Posts tagged: economics
Maria Konnikova writes:
When we think of poverty, we tend to think about money in isolation: How much does she earn? Is that above or below the poverty line? But the financial part of the equation may not be the single most important factor. “The biggest mistake we make about scarcity,” Sendhil Mullainathan, an economist at Harvard who is a co-author of the book “Scarcity: Why Having Too Little Means So Much,” tells me, “is we view it as a physical phenomenon. It’s not.”
“There are three types of poverty,” he says. “There’s money poverty, there’s time poverty, and there’s bandwidth poverty.” The first is the type we typically associate with the word. The second occurs when the time debt of the sort I incurred starts to pile up.
And the third is the type of attention shortage that is fed by the other two: If I’m focused on the immediate deadline, I don’t have the cognitive resources to spend on mundane tasks or later deadlines. If I’m short on money, I can’t stop thinking about today’s expenses — never mind those in the future. In both cases, I end up making decisions that leave me worse off because I lack the ability to focus properly on anything other than what’s staring me in the face right now, at this exact moment.
Full Story: New York Times: No Money, No Time
Former Twitter engineer and Simple co-founder Alex Payne writes in response to yet another rant by venture capitalist Marc Andreesen:
We could go back and forth all day on what exactly defines technological change – I certainly have before. But what labor wants is self-determination, not a slowing of technological change. Taxi drivers protesting Uber aren’t saying that they want apps out of their cabs. They want leverage to negotiate wages and working conditions so they aren’t barely scraping by. The pushback is on exploitative business models, not technology.
“Let markets work”, you say, “so that capital and labor can rapidly reallocate to create new fields and jobs.” Well, we’re three decades into an era of systemic deregulation and financialization. The result? Global recession, lingering structural unemployment, and an accumulation of capital at the top of the economic pyramid. In this climate, capital has indeed “rapidly reallocated” … into hard-to-tax, hard-to-regulate asset classes like fine art. Small business loans are still crunched and austerity reigns while tens of billions in corporate profits sit in off-shore tax shelters.
The “severe macroeconomic down cycle, the credit crisis, deleveraging, and the liquidity trap” that you mention in passing? We “let markets work”, and that’s what we got in return. It’s been a failed experiment for everyone but the 1%. Dismissing “the crisis of inequality” as just a “pessimistic economic theory” has not been, historically, a move that’s gone well for aristocracy.
Full Story: Alex Payne: Dear Marc Andreessen
Sarah Kendzior writes:
Jenina dropped out of nursing school after her mother lost her job, because she needed the tuition money to pay bills. Her income from McDonald’s, where she started working as a high school senior, helps support her mother and younger sister. Patrick’s Chipotle income helps support his mother, a makeup artist who has struggled to find steady work since the recession. Krystal’s Taco Bell income helps support her son; her sister, who lives with her and works at Jack in the Box; and now, her newborn daughter.
Every worker I interview is supporting someone: an unemployed parent, a child, a sibling, a friend. Most of their friends and family members work in fast food or other service industries. Everyone is in their twenties or older. All but one is African-American.
They dream of different jobs. The women want to be nurses, the men want to work in the automotive or culinary industries. But no one can pay for training when they cannot save for day to day, much less for the future.
As a result, fast food workers are turning to activism: not out of ideological motives, but because overturning the economic system seems more feasible than purchasing the credentials for a new career.
Full Story: Medium: The Minimum Wage Worker Strikes Back
I’m in Des Moines this weekend, writing this over bad hotel coffee and posting via hotel wifi, so this is going to be a quick one.
This week I sounded off on Twitter about how journalism and blogging has colonized my brain, making it difficult for me to tell what I’m really interested in anymore. I think it came off more self-pitying than I meant, when really I just find it sort of puzzling. It’s probably a mistake to even think in terms of what I “really” want to read. But here’s an example: was I interested in this article on DIY transcranial direct current stimulation because I really care about the topic, or because I thought immediately “that’s a perfect story for Technoccult”?
I’d love to take a few months off work and blogging and just see where my interests gravitate if I’m not trying to cover particular beats for particular audiences. But that’s not gonna happen.
All that said, I did find some time to catch-up on some long reads while stranded at DFW for like eight hours yesterday. I’m pretty sure I found all of this interesting:
Interesting. Here are the trends, the full article has more details:
1) Old Trend: Expensive solar, surviving only on subsidies.
New Trend: Cheap solar, disrupting old industries.
2. Old Trend: The Latinization of America.
New Trend: The Asiafication of America.
3. Old Trend: The Chinese population bomb.
New Trend: The Chinese population bust.
4. Old Trend: Soaring U.S. CO2 emissions.
New Trend: Plummeting U.S. CO2 emissions.
5. Old Trend: College is becoming more and more important.
New Trend: College is no more important than before.
6. Old Trend: Americans drive more and more.
New Trend: Americans drive less and less.
7. Old Trend: Skyrocketing health care costs, skyrocketing deficits.
New Trend: Creeping health care costs, creeping deficits.
8. Old Trend: The BRICs are conquering the world.
New Trend: China is the only BRIC in the wall.
9. Old Trend: Active management rules the finance universe.
New Trend: Passive investment rules the finance universe.
10) Old Trend: China is buying up all our debt.
New Trend: China is selling off our debt.
Nicole Aschoff on the “Alt-Labor” movement, such as the Walmart and fast food strikes:
University of Colorado-Denver management professor Wayne Cascio has shown, through a comparison of Walmart/Sam’s Club and Costco, that low wages are not necessary for high profits and productivity. Costco employees average roughly $35, 000 per year ($17 per hour), while Sam’s Club workers average roughly $21, 000 per year ($10 per hour) and Walmart workers earn an average of less than $9 an hour. Costco also provides it workers predictable, full-time work and health benefits. However, contrary to popular assumptions, Costco actually scores higher in relative financial and operating performance than Walmart. Its stores are more profitable and more productive, and its customers and employees are happier.
Costco is not exceptional. Zeynep Ton, of MIT’s Sloan School of Management, has studied retail operations for a decade and argues that “the presumed trade-off between investment in employees and low prices can be broken.” “High-road” employers like Trader Joe’s, Wegmans, and the Container Store have all found ways to make high profits and provide decent jobs. Catherine Ruetschlin’s research shows that a modest wage increase—bumping up the average annual salary of Walmart or Target workers to $25,000—would barely make a dent in big retailers’ bottom line, costing them the equivalent of about 1% of total sales. Even if a company like Walmart passed on half the cost of the increase to customers, the average customer would pay roughly $17 more per year, or about 15 cents per shopping visit. And, considering most low-wage workers spend nearly their entire paycheck on necessities, the industry would see a boost in sales ($4 billion to $5 billion more per year) to its own workers. Fast-food companies are highly profitable. McDonald’s alone saw profits more than double between 2007 and 2011. They could easily send some of these profits downstream to franchise owners and workers.
So why do most big retailers and fast-food chains insist on a bad-jobs or “low road” model? There are a few reasons. MIT’s Ton argues that labor costs are a large, controllable expense, and retailers generally view them as a “cost-driver” rather than a “sales-driver.” Store-level managers are pressured by higher-ups to control labor costs as a percentage of weekly or monthly sales. And because store managers have no control over sales (or merchandise mix, store layout, prices, etc.) they respond to pressure from above by cutting employment or forcing workers to work off-the-clock when sales dip. Another factor is financialization—the increasing dominance of finance in the economy. Firms feel a lot of pressure from Wall Street to be a Walmart and not a Costco. As Gerald Davis has argued, the rise of finance and the dominance of “shareholder value” rhetoric have resulted in an emphasis on short-term profits that register in increased share prices and big CEO bonuses.
Full Story: Dollars and Sense:
This is encouraging, but the possibility of fast food companies switching to “less-costly, automated alternatives like touch-screen ordering and payment devices” is not an idle threat. I’ve seen something like this setup in the food court at the JFK airport. But as I wrote earlier, cultural issues could stop this from becoming widespread — it’s not clear that customers will settle for robots and touch screens over human beings. But I sure wouldn’t rule it out.
Zygmunt Bauman interviewed on the subject of the “precariat”:
The notion of precariat seems quite general and vague to many people. Who are therefore the precarians?
The “general” and “vague” character of the notion of precariat bothers people accustomed to the division of society into “classes” and, in particular, to the phenomenon of “proletariat” or its idea, which the concept of “precariat” should, in my conviction (but not only mine), replace in the analysis of social divisions. In comparison to its successor, proletariat appears indeed almost as an emblem of the “specific” and “concrete”…
How easy it was, when compared to precariat, to determine its content and limits… But the fluidity of composition is one of the features defining the phenomenon of precarity; one cannot get rid of that fluidity without making the notion of “precariat” analytically useless. […]
What issues do, in your opinion, differentiate precariat most distinctly from proletariat? To what extent can one connect the two notions? And finally: is precariat a social class?
Well, I have serious doubts about that. I would prefer to call precariat a social category. The mere similarity of situation is not enough to transform an aggregate of individuals bearing similar characteristics into a “class” – that is, into an integrated group willing to pursue common interests as well as proceeding to integrate and coordinate actions stemming from that will. If workplaces of the times of “solid modernity” were, irrespective of the kind of products manufactured, also the factories of social solidarity, liquid-modern workplaces are, irrespective of their business objectives, the producers of mutual suspicion and competitiveness.
Full Story: r-evolutions: Far Away from Solid Modernity (PDF)