Thursday, March 3, 2011
Chavez and the Arab Revolutions
Nice post on this topic over at American Leftist (see here). I largely share the views put forward in the post, which is to say, I'm not at all pleased with Chavez's recent moves vis-a-vis Libya. At a moment when solidarity is crucial, and massive outpouring of revolutionary energy is unfolding... self-proclaimed revolutionaries cannot be the ones putting on the breaks and asking for reconciliation. Whatever realpolitik-oriented reasons there may have been in the past for Venezuela to cultivate foreign relations with countries willing to cooperate with (rather than undermine) ALBA, the fact is that the world has changed. The revolutions in the Arab world have shattered the old configuration to pieces, and the only genuinely progressive, socialist orientation toward these movements is one of solidarity and excitement. With so many shared interests and political goals, it's a huge shame that Chavez, in many ways the leader (for better or for worse) of the South American Left, is driving a wedge between Latin America and the Arab revolutionaries. I hope that some counter-veiling event or movement will reverse this trend.
Of course, the capitalist media is going to spin this as "yet another" reason to believe the myth that Chavez is a no-good "dictator" who will do anything to maintain his own power. They will seize upon this in ways that they haven't seized upon the hypocritical bumbling of Blair, Biden and Giddens. It doesn't take much reflection to see the imperialist apologetics woven through these sorts of stories. But rejecting the tenor of the mainstream media hardly means that leftists should withhold criticism of Chavez. As far as I'm concerned, Chavez is blowing a huge opportunity to forge a progressive tie between ground-up revolutionary movements in Venezuela and the Middle East. If the goal really is a left-wing alternative to US imperialism and global capitalism, he's completely failing to pursue it right now.
In Chavez's defense, there is something to be said about attempting to counter-balance the recent spout of calls for intervention in Europe and the US. I don't think that Euro/US powers are capable of doing anything progressive in Libya- their motives are self-serving and motivated by geopolitical/economic interests. A recent survey of their international activity makes this painfully obvious. The problem, however, is that Chavez would do better to be silent than to pursue a last ditch attempt to help his "friend". At least silence would give some measured of respect to those losing their lives in the struggle to overthrow Gaddafi (and, as I say, I think silence isn't enough; the only genuinely socialist attitude here is one of solidarity). But, alas, the so-called leader of the Left in Latin America has likely lost a great deal of credibility in Latin America and abroad. This is a shame.
The Meaning of Rahm (and Daley)
I took a look at Rahm Emanuel's top 73 individual contributions--i.e. those of $50k and up--using data from the Illinois State Board of Elections and sorted them, broadly, by origin. 45 came from financial institutions, financial professionals, or spouses of financial professionals (three were from counted twice, being separate contributions from the same sources, and I couldn't determine the particular industry of one contribution)...(Via ChicagoMag).
...Emanuel's base of money and power, quite simply, more closely resembles that of Richard M. Daley's in 2011--the role of the boss as it evolved from his father's reign, to his early days as mayor, to the time when he leaves office.
Rahm Emanuel, like the present machine-boss Richard M. Daley, rode to victory on the backs of those with deep-pockets and enormous economic power. He was, without the slightest doubt or equivocation, corporate Chicago's number one pick to take over right where Daley left off.
Where did Daley leave off? The much maligned (but sure to continue) "TIF" (Tax Increment Financing) program is as good as any a place to start (via NYTimes):
An analysis of public records by ChicagoTalks, a news Web site produced by Columbia College Chicago, shows that TIF subsidies benefited dozens of profitable companies — many of them in Chicago’s thriving downtown — while little money went to struggling, outlying neighborhoods. South Lawndale and Auburn-Gresham, for example, received no subsidies over the last decade.As The Chicago Reader's Ben Joravsky has noted on many occasions in his extensive investigative pieces on the topic, TIF's are basically slush funds filled by skimming from rises property tax revenues. The "brilliance" of the TIF is that it allows the Mayor (or select Aldermen) to get access to, and spend, billions of dollars without having it show up on the official budget. And given that the Mayor (i.e. Machine-Boss-in-Chief) has an inveterate preference for greasing the palms of corporate backers who are happy to reciprocate, it's hardly surprising that the TIF funds seem to always find their way to those with plenty. Ostensibly, they are supposed to exist to eliminate "blight" and revitalize struggling neighborhoods. But in a city in which there is a revolving door between political and economic elites, where "pay to play" and the patronage system dictate who does what, it's clear why TIF's don't serve those they were created to serve.
All the inane chatter about Rahm this and Rahm that are simply part of the ephemeral swells of "P.R. politics". Such cosmetic matters are irrelevant to the basic structure of Chicago power politics. The mood music may be changing, but the basic priorities remain the same. Rahm is Mayor because he is, without doubt, the most qualified strong-arm asshole in a position to pick up where King Daley left off.
Teachers Wonder: Why the Scorn?
That's the leading question of this recent NYTimes article. Strange that the NYTimes should ask such a question when, as I've noted on this blog on many occasions, the paper has often been among those leading the attack on teachers. But this recent spout of articles expressing some limited sympathy with teachers is instructive. Why now?
We're in a different political conjuncture now, with a surge in struggle against austerity and union-bashing. What this shows is not that our political establishment was progressive all along- what it shows is that collective struggle matters. We can't underestimate the effects of the growing resistance in Madison, which has not gone unnoticed by international media from Al Jazeera to the Guardian. Of course, that battle is still up in the air. It could go either way. But this is already a small victory. A couple of months ago it was nothing but SUPERMAN, Charters, Bill Gates, evil (lazy, greedy) teachers unions, etc. Now, this is contested territory. It shows that struggle matters and has the capacity to shift the conversation to the Left in certain circumstances.
The only way to fight the brutal assault on working peoples' living standards is to organize movements capable of waging collective struggles. As we've seen, the Democrats are every bit as zealous as the Republicans to crush teachers' unions. Obama's re-vamping of NCLB as "Race to the Top" is arguably more conservative and "market based" than its Bush-created predecessor. So, if tides are changing, we have to note that it did not come from the Democrat establishment. Change, now as always, grows out of struggles from below. If Democrats such as those in Madison are liable to show support for progressive causes when there is a movement pressuring them to do so, this should not be understood as evidence of their underlying "progressive credentials". No, what this shows is simple: they are only progressive to the extent that there is a movement pressuring them. They are, in certain cases, susceptible to pressure from the Left. But absent such pressure, we know what we get from Democrats: corporate give-aways, tax breaks for the ultra-rich, escalated war efforts, austerity, union-busting, etc. etc.
Thursday, February 24, 2011
IMF Reviews Praised Libya
Less than two weeks ago, the International Monetary Fund’s executive board, its highest authority, assessed a North African country’s economy and commended its government for its “ambitious reform agenda.” The I.M.F. also welcomed its “strong macroeconomic performance and the progress on enhancing the role of the private sector,” and “encouraged” the authorities to continue on that promising path.Read the rest here (via NYTimes).
By unfortunate timing, that country was Libya.
Wednesday, February 23, 2011
Awful NY Times Piece on Chicago Elections
From the NYTimes:
This city has had one mayor, Richard M. Daley, for 22 years, and, like his approach or hate it, Chicago has certainly grown used to it. So when Mr. Emanuel, the former chief of staff to President Obama, moves into the fifth floor at City Hall in May, it is expected to upend the politics of this city — not only because things have been mostly the same here for so long, but also because of Mr. Emanuel’s harsh style, his relationships and rivals, and the enormous challenges facing the nation’s third largest city.First of all, this is going to be a totally smooth transition from Daley to Rahm. Chicago has merely exchanged one strong-man machine boss for another. There will be no "upending" whatsoever. On the contrary, Rahm will sit down in Daley's throne before the seat even has a chance to get cold. Business as usual is sure to continue. (For the record, I'm not convinced that any of the contenders were aiming to "upend" anything either. They were all machine-friendly candidates; no reformers in the whole lot, although Del Valle was marginally less bad than the rest. The main distinguishing feature of all of them, as Cornel West might have put it, was their "unadulterated mediocrity").
“There will be more turmoil,” Kenneth Gould, a suburban Chicago resident, said recently, as the outcome of Tuesday’s race — an outright win by Mr. Emanuel — became increasingly likely. “Rahm will make more noise.”
Second, why is the first person quoted on the election from a suburb? I don't know what "suburban Chicago" means. Either you live in the city or you don't. Suburbanites don't vote for Mayor. This much, however, is clear: Mr. Kenneth Gould probably doesn't want to pay Chicago property taxes and shoulder the responsibilities of funding the city of Chicago. Sure, he's probably happy to tell people he's from "Chicago" and opine as to how it should be run. But when it comes to actually being democratically responsible for the shared fate of Chicagoans, he'll likely admit that he's not really a "Chicagoan" per se, but a Blackhawks fan who lives near the city or whatever. I'm sure he's really happy in his single-family home in a tax haven far enough away from the darkness of the city, but close enough to his job (which is likely in city limits). These suburbanites like to play fast and loose with the mantle of "Chicago" when it comes to appropriating the things they like. But when it comes to actually sharing the burdens and benefits of social cooperation that Chicago makes possible, they prefer their exclusive sprawling enclave outside the city itself.
Why not begin the article with a Chicago voter? And if you are going to interview a Suburbanite, why not make clear that they are a different constituency with different interests from most Chicagoans? I feel like that bit speaks volumes about the perspective of the article.
My only remarks regarding Rahm are as follws. Grrrrrrrr.
Saturday, February 19, 2011
Structural Adjustment, USA
Without exception, everywhere in the world that the IMF's neoliberal "Structural Adjustment" program was implemented, it was met with massive public outrage and resistance. From Tanzania to Bolivia, no population took kindly to this obvious full-frontal attack on their living standards. The reasons for the public outrage were obvious: the masses of people did not want to accept massive cuts to basic services, huge layoffs of public sector workers, elimination of food subsidies, removal of environmental regulations, abolishment of minimum wage ordinances, or the curbing of trade union power. They didn't buy the patronizing, technocratic line coming from above that this "shock therapy" was what was best for them.
So how was "structural adjustment" pushed through if the masses were unified in their hatred of it? How did elites force its implementation on populations who didn't want it?
Well, this much is obvious: those implementing structural adjustment didn't bring it to a vote among local populations. The IMF didn't work through democratic channels one bit. How could it have? When you want do something that the vast majority of the population is against, it is clear that democracy is not the route you want to pursue. The population will say "no" and that will be that. It's no surprise, then, that some of the first "experiments" of this kind were in repressive countries like Egypt (the first country to undergo structural adjustment in the world). And even when it arrived in countries with stronger democratic institutions, it was pushed through just the same, whether or not the population liked it.
This is highly instructive in making sense of the concerted effort to break workplace democracy in Wisconsin, as well as Tennessee and Indiana and elsewhere. There is, as I've described elsewhere, a strong desire by ruling elites to push through punishing austerity cuts that will, in effect, deeply undermine the quality of life of the vast majority. Unsurprisingly, the vast working majority does not want this to happen.
Thus, unions, the only organs of workplace democracy, the only means of representation that working people have, are being targeted and attacked viscously. They are an obvious barrier standing in the way of pushing through harsh cuts and layoffs. They give working people a voice, a collective means of forcing uncaring capitalists to make concessions they're not keen on making. They are a small democratic check on the otherwise unchallenged power of employers.
But, as in the structural adjustment examples above, when you want to do something that the vast majority strongly opposes, you don't want to hear these voices. You don't want a democratic check on your power. You don't want to have to negotiate with those whose lives you are undermining. You want to just push the fucking thing through by any means necessary. You want to be able to pummel working people without facing any resistance.
Hence the concerted attack on unions and the entire idea of workplace democracy. The goal is to lay the groundwork for successfully pushing through "structural adjustment". That can only be pushed through after people are beaten down so thoroughly that they have no means of self-defense. This is a high-stakes battle. If the rich win, they will win similar battles elsewhere. But if they lose, that sets an important precedent and gives hope to millions all over the country (and, even, all over the world).
All You Need to Know about Budget Deficits
All you need to know about the budget debates, austerity, cuts, and taxes is this: The basic function of the state in capitalist societies is to secure the conditions for profitability at any cost.
In less jargonistic language, that means that of everything the state does, we can almost always say that it is aimed at restoring, maintaining, or otherwise fostering the conditions in which capitalists can accumulate profits. The health of the capitalist economy, after all, depends on the profit rate being sufficiently high. When it is low, capitalists don't invest and hoard their capital: in this way capital "goes on strike" and makes political demands aimed at restoring profits (see the 1970s for an excellent example of this). In such cases, growth withers on the vine, production grinds to a halt, layoffs are implemented, and tax revenues plummet.
We are all in a relation of dependence on the capitalist class in a way that they aren't dependent on us: whereas they have massive reserves of capital that they're happy to sit on in a recession (which they can live off of in the meantime), we have no such reserves. We don't own any substantial productive wealth or capital to live off of in a recession. The vast majority of us rely on our month-to-month paychecks as well as various social services (e.g. Public Education, Pell Grants, fire protection, public transportation, public infrastructure, Libraries, public grants, Social Security, Medicare, unemployment insurance, etc. etc.) to procure the basic necessities of life. Recessions are far more dire, pressing, and threatening to us than they are to the ultra rich.
Every vital service and virtually all social goods depend upon the health of the capitalist economy, and, by extension, our access to all of these vital services and goods depends upon capitalists getting their way. And capitalists only "get their way" when their earning a sufficiently high rate of profit. What they think is "sufficient" is hard to specify abstractly, and depends on history, expectations, and their class power. But this much is true: when capital is not happy, the economy goes into crisis and everyone suffers as a result.
The function of the state is to make capital happy again so that the whole seedy process can resume. Capital, thus, can be thought of as a whiny, spoiled, short-sighted trust-fund baby... whereas the state can thought of as the underpaid nanny, who will do anything necessary to stop the spoiled brat from throwing a fit. That is the basic relationship between the capitalist class and the state.
Why think this is true? Well, let's look at the major things the state has done in the last 2 or 3 years and see how well it is explained by the model.
Take the bailout, first of all. What was the function of TARP? It was, quite obviously, a policy designed to shift massive amounts of toxic assets from "too big to fail" banks onto public rolls. It was a massive conversion of private debt into public debt. Why did the state do this? In order to restore profitability to the big banks since they teetered on the verge of collapse. So, when people think it odd that the banks are able to use the TARP funds to purchase federal bonds and earn money off the difference... what they're missing is that this is an intentionally designed function of the policy. The goal was to make the banks profitable again, the thought being that "what's good for Wall Street is good for Main Street". Policy makers from both parties agree on this whole-heartedly: the way to get the economy running again is to restore the conditions of profitability for big business.
Or, take another example: the stimulus bill. The basic goal of the bill was the traditional Keynesian one: to prop up effective demand. When you layoff millions of workers, cut their pay, force them into foreclosure and bankruptcy, etc... you create a problem for yourself if you're a capitalist: who is it that is going to buy all the commodities you produce if everyone is broke? The goal of the stimulus was to try to increase the purchasing power of workers in order to enable them to go out and buy things so that profitability can be restored to the system. Now, there is certainly a sense in which the stimulus bill wasn't Keynesian through and through: too much of it included worthless tax breaks for the rich, and the spending component of it was much too small. Still, it is a better solution than the neoliberal medicine of cuts and austerity. But let's be clear: the stimulus wasn't pushed through because of some sentimental concern for the well-being of the working class majority. It wasn't pushed through because lawmakers thought it the most just way to go. It was passed because Washington thought it was key to restoring profitability to the system.
Finally, take one further example: the austerity drives to slash basic services. Why is this happening? There are at least four reasons to explain it:
- For starters, it's happening because the recession severely decreased tax revenues. When companies earn less, tax revenues decrease. When companies layoff millions of workers who then have no more taxable income, that hurts revenues. When workers' consumption plummets, so do sales tax revenues. And when you push down workers standard of living and lay them off, they need to rely more on the very services whose present sources of funding are being eroded. Recessions hurt the state's capacity to do what it does, since it is, like all the rest of us, dependent on the engine of profit accumulation.
- Another reason is that the ways of collecting taxes in place before the recession were, in almost all cases, highly regressive and biased against the working majority. Payroll taxes, which the rich don't pay, tended to be high, whereas taxes on productive assets and property tended to be low. Many states rely heavily upon regressive, high sales taxes. Others, like Illinois, rely upon an ultra-regressive flat income tax that taxes corporate fat cats at the same rate as working class single mothers. The top marginal rate of taxation at the federal level is obscenely low. And there are more loopholes in the corporate tax code than anyone could ever hope to count in one lifetime. Finally, we must note that corporate profits reached record levels last quarter. So, it's false that our society doesn't produce enough to pay its bills. We produce plenty. But the disposition over and control of what we socially produce is limited only to a small class who owns the means of production. The simple, socialist thought here is that we, as a society, should have democratic control over what we, as a society, produce together.
- When there is a budget shortfall, there are always at least two things that can be done: one can cut services or collect more revenue. Since the political system is committed, as I argued above, to securing the conditions for profit accumulation at all costs... the preference for cuts is obvious. Think about it: if you're a corporate elite, you certainly don't want to pay higher taxes. And you don't care a thing about the well-being of the working majority, as evidenced by the fact that you've likely laid off hundreds if not thousands of your employees in order to keep your profit margins intact. You're happy to have the state pick up the slack for your layoffs by giving struggling workers unemployment insurance and food-stamps. But you're not necessarily happy to have to contribute to the state in order for it to provide these basic services. When push comes to shove, you want to keep what you have at all cost. Thus, rather than helping to pick up the tab, you do what you always do: protect your own profits and force the working majority to take a sharp cut in its quality of life.
- At the Federal level, austerity also has another function. Insofar as massive private debt was transferred onto public rolls... this puts even more pressure on the budget. In order to finance the bailout, now we're being told that we have to "live within our means" and accept deep cuts to our quality of life.
So, to understand what's happening from Greece, to London, to Washington, to Madison... all one really needs to know is that be basic function of the state is to secure the conditions in which stable, sufficiently high profits can be made by the ruling class. This has nothing to do with "fiscal responsibility", an empty and ultimately meaningless phrase. This has to do with forcing those least able to fight back to foot the bill for a mess caused entirely by those who own and control the basic structure of our economy. This is a class war being waged on us from above. Those occupying the Capitol in Madison recognize this, and their doing something that hasn't been done enough in the last 30 years in the US. They're saying enough is enough and they're fighting back. If the Democrats in opposition in WI are getting dragged along by this movement, we shouldn't be surprised at their opportunism. But we shouldn't make the mistake of thinking that they're unqualified allies in the struggle. When they are forced to act by big movements on the ground, they behave a lot differently than they do in the absence of struggle. This is instructive.
Thursday, February 17, 2011
Wednesday, February 16, 2011
On the Ideological Character of "Revealed Preferences"
Neoclassical economists purport to be able to give rigorous and accurate explanations of human behavior. But to explain actions, you have to have an idea of what it is that agents are doing. It used to be that early economists, who were utilitarians, held the view that what we're doing when we act is trying to maximize utility (construed as felt or experienced pleasure). But insofar as pleasure is difficult to quantify and measure, economists decided they needed a more easily quantified view about what agents are doing. Reality must simpler than that, they thought, because otherwise how could it fit into clean formal models? Moreover, some economists bought the argument that social science could be "value free", and they worried that utility (pleasure) was too value-laden and tendentious. At first, economists went with "desire-satisfaction" instead of felt pleasure, but then the problem arises as to how economists can describe what desires people have. The resting consensus today is that economists should just talk in terms of an agent's "preferences" and whether or not such preferences are being "satisfied".
But how do economists know what an agent's preferences are? According to contemporary orthodoxy, an agent "reveals" her preferences in certain behaviors. We look at what she in fact does (e.g. buys a coffee) and infer her preferences from that. It's actually a bit narrower than that: the only behaviors where agents reveal their preferences is in market transactions (and, maybe voting), and the measure of how to rank one's preferences is given by the amount of money they're willing to pay for some thing. When I buy a coffee everyday for a year, economists hold, it is reasonable to say that I have "revealed" a certain preference. It is in this way that economists think that they can explain everything about us that matters.
There are tons of things wrong with this whole setup. I just want to point out one glaring problem.
First, take the problem of environmental degradation. Now, it should be pointed out that neoclassicals are falling all over themselves in trying to explain how their enterprise, which essentially adopts the perspective of the capitalist and spells out what it's "rational" for capitalists to do, can account for the obvious problem of environmental degradation. At first glance, their approach seems to either say that the environment is not of value, or that it only has value insofar as it can be commodified and traded on markets. Contemporary economists are aware that this is a problem. So they are scrambling to try to re-package the same old game in order to fend off some recent criticisms of their discipline.
As is well known, one obvious problem with capitalism is that it encourages investors and capitalists to take a very narrow, short-run perspective. Big profits this quarter are often all that matters. Among it's many problems, this narrow perspective obviously clashes with the long-term perspective we would need to even begin to seriously address the problem of environmental degradation. So what do economists say about this?
Well, according to them, if we care about anything at all, it can be modeled by "revealed preference theory". We all place different emphasis on the value of the future, they'll say, so we all have different preferences regarding the importance of the future (as opposed to the present). How do we know what different preferences people have regarding the future? Look at how they're "revealed" in market activity.
Do capitalists then have a very low preference ranking for the future, and a high preference ranking for short-run profits? Capitalists, it turns out, "reveal" such preferences all the time. And insofar as capitalists are merely satisfying their preferences like the rest of us, they aren't doing anything wrong. Economics, in this way, is "neutral".
But here's the rub. This behaviorist setup is circular. It says that what people want, indeed what it would be rational for them to do, is basically just what they're already doing. That is extremely conservative. It suggests that we couldn't fall short of what we want, that we couldn't fail to be rational. It suggests that what we want just is what we're already doing. On what basis could someone, then, want to change anything? Could I have a "preference" for radically changing society? It seems not, since I'd have to actually change it in order to "reveal" such a preference. This setup is ideological because it suggests that there is no gap between the way we think things should be and the way that they are. It leaves us without very language we'd need to articulate what's wrong with existing states of affairs.
In the case of the narrow-minded capitalist chasing down short-run profits, it seems like the thing we'd want to say is this: she is acting irrationally. By her own lights, she is undermining the possibility of continuing her own enterprise in the long run. More strongly, she's undermining the possibility of doing much of anything at all in the not-so-distant future. But we cannot say this on the "revealed preference" model. For that model says that her preferences regarding the future are simply "revealed" by what she is presently doing. Thus, she's just satisfying her revealed preferences for the present, so there is no self-undermining problem. The theory forces us to say that she is acting rationally after all.
Tuesday, February 15, 2011
How to Talk About Deficits (and How Not To)
As I've noted on many occasions, there is a fallacious and deceptive argument that always surfaces when the powers that be need to legitimate deep cuts to working class living standards (such as those being proposed by Obama at present). This argument is what I've called "budget cut fatalism".
But, given that this line of reasoning is a complete distortion, what is a more accurate way of discussing budget crises and deficits?
First, we must ask: why is there a deficit? This requires that we ask how the budget works in the first place. As everyone knows, budgets consist of two components: revenues and expenditures. Depending on the context, the immediate "cause" of a deficit could either be a steep increase in spending or a steep drop in revenue. In our case, as everyone knows, the primary cause was a sharp drop in revenue.
Next, we ask: why was there a sharp drop in revenue? The answer is obvious: because our economy (and most other capitalist economies around the world) are experiencing the worst crisis since the Great Depression. This has caused revenues to decline sharply, eroding the funding for many of the basic social institutions that make up our society.
But, who is responsible for this crisis? One thing is for sure: the culprit isn't social expenditure. The obvious answer to who's responsible is: the "too big to fail" banks and financial institutions that plunged the global economy into crisis by hitching economic growth to various ponzi-like asset bubbles, of which the housing crisis is the most visible and important. A more succinct answer to the question of "why are we in a crisis?", however, would be as follows. Capitalism is a rotten, crisis-prone system.
So let us take stock of what's been said so far. First of all, the deficit is not the result of "out of control spending", it is quite obviously the result of a sharp decline in revenues. Second, the sharp decline in revenues was brought about by the global economic crisis. Third, the crisis was fomented by those who run our economy, namely the class of persons who own and control the commanding heights of the economy. They are responsible for the crisis and the deficit, (and for all the social misery it has unleashed).
Looked at in this sober light, the question of "what is to be done?" is an easy one to answer: let those who made the mess pay to clean it up. In other words, "chop from the top". A 2% windfall tax on the record profits earned last quarter would be enough to obviate the need for all austerity measures.
Note that this is precisely the opposite of what Obama has done so far. He has done more than simply propose punishing cuts to the living standards of the vast majority of Americans. He has done more than simply refused to chop from the top... he has in fact made it his priority to give the top even more by embracing the Bush tax cuts for the rich. And his "deficit commission" has recommended even more gifts to the rich: a further reduction in the top marginal tax rate, a reduction in the rate of corporate taxation, etc. The argument that such obscenely low levels of taxation for the rich are needed for "economic growth" is just plain false. The longest, most robust period of economic growth in American history saw top marginal tax rates as high as 90%, even under Republican presidencies such as Eisenhower.
What's happening is simply a narrow exertion of class power. The few are throwing the many under the bus. And its a double-whammy: first, we had to pay to bailout the banks and transfer toxic assets from corporate rolls to public ones... and now we have to pay for the deficits caused by the bank crisis (and the bailout) by taking sharp hits in our standard of living. First we are forced to shell out billions of taxpayer money to underwrite a restoration of profitability for the financial elite. Now we are forced to close schools, cut health-care, slash Pell Grants, shut down libraries, cut public transportation, layoff public workers, etc. all in order to pay for a crisis we didn't even have the chance to cause, given our powerlessness to impact the decisions made by those who own and control the commanding heights of the economy.
Protecting Profits
Many big companies, facing higher raw material costs, say they cannot hold off any longer and must raise prices to protect profits.Read the full NYTimes article, of which the above is an excerpt, here.
The above is honest in a way that many discussion of such phenomena are not. We often read about unemployment figures as though they were meteorological ongoings, i.e. as if unemployment just rises in the same way mechanical, impersonal way that the temperature does. But, of course, unemployment literally means that some group of agents (those who do the employing) did something concrete (terminated the employment of some other group of persons). To understand why they did it, one would need to look at the economic system and their role within it.
The above is honest because it says of rising prices that they can be chalked up to a desire to protect profits. The same is true of layoffs, wage cuts, speed-ups, etc. As far as a capitalist firm is concerned, it's basic function is simple: make as much profit as possible. So it doesn't even cross the mind of capitalists to balance employment against quarterly profits, i.e. to allow profits to decrease in the interests of saving jobs. Employees are mere means to the end of profit, so when profit is at stake, there is no problem with dispensing with mere tools that are no longer needed.
This makes clear how disingenuous it is to say that capitalists are "forced" to layoff workers. For example, neo-classical types will say that increasing wages (by means of a minimum wage, say) causes unemployment. This is empirically contestable, but that's beside the point. Saying that such policies "cause" unemployment is a tendentious and confused way of describing what happens. What happens is that certain agents, viz. capitalists, decide that they would rather layoff workers (causing all kinds of economic misery for those laid off) than allow their profits to decrease. They throw their workers under the bus in order to keep their profits as high as possible. So what "causes" them to do it, in effect, isn't the minimum wage ordinance, but their basic goal of maximizing profit at the expense of everyone else. I'd much rather that pundits said that in public, because it makes obvious how odious the system is.
Sunday, February 13, 2011
Obama to Unveil Deep Austerity Plan
The plan:
- Cut $1.1 trillion deficit over next 10 years
- Two-thirds of savings to come from spending cuts and one-third from tax increases.
- Defence budget: $78bn over five years
- Pell Grant Programme: $100bn over a decade
First of all, Obama only just recently caved in on the Bush tax give-aways and signed over a massive lump sum of cash to the nation's wealthiest taxpayers. The Bush tax breaks for the rich have already inflicted a $3 Trillion loss over 8 years. Given that Obama has extended them, we are set to lose $67 billion over the next 2 years alone in order to pay for these lavish gifts. This is, of course, to not even mention the fact that our top marginal tax rate was already very low before the Bush cuts (well, now, they're the Obama cuts) went into effect. And, of course, corporate loopholes are so bounteous that almost no corporation in the US actually pays at the official rate of taxation.
Now, as if all of the above wasn't awful enough, there's plenty more to add. First off, last quarter corporations posted the highest profits on record, even though the majority of us are still suffering the effects of the recession. As millions are evicted and laid off, the richest are getting richer. This was made possible because of layoffs and work speed-ups, which actually caused productivity to rise last quarter. That makes clear a basic economic truth: more exploitation means bigger profits. So it's false that there just isn't enough money to go around right now.
Second, as everyone has recently become aware, the government spends a massive amount of money doing unsavory things abroad (e.g. propping up (former!) dictators like Mubarak to the tune of several billion a year). Plus, you may have heard of these two wars we're still fighting in Iraq and Afghanistan... yeah, kinda pricey. The bills on those as yet unpaid-for adventures continues to increase every day. I'm not impressed by Obama's plan to modestly decrease the number of $400 toilet seats purchased by the military each year. Ending the wars would free up a massive wealth of funds that could be redirected to meet human need at home.
Third, you may have heard of this thing called TARP. Recall that close to a $1 trillion dollars was suddenly mobilized and distributed, at the drop of a hat, to the financial institutions that caused this crisis. All of that money emerged in an instant when the elite were in trouble- but when schools, public transit, parks, libraries, health-care and scholarships are on the line we're told, patronizingly, to live within our means.
Yet, despite all of this, the folks upstairs are telling us "we" need to tighten our belts. But who the fuck is "we"? Certainly the massive profits amidst layoffs, and the massive tax breaks for the rich amidst school closings aren't felt equally. Some are letting their waistlines balloon as others are literally starving.
Obama has already done more to increase inequality in 3 years than Bush did in 8. He has already overseen more transfers of wealth from the bottom to the top than his widely-despised predecessor. If this isn't a clear indication that Obama, and the Democratic Party, are not progressive, I don't know what is. Progressives and liberals would do well to look at the writing on the wall. Their resources and energies are wasted so long as they are funneled into the Democratic Party, the party of continued war, austerity, tax breaks for the rich, and environmental degradation.
Saturday, February 12, 2011
Herbert on the Weakening of US Democracy
As Bob Herbert writes in his most recent column:
As the throngs celebrated in Cairo, I couldn’t help wondering about what is happening to democracy here in the United States. I think it’s on the ropes. We’re in serious danger of becoming a democracy in name only.
While millions of ordinary Americans are struggling with unemployment and declining standards of living, the levers of real power have been all but completely commandeered by the financial and corporate elite. It doesn’t really matter what ordinary people want. The wealthy call the tune, and the politicians dance.
So what we get in this democracy of ours are astounding and increasingly obscene tax breaks and other windfall benefits for the wealthiest, while the bought-and-paid-for politicians hack away at essential public services and the social safety net, saying we can’t afford them. One state after another is reporting that it cannot pay its bills. Public employees across the country are walking the plank by the tens of thousands. Camden, N.J., a stricken city with a serious crime problem, laid off nearly half of its police force. Medicaid, the program that provides health benefits to the poor, is under savage assault from nearly all quarters.
Read the rest here. Herbert has been steadily moving Left in the last year or so. Unlike most of the usual suspects on the Opinion pages (Paul Krugman included), he is sober about the Democratic Party, and he is right on target about how progressive changes are brought about:
The Egyptians want to establish a viable democracy, and that’s a long, hard road. Americans are in the mind-bogglingly self-destructive process of letting a real democracy slip away.
I had lunch with the historian Howard Zinn just a few weeks before he died in January 2010. He was chagrined about the state of affairs in the U.S. but not at all daunted. “If there is going to be change,” he said, “real change, it will have to work its way from the bottom up, from the people themselves.”
I thought of that as I watched the coverage of the ecstatic celebrations in the streets of Cairo.
I must admit that Herbert's reaction to the (ongoing) Egpytian Revolution resonates with me. And he's drawing the right inference here: we need to learn from Egypt, not break our arms patting ourselves on the back for allegedly "showing them the way to freedom". We need to see Egypt as an example that impinges on the ways in which the status quo right here at home is legitimated by those in power. Though those in power will attempt to appropriate recent events in Egypt in order to encourage us to reaffirm status quo beliefs, in reality the events in Egypt should lead most Americans to drastically revise their basic beliefs about their own society and their own political process.
What the Egyptian people are learning in the course of struggle is what we need to learn as a society right here, right now: without struggle, there is no progress. Acquiescing to the barely "lesser evil" and settling for a few stale crumbs from those in power is not tantamount to struggle; this is resignation. We need social movements that are organized independently of the two major corporate parties which can force the system to honor its demands. We need to model progressive activism on the labor movement of the mid 1930s and the civil rights movement of the 60s. The cynical, conciliatory "credit card" activism of Moveon.org is not a way forward, but the surest means of thwarting real change.
Wednesday, February 9, 2011
Hypocrisy On Display
Compare and contrast the following.
First, this from when the protests first broke out in Egypt:
Asked if he would characterize Mubarak as a dictator Biden responded: “Mubarak has been an ally of ours in a number of things. And he’s been very responsible on, relative to geopolitical interest in the region, the Middle East peace efforts; the actions Egypt has taken relative to normalizing relationship with – with Israel. … I would not refer to him as a dictator.”Today:
The Obama administration was continuing its efforts to influence a transition. Vice President Joseph R. Biden Jr. called Mr. Suleiman on Tuesday to ask him to lift the 30-year emergency law that the government has used to suppress and imprison opposition leaders, to stop imprisoning protesters and journalists, and to invite demonstrators to help develop a specific timetable for opening up the political process. He also asked Mr. Suleiman to open talks on Egypt’s political future to a wider range of opposition members.Hmmm. So first he staunchly refuses to recognize Mubarak as a dictator (for reasons that are instructive). Then, in the face of unremitting struggle from below, he is forced to eat his words and "call on Mr. Suleiman", i.e. Torturer-in-Chief, "to ask him to lift the 30-year emergency law that the government has used to suppress and imprison opposition leaders, to stop imprisoning protesters and journalists, and to invite demonstrators to help develop a specific timetable for opening up the political process". But none of that should be necessary if, as Biden so vehemently maintained a few weeks ago, Mubarak really was not a dictator presiding over an authoritarian regime.
Now, we should be clear that this is basically just a rhetorical about face. I don't think the underlying objectives of Washington have changed one bit. But it's important to note how mass struggle and pressure from social movements can force elites to change, revise and adapt their legitimating narratives. And even more important is the obvious fact that the protesters aren't susceptible to such rhetorical flourishes or subtle revisions in the old legitimating stories. They're fed up with this brand of filth, and they don't want a new narrative from the old leaders. They want the old leaders to be history.
I'm watching very closely the emergence of mass strikes and the direct interventions by the working class in recent days. Washington has recently moved aircraft carriers to Suez ostensibly to "enable the evacuation of US citizens" from the area, but the more likely story is that they're trying to make sure that the canal, which facilitates close to 8% of worldwide trade, remains open.
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