Tag Archives: economics

Ecologies, Economy, Environment & Justice

Schumacher’s Small is Beautiful

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Small is Beautiful By E. F. Schumacher

I read this a number of years ago now, but still it surprised me that it should be written in 1973. Before I was born. I forget just how long Western white folks have known we were hurtling into climate crisis, though I know our indigenous kin have been voicing their warning since Europeans set foot in their ‘new world’ and began the first wave of extinctions and genocide.

This is a book critiquing economics as they are (still are, despite all good sense and years of warning) and providing a vision of economics as they could be. I feel that there are so many people rethinking economics now, writing for popular audiences with books splashed across Waterstones’ tables, that it is almost encouraging. But this analysis of the modern world as Schumacher sees it is still a good place to start, and I’ve been meaning to come back to it for a while.

He begins with the very European separation of man (because it was almost always man after all, and that was always a part of the problem) from nature.

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Economy, Environment & Justice

Joan Tronto on Care, Democracy and Economics

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I loved how Joan Tronto’s short book, Who Cares? How to Reshape a Democratic Politics, so simply and succinctly argues for a way to radically rethink politics, economics and democracy. She writes:

We hear often that we are in a care crisis. That is, we face a shortage of formal caregivers to cope with the increased care needs of ever-more elders who will need ever-more care. But this crisis involves more than demographic and labor market projections. We all experience a version of it daily: “I wish I had more time: to care for my loved ones, to contribute to causes I care about, to be there for my friends.” We spend so much time on undesirable tasks and so little time on ones we really value. How can everything be so upside down? This pressure seems to each of us a personal failing. But it isn’t. It’s a political problem. (2)

And a economic problem. And a collective problem. I love the way she is cracking open what is ‘political’ and economic, returning them where they belong in our everyday lives. She continues:

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Austerity, Health, Working

Why Austerity Kills

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I think COVID-19 has made all of us realise just how deadly austerity is, but The Body Economic by David Stuckler and Sanjay Basu should be required reading for its death-dealing potential outside of pandemic conditions.

Please, can we not go backwards after this.

I am often nervous about anything that draws parallels too strongly between society and body, policy and medicine. But I think they do it really well here.

Austerity is medicine intended to reduce symptoms of debts and deficits, and to cure recessions. It cuts governmnet spending on healthcare coverage, assistance to the unemployed and housing support. At the start of the trial, its potential side-effects were not well understood (ix).

There is a wealth of work on the social determinants of health such as Marmot‘s review — there is nothing so new here but yet it can’t be repeated enough it seems.

Good health doesn’t start in hospitals and clinics; it starts in our homes and our neighbourhoods, in the food we eat, the air we breathe, and the safety of our streets. Indeed, a top predictor of your life expectancy is your zip code. (xi)

They study the impact of the economy on health and find that it is not recession but austerity that impacts it most negatively. ‘Recessions can hurt,’ they write, ‘but austerity kills (xx)’. Even the IMF has recognized this, reversing previous policy, writing that ‘austerity slows down economies, worsens unemployment, and hampers investor confidence.’ Yet how little has changed.

This book consists of chapter after chapter of evidence pulled from around the world (I love this scope around the world…) where divergent paths can be seen and tested to some degree, starting with the Great Depression in the US. States implemented the New Deal very differently, states taking fullest advantage of government supports and providing social services showing mortality rates far below those states which did not. They move on the the post-communist mortality crisis–which I am humbled to say I had never heard of. The authors show that the huge rise in mortality in men — the awful, heartrending rise in mortality — took place wherever in the former Soviet Union they pushed Shock Therapy, ‘a radical package of market reforms’ designed to push the transition to capitalism as quickly as possible. Primarily Harvard economists were behind this: Andrei Shleifer, Stanley Fischer, Lawrence Summers and Jeffrey Sachs. Russia, Kazakhstan, Kyrgyzstan followed this advice. Stiglitz was on the other side of this argument, pushing for gradual reform, Belarus, Poland and the Czech Republic followed this path.

The austerity imposed through shock therapy did not just cause a spike in mortality, it also significantly slowed economic recovery — even by its own justification (if there could be such a thing causing so many deaths), it failed. Milton Friedman himself admitted Stiglitz was right.

Another chapter on East Asia, again showcasing the deaths caused by IMF imposed austerity in Thailand, South Korea and Indonesia, as compared to Malaysia where austerity was resisted. Heartbreaking again.

On to the ‘Great Recession’, the approach taken by Iceland prosecuting bankers rather than imposing austerity. Quicker economic recovery, fewer deaths. Compare this to Greece. Compare this to the US, where they write:

A 2009 study found that people who lack medical insurance were 40 percent more likely to die prematurely than those who had it. During the great Recession, before the PPACA came into effect, there were approximately 35,000 avoidable deaths due to the lack of healthcare insurance (99).

People were dying, and at the same time

Profits of health insurance companies soared…In 2009 the top five US health insurance companies reported $12.2 billion in profits, a staggering increase of 56% over the figures for 2008. In 2009, a year that saw 2.9 million people lose coverage, insurance companies’ profits rose by 56 percent (101).

I haven’t read Kenneth Arrow, Nobel prize-winning economist, but he wrote in a 1963 paper that markets ‘often fail to deliver affordable, high-quality healthcare‘ (101). What they do instead, is make some people a whole lot of money.

Stuckler and Basu move on to Italy, the protests of the vidove bianche, or white widows of the increasing numbers of men committing suicide after losing employment. This opens a chapter on suicide and its connections to work, the ever increasing numbers of primarily men killing themselves after the imposition of austerity around the world. The way that governments, as they have done here in the UK, averaging out the numbers of deaths erase the spikes that demand attention.

From work to housing… They look at the unprecedented rise of the West Nile Virus during droughts, ultimately it was discovered that this had been caused by the foreclosure of homes and the breeding of mosquitoes in neglected pools. As an aside, West Nile Virus is a pretty terrifying disease.

This is not the only cost to health from the housing and foreclosure crisis. Housing is a precondition for good health — to be without it is to be among the most vulnerable groups.

People without homes tend to die forty years earlier than those with a roof over their heads. They often suffer from a raft of health problems and lack adequate access to healthcare. In addition, the homeless are at high risk of contracting infectious diseases like TB, which can then spread to the rest of the population. Poor health and homelessness are so closely linked that it is difficult to ascertain which came first, but the public health outcome is the same: a huge increase in the risk of death and avoidable suffering (127).

They describe people skipping medicines to be able to pay mortgages, a rise in hospitalisation leading to increased medical debt leading to increased likelihood of foreclosure. They write that the rise in foreclosures in communities strongly correlated to a rates of emergency room visits.

Heartbreaking.

Ultimately austerity has failed because it is unsupported by sound logic or data. It is an economic ideology. It stems from the belief that small government and free markets are always better than state interventions. It is a socially constructed myth–a convenient belief among politicians taken advantage of by those who have a vested interest in shrinking the role of the state, in privatizing social welfare systems for personal gain. It does great harm–punishing the most vulnerable, rather than those who caused this recession (140).

Well said. These are their recommendations:

To break the cycle of radical austerity programs, we need a New New Deal…To work, it must follow three key principles:

1. “First, do no harm” is the ancient higher law of the healing professions. Because social and economic policies have collateral effects on health and sickness, the doctors’ mantra should become a requirement for all such policies.

2. Help people return to work: In hard times, having a stable job is often the best medicine. Unemployment and the fear of unemployment are among the most significant drivers of poor health that people face in an economic crisis (143).

3. Invest in Public Health (144)

Stuckler, David and Sanjay Basu (2013) The Body Economic: Why Austerity Klls. Recessions, Budget Battles, and the Politics of Life and Death. NY: Basic Books.

Building Social Spaces, City & Country, Housing

Ground Control: Anna Minton

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Ground Control by Anna Minton is a great summation and ordering of the neoliberal features of current planning and development in the UK, and how they have developed since the 1970s. It quite brilliantly gets at the main features of planning and housing policies, ordering them in ways that makes a wealth of detail comprehensible while also highlighting its egregious effects on individuals, their communities and society as a whole.

It is a pleasure to read, but not pleasant reading if you know what I mean. Nothing infuriates me more than the privatisation and destruction of housing and the constant increases in control, security and surveillance. Over and over again you see the looting of the public sector and land belonging to all of us by the private sector, facilitated by politicians and planners and academics as well. Not that academics have power, but write the kind of theory that people in power want to hear and watch that shit fly.  Above all, the promotion of profit as the highest and best use, and the purpose of government to facilitate that. So while the Olympics in East London were billed as a benefit and income generator, it turned out as we ‘cynics’ expected all along.

According to the House of Commons Public Accounts Committee less than 2 percent of the Olympic budget has ended up coming from the private sector. (xvii)

When things began to fall apart in the economic downturn, the Wellcome Trust made a £1 billion bid for the development to explore a more full community use for the land. They were rejected, and Minton writes:

It is amazing that despite the utter collapse of the commercial case for the Olympic development the bottom line remains the only consideration the Olympic decision makers are prepared to consider. (xix)

She describes the rise of large corporations becoming community developers, which explains why so many new builds have so little possibility of generating community. This rise of what she calls ‘Tesco towns’, where a corporation building superstores builds customer’s homes along with it through its regeneration subsidiary Spenhill. It has built homes, schools, and public places in Gateshead, Kirby , West Bromwich Bradley Stoke, Shepton mallet, Seaton, Bromley-by-Bow, Woolich, Streatham.  (xxxv)

A book in itself to explore our new company towns. But I am reminded of that book I have seen on a colleagues shelf, Tescopoly, and am resolved to steal it. Borrow it. Whatever.

Then we have the Docklands as the birth of an idea — land amassed with the support of the state and sold off (cheap) to a developer. It is no longer public but private. New ‘luxury’ residences sit under rigid control alongside bars and restaurants in gated, high-security communities.

Minton writes:

‘…every former inner-city industrial area is trying to emulate this model, from the waterfronts of Salford Quays and Cardiff to the controversial demolition programmes of the old industrial northern cities.’ (5)

God forbid, but I stare at Salford Quays and can see the truth of it for myself.

The very particular form that this has taken in this country is fascinating though, as it is quite different from the states. Beginning in the the 1980s and the rise of the quango — the Urban Development Corporation, or UDC. A very clever way for conservatives to bypass the power of local (powerful, Labour) authorities — essentially giving developers who generally dominated the UDCs power of planning & economic development, power to buy land using compulsory purchase and sell land & spend public money without debate required. Elected figures too often seemed to be a rubber stamp and an air of legitimacy, but the real teeth in planning and public processes were removed.

Thus we have the Docklands — eight and a half square miles assembled and developed with no public debate in the face of immense local opposition. It sits there today, a place that in its form goes against everything I believe quality public and city spaces — spaces that promote wellbeing, conviviality, interchange and a sense of belonging to a wider society — should be.

Minton got some great interviews, this is so telling:

In the late 1980s it was like the Yukon gold rush in the whole Docklands area. Places such as Limehouse were totally overheated and developers were building orange boxes and practically giving away  free Porsches with them. It was exciting, but it was frightening. Then the whole thing went belly up. (12)
— Bob Barlow, marketing consultant with Barratt Homes and others

In 1992 Canary Wharf Estate went bankrupt, in spite of all the public subsidy. I’ve heard Canary Wharf’s ‘success’ in generating profit billed as a success story, instead I think of just how much public taxpayer money went into building such a space for international capital and insanely wealthy individuals who have chosen to put walls and gates between themselves and the local community. There’s ExCel just down the way, I’ve written about that terribly bleak space too, just one of the spaces along the Thames that are all privately owned — like ExCel, with its exhibition centre, six hotels, 2000 homes on ‘one hundred-acre ‘campus” on the old Royal Victoria Dock.  It sits above Canning town, it’s hard to reach from the community, it makes protesting the arms fairs happening there harder. (13)

Of course that in itself is not entirely new — Minton notes the controls and the gating of the old Bedford Estate, particularly along the border with Camden (remember when Camden was full of poor people? Damn.). They:

used uniformed ex-prison officers to patrol their enclave and when a fight over entry into the area broke out, leading to a death, the coroner is recorded as saying that government conduct was “disgraceful in allowing these squares and place places to be closed to the public.” (20)

Leading to a death…unthinkable for so many years, but I think we are returning to those kinds of times once again.

Still, there is something different about what is happening now, about this huge shift in the twenty-first century towards the creation of large private estates — shopping centres and office complexes that no longer sit on public streets. A very clever way of stripping local authority assets. Much of this was made possible in 2004, when a new act of Parliament changed the definition  of ‘public benefit’ to make economic impact rather than community impact more important.

Didn’t see New Labour getting rid of that now did we.

Minton’s tells us that the best place to look for how space will be managed and run, the feel of it, is in the ‘Estate Management Strategy’. Management is all important.

“Insurers like to see developers taking as many measures as possible to avoid a claim and they’re taking an increasing interest in risk controls being put in place in developments”, Gloyn says [Bill Gloyn, chairman of European real estate at Aon]. The consequence is that the private estates are far more ‘risk averse’ than the public parts of the city. This creates a very different atmosphere and public culture, which is now at the heart of all new developments. (33)

It doesn’t matter whether your taste runs to these developments or not, Minton says (I wonder honestly who does like them, but I know I am not hanging out with people from the city):

The real problem is that because these places are not for everyone, spending too much time in them means people become unaccustomed to – and eventually very frightened of – difference. (36)

BIDs and privatisation

We move to take a look at my new home of Manchester and New Labour’s love affair here — putting this city on the cutting edge of the introduction of Business Improvement Districts (BIDs) and growing privatisation.

Vomitous.

Thus was the Free Trade Hall made into part of a national hotel chain and removed from public life — now I know to mourn. Picadilly Gardens the same. The centre of Manchester is run by Cityco since 2000, in the fashion of a BID though they took over before BIDs were introduced here. Like in the States (I write about them, and they are so much more in your face there), their primary interest in keeping the area ‘clean and safe’. This is entirely about customer experience and about business bottom lines, not community. At least, not about the whole community. BIDs are clearly set up for consumers, Minton quotes another BID manager:

…The whole business of BIDs is moving the problem on, either by putting homeless people in a hostel or making sure they go somewhere else. (57)

In 2002, David Blunkett as home secretary introduced the ‘wider police family’, broadening who could exercise police powers. (45) Minton writes, that the:

flipside to clean and safe is control and zero tolerance. (48)

It is the promotion of the view that people ‘doing nothing’ in a space are suspicious or dangerous. (53) The opposite of what people who actually study public spaces have shown to be true. So we come to the best quote from a Bid manager:

We probably are a bit controlling in your terms, but we want quality control… There’s a trade-off between public safety and spontaneity. What you want is a few surprises, I agree with that, so we add in unpredictability with lighting schemes and water features, anything that adds to the quirkiness of what happens when you walk around as a consumer. We make huge efforts to import vitality. (54)

It really is the best quote. It really explains why those spaces are completely dead inside. Minton notes, however, that BID’s face less opposition here, due partly to tangled nature of the partnerships involved. For example in Manchester the founding chair was from Cityco and head of Brintwood — then Manchester’s biggest property developer — and the current chair is joint chief exec of Argent, the company redeveloping Picaccadilly Place. But the council is also represented. (56)

Defending Space

In the 1970s Britain first moved towards policies on ‘defensible space’ — established by Oscar Newman whose ideas were adopted by Essex County Council in the Design Guide of 1973. They drew on lessons from 3 public housing projects in NY — I mean, really? And then over the last decade we’ve seen the government initiative ‘Secured by Design’ (62, 72), spearheaded by the Association of Chief Police Officers in 1998 as a crime-reduction project. Same as ‘Crime Prevention through Design’ or CPTED in teh States. Still blaming poor people’s behaviour for all the world’s problems and thinking punitive architecture can fix it. Still, insurance companies love it and provide lower premiums when its used, as do security agencies.

So everyone uses it. More gates. Minton describes them as a stereotype of  luxury living. God, I suppose they are, but it wasn’t always…She gives the depressing example of St George’s Hill of Digger fame, which was the first gated development in the 1920s. Is now a golf course and country club. Is now full of absurdly expensive hi-tech homes marketed at men just like other gated communities.

Renewal…

This breaks my heart more than anything, streets of row houses demolished for profit only, communities broken up. Oldham is her example. It’s infuriating and desperately sad. If a building is listed it can only be knocked down if it becomes a danger to the public — good reason to let it become so.

Again we are back to that 2004 Compulsory Purchase Act — allowed economic well-being alone as a justification for purchase and redevelopment. (93) Profit rules.

She gives the example of Wainman Street, here in Salford as one of these places identified by Brendan Nevin, academic and architect of the Pathfinder Policy to ‘restructure housing provision in some older industrial cities.’ (97) Houses were emptied out of people who wanted to live in them through the 2000s, demolished to create land for redevelopment. Pathfinder has been shown to benefit only developers who get control over wide areas of empty land and councils who get government funding for the program, no one else. Definitely not the families who want to keep their homes. New Labour ran with it.

There are, of course, the new HMOs, or Housing in Multiple Occupation: ‘bedsits with high concentrations of economic migrants… Often they clash with the poor, mainly white population…” (108)

In London almost everyone I knew lived in this kind of housing of course, but here up North it’s just coming into its own. Just one of the horrors of the Private Rented Sector. There are bad conditions:

Following the buy-to-let boom, there are now hundreds of thousands of landlords who have not had to pass any tests of competence, demonstrate any knowledge of landlord or tenent law, or prove their honesty, financial probity or absence from criminal convictions, let along have any experience of property management. (111)

There’s Right to Buy — only had impact it did because councils not allowed to reinvest money made through sales back into council housing, combined with the buy-to-let mortgage that really came into its own under New Labour– buy-to-let now makes up a third of the private rented sector. (117) This created huge added costs to councils to provide statutory duties to those who find themselves homeless. By 2005, it was common practice that many of these empty investment rental apartments were leased back to the council as temporary accommodation as they scrambled to find housing for homeless to whom they had statutory duty to house. At exorbitant prices you can be sure. More transferal of money from the public to the private sector.

The Civil Society

The impact of all of this on society can hardly be underestimated. Minton starts with the fear of crime —  looking at where it comes from, and how it increases for those living behind gates. Thus, while it ‘arises from a multitude of complex reasons, underpinned by the emotional state of the individual’,  eventually it turns on trust. Gates tend to dissolve trust, and shutter people away from identification with the larger world.  (132)

There’s a lot on ASBOs here which helped me understand them better — they are very English, emerging from the Labour government’s Antisocial Behaviour White Paper of 2003,  what a travesty. Of course this connects to broken-window theory, which I hate with a great passionate hatred.

Turns out Manchester was the ASBO capital of Britain, with Cityco particularly enthusiastic in this regard. Salford too declred a Respect Action Area…so a lot of focus on the impacts here.

Minton tells us about a mother in Salford describing how her kids can’t go into kebab shops or play on the street. There is nothing in Salford to do for youth, and pubs tend not to be open to people under 21. That shocked me, so I’ve started noticing just how many set age limits above the national ones. A number of them.

A final thought on the crux of it all

So many of today’s fractures in civil society have come about as a result of the single-minded approach to extracting the maximum profit from the places we live in, through policies on property.  (177)

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Economy, Sustainability

The Spirit Level — Can we just get on with greater equality already?

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The Spirit LevelThe Spirit Level marshals all the evidence — for those who needed such evidence — that inequality has a huge negative impact on everyone in a society, the rich as well as the poor. But especially the poor.  There is of course, a minimum level of security and income which human beings require. Many do not enjoy such a level. But for those who do, it still isn’t enough to guarantee a full and happy life:

Economic growth, for so long the great engine of progress, has, in the rich counties, largely finished its work. Not only have measures of wellbeing and happiness ceased to rise with economic growth but, as affluent societies have grown richer, there have been long-term rises in rates of anxiety, depression and numerous other social problems. (5-6)

This is good book full of evidence that it is the degree of equality in a  country which leads to longer, happier lives and a stronger society.

Poverty itself is a bit of a slippery concept if you think too hard, I liked this quote from Marshall Sahlins:

Poverty is not a certain small amount of goods, nor is it just a relation between means and ends; above all it is a relation between people. Poverty is a social status . . . It has grown . . . as an invidious distinction between class . . . (Stone Age Economics, quoted p 15)

Poverty as a relationship — it makes sense that this relationship is what matters above the bare minimum required for life.

Their graphs are simple, direct — only as good as their data of course, but that is well documented…This one is from p 20 and p 174, so good they showed it twice!

screen-shot-2011-07-03-at-11-25-56-pm

The best indicator for the whole gamut of health and social problems in rich countries is not poverty, but the difference between rich and poor. Reduce inequality, and you should see marked improvements in all of them.

How Inequality Gets Under the Skin

I read this over the summer, but it’s weird going back over my notes after Trump’s victory, especially reading things like this:

The growing rates of anxiety in the U.S. are very depressing indeed, yet they correlate to more aggressive declarations of self worth.

The answer turns out to be a picture of increasing anxieties about how we are seen and what others think of us which has, in turn, produced a kind of self-promoting, insecure egotism which is easily mistaken for high self esteem (36).

I’m always a little skeptical how we ascertain how society is changing us more broadly, but this rings true. Still, it is hard to analyze the water in which you’ve grown up in. They connect these kinds of psychological anxieties with inequality, and then tend to almost conflate the two in trying to explain the correlation between inequality and many of the social ills and illnesses examined as the multiple indicators of health and wellbeing.

Part 2 — The Costs of Inequality:

So for the great list of indicators:

  • Mental health and drug use

p 67. reproduced at http://thestandard.org.nz/wp-content/uploads/2010/09/spirit-level-5-620x465.jpg
p 67. reproduced at http://thestandard.org.nz/wp-content/uploads/2010/09/spirit-level-5-620×465.jpg

One of the things they cite is Oliver James on the

‘affluenza’ virus…is a “set of values which increase out vulnerability to emotional distress”, which he believes is more common in affluent societies. It entails placing a high value on acquiring money and possessions, looking good in the eyes of others and wanting to be famous. (69)

Interesting, depressing, you can see how hard this would be to live up to.

  • Physical Health and life expectancy

They cite more than 40 papers on the links between health and social capital have now been published. (See M.K. Islam, J. Merlo, I Kawachi, M. Lindstrom and U.G. Gerdtham, ‘Social Capital and health: does egalitarianism matter? A literature review’, International Journal for Equity in Health (2006) 5:3.)

Increasing social capital and reducing inequality improve health across the society, just throwing more money at it doesn’t. Probably because most of that money doesn’t actually go towards health, as in the US, but towards corporate profits, but that’s another story I suppose. Looking at this chart and realising that of all these countries the US is the one that doesn’t actually provide universal healthcare despite the obscene of money going into healthcare makes some sense of the outcomes, and makes you feel sick at the same time. Sadly, there’s no cure for that other than some serious structural changes. Like all of this really.

img_7485

  • Obesity: Wider income gaps, wider waists — correlates to inequality.
  • Educational performance — correlates to inequality.
  • Teenage births: recycling deprivation — correlates to inequality.
  • Violence: gaining respect — correlates to inequality.

They note that inequality is ‘structural’ violence, and statistically it matches up with…inequality. Again, they connect this inequality with the anxieties that emerge from our unequal society:

…increased inequality ups the stakes in the competition for status: status matters even more. The impact of inequality on violence is even better established and accepted than the other effects of inequality. (134)

  • Imprisonment and punishment — inequality

I’ve read lots about the crazy amounts of incarceration in the US, The New Jim Crow is miles and away better than this summary. But one fun fact

In California in 2004, there were 360 people serving life sentences for shoplifting. (147)

Jesus wept. And of course, there is this on p 148:

homicides

I have to note that in many of these charts I couldn’t initially find the US because it is so often alone up at the top…This chart makes me sick too.

Another brief note they make, there is so much to dig into here but it’s interesting:

In societies with greater inequality, where the social distances between people are greater, where attitudes of ‘us and them’ are more entrenched and where lack of trust and fear of crime are rife, public and policy makers alike are more willing to imprison people and adopt punitive attitudes… (155)

  • Social mobility: unequal opportunities — inequality

This is so geared towards statistics and policies, digging through data more than into experience, but every now and then they drop into higher theory, like Bourdieu writing about ‘the actions by which the elite maintain their distinction symbolic violence…’ (164) I had forgotten he wrote about this, this book underlined for me the very strong connection between inequality and violence, inequality as violence, and how that underpins everything else.

Part 3 — a better society

I appreciated that they ended The Spirit Level with some thoughts bringing everything back together, and from there thinking through what change is possible. There was some interesting things on the racial divides in the US, and again and again this book underlines that while the poor suffer from inequality most, really it is everyone who suffers. Maybe that will have some impact? Though it doesn’t seem to have had yet…

in the USA, state income equality is closely related to the proportion of African-Americasn in the state’s population. The states with wider income differences tende to be those with larger African American populations. The same states also tend to have worse outcomes…among both the black and the white population. The ethnic divide increases prejudice and so widens income differences. the result is that both communities suffer…

So the answer to the question as to whether what appear to be the effects of inequality may actually be the result of ethnic divisions is that the two involve most of the same processes and should not be seen a alternative explanations. The prejudice which often attaches to ethnic divisions may increase inequality and its effects. Where ethnic differences have become strongly associated with social status divisions, ethnic divisions may provide almost as good an indicator of the scale of social status differentiation as income inequality. (179)

It is interesting to look at how the numbers brought Pickett and Wilkinson to these findings that are more often found elsewhere. Again and again the message — inequality hurts the poorest most, but it negatively impacts everyone. Reducing inequality benefits everyone. Evidence also suggests it should make rich countries care more about reducing the terrible inequalities between countries — little sign of that despite how desperately — perhaps even more desperately — that is needing recognition, but the more arguments made the better. This is just a building block in working towards ensuring equality remains on the agenda.

 

There’s a whole section on ‘can this be done?’, can we create more equal societies, but honestly. They themselves make the point that some countries have done it already.

Another truth;

systems of material or economic relations are systems of social relations. (199)

So what is their solution? They look to worker owned business, cooperatives, give example of Tower Colliery, where miners successfully took over pit operation, combining redundancy money to buy the pit in 1995, for 15 years until seam was mined out. They also, in the bigger picture, argue for what they call a steadd health: does egalitarianism d by economist Herman Daly. (220) I’ll have to look more into this and always prefer to start with the source, so to just finish up with some of their final findings.

Evaluations of even some of the most important services, such as police and medical care, suggest that they are not among the most powerful determinants of crime levels or standards of population health. Other services, such as social work or drug rehabilitation, exist to treat — or process — their various client groups, rather than to diminish the prevalence of social problems. (233)

even more damning, this is my personal favourite sentence:

Rather than reducing inequality itself, the initiatives aimed at tackling health or social problems are nearly always attempts to break the links between socio-economic disadvantage and the problems it produces. The unstated hope is that people — particularly the poor — can carry on in the same circumstances, but will somehow no longer succumb to mental illness, teenage pregnancy, educational failure, obesity or drugs. (234)

So really this is an economic and a political problem, they write

The historical evidence confirms the primacy of political will. (238)

Behind this lack of political will? Multiple reasons of course, one being the decline of the trade unions — their decline in power has itself made possible a great deal of this growing inequality. There’s also the fact that many corporations have bigger economies than many a nation state. They quote the UN Conference on Trade and Development (UNCTAD):

Twenty-nine of the world’s 100 largest economic entities are transnational corporations (TNCs)… On the 200 TNCs with the highest assets abroad in 2000, Exxon is the biggest in terms of value added ($63 billion). It ranks 45th on the new list, making it comparable in economic size to the economies of Chile or Pakistan. Nigeria comes in just between DaimlerChrylser and General Electric, while Philip Morris is on a par with Tunisia, Slovakia and Guatemala. (244)

Small wonder they walk with such big sticks. Small wonder higher levels of equality should be so hard to achieve, despite the improvements it makes to everyone’s quality of life.

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Labour, Pillars of Capitalism

Ford, and confusion in right wing rhetoric

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Even among the many books on economics and transnational corporations that I do not agree with, there are some among them that are at least rationally argued and relatively factual. But I rather enjoy when they are not, it allows me to stay awake through the boredom, mumbling angrily at the page and marking exclamation points and question marks in the margins. And their own contradictions and prejudices always come to the fore…a few choice quotes from my recent favourite:

Ford also expanded mechanical parts manufacturing in the United Kingdom (such activities are less sensitive to labor disruptions) and body and assembly in Germany, where the work force was more efficient.

Ah, racial…er…national profiling? Grand generalizations? You have to love them, especially when they’re tossed into the argument like olives of unknown provenance into a greek salad.

Increasingly, these disagreements within the US Big Three made it difficult for the US government to intervene effectively in their bargaining with the Mexican government.

Long live free trade! I wonder who was more vexed, the big three or the US government?

The UAW’s failure to negotiate better with the auto makers that had recently established in the United States also accounted for the disadvantage that the US Big Three face vis-a-vis their foreign rivals…

Is this the present or the past, who can tell? One thing I know is that it’s those damn unions again, always letting the home country’s corporations down…but I suppose if you can’t blame the workers for not kicking some Japanese ass, who can you blame for the American corporation’s failure?

The maquiladoras became the most visible symbols of the threats that low-wage countries could pose to jobs…

Again, if you can’t blame those greedy low-wage countries for the threats against jobs, who can you blame? Oh wait…

US government policies that fostered automotive production in maquiladora plants also altered the negotiating dynamic between the Mexican government and the US vehicle producers. The US auto makers learned about the low costs and the high quality of automotive production in Mexico, and the Mexican government learned about the benefits of rationalizing Mexican automotive production on a North American basis.

This is an extraordinary thing to say by any standard (unless you’re a patriotic elementary school teacher reading directly from a company brochure). It is especially extraordinary if you’re aware of the fact, as the author states earlier in the book, that Ford opened its first Mexican factory in 1925 and GM and Chrysler in 1935. And all of them had been operating there continuously for decades.

Sadly enough, the ongoing silliness of this right-wing hodgepodge of contradictory imperialist and free-trade theories  kept me entranced until the very end! So I have now read a book in its entirety that I can never use as a source in good conscience, though I shall certainly find some of the original sources useful. I could have just read the bibliography…I suppose I know who has had the last laugh.

politics

Marcuse & Davies: 2 views on roots of crisis

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Thought I’d start out with a funny quote I’d forgotten about, courtesy of Howard Davies. It’s all downhill from here though…

“Bank failures are caused by depositors who don’t deposit enough money to cover losses due to mismanagement.”
–Dan Quayle

Peter Marcuse spoke on Tuesday night at University College of London, and Howard Davies spoke in the heart of LSE on Wednesday at noon, so technically I suppose they weren’t speaking to each other. But they should have been. So they shall through me. This is my interpretation and expansion on events of course, not a faithful recording of exactly what I heard…just to be clear.

Who are these guys exactly?

Peter Marcuse is the son of Herbert Marcuse, and a lawyer and planner. He has been a professor of Urban Planning since 1972, for three years at UCLA, and at Columbia since 1975. He has also been president of the Los Angeles Planning Commission, and has written extensively on housing and planning issues.

Howard Davies is the director of the London School of Economics, and the former head of the Chairman of the Financial Services Authority, the UK’s single financial regulator since 1998. He also served for two years as Deputy Governor of the Bank of England after three years as Director General of the Confederation of British Industry.

Two basic summaries of root causes:

Marcuse started with what are commonly seen as the underlying roots of the current economic crisis (then he tears those apart, but I’m saving the best bit for last!). In his view (his headings with with my own filler) these are:

  • The housing bubble – you know, that whole mortgage crisis thing. The inflated price of land, the mad speculation in it, the crazy loans to people with no equity. Those damn NINJA loans (I’ve always been with the pirates myself).
  • Unscrupulous people – the greedy bankers, the banks, those bastards who were out there sweet-talking your grandma into a loan worth more than her house, one that she would never be able to pay back. So she now lives with you instead.
  • Securitization – this is a big word, and of course it’s complicated. It’s deliberately complicated to get around annoying regulations and the agencies that tried to enforce them. Thousands of mortgages all packaged up together and insured and sold and then maybe reinsured and sold again and then maybe one more time…the important thing to know is that it made a lot of people rich as long as the housing market kept going up.
  • Deregulation – Not only were those “unscrupulous” people getting around existing regs and preventing the implementation of new ones, but they succeeded in getting rid of the Glass-Steagall Act which was made law in the 30’s to ensure that the Great Depression never happened again. Nice work.
  • Too much money floating around looking for something to invest in. You have to laugh at that really (and then cry), I’m sure none of us have known the feeling of too much money, too few options of what to do with it. But apparently there were trillions of dollars floating around the world economy that needed a home. I wished they’d asked me, but if equality and a just distribution of wealth around the world aren’t issues, than I suppose perhaps that could be seen as a problem.

This isn’t actually all that different from the analysis of the problem given by Mr. Davies, though he got much more technical around issues 3, 4 and 5, and sliced them up rather differently. I didn’t catch his final “summing up slide as he was talking fast and out of time, but the earlier top 4 underlying causes were:

  • Global imbalances – There was a huge increase in global imbalances, I know this is bad. I can’t remember exactly why, I do apologize! You can see the chart of global imbalances here, along with many other charts full of much technical financial information. I will, of course, be correcting my ignorance.
  • Loose monetary policy leading to a mispricing of risk and a credit bubble. What was Greenspan thinking keeping interest rates so low? There was just way too much money out there, anyone could borrow anything, and god help us all, they did. Luckily China was able to come in and sell the West lots of cheap goods (since they don’t really pay their employees) and then buy US treasury bonds. A third of them. That kept the wolf of inflation from the door, but confused everyone as to what kind of market they were operating in. Especially Greenspan.
  • Excess leverage facilitated by procyclical regulation and regulatory arbitrage. Yikes, no? It just means that banks were doing the same thing that all of those “gullible” homeowners (the same ones who are now getting evicted) were doing, taking out massive loans with no down-payment and not enough savings in the…er…bank. They had nowhere near enough money to cover their asses. And why did they think this was ok? Because their advanced historical and cyclical analyses of the housing market told them it was one market that would always go up. So everything would be fine. The equations promised.
  • ‘excess’ unmanaged growth of the financial sector – it exploded into one area really, securitizing mortgages and playing with derivatives, and by moving into this area the financial sector thought it was diversifying risk (you know, putting down bets on lots of horses, not just one. And placing bets as part of a pool so to speak, by insuring your bets and…it’s complicated). But turns out so much money was being put into trading these property related bonds and CDO’s and etc, they were actually creating risk rather than managing it. A failure of betting strategy if you like. The fall of dominoes was insanely impressive however.

As a combination of factors it all makes some kind of sense, it certainly hangs together. And if you’re a bit rusty on your economic jargon, it makes your eyes glaze over but it sure sounds damn impressive. I think I’ve got a handle on most of it, but who really knows? Understanding the ins and outs of what actually happened takes a massive amount of energy, involving remote corporate skyscrapers, hundreds of acronyms, and unfathomable sums of debt being sliced up, repackaged, insured, reinsured, moved constantly from one major player to another. And it’s all happening on a global scale. And let’s not forget the distracting million dollar bonuses and offshore accounts…

And so these kind of explanations lead to even more complicated solutions, we are witnessing a grand escape into the technical. For Howard Davies? We need more and better regulation, better internal management of banks, better global coordination and so on into excruciating detail and even bigger words.

But instead of delving into all of that, let’s return to Peter Marcuse’s lecture: everything I have written above is interesting, but really it is missing the point entirely. You got it. Missing the point entirely. How is it that so many incredibly smart people are missing the point?

Focusing on technicalities of regulation and management hide the reality that the economic system itself is fundamentally flawed.

Some of us take that for granted, others will never believe it is true. Capitalism? Well, you know what they (or some of us) say. Crisis happens. We’ve been in crisis quite regularly for several hundred years, and that will continue as long as the system continues. Because crisis is inherent to the capitalist system.

What is the motor of the current system? Adam Smith called it self-interest, but it seems rather silly to expect people to hold the contested and rather imaginary line between self-interest and greed. Greed ultimately is the motivating force, it is the entrepreneurial way and a constant pressure. When you see regulation as the answer, you really aren’t giving people enough credit. They are hell of smart. And there are thousands if not millions of them trying to get around any rule keeping them from their self-interest. And they will. The mass securitization of incredibly risky mortgages as sound investments was just one clever proof of the power of invention to get around regulation. We can fix that loophole, but there will surely be others as it is symptomatic of the fundamental basis of the current economy.

Why is this particular crisis concentrated in real estate, as so many of them are? When buying real estate, you aren’t just investing in land, you are investing in a commodity that has only a fixed supply. There’s only so much of it, and it’s all spoken for. Because of this, you can sit on it, do absolutely nothing at all to improve it, and it will continue to grow in value. This value is due entirely to population and urban growth, it is socially created, it is ‘easy’ money. It invites speculation, always has and always will until we change how the housing market and property ownership work, and we change it completely. As long as housing is seen as a means of profit and vehicle for investment, this kind of crisis will be a recurring one. There’s nothing new about housing bubbles!

Too much money? No, there isn’t too much money, there is too much capital. Capital is what is produced by the exploitation of workers, it is profit extracted from production and at great cost to those who actually produce, and it is money whose sole purpose is to be reinvested to make more money. For me, this distinction goes some way to explaining a world where we can have simultaneously the problem of ‘too much money’, and millions earning less than one or two dollars a day. Clearly there needs to be change there, as the fundamental dark absurdity of such a world is obvious. Isn’t it?

So if Marcuse is right, and I rather think he is, it renders much of current policy and debate a bit meaningless really. All of these solutions are looking at the “fundamental” roots of an issue that really has foundations much deeper still. And if we dig those up, what will we build instead? That is the perennial question.

So the next blog will be about Marcuse’s vision of the Right to the City and the role of critical theory in building a new world…very exciting, even my cynical self can get somewhat excited about that. And I will.

The other very exciting note is that Howard Davies admitted that we’ve seen the failure of the efficient market hypothesis, a mainstay of economics for years. The idea that investors will act rationally? Well, obviously, that’s been proved laughable, so we really need to start all over again there. They’re creating something to take a look. I’m going to have to watch the aftermath of such an admission, I mean, where can they go after that while keeping within their framework? I have no idea, but do hope it will be interesting. It should be, I have immense respect for their intelligence. So we’re all rebuilding, though not quite together, and not quite for the same people. But it’s an interesting time to be alive.

Violence

LAPD officer wounded, resident killed, in Boyle Heights

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Yesterday a gun battle broke out on Malabar Street, when police tried to serve a narcotics warrant. The four hour stand-off left one of the men in the building dead, and a police officer in the hospital with a wound in his leg, and the mark of a ricocheting bullet on his helmet…the swat team evacuated 30 residents from the block, and this is what they looked like to the folks living in Boyle Heights:

Luis Sinco - L.A. Times

It’s an armed invasion team really, how can this make anyone feel safe?

I was talking to my friend Leonardo yesterday, who has been organizing in Boyle Heights for years upon years…they’ve done a lot of work on the issues of gangs and drugs. And the reality is that there are systemic reasons that these things exist, the lack of jobs, good schools, opportunities. The reality is that our economic system is broken, and while it remains broken we will continue to struggle with gangs and drugs because they provide for very real needs, whether an escape or income or sense of belonging or protection.

And so while fighting to change the system, we must also fight to control the violence. And in Boyle Heights the community is beginning to do it, people are beginning to walk the neighborhoods at night, to talk to their youth, to build altars together to those have died and work together to try and stop it. It is slow, but sure, and Union de Vecinos is having an impact. The idea that humvees full of police carrying automatic weapons can bring any kind of security seems almost funny, if an endgame where people die riddled with bullets could ever be funny.

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personal

Love and Hate

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Los Angeles hurts.

It has always hurt, and all the things I love here do not seem to be quite enough to protect me from its teeth. Not now, when I am hurting so much already. Happiness carves its price into your flesh only as it goes. Los Angeles makes elections small, we had a historic day yesterday in the world of symbols, but symbols will change nothing. And I suppose if elected, Obama will carve his own price into the hopes of the nation. We saved rent control for another year, but in winning only defensive battles we are still pushed back. What are we doing? There were kids today on the train selling candy, perhaps they were 5 and 8? if that? I have seen them on the train before, and they are not the only ones. There are a few more kids, and a middle aged black man who has taped signs to his glasses saying 50 cents. He makes people laugh, and he makes people buy candy. We are being pushed deeper and deeper into a third-world economy, as the community crumbles around us.

I am writing. The words drip and smudge across the page, sometimes I think that if I were to dip a pen into my own veins it might be enough, the very ink itself my exorcism, because words alone fail. They cannot speak of pain enough, they cannot burn, they cannot taste of salt and hurt my eyes the way this does. The emptiness that night brings shudders along. I write and the words mock me, the powerlessness of them. I rage and it changes nothing. I imagine happy endings and know that in life they do not come true. I write but people remain broken, friends remain dead, battles remain lost, love remains bitter, the poor remain fucked. I smile at my own sweet exercise in futility.

If I could write the stars the way they should be seen, and can never be seen in Los Angeles, perhaps then…

Everyday, From here to there, Intersections

Economic Bubbles and the Blue Line

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I rode the train home late last night, the blue line down through South Central and Watts; L.A. makes me sad sometimes. There is so much speculation on the state of the economy, you can read it in the papers. Taking the blue train late at any time through South Central and Watts, most of that speculation seems rather out of touch. There haven’t been any good times here for a very long time, and when the economy turns, it hits here hardest. And it keeps on hitting. The contrast is stark between this world inhabited by tens of thousands of people, and the world of financial speculation. From here the bubble is very clear, and entirely maddening. Most maddening is that the bubble requires the world of poverty to exist, it is built upon it, immense wealth cannot be held by everyone. It depends on millions of poor in this country, many millions more around the world…

I was talking to an older guy who was only wearing one shoe last night, and white tube socks pulled up high. He was riding the green line train up and down, having nowhere else to go. His legs were swollen the way my gran’s legs became swollen with her diabetes and lack of exercise, the way my friend Mark’s legs became swollen when he was turned out into the streets. Like age and diabetes, the streets swell you up, make you sick, kill you. He was voting for Hillary Clinton, he said he had a crush on her. I laughed at that. He asked me if I was a model and I laughed at that too. He told me I could be anything I wanted to be, this was America, told he was working on his own modeling career. I can forgive this man his bubble, I can forgive him almost anything he needs to survive.

I can’t forgive the people who speculate on the economy night after night on the news, and I can’t figure out who they’re talking about. I don’t know the world they’re talking about either. None of them address the growing gap between rich and poor, growing numbers of people in the streets, growing poverty, growing legions of police to control the poor and protect the wealthy. The only things shrinking are the job pool, the supply of affordable housing, the access to health care, the number of teachers, support for veterans and the elderly, the water table, the ice in the arctic…