Archive for the ‘equality’ Category

How to turn recession into depression.

A new IMF report finds that austerity is only the answer if the question is “How can we reduce income, raise long-term unemployment, and make the recession even more painful for everyone?” Of course, that isn’t stopping the Republicans, especially the Tea Party Crowd, from proposing more cuts!

The belief that cutting spending in the face of high unemployment would actually create jobs has been shown to be delusional, if that isn’t apparent from the way the economy has been slowly declining for the past 30 odd years. A record 46.2 million Americans are now below the poverty line, the Census Bureau reported yesterday, and the numbers appear to be growing.

The reduction in incomes from fiscal consolidations is even larger if central banks do not or cannot blunt some of the pain through a monetary policy stimulus. The fall in interest rates associated with monetary stimulus supports investment and consumption, and the concomitant depreciation of the currency boosts net exports. Ireland in 1987 and Finland and Italy in 1992 are examples of countries that undertook fiscal consolidations, but where large depreciations of the currency helped provide a boost to net exports.

Unfortunately, these pain relievers are not easy to come by in today’s environment. In many economies, central banks can provide only a limited monetary stimulus because policy interest rates are already near zero (see “Unconventional Behavior” in this issue of F&D). Moreover, if many countries carry out fiscal austerity at the same time, the reduction in incomes in each country is likely to be greater, since not all countries can reduce the value of their currency and increase net exports at the same time.

Simulations of the IMF’s large-scale models suggest that the reduction in incomes may be more than twice as large as that shown in Chart 2 when central banks cannot cut interest rates and when many countries are carrying out consolidations at the same time. These simulations thus suggest that fiscal consolidation is now likely to be more contractionary (that is, to reduce short-run income more) than was the case in past episodes.

On the other hand, Economic equality equals happiness. So suggests a new study to be published in a forthcoming issue of Psychological Science. In order for Americans to be truly blissed out, it finds, we need to close the gap between our wealthiest and poorest citizens.

The study, lead by Shigehiro Oishi of the University of Virginia, took into account economic and psychological factors when examining data taken from 50,000 individuals between 1972 and 2008. Not surprisingly it was the lower-income participants—those in the bottom 40 percent of the U.S. population—who expressed reduced happiness during periods of greater economic disparity, but their reasons for dissatisfaction were unexpected. Expains Sobczak:

People weren’t unhappy just because their income was lower. Instead, the authors’ analysis revealed that greater inequality was linked to reductions in trust and perceived fairness—and it was drops in those attitudes that made people feel less happy…. Oishi and his colleagues argue that their results may explain why economic growth has not been accompanied by increases in happiness in the United States, unlike in other developed nations. The problem, they suggest, is that gains in national wealth in the U.S. haven’t been distributed equally, and this inequality has caused Americans’ happiness to suffer.

Oishi offers this formula to fix our happiness dilemma: “If the ultimate goal of society is to make its citizens happy, then it is desirable to consider policies that produce more income equality, fairness, and general trust.”

Of course, we can keep going down the road to ruin. The Republicans have shown that they don’t mind trashing the economy by creating fake crises over the deficit and debt ceiling. The problem is that Obama has been caving in to the right and not proposing any real world solutions to this problem. People voted for change with Obama, not more of the same.

Read more:

Posted 14/09/2011 by lacithedog in economics, economy, equality

The Fierce Urgency of Now!

I heard an interesting programme on The BBC World service called The Forum, where they were discussing the long term v. the short term which raised some very interesting issues regarding the US economy and capitalism. Not that many of the things they talked about were revelations, since I say them quite a bit, but they were something which needed to be said somewhere other than this blog. The problem is that USMSM is far too simplistic, even US Public Broadcasting which imagines that it is on par with the BBC.

Illustration by Emily Kasriel: short term thinking imprisoning capitalism and justice.

First off, the US media simplifies the issues, in particular, regarding the US budget. There is too much of an emphasis on making things black and white when the world exists in 256 greyscale. The same goes to US v. THEM in the myriad versions of that theme. Especially when one puts the US v. THEM in religious context. That makes it that WE are RIGHT and THEY are EVIL in a sense of religious fervour. This is why republican lawmakers can take an oath promising “no new taxes” even if it leads to economic Armageddon.

In this viewpoint, the enemy is weak and WE are strong. Compromise is a sign of weakness, not a virtue. So, the lawmakers left and right are obstinate in their positions and not dealing with the issues.  It’s easier to say something is “socialism” and not address the issue than deal with the complicated problems which face the United States.   US Politics has become soundbites:  Bumper Sticker solutions to complicated problems.  Simplistic solutions are meaningless.

You can’t have a sustainable economy when 5-10% of the people own 95% of the assets. The people who own most of the assets will topple the economy if they see it in their best interest.  They are not interested in the public at large.  That is part of the reason that “trickle-down”, “supply side economics”, or whatever you want to call it does not work.  That theory does not factor in greed and selfishness. Anything that addresses the inequality is labelled “Socialism”, or worse, which leads the low information voter to vote against their self-interest.

Michelle Alexander raises some interesting issues on the War on Drugs, in particular that this results in black men losing the civil rights that were gained forty years ago: voting, serving on juries, etcetera. Furthermore, drug crime is on the wain, yet this get tough on crime rhetoric works to channel the systemic racism in the US. This is because “crime” is a code word for “inner city blacks”. Even though Barack Obama is president, there is still systemic racism in the United States.

Next weeks Forum sounds pretty good as well—it’s about political elites!  Of course, that’s another topic that sets me off which is related to this post as well.  Although, the write up says that this programme is about dictators, whereas the US is an oligarchy posing as a democracy.  The masses have been dulled so far into a stupor that they don’t see this.

See also:
BBC World service’s The Forum: 23/07/2011
Wisconsin State AFL-CIO–The Right Wing Agenda

Reason, Change, and the progressive mind

In my post: Why People Don’t Believe Scientists Even When There Is ‘Consensus’ (via A Thinking Person) I mentioned that he explained:

the phenomenon of where people accept studies that are poorly supported over those with oodles of support, peer review, etcetera. That is people are more inclined to believe things that fit their worldview. Change requires effort and is uncomfortable, thus people prefer inactivity and status quo.

In the ideal world, people would be logical rather than susceptible to their emotions. Unfortunately, people are more inclined to let their emotions sway them, no matter how irrational that may be.

I am not alone in wondering this as other progressives, such as George Monbiot recently wrote an article in the Guardian, which was posted to his blog about this phenomenon.

We see someone who is Jewish allying herself with neo-nazis or a person who feels free because he can work 62 hours and not have any vacation which are totally irrational positions. George Monbiot points out that:

[we are] forming an orderly queue at the slaughterhouse gate. The punishment of the poor for the errors of the rich, the abandonment of universalism, the dismantling of the shelter the state provides: apart from a few small protests, none of this has yet brought us out fighting.

The acceptance of a course of action which run contrary to perceived interests is the pervasive mystery of the 21st Century. But most Progressives use the enlightenment model of thinking which holds that people make rational decisions by assessing facts. Psychological experiments are showing that it doesn’t work the way we would expect. Instead of performing a rational analysis, people accept information which confirms our identity and values, and reject information that conflicts with those values. We mould our thinking around our social identity, protecting it from serious challenge. Confronting people with inconvenient facts is likely only to harden resistance to the conflicting idea.

The US Tea Party crowd angrily demands that they be left without healthcare, while insisting that millionaires should pay less tax. People in the US insanely demand their “gun rights” and are easily manipulated with wedge issues. Not that they are the only victims of this irrationality as other countries seem set to abandon the social progress for which our ancestors risked their lives with barely a mutter of protest.

Our social identity is shaped by values which psychologists classify as either extrinsic or intrinsic. Extrinsic values concern status and self-advancement. People with a strong set of extrinsic values fixate on how others see them. They cherish financial success, image and fame. Intrinsic values concern relationships with friends, family and community, and self-acceptance. Those who have a strong set of intrinsic values are not dependent on praise or rewards from other people. They have beliefs which transcend their self-interest.

We are not born with our values. They are shaped by the social environment. By changing our perception of what is normal and acceptable, politics alters our minds as much as our circumstances. In addition, advertising and the media are used to persuade people by obsessive promotion of celebrity, fashion, fast cars, expensive holidays: all of which inculcate extrinsic values. They also suppress intrinsic goals by generating feelings of insecurity and inadequacy – which means reducing self-acceptance.

George Monbiot
suggests that:

People with strong intrinsic values must cease to be embarrassed by them (those who encourage selfishness). We should argue for the policies we want not on the grounds of expediency but on the grounds that they are empathetic and kind; and against others on the grounds that they are selfish and cruel. In asserting our values we become the change we want to see.

I have to admit a dilema in dealing with the severely brainwashed since I am not sure than anything short of a religious experience would convert them from their positions. It will take quite a bit to change our society so that it values community and family, not just work. We must stand up for those who believe there is more to life than the bottom line.

Perhaps the most important point that George makes is that we shouldn’t rely upon politicians to bring about this change as “their ambition must supplant peace of mind, family life, friendship – even brotherly love.” We must assert the values that we believe in and become the change that we seek.

See this report for more on the concept of reenforcing beliefs:

I’m feeling ripped off here!

I keep hearing that Obama is a Socialist, but I have yet to see any programmes from his administration which remotely resemble socialist programmes.  In fact, this rant is caused by receiving a survey from the US Democratic National Committee asking me what I thought about President Obama’s performance: piss poor in my opinion.

The problem is that I want to see more lefty/progressive solutions, but US politics fall amazingly toward the right of the political spectrum.  Socialism my arse if any health insurance I am forced to buy comes from a non-governmental source!  In fact, Politicans in the US are far too friendly with business interests to even remotely be considered “socialist”.  I have yet to hear of any industries being truly nationalised.

Oh, I forgot, “Socialism” is one of those words that the media use to scare people into voting against their interests.  Mention “Socialism” and the average US Citizen will vote to repeal the Thirteenth Amendment, get rid of the minimum wage, and ensure they are REALLY slaves.

Opinione has a couple of good posts about alternative political parties and how they are frozen out of the political process: This and This.  The problem is that the US is a one party system posing as a multi-party system.  US MSM is able to freeze out other opinions and solutions so that US politics has begun to offer pataphysical solutions to real serious crises.  Only NPR discusses the topic of US wealth inequality since mentioning that topic raises the spectre of socialism.  Heaven knows, we can allow the rich to get richer, but if the rest of us see our standard of living decline–remember who owns the media!

Anyway, I want to tell the Democratic National Committee that Obama’s performance sucks because he isn’t a socialist.

And they aren’t a socialist party either!

Feeling “left” out?

Despite all the demonising talk of liberals, socialists, progressives, and other left wing types, there is a surprisingly little attention paid to their activities in the US Main Stream Media. In fact, the astroturf tea party movement receives an out of proportion amount of attention. Of course, that shouldn’t come as a surprise to anyone.

For example, the fact that the Tea Party Convention this February received more coverage than the U.S. Social Forum convention held last June, five days of strategizing, organizing and activism inspired by the 2001 World Social Forum in Porto Alegre, Brazil. The Social Forum, in Detroit, drew an estimated 15,000–20,000 progressive activists from around the country, while the Tea Party Convention in Nashville hosted a meager 600 attendees. Compare the two “activist” gatherings striving for political and social change, one at least 25 times larger than the other—but the smaller one received the larger share of the media coverage. Across 10 major national outlets in the two weeks surrounding each event, the Tea Party got 177 mentions to the Social Forum’s three. Per participant, the Tea Party got 1,500 times as many mentions!

The U.S. Social Forum was subject to a virtual news blackout in the USMSM! Aside from local coverage, the only corporate media mentions found in the Nexis database came from Glenn Beck (Fox News, 6/29/10, 6/30/10)—warning viewers about “socialists and communists coming out of the woodwork to co-opt the youth and spread a dangerous disease”—and Democracy Now! host Amy Goodman, a guest on John King’s CNN show (6/30/10).

The U.S. Social Forum’s archive of news coverage can be found here.

I guess it shouldn’t come as a surprise to me that the left receives virtually no coverage in the USMSM: especially in the current economy. In fact, the choices which are presented to the US public are incredibly distasteful: republican, democrat, or “tea party”. The libertarian ideology is one which receives far more press than it deserves, but no surprise since Rupert Murdoch’s newscorp is a contributor to the Cato Foundation.

On the other hand, it is encouraging that the U.S. Social Forum could raise the level of participation it did despite the MSM News Blackout. An estimated attendance of 15,000–20,000 isn’t bad given that few people heard about this. Not to mention that Detroit is a dead city. I wonder what the level of participation would have been had the U.S. Social Forum had better coverage?

It is encouraging to see movements such as the U.S. Social Forum appearing. I wish that they received far more attention and that they will receive the amount of attention they deserve. Although, as I keep mentioning, the policies needed to address inequality (even if it means more jobs) “will always be controversial since they mean neutralising the advantages of wealth. A prospect that those with money and influence will fight hard against.”

See also:

This is far to complicated for the tea party crowd to grasp.

One of the great points in libertarianism is that it is so nebulous, but uses phrases such as “freedom”, “liberty”, “rights”, and so forth which are ultimately meaningless. But that’s not my point.

My point came in a comment to this post: Why Income Inequality Leads To Recessionary Conditions which I found via this post. Both posts discuss the Harrod-Domar growth model and how it leads to recessions. The Why Income Inequality Leads To Recessionary Conditions post is far more of a economic explanation than one that the masses can understand (yes, I am an elitist).

The real problem is that the western democracies are run upon MONEY. The US is the worst culprit with its elections costing candidates well into the millions to get their viewpoint across. The US has done a wonderful job of keeping third parties and less wealthy candidates from being able to run; therefore, disenfranchising a fair amount of its population. The “closed” primary where one has to declare their party affiliation before voting is also an unfair voting practise. The ultimate effect is that parties which truly represent the people do not exist in US politics.

Thus, we fail to hear anything about issues regarding equality being addressed in the US elections, which is a solution which has needed to be considered for a long time.

Posted 02/09/2010 by lacithedog in economics, economy, equality, inequality

Don’t increase taxes…

Increase the tax base.

What is the tax base? That is the group of people who pay taxes, which is part of the reason that this solution isn’t mentioned by the US political parties.

This solution would be considered “socialist” since what it proposes is getting more people working. Although, if you consider the actual alternative, progressive taxation, where the rich pay far more in taxes, this is more palatable. On the other hand, most tax proposals are regressive and effect the poor far more than the rich (e.g., increasing sales tax).  Preferably, the tax base should be increased in tandem with a good progressive income tax system.

Also, decreasing taxes has proven detrimental to society. Or, as I like to say, become unemployed if you don’t want to pay taxes. So, while people may decry “welfare queens” at least they have money to spend and are contributing to the economy. People who are out of work drain on the society in that they don’t contribute labour, they cut their spending 9or go into debt), and don’t pay taxes. Or to quote Time magazine:

Nearly everywhere, tax revenue plummeted as property values tanked, incomes dwindled and consumers stopped shopping. Falling prices for stocks and real estate have made mincemeat of often underfunded public pension plans. Unemployed workers have swelled the demand for welfare and Medicaid services. Governments that were frugal in the past are just squeaking by. Governments that were lavish in the good times, building their budgets on optimism and best-case scenarios, now risk being wrecked like a shantytown in an earthquake.

Many taxpayers might say that it’s about time spending dropped. But then they start hearing the specifics. Government budgets contain a lot of fixed costs and herds of sacred cows. K-12 education absorbs nearly a third of all spending from state general funds. Add medical expenses, primarily Medicaid, and it’s over half. Prisons must be maintained, colleges and universities kept open, interest on bonds and other loans paid. Real cuts provoke loud howls, and you can hear them rising in every corner of the country. College students have marched in California, firefighters have protested in Florida, and on June 10, Minnesota saw the largest one-day strike of nurses — some 12,000 — in U.S. history.

I am glad to learn that I am not the only voice out there mentioning this viewpoint, but increasing the tax base means:

To Build Tax Revenues, Build New Businesses and encourage growth in the businesses which already exist. There needs to be a tax system that doesn’t penalise business. For example, Philadelphia’s system of taxation is extremely business unfriendly. For example its Business Privilege Tax is most appropriately named since if Philadelphia treats doing business as a privilege, then it will discourage anyone wanting to come there. But the business privilege tax taxes both gross and net profit. This tax is then augmented by another Net Profits tax!

Get the picture?

If Philadelphia taxed business at one reasonable rate, it might just encourage people to do business in the city.

We can add in that Philadelphia has a sales tax which is 1% more than the neighbouring suburban jurisdictions. There are a myriad of complaints on that one. It might encourage people to do business in the city if there were no difference, but if you have a choice of buying at 6% or 7%, where are you going to go?

In other words, Consistent, competitive tax rates, investment incentives for businesses, incentives to venture capital, and the avoidance of one-time levies which cause financial planning problems for small businesses. Of course, one has to wonder why taxation is so skewed as to favour large business rather than entrepreneurs.

But the issue of equitable taxation goes beyond just creating jobs, this includes infrastructure and other aspects of social change. Economic growth is highly dependent on the quality of neighborhoods, educational systems, public transportation, and overall quality of life. of course the policies needed to address inequality (even if it means more jobs) “will always be controversial since they mean neutralising the advantages of wealth. A prospect that those with money and influence will fight hard against.”