Editor’s Picks

Senate Defeats Bill on Keystone XL Pipeline in Narrow Vote

Well, this happened! Despite promises to the contrary, Louisiana Democrat Mary Landrieu was not able to muster up enough votes to pass the Keystone XL Pipeline Approval Act. Link is to the New York Times, but prize goes to the Washington Post for the headline calling it a YOLO Vote.

Harvard University targeted by affirmative action opponents. For them, it’s the big one.

Apparently, there are still people who want to go to Harvard, and they are willing to undo one of the cornerstones of civil rights to do so. The epically misnomered group the Project on Fair Representation has managed to find a client who insists that he was wrongfully denied admission to the pretentious prestigious institution on the basis of his not being denied on the basis of his race. The Project on Fair Representation is suing because, among other things, it appears to be entirely a front group for the American Enterprise Institute. The group’s last misadventure was a failed attempt to represent Abigail Fisher against the University of Texas (despite the fact that she got into and subsequently graduated from another University).

Why is the U.S. Economy Underperforming?

The Great Recession of 2008 began with the bursting of the housing market bubble that led to sharp cutbacks in consumer spending, specifically the sharp decline of consumption relative to spending of the bottom 95 percent. Evidently, the cause of this major decline in spending was the growing ratio of debt to income that disrupted consumer credit access. But the root cause that led to this disastrous path was the decrease of income growth rate of the bottom 95 percent while the top 5 percent enjoyed an increase in income growth rate. Like Thomas Piketty, economists Stephen M. Fazzari and Berry Z. Cynamon focus on income inequality to explain causes of the Great Recession and the incredible stagnation of U.S. economy ever since.

They Know It’s Christmas

This week Bob Geldof and other celebrities releasted a new Band Aid song in celebration of the 30th anniversary of the original “Do They Know It’s Christmas” from 1984. The original song was released to raise funds to counter the then ongoing famine in Ethiopia. The slightly-rewritten 2014 version is designed to raise funds for the Ebola crisis in West Africa. Despite criticism from a range of actors regarding the ignorance of Africa that the original song perpetuates, the lyrics of the new version are not much different. Laura Seay at The Washington Post points out that most Africans do know when Christmas is as there are many Christians on the continent, that the song is demeaning and mostly ignores Africans and their efforts to fight Ebola, and that we do not know where the money is going.

Editor’s Picks

Rusty Radiator is Back with “Who Wants to Be A Volunteer”

SAIH, the Norwegian Students and Academics International Assistance Fund, came last year with the first edition of the Rusty Radiator Award, which is granted for the worst stereotyping in development and poverty campaigns. It is a demand for a change in the way that fundraising campaigns are communicating issues of poverty and development. The promo video for the second edition, “Who Wants to Be A Volunteer” is a satirical take on the well-intentioned Westerners journey to distant places as volunteers with little regard for culture, history or the ethical challenges their presence brings into communities that aren’t their own.

Banks and Car Dealerships Are Using an Orwellian New Tactic on Debtors

Apparently, the lives of the working poor is not nearly miserable enough. To help them out, banks and car dealers are colluding to rig cars with remote kill switches in the event your auto loan goes into default. John Dyer over at Vice News has produced a riveting expose of the abominable practice.

A Heterodox Take on Inequality

By José Coronado and Ingrid Harvold Kvangraven

A few weeks ago, New School students met with fellow heterodox students in Amherst, Massachusetts for the annual graduate student workshop, a common space for collaboration and mutual exchange of ideas. Students presented in a wide array of fields, ranging from macro modeling to interest rate theory to the eigenvalues of input output tables to Marxian theory (see the full program). The event closed with a student/faculty roundtable titled “Economic Inequality – Challenges for the Economy, Society and Policy”. The debate touched a range of areas, among them the role of the state and methodological individualism.
Continue reading

Editor’s Picks

Life in the Unemployment Capital of America

We live at time when the abstracted, deceitful big-picture commands the attention of the political authority over the tender, devastating small-pictures. In certain senses, our economy is improving, but we ought not ignore the tragedies that still exist within it. This article is important, I think, because it serves as a reminder that so many people are being left behind in ways that are truly reprehensible. Danielle Kurtzleben tells a powerful story of people simply trying to be while living in a city in southwest U.S. with an unemployment rate of over 28%.

Corporate tax avoidance and development: opening Pandora’s box

Maya Forstater spells out the why the $ 1 trillion corruption number and other “killer facts” in development finance are inaccurate and misleading. For example, while the most well-known and well-used killer fact that developing countries lose three times more from tax avoidance than they gain in aid, picking the numbers apart, Forstater finds that the estimates actually indicate that in general large, rapidly growing economies are losing more to international tax avoidance than smaller poor countries gain in aid. This tells us very little about the significance of these figures to either group of countries. Forstater warns that not taking numbers seriously puts those concerned with development at risk of conveying misunderstandings, missing chances for constructive engagement, and ultimately risking advocating for poor policy.

In States Voting on Minimum Wage, Even Critics Sound Like Supporters

Despite Republican obstruction to minimum wage increases at the federal and state level, propositions to increase the minimum wage found their way onto the ballot in four red states in last Tuesday’s election. Steven Greenhouse analyzes the political, cultural, and economic hurdles that the raise the wage campaign has overcome to get there.

5 Facts About How America Is Rigged for a Massive Wealth Transfer to the Rich

So, this doesn’t actually deliver on an analysis of how the system is rigged to transfer wealth to the rich, but it does illustrate just how well those making financial wealth are doing despite the “financial crisis.” It also makes a case for the financial transaction tax (a.k.a. Tobin Tax, a.k.a. Robin Hood Tax). Plus, who doesn’t love a single-digit listicle?

Hollaback and Why Everyone Needs Better Research Methods And Why All Data Needs Theory

Last week, Hollaback! released a video cut from 10 hours a woman walking through New York with a hidden camera. The video caused an uproar, first for its exposition of the prevalence of street harrassment, then for its selective methodology.

Simon, Simone, and the Meaning of Work

Our colleague “Simone” over at Lady Economist has written a deep meditation on the meaning of work. Here’s my favorite part (in no small measure for the nod to Simon):

Arguing that work is inherently unpleasant reinforces one of the more insidious assumptions in mainstream economics and one of the more cynical claims in our culture: that people are merely consumers trying to maximize their pleasure and minimize their pain. That sort of thinking leads managers to assume that workers are bound to shirk responsibility whenever possible, and are only motivated by money. It breeds extremely dysfunctional work environments with high surveillance and competition among co-workers. The polymath Herbert Simon has written about how workers’ sense of identification with the mission of an organization explains why employees actually perform the duties necessary to promote the institution’s goals, and not just pursue their self-interest as economic theory would expect.

Read the whole thing here.

Editor’s Picks

Invisible No More

Over at the Jacobin, George Ciccariello-Maher offers a much needed antidote to the dispatches from the Guantanamo Bay school of data torture (Harvard University) being published at Project Syndicate. Can you believe that Carmen Reinhart and Kenneth Rogoff tried to pass off a 40-year per capita GDP change as if it were a standalone statistic to indicate the success of the first year of the Maduro government? Anyway, Ciccariello-Maher makes a pretty strong case why the Bolivarian revolution in Venezuela has made progress in tackling inequality, even if foreign capitalists don’t like it.

Scientific Collapse: Lessons from Vietnam

Historian Carles Sirera offers a brief review of the well-received book of 2007, Mandarins of the Future: Modernization Theory in Cold War America by Nils Gilman at Berkeley. Gilman explores the ideological and political underpinnings of the US “development” project for poor, postcolonial countries by providing an insightful intellectual history of the movement. Then Sirera analyzes the collapse of modernization theory due to the involvement of their main proponents in the theoretical and ethical failure of the Vietnam War and inquires, “what is going to be the analogous failure that will yield the scientific collapse of neoclassical economics?” My guess is the historical role of free-market ideology in promoting [economic] imperialism and colonization.

Human Rights Council condemns vulture funds activity

By Aldo Caliari, Director of Rethinking Bretton Woods Project at the Center of Concern.

Last week, the Human Rights Council adopted a resolution condemning the activities of vulture funds for their impacts on the capacity of governments to fulfill their human rights obligations.

In a resolution passed with 33 of the votes of members, only 5 countries voting against (United States, Germany, Japan, UK and Czech Republic) and 9 abstentions, the Council held that debt repayment to the aforementioned funds, under predatory abusive conditions, bears a direct negative effect on human rights.

Although the upheaval created by US courts’ recent ruling on a case between Argentina and some of its creditors – NML v Argentina case – did, no doubt, add momentum for this decision by the Council, the Council built on the work carried out since several years ago by the Independent Expert on Foreign Debt and Human Rights on issues that extend far beyond the Argentina debt restructuring.

In fact, in an amicus curia filed with the Supreme Court in the course of that litigation, debt campaigning organization Jubilee USA network argued that “Allowing the decision below to stand would…equip financial companies that prey on the poorest nations and people of the world with a game-changing legal precedent to accelerate their predation.”

Read the rest at Righting Finance.

A view of the Human Rights Council Chamber. Photo: UN Photo/Jean-Marc Ferré

A view of the Human Rights Council.
Photo: UN Photo/Jean-Marc Ferré

On Glass Houses

When I was in undergrad, I took an investment analysis class. The class taught me two things: First, to disdain business administration majors (during exams, we econ students would take our tests with our eyes on our exams, while the business students would take their tests with their eyes on our exams – the professor graded on a curve). Second, how to adjust your investment portfolio over your lifetime.

The percentage of bonds in one’s portfolio, we were told, should be approximately equivalent to one’s age. The reasoning was rather simple: bonds are far less volatile than stocks and other securities. Early in one’s life, the game is making money, but later in life, the game becomes keeping money. Of course, the unspoken caveat was that one must first possess so much money as to make having an investment portfolio an option.

Continue reading