Some Housing Dumbness Explained

The Freakanomics boys had a good piece in June on "cash-back mortages" and how they increase official selling prices while dropping the homeowner's equity to zero or less. I dislike these guys' usual explanations of human behavior, but read this about the heart of middle-class dumbness, the faith in the ever-rising value of one's home.

Lessons of August?

It's a shock to leave reality for "reality."

I spent two weeks in the Morvan countryside with the landscape, small villages and towns, and ancient amazing monuments like the cathedrals at Autun and Vezelay. People built things over centuries and the things - their civilization - are still there. They are too, still building.

And then it's back to the usual crap, political and economic "leadership" as simulated through media coverage. Here's a picture of the one exception - Venezuela's president, Hugo Chavez, coming to London to offer subsidized oil so the Brits can afford to take the tube. But in general, I've been checking rental car prices again.

A few things we learned in the vacation month:

• After Tony Blair stepped down in the UK, President Bush needed a new poodle. Le Jogger, aka the president of France, rushed to volunteer. This is a picture of the man's embarrassing joy to be seen with the big boys. It should appear next to "wannabe" in the English dictionary.
• The one moment of reality in the coverage of le Jogger's American vacation was airbrushed out of Paris-Match's photo spread. Seems like a small lie, but it crossed the line from celebrity worship to perfecting the leader - the core function of propaganda.
• Le Jogger is not a "rupture" with the previous government - he is the previous government. Surprise! He traded arms for hostages with Libya, closing the deal with the dictator via an old-school French businessman-in-Africa handshake.
  
• When Le Jogger departs from Chirac's right-wing politics, it's to become even more right-wing. Le J's speech in Dakar was a model of nineteenth-century white supremacism, what in the US we would call stone racism. (Some English quotes; the official text in French.) Etienne Balibar called it "cultural racism," and that's putting it politely.
• In the New France, French TV news will be as bad as the American model. Public channel France 2's tireless coverage of fires, child molesters, school clothes prices, campground ice cream parties, and biting dogs is making private, pro-Sarko TF1 look dignified, and its too-tan anchorman PPDA like a French Walter Chronkite. Personally I don't think TV channels have any reporters or correspondents - just a shared pool of college students with digital video equipment following le J - the "rupturer - in his appointed rounds of publicity appearances in strategic anti-crime, anti-pederasty, anti-mugging, anti-kidnapping locales. One of the poodles will eventually climb into his lap. Bow wow wow, Monsieur le President!
  

You know, I don't hate President "Rupture," not at all. I understand why people would vote for someone who, unlike 95% of politicians, seemed like he wouldn't quit half-way through and sell you out. I just hate the idea that this man is modern, original, or constitutes a, well, rupture with someone like Chirac. I hate the idea he has a clue about how to improve the French economy for the French, as opposed to improving it for his superwealthy pals.

We were talking to a French couple at dinner the other night. They voted for Royal and the Socialists, but one of them, a musician, said how much better le J was as a "showman." It's good to improvise, he said, but you need to practice, practice, practice: he did, she did not, and it showed. You also need to work collectively, our new friend said. Le J did, she did not. Abigail and Avery noted that this was because the Socialist Party male elite, the "elephants," had no intention of letting her win and take the party away from them: they refused the collective work, and would rather lose and lead than follow a female (or more radical, or more popular figure) (sound familiar, Democrats?).

This was all interesting, and made me sadly sympathetic. But it doesn't change the fact that that was a campaign, in Iain Banks' narrator's words, between Tough Shit and Slightly Less Tough Shit. How a majority of the smartest public in the West could go for a brain-dead version of the former is a sad sign of our too-dumb times.

I think they believe deep down that le J will offer some soft Thatcher shock therapy that will fix the French economy. This is a terrible delusion that leads me to my next topic.

August's capitalist "reality." We learned that

• In the financial markets, numbers don't lie - unless they do. Rating agencies don't misprice debt quality - unless they do. Markets are efficient - unless they aren't.
• a) risk was wrongly calculated and priced and, even worse, b) due to endless chains of selling and reselling repackaged debt, risk was not actually calculable at all. See the Financial Times's good overview, which tacks on an unconvincing happy market ending for the "real" economy.
• the enormous profits of the financial sector depend not on "transparency" but on obscurity. If the public understood what they were buying, why would they pay so much more than the seller's cost? Hmm, well actually, we didn't learn this.
  
• The markets make "Main Street" mad as hell. Business Week's featured 87-year-old isn't the only older person I've heard call for revolution.
  
• Main Street's elected representatives will do nothing to help folks. The Democrats will help private equity moguls and big investors continue to pay half the income tax rate of nurses and teachers. They will also keep the war on. They represent their interests, not yours. Read your Machiavelli, like Bush brains Lee Atwater and Karl Rove always did this time of year.
• The public doesn't know enough to defend itself. Much or most current economic growth - on the Anglo-American model - depends on a combination of low-price consumption, driven by low-wage manufacuturing abroad, and high-profit finance, driven by an endless supply of "greater fools" who maintain the big markups. The retail investor pays too much in his role as the obliging greater fool, and then pays again through taxes when the central bank bails out the system with a few hundred billion dollars, easing the anxiety of the next round of fools.
  

-Well there were a few counternotes:

• Le Monde Diplomatique's editor in chief, Igancio Ramonet, had a nice front page piece in the August issue that explained the achievements of Hugo Chavez in Venezuela. When one looks behind the media handwringing about Chavez's rejection of normal business control of the Venezuelan economy, and examine actual economic statistics, one can see that Chavez's social investment policies have reduced poverty while AT THE SAME TIME increasing economic growth. This combination - more public spending, more economic growth, more widely distributed income - is what neoliberal policy advocates prefer to keep off-stage.
  
• The economist Robert Pollin published an excellent review-essay that offers a compact history of the rise of neoliberal economics, along with some simple next steps.
• Another August Diplo writer, Jean Bricmont, argued that the economic disaster underlying purely moral politics (tough on crime on one side, enhance education on the other) is becoming easier to read. The complete absence of the financial crisis from the popular left or liberal media (radio shows like Democracy Now, To the Point, even the business show rue des Entrepreneurs) is undoubtedly already a thing of the past! :)
• And then John Edwards broke the chains of Dumbocrat slumber and said some true things about rigged politics and corporate governance.
  

Walking Beats Blogging

And look where I was walking! That's la Cure, a river dans le Morvan, a big region of rivers, lakes and forests between Burgundy and the Loire, just below Avallon if you have your map out. Avery and I walked for a few hours most days, and took a few long car trips to places that are easier to get to from le Morvan than from Paris. We were staying in our very nice friends Susan and Claude's very nice place in Montarin, near Quarre-les-Tombes - yes, tombs from the Merovingians lie around outside the town church, oddly empty, about 230 km southeast of the capital.

Sleeping beats blogging too. The village was silent, and the big bedroom is upstairs in the old stone house, where the double window faces south west toward the forest, and the breeze came from the forest across the tops of the summer corn and into the window, and then carried on out the others side through the apple trees and the huge spruce and across the white Charolais cows grazing just over Susan and Claude's fence on the north side. The same breeze blew at night, and when the clouds had gone somewhere else I stared out at the black hills and the Milky Way, amazed that I couldn't see a single light. Clearly things exist for themselves. They don't need any of our constant activity. And with that thought I went to sleep, and slept and slept. I slept under the phosphorous stars that Susan had stuck on the ceiling and that glowed half the night over our heads.

One day we drove au haut Morvan, due south, and visited Bibracte, the ruins of an old Gaullish city where Cesar wrote his memoir of the Gaullic wars after his victory at Alesia in 52 BC. It was at the top of a beautiful hill, and we walked up through the forest into a clearing that had once had avenues and fountains as part of a city at the crossroads between northern and southern Europe, and between east and west. Right around there Vercingetorix had been proclaimed the head of the Gaullish coalition that didn't hold together long or well enough to keep the Romans out. We ate lunch looking out over the valley, wandered down the hill into an old leper colony on the way back, and headed east to the city that replaced Bibracte on Mont Bevray, Autun.

We've been to Autun before, and I had to go back because, well, it's a Roman city on the plain and feels southern and Mediterranean to me even though it's not. And also because it has the Saint Lazare cathedral with it's amazing tympanum, done by Giselbertus between 1120 and 1135. Christ is surrounded by the zodiac, but more relevantly the lintel divided humanity into the saved and the damned, and Christ presides over the weighing of souls (which the devil tries to skew), sending much of humanity straight to hell. This is an evil turn in Christian thought. It helps to scare everyone into temporarily good behavior but turn savior into the judge that issues eternal damnation. This is the power of blood, the power of death over life that made Burgundy an intersection between northern Europe and the East, brought back knowledge and progress through the education Byzantium and Araby and other heathens gave the crusaders, and guaranteed death and destruction and centuries of tyranny and darkness. These Middle Ages have of course not yet ended. We had a drink in the courtyard next to the church, and the headed back north through the old Roman gate.

Human nature, you say? Well actually around the same time the maker of the tympanum at Vezelay, the great pilgrimage town just northwest of le Morvan, was telling a whole different story. I really love this place, and we drove there another day from Montarin across the D 36 through luminous forests - so green the air was water you could drink - then across the river and up the hill and we arrived at this. Click on the image so you can see the details. There is no division between good and evil, saved and damned. All of humanity is there, the hunters, archers and fishermen, the artisans, the horsemen, and the Men with Big Ears. To the right and left of Christ sit various apostles, and arching over his head are the Signs but also the saved of every miscellaneous nation East and West - the outcomes of miracles that belong to the overall order represented by the collection of figures themselves. No one is going to Hell here. In the End, All Will Rise.

We took other great day trips - to the Puisaye near the Loire, to le Maconnais in the far south of Burgundy where we saw the remains of Cluny and then drove east to see unbelievable Renaissance perfection of Brou, outside of of Bourg-en-Bresse. I took dozen of pictures there and will post them eventually. It's hard to feel visiting all this medievalism that we have actually progressed. In medicine and transport, yes, but in intellectual and artistic ambition? I don't think so. We have shrunk. As artists and dreamers we are smaller than our ancestors. We go backwards as much as forward. Until our arts catch up, Bruno La Tour will still be right: we never never been modern.

Le Morvan was amazingly empty, and I had the same feeling I mentioned flying over Vienna. France has not cannibalized its land and country. It is not run by real estate promoters. It has preserved the landscape, the ranches and forests, the urban boundaries, the sociability of public life that is separated from nature as such. It has not sprawled. It has standards for itself that we Americans do not, thinking of progress as the sacrifice of our existing quality of life.

My motto: SEE FRANCE. SO UNDESTROYED.

(See Bill Maher's version if you haven't already.)

And then it was great to be back in Paris. France has had crap weather all summer - if you like sun and warmth - and today was the second day of light in about a month. I went out to get balsamic vinegar and ice cream for dinner, and decided to make a trip out of it by going up rue Mouffetard to the Italian products place, where this young shop guy acted like my vinegar purchase was as important as buying a new car. He explained the strengths and weaknesses of each brand, and offering his opinion of the quality-price ratio for all. I really love this about many French retail people - the sheer intellectual effort of their analysis of details possibly relevant to the user's experience. I asked whether I could take the sprayer out of brand number 3, bought it, and left amidst a chorus of "have a good Sunday" while bumping into a gang of smiling tan people back from somewhere like Nice.

Paris is pretty happy today, and if you're in the core areas the government hasn't let go to hell, Satan style, France has a scale designed for interaction of people on foot that has to be created artificially in a monstrously oversized country, prisoner of its gigantism, like the United States. I feel at home here.

Not Driving Me Crazy

In the last couple of days, I've spent many hours in phone meetings and email contact between Paris and California on the subject of faculty salary increases. I've been trying to understand how a 2.5% cost of living increase plus a scale adjustment of, well, long story, but the numbers involved are $30-46 million to bring UC faculty pay from about 15% below UC's peers to maybe 13% below UC's peers at a public university with 200,000 students and all sorts of cutting-edge research on which at least some future economic and social progress depends. And yet we don't think we can find the money in an $18 billion budget.

Meanwhile, private equity firm Blackstone announced that its latest equity fund raised $21.7 billion in about two years. It had about $80 billion under management at the time of its IPO a little while ago. KKR has about $53.4 billion under management. Goldman Sachs - in the same ballpark. And so on.

Why do I mention this? Because of how private equity - which is basically the buying and selling of existing assets - compares to education. A list of the largest university endowments shows you Harvard at the top with about $29 billion, only 5 universities on earth with more than $10 billion (Harvard, Yale, Stanford, University of Texas Oil System, Princeton ). There are 62 universities with $1 billion or more. This means that Blackstone raised in 2 years as much as Harvard raised in 400 years, and Harvard is in a class by itself, the most successful university - financially speaking - in the history of the world. KKR has about twice as much money under management as Harvard and three times Yale, which has been growing faster than almost any other university endowment on earth.

You get the picture. Higher ed gets a drop in the giant swimming pool of the nation's wealth. Higher ed has the proportionately tiny influence over the country's general direction.

I will be sitting in the chair above for a week or two successfully forgetting all this.

Americans Love the French . . . President

I wonder whether The Jogger took the friendly advice to eat at the Wolfetrap and of course "East of Suez." What thoughtful suggestions!

Dolts Strike Again

There are many sad and angry pundits in America this week. They are mad and pissed at the Democrats for caving into the Bush Administration again, this time on the authorization of wiretaps between the US and foreign countries without a warrant. They are sad because the right thing is rarely done these days. Their weekends were ruined by the Dolts yet again - by 16 of them anyway, including my home-state California Repubocrat Dianne Feinstein, who I think has never opposed a dominant interest in her entire career. Correct me if you can.

Why do the Dolts so regularly cave? Well, because they don't have an alternative to fight for, so why not? If you have no ideas to follow, follow the money. If the Dolts had a plan to get out of Iraq, they would push it against this unpopular president instead of paving the way for him to humiliate them later. If they really thought government was good, they wouldn't leave Paul Krugman to make the case for health insurance for children all by himself. (Well a few Dolts are helping him - Kucinich in particular.) If they really thought value came from labor, blue- and white-collar alike, they would raise tax rates on the income of private equity kings to the rate paid by nurses and first-grade teachers, so that Steve Schwartzman's $300 million last year would be taxed at the 31% paid on the $30,000 earned by Rita Espinoza, instead of at less than half her rate. But the Dolts don't believe value comes from labor. They believe it comes from investors, and that power comes from the wealthy, and that their power depends on getting wealthy investors like the ones the Republicans have. (I use Larry Summers as an example of the Dem view in the comment below.) Don't be sad - nothing personal.

This blog is about how to keep the middle classes from committing unwitting suicide. A major source of prevention would be to drill it into the Doltish head that wealth comes from the whole society not the skimmers at the top. And that means relatively equal sharing of the money- not later charitable redistribution, but equity in initial earnings.

They understand this better in France, but racial segregation with huge guilty class component is chomping away at equality there too.

There was a good moment in the Warren Buffett attack on inverted tax rates in June.

To emphasize his point, Buffett offered $1 million to the audience member who could show that one of the nation's wealthiest individuals pays a higher tax rate than one of their subordinates.

"I'm willing to bet anyone in this room $1 million that those rates are less than the secretary has to pay," said Buffett.

There were no takers. But I doubt any of the presidential Dolts will hire Buffet as their economic advisor.

Row, Row Your Little Boat

I admit The Jogger looks good without his shirt. But then I never denied that he would. I only denied that Sarkozy had the slightest political or economic originality anywhere in his well-sculpted body.

This is still true. His domestic stuff is chicken feed. The university "reforms" are especially pathetic - I'll gripe about them some other time. The big foreign policy score with Libya was a) in preparation for years in the EU, b) bought with a big nuclear weapons plant deal among other things and c) involved the usual reliance on local broker-dictators, in this case the Emir of Qatar. The support of strongman misrulers of Africa to help large French businesses perfectly continues French foreign policy in Africa rather than breaks with it. Even the outreach to the Socialists in the form of Bernard Kouchner as Foriegn Minister is less than it seems: as a guest pointed out on "On Refait le Monde" on RTL last Friday, Kouchner was bypassed by almost everyone on the Jogger's team including the Jogger's wife.

The Jogger's angry cursing at two AP photographers on Lake Winipausakee isn't original either. It fits perfectly with his role as an international celebrity stalked by papparazzi (which is how most of the press is seen by the New Class of media-handlers in politics - well this is slightly original in France). If Sarkozy can jog like Jimmy Carter in 1977, why not yell at photographers like Sean Penn in 1987? No one ever said Nicholas Sarkozy had unusual depth of character, gravitas, thoughtfulness - quite the opposite. He's a creature of his desires and ego needs, the difference being that now in the Western media this is seen as a strength rather than a liability - showing regular people how to liberate themselves to respond to market forces and all that. So why shouldn't le president de la republique act like a a teen idol who's been inconvenienced?

Still, I do admire the Jogger's originality in embarking on Lake Winnipesaukee in a canoe - original, that is, for a president of France. It's a wonderful lake and I place I really miss being so far from New England these days.

Dumbness as Not Thinking

My comments on Edinburgh yesterday implied that we need a full rethinking of the meaning of EARNED income. What is "earned" vs. "unearned" and how should they be rewarded?

This issue is a sleeping giant for middle and working-class people, since we live on earned income - wages and salaries from clocked worktime and personal output. And yet we live in countries where policy is made largely by and for unearned income people, known as investors. Our investment income is generally minor, and if you discount the value of the house we live in that we may own, and the value of our pension or 401k plan, our investment income barely exists.

At the moment when the share of national income going to wages is lower than it has been anytime since World War II, we might want to think about this. But once business leaders got the right to fire any number of people at any time for "business reasons" - which now include not just impending bankruptcy but somewhat increased revenues and hence stock value - the status of work and labor have been taken off the table. No one who utters the phrase "capital and labor" - or has a good word for "Clause IV" style ideas that workers should keep most or some big fair share of the value they create - will be covered by the U.S. media. Search the websites of Democratic candidates for a positive use of the term "labor," or "worker." The closest we now come in American politics are cant euphemisms like "America's working families." As a result, we can remain in the state of dumbness known as NOT THINKING about why the great majority of us are working harder to stay in place.

I know this sounds like an exaggeration, but perhaps you can see more easily how NOT THINKING works when you look at powerful censorship effects in foreign policy. Father Frank Rich's most recent Sunday sermon offers many examples. Here's one section:

The same playbook was followed by the war’s champions when a soldier confronted Donald Rumsfeld about the woeful shortage of armor during a town-hall meeting in Kuwait in December 2004. Rather than campaign for the armor the troops so desperately needed, the right attacked the questioner for what Rush Limbaugh called his “near insubordination.” When The Washington Post some two years later exposed the indignities visited upon the grievously injured troops at Walter Reed Medical Center, The Weekly Standard and the equally hawkish Wall Street Journal editorial page took three weeks to notice, with The Standard giving the story all of two sentences. Protecting the White House from scandal, not the troops from squalor, was the higher priority.

This continuous burying and silencing and simple lying has concrete results, namely, the kind of dumbness that we see all the time in US politics, where, as one example, the Democratic representatives of "America's working families" give away power that will be used against us. This weekend's example is that Congressional Democrats agreed to the Bush administration's wiretapping bill, which Bush immediately signed. It allows wiretapping without warrants on calls that take place partly in the United States. The taps can be authorized by the Attorney General. The Dems have thus given a huge new power over the public to the executive branch.

If you need more examples of politicians not thinking - and helping others not to think - see Paul Krugman's piece on the presidential campaign. Sigh.

On to Edinburgh

Our trip to Edinburgh began and ended in the Malt Shovel. Well, our first and last drinks in Edinburgh were there. The place was thus our cultural ground zero regardless of the Fringe and other arts festivals that were about to begin. Yes, those are bagpipes towards the right of the picture. These guys haven't played together long enough to have a band name, but they were great. Bagpipe folk stomper rock? Their genre is too good to have a name yet either.

We did spend some time outside of this pub. Avery has a chance to live in Edinburgh for two years so we had a good dinner, evening walk, and morning car tour from the folks Avery might work with. We love Scotland, so it was great just to be there. Edinburgh is beautiful, and has had the brains to hang on to its Old Town and its New Town, the latter New in the 18th century and laid out in a generous neoclassical style as though beauty and people mattered, and belonged together. We tramped around a lot on our own, buying way more crime and other Scottish fiction than was good for our backs to carry back to France, and looked at regular neighborhoods like Canonhill where Avery might possibly live. I'm leaning in favor of the move, if it links her up with the Highland mysteries not accessible through higher ed. Edinburgh is still a fairly small town, and far away, even far from Paris and London. But it would be a great place to walk everywhere in Scotland, and northern England, all the way down to the Lake District. And Flybe isn't such a bad airline either, especially when your baseline, line mine, is United.

The pub band reminded me of the greatness of the UK Arts. The power of the various countries' popular music is the best known. Their fiction has been better than the American counterpart for a few decades - it's linguistically more innovative, less ponderous, less conformist. American authors read way too much of the New York Times, just like I do, and it shows.

The same goes for theater. In the UK, acting is a trade and a craft, not a pathway to commercials and movie stardom, and they do it much better than we do. UK academia is burdened with its inane Research Assessment Exercise, where the senior figures in every discipline destroy their productivity one year out of five to grade each department on a numerical scale that literally has a star on top (shoot for the 5*) - another brilliant strategy from Thatcher-Blairite market ideologues designed to tie up independent thinking in red tape. But in spite of this, all sorts of experimental creative novelty crops up in UK schools all the time. This is especially noticeable in the social sciences and business schools, where they are not like our American lapdogs to business.

Still, I am not the UK's greatest fan. Arts aside, I think it has contributed two things to world civilization: the pub, and the waiting line. In Britain people form a line to buy bread, to get on buses, and are equally good about the law of first come first served at the ever-flowing beer tap. Soon some New Labour prat will point out that the queue may have served Old Britain well, but after all it is a seniority system that insulates line members from market forces. Lines should be subject to an open auction system in which the highest bidder boards first; bus lines will be able to use the additional auction revenue to improve bus services through private-sector efficiencies. Until that prat prevails, standing in line is the best of the UK's public experiences.

director pointed out that you see a lot of people eating while walking in Edinburgh, and I saw a lot of that too - it keeps your mind off the food. I saw people lunching on coffee and a muffin, or eating prepackaged sandwiches sitting on the sidewalk. Britons are the second fattest people on earth and its easy to see why - given both market and restaurant prices they'd want to eat fatty crap and Queueing is better than, for example, using UK city parks, which are badly planted and tended compared to their French cousins: in France public space thank god remains an art form. UK line-forming is also better than long UK city walks, which except for special zones like Edinburgh's beautiful 18th century New Town show the hodge-podge effects and profit-maximizing ugliness of the ethic of selling out to the highest bidder. UK line-forming is better than eating and paying for UK food. I realize that Great British food is supposed to have improved through globalization, in which the rich cuisines of its former colonies return to save it from its brutish utilitarianism. We did eat decent budget Indian at the Red Fort off of South Bridge. But we were sent there because we could get out of the place for under the equivalent of 30 dollars (not even 2 dollars will buy 1 pound this week - the pound was between $2.03 and 2.04). The next night two glasses of OK wine and two bowls of festival food (Avery had spaghetti and I had the worst "warm squash salad" ever made) cost us $60. Peter the EAP director pointed out how many people eat while walking, and I started seeing it everywhere. It's better than thinking about what you're eating. I saw people lunching on a muffin and coffee, and lots eating prepackaged sandwiches sitting on the curb. Brits are the second fattest people on earth, and given the prices you can see why they eat cheap fatty food, and Supersize it as often as possible. My daily breakfast was a chicken sandwich at Starbucks (whose coffee was Britishized into burnt bitterness - quite unusual for my favorite neocolonial American food chain). By the third day, I and the brilliant cook Avery were reduced to bread and goat cheese for breakfast, bread and blue cheese for lunch, and bread and hummus for pre-airplane dinner.

The point is that if all your leaders care about is money, it's not going to taste good. It's not going to look good either.

Of course the best stuff is as great in the UK as everywhere else. There were the usual quota of mobster-black Range Rovers and fancy supermarkets. It's just the regular stuff that is crap, really much crappier than the regular stuff in France. Anyone can have a country with great stuff for rich people. The whole point of "middle-class societies" is that great stuff would be there for the vast majority, and eventually everybody. On this count, Anglo-American governments stopped caring a while ago. France is a much more decent middle-class country than the US/UK beacon of the world, on the basis of quality of food, information, mass transit, K-12 education, and everybody's public space. The UK has added the special insult that one can also find on the American coasts - good housing, eating out, vacation hotels, and other elements of traditional middlebrow living are blatantly and militantly out of reach of the proverbial middle-classes, to say nothing of hourly-wage working folks. If Middle Britain has these things, it is because it is borrowing the money. (See one official international comparison of rising debt loads). Modern governments are eagerly indebting their citizenry, since then they don't have to pay for it, but France much less so than the US, UK and Japan.

There's nothing accidental about this. For thirty years the motto of US and UK leaders has been "Business Knows Best." Their corollary is "Business is Always Right." Their other axiom is "the market does everything better." The financial and real estate sectors make huge money out of rising real estate prices and increased debt loads. Obligatory hand-wringing aside, debt the big US/UK growth industry, so why should they stop it?

Housing remains an most obvious symptom of booming UK inequality. I read The Scotsman whenever I'm in the country, and thus saw Andrew Milne reporting that the average income of a first-time Scottish home-buyer is 30,000 pounds a year. The average Scottish house price is 140,000 pounds, and that jumps to 220,000 pounds in Edinburgh (see the "Property' section for 2 August 2007). First-time buyer deposits have gone from 6,000 pounds to over 20,000 pounds in five years. How do you save 20,000 pounds on 30,000 a year when you spend 30 pounds for a glass of wine and a bowl of spaghetti? (See a related example of younger people getting stuck in the US just trying to stay in the big-city rental market.) Whole books have been written on the old breaking the social contract with the young via debt - see Strapped and Generation Debt. And don't get me started on Gov. Arnold Schwarzenegger's obsession with funding new sidewalks and traffic lights with bonds. We'll use it now, the grandkids will pay for our stuff later!

Since I also read The Guardian when I'm in the UK, I saw the core UK problem nicely summarized in Geoffrey Wheatcroft's superb column, "They still use the name Labour, but now only sneer at the working class." Wheatcroft showed that the original Labour Party founders were inspired by John Ruskin's praise of labor and attack on market measures of mankind. The Ruskin slogan that inspired Labour, Wheatcroft wrote, was "There is no wealth but life." For Tony Blair and New Labour, Wheatcroft wrote, "There is no life but wealth." The enormous reversals of not just political power but also social aims flows from this flip from the vision of a world where value flows to work and craft and its various connections to and creation of the world. Think plumbers and also musicians. Imagine a society run for them.

Blair got Labour to repeal its Clause IV, which Wheatcroft cites in part. Here's the full version:

To secure for the workers by hand or by brain the full fruits of their industry and the most equitable distribution thereof that may be possible upon the basis of the common ownership of the means of production, distribution and exchange, and the best obtainable system of popular administration and control of each industry or service.

New Labour said it wanted to repudiate state-planned socialism, or the Soviet-style communism that many saw in the phrase "common ownership of the means of production." No one has advocated Soviet planning for decades, not even on the socialist left. Blair could also have cut or reworded the second part of the Clause while keeping the opening. We must look for Blair's motive of repudiation at something besides his objections to Stalin's 5 Year Plans.

Blair's clear record of mindless application of business solutions suggests that he actually wanted to repudiate a major obstacle to undiluted financial management. This was the belief in the social value of labor, since that meant that laboring people should have an enormous and majoritarian say in politics, which in turn would mean economic control as well. In the last dozen battles in the long war of economic elites against any labor influence in economics, New Labour has sided with the former, acting as though all value comes from capital and its clever financial architects. The New Labour Party is actually the Management Party, having not just given up on but rejected a real presence for labor in governing both the economy and society. This is the source of the prat-like nature of US and UK society. It also explains the supposed mystery of why Blair and Bush love each other so much: they both believe that money is always good and always right.

Whatever Blair thinks, any Labour party - even the Dems for that matter - should push hard for the great core of Clause IV - for securing for workers, whether blue- or white-collar, the world they actually earn with their work.

This is not now happening, as my new economist friend Annie Vinokur reminds us in an international comparison of student fees and loan policies: in the US, salaries represented 53.6% of Gross Domestic Product in 1970, but are now only 45%. Between 2000 and 2005, work productivity rose almost 17%, but median salaries by less than half that. Our neighborhoods and streets and schools look and feel the way they do because the working majority isn't getting back what they put in.

There's some good news for the trusty middle-class bankers and lawyers. The Bancroft family couldn't afford to take the relatively independent Dow Jones and its flagship Wall Street Journal and sell it to global media mogul Rupert Murdoch for $5.6 billion unless Murdoch paid their consultant and lawyer fees, which ran around $60 million. Too bad giving one of the remaining Rings of Power to Mordor had such a large transaction fee! So some bankers and lawyers did indeed get back what they put in. Just don't look for a flat in a neighborhood they're interested in.

Thank Baal for Thursday night bands at the Malt Shovel.