Relevant and even prescient commentary on news, politics and the economy.

War is good for the economy?

Via Big Picture, Barry Ritholz points us to discussion on the role of ‘war’ in our economy:

Preface: Many Americans – including influential economists and talking heads – still wrongly assume that war is good for the economy. For example, extremely influential economists like Paul Krugman and Martin Feldsteinpromote the myth that war is good for the economy.

Many congressmen assume that cutting pork-barrel military spending would hurt their constituents’ jobs. And talking heads like senior Washington Post political columnist David Broder parrot this idea.

As demonstrated below, it isn’t true.

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The Pernicious Prison of the Price Theory Paradigm

Steve Randy Waldman has utterly pre-empted the need for this post, cut to the core of the thing, in the opening line of his latest (collect the whole series!):

When economics tried to put itself on a scientific basis by recasting utility in strictly ordinal terms, it threatened to perfect itself to uselessness. 

But I’ll try to help a little. What that means:

In the mid 20th century, economists decided:

It’s impossible to measure absolute utility. We can’t say what the value to you is of a heart bypass for your mother, or the value of a college education for your kid, or the value of (you or someone else) buying a third or fourth Lamborghini.

So we’re simply going to punt, and only talk about ‘preferences’. For our discipline, in its scientific impartiality, absolute utility — because we can’t measure it — will effectively not exist.

Inside our hermetic logical construct, we not only aren’t able to think about absolute utility — actual human value — we are forbidden to do so. Barred.

And with this spectacular piece of rhetorical legerdemain, the discipline disavowed itself of any responsibility for the implications and effects of that rhetorical legerdemain. (It’s hard not to be impressed.)

The effects? Economic analysts must assume, prima facie, that a billionaire buying a third or fourth Lamborghini delivers the same value as buying a college education for your kid or a heart bypass for your mom.

Who are we to second-guess preferences? They’re all the same price, right?

The (inexorable) implications? Concentration and distribution of wealth and income not only don’t matter. For economists who aren’t willing to tear open the prison door (at serious risk to tenure and employment), they can’t matter.

Steve explains it all far better, with circles and arrows and a paragraph on the back of each one explaining how each one is to be used as evidence against us. But I hope this little summation helps.

Cross-posted at Asymptosis.

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The Short Version–Piketty

June’s issue of Atlantic Monthly brings to the reader a series of graphs as presented by Derek Thompson’s “How the Rich Shall Inherit the Earth”. The article gives a pictorial representation of what has taken place since the eighties in skewing income to a small, very small group of individuals numbering < than a hundred thousand taxpaying households. The bulk of the ~1 % are much like the 99% and make their income mostly from wages. It is the 1% of the 1% who have excelled in making their money from investments and inheritances.

There are quite a few discussions going on at various blogs as to whether r > g or not and whether it is a fundamental law of capitalism/economics. Side comment; FIFA governs soccer games utilizing the laws of the game which are open to interpretation by various referees monitoring the game. Laws are not rules and are open to interpretation. Courts also give interpretations of laws, which can be superseded by higher courts. When various district federal courts disagree, SCOTUS can and may make an interpretation. There does not appear to be such a governing body in economics the same as FIFA or SCOTUS..

This one comment by Yves Smith caught my eye as it does ring true:

“What I’m bothered by is that the ‘fauxgressives’ are flogging Piketty, when I don’t see his argument as helpful to the left. If you believe r > g, then large and rising wealth disparity is a state of nature. You have handed the argument over to conservatives, who will contend that you have to interfere in a very basic way in the operations of capitalism to undo that.”

In my opinion, this result is not a natural state of being and it is the result of manipulation. In a series of charts, Thompson has captured what Piketty has said in 700 pages(?) and the result of the skewing of income to a minority of taxpaying households.

– Since the late seventies, income growth among the top 1 percent of Americans has outpaced the income growth of the other 99%. In further examining the 1%, it is the top 1% of the 1% which has experienced the greatest growth.

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– Thompson poses the question; Who are these people? and answers his own question “amongst the top 0.1 percent half work in finance or as corporate executives. They are people compensated directly or in­directly by the growth of the stock market in various forms other than payroll wages. In the past 30 years, CEOs at top firms have been paid more and more with stock.”

CEO Compensation

– Adding to his earlier comment; “the richer you are, the more likely it is that your wealth came from stocks and not income from payroll wages. Most people want to believe they are capable of achieving great wealth resulting from their labor and the wages paid for it. Wages resulting from Labor “are less relevant to earnings at the top of the income pyramid”.

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“The above chart compares the inflation-adjusted incomes of the top 0.1 percent with annual inflation-adjusted S&P 500 prices, both indexed to 100 beginning in 1913. (Note: The income numbers for the 0.1 percent come from Picketty and Saez. The real S&P prices come from Robert Shiller).”

– The importance of those various factors to the increase of 3.6 percentage points in the Gini index for total market income between 2002 and 2007 differs yet again. More than 80% of the total increase in the Gini index over those years stemmed from an increase in the share of total income coming from more highly concentrated capital gains. An increase in the concentration of capital income accounts for most of the remaining increase. Labor income became somewhat less concentrated over that period, but the effect on overall income dispersion was small.” Page 12-13, Trends in the Distribution of Household Income Between 1979 and 2007

Gini

– ‘The top 1% of US households, own 38.2% of all US stock market wealth and the richest 10% of households own a combined 81.2% of all the stock market wealth, whilst the bottom 60% of US households only own 2.5% of stock market wealth.'”

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Taken from: Economic Policy Institute, “‘The State of Working America 2011, Share of Stock Holdings Held by Top 10% Has Barely Budged in Last Two Decades.’ Includes direct ownership of stock shares and indirect ownership through mutual funds, trusts, IRAs, Keogh plans, 401(k) plans, and other retirement accounts.

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Quelle Surprise, Labor Productivity is Up while Labor Wages are Still Down!

BLS economist Shawn Sprague writes What Can Labor Productivity Tell Us About the U.S. Economy?

Labor worked the exact same number of hours in 1998 as they did in 2013 or ~194 billion hours. While there was no growth in the number of hours worked, the Non-Institutional Civilian Population grew by 40 million people, and new businesses were created by the thousands which should have needed more Labor. Mean while American businesses produced $3.5 trillion in goods or 42 percent more in 2013 than in 1998 even after adjusting for inflation.

To repeat, during this period “the Business sector output grew by 42 percent, Labor hours did not grow at all, and Labor productivity (the difference in these growth rates) grew by 42 percent.” Sprague explains further; “if labor hours had grown instead by 10 percent during the period, then labor productivity would have grown by 10 percent less, or 32 percent. If labor hours had instead grown by a full 42 percent, then labor productivity would not have grown at all during the period. These examples illustrate that it is the interplay of output growth and labor hours growth that is fundamentally important to understanding labor productivity.” Labor hours of input did not grown, so what happened?

 

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Increases in throughput (as I would call it) can be achieved through more efficient equipment; faster, experienced or trained Labor; less down time for maintenance, utilization improvements, and less scrap or better materials. “In these and other cases, output may be increased without increasing the number of labor hours used.” I am gong to assume this could mean the addition of more Labor without adding hours.

Here we have a situation of increased business gained through efficiency and the resulting Productivity Gains not going to Labor and remaining with Capital. Shawn Sprague does not really delve into this topic; but, it is apparent within some of the earlier posts by Spencer England Labor’s Share, others as well, and Shawn’s footnote 4. Isn’t this a part of what Piketty is pointing out in his narrative on the growth of inequality?

Shawn’s Footnote 4: While this is possible, it is not always the case that growth in labor income keeps pace with growth in labor productivity. For instance, over the past 30 years, gains in real worker compensation per hour have fallen behind gains in output per hour. This reveals another reason why it is important to measure labor productivity—because it is the yardstick with which we can measure the extent to which additional production per hour of work ultimately ends up translating into additional income per hour of work. More on the topic: The compensation-productivity gap: a visual essay

There is no reason for business to hire more Labor to meet the increased business or shorten the work week to accommodate more workers as it would tighten the Labor Market and increase Overhead and Labor Wages. Best of both worlds for business, increased profits and a loose Labor market.

Hat Tip: Economists View

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AWESOME opinion today by Roberts in Bond v. United States!

I’ve written extensively here at AB about a two-time Supreme Court case called Bond v. United States, first three years ago when the case was heard the first time, then in the last few months as the case was heard there again.  My most recent post on it, from May 15, was called “The Supreme Court’s opinion in Bond v. U.S. will be about separation of powers.  But about separation of WHICH powers?”  I updated that post on May 17 to include an exchange between reader Mike Hansberry and me in the Comments thread to the post.

In that exchange of comments, I outlined exactly what I hoped the Court would do in the case–and how, and why.  I haven’t yet read the opinion and the concurrences in the judgment* and won’t have a chance to until later today, but SCOTUSblog’s Amy Howe and Tom Goldstein summarized it briefly on the live blog of the Court’s actions this morning, and it appears that the opinion, written by Roberts and joined by Kennedy and the four Dem appointees, is exactly what I said in that post and exchange with Hansberry that I hoped–but did not expect; no one did, best as I could tell–that the Court would do and say.  Here’s their summary from the live blog:

  • Here’s Lyle again. The third and final opinion is Bond v. US. The decision holds that Section 229 does not reach Bond’s simple assault. It is by the Chief Justice.
    by Amy Howe 10:11 AM
    Comment
  • The decision of the Third Circuit is reversed. There are no dissents; there are multiple opinions, however. Scalia has concurred in the judgment, joined by Thomas and in part by Alito. Thomas filed an opinion concurring in the judgment in which Scalia joined and Alito joined in part. Alito filed an opinion concurring in the judgment.
    by Amy Howe 10:12 AM
    Comment
  • The Court seems to avoid a major ruling on the Treaty power by limiting the federal criminal statute under which the defendant was charged.
    by tgoldstein 10:13 AM
    Comment
  • The opinion makes clear that the Court does not interpret the scope of the international weapons treaty at issue. The state laws are sufficient to prosecute an assault like the one in this case. There is no indication in the federal law that Congress intended to abandon its traditional reluctance to define as a federal crime conduct controlled as criminal by the states.
    by Amy Howe 10:13 AM
    Comment
  • The separate opinions by the other conservatives likely argue that the Treaty Power should be limited. But the Chief Justice and Justice Kennedy do not join them.
    by tgoldstein 10:13 AM
    Comment
  • A quote from the Court’s opinion: “The global need to prevent chemical warfare does not require the federal government to reach into the kitchen cupboard.”
    by Amy Howe 10:14 AM
    Comment
  • Here is the opinion in Bond.
    by kborkoski 10:16 AM

The surprise basis for the ruling–an actual honest consideration of what Congress’s purpose was, and the breadth Congress actually intended, in enacting the statute at issue–is similar to a ruling on May 19, in an opinion by Ginsburg, concerning a procedural statute.  This is a very good, new development for the current Court (although the three dissenters in that case, a Copyright Act case, called Petrella v. Metro-Goldwyn-Mayer, were Roberts, Kennedy and Breyer).

The other big news from the Court this morning–and this is VERY big news–is that the Court agreed to hear two cases filed respectively by the Alabama Democratic Conference and the Alabama Legislative Black Caucus, both which lost in the lower federal courts.  Amy Howe writes:

The questions at issue in the Alabama redistricting cases involve packing black voters into districts to concentrate their voting strength. In 13-1138, there is a subpart in the question that the Court agreed to hear about whether these plaintiffs have standing to bring their claims of racial gerrymandering.

And, a few minutes later:

Here’s Lyle [Denniston, at the Court]. We have one grant (technically noting of probable jurisdiction), in the two Alabama redistricting cases, Alabama Democratic Conference v. Alabama (is limited to question one), Alabama Legislative Black Caucus v. Alabama (question two only).

I probably will write a detailed post on Bond, hopefully tomorrow.  I don’t think I’ll have time today.

—-

*Corrected to say “concurrences in the judgment” rather than “dissents.”  I was really rushed this morning when I inadvertently misstated  that these were dissents, despite Amy Howe’s clear statement that these were concurrences in the judgment, not dissents–a particularly important distinction in this case, and one that highlights the importance of the grounds the majority did choose versus the grounds that they rejected. 6/2 at 8:42

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The Five Best Nonfiction Books

Okay fine, not the best. (Click bait!) But for me, the most important — the five books that, more than any others, taught me how to think about the world.

A friend in my “classics” book group asked me for nonfiction book recommendations. Here’s what I wrote:

The NF books that wow me, get me all excited, have me thinking for years or decades, are ones that are comprehensible to mortals but that transform their fields, become the essential touchstones and springboards for whole disciplines and realms of thought. Writing for two such disparate audiences is insanely hard, and the fact that these books succeed is a big part of what makes them brilliant.

Also books that cut to the core of what we (humans) are, how we know. (So, there’s much science tilt here, but far bigger than arid “science.”)

“I don’t know how I thought about the world before I read this.”

Or:

“Yes! That’s exactly what I’ve been kinda sorta thinking, in a vague and muddled way. THANK YOU for figuring out what I think.”

These books let you sit in on, even “participate,” in discussions at the cutting edge of human understanding. They make you (or me, at least) feel incredibly smart.

And they’re fun to read — at least for those with a certain…bent…

Probably have to start with Dawkins’ The Selfish Gene. When it came out in ’76 it crystallized how everybody thought about evolution, hence life and humanity. The amazing Dawkins, amazingly to me, has become kind of hidebound and reactionary in response to new developments since then (group/multilevel selection, inheritance of acquired characteristics), but the new information and new thinking that make parts of this book wrong, couldn’t exist without the thinking so beautifully condensed in this book. Might not need to read the whole thing, but it’s pretty short and you might not be able to resist. Very engaging writer and full of fascinating facts about different species and humans. Also the place where the word “memes” was coined.

Steven Pinker. The Blank Slate: The Modern Denial of Human Nature. The most important book I’ve read in decades. Philosophy meets science meets sociology, anthropology, psychology, politics, law… Pinker’s core expertise is in language acquisition, how two-year-olds accomplish the spectacularly complex task of learning language (see: The Language Instinct: How the Mind Creates Language.). He has a love-affair with verbs, in particular. Just loves those fuzzy little things. But his knowledge is encyclopedic and his mind is vast. And he’s laugh-out-loud funny on every other page. Also incredibly warm and human. I have such a bro-crush on this guy. (Also: everything else he’s ever written, including at least some chunks of his latest, The Better Angels of Our Nature: Why Violence Has Declined.)

Daniel Kahneman, Thinking Fast, and Slow. Kahneman and his lifelong cohort Amos Tversky (sadly deceased) are psychologists who won the 2002 Nobel Prize — in Economics! — for their 1979 work on “Prospect Theory.” (Fucking economists have been largely ignoring their work ever since, but that’s another subject…) About “Type 1” and “Type 2” thinking: the first is instantaneous, evolved heuristics that let us, e.g., read a person’s expression in a microsecond from a block away. The second is what we think of as “thinking” — slow, tiring, and…crucial to what makes us human. Interestingly, in interviews Kahneman says that he almost didn’t write this book, thought it would fail, for the very reason that it’s so great: it addresses both mortals and the field’s cutting-edge practitioners, brilliantly. The book’s discussions of his lifelong friendship and collaboration with Tversky are incredibly touching.

E. O. Wilson, The Social Conquest of Earth. Q: How did we end up at the top of — utterly dominating — the world food chain? A: “Eusociality”: roughly, non-kin altruism. Wilson knows more about the other hugely successful social species — insects and especially ants — than any other human. He basically founded the field of evolutionary psychology with his ’76 book, Sociobiology. As with the others, this is deep, profound, wide-ranging, and incredibly warm and human in its insights into what humanity is, what humans are. Those things that are wrong in The Selfish Gene? Here’s where you’ll find them.

Michael Sandel, Justice: What’s the Right Thing to Do? Philosophy. It draws on some scientific findings, but mainly this is very careful step-by-step thinking through a subject, a construct, that is not uniquely human, but close. (Elephants, apes, etc. do seem to care about justice, sort of.) I find it especially engaging and important because it addresses and untangles the central political arguments of recent times — is it “just” to make everyone better off by taking from the rich and giving to the poor? Should individual “liberty” trump individual rights? What rights? Etc. This book did much to help me comb out my muddled thinking on this stuff.

Morton Davis, Game Theory, a Nontechnical Introduction. Stands out on this list cause it’s not one of those “big” books. Available in a shitty little $10 Dover edition. But it’s an incredibly engaging walk through the subject, full of surprising anecdotes and insights. And he does all the algebra for you! The stuff in here makes all the other books above, better, cause they’re all using some aspects of this thinking. Here’s an Aha! example I wrote up: Humans are Pathologically Nuts: Proof Positive.

Okay, you noticed there are six books here. Did I mention click bait?

Cross-posted at Asymptosis.

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Wealth Is Not Capital: The Brilliant Seth Ackerman Explains It All 4 U

I’m stunned by how good the new Jacobin piece by Seth Ackerman is: “Piketty’s Fair-Weather Friends.” It gives what I find to be the best understanding so far of the whole Piketty “think space.”

It’s so good that I can’t encapsulate it, so I’ll just share some of the passages I’m most taken with, with my highlights for your skimming pleasure. RTWT.

it’s increasingly doubtful whether (or how) [Capital‘s] arguments can be reconciled with the MIT-style economic paradigm to which Piketty’s most ardent American promoters — liberal economists like Joseph Stiglitz, Paul Krugman, Brad DeLong — swear allegiance.

For [Paul Krugman], the lesson of Capital in the Twenty-First Century is that mainstream theory has shown its worth: “You really don’t need to reject standard economics either to explain high inequality or to consider it a bad thing.”

At the heart of the neoclassical apparatus lie the twin concepts of marginal productivity and the aggregate production function (more on these below), and as Thomas Palley has written, when it comes to these totems, “you are either in or out.” Thus, as soon as an economist who aspires to theoretical originality wishes to investigate the dynamics of income distribution, she’s liable to find herself swiftly tangled in a conservative straightjacket.

Now that the book’s arguments are being digested, the same liberal, MIT-style economists who did so much to thrust Piketty’s book into the spotlight are expressing serious doubts — and the reason goes back to marginal productivity theory. That theory might end up resembling less a wall that Piketty could circumvent than a maze in which he will find himself trapped.

Marginal productivity theory … makes up something like neoclassical economics’ “operating system” — the language in which almost every proposition must be embedded in order to work.

Popular attempts to recount [the Cambridge Capital] debate tend to get needlessly bogged down in the abstract. They typically focus on the brain-teaser question of whether it’s possible to quantify the “amount” of capital in the economy, given that this capital stock is made up of a vast number of heterogeneous goods, from jackhammers to hard drives. And that was, in fact, the issue that first got the debate started.

But what the argument was fundamentally about was whether the marginal productivity theory of income distribution — marginalism — is a logically coherent theory.

In the Cambridge capital debate, this textbook theory was advanced by neither side. It’s a fairy tale told to undergraduates.

the leading mid-century neoclassicals, they had long disavowed any claim that this story could logically explain the income distribution, for a simple reason: whether or not such marginal products actually exist in the real world is an entirely empirical question, and the answer is that they generally don’t.

Today, empirical studies of manufacturing industries are unanimous in finding that per-worker productivity is constant, not diminishing, as more are put to work in a factory; while even in fast food joints (as this riveting online tutorial for McDonalds managers makes clear) the volume of sales per worker does not depend on how busy the store is, except maybe during the graveyard shift, due to a residuum of fixed labor costs.

it would be irrational for a firm to lay off some workers just because, say, a strike or a minimum wage law hiked up their wage. The employer would get the worst of both worlds: a lower profit margin on every unit of output produced (because of the higher wage) and fewer units produced (because of the laid-off workers). Rather, her best option would be to keep producing as much as she can manage to sell while simply accepting the lower profit rate, assuming profits are still being made. Analyzed in this way, there’s no necessary reason why the platitude “when the price goes up, less is bought” ought to apply to human labor.

But the neoclassical economists on the MIT side of the Cambridge debate already knew all that. They were defending a more sophisticated version of marginal productivity theory that was subtler and, in a way, simpler.

It argued as follows: when the wage is hiked up …consumers switch their purchases from labor-intensive to capital-intensive goods, while firms and entrepreneurs building new lines of business choose more capital-intensive, rather than labor-intensive, techniques. … they are exerting demand for labor or capital through their purchases

And this was the argument that the Cambridge University side defeated

it becomes clear that a rise in the wage does not necessarily make labor-intensive goods relatively more costly to produce, as the neoclassicals had assumed. …it all depends on the complex pattern of input-output relations in the economy as a whole — how many units of good A it takes to produce good B, how many of good B to produce good C, etc., for all the millions of goods in the economy.

Once this neoclassical story — where the relative demands for labor and capital are dependent on their relative prices — is “debunked,” to use Paul Samuelson’s contrite term [he admitted that he lost the argument –SFR], the competitive market economy no longer contains any necessary mechanism pushing the various wage rates or the profit rate to any determinate level.

Rather, history and custom, as well as politics, laws and struggle, will determine who gets what. It’s a system of grab what you can.

Or in my words: the distribution of income, and supermanager compensation, is determined not by scarcity, but by rivalry. The prize goes not to those who put resources to best use, but to those who control who gets them.

it’s unsurprising we should find marginal productivity to be the point where Piketty’s sweeping vision of modern inequality would run into trouble with the economics mainstream.

marginal productivity theory sees a rise in the capital-output ratio as an increase in the “supply of capital,” which, in classic supply-and-demand logic, ought to bring about a reduction in its “price” — that is, a fall in r. According to the theory, this should neutralize the effect on the rg gap.

[Piketty] contended that as growth slows and the capital-output ratio rises, r might decline (as theory predicts) but the magnitude of the decline might still be small enough to permit a net widening in the – g gap.

The technical term for the quantitative relationship involved (that is, between the size of a change in the capital-output ratio and the size of the change in r that supposedly results, or vice versa) is the elasticity of substitution: the higher the elasticity, the smaller the “response” of r to a given change in the volume of capital.

Piketty’s estimate of the elasticity of substitution can’t really be compared with those in the literature. … his pertain to all private wealth, while the literature focuses narrowly on production capital. These are very different concepts.

To interject: this is exactly what I’ve been trying to say, folks. Returns on financial wealth (in the form of money/financial assets/dollars) have only the vaguest and most tenuous relationship to returns (in the form of real output) on real capital — even over very long periods. That’ the crucial lesson of the Cambridge Capital Controversy.

Money matters, and money doesn’t only appear due to the creation of real assets. It appears when real assets are indebted (particularly or generally).

Wealth is (financial assets, including deeds, are) claims on real capital — both particular claims on particular assets, and generalized claims on the stock of real assets. The relationship between wealth and capital remains almost entirely untheorized by economists.

Wealth is not an input to production. Capital is. The creation of wealth in the form of financial assets requires no inputs to production, or any real production at all. Capital does.

Even Piketty fails here; he uses “wealth” and “capital” synonymously, thereby walking right into the rhetorical mind-trap that is marginal productivity theory.

Ackerman says it perfectly:

the elasticity of substitution simply cannot be regarded as a meaningful measure of an economy’s technology (or anything else), or as providing any clue to its future.

What’s essential, rather, is Piketty’s empirical demonstration that the rate of return on wealth has been remarkably stable over centuries — and, contra Summers, with no visible tendency to vary in any consistent way against the “supply of capital.”

And that brings us to a lacuna in Piketty’s analysis that Paul Krugman and other reviewers of Capital have rightly pointed to. The skyrocketing of top-end income inequality we’ve actually witnessed so far in the English-speaking world has mainly come in the form of inflated “labor” earnings, rather than pure capital income.

Which brings us back to marginal productivity theory. Manacled to that concept as their “baseline” theory of income distribution, most liberal economists have done no better than Piketty in their efforts to account for the elephantine growth of these managerial incomes. They’ve had to depict that growth as the result of “rents,”

The problem with these arguments is that neither financiers nor public company executives have led the swelling of high-end incomes over the past several decades. Rather, the single largest contributor has been the income growth of managers in closely-held corporations outside the finance sector  — that is, firms with only a few shareholders, where the controlling owners are almost always the managers themselves, usually family members.

the incomes of supermanagers are in fact an inseparable blend of “labor” and “capital” income.

resurgent capitalists in the 1970s and 1980s, emboldened by a weakened working class, drafted managers tightly into their ranks using the tools and personnel of Wall Street, and reshaped the economic landscape.

Capital has used extraordinary compensation schemes to conscript top management into their ultimate project: ensuring that all possible surplus from production goes to them.

Which prompts me to share this perfect encapsulation of our current situation, from an Albert Wenger post that you should also read in full:

Unskilled labor has been pushed to its reservation price, skilled labor is receiving its marginal product, and all the value creation [the surplus from production] is being split between top management and capital.

I’d say that pretty much nails it.

Cross-posted at Asymptosis.

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Michigan Republican Senate Candidate Terri Lynn Land Declares Federal “War Generals” Incompetent. The Targeted Enemy Being Michigan.

[Michigan Republican Senate candidate Terri Lynn] Land, a Byron Center Republican, had defended presidential candidate Mitt Romney’s anti-bailout position two years ago and noted that GM had become known as “Government Motors.” She declined to revisit the topic Wednesday during a brief exchange with reporters, which she cut short following the forum.

“I’ve always supported auto workers,” Land said. “Detroit put Michigan on wheels. They’re the backbone of our economy here in Michigan. It’s great that the autos are doing well. I support the autos, and what I want to do is go down to Washington D.C. and make sure we have a competitive environment here in Michigan and that you don’t over-regulate, you don’t overtax and you don’t over-burden Michigan families.” …

Land used the forum to tout her credentials as a former Kent County Clerk and Michigan Secretary of State while suggesting that “the federal government has declared economic war on Michigan.”

— Terri Lynn Land dodges auto bailout question, clarifies call for ‘free’ Internet after Senate forumJonathan Oosting, MLive.com, yesterday

Uh-huh.  I mean, if you’re conducting a war, you really shouldn’t deliberately give the enemy the ammunition it needs to regroup and fight back.  Michigan’s economy was down for the count in 2008-09, when suddenly the federal government’s economic war generals handed the enemy, Michigan, the only lifeline anywhere in sight. Talk about snatching defeat from the jaws of victory!

These generals should be court-martialed for treason. Or at least for gross incompetence.

Count me among the (apparently) very few politics watchers who think these Republican Senate candidates will not make it to November spouting utter gibberish and disconnected cliches, and win.

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The War on Private Citizens and Organizations Feeding the Homeless

It has been the political right’s mantra of welfare and charity being best done by private organizations rather than be government sponsored. 50 years have passed since President Johnson declared war on poverty. It was declared an abject failure by the right as it did not make people independent nor did it make people want to get off of welfare. Accordingly, it could be only be through private organizations and then the poor would be able to succeed past welfare. One NBC article written not that long ago focused on a couple feeding the poor once a week in a park in Florida .  The police ticketed the Jimenez, his wife and others for violating a local ordinance on feeding the poor in a restricted park area. The Jimenezs refused to pay the fines levied against them, the fines were ultimately forgiven by the Daytona police, and Jimenez was warned.

 

In  a follow-up article, “Food Feud: More Cities Block Meal-Sharing for Homeless; it was learned “33 cities have either adopted or are considering food–sharing restrictions. Raleigh, N.C.; Myrtle Beach, S.C.; Birmingham, Ala.; and Daytona Beach, Fla.;  have recently fined, removed, or threatened to jail private groups offering meals to the homeless instead of letting government-run service agencies care for those in need.” The idea of restricting food to the poor is the same as with wild animals; if you do not feed them, the poor will not come around looking for handouts and your neighborhood will remain untouched.

 

Volusia County where Daytona Beach resides called on an expert to consult with the authorities on how to resolve the problem with the poor. Robert Marbut, a national homeless consultant does not believe in locking up priests, ministers, and groups helping the poor. Nor does he believe in ordinances criminalizing the helping or feeding of the poor. Marbut does believe in “24/7 programs that treat the three root causes of homelessness – a lack of jobs, mental illnesses and chronic substance abuse – have been shown to reduce local homeless populations by 80 percent” and not just feeding the poor. Doesn’t this sound a little bit familiar and it would appear we are coming full circle on localities, states, and federal government helping the poor if only it was funded. As stated by Marbut, It is only with a combination of approaches can the poor find the means of breaking the poverty barrier once they have gotten this far in life. Of course the ultimate would be to provide the education and help before the poor ever became adults; but then, there is the little problem of Milliken vs. Bradley getting in the way of better schools and economics in cities. 

 

People are more comfortable with a group of weapon-toting people wandering into a restaurant to express their 2nd amendment right to bear arms than with having the poor around them. John Adams once noted about the poor. “The poor man’s conscience is clear . . . he does not feel guilty and has no reason to . . . yet, he is ashamed. Mankind takes no notice of him. He rambles unheeded. In the midst of a crowd; at a church; in the market . . . he is in as much obscurity as he would be in a garret or a cellar. He is not disapproved, censured, or reproached; he is not seen . . . To be wholly overlooked, and to know it, are intolerable.”  It is to a life of obscurity in which many people would push the poor.

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Protesting Madame Lagarde (what is the IMF doing now?)

by Joseph Joyce  

Protesting Madame Lagarde

The protests at Smith College that led to the withdrawal of Christine Lagarde, Managing Director of the International Monetary Fund, as this year’s commencement speaker have been widely denounced as a manifestation of intolerance. They also demonstrate a lack of understanding of the IMF and the many changes that have taken place at that institution in the last decade, as well as Ms. Lagarde’s own record. The IMF adjusted its policies in response to the criticisms it received after the crises of the 1990s, but apparently its critics are mired in the past.

A petition signed by several hundred Smith students and faculty (but not supported by many Smith faculty, including members of the Economics Department) explains the grounds for their opposition to Lagarde’s appearance on their campus:

“By having her speak at our commencement, we would be publicly supporting and acknowledging her, and thus the IMF. Even if we give Ms. Lagarde the benefit of the doubt, and recognize that she is just a good person working in a corrupt system, we should not by any means promote or encourage the values and ideals that the IMF fosters. The IMF has been a primary culprit in the failed developmental policies implanted in some of the world’s poorest countries. This has led directly to the strengthening of imperialist and patriarchal systems that oppress and abuse women worldwide.”

This statement exhibits the “vagueness and sheer incompetence” that George Orwell cited as characteristics of modern English prose, particularly political writing. In addition, the assignment of responsibility to the IMF for the “imperialist and patriarchal systems” is a contemporary example of the “staleness of imagery” that Orwell deplored. Holding the IMF responsible for global poverty reveals a lack of knowledge about the decline in global poverty in recent decades as well as a gross misunderstanding of the IMF’s role.  The IMF long ago retreated from the structural adjustment policies that were criticized as inappropriate, and ceded the lead role in addressing poverty to the World Bank. More recently, the IMF was active in responding to the global financial crisis. The Fund in 2008-09 provided large amounts of credit relatively quickly with limited conditionality, and the IMF’s programs contributed to the recovery of global economic activity (see here for more detail).

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