The new austerity

Congressional Republicans have been working hard to cut SNAP funding (Food Stamps). As we know, Vice Presidential candidate Paul Ryan has worked very hard on this matter, having made his name nationally with his draconian budget proposal. While the Republican effort to cut Food Stamp funding is unsurprising, their effort remains disturbing nonetheless given the severity and length of the economic crisis which emerged in 2008 and given the looming food crisis. To be sure, the food crisis directly ahead of us will be a consequence of the 2012 drought. The existence of the drought belongs with the other effects produced by global warming, an issue on which the Republicans have an irrational position. As more Americans find themselves jobless or food-deprived and while the morbidity attributable to food-shortages will surely increase because of inflating food prices and food shortages, the Republican Party wants to intensify the deprivation many Americans will suffer by cutting Food Stamp funding.

What the Republican Party wants to impose on America is not a sound fiscal regime but an intense and risk-laden class war.

Mitt Romney picks Paul Ryan to be his running mate

Is it shocking that Romney picked a Koch Kreature such as Rep. Paul Ryan for this job? No!

Quote of the day

Bob Urie describes the politics of economic predation thusly:

For forty years the rich and connected, the ruling class, have used their representatives in government to take exactly what they wanted. Tax cuts, executive payouts and stock dividends were paid instead of promised pension contributions. Social institutions such as schools have been turned into cash cows for connected capitalists who have no intention of educating our children. Environmental standards have been gutted in return for promised jobs that never materialized. And while the ruling class has taken what it wanted without apology, the chattering class — liberals and progressives, has acted as if it’s at a debate club meeting.

Ironically, bond “king’ Bill Gross of PIMCO makes a (Keynesian) point that many clever economists looking at the issue have not grasped — the West’s bet that financial returns leveraged on the ‘real’ economy — actual goods and services, could rise forever, are coming unwound. With finance capitalism having impoverished the customers needed to keep itself going, available rates of return on investment in the real economy don’t justify making that investment. This is why corporations that have taken an increasing proportion of GDP in recent decades are sitting on piles of cash. In the aggregate, they’ve taken it from their customers who can no longer afford to buy their products. It’s also why the Fed’s QE (quantitative easing) remains a pathetic scam—keeping interest rates low when there is no loan demand (because borrowers have no faith in earning a return in the real economy) only drives financial speculation.

Paging Michał Kalecki!

Paul Krugman on ALEC

ALEC is the acronym of the American Legislative Exchange Council, a self-proclaimed non-partisan think tank which drafts legislation which is often made into law by the various states. For instance, ALEC wrote for and promoted the “kill at will” or “stand your ground” legislation that recently resulted in the Trayvon Martin killing. As a consequence of its efforts in this matter, ALEC has become a focal point for the Justice for Trayvon Martin movement. ALEC has earned this critical attention for the Martin killing and for much else, including Scott Walker‘s attack on the state of Wisconisn.

Krugman’s description of ALEC is both accurate and critical in intent:

What is ALEC? Despite claims that it’s nonpartisan, it’s very much a movement-conservative organization, funded by the usual suspects: the Kochs, Exxon Mobil, and so on. Unlike other such groups, however, it doesn’t just influence laws, it literally writes them, supplying fully drafted bills to state legislators. In Virginia, for example, more than 50 ALEC-written bills have been introduced, many almost word for word. And these bills often become law.

Many ALEC-drafted bills pursue standard conservative goals: union-busting, undermining environmental protection, tax breaks for corporations and the wealthy. ALEC seems, however, to have a special interest in privatization — that is, on turning the provision of public services, from schools to prisons, over to for-profit corporations. And some of the most prominent beneficiaries of privatization, such as the online education company K12 Inc. and the prison operator Corrections Corporation of America, are, not surprisingly, very much involved with the organization.

What this tells us, in turn, is that ALEC’s claim to stand for limited government and free markets is deeply misleading. To a large extent the organization seeks not limited government but privatized government, in which corporations get their profits from taxpayer dollars, dollars steered their way by friendly politicians. In short, ALEC isn’t so much about promoting free markets as it is about expanding crony capitalism.

ALEC — the well-funded defender and promoter of crony capitalism, desiccated democracy, political opacity and unaccountability as well as the socio-political environment which nurtures economic predation. In the last instance, it appears that Trayvon Martin was just unlucky prey for ALEC and some of its tools (George Zimmerman, the Florida state legislators linked to ALEC who passed
Florida’s Stand Your Ground law, etc.). But it is wise to keep one’s attention on the fact that Trayvon Martin was prey because the most Americans are prey.

Dominique Straus Kahn can’t keep it in his pants

Having escaped from New York with his person intact, although a civil trial remains a real possibility, our hero returned to France only to soon find himself implicated in and briefly imprisoned because of the Carlton Affair:

Dominique Strauss-Kahn’s lawyer said it was wrong for his client to be prosecuted for “simple libertine activity” after he was charged with helping to run a prostitution ring last night.

The former head of the International Monetary Fund – who quit his post last year over charges, later dropped, alleging he sexually assaulted a hotel maid in New York – denies a charge of “aggravated procurement in an organised gang”.

Mr Strauss-Kahn was released on a €100,000 (£83,000) bail last night. He is understood to have admitted that he attended orgies in what has been dubbed the “Carlton Affair”, named after the hotel in which the sex parties took place. But Mr Strauss-Kahn maintains that he was unaware prostitutes were involved.

The case also revolves around suspicions that some of his business associates were among those running the ring and were misusing corporate funds while doing so.

A (fictional) Sex Slave

Go to school, young man….

While discussing the economic value of a college education in the labor market and for those who possess a college education, Jack Metzgar wrote:

Most people are surprised when I tell them that only about 30% of Americans over the age of 25 have bachelor’s degrees. This is especially true of professional middle-class folks who went to high schools where almost everybody went to college immediately after graduation and whose friends now are almost all college graduates. But it’s also true of people from working-class and poor backgrounds, who seem to think they are “abnormal” or “below average” because they haven’t graduated from college. They’re not. They are, in fact, the ones who are “typical.”

It’s even more surprising, however, when the Bureau of Labor Statistics (BLS) reports that in 2010 only 20% of jobs required a bachelor’s degree, whereas 26% of jobs did not even require a high school diploma, and another 43% required only a high school diploma or equivalent. And according to the BLS, this isn’t going to change much by 2020, since the overwhelming majority of jobs by then will still require only a high school diploma or less. What’s more, nearly ¾ths of “job openings due to growth and replacement needs” over the next 10 years will pay a median wage of less than $35,000 a year, with nearly 30% paying a median of about $20,000 a year (in 2010 dollars).

Put these two sets of numbers together, and it is hard to avoid the conclusion that Americans are over educated for the jobs that we have and are going to have.

In other words, supply does not create demand. It has not in the past and will not in the future. Unemployment and low wages are not due to an education deficit in the United States. American college graduates will not confront structural unemployment in the labor market [see this (pdf)], although the demand for labor today does express the structural problems which defines America’s chronically stagnant economy. Therefore, it follows that, while gaining an advanced education is worthy in principle and often proves to be so in practice, it is not always an economically sound decision for the prospective student to make. By opting for a post-secondary education, the student could spend his or her life burdened with a debt he or she must repay for an education he or she will never use.

Metzgar concludes his article by stating the obvious:

If we were serious about eliminating poverty or restoring the credibility of the American Dream or simply respecting lifetimes of hard work, we would be debating how to raise wages directly — how to make it easier for workers to organize themselves into unions, how to get the federal minimum wage higher and on a steady inflation-adjusted escalator, whether to require some kind of workers council for all employers, and then legally require that the benefits of productivity growth be shared with workers. We’d also be discussing how to use a more steeply progressive system of taxation to build a social wage that makes the basics of life — food, housing, mass transit, child care, education, and health care — cheaper for everyone, but most crucially for lower wage workers.

Those of us who have benefitted, financially and otherwise, from getting good educations should tell our stories and try to inspire others with the value of education in all its forms. But we need to stop fostering illusions that good educations can ever substitute for the organized collective action — in politics, in the workplace, and in the streets — that will be required to reverse the increasingly miserable wages and conditions most people are facing now and in the future.

 

Quote of the day

This one issued from the keyboard of Edward Luce, a Washington correspondent for the Financial Times:

But these are fluid times. Leaders do not so much lead as dance to the unexpected tunes of others. Record numbers of Americans are pessimistic about their economic future and say their political system is broken. They seem to have developed an accordingly higher tolerance than normal for the politics of street protest.

That also adds to the volatility. A few months ago it looked like the 2012 debate would pivot around which candidate could show the least unpalatable path to fiscal discipline. That dimension remains. But others are being added. Take Mitt Romney, a trusty barometer of public opinion, and the least unlikely Republican nominee. Mr Romney initially dismissed the Wall Street protesters as “dangerous”. Then he changed his emphasis: “I worry about the 99 per cent,” he said. “I understand how those people feel.”

The protesters have already rebalanced the national conversation. Brace for a grand debate in 2012 in which both the Tea Partiers and the Occupy crowd are likely to be setting the pace.

Is it not amazing that street protest gains popular legitimacy as the economic crisis endures? No, it isn’t!

Reactionary whines about taxes

Words of wisdom from Riotstan

The Guardian today reports that the aristocrat George Osborne, currently Britain’s Chancellor of the Exchequer, feels optimistic about the future and Britain:

The chancellor used his emergency statement to parliament to say that recent events in the global economy had “vindicated” the government’s deficit reduction programme, putting in a bullish performance after the Bank of England downgraded its UK growth forecasts for the fifth time this year.

George Osborne made the second of two emergency government statements, speaking after nine days of economic upheaval and one day after Bank of England governor Sir Mervyn King warned of more economic “turbulence” ahead, saying “headwinds were becoming stronger by the day”.

In his statement, Osborne acknowledged this squall of bad economic news, saying the FTSE had fared badly in the past month. “The huge overhang of debt means the recovery will be longer and harder than we had hoped,” he said.

“This is the most dangerous time for the global economy since 2008, and we should be clear about that.”

But he sought to turn events to his advantage, telling parliament the UK had become a “safe haven” for stock markets in recent days, with the unpredictability of stocks making an investment in UK bonds more attractive. Referring to recent market turbulence, he said: “The market for our government bonds has benefited.”

Tory Realism

Thomas Furguson talks to Real News about the Debt Deal