Sunday, June 11, 2023

Professor Wants to Shut Down CUNY

The professor in question is James Dennis Hoff, associate professor of English at Borough of Manhattan Community College, part of the City University of New York (CUNY). His title suggests he has tenure, and from this webpage we conclude that his salary is in the $70K - $80K range. Especially if he lives in a dual-earner household, this is a solidly middle class income, even in New York City, where the median salary is about $60K.

Professor Hoff should consider himself very lucky to have a tenured job in an English department at such a high salary. From the Chronicle of Higher Education in 2019,

The news was grim. Columbia University’s English department had failed to place a single current Ph.D. candidate into a tenure-track job this year. And 19 new doctoral students had accepted admission into the program, raising questions about why the cohort is so large when the job prospects aren’t plentiful.

Yet despite that, Professor Hoff is all in on making the problem even worse. In an article for Left Voice entitled Rekindling the Militant Spirit of CUNY’s Past, he writes (emphasis mine)

Mayor Eric Adams has announced an austerity budget that includes significant cuts to the City University of New York among other city agencies. In order to defeat these cuts, students, faculty, and other workers across the city must unite our struggles and be prepared to shut the university down.

CUNY employs over 40,000 people, and Professor Hoff's plan would put them all instantly out of work, potentially deprived of a paycheck and benefits for an indefinite period. This seems hopelessly counterproductive, rather like the child who threatens to hold his breath until his mother concedes on the candy bar.

The cause of our friend's temper tantrum is because (link in original)

This year, the university is once again facing a series of potentially devastating cuts that will only make the situation worse. While the latest New York State budget provided some additional funding to CUNY (still far less than is needed), New York City Mayor, Eric Adams has threatened to shrink the city’s contribution to the university’s budget by more than $68 million and is asking colleges to make plans to cut their spending by five or six percent next year.

The NYT article he links to presents data different than Mr. Hoff cites. I can't account for the discrepancy. From the NYT:

The message, delivered in a letter from the budget director, Jacques Jiha, directed the leaders of nearly every city agency, including the Police Department, to cut their budgets by 4 percent for the coming fiscal year, which begins in July. Only the Department of Education and the City University of New York will be subject to smaller cuts of 3 percent.

What the professor doesn't mention is that CUNY enrollments declined overall by 20% since 2018, while the community college enrollments dropped by 30%. Obviously the institution has to downsize--even the otherwise irrational Professor Hoff needs to admit as much.

A second flaw in Mr. Hoff's argument is he never really tells us who he wants to strike against. He proposes multiple targets, none of which are very convincing. He writes,

Winning such a strike, however, will require more than just faculty and staff walking out of their classrooms and offices. CUNY labor is important for the social reproduction of the city’s workforce, but, unlike K-12 teachers, without whom huge portions of the entire workforce must stay home for lack of childcare, the immediate impacts of a strike at CUNY would likely be insufficient to force the hands of the CUNY administration or the state. In order to win such a struggle, the union will need allies.

Here he suggests that the strike is against "the administration" and/or "the state." Neither of these are strike-worthy. The administration suckles from the same teat as the faculty, and their incentives are exactly the same as the faculty. The difference is that, unlike Professor Hoff, they are precarious workers--none of them have tenure as administrators, and beyond top management they don't have tenure as faculty, either. For this reason they are much more sensitive about what their bosses think about them, and of necessity have both feet planted squarely in reality. The administration is not the enemy.

It's equally bizarre to think he's striking against "the state," where Democrats are totally in charge. The Dems see the teachers' unions in general, and the professors' union specifically, as tight allies, with money flowing generously in both directions. Mayor Adams himself promises a carve-out for CUNY, cutting their budget by only 3% instead of 4%. More, New York state is even raising CUNY's budget! Democratic politicians' self-interest is nearly perfectly aligned with the unions, so to cast them as a strike-worthy enemy is fanciful.

Here is what is going to happen. CUNY enrollment is down by 10% over the past year, and 20% since 2018. Therefore there needs to be a cut in personnel--which will happen over time. The CUNY budget is being cut by 3% (according to the Mayor), and even less than that if increases in state funding are included. If staffing over time has to shrink by 10%, and there is only a 3% cut in the budget, that leaves as much as 7% that can be redistributed to the remaining faculty in the form of raises. That's without raising taxes or calling for a special legislative session to completely rejigger the budget.

That's how it will play out, but it can be done the hard way or the easy way. The hard way is for the faculty to take Mr. Hoff's suggestion and go on strike, complete with the massive disruption and missed paychecks that would entail. Or one can just agree to it through some kind of (Kabuki) negotiation--little fuss and no muss. You'll end up with the same result either way.

Professor Hoff hints at a third solution, writing (link in original)

Like all of the reduced spending in Adams’ proposed budget (and there is a lot), he is blaming these cuts on the cost of helping integrate a wave of new immigrants; but in a city that is continually cited as the wealthiest in the world, there is more than enough money available for improved public services, increased wages for all public workers, and aid for new immigrants.

In other words, instead of striking against the administration or the state, CUNY faculty really need to stick it to those millionaires and billionaires--they are the strike-worthy targets. Of course one can't really strike against them. They depend on CUNY for almost nothing--and they already pay a hugely disproportionate share of the cost. The top 200,000 of the state's taxpayers pay 56.6% of all income taxes. In 2021 there were 84,366 filers who earned at least a million dollars--and they alone paid 48.5% of New York's income taxes. The richest 200 taxpayers alone pay 9.5% of all New York's income taxes! If they were to move out of state, CUNY and all public services would be royally screwed. They stay partly because they feel sorry for the likes of Professor Hoff--who shouldn't bite the hand that feeds him. (Source for above data)

What Professor Hoff and his Hoff-like friends in the city council and state legislature never remember is that those millionaires and billionaires earn their fortunes by providing useful goods and services to many millions of consumers across the country and around the world. Unlike Professor Hoff, who provides nothing of much value to anybody.


Further Reading:

Saturday, April 29, 2023

Oppression!

My Trotskyist friends are big on oppression

Using The Militant's search bar for "oppression" yields 398 hits since 2018.  A similar search on the Left Voice website generates 109 pages of hits, each citing 10 incidences of the word--or nearly 1100 hits since 2017. My friends at Socialist Action don't give me a numerical count, but the first page yields 20 hits, and I don't know how many pages there are. The comrades at Worker's Voice also don't do a tally for me, but I counted 300 hits before I got tired of scrolling.

They're obsessed with the oppressed.

As a retired faculty member at a regional college, I have definitely been a victim of oppression. My salary was too low, my office was too small, my research contributions weren't properly recognized, and I had to spend twelve (12) hours per week in the classroom teaching! Oh the misery, the humiliation! No wonder I retired.

Of course my oppression is nothing compared to that of one of my colleagues who is triply oppressed--despite her similar status as a full professor. She's female, she's a POC (person of color in today's terminology, though her skin tone is indistinguishable from mine), and she's queer (formerly a synonym for weirdo). Her oppression is somehow three times worse than anything I've ever suffered, and accordingly she feels triply more sorry for herself than I ever did. As a white male, I'm supposed to feel sorry for her, too, and to hang my head in remorseful guilt.

She likely attributes her oppression to being minoritized and marginalized. I'm not sure what those words actually mean, but I think she does that to herself. She's the author of her own problems.

Marxists believe oppression stems from the theft of surplus value from workers. In this view workers receive a wage (which is determined by the market), but which is always less than the true value of their work, as supposedly determined by the labor theory of value. The difference between this theoretical value and the wage is the surplus unjustly extracted by capitalists and is perceived as oppression.

Michael Roberts gets into the weeds how surplus value is calculated here. The fundamental formula is

Marx's original equation for Rate of Profit (P) is


where s is the surplus value (i.e., what most people would call "profit), c is the total capital stock, and v is the total cost of labor. This is intended to be measured for the entire economy--not just for any individual company.

Mr. Roberts has a very hard time estimating these quantities since Marx's definitions don't match the way the terms are currently used or quantities tabulated. E.g., Marx refers to v as the variable capital, as opposed to fixed capital represented by c, but in modern terms it roughly means total wages.  More, the rate of profit is to be calculated only for the global economy as a whole--for which it is nigh impossible to collect data. It is meaningless to apply the formula to an individual firm.

In a word, the formula is useless, which is why nobody besides Mr. Roberts and a few of his friends bother to try to calculate it.

But Mr. Roberts does say that

The bottom line of the rate of profit formula should be restricted to the capitalist sector and not include public sector or residential housing capital.

Since both I and my POC colleague worked for the public/non-profit sector, we contributed nothing to the productive economy and therefore our salaries should not be included in any calculation of surplus value. In other words, nobody makes a profit off of our labor. We are NOT oppressed--not even a little bit. It doesn't matter what our skin color is or how small our offices are.

As stated, the Marxian concept of surplus value is valid only for the global economy as a whole--it can't be used for any individual firm, much less for a particular worker. Based on Marxism, it's impossible to say that the Walmart worker is more oppressed than, say, the CEO of Citibank (who is, ultimately, merely an employee of the company, albeit a very well compensated one). So while we know that public employees are not oppressed at all, we can only speculate about the oppression of actual workers.

Still, Marxian ambiguity notwithstanding, I'll suggest that the degree of oppression depends on the size of one's wage. That is, the surplus value that a capitalist can withhold from a low wage worker is less than what he can obtain from a high wage worker. So if the unemployed are not oppressed at all, then also the minimum wage employee is minimally oppressed. There isn't much value from which to extract any surplus. Accordingly, the CEO of Citibank is way more oppressed than the Walmart worker.

Besides me, other people who aren't oppressed are people who don't have jobs. I've gone from being not oppressed as a college professor to now being not oppressed as retiree living off my savings. The last time I was actually "oppressed" was when I worked as a taxi driver in Chicago 50 years ago--that being the last time I actually created value for anybody. Similarly, unemployed people aren't oppressed, nor are those who have left the workforce for any reason--not just retirement. Homeless people--despite their dire straits--are also not victims of oppression. They're part of the lumpen proletariat, a term which meaning I'd broaden to include the lumpen intelligentsia, e.g., college professors and their ilk.

Such is the topsy-turvy land of Marxist economics.

My Trotskyist friends will argue that I'm taking Marx too literally, and perhaps they're right. This is probably one of the many ways in which Marxist economics doesn't make any sense. If Mr. Roberts' herculean efforts at calculating the rate of profit fails, it's because the task is essentially impossible and the results are meaningless. No company measures its success on the global rate of profit, nor does any worker gauge their well-being on so ill-defined and irrelevant a concept. Even I admit that my career as a professor wasn't completely useless--a few of my students really did learn something. Though I will be the first to admit that I could have spent my time better, and I'd advise anybody who asks not to work for higher education.

My Trotskyist friends have broadened oppression way beyond its Marxian roots. If Marxist economics is hopelessly vague, then modern Trotskyism is a ball of confusion. In their world, not just workers are oppressed, but so are women, POCs (but not all POCS), "queer" people, and trans people. How all those groups fit into any Marxist category is beyond me. I've written about the so-called "oppression" of women here, and found the concept wanting.

I think Trotskyism attracts people who want to feel sorry for themselves. That certainly includes the academic precariat--who have voluntarily chosen their own misery but nevertheless want to blame it on somebody else. It includes much of the LGBTQIA+..., some of whom are mentally ill and probably rightly do feel sorry for themselves.

In summary, I believe the modern Trotskyist version of oppression is simply self-pity, and it's sad that the concept plays such a large role in their newspapers.

Further Reading:

Sunday, April 16, 2023

Cozzarelli on Chicago's Mayor Race

Chicago Mayor-elect Brandon Johnson
(source)

Tatiana Cozzarelli, one of Left Voice's better and more interesting columnists, writes about the city of Chicago. I moved to Chicago back in 1972 to help build the Socialist Workers Party (SWP) branch there. In subsequent years I drove a cab for five years, and eventually graduated from the University of Chicago. In total I spent 13 years living in or near the City of Chicago, and it is the town to which I am most sentimentally attached. While there, I cast the worst vote I ever cast in my entire life--I voted for Jane Byrne for mayor in 1979!

To atone for my sins, were I still a Chicagoan I would have voted for Paul Vallas, who Ms. Cozzarelli describes as (links omitted)

Vallas was a “law and order” candidate funded by big business and conservative donors, and he was strongly supported by the Chicago police union. He received over $1 million from Trump voters and even spoke at a fundraiser for anti-queer far-right group Awake Illinois. He is the former CEO of Chicago public schools and supports a program of pro-charter privatization, attacking the Chicago public school district and the Chicago Teachers’ Union [CTU--ed].

Among the biggest issues in the election were crime (aka "law and order"), the city's imminent bankruptcy (the chief concern of "big business and conservative donors"), and the total failure of the Chicago Public Schools (CPS). Mr. Vallas, to his credit, at least addressed those concerns. His opponent ignored them.

His opponent and ultimate victor in the race was Brandon Johnson, a very progressive Democrat who Ms. Cozzarelli describes this way:

Johnson is a former public school social studies teacher. He left teaching to become a staff organizer with the CTU and was in that position during the 2012 teachers’ strike. He spoke out against police brutality and anti-Black racism, making speeches in the Black Lives Matter movement. He ran on a progressive platform, promising to invest in affordable housing, public schools, and public transportation — paid for by taxing big corporations.

Police brutality is a problem, but a relatively minor one. Anti-Black racism is mostly not a problem--at least not in the way Ms. Cozzarelli imagines it. Black Lives Matter (BLM) is a fascist organization which never had the depth of support that our friendly journalist supposes. But worst of all, Mr. Johnson wants to tax productive businesses to fund things that don't need to be funded: e.g., housing, schools and transportation.

Nevertheless, Ms. Cozzarelli agrees with Mr. Johnson in every particular. She's against police brutality (who isn't?), she's against anti-Black racism (again, who isn't?), and she's in favor of good things paid for by magic unicorns and the tooth fairy. Put more generally, Ms. Cozzarelli supports the progressive Democrat platform down the line, on everything from excessive Wokery to antisemitism.

So why isn't she a Democrat?

Unlike an elected legislator, the mayor is directly responsible for running the city, including the police and the budget. Winning and taking this position is qualitatively different from taking a legislative position, where a socialist could run on an independent ticket and primarily use the position for protest votes and to advance class struggle.

This is a very profound paragraph! Apparently it's OK for a socialist to be in a legislative body, (e.g., Kshama Sawant in Seattle) who, like Ms. Cozzarelli, is allied with the Democrats 99% of the time. But the minute a Democrat actually wins executive office, then, like Mr. Johnson, they run headlong into reality and discover that compromises have to be made. In other words--unlike a city councilwoman or kibitzing journalist--they can no longer count on the magic unicorns to come through in a pinch.

Ms. Cozzarelli will claim she doesn't believe in magic unicorns. But she uses different verbiage that mean the same things. Here's an excerpt where I have italicized places where words like "unicorn" and "tooth fairy" could be freely substituted.

Refusing to support Democrats does not signify relegating ourselves to the sidelines of class struggle.  We should participate side by side  in every struggle of the working class and oppressed, discussing the need for our own party, for our own program and highlighting the need to fight to end this oppressive system.

So let's consider a serious problem Chicago has: crime. According to Wikipedia, Chicago had 796 murders in 2021. Of those, 398 (50%) were cleared by the police--that is, the police arrested and charged somebody with murder. That means that 50% of all murderers in Chicago got away scot-free! No wonder Mr. Johnson wants to hire more detectives--Ms. Cozzarelli disagrees with that because she's worried about the poor criminals and apparently cares not a whit for the parents whose children were killed. Of course that's a position she can hold only as long as she has no responsibility for anything.

On the day Ms. Cozzarelli's article was posted, Walmart issued a press release announcing the closure of four stores in Chicago, most notably including the one in Chatham at 83rd and Stewart. This is an all-Black neighborhood--the last time I drove through there about 15 years ago it was a tidy, working-class community. The Walmart store likely served 100,000 or more people in that part of town.

While Walmart was too polite to say so, a major reason for the store losing money was shoplifting. The police never arrested the culprits, and if they did the DA wouldn't have charged them. I'm sure Ms. Cozzarelli thinks the shoplifters are all single moms desperately trying to feed their children--but she'd be mistaken in that belief.

To the contrary, shoplifting in Chicago is a criminal enterprise, probably much like this report from New York:

Nearly a third of all shoplifting arrests in New York City last year involved just 327 people, the police said. Collectively, they were arrested and rearrested more than 6,000 times, Police Commissioner Keechant Sewell said. Some engage in shoplifting as a trade, while others are driven by addiction or mental illness; the police did not identify the 327 people in the analysis.

Of course professional shoplifters likely minimize the number of times they're arrested, and they also steal the most valuable items, so despite being only a third of arrests, they probably account for a majority of the expense. So by putting 327 people in jail, more than half of all shoplifting in New York would stop. 

The stats are likely very similar in Chicago. Jailing relatively few individuals would make the difference between a profitable store and an unprofitable, closed store.

Who pays for the shoplifting? It's certainly not the Walton family! Does Ms. Cozzarelli really believe that shareholders will pay for her friends' stealing? No, the people who pay are the minimum wage employees and their comparably poor customers. Whole neighborhoods will now not have a convenient grocery store because Ms. Cozzarelli and her BLM comrades defend wholesale theft.

It's worth noting that the Chatham store was comprehensively looted during the George Floyd/BLM riots. I'm pretty sure that Ms. Cozzarelli didn't participate in the looting, and I doubt she does any shoplifting, either. Somewhere in her character is basic human decency and common sense, which unfortunately she hides behind an army of unicorns and tooth fairies.

Further Reading:


 

Wednesday, April 5, 2023

Steve Clark's Bizarre Book Bazaar



Steve Clark (MILITANT/ÖGMUNDUR JÓNSSON)












The astonishing thing about the book fair recently held in Erbil in Iraqi Kurdistan, is that Steve Clark attended it. Mr. Clark is a member of the Troika, namely the three-person team that constitutes the leadership of the Socialist Workers Party (SWP). Of those three, he is the junior member, both in age and rank. His seniors are Jack Barnes, the National Secretary of the Party, and Mary-Alice Waters, who is Jack's significant other and head of Pathfinder Press. Comrades Barnes and Waters are both octogenarians. I believe Comrade Clark is a year or two younger than I am, which suggests he's about 70.

Mr. Clark, despite his status, rarely lets his picture be published, which likely explains why he's infrequently seen at public events, and has never run as an SWP candidate for any election. It's weird that he'd travel all the way to Erbil to be photographed sitting in an easy chair like a crown prince, attended to by hijab-clad women. Indeed, the phrase "crown prince" describes him rather well given his youth and status compared to the other two royals. He's the son that comrades Barnes and Waters never had.

Two other adjectives are inspired by the picture: old and frail. In knew Mr. Clark from the Chicago branch back in the early 1970s. He looked old then--the early onset of male-pattern baldness didn't do much for youthful good looks. He rose to the challenge, leveraging his appearance to seem more serious and mature than his fellow comrades. Today he just looks old--much older than 70.

Frail may be an artifact of the photo: being seated and surrounded by much younger, standing people will make anybody look frail. Still, I don't know what Mr. Clark actually does. He writes for The Militant only occasionally. He has no formal responsibility of which I am aware. I suggested in the past that he was in ill-health. Which may be true, but he can't be all that decrepit if he is able to fly from New York to Erbil and back.

I've dubbed Mr. Clark the Sycophant in Chief. If the Party had state power, he'd be the guy in charge of the concentration camps. He behaves the way you'd expect a good crown prince to behave.

Anyway, I think he joined the Movement after I did, and partly because of that bald pate made himself felt right away. He was always behind closed doors in some important meeting or another, or taking an urgent phone call. In those days the Revolution was serious business, and comrade Clark was in the thick of it. It was only a matter of time before fate called and he ascended into heaven the National Office to sit at the right hand of the National Secretary and his wife. I never saw him again except from a distance, as he has decorated the dais of every Oberlin conference since.

The current issue of The Militant has two articles by Ögmundur Jónsson: Book fair reflects class politics in Kurdistan and Iraq, and Socialist Workers Party author speaks on new title at book fair forum. From the former we learn that this is the fourth book fair that Pathfinder Press (the SWP's publishing house) has attended in Erbil. Pathfinder set up a large booth and sold 1200 books over the 11-day event. The organizers of the fair put the attendance at 600,000 people. (By comparison, last year Amazon sold about 330 million print books and an additional 300 million e-books.)

From the latter article we discover that Mr. Clark flew all the way to Erbil to deliver a talk to 50 people at the book fair. He was accompanied not only by Mr. Jónsson (who I believe is based in London), but also by Joe Young, from Toronto. The round trip airfare from New York to Erbil (basic economy) is over $1300 per person. It may be a bit more from Toronto and a bit less from London, but the Party spent the better part of $4000 getting these folks to Erbil. That doesn't include the cost of food and lodging, or the cost of transporting all the Pathfinder books to and from the site. If the trio sold 1200 books at an average price of $10 per, then total revenue comes to around $12K--which also has to cover the cost of printing the books.

Of course this makes no sense. It obviously makes no financial sense, and it doesn't look to make much political sense, either. Why should the third most important man in the Socialist Workers Party fly all the way to Iraq just to give a speech to 50 people? Is the Revolution really that desperate for eyeballs? My former comrades need to explain what they expect the political benefits of this extravagance to be.

Reading between the lines of Mr. Jónsson's article, I doubt his speech was especially well received. While Mr. Jónsson acknowledges the crime committed by Saddam Hussein in Halabja, he writes

Clark noted the importance of holding a book fair in Erbil, a city both in Kurdistan and Iraq. “The U.S. rulers have brought so much devastation to Iraq,” he said, pointing to the killings of hundreds of thousands due to Washington’s wars of 1990-91 and 2003 and the destruction still evident in Baghdad and other cities.

He fails to note that absent the American invasion the Kurds would likely have been wiped out. More, America has protected the Kurds in both Syria and Iraq from Turkish depredations. The Kurds love the Americans--why wouldn't they? I think it probably doesn't matter if you're a Communist or a Nazi or an Islamophobe or even a Jew--if you're an American you'll be warmly welcomed no matter what.

In addition, I think Mr. Clark makes one error of fact--probably minor. He says

“The U.S. rulers continue to assert their domination over Puerto Rico, which is the largest colony in the world today. The Kurdish people are the largest nation without a country, so you have something in common.”

This is not true. The Kurds have a population between 30 and 45 million. The Hakka minority in southern China and Taiwan number around 80 to 120 million people. The Dravidian peoples of southern India and Sri Lanka number around 250 million people. These are just two examples of other peoples who don't have their own country.

Back in the day--early '70s--the Revolution really was serious business. But nobody in today's SWP expects any imminent revolution--it's all put off into the distant future like the second coming of Christ. So it doesn't really matter who leads the SWP anymore. Steve Clark and his fellow royals imagine themselves to be indispensable, forgetting de Gaulle's maxim that "the cemeteries are full of indispensable men."

In the meantime they can play games with comrades' dues and sustainers. Comrade Clark's bizarre trip to Erbil's book bazaar is a case in point.

Further Reading:


Tuesday, March 21, 2023

Michael Roberts & Monetarism

(Source)
Economist Michael Roberts pens a piece posted in Left Voice entitled Monetary Tightening, Inflation and Bank Failures. The article is about all those things, but the subtext is an argument against monetarism--and that is the aspect I wish to address. I think Mr. Roberts gets it wrong.

Monetarism (for our purposes, at least) can be summed up by Milton Friedman's famous dictum,

Inflation is always and everywhere a monetary phenomenon, in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output.

This is undoubtedly true, but it is frequently misinterpreted by many commentators. Especially on my side of the aisle, it is often claimed that the "Fed" is just "printing money" as fast as it can--one helicopter drop after the other. In fact, the Federal Reserve Bank can't print money--all it can do is add money to bank reserves. Those may eventually leak out into the economy, but such leakage depends not on the Fed, but on the economy's demand for money. 

While the Fed can't print money, the Treasury certainly can. The former is supposed to be politically independent (and to some extent it surely is) and is responsible for so-called monetary policy. The latter--responsible for fiscal policy--is very much beholden to the president and Congress (i.e., inherently political), and isn't allowed to spend anything without legislative authorization. Given that authorization, it can effectively print money.

As Mr. Friedman's suggests, inflation doesn't just depend on how much money is being created (or "printed," if you prefer that term), but also on how much money is needed by the economy. That is, if the supply of money ("printing") is balanced by the demand for money, then there will be no inflation (or deflation). Conversely, if the supply of money exceeds the demand, or the demand for money is less than the supply, then there will be inflation. (The reverse will lead to deflation.)

And this is where I think Mr. Roberts makes his most fundamental mistake: he confuses the supply of money with the supply of goods and services. He writes (link in original),

        And in a recent post, I recounted a long study by Joseph Stiglitz that offered comprehensive data showing that inflation was caused by supply-side shortages not ‘excessive demand.
        Since then, more evidence has appeared backing up the supply story.  One recent paper found that when the economy came out of the COVID pandemic lockdowns and slump there was a shift into buying more goods.  However, producers were unable to deal with this surge.

In the linked post, he compares the "supply story" with the demand story (here referring to the supply and demand of goods and services, not money). In the former, it's because of pandemic-driven snafus in the supply chain that caused price rises, and hence inflation. A variant of the "supply story" is the so-called wage-price spiral. In this case it is the labor supply that's causing the snafu, and the economy responds by raising prices.

Contrary to the supply story, it could be higher demand that's causing inflation. People want to buy more stuff, the stuff is not being produced at sufficient volume, the price of stuff goes up, so people empty out their bank accounts to buy the stuff anyway, even at the inflated prices. That is, inflation is caused because demand has outstripped supply. 

Mr. Roberts does not subscribe to the demand story--he believes that it's supply snafus that have caused inflation. The solution, therefore, is not to curtail demand (e.g., by raising interest rates), but instead to augment supply. In Mr. Stiglitz's opinion this is to be done by more regulation of the market.

I think both analyses are wrong. There is no question but that the pandemic made us poorer. It reduced the supply of a large number of goods and services--driving many businesses out of business altogether. Governments around the world made (in varying degrees) many things illegal, e.g., eating in restaurants, riding on airplanes or cruise ships, working in an office or factory, sending your children to school, etc. Increased poverty was the order of the day.

But poverty does not cause inflation--nor does inflation automatically cause poverty. Inflation is caused by variations in the money supply. Misters Roberts and Stiglitz err in conflating the money supply with supply and demand in the goods economy. They are not the same thing. And we're back at Mr. Friedman's dictum--inflation results when the supply of money (not goods) exceeds the demand for money (not goods).

The Fed purports to moderate the money supply by using two tools: 1) open market transactions to keep overnight interest rates within a certain range; and 2) varying the size of total bank reserves by various tricks including quantitative easing (QE), etc. These are very blunt instruments, and they've gotten blunter with time. The link between overnight interest rates (that the Fed controls) and longer term interest rates (such as your home mortgage) looks to have broken down. The effectiveness of the other tools is dubious at best.

More, there are too many other players in the monetary game besides the Fed. There's the whole shadow banking network (including money market funds) that exists outside of the Fed's direct reach. And then the Eurodollar market (dollars housed outside the US, uncontrolled by the Fed) is huge and clearly has an impact on the domestic money supply. So the Fed is, in significant measure, a paper tiger. 

However little control the Fed has over the money supply, it does regulate and backstop the banking system (see Bagehot's Rule). This job is as important as ever, especially right now.

But even if the Fed can't control the money supply, it is still possible for the Treasury to "print" money. So they don't actually print it, but instead they borrow it. Through its QE programs the Fed dramatically increased the levels of bank reserves. This allows the banks to lend way more money if there is a market for the loans. There was a huge market--between Trump and Biden, the government borrowed $3 trillion for so-called "Covid relief." This had absolutely no effect on the supply of goods--not a single supply snafu was straightened out as a result. But it had a huge impact on the money supply.

Mr. Roberts seems to think this had no effect on inflation. He writes,

...that increased money supply is associated with rising house prices and stock prices – no mention of the prices of goods and services.  And that is the point.  Strong money supply growth and low interest rates up to the point of the pandemic did not lead to rising prices and accelerating inflation in the shops.  Instead, money supply fuelled a credit boom expressed in a boom in real estate and financial assets.

He's right, of course. The immediate effect of the Covid Relief windfall was to increase savings--after all, with pandemic restrictions there were no easy ways to spend the money. So it went into the stock market, high-end real estate, bitcoin and other crypto assets, and collectables. Mr. Roberts doesn't count this as "inflation" because it's not measured by the CPI. But it surely is a way to store money for later use.

And later arrived with the end of the pandemic rules. All that money was pulled out of storage and poured into the goods and services economy. Accordingly, asset prices tumbled, but inflation in goods and services soared--and we're confronted with the inflation problem we have today. Like all inflation, it's caused by too much money chasing too few goods--and it has nothing to do with a wage-price spiral or a supply snafu or some such.

What to do about it? The Fed will have to raise interest rates and engage in quantitative tightening to soak back up the extra cash. But it won't work very well--it is obviously breaking the banking system before it's ending inflation. So I'm not optimistic that inflation will go down anytime soon.

The bottom line is inflation is a function of government deficit spending. When the government spends money faster than the economy is growing, inflation will ensue. Only when the government cuts the deficit will inflation slow down. Cutting the deficit means cutting social security, Medicare, Medicaid, and the defense budget. This is politically and socially impossible.

Have a nice day.

Further Reading:

Thursday, March 2, 2023

Socialist Action's Political Report


Vanguard Man (source)

Socialist Action
 (SA) split from the Socialist Workers Party (SWP) back in 1983. It has been helmed by Jeff Mackler since its founding. He was SA's presidential candidate for both the 2016 and 2020 elections, running failed and unprofessional campaigns on both occasions. The man is 82 or 83 years old. It remains to be seen if he'll be the SA's candidate in 2024.

In 2019 SA underwent a split, with a large number (perhaps even a majority) of its members leaving. Notably, the very talented editor of their newspaper, Michael Schreiber, was among the leavers, as was Mr. Mackler's vice presidential running mate, Heather Bradford. How humiliating!

Some of the splitters went on to form the new and short-lived Socialist Resurgence movement. Other leaders of SA, e.g., Erwin Freed and Ernie Gotta (frequent coauthors), formed the core nucleus.

In 2022, Socialist Resurgence merged with a group called Workers' Voice with the new group assuming the latter name. This was hailed as an historic event, which I described as

The "two historic divisions" represent two versions of the Fourth International (FI): that of the United Secretariat, which purports to be the original FI, and the International Workers' League-Fourth International  (IWL-FI), which claims a mission to "reconstruct" the original FI. (A more useless mission is hard to imagine.)

So Mr. Mackler remains leader of SA's remnant husk, which I suggest is now down to about two dozen members. Since the first of the year their webpage has posted four (4!) articles--three of which are by Jeff Mackler, and one by that old Pol Pot supporter, Barry Sheppard. Apparently, apart from Mr. Mackler, nobody with any literary skills remains in the sect. Going back further in time, besides Mr. Mackler the website contains articles by others cribbed off the web. Only Marty Goodman, an SA comrade, occasionally contributes content.

Nevertheless, the "Party" held a convention last November. Insofar as it wasn't a Zoom meeting, it likely took place in Mr. Mackler's living room. The conclave issued a document: Fighting for the Socialist Future Today: Socialist Action Political Resolution. We're told that "[t]he following resolution was approved by Socialist Action’s 20th National Convention in November 2022." Approved it may have been, but the author is undoubtedly Mr. Mackler himself--so I'll give him credit here and not let him hide behind a Zoom meeting fig leaf.

I've taken to calling Mr. Mackler the "Vanguard Man." Normally, in Trotsky-talk, one speaks of the "Vanguard Party," which organization is the custodian of revolutionary tradition and which aspires to lead us toward a socialist utopia. But SA is so small and so depleted of talent that this awesome responsibility now rests on the shoulders of one octogenarian man: Jeff Mackler. Pity the poor proletariat, whose future hangs on such a thin reed.

Anyway, Mr. Mackler is a good writer, and that's the only reason I keep reading this stuff. But in this case he falls down on the job. There are too many typos, e.g., he writes "...right of return of all disposed Palestinians... ." Disposed is obviously the wrong word; perhaps he means dispossessed or dispersed? Not sure. Compare, e.g., with the SWP Political Report that I recently reviewed, in which I didn't find a single typo. It's not a big deal, but it indicates that the talent stack at SA is too small to support a proofreader.

The report is 15,000 words long, or the same length as the SWP's. I'll confess I skimmed through parts of it--much of it doesn't interest me, though perhaps that says more about me than Mr. Mackler.

The document discusses two big issues and several less important ones. The big issues concern "imperialism," especially the American variety, and then "[t]he global warming climate catastrophe."

Mr. Mackler subscribes to a theory known as campism, which I have dubbed American Brezhnevism. That post explains what that means in more detail, but briefly, campism maintains that the chief villain in the world is something called "American imperialism." We're never told what that is or how that operates, but it is apparently responsible for every war casualty anywhere in the world today. Mr. Mackler, for example, blames "American imperialism" for all the war deaths in Syria, and then also in Ukraine. Nobody else is responsible for anything. 

Because of "American imperialism," it is necessary for Vanguard Man to support any and all opponents of said imperialism, no matter how vile. Thus Mr. Mackler lends support to Assad in Syria,  Putin in Russia, and the Taliban in Afghanistan. This is, of course, exactly the same argument that Barry Sheppard made in supporting Pol Pot and his murderous Khmer Rouge regime in Cambodia--no wonder Mr. Sheppard is an avid contributor to SA's webpage. However evil those regimes are, they're a lesser evil compared to "American imperialism."

To my mind, it's all a giant conspiracy theory. "American imperialism" does not exist in reality and is present only as a figment of Vanguard Man's overheated imagination.

Mr. Mackler is also a leader of the United National Antiwar Coalition (UNAC). Actually, it's not antiwar, but instead pro-war on the other side. They're rooting for Assad, Putin, the Taliban, Kim Jong-un, and China's Xi. Obviously this is not a popular position in the United States, especially since most sane people realize that "American imperialism" doesn't even exist.

Here is something funny. Vanguard Man admits that

With the exception of revolutionary Cuba, a healthy workers state with some inevitable bureaucratic distortions, there are no deformed or degenerated workers’ states in the world today.*

So, but for Cuba, we're all capitalist, imperialist running-dogs these days, the most evil of whom deserve support from those opposed to "American imperialism." But the humor comes from the asterisk, which footnote states,

*Tentative statement pending NC/PC discussion in the class nature of North Korea

As Shakespeare says, "uneasy is the head that wears a crown." Vanguard Man has a weighty decision to make: Is N. Korea a deformed workers' state, or instead only another imperialist, capitalist running-dog? The fate of the global proletariat depends on his answer.

Or not. Vanguard Man will support the Norks over the United States regardless of what their "class character" supposedly is.

I can't let Mr. Mackler's obvious antisemitism pass unremarked. He does say that "Anti-Zionism Is NOT Anti-Semitism." This is true--but the near-converse statement is also true: anti-Semites are always anti-Zionist. Thus anti-Zionism is an unprincipled coalition between those who support a constructive Palestinian nationalism, and those who simply hate the Jews. Vanguard Man is in that latter category because of his "...recognition of the illegitimacy of the racist, Zionist, colonial settler, apartheid state of Israel is today widespread, ..." Nobody but an antisemite could talk about Israel in such angry, vituperative terms. If he really were merely anti-Zionist, he'd use more conciliatory language.

The second big issue is climate change, where he opines:

Here, despite the uncontested facts, the world’s major powers press on to increase fossil fuel production in the face of ever-intensifying killer heat waves, deadly floods and hurricanes, inundation of low lying land masses, drying up and poisoning of major water supplies – all accompanied by unprecedented environmental destruction across the board. Forests are decimated, oceans and rivers are irreversibly polluted, air is poisoned, nature is torn asunder, with no end in sight. 2,000 people died in a single week from the recent heat wave in Spain and Portugal alone! All of the above are the undeniable reality everywhere.

This is just nonsense on stilts. He's cherry-picked random factoids that add up to nothing. He obviously knows nothing about science or scientists. Any legit climate scientist of whatever persuasion will be ashamed to be associated with our Vanguard Man.

I'm not a climate scientist, but I've spent my career as a professor of chemistry with a special interest in thermodynamics. So while I claim no expertise in climate science, I know a hell of a lot more than Vanguard Man. Which isn't hard, because he knows zilch.

The rest of the Report is about topics that are either irrelevant or unimportant: abortion, LGBTQIA+ rights, "Latinx" issues, etc. I don't have time or space, so see the links below if you're interested.

Further Reading:

Saturday, February 18, 2023

Tech Workers vs. Google

Left Voice author Rose Lemlich pens a piece entitled Tech Layoffs Are About Punishing Workers and Driving Down Wages that is a breath of fresh air compared to what the magazine usually covers. It's actually about the real economy, as opposed to the mostly inconsequential travails of academics, or the generally irrelevant concerns of the 0.1% of the population that is legitimately trans. Beyond which Ms. Lemlich is a talented writer--a trait she shares with many of her colleagues.

That said, her understanding of how capitalism really works is abysmal. She really does need to learn some basic economics--even if it's only the Marxist sort. The very title of her article represents a misconception--that tech firms are all in cahoots to drive down wages and "punish" workers. The former is impossible. The firms are in competition with each other to hire the best workers, and thus compete to offer the highest wages possible. That's why Silicon Valley tech workers typically earn well into the six figures. The latter is ridiculous. Why would any firm want to "punish" its own employees? That's hardly a strategy to improve morale or increase productivity.

Ms. Lemlich quotes a Twitter person (@CubicleApril):

Pretty incredible that Google is trying to get away with blaming macroeconomic conditions for their layoffs, when over the last year they’ve spend 57.36B on stock buybacks.

That’s enough to support the 12,000 laid off engineers at their median engineer compensation for 23 years.

It is Ms. Lemlich's opinion that the $57.36B would be better invested in featherbedding Google's workforce rather than "wasted" on stock buybacks. She's wrong on several counts.

To begin, she misunderstands who the owners of Google are. She writes,

This is because capitalism is not altruistic: major shareholders don’t buy shares because they want to invest in these companies’ visions or provide startup capital for them to become more productive. They buy shares because they believe those shares will be worth more money in the future; this is their only pursuit as capitalists; it is the only way they make money.

Of course this is true--capitalists want to make money. But so do workers--otherwise why go out on the picket line demanding more wages and bennies. And how many workers will remain long at a particular job when a neighboring employer is offering a 10% higher salary? Like workers, capitalists are people, too.

But then her image of the capitalist is wrong--she obviously imagines some Monopoly game banker in a top hat who uses money for nothing more than wallowing around in a pool of gold coins. But that's wrong. According to Investopedia

The top individual insider shareholders of Google are Larry Page, Sergey Brin, and Sundar Pichai, and the top institutional shareholders are Vanguard Group Inc., BlackRock Inc. (BLK), T. Rowe Price Associates Inc., and FMR LLC.

Misters Page and Brin each own about 3% of the company. Mr. Pichai owns 0.1% of outstanding shares. Ownership by the institutional owners (Vanguard, Blackrock, & T. Rowe Price) is more complicated, but looks to be between 4% to 7% each. Total institutional ownership of Google stands at 78.4%.

The point here is institutions serve mostly pension funds and individual savers like you and me. Anybody who owns either a mutual fund or an ETF likely has money invested in one or more of those institutions. Pension funds obviously need to maximize returns on their investments--they're greedy like everybody else. But they're not the greedy capitalists of Ms. Lemlich's overheated imagination.

More, Ms. Lemlich apparently believes stock buybacks are just an exercise in frivolity--merely used for buying fancy yachts or custom lattes. 

Stock buybacks reduce the number of shares in circulation, making them rarer and more valuable. Buying back stock does nothing to boost the productivity of a company, and it does nothing for the social good. The cost of these stock buybacks alone would’ve paid the salaries of every laid-off worker for decades. The executives are just using rising inflation and expectations of a recession as a propaganda tool to justify their greed.

She is correct that Google buying back stock does nothing to boost the productivity of Google. Stock buybacks are instead a way of returning money to shareholders. It is an admission that Google is no longer worth the investment. Indeed, Ms. Lemlich quotes an article in Business Insider that claims as much (links omitted).

But while Pichai, who made $280 million in compensation in 2019, said he took "full responsibility for the decisions that led us here," he failed to elucidate those choices. He didn't mention that during his time at the helm Google has been hit with billions of dollars' worth of antitrust fines, been left in the dust by OpenAI's ChatGPT despite "pivoting the company to be AI-first," and seen its core search product get steadily worse.

If Mr. Pichai really is that bad a CEO, then reallocating money away from Google is indeed a good strategy. It's an argument for more stock buybacks rather than fewer.

I can't judge the quality of Mr. Pichai's leadership. But I will say that Google has cornered the online advertising market and is unlikely to increase its market share. It is, therefore, no longer a growth company in the way it has been over the past few decades. So hiring on the expectations of future growth such as before the pandemic were likely not warranted. It is much better that the extra capital be reinvested elsewhere.

There are two ways that capital can be reinvested. One is that Google itself reinvest the capital in its own businesses--this is what Ms. Lemlich suggests should happen. Or the money can be returned to shareholders so they can individually decide where to reinvest it. The first option suggests that Mr. Pichai knows best where to reinvest all capital and never makes mistakes. The second option suggests that shareholders will, on average, make better investment decisions than Mr. Pichai.

Of course "reinvesting capital" is a rather bloodless way of saying that social resources generally should be reinvested. In particular, if Google is maxed out, then not only capital, but also labor should be reallocated to where it provides the most social utility. And that's what is happening: if talented people are being laid off from Google, they will in short order be hired by other companies that need both the investment and labor from talented employees. This is to the benefit of all concerned, especially including consumers.

Here is Ms. Lemlich's closing sentence:

Tech workers — because of their high wages, key place in the economy, and (until now slightly more certain) job security — are in a unique position to organize with workers in other sectors and coordinate actions in solidarity around issues facing the entire class in the face of a recession.

I'm not so certain. The whole tech industry--labor and capital alike--is now threatened by so-called artificial intelligence (AI), such as ChatGPT and its successors. These tools can now write programs better than most human beings, and do so a whole lot cheaper with a whole lot less capital. Tech jobs the world over are now at risk, the current holders of which will likely have to seek out new careers rather than just new jobs.

Further Reading: