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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
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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
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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
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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
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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
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‘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
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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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Capitalism’s latest heist: Big banks skim insane profits from minimum wage workers’ pay!
07.01.2013
09:00 am

Topics:
Class War
Economy

Tags:
capitalism


Image via Trustocorp

Great reporting in the New York Times today from Jessica Silver-Greenberg and Stephanie Clifford about an increasingly annoying, not to mention inherently immoral, problem faced by the lowest income American workers.

In an effort to save money, many businesses with lower paid workers, such as fast food franchises and retail chains, are resorting to paying workers with prepaid debit cards that often come with extremely hefty fees (like $1.75 each time you make a withdrawal at an ATM or a $7 penalty for not spending your own money before a specified date). Just getting a regular check or direct deposit at a bank isn’t even an option anymore for some workers, as well as many people on public assistance programs. Some states, like California, put unemployment insurance benefits on prepaid ATM cards subject to these sorts of fees also.

As Silver-Greenberg and Clifford point out, these charges just to get at your own money can often be so onerous as to mean that the workers who are paid this way end up making less than the minimum wage. As an increasing number of consumer attorneys, state and Federal regulators and of course the workers themselves are starting to realize, these “fees,” to put it in plainer English, amount to legal confiscation:

Taco Bell, Walgreen and Wal-Mart are among the dozens of well-known companies that offer prepaid cards to their workers; the cards are particularly popular with retailers and restaurants. And they are quickly gaining momentum. In 2012, $34 billion was loaded onto 4.6 million active payroll cards, according to the research firm Aite Group. Aite said it expected that to reach $68.9 billion and 10.8 million cards by 2017.

Companies and card issuers, which include Bank of America, Wells Fargo and Citigroup, say the cards are cheaper and more efficient than checks — a calculator on Visa’s Web site estimates that a company with 500 workers could save $21,000 a year by switching from checks to payroll cards. On its Web site, Citigroup trumpets how the cards “guarantee pay on time to all employees.”

GOOD TIMES! And hey, now that $21,000 AND THEN SOME can get pushed onto the worker’s backs and off the corporation’s bottom line! You have to wonder if Taco Bell, Walgreens and Wal-Mart are skimming micro-payment kickbacks every time one of these cards is swiped. It’s one thing for a company with 500 employees, imagine the kinds of “arrangements” that are in place between the big banks and these mega-corporations.

Many low income Americans do not have bank accounts at all, but the “innovation” of the payroll ATM cards effectively allows the big banks to pick their pockets anyway, applying a surcharge—let’s call it a “Capitalist free market tax” shall we?—to give people access to their own money. In poorer rural communities where the only ATMs might be in a mini-mart or liquor store,  the fees would also be charged by the ATM provider (and split with the owner of the store). All in all, you gotta hand it to them, it’s a damned clever, if outrageously morally reprehensible, way for the banks to make up for all those various gravy-trains that the Dodd-Frank legislation effectively ended:

For banks that are looking to recoup billions of dollars in lost income from a spate of recent limits on debit and credit card fees, issuing payroll cards can be lucrative — the products were largely untouched by recent financial regulations. As a result, some of the nation’s largest banks are expanding into the business, banking analysts say.

The lack of regulation in the payroll card market, while alluring for some of the issuers, can potentially leave cardholders swimming in fees. Take the example of inactivity fees that penalize customers for infrequently using their cards. The Federal Reserve has banned such fees for credit and debit cards, but no protections exist on prepaid cards. Cards used by more than two dozen major retailers have inactivity fees of $7 or more, according to a review of agreements.

Some employees can also be hit with $25 overdraft fees, called “balance protection,” on some of the prepaid cards. Under the Dodd-Frank financial overhaul law, banks with more than $10 billion in assets are barred from levying overdraft fees on customers’ checking accounts.

That’s great if you’ve got enough money to actually put into a checking account, but if you’re already waking up every morning on the wrong side of capitalism, these vampires can legally bleed you dry and clearly have every intention of just taking whatever they can.
 

 

Posted by Richard Metzger | Discussion
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The (In)Dignity of Labor: Top Senate Republican wants to abolish minimum wage!


“Goldman Sachs 2020 Slave Labor Camp International” by Lee Harvey

Considering the appalling number of Americans these days who are paid as little as their bosses can possibly get away with paying them, you would think that citing opposition to the notion that hard work should, you know, pay a living wage and provide for some level of human dignity in the world’s richest country, would be perceived as a toxic issue by the elders of the Republican Party. Something you wouldn’t want to touch with a ten foot pole…

But you would be wrong.

During a hearing on raising the minimum wage to $10.10 an hour, Sen. Bernie Sanders got Lamar Alexander, the ranking Republican on the Senate Health, Education, Labor, and Pensions (HELP) Committee to admit that he wants to abolish the minimum wage.

It was remarkably easy—he wasn’t even trying—for Sanders to provoke a remarkable reaction to this statement:

“There are certain conservatives who do not believe in the concept of the minimum wage. The concept of the minimum wage. In other words, if the economy as such, and I offer you three dollars an hour.”

Alexander took the bait, interrupting Sanders (“Let me jump in. I do not believe in it” he says) and offering his two unsolicited cents:

Sanders: So you do not believe in the concept of the minimum wage?

Alexander: That’s correct.

Sanders: You would abolish the minimum wage?

Alexander: Correct.

Sanders: If someone had to work for two bucks an hour, they would work for two bucks an hour?

Senator Alexander is not a stupid man. He’s a graduate of Vanderbilt University and NYU’s law school. He’s been in government since the Nixon administration, he was the 45th Governor of Tennessee from 1979 to 1987 and he served as George H. W. Bush’s Secretary of Education. He’s run for president twice.

Alexander was not caught off guard and this was not exactly a trick question that Senator Sanders posed to him, either. He volunteered this information: Alexander really means this shit.

Oy vey. When will these Republicans ever learn?

The exchange between Sanders and Alexander starts (after Sanders lays the groundwork discussing the situation that fast food workers find themselves in making $7 bucks an hour) at the 5:48 mark. At the end of it, the asshole from the conservative Heritage Foundation asserts that the minimum wage hurts “the beneficiaries”!
 

 
Via Politics USA

Posted by Richard Metzger | Discussion
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Irish town erects fake shop fronts for G8 summit


 
I shit you not. Apparently the G8 leaders and their entourages are such delicate flowers that they can’t bear to see the effect of the global recession on the towns they drive through, such as upcoming host Enniskillen in Northern Ireland.

Via RTÉ, the Irish national broadcaster:

Local councils in Northern Ireland have painted fake shop fronts and covered derelict buildings with huge billboards to hide the economic hardship being felt in towns and villages near the golf resort where G8 leaders will meet this month.

Northern Ireland’s government has spent £2m (€2.3m) tackling dereliction over the past two years, the environment department said. Some buildings have been demolished and others have been given a facelift in an attempt to make areas more attractive.

Almost a quarter of “dereliction funds” were freed up for local councillors in Co Fermanagh in anticipation of Britain hosting the annual Group of Eight leaders’ summit there on 17-18 June. More than 100 properties have been spruced up. In the one-street town of Belcoo, the changes are merely cosmetic.

At a former butcher’s shop, stickers applied to the windows show a packed meat counter and give the impression that business is booming. Across the street, another empty unit has been given a makeover to look like a thriving office supply shop.

Locals are unimpressed. “The shop fronts are cosmetic surgery for serious wounds. They are looking after the banks instead of saving good businesses,” said Kevin Maguire, 62, an unemployed man who has lived all his life in Belcoo.

Full story here.

Posted by Niall O'Conghaile | Discussion
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