Radio commentary, April 4, 2009
more signs of stabilization…
Again, more signs that the rate of decline is slowing, though hardly yet turning around. On Thursday morning, we learned that new orders for manufactured goods rose almost 2% in February, the first increase in six months. Orders for what are known as nondefense capital goods ex-aircraft, meaning the sort of gadgetry that is at the core of business investment, and a key to long-term economic growth, rose by over 7%, a very strong performance. Obviously one month’s positive numbers can easily turn into next month’s negative numbers, but this is encouraging news. For now.
New car sales even bounced a bit in March, thanks to big incentives—and they remain at very low levels. Still, this is a surprise. Yes, we need an economy that’s not so dependent on the sales of new earth-destroying machines, but until we get there, this is what people’s livelihoods depend on.
…but not in the job market
In less good news, first-time claims for unemployment insurance rose by 12,000 last week, and the average for the last four weeks rose by about half that much. About 650,000 people a week are losing their jobs and signing up for unemployment insurance checks. The number of people continuing to draw benefits also rose last week to 5.7 million, nearly twice as much as a year ago. As a percentage of the population, both these measures are still below the highs of the mid-1970s and early 1980s, but they’re still quite high, and likely to go higher.
Friday morning brought the release of the monthly employment report for March. Few signs of stabilization here—in fact, it was another stinker.
Last month, 663,000 jobs disappeared. Almost half that loss was in goods production, construction and manufacturing. But private services also got hammered, with almost every sector showing serious losses. Even government, usually a reliable if modest gainer, lost jobs last month, mostly because of declines in local government employment. Since the economy peaked in December 2007, we’ve lost over 5 million jobs, with more losses almost certainly on the way.
Those figures came from the Bureau of Labor Statistics’ survey of about 300,000 employers. Their simultaneous survey of about 60,000 households showed that the unemployment rate jumped 0.4 point to 8.5%, the highest since 1983. Though not at a post-Depression record yet—that would be 1982’s 10.8%—it’s still very high by post-World War II standards. And the share of the adult population working, the so-called employment/population ratio, fell by 0.4 point to 59.9%, the lowest it’s been since 1985. Since its cyclical peak, set in December 2006 (a full year before the business cycle peak), the employment/pop ratio is off 3.5 points, the worst decline over any similar period since the series began in 1948. The ratio’s rise was very weak during the expansion, and its steep decline over the last 27 months suggests that what used to be called The Great American Jobs Machine is now seriously broken.
The forward-looking measures in this report—like temp employment, which was down hard, and the length of the workweek, which fell to a record low, suggest more of the same to come. In somewhat more comforting news, the Economic Cycles Research Institute’s weekly leading index, which forecasts turns in the economy three to six months out, picked up a bit last week, its fourth consecutive rise. That suggests that maybe the abstraction known as The Economy is stabilizing. But the job market, which is what matters to most people, has yet to get the news.
Summers, well-paid tool of Wall Street
And an update on the rogue’s gallery of malefactors in high places. A former quantitiative analyst employed by the Harvard University endowment says she was fired for questioning the university’s investment strategies. Iris Mack, only the second African-American woman to get a PhD in applied math from Harvard, says she was scandalized by the reckless use of derivatives that the endowment’s traders didn’t understand. According to her account, published in the university newspaper, The Harvard Crimson, her colleagues didn’t get basic financial math. She wrote the university’s then-president, Larry Summers, to complain—and she was fired for making what were called “baseless allegations.” Funnily enough, her employer before Harvard was Enron, so the woman obviously knows fuzzy math from the inside! When Summers was president of Harvard, he pressed the university to borrow heavily to take aggressive investment positions that have since turned very sour, forcing the university to borrow to meet basic operating expenses. Need I point out that Summers is now running the economy?
[On Friday afternoon, the Obama administration disclosed that Summers was paid over $5 million last year by D.E. Shaw, the hedge fund where he worked after leaving Harvard. That, plus hundreds of thousands in speaking fees from other Wall Street firm. Any wonder that his administration is going so easy on Wall Street?]
Finally, in other news, one Edward Hadas, writing on the financial news site BreakingViews.com, complains about the lack of a serious left opposition. His opening words, inspired by the anti-G20 demos in London: “A great age of protest should be dawning. The global mismanagement of the financial system has led to a deep recession. Intellectual paralysis has gripped the authorities and their policy response has been risky. After such failure, the political leaders gathered in London for the G20 conference deserve a serious challenge. Sadly, all they are getting are the senseless slogans of a hippie festival.”
Sad to say, he’s right. The old Seattle strategy of street parties and puppets and all that seemed right for the late stages of the 1990s boom, but in the middle of this bust, they seem silly and irrelevant. This isn’t what the scared masses want. As Hadas says, the world needs “a new intellectual framework,” not a street party. He concludes: “Sadly, the more intellectually sophisticated Left seems to be hardly more capable of helping out. Any protester who can articulate a coherent alternative to the establishment’s tattered notions really could change the world.” It’s true, and I’m hanging my head in shame that I haven’t done more to articulate that alternative. I’ll try harder in the future.
You are right about the Left’s failure to articulate an alternative at such a propitious moment. A wasted opportunity. My own humble suggestion below, but I guess anything less than the total demolition of society won’t satisfy some: http://www.theage.com.au/opinion/bring-on-the-money-police-20090401-9js3.html?page=-1
A possible alternative, from the Wikipedia entry on Saul Alinsky.
I think he’s right. If we want change, then organize the middle class, not the working class. This is where the Marxist groupuscules get it wrong. (And in the US the classes are so blurred anyway…)
Quoting from 1917 won’t win them over, neither will throwing rocks through bank windows.
Alinsky advises his followers that the poor have no power and that the real target is the middle class: “Organization for action will now and in the decade ahead center upon America’s white middle class. That is where the power is. … Our rebels have contemptuously rejected the values and the way of life of the middle class. They have stigmatized it as materialistic, decadent, bourgeois, degenerate, imperialistic, war-mongering, brutalized and corrupt. They are right; but we must begin from where we are if we are to build power for change, and the power and the people are in the middle class majority.”
Alinsky was organizing and writing during a period when the middle class was expanding and the US was in its post-WWII productive glory, but those days are long gone. And my understanding is that Alinsky focused on organizing among churches in working-class Chicago neighborhoods, no?
Right now that model has been appropriated by people trying to privatize the public schools in urban areas, with PE and hedge fund guys providing the venture capital lurking in the background.
The middle class is disappearing in this country, while desperatley holding on to their delusions of 401Ks paying for golf in Boca sometime in the future.
The current reality is one of structural readjustment – by another name – in order to recapitalize the banks and bring back the Golden Age of 2001-2006. If this is the case, then we’ll see a shrinking middle class, as their assets either evaporate or re redistributed upward.
The greater likelihood is one of fear and instability – a far cry from middle class mythology of material progress and satisfaction, not that there weren’t serious drawbacks to that- and permanent descent into the service proletariat.
How to organize within that new reality is the big question, but for now let’s do our best to expose the Obama/Geithner/Summers looting.
Protests in the United States are being organized next weekend:
Their central demand is to breakup the banks, which you do not agree with. (Though there does seem to be an argument, beyond the knee-jerk populism you distrust, that these leviathans are simply too big to even manage. As with so many mergers and acquisitions that later falter or fail, they seem to have been built up for the sake of private empires rather than economies of scale and scope.) Best to engage them, I say.
Bernie Sanders has a usury law. Simple, direct, and one hell of a fight. It is one of those forms of legislation that fighting for and loosing is not necessarily failure. It’s educational, and you don’t need much more than a credit card to find the relevance.
Is that an attempt to demonstrate Hadas’ point, Shane? People aren’t going to go into the streets for “real structural change on Wall Street.” Jesus, that sounds like an agenda item at a shareholders’ meeting.
People need debt relief and new jobs, and a sense of purpose and progress and redemption. Those things come from Washington, not Wall Street.
Those are the actually existing demonstrations, Michael. Engage them or supplant them, but circular firing squads aren’t the answer. Quite the opposite.
With all due respect to the aspirations for a human existence “somewhere,only not right here,not right now,just over there someplace,in another country,in another lifestyle,in another social class,perhaps,there is a genuine society.” We live here and now.The cacaphonic death rattle of the New Economy we suffer is a nihilistic doom induced by “The imbalance between the supply and demand for attention lies at the root of the panic-depressive syndrome called “infostress”…”The attention economyis the product of the high rate of growth of access provoked by new technologies,in that in order to maintain or simply attract customers/consumers it necessary to capture their attention…………..’What information consumes’,Herbert Simon,Nobel prize winner for economics,has said ‘ is rather obvious:it consumes the attention of its targets.Hence a wealth of information creates a poverty of attention.'(Capital and Language-Christian Marrazzi)
The question is begged is it possible to develop an unambiguos message and program as it is nibbled to death at the fringes by the relentless din of post-modern minnows and sharks?
“Any protester who can articulate a coherent alternative to the establishment’s tattered notions really could change the world.”
What a load of old cobblers. There’ll be no changing this world with an “intellectual framework”, how out of touch must you be to believe that??
The best that can be hoped for is that technology will eventually allow people to circumvent the present networks of power and achieve some kind of equitable prosperity.
Anyway, cheers for the economic data.
Of course ideas alone can’t change the world, though they can help. But neither can technology. Networked computers can be used for surveillance and tightening labor discipline as much as they can be used to create subversive networks.
While it’s not hard-line Marxist(which I’m not anyway), what would be wrong with a social-democratic program? Meaning, strong unions(but not closed shops or automatic dues checkoff), a strong welfare state along a French or German model or even Scandanavian, and putting back all the regulation of finance we had before Clinton and the Democratic Leadership Council got rid of Glass-Steagall(sp.?), etc.
The focus would be on improving the material conditions of people’s lives so the United States would not have the highest poverty rates in the G-8(or is it G-20).
I would prefer that the Green movement go away and die(politically) since they’re anti-working class, in my opinion. (I do know that that’s a very long discussion). Furthermore, this would not be about “sustainability” or other nonsensical notions like that.
Needless to say, achieving a social-democratic program in the United States would be quite a struggle, so there’s plenty to do for everyone.
I just wanted to add, that this movement would not focus on the foreign policy of the U.S., since there’s absolutely nothing that can be changed about that by any movement here in the States.
Yes I know, another long discussion.
Shane, I’m not trying to fire at those folks. In fact, there’s more than one way to circle across our own circle. One is to call stillborn protests. I’ll take hippie street parties to blowing energies on “Wall Street reform” any day of the week.
It’s interesting that this is being discussed on LBO. The democrats.com types calling these protests are saying “the financial sector” is some kind of bad apple. As Doug Henwood has repeatedly shown, it is part and parcel of corporate capitalism. The productive corporations are every bit as responsible for and tied to our economic problems — more even, arguably — than the banks.
That’s Doug’s point here. Quietism/electoral naivete plus knee-jerk rallies called by constituent-less blogocrats and/or street partiers are flip sides of our failing coinage.
Ed’s right. It doesn’t seem to be a coincidence that the mobilization against the Vietnam war followed broad (and deep) mobilization for civil rights. For years, I have heard fellow anti-war protestors speak of beginning a movement against the war, then expanding it to cover domestic issues. Doesn’t American history suggest they have the direction reversed? (And, of course, that the national security state has insulated foreign policy from the public.)
Shane, it seems to me that it doesn’t matter whether domestic of foreign crises come first. The point is that, as Civil Rights Movement historian Harvard Sitkoff explains, powerful movements require a balance between hope, anger, and focus. The CRM fed into the Anti-War movement by showing people that organizing and protesting could produce results. Just as Brown v. Board had previously inspired CRM leaders to believe that the system wasn’t 100 percent hopeless.
The point is that we need to show people a reason for hope. To do that, we need the right focus, so that we can select a target we can hit that will be big enough to matter.
Whether this can be done from within present commercial media and propaganda/miseducation conditions remains to be seen. Can even the smartest possible left plans reach enough willing bodies?
You can pose your own guilt, imagine an alternative universe, flail away at less-than-pure pretenders on your side, foam away at “the people,” harken back to earlier glories, employ shopworn jargon, sit at the bended knees of aged gurus, take drugs, worry that you are missing the street action, or do any number of compensations, but all the brickbats at “The Left” are awful sociology. The supersystem is built of many myths, eons of social enforcement, and should be appreciated for the beast that it is. No wholly unreachable plans, no tedious catcalls – enough with the abuse of the fictitious “Left.” What, precisely, would bring down this global supersystem? Social order does not pivot on us, or any individual.
A lot of education and internal mobilization has to occur before there is anything approaching a mainstream argument against capitalism. Number #1 is doing away with bourgeois nationalism, identity politics, and analyzing behavior through a prism of skin color. The election of Obama showed how easily arguments centered around those things can be dismantled – i.e. America is a racist country. Is it ?
The U.S. ruling class is strategically far ahead of anything the socialist left has put together now.
A G-20 spectacle deserves a spectacle demo…
More interesting are the factory occupations in the UK as response to bankrupcy/mass firings.
People take to the streets for specific stuff — like stopping a war. They will not agitate for a bullet-pointed list of reform or some ill-understood idea of social democracy.
Foreclosures and health care seem like natural targets.
What’s the alternative to social democracy? Besides a refurbished Milton Friedman, of course. Many on the left don’t seem to get that the latter may be taken as an answer to the demands for justice. Market discipline is one for which Americans are primed, and market discipline is one response to those demands. Nothing about the meaning of this crisis should be taken as self-evident. Complex and ideologically contorted, it will be an ink blot for a public long primed to accept a market society.
The default left response has been to change the subject. “Corporations betray the free market!” they say, with no answer to the chaos and atomization that emerges from self-regulating markets. They answer the mantra “free to choose” with boycotts and lifestyle purchases, contriving a radical consumption rather than contesting the anemic freedom of a market society. They concede right’s claim to proprietorship of the very word freedom. New Orleans collapses in full view of the public, and there are little more than calls for charity and denuciations of racism. As if a city could be built on charity. The very notions of collective action and the provision of public goods recede further from memory.
As for stopping the war, recent activist history doesn’t inspire. David Sirota has the compelling account of that defeat.
I don’t disagree with any of that.
What I’m saying is that intellectual frameworks are probably overrated.