Louis Proyect and the Pro-Poverty Girl

In one of the small incongruities of our age Louis Proyect used to work for Goldman-Sachs, though unsurprisingly only for a short time. Nevertheless, he's on CEO Lloyd Blankfein's mailing list, receiving the annual missive to shareholders. To which Mr. Proyect responds with an open letter.

Goldman-Sachs is in the financial services industry. A brief account of what they do is presented on their webpage here. It is highly specialized. Just as the science literature is mostly opaque to people outside of the discipline, much of what Goldman-Sachs does is unintelligible to the layman. As Adam Smith pointed out over two centuries ago, specialization is a good thing. It creates more different kinds of jobs and more opportunities for trade. Indeed, specialization is the mark of rich societies--people working in large, deep, complex markets will be wealthier than those living in simple, subsistence-level economies.

Still, opacity leads to paranoia, and especially on the Left (but also on the Right), Goldman-Sachs has come to represent surreptitious villainy and corruption. That the firm's alumni populate the Trump administration is apparently proof-positive the fix is in. Without in any way excusing actual corruption  (which undoubtedly exists), I simply don't believe it is the major problem with our government, and I think these fears are way over-wrought.

Mr. Proyect objects that Goldman alumni Gary Cohn and Steve Bannon now hold high positions in the Trump administration. He just assumes that these gentlemen's ambition is solely to make the world right for Goldman-Sachs. In particular, he condemns them for supporting the repeal of Dodd-Frank.

I don't understand Dodd-Frank--it's a very complicated bill regulating an industry that is to me opaque. I don't think Mr. Proyect understands it either. But I have it on authority from people I trust that it is a highly intrusive, expensive, and vague set of rules that if completely followed would destroy most financial institutions. It is not followed, and is substantially unfollowable. It's purpose is to prevent a repeat of the financial crisis in 2008. Unfortunately, the world's next financial crisis will not remotely resemble 2008, and hence won't be prevented at all. So the primary effect of Dodd-Frank is simply to inhibit business and make people poorer.

Either way, men from Goldman-Sachs know more about Dodd-Frank than either me or Mr. Proyect. And they are no more in favor of a financial crisis than anybody else. So I'm generally inclined to defer to their judgment. Plus I distrust regulations--they hardly ever work as intended.

Then comes the quote that Mr. Proyect reports as being the takeaway:

(Mr. Proyect quoting Mr. Blankfein) Putting aside one’s individual politics, the outcome of the U.S. election raises the possibility of more stimulative tax and regulatory policies, as well as plans for more infrastructure spending. This represents a substantial change in direction for the U.S., and offers many investors and companies a reason for optimism.

So what is it that makes Mr. Blankfein optimistic? Obviously more money for Goldman-Sachs, but not only that. It also means more investment (in capital goods and equipment), more employees, more consumer products, and even more infrastructure. Why is this bad? Mr. Proyect give us a really silly reason:

A reason for optimism? My god, are you are out of your mind, Mr. Blankfein? Scientists have concluded that climate change is threatening a sixth extinction. You really need to read Naomi Klein or even watch Al Gore’s documentary. By seeing everything through the cash nexus, you are losing the thread.

We all know that Mr. Proyect loses sleep because of the apocalypse du jour. Yesterday's hypothetical disasters have conveniently been forgotten: an asteroid hitting the earth, a new ice-age, peak oil, nuclear war, a global pandemic, or perhaps a population explosion. Scientists, who have and will warn us about lots and lots of things that have never happened, are no better at predicting the future than common undergraduates. Mr. Blankfein--long familiar with failed financial forecasts--rightly dismisses such Luddite fever dreams.

(Mr. Proyect could have cited a truer criticism. If all the good things Mr. Blankfein lists are bought from borrowed money, then it probably is bad. For however much it helps us now, we'll have to pay it back in the future.)

But Mr. Proyect is not alone in his criticism. He has a powerful new ally: a little girl. Or at least the statue of a little girl who stands athwart the ambitions of Wall Street's bull in Lower Manhattan.
             

There she stands--in tailored dress and bespoke shoes--steadfast against wealth and prosperity. Odd, because she's as much a beneficiary as Mr. Proyect.

Perhaps these are her shoes, available from Zappos for $60.

Or maybe she's a more petty bourgeois consumer--akin to Mr. Proyect--and shops at Saks Fifth Avenue, where these can be had for around $400.

I couldn't find her dress on-line (maybe I just don't know where to look), but it's obviously store-bought and fits perfectly. If it cost more than $100 I'd be astonished.

Little Miss Statue lives very well at low prices because of the miracle of modern capitalism. Facilitated in part by the people at Goldman-Sachs.

She is no more inclined to live off the land on an eco-friendly subsistence farm than Mr. Proyect is. The odd thing about her statue is that she doesn't have a cell phone. How many well-dressed little girls in Lower Manhattan do you see who don't own a cell phone? Even Mr. Proyect owns a cell phone! Personally I think she's just trying to fake poverty.

So here she is--she and Mr. Proyect--standing firm for poverty for everybody else besides themselves. Not on purpose, but just because they don't understand that a modern economy needs capital to be efficiently allocated. And such allocation is non-trivial--it requires many very specialized employees doing complicated jobs. What the little girl doesn't comprehend is that her shoes and her dress and her cell phone, along with the electricity at her house and the subway that brought her to Wall Street, all depend on finance (among many other things).

On second thought, maybe I give her too much credit. Maybe she knows all to well that her efforts will make the world poorer. Perhaps she's envious, or evil, or selfish, or stupid. I don't know. Whatever the case, there she is, standing fearlessly in front of the bull demanding her welfare check.

The bull knows what's going on. He's raging for a reason. He doesn't see a little girl. What he sees is the poverty devil in disguise.

Down With Poverty!

Further Reading:

• Book Review: Rise & Fall of American Growth
• If You Really Care About the Poor
• Mr. Proyect's Pro-Poverty Alliance

The 48th SWP Convention

There's nothing like a March blizzard (more than a foot of snow on my doorstep) to make time to complete an unfinished post. I owe my former comrades in the Socialist Workers Party (SWP) some comments on their 48th National Convention, held January 14-16 in New York. The report, by Naomi Craine and John Studer (C&S), lacks some vital statistics, like attendance, etc., but has political substance.

The bottom line is this:

Convention delegates adopted the three reports and summaries, the introduction to the Clintons’ Anti-Working-Class Record, Jack Barnes’ letter to Raúl Castro, and other motions on the party’s political course. They elected a National Committee to lead the implementation of convention decisions.

The Introduction to the Clinton book was written by Steve Clark, and can be found here. The Letter to Raúl is reprinted here. The names of the fifteen National Committee members (along with eight alternates) are posted alongside C&S's article.

I'll reduce the whole thing to bullet points, expressed in my own words.

• The world is going to hell in a handbasket.
• Fidel is a saint.
• The sole alternative to the Democrat and Republican parties is the SWP.

Is the world really going to hell? It can certainly seem that way. The Introduction describes refugee flows, wars, and new diseases. C&S agree with Trump that the country has descended into "carnage," evidenced by "a decline in the size of the working class as jobs disappear, falling real wages, cop brutality, attacks on women’s right to choose abortion, multiple deployments for workers in uniform sent to fight and die in Washington’s wars in Afghanistan, Iraq, and more." The SWP attributes all of this to a "crisis" in capitalism.

They're wrong, and so is Donald Trump. Most of the increased "carnage" is just an illusion, brought on by the rise of social media. That turns everybody into a reporter, meaning that events that never used to catch the public eye now become headlines. Newsfeed from Twitter. Martin Gurri, in his sweet little book The Revolt of the Public, describes this phenomenon very well.

Technology has improved in other ways as well. Disease has always been with us, but today we can identify it in very specific terms, e.g., the scary Zika virus. The proliferation of labels makes it look like disease has gotten worse, which it definitely hasn't. So this, too, is an illusion. Likewise, while wars are more destructive than they used to be, they're hardly more common.

Coincidentally, I am just starting to read Tyler Cowen's latest book, The Complacent Class (I'll likely review it here when I'm finished). His argument is that, far from there being more turmoil, there is in fact much less. Americans are moving less, switching jobs less, going out less, etc. Mr. Cowen promises actual data to back up his case, which whether you agree with him or not, makes for a better argument than the Party's method of piling on cherry-picked anecdotes.

The Party describes all of this as a crisis of capitalism, due to the fact that the ruling class requires ever increasing profits. Accordingly, the rulers are all trying to reduce our standard of living so they can have more for themselves.

This makes no sense. No capitalist can earn a profit unless somebody buys their products. The goal of capitalism, therefore, is to increase consumption, i.e., to make everybody richer. If capitalism has a problem it's not that we're too rich, but rather that we're too poor. The ruling class has absolutely no desire whatsoever to lower our standard of living--quite the contrary. They've lent us money to beat the band, and then convinced us (as if we needed convincing) to lend ourselves even more and more money. The result is that current entitlements are unsustainable, and the world has an incipient debt crisis on its hands.

That may be a crisis, but it's definitely not the one the Party describes. The imminent impoverishment of the world's working class is not in the cards.

Is Fidel a saint? Of course not. Mr. Barnes, in his letter, simply argues by assertion. Any criticism of Fidel is a "slander." What's left are only compliments. So of course he appears rather saintly.

The letter elevates Lenin and Fidel as the two most important figures in 20th Century history. Without them, the only two successful Communist revolutions would never have occurred. Much of this is semantics--it depends on how you define "success", "communism", and "revolution." Deviate from Mr. Barnes' orthodoxy in any way and you'll come to a different conclusion.

For me, it stretches credulity to label either the 1917 or the 1961 revolutions as "successful." The former led directly to Stalin, purges, famine, exile, poverty, and mass murder. Fidel's 1961 version was not quite so disastrous, but has destroyed Cuba's economy, her links with the outside world, and decimated her population. The brightest and most ambitious Cubans now live in Miami, where they are doing very well. They will never go back to Cuba in large numbers. In that sense the Cuban revolution was successful for the United States--we got highly-skilled immigrants.

Both revolutions have left their respective countries far worse off than they were before. That's not a success. Mr. Barnes closes his letter with a quote from Fidel: "There will be a victorious revolution in the United States before a victorious counterrevolution in Cuba." Fat chance.

The SWP, like all the other vanguard grouplets, believes that it and it alone can successfully lead a revolution in the US. Taken seriously (which is hard to do), this means that the future of our country is in the hands of the 15 people elected to the National Committee. These include, among others, Jacob Perasso, whose claim to fame is that his apartment was once burglarized. I've never quite understood how this list is put together--I think Jack Barnes just makes it up. I don't know why Brian Williams isn't on it--he's clearly one of their best people.

And then there's the list of eight alternates, ranked by number, like in a jury. Does the Party really expect that eight of their National Committee members will expire in the next two years? Of course not. This is just a way of passing around extra bennies. Brian Williams isn't on that list, either. Got me hanging.

The Party has about 100 members. If past procedure is still followed, the convention is delegated--one delegate for every five comrades or major fraction thereof--for which alternates are also chosen. So perhaps 40 comrades had some official obligation at the convention. Those delegates elect the National Committee, albeit from a slate proposed by the Political Committee, which itself is a subset of the National Committee.

That's an awful lot of bureaucracy for 100 comrades! The whole thing is silly, and ultimately undemocratic because the entrenched leadership can put its thumb on the scale every step of the way. Not that that matters, because unlike in Cuba or the Soviet Union comrades can quit the organization without being shot.

Further Reading:

• Book Review: Is Socialist Revolution in the US Possible?
• If You Really Care About the Poor
• Book Review: Are They Rich Because They're Smart?