US economy in deflation and slump

corecpi

By Andre Damon
28 February 2015

The US Commerce Department said Friday that Gross Domestic Product, the broadest measure of economic output, grew by only 2.2 percent in the fourth quarter of last year, down from an earlier estimate of 2.6 percent and a sharp fall from earlier quarters.

This followed the announcement by the Labor Department on Thursday that consumer prices fell by 0.7 percent, the largest fall since December 2008. Over the past 12 months, prices have fallen by 0.1 percent, the first annual deflation figure posted since October 2009.

These figures belie official claims that the US is an economically healthy counterbalance to the overall slump and deflation that now encompasses most of the world. In fact, US economic growth, hampered by an enormous impoverishment of the working class in the years following the financial crisis, remains far below previous historical averages.

On Tuesday, Standard and Poor’s said that its Case-Shiller Index showed that home prices grew by 4.6 percent over the past year, the slowest housing price increase since 2011. “The housing recovery is faltering,” David Blitzer, chairman of the index committee at S&P Dow Jones, told the Los Angeles Times. “Before the recession, anytime housing starts were at their current level… the economy was in a recession.”

Meanwhile the number of people in the US newly filing for jobless benefits jumped by 31,000 to 313,000 last week, in the largest increase since December 2013, reflecting a series of mass layoffs and business closures announced this month.

On February 4, office supply retailer Staples announced plans to buy its rival Office Depot, which would result in the closure of up to a thousand stores and tens of thousands of layoffs. The next day, electronics retailer RadioShack filed for bankruptcy, saying it plans to close up to 3,500 stores.

Mass layoffs have also been announced at online marketplace eBay, credit card company American Express, the oilfield services companies Schlumberger and Baker Hughes, as well as the retailers J.C. Penney and Macy’s.

These disastrous economic developments come even as the Dow Jones Industrial Average hit an all-time record of 18,140 on Wednesday, though it retreated slightly later in the week. Worldwide, the FTSE All-World Index is near its highest level in history.

The rise in global stock indices reflects the satisfaction of global financial markets with the pledge by the Syriza-led Greek government to impose austerity measures dictated by the EU, as well as indications by Federal Reserve Chairwoman Janet Yellen in congressional testimony this week that the US central bank is likely to delay raising the federal funds rate in response to recent negative economic figures.

The US federal funds rate has been at essentially zero since the beginning of 2009. Together with the central bank’s multi-trillion-dollar “quantitative easing” program, this has helped to inflate a massive stock market bubble that has seen the NASDAQ triple in value since 2009.

This enormous growth in asset values has taken place despite the relatively depressed state of the US economy, which grew at an annual rate of 2.4 percent in 2014. During the entire economic “recovery” since 2010, the US economy has grown at an average rate of 2.2 percent. By comparison, the US economy grew at an average rate of 3.2 percent in the 1990s and 4.2 percent in the 1950s.

The ongoing stock market bubble has led to a vast enrichment of the financial elite: the number of billionaires in the US has nearly doubled since 2009. The financial oligarchy, however, has not used its ever-growing wealth for productive investment, as shown by the decline in business spending in the fourth quarter of last year. Instead, it has either hoarded it or used it to buy real estate, art and luxury goods.

On Thursday, Bloomberg reported that global sales of “ultra-premium” vehicles, costing $100,000 or more, surged by 154 percent, compared with a 36 percent increase in global vehicle sales overall. The report noted, “Rolls-Royce registrations have risen almost five-fold. Almost 10,000 new Bentleys cruised onto the streets last year, a 122 percent increase over 2009, while Lamborghini rode a 50 percent increase to pass the 2,000 vehicle mark.”

Meanwhile, the number of people in poverty in the US remains at record levels. In January, the Southern Education Foundation reported that, for the first time in at least half a century, low-income children make up the majority of students enrolled in American public schools.

To the extent that jobs are being created in the US, they are largely part-time, contingent and low-wage, replacing higher-wage jobs eliminated during the 2008 crash. A report published last year by the National Employment Law Project found that while American companies have added 1.85 million low-wage jobs since 2009, they have eliminated 1.83 million medium-wage and high-wage jobs.

Earlier this month, Jim Clifton, head of the Gallup polling agency, denounced claims that the US unemployment rate has returned to “normal” levels. “There’s no other way to say this,” he wrote. “The official unemployment rate, which cruelly overlooks the suffering of the long-term and often permanently unemployed as well as the depressingly underemployed, amounts to a Big Lie.”

“Gallup defines a good job as 30+ hours per week for an organization that provides a regular paycheck. Right now, the US is delivering at a staggeringly low rate of 44%, which is the number of full-time jobs as a percent of the adult population, 18 years and older.”

Clifton added, “I hear all the time that ‘unemployment is greatly reduced, but the people aren’t feeling it.’ When the media, talking heads, the White House and Wall Street start reporting the truth—the percent of Americans in good jobs; jobs that are full time and real—then we will quit wondering why Americans aren’t ‘feeling’ something that doesn’t remotely reflect the reality in their lives.”

 

http://www.wsws.org/en/articles/2015/02/28/econ-f28.html

Google has captured your mind

Searches reveal who we are and how we think. True intellectual privacy requires safeguarding these records

Google has captured your mind
(Credit: Kuzma via iStock/Salon)

The Justice Department’s subpoena was straightforward enough. It directed Google to disclose to the U.S. government every search query that had been entered into its search engine for a two-month period, and to disclose every Internet address that could be accessed from the search engine. Google refused to comply. And so on Wednesday January 18, 2006, the Department of Justice filed a court motion in California, seeking an order that would force Google to comply with a similar request—a random sample of a million URLs from its search engine database, along with the text of every “search string entered onto Google’s search engine over a one-week period.” The Justice Department was interested in how many Internet users were looking for pornography, and it thought that analyzing the search queries of ordinary Internet users was the best way to figure this out. Google, which had a 45-percent market share at the time, was not the only search engine to receive the subpoena. The Justice Department also requested search records from AOL, Yahoo!, and Microsoft. Only Google declined the initial request and opposed it, which is the only reason we are aware that the secret request was ever made in the first place.

The government’s request for massive amounts of search history from ordinary users requires some explanation. It has to do with the federal government’s interest in online pornography, which has a long history, at least in Internet time. In 1995 Time Magazine ran its famous “Cyberporn” cover, depicting a shocked young boy staring into a computer monitor, his eyes wide, his mouth agape, and his skin illuminated by the eerie glow of the screen. The cover was part of a national panic about online pornography, to which Congress responded by passing the federal Communications Decency Act (CDA) the following year. This infamous law prevented all websites from publishing “patently offensive” content without first verifying the age and identity of its readers, and the sending of indecent communications to anyone under eighteen. It tried to transform the Internet into a public space that was always fit for children by default.


The CDA prompted massive protests (and litigation) charging the government with censorship. The Supreme Court agreed in the landmark case of Reno v. ACLU (1997), which struck down the CDA’s decency provisions. In his opinion for the Court, Justice John Paul Stevens explained that regulating the content of Internet expression is no different from regulating the content of newspapers.The case is arguably the most significant free speech decision over the past half century since it expanded the full protection of the First Amendment to Internet expression, rather than treating the Internet like television or radio, whose content may be regulated more extensively. In language that might sound dated, Justice Stevens announced a principle that has endured: “Through the use of chat rooms, any person with a phone line can become a town crier with a voice that resonates farther than it could from any soapbox. Through the use of web pages, mail exploders, and newsgroups, the same individual can become a pamphleteer.” The Internet, in other words, was now an essential forum for free speech.

In the aftermath of Reno, Congress gave up on policing Internet indecency, but continued to focus on child protection. In 1998 it passed the Children’s Online Protection Act, also known as COPA. COPA punished those who engaged in web communications made “for commercial purposes” that were accessible and “harmful to minors” with a $50,000 fine and prison terms of up to six months. After extensive litigation, the Supreme Court in Ashcroft v. ACLU (2004) upheld a preliminary injunction preventing the government from enforcing the law. The Court reasoned that the government hadn’t proved that an outright ban of “harmful to minors” material was necessary. It suggested that Congress could have instead required the use of blocking or filtering software, which would have had less of an impact on free speech than a ban, and it remanded the case for further proceedings. Back in the lower court, the government wanted to create a study showing that filtering would be ineffective, which is why it wanted the search queries from Google and the other search engine companies in 2006.

Judge James Ware ruled on the subpoena on March 17, 2006, and denied most of the government’s demands. He granted the release of only 5 percent of the requested randomly selected anonymous search results and none of the actual search queries. Much of the reason for approving only a tiny sample of the de-identified search requests had to do with privacy. Google had not made a direct privacy argument, on the grounds that de-identified search queries were not “personal information,” but it argued that disclosure of the records would expose its trade secrets and harm its goodwill from users who believed that their searches were confidential. Judge Ware accepted this oddly phrased privacy claim, and added one of his own that Google had missed. The judge explained that Google users have a privacy interest in the confidentiality of their searches because a user’s identity could be reconstructed from their queries and because disclosure of such queries could lead to embarrassment (searches for, e.g., pornography or abortions) or criminal liability (searches for, e.g., “bomb placement white house”). He also placed the list of disclosed website addresses under a protective order to safeguard Google’s trade secrets.

Two facets of Judge Ware’s short opinion in the “Search Subpoena Case” are noteworthy. First, the judge was quite correct that even search requests that have had their user’s identities removed are not anonymous, as it is surprisingly easy to re-identify this kind of data. The queries we enter into search engines like Google often unwittingly reveal our identities. Most commonly, we search our own names, out of vanity, curiosity, or to discover if there are false or embarrassing facts or images of us online. But other parts of our searches can reveal our identities as well. A few months after the Search Subpoena Case, AOL made public twenty million search queries from 650,000 users of its search engine users. AOL was hoping this disclosure would help researchers and had replaced its users’ names with numerical IDs to protect their privacy. But two New York Times reporters showed just how easy it could be to re-identify them. They tracked down AOL user number 4417749 and identified her as Thelma Arnold, a sixty-two-year old widow in Lilburn, Georgia. Thelma had made hundreds of searches including “numb fingers,” “60 single men,” and “dog that urinates on everything.” The New York Times reporters used old-fashioned investigative techniques, but modern sophisticated computer science tools make re-identification of such information even easier. One such technique allowed computer scientists to re-identify users in the Netflix movie-watching database, which that company made public to researchers in 2006.

The second interesting facet of the Search Subpoena Case is its theory of privacy. Google won because the disclosure threatened its trade secrets (a commercial privacy, of sorts) and its business goodwill (which relied on its users believing that their searches were private). Judge Ware suggested that a more direct kind of user privacy was at stake, but was not specific beyond some generalized fear of embarrassment (echoing the old theory of tort privacy) or criminal prosecution (evoking the “reasonable expectation of privacy” theme from criminal law). Most people no doubt have an intuitive sense that their Internet searches are “private,” but neither our intuitions nor the Search Subpoena Case tell us why. This is a common problem in discussions of privacy. We often use the word “privacy” without being clear about what we mean or why it matters. We can do better.

Internet searches implicate our intellectual privacy. We use tools like Google Search to make sense of the world, and intellectual privacy is needed when we are making sense of the world. Our curiosity is essential, and it should be unfettered. As I’ll show in this chapter, search queries implicate a special kind of intellectual privacy, which is the freedom of thought.

Freedom of thought and belief is the core of our intellectual privacy. This freedom is the defining characteristic of a free society and our most cherished civil liberty. This right encompasses the range of thoughts and beliefs that a person might hold or develop, dealing with matters that are trivial and important, secular and profane. And it protects the individual’s thoughts from scrutiny or coercion by anyone, whether a government official or a private actor such as an employer, a friend, or a spouse. At the level of law, if there is any constitutional right that is absolute, it is this one, which is the precondition for other political and religious rights guaranteed by the Western tradition. Yet curiously, although freedom of thought is widely regarded as our most important civil liberty, it has not been protected in our law as much as other rights, in part because it has been very difficult for the state or others to monitor thoughts and beliefs even if they wanted to.

Freedom of Thought and Intellectual Privacy

In 1913 the eminent Anglo-Irish historian J. B. Bury published A History of Freedom of Thought, in which he surveyed the importance of freedom of thought in the Western tradition, from the ancient Greeks to the twentieth century. According to Bury, the conclusion that individuals should have an absolute right to their beliefs free of state or other forms of coercion “is the most important ever reached by men.” Bury was not the only scholar to have observed that freedom of thought (or belief, or conscience) is at the core of Western civil liberties. Recognitions of this sort are commonplace and have been made by many of our greatest minds. René Descartes’s maxim, “I think, therefore I am,” identifies the power of individual thought at the core of our existence. John Milton praised in Areopagitica “the liberty to know, to utter, and to argue freely according to conscience, above all [other] liberties.”

In the nineteenth century, John Stuart Mill developed a broad notion of freedom of thought as an essential element of his theory of human liberty, which comprised “the inward domain of consciousness; demanding liberty of conscience, in the most comprehensive sense; liberty of thought and feeling; absolute freedom of opinion and sentiment on all subjects, practical or speculative, scientific, moral, or theological.” In Mill’s view, free thought was inextricably linked to and mutually dependent upon free speech, with the two concepts being a part of a broader idea of political liberty. Moreover, Mill recognized that private parties as well as the state could chill free expression and thought.

Law in Britain and America has embraced the central importance of free thought as the civil liberty on which all others depend. But it was not always so. People who cannot think for themselves, after all, are incapable of self-government. In the Middle Ages, the crime of “constructive treason” outlawed “imagining the death of the king” as a crime that was punishable by death. Thomas Jefferson later reflected that this crime “had drawn the Blood of the best and honestest Men in the Kingdom.” The impulse for political uniformity was related to the impulse for religious uniformity, whose story is one of martyrdom and burnings of the stake. As Supreme Court Justice William O. Douglas put it in 1963:

While kings were fearful of treason, theologians were bent on stamping out heresy. . . . The Reformation is associated with Martin Luther. But prior to him it broke out many times only to be crushed. When in time the Protestants gained control, they tried to crush the Catholics; and when the Catholics gained the upper hand, they ferreted out the Protestants. Many devices were used. Heretical books were destroyed and heretics were burned at the stake or banished. The rack, the thumbscrew, the wheel on which men were stretched, these were part of the paraphernalia.

Thankfully, the excesses of such a dangerous government power were recognized over the centuries, and thought crimes were abolished. Thus, William Blackstone’s influential Commentaries stressed the importance of the common law protection for the freedom of thought and inquiry, even under a system that allowed subsequent punishment for seditious and other kinds of dangerous speech. Blackstone explained that:

Neither is any restraint hereby laid upon freedom of thought or inquiry: liberty of private sentiment is still left; the disseminating, or making public, of bad sentiments, destructive of the ends of society, is the crime which society corrects. A man (says a fine writer on this subject) may be allowed to keep poisons in his closet, but not publicly to vend them as cordials.

Even during a time when English law allowed civil and criminal punishment for many kinds of speech that would be protected today, including blasphemy, obscenity, seditious libel, and vocal criticism of the government, jurists recognized the importance of free thought and gave it special, separate protection in both the legal and cultural traditions.

The poisons metaphor Blackstone used, for example, was adapted from Jonathan Swift’s Gulliver’s Travels, from a line that the King of Brobdingnag delivers to Gulliver. Blackstone’s treatment of freedom of thought was itself adopted by Joseph Story in his own Commentaries, the leading American treatise on constitutional law in the early Republic. Thomas Jefferson and James Madison also embraced freedom of thought. Jefferson’s famous Virginia Statute for Religious Freedom enshrined religious liberty around the declaration that “Almighty God hath created the mind free,” and James Madison forcefully called for freedom of thought and conscience in his Memorial and Remonstrance Against Religious Assessments.

Freedom of thought thus came to be protected directly as a prohibition on state coercion of truth or belief. It was one of a handful of rights protected by the original Constitution even before the ratification of the Bill of Rights. Article VI provides that “state and federal legislators, as well as officers of the United States, shall be bound by oath or affirmation, to support this Constitution; but no religious test shall ever be required as a qualification to any office or public trust under the United States.” This provision, known as the “religious test clause,” ensured that religious orthodoxy could not be imposed as a requirement for governance, a further protection of the freedom of thought (or, in this case, its closely related cousin, the freedom of conscience). The Constitution also gives special protection against the crime of treason, by defining it to exclude thought crimes and providing special evidentiary protections:

Treason against the United States, shall consist only in levying war against them, or in adhering to their enemies, giving them aid and comfort. No person shall be convicted of treason unless on the testimony of two witnesses to the same overt act, or on confession in open court.

By eliminating religious tests and by defining the crime of treason as one of guilty actions rather than merely guilty minds, the Constitution was thus steadfastly part of the tradition giving exceptional protection to the freedom of thought.

Nevertheless, even when governments could not directly coerce the uniformity of beliefs, a person’s thoughts remained relevant to both law and social control. A person’s thoughts could reveal political or religious disloyalty, or they could be relevant to a defendant’s mental state in committing a crime or other legal wrong. And while thoughts could not be revealed directly, they could be discovered by indirect means. For example, thoughts could be inferred either from a person’s testimony or confessions, or by access to their papers and diaries. But both the English common law and the American Bill of Rights came to protect against these intrusions into the freedom of the mind as well.

The most direct way to obtain knowledge about a person’s thoughts would be to haul him before a magistrate as a witness and ask him under penalty of law. The English ecclesiastical courts used the “oath ex officio” for precisely this purpose. But as historian Leonard Levy has explained, this practice came under assault in Britain as invading the freedom of thought and belief. As the eminent jurist Lord Coke later declared, “no free man should be compelled to answer for his secret thoughts and opinions.” The practice of the oath was ultimately abolished in England in the cases of John Lilburne and John Entick, men who were political dissidents rather than religious heretics.

In the new United States, the Fifth Amendment guarantee that “No person . . . shall be compelled in any criminal case to be a witness against himself ” can also be seen as a resounding rejection of this sort of practice in favor of the freedom of thought. Law of course evolves, and current Fifth Amendment doctrine focuses on the consequences of a confession rather than on mental privacy, but the origins of the Fifth Amendment are part of a broad commitment to freedom of thought that runs through our law. The late criminal law scholar William Stuntz has shown that this tradition was not merely a procedural protection for all, but a substantive limitation on the power of the state to force its enemies to reveal their unpopular or heretical thoughts. As he put the point colorfully, “[i]t is no coincidence that the privilege’s origins read like a catalogue of religious and political persecution.”

Another way to obtain a person’s thoughts would be by reading their diaries or other papers. Consider the Fourth Amendment, which protects a person from unreasonable searches and seizures by the police:

The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.

Today we think about the Fourth Amendment as providing protection for the home and the person chiefly against unreasonable searches for contraband like guns or drugs. But the Fourth Amendment’s origins come not from drug cases but as a bulwark against intellectual surveillance by the state. In the eighteenth century, the English Crown had sought to quash political and religious dissent through the use of “general warrants,” legal documents that gave agents of the Crown the authority to search the homes of suspected dissidents for incriminating papers.

Perhaps the most infamous dissident of the time was John Wilkes. Wilkes was a progressive critic of Crown policy and a political rogue whose public tribulations, wit, and famed personal ugliness made him a celebrity throughout the English-speaking world. Wilkes was the editor of a progressive newspaper, the North Briton, a member of Parliament, and an outspoken critic of government policy. He was deeply critical of the 1763 Treaty of Paris ending the Seven Years War with France, a conflict known in North America as the French and Indian War. Wilkes’s damning articles angered King George, who ordered the arrest of Wilkes and his co-publishers of the North Briton, authorizing general warrants to search their papers for evidence of treason and sedition. The government ransacked numerous private homes and printers’ shops, scrutinizing personal papers for any signs of incriminating evidence. In all, forty-nine people were arrested, and Wilkes himself was charged with seditious libel, prompting a long and inconclusive legal battle of suits and countersuits.

By taking a stand against the king and intrusive searches, Wilkes became a cause célèbre among Britons at home and in the colonies. This was particularly true for many American colonists, whose own objections to British tax policy following the Treaty of Paris culminated in the American Revolution. The rebellious colonists drew from the Wilkes case the importance of political dissent as well as the need to protect dissenting citizens from unreasonable (and politically motivated) searches and seizures.

The Fourth Amendment was intended to address this problem by inscribing legal protection for “persons, houses, papers, and effects” into the Bill of Rights. A government that could not search the homes and read the papers of its citizens would be less able to engage in intellectual tyranny and enforce intellectual orthodoxy. In a pre-electronic world, the Fourth Amendment kept out the state, while trespass and other property laws kept private parties out of our homes, paper, and effects.

The Fourth and Fifth Amendments thus protect the freedom of thought at their core. As Stuntz explains, the early English cases estab- lishing these principles were “classic First Amendment cases in a system with no First Amendment.” Even in a legal regime without protection for dissidents who expressed unpopular political or religious opinions, the English system protected those dissidents in their private beliefs, as well as the papers and other documents that might reveal those beliefs.

In American law, an even stronger protection for freedom of thought can be found in the First Amendment. Although the First Amendment text speaks of free speech, press, and assembly, the freedom of thought is unquestionably at the core of these guarantees, and courts and scholars have consistently recognized this fact. In fact, the freedom of thought and belief is the closest thing to an absolute right guaranteed by the Constitution. The Supreme Court first recognized it in the 1878 Mormon polygamy case of Reynolds v. United States, which ruled that although law could regulate religiously inspired actions such as polygamy, it was powerless to control “mere religious belief and opinions.” Freedom of thought in secular matters was identified by Justices Holmes and Brandeis as part of their dissenting tradition in free speech cases in the 1910s and 1920s. Holmes declared crisply in United States v. Schwimmer that “if there is any principle of the Constitution that more imperatively calls for attachment than any other it is the principle of free thought—not free thought for those who agree with us but freedom for the thought that we hate.” And in his dissent in the Fourth Amendment wiretapping case of Olmstead v. United States, Brandeis argued that the framers of the Constitution “sought to protect Americans in their beliefs, their thoughts, their emotions and their sensations.” Brandeis’s dissent in Olmstead adapted his theory of tort privacy into federal constitutional law around the principle of freedom of thought.

Freedom of thought became permanently enshrined in constitutional law during a series of mid-twentieth century cases that charted the contours of the modern First Amendment. In Palko v. Connecticut, Justice Cardozo characterized freedom of thought as “the matrix, the indispensable condition, of nearly every other form of freedom.” And in a series of cases involving Jehovah’s Witnesses, the Court developed a theory of the First Amendment under which the rights of free thought, speech, press, and exercise of religion were placed in a “preferred position.” Freedom of thought was central to this new theory of the First Amendment, exemplified by Justice Jackson’s opinion in West Virginia State Board of Education v. Barnette, which invalidated a state regulation requiring that public school children salute the flag each morning. Jackson declared that:

If there is any fixed star in our constitutional constellation, it is that no official, high or petty, can prescribe what shall be orthodox in politics, nationalism, religion, or other matters of opinion or force citizens to confess by word or act their faith therein. . . .

[The flag-salute statute] transcends constitutional limitations on [legislative] power and invades the sphere of intellect and spirit which it is the purpose of the First Amendment to our Constitution to reserve from all official control.

Modern cases continue to reflect this legacy. The Court has repeatedly declared that the constitutional guarantee of freedom of thought is at the foundation of what it means to have a free society. In particular, freedom of thought has been invoked as a principal justification for preventing punishment based upon possessing or reading dangerous media. Thus, the government cannot punish a person for merely possessing unpopular or dangerous books or images based upon their content. As Alexander Meiklejohn put it succinctly, the First Amendment protects, first and foremost, “the thinking process of the community.”

Freedom of thought thus remains, as it has for centuries, the foundation of the Anglo-American tradition of civil liberties. It is also the core of intellectual privacy.

“The New Home of Mind”

“Governments of the Industrial World, you weary giants of flesh and steel, I come from Cyberspace, the new home of Mind.” So began “A Declaration of Independence of Cyberspace,” a 1996 manifesto responding to the Communications Decency Act and other attempts by government to regulate the online world and stamp out indecency. The Declaration’s author was John Perry Barlow, a founder of the influential Electronic Frontier Foundation and a former lyricist for the Grateful Dead. Barlow argued that “[c]yberspace consists of transactions, relationships, and thought itself, arrayed like a standing wave in the web of our communications. Ours is a world that is both everywhere and nowhere, but it is not where bodies live.” This definition of the Internet as a realm of pure thought was quickly followed by an affirmation of the importance of the freedom of thought. Barlow insisted that in Cyberspace “anyone, anywhere may express his or her beliefs, no matter how singular, without fear of being coerced into silence or conformity.” The Declaration concluded on the same theme: “We will spread ourselves across the Planet so that no one can arrest our thoughts. We will create a civilization of the Mind in Cyberspace. May it be more humane and fair than the world your governments have made before.”

In his Declaration, Barlow joined a tradition of many (including many of the most important thinkers and creators of the digital world) who have expressed the idea that networked computing can be a place of “thought itself.” As early as 1960, the great computing visionary J. C. R. Licklider imagined that “in not too many years, human brains and computing machines will be coupled together very tightly, and that the resulting partnership will think as no human brain has ever thought.” Tim Berners-Lee, the architect of the World Wide Web, envisioned his creation as one that would bring “the workings of society closer to the workings of our minds.”

Barlow’s utopian demand that governments leave the electronic realm alone was only partially successful. The Communications Decency Act was, as we have seen, struck down by the Supreme Court, but today many laws regulate the Internet, such as the U.S. Digital Millenium Copyright Act6and the EU Data Retention Directive. The Internet has become more (and less) than Barlow’s utopian vision—a place of business as well as of thinking. But Barlow’s description of the Internet as a world of the mind remains resonant today.

It is undeniable that today millions of people use computers as aids to their thinking. In the digital age, computers are an essential and intertwined supplement to our thoughts and our memories. Discussing Licklider’s prophesy from half a century ago, legal scholar Tim Wu notes that virtually every computer “program we use is a type of thinking aid—whether the task is to remember things (an address book), to organize prose (a word processor), or to keep track of friends (social network software).” These technologies have become not just aids to thought but also part of the thinking process itself. In the past, we invented paper and books, and then sound and video recordings to preserve knowledge and make it easier for us as individuals and societies to remember information. Digital technologies have made remembering even easier, by providing cheap storage, inexpensive retrieval, and global reach. Consider the Kindle, a cheap electronic reader that can hold 1,100 books, or even cheaper external hard drives that can hold hundreds of hours of high-definition video in a box the size of a paperback novel.

Even the words we use to describe our digital products and experiences reflect our understanding that computers and cyberspace are devices and places of the mind. IBM has famously called its laptops “ThinkPads,” and many of us use “smartphones.” Other technologies have been named in ways that affirm their status as tools of the mind—notebooks, ultrabooks, tablets, and browsers. Apple Computer produces iPads and MacBooks and has long sold its products under the slogan, “Think Different.” Google historian John Battelle has famously termed Google’s search records to be a “database of intentions.” Google’s own slogan for its web browser Chrome is “browse the web as fast as you think,” revealing how web browsing itself is not just a form of reading, but a kind of thinking itself. My point here is not just that common usage or marketing slogans connect Internet use to thinking, but a more important one: Our use of these words reflects a reality. We are increasingly using digital technologies not just as aids to our memories but also as an essential part of the ways we think.

Search engines in particular bear a special connection to the processes of thought. How many of us have asked a factual question among friends, only for smartphones to appear as our friends race to see who can look up the answer the fastest? In private, we use search engines to learn about the world. If you have a moment, pull up your own search history on your phone, tablet, or computer, and recall your past queries. It usually makes for interesting reading—a history of your thoughts and wonderings.

But the ease with which we can pull up such a transcript reveals another fundamental feature of digital technologies—they are designed to create records of their use. Think again about the profile a search engine like Google has for you. A transcript of search queries and links followed is a close approximation to a transcript of the operation of your mind. In the logs of search engine companies are vast repositories of intellectual wonderings, questions asked, and mental whims followed. Similar logs exist for Internet service providers and other new technology companies. And the data contained in such logs is eagerly sought by government and private entities interested in monitoring intellectual activity, whether for behavioral advertising, crime and terrorism prevention, and possibly other, more sinister purposes.

Searching Is Thinking

With these two points in mind—the importance of freedom of thought and the idea of the Internet as a place where thought occurs—we can now return to the Google Search Subpoena with which this chapter opened. Judge Ware’s opinion revealed an intuitive understanding that the disclosure of search records was threatening to privacy, but was not clear about what kind of privacy was involved or why it matters.

Intellectual privacy, in particular the freedom of thought, supplies the answer to this problem. We use search engines to learn about and make sense of the world, to answer our questions, and as aids to our thinking. Searching, then, in a very real sense is a kind of thinking. And we have a long tradition of protecting the privacy and confidentiality of our thoughts from the scrutiny of others. It is precisely because of the importance of search records to human thought that the Justice Department wanted to access the records. But if our search records were more public, we wouldn’t merely be exposed to embarrassment like Thelma Arnold of Lilburn, Georgia. We would be less likely to search for unpopular or deviant or dangerous topics. Yet in a free society, we need to be able to think freely about any ideas, no matter how dangerous or unpopular. If we care about freedom of thought—and our political institutions are built on the assumption that we do—we should care about the privacy of electronic records that reveal our thoughts. Search records illustrate the point well, but this idea is not just limited to that one important technology. My argument about freedom of thought in the digital age is this: Any technology that we use in our thinking implicates our intellectual privacy, and if we want to preserve our ability to think fearlessly, free of monitoring, interference, or repercussion, we should embody these technologies with a meaningful measure of intellectual privacy.

Excerpted from “Intellectual Privacy: Rethinking Civil Liberties in the Digital Age” by Neil Richards. Published by Oxford University Press. Copyright 2015 by Neil Richards. Reprinted with permission of the publisher. All rights reserved.

Neil Richards is a Professor of Law at Washington University, where he teaches and writes about privacy, free speech, and the digital revolution.

Ending austerity in Greece: time for plan B?

By Jerome Roos On February 26, 2015

Post image for Ending austerity in Greece: time for plan B?Syriza’s “head-long retreat” in the standoff with its creditors hails the failure of Tsipras’ pro-euro strategy. It’s time to start preparing for Grexit.

Photo by Angelos Tzortzinis.

When the Eurogroup accepted Greece’s reform proposals on Tuesday, investors and EU leaders let out a collective sigh of relief: it appears that the bombshell of a disorderly Greek exit from the Eurozone has been diffused, at least until the start of the summer. In return for a significant roll-back of its campaign pledges, Greece’s freshly inaugurated government secured a four-month extension of its current bailout program and thereby managed to avert a potentially catastrophic bank run that would likely have resulted in Grexit.

But while Greece’s creditors seemed content, the agreement immediately unleashed a bitter debate within the governing leftist party Syriza. Prime Minister Tsipras may have declared a tentative victory for his anti-austerity coalition, but some influential party members strongly criticized what they perceived to be an unacceptable climbdown. Costas Lapavitsas, the SOAS economist and Syriza MP, wrote a scathing letter expressing his serious concerns about the government’s ability to stick to its promises, while Stathis Kouvelakis of Syriza’s central committee dubbed the agreement a “head-long retreat.”

Manolis Glezos, the 94-year-old war hero and Syriza MEP, even went so far as toapologize to the Greek people for having participated in “this illusion,” while the legendary composer Mikis Theodorakis urged the government to resist the “fatal embrace” of its creditors. Paul Mason reports that “there is a sea change going on within Syriza. In the past 48 hours I’ve heard people who were staunch believers in the ‘good euro’ — a euro that can accommodate by negotiation a radical left government — say, effectively, they were wrong.”

How are we to respond to all this? The first thing to observe is Spinoza’s dictum:non ridere, non lugere, neque detestari, sed intelligere — not to ridicule, lament or condemn, but to understand. If we really want to understand Syriza’s rapid retreat over the past week and engage in constructive criticism to end austerity, we’ll have to start, first of all, with the strategy chosen by its party leadership, particularly in relation to the euro; and secondly with the way in which the single currency serves as an amplifier of structural power relations between creditors and debtors — core and periphery — in the European political economy.

On the first point, it is clear that the so-called “good euro” strategy proposed by the party leadership and Finance Minister Yanis Varoufakis, whose “modest proposal” for resolving the crisis fundamentally revolves around a wholesale restructuring of the Eurozone along Keynesian lines, has run headlong into the opposition of virtually everyone else involved. In the negotiations, Greece found itself isolated not only by the 18 other Eurozone finance ministers (including the center-left French and Italians and the other heavily indebted countries), but also by the ECB and the European Commission.

Moreover, going into the negotiations, Greece suffered from two structural weaknesses: the near-total depletion of its public finances and the extremely parlous state of its domestic banking system. With its reserves running on empty, the government would have run out of financing by February 24 and would have been forced to default on its IMF obligations by March. At the same time, increasing uncertainty about Greece’s place in the Eurozone produced sustained deposit flight, bringing the Greek banks to the brink of collapse.

Strategically speaking, the government could have wielded these weaknesses as a bargaining chip. Had it been willing to put its euro membership on the line, Greece might have been able to extract greater concessions from its risk-averse “partners” by threatening unilateral action if the creditors refused to give in. But default and Grexit were ruled out a priori by Syriza’s moderate leadership, which repeatedly declared its unwavering commitment to the single currency. Knowing this, Germany and its allies pushed for total surrender: with Greece weak and dependent on external loans, the Eurozone could enforce strict conditions in return for continued membership.

This first observation is connected to the second point: the highly asymmetric power relations at the heart of the monetary union. In previous columns, I have repeatedly argued that Germany — as the dominant force inside the Eurozone — would never accept a restructuring of the Greek debt, that the Eurozone wouldnever accommodate a social democratic alternative in its midst, and that as a result Greece’s leftist government would find it impossible to pursue a socially progressive alternative (let alone a radical program) inside the fundamentally regressive, anti-social and anti-democratic straitjacket of the Eurozone.

These predictions — which are very similar to those made by Costas Lapavitsasand others inside Syriza’s Left Platform — have now been proven correct. Continued Eurozone membership keeps Greece stuck within a web of structural constraints from which it cannot escape without its creditors’ approval. And since these creditors are loathe to set a precedent of successful debtor defiance, they will do anything to prevent Greece from upending the neoliberal austerity doctrine. There can be only one conclusion from this: to truly end austerity, Greece will have to leave the euro.

To be sure, Grexit is not a panacea. Readjustment will be extremely painful in the short term, and even in the long-run it is clear that restoring fiscal and monetary policy autonomy will never be enough to overcome the structural dependence of the Greek economy on foreign investment or to insulate the Greek state from the systemic pressures of global finance. The point of Grexit, however, is not to fetishize national sovereignty but simply to reclaim the essential monetary and fiscal policy tools that the government now lacks — and without which it is materially impossible to determine socioeconomic priorities and pursue a progressive economic program.

The most important challenge, in this respect, will not necessarily be economic in nature but rather social, political and psychological. Before Greece can ever be liberated from its state of debt servitude and its plight of permanent austerity, its government will first need to be in a position to default on its European creditors and “print” its own currency. This will in turn require three things:

First, mass mobilization from below will be essential, both to put pressure on Syriza’s leadership and to empower the pro-Grexit faction inside the party, which is now steadily growing in the wake of last week’s dramatic retreat. Second, voters will have to abandon their aversion towards Grexit and public opinion will have to sway behind a much more confrontational approach. To get there, the left and the movements will have to embark on a concerted campaign of “popular education” to inform the Greek public of the only real options available to their country: progressive exit or endless austerity.

Finally, and most importantly, the government would have to be meticulously prepared to manage the extremely difficult transition period, in which the price of imported goods will skyrocket following a sharp devaluation; key commodities like food, petroleum and medicine will have to be rationed to deal with sudden scarcity; capital controls and border controls will have to be reintroduced to prevent catastrophic capital flight; deposits and loan contracts will need to be re-denominated into drachma; and the banks will have to be nationalized to prevent a complete collapse of the financial system.

All of this will require a degree of radicalization and preparation that currently seems both utterly irresponsible and completely unrealistic. Yet this is precisely where the brutally anti-democratic methods of the Eurozone are pushing Greece today. For five years, Greeks have been living in total despair. Desperate times call for desperate measures — and the time for unilateral default and Grexit may be approaching faster than most people are willing or able to recognize. If the left truly cares about ending austerity, it should start preparing for Plan B.

Jerome Roos is a PhD researcher in International Political Economy at the European University Institute and founding editor of ROAR Magazine. Follow him on Twitter @JeromeRoos. This article was written for TeleSUR English.

 

http://roarmag.org/2015/02/greece-austerity-euro-exit/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+roarmag+%28ROAR+Magazine%29

Record global stock prices reflect growth of financial parasitism

stock-market-down

By Nick Beams
27 February 2015

This week has seen global stock prices approach record highs under conditions where the German government took the unprecedented step of issuing bonds at a negative yield. The two interrelated developments point to an explosive growth of financial parasitism.

World equity markets are close to their highest levels in history, as measured by the FTSE All-World Index. The FTSE 100, Britain’s index of leading shares, surpassed its previous high, achieved at the end of 1999 on the eve of the bursting of the dot.com share market bubble, to join Wall Street’s Dow and the German DAX in record territory.

This is an extraordinary phenomenon given that large areas of the global economy, most notably Europe and Japan, are either stagnant or in recession; China and the so-called “emerging markets,” which have been the main centre of global growth, are slowing down; and the much-vaunted US growth is still below historical trends.

All of the major reports on the state of the world economy in the recent period—from the World Bank, the International Monetary Fund, and the Organisation for Economic Cooperation and Development—have downgraded previous growth projections and warned that the economy is increasingly characterised by a vicious cycle.

Investment has fallen to historic lows because of the lack of demand and profit opportunities. The decline in investment is leading, in turn, to a further decline in demand and profit expectations.

Notwithstanding these powerful trends, the stock markets continue to power on, providing a graphic demonstration of the degree to which the accumulation of wealth by global financial elites has become divorced from the actual process of production.

One of the main factors boosting Wall Street in recent days was the estimation, following the testimony by US Federal Reserve Chairwoman Janet Yellen to the US Congress, that the central bank was in no hurry to start lifting official interest rates, ensuring that the flow of cheap money into financial markets would continue.

European markets also took heart from Yellen’s remarks and were boosted as well by the approach of the European Central Bank’s money-printing “quantitative easing” (QE) program, slated to begin next week.

In addition, they were warmed by the news that the European Union and the financial oligarchy it represents had obtained the Syriza-led Greek government’s abject capitulation, including the renunciation of the pseudo-left party’s election promises to fight the EU’s austerity program. The Greek developments, ensuring the further impoverishment of the Greek working class, were a source of satisfaction not only because of their implications for Greece, but also for the message they sent across Europe that any demand for an end to austerity would meet the same fate.

The emergence of negative bond yields, underscored by the German government’s issuance of five-year notes at a negative rate, signifies that the bond market is being transformed into a gigantic Ponzi scheme, in which the ability to make money depends on the continuous flow of new cash—largely emanating from central banks—into the financial system. It is increasingly operating according to the “bigger fool” principle. While it may be considered foolish to invest in a high-priced bond that offers a negative yield, speculators bet that there is an even bigger fool who will buy the bond when its price rises even further.

When negative yields first made their appearance, it was thought they were a transitory phenomenon, the result of the search for a “safe haven” for cash. But now they are becoming a permanent feature of the financial landscape.

Besides Germany, five-year bonds issued by Denmark, Finland, the Netherlands and Austria, as well as corporate bonds issued by Nestlé and Shell, have come with negative yields.

The immediate impetus for the growth in negative yields is the decision by the European Central Bank to begin bond purchases from March 1 at the rate of €60 billion per month for at least the next 16 months.

Speaking to the Financial Times, Divyang Shah, a global strategist at IFR Markets, said: “It should not be ruled out that, once the ECB QE program begins, we will see German 10-year yields trade through zero and into negative territory.” Swiss 14-year bonds were already trading at negative yields, so such an outcome could not be ruled out, he said, adding that “instead of safe haven-related demand we have QE-related demand.”

The yield on the German 10-year bond yesterday touched a record low of 0.28 percent, with 10-year yields in France, Portugal and Spain also falling to record levels.

The truly explosive growth of financial parasitism, expressed in the negative yield phenomenon, is highlighted by data compiled by JPMorgan Chase. It estimates that in the past year alone the value of negative-yielding bonds in Europe has escalated exponentially—from $20 billion to $2 trillion, a hundred-fold increase. It is calculated that at least one-third of all European bonds now show negative yields. Nothing remotely resembling this has been seen in economic history.

One of its immediate effects is to destroy the financial modus operandi of pension funds and insurance companies. Throughout their history, they have invested in government debt in order to secure a steady and safe rate of return over the long term, often under legal requirements to do so. However, this strategy is increasingly unviable, and in order to meet their commitments, they are being forced to make riskier investments or join the bond market speculation.

The rise of financial parasitism has decisive economic and political implications. As the whole of economic history demonstrates, and the events of the past decade have again revealed, the maintenance of this house of cards cannot continue indefinitely.

A major bankruptcy, produced by a sudden shift in the value of one or another of the major currencies, for example, (such as took place earlier this year with the dramatic leap in the value of the Swiss franc), a corporate default, a sudden shift in sentiment due to an interest rate rise, or one of any number of seemingly accidental events can trigger a chain reaction that brings the entire rotten financial edifice crashing down.

Furthermore, because trillions of dollars have been injected into the financial system by central banks over the past six years, the consequences have the potential to be even more serious than those that followed the collapse of Lehman Brothers in September 2008.

The consequent closures, sackings and mass unemployment and the intensification of the assault on social services will fuel the eruption of social and political struggles that will be met with an immediate and ruthless response from the financial oligarchy. That is the lesson of Greece.

Acutely aware that they have no economic solution to the crisis of the profit system, the ruling elites in every country have spent the past six years boosting police and security forces to deal with the inevitable outbreak of mass struggles.

 

 

http://www.wsws.org/en/articles/2015/02/27/econ-f27.html

The poor fetish: commodifying working class culture

By Joseph Todd On February 25, 2015

Post image for The poor fetish: commodifying working class cultureBullshit jobs and a pointless existence are increasingly driving London’s spiritually dead middle class towards a fetishization of working class culture.

Photo: Fruit stall in Shoreditch, London (Source: Flickr/Garry Knight).

Literally, he paints her portrait, then he can fuck off  —  he can leave. When Leonardo DiCaprio is freezing in water, she notices that he’s dead, and starts to shout, ‘I will never let you go,’ but while she is shouting this, she is pushing him away. It’s not even a love story. Again, Captains Courageous: upper classes lose their life, passion, vitality and act like a vampire to suck vitality from a lower-class guy. Once they replenish their energy, he can fuck off.

– Slavoj Zizek on Titanic

London’s middle class are in crisis — they feel empty and clamor for vitality. Their work is alienating and meaningless, many of them in “bullshit jobs” that are either socially useless, overly bureaucratic or divorced from any traditional notion of labor.

Financial services exist to grow the fortunes of capitalists, advertising to exploit our insecurities and public relations to manage the reputations of companies that do wrong. Society would not collapse without these industries. We could cope without the nexus of lobbyists, corporate lawyers and big firm accountants whose sole purpose is to protect the interests of capital. How empty if must feel to work a job that could be abolished tomorrow. One that at best makes no tangible difference to society and at worst encourages poverty, hunger and ecological collapse.

At the same time our doctors, teachers, university professors, architects, lawyers, solicitors and probation officers are rendered impotent. Desperate to just do their jobs yet besieged by bureaucracy and box-ticking. Their energies are focused not on helping the sick, teaching the young or building hospitals but on creating and maintaining the trail of paperwork that is a prerequisite of any meaningful action in late capitalist society. Talk to anybody in these professions, from the public or private sector, and the frustration that comes up again and again is that they spend the majority of their time writing reports, filling in forms and navigating bureaucratic labyrinths that serve only to justify themselves.

This inaction hurts the middle-class man. He feels impotent in the blue glare of his computer screen. Unable to do anything useful, alienated from physical labor and plagued by the knowledge that his father could use his hands, and the lower classes still do. Escape, however, is impossible. Ever since the advent of the smartphone the traditional working day has been abolished. Office workers are at the constant mercy of email, a culture of overwork and a digitalization of work. Your job can be done anytime, anywhere and this is exactly what capital demands. Refuge can only be found in sleep, another domain which capital isdetermined to control.

And when the middle classes are awake and working, they cannot even show contempt for their jobs. Affective (or emotional) labor has always been a part of nursing and prostitution, be it fluffing pillows or faking orgasms, but now it has infected both the shop floor of corporate consumer chains and the offices of middle-management above. Staff working at Pret-à-Manger are encouraged to touch each other, “have presence” and “be happy to be themselves.” In the same way the open plan, hyper-extroverted modern office environment enforces positivity. Offering a systemic critique of the very nature of your work does not make you a ‘team player.’ In such an environment, bringing up the pointlessness of your job is akin to taking a shit on the boss’s desk.

This culture is symptomatic of neoliberal contradiction, one which tells us to be true to ourselves and follow our passions in a system that makes it nearly impossible to do so. A system where we work longer hours, for less money and are taught to consume instead of create. Where fulfilling vocations such as teaching, caring or the arts are either vilified, badly paid or not paid at all. Where the only work that will enable you to have a comfortable life is meaningless, bureaucratic or evil. In such a system you are left with only one option: to embrace the myth that your job is your passion while on a deeper level recognizing that it is actually bullshit.

This is London’s middle class crisis.

But thankfully capital has an antidote. Just as in Titanic, when Kate Winslet saps the life from the visceral, working class Leonardo DiCaprio, middle-class Londoners flock to bars and clubs that sell a pre-packaged, commodified experience of working class and immigrant culture. Pitched as a way to re-connect with reality, experience life on the edge and escape the bureaucratic, meaningless, alienated dissonance that pervades their working lives.

The problem, however, is that the symbols, aesthetics and identities that populate these experiences have been ripped from their original contexts and re-positioned in a way that is acceptable to the middle class. In the process, they are stripped of their culture and assigned an economic value. In this way, they are emptied of all possible meaning.

Visit any bar in the hip districts of Brixton, Dalston or Peckham and you will invariably end up in a warehouse, on the top floor of a car park or under a railway arch. Signage will be minimal and white bobbing faces will be crammed close, a Stockholm syndrome recreation of the twice-daily commute, enjoying their two hours of planned hedonism before the work/sleep cycle grinds back into gear.

Expect gritty, urban aesthetics. Railway sleepers grouped around fire pits, scuffed tables and chairs reclaimed from the last generation’s secondary schools and hastily erected toilets with clattering wooden doors and graffitied mixed sex washrooms. Notice the lack of anything meaningful. Anything with politics or soul. Notice the ubiquity of Red Stripe, once an emblem of Jamaican culture, now sold to white ‘creatives’ at £4 a can.

The warehouse, once a site of industry, has trudged down this path of appropriation. At first it was squatters and free parties, the disadvantaged of a different kind, transforming a space of labor into one of hedonistic illegality and sound system counter-culture. Now the warehouse resides in the middle-class consciousness as the go-to space for every art exhibition or party. Any meaning it may once have had is dead. Its industrial identity has been destroyed and the transgressive thrill the warehouse once represented has been neutered by money, legality and middle-class civility.

Nonetheless many still function as clubs across Southeast London, pumping out reggae and soul music appropriated from the long-established Afro-Caribbean communities to white middle-class twenty-somethings who can afford the £15 entrance. Eventually the warehouse aesthetic will make its way to the top of the pay scale and, as the areas in which they reside reach an acceptable level of gentrification, they will become blocks of luxury flats. Because what else does London need but more kitsch, high ceiling hideaways to shield capital from tax?

The ‘street food revolution’ was not a revolution but a middle-class realization that they could abandon their faux bourgeois restaurants and reach down the socioeconomic ladder instead of up. Markets that once sold fruit and vegetables for a pound a bowl to working class and immigrant communities became venues that commodified and sold the culture of their former clientèle. Vendors with new cute names but the same gritty aesthetics serve over-priced ethnic food and craft beer to a bustling metropolitan crowd, paying not for the cuisine or the cold but for the opportunity to bathe in the edgy cool aesthetic of a former working class space.

This is the romantic illusion that these bars, clubs and street food markets construct; that their customers are the ones on the edge of life, running the gauntlet of Zola’s Les Halles, eating local on makeshift benches whilst drinking beer from the can. Yet this zest is vicarious. Only experienced secondhand through objects and spaces appropriated from below. Spaces which are dully sanitized of any edge and rendered un-intimidating enough for the middle classes to inhabit. Appealing enough for them to trek to parts of London in which they’d never dare live in search of something meaningful. In the hope that some semblance of reality will slip back into view.

The illusion is delicate and fleeting. In part it explains the roving zeitgeist of the metropolitan hipster whose anatomy Douglas Haddow so brilliantly managed to pin down. Because as soon as a place becomes inhabited with too many white, middle-class faces it becomes difficult to keep playing penniless. The braying accents crowd in and the illusion shatters. Those who aren’t committed to the working class aesthetic, yuppies dressed in loafers and shirts rather than scruffy plimsoles and vintage wool coats, begin to dominate and it all becomes just a bit too West London. And in no-time at all the zeitgeist rolls on to the next market, pool hall or dive bar ripe for discovery, colonization and commodification.

Not all businesses understand this delicacy. Champagne and Fromage waded into the hipster darling food market of Brixton Village, upsetting locals and regulars alike. This explicitly bourgeois restaurant, attracted by the hip kudos and ready spending of the area, inadvertently pointed out that the emperor had no clothes. That the commodified working class experience the other restaurants had been pedaling was nothing more than an illusion.

The same anxiety that fuels this cultural appropriation also drives first wave gentrifiers to ‘discover’ new areas that have been populated by working class or immigrant communities for decades. Cheap rents beckon but so does the chance of emancipation from the bourgeois culture of their previous North London existence. The chance to live in an area that is gritty, genuine and real. But this reality is always kept at arm’s length. Gentrifiers have the income to inoculate themselves from how locals live. They plump for spacious Georgian semi-detached houses on a quiet street away from the tower blocks. They socialize in gastro-pubs and artisan cafés. They can do without sure start centers, food banks and the local comprehensive.

Their experience will always be confined to dancing in a warehouse, drinking cocktails from jam jars or climbing the stairs of a multi-story car park in search of a new pop-up restaurant. Never will they face the grinding monotony of mindless work, the inability to pay bills or feed their children, nor the feeling of guilt and hopelessness that comes from being at the bottom of a system that blames the individual but offers no legitimate means by which they can escape.

This partial experience is deliberate. Because with intimate knowledge of how the other half live comes an ugly truth: that middle-class privilege is in many ways premised on working class exploitation. That the rising house prices and cheap mortgages from which they have benefited create a rental market shot with misery. That the money inherited from their parents goes largely untaxed while benefits for both the unemployed and working poor are slashed. That the unpaid internships they can afford to take sustains a culture that excludes the majority from comfortable, white collar jobs. That their accent, speech patterns and knowledge of institutions, by their very deployment in the job market, perpetuate norms that exclude those who were born outside of the cultural elite.

Effie Trinket of the Hunger Games is the ideal manifestation of this contradiction. She is Kaitness and Peeta’s flamboyant chaperone who goes from being a necessary annoyance in the first film towards nominal acceptance in the second. The relationship climaxes when, just as Kaitness and Peeta are about to re-enter the arena, Effie presents Hamich and Peeta with a gold band and necklace, a consumerist expression of their heightened intimacy. And in that very moment, her practiced façade of enthusiastic positivity finally breaks. Through her sobs she cries “I’m sorry, I’m so sorry” and backs away, absent for the rest of the film.

For Effie, the contradiction surfaced and was too much to bear. She realized that the misery and oppression of those in the districts was in some way caused by her privilege. But her tears were shed for a more fundamental truth — that although she recognizes the horror of the world, she enjoys the material comfort exploitation brings. That if given the choice between the status quo and revolution, she wouldn’t change a thing.

Joseph Todd is a writer and activist who has been published in The Baffler, Salon and CounterFire, among others. For more writings, visit his website.

The 21st century belongs to China

Why the new Silk Road threatens to end America’s economic dominance

Beijing is building a trans-Siberian railway system that rivals the Marshall Plan in its ambition and global reach

The 21st century belongs to China: Why the new Silk Road threatens to end America's economic dominance
Performers show the dragon dance during a night parade to celebrate Chinese New Year in Hong Kong, Thursday, Feb. 19, 2015. (Credit: AP/Vincent Yu)
This piece originally appeared on TomDispatch.

BEIJING — Seen from the Chinese capital as the Year of the Sheep starts, the malaise affecting the West seems like a mirage in a galaxy far, far away. On the other hand, the China that surrounds you looks all too solid and nothing like the embattled nation you hear about in the Western media, with its falling industrial figures, its real estate bubble, and its looming environmental disasters. Prophecies of doom notwithstanding, as the dogs of austerity and war bark madly in the distance, the Chinese caravan passes by in what President Xi Jinping calls “new normal” mode.

“Slower” economic activity still means a staggeringly impressive annual growth rate of 7% in what is now the globe’s leading economy. Internally, an immensely complex economic restructuring is underway as consumption overtakes investment as the main driver of economic development. At 46.7% of the gross domestic product (GDP), the service economy has pulled ahead of manufacturing, which stands at 44%.

Geopolitically, Russia, India, and China have just sent a powerful message westward: they are busy fine-tuning a complex trilateral strategy for setting up a network of economic corridors the Chinese call “new silk roads” across Eurasia. Beijing is also organizing a maritime version of the same, modeled on the feats of Admiral Zheng He who, in the Ming dynasty, sailed the “western seas” seven times, commanding fleets of more than 200 vessels.

Meanwhile, Moscow and Beijing are at work planning a new high-speed rail remix of the fabled Trans-Siberian Railroad. And Beijing is committed to translating its growing strategic partnership with Russia into crucial financial and economic help, if a sanctions-besieged Moscow, facing a disastrous oil price war, asks for it.



To China’s south, Afghanistan, despite the 13-year American war still being fought there, is fast moving into its economic orbit, while a planned China-Myanmar oil pipeline is seen as a game-changing reconfiguration of the flow of Eurasian energy across what I’ve long called Pipelineistan.

And this is just part of the frenetic action shaping what the Beijing leadership defines as the New Silk Road Economic Belt and the Maritime Silk Road of the twenty-first century. We’re talking about a vision of creating a potentially mind-boggling infrastructure, much of it from scratch, that will connect China to Central Asia, the Middle East, and Western Europe. Such a development will include projects that range from upgrading the ancient silk road via Central Asia to developing a Bangladesh-China-India-Myanmar economic corridor; a China-Pakistan corridor through Kashmir; and a new maritime silk road that will extend from southern China all the way, in reverse Marco Polo fashion, to Venice.

Don’t think of this as the twenty-first-century Chinese equivalent of America’s post-World War II Marshall Plan for Europe, but as something far more ambitious and potentially with a far vaster reach.

China as a Mega-City

If you are following this frenzy of economic planning from Beijing, you end up with a perspective not available in Europe or the U.S. Here, red-and-gold billboards promote President Xi Jinping’s much ballyhooed new tagline for the country and the century, “the Chinese Dream” (which brings to mind “the American Dream” of another era). No subway station is without them. They are a reminder of why 40,000 miles of brand new high-speed rail is considered so essential to the country’s future. After all, no less than 300 million Chinese have, in the last three decades, made a paradigm-breaking migration from the countryside to exploding urban areas in search of that dream.

Another 350 million are expected to be on the way, according to a McKinsey Global Institute study. From 1980 to 2010, China’s urban population grew by 400 million, leaving the country with at least 700 million urban dwellers. This figure is expected to hit one billion by 2030, which means tremendous stress on cities, infrastructure, resources, and the economy as a whole, as well as near-apocalyptic air pollution levels in some major cities.

Already 160 Chinese cities boast populations of more than one million. (Europe has only 35.) No less than 250 Chinese cities have tripled their GDP per capita since 1990, while disposable income per capita is up by 300%.

These days, China should be thought of not in terms of individual cities but urban clusters — groupings of cities with more than 60 million people. The Beijing-Tianjin area, for example, is actually a cluster of 28 cities. Shenzhen, the ultimate migrant megacity in the southern province of Guangdong, is now a key hub in a cluster as well. China, in fact, has more than 20 such clusters, each the size of a European country. Pretty soon, the main clusters will account for 80% of China’s GDP and 60% of its population. So the country’s high-speed rail frenzy and its head-spinning infrastructure projects – part of a $1.1 trillion investment in 300 public works — are all about managing those clusters.

Not surprisingly, this process is intimately linked to what in the West is considered a notorious “housing bubble,” which in 1998 couldn’t have even existed. Until then all housing was still owned by the state. Once liberalized, that housing market sent a surging Chinese middle class into paroxysms of investment. Yet with rare exceptions, middle-class Chinese can still afford their mortgages because both rural and urban incomes have also surged.

The Chinese Communist Party (CCP) is, in fact, paying careful attention to this process, allowing farmers to lease or mortgage their land, among other things, and so finance their urban migration and new housing. Since we’re talking about hundreds of millions of people, however, there are bound to be distortions in the housing market, even the creation of whole disastrous ghost towns with associated eerie, empty malls.

The Chinese infrastructure frenzy is being financed by a pool of investments from central and local government sources, state-owned enterprises, and the private sector. The construction business, one of the country’s biggest employers, involves more than 100 million people, directly or indirectly. Real estate accounts for as much as 22% of total national investment in fixed assets and all of this is tied to the sale of consumer appliances, furnishings, and an annual turnover of 25% of China’s steel production, 70% of its cement, 70% of its plate glass, and 25% of its plastics.

So no wonder, on my recent stay in Beijing, businessmen kept assuring me that the ever-impending “popping” of the “housing bubble” is, in fact, a myth in a country where, for the average citizen, the ultimate investment is property. In addition, the vast urbanization drive ensures, as Premier Li Keqiang stressed at the recent World Economic Forum in Davos, a “long-term demand for housing.”

Markets, Markets, Markets

China is also modifying its manufacturing base, which increased by a multiple of 18 in the last three decades. The country still produces 80% of the world’s air conditioners, 90% of its personal computers, 75% of its solar panels, 70% of its cell phones, and 63% of its shoes. Manufacturing accounts for 44% of Chinese GDP, directly employing more than 130 million people. In addition, the country already accounts for 12.8% of global research and development, well ahead of England and most of Western Europe.

Yet the emphasis is now switching to a fast-growing domestic market, which will mean yet more major infrastructural investment, the need for an influx of further engineering talent, and a fast-developing supplier base. Globally, as China starts to face new challenges — rising labor costs, an increasingly complicated global supply chain, and market volatility — it is also making an aggressive push to move low-tech assembly to high-tech manufacturing. Already, the majority of Chinese exports are smartphones, engine systems, and cars (with planes on their way). In the process, a geographic shift in manufacturing is underway from the southern seaboard to Central and Western China. The city of Chengdu in the southwestern province of Sichuan, for instance, is now becoming a high-tech urban cluster as it expands around firms like Intel and HP.

So China is boldly attempting to upgrade in manufacturing terms, both internally and globally at the same time. In the past, Chinese companies have excelled in delivering the basics of life at cheap prices and acceptable quality levels. Now, many companies are fast upgrading their technology and moving up into second- and first-tier cities, while foreign firms, trying to lessen costs, are moving down to second- and third-tier cities. Meanwhile, globally, Chinese CEOs want their companies to become true multinationals in the next decade. The country already has 73 companies in the Fortune Global 500, leaving it in the number two spot behind the U.S.

In terms of Chinese advantages, keep in mind that the future of the global economy clearly lies in Asia with its record rise in middle-class incomes. In 2009, the Asia-Pacific region had just 18% of the world’s middle class; by 2030, according to the Development Center of the Organization for Economic Cooperation and Development, that figure will rise to an astounding 66%. North America and Europe had 54% of the global middle class in 2009; in 2030, it will only be 21%.

Follow the money, and the value you get for that money, too. For instance, no less than 200,000 Chinese workers were involved in the production of the first iPhone, overseen by 8,700 Chinese industrial engineers. They were recruited in only two weeks. In the U.S., that process might have taken more than nine months. The Chinese manufacturing ecosystem is indeed fast, flexible, and smart — and it’s backed by an ever more impressive education system. Since 1998, the percentage of GDP dedicated to education has almost tripled; the number of colleges has doubled; and in only a decade, China has built the largest higher education system in the world.

Strengths and Weaknesses

China holds more than $15 trillion in bank deposits, which are growing by a whopping $2 trillion a year. Foreign exchange reserves are nearing $4 trillion. A definitive study of how this torrent of funds circulates within China among projects, companies, financial institutions, and the state still does not exist. No one really knows, for instance, how many loans the Agricultural Bank of China actually makes. High finance, state capitalism, and one-party rule all mix and meld in the realm of Chinese financial services where realpolitik meets real big money.

The big four state-owned banks — the Bank of China, the Industrial and Commercial Bank of China, the China Construction Bank, and the Agricultural Bank of China — have all evolved from government organizations into semi-corporate state-owned entities. They benefit handsomely both from legacy assets and government connections, or guanxi, and operate with a mix of commercial and government objectives in mind. They are the drivers to watch when it comes to the formidable process of reshaping the Chinese economic model.

As for China’s debt-to-GDP ratio, it’s not yet a big deal. In a list of 17 countries, it lies well below those of Japan and the U.S., according to Standard Chartered Bank, and unlike in the West, consumer credit is only a small fraction of total debt. True, the West exhibits a particular fascination with China’s shadow banking industry: wealth management products, underground finance, off-the-balance-sheet lending. But such operations only add up to around 28% of GDP, whereas, according to the International Monetary Fund, it’s a much higher percentage in the U.S.

China’s problems may turn out to come from non-economic areas where the Beijing leadership has proven far more prone to false moves. It is, for instance, on the offensive on three fronts, each of which may prove to have its own form of blowback: tightening ideological control over the country under the rubric of sidelining “Western values”; tightening control overonline information and social media networks, including reinforcing “the Great Firewall of China” to police the Internet; and tightening further its control over restive ethnic minorities, especially over the Uighurs in the key western province of Xinjiang.

On two of these fronts — the “Western values” controversy and Internet control — the leadership in Beijing might reap far more benefits, especially among the vast numbers of younger, well educated, globally connected citizens, by promoting debate, but that’s not how the hyper-centralized Chinese Communist Party machinery works.

When it comes to those minorities in Xinjiang, the essential problem may not be with the new guiding principles of President Xi’s ethnic policy. According to Beijing-based analyst Gabriele Battaglia, Xi wants to manage ethnic conflict there by applying the “three Js”: jiaowang, jiaoliu, jiaorong (“inter-ethnic contact,” “exchange,” and “mixage”). Yet what adds up to a push from Beijing for Han/Uighur assimilation may mean little in practice when day-to-day policy in Xinjiang is conducted by unprepared Han cadres who tend to view most Uighurs as “terrorists.”

If Beijing botches the handling of its Far West, Xinjiang won’t, as expected, become the peaceful, stable, new hub of a crucial part of the silk-road strategy. Yet it is already considered an essential communication link in Xi’s vision of Eurasian integration, as well as a crucial conduit for the massive flow of energy supplies from Central Asia and Russia. The Central Asia-China pipeline, for instance, which brings natural gas from the Turkmen-Uzbek border through Uzbekistan and southern Kazakhstan, is already adding a fourth line to Xinjiang. And one of the two newly agreed upon Russia-China pipelines will also arrive in Xinjiang.

The Book of Xi

The extent and complexity of China’s myriad transformations barely filter into the American media. Stories in the U.S. tend to emphasize the country’s “shrinking” economy and nervousness about its future global role, the way it has “duped” the U.S. about its designs, and its nature as a military “threat” to Washington and the world.

The U.S. media has a China fever, which results in typically feverish reports that don’t take the pulse of the country or its leader. In the process, so much is missed. One prescription might be for them to read The Governance of China, a compilation of President Xi’s major speeches, talks, interviews, and correspondence. It’s already a three-million-copy bestseller in its Mandarin edition and offers a remarkably digestible vision of what Xi’s highly proclaimed “China Dream” will mean in the new Chinese century.

Xi Dada (“Xi Big Bang” as he’s nicknamed here) is no post-Mao deity. He’s more like a pop phenomenon and that’s hardly surprising. In this “to get rich is glorious” remix, you couldn’t launch the superhuman task of reshaping the Chinese model by being a cold-as-a-cucumber bureaucrat. Xi has instead struck a collective nerve by stressing that the country’s governance must be based on competence, not insider trading and Party corruption, and he’s cleverly packaged the transformation he has in mind as an American-style “dream.”

Behind the pop star clearly lies a man of substance that the Western media should come to grips with. You don’t, after all, manage such an economic success story by accident. It may be particularly important to take his measure since he’s taken the measure of Washington and the West and decided that China’s fate and fortune lie elsewhere.

As a result, last November he made official an earthshaking geopolitical shift. From now on, Beijing would stop treating the U.S. or the European Union as its main strategic priority and refocus instead on China’s Asian neighbors and fellow BRICS countries (Brazil, Russia, India, and South Africa, with a special focus on Russia), also known here as the “major developing powers” (kuoda fazhanzhong de guojia). And just for the record, China does not consider itself a “developing country” anymore.

No wonder there’s been such a blitz of Chinese mega-deals and mega-dealings across Pipelineistan recently. Under Xi, Beijing is fast closing the gap on Washington in terms of intellectual and economic firepower and yet its global investment offensive has barely begun, new silk roads included.

Singapore’s former foreign minister George Yeo sees the newly emerging world order as a solar system with two suns, the United States and China. The Obama administration’s new National Security Strategy affirms that “the United States has been and will remain a Pacific power” and states that “while there will be competition, we reject the inevitability of confrontation” with Beijing. The “major developing powers,” intrigued as they are by China’s extraordinary infrastructural push, both internally and across those New Silk Roads, wonder whether a solar system with two suns might not be a non-starter. The question then is: Which “sun” will shine on Planet Earth?  Might this, in fact, be the century of the dragon?

Federal Reserve Says Your Wages are Too High

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The New American Way: Work Harder for Less Pay

by PETE DOLACK

The Federal Reserve has declared that the reason for ongoing economic weakness is because wages have not fallen enough. Wages have been stagnant for four decades while productivity has soared, but nonetheless orthodox economists believe the collapse of 2008 has been a missed opportunity.

A paper prepared by two senior researchers with the San Francisco branch of the U.S. Federal Reserve Bank attempts to explain the lack of wage growth experienced as unemployment has fallen over the past couple of years this way:

“One explanation for this pattern is the hesitancy of employers to reduce wages and the reluctance of workers to accept wage cuts, even during recessions, a behavior known as downward nominal wage rigidity.”

The two Federal Reserve researchers, Mary Daly and Bart Hobijn, based their argument on the standard ideology of orthodox economists, writing:

“Downward rigidities prevent businesses from reducing wages as much as they would like following a negative shock to the economy. This keeps wages from falling, but it also further reduces the demand for workers, contributing to the rise in unemployment. Accordingly, the higher wages come with more unemployment than would occur if wages were flexible and could be fully reduced.”

The “problem” of wages stubbornly refusing to drop as much as corporate executives and financiers would like is referred to as the “sticky wages” problem in orthodox economics. Simply put, this “problem” is one that orthodox economists, themselves not necessarily subject to the market forces they wish to impose on others, have long struggled to “solve.” You perhaps will not be surprised to hear that “government” is the problem. Consider this remarkable passage published on the web site of the Mises Institute, an advocate of the Austrian school of economics:

“Much of the alleged ‘stickiness’ of wages is due to government policies. … [T]he trouble stems from workers not being willing to take pay cuts. When the demand from employers drops, at the old wage rate there is now surplus labor — a.k.a. unemployment. Only when market wages drop to a lower level, so that demand once again matches supply, will equilibrium be restored in the labor market.”

Collapsing wages in the Great Depression didn’t help

According to this author, Robert P. Murphy, an “associated scholar” of the Mises Institute, failing to drive down wages is such a big mistake that it caused the Great Depression. He writes:

“After the 1929 crash, Herbert Hoover gathered the nation’s leading businessmen for a conference in Washington and urged them to allow profits and dividends to take the hit, but to spare workers’ paychecks. Rather than cut wages, businesses were supposed to implement spread-the-work schemes where workers would cut back their hours. The rationale for Hoover’s high-wage policy was that the worker supposedly needed to be paid ‘enough to buy back the product.’ … The idea was that wage cuts would just cause workers to cut their spending, which would in turn lead to another round of wage cuts in a vicious downward spiral.”

Herbert Hoover was not vicious enough! Although it was Hoover’s Treasury secretary, Andrew Mellon, who advocated the government “liquidate labor, liquidate stocks, liquidate farmers, liquidate real estate” so as to “purge the rottenness out of the system,” and not Hoover himself, the president did take hard-line right-wing positions. Michael Parenti, in discussing Hoover in his book History as Mystery, wrote:

“Like so many conservatives then and now, Hoover preached the virtues of self-reliance, opposed the taxation of overseas corporate earnings, sought to reduce income taxes for the highest brackets, and was against a veterans’ bonus and aid to drought sufferers. He repeatedly warned that public assistance programs were the beginning of ‘state socialism.’ Toward business, however, he suffered from no such ‘inflexibility’ and could spend generously. He supported multimillion-dollar federal subsidies to shipping interests and agribusiness, and his Reconstruction Finance Corporation doled out about $2 billion to banks and corporations.” [page 261]

Hoover’s concern for working people was demonstrated when his troops fired on veterans demanding payments owed to them and burned their camps. His laissez-faire policies led to manufacturing wages falling 34 percent and unemployment rising to about 25 percent by 1933. That collapse in wages did not bring better times; only the massive government spending to wage World War II put an end to the Depression. Such wage declines, in the real world, actually make the economy worse, argues Keynesian economist Paul Krugman:

“[Y]ou could argue that a sufficiently large fall in wages could restore full employment now — but it would have to be a very large wage decline, and the positive effects would kick in only after deflation had first driven just about every debtor in the economy into bankruptcy.”

How many formulae can be written on the head of a pin?

Although orthodox economics is often nothing more than ideology in the service of capitalist elites, its practitioners like to believe themselves scientific because they base their theories on mathematical models. Unfortunately, these formulae are divorced from the real, physical world; the economy and the human behavior that animates it are not reducible to mathematics.

Robert Kuttner, a heterodox economist, explored these shortcomings in an article originally published in Atlantic Monthly. He wrote:

“The [prevailing] method of practicing economic science creates a professional ethic of studied myopia. Apprentice economists are relieved of the need to learn much about the complexities of human motivation, the messy universe of economic institutions, or the real dynamics of technological change. Those who have real empirical curiosity and insight about the workings of banks, corporations, production technologies, trade unions, economic history or individual behavior are dismissed as casual empiricists, literary historians or sociologists, and marginalized within the profession. In their place departments are graduating a generation of idiots savants, brilliant at esoteric mathematics yet innocent of  actual economic life.”

That was written in 1985; little if anything has changed since and arguably has gotten worse. Professor Kuttner points out that the very fact of persistent unemployment contradicts the basic theses of orthodox neoclassical economics. If the belief that markets automatically reach equilibrium were true, then wages would automatically fall until everybody had a job. Rather than acknowledge the real world, orthodox economists simply declare involuntary unemployment an “illusion,” or claim “government interference” with the market is the culprit. “Business cycles were around long before trade unions or big-spending governments were,” Professor Kuttner noted.

Wages are not as flexible as orthodox ideology suggests because within an enterprise preference is ordinarily given to existing workers to fill job openings, thereby buffering wages from external market forces, writes another heterodox economist, Herbert Gintis. In an essay originally appearing in Review of Radical Political Economics, he wrote:

“In particular, there is a tendency for the number of individuals qualified for a position to exceed the number of jobs available, in which case seniority and other administrative rules are used to determine promotion. Hardly do workers compete for the job by bidding down its wage.”

In almost all cases, employees do not even know what wages their co-workers are earning. This top-down secrecy facilitates the disparity in wages, whereby, for example, women earn less than men. If everybody earned what they were worth, there would no such wage disparity. The very fact of disparities between the genders or among races and ethnicities demonstrates the ideological basis of orthodox economics, which assumes that employees who do the work of production are in their jobs due to personal choice and wages are based only on individual achievement independent of race, gender and other differences.

You produce more but don’t earn more

Back in the real world, wages have significantly lagged productivity for four decades; thus, wages, examined against this benchmark, have significantly declined for those four decades. A study by the Economic Policy Institute, written by heterodox economist Elise Gould, reports:

“Between 1979 and 2013, productivity [in the U.S.] grew 64.9 percent, while hourly compensation of production and nonsupervisory workers, who comprise over 80 percent of the private-sector workforce, grew just 8.0 percent. Productivity thus grew eight times faster than typical worker compensation.” [page 4]

Middle-class U.S. households earn $18,000 less than they would had wages kept pace with productivity, Dr. Gould calculates. Nor is that unique to the U.S.: Wages in Canada, Europe and Japan have also fallen well short of productivity gains. Canadian workers, for example, are paid at least $15,000 per year less than they would be had their wages kept pace.

To circle back to the San Francisco Federal Reserve paper that began this discussion, the authors claim that wage stagnation will persist until markets “return to normal.” They assert:

“[T]he accumulated stockpile of pent-up wage cuts remains and must be worked off to put the labor market back in balance. In response, businesses hold back wage increases and wait for inflation and productivity growth to bring wages closer to their desired level.”

But as we can plainly see, and as those of us living in the real world experience, wages cuts have been the norm for a long time. The caveat at the end of the paper that it does not necessarily reflect the views of the Fed board of governors should be noted, but the paper was issued as part of a regular series by the San Francisco Fed and the authors are senior members of it, so it is not likely to be at variance with opinions there. It certainly does reflect orthodox economic ideology. Similarly, the argument by the Austrian School’s Mises Institute, stripped of its academic-sounding veneer, is a call to eliminate the minimum wage.

Stagnation, declining wages and the ability of capitalists to shift production around the globe in a search for the lowest wages and lowest safety standards — completely ignored in the orthodox hunt for economic scapegoats — are the norm. Our need to sell our labor, the resulting reduction of human beings’ labor power to a commodity, and the endless competitive pressures on capitalists to boost profits underlie the present economic difficulties.

Collective bargaining through unions and the needs of capitalists to retain their employees can be brakes against the race to the bottom — what the orthodox economists at the Fed and elsewhere are arguing is that these remaining brakes be removed and wages driven down to starvation levels. That is what global capitalism has to offer.

Pete Dolack writes the Systemic Disorder blog. He has been an activist with several groups.

 

http://www.counterpunch.org/2015/02/20/the-new-american-way-work-harder-for-less-pay/