of Americans kept up with GDP growth, they’d have collectively taken home $2.5 trillion more in 2018. Over the 43 years since 1975 combined, the figure is $47 trillion.

● The wealth of the bottom half of families — roughly 64 million families — adds up to only 1% of total U.S. household wealth.

● The median white family has 41 times more wealth than the median Black family and 22 times more wealth than the median Latino family.

● In 2016, 72% of white families owned their home, compared to just 44% of Black families and 45% of Latino families.

● For the average American consumer, the share of their expenditures spent on health doubled from 1980 to 2018.

● Half of U.S. adults with lower incomes skipped necessary medical care such as doctor visits, recommended tests, treatments, follow-up care or prescription medications in the past year because of the high cost.

● Between 2008 and 2018, the number of states in which health insurance premiums and deductibles consumed at least 10% of median income increased from seven to 42.

● The price of education increased 600% more than incomes from 1980 to 2018.

● One in four Americans have no retirement savings — and those who do aren’t saving enough. The median retirement savings account of $120,000 for those approaching retirement (ages 55 to 64) will likely provide less than $1,000 per month over a 15-year retirement span.

● Social Security benefits have lost 30% of their buying power since 2000.

● Nearly 83 million adults — 34 percent of all adults in the country — reported that their household found it somewhat or very difficult to cover usual expenses such as food, rent or mortgage, car payments, medical expenses or student loans in the last seven days, according to survey research in November 2020.

● Nearly half of Black adults reported it was somewhat or very difficult to pay usual household expenses, nearly twice the rate among white adults and Asian adults (28%). A similar share (47%) of Latino adults reported such difficulties.

Sunday, June 20, 2021

Week-end Wrap – Political Economy – June 20, 2021

Week-end Wrap – Political Economy – June 20, 2021

by Tony Wikrent

Strategic Political Economy

The Lords Of Hell (And Their Slaves) 

Ian Welsh

Homelessness, despair and so on are required: without them people will not work at bad jobs. Indeed, without them many people would not work any more than required to feed and house themselves.

Now, understand clearly, rip a hole in your skull, and put this in: there is more food than needed and way more homes than homeless people in all developed countries and more food than needed to feed everyone in the world. We could easily feed and house everyone in the world. It is almost a trivial problem. We simply have to do it.

Industrialization plus modern agriculture produces more than we need, easily. Automation should mean that less and less hours needed working. We should be living in a paradise of free time and choice.

We do not because a small minority has captured power and enslaved the rest of us.

These people are monsters on every possible level, including their depraved indifference to what will happen to their children and grandchildren under environmental collapse and climate change.

We have a surplus, but it is generated in the stupidest ways possible: with planned obsolesence, soil degradation and pollution causing environmental collapse.

Matt Stoller: A Society Designed to Incentivize Criminal Behavior at the Highest Level

Washington’s Dangerous New Consensus on China (not paywalled)

Bernie Sanders [Foreign Affairs, via Naked Capitalism 6-18-2021]

The deck: “Don’t Start Another Cold War.”

The carnage of mainstream neoliberal economics

Many Americans moved to less pricey housing markets in 2020 

[AP, via The Big Picture 6-15-2021]

Many Americans who moved last year relocated to areas where homes were, on average, bigger and less expensive. On average, people who moved to a different city in 2020 ended up in a ZIP code where average home values were nearly $27,000 lower than in their previous ZIP code.

Sunday, June 13, 2021

Week-end Wrap – Political Economy – June 13, 2021

Week-end Wrap – Political Economy – June 13, 2021

by Tony Wikrent

Strategic Political Economy

[Twitter, via Naked Capitalism 6-11-21]



Vast Majority of Voters Want Higher Taxes on Wealthy, Corporations 

[Americans For Tax Fairness, via Daily Poster 6-12-2021]

Nearly 7 in 10 voters support raising taxes on the wealthy and corporations, according to a new poll from ALG Research, Hart Research, and Americans for Tax Fairness. Moreover, voters become more supportive of President Joe Biden’s economic plans when they are told they will be funded by taxes on the wealthy and corporations.

The Global South has lost $152 trillion through unequal exchange since 1960
Dylan Sullivan [Progress in Political Economy, via Mike Norman Economics, June 7, 2021]

Dependency and world-systems theorists have long argued that “unequal exchange” is a key driver of global inequality. Since wages and natural resource prices are much lower in the global South than the North, poor countries must export many more units of embodied labour and resources than they import in order to achieve a monetary balance of trade. This creates a constant transfer of labour and ecology from the periphery to the core, developing the latter but impoverishing the former.

In a recent paper in New Political Economy that I co-authored with Jason Hickel from the University of London, and Huzaifa Zoomkawala, a data analyst based in Karachi, we quantify the value that has been appropriated from the South through unequal exchange since 1960. To do this, we use a method developed by the economist Gernot Köhler. Köhler proposes that we can use purchasing power parity (PPP) exchange rates constructed by the World Bank to value the South’s exports at the North’s price level. By subtracting the actual market price that the South received for its exports from this figure, we can measure the commodities appropriated by the imperialist states, in terms of the Northern price of those commodities.

Using Köhler’s method, we find that in 2017 the ‘emerging and developing economies,’ as defined by the IMF, lost $2.2 trillion worth of goods to the ‘advanced economies.’ This represents an enormous loss for the South. These resources could have ended extreme poverty 15 times over, but instead they were transferred gratis to the core. This windfall is of enormous benefit to the centres of empire. For instance, in 2017 the US gained $2,634 per person through unequal exchange, while the average Australian citizen received $3,116 from the South. Since 1990, the North’s annual gains from unequal exchange have sat at 5.2% of GDP, considerably higher than the North’s annual growth rate. In other words, if not for imperialist plunder, aggregate income in the North would have been declining for decades. The extraordinary levels of material consumption currently enjoyed in the North are predicated upon exploitation and poverty in the periphery.

Figure 1 shows total value transfer since 1960. All up, the South has lost $62 trillion (constant 2011 dollars), equivalent to 97% of its 2017 GDP. If this surplus had been available to the South, it could have been reinvested in domestic economic development. If we assume this surplus would have grown at the same rate as Southern GDP, it would now be equivalent to $152 trillion.…

And don’t forget the RAND study that found in USA alone, the one percent have taken over $50 trillion from the bottom 90 percent since 1975Trends in Income From 1975 to 2018.

Friday, June 11, 2021

A tribute to Frank Ryan, a Producer Class HERO


Frank Ryan passed in April 2021. He was a close friend who led one of the more interesting lives imaginable. He was a builder of complex and difficult things. And he made a decent living fabricating some of the parts of our complicated existence.

For example, he made what he laughingly called "terminator" parts—titanium pieces that were used by an orthopedic surgeon to re-enforce and replace bones during a long-term research project going on over at the University of Minnesota Hospital. The surgeon would ask for Frank by name and together, they created a whole line of prototypes that resulted in a serious expansion of what orthopedic surgery can actually fix. The doc had great ideas that Frank turned into titanium parts that were often so light, they fell like a leaf if dropped.

The shop where Frank worked had an established reputation and so received every month perhaps eight metal-bending journals directed at high-end fabricators. These publications were paid for by the machine toolmakers so I am pretty sure they were just junk mail for the shop. Fortunately, someone in the administrative offices carried these magazines down to the shop floor break room. Frank would wait a few days so anyone interested could look at the articles, and then would bring them home.

Which is how I got to see them. And I thought they were absolutely wonderful. And this is where the story gets complex and fascinating. The reason I was so interested in reading journals directed at the machine-tool industry, is because I was trying to understand what had happened to the USA economy (and by extension the global economy) during the late 1970s and the 80s. The trigger for my curiosity was an argument I had in 1982 with the highest-ranking civil servant I knew in Washington DC. We were discussing the effects of the Recession of 1980-1. His take on events was that Reaganomics was going to herald a new day of economic growth and prosperity. My take was that this economic calamity had wiped out hundreds of thousands of small and mid-sized farmers and businessmen and much of the destruction was permanent.

It was about that time I discovered that the political economist Thorstein Veblen had been very careful in drawing a distinction between business and industry. I had long assumed that these two words were simply synonyms. Not so! argued Veblen. For him, industry was the organization of the community's necessary work—growing food, building infrastructure, inventing, etc. Business, on the other hand, consisted of the efforts employed by those who could not or would not do the necessary work themselves and gained their incomes through force and fraud—imperialism, rents, usury, tithes, taxation, the whole predator-class list.

The business vs. industry dichotomy is one of those ideas that once you have seen it, it is damn difficult to unsee it. Ever! Veblen's famous "The Theory of the Leisure Class" in 1899 described the antics of the Business / Leisure classes. It took until 1914 for him to describe the characteristics of the industrial classes. He called that description "The Instinct of Workmanship: and the state of the industrial arts".

The implications of Veblen's Business / Industry dichotomy were, and still are, absolutely staggering. For one thing, the numbers suggested that while the Leisure Classes were culturally dominant, the overwhelming majority of humanity had to struggle through life employed in jobs that had little status and pay. On the other hand, the industrial classes were far more accepting of science and technological advancement. They had discovered that one sure way to advance themselves out of their subservient status was to invent and build a new world. 

When Veblen was born in 1857, the vast majority of the population farmed with brute labor—harvesting wheat with a scythe or picking corn by hand. 100 years later, plumbers owned Corvettes, radio and TV allowed everyone to have their own soundtrack, and food was so plentiful that anyone remotely interested could become a food snob. And all of this was made possible by a torrent of inventiveness that allowed for the mass production of high quality metals and tools that could output products to the accuracy of microns. The Industrial Revolution was the first and only revolution that provided real material progress to folks who had previously been slaves, share-croppers, serfs and peasants. 

I learned NONE of this tale of Industrial Class revolution during my years in school. And yet when I discovered these social histories by reading Veblen and others of the era of scientific invention, I immediately believed them because of my good friend, Frank Ryan, was a living example of why they were true. 

That Frank Ryan was this production genius is one in thousands of examples for why the USA Midwest became the global heartland of invention. If he had grown up in someplace like Detroit or Chicago or Muncie Indiana, he would have known dozens of people with his eventual mechanical skills. But Frank was born in a tiny, desolate, wind-swept burg near where the Missouri River exits the state of South Dakota. And while Ole Rolvaag was correct in asserting that it was only the Giants in the Earth that could settle the brutal environments that were the high prairies, these were not the high precision skills that produced substitute human body parts. The nearest such operation was probably at least 100 miles from where Frank spent his childhood.

But Platte South Dakota wasn't nowhere. In fact, it had a lot of the same characteristics of the industrial incubators that gave us Henry Ford and the thousands of farm-kid inventors who would follow his recipe. In farm country, inventiveness is a survival skill. Being able to figure out a novel way to solve problems becomes a highly admired attribute. Frank's father was a veterinarian back before licensing procedures had been instituted. He was a vet because he successfully treated animals so it was farmers who kept him in business—not diplomas. He was successful because he was scientifically literate enough to understand causation.

Frank also grew up during the early heyday of model airplanes and apparently built a lot of them. Kits could be had for $0.10 and usually took a couple of months to assemble. Considering it took from the dawn of recorded history until 1903 to figure out powered flight, the fact that by the 1930s, models that flew were considered a children's pastime was really a stretch. For a model to fly, it must follow the same laws of nature that a full-sized airplane does. Frank never bragged about how well his models flew which suggests they probably usually crashed. Folks who build those large-scale models you see flying on YouTube are fabricated by middle-aged men (or older) with considerable skills and persistence. But simply building those $0.10 models taught a host of fabricating skills merely to get them to the stage where you could hang them from the bedroom ceiling.

And then there was the Army. Frank was hardly the first small-town kid that the military tapped to operate and maintain its technologically advanced tools of war. In fact, rural kids were considered prime recruits. Frank easily passed the Army entrance test which sought out technical skills and was told he could select any training path that interested him. He selected the skill that had the longest training. The Army got the last laugh—his training made him qualified to operate the over-the-horizon radars which supposedly gave an early heads-up on missiles launched over the North Pole. This meant he spent some long winters in places like Greenland and Alaska. Even a South Dakota upbringing does not prepare someone for the sheer brutality of a Greenland blizzard. There was a limit to how long someone could tolerate such an assignment especially since in practice, this meant that, at best, North Americans could be terrified for 20 extra minutes before their world would end.

After 7 years, Frank left the Army to join the post-war economic expansion. His military skills had no civilian application so he found himself selling temporary classrooms to frantic school boards facing the results of the baby boom. Sales gigs would become an increasingly difficult way to make a living so one day, a few years later, he walked in the door of small punch-press shop and was hired by someone who assumed that anyone with reasonable personal habits could feed one. But even in a small punch shop, there is a hierarchy of skills. By the time I met Frank in the early 1970s, he had become a premiere set-up specialist—the guy who arranges tools precisely so they make accurate parts. This was obviously a critical skill—not the least reason was the fact that even tiny mistakes could result in the destruction of $thousands worth of specialized tools. What made all this especially ironic was that those difficult jobs Frank would come to excel at, he had probably never even heard of that day when he went to work as a punch-press operator.

When I first met Frank, I took an instant liking for him—he was from a small prairie town, he understood and appreciated those rural survival skills, and most importantly, he had built flying model airplanes made of balsa and tissue—a hobby that had occupied a significant portion of my youth. He told interesting stories about the struggles to make difficult parts from a wide assortment of alloys. 

But most of all, he wanted to help me with my big problem. I had teamed up with a couple of dreamers who believed we should rehab a vacant building in a neighborhood that had deteriorated from fashionable to thoroughly dilapidated. I had built houses as a carpenter to help finance my college education and so I confidently assured them I could fix their building. It soon became apparent that the skills necessary to build tract houses did not obviously transfer to restoring late 19th-century Victorian and Queen Anne mansions. I was WAY in over my head. I had to figure it out on the fly and so I got together with Frank each night when he got off work and we would plot my next move. Frank was amazingly helpful. Not once on that project did I have to take something apart because I had taken a wrong turn.

Sometimes, I would have a project where I really needed an extra set of hands. Frank was an incredible sidekick. He would keep track of tools and materials, he would help organize the workspace, and when I needed those extra hands to guide large parts through tools, he always knew where to hold on and which way to push. One project involved making a teak room divider in a room with a 10' ceiling. It would have glass doors and shelves, it would be lit with a bulb on a dimmer, and there would be a a wooden cabinet to store the booze. No drawings had been produced so Frank had only a vague understanding how everything would go together but he soldiered on being his very useful self. The end result was stunning. The woman whose crystal collection this room divider would house showed up when Frank and I were sitting around and admiring our handiwork. She asked Frank when he actually understood what we were building. He laughed, "Oh, about 1/2 hour ago." It was at that moment when I realized what Frank had brought to my life—expert help, loyalty, trust, and understanding.

When Frank started supplying me with those machinist trade journals, he became someone who was more than an example of raising usefulness to an art form, he was making a critically important contribution to my intellectual understanding of the world. Veblen argued that the industrial classes were the numerical majority. What he left out of his argument were speculations on how amazingly stratified his giant industrial class was. Frank's magazines just exploded this point into my consciousness. Frank had more practical skills than anyone I had ever met, yet compared to the people who designed and built the machine tools he operated, he was a hobbyist. Hyper-accurate machine tools are one of the more critical elements of a science-based civilization. One of the easier ways to judge the technological sophistication of any social order is to examine the quality of their machine tools. Of course, even the finest machine tools are pretty worthless unless operated by passionately skilled and imaginative Frank.

Once I had become acquainted with the nearly limitless possibilities and crazy difficult problems that could be solved by the nearly miraculous tools available to humanity, the question then became, "Why are we not creating this available utopia?" And I became fixated on expanding Veblen's class theories because it provided a believable answer to the question "Why are modern societies run by people who have NO IDEA how their world actually works?" Veblen's social theories provide a brilliantly simple response. The highest goal of the Leisure Classes is a life of uselessness. The highest goal of the industrial classes is usefulness. So while a Leisure Class occupation like politics has, if anything, deteriorated in the last 150 years (think Abe Lincoln to W. Bush) the Industrial Classes have invented miracles (like the progress from the telegraph to the satellite-based Internet). So it turns out that folks determined to live useful lives WILL significantly outperform the people determined to be absolutely worthless.

Soon I would write a book inspired by my new insights into Frank's world. When I had a first draft, I showed it to to him. He was absolutely delighted and read it in three days. We got together and he began to read some of the passages that truly amused him. A couple provoked genuine belly laughs—some a giggle. I was flattered beyond words that he thought I had captured the world-view of a prime set-up man.

Frank lived an important life. Everything that is truly amazing about this country was the result of the hard work, inventiveness, and determination of men like Frank Ryan. Folks like him still exist—though there seems to be fewer of them these days and their social situation seems nearly hopeless. 40+ years of USA de-industrialization will do that. So here's a toast to a Producer Class hero. R.I.P.

So what does a true Producer do when he retires? Why build a ridiculously complex trimaran, of course.

Sunday, June 6, 2021

Week-end Wrap – Political Economy – June 6, 2021

 Week-end Wrap – Political Economy – June 6, 2021

by Tony Wikrent

Strategic Political Economy

The Particular Psychology of Destroying a Planet” What kind of thinking goes into engaging in planetary sabotage?

Bill McKibben [The New Yorker]

….in a new book from the British psychoanalyst Sally Weintrobe. “Psychological Roots of the Climate Crisis” states its argument in its subtitle: “Neoliberal Exceptionalism and the Culture of Uncare.” Weintrobe writes that people’s psyches are divided into caring and uncaring parts, and the conflict between them “is at the heart of great literature down the ages, and all major religions.” The uncaring part wants to put ourselves first; it’s the narcissistic corners of the brain that persuade each of us that we are uniquely important and deserving, and make us want to except ourselves from the rules that society or morality set so that we can have what we want. “Most people’s caring self is strong enough to hold their inner exception in check,” she notes, but, troublingly, “ours is the Golden Age of Exceptionalism.” Neoliberalism—especially the ideas of people such as Ayn Rand, enshrined in public policy by Ronald Reagan and Margaret Thatcher—“crossed a Rubicon in the 1980s” and neoliberals “have been steadily consolidating their power ever since.” Weintrobe calls leaders who exempt themselves in these ways “exceptions” and says that, as they “drove globalization forwards in the 1980s,” they were captivated by an ideology that whispered, “Cut regulation, cut ties to reality and cut concern.” Donald Trump was the logical end of this way of thinking, a man so self-centered that he interpreted all problems, even a global pandemic, as attempts to undo him. “The self-assured neoliberal imagination has increasingly revealed itself to be not equipped to deal with problems it causes,” she writes.

The real Lord of the Flies: what happened when six boys were shipwrecked for 15 months

[The Guardian, via The Big Picture 6-3-2021]

When a group of schoolboys were marooned on an island in 1965, it turned out very differently from William Golding’s bestseller, writes Rutger Bregman….

For centuries western culture has been permeated by the idea that humans are selfish creatures. That cynical image of humanity has been proclaimed in films and novels, history books and scientific research. But in the last 20 years, something extraordinary has happened. Scientists from all over the world have switched to a more hopeful view of mankind. This development is still so young that researchers in different fields often don’t even know about each other.