Paying the Price
The economics profession is starting to wake up to the terrible price of obsession with distribution-blind “efficiency”:
The AEA [American Economic Association] meetings took place against the backdrop of the publication of Anne Case and Angus Deaton’s remarkable and poignant book Deaths of Despair, which was presented during a special panel. Case and Deaton’s research shows how a particular set of economic ideas privileging the “free market,” along with an obsession with material indicators such as aggregate productivity and GDP, have fueled an epidemic of suicide, drug overdose, and alcoholism among America’s working class. Capitalism is no longer delivering, and economics is, at the very least, complicit.
Read more here.
Predation 101. Part 2: The Enablers
A remarkable new report from South Africa illuminates the role of international banks, accountancy firms, and lawyers in enabling state capture and corruption at home and abroad:
Read the report here. And see here for an eloquent interview with one of its authors.
Inequality 101
A new five-part video series from the Institute for New Economic Thinking:
For more, see here.
“Shocked and disappointed”
The Luanda Leaks reveal the complicity of international enablers in the looting of Africa. The head of one of the world’s top accounting firms is “shocked”:
Accounting giant PwC launched an internal investigation into its dealings with Angolan billionaire Isabel dos Santos, and a major Portuguese bank cut ties with her, as fallout from an International Consortium of Investigative Journalists examination of the source of her wealth continued.
Bob Moritz, the chairman of PwC, told ICIJ reporting partner The Guardian that he was “shocked and disappointed” by revelations that his firm advised companies owned by dos Santos.
Speaking on the sidelines of the World Economic Forum held in Davos, Switzerland, Mortiz said that PwC will investigate its work with dos Santos and that employees may be docked pay or dismissed if they behaved inappropriately. From a reputational perspective, the dos Santos story was the worst thing to have happened to PwC on his watch.
We’ve seen this movie before:
How to become part of the climate solution
Environmental writer Emma Marris offers a five-step plan to stop freaking out and be part of the solution. Step 1: Ditch the shame.
The first step is the key to all the rest. Yes, our daily lives are undoubtedly contributing to climate change. But that’s because the rich and powerful have constructed systems that make it nearly impossible to live lightly on the earth. Our economic systems require most adults to work, and many of us must commute to work in or to cities intentionally designed to favor the automobile. Unsustainable food, clothes and other goods remain cheaper than sustainable alternatives.
And yet we blame ourselves for not being green enough. As the climate essayist Mary Annaïse Heglar writes, “The belief that this enormous, existential problem could have been fixed if all of us had just tweaked our consumptive habits is not only preposterous; it’s dangerous.” It turns eco-saints against eco-sinners, who are really just fellow victims. It misleads us into thinking that we have agency only by dint of our consumption habits — that buying correctly is the only way we can fight climate change.As long as we are competing for the title of “greener than thou,” or are paralyzed by shame, we aren’t fighting the powerful companies and governments that are the real problem. And that’s exactly the way they like it.
Check out the other steps here.
Neither complacency nor despair
Between complacency and despair, there is an intermediate terrain where both sanity and social responsibility lie. Those of us who are painfully attuned to the world’s urgent problems and needless suffering sometimes veer onto the side of despair. To get a grip, consider:
Every single day in recent years, another 325,000 people got their first access to electricity. Each day, more than 200,000 got piped water for the first time. And some 650,000 went online for the first time, every single day.
Perhaps the greatest calamity for anyone is to lose a child. That used to be common: Historically, almost half of all humans died in childhood. As recently as 1950, 27 percent of all children still died by age 15. Now that figure has dropped to about 4 percent….
As recently as 1981, 42 percent of the planet’s population endured “extreme poverty,” defined by the United Nations as living on less than about $2 a day. That portion has plunged to less than 10 percent of the world’s population now. Every day for a decade, newspapers could have carried the headline “Another 170,000 Moved Out of Extreme Poverty Yesterday”….
It can seem tasteless, misleading or counterproductive to hail progress when there is still so much wrong with the world. I get that. In addition, the numbers are subject to debate and the 2019 figures are based on extrapolation. But I worry that deep pessimism about the state of the world is paralyzing rather than empowering; excessive pessimism can leave people feeling not just hopeless but also helpless.
Extracted from an end-of-the-year piece by Nicholas Kristof.
To explore the roots of apocalyptic anxiety in American politics, see Betsy Hartmann’s book (just out in paperback), The America Syndrome: War, Apocalypse, and Our Call to Greatness.
Getting it in Finland
A couple with a new baby recount their move from Brooklyn to Helsinki:
We’ve now been living in Finland for more than a year. The difference between our lives here and in the States has been tremendous, but perhaps not in the way many Americans might imagine. What we’ve experienced is an increase in personal freedom. Our lives are just much more manageable. To be sure, our days are still full of challenges — raising a child, helping elderly parents, juggling the demands of daily logistics and work.
But in Finland, we are automatically covered, no matter what, by taxpayer-funded universal health care that equals the United States’ in quality (despite the misleading claims you hear to the contrary), all without piles of confusing paperwork or haggling over huge bills. Our child attends a fabulous, highly professional and ethnically diverse public day-care center that amazes us with its enrichment activities and professionalism.The price? About $300 a month — the maximum for public day care, because in Finland day-care fees are subsidized for all families.
And if we stay here, our daughter will be able to attend one of the world’s best K-12 education systems at no cost to us, regardless of the neighborhood we live in. College would also be tuition free. If we have another child, we will automatically get paid parental leave, funded largely through taxes, for nearly a year, which can be shared between parents. Annual paid vacations here of four, five or even six weeks are also the norm….
But surely, many in the United States will conclude, Finnish citizens and businesses must be paying a steep price in lost freedoms, opportunity and wealth. Yes, Finland faces its own economic challenges, and Finns are notorious complainers whenever anything goes wrong. But under its current system, Finland has become one of the world’s wealthiest societies, and like the other Nordic countries, it is home to many hugely successful global companies….
Finland also has high levels of economic mobility across generations. A 2018 World Bank report revealed that children in Finland have a much better chance of escaping the economic class of their parents and pursuing their own success than do children in the United States.
Finally, and perhaps most shockingly, the nonpartisan watchdog group Freedom House has determined that citizens of Finland actually enjoy higher levels of personal and political freedom, and more secure political rights, than citizens of the United States.
What to make of all this?
Read more here.
The wealth-power nexus
“We must make our choice,” Supreme Court Justice Louis Brandeis warned Americans as the country emerged from the Great Depression. “We may have democracy, or we may have wealth concentrated in the hands of a few, but we can’t have both.” The choice is no less crucial in our own time. Here is Paul Krugman in today’s Times:
The first thing you need to know about the very rich is that they are, politically, different from you and me. Don’t be fooled by the handful of prominent liberal or liberal-ish billionaires; systematic studies of the politics of the ultrawealthy show that they are very conservative, obsessed with tax cuts, opposed to environmental and financial regulation, eager to cut social programs.
The second thing you need to know is that the rich often get what they want, even when most of the public want the opposite. For example, a vast majority of voters — including a majority of self-identified Republicans — believe that corporations pay too little in taxes. Yet the signature domestic policy of the Trump administration was a huge corporate tax cut.
Read more here.
The price of globlasé
The blasé attitude of Western elites toward “globalization” in recent decades was lubricated by short-run payoffs: it brought handsome profit opportunities for (some) multinational corporations; foreign borrowing (above all, from China) provided a soft alternative to taxing the rich; and cheap trinkets trickled down to placate the masses. But today the long-run political costs of screwing the working class are coming home to roost. Here’s how it’s going down in Italy:
“We lived in a place where everything had been good for 40 years,” Mr. Nesi says. “Nobody was afraid of the future.”
In retrospect, they should have been. By the 1990s, the Germans were purchasing cheaper fabrics woven in Bulgaria and Romania. Then, they shifted their sights to China. The German customers felt pressure to find savings because enormous new retailers were carving into their businesses — brands like Zara and H&M, tapping low-wage factories in Asia….
What Ms. Travaglini knows is downward mobility. She buys groceries with cash from her parents. Her younger son is about to move to Dubai to look for work, seeing no future in Prato.
Her older son used to consider himself a Communist, worshiping Che Guevara and Fidel Castro. Now, he is active with the League.
Read – and think – about the lessons here.
A death rattle for supply-side economics?
The times they are a changin’:
Led by Elizabeth Warren, presidential candidates and liberal economists are pushing an unorthodox “pro-growth” argument for raising taxes on the rich.
Since the days of Reagan and Thatcher, supply-side orthodoxy has maintained that taxation is always bad for the economy – and this ideology has maintained a stranglehold on public policies. At last, change is in the air. Read more here.
