Wednesday, May 29, 2013

Canaries In The Coal Mine

This post is partly inspired by an article in The Militant by Kennedy and Farley. They report on another demonstration by the United Mine Workers (UMWA) in St. Louis. The targets are Patriot Coal Co., and also Judge Kathy Surratt-States, who is supposed to rule on the Patriot's bankruptcy petition today (May 29th). I haven't found any news of a decision on the web as of now.

The union claims that Patriot was spun off from Peabody Coal and Arch Coal precisely for the purpose of destroying the union. All the UMWA mines are now owned by Patriot; they employ 2000 miners and are responsible for the pensions of 20,000 retirees. The union is probably correct, but it makes no difference. If the union mines are unprofitable, they are unprofitable regardless of who owns them. I've posted on this issue before here and here.

I have recently finished reading The Box, by Marc Levinson, a history of the shipping container and the revolution in world shipping. It is an excellent book--well worth reading. The analogy to the coal industry is surprisingly exact.

As a person who joined the Socialist Workers Party (SWP) on the West Coast, I soon encountered the name of Harry Bridges. He was the long-time head of the International Longshoreman's and Warehouseman's Union (ILWU), which had a lock on the West Coast ports. We Trotskyists hated him--he was a Stalinist, reformist, labor-skate, sell-out, and probably a few other things besides. By the same token, the employer's association also hated him--he was a Stalinist, Commie Pinko, union thug who hated America. That Mr. Bridges hailed from Australia resulted in that last expletive, and also in numerous government attempts to deport him, despite his naturalized citizenship.

With enemies like that, what could go wrong? Not much, really. His fearlessness inspired awe among the rank and file, and his credibility among ILWU members allowed him bargaining flexibility that few other union leaders had. As a result, in 1960 ILWU signed the Modernization and Mechanization Agreement (MMA), substantially changing the work life for longshoremen.

Up through the 1950s, most freight was shipped as breakbulk cargo. Longshoremen would load freight one piece at a time, stowing it carefully in the hold. At the other end the freight was similarly unloaded. This was backbreaking work, and worse, it took a week or more to unload and then load a single ship. The entrepreneurial genius in Levinson's story is Malcom McLean, the man who "invented" the container, i.e., a box that could be packed by the shipper, loaded whole onto a truck, and than packed easily on a ship. The big advantage is that ships could be turned around in port in about 12 hours.

Of course containerization meant that most longshoremen would be unemployed. And prior to the MMA, the unions came up with very imaginative make-work schemes, such as the "strip and stuff" requirement. Under this rule any container arriving on the pier had to be emptied and then repacked by longshoremen--a process that effectively made the container uneconomical. The result was that shipping traffic was falling dramatically at West Coast Ports, and both the shippers and Mr. Bridges realized that something had to change.

What the MMA gave to the employers was "...the contract, working and dispatching rules shall not be construed so as to require the hiring of unnecessary men." In compensation the union got money--quite a lot of it. There were generous retirement benefits, and the A-listers (the top of the two-tier workforce) got guaranteed hours. The labor force was reduced solely through natural attrition--no layoffs were planned.

Indeed, no layoffs were necessary. Because of the MMA there was a huge spike in port traffic, and every longshoreman was busy. For the first time in many years many B-listers were promoted to the A-list. In the long run, of course, many fewer longshoremen are employed today, and freight transport costs have come down by about 90%. We are all vastly richer as a result.

The MMA was a success, but Harry Bridges was condemned as a sell-out. His East Coast counterpart, International Longshoreman's Association (ILA) head Teddy Gleason didn't sell out, but was much less successful. His circumstances were more difficult and he didn't have Mr. Bridges' credibility, so there was no MMA equivalent until the late 60s. By this time the bargaining power of the union was greatly reduced, and a lot of longshoremen were left with nothing.

President Kennedy put it well in 1962:
I regard it as the major domestic challenge, really, of the 60s, to maintain full employment, at a time when automation, of course, is replacing men."
Substitute "60s" with "2010s" and you have a pretty good summary of today's circumstance. We are beginning a huge new round of automation--millions of people will be thrown out of work. In the long term new jobs will be invented to replace the ones that are lost (how many unemployed longshoremen are still around today?), but that won't help in the meantime.

And this brings us back to the coal miners. Coal mining has been automated--yes--but the big change is fracking. Natural gas replaces coal with only a fraction of the labor investment, and is cleaner and cheaper for the end user. Accordingly, domestic demand for coal is down about 10% since 2008. So union coal miners are gradually being put out of business. The question is--is the UMWA more like ILWU under Harry Bridges, or like the ILA under Teddy Gleason?

I think the answer is more like the ILA. They do not have a leader with the credibility of Mr. Bridges, and their bargaining position is muchU, much weaker. Patriot Coal is good example--you can't strike against a bankrupt company, and you can't go on strike if you're retired. So the UMWA is doing the only thing it can do--sending bus loads of miners to St. Louis to throw a temper tantrum or two. It won't help.

So here's the good thing unions do: they put some friction in the works. In the long run the world needs fewer coal miners. But we can't just turn them out on the street. Harry Bridges' great genius was to find a way to enable mechanization, while still being fair to people already in the profession. By the same token, the UAW got bailed out by the government and they've been made (mostly) whole. I don't think the UMWA has been that wise. There just aren't enough of them and their bargaining power is too small. With luck they'll get some kind of government bailout. I rather hope so.

Automation here we come. You can hear it already. Just listen to the canaries in the coal mines.

Further Reading:

Sunday, May 26, 2013

Book Review: Human Capitalism

We're all petty bourgeois now.

That's the thesis of Brink Lindsey's e-book, Human Capitalism. Lindsey denotes the investment made in  skills, abilities and children as human capital. In a previous post I called the concept social capital, and suggested that people so invested were petty bourgeois. The example I used were college professors, who because of their large human capital investment are more like small businessmen than proletarian laborers.

Lindsey quotes Gary Becker as claiming that "some 70 percent of all the capital in the United States today consists of investments in health, knowledge, and skills." In a word, we live in a very different era from the bourgeois world of plant and equipment. This is obvious for companies like Google or Facebook--for these firms human capital is obviously the bulk of their investment.

It's less clear for a company like Walmart, but there, too, the investment is mostly human. Walmart's competitive advantage is logistics, i.e., bringing product directly from the manufacturer to the consumer as cheaply as possible. This involves a lot of algorithm development and computer programming--that is, human capital. The physical plant, by comparison, is very simple--cheaply built, big-box stores, and some trucks.

So are we all petty bourgeois now? Not so fast, says Mr. Lindsey, for he suggests that only about one third of Americans have the human capital necessary to be successful. He puts human capital into three categories:  education (including an IQ component), personal charisma, and time management (especially an ability to defer gratification). Many of these qualities are innate--heritable in the technical, current lingo--and therefore difficult to change. But Mr. Lindsey disagrees with Charles Murray and Richard Herrnstein who give disproportionate weight to IQ.

Instead, Lindsey suggests that education is among the most significant sources of human capital, and this society can do something about. Most importantly, parents matter. Children are much better served being raised in two-parent families with biological parents, rather than in single-parent or blended families. He recommends all the usual, good advice we hear all the time: talk to your kids, read to them, enrich their lives, care about their schooling. Tiger Moms are better at developing human capital than those with a the kids can raise themselves attitude.

His public policy suggestions all aim to enhance education, including many ideas dear to the Libertarian heart. He advocates for much more competition in K-12 and higher education, breaking up the public employee monopolies and putting parents and children in charge. He strongly opposes the recent trend requiring licensure for many occupations, including lawyers, accountants, interior decorators, teachers, beauticians, taxi drivers, etc., etc. These requirements simply enhance poverty, and here he simply echoes what Milton Friedman said many years ago.

More controversially, Mr. Lindsey advocates for early childhood education programs, similar in purpose to Head Start (a program he acknowledges didn't work very well). Fortunately, he anticipates the potential critic who (like me) suggests that such programs won't succeed. Mr. Lindsey is full of Libertarian humility, and cites Peter Rossi's Iron Law Of Evaluation, which says that "The expected value of any net impact assessment of any large scale social program is zero." This is accompanied by Mr. Rossi's Stainless Steel Law: "The better designed the impact assessment of a social program, the more likely is the resulting estimate of the net impact to be zero." All very depressing for potential social engineers.

So what could go wrong? The rising importance of human capital enhances social inequality. Smart, well-educated, hard-working, attractive people (think Richard Branson or Sam Walton) will do extremely well and become billionaires. On the other hand, a person with below average intelligence, raised by a single mom, and neither athletic nor good looking, is pretty much doomed to a life of relative poverty. Opportunities to earn a living through proletarian labor are rapidly closing.

If all of Mr. Lindsey's social engineering suggestions are implemented and maximally successful, then at very best only about 50% of the labor force will have sufficient human capital to compete. In reality, social engineering is likely to result in squat, so we're probably stuck with 60% or more of the population being unable to participate in productive economic activity. Mr. Lindsey suggests that the resulting social unrest will destabilize the entire system, resulting in everybody being poor.

There are two ways to deal with this. One is to set up the Mother Of All Welfare States, where approximately 60% of the labor force would be on the public dole. There are some who suggest that work is a human right, and everybody has a right and an obligation to do something socially productive with their lives. Sitting around drinking beer and watching TV is not a satisfying career. But I think this attitude is easier to change than implementing Mr. Lindsey's social engineering projects. Honestly, I don't think slaving all day for The Man is something everybody wants to do. So the welfare state option could actually work. Think Mitt Romney's 47%.

The second option--the one that I think will actually come to pass--is that new wealth will create new markets, and hence new employment. These new jobs are frequently classed as "personal services," i.e., butlers, maids, gardeners, and other positions that are in some way degrading. Such work exists in part because they award status to the employer at the expense of the employee. And there will be some of this, but I don't think these will be the majority of future jobs. Personal services will still be on offer, but they'll be provided for impersonally--i.e., the service will be sold without the status transfer.

An example is the barista--a job that didn't exist twenty years ago. Today I am an avid Starbucks customer, whereas in my youth I'd go to the local diner and settle for a very mediocre cup of stale coffee. Few people are going to hire their own private barista, but this is an example of a personal service on offer that exists today only because people are rich. When I was a kid growing up in a college town, there was exactly one, mediocre Chinese restaurant. Today there are sushi bars, Indian restaurants, a variety of restaurants specializing in regional Chinese cuisines, good Mexican food, etc., etc. This is all because society as a whole is vastly richer than it was before. Unlike even ten years ago, now there are spas, threading parlors, waxing, massage, dog walking, etc., etc. The list is endless, and as human capital investment makes us richer, the list of personal services will get very much longer.

I predict that the free market will save us from ourselves--just as it has in the past.

Further Reading:

Wednesday, May 22, 2013


This post is inspired by Andrew Pollack's article in Socialist Action (SA) about "autonomous horizontalism." The article is first in a two-part series critiquing Marina Sitrin, who Pollack describes as "one of the most prolific, visible and eloquent theorists of 'horizonalism' and 'autonomy'." I, being out of the Leftist loop, had never heard of her before, but I have now resolved to read one of her books.

Dr. Sitrin (Ph.D., Stony Brook, in Global Sociology (!?)) has a beautiful webpage (linked above), where the tagline reads "dreaming the impossible." Now that is certainly true, for there is nothing realistic in anything she posts. As practical politics it is all nonsense, and making fun of her is way too easy. That's precisely what Mr. Pollack does.

So I don't know what "autonomous horizontalism" really is, but it comes with a wonderful slogan, borrowed from the Zapatistas: From below, and to the Left. To me it sounds like anarchism puffed up in academic lingo. The core thesis, according to Pollack, is that revolution is OK, but the participants should never take state power. I suppose power corrupts, but as Pollack points out, it's really difficult to visualize the end game without it.

The anarchist's dream, which as a Tea Partier I sympathize with, is that government is evil, and any form of state power is an infringement on liberty. It is precisely this sentiment that leads the Tea Party to advocate for limited, constitutional government. Liberty and the constitution are, in our view, inextricably linked--the constitution was written to prevent tyranny, including the tyranny of the majority. For example, the Bill of Rights are all statements of things that congress cannot do, even by unanimous vote.

Two things separate the Tea Party from impossible dreamers represented by Dr. Sitrin. One is we recognize that government is necessary--an evil necessity to be sure, but very necessary. Countries without governments are not places where you or I would want to live: Somalia, Syria, Central African Republic. Where government fails it is replaced not by impossible dreamers, but instead by street gangs. In existing anarchic societies, people are totally dependent on kin, tribe and neighbors. Secular society is impossible.

The second difference between us and anarchists is the latter regard corporations as evil. In a word, they buy the Marxist myth: we're poor because the rich people stole all the money. Tea Partiers are smart enough to understand that's not true--rich people (excepting crony capitalists or other instances where government extorts money by force) created wealth. Bill Gates made us all richer by enabling the personal computer. Dr. Sitrin depends as much as I do on the Google Guys. These people didn't steal money--they created it. Ayn Rand describes it quite correctly.

There are people who live "off the grid," and as a matter of personal pride don't participate in our technological society. The Amish are like that--they've never paid a cent to Mr. Gates, or even to the electric company. But the Amish are nevertheless forced to pay taxes--government has a power of coercion that even the largest corporation lacks. Corporations make us richer--government makes us poorer. Dr. Sitrin has it half wrong.

While Dr. Sitrin admits to being an impossible dreamer, Mr. Pollack asserts something he thinks is "reality." In reality, his reality isn't any more real than Dr. Sitrin's. The example he gives is revealing:
As I write this, teachers in Greece are preparing for a strike tomorrow (Tuesday, May 14), likely to be followed by another strike on the 17th, and the distinct possibility of solidarity strikes on both days. The government has responded by threatening to impose—for the third time this year—“mobilization” orders, in essence breaking the strike by enrolling all teachers overnight into the military, AND thus making it “illegal” for them to walk off their jobs.
Mr. Pollack suggests that the teachers should take state power--his view of a realistic solution. But it won't work any more than Dr. Sitrin's impossible dream. The teachers are government employees, i.e., they live off the taxpayer. They create no wealth--instead they consume it. The money they earn is confiscated by force from the people who pay taxes. Now the problem is that the taxpayer in Greece--and by extension, the government--is broke. There is no more money. The teachers can riot and scream obscenities at the Troika and break piggy banks all they want, but they still won't get paid.

Their cause is completely lost. Mr. Pollack is just as much an impossible dreamer as Dr. Sitrin. He believes money can be created out of thin air if you just throw a big enough temper tantrum.

There are some fundamental things on which Dr. Sitrin and I disagree--that's why she's a Leftist and I'm a Republican. But on some deeper, moral level, we agree. We both believe that individual liberty is the touchstone for a humane society. We disagree in our assessment of the current situation, and we disagree on what tools to use to make the world better, but I think we both subscribe to the same fundamental concept of liberty. Right and Left we may be, but we're nevertheless distant cousins.

Not so with Mr. Pollack. He doesn't believe in liberty at all. He calls for the dictatorship of the proletariat, which (though he will deny this) will involve the mass murder of millions of people, certainly including both Dr. Sitrin and me. Accordingly he sympathizes with governments in North Korea and Cuba, calling both a step forward for human progress. I'm sure Dr. Sitrin and I agree about North Korea (though she does seem to be a bit fuzzy on Cuba).

So is it a surprise that SA will devote numerous articles criticizing "autonomous horizontalism"? Given the honest unreality of the anarchist project, why do they care? They care because anarchism has become the Leftist movement of the day. It still subscribes to the Marxist meme (we're poor because the rich people stole all the money), but it rejects Leninism in all it's vile forms. Gone are the useless vanguard parties, gone is the obsolete concept of "democratic centralism," gone is the support for regimes like North Korea or Zimbabwe, gone is the evil "dictatorship of the proletariat" language. In other words, for all it's fairy tales, anarchism is socialism for the modern age.

This is totally consistent with the way the modern economy is increasingly organized. Economies of scale are getting smaller and smaller. Big institutions--from car manufacturers to state universities to the federal government--provide less and less added value. It is now possible for individuals and small groups of individuals to generate huge amounts of wealth--witness Google and Facebook. Manufacturing, education, and health care are rapidly evolving into cottage industries, connected by the Internet and governed by the "invisible hand" market.

Leninists--here represented by Mr. Pollack--subscribe to the biggest fairy tale of all. They believe that everything under the sun can be run bureaucratically from some Central Plan. They're for Jack Barnes--Master Of The Universe.

That is not a winning program.

Further Reading:

Saturday, May 18, 2013

Does 2013 Rhyme With 1934?

"History never repeats, but it does rhyme." - Mark Twain

Joe Johnson is an old Trotskyist, a one-time comrade of Farrell Dobbs and Vincent Ray Dunne. Dunne was a leader of the famous 1934 Minneapolis Teamsters' strike, vividly chronicled by Farrell Dobbs in his excellent book, Teamster Rebellion. Dobbs was also the National Secretary of the Socialist Workers Party (SWP) from 1953 to 1972.

Johnson's thesis, in a piece published in Socialist Viewpoint, is that 2013 is an echo of 1934. He predicts a major upswing in the labor movement. His title, also a rhyme on history, is Today's Situation and What Is To Be Done Next. At first impression, Johnson's claim is silly. Upon closer reading--well, it's still silly. But the argument makes for a fun ride.

Johnson begins by pointing out two important innovations that, back in 1934, led to the Teamsters' victory. Most unions in that time were craft unions, and thus divided carpenters from plumbers from electricians from machinists. The Teamsters initiated the concept of industrial unionism, i.e., a union that organized all workers in an industry, regardless of craft. This gave them much more power than they previously had. The second new idea was an ability to connect with the larger community--in Johnson's example the Teamsters successfully turned small merchants into allies.

So how does it rhyme today? Johnson reasonably suggests that today's unions are much more like the craft unions of yore than the industrial unions they claim to be. The union movement has gotten too small and too isolated to effectively counter capital. Strikes are increasingly impossible. Johnson blames anti-union legislation for this--I think more fundamental changes in the economy are a likelier culprit.

In his telling the modern day echo of the Teamsters' industrial union is the fast-food strike! (You never heard of that? That's only because you haven't been reading the Trotskyist literature enough.) Most recently, 500 fast food and retail workers from Chicago's Michigan Avenue went on a one-day strike demanding $15 per hour. There's a nice news account (by Josh Eidelson from The Nation) reprinted in Socialist Viewpoint here. Similar demonstrations took place in New York, Milwaukee, and other cities.

Johnson argues this is a Teamster-like response to a 1934-like problem. Rather than trying to organize individual companies, such as McDonald's or Macy's, as a traditional union is wont to do, instead it goes after the whole shootin' match. Anybody who works minimum wage retail is invited to join--who cares who your capitalist boss is. Beyond this, gone is the traditional union strategy: organize a union, bargain for a contract, and then call a strike if you have to. No--instead these folks went straight to the strike--screw the bourgeois process. It's all very exhilarating and radical--and doomed to fail.

It will fail for at least three reasons:
  1. The companies are simply incapable of paying $15 per hour. They can't raise prices, and their profit margins are already pretty thin. So the demand is impossible to meet. (Eidelson recognizes this.)
  2. Retail workers are not in a very strategic position vis-a-vis the economy. There will always be a non-union retail sector, including family-run businesses. Indeed, many Dunkin' Donuts franchises come under that category. No union will ever be able to shut down retail in the way the Teamsters shut down trucking.
  3. Even if hurdles 1 and 2 are surmounted, then automation will do them in. Long run, Baxter can flip hamburgers better than any human being. With sufficient capital investment, McDonald's can  greatly reduce the number of employees. Macy's and Walmart are already being undercut by, who books the same revenue with a fraction of the workforce. 
Retail unionism is doomed. And this explains the small turnout--500 retail workers in Chicago is not a very effective strike. It's not even that good--there were 500 people at the demonstration, but only a percentage were actually skipping out on work. This isn't serious, and reading between the lines in Eidelson's piece, the companies don't take it seriously, either. They all took the employees back as if nothing had happened. Actually, nothing did happen.

For the second rhyme--making connections with the community--Johnson points to the Chicago Teachers' Strike. He claims the teachers "were only able to get support by enfolding within their union demands the needs of the community." I think he is on pretty thin ground here. The teachers demands are mostly in opposition to the community, for they insist that property taxes be raised to support their privileged position. I don't think community solidarity had much to do with this strike's success.

To the contrary, the teachers won only because of special circumstance. The 2012 strike was right before the election in Obama's home town, unions are a core part of Obama's coalition, and Mayor Emanuel is closely associated with the Obama administration. This was not a fight Emanuel wanted to take on, so he just caved. In almost every other instance the public employee unions have gotten their clocks cleaned: Wisconsin, New Jersey, and most recently, Michigan. The Chicago teachers are an exception, not the start of a trend.

So I think Mr. Johnson has it mostly wrong. He is correct that, had it been successful, the fast-food strike would be a game-changer. That's the interesting idea which inspires this post. But it was mostly a non-event, and it is nearly impossible to imagine how it can ever be more than that. He badly misinterprets the teachers' strike, which was a once-off success in an election year.

The rest of Mr. Johnson's article goes off the deep end. He writes about forming soviet-style assemblies--councils of working people representing different constituencies: unions, neighborhoods, environmentalists, etc. He asks that these take over government, and suggests Detroit would be a good initial target. He cites the "fact" that Congress has a 90% unfavorable rating as evidence the time has come for revolutionary change. He's just wrong.

So history has no rhyme, and methinks Mr. Johnson has no reason.

Further Reading:

Wednesday, May 15, 2013

Joel Kotkin Hates The Tech Business

Joel Kotkin doesn't like the tech business. Just read his latest screed here.

Now I'm usually a fan of Mr. Kotkin, but in this I think he's gone off the deep end. Reduced to bullet points, his argument is as follows:

  • They're rich ("they" being the wealthy, technology oligarchs, such as the Google guys, Steve Jobs, Jeff Bezos, etc.).
  • They don't hire many Americans.
  • They hire way too many Chinese.
  • They don't pay taxes.
  • They live in a bubble.
  • They want to take over the country.
  • They're out to steal your soul.
Let's take the bullet points in turn.
  • They're rich.
Well, duh! But they got rich by creating great wealth. The iPhone established a whole new industry. So did Google. According to Free: The Future Of A Radical PriceGoogle gives 80% of it's content away for $0.00. I write this blog on Google, and I haven't paid them a dime. It is probably impossible to estimate the total value to society created by Google, but the share captured by the Page & Brin, et al., is a minuscule fraction.
  • They don't hire many Americans.
Well, good, I say. Mr. Kotkin can't have it both ways. On the one hand he complains these people are too rich, and on the other hand he wants us to hire more of them. No--the fewer employees the better. Just that much more money for the rest of us (in the form of better and cheaper goods and services). What earthly purpose is there in featherbedding the technology industry?

Mr. Kotkin also opposes the H1B visa program bringing in "cheap" foreign engineers. Here he has a point, but it's not the point he wants to make. The problem is not with the foreign engineers; the problem is the visa program that renders them indentured laborers. That is what unfairly distorts the market. We need a much more open immigration system--if foreigners want to come here and work for cheap, then that's wonderful. More money for the rest of us. But for the consumer to capture the product they have to come as free individuals and not bound to a specific employer.
  • They hire too many Chinese.
Mr. Kotkin should check out the data here: the manufacturing cost of an iPhone is $8 per phone. So all those zillions of Chinese workers that Mr. Kotkin so envies--they're netting less than 2% of the value of the product. This site speculates that it takes about 17 hours to assemble an iPhone--so the Chinese are paid less than $0.50/hour. Are these jobs we want to repatriate to the US? I don't think so.
  • They don't pay taxes.
Again, I say good. Government in this country (and every other country) is a rat hole and not worth the money we spend on it. Cash that the tech industry holds on to will eventually either be a) returned to the consumer, or b) invested in new enterprises. Either way, any penny saved in taxes is a penny that makes us richer. If they can legally avoid paying taxes, then so much the better.
  • They live in a bubble.
Mr. Kotkin worries that the tech gurus all live in a self-contained community gated off from the rest of the world. In his telling, Silicon Valley is a bubble served by fancy sex workers, private planes, maids, and luxury cars. The people who live there have lost touch with reality. So--what's the problem? Mr. Kotkin compares this with the desperate circumstances of East Bay communities nearby. Of course there's no connection--the problems of the East Bay are not in any way caused by tech geeks in Silicon Valley. This is all a reprise of the Marxist meme: we're poor because the rich people stole all the money. Are the people in South Sudan poor because Mr. Kotkin lives in a middle class house? Same argument.
  • They want to take over the country.
Mr. Kotkin panics about, a supposedly surreptitious and vile plot by the technocrats to buy influence in Washington. He cites Twitter's founder, 37-year-old Jack Dorsey, who says he wants to be mayor of New York City, despite never having lived there. I have no doubt that a bunch of very successful, wealthy, self-righteous youngsters dream of world conquest. But it won't work--witness the money they've spent on the now-imploding Obama administration. Every political action invites a reaction, and the closer the tech oligarchs get to their goal, the greater the opposition will be. Remember the phrase "what's good for General Motors is good for the country"? GM had hundreds of thousands of employees spread across the entire nation, and they still couldn't pull it off. There's no way the tech guys--living in a bubble with only a few employees and disconnected from the larger culture--are going to take over the world. Mr. Dorsey's utterly silly comment is proof of that.
  • They're out to steal your soul.
Google (and others) actually make money giving away stuff for free by collecting data. They use that data to specifically target advertising to individuals. There's the famous story (apocryphal?) about a father getting ads for baby supplies from a local store before his daughter had even told him she was pregnant. Such are the wily ways of Big Data. Mr. Kotkin thinks this is a huge problem. I disagree.

There are two parts to this.

First are ads that help consumers buy things they want to buy. Amazon's recommendations are in this category--very often I find books there that interest me that I would never have encountered otherwise. I regard this as a benefit that enhances my standard of living. Google Local apparently is an effort to turn people on to area restaurants that might be good. I think this is unobjectionable.

Second are ads that try to convince you to buy something you don't want to buy. This turf still belongs to the personable salesman--hawking encyclopedias, or diet fads, or some status symbol. I don't think Big Data will be particularly effective doing this--it depends on personal interaction. Banner ads, pop-ups, animations, etc., are a proven bust. 

Mr. Kotkin may be old enough to remember The Hidden Persuaders, written at the dawn of the television age. When I was in high school everybody was talking about subliminal advertising, i.e., if Coca Cola appears for microseconds during the movie, then people will unconsciously be inspired to go out and buy a Coke. I don't think that worked very well. The fact is people learn how to game the system and will push back against buying stuff they don't want to buy. Mr. Kotkin's panic is unwarranted.

In truth, advertisers are not trying to beat the consumer. They're just trying to be more effective than other advertisers. I think that's a zero-sum game--there is no way that Big Data is going to increase the (small) fraction of income spent on involuntary purchases.

In summary, Mr. Kotkin has gotten too Marxist for me.

Further Reading:

Saturday, May 11, 2013

Syria's Problem

"More than ever, the U.S. and worldwide antiwar and social justice movement must demand: U.S. Hands Off Syria! Bring All U.S. Troops Home Now! Self-determination for the Syrian people! No to U.S. Sanctions! No U.S. Aid to Israel! U.S. Out of the Middle East Now!"

That is the closing paragraph of Jeff Mackler's recent piece in Socialist Action (SA) entitled Israel Bombs Syria; US Signals Support. It is an excellent summary of everything that is wrong with SA's position. Other recent articles are here and here. All three indicate that SA lives in the Land Of Wishful Thinking.

The biggest howler is their call for "Self-determination for the Syrian people!" World to Socialist Action: there is no Syrian people. There are Sunnis and Alawites and Kurds and Christians and Palestinians and Druze and Ismailis and Assyrians, and probably still even a few old Jews. But none of these groups are especially loyal to Syria--a state in arbitrary boundaries drawn by the British after WWI. The Sunnis are the numerical majority, but they now nurse a murderous hatred for the Alawites. A Sunni rebel victory will lead to vicious ethnic cleansing.

The Sunnis are tribal, and the various tribes are already fighting each other during pauses in the main battle. The Kurds hate Assad, but since he has tactically chosen to leave them alone they are now fighting the Sunnis (who are allied with the Kurd's other enemy, Turkey). The Christians don't like Assad either, but view him as the lesser of evils. They stand to lose if the country erupts into an all-against-all civil war. Most other minorities share the Christian's dilemma--Assad always billed himself as the protector of minorities. The Palestinians--Sunnis--have divided allegiances.

SA will have you believe that the war is a working class rebellion against the Syrian "bourgeoisie." Again, world to Socialist Action: there is no Syrian "bourgeoisie." People like me are inclined to call Assad's regime socialist, and indeed, the Baath party has strongly secular, vaguely Marxist roots. They were closely allied with the Soviet Union during the Cold War. But in deference to SA, who will reject that characterization, I'll just call it a kleptocracy. There are no capitalists in Syria, i.e., people who put up capital to run businesses. Instead you have a Mob-like, rent-seeking class that, with government connivance, extorts a kickback from any business transaction.

So SA barely mentions the ethnic diversity of Syria, but instead touts irrelevant organizations such as the "local coordinating committees" (LCCs). Now I'd never heard of these folks before, and probably you haven't either. In SAs imaginary universe, they represent the class-conscious, secular workers striving to impose a secular, socialist state in Syria. Put another way, they are advocating for the traditional Baath Party program, claiming only that they could execute it better than the existing Baathists. We could call them the Re-Baath party. This will not go over well. World to Socialist Action: secular Marxism (or more accurately, Leninism) is an absolute dead letter in Syria. It has no future. Get over it.

In SA's imagination, the most evil country in the world is the United States, who at this very moment is conniving to commit the most horrible atrocities against the Syrian people. To prevent this, even the most innocuous involvement by the US must be prevented at all costs. Thus SA opposes humanitarian assistance. Their article puts "non-lethal aid" in scare quotes, because it's supposed to be scary. Hence the absurd demand: US Hands Off Syria.

Syria's problem is not too much US involvement, despite what the irrelevant LCCs say. It is precisely the opposite--too little American involvement. The truth is that Syria is just not that important a country. At this point the primary US concern is that the war doesn't spread. It has sadly already reached into Iraq. If we can keep it out of Lebanon and Jordan, so much the better. The last thing anybody needs is for Turkey to get directly involved. Syria would be much better off if the US would just invade, prevent a round of ethnic cleansing, and install a civilized government. But we're not going to do that because that simply invites a larger war. We're not even providing arms to the rebels for just that reason.

If the US is the most evil country in the world, it isn't by very much. I've quoted the last paragraph in the article, but here's the lede sentence:
No serious of Middle Eastern politics believes that the Zionist, colonial, settler, and racist state of Israel makes a single move before consulting with its U.S. benefactors.

Wow--that's some invective! Apparently the Global Jewish Conspiracy still lives. World to Socialist Action: Israel is a bit player in the Syria conflict. It has no dog in the fight and it doesn't like either side. SA, by grotesquely exaggerating both the influence and evil of the Jewish state displays it's not very secret anti-Semitism.

Further Reading:

Wednesday, May 8, 2013

The Status of Marxists

This post is inspired by an article by Kevin Simler that appeared on Ribbonfarm, entitled The Economics of Status. Simler's piece is long, complex and interesting--I will not try to summarize it here. Read the whole thing.

Marxists rarely talk about status at all. They view it as immaterial, and therefore derivative to the more essential economics. I think this is backwards--status is all about sex, and serves as a proxy for reproductive fitness. High status individuals are sexy; low status ones are not. Thus I think status is more important to the individual than economic well-being.

Simler's principle thesis is that status can be transacted--that is status has some properties that we attribute to money. In some cases this is explicit, as when a star athlete trades status for cash by making a product endorsement. In other cases it is a simple courtesy. "Please" and "thank you" are words that transfer a small amount of status to the recipient--kind of like a tip.

So I notice that my college's president is effusive in his "pleases" and "thank yous." And why shouldn't he be? He has a high status and it costs him almost nothing to spread a bit of that around. He is happy to convey status to janitors and cafeteria workers. Not only will it (slightly) reward them for their efforts, but it is also an indirect investment in the president's own future status (he'll be known as a "nice guy"). On the other hand, many low-level workers and students are much less generous with the courtesy words--they don't have status to share.

My status has gone down since I got "fired" from my administrative position. A "thank you" from a mere professor carries a lot less weight than that from a dean. In my former role a simple word would suffice, but now people want me to actually return the favor. True celebrities, such as Bill Clinton, often forget that people work for money--they occasionally think that a mere "thank you" will cover lunch at the local diner. And often it probably does.

The primary difference between economic success and status is that wealth is not zero-sum. In economics, a rising tide lifts all boats--everybody in a society can get richer. But status is a zero-sum game. No rising tide will turn my 10 ft rowboat into your 100 ft yacht. If your status goes up, it's only because mine goes down.

I've always thought about status as "the ability to get laid." Now that's probably too narrow a definition, but it brings up the point I want to discuss in this post. That is, men and women are in separate status competitions, and only rarely compete with each other. In the modern world I am in economic competition with women--for jobs and money--but not in a status competition. My economic competition with female colleagues is nowhere near as brutal as my status competition against other men. Regards status, the battle of the sexes does not exist.

So my definition of status--the ability to get laid--applies mostly to men. This has some interesting implications. First, while women are not competing against men, they are the arbiters of male status. Men are rewarded for having traits women like: tall, dark, handsome, brave, intelligent, rich, courteously dominant, passionate, manly, etc. Conversely, weak-willed, cowardly, short, effeminate, poor men have lower status.

There is a correlation between money and status. Being rich will accord you some status, and some men--Donald Trump comes to mind--have acquired status by becoming rich. But in most cases the cause-effect arrow goes the other way. Pro sports figures have high status, and get rich as a result. Saul Bellow never sought wealth, but his high status brought him money. Steve Jobs regarded money as just a way of keeping score--the game he played was a status game, not a wealth game.

Some men have high status without a lot of money. The burly construction worker (assuming he's healthy) can have substantial status, as does the special forces soldier. There are many college professors who parlay charm, intelligence and good looks into status, without it ever becoming money. Marxists have it wrong--money does not make the world go round. It's male competition for female favor that sustains rotation.

The hard-charging, risk-taking, manly daredevil can be high status--think Ernest Hemingway. Or as Woody Guthrie put it, "there are a lot of good ideas in a pint of whiskey, but not too many in a quart." The bad boy act is successful, unless and until you fall over the cliff. The difference between the high status bad boy and the homeless, derelict bum is one drink too many. Status can plunge dramatically--just ask Mr. Hemingway.

There is a status competition among women as well, and fashion is certainly part of it. Trotskyists, in the person of Evelyn Reed (here and here), argue that women are forced by the patriarchy to engage in degrading fashion competitions to attract men. They do it all for men, is how the argument goes. And it's completely wrong. Men are not attracted to fashionistas--they're too skinny, too tall, and above all, too expensive. The fashion thing is an intra-female competition for status that has nothing to do with men at all.

So who is a high-status female? I'll posit that such a lady is like Cinderella. She's beautiful, of pure character, highly moral, and ignored by society. Yet she inspires a handsome prince, aka high-status male, to fall madly and helplessly in love with her. There are any number of romance novels and chick-flicks along the same theme. The movie Maid in Manhattan comes to mind--that is the Cinderella story for the modern age.

Hillary Clinton, who remains the love of Bill's life, is a high-status woman. (His transgressions ironically probably enhance her status.) Monica aspired to be high status, but failed miserably. This is why women find Hillary so admirable, while men are mostly unimpressed. Feminists think this is just hopelessly retrograde, which of course it is, harking back to stone-age, human nature. They also conflate money and power with female status. They're wrong--Hillary's status has nothing to do with either.

Further Reading:

Saturday, May 4, 2013

Free Trade or Foul

If there are any principles I have held consistently since I was a teenager, it is these: free trade and open borders.

The Socialist Workers Party (SWP) supported free trade when I was a member (1969 - 1977). They regarded protectionism as an effort to divide the working class, i.e., to put US workers and foreign workers in competition with one another. At the same time, the Party opposed any trade agreements (such as NAFTA) on principle, arguing that anything a capitalist was for had to be bad for workers. So they had it both ways--they supported free trade while opposing any free trade agreements. You can't win with these people.

Socialist Action (SA) has a similar position to this day, though they are now more inclined to emphasize their opposition to free trade agreements than their support for free trade. Unlike the SWP, SA cozied up to the Occupy Movement, which required them to radically oppose any trade agreements. SA's position is described here, among many other places.

Their argument is that trade agreements are never perfect, always leaving parts of the economy protected, and hence they're just horse-trading between various capitalists. They're not really free trade. In their view the corruption is so bad that in some articles the words "free trade" always appear in scare quotes. And of course they're right: there is horse-trading and corruption galore, but I remain convinced that trade agreements are generally very good. There is no question that NAFTA, for example, has greatly improved the standard of living in the US, Canada, and especially in Mexico. Despite the intense controversy at the time, today very few people oppose NAFTA in any of those countries.

The main problems that Leftists have with free trade agreements are lack of labor protections and lack of environmental protections. The extreme position (which I believe SA and the SWP both hold) is that free trade is fine as long as workers in both countries are earning equal wages. The somewhat more moderate view is the so-called fair trade model, popular in my college town and even subscribed to by my daughter! Indeed, it is a conversation with her this morning that brings this to mind.

There used to be a fair trade coffee shop in my town, until it went bankrupt. The fair trade model says that American consumers will pay a premium for their coffee, and that surplus will be passed along to coffee farmers in Uganda (or where ever) to enable them a higher standard of living.

It is easy to see how this does not work. The market price is the price that maximizes revenue for Uganda. At prices higher than market, fewer customers will buy coffee and Uganda's total revenue will decrease. At prices below market, they simply don't collect the money they could. So Uganda as a whole benefits by charging market rates.

However, the farmers who are members of the fair trade group will gain from the higher price they get for coffee. They successfully collect rents from being members of a cartel, so even though revenue for Uganda goes down, for that smaller group it goes up. The downside is pretty obvious: the country is poorer than it should be, there is greater inequality, and the farmers who are not in the cartel have drastically lower incomes.

By the same standard, American consumers benefit from market prices. If the price is too high, people will forego coffee. If the price is too low, there won't be enough coffee to meet demand. The market price is optimal for both consumers and producers. Fair trade advocates suggests that Americans should be more charitable and buy coffee even at the higher price. But as the bankruptcy of my town's fair trade coffee shop shows, this doesn't usually get very far.

The most successful fair trade cartel I can think of was OPEC. Members of the cartel made out like bandits, whereas everybody else was made poorer. Fortunately, increased oil production from non-OPEC countries has significantly clipped their wings (yay fracking!). Protectionism helps small groups of people, but mostly it just gums up the works. It makes most people--producers and consumers--poorer.

There are other ways to gum up the works, and you don't need to be a Trotskyist to come up with them. In yesterday's NYTimes, a certain Jared Bernstein--who calls himself an economist--has devised a solution for our unemployment woes. He says that our unemployment problem is because of rapidly increasing productivity--machines are replacing human beings. This is certainly partly true, and will ultimately lead to lower prices for a wide range of consumer products and services. It will increase our standard of living. And if history is any guide, the consumer savings will result in demand for new goods and services, leading to new jobs.

But Mr. Bernstein's solution is just nuts! He wants to lower productivity so that everybody can be employed. So, for example, instead of one guy operating a diesel earth mover, he'd have us hire hundreds of guys with shovels to do any excavating for us. Yes--they'd all have jobs! But it's easy to see that society is worse off.

So Mr. Bernstein wants the government to employ all the excess labor in make-work, charity projects that waste resources, are bad for the environment, and make everybody poorer. Honestly, I don't see how that helps. Oh yes, I know he'll say the new government employees should do something useful, like repair the much maligned infrastructure.

We're fixing infrastructure that way on my campus already--we're building all kinds of new buildings on the taxpayer's dime at union wages, that don't need to be built. None of the new construction will enhance any student's education by a single scintilla. In an era of declining enrollments and operating funds, the whole scheme is just crackpot. We'd be better off paying the union wages as welfare benefits, and at least save the other costs of construction.

These make-work projects do not help the economy. They just makes everybody poorer--except for the hundred or so people getting the union wages.

If the SWP had held today's SA position, I would never have joined. I couldn't have given a coherent argument as an 18-year-old, but in my gut I always thought protectionism was a form of xenophobia. I still think that. For me free trade is a matter of principle--for them it's just tactics.

Further Reading:

Wednesday, May 1, 2013

Why The Academy Sucks

On the surface this is just another alpha-male, chimpanzee-style spat. A certain Vivek Chibber tried to push Mr. Louis Proyect down a peg, and Mr. Proyect pushed back twice as hard. As Mr. Proyect has the bigger megaphone, he won the confrontation easily.

Now that's really very strange. It turns out that Vivek Chibber (Ph.D., Univ of Wisconsin) works at New York University (NYU) in the sociology department, where he is an associate professor (meaning he has tenure). NYU is one of America's most renowned colleges, where the sticker price for a year of study exceeds $44K. Contrast this illustrious perch with Mr. Proyect's: a man of uncertain (probably non-existent) academic rank, and likely without even a doctorate. My academic colleague (for I am also a professor) should have been able to brush off Mr. Proyect with a flick of his wrist. Instead, he comes across (accurately) as a loser.

Now I've never met Professor Chibber--indeed, I'd never even heard of him until now. I have nothing against him personally. But his plight is so representative of problems in academia that I can't help but use him as an example. He is the author of two books: Locked In Place (2003) and Postcolonial Theory And The Specter Of Capital (2013). The latter is described as
A provocative intellectual assault on the Subalternists' foundational work.

Postcolonial theory has become enormously influential as a framework for understanding the Global South. It is also a school of thought popular because of its rejection of the supposedly universalizing categories of the Enlightenment.
So I went to Wikipedia to look up subaltern and discovered that the concept is part of a much larger category known as Nonsense Theory. That is, it is meaningless to anybody outside the rarefied, reality-deprived, esoteric circles of academe. Nobody is going to read this stuff.

OK--not nobody. It appears that Mr. Proyect reads at least some Nonsense Theory, but he is kind enough to write about it succinctly and clearly on a free blog, omitting only all the extraneous verbosity. For this we mere mortals can be thankful, and for this Mr. Proyect has earned a sizable readership. In other words, he has a megaphone.

Mr. Proyect is an example of an independent scholar. He receives no paycheck and is beholden to no one. His influence resides only in his ability to acquire an audience, and does not depend on credentials or publications. I admire and respect this. Please note--I don't agree with a thing Mr. Proyect says. I think Marxism is nuts, and I haven't watched a movie in two or three years. But wrong and irrelevant are two different things. Mr. Proyect is wrong, but very relevant. Professor Chibber is wrong, and totally irrelevant.

Another more famous example of an independent scholar is Stephen McIntyre, of the Climate Audit blog. Mr. McIntyre (no Ph.D.), more than any other single individual, is responsible for the demise of the global warming movement. Some of us believe he's won the scientific argument, but there is no question that he's won the political argument.

Some academics also become independent scholars--Tyler Cowen comes to mind. Yes, he's a super-credentialed bigwig at George Mason University, but his real influence comes from the blog, Marginal Revolution (that I read religiously). Further, he is co-founder of MRUniversity, which aspires to offer excellent, on-line economics education to a global audience for free. In other words, he's biting the academic hand that feeds him.

So how is it that the overpaid, highly-credentialed, ultra-distinguished Associate Professor Chibber has gotten so far detached from reality to take Nonsense Theory seriously? His problem, ultimately, is the Internet. Back in the good old days, peer review had merit. Print publication was expensive and had to be rationed. The peer review process facilitated that rationing in a reasonably fair way.

But publication on the web is free--there is no reason to ration it, and thus no more reason for peer review. In this environment the bad parts of the peer review process dominate. Peer reviewers are a small circle of like-minded people who referee each other's papers. Peer review is no longer about merit, but instead it's about who you know and how much you flatter them. This has become a glaring problem in climate science (where the peer review process has been discredited), and it leads to Professor Chibber's delusion.

Professor Chibber is talking to the wrong people. Instead of potential referees, he should seek out that larger group of educated citizens who are interested in social progress. In a word, he needs Mr. Proyect's audience. People who read The Unrepentant Marxist will also read the books that Mr. Proyect recommends (just like I choose from Mr. Cowen's suggestions). It's a pity that Professor Chibber has damaged his odds of favorable mention on that blog.

But that's not the worst of it. Independent scholars are self-financing. Mr. Proyect earned an honest living during his career, and Stephen McIntyre served as a mining engineer. By contrast, Professor Chibber is a paid flack, sucking up to the referees and the academy, because without their good offices he'd be out on the street. And ironically, apparently the guy claims to be a revolutionary! Sheesh--I'm more of a revolutionary than he is.

So we have undergraduate students--suckers all--paying up to $44,000 annually to support Professor Chibber's brown-nosing. This is a scandal. Now I have no objection to Professor Chibber writing anything he wants to write, but he has absolutely no business expecting it to be subsidized by 19-year-olds. Fortunately, I think the business model of schools like NYU is broken, and it is plausibly likely that Professor Chibber will end up unemployed at some point. I have nothing personal against him, but I desperately hope that happens soon.

If there is any injustice in this world, it's crackpot college professors living off the backs of the screwed generation.

Addendum: OK--I admit it, I really do dislike academics. This despite the fact that many (most) of my best friends are academics. I consider it a dishonest, disreputable, parasitic profession. Clearly there's an emotional driver behind my attitude. It may be because my career has not been as successful as I wanted it to be, or it may be that I wouldn't want to join any club that would have me as a member. Be that as it may, I could write several essays on Why The Academy Sucks, and will undoubtedly return to this topic in the future.

Further Reading: