Why Aren't There More Radicals at Work?

by Dollars and Sense

From the (new?) website, radicalsatwork.org:

Works sucks and it's been getting worse in the U.S. for decades.

So why aren't there more radicals at work?

For the first part in a series about radicals and labor today, we asked a dozen radical workplace organizers—teachers, Teamsters, telephone technicians, union organizers, and more—that question. Read what they had to say.

The activists we talked to blamed the American Dream, persistent racism, and a feeling that struggle and collective won't do any good. They also laid some of the blame on radicals themselves, for failing to connect with working people.

It hasn't always been this way. Before World War II, radicals in the United States had much deeper roots in the working class. Employers, the government, and even union officials purged those Reds after the war.

If we want to rebuild those connections, we have to understand the barriers that hold us back.

American Dreams

For over a century, historians and organizers have said that American prosperity—and the hope of getting a slice of the pie—explained why there was "no socialism in America."

Millions of workers still see the path to success through individual hard-work, not collective struggle.

"There's a sense among some—not all—that ‘I got to where I am by hard work, and other people should be able to as well,'" said a telephone technician in New York.

That hope doesn't just apply to people who've "made it" and are living the American Dream.

"Most of the folks that I worked with in the Army, construction and restaurant industries, ended up in those low-wage jobs because of a lack of resources and education," said a union organizer in Pennsylvania. "A good percentage still subscribed to the whole ‘pull your self up by the bootstraps' bit, even though they were clearly struggling with no end in sight."

The same is true for jobs with a lot of prestige—even though many of those jobs are getting worse.

Take college professors. There are way more Ph.D.s looking for work than tenure-track positions. Many are getting by cobbling together part-time adjunct work.

But that doesn't stop many Ph.D.s from hoping. "In grad school TAs think: ‘I don't need a union, I'm going to get a cushy job,'" said a college professor in New York. "That's just not really the reality anymore."

"Then when someone lands a full-time position, they think, ‘I realized my goal and compared to most people I have it good, so no there's no need to rock the boat,'" she said.

American Nightmares

For years, many white workers achieved their own American Dream by keeping workers of color out of "white" jobs, "white" neighborhoods, and "white" schools.

Competition over jobs, housing, and schools has led many white workers to identify as white first, workers second—if at all.

And that's still true today. "A lot of the white folks I work with are really drawn to the Tea Party movement," said a telephone operator in the South. "Part of it is backlash against having a Black president. Part of it is backlash against immigrant workers in their communities."

"White workers often respond to exploitation by pushing others downwards rather than attempting to tear down those at the top," said a union organizer out West.

Today, those fears are played up by the right-wing press. "A lot of my co-workers get almost all of their news of the world from the New York Post or other tabloid papers, supplemented by the local news or CNN," said a telephone technician we interviewed. "There's almost no counter-weight to the conservative B.S. they hear on the radio, the TV news, the tabloid papers," she said.

Historically, many unions have helped to confront working-class racism. Unions formed in the great upsurge of the 1930s brought together workers across the color line, promoted the leadership of workers of color, and challenged white racism.

But historian and activist Bill Fletcher points out that many U.S. unions have followed a different strategy: rather than including all workers, some unions have reserved jobs for white men by excluding workers of color and women.

That practice goes back to the nineteenth century, when craft unions kept Black workers out of skilled trades, and unions promoted legislation to exclude Chinese workers from the U.S. And that's why white males still dominate the construction trades to this day.

We're Getting Our Butts Kicked

It's hard for most workers to imagine an alternative to those individual survival strategies offered by the American Dream and racism. Why?

Being a radical means that you think ordinary people can improve our lives and change the world when we work together. But the organizers we talked to said that most workers feel alone, isolated, and powerless.

"People don't feel empowered in life. Their entire life they've been socialized to defer to authority," said a UPS part-timer in Pennsylvania. "People aren't sure they deserve better. People have never seen collective action."

A big part of that powerlessness is the weakness of the labor movement. Factory closings. Lockouts and permanent replacements. Tough anti-union employers: Organized labor has been getting its butt kicked since the 1980s. Only 12.3 percent of workers in the U.S. were in unions in 2009.

Even when workers are in unions, many don't feel the power.
A New York nurse sums up the problem: "Nurses feel powerless and vulnerable. Management has managed to structure things in a way that reinforces that feeling, and there is no history of recent collective struggle and solidarity to chip away at that overwhelming feeling."

For decades, officials treated their unions like a business—not a social movement. When employers went on the attack in the 1980s, they were caught off guard, and the union movement is still scrambling to respond today.

That's not to say that there isn't fightback on the job. But the barriers to collective action are high: Most workers don't have any experience in fighting back. And most aren't in unions. And many unions have given up challenging "management's right" to run their business—even when workers pay the price.

Sometimes workers who speak out are sidelined—either by the employer, or even by their own union officials: "When anyone speaks out about some injustice on the job, they are called a troublemaker and harassed until they learn their lesson: just do your job and shut up," said a union dissident in the longshore industry.

Given all that, it's no wonder most workers choose individual, not collective, solutions to their problems.

Freaks and Geeks

Even if they are open to alternative ideas, most workers in the United States have never met a radical.

"There is very little exposure to radical culture: arts and literature that is motivated by radical politics, news analysis of the effects of capitalism on our lives, a sense of history of radical struggles, a familiarity of leaders of radical movements," said a former hotel worker on the West Coast.

Many people associate radicals with the mistakes and tragedies of Russia under Stalin. "They think that's Stalin's Russia was real socialism—and that socialism is doomed to failure. Totalitarian Communism couldn't be more different than grassroots, bottom-up socialism," said a web designer in New York.

But without contact with real radicals, most people don't make that distinction.

Even when they have met a radical, that experience isn't always that good. For many, their first experience meeting a radical is someone trying to sell them a newspaper, or getting in an argument with them.

Let's face it—we're partly to blame for our isolation because so often we fail to meet workers where they're at.

All that doesn't mean that people don't have some radical ideas. Here's what one teacher in a small town in the mountain states said: "One reason that people who have left views on a wide range of issues don't identify as radicals is because they don't know what it means to be a radical, or all the self-professed radicals they've met have been off-putting in some way."

"In my case, this was definitely true until I met radicals who seemed smart, relatable and sane," she said. "Once I met them, and they exposed me to more radical ideas and perspectives, I was ready to join!"

Breaking Through the Isolation

Radicals haven't always been so isolated.

Scratch a union struggle before World War II in the United States, and you'd find some Reds. Anarchists at the Haymarket. Socialists in the garment industry. Communists in the auto union. Trotskyists in the Teamsters. Reds inspired and led some of the greatest organizing drives and union battles in our history.

Socialists, Communists, and Trostkyists were on the frontlines of building the CIO during the thirties and helped build big industrial unions in meatpacking, auto, steel, and transportation.

But in the Red Scare after World War II, the union leadership purged these Reds—and since then, most radicals have done a pretty poor job of re-connecting those roots.

Here's what socialist activist and theorist Kim Moody had to say about that:

At no time since the 1950s has the isolation of socialists from the working class been greater. Socialist organizations in the U.S., including Solidarity, remain small and largely populated by people with an educated middle class background. Many socialist groups' connection with the working class is limited to support work for various strikes. The gap between the socialist organizations and the active sections of the working class who are the organizers of much of the resistance to the employers and rebellions within the unions is too great. The gap has many facets: some arise from different class origins, others from the habit of defeat on the left and the proclivity for symbolic actions and campaigns that flows from it. Most of the gap, however, is one of consciousness. The left with its highly theorized, often moralistic politics, and the worker activists with an un-theorized pragmatic outlook are often like trains passing in the night. This can be true even where left groups or individuals work within the unions. (Kim Moody. The Rank-and-File Strategy for Building a Socialist Movement in the United States. Solidarity. 2000)

Some radicals are trying to break through that isolation—including all of the activists we talked to. You'll hear about what they're doing differently in future articles in this series.

Now tell us what you think.

Why do you think that there aren't there more radicals at work? Share your ideas and your stories in the comments.

Visit radicalsatwork.org.

Labels: anarchism, communism, labor, labor movement, Radicals at Work, socialism, workers, workplace democracy

 

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2/09/2010 09:32:00 AM 0 comments links to this post

 

Deficit Hawk, Progressive Style, Part II

by Polly Cleveland

As I wrote in Part I (Feb 3), the deficit hawks legitimately claim that huge deficits will hinder investment and kill jobs. But their solutions would make matters worse. What are those solutions? What are alternatives? A leading hawk, C. Fred Bergsten of the Peterson Institute for International Economics, proposes three control measures: containing Medicare and Medicaid costs, "comprehensive Social Security reform, including gradual increases in the retirement age and an alteration of the benefits formula" and a national consumption tax.

The hawks are right that we need to control all--not just public--health care spending, but only as part of national health reform. They are wrong about Social Security, which does just fine under any reasonable projections. They're especially wrong about a consumption tax.

A consumption tax is essentially a national sales tax. Why a consumption tax? Because, the argument goes, it will encourage more saving. More saving will engender more investment. Of course, as even proponents recognize, a consumption tax hits poorer people harder, because they consume proportionately more of their income.

There's little evidence a consumption tax will encourage saving and investment, let alone productive investment. To see why, consider the main reason that U.S. saving and investment fell so low in recent years: the real estate bubble. Middle class homeowners thought they were saving through the appreciation of the land under their houses. So why put aside a portion of their wages? Banks and other investors thought they were investing by buying up high-yield mortgage-based securities. So why lend at lower returns to productive businesses? In fact, real estate bubble investments closely resemble investment in government debt: both are passive investments, parasites on the real economy.

Here are three alternatives to the conservative hawks' program of entitlement-cutting and consumption taxes: 1. Cut military spending. 2. Restore progressivity of federal taxes and raise rates, and 3. At state and local levels, rediscover the original wealth tax--the property tax.


1. Cut military spending. Dollar for dollar, military spending generates the fewest jobs and creates the most waste. Even strong advocates of a second "stimulus" wouldn’t demand more military pork. Chart III (click to enlarge) shows military spending from 1940 to 2013, in 2005 dollars and as a percentage of GDP. Cutting military spending both absolutely and relative to GDP helped Clinton lower debt and stimulate the economy. Obama seems headed the other way.

2. Restore the progressive income tax system. Since World War II, the federal income tax system has both declined as a proportion of GDP, and grown steadily less progressive. Top rates of the official income tax have fallen from over 90% to 35%, and unearned income like capital gains gets special low rates or disappears into loopholes. Meanwhile the other income tax--the payroll tax supporting Social Security and Medicare--has grown larger than the official income tax itself! The payroll tax hits all earned income up to a cap, now $106,800. The payroll tax rate, 2% in 1937 at the start of Social Security, has risen to 15.3%. Some two thirds of American families pay more payroll tax than income tax. Chart IV (click to enlarge) shows how the payroll tax has overtaken the official income tax as a source of federal revenue.

Conservative economist Greg Mankiw wrote in a recent New York Times op-ed that "Higher tax rates mean reduced work incentives and lower potential output." That's true, but only at the lower end of the income scale, not the upper. (Can you imagine a CEO saying, "If you cut my pay by $1 million, I'll go home early on Friday"?) The payroll tax has become the ultimate killer of small business and low-wage jobs.

Federal taxes as a percentage of GDP have hit a historic low, well under 20%. There's plenty of room to raise taxes and make the system much more progressive. To do so, we should: a. Reinstate high progressive rates for the regular income tax. b. Cut or eliminate payroll taxes at the lower end, and remove the cap.

3. At state and local levels, rediscover the property tax. The property tax? Despite much rhetoric to the contrary, the property tax really is a tax on property--including corporate property (about 50% of the base). It's a wealth tax, intrinsically the most progressive tax we have. Until World War II, it was the most important tax in the US. Since then, as Chart V (click to enlarge) shows, sales and income taxes have substantially displaced the property tax. But as also evident in Chart V, the property tax doesn't fall off in recessions as do income and sales taxes--if states had stuck with the property tax, as has New Hampshire, they wouldn't be in their present fiscal jam. As an added bonus, because the property tax hits land values, it checks the false savings of real estate bubbles--encouraging real saving!

Conclusion: If we want to reduce debt, lessen inequality, stimulate small business investment and create jobs, here's how to do it: cut military spending; restore progressivity and raise rates in the income tax system; and resurrect the property tax. Politically impossible? Only if it's unthinkable!

Labels: deficit, deficit hawks, Fred Bergsten, Greg Mankiw, income tax, military spending, payroll taxes

 

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2/07/2010 05:52:00 PM 0 comments links to this post

 

Mixed Jobs Report for January (BLS)

by Dollars and Sense

The Bureau of Labor Statistics has released its employment numbers for January. It is a mixed report: the official unemployment rate fell from 10.0% to 9.7%, yet the economy lost 20,000 non-farm jobs. This means that the decline in the rate of unemployment has to do with people who aren't (fully) employed but aren't counted as unemployed (i.e. they have become discouraged or marginally attached). The BLS also revised upward its estimate of the number of jobs that were lost in Dec. 2009, from 80,000 up to 150,000. Here are the basics from the BLS:

THE EMPLOYMENT SITUATION -- JANUARY 2010

The unemployment rate fell from 10.0 to 9.7 percent in January, and nonfarm payroll employment was essentially unchanged (-20,000), the U.S. Bureau of Labor Statistics reported today. Employment fell in construction and in transportation and warehousing, while temporary help services and retail trade added jobs.

Household Survey Data

In January, the number of unemployed persons decreased to 14.8 million, and the unemployment rate fell by 0.3 percentage point to 9.7 percent.

In January, unemployment rates for most major worker groups--adult men (10.0 percent), teenagers (26.4 percent), blacks (16.5 percent), and Hispanics (12.6 percent)--showed little change. The jobless rate for adult women fell to 7.9 percent, and the rate for whites declined to 8.7 percent. The jobless rate for Asians was 8.4 percent, not seasonally adjusted.

This release includes new household survey tables with information about employment and unemployment of veterans, persons with a disability, and the foreign born. In January, the unemployment rate of veterans from Gulf War era II (September 2001 to the present) was 12.6 percent, compared with 10.4 percent for nonveterans. Persons with a disability had a higher jobless rate than persons with no disability--15.2 versus 10.4 percent. In addition, the labor force participation rate of persons with a disability was 21.8 percent, compared with 70.1 percent for those without a disability. The unemployment rate for the foreign born was 11.8 percent, and the rate for the native born was 10.3 percent. (The data in these new tables are not seasonally adjusted.)

In January, the number of persons unemployed due to job loss decreased by 378,000 to 9.3 million. Nearly all of this decline occurred among permanent job losers.

The number of long-term unemployed (those jobless for 27 weeks and over) continued to trend up in January, reaching 6.3 million. Since the start of the recession in December 2007, the number of long-term unemployed has risen by 5.0 million.

In January, the civilian labor force participation rate was little changed at 64.7 percent. The employment-population ratio rose from 58.2 to 58.4 percent.

The number of persons who worked part time for economic reasons (sometimes referred to as involuntary part-time workers) fell from 9.2 to 8.3 million in January. These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job.

About 2.5 million persons were marginally attached to the labor force in January, an increase of 409,000 from a year earlier. (The data are not seasonally adjusted.) These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey.

Among the marginally attached, there were 1.1 million discouraged workers in January, up from 734,000 a year earlier. (The data are not seasonally adjusted.) Discouraged workers are persons not currently looking for work because they believe no jobs are available for them. The remaining 1.5 million people marginally attached to the labor force had not searched for work in the 4 weeks preceding the survey for reasons such as school attendance or family responsibilities.

Read the full report.

Labels: Bureau of Labor Statistics, jobs, unemployment

 

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2/05/2010 01:00:00 PM 1 comments links to this post

 

Deficit Hawk, Progressive Style, Part I

by Polly Cleveland

 

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2/03/2010 10:37:00 PM 0 comments links to this post

 

The Obama Budget and the Deficit Chorus

by Dollars and Sense

Get ready for "the deficit chorus," as James K. Galbraith put it to us today.

I was happy to see that David E. Sanger quoted Galbraith in his news analysis of Obama's budget in today's New York Times.

But I was puzzled by the way he was quoted, in an article that makes this claim: "For Mr. Obama and his successors, the effect of those projections is clear: Unless miraculous growth, or miraculous political compromises, creates some unforeseen change over the next decade, there is virtually no room for new domestic initiatives for Mr. Obama or his successors." There is some wiggle room here—virtually no room for new domestic initiatives, unless there are no miraculous political compromises; and I suppose it would take a miraculous political compromise for Congress to change its priorities away from ever-increasing military spending and refusal to raise marginal tax rates on the wealthy, and toward health care, education, jobs programs, etc. But the effect is to suggest that domestic spending is just not possible.

Well—judge for yourself; here's the beginning of the article:

Deficits May Alter U.S. Politics and Global Power

By DAVID E. SANGER | February 1, 2010

WASHINGTON—In a federal budget filled with mind-boggling statistics, two numbers stand out as particularly stunning, for the way they may change American politics and American power.

The first is the projected deficit in the coming year, nearly 11 percent of the country's entire economic output. That is not unprecedented: During the Civil War, World War I and World War II, the United States ran soaring deficits, but usually with the expectation that they would come back down once peace was restored and war spending abated.

But the second number, buried deeper in the budget's projections, is the one that really commands attention: By President Obama's own optimistic projections, American deficits will not return to what are widely considered sustainable levels over the next 10 years. In fact, in 2019 and 2020—years after Mr. Obama has left the political scene, even if he serves two terms—they start rising again sharply, to more than 5 percent of gross domestic product. His budget draws a picture of a nation that like many American homeowners simply cannot get above water.

For Mr. Obama and his successors, the effect of those projections is clear: Unless miraculous growth, or miraculous political compromises, creates some unforeseen change over the next decade, there is virtually no room for new domestic initiatives for Mr. Obama or his successors. Beyond that lies the possibility that the United States could begin to suffer the same disease that has afflicted Japan over the past decade. As debt grew more rapidly than income, that country's influence around the world eroded.

And this would be a bad thing?

Here's the bit quoting Jamie Galbraith:

[Obama's chief economic advisor Lawrence] Summers, in an interview on Monday afternoon, said, “The budget recognizes the imperatives of job creation and growth in the short run, and takes significant measures to increase confidence in the medium term.”

He was referring to the freeze on domestic, non-national-security-related spending, the troubled effort to cut health care costs, and the decision to let expire Bush-era tax cuts for corporations and families earning more than $250,000.

But Mr. Summers said that “through the budget and fiscal commission, the president has sought to provide maximum room for making further adjustments as necessary before any kind of crisis arrives.”

Turning that thought into political action, however, has proved harder and harder for the Washington establishment. Republicans stayed largely silent about the debt during the Bush years. Democrats have described it as a necessary evil during the economic crisis that defined Mr. Obama’s first year. Interest in a long-term solution seems limited. Or, as Isabel V. Sawhill of the Brookings Institution put it Monday on MSNBC, “The problem here is not honesty, but political will.”

One source of that absence of will is that the political warnings are contradicted by the market signals. The Treasury has borrowed money to finance the government’s deficits at remarkably low rates, the strongest indicator that the markets believe they will be paid back on time and in full.

The absence of political will is also facilitated by the fact that, as Prof. James K. Galbraith of the University of Texas puts it, "Forecasts 10 years out have no credibility."

He is right. In the early years of the Clinton administration, government projections indicated huge deficits—over the "sustainable" level of 3 percent—by 2000. But by then, Mr. Clinton was running a modest surplus of about $200 billion, a point Mr. Obama made Monday as he tried anew to remind the country that the moment was squandered when "the previous administration and previous Congresses created an expensive new drug program, passed massive tax cuts for the wealthy, and funded two wars without paying for any of it."

But with this budget, Mr. Obama now owns this deficit. And as Mr. Galbraith pointed out, it is possible that the gloomy projections for 2020 are equally flawed.

Simply projecting that health care costs will rise unabated is dangerous business.

"Much may depend on whether we put in place the financial reforms that can rebuild a functional financial system," Mr. Galbraith said, to finance growth in the private sector—the kind of growth that ultimately saved Mr. Clinton from his own deficit projections.

His greatest hope, Mr. Galbraith said, was Stein's law, named for Herbert Stein, chairman of the Council of Economic Advisers under Presidents Richard M. Nixon and Gerald R. Ford.

Stein's law has been recited in many different versions. But all have a common theme: If a trend cannot continue, it will stop.

When I asked Jamie Galbraith whether he was misquoted, here's what he told us:

The press is indulging in a vast wave of hysteria.

Of course the deficit chorus has an agenda, which is to block jobs programs, prevent public investment, and to trim and privatize Social Security and Medicare.

I'm not normally an oracle of the markets. But the markets are sending a very clear signal: they don't believe a word of the hysteria. If they did, the 20 year Treasury bond rate would not be under 4.4 percent. In fact, the US government can borrow what it needs, at historically low interest rates, and so there is no financial barrier to funding the jobs, social programs and public investments that the country actually needs.

It's case of who you gonna believe, them or your lying wallet?

Not quite what showed up in Sanger's analysis, alas. (Otherwise wouldn't the headline have been: "There is no financial barrier to funding the jobs, social programs and public investments that the country actually needs"?) I'm still glad he contacts Galbraith for his articles, though...

Labels: Barack Obama, budget, deficit, James K. Galbraith, jobs

 

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2/02/2010 07:41:00 PM 0 comments links to this post

 

The Ignoble Prize for Economics

by Dollars and Sense

The Real-World Economics Review (formerly the Post-Autistic Economics Review), has opened voting for what they are calling the Ignoble Prize for Economics, for "the three economists who contributed most to enabling the Global Financial Collapse." Here are the details:

Twenty-two economists were nominated for the prize. Through consultation with contributors to the Real-World Economics Review Blog, the following short list of ten, including two pairs of economists, has been selected for the ballot.

Dossiers of short-listed of nominees for the Ignoble Prize for Economics:

Fischer Black and Myron Scholes
They jointly developed the Black-Scholes model which led to the explosive growth of financial derivatives. The importance given to their hypothetical calculation of derivative prices was baneful not just because it was bogus, but also because it meant that relevant and often urgent real-world economic research was widely neglected by the profession.

Eugene Fama
His "efficient market theory" provided the moral umbrella for all sorts of greed, predatory behaviour and incompetent corporate management. It also provided the rationale for deregulation. And his theory’s widespread acceptance meant that "discussion of investor irrationality, of bubbles, of destructive speculation had virtually disappeared from academic discourse." In these three ways Fama’s work created the environment which made possible the GFC.

Milton Friedman
He propagated the delusion, through his misunderstanding of the scientific method, that an economy can be accurately modeled using counterfactual propositions about its nature. This, together with his simplistic model of money, encouraged the development of the financial theories with unrealistic assumptions that facilitated the GFC. In short, he opened the door for everyone subsequently to theorize without fear of having to be attached to reality.

Alan Greenspan
As Chairman of the Federal Reserve System from 1987 to 2006, he both led the over expansion of money and credit that created the bubble that burst and aggressively promoted the view that financial markets are naturally efficient and in no need of regulation. Before a Congressional committee on 28 October 2008 Greenspan confessed that his theoretical beliefs of 40 years were now proven to be without foundation, hence his total confusion and failure at his job.

Assar Lindbeck
By working to make the Riksbank Prize in Economic Sciences ("Nobel Prize in Economics") almost exclusively a prize for neoclassical economists, this Swedish economist has contributed significantly to the conversion of the economics profession and of world public opinion to market fundamentalism.

Robert Lucas
His development of the rational expectations hypothesis, which defined rationality as the capacity to accurately predict the future, both served to maintain Friedman's proposition that monetary factors do not affect the real economy and, in the name of "rigor", distanced economics even further from reality than Friedman had thought possible.

Richard Portes
As Secretary-General of the Royal Economic Society from 1992-2008, he helped suppress worries expressed by non-mainstream economists about developments in the financial sector. In 2007 he wrote a Report for the Icelandic Chamber of Commerce giving a clean bill of health to Icelandic banks only a few months before they collapsed. When investigators called attention to the real state of Icelandic banking, he wrote a series of letters to the Financial Times defending the soundness of Icelandic banks and imputing professional incompetence to those who doubted it.

Edward Prescott and Finn Kydland
For jointly developing and popularizing "Real Business Cycle" theory, which by omitting the role of credit greatly diminished the economics profession’s understanding of dynamic macroeconomic processes.

Paul Samuelson
Through his textbook Economics: An Introductory Analysis (19 English language editions and translated into 40 languages), he popularized neoclassical economics, contributing more than any other economist to its diffusion and thereby to the deregulation of financial markets which made possible the GFC.

Larry Summers
As US Secretary of the Treasury (formerly an economist at Harvard and the World Bank), he worked successfully for the repeal of the Glass-Steagall Act, which since the Great Crash of 1929 had kept deposit banking separate from casino banking. He also worked with Greenspan and Wall Street interests to torpedo efforts to regulate derivatives.

Procedures
The voting is being conducted using PollDaddy. Its system uses cookies to prevent repeat voting. A voting box showing the short-listed candidates and a link to their dossiers will remain till voting closes near the top of the right-hand column on the home page of the Real-World Economics Review Blog. Voting is open to all interested parties. Each voter can vote for up to three of the listed candidates. The ballots are secret. Voting will remain open for several weeks. No results will be announced before closing the poll.

Labels: Alan Greenspan, Edward Presscott, Eugene Fama, larry Summers, Milton Friedman, Paul Samuelson, Real-World Economics Review, Robert Lucas

 

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2/02/2010 11:20:00 AM 0 comments links to this post

 

Move Your Money? (Doug Henwood)

by Dollars and Sense

Hat-tip to reader Michael E. for pointing us to the lead story in the January issue of Left Business Observer (which I hadn't gotten around to reading yet), where Doug Henwood skewers the "Move Your Money" campaign that we posted on yesterday. Our introductory note to that post expressed some mild skepticism by observing that you have to *have* some savings to participate in the campaign. And we certainly should have gone on to criticize the individualism of the campaign, the limits of PC consumerism, etc.

Doug usefully points out that the strategy behind the campaign is flawed because of the fungibility and mobility of money. You can't ensure that your money will be put to good, local uses by picking a local bank; at any rate, the banks that the campaign's zip-code-based locator suggests are not necessarily good ones or insulated from big banks and global capital.

I did check my zip code in humble East Boston and found East Boston Savings Bank and some credit unions—maybe Doug's Brooklyn neighborhood is tonier than mine and has not only more banks, but slimier ones. I wouldn't want to face trying to be a PC financial consumer in New York City, even if I had any money to park.

Doug's crack about HuffPo is on the money, but it's even worse than he says. HuffPo thrives on the paid labor of interns, in the sense that the interns pay for the privilege of interning at HuffPo, as widely reported last spring.

Anyway, here's part of Doug's take; I strongly encourage everyone to subscribe to LBO and/or purchase the January issue go get the full article:

The latest populist spasm is Arianna Huffington's "Move Your Money" campaign, which would have those of us with money in large banks move it to small ones. This touches on another foundational populist fantasy: that virtue and size are inversely related. Her website, which thrives on the unpaid labor of hundreds of eager contributors, even provides a helpful list of convenient local banks if you enter your zip code.

What's wrong with this scheme? Several things. First, many small banks have more money than they can profitably invest locally. As Barbara Garson shows in her wonderful book, Money Makes the World Go Around, the portion of her book advance she deposited in tiny upstate New York bank was probably lent via the fed funds market to Chase, where it entered the global circuit of capital. This is not at all uncommon. Money is fungible, protean, and highly mobile even when it looks locally rooted. That very mutability is part of what makes money so valuable: it's the ideal form of general wealth that can instantly be turned into caviar, lodging, Swedish massage, or shares of Google.

Read the whole article.

Subscribe to LBO.

Labels: Arianna Huffington, Doug Henwood, Huffington Post, Move Your Money

 

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2/02/2010 10:59:00 AM 3 comments links to this post

 

Move Your Money

by Dollars and Sense

This is from the Feb. 1st issue of The Nation; here's the link to the Move Your Money campaign, which Arianna Huffington and Rob Johnson of the Roosevelt Institute started. It sounds like a worthy campaign; if I had any savings I would move them (except I have never given the big banks my business, at least when I've been able to avoid it).

Are you angry about Wall Street's reckless excesses? Are you disappointed with President Obama's limp approach to reform? You can change this, acting individually and collectively. Withdraw your deposit and savings accounts from the large banks that brought the system to ruin and were subsequently rescued with billions in government bailouts. Put your money instead in smaller, safer banks or credit unions closer to home--the thousands of community institutions that do not harvest their profits from greed and recklessness.

"Move Your Money" is an electrifying slogan that's lighting up the Internet because it shows people how they can push back against the big dogs of banking. The concept is simple, but this is a big idea that could alter the timid direction of financial reform.

This campaign is potentially more than a feel-good gesture. If coordinated with institutional reform efforts, it could lead to a broad rebellion against the financial system, with citizens reclaiming the power to act directly when politicians are too intimidated by moneyed interests to act in the public interest. Economist Jane D'Arista put it crisply: "We are not a nation of widows and orphans. We have quite a lot of money, and people control some of it. They might ask why they don't control more of it."

The campaign was launched just before New Year's Eve by Arianna Huffington of the Huffington Post and Rob Johnson of the Roosevelt Institute. An influential bank-rating firm, Institutional Risk Analytics, donated a website window (moveyourmoney.info/find-a-bank), where citizens can find banks in their ZIP code that IRA certifies as safe and sound.

In the first forty-eight hours more than 100,000 responded with inquiries. Within a week, people had searched for good banks in 16,631 ZIP codes--nearly 40 percent of the nation. The search tool is now getting 45,000 users a day. Naturally, the corporate media promptly assured readers that "ordinary Americans lack the power to hurt the big banks," as a Washington Post headline put it.

Wrong. The cynics either do not understand banking or misunderstand the widespread public anger. Dennis Santiago, IRA's CEO and managing director, explained that banks compete fiercely for the "core deposits" provided by individual and small business accounts--this stable money is their preferred base for profitable lending. Take away core deposits, and bankers feel immediate balance-sheet stress. Expand the account base for community banks, and they gain greater stability and greater lending power. "Will moving your money have an effect?" Santiago asked. "And by effect, I don't mean making a momentary political statement. I mean making a structural difference to the country's financial system. The answer is yes."

Structural change ought to be the primary goal of financial reform--breaking up the concentrated power held by mega-banks and creating a balanced system of smaller, more diverse lending institutions that thrive by serving local credit needs. Alas, the Obama administration and Congress are pursuing the opposite goal--rescuing the behemoths that failed and encouraging even greater financial concentration. This will lead to more reckless adventures, more "too big to fail" bailouts.

"Move Your Money" is an important model for teaching people how to change a dysfunctional system. The same principle of taking control of your own money is at work in related reform movements. A campaign launched by faith-based community organizations associated with the Industrial Areas Foundation identifies sky-high interest rates on credit cards and other lending as the ancient sin of usury. IAF groups are asking churches, foundations and local governments to withdraw funds from the usurious banks that profit by destroying borrowers. Organized labor, likewise, has launched an aggressive movement to insist on responsible investing values for the pension-fund wealth of working people, urging state treasurers and fund managers to invest for society's interests as well as good returns.

Changing the nature of finance capitalism is a long road, to be sure, and the industry will resist change every step of the way. But the fight begins in earnest when people decide to move their money.

Labels: Arianna Huffington, Bank of America, banking industry, banking system, Move Your Money, Too Big to Fail

 

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2/01/2010 12:46:00 PM 2 comments links to this post

 

'New Haiti'; Same Corporate Interests

by Dollars and Sense

Terrific article by Isabel MacDonald, at the Nation.

By Isabel MacDonald | January 29, 2010

In the wake of the earthquake that has killed more than 100,000 people in Haiti, the foreign ministers of several countries calling themselves the "Friends of Haiti" met on Monday in Montreal to discuss plans for "building a new Haiti." Participants in the Ministerial Preparatory Conference on Haiti, who included Secretary of State Hillary Clinton; representatives of international financial institutions including the World Bank and the International Monetary Fund; and Haitian Prime Minister Jean-Max Bellerive came to what Canadian Foreign Affairs Minister Lawrence Cannon, the conference chair, referred to as a "road map towards Haiti's reconstruction and development."

However, the Latin American countries of ALBA--the Bolivarian Alliance for the Americas--who held a counter-conference, and several grassroots Haiti solidarity organizations, who organized protests outside the conference, expressed skepticism that the "Friends of Haiti" and the international financial institutions would work to further the interests of ordinary Haitians.

One of the groups protesting the conference, Haiti Action Montreal, issued a statement warning that "There is a danger that these major powers will try to exploit the earthquake to further narrow pro-corporate ends, if reconstruction of New Orleans after Katrina and in Asia following the tsunami are any indication."

As Naomi Klein has observed, this process is already underway. The Heritage Foundation think tank's initial response to the earthquake clearly followed the pattern she documented in her book The Shock Doctrine, by which neoliberal reformers seek to impose an agenda of privatization in times of crisis. It was less than twenty-four hours after Haiti was hit by an earthquake of 7.0 magnitude that the Heritage Foundation issued a release recommending that "In addition to providing immediate humanitarian assistance, the U.S. response to the tragic earthquake in Haiti earthquake offers opportunities to re-shape Haiti's long-dysfunctional government and economy as well as to improve the public image of the United States in the region."

That sentiment was echoed by James Dobbins, former special envoy to Haiti under President Bill Clinton and director of the International Security and Defense Policy Center at the RAND Corporation, who stated in a recent op-ed in the New York Times, "This disaster is an opportunity to accelerate oft-delayed reforms," including "breaking up or at least reorganizing the government-controlled telephone monopoly" and restructuring the ports, which also represent two of Haiti's few remaining state enterprises.

The World Bank also observed an upside to the catastrophe in Haiti; in a January 18 blog post titled "Haiti earthquake: Out of great disasters comes great opportunity," a World Bank disaster management analyst recently stated that "there is a silver lining to this great tragedy. Looking back in history, great natural disasters are often a catalyst for huge, positive change." Even calls for the expansion of Haiti's sweatshop industry are being made in the media.

Read the rest of the article.

Labels: Disaster Capitalism, earthquake, Haiti, IMF, World Bank

 

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1/31/2010 12:42:00 PM 0 comments links to this post