Recently in economics Category

James Kwak's look at Econ 101 and the minimum wage [an excerpt from his book Economism: Bad Economics and the Rise of Inequality] points out that "The minimum wage has been a hobgoblin of economism since its origins," from Henry Hazlitt to Milton Friedman to Ronald Reagan:

Think tanks including Cato, Heritage, and the Manhattan Institute have reliably attacked the minimum wage for decades, all the while emphasizing the key lesson from Economics 101: Higher wages cause employers to cut jobs.

Kwak cites two recent meta-studies suggesting that "increasing the minimum wage does not have a significant impact on employment." One study is "The New Minimum Wage Research;" the other, "Publication Selection Bias in Minimum-Wage Research? A Meta-Regression Analysis," agrees that minimum-wage increases can drive up labor costs overall, but with this caveat:

But many companies can recoup cost increases in the form of higher prices; because most of their customers are not poor, the net effect is to transfer money from higher-income to lower-income families.

"Raising the minimum wage," this study observes, "would also reduce inequality by narrowing the pay gap between low-income and higher-income workers:"

This conviction that the minimum wage hurts the poor is an example of economism in action. Economists have many different opinions on the subject, based on different theories and research studies, but when it comes to public debate, one particular result of one particular model is presented as an unassailable economic theorem.

Bloomberg's Noah Smith takes aim at Milton Friedman's cherished theory, noting that "Friedman was wrong about the permanent income hypothesis:"

But unlike with the first two examples [Einstein on quantum mechanics and Linus Pauling on DNA], where scientists quickly realized the mistake, economists haven't yet come to grips with the reality.

"This idea is important," Smith continues, "because it meant that we shouldn't expect fiscal stimulus to have much of an effect"--which it clearly does. Smith cites this study (PDF) by Peter Ganong and Pascal Noel showing that "consumer behavior is more short term than almost any mainstream model predicts." His conclusion is that "it's likely that decades of believing in Friedman's idea have caused us to underrate the potential power of fiscal stimulus and other policies that boost short-term income:"

Even the greatest scientists can be wrong. The measure of a science is how quickly it comes to grips with the mistakes its heroes make.

I suspect that, particularly on the conservative side, economics will fail that measure.

The Nation's Julia Mead explains why Millennials aren't afraid of the S word. She reveals that "I'm 22. I was born in 1994" and talks about "The erasure of socialist ideas from serious political discourse throughout most of my life" where "communism was killed, and along with it went any discussion of socialism and Marxism:"

This was the world of my childhood and adolescence, full of establishment progressives who were aggressively centrist and just as willing as conservatives to privilege the interests of capital over those of labor: think of the reckless expansion of so-called free trade, or the brutal military-industrial complex. For most of my life, I would have been hard-pressed to define capitalism, because in the news and in my textbooks, no other ways of organizing an economy were even acknowledged. I didn't know that there could be an alternative.

She notes that "while Trump has dominated the headlines, there is still plenty of momentum around the socialist ideas that Bernie used to inspire America:"

Our Revolution is working hard to take the fight to the states; there it will be joined by groups like the Working Families Party and the Democratic Socialists of America, whose membership has grown by more than 50 percent since November 8. That's more than 4,000 new members.

"Maybe socialism isn't a lost cause after all," she concludes. "Maybe it's our best hope."

Matt Bruenig writes that UBI already exists for the 1%:

The universal basic income -- a cash payment made to every individual in the country -- has been critiqued recently by some commentators. Among other things, these writers dislike the fact that a UBI would deliver individuals income in a way that is divorced from working. Such an income arrangement would, it is argued, lead to meaninglessness, social dysfunction, and resentment.

He points out the flaw in this argument:

One obvious problem with this analysis is that passive income -- income divorced from work -- already exists. It is called capital income. It flows out to various individuals in society in the form of interest, rents, and dividends.

Currently, "around 30% of all the income produced in the nation is paid out as capital income," which prompts Bruenig to snark that "If passive income is so destructive, then you would think that centuries of dedicating one-third of national income to it would have burned society to the ground by now:"

In 2015, according to PSZ, the richest 1% of people in America received 20.2% of all the income in the nation. Ten points of that 20.2% came from equity income, net interest, housing rents, and the capital component of mixed income. Which is to say, 10% of all national income is paid out to the 1% as capital income. Let me reiterate: 1 in 10 dollars of income produced in this country is paid out to the richest 1% without them having to work for it.

This leads to an improved defense of UBI:

The UBI does not invent passive income. It merely doles it out evenly to everyone in society, rather than in very concentrated amounts to the richest people in society.

Meanwhile, the indignity of not-work should be examined:

As I see it, there's nothing necessarily dignified about most people being forced to have the freedom to sell their ability to work to a tiny group of employers. The idea may be intrinsic to capitalism--but that doesn't mean it contributes to the dignity of people who work for a living, especially when they have no control over how they work or what they produce when they work.

"So, when critics of a universal basic income rely on the 'dignity of work' argument," the piece continues, "what they're really doing is reinforcing the idea that most people can and should derive dignity from working for a small group of employers:"

At the same time, critics are presuming there's no loss of dignity for the tiny group at the top, those who have managed to capture most of their income from sources related not to their own work, but the work of everyone else.

Where's the dignity in that?

Kaveh Waddell writes about being tracked by your employer 24/7:

The Fourth Amendment protects Americans from unreasonable searches and seizures, but it only constrains the government's actions. If local police or the FBI wants to track your car, they have to ask a judge for a warrant first. But if your boss wants to track your phone, it's likely within his or her rights.

"In fact, businesses track their employees' locations all the time," Waddell writes, but "The legal landscape around tracking employees is murky," because "There's no federal privacy law to keep businesses from tracking their employees with GPS, and only a handful of states impose restrictions on it:"

A survey released last month offered a few hints: Nearly a third of people who responded said their employer tracks them by GPS, and 15 percent said they were tracked 24 hours a day. More than 22 percent said they weren't told they would be tracked when they started their job.

Waddell talked to Lillian Chaves Moon, a lawyer who represents employers:

According to Moon, employers have a whole lot of leeway to track their employees, both on the clock and off, and most workers have a very high bar to clear if they want to challenge their employers for invading their privacy. "In most states, you have to show that it would be highly offensive to a reasonable person, and that's a pretty high standard," she said. "You have to show that it's so egregious and outrageous." [...]

At least 29 states and the District of Columbia have at least some discrimination laws that prevent companies from firing employees for their off-duty conduct. In states without those laws, a boss can fire an employee for his or her actions outside of work.

Drum on deficits

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Kevin Drum quotes this WaPo piece about GOP concern for deficits:

In a dramatic reversal, many members of the hard-line House Freedom Caucus said Thursday they are prepared later this month to support a budget measure that would explode the deficit and increase the public debt to more than $29.1 trillion by 2026, figures contained in the budget resolution itself.

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"As always," continues Drum, "Republicans only care about deficits when a Democrat is president:"

This time around they didn't waste even two days before they made that crystal clear. I wonder how many times they can pull this bait-and-switch before the public and the press stops taking them seriously on their alleged horror of the spiraling national debt?

Republicans want to cut spending on the poor and cut taxes on the rich. That's it.

Yves Smith describes the American dream:

A third of Americans think they'll be rich someday. More than half of 18-29 year olds think they will be.

Less than 5% actually make it. And many of those do it the old-fashioned way: they inherit it.

That's quite a caveat. Smith then asks, "how do Americans accumulate wealth?"

And how does that vary across income and wealth classes? How do the bottom 50% accumulate wealth, for instance, compared to the top 1%?

A huge aid to answering that question arrived last month. Gabriel Zucman, Emmanuel Saez, and Thomas Piketty (PSZ) released one of the most important pieces of economic research in the last century. Their Distributional National Accounts (DINAs) reveal the distribution of national income to different income classes, wealth classes, age groups, and genders (and potentially different races, etc. etc.).

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"Concentration of total wealth accrual is almost always far higher," Smith notes, "and has been rising faster, than concentration of income alone:"

The rich are getting richer, faster. It's an inequality picture more dire even than that depicted in the DINAs. And because wealth begets more wealth, it's a self-perpetuating picture.

We pay people for doing things, and we pay people for owning things. Increasingly, the latter.

Trump and tax cuts

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Steven Rattner's 2016 in charts piece notes "the strong economy that President Obama will be leaving him:"

Unemployment is down to 4.6 percent, the lowest since August 2007 and a stunning decline from the 7.8 percent when Mr. Obama took office. The economy has expanded by nearly 15 percent (adjusted for inflation), the stock market has nearly tripled, auto sales have notched records, the federal deficit has been cut by more than half and house prices nationally are above past peaks. Even real median incomes ended marginally higher.

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Rattner says this of Trump's tax-cut plan:

It includes a $6 trillion tax reduction over the next decade, vastly tilted toward business and the wealthy. An estimated 83 percent of the benefits would go to the top 20 percent of Americans and 51 percent to the top 1 percent by 2025. A middle-class taxpayer would receive an average tax benefit of $1,090; a typical member of the top 1 percent would get $317,100.

These huge tax giveaways -- along with Mr. Trump's promises to increase infrastructure spending and not touch Social Security and Medicare -- would blow up the deficit and add $4 trillion to the national debt over the next 10 years over and above current projections. That's made particularly ironic by Mr. Trump's claim in a Washington Post interview that he would eliminate our current $19 trillion of debt over eight years through better trade deals and economic growth. [emphasis added]

Here's another chart, an indication of the fiscal damage that Trump intends to wreak:

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Salon's Erin Coulehan calls work stress "the saddest American status symbol:"

It's no secret that our culture today prides itself on the amount of work we put into our jobs. We work to an excessive degree as if there's a competition to impress people by our willingness to take our work everywhere.

But why?

A new study sheds light on what seems to be an American obsession with being overworked and stressed out.

A Harvard Business Review report shows that a busy person is "perceived by participants to have higher status than the one with free time," indicating that "Americans seem to be obsessed with overworking ourselves in an effort to gain social esteem:"

The research suggests part of Americans' obsession with being overworked is an effort to seem important and gain social influence, which makes sense given the hyper-competitive system with which we're socialized. [...]

It's foolish to think we must unnecessarily burden ourselves in order to be effective, important, or relevant. Our time management skills should be adapted to include time for work and leisure, although doing so in the digital age seems nearly impossible.

"In today's America," the study points out, "complaining about being busy and working all the time is so commonplace most of us do it without thinking:"

If someone asks "How are you?" we no longer say "Fine" or "I'm well, thank you." We often simply reply "Busy!"

This is more than just a subjective impression. An analysis of holiday letters indicates that references to "crazy schedules" have dramatically increased since the 1960s.

"What has changed so dramatically in one century?" the study asks:

We think that the shift from leisure-as-status to busyness-as-status may be linked to the development of knowledge-intensive economies. In such economies, individuals who possess the human capital characteristics that employers or clients value (e.g., competence and ambition) are expected to be in high demand and short supply on the job market. Thus, by telling others that we are busy and working all the time, we are implicitly suggesting that we are sought after, which enhances our perceived status.

Veblen's theory that "leisure is a mark of higher status" is thus inverted, to the detriment of (nearly) all of us, as we become a leisure-less class of worker bees, consumed by busyness.

the C-suite credo

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Jon Chait points out how 'the wealthy would never steal' is a credo for Trump's party:

Donald Trump's government has not yet taken power, but its epitaph may have already been written. The author, Lawrence Kudlow, is a noted voodoo economist and the reported leading candidate to head the administration's Council of Economic Advisors.

In a National Review column, Kudlow makes the case not only that Trump and his administration are not corrupt, but also that they cannot be corrupt, by virtue of their wealth. "Why shouldn't the president surround himself with successful people?" reasons Kudlow, "Wealthy folks have no need to steal or engage in corruption."

The examples of Bernie Madoff, Don Blankenship, the Enron crew, WorldCom, and too many others to list come to mind--but not at NR. "Conservatives like to imagine that their policy represents a challenge to the power structure," Chait continues, but 'crony capitalism' is not the only type of white-collar thievery. Chait continues:

The conceptual distinction between the good kind of wealth, earned through the free market, and the bad kind, earned through political favoritism, is an absolutely vital one for right-wing intellectuals. And yet Trump is showing how easily it collapses in practice. Conservatives have treated a first family using the powers of office to enrich itself -- not theoretically or in the future but right now, on an ongoing basis -- as, at worst, a distraction or a problem of optics. In practice, conservatives share Kudlow's belief that a government of and by the rich is necessarily virtuous.

The conclusion?

We can be pretty sure that Trump, his family, and his friends will be among the people who gain from his policies. Conservatives appear distinctly unalarmed by the prospect.

economic regression

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Economist Anatole Kaletsky writes about the crisis of market fundamentalism, suggesting that "The US may now be ready to abandon the monetarist dogmas of central-bank independence and inflation targeting, and to restore full employment as the top priority of demand management:"

By deregulating finance and trade, intensifying competition, and weakening unions, governments created the theoretical conditions that demanded redistribution from winners to losers. But advocates of market fundamentalism did not just forget redistribution; they forbade it.

The pretext was that taxes, welfare payments, and other government interventions impair incentives and distort competition, reducing economic growth for society as a whole. But, as Margaret Thatcher famously said, [...] "there's no such thing as society. There are individual men and women and there are families." By focusing on the social benefits of competition while ignoring the costs to specific people, the market fundamentalists disregarded the principle of individualism at the heart of their own ideology.

Kaletsky continues:

Just as fiscal and monetary policy can be calibrated to minimize both unemployment and inflation, redistribution can be designed not merely to recycle taxes into welfare, but to help more directly when workers and communities suffer from globalization and technological change.

He then notes that "governments have mostly done the opposite:"

They have made tax systems less progressive and slashed spending on education, industrial policies and regional subsidies, pouring money instead into health care, pensions, and cash hand-outs that encourage early retirement and disability. The redistribution has been away from low-paid young workers, whose jobs and wages are genuinely threatened by trade and immigration, and toward the managerial and financial elites, who have gained the most from globalization, and elderly retirees, whose guaranteed pensions protect them from economic disruptions.

It's a Wonderful S&L

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Bourree Lam and Gillian White discuss It's a Wonderful Life and banking; here are some highlights:

Lam: I actually think the movie does a good job of portraying the downsides of what it means to be both a "good" bank (one that lends to people who need it, but is likely over-leveraged) and a "bad" bank (a more profitable one that loans at high interest rates and only provides credit to people who already have money). But there are also inherent moral judgments about the way a bank should work that come across as too black-and-white. For example, when Potter asks Bailey, "Are you running a business or a charity?" we know it's not mutually exclusive like that. After all, a bank ideally would help people reach financial goals while also turning a profit.
White: I think part of what makes It's a Wonderful Life such an appealing movie is that people can easily rally around Bailey as the savior of the community. He's a hard-working and self-sacrificing businessman, who is helping out his neighbors. In the end, the community saves itself. I think what's interesting is that in reality, many places probably didn't have a George Bailey. And certainly now--with bank consolidation--there are fewer and fewer neighborhood financial institutions and certainly fewer individuals who could help bridge those gaps. In those instances, people who are having a hard time would have much less heart-warming options: government services or dangerous, expensive short-term loans, like payday or auto titles.

two retirements

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A report from the Institute for Policy Studies prompted Mother Jones to declare that saving for retirement is a struggle--unless you're a CEO:

The study, titled "A Tale of Two Retirements," found that in 2015 just 100 CEOs had retirement funds worth $4.7 billion--equivalent to the entire retirement savings of the least wealthy 41 percent of American families, or 116 million people. [...]

Those 100 CEOs have nest eggs large enough to generate a retirement check of more than $250,000 per month for the rest of their lives. Meanwhile, the average American fortunate enough to have a 401(k) plan has socked away only enough to receive a monthly check of just $101. And those are the lucky ones: 37 percent of all US households have no retirement savings at all.

"So how has this happened?"

Simply, the tax rules are structured in favor of massive executive retirement packages. Ordinary workers face strict limits on how much pre-tax income they invested in tax-deferred plans like 401(k)s. (The current limit is $18,000.) CEOs may participate in regular employee plans, but they also get Supplemental Executive Retirement Plans, which Fortune 500 companies set up with unlimited tax-deferred compensation. Since more than half of executive compensation is tied to stock price, CEOs have direct incentives to cut back on worker retirement benefits to pad their balance sheets. The money saved by those cost-cutting measures goes straight back into executives' pockets, often tax-free: Corporations may deduct unlimited amounts of executive compensation from their federal taxes so long as it's "performance based."

The IPS report asks, "Why has the CEO-worker retirement benefit gap become such a chasm?" and answers:

This is not the result of executives working harder or investing more wisely. Instead, this gap is one more example of rule-rigging in favor of the 1%.

After getting screwed by trickle-down economics our entire working lives, retirement is salt in the wound.

ThinkProgress notes that Gingrich's desire to trash the New Deal is still strong, as seen in his Heritage comments that "this is the third great effort to break out of the Franklin Delano Roosevelt model." ThinkProgress continues:

Yet the thrust of the speech was that Trump has opened the door to a transformative moment where nearly a century's worth of liberal victories can be reversed. Gingrich twice brought up the possibility of rolling back Roosevelt's model of governance, at one point telling the conservative audience that, if Trump is succeeded by another Republican, that would establish "firmly that we have replaced the FDR model and that we are now in a period of very different government."

So what is this "FDR model" that Gingrich finds so odious? Roosevelt took office amidst a catastrophic depression, but he also assumed power at a time when a conservative majority on the Supreme Court choked off progressive legislation, especially laws intended to protect workers. These rigid limits on governance, FDR proclaimed a month before he accepted his party's nomination to be president, would hobble the nation's ability to extract itself from the Great Depression.

FDR's successes were, of course, legion:

Roosevelt's experiments also provided workers with a minimum wage and a right to unionize. And he signed the Social Security Act, which didn't just provide a safety net to the aged and the unemployed, but which also laid the foundation for health legislation such as Medicare and Medicaid.

Roosevelt's experiments brought modern liberalism into being in the United States, and they helped liberals prove that their model works.

Dissent's look at the triumph of the 1% illuminates other facets of the problem:

The election of Donald Trump, and the daily infliction of another huckster, ideologue, paranoid, or unrepentant one-percenter cabinet appointment, has upended the politics of inequality. The defining issue of our time, not an insignificant source of Trump's victory, is disappearing from the national political radar. [...]

By all indications, the incoming administration is not just indifferent to the root causes--growing wage inequality, financialization, the collapse of progressive taxation--but eager to double down on all of them.

The new analysis ["Distributional National Accounts: Methods and Estimates for the United States" (PDF)] explains, yet again, where all the surplus goes:

Well, a large chunk of it is captured by the top 1 percent, whose share of national income almost doubled between 1970 and 2014--from 11 percent to 20.2 percent.

"What this means, in general terms," the analysis continues, "is the growth of inequality over decades is due to the ability of the 1 percent to capture a large portion of the growing surplus:"

But there has also been a change in the nature of that inequality in recent years--which is not due to escalating wages at the top, but to a boom in income from the ownership of stocks and bonds. The high incomes of the "working rich," it seems, have increasingly been used to purchase financial assets.

It looks then as if the working rich are either turning into or being replaced by rentiers--thus mirroring, after a short interruption, the structure of inequality last seen during the first Gilded Age.

update (13:54):
Thomas Piketty explains at The Wire that "on both the Right and the Left, everyone seems to agree on the existence of a minimum income around this level in France, as is the case in other European countries"--but not the US, of course. "If we wish to live in a fair and just society," he writes, "we have to formulate more ambitious objectives which cover the distribution of income and wealth in its entirety and, consequently, the distribution of access to power and opportunities:"

To move towards fair pay, we must stop denigrating the role of trade unions, the minimum wage and salary scales. We should reconsider the role assigned to the employees' representatives. In countries where they play an active role on the executive boards - between one third and half of the votes in Sweden and Germany - we find a narrower range of salary scales, greater investment of the employees in the firms' strategy and, as a consequence, higher productivity. In addition, there is nothing to prevent us from imagining original forms of power-sharing, with the board members being elected by a combination of employees and shareholders (to go beyond the interaction between paid administrators and shareholders with the latter automatically holding the majority).

Democracy is even more dangerous to authoritarians when employed at work than it is at the ballot box.

TPM reminds us that repealing Obamacare would mean a big tax cut for the rich:

Two taxes that will be presumably axed with the law affect only those making $200,000 or more. The break the ACA repeal will bring to those taxpayers will amount to a $346 billion tax cut in total over 10 years, according to the CBO report on the 2015 repeal legislation GOP lawmakers say they'll be using as their model next year. [...]

"That $346 billion represents about $1,000 for every man, woman, and child in the United States. Every cent will go into the pockets of people making more than $200,000 per year," [University of Michigan law professor Nicholas] Bagley wrote. [...]

The taxes in question are known as the Medicare tax on higher income individuals and the net investment income tax. The former is a 0.9 percent tax placed on those who earn $200,000 or more individually (or $250,000 for married couples who file jointly). It comes on top of the Medicare payroll tax employees pay together with their employers, but only applies to the income that exceeds the $200,000 threshold.

The net investment income tax is a 3.8 percent levy meant to complement the Medicare payroll tax, since investment income was not previously taxed in that way. It applies on investment income, such as such as capital gains, dividends and interest income, for those making $200,000 or more.

A Tax Policy Center report found that the repeal of the net investment income tax would equate to $154,000 in annual savings for earners in the top 0.1 percent.

Regarding another of Trump's impending disasters, Paul Krugman writes of his "Make America Gasp Again" nominee to head the EPA that "Trump can indeed restore the world of the 1970s:"

He can, for example, bring us back to the days when, all too often, the air wasn't safe to breathe. And he's made a good start by selecting Scott Pruitt, a harsh foe of pollution regulation, to head the Environmental Protection Agency. Make America gasp again!

"The key point," Krugman continues, "is that better air didn't happen by accident:"

It was a direct result of regulation -- regulation that was bitterly opposed at every step by special interests that attacked the scientific evidence of harm from pollution, meanwhile insisting that limiting their emissions would kill jobs.

These special interests were, as you might guess, wrong about everything. The health benefits of cleaner air are overwhelmingly clear. Meanwhile, experience shows that a growing economy is perfectly consistent with an improving environment. In fact, reducing pollution brings large economic benefits once you take into account health care costs and the effects of lower pollution on productivity.

Meanwhile, claims of huge business costs from environmental programs have been wrong time and time again. This may be no surprise when interest groups are trying to maintain their right to pollute.

AlterNet points out that "The only slim consolation Krugman can find is that dirty air is a lot more visible and obvious than climate change and Americans will know exactly who to blame for it."

Richard Eskow, who notes that Trump's grift gave government to the 0.01 percent, sees the endemic "economic fear and distress [as] a breeding ground for grift:"

Studies like those conducted by Boston College's Center for Retirement Research confirm what professional con artists have always known: people in financial distress are easier marks. And make no mistake about it: Donald Trump is a con artist. Trump voters have been taken in by a grift so shameless he might as well have pretended to be calling from the IRS.

Trump was always a Trojan horse for the 0.01 percent. And now he's forming a government of, by, and for the very elites he campaigned against.

"Trump's administration is already the wealthiest in history," he continues, but "It's not just their wealth that distinguishes Trump's team from the vast majority of Americans:"

It's their class exclusivity. Trump has largely drawn from people who, like him, were born into wealth and privilege. This insularity, combined with the heartlessness of the policies they espouse, makes it even less likely that they will empathize with -- or even understand -- the problems of ordinary people.

Most of them have never experienced hard times. And judging from their policy positions, they can be counted on to have about as much empathy for working people as Leona Helmsley's dog. [...] Here's Trump last February, speaking about his primary opponent Ted Cruz:

"I know the guys at Goldman Sachs. They have total, total control over (Cruz). Just like they have total control over Hillary Clinton."

What a difference a few weeks make. Key Trump picks from Goldman Sachs include Steve Mnuchin, Trump's pick for Treasury Secretary; his political czar, Steve Bannon; his transition advisor Anthony Scaramucci; and even Cohn, who is seen as a possible top hire.

Those picks are no better than billionaire Betsy DeVos for Education Secretary or ExxonMobil's CEO as Secretary of State:

It's becoming clear that Trump plans to give direct control of the government to the people who have indirectly ruled us for decades, thanks to an over-financialized economy and a government whose policies are guided by the desires of oligarchs.

The new boss is indeed the same as the old boss, as Trump's team of fake populists and real crony capitalists reveals his duplicity. "After playing to the country's populist mood as a candidate," WaPo writes, "Trump has surrounded himself almost exclusively with corporate elites:"

Trump has loaded up his transition and Cabinet-in-waiting with members of the establishment he claimed he would crush. Trump's team, with few exceptions, is filled by the "swamp creatures" we'd expect in virtually any Republican administration.

WaPo's conclusion is brutal:

Like the contractors he stiffed throughout his career, millions of working-class voters may soon learn that Trump has no intention of fulfilling his campaign's red-meat promises. One way to hold him accountable is for the media to spend less time gawking at Trump's tweets and more time exposing the greed and cronyism that are already poisoning his administration.

In writing about Carrier's crony capitalism, Bernie Sanders explains that corporations have figured out how to roll Trump:

In exchange for allowing United Technologies to continue to offshore more than 1,000 jobs, Trump will reportedly give the company tax and regulatory favors that the corporation has sought. Just a short few months ago, Trump was pledging to force United Technologies to "pay a damn tax." He was insisting on very steep tariffs for companies like Carrier that left the United States and wanted to sell their foreign-made products back in the United States. Instead of a damn tax, the company will be rewarded with a damn tax cut. Wow! How's that for standing up to corporate greed? How's that for punishing corporations that shut down in the United States and move abroad?

In essence, United Technologies took Trump hostage and won. And that should send a shock wave of fear through all workers across the country.

He continues by reminding us that "I said I would work with Trump if he was serious about the promises he made to members of the working class:"

But after running a campaign pledging to be tough on corporate America, Trump has hypocritically decided to do the exact opposite. He wants to treat corporate irresponsibility with kid gloves. The problem with our rigged economy is not that our policies have been too tough on corporations; it's that we haven't been tough enough.

In an assessment that should surprise no one, Nicholas Napier pegs Trump's picks as comprising the richest cabinet in history:

Remember when President-elect Trump attracted working class voters by promising to "Drain the Swamp" of establishment politicians and wealthy Wall Street bankers?

As evidenced by Trump's picks, he's convinced that a cabinet full of billionaires will know what's best for a country where the average household earns $52,250 per year.

The three billionaires identified include Betsy DeVos (Secretary of Education), Wilbur Ross (Secretary of Commerce), and Todd Ricketts (Deputy Secretary of Commerce). Napier continues:

Trump rewarded his wealthy contributors with positions of power, and he isn't the first. However, for a campaign that was run touting the needs of the uneducated working class, it's hard to believe that a team comprised of the wealthiest people ever to work in government will have his voters' best interest in mind.

Over at Crooks and Liars, shelleyp asks, how much damage can they do?

If we were to search for the absolute best leaders for the different cabinet positions in the White House, we'd find Trump's picks directly opposite them. A cabinet leader should support the mission of his or her cabinet, and seek to ensure it operates to the best of its ability. Trump's picks have been, almost universally and vehemently, opposed to both the work and the premise of the organizations they've been picked to lead.

She continues:

In the Department of the Interior, requirements related to resource allocation can be relaxed. This could lead to more coal, gas, and oil leases, trees cut for timber, more acreage for cattle grazing permits, not to mention opening up mining where it was previously disallowed on public land.

Enforcement of existing water and air regulations can be discouraged, to allow more agricultural and industrial pollution. Fewer endangered species will make it to the lists, and to the protection they need.

She sees hope in a rather unusual place:

What will be the primary saving grace from the destruction these ill-equipped, fanatical leaders can bring?

Bureaucracy.

Federal departments and agencies are large, with big budgets, and considerable responsibility. How the organization operate is guided by procedures and rules that have been in place for decades, if not centuries. For the government to function, it can't go through a complete upheaval every four years. It can't be completely undermined by an incapable President and his ill-considered choices. Bureaucracy is the basis for maintaining a functioning government.

Most of Trump's picks are inexperienced, and ill-equipped for their jobs. Meanwhile, the work in the federal agencies and departments is done by career employees, who understand what they need to do to keep things running and fulfill the obligations of their job. Though these employees can be severely hindered in what they do, especially with budget cuts, they're also capable of slowing, or even stopping, permanent harm.

It's not an inspiring call to arms, but it may well mitigate the damage.

fuck work

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History professor James Livingston (author of No More Work: Why Full Employment is a Bad Idea) suggest a fuck work mindset, writing that "'full employment' is not the way to restore our faith in hard work, or in playing by the rules, or in whatever else sounds good:"

The official unemployment rate in the United States is already below 6 per cent, which is pretty close to what economists used to call 'full employment', but income inequality hasn't changed a bit. Shitty jobs for everyone won't solve any social problems we now face.

Livingston reminds us that "Oxford economists who study employment trends tell us that almost half of existing jobs, including those involving 'non-routine cognitive tasks' - you know, like thinking - are at risk of death by computerisation within 20 years:"

But that is why it's also an intellectual opportunity: it forces us to imagine a world in which the job no longer builds our character, determines our incomes or dominates our daily lives.

What would you do if you didn't have to work to receive an income?

In short, it lets us say: enough already. Fuck work.

He continues, "I know what you're thinking - we can't afford this!"

But yeah, we can, very easily. We raise the arbitrary lid on the Social Security contribution, which now stands at $127,200, and we raise taxes on corporate income, reversing the Reagan Revolution. These two steps solve a fake fiscal problem and create an economic surplus where we now can measure a moral deficit. [...]

Taxing the profits of corporations to finance a welfare state that permits us to love our neighbours and to be our brothers' keeper is not an economic problem. It's something else - it's an intellectual issue, a moral conundrum.

"Character can be created on the job," he writes, "only when we can see that there's an intelligible, justifiable relation between past effort, learned skills and present reward:"

When I see that your income is completely out of proportion to your production of real value, of durable goods the rest of us can use and appreciate (and by 'durable' I don't mean just material things), I begin to doubt that character is a consequence of hard work.

When I see, for example, that you're making millions by laundering drug-cartel money (HSBC), or pushing bad paper on mutual fund managers (AIG, Bear Stearns, Morgan Stanley, Citibank), or preying on low-income borrowers (Bank of America), or buying votes in Congress (all of the above) - just business as usual on Wall Street - while I'm barely making ends meet from the earnings of my full-time job, I realise that my participation in the labour market is irrational. I know that building my character through work is stupid because crime pays. I might as well become a gangster like you.

That's why an economic crisis such as the Great Recession is also a moral problem, a spiritual impasse - and an intellectual opportunity. We've placed so many bets on the social, cultural and ethical import of work that when the labour market fails, as it so spectacularly has, we're at a loss to explain what happened, or to orient ourselves to a different set of meanings for work and for markets. [...]

Though work has often entailed subjugation, obedience and hierarchy [...], it's also where many of us, probably most of us, have consistently expressed our deepest human desire, to be free of externally imposed authority or obligation, to be self-sufficient. We have defined ourselves for centuries by what we do, by what we produce.

Livingston finally asks, "How would human nature change as the aristocratic privilege of leisure becomes the birthright of all?"

So the impending end of work raises the most fundamental questions about what it means to be human. To begin with, what purposes could we choose if the job - economic necessity - didn't consume most of our waking hours and creative energies? What evident yet unknown possibilities would then appear? How would human nature itself change as the ancient, aristocratic privilege of leisure becomes the birthright of human beings as such?

economic rent

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I've railed against simplistic conservative misreadings of Adam Smith before, so Dustin Mineau's explanation of how economists duped us into attacking capitalism (by explicating the concept of economic rent) was a very intriguing read:

I admit, reading the term, "economic rent" can cause eyes to glaze over quickly. A more accurate description is "unearned income". It is people and companies who make money by doing zero work and risk little or none of their own assets.

Many conservative economists claim to be staunch followers of Adam Smith. They shout slogans such as "Supply and Demand!" "Capitalism"! " "Let the markets work!" However, for anyone who actually read Adam Smith, you would note that the "invisible hand" was not his only observation of the inner workings of capitalism. Adam Smith recognized that many in the economy were making gobs of money, but weren't contributing anything. He was referring to what was eventually called "economic rent".

"Adam Smith and future classical economists," he reminds us, "existed in a time where the noble families of medieval Europe were still the large landowners:"

The nobles had just turned into Rentiers. Because they owned the land, they were able to rent it out to capitalist and workers and claim a portion of their profits and wages by charging "rent". They were able to do this without ever working. It was unearned income.

Much of the work done by economists from Adam Smith until the late 19th century was all about finding and identifying "rent-seeking". These classical economists didn't want to overthrow capitalism, they wanted to free it from the "rent-seeking" parasites.

Because "many modern economists no longer make a distinction between land and capital," he continues, "therefore the concept of economic rent is no longer discussed in our politics:"

Rent-seeking is any income that is unearned. An alternative definition is "profit without a corresponding cost of production". "Economic Rent" can come from ownership of land and just "renting" it out for money. It can also come from collecting so much capital that a firm now has a monopoly and can set the price independent of supply demand considerations, It can be from government monopoly granting, control of other "land" like our rivers, broadband spectrum, or "mineral rights" of land. It can come from control of financial assets like capital gains, dividends, and interest on loans(especially usury). It can also come from political favors from the government.

A side effect of this is that "when progressives rail against the unearned income of the rentiers, we lack the vocabulary to properly express what is happening:"

Instead, conservatives try to make it look like liberals are railing against capitalism itself or against businesses in general. In some cases we may even come to believe it ourselves. Many times when we're fighting against the "excesses of capitalism", what we are actually fighting is parasitic rentiers that are hurting the true capitalists as much as the workers.

"One could argue, he concludes, that "history is repeating itself:"

200 years ago, the conservative vs. liberal mantra was that conservatives were fighting to keep the power of the nobles and large landlords intact. The liberals were the ones trying to free themselves politically and economically from their control. Today it's the same. Conservatives are fighting to maintain the privilege of the Rentiers by pretending to defend capitalism itself. And once again, us liberals are fighting to free the market from the parasitical Rentiers.

Lynn Parramore's observation that medieval peasants got more vacation time than you is an interesting one, despite the obvious caveat that "Life for the medieval peasant was certainly no picnic:"

His life was shadowed by fear of famine, disease and bursts of warfare. His diet and personal hygiene left much to be desired. But despite his reputation as a miserable wretch, you might envy him one thing: his vacations.

Plowing and harvesting were backbreaking toil, but the peasant enjoyed anywhere from eight weeks to half the year off. The Church, mindful of how to keep a population from rebelling, enforced frequent mandatory holidays. Weddings, wakes and births might mean a week off quaffing ale to celebrate, and when wandering jugglers or sporting events came to town, the peasant expected time off for entertainment. There were labor-free Sundays, and when the plowing and harvesting seasons were over, the peasant got time to rest, too. In fact, economist Juliet Shor found that during periods of particularly high wages, such as 14th-century England, peasants might put in no more than 150 days a year.

As for the modern American worker? After a year on the job, she gets an average of eight vacation days annually.

"Shor's examination of work patterns," writes Parramore, "reveals that the 19th century was an aberration in the history of human labor:"

When workers fought for the eight-hour workday, they weren't trying to get something radical and new, but rather to restore what their ancestors had enjoyed before industrial capitalists and the electric lightbulb came on the scene. Go back 200, 300 or 400 years and you find that most people did not work very long hours at all. In addition to relaxing during long holidays, the medieval peasant took his sweet time eating meals, and the day often included time for an afternoon snooze. "The tempo of life was slow, even leisurely; the pace of work relaxed," notes Shor. "Our ancestors may not have been rich, but they had an abundance of leisure."

Parramore identifies the precarious nature of today's middle-class existence, as well as the irony that "this cult of endless toil doesn't really help the bottom line:"

Study after study shows that overworking reduces productivity. On the other hand, performance increases after a vacation, and workers come back with restored energy and focus. The longer the vacation, the more relaxed and energized people feel upon returning to the office.

(It's almost as if one of the corporate goals of this setup is workers' terrified obedience, rather than mere productivity...)

In the course of explaining why market-based healthcare reform can't succeed, Smirking Chimp examines the proposition that "No 'free market' solution to providing health care can work without price controls:" He notes that "In other countries, 'market-based' solutions work because of decidedly non market-based practices, like government-mandated price-setting:"

Any solution that places pricing power in the hands of monopolies and near-monopolies will always fail to deliver an affordable product, whether that market is cable TV or health insurance. Monopolies inevitably lead to high prices.

He quotes from this Jacobin article by Benjamin Day (executive director of single-payer advocacy group Healthcare-NOW), which points out that Aetna, one of the largest insurers, "is pulling out of state health exchanges in 2017. The company's action marks the failure of every market-based reform included in the Affordable Care Act (ACA):"

The last gasp of the ACA's market-based reforms reveals an uncomfortable truth about our health-care system: we cannot afford to expand or even maintain our current access to care without cost controls, and health-care costs cannot be controlled with competition or markets.

The only cost control that works without undermining access to care is also the kind that Republican and Democratic leadership have foresworn this election: public budgeting and rate-setting through a single-payer system, or regulations that force nonprofit insurers to act like a single-payer.

The idea of taxing conspicuous consumption is gaining ground, as Smirking Chimp explains when talking to economist Robert Frank (lauded as "arguably the country's leading expert on wretched excess"):

The reason the nation's wealthiest have become a menace to the commonweal, Frank has concluded, is not because of how much more they make than the rest of us. It's how much more they spend. [...] It boils down to this: Scrap the income tax.

The specter of "trickle-down consumerism" haunts middle-class lives:

Whatever you do, just don't call it keeping up with the Joneses on steroids. Frank finds that too judgmental. The reason the median family is spending 50 to 75 percent more to buy a house that's at least 50 percent bigger than the ones they bought in 1970, or proud parents are spending more than three times as much on weddings than they did in 1980, Frank says, has less to do with envy or status-seeking than what he calls "context." [...]

"The better schools are located in the neighborhoods where the houses are more expensive," he said. So middle-class families "bid up the prices, of course, in the better school districts."

"Frank doesn't expect his recommendations to come to fruition overnight," the piece observes, although:

...other once-unthinkable things, such as a tax on carbon consumption and legalized gay marriage, gained rapid acceptance once they had gathered momentum. "Things happen incrementally until they don't," said Frank. "Revolutions, when they come, are never widely predicted."

TruthDig's Paul Street looks at the ubiquitous "PBS NewsHour" program and how it is funded:

The claim [of neutrality] has long been contradicted by the string of corporate-image commercials (purchased by leading financial, defense, auto, insurance and rail corporations) that appear before the network's nightly "NewsHour" broadcast--along with a list of corporate-sponsored foundations and superwealthy individuals who pay for the show, along with "regular viewers like you."

It is important that PBS news products exist within "the narrow capitalist parameters of acceptable coverage and debate that typify the more fully and explicitly for-profit and commercialized corporate media:"

Whatever the global issue of the day or week, "NewsHour" anchors and their invited "experts" can be counted on to report and reflect in accord with the doctrinal assumption that Washington always operates with the best of intentions. They almost uniformly treat the U.S. as a great, benevolent and indispensable force for freedom, democracy, security, peace and order in a dangerous world full of evil and deadly actors.

"Today's PBS, Street continues, "is not about to blow the whistle on the moral contradictions:"

There is a natural connection between the "P" in PBS standing for "Plutocracy" and it standing for "Pentagon." The core economic interests of the nation's superwealthy corporate and financial elite have long been global in nature. And, as the arch-neoliberal guru and New York Times columnist Thomas Friedman explained in New York Times Magazine on the eve of the U.S.-led bombing of Serbia, "The hidden hand of the market will never work without a hidden fist--McDonald's cannot flourish without McDonnell Douglas, the builder of the F-15. And the hidden fist that keeps the world safe for Silicon Valley's technologies to flourish is called the U.S. Army, Air Force, Navy and Marine Corps." Friedman is a PBS favorite. He has appeared on "NewsHour" and other PBS productions at least 50 times by now.

Of such bricks is a media elite edifice constructed.

stack ranking

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As Evonomics explains, stack ranking is destructive--both in corporations and on sports teams:

Stack-ranking and other business practices of individual selection have been widespread, from General Electric to Microsoft, and is a standard modus operandi in sports teams including the focus of this piece, the European soccer team, Real Madrid. However, the wisdom behind the application of these models, both in business and sport, is under scrutiny. [...]

This mismatch of incentives for individuals within a group is most certainly an area of concern for managers of all kinds. The relevance of these findings for management strategies in industry has gained some recent publicity, mainly following a popular TED talk by Margaret Heffernan which referenced [evolutionary biologist William] Muir's original experiments with specific focus on how traditional 'pecking orders' may not be the most productive organizational structure. [...]

Research on salary allocation shows one mechanism why this can occur, finding that pay inequality is linked to detrimental issues within teams, such that teams with highly unequal salary structures tend to also elicit more negative affect for their members, which can then lead to greater within-group problems.

C-level executives receive enormous feasts, while the rest of us fight over the table scraps; signing bonuses in soccer appear to have much the same effect:

Upon review, the Galactico policy of acquiring (or selecting for) top players by paying extraordinarily large sums of money [...] is likely to attract players with a pre-existing tendency to benefit individually at the expense of the team. Indeed, while the chance to sign for Real Madrid is a flattering opportunity for any player, the likely stack- ranking environment would seem more likely to attract certain traits. Accordingly, the relatively disappointing return of trophies and high turnover rate of world class players may be a consequence of the nature of the players recruited, or the behaviors which are coerced out of players by the high incentives to be the most productive or stand out performer.

Perhaps this in-group rivalry leads to an excess of competing against each other rather than against the opposite teams?

working parents

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The Center for American Progress report "Workin' 9 to 5: How School Schedules Make Life Harder for Working Parents" looks at "the unrealistic expectations that schools too often have for working parents and the ways in which school policies put pressure on already stretched families:"

By closing at 3:00 p.m., shutting down intermittently and frequently, hosting important school events in the middle of the day, and more, schools make it really hard for parents to balance their commitments to their children and their jobs.

[...] In fact, nearly half of all workers report not having any form of flexibility in their work schedules. Almost 40 percent of all workers do not even have paid vacation

The report enumerates and examines "the multitude of ways that U.S. public schools make life unnecessarily harder for working parents:"

Throughout the school year, schools are closed for 29 days, more than two workweeks longer than the average private-sector worker has in paid vacation and holidays.
As a consequence, even if full-time workers devoted all of their paid vacation time and holidays to cover school closings, they would still need to find an alternative way to care for their children on at least 13 days throughout the school year.

If families pay out of pocket for child care to cover the excess school closure days and hours, it would cost an average of $6,600 per year, or 9 percent of an average family's income. [...]

Misaligned school schedules cost the U.S. economy $55 billion in lost productivity annually.

What to do?

CAP recommends policy changes at the federal, state, and local levels to align school and work schedules. These policy solutions should extend the length of the school day, reduce the number of school closures, reform the calendar year, and rethink engagement strategies.

The idea of "a 9-to-5 school day" deserves serious consideration.

shell games

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As the new report "Offshore Shell Games 2016" indicates, "Overall, multinational corporations use tax havens to avoid an estimated $100 billion in federal income taxes each year." The downside, of course, is that "when corporations don't pay what they owe, ordinary Americans inevitably must make up the difference:"

In other words, every dollar in taxes that corporations avoid must be balanced by higher taxes on individuals, cuts to public investments and services, and increased federal debt.

"Most of America's largest corporations maintain subsidiaries in offshore tax havens," the report observes:

At least 367 companies, or 73 percent of the Fortune 500, operate one or more subsidiaries in tax haven countries [and] these 367 companies maintain at least 10,366 tax haven subsidiaries.

For those keeping score at home, that's 28 for each corporation, but it gets worse:

A Citizens for Tax Justice analysis of 27 companies that disclose subsidiary data to both the Securities and Exchange Commission (SEC) and the Federal Reserve revealed that weak SEC disclosure rules allowed these companies to omit 85 percent of their subsidiaries on average. If this rate of omission held true for the entire Fortune 500, the number of tax haven subsidiaries in reality could be nearly 55,000, rather than the 10,366 that are being publicly disclosed now.

(That would bring the average up to almost 150 tax havens per Fortune 500 firm.) Crooks and Liars notes that "Congress - for obviou$ rea$on$ - refuses to stop this 'deferral' loophole:"

And then these same companies fund "think tanks" and other propaganda mills that tell us we have a huge budget "deficit" and "debt" problem and therefore need to cut spending on things that make people's lives better.

It's almost all a sham, though:

For many companies, increasing profits held offshore does not mean building factories abroad, selling more products to foreign customers, or doing any additional real business activity in other countries. Instead, many companies use accounting tricks to disguise their profits as "foreign," and book them to a subsidiary in a tax haven to avoid taxes. [...] The 298 Fortune 500 companies that report holding offshore cash had collectively accumulated more than $2.49 trillion that they declare to be "permanently reinvested" abroad.

That's rather reminiscent of the $1.8 trillion in cash that corporations were hoarding while the rest of us dug out from the Great Recession. As far as proposing solutions, the reports offers a few:

The most comprehensive solution to ending tax haven abuse would be to stop permitting U.S. multinational corporations to indefinitely defer paying U.S. taxes on profits they attribute to their foreign subsidiaries. In other words, companies should pay taxes on their foreign income at the same rate and time that they pay them on their domestic income. Paying U.S. taxes on this overseas income would not constitute "double taxation" because the companies already subtract any foreign taxes they've paid from their U.S. tax bill, and that would not change. Ending "deferral" could raise up to $1.3 trillion over ten years, accord¬ing to the U.S. Treasury Department.

"bullshit jobs"

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David Graeber explains why capitalism creates pointless jobs. Instead of using technology to increase our leisure time, he explains that it "has been marshaled, if anything, to figure out ways to make us all work more:"

In order to achieve this, jobs have had to be created that are, effectively, pointless. Huge swathes of people, in Europe and North America in particular, spend their entire working lives performing tasks they secretly believe do not really need to be performed. The moral and spiritual damage that comes from this situation is profound. It is a scar across our collective soul. Yet virtually no one talks about it.

Graeber is more than happy to pick up the slack:

But rather than allowing a massive reduction of working hours to free the world's population to pursue their own projects, pleasures, visions, and ideas, we have seen the ballooning not even so much of the "service" sector as of the administrative sector, up to and including the creation of whole new industries like financial services or telemarketing, or the unprecedented expansion of sectors like corporate law, academic and health administration, human resources, and public relations. And these numbers do not even reflect on all those people whose job is to provide administrative, technical, or security support for these industries, or for that matter the whole host of ancillary industries (dog-washers, all-night pizza deliverymen) that only exist because everyone else is spending so much of their time working in all the other ones.

These are what I propose to call "bullshit jobs."

It's as if someone were out there making up pointless jobs just for the sake of keeping us all working.

That's quite contrary to the efficient-market hypothesis, isn't it? Graeber continues by noting that "The answer clearly isn't economic: it's moral and political:"

The ruling class has figured out that a happy and productive population with free time on their hands is a mortal danger (think of what started to happen when this even began to be approximated in the '60s). And, on the other hand, the feeling that work is a moral value in itself, and that anyone not willing to submit themselves to some kind of intense work discipline for most of their waking hours deserves nothing, is extraordinarily convenient for them.

It's also clearly not an accidental situation, as he points out by writing that "If someone had designed a work regime perfectly suited to maintaining the power of finance capital, it's hard to see how they could have done a better job:"

Real, productive workers are relentlessly squeezed and exploited. The remainder are divided between a terrorised stratum of the - universally reviled - unemployed and a larger stratum who are basically paid to do nothing, in positions designed to make them identify with the perspectives and sensibilities of the ruling class (managers, administrators, etc) - and particularly its financial avatars - but, at the same time, foster a simmering resentment against anyone whose work has clear and undeniable social value. Clearly, the system was never consciously designed. It emerged from almost a century of trial and error. But it is the only explanation for why, despite our technological capacities, we are not all working 3-4 hour days.

Cass Sunstein's piece on free-market fools discusses the book Phishing for Phools: The Economics of Manipulation and Deception by George Akerlof and Robert Shiller, and notes that "behavioral findings about human fallibility" illuminate a number of psychological failings: overconfidence, unrealistic optimism, poor risk assessment, a short-term bias, and the fact that "most economists have not had much to say about the problem of inequality"

There is a strong argument that within the economics profession, these problems are closely linked, and that they have had unfortunate effects on public policy. Most economists celebrate free markets, invoking the appealing idea of consumer sovereignty. If people are buying potato chips, candy, and beer, or making risky investments, that's their business; they know their own values and tastes. Outsiders, and especially those who work for the government, have no right to intervene.

"By emphasizing human fallibility," he continues, "the group of scholars known as behavioral economists has raised a lot of doubts about this view" that "competitive markets are generally trustworthy:"

Their catalog of errors on the part of consumers and investors can be taken to identify a series of "behavioral market failures," each of them calling for some kind of government response (such as information campaigns to promote healthy eating or graphic warnings to discourage smoking). But George Akerlof and Robert Shiller want to go far beyond behavioral economics, at least in its current form. They offer a much more general, and quite damning, account of why free markets and competition cause serious problems.

"Both Akerlof and Shiller have won the Nobel Prize," he notes before presenting their argument:

Akerlof and Shiller believe that once we understand human psychology, we will be a lot less enthusiastic about free markets and a lot more worried about the harmful effects of competition. In their view, companies exploit human weaknesses not necessarily because they are malicious or venal, but because the market makes them do it. Those who fail to exploit people will lose out to those who do. [...]

Akerlof and Shiller contend that the invisible hand guarantees "rip-offs," which are "fertile ground to find phishing for phools." At the closings of home sales, for example, people face a baffling array of transaction costs. [...]

Akerlof and Shiller make related arguments about the marketing of pharmaceuticals (with reference to the Vioxx scandal), the success of Facebook (which, they argue, is a mixed blessing for young people in particular), the sale of junk bonds, and the democratic process.

"Akerlof and Shiller make a convincing argument," he concludes, "that phishing occurs because of the operation of the invisible hand, not in spite of it:"

If a company can make money by deceiving or manipulating people, someone is going to create such a company, and it will prosper (unless the law regulates it). And if it prospers, companies that do not deceive or manipulate people may well be at a competitive disadvantage. Of course there are a lot of consumers out there, and some of them will avoid phishermen. In fact markets might well be segmented into sophisticates and phools, with the former avoiding, and the latter flocking to, complex (but risky) financial products, expensive closing fees, tobacco, and alcohol.

Free-market fundies will, of course, object to any sort of liberal "paternalism," regardless of the money or lives saved.

American Prospect's Abby Rapoport reminds us that "For more than 15 years, congressional Republicans have been trying to do away with federal funding for political-science research:"

Every time until now, political scientists successfully fought back. One reason they could: The pot designated for political science in the National Science Foundation (NSF) was a tiny percentage of overall research money--about $10 million out of a $7 billion budget. That's less than two-tenths of a percent.

Rapoport details the deal:

But tucked inside the 600-page continuing resolution the Senate passed on Wednesday afternoon--the measure that must pass to avoid a government shutdown--is an amendment from Republican Senator Tom Coburn, designed to cut off the vast majority of federal support for political-science research. The amendment prevents the National Science Foundation from funding its Political Science Program, "except for research projects that the Director of the National Science Foundation certifies as promoting national security or the economic interests of the United States."

She also notes that "for decades, the Political Science Program has funded the National Election Study, a multimillion-dollar project run out of the University of Michigan

The data, freely available to anyone, provides the most comprehensive look at how American political opinion has changed over time on key issues. Through the study, we can track the evolution of partisan identification, public opinion, and a variety of other key issues over decades. The findings are used by journalists and campaigns, and they're used to train undergraduates and graduate students in research. If the study ceases, there will suddenly be no way to see long-term trends in the American electorate.

(At least, no way that's not tied to some profit-making scheme...) Rapoport also highlights Coburn's hypocrisy:

Coburn hasn't let his opposition to NSF's political-science grants stop him from relying on NSF-funded political-science research when the research bolsters his own positions. In one debate, he cited NSF-funded research to demonstrate the lack of congressional oversight of the Government Accountability Office.

Jen McCreight rages against capitalist cluelessness as displayed in Sarah Butcher's money-saving tips for bankers piece. Butcher's whine that "bankers and their once free-spending wives are suddenly becoming familiar with the art of thriftiness" falls on deaf ears, as tips such as send your kids to state schools (#3), iron your own shirts (#6), and cook your own food (#14) represent a reasonable status quo for most Americans--not a sacrifice.

Exhortations to "Stop skiing, or ski more cheaply" (#9) and Ensure both adults are working (#16) are rather galling, but this one is the worst:

11. Sell the second home

It's easy to see why such cluelessness can inspire rage.

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