Grapes of workamping

The race to the bottom is over. The 1% won. American capitalism - the kind without a human face - looks more and more like the bastard spawn of neo-feudalism and indenture to the company store.

Workampers - some of them, anyhow - are the Okies of the Great Recession. Psst, only white people have RVs. Good demographic!

At least the workampers can go mobile. The locals are completely stuck between penury and abuse as temporary, disposable employees:

Industry consultants describe the temp-staffing business as "very, very busy." "On fire." Maximizing profits means making sure no employee has a slow day, means having only as many employees as are necessary to get the job done, the number of which can be determined and ordered from a huge pool of on-demand labor literally by the day. Often, temp workers have to call in before shifts to see if they'll get work. Sometimes,they're paid piece rate, according to the number of units they fill or unload or move. Always, they can be let go in an instant, and replaced just as quickly.

In another mind-numbing warehouse:

A few days later, I had breakfast with someone who coincidentally works with the CEOs of logistics companies. Telling him about the conditions and the sterility and the mind-numbing sadness of the warehouse made him almost too bummed to eat his oatmeal. "Somebody did studies and spreadsheets and crunched those numbers," he said, "and figured out that the cheapest way to get that job done is to treat people like that." Which is important, he explained, because "the profit margins on those contracts are razor thin." Of course. A lot of the Internet retailers' merchandise is nearly worthless—ice princess star-shaped ice cube trays, cheap sunglasses, anthropomorphic stuffed bacon toys—and is sold for nearly nothing, often with free or reduced-price shipping.

Susie told me it's pretty dispiriting to act as though her workers are as disposable as the products they're shipping. But that's just the way it is, she said. The logistics clients aren't interested in spending money on a better or more sustainable work culture. Nor do they need to. There are 100 people employed in the warehouse I visited, and Susie could fire every one of them today without costing her bosses a dime of lost profits. She has applications from hundreds of people ready to take the job.

And the logistics companies call their abusive work rules their culture.

All I can say is that Americans are heavily armed, and woe be to those who are inflicting this "culture" on us when we finally figure out that it's not the liberals who are to blame for every ill the wealthy are inflicting on us.

Suicide by central bank

Most analysts continue to parrot the wrong prescription for economic woes, at home and abroad:

The fact that Spanish public pensions are not only off limits to the budget knife but also are being enhanced, is a reminder of one reason that European debt and deficit problems have proved so difficult to resolve.

Only Greece, under duress and at a point where the move may be coming too late to salvage the government’s finances, seems prepared to risk the consequences of severe pension cutting.

The real crisis is not debt - although it's a long-term problem. The real crisis is:

In Spain, pensions have become a lifeline. With unemployment at 25 percent, and even higher among young people, many Spaniards now rely on pension-drawing parents and grandparents to support them. Economists estimate that up to 1.7 million of Spain’s 16 million households have no salary earners.

and:

Of course, as many economists would note, such a reduction in Greek public spending is likely only to compound an economic decline in which gross domestic product shrank 25 percent over the past five years.

These countries are in full-blown economic depression, yet their governments and their bankers continue to urge penury and worse on people who did not cause the debt crisis.

Europeans should be in the streets, should topple their governments. Americans should choose a better path, one that grows first, then reduces debt. Paul Krugman gets it, why not the rest of the New York Times?

(Note to American conservatrolls: You think Fannie and Freddie caused the mortgage loan debacles here in the U.S. Does their legal power over the market reach Europe? Of course not, you stupid twerps.)

Who is Mitt Romney for?

How could higher savings be bad?

Paul Krugman puts the pipsqueak stimulus in context:

[C]onsumers suddenly increased their savings. ...

[Y]ou have a negative shock on the order of 6 percent of GDP.

Against this you had a stimulus bill of $800 billion — except $100 billion of that was AMT extension that was going to happen anyway, another $200 billion was other tax cuts of dubious effectiveness, so you were left with $500 billion of spending, spread over more than 2 years — maybe 1.5 percent of GDP or less.

It just wasn’t big enough to do the job.

The $1.5 trillion stimulus package - the one that Larry Summers refused even to present to President Obama - and it's Obama's fault for appointing Summers, whose foremost attribute is undeserved arrogance (though he thinks it's brilliance) - would have filled 75% of the demand gap. We wouldn't have 9% unemployment if Obama had taken this case to the people:

• It's free to borrow money.
• The best way out of recession is to grow.
• We're going to build useful infrastructure that we and our children will benefit from for the next 30 to 60 years.
• This will heal unemployment, which will take much of the pain - and there will be some pain - out of repaying the debt.

The estimable professor forgets to explain why higher savings in face of a recession could possibly be bad. People are tightening their belts in the face of hard times. Rational, careful, conservative (in the good sense).

The paradox of thrift is the textbook example of the fallacy of composition in Keynesian economics. Behavior that's good for an individual or a family makes a recession worse. Money that's saved - not because people suddenly became virtuous but because they are fearful about the future - is money that's not spent. Since it's not spent, businesses have to contract their economic activity. They may be sitting on big profits (sound familiar?), but there's no reason at all for them to build more capacity, much less to hire unemployed workers.

Only the government, acting on behalf of all of us, can break this vicious cycle with deficit spending. And again, borrowing money is as close to free as it has ever been in history.

Limits of sympathy

I was at Boston College Law School's commencement on Friday and was amazed to hear speaker after speaker refer to these "uncertain times."  Wow, I thought, I would never have guessed these lawyers would be both so liberal and so insightful that they would see the impact of the Great Recession on the people at large.  Or maybe it's the parlous state of American democracy and civil society that they see.  Either way...

Then it struck me.  They were worrying about lawyers, about their fellow guild members, not about the population at large.  Times are uncertain for the employment of lawyers, especially newly minted juris doctors.

What would it take for all Americans to see the peril that now exists to our society in stark and persistent income  inequality, in the power equality that permits the wealthy to buy elections, in the waste of human lives in favor of corporate unaccountability, in the vicious vituperation from wingnuts that is the new normal?  How many people have to suffer for the rest of us to understand?

Where's the pro in all the con?

The optimistic view:

[T]he inadequacy of the administration’s initial economic plan has landed it — and the nation — in a political trap. More stimulus is desperately needed, but in the public’s eyes the failure of the initial program to deliver a convincing recovery has discredited government action to create jobs.

In short, welcome to 1938.

Then there's the pessimistic view:

There is one big difference between today and the 1930s, however. Once there was a political party in America - the one that did the New Deal and the Great Society - that stood up a bit for the middle class and the poor. But Bill Clinton and Barack Obama have led the Democrats down a different path. Now the party stands for a slightly weaker version of the GOP's plutocracy protection service. And, seemingly, for getting its face bitch-slapped bright red at every possible juncture.

We may have a long, hard slog of privation and national diminishment ahead of us. Democrats, who are merely disappointing, are taking the blame. Republicans, who offer nothing more than "you're not rich, screw you" - and who really are to blame - stand to regain power.

Fairness doesn't enter into it remotely. Or maybe, as David Michael Green says, this bitter outcome is just what we've earned by being repeatedly stupid.

Living through it

Click image for full Pat Bagley/Salt Lake Tribune cartoon.

Grinch politics

Shorter Thune: "If the Dems will just cut to the bone and forget stimulating the economy, we Repubs can blame them for the ensuing depression. Yahahaha!"

How you know the recession is still going strong

Low-production-value local ads are running on Monday Night Football. Roni Deutch. Standard def!? Bob's Furniture. Even major college NCAA football runs cheap and cheesy ads.

Newspapers aren't the only medium with business model problems.

Wrong kind of growth

In business especially, the number you measure and reward is the number you optimize. If recession is defined solely as GDP growth and that's all economic policy-makers care about, jobless recoveries will continue to happen, with their attendant growth in income inequality.

We need a new definition.

What was it Santayana said?

No way can I add noticeable page views to Paul Krugman, but here's remedial macroeconomics for all believers in perfect markets:

Mulligan has suggested, in particular, that workers are choosing to remain unemployed because that improves their odds of receiving mortgage relief. And Cochrane declares that high unemployment is actually good: “We should have a recession. People who spend their lives pounding nails in Nevada need something else to do.”

Personally, I think this is crazy. Why should it take mass unemployment across the whole nation to get carpenters to move out of Nevada? Can anyone seriously claim that we’ve lost 6.7 million jobs because fewer Americans want to work? But it was inevitable that freshwater economists would find themselves trapped in this cul-de-sac: if you start from the assumption that people are perfectly rational and markets are perfectly efficient, you have to conclude that unemployment is voluntary and recessions are desirable.

Damn socialist

This is a sea change in American elite politics:

[O]ne of the things that we all agree to is that the touchstone for economic policy is, does it allow the average American to find good employment and see their incomes rise; that we can’t just look at things in the aggregate, we do want to grow the pie, but we want to make sure that prosperity is spread across the spectrum of regions and occupations and genders and races; and that economic policy should focus on growing the pie, but it also has to make sure that everybody has got opportunity in that system.

Success within reach of everyone!? Every Republican knows that the important numbers are the stock market indexes. Those are the numbers that reflect the proper ideological, perfervid faith that "the rich will make wise, proper investments that will grow the economy," as one particularly indiscreet conservative commenter put it.

(Note to talk radio meme-mongerers: Obama did this entire interview without a teleprompter and without aides. It's remarkably devoid of the empty and disconnected sloganeering that Duhbya used to repeat until his interviewer gave up.)

(h/t Mom for pointing the interview out to me)

Peabody Award nomination

The Daily Show With Jon Stewart	M - Th 11p / 10c
Intro - Brawl Street: Get Ready to Buy Low! And Sell Die
comedycentral.com
Daily Show Full Episodes Important Things w/ Demetri Martin Political Humor

I finally caught up on the Jon Stewart/CNBC foofaraw. Like Garry Trudeau before him, Stewart is the best journalist in America, never mind that he's in comedy.

Stewart ripped Cramer several new assholes, yet Cramer kept right on temporizing after being caught in lie after lie. Stewart expects honesty even if it's just a knowing wink at his own satirical or serious bias, he resents being lied to, and he's smarter and better prepared than anyone else on TV. Cramer falls lamely back to the Rush Limbaugh excuse that he's just an entertainer and to the big media excuse that, boo-hoo, his sources lied to him. Did he ever out even one of them when a lie became too obvious for even the willing naif poseur to deny?

Because Stewart said 'fuck' a few times, the journalistic awards will no doubt ignore him. But let me say this: That's why we as a polity are so thoroughly fucked up. Showing the truth is no longer job one for so-called journalists. Nope, conveying the bullshit is their job.

If the Peabody Awards are not up to recognizing Stewart's contribution, we're going to need some new awards. But wouldn't it be a joy if Stewart received the award that Bill O'Reilly could only fantasize (ugh!) about!

Be more like Duhbya

Instead of moving to nationalize failing banks, Obama should follow Duhbya's obviously successful gambit with Lehman Brothers and let some big banks fail. Yep, that's what free market fundies John "Don't know much about economics" McCain and Richard Shelby have to say.

Of course, the problem from the center is that Obama's policy of sucking down endless capital infusions for the benefit of executives whose epic fails caused these problems is foolish, too.

I wasn't very far ahead of the curve, but in the fall, when I heard that the bailed out banks were using their free money for acquisitions instead of loans, I asked the question: If the problem in the economy is that credit is drying up, why not cut out the middle man, nationalize failed banks, and make the responsible loans ourselves?

Some people deserve to go broke. There are ways to make sure they do without screwing all the rest of with a decade-long depression.

Porketty-pork-pork-pork

Woo-hoo! Why would you want a new New Deal when we're always here to trickle down onto you?

Click image to see full Mark Fiore animation.

Not even the cow catcher

Republican DNA has two deleterious traits:

• Utter faith in the so-called free market to solve every problem they care about
• An eagerness for other people to suffer so that they'll become as virtuous as the wealthy (yeah, no shit!)
  

These are people who will still baldly assert despite the locomotive sounds and the dopplered train whistle that the oncoming 4:00 a.m. express is really the light at the end of the tunnel, right up to the moment its impact liquefies their (useless) cerebral cortexes.

John McCain wants a stimulus that's half the already too small size of the Obama stimulus and 50% useless tax cuts to boot. Yep, just one more proof that he was (briefly) honest when he admitted knowing nothing about economics.

We're at risk here. Our kids are going to pay the bill either way, thanks to the Bushist borrow and spend policies. Would they be better off with a revitalized economy or with one coming out of depression?

To me, the answer couldn't be more obvious. But Republicans love to tell us how much better we'll be as people if we get back to basics - like lower wages, less leisure, and gratitude to them for reducing us to penury.

Entitlement programs

Click image for full Jack Ohman/Portland Oregonian cartoon.

Somehow, the guys in this cartoon have gotten a large number of Americans, those who have much more commonplace needs, who have made essentially all of the sacrifices of the last thirty years, to back their vision of America, in which only the so-called entrepreneurs at the top of huge corporations cream off the best of every kind of economy.

Pause that refreshes

I spend a lot words here criticizing aghast at the absurdities of conservatism, particularly its virulent Bushist strain. But you shouldn't get the idea that I think all conservatives are bad people. Far from it. I know many, many good conservatives who would give you the shirt off their backs.

There's a particular type of conservative whose houses I pass by. These houses are well kept, decorated by traditional touches - a window box of geraniums (not right now), an Amish star over the garage, an American flag. They may have a pickup out front with a snow plow ready. Their McCain-Palin sign was gone within a week of the election.

The people who live in these houses are self-reliant. They work. They budget and spend within their means. They make sure their kids are accountable, although they sometimes didn't value schooling that much themselves. They want to be left alone to pursue their lives. They don't feel entitled.

These are civic as well as personal virtues. They were foundation stones for the Jeffersonian democracy of yeomen.

These men and women hate taxes, and hate is not too strong a word. They believe that their taxes could go down because they think government revenue goes mainly to handouts, and tax cuts are what they generally vote for.

These good people think the world would work perfectly if everyone else shared this particular set of virtues. What they don't credit is the fact that many are a single crisis away from the edge of poverty. This isn't unique to them. The current recession has shown that many of even the very affluent are only one bad year away from losing their houses, their lifestyles, and much more.

What's wrong with this variety of the conservative world view? In good times, while these conservatives are strong, it works for them. Their work ethic and their social networks (churches, neighborhoods, friends) can adjust to help with small misfortunes voluntarily, at least for a while. In bad times - either affecting the whole society or if some specific major misfortune befalls them - it often fails.

That's where we are now.

The sins of the Republicans

... are visited upon the Democrats. Because Duhbya and Henry Paulson were completely irresponsible with the bailout money, the GOP will screw Obama.

The ultimate destruction of the Republican Party would benefit America, as long as it was replaced by something better. If you read the comments on any news story that's vaguely political, it's tough to be sure the replacement would be an improvement.

We're in deep shit, America. Obama wants to use a Keynesian stimulus to paddle out of it - with way too much bullshit tax cutting to try to mollify the congenitally irresponsible Republican caucus. The Republicans, of course, reward him by flinging poo at him. They're a bunch of two-year-olds, so what did Obama expect?

Don't be optimistic about a short recession. It doesn't make any sense. Between actively evil Republicans and lily-livered Democrats who aren't nearly tough enough, I see another Great Depression coming. Whether any of these political institutions survive, including the United States itself, will be an open question if a depression happens.

I'm going to learn brewing, wine-making, and distilling. Those are depression-proof industries, and I have a family history of bootlegging. (No, I'm not an arriviste Kennedy. My people were most recently making their own whiskey way before Prohibition.)

Sound of inevitability

In a lightly regulated financial market, a meltdown is inevitable.

The equity markets hold corporate officers in any sector to the standards of profitability and thus stock price performance in their sector. Corporate officers of publicly traded companies who fail to deliver lose their jobs.

These incentives are short-term incentives. The executives who are sensitive to them - all executives - want most of all not to be left behind, lest they not meet the metrics for their bonuses. They measure their numbers quarter to quarter.

There are no corresponding short-term disincentives. Paper gains made today are compensated immediately irrespective of their endurance past the fiscal year.

This means that any "innovative" investment vehicle that provides strong returns will quickly spread throughout the financial sector. It doesn't matter whether it hides risk which guarantees that eventually it will hide risk. The temptation to pump is too great without the restraints of law.

The dump to come? Who cares? That's years away, and they'll have theirs. Besides, as executives, they're convinced by their own forward-looking optimism that nothing will go wrong, anyway. This business cycle is different. This business cycle is weightless.

Financial services companies also have to satisfy their clients or they'll move their capital elsewhere. This is the so-called free market mechanism for constraining risk in the market. Some clients should be more risk averse and thus should accept smaller returns for lower risk.

The irony is that these clients have less information about their risks than those who are selling them on the risk-hiding investment vehicles, and yet the free market relies on the relatively ignorant to take less money by being smarter than their professional advisers. It's human nature in any case (probably animal nature, too) to underestimate long-term risk to gain short-term reward.

Financial "innovation", so beloved by Phil Gramm and his libertarian ilk, is in fact often a path to danger for all of us with only a few reaping the benefits. The correct role for government is to make risk transparent and to constrain short-term operators from leveraging too much of it.

The consequences of having to relearn these lessons of the Great Depression surround us. Smart people are trying to figure their way out of the mire created by other smart people without too much pain - painless exits were all boarded up years ago. It's anyone's guess whether they'll succeed.

For instance, will the Chinese still have enough surplus from their manufacturing economy to lend us another trillion dollars ($1,000,000,000,000!) for use as an economic stimulus? Where are they going to get it if our consumers are cutting back?

At best, this is going to be one hell of a hangover.

Update: Common threads from Andrew Leonard in Salon, notably:

We now know that dereliction of duty ran rampant at every step of the chain. Mortgage borrowers lied about their income. Mortgage lenders failed to check the credit-worthiness of borrowers. Banks restructured loans into derivative instruments that obscured the underlying liabilities. Credit rating agencies -- dependent on fees from the very institutions whose products they were supposed to be judging -- gave the newfangled securities gold-plated ratings. Government regulators looked the other way. We now know that the incentives built into the system encouraged every individual actor to act in defiance of economic rationality.

We now know, in other words, that left to themselves, economic actors do not pursue rational, sustainable courses of action. Greed and self-interest will steer you into the ditch every time.

Yeah, I'd say that Leonard and I are on the same page.