Category: Economy

What #OccupyWallStreet is about

#OccupyWallStreet is just the sort of movement I’ve been expecting. It’s a true grassroots movement catalyzed and sustained by social media (which is probably crucial, as I explained in an earlier post). While there is an overriding agenda about economic justice, OWS represents a diversity of interests and concerns. It’s a working class phenomenon, but it includes both blue collar and white collar workers, many of them newly unemployed. These are the statistics that corporations ignore when they cut jobs and strip healthcare benefits. These are people who heard a promise throughout their lives and saw it shattered to dust over the last decade. These are people who have created much of the value that millionaires and billionaires have captured and stashed in their Swiss bank accounts. These are honest, hardworking swimmers who didn’t see the sharks coming until it was too late.

Remember Frank Capra’s film “Mr. Smith Goes to Washington,” where an ordinary guy played by James Stewart takes on Washington corruption? Sending a true-blue Mr. Smith to Washington didn’t work to his advantage, the level of corruption almost took him down. What happens, though, if you have an army of idealistic, straight-shooting Mr. Smiths who actually believe that the system should work for everybody, not just the wealthiest 1%? To me the Occupy movement is that army, and they’re occupying not Washington D.C., but Wall Street, which has become the real seat of power as corporations ascend and governments weaken.

I saw a talk last night by David Cobb, a former shrimper and construction worker who got his law degree in 1993 and was the Green Party’s presidential candidate in 2004. He’s currently active with MoveToAmend.org, and organization that seeks an amendment to abolish the concept of corporate personhood, arguing that corporations never should have been assigned the rights normally assigned to a person in the first place. Why is this a problem? The biggest issue currently is the assertion of a corporation’s Constitutional right to contribute to political campaigns. The question is the extent to which corporate power and influence over government should be limited. Cobb’s argument was that the supposed American democracy is not really “of, by, and for the people” because corporations are making and enforcing (through influence) decisions that we should be making together. What’s an example? One might be the complex of government decisions connected with the recent “too big to fail” financial crisis and bailouts, including weakened regulation of banking and credit card industries. It’s the financial crisis, and more so the response to it, and resulting loss of jobs and benefits, that’s brought diverse citizens to the streets in the “Occupy” movement. Also, for that matter, it was an inspiration for the formation of the Tea Party on the right side of the fence.

Like Cobb, I don’t think the issue is the idea of the corporation, of people coming together to create an entity to accomplish something, like building a business or fulfilling a not for profit mission. The problem is an imbalance of power and influence, and the growing sense that a few rule the many. Most of us grew up believing in something called democracy, which is difficult to achieve and too easy to game. Cobb pointed out that there’s been a democratization trend – more and more people assigned the rights of a person, women minorites, etc. But at the same time there’s a corporatist trend, a kind of gentler version of what we used to call fascism, that has been growing and is currently ascendant and taking as much power as possible.

I don’t think it’s too radical for the people to demand their rights as persons and as citizens, and assert those rights against the rights of “legal fictions,” i.e. corporations. But (as I posted in Facebook and Google+ earlier), we have to stop feeling outraged and start feeling a tranquil and firm sense of empowerment. That’s what I think I’m seeing in the OWS demonstrations so far.

Occupy ABC’s This Week

Update: link to a transcript of La Greca on This Week at DailyKos

DailyKos blogger Jesse LaGreca was eloquent and focused on ABC’s This Week this morning. I want to post the conversation about #OccupyWallStreet featuring Jesse, and come back a little later with my own thoughts.

To the question, “What is your plan? Are you going to harness this into a political movement?” – a question that keeps coming up, and misses how this movement is different, Jesse responded that OWS is really about “pushing the narrative that working people can no longer be ignored.” They’re not trying to be the politicians – the more important thing is for politicians to come out and listen to the people at OWS.

Notes on the financial crisis

John Robb connects the fall of the US Empire, like the fall of the Soviet empire, to central planning, but of a different kind:

The parallels between the rapid growth of US government bureaucracy and the Soviet bureaucracy is straight forward. As more and more of US economy was controlled by a narrow group of decision makers allocating government resources, the more sluggish the entire economy became (most of this was due to massive growth and mis-allocation in entitlements and defense). Further, the ability of government bureaucracies to extend their decision making to remaining majority of the economy through regulatory action, is also a form of centralization. However, even with all of this government growth, it’s is still not enough to account for the level of misallocation we are seeing.

There’s is something else at work.

The answer is that an extreme concentration of wealth at the center of our market economy has led to a form of central planning. The concentration of wealth is now in so few hands and is so extreme in degree, that the combined liquid financial power of all of those not in this small group is inconsequential to determining the direction of the economy. As a result, we now have the equivalent of centralized planning in global marketplaces. A few thousand extremely wealthy people making decisions on the allocation of our collective wealth. The result was inevitable: gross misallocation across all facets of the private economy.

David Brooks says that the U.S. “meritocracy” is less functional than before, He says it is based on an overly narrow definition of talent, has created new social chasms and less of a sense of connection, has less solidarity as a leadership class, is less into long-term thinking and more into fast response – “less emphasis on steady, gradula change and more emphasis on the big swing,” which “produces more spectacular failures and more uncertainty.” He alos says that we’re too transparent – “the more government has become transparent, the less people are inclined to trust it.” I’m not quite on board with that last, as one who has pushed for more transparency. Government should be functional, not mythic.

In another conversation, at Thrivable, Scott Reynolds Nelson expresses another view of transparency, speaking of banks rather than government:

Openness of books, transparency, clarity aren’t just things that are nice to have – they can make or break any institution that relies on trust to function. That includes banks but also NGO’s, funds, etc. Much of the internal workings of banks for example had been invisible to most folks. The so-called “stress test” that the federal government used on the banks in 2009 exposed some of the problems with bank operations. It turned out that many banks had much higher reserve ratios than they claimed. Likewise many of the big banks were forced to take off-the-books vehicles back into their firms for accounting purposes. In banks, anyways, that transparency can remove that semiotic doubt.

Finally, this RSA Animate video explains “Crises of Capitalism”:

Heads

In a conversation with a longtime friend, I just sent an email message that was fairly clear on some points I’ve been thinking about, so I’m reposting part of it here, ending with an unusual reference.

I’m currently into Buddhist practice and a related qigongish practice, and while many people who aren’t into those things mistakenly believe they’re “religious” or “spiritual,” they’re really just practices about understanding mind and self. In Buddhism we talk about emptiness, the realization that there’s no permanent real self. I heard a Buddhist say the other day something about not believing your thoughts. I think that’s really key to getting straight. We identify with thoughts in our heads as though they were real objects with weight and permanence, and it just ain’t so. The voices in your head aren’t necessarily your friends, and often it’s better to ignore them. I thought about all this when I read your paragraph above about identity and opportunity. I think it’s important to get behind your identity and realize there’s nobody behind the curtain. It’s a hard realization and it takes work. It leads to a real opening, potentially, though.

Truth, power, justice, framing, global warming etc. are just concepts and aren’t real things, and it can be helpful on some level to realize this. You do have to come back to a level where they’re treated as real – but there’s creativity in understanding that they’re not real things that are beyond your reach, but concepts that you’re co-creating with everyone else – that can be asserted, diverted, hacked, etc. They’re only real in a kind of mental consensus that we have about them.

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Our politicians are more focused on politics and power – concepts, not realities – and they’re not so much into focusing on what’s real. What are the markets of the future and what skills do we require to be competitive and have viable economies? My business partner and I have been saying that we’re moving away from economies where you make money by extracting resources, applying labor to produce products, and tossing whatever’s not used as waste – to economies where knowledge substitutes for labor and heavy equipment, and where we engineer to extract as much as possible from any resource. Knowledge and social capital become as valuable as, or more valuable than, finance capital. We’ve wanted to study this more and write about it more, but we’re working on our social media consulting business, where we have deep knowledge and understanding. However we see that social media is relevant to sustainability economy, so we’re moving in the right direction no matter what.

Around 1966 or 67, Bert Rafelson and Jack Nicholson made a film called “Head” starring the Monkees (Nicholson was the screenwriter). There’s a scene in that film, where the Monkees stumble into a steambath where a Maharishi-like yogi is sitting, and he says this:

We were speaking of belief; beliefs and conditioning. All belief possibly could be said to be the result of some conditioning. Thus, the study of history is simply the study of one belief system deposing another, and so on and so on and so on… A psychologically tested belief of our time is that the central nervous system, which feeds its impulses directly to the brain, conscious and subconscious, is unable to discern between the real, and the vividly imagined experience. If there is a difference, and most of us believe there is -am I being clear? For to examine these concepts requires tremendous energy and discipline. To experience the now, without preconception or beliefs, to allow the unknown to occur and to occur, requires clarity. And where there is clarity there is no choice. And where there is choice, there is misery. And why should anyone listen to me? Why should I speak, since I know nothing?

A.I.G.: great story, wish it was fiction

Michael Lewis does a great job telling the story of A.I.G. and how it failed, bringing down the global economy. It’s fascinating, especially how much the tumble evidently depended on the failings of one guy, Joe Cassano.

The people still left inside A.I.G. F.P. like to list just how many things had to go wrong for their business to implode. Any one of a number of things might have sufficed to avert their catastrophe: our political leaders might have decided against the Wall Street argument not to regulate credit-default swaps; the ratings agencies might have resisted the Wall Street argument to rate subprime bonds AAA; Wall Street banks, in 2006 and 2007, might have declined to replace A.I.G. F.P. in the role of subprime risktaker of last resort; and on and on. Their list is mostly a catalogue of large, impersonal forces. But impersonal forces require people to conspire with them. Joe Cassano was the perfect man for these times—as responsible for a series of disastrous trades as a person in a big company can be. He discouraged the dissent of subordinates who understood them better than he did. He acted with the approval of A.I.G., but he also must have known that A.I.G. wasn’t able to evaluate his trades. Once he was persuaded to stop insuring subprime-mortgage bonds, the logical course of action was to reverse the deals he had already done. In 2006 he might have found a way to do this, if he had been willing to accept the costs involved, but he wasn’t. Had he been, the machine he helped to create would have kept running—by then it had a life of its own—and the losses would have simply wound up more concentrated inside the big banks. But he’d have saved his company.

Happiness Is Mobile Loaves and Fishes

Mark Horvath (aka @hardlynormal), who is an advocate for the diverse and generally invisible homeless population, is in Austin hanging out with our friends at Mobile Loaves and Fishes, just in time for this week’s social-mediated screenings of Andrew Shapter’s film “Happiness Is” on Thursday, preceded by a Tweetup (info blogged here by the MLF crew). A “tweetup” is a meetup coordinated via Twitter, but you don’t have to be a twitizen to go there and have a great time.

Mobile Loves and Fishes is featured in the film, a documentary that asks how we can create more happiness (however defined) in our lives. Here’s a clip…

Credit where credit is due

James Suroweicki explains the logic that drives credit card companies to strangle consumers.

…credit-card companies have created a strange business, in which there’s a fine line between good and bad customers. Their best customers aren’t those who dutifully pay off their balance every month; instead, they’re the ones who charge a lot and pay only a little every month, carrying a sizable balance and racking up interest charges and late fees. These are the “revolvers,” and the credit-card business feeds on them. Credit-card companies don’t necessarily want revolvers to pay off their debts; if they did, there’d be no interest or fees to collect. They want their loans to be, in the words of a banking regulator, “a perpetual earning asset.” And they’ve thought a lot about how to keep those interest payments coming. For instance, they used to keep minimum payments relatively high. But, over time, companies started lowering minimum payments, sometimes to just two per cent of the balance. The lower the minimum payment the less people pay off each month and the longer they stay on the hook.

Shopocalypse now: be mindful

Gary Gach considers how Buddha would approach consumer Christmas: “We should be trying to base contentment on being, rather than having. Then the question of buying that fourth shirt or that new gizmo on display might be dwarfed by the prospect of creating more space in one’s life by donating your extra stuff. When tempted to bite the hook of despair over seeming scarcity in one’s life or in the world, try practicing generosity instead.” He menntion’s Reverent Billy’s motto: “love is a gift economy. Pass it along.”

The Buddha’s critique of mindless craving and needless suffering pinpoints the precise moment during which real pleasure becomes abstract desire – the want to want. In our addictive culture of capitalism, it’s the exact same vital acupressure point that our basic market economy capitalizes on. “Don’t get hooked,” the Buddha says. Remember the hungry ghost, craving more and more of what can never satisfy.

The Working Poor

According to seattlepi.com, the working poor missed the benefits of the economic boom, but they definitely won’t miss the effects of the bust. The article references a report by The Working Poor Families Project, called “Still Working Hard, Still Falling Short.” [Link to pdf]

From the seattlepi.com article:

Nationally, 28 percent of families were deemed working poor in 2006, up from 27 percent in 2002 as parents spent more on housing and the number of low-paying jobs grew, the report found.

New Mexico ranked worst with 41 percent of working families considered low-income. New Hampshire had the lowest rate at 15 percent.

While the fortunes of low-wage workers worsened, the report paints a picture of those families that runs counter to some common beliefs. Struggling families typically worked more than 40 hours a week, while most were headed by parents who were 25 or older. Only a quarter received food stamps.

Blog Action Day: Poverty

A little-known fact about me: just out of college and eager to save the world, I worked with poverty programs for quite a few years, in fact (long story) that’s how I became a technology professional. The same idealism drove my later focus on the social web and online community. When I saw that this year’s Blog Action Day was about poverty, I quickly signed on, and I also signed on with local bloggers committed to the Blog Action Day project. (Some of my colleagues, like Bob Carlton, were thinking to spend a night at a homeless shelter.)

If you haven’t spent much time focused on poverty, it’s an abstraction, your perceptions based on random encounters with “the disadvantaged,” media coverage, and probably mental autofill based on your unschooled sense of what it would mean to be without appreciable income and resources. In my years as a caseworker, I saw a world that was hidden and unfamiliar. The poor are hidden from view both physically and conceptually. We’re in state of denial about poverty, and assume that people can only be poor because of their own shortcomings – it was common to hear that they’re “lazy, don’t want to work, want to live off the public dole.” I met few,if any, that fit that description. Many I met were working poor who never had the network of suppports and resources, the social safety net, that I had known. Some were sick. Some had spectacularly bad luck that persistently set them back. Some were destabilized by cycles of addiction and recovery. Many were only temporarily what you would call “poor,” and working hard to change their circumstances.

I met many whose lives had little of the structure I had known as an upper-middle-class white kid in West Texas – the structure and rhythms that set the stable path through school, through college, into a career. They were struggling with notions and disciplines that many of us take for granted. The “basic job skills” training programs were set up to create the habits and disciplines they’d missed.

One way to think about poverty: it has no single cause, and to talk about fixing the problem of poverty is like talking about curing disease – which disease? The cures vary, depending on the specifics of the condition.

On the other hand, many common diseases are associated with lifestyle, they’re systemic, and can be addressed by corrections to cultural systems and assumptions. Consider the negative health impact of efficient production and distribution of high-fat, high-calorie fast food, and the positive impact of retooling to produce fast foods that have less fat, fewer calories, more nutrition. I.e. just thinking about the problem, thinking about what has to change, taking relevant action yourself and demanding action from others, can have a positive effect.

So I think asking bloggers to focus on poverty is a great first step.

Tiptoe through the tulips

Tulips

Dave Wilson sent David Farber’s “Interesting People” email list a paragraph from Charles Mackay’s Extraordinary Popular Delusions and the Madness of Crowds (which I may have somewhere; Mark Frauenfelder once gave it to me for Christmas… if I had only thought to take it more seriously!) Here’s the paragraph, suggesting what you have when the bubble bursts:

At last, however, the more prudent began to see that this folly could not last for ever. Rich people no longer bought the flowers to keep them in their gardens, but to sell them again at cent. per cent. profit. It was seen that somebody must lose fearfully in the end. As this conviction spread, prices fell, and never rose again. Confidence was destroyed, and a universal panic seized upon the dealers. A had agreed to purchase ten Sempers Augustines from B, at four thousand florins each, at six weeks after the signing of the contract. B was ready with the flowers at the appointed time; but the price had fallen to three or four hundred florins, and A refused either to pay the difference or receive the tulips. Defaulters were announced day after day in all the towns of Holland. Hundreds who, a few months previously, had begun to doubt that there was such a thing as poverty in the land, suddenly found themselves the possessors of a few bulbs, which nobody would buy, even though they offered them at one quarter of the sums they had paid for them. The cry of distress resounded everywhere, and each man accused his neighbour. The few who had contrived to enrich themselves hid their wealth from the knowledge of their fellow-citizens, and invested it in the English or other funds. Many who, for a brief season, had emerged from the humbler walks of life, were cast back into their original obscurity. Substantial merchants were reduced almost to beggary, and many a representative of a noble line saw the fortunes of his house ruined beyond redemption.

According to Wikipedia, “economists have debunked many aspects of [Mackay’s] account,” primarily whether “tulipmania” was actually a “bubble.”

While Mackay’s account held that a wide array of society was involved in the tulip trade, Goldgar’s study of archived contracts found that even at its peak the trade in tulips was conducted almost exclusively by merchants and skilled craftsmen who were wealthy, but not members of the nobility. Any economic fallout from the bubble was very limited. Goldgar, who identified many prominent buyers and sellers in the market, found fewer than half a dozen who experienced financial troubles in the time period, and even of these cases it is not clear that tulips were to blame.

Where today’s economic crisis is concerned, I’ve wondered to whether it’s catastrophic for the middle (and lower) income classes as compared to the wealthy, who have more to lose. Whatever the case, we’re on the edge of a volatile transformation. David Armistead and I (among others) have been talking for many months now about the inevitable evolution of a “sustainability economy,” shifting from assumptions of resource abundance driving seemingly unlimited consumption to a prevailing assumption that resources are inherently limited (not so much an assumption as a given). (Thomas Friedman suggests that we “green the bailout.”) In the new economy, we’ll shift from resource extraction to resource efficiency, from drilling for oil to drilling for knowledge. Our tulip farms will be organic, and we’ll return to the soil what we take.