Saturday, May 1, 2021

Amazon Defeats the Union

The Retail, Wholesale and Department Store Union (RWDSU) tried to organize the Amazon warehouse workers in Bessemer, Alabama, and they failed. The vote was 1798 against and 738 for the union, from a total of 5698 workers.

I get my information from several articles at Left Voice (LV - here, here and here), from Socialist Resurgence (SR - pdf, see p. 4), from Vice (here) and from the Wall Street Journal (WSJ - here and here).

My correspondents give several reasons for the loss. First, they claim that Amazon cheated. There was an "illegal" USPS mailbox set up at the employees' front door to make it easier for them to mail in their ballots--but gave the impression that the company would check the ballots. Employees were required to attend meetings where the union was denigrated. The size of the bargaining unit was inflated to include supervisors and managers, and workers were subject to a barrage of text messages. The WSJ partially disputes some of these points, and I doubt--even if true--that any of this could have swung the election to such an overwhelming extent. If the workers really wanted a union, none of these tactics would've mattered.

Second, the loss is blamed on "business unionism." That is, the union tried to organize from the top down, and failed to do the grass roots work necessary to sway the vote. LV's reporter, Tatiana Cozzarelli, relates that, as a reporter, she found it nearly impossible to interview actual Amazon workers. They weren't involved in organizing activity at all. The union dismissed this, saying that they were keeping them under wraps to prevent retaliation. But to me (and apparently also to Ms. Cozzarelli) it was because the workers just weren't interested. The lopsided vote, along with the large number of non-voters, bears out this hypothesis.

Finally, the WSJ suggests that workers didn't think the union could do anything for them. They already get, as starting wages, $15/hour, which in Alabama is pretty good scratch. Amazon recently announced that, while keeping starting salaries the same, it was raising wages nationwide of many employees by as much as $3/hour. The workers didn't believe a union could improve on that, and then would take a cut off the top for union dues.

Amazon has a reputation (probably never entirely fair) of treating its employees like disposable commodities--as casual labor. If somebody quits, a new worker could replace them easily enough. But this is no longer true, for two reasons.

  • There is a labor shortage in this country. Demand for labor is strong as we recover from the pandemic, and the supply of workers is diminishing for demographic reasons.
  • Amazon is automating its warehouses. This means that it needs fewer employees, but they require higher skills. They need to work well around complicated and potentially dangerous machinery.

The result is Amazon has to pay higher wages, it has to provide some kind of career track, and it has to cover medical and retirement benefits. It's doing all those things. This is no longer a job for casual labor. Amazon can and will raise wages as much as needed to make sure it has the labor force it needs. If wage increases are what workers are after, they don't need a union--and the workers knows that.

So instead of promising wage increases, the union offered better working conditions. LV guest contributor Michael Goldfield describes it as "dignity."

And, there were not clear sets of public demands the union put forward, just dignity, etc. They should have said, if the union is certified, we will ask for $20 or so per hour, union safety and health committees, longer and more frequent breaks and lunch periods, less monitoring by computers and supervisors, no discussion of output and breaks without a union steward present, etc., demands that could have been developed at public meetings of workers, not to put in stone the examples that I have given.

Unfortunately, this dignity thing is expensive! And not just that--it destroys Amazon's entire business model. The company can't run a business paying employees to take longer breaks, extended lunch periods, and endless discussions with shop stewards.

But the real clinker is the "monitoring by computers and supervisors." Amazon has invested millions in equipment--robots if you will--and it's the robots who drive the speed of work. The investment is wasted if the employees purposely slow down the line. From the company's point of view this is complete non-starter. If the workers can't work, then Amazon will just pick up its robots and move them some place else.

The bargain is: you (worker) promise to arrive on time, every day, and to work as hard as you can during your shift. In return, we (Amazon) will pay you as much as you need to make that happen. For all that, Amazon is doing its best to improve working conditions within the constraint of running an efficient shop, e.g., by rotating workers from job to job to reduce repetitive motion problems.

What the union really asked for was the right to sabotage Amazon's business. The workers, by overwhelming margin, understood that for what it was, and rejected it. Because they realized that a secure future with a solid paycheck, health and retirement benefits will not be forthcoming if the business is destroyed.

This illustrates an important point: the incentives for the union differ from those of the employees. The workers benefit from higher pay and benefits, and reasonable attention to working conditions. 

The union, meanwhile, benefits most by increasing the total number of employees--for union dues increase more by employee number than by salary level. That's why they want to gum up the works as much as possible, for by minimizing worker productivity they maximize headcount. Apparently Amazon employees saw through this scam, too, and understood that their long-term future is not well served by sabotage.

I think the traditional union with contractual bargaining rights is a dead letter. It's very expensive, it leads to an unaccountable bureaucracy, and has incentives that don't correspond to the employees'. A strike to form a union benefited first and foremost the RDSWU--and that's why Ms. Cozzarelli couldn't find many workers involved in the effort.

More successful will be an informal employees' association, similar to what the West Virginia teachers had when they won their strike. An association travels light--it doesn't suffer under the legal and bureaucratic constraints of a legal union, it needs little or no staffing, doesn't need to pay dues to an "international," and is under no contractual or legal constraints.

My Trotskyist friends might call this suggestion-box unionism. And they'd be right in those cases where labor-management relations are good. But if there's any conflict, an association could make life very difficult for their employer. Recall that the West Virginia teachers' association actually called a strike--despite not being a union. Note that Amazon has a reputation for treating workers poorly--no union is necessary to make that case if the charge is true. The company would be forced to respond--as it is currently doing.

By voting down the RDSWU, the workers at Amazon's Bessemer warehouse showed they are much smarter than the college professors and grad students who write for Left Voice and Socialist Resurgence give them credit for.

Further Reading:

Thursday, April 22, 2021

Peak Bitcoin?

Have we reached peak bitcoin?

Yes--I think we have, at least for this year.

I feel very strange saying that, seeing as I've been an enthusiastic bitcoin bull for many years. But now I'm bearish and have recently sold half my hoard. The reasons are various--some concern our current circumstances, but others reflect a changed understanding I have about the whole crypto phenomenon.

There is the old market saw: Buy the rumor. Sell the news. The idea is that the market goes up as rumors swirl, but by the time they actually become true the trend is already priced in. Then it's time to sell--or at least stop buying.

For months two big rumors have been making the rounds. First, big institutions have started buying bitcoin--most famously Tesla purchased $1.5 billion worth. Other companies are following suit, and many of the big money-center banks are jumping aboard. Options and other derivatives now widely available, and it's just a matter of time before an exchange-traded fund (ETF) is offered.

In other words, institutional involvement in bitcoin is no longer a rumor--it's a fact.

The second rumor--now news--was the prospective IPO of Coinbase. Coinbase is the largest crypto exchange in the United States--it's the place to go if you want to buy or sell bitcoin. Its going public represents a coming of age--the crypto debutante has arrived at the ball. And come of age it did--Coinbase is now traded on the NASDAQ and has a market cap of about $62 billion. Unlike many new public offerings, it's a profitable company.

The Coinbase reality has not quite lived up to the hype. Bitcoin rose to nearly $65,000 per coin leading up to the IPO--afterwards it fell to about $51K (now back up to $54K). Coinbase is priced in--the news will no longer move the market by much.

So the two big rumors that have been driving the bitcoin market for the past six months or so are now priced in. What's taking their place? Nothing that I can see. Yes, there are stories about progress in the DeFi space, or in Lightning applications. Have you heard of those? No? I didn't think so. They're just rumors of rumors--vaporware, if you will--without enough substance to push up the price.

That could change--and eventually I think it will. But for now there are few reasons to think bitcoin will go up.

A second reason I'm now bearish is precisely because of the aforementioned institutions. Institutional investors--banks, pension funds, insurance companies, hedge funds--behave differently from retail investors like you and me. We retail folks make one-directional bets--we buy the coin because we think the price is going up. If it goes down, we're pissed.

Institutions don't always do that--they make two-directional bets so that they can profit whether bitcoin goes up or down. They lose money when the price doesn't move much at all. How they do this is complicated--and since I'm not an institution I don't follow all the details--but it's got a lot to do with options and short-selling. The point is, they're not betting on bitcoin, instead they're betting on the volatility of bitcoin.

So bitcoin is wonderful for volatility investors--it goes up ten-fold one day, and crashes 80% the next--and institutions make money both on the way up, and then again on the way down. It's good work if you don't mind sitting in front of a computer screen 24/7. What they're really doing is arbitraging volatility--or oversimplifying it another way, they buy low and sell high.

The result is that bitcoin's low prices get higher, and the high prices get lower--the institutions squeeze the volatility out of the system. Thus bitcoin is now unlikely to crash by 80%--aren't you happy? But the other side of the bitcoin is also true--it's unlikely to go up by 1000%, or maybe not even 50%. In other words, bitcoin just becomes another boring investment, kind of like gold. OK, maybe not yet that boring, but it's getting there.

So I think reality has squashed the upside, and institutions have limited the downside. It's not gonna go up because nothing is driving the market, and it's not going down because institutions are buying on the dips. So there's little left for the one-directional, retail investor like me, and what is left is mostly on the down side. I think bitcoin is in a trading range, perhaps between $40K and $60K, and absent some big new rumor it will stay there until at least the New Year.

I finally came out as a bear after hearing a talk by Raoul Pal (paywalled) entitled The Exponential Age: Crypto's Fast and Furious Rise. As the title suggests, it's a breathless argument for the continued steep rise in cryptocurrencies, including bitcoin. We're all gonna become billionaires if we just hodl long enough! I thought it was way over the top, and it convinced me that the coin had topped out.

There is one argument for bitcoin that until a few weeks ago I subscribed to, but now I think it's wrong. The claim goes that bitcoin will eventually replace the dollar as the world's reserve currency. At first glance that seems reasonable, but on closer examination it completely falls apart.

Bitcoin will never become the world's reserve currency. Indeed, the very term is a misnomer.

There are two parts to this reserve currency business, and it's important to keep them straight. The first is the currency in which world trade is denominated--currently it is the US dollar, or more precisely, US dollars deposited in foreign banks known as eurodollars. If the only constraint on global trade was denominating it in the proper currency, then yes, bitcoin could solve all our problems. So could gold, or euros, or even toothpicks. The choice of currency is at some level arbitrary.

But that's not the essential feature of a reserve currency. A reserve currency has to finance global trade, not just denominate it. To oversimplify, some countries run trade surpluses while others run trade deficits. The surplus countries have to lend money to the deficit countries. In part this is just an accounting principle--the balance of payments has to balance.

Suppose Thailand ran a surplus in it's trade with Paraguay. Then for that bilateral trade to continue Thailand would have to invest in Paraguayan government bonds--along with all the other countries with which it ran a surplus. This is completely impractical. What happens instead is that Paraguay borrows money from a bank, while Thailand lends (deposits) money to that same bank--and the bank makes sure that all the numbers worldwide add up to a zero net balance of payments.

So what do you want in a bank? It has to be solvent--nobody wants to invest in a bankrupt bank. It has to be honest--that is the bank can't trade too much on its own account. And it has to be secure--no bank robber is gonna get away with the cash.

So who is the bank for today's global trade? It's the United States of America. We're definitely solvent--don't let anybody ever tell you otherwise. We're completely self-sufficient in food and fuel. Indeed, we have most of the natural resources we need. We have lots of people--the third largest in the world. Our population is younger than any other developed country.

We're (relatively) honest. For the most part we don't play favorites among nations, and when we do (e.g., impose sanctions) it's to widespread international complaint. We're honest in major part because international trade is a small percentage of our GDP--again, the smallest of any large nation. We're so self-sufficient we don't need to cheat.

And we're certainly secure--we have by a big margin the world's most powerful military. And our geography is a huge advantage--neither of our neighbors is a geopolitical rival. Nobody is capable of invading us. We have no territorial disputes with anybody.

Bitcoin is a computer program. The USA is a country. It's an apples & oranges comparison--and it should be obvious that bitcoin can't finance global trade any more than little green pieces of paper could do so by themselves without the full faith and credit of the USA. A so-called reserve currency isn't really a currency at all--it's really a very big bank. Only the USA is big enough to fit the bill.

I think crypto technology will dramatically change finance and property transactions, and so it will make things cheaper and better for everybody. Bitcoin is an indirect investment in that change, and as such it will gain value. That's why I'm still long-term bullish. But the rhetoric has gotten way out of hand, and expectations need to come down a few notches.

So I've sold half my stake--and I'm keeping the other half in case I'm wrong, and also for whatever long-term gains still remain. Though I think the big gains from crypto are probably behind us.

Further Reading:

Sunday, March 21, 2021

Keith Leslie's International Report

Socialist Resurgence (SR) held a convention meeting on March 13th, and issued the usual, Trotskyist-style reports: a Political Report by Erwin Freed, and an International Report by Keith Leslie. The topic for this post is the latter.

Readers may recall Mr. Leslie from our discussion of the long and excellent monograph he wrote while he was still a member of Socialist Action, entitled China: A New Imperial Power (pdf). In those days he was known as "Comrade Keith," and while I credited him with considerable erudition, I faulted him for putting too much weight on the word imperialism--a mostly meaningless term.

Unfortunately, the same error leads him astray in the International Report. He is so convinced that the US is an "imperialist" power, and that China aspires to be an "imperialist" power that he completely misses the historical dynamic. So let's just ignore the word imperialism and try to make sense of things as they really are.

Here's a key graf:
The election of Joe Biden heralds a new effort by U.S. imperialism to halt or reverse the phenomenon of its declining global power. The Trump administration sought to reinvigorate U.S. standing through brash unilateralism, disruption of existing agreements, and trade wars waged on every front, including against both traditional allies and opponents in Europe and Asia. Meanwhile, it suffered a series of embarrassing reversals such as the failure of a U.S.-backed coup effort in Venezuela, a partial withdrawal of military forces from Syria, which provoked wide backlash in bourgeois circles, and a negotiated truce in the trade war with China.

The first sentence is partly true. Following WWII the US contributed about 50% of gdp; today the value is a bit over 25%. But this is only relative decline--in absolute terms the US economy has grown like gangbusters. It's just that the global economy has grown faster because it started from a much lower base. In particular, China went from zero to hero once it got over the whole Revolution-Mao-Tse-Tung-mass-murder thing.

The Trump administration, far from trying to "reinvigorate U.S. standing" intended precisely the opposite. His goal was isolationism--and for good reason. To wit:

  1. The US depends less on foreign trade than any country on earth (for which data exists) besides Afghanistan and Sudan. Our total trade (imports plus exports) amount to only 26% of gdp. Even Cuba (at 27%) relies more on foreign trade than we do. By comparison, China is at 36%, Canada at 65%, and Germany at 88%. (The leader is Luxembourg at 382%, but for obvious reasons small countries have a greater dependence on foreign trade than big ones.)
  2. Yet, despite our relative self-sufficiency, we have been financing global foreign trade through the Eurodollar system. This is known colloquially as "the dollar is the reserve currency." 
  3. Owning the reserve currency has some big advantages (we can unilaterally sanction anybody we want), but it comes with a huge disadvantage--we have to run permanent and large trade deficits. That's because everybody else needs dollars in order to finance their trade, and the only way they can get dollars is to sell into the US market. Thus our imports are nearly unlimited, while our exports are capped because our trading partners are hoarding dollars to use as a global currency.
When the US contributed 50% of global gdp, financing the reserve currency was a tolerable expense, and the advantages outweighed the cost. But now the shoe is on the other foot--especially since the US is nearly self-sufficient, and including Canada and Mexico almost entirely self-sufficient. Trump decided (rightly in my opinion) to stop financing global trade, and as a corollary to repatriate manufacturing back to the United States (so we don't have to import the products). Hence all the tariffs on everybody.

If we're gonna withdraw from foreign trade, then there's no reason for us to be the world's policeman. Thanks to fracking, we no longer have much interest in the Persian Gulf--the US Navy has largely withdrawn from that venue. Likewise neither the Indian Ocean nor the Mediterranean are of much concern for us. There's no reason for us to have troops in either Afghanistan or Syria--or for that matter in Germany or the Korean peninsula. Trump--left to his own devices--would have withdrawn US troops from all those locales. Beyond North America and the Caribbean, only the North Atlantic, the North Pacific, and the South China Sea remain important trading routes for us.

Put bluntly, the United States has not been acting like an "imperialist" nation. Quite the opposite. Mr. Leslie is pounding square pegs into round holes.

Now let's look at it from China's perspective. (My view is heavily influenced by Peter Zeihan, whose books I reviewed here, here, and here.)

This is what Mr. Leslie has to say:

For its part, China is facing a new series of obstacles to its investments abroad. A number of stops along the Belt and Road Initiative have run into serious issues, with infrastructure falling behind schedule, large debt loads piling up, economic returns underachieving expectations, and a few messy defaults in progress. These experiences reflect the relatively poor investment locations that China has had access to as a newly emerging power. As Chinese capital licks its wounds from this first round of setbacks, it seems likely that the BRI will not succeed, at least in the immediate future, at shaping global economic and trade flows as hoped. China will be forced to increasingly compete with other powers to access more stable investment locations, or intensify its international political and military presence to better secure its existing ones.

Everything he says is very true--I don't disagree with a word of it. But he misses the elephant in the room, and that is--unlike the USA--China is NOT self-sufficient.

  • China can't feed itself. According to Mr. Zeihan, their productivity per acre is declining because of a move toward mechanized farming. Recently they've had some bad luck--a major swine flu epidemic, and serious flooding in the Yangtze river basin. China has to buy food on the open market--and for this they need dollars. Mr. Zeihan suggests they're on the verge of famine. China has begun an anti food-waste campaign.
  • China depends on foreign energy--especially from the Persian Gulf. While China possesses huge reserves of shale gas, the American fracking method won't work in their geology. So for the moment they have to import most of their energy--and for that they need dollars.
The bottom line is that China urgently needs dollars--and just at a time when the US is no longer providing them. They're trying to turn the RMB into a reserve currency, but this has failed--less than 2% of global trade is settled in RMB. More--China does not run huge trade deficits and has no intention of doing so--so there aren't enough RMB in global circulation to work as a reserve. No major food exporter--the US, Canada, Argentina, Brazil, Europe--is willing to accept RMB as payment.

So Mr. Leslie completely misreads the situation. Far from seeking to be an "imperialist" power (whatever that means), the country is desperately trying to keep the wolf from the door. Mr. Zeihan thinks they won't succeed--and I'm increasingly inclined to agree with him.

Conventional Wisdom has it that tariffs are a tax on consumers--prices will go up to reflect the cost of the tariff. But in the case of China this has proven false. They are so desperate for dollars that they're not willing to raise prices and so lose market share. They're simply eating the losses so that they can procure enough dollars to feed themselves.

The situation is that serious.

Further Reading:

Saturday, March 20, 2021

Socialist Action Believes American Children Should Freeze to Death

James Fortin, a journalist for Socialist Action (SA), pens an article entitled The Capitalist Criminality of (Un)Natural Fracked Gas. It is complete nonsense, buttressing SA's reputation as a pro-poverty grouplet. Indeed, the logical conclusion is that American houses should not be heated, and children should be allowed to freeze to death. It's the socialist way.

The rot starts at the top:

Exxon Mobil, fifty years ago, was the first to obscure and lie about the dangers that fossil fuels pose to the climate. But such criminal “traditions” carries on to this day. Pittsburgh EQT, the largest supplier of U.S. gas, pumping about 4 billion cubic feet a day, says on its website as of this writing: “Clean burning natural gas is an important part of our country’s energy mix, and we are proud to be a major producer of natural gas and even prouder to produce it in an environmentally responsible manner.”  Whatever the claim, the record on natural gas says otherwise, overwhelmingly.

If anybody is lying about fossil fuels, it's SA. Solar and wind (S&W) combined produce less than 4% of America's energy, while fossil fuels are responsible for 80% (nuclear, biofuels and hydroelectric make up most of the difference). It is literally impossible for S&W contribute much more than 10% of total electricity production. Germany has gone the farthest with this, with S&W comprising 11.9% of total electric power, but they have the costliest electricity in the world, at 38.1 cents/kwh. Compare that with Oklahoma's 8.8 cents/kwh.

Unlike what Mr. Fortin claims, cheap electricity does not just benefit Exxon Mobil. How many children would freeze to death if Mr. Fortin turned off gas supply? How many people would lose their jobs if factories had to pay double or triple their current electric bill?

Mr. Fortin admits that gas has ended most coal consumption in the US, and also that it is a much cleaner fuel. As a result, US CO2 emissions have declined steadily since 2005.

(Source)
He also points out that cheap gas made investment in S&W uneconomic. Of course--why invest in something that's more expensive, and therefore wastes more resources and is likely worse for the environment? Raw materials needed for S&W manufacture include silicon, copper, aluminum, cadmium, manganese, molybdenum, and zinc, along with rare earth metals. These are expensive to mine and leave a lot of heavy metal waste in their wake. It is not clear that S&W is a green technology.

While understating the potential costs of S&W, Mr. Fortin hugely exaggerates the dangers of fracking. He writes,

Fracking operators have avoided disclosure of the chemicals used in their extraction process. Numerous studies though have confirmed evidence of cancer-causing chemicals such as benzene, toluene, ethylbenzene, and xylene contaminating groundwater in the area of the wells, and populations in the vicinity of wells experiencing disproportionate occurrences of respiratory, nervous, and immune system problems. A wide assortment of lesser impacts such as headaches, eye irritation, and dizziness have been found as well.

Mr. Fortin provides no source for this data. While the precise components of fracking fluid are kept as trade secrets, the major components are well-known: sand and soap. There is this:

Fracking fluids fall within such cryptic catagories as carrier/basefluid, biocides, scale inhibitors, solvents, friction reducers, additives, corrosion inhibitors, and non-ionic surfactants – which is a catch-all category for dozens of fluids like Naphthenic Acidethoxylate or Poly (Oxy-1,2-Ethanediyl), Alpha-(4-Nonylphenyl)- Omega-Hydroxy-, Branched.

While it sounds scary, most of these are just "soap." Indeed, the term surfactant is a generalization on the "soap" idea. "Solvents" is likely just a synonym for water. According to The Frackers (my review here), the industry has become very sensitive about being green, and tries to source all fracking fluid ingredients from consumer products. It is highly unlikely that anything very toxic is found in fracking fluid--certainly not as hazardous as the waste from S&W manufacturing.

The chemicals that Mr. Fortin lists are very unlikely fracking ingredients and are almost certainly not used. Benzene is a strong carcinogen and is banned from most industrial processes (and from undergraduate chemistry laboratories). Mr. Fortin, as usual, provides no reference nor context for his data. Similarly, his list of ailments is so vague and so common that it is unlikely that they're caused by fracking.

He also writes,

In one Texas location a study performed between 2012 and 2015 demonstrated that babies born to mothers who lived within 5 miles of natural gas flaring during that time frame were 50 percent more likely to be premature. In other areas excessive nausea, fatigue and cancer have been attributed to exposure to radioactive materials extracted from the fracked bedrock together with the natural gas.

Natural gas flaring comes from oil wells, not gas wells. The purpose of a gas well is to capture the gas, not to burn it off. So this is a silly charge. He may be correct that gas wells bring radioactive substances to the surface, but this has to be a minor effect. Is there any evidence of higher radioactivity around gas wells? I doubt it, and again, Mr. Fortin cites no reference. Here as well, the list of ailments is too vague and other possible causes too widespread for anything to be attributed to gas wells.

I'll cite just one more paragraph, full of hyperbolic claims. My responses are in red.

The attack on public health is part and parcel of the assault on the environment. With the development of fracking technology came the exploitation of shale geological formations where 75 percent of U.S. gas now originates, now found throughout the continental U.S. Obviously any resource extraction has some environmental impact. But fracking is less dangerous than coal mining, than the traditional way of procuring gas, and likely less destructive than the manufacture of S&W technology. A poisonous mix of patently secret  chemicals and massive amounts of water, under enormous pressure, are blasted into the fissures created thousands of feet below the surface. The list of chemicals is not secret, and they're not especially poisonous. The deadly concoction – presently with each well consuming over 14.3 million gallons of water on average – is pumped out and stored for treatment and further use. Fracking in total uses about as much water as American golf courses. Much of the water comes from deep underground, way below well-water aquifers, and is too saline for human/agricultural consumption. That the water is reused is a benefit. The fracked gas now being produced releases into the atmosphere carbon dioxide, nitrous oxide, carbon monoxide and methane, a greenhouse gas 80 times more potent than carbon dioxide, alone. Methane is natural gas, and is the product the frackers wish to sell. They obviously try to prevent its escape into the atmosphere. Unlike CO2, methane decomposes quickly in air. Side effects (have that read “cost of doing business”) include earthquakes, billions of gallons of water poisoned beyond repair, and despoilment of grasslands and forest. The earthquakes are a problem, but increasingly understood and perhaps avoidable. As said, the water is already saline before the frackers use it, and "despoilment" is a lot less than open-pit mining, as is done to obtain copper and other metals for solar panels and electric cars.

Not only is Mr. Fortin against fracking, he's also against pipelines. Indeed, he's against any kind of industrial infrastructure at all. He apparently believes that electric power and home heating will appear miraculously from the tooth fairy and free unicorns.

The man literally believes that letting children freeze to death is a price worth paying in order to prevent "climate change." Mr. Fortin and SA have their priorities all mixed up. They're subscribe to pro-poverty politics.

Unlike Mr. Fortin, I'm against poverty, and I hope it can be eliminated.

Further Reading:

Sunday, March 14, 2021

What's Happening at Socialist Resurgence?

For those of you who don't follow the ins and outs of Trotskyist grouplets, Socialist Resurgence (SR) arose from a split in Socialist Action (SA), as I described here. Nominally, the split was over some abstruse (and irrelevant) issue concerning Syria. In reality, I think the break-up was over leadership. Specifically, SA's chief honcho (and failed presidential candidate) is the incompetent, 80 year old Jeff Mackler. He has been national secretary since SA was founded in 1983.

The problem extends way beyond SA. Gus Hall was national secretary of the CPUSA from 1959 until just before his death in 2000. James P. Cannon, founding leader of the Socialist Workers Party (SWP), led the organization from 1938 to 1953--though he retired long before he died in 1974. The SWP is now helmed by 81 year old Jack Barnes, who has served since 1972.

So Trotskyism has a problem--their leaders seem to think they own a birthright. There is no bench, no term limits, no succession planning. It's a conceptual flaw in the democratic centralism framework, and it's why the organizations always split after they grow beyond a certain size. I see no indication that SR has addressed--much less solved--this issue.

In commemoration of James Cannon's birthday, SR comrades Ernie Gotta and Erwin Freed pen companion articles about the relevance of his legacy for today. Mr. Gotta writes,

Cannon would likely conclude (I think this is obvious) that the revolutionary leadership of the working class in our present moment is in poor condition. He might suggest that our historic role in 2021 must be in reforging a revolutionary leadership in the U.S. with a deeply internationalist perspective. As we begin resolving the problems of revolutionary socialist leadership in the U.S. through fusions and regroupments, we’ll have to do the same internationally as well.

This is mostly Trotskyist gobbledygook, but a little meaning can be extracted. By "revolutionary leadership," he means the existence of a vanguard party. This is a disciplined organization that is possessed with the precisely correct political line so that it can steer the benighted working class around the dangerous shoals of reformism and ultraleftism until a workers' state beachhead can be established on the other side.

SR possesses at least a tinge of self-awareness in the realization that their organization--perhaps 50 comrades--is too small to qualify as a vanguard that's gonna overthrow the capitalist system. So they have connected with an umbrella group--the Revolutionary Socialist Network--consisting of leftover grouplets from the now defunct International Socialists (along with something derived from the Workers' League). It's a hodge-podge of sectarian grouplets that all believe in almost the same thing but for theological differences. And they can't agree on who their leaders should be--so I think unity is likely a lost cause.

Mr. Freed opines on the importance of the "revolutionary press."

The press is a central component of all Bolshevik organizations. As Cannon said, the purpose of the vanguard party “is deep-rooted in two of the weightiest realities of the 20th century: the actuality of the workers’ struggle for the conquest of power, and the necessity of creating a leadership capable of carrying it through to the end.” Cannon took seriously the paper’s role in realizing these actualities, which Lenin defined as “not merely a collective propagandist and collective agitator, [but also] collective organizer.”

The concept was likely unworkable even in Mr. Cannon's day, but today it is completely ridiculous. The idea is that a single publication (edited by Socialist Resurgence) will have so much credibility among the working class that they won't bother to read anything else. Perhaps that was vaguely realistic dream when each city had only one daily paper and two TV stations--a Revolutionary Press could conceivably gain status in that environment. But today--with 500 channels on TV, millions of channels on YouTube, along with blogs, Twitter, Facebook, Reddit, etc., etc.--the notion that the publication of some tiny grouplet like SR is gonna get heard above the noise is utterly absurd. Not gonna happen. Even the New York Times struggles in this environment, and nobody else has a chance.

Still, they're trying, and unlike their former comrades in SA, they're competent. Their webpage is as good as any of the grouplets--but you can see by the number comments (mostly zero) that their reach is not very far. SR consists predominately (as best I can tell) of graduate students--people whom Lenin would've called the intelligentsia, but whom I refer to as the lumpen proletariat. But they're educated, they write well, and they can organize things like a podcast.

I just listened to a podcast on Socialist Resurgence Radio, an interview between host Alex Coy and SR's resident economist, Osman Keshawarz (a grad student at UMass). I do not have a transcript, so apologies if I misremember something.

  1. It's professionally done. The sound quality is excellent, the host is fluent and entertaining, and the guest is smart and well-informed. There is nothing to be ashamed of here. How very unlike the endlessly boring podcasts by Jeff Mackler, hacking his way through a monotone exposition of whatever (I never managed to sit through an entire episode).
  2. Mr. Keshawarz, while competent, is still wrong. He thinks wealth accrues in a zero-sum competition between capitalists and workers, where the system is rigged so that workers inevitably lose. In truth, it's not zero-sum--the standard of living of everybody in capitalist societies has steadily increased since the dawn of the industrial revolution. This is because entrepreneurs, via a process of trial and error, try to find the most efficient uses possible for resources (labor, capital, raw materials). Accordingly, there is a continuous ratcheting up of productivity, leading to more wealth across the entire society.
  3. Mr. Keshawarz is narrowly correct about the division of the producer surplus. That is, at any given time the producers (workers and capitalists) have to figure out how to divvy up the proceeds between them. But he completely ignores the consumer surplus, i.e., the benefit that accrues to consumers by reducing the costs of production as much as possible. It is the growth in the consumer surplus that drives the persistent increase in our standard of living across the centuries.
    (Source)

  4. As mentioned, entrepreneurs seek to maximize social utility by a process of trial and error. The purpose of financial markets--in all their complexity--is to reallocate capital from inefficient enterprises to efficient, highly productive enterprises. Of course there is a lot more error than there are successes--most new ventures either fail, or end up as small businesses. Mr. Keshawarz apparently wants the 14,000 people employed by GameStop to keep their jobs forever, despite the fact that the company no longer makes any sense--the world has changed. Even he admits that those employees are today "ripping off their customers." It will be much better if that labor force is reemployed doing something else that is of greater value to consumers.
Anyway, SR is interesting. They write well. They know how to host a podcast. Whether or not they have the precisely correct revolutionary program is above my paygrade. But I am certain that their larger influence on American society and history will be zero.

Further Reading:

Monday, March 8, 2021

Book Review: The Cult of the Smart

This is the book that Jack Barnes wishes he'd written. Mr. Barnes is the long-time leader of the Socialist Workers Party (SWP), who penned a tome entitled Are They Rich Because They're Smart? .

In today's book, The Cult of the Smart, author Frederik deBoer declares

This book is my prayer for the untalented, an attempt to show how badly our society and its people are hurt by the obsessive focus on schooling and smarts.

He does answer Mr. Barnes' question: they are rich because they're smart! This is unjust in two ways:

  1. The emphasis on smart results in a meritocracy, namely a class of people that claim for themselves all the best jobs, and because they've done so well at school, they hold themselves morally superior to folks with low IQ scores. Mr. deBoer claims that most jobs don't require a high IQ, and sorting people by education is largely unjust.
  2. "Smarts," aka intelligence (measured as IQ), is substantially genetically inherited--that is at least 50% of a person's IQ score can be attributed to genes. In this it is very much like musical talent, aptitude for basketball, or good vision, among many other traits. And while those attributes can contribute to a better life, smarts looms vastly larger in future outcomes. Intelligent people earn substantially more than the less intelligent. In Mr. deBoer's world, this is grossly unfair.

    Mr. deBoer imagines himself a Marxist, and accordingly the real villains are the bourgeoisie, otherwise known as the top 1%. But there not very many of them--only 1%--so while their economic importance is indisputable, their cultural influence is much weaker. For this they rely on the upper middle class--the top 20% of the population, and the best-educated people in the country. These are the folks who dominate academia, the media, politics, and the prestigious professions. They are, in a word, the meritocracy. This is also Mr. Barnes' point of view. 

    The claim of the education establishment is that school is the great leveler--it gets everybody up to speed so they can compete in the modern economy. Mr. deBoer disagrees.

    Because education is not a weapon against inequality; it is an engine of inequality. Far from making society more equal, our education system deepens inequality, sorting winners from losers and ensuring even greater financial rewards for the former. Nowhere is this dynamic more prevalent than in college.

    He describes college as the "instrument of inequality." Students are tracked according to their IQ scores--those who are smart get ahead and eventually enroll at Harvard. The less gifted wind up at the local beauty school. It's deeply unfair.

    It's a chicken-and-egg problem. Do students perform badly because they attend bad schools? Or are the schools bad because they enroll poorly performing students? The received wisdom on the Left is the former answer--if we just equalized the schools, or the curriculum, or the funding, then all students would excel equally and educational inequality would disappear. This is termed the blank slate hypothesis--the contention that all children are equally endowed with intelligence, and all can learn calculus if they just try hard enough.

    Mr. deBoer rejects the blank slate hypothesis. Summarizing current literature, he writes,

    The relationship between genes and behavioral traits is neither perfect nor fixed; environment does matter, to a varying degree, and there are interventions that can ameliorate some of the impact of genes. The degree to which genes assert themselves varies over the course of life. Profoundly unequal environments for children can drown out genetic effects. There is also what behavioral geneticists call the "unshared environment," ...--the influence of unpredictable events, random chance, the flux of life. But none of that changes the fact that our genetic heritage deeply influences our behavioral selves, including our academic selves and that we should recognize that individual exceptions are less important than larger trends when we are dealing with broad populations. Like, say, when we're considering educational policy.

    What Mr. deBoer writes about genes and behavioral traits corroborates the book Human Diversity, written by Charles Murray and which I regard as the leading textbook of the discipline. That Mr. deBoer and Mr. Murray mostly agree is something I find very reassuring.

    Mr. deBoer urges his fellow Leftists to reject the Blank Slate dogma--the evidence for genetic influence on personality is too strong. By insisting on a manifestly false principle, the Left discredits itself.

    In one important respect he disagrees with Mr. Murray--Mr. deBoer insists there are no racial or ethnic differences in IQ or other personality traits. He concedes that much is inherited--children tend to be as smart as their parents, who in turn take after their grandparents, and similarly are related to their cousins, nieces and nephews, and the whole clan. But to then claim that an ethnic group that practices endogamous marriage does not share on average a suite of personality traits is unreasonable. Of course they do--and in fact they must, as is amply and overwhelmingly demonstrated in Human Diversity.

    Scott Alexander, in his lengthy review of The Cult of the Smart, argues that this opinion is not just a concession to political correctness, but rather a deeply held belief by Mr. deBoer--which Scott describes as vaguely irrational. But I think I have some insight here, because like Mr. deBoer, I have spent my career as a college professor. And I can tell you that thinking about IQ in racial categories is deeply, deeply destructive.

    I used to teach general chemistry to a class of about 100 students--including a handful of Black students. It is horribly unfair to those students to walk into a classroom with the prejudice that Blacks aren't as smart as whites. For even if that is true on average, the students in my room are not average--they're not even close to average. For that matter, the white students aren't average, either--because anybody who enrolls in a general chemistry class is both smarter and more motivated than anything average. Conflating a half dozen individuals with an average over a large, and in this context irrelevant population is a huge category error. So big, in fact, that it's immoral. Anybody smart enough to read Charles Murray or Frederik deBoer should know better.

    I think Mr. deBoer, with his otherwise irrational rejection of racial similarities, is responding to that immorality--and for that I give him props. But he's still wrong.

    Mr. deBoer offers two lists of reforms--a list to be accomplished in the short-term, like under the Biden administration. And a more utopian list that might have to wait till after the revolution. Surprisingly, I agree with many items. I'll summarize in bullet points:

    • "Provide Universal Childcare and Afterschool Care"-- He rejects the argument that either of these improve educational outcomes, but he supports it...
    As a socialist, my interest lies in expanding the degree to which the community takes responsibility for each of its members, in deepening our societal commitment to ensuring the wellbeing of everyone.

    Needless to say, I don't support this objective.

    • "Lowering the Legal Dropout Age to 12"-- If the less-intelligent are forced to stay in school, then the obligation to graduate them requires the school to dramatically lower standards. Mr. deBoer documents this phenomenon at length. Among other things, it renders the high school diploma meaningless.

      I support this--our children spend waaaay too much time in school. An unmentioned corollary is that we need to let teenagers participate in the paid labor force--otherwise you have unsupervised kids out looking for trouble.

    • "Eliminating Charter Schools"-- Why? I mostly accept Mr. deBoer's argument that charter schools yield no net positive educational benefit, but that misses the point for two reasons. First, while not changing the statistical average, charter schools may be of significant benefit to individuals. It's very much like the Black students in my gen-chem class--the average is irrelevant. All that matters are the individuals. Why not let students choose the school where they will be most successful?

      The second reason--even if there is no educational benefit--there are surely other benefits. There are, for example, advantages to children wearing uniforms--it likely saves the parents money. Scott mentions that kids can escape bullies by moving to a charter school. For many kids and parents, they're just more fun. Besides, they're cheaper than the public schools. I see no benefit in banning them.

    • "Loosening Standards"-- I strongly agree with this one. We should abolish the absurd standards left over from the early 20th Century. My pet peeve--which Mr. deBoer also addresses--is the high school algebra requirement. Many kids will never pass it. Many more will pass it, but only at great cost in terms of time and misery. And to what end? If anything is less useful than high school algebra, I can't imagine what it is. Probably fewer than 1% of jobs in this country will require any facility in algebra, and computers can do it better than you can. The only people who should take algebra are people who are interested in mathematics for its own sake, or people who know they're headed for certain STEM careers.

      I feel the same way about long division. When was the last time any reader of this blog used long division? Likely not since the fourth grade. Waste of time.

    • "College is Unnecessary for Living a Satisfying Life"-- Amen, brother! In college we have something called a general education program that's designed to turn you into an educated man or woman. In this day of unlimited bandwidth and instant access to any information you want, it's completely unnecessary. Anybody can go on YouTube and learn about anything from introductory electrical engineering to the Bible as literature, and everything else in between. The notion that you have to study all that at age 18 (when, frankly, most people are not interested) is almost as silly as learning algebra.

      If we canned the gen-ed programs, college could be shortened by a whole year, saving everybody a lot of time and money.

      I disagree with Mr. deBoer's claim that general education is mostly about racial bigotry.

      He spends most of the chapter discussing the salary benefits that accrue to college graduates. He rightly points out that it's mostly about native aptitude, not anything learned in school.

      My view is that college is useful for those people who enjoy school and are good at it. Everybody else should stay away. The worst thing you can do for your career is to go to college and then not graduate. That's a black mark that will follow you for the rest of your life. Better not to go to college at all.
    The final chapter of the book lays out his idealistic perspective. It's complicated and I won't cover it here. Let me just pick out a snippet. 

    The modern meritocracy doesn't judge itself by its material well-being, but instead ranks itself by status symbols: where you went to school, where and how intensively you've traveled, how Woke you are, how much you feign concern for the environment, etc. Mr. Barnes cites a similar list.

    Mr. deBoer writes,

    The old version of middle-class success--a two-car garage, a well-mowed lawn, and a big-ass television--seems simpler and more accessible, as it placed far less emphasis on success in a scarce number of fields ... But of course the heyday of this type of success was riven by racial and gender exclusion...

    Like too many Leftists, Mr. deBoer grossly exaggerates the effects of racism. The problem was never racism as much as poverty--solve the poverty problem (which we've substantially done), and the "racism" mostly goes away.

    And so those old middle-class ambitions have made a comeback--now expressed as Make America Great Again. The Left, of course, interprets it as "racism", but then they interpret everything that way. It's not racism. It is instead a plea to return to middle-class, bourgeois values that are much more democratic than those of our current meritocracy.

    Mr. deBoer has written an excellent, very worthwhile book. Jack Barnes really needs to read it. 

    Further Reading:

     

    Wednesday, February 24, 2021

    Teachers Can't Teach

    Teachers get a bum rap. If Richie can't read and Suzie can't do her sums, it's all the teacher's fault. The failure of our public schools is chalked up to the perfidy of the teachers' unions. Even I have piled on, blaming teachers for the existence of "systemic racism" because they've failed to educate us white folks out of our primordial prejudices.

    Of course it's not true--or at least not the whole truth. Richie might be dyslexic, and Suzie maybe isn't very bright. A lot of kids watch too much TV, are obese and unhealthy, have mental health issues, have fallen foul of the law, are smoking too much dope, or, like Suzie, aren't all that smart.

    No bespoke third grade curriculum is going to overcome all those handicaps, no matter how good the teacher is.

    But I'm still gonna cast some shade on the teachers' unions, because to them it seems it all reduces to not enough money. Teachers aren't getting paid enough--and if only their salaries were doubled or tripled then all the above problems would be solved. Or, as a condition of going back to work after the pandemic, the ventilation system of every school in the country has to be completely rebuilt. Failing that, or perhaps in addition to that, teachers need to be first in line for vaccinations.

    If those conditions aren't met, they threaten to go on strike.

    Left Voice, a high-quality blog published by a loose collective of New York City college professors and their hangers-on, has the education beat covered. They include this picture of Catholic school students.

    (Source)

    Alert, physically-fit, neatly attired in bespoke uniforms, hair laboriously primped--these are the kids educated by Catholic schools. The parents have obviously invested lots of money and hours of time into their offspring. The teachers don't do any of this--they don't buy the uniforms, arrange for the extra-curricular dance classes, make sure the kids do their homework, or get them ready for school every morning. The parents do all of that--leaving it to the Catholic schools to take credit for being better than their public counterparts.

    And yet it's not enough for Left Voice author Ellie Thomas, who writes about the Catholic school where she works.

    In August, my school district gave families the option of either full-time, in-person learning or full-time, remote learning. At my school, more than half of all students returned in person, and in some grades nearly all returned in person. Over the summer, Catholic school teachers in my district were likewise offered the option of teaching in person or remotely, which came as a relief to many teachers who were afraid to contract the virus or spread it to vulnerable family and community members. However, that mandate quickly changed: in the end, all teachers were required to teach both in-person and remote students while in the school building, without any additional compensation for the additional workload. Those who refused were told they could sign a voluntary resignation letter. 

    Ms. Thomas seems remarkably ungrateful. With all the obvious sacrifices that parents make to send their children to a Catholic school, it is surely reasonable to expect school employees to reward the effort. We learn later in the article that the school did accommodate the employees with release time, and nowhere in the article does Ms. Thomas claim there was a Covid outbreak--so it's all just one big whine.

    Meanwhile, James Dennis Hoff--history professor, union activist, and Left Voice journalist--reports from Chicago (dated 2/11/21)--

    After three weeks of fierce negotiating and threatening to strike, the Chicago Teachers Union (CTU) has reached a tentative agreement with the Chicago Public Schools (CPS) administration to reopen all of the city’s more than 600 public schools.

    Chicago's schools have been closed since March 17th, 2020 (nearly a year ago) on Governor Pritzker's order. Prior to the governor's edict, Chicago's mayor Lori Lightfoot had vowed to keep the schools open. She was forced backtrack on that. While we right wingers occasionally accuse her of not having much of a backbone, there's no question but the lady has heart. Here's what she said (3/13/20):

    “In light of this order, the best place for our students to be is at home,” she said Friday evening. “I’m asking residents to remain in your homes. Of course, I know that’s not possible for everyone. CPS serves thousands of children who’re experiencing homelessness or housing instability.” … 

    Lightfoot is calling on the business community to accommodate workers who are CPS parents and may not have access to paid sick leave.

    “No parent should be forced to choose between staying home with a child or earning a paycheck. That is why my team is finalizing our contingency plan to meet the needs of our children and families,” Lightfoot said. “In Chicago, we know that schools are more than just places of learning.”

    Unlike Mr. Hoff, Mayor Lightfoot realizes that public school students are not always like the well-cared-for, intelligent, carefully groomed pupils in Catholic schools. Some of them are hungry and homeless, more haven't showered in weeks, a few are just plain stupid, and many others hugely unmotivated. There are those who are abused, or who live in foster homes, or who are lonely and abandoned.

    These kids don't come to school to be educated--instead they just need a safe place to spend the day. If they're lucky, there's a teacher who can spare them a smile. Lori Lightfoot understands that.

    Mr. Hoff doesn't. Instead he argues that schools should remain closed indefinitely.

    Though they did not go on strike, the CTU managed to postpone sending most teachers to classrooms until it was safer and until all faculty and staff were vaccinated. In a country where right to work laws have increasingly undercut the power of unions, postponing school reopenings for more than an entire month is a significant victory. This was made possible because the CTU members voted overwhelmingly in January to support a strike if needed to win their demands. That strike threat was made all the more powerful, however, by the fact that the CTU had already shown twice in the last decade that they are willing to do more than make idle threats, and that they are ready to strike and strike big. That strike muscle is strong in the CTU and it is the reason why they were able to remain firm in their negotiations with Lightfoot and eventually win their demands.

    So who are the teachers gonna strike against? According to Emma Lee, the foe is the evil Lori Lightfoot herself. Never mind that Ms. Lightfoot has humored the unions for nearly a year, keeping schools closed despite increasing evidence that opening them won't spread the virus. Meanwhile, the rightwing media accuse her of coddling the unions--the lady can't win. At the end of the day, she's just the messenger--she doesn't really control the purse strings.

    My friends at Left Voice will say battle is against the millionaires and billionaires who supposedly have endless amounts of money stashed away in some safety deposit box. So let's imagine a selfish billionaire who lives not in Chicago but on the North Shore, and she hears that Chicago's teachers are going on strike. "Great!" she says. "Now the state can save money by not paying those stupid teachers. Hope they stay on strike forever." The teachers' union can't win against that attitude.

    Or maybe the strike is against middle class homeowners, liable for property taxes, and who themselves depend on the public schools--if only for the sake of civil order. But they don't have a lot of money. Raising property taxes will reduce their home values, and ultimately force them to move. That's happening in Chicago already--the city is losing population.

    In reality, the strike is against poor people--people who don't pay any taxes, who live on food stamps and Section 8, who spend time in jail and are functionally illiterate. The French have a word for them: Les Misérables--The Miserables, Those are the folks who the teachers' union really wants to screw over--with help from Mr. Hoff and his friends over at Left Voice.

    A kid can't even get a smile anymore.

    Further Reading: