31 August 2010

Fantasies of upper mobility

This is one of the best articles on the economy that I've seen recently:

The Fantasy of the Vast Upper Middle Class

Among the many theories exposed as fallacies by the Great Recession is the idea of the mass upper middle class. During the years of the American bubble economy, progressives and conservatives alike lauded the graduation of most citizens from the working class to a new elite that included the majority of Americans.

The center-left and center-right defined this alleged new class somewhat differently. In 19th century Germany, scholars distinguished the credentialed middle class (Bildungsbuergertum) from the propertied middle class (Besitzbuergertum). A similar divide separates America’s progressive elite, based in the educational profession, civil service and nonprofit sector, from America’s conservative elite, based in business and banking. Elite progressives and elite conservatives share the assumption that the ideal society is one in which most Americans would be more like them, in owning educational credentials (progressives) or capital (conservatives).

The elderly in America can remember a long-distant era when progressive thinkers included leaders of organized labor and small-town populist politicians. But nowadays progressive politicians and strategists tend to be affluent meritocrats who got where they are by making good grades at highly selective schools. Their narrow personal experience leads many elite progressives to equate social mobility and increases in income with obtaining academic credentials like their own. While New Deal labor liberals and populists wanted to promote unions and a living wage, many members of the new breed of Ivy League-educated liberal technocrats prefer an alternate plan: send everybody to college.

Progressives love to claim that education is the key to upward mobility. But this is based on an obvious fallacy. The "college premium" that results in higher incomes for college graduates is the result of the relative scarcity of college degrees. If everyone had a B.A., then the value of a B.A. in generating high wages would drop. We know this to be the case, because access to college has expanded more rapidly in Europe, where the gap in wages between the college-educated and the rest as a result is smaller than in the U.S.

Nor is there any basis to the claim, repeated by politicians and pundits of both parties, that most of the jobs of the future require a college education. On the eve of the Great Recession, the Bureau of Labor Statistics identified the occupations with the largest numerical growth in 2008-2018: registered nurses; home health aides; customer service representatives; combined food preparation and serving workers, including fast food; personal and home care aides; retail salespersons; office clerks, general; accountants and auditors; nursing aides, orderlies, and attendants; and post-secondary teachers. Of these careers, only two -- accountants and auditors, and post-secondary teachers -- require a bachelor’s degree rather than on-the-job training or an associate degree, and only one -- post-secondary teachers -- requires a graduate degree (a doctorate).

Some have claimed that the millennium of the credentialed class has already arrived. In a 2008 paper titled "The Decline of the White Working Class and the Rise of a Mass Upper Middle Class," the leading political analyst Ruy Teixeira and the scholar Alan Abramowitz argue that the key factor in contemporary American politics is the expansion of the highly educated, white-collar professional sector. But they reach this conclusion only by truly heroic feats of definition. They are able to claim that 54 percent of the American people are college-educated only by combining the 29 percent who had B.A.’s in 2007 with the 25 percent who had "some college." Taking a different approach and combining the "some college" crowd with high school graduates produces a more recognizable picture of an America with a majority of workers who have less than a four-year college degree.

The definition of "white-collar jobs" used by Teixeira and Abramowitz is even more generous, including "clerical" and "sales" along with professional. Do receptionists and shoe-store sales clerks in the mall really think of themselves as being in the same social class as doctors, lawyers and corporate executives?

Conservatives of the bubble economy era had their own mass upper-middle-class fantasy. In their version, membership in the mass upper middle class depended not upon educational credentials but upon ownership of capital invested in the stock market. By the beginning of the 21st century, according to some calculations, a majority of Americans had private retirement accounts or employer pensions that were invested in stocks and bonds. In the pages of the Wall Street Journal and elsewhere, conservative intellectuals declared that this made the United States a "nation of capitalists," an "investor society" based on "universal capitalism."

Defining janitors with 401K’s as "capitalists" is a kind of social promotion comparable to the elevation by progressives like Teixeira and Abramowitz of shoe-store clerks who dropped out of college into the "mass upper middle class." Genuine capitalists derive most of their income from the return on their investments or savings, not from labor. By this definition, there are hardly any capitalists in the U.S.  Most of the rich are the "working rich," who derive most of their income from wages or professional fees, not from investments. We are a nation of wage earners, some paid well and others poorly.

A majority of Americans may have some money invested in the stock market, usually through employer pension plans or 401Ks, but it is very little indeed. Forty-three percent of Americans have less than $10,000 in retirement savings and 36 percent contribute nothing to retirement savings at all. Thanks to two stock market collapses in less than a decade, most Americans will be more dependent on Social Security in retirement than ever. So much for the "nation of capitalists" and "the investor society."

At least the credentials touted by the center-left and the stocks and bonds touted by the center-right could be described with some plausibility as income-generating assets. During the bubble years, houses also began to be seen as income-producing assets, as well as symbols of membership in the suburban upper middle class.

For a generation, most Americans have been told by left, right and center that they would be failures if they ended their educations with high school, worked hard, saved cash for emergencies and bought modest homes they could afford. They have been told that to succeed in life they need to ape the lifestyles of the upper middle class that provides most of America’s politicians, pundits and scholars.
The result has been an experiment in social engineering that has gone horribly wrong: the creation of a faux mass upper middle class. Millions of Americans who by objective standards belong to the working class or lower middle class have persuaded themselves that they are part of the professional-investor elite, because they have worthless degrees from diploma mills, negligible amounts invested in stocks, and suburban trophy houses they cannot afford. For the college graduates at Starbucks working to pay off student loans for degrees that they will never use, as for the millions of Americans who are now "underwater," owing more on their mortgages than their houses are worth, the American dream has turned into a nightmare.

But many have profited from the peddling of the dream of the mass upper middle class. The claim that everyone should go to college served the interests of the educational-industrial complex, from K-12 to the universities, that now serves as an important constituency of the Democratic Party. (Along with Wall Street investment banks, universities provided Barack Obama with his largest campaign donations.) And the claim that everyone needs to pour money into the stock market, to be managed by banks and brokers who fleece their clients, served the interests of the financial-industrial complex that has replaced real-economy businesses as the dominant force in the Republican Party. Both the educators and the brokers have successfully lobbied Congress to subsidize their bloated industries, swelling them even further, by means of tax breaks for student loans and personal retirement savings. The big losers have been the millions of working Americans whom many Democrats and Republicans alike have persuaded, against their interests, to indulge champagne tastes on beer budgets.

The alternative to the mass upper-middle-class fantasy peddled by Republicans and New Democrats is a return to the older New Deal liberal approach, based on high wages and adequate social insurance. Working Americans should not need to go into debt to obtain college diplomas, in order to share more of the gains of national economic growth in the form of higher wages. And there would be less pressure on working Americans to gamble with their money in the stock market, if Social Security, like public pensions in the rest of the world, replaced a higher percentage of pre-retirement income than the 30-40 percent it replaces today.

An America with a college-educated professional class majority was always a fantasy. So was an America with a majority of affluent day traders. The America we need is one in which all Americans are paid a living wage and guaranteed a comfortable retirement -- even if they didn’t go to a university and don’t own stocks and bonds.

Michael Lind is the policy director of the Economic Growth Program at the New America Foundation.

28 August 2010

Agora and Mao's Last Dancer

Yesterday, I went on a sort of movie marathon and watched both Agora and Mao's Last Dancer. Agora is based on the story of Hypatia of Alexandria, an atheist philosophy professor who struggled against religious ignorance as Christianity took power in Egypt (then part of the dying Roman Empire). In addition to some very impressive visuals of the great library of Alexandria, the movie offers an interesting look at issues of religion and science. Mao's Last Dancer is based on a biography about Liu Cunxin, who came to the U.S. as a ballet dancer and then defected to the U.S. The movie flips back and forth between Liu's early peasant life, his training in Beijing, and his time in the Houston ballet. I saw both of these in an art house theatre. I don't know why they aren't shown everywhere. The main holywood fare is sappy and unimaginative. Some elegant period pieces might spice things up a bit.

25 August 2010

Do not pass go

Zach Carter has some very apropos comments on a recent NPR segment:

Roberts is arguing that the basic goals of real, living human beings are essentially the same as those of a Monopoly player. A Monopoly player wins by pushing everyone else into total poverty in order to control all resources and establish complete economic domination over his peers. People in the real world who are fueled by such motivations are not ordinary, model citizens—they are completely insane. Life is not a quest to get our hands on as much stuff as we can so our neighbors don't get to it first. A society that allows a few people to establish supreme economic dominion over all others is not a society at all—it's just a bunch of nasty brutes trying to destroy each other.

Unfortunately, domination and exploitation are driving forces that motivate the top people in our economy. (Why else would any sane person give a damn about amassing so much wealth?) But for most of us, it certainly doesn't all have the feel of a "game."

24 August 2010

About advising and assisting

It's a sign of our Orwellian times that the U.S. be described as having pulled out of Iraq while 50,000 troops remain. My guess is that the plan is to keep a 50,000-strong occupation force there indefinitely (or more accurately, until the oil dries up).

The Army Times reported on Saturday that the US still has seven combat brigades inside Iraq, but they have been renamed "advise and assist brigades." The name change will reportedly change little in terms of the duties the brigades carry out: The Army selected the brigade combat teams as the unit upon which to build advisory brigades partly because they would be able to retain their inherent capability to conduct offensive and defensive operations, according to the Army’s security force assistance field manual, which came out in May 2009. This way, the brigade can shift the bulk of its operational focus from security force assistance to combat operations if necessary. Of the roughly 50,000 American military personnel who remain in Iraq, the majority are still combat troops -- they're just named something else. The major units still in Iraq will no longer be called "brigade combat teams" and instead will be called "advisory and assistance brigades." But a rose by any other name is still a rose, and the differences in brigade structure and personnel are minimal.

23 August 2010

Ron Paul on the mosque controversy

Congressman Ron Paul today released the following statement on the controversy concerning the construction of an Islamic Center and Mosque in New York City:

Is the controversy over building a mosque near ground zero a grand distraction or a grand opportunity? Or is it, once again, grandiose demagoguery? It has been said, “Nero fiddled while Rome burned.” Are we not overly preoccupied with this controversy, now being used in various ways by grandstanding politicians? It looks to me like the politicians are “fiddling while the economy burns.”

The debate should have provided the conservative defenders of property rights with a perfect example of how the right to own property also protects the 1st Amendment rights of assembly and religion by supporting the building of the mosque. Instead, we hear lip service given to the property rights position while demanding that the need to be “sensitive” requires an all-out assault on the building of a mosque, several blocks from “ground zero.”

Just think of what might (not) have happened if the whole issue had been ignored and the national debate stuck with war, peace, and prosperity. There certainly would have been a lot less emotionalism on both sides. The fact that so much attention has been given the mosque debate, raises the question of just why and driven by whom? In my opinion it has come from the neo-conservatives who demand continual war in the Middle East and Central Asia and are compelled to constantly justify it.

They never miss a chance to use hatred toward Muslims to rally support for the ill conceived preventative wars. A select quote from soldiers from in Afghanistan and Iraq expressing concern over the mosque is pure propaganda and an affront to their bravery and sacrifice. The claim is that we are in the Middle East to protect our liberties is misleading. To continue this charade, millions of Muslims are indicted and we are obligated to rescue them from their religious and political leaders. And, we’re supposed to believe that abusing our liberties here at home and pursuing unconstitutional wars overseas will solve our problems.

The nineteen suicide bombers didn’t come from Iraq, Afghanistan, Pakistan or Iran. Fifteen came from our ally Saudi Arabia, a country that harbors strong American resentment, yet we invade and occupy Iraq where no al Qaeda existed prior to 9/11. Many fellow conservatives say they understand the property rights and 1st Amendment issues and don’t want a legal ban on building the mosque. They just want everybody to be “sensitive” and force, through public pressure, cancellation of the mosque construction.

This sentiment seems to confirm that Islam itself is to be made the issue, and radical religious Islamic views were the only reasons for 9/11. If it became known that 9/11 resulted in part from a desire to retaliate against what many Muslims saw as American aggression and occupation, the need to demonize Islam would be difficult if not impossible. There is no doubt that a small portion of radical, angry Islamists do want to kill us but the question remains, what exactly motivates this hatred?

If Islam is further discredited by making the building of the mosque the issue, then the false justification for our wars in the Middle East will continue to be acceptable. The justification to ban the mosque is no more rational than banning a soccer field in the same place because all the suicide bombers loved to play soccer.

Conservatives are once again, unfortunately, failing to defend private property rights, a policy we claim to cherish. In addition conservatives missed a chance to challenge the hypocrisy of the left which now claims they defend property rights of Muslims, yet rarely if ever, the property rights of American private businesses. Defending the controversial use of property should be no more difficult than defending the 1st Amendment principle of defending controversial speech. But many conservatives and liberals do not want to diminish the hatred for Islam–the driving emotion that keeps us in the wars in the Middle East and Central Asia.

It is repeatedly said that 64% of the people, after listening to the political demagogues, don’t want the mosque to be built. What would we do if 75% of the people insist that no more Catholic churches be built in New York City? The point being is that majorities can become oppressors of minority rights as well as individual dictators. Statistics of support is irrelevant when it comes to the purpose of government in a free society—protecting liberty.

The outcry over the building of the mosque, near ground zero, implies that Islam alone was responsible for the 9/11 attacks. According to those who are condemning the building of the mosque, the nineteen suicide terrorists on 9/11 spoke for all Muslims. This is like blaming all Christians for the wars of aggression and occupation because some Christians supported the neo-conservative’s aggressive wars.

The House Speaker is now treading on a slippery slope by demanding a Congressional investigation to find out just who is funding the mosque—a bold rejection of property rights, 1st Amendment rights, and the Rule of Law—in order to look tough against Islam.

This is all about hate and Islamaphobia.

We now have an epidemic of “sunshine patriots” on both the right and the left who are all for freedom, as long as there’s no controversy and nobody is offended.

Political demagoguery rules when truth and liberty are ignored.

21 August 2010

Pro deo et patria

Recently, 80 soldiers were punished for not attending a Christian concert. This is pretty typical. A more subtle form of this proselytizing occurs when Christian chaplains take part in military events and everyone is forced to remain in formation for the reading of some long prayer. It makes me wonder if there's anywhere in the services where these prayers are Buddhist or Islamic (In the latter case, the whole congregation could then be told to turn to Mecca while the prayer was uttered). Or for that matter, why aren't there athiest or humanist sorts of ministers? There's an organization devoted to religious freedom in the military (http://www.militaryreligiousfreedom.org/) and a documentary called Chaplains Under Fire that apparently provides a fairly even-handed treatment featuring people on both sides of the issue.

18 August 2010

Sharing the Pain

Now here's a good idea from across the pond:

How can the sixth richest nation in the world be contemplating cuts in school meals services and regressive forms of taxation? In the political and media commentaries on the national crisis and the need for cuts, there has been very little discussion on how much wealth there is and why "we" as a nation are apparently so poor. Actually the economy keeps growing, and we are becoming richer than we were before the financial crisis.

The total personal wealth in the UK is £9,000bn, a sum that dwarfs the national debt. It is mostly concentrated at the top, so the richest 10% own £4,000bn, with an average per household of £4m. The bottom half of our society own just 9%. The wealthiest hold the bulk of their money in property or pensions, and some in financial assets and objects such antiques and paintings.

A one-off tax of just 20% on the wealth of this group would pay the national debt and dramatically reduce the deficit, since interest payments on the debt are a large part of government spending. So that is what should be done. This tax of 20%, graduated so the very richest paid the most, would raise £800bn. A major positive for this scheme is that the tax would not have to be immediately paid. The richest 10% have only to assume liability for their small part of the debt. They can pay a low rate of interest on it and if they wish make it a charge on their property when they die. It would be akin to a student loan for the rich.  ...[full article]...

13 August 2010

Econopocalypse: Reaganite Blames Republicans

David Stockman, director of the Office of Management and Budget under Reagan, now blames the economic downturn on Republican policies during the last four decades.

From a MarketWatch article:

Stockman sees a class-rebellion, a new revolution, a war against greed and the wealthy. Soon. The trigger will be the growing gap between economic classes: No wonder "that during the last bubble (from 2002 to 2006) the top 1% of Americans -- paid mainly from the Wall Street casino -- received two-thirds of the gain in national income, while the bottom 90% -- mainly dependent on Main Street's shrinking economy -- got only 12%. This growing wealth gap is not the market's fault. It's the decaying fruit of bad economic policy." . . .

His bottom line: "The day of national reckoning has arrived. We will not have a conventional business recovery now, but rather a long hangover of debt liquidation and downsizing ... it's a pity that the modern Republican party offers the American people an irrelevant platform of recycled Keynesianism when the old approach -- balanced budgets, sound money and financial discipline -- is needed more than ever."

8 August 2010

7 August 2010

Collapse (documentary)

I watched Ruppert's documentary Collapse (consisting almost entirely of him sitting in a dark room talking). Those who have seen The End of Suburbia or other pieces on peak oil probably don't want to see the film as it doesn't offer much new except for some discussion of Ruppert's life. Michael Ruppert was a police officer who became an independent reporter who was initially interested in CIA-sponsored drug running but later turned to the topic of peak oil. I'd agree with much that's said in the film, but there are a few parts that leave me cold. At one point, he races through alternate fuels and rapidly dismisses all of them, citing, among other reasons, the fundamental laws of thermodynamics. This is clearly hogwash--there's so much wasted energy around us that an ability to use even the smallest fraction of it (even with considerable waste) would give us more energy than we could find uses for. That said, Ruppert's point that we'd need to be moving in the right direction very rapidly so that we'd have access to our current infrastructure (built and sustained on oil) while making the expensive transition is, I'm sure, right on. If you're interested in this sort of thing, I think The End of Suburbia, although a bit older, is much more watchable and convincing, as it features a lot more speakers (many of whom have greater expertise). That said, we have to be thankful for our Michael Rupperts. They're an important breed of self-educated, independent-minded muckrakers, who are able to see beyond the blanket of lies cast by the media and critically analyze the situation for themselves.

3 August 2010

Love, hate, and . . .