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Saturday, October 22, 2011

The Financial Lives Of The #OccupyEverywhere Demonstrators


I am not a card carrying member of that dismal science, Economics, in fact I received a stunningly inflated mark of 49% for my Economics exam in HSC (Year 12). Inflation, I knew what it was, but I didn't know what it was, as in the current rate (it was about 15%). I was more the poetic type economist than the strictly scientific one. As No1 son pointed out a few years ago, almost every Nobel Prize winner for Economics has had his theory debunked not long after, so not sticking to the alleged science was probably the correct option, however it made me a failure in the eyes of the scientific examiners - sob, sob. Not.

But after reading an article by a bona fide Economic Scientist - here - damning "post modern" [sic], which is to say Keynesian, thinking, that is, the method of stimulating the economy by giving people money to spend that allegedly saved us from the Great Depression, I got to - look out everybody - thinking.

Quote:
Perhaps it does take someone from outside the economics profession to state the obvious. The stimulus packages that were applied across the world, failures each and every one of them, were applied in the name of Keynes. Why, then, did these stimulus packages not work?
Endquote.

There is no-one further from the Economics profession than E@L, so here goes.

~~~~~~~

Is it true that people are saving and not spending? Or is that people have no money to spend? Except on the evil iPhone! (Not me, I'm off to buy a new Samsung phone, this one is three months old.) Many people are just frackin' poor. Money goes on food on rent and servicing their enormous personal debt (and staples like cigarettes and alcohol). It was the easy money offered by credit cards that fueled the personal crises of many and then up comes new, free, money for the banks from the exorbitant interest rates these people struggle to pay. This is where their money goes, not into saving. (I know people in this situation.) And they're not even reducing any of this debt as the interest rates keep slugging them back to max-out each month.



And so many have no jobs. Some can't work thanks to work-induced debilitation, or from psychological problems (I know people in these situations - we all can't be high-flying execs like E@L). Some just don't have the appropriate skill-set, inclination, intelligence (it's true), ability and personalities to work in offices, to wait tables, to flip burgers even (how many new McD's required to soak up the unemployed?) . Much of the physical work in factories and dark satanic mills have gone - well not gone, but moved overseas. Skilled labour is under threat too. In Geelong (my home town in Victoria) the other week, almost every one I saw on the street was wearing the fluoro-yellow vest of a tradie. A tradesman. Brickies, carpenters, electricians, roofies, etc.. They were the brash, loud (violent too) men of an economy that's not doing too bad despite having good unions that protect worker's rights and incomes.

But look here, in Singapore and throughout the Middle-East as well,: who are doing all these tradie jobs? The economies may be coming back after the hit of 2008/9, but It is South-Asians - Indians and Sri-Lankans - Cambodians, Vietnamese and Chinese mainlanders who are sitting on the backs of tray-trucks, or waiting for them, squatting by the road-sides next to sky-scrapers-in-progress. These exploited, these wretched-looking, desperate men who clamber up the concrete and steel without qualm, are paid much less than the previously doing-well thank you Singaporeans builders. And many of those Singaporeans, forced out by cheaper labour, are now driving taxis (which explains their skills and attitude!) And the price of the hundreds of these cheaply inexpensively built apartments hasn't dropped, but sky-rocketed.

Looking at the USA, it seems that low-skilled (nice pejorative term, I note - you know that show where supercilious managers struggle and fail to do the tasks of their "low-skilled" minions? Ha!) jobs went with the factories to Asia, South Asia, China and Africa. And those jobs that didn't and can't be automated go to low-paid immigrants, some illegal. And this is the corporations strategy to maximize their profits, it is not some scheme by Mexicans and others to overthrow that good ole white American frontier spirit.

Not to mention the chronic addiction to automation and robot-ization in many parts of what we used to call work. When flying QANTAS domestic, (when they are flying, and I won't go into the domestic disputes caused by that Irish Ryan-Air twit who is trying to take apart and out-source our national airline) you do your own check-in, get your own boarding pass, put the tags on your own baggage and load it onto the conveyor belt. There is no-one there. The player pianos have taken over.

More about Player Piano


And with the unemployment benefits scheme cutting out after, what is it six months (Bill Clinton if I am not mistaken), people who remain unemployed just drop off the list and don't get counted anymore.

Quote:
They're shutting down the factory now,
Just when all the bills are due.
The fields are under lock and key
But the rain and sun shine through."
Leonard Cohen: Coming Back To You
EndQuote.

Small farmers are forced off the land by mega-farms who undercut the prices so they can't make a living. Monsanto makes the rest buy hybrid seeds that are sterile and seeds for next year must be purchased not taken form stored gain from last years crop.

To me it seems obvious. Corporations are squeezing for increased profit, as this means increased share prices and this is where the real money is to be had, in the financial world, in the stock exchanges. And as everyone in the #OccupyEverywhere campaigns is showing, the huge payouts to execs are just such a blatant rubbing of shit in of the faces the middle and lower classes, it is aggravating to the tipping point of the anger and frustration, such as they are now demonstrating. Demonstrations are not just for demonstrating against things, sometimes they are just demonstrating (showing) how people feel.

The way to may increase profits is to improve workers' productivity, or to reduce the cost of labour. There is the Wal-Mart Way - just pay shit money. Of course the Waltons girls are now amongst the richest humans (if you can call them that) on earth. Productivity. Love it.


Another way to increase productivity is create ways for fewer workers do the same amount of production - shedding jobs. Automation etc.

Yet another way is make the employees work harder, duh, and increase their output, but after 30 years of this squeeze effort, can much more be done? Health issues, stress and injury, workers have to leave, can't get new employment because of this history and because of my second comment and eventually slip off the employment radar... Pusjing the limits pushes people over the top.

Fourth way: go offshore, pay Asian workers a pittance - double the daily wages of the factory workers in Shenzen and your iPhones (and Samsungs) would cost $2 more (well, maybe $2 divided by the number of products they so productively produce per day). Plus there is the benefits of not paying corporate tax at home, not that the US corporate tax could go any lower (it is half what it was under Reagan, or close, I remember reading somewhere, The Economist?). And so now we hear stories of crippling injuries and horrendous hours of work and child labour coming out of Shenzen (not to mention that pollution that drifts over Hong Kong thanks to un-policed emission standards).

We choke, they die, you have Siri.

~~~~~~~~

Of course all of this is off the top my head, which is why I failed my Economics exam. However, I was (am) passionate, if not poetic, about the people affected by the decisions made by governments under the advice of economists whose theories are about to be blown away. By economists who have a fundamentally flawed view of how the world works.

More about The Financial Lives of the Poets


~~~~~~~~

I always of think of Economics in the terms of people, not of markets, not of institutions.

People are not no spending because have no money. In debt, unemployed and with an about to be repossessed house, what money? It seems much simpler to me than stimulus packages that rescue those financial people and ensure their huge payouts continue by making more and more people un- and underemployed, un- and underpaid.

An nice semi-socialist proposal - put staff and workers on the other side of the economic equation:

Capital income + employee income = revenue - cost of materials

"We might note that while employees and the community are left to the protection of the invisible hand, wealth is protected by the visible hand of government and corporations."

Marjorie Kelly - The Divine Right Of Capital

~~~~~~~~

Ah, it's not what I know, it's what I feel.

E@L

[Shit, I think my revisions here have made my arguments even weaker and more confused - as if that were possible.]

15 comments:

Tim Footman said...

Marx's analysis of the essential flaws of capitalism was bang on; unfortunately the alternative he formulated didn’t work either. I don't mind people going through the motions with capitalism, on the basis that it's probably the least shitty way to organise a complex society *THAT WE'VE THOUGHT OF YET*; but when politicians and bankers and economists start claiming with quasi-religious fervour that the market is some kind of perfect system that will last unto eternity, I really want to bumrape them with Ayn-Rand-shaped dildos, before melting their bonuses down into gold baseball bats and beating seven shades of reality into the bleating simpletons.

expat@large said...

Thought you'd come up with a better Leonard Cohen quote than mine!

An arm-chair socialist (as I've been called by a bunch of libertarians who were taking liberties with my whiskey at the time) like me would argue that Marxism has not been seriously implemented without the personality cults of Stalin and Mao.

And it's very polite of you to make the effort to go through that illiterate, typo-laden and ellipsis-ridden shambles of a post which I am just about to make an effort to tidy up without rolling your eyes at my incompetence. Or at least not telling us that you rolled you eyes at my incompetence, which no doubt you did (and should have)...

marke said...

I have the feeling capitalism is rapidly trundling in the wrong direction, with the huge corporations getting bigger, takeovers (really merging) etc.

Logical endpoint? One big company running everything. Then it (capitalism) ain't working anymore.

We need rules! (well, more of em - the only reason it has worked to the point it has are the rules we do have) Those who push for less regulation and “free capitalism” (and incidentally, free markets) are interested only in their own profit.

And did you ever wonder why top execs get paid so much and get huge bonuses even when they f*** up? Read the letter the sacked CEO says brought about his dumping:

http://graphics8.nytimes.com/packages/pdf/business/20111018/letter-text.pdf

That’s what you are investing in when you buy shares.

DanPloy said...

It is not any economic system that is flawed, it is the people that are part of it.

Laudable though your efforts are to talk up the under-classes the fact is they are as greedy as the bankers and the CEOs, they just don't have the opportunity.

But swap their roles and the actions and results would be the same. Your equation will not work, there is no negative feedback. Open loop systems do what open loop systems do, they go unstable. Greed, profit, call it what you will, is a positive feedback system which is even worse. But no-one wants to work for the same money year in, year out even if their costs are the same. That just emphasises the futility of life.

Genetic engineering for all (and would you trust that!) or an apocalypse is the best solution.

Give it time and mankind will bring one about anyway.

expat@large said...

Any attempt to mold people to fit a political, economic or even religious preconception is going to have trouble. People are what they are, true. What we would all prefer to see is a disinterested (non-corrupt) democratically elected government (one that can be voted out) enacting regulations that not only protect the self-interests of the poor from the self-interests of rich and provide a balance. With the open slather the self-interested rich have had lately (i.e. since Reagan, they've always had it easy) the balance has shifted too far one way. Similarly, the balance been between the real economy and the financial economy.

Apocalypse?

Any political, economic, or religious dictatorship that requires death on a large scale to achieve success, as in the perfectibility to mankind to its theoretical gold-standard, is not going to get my vote.

A great book on the futility and ensuing evil of such millenarian thinking is Black Mass by John Gray.

expat@large said...

Rest my case:

http://www.nytimes.com/2011/10/21/business/wal-mart-cuts-some-health-care-benefits.html

How can you have a "real" job and still be poor? Take a job at Walmart. Did anyone follow my link to the billionaires in the Waltons family?

marke said...

When I was a young, Queensland based, Joh Bjelke Petersen supporting, extremely right wing, but very poor, farm boy, I used to think the illogical, extortional tactics of the worker unions were appalling, and were destroying the country.

Now, thirty years of big business experience later, I realize that they were only (somewhat unsuccessfully) balancing out the rapacious greed and sense of entitlement that exists at the top, in that unholy alliance between business and government .

marke said...

"....Fourth way: go offshore, pay Asian workers a pittance - double the daily wages of the factory workers in Shenzen and your iPhones (and Samsungs) would cost $2 more ..."

A comment. These people are very happy to have a job. If we suddenly paid them western wages, their jobs will disappear.

With a workforce I was managing in Indonesia, I basically tried to give 15 to 25% pay rises (in the face of fairly high inflation too) year on year over a period of 5-6 years while I was in that position, at least trying to improve everyone’s life each year, whilst also ensuring they had a job.

Of course, that cannot go on forever, there has to be gradual sliding back of these increases, and a gradual increase in efficiency to remain competitive (not just with the West, but also with other competing low-cost regions).

Another real problem with that sort of approach, more senior local managers expected the same percentage rise as the lowest paid workers, when they were earning more by a factor of 10. ie, a pay rise that was more than the lowest level guy was earning, and raising his family on.

In regard to that last point, this is exactly what is happening in our society too.

Skippy-san said...

This a pretty cogent analysis . Too bad none of our Galtian overlords in America will believe it. They just blame the shit wages on the workers for being lazy. Just read any of the "53 percent" bullshit you see floating around . Just because regulated capitalism performed better than state regulated economies- it does not follow that totally unregulated capitalism will perform better than regulated capitalism. In fact it's just the opposite - a race to the bottom.

But are dipshit teabaggers can't look at the facts.

Carl Parkes said...

You, my friend, are a brilliant writer.

expat@large said...

OMG - Carl, you are still alive!

expat@large said...

Marke: regarding low wages in third-world, I saw a brilliant piece of "performance economic" (that's what he called it) type art. I may have blogged about it on the old blog.

He had some shirts made in the Philippines in a Korean free trade region (i.e. not control by Philippine government whatsoever regarding wages, pollution, etc... but a minimum of worker's rights - some but a minimum) He wanted to follow the process of how the cost is added to the raw product and its social implications of this added value. From the pittance the seamstresses get to the manager of the factory, he interviewed all. They were paid shit; the seamstresses not even enough to buy food, forever put onto short-term contracts to avoud even those minimum rights - no holidays would accrue, no accident insurance etc... Why work there then? The factory manager was paid crap as well, so he got the largest part of his income from bribes off the rubbish collection companies.

Shambles. The shirts cost our artist ~ $15 from raw material to finished product. He actually sold them in a store in Singapore - for $200! (Which gave the purchaser access to the website with 200hrs of videos of those interviews.)

The factory was doing poorly because clothing companies were moving their production to Bangladesh in order to save a couple of $s per shirt.

expat@large said...

Maybe it was less than $15, I didn't keep his explanatory handout.

marke said...

E@l, it is an amazing world ... logic is not a requirement for senior management.

Electronic companies have up and shifted from here (Indonesia) to China and Vietnam because of "excessive labour cost increases".

Ignoring the fact that a few cents at the bottom (to the people who were actually making things) is lost in the millions of dollars being paid at the top in "performance bonuses". (Yep, the bonuses I was getting too...but not the millions, I was only a small fish).

It is really more about some manager maaking his powerpooint look meaningful so he cous be seent to be "visionary". When he's wrong, no-one blames him, some other "visonary" makes the brilliant decision to move back.

No-one says "Hey, weren't we right here ten years ago???"

marke said...

Skippy saysitall her (in far less workd thatn my usual effort)...(and it is warth repeating!):

"Just because regulated capitalism performed better than state regulated economies- it does not follow that totally unregulated capitalism will perform better than regulated capitalism. In fact it's just the opposite - a race to the bottom."

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