(1) Oligarchs on the Titanic: Via Naked Capitalism, this clip of Robert Johnson of the Institute for New Economic Thinking (watch the video or read the transcript, which follows the video), with the striking metaphor of oligarchs staring into each others’ eyes on the deck of the Titanic:
Robert Johnson: I think the, call it the oligarchy now is audacious. They don’t really care if they’re legitimate. There was a time – you know, I always hear Jurgen Habermas was paraphrased by saying, “Legitimate if you can, coerce if you have to, and accommodate if you must.” And I think we’ve gone past – I almost started, this was really eerie because we didn’t compare notes – I almost started my discussion about John Ralston Saul’s book, The Unconscious Civilization, and I think we’ve gone beyond – I’m grateful we have gone beyond the unconscious civilization. A lot of people don’t buy the package anymore that’s emanating from those corporations you talked about.
But there is a sort of, “Okay guys, you’re mad, how are you going to stop me?” mentality at the top. Now I’m going to say that that fight has to happen, but there’s also, you know, they always talk about Marx and capitalism, capitalists versus labor. A lot of the interesting fissures in a system are intra-capitalist conflict, and right now, I guess the way I’d put it in a metaphor is it feels like there are an awful lot of the elite that know this system is not wholesome, and they’re all standing on the deck of the Titanic looking in each other’s eyes, and they’re asking a question with their eyes, “Are we going to help this navigator? Are we going to help this captain get off the ice? Or are we going to get the food and the jewels from the safe and put them in our lifeboat?” And my sense is that most of them are trying to get stuff into their lifeboat, and that system isn’t going to cohere. And in that dysfunction there is opportunity.
The image at the top of this post, somewhat analogous to the scenario Johnson invokes (it’s a slave ship in a typhoon, with the dead and dying (slaves presumably) being thrown off the ship) is via Naked Capitalism’s Lambert Strether. Beautiful painting–it’s at Boston’s Museum of Fine Arts, so I’ll have to go see it.
(2) BAdidas Victory! Our Sept/Oct 2012 Annual Labor Issue included a great piece by Sarah Blaskey and Phil Gasper on the struggle to get the University of Wisconsin to cancel its licensing agreement with Adidas because one of Adidas’ subcontractors in Indonesia owed millions of dollars in back pay to workers. We hear from Sarah and Phil that the campaign has succeeded, and Adidas has reached a settlement. Here are details from Madison’s Cap Times, United Students Against Sweatshops (USAS), and the website Working Indonesia. Woo hoo! (If you go back to our original piece, find the despicable quote from UW’s athletic director about the sacrifices the department would have to make if they dumped Adidas. That guy makes $1 million a year in compensation.
(3) Frontline on Retirement: Although I haven’t had a chance to watch it all yet, several people have recommended this week’s Frontline story on what a scam the mutual fund industry is, The Retirement Gamble. Subscriber John S. called in from Berkeley just to recommend it; he said one of the highlights was Helaine Olen, author of Pound Foolish: Exposing the Dark Side of the Personal Finance Industry, knocking down claims of industry reps point by point. Yves Smith at Naked Capitalism also praised the episode, but says Even Harsh Frontline Program on Retirement Investments Understates How Bad They Are.
(4) WashPo on Big-Money Investors in Residential Real Estate: The Washington Post is catching up to our current cover story, with a piece called Wall Street Betting Billions on Single-Family Homes in Distressed Markets. Hat-tip: Polly C.
(5) Peter Orzag, Now at Citigroup, Pushes P3: Obama’s former head of OMB, now at Citigroup (revolving door, anyone?) is now pushing for public-private partnerships for infrastructure projects, in a piece at Bloomberg called Let the Free Market Not Bureaucrats Build Bridges. (This from a former bureaucrat.) On the problems with P3, see our Nov/Dec 2012 cover story, Highway Robbery, by Darwin BondGraham. (Hat-tip to Darwin for this.)
(6) More from Dean Baker on HAP vs. R&R: Dean Baker has a nice blog post over at CEPR on the paper by Herndon, Ash, and Pollin (“HAP”) that took down the austerity apologists Reinhart and Rogoff (“R&R”). The best part of it–excuse the long quotation–is his homage to the UMass-Amherst econ department (and other heterodox econ departments) and why we need them:
It is not an accident that this work came from the University of Massachusetts. The economics department at the UMass stands largely outside of the mainstream of the profession. You would need scuba gear to find it in standard departmental rankings. None of its faculty are fellows at the National Bureau of Economic Research, a credential that is a virtual prerequisite for employment at elite departments.
UMass has followed a different path that is not likely to gain it plaudits from the mainstream of the profession. It owes its current status to a group of progressive faculty, led by Harvard Professor Sam Bowles, who left some of the country’s top departments in the early 1970s to form a progressive department at UMass. While the original group has all since retired or moved on, the department continues to maintain its character as a center for progressive economics. [Disclosure, many of the faculty and grad students at UMass are friends and colleagues.]
As a result, the economists at UMass are less willing to adhere to the norms of the mainstream of the profession. They are more willing to challenge the received wisdom from the top economists in the profession without according them the deference they typically receive from less established economists.
For example, one prominent mainstream liberal economist complained that HAP should have shared their paper with R&R before going public. While it may have been polite to notify R&R of a paper that exposed their calculation errors before sharing it with the world, if R&R had advance notification they would have almost certainly made efforts at damage control to minimize the impact of HAP’s findings.
Economists concerned about their standing in their mainstream of the profession likely would have gone this route. HAP wanted to ensure that their paper would provoke a serious debate about R&R’s case for austerity and were less concerned about professional etiquette.
The fact that departments like UMass exist is incredibly important. The reason we are in this economic crisis is because of the extraordinary conformity of thought among top economists in the years leading up to the collapse of the housing bubble. In the summer of 2005, when all the alarm bells should have ringing at top volume, the Fed devoted its annual meeting of central bankers to an Alan Greenspan retrospective. They debated whether he was in fact the greatest central banker of all time.
The culture of sycophantism might be too deeply ingrained in the economics profession to expect any changes any time soon. For this reason we badly need departments like UMass (the New School, the University of Utah, and University of Missouri-Kansas City are three others that fit this bill, as is Colorado State University, where I spoke last week) to expose the consensus within the profession when it strays too far from reality. The R&R debacle shows clearly the importance of this dissenting voice.
(7) What Robert Paul Wolff Has Been Thinking: A very interesting piece on the relevance of Marx today: I’ve Been Thinking. Hat-tip Phil G.
That’s it for now.