Tuesday, December 16, 2008

The permanent adolescence of the CATO institute

I'm responding to this ridiculous post by a CATO institute guy, which tries to sum up the problems of Keynesianism. Of course it is also making the rounds on the usual blogs and lists (like the Austrians). And as I watch it, I can't help but ask: Does he really believe that the reason we are saying government spending should increase it to "improve growth?" I'm all for improved growth, but in the present moment I think the belief is that it will stave off a collapse. On the other hand, in the long run it could be useful for the average worker to have more money--you know, just something more than the 450:1 ratio of the average CEO pay to the average worker pay. But I doubt a plan as radical as that would find many backers there.

Then he makes this fantastic ploy to prove the "logical fallacy" Keynesianism: "The government can't put money into the economy without taking money out of it." The money, as in Keynes' time is first of all raise through the same sorts of loans we've already been taking out--mostly from abroad. I'm always puzzled by how reactionary these tracts can get when they want to: it's a global economy when we're shipping jobs overseas but the inflow of capital from abroad is completely impossible when it's funding government spending.

Then he acts as if "slicing the pie differently" would be, in itself, a bad idea--as if having no pie at all would be a better alternative.

In addressing Keynes argument about the division between savings and investment, he basically denies facts on the ground: money *does* sit idle. What this basically advocates is letting rich people keep their earnings sheltered during a time of crisis--where they neither have an inclination to expose it to the "gales" of creative destruction through investment or are asked to pitch in to help at least keep the rest of the country alive during the crisis. This is where Keynes' chapter on "long run prospects" seems most pertinent: the "animal spirits" of investors are dulled and, if we are to be dependent on them for all forms of social production, these spirits must be lifted. How is this supposed to happen? Consumers have no money to spend and potential business customers (the "dept II" he conveniently leaves out of his equation) see the lack of confidence and spending. He gets uppity because Keynesian wants to get money out of banks and into the economy--but, he says, if you give it to consumers they will probably just save it anyway--as if people would, in large numbers, rather sock away their income than pay for food and--especially today--shelter.

The whole point of making the economy a national issue is getting money into the hands of the average person so that they can meet their basic needs through cash-based commodity consumption. "The Economy" is not separate from that (as his nifty graphic shows). This is essential to the economy: you can't have businesses produce things without workers or consumers, however much these titans would wish they could (or try to get around it by outsourcing.)

Throughout the video this is the real anxiety. We may ask, "Why are we supposed to give all our money to the capitalists instead of the government?" Our good CATO interlocutor promises, "Because they will rationally invest it--not like those irrational investors who, anyway, were only led astray by tiny government programs." And if they don't? If none of these magical small businesses that are supposed to replace the industrial economy of yore crop up? If all of them that do are ridiculous dot.com pyramid schemes that workers invest time and energy only to have their future employment and pensions evaporate with the shell companies that were set up? Well just sit and wait: the capitalists will eventually get around to it: they're busy helping build up the Chinese economy. When the US population has been properly disciplined (to accept third world wages, benefits, and labor rights) they'll be back to exploit the people who haven't died off. Hold your horses...geez.

His final argument about why Keynesianism is so popular is classic: he says it is used only because politicians like to spend other people's money. Is this guy trying to parody himself? Obviously there are actual academics who believe in this policy: they have data too. More than that, there is this pretention that all these decisions are being taken by elite members of society rather than resulting from popular pressures. It is a strange kind of populism that acts as popular pressure doesn't exist. I'll agree that it is being decided by elite members of society--but so is neo-liberalism.

And, far from it being something Marxists or even radical leftists would see as a step forward, those who are paying attention know exactly who this will benefit in the long run. Capitalism is prone to terrible crises. It is an inherently unstable system--a quality that people on this site seem to see as generally laudable. If only it wasn't so often paired with the pesky pressure of democracy--of all the rabble wanting to "eat" and "live" while obviously serving no purpose in society since they aren't being paid (enough) by capitalists--well then it would likely work out fine. The little nugget this video fails to mention were the forces pushing for outright fascism (then seen in very different light) or full communism. Roosevelt was not just working with fancy abstractions that tailored, tenured CATO baffoons can scrape out of the (Keynesian inspired) data: he was trying to stave off a popular revolt to right totalitarianism or left wing radicalism. Businesses and the US government realized this as well hence, as Staughton Lynd chronciles, legislation was sponsored to recognize unions and collective bargaining:
It was the hope of those sponsoring this legislation that strikes would decrease. In the short run, strikes increased and took the more militant form of sit-downs. But the national government stuck to its strategy of benevolent neutrality. It is as if the government consciously took its chances on militancy in order to be sure of forestalling radicalism. At some point (whether before or after the governmental initiative seems still unclear), a part of the American business community endorsed this cooptive strategy and independently implemented it. (37)
He gives the example of United States Steel, which recognized their unions even before the US government mandated it as they realized this was the best way to stifle the revolt. For Lynd, this is exactly what it did, mostly killing off the radicalism that threatened American business.

If we were to look at Keynesianism in truth, it would be in the post-war economy, which, even then was largely based on an impressive set of new, imperial strategies. Still, it is a more reasonable place to look for when Keynesianism was succeeding--and when workers wages were far better than they are today in real terms. For many radicals--such as the economist and former editor of the Monthly Review, Harry Magdoff--this represented not a challenge to capitalism, but it's saving grace. On the whole, nothing was changed in terms of the class structure of production, just its distribution. And even that only looks desireable in retrospect. It certainly isn't the best we can do. More importantly, for the entire post war period--and more so today--the bulk of government spending (aside from payments on the debt itself and social security obligations) goes towards military spending.

As John Stewart wondered last week, why do libertarian minded folks “trust government with tanks and nuclear weapons, but not to pass out cheese to poor people." It doesn't seem to make sense but judging from the frenzy of activity on the topic of the great depression (as opposed to the hangover we still have from much larger build up of the "military industrial complex" there is little principle involved other than making sure people who have the bulk of the money today come out on the other side of this crisis with their wealth intact. How that happens is a mystery, but they seem to be banking on bailouts with no takebacks--once again confirming the permanent adolescence of the capitalist consciousness.

Wednesday, December 10, 2008

Investors flock to zero percent treasury bills (and what Keynes would say about it)

I saw this story this AM and thought it an interesting example of what's going on at the moment.

NY Times, December 10, 2008
Investors Buy U.S. Debt at Zero Yield
By VIKAS BAJAJ and MICHAEL M. GRYNBAUM

When was the last time you invested in something that you knew wouldn't make money?

In the market equivalent of shoveling cash under the mattress, hordes of buyers were so eager on Tuesday to park money in the world's safest investment, United States government debt, that they agreed to accept a zero percent rate of return.

This got me thinking DeLong's essay earlier this week. People parking assets in zero percent treasury bonds is a good example of what DeLong says of the major hang up in the
world economy at the moment:

[Default Discount] and [Liquidity Discount] together can only account for [$3 trillion of the $20 trillion] decrease in market value. The rest of that decline in the value of global capital — all $17 trillion of it — thus comes by arithmetic from (5): a rise in the risk discount. There has been a massive crash in the risk tolerance of the globe's investors.

Thus we have an impulse — a $2 trillion increase in the default discount from the problems in the mortgage market — but the thing deserving attention is the extraordinary financial accelerator that amplified $2 trillion in actual on-the-ground losses in terms of mortgage payments that will not be made into an extra $17 trillion of lost value because global investors now want to hold less risky portfolios than they wanted two years ago.

[. . . .]

Our models predict that in normal times, with the ability to diversify portfolios that exists today, the risk discount on assets like corporate equities should be around 1% per year. It is more like 5% per year in normal times — and more like 10% per year today. And our models for why the
risk discount has taken such a huge upward leap in the past year and a half are little better than simple handwaving and just-so stories. Our current financial crisis remains largely a mystery: a $2 trillion impulse in lost value of securitized mortgages has set in motion a financial accelerator that we do not understand at any deep level but that has led to ten times the total losses in financial wealth of the impulse.

In reading this I was reminded of John Maynard Keynes' discussion of the role of investors in the economy--and of relying on investors for the economy to prosper. In Chapter 12 of his General Theory of Employment, Interest and Money he speaks about the need for "spontaneous optimism" which he terms "animal spirits" for anything to get done. This is akin to the "irrational exuberance" that Greenspan spoke of in the late 1990s. I don't know if this is similar to what Friedman, in his new book, discusses in terms of a "green bubble" to restart investment. In the latter case, I think there would have to be some role for the federal government--and in any case, it is funny to think that all the talk about rationality in markets is overlooking their most important characteristic: irrationality. I thought this passage from Keynes was useful so I'll leave off with it.

Section VII

Even apart from the instability due to speculation, there is the instability due to the characteristic of human nature that a large proportion of our positive activities depend on spontaneous optimism rather than on a mathematical expectation, whether moral or hedonistic or economic. Most, probably, of our decisions to do something positive, the full consequences of which will be drawn out over many days to come, can only be taken as a result of animal spirits—of a spontaneous urge to action rather than inaction, and not as the outcome of a weighted average of quantitative benefits multiplied by quantitative probabilities. Enterprise only pretends to itself to be mainly actuated by the statements in its own prospectus, however candid and sincere. Only a little more than an expedition to the South
Pole, is it based on an exact calculation of benefits to come. Thus if the animal spirits are dimmed and the spontaneous optimism falters, leaving us to depend on nothing but a mathematical expectation, enterprise will fade and die;—though fears of loss may have a basis no more reasonable than hopes of profit had before.

It is safe to say that enterprise which depends on hopes stretching into the future benefits the community as a whole. But individual initiative will only be adequate when reasonable calculation is supplemented and supported by animal spirits, so that the thought of ultimate loss which often overtakes pioneers, as experience undoubtedly tells us and them, is put aside as a healthy man puts aside the expectation of death. This means, unfortunately, not only that slumps and depressions are exaggerated in degree, but that economic prosperity is excessively
dependent on a political and social atmosphere which is congenial to the average business man. If the fear of a Labour Government or a New Deal depresses enterprise, this need not be the result either of a reasonable calculation or of a plot with political intent;—it is the mere consequence of upsetting the delicate balance of spontaneous optimism. In estimating the prospects of investment, we must have regard, therefore, to the nerves and hysteria and even the digestions and reactions to the weather of those upon whose spontaneous activity it largely depends.

We should not conclude from this that everything depends on waves of irrational psychology. On the contrary, the state of long-term expectation is often steady, and, even when it is not, the other factors exert their compensating effects. We are merely reminding ourselves that human decisions affecting the future, whether personal or political or economic, cannot depend on strict mathematical expectation, since the basis for making such calculations does not exist; and that it is our innate urge to activity which makes the wheels go round, our rational selves choosing between the alternatives as best we are able, calculating where we can, but often falling back
for our motive on whim or sentiment or chance

.

PS: if anyone is interested in doing a little reading, there is a reading group on Keynes _General Theory_ going on at both DeLong's blog and at Marginal Revolutions, the blog of a GMU econ professor: http://www.marginalrevolution.com/marginalrevolution/2008/12/general-theory.html

Friday, December 05, 2008

Bolivia, lithium

BBC had a story about the largest known lithium deposits in the world. They are found in Bolivia, where environmental and world historical concerns are keeping the supply from being exploited. If only the writers of the latest Bond movie had known this they could have focused on a real set of future concerns rather than rehashing an old scenario through what was basically an imperialist lens (i.e. British agent necessary to help the poor Bolivians). More here.

Thursday, December 04, 2008

FCC spectrum changes: Cell Phone Companies vs. free public WiFi

Over the Thanksgiving holiday, I had the opportunity to use one of these fancy new iPhones--two of them, actually. They really are amazing little pieces of technology--though I confess that, when holding one, my first question was what I should do with it. I didn't need to call anyone and I had little inclination to look something up on the web. Being with other people, surfing the web or watching videos seemed a little anti-social--though during the holidays, being anti-social is a very practical defense mechanism. Since I was mostly in homes that had upwards of 2 different internet connected computers--usually closer to 3 or 4--or well within a few hundred yards of a terminal I could access if really necessary, the idea that it was imperative to have this gadget to get something done was mostly the result of advertising hype and the experience of the technological sublime--only instead of being horrified, you're just smitten. I know I could do it on that computer over there, but it is so much cooooler to do it on this one. In any case, after handling the thing for a few minutes, I could understand why the apps are so popular (and why Apple likes to highlight them in its commercials): it gives you something, anything, to do with the thing. It makes it a use value, one, according to my wife, that you MUST have.

We'll be putting off that kind of purchase for a while. We could probably afford to buy the phone--it is, after all, the holidays--but getting service for it (or one of the similar devices like the Sprint network's Instinct) would double our monthly cellular bill for the indeterminate future. Within a year the $300 phone would have cost us an additional $600 in phone bills. I suppose that is an expense we are really supposed to be able to overlook for the tremendous power we are given by the AT&T or Sprint networks. Recent advertisements have highlighted this--both competing to claim they have "The Nation's Fastest 3G network."

This is important because, it seems, anyway, the network is somewhat separate from the devices themselves. Yes they are phones, so having a phone service is useful. But they are basically handheld computers that are being plugged into the already computer-saturated lifeworld of the contemporary, North/Western bourgeoisie. I noticed this as I was trying to search using the iPhone, in one of these computer hotspots, and it offered to connect me to two of the local WiFi networks. I confess I don't know exactly how this works or what degree of functionality the device would have using only this kind of connection--I suppose that's why I'm encouraged by ads to think mostly about the 3G network speed. Still, it seems feasible that you could buy the device--which is still less than even the cheapest laptop--and not connect it to Sprint, AT&T or whoever was the proprietary owner of the network service for that device (a problem in itself, as far as I'm concerned.)

This got me thinking about these devices in relation to another big story in the news--the switch to digital TV, which will leave wide swaths of public airwaves open for future use, determined in part by the rules the FCC will decide later this month. The future of communications networks, especially in relation to the role the current incumbents will play, will likely be determined by rules made before Christmas.

The current proposal, which is championed by Republican (!) chairman Kevin Martin (who will be replaced when Obama takes office) is similar to the plan advocated by a venture capital firm M2Z, which includes CEOs of Google. It would require whoever wins the spectrum auction to provide free WiFi access at a speed of at least 768 kbps downstream. According to ars technica, over ten years it would provide service to 95% of the US population. On the downside, the proposal says it would also have to include some sort of filtering mechanism to keep out the pron, an almost unworkable feature, which, of course, will likely the be death knell of the whole proposal as it is implemented. Still, The Washington Post overplays the resistance of the plan for this reason, citing Ben Scott from the communication activist org Free Press as if he is an opponent of the plan on free speech grounds (I don't have any word from Scott on this either way, but the Free Press statement of support for the plan says nothing about these issues.)

The real opponents are some current incumbents (which the Post says "question whether investors are willing to create the needed infrastructure for free Internet access in the recession-hit economy) as well as T-Mobile, which claims free WiFi will interfere with its ability to use the spectrum it just bought in 2006.

Google, on the other hand, is a very vocal advocate of the plan--and for good reason. In 2006 it launched a free WiFi service in San Francisco and later filed three patents related to the provision of free, but advertiser supported, WiFi (the patents related to being able to subsidize the service using geo-specific, user-oriented advertising on a dynamic browser platform that would change based on the above specifications. It has long been building a network of not only WiFi but wired capacity, as reported in 2005:

For the past year, it has quietly been shopping for miles and miles of "dark," or unused, fiber-optic cable across the country from wholesalers such as New York's AboveNet. It's also acquiring superfast connections from Cogent Communications and WilTel, among others, between East Coast cities including Atlanta, Miami, and New York. Such large-scale purchases are unprecedented for an Internet company, but Google's timing is impeccable. The rash of telecom bankruptcies has freed up a ton of bargain-priced capacity, which Google needs as it prepares to unleash a flood of new, bandwidth-hungry applications.
I don't know the status of this infrastructure, but I do know that Verizon's chairman got pissed off about it shortly afterwards, though he phrased it as if the problem was Google using existing lines. Here the issue was basically one of net-neutrality--he wanted Google to pay extra to use the internet. At the moment Google seemed poised to create it's own network, bypassing these majors. It's recent patent filing on "Flexible Communication Systems and Methods" seems to confirm that this is eventually its intent, especially with regard to the somewhat fabled (though evidently in existence for almost six weeks now) Google Phone.

Google’s filing describes cellular, WiFi and WiMAX networks as all being potential routes, with the technicalities invisible to the user; their example is a mobile handset that works on home WiFi then seamlessly transitions to a WiFi hotspot or cellular network when outside.
As WIRED put it, this could kill off cell phone contracts as we know them. Interestingly, the GooglePhone is currently supported by T-Mobile, the company rejecting the current FCC proposal.

In relation to the FCC wireless WiFi bid, however, this seems to make sense. If you had a device that could move from cellular network to WiFi hotpot--which, though I admit I'm not exactly clear on the technology, the iPhone seems to be able to do--then using the 3G network would be just one way to use this device. Of course this is not just about internet service: as VOIS services--and even free video chatting via services like Skype--have shown, the internet is more efficient at providing phone service than the phone companies. If this is true of land lines, why not cell phones? Sure, the iPhone is marketed as if the nifty thing about it is that it could provide internet access at your fingertips--the cool thing about Blackberries, etc. as well. But this supposes that it is just a layer of gravy that you pay extra for in your cellular phone bill. What if the device, using free (even if ad supported) WiFi, was able to provide not only Internet capabilities, but phone service? Evidently, this idea is not lost on Google (or T-Mobile) as in NYT's review of what could be called the "Google Phone" they explicitly mention it:

Google insists that its store will be completely open. Unlike Apple, it will not reject software submissions if they don’t serve the mother ship’s commercial interests. For example, Apple rejects programs that would let you make phone calls over the Internet, thereby avoiding using up cellular airtime. Google and T-Mobile swear they would permit such a thing
This would create an incredible devalorization of the investments Sprint, AT&T and others have sunk into building these networks--but it would also erase two of my most significant monthly costs--cell phone and Internet service (I no longer pay for a land line). This is especially significant since it would likely reduce my costs while giving me more services. I know that is the promise of modernity and the supposed productivity revolution technology is claimed to catalyze, but neither of these are usually the goal of capitalist organizations.

Google is certainly one of these organizations, but it seems more able to look at the long term as a space of new possibilities rather than simply amortizing investments and raking in profits. I keep waiting for the other shoe to drop--for Google to announce that, from here on out, they will begin to "do evil." As for who would pick up the tab on this public WiFi or its infrastructure, especially, as the Post speculates, "in a recession-hit economy:" Nancy Pelosi, the Representative of California's 8th district, where Google has had much trouble getting a proposed free-wifi system launched, has proposed that building this infrastructure be part of the bailout plan. If this sounds socialistic, it should be noted that, as NPR reported earlier this week, the US is well behind most countries in Europe, where WiFi provision is much cheaper and infrastructure publicly subsidized.

In any case, the possibility of this framework for communication is there and the devices are probably well within reach. A big piece of the puzzle about the future of wireless communication in the US is the way the legislation is written to allow Google and its venture capitalist pals to use this area of the spectrum for broadband--oh and whether the legislation favors incumbent providers or not.

Interestingly, AT&T--which could have much to lose--favors the Martin proposal, as does Verizon, which famously tried to scuttle a public WiFi system in Phili a few years back; while Google phone partner T-Mobile opposes it. So much for seeing clearly where these lines of interest are drawn (I'm sure someone with more information on the background relationships could help me understand it). In the meantime, I'm most taken by the fact that the two most established industries of spectrum use--TV and radio--seem only as involved in resisting the plan as Broadway theatres. Again, the supposed reason for this is that the use of the white space for anything else would cause potential interference. I'm more partial to Martin's claim that the real interference they fear is with their business model:
“We’re being very cautious about protecting the broadcasters, but at the same time making sure the technology allows us to make greater use of this invaluable resource,” Mr. Martin said. He added that he thought some opponents, like the broadcasters, were fighting the proposal because they were unnerved by the rise of interactive tools that offered a less passive media experience. “The empowerment of consumers is threatening,” he said
On this point, I am forced to recall Michael Power, the former FCC chair, and to say that I too hastily judged him. He was in charge of trying to push through the ownership changes that led to a broad public backlash in 2003--an event which formed the backbone of Free Press' advocacy and sits as a central event in Robert McChesney's The Problem of the Media. At the time, I thought Powell was being cavalier and somewhat utopian when he claimed that the FCC had little Constitutional right to regulate spectrum because,
Moreover, unique scarcity as a justification for lesser constitutional protection for broadcasters is demonstrably unsupportable. Technology makes ever more efficient use of spectrum. Broadcast channels are continually increasing. Cable, internet, and VCRs provide an untold number of outlets for speech. We must admit to these realities and quit subverting the Constitution in order for the government to be free to impose its speech preferences on the public. [. . . .] The fact is that spectrum is not really scarce. It may actually be infinite, dependent only on advances in technology that can make ever-increasing efficient use of it.... Perhaps, it is uniquely abundant rather than uniquely scarce.

At the time I didn't doubt the technological possibilities--and still don't--but the institutional possibilities within the current media oligopoly. Here I think the major difference between the way principled libertarians and principled leftists see the relationship between the state and the market is that "freedom" in libertarian terms is always mediated by the immense power of control over monetary resources. I still basically believe that as well (and the proposed changes could just as easily lead to the kind of concentrated, media monopoly, Google(dis)topia that all of us should fear), but I suppose Powell is sort of being proven right in the sense that these changes are taking place so rapidly it is hard to retain a monopoly. So increases in technology may, indeed, allow for more space for competition--and that could have undermined the concentration that would have followed the 2003 changes he advocated. 2003 is ages ago in terms of the media (there was no bittorrent, at least in widespread use; no flash video; etc.). It is hard to imagine what would have happened had the public protest not prevented those changes taking place. Still, in so far as the new changes might make that more efficient spectrum available for other uses, Powell has been vindicated in what appears, in retrospect, as a principled stand. Only time--and the Dec. 18 FCC meetings--will tell just how true this is. Like the iPhones and Google Phones that will likely pop up if the changes are approved, after that it will be up to the rest of us to figure out what we're going to do with it.

Wednesday, October 29, 2008

laborer, worker, employee

While reading the first chapter of Keynes General Theory, I came across this sentence:

Now the assumption that the general level of real wages depends on the money-wage bargains between the employers and the workers is obviously not true.

I guess I shouldn't say I just came across it: it pretty much outlines the greater part of the argument he's making. I was somewhat surprised to find that the greater part of the text is devoted to the question of involuntary unemployment. I thought that the latter was mostly a canard that was meant to counter Friedman's brand of liberalism, but it appears that this was already central to the marginal movement before Keynes' day.

Of course, in exploring whether unemployment is voluntary, we have to assume that all employment is voluntary--or that the wage contract is, anyway. This was a hotly contested issue in the US at around the time Keynes published his general theory and it is quite interesting to see that liberal economists have come up with no better defenses for the capitalist system than existed in the early 20th century, despite it going through enormous changes. In a way, it gives me a great deal of respect for R. H. Coase because, although he was evidently committed to the creed till the end, his early empirical work--i.e. his essay on "The Firm"--seems unique in this tradition for trying to evaluate these enormous industrial firms using the creed itself.

In any case, in reading Keynes', I noted that the word he uses to describe workers is, well workers. Or "Labour." The latter is a more British formation and the former is still often used in US speech today to talk about people who work for other people. But since all these terms inevitably sound Marxist or at least leftish, I started wondering about the term "employee." It is a more formal term and seems somewhat more washed of the political baggage the other two contain. More than that, it places the "worker" and "employer" in a relationship of interdependence: The employee is employed by the employer. It makes the Durkheim argument about the division of labor seem accurate.

I don't really know what the origins of it are, but according to the OED, "employer" or "imployer" has been around, in English, since at least the turn of the 17th century. "Employee" however, doesn't appear until the mid 1800s--about 1850. Here is the entry:

a. A person employed for wages; =EMPLOYÉ, which it has now virtually superseded. b. (nonce-use.) Something that is employed.

1850 L. H. GARRARD Wah-To-Yah xii. 172 Horses and mules..were here herded, by their employees. 1854 THOREAU Walden iv. (1886) 113 They take me for an employee. 1879 TOURGEE Fool's Err. xxxv. 241 Their commands are..obeyed by the..employees. 1886 A. MORGAN in Lit. World (Boston, U.S.) 15 May 172/1 The supines of Shakespeare outnumber the employees of most authors. 1891 Pall Mall Gaz. 23 Oct. 2/1 To arrange a forty-eight hour week for the few binders, while retaining the fifty-four hours for the bulk of the employees. 1906 Daily Chron. 9 May 5/5 ‘I don't like this affectation of “employee”,’ observed Judge Addison, in the Southwark County Court. ‘I prefer English words.’ 1909 Ibid. 15 Dec. 1/3 The employee shares in the company are 50,000 of £1 each. 1928 Britain's Industr. Future (Lib. Ind. Inq.) III. 141 The stimulation of employee-ownership under schemes of profit-sharing and investment by employees. 1954 J. A. C. BROWN Soc. Psychol. Industry iii. 84 The supervisors of high production groups were those who were..more employee-centred.

The inflections here--"I prefer English words" and "schemes of profit-sharing and investment"-- suggest the French word from which it was taken, employé, which seems to have a slightly longer history, at least in English use:

One who is employed. (In Fr. use chiefly applied to clerks; in Eng. use gen. to the persons employed for wages or salary by a house of business, or by government.)

1834 O. P. Q. in Spectator 22 Nov. 1112/2 An old bankrupt employé of the Empire.
1848 MILL Pol. Econ. I. ix. §2. (1876) 87 Connecting.. the interest of the employés with the..success of the concern. 1860 GEN. P. THOMPSON Audi Alt. III. cii. 4 No representations against a Government employé shall be entertained. 1862 Macm. Mag. July 257 All these employées should be women of character. 1879 G. C. HARLAN Eyesight v. 64 In Italy, all railroad employés are subjected to rigorous examination.
Here, the pattern, basically, is that it is used to describe workers who are employed in government and, later, in corporations. The sense above of "schemes of profit-sharing and investment" is actually crucial to J. S. Mill's use of the term, which is obviously influenced by his experience as an "employee" of the British East India Company, where he spent most of his life as what might be called a PR clerk. The term comes from his Principles of Political Economy, and follows a section where he recommends "production on a large scale" be promoted in much the same fashion as a joint-stock company, such as his current employer. Overall, he says, these are an excellent model--save the problem of inefficient management, which he notes Adam Smith was concerned about. Here, he basically enunciates a philosophy of business that is still around today: that the people at the top are of superior intelligence and discipline to keep themselves--and everyone below them--on task; hence their very, very fat paychecks:

Adam Smith fixed his observation too exclusively on the superior energy and more
unremitting attention brought to a business in which the whole stake and the whole gain belong to the persons conducting it; and he overlooked various countervailing considerations which go a great way towards neutralizing even that great point of superiority.

Of these one of the most important is that which relates to the intellectual and active qualifications of the directing head. The stimulus of individual interest is some security for exertion, but exertion is of little avail if the intelligence exerted is of an inferior order, which it must necessity be in the majority of concerns carried on by the persons chiefly interested in them. Where the concern is large, and can afford a remuneration sufficient to attract a class of candidates superior to the common average, it is possible to select for the general management, and for all the skilled employments of a subordinate kind, persons of a degree of acquirement and cultivated intelligence which more than compensates for their inferior interest in the result. Their greater perspicacity enables them, with even a part of their minds, to see probabilities of advantage which never occur to the ordinary run of men by the continued exertion of the whole of theirs; and their superior knowledge, and habitual rectitude of perception and of judgment, guard them against blunders, the fear of which would prevent the others from hoarding their interests in any attempt out of the ordinary routine.


And in the case of both this class of professional managers and anyone below them, there were ways to incorporate them into the enterprise such that the self interest that was supposed to make them function as enterprising little workers in the free market would still be brought to bear in the large corporate structure: namely, stock options. The introduction of the latter is what prompts his use of the term "employé." The employee, in other words, is one who is incorporated into the corporation by making its interests their own.

It must be further remarked, that it is not a necessary consequence of joint stock management, that the persons employed, whether in superior or in subordinate offices, should be paid wholly by fixed salaries. There are modes of connecting more or less intimately the interest of the employés with the pecuniary success of the concern. There is a long series of intermediate positions, between working wholly on one's own account, and working by the day, week, or year for an invariable payment. Even in the case of ordinary unskilled labour, there is such a thing as task-work, or working by the piece: and the superior efficiency of this is so well known, that judicious employers always resort to it when the work admits of being put out in definite portions, without the necessity of too troublesome a surveillance to guard against inferiority in the execution. In the case of the managers of joint stock companies, and of the superintending and controlling officers in many private establishments, it is a common enough practice to connect their pecuniary interest with the interest of their employers, by giving them part of their remuneration in the form of a percentage on the profits. The personal interest thus given to hired servants is not comparable in intensity to that of the owner of the capital; but it is sufficient to be a very material stimulus to zeal and carefulness, and, when added to the advantage of superior intelligence, often raises the quality of the service much above that which the generality of masters are capable of rendering to themselves.

So, much in the way that I suspected, the term employee was used to talk about the interdependence of employees on employers and their mutual employment in the firm. However, somewhat surprisingly, from nearly the beginning of the use of the term it has referred to a particular class of workers in a firm: those who are given a share of the profits via stock options of some kind. Note, that as Mill goes down the labor hierarchy--from the managers to unskilled laborers--the method of using money to make them work shifts. The unskilled laborer isn't given stock options, he is given the option to do piece work, which Marx called, "the most fruitful source of reductions of wages and capitalistic cheating." Yet the effect of both the piece wages and stock options is to incorporate the worker or employee into the concerns of the efficient production of profits for the corporation:

In England this system is characteristically called the “sweating system.” On the other hand, piece-wage allows the capitalist to make a contract for so much per piece with the head labourer-in manufactures with the chief of some group, in mines with the extractor of the coal, in the factory with the actual machine-worker — at a price for which the head labourer himself undertakes the enlisting and payment of his assistant work people. The exploitation of the labourer by capital is here effected through the exploitation of the labourer by the labourer. [7] Given piece-wage, it is naturally the personal interest of the labourer to strain his labour-power as intensely as possible; this enables the capitalist to raise more easily the normal degree of intensity of labour. [8] It is moreover now the personal interest of the labourer to lengthen the working-day, since with it his daily or weekly wages rise. [9] This gradually brings on a reaction like that already described in time-wages, without reckoning that the prolongation of the working-day, even if the piece wage remains constant, includes of necessity a fall in the price of the labour. [. . . .] The wider scope that piece-wage gives to individuality tends to develop on the one hand that individuality, and with it the sense of liberty, independence, and self-control of the labourers, and on the other, their competition one with another. Piece-work has, therefore, a tendency, while raising individual wages above the average, to lower this average itself.
The mechanisms that Mill describes, and that are implicit in the use of the term "employee" are basically a restatement of the lessons that Mill likely learned at the hands of his childhood tutor, Jeremy Bentham. Namely, that the most efficient organization is one in which the worker polices himself.

I don't know exactly how this relates to the French bureaucratic origins that this term; but Bentham himself is evidence enough that the strict division between laissez-faire and the absolutist, bureaucratic state was never all that apparent to the people at the top advocating both. In this, the major difference in Bentham and Mill is that one advocated a stick and the other a carrot, respectively. According to L. J. Hume in his article "Jeremy Bentham and the Nineteenth-Century Revolution in Government" (The Historical Journal, Vol. 10, No. 3.)

Bentham provided first for the systematic arrangement of his functionaries in a hierarchy based on the line of authority or command, and in which all authority, all power of direction, flowed downwards from the legislature to successive levels of subordinates. Within the hierarchy, he sought to establish, at all levels, 'the completeness of the necessary mass of responsible power, together with the exclusion of all irresponsible exercise of power.' Subordinates' adherence to the legislature's instructions, and their acceptance of the limits to their power imposed by the legislature, were to be enforced through a chain of responsibility and liability to punishment (buttressed in turn by the administrative procedures which Bentham devised to detect and to prevent malpractice) that extended back to the legislature. Characteristically, the functions, the chain of command, and the arrangements for enforcing responsibility and punishing malfeasance were to be prescribed by legislature's instructions, and their acceptance of the limits to their power imposed by the legislature, were to be enforced through a chain of responsibility and liability to punishment (buttressed in turn by the administrative procedures which Bentham devised to detect and to prevent malpractice) that extended back to the legislature. Characteristically, the functions, the chain of command, and the arrangements for enforcing responsibility and punishing malfeasance were to be prescribed by law. (367)

The "employee" here, in the guise of the government functionary was supposed to be limited by law and governed by the legislature. And, in its broad strokes, this seems to be largely what, internally at least, would be necessary to have a large company function. Instead of laws, there would be company policies and, as in Bentham's system, where

He saw that in the ordinary course of administration functionaries must face choices between different lines of action, and that they must make the choices without specific guidance from the legislature. Thus he noted the existence of functions 'mutually competitional or say antagonistic. . .as to which, on this or that occasion, option may require to be made, by the appropriate functionary as to which of them exercise shall. ..be given to'. Again, he conceded that it would on occasions be necessary to permit subordinate officials, on their own judgement, to adopt emergency measures running counter to or lying outside the permanent law of the land. His analysis of this problem revealed him as equally concerned to provide authority for such action and to prevent its abuse. (368)
The ability to make independent choices is what supposedly makes the joint-stock model more efficient. But anyone who has worked for a large corporation knows that, except for a few people near the top, one's range of independent action is fairly limited; choices must be run past superiors and, in the event that they are not, one must be able to justify them according to company policy.

The Public Choice argument that this is impossible to do in government unless one introduces market mechanisms into its structure represents the supposed partition of these two traditions: at roughly the same moment that Foucault started writing about governmentality. The argument went that, the government employees have their own self interest in mind and if the mechanisms of government aren't set up so that they can satisfy them, well they are sure to figure out a way to use those mechanisms to profit from their position in another way. The early 1980s saw James Buchanan entering the British civil service and trying to elaborate his utopia on the British public.

Fast forward to 2001, when much of Buchanan's philosophy was more apparent in the total deregulation of, for instance, the energy and finance industries in the US. There is no need to chronicle the effects of this extensively (Enron being the quintessential example), but just to note that, as a result, the US Congress passed the Sarbanes Oxley Act which, more or less, made it mandatory that the heads of corporations be able to verify their financial statements: in other words, it made it mandatory for the managers--the geniuses at the top of Mill's organization--to know what was actually going on in their organizations: to be so confident in it that they would stake their reputation on it. In other words, the market mechanism that was supposed to keep the whole structure of management in line had failed: it was necessary to have the Benthamite Law come in and "Stick" it to them.

Now I'm getting off on a tangent, but it is worth noting that, all those employee stock options: well they might have helped keep some of the "employees" at the bottom in line, but the ones at the top...not so much. In the end, Enron culminated in the upward distribution of wealth and employee stock options ended up being worthless. The Smartest Guys in the Room ended up gaming the system so that they could retire in style while their subordinates, who had worked much more dutifully in the interest of the company, "rode the stock to the bottom" along with the rest of the shareholders. So much for market discipline.

Tuesday, October 28, 2008

Education for life

One of the predominant dispositions of the habitus of intellectuals is illuminated the unenlightened with what seem to be counter intuitive views--observations of fact which go against what conventional wisdom would assume to be the case. In fact, one could say that this is the first trick performed by anyone trying to claim legitimacy for their interpretation of the world. Hence the 9/11 truth movement depends on its legitimacy for some twist in what is supposedly a settled case. The difference being that, since it remains marginal (and since it basically has only one trick), it can only concentrate on amassing data to support its case, pushing for support of its case.

The fact that there is not much else to its interpretation of the world (if Bush did it, why? What would this mean down the road? If all these thousands of government workers collaborated with them in perpetrating the fraud, how can we understand what led them to do so? In short, so what?) would place it in a precarious position if conventional wisdom were overturned. It actually acts as a sinkhole for all radical ideas about society--especially those which would talk about the banal violence of the everyday functioning of our culture--so that, to the hegemonic view, all marginal ideas are marginal because they are fragile, ignorant, or despicable.

The more acceptable, and totalizing, intellectual narratives work with a similar sleight of hand in their more public observations. And, like the 9/11 truth movement, they work by using a selective filter (an odd move for totalizing narratives, but whatever works.) Hence it is a commonplace of libertarian views on economics that, since everything must be done through the free market, nothing that is done directly except for working towards the more efficient functioning of commodification, privatization, and accumulation through the profit motive. Cherry picking, for instance, government regulations that produce the opposite effects is a favorite--chief amongst them being minimum wage requirements which, according to marginal economists and those of a more radical Austrian bent, inevitably increases unemployment.

I'll lay this canard to one side for the moment. The point is that, if the only way to approach social good is through the market, that is the only way to achieve social good. Oh yes--we forgot about that premise: social goods can be achieved efficiently through the market. It's easy to leave that out because it is basically just something brought in as window dressing for its apologetics of the status quo. It basically says that we can't choose social benefits or goods directly: instead, if they are something that everyone values (which, supposedly, social goods should be) the market will provide them. This is, of course, based on an assumption that everyone is rational, fully informed, and at least mildly motivated by the future effects of their choices. Polluting water and air; poisoning the food system with antibiotics; killing your customers with cancer; working employees to their breaking point; allowing yourself to be exploited to the detriment of your health and well being: these should be impossible externalities which the long run benefits of capitalism would eventually undermine, just, as Richard Epstein and others claim, child labor was eventually eliminated (though, according to them, the law was useless: the market provided!)

The point, in other words, is that the only directed activity should be the profit motive: these external costs should be figured into the prices of the commodities and activities you undertake. In weak cases, the omniscient, omnipotent force that helps determine, allocate, collect, and distribute the proceeds of this tax is something like the state; in extreme versions, it can only happen through the voluntary participation of the market: if it doesn't happen there, well then I guess it isn't a problem after all. In any case, taking direct action to create some social good is generally seen as failed before it begins. Social goods--the rising quality of living in general--cannot be proscribed: they can only be created, like black lung or repetitive stress injuries, as externalities to the voluntary, profitable contracts of private individuals in the market.

There is, of course, something to be gained by seeing the logic behind this system. Cass Sunstien has made a good career of trying to square the peg of his mildly liberal (in the post-war, Keynesian sense) disposition with the atomistic cubicles of Chicago School legal and economic theory. If this theory remained marginal, it could simply spin its counterintuitive logic and provide a source of cautionary information about previous regulatory attempts. However, since it assumes the totality of human society is either the product of 1) human nature; 2) the natural market economy, i.e. the interplay of atomistic nodes of human nature on a larger canvas; or, the source of all complication and distortion of the above: the government--it cannot actually conceive of the forces that have made it possible for it to assume these things and still seem rigorous and rational. As Bourdieu quotes Bergson: "It takes centuries of culture to produce a utilitarian such as John Stuart Mill."

This is especially true in the field of education. One of the points made by Harry Braverman in Labor and Monopoly Capital is that education in the USA--and science education in particular--has almost always been wrapped up with creating more productivity in the marketplace. That is, in so far as science education and research has been supported, it must be "scientific calculation" to lead "to quicker solutions," science "confined to trouble-shooting and [. . .] product engineering [. . .] the guiding principle seems to have been almost entirely fast payoff" (163). He does not mean that this was just a corporate model either: it was the focus of the entire science establishment, as it has developed in the US, up until the mid twentieth century.

To this he contrasts the German (or Prussian) model of science education, which was more concerned with basic research. He cites P.W. Musgrave's research into technical change, who had credited Hegel's influence with that culture's advanced scientific culture:

Hegel's influence on the development of science was, as Musgrave points out, both direct and indirect. In the first instance, there was his role in the reform of Prussian education in the second decade of the nineteenth century. And next, there was the pervasive influence of German speculative philosophy, of which Hegel was the culminating thinker, in giving to German scientific education a fundamental and theoretical cast. Thus while Britain and the United States were still in the grip of that common-sense empiricism which stunts and discourages reflective thought and basic scientific research, in Germany it was these very habits of mind that were being developed in the scientific community. It was for this reason more than any other that the primacy of European science passed from France to Germany in the middle of the nineteenth century, while Britain in the same period remained mired in, "what J. S. Mill called 'the dogmatism of common sense' backed by the rule of thumb. (160)


The lack of funding and support for basic science continued in the US throughout the remainder of the nineteenth century, with some of the larger enterprises finding the need to borrow from Germany--both by importing scientists or, in the case of the wholesale appropriation of German patents after WWI, simply stealing their discoveries--in order to advance the technical aspects of industry more than the "fast payoff" would allow. The change came at mid-century, when the Nazis drove all the Jewish intellectuals and scientists out of Germany

that the United States acquired a scientific base equal to its industrial power, which had prior to this development depended largely on the engineering exploitation of foreign science. Thus it has only been since World War II that scientific research in the United States, heavily financed by corporations and government, and buttressed by further drafts of scientific talent from all over the world, has systematically furnished the scientific knowledge utilized in industry. (166)
Braverman overplays the depth of the instrumentality that then occurred, in some ways undercutting his larger point. This seeding of investment in basic science research--of education that is not directed completely towards its instrumental association with capitalist profit--led to many important discoveries. In large part, what it showed was that there could be indirect benefits to carrying out undirected research. And that the public funding of seemingly mundane or ridiculous experiments and research may result in simply finding the answer to the particular hypothesis one was looking for: or it may lead to a breakthrough that others can build upon later.

Recent proof of this tradition still existing at the university level occurred a few weeks ago when the NYT reported on a team of Harvard physicists that had discovered the light sensitivity of a substance they called "black silicon." It can be used for ultra sensitive sensors and possibly for harnessing solar energy.

This would never have happened if the physicist, Eric Mazur, and his graduate students had stuck to the original purpose of their research. He says their experience offers a lesson in government financing of science and technology, which is becoming so narrow and applied as to make discoveries like theirs much less likely.

A more narrow focus does have its advantages: for one, it can be more likely to produce an immediate payoff.

But in the current research environment, “you are less likely to be open to serendipity,” said Judith L. Estrin, an electrical engineer and author of “Closing the Innovation Gap: Reigniting the Spark of Creativity in a Global Economy” (McGraw-Hill, 2008).

Black silicon was discovered because Dr. Mazur started thinking outside the boundaries of the research he was doing in the late 1990s. His research group had been financed by the Army Research Organization to explore catalytic reactions on metallic surfaces.
Of course, this example does confirm some of what Braverman laments: most basic science research comes out of efforts to create more effective weapons just as often as it is hoped it will result in an indirect benefit for an entrepreneurial enterprise--which, in this case, it did: the article says that, "Harvard plans to announce that it has licensed patents for black silicon to SiOnyx, a company in Beverly, Mass., that has raised $11 million in venture financing." This, in turn, points to the problem of patents of this kind, more thoroughly explored by Michael Perelman who points out that much of the basic research on which patents in technology or medicine are based is done by government funded labs. I will speak more about this in the dissertation--and it is indeed an enormous problem, especially when, in the case of pharmaceuticals, the Government hands the companies to whom they grant these patents an even larger subsidy after the fact.

At the moment, I want to point out the basic misunderstanding in US culture about science and, in a larger scope, education. Whatever the actual changes that have been made to the development of science and education at the university level, the rest of the system is still polluted with the nineteenth century presumption of how knowledge and technological innovation occur in relation to these institutions. Thus, in the presidential debates, candidates often (as Sarah Palin did in the Vice Presidential round, as well as on the stump) pick on government funding for what they deem useless (i.e. unprofitable) scientific research (on Fruit Flies or seal DNA, as the two links above describe). When a candidate assumes that, just by mentioning these studies to any average American audience, you can make them groan with this absurd use of their tax dollars. As Josh Marshall's commenters point out, there are other mechanisms for government funding than earmarks (the NSF, other peer-reviewed institutions) but the point here is not whether it went through these channels or not: it is just that the candidate can assume people will find government support for any basic research a ridiculous proposition--especially when you simply read the proposals. As a principle, perhaps, people will claim to support it: but when they are told, specifically, what that means, the presumption is that they will groan.

The assumption is based in the longstanding culture of US approaches to education and knowledge production: that they really should be focused on creating payoffs, not dabbling around with the basics. The quintessential US image of innovation is found in the lone, somewhat eccentric, even uneducated innovator, tinkering in the garage, Edison-like, to find a marketable invention that will make him rich: hence the popular mythology of how Apple got its start in a garage (a myth that Manuel Castells sees as organizing much of the libertarian ethic in silicon valley, in stark contradiction to the massive state funding that went into the college system there.)

It is a basic presumption about how things should work. The paradoxical shift in our understanding of how science and education should function in our culture--along these utilitarian yet libertarian indexes. We like to have the image of the instant success, the burst of genius, but never the long hard slog through basic education and learning. It may be that these don't make for good T.V. Watch an episode of CSI or even Law and Order: the basic fantasy here about the use of science, technology, even the law is that there are people who are so seemingly enlightened and adept that nothing delays their swift, effective use of the tools at hand to produce the required result. Sure, there is the general running down of hypotheses about who killed who or what their human motives are--a mystery in which the viewers are invited to participate. But in running these through the mechanism of science or the law--the effective use of the tools, long in production, long in education, often inconclusive, even counterproductive and contradictory--the results are quick and the process hidden from view.

If it were to be a real display of the struggle involved in producing results, each plot twist in which science is the pivot--particularly when it is an unusual or flashy use of science or technology--would likely play out like an entire episode of HOUSE, where the process of illuminating the truth that science and education can provide is so long and painful that angry, volatile characters involved in salacious interludes of sex, drugs and violence are required to make us pay attention. Yet outside the "immediate payoff" resulting from the NYT article above calls narrowly focused research and education--that is, narrowly focused on financial remuneration or, in the case of CSI and Co., catching bad guys (i.e. military hardware)--science and education are simply not that exciting to watch in a 30 minute segment.

Thus, when Obama speaks of improving science and math education, as in the one doesn't really see him advancing the push for basic research. He frames it, as does the author to the book cited in the NYT piece, in terms of competitiveness. In fact, this is almost the only way we can frame education in the US environment: learning for learning's sake is basically frowned upon and proving results in instrumental enculturation of specific learning tasks becomes the only goal of teachers. Competativeness becomes the watchword, with schools competing with each other to have better scores on instrumental standardized tests; teachers competing with each other within schools; students competing with each other in class; states competing with each other for federal money; etc. It could be said that, in such a deeply--primitively, as Paul Smith would say--capitalistic culture, these would be good survival lessons for educators to impart. But we can't say that this culture will necessarily produce any increase in the standard of living or, in fact, give us any leg up on our international competition.

It is the unhealthy focus on the last issue--the competitiveness in terms of international economics--that Paul Krugman calls "A Dangerous Obsession" in his book Pop Internationalism. Here he argued (in 1996)

that the obsession with competitiveness is not only wrong but dangerous, skewing domestic policies and threatening the international economic system. [. . . .] Thinking in terms of competitiveness leads, directly and indirectly, to bad economic policies on a wide range of issues, domestic and foreign, whether it be in health care or trade.

Lest it appear that I'm making him out to sound like some sort of commie (which the Libertarians already believe anyway) his basic point is that placing people who have this competativeness bug--the idea that we need to have a workforce that is instrumentally prepared to be plugged into any task, that the purpose of education is rote learning rather than undirected, experimental exploration, critical thinking, and collaborative endeavors--in charge of public policies that, on the surface have no background in dealing with them, is ridiculous. Further, by assuming that the thing that these endeavors need is a focus on paring down, efficiency, and cost cutting (a philosophy that, more and more, seems to be taking hold in higher education, where upwards of 60% of the staff are overworked, non-tenured faculty--a model mostly advocated by the dominance of former CEOs in the role of university presidents) we misunderstand what these endeavors are supposed to do.

It is the logical conclusion of the limited utilitarianism of libertarian philosophy: namely, that, by making education run more efficiently, more in line with the rules of the market, we will produce a more competitive, educated workforce. This ideology is so dominant that, even in framing my own argument for this short piece, I can only fall back on it in some skewed way. Like Braverman and Perelman above, the implication of the argument I am building is that they can, in fact, create a more profitable workforce, they just have to approach it from a different direction. The basis of judging a pragmatic success is therefore already given: instead of making the goal the best educated population, the most enlightened critical thinkers--just because we value learning and thought--we have to focus on how this can be beneficial in the war we face in the marketplace. Learning for learning's sake just sounds naive and weak.

Unfortunately, it is this short sighted understandig of education itself that continues to plague the nation--and may likely bring the US as we know it to its knees during this crisis. As Mike Davis said last week

If you've been watching the sad parade of economic gurus on McNeil-Lehrer, you know that the intellectual shelves in Washington are now almost bare. Neither major party retains more than a few enigmatic shards of policy traditions different from the neo-liberal consensus on trade and privatization. Indeed, posturing pseudo-populists aside, it is unclear whether anyone inside the Beltway, including Obama's economic advisors, can think clearly beyond the indoctrinated mindset of Goldman Sachs, the source of the two most prominent secretaries of the treasury over the last decade.

Or, more provocatively, as the now infamous manager of Ladhe Capital said in his farewell letter to the financial industry:

Recently, on the front page of Section C of the Wall Street Journal, a hedge fund manager who was also closing up shop (a $300 million fund), was quoted as saying, "What I have learned about the hedge fund business is that I hate it." I could not agree more with that statement. I was in this game for the money. The low hanging fruit, i.e. idiots whose parents paid for prep school, Yale, and then the Harvard MBA, was there for the taking. These people who were (often) truly not worthy of the education they received (or supposedly received) rose to the top of companies such as AIG, Bear Stearns and Lehman Brothers and all levels of our government. All of this behavior supporting the Aristocracy, only ended up making it easier for me to find people stupid enough to take the other side of my trades. God bless America.

In our stuggle to carry on the unending competative war, in our misguided attempt at structuring education for instant payoffs without considering the investment necessary for making those actually occur, we have forgotten what the purpose of education was supposed to be. It was not simply to prepare us to be good workers, to indoctrinate a class of managers, to justify the unofficial aristocracy: it was supposed to help us live a good life.

In this, one would think the best use of our resources would be to try to improve the health care, the infrastructure, the old age assistance, the education and basic nutrition of the population as a whole. One would think that the best goal of education would be to prepare us for making life better for one another. Surely this would be the best ground on which we could be competative internationally, if that were the goal. Instead, it is seen as an ineffective strategy that ignores the realities on the ground: governments need to be trim, efficient, transparent (you know, unlike multinational corporations.) The goal--competativeness, a.k.a. market freedom-- is the only goal: it must be pursued single mindedly. Any attempt to alter it will fail--and the forces that favor it will do all in their power to make sure that it does, ignoring the failure of their favored mechanism and casting all the blame, as they have with the CRA and ACORN, on any attempt to alter the cold rational logic of their utopia. That this mechanism has never existed in its purity, that it depends on the work of the larger society, that it feeds on people educated in basic research and critical thinking and needs them to compete, these are denied or explained away. Standardized testing, standardized education, after all, is a big business.

It seems like a better time than ever to dismiss this rationale and institute a more coherent understanding of what education and science should look like. On this, the idea of education for life has two meanings. On the one hand, it points to the focus mentioned above--on teaching people how to care, how to create a better life in the domestic sphere. This certainly relies on the scientific institutions in a clear way and would be equally dependent on the infusion of money from the embedded market economy. There will, most likely, always be some form of market through which some commodities are exchanged: that doesn't mean that everything has to take this form or use this mechanism. There will likely be plenty of places to make a profit and, if we really have to combat the obtuse charges of naivete, we might point out that a system that was supportive in this way would likely produce a myriad of contraptions and arrangements that could be profitably exported. Since the basic accusation seems to be "supporting life directly is wrong; life can only be supported indirectly by privatization of life processes," I sincerely believe we have come to an impass in rational discussion. The empirical results of the failure of privatizing health care, food production, medicine and pharmaceuticals seems fairly clear: it has reinstated a steep hierarchy where the working poor find themselves without all or enough of one or even all of these on a regular basis. The fact that we still mostly have to deal with trash, shit, and crime--the three most unappealing issues brought up against anyone proposing even mild forms of social democracy--are still dealt with through public or semi-public mechanisms, it is a fallacy to say that these would fall by the wayside. Having investment and education focused on life, directly, seems like a reasonable alternative.

On the other hand, it refers to the consequences of this changing environment--consequences that seem to be here no matter what. And it refers to a principle we should reinstate whether the above emphasis is ever able to take hold or not. In a way, it actually seems to be something that we have forgotten in the last two generations. Namely, that education isn't just something we do once and then get on with the money-making. The time when the same kind of problems would face us forever and require the same people with the same knowledge of them are behind us--if they were ever here before. We will need to have people learning throughout their lives, building on their knowledge and filling in the gaps, continuously.

But more than this, we need to adjust our understanding of how education fits into the average person's life. This is all the more pertinent in the current atmosphere of education and work, which doesn't allow for the kind of learning--or at least the liesure to do it--just mentioned. In this atmosphere, to justify the runaway profits of a select few, we are greeted with the narrative about how bravely they have risked their capital in putting it to work for the social good in the profitable investment. I've recently said what I think about this notion of risk. And I stand by the idea that there has been a starkly unequal reward provided for this kind of risk in the current atmosphere. In large part this is because the risk that workers undertake is sleighted in favor of the glamorous Objectivist capitalist/entrepreneur-porn above.

To this, I could just say, bollocks: there's no risk and you know it. You might go under but you won't lose your shirt. You might lose some money, but there is, as you seem to think, plenty of it to be made.

But I'll be a little more nuanced. In starting a trade, training for a career or beginning college, the fanciful thing to ask people is what they would like to do. Of course few people will get to do what they would like to do, and only a marginal percentage settle on doing something they can tolerate. The point being here that when people decide this, more than likely they are forced to look around and see what employment opportunities are out there for the doing of that thing they might "want to do." More than likely, there isn't and they have to reconsider. I see this struggle often with students I advise, who are pulled in various directions. The unfortunate thing is that, those who don't consider this in a calculated way, those who are really into a university education for the learning, for the education, find themselves in pretty desparate straits at the end, trying to figure out what they will now do after graduation: they have been educated, many of them, far above what their class position necessitates: yet in order to make a living they will likely have to find some new career, one they will need to be trained for, to invest yet more time in, in order to support themselves. The education they have, in this way, is usually very ill suited for the work they will ultimately have to do.

This is, of course, fine. Many people do things they don't like and have to undergo training and put in time in an industry in which they only slowly learn to take an interest. But, on the other hand, in whatever path they choose--whether before training, in beginning college or a trade school, after college in starting at ground level in a career path--they take a risk. It is a significantly greater risk than the simple, short term investment of one's already plentiful capital: it is an investment of valuable, irreplacable time in one's life. Granted the prudent capitalist will invest in similar time and effort, but the stakes are lower. And while there is always lament about investors losing their money, when the average worker suddenly finds that their chosen career path is no longer viable, this is not seen as a similar sort of risk: it is seen as a force of nature, overtaking a poor cog in an enormous machine. But, just as the system supposedly depends on capitalists taking risk with their capital, it equally depends on workers risking their time--and often their mental energy, their health, their relationships--in order to work for those capitalists. When they are suddenly turned out of an industry, when a shop is shuttered and sent abroad, when any number of world events occur to displace workers, the risk that they have taken is not rewarded with, for instance, the golden parachute of the CEO. In increasinly rare cases, they are given six months of meager benefits in order to 1) discover whether it was just a single closure in an industry that still has viable employment options or 2) discover a completely new industry at which they could be qualified, get training, and, in either case, find a placement in a job. In other words, they have to embark on another set of risks which will possibly lead to another set of failures.

This is not the case of people not wanting to work or asking for more than their share: it is the case of people trying very hard and their effort being squandered, often by the very system they train themselves to serve.

Education for life, in this case, means that workers--as they are starting to--will need to be more nimble in their association with the relationship of their education with their job. Retraining for the next career will need the be something that we all continue doing throughout our lives in order to combat the chaotic turnover that the market creates--the exponential destruction of our investment in life time through devalorization of our work experience and knowledge. Most of us should deny loyalty to this system or to its administrators, except in so far as we are paid to do so. This is the fragile, fragmented association it has deemed we are worthy of and we should afford it no deeper relationship.

Perhaps this could be mediated by more government or community programs--and if there are any wise administrators in the system left, they will suddenly find this in the back of the intellectual cupboard Davis refers to above--but in the event that it is not, it should be a cue to all of us that, if the system isn't ready to educate us for life--in either sense of the phrase--we need to be laying the groundwork for a new system which will.

Monday, October 27, 2008

indicators of things to come?

Two stories this PM that make the coming months look bleaker:

Gun sales thriving in uncertain times
Economic woes, fears that Dems will enact new controls drive increase
By Fredrick Kunkle
updated 11:38 p.m. CT, Sun., Oct. 26, 2008

Americans have cut back on buying cars, furniture and clothes in a tough economy, but there's one consumer item that's still enjoying healthy sales: guns. Purchases of firearms and ammunition have risen 8 to 10 percent this year, according to state and federal data.

Several variables drive sales, but many dealers, buyers and experts attribute the increase in part to concerns about the economy and fears that if Sen. Barack Obama of Illinois wins the presidency, he will join with fellow Democrats in Congress to enact new gun controls. Obama has said that he believes in an individual right to bear arms but that he also supports "common-sense safety measures."

"Even though [Obama] has a lot going for him, he's not very pro-gun," said Paul Pluff, a spokesman for Massachusetts-based Smith & Wesson, which has reported higher sales. Gun enthusiasts are "going to go out and get [firearms] while they still can."

Gun purchases have also been climbing because of the worsening economy, which fuels fears of crime and civil disorder, industry sources and specialists said.

"Generally, we know that hard economic times always result in firearm sales," said James M. Purtilo of Silver Spring, who publishes the Tripwire Newsletter.

and

ATF: 2 neo-Nazi skinheads' plot to kill Obama, 102 black people broken up

By LARA JAKES JORDAN
Associated Press

via Detroit Free Press

WASHINGTON — Federal agents have broken up a plot to assassinate Democratic presidential candidate Barack Obama and shoot or decapitate 102 black people in a Tennessee murder spree, the ATF said today.

In court records unsealed today, federal agents said they disrupted plans to rob a gun store and target a predominantly African-American high school by two neo-Nazi skinheads. Agents said the skinheads did not identify the school by name.

Jim Cavanaugh, special agent in charge of the Nashville field office for the Bureau of Alcohol, Tobacco, Firearms and Explosives, said the two men planned to shoot 88 black people and decapitate another 14. The numbers 88 and 14 are symbolic in the white supremacist community.

The men also sought to go on a national killing spree, with Obama as its final target, Cavanaugh told The Associated Press.

“They said that would be their last, final act — that they would attempt to kill Sen. Obama,” Cavanaugh said. “They didn’t believe they would be able to do it, but that they would get killed trying.”