Monthly Archives: June 2012

Henry Blodget: Corporate Profits Hit All-Time High, Wages Hit All-Time Low

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Business Insider’s Henry Blodget – not exactly a bomb throwing radical – put up three charts that together are pretty mind blowing. You can see the charts on his site; here’s his summary.

1) Corporate profit margins just hit an all-time high. Companies are making more per dollar of sales than they ever have before. (And some people are still saying that companies are suffering from “too much regulation” and “too many taxes.” Maybe little companies are, but big ones certainly aren’t).

2) Fewer Americans are working than at any time in the past three decades. One reason corporations are so profitable is that they don’t employ as many Americans as they used to.

3) Wages as a percent of the economy are at an all-time low. This is both cause and effect. One reason companies are so profitable is that they’re paying employees less than they ever have as a share of GDP. And that, in turn, is one reason the economy is so weak: Those “wages” are other companies’ revenue.

In short, our current system and philosophy is creating a country of a few million overlords and 300+ million serfs.

And this is after Wall Street blew itself up.

This is completely insane.

Climate Change and the Cost of National Security

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I’ve been rereading Naomi Klein’s seminal article from last year, Capitalism vs. the Climate. One of the things she argues is that we’re going to need to revive the public sphere.

After years of recycling, carbon offsetting and light bulb changing, it is obvious that individual action will never be an adequate response to the climate crisis. Climate change is a collective problem, and it demands collective action. One of the key areas in which this collective action must take place is big-ticket investments designed to reduce our emissions on a mass scale. That means subways, streetcars and light-rail systems that are not only everywhere but affordable to everyone; energy-efficient affordable housing along those transit lines; smart electrical grids carrying renewable energy; and a massive research effort to ensure that we are using the best methods possible.

When it comes to how we pay for it, Klein writes:

Traditionally, battles to protect the public sphere are cast as conflicts between irresponsible leftists who want to spend without limit and practical realists who understand that we are living beyond our economic means. But the gravity of the climate crisis cries out for a radically new conception of realism, as well as a very different understanding of limits. Government budget deficits are not nearly as dangerous as the deficits we have created in vital and complex natural systems. Changing our culture to respect those limits will require all of our collective muscle—to get ourselves off fossil fuels and to shore up communal infrastructure for the coming storms.

Let’s put aside for the moment that at least for the next few years, we could borrow lots of money at rock-bottom interest rates and, by getting the economy going again and creating new wealth, could afford to pay for it pretty straightforwardly. After seeing David Robert’s talk last week, I’m having trouble thinking of our efforts to stop climate change in any way other than as a matter of national security.

I don’t mean in a cutesy, look-how-clever-I-am kind of way. I mean that there is no other probable threat to the lives & property of millions of Americans that’s as big as the threat of massive climate change.

Saddam Hussein? Even if he had actually had weapons of mass destruction, he wouldn’t have even been in the same league as the threat to our lives & livelihood posed by massive climate change.

And when it came to ousting Saddam Hussein, money was no object. Nobel economist Joseph Stiglitz calculated that between direct costs, interest costs and increased VA costs, the total money we will have ended up spending on the war is around $3 trillion.

So if we can afford to spend $3 trillion against a tiny/nonexistent threat to our survival, how can anyone say with a straight face we can’t afford to spend trillions of dollars to protect us against one of the biggest threats to national security we’ve ever seen?

For that matter, there’s no reason we couldn’t pay for a good chunk of protecting our nation from climate change by taking it out of money we are spending against other threats to national security – we spend so much on the military that the Pentagon still doesn’t know where its money is going.

Money isn’t the issue. The issue is will.

UPDATE: in case I wasn’t clear, I wasn’t saying that Naomi Klein doesn’t understand that money isn’t the issue – the main point of her article is that US right-wingers see climate change as a fundamental challenge to their extremist free-market ideology.

David Roberts: If We Don't Get Serious about Climate Change, We Are Seriously Screwed

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Grist’s David Roberts did a terrific TEDx video that strips away all the complexities, nuances, and games to explain in 15 min. why if we don’t get our act seriously and gear around climate change, we are screwed.

After seeing it, I feel like an idiot that I haven’t been spending more of my time pushing around climate change – and connecting the dots to jobs, justice, and all the other interrelated issues I’ve been focusing on. So, time to get my Green on.

Endless Meetings about Breakfast Cereal

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At Crooked Timber, they’ve been having a interesting book club discussion of Red Plenty, a novel about why central planning failed in the Soviet Union. Part of what they’re wrestling with is, did planning fail because of the particular failings of the thuggish, totalitarian Soviet state? Or is any form of central planning, including a truly democratic form of central planning at the heart of many visions of Socialism, doomed to fail?

I’m not a Socialist (I’m not sure what I am). But I think that before anyone tries to figure out whether a democratic centrally planned economy can work, first we ought to ask, would we want it to?

Or to put it another way, would you want to spend the rest of your life in endless meetings about breakfast cereal?

I think most lefties – and for that matter many liberals and even some moderates – believe that ordinary people need a whole lot more say over the major decisions shaping our economy than we’ve got right now. The balance of power today is seriously out of whack.

But in an ideal world, just how much say would we want? Do we want to live in a world where part of our solemn responsibilities as citizens would be to decide together how much & what kind of breakfast cereals were being produced every year? And toothpaste, and sneakers, and paperclips, and computers, and socks, and forks, and boxes, and light bulbs, and paint, and paint brushes, and so on?

Let’s try a thought experiment. Wherever you are right now, stop and take a good, detailed look at your surroundings. Imagine that as a member of a truly democratic society, you were responsible for both voting on and discussing the quantity, quality, etc. of every product or service you see – not just today but for the rest of your life.

Imagine the number of planning meetings – and the endless stream of tweets of “dnt forget, comments on brkfst optns v7.5 due Fri 3PM!” The never ending Facebook discussions: are more sugary breakfast options okay so long as they use natural, sustainably grown sweeteners? Should we encourage more people to make their own oatmeal from scratch by subsidizing the cost of oat grinders (if you think I’m kidding about this last one, check out this video from Chow.com’s “You’re Doing It Wrong” series)?

Now check your stomach. Are you feeling vaguely nauseous?

Mind you, there are some people who like talking about breakfast cereal and who would enjoy having meetings every year to discuss it. Like the characters in Judd Apatow movies. Or one of your friends who’s an “environmentally conscious” parent and who, with the fervor of the football fanatic discussing whether their team will make the playoffs, always wants to engage you in a conversation about the content of their child’s current baby food.

Now imagine being stuck in meetings about breakfast cereal. With both of them. For the rest of your life.

The economy would need to produce an awful lot of high-quality pot to make this work.

So before anyone spends too much time worrying about whether a truly democratic, fully centrally planned economy is feasible, I think we need to have a real discussion about just how much control – and what kind of control – we really want over the economy. I don’t have a clear sense as to what I think the right balance is. But personally, I hope that a fully centrally & democratically planned economy isn’t possible. Because I sure wouldn’t want to live in one.

Brain Dump Iteration #3b: We're Not As Smart As We Think We Are

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Here’s Part B of Iteration #3: We Are Not As Smart As We Think We Are. After this, I promise to try to go back to writing something that will make sense to somebody other than me. For the moment, it’s just too damn tricky to think this through & be intelligible at the same time.

II. We’re Not As Smart As We Think We Are
- The argument against: “it’s too complicated” – “central planning” can’t handle the millions of decisions that a decentralized market can, law of unintended consequences.
- But that’s true for any intervention, including so-called “market-based” (e.g., Wall Street “deregulation,” European experience with Cap And Trade)
- The alternative: deal with the problem the same way businesses & organizations do everyday: by admitting that we’re not as smart as we think we are & tackling it head-on.

1) Everyone Should Have a Real Say
-How decentralizing many – but not all – decisions with bottom-up democracy can help address uncertainty (e.g., Open Source’s With 1000 Eyes All Bugs Are Shallow)
- if we assume it’s too complicated, set goals centrally but often – not always – decentralized creating solutions
- decentralized vs. centralized
- What’s the role of central? When we know what we need to do (e.g., lead paint), when we need big scale (e.g., BAR T), regional Justice (black folks, Alaska oil revenue “owned” by Alaskans)
- won’t get stepped on
- charettes vs. Parklets

2) Create Feedback Loops & a Culture of Accountability
- Did we make the decisions we thought we made?
- “more savings = investments = more good jobs” vs. whether good jobs actually get created
- Scale: getting real about what it takes to hold accountable, not just “small is beautiful”

3) Spiderman’s Dad: With Great Power Comes Great Responsibility
a) Create Structures to Promote Real Decision-Making: Participatory Budgets, Charrettes, Etc.
- “Thinking like an owner” is tough (e.g., participatory budgeting)
- Easier with Everyone Should Have a Real Say
b) Balancing creation & Justice
- Practitioner’s Perspective (Golden goose)
- Neighborhoodland food trucks vs. good pay & benefits

Brain Dump Iteration #3a: We Have More Power to Shape the Economy Than We Think We Do

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Iteration #2 was lumpy but useful. Given that this framework is still pretty complicated, I’m going to split the next iteration into 2 parts. Today: We Have More Power to Shape the Economy Than We Think We Do.

Question: if our economy isn’t “natural” and wasn’t inevitable, then what? What is an alternative that would actually work?

Answer: we have more power to create a just economy than we think we do – but only if we embrace the fact that we’re not as smart as we think we are.

I. We Have More Power To Shape the Economy Than We Think We Do

1) “Shape the Economy”: What Kind of Community Do We Want to Live in?
- How do we know we have more power than we think we do? Because of what we’ve already done
- Reality: we already massively intervene in the economy
- “Market failure”: with this much intervention to take care of massive market failure, is “market failure” a useful way of thinking about it?
-Most successful massive interventions in the economy were not to fix “market failure”: Japanese/Korean industrial policy, creating the Internet, building suburbs, creating the credit-based 20th-century economy.
- creating jobs, creating markets
- Example of hypocrisy: government-created sprawl isn’t “government,” smart growth is
- When we act, they say we’re “job killers”; when they do, it’s “market forces”
- So instead of talking about fixing “market failure,” ask, where are we now? Where do we want to go? (Don’t know how far is possible – that’s Part II of the framework)
- Then Stack the Odds in Favor of the Good Guys

2) “We Have More Power”: Power & the Movement Perspective
- Instead of pretending power isn’t in the economy or treating power as “icky,” ask, how is power used in the economy? Who has it? Who should have it?
- Movement Power vs. Consumer Power
- Individual personal virtue vs. mobilizing/turning off other people through your actions
- “if we all do our part” vs. Scaling up
- Individual decisions matter, but Movement Perspective sees them differently: sees people as part of social webs of influence, sets goals of number of individuals needed to win (e.g., you choosing which shoe to buy vs.counting votes needed to win an election)
- Movements vs. Institutions