December 11, 2018

WWII ended the Great Depression, not New Deal economics

Filed under: Counterpunch,financial crisis,WWII — louisproyect @ 2:04 pm

My views on these matters were first put forward in a blog post titled “Did World War Two End the Great Depression”, written in September, 2011. It cited a Paul Krugman Op-Ed piece written in 2008 and titled “Franklin Delano Obama?”. Krugman made the case that “What saved the economy, and the New Deal, was the enormous public works project known as World War II, which finally provided a fiscal stimulus adequate to the economy’s needs.” With respect to the public works projects mentioned by Al Ronzoni, Krugman described them as “largely offset by other factors, notably a large tax increase, enacted by Herbert Hoover, whose full effects weren’t felt until his successor took office.”

In Krugman’s view, FDR was someone who “thought he was being prudent by reining in his spending plans.” Sounds rather like Obama, doesn’t it? In fact, Krugman’s op-ed was a cautionary tale warning Obama, the supposed new FDR, not to be as tightfisted with government-funded recovery programs as occurred during the New Deal unless he wanted to take “big risks with the economy and with his legacy.”

Well, given the high costs of another world war (after all, those H-Bombs can make a real mess of things), Obama didn’t even create a public works program—the only option open to him. In fact, as I have argued, Obama was inspired more by Herbert Hoover than FDR. As someone who relied heavily on U. of Chicago economists, he was not likely to embark on a new New Deal despite all the advice he got from Paul Krugman, The Nation Magazine, Huffington Post, et al.

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October 3, 2017

The political economy of hurricanes and debt

Filed under: climate,colonialism,financial crisis,Puerto Rico — louisproyect @ 8:53 pm

Yesterday I interviewed Ian Seda-Irizarry, an economics professor at John Jay College, about the situation in Puerto Rico, where he was born and raised, The interview covered the hurricane aftermath as well as the ongoing economic disaster that makes recovery all the more difficult. Despite the grim situation, there are signs that a new left is emerging in Puerto Rico that prioritizes class demands and a new approach to the age-old question of the island’s colonial status. Ian recommends the following articles as good background on Puerto Rican politics and economics:

1) http://www.80grados.net/wp-content/uploads/2016/02/Social-Desintegration-in-Colonial-Puerto-Rico.pdf

2) https://www.telesurtv.net/english/opinion/Politics-Primaries-and-Crisis-in-Puerto-Rico-20160602-0035.html

3) http://www.fsdrecertification.com/sites/default/files/contentgroups/economics/SedaAJuntaforPuertoRico.pdf

4) http://www.fsdrecertification.com/sites/default/files/contentgroups/economics/02-Ian_1.pdf

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January 29, 2017

Divided We Fall

Filed under: Film,financial crisis,trade unions,ultraright,Wisconsin,workers — louisproyect @ 9:03 pm

If victorious strikes by teamsters in Minneapolis in 1934, by San Francisco dockworkers the same year and auto workers three years later in Flint define the rise of the American working class as a powerful force to be reckoned with, three confrontations between labor and capital in our lifetime mark its retreat.

In 1981 Ronald Reagan fired 11,000 airline controllers who had gone out on strike as a signal that the partnership between labor and capital was a thing of the past. Four years later, the meatpacking workers organized as P-9 struck Hormel in an effort to maintain the good-paying jobs with generous benefits that were seen as essential for a decent middle-class existence. With the defeat of P-9, jobs at Hormel and other meatpacking jobs became non-union, low-paying and dangerous with a predominantly immigrant workforce made up in large part of vulnerable undocumented workers.

While not a strike as such, the union-led struggle in Madison, Wisconsin of 2011 was launched to prevent teachers and other public service employees from being “Hormelized”. When Governor Scott Walker introduced a bill in January of that year that would cut wages, benefits and eliminate dues checkoff—a mechanism that is essential to keeping a union functioning in a closed shop environment—over 100,000 people took part in a “kill the bill” movement that adopted many of the tactics of the Occupy Wall Street movement that erupted a couple of months later.

For those not old enough to have bitter memories of the P-9 strike, I recommend tracking down Barbara Kopple’s 1990 film “American Dream” that unfortunately is nowhere to be seen on VOD but that can be borrowed as a DVD from better libraries, such as Columbia University’s. Kopple is also the director of “Harlan County, USA”, another documentary about labor struggles, in that case a 1973 strike by coal miners in the legendary pro-union county that voted 8-1 for Donald Trump in November.

Kopple has declined in recent years, stooping so low as to make a documentary about Woody Allen in 1997 and following up with a docudrama about the Hamptons in 2002 that was a Yankee version of British soap operas like Upstairs/Downstairs or Downton Abbey.

Fortunately for us, a new Barbara Kopple has emerged, namely Katherine M. Acosta, the sociologist and obviously politically advanced director of “Divided We Fall”, a film about the Wisconsin labor struggle that I had the good fortune to watch yesterday. For now, the film has not found a distributor and hopefully this review will inspire some enterprising party to invest in this film that is equal to Kopple at her best and moreover a story that demands the attention of everybody trying to understand how we have ended up with an orange-haired baboon in the White House determined to throw us back to the 1880s. Essentially, the defeat of the public workers struggle in Wisconsin involved all of the players and all of the contradictions that led to the defeat of Hillary Clinton and the nightmare we are now living with.

Even if you’ve read every article about the Wisconsin struggle as it was unfolding in 2011, nothing comes close to seeing exactly how young people and workers rallied to the capitol building to put their bodies on the line to oppose Scott Walker’s anti-labor assault that was as calculated a bid to destroy organized labor that year as Reagan’s firing of the airline controllers was in 1985.

Acosta draws from a wide variety of interviewees, from relatively lowly teaching assistants at the U. of Wisconsin, including FB friend Elizabeth Wrigley-Field, who is a brilliant Marxist analyst in her own right, to sociology professor Rahul Mahajan, who I first ran into in the mid-90s as a graduate student on the list that would evolve into Marxmail. Rahul is witty, wise and as informed in class analysis as Wrigley-Field. So, with people like that in the front ranks of the occupation of the capitol building and in strategy meetings, what could have gone wrong? The title of the film says it all. The movement was divided and as such bound to fail.

There were basically three blocs involved within the workers’ camp but each with its own priorities. Those closest to the student movement like Wrigley-Field and Mahajan were revolutionaries, to put it bluntly. They saw the fight against Scott Walker in exactly the same way that Farrell Dobbs saw the fight to organize truck drivers in 1934, as the first step in building a new (in this instance, renewed) labor movement that could fight effectively for the interests of workers in general and lead ultimately to a transformation of American society.

In the middle were union officials at the local level who had to stand up for the rights of their membership, those people who would be forced to pay more for health insurance and face wage stagnation. Like the average member, the officials had a class status just one step above precarity. Losing a job as a clerical worker in an AFSCME union could plunge some into penury and worse. The officials often came directly out of that social layer and knew what was at stake.

The head of AFSCME, who was led off in handcuffs toward the end of the film, was Marty Beil. Beil, who died two years ago, was a bear of a man with Michael Moore’s physique (or lack thereof) who understood the importance of AFSCME better than the top officials in Washington. Formed in Wisconsin in 1932, AFSCME was the first and foremost organizer of predominantly white collar clerical government jobs even though it grew to include firefighters. It is of some interest that Beil’s first job was as a probation and parole officer, not exactly the sort of position that you would associate with labor militancy. As the film makes clear, the police presence at the capitol building was initially drawn from campus and local cops who were much more sympathetic to the struggle, even to the point of marching in support. Such contradictions might vex those addicted to Marxist schemas but one that the film skillfully engages with especially as these cops were replaced by state troopers who had no use for workers at all.

Another powerful presence from the local labor movement was John Matthews, the president of the city’s public schoolteacher’s union who combines a soft-spoken Midwest speaking style with a willingness to openly confront the national leadership of his union. These big shots parachuted into Madison and stayed at a luxury hotel, where they mapped out a strategy to settle the strike on terms favorable to Scott Walker.

For reasons probably having something to do with being reluctant to defend their role in in Acosta’s film, they are not heard from. But you don’t need to hear from AFSCME president Gerald McEntee to know what agenda he would follow in Madison. In 2009, McEntee was being paid $480,000 per year. When you make that kind of money, plus fringe benefits such as staying at Madison’s best hotel on the membership’s dime, you tend to lose track of the sort of class antagonisms that drove the average worker to rise up.

Another problem was the reliance on Democratic Party “friends of labor” who were just as eager as McEntee to deescalate the struggle in Madison and get things back to normal, even as they were giving speeches in support of the unions and in working to undermine Republican attempts to steamroll through Walker’s legislation.

If the film consisted of nothing but talking heads, it would still be worth watching, particularly to hear from Wrigley-Field, Mahajan and other radical students and professors at the U. of Wisconsin. But beyond that, Acosta was present throughout the occupation directing her film crew to capture the Occupy Wall Street type drama of those sitting in. That footage combined with the commentary by people involved with the struggle make up for an unforgettable movie experience that screams out for nationwide distribution.

The film makes clear that occupy type tactics could only go so far. The Republicans had a majority in the state legislative bodies and would ultimately prevail. Of course, the real question is why a shit-hook like Scott Walker could ever become governor of a progressive state like Wisconsin.

Once the occupation ran out of steam (helped along by “kettling” tactics by the state troopers), the trade union officials and Democrats thought that the answer was to replace Walker. Instead of considering ways to block the legislation by either a general strike (probably an over-projection by some leftists) or guerrilla tactics in the workplace like “sick-outs” or working by the rule, all the energy went into the recall campaign.

But the recall was to no avail. Walker was reelected. Why?

He was reelected because he was to Donald Trump as his Democratic Party opponent Tom Barrett was to Hillary Clinton. Walker had defeated Barrett in 2010 and by even more votes in the 2012 recall election. This has to do with Barrett running exactly the same kind of campaign as Clinton, one geared to the “swing voter” and careful to avoid any association with trade unions, sit-ins and the like.

But looking past the Wisconsin context, which the film understandably did not try to address, I would suggest that there was an important element that militated against success. As the film’s title implies, there were problems of being divided—but not just within the labor movement but in the Wisconsin population as a whole. Seen as benefiting from Democratic Party largesse, the taxpayers felt that these unions were a privileged layer. If Wisconsin was facing a fiscal crisis, why shouldn’t teachers et al not have to “chip in” to bail out the state?

The fiscal crisis, of course, was rooted in a system that included “starving the beast”. State budgets were in the red because taxes kept being cut. If the Democratic Party had stood up to the rich, returned tax rates to what they were under Eisenhower, pushed through single-payer health insurance and stood up for the rights of homeowners who had been devastated by the subprime meltdown of 2008, maybe the voters would have been more motivated to back the Democrats. This would have required a total transformation of the labor movement that might yet be in the offing as we sail into the stormy seas facing us over the next four years. As Harriet Rowan, one of the politically astute graduate students interviewed in the film, put it toward the end of the film, we can’t wait for the leadership to catch up with the people.

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May 30, 2016

Is America committing slow-motion suicide? A look at the decline of CUNY

Filed under: economics,Education,financial crisis — louisproyect @ 5:19 pm

Since my wife is a faculty member at Lehman College, the picture of its library in yesterday’s NY Times captured my attention:

Lehman and other City University of New York colleges were profiled in an article titled “Dreams Stall as CUNY, New York City’s Engine of Mobility, Sputters” that like so many in the newspaper recently depicts an American in deep if not irreversible decline. Lehman’s library was a case in point:

At Lehman College in the Bronx, Robert Farrell, an associate professor in the library department, said the library’s entire book budget this academic year was $13,000, down from about $60,000 a decade ago. Because the roof has been chronically leaky, about 200 books were damaged during a rainstorm three years ago; a tarp still covers some volumes.

Mr. Farrell also said that the library has had to reduce its spending on academic journals and database subscriptions. “We can’t be a serious institution of higher learning without providing our faculty and students with access to these kinds of things,” he said.

It was just one more reminder that the ruling class of the USA has no intention of funding the public good. With respect to private enterprise, unless the same kinds of profits can be generated on American soil that can be made overseas in an epoch when capital takes wings and flies around the globe in search of higher profits, you will wait in vain for the post-WWII prosperity that both the Trump and Sanders campaign evoke. After all, capitalism does not exist to create middle-class jobs. It exists to allow men and some women to be able to buy $15 million condominiums in New York and vacation in St. Bart’s just like Gaddafi’s sons did.

The article mentions that the City University of New York was founded by Townsend Harris in 1847 as the Free Academy of New York to educate “the children of the whole people.” What a benign figure. But if you take five minutes digging into his past, you will learn that he was named the first Consul General to Japan in July, 1856 just after Commodore Perry made the Japanese an offer they couldn’t refuse. Perry commanded a fleet of four warships that arrived in Edo Bay on July 8, 1853. After the Japanese instructed him to go to Nagasaki, the designated port for foreign contact, he threatened to burn Edo to the ground unless they kowtowed to American demands to “open” up their country for trade. As it happens, the American Manifest Destiny that led to this gunboat diplomacy and the creation of a school for “the children of the whole people” went hand in hand. Slavery, colonial expansion abroad and internal expansion through the grab of Mexican and Indian land were essential to the consolidation of a modern capitalist powerhouse that needed an educated workforce to maintain its ledger books and sell its commodities.

It is questionable whether the same imperative exists today, even as neocolonialism and the oppression of Mexicans and Indians continue.

It is probably not news to people who have been following higher education issues as I have ever since I began working at Columbia University in 1991, but essentially the powers that be are “starving the beast” as Grover Norquist urged. The Times reports:

Since the 2008 recession, states have reduced spending on public higher education by 17 percent per student, while tuition has risen by 33 percent, according to a recent report by the nonpartisan Center on Budget and Policy Priorities. Arizona is spending 56 percent less, while students are paying 88 percent more. In Louisiana, students are spending 80 percent more on tuition, while state funding has been cut by 39 percent.

The article places emphasis on feuding between NYC mayor Bill De Blasio, hailed by the liberal left like Obama was in 2008, and Governor Cuomo about whom there are no illusions. Cuomo has foisted much of the funding for CUNY on the city, a burden it can ill afford. Some say that this is his way of paying back the PSC, my wife’s union, for backing his rival Zephyr Teachout in the DP primaries in the last gubernatorial election.

As a frequent visitor to the Nicaragua Network meetings in 1989, De Blasio struck me as a smooth operator but I hardly figured him as a future mayor. Despite dark reminders about his visit to Cuba and Sandinista sympathies, De Blasio has been a reliable friend of real estate interests. In yesterday’s Times, there’s an op-ed piece on the gentrification of Harlem that nails him for his failure to take them on:

Still Harlem endures as a community with high hopes, and in 2013, we felt sure we had found a champion. Bill de Blasio ran as the mayor for everyone, which we figured had to include Harlem. Black voters were crucial to his victory, and we thought we were covered and cared for. He even has a likable son, as liable to get stopped by the police as ours might.

We were wrong. The man we saw as “our mayor” may talk about housing affordability, but his vision is far from the rent control and public housing that President Franklin D. Roosevelt and Mayor Fiorello H. LaGuardia once supported, and that made New York affordable for generations. Instead, he has pushed for private development and identified unprotected, landmark-quality buildings as targets. He and the City Council have effectively swept aside contextual zoning limits, which curb development that might change the very essence of a neighborhood, in Harlem and Inwood, farther north. At best, his plan seems to be to develop at all speed and costs, optimistic that the tax revenues and good graces of the real estate barons allow for a few affordable apartments to be stuffed in later.

Corey Robin, who teaches at Brooklyn College, one of the more prestigious campuses in the CUNY system, blogged about the article:

The piece makes a brief nod to my campus, Brooklyn College, whose “rapidly deteriorating campus” has earned it the moniker “Brokelyn College.”

I can personally attest to that. On Thursday, as I left campus, I stopped in the men’s room of our wing of James Hall. One of the two urinals was out of business, covered by a plastic sheet. I sighed, and thought back to the time, about a year ago, that that urinal was so covered for about six months. The clock in my office has been stopped for over a year. Our department administrator tried to get it fixed: it worked for two days, and broke again.

He includes a picture of the desks in a classroom:

You can bet that there are no desks like that at NYU or Columbia where the students are being prepped for jobs in the financial services or those sectors of the economy that look after big business’s far-flung empire. I imagine that an MBA from either of these two schools and a minor in computer science might open doors at an accounting firm or investment bank. Art history or sociology? Forgettaboutit.

You have to understand the decline of CUNY in the context of public higher education’s nationwide crisis. Everywhere you look, schools are being denied funding adequate to their needs. This almost certainly means that it will be more and more difficult for American corporations to staff the middle-tier managerial positions for which these schools are expected to furnish. The Times article points to the difficulties a young woman is facing trying to become qualified as a public school teacher:

At City College, Anais McAllister, 22, a senior from Yonkers, said she had planned to major in English with a concentration in education, which would have allowed her to become a teacher after graduation. When some of her required education classes were canceled, she realized she would need another year — and another $6,000, at least — to graduate with the education credential.

With her scholarship expiring at the end of this academic year, and a younger brother entering trade school in the fall to obtain his plumber certification, she dropped the education concentration.

“The fact that this can happen, where your department can be cut financially where you have to think about dropping it, is ridiculous,” she said.

With her problems probably being repeated across the system, it will be difficult for public schools to operate effectively, which obviously will be of little importance to someone like Cuomo who is a major backer of charter schools.

When Corey Robin posted a link to the Times article yesterday morning on FB, the first comment to appear was this: “We’re committing slow-motion suicide as a country.” I responded as follows:

This is obviously related to the state of American capitalism that in its current phase has little interest in the kind of national development that led to all sorts of public investments such as expressways, railway systems, higher education on one hand and on the other private investment in nationally-based manufacturing (auto, steel, etc.) Bernie Sanders advocates investment in the former but really has no idea how to get the capitalist class to invest in American manufacturing when you can get Mexican auto workers to accept much lower wages. The writing is on the wall but it is not suicide–it is homicide. Andrew Cuomo, the Koch brothers, Donald Trump, Hillary Clinton, Michael Bloomberg, Barack Obama–all of them could care less if Lehman College, where my wife works, has a leaking ceiling. They are only interested in serving their own class interests. The USA needs a socialist revolution and the longer we place hopes in capitalist reform, the longer we delay confronting the tasks that are staring us in the face.

Of course in FB, you are loath to post longer comments but I’d like to now expand upon what I wrote.

On May 15^th Barack Obama gave the commencement speech at Rutgers University that contained this Panglossian statement:

Point number one: When you hear someone longing for the “good old days,” take it with a grain of salt. (Laughter and applause.) Take it with a grain of salt. We live in a great nation and we are rightly proud of our history. We are beneficiaries of the labor and the grit and the courage of generations who came before. But I guess it’s part of human nature, especially in times of change and uncertainty, to want to look backwards and long for some imaginary past when everything worked, and the economy hummed, and all politicians were wise, and every kid was well-mannered, and America pretty much did whatever it wanted around the world.

Guess what. It ain’t so. (Laughter.) The “good old days” weren’t that great. Yes, there have been some stretches in our history where the economy grew much faster, or when government ran more smoothly. There were moments when, immediately after World War II, for example, or the end of the Cold War, when the world bent more easily to our will. But those are sporadic, those moments, those episodes. In fact, by almost every measure, America is better, and the world is better, than it was 50 years ago, or 30 years ago, or even eight years ago. (Applause.)

Although the students were likely to appreciate the president’s visit, they might have questioned his take on the “good old days” considering that the school’s tuition is now $13,000 per year, one of the most expensive public university in the country. Of course, the school has tried to generate revenue through its athletic program but it keeps running into scandals on an almost yearly basis, the latest one connected to the football coach trying to get the administration to overlook a star player’s failing grades.

The problem for Obama is that many Americans do remember “the good old days”, which were not that long ago. When I was a student at the New School in 1967 and had completed most of the credits I needed for a PhD in Philosophy, I needed a job to keep me going as I worked on my dissertation. That led to jobs as a welfare worker and 5^th grade teacher in Harlem that went begging back then when AFDC and funding for public education were in ample supplies as part of the Great Society—funded to some extent by feverish war spending a la Military Keynesianism.

When those jobs became too much of a psychological toll, I began looking at the classified ads in the Sunday Times business section, which usually ran for 5 pages or so. They were in alphabetical order and I turned directly to those that started “college graduates”. There were usually about three hundred listed that read something like this: “Major insurance company seeks programmer trainees, starting salary $6000. No experience necessary.” That’s how I got my first job at Met Life in 1968. The $6000 was adequate to pay for a modest one-bedroom or studio apartment. For me that was “the good old days” even though it was inextricably linked to a brutal imperialist war that would cost the lives of millions of Vietnamese.

For most working people in the area, jobs could be landed at places like Ford Motors in Mahwah, New Jersey or the oil refineries just across the river along the New Jersey Turnpike. Those were good union jobs that paid the kind of money that would allow you to live in a suburban tract housing and send your kids to college. Those who remember those “good old days” are being wooed by both Trump and Sanders who have about as much of an idea to bring them back as I do about the origins of the universe.

None of this matters to Barack Obama or the rich bastards who are funding both the Democrats and Republicans an on equal opportunity for profit basis. Their newspapers like the NY Times and even Rupert Murdoch’s Wall Street Journal can publish hand-wringing items like the one on CUNY but in the final analysis, they have no idea how to make America “great” again.

We are living in a period that can both be described as capitalist decline and capitalist expansion. Places like Detroit go down the tubes but for the capitalist investor, it could not be any better. All you need to do is stroll around the Chelsea neighborhood in NYC and gaze at the new condominiums that are the preferred homes for Wall Street hedge fund operators or plutocrats from Brazil, Russia, India or China, the bloc of nations that are supposed to be rescuing us from neoliberalism according to imbeciles like Mike Whitney.

The truth is that we are in a new kind of “The Other America”, the 1962 book that SP leader Michael Harrington wrote about the pockets of poverty in a nation in which everybody else was prospering. The coal fields of West Virginia and California’s Central Valley came under the spotlight. Nowadays, it is getting to the point where there will be pockets of extreme wealth surrounded by oceans of poverty or near-poverty only relieved by those middle-class families that can tread water sufficiently to keep from drowning.

This is not a nation “committing suicide”. It is one in which the superrich are killing the rest of us through a slow process of attrition. There is absolutely nothing in Bernie Sanders’s economic program that can reverse this. The idea that the USA can adopt a Nordic socialist model when Northern Europe itself has been cutting back on social programs and making life hell for immigrants is—in a word—utopian. The sooner we revive the radical movement of the sixties in which Sanders was committed to genuine socialism, the better.

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May 8, 2016

Karl Marx rides again

Filed under: economics,financial crisis,socialism — louisproyect @ 5:52 pm

(From my 2014 archives)

Seemingly three or four years late in the game, Rolling Stone weighed in on the relevance of Karl Marx. In an article titled Marx Was Right: Five Surprising Ways Karl Marx Predicted 2014, Sean McElwee told his readers that the Great Recession of 2008 confirmed Marx’s analysis of the capitalist system as “chaotic” and “crisis-prone”.

Just to make sure that nobody would accuse him of being a Commie, McElwee also points out that Marx was wrong about many things, especially failing to offer a proposal about what should replace capitalism. This lack left his writing “open to misinterpretation by madmen like Stalin in the 20^th century.” Now it should be said that Marx never intended to write about the workings of socialism, not that this would have made any difference to Stalin. The horrors of the USSR have much less to do with Marx’s failure to write what he called “recipes for the cook-shops of the future” (Afterword to the 1873 edition of V. 1 of Capital) than the sheer backwardness of Czarist Russia, exacerbated by a bloody civil war.

I could not help but notice the renewal of interest in Karl Marx’s ideas just after the 2008 financial crisis began. While the Communist Manifesto is the second-best selling book in history, there was a pronounced spike in sales around that time, no doubt aided by Marx’s words that read like a prophecy: “The modern labourer, on the contrary, instead of rising with the process of industry, sinks deeper and deeper below the conditions of existence of his own class. He becomes a pauper, and pauperism develops more rapidly than population and wealth.” McElwee paraphrases Marx: “Decades of deepening inequality reduced incomes, which led more and more Americans to take on debt. When there were no subprime borrows left to scheme, the whole façade fell apart, just as Marx knew it would.”

It is interesting to note that Sean McElwee does not allow his past associations with John Stossel, the Hudson Institute and Reason Magazine to prejudice him against Karl Marx, a sure sign that history is moving in the right direction. There was a time when McElwee found rightwing ideas more useful. After graduating from King’s College in New York, a school with the dubious distinction of having Dinesh D’Souza named president in 2010, McElwee’s writings tilted rightward as evidenced by his Reason article arguing that plastic garbage floating around in the oceans was not that worrisome.

After 2008 there were deep worries in the financial punditocracy. You might remember that scene in China Syndrome when the first shudders took place in the nuclear reactor. Was this going to be the “Big One”? That is how Nouriel Roubini must have felt on August 11, 2011 when he told a Wall Street Journal interviewer:

Karl Marx had it right. At some point, Capitalism can self-destroy itself because you cannot keep on shifting income from labor to Capital without having an excess capacity and a lack of aggregate demand. That’s what has happened. We thought that markets worked. They’re not working. The individual can be rational. The firm, to survive and thrive, can push labor costs more and more down, but labor costs are someone else’s income and consumption. That’s why it’s a self-destructive process.

Even more shockingly, George Magnus, an economist with the UBS investment bank, advised Bloomberg News readers to Give Karl Marx a Chance to Save the World Economy just 18 days after Roubini’s interview appeared. Magnus quoted Marx’s Capital: “The ultimate reason for all real crises always remains the poverty and restricted consumption of the masses.” But his solutions had more to do with Keynes than Marx, such as this one: “Governments and central banks could engage in direct spending on or indirect financing of national investment or infrastructure programs.” If Karl Marx confronted a crisis as deep as the one we faced in 2008, his advice would have been to nationalize the banks not use them as tools for fiscal pump-priming.

However, Umair Haque probably spoke for most of these commentators—including Sean McElwee, I imagine—when after posing the question Was Marx Right? in the Harvard Business Review he came down squarely on the side of capitalism. After giving Marx his due (“Marx’s critiques seem, today, more resonant than we might have guessed”), Haque sides with McElwee on the “recipe” question: “Now, here’s what I’m not suggesting: that Marx’s prescriptions (you know the score: overthrow, communalize, high-five, live happily ever after) for what to do about the maladies above were desirable, good, or just. History, I’d argue, suggests they were anything but.”

It is, of course, only natural that Marx’s books get taken off the bookshelves and dusted off during a period of profound economic crisis. For that matter, a political crisis will also have the same effect. In 1967 I took the unprecedented steps of reading the Communist Manifesto after two years of facing the draft and working in Harlem as a welfare investigator. A combination of napalm bombing of peasant villages and urban rebellions against racism and poverty convinced me that a revolution was necessary and who better to consult on that matter than Karl Marx?

I made the decision at that time to join the movement founded by Leon Trotsky since his connections to Karl Marx seemed to have more of a pedigree than those of Joseph Stalin or Mao Zedong. I failed to realize at the time that notions of pedigrees were exactly what prevented Marxism from full development.

In April 1939, just a year before his assassination, Leon Trotsky wrote Marxism in Our Time as an introduction to a new edition of Karl Marx’s V. 1 of Capital. It is of extraordinary value as a statement of the ABC’s of Marxism, as well as unwitting evidence of its unresolved contradictions.

Trotsky does not shy away from the key challenge to Marxism that I first heard in a social studies class in 1958 when the American economy was reaching new heights–what his article refers to as “the theory of increasing misery”. Our teacher said something that most of us heard in public school growing up in the USA. It goes something like this: Karl Marx was right about workers being oppressed and exploited in 1850 but he never would have dreamed about how wealthy they would become a hundred years later. Probably the first person to articulate this seemingly irrefutable point of view was Werner Sombart, the German ex-Marxist and author of Why there is no Socialism in America.

Writing in 1939, when misery was widespread throughout the capitalist world, Trotsky would seem to have had the upper hand but interestingly enough he sought to vindicate Marx’s analysis not on the basis of what existed during the depths of the Great Depression but at the height of its economic vitality: the roaring 20s. Trotsky observed that while industrial production increased by 50 per cent between 1920 and 1930, wages only rose only by 30 per cent. The workers were getting screwed in the best of times.

Like the nuclear reactor that withstood a meltdown in China Syndrome, the American economy supposedly is in recovery. Of course there are those unfortunates who cannot seem to find a job, especially in the Black community, but the stock market is at an all-time high and the housing market—according to the experts—is doing quite well. GM is showing a handsome profit even if it faces criminal charges for failing to inform owners of their cars that a faulty ignition might lead to fatal accidents.

More to the point, the NY Times of March 12, 2014 reported on economist Thomas Piketty’s new book Capital in the Twenty-First Century that would be of little assurance to anybody except the wealthy. Piketty deploys a mountain of data to prove that economic inequality will not only persist into the future but that the system itself is the primary generator, not “vampire squids” as Matt Taibbi put it. It is the very nature of the system that leads to a concentration of wealth at the top and misery at the bottom. Timesman Eduardo Porter, not a critic of capitalism after the fashion of Nouriel Roubini, puts it bluntly:

The deep concern about the distribution of income and wealth that inspired 19th-century thinkers like David Ricardo and Karl Marx was attributed to a misunderstanding of the dynamics of growth leavened with the natural pessimism that would come from living in a time of enormous wealth and deep squalor, an era that gave us “Les Misérables” and “Oliver Twist.”

Today, of course, it’s far from obvious that the 19th-century pessimists were entirely wrong.

Glancing back across history from the present-day United States, it looks as if Kuznets’s curve swerved way off target. Wages have been depressed for years. Profits account for the largest share of national income since the 1930s. The richest 10 percent of Americans take a larger slice of the economic pie than they did in 1913, at the peak of the Gilded Age.

Recently, a trend within Marxism has emerged that argues against the importance of “immiseration” altogether. To somehow link revolution with a declining standard of living is tantamount to what they call “Catastrophism”, a word in the title of a collection of essays edited by West Coast radio host Sasha Lilley: Catastrophism: The Apocalyptic Politics of Collapse and Rebirth.

Lilley’s chapter (Great Chaos Under Heaven: Catastrophism and the Left) in the collection can be read in Google books, something I highly recommend it even if I disagree with every word. Lilley is a stimulating thinker who can at least be given credit for being forthright. While she correctly discredits the notion that the capitalist system will collapse as a result of its own contradictions (Marx instead believed that cyclical crisis was endemic to the system), she goes too far in saying that crisis itself was inimical to class consciousness and political struggle and that an expanding capitalist economy was far more propitious for the left:

With the exception of the 1930s, periods of intense working class combativeness in the United States have tended to coincide with periods of economic expansion, not contraction and crisis. The two big strike waves of the early twentieth century, from 1898 to 1904 and 1916 to 1920, took place during years of growth. These were periods in which radical workers forced employers to raise wages—by 35 percent between 1890 and 1920—and, through struggle, successfully shortened the workweek by nine hours. These strikes were fueled by relative prosperity, and industrial action fell off when the economy moved downward.

Workers struck throughout the early 1960s for that matter. This was a time when the UAW, the Teamsters, and the railway unions went out on strike for substantial wage increases all the time. During the brief time I was a public school teacher in the late 60s, Albert Shanker was one of the most “militant” trade unionists in the U.S. if going out on strike is some kind of litmus test. This was the guy after all who resulted in civilization being destroyed after he got his hands on a nuclear weapon, as the Doctor told Woody Allen in Sleeper after he awoke. That’s pretty militant but I do not think that’s the sort of thing Lilley had in mind.

But the kinds of strikes that capture Marxist’s attention are not the Samuel Gompers inspired affairs for higher wages. Instead we study what happened in Flint, Michigan in 1936 and 1937 when workers occupied factories and battled the cops and National Guard. This was a strike that began to educate workers about FDR back-stabbing the CIO. Like it and so many other major class battles of the 1930s, it eventually came to naught because the Communist or Social Democratic leadership (Victor and Walter Reuther in the case of the UAW) was determined to back FDR. If the trade union movement had broken with the Democrats and launched a labor party, American politics would look a lot different today.

In the final analysis, it is politics that is key for Marxism in our time. Accepting Piketty’s findings at face value (something made easier by the “new normal” of unemployment, stagnating wages, environmental despoliation, and decaying infrastructure), the emphasis should be on strengthening the left and challenging the rich on every single issue that divides us. Nobody can predict when and if the class struggle will reach such an advanced level that workers will become revolutionary, but the best way to move forward in that direction is by exploiting every injury and insult to those who own nothing but their labor power.

Although Marx was the first to understand the laws of motion in capitalism, it was really up to Lenin to think through what strategies were most effective. Ironically, it was lessons he learned from the German Social Democracy that helped him to formulate policies for a Czarist state that on the surface had little in common with a parliamentary democracy like Germany’s.

In “What is to be Done?”, Lenin appealed to his Russian co-thinkers to learn from the Germans:

Why is there not a single political event in Germany that does not add to the authority and prestige of the Social-Democracy? Because Social-Democracy is always found to be in advance of all the others in furnishing the most revolutionary appraisal of every given event and in championing every protest against tyranny…It intervenes in every sphere and in every question of social and political life; in the matter of Wilhelm’s refusal to endorse a bourgeois progressive as city mayor (our Economists have not managed to educate the Germans to the understanding that such an act is, in fact, a compromise with liberalism!); in the matter of the law against ‘obscene’ publications and pictures; in the matter of governmental influence on the election of professors, etc., etc.

You have to wonder how our dogmatic Marxists of today can have so little appreciation for how the Russian social democracy operated. Could you imagine any of the 57 varieties of “Leninist” sects ever taking up the cause of a “bourgeois progressive” being denied the right to take office? Just recently, the Senate rejected Obama’s appointment of Debo Adegbile to a top civil rights post because he had participated in an appeal filed on behalf of Mumia Abu-Jamal. A powerful left party in the USA would have raised hell about this, even if the Democrats did not lift a finger.

In terms of the laws against “obscene” publications and pictures, and governmental interference in the election of professors, Lenin is amazingly prophetic when you think of Piss Christ and Ward Churchill. In many ways, capitalism is not just about whether the boss is enjoying a higher return on profits than a worker’s rise in wages since Marxism is not reducible to economic determinism. Capitalism constitutes an assault on our lives during every working moment of the day and the duty of a revolutionist is to find ways to get people to come out of their apolitical shell and take part in civil society in order to fight for greater freedoms now and total liberation after the final conflict.

But in order to become effective, Marxism has to learn how to avoid the “pedigree” trap alluded to above since size matters. Nothing prevents growth more than hairsplitting after all. To be taken seriously by working people, socialists have to get out of their isolation chambers and use ideas and language drawn from their nation’s own experience. This means first and foremost casting off the iconography of the Russian Revolution and especially terms like “communism” that would be totally misunderstood by the ordinary person even if they excite Slavoj Žižek.

In early 2010 the Gallup Poll discovered that 36 percent of Americans view socialism positively. Can you imagine if Gallup had used the word communism instead? That word might have registered more positively in the NYU sociology department but we are far more interested in what appeals to the average American.

As is most likely the case, Kshama Sawant was elected to City Council in Seattle by representing herself as a socialist rather than a communist and downplaying the dogmatic beliefs of her Trotskyist organization. Instead of making speeches about the need for a Leninist party, it was the need for a $15 minimum wage that won her volunteers and votes.

As a sign of how intoxicated the left can become when it loses track of what century it is in, the Socialist Workers Party of the USA—a group Leon Trotsky hailed as most faithful to his party-building conceptions—dismissed Sawant’s campaign as “reformist”:

Constrained to the narrow boundaries that typify capitalist election contests for local offices, her literature avoided important political issues that affect all workers, such as high unemployment and a woman’s right to choose abortion. It made no mention of key international issues, Syria, the place of the Cuban Revolution, the common interests of working people worldwide against the bosses or the global crisis of capitalism that is driving their attacks against us.

Considering that her bid was for City Council, it made eminent good sense for her not to make speeches about Syria and the Cuban Revolution (whatever that means in 2014, when the country seems poised to adopt the Chinese model).

Not long after the cops expelled the last Occupy protester out of the last public park, I had hopes that the movement could have come together and run candidates under the name of the Occupy Party. Unfortunately, the autonomist and anarchist prejudices of the key activists made this impossible. For the ordinary person, taking a leave of absence from their job in order to camp out in the bitter cold was never a realistic possibility to begin with.

Making every possible tie to the Occupy movement, the Sawant campaign became a small token of what may be possible if the American left puts aside its petty differences and began to come together in a common organization to defend the rights of working people for a livable wage as well as their freedom to go to a museum and see works like Piss Christ or photographs by Robert Mapplethorpe.

We have no crystal ball that would indicate when such an organization has reached the critical mass that is necessary to lead to the explosive reaction that can transform society and usher in a new civilization based on freedom and justice but we must do everything in our power to remove all obstacles in our way, especially those put there in the name of Marxism.

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March 11, 2016

Boom Bust Boom

Filed under: economics,Film,financial crisis,humor — louisproyect @ 9:13 pm

If I were to mention that a new film opened today that consisted pretty much of economists discussing financial crisis, your eyes would glaze over, right? But when such a film is directed by Monty Python alum Terry Jones, that’s a horse of another color. (It is co-directed by Bill Jones who directed a documentary on fellow alum Graham Chapman and Ben Timlett who produced a six-part TV tribute to the group.)

So what you get is a wickedly funny but mind-expanding analysis of 2008 by economists both famous (Paul Krugman) and famous only to their comrades (Nathan Tankus) that is driven by the proposition that the capitalist system is inherently unstable.

To give you an idea of how deep it gets into its material, it spends 15 minutes reprising Hyman Minsky’s Financial Instability Hypothesis using his son Alan and a cartoon representation of dad going back and forth on the ramifications. As someone who has delved somewhat superficially into Minsky over the years (I prefer the more hard-core Marxists obviously) but never quite understood him, this was an amazing segment that finally allowed his ideas to sink in. Put in a nutshell, crises are cyclical affairs that grow out of stability. When a system is stable as the American economy was after WWII, it is easier for a sense of euphoria to develop that leads to speculation of the sort that makes bubbles possible. Once the bubble bursts, the system goes into crisis and a sense of impending doom. Then, once again, the system drags itself out of the abyss and new round of stability ensues–leading once again to another round of instability.

Minsky is much beloved by a number of the interviewees including Randall Wray from the U. of Missouri (a department that tolerates dissidents opposed to neoclassical bunkum), New Yorker Magazine contributor John Cassidy, British journalist Paul Mason, and our boy genius Nathan Tankus from Naked Capitalism and PEN-L.

We learn that Minsky decided to study economics in the 1930s because the pat answers being presented by academic experts and media pundits was so out of whack with the reality. As it turns out, it was the Great Recession and the Occupy Wall Street movement (events that can be understood as a somewhat less cataclysmic repeat of the 1930s) that inspired Nathan to study economics. How do I know? He told me so.

Using puppets, animation and Terry Jones’s inspired narration, the film makes economic history not only understandable but hugely entertaining. For example, in reviewing past bubble-bursting affairs, it starts with the Tulip Mania in Holland of 1637 in which the lovely but ultimately common bulb was sold as if it were gold until one morning sellers showed up at a marketplace to discover that all the buyers were gone. Terry Jones illustrates this with an animated caricature of a Rembrandt portrait of a Dutch burgher singing “I kiss thee tulips with my two lips”.

Towards the end of the film, there is a well-deserved assault on the economics profession from people like Nathan who are trying to use the discipline as a tool for social change. We hear from students in the postgraduate economic society at the University of Manchester who like him are organizing extracurricular activities to examine about the true cause of economic instability, a phenomenon that their own instructors have ignored. One student points out that economics department get funding based on the studies they produce for mainstream outlets that are inherently neoclassical. So there is an economic incentive to falsify economics.

This is an amazing film that I can’t recommend highly enough. That being said, I did have a problem with a segment that seems to express a bias of the men who made it, namely that financial crises arise out of some deeply rooted flaw in human psychology that fosters a get rich quick behavior. Indeed, the film begins with an explanation for the subprime crisis that veers a bit too much in the direction of poor people getting mortgages they really didn’t qualify for.

We hear from scientists involved with studying rhesus monkey behavior on an island near Puerto Rico. They trained them to gamble by choosing one of two options: the safe choice offered them at least a little food for sure, while a risky choice generally offered them a bigger amount of food but only a fifty-fifty shot of getting it. One of the scientists argues that given 35 million years of evolution, such behavior is very difficult to eradicate.

This is a little too close to Jared Diamond’s sociobiology for comfort. I don’t think that evolution has anything to do with this. Generally speaking, pre-capitalist society, especially among hunting and gathering peoples, is marked by an aversion to risk. People hunted collectively in order to provide food that would keep them fed for a given period without any desire to accumulate after the fashion of a banker buying collateralized mortgage obligations in 2006.

Whenever I hear about monkeys or chimps having anything in common with us, I am reminded of a silly business in Diamond’s “The Third Chimpanzee”. This exercise in sociobiology (an updated version of the 19th century social Darwinism) includes a chapter titled “The Golden Age That Never Was” where he argues that since monkeys and apes have an evolutionary imperative to pass on their genes, art must be a clever stratagem by men to lure women into bed. This led Tom Wilkie to drolly observe in the May 22, 1991 Independent that this lesson must have been lost on Tchaikovsky, Andy Warhol and other homosexual artists.

“Boom Bust Boom” opened today at the Village East in New York City. Don’t miss it. It is more fun than a barrel of monkeys.

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April 11, 2014

Reading Richard Seymour in the Age of Austerity

Filed under: economics,financial crisis — louisproyect @ 11:48 am

Counterpunch Weekend Edition April 11-13, 2014

Strategies of Resistance

Reading Richard Seymour in the Age of Austerity

by LOUIS PROYECT

Dating back to the overthrow of Salvador Allende, financial austerity has been the watchword of the capitalist class. Frederick Hayek supplanted John Maynard Keynes in the ideological driver’s seat, as the free market became sacrosanct. Adding to the neoliberal momentum, the collapse of the Soviet Union caused Karl Marx to lose his official status for a third of mankind. Despite the hiccup of interest in Karl Marx following the 2007 financial meltdown and rueful reflections by Francis Fukuyama that it might not be the end of history after all, the mantra of balanced budgets and eliminating “waste” was taken up by politicians and pundits alike. To paraphrase W.H. Auden, we seem to be living through an Age of Austerity.

As perhaps the first study to take these issues head-on, Richard Seymour’s “Against Austerity” is a must-read primer for old hands in the class struggle and newcomers alike. Leaving aside the merits of his arguments—and they are plentiful—Seymour would be worth reading if for no other reason than his elegant and witty style. At the risk of inflating the young man’s ego, I regard him as the most compelling prose stylist on the left since Alexander Cockburn in his heyday and Christopher Hitchens before he turned into Mr. Hyde. Also, unlike most people who write for leftwing publishing houses, Seymour has a brash but self-effacing manner that is as refreshing as a cold beer on a sweltering summer night. From the book’s preface:

There is also a certain familiar use of esoteric political theory and rococo ornamentation that some readers will find off-putting. I hope so anyway. Those readers would be far better off reading something else. (Or, alternatively, stay and have your middlebrow sensibilities challenged.) This book comes with swearing and unapologetic intellectual swagger.

I imagine you’re scanning this page while still in the bookshop calculating whether you’d be willing to be seen reading this book on the train. If the above appeals to you, you’re probably a bit ‘wrong’ in some way, but I welcome you. If it doesn’t, then make your way the holy apotheosis of bookshops that is the ’3 for 2′ section. And buy yet more inconsequential shit with which to line your shelf of good intentions.

Read full article

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October 19, 2013

Assault on Wall Street

Filed under: Film,financial crisis — louisproyect @ 1:23 pm

“Assault on Wall Street”, a B movie that was in and out of New York theaters about a year ago for only a moment and with scant attention from critics, just showed up on Netflix streaming. The director Uwe Boll is regarded as one of the worst in the world, with some considering him the “Ed Wood of the 21^st century”. The film got one “fresh” on Rotten Tomatoes and six “rottens”. The one fresh came from my NYFCO colleague Prairie Miller who described it:

Possibly the only director on the planet who has garnered a strange recognition through utter infamy, Boll engages in a weirdly raw and rowdy subversive ideological descent into the dysfunctionally dark recesses of US culture.

Prairie’s full review

I went to a press screening but did not write anything about it since I considered it to be more in the grindhouse genre than a serious film dealing with the collapse of the financial system like J.C. Chandor’s great “Margin Call”.

Although I still am loath to overpraise this film, it is definitely worth watching if you are a Netflix subscriber. It starts out in exactly with the way that “Margin Call” ends with a Goldman-Sachs type firm dumping bundled securities worth almost nothing on unsuspecting clients, including a security guard named Jim Baxford who is a modern-day Job. His wife is undergoing expensive cancer treatments whose monthly costs are only partially covered by insurance. When his investments go south, he can no longer pay his bills and his wages become garnished. Once that happens, he loses his job as an armored truck guard since the company cannot keep someone with major financial burdens on the payroll since they theoretically might be tempted to become part of an inside job.

The only thing that Baxford becomes tempted into becoming is a combination of Travis Bickle and an Occupy Wall Street protester. The finale of the movie is a beautiful and deeply satisfying mass murder of a bunch of stockbrokers and other scumbags who victimized our hero. Is that a spoiler alert? Sorry about that.

German director Uwe Boll’s last film was obviously preparatory to this. Titled “Postal”, it is a “comedy” that Wikipedia describes as follows:

The film takes place in the town of Paradise, Arizona (a ghost town in real life), where the volatile Postal Dude, after being mocked at a job interview, kicked out of his local unemployment office and discovering that his morbidly obese wife is cheating on him, is more than a little angry and is desperate to get enough cash to finally leave his dead-end town. He decides to team up with his Uncle Dave, a slovenly con artist turned doomsday cult leader who owes the US government over a million dollars in back-taxes. With the help of Uncle Dave’s right hand man Richie and an army of big-breasted, scantily clad cult members, the Dude devises a plan to hijack a shipment of 2,000 Krotchy Dolls, a rare, sought-after plush toy resembling a giant scrotum. Uncle Dave plans to sell them online, where their prices have reached as high as $4,000 a doll.

Unbeknownst to them, Osama bin Laden and his group of Al-Qaeda terrorists, who had been secretly hiding in Paradise since September 11, under the watchful eye of bin Laden’s best friend George W. Bush, are after the same shipment, but for entirely different reasons. Hoping to outdo the catastrophe of 9/11, they plan to instill the dolls with Avian influenza and distribute them to unsuspecting American children. The two groups meet at the shipment’s destination, Nazi-themed amusement park Little Germany. A fight between Postal creator Vince Desi and Postal director and park owner Uwe Boll (which ends with Boll being shot in the genitals, confessing “I hate video games”), sparks a massive shootout between the cult, the terrorists and the police, resulting in the deaths of dozens of innocent children. The Dude and the cult are able to get away with both the shipment and the park’s opening day guest, Verne Troyer, pursued by Al-Qaeda, the police and a mob of angry citizens.

I can’t vouch for this but “Assault on Wall Street” does have its moments.

Boll is something of a character. In June 2006 he challenged some of his harshest critics to a boxing match, something I should have done with Vivek Chibber now that I think about it. He beat the living crap out of one of them:

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October 10, 2013

When the puppet talks back to the puppeteer

Filed under: conservatism,economics,financial crisis — louisproyect @ 8:26 pm

The puppet becomes the master in a classic Twilight Zone episode

Today’s NY Times raises some interesting questions about the connections or lack thereof between the big bourgeoisie (pardon me for a little Marxist jargon) and the Tea Party faction of the House of Representatives that has thrown the government into a crisis. Despite the reputation of the Tea Party for being free market fundamentalists, the masters of the marketplace find them rather inconvenient:

As the government shutdown grinds toward a potential debt default, some of the country’s most influential business executives have come to a conclusion all but unthinkable a few years ago: Their voices are carrying little weight with the House majority that their millions of dollars in campaign contributions helped build and sustain.

Their frustration has grown so intense in recent days that several trade association officials warned in interviews on Wednesday that they were considering helping wage primary campaigns against Republican lawmakers who had worked to engineer the political standoff in Washington.

Such an effort would thrust Washington’s traditionally cautious and pragmatic business lobby into open warfare with the Tea Party faction, which has grown in influence since the 2010 election and won a series of skirmishes with the Republican establishment in the last two years.

“We are looking at ways to counter the rise of an ideological brand of conservatism that, for lack of a better word, is more anti-establishment than it has been in the past,” said David French, the top lobbyist at the National Retail Federation. “We have come to the conclusion that sitting on the sidelines is not good enough.”

I probably listen to a lot more AM rightwing talk radio shows than the average socialist. Recently I discovered that there’s now a Fox radio station in NY at 970 on the dial that competes with WABC, the home of Sean Hannity and Rush Limbaugh. At 10pm there’s a Christian fundamentalist named Steve Deace who broadcasts for Fox radio out of Des Moines, Iowa. His motto is “Fear God. Tell the Truth. Make Money.” I can barely listen to him (or any of these characters) for more than 10 minutes but it helps me take the pulse of the ultraright.

Deace is fond of using the word “ruling class”, a term that he obviously knows was coined by the revolutionary movement. He uses it primarily to refer to the Republican Party establishment such as in this Politico article:

Not since Reagan has a nonestablishment presidential candidate had the comprehensive worldview and charisma capable of coalescing enough of the conservative/libertarian base to defeat the Republican ruling class in a national primary.

For Deace, the views of Hannity and Limbaugh are within “ruling class” parameters. On Town Hall, he blasted Bill O’Reilly as well:

From reporting inaccuracies on gun control, to no longer defending marriage, O’Reilly is now scoring goals for the other team. Similar sellouts and flip-flops aren’t news when they come from politicians. But given how O’Reilly has branded himself as the man with the moral high ground inside the “no spin zone,” it definitely has the potential to damage him much more. Nobody, right or left, likes a hypocrite. O’Reilly is now “evolving” so fast it would even give presidential candidates from Massachusetts ideological whiplash.

Clearly, the Tea Party right is on some kind of collision path with the establishment Right even though they share a common agenda against the left, working people, gays, and anybody who does not believe that Adam and Eve commingled with the Brontosaurus.

Before presenting my own views on what is going on here, I’d like to refer you to some noteworthy attempts by the left to explain the roots and dynamics of the Tea Party.

Doug Henwood was interviewed by Salon.com’s Josh Eidelson who asked: “You’ll hear some conservatives argue that the Tea Party represents a different politics, less “pro-business” than the GOP we knew – instead, consistently committed to “limited government” in ways that can be counter to business interests. To what extent is that just spin, or a real divide?” Doug replied:

It’s a kind of regional and inter-class battle. I think, to use the Marxist language, [the Tea Partyers] represent an enraged provincial petit bourgeois that feel that they are seeing society change in ways that they don’t like. They look at things like Obamacare and see that as a way of subsidizing a minority electoral bloc that will push the government in ways that they don’t like. These are the small-town worthies, like the local car dealers — people who are millionaires, but not billionaires. They are big wheels in their local communities, but not on a national level. And then you have ideological right-wingers like the Koch brothers who use these folks very effectively.

I would also refer you to Tim Horras, a founder of the Philly Socialists, who wrote a piece titled “Slouching Towards Shutdown: Left Reflections on the Tea Party, Then & Now” for the North Star website. Like Doug, Tim views the Tea Party as autonomous from what Deace calls “the ruling class”:

[T]he Tea Party was not an astroturf operation, but rather a legitimate social movement with a large mass base of support, 2) the mainstream Republican Party agenda was actually very different from the Tea Party agenda, 3) the capitalist class wouldn’t necessarily be in control of the Tea Party, like the sorcerer conjuring up forces they are incapable of controlling, 4) economic recovery was not going to happen, therefore extremism would continue to rise, and, (not mentioned in the passage quoted above), 5) key political conflicts would be centered around debt and default.

While some analysts like Michael Lind regard the Tea Party movement as an expression of Southern White racism, there are signs that it has powerful roots in the North as well. For example, Wisconsin governor Scott Walker went on the offensive against organized labor with backing from the Koch brothers and Ohio is the site of some of the most stringent anti-abortion laws in the country. Thirty years ago both Wisconsin and Ohio were considered strongholds of liberal Democratic power. What has happened?

I strongly agree with Doug’s assessment of it being the expression of an enraged petty-bourgeoisie but would differ on whether it is “provincial” (Doug cites Michael Lind favorably in the interview.) The big question, however, is what would make them so enraged? Does a millionaire car dealer in Mississippi really feel that Obamacare is an existential threat? I am not raising this question in a polemical fashion but only to demonstrate that I am not really sure.

The one thing I am relatively sure about is that the Tea Party flourishes in an environment where the Democratic Party lacks any kind of populist zeal. Obama is the perfect symbol of the kind of Eastern elitism that becomes a red flag in the face of the typical Tea Party activist. His connections to Wall Street, his Ivy League law degree, and primarily his condescending attitude to dwellers in “small towns in Pennsylvania and… small towns in the Midwest” who bitterly cling to guns or religion because of job loss, make him an easy target. Basically, Obama has generated the kind of blind hatred found in George Wallace’s 1968 campaign. Wallace ran as the candidate of the American Independent Party, a forerunner of the Tea Party in many ways. Wallace went around saying, “There’s not a dime’s worth of difference between the Democrat and Republican parties,” a virtual echo of Steve Deace’s complaint.

Middle class fury erupts on a fairly regular basis like Old Faithful in Yellowstone National Park but most of all in periods of economic crisis. Perhaps the first examination of this phenomenon was Karl Marx’s “18^th Brumaire” that tried to explain how Louis Bonaparte, Napoleon’s nephew, could rule on behalf of the big bourgeoisie while assaulting it both verbally and through actions inimical to its interests. Marx wrote:

As the executive authority which has made itself independent, Bonaparte feels it to be his task to safeguard “bourgeois order.” But the strength of this bourgeois order lies in the middle class. He poses, therefore, as the representative of the middle class and issues decrees in this sense. Nevertheless, he is somebody solely because he has broken the power of that middle class, and keeps on breaking it daily.

You will, of course, note how Marx is focused on the contradictions of Bonaparte’s rule. A government committed to the “bourgeois order” carries out policies that violate the wishes of the very class on whose behalf it rules, drawing upon the power of a middle-class that has become alienated by the very order that makes it insecure. This is the same pattern that existed in fascist Italy, Germany and Spain but to a degree never seen before.

Throughout its existence as a class, the bourgeoisie has often relied on the middle class to impose its will even if there are appearances that a “new order” has prevailed. Marx’s article was the origin of the term Bonapartism, a useful way of looking at political figures who appear to rule above and beyond the major social classes while cultivating the impression that it rests on the will of the “people”. Juan Peron was an example of left-Bonapartism while DeGaulle was an example of right-Bonapartism.

While France never became fascist in the 1930s, the threat certainly existed. Trotsky was determined to warn the left about such a possibility in “Whither France”, a work that I hold in the highest regard. I might not be a Trotskyist in terms of the party-building methodology but his analysis of the class struggle will remain valuable as long as there are classes. Trotsky described the ruling Radical Party in 1934 as temporizing in the face of capitalist crisis. Despite the party’s name, it had more in common with the Democratic Party in the USA. Its refusal to act decisively led the middle-class to lean toward the fascists who at least gave the impression that they meant business. Trotsky wrote:

The petty bourgeoisie, the ruined masses of city and country, begins to lose patience. It assumes an attitude more and more hostile towards its own upper stratum. It becomes convinced of the bankruptcy and the perfidy of its political leadership. The poor peasant, the artisan, the petty merchant become convinced that an abyss separates them from all these mayors, all these lawyers and political businessmen of the type of Herriot, Daladier, Chautemps and Co., [Radical Party leaders] who by their mode of life and their conceptions are big bourgeois. It is precisely this disillusionment of the petty bourgeoisie, its impatience, its despair, that Fascism exploits. Its agitators stigmatize and execrate the parliamentary democracy which supports careerists and grafters but gives nothing to the toilers. These demagogues shake their fists at the bankers, the big merchants and the capitalists.

I should make it clear, however, that the Tea Party is not a fascist threat. Fortunately (or unfortunately in another sense) there is no threat because there is no working class radicalism to speak of. Unlike the 1930s, the “Great Recession” has produced no mass leftwing movement in the USA. There are a number of reasons for this but suffice it to say that the existence of various safety nets make survival easier, even though those protections might be hollowed out or abolished in a period of even deeper crisis.

Tim Horras got it right. In his article he urged the need for militant mass action:

If the Left can successfully organize a genuine pole of attraction in the coming years, I remain convinced that poor and working class Americans will have the wherewithal to beat back the “rough beast” of reaction, press on towards social democracy, and finally arrive at a more fair and just society: the cooperative commonwealth.

We should never forget that during the Occupy Wall Street movement, there was hardly a peep about the Tea Party. When the left is on the offensive, the right tends to back down. For that matter, there is not much in the way of rallies by the Tea Party today. As a movement, it is manifested more by press conferences by politicians like Ted Cruz than those menacing gatherings that saw men toting semiautomatic weapons.

The conditions that created Occupy will be with us for the foreseeable future. There’s a tendency for some to view the current phase as one of post-crisis since reports about an uptick in employment and home sales occur daily in the newspapers, radio and television. At least one bourgeois economist warns about expecting prosperity around the corner, however. In an op-ed piece in the NY Times titled “When Wealth Disappears”, Stephen King warns about the horrors that await us. Unlike the novelist, this King’s fears are centered on economic stagnation rather than vampires or werewolves.

NY Times Op-Ed October 6, 2013
When Wealth Disappears
By STEPHEN D. KING

LONDON — AS bad as things in Washington are — the federal government shutdown since Tuesday, the slim but real potential for a debt default, a political system that seems increasingly ungovernable — they are going to get much worse, for the United States and other advanced economies, in the years ahead.

From the end of World War II to the brief interlude of prosperity after the cold war, politicians could console themselves with the thought that rapid economic growth would eventually rescue them from short-term fiscal transgressions. The miracle of rising living standards encouraged rich countries increasingly to live beyond their means, happy in the belief that healthy returns on their real estate and investment portfolios would let them pay off debts, educate their children and pay for their medical care and retirement. This was, it seemed, the postwar generations’ collective destiny.

But the numbers no longer add up. Even before the Great Recession, rich countries were seeing their tax revenues weaken, social expenditures rise, government debts accumulate and creditors fret thanks to lower economic growth rates.

We are reaching end times for Western affluence. Between 2000 and 2007, ahead of the Great Recession, the United States economy grew at a meager average of about 2.4 percent a year — a full percentage point below the 3.4 percent average of the 1980s and 1990s. From 2007 to 2012, annual growth amounted to just 0.8 percent. In Europe, as is well known, the situation is even worse. Both sides of the North Atlantic have already succumbed to a Japan-style “lost decade.”

Surely this is only an extended cyclical dip, some policy makers say. Champions of stimulus assert that another huge round of public spending or monetary easing — maybe even a commitment to higher inflation and government borrowing — will jump-start the engine. Proponents of austerity argue that only indiscriminate deficit reduction, accompanied by reforming entitlement programs and slashing regulations, will unleash the “animal spirits” necessary for a private-sector renaissance.

Both sides are wrong. It’s now abundantly clear that forecasters have been too optimistic, boldly projecting rates of growth that have failed to transpire.

The White House and Congress, unable to reach agreement in the face of a fiscal black hole, have turned over the economic repair job to the Federal Reserve, which has bought trillions of dollars in securities to keep interest rates low. That has propped up the stock market but left many working Americans no better off. Growth remains lackluster.

The end of the golden age cannot be explained by some technological reversal. From iPad apps to shale gas, technology continues to advance. The underlying reason for the stagnation is that a half-century of remarkable one-off developments in the industrialized world will not be repeated.

First was the unleashing of global trade, after a period of protectionism and isolationism between the world wars, enabling manufacturing to take off across Western Europe, North America and East Asia. A boom that great is unlikely to be repeated in advanced economies.

Second, financial innovations that first appeared in the 1920s, notably consumer credit, spread in the postwar decades. Post-crisis, the pace of such borrowing is muted, and likely to stay that way.

Third, social safety nets became widespread, reducing the need for households to save for unforeseen emergencies. Those nets are fraying now, meaning that consumers will have to save more for ever longer periods of retirement.

Fourth, reduced discrimination flooded the labor market with the pent-up human capital of women. Women now make up a majority of the American labor force; that proportion can rise only a little bit more, if at all.

Finally, the quality of education improved: in 1950, only 15 percent of American men and 4 percent of American women between ages 20 and 24 were enrolled in college. The proportions for both sexes are now over 30 percent, but with graduates no longer guaranteed substantial wage increases, the costs of education may come to outweigh the benefits.

These five factors induced, if not complacency, an assumption that economies could expand forever.

Adam Smith discerned this back in 1776 in his “Wealth of Nations”: “It is in the progressive state, while the society is advancing to the further acquisition, rather than when it has acquired its full complement of riches, that the condition of the labouring poor, of the great body of the people, seems to be the happiest and the most comfortable. It is hard in the stationary, and miserable in the declining state.”

The decades before the French Revolution saw an extraordinary increase in living standards (alongside a huge increase in government debt). But in the late 1780s, bad weather led to failed harvests and much higher food prices. Rising expectations could no longer be met. We all know what happened next.

When the money runs out, a rising state, which Smith described as “cheerful,” gives way to a declining, “melancholy” one: promises can no longer be met, mistrust spreads and markets malfunction. Today, that’s particularly true for societies where income inequality is high and where the current generation has, in effect, borrowed from future ones.

In the face of stagnation, reform is essential. The euro zone is unlikely to survive without the creation of a legitimate fiscal and banking union to match the growing political union. But even if that happens, Southern Europe’s sky-high debts will be largely indigestible. Will Angela Merkel’s Germany accept a one-off debt restructuring that would impose losses on Northern European creditors and taxpayers but preserve the euro zone? The alternatives — disorderly defaults, higher inflation, a breakup of the common currency, the dismantling of the postwar political project — seem worse.

In the United States, which ostensibly has the right institutions (if not the political will) to deal with its economic problems, a potentially explosive fiscal situation could be resolved through scurrilous means, but only by threatening global financial and economic instability. Interest rates can be held lower than the inflation rate, as the Fed has done. Or the government could devalue the dollar, thereby hitting Asian and Arab creditors. Such “default by stealth,” however, might threaten a crisis of confidence in the dollar, wiping away the purchasing-power benefits Americans get from the dollar’s status as the world’s reserve currency.

Not knowing who, ultimately, will lose as a consequence of our past excesses helps explain America’s current strife. This is not an argument for immediate and painful austerity, which isn’t working in Europe. It is, instead, a plea for economic honesty, to recognize that promises made during good times can no longer be easily kept.

That means a higher retirement age, more immigration to increase the working-age population, less borrowing from abroad, less reliance on monetary policy that creates unsustainable financial bubbles, a new social compact that doesn’t cannibalize the young to feed the boomers, a tougher stance toward banks, a further opening of world trade and, over the medium term, a commitment to sustained deficit reduction.

In his “Future of an Illusion,” Sigmund Freud argued that the faithful clung to God’s existence in the absence of evidence because the alternative — an empty void — was so much worse. Modern beliefs about economic prospects are not so different. Policy makers simply pray for a strong recovery. They opt for the illusion because the reality is too bleak to bear. But as the current fiscal crisis demonstrates, facing the pain will not be easy. And the waking up from our collective illusions has barely begun.

Stephen D. King, chief economist at HSBC, is the author of “When the Money Runs Out: The End of Western Affluence.”

Comments (6)

July 30, 2013

Obama doublespeak on the economy

Filed under: economics,financial crisis,Obama,workers — louisproyect @ 7:05 pm

Last week Obama gave a speech at Knox College in Illinois on the economic situation that like his remarks on Trayvon Martin a few days earlier was filled with the number of bromides calculated to give his MSNBC posse just enough to rally around. To give you a sense of the shallowness of it all, he uses the term “folks” 26 times. One supposes that with people like Al Sharpton and Ed Schultz, the only thing that would cause a breach with the President is a Swiftian modest proposal that hungry folks eat their children.

Early on in the speech he says:

See, I had just spent a year traveling the state and listening to your stories — of proud Maytag workers losing their jobs when the plant moved down to Mexico. (Applause.) A lot of folks here remember that. Of teachers whose salaries weren’t keeping up with the rising cost of groceries. (Applause.) Of young people who had the drive and the energy, but not the money to afford a college education. (Applause.)

The hypocrisy in this paragraph reaches achieves Olympian proportions. In 2008, when Obama was first making these demagogic appeals about the fate of Maytag workers, the Chicago Tribune reported that the main union at the plant urged a vote for Hillary Clinton. Leaving aside the logic of that advice, the union was correct to point out that Lester Crown, one of Maytag’s directors, raised tens of thousands of dollars for Obama’s campaigns since 2003. Crown’s son James was Obama’s 2008 campaign’s financial director for that matter. After Lester Crown revealed that Obama never brought up the plant closing with him, Obama’s alibi was that he was unaware that the Crowns had anything to do with Maytag. Oh, sure. To give you an idea of the incestuous relationship between big capital and the Democratic Party, as if you needed any reminder, here’s what warisacrime.org had to say:

Lester Crown first met Obama when he was a 27-year-old intern at the Sidley Austin law firm in Chicago in the summer of 1989. One of Obama’s law professors at Harvard, Martha Minow, had recommended Obama to her father, Newton Minow, who was a partner at the firm. Minow took Obama under his wing and introduced him to his friend Lester Crown. Crown recalls that Minow called him and “said we have in our office a young man who I think is really going places and I’d like you to meet him.” Crown says he has been a supporter ever since.

For people who applauded Obama’s plaint over the Maytag runaway plant, my advice is that outfits like SeaWorld get rid of their trained seals and replace them with these clapping fools.

Obama claims that he is also troubled by the fact that there were “teachers whose salaries weren’t keeping up with the rising cost of groceries.” Really? If Obama really cared about teachers, he would take a stand against the union-busting initiatives of his ex-Chief of Staff Rahm Emanuel or the charter school agenda of his Secretary of Education Arne Duncan. Using the excuse that teacher productivity must be raised, administrations across the country are firing teachers left and right. In 2010 the school board of Central Falls fired all 93 teachers, a move that Obama described: “If a school continues to fail year after year after year and doesn’t show sign of improvements then there has got to be a sense of accountability. That happened in Rhode Island last week.” This led Zeph Capo, a teachers union official in Houston, to state:

I ripped the Obama sticker off of my truck. We worked hard for this man, we talked to our neighbors and our fellow teachers about why we should support him, and we’re having to dig the knife out of our back.

One imagines that Capo fell into line when the 2012 election season started. After all, Obama was better than Romney. Romney would have not only fired the teachers but tied them to the roof of his car on a vacation trip to Canada. We can’t have that, can we?

Continuing along in the education vein, Obama added that the number of “young people who had the drive and the energy, but not the money to afford a college education” distressed him. This statement above all brought to mind the character that Jon Lovitz played on Saturday Night Live, the Pathological Liar.

I didn’t always lie. No, when I was a kid, I told the truth. But then one day, I got caught stealing money out of my mother’s purse. I lied. I told her it was homework – that my teacher told me to do it. And she got fired! Yeah, that’s what happened!

Just days after Obama’s speech, Congress passed a bill that tied student loan interest rates to financial markets. This proposal was not the typical Republican plan “forced” on Obama but was his own profit-making scheme inspired by a paper written by Jason Delisle at the New American Foundation, whose president Anne-Marie Slaughter (appropriately named) was Hillary Clinton’s Director of Policy Planning at the State Department. As a member of the Peterson-Pew Commission on Budget Reform and the Committee for a Responsible Federal Budget, Delisle had just the right credentials to draft a policy paper that would stick it to the students. The Huffington Post reported that a record $51 billion profit could be expected from the student loan shark racket cooked up by Obama. That’s greater than the earnings of America’s most profitable companies and roughly equal to the combined net income of the four largest U.S. banks by assets.

Arguably the only Democratic Senator with a shred of integrity, Elizabeth Warren stated: “I can’t support a proposal that squeezes even more profits out of our kids. In fact, I think this whole system stinks.’’

After listing these items that fell in the doom-and-gloom category, Obama raised his hand over his eyebrows like the captain of a leaking vessel and saw the sun breaking through the dark clouds. Good-god-almighty, jobs were on the horizon: “So you add it all up, and over the past 40 months, our businesses have created 7.2 million new jobs. This year, we’re off to our strongest private sector job growth since 1999.”

An honest appraisal of the job market, however, would be based on the payroll-to-population ratio, something that reflects the real health of the economy. If, for example the population of a country was one million and the number of employed doubled from 100 to 200, who would cheer about that?

On June 6^th Zero Hedge reported that the payroll-to-population was worse than a year ago and that “the unemployment rate is also rising with under-employment – at 18.0% – near 15 month highs.”

There is one sector that appears booming, however. The number of minimum wage waiters and bartenders hit an all-time high of 10,339,800 workers, increasing by a 51,700 in just one month. But mixing drinks like Tom Cruise in “Cocktail” must be a lot more fun than working in some boring factory with a health plan, so it is not that troubling to learn from Zero Hedge that manufacturing jobs have dropped four months in a row, now numbering 11.964 million jobs. Pretty soon the number of bartenders, waiters, and busboys will exceed the number of factory workers. I wonder what Marxist value theorists will make of that?

Obama was also pumped up over the fact that Ford is now hiring workers for its Kansas City plant. Glory be, America is coming back! Well, one can certainly understand why Ford would want to increase the number of workers in Kansas City since it cut a deal with the UAW that entry-level workers will be paid $16 per hour, just about the same amount that fast food workers in New York are struggling to win. Not only that, it will take a lot longer to get a raise. That’s about $31,000 per year, good enough for a mobile home and a night out once a week at the local Burger King. No wonder the UAW bureaucrats got out the vote for Obama in 2012. They, Obama, and the Ford bosses see eye to eye.

Obama made sure to get everybody on board the fracking bus. “We produce more natural gas than any country on Earth. We’re about to produce more of our own oil than we buy from abroad for the first time in nearly 20 years.” That’s great. With shale oil produced by fracking, we’ll be able to take advantage of all those new bartenders to get a pint of beer rather than put up with water catching fire as it flows from your faucet at home.

To make sure that Rachel Maddow will continue to coo over him, Obama made sure to throw in some cheap demagogy:

Even though our businesses are creating new jobs and have broken record profits, nearly all the income gains of the past 10 years have continued to flow to the top 1 percent. The average CEO has gotten a raise of nearly 40 percent since 2009. The average American earns less than he or she did in 1999. And companies continue to hold back on hiring those who’ve been out of work for some time.

Oooh, agitating against the top 1 percent. The Kenyan Marxist is at it again.

One understands why Obama would have to throw in a few words like these. Not only do they come cheap, at least those still laboring under the illusion that the capitalist system is redeemable can con themselves into believing that the President really cares.

Those illusions might finally be breaking down. Who cannot be cheered by the sight of fast food workers calling a one-day strike in New York? As the one host on MSNBC with a smidgen of liberalism left, Chris Hayes had on three people involved with the action last night, as well as my own Congressperson Carolyn Maloney who was on the picket line. Theirs is the voice of a new labor movement. It is a sign of its strength that it can draw upon Maloney for support:

HAYES: We`re talking about the fast food strike under way across the country tonight. Still with me at the table, Tsedeye Gebreselassie from the National Employment Law Project, McDonalds worker, Kareem Starks who is striking and Gregory Reynoso from Fast Food Forward, and joining us is Congresswoman Carolyn Maloney, Democrat from New York. Great to have you here, Congresswoman.

REPRESENTATIVE CAROLYN MALONEY (D), NEW YORK: Great to be here.

HAYES: Gentlemen, I want to get your reaction to the bite I played. If people are feeling they`re not being paid adequately, they have to go find a job someplace elsewhere paid higher wages. What`s your response to that? Just go get a higher wage job.

STARKS: You know, I work for McDonald`s for, like, five months. Before that, I worked for the Parks Department, climbing trees. I made $10.25 more than what I`m making now. So I`ve had a better job, and I was never in poverty like I am now. But whoever is, like, against it, obviously isn`t ever made $7.25 and never tried to budget paying for two kids and an apartment and bills and food all for $7.25.

HAYES: My sense, Gregory, if there were jobs available that paid higher wages, you would be happy to take them.

REYNOSO: Yes, I would be happy. The point is, it`s not these types of opportunities for everybody. There are not a lot of people what can really go out and find these types of jobs. That`s why people have to live on $7.25.

HAYES: Congresswoman, it`s fairly unusual to find members of Congress walking the picket line. There were a number. Why were you out there?

MALONEY: Well, I was looking for you, Chris.

HAYES: I was prepping this segment.

MALONEY: We were out there to show solidarity, the fight we have before Congress. We have a bill before Congress, HR-1010. We have 142 co- sponsors, 30 in the Senate and it would raise the minimum wage to $10.10, over 3 years, 95 cents a year. The president even in 2009 was calling for minimum wage increase in his state of the union and, of course, last week in Illinois. It`s a priority of his. It`s a priority of ours. We`re working hard to pass it.

HAYES: In the past, raising the minimum wage, you`ve been able to get some Republicans to vote for it. There was a minimum wage raised under George W. Bush that happened. There were a number of Republican votes. Is the Republican Party, do you think you can find people on the other side of the aisle who would vote for this bill?

MALONEY: I believe it merits bipartisan support and we`ll certainly be working to secure it. You`re not going to secure it if you don`t try.

HAYES: That doesn`t occur to me very much.

MALONEY: We`re going to try. We`re going it try because it`s too important and talking to Greg and Kareem, you see the importance of it. I believe you`re working two jobs.

REYNOSO: Yes.

MALONEY: He doesn`t have time to sleep. He`s working two jobs and it`s hard.

STARKS: I actually work the overnight shift last night and I`m here now.

HAYES: Thank you for coming in.

STARKS: I just, like, want to thank everybody for the support.

HAYES: Tsedeye, when I was talking to Kareem and Gregory about this idea that if you want a better job then go get a job that pays a higher wage what is happening right now in this economy, I don`t think this is underappreciated. The jobs are being created at the bottom of the wage scale. That is a trajectory that many Americans are experiencing.

GEBRESELASSIE: Kareem`s story is the story of our economy and how our labor markets have shifted so we`ve like hemorrhaged these decent paying jobs. What`s taking its place jobs that pay low wages like fast food and retail. Not only are those the jobs that are being created. They`re also jobs where real wages are actually declining, you know, since —

MALONEY: Out of the 3.2 million low-income jobs, 2/3 of them are women. Women are disproportionately in these low-income jobs.

GEBRESELASSIE: They`re also adults. That`s the other thing.

MALONEY: They always say they`re teenagers. They`re not. Most of them are —

HAYES: Were your co-workers, your co-workers, the image is, like, these are teens on summer jobs. Your co-workers were supporting families.

REYNOSO: Yes.

STARKS: There`s a few co-workers I know that has kids and supporting families and paying bills and stuff like that. I mean, it`s probably — McDonald`s and fast food chains usually target younger kids or whatever, but at the end of the day, there are still older people that have these jobs. There`s, like, a 60-year-old lady in my store.

GEBRESELASSIE: The median age for a fast food worker in this country is 29 years old.

HAYES: Wow.

GEBRESELASSIE: That is an adult. The other thing the industry says these are stepping stone jobs.

HAYES: You could rise up in the ranks.

GEBRESELASSIE: That`s just not the case. There`s limited opportunities for advancement.

REYNOSO: People from 50 years old, they`ll be working in these companies. Imagine those people supporting families.

HAYES: Will you quickly show that mobility graphic? It`s 2.2 percent jobs in the fast food industry are managerial, professional and technical occupations.

GEBRESELASSIE: The vast majority, 90 percent are frontline occupations. The median wage is $8.94 an hour.

HAYES: Compared to all industries, 31 percent —

MALONEY: It hasn`t gone up in four years.

HAYES: And it hasn`t gone up in four years. Tsedeye Gebreselassi from the National Employment Law Project, McDonalds worker, Kareem Starks, Gregory Reynoso from Fast Food Forward, and Congresswoman Caroline Maloney from New York, thank you all.

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