Running out of excuses

by John Quiggin on September 14, 2011

The latest data on US incomes make for grim reading, both as regards the bottom of the income distribution where the number in (absolute) poverty is at an all-time high (the proportion of the population was the highest since 1993), and in the middle, where median household incomes have fallen back to the 1997 level. For some groups, such as male wage earners without college education, real incomes haven’t risen since around 1970

Having discussed this issue before I’m familiar with most of the standard arguments[1] used to show that things really aren’t that bad. The big ones are
(i) household size is decreasing
(ii) the consumer price index doesn’t take adequate account of product quality
(iii) the Earned Income Tax Credit isn’t taken into account
(iv) health insurance and other benefits are undervalue

Looking at the period from 1970 as a whole, there’s some truth in these claims, though not enough to offset the dramatic contrast between the huge gains before 1970 and the relative stagnation thereafter. But over the last decade or two, these excuses have run out.

  • Average US household size has been increasing since 2005 and is now back to the 1990 level
  • Changes following the Boskin Commission report of 1996 have mostly accounted for product quality improvements and substitution effects
  • The EITC was last changed in 2001, and the effects were modest. It seems likely to be cut as part of the current move to austerity
  • Access to health insurance has generally declined. Obama’s reforms will change this if they survive to 2014, but that’s far from being a certainty

To sum up, whereas the apparent stagnation in household incomes, poverty rates and so on since the 1970s is somewhat misleading (even corrected, the picture is still pretty bad), the official statistics probably understate the decline in median household income and the increase in poverty over the last decade.

fn1. I’m not going to bother with another round of “people have more of things that have become relatively cheaper”. If you haven’t seen the repeated refutations of this, read my book Zombie Economics, Ch4.

{ 234 comments }

1

Moe 09.14.11 at 3:37 am

I had this strange evening where I watched a bit of Jackie Kennedy talking smack about people and then heard this statistic about the increase in poverty and I was thinking of the alteration in attitudes toward poverty in the US between the Kennedy years and our years. I think the only thing that can explain the change in attitude, rhetoric and policy is the decline of the Soviet Union. There are no rival models, there’s no need for lip service about shared prosperity.

The depressing thing about your title here is that we’ve reached a point where no one seems to need an excuse anymore. They just don’t care.

2

StevenAttewell 09.14.11 at 3:59 am

In other words, we need some redistribution, and we need it fast.

There’s something about the scale of this that’s quite fascinating in a car crash rubbernecking sort of way. Makes the 1870-1910 period seem much more understandable, in terms of how an entire socio-economic order can just slip out from under you.

3

Glen Tomkins 09.14.11 at 4:20 am

Social democracy had a good run, but it seems to be over now. Capital can get back to grinding wages down inexorably to bare subsistence as the consumer society is deleveraged.

Capital temporarily lost control of the state because a climate of opinion, informed and at least partially formed by a fear of the consequences Marx predicted, dictated that Labor be allowed to organize to hold Capital at bay. But that worked so well for so long that people forgot the danger that had been averted, and so the climate of opinion has settled back to the entropic setting of letting Capital have free rein. It’s not so much that D politicians have been bought, as that they don’t really disagree anymore with the idea that, of course, the people who have made boatloads of money for their corporations must know best how to so order society as a whole that it makes boatloads of money.

Medicine was so wildly succesful at ending the 50% mortality by age six that used to prevail before childhood vaccinations, that people can no longer get their heads around 50% child mortality, much less imagine its actual return in our own time. So half-formed, entropic non-ideas, such as “that’s too many vaccines to throw at mere kids”, or, “well, maybe vaccines cause autism” creep back in and gain power. Of course, vaccinations actually could cause autism (they don’t), and avoiding all the autism in the world would still not get anywhere near justifying a return to 50% child mortality.

Public policy in general shares this problem with public health, that its greatest and clearest triumphs eventually destroy the climate of opinion that made them possible. When public policy works, it gets rid of the threat. But then people forget the threat was ever real, and they stop being willing to support the public policy that made their safe little world of blissful ignorance possible. So that world comes crashing in, and some wisdom is regained. Pathei mathos.

4

Ed 09.14.11 at 4:23 am

Also see this thread in Marginal Revolution:

http://marginalrevolution.com/marginalrevolution/2011/09/u-s-fact-of-the-day-3.html#comments

Lots of attempts to explain away the data by about half the commentators, though to be fair not by Cowen himself.

The situation appears worse when you realize that two income households only became the norm in the 1970s. Before a big chunk of today’s labor force was diverted into household work, not compensated in any way that can be captured by the stats, but the salary of only one wage earner was sufficient to support a household.

5

Myles 09.14.11 at 5:11 am

Social democracy had a good run, but it seems to be over now. Capital can get back to grinding wages down inexorably to bare subsistence as the consumer society is deleveraged.

Look, it’s typical of political junkies to attach political agency to events which might have no agency, and I think this is one of those things. I don’t, in fact, think increasing inequality is a political development, but rather an economic and technological one.

What this reminds me of, in a sense, is the course of European history from the aftermath of the Black Death right up to the Industrial Revolution. Wages in Western Europe in the aftermath of the Black Death were so high that they were not again matched until the early decades of the 19th century. In the main time, wages gradually fell and capital did squeeze more out of labour, via things like enclosure (which was related directly to the same social effects of Black Death which produced high wages). But enclosure, although sanctioned (eventually) by acts of Parliaments, wasn’t really a political event, some scheme cooked up by the plutocracy or whatever, as it much as it was an economic necessity. Without enclosure the Commercial Revolution, and subsequently the Industrial Revolution, was not possible, and we’d still be in a Malthusian world. Yet it also was tremendously hard on labour in its immediate effects.

It seems that we are in, in some way at least, a kind of modern parallel to enclosure. The high wages of the postwar era changed fundamentally the assumptions and bases of capitalism; what we are saying today are the inevitable results as the economic and technological changes become fully manifest, except instead of agricultural enclosure we have today a kind of digital and technological effect that does the same. But if this parallel is any use at all it does raise very difficult questions for the left as it does for the right: after all, would you have been the one to stop enclosure in its tracks? I don’t know what my ancestor was, lord or peasant, but I would much rather enclosure had happened no matter which one it is.

6

Gene O'Grady 09.14.11 at 5:15 am

Is it really true that enclosure was a necessary prerequisite to the industrial revolution? Goes against the history and history of technology that I’ve been taught.

7

Jack Strocchi 09.14.11 at 5:41 am

Ed @ #4 said:

The situation appears worse when you realize that two income households only became the norm in the 1970s. Before a big chunk of today’s labor force was diverted into household work, not compensated in any way that can be captured by the stats, but the salary of only one wage earner was sufficient to support a household.

The disutility of increased labour supply is persistently over-looked by some people posing as welfare economists. Median household income should be “normalised” to reflect the change in average hours supplied to the market by householders. By this standard, median household compensation per hour has declined drastically since the early seventies. Households have maintained their economic status by working longer hours and going deeper into debt. [1]

Measuring this would be tricky. Can anyone point to stats that attempt to summarise the change in median household labour hours over the past two generations?

But the general trends are clear. Most men seem to be working more overtime or in 24/7 mode. Obviously women are now all over the workforce compared to the days when their working career was behind the counter or at a typing pool. Even teenagers seem to have more part-time work, at least compared to a baseline set during the Huckleberry Fin days of the sixties and seventies.

My guess is that the median household, compared to a similar one in the seventies, now supplies about 30% more labour per week in order to achieve a significantly poorer income growth path.

Liberalisation of finance is causing a gradual immiseration of the lower-middle and working classes. We need to ramp up the class war.

[1] With compensating accumulation of assets, at least until the bubble burst.

8

William Timberman 09.14.11 at 6:17 am

Myles @ 5

What did capitalism do for us? What did it do to us? If you read Jane Austen, with enclosures going on virtually next door, the threat to the tight, inescapably psychologized world of women-arranging-a-suitable-sinecure in an environment designed for someone else, and deployed against all their hopes is almost palpable, but comprehensible only in retrospect. If you read Marx, whose passionate portraits of the sharp end of developing capitalism read like a tour through George Romero’s nameless zombie herds, you can almost taste the misery — far more so, I would argue, than in Dickens.

Does any of this matter, sub specie aeternitatis? Probably not, but it matters a hell of a lot to people who are going through it, the more so if someone has taught them a little history, and they have even a temporary respite to think about it. Whatever the defenders of things as they are insist is necessary, I’m not persuaded that we can solve the problem of suffering simply by refusing to educate the slaves. In the long run, yes, even the well-off are dead, but that doesn’t give them the right to make light of the price paid by others for their prosperity in the meantime. Any civilization which aims at a self-respecting decency should take care of all God’s children, and give up inventing ever-newer ways to minimize the significance of those who wind up at the bottom of the heap.

9

Adrian Kelleher 09.14.11 at 7:22 am

One of the Economist’s anonymous correspondents once drew a connection between the death of social democracy and the end of conscription. I don’t know if the observation was original or not, but after much consideration I find it increasingly compelling. 1945 did not witness any events like ‘Red Clydeside’ etc. and ‘a land fit for heroes’, the election slogan of 1919, was finally made a reality with the Beveridge-inspired reforms. The US experience was different, but Between a River and a Mountain by Edmund F. Wehrle does an outstanding job of making sense of the divergent courses of social democracy in the USA and elsewhere in the postwar period; organised labour understood its needs differently there, and pursued different objectives.

In the era of automatic weapons, the powerful needed the mass levy. It’s worth comparing military expenditure in the pre-1914 era with today; expenditure was actually low, but the numbers of (cheaply-equipped) riflemen were enormous. Mass conscription is not useful in an era of self-guided munitions and automatic drones, and the political power of the working classes may have vanished with it.

I’m also baffled by the connection between land enclosures and the industrial revolution. Surely the evidence runs all the other way; before the industrial revolution came the golden age of the Dutch Republic, but the Dutch Republic was the freest, most egalitarian society of its time, and the one with the greatest social mobility.

Wrigley’s Energy and the Industrial Revolution connects industrialisation and fossil fuel exploitation with almost syllogistic precision.

10

Alex 09.14.11 at 8:19 am

Interesting that the same politicians who ended 230 or so years of compulsory military service in France and Germany also turned out to be the official Eurozone flagellant tendency.

11

Henri Vieuxtemps 09.14.11 at 8:29 am

I think (I guess I’m on Myles’ side) that this phenomenon is, at least in part (significant part), a result of technology/economics; specifically: globalization. Huge new army of unemployed, often on the edge of starvation, new means of separating labor markets from distribution/consumption markets, global finance, and so on. Not your Henry Ford economy any more; especially in the States, the center of international capital. ‘Social democracy’ is a good model for a national capitalist system, but not for an international one, and so it had to go.

12

Tim Worstall 09.14.11 at 8:57 am

“Looking at the period from 1970 as a whole, there’s some truth in these claims,”

Quite. My claim is not that the more recent figures do not show an increase in poverty. Of course they do. Rather, that there’s been a series of gradual changes since the 1960s which make comparisons over the long term if not impossible then at least tricky.

Household size has declined by some 20%. More importantly, pre-mid 70s, what the poverty line was really measuring was the number of people in poverty after whatever it was that was done to help them. Welfare was generally a cash transfer and it was your market income plus cash transfers which were used to calculate whether you were under the poverty line.

Since the mid 70s we’ve been, more and more, measuring the number of people who are in poverty before whatever is done to help them. Aid to those in poverty has moved, substantially, from cash transfers to goods and services in kind (food stamps, section 8 housing vouchers, Medicaid expansions etc) and aid through the tax system (EITC). However, when we measure the number in poverty we do not include goods and services in kind nor transfers through the tax system.

So, while not absolutely true, it is generally so that the old system measured those still in poverty after their being aided by the system, today we are measuring those in poverty before they are helped by the system.

I’ll admit to being very surprised by how difficult it is to get various people to accept this point. I would have thought that those who want to argue in favour of poverty reduction (as I also do) would want to leap upon it. For it answers the question, “how is the US spending hundreds of billions of $ a year to alleviate poverty and not alleviating much poverty?”. Well, if you don’t count the poverty you’ve alleviated by spending hundreds of billions of $ then there’s your answer.

I agree absolutely that if the US moved to the system everyone else uses, 60% of equivalised median household income, post tax and post benefit, then the US would still have a high poverty rate. I also agree that poverty should be alleviated and so on.

My whine is only and purely that looking at the US poverty numbers as currently calculated and constructed we can’t gain all that much useful information over long periods, decades, of time.

13

Tim Worstall 09.14.11 at 8:59 am

Jack:

“Measuring this would be tricky. Can anyone point to stats that attempt to summarise the change in median household labour hours over the past two generations?”

Yes.

http://www.bos.frb.org/economic/wp/wp2006/wp0602.htm

“In this paper, we use five decades of time-use surveys to document trends in the allocation of time. We document that a dramatic increase in leisure time lies behind the relatively stable number of market hours worked (per working-age adult) between 1965 and 2003. Specifically, we document that leisure for men increased by 6-8 hours per week (driven by a decline in market work hours) and for women by 4-8 hours per week (driven by a decline in home production work hours). This increase in leisure corresponds to roughly an additional 5 to 10 weeks of vacation per year, assuming a 40-hour work week. We also find that leisure increased during the last 40 years for a number of sub-samples of the population, with less-educated adults experiencing the largest increases. Lastly, we document a growing “inequality” in leisure that is the mirror image of the growing inequality of wages and expenditures, making welfare calculation based solely on the latter series incomplete.”

Make of it what you will.

14

Myles 09.14.11 at 9:29 am

What did capitalism do for us? What did it do to us? If you read Jane Austen, with enclosures going on virtually next door, the threat to the tight, inescapably psychologized world of women-arranging-a-suitable-sinecure in an environment designed for someone else, and deployed against all their hopes is almost palpable, but comprehensible only in retrospect.

The most noticeable thing about the social landscape of Jane Austen is the very absence of capitalism and the oppressive omnipotence of agrarian aristocracy. The phenomena which you mention all exist in direct opposition to latter capitalistic development; it is notable that the only figures of wholesale decency in Pride and Prejudice were, in fact, the early capitalistic middle-class aunts and uncles of Liz’s living in London. I’m afraid you are confusing both your history and your terms here, and I can’t take your complaint about capitalism seriously.

I’m also baffled by the connection between land enclosures and the industrial revolution. Surely the evidence runs all the other way; before the industrial revolution came the golden age of the Dutch Republic, but the Dutch Republic was the freest, most egalitarian society of its time, and the one with the greatest social mobility.

Wool was the basis of English international trade in the Commercial Revolution; and for wool to have become such a dominating force in the English economy it was inevitable that enclosure must occur. In any case, EP Thompson made the very convincing argument that the surplus labour populations that were driven off the farms by enclosure formed the core basis of the urban working classes, a social class which didn’t exist prior to capitalism and in any case was much more difficult to bring into being than often assumed. (At the very beginning of the Lowell mills, for example, it was incredibly difficult to get previously rural workers to follow a fixed schedule, etc.; it is notable that the American equivalent to the dispossessed English peasantry were dispossessed European immigrants.)

That was actually the parallel that I was trying to make; that things like the decline in middle-class American society were really consonant with what EP Thompson argued were the significant effects of enclosure on latter economic development.

15

John Quiggin 09.14.11 at 10:16 am

@13 “Dramatic” seems way OTT here. Average market and non-market hours worked in the US declined by about 10 per cent over 40 years. We don’t have comparable data for previous periods, but if you took two more 40-year periods you would be back to 1880, and a standard (market) working week of 60 hours for men.

And, looking closely at the data, the increase in “leisure” is concentrated on low-income, low-educated households, suggesting that much or all of it may be involuntary, particularly the decline in market hours worked by men.

16

derrida derider 09.14.11 at 10:52 am

Tim, income poverty has pretty well always been measured from disposable income – that is, post tax-and-cash-transfer. If there had been a really big move to shift transfers from cash to in-kind you might have a point, but where’s your evidence for that? After all, food stamps have been around since the 1940s, and soup kitchens and emergency-room based medicine around even longer. And it’s not as though the US welfare system is so big that changes in its delivery would make much difference to measures of overall income distribution anyway.

Arguments about poverty rates don’t in any case detract from the central point of the post – that a very large minority, possibly even a majority, of Americans have not shared in the massive increase to aggregate GNP of the last 40 years.

17

LFC 09.14.11 at 12:30 pm

A. Kelleher @9
I’m not sure there’s any connection between the rise of neoliberalism and the end of conscription, but possibly one reason conscription has waned, in addition to technological changes in weaponry etc., is that the overall amount of armed conflict in the world has declined since the end of the Cold War. Also, major wars directly between great powers are extremely unlikely, perhaps entirely obsolete, decreasing the need for conscription. The main argument in favor of conscription has to do with social solidarity and shared sacrifice, considerations which have not managed (in the US context at any rate) to carry much political weight.

18

Barry 09.14.11 at 1:07 pm

Myles: “But enclosure, although sanctioned (eventually) by acts of Parliaments, wasn’t really a political event, some scheme cooked up by the plutocracy or whatever, as it much as it was an economic necessity. Without enclosure the Commercial Revolution, and subsequently the Industrial Revolution, was not possible, and we’d still be in a Malthusian world. Yet it also was tremendously hard on labour in its immediate effects.”

First, enclosure was a political event. The elites took possession and control of assets, enforcing this with private and public force. The fact that they might have done a lot of this before getting their lackeys to pass laws doesn’t make it any less political.

Second, it was not an economic necessity; it was done to increase the wealth and power of those elites (I wonder, was this a Freudian slip, where that’s defined as a necessity?).
As has been pointed out, the Commercial Revolution was going quite well before this.
As for making the Industrial Revolution possible, this might be true, which suggests that you are justifying massive political interference in the economy; hardly a free market doctrine. And, of course, the standard justification for use of machinery and mass production is to deal with expensive labor; the theory was that cheap labor impedes mechanization.

19

ajay 09.14.11 at 1:10 pm

One of the Economist’s anonymous correspondents once drew a connection between the death of social democracy and the end of conscription. I don’t know if the observation was original or not, but after much consideration I find it increasingly compelling.

John Keegan (and I’m sure the observation isn’t original to him) points out the coincidence between the spread of social democracy and the spread of conscription in the late 19th century, but he doesn’t say that one led to the other: he limits himself to pointing out that if you have a large efficient bureaucracy, then it will be able to administer a) a social democracy and b) a conscription system. It’s like noting that the rise in people playing Halo goes along with the rise in people watching DVDs. It’s not that playing Halo also makes you want to watch DVDs, it’s just that both are applications of the same basic hardware.

Obviously, this argument doesn’t really work for the other end; you can’t really argue that governments in the 1970s became so incompetent that they were suddenly unable to administer social spending and conscription.

Wool was the basis of English international trade in the Commercial Revolution; and for wool to have become such a dominating force in the English economy it was inevitable that enclosure must occur.

I am not sure about this at all. Wool was a massive part of the English economy for centuries before enclosure. The Lord Chancellor has sat on a Woolsack since the 14th century.

20

Barry 09.14.11 at 1:10 pm

John Quiggin: “And, looking closely at the data, the increase in “leisure” is concentrated on low-income, low-educated households, suggesting that much or all of it may be involuntary, particularly the decline in market hours worked by men.”

Of course, to far too many economists, unemployment = leisure.

Didn’t someone (Mulligan, perhaps?) state that the Great Depression was merely a bunch of people deciding that they wanted to work less?

21

understudy 09.14.11 at 1:32 pm

I don’t know – the marginal revolution commentary seemed to identify one big issue you don’t list: immigration.

+10 million low skilled workers coming into the country have an impact on median wages just from their addition, as well as the follow-on impact that wages in those low-skill sectors (ag, construction, etc.) have gone down for native and non-natives alike. I know if farmers and construction firms had to attract labor without immigrants, they’d have to radically change their compensation packages to staff effectively…

22

straightwood 09.14.11 at 1:45 pm

The creaming off of most of the wealth generated in the US since the 1970’s by the wealthy and powerful is clearly attributable to concentrated and sustained political efforts, from Reagan onward, to attain this end. There may be some impact of technological change and globalization of markets, but it was largely a triumph of propaganda engineering that persuaded millions of Americans to vote against their own economic interests. This process continues today.

23

Henri Vieuxtemps 09.14.11 at 2:03 pm

Who cares how they vote, what choice do they have? They got two parties, both committed to the same economic policies. Ross Perot (Perot le fou), running against NAFTA, got 19% the popular vote in 1992; which was, all thing considered, an amazing success.

24

Glen Tomkins 09.14.11 at 2:24 pm

@5

The comparison between the effect of the Black Death on wages in Europe, and WWII on wages in the US and Western Europe, might be pretty apt, except that absolutely nothing matches up. Well, except for the persistence of magical thinking.

No doubt the Black Death, which killed upwards of a third of Europe, created a labor shortage. I’m not sure how meaningful it is to look at wage levels in the 14th Century, since most people worked mostly for subsistence at that time — but sure, whatever small fraction of the work of living was on a monied economy in 1360 saw a huge labor shortage that allowed labor to command high wages.

WWII didn’t cause anything close to 33% deaths even in the most affected countries such as the SU. The SU saw the least of the subsequent boom in wages and production.

In the US, WWII did not cause the slightest demographic blip, much less anything big enough to dramatically increase upward wage pressure — certainly not in a country in which WWII had just made it unprecedentedly acceptable for women to work on the monied economy.

What did cause the steady rise in production and wages in the US after WWII was the take-off of the consumer society, a phenomenon the likes of which is not seen even in wildest analogy in 1360. My idea is that the take-off of that consumer society was made possible by a climate of opinion that expected that in the natural course of things, everyone in society would enjoy the products made possible by industrial society. More money would be diverted to labor, which, having more than needed for subsistence, would devote the excess to buying all these consumer goods, which would increase production, leading to higher demand for labor and thus higher wages, continuing the virtuous cycle (well, virtuous if you think economic growth is per se virtuous). I don’t think it’s reasonable to say that this climate of opinion, this set of expectations, was triggered by some notional temporary higher wage pressure created by WWII related deaths, both because that really is a weakly supported notion, and because we certainly didn’t see the very real and undoubted upward pressure on wages following the Black Death lead to any such climate of opinion or set of expectations that everyone in society should live like the nobility.

You have a point about the emptiness of the political labels involved.

In those immediate post-WWII years, we had Nixon, who was a key figure in the process that made anything with “Social” in the label political poison in the US, square off against Kruschev over washing machines. His argument was that the US had a society in which everyone was going to get a washing machine and a refrigerator and a car, and the massive productive capacity required to do that meant that it was the US that was going to do the burying in the SU vs US struggle. Whatever it said on the label of their respective ideologies, in practice the US was making the worker king and the SU was making him a serf.

What we see today, two generations later, is that the folks who run Nixon’s party think it’s good politics to point with outrage at the fact that the working poor can afford refrigerators. We’re coddling them! How can we be competitive if we allow such luxuries, whether directly, through welfare, or indirectly, via policies that let workers extract wages high enough to afford such?

Oh, sure, our side barks back at them. But we can do no better than base our objection on some vague notion of compassion (in which we lack all conviction, since we read The Midas Plague as teenagers and are post-consumer society by ideology and shop at Whole Foods anyway), when we would, had the climate of opinion not changed out from under us, instead be thundering back that, “Of course, you morons, we want the poor to have refigerators. How else are there going to be jobs for the people who make refrigerators, and then those who make all the products that refrigerator ownership creates a demand for?”. But the consumer society has no Nixon left to champion it against their Kruschevs, people who are monomaniacal about “efficiency” and competitiveness.

The key elements of this post-Social Democracy climate of opinion are all bipartisan. Everybody views inflation, which is actually good for the debtor, in approximately the same light as folks in the time of the Black Death thought of miasma. And “competitiveness” stands somewhere near where that age would have put the Holy Spirit. These entropic half-ideas can’t be challenged because everyone believes them, they’re axiomatic no matter what the counter-evidence.

25

Gabriel 09.14.11 at 2:24 pm

In terms of the discussion as to whether Enclosure was necessary for the industrial revolution to take place, the economic historian Robert Allen argued most recently in The British Industrial Revolution in Global Perspective that enclosure had a negligible impact. He cites rather the combination of high wages and low energy costs due to abundant and cheap coal which made it economical for people to substitute energy intensive inputs for labor. The book is quite good, but for those without a library to hand this Vox article seems to summarize some of his findings http://www.voxeu.org/index.php?q=node/3570.

26

straightwood 09.14.11 at 2:50 pm

The spectacle of a self-oppressing electorate must cause considerable mirth for the propaganda technicians who manufacture potent slogans like “death tax” and “Obamacare.” I think that even they are amazed at how long they have been able to keep a lid on lower and middle class living standards in America while steadily enriching their masters.

27

Myles 09.14.11 at 3:16 pm

I think that even they are amazed at how long they have been able to keep a lid on lower and middle class living standards in America while steadily enriching their masters.

Can we do away with this absurd fiction that the American economy was somehow unmoored from its wholesome, fair equilibrium by a bunch of scheming elites? Look: the whole thing was a cheat anyways, ever since the end of WWII in Europe. Do you know why the American automotive sector was so immensely fat and wealthy in the first few decades of the postwar era? Because the competition didn’t exist. When competition finally came on line in the form of Japan, it turned out American manufacturers had been making shitty cars all along and getting away with it. AT&T had a government-sanctioned monopoly (one that stretched across almost an entire continent) on telephony, which it milked, partially for the benefit of its equally fat union by imposing absurdly high prices on consumers. Why do you think US industrial companies had such ready foreign markets in the aftermath of WWII (thus having lots of fat to deliver to their workers, and in the process solving the excess labour problem that had always existed in the US)? Is it because they made substantially better products? Not starting the period about a decade after the war. It’s because they had the benefit of having markets formerly in the British and French orbit (hello, Brazil) carved up for their benefit as part of WWII negotiations.

So on and so forth. The entire facade of postwar American middle-class prosperity is a bit of a scam, because it is based upon the premise of the U.S. fiddling around with the kind of rules everyone else had to follow (but it didn’t, at least not at that point). When the U.S. starts having to follow the same rules, as trade and other rules became fairer among nations, of course it is less able to deliver outsized gains to its constituencies.

The insularity of Americans thinking that the fat prosperity enjoyed at the expense of other nations (what do you think the post-war British standard of living was?) was somehow a state of nature and was somehow divinely deserved is just utterly flabbergasting. You guys had a good run. Now you don’t anymore. This is a change in fundamentals, not some insidious scheme.

28

someguy 09.14.11 at 3:18 pm

Real total hourly compensation lags behind productivity gains but increased from 2000 – 2009.

http://compensation.blr.com/Compensation-news/Compensation/Compensation-Administration/BLS-Reports-on-Compensation-Productivity-Gap/

29

LFC 09.14.11 at 3:23 pm

Myles,
Post-WW2 prosperity was not just a US thing. Have you ever heard of the trentes glorieuses (or the Wirtschaftwunder)? Read Hobsbawm on ‘the golden age’ — it wasn’t only such in the US. And I believe the post-war British standard of living was quite good, after a period of recovery in the late 40s-early 50s. Harold Macmillan ran in the late 50s on the slogan “you never had it so good”.

30

William Timberman 09.14.11 at 3:41 pm

Myles @ 14

The most noticeable thing about the social landscape of Jane Austen is the very absence of capitalism and the oppressive omnipotence of agrarian aristocracy. The phenomena which you mention all exist in direct opposition to latter capitalistic development; it is notable that the only figures of wholesale decency in Pride and Prejudice were, in fact, the early capitalistic middle-class aunts and uncles of Liz’s living in London. I’m afraid you are confusing both your history and your terms here, and I can’t take your complaint about capitalism seriously.

Precisely. The room was getting smaller. Capitalism was outside pushing on it. The feeling of suffocation in her writing comes from something which never enters the conversation because she has no way of seeing outside her place in history. The point wasn’t what her class understood about capitalism, but what capitalism understood about them.

Your argument that what we’re seeing today is as necessary and as inevitable as the enclosure movement is convincing — I’m sure Marx would have approved. You’re almost certainly right as well in thinking that it will raise very difficult questions for the left as it does for the right, but I find your attitude toward both entirely too God-like for my taste. However fraught with irony a political response to the new order of things might be, I figure we ought to get on with one anyway — out of nostalgia if for no other reason.

31

straightwood 09.14.11 at 3:49 pm

This is a change in fundamentals, not some insidious scheme.

The US economy grew nicely right through the last 50 years, because our newer industries, like microprocessors and software, made up for the slack in fading sectors, so your fading boom argument doesn’t hold. Germany’s inequality statistics have been relatively constant for the last few decades, but in America the tilt toward the rich has been increasing since Reagan. The systematic reduction of labor union membership and the lowering of upper-income tax rates, together with the demonization of government social programs led to a substantial shift of GDP toward the wealthy. This was hardly an “insidious” scheme; it was done quite openly by the best propaganda technicians that money could buy.

32

john c. halasz 09.14.11 at 4:22 pm

I’m sorry to respond to another ditzy comment by Myles, but the explanation for the higher “wages” after the Black Death is simply to be found in Ricardo’s theory of rent. With the massive decline in populations, low-productivity lands were taken out of cultivation and the per capita productive surplus in agricultural output eo ipso increased. (since agriculture was then overwhelmingly the largest share of output and productive surpluses). As a side effect, too, likely aristocratic landlords on more fertile holdings would have undertaken efforts to recruit workers from lesser landlords and thus bid up “wages” such that though the relative share of the surplus product going to workers might have marginally increased, the absolute amount of the surplus going to commoners and aristocrats probably both increased, (so the aristocrats might not have minded or even noticed such an effect). There could have be no shortage of labor per se, because the reduction of the population was also a reduction in aggregate demand.

As to WW2 and the post-War boom, the key factor was undoubtedly the huge build up in household savings during the hyper-employment, consumption rationed war economy, which reversed the deb- laden conditions of the Great Depression, (which was actually a very technologically innovative decade, such that there were large possibilities of consumer goods production that had been developed but couldn’t be implemented). Whereas Federal debt was 120% of GDP at the end of the War, it was virtually all held by domestic households. And the gov. debt was rapidly diminished as % of GDP though nominal GDP growth.

33

john c. halasz 09.14.11 at 4:26 pm

I’m no historian, but the significance of the Black Death in the long-run was not a temporary spike in “wages”, but likely that it loosened the institution of serfdom, leading on to its eventual demise in western Europe, just as it took hold in eastern Europe.

34

john c. halasz 09.14.11 at 4:40 pm

There would, of course, have been local shortages of labor after the Black Death, and I would guess that death rates were higher in the cities than in the countryside, (due to population densities and unsanitary conditions), such that another effect would have been a wave of migration to the cities and an increase in urbanization, since the shortage of skilled craft labor would have been a spur to attractively high wages, while the increase in agricultural surpluses per capita could support relatively higher urban populations, while increasing the ratio-of-exchange/relative prices between craft products and agricultural produce.

35

StevenAttewell 09.14.11 at 4:58 pm

I’m sorry, but why are we even debating whether “increasing inequality is a political development”? In the last five years, we have had multiple empirical studies that have shown that countries with extremely similar levels of economic development have wildly different levels and growth patterns of inequality.

That’s like saying a ship sinking is caused by the ocean when you have one case in which a captain has managed to guide their vessel through the storm and the next ship over the captain is knocking holes in the bottom of the boat.

36

Jim Harrison 09.14.11 at 5:09 pm

You can at least make a case that the miseries associated with enclosure and the creation of the surplus labor army were a necessary precondition to the huge increase in productivity that resulted from modern agriculture and industrialization. If there is any plausible tale to tell of the benefits of increasing poverty now, I haven’t heard it.

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straightwood 09.14.11 at 5:23 pm

why are we even debating whether “increasing inequality is a political development”?

Because the rich wish to keep wages and taxes low. All of the Republican Presidential candidates are urging further tax cuts and resisting government efforts to create jobs. “Class Warfare” is the term the propaganda technicians have engineered to repudiate any suggestion that this is a deliberate assault on the living standards of the poor and middle class. The rich deny they are shifting more and more of the nation’s wealth into their own pockets by pushing the fairy tale that everyone who is “hard working” will become rich if the rich are given sufficient advantages.

38

SMK 09.14.11 at 5:24 pm

If low-income workers and those receiving unemployment benefits spend almost all their income, thus consistently contributing to demand, and if a lack of aggregate demand is the greatest impediment to job creation, then aren’t those two groups, relative to their income, the most highly efficient and highly dependable “job creators”, and shouldn’t Western governments do far more to boost their incomes? Job creators aren’t the minority, they’re the majority.

– SMK

39

MPAVictoria 09.14.11 at 6:32 pm

Shorter Myles: Listen peasant you have had it far too easy for far too long.

40

Glen Tomkins 09.14.11 at 6:35 pm

@36

You’re looking for plausible tales about what’s good for society as a whole, but the austerity people would say that that perspective is somewhere between socialist and naive. We all seem to know these days that, of course, what’s good for large enterprises is good for society, is the only possible good for society, and no one but the people who run large enterprises could possibly know how to get us to large enterprise job creation nirvana.

What’s clearly very good for individual enterprises is indeed the further and continuing pauperization of labor. We can’t compete with Myanmar on job creation, you know, until and unless we get some Myanmar wage levels accepted here in the US, and that won’t happen as long as labor has higher wages available.

No doubt getting us back to Myanmar wage levels would involve an absolutely socially devastating contraction, as our consumer society is deleveraged and deflates to nothing. No doubt the ebbing tide would ground all sorts of boats. But if you believe that we’re headed there anyway, because that’s the only conclusion that serious people can draw about where we are and should be headed, even if you do have some faint stirrings of regard for the common wheal, those aren’t going to overcome your overriding fiduciary responsibility to your shareholders to make damn sure that your enterprise is ahead of the rest in beating your workers down to Myanmar levels. Even if, at the end of the deflation, there’s only going to be 500 families left in the US that can buy your goods or services, well, that just means you need to be awesomely ruthless to insure that your enterprise is one of the two or three that survive to meet the demands of these 500 families. That will be the only demand left for anything but the gruel and hovels and rags that the rest of us will have to get by on.

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MPAVictoria 09.14.11 at 6:50 pm

Glen you are making me depressed. I would subscribe to your newsletter but I have lost the will to do anything but sit here gently sobbing and rocking slowly back and forth.

42

Rob in CT 09.14.11 at 7:00 pm

MPAVictoria beat me too it. I was about to post: damn, Glen, that’s depressing.

43

Adrian Kelleher 09.14.11 at 7:01 pm

Re. Conscription

My core argument personally would be that the particular details of dispersed fighting exercised a reverse pressure on political ideology. Conscious of the need for mass support, politicians of both left and right began to characterise as just and reasonable what were in reality necessities. Note that Eisenhower and Nixon would have been horrified by modern rightwing thinking because it damages the power of the state.

The connection is less between conscription per se and social democracy than it is between the simple need for large numbers of motivated fighters and those fighters’ reciprocal power over government.

Interesting historic parallels may be drawn with the Swiss Confederation and the Dutch Republic, both at their prime unusually egalitarian societies that were fearsome opponents in war.

The era of rifled weapons produced dispersed fighting, meaning that the sergeant became the critical level of command without whom nothing could happen. Officers alone could not effectively discipline their men as previously with pistol and sabre because those men were no longer operating as a single cohesive block.

For reference purposes, I’ll list without argument some central examples:

A) The French Revolutionary Wars saw ‘swarms’ of fighters successfully defend the revolution against field armies wielded by the reactionary powers. This paralleled the Soviet experience in the 20th Century in that economic and social opportunity for the masses proved enough to counterbalance extremes of political terror that would otherwise have destroyed the state.

B) The US Civil war, especially in its later stages, saw extensive dispersed fighting and prefigured the conflicts of the 20th Century in ideology. Phil Sheridan later told the Prussians that if U.S. Grant landed in Lisbon with 100,000 men, he’d be in Berlin in six weeks. The boast wasn’t as fatuous as it sounds; the reactionary powers completely failed to understand the conflict’s implications.

C) Post-war, a long conflict occurred between what is now the NRA and conservative elements of the military over who should aim the weapons. The NRA favoured individual marksmanship, its opponents wanted officers to determine the range. The political elements of this dispute are still not fully resolved. The debate characterised the general inability to digest the implications of the Civil War.

D) The Boers’ fighting qualities impressed their many Prussian officers, though they also found that the men simply did whatever they pleased; fanatical troops enjoy this luxury when dispersed fighting demands individual initiative.

E) The implications of dispersed fighting finally became generally recognised during WWI. 1914 was characterised by ordered skirmish lines but by 1918 all offensives relied on the lowest levels of command formulating plans on the fly.

@17, LFC

The mass conscript army was in decline long before the end of the cold war, however. Military expenditure during the period was much higher than in the pre-WWI era, but the greater expenditure was lavished on far fewer troops.

This wasn’t uncontroversial. For example in the 60s and 70s, many felt that tiny numbers of pricey F-15s were a poor investment and that the Soviet choice of large numbers of simpler aircraft was superior. Time has settled that argument.

It’s also worth noting that the 1945-89 period was one of exceptional violence by historic standards, it’s just that most of the conflicts were civil conflicts. The period isn’t as unique as it might seem and not all wars are between geographically distinct enemies; consider, for example, the religious wars in Europe or the internecine conflicts between adherents of traditional and feudal law in Scotland and Ireland between ca. 1200 and 1750. The recent riots in Britain echo these conflicts in that they originated in many places at once.

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Glen Tomkins 09.14.11 at 7:06 pm

@41 and 42

You don’t have the luxury of giving in to depression. You’ld best act now to identify and claim a good rubbish heap to pick over after the Great Deflation, because if you don’t get in early, all the high quality rubbish heaps will be taken.

45

John Quiggin 09.14.11 at 7:11 pm

I’m not convinced. Conscription lasted into the 1970s, and there were certainly plenty of ex-conscript veterans around when the swing back to the right began.

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Adrian Kelleher 09.14.11 at 7:26 pm

@JQ

The circumstances outlined had passed already by the 1960s at the latest, but entirely new ideologies take time to emerge.

What has occurred is not so much a swing to the right as a swing to a particular sort of radical individualistic ideology. Hitler was right wing but he didn’t espouse individualism.

I wouldn’t claim the point made is the sum total explanation for what’s transpired since the Reagan/Thatcher revolution, however I do believe it was a subtle but major, persistent and pervasive factor tilting the scales during much of the 20th Century.

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mrearl 09.14.11 at 7:31 pm

There were food stamps in the 1940s, but that program ended in WWII. However, I take what I think is the point: The guy on food stamps still needs the food stamps even after we’ve defined him out of poverty by the food stamps. Pinhead, angels, etc.

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Adrian Kelleher 09.14.11 at 7:35 pm

@JQ again

I’ll mention as an aside that the gap between neoliberal ideology and practice can be huge. For example a diehard neoliberal would ban all fossil fuel combustion.

The run up to the financial crisis was characterised by a previously unknown species of management capitalism; employees of banks worked in the banks but for themselves, and facilitated this by making extensive use of shareholders’ own funds to bamboozle them.

Politicians genuinely pursuing a neoliberal economic agenda would have been expected to aggressively reassert shareholders’ powers of oversight but no efforts whatsoever have been made in this direction. On the contrary, the response has been to feather-bed the same cliques that exploited their positions to cause the disaster.

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Glen Tomkins 09.14.11 at 7:43 pm

Just to clarify, my thought is that we near a brink precisely because things have been going so well, Social Democracy worked so well, that people have grown complacent, and don’t understand, don’t remember, how austerity could deflate the consumer society back to a subsistence society. As we forget the School of Hard Knocks lessons that instucted us in a demand-side bias for societal action, supply side thinking is what we revert to entropically, because individuals and individual enterprises act on supply side principals. An individual family doesn’t go on a spending spree in order to pump up demand in the wider economy. That would be stupid and irresponsible. So we forget that society, through government, needs to go on counter-cyclical spending sprees just when that would be most irresponsible for an individual family, and precsiely because that would be so irresponsible for individuals that they have mostly quit spending. We forget that private vice is public virtue, as Mandeville preached.

I don’t see wisdom prevailing until and unless we have some School of Hard Knocks sessions. But that doesn’t mean that I, or anyone who might subscribe to my dismal beliefs, can know exactly what form, and how extensive the hard knocks have to be. Maybe we’ve already had enough, and we’ll pull back from the brink before it gets much worse than it is now. Maybe that last Republican candidate debate will get us to some moment of national clarity, we’ll realize we’ve hit rock bottom, and we’ll swear off supply-side thinking. But I’m a horrible judge of that prospect, because I hit personal clarity on Republican politicians a couple of generations ago, and I’ve never been able since to understand what folks see in that particular brand of the Demon Whiskey. It has no temptations for me, so I don’t understand its allure. I suspect that just about anyone reading this blog, trolls even included, is equally handicapped in that regard.

So, please, no wrist slitting. We’re in a stupid patch just now because we were recently uncharacterisitically perspicuous, and that led to good times, and good times breed stupidity. This is just another turn of the great wheel of earthly illusion. The current stupidity actually promises a rebirth of perspicacity, because human nature is such that we only learn reliably from the consequences of having been stupid. Pathei mathos, and we probably have some banner years coming up for teachable moments in that respect. We’ve been this ignorant and god-forsaken before and made it through it, and we’ll do so again, no doubt.

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LFC 09.14.11 at 7:58 pm

A. Kelleher @43
The mass conscript army was in decline long before the end of the cold war, however.
Ok, but to make your argument work you need to make a persuasive connection betw. decline of mass conscript armies and decline of working-class political strength. The latter was probably the result of several factors, of which the waning of mass armies might have been one, but only one.
not all wars are between geographically distinct enemies
Indeed, and there were a lot of civil conflicts from 1945 to 1989, but I’m not sure exactly what relevance this has.

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Jim Harrison 09.14.11 at 8:10 pm

The canonical version of the argument that mass armies go along with democracy is not, as I understand it, an argument that mass armies go along with social democracy or liberalism. The democracy in question is democracy in the sense of Carl Schmitt so movements of reactionary populism or communism count just as much as social democracy or New Deal liberalism. In America, though, it seems to me that the fortunes of the left really did come to depend on conscription, albeit in an ironic way. I recall how quickly the air went out of the tire when Nixon ended the draft. It wasn’t just that military necessity made the masses relevant to political elites: obligatory military service made politics relevant to the masses.

52

Omega Centauri 09.14.11 at 8:16 pm

lasasz@32.
Yes, the rise in wages and general levels of income after the black death was primarily Malthusian in origin. It isn’t just that having more acres of cultivatable land per capita allows the lesser productive lands to lie fallow. But, in general, there is a tradeoff between the labor intensity per unit of output, and productivity per unit of land, irrespective of the quality of the land. This observation scales all the way down to hunter gatherer densities. Hunter gatherer societies had abundant leisure time, as well as better nutrition than the agricultural societies that replaced them.

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Watson Ladd 09.14.11 at 8:20 pm

Myles, there’s a world of difference between the rise of capital which was truly liberatory and todays tragic unfolding. Capital has overstayed its welcome: the bourgoise cannot rule and the workers can not yet rule, etc. The failure to achieve broader prosperity isn’t some accident: it’s the result of the political failures of a century of leftist activists.

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P O'Neill 09.14.11 at 8:22 pm

Conscription worked great for social democracy in Russia.

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Henri Vieuxtemps 09.14.11 at 8:25 pm

Glen, why are you attributing this to stupidity? It’s the conditions. Capital is fluid, it doesn’t know national borders anymore. Labor is constrained by borders, and other parameters. And, for that matter, one reason for the working stiff to support the Republicans is their anti-immigration rhetoric. Most people are not irrational; propaganda plays a role, of course, but still, if they do something, and keep doing it for a long time, there must be a reason.

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straightwood 09.14.11 at 8:35 pm

if they do something, and keep doing it for a long time, there must be a reason.

The Aztecs tore the beating heart out of a sacrifical victim to keep their gods happy . The peasants of the Middle Ages sunk deeper into poverty to erect cathedrals. Surely American voters, targeted by the most refined broadcast propaganda ever developed, can be persuaded to give more money to the rich, so that they can become rich themselves.

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Henri Vieuxtemps 09.14.11 at 8:57 pm

Peasants didn’t choose to erect cathedrals, their lords did. And there is a reason the peasants weren’t (most of the time) revolting and killing their lords: the lords organized and provided defense against invaders and bandits. I’m not buying the “pure stupidity” explanation; it’s just too easy.

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Adrian Kelleher 09.14.11 at 9:02 pm

@LFC

Ok, but to make your argument work you need to make a persuasive connection betw. decline of mass conscript armies and decline of working-class political strength. The latter was probably the result of several factors, of which the waning of mass armies might have been one, but only one.

Well I certainly would never claim it was the sole factor. All ideologies come in waves, and will typically have acquired all sorts of nonsensical baggage by the time the tail end of the wave has arrived.

I’ll illustrate how an ideological system can acquire baggage with a quick example. Consider that just about every religious system in any stable sociecty includes taboos against incest in particular and promiscuity in general. Such systems may later add all sorts of completely meaningless injunctions but the entire package will remain viable because an incest taboo is of great benefit and the system can remain a net positive even if 98% of its informational content is literal gibberish.

By the late ’70s, social democracy had accumulated lots of nonsensical baggage. Initially internationalist and universalist, the union movement had degenerated into a network of local and particular interest groups ideologically incapable of fairly resolving disputes between themselves.

For example unions whose members enjoyed ‘gatekeeper’ powers, such as dockers, relentlessly exploited those powers at the expense of other sections of society and, though the other unions may have disapproved, no mechanism to effectively restrain them existed. The union movement might have been organised differently but it wasn’t and the actuality of unions organised by industry and by skill (craft vs general unions) guaranteed this outcome in the long run.

The sole focus on their traditional enemies and inability to engage in substantive self-criticism undermined the movement over time. I once heard a Radio 4 documentary where veterans of the winter of discontent relived their glory days. They celebrated ‘achivements’ such as (to quote one) “shutting down the entire north east” [of England] through secondary picketting, ‘wildcatting’ etc. There was barely any mention of how (if at all) this advanced members’ interests; the conflict itself had become the sole focus.

Likewise, the response on the left to Scargill and the miners’ strike in the ’80s focussed almost exclusively on the evils of Thatcherism. Few on the left paused to consider how Scargill had been outmanoeuvred by Tebbitt and Thatcher (who built up large stocks of coal and then baited him into a strike at a time of their own choosing), let alone how the miners’ elevated wages relative to their unionised peers in other industries were symptomatic of the degeneration of the initially universalist union ideals.

Indeed, and there were a lot of civil conflicts from 1945 to 1989, but I’m not sure exactly what relevance this has.

You pointed out that violence internationally declined after 1989… (or it did until 2001 at least). The point is that (a) the ’45-’89 period was itself quite extraordinary and that some decrease in the level of violence was only a return to historic norms and b) the pattern (as opposed to the scale) of conflict in the cold war is itself not without historic precedent.

Many of the parties to civil conflicts around the world remain tied to their fighters’ aims and interests, e.g. the Taliban wouldn’t last long if it wasn’t a fair reflection of its localist, traditional, rural and male powerbase that has remained beyond central authority for centuries.

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Watson Ladd 09.14.11 at 9:05 pm

Henri, why would increased mobility of labor combined with increased mobility of capital lead to a significantly different result? I’m not sure that the free sale of labor is going to reverse the ascendency of neoliberalism or overcome it.

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Adrian Kelleher 09.14.11 at 9:05 pm

@P O’Neill

Read the bios of all the top Soviet communists from the 1940s through to its fall. Nearly all were from peasant or working class backgrounds. Napoleonic France similarly exploited the novelty of opportunity to counterbalance political terror.

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straightwood 09.14.11 at 9:09 pm

I’m not buying the “pure stupidity” explanation; it’s just too easy.>/i>

How many examples do you want? Have you read polls on the number of Americans who believe in evolution, miracles, or the after-life? Do you think people buy lottery tickets because they comprehend their chances? Are you aware that a large fraction of Americans believe that Saddam Hussein was behind the 9/11 attacks? Look at Palin, Bachmann, and Perry: these are somewhat stupid people who appeal to extremely stupid voters.

Homo Sapiens is engineered by evolution to favor destructive simplifications (i.e., stupid ideas) because these promote tribal cohesion (USA! USA! USA!), and cohesive fighting units have survival advantages. Even the most highly educated circles are riddled with group-think and dogmatic stupidity (except for CT, of course!).

The most certain path to power in the modern world is the exploitation of stupidity, and that that is demonstrated by American politicians every day. This is why Americans believe that austerity is the path to prosperity, security restrictions make us free, and war is the path to peace. They are stupid.

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Henri Vieuxtemps 09.14.11 at 9:45 pm

Look, one can believe in flying saucers, and, nevertheless, act perfectly rational all the time. One could buy a lottery ticket because it’s cheap and it gives him hope, makes him feel better for a while, until he checks it. This is not irrational.

I don’t think they believe in austerity, I think they don’t like high deficits and high national debt, and that is not irrational.

As far as security restrictions, I saw some polling data in a Greenwald post a few days ago. Yes, the approval rate was high in 2001-2002, but it’s been steadily declining since. Seems normal to me.

I’m not denying that propaganda often works, nationalist fever can get high, and so on, but that’s only a part of it.

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Simon 09.14.11 at 10:12 pm

Yet the global gini coefficient has gone down due to China and India, and the percentage of the population living in absolute poverty has decreased from 40 to 20% despite a tremendous a tremendous rise in population growth itself. I don’t understand why we take nation states for granted, aggregate all the individuals who live within them, and then make doom and gloom about inequality.

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Nibi 09.14.11 at 10:24 pm

Do you think people buy lottery tickets because they comprehend their chances?

I actually can, and do, calculate the odds of winning for the various lotteries I play. I have a spreadsheet where I calculate the estimated returns based on a constantly tweaked utility function. In all cases, of course, it’s not pie in the sky but pie beyond the orbit of Neptune. Nevertheless, at this point it seems my best hope of escape.

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Watson Ladd 09.14.11 at 10:30 pm

Henri, if your beliefs don’t change their action they aren’t meaningful. (Yeah, yeah, I know the response you are going to launch back at me, but honestly let’s stick on topic). The person buying the lottery ticket isn’t thinking “the outcome I desire is too rare to make this worth it” rather they are just feeling how good that million would be, irrationally. A working definition of irrational: if I can get money for nothing off you, you are irrational, and most people are.

Simon, that’s true, but at the same time inequality within countries as soared dramatically. This is the last excuse in some sense: if you want to make 10x what the Indians make, better work 10x as hard. And yes, its a fairly sympathetic position. But when one quarter of all americans are on food stamps, what does that say about how rich the poor Indians will get?

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ezra abrams 09.14.11 at 10:33 pm

Jobs and industrialization
My understanding is that over the last few hundred years, as technology has elimminated jobs, new jobs have appeared.
I wonder if that finally changing with software and computers.
I work for a small biotech company that makes lab equipment (sort of like the stuff you see on CSI). The impact of computers on our productivity, in terms of making new things (its another question, does anyone want them) is un believable.
If you just go through the process of injection molding, and the role of CAD programs like Solidworks and ProE, and the role of toolpath programs on CNC machines, and so forth, large numbers of skilled people are out of jobs. (I always find it amusing that economist talk knoweldably about jobs and the economy, but they don’t know what solidworks is; you want to talk about software that is really changing how manufacturing is done, checkout solidworks and ProE and the high system from Dassault (disclaimer: I’ve got no ax to grind here))
And what will happen when software gets good enough to take over most customer service jobs (thats already happening) or when robots take over a lot of K12 education don’t laugh – teacher salary is the main component of K12, and the main thing in your local tax bill, and when people demand lower taxes, and you have to cut something, teacher salarys will go; I predict that in a few years the difference between blue collar and poor towns (like Lowell MA, or Waltham MA) and wealthy towns (Newton MA or Concord MA) will be the # of K12 classes taught by a non human.

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ezra abrams 09.14.11 at 10:39 pm

To
#58 Adrian Kelleher 09.14.11 at 9:02 pm
You say, quote ” By the late ‘70s, social democracy had accumulated lots of nonsensical baggage. Initially internationalist and universalist, the union movement..”

do you know what it means, when I say the socialist members voted for the war credits in 1914 ?

For the less educated: as war clouds gathered over Europe in the fall of 1914, the international socialist movement declared that this war was a war of the capitlist/ruling class, and socialists would not participate; the working people of Europe would reject the call to war, and the implicit nationalism, as a ploy of the ruling class.

In the fall of 1914, Chancellor Bismark asked the Reichstag for war credits; to a man, the socialists voted YES.
So the moral is, the union movement has been less then perfect a long time (and don’t even get me started on the history of hte AFL, and how black and women, to say nothing of less skilled CIO workers, were ignored (at best)).

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Simon 09.14.11 at 11:00 pm

@ Watson. Not sure I totally follow your argument. I still think there is something odd about caring more about American on food stamps (who CAN get food, have air conditioning, clothing, emergency healthcare and on and on), then slumdogs in Mumbai who crawl over garbage heaps all day looking for food. What could be more tribalistic than that? They’re American so…uhh..they matter more. An evolutionary quirk perhaps. What if the increase in American inequality was absolutely necessary for the alleviation of poverty in China and India, what then?

69

LFC 09.14.11 at 11:20 pm

A Kelleher:
that some decrease in the level of violence [after the Cold War] was only a return to historic norms
I think this is wrong. The data strongly suggest that the decrease in violence is not a return to historic norms but rather is quite unprecedented in historical terms. War-related deaths since 2000 have averaged 55,000 a year; they were twice that in the 90s, more than thrice that in the Cold War, orders of magnitude higher during WW2, and I don’t have the figures handy for pre-1939 but I would be very surprised if the interwar figure was as low as the post-2000 figure. See here.

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LFC 09.14.11 at 11:30 pm

In other words (just to repeat one aspect of the above), the decade 2000-2010 was, in terms of war deaths per year, more peaceful than the decade 1990-2000, not less. And both decades were more peaceful than those that preceded them.

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John Quiggin 09.14.11 at 11:34 pm

@Simon, the relevant point here is that it American public policy on tax, union rights and so on seems likely to affect the distribution of income within the US much more than that in India and China or between those countries and the rest of the world. Note that, so far at least, the US experience is quite different from that of the eurozone or Japan (the other English-speaking countries are somewhere in between).

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John Quiggin 09.14.11 at 11:39 pm

Is there data to support the claim that 1945-89 was more war-ridden than 1919-39 – 0bviously, the claim is ludicrously false if you take 1900-45 as a whole, and you need to interpret “war” in a way that excludes the crimes of Stalin and Hitler. Even so, I find the claim hard to believe.

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Barry 09.14.11 at 11:41 pm

Adrian Kelleher :

“This wasn’t uncontroversial. For example in the 60s and 70s, many felt that tiny numbers of pricey F-15s were a poor investment and that the Soviet choice of large numbers of simpler aircraft was superior. Time has settled that argument.”

Not really; the question was would the large numbers of poorer systems, used en masse and in a short time period, would swamp the lower numbers of better systems.

That contest never happened, due to the fall of the Soviet Union.

At that point, as far as the USA was concerned, any conventional battle was a larger number of better systems, with lavish support, against a far smaller number of poorer systems, with poor support.

I’ve seen histories of the first Gulf War which stated that by the time of the ground offensive, the US had more soldiers in the area of operations than the Iraqi Army did.

And outnumbered the Iraqi Air Force by – I don’t know – 10:1?

74

Simon 09.14.11 at 11:45 pm

Hey John. Thanks for the response- I really enjoy reading your stuff and its an honor to have a personal reply! I, like you, hope that we can take measures to reduce inequality within our borders (as you mention, tax policy, unions etc) without causing harm to those further away. I’m just worried that the emergent global division of labor that has allowed for the wonderful social democracies of Europe and the export led developing economies might fall apart were we to try and emulate them. Is there any data that shows such a precarious equilibrium? This is also my worry about downsizing the US projection of military power….

75

Watson Ladd 09.14.11 at 11:48 pm

What about capital exports from the core to the periphery, as well as the drive to export neoliberal reforms? I’m not sure we can cleanly break out nations as policy zones.

76

John Quiggin 09.14.11 at 11:53 pm

Umm, the US has been a capital importer for decades. That’s what it means to run a current account deficit.

77

Adrian Kelleher 09.14.11 at 11:54 pm

@LFC

Well this study by researchers at Johns Hopkins placed the numbers of deaths by violence in Iraq alone at 655,000, and that only covered the time up to its publication in 2006. This figure alone exceeds your average of 55,000 p/a for the decade.

I don’t see how it’s useful to extrapolate a trend based on events since the second world war which was after all the greatest paroxysm of violence in human history. The 1914-89 period that historians term ‘the short 20th century’ can be pretty much written off as a reference point. Not only were there the world wars, there were also the numerous cold war crises (McArthur wanting to nuke China, Berlin ’48 and ’59, Cuba, USSR v China Island etc. etc.; Soviet diplomats were openly discussing the prospect of a preemptive strike on China’s nuclear arsenal in 1968) of potentially apocalyptic proportions.

Even today, the world is armed to a degree unimaginable in 1914. A nuclear exchange would see more people killed before the first winter was out than died in all the other wars in history.

The decline in violence since 1989 reflects a gradual ending of the cold-war conflicts. Some warring parties (e.g. Najibullah in Afghanistan) didn’t last too long while others (e.g. UNITA) held out longer but nobody denies that many cold-war fuelled conflicts have petered out over time. I would interpret this as a one-off change rather than a trend as in most cases it resulted from a single event: the collapse of the USSR.

78

gordon 09.15.11 at 12:07 am

I wonder whether Myles would embrace the “unemployment in the US is structural” line as a corollary of his technological determinist position. I’ll say at once that I’m thinking of Prof. Krugman’s continuing attacks on the structural unemployment line, eg. in this post:
http://krugman.blogs.nytimes.com/2011/07/09/the-fatalist-temptation/

He says there (among other things): “Why is unemployment remaining high? Because growth is weak — period, full stop, end of story…the truth about our slump — that we know how to fix it, that we could fix it in a year if we had the political will, but that bad ideas and worse politicians are standing in the way — makes people uncomfortable. They want to believe that we have a deep problem, and that’s why we’re in such a mess.

The truth is that the fault lies not in our structure, but in ourselves”.

This amounts to saying that US unemployment isn’t structural, it’s essentially political, in the sense that there is a political barrier to implementing well-understood remedies.

I know that contemporary US unemployment isn’t exactly the same thing as a trend to greater inequality, but there have been essentially political explanations of that, too.

79

Simon 09.15.11 at 12:21 am

@ 75 and 76. Not sure what either of you are saying!

80

Bruce Wilder 09.15.11 at 12:26 am

Krugman, in embracing the cyclic v. structural unemployment debating frame, does public understanding no favors. It’s a foolishly concocted dichotomy, because these are not mutually exclusive categories, but different aspects of a single economic reality. There’s no “end of story”; there are deep problems, even if Robert Barro, Casey Mulligan and the like are not going to identify what those structural problems are.

The late Maxine Udall, Girl Economist, had a thoughtful post on structural explanations, which deserves greater attention.
http://www.maxineudall.com/2010/09/structural-misalignment-and-a-counterfactual-economy.html
Krugman responded (see comments under the post for a link) in a sensible, and revealing, acknowledgement.

81

LFC 09.15.11 at 12:29 am

@ A Kelleher
The 55,000 p/a figure is not ‘mine’ but that of the Peace Research Institute Oslo.

82

LFC 09.15.11 at 12:35 am

P.s. If you write off the 1914-89 period as a reference point, you miss the point that it was the very violence of that period that contributed to subsequent changes in great-power attitudes and behavior. See e.g. John Mueller, Retreat from Doomsday (1989).

83

john c. halasz 09.15.11 at 1:01 am

@76:

Yes, the U.S. has been running a CA deficit and thus by definition importing capital, a capital account surplus, for decades now. However, much of the incoming investment has been in gov. bonds and other relatively low yielding “fixed income” securities, which displaced domestic demand for such securities, while the incoming money was then recycled by Wall St. internationally into higher yielding investments abroad. In 2006, the official measure of the U.S. external deficit, the Net International Investment Position, stood at $2.6 trillion, which was amazing since it had shrunk from $3 trillion just a couple of years before, even as the U.S. CA deficit was ballooning to an unprecedented 6% of GDP. If one added up all the CA deficits since 1990, in fact, $2.9 trillion was missing from the NIIP account. The basic answer, aside from the relatively minor effects of $ depreciation, was that foreign equity investment and FDI by U.S. corps and wealthy individuals boomed while domestic returns were relatively lackluster. (The last available figure for the NIIP I could find, from 2008, stood at $3.4 trillion).

Some food for thought.

84

ezra abrams 09.15.11 at 1:19 am

barry at 73
I guy I know, who does defence consulting stuff, told me what happened in the first Iraq war.
Turns out the M1 Abrams tank can shoot a shell 5 miles (I forget the exact distance)
the late model soviet tanks that saddam had could shoot a sheel 4 miles
end of story; the M1s simply sat 4 miles from the iraqis, and toasted them.

Another story: there are a variety of hand held “smart missles” that an foot soldier can use to shoot down a plane. For one of them, you have remote control: you stand up out of your fox hole for a second, fire, hunker down in safety, and guide the missle.
All the others, you got to stand there line of sight with the plane…..guess which one foot soldiers prefer

85

gordon 09.15.11 at 1:28 am

Bruce Wilder, thanks for the links.

Prof. Krugman (in his reply) and the late Maxine Udall agree that there may indeed be long-term structural problems with the US economy arising from eg. “massive distortions in or induced by financial markets”, to use Ms. Udall’s phrase. But that doesn’t mean that contemporary unemployment couldn’t be remedied by the sorts of political action (mostly fiscal stimulus) that Prof. Krugman has long advocated. And I note that Ms Udall calls for political action to remedy the long-run distortions caused by malfunctioning financial markets which were worrying her. Neither Ms. Udall nor Prof. Krugman rely on any sort of technological determinism to explain either contemporary unemployment or unemployment (misallocation of resources might be a better description) which might arise from long-run distortions.

As an aside, long-run distortions in the US economy (assuming they exist) might arise from a number of things. A malfunctioning financial sector is one, subsidies and tax breaks are another, militarisation is a third (I remember Seymour Melman on that). All of these, and maybe more, could be operating and interacting simultaneously.

Myles, on the other hand, seems to want to blame impersonal and inevitable historical forces for contemporary inequality. I suspect that implies a belief in structural explanations for contemporary unemployment in the US, which was why I commented above (78). In any event, political action will be necessary, even if only to remove distortions (see Udall), facilitate adjustment and minimise consequent pain.

86

StevenAttewell 09.15.11 at 1:37 am

Bruce Wilder – I think the difference between Krugman and those arguing a “left structuralist” position could be easily resolved if we replace “structural” with “secular” (which I find an annoying way to say “long-term”). Krugman’s objections to “structural” theories has to do mostly with the absence of sectors/regions with rising wages and the like.

87

wintercow20 09.15.11 at 2:20 am

Maybe I am puzzled by the excuses thing. I would seem to be one of the folks being treated as a fan of exploitation, an apologist, etc. But I do not feel compelled to “defend” the possibility that incomes have not stagnated nor do I feel compelled to defend the data for anything other than what it seems to be telling us.

Does it strike anyone here as possible that the data are perfectly correct but that we curmudgeonly limited government, property respecting, rule of law aspiring folks see it as possibly supporting our view of how the world works too? So while we all have a food fight about what the data actually are saying, there is far less constructive discussion happening about how we got here.

88

Peter Schaeffer 09.15.11 at 3:14 am

Why make excuses. Elite globalization is designed to promote radical inequality… and it does. “Free trade” actually means huge declines in well paid manufacturing jobs combined with very large (6+% in a normal economy) trade deficits and destructive debt accumulation (end in a crisis of course). Open Borders means 10s of millions of low-skill immigrants who drive down wages while enabling the elite to feel good about themselves while they enjoy cheap servants and lawn care.

The steady decline in real wages and expansion of poverty isn’t a byproduct of elite globalization, it is the goal. Robin Hood in reverse for the elite, the shaft for everyone else.

Note the solution offered by elite in response to the obvious failures of the system. Education and innovation always top the list. How convenient. An elite that defines itself by getting into Ivory League schools, thinks education is the solution. Never mind that Open Borders means a steadily declining de facto high school graduation rate (measured in terms of skills rather than paper diplomas). Of course, the elite is creative. Extolling innovation provides a wonderful justification for top 1%, 0.1%, and 0.01% incomes. Hey they are the most innovative, why not give them everything?

The fact that innovation on Wall Street crashes the economy can be politely ignored.

Of course, if anyone dares to challenge the status quo, they can be silenced one way or another. Suggest the $600 billion trade deficits might be problematic, accusations of “protectionism” should suffice. If not, the ghost of Smoot Hawley can always be resurrected. If that doesn’t work, you can always beat them with copies of “The Earth is Flat”.

Raise mass immigration in a time of mass unemployment and you are a pariah. The words “xenophobe”, “racist”, and “nativist” can be brandished to censor any inappropriate ideas. If not, just invent some theory about how magical immigrants are and how they can conjure up jobs from thin air, even if unemployed Americans seem incapable of doing so.

If minorities complain about the dismal economy, just buy them off with racial identitly politics, racial quotas (politely called affirmative action), food stamps, etc. If they are Hispanic, try playing the Amnesty card and accusing everyone else of being anti-immigrant if they dare to suggest America should have a border.

The bottom line is that Flat Earth worldview is about an elite inventing an ideology to serve itself. Sure it’s good for the Thomas Friedman class of billionaires and ravages the lives of the lives of the great majority of Americans. That’s a feature, not a bug.

89

Simon 09.15.11 at 3:27 am

@ Peter. Your post reeks of paranoia and conspiracy. Just who are the elites, and what evidence have you to attribute to them such terrible motives, rhetoric aside? I would guess you have very little. I ‘m a student just out of college and support immigration because it seems to me that people come here to seek a better life, make more money, and gain more opportunities for fulfillment. Am I an elite trying to placate the masses as I get rich? I make close to minimum wage doing biomedical research, so I doubt it. As I’ve said earlier in this thread, would you, from your perch over your computer, choose that individuals in developing countries NOT have the opportunity to enrich themselves and their families? Who are you to make this decision? Who is really the elite in this instance?

90

Peter T 09.15.11 at 3:51 am

The link between conscription (or mass armies) and social democracy has to be looked at in both national and international terms. Traditional elites in Europe in the late 19th and early 20th centuries (and later elsewhere) faced a painful dilemma – large armed forces and the support of the industrial working classes to equip and sustain them were essential to effective international competition, but they required the dilution of traditional elite control nationally (one example – the heads of the German army opposed, successfully, any increase in the size of the army from 1895 to 1908, because this would demand more officers, and these could only come from potentially “socialist” backgrounds – ie be politically unreliable). Internal army politics and appointments were hot topics in France and Germany from 1880 on, and this issue was not absent in Britain (see eg the Curragh Mutiny). Successive wars decided the issue against traditional elites.

But “socialism” was so bitterly opposed because the traditional elites were under enormous pressure, as landed incomes fell, the professions expanded and old social relations withered. At the same time it was so fervently sought because the new industrial economy lacked the basics of a decent community life – all the old forms of protection and social bargaining (monasteries, vestries, guilds, fraternities, local riots) had been systematically dismantled. The outcome was a long period of mixed international and civil war (much as in the 16th century with the wars of religion), leading to the settlements of 1945.

The issue now is whether those settlements can be revived. I would argue no – the environmental impacts of sustained rising consumption are too great. So we have to look for new ways to contain elites.

91

Simon 09.15.11 at 3:54 am

I have to ask again, who are the “elites?” In one of the incredible absurdities of our modern political discourse, each end of the spectrum blames our problems on “elites.” They obviously are not referring to the same people, so I suggest that this term be discarded immediately for reasons of conceptual clarity and to bring out real arguments from the veil of rhetoric.

92

Myles 09.15.11 at 4:30 am

The Lord Chancellor has sat on a Woolsack since the 14th century

The very first acts of enclosure, which Parliament tried to ban at the time (due to its increasing social instability), occurred in the 14th century, if not earlier. I think enclosure was more or less inevitable given the development path of the medieval mercantile towns (at least as they existed in England) and the gradually increasing importance in the production and trade of commercial goods (such as wool), but (and I admit this is a bit of a fine distinction) the Black Death, in its determinative effects on feudalism, made sure that the balance of historical forces stayed decisively on the side of the trading towns and rather than being possibly flipped by discrete political forces.

I wonder whether Myles would embrace the “unemployment in the US is structural” line as a corollary of his technological determinist position.

I agree with Krugman and don’t believe the current unemployment situation in the US is structural. But I think the stagnation in middle-class wages over the past few decades in the US are possibly structural rather than political. (USA can’t be Germany: the US has always had a (actually quite serious) surplus labour problem, a problem which it solves through capital non-intensive exports, and I think the full-employment postwar decades are are aberration rather than the norm. So the US faces difficulties that are not relevant to Germany or Sweden in terms of equitably distributing gains from globalization and technologically led wealth aggregations.)

You’re almost certainly right as well in thinking that it will raise very difficult questions for the left as it does for the right, but I find your attitude toward both entirely too God-like for my taste.

Economically driven dislocation are, almost without except, less bloody than politically driven dislocation. Enclosure was nothing compared to the Thirty Years’ War; the Rust Belt is not comparable to the wars of the 20th century. The prospects might seem dim now, but the alternatives are actually dark holes.

I’m no historian, but the significance of the Black Death in the long-run was not a temporary spike in “wages”, but likely that it loosened the institution of serfdom

Good spot, but increase in wages and reduction in serfdom are the two sides of the same coin.

93

john c. halasz 09.15.11 at 5:12 am

“Good spot, but increase in wages and reduction in serfdom are the two sides of the same coin.”

Umm…, Myles, did you miss the surrounding context? There really were no “wages” as a standard measure,- that required much further “developments”,- and the sort of simultaneity of “flip sides of the same coin” is a historical anachronism, induced by the fallacies of neo-classical economics.

94

Josh G. 09.15.11 at 5:22 am

In 1 John 4:20 it is written: “If anyone says, “I love God,” and hates his brother, he is a liar; for he who does not love his brother, whom he has seen, cannot love God who he has not seen.”

The same argument could be leveled at most of the modern globalizers. They say “I love the Indians and Chinese and Mexicans” but they hate their own countrymen. If they do not care for their countrymen, who they have seen, how can they care for Indian and Chinese that they have not seen?

The truth is that most of these people are just goddamned liars. They care for naught but the contents of their own wallets. They will whip out every excuse they can think of to explain away the income inequality of the past 30 years in America, and when all those arguments are demolished one by one, they resort to a guilt trip, claiming that Americans have it too good and that having all our jobs and our industrial base sent overseas is what we deserve.

95

greg 09.15.11 at 6:03 am

Simon @90 (and @88) asks:
I have to ask again, who are the “elites?”

How about the top wealthy 400 individuals in the US, among others.


http://www.politifact.com/wisconsin/statements/2011/mar/10/michael-moore/michael-moore-says-400-americans-have-more-wealth-/

Who have between them more wealth than the bottom half of all households in the US combined. That is 400 individuals have more wealth between them than the poorest 150 Million Americans.

How about the top 1% income earners US, among others


http://www.vanityfair.com/society/features/2011/05/top-one-percent-201105
Who collect 24% of the US’s personal income, as much income as the entire US government.

As for the consequences of their recent activities:
http://anamecon.blogspot.com/2010/10/what-income-of-top-1-means-to-rest-of.html

Or:

http://anamecon.blogspot.com/2011/09/unemployment-average-wage-and.html

Now I don’t know what elites the Right refers to. Elite elementary school teachers, perhaps, or elite unemployed. But it seems the Left has a fairly well defined ‘elite’ they can point their finger at. It would be a shame to discard a term with such rich, and increasingly richer, connotations. As for this elite’s evil motives, I suggest mere, shortsighted greed, because I cannot believe that screwing over the society which is the very foundation of their wealth is in their own long term best interests. But I could be mistaken.

96

Henri Vieuxtemps 09.15.11 at 6:10 am

Watson Ladd: A working definition of irrational: if I can get money for nothing off you, you are irrational, and most people are.

Not for nothing, for a lottery ticket. A lottery ticket may feel like nothing to you, but it certainly isn’t nothing. It’s a very small chance to get very rich, which is certainly different from having no chance at all. Having a lottery ticket in one’s valet (and gambling in general) produces certain emotions, and people are willing to pay for it.

Similarly, a number of people feel that, say, a classical music concert is nothing, or worse than nothing, and only a very stupid, irrational person would repeatedly waste his time and money going to such concerts. Stupidity of others, or arrogance of oneself? Hard to tell, sometimes.

97

Peter Schaeffer 09.15.11 at 6:50 am

Simon,

A few more notes on the impact of immigration on education (disaster is the summary).

John Judis “End State Is California finished?”

“At the gathering, held in a plush conference room, one of the experts projected tables and graphs comparing various states. It was there that I had my own “AHA!” moment. The states with thriving educational systems were generally northern, predominately white, and with relatively few immigrants: the New England states, North Dakota, and Minnesota. That bore out the late Senator Patrick Moynihan’s quip that the strongest factor in predicting SAT scores was proximity to the Canadian border. The states grouped with California on the lower end of the bar graph were Deep South states like Mississippi and Alabama with a legacy of racism and with a relative absence of new-economy jobs; states like West Virginia that have relatively few jobs for college grads; and states like Nevada, New Mexico, and Hawaii that have huge numbers of non-English-speaking, downscale immigrants whose children are entering the schools. California clearly falls into the last group, suggesting that California’s poor performance since the 1960s may not have been due to an influx of bad teachers, or the rise of teachers’ unions, but to the growth of the state’s immigrant population after the 1965 federal legislation on immigration opened the gates.”

Michael Lind “Innovation and education won’t save our economy” “The overall PISA scores of American students are lowered by the poor results for blacks and Latinos, who make up 35 percent of America’s K-12 student population. Asian-American students have an average score of 541, similar to those of Shanghai, Hong Kong, Japan and South Korea. The non-Hispanic white American student average of 525 is comparable to the averages of Canada (524), New Zealand (521), and Australia (515). In contrast, the average PISA readings score of Latino students is 446 and black students is 441.”

Rice U. demographer Steve Murdock:

“By 2040, only 20 percent of the state’s public school enrollment will be Anglo, he said. Last year, non-Hispanic white children made up 33.3 percent of the state’s 4.8 million public school enrollment…. “The state’s future looks bleak assuming the current trend line does not change because education and income levels for Hispanics lag considerably behind Anglos, he said. “Unless the trend line changes, 30 percent of the state’s labor force will not have even a high school diploma by 2040, he said. And the average household income will be about $6,500 lower than it was in 2000. That figure is not inflation adjusted so it will be worse than what it sounds. ““It’s a terrible situation that you are in. I am worried,” Murdock said.”

You can go to http://nces.ed.gov/nationsreportcard/naepdata/ and get test data by race, state, school type, etc. More or less invariably, Hispanic score are somewhere between white scores and black scores, but much closer to black levels. A useful note is that the percent of Hispanics with “advanced” skills appears to always round to zero.

98

Adrian Kelleher 09.15.11 at 6:55 am

I’m going to clarify some of my points and mention one or two things I forgot initially.

First of all, the idea is a direct analogue of Lynn White’s stirrup thesis of feudalism. It pains me to admit this as the connections between dispersal and fanaticism on the one hand (the crucial element, IMO) and conscription and social democracy on the other, were an original observation even if the second half wasn’t. It was only afterwards that I realised where the inspiration for the idea came from.

The key point is that rifles and high explosive shells implied dispersed fighting and these in turn implied (I would claim) the democratisation of violence; NCO’s and individual soldiers’ initiative became paramount.

A great many of the early fascists were drawn from Italian arditi; this is of interest less because these were ‘elite’ than because these units exemplified the new tactical — i.e. dispersed, initiative-based — approach that emerged by 1918. After d’Annunzio’s occupation of Fiume, the Arditi split into left- and right-wing components, so they weren’t all rightists, however it was abundantly clear both that no political force could afford to ignore these very dangerous individuals and that men selected specifically for their talent for organised violence were likely to choose violent solutions to problems. If the only thing you have is a hammer…

The German concept of auftragstaktik, meaning subortinates interpreting missions handed down from above instead of superiors directing their actions, came to be applied at all levels of command and in the end by all armies. (It’s called ‘mission type orders’ in the US today, an innocuous name for a profound shift in emphasis.) In fact the Führerprinzip — the idea that underlings should attempt to interpret Hitler’s will rather than seeking direction — extended the idea absolutely without limit.

Like in Italy, the Stosstruppen were disproporionately influential in the Freikorps etc., and in the end in the Nazi party. Nazism and communism count as having mass appeal, as Jim Harrison (51, above) points out, because the energetic support of a modest fraction of fanatics is more important than lukewarm endorsement of large numbers.

The pomp of Nazism was of quite different character from that of the Empire. The Kaiser reviewed his ships and troops surrounded by personal imperial regalia and flanked by politicians and generals drawn from an aristocracy that was a closed caste (due to morganatic marriage resulting in loss of title). By contrast, Nazi propaganda deified a “body national” encompassing all aryans regardless of class; aristocrats, whom Hitler despised, barely featured at all in the Nazi government.

IMO, this popularisation of violence coloured all politics in the 20th Century. The old aristocratic governing class had suffered a fate far worse than deposition: it had become absurd. The process is portrayed with delicious black humour in the novel The Radetsky March.

99

Peter Schaeffer 09.15.11 at 7:01 am

Simon,

For a useful description of the dominant elite, take a look at “The New Cosmopolitans” by Robert J. Shiller or you can just read the editorial page of the NYT or the WP. The New Republic has a rather good summary of elite opinion over at “Mediscare And Elite Bias”. I quote

“Elite opinion and the biases of the news media, which are generally synonymous, tilt left on social issues, like gay rights, abortion and immigration, reflexively deeming conservative views as bigoted and irrational. On economics, elite opinion tilts slightly right — opposed the the GOP agenda of debt-financed tax cuts, but strongly in favor of free trade. Elite opinion militantly favors deficit reduction and regards the cause of cutting entitlements as sacred writ.”

100

Britta 09.15.11 at 7:50 am

The US population is like the frog in the pot who doesn’t notice that the water is beginning to boil, except in this case, as they turn up the heat, the GOP is telling us the temperature rise we’re just in a hot tub.

101

gordon 09.15.11 at 8:19 am

Myles (at 91): “I think the stagnation in middle-class wages over the past few decades in the US are possibly structural rather than political”.

In my quote from Prof. K. (at 78), he said: “Why is unemployment remaining high? Because growth is weak — period, full stop, end of story…”

Maybe that’s the explanation for stagnation in middle-class wages, too, but not necessarily. Lane Kenworthy points out that growth in wages and growth in the economy as a whole have parted company in the US since about 1973:
http://lanekenworthy.net/2011/01/31/the-great-decoupling/

He says in conclusion: ” …the big change in recent decades lies in the degree to which economic growth lifts middle-class incomes. If we want to understand slow income growth, that should be our focus”.

I think the answer to that question has got to be political. I don’t see what structural explanation there can be for incomes rising with growth before the mid-1970s, but not afterwards.

If, on the other hand, growth is over, then you have a structural explanation for stagnant middle-class incomes. But even in that case there will be social pressure for redistribution by political means, because the increasing wealth of the top decile or top one percent in the same period means that, in the absence of growth, they have managed to prosper at the expense of others.

102

Tim Worstall 09.15.11 at 9:11 am

“Conscription lasted into the 1970s, and there were certainly plenty of ex-conscript veterans around when the swing back to the right began.”

An alternative explanation: “Conscription lasted into the 1970s, and there were certainly plenty of ex-conscript veterans around causing the swing back to the right .”

Someone who has been forced to spend a year or two of their golden youth at the beck and call of the State is likely to be fertile ground for the argument that the State shouldn’t have quite so much power over people.

103

John 09.15.11 at 9:55 am

Straightwood, that’s a nice ideological narrative you’ve got there! And that bit about poor people who disagree with you being dumb proles, well, it seems an awful lot like a “destructive simplification”. Narcissistic ideologue: meet mirror.

104

John Quiggin 09.15.11 at 10:09 am

Peter Schaeffer, I’ve deleted a bunch of massive, thread-derailing comments. Please keep to shorter comments and use (not too many) links. If people want to discuss the role of migration, they can respond to you, and you can engage in discussion rather than data-dumping. Otherwise, I think you’ve made your point.

105

Del Cotter 09.15.11 at 11:30 am

Way back in the fifth comment: “I don’t, in fact, think increasing inequality is a political development, but rather an economic and technological one.”

Economic and technological developments are political. Marx wrote entirely about economics and technology in Capital, but his critics seem to have thought it was a pretty darn political book.

106

Watson Ladd 09.15.11 at 1:30 pm

Peter, you have to ignore the role of politics in allocating educational resources to get race out. I know first hand that many south side math teachers cannot simplify basic expressions. How will be they able to teach children if they don’t know math? Did you remember to regress on household income as well?

107

straightwood 09.15.11 at 1:49 pm

@103

Rejecting evolution is not a matter of “disagreement;” it is objectively stupid. Many other popular beliefs (e.g., American Exceptionalism) are demonstrably false, and thus objectively stupid. People who hold many demonstrably false beliefs are stupid people. The notion that we should respect any persistent human belief is patently absurd. Human sacrifice, anyone?

108

Steve LaBonne 09.15.11 at 1:58 pm

What shall we call people who have just enough sense to know they’re getting screwed, but are not only too stupid to understand by whom, but allow themselves to be convinced, by the very people who are screwing them, that their fellow victims (typically of the “wrong” ethnicity) are the culprits? What shall we call them when, in consequence, they vote for policies that are guaranteed to make them worse off? I’d say “dumb proles” fits them pretty damn well. It’s an ugly reality, but it’s the reality we live in.

109

Simon 09.15.11 at 2:20 pm

@Greg. Some of your links don’t work. I don’t see any evidence that the top 400 richest tax payers influence public opinion. Warren Buffet is surely one of them and he just called for higher income tax. I don’t think Tiger Woods and JK Rowling (does she live here) are waging class warfare.

110

straightwood 09.15.11 at 2:21 pm

allow themselves to be convinced, by the very people who are screwing them, that their fellow victims (typically of the “wrong” ethnicity) are the culprits?

It’s not just ethnicity. In the case of the Wisconsin union-busting, the hate-fest was aimed at the wicked (mostly white) school teachers and administrators who were robbing the honest workers by demanding scandalous benefits. The mob control technicians employed by the plutocrats know where every weak spot is in the proletarian mind. They have made a high technology out of the manipulation of irrationality and human frailty.

111

Simon 09.15.11 at 2:22 pm

I meant like, literally don’t work by the way, not like, not work for me. Cheers.

112

straightwood 09.15.11 at 2:23 pm

I don’t see any evidence that the top 400 richest tax payers influence public opinion.

Clearly, you have never heard of the Koch brothers.

113

Walt 09.15.11 at 2:32 pm

Simon, are you for real? Like, are you an actual honest-to-God flesh-and-blood person? I would prefer to find out that you were a rogue spambot than someone that ill informed.

114

Simon 09.15.11 at 2:33 pm

Touche. But I still think the group it heterogenous in its political views-apparently you’ve never heard of George Soros.

@ Steve. We don’t have to respect the VIEW of creationism or American exceptionalism. What we can do, in the spirit of William James, is to respect and appreciate the emotional comfort that these ideas provide to those who hold them.

115

John 09.15.11 at 2:33 pm

@ 107 I think you misunderstood my post. Do you understand that your positions are ideological? I’m not questioning voter ignorance. What you did was reduce the attitudes of the poor and middle classes toward things like redistribution and taxation to their stupidity, rather than to ideological differences. Lower-middle-class “tea partiers” don’t oppose your policies because the Kochtopus underneath their beds has tricked them, but because they have different understandings of justice and desert. You don’t acknowledge that they are being ideological because doing so makes the discussion more complex. Simplifying keeps your rants clean cut. And don’t be daft – we’re not talking about evolution or human sacrifice, we’re talking about income redistribution in liberal democracies. Your rhetoric is almost identical to Krugman’s, by the way. Remember, it’s only propaganda when they do it.

We’re well off topic, now. I won’t comment again.

116

Simon 09.15.11 at 2:36 pm

@ John. This is exactly correct.

117

Steve LaBonne 09.15.11 at 2:39 pm

Lower-middle-class “tea partiers” don’t oppose your policies because the Kochtopus underneath their beds has tricked them, but because they have different understandings of justice and desert.

Yeah, the understanding that an “essential” government service is one which they personally need when they’re in trouble, and everybody else can just f*ck off and die (like Ron Paul’s uninsured campaign manager). They oppose rational policies that would help everyone, and support policies that (unbeknownst to their ill-informed selves) are hurting them, because they’re both ignorant and selfish.

It’s amusing to note the way extreme relativism has migrated from left to right over the years.

118

Simon 09.15.11 at 2:39 pm

It seems to be one of the most persistent themes on the left to assume a false consciousness of the right. Dissent writer and historian Michael Kazin has pointed this out on numerous occasions http://hnn.us/articles/44217.html.

119

Steve LaBonne 09.15.11 at 2:41 pm

don’t have to respect the VIEW of creationism or American exceptionalism. What we can do, in the spirit of William James, is to respect and appreciate the emotional comfort that these ideas provide to those who hold them.

Nice meaningless form of words, that. THEY certainly won’t perceive their ideas as “respected” until creationism is taught in all schools. I will not tempt Godwin by pointing to examples of even worse ideas that gave emotional comfort.

Speaking of ideology, yours makes your remarkably blind to reality.

120

Simon 09.15.11 at 2:47 pm

That, I think, is unfair. Perhaps I’m not aggressive enough, I’ll concede that. We shouldn’t stop fighting to teach evolution in schools, obviously. But we don’t have to call other people stupid and we can empathize even when we strongly disagree.

121

Steve LaBonne 09.15.11 at 2:49 pm

Do you really want me to give you a list of some people whose ideas give them emotional comfort but with whom no decent human being should empathize? I think you can mange that task for yourself. Get real.

122

Steve LaBonne 09.15.11 at 2:54 pm

Just to stick to examples that are recent, completely germane to this discussion, and non-Godwinesque, can you really empathize with people who cheer for executions (that too on the part of a governor who has certainly rushed to execute one innocent man and then quashed the ensuing investigation, and who almost certainly has presided over many more executions of innocent people)? Can you really empathize with people who cheer for the idea that uninsured sick or injured people should just be allowed to die? I certainly hope my own capacity for empathy never becomes that elastic.

123

Simon 09.15.11 at 2:58 pm

Well, to get all metaphysical, I basically am a determinist (this informs my stance on social justice) so I’m not going to view them as ULTIMATELY responsible for holding those views. I don’t know what happened to them in their youth-maybe they were abused, bullied, had mental/emotional troubles etc. I don’t know their friends, families, and personal professions. All I know is that in the heat of the moment they cheered for some pretty egregious things. I thus refuse to see them as something other than human beings like me.

124

Steve LaBonne 09.15.11 at 3:08 pm

And here I thought we were discussing politics, not Unitarian theology.

125

Harold 09.15.11 at 3:17 pm

I refuse to condescend to people who listen to Rush Limbaugh and disbelieve in evolution, though they put me in that position. I respect them enough as human beings to consider them capable of better things.

126

Steve LaBonne 09.15.11 at 3:30 pm

I respect them enough as human beings to consider them capable of better things.

Exactly.

127

straightwood 09.15.11 at 3:50 pm

We seem to be trapping in lexical cobwebs. If I were to retire the compact term “stupid” and substitute “cognitively challenged,” how long before this would be denounced as a slur because it hurt the feelings of those to whom it was applied?

Is it a secret that huge profits are earned by taking advantage of stupid people? From gambling casinos, to drug dealers, to payday lenders, to stockbrokers, a huge chunk of the consumer economy is sustained by the increasingly refined exploitation of people with poor access to information and low ability to act in their own long-term interest.

The notion that the wishes of these people should be “respected” and their desire to further reduce their own living standards should be legitimized as the vox populi is arrant nonsense.

128

Harold 09.15.11 at 4:27 pm

“I basically am a determinist (this informs my stance on social justice) so I’m not going to view them as ULTIMATELY responsible for holding those views.”

If you are a determinist (fatalist), perhaps you think that if you see someone lying injured on the street, no one is obligated to call an ambulance or to do anything at all. It is a curious stance for a medical student (or technician) as you purport to be, since medicine is the ultimate attempt to improve the human condition by interfering with destiny, no?

On the other hand, someone pointed out that determinists: Calvinists and Marxists are the ultimate activists, since they believe that it was fated for them to act — or to help destiny along, as the case may be.

You might even say it was determined for people on this board to try and combat the n fallacies of neoliberalism, neoconservativism, creationism, and other ignorant ideas, the effects of which, to me, at least, are the equivalent of letting someone die on the street.

129

Simon 09.15.11 at 4:34 pm

As you note later in your post, fatalism does not equal determinism, so I don’t know why you think that I am one (a fatalist). My actions have effects regardless of whether they were determined. And no, I do not think that” no one is oblligated to call an ambulance for someone in the street.” All I said was that I wanted to have empathy for people who have opinions different than mine. I think you and Steve have good points in response.

130

bianca steele 09.15.11 at 5:01 pm

Steve LaBonne’s characterization way upthread is perfectly reasonable in a case in which the mass of the people is being misled and stupefied in a way that prevents them even from forming a thought about what might really be going on. It isn’t obvious, however, that this is what’s at stake in the discussion. If I had time, I might write a blog post explaining for Straightwood and Steve the points of view each of them might have in mind so everybody can have the benefit of a defense of what they say and discussion could proceed more easily.

131

Bruce Wilder 09.15.11 at 5:20 pm

This might be an opportune moment to, once again, draw attention to Bob Altemeyer’s The Authoritarians.
http://home.cc.umanitoba.ca/~altemey/

Attitudes toward Darwinian evolution, justice and due process, or income distribution are attitudes — not political philosophy or economic analysis. They may be said to have deep psychological roots, I suppose. Maybe depends on what one means by the metaphor, deep. But, there’s no determined relationship to a political program or movement. The attitudes are just handles, where the hooks of populist appeals and slogans can catch hold, and political identification and organization develop tension.

The liberal tribe seems to have an aversion to making populist appeals, which would marshal the political activity of people with the attitudes of “authoritarian followers”. It is unfortunate, since it is hardly possible for a left coalition to achieve political power without a substantial fraction of them, and still be recognizably left; it is still more unfortunate, that right coalitions in which their numbers predominate tend to become deeply pathological and violent.

In American political history, successful integration of substantial blocks of people, with authoritarian attitudes in coalitions with reformist or progressive or liberal agendas has been associated with progressive change. In antebellum American politics, the formation of the Republican Party on an antislavery platform depended on the deliberate efforts of Republican leaders to take over and subvert the anti-immigrant Know-Nothings. Progressivism, in the early 20th century, received considerable strength from earlier Populism. FDR’s New Deal coalition rested in part on the populism, and Democratic Party identification of the southern white supremacists and big-city political machines. Martin Luther King’s nonviolent tactics worked as an appeal to national conscience, in part because of the predictable response of people with authoritarian attitudes to the kind of political theatre they created. (Oddly enough, the same people, who nod agreeably to racist demagoguery can also be deeply affected, in a good way, by scenes of peaceful people attacked with firehoses and police dogs.)

132

Harold 09.15.11 at 5:22 pm

If I had no empathy it wouldn’t matter to me what people’s opinions were.

133

Steve LaBonne 09.15.11 at 5:37 pm

Bruce @130- a substantial fraction of them, absolutely, and I am very disheartened by the post-Clinton Democratic allergy to anything even remotely resembling populism- you may even have understated what a dangerous disaster that is. But the hard-core tea partiers (whom polls show to be despised by the great majority of the population) can’t possibly be among that fraction. Nor, thankfully, do they need to be.

134

Barry 09.15.11 at 7:57 pm

Walt 09.15.11 at 2:32 pm

” Simon, are you for real? Like, are you an actual honest-to-God flesh-and-blood person? I would prefer to find out that you were a rogue spambot than someone that ill informed.”

These days, the difference between a supporter of neoliberal doctrine and a spambot is small.

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Bruce Wilder 09.15.11 at 8:08 pm

The hard-core Tea Partiers are not authoritarian followers, in Altemeyer’s categorization; their attitudes appear to be better characterized by the concept of Social Dominance Orientation. These are not mutually exclusive attitude clusters, but the correlation is low among individuals.

The scary thing, politically, is when authoritarian followers find a demagogue, and the Tea Party, and its sponsors, seem to be shopping for a demagogue.

136

Watson Ladd 09.15.11 at 10:17 pm

Wait, Communists also support free immigration! (And so Karl Marx and Milton Friedman are really the same person. WTF happened to history)

Furthermore Simon has a real argument: if the distribution of US wages was in fact tied to poverty for the rest of the world, we should prefer todays outcome to the past. But I think it has much more to do with transfer payments within the US. But then, why should US citizens get them and not people who would be helped a lot more?

I would honestly have trouble dismissing that argument, except by arguing that the political strength of the US working class is the only thing that could lead to a truly equitable worldwide development. But today that doesn’t seem true.

137

Steve LaBonne 09.15.11 at 10:29 pm

I’ve been noticing a lot of this bogus concern for workers in other countries of late. Must be the new neoliberal talking point to attempt to justify the obscene covetousness of the top 1% in the US and their rape of the working and middle classes.

Nobody who is so cavalier about the welfare of his fellow countrymen is genuinely concerned about all of humanity.

138

Watson Ladd 09.15.11 at 10:37 pm

Steve, one might say that no one concerned with the lives of humans could mistreat an animal. But that would still tolerate, and indeed require, animal experimentation to save human lives. If the preference for ones countrymen is just that, then it is a much weaker duty then to strangers. Furthermore of all the lusts that inspire men to crimes, none is as great as love of country.

139

ScentOfViolets 09.15.11 at 11:01 pm

@Greg. Some of your links don’t work. I don’t see any evidence that the top 400 richest tax payers influence public opinion. Warren Buffet is surely one of them and he just called for higher income tax. I don’t think Tiger Woods and JK Rowling (does she live here) are waging class warfare.

Science guy entering the lists to make his pitch for rationality and the scientific method again.

Simon, rather than simply say that you don’t find some evidence presented “convincing” isn’t really helping anyone. Could you please – before and not after – the next person makes their case what sort of evidence you’re looking for, and what you would find acceptable?

If all you’re saying is that you won’t believe this until presented with signed and notarized confessions by 100 million people, well, I think we’d all have a better sense of just how seriously to take you.

140

john c. halasz 09.15.11 at 11:02 pm

OMG! This is why normative arguments are so bad, when they don’t consider the functional “grid” and its respective alternatives that make the former possible.

141

gordon 09.15.11 at 11:09 pm

I thought Peter Schaeffer’s comments were interesting and had some good links. I had intended to read them again this morning, only to find they’d been deleted (see 104). I for one would like to see them reinstated.

142

Harold 09.15.11 at 11:23 pm

We have seen a rise in prosperity in all countries in the last 50 years. I don’t think that it is at all a given that decent wages for workers in one part of the world, or in one segment of the workforce inside a country necessarily mean lower wages for those in another. Prosperity is not a race.

143

Watson Ladd 09.15.11 at 11:34 pm

Harold, if wages are increased in India because of increased productivity caused by capital intensive production methods moving there, then there will be a shift of capital that will reduce the growth of US wages.

144

VV 09.16.11 at 12:00 am

” if wages are increased in India because of increased productivity caused by capital intensive production methods moving there, then there will be a shift of capital that will reduce the growth of US wages.”

This is true on average. But then it becomes more critical how the pie is shared — the whole notion of being happy with a small slice of an increasing pie seems to be changing…

145

Bruce Wilder 09.16.11 at 12:10 am

Like Harold, I do not see the logic that expects increasing productivity to reduce wages anywhere. If workers in India are producing more stuff, and trading with America, everyone should be better off — at least that should be well within the realm of the politically possible, as it is (I would think obviously) within the realm of the economically possible.

There are real issues of income distribution, of course. The U.S. is engaged in some serious disinvestment, which is driving down U.S. wages and median household income, and driving up the poverty rate. Public infrastructure has been allowed to age and deteriorate and financialization has pushed out a lot of manufacturing. But, those are issues subject to national policymaking, if we choose to rule ourselves, instead of allowing government by Goldman Sachs.

146

Simon 09.16.11 at 12:31 am

@ Scent. I truly have no idea what you’re talking about. Where in this post was any evidence besides “ever heard of the Koch brothers?” presented to me, and where did I say it wasn’t convincing.

@ Harold: “Nobody who is so cavalier about the welfare of his fellow countrymen is genuinely concerned about all of humanity.” This is not an argument, but rather an assertion, made it seems in order to pump up your self esteem and those who agree with you. You don’t know me, my friends, or my family. That I should care much more about someone 1 mile north of the Texas border because they are “my fellow countryman” then 2 south of the border is bizarre and tribalistic.

147

Simon 09.16.11 at 12:41 am

@ Scent again. The burden of proof is on you to show that the portion of the electorate who votes Republican is suffering from a false consciousness constructed by the wealthy rather than by their opinion of desert and justice, as John put it above. Otherwise, you’re beliefs are grounded in faith, and a particularly offensive one that when people disagree with me they are being manipulated

148

Harold 09.16.11 at 12:53 am

Simon, you have me mixed up with another poster. Though it is interesting that you so readily admit to being cavalier about the welfare of your fellow countrymen.

149

Bruce Wilder 09.16.11 at 1:21 am

@Simon 145

But, then there is that border. We organize politically and economically, primarily around nation-states. It is not a question of “caring”; the operative questions are about organization, institution-building, funding public goods investment, etc.

150

Simon 09.16.11 at 1:31 am

@ Bruce. Thank you for the thoughtful response.

151

Harold 09.16.11 at 1:37 am

Didn’t there used to be a leftist faction (hint, it began with a “t”) that opposed reform unless it involved a violent world-wide workers’ revolution? Perhaps this is what neo-liberals mean when they claim to be “leftist” while opposing unions and worker protections in one country while other countries don’t have them.

152

Simon 09.16.11 at 1:56 am

Lol, perhaps there is a Trotskyist somewhere in me but I doubt it. I do not oppose unions and worker protections. All I was asking John Quggin earlier on was whether there was empirical evidence indicating, in your words “decent wages for workers in one part of the world, or in one segment of the workforce inside a country [may] necessarily mean lower wages for those in another.” You say I don’t think so, and I hope you’re right, but I just would like to know for sure. As Watson pointed out, as capital intensive jobs have shifted out of America income inequality has increased and median wage has declined, while many people in China and India have become richer. I like people in China and India becoming richer, so I just wanted more information.

153

Watson Ladd 09.16.11 at 2:13 am

Bruce, we could organize within the nation state to smash it. Its a sad day when the followers of Leon Trotsky and of Milton Friedman meet and agree on the practical political issues because there are no other alternatives. This is the real tragedy of history, not the declining wages which are only symptoms of a deeper problem of capital.

154

ScentOfViolets 09.16.11 at 2:29 am

@ Scent. I truly have no idea what you’re talking about. Where in this post was any evidence besides “ever heard of the Koch brothers?” presented to me, and where did I say it wasn’t convincing.

and:

@ Scent again. The burden of proof is on you to show that the portion of the electorate who votes Republican is suffering from a false consciousness constructed by the wealthy rather than by their opinion of desert and justice, as John put it above. Otherwise, you’re beliefs are grounded in faith, and a particularly offensive one that when people disagree with me they are being manipulated

This seems rather nonsensical. I never said anything about the burden of proof, and I certainly never said that burden was yours. But you haven’t exactly indicated what sort of evidence would satisfy you. Notice that I am not claiming that this evidence exists (and if the “400” really didn’t influence public opinion, it wouldn’t, of course).

But you need to tell us what you need to see before you’ll be convinced so we can go dig for it. That’s just good, basic, bog-standard scientific procedure. Right?

So let me explicitly ask you again: what sort of evidence to support that claim would you find satisfactory? And please – be specific. Once you’ve given your criteria, the other people you’re arguing with can satisfy their burden of proof obligations by going out and getting it.

155

Simon 09.16.11 at 2:31 am

Haha. I didn’t realize you were a Marxist, and the only one who understands the point I was trying to get at to boot! I wouldn’t say I’m a follower of Milton Friedman though (although I like some sections of Capitalism=Freedom).

156

Simon 09.16.11 at 2:55 am

@ Scent. Thanks for your response. I disagree that I have to specify what kind of evidence would convince me, and in fact I can’t, because I find the hypothesis incredibly implausible and arguably unverifiable. Were someone to present evidence purporting to prove the phenomenon, and I said it wasn’t convincing, I would have to say why, and I will. But again, no one has done so.

157

Simon 09.16.11 at 3:00 am

It is much more likely that political views are influenced by hereditary/socially conditioned moral attitudes (see Jonathan Haidt’s TED talk for one of my favorite introductions) , religion, or even racism. This makes things much more complicated, and doesn’t allow us liberals to say “oh they’re being manipulated” but it both has evidence and squares much more nicely with salient aspects of our society. I will say that the right wing media may play into this, but is thus an epiphenomenom on more complex fundamentals of personality.

158

Simon 09.16.11 at 3:03 am

My friend David Shor has also suggested that political attitudes are rooted in whether an individual takes a deontological moral stance (betraying your country is bad no matter what) or a consequentialist one, with the latter being more common amongst those on the left. This is also plausible.

159

Myles 09.16.11 at 5:24 am

I’ve been noticing a lot of this bogus concern for workers in other countries of late. Must be the new neoliberal talking point to attempt to justify the obscene covetousness of the top 1% in the US and their rape of the working and middle classes.

Whether the concern is bogus or not is irrelevant. The fact of the matter remains, and is not affected by the degree of sincerity of the people who state such a fact; facts are independent therefrom. Overall welfare in the world has increased massively over the last 30 years. MASSIVELY. If the world welfare level continues increasing at such a pace it would be a beneficent deliverance of biblical proportions, almost unknown in the history of mankind. Look at China. Look at India.

Neoliberalism has played an undoubted and indubitable role in this massive increase of welfare in the world, and for this singular achievement neoliberalism should be praised. The caterwauling of left-wingers on this point is just so much nonsense.

160

greg 09.16.11 at 7:35 am

@Simon:

I tested my links @ 95. The only one that didn’t work for me was:


http://anamecon.blogspot.com/2010/10/what-income-of-top-1-means-to-rest-of.html
I apologize. Er. Darn editor, too. Cut and paste will work if the link itself doesn’t. This quote from the Vanity Fair article might interest you: ”First, growing inequality is the flip side of something else: shrinking opportunity. Whenever we diminish equality of opportunity, it means that we are not using some of our most valuable assets—our people—in the most productive way possible.”

Simon: “The burden of proof is on you to show that the portion of the electorate who votes Republican is suffering from a false consciousness constructed by the wealthy rather than by their opinion of desert and justice, as John put it above. Otherwise, you’re beliefs are grounded in faith, and a particularly offensive one that when people disagree with me they are being manipulated.”

Well, here’s a recent paper showing false consciousness on the part of the entire electorate:


http://www.people.hbs.edu/mnorton/norton%20ariely%20in%20press.pdf

It’s the famous paper showing people think income is more equitably distributed than it is, and that people think it should be even more equitably distributed than they think it is. Note the bar graphs.
How much false consciousness is constructed by the wealthy?.
Well here’s Michele Bachmann laying down some false consciousness on taxes:

http://www.politifact.com/truth-o-meter/statements/2011/apr/18/michele-bachmann/michele-bachmann-says-top-1-percent-pay-40-percent/

If you work out all the figures, you find the wealthy pay about 17% of their income on federal taxes. The fact that almost half the electorate has too little income to pay ncome taxes should be viewed, not with outrage, but with alarm, since it shows just how skewed the income distribution really is, and how poor most of the electorate really is.

We know the wealthy spend many millions of dollars on shaping public opinion. Are they fools with their dollars? Is it all in the public interest? We would be naive to think that none of it was self serving.

161

steve 09.16.11 at 7:40 am

I can sympathize with people complaining about the wealthy’s growing share of the economic pie. I can sympathize with the desire to raise taxes on the wealthy.

However, what confuses me to no end is the progressives continuing support of Keynesian economics. If you read the Keynesian economists, they are explicity stating that the way to increase employment is through deliberately targeting inflation (3-5%). They say this will have two benefits. It will spur demand and it will lower costs of labor. Inflation doesn’t effect the rich as much because they store most of their wealth in assets not money.

If I was the conspiracy type, I would guess that Democratic politicians actually prefer it when the rich are getting richer so long as they aren’t viewed as the cause. Or perhaps, people are just too dumb to recognize when they are working against their own interests as many commentators have already suggested.

In my opinion, you are screwed either way neither choice currently leads to more prosperity for the middle class.

162

Simon 09.16.11 at 1:27 pm

@Greg. You’re data that half our electorate votes Republican because of top income earner money consists of a) an assertion that income inequality equals shrinking opportunity b) a graph showing that both Kerry and Bush voters want the same distribution of income and c) that the rich pay most federal taxes because they earn the most money. I do not dispute any of these things, but none of them provide any evidence that the income of top earners is influencing public opinion.

@Myles “Whether the concern is bogus or not is irrelevant. The fact of the matter remains, and is not affected by the degree of sincerity of the people who state such a fact; facts are independent therefrom. Overall welfare in the world has increased massively over the last 30 years. MASSIVELY.” Puzzles the heck out of me too.

163

straightwood 09.16.11 at 1:28 pm

Krugman’s latest column in the NYT seems to get at the heart of the matter. There has been a turn toward cruelty in the minds of a large portion of the electorate. This has obvious consequences for the apportionment of resources in our society. When the poor are despised as morally deficient, their suffering is not only tolerated, it is sought as a form of retributive justice. No amount of rational argument can prevail against a mood shift of this kind. One can only hope that the cyclic phenomena that brought us to this sad state will eventually take us back to enlightenment and reform.

164

Bruce Wilder 09.16.11 at 2:06 pm

The American political economy has become increasingly predatory. And, of course the (remaining) electorate is mean. It is not as if anyone is allowed on the ballot, who might not serve the predators. When the choice is between Greater Evil and Lesser Evil, of course, the Evil are going to be the enthusiastic voters, and turn out.

165

Harold 09.16.11 at 2:58 pm

Simon does not assent to the statement that “we know that the rich pay to influence public opinion.” How does the American Enterprise Institute get funded, I wonder, and who pays Rush Limbaugh and what is his salary, by the way?

166

Simon 09.16.11 at 3:06 pm

I hope that at some point Harold you will actually read my arguments and understand the point I’m trying to make. Watson, a Marxist, hasn’t found it hard, so I don’t know whats getting in the way with you.

167

Simon 09.16.11 at 3:10 pm

If you animosity can be traced to my comment saying I support Yglesias’ neoliberal “agenda,” than I withdraw it. All I want is a dialogue, but all you persist in doing is misrepresenting my views and being obnoxious.

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Bruce Wilder 09.16.11 at 3:32 pm

Simon @158: “. . . political attitudes are rooted in whether an individual takes a deontological moral stance (betraying your country is bad no matter what) or a consequentialist one, with the latter being more common amongst those on the left.”

This is a popular dichotomy for libertarians, but doesn’t make much sense. See:
http://noahpinionblog.blogspot.com/2011/02/all-ethical-systems-are-both.html

Oh, and by the way, in the U.S., betraying your country is a right-wing speciality.

169

john c. halasz 09.16.11 at 3:35 pm

“Look at China. Look at India.

Neoliberalism has played an undoubted and indubitable role in this massive increase of welfare in the world, and for this singular achievement neoliberalism should be praised. The caterwauling of left-wingers on this point is just so much nonsense.”

Umm…Myles, if you mean by “neo-liberalism” the so-called Washington consensus set of policy prescriptions, then India and China are precisely not the examples to cite. India did partially “liberalize”, deregulate, its industrial economy, but it has maintained a tightly regulated banking system and capital controls. I don’t think the case of Red China needs much elaboration, since its level and many modes of government intervention and control are too well-known. IOW India and China have developed semi-successfully as free-riders on, not adherents to, the Washington consensus.

170

Substance McGravitas 09.16.11 at 3:54 pm

The Indian constitution is a long and complex document that includes pensions and pay for government employees plus delineation of federal and state responsibilities over such things as taxes on animals and boats and their united responsibilities regarding boilers.

171

Myles 09.16.11 at 4:01 pm

IOW India and China have developed semi-successfully as free-riders on, not adherents to, the Washington consensus.

Yes, I mean in the way the increase in free trade and capital movements, which is something propelled by the neoliberal revolution in the West, has been responsible for the massive growth in China and India. If the West didn’t liberalize economically, it would still have been difficult for China and India to sustain the degree of export-led growth (which would lead eventually to consumption-driven growth) that they did.

Insofar as policies in the West have contributed (and they indeed have) to the massive increase in human welfare and reduction in poverty in China and India, they are the policies of neoliberalism.

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Simon 09.16.11 at 4:20 pm

@ Bruce. Yes I agree with Noah, whose blog I like very much. The distinction between positive and negative liberty is fuzzy in the same way, and libertarians (which I am not) tend to get caught up on this as well. All I was suggesting in the OP, well, all that the person I quoted was suggesting, was that those to the right tend to hold rigidly to deontological maxims without even thinking of the consequences. This may be a charitable way of saying conservatives dont think very much at all, but I was just throwing it out there. Haidt’s work on moral foundations seems much more plausible, and supports my assertion that Fox news plays into, rather than forms, deeper emotional attitudes that makes people conservative. (After all, you can watch Keith Olbermann just as easily as Fox) Have you had a chance to look at his work?

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john c. halasz 09.16.11 at 4:27 pm

Umm…, Myles, once again, you do realize that massive CA imbalances are a principal causal factor behind the current global crisis, eh? And you do realize that most of global “free trade” is actually, directly or indirectly, infra-corporate transfers by MNCs, arbitraging FX deviations, most of all, as well as wages, taxes and regulations? And it’s obvious that all countries in the world can’t “develop” based on export-led growth. Neo-liberalism was not instituted for the sake of benefiting the workers in poorer countries any more than for the sake of benefiting workers in richer countries.

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Harold 09.16.11 at 4:40 pm

“Fox news plays into, rather than forms, deeper emotional attitudes that makes people conservative” —

So what? The effect is the same.

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Simon 09.16.11 at 4:48 pm

@ Harold “The effect is the same.” Is the same as what? I think what it indicates is that achieving a liberal political concensus will involve more than just taking over the airways, which we absolutly cannot support in a liberal society anyway, and which would just leave conservatives looking for more ways to confirm their worldview. It involves trying to establish dialogue with the right to help them comprehend our views on social justice and the appropriate role of government.

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Watson Ladd 09.16.11 at 4:49 pm

But the causes are different. Capitalism would be remade even if all the people with FOX and whatever laundry list of groups you name died tomorrow. Its not some conspiracy forced from the top, but an organic form of life that must be attacked at its roots in the sale of labor.

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Simon 09.16.11 at 4:54 pm

Well I’m not sure that I want to do that, as the Burkean in me wants a better plan to replace it first, but you do understand my point. “Capitalism would be remade even if all the people with FOX and whatever laundry list of groups you name died tomorrow.”

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cian 09.16.11 at 5:00 pm

Neoliberalism has played an undoubted and indubitable role in this massive increase of welfare in the world, and for this singular achievement neoliberalism should be praised. The caterwauling of left-wingers on this point is just so much nonsense.

Global growth rates globally have fallen under neoliberalism, in Africa and S. America rather dramatically, in India and China less so (not that China is strictly speaking neoliberal, but never mind). That lower growth has largely been captured by the wealthy.

At least some of the global rise in incomes is a statistical artefact arising from people being drawn into cash economies, where previously they existed in various forms of subsistence. In terms of diet and health it’s usually a step backwards.

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Bruce Wilder 09.16.11 at 5:01 pm

Simon @172

I have found Jonathan Haidt’s work on the diversity of moralities to be interesting and enlightening.

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cian 09.16.11 at 5:03 pm

However, what confuses me to no end is the progressives continuing support of Keynesian economics. If you read the Keynesian economists, they are explicity stating that the way to increase employment is through deliberately targeting inflation (3-5%). They say this will have two benefits. It will spur demand and it will lower costs of labor. Inflation doesn’t effect the rich as much because they store most of their wealth in assets not money.

One of those assets being bonds, which are hit badly by inflation. Language can be tricky. Generally the poorer your are, the more likely you are to either have no savings, or debt. In either case, providing your salary keeps pace with inflation (which in a tight labour market it will), inflation is good. Given a choice between zero growth, and growth; growth is better. Particularly if you’re middle class.

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cian 09.16.11 at 5:11 pm

Simon. The wealthy in the US give huge sums of money to rightwing think tanks. These right wing think tanks then provide talking heads for TV/radio, and churn out blog content, opinion pieces in newspapers, as well as providing “experts” for various policy debates in Washington/TV/newspapers, etc. Right wing think tanks dwarf anything even on the centre-liberal side of things, yet alone on the left. The right also fund very successful astro-turfing operations, as well as operations such as the guy who shut ACORN down. The wealthy also channel funds to favoured candidates, and pay for political advertising.

George Soros mostly funds projects abroad. Buffet doesn’t fund anything very much.

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Watson Ladd 09.16.11 at 5:12 pm

cian, height doesn’t lie. Unfortunately I cannot find statistics on average heights across populations and times anywhere. But I would bet that height in India has increased since 1970, whereas you would have it decrease.

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Steve LaBonne 09.16.11 at 5:16 pm

Given a choice between zero growth, and growth; growth is better. Particularly if you’re middle class.

And it’s one of the triumphs of the propaganda we’ve been discussing in this thread to have made highly inflation-averse so many people who would benefit from moderate inflation, which would ease the pain of the deleveraging process that we’re nowhere near the end of. Support of policies that are personally harmful to you, because you’ve been misled into believing the contrary (by people with a pecuniary interest in misleading you), IS false consciousness.

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straightwood 09.16.11 at 5:38 pm

It appears that there is a quantum of economic suffering that must accumulate before populist anger is sufficiently concentrated to enable serious political reform. At some point, the talking heads and propaganda technicians will no longer be able to create illusions convincing enough to offset the lack of jobs, housing, and health care afflicting large numbers of Americans. That is when our politics will change.

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Myles 09.16.11 at 5:44 pm

Global growth rates globally have fallen under neoliberalism, in Africa and S. America rather dramatically

It takes quite some imagination to believe that South America did better under what preceded neoliberalism. Dude, Peronism started not working out in the bloody 1950’s. It never actually worked in the first place. In so far as it had any successes they were illusions. Brazil’s import-substitution strategy was in shambles before it even got underway.

WRT to Africa, that’s a political problem, not an economic one. The economic model of Botswana is sound and Botswana has been doing well.

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cian 09.16.11 at 6:04 pm

It takes quite some imagination to believe that South America did better under what preceded neoliberalism.

Or, you know, a brief look at the data.

WRT to Africa, that’s a political problem, not an economic one.

Because? It is fascinating that this supposed political problem arose at around the same time of the completely non-poitical neoliberal project. Probably a conincidence.

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Hidari 09.16.11 at 6:05 pm

Talking of false consciousness brings me back to an old pet theory of mine the Belief in a Just World (which I have banged on about at CT before). But it really does demonstrate that there is such a thing as false consciousness, we can prove it, and it can be and is manipulated by the political right for political reasons.

This contains details. Just scroll down through the graphs. It lapses into ‘economicsalism’ later on but the basic point is simple enough.

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Myles 09.16.11 at 6:11 pm

Or, you know, a brief look at the data.

Reported data on South American growth in the first few decades after WWII have as much relation to reality as Soviet GDP numbers.

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cian 09.16.11 at 6:11 pm

Cian, height doesn’t lie.

No, it correlates quite well with protein intake. You don’t actually need that much protein; people in the west get far more than they need. Its quite rare, outside famines, for peasants to not have access to sufficient protein.

The Japanese are becoming taller due to changes in diet, but it seems to be accompanied by increasing western style health problems. Simple metrics can be useful up to a point, but only so far.

Unfortunately I cannot find statistics on average heights across populations and times anywhere. But I would bet that height in India has increased since 1970, whereas you would have it decrease.

One very noticable change in the diets of people in both SE Asia and Africa, has been an increasing reliance of people moving to the cities on a far more restrained diet, which is nutritionally deficient. Its not poverty that leads to the nutritional diseases, its poverty within cities. Vitamin A deficiency for example.

I wouldn’t necessarily bet that people living in cities have greater access to meat than people living on farms, incidentally. Particularly with rapid rises in population.

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cian 09.16.11 at 6:18 pm

Reported data on South American growth in the first few decades after WWII have as much relation to reality as Soviet GDP numbers.

How convenient for you. Any other facts that you need to change for the sake of the argument? I take it the notoriously accurate Chines GDP figures of today are fine with you, but you’d rather disregard the figures under Mao? That kind of thing?

“Who loves the Queen and who votes Tory?
Come on joker read us a story”

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Watson Ladd 09.16.11 at 7:29 pm

So cian, now you are saying increases in height are bad? If it was so rare for peasants to have insufficient protein, why are Romans so short? I really don’t see the problem with having too much food instead of too little. The World Bank confirms it: the percentage of people in extreme poverty has dropped dramatically due to economic growth in India, growth that wasn’t happening until India liberalized.

As for Mao, well, we’ll just count the bodies from the Great Leap Forward. How many starving people does it take to convince you that Chinese economic policy was fucked up then?

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Bruce Wilder 09.16.11 at 7:47 pm

straightwood @184

It doesn’t appear that way to me. I doubt that the “quantum of suffering” ever enters into it. It appears to me that it is perfectly possible to grind a people all the way down to famine. Think Burma, North Korea or Haiti.

The less the mass of people have, in terms of resources of all kinds, the less able they are to organize themselves, while the elite always have a superior ability to organize and a relative preponderance of claims on resources, which only increases as a state becomes more predatory and incomes and wealth more concentrated. Even if the social contract is a strongly negative-sum game, by a counterfactual standard of what is possible, the immediate price of rebellion is the loss of the benefits of social cooperation, and while crises might seem to alter the calculus, by removing the benefits in advance, the usual reaction is to make people more desperate for social cooperation and more authoritarian in their political preferences and attitudes.

It seems to me that only competition among elite factions, which leads those factions to seek mass support, is likely to lead to effective, progressive reform. That can be competition intra-nationally, and/or inter-nationally, with all the dynamic confusion that creates. But, something has to lead at least some of the elite to want mass support badly enough to pay for it with benefits for the masses and organizational capital. It may well be that fear of the masses enters into it, but I doubt that the actual suffering of the masses correlates well with that fear.

For the U.S., at least, no part of the elite depends on mass support. The politicians compete for plutocratic support, end of story. And, the plutocrats feel themselves tied to a globalized system; maybe, the deterioration of the U.S. (particularly as a military power) gives them pause; maybe not. An elite faction, seeking anything other than manufactured mass support a la Tea Party, would face daunting challenges, amid the hazardous temptations of funding from the plutocrats, and a hostile mass media already fully dominated by international corporate business conglomerates.

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Adrian Kelleher 09.16.11 at 8:03 pm

@191

There’s a bit of a leap from Mao to neoliberalism. Jeez. Maybe one or two points in between deserve consideration?

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Harold 09.16.11 at 8:18 pm

Availability of protein is not the only factor correlated to height. Infectious disease stunts growth as well, so availability of modern antibiotics — or lack of crowding are also factors. Cultural preference (sexual selection) also plays a part. Mediterranean cultures do not have the same admiration for tall men, as more northerly ones.

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cian 09.16.11 at 8:30 pm

Harold, true. My point was more that its not a very good proxy for health. I would guess mortality (possibly excluding child mortality) would be a better one.

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Watson Ladd 09.16.11 at 8:33 pm

Okay, use that one also. See what you find. But I bet that the vanquishment of Rindpest, Smallpox, Polio (discontinued due to budget cuts! WTF!) will more then make up for anything else. Life expectancy is rising neglecting AIDS, and with the protease inhibitors even that is getting slowly manageable.

Adrian, that’s true, but economic growth does far more then purely government action to improve the lot of the poor. I was making the remark just so that discounting the GDP figures from Mao’s China would be justified. Those who lie don’t stop.

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cian 09.16.11 at 8:38 pm

Bruce,

India grew faster in the golden age than in the neoliberal era. The argument being made was that neoliberalism has led to unprecidented levels of growth. This isn’t true.

Growth doesn’t necessarily mean that poorer people become less poor. If they get some of the benefits of growth then it does, but neoliberalism tends to lead to policies that make that less likely (crack downs on unions, lower taxation, less schooling, no redistributive policies). In some countries, Mexico and the US for example, most of it has gone to the elites, with the poor seeing almost none of it.

As for Mao, well, we’ll just count the bodies from the Great Leap Forward. How many starving people does it take to convince you that Chinese economic policy was fucked up then?

The dead body period was not one of the growth periods. So despite that insanity, still China achieved greater growth. Not of course that modern China is a neoliberal state and while I suppose one can make the arguments its benefited from trade/capital liberalisation, Japan, S. Korea and Taiwan all grew in earlier periods following the same model, so its not the most convincing of arguments.

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cian 09.16.11 at 8:40 pm

Okay, use that one also. See what you find. But I bet that the vanquishment of Rindpest, Smallpox, Polio (discontinued due to budget cuts! WTF!) will more then make up for anything else. Life expectancy is rising neglecting AIDS, and with the protease inhibitors even that is getting slowly manageable.

And these are all thanks to neoliberalism, are they? This argument, already strange from an alleged Marxist, is getting stranger.

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Simon 09.16.11 at 8:58 pm

@Cian. Why would we discount infant mortality (http://tinyurl.com/3jbgn7c)? That seems like a pretty good indicator, as does life expectancy from birth, which has increased by twenty years despite a doubling of the population. Whatever is responsible for that, I’m quite happy to have it. Thats a lot of years people are enjoying they didn’t have before. As for “growth” being higher under Mao, along with other possible benefits, I’d say what we have now, without severe political repression and mass famine, is preferable, but I’m not sure we’re disagreeing about that. What would you like to see done to improve on what we have today?

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straightwood 09.16.11 at 9:05 pm

Lurching between assessing neo-liberal impacts in the US and developing nations makes the discussion hopelessly intractable. Clarity can be restored by looking at Germany, Sweden, or Switzerland, none of which have has experienced a US-scale surge of inequality, while trading and competing with the developing countries. The rise of income and wealth inequality is not a generalized phenomenon in the advanced nations; it has occurred in countries where the wealthy have been able to exert disproportionate political influence.

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Watson Ladd 09.16.11 at 9:36 pm

Cian, that’s the problem! Time makes assigning causation experimentally very difficult. I’m not claiming neoliberalism is responsible for our increased capabilities to tackle these problems. Rather the decrease of tarif barriers enables poor countries to take advantage of them. In case you are forgetting the original post was claiming that the current economic climate was unequivocally bad because workers in the core capitalist states were suffering. I’m just pointing out its fairly shortsighted to look only at those workers, and life has gotten better since the 1970’s for a lot of people. The only question is what further improves it.

Straightwood, those countries you just mentioned also cut back on the welfare state during the 1970’s, and also deregulated. They weren’t exempt from neoliberalism just because they kept the tax rates high.

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Simon 09.16.11 at 9:43 pm

Brad Delong attributes India’s success to neoliberalism. http://econ161.berkeley.edu/TotW/world_income_dist.html

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Simon 09.16.11 at 9:50 pm

The beginning of my message got cut off, which is that Brad’s piece helps frame the argument I was trying to make, that, as Watson put it, “its fairly shortsighted to look only at those workers [US], and life has gotten better since the 1970’s for a lot of people.”

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straightwood 09.16.11 at 10:12 pm

The notion that there is some kind of conservation law, whereby for developing nations to advance, worker living standards in the US must fall, is refuted by the stability of worker living standards in Germany, Switzerland, and the Scandinavian countries. There is no law of global economic development at work here: it is politics that is causing sharp shifts in income and wealth distribution in the US.

German wages remain high, and German unions remain strong. American labor has been losing ground steadily and worker income has been flat for decades. American politics since Reagan has been the story of the greatest reallocation of income and wealth in our history: from the bottom 90% of the income distribution to the top 10%.

Nobody in Europe is talking about dismantling government medical and retirement programs, yet this a primary goal of the US Republican Party. The Democrats are eager to split the difference with their “opposition,” and differ only in how rapidly they wish to diminish government safety net programs. What we are witnessing in the USA is pure politics (funded by right wing plutocrats like the Koch brothers), not some inexorable economic process.

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Watson Ladd 09.16.11 at 10:32 pm

Straightwood, the European welfare state today is very different from the previous welfare states. Unions have come under attack, but were never as strong as in the US because the US takes a hands off bare knuckles approach to labor disputes: the union fights it out with the boss. In Europe these disputes were settled politically. Regulation is vanishing thanks to the EU. Europe is more like Brad de Long in policy terms then anything else. I don’t identify neoliberalism with massive cuts to the welfare state because that wasn’t what it was about. It was a narrative responding to widespread disenchantment with the way the welfare state claimed to regulate everyone’s life. The rhetoric that supported the welfare state in the 1950’s also supported anti-gay and anti-black legislation.

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Simon 09.16.11 at 10:35 pm

“The notion that there is some kind of conservation law, whereby for developing nations to advance, worker living standards in the US must fall, is refuted by the stability of worker living standards in Germany, Switzerland, and the Scandinavian countries. “

I still don’t know one way or the other, but that this is serves as a refutation is obviously wrong. The US is larger than all the countries you mentioned combined, and our import driven consumption binge of the last thirty years coupled with export of manufacturing jobs to China and India is mirrored on their end by export driven growth and large manufacturing sectors. How can you not see this?

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Simon 09.16.11 at 10:36 pm

That doesn’t mean that we can’t or shouldn’t fight for universal healthcare and other social democratic provisions, but sticking our head in the sand about an emergent global division of labor seems foolish.

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Watson Ladd 09.16.11 at 11:06 pm

But that raises the problem of what kind of consciousness these struggles will produce. Rosa Luxembourg (!) pointed out that a union might oppose the unification of two plants even though such a thing was in the class interest of the proletariat. But what other base for politics is there?

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Harold 09.16.11 at 11:29 pm

Brad de Long’s piece does indeed say that India adopted what could be called a neo-liberal policy. But even after “shrinkage” India’s government bureaucracy (I won’t even mention China’s) is still much bigger than ours. Our is very puny compared to other industrialized economies and is lacking many key personnel who serve a life-saving function in many cases — mine safety, and oil rig inspection come to mind. Our Civil Service needs to be expanded to match our growing population, not shrunk. Likewise our unions, as Watson Ladd pointed out, are not as strong as those of Europe and also need to be expanded, not curtailed, and the Taft-Hartley provisions, put in by reactionary Dixiecrats over Truman’s veto, repealed.

Simons assertions that he still “doesn’t know one way or the other” despite the ready availability of information in books and on the web suggests to me that he is insincere (to put it as kindly as possible). It is hardly a secret that Europe’s economy all together is bigger than the U.S.’s and also that it imports plenty from China and India. Europe’s social safety net and unions mean that its workers are healthier and more prosperous than those of the USA, a fact that stands as proof that Indian and Chinese prosperity do not require the immiseration of workers in other industrialized countries.

Wikipedia says:
The economy of the European Union generates a GDP of over €12,279.033 trillion (US$16,228.23 trillion in 2010) according to the International Monetary Fund (IMF), making it the largest economy in the world. The European Union (EU) economy consists of a single market and the EU is represented as a unified entity in the World Trade Organization (WTO). .

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Simon 09.16.11 at 11:31 pm

Well, I’m not a scholar of Marx (at all) so I can’t comment on whether class struggle is feasible or coherent in today’s economy. I can say that I see many encouraging movements (a shift to more local food sources, physicians united for universal medical care, feminist movements such as SlutWalk) that are making the world a better place and letting people have more positive freedoms and a say in how they live their lives.

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Watson Ladd 09.16.11 at 11:33 pm

European unions are weaker. They engage in strike actions less frequently, often cave to employee demands, and are only now importing organizing models from the US. Also, India is very big. I would be worried if their bureaucracy was smaller. David Harvey points out that 1973 saw a shrinking of the welfare state globably: I’m not sure a small shift one way or another is going to cancel out that pattern.

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Cian 09.17.11 at 8:46 am

Simon: Why would we discount infant mortality (http://tinyurl.com/3jbgn7c)?

Because adult mortality and child mortality are caused by different things. You have to consider them separate variables.

That seems like a pretty good indicator, as does life expectancy from birth, which has increased by twenty years despite a doubling of the population.

It doesn’t have much to do with neoliberalism. The opposite if anything, given that neoliberalism has pushed for cuts in public health spending, the privatisation of water and similar types of spending. And quite poor countries can have good mortality rates due to effective health policy, while richer countries can have quite poor mortality rates due to ineffective health policy.

What would you like to see done to improve on what we have today?

For the developing world? A different economic model. One with capital controls, national industrial policies, high spending on school education, fixed exchange rates. The kind of stuff that actually worked for a number of countries, despite neoliberal orthodoxy saying it could never work. Indeed to take one of the countries that used it successfully for a while, S. Korea, neoliberalism has been a disaster for that country.

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Cian 09.17.11 at 8:46 am

Watson:
Rather the decrease of tarif barriers enables poor countries to take advantage of them.

Despite the fact that lots of countries have used tarif barriers very successfully to develop, while operating in a world with tarif barriers you mean? For developing countries a lack of tarif barriers has usually made it impossible for their native industries to develop

In case you are forgetting the original post was claiming that the current economic climate was unequivocally bad because workers in the core capitalist states were suffering. I’m just pointing out its fairly shortsighted to look only at those workers, and life has gotten better since the 1970’s for a lot of people. The only question is what further improves it.

But you haven’t shown there’s a connection. Firstly EU workers have suffered a lot less, their countries are far more equal and they have a welfare state, albeit one that is being shrunk too. Secondly during the neoliberal period, when things have got worse (or at best remained static) for American workers, global growth rates have slowed. We’ve also had some pretty severe crises in the developing world caused by neoliberal policies on financial flows.

Those countries would almost certainly have grown anyway. The question is whether they would have grown faster with other policies (as I’d argue), or slower. I see very little evidence to suggest faster growth. The other question is whether most people in those countries would have done better with policies that advocated more equal distribution of wealth, investment in public health, education and infrastructure; rather than the policies advocated by neoliberalism which is very much opposed to these things being provided as public goods. I mean the US has had okay growth for 30 years, but most people haven’t benefitted from it. That’s also true of some developing world countries (Mexico in recent years, for example).

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Cian 09.17.11 at 8:49 am

Brad Delong attributes India’s success to neoliberalism.

He does, based upon the fact that the world was in a global crisis in 1975. Now what facts can state about 1975:
+ Massive oil shock
+ Massive developing world debt crisis caused by oil shock
+ Massive crisis in the global financial system caused by the breakdown of the Bretton Wood system, due to America pumping out dollars to pay for the Vietnam war

You could just as easily argue that what happened since then was simply the world recovering from this rather severe shock. People tend to ignore the fact that neoliberalism was imposed after a particular crisis was coming to an end anyway.

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Cian 09.17.11 at 8:52 am

I don’t identify neoliberalism with massive cuts to the welfare state because that wasn’t what it was about.

It was one of the objectives of its architects, so I don’t think this is really sustainable as an argument.

It was a narrative responding to widespread disenchantment with the way the welfare state claimed to regulate everyone’s life.

If you’re talking about Europe, this is a fiction. There was no such disenchantment.

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John Quiggin 09.17.11 at 10:44 am

There’s a big problem here that “neoliberalism” as used in the US debate and by Brad DeLong means something substantially different from what it means elsewhere (reflecting the fact that “liberal” means something almost entirely different as regards economic policy). In the US “neoliberal” refers to a version of US-style liberalism that’s pro-market, but still aims at greater equality or at least helping the poor, and doesn’t support radical retrenchment of the state. Whatever you think of that, it’s not the way the word is used elsewhere or (AFAICT) by most in this thread.

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Steve LaBonne 09.17.11 at 10:57 am

Prof. Quiggin has a point, though when you look at actual policies and their results, the US and non-US “brands” of neoliberalism may be a bit closer than they are in rhetoric.

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Soru 09.17.11 at 11:09 am

Yes, the two main meanings of the word are more or less the polar opposites of each other. One is the historical realisation, in russia, China and elsewhere, that the post-war US economic model was actually better than what they had.

The other is an attempt to deconstruct the 1950s US economic model in favour of an abstract, idealistic and theory-driven account of the world.

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Henri Vieuxtemps 09.17.11 at 11:10 am

Nah, I don’t think so. It’s true that the term ‘liberalism’ has different connotations, only because in the US it passes for ‘the left’. But the term ‘neoliberalism’, the “Washington Consensus” sort of thing, that means the same everywhere.

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Simon 09.17.11 at 3:29 pm

@ Soru. One is the historical realisation, in russia, China and elsewhere, that the post-war US economic model was actually better than what they had.
The other is an attempt to deconstruct the 1950s US economic model in favour of an abstract, idealistic and theory-driven account of the world.

Can you expand? Cheers

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Cian 09.17.11 at 4:46 pm

One is the historical realisation, in russia, China and elsewhere, that the post-war US economic model was actually better than what they had.

In China’s case the model was Japan, S. Korea and Taiwan. They’ve never been hugely impressed by the US model. And the reforms were not that dramatic.

Neoliberal reform in Russia was either a disaster, or the biggest act of larceny the world has ever seen, depending upon one’s perspective.

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bianca steele 09.17.11 at 6:15 pm

Are Louis Hartz, Richard Hofstadter, and Cass Sunstein “neoliberal” in either sense? (I would say they are, in the modern American sense.)

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bianca steele 09.17.11 at 6:36 pm

And even in the David Harvey sense (where nobody is inclined to call another a liberal for supporting labor unions), is it supposed to be that social democrats are now neoliberals because their theories have been incorporated within neoliberal consensus (in something like the American manner, maybe), or because they sold out and abandoned whatever part of their theory wasn’t compatible with neoliberalism in the sense of “classical liberalism”?

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soru 09.17.11 at 8:07 pm

@various

It’s definitely true that Japan etc. (I believe Singapore was a particular influence, and Hong Kong can’t be irrelevant) was the main vector of the spread of recognisably US, or at least Western, economic models to China and India.

It’s also not true that not _everyone_ uses the term in the dual way. But if you look up-thread, you _will_ see some people describing modern China as neoliberal. Which it is in the sense of ‘a command economy is not an ideal, and our problems are not really caused by failure to adhere to that ideal with enough rigour’. Or ‘I used to be Maoist, but I got better’.

‘Washington consensus’ is a more narrow term: in particular, I haven’t heard anyone suggest that Washington should follow the Washington consensus.

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Cian 09.17.11 at 8:51 pm

Soru,
yeah Hong Kong, and Hong Kong trading families in particular, had a lot to do with it. Though Taiwan also had factories and stuff there. It was a far more gradual process than people seem to realise. Really the let it happen.

I don’t know enough about Indian’s economy in practice to comment, though India is a very poor country overall. Quite a bit of Africa is richer, which doesn’t really fit the rhetoric. Bits of it are doing quite well; much of it is desperately poor still and doesn’t seem to be improving significantly.

But if you look up-thread, you will see some people describing modern China as neoliberal.

Yeah and I’ve heard people describe it that way in newspapers. I think its ignorance more than anything. China’s less neoliberal than W. Europe was in the 50s.

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ScentOfViolets 09.17.11 at 9:55 pm

And even in the David Harvey sense (where nobody is inclined to call another a liberal for supporting labor unions), is it supposed to be that social democrats are now neoliberals because their theories have been incorporated within neoliberal consensus

Joe Palooka despises minorities, thinks a woman’s place is at home raising her husband’s children and is rabidly against “government handouts” for anyone who isn’t like him. Joe Palooka also hasn’t worked in the last eighteen months and he wants the President to stop scratching himself and do something about it.

Therefore – of course – Joe Palooka is one of those far-left liberals who have been so successful in blocking the current administration’s efforts to help The People.

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bianca steele 09.17.11 at 10:12 pm

SoV,
Call me uncharitable, but I don’t find it too far beyond the bounds of possibilities that “far left liberal” is exactly how parts of the Serious, Responsible right in this country think of Joe Palooka. They are happy to have his support for their agenda of “reinstituting traditional religious values” (which they plausibly sincerely believe will result in economic prosperity, as much as any neoliberal who believes hard work and education are all it takes for anyone to prosper), and they are equally happy to have the Democrats to kick around so they can make a persuasive argument that that’s where JP belongs.

And why not? Isn’t it awfully exoteric to assume that the Republican-Democrat right-left split is more than a mere appearance, that it is an accurate representation of True Reality? Wouldn’t it be . . . neat . . . if the secret reality behind appearances were more interesting than this?

And best of all: they can privately support anti-racism, too. Only people like Joe Palooka are racists. Joe Palooka should by rights be a Democrat. Therefore, Democrats are the real racists. QED!!!

Sad.

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bianca steele 09.17.11 at 10:16 pm

Or were you going for the “I hate liberals” version: Joe Palooka has been out of work for eighteen months. Therefore he is the kind of person who despises minorities and thinks a woman’s place is at home raising her husband’s children and all that. Therefore he is by rights a Republican–not one of us.? I suspect there’s a “neoliberal” or “Blue Dog Democrat” out there who thinks somewhat along those lines, and they’re screwing it up for the rest of us real left-liberals, but it’s kind of difficult to figure out what your point is.

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dictateursanguinaire 09.18.11 at 3:56 pm

I think some people are making something of a strawman of the ‘false consciousness’ idea. I’m not versed enough in traditional Marxist thought to give an account of what exactly Marx/etc. defined it as — but I think the following rough approximation of it as a hypothesis is plausible and could be made easily falsifiable (and I’d guess would be empirically supported): ‘Many people believe things that are not objectively in their own material best interest. This is due to a misunderstanding of certain issues (e.g. gold standard populism even though a gold standard is very likely not in the best interest of the poor or middle class) and/or moral beliefs (e.g. in the wrongness of redistribution) that conflict with their material conditions’ improvement (e.g. material benefits of redistribution.)’ Of course, you can argue about subjectivity and about relativism and all that and about what the utility-maximizing policy choice is from the implied options. But it seems there’s quite a bit of empirical evidence to support both those ideas. Dan Ariely (Duke economist) did some interesting work (http://danariely.com/2010/09/30/wealth-inequality/) that suggested that Americans are more accepting of less income distribution in part because they are simply uninformed on the actual distribution of income in this country.

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Watson Ladd 09.18.11 at 8:21 pm

Henri, I was using it as the Friedman-De Long program of technocratic reform which was a global process, and which JQ identifies as the US meaning. I don’t know what you were thinking of. Blame it on my Chicago provincialism. Furthermore, 9 points of the Washington consensus centered on avoiding pegs and opening markets, which Washington has in fact been doing.

Cian, I don’t think we can say that post-1975 recover was necessarily going to lead to more then the 2% growth India was known for before then. I’m also skeptical about tarif barriers: Its just another kind of theft from the poor by the domestically connected manufacturing class.

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Cian 09.18.11 at 10:49 pm

Cian, I don’t think we can say that post-1975 recover was necessarily going to lead to more then the 2% growth India was known for before then.

Yeah I should have refrained from commenting on India, as I simply don’t know enough about it. The country’s development policies were pretty stupid, so its possible anything’s better. But at the same time that they weren’t growing, Taiwan, S. Korea, etc.

That said, most of the development has been in Kerala, AFAIK. Which is the part of Indian which has followed the sanest development policy (heavy investment in education, infrastructure and health), by the sort of Marxist government. They haven’t followed, and have pointedly ignored, much of the advice they were given. China I can see becoming a wealthy country given time, I’m more skeptical about India as a whole. Most of it still isn’t really developing all that much.

I’m also skeptical about tarif barriers: Its just another kind of theft from the poor by the domestically connected manufacturing class.

Yeah, but its a form of theft where the country gets richer, and the poor generally benefit quite significantly in that form of development. I mean S. Korea was really poor in the 50s. They were sending food parcels at one point from the North. People went north for the good life, and the North wasn’t really that great even with Soviet money.

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Watson Ladd 09.18.11 at 11:42 pm

Cian, de Long is for those same investments!

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LFC 09.19.11 at 1:03 am

Henri @219
But the term ‘neoliberalism’, the “Washington Consensus” sort of thing, that means the same everywhere.
‘Washington Consensus’ means the same (roughly) everywhere, but as has been discussed at CT before (notably by Ben Alpers, though also others) neoliberalism has a distinct meaning within the context of US politics. This is a well-known, demonstrable fact, going back to Charles Peters at Wash Monthly in the 80s. The two ‘neoliberalisms’ may be closer to each other than some think, as Steve LaBonne suggests, but the term ‘neoliberalism’ has one meaning in the ‘Washington Consensus’ sense and another meaning in the Charles Peters sense. The term Washington Consensus did not even exist when Peters published his ‘neoliberal manifesto’.

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Simon 09.19.11 at 1:46 am

@dictateursanguinaire Thank you for your response and clarification.

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