If you were going to assign blame to any single person for the financial crisis, Angelo Mozilo would rank right up there with people like Lehman’s idiot CEO Dick Fuld, deranged credit-default-swap peddler Joe Cassano of AIG’s Financial Products unit, and deregulatory pioneers like Bob Rubin and Phil Gramm. Mozilo’s role, however, was probably the single most shameful, as he represented the conscious decision of mortgage underwriters to abandon lending standards in order to claim ever-larger chunks of market share.
The Jetson’s was an early 60’s vision of the future that suggested a society freed from the yoke of long hours spent at tough jobs. It is not a society without stress or problems or else there would be no reason to watch the show. Regardless of any dramatic tension the show might have created, many a fool has simply salivated at the vision of a Jetson’s future. The Jetson’s came out in 1962 and was set in 2062, so we are exactly the mid-point on our journey to the future and the big message at year’s end is that we need to raise the eligibility age for Medicare, pay out less in Social Security, and to have everyone make sacrifices, since there aren’t enough resources to pay for nice things anymore. The question of how technological advances could lead to the misery of the middle and lower classes was addressed brilliantly by Paul Krugman last week.
One of the easiest tricks for creating a blog post is to cut and paste a Paul Krugman column into a post and then kick back like George Jetson.
The real slick-types break their post in two and surround it with their own chatter. With practice a blogger can generate a couple of posts a week, on the fly. Sure enough, every Monday and Friday, when Krugman’s columns appear, one notices the cut, paste and surround technique everywhere on the blogs. It may be justified since the New York Times slapped a paywall on its digital content, and not everyone has access to Krugman. It is also justified because Krugman says a lot of important things at a paper that can’t be ignored. Still, it is best for a high integrity blog like the one you’re reading right now, to use Krugman sparingly. That way you can make the point when a very special Krugman column comes along like last week’s, titled, “Robots and Robber Barons,” which follows:
The American economy is still, by most measures, deeply depressed. But corporate profits are at a record high. How is that possible? It’s simple: profits have surged as a share of national income, while wages and other labor compensation are down. The pie isn’t growing the way it should — but capital is doing fine by grabbing an ever-larger slice, at labor’s expense.
Wait — are we really back to talking about capital versus labor? Isn’t that an old-fashioned, almost Marxist sort of discussion, out of date in our modern information economy? Well, that’s what many people thought; for the past generation discussions of inequality have focused overwhelmingly not on capital versus labor but on distributional issues between workers, either on the gap between more- and less-educated workers or on the soaring incomes of a handful of superstars in finance and other fields. But that may be yesterday’s story.
More specifically, while it’s true that the finance guys are still making out like bandits — in part because, as we now know, some of them actually are bandits — the wage gap between workers with a college education and those without, which grew a lot in the 1980s and early 1990s, hasn’t changed much since then. Indeed, recent college graduates had stagnant incomes even before the financial crisis struck. Increasingly, profits have been rising at the expense of workers in general, including workers with the skills that were supposed to lead to success in today’s economy.
Why is this happening? As best as I can tell, there are two plausible explanations, both of which could be true to some extent. One is that technology has taken a turn that places labor at a disadvantage; the other is that we’re looking at the effects of a sharp increase in monopoly power. Think of these two stories as emphasizing robots on one side, robber barons on the other.
About the robots: there’s no question that in some high-profile industries, technology is displacing workers of all, or almost all, kinds. For example, one of the reasons some high-technology manufacturing has lately been moving back to the United States is that these days the most valuable piece of a computer, the motherboard, is basically made by robots, so cheap Asian labor is no longer a reason to produce them abroad.
In a recent book, “Race Against the Machine,” M.I.T.’s Erik Brynjolfsson and Andrew McAfee argue that similar stories are playing out in many fields, including services like translation and legal research. What’s striking about their examples is that many of the jobs being displaced are high-skill and high-wage; the downside of technology isn’t limited to menial workers.
Still, can innovation and progress really hurt large numbers of workers, maybe even workers in general? I often encounter assertions that this can’t happen. But the truth is that it can, and serious economists have been aware of this possibility for almost two centuries. The early-19th-century economist David Ricardo is best known for the theory of comparative advantage, which makes the case for free trade; but the same 1817 book in which he presented that theory also included a chapter on how the new, capital-intensive technologies of the Industrial Revolution could actually make workers worse off, at least for a while — which modern scholarship suggests may indeed have happened for several decades.
What about robber barons? We don’t talk much about monopoly power these days; antitrust enforcement largely collapsed during the Reagan years and has never really recovered. Yet Barry Lynn and Phillip Longman of the New America Foundation argue, persuasively in my view, that increasing business concentration could be an important factor in stagnating demand for labor, as corporations use their growing monopoly power to raise prices without passing the gains on to their employees.
I don’t know how much of the devaluation of labor either technology or monopoly explains, in part because there has been so little discussion of what’s going on. I think it’s fair to say that the shift of income from labor to capital has not yet made it into our national discourse.
Yet that shift is happening — and it has major implications. For example, there is a big, lavishly financed push to reduce corporate tax rates; is this really what we want to be doing at a time when profits are surging at workers’ expense? Or what about the push to reduce or eliminate inheritance taxes; if we’re moving back to a world in which financial capital, not skill or education, determines income, do we really want to make it even easier to inherit wealth?
As I said, this is a discussion that has barely begun — but it’s time to get started, before the robots and the robber barons turn our society into something unrecognizable.
Finally, a great explanation for what is happening. The advances in technology must be acknowledged. Closed factories are never going to reopen with more than a few humans working in them. This might not be cause for concern if we weren’t ruled by sociopathic monopolists with no interest in helping the rest of us figure out how to exist in a laborless society. There was a great scene in Dr. Strangelove about the abandonment of society by a ruling class.
From the movie:
Dr. Strangelove: I would not rule out the chance to preserve a nucleus of human specimens. It would be quite easy…heh, heh…at the bottom of ah…some of our deeper mineshafts. Radioactivity would never penetrate a mine some thousands of feet deep, and in a matter of weeks, sufficient improvements in drilling space could easily be provided.
Muffley: How long would you have to stay down there?
Dr. Strangelove: …I would think that uh, possibly uh…one hundred years…It would not be difficult Mein Fuehrer! Nuclear reactors could, heh…I’m sorry, Mr. President. Nuclear reactors could provide power almost indefinitely. Greenhouses could maintain plant life. Animals could be bred and slaughtered. A quick survey would have to be made of all the available mine sites in the country, but I would guess that dwelling space for several hundred thousands of our people could easily be provided.
Muffley: Well, I, I would hate to have to decide…who stays up and…who goes down.
Dr. Strangelove: Well, that would not be necessary, Mr. President. It could easily be accomplished with a computer. And a computer could be set and programmed to accept factors from youth, health, sexual fertility, intelligence, and a cross-section of necessary skills. Of course, it would be absolutely vital that our top government and military men be included to foster and impart the required principles of leadership and tradition. Naturally, they would breed prodigiously, eh? There would be much time, and little to do. Ha, ha. But ah, with the proper breeding techniques and a ratio of say, ten females to each male, I would guess that they could then work their way back to the present Gross National Product within say, twenty years.
Muffley: Wouldn’t this nucleus of survivors be so grief-stricken and anguished that they’d, well, envy the dead and not want to go on living?
Dr. Strangelove: When they go down into the mine, everyone would still be alive. There would be no shocking memories, and the prevailing emotion will be one of nostalgia for those left behind, combined with a spirit of bold curiosity for the adventure ahead! [involuntarily gives the Nazi salute and forces it down with his other hand]Ahhh!
Turgidson: Doctor, you mentioned the ratio of ten women to each man. Now, wouldn’t that necessitate the abandonment of the so-called monogamous sexual relationship, I mean, as far as men were concerned?
Dr. Strangelove: Regrettably, yes. But it is, you know, a sacrifice required for the future of the human race. I hasten to add that since each man will be required to do prodigious…service along these lines, the women will have to be selected for their sexual characteristics which will have to be of a highly stimulating nature.
Russian Ambassador: I must confess, you have an astonishingly good idea there, Doctor.
Rather than being abandoned to nuclear annihilation by our general and politicians in 1964, it is now an abandonment by plutocrats of all the lower classes to a race against automation, computers, drones, robots, surveillance and corrupt politicians. Once you understand that you are competing against a non-human owned by a soulless plutocrat, you start to understand your problems and once you understand your problems you at least have some hope of overcoming them.
Take the Wal-Mart employee who thinks they are in their position, because they failed to work as hard as the Koch Brothers. It would be no surprise if this worker felt they were separated from relative economic security by their lack of hard work and their poor decisions. Finding flaws in people to explain their position is something any conservative talk show host can do in their sleep. Too often people misdirect their dissatisfaction against people who are just as screwed. Krugman’s column concentrates the reader on the robots and the robber barons.
Somehow, some way the robots must be made to work for the masses and not just for monopolists. Societies are in danger of their citizens losing a rational connection between what they do for a living and how they live. In Greece, a large portion of the population doesn’t even work. The populations are sold on austerity as if there is some equilibrium to be found by putting people out of work and cutting their support from society at the same time. Are unemployed Greeks supposed to be figuring out how to beat a robot motherboard manufacturer in Taiwan? Austerity is based on a set of assumptions that has been eclipsed by technology. Furthermore, the fruits of austerity can only feed the robber barons.
It should not be a hopeless situation. Society can work again, but there is so much junk-thinking that has to be defeated and discredited. Krugman’s column helps to concentrate the reader on the type of thinking that will allow for positive thinking about what we need to do for humans to have dignified lives.
An international drug trafficker is a criminal and usually a murderer; the drug addict walking the street is one of his victims. But thanks to (Assistant US Attorney General Lanny) Breuer, we’re now in the business, officially, of jailing the victims and enabling the criminals.
go matt, go!
If you go to the city of Washington, and you examine the pages of the Congressional Directory, you will find that almost all of those corporation lawyers and cowardly politicians, members of Congress, and misrepresentatives of the masses — you will find that almost all of them claim, in glowing terms, that they have risen from the ranks to places of eminence and distinction. I am very glad I cannot make that claim for myself. I would be ashamed to admit that I had risen from the ranks. When I rise it will be with the ranks, and not from the ranks.
this little humdinger from eugene debs stays with me often.
debs received more than three percent of the vote in the 1920 election.
even though (as the record points out) he was incarcerated due to resisting the draft.
americans pay taxes in many ways, and we do so with the knowledge that our money will be redistributed. it goes without saying. and a nation united can survive any calamity. so are we working together or working to destroy each other in a darwin nightmare?
the rich would like us to buy into the competition script. it seems they are now lobbying that letting the temporary bush tax cuts finally expire will cause a run for the exits. back to ayn rand all over again. jesus. apparently the job creators will remove themselves from the tax equation entirely if their rates return to the level of the booming clinton juggernaut…
Economists point to then-British Prime Minister Gordon Brown’s proposal in April 2010 to increase the marginal tax rate by 10 percent — to 50 percent — on residents earning more than $1 million. As a consequence, the number of people declaring that amount of income or more dropped from 16,000 to 6,000 in the 2010-2011 tax year, according to Her Majesty’s Revenue and Customs, the United Kingdom’s tax collection agency.
Before Brown’s proposal, Britain’s wealthiest composed roughly 9 percent of the country’s tax pool. That percentage dropped by half — to roughly 4.4 percent — after the proposal.
It is believed that rich Britons moved abroad or took steps to avoid paying the new levy by reducing their taxable incomes, according to a report in the London Telegraph.
can’t get enough of that atlas dope…
who still has faith in the stars and bars?
not the business tycoons who got rich here…
Understanding what a president reads can provide surprising insights. Bill Clinton is a legendary reader and it shows. George W. Bush surprised everybody when his memoirs revealed that he was a voracious reader as described here.
The most startling nugget to emerge from George W. Bush’s memoirs, currently hidden behind the whopping paywall, is that he had a competition with his political adviser Karl Rove to see who could read the most history books in a year.
Rove won with 110, but Dubya wasn’t far behind – he read 95 in all; that’s 37,343 pages, he relays proudly. So he was reading 350-odd pages of serious history every four days. That’s pretty impressive when your day job is running the free world and your critics have marked you down as semi-retarded. I doubt Obama is getting through that much; he may not even have played 95 rounds of golf this term.
Bush obviously made a mistake by getting in a reading war with this guy:
Putting aside American politicians, it is worth noting that today Mexico is starting a new 6 year adventure with Enrique Peña Nieto. He has been sworn today as Mexico’s new president. Since it is happening South of the border, you can expect to hear very little about it from your local mainstream media outlet. One way to gain insight into the new Mexican president is to retell a story about when Peña Nieto answered a question about what books had influenced him the most. The following is my translation of this spanish language link to a CNN story, so reader beware. The candidate Enrique Peña Nieto attended a respected conference on books and a reporter asked Peña Nieto a question about what books stood out for him. He answered:
“Books I have read that lifted my spirit in my vocation as a politician. There were various books. “La Silla de Aguila,” de Krauze,” he said to the press at the conference [a conference on books] as an answer to a question of which books stood out to him in his life.
Hours after his press conference, through Twitter, Peña Nieto admitted the error. “The Imperial Presidency,” is by E. Krauze and “La Silla del Águila,” is by C Fuentes. Both are books that I enjoyed reading and today I confused them. I recommend both.”
In the press conference, during more than five minutes, Peña Nieto tried to remember names of books and of authors, but he couldn’t and he had to asked for help from the attendees of the conference in remembering.
“The truth is that when I read books, it happens that I don’t notice the title at all. For me I focus on the text, and I get the idea of the books from what I have read,” he offered as an excuse to a reporter
Enrique Peña Nieto insisted, at the conference, with the work of Krause: “There is another book by him that I wish I could remember the title, about caudillos, but I don’t remember the title . . . ¿eh?”, intending to listen to someone who would let him know the title, but he still couldn’t ascertain which book he had read.
The only book Peña Nieto was able to name successfully was the Bible. That is a perfectly natural answer for a politician, but it is hardly satisfying for a room full of book lovers. Peña Nieto managed to confuse a fictional book set in 2020, “La silla del águila, with a book about Mexican politics from 1940-1996, “La presidencia imperial.” The best is that he tries to fix his error by explaining that he just isn’t into books for their titles. That is hilarious because we have a candidate that is all about appearances having to claim that the appearance of a book, with its title, is the least interesting part to him. Here is the guy who could not care less about appearances.
Brozo who is the equivalent to Jon Stewart in the Mexican media check this video out. A few minutes into the video thay show clips of Peña Nieto at the book fair trying to see if he can come up with the name of one blasted book that isn’t the Bible. If you are curious about Brozo, keep an eye out for this guy:
This is reminiscent of Rick Perry’s attempt to name the three agencies he would immediately cut when he was innaugarated. He managed to name two, but was never able to come up with the third, and finally said, “oops.” Video here. Thinking of Rick Perry as president isn’t a bad way to start to understand the frustrations of groups like Yo Soy 132 and Morena.