Two Long Recessions

by: Paul Rosenberg

Sat Mar 15, 2008 at 13:39

(Another shot at getting some attention to this, since I'll be posting a follow-up diary soon. - promoted by Paul Rosenberg)

As concerns rise about a looming recession, there have been a couple of reminders recently about much longer recessions that generally pass unnoticed:

(1)   On March 10, the LA Times carried an Op-Ed, "Our three-decade recession: The American quality of life has been going downhill since 1975," by Robert Costanza, which dealt with the inadequacy of GDP as an indicator of economic growth that produces real value, and talked about alternatives, including the Genuine Progress Indicator, which I discussed in my diary, "Republicans Are BAD For The Economy", back in early February.

(2)  But if three decades seems like a long recession, what about a permanent one?  That's the subject of a March 6 post at Facing South, the blog of the Institute for Southern Studies/Southern Exposure, "Black America is in a permanent recession"

Combining the two perspectives, it is obvious that Black America as a whole remains in very dire circumstances.  Yet, we can look forward to another round of anti-affirmative action initiatives this year, particularly in certain swing states, even as Barack Obama tries to run a campaign that is not about race.  This constellation of facts gives us clear warning of how necessary it is to begin establishing a more realistic foundation for discussing both race and economics.

Paul Rosenberg :: Two Long Recessions
America's Long Recession

In the LA Times, Costanza begins:

The news media and the government are fixated on the fact that the U.S. economy may be headed into a recession -- defined as two or more successive quarters of declining gross domestic product. The situation is actually much worse. By some measures of economic performance, the United States has been in a recession since 1975 -- a recession in quality of life, or well-being.

The reason is that GDP is a very poor measure of economic well-being, neglecting goods and services outside the market, and including all sorts of "goods" that are actually "bads":

An oil spill, for example, increases GDP because someone has to clean it up, but it obviously detracts from well-being. More crime, more sickness, more war, more pollution, more fires, storms and pestilence are all potentially positives for the GDP because they can spur an increase in economic activity.

In fact, as we'll see shortly, GDP actually can be systematically perverse as a guide to policy.

There are, Costanza informs us, several alternative measures:

The shortcomings of GDP are well known, and several researchers have proposed alternatives that address them, including William Nordhaus' and James Tobin's Measure of Economic Welfare, developed in 1972; Herman Daly's and John Cobb's Index of Sustainable Economic Welfare, developed in 1989; and the Redefining Progress think tank's more recent variation, the Genuine Progress Indicator. Although these alternatives -- which, like GDP, are measured in monetary terms -- are not perfect and need more research and refinement, they are much better approximations to a measure of true national well-being.

The formula for calculating GPI, for instance, starts with personal consumption expenditures, a major component of GDP, but makes several crucial adjustments. First, it accounts for income distribution. It then adds positive contributions that GDP ignores, such as the value of household and volunteer work. Finally, it subtracts things that are well-being-reducing, such as the loss of leisure time and the costs of crime, commuting and pollution.

I referred to Rederining Progress and the Genuine Progress Indicator (GPI) in my early February diary, "Republicans Are BAD For The Economy". In their report, The Genuine Progress Indicator 2006 [PDF], they explain:

In fact, in a 1934 report to Congress GDP's chief architect, Simon Kuznets, cautioned that "[t]he welfare of a nation can scarcely be inferred from a measurement of national income" (Kuznets, 1934).

Despite these cautions, GDP maintains its prominent role as a catchall for our collective well being. Perhaps this is because there has been little consensus on a suitable replacement. Perhaps, more fundamentally, it is that there is even less consensus on how well being should really be measured and if quantitative measurements can be made at all. Nevertheless, efforts to find replacements are critical since GDP forms the basis for important public policy decisions--i.e. those predicted to increase GDP growth fare better while those shown to restrict GDP growth are often killed by political shortsightedness. Recently, GDP growth was a prominent justification for highly controversial tax cuts on capital gains while efforts to secure long overdue increases in the federal living wage have been thwarted by persistent gloom and doom forecasts with respect to effects on jobs and economic growth (Foertsch, 2006; Roth, 2005) [Emphasis added]....

GDP plummets as communities become more self reliant. If a community decided to decrease its reliance on imported food, energy, and fi nancial markets by expanding rooftop and community gardens, farmers' markets, local currencies, and solar energy and promote social cohesion by expanding the number of goods and services exchanged by friends and neighbors, GDP analysts would call for drastic measures to save the community from impending economic collapse. GDP grows when we deplete or degrade natural resources. Clearcutting and sprawl are good for economic growth since GDP assumes forests, farmland, and wetlands have relatively little economic value if left alone.

Indeed, all indications are that we vastly undervalue the economic worth of natural ecosystems, as I wrote about in an Earthday feature for Random Lengths News in 2005:

For decades pollsters, pundits and politicians have pitted environmental protection against economic growth, but a pathbreaking new report challenges this view by focusing on the economic value of services ecosystems provide, and stressing the economic costs of environmental degradation.  

Ecosystem services are broken down into four categories: provisioning services, like supplying food, water and fiber; regulatory services, that control climate, water flow and quality, air quality, pests and disease; cultural services, that supply recreational, aesthetic and spiritual/religious benefits; and supporting services, such as photosynthesis, soil formation and nutrient cycling.  

Things could get much worse in the next 50 years, but a projection of four different scenarios--two of them reactive and two pro-active--also showed that "significant changes in policies, institutions, and practices can mitigate some but not all of the negative consequences of growing," according the to report, known as the Millenium Ecosystem Assessment (MA). Contributors included 1,300 experts from 95 countries....

The MA found that 15 of 24 ecosystem services studied "are being degraded or used unsustainably, including fresh water, capture fisheries, air and water purification, and the regulation of regional and local climate, natural hazards, and pests." These changes are "increasing the likelihood of nonlinear changes in ecosystems (including accelerating, abrupt, and potentially irreversible changes)" such as "disease emergence, abrupt alterations in water quality, the creation of 'dead zones' in coastal waters, the collapse of fisheries, and shifts in regional climate."


For example:

Collapse of Fisheries: Newfoundland Cod Example

My article contiuned:

The MA also found that harmful effects "are being borne disproportionately by the poor... contributing to growing inequities and disparities across groups of people," which "are sometimes the principal factor causing poverty and social conflict."

"There's no marketplace on some of those services. We regard them as free, simply because there's no market," said Stanford biologist Harold A. Mooney, one of the MA's lead authors. As a result, Mooney told Random Lengths, "You could cut down the whole forest," without paying for the regulatory services lost.


Multiple reports and specialized presentations are available online at the Millenium Ecosystem Assessment website.

The fact that GDP plummets with increased self-reliance is connected with the mania for trade-based developed, in place of development aimed at building a self-sustaining economy.  Of course trade will and should always play some role in any nation's economy, and some nations are ideally suited for relatively high levels of trade. But as Naomi Klein stressed in The Shock Doctrine, the earliest targets of the ideological hostility that gave rise to the Shock Doctrine were countries that followed a developmentalist capitalist path, not a socialist one--a path devoted to developing a countries internal economy, rather than relying on exports indefinitely as the foundations of its economy.

Developing a certain basic level of internal self-reliance has clear benefits for any nation.  A nation utterly dependent on trade will inevitably bargain from a position of weakness, receiving less for what they produce than they would if they were less dependent. In the extreme, they can be forced to make political concessions contrary to their national welfare.

Thus, for a wide range of reasons, a more sensitive measure than GDP is necessary in order to make more prudent policy decisions.  Where there are real costs involved that markets do not register, policymakers need to know what they are.

Costanza again:

While the U.S. GDP has steadily increased since 1950 (with the occasional recession), GPI peaked about 1975 and has been relatively flat or declining ever since. That's consistent with life-satisfaction surveys, which also show flat or dropping scores over the last several decades.

The divergence is striking:

Costanza continues:

This is a very different picture of the economy from the one we normally read about, and it requires different policy responses. We are now in a period of what Daly -- a former World Bank economist now at the University of Maryland -- has called "uneconomic growth," in which further growth in economic activity (that is, GDP) is actually reducing national well-being.

How can we get out of this 33-year downturn in quality of life? Several policies have been suggested that might be thought of as a national quality-of-life stimulus package.

To start, the U.S. needs to make national well-being -- not increased GDP -- its primary policy goal, funding efforts to better measure and report it. There's already been some movement in this direction around the world. Bhutan, for example, recently made "gross national happiness" its explicit policy goal. Canada is developing an Index of Well-being, and the Australian Treasury considers increasing "real well-being," rather than mere GDP, its primary goal.

One can only imagine the eye-rolling from Timmeh and company that will great such a proposal here in America.  But it's exactly what we need.

Black America's Perpetual Recession

Obviously, Black America suffers disproportionately from the long depression described above.  Income inequality--one of the factors measured by GPI--affects Black America disproportionately.  Negative externalities--such as exposure to pollution--also impact Black America much more severely than they affect America as a whole.  But Black America also suffers a perpetual depression in conventional economic terms as well.

The Institute for Southern Studies was founded in 1970 by veterans of the civil rights movement, and has published its journal, Southern Exposure since 1973.  It also has a blog, where Executive Director Chris Kromm recently wrote:

Black America is in a permanent recession

Pundits are working themselves into a dither about whether the U.S. is or isn't officially "in a recession." But for at least one segment of the country, the question is settled: African-Americans are deep in recession, and have been for a while.

In fact, black America is in what should be called a permanent recession.

In January, economist Algernon Austin at the Economic Policy Institute pointed out that even in good times, huge numbers of African-Americans are being left behind:

    In the best of times, many African American communities are forced to tolerate levels of unemployment unseen in most white communities. The 2001 recession pushed the white annual unemployment rate up from a low of 3.5% in 2000 to a high of 5.2% in 2003. During the same period, the black unemployment rate shot up from 7.6% to 10.8%.

In the "one picture/one thousand words" department:

As we see, the black unemployment rate is routinely significantly higher than white unemployment rate--so much higher, in fact, that black unemployment at its lowest only briefly dipped below the highest levels for white unemployment since record-keeping began.  White unemployment rose above 7.5% in the early 1980s, considered a period of wrenching hard times.  But black unemployment only dipped below these record levels  for a few years during Clinton's second term--a period of broad economic expansion that blacks remember fondly as a period of economic opportunity!  Indeed, this experience is one of the chief reasons that Hillary Clinton initially mantained such broad black support against Barack Obama, until his victory in Iowa caucuses among white voters.

Looking at the chart above, it looks to the naked eye as if the white and black unemployment rates go up and down together, but that the black rate is roughly twice that of the white rate, and indeed, if we graph the difference between the two rates, we see that this is generally so, as the difference between the rates closely tracks the black rate itself:

What this tells us is quite significant--generally speaking there are twice as many blacks as whites, percentagewise, looking for work, regardless of how tight the labor market is.  
If one black worker in six is looking for work, then one white worker in twelve will be looking, too.  If things improve, and one black worker in twelve is looking for work, then one white worker in twenty-four will be looking for work.  If things improve even more, and one black worker in twenty-four is looking for work... well, that's never happened.  The economy has never been that good.

Perhaps, you might think this is because blacks just aren't as good job prospects as whites--lower skill, or whatever.  Not so much...

In April, 2005, Princeton University sent out a press release :

Many New York employers discriminate against minorities, ex-offenders
by Steven M. Schultz · Posted April 1, 2005; 10:56 a.m.

Black applicants without criminal records are no more likely to get a job than white applicants just out of prison, according to a Princeton University study of nearly 1,500 private employers in New York City.

The study, "Discrimination in Low Wage Labor Markets," was conducted by sociology professors Devah Pager and Bruce Western . It is the largest and most comprehensive project of its kind to date.

The study, which investigated discrimination against young male minorities and ex-offenders by employers, also showed:

    • Young white high school graduates were about twice as likely to receive positive responses from New York employers as equally qualified black job seekers;

    • Ex-offenders face serious barriers to employment; a criminal record reduced positive responses from employers by about 35 percent for white applicants and 57 percent for black applicants.

Even without criminal records, however, black applicants had low rates of positive responses, about the same as the response rate for white applicants with criminal records. Hispanics also faced discrimination by employers, but were preferred relative to blacks.

Note that these ratios--"about twice" and a reduction of 35% compared to 57%--are quite in line with blacks having twice the unemployment rate of whites.

This results are bad enough in themselves, but there's an additional level of discrimination involved, since blacks are incarcerated far more frequently than whites are, so that blacks and whites with similar behaviors are treated very differently, first by the criminal justice system, and then by employers--a topic I'll take up in a follow-up diary.

The press release continued:

"The results of this landmark study are deeply disturbing and highlight the need for strong enforcement of the New York City Human Rights Law," said Patricia Gatling, commissioner of the New York City Commission on Human Rights, which assisted in the study. In New York City it is illegal for employers to discriminate on the basis of race or a criminal record.

The researchers presented the results of their study at the Population Association of America's annual meeting in Philadelphia on March 31 and are preparing a paper for submission to an academic journal.

"A lot of people are skeptical that African Americans still face discrimination in the job market. But even in a diverse city like New York , the evidence of discrimination is unmistakable," Pager said.

Chris Kromm (remember him?) continues:

But the reality of inequality is too often left out of the equation. For example, USA Today ran a feature this week -- "Is your state in a recession?" -- which found that many parts of the country aren't in a recession, and are actually growing.

But is everyone benefiting? USA Today made no reference to another study released this week by the Urban League, which found inequality is stubbornly persistent:

    Across a range of economic indicators including measures of employment, poverty, housing, income and wealth, blacks were much worse off than whites. If whites scored 100 percent on such measures, blacks scored just 56.8 percent, a figure unchanged from last year, the National Urban League said. [...]

    Three times as many U.S. blacks as whites live below the poverty line, defined as an income of $20,000 for a family of four. The disparity between the races on unemployment narrowed slightly, but blacks were still twice as likely to be jobless.

Indeed, as we've just seen, the black unemployment rate has been roughly double the white rate for as long as the two figures have been tracked.  The degree to which White America manages not to see Black America--which has never experienced a healthy economy--is truly remarkable.  But, of course, White America has something else to look at instead: the bad faith paranoid fantasy of Black America.   Coming soon to a diary near you....

I close with this map of air pollution cancer risk from the South Coast Air Quality Management District's recently-released MATES III [Multiple Air Toxics Exposure Study-III] Report:


Anyone passingly familiar with the Los Angeles area will see at a glance that the heaviest concentrations of cancer risk are generally associated with the regions with the highest concentrations of people of color--Black, Latino and Asian-American. Here's a mostly overlapping census map, showing where whites live, with the lowest density corresponding to the highest cancer risk in the map above:

This is a reminder of the double depression in which Black America lives.

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Two Long Recessions | 34 comments
Herman Daly (4.00 / 2)
I'm glad to see his work mentioned on your post. There is a new reality and that is globalization.  Unfortunately Democrats want to spin this as "immigration" but it's not, its part of globalization and has everything to do with labor markets or migration.

People need to realize that labor, globalization, wages, markets are being squeezed via global labor arbitrage at every level and unfortunately Democrats especially are more than willing to sell US workers down the river on these issues.  

Herman Daly is a well known economist who is focused on economic justice and equality, so hopefully it is realized the real effect of unfettered global migration will have.  It's the opposite of what one philosophically or intuitively would believe.  A race to the bottom

Herman Daly has written on these economic realities fairly extensively and this is why Obama's denial of wage repression is one frightening statement.  

The trend toward globalization (free trade, free capital mobility), is not usually associated with migration or demography. If globalization were to be accomplished by free mobility of people, then demographers would certainly be paying attention. However, since globalization is being driven primarily by "free migration" of goods and capital, with labor a distant third in terms of mobility, it has often escaped notice that the economic consequences of this free flow of goods and capital are equivalent to those that would obtain under a free flow of labor. They are also driven by the same demographic and economic forces that would determine labor migration, if labor were free to migrate.

The economic tendency resulting from competition is to equalize wages and social standards across countries. But instead of cheap labor moving to where the capital is, and
bidding wages down, capital moves to where the cheap labor is, and bids wages up-or would do so if only there were not a nearly unlimited supply of cheap labor, a Malthusian
situation that still prevails in much of the world. Yet wages in the capital-sending country are bid down as much as if the newly employed laborers in the low-wage country had
actually immigrated to the high-wage country. The determinant of wages in the low-wage country is not labor "productivity," nor anything else on the demand side of the labor market. It is entirely on the supply side-an excess and rapidly growing supply of labor at near-subsistence wages. This demographic condition-a very numerous and still
rapidly growing underclass in the third world-is one for which demographers have many explanations, beginning with Malthus.

I bring this up because Democrats right now are introducing bills for more guest worker Visas, per corporate lobbyist requests, including Bill Gates.

This is positively despicable considering we're on the cusp of a deep recession, with layoffs coming.  The last thing US workers need is to import more cheap labor to wage arbitrage, displace and age discriminate US workers.

Believe it or not Giffords (D-AZ) who supposedly is a Progressive just sold out Professional workers, no problem, by doing corporate lobbyists bidding.  

People are complaining about Netroots endorsed '06 candidates voting against Progressive values and I want to add Giffords to the list!  Anyone not aware, H-1B/F-4 Visas are a major Professional labor issue and there are many unions trying to stop this global labor arbitrage agenda.  

The Economic Populist

Democrats respond rather than lead (4.00 / 2)
The key element is that Democrats respond rather than lead. This is important with regard to the race to the bottom because, to be quite frank, many Americans don't understand the concept.

I am a lawyer. I tried to explain race to the bottom to some other lawyers, and they didn't understand the concept. These are highly educated people. I tried to provide them a metaphor from law called "forum shopping." This is when a plaintiff or defendant will attempt to shop around for the jurisdiction or forum that will maximaze their chance of winning the case based on procedural rules. I tried to explain that race to the bottom works on the theory that companies are shopping around for the cheapest labor, and that therefore, other companies feel compelled to compete locally by trying to push off the cost of labor. It was like I was speaking Cantonese.

Much of the population has spent nearly 30-years being force fed the idea that we live in a "grandpa on the farm going the local store to barter" economy. There ideas about costs, risks, savings and, generally, how concepts about opportunity are antiquated. To me, it's not even a question of liberal versus conservative. It's about what works and what doesn't.

If the Democrats were real leaders they would be explaining this to the American people. That we aren't grandpa on the farm. That our ideas about , for example the credit markets, are wrong because we are talking about extremely complex global markets.

Without that leadership, you are asking Americans for the first time in our history to understand that we aren't manifestly destined to suceed. That despite our early sucesses, there are no guarantees that (as the dollar weakens, and oil prices increase) that foreign countries will not switch from the dollar to the euro. I barely understand this, and yet, we are asking people who are more concerned with antiquated ideals about liberty to get that liberty is a matter of context. If you don't understand the context is globalization then yo ucan't appreciate what liberty, and real choices mean. You can't appreciate what opportunity is in fact versus rhectorial opportunity.

[ Parent ]
repressed (0.00 / 0)
It's much worse for the minute one mentions global labor supply, immediately, immediately out come the name calls.

I believe you that they cannot get their head around the realities of labor economics.  

Try pointing out that lawyers are being targeted for their jobs to be offshore outsourced, that they will be exposed to global labor arbitrage.  Usually when their career is threatened people have a tendency to pause.  ;)  

The Economic Populist

[ Parent ]
That doesn't work either (4.00 / 1)
The core problem is that they believe a certain narrative. When given a choice between the narrative and what they can see in their own daily lives, they would rather read the Secret, and believe it will eventually work out.

[ Parent ]
Yup (0.00 / 0)
and even worse, they(the public relations puppet masters) are linking that narrative with who someone is as some sort of sense of moral principles so it's even harder to crack a concrete brain head.  

The Economic Populist

[ Parent ]
Exactly right (4.00 / 2)
They say "it's because you don't believe in yourself enough." I mean the irony , at least to me, is that if you have read the biographies of some of the most sucessful people in this country, they didn't supremely believe in themselves They had huge doubts and questions along the way. They had good idea, They got lucky- right place, right time, good connection, enough capital, ruthless drive, etc. So they won, but the idea that all i takes is good vibrations is incredibly  naive and dangerous

[ Parent ]
Excellent Point (4.00 / 1)
I know you're talking more in the commercial/technological/entreprenurial vein, but I'd really like to hear what chronic depressive Abe Lincoln might have said about "the power of positive thinking."  

"You know what they say -- those of us who fail history... doomed to repeat it in summer school." -- Buffy The Vampire Slayer, Season 6, Episode 3

[ Parent ]
Well, one of my problem with Obama's rhectoric, for example, (4.00 / 2)
is that it plays too  much into the Oprah-tization of America. My friend, who is a black professional like me, told me  that her mother saw an Obama speech, and said "What's this mess? Why does this man sound like Oprah?" I laughed because I thought it was so-true.

But, of course, it's not really who she is or how she got there. Oprah in real life isn't really Oprah. Oprah became Oprah by being a ruthless business woman who one former business colleague described as cold as ice in negotiations.

I have no problem with that. In fact, I admire business acumen. However, it brands the illusion that "gosh darn it, if I am good enough" into the conciousness of the American psyche. One of the movies that I really liked recently was "There Will Be Blood" because it gives a relatively honest portrayl of  what it took to build this country. It wasn't easy, required sacrifed, being pragmatic about what was really happening and took resources. Lincoln would have been seen as pessmistic and not electable precisely because he would have told us what it will take the accomplish ones goals in fact rather than feel good about it happening in theory.  

[ Parent ]
We've Got An Ant's-Eye View Of Crumbs (0.00 / 0)
And we need to be talking recipies.

What I mean is that there really is a necessity not to fall into scapegoating.

But giving this sort of point undue porminence in your politics simply betrays a lack of competence to engage in the fundamentals--such as what it takes to not just bake a cake, but to conceive from the get-go what sort of cake one actually wants to have.

"You know what they say -- those of us who fail history... doomed to repeat it in summer school." -- Buffy The Vampire Slayer, Season 6, Episode 3

[ Parent ]
I take exception to that (0.00 / 0)
This is a fundamental.  Labor economics, labor markets is a fundamental.  

It is so much a fundamental and also directly connected to trade.  You will see me writing often on WTO, GATS mode 4 where this global migration agenda is playing out.  

This is not a "crumb" in terms of focus at all, it's the entire globalization agenda, which is glorified offshore outsourcing, global labor arbitrage, a destruction of economic justice, social mobility, the middle classes.  

I think trying to claim this is a "crumb" shows once again how the rhetoric and propaganda spins and rules this entire area so no economic reality can be brought to light.  

The Economic Populist

[ Parent ]
Well, I didn't address this before, (0.00 / 0)
but I think his point is that even if this issue were solved that you are referring to, it still would be like building a sand castle to protect yourself on the beach as a tidal wave is about to hit.

[ Parent ]
oh yeah (0.00 / 0)
in that regard that's why we have The Economic Populist and every single policy area that has effect on globalization, economics is covered.  Includes the cost of Iraq, privatization, hedge funds, subprime, bond markets, corporate tax code, you name it...

This is a new community blog, where anyone can write a blog post (or a forum dicussion thread) and it's user controlled, people can vote off content on the front page, vote onto the front page a discussion thread).

We need a hell of a lot of activism on economic issues generally and because it requires a lot of personal awareness, knowledge, getting others to start analyzing this is the goal of the new site.  

I just write on H-1B because this is one of my watch areas because I am a STEM professional,  plus many members of our group are Professionals and this affects us personally, plus it's really misunderstood.   It's one of those "slide right by" issues which greatly affects the economy because these professionals innovate, they create the economies of the future.  So, undermining them as if they are burger flippers has further implications than just global labor arbitrage.  

But, in terms of my own world view, it's multiple policy areas that need to be dramatically restructured, not just labor supply, global migration issues.  

The Economic Populist

[ Parent ]
but I agree- poor choice of words (0.00 / 0)

[ Parent ]
I'm Sorry, I Wasn't Clear (4.00 / 1)
Since you've completely misunderstood what I was trying to say.  I wasn't saying that your concerns were the crumbs.  I was saying (or at least trying to say) the exact opposite.

I meant that focusing on not scapegoating immigrants was the crumb.  It's an important point, but relatively easy to grasp.  Whatever the issue at hand is, scapegoating distracts from solutions.  But assuming that fighting scapegoating is beginning and end of the matter is pure foolishness.

Deciding what kind of cake you want to make--the most important question--that's what you're talking about.

It's part of an extended metaphor.  You know, the cake is the world, the recipe for the cake is the principles, rules and policies, etc.  And the individuals who get shoved around by forces much bigger then them--they (we) are the crumbs.

The crumbs need dignitity.  They need respect.  But above all, they need a way to collective act to determine what sort of cake they will be part of.

"You know what they say -- those of us who fail history... doomed to repeat it in summer school." -- Buffy The Vampire Slayer, Season 6, Episode 3

[ Parent ]
ah (0.00 / 0)
Well, I see the claim of scapegoating as part of the corporate cheap labor lobby rhetoric and is used at every turn and corner to repress, silence an overall discussion on how this affects domestic labor markets, economies, global economies.   You're right, anyone can understand that as a basic human value but that's not the real agenda, corporations are thinking in terms of domestic labor markets, not at all in terms of people wanting to permanently move to another nation-state, adopt it as their new home and so forth. Hence now our basically sense of equality, justice is being turned upside down and used to repress examination of this entire globalization agenda.  

The Economic Populist

[ Parent ]
An Even More Extreme Example (4.00 / 2)
is the rhetoric attacking affirmative action using "colorblind" rhetoric, ala Ward Connerly, which I touch on in the follow-up to this diary.

"The Devil can quote scriupture if it suits his purpose," as the saying goes.

"You know what they say -- those of us who fail history... doomed to repeat it in summer school." -- Buffy The Vampire Slayer, Season 6, Episode 3

[ Parent ]
yes! (4.00 / 1)
Exactly.  Universities especially drive me nuts because they have become way more exclusive.  The focus should be on getting out, not getting in.  So then you see precisely that absurd rhetoric to get an opportunity to get in...when the real accomplishment is getting out, i.e. graduating!  

The Economic Populist

[ Parent ]
The major problem (0.00 / 0)
is that globalization, as a purely abstract concept and in an inherent sense, is not a bad thing.  The same thing with capital mobility and free trade - as stand alone abstract concepts, understood theoretically, they're not bad things.  But as you point out, there are obviously lots of problems (especially when occurirng in combination), race to the bottom, labor issues, what happens when bad people and bad policies corrupt potentially beneficial theories, etc. etc.  

That said, even in its current form, globalization's negative impact is not universal in its scope; there are lots of perfectly legitimate businesses and individuals in the United States and elsewhere who have benefited from globalization, which is terrific for them.  Clearly, and in many cases rightly, you've pointed out the downsides to globalization, which are also numerous.  

The problem is that, with a few exceptions, the world economy is more integrated in 2008 than it was in 1958, more in 1958 than in 1858, etc. etc. Thus, the process of integration and globalization, as currently conceived, is in many ways inevitable.  I believe that this is a good thing in the long term, for the same reasons I believe that the concepts I mentioned earlier are good, abstractly.  In most things, there were will be more perfect and more symmetric information, dramatically reduced non-productive transactions costs, new tools for collective socioeconomic and political action, efficiency inducements from demand coming from huge new markets, etc.  

In my opinion, the problem with globalization is not that it must naturally lead to all the bad things you mention, and for which you rightfully criticize it for, but that current laws and policies, and a lot of firms are well positioned (and rewarded) to corrupt a fair global economy.  To that end, we must also realize that the American economy in some respects may be damaged to the point where there may not be full recovery, but that it is important to be appropriately reactionary but fundamentally proactive and always look ahead to future contingencies - as bad as things might be right now, they may only get worse in the future if we don't act to secure our place in the global economy, even if it involves some short-term sacrifices.  Our place of relative superiority and prosperity is not guaranteed, as it wasn't for the British and many prior.

So my question is this: do you agree with my opinion of the problem of globalization? If so, how do we achieve all of the benefits of globalization while ameliorating and preventing its adverse effects? The solution to me seems not to de-globalize or de-integrate, but to have our government do a few things:

Reward firms that uphold fair standards and labor practices, both at home and abroad, and punish those who don't rather than give away billions in corporate welfare;

Provide serious incentives for businesses to develop and for consumers to utilize innovative green technologies, as we have a significant advantage in the global economy in that regard, as far as our capacity to develop and implement such technologies on a mass scale and as part of a new, inexpensive and popular non-carbon economy that could reduce the price of energy inputs everywhere;

Radically rewrite tax policies to prevent unfair offshoring of labor and wealth;

More equitable taxation of personal income so as to balance the budget, provide working class tax relief, reduce the national debt, with concordant benefits to the dollar and interest rates;

Take appropriate measures to prevent predatory lending practices from creditors of all sorts, and provides incentives for increasing the national savings rate and spurring economically sustainable and productive investment;

Create a more competitive labor market in the U.S. through dramatically improved government funded education and healthcare, and make a serious commitment to infrastructure investments that would reward the best domestic firms;

Work with other countries to completely level the playing field on agricultural products;

Provide meaningful assistance to all those in the U.S. and in developing countries whose livelihoods are materially, permanently, and adversely affected by globalization.  


[ Parent ]
globalization vs. internationalization (4.00 / 1)
Firstly, globalization really means more of a "new world order" whereas internationalization implies the nation-state is intact.  It's fairly critical to keep nation-states intact for this is the basic structure of the world and like it or not, nation-states represent the citizens of it. (badly or not).  

So, in terms of what needs to change that's something I cannot just answer in one blog comment.  Right now trade agreements are glorified outsourcing agreements, they do not follow the abstract theory of free trade at all.

There are so many different policy areas and of course one can create strategic trade that is mutually beneficial and in the national interest, working people, citizens interests.  That's not what we have today.  

One needs to go way beyond the corporate tax code, although that is certainly part of it.  One thing that I think they need to do is make taxpayer expenditures be US based to pump those tax streams back into the domestic economy.

A good place to start is the Horizon Project, which has a series of policy changes listed that could go a long way to improve multiple areas of policy that would help result in a mutually beneficial scenario.

Another way to put it is the United States is stuck on stupid in terms of policy, both from a macro economic viewpoint and for it's citizens.  A lot of short term, quarterly profit type of special interest demands.

Case in point is the MBNA (credit card company) bankruptcy bills....well, they wanted it, they finally got it and now we have massive foreclosures because 1.  people cannot write off their credit card debt, even in bankruptcy and 2.  bankrupcy judges cannot restructure the mortgage loans in order to let people keep them.

Short term agenda, of course did not think it through and here we are.  

The Economic Populist

[ Parent ]
Thanks For This Thoughtful Comment (4.00 / 1)
In Jihad vs. McWorld, Benjamin Barber makes an excellent case for the role that nations play--particularly with welfare states--in curbing the excesses of markets.

The attempt to dissolve their authority is very much a form of re-feudalization, which was eerily foretold in the cyberpunk novels of the early 1980s.

"You know what they say -- those of us who fail history... doomed to repeat it in summer school." -- Buffy The Vampire Slayer, Season 6, Episode 3

[ Parent ]
link + invite (0.00 / 0)
This post is really well researched and I'd love to have you post/crosspost/participate over on EP (see link below).

Plus do you have a link on such an article?  

The Economic Populist

[ Parent ]
I'd Be Happy To Cross-Post (0.00 / 0)
though I'm a bit stretched for time right now (I should be packing stuff in boxes, so the electricians can get in and rewire my apartment starting Tuesday).

I'm not sure what you mean by "such an article"--you mean one that lays out Barber's argument I referred to?  Right off the bat I can't think of one.  As the title indicates, Barber's primary focus is on these two rival forces both of which are hostile to democracy, and while he develops the argument I refer to, it's sort of done in a minor mode--which is somewhat strange, coming from the author of Strong Democracy.

"You know what they say -- those of us who fail history... doomed to repeat it in summer school." -- Buffy The Vampire Slayer, Season 6, Episode 3

[ Parent ]
adsf (0.00 / 0)
that's it, Barber's argument.  Happy wiring!  

The Economic Populist

[ Parent ]
Globalization (0.00 / 0)
You people really enjoy preaching to the choir. I think that history shows that trade is a win-win situation if it is fair. One can certainly argue over 'fairness'. Historically, the merging of England and Scotland in 1707 led to the Scottish Enlightenment which was built on trade. Before 1776, the states in American had trade barriers between them. After the 1787 Constitution, the economy boomed because of free trade between states. Of course, now the EU has free trade resulting in a net gain. Look at Ireland, Spain and Portugal. There are winners and losers with trade and technology, but generally a net gain. Do you actually want to increase trade barriers or go back before the industrial revolution? Do you want to subsidize obsolete technologies? Are you suggesting that Japan, with no resources, would be better off without trade? I'm sure we read history differently.

Incidentally, the number of African American families in the middle class (over $40,000/year) have doubled in the last 30 years from 18% to 36%. So in relative terms, they are much better off. One can argue whether the tide has risen or fallen based on GDP or GPI. Finally, I couldn't find the definition of GPI. What is it?

[ Parent ]
WOW! (4.00 / 1)
Crediting trade for the Scottish Enlightenment!

Now I really have heard everything!

Attempting to refute such an outlandish claim would only detract from its self-evident absurdity.

"You know what they say -- those of us who fail history... doomed to repeat it in summer school." -- Buffy The Vampire Slayer, Season 6, Episode 3

[ Parent ]
learn before ye speak (0.00 / 0)
well well, amazing set of opinions considering you do not recognize a major macro economic indicator proposal GDI,  or the ability to click on a link.

Is that you John McCain?  

The Economic Populist

[ Parent ]
Quibble (4.00 / 1)
I have a quibble with the use of the word recession.

1  The act of withdrawing or going back.
2 An extended decline in general business activity, typically two consecutive quarters of falling real gross national product.

I realize that words that have a resonance get picked up and used in metaphorical ways, but this always does a disservice to the original usage.

If blacks in the country have never achieved the standard of living of whites then it's not a recession, it's long-standing economic discrimination. A recession is a process, what is meant here is a more or less permanent condition.

Now it is possible that blacks are also feeling the effects of the current recession more than whites, but that should be treated as a separate topic. The reason to use more precise terms is not just pedantic. The steps that need to be taken to combat a downturn and those needed to fight discrimination are different. Conflating the two issues makes it more likely that the short-term fix will be addressed, but the fundamental issues will then be ignored when the overall economic conditions improve.

How about "chronic economic discrimination"?

Policies not Politics

Yes, Words Matter (0.00 / 0)
And the words I've used can serve to jar folks in a way that "chronic economic discrimination" just doesn't do.

My justification is pretty simple: it's the unemployment levels, stupid!  That, and the fact that a good chunk of ordinary people already experience current economic conditions as being a recession.  Thus, there's already a looser, non-technical folk understanding of "recession" that hasn't made it into the dictionary yet.  And a number of economists and economics writers have picked up on this in the last several months.

"You know what they say -- those of us who fail history... doomed to repeat it in summer school." -- Buffy The Vampire Slayer, Season 6, Episode 3

[ Parent ]
But (4.00 / 1)
The danger is that in a couple of years when the "recession" is over so will be any acknowledgment of persistent economic discrimination.

It's like when welfare was "ended" by Clinton so was poverty. Thus the shock at scenes after Katrina.

I'm all for a punchy buzzword or sound bite, I'm just not able to come up with one myself.  

Policies not Politics

[ Parent ]
Ummm. My Point Is (4.00 / 1)
the recession is never over if you're Black.

"You know what they say -- those of us who fail history... doomed to repeat it in summer school." -- Buffy The Vampire Slayer, Season 6, Episode 3

[ Parent ]
Obama's Candidacy Makes Issues of Social Justice LESS Likely To Gain Traction (4.00 / 2)
The post-colonialist structure of the Dim primary is fascinating: members of the two dominant Dim 'colonized' base-groups--'women' and 'minorities'--forced to play White Man's cut-throat, zero-sum, winner-take-all politics to put themselves in a position from which they will be in effect prevented from answering the particular dilemmas and issues of the groups of which they are avatars...

Such is the irony of Murka's first seriously multi-ethnic "National" political campaign.

By running as as the "Non-African-American" Black person, Obama CANNOT call or devote (should he be 'elected') special attention to the systematic social and economic marginalization of People-of-Color without losing popularity with 'tolerant whites' who might vote for a Pale Male Black who knows his place, by running the risk of being retroactively labeled as 'just another one of "them" '...

Of course, he cannot run as a 'Jesse Jackson' Black--that is, as a Black person with a special sympathy for the plight of poor, economically marginalized Blacks (and others, which of course the critics dismiss) without losing the 'white' votes that appear to make him a 'viable' candidate.

Quite True (0.00 / 0)
And the discussion of dignitarianism is, in part, an intended to show a way out of this dilemma.  Maybe he can't "run as a 'Jesse Jackson' Black--that is, as a Black person with a special sympathy for the plight of poor, economically marginalized Blacks (and others..."  but he can run as a candidate with sympathy for all whose dignity has been violated.

And that at least opens the door for the mariginalized masses who cannot be mentioned directly.

"You know what they say -- those of us who fail history... doomed to repeat it in summer school." -- Buffy The Vampire Slayer, Season 6, Episode 3

[ Parent ]
A Process Comment/Question (0.00 / 0)
I've seen this sort of editorial at least once or twice in the past three decades but nothing happens.

What prevents a think tank or other group from publishing and promoting the GPI rate, advertising the definition and value of GPI regularly in TV and print, and generally injecting it into the political mainstream as a viable alternative to GDP when issues are publicly debated? GPI does not have to be perfectly refined to be promoted. GDP is not, as you point out. Indeed, promotion could also include periodic public debates to refine and make GPI more valuable.

I agree totally that GPI is a far better way to measure the impact of government, corporate, and personal decisions. But it's a waste of time to discuss if no group is willing to promote GPI early and often. And few if any politicians will take up an idea like GPI if it is not already mainstream. Same goes for media adoption of GPI.

I also approve of your framing where we are today in terms of the past three decades. Much of the situation we're in is the fruit of Republican ideas going back to Reagan and pre-Reagan. It's only fair to call that out early and often so people can make sensible decisions about what is next.

I Agree We Need A Serious Effort To Mainstream The GPI (0.00 / 0)
And I guess this is as good a place as any to start beating the drum for it.  But I'm wide open to suggestions about further steps.

"You know what they say -- those of us who fail history... doomed to repeat it in summer school." -- Buffy The Vampire Slayer, Season 6, Episode 3

[ Parent ]
Two Long Recessions | 34 comments

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