Category Archives: The destruction of the middle class

The Mixed International Picture on Poverty and Inequality

Yves here. As much as readers may already have an intuitive grasp of the story told in this post, data can help define its contours better. Here we see that the rising tide of global growth has not lifted all boats. The gains of the once-poor in China and India have come at the expense of the what used to be the middle class in more developed countries. Reducing poverty has not been a zero sum game. This post also omits another key piece: the rise and rise of an uber-wealthy class.

A Picture Worth 1000 Words: A Sighting from the McJobs Market

One of the complaints too often taken seriously by the business press is employer claims that they can’t find workers with the right skills for open job slots. We’ve looked at some of these stories in the past, and when employers complained, it pretty much without exception reflected that because the economy is slack,they expect to be able to hire workers cheaply, which often includes not being willing to spend time to train someone. In fact, there has been a perverse trend starting more than a decade ago of employers putting out incredibly narrow job specifications. They were effectively saying they were willing only to hire someone who had been in precisely the same role at a similar company.

But even as McJobs look to be the fastest growing employment sector, just because they want to hire workers for as little as possible does not mean that prospective employees will hit their bid.

Michael Hudson: Piketty vs. the Classical Economic Reformers

Yves here. This post by Michael Hudson is one entry from an issue of a journal critiquing Thomas Piketty’s Capital in the 21st Century. Hudson argues that even though Piketty’s findings about wealth accumulation over the centuries are useful, he nevertheless has done a great disservice by treating “wealth” as an undifferentiated lump. By contrast, classical economists differential between rentier behavior (such earning income from economically unproductive activities such as land ownership), financialization, and leveraged speculation on asset prices. Hudson argues that Piketty’s failure to probe the types of wealth and the impact of income-generation strategies for various types of wealth, as well as his failure to incorporate legal and political arrangements means his book tacitly supports the status quo. Inequality for him is a state of nature, not a function of how our economy is organized.

Masaccio: The Shaky Foundation of Neoliberal Economics – Life-Cycle Savings

ves here. Readers may know that we regularly savage neoliberal economics, which we often refer to as “mainstream economics.” For instance, that’s why we so often take aim at Paul Krugman, who despite his leftist inclinations, never takes them very far because he is intellectually hostage to a flawed, destructive orthodoxy.

Here masaccio makes a point that the many enthusiastic reviewers of Piketty’s Capital in the 21st Century have skipped over, namely, that his book indicts orthodox approaches and conclusions. Masaccio then focuses on a glaring example of where neoliberal economic theory does not match up with real-world behavior, in its life cycle savings theory.

Mark Ames: Why Finance is Too Important to Leave to Larry Summers

Welcome to the world of running a small website. The estimable Mark Ames, who is as much a litterateur as journalist, promised, promised, promised us a fundraising post, but told us he just can’t deliver the piece. I know Mark didn’t do this casually; he was a publisher himself, at The eXile in Russia and then with its US incarnation, The eXiled.

But Mark did give us a hard-to-beat post three years ago, and it deserves being reprised. So enjoy!

Americans Work Too Long and at Strange Times

Is inequality the reason Americans have such weird work habits?

Don Quijones: “Slimlandia,” The Land of Mexican Oligarchs

Yves here. As Don Quijones explains, “In many ways, Mexico is the poster child of neoliberalism.” So take this as a cautionary tale of what rule by our modern oligarchs will look like.

Media Giving Corporate Executives a Free Pass on Their Value Extraction

Executive rentiers and their media lackeys are invoking the canard that they can’t find decent investment opportunities. The truth is that they’ve exhausted the first and second lines of value extraction, that of labor-squeezing and disinvestment, and aren’t prepared to accept the lower but still attractive returns of taking real economy risks.

And Then Gerard’s Car Caught on Fire

“I’m ready to get back to work. I just doesn’t have much to work with.”

Bill Black: The New York Times’ Coverage of EU Austerity Remains Pathetic

Yves here. Bill Black shellacks a New York Times article that gives a big dose of unadulterated neoliberal propaganda supporting austerity. To give you a sense of the intellectual integrity of this piece, it including citing a Peterson Institute staffer without cluing readers in to the fact that the Institute has what is left of the middle class in its crosshairs.

Black stresses that one of the major lies behind the continuing for more, better hairshirts for long-suffereing Europeans is that the explosion in debt levels in Europe was the result of overly-generous social safety nets. In fact, as in the US, the tremendous rise in government debt levels was the direct result of the crisis. Tax revenues collapsed due to GDP whackage (and the costs continue as GDP is well below potential). And any economist worth their salt will also say that social safety nets ameliorated the severity of the damage, that those automatic stabilizers increased government spending when it was needed most, at the depth of the implosion, and prevented a spiral into a much deeper downturn.

Are Advanced Economies Mature Enough to Handle No Growth?

Economists occasionally point out that societies generally move to the right during periods of sustained low growth and economic stress. Yet left-leaning advocates of low or even no growth policies rarely acknowledge the conflict between their antipathy towards growth and the sort of social values they like to see prevail. While some “the end of growth is nigh” types are simply expressing doubt that 20th century rates of increase can be attained in an era of resource scarcity, others see a low-growth future as attractive, even virtuous, with smaller, more autonomous, more cohesive communities.