Category Archives: Economy

Why we should say working class instead of middle class

David Rosen writing in Counterpunch makes a good point. 

In the postwar era of the great recovery, the working-class became the middle-class and lost its progressive meaning. Three factors shaped this development. First, the consumer revolution and suburbia fostered the celebrated middle-class prosperity. Second the new social sciences turned social relations into hollow income categories and consumer hucksters promoted aspiration rooted in accumulation and conformity. And, third, the Cold War at home, signified by Sen. Joe McCarthy, HUCA and the execution of Ethel and Julius Rosenberg, imposed social order.

Oil Tycoon Harold Hamm loses billions and I’m not sorry for him

So Bloomberg news wrote a story about an oil magnate by the name of Harold Hamm and how he has lost billions of dollars since oil prices have dropped. I guess they feel that this is news and that we should feel sorry for him. Well, the truth is I don’t feel sorry for Mr. Hamm. I have no sympathy for this 1 percenter whatsoever.

Investors have been spooked as oil has declined to a five-year low. The downturn comes after prices above $100 a barrel sparked a boom in output from U.S. shale formations that helped create a glut of supply.

Hamm’s wealth, which is largely tied to the fate of Oklahoma City-based Continental, has fallen by more than $12 billion in three months, according to the Bloomberg Billionaires Index.

Cry me a river. As Rick Smith has said, so what if Hamm’s wealth has decreased by this much? So he doesn’t get to put cheese on the hamburger–he is still eating! There are people fighting for their lives in San Francisco, displaced by the gentrification of the area due to Google, Microsoft, Facebook, Twitter et al. There are people working for retailers like Walmart and fast food restaurants like McDonald’s who can’t earn enough to support themselves. There are people who are just fighting for some respect on the job! They want paid sick leave to take care of their families, humane scheduling that doesn’t treat them like cogs in a machine and they want an end to wage theft by their employers.

So to Mr. Hamm I say sorry you’ll survive but this is class war. Inequality is running rampant through society and people are hurting. Unless something is done we’ll start seeing more protest and more civil unrest. Lastly, Harold Hamm is involved in an industry that is doing nothing but destroying the planet. They refuse to help us move past fossil fuels and towards a sustainable energy source.

Photo by Rainforest Action Network

The IMF says global growth may never reach pre-2007 levels again

The International Monetary Fund is cutting their global growth forecasts.

“The pace of global recovery has disappointed in recent years”, the IMF said, noting that since 2010 it had been consistently forced to revise down its forecasts. “With weaker-than-expected global growth for the first half of 2014 and increased downside risks, the projected pickup in growth may again fail to materialise or fall short of expectation.”

The bank thinks that the Eurozone and deflation will be a major hinderment to global growth in the future.

To me it is clear that the focus on growth above all else has had its benefits but also a lot of negatives. Climate change is one of the more noticable problems associated with our fixation on growth.

In Thomas Pikkety’s book Capitalism in the 21st Century he mentions that for the years pre-dating the 20th century levels of growth were below 1 percent for many a year. Then the Industrial Revolution happened and global econonomic growth took off.

Developing countries like China and India will usually have higher growth rates than developed countries until they are finally developed and their super-charged economies enter a cooling off period. Yet even a developed country like the United States with a lower growth rate can accomplish major things–like creating the Internet for example.

So growth is not the end all be all. We’re seriosuly going to have to discuss how we want the future of the world to develop. The global growth rate will be lower but we should also be thinking about it being sustainable.

Photo by International Monetary Fund

Student loan debt may finally be hurting the overall economy

Our higher education system is dysfunctional. Tuitions are unreasonably high and most colleges and universities these days care less about education and more about building multi-million dollar complexes on their campuses. This results in more students going into debt to pay for a higher education that doesn’t result in gainful employment after graduation anyway. For some time now I suspect that financial analysts probably felt that student debt would not lead to a financial collapse on par with the subprime meltdown of 2008. This is government backed debt and the government will extract its pound of flesh through garnishment if need be. Therefore people will pay one way or another. While the risk of massive defaults and a meltdown will not occur, what this massive student debt can do is bleed into other sectors of the economy.

Higher debt burdens will defer home purchases for many borrowers while requiring others to buy a less expensive home in order to qualify for a loan or save for a down payment. The paper estimates that every $250 per month in student loan debt reduces borrowers’ purchasing power by $44,000, and since 2005, some 3.8 million additional households have at least $250 per month in student debt. For now new home sales are impacted but what about other big-ticket items like vehicles? I say that you will start seeing car sales slow too. I highly recommend people see the documentary Ivory Tower. After watching this film if you don’t walk away angry then you’re probably in the 1 percent. via Student Debt Could Reduce Home Sales 8% This Year, Report Says – Real Time Economics – WSJ.

Photo by thisisbossi

How China will finally beat the United States of America

I look at it as a government and economy being inclusive versus being extractive. This was the main thesis of the book Why Nations Fail.

The question of work styles may become intense as China becomes a developed country. China is a mercantilist country led by an elite focused on maximizing the country’s economic wealth and dominance. The U.S. is different in that it tries to maximize its elites wealth (via Congress), but not the country’s wealth (i.e. its people’s potential). A mercantilist country could out perform elites who are more focused extracting wealth from its people then developing them. This contradiction will make for increasing political fractures in the U. S. I’m not saying China is a paragon of democracy or that the U.S. is an authoritarian regime, but our economic system is rife with inequality and it extracts wealth from one class, those in the 99 percent, to give to those in the 1 percent and the 0.1 percent. If China is truly focused on maximizing wealth for the entire country and not just its elites, then we will see much different country in the next 50 years as compared to the United States. via The Future of Work.

Photo by Christian Junker – AHKGAP

Three cheers for Alexander Hamilton

I was happy to see this essay in Jacobin magazine that echoed the sentiments I’ve had since reading Ron Chernow’s amazing book on Alexander Hamilton a few years ago.

Basically the piece was saying that there was more for the left to get out of Hamilton than his rival Thomas Jefferson which I agree with. Personally I would’ve seen myself as a Federalist back then.

I also agree with the economic vision that Hamilton had for America.

This American dirigiste model has had a major impact on global history. As the South Korean economist Ha-Joon Chang has pointed out, every successful case of industrialization has used some version of the Hamiltonian model. A line runs directly from it to the postwar rise of the developmental states of East Asia. During Henry Clay’s heyday as John Quincy Adams’s Secretary of State, the German political economist Fredrich List — who would formulate the developmentalist theory of “infant industry” protection — moved to Pennsylvania where he soaked up the statist ideas of Hamilton and Clay.

We’ve strayed from the Hamiltonian economic model in favor of trickle down economics, neoliberalism and austerity.

Why don’t conservatives support the alternative energy economy?

It’s a paradox as far as I’m concerned. Conservatives are supposed to be pro-business (and anti-labor for that matter), yet they continuously demean any type of alternative energy subsidy and the entire industry for that matter. You’ve even had Republicans in the past actually fighting to keep inefficient lightbulbs in use. They also appear to be perfectly content with keeping the current panoply of fossil fuel subsidies in place.

Yet here we are in the year 2014 and the alternative energy economy is actually doing phenomenal things.

More than 12,500 clean energy and clean transportation jobs were announced in 29 states between April-June. Arizona, California and Michigan led the country in new clean energy job announcements, but other states ranging from Utah to North Carolina rounded out the Top 10.

If you continue to read this article you’ll see that there are some huge projects planned for the future. With all the economic activity being generated it’s truly a shame that ideology prevents those on the right from acknowledging how great all of this is for America and its future.

Is Ferguson a denial of the class struggle?

The author of this essay is on to something when he says:

There is no Paul Robeson, W.E.B. Du Bois, or A. Philip Randolph among today’s black leadership, neither is there Dr. King to mount the essential two-pronged attack on the American structure of class rulership and widespread poverty, directed against war and militarism, and, at his death, embarked on the Poor People’s Campaign at home, both fraught with meaning for the liberation of class consciousness beyond the confines of race.

While there is no denying the racial aspect of the struggle in Ferguson, MO which is comprised of racial profiling and police brutality. The class struggle must also be highlighted. It is the underlying issue.

via Race, Religion and the Denial of Class.

Janet Yellen says economy still in recovery. She’s right.

Here’s what Chairman of the Federal Reserve Janet Yellen had to say about the current state of the U.S. economy:

The jobless rate has fallen faster than expected, but Yellen said the economic disruption of the last five years has left millions of workers sidelined, discouraged, or stuck in part time jobs – facts that are not captured in the unemployment rate alone.

It is because of this weak economy that Janet Yellen doesn’t want the Federal Reserve to raise rates although there are some on the board that disagree. They’ve already cut back on quantitative easing which might be all that can be  done for now.

The only issue I have with all of this rate lowering and past QE is the fact that main street hasn’t really benefited from these low rates. Yes it’s cheaper to get a loan now but banks aren’t willing to lend.

My only hope that wat the Fed is doing is at least benefiting the economy on some macro level. Maybe its allowing a few large firms to borrow money cheaply and take on larger projects that create some jobs for people?

In the end main street is still hurting but Wall Street is fine. Thanks to all the bankers and bank sympathizers in the federal government. You can just look to the BLOB on Capitol Hill.

Photo by International Monetary Fund

Why the DC cab driver hates Uber

What can be done to fix it?

There’s been a lot of stories written about Uber and the push back it has received from the taxicab industry. All over the world there have been mass protests by cab drivers angered by Uber and its ride sharing service UberX.  Additionally, Uber has run afoul of the laws governing drivers for hire in different areas.

To put it simply, these cab drivers feel that UberX and UberXL its SUV sibling, is undercutting them by allowing non-commercially licensed drivers to transport passengers, even though they are limited only to people who use Uber’s smart phone app and cannot pick up street hails. It is also worth noting that Uber provides its non-commercial ride sharing drivers with insurance for the driver and every passenger in the car, up to 1 million dollars per incident.

Uber is more than just ride-sharing as it has a number of different services that do utilize commercially licensed, insured and registered drivers (Uber Taxi, Uber Black Car and Uber SUV). Actually, when Uber first started, all it offered was the luxury sedan service (now known as Uber Black), which people in D.C. were fanatical about using due to the smart phone app technology. They also didn’t seem to mind paying more for the luxury ride vs. taking a regular taxi.

What the taxicab industry has been slow to recognize is that Uber did what the industry should’ve been doing all along and that was innovating and providing better customer service. While there were alternative smart phone apps on the scene like Taxi Magic, the truth is that the app is only part of the equation.

When you talk to customers their major beefs with your average hack is that they can be impolite, keep dirty vehicles, take a very long time to pick someone up if called over the phone, ignore your hails which can be due to a number of biases and they can refuse to take you somewhere if they feel it is not in their interests.

With Uber you don’t have to hail or call anyone. The smart phone app is so revolutionary in that you can see where your driver is and how long it is going to take for them to arrive at your location. Drivers using Uber cannot discriminate and they have to take you to your destination. Lastly, there is no need to exchange money as payment is done through Uber’s app online (the downside is you cannot tip). The professionalism and politeness of Uber’s ride sharing and commercial drivers have also been noted by customers, hence the second part of the equation being customer service.

Despite all that I’ve just pointed out about taxi cab companies and taxi drivers there are reasons to care about these drivers and their futures as working people.

The daily life of a taxi cab driver in the District of Columbia (and Maryland and Virginia for that matter) can be one filled with quite a number of obstacles. Many drivers work 12 hour shifts. Most cab drivers before Obamacare didn’t get healthcare benefits because they were independently registered or their cab company didn’t provide them. Some drivers are charged an enormous amount of money, either by cab companies or vendors, to keep equipment in their cabs which allow them to accept credit cards and operate taxi meters. In addition if they are employed by a cab company that company might also be passing along the credit card transaction fees to the driver.

In DC cab drivers are facing attacks from many different directions. They have to deal with a Taxi and Limousine Commission that is hostile to cab drivers, especially if they are of a foreign nationality. There is also a push underway to rid the city of the independently registered cab driver in favor of one that must work under a central cab company. I’m told that the TLC is no longer issuing these independent registrations. This actually prevents new taxi drivers from signing up to use Uber and its Uber Taxi service.

So in addition to the pressures cab drivers currently face it’s only natural that they would look at something like Uber unfavorably. They go through a lot to get the approval to drive a taxi and are now being upstaged by non-commercial drivers.

One of the overlooked issues of the Uber-Taxi driver divide is that of the cab company. They can often be the reason why taxi fares are as high as they are compared to the fares of UberX and its other services. I’ve spoken to former taxi drivers turned Uber Black drivers who are very happy to have been alleviated of the repression of the cab company. Sure, they have to go out and get their own vehicles but they have more freedom and earn a larger share of the revenue coming from fares.

Whatever is to be the fate of the modern taxi driver, it is in our best interests as members of a larger community to ensure that we don’t leave them behind. They require a level playing field to operate.  This doesn’t mean the repression of new technologies and new ways of doing business, but we have to take taxi drivers into account when devising new regulations.