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Posts tagged: economics

Poverty isn’t just about money

Klint Finley

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

See also:

Time Wars

The High Cost of Poverty

The Cognitive Burden of Poverty

The problem isn’t technology, it’s exploitative business models

Klint Finley

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

See also:

Marc Andreessen’s Crude and Nuanced Tech Cynicism

Rusty Foster on Andreessen

Thomas Frank Interviews David Graeber

Klint Finley

Salon is running a great new interview with David Graeber by Thomas Frank. Here are some highlights (Graeber’s words):

Well, radical elements in the labor movement began embracing such visions from quite early on. After the successful campaigns for the eight-hour day in the 1880s, people immediately started thinking, can we move this to seven, six, or less. Paul Lafargue, Marx’s son-in-law, and author of “The Right to Be Lazy,” was already calling for something along those lines in 1883. I have a Wobbly T-shirt with a turn-of-the-century style design that says “join the IWW for a new dawn,” it has a sun rising over the rooftops, and on the sun is written, “four-day week, four-hour day.” […]

In the late 19th and early 20th centuries, one of the great divisions between anarcho-syndicalist unions, and socialist unions, was that the latter were always asking for higher wages, and the anarchists were asking for less hours. That’s why the anarchists were so entangled in struggles for the eight-hour day. It’s as if the socialists were essentially buying into the notion that work is a virtue, and consumerism is good, but it should all be managed democratically, while the anarchists were saying, no, the whole deal—that we work more and more for more and more stuff—is rotten from the get-go. […]

Call it the revolt of the caring classes. Because, after all, the working classes have always been the caring classes really. I say this as a person of working class background myself. Not only are almost all actual caregivers (not to mention caretakers!) working class, but people of such backgrounds always tend to see themselves as the sort of people who actively care about their neighbors and communities, and value such social commitments far beyond material advantage. It’s just our obsession with certain very specific forms of rather macho male labor—factory workers, truck-drivers, that sort of thing—which then becomes the paradigm of all labor in our imaginations; that blinds us to the fact that the bulk of working class people have always been engaged in caring labor of one sort or another. So I think we need to start by redefining labor itself, maybe, start with classic “women’s work,” nurturing children, looking after things, as the paradigm for labor itself and then it will be much harder to be confused about what’s really valuable and what isn’t.

Full Story: Salon: David Graeber explains why the more your job helps others, the less you get paid

See also:

On the Phenomenon of Bullshit Jobs

How the “Do What You Love” Mantra Enables Exploitation

An Army of Altruists

How Did Democracy Become a Good Thing?

Klint Finley

Interesting contrarian take on the rise of contemporary democracy:

The story of modern democracy is one in which democracy lost its social and economic content at the very moment it gained political ascendancy.

What happened was the separation of the “economic” and the “political” into separate spheres. It was only under the conditions of this separation that a widely dispersed political power, through the universal suffrage, began to appear possible. Power relations, which had hitherto been fundamentally political issues, of lordship and so on—like who owed what to whom, and who could do what to whom, and who could make whom do what they wanted—were transformed into fundamentally economic issues, having to to do with ownership and contract. So if you want to know why democracy—defined basically as a diffusion of formal political power among the people—went from being bad to good, from being not only impossible but undesirable to not only desirable but possible, one way of answering the question is actually extremely straightforward: the real power wasn’t in politics any more; it was somewhere else, in the newly separate sphere of the economy.

Full Story: The Junto: How Democracy Became a Good Thing

I don’t think it’s really fair to say that power shifted out of the political, but I think there’s a case to be made that capital has effectively insulated itself from the democratic process within liberal democracies, and has done so for a very long time.

The Minimum Wage Worker Strikes Back

Klint Finley

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

Previously:

New York City Fast Food Workers Go On Strike, Demand $15 An Hour

The Alt-Labor Movement: Low-wage workers fight to make bad jobs better

Mutation Vectors 5/10/2014

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.

Journalism

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:

Music

Fiction

Strip Her” by Amanda Sledz.

The 10 Stealth Trends That Rule the World Today

Klint Finley

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.

Full Story: The Atlantic: The 10 Stealth Economic Trends That Rule the World Today

(Thanks Tim)

The Alt-Labor Movement: Low-wage workers fight to make bad jobs better

Klint Finley

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: 

Low-wage workers fight to make bad jobs better.

(via Metafilter)

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.

Sociologist Zygmunt Bauman Talks About the Precariat

Klint Finley

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)

(via [m])

See Also:

The Precariat – The new dangerous class

Temp Worker Nation: If You Do Get Hired, It Might Not Be for Long

Time Wars

The Gentrification of the Left

Klint Finley

Mike Wayne and Deirdre O’Neill on the friction between the “middle class” and the “working class”:

The whole concept of the 99% against the 1% is a powerful way of both focusing attention on that tiny elite who own and control the major resources globally, and of repressing the class divisions within the 99%. The 99%, the slogan of the social movements dominated by the middle class, projects a unity of the majority which has yet to be built, and which cannot in fact be built unless we first acknowledge the real differences and divisions between the middle and working classes within the 99%.

The classic Marxist view that the working class is defined by the fact that it sells its labour power to the owners of the means of production is also problematic for similar reasons. Since Marx’s time there has been an enormous expansion of the professional middle class, especially in the public sector, who in terms of income and other cultural-educational benefits are differentiated from the working class. Typically many of these professional jobs involve some sort of controlling position over the working class which further problematises the notion that the middle class can be simply incorporated into the working class. True, a number of middle class professions, such as teaching have been subject to ‘proletarianisation’ and the middle class can be on the receiving end of employer demands just as the working class usually are. Globalised capitalism is likely to make these tendencies impact further on the middle class, pushing towards a de-differentiation between the working and middle class. Nevertheless the Marxist notion that virtually everyone bar senior managers and bosses are working class points forward to a political project that has to be constituted rather than assumed as an empirical fact in the here and now.

Full Story: New Left Project: The Gentrification of the Left

(via Paul Graham Raven)