… [T]he austerity drive in Britain isn’t really about debt and deficits at all; it’s about using deficit panic as an excuse to dismantle social programs. And this is, of course, exactly the same thing that has been happening in America.
In fairness to Britain’s conservatives, they aren’t quite as crude as their American counterparts. They don’t rail against the evils of deficits in one breath, then demand huge tax cuts for the wealthy in the next (although the Cameron government has, in fact, significantly cut the top tax rate). And, in general, they seem less determined than America’s right to aid the rich and punish the poor. Still, the direction of policy is the same — and so is the fundamental insincerity of the calls for austerity.
It’s not a matter of suffering more, it’s an issue of the nature of exploitation. Yeah, peasants, petty bourgeoisie, lumpenproletarians, all totally fucked. Still, Marxists side with the proletariat. This is due not to a battle of who has it worse but historical materialism and the revolutionary nature of the proletariat. Emotive examples are not our reasoning but a reflection of the force that leads to our conclusions. When a Marxist brings up child labor we are not saying “Capitalism is bad because they do bad things to.children and nothing has ever been worse!” nor is it a matter of.caring about poor people. The proper Marxist conclusion is that under this system of wage slavery, the child is exploited by the ruling capitalist class. Therefore, this child is condemned to be reduced to a commodity, able to live so long as they produce surplus value for the capitalist. Given the development of class consciousness, exploited workers such as this child are able to overthrow the bourgeoisie and build socialism,.the only deliverance from war, poverty, and exploitation. That is not to say there will be no work. Rather the fruits of labor will instead go to the producers. Child labor is just a structurally necessary feature of capitalism.
David Graeber’s new book Debt: The First 5,000 Years re-examines the accepted economic wisdom that the development of our system of money and debt was inevitable. In this review for The New Inquiry, Aaron Bady explores Graeber’s argument and imagines a world without money:
Originating with Adam Smith, the argument is that humanity needed to invent money because it was so inconvenient to do all our shopping by exchanging whatever we happened to have for whatever people around us happened to have. If your neighbor is a weaver, and you raise pigs, it’s going to be difficult to do any kind of economic transaction that doesn’t involve trading pigs for cloth – goes the story – so people created forms of currency to better enable themselves to trade and re-distribute the stockpile of goods that specialized artisans and producers suddenly find themselves over-producing. What if I want cloth but my neighbor doesn’t want pigs? What if the people who want pigs have nothing that I want? And what if you want an iPad, for god’s sake?
…
Graeber is only the latest anthropologist to point out that this story is pure wish-fulfillment, that no such pure-barter society has ever existed, and that we have a deep and rich historical record of what people actually did in non-money economies: go into each other’s debt. And it makes a simple kind of sense. In rural communities where people live side by side for their entire lives — working and eating and trading together, as they have for the majority of human history – people begin to depend on each other, rely on each other, even enjoy each others’ company. They begin to act like neighbors rather than competitors; they begin to worry about maintaining their status and well-being in a community whose status and well-being suddenly also becomes, as a result, a matter of their own self-interest; and they begin to think of human relations as a thing to be fostered for mutual benefit and long-term stability (rather than plundered and exploited for personal enrichment).
I actually wanted to read this book awhile ago, but wound up starting my self-education in Economics in other ways, but this is still on my list of future books. David Graeber is one of the people who’s thinking and discussion influenced and sparked the start of the Occupy Movement growing out of Vancouver. I did read the first chapter once, and it serves as an in-depth and enlightening counter point to the Tea Party’s ignorant insistence against debt.
New economic figures point to a renewed downturn of the world economy amid a growing debt crisis in Europe and the threatened breakup of the euro zone.
The economy of the 17-member euro zone contracted sharply in May, according to the currency bloc’s purchasing managers’ index, which fell at its fastest rate since June 2009. Market, the issuer of the survey, said the figures indicate the euro zone economy will likely shrink by about 0.5 per cent in the current quarter.
The euro zone purchasing manager’s index fell to 45.9 in May, down from 46.7 in April. Germany’s index dropped to 49.6, down from 50.5, and that of France fell from 45.9 to 44.7. Figures below 50 indicate a contraction.
The euro zone’s gross domestic product remained flat in the first quarter of the year, avoiding a negative figure due only to the relatively stronger performance of the German economy, which expanded by 0.5 percent.
In May, however, even Germany’s economy likely shrank. Business confidence there fell last month to 106.9 from 109.9 in April, according to the Ifo institute, the second-biggest monthly drop since late 2008.
Here are three maps depicting the “Advertising and Street Trade Restrictions venue restriction zone” to be set up in London during the 2012 Olympic Games. From Kosmograd:
Within this area… no advertising for brands designated as competing with those of the official Olympic sponsors will be allowed. This will be supported by preventing spectators from wearing clothing prominently displaying competing brands, or from entering the exclusion zone with unofficial snack and beverage choices. Within the Zone, the world’s biggest McDonald’s will be the only branded food outlet, and Visa will be the only payment card accepted.
The increased presence of the security state in England here dovetails with business influence to carve out a new corporate geography for the purposes of marketing. This spatial strategy is a neoliberal twist on the historic creation of colonial states administrated by businesses (consider the historic case of Rhodesia). Of course, police measures designed to restrict one form of personal expression can also just as easily restrict others, so it would hardly be surprising to see anti-corporate clothing forbidden in a similar manner to wearing the wrong brand’s clothing. Nevertheless, it seems to be an ironic twist that wearing corporate, rather than political, imagery and messaging is the expressly forbidden and subversive act within these exclusion zones.
It is through this neocolonialism at the urban scale that we see, utterly exposed, the political nature of economic practice. Corporations compete for spatial monopolies through reconfigured property arrangements, both with and without the help of the state, with purportedly fundamental liberal rights trampled on in the process.
Consider this: As fuel for the investor craze over the ‘historic’ Facebook IPO today, is the memory of Google’s stock performance over the years to it’s market capitalization of $200 billion, nine times its stock value at its IPO. With Facebook’s IPO valuation at $104 Billion ($38 a share), for it to have the same kind of performance over 8 years it would have to reach the value of at least $900 Billion. The most valuable Public Company is Apple at $490 Billion, so good luck you idiot trend worshiping investors, I hope by the end of the trading day Monday, that stupid stock of a company with falling profits is worth at least as low as $37 bucks a share, and hopefully lower.
Yet so many wonder, and blame Government intervention, for a weak recovery. A chart by Paul Krugman showed the decrease in public employment being equal to a whole percentage of possible GDP growth. Another significant factor in weaker growth, in its common comparison to the ‘Reagan Recovery’, is increased income inequality. Due to the high Private wealth centric economic views of our society, we have enabled through tax policy, the tipping of the scales to create that inequality.
Without the 2009 Stimulus, $140 Billion of funding would have been non-existent at the State and local levels for a two and a half year period. According to the CBPP that covered 30-40% of state shortfalls. That funding is now gone. Also, as much spending is cut in deficit reduction those state and local levels will be hit with more shortfalls. But State government budgets are projected to have higher tax revenues this year as the recovery continues, like from the housing sector. State governments created 1,000 jobs in April but still 12,000 jobs were lost at local.
By Ezra Klein, a simple look into the National Debt and its drivers.
“New spending accounted for 41 percent of our debt since 2001. So if “spending-driven debt” is all that Republicans want to address, they’re leaving most of our debt problems alone.
If you break it down by policies, the term becomes even more absurd. The single largest debt-producing policy passed since 2001 was the Bush tax cuts. It’s followed by the wars in Iraq and Afghanistan. In recent years, the driver has been the economic aftereffects of the financial crisis and, to a lesser extent, the policies, like TARP and the stimulus, that were passed to ameliorate them.
So if you read the chart carefully, you would say we should reverse the tax cuts, stop launching so many deficit-financed wars, and make sure we regulate the financial sector so it doesn’t blow up again. But that’s not exactly the Republican agenda right now.”
There is also a nifty pie-chart of the debt sectors in the linked article.
I’ve been wanting to write a big piece about this topic, since it’s become obvious that MSNBC was manipulating this story through oversimplification to make what is more of a political point than a real conversation about the structure and regulation of our financial sector. That political point lies mostly just in the idea of agreement and promotion of the Dodd-Frank Financial reform, without much of a discussion about Dodd-Frank’s true possible effectiveness or how it was influenced by the Financial sector’s lobbyists. I’m not going to write that piece, except for a few thoughts I’ve been having, because if I did, it would just be another piece saved in the drafts for a later time.
J.P. Morgan’s CIO clearly made some major misjudgements of the market, and that associated behavior had been on the radar of the Financial industry, its regulators, and its news media since around a month before the disclosure of the loss, because it was possible the size of the market behavior was having a significant effect on the rest of the particular market. The investment activity was a particularly complex investment in Credit Default Swap Indexes, not individual OTC swaps, and is not simple enough to be discussed in a realm without understanding of finance and the markets today like it has been in the Political realm. Considering the size of the loss, a mere fraction below one-twentieth, of the assets of a [bank] holding company worth a few trillion dollars, it’s important to remember this situation was an example of failed hedging activity of a financial firm as opposed to the proprietary trading that is the focus for the particular regulations being discussed as the result of JP Morgan’s loss. That is the Volcker rule in Dodd-Frank, in an attempt to reinstate some of the safeguards that existed in the Glass Steagall Act post-1929 pre-1999, a prevention of combination and multifunction of financial institutions in commercial banking, investment, and insurance, and more specifically keeping banks from using customer’s depository assets for profit oriented investment.
Hedging is an attempt through investment to offset the risk of the financial institution’s loans, while proprietary trading is the investment activities, in any market, including over-the-counter derivatives, in an attempt to increase company profit, and using depositor money. That distinction has not been made in virtually any of the political coverage of this, except in financial news, where some of the real discussion is being had about this.
The main thing that is bothersome about MSNBC making a big deal about this loss and what it thinks its political implications are, in combination with their failure to distinguish the difference between this trading and proprietary trading, is that last fall, a major financial firm, an investment bank also functioning as a depository institution, MF Global, went bankrupt as the result of terrible proprietary trading bets, and even the direct abuse of customer funds in desperate attempts to offset losses, and it was not discussed to the extent of the heated discussion now the result of the much less significant J.P. Morgan trading loss. The JP CEO Jamie Dimon may have been considered for Treasury Secretary, but John Corzine, then CEO of MF Global, had been a Governor and U.S. Senator of New Jersey.
It’s not that I disagree with the discussion about the need for greater financial regulation. It’s that I think it’s coming in the wrong context, and simplified from any of the discussion about the type of regulations we need. There are plenty of economic and financial experts who understand the need for regulation, and if you invited them to talk about it, instead of politicians, you’d have yourself a real discussion about making the financial sector of much less danger to the rest of the economy, like through the use of stronger Capital requirements.
