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Posts Tagged ‘policy

“There’s class warfare, all right, but it’s my class, the rich class, that’s making war, and we’re winning”*…

In the past few decades, the Gini coefficient—a standard measure of income distribution across population segments—increased within most high-income economies. The United States remains the most unequal high-income economy in the world. The disparity reflects a surge in incomes for the richest population segments, along with sluggish or even falling incomes for the poorest, especially during bad economic times.

At the same time, the middle class is shrinking. The percent of Americans in the middle class has dropped since the 1970s, from 61 percent in 1971 to 51 percent in 2019. Some have moved up the income ladder, but an increasing number are also moving down. The middle class has also shrunk considerably in countries like Germany, Canada, and Sweden, but other advanced economies have generally experienced more modest declines.

From the introduction to the Petersen Institute for International Economics report “How to Fix Economic Inequality?

Founded by Pete Petersen (Lehman Brothers Chair, Nixon’s Secretary of Commerce, and co-founder, with Trump supporter Stephen Scharzman, of investment giant Blackstone), and overseen by trustees who include Larry Summers, Alan Greenspan, and George Schultz, PIIE is hardly a “progressive” think tank. But they are worried: quite apart from its obvious humanitarian toll, inequality at the scales that have emerged is highly unlikely to be sustainable (even at the human cost that we’ve so far been willing to pay). Put more bluntly, it is ever more likely to torpedo the domestic (and large hunks of the global) economy and indeed to threaten the stability of democratic society.

Other sources suggest that they have very good reason for concern:

• Even as the stock market hits new highs, 26 million Americans are suffering food insecurity (See also: “The boom in US GDP does not match what’s happening to Americans’ wallets.”

• The distribution of assets in the US (and other developed economies, but most egregiously in the U.S.) is even more skewed than income: see data in the PIIE report and “The Asset Economy.”

• And lest we think that this issue is confined to the U.S., social democracies throughout the developed world are feeling the same pressures (albeit mostly less dramatically).

FWIW, your correspondent doesn’t have terrifically strong confidence in the remedies mooted in the PIIE report. Even as the authors recognize that the issues are deeply structural, they confine themselves to recommending (what seem to your correspondent) relatively timid and incremental steps– which, even if taken (and most require legislative or regulatory action) are more likely to slow the polarization underway than to reverse it.

But they are worth contemplating, if only to provoke us to more fundamental measures (e.g., here). And in any case, it’s telling– and one can only hope, encouraging– that determined champions of the very neoliberal economics that have gotten us here recognize, at least, that unless we change course, we’re speeding into a dead end.

* Warren Buffett

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As we agree that fair’s fair, we might recall that it was on this date in 2001 that Enron, once #7 in the Fortune 500, declared bankruptcy. Six months earlier, it’s stock had traded as high as $90; it closed November 30th at 26 cents, wiping out billions in wealth (a appreciable part of it disappearing from employees’ pension plans). At the time, Enron had $63.4 billion in assets, earning it the honor of being the nation’s largest bankruptcy to that date. (It would be surpassed by the WorldCom bankruptcy a year later.)

Jeff Skilling, Enron’s CEO served 11 years in prison on several counts of fraud; Andy Fastow, Enron’s CFO, would served about 5 years. Chairman Ken Lay was also found guilty, but died before his sentencing. Enron’s accounting firm, Arthur Andersen (at the time a leader among the “Big 5”), which at least “missed” the egregious fraudulent practices in their audits of Enron, was effectively forced to dissolve after the scandal.

Published a year before the scandal broke

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“The Net is the new underlying infrastructure for civilization itself”*…

 

infrastructure

 

Most governments have traditionally argued that there are certain critical societal assets that should be built, managed, and controlled by public entities — think streets, airports, fire fighting, parks, policing, tunnels, an army. (And in just about every rich country except this one, access to and/or the provision of health care.) The choice to have, say, a city-owned park reflects two key facts: first, a civic judgment that having green outdoor spaces is important to the city; and second, that free parks open to all are unlikely to be produced by private companies driven by a motive for profit.

When it comes to the Internet we all live on, huge swaths of it are owned, controlled, and operated by private companies — companies like Facebook, Google, Amazon, Apple, Microsoft, and Twitter. In many cases, those companies’ public impacts aren’t in any significant conflict with their private motivations for profit. But in some cases… they are. Is there room for a public infrastructure that can offer an alternative to (or reduce the harm done by) those tech giants?

A diagnosis of the issue with a set of proposed remedies: “Public infrastructure isn’t just bridges and water mains: Here’s an argument for extending the concept to digital spaces.”

This article is based on a piece by Ethan Zuckerman, written for the Knight First Amendment Institute at Columbia, in which he lays out what he calls the case for digital public infrastructure. (He also published a summary of it here.)

Pair with this consideration of another piece of our political/social/economic “infrastructure,” corporate law, and its effects– contract, property, collateral, trust, corporate, and bankruptcy law, an “empire of law”: “How ‘Big Law’ Makes Big Money.”

* Doc Searles

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As we contemplate the commons, we might recall that it was on this date in 1865 that the U.S. government dismantled a monstrous piece of “infrastructure” when Congress passed the Thirteenth Amendment to the United States Constitution and submitted it to the states for ratification.

The amendment abolished slavery with the declaration: “Neither slavery nor involuntary servitude, except as a punishment for crime whereof the party shall have been duly convicted, shall exist within the United States, or any place subject to their jurisdiction.”

Thomas Nast’s engraving, “Emancipation,” 1865

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Written by LW

January 31, 2020 at 1:01 am

“Not with a bang, but a whimper”*…

 

automation

 

What actually happens to workers when a company deploys automation? The common assumption seems to be that the employee simply disappears wholesale, replaced one-for-one with an AI interface or an array of mechanized arms.

Yet given the extensive punditeering, handwringing, and stump-speeching around the “robots are coming for our jobs” phenomenon—which I will never miss an opportunity to point out is falsely represented—research into what happens to the individual worker remains relatively thin. Studies have attempted to monitor the impact of automation on wages on aggregate or to correlate employment to levels of robotization.

But few in-depth investigations have been made into what happens to each worker after their companies roll out automation initiatives. Earlier this year, though, a paper authored by economists James Bessen, Maarten Goos, Anna Salomons, and Wiljan Van den Berge set out to do exactly that…

What emerges is a portrait of workplace automation that is ominous in a less dramatic manner than we’re typically made to understand. For one thing, there is no ‘robot apocalypse’, even after a major corporate automation event. Unlike mass layoffs, automation does not appear to immediately and directly send workers packing en masse.

Instead, automation increases the likelihood that workers will be driven away from their previous jobs at the companies—whether they’re fired, or moved to less rewarding tasks, or quit—and causes a long-term loss of wages for the employee.

The report finds that “firm-level automation increases the probability of workers separating from their employers and decreases days worked, leading to a 5-year cumulative wage income loss of 11 percent of one year’s earnings.” That’s a pretty significant loss.

Worse still, the study found that even in the Netherlands, which has a comparatively generous social safety net to, say, the United States, workers were only able to offset a fraction of those losses with benefits provided by the state. Older workers, meanwhile, were more likely to retire early—deprived of years of income they may have been counting on.

Interestingly, the effects of automation were felt similarly through all manner of company—small, large, industrial, services-oriented, and so on. The study covered all non-finance sector firms, and found that worker separation and income loss were “quite pervasive across worker types, firm sizes and sectors.”

Automation, in other words, forces a more pervasive, slower-acting and much less visible phenomenon than the robots-are-eating-our-jobs talk is preparing us for…

The result, Bessen says, is an added strain on the social safety net that it is currently woefully unprepared to handle. As more and more firms join the automation goldrush—a 2018 McKinsey survey of 1,300 companies worldwide found that three-quarters of them had either begun to automate business processes or planned to do so next year—the number of workers forced out of firms seems likely to tick up, or at least hold steady. What is unlikely to happen, per this research, is an automation-driven mass exodus of jobs.

This is a double-edged sword: While it’s obviously good that thousands of workers are unlikely to be fired in one fell swoop when a process is automated at a corporation, it also means the pain of automation is distributed in smaller, more personalized doses, and thus less likely to prompt any sort of urgent public response. If an entire Amazon warehouse were suddenly automated, it might spur policymakers to try to address the issue; if automation has been slowly hurting us for years, it’s harder to rally support for stemming the pain…

Brian Merchant on the ironic challenge of addressing the slow-motion, trickle-down social, economic, and cultural threats of automation– that they will accrue gradually, like erosion, not catastrophically… making it harder to generate a sense of urgency around creating a response: “There’s an Automation Crisis Underway Right Now, It’s Just Mostly Invisible.”

* T. S. Eliot, “The Hollow Men”

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As we think systemically, we might recall that it was on this date in 1994 that Ken McCarthy, Marc Andreessen, and Mark Graham held the first conference to focus on the commercial potential of the World Wide Web.

 

 

Written by LW

November 5, 2019 at 1:01 am

“I think calling it climate change is rather limiting. I would rather call it the everything change.”*…

 

28-climate-change-fire.w700.h467

The Trump administration released a report that predicted global temperatures will be four degrees higher by the end of this century, assuming current trends persist. World leaders have pledged to keep global temperatures from rising even two degrees (Celsius) above pre-industrial levels, with the understanding that warming beyond that could prove catastrophic. The last time the Earth was as warm as the White House expects it to be in 2100, its oceans were hundreds of feet higher. Which is to say: The Trump administration ostensibly, officially expects that, absent radical action to reduce carbon emissions, within the next 80 years, much of Manhattan and Miami will sink into the sea; many of world’s coral reefs will be irreversibly destroyed by acidifying oceans; vast regions of the Earth will lose their primary sources of water; and a variety of extreme weather events will dramatically increase in frequency.

And the White House believes that this fact is an argument for loosening restrictions on carbon emissions… the administration uses its four-degree warming estimate to argue that eliminating 8 billion tons worth of emissions won’t be enough to change the climate outlook, by itself, so the federal government shouldn’t bother…

This argument is deplorable in its nihilism. But its core assumption is also patently absurd. The administration’s analysis is premised on the notion that there is no relationship between what the United States does with regard to climate regulation, and what the rest of the world’s countries do. Which is totally bogus: Not only can the U.S. lead by example, it also has the power to coerce other countries into emulating the carbon standards we set for ourselves…

That said, if one assumes that the entire leadership of the Republican Party has concluded that human civilization will not survive Barron Trump, then their governing agenda starts to make a lot more sense. Exacerbating inequality and subordinating the commons to short-term profit maximization isn’t in the enlightened medium-term interests of the GOP donor class — but in the medium-term, we’ll all (apparently) be dead!

The whole sad story in full: “The Trump Administration Anticipates Catastrophic Global Warming by 2100.”

* Margaret Atwood

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As we we recall, with Marshall McLuhan, that there are no passengers on Spaceship Earth, only crew, we might take a celebratory trip in honor of Thor Heyerdahl, the Norwegian explorer and anthropologist who became famous for his Kon-Tiki  Expedition in 1947 (though he went on many others as well); he was born on this date in 1914…  He once responded to an interviewer, “Borders? I have never seen one. But I have heard they exist in the minds of most people.”

220px-ThorHeyerdahl source

 

“The only function of economic forecasting is to make astrology look respectable”*…

 

We should remember that we will pass down a whole society to our kids—including the natural environment that underwrites the quality of life of future generations. If the cost of ensuring that large numbers of children do not grow up in poverty and that the planet is not destroyed by global warming is a somewhat higher current or future tax burden, that hardly seems like a bad deal—especially if the burden is apportioned fairly. Now suppose, by contrast, that we hand our kids a country in which large segments of the population are unhealthy and uneducated and the environment has been devastated by global warming, but we have managed to pay off the national debt. That is, after all, the future that many in the mainstream of the economics profession are prescribing for the country. Somehow, I don’t see future generations thanking us…

Economists have botched the promise of widely distributed prosperity: why they have no intention of stopping now– and why that matters so much: “The Wrongest Profession.”

* John Kenneth Galbraith

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As we recalculate, we might recall that it was on this date in 1602 that Vereenigde Oost-Indische Compagnie (VOC, or The Dutch East India Company, as it’s known in the Anglophone world) was born.  Generally considered the world’s first trans-national corporation and the first publicly to issue stocks and bonds (and the first company to be ever actually listed on an official stock exchange), it began with a 21-year monopoly on the Dutch spice trade.  The VOC also prefigured the mega-corporation of today in that it had quasi-governmental powers, including the ability to wage war, imprison and execute convicts, negotiate treaties, strike its own coins, and establish colonies.  Considered by many to be the greatest corporation in history, the VOC eclipsed all of its rivals in international trade for almost 200 years.

 source

 

Written by LW

March 20, 2017 at 1:01 am

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