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Archive for the ‘neoliberalism’ Category

A Tale of Two Cities: Students Protests in Columbus, Ohio and Montreal, Quebec

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by Julian 

Is student loan debt a ticking time bomb? At $870 billion dollars, the money owed on student loans in the United States now surpasses total credit balances. In Canada, the average student debt for a university graduate totals $27,000. Two million Canadians now owe around 20 billion dollars in student loans. Growing levels of student debt in both countries represents part of a larger phenomenon of governments passing off educational costs to individual students rather than funding them as part of the public good.

While part of an international trend, I’ve witnessed how much response to these tuition hikes can vary from place to place. In 2005, I moved from Montreal to Ohio to complete a master’s degree. Even then, tuition rates were rapidly expanding at Ohio’s state universities. The apathetic response to tuition hikes that I encountered among students amazed me.  The reason for my surprise was because at that exact same moment in my native Quebec, over 200, 000 students had gone on strike. They had done so because the provincial government had cut loans and bursaries. Even with these cuts (which were unsuccessful due to student mobilization), Quebec tuition would still have remained about half of what it was in Ohio.

Today, the gap between the student movements in Ohio and Quebec seem just as stark.  In Ohio, average costs for state residents at the main campuses of four-year universities stands at $ 9,600 a year (a 56% increase over the past decade). Ohio State, which has increased annuals charges by 72% over the past decade to $13, 081, even warns its prospective students that they should expect to pay an additional 5% to 10%  every year that they attend. Three weeks ago, around 100 Ohio State students marched in protest.  In contrast, three days ago in Montreal, tens of thousands of students showed up for a demonstration that spanned over 50 city blocks. They were protesting the Liberal government’s plans to raise annual in-province tuition fees from $2,500 to $4,100 over the next five years. Since mid-February, more than 300,000 students have stopped attending classes to challenge this policy.

Montreal demonstration against tuition fees , March 22, 2012

Although many believe that college education is an investment into one’s future—which individual students should play a substantial role in paying back themselves—upon closer inspection the arguments for state tuition increases don’t sound very convincing. Increased fees deter financially disadvantaged students from applying to university, lead to worrisome debt loads for anyone whose family isn’t already well off, and neglect the obscene growth in administrative salaries at college and universities in recent years (which actually do waste money). They also tend to encourage the view that higher education is nothing but a commodity designed for individual advancement, rather than a system that promotes the common good through its original research and teaching.

In cases such as Quebec’s, the tuition increases also represent a drop in the bucket when compared with overall spending on higher education. The tuition hikes seem designed less to pay for needed expenses than to encourage the principle that individuals—rather than society as a whole—should bear the financial burden every time they use a government service. That is, in the name of austerity, they should get used to more regressive taxation.

As the size of student protests in Ohio and Quebec demonstrate, student culture matters in shaping responses to tuition increases. While the Canadian media has relentlessly reminded its readers that Quebecers pay less in tuition than anyone in Canada, they have neglected to highlight to that they also pay considerably higher income taxes in part because they expect more social equality. Since the late 1960s, Quebec students have launched a number of successful petition drives, strikes, occupations, and mass demonstrations that have helped keep costs down. This commitment to student solidarity helps explain why Quebec’s student debt load is by the far the lowest out of all of Canada. In Ohio, on the other hand, not only do you find a political culture that places less of a premium on social equality, but you also have a complex system of higher education that makes organizing protests much more difficult.

Culture and institutions, of course, are malleable. Many in Quebec support increased tuition fees. Its student movement may very well fail to stop the current government’s agenda (as was recently the case in London). At the same time, they might help inspire others. My own, admittedly utopian, hope is that the activism in Quebec encourages students in places like Ohio (just as the negligible tuition fees in places like Norway and the Netherlands have motivated many in Quebec). As universities around the world consider abandoning their missions of serving the common good for the promise of neo-liberal economic efficiencies, the response should ideally be international as well. Indeed, many in the Occupy Movement have turned crushing levels of student debt into an organizing issue.  While I like seeing 100, 000 people marching against tuition increases in Montreal (or London), it would be a great thing to see in Columbus, Ohio too.

Written by Julian Nemeth

March 27, 2012 at 00:19

Occupy Economics?: A Report Back from the Nerdiest Protest I’ve ever been to.

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By Peter

I just got back from Chicago, where, along with attending the American Historical Association, I participated in a series of protests held by Occupy Chicago, along with CACHE (Coalition Against Corporatization of Higher Education) that targeted the American Economics Association (AEA). Its not everyday that the worlds of street protests and academic conferences blend so well. But then again, part of the point was to “puncture the bubble,” that academic economists live in.

The protesters gave out “alternative” awards for Most Conflict of Interests (Columbia’s Glenn Hubbard), Intellectual Narrowness (Harvard’s Greg Mankiw), and top prize, the “Toxic Waste of Space Award” (Harvard/Obama administration’s Larry Summers). Other than a brief yelling match that one protester got in with a professor, the tone was light and fun. Protesters “accepted” awards acting as Mankiw, Hubbard, and Summers (who reminded us how much smarter he was than us) and served “Rahmon” noodles, in honor of the Chicagoans impoverished by Rahm Emmanuel’s neoliberal policies. Overall a lot of fun, albeit fun that might have gone over the heads of the random shoppers on Michigan Ave.

According to protesters: “The bankrupt ideologies of ‘neo-liberalism’–trickle-down theory, austerity, deregulation, privatization–have all been proven empirically disastrous. Those ideas still enjoy a monopoly in the mainstream debate due to the massive scale of academic subsidizing by the bought AEA and it’s cohorts in the 1%.” Watch a great interview with an organizer at the bottom of this post.

It just so happens the protests came at a time of particularly hot debate about the ideology of the economics profession. The recent release of the minutes of the 2006 Federal Reserve Meetings well illustrates—along with Timothy Geithner’s utterly pathetic sycophancy towards Alan Greenspan—that the High Priests were asleep on the job, completely unaware of the looming housing crisis. Said one professor quoted by the New York Times:

“It’s embarrassing for the Fed,” said Justin Wolfers, an economics professor at the University of Pennsylvania. “You see an awareness that the housing market is starting to crumble, and you see a lack of awareness of the connection between the housing market and financial markets.”

“It’s also embarrassing for economics,” he continued. “My strong guess is that if we had a transcript of any other economist, there would be at least as much fodder.”

Not the discipline’s finest moment, no doubt.

I have a longstanding hatred/fascination with the foundational logic taught in modern Economics courses: its technocratic imagination, its inability to question its own premises, its ahistorical logic (see Daniel Rodgers’ Age of Fracture, Chapter 2 for more on how society, power, and history dropped out of the Economics discipline), its inattention to moral consequences, its reductionism (like the horrid Freakonimics series, which thinks all aspects of human existence can be explained by their simplistic assumptions about human behavior), and its normative amorality (seriously, studies have shown that taking economics makes students less generous people).

And this is all important because Economics inhabits a unique disciplinary position. Part academic discipline, part incubators of elite policy makers, academics in no other departments transition so seamlessly from academia to government to Wall Street. Look at a figure like Larry Summers, who has (in the last five years alone!) inhabited leading roles in all three worlds. While taking money from Wall Street while producing intellectual material about Wall Street suggests casual corruption, the influence that economists, and what Tony Judt called economism (the tendency to think of all social problems in terms of the marketplace) has deep ramifications on our public policy. The very power of economists makes it more likely that they will be captured by elites. I think, then, it is fair to target the AEA, even if many, if not most, economists are actually innocent of any corruption. It matters to the public what economists talk about, much more so than whats going on in, say, the MLA.

A silver lining, though, to the economic collaspe might be a rethinking of some economic thought.

Writing about the great shift in Economics departments that occurred in the 1970s, as Samuelson, Galbraith, and the other Keynesians lost favor, Daniel Rodgers writes:

“The economic crisis of the 1970s was, in short, not merely a crisis in management. It was also, and at least as painfully, a crisis in ideas and intellectual authority. An extremely confident analytical system had failed to explain or make sense of the unexpected.”

The results, according to Rodgers, were that the profession increasingly moved towards a more neoclassical model and microeconomics prevailed over macroeconomics. Meanwhile, the logic of markets and economic thinking invaded other disciplines: rational choice theory in political science, the “law and economics” movement in law schools, etc… One hopes that our recent crisis and the inability of our policy elites to predict or solve the problem, will produce a similar paradigmatic shift. This time, though, hopefully it will be away from such apologias for capitalism.

So in that spirit, I wanted to highlight two interesting thinkers. The first, I saw over at Crooked Timber, where New School economist Sanjay Reddy gives a fabulous interview about the need to bring moral reasoning back into the study of Economics. Reddy argues against the notion that Economics is a value-neutral science, restoring an “evaluative framework” to the discipline. It is impossible, he argues, to come to purely technical solutions to most problems. In a sense, Reddy is asking that we take moral sides before we engage in economic debate. First, for instance, we say that a goal of policy should be to aid the poor, then we figure out ways to so.

This seems to fit well with an article in the latest issue of Jacobin magazine (also featuring an excellent piece by friend of the blog, Andrew Hartman), by Mike Beggs, calling for radicals to occupy economics. Begg’s article asks economists to be less technocratic, and more openly political in their ends. Beggs takes a middle ground (for radical intellectuals), acknowledging that “mainstream economics is both an ideological bastion of capitalism and a genuine social science.” A tool for understanding the world, it is also wrapped up in a set of assumptions that are not neutral, but that favor a free market approach to the world. Nevertheless, as Begg’s points out, the stereotype that many have of a discipline of Milton Friedmans is actually unfair. A wide swath of economists agree with the need for some government intervention, and, other than a few reactionaries in Chicago or George Mason, most also acknowledge the importance of Keynes. The problem, Beggs suggests, is “not that mainstream economics was delusional, or biased to the right, but that it was technocratic.” It presumed it could manage and control, rather than take sides in class warfare.

In the opening editorial of Jacobin, the editors declare that, as the rebellion of Occupy Wall Street spreads, “we are in the last throes of the era of Ezra Klein.” What they mean, I think, is that the tepid liberalism of the technocratic elite (poor Ezra has, a bit unfairly, become a symbol of this) says nothing to the fundamental message of the OWS movement: the restoration of politics—full throated politics—to our understanding of class and economics. Class will no longer be something discussed in dry studies by the Brooking Institute or in economics seminars, but in the chants and marches in the streets, as those without challenge those with. Millions of people simply standing up and rejected these “market-based” solutions that have been crammed down our throats, will do more to change the dialogue than any polite article or policy paper ever will.

Written by Peter Wirzbicki

January 16, 2012 at 23:21

Marriage Equality in New York

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By Wiz

I stopped by the big Pride Parade yesterday, which, for obvious reasons, was pretty exciting this year. I parked myself on Christopher and Bleecker Streets, a place which I figured had some pretty historic connotations and took some pictures (click on them to blow them up), which I thought I’d share along with some thoughts.

1. The only moment, in my life, where I’ve seen so much authentic and unscripted joy was election night 2008, when the whole city burst into spontaneous celebration. New Yorkers are a pretty rude antisocial bunch, but the mood in Greenwich Village was completely jubilant and communal. Everyone was talking about the bill in every coffee shop and restaurant. I heard strangers discussing it in the Strand bookstore, and the level of authentic joy and happiness, including among the many straight people, was infectious.

The Cutest old Gay Men. Sign says Together 54 Years.

2. If anyone still thinks of the gay rights movement as a rich white movement, they haven’t spent much time in New York City. It may be that marriage equality was able to pass because rich white New Yorkers, by and large, either supported it or didn’t care. But both the crowd and the marchers were appropriate for New York: a completely diverse, rowdy, and democratic bunch. There were the South Asian gay marchers, the Orthodox Jews, the Latina Women, the Asian marchers, etc…I’d like to think it would make Walt Whitman proud, on a whole bunch of levels.
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Written by Peter Wirzbicki

June 27, 2011 at 16:14

Neoliberalism and Corruption

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By Wiz

The core assumption of our neoliberal moment, of course, is that markets are the best ways to distribute goods and organize society. Right-neoliberals end there, and declare war on all public goods and any attempt whatsoever to regulate that market. Left-neoliberals maintain that individuals should have access to some basic social welfare, but always reject the idea that the state should be in charge of distributing it. Thus you end up with bizarre, hideously complicated, and inefficient systems like Obama’s health care plan. Since it is almost literally unthinkable that the state could provide a good better than the Market could (every time you say the word Market, by the way, an angel should be playing flutes inside your brain), left-neoliberals have to invent complicated ways to bribe, coerce, and manage the Market God into sort-of-kind-of-not-really providing the resource that left-neoliberals admit is essential.

This critique of neoliberalism is well known. Two recent stories, though, have reminded me just how much this brand of brain-dead market worship isn’t just inefficient and wasteful, but contributes directly to corruption and the erosion of our democracy. First, this one from Albany. Charter schools are, of course, neoliberalism’s wet dreams– you get abundant public money, little oversight, and, best of all, get to hide behind cute disadvantaged kids, all while doing Goldman Sachs’ bidding. Problem is, of course, they don’t actually perform any better than most public schools, so given a choice parents might not send their children to charter schools. The first solution, of course, is to spend money on advertising, a horrible waste of public money, which doesn’t in any way contribute to a better educational experience. The second option we see in Albany, where Charter Schools are spending their money, which comes, remember, from the taxpayers, to advertise against the local school budget. Why? Well, the budget didn’t affect them at all, but it would increase support for the city’s public schools. So they used public money, in order to try to lower the funding for their competitors, who happen to be public schools. Cute, huh? Public money in order to hollow out public institutions.

Next, we have the prison industry, where the New York Times reports that private prisons are no cheaper, and often more expensive, then public government run prison. If Dostoevsky famously said that the conditions of prisons demonstrates the level of your civilization, then the fact that we have turned our prisons over to faceless, unaccountable corporations seems appropriate. But even more appropriate to our time, is that the prison industry often uses their money, which comes from the public, to advocate for brutal racist immigration policies that are guaranteed to produce more prisoners. Specifically, they were behind the push for Arizona’s notorious SB 1070 law, cracking down on undocumented immigrants.

Connecting both stories, obviously, is that fact that the market is not some neutral “tool” that can be manipulated to serve the ends of the state. By turning public goods over to private entities, we empower people who have a particular interest in public policy. The (attempted) underfunding of Albany schools and the racist immigration laws of Arizona, then, are partly the product of seemingly separate political decisions about how to provide certain services.

Left-neoliberal’s love to wrap themselves up in the language of hardheaded pragmatism (generally the sign that you are about to do something fucked up) and say that they don’t care how people get, say, health care, education, or safe streets. And if they have to resort to the market, they don’t mind doing it (implication– they care more about these issues than you, you dogmatic ideological leftist). Problem is, the market is not just some tool, that is completely neutral. Rather by using it as a means, we predetermine a set of ends that we never agreed upon in the first place: ends like anti-immigrant laws and poorly funded public schools, since those things are in the interests of the entities that we are funding to provide our services to us.

Written by Peter Wirzbicki

May 19, 2011 at 20:55

Posted in neoliberalism

Aid and Intervention

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by apini

Humanitarian rhetoric has ramped up recently.  Do we have a moral duty to intervene on the behalf of those civilian populations in Libya being targeted by Qaddafi (or in Bahrain, or Yemen, or Egypt, or Cote d’Ivoire)?  Is it our responsibility to respond to the ‘humanitarian’ disaster following the earthquake in Japan (or New Zealand, or Haiti, or Chile)?

Accompanying this increased (over)use of ‘humanitarianism’ has been a growing reaction against it.  Pundits from Fox News to the Guardian who pointed to a humanitarian crisis before the intervention are now questioning its relevance – do we need to intervene because it is a humanitarian crisis?  Or is it a humanitarian ‘crisis’ because we need to intervene? And once we’ve intervened, what comes next?  State-building? Humanitarian relief? Regime change?

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Written by apini

March 24, 2011 at 05:17

Economists: Scientists or the Court Poets of Wall Street?

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By Wiz

The blogosphere is wondering whether or not economics is a science. Ryan Avent and Mathew Yglesias say yes, and Krugman thinks maybe not. Atrios says “Basically the ignorant bullies took over the profession to some degree.”

There seem to be a couple of obvious things missing from this debate, that perhaps this humble intellectual historian could add. First thing lacking is any critical understanding of what science is. The general assumption seems to be: if economists can operate in some sort of “objective” world, in which value and personal bias don’t structure your results, where in good Gradgrindian fashion “facts and nothing but the facts,” determine your answer to a given question; in which scholarly debate can come to final conclusions about matters; where political power, ideology, and hegemonic values aren’t determining the results; where predictions can be made with some confidence, etc… If these things exist then we’re scientists!

Unfortunately, by most of these standards most scientists aren’t scientists either. In other words, even when dealing with cells and atoms this is a hard ideal to reach. To me, if there is one thing that historians, especially intellectual historians, can remind the world is that people are always the product of their time. They never exist in the rarified abstract space that is imagined here, where politics, discourse, and ideology don’t affect them. This isn’t to advocate some vulgar nihilism, but rather to remind people that conclusions are always provisional and always affected by the positionality of the observer.

And if I could posit a general theory of human knowledge here: one’s ability to even approach the scientific ideal of detached neutral observation gets harder and harder the more you study people and the less you study not-people (official scientific term there). And though you would excused in not realizing this when you read most economists, the profession is still ultimately concerned with human issues: wages, economic inequality, human motivation, environmental destruction, etc… Remember, after all, that Adam Smith was a moral philosopher, not a physicist. The idea that anyone could be drily scientific and objective about these issues– that their own personal biases, preferences, and, frankly, self-interest–would not color what they do is ludicrous and almost comically naive. Read the rest of this entry »

Written by Peter Wirzbicki

March 22, 2011 at 23:16

The Euro Crisis, Geography, and Globalization: Is Ireland like Detroit?

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By Wiz

There’s a lot to chew on in Paul Krugman’s new magnum opus on the failures of the Euro. But I wanted to riff off this point he makes:

“America, we know, has a currency union that works, and we know why it works: because it coincides with a nation — a nation with a big central government, a common language and a shared culture. Europe has none of these things, which from the beginning made the prospects of a single currency dubious.”

Although Krugman doesn’t frame it this way, his argument is to some degree about geographic scales. The problem with Europe, among other things, is that the space of the Euro is larger than the space of any particular political unit’s fiscal policies. As such, when the fiscal policies of a particular country—Spain, Italy, Greece, etc…– get the country in trouble for whatever reason (often from causes not necessarily the country’s fault) they are unable to devalue their currency, since it belongs to the bigger unit of Europe. As such the Greek people are stuck using a currency that is, from their perspective, too strong because it represents attitudes towards the entire European project (including the stronger economies of Germany and France), when devaluation would actually benefit their economies. In the end, he argues for increased fiscal integration, bringing the space of fiscal decision making closer to the space of the European currency.

I’m in no position to judge the economics of the argument (as if that ever stopped me…). But I think the so called “spatial-turn” in history may have some valuable insights here, as what is occurring in Europe strikes me as analogous in some ways to recent moments in American urban history. In American historiography, scholars have begun analyzing how power is written into social space, and how different and competing geographies affect politics and economics. The work I’m most familiar with is 20th century histories, especially those of suburbanization and urban planning. I’m particularly thinking here of Robert Self’s American Babylon, Lizabeth Cohen’s A Consumer’s Republic, and the Thomas Sugrue’s The Origin of the Urban Crisis, each of which studies post-war urbanization practices in, respectively, Oakland, New Jersey, and Detroit. Each are intricate and important works, which don’t always agree with each other, but to me, highlight one important insight: when the effective economic space of a given market does not coincide with the effective political space(s) governing that market serious political and economic problems arise.

Detroit

In urban politics the fact that, for instance, labor markets can be “bigger” than the political unit which theoretically manages the economy has encouraged things like white flight and suburbanization. Middle class parents can continue to work downtown, while taking advantage of lower-taxes, cheaper land, and (likely) their own conscious or unconscious preference for de facto racial segregation in the suburbs. Take New York City, for instance, which in the 60s embarked on a series of ambitious social democratic measures (free higher education at the CUNY system, public hospitals, public housing, etc…). These measures, which primarily benefit the poor and working class, all require taxation and/or debt financing. If an individual, let’s say, ad executive, can continue to work on Madison Avenue while living in lower tax Westchester County or Long Island, where there are no poor people to support, he will move out there. The suburban resident, then, essentially is parasitic, taking advantage of the urban labor market while self-seceeding so as to avoid paying for its maintenance. And bondholders will prefer lending to fiscally conservative suburbs which are, theoretically at least, less likely to default, driving up the cost of borrowing for urban polities.

A vicious circle begins, in which the infrastructure and social programs of the city decline, hastening the flight of middle and upper class taxpayers into the suburbs. The result, of course, is a process of class and race based segregation that undermines social democratic urban policy. After the debt crisis of the 1970s– brought about in no small part because the city lost so many high and middle income taxpayers to the suburbs– New York City retreated from any serious commitment to its working class citizens and hasn’t looked back since (see Josh Freeman: Working Class New York). In cities like Atlanta this is being taken to the absurd extreme of outer-ring areas seceding from the city, in order to avoid having to pay to maintain urban facilities (and, once again, to avoid political integration with the African-American core of the city).

Meanwhile the fact that there is one market but multiple, and competing, political units, each smaller than the market, only aggravates this problem. My father has served in a number of thankless positions in our local town government. Almost every year, our town government face some sort of dilemma that goes like this: Company A asks for a tax break or the right to disobey an ordinance or whatever. If they don’t get it they’ll leave. The problem is each town council knows if they don’t give in, their neighbors might, and Company A will just relocate. So even if every local government sees through this crass corporate blackmail, they’re all stuck in a collective action problem. In Massachusetts, Deval Patrick is under a bit of attack for funneling 58 million dollars to a solar power plant, on the hopes of keeping employment in state, only to see it turn around and move to China. But what choice did he have? If New Hampshire was willing to give them $57 million, he had to pony up. The solar plant violated the terms of the informal contract only being rude enough to leave so quickly. This is a long way of saying, of course, that capital can play individual political units off each other, setting off a race to the bottom.

And what happened in a minor scale, in cities across America, is now occurring across the globe. In Greece and Ireland, for instance, the debt crises have forced a massive reduction in the welfare state, even while, as in Ireland, corporate taxes remain low in order to continue to attract highly mobile international capital.

David Harvey is the theorist who has most extensively written on this, arguing that one of the main strategies for renewed capital accumulation in the neoliberal age has been what he calls a “spatial fix.” Part of this is as old as capitalism itself, which has always had the tendency towards constant geographic expansion (“The need of a constantly expanding market for its products chases the bourgeoisie over the entire surface of the globe. It must nestle everywhere, settle everywhere, establish connexions everywhere”). The annihilation of space and time that accompanied the rise of the internet, containerization, and trucking all sped up and intensified this pre-existing process.

But spatial fixes become especially useful in the post-war period as a form of top-down class warfare against social democratic regimes. The greater mobility of capital is one of its most powerful weapons against both labor movements (which are most often local or nationally based) and against government regulation. Are wages too high in this country? Did the voters just implement some pesky environmental regulation? Did the government just approve taxes in order to finance some social program? Capital can find somewhere else that is friendly to its continued accumulation. Especially attractive are undemocratic states like Dubai or China where you never have to worry about the citizens getting in your faces if you pollute their river. And even if the factory doesn’t move, just the threat that they could relocate serves as a powerful disciplinary tool. Go try to organize a union of manufacturing workers in America. See how long it takes before management puts up posters reminding people that “In the past, when factories have unionized, these jobs have been forced to go overseas, hint, hint, nudge, nudge.” Under the Breton Woods system, as I understand it, it was actually fairly difficult to move capital in and out of countries, as nations maintained strong restrictions on the out-flow of capital.

But now this is possible, of course, because with 30 years of “free trade” globalization combined with technological improvements, the effective space that capital can operate has become much larger than the effective space that capital’s main antagonists (organized labor and democratic oversight) generally function in. And, of course, the fact that the era of globalization has also been one of increased repression and restriction of immigration (i.e. labor trying to move around just as capital does), only highlights the mocking farce that is the ideology of globalization.

The problem, then, is that by making the market bigger than the democratic institutions which used to oversee it, the neoliberals have undermined their own ability to regulate that market, even in ways they might want to. In their honest moments, neoliberals even admit this, as when bankers threaten to move overseas if the rabble taxes them, or when Thomas Freidman writes about the “golden straightjacket,” that limits the policies governments can implement if they want to grow economically. Now Europe, it seems, is suffering from the ability of capital (in this case bondtraders) to operate in a significantly larger arena than other agencies.

A lot of ink has been spilled on the left about the undemocratic nature of the various international agencies that oversee the world economy– the IMF, the World Bank, G-20, etc… But to some degree, these critiques miss the point. The problem isn’t the undemocraticness of the IMF itself as in institution, though that might be true. The problem is that by creating a market bigger than our nation-state, we’ve undermined our ability to democratically control the market through our normal channels of citizenship and democratic participation.

I realize the analogy with modern European problems isn’t perfect: I’m not totally sure that the bond market, for instance, operates in the same way that other markets do. And since countries are bigger than urban spaces, and produce strong affective ties, I’m not sure that individual taxpayers move around that much. But capital certainly does, blessing Ireland one day, and then pulling out the next. And the fundamental point, that the problem arises from the mismatch between the space of the market and the space of the effective political units, preventing the regulation and management of the market, I think holds. (I say effective, since in this case the actions of the Greek or Irish parliaments are clearly more salient than the largely meaningless European Parliament).

One solution, of course might be reintroduce restrictions of various sorts, as those who wish to leave the Euro suggest. The other is to “scale up” the various political units so that they more accurately coincide with the various economic marketplaces. This seems to be Krugman’s preference. Theoretically there are certain UN bodies, like the ILO, which have some universal jurisdiction. But at this point the ILO is completely toothless (I know, they condemned NYU, my employer, for its labor practices in no uncertain terms back in 2008, and here we are still without a union.) And given that the international community has been unable to agree on some proper management of the carbon in our atmosphere, the clearest example of a global commons, there isn’t a lot of hope that, at least in the near future, countries would give up their sovereignty over issues like taxation, labor policy, and their welfare state. And the UN, whose various agencies are perhaps best positioned to oversee some of these issues, is still only indirectly democratic, with both India and Belize getting the same votes in the General Assembly, and the Security Council dominated by those countries which happened to win World War II. And of course, the other major global institutions—the World Bank, the IMF, the G-20, etc…—are far less democratic, dominated, at best, by unaccountable neoliberal technocrats, and at worse by the naked influence of the financial industry.

And so any real global integration of global politics seems, at this point, to be almost completely utopian. Which is to say, that the problem Krugman hints at, that the spaces in which global capital operates in will continue to be larger than the spaces in which the countervailing forces operate, will not be restricted to Europe. Hopefully we don’t all end up like Detroit, but I’m not optimistic.

Written by Peter Wirzbicki

January 17, 2011 at 10:12

A Modest Proposal: Job Creation through Incarceration

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by Nemo

For the past few days, thousands of Georgia prisoners have been striking against their poor working conditions. The strikers—by demanding actual wages and fair working conditions—risk undermining one of the America’s few areas of global economic competitiveness. Ever buy packaged Starbucks coffee? Ever buy a mouse from Microsoft? Ever shopped at Wal-Mart? Chances are you have benefited from a quality product made in the USA—by prisoners. Prison labor represents one of the few ways that American companies can compete with the low wages offered in the developing world. Prison authorities must break the Georgia prison strike—the fate of the American worker might depend on it.

Although Georgia–unlike dozens of other states–has barred the age old right for prisoners to work without pay for private companies, it has managed to cutback on many costly state and municipal jobs by making prisoners do them instead. With their irresponsible protests, the strikers risk creating better working conditions at prisons more generally.

This is especially the case since Georgia has been so innovative in making prisons economically productive. It spends less on prisoner upkeep than nearly anywhere else does in the country. As one journalist has observed “Prisoners are confined in overcrowded cells, with very little heat in the winter months and sweltering heat in the summer.”

Georgia has also cut back on wasteful government spending by denying prisoners access to any educational opportunities beyond the General Equivalency Diploma. After all, if prisoners had access to education, it might increase the chances that they would never return to jail, and thus deny the state its right to their unpaid labor. With nearly 1 in 13 of Georgia’s citizens either in prison, probation, or on parole, these huge labor reserves provide a great way to reign in runaway government spending.

Snake River Correctional Institution Call Center, Oregon. Ensuring that those telemarketing calls you receive during dinner are "made in the USA."

Georgia’s prison employment has been a particular boon to the state’s black community. While comprising 30% of the state’s population, African Americans make up 63% of the state’s prisoners. This provides the community with well-needed jobs. On this point, Georgia has established itself as a leader in a broader national trend.  As Atlantic blogger Ta-Nehisi Coates has observed, “Of the 2.3 million people in American jails, 806,000 are black males.  African-Americans–males and females–make up .6 percent of the entire world’s population, but African-American males–alone–make up 8 percent of the entire world’s prison population.” Thus, the prison strike threatens not only American financial competitiveness, but also employment opportunities for some of the nation’s most economically disadvantaged citizens.

The good news, however, is that America holds the world’s largest prison population. If prison officials make sure to shutdown this peaceful protest with maximum force—as they seem intent on doing—this important system of competitive labor management stands a high chance of remaining in place. In fact, if Georgia succeeds, President Obama might follow the state’s example in launching the “job creation” package that his liberal supporters have long been demanding. Indeed, with federal judges now ruling the health care mandate unconstitutional, Congress should consider re-opening debtors’ prisons for Americans who cannot afford to pay their health care bills. This might not solve the health care crisis, but it would go along way to reducing unemployment.

Written by Julian Nemeth

December 13, 2010 at 17:47

In which I Disagree with Paul Krugman

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By Wiz

The Krugmonster writes:

The root of our current troubles lies in the debt American families ran up during the Bush-era housing bubble. Twenty years ago, the average American household’s debt was 83 percent of its income; by a decade ago, that had crept up to 92 percent; but by late 2007, debts were 130 percent of income.

All this borrowing took place both because banks had abandoned any notion of sound lending and because everyone assumed that house prices would never fall. And then the bubble burst.

Now its true that I’m still waiting for my Nobel prize in economics (next year, I think), but I would say that Krugman’s interpretation of why households have so much debt is a bit simplistic. 30 years of wage repression, union-busting, and off-shoring; combined with an explosion in the costs of health care, education, and (until recently) housing, is the true reason for this household debt. The credit card and mortgage industries played a part, by functioning to conceal the fact that the neoliberal turn mandated lower living standards for most Americans, and allowing people to continue to live a similar lifestyle as before. But the financial industry wasn’t the root causes, even if it profited by parasitically exploiting the situation. Easy credit was the “how” but not the “why” of the crisis, if that makes sense.

Which is to say. Go watch David Harvey.

Then go read this hilariously pathetic neoliberal tripe post which Ezra Klein sympathetically links to, which claims that the crisis is the result of “Republican and Democratics [sic] administrations that were more concerned with punishing innovative industries and ladling on additional security and economic regulations.” Yes! If only we have provided more tax-breaks to pharmaceutical companies or eliminated OSHA regulations. That would have averted this crisis! To paraphrase Marx, when the neoliberals are confronted with a crisis they flee from economics to seek refuge in (corporate welfare for) organic chemistry.

Update: Check this out from Kevin Drum:

However, their introduction is pretty easy to understand: they’ve constructed a simple model for financial crises that essentially proposes the following narrative:(a) growing inequality produces less money for the middle class and more money for the rich, (b) the rich loan much of this money back to the middle class so they can continue to improve their living standards even with stagnant incomes, (c) the financial sector balloons to mediate all this, and (d) the system eventually collapses since, after all, this kind of thing can’t last forever

Written by Peter Wirzbicki

December 13, 2010 at 12:12

Tea Partiers sure love their Freedom

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Wiz

I’m sure you’ve all seen the video of Joe Miller– Alaskan senate candidate/post-apocoplytic survivalist– and his private guards detaining a journalist at a public event. Glenn Greenwald points out that these guards were active duty military, which certainly adds a extra dash of creepy authoritarianism to the whole thing.

A couple of days ago I caught a bit of the California governors debate, and Meg Whitman was saying something about how terrible and greedy the public employees unions were, and how she was going to slash their pay. Except– she made a point of saying– not for uniformed employees who care a gun. Which I assume would be cops and prison guards. Slash away at the nurses or teachers who, you know, make peoples’ lives better. But never say a bad word about someone with a gun.

The connecting link, of course, is the strange definition of freedom our friends on the right have adopted. Who knew that our shining city of the hill of freedom and individual liberty included so many cops and soldiers telling you what to do?

But then, is this not a defining feature of neoliberalism? The move to slash public investment in social goods necessarily goes hand in hand with the increased investment in the security and military apparatus of the government.

This probably deserves more thought, but it brings to mind one of my favorite quotes from David Montgomery’s Citizen Worker. In the nineteenth century, even as social darwinist ideology proclaimed that government could not care for the sick or poor, “the coercive capacity of the government grew steadily throughout the century.” Meanwhile, “the authority it exercised was narrowed in scope.” (Montgomery 117).

Written by Peter Wirzbicki

October 19, 2010 at 16:03

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