Today's Sunday Dumbness: Star Economics

This is 50 million dollar man David Beckham - 50 million a year that is, "earning" his money by risking brain damage every day. He just signed with the L.A. Galaxy in a deal that should allow him to earn that amount each year for many years, in what is the galaxy's most pathetic soccer league. Though his best years as a player are behind him, his best years as an L.A. star are not. This is apparently why his personal salary, as Daniel Altman points out in today's New York Times business section, is as big as the payroll for the rest of the league.

We are now regularly confronted with individuals whose salaries higher than that of entire towns. Quite often our response is to fall on our knees and worship them, and then give them everything they want. This is of course a sign of our advanced mental degeneration, an index of a Rome-like empire on its last legs. Or is it? Luckily the business pages are there to save me from the agrarian populist in me that thinks Beckham is a vampire waiting to find his Buffy. Thank you NYT.

Daniel Altman tells us that there's this thing called "star economics," and it has a theory. The theory

is that an enterprise can’t distinguish itself just by maintaining a high average in the quality of its work force. It has to have a star, a breakaway figure, to attract the attention of customers and to inspire its own employees. Moreover, the received wisdom is that a business can’t do all the things that we now think are so important — “taking it to the next level,” “thinking outside the box” or “beating expectations” — without a star leading the way.

Another way of putting the theory is that people are sheep, including the people that run big businesses like pro sports teams. Or alternately - the agrarian populist in me of course loves the people - that the product is no good on its own, so needs some kind of hypnotic trick. This is of course the core objective of advertising: create a need that doesn't yet exist, or magnify a small need into a big one. So firms that make dubious products will now spend any amount of money making those products look beautiful and good.

The question is where does this money come from? The amounts are incredible - in 2006, the New York Yankees 40-player payroll was almost $195 million, or nearly 4 Beckhams. The sources are complicated, but they boil down to the consumer of the product, including the consumers of the cars and beers that advertise and of the products of the corporations whose luxury boxes and other expenditures supply a growing slice of pro sports teams' revenues. Nobody puts a gun to our heads to force us to buy this stuff.

The problem for me is that it's impossible for anyone to tell how it works by reading articles even in more or less the best newspaper in the country (with undoubtedly the best business section, by far). Here's the kind of crud you have to wade through (Altman again).

The economy certainly seems to be producing more stars. The highest-paid Americans are leaving the rest of the work force further behind almost every year. A combination of factors is behind the trend: the huge opportunities offered by globalization, the sudden popularity of hedge funds, the heady climate of innovation in high technology, the enormous pay packages offered to top executives, and more. The economy creates stars. And the more that employers chase them, the greater their radiance.

Yet one could argue that in corporate America, at least, the heyday of the star system has already passed. Even Jack Welch, the nation’s favorite management guru, now has his critics.

As an explanation, this is dead on arrival. It can't even tell the difference between a cause and an effect. Executive pay is not, for example, an effect of globalization, but an effect of an elite culture whose tiny membership compete to stay ahead of each other. Globalization as we know it, driven by companies seeking the cheapest wages in the world and global reach, is in part the effect of absurd executive salaries. It's more complicated than that, sure, but you'll never figure it out from the newspapers. Stars are produced, globalization and hedge funds appear, engineers bring forth new thoughts at dawn, crows fly east before the gathering storm, blah blah blah, and then "the economy creates stars." Actually, no.

The economy doesn't create stars, people do. In particular, people in power with bad policies. But why go into it: who's paying attention? We live in a culture that is completely intimidated by money and prone to superstition and hero-worship. Does the U.S. really believe in democracy? Can you have democracy in a "star economy"? Can you have self-governance when some people make 1000 times more than the next person?? Jefferson would have thought we are insane.

Let's count the way the French do, in terms of the time it takes for one person to earn as much as the next. If you make, say $50,000 this year, you are above the median income in the United States - middle-class we might say. To earn Beckham's annual $50 million, you would have had to start working one thousand years ago - around, say, 1066, at the Battle of Hastings when the Normans invaded Britain. And that's just one year of Beckham. To earn two years of Beckham, you would need to have started to work when Jesus was born.

Too bad you can't bend it like Beckham.

By the way, the NYT reported a few days earlier that the cost of immunizing all the world's children against measles, whooping cough, tetanus, tuberculosis, polio and diphtheria, is $600 million - or a little more than 10 Beckhams.

The Fed and Your Wallet

This is Ben Bernanke, Chairman of the Federal Reserve bank. He is about to explain to Congress why they have to cut the programs that created and still support the existence of the American middle-class.

Cynics would say that this is the Fed chief's job. He chairs our "independent" central bank, meaning that the bank is not under the direct control of one of the three branches of government, even the one, the legislature, that represents the people. The bank is therefore free to reflect the world view of the people who staff it, known as "bankers" and the economists that are acceptable to them. The Fed chair is also free to testify about this or that danger in a way that sets the economic agenda for politicians and the press - two groups notoriously not independent in their economic thinking. The Fed is free to serve its most immediate and powerful constituency, the financial community.

The photo comes from the New York Times's coverage of Bernanke's Congressional testimony, entitled "Fed Chief Warns that entitlement growth could harm economy." There are two things to say about this.

First, Bernanke makes the mistake most of the press likes to make too. He lumps all entitlements together, so that Social Security is a huge problem along with health benefits. In fact, Social Security is not a problem. As the economist Dean Baker has pointed out weekly during most of the Bush administration, Social Security has no deficit at all, and can pay all scheduled benefits with no change in contributions through at least 2041. Health care costs are, on the other hand, a big problem, running long-term costs around eight times higher than social security. Reigning in health care costs is not a question of reigning in "government spending," but of reigning in the cost of health care. It's a government problem only because the government has to deal with the same thing we all do: American health care costs more than twice as much as the next more expensive system in the world, and delivers about the 30th best care.

Second, why are the programs that benefit the economic majority always the official problem? Why isn't Bernanke upset about corporate tax cuts, profit offshoring, the fact that we are spending $8.4 billion a month making Iraq worse, or the grotestquely inefficient, growing concentration of wealth that does not flow back to cover government costs?

Bernanke made useful if familiar points about sloppy spending and its price - e.g. the national debt will be 100% of GDP by 2030 and interest charges alone will triple to 4.6% of GDP. But until he can take on inefficient wealth as well as necessary health and retirement programs, he should be ignored.

Happy MLK Day

Overall this country still doesn't know how to celebrate Martin Luther King's birthday. Blogging in the New York Times, noted literary critic Stanley Fish decided to reflect on what KANT thought about affirmative action, and the other four-letter name that begins with K didn't get a mention. Seems Kant wouldn't have approved of affirmative action because of its faulty universalism, which Fish doesn't mean as an argument against affirmative action, but he doesn't feel good about it like he used to. Whatever. Pretty much sums up the general mental feebleness on all the social and cultural subjects King felt strongly about, like racial equality. What if we just said racial equality, we're for it. Yes, equality of OUTCOME. If there are gross racial disparities, there is racial discrimination, period. Sigh. I'll guess I'll go stand in line for my school voucher.

Why did I like King so much as a kid, a first-generation white-collar white kid in the western suburbs of L.A.? Well he was against racism, which was great, especially post-Watts 1965 - that was my city too that was going up in smoke, and the city fathers were clueless, the voters kept rejecting a rail system so I was never going to get out of the burbs, and there was a gubunatorial candidate named Reagan who was running for office against the long hair and wild music at UC Berkeley, i.e. the stuff I played every afternoon on my record player that made me feel really alive. The poverty and the racism were obvious, let's do something shall we? There was King, standing up against one catastrophic mistake after another, getting hosed, bit, jailed and insulted, and standing up again. And yet he went to protests in a suit and tie, and talked in church like a preacher and a teacher. He was the only thing I'd ever seen that looked like the kick-ass middle class. Fighting for something - including itself.

The Black civil rights movement was one of the only times in modern American history that a middle-class stuck with the working class. The main time for whites was the 1930s, when most whites knew that being poor didn't make you part of a degenerate underclass. Most of us seem to have forgotten this obvious fact. Black folks still haven't, and they were extremely clear about that during the 1950s and 1960s when King was operating. There were differences in Black ranks, but the poor didn't get pitched over the side by their own people. King's last speech was in Memphis, where he'd come to support a sanitation workers strike.

Racial equality? The economic majority? Sounds better than Kant! Happy Birthday Dr King.

David Brooks's War on the Middle Class

New York Times columnist David Brooks presents himself as the middle-class's great advocate and friend, which makes his presence in this leading newspaper and on public television all the more insidious. His column today is a good example.

Called "The American Way of Equality," it showcases the Brooks Formula for keeping the middle-class in its mental diapers.

1. admit income inequality is on the rise. (Brooks resisted this simple fact for years, but better late than never.)
2. say Americans have always been opposed to inequality.
   
3. assert Americans have always been opposed to government remedies to inequality (read "redistribution").
4. resolve the contradiction between (2) our American opposition to inequality and (3) our opposition to fixing it by defining (2) out of existence. Today's version is this: "When Americans use the word 'equality,' they really mean 'fair opportunity.'"
5. say America does have fair opportunity.
6. Conclude that therefore we have no problem of inequality.

Some dismiss Brooks as that perennial seminar student - the eager junior among seniors - who likes the big ideas but never quite gets them right. I don't dismiss him. Brooks is a soft Darwinist and hard antiegalitarian who sees our inequality boom as the natural order, but wants us to feel happy about it.

Brooks gains influence because of his sincere and continuous efforts at consolation. He is the domestic counterpart of Thomas Friedman on the globalization front. The success of both men suggest that their middle- to upper-class readerships do prefer concentrated wealth to social justice, but don't want injustice to be too grim. This mentality has been in unilateral control of U.S. economic policy for three decades.

So it's worth saying what's wrong with Brooks' argument. The single biggest error is the idea that the "activist state" exists only to redistribute income out and down - from the upper to the middle and working classes. In fact, business and political leaders have long used the state to redistribute income upward. This takes the form of massive tax cuts for corporations and the wealthy, steady or increasing tax burdens for the middle, subsidies and other public grants to persuade companies to stay in business, cuts in services on which the middle class depends - health and higher education heading a long list - among many other policies.

The Right's activist state has also created a shift in Brooks' beloved "values," so that layoffs, both blue- and white-collar, are seen as an organic feature of nature's economy, while union organizing is a parasitic blight. (Remember "community -employee ownership" campaigns to buy steel companies that wanted to shut down? You don't, because they quickly disappeared. Organizing to save jobs was too "activist.") For Brooks, only liberals are activist when they write contracts or tax code or legislation. When conservatives do it, to systematically favor the rich, they are merely unshackling the Great Producers to whom we owe all wealth our society has.

Brooks' embrace of inequality rests on the idea that inequality expresses natural differences. This idea is sheer prejudice. It is prejudice in favor of the wealthy and against the middle and bottom. It is prejudice against the value created by labor - white collar as well as blue collar - that never rises to the pay grades that in our warped economic culture signal creative greatness.

Brooks lives in a twilight zone in American economic debates, in which figures from the 1700s like Adam Smith - in simplified, college-textbook form - are treated as scriptural oracles. In this case, Brooks replicates the ideology of some manufacturers of Smith's time - opposed by Smith himself - who saw all value coming from them and their new technology, and none at all from the people that did the work.

Intellectually we seem to be locked into a pyramid with mummified figures from distant eras. Pundits like Brooks constantly channel some mummy's thoughts from beyond the grave. The seance is apparently all too convincing. Brooks has become a pillar of the Great Dumbness that has swept the country and that I chronicle in my invisible blog. He should be sent back to school until he can do something besides blind us to the fact that we the large majority created the most of the value in the fortunes that Brooks doesn't want us to touch.

Bush's Iraq War on America

Bush's economic policies are designed to move wealth from the large middle to the small top of the American social pyramid. I have blogged with charts on this before, and will do so again, but it's pretty obvious that these policies continue thirty years of attacks on what I call "majoritarian economics" and that they are succeeding at increasing the gap between the very rich and everybody else.

The war in Iraq has a similar effect, continuing the slow strangulation of the public services - health, higher education, long-term research, social security - on which the large middle classes depend. The occupation of Iraq has no achievable goal, except, that is, the destruction of a useful domestic government, both in Iraq and the United States. Federal uselessness was on grotesque display in Louisiana and Mississippi after hurricane Katrina, and milder, less visible declines in the quality of everyday life are as obvious as the growing wealth and income skew. It's not the Iraqization of the U.S., but it is the Brazilianization - a long, steady regression towards the old plantation ways of the region that continues to control U.S. politics, the American South. If you doubt me, look at income, wealth, health, and education indicators for the Deep South states that remain in thrall to the Republican Right. Hell, look at the indoor plumbing indicators. Back, back, back we go to the Middle Ages. And by the way, the Middle Ages lacked a middle class.

Why the middle class votes for the chuckleheads who undermine their conditions of life - well that's the vote against life and for death that gives title to this invisible blog. We will keep trying to explain it. In the meantime, what will we do in the wake of Bush's Little Surge speech this week?

The Surge is a booby-trap, but not for the Iraqi "insurgents." 20,000 more troops is about a 15% increase. Even if you captured 15% more snipers and bombers that would obviously not solve the problem. On top if this, the surge is actually a series of smaller incoming waves, a few thousand troops at a time. Even John McCain expressed doubts about the military value of this strategy, and the surge was basically his idea.

So who's the booby-trap set for? Congressional Democrats, of course. If they successfully oppose the surge, Bush-Rove will blame failure on them. This kind of fact-free finger-pointing works well in this undereducated country where a lot of people seem to believe their televisions. On the other hand, if the Democrats support the surge, they will squander the issue that gave them control of Congress last November. Since they ARE Democrats, they will dither and splinter and do little good for anybody here or in Iraq. We will get a better minimum wage and maybe some cheaper medications, and that's about it.

The reason is that the Democrats cannot take responsibility for the consequences of their values and choices, since these consequences generally contradict their values and choices. Democrats don't like to cut health care benefits and see mass layoffs - that's their long-standing pro-working class value frame. And yet they vote for forms of free trade, tax cuts, and fiscal austerity that do exactly that. The same is true of the war in Iraq, which the vast majority of them supported. They may not have wanted the invasion, but they felt they had to go along with it - support the president, fight terror, look tough, look good, not be called bad names by Republicans. The war - their Democratic war too - is a horrible failure. Actually leaving Iraq, and not just opposing being there, will make them look bad.

The pundit who faced this fact was, of all people, Thomas Friedman in the New York Times, writing on January 12th. Normally, Friedman is a cheerleader for American deindustrialization with a lemon-twist of safety net programs so the sinking middle doesn't feel so bad. But this time he faced a real reality, and not one he made up. He said Bush should set a firm deadline for withdrawl, and then wrote this:

Of course, just leaving would be bad for us and terrible for those Iraqis who have worked with us. We need to give them all U.S. passports. We have a moral responsibility to them. But it would also be bad for a lot of bad people. They would be left to fight it out with each other. And yes, Syria and Iran would “win” Iraq — meaning they’d win the responsibility of managing the mess there or have it spill over on them. Have a nice day.

Friedman also said some decent stuff about reducing the flow of oil money to oppressive authoritarian leaders in the oil states.

Forget the "make them fight all of us" bravado. Friedman offers two insights that would make the middle-class less self-destructive. First, follow the money, and then be ready to change its course. And second, face the effects of what you do.

The only hope lies in the economic and political majority of this country no longer pretending to look good, and learning to face the bad. Their bad.

Zizek, Philosopher of the Suburbs

Which of these nice guys wrote the following sentence in today's New York Times" - "in Bushspeak 'modernize' is a synonym for 'privatize.' And one of the main features of the legislation was an effort to bring private-sector fragmentation and inefficiency to one of America’s most important public programs." Was it the liberal free-trader Paul Krugman? Or everyone's favorite Lacanian Leninist, the radical philosopher Slavoj Zizek?

Yes, you guessed from this set-up that the very eloquent blast at private-sector capitalism came this morning from Times regular Krugman. Zizek wrote the top op-ed piece, however, taking up half the page above the fold. He said what he always says: freedom is slavery, desire is domination, and black is white. So he shows that Jeanne Kirkpatrick's definition of totalitarian states actually applies to the United States (ideology overcoming pragmatism). OK, fine, very ironic. Like we hadn't noticed the authoritarian strain in the Bush administration - oops, I mean totalitarian. The fact that I am thinking about these two words together makes me believe that Zizek is as much a creature of the Cold War as is Cheney, but that's a cheap shot so I'll get back to my point.

The walk around the block doesn't work so well this time, but it does show Zizek at home in his middle-class habitat. His tag line comes from Saddam's pre-war spokesperson, who said, as the Americans invaded, "They are not in control of anything — they don’t even control themselves!” This allows Zizek to conclude as follows: "And now the United States is continuing, through other means, this greatest crime of Saddam Hussein: his never-ending attempt to topple the Iranian government. This is the price you have to pay when the struggle against the enemies is the struggle against the evil ghosts in your own closet: you don’t even control yourself." 

Really?  The US invaded and occupies Iraq and threatens Iran because Bush doesn't control himself? Or Cheney? Actually they control themselves quite well - well enough to ignore any and all facts that conflict with their quite clearly formulated goals. One of their goals is to control the Middle East, its politics and its resources. Bush et al. also control the state and the military, and two branches of the federal government (and still control the Congressional agenda even as the Lapdog Party gets to sit in the big chair for a while). Since Iran is in the way, Iran must be pushed aside somehow. Bush isn't struggling against his evil ghosts, he's struggling against the power of Iran.

Zizek's analysis reproduces middle-class Americanism in three ways. First, it makes the country's will to power over most of the world into an internal psychodrama, "An American Dilemma" in which we wrestle with our good and bad impulses. Second, he reproduces the suburbs' belief in our own basic innocence: he sidesteps the real story, which is that we avert our eyes from the consequences for others while voting for our financial and political interests as they are being protected in Iraq. These are the maintenance of the great and unearned wealth disparity for all of us ordinary American middle-class folks who aren't really better than our Indian or Filipino counterparts who do the same work for a tenth of the pay. Did we all vote for Bush, and then vote for him again, , by mistake? Because we couldn't control ourselves? Because we were controlled by evil elements in our unconscious? Third, Zizek enforces that middle-class truism that the system really isn't controllable and therefore there's nothing for us to do. A radical epistemology of inevitable misrecognition is the identical twin of suburban complacency. "We're all totalitarians now" is the Zizekian Call of the Mall.

Zizek made more sense in the first years after the collapse of the Soviet Union, when ethnic difference was being manipulated by nationalists into dirty civil wars.  He furnished a superb one-line explanation for how people could be made to kill their unoffending long-term neighbors: "you, newly-identified as Other, have stolen my enjoyment." 

People fight, Zizek explained, to preserve the illusion that they had some enjoyment to lose and that they didn't kill it on their own. As we saw in yesterday's posting, they will accept a self-designated Good Shepherd who kills people so they don't have to face that a) their enjoyment is gone and that b) they got rid of it themselves by putting other things first, like their money and their control. 

But at some point, Zizek forgot that the problem in the West is too much control and not too little. I think race flipped him out - his mid-to-late 1990s diatribes against multiculturalism as pure market ideology are wrong but symptomatic of an academic middle-class that deep down didn't want to share power with brilliant newcomers from "other" cultures in the US and the rest of the world. In any case, he got stuck in his "things are really their opposite" doggie show. Multiculturalism is capitalist consumption, and democracy is totalitarianism, and the Bush administration doesn't control itself. 

These tricks mean that Zizek can always stay one step ahead of people with substantive knowledge or socio-cultural experience of which he is wholly ignorant. He always already knows, and retains his analytic priority to everyone else. Different or alien knowledge and political programs are self-preempting, and this is a perfect display of the political passivity that serves the gated communities.

Good ol capitalist Krugman is the one who says, on the same page, that public services are often more efficient that private ones - that the capitalist fix of society is frequently a lie. Is this really less radical than Zizek? Academia - like the US in general - should be much clearer about what is radical and what is not. And when it is it will be less paralytically middle class.

Little Shepherds

Here are Matt Damon and John Tuturro, good Company men who just blew the Bay of Pigs operation, taken from "The Good Shepherd." Unfortunately, the film itself was a snooze-fest about the empty WASPs who ran an empty US foreign policy. I stayed awake so as not to offend my pal Rebecca who took me to it, and entertained myself by wondering if the film was cleverly thematizing boring emptiness or just being boring and empty without meaning to. Sadly, there were no other signs of cleverness in the film, just ghosts of two decent ideas. One was about the effects of this post-war emptiness at the top of US society -that the deadliness of the US in the Cold War came less from necessary responses to real threats than from our own leaders' emotional exhaustion and intellectual emptiness (the USSR military is described as a sham by one would-be defector our hero Matt Damon has been busy torturing). This idea is like an object in one of the photos the techie spooks analyze that you can infer but never actually see. The second ghost of an idea came from my pal Rebecca, who recalled the film's only good line. Italian mobster Joe Pesci names a few things different US ethnic groups have and then asks the typically silent and inert Damon, "what do you people have"? "We have the United States of America," Damon replies. "The rest of you are just visiting." Rebecca said that this could have been a movie about the CIA as an agent of white supremacy. True, but it was just ghost #2.

Some IMDb reviewers have complained about Jolie's performance, among others. I don't think any of the performances are bad as such - Jolie's is technically quite good - but there IS something wrong with the characters and their interactions. The film plays like a group vanity project in which De Niro and crew put on an extra-long after-dinner skit for their wealthy liberal friends. They know things have gone bad in America, they don't like American foreign policy and all the dirty tricks and killing. But they don't know what went wrong, or why, or what to do about it. They especially don't think that they benefit from any of this killing - that the CIA has been quite handy at giving the U.S., a declining manufacturing and increasingly corrupt power, unfair advantages in the world, advantages that in turn lead to Hollywood and Wall Street's ridiculous wealth. Could part of America's problem be exactly this kind of mental passivity and actual indifference to democracy among the most privileged members of the middle class? Gosh! It raises a question I sometimes blog about on these very pages - did we long ago trade in democracy and camaraderie with the rest of the world for the sake of unearned, coerced global privileges? Just like Damon's character, the movie isn't self-aware enough to ask any questions like this, and the result is boredeom - theirs and ours - all the big implications and feelings gone missing.