Corporate Suicides in France

About 24 employees of France Télécom have killed themselves in the past 18 months, and most of them have been tied directly to the workplace environment, and particularly insecurity and stress. The story has been well-covered in France, and the NYT has a piece in English on what has become a huge story about the effects of workplace unhappiness that underlies the bollocks about "lifetime employment" and how good everybody with a job really has it.

Productivity gains are often attributed to technology, but the are more likely to come from overwork and other conditions that cause stress.  The U.S. professional workforce has more or less abandoned the 40 hour week - and they don't get paid for extra hours.  The toll on quality of life is basically ignored, because in the post-Cold War period quality of life has taken a back seat to sheer production, growth, and wealth as the measures of all things, drowning out peoples' voices and actual experiences that should be making the rules and not the other way around.

Inequality Takes Another Bow

forever on the rise, now fueled by the recession near you, and with predictable effects on the middle: 

Household income declined across all groups, but at sharper percentage levels for middle-income and poor Americans. Median income fell last year from $52,163 to $50,303, wiping out a decade's worth of gains to hit the lowest level since 1997.

Future of Housing?

At Calitics, Robet Cruickshank has a nice piece on boomer housing fortunes and looming failures - the housing boom as a short-cut to wealth that has helped wreck California and that won't save their retirement either.  It's more  relearning of the old lessons we stuipidly forgot, and maybe too late . . .

Here's his summary of the dumbness:

After having spent 30 years steadfastly refusing to pay higher taxes to help provide to younger generations the affordable education, health care, and other benefits [boomers] themselves enjoyed when they were younger, they have now created a situation where they'll either have to live in their paid-off houses without the ability to provide for their own needs, or will have to sell for cash at fire sale prices in a marketplace without enough buyers.

thanks to Michael M for the link

Why Must We Relearn the Obvious?

Fr. Frank's piece today on Obama's Afghanistan-Vietnam made me sad.  It's a typically learned and perceptive reflection on the historical parallels for Obama's increasingly obvious quagmire in foreign policy.  By why does he have to work so hard to lay out what any 8-year old outside the beltway can see? The US in Afghanistan is a way to kill innocent people, piss off absolutely everyone, block economic recovery, throw away whatever money the public has left, destroy his own presidency, and revert the Dims to an imitation of Republican hawkishness that will lose in 2012. 

I felt compelled to write a whole book about failing cultural capacity in the US - the reduced ability to learn quickly, retain what we learn, and apply knowledge when it is actually relevant.  Afghanistan.  Just say the word.  How stupid can we really be?  Where's the bottom of our stupidity?

"White House Near Chosing U.S. Location to Hold Gitmo Detainees" Am I really reading this headline today, and not three years ago when Cheney was Prez and we were winning the war for hearts and minds in Iraq?

I heard multiple interviews this week in English and French from leaders trumpeting the G20 reforms.  But the best analyses were first, from Lori Wallach of Global Trade Watch, who pointed out the contradictions between reigning in finance and letting do whatever the hell it wants, i.e. more of what we have; and then a citation in a  John Authers column in the Financial Times, this of one David Bowers of Absolute Strategy Research in London, describing the equity markets right now:

It’s the last game of pass the parcel. When the tech bubble burst, balance sheet problems were passed to the household sector [through mortgages]. This time they are being passed to the public sector [through governments’ assumption of banks’ debts]. There’s nobody left to pass it to in the future.

That's where we are now, with no plan from the top, except for pointless military interventions and additional threats, which utterly undermine Obama One's promises of an era of rebuilding. 

We are going to have to start that work by ourselves.

Reforms that Weren't, Reforms to Come

President Obama's speech about reforms in the financial sector was disappointing, to put it mildly.  There were no plans for implementation and no ongoing developments that might actually change the system that blew things up. The consumer agency has nothing to do with stopping problems with overleveraging, opacity, internal fragility, and the unbelievable social costs of the extreme profits involved in financial speculation. Obama appears to be assuming a trickle-down recovery, although evidence at the state level is very much to the contrary. See California's tax revenue stream, for example:

I assume folks who track spreads in lending rates, loan volume and the like could clarify the "two economies" divergence that is crushing a lot of regular folks. You'd think Obama would at least have figured out that the backlash against his health care reforms are fueled by very reasonable economic fear and panic enabled by his non-existent financial reforms.

There's more hope in the report of the Stiglitz commission to the French government on moving from narrowly economic to broader measures of social progress.   See also the interesting papers on the commission's website.

It would be nice to be able to say at some point in my lifetime that the US was back on the front lines of economic thinking. That time still looks a long way off.

Dumbest Health Care in the World

Thank you Matt Taibbi for this opener:

Let's start with the obvious: America has not only the worst but the dumbest health care system in the developed world. It's become a black leprosy eating away at the American experiment — a bureaucracy so insipid and mean and illogical that even our darkest criminal minds wouldn't be equal to dreaming it up on purpose.

 Keep reading.  Taibbi combines a certain gonzo directness with lots of lucid detail on political processes that people really need to know in order to understand what is happening in their government.

We are still so screwed

Thus spaketh the Congressional Budget Office's projections, in which ballooning deficits don't buy us lower unemployment.   When are policymakers going to get really upset about this and actually do some New Deal public works and general rebuilding of the kind our decrepit public infrastrucure actually needs?

Republicans have absolutely nothing to offer on the economy, health care, education, you name it, as Arnold proves every day in California.  Their operatives are making Americans insane. The president of the US wants to give a speech to children about how school is important.  In the Insane Country, saying school is good becomes controversial. Hundreds or thousands of people spend their working day considering what to do about this.

In Florida's Indian River County, the superintendent met with local officials up to the 11th hour to determine how to treat the broadcast. According to the Press Journal, school officials last week decided that the speech had to be taped and reviewed before showing students, meaning it would not be shown live.

And these people are allowed to run schools for children?  They are completely dumb.

Obama rose to the occasion with this crescendo:  "I expect great things from each of you," he said. "So don't let us down -- don't let your family or your country or yourself down. Make us all proud. I know you can do it."

"we" can. they can't.

Krugman Softpedals the Woes of Economics

Paul Krugman has a lot of good moments in his big think piece on the many failures of the field of economics.  He sums up his thesis early on:

Few economists saw our current crisis coming, but this predictive failure was the least of the field’s problems. More important was the profession’s blindness to the very possibility of catastrophic failures in a market economy. During the golden years, financial economists came to believe that markets were inherently stable — indeed, that stocks and other assets were always priced just right. There was nothing in the prevailing models suggesting the possibility of the kind of collapse that happened last year. Meanwhile, macroeconomists were divided in their views. But the main division was between those who insisted that free-market economies never go astray and those who believed that economies may stray now and then but that any major deviations from the path of prosperity could and would be corrected by the all-powerful Fed. Neither side was prepared to cope with an economy that went off the rails despite the Fed’s best efforts.

The blindness of a whole field was possible because of a wholesale "retreat from Keynesianism and a return to neoclassicism."  

There's some handy simplified intellectual history here, but the best feature of the piece is Krugman's linking of even those liberal economists who rejected hard core neoclassicism (and its key mathematical axiom, the efficient market hypothesis) to a debilitating consensus.

But the self-described New Keynesian economists weren’t immune to the charms of rational individuals and perfect markets. They tried to keep their deviations from neoclassical orthodoxy as limited as possible. This meant that there was no room in the prevailing models for such things as bubbles and banking-system collapse. The fact that such things continued to happen in the real world — there was a terrible financial and macroeconomic crisis in much of Asia in 1997-8 and a depression-level slump in Argentina in 2002 — wasn’t reflected in the mainstream of New Keynesian thinking.

The lesson here is that moderation is blindness.  Moderation enforces the intellectual limits of the consensus.  In this case, "the New Keynesians, unlike the original Keynesians, didn’t think fiscal policy — changes in government spending or taxes — was needed to fight recessions. They believed that monetary policy, administered by the technocrats at the Fed, could provide whatever remedies the economy needed."

Then there's the not so good. The first weakness is the total lack of novelty in the critique of economics as delusionally neoclassical.  People outside economics have been saying this for years or decades.  They are often called sociologists or anthropologists, and have always thought that the models had lost touch with institutions, people, and also of course power and coercion, which played huge roles in setting up actual economies.  In addition to the recent book by Curious Capitalist Justin Fox, there is also Doug Henwood, longtime editor of Left Business Observer, whose classic 1996 book Wall Street offered a much more thorough intellectual history and critique than Krugman even hints at here. 

More importantly, Krugman blames "beauty" for leading economics astray.  He offers the philistine tag line, "As I see it, the economics profession went astray because economists, as a group, mistook beauty, clad in impressive-looking mathematics, for truth."  In reality, economists mistook money for truth.   Models that made important people lots of money had to be true.  Krugman only superficially considers the possibility that financial incentives corrupted the heart and soul of the economics profession.  Some of this corruption was personal and some was collective - it's hard to argue with what seems to be success.  But economists are like all scholars in being paid to look past the surface of things to the real forces at work. They have flopped big time, and they

Finally, Krugman's cure is little more than a weaker form of the disease:

So here’s what I think economists have to do. First, they have to face up to the inconvenient reality that financial markets fall far short of perfection, that they are subject to extraordinary delusions and the madness of crowds. Second, they have to admit — and this will be very hard for the people who giggled and whispered over Keynes — that Keynesian economics remains the best framework we have for making sense of recessions and depressions. Third, they’ll have to do their best to incorporate the realities of finance into macroeconomics.

These are three ways of saying that economists have to admit that markets aren't perfect. This may well get them into a freshman sociology or culture or history course, but it won't get them to the point of explaining how our economies actually work or how to keep them from being giant factories of social inequality and environmental destruction.  Moderation is blindness, even when it comes from Krugman.

What if We Don't Shop?

The NYT published this piece about fundamental changes in US consumption.

Millions of Americans spent years tapping credit cards, stock portfolios and once-rising home values to spend in excess of their incomes and now lack the wherewithal to carry on. Those who still have the means feel pressure to conserve, fearful about layoffs, the stock market and real estate prices.

I've wondered for years what  most Americans like to do besides shop their way up the commodity ladder to bigger or more expensive. I don't know that many people who did this full time, but the ones who do seem to make the rules for everyone else.

We're seeing a forced slowdown, but no real shift in desires - are we?  Are consumers as totally inflexible as bankers, who a year after the big meltdown have taken all the government's money, maintained all the rules, and blocked all reform?

The main difference seems to be that bankers have more money - including more public money than the public has.

Even Economists Wonder: Is this NOT a Recovery?

Here's a doubting Stiglitz.  W-shapes, anyone?

There's some good stuff in this June piece by Marshall Auerback on why our bank bonanza isn't an economic bonanza, and will never be.

And here's a piece by one of my Supply Sider Pals on the "Non-Stimulating Stimulus." He, being a supply sider and a Poverty Denier, thinks the non-stimulus is good, because all government spending is by definition bad.  But his data is interesting - only 12% of the stimulus is going into new purchases of goods and services.  This helps explain the non-stimulus.