Zizek on the limits of self-organization, etc.
This splendid rant by Slavoj Zizek is from the Subversive Festival, Zagreb, May 15, 2013. I excerpted some bits Zizek delivered during a joint session with Alexis Tsipris, president of Syriza, the Greek left party (which is now a formal party, and not a loose coalition) for my June 6 radio show. For those who don’t want to listen to the whole show, here’s an MP3 of Zizek proclaiming the limits of spontaneous self-organization and autonomous zones, and calls for a reinvention of the state that provides a basic structure to allow social movements to flourish and also allow him to do his crazy philosophy.
Here’s the audio file (length: 6:33):
The full video—which is quite good—is here.
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June 6, 2013 Sungur Savran on the Turkish uprisings • Slavoj Zizek on the limits of spontaneity (excerpt from a conference talk—full video here) • Lee Badgett on LGB poverty (paper here)
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May 30, 2013 Harry Browne, author of Frontman: Bono (In the Name of Power), on the dreadfulness that is Paul Hewson • Eamonn Fingleton on how Japan isn’t as bad off as they’d like you to think
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May 23, 2013 David Cay Johnston, columnist for Tax Analysts, on the IRS scandal • Richard Katz, editor of The Oriental Economist Report, on the long Japanese slump and the prospects for Abenomics
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May 16, 2013 Barbara Garson, author of Down the Up Escalator, on how people are coping with the Great Recession, its aftermath, and 40 years of general decline (updates to the book here)
Deficit emergency over
The Congressional Budget Office’s latest debt and deficit projections for the next ten years are out and there’s no way any honest analyst could read them as anything but the official end to any rational concern about red ink.
Of course, given that the phantasmic plays such a large role in politics, it’s likely that important people will still worry about fiscal ruin. But to the degree that reality exerts even a weak gravitational pull on discourse, it should be harder to generate the sense of emergency that austerians thrive on.
From the CBO’s summary:
If the current laws that govern federal taxes and spending do not change, the budget deficit will shrink this year to $642 billion, CBO estimates, the smallest shortfall since 2008. Relative to the size of the economy, the deficit this year—at 4.0 percent of gross domestic product (GDP)—will be less than half as large as the shortfall in 2009, which was 10.1 percent of GDP.
Because revenues, under current law, are projected to rise more rapidly than spending in the next two years, deficits in CBO’s baseline projections continue to shrink, falling to 2.1 percent of GDP by 2015.
And a featured graph:
The graph shows the sharp rise in the debt/GDP ratio that came with the Great Recession is nearly over, and the line is about to go flat—flat at a level well below the now-discredited 90% danger level that Carmen Reinhart and Kenneth Rogoff got people all worried about until their work was exposed as bogus. According to the spreadsheet that accompanies this release, the CBO projects the 2023 federal debt/GDP ratio to be 73.60%, down from 75.07% today. (You gotta love projections for ten years hence that are carried out to two decimal places.) Over the next 10 years, they project revenues to rise by 1.6 percentage points of GDP, and spending to rise by 1.0 points, for a (rounded) shrinkage in the deficit of 0.5 points. (Before rounding, the decline is 0.547774045234583 points, a hilarious level of precision.) The CBO projects this year’s deficit at 4.0% of GDP, which is very close to the 3.0% that many orthodox analysts regard as trivial.
The spending projections for the next decade are quite austere. Social Security’s share of GDP is slated to rise by 0.4 percentage points, and health spending (Medicare, Medicaid, etc.) by 1.0 point, but other major spending categories will decline. Mandatory spending other than Social Security and health will fall by 0.4 points; military spending, by 1.2 points; and civilian discretionary spending (which includes much of the civilizing stuff, like education and environment), by 0.9%. Whether that level of austerity is politically sustainable is an open question—people purport to hate government spending in the abstract, but when it gets down to specifics, the politics get a lot rougher. But these projections are basically what will happen if we continue on the path set by current law.
This being American politics, it’s time to bring the rational, evidence-based portion of this post to a close. Austerians are driven by a mix of irrational anxiety and a desire to take benefits away from all but the rich. Benefits create expectations, and dilute the power of labor market discipline, both of which are potentially explosive. People don’t like to have things taken away from them, so it helps to create a sense of emergency to lubricate the process.
So what will the fiscal sadists do? The CBO itself offers a hint of how to maintain deficit hysteria—the deficit will rise from 2020 to 2023, and could get really bad in the late 2020s (though they don’t provide any numbers). Egads! But the rise in the debt/GDP ratio from 2020 to 2023 is all of 2.2 percentage points, to a level still below today’s—and projections 15 or 20 years into the future are a thin support for drastic action today. (This is further proof of the rule that one should always read the numbers before the prose in official reports like these.) But that doesn’t mean fiscal hawks won’t piss and moan. They will. But their emoting will either have to get even more phantasmic—or more nakedly class war-ish.
If only we could get important people to show this level of long-term anxiety about atmospheric CO2.
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May 9, 2013 Corey Robin, political scientist at Brooklyn College and author of The Reactionary Mind, on how the right thinks (with additional discussion of this essay on Nietzsche, Hayek, etc.)
May 2, 2013 Mark Blyth, author of Austerity: The History of a Dangerous Idea, on just that
April 25, 2013 Alex Vitale on the militarization of police forces • Josh Eidelson on spreading worker actions against Walmart and fast food
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April 18, 2013 Minqi Li on the Chinese economy • George Ciccariello-Maher, author of We Created Chavez, on the social movements that allowed for Hugo Chavez’ emergence and he in turn stimulated
April 11, 2013 Tom Mills (author of this article) and Richard Seymour (author of this one) on the dreadful Margaret Thatcher
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Money porn
Institutional Investor’s alpha is out with its annual ranking (The Rich List) of top hedge fund earners, which always provokes meditation on our upper class. In 2012, the top 25 hedgies collectively earned $14.14 billion. That’s the lowest since 2008, but down only 2% from 2011. It is also equivalent to the collective income of 1.3 million of the poorer households in the U.S.
In the magazine’s telling, this year the markets rewarded “the fearless investor,” who ignored all those macro worries—a crappy U.S. recovery, implosions on the periphery of Europe, etc.—and stayed boldly long. At the top of the list was David Tepper, who made $2.2 billion last year. Tepper, you might be surprised to learn, said a couple of years ago that he was “tired of making money” and wanted to start giving it away. Less surprisingly, Tepper wants to put some of it to work kicking around teachers’ unions and promoting charter schools and vouchers (“Hedge fund manager readies for battle with NJEA to reform NJ schools”). In second place, Ray Dalio at $1.7 billion, less than half what he made as 2011’s #1. Dalio is best known for doing transcendental meditation, and also for cultivating a brutal, chilly, even cult-like atmosphere at his firm, Bridgewater Associates (The Billion-Dollar Aphorisms of Hedge Fund Cult Leader Ray Dalio). Together, Tepper and Dalio earned as much as almost 350,000 poorer households.
In standard theory, income is a reward commensurate with what one produces. What do guys like these produce? Profits for their investors.
technical notes
alpha, the name of II’s magazine, is investment jargon for returns in excess of what can be explained by market averages, adjusted for risk. It’s supposedly the measure of a money manager’s skill, which is not easy to tell statistically from luck.
The income calculation is this: the average income of the poorest 20% of U.S. households was $11,239 in 2011. Divide that into $14.14 billion and you get 1.3 million poorer households.
The economic consequences of student debt
The Federal Reserve Bank of New York is out with new research (“Young Student Loan Borrowers Retreat from Housing and Auto Markets”) showing that student debt is not merely painful to those owing it, but has also become economically damaging. The debt service burden is essentially neutralizing, or worse, the income advantage of having earned a bachelor’s degree or more, at least as measured by the ability to buy a house or a car.
Over the last decade, the share of 25-year-olds with student debt has risen from about 25% in 2003 to 43% in 2012, and their average debt burden has nearly doubled, from $10,649 in 2003 to $20,326 in 2012. At first this seemed to have few economic consequences; from 2003 to 2009, the homeownership rate of people with student debt was significantly higher than that of those without student debt—which isn’t surprising, given the income premium still enjoyed by those with education after high school. That changed during the Great Recession, as homeownership rates fell across the board. But those for student debtors fell harder than others, and as of 2012, the homeownership rate of those with student debt was lower than those without.
Something similar is true of car ownership: a higher proportion of those with student debt have historically borrowed to buy new or late-model used cars than those without student debt. That changed during the recession too. Now the rates are about the same.
It looks like student debt is replacing other kinds. Despite the rise in the student debt burden, the overall indebtedness of those still paying for their degrees has declined, meaning that they’ve pulled back markedly from more traditional forms of borrowing. This is, the New York Fed researchers conclude, probably the result of joint decisions by both borrowers and lenders. Student debtors have probably concluded that their future earning prospects are pretty crummy, and that paying down their loans will claim a painfully large chunk of their income. Why add to the problem by borrowing more to buy a house or a car? And lenders are no doubt spooked by all that lingering education debt (especially given high and rising delinquency rates). Credit scores of those with and without student debt were once pretty similar, but they diverged around 2008. As of last year, the average Equifax credit score for a 30-year-old with student debt was 24 points below the average for those without student debt; for 25-year-olds, the difference was 15 points. And that’s despite the theoretically greater earnings potential for the degreed.
Car sales have recovered since the recession lows, but they remain well below their long-term trend. And the recovery from the housing bust has been very weak. Weakness in both these markets, especially housing, has been a major drag since the economy officially bottomed out in 2009.
It’s nice to imagine an economy where the purchase of cars and houses using gobs of borrowed money would be less central to material well-being, but we’re a long way from that. It looks like student debt, aside from being a miserable burden on those paying it, is harming the broad economy, and will continue to for years to come.
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April 4, 2013 Kate Losse, who spent five years at Facebook and wrote about it in The Boy Kings, on Sheryl Sandberg’s “lean-in”corporate feminism (which she reviewed here) • Ahmad Shokr, historian and journalist, on Egypt’s economic troubles
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March 28, 2013 Terry Kupers on the psychological effects of prison • Haley Sweetland Edwards, author of this article, how Wall Street took over Dodd-Frank
March 21, 2013 Yanis Varoufakis on the economies of Australia, Cyprus, and Greece • Jonathan Westin of Fast Food Forward on organizing fast food workers in NYC
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March 14, 2013 Özgür Orhangazi, author of this paper, on the economics of Venezuela under Hugo Chávez • George Ciccariello-Maher, author of the imminently forthcoming We Created Chavez, on the politics of Venezuela under Hugo Chávez
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March 7, 2013 Robert Gordon on the end of growth (paper here) • Adolph Reed, author this review essay, on some recent “race” movies (Django Unchained, etc.)
LBO News from Doug Henwood 