“This is What Minimum Wage Would Be If It Kept Pace with Productivity”

by Dean Baker (CEPR)

Main point:

“If the minimum wage did rise in step with productivity growth since 1968 it would be over $24 an hour today”

“Colossus Wears Tweed”

A number of recent books blame the rise of neoliberalism on economists. But the evidence suggests it is still capital that rules.

by Quinn Slobodian (Dissent)

“By putting the burden of historical change on Friedman and his minions, we miss the real storyline.”

” a position that is not seriously entertained by the other three books, but accords well with our world from Davos to Silicon Valley: the proposition that neither politicians nor economists but ‘corporate managers . . . were the true guardians of the public good and the proper stewards of the state.'”
American Factory (Netflix)

dir. by Julia Reichert, Steven Bognar

A GM parts supplier in Ohio is shut down, and in its place a Chinese automotive glass manufacturer, Fuyao, opens. This documentary is about the culture clash between the Chinese management and the U.S. workers, many of whom used to work at the unionized GM plant. The film crew also follows a team of U.S. workers as they visit Fuyao’s Chinese plant. The Chinese workers talk about working 12 hour days, and often through the weekend to meet quotas. Some don’t see their children more than one or two times a year. In a company sponsored talent show in China, a group of young people sing a song about the virtues of lean manufacturing, an ode to the violent managerial upheavals of the last half century. The Americans sing “Y.M.C.A.” by the Village People.

The documentary implies that extreme nationalism motivates Chinese workers, and a culture of militant managerialism drives ruthless efficiency, something that can’t translate to the U.S. workplace because the workers here are slow and concerned with safety. The conclusions to take from the film are potentially dangerous. Is autocracy the path to productivity in a globalized world? Have we traded freedom and obesity for industrial power? The conflict between Chinese management and U.S. workers, to me, is not as much of a clash between national identities but a general conflict between management and workers, the same of which could be reproduced in any other U.S. factory. The Chinese owners, in this case, were accustomed to total managerial power, but this isn’t so different from the way that the Koch brothers run their paper plants or the way Amazon runs its warehouses. Surely it says something about the way that Chinese culture has embraced managerial power, but doesn’t say a lot about the U.S. workforce.
“Riding for Free in Kansas City”

Big cities have shunned free public transit. Now, KC’s free-fares push may provide transit systems across the country with a ‘how-to’ guide.

by Gabrielle Gurley (American Prospect)
Kansas City has implemented free fares for all of its public transit, prompting free-fare questions in other cities. The obvious problem is how to fund it. However, when you compare the contribution of fares to the total operating budget it is clear that the question is not whether the government will pay for public transit, but how much:

“Minneapolis-St. Paul’s Metro Transit, where fares generate about $100 million or 22 percent of its budget, has already expressed some skepticism about launching a free-fare program. Boston fares bring in nearly $700 million, or about one-third of the MBTA’s annual budget. But years of poor MBTA service and growing traffic congestion fuel insistent demands for fare-free buses. For the New York MTA, where only the Staten Island Ferry is free, fare revenues make up 50 percent of its operating budget. In the largest metros like New York and Boston, a special fare for low-income residents is more likely to be the route to a more equitable system than free fares for everyone.”

The difference in fare funding between the Twin Cities and NYC is notable; it is a huge difference between 22 percent of the budget and 50 percent. Why does NYC rely so heavily on fares to fund its operations? It’s a wealthy city, why is it not subsidizing its transit more? The New York City subway, for the first 44 years of its existence, kept the fare artificially low, at 5 cents. This was a subsidy that benefited workers and industry; people could cheaply and easily get to work. Now, the high cost of public transit shows an indifference to workers and industry, one that ultimately causes workers (and to some extent, tourists) to shoulder the function of public transit. To me, this implies that the state of New York sees the transit system as an amenity instead of as a public utility, or a tool to reduce carbon emissions, or a device that redistributes locational power.

In NYC, the failure to raise property taxes on real estate surrounding public transit has meant that there isn’t a great way for the city to capture the benefits of transit for property owners, which ends up being a big problem for the system at large. The cost ends up being shouldered by riders.  So, how much should the state subsidize public transit? A little or a lot? Who benefits and who pays for a functioning city?

NY lawmakers propose real estate tax on investors to boost public housing funds

By Denis Slattery (New York Daily News)

Could be good.
“Law and the Future of Gig Work in California”

by Veena Dubal, Sanjukta Paul (On Labor)

The policy debate about how freelance and contracted work should be regulated has, thankfully, started. Here, some proponents of a law in California try to dispel some objections to the law that cab drivers might have. One concern is over flexibility, and that new regulations might force companies to make their workers work set schedules or wear uniforms. Fortunately, this isn’t true, rigidity in the workplace is something like a historical accident and companies like Uber and Lyft could offer their employees the same amount of flexibility in scheduling while employing them. Plenty of workplaces have flexible, dynamic schedules (oftent to the detriment to employees, but whatever).

Making freelancers into employees will also further worker empowerment, as the authors argue: “employee status will necessarily increase the bargaining power of these workers, putting them in a much better position to negotiate an increase in overall schedule flexibility.”

“Student debt is over $1.6 trillion and hardly anyone is paying down their loans”

by Jeff Cox (CNBC)

College enrollment is down since 2011, something like 11 percent. But this study from Moody’s shows that balance of total student debt (now at $1.3 trillion) has grown in that time, almost 74 percent. Why? No one is paying their debt down.

The amount of balances that are getting paid off is 3 percent, with most balances just not being paid down at all.

Student loan debt problems for the nation are worse, and getting worser.

“The Quest to Improve America’s Financial Literacy Is Both a Failure and a Sham”

Financial literacy promotion may sound perfectly sensible—who wouldn’t want to teach children and adults the secrets of managing money?—but in the face of recent research it looks increasingly like a faith-based initiative.

by Helaine Olen (Pacific Standard)

and

“Why ‘financial literacy’ is a bunch of hooey – and why the banks promote it”

Companies and colleges say that if we all understand our finances, financial crises won’t happen. This is simply untrue

by Helaine Olen (The Guardian)

Financial literacy has risen to prominence as debt burdens skyrocket. It’s not a coincidence. Everyday life has increasingly required the use of more financial products–529 savings plans, 401(k)s, IRAs, credit cards, exotic mortgages, payday loans–all managed by the individual. A pension, conversely, is a benefit managed by a specialist in an institution. Now the individual is solely responsible for mastering the dark arts of finance. We are expected to be a financial experts. But most people aren’t.

Financial literacy is a subtle form of victim blaming, telling people that if they just knew more they wouldn’t be so in debt. First it’s like telling the victims of a defective, exploding automobiles that if only (if only!) our schools taught automotive science many fewer people would have died. If only more Flint, Michigan residents studied water quality, things wouldn’t have gotten so out of hand.

Second, it’s just not true. Debt is too expensive for the majority of people and too many financial products are exploitatively designed. We never had a chance!
 

“The Ultra-Wealthy Who Argue That They Should Be Paying Higher Taxes”

In an age of historic disparity, Abigail Disney and the Patriotic Millionaires take on income inequality.

by Sheelah Kolhatkar (The New Yorker)

This article profiles an advocacy group made up of wealthy people who are fighting against inequality, Patriotic Millionaires. Their major contribution, in my estimation, is altering laws. I’m skeptical, of course, but in some ways this should be welcome: first because it is necessary and second because no one has political power like they do. What’s surprising is how long it took for a group like this to emerge, but the article points out that most members are worried that if they don’t do something, there’ll be a violent uprising. Which might be a true, or, if its not true, a useful delusion.

Will they fight for all the right laws? Likely not. But some concern about the distribution of resources by people with political power would be good. As long as the solutions are not widening access to financial products.

It would be even more optimistic to see them in coalition with wise labor unions and other worker-powered advocacy groups.

“Revolution on the Installment Plan”

The moral hazards of the money diary

by Jessa Crispin (The Baffler)

After a bevy of articles chronicling the spending habits of young people, it’s clear the problem with a money diary is that it always looks bad. In the abstract, every purchase looks frivolous and every advantage is tasteless. But the class war waged through the lurid articles is a waste of time, because records individual spending habits are crude memoirs, not indicative of much beyond a highly specific moment in time.

“How Taylor Swift Dragged Private Equity Into Her Fight Over Music Rights”

The Carlyle Group, an investor in her catalog, has stepped in to encourage talks between Ms. Swift and Scooter Braun, who now controls her old label.

By Kate Kelly, Joe Coscarelli and Ben Sisario (The New York Times)

Private equity looks at music and sees real estate; instead of land and houses you have songs and artists. The article spotlights the fact that most artists do not own their songs, and everyone below the level of Taylor Swift is denied economic agency. Of course, the music business has been exploitative for at least a century. Until musicians own their music, it will just become another commodity for PE firms to securitize, trade, and profit from.

“Make Antitrust Democratic Again!”

The response to the next recession should put economic power back in the hands of the people.

By Sanjukta Paul and Sandeep Vaheesan (The Nation)

This reinforces the point I made in my article about antitrust, but good to hear it from experts: “Demanding that antitrust law promote only competition is not a tenable solution. Competition is not categorically good.”

What is the real promise of a democratic antitrust movement? Cooperation between independent contractors and other economically marginalized groups.

“Think of the possibilities for cooperation among consumers and smaller players if they were freed from the threat of antitrust. Gig workers, freelancers, and small producers who often experience precarity and poverty could bargain collectively for better contracts, much as if they belonged to a union.”

“U.S. Farmers Are Being Bled by the Tractor Monopoly”

Forcing them to use authorized repair centers hurts rural America.

By Adam Minter (Bloomberg)

Farming has emerged as ground-zero for the Right to Repair movement. Dealers and manufacturers exploit the computerization of farm machinery, installing software that can’t be fixed without authorized technicians. Where farmers once might have tinkered with their own machines, they now have to wait for someone to show up, and hope they have the part. They are the victims of repair monopolies.

“In Nebraska, an independent mechanic can replace a John Deere Co. tractor transmission. But if the farmer wants to drive it out of the mechanic’s garage, a Deere technician must be hired for $230, plus $130 per hour, to show up to plug a computer into the tractor to authorize the part”

“Can the Art World Kick Its Addiction to Flying?”

By Kyle Chayka (Frieze)

Flying is pervasive in any sales-intensive industry, the difference with the art world is that flying is glorified even by theorists. The author argues against the veneration of peripatesis. My twitter thread on the issue.

“Why We Need a Working-Class Media”

What could the political effects be of a media that actually served working-class Americans?

by Carla Murphy (Dissent)

A veteran journalist reflects on what it would take to change the narrative in our culture, something I think about a lot. How do we swivel our focus from wealth, to the stories of people leading and making the changes we want to see?

“We need a view of society and ourselves from the underside of power.”

This edition is heavy on wonkish economics issues, but it is stuff that is important for the general public to be aware of. So hang on tight!

“Gregory Mankiw is Confused About Reselling”

Markets are great if they’re for thousand-dollar scalped tickets. Economics textbooks, on the other hand…

By Jack Meserve (Democracy Journal)

Even for a conservative economist, it’s mind boggling how cynical Mankiw is. He once suggested that scalpers played a useful role in the economics of ticket sales, but spent an enormous amount of effort to prevent efforts to lower the price of his required textbook through reselling. It is a good encapsulation of the economic policy over the last half-century: support policy that lowers prices for wealthy people and oppose any effort to reduce income for wealthy people. A lifelong Republican, he recently suggested in the New York Times that because he is abandoning the Republican party, Democrats should listen to a few of his regressive policy suggestions. His party affiliation may have changed, but his policy ideas are exactly the same. His article’s suggestion is basically that the Democrats should become the old Republicans. Once again, mind-boggling logic.

“Automation and the Future of Work—1”

by Aaron Benanav

This is an important article about automation. It’s fairly technical, but makes some persuasive arguments about why automation is less important of an issue than pundits make it out to be.

“Automation worry,” let’s call it, recurs throughout the ages, from the Luddites on, always with the same tone:

“Automation theory may be described as a spontaneous discourse of capitalist societies, which … reappears in those societies time and again as a way of thinking through their limits. What summons the automation discourse … is a deep anxiety about the functioning of the labour market: there are simply too few jobs for too many people.”

I’m inclined to agree. Fear of automation is historically persistent, and often fails to explain change:

“What automation theorists describe as the result of rising technological dynamism is actually the consequence of worsening economic stagnation.”

So another thesis is that, since the 1970s, global manufacturing overcapacity (too many goods seeking too few buyers) explains our current economic status better than increased automation does:

“Global manufacturing overcapacity explains why the countries that have succeeded in attaining a high degree of robotization are not those that have seen the worst degree of deindustrialization. In the context of intense global competition, high degrees of robotization have given firms competitive advantages, allowing them to take market share from firms in other countries. Thus Germany, Japan and South Korea have some of the highest levels of robotization; they also have the largest trade surpluses in the world.”

“The decline in the demand for labour is due not to an unprecedented leap in technological innovation, but to ongoing technical change in an environment of deepening economic stagnation.”

So what are we to do?

“We should be reaching towards a post-scarcity world, which advanced technologies will certainly help us realize, even if full automation is not achievable—or even desirable.”

“Impoverished economics? Unpacking the economics Nobel Prize”

When the world is facing large systemic crises, why is the economics profession celebrating small technical fixes?

by Ingrid Harvold Kvangraven (Open Democracy)

The most recent Nobel prize in economics indicates that randomized controlled trials are the future of economics, a microscopic focus on symptoms instead of massive structural problems. It is a turn away from sweeping, totalizing theories (read: neoliberalism), a movement to focus on “manageable problems” as the Nobel committee cheered. But humble thinking isn’t exactly atonement for fifty years of disastrous consensus.

“What Happens Next Will Amaze You”

By Maciej Cegłowski (Idle Words)

(This is the text version of a talk from September 14, 2015, at the FREMTIDENS INTERNET conference in Copenhagen, Denmark.)

Are venture capitalists really just wealthy, private central planners? This presentation compares VC first to landed gentry and then to Poland’s failed central planning of the 1980s.

“There’s something very fishy about California capitalism.

Investing has become the genteel occupation of our gentry, like having a country estate used to be in England. It’s a class marker and a socially acceptable way for rich techies to pass their time. Gentlemen investors decide what ideas are worth pursuing, and the people pitching to them tailor their proposals accordingly.

The companies that come out of this are no longer pursuing profit, or even revenue. Instead, the measure of their success is valuation—how much money they’ve convinced people to tell them they’re worth.

…

We had people like this back in Poland, except instead of venture capitalists we called them central planners. They too were in charge of allocating vast amounts of money that didn’t belong to them.

They too honestly believed they were changing the world, and offered the same kinds of excuses about why our day-to-day life bore no relation to the shiny, beautiful world that was supposed to lie just around the corner.

Even those crusty, old-fashioned companies that still believe in profit are not really behaving like capitalists. Microsoft, Cisco and Apple are making a fortune that just sits offshore. Apple alone has nearly $200 billion in cash that is doing nothing .

We’d be better off if Apple bought every employee a fur coat and Bentley, or even just burned the money in a bonfire. At least that would create some jobs for money shovelers and security guards.

…

So what kinds of ideas do California central planners think are going to change the world?

Well, right now, they want to build space rockets and make themselves immortal. I wish I was kidding.”

One of the main tenets of capitalism is that owners reinvest their profits, which owners basically stopped doing almost 100 years ago. What this means is that we are not experiencing a time of extreme capitalism, but something else. Capitalism had a theory for profits (which a person could no doubt contest) but what are they doing with their profits? Finding the answer is a big political question, because where capital is invested determines what we manifest as a society. Do we work together to figure out where profits get allocated, or continue to leave it up to a small group of wealthy venture capitalists?

“Against Economics”

by David Graeber (The New York Review of Books)

David Graeber reviews a heterodox book on economics by Robert Skidlesky and finds some extremely fundamental problems with economics scholarship, not least of which is that the field still doesn’t understand how loans are made:

“Economists … have spent much of the twentieth century arguing about what actually happens when someone applies for a loan.

The one thing it never seemed to occur to anyone to do was to get a job at a bank, and find out what actually happens when someone asks to borrow money. In 2014 a German economist named Richard Werner did exactly that, and discovered that, in fact, loan officers do not check their existing funds, reserves, or anything else. They simply create money out of thin air, or, as he preferred to put it, “fairy dust.””

Graeber finds Robert Skidelsky’s book to a useful retort about how markets come to be:

“Skidelsky is providing us with a worthy extension of a history Karl Polanyi first began to map out in the 1940s: the story of how supposedly self-regulating national markets were the product of careful social engineering.”

Another idea Graeber suggests, which I find intoxicating, is that income tax is designed to be intrusive and exasperating. It makes us hate the government and demand a smaller state, when really corporate, wealth, capital gains, and other non-individual taxes could work extremely well.

“The Art of Dying”

I always said that when my time came I’d want to go fast. But where’s the fun in that?

By Peter Schjeldahl

“I had a moment, while anticipating my diagnosis, of feeling special. But what’s as commonplace as dying? Everybody does it. I also had an instant of fancying that I could drink again. That evanesced in a flash. Fellow-alcoholics know that the beast, though out of mind, survives. My thought was a foul little burp from a cave.”

“The Smartest Guys in the Clubhouse”

How the McKinsey-fied Astros cheated their way to a championship—and became a parable of American success

By David Roth (The New Republic)

McKinsey & Co. analyzed the Astros and found they could win by cheating.

An Unquiet Mind: A Memoir of Mood and Madness by Kay Redfield Jamison

I’ve been reading about bipolar disorder, and it was suggested I read this memoir by Kay Redfield Jamison. I had me thinking about how addictive high energy is, in general, and how it seduces people with bipolar disorder to abandon their treatment.

Your Favorites for the Year

I asked a number of regular readers what their favorite book of the year was and, happily, got an eclectic list.

Alice: Favorite from this year was A Disappearance in Damascus, by Deborah Campbell.

Sue: Right now I’m reading The Three-Body Problem, by Liu Cixin, revised and translated by Ken Liu.  I’m only a little more than half-way through it, but I think I like it a lot. Anyhow, it’s different from what I usually read.  So is The View from Flyover Country, by Sarah Kendzior (I mean, also not finished, also different, and I like it).

Sarah: If you like sci fi/genre fic, I recommend The Expanse—super fun! I spent a ton of the year reading that.

Also loved The Body Keeps the Score about trauma and the nervous system.

Oliver: The Metaphysical Club – Not news to you! I didn’t really know what pragmatism was until I read this. Really absorbing intro to the first pragmatist thinkers and the historical circumstances that conditioned their thought.  Reading it I had the rare experience of having my worldview actually altered. Especially by the encounter with John Dewey.

Transit of Venus by Shirley Hazzard – A kind of terrifyingly perfect novel shaped like a mobius strip. I don’t think I’ve felt so reproached by a work of fiction. But it’s also just sad and beautiful.

Berlin Alexanderplatz  by Alfred Döblin – Outrageous and bleak sound collage from Weimar Germany.

Honorable mention is not a book but an essay, “Special Journey to Our Bottom Line” by Elizabeth Schambelan (published in n+1), of which I know you’re aware!

(Rob: I liked The Metaphysical Club too, especially the part about Dewey encountering the Pullman strike in 1894 on the way to his job at the University of Chicago. And the Schambelan essay was good too, a breathtaking amount of research on a subject that came from way left field.)

David: The Nickel Boys by Colson Whitehead. Definitely my favorite. I read a lot of older books this year that I’ve been meaning to read for a while. Very few new books. Of the new ones, Nickel Boys was at the top of the list—but also probably top of the list regardless

Matt: The Birth Partner (5th ed.) by Penny Simkin (with Katie Rohs), which advertises itself as “a complete guide to childbirth for dads, partners, doulas, and other labor companions,” is by far the most useful book I have ever read and a favorite of the year not just for its practicality but also for the nice, clear, easy writing style. There are some pleasant hand-drawn illustrations as well as bullet-pointed lists, gridded charts, and multi-paged sections highlighted with a dark orange background for quick reference––all design features geared toward high didacticism. One interesting feature of the 5th edition is the switch to gender-neutral language, which reflects our society’s broadening acceptance of multiple family configurations. Thus the authors refer to a “pregnant parent” or “birthing person” rather than “pregnant woman” or “mother.”
Adam: I think the best book I read this year was Neil Sheehan’s A Bright Shining Lie, about John Paul Vann and the Vietnam War. I couldn’t put it down. This may mean I’m turning into an old man.

Marguerite: Conversations with Friends and Normal People by Sally Rooney. I had trouble remembering what I read this year because not a lot of it stood out (except for the books that were either really hard or really bad). I guess I don’t read a lot of “fun” books like these, and it was thoroughly enjoyable to blast through each of them in a few days––something I realized don’t do often.

Lucas: In a world where we’re paralyzed by fear around current events… the classic Hero of a Thousand Faces by Joseph Campbell is a reminder that there are no new stories under the sun. Regardless of age, language, creed, or identity, we are always living the same chapters of the same journey. And we’re being carried by a deep, unifying, worldwide, subconscious current underneath the veneer of our demographic differences.

Michelle: Definitely Robert Caro’s Working. By a long mile.

Peg: My favorite is Annie Dillard’s An American Childhood. It’s very cleverly written, something you pointed out to me––the first part of it can become hard to read, unless you understand it as a reflection of the youth it describes.

Dillard is only about 5 years older than I, and as a white person growing up in a city, she had some childhood experiences similar to mine.

(Rob: I agree. The first page of the book is an Olympian feat of writing.)

Guy: My dad’s book, Unbound: How Eight Technologies Made Us Human and Brought Our World to the Brink (2015), is really quite good. (His name is Richard L. Currier)

Pushing Ice (2005) by Alastair Reynolds is both superior hard science fiction and a great yarn

I think Caroline Alexander’s recent (2015) translation of the Iliad is a masterwork that should become the standard
My Favorites

I’ve already written about many of these, so I’ll include just a short note about each one. But these are things I would recommend to anyone.

Documentary

Honeyland

A nonfiction story about a beekeeper in rural Macedonia that most documentarians and writers would kill for. I know I would!

Book Review

“Not Enough Deliliahs”

by Andrew O’Hagan (London Review of Books)

Hilarious. “She went at her Cobb salad like a demon.”

Book

Fear City: New York’s Fiscal Crisis and the Rise of Austerity Politics

by Kim Phillips-Fein (Norton)

By examining what happened to New York City in the late 1970s, Phillips-Fein is able to explain everything about what went wrong with the US.

TV

The Wire Season 4 (HBO)

A season of television primarily about children, sweetness cut with brutality. I also really enjoyed Wu-tang: An American Saga this year.

Essay

“Is Poverty Necessary?”

An Idea That Won’t Go Away

by Marilynne Robinson

A wandering, complicated, and heterodox take on the vexing issue of poverty. A great work of economics that you really can’t imagine a contemporary, professional economist ever writing.

Reported Feature

“Crash Course”

How Boeing’s Managerial Revolution Created the 737 Max Disaster

by Maureen Tkacik (The New Republic)

This article argues it wasn’t inexperienced pilots that caused the 737 MAX crashes, but a cynical managerial desire to suck as much money out of Boeing as possible, even if it meant that their planes were less safe.
Reading List

“The 50 Best Nonfiction Books of the Past 25 Years”

Slate’s books team selects the definitive works of reporting, memoir, and argument of the past quarter-century.

By Dan Kois and Laura Miller

Pretty good list.

“How the Teamsters pension disappeared more quickly under Wall Street than the mob”

By Elliot Blair Smith (MarketWatch)

For anyone who watched The Irishman, and wondered with happened to Jimmy Hoffa’s pension fund, this is the article for you.

“Emotional baggage”

Away’s founders sold a vision of travel and inclusion, but former employees say it masked a toxic work environment

By Zoe Schiffer

Very stressful read. My first thought was that many people venerate start-ups, but they are often terrible places to work. Trying to break into a market requires tremendous effort and capital, and often the only way to do this is to work like crazy. They are people trying to squeeze two pennies out of one. Maybe some people want to do this, but for most people, it is a waste. The founder of Reddit once said that founders are “emotionally broken people,” and I would say that this could easily be applied to the founders of Away. Bad people in a bad situation.