Another Sign that Economic Recovery Isn't Reaching Everyone

Chase is rolling out new ATMs that dispense $1 and $5 bills.

The option to get exact change will be a plus for customers -- including those with low account balances who want to take out less than $20 or who need $25 but don't want to take out $40, for example, said Greg McBride, senior financial analyst at Bankrate.com.

"Particularly in difficult financial times when peoples' account balances have been lower, not having to withdraw more money than you really need is helpful," said McBride.

Do Corporations Have Religion? What Would A "Corporate Person's" Church Be Like?

The Supreme Court, having already ruled that corporations are "people," is now set to hear a case that will decide if these corporate beings have the same religious freedom as their flesh-and-blood human counterparts. This got me to thinking about what kind of religion "corporate people" might have.
I take you now to the DTE Energy Church.  The corporate people stand and recite the Associations Creed:

We believe in money’s unending generative power.
We believe in the Holy Profit.
We believe that efficiency creates growth and that growth is good.

Pastor Pillsbury starts his sermon:

We gather today to join in healthy competition, which rises all boats, in the name of our Lord Chrysler (born of virgin Bethlehem Steel, died and resurrected in 1979 in the miracle of the bailout.) We begin with a reading from the book of Monsanto.

Our Lord sat among his disciples, the ancient ancestors, Packard, Borders, Pan Am, General Foods, Delorean, The Pullman Company, Commodore Computers, Burger Chef, Statler Hotels, Studebaker and Enron, who betrayed him. Great crowds gathered around them, because they had sent out a well-worded press release.

The Lord reminded the disciples of the great prophet who came before, E.F. Hutton, a voice crying in the wilderness.  When E.F. Hutton talked, people listened.

Lord Chrysler explained the meaning behind the parable of the sower of the seeds.

"A poor farmer went out to sow his field. Because he had not taken full advantages of farm subsidies, he had only a small patch of land, and his endeavors were not profitable.  And as he sowed, some seeds fell along the path, and the birds came and devoured them. Other seeds fell on rocky ground, where they did not have much soil, and immediately they sprang up, since they had no depth of soil, but when the sun rose they were scorched. And since they had no root, they withered away. Other seeds fell among thorns, and the thorns grew up and choked them."

"In a neighboring field was a farmer with patented Monsanto seeds.  These seeds were genetically engineered to be resistant to thorns.  Some of these seeds blew across the road fell on good soil and produced grain, some a hundredfold, some sixty, some thirty. And Lo! the corporate person who held the patent sued the small human farmer for theft. The farmer was driven into bankruptcy and the field was purchased at foreclosure prices and growth for the corporate person was achieved and the Lord said this was good. He who has ears, let him hear!"


"Those who hear will have everlasting life in the laissez-faire paradise where the one true free market reigns. There the will of the Lord will be carried out with ultimate, transcendent efficiency.  In the Kingdom buying and selling will be pure, unhindered by utility or human person needs and desires. Truly I say to you, the Kingdom will not come until the corporate people have proven themselves by devoted service to the needs of their shareholders and rejected the heresy of so-called stakeholders. When corporates have reached that perfect state of purity the flesh-people will be left behind and the corporate people raptured to that place of moving numbers, trading without end, increasing exponentially, glorious, infinite-- an economy of the greatest scale."

And then the Lord said,  "If you want to be perfect, go sell all your possessions to the poor at 30% interest, and you will have a treasure. Truly I tell you, it is impossible for someone who is poor to enter the Kingdom. It is easier for a camel to go through the eye of a needle than for someone who is poor to enter the Kingdom."

After a moment of silent reflection, the corporate people sang a traditional hymn:

"The Debtor Paid It All." Then they took up a collection for royalty fees to Disney for having sung it.
The service concluded, as it often did, with a reading of the "Sermon on the Piece of the Rock" sponsored by Prudential. (Formerly known as the Beatitudes back when it was sponsored by Beatrice Foods.)

Blessed are the rich in spirit, for they shall have the habits of highly successful people.
Blessed are those who re-invest, for they shall be the winners.
Blessed are the marketers, for their brand names will have the most impressions.
Blessed are those who hunger and thirst for profits, for they shall receive their bonuses.
Blessed are the competitive, for they shall create market efficiencies.
Blessed are the self-made, for no one should have to help you.
Blessed are the warmongers, for they shall get government contracts.

Rejoice and be glad, for your reward is great. Really, really great. Seriously, you will get such a huge reward you'll need six accountants to keep track of it.

The Lord is my CEO. I shall not want... for anything... ever.

In the name of the Dow. Amen.

Quote of the Day: Measuring Well-Being

Consumption is what we do, and, no matter how often it is demonstrated to be unsatisfying, we go on believing in it. No American Administration has ever seriously considered a yardstick for success other than the G.N.P. Our economists point to the long-term stagnation of the Japanese economy as though it were an index of discomfort and unhappiness, despite the fact that the Japanese live better in almost all ways than nearly ninety-nine per cent of the people on the planet. My parents were two educated (Harvard, Regis) members of blue-collar families. I noticed early that their view of success had not made them happy, while the siblings they had “left behind” were quite merry.-Thomas McGuane, The New Yorker

Developed or Waiting to Be

An article in the Utne Reader today made me pause and think about the expression "developing nation."  It is an expression we (by "we" I mean those of us in the "developed" world also known, to us, as the countries that don't really need a label because we're the example of how things ought to be.) adopted as a more positive way of referring to what we once called "third world nations."  I don't think I have ever taken the time to pause and think about the underlying cultural assumptions behind the expression.  In short, I don't think I have stopped to ask "developing into what?" and "is that necessarily better?" (See some of my other posts here on "growth." As well as this one about called What Are We Growing For? on my sister literary/fiction blog.)

My wife grew up in what Western experts, not without condescension, call a “developing” country. The social life of her village revolved largely around a tree...

In the United States we spend hundreds of billions of dollars on everything from community centers to kiddie videos to try to achieve those results, with great inefficiency and often much less positive effect. Yet most Western economists would regard the tree as a pathetic state of underdevelopment. They would urge “modernization,” by which they would mean cutting down the tree and making people pay money for what it provided. In their preferred vision, corporate-produced entertainment would displace local culture. Something free and available to all would become commodities sold for a price. The result would be “growth” as economists understand that term.

Read the full article, "Common Property: Our Hidden Wealth" at the Utne Reader.

Beyond Jobs

Douglas Rushkoff writing for CNN asks whether our problem is really "jobs" or should we instead be re-envisioning our entire social economic structure:

The question we have to begin to ask ourselves is not how do we employ all the people who are rendered obsolete by technology, but how can we organize a society around something other than employment? Might the spirit of enterprise we currently associate with "career" be shifted to something entirely more collaborative, purposeful, and even meaningful?

Instead, we are attempting to use the logic of a scarce marketplace to negotiate things that are actually in abundance. What we lack is not employment, but a way of fairly distributing the bounty we have generated through our technologies, and a way of creating meaning in a world that has already produced far too much stuff.

Deserving of Careful Study

"The connection between deteriorating economic and social conditions and high corporate profitability deserves careful study as does the question of whether this is a stable relationship. Regardless, these charts provide important insight into our national policy-making nexus. As long as our large corporations are prospering we should not expect our political process to produce meaningful change. The problem isnt a lack of good ideas for how to strengthen our economy and generate jobs, it is the lack of interest on the part of our elected leaders — on both sides of the aisle – to seriously consider them. It appears that meaningful economic change will have to await either a further unraveling of our economic and social infrastructure or the rise of a powerful social movement with a new economic vision."-The conclusion of Martin Hart-Landsberg writing in Sociological Images after examining an International Monetary Fund report on the U.S. economy.

History of Debt

There is a fascinating interview with David Graeber author of Debt: The First 5,000 Years on the blog Naked Capitalism which turns a lot of our conceptions about the origin of money on its head and which examines the role and consequences of indebtedness on all aspects of society.  I highly recommend the article.  Here are some highlights:

Money evolving out of barter is a myth.  Rather a sense of indebtedness and mutual responsibility came long before an exact accounting of goods for trade.  

Think about what they’re saying here – basically: that a bunch of Neolithic farmers in a village somewhere, or Native Americans or whatever, will be engaging in transactions only through the spot trade. So, if your neighbor doesn’t have what you want right now, no big deal. Obviously what would really happen, and this is what anthropologists observe when neighbors do engage in something like exchange with each other, if you want your neighbor’s cow, you’d say, “wow, nice cow” and he’d say “you like it? Take it!” – and now you owe him one. Quite often people don’t even engage in exchange at all – if they were real Iroquois or other Native Americans, for example, all such things would probably be allocated by women’s councils.
So the real question is not how does barter generate some sort of medium of exchange, that then becomes money, but rather, how does that broad sense of ‘I owe you one’ turn into a precise system of measurement – that is: money as a unit of account?

The first word for "freedom" in any language was related to freedom from debt.

This was the great social evil of antiquity – families would have to start pawning off their flocks, fields and before long, their wives and children would be taken off into debt peonage. Often people would start abandoning the cities entirely, joining semi-nomadic bands, threatening to come back in force and overturn the existing order entirely. Rulers would regularly conclude the only way to prevent complete social breakdown was to declare a clean slate or ‘washing of the tablets,’ they’d cancel all consumer debt and just start over.

 In Sanskrit, Hebrew, Aramaic, ‘debt,’ ‘guilt,’ and ‘sin’ are actually the same word.

Graeber also concludes that our economic system is at tremendous risk because it does not offer enough protection to debtors.

In the past, periods dominated by virtual credit money have also been periods where there have been social protections for debtors. Once you recognize that money is just a social construct, a credit, an IOU, then first of all what is to stop people from generating it endlessly? And how do you prevent the poor from falling into debt traps and becoming effectively enslaved to the rich? That’s why you had Mesopotamian clean slates, Biblical Jubilees, Medieval laws against usury in both Christianity and Islam and so on and so forth.

Since antiquity the worst-case scenario that everyone felt would lead to total social breakdown was a major debt crisis; ordinary people would become so indebted to the top one or two percent of the population that they would start selling family members into slavery, or eventually, even themselves.

Well, what happened this time around? Instead of creating some sort of overarching institution to protect debtors, they create these grandiose, world-scale institutions like the IMF or S&P to protect creditors. They essentially declare (in defiance of all traditional economic logic) that no debtor should ever be allowed to default. Needless to say the result is catastrophic. We are experiencing something that to me, at least, looks exactly like what the ancients were most afraid of: a population of debtors skating at the edge of disaster.

Although governments and banks are behaving differently at the moment, if we recognize debt as a social agreement, we can change and negotiate the terms.

The UK takes the even weirder position that this is true even of debts the government owes to banks that have been nationalized – that is, technically, that they owe to themselves! If that means that disabled pensioners are no longer able to use public transit or youth centers have to be closed down, well that’s simply the ‘reality of the situation,’ as they put it.


These ‘realities’ are being increasingly revealed to simply be ones of power. Clearly any pretence that markets maintain themselves, that debts always have to be honored, went by the boards in 2008...

When thousands of people begin assembling in squares in Greece and Spain calling for real democracy what they are effectively saying is: “Look, in 2008 you let the cat out of the bag. If money really is just a social construct now, a promise, a set of IOUs and even trillions of debts can be made to vanish if sufficiently powerful players demand it then, if democracy is to mean anything, it means that everyone gets to weigh in on the process of how these promises are made and renegotiated.” I find this extraordinarily hopeful.

A truly interesting read worth checking out in full via the link above. I've also added Debt: The First 5,000 Years to my (overly long) to read list.

Who Isn't Paying Taxes

From Andrew Sullivan's column. He quotes Bruce Bartlett at the New York Times:

There are 78,000 tax filers with incomes of $211,000 to $533,000 who will pay no federal income taxes this year. Even more amazingly, there are 24,000 households with incomes of $533,000 to $2.2 million with zero income tax liability, and 3,000 tax filers with incomes above $2.2 million with the same federal income tax liability as most of those with incomes barely above the poverty level.

Growing Beyond Growth

Yale Environment 360 today tackles the question of whether our focus on economic growth harms our well-being.  James Gustav Speth wrote:

There are some, myself included, who believe that the U.S. is now experiencing uneconomic growth. If one could measure and add up all the environmental, security, social and psychological costs that U.S. economic growth generates at this point in our history, they would exceed the benefits of further ramping up what is already the highest GDP per capita of any major economy.

Though not widely accepted, the case is strong that growth in the affluent U.S. is now doing more harm than good. Today, the reigning policy orientation holds that the path to greater well-being is to grow and expand the economy. GDP, productivity, profits, the stock market, and consumption must all go up. This growth imperative trumps all else. It can undermine families, jobs, communities, the climate and environment, and a sense of place and continuity because it is confidently asserted and widely believed that growth is worth the price that must be paid for it...

It is time for America to move to post-growth society where the natural environment, working life, our communities and families, and the public sector are no longer sacrificed for the sake of mere GDP growth; where the illusory promises of ever-more growth no longer provide an excuse for neglecting to deal generously with our country’s compelling social needs; and where true citizen democracy is no longer held hostage to the growth imperative.

What if the Economy Listened

Scott Gast writing on Post Growth ponders what it would mean for the world if we measured the economy's effect on something other than the market itself;

But what if the economy listened? What if, for a minute, the economy stopped talking to itself—to its own swirl of messages and indicators and pundits and forecasts—and actually gave an earnest ear to the world around it? Here’s Steingraber in a 2009 column for Orion magazine:

“Imagine that ecological metrics were as familiar to us as economic ones. Imagine ecological equivalents to the Dow, NASDAQ, and S&P that reported to us every day—in newspapers, on radio, on websites, on the crawl at the bottom of TV screens, on oversized tickers in Times Square—data about the various sectors of our ecological system and how they are faring. What are the atmospheric parts per million of carbon dioxide today? Has the extinction rate become inflationary? What is the exchange rate between sea ice and fresh water? What is the national deficit of topsoil?

Suppose that ecological pundits discussed every night on cable TV the ongoing disappearance of bees, bats, and other pollinators and the possibly dire consequences for our food supply. Suppose we received daily reports on the status of our aquifers. Suppose legislators and citizens both agreed that if we don’t take immediate action to bail out our ecological system, something truly terrible will happen. Our ecology will tank.”

***

What would a listening economy look like? One thing I bet it wouldn’t look like would be a growing economy. A listening economy would be aware of the world beyond itself—that there is a world beyond itself—which means it would know that there’s no more room to grow. It would be a good conversationalist: it would listen to the world it lives in and respond accordingly. It would be less noisy, because listening requires periods of quiet and slowness and caution. It would be principled—and its highest principle might be the precautionary principle. It would know that listening is progress. It would know that listening is related to learning.

The Impossible Hamster

Meaning of Prosperity

"My hunch is this: we can cut, slash, and burn all we want — all the way right down deep into the black heart of austerity, until we're reduced to shivering in caves, hunting with stone axes, and singing songs by firelight. But if it's the city at the other end of the economic world we wish to reach — the shining city on a hill we once called prosperity, a conception of richness that, resonantly American, was never merely about hands grabbing at wealth, but about imagining, building, and creating lives that were authentically richer — then we might just have to get serious not merely about what it is we don't do, but what we will do differently tomorrow than we have done for the last several decades."

-Umair Haque, Harvard Business Review

Video of the Day: An Economy in Accordance with Our Hopes

Tim Jackson on prosperity without growth.

Austerity v. Frugality

CNN today has an opinion piece titled "Frugal Living is the Road to New Prosperity." Here is an excerpt:

Austerity comes from the Greek verb "to dry." It is sour and astringent. Self-flagellation is the order of the day...Austerity is all about cutting back the public sector in an attempt to reinvigorate the private sector.

Frugality is about shifting our attention, and our income, away from restless consumption and toward long-term saving. Spending less, yes, but investing more -- both in the public and the private sphere. And in our rush to rebuild financial markets, we need to pause long enough to make them fit for the purpose...

Frugality comes from the Latin. It speaks of bearing fruit. Of our ability to flourish, not through relentless material profligacy, but through a due attention to season and cycle and the processes of maturation. Austerity presents us with an arid world, stripped bare of meaning, devoid of hope. Frugality offers us a way to re-enchant the future.

Read the full article at CNN.

J. Ralston Saul on the "Consumption Fantasy"

The Decade of the Broke

The Washington Post is reporting that the decade that we just completed was the first since the relevant data have been kept in which the economy did not grow and personal income and wealth did not rise.

There has been zero net job creation since December 1999. No previous decade going back to the 1940s had job growth of less than 20 percent. Economic output rose at its slowest rate of any decade since the 1930s as well....

And the net worth of American households -- the value of their houses, retirement funds and other assets minus debts -- has also declined when adjusted for inflation, compared with sharp gains in every previous decade since data were initially collected in the 1950s...

But beyond these dramatic ups and downs lies an even more sobering reality: long-term economic stagnation. The trillions of dollars that poured into housing investment and consumer spending in the first part of the decade distorted economic activity.

Capital was funneled to build mini-mansions in Sun Belt suburbs, many of which now sit empty, rather than toward industrial machines or other business investment that might generate economic output and jobs for years to come.

Women Breadwinners

According to the recently released Shriver Report, women comprise 50% of today's workforce. Is it time to strike up a chorus of "Sisters are Doin' it For Themselves?"

Well, maybe not. Women are making up more of the workforce because three-quarters of those laid off in the economic crisis have been men. Women continue to earn less for the same work as men. So perhaps companies are retaining their women instead of their men as a cost-saving measure, the way a corporation might move its operations to Mexico where wages are lower.

Canadian journalist Leah McLaren at the Globe and Mail writes:

Despite working harder and in greater numbers than ever before, women are still earning less than men in the same jobs over all and taking most of the responsibility for housework and child care.

In essence, the plight of women is like that old morale-boosting management trick: the no-compensation promotion (also known as the non-raise raise). It's all very flattering until you realize that you have just taken on twice as much work and responsibility for no extra pay or respect...

I'm not saying that men don't work hard – just that, when they do, they are much better at reaping the benefits of success. While men work toward outward status – the double brass ring of power and success – women tend to be driven by intrinsic reasons: duty, loyalty, the need to be “good.”

Joanne Lipman, the former deputy managing editor of The Wall Street Journal and editor-in-chief of Portfolio magazine, recently wrote an op-ed piece for The New York Times responding to the Shriver Report. In it, she revealed that, during her years as an editor, “many, many men have come through my door asking for a raise or demanding a promotion. Guess how many women have ever asked me for a promotion? I'll tell you. Exactly… zero.”

Individual Choices and the Free Market

I recommend Edward Harrison's article at Credit Writedowns. Lots of food for thought here, beginning with an argument against using the rhetorical tool of dehumanizing individuals with terms like "bankster" and "bureaucrat," Harrison goes on to ask some philosophical questions about the culpability of an individual in a large impersonal system like banking:

What blame could/should an individual like this bear for alleged predatory lending at Washington Mutual (I hate to pick on the employee in this example as her instincts seem to be in the right place)? If we individually make the wrong moral decisions, do we collectively risk a market failure like the one we saw in the recent spate of predatory lending? I think the answer is yes. But I also think it is difficult for one individual to make a difference in a system where the incentives go against doing the right thing. This is a major argument in favor of regulation.

The entire article is worth a read.

Food for Thought: A New Permanent WPA?

A University of Missouri-Kansas City economist is proposing a system of direct job creation to combat unemployment.

Direct job creation programs have been common in the US and around the world. Americans immediately think of the various New Deal programs such as the Works Progress Administration (which employed about 8 million), the Civilian Conservation Corps (2.75 million employed), and the National Youth Administration (over 2 million part-time jobs for students). Indeed, there have been calls for revival of jobs programs like VISTA and CETA to help provide employment of new high school and college graduates now facing unemployment due to the crisis.

But what I am advocating is something both broader and permanent: a universal jobs program available through the thick and thin of the business cycle. The federal government would ensure a job offer to anyone ready and willing to work, at the established program compensation level, including wages and benefits package. To make matters simple, the program wage could be set at the current minimum wage level, and then adjusted periodically as the minimum wage is raised. The usual benefits would be provided, including vacation and sick leave, and contributions to Social Security.

Being Broke By Any Other Name...

So the VEEP has apparently declared our current financial crisis a "Depression."

"My grandpop used to say: There was a suburb of Scranton called Minooka,” Biden explained in a speech.

“He said, ‘When the guy in Minooka's out of work, it's an economic slowdown. When your brother- in-law's out of work, it's a recession. When you're out of work, it's a depression.'”

So how does Biden view it? "Well, it's a depression. It's a depression for millions of Americans, through no fault of their own," he said.

Reporters and bloggers seem to be taking this as another example of Joe Biden putting his foot in his mouth because as we all know it's really a recession not a depression and anyway, the recession is actually over.*

For example Dan Weil at Moneynews.com writes:

"Vice President Joe Biden says the U.S. is in a depression, contradicting the view of virtually all economists, not to mention his own previous statements...Certainly, the U.S. economy shrank by 0.7 percent in the second quarter. Yet nearly all economists now forecast an expansion for the third quarter. Former Federal Reserve Chairman Alan Greenspan goes so far as to predict third-quarter growth of 3 percent... Economists, meanwhile, are coming to believe that the recession, great or not, has already have ended."

So here's my question: Do you care if it is a "recession" or a "depression"? As an individual in the economy, will it change anything if we label it with a word starting with an R or a D? And if the recession is, in fact, over has that made a difference in your personal financial situation and your life?

*A telling line in a CNN Money article on the difference between a recession and a depression written back in March explains: "Even though household net worth has fallen a record $11 trillion, or 18%, during the course of this recession, the broader economy can weather such a shock."

So the people are more broke than they have ever been since we started keeping records, but not to worry because the economy is in good shape. As long as "the economy" is happy...