Pew Report: The American middle class is shrinking & standards of living are slipping.

The American Middle Class Is Losing Ground
No longer the majority and falling behind financially

After more than four decades of serving as the nation’s economic majority, the American middle class is now matched in number by those in the economic tiers above and below it. In early 2015, 120.8 million adults were in middle-income households, compared with 121.3 million in lower- and upper-income households combined, a demographic shift that could signal a tipping point, according to a new Pew Research Center analysis of government data.¹

Read more »  PewResearchCenter

Britain ‘is experiencing same decline as Rome in 100BC’

By Sarah Knapton, Science Editor

Britain is experiencing the same decline as Rome in 100BC, with the collapse of civilisation inevitable, a scientist has warned.

Read more » The Telegraph

I am a cook in the US Senate but I still need food stamps to feed my children

By Bertrand Olotara

I work 70 hours a week doing two jobs but cannot make ends meet. Presidential hopefuls must make profitable federal contractors pay living wages

Every day, I serve food to some of the most powerful people on earth, including many of the senators who are running for president: I’m a cook for the federal contractor that runs the US Senate cafeteria. But today, they’ll have to get their meals from someone else’s hands, because I’m on strike.

I am walking off my job because I want the presidential hopefuls to know that I live in poverty. Many senators canvas the country giving speeches about creating “opportunity” for workers and helping our kids achieve the “American dream” – most don’t seem to notice or care that workers in their own building are struggling to survive.

I’m a single father and I only make $12 an hour; I had to take a second job at a grocery store to make ends meet. But even though I work seven days a week – putting in 70 hours between my two jobs – I can’t manage to pay the rent, buy school supplies for my kids or even put food on the table. I hate to admit it, but I have to use food stamps so that my kids don’t go to bed hungry.

Courtesy: The Guardian

Greece looks to China and Russia for help but cannot get around its euro zone partners

Running out of room

ALEXIS TSIPRAS, the Greek prime minister, and his radical Syriza party are beginning to feel the heat. Two months of bluster by Greece’s first left-wing government have failed to produce the results it wanted. Those include an injection of fresh cash from the country’s current €172 billion ($185 billion) bail-out programme, and a new deal with the European Union and the International Monetary Fund (IMF) that would allow Athens, not its creditors, to decide on future economic reforms.

Greece’s eurozone partners are still waiting for Athens to come up with details, promised two weeks ago, on the country’s deteriorating public finances. Mr Tsipras has promised Greek voters that Syriza has banned the hated “troika” of bail-out monitors (from the European Commission, the IMF and the European Central Bank) from Athens. To protect that political narrative, a team of mid-level officials from the three institutions sits ensconced in a four-star Athens hotel, gathering information by exchanging e-mails with their finance ministry counterparts. The ministry itself is strictly off-limits. “This system works quite well,” claims Dimitris Mardas, the budget minister. The visitors disagree, complaining about delays and inaccurate replies that could be avoided if they were allowed to meet Greek colleagues face-to-face.

‘Contingency plan’ needed for Greek eurozone exit – British govt

The UK is preparing for a possible Greek exit from the eurozone by taking measures to ensure British banks and companies are not exposed to risk.

Prime Minister David Cameron discussed plans to prepare the UK for a Greek exit from the eurozone with senior Treasury and Bank of England officials at a meeting on Monday.

They debated the possible impact an exit would have on markets and considered potential contingencies for the British businesses thought to be exposed to financial risk.

The meeting follows comments by the former chairman of the US Federal Reserve, Alan Greenspan, who told the BBC: “I believe [Greece] will eventually leave.”

Read more » http://rt.com/uk/230603-uk-begins-preparations-grexit/

Technology And the Threat of a Jobless Future

The Typical Millennial Is $2,000 Poorer Than His Parents at This Age

More young people are living in poverty and fewer have jobs compared their parents’ generation, the Baby Boomers, in 1980

By DEREK THOMPSON

The past is another country. In 1980, the typical young worker in Detroit or Flint, Michigan, earned more than his counterpart in San Francisco or San Jose. The states with the highest median income were Michigan, Wyoming, and Alaska. Nearly 80 percent of the Boomer generation, which at the time was between 18 and 35, was white, compared to 57 percent today.

Three decades later, in 2013, the picture of young people—yes, Millennials—is a violently shaken kaleidoscope, and not all the pieces are falling into a better place. Michigan’s median income for under-35 workers has fallen by 26 percent, more than any state. In fact, beyond the east coast, earnings for young workers fell in every state but Hawaii and South Dakota.

Read more » The Atlantic
Learn more » http://www.theatlantic.com/business/archive/2015/01/young-adults-poorer-less-employed-and-more-diverse-than-their-parents/385029/

Italy’s finance ministry gets egged by #socialstrike protesters

 

By Magan Specia

Protesters hurled eggs at the country’s finance ministry and scaled the sides of the Colosseum on Thursday as nationwide labor demonstrations heated up.

Students and union members were the driving force behind the demonstrations, rallying on Twitter under the hashtag #socialstrike.

Several were injured in in Padua where protesters clashed with police. The violence erupted when members of the march headed toward the local offices of Premier Matteo Renzi’s centre-left Democratic Party (PD).

Read more » Mashable
Learn more » http://mashable.com/2014/11/14/national-labor-protest-italy/

Swiss National Bank will cut interest rate to minus 0.25%

Switzerland’s National Bank (SNB) will bring in a negative interest rate cutting the value of large sums of money left on deposit in the country.

The Bank is imposing a rate of minus 0.25% on “sight deposits” – a form of instant access account – of more than 10m Swiss francs ($9.77m).

It is trying to lower the value of the Swiss franc, which has risen recently.

Russia’s market meltdown and a dramatic plunge in the oil price have led investors to seek “safe havens”.

The announcement sent the franc lower, and in early trading the euro was buying 1.2095 Swiss francs, fewer than the 1.203 it was worth before the news, just within the target.

Switzerland typically sees money flow in during economic uncertainty.

The new rate will be introduced on 22 January and will only affect banks and large companies who use the “sight account” to transfer funds quickly and without restrictions.

A negative rate means depositors pay to lend the bank their money.

Read more » BBC
Learn more » http://www.bbc.com/news/business-30528404

Is Germany Already Signalling The Complete (Economic) Collapse Of The European Union?

by Sprout Money

In an attempt to try to divert a looming economic stagnation in the European Union, some leading German and French economists have launched some plans to try to revive (read: ‘resuscitate’) the economy of the Eurozone by tackling two issues which might have deteriorated the economic situation in the currency bloc.

Enderlein, an associate at a German school of Governance and Pisani, member of a French think thank have announced some ideas focusing on solving the issue of the rigid French labor market and the lack of government spending on infrastructure projects in Germany. This could be the perfect time to push some of these ideas through as the next elections in both countries are still 2.5 years away which means there’s plenty of time to implement new measures and restoring the popularity of the politicians before the next elections.

Read more » Zero Hedge
Learn more » http://www.zerohedge.com/news/2014-12-14/germany-already-signaling-complete-economic-collapse-european-union

Japan’s economy makes surprise fall into recession

Japan’s economy unexpectedly shrank for the second consecutive quarter, leaving the world’s third largest economy in technical recession.

Gross domestic product (GDP) fell at an annualised 1.6% from July to September, compared with forecasts of a 2.1% rise.

That followed a revised 7.3% contraction in the second quarter, which was the biggest fall since the March 2011 earthquake and tsunami. Economists said the weak economic data could delay a sales tax rise.

Read more » BBC
See more » http://www.bbc.com/news/business-30077122

Canadian dollar sinks

 

Weaker loonie won’t save Canada’s low-skilled manufacturing sector, top economist says

By Greg Quinn, Bloomberg News

Canadian makers of goods such as dishwashers shouldn’t look to a depreciation of the nation’s currency to save their businesses, said Carl Weinberg, chief economist at High Frequency Economics.

Parts of Canada’s manufacturing industry will be wiped out by lower-cost Asian rivals, according to Weinberg, who said the country doesn’t have any competitive advantage when it comes to the business of bolting together cars and appliances from imported kits.

Read more » Financial Post
See more » http://business.financialpost.com/2014/10/02/weaker-loonie-wont-save-canadas-low-skilled-manufacturing-sector-top-economist-says/

30,000 Canadians are homeless every night

200,000 Canadians are homeless in any given year, national report says

By CBC News

Despite sporadic success in addressing homelessness in Canada, little progress has been made toward a permanent cross-country solution, says a national report into the extent of the problem.  The report’s initial numbers tell a grim story. Among the report’s findings:

At least 200,000 Canadians experience homelessness in any given year.
At least 150,000 Canadians a year use a homeless shelter at some point.
At least 30,000 Canadians are homeless on any given night.
At least 50,000 Canadians are part of the “hidden homeless” on any given night — staying with friends or relatives on a temporary basis as they have nowhere else to go.

Read more » CBC
See more » http://www.cbc.ca/news/canada/30-000-canadians-are-homeless-every-night-1.1413016

 

Mass protest in Italy

Italy job reforms: CGIL union organises mass protest

A mass protest is being held in the Italian capital, Rome, against Prime Minister Matteo Renzi’s plans for labour market reform.

The turnout for the rally, organised by the largest union, the CGIL, was put at up to one million.

Mr Renzi has backed plans to loosen labour protection and make it easier for firms to fire workers.

The protesters are angry in particular at job prospects for the young – youth unemployment is at a record 44.2%.

Susanna Camusso, head of the CGIL, told the crowds: “We want work for everyone, and work with rights. This is a demonstration for those without work, without rights, those who suffer, who have no certainties for the future.”

Read more » BBC
http://www.bbc.com/news/world-29771540

Conversation Between Noam Chomsky, Paul Craig Roberts and Rob Kall part 1– the future of capitalism

Conversation Between Noam Chomsky, Paul Craig Roberts and Rob Kall part 1– the future of capitalism

By Rob Kall

Excerpt;

NC: Well the first point to mention is that we’re very far from a capitalist economy and have never been one — it’s a state capitalist economy with substantial state intervention that, in many respects from basic research and development to manipulating interest rates to determining the laws that administer regulations that permit CEOs to pick their own boards and hence to enhance their salaries, and thousands of other ways. What’s the future of it? That depends on how the public will respond to the circumstances in which there are. I mean, there is an institutional logic which will perpetuate things in a certain direction, but it is not graven in stone. It has been in the past, and can be in the future, influenced, modified, even radically changed by public engagement and action. And there’s no way to predict that — those are matters for action not for speculation.

Rob: OK, Paul?

PCR: Well I think that’s a very insightful view of it. All I would add is that in more recent years, the private interest groups seem to have taken control of the government. Wall Street, Military Security Complex, Agribusiness, the extractive industries — their campaign donations elect the House, the Senate, the President, and they then write most of the bills that Congress passes and the President signs, so it’s a form of state capitalism in which the capitalists seem to have the upper hand.

I think that greed has run away with them to such an extent that they have let it undermine the domestic economy on which they themselves depend. For example, they greatly increased profits in managerial or executive performance bonuses by offshoring so many of the middle class jobs, not only the manufacturing jobs but the professional tradable service jobs, such as software engineering, research, design — these things have left, or a large percentage of them, and it erodes consumer purchasing power. The middle class is damaged, the kids who graduate from university expecting jobs find that jobs are offshored, they’ve got debts, increasingly the big retail box stores just offer part-time employment — you can’t form a household on one of those jobs. You can’t get married, buy a house. You have to work two of those jobs, some people three. There are no benefits, no pension. The years of zero interest rate, in order to save the big mega banks, have caused the retired element to have to draw down their savings because they don’t get any interest income, and so inheritance for children is disappearing. And so the whole system has become a house of cards.

Massive debt/money creation is not matched by the increase in real goods and services. As Chomsky said, interest rates are rigged, the gold price is rigged, the stock market is a bubble, the dollar is a bubble — in a way it’s a house of cards. And the power of the United States rests, to a substantial extent, on the dollar being the world reserve currency. And yet, when you create massive new dollars to support quantitative easing but the goods and services don’t increase, you worry the whole world about their dollar holdings. And then you step in and threaten other countries with sanctions? That gives them an incentive to leave the dollar payment system, which means the demand for dollars drops.

So, I think the whole thing is a house of cards and that change could come from a substantial collapse that simply totally discredits the elites from both parties; and some kind of collapse of that extent would give room for the sort of thing Noam mentioned — that people could get back in and be determining factors in the process and some kind of new leadership could arise.

Read more » OpEdNews
Learn More » http://www.opednews.com/articles/Transcript-Conversation-B-by-Rob-Kall-Capitalism_Climate_Greed_Predatory-Capitalism-140928-11.html

Anger grows as wages soar for health-care CEOs while services cut for patients.

Kathleen Wynne must clean up home-care mess: Hepburn

Workers on the front lines of health care are angry that executive salaries are soaring while vital health services are silently slashed.

By: Bob Hepburn

She sits in her car and cries after telling a war veteran suffering from Parkinson’s disease that she can’t approve visits by a nurse to his home to give him the insulin he needs.

Read more » The Star

Neoliberalism has brought out the worst in us

An economic system that rewards psychopathic personality traits has changed our ethics and our personalities

By Paul Verhaeghe, theguardian.com

We tend to perceive our identities as stable and largely separate from outside forces. But over decades of research and therapeutic practice, I have become convinced that economic change is having a profound effect not only on our values but also on our personalities. Thirty years of neoliberalism, free-market forces and privatisation have taken their toll, as relentless pressure to achieve has become normative. If you’re reading this sceptically, I put this simple statement to you: meritocratic neoliberalism favours certain personality traits and penalises others.

There are certain ideal characteristics needed to make a career today. The first is articulateness, the aim being to win over as many people as possible. Contact can be superficial, but since this applies to most human interaction nowadays, this won’t really be noticed.

It’s important to be able to talk up your own capacities as much as you can – you know a lot of people, you’ve got plenty of experience under your belt and you recently completed a major project. Later, people will find out that this was mostly hot air, but the fact that they were initially fooled is down to another personality trait: you can lie convincingly and feel little guilt. That’s why you never take responsibility for your own behaviour.

On top of all this, you are flexible and impulsive, always on the lookout for new stimuli and challenges. In practice, this leads to risky behaviour, but never mind, it won’t be you who has to pick up the pieces. The source of inspiration for this list? The psychopathy checklist by Robert Hare, the best-known specialist on psychopathy today.

George Carlin – Why You Are In Debt

Courtesy: YouTube

1 million workers across the UK walk off their jobs to protest pay and pension cuts in the nation’s largest strike in decades

Public sector strikes hit schools and services around the UK

Hundreds of thousands of people have taken part in rallies and marches across the UK as part of a day of strike action by public service unions. Teachers, firefighters and council workers joined the strike, which follows disputes with the government over pay, pensions and cuts. Thousands of pupils were affected as some 6,000 schools in England closed, the Department for Education said.

Read more » BBC
http://www.bbc.com/news/uk-28240683

 

The biggest threats to American workers

By Rick Newman

A century ago, roughly one-third of U.S. workers toiled in agriculture. Now just 1.5% do. Yet agricultural output has skyrocketed, and the United States, after feeding itself, has plenty of food left over to export.

That explosion in agricultural productivity is considered a crowning achievement of 20^th-century capitalism. Yet a similar trend that may now be underway in manufacturing and even the service economy isn’t viewed with the same reverential awe. Instead, the rise of robots and computers in place of workers looms as one of the great challenges in capitalism’s next century.

Read more » Yahoo News
https://ca.finance.yahoo.com/news/the-biggest-threat-to-american-workers-162716201.html#more-id

Empty wallets explain new levels of partisan hatred

By Rick Newman | Daily Ticker

A new study by Pew Research verifies much we already know about political extremism in America: It’s getting worse and interfering with social and economic progress. The big question is: Why?

Pew doesn’t address that question, but here’s a plausible answer: Voters are becoming angrier because living standards are falling and the middle class is shriveling. Prosperity breeds comity, but when it gets harder to get ahead, the natural inclination is for the losers to look for somebody to blame and the winners to feel more threatened. That’s been going on for nearly 30 years. Income inequality began to worsen in the United States starting around the early 1980s.

Read more » Yahoo News
https://ca.finance.yahoo.com/blogs/daily-ticker/empty-wallets-explain-why-democrats-and-republicans-hate-each-other-191155158.html

The jobs don’t pay enough and the rents are insane. Now New York City’s young add student loans to their misery

Young and in Debt in New York City

Student Loans Make it Hard to Rent or Buy a Home

By NATALIE KITROEFF

For young people, moving to New York City hasn’t made much mathematical sense for decades. The jobs don’t pay enough, the internships don’t pay at all, and the rents are prohibitive by any sane standard.

But now add a new economic fact of life to that list: soaring student loandebt. More students are taking out bigger loans than ever before, and in the last 10 years alone, education debt tripled, reaching over $1 trillion. A record number of college students are graduating knee deep in a financial hole before they begin their adult lives.

Still, new research suggests that college is working, economically. Four years on campus nets the average graduate almost twice as much in wages as someone without a degree. Those odds may be comforting in the long run, but not when you’re young, deeply in debt and trying to nest in New York City.

Read more » The New York Times
http://www.nytimes.com/2014/06/08/realestate/student-loans-make-it-hard-to-rent-or-buy-a-home.html?smid=tw-nytimes&_r=0

European Central Bank hurls cash at sluggish euro zone economy, seeks to force bank lending

FRANKFURT (Reuters) – The European Central Bank launched a raft of measures on Thursday to fight low inflation and boost the euro zone economy, cutting rates, imposing negative interest rates on its overnight depositors and offering banks new long-term funds.

By John O’Donnell and Eva Taylor

FRANKFURT (Reuters) – The European Central Bank launched a raft of measures on Thursday to fight low inflation and boost the euro zone economy, cutting rates, imposing negative interest rates on its overnight depositors and offering banks new long-term funds.

The ECB cut all its main rates to record lows in a drive to fight off the risk of Japan-like deflation and bring down the euro’s exchange rate. For the first time, it will charge banks 0.10 percent for parking funds at the central bank overnight.

It stopped short of large-scale asset purchases known as quantitative easing for now, but ECB President Mario Draghi said more action would come it necessary.

Draghi outlined a four-year 400 billion euro ($544.86 billion) scheme giving banks that have been holding back credit due to looming stress tests an incentive to increase lending to businesses in the euro zone.

“Now we are in a completely different world,” Draghi told a news conference, citing “low inflation, a weak recovery and weak monetary and credit dynamics”.

The package, adopted unanimously, was aimed at increasing lending to the “real economy”, he said.

Other steps included extending the duration of unlimited cheap liquidity for euro zone banks, injecting about 170 billion euros by stopping tenders that withdrew funds spent on past government bond purchases, and preparing for possible future purchases of asset-backed securities to support small business.

Read more » MSN
http://money.ca.msn.com/investing/news/breaking-news/ecb-hurls-cash-at-sluggish-euro-zone-economy-seeks-to-force-bank-lending

Income Inequality in Canada

Canada gets a “C” grade and ranks 12th out of 17 peer countries.
Income inequality in Canada has increased over the past 20 years.
Since 1990, the richest group of Canadians has increased its share of total national income, while the poorest and middle-income groups has lost share.

Read more » http://www.conferenceboard.ca/hcp/details/society/income-inequality.aspx

Bill Gates: People Don’t Realize How Many Jobs Will Soon Be Replaced By Software Bots

Big changes are coming to the labor market that people and governments aren’t prepared for, Bill Gates believes.

Speaking at Washington, D.C., economic think tank The American Enterprise Institute on Thursday, Gates said that within 20 years, a lot of jobs will go away, replaced by software automation (“bots” in tech slang, though Gates used the term “software substitution”).

This is what he said:

“Software substitution, whether it’s for drivers or waiters or nurses … it’s progressing. …  Technology over time will reduce demand for jobs, particularly at the lower end of skill set. …  20 years from now, labor demand for lots of skill sets will be substantially lower. I don’t think people have that in their mental model.”

He’s not the only one predicting this gloomy scenario for workers. In January, the Economist ran a big profile naming over a dozen jobs sure to be taken over by robots in the next 20 years, including telemarketers, accountants and retail workers.

Gates believes that the tax codes are going to need to change to encourage companies to hire employees, including, perhaps, eliminating income and payroll taxes altogether. He’s also not a fan of raising the minimum wage, fearing that it will discourage employers from hiring workers in the very categories of jobs that are most threatened by automation.

More » Business Insider
Read more: http://www.businessinsider.com/bill-gates-bots-are-taking-away-jobs-2014-3#ixzz2zHqj2cOH

BBC – Brazil police strike ends in Bahia amid troop deployment

Police in the state of Bahia in north-eastern Brazil say they have voted to end a two-day strike over pay after accepting an improved government offer.

They said they accepted salary increases ranging from 25% to 60%, according to Brazil’s G1 news portal.

On Wednesday, elite police units and armed soldiers were deployed to the state to restore order amid a hike in the number of murders and other crimes.

Shops were also looted in the capital, Salvador, following the walkout.

Brazil’s third-largest city is due to host six matches during the football World Cup, which begins in June.

Following their vote to end the walkout, the protesting officers were seen on local TV celebrating what they said was a “victory”.

Their decision came a day after a federal judge ruled the dispute illegal and ordered the striking officers to return to work or their union would face fines.

‘Unacceptable’

State officials said 39 people have been killed in and around Salvador since the strike was announced, a much higher figure than normal.

The labour dispute also prompted car robberies and looters to pillage supermarkets, electronics stores and other shops, as police stayed away in defiance of the court order.

Many shops, schools and universities remained closed, and fewer buses circulated in Salvador after drivers refused to go to work for fear of being attacked.

Read more » BBC
http://www.bbc.com/news/world-latin-america-27074277

Britain’s looming energy crisis

Over the last weeks and months, concerns about energy have become more and more widespread in Britain. Firstly the simmering controversy over “fracking” has become more prominent, with a series of demonstrations pushing this issue into the public eye. Then the pledge of Ed Miliband that the next Labour government will freeze energy prices was met with howls of protest from the coalition parties and threats by the energy companies that “the lights will go out”. In addition, the announcement that Britain will build the first new nuclear power station for decades has been overshadowed by the attempt to close the Grangemouth oil refinery. The question has to be asked: is Britain facing a serious energy crisis?

Read more » http://www.marxist.com/britains-looming-energy-crisis.htm

‘March for dignity’: Thousands arrive in Madrid to protest govt austerity

88 injured, 29 arrested in Madrid as anti-austerity march turns violent

Protesters clashed with police in Madrid as thousands of people trekked across Spain to protest austerity which they claim is destroying their country. Under the banner “no more cuts!” the protesters called for an end to the government’s “empty promises.”

Police arrested at least 29 protesters following the clashes which took place after the march. According to emergency service, 88 people were injured – 55 of them police, El Mundo newspaper reports.

Protesters were seen throwing stones and firecrackers at police. According to witnesses, officers used tear gas to disperse the demonstrators.

Clashes broke out during a final speech at the demonstration when protesters tried to break through a police barrier. Riot police took charge by beating protesters with batons, AP reported.

“The mass rally was coming to an an end when reportedly a group of younger protesters, who had masks on their faces, started throwing rocks at the police. Police tried to push them away from the parameter that they organized around this area,” RT’s Egor Piskunov reported from Madrid.

Read more » http://rt.com/news/spain-protest-cuts-crisis-509/

Thousands march in Argentina for higher wages

BUENOS AIRES (AFP) – Thousands of workers marched in Argentina’s capital Wednesday seeking to double the minimum wage to cope with sky-high inflation.

Prices have been rising steadily in recent months particularly since January, when the peso shed 18 per cent of its value against the US dollar.

Workers with the Argentine Workers Federation representing teachers and government workers marched on the landmark Plaza de Mayo square and the Casa Rosada government house.

Union chief Pablo Micheli said the workers were seeking a minimum wage of 9,000 pesos (S$1,447 per month) – more than twice the current minimum of 3,600 pesos a month.

Read more » ST
http://www.straitstimes.com/breaking-news/world/story/thousands-march-argentina-higher-wages-20140313

Strikes in Greece as austerity deal proves elusive

By DEREK GATOPOULOS

ATHENS, Greece (AP) — A 24-hour strike by civil servants disrupted public services in Greece on Wednesday as the government struggled to hammer out a deal on further austerity measures with international creditors.

Thousands of protesters attended rallies in Athens and other cities, while civil servants penciled in another 48-hour strike on March 19-20.

In central Athens, cleaning staff fired by the finance ministry marched holding up buckets and mops, and a group of school teachers chained themselves to railings in front of parliament.

“I feel like I’ve been dumped in the trash,” said Nikos Kikakis, a suspended 59-year-old high school headmaster who is due to be laid off this month and joined the protest at the parliament. “I have worked for 26 years in public service, and have no hope of finding a job now.”

Read more » Yahoo News
http://news.yahoo.com/strikes-greece-austerity-deal-proves-elusive-090617286–finance.html

The Dominant Economic Model of the 21st Century: Pain and Suffering for — Almost — All

Truthdig / By Chris Hedges

March 3, 2014  |  This article originally appeared on TruthDig.com, and is reprinted here with their permission.OXFORD, England—The morning after my  Feb. 20 debate at the Oxford Union, I walked from my hotel along Oxford’s narrow cobblestone streets, past its storied colleges with resplendent lawns and Gothic stone spires, to meet  Avner Offer, an economic historian and Chichele Professor Emeritus of Economic History.Offer, the author of “ The Challenge of Affluence: Self-Control and Well-Being in the United States and Britain Since 1950,” for 25 years has explored the cavernous gap between our economic and social reality and our ruling economic ideology. Neoclassical economics, he says, is a “just-world theory,” one that posits that not only do good people get what they deserve but those who suffer deserve to suffer. He says this model is “a warrant for inflicting pain.” If we continue down a path of mounting scarcities, along with economic stagnation or decline, this neoclassical model is ominous. It could be used to justify repression in an effort to sustain a vision that does not correspond to the real world.Offer, who has studied the rationing systems set up in countries that took part in World War I, suggests we examine how past societies coped successfully with scarcity. In an age of scarcity it would be imperative to set up new, more egalitarian models of distribution, he says. Clinging to the old neoclassical model could, he argues, erode and perhaps destroy social cohesion and require the state to engage in greater forms of coercion.

“The basic conventions of public discourse are those of the  Enlightenment, in which the use of reason [enabled] us to achieve human objectives,” Offer said as we sat amid piles of books in his cluttered office. “Reason should be tempered by reality, by the facts. So underlining this is a notion of science that confronts reality and is revised by reference to reality. This is the model for how we talk. It is the model for the things we assume. But the reality that has emerged around us has not come out of this process. So our basic conventions only serve to justify existing relationships, structures and hierarchies. Plausible arguments are made for principles that are incompatible with each other.”

Offer cited a concept from social psychology called the  just-world theory. “A just-world theory posits that the world is just. People get what they deserve. If you believe that the world is fair you explain or rationalize away injustice, usually by blaming the victim.

“Major ways of thinking about the world constitute just-world theories,” he said. “The Catholic Church is a just-world theory. If the Inquisition burned heretics, they only got what they deserved. Bolshevism was a just-world theory. If  Kulaks were starved and exiled, they got what they deserved. Fascism was a just-world theory. If Jews died in the concentration camps, they got what they deserved. The point is not that the good people get the good things, but the bad people get the bad things. Neoclassical economics, our principal source of policy norms, is a just-world theory.”

Offer quoted the economist  Milton Friedman: “The ethical principle that would directly justify the distribution of income in a free market society is, ‘To each according to what he and the instruments he owns produces.’ ”

“So,” Offer went on, “everyone gets what he or she deserves, either for his or her effort or for his or her property. No one asks how he or she got this property. And if they don’t have it, they probably don’t deserve it. The point about just-world theory is not that it dispenses justice, but that it provides a warrant for inflicting pain.”

Read more » Alternet
http://www.alternet.org/economy/dominant-economic-model-21st-century-pain-and-suffering-almost-all