Read the keystone essay: What Is Market Capitalism and Why Do We Need to Understand It?
The US Economy
The US economy is still the largest in he world and it makes us one of the richest nations on earth. We think of it as the most dynamic, innovative, technologically advanced in the world. However, the trends of the recent decades show that there is much to be concerned about.
The results are extremely tilted in the favor of the top 10% and even then to the top 1% really. Everyone else has not had a pay raise in forty years. We are well beyond the transition from an economy that was dominated by manufacturing, making things, to a services economy with an outsized chunk of that concentrated in the super profits of the financial sector. Throughout the economy the educational requirements have changed from a simple high school diploma to a college degree and higher. Automation and process improvements have driven enormous increase in labor productivity but very little to none of the benefits have remained available to the bottom 905 of the population.
The focus of this delusion, the US economy, is on understanding the trends and seeking suggestions for policies that could make the results more equitably distributed and the externalized social and environmental costs more agreeable.
Posts about the US Economy
monopoly, antitrust, trust, economy, US economy, Zephyr Teachout, Break’em Up, competitive markets, monopoly market, economic concentration, big tech, chickenization
If you are struggling to get your head around how racism works you will probably find it helpful to have a general framework as a guide. This one hour lecture from 2017 features an overview by Brown University Professor Tricia Rose of the structure of racism and how it works in the US (approx. 29 minutes). Then follows a case study by Samuel Rosen, senior researcher, How Structural Racism Works Project at Brown, of how —>> read more –>>
Tightrope provides a well-written description of the American crisis through personal stories and hard data. Unfortunately it falls flat in its call for action.
The rich and corporations win even during a global pandemic.
Perhaps the ceaseless clamoring for our attention by marketers is reaching its final stage of saturation in which our brains simply shut down and go on attention strike.
Essay explores the grim reality of life in one small corner of America within the broader landscape of the bottom 90%.
In an area with dozens of empty store fronts and several hundred thousand sq ft of empty space, a new strip mall is approved for construction. A rational market??
Nobel Prize winners Duflo and Bannerjee take on idealized views of markets. They target the role of financial incentives, markets as self-correcting, efficient and ethically sound.
Robert Reich is continuing his series of brief YouTube videos on progressive view of the economy. This is a good introduction to the arguments for re-invigorating our protections against monopolies. However, the problem is much more widespread than just the high tech industry. We’ve written about this broader phenomenon in The Monopolization of America. Here is one chart from that post. Dominance of Corporate Behemoths – NYTimes – 11/25/2108 The concentration of market power is —>> read more –>>
It’s Time to Break Up Facebook, by Chris Hughes, the co-founder of Facebook is very thorough in describing the current monopoly behavior of Facebook, the deleterious effects on competition and vigor in the economy of monopolies, and a great introduction to the history of anti-trust movements and legislation in the US.
Recently Noted – Robert Reich: Socialism for the Rich, Capitalism for the Rest – a new video presentation
Robert Reich provides us with an accessible, brief analysis of why the rich and corporations are feasting while the rest of us experience the rigors, oppression, and discipline of the capitalist marketplace. Only a bit over 4 minutes long.
In our continuing effort to find varied sources to illustrate the power of marketing and the costs of unregulated capitalism we return to John Oliver’s show Last Week Tonight for his segment on sugar in food. The food industry continues to put sugar in nearly every processed food and fights efforts to reveal how much of this dangerous additive is in each bite.
We have written earlier (for example our article The Monopolization of America) about the increasing concentration of market power In the hands of just a few corporations. This is a phenomenon occurring throughout the US economy (really more broadly across the globe). Here is an 11 minute review of the history and current state of monopolies in our economy.
“Women are almost half of the workforce. They are the sole or co-breadwinner in half of American families with children. They receive more college and graduate degrees than men. Yet, on average, women continue to earn considerably less than men. In 2017, female full-time, year-round workers made only 80.5 cents for every dollar earned by men, a gender wage gap of 20 percent.”
Adam Smith discussed the harms caused by monopolies1 in the frequently, ritualistically cited book, The Wealth of Nations2. The progressive politics of the end of the 19th century and into the beginning of the 20th was marked by a deep reaction to the monopolistic practices of large companies then. This led to the ant-trust legislation that remains the cornerstone of the Federal government’s efforts to protect competition in the marketplace: Sherman Act of 1890, the —>> read more –>>
- A note about the term “monopoly”: Economists have long acknowledged that the literal meaning of monopoly, a company having exclusive control over a commodity or service, is not a useful representation of how capitalist economies actually work. In practice when a small number of firms, say 3 or 4, control roughly 50% or more of a market, they can and do act to control prices, restrain trade, and force weaker competitors out of the market. As John Oliver notes we can experience this by simply booking an airline flight. Southwest, Delta, United, and American control 69% of the domestic market. This concentration is amplified by the hub and spoke system that assures that in many localities there is no choice but a single provider of air services. This is precisely why we need to reinvigorate the existing anti-trust laws and protect consumers from the gouging and abuse we now experience every time we fly.
- Smith, Adam. An Inquiry into the Nature and Causes of the Wealth of Nations.
- chart borrowed from: Leonhardt, David. “Opinion | The Monopolization of America.” The New York Times, November 26, 2018, sec. Opinion. https://www.nytimes.com/2018/11/25/opinion/monopolies-in-the-us.html.
Corporate concentration of income and wealth are core features of capitalism. From its earliest cheerleaders like Adam Smith, the drive for corporations to get ever larger and in the doing drive their competitors out of the market was noted and warned against. John Oliver provides a thorough and amusing introduction.
The new digital economy is displaying the same drive to concentration, monopolies and oligopolies, that capitalism has always displayed. Facebook, Google, Amazon, Apple, and Microsoft are just a new face of the predatory monopolists of the Rockefeller Standard Oil age.
Shifts to contract work, losses in jobs due to automation and robots, growth in poorly paid occupations, low participation rates, healthcare and retirement tied to full-time jobs, and extremely unequal gains in income for the top 10% characterize jobs in our economy. Something radical needs to be done. Republicans are trickling, Democrats cautious, neither addresses the big changes underway.
UPDATE: IBM does blockchain….Cryptocurrencies and blockchain technologies are subject to the same control by the rich and corporations as our existing financial and business sectors. These technologies are embedded in the socio-economic structures of capitalism. Concentrations of power dominate the existing capitalist world and they will dominate these new “disruptive” technology entrants.
A Note on Jobs & Unemployment Original publication date – 12/27/2016; Revised – 12/31/2017 As the presidential campaign of 2016 fades away and the Trump Era begins, we find a national scene without any real discussion of the facts of jobs and unemployment and what the future might bring. Trump and others talk about bringing manufacturing back to the US. No plan, plausible or otherwise, has ever been mentioned for how to accomplish this. The —>> read more –>>
- To be sure the US rank amongst steel producers has declined significantly with most of the world's steel now being produced in Asia
- Allan Collard-Wexler and Jan De Loecker, “Reallocation and Technology: Evidence from the U.S. Steel Industry,” Working Paper National Bureau of Economic Research, January 2013, http://www.nber.org/papers/w18739.
- Jane Wakefield, “Foxconn Replaces ‘60,000 Factory Workers with Robots,’ BBC News, May 25, 2016, sec. Technology, http://www.bbc.com/news/technology-36376966
- Angel Gonzalez, “Amazon Unveils Smart Convenience Store sans Checkouts, Cashiers,” The Seattle Times, December 5, 2016, http://www.seattletimes.com/business/amazon/amazoncom-unveils-self-driving-brick-and-mortar-convenience-store/
- Brick and mortar retail stores have sales per employee between a 1/4 and a 1/3 of Amazon's performance.
- Thanks to Elizabeth Kolbert, “Our Automated Future,” The New Yorker, http://www.newyorker.com/magazine/2016/12/19/our-automated-future and Daron Acemoglu and David Autor, “Skills, Tasks and Technologies: Implications for Employment and Earnings,” Working Paper (National Bureau of Economic Research, June 2010), http://www.nber.org/papers/w16082.
At a time when the Republicans are transferring income and wealth to the rich and corporations over 40 million Americans fall below the official poverty line.
Republicans Create Bigger Deficits Then Blame The Entitled Poor. Cuts to social programs coming to fix the Republican created deficit problem.
Inequality in wealth and income is a continuing global crisis. The World Inequality Report 2018 defines the problem based on wealth ownership and the transfer of public wealth into private hands. Their are solutions but they require political organization and will.
Otto Budweiser beer delivery The shape of jobs in the US and around the world it’s changing rapidly. On 11/5/2017 NBC News reported: Self-driving trucks One year ago this week a truck rolled into history as it traveled from a Colorado brewing plant to a warehouse 120 miles away carrying 45,000 cans of Budweiser beer. The early morning run was done using a truck developed by a start-up called Otto, now an Uber subsidiary. Though there —>> read more –>>
We are hearing from Republicans that American corporate tax rates are the highest in the world. The tax rate on the books is in fact higher than most. But, the amount of taxes paid by American corporations is not. It is inline with other wealthy countries.
Trump and Republicans (and some Democrats) puff up the return of well-paid manufacturing jobs and toss about ideas that thirty years of globalization can be reversed by renegotiating NAFTA and other trade agreements. All the while one of the most important factors in the disappearance of jobs, automation and robots are taking away jobs in plain view. The implications for the future of jobs seems daunting to minimize the impacts. Our political system is completely —>> read more –>>
- Neiswanger, Robbie. “PHOTOS/VIDEO: Robots to Work in 50 Wal-Marts, Including Several in Arkansas.” Arkansas Online. Accessed October 30, 2017. http://www.arkansasonline.com/news/2017/oct/26/robots-to-work-in-50-wal-marts-20171026/.
- Santens, Scott. “The Real Story of Automation Beginning with One Simple Chart.” Medium (blog), October 24, 2017. https://medium.com/basic-income/the-real-story-of-automation-beginning-with-one-simple-chart-8b95f9bad71b.
Report from Economic Innovation Group shows that US economy is becoming less dynamic and more focused around a few geographic regions. Recovery from Great 2008-09 Recession accelerated this process.
The impact of globalization on the US economy has been mostly cast by the media and politicians in light of the disappearance of many manufacturing jobs and the swarms of cheap products imported to fill our stores. We should not think that just because we invented the internet and most of its prominent toys that hi-tech jobs are immune from the same search for low wages by corporate America. We need to remodel our thinking —>> read more –>>
- ”IBM Now Has More Employees in India Than in the U.S.” by Vinod Goel 9/28/2017 NYTimes. https://www.nytimes.com/2017/09/28/technology/ibm-india.html
It is widely known that the bottom 80% of the US population has been stuck in neutral or gone backwards in terms of income and wealth over the last 45 years. But even this woeful state of affairs is not distributed evenly across the country. A new analysis of the vitality of US communities by the Economic Innovation Group describes how 52 million (17% of the population) Americans live in “distressed” communities whose trajectories in terms —>> read more –>>
- “2017 Distressed Communities Index.” Economic Innovation Group. Accessed September 29, 2017. http://eig.org/dci.
- The report actually groups communities as follows: Prosperous, comfortable, mid-tier, at risk, and distressed.
- all data and graphs from the DCI report
- https://www.nytimes.com/2016/02/13/health/disparity-in-life-spans-of-the-rich-and-the-poor-is-growing.html?_r=0 By SABRINA TAVERNISE FEB. 12, 2016
Trickle-down economics has never worked, yet once again it is being used to justify tax cuts for the rich and corporations. Trump and Republicans are once again using this thoroughly debunked theory to justify tax cuts.
Capitalism, Monopoly, Oligopoly and John Oliver Capitalism does a number of things very well. Concentrating power, wealth and income is one of them. Though we naturally focus our attention on wealthy individuals, fat cats, tycoons, money bags, but corporations, the legal entities with personhood (at least in the US) are also recipients of this concentrating power. John Oliver in his HBO program “Last Week Tonight” took on monopoly and oligopoly. His focus on the airline —>> read more –>>
In the US four airlines control over 80% of the seats and in many regional markets the competition veers towards a state of monopoly. There is simply no effective competitive controls on what the airlines can charge and under what conditions.This has lead to persistent high fares and a seemingly endless series of innovations in how many people can be jammed into a plane with as many extra charges tacked on for fewer and fewer —>> read more –>>
The title of this short book, only 130 pages, Building the New American Economy: smart, fair, & sustainable by Jeffrey D. Sachs with a foreword by Bernie Sanders (Columbia University Press, 2017) is unfortunately misleading. There is much here about the new economy. The misleading part is that there is very little about its construction, how to build the new economy. Sachs covers many important issues in a thorough, efficient fashion. If you need a —>> read more –>>
Ever since Ronald Reagan told us in his 1981 Inaugural Address, “Government is not the solution to our problem; government is the problem.” government bashing by right-wingers, Republicans and many Democrats has been a constant drumbeat of political rhetoric. Now we have Trump with his “Kill 2 regulations for every new one” and a government dominated by Republicans for whom destroying government has been an objective for decades. We are faced with the probable destruction —>> read more –>>
- audio of song here: https://youtu.be/VtW8RkI3-c4))
My friend Joe Keenan recently sent me an article by Vicki Boykis, “Fix the internet by writing good stuff and being nice to people” from her blog Woman.Legend.Blog. Today’s internet is mean. It’s hard to pinpoint exactly when everyone online became a jerk, but to me it seems that the tipping point occurred right when making money off content started being worth more than the content itself. Ms. Boykis devotes a lot of attention to —>> read more –>>
This 2013 article “How Much Money Would It Take to Eliminate Poverty” (http://prospect.org/article/how-much-money-would-it-take-eliminate-poverty-america) addresses this question. The answer then was $175 billion. This is a ridiculously small number in the context of a $16 trillion GDP. As someone who is on the homeowners gravy train I was stuck by this part of the article: “The utterly ridiculous tax expenditures directed toward the disproportionately affluent class of people called homeowners—mortgage interest deduction, property tax deduction, exclusion of —>> read more –>>
President Reagan was not the originator of this central trope of free-market (neo-liberal) politics, but he famously said in his first Inaugural Address in 1981, “Government is not the solution to our problem; government is the problem.” President Clinton, a Democrat, continued this theme during his terms culminating the the deregulation of the financial industry in 1999 setting the table for the collapse of 2008 and the Long Recession. Listening to almost any discussion by —>> read more –>>
- See Block, Fred L., and Matthew R. Keller. 2011. State of innovation: the U.S. government's role in technology development. Boulder, CO: Paradigm Publishers and Mazzucato, Mariana. 2011. The entrepreneurial state.
Park Avenue puts faces to many of the wealthy and the corporations. Do not for a moment think that if we could just rid ourselves of these avaricious individuals that our problems would be solved.
The values of capitalism, especially as expressed through free market (neoliberal) ideology, have come to dominate how we organize our lives. Silicon Valley and the tech sector is busy celebrating the “gig” economy. Companies have simply stopped hiring employees and now conduct much of their work using “temps”, “1099ers”, part-time contract workers. The companies, and the champions of free markets, tout this as a wonder of flexibility and opportunity. For gigers not being recognized as —>> read more –>>
The Rise and Fall of American Growth: the US standard of living since the Civil War by Robert J. Gordon is a weighty book in every regard. At 762 pages it is a heavy lift – not beach reading or even bed-time either. But I found it almost a page turner. It is very well structured and written. None of the fussiness or obscurantist language one often finds in academic works. The —>> read more –>>
|Princeton U. Press. 2016|
Since the beginning of the 2008 Great Recession we have hoped that the government would return to applying some real rational restraints on the financial system. To be honest, with both political parties deep in the pocket of the industry, this is probably merely wishful thinking.
We should demand that our financial markets serve their findamental purposes – connect investors with those who can deploy those resources to create new products and services and enable the flow of these goods and services. To call holding financial insturments whether stocks, bonds, or other assets for mere seconds investments is to beggar the mind.
photo courtesy of Chance Agrella, photographer An article in the NY TImes today reports that NY Attorney General Schneiderman is pursuing various information providers, Thomson Reuters in the immediate case, for their practices of selling market sensitive information preferntially. Those paying a premium get information several minutes before its release to the general public. This is more evidence that Wall St (standing in here for the —>> read more –>>
|Regulators Examining Early Sales of Financial Data http://nyti.ms/12hDF3t|
Reading this op ed leaves one with the notion that these changes have arisen through some immutable forces of nature. He fails to mention that in parallel with the individual being more and more alone in the world, big corporations and governments are becoming ever more well integrated, feeding at each others’ troughs.
In recent years a standard bit of political rhetoric in the US has included references to “the job creators”. This most usually flows along the lines of higher taxes on the wealthy will injure the job creators. Or, government regulation is crushing the job creators. The presumption of course is that the wealthy, the 1% in the current rhetoric, create jobs (and those not created by the wealthy are created by small business – this being another, —>> read more –>>
A recent PBS Newshour report by Paul Solman on Thursday 3/15/12 in his series “Making Sense of Financial News” gave pause concerning the role of high frequency traders (HFT) on Wall St. (and doubtless on other markets around the world). First, you might ask what are HFTs? These are traders who use computer-based algorithms to select, buy, and sell shares on the markets. The speed of these transactions and the “thinking” that is performed is —>> read more –>>
I came on a set of graphics in Mother Jones, “It’s the Inequality, Stupid: Eleven charts that explain what’s wrong with America” that illustrate what you probably already know. But, a simple refresher course in some of the reasons why the rich are rich. The 99% already have this base covered. Here are some of the charts I liked. Read the whole article at the Mother Jones website. Income (constant dollars) Note that if median family income had simply kept up —>> read more –>>
I ran across this somewhat longish article at NakedCapitalism.com. Even if you are not a 6th grader you will find this interesting. In part, Andrew Dittmer, who in fact has taught 6th graders, our author, points out that modern economics is based on certain assumptions that render much of the application of advanced mathematics in economics false, misleading, yet amazingly resistant to criticism by non-economists exactly because of the use of obscurantist fog of mathematics. One of these assumptions is that players in a —>> read more –>>
When it comes to job creation both Democrats and Republicans reflexively trot out small business as the engine of growth. These flights of breathy admiration for plucky small business owners are part of our national myth, right up there with cowboys. There probably is some truth in this myth as long as you accept the other side of the equation which includes the fact that jobs in small businesses are lower paying and less stable —>> read more –>>
The political rhetoric of the current moment, chiefly flowing from Republicans, but barely challenged by the Democrats, describes tales of profligate over-spending by the Federal government matched with burdensome taxation. While it is true that Federal spending is higher proportionately than post-WWII norms, social programs are not the source of this over spending. One only has to look back to George Bush’s two terms to see the true sources of the debt. War, Wars, More Wars —>> read more –>>
Submitted Today to Hudson’s Register Star Letter to the Editor May 6, 2011 As our politicians and the media continue the “debate” about our public budgets, Federal and state, we need to continue to ask that they have a debate that includes all aspects of income and expenditures. I want to focus here on our spending in the Dept. of Defense. Let’s just focus on the more than 750 military bases outside of the US —>> read more –>>
(This was submitted to the Letters to the Editor section of the Register Star here in Hudson. Not clear at the moment whether it will be published.) Discussions of the Federal budget almost never mention the defense department. Both political parties continue in the thrall of what President Eisenhower called the “military-industrial complex”. The defense budget is off limits. But, can we afford this military establishment? The US, with just 4.5% of the world’s population, supports almost 50% of the world’s —>> read more –>>
The case of the Federal Communications Commission v. AT&T now being heard before the US Supreme Court raises anew the craziness of the thinking that has position corporations to be “persons” in the first place. Noun vs Adjective! First we have several of the justices focusing argument around the difference between “persons” and “personal”. But several justices —>> read more –>>
|See the NYTimes, “Court Weighs Whether Corporations Have Personal Privacy Rights” By ADAM LIPTAK Published: January 19, 201|
There is more evidence that the current run of religious mania about “free markets” is finally giving way to a more fact-based approach to this important human invention, many countries are now applying capital controls on the flow of monies into their economies. The world flood of money seeking higher rent districts is terrorizing smaller economies like a tsunami. Fears of speculative bubbles burgeoning and then bursting with disastrous consequences for local economies are driving many to control inflows. —>> read more –>>
The current tsunami of revelations of misbehavior, if not outright criminality, by the banking industry in their pursuit of mortgages gone bad, is further evidence of how fundamentally corrupt and cynical this industry continues to be. On the front end of this global economic disaster the financial system engaged in misleading sales tactics using financial products that were baroque in their complexities. Aided by governments seduced by the siren songs of free market religion and floods of money —>> read more –>>
The August 1st New York Times carries the latest Paul Krugman opinion piece, “Defining Prosperity Down”. He is depressed because it is dawning on him that the elite is in the process of redefining the level of structural unemployment that is normal to adjust to the significant likelihood that we will be living with 9%+unemployment on into the future. Where has Krugman been? He is old enough to remember that back in the 1960s structural —>> read more –>>
What Is the Function of Wall St.? The global financial meltdown of 2008 – 2009 with its ongoing sequelae seems not to have definitively demonstrated the dangers of our continuing belief in the religion of “free markets” nor shaken, especially it seems in the Obama administration, our thrall with Wall St. and all things financial. We are seeing the combined effects of Wall St.’s funding of the Democrats and Republicans, the primacy of Wall St-ers —>> read more –>>
Return to Creditor There is an interesting headline in today’s (1/25/10) New York Times, “Huge Housing Complex in N.Y. Returned to Creditors”. This article reports that Tishman Speyer Properties and BlackRock Realty defaulted (welched?) on their debt obligations of $3 billion for their 2006 purchase of the Stuyvesant Town/Peter Cooper Village in Manhattan for —>> read more –>>
|photo by Nicole Bengiveno/The New York Times – The Peter Cooper Village and Stuyvesant Town complex in 2006- borrowed without permission|
This week’s decision by the US Supreme Court to allow corporations, including unions, to hold full rights to free speech and political action under the First Amendment to the Constitution once again reminds me of the strange practical and ethical relationship we have with corporations. In the 1886 ruling, Santa Clara County v. Southern Pacific Railroad Company1, the court reporter wrote in a summary: “The court does not wish to hear argument on the question —>> read more –>>
Anti-Wall St Does Not Mean Anti-Business President Obama’s proposals to break up the “too large to fail” mega banks and otherwise reapply the Glass Steagall Act to the financial sector has predictably brought loud complaints that this is populist and anti-business. Even the rhetoric of the reporters and expert talking heads reflects a general bias that anything that we might do to prevent a re-occurrence of last year’s global financial meltdown is anti-business. How Is —>> read more –>>
Manias, Panics, and Crashes: a history of financial crises, fourth edition by Charles P. Kindleberger (New York: Wiley 6th edition 2011) A recent Wall St Journal article described this book as a “must read” classic for anyone involved in financial markets. I have been involved directly in financial markets in two ways recently. First, I spent a year chasing around chasing angel investors and venture capitalists during the DotCom boom to fund Valuedge (the software company —>> read more –>>
January 23, 2002 (revised 1/29/02) The collapse of energy giant Enron over the last six months has produced a surprising level of outrage especially for a cynic like me. As this drama continues to unfold, I have been trying to understand how Enron structured their business and made money. Until just last night I was operating on the belief that the cleverness and sophistication of Enron’s managers simply outstripped my analytical skills. But, as I —>> read more –>>