Subscribe to Dollars & Sense magazine. Recent articles related to the financial crisis. Workers Appeal for Help as Just Garments ClosesThis appeal just came to us from the tireless and wonderful Charles Kernaghan of the National Labor Committee, about the Just Garments factory in El Salvador (covered in an article in the Sept/Oct 2005 issue of D&S); thanks to Jay Blair for alerting us:Something went terribly wrong at the Just Garments factory in El Salvador, which was set up in 2003, supposedly as a worker cooperative with a strong and vibrant union. According to the workers, neither was true. The mostly women workers were mistreated, forced to work overtime--often unpaid, cheated of their benefits and routinely fired without receiving their legal severance pay. Just Garments management deducted Social Security payments from the workers' wages, but illegally held the money rather than passing it on to the government. This meant that the workers and their children had to go without healthcare, despite the fact that they were paying for it. It was the same with their pensions: the wage deductions were stolen. Not a single worker who was there when Just Garments opened in 2003 remains. They have either been fired or have quit in disgust over the abusive sweatshop conditions. Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). This just in...D&S reads the news (#7)The seventh in a series of blog entries by D&S collective member Larry Peterson.Usually one can expect The Financial Times to stay clear of the more flamboyant rhetorical and editorial excesses characteristic of the Wall Street Journal, but today a headline so crass struck my befuddled morning eyes that I thought I had my continents mixed up (the FT is published in the UK): Philanthropy Steps In Where The State Failed. The article itself consists of little more than jargon-fogged ("This is not an investment that will pay immediate dividends, and very much fits in with our risk tolerance as this kind of investment is risky"), at times syntactically confusing ("people are so disenfranchised with the political system") and ultimately self-serving testimonials to the superior value of private charities on the part of three specific organizations, by their own officers or other, often bizarrely titled denizens of the humanitarianism industry ("principal and director of tactical [sic] philanthropy"; "job vendor"). And some of the claims made about philanthropy in general, particularly its use and abuse in society, are so disingenuous that it almost beggars belief. A good example is the one referred to above, this time in full: "The role of philanthropy in our culture is exploding right now because people are so disenfranchised with the political system that they are viewing philanthropic donations as another way to vote on issues that are important for them." And then there's this, shockingly repetitive piece of gibberish: "We have, by and large in American society, lost our conviction that government is the place where solutions to social problems occur. From the time of the Reagan revolution forward, we have gravitated to the view it is the private sector that is going to create innovative and effective solutions. The only viable solution we see now is private enterprise and private philanthropic action, so we look to it to solve problems." One really wonders whether or not these "professionals" can possibly know what they're talking about if they feel confident enough to express themselves in this way to perhaps the most renowned financial newspaper in the world. And it's odd that a publication like the FT would reproduce such comments without some sort of snarky comment; if sentiments critical of free trade had been voiced in similarly awkward tones, that would almost certainly happen. But, regarding the content of the statements, it does not take much reflection to realize just how wrong they are, and how they serve an almost purely propagandistic purpose. The social programs instituted only a decade and a half before Reagan, and some long before that, were, and still are in some instances, extraordinarily successful and popular: Social Security, Medicare, Medicaid, Head Start. And if an inordinate amount of the aggression directed by the Reagan administration fell on public services, it was often precisely because the particularly successful and popular programs were becoming too expensive, partly due to demographic factors; so the gutting of other social programs did not reflect inefficiency so much as the fact that they were simply crowded out (remember the role of deficit-military spending here, too). And the fact that many of the philanthropic enthusiasts who berate the public sector have been the beneficiaries of hugely skewed tax cuts-the very same cuts that have eviscerated the public sector, whilst forming a part of the capital formation which would eventually be applied to the formation of the private charities-over the years elaborates the mockery. One of the charities mentioned in the article is called the "Coalition To Salute American Heroes." (And here I remember the wise words of Berthold Brecht: "When they start talking about heroes, it’s time to emigrate.") Its mission is to check up on the severely wounded veterans of the recent wars in Iraq and Afghanistan and help them rebuild their lives. To use this kind of operation to illustrate how private charities clean up the mess in the wake of public failure is particularly revolting: the Bush administration has not merely gutted remaining public services when given the opportunity, but has been—probably to a criminal extent—neglectful of fulfilling the legal responsibilities it has in public provision. The fact that a private charity is filling the gap here is a sign not so much that a more efficient way of dealing with a social problem has been found as a frank admission that we have allowed politicians to go much farther in cutting public services than the great majority of us are prepared to countenance. The failure of Social Security "reform" is another sign that not all of us are willing to bet the farm that some private charity will be there for us if we find ourselves in need. And then there's a heavy dose of irony at work here: a private charity is caring for victims of a war that was foisted on the American people not least because the mainly private media almost consciously spoon-fed the lies of the Bush administration and created an atmosphere in which divergent opinions were actively silenced. Public media, both here and abroad (I'm thinking mostly of the BBC) didn't do much better on this score, but their performance was several orders of magnitude better than that of the major private media outlets. As for the efficiency of charities, it is common knowledge that many have huge overhead expenses (some of around 60%); and that marketing costs continue to take a larger bite of donations as more and more charities enter the field and compete with each other (though the donor bases are growing, mostly at a much lower level). And as for the donors themselves, a recent study (I can't remember where I saw it: I think it was commented on in Slate) revealed that the wealthy and very wealthy give far less as a proportion of their earnings than do the middle and lower-middle classes. This redoubles the effect of the super-regressive Bush tax cuts, and condemns these classes to pay a larger share for less public services. This may be the actual reason why people are "disenfranchised with the political system"; but rather than simply abandoning a political vote for a vicarious humanitarian, the situation seems to call on us to simply reclaim the political one. In spite of this, the business press and its acolytes continue to gush embarrassingly about private charities: In the FT piece, philanthropy is seen as a viable successor to the state in the funding of medical and other forms of research. But given a situation in which much subsidized basic research is basically given away for free to the private sector, and paid for again by consumers, this claim is just as disingenuous as the others. A couple of years ago (right before the dot.com bubble burst, I believe) the Economist did a piece on the new crop of philanthropists who were supposed to push the state out of the way and get on with the real business of solving social problems. An astute reader wrote in at the time that it would be strange indeed to entrust such a task to cutthroat businessmen who are all too prone to use good deeds to insulate themselves from public criticism about tactics that all too often involved the gutting of entire communities for profit. His final words to the new philanthropists? "Let them fix hell when they get there." Labels: charities, Financial Times, philanthropy, Ronald Reagan Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). The economics, and the politics, of environmentalismBy Gerald Friedman, CPE Staff EconomistAn Econ-Atrocity, brought to you by the Center for Popular Economics. At the time of the first Earth Day, April 22, 1970, the Environmental Movement straddled two approaches to addressing environmental problems, approaches rooted in two alternative theories. Senator Gaylord Nelson of Wisconsin proposed the first Earth Day to “force this issue onto the political agenda,” to promote changed government policy to protect the environment. But many of the 20 million Americans who took part in this first Earth Day were deeply suspicious of organized politics or state action. “Personal salvationists,” they blamed environmental troubles on our weaknesses as individuals. Instead of failed social policy, the enemy was ourselves: we use too much, waste too much, want too much; and the only salvation for the environment is to change our preferences, use less, recycle more, and choose to live simply. Twenty seven years later, the Environmental Movement confronts the same division between personal salvation and political action, a division nicely illustrated by a new book, Bill McKibben’s Deep Economy. A prominent environmentalist, McKibben has written a clear attack on much of what ails us; but he misses the underlying cause of these ills and, therefore, his prescription for remedial action is necessarily off. In many ways, a pleasure to read; the book also left me so frustrated that I threatened to throw it against the wall. What could be wrong with a book that criticizes the Bush Administration, individualism, big oil, Cargill, Monsanto, and the economics profession? Especially when the author’s heroes include farmers’ markets, urban gardens, organic farmers, Heifer International, and the Indian state of Kerala. No question: we would all be better off, and the world a lot better off, if we lived the way that Bill McKibben recommends. The problem is that McKibben largely accepts the mainstream economic theory that he criticizes. He writes as if our economic system is governed by the wishes of consumers so that the only way to lessen our environmental impact is to change individual wishes. Notwithstanding abundant evidence to the contrary, including much in his book, he implicitly assumes that we are already using the best technology. Associating modern life with technologies that burn fossil fuel, he concludes that “getting rich means getting dirty” (p. 21); and the only way to get clean is to do without and to consume less. Combined with a technology that produces economic growth by burning fossil fuels, individual consumerism leads to environmental disaster. Many will even find comfort in McKibben’s message: If our individualism makes us responsible for the mess, then we can fix it by our own actions. If consumerism is the problem, then the search for personal salvation becomes the environmental imperative. But, I fear that he is telling us what we want to hear rather than what we need. To begin, McKibben is wrong about the British Industrial Revolution. Rather than fossil-fuel burning steam engines, the signal change that inaugurated modern economic growth was the creation of factories, usually without steam power, where employers, ‘capitalists,’ were able to regulate the work hours of their workers by controlling access to the means of production. Factories proliferated because they allowed capitalists to increase their profits by forcing their wage workers to labor harder or be fired. In a capitalist society, we produce for profit, not to provide useful things; and we choose production technologies that are profitable regardless of whether they are good for society, or the environment. Rather than personal values, it is the profit system, capitalism, that has led to our current malaise. We subsidize the burning of fossil fuels because these feed the profits of fuel and automobile companies. Our agricultural research emphasizes large-scale, oil-intensive technologies because these favor agribusiness profits. State policy promotes extensive housing development because this favors profits in real-estate, construction, furniture, and transportation. State policy favors private consumption of marketable commodities rather than communal use of public goods to feed corporate profits. Home production, community building, and the development of social capital are all shunned not because Americans have bad personal values but because our politics have been dominated by corporations looking for profit. Economic growth has become a curse because we grow to inflate the profits of the corporations who dominate our social policy. The problem is not in our values, not in an excessive desire for liberty, but in our politics; and salvation is not in personal change but in political action. I suspect that, notwithstanding his writings, Bill McKibben would agree with me. Since writing Deep Economy, McKibben has taken the leadership of the StepItUp campaign for federal legislation to mandate an 80% reduction in carbon emissions by 2050. After urging an audience recently to sing “at the top of their lungs” to demand federal legislation to help stop global warming, McKibben spoke of the need for a new politics to save our environment. Like the Garrisonian abolitionists of the 19th century, and many Environmentalists of the first Earth Day, he began with “moral suasion” before concluding that while personal salvation is a good goal, we need political action to save our planet and to rebuild our communities. Sources: The first Earth Day is described here. Bill McKibben Deep Economy (New York, Henry Holt: 2007) McKibben’s StepItUp campaign is described here. © 2007 Center for Popular Economics Econ-Atrocities and Econ-Utopias are the work of their authors and reflect their author's opinions and analyses. CPE does not necessarily endorse any particular idea expressed in these articles. The Center for Popular Economics is a collective of political economists based in Amherst, Massachusetts. CPE works to demystify economics by providing workshops and educational materials to activists throughout the United States and around the world. If you would like more information about CPE please visit our website. Labels: Bill McKibben, Deep Economy, Earth Day, StepItUp Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). This just in...D&S reads the news (#6)The sixth in a series of blog entries by D&S collective member Larry Peterson.Perhaps the most far-reaching yet underappreciated economics-related story hitting the news this week concerned the fight in Congress over patents. This fight features as antagonists two of the most important and influential sub-sectors in the economy (not to mention their lobbyists): pharmaceutical firms and high-tech companies. Since the Democrats won control of Congress in November, patent reform has been something they have increasingly set their sights on. According to the Washington Post article, the political shift has "energized a congressional drive to revamp the patent system for the first time since the 1950s." Besides being noteworthy in itself, the article shows how vastly different incentives and reward structures have created a situation which threatens to clog the entire research-driven part of the economy up in legal or legislative congestion, and underscores how difficult it will be to come to a new settlement. Large tech companies, who are for reform of existing law, argue that they cannot respond to a fast-changing marketplace in products as ethereal as software (which essentially consists of nothing more than sequences of code) without a flexible standard of patents; otherwise, the threat of launching court cases involving arcane and sometimes incomprehensible (at least to most juries, and even jurists) distinctions will be sure to slow research and development to a crawl. On the other hand, pharmaceutical companies, which require comparatively high up-front costs, call for the maintenance of a strict interpretation of the present law: they are interested in having their products protected as long as possible, so as to spread the large fixed costs out over as long a period as possible to pay them back. And though, no doubt, much of the substance of the claims and counter-claims is no doubt somewhat disingenuous (many tech firms themselves have been among the most enthusiastic bringers of lawsuits, and, as we all know, more money is dedicated by pharmaceutical firms to advertising and marketing than to research and development in the first place), the point is that such a fundamental showdown between the two juggernauts of the most advanced segment of our economy will certainly result in either far-reaching legislation or serious, costly gridlock. If there’s anything approximating a clash between the forces of production and relations of production specific to the so-called "new economy," this is bound to be an important manifestation of that. Keep an eye on this bill as it wends its way through Congress. A couple of global warming—oh, excuse me, "climate change"—stories really need to be highlighted this week. The Christian Science Monitor had an article about a real Hobson's choice that will be faced my many of the largest and fast-growing communities and regions in the country (in the Southeast, West and Southwest, particularly) very soon: between secure water supplies and electricity that itself requires considerable amounts of water to generate it. Barring any huge technological breakthroughs, the choice between water and electricity is rapidly turning into a zero-sum game in these parts of the country, with the situation set to get far worse as more and more air conditioning units are installed there. By the way, large parts of Southern Asia are set to face the same set of problems, but with far larger population densities undergoing the adjustments. Today's Independent features a front-page story on drought-ridden Australia; it notes that the drought, which may constitute (I’m sure many in our Western states would disagree) "the first extended drought brought about by climate change in a developed country," has caused even the loathsome Howard government to announce plans to ban inefficient light bulbs to reduce Australia's carbon emissions. Of course, Howard is more concerned about the elections he faces later in the year, and of the wrath of the farm lobby, but Asian countries (especially China) who have been importing huge amounts of Australian commodities lately to fuel their economic booms, and are already experiencing rising inflation (in Japan this isn’t an issue), must be alarmed at this phenomenon (especially if it is world-wide, thus possibly preventing other locations from picking up the slack if Australian supplies dwindle). Besides these stories, lefty heavyweights Mike Davis and Doug Henwood write in The Nation about some unexpected and, at times, frightening aspects of the phenomenon. Finally, the pound broke the $2 mark this week, based on far higher inflation numbers (3.1%) in the UK than expected. An inordinate amount of the increase came in furniture and furnishings costs, which are growing at an astounding 10% a month. An impressive sign of the importance—and potential danger of—real estate related sectors in the post-manufacturing economy. Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Post Office to the First Amendment: Drop DeadBy Robert W. McChesneyThis article appeared on Common Dreams on Tuesday, April 17th. Everyone who visits the Common Dreams site is reading articles that were first published or commissioned by print publications. Without these print publications, there would be a lot less material for all of us to read, and some of our most important reporters and thinkers wouldn’t get paid to write. Yet the independent magazines and small publications that contribute to Common Dreams are under attack by government bureaucrats and media conglomerates. Unless we take action now, the wide variety of voices and viewpoints available on sites like this one will become considerably diminished. This crisis which could have devastating effect on new media revolves around Americas very first and arguably most visionary and progressive media policy: postal rates for periodicals. Because the Post Office is a monopoly, and because magazines must use it, the postal rates always have been skewed to make it cheaper for smaller publications to get launched and to survive. The whole idea has been to use the postal rates to keep publishing as competitive and wide open as possible. This bedrock principle was put in place by James Madison and Thomas Jefferson. They considered it mandatory to create the press system, the Fourth Estate necessary for self-government. It was postal policy that converted the free press clause in the First Amendment from an abstract principle into a living breathing reality for Americans. And it has served that role throughout our history. What the Post Office is now proposing goes directly against 215 years of postal policy. The Post Office is in the process of implementing a radical reformulation of its mailing rates for magazines. Under the plan, smaller periodicals will be hit with a much larger increase than the big magazines, as much as 30 percent. Some of the largest circulation magazines will face hikes of less than 10 percent. The new rates, which go into effect on July 15, were developed with no public involvement or congressional oversight, and the increased costs could damage hundreds, even thousands, of smaller publications, possibly putting many out of business. This includes nearly every political journal in the nation. These are the magazines that often provide the most original journalism and analysis. These are the magazines that provide much of the content on Common Dreams. We desperately need them. What the Post Office is planning to do now, in the dark of night, is implement a rate structure that gives the best prices to the biggest publishers, hence letting them lock in their market position and lessen the threat of any new competition. The new rates could make it almost impossible to launch a new magazine, unless it is spawned by a huge conglomerate. Not surprisingly, the new scheme was drafted by Time Warner, the largest magazine publisher in the nation. All evidence available suggests the bureaucrats responsible have never considered the implications of their draconian reforms for small and independent publishers, or for citizens who depend upon a free press. The corruption and sleaziness of this process is difficult to exaggerate. As one lawyer who works for a large magazine publisher admits, “It takes a publishing company several hundred thousand dollars to even participate in these rate cases. Some large corporations spend millions to influence these rates.” Little guys, and the general public who depend upon these magazines, are not at the table when the deal is being made. The genius of the postal rate structure over the past 215 years was that it did not favor a particular viewpoint; it simply made it easier for smaller magazines to be launched and to survive. That is why the publications opposing the secretive Post Office rate hikes cross the political spectrum. This is not a left-wing issue or a right-wing issue, it is a democracy issue. And it is about having competitive media markets that benefit all Americans. This reform will have disastrous effects for all small and mid-sized publications, be they on politics, music, sports or gardening. This process was conducted with such little publicity and pitched only at the dominant players that we only learned about it a few weeks ago and it is very late in the game. But there is something you can do. Please go to www.stoppostalratehikes.com and sign the letter to the Postal Board protesting the new rate system and demanding a congressional hearing before any radical changes are made. The deadline for comments is April 23. I know many of you are connected to publications that go through the mail, or libraries and bookstores that pay for subscriptions to magazines and periodicals. If you fall in these categories, it is imperative you get everyone connected to your magazine or operation to go to www.stoppostalratehikes.com. We do not have a moment to lose. If everyone who reads this piece responds at www.stoppostalratehikes.com, and then sends a link to it to their friends urging them to do the same, we can win. If there is one thing we have learned at Free Press over the past few years, it is that if enough people raise hell, we can force politicians to do the right thing. This is a time for serious hell-raising. Robert W. McChesney is the co-author, with John Nichols, of Tragedy & Farce: How the American Media Sell Wars, Spin Elections, and Destroy Democracy (New Press). He is the founder of Free Press, www.freepress.net. Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). This just in...Circuit City and the Global Economy(#5)The fifth in a series of blog entries by D&S collective member Larry Peterson.We found this in our Inbox today:
The economy is, according to virtually all conventional sources—and that includes just about all policy makers and legislators of both political parties, professional economists and financial journalists—evaluated first and foremost, if not almost exclusively, in terms of raw output. So, gross domestic product measures the dollar value of all goods and services produced in the United States in a year, without regard for how it is distributed; employment is evaluated on the number of jobs created each month without much notice of their quality. (Some useful work doesn't have dollar value put on it at all—housework and much caregiving, for instance. There is a movement now on the fringes of the economics profession which attempts to integrate some of these factors qualitatively and even quantitatively into the analysis, and while these attempts are being received somewhat sympathetically among governments (especially in Europe and even in more progressive localities here), NGOs and even institutions like the World Bank, it'll be a long, long time before such considerations are current on Wall Street or at the Federal Reserve or the European Central Bank.) So, the overwhelming preponderance of commentary on the performance of "the economy" reflects the use of a pretty narrow set of parameters; it also tends to reinforce its own presence among practitioners who tend to use the information in the pursuit of profit only (financial professionals working for private firms, etc). And this, in turn, is redoubled by the fact that very little criticism of this kind of use is allowed to see the light of day at this level. Because, as long as short-term profit goals are reached or considered essentially safe, no one will complain much. Your question seems to focus on the international dimension: you have noticed that several economic indicators are evaluated in a positive light which involve good things happening elsewhere while bad things are increasingly taking place here. So, a phenomenon like outsourcing is currently controversial among non-economists because they tend not to employ as narrow a criterion of what's good for an economy sometimes, too. To economists, outsourcing is good because it is believed to result in a more efficient allocation of the international-rather than national-division of labor, and this, in turn, should lead to lower prices for goods and services for all the rest of us, including those "temporarily" hurt by it. While there is some truth to this, it is by no means clear that the trade off is one that many people would be prepared to accept. And the empirical data, much of it very recent and of decidedly poor quality (many of our new trading partners keep very poor records) is mixed, so far as I can see. But economists went into the neoliberal era believing it would benefit all, and in a decidedly short time. This accounts for much of Russia’s US consultant-led slide into kleptocracy and Mexico’s meltdown post-NAFTA. Only now are some of the more prominent economists just beginning to rethink their positions on this outsourcing, to get back to that. Former Federal Reserve governor and Princeton economics professor Alan Blinder is perhaps the leading figure here. (But, see Dean Baker's recent blog commentary on Blinder's turn-around on trade.) But there is another aspect of outsourcing that economists miss precisely because their emphasis this time is so wide. On this view, workers who are adversely affected by outsourcing should be willing and able to move to areas where jobs are plentiful. But this tends to neglect that the vast majority of workers simply can't liquidate their assets fast enough to be able to move to these spots in a timely way or efficient way: they may get there only when it's too late, or in the middle of a property boom/bubble, or who knows what. And even if they were, they'd face losses selling their assets if large numbers of them had to head for the exits at the same time. So there’s no way to evaluate the tradeoffs involved in such a move in such a way that gains can be maximized. About Circuit City, the Christian Science Monitor notes today that Circuit City is now involved in court cases which charge it with discharging some of its best workers precisely because they were, well, too experienced (and hence well paid). The amazing thing about this story—besides the fact that, in the narrow sense preferred in most cases by economists, productivity, which is intimately tied to levels of experience, is supposed to be the factor which determines employability and wage rates—is that the retail sector is one of the few which capitalized heavily on the employment of information technology in the 'nineties (many other industries are beginning to jump on the bandwagon now) and continues to do so, now. So you have a situation in which huge productivity gains reaped by employment of capital are increasingly offsetting—rather than complementing—the productive capacities of workers in that sector. Inasmuch as this model presages what we can expect from the "new" economy, workers have every reason to be concerned; and these concerns are not necessarily going to be reflected in many of the evaluative criteria used by economists and financial professionals. Labels: Alan Blinder, Circuit City, jobs, outsourcing Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Monique Harden responds to the TimesEnvironmental activist Monique Harden, whom D&S collective member Ben Greenberg interviewed for our March/April 2006 special issue on Katrina, co-wrote an excellent letter to the editor of the New York Times:April 15, 2007 Thank you, Monique and Nathalie, for taking the Times to task for praising this "outsider's" perspective. Labels: Edward J. Blakely, katrina, Monique Harden, New Orleans, New York Times, right of return Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Dreams and borders: Looking at immigration from the Mexican sideChris Tilly and Marie KennedyApril 14, 2007 This is the third in a series of posts by D&S comrades Marie Kennedy and Chris Tilly, who are spending six months in Tlaxcala in central Mexico. Their first posting was about the recent increases in the price of tortillas in Mexico. The raid came on a Friday night. Law enforcement officials swooped down on hundreds of undocumented immigrants who had not made it far past the border. That's when "the American dream," as so many migrants call it without irony, ended for over one hundred of them who were detained, some hospitalized with major injuries. "Everybody was running as fast as they could because the authorities were hitting them to force them to climb onto the pickup trucks," reported Teresa García, one of the ones who ended up in the hospital. "I slipped and fell, people were stepping on me and then I lost consciousness." One woman, she added, "was pregnant, maybe five months, and I was able to see them pulling her and hitting her to arrest her. It was very violent, there was a lot of yelling." It was the third major raid on migrants in this location in a month's time. It was an all-too-familiar experience for Mexicans trying to cross into Arizona, California, or Texas. Except this raid did not take place in any of those states, but in Mexico's southern-most state of Chiapas. And those detained were not Mexicans, but Guatemalans, Hondurans, Salvadorans, Nicaraguans, and one Cuban. Welcome to Mexico's other immigration problem. In the words of Isabel Vericat, a filmmaker working on a documentary spotlighting illegal immigration across Mexico's southern border, "The northern border of Mexico begins in the south." An estimated 350,000 undocumented immigrants—a majority Central American, but also including many from South America—crossed from Guatemala and Belize in 2005. They came not to seek a living in Mexico's sputtering economy, but to find a way to El Norte. Of the 350,000, it is estimated that about 40,000 made it to their objective. Another 10,000 ended up staying in Mexico. The rest were detained and deported. Between Mexico's northern border problem and its southern border problem, Mexico is caught in a difficult squeeze. The Mexican government of Felipe Calderón complains that its US counterpart does not sufficiently take into account the needs nor respect the human rights of Mexican immigrants. But at the same time, Mexican authorities are implicated in brutal repression against migrants from farther south…at the behest of the US government. Survival strategy The number of Mexicans in the United States is estimated at 11-12 million, with about half a million crossing each year. The Banco de México (Mexico's central bank) claims that the real numbers are substantially larger than these official statistics, citing as evidence the fact that the population in a number of Mexican states has stopped growing despite no drop in the birth rate. Migration's impact on communities, particularly declining rural ones, is enormous. One window onto this is the family saga of our friend Angelina, a market woman in Michoacán's capital city of Morelia who lives in an agricultural town about one hour to the north. Her aging father has gone to el otro lado repeatedly to work in agriculture, injuring himself on the job there in 2004. Her husband was crippled there in a car accident. One sister crossed illegally, only to be deported. Four other siblings are working in Texas and Rhode Island. Her son just went to join relatives in Ohio and do yarda work, a Spanglish word meaning landscaping. Millions of families across Mexico have similar stories. Border wall or not, immigration reform or not, nobody in Mexico expects this to change soon. (The only noticeable changes in recent years have been increasing rates of immigration from Mexico's more remote southern states, of women, and of unaccompanied children, many of them looking for their parents.) The Banco de México projected in February that even if Mexico achieves a 5% annual growth rate (higher than it has seen since 2000), the pay differential will continue drawing migrants to the north "for two or three decades." Héctor Rangel, the president of the board of Mexican bank BBVA Bancomer, remarked not long afterward that Mexico has been "unable to create the number of jobs necessary to hold onto our population." NAFTA has been a bust for most Mexicans. The current example of trucking is indicative. In early 2007, with much fanfare, the Mexican government announced that Mexican truck drivers could now haul their loads into the United States. But a couple of weeks into the pilot program, the Mexican trucking association demanded that the agreement be scrapped and a new one negotiated. With long delays at the border plus fines for "safety" infractions, the operators said the current agreement is worthless. But the problem goes well beyond trucking. Overall, Mexico's average wage level is only marginally beyond where it stood in 1994 when NAFTA went into effect, and slow economic growth has driven millions into informal sector jobs, ranging from selling on street corners to sewing in the home. The maquiladora (export assembly) industry grew over the 1990s, but then shrank as cost-conscious transnationals shifted sourcing to Central America or China. Meanwhile, US agricultural imports such as poultry have swept the Mexican market, putting tens of thousands of small producers out of business. Looking ahead with dread to 2008, the deadline for removing all remaining restrictions on US corn, beans, and wheat (with low prices supported by US government subsidies), Mexican peasant associations and their allies have called for re-negotiating NAFTA, but the government remains staunchly pro-free-trade. Perhaps the only "bright" spot, according to researcher Huberto Juárez of the Autonomous University of Puebla, is that as Mexican wages stagnate and Chinese wages grow, Mexico's wage levels are becoming cost-competitive with Chinese ones in some manufacturing sectors. In this context, the remittances sent home by Mexican's millions of migrants are vital not only for the economic survival of their families, but also for the economic survival of the country. Migration is Mexico's second largest source of export earnings (in this case, via the export of labor), yielding $24 billion US in 2006, second only to petroleum. But like Mexico's oil, which is projected to run out in twenty years or so, remittances can form a deceptive cushion that allows the government to shirk its job-creation responsibilities—temporarily. Raúl Delgado, director of the International Network on Migration and Development, criticizes governments of immigrant-sending countries for over-dependence on remittances at the expense of developing a well-rounded development policy "following alternative strategies" and "fighting to transform the asymmetrical and unjust relations that characterize the current global order." The southern border If the pay difference is a magnet for Mexican migration, it is an even stronger magnet for people struggling to survive in the poorer Central American countries, which over the last twenty to thirty years have been ravaged by civil wars, hurricanes, free trade, and the global coffee glut. Deals between corrupt border guards and polleros (traffickers whom migrants pay to escort them across) make it easy to cross the border itself. But once in southern Mexico, immigrants from Central America or farther south are easy prey for those same polleros and police, along with maras (Salvadoran gangs active in the border area), Mexican organized crime, and freelance robbers and con men. Migrants with money can pay to travel north by car or even plane. But most have no choice other than the train. The train in question starts in Arriaga, Chiapas, 180 miles north of the border. (It began at the border until Hurricane Stan devastated a long stretch of it in 2005.) Migrants must walk for ten dangerous days to reach Arriaga. If they succeed, they climb onto train cars, holding on any way they can. The rail voyage to the northern border takes another 10 to 12 days. That's if everything goes right. But usually it doesn't. In the 180-mile gauntlet from the border to Arriaga, in addition to deportation, migrants run the risk of extortion, robbery, assault, rape, and even murder. According to first-hand accounts from migrants collected by film-maker Vericat, the perpretrators are often the uniformed police who are charged with enforcing immigration law. Thousands of women, mostly young Central American mothers with one or more children to support, many under 18, have been lured or forced into prostitution in the Soconusco border region of Chiapas when the option of going further north evaporated. Vericat reports that Soconusco has become the third largest center of prostitution in the world, behind only border regions in Brazil and Thailand. And getting on the train does not mean they are home free, either. The train ride is exhausting and dangerous. Mounting or dismounting—or falling—from the moving train can cause serious injury or death. Police raids are frequent (the February 10, 2007 raid described in the introduction to this article targeted the train in Arriaga; reportedly there were 500 migrants aboard). In that raid, one woman fell under the train and lost a foot. And of course, the travelers must sometimes get off to get food, water, a little sleep in some place where they don't have to hold on for dear life. Apizaco, in the state of Tlaxcala where we are spending six months, marks the halfway point in the journey. The Casa del Migrante in Apizaco, a charitable organization that provides assistance with no questions asked, reports that migrants are often out of money and desperate. Confused, some of them make the tragic error of re-boarding the train heading south instead of north. And of course, at the US border they face another set of obstacles. Even once on the job in the United States, they are not safe, as we saw in the March New Bedford, Massachusetts raid that nabbed hundreds of undocumented Central Americans. But many of those who are deported keep trying, again and again. The immigration debates in Mexico The policy discussion of immigration in Mexico is split. Looking north, everybody agrees that the US should allow more Mexicans to enter legally and that the border wall is a barbarity. Everybody recognizes the hypocrisy of the wealthy northern neighbor that depends on large numbers of Mexican laborers but insists on selectively enforcing a law that is completely out of step with reality. The only disagreement is between the Calderón administration, which is pressing the Bush administration in the most cautious of ways, and critics who call on the government to stand up more forcefully for opportunities for Mexicans. The debate about the southern border is much more wide-open. Legislators from the center-to-right PRI and PAN parties, which make up a majority in congress, have called for stronger sanctions against undocumented immigrants from the south in phrases that could have come from US Republicans. But the government of Calderón (who was the PAN's candidate for presdident) has announced plans to decriminalize illegal immigration (that is, deport them but don't fine them, in order to decrease the incentives for extortion by officials) and to expand legal immigration channels, increasing the number of Guatemalans permitted to enter for agricultural work and issuing visas of up to five years for professional workers. At the same time, they have promised the US government to tighten up the "porous" southern border, by means they have yet to specify. And Mexico's federal agents continue to deal out violent treatment to migrants. Meanwhile, a chain of Casas del Migrante located at strategic points in the migration from the south, such as Arriaga and Apizaco, offer temporary shelter, food, counseling, and small amounts of cash, defying legal restrictions. And many ordinary Mexicans offer the immigrants from the south a meal or place to sleep. In a highly publicized case, María Concepción, who lives in a community along the south-north train where it passes through the central state of Querétaro, was recently sentenced to two years in prison for human trafficking after being caught feeding supper to six migrants from Honduras in 2005. The government claimed to have witnesses who testified that Concepción worked for pay with a network of traffickers. Concepción and her family members insist she was just offering charity, and that everybody in the community "would give them a taco or some water," in the words of her daughter. Because they have concluded that for the government "it's a crime even to give them a glass of water, now we don't even give them a glass of water." But for most Mexicans, unlike the issue of the northern border, the issue of the southern border remains a bit remote. Arturo, a neighbor of ours in Tlaxcala who runs a laundromat, commented, "Mexico is just a ‘trampoline' for the Central Americans, because there's nothing for them here, no jobs." Still, with the growing volume of migrants and increasing media coverage, there is growing consciousness of the human rights issues involved. On a visit to the hospital, Arturo had met a Guatemalan who had fallen under the train in Apizaco. "The police picked him up and beat him. He was at the hospital, under armed guard, and once he was better they were going to deport him. That's not fair, that's a violation of human rights! If the man wants to work, let him try to get a job." Burning questions The week leading up to Easter is a time of school vacations and colorful celebrations all across Mexico—not a time when many are thinking about the grim issues of immigration. But we saw the issues flare up—literally—at the Holy Saturday celebration (the night before Easter) in San Cristobal, Chiapas, about 80 miles from Arriaga as the crow flies. Mexico has a Holy Saturday tradition of burning los Judas, papier-mâché dummies named after Judas, often crammed with fireworks and representing the ills and evils the community would like to purge. San Cristobal hosts an annual Judas contest. This year the competition was brisk, with two effigies of George Bush (one as a rat, the other as a sea monster), two of President Calderón, two of environmental pollution and global warming, and two of a Grim Reaper-like figure of Abortion (conservative Mexicans are appalled that Mexico City is on the verge of decriminalizing abortion), among others. But the winner was "El muro de la vergüenza" (the wall of shame), as Mexicans call the barrier the United States is erecting along the border. Less noticed, however, was an evocative sculpture showing a faceless figure with a club beating down a second faceless figure who was trying to clamber up onto a boxcar. "The plight of the Central American immigrant" said a simple label scrawled in chalk. We watched as they lit up the boxcar. The flames leaped up, the fireworks shot off, but as the fire died down again the crowd could see that the figures and the boxcar were still there. The celebrants tried twice more to relight the Judas, but it stubbornly refused to be consumed, and they finally gave up and moved on to the next one. For Mexico as for the United States, the treatment of migrants from the south will not be an easy Judas to burn. Resources: Isabel Vericat, La otra frontera (México-Guatemala), Jornada Semanal, March 4, 2007; Casas del Migrante-Scalabrini web site. Labels: Calderón, immigration, Mexico, PAN, PRI, remittances Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). This just in...D&S Reads the News (#4)by Dollars & SenseThe fourth in a new series of blog entries by D&S collective member Larry Peterson. I had really hoped to avoid posting an entry on embattled World Bank President Paul Wolfowitz. Honestly, I did. To me, the idea of an "anti-corruption" crusading Wolfowitz constituted something of a sick joke even before allegations concerning his efforts in getting his girlfriend a job in the State department (with a salary larger than that of Condoleeza Rice, no less) started to filter in maybe a week ago; after all, this is the guy who was our ambassador to Jakarta under the supercorrupt dictator Suharto. But then I came across an article in the April edition of the Far Eastern Economic Review in which Shaomin Li and Judy Jun Wu attempt to distinguish Chinese corruption (which allows for economic benefits) from the Filippino variant (which results in net losses to the society with no efficiency gains). While mildy interesting, if generally wrongheaded (the analysis attempts to reduce incentives to the one-dimensional ones characteristic of game theory, rather than operating under the assumption that this kind of behavior is more often the product of the intersection of competing and sometimes clashing sets of incentives) the piece got me thinking about the nature of the kind of corruption that exists in our society. It seems to me that the type of corruption engaged in by Wolfie and friend reflects a mentality on the part of the elite, operarative for some time now, but perfected under this administration, that society owes more, far more to its public servants, who, after all, could be making a killing in the private sector. But this is to overlook the fact that so much public policy these days takes place in the grey area between the private and public sectors, and that this has made use of the revolving door the indispensible nexus of the legislative craft these days. And it is also to overlook that these people tend to feel they are entitled to extra percs for devising and implementing policies which are, all too often, extremely unpopular, and use that very knowledge of policymaking they think they should be rewarded extra for to cover up their tracks from anyone who would point out the differences between the effects of such policies and the official spin. And yet, the unchallenged persisitence of such behavior has served to increase public cynicism to the point where such behavior is all-too-often considered normal. Hence, not only is it the case that people like Wolfie, Gonzales and all the others continue in their positions long after they should have been thrown out, and perhaps prosecuted; indeed, it is considered incomprehensible that anyone else in the position would behave differently. And this makes the next scandal almost certain to be more brazen and costly to society. Though I am hesitant to steal a concept from the great Thorstein Veblen, it really does seem to me that we have a kind of conspicuous corruption that has become the standard operating procedure in this administration, and that the cost of this kind of corruption is having a dangerously corrosive effect on public finances and the economy in general. Nobelist George Ackerlof has characteriized this administation's policies as "a form of looting". Furthermore, as others have noted, this underscores the real scandal here: that even if Wolfowitz were kicked out, he'd probably be replaced by someone just as bad, if not worse. Labels: Alan Blinder Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). This just in...D&S reads the news (#3)The third in a new series of blog entries by D&S collective member Larry Peterson.Max Fraad Wolff of Global Macroscope has a knack for keeping his eye on what's absolutely essential: ...tax rates on the highest income earners fell starting in the 1970s...tax rates actually rose for the middle fifth of the income distribution in the 1970s, only to fall back again in recent years to about where they were in 1960. Both Democratic and Republican Presidents and Congresses presided over these trends. Debt has kept the realities suggested by our internet enabled, cutting edge, early 20th Century economy from being widely understood. The Federal Government borrows back the taxes it fails to collect while spending freely. Toiling multitudes follow suit. They borrow the wages they didn't get and then some. Thus, consumption booms to 70% of GDP as wages fall as a percentage of our overall economy. Once again, he reminds us that, in important ways, policies allowed to work their effects for decades without serious interruption play as important a role in, and in important respects even undermine, aspects of our economic performance which seem more important when considered in isolation. And while many commentators manage to do this to some extent, Wolff is really proficient at remembering to enumerate all the most important variables, rather than simply noting single ones. We're all so used to regressive tax incidence these days that it's perhaps not easy to connect such policies with federal, personal, and current-account deficits, technological booms and falling wages as breathlessly as Woolf does here. Ant yet, the facts speak for themselves: the Reagan tax cuts led to massive expenditures in defense-related industries, some of which would spin off into the private sector and aid in the birth of the internet economy, while at the same time putting such pressure on the public purse that not only deficit reduction, but elimination was achieved by a Democratic president in the late '90s'. The elimination of the government deficit strengthened the dollar and led to both surging FDI in the US and even greater purchases of imports from outside. The steady inflow of capital aided deregualtory efforts which put pressure on employment conditions and redoubled the assualt on wages, which was an effect of the deregualtion and concomitant liberalization of markets. As wages failed to keep up, but with all that capital coming in, easy money was made available for consumer purchases, in spite of the wage lag. The maturing technologies then aided in the process by keeping prices down. Unfortunately, the credit cycle eventually turns, interest rates go up, companies go bankrupt and capital flees the country. This happened in 2000-2001. But the Fed then stepped in, lowered interest rates in no time at all some 500 basis points, and investment resumed. Not in technology or capex, of course, but in housing and, well, consumer spending again. Thus, as Wolff notes, consumption increases as wages stagnate; and by this point, the government surplus was being tapped, and reversed, partially in response to 9/11 (adding Department of Homeland Security, fighting 2 wars, etc.), but just as much due to...more (this time hyper-regressive) tax cuts! So this gets the whole thing going again! More divergence between wages and consumer spending; more government deficits; greater foreign inflows of capital (this time more on the part of foreign central banks concerned about keeping their imports locked into the system by boosting the value of the dollar, rather than private investors looking to capitalize on American productivity or access to our markets); and, consequently, interest rates that, seemingly, will never go up, in spite of the crazy demand. One of the reasons for this being, of course, that wages never rise! Now that the housing bubble is starting to deflate, and political tensions in oil-producing regions threatens to disrupt production significantly, the ability of external shocks to punch a hole in this dysfunctional perpetual-motion machine is more evident to many of us as well as to policymakers. But, Wolff's analysis is great precisely because it reveals the contradictions that characterized the running of the system even without the shocks. And he shows how what many consider the sine qua non of the conjuncture, namely technological change, cascades out from tax policy decisions made decades ago, in tandem with the operation of a few other, essential macroeconomic variables. And the analysis challenges us, in turn, to look to the political sphere to reverse it, rather than hoping the technology can somehow break free of the contradictory dynamic, which, while strangely resilient, is still subject to shocks. For readers who would like to see more of Wolff's work, I recommend this article: The US, the World's Hedge Fund, Asia Times, February 27th, 2007. In it Wolff characteriastically finds a simpler, institutional answer to a question that had been dogging academic economists so much that some of them even looked to subparticle physics for a metaphor to describe it: the US current account deficit. Labels: deficit, globalmacroscope, Max Fraad Wolff, regressive taxation Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). This Just In: D&S Reads the News (#2)The second in a new series of blog entries by D&S collective member Larry Peterson.Before getting into the econ nitty-gritty, I'm going to take this opportunity to briefly lay out my plans for this series of blog entries, and invite suggestions, criticisms, and comments. It's my impression that lots of people aren't aware of the diversity of opinions and magnitude of the disagreements that characterize academic and policy discussions in economics, finance and business, even among conventional practitioners. That being the case, it behooves all of us, and especially those of us who consider questions of justice to be an essential motivator in our thinking about such issues, to attempt to maintain as broad an overview of the subject as we can. Accordingly, I propose, in this series of blog entries, to use my familiarity with the literature to trawl, two or three times a week, for stories, especially in the mainstream press, but also in academic papers and longer articles, that seem to me to be emblematic of how the economy interfaces with questions of justice in its current conjuncture. In addition, I hope to find stories that aren't widely disseminated or discussed in the mainstream press (though they are, in many instances, mined from it). In short, I hope to provide a useful reference and summary for those who, while interested in economic issues in general, aren't familiar with all the facets of the controversies that animate—or should animate, from the perspective of those for whom social justice issues are important, or indeed paramount—its public debates. As for a name, I propose two candidates: "Moral Hazards" and "Lagging Indicators." If anyone has any strong feelings about the name, or proposes an alternative, I'm all ears. Otherwise I'd probably go with the former. Oh—then there's me. I'm a very recent addition to the D&S collective, and am a member of the Union for Radical Political Economics (URPE). I'm not a professional economist or journalist, but have studied all aspects of economics, finance and business pretty intensively for about fifteen years now. Hey, that was good enough for Marx, right (forgive me, Karl!)? Alrighty (to use the favorite expression of our esteemed co-editor here): I'm going to focus today on two issues: trade with China and the housing bubble (so much for all the bit about attempting to publicise what often gets overlooked, I know). Last week the administration slapped import duties on certain Chinese manufactured goods, claiming they were the beneficiaries of improper subsidies. And today, reports The New York Times (U.S. Toughens Its Position on China Trade), a World Trade Organization complaint is being prepared against China which will center on trade barriers and the piracy of goods. The Times notes that the recent aggressiveness towards China in trade matters stems from an increasing impatience in the Democratic-led Congress for action. In this light, the Bush administration appears to be attempting to prevent Congress from taking even harsher actions in the future, if nothing is done now. The administration is particularly keen to avoid such a scenario while Treasury Secretary Henry Paulson is engaged in sensitive ongoing talks about revaluing China's currency in an attempt to reverse the humungous US trade deficit with China. The Times also says that China is trying to ease tensions by committing to more large bulk purchases of US imports, which the administration no doubts hopes will keep select members of Congress quiet while softer diplomacy is given a chance to work. The reason I picked this article to comment on is that it's interesting to juxtapose it with a piece that appears in today's Asia Times (How Foreign Firms Dodge Taxes in China). The article, by Olivia Chung, begins with a paradox: "It seems strange that while Chinese enterprises, including state-owned, joint-stock and private companies, have been making profits in recent years, nearly half of all foreign owned-businesses have been losing money. Yet while so many foreign enterprises claim to be losing money, China witnesses a continual rise in its foreigh direct investment (FDI)." The article goes on to present some pretty astonishing statistics (mostly from official Chinese sources): two-thirds of foreign companies in China report "extraordinary losses;" of the top 10 countries or regions investing in China in 2005, many were offshore financial centers (including Hong Kong) customarily grouped as tax shelters, and that these foreign funds often outstripped those provided by major trading partners, including the US; and finally, the kicker: "…foreign funded companies contributed to one-third of China's industrial output, but generated one-fifth of the total tax revenues." The upshot of the story is clear: foreign investors in China are being accused of using all manner of devices to transfer costs to their Chinese subsidiaries while repatriating profits without paying tax. That being the case, the US complaints about China may not resonate as much with trade negotiators in Beijing (though the article also mentions how Chinese firms game the system by registering as foreign, and that local officials encourage foreign investors to play the tax-avoidance game to pad the books on local production. Now to the housing bubble. The Washington Post had an article today which suggests that one of the most alarming, yet underappreciated aspects of the housing bubble is the prevalence of fraud. It notes that a confluence of developments led to a situation rife with opportunities for criminal gain, from lax-or no-oversight of new mortgage companies to the huge demand for bonds made up of repackaged mortgage loans (a good deal purchased by the very Chinese we want to stop from buying our bonds now). Much of this stuff is common knowledge now, so I'll simply let the follwing comment from the article speak for itself: "No one knows exactly how extensive the crime has become, but new data from the federal government suggest that it has jumped tenfold since 2000 (another bubble year, recall, LP). Prosecutors are finding cases all over the country in which sham transactions, based on fraudulent appeals, led to homes changing hands at far above their real value." If such homes were purchased far above cost, that must have driven up the values of surrounding properties in to a similar extent. And that means there may be more-perhaps far more air left in the housing bubble than we care to imagine. This is particularly so inasmuch as investment in industrial property, which offset losses in the constructions sector for a while, appears to be tapering off as well. (Note also the April 7th op-ed piece on the housing crisis by Dean Baker of the left-leaning Economic Policy Institute (and also an occasional D&S contributor.) Oh—one last thing. The New York Times reported yesterday (Democrats Seek to Lead the Way in Tax Overhaul) about Democratic efforts to abolish the alternative minimum tax. This tax is slated to fall on unprecedented numbers of Americans in coming years (as their nominal incomes enter brackets set long ago, before the inflations of the ‘seventies and ‘eighties), and most politicians want to avoid this at all costs. The Democrats, while deserving applause for attemting to shield middle-class families from the incidence of this tax, propose no new taxes to offset the losses in revenue. The Times notes that this amount "…would be far bigger than Democratic initiatives to provide money for children's health care, education or any other spending program." Scared of their obscenely wealthy donors, ir seems the Dems are all too willing to shelter the rich by abolishing the AMT altogether, rather than for families earning up to, say, $250,000 a year (or raising other taxes on them). This inn is already full. Labels: alternative minimum tax, China, fair trade, housing bubble, subprime lending, URPE Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). MiceSome years back a neighbor caught a white mouse that had tunneled into a bag of Purina Dog Chow. Perhaps he was an escaped snake lunch. We put him in a 20-gallon terrarium and called him Manny--for Manhattan Mouse, because he was always busy. All day he zipped around, moving his nest and seed stash from one corner to another, climbing his branches, running in his wheel. Or he sat upright nibbling corn kernels, oblivious to Edgar and Emily staring round-eyed, inches away behind the glass. We put his picture on our New Year's card, contemplating three red grapes. The day he died, a two-year-old hunchbacked geezer, he raced all morning in his wheel before turning up his little pink toes. It once amused me when, every six months or so, Edgar or Emily caught a wild mouse that foolishly slipped through the floor next to the radiators. But in the last months we've been invaded. All the neighbors complain; the super runs around stuffing steel wool into cracks and laying out glue traps. But they keep coming, relentless gray-brown legions. They leave trails of droppings on kitchen counters. They shred newspapers and gnaw electric cords. Edgar and Emily spend their days patrolling the cracks through which manna squeezes from below. I feel overwhelmed. How did more primitive societies cope? The first true human tools were not rocks--sea otters crack shells with rocks; chimps crack nuts. The first human tools were skin bags or slings to carry the rocks. Also to collect food like roots and nuts, or small game like turtles and lizards. And especially, to carry infants, freeing their mothers' hands. The first hunter-gatherers set out from Africa schlepping their gear in bags. A bag is great for transporting stuff, but not for storage. Agriculture and higher civilization awaited the invention of mouse-proof containers. Neolithic settlements like Jericho on the West Bank, or Catal Hoyuk in Turkey, date back as far as 8000 BC. They used lined storage pits and mud brick silos. Between 6000 to 4000 BC crude hand-formed pottery appears in the Middle East; wheel-thrown pottery around 4000 BC. There follows an explosion of Bronze Age trade from the eastern Mediterranean to India and beyond, much of it carried by water in giant sealed storage jars. The jars, known as pithoi, typically held grains, wine, and olive oil. Smaller jars held luxury unguents and opium paste. (Pottery may have appeared even earlier in China and Japan; it appears in the Americas sometime before 2000 BC.) What luxury to live in a place and age where most of us needn't worry about mice devouring our food! Yet they keep coming. There was a growing sour smell in the kitchen. I dreamt of nosing Polonius behind the arras. In the morning, I unscrew the base plate from the dish washer, lie flat on the floor with a flashlight and a Chinese bamboo backscratcher, and rake out a very dead mouse. Squeak softly and carry a big stink. Meanwhile--eeeee--Edgar has nailed another one. I chase him under the piano. Crack, crunch, smack smack. In the end there's a little glob of mousie guts. And a tail. &&&&&&&&&&&&&&&&& More Econamici I send Econamici--occasional emails with interesting attachments or links--to friends who are economists or care about economic issues. If you can't follow a link, I can send you the actual article. Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). This just in...D&S reads the news.Notes on the news from Larry Peterson of the D&S collective.A couple items in the news today caught my eye, besides the coverage of the ever-solemn first-Friday jobs report ritual. The Washington Post had an article today on college admissions (“Battle To Win Top Colleges’ Nod Escalating: Future Applicants Face Array of Competitors”) which focused on the increasingly baroque intellectual and other (not least financial) gyrations required to get into an elite school these days. It notes in particular the travails of well-heeled high school superachievers who are left holding the bag after being rejected by the best schools for reasons that are seemingly impossible to fathom. The Post’s analysis, such as it is, highlights demographics: the baby-boomer bulge (children of baby boomers and so on) is increasing demand for admission slots at a far faster rate than can be accomodated. It also relies on the old saw about the indispensibility of a college education in our economy; according to that story, the pronounced gap in earnings between college graduates and high school graduates that’s opened up in the last generation or reveals that a degree (particularly one from a better school) is the indispensible correlate to higher and growing incomes.
The International Herald Tribune had an article today on executive expenses for security. It analyzed Eric Schmidt’s (of Google fame) regulatory filings and found that Schmidt’s personal security cost shareholders a cool $532,755.00. Granted, that was much higher than Google co-founders Larry Page and Sergey Brin’s $36,795.00 for transport, logistics and security, but it also reveals the extent to which executives can be tempted to identify their own percs with investment in “human capital,” especially if some of the security costs serve to further insulate such executives from contacts with, well, shareholders. On a happier note, the BBC reports that the 1.8 million-member UK union Amicus is in merger talks with the United Steel Workers here and in Canada. Such a merger would create a 3 million strong multinational force. And finally, the sacred jobs report. The Bureau of Labor Statistics reported that 180,000 new jobs were created in the US in March, far exceeding expectations. The markets haven’t moved much in response to the news, but the dollar is up. Currency investors evidently believe the report evidences signs of resilience in the labor market in spite of troubles in the housing and housing-related sectors. But given the recent slowing productivity and higher pay statistics, this figure reduces the likelihood of an interest rate cut by the Fed at their next meeting considerably. And that means any additional signs of inflation will bring up spectres interest hikes, and of the dreaded suprime spillover again. Look for Bernanke to have to wheel out Alan Greenspan again to cover up his tracks if that turns out to be true. Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). |
