Want to see what’s ahead for America’s young? Pay attention to what’s already happened in Japan
08.28.2013
01:15 pm

Topics:
Class War
Economy
Thinkers

Tags:
Japan
Charles Hugh Smith


 
This is a guest post from Charles Hugh Smith. His newest book is Why Things Are Falling Apart and What We Can Do About It

Social recession is my term for the social and cultural consequences of a permanently recessionary economy such as that of Japan—and now, Europe and the U.S.

Forget Gross Domestic Product (GDP) as a measure of expansion (“growth”) or recession—what really matters is the social recession, which continues to deepen in America.

The term social recession has two distinct meanings: around 2000, the term was used to describe the erosion of social cohesion via the decline of institutions such as marriage and the rise of social problems such as teen pregnancy.

Many commentators pinned the responsibility for this erosion of social constraints and bonds on rampant individualism and overstimulated consumerism, while others pointed to urbanization, the commodification of child care, women entering the workforce en masse and similar trends. Poverty was explicitly rejected as a causal factor, hence the term “social recession.”

This notion of social recession was aptly described by Robert E. Lane, author of the 2001 book The Loss of Happiness in Market Democracies:

There is a kind of famine of warm interpersonal relations, of easy-to-reach neighbors, of encircling, inclusive memberships, and of solidary family life… For people lacking in social support of this kind, unemployment has more serious effects, illnesses are more deadly, disappointment with one’s children is harder to bear, bouts of depression last longer, and frustration and failed expectations of all kinds are more traumatic.

(For more on the subject, please see “The Social Recession” (The American Prospect.)

I use the term social recession to describe a very different phenomenon, the social and cultural consequences of permanently recessionary economies such as Japan, and now Europe and the U.S.

I have defined and used social recession in this way since 2010:

The Non-Financial Cost of Stagnation: “Social Recession” and Japan’s “Lost Generations”
(August 9, 2010)

Here are the conditions that characterize social recession:

1. High expectations of endless rising prosperity have been instilled in generations of citizens as a birthright.

2. Part-time and unemployed people are marginalized, not just financially but socially.

3. Widening income/wealth disparity as those in the top 10% pull away from the shrinking middle class.

4. A systemic decline in social/economic mobility as it becomes increasingly difficult to move from dependence on the state (welfare) or parents to the middle class.

5. A widening disconnect between higher education and employment: a college/university degree no longer guarantees a stable, good-paying job.

6. A failure in the status quo institutions and mainstream media to recognize social recession as a reality.

7. A systemic failure of imagination within state and private-sector institutions on how to address social recession issues.

8. The abandonment of middle class aspirations by the generations ensnared by the social recession: young people no longer aspire to (or cannot afford) consumerist status symbols such as autos.

9. A generational abandonment of marriage, families and independent households as these are no longer affordable to those with part-time or unstable employment, i.e. the “end of work”.

10. A loss of hope in the young generations as a result of the above conditions.

I have described the “end to (paying) work” many times:

End of Work, End of Affluence   (December 5, 2008)

End of Work, End of Affluence II: Cascading Job Losses (December 8, 2008)

End of Work, End of Affluence III: The Rise of Informal Businesses (December 10, 2008

Endgame 3: The End of (Paying) Work   (January 21, 2009)

Demographics and the End of the Savior State   (May 17, 2010)

What happens to the social fabric of an advanced-economy nation after a decade or more of economic stagnation?

For an answer, we can turn to Japan. The second-largest economy in the world has stagnated in just this fashion for almost twenty years, and the consequences for the “lost generations” which have come of age in the “lost decades” have been dire. In many ways, the social conventions of Japan are fraying or unraveling under the relentless pressure of an economy in seemingly permanent decline.

While the world sees Japan as the home of consumer technology juggernauts such as Sony and Toshiba and high-tech “bullet trains” (shinkansen), beneath the bright lights of Tokyo and the evident wealth generated by decades of hard work and the massive global export machine of “Japan, Inc,” lies a different reality: increasing poverty and decreasing opportunity for the nation’s youth.

The gap between extremes of income at the top and bottom of society—measured by the Gini coefficient—has been growing in Japan for years; to the surprise of many
outsiders, once-egalitarian Japan is becoming a nation of haves and have-nots.

The media in Japan have popularized the phrase “kakusa shakai,” literally meaning “gap society.” As the elite slice of society prospers and younger workers are increasingly marginalized, the media has focused on the shrinking middle class. For example, a bestselling book offers tips on how to get by on an annual income of less than three million yen ($30,770). Two million yen ($20,500) has become the de-facto poverty line for millions of Japanese, especially outside high-cost Tokyo.

More than one-third of the workforce is part-time as companies have shed the famed Japanese lifetime employment system, nudged along by government legislation which abolished restrictions on flexible hiring a few years ago. Temp agencies have expanded to fill the need for contract jobs, as permanent job opportunities have dwindled.

Many fear that as the generation of salaried Baby Boomers dies out, the country’s economic slide might accelerate. Japan’s share of the global economy has fallen below 10 percent from a peak of 18 percent in 1994. Were this decline to continue, income disparities would widen and threaten to pull this once-stable society apart.

Young Japanese, their expectations permanently downsized, are increasingly opting out of the rigid social systems on which Japan, Inc. was built.

The term “Freeter” is a hybrid word that originated in the late 1980s, just as the Japanese property and stock market bubbles reached their zenith.  It combines the English “free” and the German “arbeiter,” or worker, and describes a lifestyle which is radically different from the buttoned-down rigidity of the permanent-employment economy: freedom to move between jobs.

This absence of loyalty to a company is totally alien to previous generations of driven Japanese “salarymen” who were expected to uncomplainingly turn in 70-hour work weeks at the same company for decades, all in exchange for lifetime employment.

Many young people have come to mistrust big corporations, having seen their fathers or uncles eased out of “lifetime” jobs in the relentless downsizing of the past twenty years. From the point of view of the younger generations, the loyalty their parents unstintingly offered to companies was wasted.

They have also come to see diminishing value in the grueling study and tortuous examinations required to compete for the elite jobs in academia, industry and government; with opportunities fading, long years of study are perceived as pointless.

In contrast, the “freeter” lifestyle is one of hopping between short-term jobs and devoting energy and time to foreign travel, hobbies or other interests.

As long ago as 2001, The Ministry of Health, Labor and Welfare estimates that 50 percent of high school graduates and 30 percent of college graduates now quit their jobs within three years of leaving school.

The downside is permanently downsized income and prospects. Many of the four million “freeters” survive on part-time work and either live at home or in a tiny flat with no bath.  A typical “freeter” wage is 1,000 yen ($10.25) an hour.

Japan’s slump has lasted so long, that a “New Lost Generation” is coming of age, joining Japan’s first “Lost Generation” which graduated into the bleak job market of the 1990s.

These trends have led to an ironic moniker for the Freeter lifestyle: 
Dame-Ren (No Good People).
The Dame-Ren get by on odd jobs, low-cost living and drastically diminished expectations.

The decline of permanent employment has led to the unraveling of social mores and conventions.  Many young men now reject the macho work ethic and related values of their fathers. These “herbivores” also reject the traditional Samurai ideal of masculinity.

Derisively called “herbivores” or “grass-eaters,” these young men are uncompetitive and uncommitted to work, evidence of their deep disillusionment with Japan’s troubled economy.

A bestselling book titled The Herbivorous Ladylike Men Who Are Changing Japan by Megumi Ushikubo, president of Tokyo marketing firm Infinity, claims that about two-thirds of all Japanese men aged 20-34 are now partial or total grass-eaters. “People who grew up in the bubble era (of the 1980s) really feel like they were let down. They worked so hard and it all came to nothing,” says Ms Ushikubo. “So the men who came after them have changed.”

This has spawned a disconnect between genders so pervasive that
Japan is experiencing a “social recession” in marriage, births, and even sex,
all of which are declining.

With a wealth and income divide widening along generational lines, many young Japanese are attaching themselves to their parents, the generation that accumulated home and savings during the boom years of the 1970’s and 1980’s. Surveys indicate that roughly two-thirds of freeters live at home.

Freeters “who have no children, no dreams, hope or job skills could become a major burden on society, as they contribute to the decline in the birthrate and in social insurance contributions,” Masahiro Yamada, a sociology professor wrote in a magazine essay titled, Parasite Singles Feed on Family System.

This trend of never leaving home has sparked an almost tragicomic counter-trend of Japanese parents who actively seek mates to marry off their “parasite single” offspring as the only way to get them out of the house.

An even more extreme social disorder is Hikikomori, or “acute social withdrawal,” a condition in which the young live-at-home person will virtually wall themselves off from the world by never leaving their room.

What we’re seeing in Japan is the confluence of three dynamics: definancialization, the demise of growth-positive demographics and the devolution of the consumerist model of endless “demand” and “growth.”

Japan is the leading-edge of the crumbling model of advanced neoliberal capitalism: that consumerist excess creates wealth, prosperity and happiness.

What consumerist excess actually creates is alienation, social atomization, narcissism,and a profound contradiction at the heart of the consumerist-dependent model of “growth”: the narcissism that powers consumerist lust and identity is at odds with the demands of the workplace that generates the income needed to consume.

Japan and the Exhaustion of Consumerism

The Hidden Cost of the “New Economy”: New-Type Depression

The Future of America Is Japan:  Stagnation

The Future of America Is Japan: Runaway Deficits, Runaway Debts

The younger generation of workers raised in a consumerist “paradise” are facing an economic stagnation that reduces opportunities to earn the high income needed to fulfill the consumerist demands for status symbols. Given the hopelessness of earning enough to afford the consumerist lifestyle, they have abandoned traditional status symbols such as luxury autos and taken up fashion and media as expressions of consumerism.

But the narcissism bred by consumerism has nurtured a kind of emotional isolation and immaturity, what might be called permanent adolescence, which leaves many young people without the tools needed to handle criticism, collaboration and the pressures of the workplace.

Narcissism is the result of the consumerist society’s relentless focus on the essential project of consumerism, which is “the only self that is real is the self that is purchased and projected.”

Narcissism, Consumerism and the End of Growth  (October 19, 2012)

In my analysis, this is the direct consequence of the supremacy of a consumerism that is dependent on financialization: an economy dependent on debt-fueled consumption to power its “endless growth” is one that will necessarily implode from its internal contradictions: debt and leverage eventually exceed the carrying capacity of the collateral and the national income, and the narcissism of consumerism leads to social recession, a crippling state of “suspended animation” adolescence and great personal frustration and unhappiness.

The ultimate contradiction in this debt-consumption version of capitalism is this: how can an economy have “endless expansion and growth” when pay and opportunities for secure, high-paying jobs are both relentlessly declining? It cannot. Financialization, consumerist narcissism and the end of growth are inextricably linked.

This leads to a dispiriting no exit:It’s as if there is a split in the road and no third way: some young people make it onto the traditional corporate or government career path, and everyone else is left in part-time suspended animation with few options for adult expression or development.

We need a third way that offers people work, resilience and authentic meaning. In my view, that cannot come from the Central State or the global corporate workplace: it can only come from a relocalized economy in revitalized communities.

For more on this topic:

Generational Wealth and Upward Mobility
(October 24, 2012)

Priced Out of the Middle Class
(June 28, 2012)

Do We Have What It Takes To Get From Here To There? Part 1: Japan
(November 8, 2012)

Degrowth, Anti-Consumerism and Peak Consumption
(May 9, 2013)

Tune In, Turn On, Opt Out
(May 17, 2013)

Will Crushing Student Loans and Worthless College Degrees
Politicize the Millennial Generation?
(May 31, 2013)

The Recession That Never Ended: 2008 -2013 (and Counting)
(August 26, 2013)

This is a guest post from Charles Hugh Smith. His newest book is Why Things Are Falling Apart and What We Can Do About It

Posted by Richard Metzger | Discussion
America is awash in money, yet poverty grows: We need a Basic Income Guarantee


 
This is a guest editorial by Allan Sheahen, the author of the new book Basic Income Guarantee: Your Right to Economic Security (Palgrave/MacMillan, NYC). A previous essay from Mr. Sheahen, “Jobs are not the answer: The BIG idea that libertarians and socialists alike can agree on?” was published at Dangerous Minds last week and proved to be very popular.

America is awash with money.

Yet poverty continues to grow.

Does anybody care?

The latest government figures show that 46 million Americans live in poverty, more than at any other time in our nation’s history. That’s 15.1 percent of our population. One in five children live below the poverty line of $22,314 for a family of four, compared to one in twelve in France and one in 38 in Sweden.

Yet whenever elected officials ask their constituents what issues are most important to them, poverty isn’t even on the list. The economy, jobs, Afghanistan, the environment, health care, and education always show up. But not poverty.

Accordingly, Congress is now debating not whether to cut food stamps for the poorest Americans, but by how much.  The Senate is proposing $4 billion in cuts. The House wants to cut $20 billion. Many Democrats are supporting the Senate version.

More than a half-million people are homeless in America. Food banks and homeless shelters are serving more people now than a year ago.  Unemployment is at 7.6 percent.

The problem is that all the private charities in America can’t end hunger and poverty. Ending poverty demands government programs, such as Social Security, unemployment compensation, Medicare, welfare, food stamps, child care, and more.

The 1996 Welfare Reform Act was sold to us as a way to get people off welfare, and it did.  Welfare rolls in the United States are down more than 50 percent.  But it didn’t reduce poverty. That’s because welfare reform dumped many recipients into low-paying jobs—with no benefits or ability to move up.

Does anybody care?

Maybe we care, but we don’t know what to do about it. So we shrug, say the poor will always be with us, and forget about it.

In 1969, a Presidential Commission recommended we establish a Basic Income Guarantee (BIG) at the poverty level for all Americans.

On that Commission, the chairmen of IBM, Westinghouse, and Rand, former California Gov. Edmund G. (Pat) Brown and 17 others unanimously agreed with economist Milton Friedman that: “We should replace the ragbag of welfare programs with a single, comprehensive program of income suplements in cash—a negative income tax.  It would provide an assured minimum to all persons in need, regardless of the reasons for their need.”

Fast-forward 44 years, and we find that welfare has failed because it has destroyed people’s ability to take control of their own lives and make their own decisions. We assume the poor are incapable of making sound decisions; that they can’t be trusted with cash and have to be protected from themselves. It’s as if your employer thought you so irresponsible that he sent part of your paycheck to your landlord, another part to your grocer, another to the bank that provided your car loan, another to your doctor.

There are more than 300 income-tested social programs costing more than $400 billion a year. Much of that money goes for administrative expenses, not to the needy.

Charles Murray, whose 1984 book Losing Ground claimed that welfare was doing more harm than good, now agrees with the BIG approach.

“America’s population is wealthier than any in history,” Murray writes in his new book, In Our Hands.  “Every year, the American government redistributes more than a trillion dollars of that wealth to provide for retirements, health care, and the alleviation of poverty. We still have millions of people without comfortable retirements, without adequate health care, and living in poverty. Only a government can spend so much money so ineffectually. The solution is to give the money to the people.”

Murray calls for giving an annual cash grant of $10,000—with no work requirements—to every adult over age 21.

Indeed, the U.S. is a wealthy nation. Our 2011 Gross Domestic Product was $14.4 trillion. That’s an average of $46,000 for each man, woman and child in the country. It’s an average of $61,000 per adult. It’s more than enough to end poverty.

Poverty is wrong. A Basic Income Guarantee would establish economic security as a universal right. It gives each of us the assurance that, no matter what happens, we won’t go hungry.

Allan Sheahen is the author of the new book: Basic Income Guarantee: Your Right to Economic Security (Palgrave/MacMillan, NYC).  For more information, go to www.basicincomeguarantee.com

Below, footage of FDR’s so-called “Second Bill of Rights” speech which was filmed right after he had finished his State of the Union Address on radio on January 11, 1944.
 

Posted by Richard Metzger | Discussion
Jobs are not the answer: The BIG idea that libertarians and socialists alike can agree on?


 
I was thrilled to see Allan Sheahen’s important essay on the BIG idea of the “Basic Income Guarantee” concept make it to the front page of Huffington Post recently, and I am pleased to be able to share it here with Allan’s blessing. I’ve long been a fan of the “Basic Income Guarantee” concept (which I was introduced to by Robert Anton Wilson) and this is as succinct an explanation of it as I have read anywhere. No surprise that it was shared so many times by Huffington Post readers.

As Mr. Sheahen explains below, the “Basic Income Guarantee” is a common sense solution to poverty that the likes of Libertarian economist Milton Friedman (overstating Friedman’s place of primacy in conservative economic orthodoxy would be difficult to do), liberal icon Senator George McGovern, Dr. Martin Luther King and even welfare critic Charles Murray could all agree upon.

That’s really saying somethin’, but I’ll let Allan explain…

Jobs Are Not the Answer

The current unemployment rate of 7.5 percent means close to 20 million Americans remain unemployed or underemployed.

Nobody states the obvious truth: that the marketplace has changed and there will never again be enough jobs for everyone who wants one—no matter who is in the White House or in Congress.

Fifty years ago, economists predicted that automation and technology would displace thousands of workers a year. Now we even have robots doing human work.

Job losses will only get worse as the 21st century progresses. Global capital will continue to move jobs to places on the planet that have the lowest labor costs. Technology will continue to improve, eliminating countless jobs.

There is no evidence to back up the claim that we can create jobs for everyone who wants one. To rely on jobs and economic growth does not work. We have to get rid of the myth that “welfare-to-work” will solve the problems of unemployment, poverty, and homelessness.

“Work” and jobs are not the answer to ending poverty. This has been the hardest concept for us to understand. It’s the hardest concept to sell to citizens and policy makers. To end poverty and to achieve true economic freedom, we need to break the link between work and income.

Job creation is a completely wrong approach because the world doesn’t need everyone to have a job in order to produce what is needed for us to live a decent, comfortable life.

We need to re-think the whole concept of having a job.

When we say we need more jobs, what we really mean is we need is more money to live on.
 

 
Basic Income Guarantee

One answer is to establish a basic income guarantee (BIG), enough at least to get by on—just above the poverty level—for everyone. Each of us could then try to find work to earn more.

A basic income would provide economic freedom and income security to everyone. We’d have the freedom to work less if we wanted to, or work the same amount and save or spend that money.

It would provide a direct stimulus to the economy, which would help create more jobs.

In 1972, Democratic presidential candidate and Senator George McGovern knew the economy was changing. He proposed a $1000 annual “demogrant” for every American. The grant would act as a kind of cushion against the loss of a job or other misfortune.

We could pay for a Basic Income Guarantee by eliminating most of the 20th-century programs like unemployment insurance, welfare, Social Security, Section 8 housing, etc., and by having the wealthy pay their fair share in taxes.

Billionaire Warren Buffett admits he pays a lower tax rate than his secretary. Mitt Romney said he paid only 13.9 percent in federal income tax in 2010, despite earning $22 million. Average-income Americans pay about 20 percent.

A BIG would be cheaper than a jobs program. President Obama’s 2009 stimulus plan promised to create 3 to 4 million jobs at a cost of $862 billion. That’s over $200,000 per job.

Such a basic income would recognize that with productivity as high as it is today, too many workers get in each other’s way. Those who don’t have to work shouldn’t be required to do so. Instead, they can create, do volunteer service, or work at low-paying jobs which are still socially needed, such as teaching or the arts.

Think of it as the opposite of trickle-down economics, where we give huge tax breaks to the rich in the false hope that something will trickle down to the rest of us.
 

Try telling a conservative blow-hard that their hero Milton Friedman was the architect of the most successful social welfare program in US history and they’ll often simply refuse to believe you! When offered proof, it seems to infuriate them.

Not a New Idea

Basic income is not a new idea. It’s been debated among policymakers in several nations since the 1970s. Economist Milton Friedman said: “We should replace the ragbag of specific welfare programs with a single comprehensive program of income supplements in cash—a negative income tax.”

The Reverend Martin Luther King, Jr., said: “I am convinced that the simplest solution to poverty is to abolish it directly by a guaranteed income.”

BIG’s most recent American advocate is welfare critic Charles Murray. In his book: In Our Hands, Murray agrees with Friedman and King, and proposes a $10,000 yearly grant paid to every adult. Murray and others argue it would save money. There would be no bureaucracy to support and no red tape to manage.

Opponents claim we shouldn’t pay people not to work. But the duty to pursue work is based on the mistaken assumption that there is work to be had.

In the post-industrial age, the USA will provide ever fewer opportunities for low-skilled workers. Policies in pursuit of full employment make no sense.
 

 
Basic Income Can Work

In 1982, the state of Alaska began distributing money from state oil revenues to every resident. The Alaska Permanent Fund gives about $1000 to $2000 each year to every man, woman, and child in the state. In 2012, the amount fell to $878. There are no work requirements. The grant has reduced poverty and the inequality of income in Alaska.

A 10-year, 7800-family, U.S. government test of a basic income in the 1970s found that most people would continue to work, even when their incomes were guaranteed. A test in Manitoba, Canada produced similar results.

In 2005, Brazil created a basic income for the most needy. When fully implemented, the plan will ensure that all Brazilians, regardless of their origin, race, sex, age, social or economic status, will have a monetary income enough to meet their basic needs.

A two-year, basic income pilot program just concluded in Otjivero, Namibia. Each of 930 villagers received 1000 Namibian dollars (US$12.40) each month. Malnutritition rates of children under five fell from 42 percent to zero. Droupout rates at the school fell from 40 percent to almost zero. It led to an increase in small businesses.

Most Americans are six months from poverty. Middle-class people who worked all their lives, then lost their jobs and saw their unemployment benefits expire, are now sleeping in parks and under bridges.

America hasn’t seen full employment in decades. Even a full-time job at the minimum wage can’t lift a family of three from poverty. Millions of Americans—children, the aged, the disabled—are unable to work.

A basic income guarantee would be like an insurance policy. It would give each of us the assurance that, no matter what happened, we and our families wouldn’t starve.
 

 
This has been a guest editorial courtesy of Allan Sheahen, committee member of the U.S. Basic Income Guarantee Network (USBIG) and author of the recently published book Basic Income Guarantee: Your Right to Economic Security .

Below, Allan Sheahen discusses the guaranteed income bill with Mark Crumpton on Bloomberg Television’s Bottom Line.

Posted by Richard Metzger | Discussion
Eating like a poor person: Why are rich politicians so baffled by simple grocery shopping
08.21.2013
09:42 am

Topics:
Class War
Economy
Politics

Tags:
poverty
hunger

breadline
 
Politicians, many of whom have probably never met anyone on food stamps in real life, played a fun game over the summer.

The SNAP Challenge!

As of May more than 47 million Americans are on SNAP (Supplemental Nutrition Assistance Program, what we used to call “food stamps”). The program was not originally designed to provide an individual’s or family’s entire food budget. It is supposed to provide supplemental money for food, in addition to other income from work, pensions, child support, or government benefits (unemployment, disability, Social Security, SSI). However, 20% of people on SNAP (almost 10 million people) rely on it alone to buy groceries.

Democrats started the #snapchallenge over the summer to show how difficult it is already for this 20% of our nation to get by and make a real-life point about why SNAP cuts are a bad idea. They ate on $4.50 a day, using the average SNAP payment for one person of $133.44 per month. Journalists from the Pittsburgh Post-Gazette joined them but were allowed to budget $6 a day.

A family of four could receive up to a maximum benefit of $668 in SNAP per month for food. According to the USDA’s Food Plans, updated in June, for a family of four (a couple with two children between 6-8 and 9-11 years old) SNAP benefits are slightly more than the USDA “Thrifty Plan” of $632 per month. The “Liberal Plan” is $1250 a month for the same family.

The USDA does have somewhat decent resources, including a list of cheap recipes to enable recipients to plan meals around the food one can afford, searchable by dollar amount, and ponderous, somniferously dull Dietary Guidelines. This is useful for SNAP users with access to computers and internet access, probably at their nearest library branch, which is hopefully within walking distance or on the same bus line as a grocery or dollar store.

For a family of four including teen-agers, I suspect that surviving on $632 would be possible only if they also raised chickens, had a large vegetable garden, and at least one actively extreme-dieting family member subsisting on protein shakes and cotton balls dipped in orange juice.

Massachusetts’ Department of Transitional Assistance Commissioner Stacey Monahan did the challenge for a week. She told WCVB:

Yesterday I had my last apple. And I was really anxious about that. If this were my way of life for more than just a week, I can see how that would be really difficult. A lot of people that utilize SNAP run out of their benefits by the third week in the month.

Unfortunately a lot of Democrats – however good their intentions were with this challenge – are clearly not used to grocery shopping for themselves. They made themselves look foolishly out of touch with people living in poverty. Instead of buying in bulk, shopping at a farmer’s market, making a lot of food and freezing it in portions for future meals, they pulled idiot moves like buying expensive Boca Burgers (Rep. Mark Pocan), grated cheese, non-seasonal fruit, one (!) presumably free-range egg dipped in gold for $1.08 (Donald M. Payne, Jr.), and—preposterously—setting foot in Whole Foods (children’s health advocate Matthew J. Wright).

Fitness and nutrition blogger Lisa Johnson used the USDA “Thrifty Plan” in 2012 ($491.10 for 30 days in her case, which is 30% higher than SNAP), and shopped only at Whole Foods in an attempt to prove that if you really, really try, you can feed your family healthy organic food near the poverty line. When she succeeded, Whole Foods agreed to reimburse her for the month’s expenses. She asked the company to donate the amount to a local food bank instead.

Lisa wrote:

Throughout the 30 days I kept thinking of families who were living at or below the poverty level trying to feed everyone. It was such a struggle for us even though we had done our homework and only had to do it for one month. I can’t imagine what the grind feels like after months or years of living like this.

If you’re on food stamps it can be really challenging to feed your family healthfully. Starches are cheaper than produce and it’s easy to reach for those. I can see how the poverty/obesity trap happens and why it’s so difficult to get out of.

Over the 30 days, I gained a lot of knowledge about how to feed a family well even on a tight budget. When I started our meals were starch heavy but as I got savvier about living on a frugal budget, I figured out how to add more produce into our diets. It’s definitely possible, but it takes a lot of patience and tenacity.

A former Wild Oats (bought out by Whole Foods) employee told me that the Thrifty Challenge is do-able if you buy almost everything in their bulk food aisle and carefully shop their sales. Hope you like quinoa and dried figs!

To prove that living in poverty and getting enough to eat on a daily basis is no biggie, lawmakers like Texas congressman Steve Stockman declared the SNAP Challenge to be a left-wing publicity stunt and set out to disprove it. In fact, one of his staffers, Donny Ferguson, claimed that all the SNAP Challenge accomplished was prove that poor people are already getting too much food assistance and the program should be decimated. It also had the unintended consequence of proving that Donny Ferguson is a morally-repugnant douchebag of low character who possesses zero empathy for his fellow man. No doubt this Texas Republican toady considers himself a good Christian…

A press release from Stockman’s office bragged:

Donny Ferguson, who serves as Stockman’s communications director and agriculture policy adviser, was able to buy enough food to eat well for a week on just $27.58, almost four dollars less than the $31.50 “SNAP Challenge” figure.

“I wanted to personally experience the effects of the proposed cuts to food stamps. I didn’t plan ahead or buy strategically, I just saw the publicity stunt and made a snap decision to drive down the street and try it myself. I put my money where my mouth is, and the proposed food stamp cuts are still quite filling,” said Ferguson.

“We can cut the proposed benefits by an additional 12.4 percent and still be able to eat for a week,” said Ferguson. “Not only am I feeding myself for less than the SNAP Challenge, I will probably have food left over.”...

“Not only did I buy a week’s worth of food on what Democrats claim is too little, I have money left over. Based on my personal experience with SNAP benefit limits we have room to cut about 12 percent more.”

Here’s what he bought to feed himself for a week:

Two boxes of Honeycomb cereal
Three cans of red beans and rice
Jar of peanut butter
Bottle of grape jelly
Loaf of whole wheat bread
Two cans of refried beans
Box of spaghetti
Large can of pasta sauce
Two liters of root beer
Large box of popsicles
24 servings of Wyler’s fruit drink mix
Eight cups of applesauce
Bag of pinto beans
Bag of rice
Bag of cookies
Gallon of milk
Box of maple and brown sugar oatmeal


Paraphrasing Marie Antoinette, “Let them eat empty calories and carbs!”

What is objectionable about this challenge is that it is a political version of The Simple Life. After smugly making their case for or against SNAP cuts, like Paris Hilton and Nichole Richie going back to Beverly Hills after taping an episode among the peasants in Bumfuck, USA, these politicians, journalists, bloggers, and public policy researchers can go back to a normal, much higher food budget, whereas the people for whom this struggle is daily reality…. can’t.

Democracy Now’s report on food insecurity in the U.S., below:
 

Posted by Kimberly J. Bright | Discussion
How low can it go? Millions of Americans live on LESS THAN $2 A DAY according to alarming new study
08.19.2013
03:35 pm

Topics:
Class War
Economy
U.S.A.!!!

Tags:
SOCIALISM NOW


 
A new report from the National Poverty Center (NPC) throws the disturbing trend of “extreme poverty” (as opposed to mere “deep poverty”) into stark relief: There are currently an astonishing 1.65 million American households (with 3.55 million children living in them) where each family member lives on less than $2 a day!

Mull that over for a moment. Half the country is near or below the poverty line already!

My parents operate a soup kitchen/food pantry out of their church and my mother has all kinds of sad stories about kids who will rip open packs of raisins and wolf them down like they’re feral and other kids who look like they’re dead behind their eyes. For many of the children who they see regularly, if it weren’t for subsidized school lunches and stops at more than one local church food pantry, they’d be starving. On the weekends, many of them probably do.

I should mention that this is in West Virginia, a state with super high, very persistent structural unemployment rates and a very, very frayed government social services network, one of the worst—and stingiest—in the nation. People think of West Virginia as being a backwards place, but you could choose instead to see it as a glimpse of a possible, even likely, future: Want to know what our increasingly predatory capitalist society will look like in another ten years? West Virginia looks like that NOW.

There are no jobs, the roads are full of potholes that can swallow a pick-up truck, the land has been raped by the coal companies’ mountaintop removal activities and your next door neighbor is all too happy to sell the fracking rights to his backyard to a multinational. Who cares what you think or if it fucks up your living situation? No one is going to turn away an offer that can see them turn into the next Jed Clampett. Who could blame them? I mean… get real.

West Virginia, rural Texas, the meth-head armies of the California desert, the vast tracts of uninhabited homes across the sun belt. There’s some ill shit brewing in this country.

Debra Watson writes at the World Socialist Website:

The report, published in Social Service Review, was authored by H. Luke Shaefer, University of Michigan, School of Social Work, and Kathryn Edin, Harvard University, Kennedy School of Government. Measuring extreme poverty uncovers a further income stratification among those below the official poverty level. The sharply rising income inequality in the US has created in its wake a new phenomenon: massive numbers of US families that live in daily conditions once relegated the poorest of the poor in the economically underdeveloped world.

It throws light on particular aspects of the growth in inequality in the US that have not been examined in reports from the Census Bureau and other sources that compare income for different quintiles of the population. Some recent research has developed a category called “deep poverty” or a yearly income below half the official poverty line. Both these methods of research have revealed drastically rising inequality and the growth of deep poverty in recent years.

The researchers used the figure of $2 a day per person, the United Nations measure of poverty in developing countries. The official poverty line for a family of three would equate to roughly $17 per person per day averaged over a year. Deep poverty, below half the poverty line, would equate to an average of approximately $8.50 per person per day.

At $2 per person per day, the extreme poverty category examined in this report finds a family with virtually nothing to live on, or roughly 13 percent of what is considered official poverty. Social science researchers have estimated that it requires an income twice the Census Bureau’s official poverty level to actually support a family.

Counting food stamp benefits, now called SNAP, as cash only reduces the number of extremely poor households with children by half. The current food assistance benefit for a family of three tops out at $526. Since it only is available to families with income below 130 percent of the official poverty level, receiving the benefit does not bring any family to a livable income. If counted as the equivalent of cash income, the assistance actually would barely move a family in extreme poverty to deep poverty.

In addition, the SNAP benefit itself is facing serious cuts and even outright elimination for many poor families. In November, a family of three will lose $29 a month when the SNAP per person benefit allotment is cut as the federal government eliminates stimulus measures instituted in the immediate aftermath of recession. Five million people will be entirely cut off from SNAP benefits if limits in eligibility are imposed under plans to cut the program that emerged during discussion of the new Farm Bill this summer.

When Bill Clinton—no fan of welfare—was in office there were an average of 25.5 SNAP million recipients each month, but by the end of 2012, it was nearly twice that, at 47.5 million people.

The minimum wage is basically a slave wage, and everyone knows it. It works out to about just about half of what has been computed to be a living wage. You can work full-time and it’s still nowhere near close to providing for a life of basic dignity. Sure, no one’s forcing anyone with a whip to their backs to take a job that pays $7.40 an hour, but even when people are willing to work hard, and do, there’s often no way, as in none, for them to be able to make it work in this harsh, unsympathetic society.

And now the foaming at the mouth Republicans want to cut food stamps even more. The wishy-washy Democrats will undoubtedly let them get away with a little bit of it in the name of “compromise” (because they know, like the GOP knows, that the poorest of the poor seldom vote, so they’ll give on that).

Far from being Ronald Reagan’s “rising tide that lifts all boats,” in 2013 American-style capitalism is a raging tsunami of economic degradation, battering her own people against its rocks. If the news of millions of people in the richest country in the world living on less than $2 a day doesn’t shock you to your very core, what the fuck would?

Would it take a rash of childhood deaths attributed to malnourishment?

How many deaths of US children from severe malnutrition would be acceptable? Where then should society draw the line? Is allowing kids to suffer from brain damage and developmental problems okay or is that not okay?

It’s predictable that the most vulnerable are expected to bear the brunt of it. But for how long? An empty stomach breeds resentment. The GOP (and their complicit pals the moderate Democrats) seem intent on stoking the flames of class war. If they want to breed a class war mentality, they’re going about it in the right way!

Less than two dollars a day. How much lower can it go? (Hint: “To nothing” is not the correct answer)

Previously on Dangerous Minds:
We’re screwed: How will we survive in a future without jobs?

How much longer can capitalism last when robots do all the work?

Hard Times Generation: Families living in cars
 

 

Posted by Richard Metzger | Discussion
An easy way to wrap your head around what a billion dollars is actually worth
07.19.2013
08:32 am

Topics:
Economy

Tags:


 
YouTube channel ReckfulTV helps you visualize what a billion dollars is actually worth.

Once it’s put in this context, if you took the billion you just saw on the gentleman’s computer screen and multiply it by 11, you’ll get Rupert Murdoch’s net worth which is around $11 billion. Kinda staggering, eh?

Earlier this morning my husband came in with a relevant factoid he’d heard on NPR: “Apparently, 83% of all the wealth in Russia is controlled, not by ‘the 1%,’ but by HALF of one percent!”

Madness. What worked in the 20th century sure ain’t working in this one!

 
Via reddit

Posted by Tara McGinley | Discussion
Anarchism, Activism and El Movimiento: Dangerous Minds Goes Inside the Second Spanish Revolution


“Are you not ashamed to kick people out of their homes?”

Barcelona, it occurs to me, as our plane descends towards the unfortunately named El Prat, must have some strange and singular relationship to concrete. Due to the national tendency to live stacked up, from above the city undulates in a wild concrete wave—coming to a dead, teetering halt at the brink of the Mediterranean, which meets it with almost parodic calm. Yet, elegant Barcelona somehow manages to make the best out of concrete. Hell, even La Sagrada Familia is moulded from stuff that wouldn’t look out of place in a public housing high rise.

And, ironically enough, it is concrete Barcelona finds its feet encased in, as along with the rest of Spain it sinks to the bottom of the economic ocean…

Of all the houses built in Spain between 2001 and 2007 (and there were a lot: this was the property boom that engendered the economic collapse that has left the country with around 26% unemployment, and around 55% youth unemployment) over a quarter stand empty. But despite being dotted with veritable ghost towns, there were over 75,000 evictions in Spain last year, a figure that looks ready to rise in 2013.

Now, in Spain, if a bank kicks you out of your home, seizing your assets, their value is only deducted from your debt. And since the value of Spanish property, post-crash, is a slither of what it was when most evictees bought their properties, and since there were a lot of forty and fifty year mortgages going around, this means many are still expected to pay hundreds of thousands of Euros for an abruptly worthless cube of concrete that will henceforth stand empty, redundant as a sprung trap.

Odd that this should happen in Spain, with its historical antipathy (among a significant portion of its population, anyway) to the very notion of “private property”. “ALL PROPERTY IS THEFT!” declared the anarchist philosopher Proudhon. Well, Spain, you might say, was bound to balk at such daylight robbery. And balk it did, in the spontaneous 15M nationwide protests that marked the proper beginning of what everyone there refers to as the movimiento in the spring of 2011.

Exactly two years later, I am visiting Barcelona to see where the second Spanish revolution is at.

I have, however, a vicious summer cold, and am unsure if my skittish temperature and face full of snot is infecting my view of the city. I’ve heard a lot about how inconspicuous the economic crisis is to the naked eye, but for me, sweating a fever out beneath the first sustained sunshine to touch Catalonia all year, Barcelona seems everywhere composed of two distinct layers.

Along the surreally telegenic beach, for example, there is the expected abundance of tourists, bathers, bars. But there is also, there by the outdoor showers, two apparently underage girls in the early stages of a porn shoot, listlessly palming water at one another’s bikini tops while a photographer snaps and a crowd gawp on.

A random sight, perhaps, but it feels like a symbol.
 

 
Further up the promenade we see some anarchist graffiti: “Tourist! Save the planet. Kill Yourself.” Beneath this it reads “Guirifobia Power.” Guiri (sounds like “giddy”), explains Sara Marquez, our friend, hostess and guide to the movimiento, is the derogatory slang for tourist. “There is increasing hostility against visitors—that is, rich foreigners—among some,” she elaborates, for the benefit of this slightly affronted guiri. “As the crisis deepens the only economic sector that really works is tourism. Many feel that the city council is ruling the city thinking in terms only of tourists rather than citizens.”

We stop at a bar for some food—washing it down with cheap beer and tobacco that do my virus few favors. Sara tells us some typical examples of people she knows in the city: University Lecturers earning a couple of hundred Euros a month, and even some doctors and lawyers either unable to get work or earning relatively negligible amounts. Presently in vogue, she says, is the notion of a mileurista—somebody lucky enough earn over a thousand Euros a month. No wonder there is a steady seeping abroad of Barcelona’s young, an exodus massaged by the government, who don’t even bother pretending their homeland has a future for them.

We get up to pay. “Why are you with these foreigners,” the waiter hisses at Sara, “why are you speaking English?” (Earlier today, some respectable-looking old crone had spun on her heel to shout abuse up the street at Sara for the same reason.)

While she tells the geezer where to go, I stand there sniffing and squinting at the street. Rich-looking American girls saunter by in designer shades, swaying honeyed limbs, and platoons of British lads march between bars. But there is also, I note, a continuous quiet traffic of disheveled elderly Catalans and gypsies, all pushing warped trolleys piled with scrap metal. “There seems to be more of this all the time,” says Sara. There is something ominous about the trade, as if they are picking the bones of an economic corpse.

That evening I interview Marc Pradel, an activist and academic. Marc has that air of slightly weary integrity that proliferates whenever a political class manages to entirely monopolise corruption. We begin by discussing the development of the movimiento.

“Two years ago it was as if no one was protesting anything, and then there was this small thing,  ¡Democracia Real YA! [Real Democracy Now!], and then this demonstration, and suddenly, surprisingly, everybody came and it was huge. And the last two years, more or less, have highlighted the difficulty in organizing a coherent, conventional political response. There are many things happening at a local level and neighborhood level, a lot of new ideas and discussions, but the movement is in danger of losing momentum unless it can organize.”

I ask to what extent this generation of activists identify with the Spanish libertarian socialist tradition.

“Some parts of the movement are not that conscious of continuing this political tradition, while others are very aware of it, and are openly inspired by Cooperatism and decentralization. Sometimes the movement acknowledges this heritage in a very symbolic way—for instance they tend to organize in columns when they demonstrate, just as the anarchists did in the civil war. But there is also a general awareness they’re not going to solve anything in a classical fashion.”

Yet, on its second birthday, the crossroads the movimiento finds itself at would be readily recognizable to any Spanish anarchist of the 1930s…
 

Pau Faus, Barcelona PAH
 
“In Barcelona especially there is a real hostility towards political centralization, a fear of being co-opted, a fear of becoming part of the problem. This is very typical of the social movements here, and I think you can see the continuity from the old anarchism to now, a commitment to decentralization, which can become problematic. Many people say that this movement needs leadership. We do need some kind of organisation, because otherwise you cannot expect major changes. The only time anarchism has been effective is when there was a trade union or something behind it.”

For now, the onus remains entirely on the grass roots.

“There are, in Barcelona and everywhere in Spain, lots of things emerging. For instance we have the community banks: Coop57 is a credit cooperative that gives credit to social projects and gives people the chance to invest in social causes… Som Energia is a renewable energy cooperative… La Fageda is a more traditional cooperative but is very significant in Catalonia. Their workers are handicapped and the company adapts its production accordingly. There are lots of examples of businesses trying to overcome the logic of capitalism.”

He describes the network of community centers, cooperative allotments and squats across Barcelona, created to provide food, shelter, work and support for people. I ask about the state’s response to such initiatives.

“They expect this kind of thing. As long as they’re not attacking some basic things, like the financial system of whatever, they know it can help them, relieve their responsibilities. For instance, if there’s some empty land being cultivated which belongs to the banks, it has no value anyway and if somebody’s growing food it’s helping to solve some social problems. But when there’s a more political approach, or organised protesting, then you find opposition—and often very violent opposition. The level of violence is high. Just to scare citizens—normal citizens—from joining the movement. Because the movement was initially very apolitical, a citizen’s movement with nothing to do with the traditional party politics or allegiances, and they tried to scare people away. And they succeeded, in part.”

The most powerful part of the movimiento remains the PAH—the Platforma de Afectados por la Hipoteca (Platform for those Affected by the Mortgage).     

“The numbers affected by evictions are huge, incredibly huge. The PAH movement actually started before the crisis, defending the rights of people who were unable to afford a mortgage—then in 2008 the speculative housing bubble burst, and it transformed itself into something that defended the rights of people facing eviction because of the crash, going to places where people were being evicted, blocking evictions. Many, many people started to participate in it, and it became quickly linked with the indignados movement and the local assemblies. But because the PAH were working for a very specific thing, they were very successful in terms of receiving support, because everybody saw that this was a very precise thing that could be aimed for, changing a specific law on housing—and keeping people from becoming homeless. Because of that we have the support of eighty percent of Spanish society.”
 

Banker Emilo Botin and his “juicy booty”

This specific change in the law, Marc explains, was to “approve the dation in payment”—in other words, your debt would be cancelled when you lost your dwelling. The PAH gathered 1.4 million signatures to petition for this change, which was rejected by the government in April.

“This was denied because it generates a problem for the banks, who receive a property without value and don’t have any other way to recover the money they have lent. This is not important for the Spanish banks themselves, but for the European banks—German ones mainly—who were behind their capacity to give credit.”

On Friday Sara and I visit the working class district Encants to see the PAH in action. This requires a strange early evening journey, through somnolent shopping centers and amnesiac underpasses, until Barcelona finally cuts the shit and we find ourselves in breezeblock central: vacant balconies jut out from the dull high apartment blocks, like the handles of empty filing cabinets.     

We approach what might be a club or a bar—a large crowd mills about on the pavement outside smoking and talking. It is the local PAH center, though, and we enter a large, swelteringly hot space, with raw concrete walls plastered in printouts, schedules and slogans. It is packed. Over three hundred people are sitting close together, fanning out around a small panel of middle-aged, robust, blonde women, who are passing a microphone to and fro and filling the space with echoing bursts of musical, exhortative Spanish.

Clearly this entire audience is facing eviction—eviction and a lifetime of debt. It’s no small burden. Just a few months ago a forty-seven-year-old woman walked into her local bank in Valencia and set herself on fire. (She survived, just about.)

Here, though, there is something in the atmosphere besides tension, something like relief. Eviction, penury—these are definitively lonely ordeals, and through the PAH people can find emotional, practical and political support and solidarity. 

My assumption, as I watch the panel move through the endless succession of questions—everyone here has at least one—is that it consists of pro bono professionals. Apparently not. “They are not qualified,” whispers Sara, “they are just normal, working class women, but they sound like property lawyers.”

These panelists, it transpires, know every twist in the labyrinth because they were lost in it themselves, and so by necessity became expert at frustrating and thwarting the banks. In the week the PAH holds separate surgeries for the victims of the separate banks, organize sit-ins to stop evictions, and protest at the banks. They have been awarded a European Citizen of the Year award from the European Parliament, and enjoy—it warrants repetition—over 80% support from the public.
 

Pau Faus, Barcelona PAH
 
The Spanish government, meanwhile, has compared the PAH to ETA, to terrorists, to Nazis, and wants to see them stripped of their award…

This hysterical reaction was in response to escrache, a PAH approach that brought protest to these politicians’ literal doorsteps. However, it ain’t hard to see why the PAH might make the Spanish establishment generally nervous. In reality, there is nothing “apolitical,” say, about their guiding asservation that “having a home is a basic right,” or about their effort to remove the unjust financial yoke so cynically fastened upon the necks of hundreds of thousands of Spaniards. On the contrary, such ideas and actions are potentially revolutionary.

A hesitant African woman stands up. Her bank, she explains, are offering her a so-called “social rent” (whereby you lose your home but can go on living there). This is a very rare concession, so rare that it inspires one of the panelists to stand on her toes and flamboyantly flap her “Si Se Puede!” t-shirt high enough to flash the audience a glimpse of her bra.

Laughter flows through the crowd and out onto the pavement. The noise level instantly rises, interfering with the discussion and sparking a collective shhhhhh. It carries a hint of the Spanish lisp, this shhhhhh, making it sound more like a hiss than a hush, and this crowd of debtors, activists and volunteers a very large, very angry snake.

I remember what Marc said yesterday about the movimiento needing leadership, and wonder what on earth could happen if it finds it.

Masses of thanks to Sara, Moritz, Marc & Rebecca
 

 

Posted by Thomas McGrath | Discussion
What Marx got right


 
This is a guest post from Charles Hugh Smith. His newest book is Why Things Are Falling Apart and What We Can Do About It

The crisis of capitalism has not been resolved; it’s simply been papered over.

First, a disclaimer: this is an interpretive discussion of some aspects of Marx’s analysis (which was based on the capitalism he observed in the late 19th century) applied to present-day cartel-state capitalism. It is not a scholarly or academic presentation.

The discussion covers a lot of ground, though, so please refill your beverage container and strap in….

That Marx’s prescription for a socialist/Communist alternative to capitalism failed does not necessarily negate his critique of capitalism. Marx spent hundreds of pages analyzing capital and capitalism and relatively few sketching out a pie-in-the-sky alternative that was not grounded in historical examples or working models.

So it is no surprise that his prescriptive work is an occasionally risible historical curiosity while his critique stands as a systemic analysis.

Marx got a number of things right, one of which appears to be playing out on a global scale. You probably know that Marx expected capitalism to experience a series of ever-larger boom-bust cycles that would eventually precipitate revolution and overthrow of the existing financial-political order.

One driver of these cycles was the interplay of increasing production and declining labor costs. In broad-brush, Marx recognized that industrial capital (as opposed to finance capital) could only increase profits and accumulate more capital by raising production and/or establishing a price-fixing cartel or monopoly.

Mechanization characterized industrial capitalism in the late 19th century, and Marx observed that as mechanization increased productivity, the marginal value of labor decreased on a per unit basis.

Here is a real-world example: When I first visited China in 2000, there was a massive glut of television production: the capacity to manufacture TVs had expanded far beyond China’s domestic demand for TVs. To wring out a profit in a highly competitive industry, manufacturers had to ramp up production while lowering the unit cost of labor and the unit cost of each TV to undercut the competition.

If an assembly line of 100 workers could produce 1,000 TVs a day, the only way to lower the price of the TV is to either lower the wages paid to the workers or invest capital in machinery that enables the same 100 workers to produce 2,000 TVs a day.

At 2,000 TVs a day, the per unit labor cost falls in half. For example, at 1,000 TVs a day, the labor cost per TV might be $40. At 2,000 TVs per day assembled by the same 100 workers, the labor cost per unit drops to $20.

The key point here is that labor’s share of the total production cost declines. If workers had taken home $1 million in pay to make 100,000 TVs at the old production rate of 1,000 TVs/day, they now take home $500,000 to make 100,000 TVs at the new production rate.

In other words, labor’s share of value creation constantly declines as mechanization boosts productivity. Marx described the impact of another factor: oversupply of labor. As rural agricultural workers flooded into cities for jobs that paid cash, there was an abundance of factory labor. Competition for jobs pushes wages lower, so workers faced a double-whammy: their share of production relentlessly declined as productivity rose, and the pressure on wages constantly rose as per unit labor costs declined.

The competition to outproduce industrial rivals with cheaper per-unit production costs and labor’s competition for jobs both generate a structural crisis in capitalism: as production of goods rises, both the cost per unit and the number of workers earning enough to buy the goods declines.

Keep reading ‘What Marx Got Right’ from Charles Hugh Smith after the jump…

Posted by Richard Metzger | Discussion
‘1962 Cost of Living’ list will make you weep
07.11.2013
08:18 am

Topics:
Economy
History

Tags:
Cost of Living


 
To be honest, I’m kinda surprised a gallon of milk was that expensive back then.

Via Copyranter

Posted by Tara McGinley | Discussion
The NEXT American revolution: Concentrated wealth and power will either implode or fade way
07.04.2013
11:33 am

Topics:
Class War
Economy
History
Thinkers

Tags:
Charles Hugh Smith


 
Some July 4th thoughts on revolution as a process rather than an event from Charles Hugh Smith. His newest book is Why Things Are Falling Apart and What We Can Do About It

The next American Revolution will not be an event, it will be a process. We naturally turn to the past for templates of the future, but history has a way of remaining remarkably unpredictable. Indeed, all the conventional long-range forecasts made in 1900, 1928, 1958, 1988 and 2000 missed virtually every key development—not just in the distant future, but just a few years out.

The point is that extrapolating the present into the future fails to capture sea changes and developments that completely disrupt the supposedly unchanging, permanent Status Quo. The idea that the next revolution will take a new form does not occur to conventional forecasters, who readily assume the next transition will follow past critical junctures: armed insurrection against the central authority (The first American Revolution, 1781), civil war (1861) or global war (1941).

I submit that the next American Revolution circa 2021-23 will not repeat or even echo these past transitions. What seems likely to me is the entire project of centralization that characterized the era 1941-2013 will slip into irrelevance as centralization increasingly yields diminishing returns.

Everything centralized, from the Federal Reserve to the Too Big To Fail Banks to Medicare to the National Security State depends on the Federal government being a Savior State that must ceaselessly expand its share of the national income and its raw power lest it implode. All Savior States have one, and only one trajectory—they must ceaselessly expand and concentrate wealth and power or they will fail.

They are like the shark, which dies once it stops moving forward: the Savior State must push forward on its trajectory of expansion or it expires.

Stasis is not possible, nor is contraction; the promises made to the citizenry cannot be withdrawn without political instability, but the promises cannot be kept without fatally disrupting the neofeudal financialized debtocracy.

You see the dilemma: The Savior State cannot stop expanding, but the financial system that generates its revenues can no longer support its vast machinery of debt and phantom collateral. This is why I suggest all the centralized concentrations of wealth and power will either implode or fade into irrelevance.

If all the phantom wealth and collateral vanishes in a market clearing event, the Federal Reserve will simply become irrelevant to the vast majority of people. A handful of nimble speculators may well benefit by picking over the carcass of financialization and centralized omnipotence (i.e. central banking), and perhaps the 1/10th of 1% will still have enough assets influenced by the Fed to care, but the forces of disruption will replace centralization with decentralization.

Here is another example: Medicare may not cease to exist, but it will become increasingly irrelevant to most people because it will not longer function. The remaining doctors willing to treat Medicare patients will be working 13-hour days for sketchy pay, and as each one burns out and leaves the system, the system contracts. Eventually it contracts to the point of irrelevance.

The revolution will be in work and social innovations enabled by technology. The conventional view is that technology will magically enable the permanence of the present; this will be proven incorrect, as what technology enables is not the waste, entitlement and centralization that characterize the present but social innovations, some of which are already visible.

If we sought to summarize the profound transformation ahead in one sentence, it would be this: Wages are no longer an adequate model for distributing the surplus generated by the economy.

The current Savior State model responds to this by increasing taxes on the dwindling minority with fulltime jobs and increasing entitlement payments to all those without government or private-sector jobs. This model will collapse, politically, socially and economically, as no society or economy can squander half or more of its productive labor force while increasing the burden on the dwindling cohort of productively employed. The inevitable result of this dynamic is a destabilizing tyranny of the majority.

Technology is not just disrupting old industries and companies, it is disrupting the entire Savior State/cartel-capitalism model. The disruption has barely begun, but it will pick up speed over the next decade.

I suspect the next American Revolution will begin in the 2015-16 timeframe. A series of interlocking crises will lead to reforms that preserve the Savior State/ cartel-capitalism for another few years, at a lower level of consumption, i.e. burn rate.

But the process of revolution will be far from complete; this initial response of the centralized neofeudal debtocracy will buy time for the Status Quo, and every conventional onlooker will be infused with optimism and hope that the system established in the Great Depression, World War II and its Cold War aftermath—the secular religion of consumerism (i.e. aggregate demand), permanent war footing and the National Security State, and universal dependence on the Savior State and its ceaseless expansion of concentrated wealth and power—will continue.

But this Springtime for the Savior State/cartel-capitalism partnership will be brief, and by 2018-19 all the systemic flaws and disruptive trends will reassert themselves with renewed vigor.

The entire current model of governance, social order and the economy will be revolutionized not by overthrow but by the process of irrelevance. What will become relevant will no longer be in the control of the Savior State or its partner, financialized cartel capitalism.

Those currently holding all the concentrated power and wealth cannot believe they will become irrelevant, but that’s the result of projecting the present as if it is permanent and immutable.

The new system will be better, more humane, more flexible, more transparent, with more opportunity, for it will be everything the current corrupt, sclerotic, parasitic and exploitative system is not.

Previously on Dangerous Minds from Charles Hugh Smith:
Concentrated wealth and power are intrinsically sociopathological by their very nature

Global Crisis: The Convergence of Marx, Orwell and Kafka

Will crushing student loan debt and worthless college degrees radicalize the Millennial generation?

Wage Slaves: Are You Loving Your Servitude Yet?

Posted by Richard Metzger | Discussion
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