Tuesday, December 11, 2012

Paul Krugman on the Illusory Mythology of the 'Fiscal Cliff' vs. the Stark Reality of Mass Unemployment, Class Warfare, and the Fight For Genuine Economic Democracy in the United States Today



In a sordid and nihilistic media age where rampant intellectual and political dishonesty, careerist pandering, and brazen forms of Machiavellian opportunism, rhetorical posturing and public manipulation are almost de rigueur among many "mainstream" journalists it is more than merely inspiring to read the work of writers and thinkers like Paul Krugman whose genuine insight and deep critical consciousness --like that of such equally compelling and committed truth telling contemporary colleagues as Frank Rich, Matt Taibbi, Jeffrey Scahill, Ta-Nehisi Coates, and Jonathan Chait-- is under present circumstances almost downright heroic.  In any event Krugman is never afraid to lucidly remind us of exactly what the real consequences of actual public policy are or to tell us how and why political and economic elites in the government, the corporate and financial worlds, and media itself work overtime to openly distort reality and con us into thinking that the endless lies and corny "narratives" they keep spoon feeding the public are the only possible solutions and/or alternatives available to us.  Krugman knows far better than that and never fails to say as much.  We had all better listen very closely to what he tells us because it's not only true but the quality of our very lives in this society depends on us seriously addressing both the text and subtext of what he's talking about and why...


Robots and Robber Barons
December 9, 2012
New York Times

The American economy is still, by most measures, deeply depressed. But corporate profits are at a record high. How is that possible? It’s simple: profits have surged as a share of national income, while wages and other labor compensation are down. The pie isn’t growing the way it should — but capital is doing fine by grabbing an ever-larger slice, at labor’s expense.

Fred R. Conrad/The New York Times
Paul Krugman

Wait — are we really back to talking about capital versus labor? Isn’t that an old-fashioned, almost Marxist sort of discussion, out of date in our modern information economy? Well, that’s what many people thought; for the past generation discussions of inequality have focused overwhelmingly not on capital versus labor but on distributional issues between workers, either on the gap between more- and less-educated workers or on the soaring incomes of a handful of superstars in finance and other fields. But that may be yesterday’s story.

More specifically, while it’s true that the finance guys are still making out like bandits — in part because, as we now know, some of them actually are bandits — the wage gap between workers with a college education and those without, which grew a lot in the 1980s and early 1990s, hasn’t changed much since then. Indeed, recent college graduates had stagnant incomes even before the financial crisis struck. Increasingly, profits have been rising at the expense of workers in general, including workers with the skills that were supposed to lead to success in today’s economy.

Why is this happening? As best as I can tell, there are two plausible explanations, both of which could be true to some extent. One is that technology has taken a turn that places labor at a disadvantage; the other is that we’re looking at the effects of a sharp increase in monopoly power. Think of these two stories as emphasizing robots on one side, robber barons on the other.

About the robots: there’s no question that in some high-profile industries, technology is displacing workers of all, or almost all, kinds. For example, one of the reasons some high-technology manufacturing has lately been moving back to the United States is that these days the most valuable piece of a computer, the motherboard, is basically made by robots, so cheap Asian labor is no longer a reason to produce them abroad.

In a recent book, “Race Against the Machine,” M.I.T.’s Erik Brynjolfsson and Andrew McAfee argue that similar stories are playing out in many fields, including services like translation and legal research. What’s striking about their examples is that many of the jobs being displaced are high-skill and high-wage; the downside of technology isn’t limited to menial workers.

Still, can innovation and progress really hurt large numbers of workers, maybe even workers in general? I often encounter assertions that this can’t happen. But the truth is that it can, and serious economists have been aware of this possibility for almost two centuries. The early-19th-century economist David Ricardo is best known for the theory of comparative advantage, which makes the case for free trade; but the same 1817 book in which he presented that theory also included a chapter on how the new, capital-intensive technologies of the Industrial Revolution could actually make workers worse off, at least for a while — which modern scholarship suggests may indeed have happened for several decades.

What about robber barons? We don’t talk much about monopoly power these days; antitrust enforcement largely collapsed during the Reagan years and has never really recovered. Yet Barry Lynn and Phillip Longman of the New America Foundation argue, persuasively in my view, that increasing business concentration could be an important factor in stagnating demand for labor, as corporations use their growing monopoly power to raise prices without passing the gains on to their employees.

I don’t know how much of the devaluation of labor either technology or monopoly explains, in part because there has been so little discussion of what’s going on. I think it’s fair to say that the shift of income from labor to capital has not yet made it into our national discourse.

Yet that shift is happening — and it has major implications. For example, there is a big, lavishly financed push to reduce corporate tax rates; is this really what we want to be doing at a time when profits are surging at workers’ expense? Or what about the push to reduce or eliminate inheritance taxes; if we’re moving back to a world in which financial capital, not skill or education, determines income, do we really want to make it even easier to inherit wealth?

As I said, this is a discussion that has barely begun — but it’s time to get started, before the robots and the robber barons turn our society into something unrecognizable.

December 6, 2012

Let’s get one thing straight: America is not facing a fiscal crisis. It is, however, still very much experiencing a job crisis.

It’s easy to get confused about the fiscal thing, since everyone’s talking about the “fiscal cliff.” Indeed, one recent poll suggests that a large plurality of the public believes that the budget deficit will go up if we go off that cliff.

In fact, of course, it’s just the opposite: The danger is that the deficit will come down too much, too fast. And the reasons that might happen are purely political; we may be about to slash spending and raise taxes not because markets demand it, but because Republicans have been using blackmail as a bargaining strategy, and the president seems ready to call their bluff.

Moreover, despite years of warnings from the usual suspects about the dangers of deficits and debt, our government can borrow at incredibly low interest rates — interest rates on inflation-protected U.S. bonds are actually negative, so investors are paying our government to make use of their money. And don’t tell me that markets may suddenly turn on us. Remember, the U.S. government can’t run out of cash (it prints the stuff), so the worst that could happen would be a fall in the dollar, which wouldn’t be a terrible thing and might actually help the economy.

Yet there is a whole industry built around the promotion of deficit panic. Lavishly funded corporate groups keep hyping the danger of government debt and the urgency of deficit reduction now now now — except that these same groups are suddenly warning against too much deficit reduction. No wonder the public is confused.

Meanwhile, there is almost no organized pressure to deal with the terrible thing that is actually happening right now — namely, mass unemployment. Yes, we’ve made progress over the past year. But long-term unemployment remains at levels not seen since the Great Depression: as of October, 4.9 million Americans had been unemployed for more than six months, and 3.6 million had been out of work for more than a year.

When you see numbers like those, bear in mind that we’re looking at millions of human tragedies: at individuals and families whose lives are falling apart because they can’t find work, at savings consumed, homes lost and dreams destroyed. And the longer this goes on, the bigger the tragedy.

There are also huge dollars-and-cents costs to our unmet jobs crisis. When willing workers endure forced idleness society as a whole suffers from the waste of their efforts and talents. The Congressional Budget Office estimates that what we are actually producing falls short of what we could and should be producing by around 6 percent of G.D.P., or $900 billion a year.

Worse yet, there are good reasons to believe that high unemployment is undermining our future growth as well, as the long-term unemployed come to be considered unemployable, as investment falters in the face of inadequate sales.

So what can be done? The panic over the fiscal cliff has been revelatory. It shows that even the deficit scolds are closet Keynesians. That is, they believe that right now spending cuts and tax hikes would destroy jobs; it’s impossible to make that claim while denying that temporary spending increases and tax cuts would create jobs. Yes, our still-depressed economy needs more fiscal stimulus.

And, to his credit, President Obama did include a modest amount of stimulus in his initial budget offer; the White House, at least, hasn’t completely forgotten about the unemployed. Unfortunately, almost nobody expects those stimulus plans to be included in whatever deal is eventually reached.
So why aren’t we helping the unemployed? It’s not because we can’t afford it. Given those ultralow borrowing costs, plus the damage unemployment is doing to our economy and hence to the tax base, you can make a pretty good case that spending more to create jobs now would actually improve our long-run fiscal position.Nor, I think, is it really ideology. Even Republicans, when opposing cuts in defense spending, immediately start talking about how such cuts would destroy jobs — and I’m sorry, but weaponized Keynesianism, the assertion that government spending creates jobs, but only if it goes to the military, doesn’t make sense.No, in the end it’s hard to avoid concluding that it’s about class. Influential people in Washington aren’t worried about losing their jobs; by and large they don’t even know anyone who’s unemployed. The plight of the unemployed simply doesn’t loom large in their minds — and, of course, the unemployed don’t hire lobbyists or make big campaign contributions.So the unemployment crisis goes on and on, even though we have both the knowledge and the means to solve it. It’s a vast tragedy — and it’s also an outrage.


Krugman: ‘America Is Not Facing a Fiscal Crisis’
December 7, 2012
Ear To the Ground

 r-z (CC BY 2.0)
No, says the Nobel Prize-winning economist, who must be hoarse from repeating the same thing for the last four years: The United States is facing a jobs crisis, one that costs the savings, homes and dreams of millions of Americans and about $900 billion a year in lost productivity.

The tragedy of the loss is compounded by its lack of necessity, Krugman writes. Low interest rates currently enable the government to borrow money that it could use to fund stimulus programs that would put Americans to work. And because the government prints its own money, there’s no risk of running out of it.

Yet many of America’s millionaires and billionaires are set on reducing the deficit that is necessary to fund a stimulus program, even as the nation added a measly 146,000 jobs in November, one-third of which came from the retail sector, which is preparing for the holiday shopping rush. Krugman explains why.

—Posted by Alexander Reed Kelly.

Paul Krugman at The New York Times:

So why aren’t we helping the unemployed? It’s not because we can’t afford it. Given those ultralow borrowing costs, plus the damage unemployment is doing to our economy and hence to the tax base, you can make a pretty good case that spending more to create jobs now would actually improve our long-run fiscal position.

Nor, I think, is it really ideology. Even Republicans, when opposing cuts in defense spending, immediately start talking about how such cuts would destroy jobs — and I’m sorry, but weaponized Keynesianism, the assertion that government spending creates jobs, but only if it goes to the military, doesn’t make sense.

No, in the end it’s hard to avoid concluding that it’s about class. Influential people in Washington aren’t worried about losing their jobs; by and large they don’t even know anyone who’s unemployed. The plight of the unemployed simply doesn’t loom large in their minds — and, of course, the unemployed don’t hire lobbyists or make big campaign contributions.

Robin D. G. Kelley On Gaza, U.S. Foreign Policy, President Obama, and the Historical Necessity of Moral and Political courage



This is a great and typically very informative piece by the renowned historian, scholar, teacher, and activist Robin Kelley on the ongoing Gaza crisis and the woefully inadequate response of the Obama administration to the carnage.  Please read it carefully and pass the word.  Thanks...


Sasha, Malia: Tell Your Parents About Sara al-Dalou!
Gaza: What Would Lincoln Do?

Most American media have praised President Obama’s handling of the Gaza crisis. It is certainly a relief that Operation Pillar of Defense produced about one-tenth the casualties of Operation Cast Lead four years earlier, though it is small comfort to the 168 Palestinians and 6 Israelis who died, or the nearly 1,600 injured, or the thousands left homeless. Palestinian civilians, about one-fifth of whom were children, were the war’s main victims. Careful observers know that the Egyptian brokered cease-fire is but a stop-gap measure. If anything, the war heightened insecurity in the region, strengthened Hamas’s legitimacy among Palestinians, and, as Israeli journalist Amira Hass recently put it, cemented Israel’s self-image as the victim.

The conflict did not begin with indiscriminate rocket fire from Hamas militants, or the assassination of Ahmed Jabari, or the IDF killing of 13-year-old Ahmad Abu Daqqa. It dates back to 1967 and the occupation—and even that’s not the whole story. A permanent solution will require nothing short of ending the occupation and securing real Palestinian sovereignty or extending full citizenship rights in a single, democratic state.

President Obama knows this, but his decision to unconditionally support Israel’s latest siege reveals a lack of political will and imagination. “There is no country on earth that would tolerate missiles raining down on its citizens from outside its borders,” the President announced during his Asia tour (ignoring U.S. drones strikes on other countries). Even if one believes these principles apply to Gaza, the analogy masks the fact that Gaza is not a sovereign state but under occupation since Israel controls its borders, air space, and sea-lanes—a fact confirmed by our own State Department. He knows that Israel’s blockade of Gaza, the source of the region’s immense poverty, is a clear violation of Articles 33, 55, and 56 of the 4th Geneva Convention prohibiting the collective punishment of civilians and requiring an occupying power to ensure access to food, medical supplies, hospitals and public health facilities.

Although President Obama and Benjamin Netanyahu insist that the bombing of Gaza was merely a necessary security measure, Israeli Interior Minister Eli Yishai was more forthright when he declared that the “goal of [Operation Pillar of Defense] is to send Gaza back to the Middle Ages.” Obama also knows that these intermittent wars, not to mention IDF attacks and home demolitions in the West Bank, violate our own Arms Export Control Act, which prohibits the use of U.S. weapons against civilians. And as Richard Falk, UN Special Rapporteur on Palestinian Human Rights has argued, civilians in Gaza are denied the fundamental right to flee the conflict and become refugees.  They end up like sitting ducks crowded into one of the most densely populated regions on earth, or as some critics described Gaza, the largest open-air prison in the world.

As the crisis in Gaza unfolded, Abraham Lincoln’s looming presence was unavoidable, especially as Daniel Day-Lewis’s bearded, contemplative profile dominates billboards everywhere, and President Obama continues to fashion himself in the mold of the Great Emancipator—an intelligent and fair-minded executive who believes in the rule of law, willing to reach across the aisle, and committed to a “smart” realpolitik guided by a moral compass.

The point of invoking Lincoln is not to guess what he might do in Obama’s shoes, but to reflect on what he did when forced to balance political calculus, the rule of law, and moral and humanitarian considerations. Lincoln was our first anti-slavery president, but at the onset of the war he thought complete abolition was unimaginable and a multiracial America based on full citizenship rights for all was unthinkable. He first hoped to contain slavery in the South, backed targeted emancipation as a military strategy to win the war, and supported deporting free black people to Africa or South America—a “humane” strategy of ethnic cleansing. Then unexpected things began to happen. The “property” over which Southerners waged war began to flee to Union lines, emancipating themselves, undermining the Confederacy, and forcing the nation—the president included—to reckon with their humanity. The gross stereotypes of black indolence, ignorance, and violence did not disappear, but they were dealt a mighty blow, especially after 186,000 black men joined the Union Army and 40,000 gave their lives for a “new birth of freedom.”

Midway into the war, Lincoln proposed gradual, compensated emancipation (though it was the slaveholders, not the enslaved, who were to be compensated) and continued to support deportation schemes, but black abolitionists such as Frederick Douglass persuaded him that one multiracial democracy is not only possible, but the only viable path forward. By the war’s end (and by the time Spielberg’s hero enters the frame) black struggles for freedom, the exigencies of war, and a burgeoning, militant abolitionist movement had transformed A. Lincoln. Indeed, abolitionism had grown from a radical fringe movement in the 1840s and ‘50s to a legitimate, powerful force during the war.  This gale force gave Lincoln strength to stand up to pro-slavery Democrats, even as he sought compromise and reconciliation.  In his second inaugural, he acknowledged that the men and women once thought of as chattel were on the road to citizenship, and that the men who had taken up arms against the nation were to be welcomed back with dignity and respect.

President Obama has the same capacity for growth as our 16th president, and he has shown some mettle in the past, particularly when pressured by movements. In 2010, he supported easing the blockade following the international condemnation of the IDF’s attack on the Mavi Marmara (part of the Free Gaza flotilla), and his short-lived stand against the expansion of West Bank settlements earned him the ire of Israeli officials—forcing him to retreat. Arguably, the Islamophobic attacks on President Obama accusing him of being a closeted Muslim harboring plans to impose Shari’ah law has compelled him to work harder to demonstrate his support for Israel and fealty to the powerful American Israel Public Affairs Committee (AIPAC).

Then again, Lincoln had to fend off accusations of “favoring Negro equality” and being part Negro, often arguing—as he had in his famous debates with Stephen Douglass—that blacks were morally and intellectually inferior and ought not be granted social and political equality. I do believe both men were sincere—Obama in his unwavering support for Israel, and Lincoln’s initial belief in black inferiority. However, on the question of slavery, Lincoln revealed a level of consistent moral courage that Obama has not shown in his advocacy of human rights. In those same debates with Stephen Douglass, he declared, “I hate [slavery] because it deprives our republican example of its just influence in the world—enables the enemies of free institutions, with plausibility, to taunt us as hypocrites—causes the real friends of freedom to doubt our sincerity, and especially because it forces so many really good men amongst ourselves into an open war with the very fundamental principles of civil liberty—criticizing the Declaration of Independence, and insisting that there is no right principle of action but self-interest.” President Obama, on the other hand, has been accused of hypocrisy by speaking out against the Assad regime’s murderous attacks on the Syrian opposition, and acting on behalf of Libyans struggling against Muammar Gadaffi, but doing nothing on behalf of Palestinian human rights.

And yet, I am hopeful that President Obama may have his Lincolnesque moment, when the inexorable force of history will push him beyond political expediency into the realm of moral courage. Only then will he be able to imagine a truly democratic, just solution to the question of Palestine. For Lincoln, that inexorable force was the movement—the abolitionists and their allies demanding freedom, the ex-slaves demanding justice, the changing course of world opinion.  Absent a powerful movement to end the occupation, for broad-based support for Boycott, Divestment, Sanctions, to counter the media whitewash of Israel’s war crimes and human rights violations, it is unlikely Obama will make that Lincolnesque leap.  Like Lincoln, Obama requires more than political pressure. He needs to come face to face with Palestinian activists, critics, and intellectuals; he needs to visit a West Bank refugee camp or walk the streets of Gaza City and talk to the children. By opening up to other perspectives and discovering what is already happening on the ground, Obama will discover what Lincoln recognized: emancipation had already begun without him, in the development of a rich civil society forged in a bloody war. Palestinians do not need a US- imposed peace process.  What they do need is a US willing to stand up to Israel and enforce international law, defend human rights for all, and recognize that the status quo is unsustainable and the source of violence and instability in the region. And that takes enormous courage.

I wonder if things would be different if Sasha was obsessed with photos of Palestinian children, or if Malia begged her mom and dad to spend the summer working in a refugee camp in the West Bank. But that’s just a Hollywood fantasy.

Robin D. G. Kelley, who teaches at UCLA, is the author of the remarkable biography Thelonious Monk: The Life and Times of an American Original (2009) and most recently Africa Speaks, America Answers: Modern Jazz in Revolutionary Times (2012).