I cite

Robert Reich: structural changes

The basic assumption that jobs will eventually return when the economy recovers is probably wrong. Some jobs will come back, of course. But the reality that no one wants to talk about is a structural change in the economy that's been going on for years but which the Great Recession has dramatically accelerated.

Under the pressure of this awful recession, many companies have found ways to cut their payrolls for good. They’ve discovered that new software and computer technologies have made workers in Asia and Latin America just about as productive as Americans, and that the Internet allows far more work to be efficiently outsourced abroad.

This means many Americans won’t be rehired unless they’re willing to settle for much lower wages and benefits. Today's official unemployment numbers hide the extent to which Americans are already on this path. Among those with jobs, a large and growing number have had to accept lower pay as a condition for keeping them. Or they've lost higher-paying jobs and are now in a new ones that pays less.

Yet reducing unemployment by cutting wages merely exchanges one problem for another. We'll get jobs back but have more people working for pay they consider inadequate, more working families at or near poverty, and widening inequality. The nation will also have a harder time restarting the economy because so many more Americans lack the money they need to buy all the goods and services the economy can produce.

So let's be clear: The goal isn’t just more jobs. It's more jobs with good wages. Which means the fix isn’t just temporary measures to accelerate a jobs recovery, but permanent new investments in the productivity of Americans.

What sort of investments? Big ones that span many years: early childhood education for every young child, excellent K-12, fully-funded public higher education, more generous aid for kids from middle-class and poor families to attend college, good health care, more basic R&D that's done here in the U.S., better and more efficient public transit like light rail, a power grid that's up to the task, and so on.

The problem with education as the solution is the one unfolding in California (and present most everywhere else): neoliberalism's finance capital doesn't need more people. As the plutonomy papers made clear, consumerism under advanced inequality can still thrive: the very rich are the doing most of the buying. Reich's investment model presumes that education is the solution but that only works if the problem is a lack of suitable employees; his own analysis shows that there is a surplus of them. He's taking a short cut, providing a salve in a desperate effort to make the fundamental crisis he's identified look like it's manageable within capitalism's terms.

It's not.

via robertreich.blogspot.com

The wages of sin are really, really good

   

from here

German politicians, media warn about the next global financial crisis

Schäuble compared the present financial crisis with the fall of the Berlin Wall twenty years earlier. “The financial crisis will change the world as powerfully as did the fall of the [Berlin] Wall. The balance between America, Asia and Europe is shifting dramatically,” he told Bild am Sonntag. He also appealed to bankers to exercise restraint when it came to their bonus payments.

Jean-Claude Trichet, president of the European Central Bank, expressed fears about a social collapse if there is a new round of bank failures. “It is surely too early to say the crisis is over,” he told a European congress of bankers in Frankfurt, adding the warning: “Our democracies will not accept twice giving such extensive support to the financial sector with taxpayers’ money.”

The enormous stock market bubble that has formed over the past eight months is seen as the biggest source of danger of another crash. The most important share indices—the Dow Jones, the Japanese Nikkei and the German DAX—have risen by around 50 to 60 percent since March. The prices of crude oil, copper and other raw materials have also more than doubled. These enormous increases are not based upon any corresponding economic growth. On the contrary, economic activity has fallen in numerous countries and many firms are still posting losses.

The rally in stock prices is due to the enormous liquidity that governments and central banks have pumped into the economy. Financial establishments are able to borrow unlimited sums of money from the central banks at virtually zero interest, and thus make high profits from their speculative deals. The trillions in taxpayers’ money that are being spent to revive the economy do not flow into investments, but into speculative deals, high payouts to shareholders, and exorbitant bonus payments for the bankers.

via www.wsws.org

Comments on the necrosocial

I was re-reading The Necrosocial, an essay or polemic written in connection with the UC strike and occupation last week. I want to think about two aspects of the essay, not quite as a critique but more in an effort to push my own thinking. These two aspects involve shifting the terms from social death to death of the social and drive as a domain between the two deaths. I'll talk about the first aspect here and, I hope, discuss the second in a follow up post.

First, the essay describes the university as

a factory of  meaning which produces civic life and at the same time produces social death.  A factory which produces the illusion that meaning and reality can be separated.

On the one hand, the discussion of social death incorporates Marxist ideas of dead, accumulated labor as well as from New Left critiques of the university's role in support the military-industrial-bureaucratic state machine. On the other, it includes a contemporary critique of identity categories (understood very broadly) as divisions enabling the division and domination of the people:

In this graveyard our actions will never touch, will never become the conduits of a movement, if we remain permanently barricaded within prescribed identity categories—our force will be dependent on the limited spaces of recognition built between us.  Here we are at odds with one another socially, each of us: students, faculty, staff, homebums, activists, police, chancellors, administrators, bureaucrats, investors, politicians, faculty/ staff/ homebums/ activists/ police/ chancellors/ administrators/ bureaucrats/ investors/ politicians-to-be.  That is, we are students, or students of color, or queer students of color, or faculty, or Philosophy Faculty, or Gender and Women Studies faculty, or we are custodians, or we are shift leaders—each with our own office, place, time, and given meaning.  We form teams, clubs, fraternities, majors, departments, schools, unions, ideologies, identities, and subcultures—and thankfully each group gets its own designated burial plot.

This passage suggests a social life folded in on itself and intensified, amplified to the extent that the ever fragmented social dissolves in a multitude of singularities. These singularities are related through the slashes that separate them, as well as through the common acceptance of a dynamic of singularity, a becoming singular, becoming unique, to the point that absorbs and destroys in possibility of social relation, that is, relations that are not already contained in economies of profit and loss, domination and submission. The passage evokes the shift from disciplinary to control societies, suggesting thereby the ways that singularization itself functions as a mechanism of control as well as the ways that the university contributes to the maintenance and extension of control mechanisms as it repeats injunctions to identify and specify.

The death of the social in societies of control thus follows directly from the 'intensification and generalization of the normalizing apparatuses of disciplinarity that internally animate our common and daily practices; (Empire 23). Normalizing, though, should be understood in terms of norms of idenfitication and separation, injunctions to become unique.

Under in terms of the normalization of uniqueness in the society of control (a commodified, reified uniqueness that condemns newly formed and fragile individuals to isolation in a multitude of singularities, a kind of isolation radically different from the alienation criticized in the 50s and 60s), the university as a factory of meaning separate from reality makes a kind of sense. But I don't think that the primary problem at stake in the death of social is the production of the illusion that meaning and reality are separated. In fact, this is where the analysis in "The Necrosocial" begins to miss its target (and, in fact, in the later paragraphs of the essay, make this point: "Social death is our banal acceptance of an institution’s meaning for our own lack of meaning."). The meaning of the university is reality; the values of the machine constitute reality. Reality is the problem--and our failure to remake it into what it could or should mean.

I can put this differently, drawing--to no one's surprise, from Zizek's recent injunctions to think: part of the contemporary challenge is breaking the absorption of meaning into neoliberal capitalist reality, waking up from the dream that low taxes and beanie babies are the road to happiness, disconnecting from the illusion that efficiency measures and competition access the world we want rather than providing the language of our capture. The challenge is separating meaning from this reality in order to make a new one. Some separations are better than others.

a world sceptical of free markets

Survey finds a world sceptical of free markets

By Alan Beattie in London

Published: November 23 2009 02:00 | Last updated: November 23 2009 02:00

The free market economy is flawed but should be addressed by regulation and reform rather than being replaced by a new economic system, according to a poll conducted in 27 countries.

The survey, commissioned by the BBC World Service, found widespread but measured scepticism of the world economic system in light of the financial crisis. Carried out to coincide with the 20th anniversary of the fall of the Berlin Wall, the survey suggests hopes held then may since have been dashed. Doug Miller, chairman of Globe-Scan, which conducted the survey, said: "It appears that the fall of the Berlin Wall in 1989 may not have been the crushing victory for free-market capitalism that it seemed at the time - particularly after the events of the last 12 months."

The poll, which surveyed almost 30,000 people, revealed differences between nations, with attitudes largely corresponding to popular perceptions of national cultures. In the US, one in four respondents thought that capitalism was working well. Pakistan was the only other country to get above 20 per cent on that score.

Across the sample, 51 per cent thought that free-market capitalism had problems that could be addressed by regulation and reform, with 23 per cent calling for an entirely new system. In France, 43 per cent wanted radical change, almost as many as wanted only moderate reform at 47 per cent.

In more than half the countries, most wanted their government to be more active in owning or directly controlling major industries, while 67 per cent of the total wanted the state to intervene to distribute wealth more evenly.

Steven Kull of the University of Maryland, which helped with the survey, said: "Some features of socialism . . . continue to appeal to many people."

The poll found a sharp divide over the break-up of the Soviet Union in 1989. Large majorities in the rich countries regarded it as a positive development, contrasting with some nostalgia among former Soviet countries and elsewhere in the developing world. A majority of Russians (61 per cent) and Ukrainians (54 per cent) regarded the disintegration of the bloc as mainly a bad thing.

via www.ft.com

Krugman: The Big Squander

About the A.I.G. affair: During the bubble years, many financial companies created the illusion of financial soundness by buying credit-default swaps from A.I.G. — basically, insurance policies in which A.I.G. promised to make up the difference if borrowers defaulted on their debts. It was an illusion because the insurer didn’t have remotely enough money to make good on its promises if things went bad. And sure enough, things went bad.

So why protect bankers from the consequences of their errors? Well, by the time A.I.G.’s hollowness became apparent, the world financial system was on the edge of collapse and officials judged — probably correctly — that letting A.I.G. go bankrupt would push the financial system over that edge. So A.I.G. was effectively nationalized; its promises became taxpayer liabilities.

But was there any way to limit those liabilities? After all, banks would have suffered huge losses if A.I.G. had been allowed to fail. So it seemed only fair for them to bear part of the cost of the bailout, which they could have done by accepting a “haircut” on the amounts A.I.G. owed them. Indeed, the government asked them to do just that. But they said no — and that was the end of the story. Taxpayers not only ended up honoring foolish promises made by other people, they ended up doing so at 100 cents on the dollar.

Could things have been different? Some commentators argue that government officials had no way to force the banks to accept a haircut — either they let A.I.G. go bankrupt, which they weren’t ready to do, or they had to honor its contracts as written.

But this seems like a naïve view of how Wall Street works. Major financial firms are a small club, with a shared interest in sustaining the system; ever since the days of J.P. Morgan, it has been common in times of crisis to call on the big players to forgo short-term profits for the industry’s common good. Back in 1998, it was a consortium of private bankers — not the government — that put up the funds to rescue the hedge fund Long Term Capital Management.

Furthermore, big financial firms have a long-term relationship, both with the government and with each other, and can pay a price if they act selfishly in times of crisis. Bear Stearns, the investment bank, earned itself a lot of ill will by refusing to participate in that 1998 rescue, and it’s widely believed that this ill will played a major factor in the demise of Bear Stearns itself, 10 years later.

So officials could have called on bankers to offer a better deal, for their own sake, and simultaneously threatened to name and shame those who balked. It was their choice not to do that, just as it was their choice not to push for more control over bailed-out banks in early 2009.

And, as I said, these seemingly safe choices have now placed the economy in grave danger.

via www.nytimes.com

How the tax code encourages debt : The New Yorker

Debt didn’t get dangerously out of scale because the system was broken. It got out of scale, in part, because the system worked.

The government doesn’t make people go into debt, of course. It just nudges them in that direction. Individuals are able to write off all their mortgage interest, up to a million dollars, and companies can write off all the interest on their debt, but not things like dividend payments. This gives the system what economists call a “debt bias.” It encourages people to make smaller down payments and to borrow more money than they otherwise would, and to tie up more of their wealth in housing than in other investments. Likewise, the system skews the decisions that companies make about how to fund themselves. Companies can raise money by reinvesting profits, raising equity (selling shares), or borrowing. But only when they borrow do they get the benefit of a “tax shield.” Jason Furman, of the National Economic Council, has estimated that tax breaks make corporate debt as much as forty-two per cent cheaper than corporate equity. So it’s not surprising that many companies prefer to pile on the leverage.

There are a couple of peculiar things about these tax breaks—which have been around as long as the federal income tax. The first is that they’re unnecessary. Few people, after all, can save enough to buy a home with cash, so home buyers naturally gravitate toward mortgages. And businesses like debt because it offers them tremendous leverage, making it possible to put down a little money and potentially reap a huge gain. Even in the absence of the deductions, then, there would be plenty of borrowing. The second thing about these breaks is that their social benefits are pretty much nonexistent. Advocates of the mortgage-interest deduction, for instance, claim that it increases homeownership rates. But it doesn’t: in countries where mortgage deductions have been eliminated, homeownership rates haven’t dropped. Instead, the deduction simply inflates house prices. The business-interest deduction, meanwhile, may lower an individual company’s taxes, but it also means that the over-all corporate tax rate is higher, so its real impact is to give companies with lots of debt an unjustified advantage.

If the benefits are illusory, the costs are all too real. Economies work best, generally speaking, when people are making decisions based on economic fundamentals, not on tax considerations. So, as much as possible, the tax system should be neutral between debt and equity, and between housing and other investments. It’s not, and, worse still, as we’ve seen in the past couple of years, debt magnifies risk: if companies or individuals rely on large amounts of leverage, it’s much easier for bad decisions to lead to insolvency, with significant ripple effects in the wider economy. A debt-ridden economy is inherently more fragile and more volatile.

via www.newyorker.com

t r u t h o u t | Zombie Politics and Other Late Modern Monstrosities in the Age of Disposability

Excerpts from Henry Giroux (read the whole thing):

Zombies are invading almost every aspect of our daily lives. Not only are the flesh-chomping, blood-lusting, pale-faced creatures with mouths full of black goo appearing in movie theaters, television series, and everywhere in screen culture as shock advertisements, but these flesh-eating zombies have become an apt metaphor for the current state of American politics. Not only do zombies portend a new aesthetic in which hyper-violence is embodied in the form of a carnival of snarling creatures engorging elements of human anatomy, but they also portend the arrival of a revolting politics that has a ravenous appetite for spreading destruction and promoting human suffering and hardship.[4] This is a politics in which cadres of the unthinking and living dead promote civic catastrophes and harbor apocalyptic visions, focusing more on death than life. Death-dealing zombie politicians and their acolytes support modes of corporate and militarized governance through which entire populations now become either redundant, disposable or criminalized. This is especially true for poor minority youth who, as flawed consumers and unwanted workers, are offered the narrow choice of joining the military, going to prison or being exiled into various dead zones in which they become socially embedded and invisible.[5] Zombie values find expression in an aesthetic that is aired daily in the mainstream media, a visual landscape filled with the spectacle of destruction and decay, wrought by human parasites in the form of abandoned houses, cars, guttered cities, trashed businesses. There are no zombie free spaces in this politics, as a country paralyzed by fear has become the site of a series of planned, precision attacks on constitutional rights, dissent and justice itself. Torture, kidnappings, secret prisons, preventive detention, illegal domestic spying and the dissolution of habeas corpus have become the protocol of a newly fashioned dystopian mode of governance. Zombie politics reveals much about the gory social and political undercurrent of American society.

via www.truthout.org

cut the thread

If financialized neoliberal capitalism is hanging by a thread, what does it take to cut the thread?

Does the shift of indicators of financial stability to markets, currencies, credit, and risk mean that those are the primary locations for political engagement? Differently put, if organized labor was the primary means for opposition industrial capitalism and, say, boycotts a primary means for engaged opposition in consumer capitalism (I don't actually think this is accurate; nor do I think the opposition or clear staging this suggests works), what is the corresponding activity and location of struggle under finance capitalism? Are the only actors whose resistance counts investors? Those who can pull or redirect massive amounts of capital? Is China the only political agent left?

I can imagine a general strike--service sector, medical personnel, transportation, call centers, IT sectors, local banks, grocery stores, gas stations. But, under conditions of over ten percent unemployment, this doesn't seem like the most likely or effective sort of action.

The right imagines armed resistance--frequently and vocally. It doesn't seem like a fantasy; it feels a threat, thuggish, a way of inciting fear. (Yet, a line from The Prisoner: fear is a cover for guilt; is at least part of the fear a mask for guilt in not having convictions worth defending, worth fighting for?). While I sometimes find myself admiring the boldness, I think this is ultimately weak, a failure to do the harder work of organizing, changing minds, building something else (Zizek sometimes says that violence betrayals the refusal to go to the end). It favors acting out rather than an Act (although aren't there instances when these overlap, like in the last scene of Fight Club?).

I don't admire either a micropolitics of everyday transactions--I'll just pull my money out of the bank and put it under my mattress; even better, I'll stop using money altogether. Yet, the hyperindividualism and personalization of communicative capitalism pushes the tiny gestures: click here to say you don't like the bailouts. 

What does it mean to cut the thread? The bad guys are screaming about refusing to pay taxes. This dismantles government and social services--it feeds the neoliberal mentality of letting economic competition govern ever more aspects of existence.

What does it mean to cut the thread? Maybe pull the plug, scramble the code, deny service. Maybe erase and block and redirect and rewrite, a pretty easy task for 100 or so well placed programmers. But here's the thing: is that what we want? Or are we hanging on by it, too?

The worst is yet to come: Unemployed Americans should hunker down for more job losses

The long-term picture for workers and families is even worse than current job loss numbers alone would suggest. Now as a way of sharing the pain, many firms are telling their workers to cut hours, take furloughs and accept lower wages. Specifically, that fall in hours worked is equivalent to another 3 million full time jobs lost on top of the 7.5 million jobs formally lost.

This is very bad news but we must face facts. Many of the lost jobs are gone forever, including construction jobs, finance jobs and manufacturing jobs. Recent studies suggest that a quarter of U.S. jobs are fully out-sourceable over time to other countries.

Other measures tell the same ugly story: The average length of unemployment is at an all time high; the ratio of job applicants to vacancies is 6 to 1; initial claims are down but continued claims are very high and now millions of unemployed are resorting to the exceptional extended unemployment benefits programs and are staying in them longer.

via www.nydailynews.com