So About That Whole Tech-Eating-Jobs Thing

On July 4, 2015, Jon Evans writes on TechCrunch:

The argument seems compelling, the logic inescapable. As hardware doubles its density every 18-24 months, courtesy of Moore’s Law, and as software eats the world, technology willreplace a broad swathe of jobs outright–from burger-flippers to diagnosticians–and atomize many others from full-time positions into gigs performed by many fungible workers. Tech, in short, will eat jobs.

Oh, it will create new jobs too, obviously. But it seems flagrantly apparent that technology moves faster than society these days, and hence it seems very likely that technology will destroy jobs faster than it creates them. What’s more, those jobs it creates will tend to be in fields that emphasize human creativity–ie “tournament” fields with a few winners and many losers.

All of which would be a good thing–as most jobs are crap jobs–except that our society is not built for a world in which more and more people are unemployed. Not unless we implement something like a basic income.

…That’s the argument, at any rate. It’s one I’ve made repeatedly in this space over the last few years. (Echoing many others, to be clear.) But intellectual honesty compels me to admit: the available evidence does not currently support it at all.

If the USA is the canary in our global coal mine–which seems likely, given its high technology and liberal labor laws–then the workers of the world have little to worry about any time soon. “Robots Seem to Be Improving Productivity, Not Costing Jobs,” reports the Harvard Business Review. Total nonfarm payroll employment is far above where it was ten years ago:

Even the age-adjusted employment-to-population ratio has, crucially, recovered almost two-thirds of its Great Recession losses. The trend is obvious. Yes, the tech-eating-jobs argument still seems to hold logical water. Yes, this may be a sharp cyclical rise masking a gradual structural decline. But right now the evidence indicates that “tech is eating jobs!” is vaporware at best. Opinions are interesting, but evidence is what matters.

This evidence is arguably a bad thing–no, really–because, again, tech eating jobs is anoptimistic future … assuming we figure out a new tech-driven socioeconomic structure that shares machine-generated wealth in a decentralized way that still incentivizes productivity and creativity. But it’s also a good thing, because, realistically, as a society, we’re not very good at that sort of restructuring. (Cf my favorite Winston Churchill quote.)

Really we’re not even good at understanding the problem. Consider Derek Thompson’s long, puzzling piece “A World Without Work” in The Atlantic. He doesn’t seem to get that the point of a basic income is to supplement jobs and tide people over through periods of unemployment, not replace work entirely; and, as Mike Konczal points out, Thompson doesn’t really address either the wrenching transition to such a world, or the vicious inequality that it might feature–arguably the topic’s two most important problems.

It seems that we face one of five futures:

  1. Tech eats many/most jobs entirely. Could be Star Trek, if we reshape our society to fit. Could also very easily be a world of a small, very wealthy rich minority; a barely larger middle class; and a vast impoverished underclass precariat. (Americans tend to think, wrongly, that such a society would be unstable and soon overthrown by revolution. In fact much/most of the world is already structured this way and has been for many years.)
  2. Tech atomizes jobs into gigs, and/or creates new tournament-style Extremistan jobs. Not especially phenomonologically distinct from option 1.
  3. Tech creates great, or at least better, new jobs for everyone. This would be pretty good! Not as idyllic as a future where work is completely optional as long as you accept a low (but survivable) standard of living, but pretty good. A minority of people in today’s world have enjoyable jobs that both challenge and reward them. (I’m one of them.) People who are high-profile, or have high-profile soapboxes, are more likely to be among this cohort … so, I suspect, they think it’s a more likely future than it actually is. But it’s at leastplausible.
  4. Global catastrophe, and/or the Singularity, or something else that makes all this irrelevant.
  5. Something much, much weirder.

I actually think Option 5, the “unknown unknown,” is quite likely–but it’s a moot point. The available evidence, to my surprise, is currently pointing towards Option 3. Which is not what I predicted, and is no bad thing at all.

But in ten years’ time? Or even five years’ time?

No one can say for sure, but it seems to me that we collectively face a variant of Pascal’s Wager. It seems to me that it would do us a lot of good, and no harm at all, to at least prepare for the possibility of Option 1 and/or Option 2 — especially now that we have some breathing room.

That’s why I’m watching the increasing experimentation with basic incomes around the world with great interest. True, if jobs keep being created faster than technology destroys them, we may not need that at all. But let’s not put all our eggs in that basket just yet. Moore’s Law, and human ingenuity, are relentless and implacable forces.


5 Obvious Pieces Of Evidence That NAFTA Is Killing The U.S. Economy


On May 1, 2015, Daniel Mills writes on Economy In Crisis:

When NAFTA (North American Free Trade Agreement) was passed, many people feared the worst. The results have indeed been disastrous. Just look at the results:

  1. The trade deficit with Mexico has exploded
  2. Mexican wages remain nearly as low as they were prior to NAFTA and are still a small fraction of our average wages
  3. Wealth and power has not filtered to the people. Most of Mexico is still controlled by less than 100 corporations
  4. Many of our other trading partners have relocated facilities to Mexico to circumvent other trade agreements with the U.S.
  5. American manufacturing has lost 3 million jobs in the past 10 years as U.S. companies have also moved to Mexico for lower wages and lax regulations

On the basis of the one-sided disastrous results over the past 15 years, whoever advocated NAFTA seems to be either grossly negligent of their duty of representing their constituents or is simply working contrary to the best interests of this country.

The evidence was clear that NAFTA would be a disaster.

Imagine if Congress decided that a single state, such as California or Michigan, was in desperate need of jobs and investment and made dramatic changes to boost that state’s economy.

Imagine Congress did the following for only that one American state:

  • Dropped the minimum wage to $3 per hour
  • Exempted them from child labor laws
  • Expanded the work week
  • Reduced health and work place safety laws
  • Banned unions
  • Reduced protection for the environment

On top of this, the companies residing in this state would still have tariff and duty-free access to all of the others states. In other words, companies in this state could produce at a fraction of the cost of other states, yet would be able to sell directly to all other 49 states and compete at no additional cost.

What would you think of that? You and the other 49 states might agree that this was absolutely ridiculous!

But this is exactly what is happening right now with NAFTA and other “free” trade agreements, like the KORUS FTA (Korean.S. Free Trade Agreement). Not with California or Michigan, but with Mexico and Canada from the time NAFTA was passed. Why would any company manufacture in the U.S. now when it can produce next-door in Mexico with all these unfair advantages?

Because of disastrous free trade agreements like NAFTA and the KORUS FTA, our productive factories are shutting down. Millions of jobs are disappearing. Enrollment on programs like food stamps is exploding. Poverty is becoming an epidemic.

Our government allows outsourcers to ship our jobs overseas, which results in millions of dollars in profits for them, while our middle class erodes.

The quickest solution is to penalize outsourcing, establish tariffs and incentivize production. We can either do this—or enact similar changes—or the millions of our jobless will soon storm out of their homeless shelters and take to the streets to demand new elections, to select leaders who can actually lift them and the rest of the nation out of poverty and starvation.

We MUST get out of NAFTA now!


One Of The Wealthiest People On Earth Just Announced He’s Giving All His Money To Charity.

On July 3, 2015, Robbie Couch writes on Unworthy:

This is Prince Alwaleed bin Talal. He’s CRAZY rich. Like, wealthier-than-the-entire-country-of-Paraguay rich.

But don’t fret. He’s great, I promise. Read on…

Here he is at a press conference July 1, 2015, where he announced he’s doing something awesome with all his money. Image by Fayez Nureldine/AFP/Getty Images.

He’s the 60-year-old nephew of Saudi Arabia’s royal leader, King Salman. And he has $32 billion.

In case you’re wondering, Forbes pegs him as the 34th wealthiest human on the planet.

But before you get upset with Alwaleed and pull an Anne Hathaway because you don’t have $32 billion…

We feel you, Anne. GIF via “Love & Other Drugs.”

you should know Alwaleed uses a good chunk of his change to make the world a better place.

The prince has given billions of dollars to various philanthropic efforts. His foundation has supported projects in 92 countries around the globe!

And this week, he just stepped up his charity game even more.

On July 1, 2015, Alwaleed announced he’s giving away his entire $32 billion fortune to charity.

Every. Last. Penny.

His gargantuan gift will go to his own nonprofit, Alwaleed Philanthropies, throughout the next several years. There, the dollars will bolster a handful of causes worldwide, likeempowering women, eradicating diseases, assisting in disaster relief, ending poverty, increasing intercultural understanding, developing underserved communities … shall I go on? Because there’s more.

Here’s his two cents on the matter:

Image via Fayez Nureldine/AFP/Getty Images.

As if he needed us to like him even more, the prince noted his decision was inspired by the one, the only, Mr. Bill Gates.

Alwaleed said the Bill & Melinda Gates Foundation, which launched about 15 years ago to do things like help kids be able to attend school and fight preventable diseases,prompted him to empty his wallet for good.

Gates called Alwaleed’s move “an inspiration to all of us working in philanthropy around the world.”

Bill Gates being awesome in Paris, France, in June 2015. Image via Bertrand Guay/AFP/Getty Images.

So, an important lesson to all those who can afford to lend a helping hand:

Be awesome like Prince Alwaleed. He’s living proof the world needs more big hearts — not big bank accounts.

In this spirit, ALL wealthy people should support the proposed Capital Homestead Act ( and See and…/uploads/Free/capitalhomesteading-s.pdf). A provision of this Act is as a substitute for inheritance and gift taxes, a transfer tax would be imposed on the recipients whose holdings exceeded $1 million, thus encouraging the super-rich to spread out their monopoly-sized estates to all members of their family, friends, servants and workers who helped create their fortunes, teachers, health workers, police, other public servants, military veterans, artists, the poor and the disabled.

A Revolutionary Pope Calls For Rethinking The Outdated Criteria That Rule The World

The Revolutionary Pope by

On July 4, 2015, Ellen Brown writes on OptEd News:

Pope Francis’ revolutionary encyclical addresses not just climate change but the banking crisis. Interestingly, the solution to that crisis may have been modeled in the Middle Ages by Franciscan monks following the Saint from whom the Pope took his name.


Pope Francis has been called “the revolutionary Pope.” Before he became Pope Francis, he was a Jesuit Cardinal in Argentina named Jorge Mario Bergoglio, the son of a rail worker. Moments after his election, he made history by taking on the name Francis, after Saint Francis of Assisi, the leader of a rival order known to have shunned wealth to live in poverty.

Pope Francis’ June 2015 encyclical is called “Praised Be,” a title based on an ancient song attributed to St. Francis. Most papal encyclicals are addressed only to Roman Catholics, but this one is addressed to the world. And while its main focus is considered to be climate change, its 184 pages cover much more than that. Among other sweeping reforms, it calls for a radical overhaul of the banking system. It states in Section IV:

Today, in view of the common good, there is urgent need for politics and economics to enter into a frank dialogue in the service of life, especially human life. Saving banks at any cost, making the public pay the price, forgoing a firm commitment to reviewing and reforming the entire system, only reaffirms the absolute power of a financial system, a power which has no future and will only give rise to new crises after a slow, costly and only apparent recovery. The financial crisis of 2007-08 provided an opportunity to develop a new economy, more attentive to ethical principles, and new ways of regulating speculative financial practices and virtual wealth. But the response to the crisis did not include rethinking the outdated criteria which continue to rule the world.

. . . A strategy for real change calls for rethinking processes in their entirety, for it is not enough to include a few superficial ecological considerations while failing to question the logic which underlies present-day culture.

“Rethinking the outdated criteria which continue to rule the world” is a call to revolution, one that is necessary if the planet and its people are to survive and thrive. Beyond a change in our thinking, we need a strategy for eliminating the financial parasite that is keeping us trapped in a prison of scarcity and debt.

Interestingly, the model for that strategy may have been created by the Order of the Saint from whom the Pope took his name. Medieval Franciscan monks, defying their conservative rival orders, evolved an alternative public banking model to serve the poor at a time when they were being exploited with exorbitant interest rates.

In the Middle Ages, the financial parasite draining the people of their assets and livelihoods was understood to be “usury” — charging rent for the use of money. Lending money at interest was forbidden to Christians, as a breach of the prohibition on usury proclaimed by Jesus in Luke 6:33. But there was a serious shortage of the precious metal coins that were the official medium of exchange, creating a need to expand the money supply with loans on credit.

An exception was therefore made to the proscription against usury for the Jews, whose Scriptures forbade usury only to “brothers” (meaning other Jews). This gave them a virtual monopoly on lending, however, allowing them to charge excessively high rates because there were no competitors. Interest sometimes went as high as 60 percent.

These rates were particularly devastating to the poor. To remedy the situation, Franciscan monks, defying the prohibitions of the Dominicans and Augustinians, formed charitable pawnshops called montes pietatus (pious or non-speculative collections of funds). These shops lent at low or no interest on the security of valuables left with the institution.

The first true mons pietatis made loans that were interest-free. Unfortunately, it went broke in the process. Expenses were to come out of the original capital investment; but that left no money to run the bank, and it eventually had to close.

Franciscan monks then established montes pietatis in Italy that lent at low rates of interest. They did not seek to make a profit on their loans. But they faced bitter opposition, not only from their banking competitors but from other theologians. It was not until 1515 that the montes were officially declared to be meritorious.

After that, they spread rapidly in Italy and other European countries. They soon evolved into banks, which were public in nature and served public and charitable purposes. This public bank tradition became the modern European tradition of public, cooperative and savings banks. It is particularly strong today in the municipal banks of Germany called Sparkassen.

The public banking concept at the heart of the Sparkassen was explored in the 18th century by the Irish philosopher Bishop George Berkeley, in a treatise called The Plan of a National Bank. Berkeley visited America and his work was studied by Benjamin Franklin, who popularized the public banking model in colonial Pennsylvania. In the US today, the model is exemplified in the state-owned Bank of North Dakota.

Pope Francis’ revolutionary encyclical addresses not just climate change but the banking crisis. Interestingly, the solution to that crisis may have been modeled in the Middle Ages by Franciscan monks following the Saint from whom the Pope took his name.

Pope Francis has been called “the revolutionary Pope.” Before he became Pope Francis, he was a Jesuit Cardinal in Argentina named Jorge Mario Bergoglio, the son of a rail worker. Moments after his election, he made history by taking on the name Francis, after Saint Francis of Assisi, the leader of a rival order known to have shunned wealth to live in poverty.

Pope Francis’ June 2015 encyclical is called “Praised Be,” a title based on an ancient song attributed to St. Francis. Most papal encyclicals are addressed only to Roman Catholics, but this one is addressed to the world. And while its main focus is considered to be climate change, its 184 pages cover much more than that. Among other sweeping reforms, it calls for a radical overhaul of the banking system. It states in Section IV:

Reaganomics Killed America’s Middle Class

Reaganomics killed America's middle classEnlargeRonald Reagan (Credit: AP/Doug Mills)

On April 19, 2015, Thom Hartmann writes on Salon and AlterNet:

There’s nothing “normal” about having a middle class. Having a middle class is a choice that a society has to make, and it’s a choice we need to make again in this generation, if we want to stop the destruction of the remnants of the last generation’s middle class.

Despite what you might read in the Wall Street Journal or see on Fox News, capitalism is not an economic system that produces a middle class. In fact, if left to its own devices, capitalism tends towards vast levels of inequality and monopoly. The natural and most stable state of capitalism actually looks a lot like the Victorian England depicted in Charles Dickens’ novels.

At the top there is a very small class of superrich. Below them, there is a slightly larger, but still very small, “middle” class of professionals and mercantilists – doctor, lawyers, shop-owners – who help keep things running for the superrich and supply the working poor with their needs. And at the very bottom there is the great mass of people – typically over 90 percent of the population – who make up the working poor. They have no wealth – in fact they’re typically in debt most of their lives – and can barely survive on what little money they make.

So, for average working people, there is no such thing as a middle class in “normal” capitalism. Wealth accumulates at the very top among the elites, not among everyday working people. Inequality is the default option.

You can see this trend today in America. When we had heavily regulated and taxed capitalism in the post-war era, the largest employer in America was General Motors, and they paid working people what would be, in today’s dollars, about $50 an hour with benefits. Reagan began deregulating and cutting taxes on capitalism in 1981, and today, with more classical “raw capitalism,” what we call “Reaganomics,” or “supply side economics,” our nation’s largest employer is WalMart and they pay around $10 an hour.

This is how quickly capitalism reorients itself when the brakes of regulation and taxes are removed – this huge change was done in less than 35 years.

The only ways a working-class “middle class” can come about in a capitalist society are by massive social upheaval – a middle class emerged after the Black Plague in Europe in the 14th century – or by heavily taxing the rich.

French economist Thomas Piketty has talked about this at great length in his groundbreaking new book, Capital in the Twenty-First Century. He argues that the middle class that came about in Western Europe and the United States during the mid-twentieth was the direct result of a peculiar set of historical events.

According to Piketty, the post-World War II middle class was created by two major things: the destruction of European inherited wealth during the war and higher taxes on the rich, most of which were rationalized by the war. This brought wealth and income at the top down, and raised working people up into a middle class.

Piketty is right, especially about the importance of high marginal tax rates and inheritance taxes being necessary for the creation of a middle class that includes working-class people. Progressive taxation, when done correctly, pushes wages down to working people and reduces the incentives for the very rich to pillage their companies or rip off their workers. After all, why take another billion when 91 percent of it just going to be paid in taxes?

This is the main reason why, when GM was our largest employer and our working class were also in the middle class, CEOs only took home 30 times what working people did. The top tax rate for all the time America’s middle class was created was between 74 and 91 percent. Until, of course, Reagan dropped it to 28 percent and working people moved from the middle class to becoming the working poor.

Other policies, like protective tariffs and strong labor laws also help build a middle class, but progressive taxation is the most important because it is the most direct way to transfer money from the rich to the working poor, and to create a disincentive to theft or monopoly by those at the top.

History shows how important high taxes on the rich are for creating a strong middle class.

If you compare a chart showing the historical top income tax rate over the course of the twentieth century with a chart of income inequality in the United States over roughly the same time period, you’ll see that the period with the highest taxes on the rich – the period between the Roosevelt and Reagan administrations – was also the period with the lowest levels of economic inequality.

You’ll also notice that since marginal tax rates started to plummet during the Reagan years, income inequality has skyrocketed.

Even more striking, during those same 33 years since Reagan took office and started cutting taxes on the rich, income levels for the top 1 percent have ballooned while income levels for everyone else have stayed pretty much flat.

Coincidence? I think not.

Creating a middle class is always a choice, and by embracing Reaganomics and cutting taxes on the rich, we decided back in 1980 not to have a middle class within a generation or two. George H.W. Bush saw this, and correctly called it “Voodoo Economics.” And we’re still in the era of Reaganomics – as President Obama recently pointed out, Reagan was a successful revolutionary.

This, of course, is exactly what conservatives always push for. When wealth is spread more equally among all parts of society, people start to expect more from society and start demanding more rights. That leads to social instability, which is feared and hated by conservatives, even though revolutionaries and liberals like Thomas Jefferson welcome it.

And, as Kirk and Buckley predicted back in the 1950s, this is exactly what happened in the 1960s and ’70s when taxes on the rich were at their highest. The Civil Rights movement, the women’s movement, the consumer movement, the anti-war movement, and the environmental movement – social movements that grew out of the wealth and rising expectations of the post-World War II era’s middle class – these all terrified conservatives. Which is why ever since they took power in 1980, they’ve made gutting working people out of the middle class their number one goal.

We now have a choice in this country. We can either continue going down the road to oligarchy, the road we’ve been on since the Reagan years, or we can choose to go on the road to a more pluralistic society with working class people able to make it into the middle class. We can’t have both.

And if we want to go down the road to letting working people back into the middle class, it all starts with taxing the rich.

The time is long past due for us to roll back the Reagan tax cuts.

How The Financial Elite Have Failed Us

The doyen of global economics journalists, Martin Wolf: "The gainers should compensate the losers … they should be prepared to pay some of their winnings so that society remains civilised."
The doyen of global economics journalists, Martin Wolf: “The gainers should compensate the losers … they should be prepared to pay some of their winnings so that society remains civilised.” Peter Braig
On July 4, 2015, Kevin Chinnery writes on AFR Weekend:

Martin Wolf is the doyen of global economics journalists.

His weekly Financial Times column, which also runs in The Australian Financial Review, dissects the performance of the world’s top economic policymakers in prose of elegant and sometimes merciless clarity. Few are let off easily.

Normally, he would be sitting on the other side of this table, grilling a central banker or a Nobel laureate. It is vaguely unnerving to play the interviewer to him. Don’t worry, he confides: “It’s a lot easier asking the questions than it is answering them.”

We have come to Matt Moran’s Aria restaurant next to the Opera House, easy for a visitor arrived from London that morning to find.

Wolf might be lead columnist at the house journal of the world’s financial elites, but he has written a hefty book called The Shifts and The Shocks, in which he says these people have collectively screwed up. They did so with “complete insouciance” before the global financial crisis in 2008, he says, and have failed ever since to manage the recovery as well as they could have.

He is keen to order. Sashimi to start, then barramundi for both of us. I offer wine. He will have a glass of white, but gladly changes his mind when I don’t join him.

The GFC has been the crisis of my lifetime and his, I suggest, badly shaking the post-1945 era of prosperity we were both lucky enough to be born into. That makes it feel personal. I go through some of his book’s damning conclusions.

The banking sector has produced serial crises since it was unchained in the 1970s and 1980s, Wolf writes, and “no industry should be able to inflict damage equivalent to a world war” as it did in the GFC.


Globalising finance allowed the “transferring of excess savings of Chinese into the wasteful consumption of Americans, which made no sense. To generate a huge financial crisis as a result was worse than senseless”.

The crisis was an intellectual and moral failure of the Western elites that now threatens their political legitimacy, he concluded.

“It’s an angry book,” I say. “Yes,” he replies, “surely angry with myself because it ended up so much worse than I thought”.

“Here was a financial sector that had enormous power and influence, and wealth that had been fantastically mismanaged in a way that was familiar from 19th-century writings but which I assumed, in more modern times, could not recur,” he says. “It was a huge shock.”

But bad as the crisis at the banks was, Wolf thinks the GFC has masked deeper, more disturbing problems of declining growth, investment and productivity that were already bedevilling Western economies.

He squints through the midday glare at the Harbour Bridge in front of us. That was a massive Great Depression-era investment project, he remarks. It’s his theme: growth in the world economy is stagnant and disappointing not because it is sinking in debt, but because it is awash in a glut of savings for which there is nowhere to safely invest to get things going again.

“It is very clear to me that the engines of the world economy have not been working properly for quite a long time – that is, supply and demand,” he says.


Wolf tackles the beautifully sliced sashimi with just a fork. He eats quickly and keeps the conversation going without missing a beat – a valuable skill for a journalist – which I admire as I struggle to keep up.

The private sector in the advanced countries is sitting on huge profits and savings, he goes on. But there is nothing to unlock them for better use. There are no great new innovations, which demand enormous capital investment. Workforces are ageing and shrinking, and often now work in services.

“There are real reasons why our corporate sector does not see any need to invest a lot,” he says. And demand growth is even weaker than investment growth, he says, with one feeding off the other.

“In the developed world we don’t have much productive use for our savings. And that has meant that in normal times with normal interest rates, demand is insufficient. So what we do is create abnormal times with abnormal credit growth, which then blows up, and that seems to be the cycle that we are in,” he says. “The only way we get consumption to grow adequately is all these bubbles.”

Wolf says that the genuinely strong periods of economic growth in the 19th and early 20th centuries, and into the 1960s, all had the same thing: “a tremendous investment dynamic in the private sector … a huge investment boom to get the motor going”, even if it is not clear what caused those booms to happen.

It certainly isn’t there now. “What’s peculiar is that there has been no investment boom in the developed world for a very long time. The only investment booms are in housing, which is very nice but it doesn’t make us any richer.”

No longer needed or valued, our savings have become flows of hot, cheap money destabilising the economies they crash into, from the West into Asia in the 1990s, then from Asia into US houses, and more recently into a bubble of everything.


As our plates are cleared, Wolf starts quizzing the maitre d’ about the barramundi. Excellent eating, but he has never seen it anywhere else in the world. Is it found in Indonesia, perhaps? These fish were from Broome in WA, he is told; though he guessed right, it is also common in Asia.

Things might have been different if China and other emerging economies had successfully absorbed the West’s surplus savings.

“You could perfectly imagine another world history,” Wolf resumes. “China invests 50 per cent of GDP, it saves another 40 per cent of GDP, and imports the rest in foreign investment. All the other countries run huge surpluses, and accumulate large claims on the Chinese economy. That would be a perfectly normal economic relationship,” and it’s how America and Australia were financed.

But China is not normal. It would never allow foreigners to own its development.

Instead, he fears, China has just copied the West’s mistakes – a theme he would stress if he were writing his book again.

“It relied ludicrously on exports, saved too much. When the crisis hit, it had a temporary, distorting credit boom. It has slowed.”

Greece’s long agony is nearing a head as we meet. “Greece is proof that the euro was a very bad idea, at least when it was extended to countries so profoundly different from those of core Europe. It is not obvious whether it should seek to stay in or leave,” he tells me after the vote is announced.

I have never met anyone who can speak (and presumably think) in fully formed sentences at this sustained pace. Wolf came to journalism late, nudging over 40 in 1987, after a decade at the World Bank, and then at a London-based trade think tank.

He had thought of politics, but decided he would be bad at partisanship: “I tend to think everybody is wrong.”

It made a fine qualification for chief leader writer at the FT when the invitation came, and then chief economics commentator.


The post-1945 prosperity was the first time in history that the common person, at least in the West, has been treated well, I venture. Now that idea seems threatened by continual crises, and the spectre of technological unemployment to come.

Even Marx’s prophecies have been recently dug up again, I say: on the lines that globalisation and digitisation mean capital does not seem to need labour as it once did.

He says globalisation has benefited lots of people in the developing world, and lots of upper middle-class and upper-class people in the developed world. But not the middle and lower classes in the developed world.

“If you looked at the world economy in 1970, there had been tremendous growth, a lot of which had gone to the Western working classes who lived in a few relatively rich countries which shared income relatively widely, and had developed welfare states.

“Their incomes did not reflect any extraordinary talent or knowledge. They were just fortunate to live in countries that had the know-how, and live off the rent of scarce know-how, as it were.”

But that know-how has been globalised. “It is as easy to open a car plant in China as in the US,” he says. “In a global sense, inequality has fallen.” But there is more inequality within Western societies. Those with knowledge do very well, especially in the financial sector. Others are left out.

There is genuine tension, he says. “Globalisation and technology have given so many human beings opportunities they would not have had.” But the downside is “enormous stresses on Western societies, pulling them apart and making them less functional, less pleasant in pretty obvious ways”.

What should be happening, he says, is “that we go back to the beginning of economics, that the gainers should compensate the losers … they should be prepared to pay some of their winnings so that society remains civilised”.


It now surprises Wolf that we have “gone through the catastrophe of the GFC with no new questioning of economic models”.

When stagflation in the 1970s blew up the Keynesian world – which as he says, meant high taxes and, extraordinarily, a more egalitarian society run against the direct interest of elites – then the new model of monetarism and free markets was ready to step up.

He did not see it at the time, he says, but that intellectual change suited powerful interests.

“No comparable process has taken place this time,” he says: the GFC has not changed how we think about society because there is no countering political force to push an alternative view. That’s less to do with economic thought, he thinks, than who is powerful.

Giddy with that whiff of revolt from the top of the pink paper, I let Wolf return through the winter sunshine to his hotel.


AFL-CIO Leader Tries To Quell Pro-Sanders Revolt

CHARLOTTE, NC - SEPTEMBER 05:  President of the American Federation of Labor and Congress of Industrial Organizations (AFL?CIO) Richard Trumka speaks during day two of the Democratic National Convention at Time Warner Cable Arena on September 5, 2012 in Charlotte, North Carolina. The DNC that will run through September 7, will nominate U.S. President Barack Obama as the Democratic presidential candidate.  (Photo by Alex Wong/Getty Images)




On July 3, 2015, Brian Mahoney writes on Politico:

Richard Trumka has a message for state and local AFL-CIO leaders tempted to endorse Bernie Sanders: Don’t.

In a memo this week to state, central and area divisions of the labor federation, and obtained by POLITICO, the AFL-CIO chief reminded the groups that its bylaws don’t permit them to “endorse a presidential candidate” or “introduce, consider, debate, or pass resolutions or statements that indicate a preference for one candidate over another.” Even “‘personal’ statements” of candidate preference are verboten, Trumka said.

The memo comes amid signs of a growing split between national union leaders — mindful of the fact that Clinton remains the undisputed favorite for the nomination — and local officials and rank and file, who are increasingly drawn to the Democratic Party’s growing progressive wing, for whom Sanders is the latest standard-bearer.

The South Carolina and Vermont AFL-CIOs have passed resolutions supporting Sanders, and some local AFL-CIO leaders in Iowa want to introduce a resolution at their August convention backing the independent senator from Vermont. More than a thousand labor supporters, including several local AFL-CIO-affiliated leaders, have signed on to “Labor for Bernie,” a group calling on national union leaders to give Sanders a shot at an endorsement.

The AFL-CIO’s constituent unions — as distinct from divisions of the federation itself — remain free to make endorsements however they wish. But they can’t make those endorsements acting through local and regional divisions of the AFL-CIO, as Trumka reminded everyone in the memo.

His message wasn’t anything new for the federation’s state leaders: They know that endorsement decisions belong to the national leadership. Still, it was unusual for Trumka to call them out in a memo. “I’m not sure I’ve ever seen one before like this,” said Jeff Johnson, the president of the AFL-CIO’s Washington state labor council.

Johnson agreed that it was important for the AFL-CIO to speak with a single voice. But “there’s a lot of anxiety out there in the labor movement,” he said, “and we’re desperately searching for a candidate that actually speaks to working-class values. The Elizabeth Warren/Bernie Sanders camp is very, very attractive to many of our members and to many of us as leaders, because they’re talking about the things that need to happen in this country.”

Similarly, Massachusetts AFL-CIO President Steven Tolman said he agreed that Trumka had to lay down the law. More tellingly, though, he added: “Bernie Sanders has spent his life actually fighting for working people. He’s made no secret of it, and he’s used it as his mantra. And that I respect very much.” When asked about Clinton’s candidacy, Tolman was less effusive: “Who? Who? Please. I mean with all respect, huh?”

Other state-level union leaders affiliated with the AFL-CIO didn’t bother to give Trumka and his memo lip service. “I was disappointed by it,” said UPTE-CWA Local 9119 organizing coordinator Lisa Kermish, of Berkeley, California. “I think that local unions and national unions, while it’s important to work together for strength, I think that this is in some ways truncating dialogue. And I find that very unfortunate.”

The memo surfaced a day before top staffers for Clinton and Sanders participated in a meet-and-greet with AFL-CIO political directors Thursday morning in Washington. A person who attended the meeting said those present included Clinton campaign manager Robby Mook, Clinton labor liaison Nikki Budzinski, Sanders campaign manager Jeff Weaver and top Sanders strategist Tad Devine.

Under AFL-CIO procedures governing endorsements, a political committee makes a recommendation to the executive council in Washington, which then submits it for ratification by leaders of its member unions. A two-thirds majority is required.

“Because in years past, and already this year, a number of questions have been raised,” Trumka wrote in his memo, “I want to remind you all that the AFL-CIO endorsement for president and vice president belongs to the national AFL-CIO. State federations, central and area labor councils, and all other subordinate bodies must follow the national AFL-CIO endorsement regarding president and vice president.”

The process is typically a cautious one. In the last presidential election, the federation endorsed President Barack Obama in March 2012, shortly before he locked up renomination. In 2008, it waited to endorse then-Sen. Obama until late June, after he’d accumulated the necessary delegates. In 2004, it endorsed John Kerry in February — before he locked up the nomination but at a time when Kerry was well ahead in the delegate count.

“That’s the formal process of the AFL-CIO,” said Larry Cohen, former president of the Communication Workers of America. “But, of course, across the country there is a huge surge of union members and of working class people stepping up for Bernie.”

Cohen announced his own endorsement of Sanders in a Huffington Post op-ed Wednesday. Cohen, CWA President Chris Shelton and American Postal Workers Union President Mark Dimondstein will host Sanders at APWU July 13, one day before national union leaders meet with Clinton at the home of her campaign chairman, John Podesta.

Sanders supporters hope they can convince the AFL-CIO to withhold a primary endorsement from Clinton, as it did in 2008. “Most people kind of assume there’s an AFL-CIO endorsement in the primaries. Not so,” said Steve Rosenthal, former political director of the AFL-CIO and president of the progressive Organizing Group.

Indeed, the Iowa AFL convention Aug. 5-8, which Trumka is set to attend, may become a major showdown between Sanders and Clinton for labor’s support. Clinton and Obama both showed up there in 2007.

Trumka, meanwhile, said the AFL-CIO had sent questionnaires to Democrats and Republicans with a Friday deadline. The federation also plans to set aside time at its July executive council meeting to interview candidates, the memo said.

Trumka is not the labor leader workers need in an age where if workers to not gain ownership of the non-human means of production, the result of technological invention and innovation, they are dead economically. Trumka is not Walter Reuther, who understood the future of production would require far, far less workers as increasingly jobs are eliminated and replaced with “machines.” Reuther understood the importance of workers acquiring OWNERSHIP IN the corporations they work for.The labor union movement should transform to a producers’ ownership union movement and embrace and fight for this new democratic capitalism. They should play the part that they have always aspired to––that is, a better and easier life through participation in the nation’s economic growth and progress. As a result, labor unions will be able to broaden their functions, revitalize their constituency, and reverse their decline.

Unfortunately, at the present time the movement is built on one-factor economics––the labor worker, which why Trumka is failing. The insufficiency of labor worker earnings to purchase increasingly capital-produced products and services gave rise to labor laws and labor unions designed to coerce higher and higher prices for the same or reduced labor input. With government assistance, unions have gradually converted productive enterprises in the private and public sectors into welfare institutions. Binary economist Louis Kelso stated: “The myth of the ‘rising productivity’ of labor is used to conceal the increasing productiveness of capital and the decreasing productiveness of labor, and to disguise income redistribution by making it seem morally acceptable.”

Kelso argued that unions “must adopt a sound strategy that conforms to the economic facts of life. If under free-market conditions, 90 percent of the goods and services are produced by capital input, then 90 percent of the earnings of working people must flow to them as wages of their capital and the remainder as wages of their labor work…If there are in reality two ways for people to participate in production and earn income, then tomorrow’s producers’ union must take cognizance of both…The question is only whether the labor union will help lead this movement or, refusing to learn, to change, and to innovate, become irrelevant.”

Unions are the only group of people in the whole world who can demand a real Kelso-designed ESOP, who can demand the right to participate in the expansion of their employer by asserting their constitutional preferential rights to become capital owners, be productive, and succeed. The ESOP can give employees access to credit so that they can purchase the employer’s stock, pay for it in pre-tax dollars out of the assets that underlie that stock, and after the stock is paid for earn and collect the capital worker income from it, and accumulate it in a tax haven until they retire, whereby they continue to be capital workers receiving income from their capital ownership stakes. This is a viable route to individual self-sufficiency needing significantly less or no government redistributive assistance.

The unions should reassess their role of bargaining for more and more income for the same work or less and less work, and embrace a cooperative approach to survival, whereby they redefine “more” income for their workers in terms of the combined wages of labor and capital on the part of the workforce. They should continue to represent the workers as labor workers in all the aspects that are represented today––wages, hours, and working conditions––and, in addition, represent workers as full voting stockowners as capital ownership is built into the workforce. What is needed is leadership to define “more” as two ways to earn income.

If we continue with the past’s unworkable trickle-down economic policies, governments will have to continue to use the coercive power of taxation to redistribute income that is made by people who earn it and give it to those who need it. This results in ever deepening massive debt on local, state, and national government levels, which leads to the citizenry becoming parasites instead of enabling people to become productive in the way that products and services are actually produced.

When labor unions transform to producers’ ownership unions, opportunity will be created for the unions to reach out to all shareholders (stock owners) who are not adequately represented on corporate boards, and eventually all labor workers will want to join an ownership union in order to be effectively represented as an aspiring capital owner. The overall strategy should assure that the labor compensation of the union’s members does not exceed the labor costs of the employer’s competitors, and that capital earnings of its members are built up to a level that optimizes their combined labor-capital worker earnings. A producers’ ownership union would work collaboratively with management to secure financing of advanced technologies and other new capital investments and broaden ownership. This will enable American companies to become more cost-competitive in global markets and to reduce the outsourcing of jobs to workers willing or forced to take lower wages.

Kelso stated, “Working conditions for the labor force have, of course, improved over the years. But the economic quality of life for the majority of Americans has trailed far behind the technical capabilities of the economy to produce creature comforts, and even further behind the desires of consumers to live economically better lives. The missing link is that most of those unproduced goods and services can be produced only through capital, and the people who need them have no opportunity to earn income from capital ownership.”

Walter Reuther, President of the United Auto Workers, expressed his open-mindedness to the goal of democratic worker ownership in his 1967 testimony to the Joint Economic Committee of Congress as a strategy for saving manufacturing jobs in America from being outcompeted by Japan and eventual outsourcing to other Asian countries with far lower wage costs: “Profit sharing in the form of stock distributions to workers would help to democratize the ownership of America’s vast corporate wealth, which is today appallingly undemocratic and unhealthy.

“If workers had definite assurance of equitable shares in the profits of the corporations that employ them, they would see less need to seek an equitable balance between their gains and soaring profits through augmented increases in basic wage rates. This would be a desirable result from the standpoint of stabilization policy because profit sharing does not increase costs. Since profits are a residual, after all costs have been met, and since their size is not determinable until after customers have paid the prices charged for the firm’s products, profit sharing [through wider share ownership] cannot be said to have any inflationary impact on costs and prices.”

Unfortunately for democratic unionism, the United Auto Workers, American manufacturing workers, and American citizens generally, Reuther was killed in an airplane crash in 1970 before his idea was implemented. Leonard Woodcock, his successor, nor any subsequent union leader never followed through.


CEO Wages Have Increased 54% In Past Five Years – Workers Have Increased Zero


On July 3, 2015,K.J. McElrath writes on Ring Of Fire:

Since the end of George W. Bush’s Reign of Error, CEOs at the 350 largest corporations have seen their paychecks increase by a whopping 54%. How much did your pay go up over the past five years? If you are typical of those who actually work for a living producing real, tangible goods and services, help making the wheels of society turn, the answer is zip. Nothing. Nada.

Today, CEO salaries average $16.5 million a year. That’s almost $300,000 a week. It works out to an hourly wage of just over $7,400. It’s approximately eight times what an average American with a bachelor’s degree makes over a lifetime. Furthermore, CEOs get this kind of pay whether the rest of the economy does well or not. If the economy falters and employees wind up being laid off, that Great King or Queen residing in that upper floor throne room is going to be doing just fine, thank you very much. They might even get a raise for laying off those employees. If they make a bad judgment call that costs the company money – such as overseeing the acquisition of a company with liabilities or overlooking the manufacture of a dangerous product, they may be relieved of their command. However, they’ll typically get a very generous severance package (known as a “golden parachute”). And typically, they’ll wind up literally “failing upwards,” getting an even better position somewhere else.

Most often, however, the kinds of mistakes that would get most of us sacked from our jobs and seriously harm our future prospects have little or no effect on the careers of CEOs. They might even go on to be Vice-President of the United States.

What exactly do these titans of the capitalist system do for such handsome remuneration?

According to Professor Andrea Prat, who teaches economics at Columbia Business School, they engage in “interactions with people” four-fifths of the time. Basically, they hold meetings – mostly with employees.

“Interactions with people” sounds like what most of us do in our jobs. Yet these latter-day kings and queens of industry think that the working people that actually make their companies operate and represent its goods and services to the public aren’t worth $15 an hour?

According to an article published in the Washington Post less than a year ago, average CEO pay in the U.S. is 350 times that of the average worker. That gap is 40% greater than that of runner-up Switzerland. It’s twice that of Germany, three times that of France and Sweden, and a whopping six times greater than Denmark.

And those countries offer guaranteed health care for their citizens and don’t burden their college grads with a lifetime of student loan debt.

As more Americans become aware of this gross inequality, it is small wonder that they are getting increasingly pissed off. And increasingly, that anger and frustration is being channeled in a direction that is making the Corporate Lords of the Capitalist Universe very, very nervous.

The author of this article must be extremely naive not to understand at CEO pay is linked to their earnings as stock OWNERS of the corporations they work for, while the employees are non-OWNERS. What this is really about in terms of net income gains for top CEOs is the value of stock options exercised in a given year. CEO stock option incentives are offered to reward profit earnings performance. It’s really all about CEO sharing in the OWNERSHIP of the corporations they work for. Granted their wage salaries are high, but the real payoff is the stock issues that they can cash in on by selling them on the secondary stock market.

What we need is to prevent concentrated capital asset OWNERSHIP, which is valued in terms of corporate stock, and ensure that as the economy grows we simultaneously broaden personal stock ownership by financing the companies growing the economy in way that create and provide for EVERY child, woman and man OWNERSHIP shares that produce a new source of income from dividend earnings to support their consumption needs, which in turn creates more demand and growth, while creating new capital OWNERS.