Archive for the ‘economics’ Category
There’s a terrific article up at n+1 by Stephen Squibb on the origins of the current crisis. The piece loses none of its pertinence – in fact, probably the opposite – due to the “resolution” of the debt ceiling issue yesterday. Go take a look…
From Paul Krugman today:
Oh, and the UK: was it “forced to impose painful austerity”? Here’s the interest rate on 10-year UK bonds:
There was no sign of a crisis of confidence in the UK budget before the May election; the Conservative government chose to embark on austerity, it wasn’t forced into it.
1. According to Bloomsberg Businessweek, “In 2010, the U.S. added 937,000 jobs; Foxconn, the Taiwan-based maker of nearly every consumer product you wanted this year, added 300,000.” But on the other hand, from another article in the same magazine,
Ah Wei has an explanation for Foxconn Technology Group Chairman Terry Gou as to why some of his workers are committing suicide at the company’s factory near the southern Chinese city of Shenzhen.
“Life is meaningless,” said Ah Wei, his fingernails stained black with the dust from the hundreds of mobile phones he has burnished over the course of a 12-hour overnight shift. “Everyday, I repeat the same thing I did yesterday. We get yelled at all the time. It’s very tough around here.”
Among other things, Foxconn manufactures the iPhone and the iPad for Apple.
Further, China moved at the end of 2010 to limit its exports of the “rare earth metals” whose supply it almost entirely controls and which are necessary for the production of most electronic devices so as, it seems, to protect its share of the manufacturing market as its workforce begins to expect ever higher wages. In other words, if there’s fancy strange rocks hiding in the engine room of your Device, they’re likely going to have to be made in China for the foreseeable future.
2. On the other hand, the guy who made the art installation pictured above – which seems to me about the most sublimely appropriate artistic representation of the global economy imaginable – had his studio demolished in Shanghai last week.
Chinese demolition workers have torn down the Shanghai studio of the artist Ai Weiwei – a move he says is linked to his political activism.
Mr Ai said the demolition crews arrived without warning on Tuesday and flattened the building within a day.
He originally had permission to build the studio, but later officials ordered it to be destroyed, saying he had failed to follow planning procedures.
Mr Ai has been increasingly vocal in his criticism of China’s leaders.
The work pictured above is “Sunflower Seeds,” which was recently on display in the Turbine Hall of the Tate Modern. Here’s the description from the Tate’s website:
Sunflower Seeds is made up of millions of small works, each apparently identical, but actually unique. However realistic they may seem, these life-sized sunflower seed husks are in fact intricately hand-crafted in porcelain.
Each seed has been individually sculpted and painted by specialists working in small-scale workshops in the Chinese city of Jingdezhen. Far from being industrially produced, they are the effort of hundreds of skilled hands. Poured into the interior of the Turbine Hall’s vast industrial space, the 100 million seeds form a seemingly infinite landscape.
Porcelain is almost synonymous with China and, to make this work, Ai Weiwei has manipulated traditional methods of crafting what has historically been one of China’s most prized exports. Sunflower Seeds invites us to look more closely at the ‘Made in China’ phenomenon and the geo-politics of cultural and economic exchange today.
Without getting all Pater-before-La-Gioconda on you, I hope that you can even vaguely imagine the overwhelming power – at once critical and, well, crushingly aesthetic in some sort of very old fashioned sort of sense – of seeing this work. When the visual titanicness of the display meets your recognition that each of the 100,000,000 seeds was painstakingly handpainted by human beings working for a wage, one comes as close as one can – as I ever have – to a painfully concrete yet at the same time marvellously abstract sense of the absurd scales, absurdly tipped scales, that orchestrate our world today.
3. Francis Fukuyama, Sisyphusianly obligated to revise forever his early call of time at the pub of history (how’s that for a mixed metaphor?), has recently written a piece for the FT titled “US democracy has little to teach China.” Here’s an extract:
The most important strength of the Chinese political system is its ability to make large, complex decisions quickly, and to make them relatively well, at least in economic policy. This is most evident in the area of infrastructure, where China has put into place airports, dams, high-speed rail, water and electricity systems to feed its growing industrial base. Contrast this with India, where every new investment is subject to blockage by trade unions, lobby groups, peasant associations and courts. India is a law-governed democracy, in which ordinary people can object to government plans; China’s rulers can move more than a million people out of the Three Gorges Dam flood plain with little recourse on their part.
Nonetheless, the quality of Chinese government is higher than in Russia, Iran, or the other authoritarian regimes with which it is often lumped – precisely because Chinese rulers feel some degree of accountability towards their population. That accountability is not, of course, procedural; the authority of the Chinese Communist party is limited neither by a rule of law nor by democratic elections. But while its leaders limit public criticism, they do try to stay on top of popular discontents, and shift policy in response. They are most attentive to the urban middle class and powerful business interests that generate employment, but they respond to outrage over egregious cases of corruption or incompetence among lower-level party cadres too.
Fukuyama focuses, as he would, on autocratic China’s ability to force infrastructral development and to please it’s new and growing – yet still demographically insignificant – urban middle classes. The infrastructure is important sure, and the middle classes may well be happy with the fruits of upward mobility, but we all know that the real competitive advantage – and human cost – of China’s “democracy deficit” is the fact that it is able to manipulate its internal labour market and keep its currency artificially weak, thus keeping standards of living artificially depressed.
Despite the fact that Fukuyama stages his piece as a question begging affair -
During the 1989 Tiananmen protests, student demonstrators erected a model of the Statue of Liberty to symbolise their aspirations. Whether anyone in China would do the same at some future date will depend on how Americans address their problems in the present.
- the title gives the game away. Fukuyama hasn’t really described a question so much as yet another equipoised situation, a roadmap of the configuration that, whatever the grumbling of our leaders, is basically the baserock foundation of our current and miserable status quo.
4. What causes Foxconn workers to kill themselves is that which permits Foxconn alone to add a third of the number of jobs as the entire US economy in 2010 is that which depresses wages around the world, and is that which renders Ai Weiwei obnoxious to the PRC, and is that which sanctions the race to the bottom that we’re all suffering through, the rise in in what the BBC was chirping away this morning about as the “misery index.”
We are suffering separately, and somewhat differently now. The ebb tide of the economic cycle is rapidly lowering all of our boats – our separate little skiffs that float on the sea of production. Would that we could figure out how to suffer, and thus perhaps to alleviate the suffering, together.
Just spent the morning banging out a piece centred on this, from the NYT:
The “new normal,” as it has come to be called on Wall Street, academia and CNBC, envisions an economy in which growth is too slow to bring down the unemployment rate, while the government is forced to intervene ever more forcefully in a struggling private sector. Stocks and bonds yield paltry returns, with better opportunities available for investors overseas.
Didn’t we just have a “new normal,” only slightly different from this one, a few years ago? Anyway, hope someone takes the piece… We’ll see. Again, wish I could link to it from here if it goes. Soon enough, if things go right….
The Greek crisis is, simply speaking, simply the clearest and most direct illustration of the general tendencies in place for handling the financial crisis. In most cases, states have taken on enormous debt in order to refinance corrupt banks that will only later, when the loans come due, result in dramatic cuts and, you know, closed universities and reduced medical benefits and the like. With the EU / IMF intervention in the Greek economy, both steps involved with the privatization of public wealth under the conditions of crisis, are happening at exactly the same time. From the NYT today:
The government is now committed to whack back the public sector, including pensions and popular social benefits; to raise consumption taxes to record highs; and to promote tax reform, in an effort to shrink the enormous black market, reduce tax evasion and increase government receipts.
Embedded in the euro and thus no longer in control of its own currency, Greece cannot take the easy way out of its debt by devaluing. So Greece must either cut its spending sharply or default on its loans — which would badly damage German and French banks carrying a lot of Greek debt.
That is considered one reason President Nicolas Sarkozy of France has been so quiet on the Greek crisis, Mr. Fitoussi said. The Greek deal “is an indirect way of bailing out French and German banks,” he said. “The French understood this from the start, but Germany didn’t seem to.”
Katinka Barysch, an economist and deputy director of the Center for European Reform in London, said that that realization had hit home in Germany. “It might be unpopular for the Germans and Europeans to bail out Greece, but it will be even more unpopular for them to bail out the banks that owned Greek bonds,” she said.
The involvement of extra-state institutions, like the EU and the IMF, allow the process in play to be rendered more brutally efficient, faster. The US federal government can’t quite get away with, say, handing the Veterans Administration health services infrastructure to Citigroup, nor the UK government change the direct deposit address of welfare benefits from the urban poor to the Royal Bank of Scotland, but rather have to run up debt that will later be repayed by privatization and disinvestment. With Greece, however, the interim in the middle has been shrunk considerably…
In Athens, the Greek government had no choice but to seek an I.M.F. solution after its costs of borrowing skyrocketed, but that has not made the negotiations for aid any easier.
According to people who have been briefed on the talks, the aim is to secure from Greece a letter of intent for even deeper budget cuts than the tough measures imposed so far, like reductions in civil service pay, in exchange for emergency funds.
Steps being discussed include closing down parts of the little-used Greek railway system, which employs 7,000 people and is estimated to lose a few million euros a day; limiting unions’ ability to impose collective bargaining agreements, which lead to ever-higher public sector pay; cutting out the two months of pay that private-sector workers get on top of their annual pay packages; increasing the retirement age and cutting back on pensions; and opening up the country’s trucking market in an effort to lower extremely high transportation rates that have hindered the country’s competitiveness.
With Greece now shut out of the debt markets, it has little leverage to resist — especially in light of the 8 billion euros it needs to repay bondholders on May 19. Analysts expect a deal by next week at the latest.
I’ve always been a fan of the euro – not that I’ve given it the amount of thought that I’ve given, say, the style indirect libre and such matters. But it does occur to me today that one thing the common currency seems directly to prevent is the present or eventual adoption of the Kirchner method of handling such crises:
On 15 December 2005, following Brazil’s initiative, Kirchner announced the cancellation of Argentina’s debt to the IMF in full and offered a single payment, in a historical decision that generated controversy at the time (see Argentine debt restructuring). Some commentators, such as Mark Weisbrot of the Center for Economic and Policy Research, suggest that the Argentine experiment has thus far proven successful.Others, such as Michael Mussa, formerly on the staff of the International Monetary Fund and now with the Peterson Institute, question the longer-term sustainability of Pres. Kirchner’s approach.
In a meeting with executives of multinational corporations at Wall Street—after which he was the first Argentine president to ring the opening bell at the New York Stock Exchange—Kirchner defended his “heterodox economic policy, within the canon of classic economics” and criticized the IMF for its lack of collaboration with the Argentine recovery.
The Kirchner method, rather than starving labor and the state in service of debt repayment, imposes “austerity measures” on the international banks that made the loans (confident that they’ll be back when the situation improves – and they will) and allows leeway in the domestic effects of a financial crisis (i.e. Argentinians weren’t buying Japanese televisions for quite a bit of the decade…) But due to the eurozone arrangement, this way out, whatever the ideological predilections of those in power, is probably off the table now and for a time to come… As it turns out, the eurozone right now looks like an engine for stealing trains from the Greeks to keep Orlando vacations affordable for the Germans…
And of course, amidst all this, the NYT runs its inevitable ordinary Greeks admit that they are a nation of thieves, and therefore deserve the pain that awaits them piece….
“We did this to ourselves,” said Mr. Koptides, 37. “It is our problem. It’s not Germany or Europe’s fault. We did this to ourselves.”
Greeks seem to be engaged in national soul-searching these days, wondering whether traits they once found amusing might have led to many of their difficulties now.
Some say their country may have been unprepared to join the European Union in the first place. Some focus on how European Union funds sent to Greece were spent on wasteful projects. Greece’s last administration hid the extent of its debt.
“There has always been this way of thinking in Greece that the thieves are the clever ones and the ones who don’t steal are the patsies,” said Petros Anagnostou, 46, a book dealer. “We have to develop a conscience as a community, to see ourselves as a collective society. If it is a jungle out there, then we will eat each other and end up in a place like we are today.”
But of course the right path toward the reestablishment of “a community… a collective society” is by the elimination of the right to collective bargaining and the phasing out of public mass transit!
From an FT article yesterday about the probability that European states are about to sell-off what’s left of their publically-owned companies in order to plug budget gaps:
“The original catalyst for privatisations in the 1980s and 1990s was ideological, but the current motivation will be far more financially-driven,” says Craig Coben, head of equity capital markets in Europe for Bank of America Merrill Lynch. “Governments don’t quite have the crown jewels they had before but they are going to be looking to take advantage of market opportunities.”
Of course, both episodes are ideologically-driven, and of course there was a “financial” issue at play the first time around too, but then again we know what Coben means. The first round of privatizations happened because it was the right thing to do, this time because, ostensibly, there’s nothing else to do, which may have as much to do with the volume and viability of other possible answers in the two cases, but again, we know what he means.
But there’s something counter-intuitive about the progression, isn’t there? A drive that starts in ideological realm, the realm of argument and fantasy, that procedes to materialize itself, to come true. That is to say, there’s something psychosomatic, something of the imagined-become-real symptom about the long progression of this crisis. You worry so much about having a heart attack, you get so anxious about assembling your collection of cures both conventional and holistic, chemical and folk-borne, that there you are, dead in the parking lot of your Recently Privatized Medical Facility.
Frederick Studemann argued recently in the FT that Aeroflot in the 1970s was a forerunner of the low-cost, low-service airlines of today.
Not only was it far more extensive and cheaper than in the west, it was less elitist. While back home air travel was for the few, in the USSR it was for the many – just another mode of public transport. Aeroflot, the national carrier, was both the world’s biggest airline and one of the cheapest, so catching the red-eye to Vladivostok was as easy as hopping on the Number 2 trolley bus on Kutuzovsky Prospekt.
Frankly, it was difficult to know where to start. Maybe with the pervasive, sweet, plasticy smell of the planes or the routine delays and constant lack of information. Or how about the flint-faced stewardesses stomping down the aisle offering the “choice” of tangy water or tangy water? Or perhaps the unspeakable food, the shabby fittings and the bleak, run-down airports in the middle of nowhere. Then who can forget the grumpy staff for whom dialogue was an alien concept, preferring instead to find new ways of deploying arbitrary rules and associated punishments. All in all, not unlike a rush-hour ride on the Number 2 trolley bus.
Any of this sound familiar? We may have scoffed at the notion of Aeroflot leading the world.
But how wrong we were. Thirty years on it is clear that far from being a laughable expression of a clapped-out system destined to crash under the weight of its internal contradictions, Aeroflot was in fact the pioneer. Low-cost travel today is simply playing catch-up with those Heroes of the Soviet Union: passengers packed in like sardines, robbed of respect and subjected to a baffling array of terms, conditions and penalties. Passengers do not interact with people but with an impersonal, unforgiving apparat dedicated to the ruthless pursuit of a (centrally fixed) plan.
It’s an interesting effect, this one, when some product sector or another in capitalist economies drops low enough in price that it starts to take on the sheen of a popular good. (Can’t find the story, but some UK government official or another recently defended the “right” of “ordinary people” to low-cost flights… Can anyone remember this and point me in the right direction so that I can update the post?) Google’s empire, to cite the most obvious example, depends entirely upon this populist semblance of public provision – everyone has the “right” to a free email address, a free blog, free news stories, free internet search, free telephony, etc… Chris Anderson’s just written a book about this, that according to the publisher’s description
considers a brave new world where the old economic certainties are being undermined by a growing flood of free goods – newspapers, DVDs, T shirts, phones, even holiday flights. He explains why this has become possible – why new technologies, particularly the Internet, have caused production and distribution costs in many sectors to plummet to an extent unthinkable even a decade ago. He shows how the flexibility provided by the online world allows producers to trade ever more creatively, offering items for free to make real or perceived gains elsewhere.
Corporations like Ryanair and Google are figures that populate one of the stories that capitalism loves to tell itself and those doomed to live in its grasp – that given enough time and given the allowance for the markets to operate without regulatory hindrance, the general level of affluence will rise as the cost of living drops. But of course, especially when it comes to the airlines, most of the cheap or freeness is a smoke and mirrors false advertisting effect. The Times (UK) ran an article revealing what anyone who’s ever tried to check a bag on a Ryanair flight already knew – that BA actually costs less on many, many flights than its cut price competitors. But let’s even pretend that you actually can access a low-cost flight. I’m sure many many people actually have flown to Spain or Greece from the UK for what I pay for a pack of cigarettes everyday, even if not nearly as many as the advertisements would have you believe.
The answer, and the overall answer to the free and the cheap that is one of the primary calling cards of capitalism remaining, of course involves a heady mix of financialisation, micro-payments, consumer distraction, non-populist austerity, and government subsidy. And the game ends with the demise of the less cynically-minded corporations and then prices rising right back to the place where they were before the game began.
Would love to say more about this, but can’t yet. Given world enough and time, I’d sit in the British Library – or at least the Pret à Manger across Euston Road from the it – and work on a new version of Kapital, centred on the mystical question of what it costs us to view the tiny advertisement at the top of our Gmail inboxes. Actually, seriously… There’s the magnum opus right there – political economy, temporality, “free,” text, interactivity, attention in distraction, ecology – everything all at once… Perhaps once I’m done with the tedious thing I’m working on now… Like Marx, I a) live in North London b) like do my drinking on or near Tottenham Court Road and c) tend to spend Saturdays with my family on Hampstead Heath, so I think I’m a perfect fit for the job.
It’s funny how you hear a lot less about the Walmart Effect lately, though, isn’t it?
Perhaps one of the most comforting ways to think of the current crisis, if you’re an academic in the humanities with some or lots of investment what we call “theory,” is that it is a giant, real world Sokal hoax, except one written collectively but especially by the Sokaled themselves, and that has exposed the so-called “discipline of economics” as a self-spinning, jargon-laden fraud.
Their journals should be defunded, their tenureships revoked, and I hope that their TIAA-CREF accounts have been well and truly emptied, those guys.
Red asses not yet red enough, here, at the NYT.
Interesting! Brad DeLong slams David Harvey (at one point as a provisioner of “pointless intellectual masturbation”) and Harvey shows up in the comment box to defend himself. The final paragraph of Harvey’s response:
These are dangerous times and I would have thought the definition of fair and unbiased to which DeLong subscribes might go somewhat further than that given by Bill O’Reilly. What is needed is generous critique, the taking of whatever is positive in competing accounts and a real struggle to come to terms with ways we might better proceed. It will be hard enough to save capitalism from the capitalists but the real tragedy here is that the real message from DeLong’s commentary is that we need also to save capitalism from the economists.
(Ha! Found it after I googled for “William James chronic masturbation” because I was trying to say something funny in the last post about this sort of thing… Much better that I didn’t, I think….)
Why are economists into such bad fiction? Why do they so enthusiastically announce that they are? Is Stross to the soft neoliberals what Rand was to Greenspan and the like?
Do you know what’s funny to reconsider in exactly this light? Marx’s thing for Dickens. Shhhh. No I love Dickens. But you know, there’s a way to my jadedly modernist eyes that maybe, if you pull the covers around on the bed just the right way, there’s a commonality there.
In order for this to be about something other than being mean and elitistly snarky about bookjackets, I have to say something about the fiction itself, don’t I? What I would say would have something to do with the basic anticipation / fulfillment / frustration model of narrative form that I somewhat idiosyncratically have been carrying around ever since I was a wee litscholar.
Anyway, more, perhaps, to come, when less worked right to the brink of adieu.
(I’d like to quote it, but it would have to be in full, which isn’t good blog form, so go look and maybe come back…)
Now, I haven’t much to add except this: the trick of course is to figure out what to do with the symmetry. What does it matter that poetry imitates price or price poetry or that there’s an inadvertent or atmospherically determined correlation between the two. I ask because this is exactly the sort of thing that I am trying to clarify in my own stuff right now. And in fact, a clarification of this would be a clarification perhaps of the point of the study of literature today (as broadly or narrowly as you’d like to think “today”). And perhaps further (and more importantly) it might also be a clarification of the point of literary creation when aimed toward any end other than airballing polemical delivery or obsolescent content provision. Hmmm…. Art as social heiroglyphic where we can read what can’t be read (or can it) elsewhere, but if we can read it elsewhere, why bother with the detour? Or form appears in the art more clearly than elsewhere – because everywhere else the seamstitches are hidden and the statues seem to be balanced, free-standing?
I’d love to hear what Jane thinks, but it’s perhaps not a conversation that one has in a comment box.
I think if I could figure this out, or at least feel as though I’m on my way to figuring something out about this, I could work again as I used to…
Was at this conference a few weekends ago, not as much as I would have liked, but a bit. Saw Owen Hatherley’s paper – excellent stuff as usual. I want to be a little unspecific about what I was doing there, to protect all involved. But I was in a position to ask people questions about literature and politics, and I sort of duffed it a bit. My questions were fine, but I didn’t really ask the question that I wanted to ask, at least in the way that I wanted to ask it. There are reasons why I didn’t, the leading one being that it’s the sort of question that has a tendency to drive situations (seminars, conference panels) off the rails, away from the work under discussion. But still I’m a little disappointed I didn’t ask it. Here it is, roughly, though way more self-referentially than I would have made it there:
I’ve written one thing in my life that I’m relatively proud of. It’s a piece of academic literary criticism, one that I think says something fairly new and profound about a very canonical work of literature. It was accepted for publication at a fairly prestigious journal as I was applying for jobs the first time around, and it served as my writing sample when I applied for the job I now have. In short, it has served me very well.
Here’s the issue. It is, I think, a fairly good piece of leftist literary criticism. Marxist might not be quite the word, as there’s not tons of Marx referenced in the paper itself, but it is centered on questions of work and employment and what they have to do with the way that the work is written and what the work ultimately has to tell us about these things and its world in general.
That said, and here’s where the problem starts – a problem both extremely obvious yet something that none of us in the business of left literary academia seem to want to address – what is very very clear is that the readership of this piece will be comprised almost entirely of scholars and students of the author in question. They will use this piece in order to help compose their own works on the same topic by borrowing from or adding on to or arguing with my paper. It is impossible to think of a single possibility of the findings that I advance in this paper having any effect on anyone anywhere who is working on anything other than literature.
So… there is an utter disconnection between the tools that I put to use in this paper, what the tools were intended to do, and the context of usefulness that my paper itself fits into. The left technology that I brought to bear upon the text I brought to bear because I believe in its potential worldly usefulness, but when applied to literary texts, that usefulness becomes merely literary, an acting-out or practice version of something that seems never to get beyond acting-out or practice versions.
It feels a bit like training very dilligently to become, what, a pediatric neurosurgeon, honing those delicate finger movements, only to spend most of your time tying bows on birthday presents because that’s all your really allowed (or capable, somehow) of working on – bows. Or maybe it’s like getting really pissed off at someone to the point of deciding you’ll head to the gun shop and buy a really nice submachine gun, and then coming home and using the submachine gun to open your cans of beer the quick and dirty way.
There are probably a lot of other ways I could put this, an infinite numbers of ways. It is frustrating. You see my point, yes? I understand that it’s an incredibly obvious problem, but on the other hand it’s also obvious that we all just keep going along producing left-inflected literary criticism without quite solving out the fundamental issue. And even if we can’t solve out the fundamental issue, we’re still left in a very weird spot: if we simply aren’t able (for professional reasons or because of our aptitudes and training) to do anything other than produce literary criticism and history, it would feel irresponsible or worse to abandon the leftist forms of the enterprise, but those forms nonetheless make nothing happen, so we probably might as well let them go.
Theory, the period of high theory in literature departments, allowed us to ignore the problem at hand more easily, even if it still was very much at hand. There was a collective hallucination in place that allowed us to believe that our work mattered in a way that it never did. But now that the hallucination is over, we’re left in a tough spot.
Maybe I’ll write about the ways that I’m thinking about getting out of the bind in another post. But this is a start. Wish I had asked something like this during my turn at the conference, and if the venue was ever going to be right, it was here. But you can see, perhaps, why I didn’t….