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Archive for the ‘economics’ Category

left lit crit

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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….

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December 9, 2008 at 8:28 pm

the canary’s dead

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Not the one that lives at the wharf, the one in the coalmine.

I’m lucky to have in-laws that I can use as my own personal focus group of middle american attitudes and reactions. Middle to lower-middle class, from the middle of the country (though down a bit from the exact center), a smattering of evangelicals and irreligious libertarian conservatives, also one Hilary Clinton supporting (now Sarah Palin? I’d bet) late-middle-aged single mom, they run the gamut. I’m not being arrogant – I come from rather ordinary to sub-ordinary stock as well (you should see the stuff that comes across the google alert thing I’ve set up for my very very rare last name – police blotter clip after police blotter clip), it’s just mine are from the wrong side of the St. Lawrence and I don’t really keep in touch.

Anyway. Um. Yeah. Mom-in-law emailed today saying that she’s thinking about pulling her $ out of the mutual fund in her retirement account. I’m sure I’m not the only person that’s been wondering at what point the bad news penetrates the awareness bubbles of ordinary americans, but I think, folks, that day is coming soon. Tomorrow? And when it does, watch what happens. They keep writing articles calling various abstract things that happen “the postmodern version of a bank run.” I think that the pre-postmodern version is still a viable form. We’ll see.

I’ve suggested that it’s probably not smart for her to pull the money, given the tax liability and the fact she’s yanking it back at a very unfortunate time. Who knows though. But even if she goes ahead and does it, where then should she put it? After all, from what I understand, the FDIC is funded to handle maybe one significant bank failure – say Washington Mutual if (when?) it goes.

Here’s guessing tomorrow’s going to be an interesting day.

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September 17, 2008 at 11:18 pm

Posted in collapse, crisis, economics

the mitotic phase

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From the NY Times just now:

Lehman, one of the nation’s largest investment banks, said it expected to report a $3.9 billion loss for the third quarter, an even bigger deficit than analysts had forecast, and cut its dividend to shareholders. It also announced long-expected plans to sell most of its prized investment management division and, more radically, to split itself into a “good” bank and a “bad” one.

The split, a strategy employed with mixed success by several other banks in the 1980s and 1990s, would enable Lehman to isolate worrisome commercial mortgages and real estate.

Lehman planned to spin off about $30 billion of such problematical assets into a separate company — the “bad” bank — which would be owned by Lehman shareholders. The hope was that the holdings of the bad bank will eventually increase in value, yielding profits for its shareholders.

No, it’s a brilliant idea. And following Lehman’s lead, I am delighted to announce that as of 00:00 12/9/08 GMT, I will split myself into two entities, a “good” CR and a “bad” CR.

The former will henceforth spend his evenings reworking his manuscript per the reader’s orders, will limit his alcohol consumption to UK government’s suggested 28 units per week, and will only blog about high-minded matters and without self-involvement.

The latter will continue to spend afternoons in a crappy coffeehouse filling up a moleskine with poetry better written back when he was a kid, continue writing posts that he wakes up to regret the next morning, and will check the JIL * first thing tomorrow because he was both made and broken by that system and refuses to recover from his addiction, even though he’s no longer on the market.

I’m not sure I understand the technicals of the Lehman thing, but seems a wee bit unfair, no?

* Good luck, JILers of the world.

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September 11, 2008 at 9:48 pm

Posted in economics, me

my bank branches: a brief memoir

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My parents, to this day, still don’t believe that they can use their ATM cards at banks not their own. And by “their own,” I mean the actual branch a quarter-mile from their house. I’ve taken their card and done it for them, drawn cash at the mall, etc. But they still don’t believe me, even when it works.

My first ATM card came with my second bank account. I had a little passbook account during high school which never filled higher than $60 and generally hovered around $0. The passbook was interesting – I’m not sure if it was really true or not, but I had the sense that if I lost it the money would vanish too. As if the passbook was the only record of the money in my savings account – that it was in fact my savings account.

It’s funny to think about kids growing up without the experience of waiting on line in banks with their mum. Every week, the same. I have very fond memories of waiting on line with my grandmother at her bank in the mall, across from the hair salon that she had after my grandfather died, to drop off the day’s takings. And there was, overall, a sense small awe about it – the sense that this is where they keep the money, the fact that this was the only working office you entered (except for dad’s, when he’d take you by every once in awhile…) There was a bureaucratic solidity and functionalism to the place that would seem so out of place. Whatever it smelled of, the local branch, it wasn’t multinational capitalism, the slash and burn of the market now available on PC! or whatever it smells like now. I want to write more about quasi-governmentality, about the air of officialness, but not now…

For now, think about the very fact of safety deposit boxes! They surely don’t exist any more, right? They are exactly antithetical to what a bank is today, they send the wrong message about the company in question… They are primitive, and cater to primitive impluses on the part of the customers, and as such, I am sure thay they no longer exist. Perhaps I will check, just to make sure…

I remember noticing, toward the end of my growing up, that this branch still had an 8 inch floppy disk drive on the counter. 8 inches! This was at the beginning of harddrives and laptops and the peak of the 3.5″ disk days! Even I had never used one of those, and my first computer (sort of lifted from my dad’s work) came in 1981 or 1982, an original IBM PC with dual 5.25″ drives. Were they keeping the account records on those? What else would they be for?

So it was only in college that I opened an account that came with an ATM card. But, like many, I remained nervous about depositing checks through the machine. Do you remember the cycles of news features that went around, I think around 1999 – 2000, that asserted that statistically you’re better off with the machine for deposits? Machines make errors, but not more than tellers, who are human, bored, expensive, and we’d like to have fewer of them, thanks. And so I stopped depositing my checks inside and learned to use the ATM for that too.

In my college town there were two banks to choose from, then one bought the other a few months after I moved in. My bank, days after it bought the naming rights to a brand new arena in an east coast city, was in turn acquired by yet another, larger bank. The accents of the stationary that they wrote you on changed from blue and green to red and blue, and then they asked if they could stop sending you “expensive, wasteful” mail altogether and so the emails arrive, painted up in red and blue.

In graduate school, the branch of my bank closed for six months after I arrived in order to refurbish. When it reopened, it had dragged the teller bar back to a windowless warren at the back of the building and replaced it up front with a “personal finance center” with self-standing cardboard cut outs of sailboats and hanggliders, country homes and, I think, the Eiffel Tower. There were couches and booklets to peruse, and soon after they added an espresso machine, though it was unclear when, if ever, you were entitled to an espresso drink. Certainly not when you were heading to the counter (barely happened anymore anyway) to do something like question a charge on your account or have a certified check made out.

But up front, well-dressed people milled around ignoring the grad school looking types who came in. The first few times, embarrassingly, I tried to cash a check with them. I thought it was just a late-ninties thing, like the open-plan offices that were opening everywhere – and that maybe you’d walk around with your teller as they got you your cash. (Think what Apple’s done in their stores – they have checkouts in the back but sort of frown on you for using them… You’re supposed to “pick up” one of the “geniuses” and get him to whip out his little wi-fi device and instamagic the funds off your card…)

I still have that account, but I’m going to close it soon. I got scared about closing accounts for awhile because of the mysteries of the credit rating, the effect that it has to open and close accounts. If we were to rewrite Capital today, we’d have to have a whole chapter on credit ratings, those of individuals, those of non-individuals and so on. Have you ever had trouble with your credit rating? Ever tried to contact the agencies in question? Lucky you if not. They do not publish the phone number – I think the helpful people that found it must have tried every possible number in sequence until they got someone who picked up with “Yeah, Experian here, whatchu want?” You get about seven seconds to state your case, despite the fact that they seem, from the volume of email that I receive from them, to make half their living on selling peeks at your credit report back to you. They don’t mention that, shit, if there’s something wrong you won’t be able to do anything about it. It’s basically like that perennial and increasingly-less sci-fi question about knowing the exact date and cause of your death in advance.

Anyway, my new bank account is with an outfit that I’ve visited exactly twice, and a year or so went by between opening the account and my first visit. Both times it was for a certified check, once to move out of New York and once to buy a car. There are branches here, but I’m not entirely sure where they are. When I talk to them, I talk to people in call-centers in India. When I need money, I go wherever’s closest and cheapest to get money. My daughter, I’m sure, will never write a check – I’m down to one or two a year. It is annoying when people send checks to me. My salary drops automatically in, the utility payments are lifted automatically out. I’m not sure they even give you an option of being paid any other way. The banks that you pass on the street look less and less open for business everyday – you’d feel strange entering one, like you might find it empty once you were in, just a plasma screen showing infomercials about investment products and retirement plans staring Dennis Hopper or someone who looks like Dennis Hopper, and an espresso machine, but no coffee and no cups.

We learn about things through buildings – we are taught about the rules of the world, the way things are now going to work, however they worked in the past. And, just as important, corporations compose their constitutions, their business plans, in brick and mortar, faux-leather sofas displacing marble columns, product pamphlets replacing deposit slips in the little containers under the writing surface. Imagine the conversations in the corporate HQ that eventually led to the redesign of my grad school bank. Imagine what came before and after those conversations. What changed when they decided to start charging to see a teller?

Most pertinently, when we see these new images of people lining up outside the failing banks, we are used to thinking 1929. The media reminds us of 1929. But there is more to it than that. For how many of these people is this the first trip ever to their local branch? The second time they’ve stepped inside, the first being the day that they opened their account? The bank run, queue to see a teller, materializes the anachronistic nature of the bank branch today, physically inforces a return to practices that have long since been marginalized, rendered as old-fashioned as mailing a letter with a stamp, writing in long-hand, or having shoes repaired. This is, truly, a dialectical image, where the spark leaps from past to present, despite the fact that both prongs are nowhere else but the grubby sidewalk of this supermarket plaza in California.

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July 16, 2008 at 11:36 am

kkr state

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Worse than I was saying… Sebastian Mallaby in the Washington Post today:

As long as Fannie and Freddie retain their private/public form, private managers will invent reasons to grow courtesy of public assistance. The best shot at taming them is to bring them into the government. Then, once financial markets have stabilized, the government should shrink the institutions radically and spin them off in pieces, creating maximum space in the mortgage market for smaller private players.

The collapse of Fannie and Freddie’s share prices presents an opportunity to buy them on the cheap. Rather than rushing to prop up these behemoths, authorities should seize the moment: Nationalize — and then dismantle.

I should have known better when I clicked through the link that read Nationalization: A Solution for Housing. This is the Kohlberg Kravis Roberts version of nationalization, with the nation as a whole playing the part of Gordon Gekko. And, to echo some of the comments around here lately, establishes the state as the agent of decomposition of last resort, when none of the other boys have the wallets and balls to do the nasty (and profitable) work with the scapels and circular saws.
Above all else, it is perhaps the last, perverse turn of Reagonomics: nationalization as a weapon against the state sector itself. Think destruction of medical care through fiscally-minded nationalization – which is a tick or two away from what actually happened during the botched attempt by the Clintons back in the 1990s.

From the NYT today:

“If you’re a socialist, you should be happy,” said Michael Lind, a fellow at the New America Foundation, a research institute in Washington. “But you should really wonder whether you want people’s ability to pay for housing and college dependent on the motives of people in Washington.”

Yeah, I’m not so sure that I’m a very happy socialist, and yes, of course, it’s because of what I know about the “motives of people in Washington.” Cue Naomi Klein, cue Iraq / student loans analogies.

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July 14, 2008 at 10:01 am

Posted in economics

the n-word

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Everybody’s talking nationalization, and of course the whisper of those six syllables makes pinko hearts go all aflutter. It’s been a bad word for so, so long – and it’s nice to hear it get current again.

That said, and persuant to some of the issues raised in the comments of this post, we should tread with caution, for all nationalizations are not created equal. In some cases, they can be great – plowing the profits from Venezuelan oil into social programs is as lovely as it gets, yes. Sometimes, they just simply have to happen, as might well prove to be the case with those strange “government sponsored enterprises,” already neither fish nor fowl, Fannie Mae and Freddie Mac.

But if anyone can locate any social benefits that have or will accrue from the takeover of Northern Rock, please do speak up in the comments. All that I can see is burgeoning moral hazard, this time for stockbuyers and bank managers rather than the usual suspects, the poor, and the preordained endstory that comes when the bank has its first profitable year, it will again be privatized lest it interfere with enterprises of the earnest, hardworking, honest gents down in the City. Whatever it is, it’s not socialism – part corporate welfare, part necessary first aid, but not socialism.

So, a modest proposal: how about, if this trend continues, each time the state has to plow money into a steaming pile of shit in the form of a dropped dead bank, downfluttering airline or the like, it by law must at the same time nationalize something really nice, enormously profitable, and potentially socially useful. Like, dunno, Mobil. Or Google. Call your congressman today…

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July 10, 2008 at 10:07 pm

Posted in economics, socialism

schadenfreude too is a form of market fundamentalism

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Britain’s social housing industry suggests £1bn spree on empty stock – Times Online

The group representing Britain’s social housing industry is in talks with the Government to free £1 billion of public money to help to bail out the new homes market.

The funds would be used to buy tens of thousands of mostly inner-city flats and family homes at a heavy discount from beleaguered housebuilders.

These properties were originally expected to be sold to private buyers but are now part-built or empty as the sector struggles to deal with the sharpest slump in sales for more than a generation.

The proposal from the National Housing Federation (NHF), the umbrella body for the UK’s housing associations, is under consideration by ministers at the Treasury and the Department for Communities and Local Government. If the package is agreed, it could kickstart the moribund housing market by buying at least 10,000 units. That would help the big housebuilders, whose share prices have collapsed over recent weeks amid fears that they will be unable to service their debts as cashflow dries up.

It would be really nice if someone a bit more economically numerate than me could maybe write some thing explaining why any coming housing collapse isn’t simply going to be the real opportunity to get on the property ladder that you’ve been waiting for – that, in fact, unless you have stacks of cash sitting around the house (and if you did, you’d likely have a house already, and thus be wrapped up on the downside of this thing) it’s not going to be any easier for you to obtain a lovely little 2 bedroom in Brooklyn or whatever than it was before. The housing crunch is structural, it has largely to do with mortgage rates, not underlying consumer demand. Have you noticed any fewer people milling about? Nope – everyone’s still here and everyone still wants a roof over their heads. The only winners will be those, say, emerging with their college degrees and a stack of dad’s cash to spend without financing. Oh, and property speculators. They’ll win because they always do.

Donc, maybe a little more thinking like the above and a little less hand-rubbing anticipation of the bargains to come. They won’t.

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June 20, 2008 at 9:26 am

Posted in economics, socialism

“you would think they were praying to it”

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A young man whose English is of rather recent vintage has been coming around just about every other day in a very sharp if cheap suit to knock on our door and educate us on the amazing opportunities to save! big! bucks! via energy deregulation. He’s caught me in moments of rage in my sleepy clothes (rage re: the previous post) and yesterday he woke up my daughter after my wife had painstakingly gotten her down for a nap so that she could get some work in.

We tell him to come back later, every time he knocks, but yesterday he caught me coming in from a smoke on the street and I got to hear the pitch. I had a bit of trouble making out what he was exactly talking about, what he was selling – I think electricty, from some company that’s not British Gas, which is what we’ve got. But what I could make out – and christ if he didn’t say the word six or seven times in the course of his 90 second pitch – was deregulation. I had not heard of deregulation, had I? I did not know what deregulation was, did I, and that what it was was an opportunity for me to save several pence per unit on my electricity consumption? Did I know that deregulation afforded me choice, unprecedented choice, whereas in previous years, the years Before Deregulation, I was forced to simply pay the rate they wanted me to pay for my energy?

It made me think of Conrad, actually, though almost everything nowadays does:

“I went to work the next day, turning, so to speak, my back on that station. In that way only it seemed to me I could keep my hold on the redeeming facts of life. Still, one must look about sometimes; and then I saw this station, these men strolling aimlessly about in the sunshine of the yard. I asked myself sometimes what it all meant. They wandered here and there with their absurd long staves in their hands, like a lot of faithless pilgrims bewitched inside a rotten fence. The word ‘ivory’ rang in the air, was whispered, was sighed. You would think they were praying to it. A taint of imbecile rapacity blew through it all, like a whiff from some corpse. By Jove! I’ve never seen anything so unreal in my life. And outside, the silent wilderness surrounding this cleared speck on the earth struck me as something great and invincible, like evil or truth, waiting patiently for the passing away of this fantastic invasion.

I guess Enron, not just its final implosion but more the summer of rolling blackouts that it orchestrated in California in 2000 (see the last paragraphs here) wasn’t as big a story over here. But then again, I guess you can still here the pitch back home – more to would-be pyramid scheme early-entryists than to end users, but still…

Perhaps that’s the sort of video my young travelling salesman friend has seen. Perhaps that’s what he’s up to. I love the part about the “greatest redistribution of wealth ever seen in our nation.” There’s a specter haunting America, the specter of infotainment driven microenronbots knocking on yr doors, redistributing yr wealths…

Mine is a bit more perverse perhaps and frontminded, but I think there are actually tons and tons of people who share a tendency to stick with what once were state-run monopoly operators out of a set of wholly comprehensible (if often, now, illusory) reasons. Nostalgia for simplicity and security would probably lead the pack. It drives the slimy-laissez fairists mad, the unwillingness to take the time to consider our options in full (maybe set a weekend aside to go over our literature and those of our competitors with your spouse) and to be brave and self-standing enough to take the great leap forward into market choice! This tendency – see this clip for an interesting case study – is again something that might well be a popular instinct with potential to be activated into something useful indeed.

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June 17, 2008 at 11:21 am

all your fault

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From the IHT today:

Despite rising energy and food prices, Trichet said it was vital for workers in Western countries to moderate wage increases, which economists regard as the best way to avoid an inflationary spiral.

We are being trained. There is no need to allege conspiracy – there isn’t one. The Zeitgeist gusts and guesses, and governments and the media follows the lead. It is a time for austerity, clearly, so that’s the route that the stream of instruction and soft indictment flows.

It is the nasty plastic bag you take from the supermarket that has caused the climate crisis, the spike in fuel prices! It is your wage demand, unionist, that has lodged us between the rockandhardplace of stagflation! Moderate your consumption, learn to live with less, police yourself lest you, through negligence or bad intent, set fire to the housing stock, destroy the savings in your or your family’s or your friends’ and colleagues’ savings account! It is because of you, schoolteacher or tram driver, that the children of Egypt have less bread, that the UN has no rice to bring to the hungry of Asia!

Most unexpectedly, we will soon learn that it was socialism itself, the last living, deep rooted, if withering stalks of it, that was behind all of this that is tipping our time toward catastrophe (reported daily, believed by none, but coming nonetheless). User fees, user fees, carbon based taxation. We do not, so we are told, understand that we must pay for what we use. We have learned to take for free, we have come to expect progress without pain – this was our great sin.

The joining of the fight against inflation with anti-union rhetoric and self-aggrandizing self-flagellation is not, of course, without precedent.

Written by adswithoutproducts

June 10, 2008 at 11:46 am

Posted in catastrophe, economics

thank god for the complacent workforce

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Krugman in the NY Times today:

But as I said, this time around there’s no wage-price spiral in sight.

The inflation hawks point out that consumers are, for the first time in decades, telling pollsters that they expect a sharp rise in prices over the next year. Fair enough.

But where are the unions demanding 11-percent-a-year wage increases? (Where are the unions, period?) Consumers are worried about inflation, but you have to search far and wide to find workers demanding compensation in the form of higher wages, let alone employers willing to accept those demands. In fact, wage growth actually seems to be slowing, thanks to the weakness of the job market.

And since there isn’t a wage-price spiral, we don’t need higher interest rates to get inflation under control. When the surge in commodity prices levels off — and it will; the laws of supply and demand haven’t been repealed — inflation will subside on its own.

Still, why not raise interest rates a bit, as extra insurance against inflation?

Part of the answer is that the financial crisis, which seems to be in remission right now, could flare up again if money gets more expensive.

And even if the financial crisis doesn’t come back, higher rates would further weaken an already weak real economy. Never mind whether we’re technically in a recession: it feels like a recession to most people, and higher interest rates would make it worse.

The bottom line is that while expensive gas and food are inflicting real harm on American families, they aren’t setting off a ’70s-type inflationary spiral. The only thing we have to fear on that front is inflation fear itself, which could lead to policies that make a bad economic situation worse.

In other words, due to the evisceration of unions and, above all, a serious shift rightward in the borders of the thinkable, in the politico-ideological horizons, the American worker herself is eating this crisis – or, that is to say, not eating through this crisis. Notice, notice, Krugman doesn’t have lots to say about this fact.

He seems to have, it is sad to report, returned to form in the last few months.

Written by adswithoutproducts

June 2, 2008 at 1:16 pm

Posted in economics

loss leaders

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From the Independent today:

A draft law on the “modernisation of the economy” unveiled yesterday threatens, according to its supporters and some of its critics, to revolutionise shopping in France. Other critics suggest the draft law is too timid. Large French shops will mostly remain closed on Sundays. Little effort will be made to diminish the regional domination of French supermarket chains.

The draft presented by the Economy minister Christine Lagarde will make it simpler to build medium-sized supermarkets. That should encourage “hard-discount” chains such as Lidl and Aldi, which have a relatively small share of the French market.

If approved by parliament, the law would also abolish the existing complex rules which, in theory, forbid sale below cost and force manufacturers to provide goods at the same wholesale price to hyper-markets and village shops.

With inflation gathering pace and wages stagnating, the law is intended to help to fulfil the President Nicolas Sarkozy’s promise to increase the purchasing power of French people.

The federation of large shopowners predicted that the law would reduce prices of food and basic household goods by 2 per cent. Serge Papin, head of the Système U chain of supermarkets, predicted price cuts of up to 3 per cent.

Michel-Edouard Leclerc, head of the Leclerc chain, said the law would “cut inflation in half” by allowing shops to refuse the “excessive price rises” demanded by manufacturers. He predicted a “vast spree” of price-cutting from September, if the law is passed.

Yes, it will slightly cut inflation doubly. On the one hand, grocery prices will go down slightly. On the other hand, massive numbers of workers and owners of small groceries will likely be put out of work and either stay out of work or accept the low wages offered by the hypermarkets that walmartized their shops out of existence. We’ve seen this before – back during the boom in the US the greenspanites couldn’t stop talking about the fact that Walmart singlehandedly kept inflation at safe levels. What they didn’t discuss much is the fact that this is in part accomplished by the proletarianization of the workforce.

The French ban on loss-leaders always seemed to me an incredibly sensible piece of law, one that at once supported employment and consumer convenience and urban vitality. Prices at hypermarkets may go down some, but it seems to me the net effect has to be that prices at small shops will simply go up.

As if we needed to be reminded that each crisis – whether deflation or inflation, whether demand failure or food crisis, poor farmers or expensive food, too-expensive houses or too-cheap ones – will always be met with the same set of responses: deregulation, lower taxes, and the dismantling of the social state.

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April 29, 2008 at 12:07 pm

perils of going plastic

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Just try doing this with your Visa card:

Written by adswithoutproducts

February 15, 2008 at 10:52 am

Posted in economics

we’re winning! or, we’re losing!

with one comment

Strange and a bit refreshing to see this from Brad Delong….

But, over the past generation, confidence in the “Kuznets curve” has faded. Social-democratic governments have been on the defensive against those who claim that redistributing wealth exacts too high a cost on economic growth, and unable to convince voters to fund yet another massive expansion of higher education.

On the private supply side, higher returns have not called forth more investment in people. America’s college-to-high-school wage premium may now be 100%, yet this generation of white, native-born American males may well wind up getting no more education than their immediate predecessors. And increasing rewards for those at the increasingly sharp peak of the income distribution have not called forth enough enterprising market competition to erode that peak.

The consequence has been a loss of morale among those of us who trusted market forces and social-democratic governments to prove Marx wrong about income distribution in the long run – and a search for new and different tools of economic management.

Never thought I’d see the day….

Written by adswithoutproducts

February 14, 2008 at 11:41 pm

Posted in economics, socialism