Our Economic Turn From Shared Sacrifice to Social Darwinism

Paul KrugmanYesterday, Paul Krugman wrote, Why Corporations Might Not Mind Moderate Depression. What he’s trying to get at in a deductive way is that there might be a level of unemployment that maximizes profits for companies. Under normally circumstances, companies would want a high customer demand. But that requires a lot of employees. And if the company requires a lot of employees, they will probably have to pay their employees more. But if demand is less because unemployment is high, they may be selling less, but this could be offset by the lower wages they pay.

He notes that since 2009, while wages have remained fairly stagnant, company profits have almost doubled. He admits that a lot of factors go into this and that it doesn’t show that there is such a depressed economy that maximizes company profits. But still, I don’t buy it. In general, direct labor costs for a company are low. For example, for your average GM car, only about 5% of the retail price went to wages for GM employees. Of course, there are a lot more wages: the salesmen and all the people who get paid to make the parts that GM buys. But you get the idea. For any given company, wages aren’t that big an issue.

But we’ll see. There is no doubt that there may in fact be some level of unemployment that does maximize profits for the corporate industry generally. There is also no doubt that the way the Federal Reserve operates, it pushes for exactly this kind of situation. This is why Ben Bernanke wasn’t that concerned when unemployment was at 8% and inflation was at 2%. That’s a very pro-business situation.

What bothers me more is that employers don’t have that much to gain by keeping employee wages at rock bottom. Investing in new technology and employee training is far more important if the employers want to make a lot of money. But we constantly hear them grumbling about labor costs. (But don’t be confused: lack of demand is the biggest complaint of business owners—now and pretty much forever.) So what’s with that? I think that’s a class thing. I’ve watched time and again as employers allow great employees to leave rather than trying to entice them to stay.

Employers don’t want to ever admit that they are part of the company. They want to think that they are the company. That’s what was behind all that screaming about, “I did build that.” It was all them: the owners. It wasn’t something they did inside a social structure that allowed communities with things like roads. And it sure wasn’t something they did with the help of their workforce. (Interestingly, employers claim that employers aren’t part of the building process because they were paid. This makes no sense, because the business owner was also paid for building the business. As with most “conservative” thinking, it is not deep.)

I think the biggest thing that is different between 1945-1975 and 1976-present, is that the post-war period made people think they were working together. By the late 70s, we had forgotten that we are all in this together and the era of “Greed Is Good” started. And that’s where we are today. I don’t know what we are going to do about it, either. If the attacks on 9/11 caused our leaders to think that tax cuts for the rich and welfare cuts for the poor was the way forward, I’m not sure there is any hope.

As always: the very least we can do is vote.

Elisha Cook and Henry Miller

Elisha Cook JrYou wouldn’t believe the day I’ve had. I’m exhausted and angry. I doubt I will write more today after this very late birthday post.

On this day in 1891, the great novelist Henry Miller was born. I’ve never especially liked his work, but he really did revolutionize the novel. Not that anyone really followed in his footsteps—maybe the Beats and Burroughs. I think a lot could be done with his approach to the novel without his various annoying habits and obsessions. I’ve often thought that this approach might work well for me. Anyway, he’s an important guy and well worth reading. His novels were apparently banned in the United States until 1961, although I really can’t tell you why. They seem tame even by the standards of the 1950s. But America has never been as free a nation as people have claimed. And that is especially true from about 1820 onward.

Other birthdays: English poet Thomas Gray (1716); science writer Mary Somerville (1780); inventor Charles Babbage (1791); American novelist E D E N Southworth (1819); Irish poet Dion Boucicault (1820); French playwright Rene Bazin (1853); French cityscape painter Maurice Utrillo (1883); novelist Jean Toomer (1894); Russian painter Anatoli Lvovich Kaplan (1902); comedian Steve Allen (1921); comedian Alan King (1927); music producer and possible murderer Phil Spector (74); and comedian Tony Rosato (59).

The day, however, belongs to one of my favorite character actors Elisha Cook Jr who was born on this day in 1903. I liked him most in Shane and House on Haunted Hill. He’s also great in The Big Sleep. He had a great and varied career. If you were going to be an actor, his is the kind of career you would want to have.

Happy birthday Elisha Cook Jr!

Conservative and Liberal Cover the Same Event; Guess Which One Lies?

New Gingrich

I just came upon a really good example of what is wrong with the right-wing media. Actually, it is the second one I saw today, but I left the other one because although it was a complete mess reported as a great conservative victory, it was too complicated to describe. This one is clear and simple.

Newt Gingrich and Robert Reich were both on This Week With George Stephanopoulos. They were discussing the war on poverty and Reich was arguing that things worked well at the beginning but that it has been basically killed by the Republicans.

Gingrich responded, “This is baloney… Every major city which is a center of poverty is run by Democrats. Every major city.”

As far as the right-wing publication Down Trend was concerned, that was the end of the conversation, Gingrich Destroys Reich: “Every Major City Which Is a Center of Poverty Is Run by Democrats.” All the article added was, “Ouch!” (Italics in the original.)

Of course, that wasn’t the end of the debate. For one thing, anyone who knows Robert Reich knows he is too much a fighter to let that stand. For another, what are we to believe? That Reich crawled away to lick his wounds? Even the lamest of debaters would have some counter argument.

You had to read The Raw Story or another liberal or mainstream publication to get the whole story. In Robert Reich Hammers Newt Gingrich After He Blames Democrats for Increasing Poverty, we get Reich’s response:

First of all, [former New York City Mayor] Michael Bloomberg is not a Democrat,” Reich shot back. “What’s happening in America is happening all over America. And it is happening in a way that has to do with the fact that wages, median wages, are going nowhere and rents are going up. And there’s absolutely no response in Washington or elsewhere.”

“Newt, I’m surprised you are not taking responsibility here,” he concluded.

The conservative publication presented the video, cutting it at exactly the point to make it look like Gingrich had made his great rebuttal — Ouch! The Raw Story showed the segment to its end.

It did give Reich the last word, but that’s just because of where things end. I don’t doubt that Gingrich has a response. But Reich has already shown him to be spewing lies. I suspect that we would get more of that if he continued. [Note: both the videos have be removed. -FM]

This is a big part of what is wrong with American politics. The right is given “news” that is intentionally deceptive.

There is no doubt that Brian Carey who wrote the Down Trend article knows that he’s deceiving. To him, it is just propaganda for the cause. There is a place for that. But it should not be presented as journalism. In this way, liberals are far more ethical. As a result, we get a citizenry who are especially ignorant on the right. That’s a recipe for disaster.

I really don’t know how these right-wing hacks live with themselves. My job is very easy. Most liberal policies really are the best in a practical sense. They are also generally popular (at least until the conservative PR campaigns begin). So I have no trouble calling out bad liberal policy.

Liberalism is overflowing with good ideas, so we don’t have to push every idea that comes along the way that conservatives do. It must be really hard to be a conservative political analyst. I feel for them, but what they do is evil.

If our culture were working properly (and it is in as bad a shape as our politics), such people would be ostracized. And that would go a long way toward fixing the problem.