Monday, October 30, 2006

What Dean Baker says. . .

Dean Baker asks a good question: Why exactly do pundits call it "free" trade when there are tons of protectionist measures contained in these deals?

Referring to the proposed free trade pact with Ecuador and its impact on that country's presidential campaign, Baker notes that it in fact "[the trade deal] would not create free trade. It would largely leave in place the protections that ensure high wages for doctors, lawyers, accountants, economists and other highly educated professionals in the United States. It would also increase protectionism by requiring more stringent rules in Latin America for drug patents and copyrights."

Baker asks: "So, why not save a word and just call it a "trade" agreement?" That's a damn good question.

Andy Stern is a hero

Andy Stern, President of the SEIU, has a new book out that I have every intention of reading once this semester is over. He has a solid post over at TPM Cafe that I recommend for anyone interested in the battle for economic justice in this country. It's basically a nice populist stump speech with the requisite anecdotal evidence of the working class struggles going on across America, but I found it to be fairly inspirational. Go check it out.

Thursday, October 26, 2006

Wealth not being spread (or, inequality still matters)

Max Sawicky runs through the economy and finds that all is not well, particularly in terms of growing income inequality. For example, even though the DOW is currently sitting at record highs, less than half of Americans own any stock at all, and 80% of the population has only 10% of all stock market wealth.

Another major problem that the Bush administration would like to gloss over in their rosy view of the economy is the fact that 40 million Americans currently have no health insurance. Also, fewer employees are currently receiving health insurance from their employers now than they have in the past--coverage has declined from 61.5% in 1989 to 58.9% in 2000 and down to 55.9% in 2004. And Sawicky adds: "Less well-known is the fact that those who still receive employer-provided coverage are now paying a larger share of those insurance costs. From 1992 to 2005, this share has risen from 14 to 22 percent."

There's also the fact that the ratio of pay between CEOs and average workers has risen from 7100% to 26,200% (in 1979 and 2005, respectively), the fact that adjusting for inflation, the median earnings of full-time workers have fallen since 2001 (no thanks to the Bush administration and GOP Congress tax cuts).

Wednesday, October 25, 2006

The election and the economy

Economist Jared Bernstein over at the Economic Policy Institute points out how the Republicans are now desperately trying to spin the latest economic news to their party's electoral favor. He analyzes Treasury Secretary Paulson and head of OMB Portman's claims that the economy is great for middle class Americans and demonstrates how ridiculous they are.

According to Paulson, the economy is great but the news just isn't getting through to working Americans. But Bernstein notes that, for example, the inflation-adjusted income of the typical working-age household is down $3000 since 2000. Further, the buying power of the typical, full-time worker's weekly paycheck is down 3% since late 2001, when the Bush economic "recovery" began.

Bernstein frames the administration's economic PR job with a helpful analogy: "It's not that these officials are wrong about some impressive aspects of the current economy. Productivity growth, a vital indicator of our increased efficiency in producing goods and services, has been quite stellar in recent years. But put that together with these wage and income trends, and you see the problem: These officials are praising the bigger and better pie baked by the American work force, but they're missing the fact that the bakers are walking away with smaller slices."

Tuesday, October 24, 2006

Leonhardt makes sense on raising the minimum wage

David Leonhardt, writing in The New York Times, really hits the nail on the head in his piece discussing the popularity of raising the minimum wage this election year. He points out that not only have opponents' hysterical claims that raising the wage will hurt job creation, but that Americans actually care about the growing income inequality in this country.

He makes a very interesting point that I hadn't thought of before. Social Security, when first proposed by FDR in 1935 as a response to the Great Depression, was criticized as being a job creation killer. And the important fact is that not only did Social Security pass and become an incredibly popular program - and cornerstone of our social safety net - but it also technically is bad for job creation because of the financial burden it places on both workers and corporations in order to subsidize retirees. Same thing goes with Medicare and workplace safety regulations (for the same reasons). But that is exactly the point: there are times when economists must take normative concerns like fairness and societal values into account when enacting economic policy alongside positive (that is, strictly efficiency) judgements.

The article concludes: "The current batch of ballot initiatives isn’t perfect. Three of the six would enshrine the new wage in the state constitution, which seems a strange place to discuss inflation indexing (a point that opponents are emphasizing, perhaps realizing that the old scare tactics aren’t enough). A higher minimum wage also isn’t the most effective way to fight poverty, because some minimum wage jobs are held by middle-class teenagers. But Congress and state legislatures have yet to come up with better solutions, and voters may not be willing to wait for perfection."

Exactly right.

Does Edmund Phelps really deserve the Nobel Prize in Economics?

Writing at ZNet, Indian economist Girish Mishra offers up some historical context for the purposefully created phenomenon of "involuntary employment", and in that perspective demonstrates what seems to be a somewhat controversial decision in giving a Nobel Peace Prize to Columbia University economics professor Edmund S. Phelps. He traces the role of unemployment as a tool to keep workers from taking "collective action" like unionizing and demanding a living wage, benefits, etc, through Keynes' post-Depression prescription that the federal government needed to proactively generate employment opportunities in order to increase the volume of effective demand to clear the market--advice that ultimately saved capitalism from itself.

While Keynes' philosophy helped pave the way for the New Deal and the creation of a welfare state in America for the first time, conservatives pushed back with theories of their own to support governmental interference in the marketplace of a more malevolent kind. Specifically, the British economist Alban Phillips posited that a negative relationship existed between unemployment and the level of inflation, which meant that when unemployment rose, the rate of increase of money wages fell, and vice versa. This counter-intuitive relationship gained currency among technocrats and was called the "Phillips curve" (see here for more background).

The upshot of this theory was that with an unemployment rate of 3%, (which was regarded by most Americans as the full employment level), inflation would be between 4-5% and therefore a policy of working toward very low unemployment rates was not desirable.

During the stagflation of the 1960s and 70s in the US, where unemployment and inflation began to rise simultaneously, the world of academia began to question the efficacy of the theory, and it was not until it was rescued by Phelps, who put forward research demonstrating that the Phillips curve was, in fact, still valid. There was a return to the seemingly-discredited economic theory, which Mishra provocatively describes as:

"If the labour market is tight because the rate of unemployment is low, companies may offer higher wages to attract workers, but these higher wages are bound to push up the prices by pushing up costs of production. Rising prices, in turn, pull down the real wages, which may, sooner or later, prompt workers to agitate for higher wages. Thus an unending race between higher wages and higher rates of inflation begins. The solution, according to Phelps, is establishing an equilibrium where workers’ expectations are fulfilled and prices stabilize. This equilibrium does not mean full employment. Phelps stresses that this equilibrium is achieved when unemployment rises to its natural rate, telling a certain number of workers that they are redundant or unwanted."

The validity and renewed acceptance of this theory, while clearly comforting to policymakers at the Fed and the investment banks whose interests they strive to protect and advance, is very much in question. See, for example, this editorial by economist Dean Baker as well as this critique by Ramaa Vasudevan over at Dollars & Sense. Whether Phelps deserves a Nobel Prize for his contributions to advancing these theories ought to be somewhat controversial, I think. Apparantly, Brad DeLong thinks the decision is a good one, and I tend to value his opinion rather highly when it comes to economics, but I still have some concerns.

Debating "The Great Risk Shift"

Check out Mark Schmitt's contribution to the debate over Jacob Hacker's new book "The Great Risk Shift" sponsored by The American Prospect here. There are also links to the other contributors, including the Matthew Yglesias, Ezra Klein and of course Hacker himself. There is also a link to a review of the book by Robert Kuttner. But I link to Schmitt's responsed because to my mind he best encapsulates what the discussion is really all about. He notes: "If inequality of security matches and reinforces inequality of income, rather than countering it, it's a double hit. If inequality of income and security are further reinforced by widening inequalities in education and health care quality, and also by political inequality (and there's another book to be written on just that topic), then we will be, indeed, two nations.

The great achievements of American liberalism have all been achievements of security, not redistribution. No one ever moved up the socio-economic ladder because of welfare or even the EITC, and that's not the point. Instead, social insurance of various kinds, including welfare, gave people a platform of security that helped them find their own way in the economy. The great era of homeownership was made possible by FHA insurance, which in turn had a redistributive effect but was not explicitly redistributive. Unemployment insurance made it possible for people to weather the cyclical nature of employment in the auto and steel industries. Some of these measures of security have been taken away by the ideology of personal responsibility, while others have been eroded by shifts in the economy. But in either case, the platform of security that helps people make their way in the economy needs to be rebuilt, probably for a majority of American families, and Jacob's analysis is the first serious start in that direction.

Yglesias seems to be on the right track as well, which is suprising as I generally find fault with his anti-populist economic views. But he gets bonus points for his recognition that "[i]nequality is not the only thing that matters, and risk and security issues should be on the table as well, but anything that aims at further downplaying the extent to which the distribution of wealth and income is a legitimate subject of political controversy should be resisted."

Amen to that.

Microfinance pioneer wins Nobel Prize

This past Spring, I took a graduate course on Development Economics at New York University (where I'm currently working toward an MPA in public policy) taught by Jonathan Morduch. It was an incredibly interesting course, with the lectures and class discussions as enlightening as the academic journal articles and textbook readings. Making the class even more interesting was the fact that I was concurrently taking a course called "The Politics of International Development" taught by Foreign Policy in Focus co-director and NYU professor John Gershman. In case you have to ask, yes, the field of international development is dominated by political disagreements (many between the global North and the global South) which make the textbook economic theories seem somewhat naive and simplisti to say the least.

I'm pretty interested in development economics and perhaps will someday pursue a career in a somewhat tangential field. I mean, after all, who isn't interested in fighting poverty. The only problem is that since the end of World War II and the beginning of the present world order, the wealthy industrialized nations of the world have spent hundreds of billions of dollars in various ways to fight poverty throughout the world. And the level of poverty, including the most extremely poor (who live on less than one dollar a day, a standard benchmark used by economists) has pretty much remained static.

There are, of course, a million reasons as to why the war on global poverty has failed--including corrupt dictatorships in developing countries, inefficiency and bloated bureaucracies at both non-governmental organizations (NGOs) and multilaterals (The World Bank, UN), disease, war, globalization/neoliberalism and many other factors. But the bottom line is that the economists haven't been able to claim success for all of their efforts in the past six decades, despite that fact that literally some of the world's greatest minds have devoted their lives to the cause, and despite all the resources being mobilized.

Some economists argue for a market-based approach to all of this. Others argue that aid should be tied directly to accountability measures at the target country, the latter of which is the philosophy behind the Bush-approved Millenium Development Goals. Another approach is microfinance, pioneered by Bangladeshi economist Muhammad Yunus. The idea is to provide small loans with relatively high interest rates (fair enough, as the very poor are difficult to service and have high default rates), combined with group lending and some other mechanisms to get around the traditional barrier to lending to the poor--their lack of traditional collateral.

Microfinance has had it's successes, and perhaps the best evidence of this is the fact that Yunus is being honored with a Nobel Prize this winter. But as my former professor argues in a very long, but well written article in New Yorker, it is not a panacea. Relying on institutions that provide for regular loans to the poor can't solve the problem without simultaneously tackling many other serious problems such as the incidence of disease, war and tyrranical dictatorships. Also, not suprising, politics are front-and-center in the microfinance debate, with some providers looking for a profit-driven model and others looking to keep a purely philanthropic mission. But the bottom line is many of the worlds wealthiest individuals, including Bill Gates, internet entrepreneur, Pierre Omidyar, Michael Dell and others, are getting in on the action and t looks like microfinance is here to stay.

As the article makes clear, there are those who would like to profit from lending money to the world's poor, which I don't have any qualms with per se, but I do think that combining approaches such as increased education, public health campaigns and pushing for more accountability from governments are essential as well. This isn't a war that is going to be won in my lifetime, but with enough political will combined with billions in philanthropy and innovative thinking from our best economists, perhaps we can break the logjam that has existed since the 1940s.

Update: For a critique of microfinance from the Left, see this editorial by Walden Bello in The Nation called "Microcredit, Micro Problems". More generally, see this analysis by of the fascinating debate between two development economists (Jeffrey Sachs and William Easterly) who have opposing views on development economics and the structural reasons for its frustrating lack of success.

Sunday, October 22, 2006

Nothing noble about Iraq invasion

Neocon Jonah Goldberg has written an op-ed in the Los Angeles Times so obscene, so mendacious, so full of lies and apologies that it deserve to be exposed sentence for sentence for what it is: a farcical interpretation of the current administration's foreign policy disaster that is the occupation of Iraq. Of course, Goldberg, no longer able to duck reality as his ilk have tried desperately to do during the last three and a half years, is now "admitting" the Iraq was was a "mistake". But, you see, it was a "worthy" mistake, and we could even now choose to leave the country in the throes of anarchy "with honor".

Let's go through some of his absurd argument.

[Th]e antiwar types aren't really pacifists. They favor military intervention when it comes to stopping genocide in Darfur or starvation in Somalia or doing whatever that was President Clinton did in Haiti.

Um, many "anti-war" types actually are pacifists based on either the conscience or religious beliefs. Perhaps he's never heard of the Friends (AKA "Quakers", although they don't like being referred to as such". To claim that the same people who were correctly against the Iraq war in 2002 were the same people who rubber-stamped Clinton's foreign policy mistakes such as bombing and sanctioning Iraq or his disastrous and self-serving intervention in Haiti is nothing more than a transparent and clumsy lie.

The failure to find weapons of mass destruction is a side issue. The WMD fiasco was a global intelligence failure, but calling Saddam Hussein's bluff after 9/11 was the right thing to do.

That's interesting, I seem to remember that the Iraq war was expressly sold on the idea that Saddam Hussein was violating the UN Resolution calling for it to disarm. . .that is to say, sold on lies and scaremongering as there was no real "evidence" to back up the Bush administration's claims. Goldberg believes that "calling Hussein's bluff" was the right thing to do after the September 11 terrorist attack, but fails to even pretend to support this ridiculous claim. Why exactly was it the right thing to do, now that we're in year three of an illegal occupation of a country in the Middle East that has become a breeding ground for terrorists and led to the death of tens of thousands of Iraqis and thousands of US soldiers.

Washington's more important intelligence failure lay in underestimating what would be required to rebuild and restore post-Hussein Iraq. The White House did not anticipate a low-intensity civil war in Iraq, never planned for it and would not have deemed it in the U.S. interest to pay this high a price in prestige, treasure and, of course, lives.

Mr. Goldberg needs to take an intro class in logic. If there was no reason to invade Iraq (at least none he deigns to mention in his diatribe), then what difference does it make that the biggest mistake was not planning for the insurgency. The biggest mistake was starting the war in the first place. The insurgency was a natural and predictable outcome of a US-led military flagrently disobeying the UN Security Council and international law and invading a country that didn't exactly want to be "liberated" by us.

Further, if the WMD wasn't the justification in Goldberg's mind for the war, then perhaps humanitarian intervention was? But as he states. the intensity of the guerilla warfare doesn't make this particular conflict worthwhile for us because it costs too much money (and of course lives). If this was truly an honorable war, why would it matter how many lives and how much money it would cost to defeat the insurgency? After all, World War II was certainly no cakewalk.

Goldberg would have the American people believe that the problem with the war is not its illegality or mounting death-toll, but rather that our country failed to predict how "tough" it would be. Of course, Bush repeated ad nauseum in the run--up to the war that it would be a difficult and costly battle, so much so that he drew resources slated for the Afghanistan front to fund it.

If it was a mistake to go in, we should get out, some argue. But this is unpersuasive. A doctor will warn that if you see a man stabbed in the chest, you shouldn't rush to pull the knife out. We are in Iraq for good reasons and for reasons that were well-intentioned but wrong. But we are there.

This analogy is just silly. The proper analogy, not to belabor the point, is not whether to leave a knife in one's chest, but rather to stick the knife in the first place. See, the invasion was the literal "sticking the knife in the heart of US national security", as the most recent National Intelligence Estimate has made clear.

Again, he says we are in Iraq for "good reasons", but can't bring himself to list them for his by now utterly confused readers.

Those who say that it's not the central front in the war on terror are in a worse state of denial than they think Bush is in. Of course it's the central front in the war on terror. That it has become so is a valid criticism of Bush, but it's also strong reason for seeing our Iraqi intervention through. If we pull out precipitously, jihadism will open a franchise in Iraq and gain steam around the world, and the U.S. will be weakened.

This is a very interesting point, except, what if our continued presence there is actually worse for the security situation there than pulling out? But as we'll see, Goldberg wouldn't have us pull out unless a very clever pre-condition was fulfilled:

I think we should ask the Iraqis to vote on whether U.S. troops should stay. Polling suggests that they want us to go. But polling absent consequences is a form of protest. With accountability, minds may change and appreciation for the U.S. presence might grow. If Iraqis voted "stay," we'd have a mandate to do what's necessary to win, and our ideals would be reaffirmed. If they voted "go," our values would also be reaffirmed, and we could leave with honor. And pretty much everyone would have to accept democracy as the only legitimate expression of national will. Finishing the job is better than leaving a mess. And if we can finish the job, the war won't be remembered as a mistake.

So now the citizens of the country we illegally invaded and have occupied for the last three years should be allowed a referendum on whether was stay or go? Funny how we didn't need such consent when we decided to burn the barn down for the last three years. But let's put that to one side. The Iraqi people have already expressed their opinion, clearly and repeatedly as Goldberg himself notes. But the problem is that these poor, ignorant, utterlt ungrateful Iraqis are voicing their opinion without the attachment of any consequence.

So I guess in Goldberg's formulation, we must put the question as "Do you want us to stay or go? But if you say we will go, we will go and the country we destroyed will be left on it's own, without reperations, the rebuilding of infrastructure, etc. Here's the analogy: an inebriated man stabs what he thinks is an armed man in a barfight. But the victim was not armed and did no constitute a threat to him (or anyone else, for that matter).

After a few minutes pause, the aggressor asks the innocent, maimed victim if he would like for him to continue kicking him while he bleeds to death, or if he would prefer the aggressor leaves the man to die without assistance.

Sounds honorable and noble, don't you think?

Update: Norman Solomon really nailed this whole incompetence-dodge issue a while back here.

Friday, October 20, 2006

As middle class struggles to stay afloat, the number of uninsured Americans is still growing

The Cox News Service reports: "More Americans are working for companies that don't offer health insurance plans, two reports released Thursday concluded. One report found that the percentage of the population with employer-sponsored insurance continued to drop despite an upturn in the economy. Another report found that about three-fourths of the decline in coverage was due to a lack of employers offering it or ineligibility."

The Nation's Barbara Ehrenreich has more on the "quiet erosion of the Middle Class", not withstanding our incredible economy.

Check out both articles, as well as the study referenced in the first article by the Kaiser Family Foundation that discusses the growing uninsurace crisis in America.

Thursday, October 19, 2006

Bush's North Korea failure

Probably the single best post on how this administration allowed North Korea to go nuclear by failing to engage in diplomacy. The post provides a useful timeline of the unfolding crisis, from Clinton's "Agreed Framework" (which wasn't nearly as bad as the Right would have the public believe) right up to present times.

Here's the crux of the argument in just two paragraphs:

"Think about this for a moment. We were considering going to war with Iraq, ostensibly because we were worried that it had weapons of mass destruction that it might sell to terrorists. Suddenly, we discover that North Korea, which is willing to sell more or less anything to anyone, is trying to make not just any old WMD -- not, say, mustard gas or anthrax -- but nuclear weapons. On any plausible view of our rationale for going to war with Iraq, North Korea had just revealed itself to be a much more serious threat than Iraq.

The obvious response would have been to put Iraq aside while we tried to come up with a solution to the more pressing problem of North Korea's nuclear program. Bush's response was to conceal this more pressing problem lest it distract us from the one he wanted to deal with. That's like not telling someone he's flunked out of school because you're afraid it will distract him from his upcoming social studies quiz. It makes no sense at all, if you're actually worried about the threats in question."


Update: Were certain senior administration officiallys, say Secretary of State Condoleeza Rice, actually hoping that North Korea would test-fire it's nuclear weapons? Check out this unbelieveable story to find out more.

Wednesday, October 18, 2006

Wolfowitz getting his anti-labor agenda pushed through at World Bank

SirotaBlog reports that according to Democratic Senators Durbin, Dorgan, Sarbanes, Biden, Dodd and Akaka, The World Bank (under the leadership of Bush confidant and Iraq war architect Paul Wolfowitz) is "working to reward countries that deliberately ignore basic international labor standards."

Quoting from a letter sent to the World Bank from the senators, we learn that "[t]his year's edition [of the World Bank's major report] appears to discourage countries from upholding established standards of worker rights as set by the International Labor Organization...The report ranks countries on various indices of the ease of doing business including 'Employing Workers.' In this category, countries which do not have a minimum wage and do not restrict the number of hours an employee can work are ranked high. Rewarding lax or non-existent labor standards contradicts ILO policy, which encourages countries to establishe a minimum wage and regulate housr of work and to pass and enforce laws protecting freedom of association and collective bargaining...The mission of the World Bank is to alleviate poverty. We fail to see how praising countries for failing to guarantee a minimum wage and overtime pay lifts people out of poverty."

There is no question that neocon Wolfowitz has been quite the busy bee over at the World Bank. When not working overtime to set back workers' rights in developing countries, he is pushing hard for the multilateral to ignore dissident voices and peaceful protests at its annual meetings.

Monday, October 16, 2006

Shine on you crazy diamond

Check out this trippy Pink Floyd video. . .

YouTube and Google Video rock!

Saturday, October 14, 2006

Record household debt is driving economic "expansion"

Blogger and Democratic consultant Hale Stewart reports the troubling news about our current economic expansion, namely that it is being driven primarily by household debt. This is, of course, about as sustainable in the long-term as the current administration's "stay the course" policy for Iraq. Stewart notes:

Right now, household debt is over 90% of GDP and over 120% of disposable income at the macro level. While there is no bright line economic rule about when a debt level is too high, I feel pretty confident in saying we're to high now. [. . .]

According to the Federal Reserve, we are spending a record amount of income on debt payments on mortgages and consumer debt payments. In other words, instead of saving money for the future or spending money we already have (or have already saved), we're borrowing money to purchase today what we may be able to afford tomorrow. And we're doing it in record levels.

What happens if the person [living off of borrowed money] has an economic set back? Because a larger portion of his income is going to debt payments, he has less financial wiggle room. [. . .] the chances of him having any meaningful savings to fall back on are remote. This means the average American is coming closer and closer to having to walk the perfect financial tightrope, literally living paycheck to paycheck and unable to adjust to a financial problem.

This is one of the main reasons I have personally been very concerned about this recovery. Instead of being driven by equity - actual ownership - it is driven by debt. This means we haven't paid for this expansion yet. We will instead be paying for this expansion for the next few years. That also means we are facing the problem of increased downside risk in the event of an economic downturn.

And that's not good for anybody.

Johns Hopkins study: 2003 invasion of Iraq led to 665,000 "excess" deaths

The Washington Post reports on a chilling new study conducted by Johns Hopkins University (free registration required) that finds 655,000 more people have died in Iraq since coalition forces illegally invaded and overthrew the country in March 2003 than would have died if the invasion had not occurred. In other words, the scientific study--which arrived at its death toll estimate by randomly interviewing Iraqi civilians throughout the country—demonstrates that in fact Bush’s little Middle East military adventure has killed more than half a million more Iraqi civilians than would have perished under the tyrannical rule of Saddam Hussein. It’s difficult to wrap one’s mind around such an incredible concept, but remember, this is a very credible, scientific study conducted by one of the most prestigious universities in the world, not merel an informal poll conducted by or the opinion of some anti-American commentator on al Jazeera.

Of course, the Bush administration will callously downplay such findings, claiming they are wild-eyed exaggerations made by unpatriotic academics with no basis in fact. Of course, Bush has already gone on record as saying that the Iraqi people deserve our admiration because of their willingness to “tolerate" the horrible violence that has engulfed their country during the last three and a half years. This, of course, after Bush argued that the hundreds of thousands of dead American GIs and Iraqi civilians killed as a result of this disgusting war will look “just like a comma” when the final history of the region is written. Apparantly, Bush is hoping that in a thousand years, even his colossal foreign policy fuck-ups will seem less dramatic in perspective.

I think all of this truly speaks for itself in terms of our president’s utter lack of humanity or common decency. The man apparently can’t even pretend that he understands how badly the violence in the Middle East has spiraled out of control, or feel even the slightest twinge of guilt due to his role in precipitating the crisis. Or perhaps he can pretend he has a conscience, but he is just tired of keeping up the act after almost six years and has decided that it’s more fun to show the entire world how much of a psychopath he is.

If you get a chance, be sure to check out this column by Norman Solomon in Alternet that holds the media’s feet to the fire in terms of their pathetic coverage of the war’s human toll.

Friday, October 13, 2006

Military Commissions Act

I wrote recently in this blog that while I agree that the Mark Foley page scandal is horrendous and needs to be addressed, there are many other serious issues going on in the background that the media is failing to cover. Sex sells, no doubt, and gay sex with minors makes for a veritable blockbuster story, but it's a true tragedy if it causes the media to take their eye off the ball and ignore what else is going on in the world.

One of these stories not getting nearly adequate coverage giving its importance is the passage of the Military Commissions Act of 2006. To find out more about this outrageous law that effectively ends the centuries-old legal doctrine of habeus corpus for alleged terrorists, read this entire speech by the courageous Democratic Senator Russell Feingold. Here's is the key excerpt:

Habeas corpus is a longstanding vital part of our American tradition, and is enshrined in the U.S. Constitution.

As a group of retired judges wrote to Congress, habeas corpus "safeguards the most hallowed judicial role in our constitutional democracy--ensuring that no man is imprisoned unlawfully."

This bill would fundamentally alter that historical equation. Faced with an executive branch that has detained hundreds of people without trial for years now, it would eliminate the right of habeas corpus.

Under this legislation, some individuals, at the designation of the executive branch alone, could be picked up, even in the United States, and held indefinitely without trial and without any access whatsoever to the courts. They would not be able to call upon the laws of our great nation to challenge their detention because they would have been put outside the reach of the law.

That is unacceptable, and it almost surely violates our Constitution. But that determination will take years of protracted litigation.

For more background, check out this post by Glenn Greenwald, read this editorial in the Los Angeles Daily Journal and finally this post from the TPM Cafe blog.

I suspect that in twenty years, the damage done to our constitutional republic by the MCA will be judged to have been a thousand-fold of that done by the Foley scandal. Yet the case against this deeply troubling law are not by and large being made on the front pages of this country's most widely-read newspapers or on 24 hourn cable news network programs. This is a tragedy that I don't think we can even appreciate at this point in time, but a tragedy nevertheless that marks one of the darkest hours in this country's legislative histories.

Liberals try discussing alternatives to American empire

Michael Lind has a very interesting post up at American Prospect Online discussing his latest book "The American Way of Strategy", as well as defending it from some criticism it garnered by James Lindsey.

Lind's foreign policy vision is based on "traditional liberal internationalism", or as he explains it, a world policed by "great-power concerts in which the United States would take a leading part." Lindsey argues that this formulation might or might not be preferential to the current administration's.

Lind notes that Lindsey is on record as arguing that "the real debate [in America] is not whether to have an empire, but what kind.” Lind wryly notes that this is a debate that the American people have not been invited to participate in.

Frankly, reading through the various authors' descriptions of what US foreign policy should consist of, I'm left wondering if this is the best The American Prospect, or the US for that matter, can muster. Clearly neoconservative apologists Lindsey and his collaborator Ivo Daalder ought to be ignored by anyone serious about the future of this nation. But I find self-described "radical centrist" Lind's thesis, that the focus ought to be a "tough-minded liberal internationalism of Franklin Roosevelt and his Cold War liberal successors" to be essentially just as unworkable. Lind's pronouncements are as vague as Peter Beinhart's (see "The Good Fight") and advance the canard that progressives aren't as "tough-minded" in foreign policy as their 20th Century counterparts, I can only guess because they did not support the illegal invasion of Iraq.

According to Lind:

I reject the profoundly un-American idea of an American global “empire” of any kind in favor of Franklin Roosevelt’s realistic vision of a post-imperial system of sovereign states policed not by a hegemonic U.S. but by a concert of great powers, whose members do not have to be democratic as long as they share a commitment to peace, including peace from terrorism

If someone can explain to me what this means in practice, as opposed to principle, I'd love to hear it. For example, are these "great powers" he refers to supposed to stand in for, say, the UN's permanent Security Council members? What "non-democratic" countries does he envision will lead the new world order to peace and security?

If Lind fails to advance an intelligent framework for moving the ball forward, at least he is smart enough to call bullshit on the neoconservative-neoliberal "free markets will save the world" fundamentalism.

Anyway, check out what passes in serious policy circles these days for liberal foreign policy debate, while noting what important questions are discretely left off the table.

Update: After reading a review of Lind's book "The American Way of Strategy" in the Inernational Herald Tribune, I understand his specific recommendations a little better, and am even more convinced that he is nearly as misguided as the neoconservative supprters of a unipolar, imperial America he rightly denounces.

From the review:

Lind's case against [a US foreign policy] Goliath is forceful but repetitive, and it culminates in only a vague and facile formula for a less taxing American posture. The United States should lead "a concert of power," he says, defining it as "a kind of hegemony shared among a number of great powers." Uncle Sam, as concert master, would rule alone over North and Central America but combine with different nations to manage different regions - with China, Japan and Russia in Northeast Asia; with China, Japan and India in Southeast Asia; with China, India, Russia and maybe Iran and Turkey in Central Asia; and so on.

If all these proud lions actually worked in concert, Lind would ask them to enforce peace and order, "not to produce liberty, democracy and the rule of law in every country." But he expects them also somehow to eliminate terrorism, prevent the spread of major weapons, rescue disintegrating states, end ethnic cleansing, manage energy supplies and protect the environment. (emphasis added)

To stimulate such sweeping cooperation, Lind urges that we stop isolating Russia in Europe and threatening to fight China over Taiwan. He does not say what will happen if his regional teams fall out of balance and into conflict. And he concedes that no foreseeable concert can work in the Middle East, where the "least bad" option now, after retreat from Iraq, is for the United States to act as an "offshore balancer," arming others to preserve an equilibrium. That hardly addresses our problems if Egypt or Saudi Arabia succumbs to radicals or Iran eludes balancing.

Chamber of Commerce, US corporations upset with China's plans to improve workers' rights

This article in today's New York Times business section is as illuminating as it is troubling. It appears China, an un-democratic country that fails to guarantee its citizens with the basic freedoms of press and assembly that Westerners take for granted, is proposing sweeping changes to its labor laws in order to strengthen workers’ rights, allow for collective bargaining and unionization and protect employees from unsafe work environments. Not only would this provide everyday workers in that country with a regulatory system to challenge safety violations but would also put upward pressure on wages and lay the groundwork for benefits such as health insurance.

One might expect the US, proud member of the Global North that she purports to be, would be extremely supportive of such a move, at least in its public pronouncements. After all, bolstering the rights of workers would appear to be a positive step toward democratization and liberalization for China. But as the article makes clear, all US corporations, and by extension lobbying groups like the US Chamber of Commerce, care about are how such developments will impact their profit margin. Concerned that improving working conditions in “Developing” nations such as China might increase their cost of doing business by some small fraction, major US and other Western multinational corporations are threatening to stop building new factories there (and presumably find another dictatorship with weaker labor laws to set up shop in). And the Chamber of Commerce is using all of its political and economic leverage to “lobby” (i.e. coerce) against these reforms seeing the light of day.

This is truly one of the most nauseating articles I’ve read in a good while. Recognizing the long-term threat increasing income inequality poses to its society (as should the US), China is planning to put in place new laws that will crack down on sweatshops and protect workers’ rights. But rather than cheer on its efforts to fight abuse by employers (we’re talking about sweatshops, many of which are manufacturing products for American companies), US corporations are instead fuming that their cost of doing business is going to go up because they will no longer be able to get away with paying their factory workers pennies on the dollar and may soon have to negotiate with unions. The US corporations protesting these proposed laws are literally favoring a system that has led to systemic and widespread labor abuse, which they don’t mind because it provides them with greater “flexibility” to fire workers and increase profits.

The article quotes a labor activist as saying: “You have big corporations opposing basically modest reforms. This flies in the face of the idea that globalization and corporations will raise standards around the world.” No kidding.

The Bush administration should be praising the Chinese government for undertaking these long-needed reforms to their labor laws. Not only will the changes lift workers’ wages and put the breaks on growing income inequality, but they protect workers from unsafe working environments and 18-hour work days. The fact that US corporations are instead complaining that implementing these basic human rights protections will hurt their competitive edge is as despicable a line of reasoning as are the arguments recently made by the New York Times editorial page that the reason the US manufacturing sector is losing out to countries like China is simply because their business practices aren’t “competitive enough”.

Yes, we live in a capitalist world where manufacturers will operate and invest in the countries that offer the lowest costs of doing business. But for the US’s private sector to stand in the way of China’s attempts to improve their labor rights laws while at the same time bemoaning the fact that the country is “un-democratic” and taking over our manufacturing base because they have more “competitive” business practices is to cross over into the land of Orwellian nightmare. If you want to know why the American Middle-Class is falling further behind and why countries like China don't provide its citizens with even barely adequate labor and human rights protections, it’s because doing so might crimp quarterly profits for Nike, GE and Microsoft.

Update: SirotaBlog and Jonathan Tasini both have excellent posts on the topic that are well worth the time.

Update #2: More background from Global Labor Strategies here.

Thursday, October 12, 2006

Dodd on hedge fund regulation

In this piece in the Financial Policy Forum, Randall Dodd reacts to the "reckless complacency” of a Bank of International Settlements (BIS) senior official, who states that hedge fund operations do not constitute any significant problem in the context of international financial stability. Dodd argues that banks cannot be relied upon to oversee hedge funds in a way that protects public interests, and makes the case for ‘prudential regulation’ of hedge funds, ensuring codification of registration, reporting and capital requirements.

States step up on minimum wage issue

The Center for American Progress reports that five states--Nevada, Montana, Missouri, Ohio, and Arizona--will all be voting on amendments to their state constitutions to raise the minimum wage this November. With the federal minimum wage unchanged for the last nine years (and is currently at its lowest level in current dolars in half a century), it is very good news that state legislators are taking matters into their own hands. In Ohio, for example, raising the state's minimum wage level will be a ballot initiative, which will boost wages for 700,000 Ohio workers if passed.

Once Democratic politicians have finished (rightfully) condemning Mark Foley and the GOP Congressional leadership for their ethical failings, it would be a good idea for them to start talking up a raise in the federal minimum wage. The issue has high salience and popularity among the public, as this poll by the Pew Center shows, and raising the hourly level by $1 to $2.50 is strongly supported by hundreds of leading economists as well. The bottom line is that raising the minimum wage and lifting hundreds of thousands of working poor Americans out of poverty and in to financial independence is as much of a moral issue as preventing and punishing sexual misconduct and pedophelia.

Weighing priorities: Diversity vs. Inequality

David Moberg has an interesting column up at In These Times discussing an issue that gets far too litte coverage in the progressive media. The question addressed is: can the fight for greater racial/religious/ethnic diversity distract valuable resources from the fight to address economic inequality (and economic justice more broadly?)

Moberg's article is centered on an interview with University of Illinois, Chicago English Professor Walter Benn Michaels, who has penned a new book titled "The Trouble With Diversity: How We Learned to Love Identity and Ignore Inequality".

According to the article: "As Michaels sees it, the social focus on achieving diversity diverts attention from the most fundamental injustice in our society—economic inequality. Moreover, the pursuit of diversity, especially in universities, gives legitimacy to the growing economic inequality of American society, because it protects the inheritance of economic privilege and does little to create opportunity for the poor, whether black or white."

In other words, isn't striving for a society where there is a level playing ground for economic opportunity as fundamentally important of a goal as striving for "diversity" in universities or workplaces?

Moberg is one of ITT's best columnists, and this article is no exception. It's pretty controversial to be sure, and Moberg has some valid criticisms of Michael's thesis, but it's well worth a read and some thought.

What are the policy implications of slowing US job growth?

John Schmitt, writing at the Center for Economic and Policy Research, notes that the glory days of this country being able to boast private-sector job creation that far outstripped the countries comprising the European Union appear to be over.

Between 2000 and 2005, employment grew at a 0.7% annual rate in the US, below the 0.9% rate for the European Union (EU-15) as a whole. Since 2000, Spain (4.0%), Ireland (2.9%), Greece (1.3%), and Italy (1.2%) all have managed to create jobs at a faster rate than the US, with it's "flexible" labor market. The UK (0.7%) and Belgium (0.7%) have matched US job growth rates. And France (0.5%), Finland (0.5%), and Sweden (0.5%) have trailed fairly closely behind the United States.

Unfortunately, Schmitt fails to provide much in the way of context for the reader or explain why job creation here has slowed down to the extent it has, especially when compared with Europe. One of the interesting implications of this development, if it continues, is that it really calls into question how important the US's labor market's flexibility, i.e. the ease in which employers can quickly lay off workers, is for job growth in the first place. Countries like Germany and France are less "flexible" than the US in terms of labor regulations, meaning their laws provide more of a social safety net for its workers. If providing such a safety net doesn't directly impede job creation, as this data may suggest (my interpretation, not Schmitt's), then that could provide a fairly compelling argument for developing a more robust safety net here as well.

For some background on this security/flexibility tradeoff theory, I recommend this report by economist Susan Houseman from the W.E. Upjohn Institute for Employment Research. It's slightly old, but provides a good introduction to the macroeconomic concepts involved.

Tuesday, October 10, 2006

Considering Foley-gate

Robert Kuttner argues in his latest American Prospect editorial that the Mark Foley scandal is emblematic of the GOP's failed leadership for the past six years. He compares the Congress' party leadership placing a "pedophile in charge of pedophilia" (Mark Foley was chairman of a House caucus on missing and exploited children) parallels Cheney's allowing energy companies to write energy regulation, drug and insurance industries to write the disastrous Medicare prescription bill, and lobbyists for polluting industries in charge of drafting environmental protection legislation. Or, as Kuttner puts it with the old aphorism: "letting the foxes guard the henhouse".

While I am obviously disgusted by the betrayal of public trust evidenced by Foley, I'm not so sure this scandal will play as fundamental role in changing undecided voters' perceptions about the Democratic and Republican parties. I think the "pox on both houses" mentality is more likely to prevail, as many Democratic politicians have been caught committing unethical, illegal and just plain nauseating affonts in recent years.

Sending lewd IMs to teenage boys is quite unseemly to say the least, and if reports that the Congressmen did in fact sleep with pages under the age of 18, then he clearly broke the law. But let's look at the situation in perspective.

Is a scandal involving sexual misconduct between a Congressman and pages (or a former President and one of his interns) really a bigger moral outrage than the GOP's tax cuts for the already super-rich, which has led to cuts in social programs, hurt the economy and put the Middle Class further behind the eight-ball? Is it really worse than cherrypicking intelligence to bake a case to the world in order to invade a country--an invasion that had been in the planning for years and was completely unnecessary? Is it worse than the fact that over 40 million Americans, many of them working full-time jobs, have no access to health insurance and are thus more likely to get serious illnesses and die while the insurance industry that lobbies against universal healthcare see skyrocketing profits? Is it worse than the fact that millions of workers nearing the age of retirement are watching their pensions go up in smoke?

I am not really all that worked up about the Foley scandal. Teenage pages may have been abused, they may not have been abused, and a Congressman's political career is over. But the broader economic and foreign policies shoved down our throats courtest y of the GOP are so much more egregious than the failure of leadership by Speaker Hastert and others. As journalist Patrick Martin puts it, the same Democratic politicians who issue moralizing pronouncements against the abuse of 16 year old boys seem to have no problem voting military appropriations so that the Bush administration can send 19-year-olds to their deaths in imperialist wars in Iraq and Afghanistan. Such is the lack of perspective in Washington today.

My biggest fear is that in the weeks ahead, the scandal will turn into a salacious soap opera like Monica-gate did some eight years ago. The media's, and the voting public's attention should be on the matters of life and death and economic survival affecting millions of their fellow countrymen.

Monday, October 09, 2006

BLS report: Job growth slows, but good news on wage growth

Jared Bernstein at the Economic Policy Institute reports on the Bureau of Labor Statistics (BLS)'s October 6th jobs report and provides some sobering analysis.

Job growth "downshifted sharply" in September, with only 51,000 private sector jobs being created. As Bernstein notes, this represents the lowest month for net job gains since the Gulf Coast hurricanes disrupted the labor market in August-September 2005. Unemployment remained pretty much flat (down a "statistically insignificant" amount to 4.6%), and the Household Survey indicates that national employment levels continue to remain at levels below that which is needed to indicate, with "statistical certainty", that job growth is in fact positive.

And what is leading to this slower job growth? Pretty much what you would expect; the slumping housing market, continuing economic woes in the manufacturing and retail sectors.

There is some good news, however. The data point to real gains finally being made in hourly wage growth (up 4% year-on-year, on track to finally outstrip inflation later this year). According to Bernstein, "[A]ssuming falling energy prices do not reverse course, nominal gains of this magnitude will surely translate into real gains in coming months."

That's good news for the millions of blue-collar American workers who have been falling further and further behind in the Bush/GOP Congress economy, while the federal minimum wage continues to erode in real value and tax cuts for the wealthy redistribute wealth to the top 2% of income earners.

But as Daniel Gross reminds us, even this "good news" on jobs growth is far from impressive. He notes:

"So, lets see: wages have risen by 4.0 in the past 12 months, while inflation has risen by 3.8 percent in the past 12 months. And that means hourly wages are rising impressively? Sadly, that .2 percent growth in real wages may just be the best wage growth in the past five years. The economy created a mere 51,000 in jobs, the weakest total in a year and not enough to keep up with population growth, and yet the job numbers remain strong? Ok."

Saturday, October 07, 2006

Whatever happened to the concept of "the welfare state"?

Ezra Klein reads this depressing Center for American Progress report on how the middle class is continuing to fall further and further behind and asks an interesting question: should some policy entrepreneur develop something called "Universal Insurance"?

The idea, according to Klein (who got the inspiration from a book called "The Great Risk Shift" by Jacob Hacker), is to have some sort of "all-purpose form of insurance" that would cover catastrophic expenses from health emergencies, job losses, etc. The coverage amount, apparantly, would depends on "the extent of the loss" So according to Klein, "[A] massive income drop for a low-income person will result in relatively generous benefits, while a moderate drop for a wealthy individual will attract less generous compensation."

Sounds like a pretty complicated new federal bureaucracy would be needed to administer such a Universal Insurance scheme, and it would probably take decades for it to be fine-tuned enough to work. But the very first commenter to Klein's post really nails the problem with this idea. He argues: "I don't understand why we need some new all-encompassing universal insurance program when we already have it -- it's called the welfare state. What we need to do is upgrade it - universal health insurance, full employment and adequate unemployment compensation, expand the EITC and raise the minimum wage, add a defined-contribution plan onto Social Security, etc."

This is, of course, exactly right on. Universal health insurance is supported by the national electorate in poll after poll (although paying for it is a more controversial issue), the minimum wage hasn't been raised in nine years and Social Security could be fixed by simply tweaking the structure (increasing payments slightly or adding on a defined contribution plan, and tax policy could be made radically more progressive. All of this would involve a lot less work and be more popular with the American people, and accomplish the same thing as the Hacker/Klein plan.

It's just a matter of getting Democratic party in charge of COngress and pressuring them to make these economic policy changes.

al Qaeda, North Korea and Iran benefitting from extended Iraqi occupation

As the few readers of this blog may have noticed, I've been trying recently to post more on economic policy matters than foreign policy, mainly because the latter is so damn depressing. But the Christian Science Monitor has a very important piece by staff writer Dan Murphy. It goes a long way to explaining just how al Qaeda views the protracted US military occupation of Iraq.

There is no longer a question as to whether the Bush administration's brilliant "flypaper strategy" (i.e. it's better to fight jihadis in Iraq than in American cities) is an abismal failure. That is, if the administration's own intelligence agencies can be believed. But the idea that al Qaeda is actually benefitting from our continued presence there is a double insult.

Bush foreign policy legacy appears to be crystalizing. In 2003, we invaded a country in the Middle East that had no weapons of mass destruction under false pretenses, leading to our isolation in the international community, pulling our resources away from Afghanistan (where the Taliban is now resurgent) and in the process killing hundreds of thousands of Iraqi civilians and over 2200 US soldiers.

Meanwhile, North Korea has just successfully conducted an underground test of a nuclear device, despite their having been labeled a member of the Axis of Evil by the administration just four years ago. Bush's response? Increase economic sanctions on a country that is literally starving to death. And Iran is resolutely marching toward developing their own nuclear energy program while the US seems completely unable to engage in diplomatic efforts to avert this proliferation.

Update: Reuters is reporting that the US Army is planning on the basis that it may have to maintain current troop levels in Iraq until at least 2010 , according to Chief of Staff Gen. Peter Schoomaker. Considering the permanent military bases being built in the country, this really shouldn't be such a big surprise, although the fact that the Pentagon is telegraphing it so far in advance shows how serious the Neoconservatives running the show are about maintaining the occupation.

Understanding how "free" trade really works

I think Matt Taibbai does. He has a great new editorial in Rolling Stone (helpfully reprinted in Alternet) called "Competition with China is Killing US" and he points out the manifestly obvious, but unspoken, reasons why US "free" trade deals with developing countries hurt both the target country and US workers.

He exposes just how cynical and self-serving neoliberal protestations that US workers need to "compete harder" with workers in Third World dictatorships like China really are. The argument is ostensibly that the US has a trade competitiveness problem with countries like China because they haven't been forced to adopt more "competitive" business practices. Of course, it is impossible (as well as horrendously immoral) for US workers to have to compete for jobs against Chinese children working in sweatshops for pennies without any human rights protections. Taibbai does a better job of explaining this than most.

You really need to read the whole piece, but here are the two money graphs:

"Everyone knows what the end result of all of this is. The more countries like China prosper and take over our manufacturing business, the more downward pressure is exerted not only on American wages, but on local tax rates and American workers' rights. It's not a coincidence that unions all over America are being broken and forced to take humiliating positions in collective bargaining agreements as our manufacturing economy moves across the Pacific Ocean. And it's not a coincidence that states are not only no longer collecting the same tax revenue from manufacturers, they're practically paying companies to stay -- like the case of the state of Ohio, which worked with the city of Toledo to provide GM with over $300 million in tax breaks, as well as property and infrastructure investments, to keep Jeep in that city.

The dirty little secret of both the American media and the American government is that neither sector much minds this state of affairs. In both cases the corporate sponsors who pay their bills would like nothing more than a full rollback here in America of workers' rights and deep cuts, if not the outright elimination, of corporate taxes. And if the General Electrics and the Caterpillars of the world are very much concerned about preserving democracy and civil liberties here in America, well, they're doing a good job of hiding it. These companies would love to be able to dump raw thallium in the Mississippi River, pay even skilled Americans pennies and get local cops in Little Rock and Peoria to arrest troublesome union leaders. And one good way to get there is to move overseas and then insist that America needs to "try harder" to compete. And we know what they mean by "trying harder.""

Couldn't have said it better myself.

Tuesday, October 03, 2006

Putting the Dow in perspective

Billmon makes a good point:

The Dow Jones Industrial Average hit a record high today: 11,727 -- four points higher than the previous record, set January 14, 2000. So if you invested $1,000 in the 30 companies in the Dow six years and almost nine months ago, you'd have $1000.34 today!

But, alas, if you invested that same amount in the S&P 500 Index (which in the winter of 2000 was bubbliciously full of tech stocks) you'd have only $910.56, and if you "invested" it in the companies in the Nasdaq Composite (the souffle of '90s equity indices) you'd have just $552.04.

Now, doesn't that make you feel better about the economy?

(Full disclosure: The dollar amounts above are actually a little light, since they don't include dividends. On the other hand, they also don't include fees, commissions and other investment expenses. In any case, I think you probably get the idea -- taking almost 7 years to get back to where you started isn't exactly something to brag about.)

There is an issue, first of all, how representative the DOW Industrial companies are for US equity prices in general. For instance, the S&P 500 and Russell 3000 indices are arguably much better indicators of the broad market, and these yardsticks were still 10% below their record highs reached in March 2000

And not to split hairs too finely, but even Billmon the former financial journalist forgot to factor in a little thing called inflation, which at, say 2% during the past six years comes out to...

I'll have to get back to you on that one.

FV = PV (1 + r)n = $909.09

Update: Dean Baker adds "[T]he stock market represents the discounted value of the future profits of corporate America. If the value rises because the economy can now be seen as growing more rapidly, then this is certainly good news. But, if future profits are projected to be higher because of lower wages or lower corporate taxes (e.g. a higher tax burden on workers or fewer public services), why should the mass of the population, who own little or no stock celebrate?

Of course, the higher stock market may just be due to the irrational exuberance of people who control lots of money, as happened in the nineties. This is also not obviously good news. In this case, a higher stock market will shift wealth to those smart enough to get out, from those stupid enough to get in. In short, there is no general public interest in a higher stock market. When reporters celebrate a run-up in the market, their class bias is showing."

The only thing I would disagree with is that a lot of middle-class Americans do own stocks, albeit indirectly, through their pension plans, 401(k), etc. And a strong Dow provides some upward pressure on real estate values, which unquestionably is propping up the economy. Whether that is a good thing or not is a different issue, I suppose.

Latin American independence?

Noam Chomsky has a short piece in the International Herald Tribune that's worth a read (it won't take you long). It's titled "Latin America Declares Independence" and it examines how the new wave of democratization in many countries in the continent are occuring as a reaction to externally mandated neoliberal economic reforms (i.e. "The Washington Consensus") that undermined effective democracy in these countries for decades.

According to Chomsky: "In a world of nation-states, it is true by definition that decline of sovereignty entails decline of democracy, and decline in ability to conduct social and economic policy. That in turn harms development. The historical record also reveals that loss of sovereignty consistently leads to imposed liberalization, of course in the interests of those with the power to impose this social and economic regime."

He goes on to compare the socioeconomic conditions in Southeast Asia, which has seen significant economic development in the past two decades, with Latin America which has pretty much fizzled. One of the key differences between these regions, of course, is that Latin American economies have in general been more open to foreign investment than Asia, and that foreign investment and privatization have "tended to substitute for other capital flows in Latin America, transferring control and sending profits abroad, unlike East Asia."

Implicit in Chomsky's argument, of course, is that populist political figures in Latin America such as Hugo Chavez and Evo Morales are not only defying US economic intervention, but that they are also doing a better job for the overwhelmingly poor peasants of their respective countries by re-nationalizing key infrastructure among other reforms. While Chavez is an odious character, there is little doubt in my mind that he has done wonders with Venezuela's domestic economy, which is the principle reason why he remains incredibly popular among voters unlike, say, our president. The fact that he is providing subsidized oil for low-income families in the Bronx is also providing a nice benefit, while at the same time providing him with an opportunity to tweak the noses of the neoconservatives in Washington.

Update: More Chomsky analysis on US-Latin American relations here.

Debt collector abuse

This is truly shameful. Harvard Law professor and TPM Cafe contributor Elizabeth Warren explains how the GOP-controlled Congress is perversely rewarding abusive debt collectors, as opposed to protecting their vulnerable victims by offering up new, "industry approved" changes to the Fair Debt Collection Practices Act.

The abuses the debt collection industry is allowed to inflict on its prey is bad enough, but by pushing through legislation that effectively legalizes this behavior, Congress has truly stepped over the line in their increasingly-literal war on working Americans.

Sunday, October 01, 2006

Forbes 400: multimillionaires need not apply

The annual Forbes 400 listing of the worlds wealthiest men and women is out, and in a first, everyone on the list is a billionaires. Think about that for a minute. If you are worth $900 million, you are no longer eligible for the list. I'd be very interested in knowing what is responsible for this global trend of the wealthiest getting that much wealthier. I'm sure globalization has a lot to do with it, and of course investment returns play a big role as well. But what else is behind this?