Wheat from the Chaff

The Decline of the American Empire

A popular media topic these days is the cultural, economic and political decline of the American Empire. It’s reflected in a large number of books, blogs and mainstream news stories. My former professor, Morris Berman, writes a popular blog, Dark Ages America, almost singularly devoted to the theme.

Perhaps you’re skeptical? Well, if you remain doubtful, I’ve come across a number of recent examples of this decline, including two from that increasingly important barometer (and archive) of American culture, YouTube. Let’s proceed with the evidence…

Exhibit #1: In the land of torts, Gloria Allred has risen above the pack and become a well-known trial lawyer and media manipulator. She’s also lost her mind. Witness the following press conference captured on YouTube, and consider the utterly inappropriate content given the two young girls who are flanking her.

Exhibit #2: American presidential hopeful Mike Huckabee [Note: On May 16, Huckabee withdrew from the presidential race.] thinks American teachers are too biased, so he's created his own company called learnourhistory.com. Here is the website's introduction:

Welcome to Learn Our History, where kids discover history through entertaining animated videos! I co-founded this company to give children a fun, fresh way to learn about America’s rich past and most influential people.

Many of our schools and teachers today haven't found ways to make history for kids fun. Instead, they’re teaching with political bias that distorts facts for the sake of political correctness. As a result, our national pride and patriotism are in jeopardy.

That's what makes Learn Our History different. Your kids will love to learn American history as they watch our nation's stories come to life right before their eyes! All the while, they’ll build a strong sense of national pride and appreciation for America.

Now, watch one his company's "inspiring" video promos on Ronald Reagan:

Not surprisingly, comments have been turned off for the YouTube site. As an educator, my only question is this: Do I use Huckabee’s site first to teach irony, or do I move immediately to the topic of propaganda?

Exhibit #3: On a more serious note, Andy Kroll, a well-known writer for Mother Jones magazine, has written a chilling article on the hollowing out of the American middle class. He documents the jobless and unequal recovery now being touted by the Democrats - minus the jobless and unequal part, of course – and the critical role that labour unions used to play as the foundation of the modern middle class. Here are two excerpts:

... On April 19th [2011], McDonald’s launched its first-ever national hiring day, signing up 62,000 new workers at stores throughout the country. For some context, that’s more jobs created by one company in a single day than the net job creation of the entire U.S. economy in 2009. And if that boggles the mind, consider how many workers applied to local McDonald’s franchises that day and left empty-handed: 938,000 of them. With a 6.2 percent acceptance rate in its spring hiring blitz, McDonald’s was more selective than the Princeton, Stanford, or Yale University admission offices....

…Bargaining-table clout is crucial for unions, since it directly affects the wages their members take home every month. According to data from the Bureau of Labor Statistics, union workers pocket on average $200 more per week than their non-union counterparts, a 28 percent difference. The benefits of union representation are even greater for women and people of color: women in unions make 34 percent more than their non-unionized counterparts, and Latino workers nearly 51 percent more.

In other words, at precisely the moment when middle-class workers need strong bargaining rights so they can fight to preserve a living wage in a barbell economy, unions around the country face the grim prospect of losing those rights….

Yes.

But of course, it’s self-defeating and just plain ‘ol bad karma. As a Canadian, I know that America’s decline almost certainly means our decline. But it’s like a car wreck. Terrible. Awful. Irresistible.

Tea Party Contradictions

One of the most fascinating examples of the absurdity of US politics has been the Tea Party movement. Populated largely by angry and frightened working class and middle class (white) Americans, the movement proves that contradictions are rarely a barrier to political action.

At the core of the problem is a series of demands by the Tea Party that have little to do with the interests of its members: less government regulation, lower taxes (especially for the upper class and corporations), and cutbacks to social programs like Medicare. These interests do coincide with the upper class and corporate sector, but not with Americans living from cheque to cheque, and from housing payment to housing payment.

It gets worse when you consider that deregulation and upper-class tax cuts are at the core of the economic meltdown in the United States. But the Tea Party is undaunted: the solution to our problems is to reintroduce the policies that caused the problems in the first place. This sounds like Santayana's definition of fanaticism.

Why isn't the Tea Party an angry mob of left-wing populists? Why aren't they demanding an end to monied interests and corporate lobbyists? Part of the answer is that the corporate and upper-class funding for the Tea Party has been partially hidden. Yet repeated, high-quality exposés of Tea party financiers like the Koch Brothers have started to shed light on the self-interest that compromises the rationale of the Tea Party. Nevertheless, the Tea Party continues on, revelling in its political power within the Republican Party and apparently oblivious to its corporate benefactors. I suppose part of the answer to the TP's self-cancelling populism can be found in an economic and political maelstrom that obliges its victims to seek an easy scapegoat; you go with what you know. And, in the United States, what they know are the centuries-old platitudes about the dangers of government and taxes, platitudes eagerly reinforced by Fox News.

Humour may be the best retort, as exemplified by Barack Obama's evisceration of Donald Trump. In response to the contradictions of the Tea Party, two excellent American cartoonists, Cole Bennett and Steve Greenberg, have provided many biting political cartoons:

 

Sun Media Brings Fox News to Canada

This is almost hilarious. It must be the most absurd media promo I've ever seen - as if it's a parody made by the people at The Colbert Report or The Onion. Unfortunately, these yahoos are serious.

Ben Levin's thoughts on education

The presentation below, by Ontario professor Ben Levin, makes some interesting points about modern education.

The first point is that many of the elements that differentiate the education systems of Canada and the USA - and lead to better PISA results in Canada - are macro-factors outside the control of individual teachers. Levin points to political differences, such as strong provincial governments versus weak state governments, that retard the consistent implementation of programs in America. He also points to financial inequities between American school districts that are much less pronounced in Canada. [He might have added that the USA is one of the most unequal societies in the western world.] Levin points out that countries with strong test scores closely correlate with strong teacher unions; strong unions succeed in winning good pay, benefits and working conditions, and this in turn attracts better candidates to the teaching profession. In many American school districts, where teachers are lucky to make $30,000 a year, the most capable young people generally go elsewhere to start their careers.

Levin's second major point refers to a problem that I have witnessed since the start of my education career: innovation for the sake of innovation. Usually caused by certain educators wishing to advance their careers, the constant cycle of innovation produces exhaustion and cynicism. Even if a new program has merit, it will most assuredly be dropped within five years. At most. No discussion about the past is allowed - that would embarrass those in power and expose an endless cycle of change - while we move on to the "latest and greatest". And there's an almost Orwellian air to professional development discussions; we must pretend that the old programs never existed. Levin's final conclusions on this topic should be a key lesson for all administrators: spend much more time on implementation than innovation. If he had supported the idea that brand new programs must be supported for at least, say, 8 years, then I would be in full agreement.

Levin's last major point is somewhat more problematic. To be sure, he argues that teachers must be respected and convinced to employ best practices, rather than be used and bullied. I have no problem with that! But I do have a problem with his assumption that there is one best way to accomplish a certain goal (like improving reading scores) or manage a classroom. In my experience, education is not analogous to flying a plane or designing a bridge. I often find that there are many ways to reach a common pedagogical goal or be a successful educator. These different paths often correlate with the many different personalities and temperaments that we find in a school's staff. Unfortunately, those differences are often seen as threats to the innovators, and older teachers (especially) are compelled to withdraw to their classrooms, lest their wisdom and experience provide a path away from the latest changes - and make them a target.

Improvement, Not Innovation, is the Key to Greater Equity from CEA ACE on Vimeo.

Buffett Tells ABC Rich Americans Should Be Paying "A Lot More in Taxes"

Billionaire Warren Buffett has come out and said the equivalent of 2+2=4. Or =666, if you're a neo-liberal hell bent on even more tax cuts.

In a recent interview, Buffett said, “I think that people at the high end -- people like myself -- should be paying a lot more in taxes. We have it better than we’ve ever had it.” In opposition to the trickle-down economics which has pervaded American thinking for decades (and particularly the massive George Bush tax-cut agenda), Buffett responded, "The rich are always going to say that, you know, just give us more money and we’ll go out and spend more and then it will all trickle down to the rest of you. But that has not worked the last 10 years, and I hope the American public is catching on.”

Of course, don't feel too badly for the wealthy. Even the Obama administration is promoting a "compromise". The upcoming tax cuts promised by the Bush Administration will still go through, up to the first $250,000. This means that the poor, working class and middle class will not be able to take full advantage of the proposed tax cut. You guessed it: only the upper middle class and wealthy can fully utilize the benefits.

An analysis of the US economy by Robert Reich

I would encourage you to download this speech by Robert Reich. [Right-click on the link and choose "Save Link As" or "Save Target as".] It's a cogent Keynesian analysis of America's current economic situation, except that it's also a near-perfect Marxian analysis, too, aside from the Keynesian interventionist strategies. Reich's key argument is that inequality is bad for business, and unless America can address this fundamental challenge, all of the secondary problems will be insoluble. The irony is that, in the end, Reich copies much of David Harvey's Marxist analysis of the fundamental contradictions of capital accumulation. The only real difference is that Reich wants to save capitalism, while Harvey has no such allegiance.

One interesting contribution by Reich is his discussion of the "three coping mechanisms" that the average American household has been using over the past 30 years to compensate for the effective decline in wages:

1. moving women into the workforce
2. making men work more overtime (a great source of "improved" US productivity)
3. borrowing money against home equity

Reich asserts that these mechanisms have, up to now, allowed Americans to ignore the problems of inequality. However, these mechanisms are now spent, and it's time American politicians own up to the fundamental problem: the engine of the American economy - the average consumer - is no longer capable of spending the money that makes economic growth possible.

Recognition of a Keynesian Moment

I rarely take a lead editorial from the Vancouver Sun seriously. This Canwest/Postmedia corporate entity is at the center of right-wing propaganda in BC, and is representative of the very conservative outlook from Canada's media generally.

Nevertheless, today's editorial provides a sobering analysis of the American economy and its implications for Canada. It's also a clear (though unstated) reminder that Keynesian economic theory still matters. The editorial admits that the gathering storm clouds of a double-dip American recession are a matter of demand - or lack thereof. There is no supply-side monetarism in the newspaper's argument, primarily because near-zero interest rates have not overcome the massive debts that spring from a consumer society which is also stunningly unequal.

The Vancouver Sun decries the growing evidence of deflation, which is caused by "a drop in aggregate demand. That is clearly the case in the U.S., where consumers have simply stopped spending". And the culprits are not interest rates or its neo-liberal brethren, tax rates. At the center of the problem is a demand-side drop in the expectation of profit: "the drop in demand for goods and services means business has little reason to invest, expand and create jobs". In other words, in a society where the majority of the GDP is controlled by consumers, businesses will not invest in goods, services or productivity enhancements if there is no expectation that consumers will buy these goods and services. Paying less tax is irrelevant if there is no taxable profit.

Keynes, anyone?

Bill Maher recaps the summer

A Review of John Gray's False Dawn

John Gray’s popular critique of globalization and laissez-faire capitalism, False Dawn*, was originally published in 1998. It has enjoyed a resurgence as a “prophetic” account of our current global economic problems, but I think the book is better viewed as an incomplete analysis, and one that is riven with contradictions and equivocations.

Gray’s clearest and most consistent argument is that capitalism, and especially the sort of global laissez-faire capitalism promoted by the United States (i.e. the so-called “Washington consensus”) is not a natural state of being, and did not evolve naturally. On the contrary, laissez-faire capitalism is a politically constructed product, quite unnatural in most human societies and rarely long-lasting. Thus, the free market “that developed in Britain in the mid-nineteenth century did not occur by chance. Nor, contrary to the mythic history propagated by the New Right, did it emerge from a long process of unplanned evolution. It was an artefact of power and statecraft” (p.7). The system was contingent on an extensive and efficient colonial system, a government-led enclosure movement that enshrined private property, and a long-standing (but relatively unique) culture of individualism. On top of these elements, the British government engineered a laissez-faire economy through a number of extraordinary government measures: “The removal of agricultural protection and the establishment of free trade, the reform of the poor laws with the aim of constraining the poor to take work, and the removal of any remaining controls on wages were the three decisive steps in the construction of the free market in mid-nineteenth-century Britain” (p. 11). Indeed, only in mid-nineteenth century Britain, and in Anglo-American countries since the 1980’s, has laissez-faire capitalism been sustained in any meaningful manner. Gray concludes that the promotion of laissez-faire capitalism - an Enlightenment “universal civilization”, according to Gray – is as utopic as Soviet Bolshevism. The promoters of “neo-conservative” capitalism [now called neoliberal] are “as much captivated by the illusion that the historic sources of human conflict can be transcended as the most vulgar Marxist” (p. 102).

So what form of global economic system is likely to develop in the near future? According to Gray, it will be an eclectic mixture of different forms of capitalism, forms which respect local cultures and traditions, and which meet the primary needs of social cohesion and a baseline level of sustenance. Gray believes that the most successful economies will be the mixed economies in Asia. [Can Germany emerge as a successful and pragmatic member of the global economy? His answer (in Chp. 4) is a tortuous yes and no.] Though Gray wants to avoid generalizations about Asiatic economies, he nevertheless generalizes about Asiatic economies: “One of the appeals of ‘Asian values’ is that by adopting a thoroughly instrumental view of economic life they avoid the western obsessions that make economic policy an arena of doctrinal conflict” (p. 192). In comparison to Asian pragmatism, ideologically narrow laissez-faire economies are at a disadvantage: “In the contest between the American free market and the guided capitalisms of East Asia it is the free market that belongs to the past” (p. 131). The United States will continue to advocate for the Washington consensus, but its long-term prospects are dim. Indeed, evidence “of the superior economic growth, savings rates, educational standards and family stability of countries that have repudiated the American model will be repressed, denied and resisted indefatigably. To admit this evidence would be to confront the social costs of the American free market” (p. 131). America, in other words, will retard the successful acceptance of a framework “in which governments can protect what is distinctive and valuable in their economic cultures” (p. 204). Because of this, Gray is enormously pessimistic about the future of the global economy.

There are two profound problems with Gray’s analysis. The first is that inequality is only briefly discussed (see pp. 32, 108 and 114 ff.). For Gray, inequality is a social problem that leads to legitimacy issues for Western governments. Yet, as we’ve seen from the analyses of David Harvey, inequality is more than merely a political steering problem. Inequality is at the core of the housing bubble and the exotic debt instruments that have been used to create demand where real wealth does not exist. The wealth and income inequalities within states, and the growing trade imbalances between states, are simply not a major part of Gray's Tory worldview. In this manner, Gray’s book is not prophetic as one reviewer has stated.

The second major problem with Gray’s book is that he has two meanings of “anarchic” economies. The first meaning is clear enough: laissez-faire capitalism is enormously destructive of both political intervention (via Keynesianism and social democracy) and traditional social structures (so revered by conservatives). There is no longer any job security when global capital and trade flow freely across borders. And, ironically, the” free market seems set to achieve what socialism was never able to accomplish – a euthanasia of bourgeois life” (p. 72). In addition to social destruction, laissez-faire capitalism hollows out “the business corporation as a social institution” (ibid). Pensions and other long-term guarantees are no longer the responsibility of corporations, and the prospect of a life-long career seems an archaic relic. Finally, the ascendancy of financial capitalism in the West has meant that the “inherent instability of anarchic [emphasis added] global markets has been enhanced by the growth of an enormous, highly leveraged virtual economy in which currencies are traded for short-term profits” (ibid). In short, the laissez-faire project of reducing all relationships to self-interested monetary transactions seems at hand.

On the other hand, Gray also uses “anarchic” to refer to a period of globalization when the laissez-faire experiment has failed: “Every economy is being transformed as technologies are imitated, absorbed and adapted. No country can insulate itself from this wave of creative destruction. And the result is not a universal free market but an anarchy [emphases added] of sovereign states, rival capitalisms and stateless zones” (p. 194). Technological interdependence, environmental degradation and resource scarcity will render the current set of national and international institutions powerless to stop increased strategic conflict.

It’s unclear whether Gray is aware of the two meanings of anarchy, but he occasionally offers a synthesis: “Worldwide mobility of capital and production triggers a ‘race to the bottom’, in which more humane capitalist economies are compelled to deregulate and trim back taxes and welfare provision. In this new rivalry all the varieties of capitalism that competed during the post-war period are mutating and metamorphosing” (p. 218). Gray appears to be arguing that laissez-faire capitalism causes its successor (post- laissez-faire capitalism). This might actually make sense, but the transition is never fully explained, and it does not reflect his other argument that the Asian and German economies will resist laissez-faire capitalism. To the extent that they are successful in resisting the transformative nature of capitalism, then neither form of anarchy appears inevitable. Of course, it could be that the second meaning - of technology and resource-driven global anarchy - is really just moving the laissez-faire project to its most extreme form. The two anarchies are not conceptually distinct nor successive stages; they are part of the same process. In his original conclusion, Gray seems to be pointing that way, even if it contradicts his earlier discussions:

“The spread of new technologies throughout the world [Gray’s second form of global anarchy] is not working to advance human freedom. Instead it has resulted in the emancipation of market forces from social and political control [laissez-faire capitalism]. By allowing that freedom to world markets we ensure that the age of globalization will be remembered as another turn in the history of servitude.” (p. 208)

This confusion and equivocation is seen throughout the book, and particularly in its conclusions. To be sure, Gray’s book does have some strong elements. The arguments about the artificiality of market capitalism and America’s fateful intransigence are consistent and well argued. Nevertheless, the inconsistencies betray his argument. Does laissez-faire capitalism cause or succumb to a new form of global anarchy? Are they really the same thing? Will the Asian economies resist the demands of laissez-faire capitalism? Gray believes they will, but Asia (as Gray admits) seems weakened compared to the West after 1997. And, finally, if the Asian countries do resist laissez-faire capitalism, isn’t their pragmatism likely to overcome global anarchy? If so, Gray’s Hobbesian pessimism may derive from the wrong problems.

..................

*Gray, John. False Dawn, 2009 Edition ed. London: Granta, 2009. Print.

Measuring our Debt

One of the most important but confusing economic benchmarks is the level of debt carried by a nation. Is it in constant or inflated dollars? How do we account for population growth and inflation? Adding to the complexity is the different levels of government in a country like Canada. Probably the best way of measuring debt is as a percentage of gross national product. In an indirect way, it accommodates natural growth (like population and inflation), the health of our economy, and the capacity to carry debt at any given time.

The following are two interesting graphs that help explain Canada's debt, as reported by The Globe and Mail on Aug. 3, 2010:

One interesting thing to note from the second graph is that Canada's total debt load looks as bad as the United States. In a certain sense it's true; debt is debt, after all, and all citizens must eventually pay up. But constitutionally speaking, Canada's federal government is not responsible for provincial debt, while most of the 50 states in the United States cannot run long-term deficits. So, the American federal government owns most of America's debt, while Canada's federal government is, as of 2006, only responsible for 63% of Canada's overall government debt. Our federal government, in other words, doesn't have the same debt burden as the American national government, or even the British government (given its unitary structure). Of course, the current federal government in Canada is also benefiting from Paul Martin's reign as Finance Minister during which he passed "the buck (but not the bucks) on to lower levels of government".