Using Veblen to explain the Obama's adminstration's hostility toward labor

The tubez this morning are filled with discussion of a "senior White House aide" attacking organized labor for labor's support of Bill Halter, who nearly unseated incumbent Arkansas Senator Blanche Lincoln in the Democratic primary yesterday.

Two weeks ago, I explored the problem of why President Obama's administration has so little concern for the problems of working Americans, in The Obama administration as “managed democracy". I used Thorstein Veblen's insights into the Leisure Class to extend Sheldon Wolin's analysis of "managed democracy" (a new form of authoritarianism developed in the past two or three decades, which most of us would also call corporatism). The fundamental point I was trying to make is that there is nothing in the education or life experiences of someone like Barack Obama or Larry Summers that would provide them an understanding of industrial economics or real (not politically expedient) empathy for the working class. (Let me qualify that, because I had hoped, and still cling to a hope, that Obama's experience as a community organizer might have given him a reservoir, not yet drawn upon, of support for industrial economics, or at least enmity for, or the very least suspicion of, financial economics.)

Forthwith, my post in full:

In his important 2008 book, Democracy Inc.: Managed Democracy and the Specter of Inverted Totalitarianism, Princeton professor emeritus of politics Sheldon S. Wolin has identified and dissected the emergence of a new type of authoritarian political system in the United States.

The new constitution conceives politics and governance as a strategy based upon the powers that technology and science (including psychology and the social sciences) have made possible. Exploitation of those powers enables their owners to redefine the citizenry as respondents rather than actors, as objects of manipulation rather than as autonomous.

This new political type has arisen as the revolving door between government and the private sector as spun faster and faster, infusing the government with the morals and social customs of the American managerial class, while suffocating the older, more noble idea of civic virtue. In short, American politics has been “managerialized.” To fully understand this, Wolin first recounts the history of the concept of civic virtue and the emergence of the polis:

Over the centuries politicians and political theorists-starting with
Plato's Republic have emphasized disinterestedness, not personal advantage, as the fundamental virtue required of those entrusted with state power. In recognition of the temptations of power and self-interest a variety of constraints -- legal, religious, customary, and moral -- were invoked or appealed to in the hope of limiting rulers or at least inhibiting them from doing harmful or evil acts. At the same time rulers were exhorted to protect and promote the common good of society and the well-being of all of their subjects. With the emergence of democratic ideas during the seventeenth and eighteenth centuries, it fell to the citizen to assume responsibility for taking care of political and social arrangements, not only operating institutions but "cultivating" them, caring for them, improving them, and, ultimately, defending them. Democracy presumed the presence of a "popular culture," not in the contemporary sense of packaged pleasures for a perpetually adolescent consumer, but culture in its original meaning: from the Latin cultus = tilling, cultivating, tending. The ideal of a democratic political culture was about cooperating in the care of common arrangements, of practices in which, potentially, all could share in deciding the uses of power while bearing responsibility for their consequences. The assumption was that if decision-making institutions of a community were left untended, all or most might suffer.

Wolin does not get into enough details to actually name names, but the basic trajectory of America’s descent is clear enough. In the era immediately after World War Two, the U.S. political establishment -- or at least, the foreign policy arm of it -- was dominated by an easily identfied group of patricians, beginning with Walter Isaacson’s The Wise Men (Dean Acheson, Averell Harriman, George Kennan, John McCloy Jr., Charles Bohlen, and Robert Lovett) who hand-crafted the post-war posture of the Cold War, and ending with David Halberstam’s The Best and the Brightest (Dean Rusk, Robert McNamara, Clark Clifford, George Ball, McGeorge Bundy, Walt Rostow, William Bundy and others), who muddied the U.S. political establishment in the rice paddies of Vietnam.

Of these latter, Ford Motor Co. CEO McNamara stands out, for bringing modern business management theories and practices, including cost-benefit analysis, into the Pentagon, and the government generally. However, Wolin does not mention McNamara and his Whiz Kids (including Charlie “Tex” Thornton, founder of Litton Industries, America's first major corporate conglomerate since the Morgan trusts of the late 1800s and General Motors of the 1920s). Instead, Wolin fingers the Reagan administration as the first major example of business managers transforming American politics.

The examples of McNamara and Lovett show there have always been businessmen present in top levels of the U.S. government. This particular point -- of exactly when a business mentality gained ascendance in U.S. government -- is more than an interesting academic question. It brings us to an subject that Wolin fails to consider: just how American capitalism itself has been transformed. Simply stated, there has been a fundamental shift from industrial capitalism to financial capitalism, and it has huge implications for cultural and political norms of behavior, not just in government, but in the entire society. Basically, while it has become the dominant type of culture in the United States, business culture, as foreseen and explained by Thorstein Veblen, has degenerated to lower forms of barbarism, dragging the rest of society down with it. Veblen’s understanding of the politico-sociological, as well as economic, differences between industrial producers, as distinct from financial predators, gives us a far more powerful means of socio-economic analysis than Marxism does, which fails to distinguish between productive and predatory economic and social behaviors. Marxism’s obsession with ownership of the means of production blinds Marxists to the crucial differences and deadly conflict between real industry and predatory financial and monetary systems.

According to Wolin,

Corporate culture might be defined as the norms and practices operative at various levels of the corporate hierarchy that shape or influence the beliefs and behavior of those who work in a particular institutional context. Today corporate culture is not confined to the corporation. Managed democracy depends upon managers, and managers are the product and creators of corporate culture. The question is this: what are the characteristics of the culture that corporate managers bring to government? How are the corporatists likely to approach power and governance, and how does that approach differ from political conceptions?

Wolin’s approach here is basically that of Veblen’s institutional analysis. Wolin compares corporate culture to the civic culture he discussed above.

In contrast, the ethos of the twenty-first-century corporation is an antipolitical culture of competition rather than cooperation, of aggrandizement, of besting rivals, and of leaving behind disrupted careers and damaged communities. It is a culture for increase that cannot rest (= "stagnation") but must continuously innovate and expand. It accepts as axiomatic that top executives have to be, first and foremost, competition-oriented and profit-driven: the profitability of the corporate entity is more important than any commonality with the larger society. "The competitor is our friend," according to an Archer Daniels Midland internal memo," and the customer is our enemy." Enron had "visions and values" cubes on display; its chief financial officer's cube read, "When Enron says it will rip your face off, it will rip your face off."

The ADM internal memo exactly defines the political culture in the U.S. Congress, and its uneasy relationship with its citizen constituents. Remember how Joe Lieberman was welcomed back by his fellow Senators after running as an “independent” to beat back Ned Lamont’s challenge. And “the customer is our enemy" mentality goes a long way in explaining Rahm Emanuel’s notorious antipathy to political progressives.

A little later, Wolin writes,

The essential skill that a corporate executive brings to his firm and to a top-level governmental position is the skill of devising and implementing strategies of aggrandizement. . .

Here, Wolin’s work would be made vastly more powerful if he incorporated Veblen’s insight about the essential difference between “industry” and “business.” As economist Douglas W. MacKenzie explains in a November 2007 paper, Veblen examined the functional and cultural differences between financial and industrial institutions, contrasting the profit-driven process of financial capitalism, to the workmanship and science-driven machine process of industry. In general, once an industrial firm falls under the sway of “business managers” and financiers, its focus becomes one “of acquisition, not of production; of exploitation, not of serviceability”.

Moreover, unlike industrialists, business managers and financiers dislike the uncertainty and unpredictability created by technological innovation. American folklore is rife with stories and myths of breakthrough technologies that were suppressed by corporate behemoths. Rather than creating wealth through increased and less imperfect production (here, think of the Japanese concept of kaizen), business managers and financiers instead seek to acquire wealth “by a shrewd restriction of output,” causing privation and unemployment. This actually establishes and perpetuates a process of financial sabotage of industry. In the first chapter of Veblen’s 1921 book, The Engineers and the Price System, he writes:

Without some salutary restraint in the way of sabotage on the productive use of the available industrial plant and workmen it is altogether unlikely that prices could be maintained at a reasonably profitable figure for any appreciable time. A businesslike control of the rate and volume of output is indispensable for keeping up a profitable market and a profitable market is the first and unremitting condition of prosperity in any community whose industry is owned and managed by business men. And the ways and means of this necessary control of the output of industry are always and necessarily something in the nature of sabotage: something in the way of retardation, restriction, withdrawal, unemployment of plant and workmen, whereby production is kept short of productive capacity. The mechanical industry of the new order is inordinately productive. So the rate and volume of output have to be regulated with a view to what the traffic will bear; that is to say, what will yield the largest net return in terms of price to the business men who manage the country's industrial system.

(To see how mainstream economics today veers far and violently away from Veblen’s ideas, pick up any introductory economics textbook and read the first two or three paragraphs, which invariably describe economics as the study of “how society allocates scarce resources.” Such a definition immediately launches the student away from any serious consideration of modern industry and its near-miraculous productive potentials, into pastures more congenial to the ever status-conscious “leisure class.”)

The reality and effects of industrial sabotage by financiers and business managers is all too familiar to anyone who has examined the effects of the leveraged buy-out binge and corporate raiding of the 1980s, which mainstream economists have strived to hide from public view behind academic arguments that these predatory financial practices actually represented a “more efficient use of capital” that “increased shareholder value” – a crime of active misinformation that the economics profession has yet to answer for. (Two excellent books that rip the economists’ pretty façade to shreds are the 1992 series of investigative reports by Philadelphia Inquirer Pulitzer Prize-winning reporters Donald L. Barlett and James B. Steele, America: What Went Wrong?; and the 1990 history by Max Holland of how one of America’s largest machine tool companies was destroyed in a series of buyouts, When the Machine Stopped : A Cautionary Tale from Industrial America, which has been republished under the new title, From Industry to Alchemy: Burgmaster, A Machine Tool Company.)

In short, Veblen saw finance as an acquisitive process similar to the barbaric practices of leisure classes in earlier civilizations. (For further discussion of Veblen’s views on this point, see this diary and its thread on EuroTrib: The Credit Bubble theory of the Business Cycle (I: Veblen) especially this comment.)

It is worth peering even deeper into the business manager’s mindset, since it has come, since the 1980s, to so completely dominate America’s political elites, and because it has absolutely crucial implications for the making and practice of national economic policies. James Crotty, a heterodox economist at the Political Economy Research Institute (PERI), has a July 2003 paper, The Neoliberal Paradox: The Impact of Destructive Product Market Competition and Impatient Finance on Nonfinancial Corporations in the Neoliberal Era in which he examines a number of negative effects on general economic performance by large U.S. non-financial corporations (NFCs) (not exactly industrial firms, but as close as we can hope to get, as we shall see as Crotty’s analysis unfolds). Crotty stresses

two aspects of the changing relation between financial markets and large NFCs. The first is a shift in the beliefs of financial agents, from an implicit acceptance of the Chandlerian view of the large NFC as an integrated combination of illiquid real assets – that is, physical and organizational assets that cannot be sold for cash quickly and without a major loss in value – assembled to pursue long-term growth and innovation, to a “financial” conception in which the NFC is seen as a ‘portfolio’ of liquid subunits that home-office management must continually restructure to maximize the stock price at every point in time. The second is a fundamental change in management’s reward structure, from one that linked pay to the long-term success of the firm, to one that links it to short-term stock price movements.

The 1960s conglomerate merger movement initiated a change in the perception of the proper role of top management, from one in which managers were expected to be experts in the main business of the firm, to an evolving view of top executives as generalists who knew how to buy and sell subsidiaries as business conditions changed. This shift remained incomplete, however, until the hostile takeover movement of the 1980s, which forced NFC insiders to either divest units whose stock price fell below the level demanded by Wall Street or yield control of the firm to corporate raiders. Raiders relied primarily on debt to finance takeovers, while managers of targeted firms often defended their turf by loading the firm with debt-financed stock buybacks and special cash dividends to deter potential raiders. These developments pushed NFC debt burdens to historic highs. They also forced a change in managerial goals, from concern with the long-term success of the firm to a short-term obsession with keeping the stock price high enough to deter a hostile takeover.

NFC payments to financial markets.jpg

Crotty’s phrase, “the Chandlerian view of the large NFC as an integrated combination of illiquid real assets” is extremely important because it points to something that very few economists ever consider: the immense difficulty and length of time required to assemble a well-functioning industrial enterprise. Consider that it takes at least ten years to train a competent tool-and-die maker. Or how long it takes to train a competent airline pilot. Why would any industrial enterprise want to invest in years of educating someone, if that industrial enterprise is likely to be sold off like a commodity in a few years?

In fact, as an industrial enterprise grows and matures, its trained and skilled employees make the surrounding community a pool of technical talent that is highly conducive to the creation of other industrial enterprises that use the same or similar skills. That’s why certain towns and cities become known as centers for specific industrial products. Sheffield in England was known for its highly specialized alloy irons and steels. Delft in Holland is known world-wide for its blue pottery. The Hocking River valley in southern Ohio became known in the 1800s as a center of brick manufacture. The Connecticut River valley was known for almost a century as “Precision Valley” because it was a center of designing and making high-precision metal-working machine tools. Detroit became known for making automobiles. Today, almost every high-speed, high-volume printing press in the world comes from Heidelberg, Germany. The southern part of the San Francisco Bay area became known as Silicon Valley.

How much is it worth to have a locale or city renowned for the technical excellence of its local enterprises and workers? What value can be assigned to having a few hundred wizened old men around who can train entire generations of new, highly-skilled workers? Or who have a few different ideas than their boss, and decide to start up their own company? The value must be very high, because thousands of national, regional, and local governments around the world have spent hundreds of billions of dollars over the past two decades trying to create “incubators” of new technologies, new companies, and new “employment opportunities.” Such a great irony: finance capitalism is unleashed and destroys the social organizations of industrial enterprises in which technical excellence is revered and rewarded, and the public worldwide has been forced to pay billions of dollars to fund a poor replacement.

How is it possible that political elites would allow financiers and business managers to pillage and destroy industry, and then spend billions trying to repair the damage that could have been prevented in the first place by simply preserving the regulatory legacy of Franklin Roosevelt’s New Deal? Why did the Democratic Party turn its back on organized labor in the 1970s and 1980s, and embrace instead Friedman / Thatcher / Reagan policies of “free trade” and “free markets” that have destroyed the American working class?

“Destroyed the American working class” is not hyperbole. It is now widely known that Americans’ earnings have stagnated for the past four decades. The December 2007 report Economic Mobility: Is the American Dream Alive and Well?, by the Economic Mobility Project of The Pew Charitable Trusts showed conclusively that American men now have less income than their fathers’ generation did at the same age. Even more troubling is that income mobility has been falling over the same period – meaning that it is less and less likely that a person born into a poor family will ever earn enough to also avoid being poor. (Trends in U.S. Family Income Mobility, 1967–2004, Federal Reserve Bank of Boston Working Paper No. 09-7, September 2009.) Why is it that American political elites, including President Obama and his economics team, seem so unresponsive to this national calamity?

Here again, we can turn to Veblen for answers. Political elites are members of the Leisure Class or Predatory Class, along with financiers and business managers, according to Veblen. The Leisure Class sets themselves apart from the unwashed masses with a refusal to get their hands dirty doing the actual work of procuring and producing the necessities of everyday life.

The institution of a leisure class is found in its best development at the higher stages of the barbarian culture; as, for instance, in feudal Europe or feudal Japan. In such communities the distinction between classes is very rigorously observed; and the feature of most striking economic significance in these class differences is the distinction maintained between the employments proper to the several classes. The upper classes are by custom exempt or excluded from industrial occupations. . . .

. . . . A distinction is still habitually made between industrial and non-industrial occupations; and this modern distinction is a transmuted form of the barbarian distinction between exploit and drudgery. . . .

During the predatory culture labour comes to be associated in men's habits of thought with weakness and subjection to a master. It is therefore a mark of inferiority, and therefore comes to be accounted unworthy of man in his best estate. By virtue of this tradition labour is felt to be debasing, and this tradition has never died out. On the contrary, with the advance of social differentiation it has acquired the axiomatic force due to ancient and unquestioned prescription.

--The Theory of the Leisure Class, Chapter One – "Introductory." (The text of the book in full has been made available online by Project Gutenberg at www.gutenberg.org.)

What makes Veblen far superior to Marx is that Veblen recognizes that the essential characteristic of modern industrial societies is a culture of tools, workmanship, and machine processes.

In more than one respect the industrial system of today is notably different from anything that has gone before. It is eminently a system, self balanced and comprehensive; and it is a system of interlocking mechanical processes, rather than of skilful manipulation. It is mechanical rather than manual. It is an organization of mechanical powers and material resources, rather than of skilled craftsmen and tools; although the skilled workmen and tools, are also an indispensable part of its comprehensive mechanism. It is of an impersonal nature, after the fashion of the material sciences, on which it constantly draws. It runs to "quantity production" of specialized and standardized goods and services. For all these reasons it lends itself to systematic control under the direction of industrial experts, skilled technologists, who may be called " production engineers," for want of a better term.

This industrial system runs on as an inclusive organization of many and diverse interlocking mechanical processes, interdependent and balanced among themselves in such a way that the due working of any part of it is conditioned on the due working of all the rest. Therefore it will work at its best only on condition that these industrial experts, production engineers, will work together on a common understanding; and more particularly on condition that they must not work at cross purposes. These technological specialists whose constant supervision is indispensable to the due working of the industrial system constitute the general staff of industry, whose work it is to control the strategy of production at large and to keep an oversight of the tactics of production in detail.

Such is the nature of this industrial system on whose due working depends the material welfare of all the civilized peoples.

--The Engineers and the Price System, pp 52-53.

In his 1993 book Elegant Technology: Economic Prosperity from an Environmental Blueprint, Veblen scholar Jonathan Larson zeros in on the exact point of interface between human beings and the modern industrial system of mechanical processes:

Nothing can be manufactured without the use of tools. Hand-made is only a term to describe goods that are made with primitive tools. Some items, like sweaters and furniture, can be made with primitive tooling and still compete in the marketplace.

Most items can only be manufactured with advanced tooling. There are no primitive options for making a color picture tube . . . Understanding the levels of sophistication in tools is to comprehend a very great deal about industrialization.

. . . . Sophisticated products can only be made with sophisticated tools. A computer cannot be made with a stone axe. The primary producer motivation for increased sophistication in tools is to permit the production of sophisticated products. Peoples who can fabricate sophisticated tools usually dominate peoples who cannot.

. . . . The most interesting fact about tools is that it takes tools to make tools. Making primitive tools with sophisticated tools is a simple proposition. Making a pair of pliers is easy if there is a steel mill and a drop forge. Making sophisticated tools with simple tools is an extremely difficult proposition. The ability to go up the ladder of tool sophistication is the essential story of industrial development.

As we noted earlier, Veblen draws a distinct line between business and industry. So, a curious thing happens as societies progess industrially. In his 1904 book, The Theory of the Business Enterprise, Veblen observes

Conversely as regards the men in the pecuniary occupations, the business men. Their exemption from taking thought of mechanical facts and processes is likewise only relative. Even those business men whose business is in a peculiar degree remote from the handling of tools or goods and from the oversight of mechanical processes as for example bankers, lawyers, brokers, and the like have still at the best to take some cognizance of the mechanical apparatus of everyday life they are at least compelled to take some thought of what may be called the mechanics of consumption. . . Their exemption from mechanical thinking from thinking in terms of cause and effect is therefore materially qualified. But after all qualifications have been made the fact still is apparent that the everyday life of those classes which are engaged in business differs materially in the respect cited from the life of the classes engaged in industry proper. There is an appreciable and widening difference between the habits of life of the two classes and this carries with it a widening difference in the discipline to which the two classes are subjected. It induces a difference in the habits of thought and the habitual grounds and methods of reasoning resorted to by each class. There results a difference in the point of view in the facts dwelt upon in the methods of argument, in the grounds of validity appealed to, and this difference gains in magnitude and consistency as the differentiation of occupations goes on. So that the two classes come to have an increasing difficulty in understanding one another and appreciating one another's convictions ideals capacities and shortcomings. (pp 316-18)

Now, if Veblen is correct about 1) how the Predator Class abhors actually having to do real work, and in fact does not even like to think about it, and 2) political elites are part of the Predator Class and embody that class’s ways of thinking and understanding the world, what would be the results as manifested in national economic policies? Would we expect to find any sympathy for the plea of industrialists to prevent Wall Street from forcing them to focus on quarterly and annual earnings gains? Would we expect to find any understanding of the opposition of industrialists to short selling of stocks or floating exchange rates and currency futures trading? Would we expect to find any consideration for industrialists’ desire for low, fixed interest rates below the natural usury point? Would we expect to find any serious consideration of a coherent national industrial plan that would revive the nation’s manufacturing base? How much weight would we expect political elites to actually give to the views and concerns of trade unions of machinists, steelworkers, assembly line workers, maids, and bus drivers? Would we expect to find any real concern for a national employment picture where the unemployment rate in the working class is five times higher than in the Leisure Class?
unemployment by income

Earlier, I quoted Veblen on the origins of the Leisure Class. Veblen’s reference to "barbarian" is crucial, because the more advanced a society becomes industrially, the more removed from real industry the elites become. In a very real sense, the elites become more barbaric. This devolution of business culture is clearly seen in how the meme of "ripping their faces off" has spread from the trading floors of Wall Street in the 1980s (as captured in Michael Lewis's first book, Liar's Poker: Rising Through the Wreckage on Wall Street), to the rest of the business world. As the elites drive the culture downward into ever more primitive barbarism (think of what modern art and modern architecture have become), the very idea of civic virtue comes under explicit attack. We see this in the assaults by "conservatives" on the idea of the common good being a "liberal codeword" for nazism or socialism, i.e., Glen Beck's recent warning to his followers about the dangers of their churches preaching the gospel of social justice.

Which brings us back to the theme Sheldon Wolin develops in Democracy Inc.: Managed Democracy and the Specter of Inverted Totalitarianism. Whether or not President Obama is a sell-out is not the real question we must face. The real question is: what are we going to do about the corporate culture that has come to dominate our politics?

Cross posted from Real Economics.

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Comments

The "Center"

Anyone notice the talking head pundits, especially cable TV, talk about "the center" and "bi-partisanship", when in reality that's simply the corporate lobbyists' demands and desires? So do politicians. Every time these buzz words are uttered you know it's some corporate lobbyist wanting something or something removed.

The center is corporate control, oligarchy. The real problem to me is a lack of policy specifics, which is dead opposite what most pundit du jour would say. Politics is loaded with mealy mouthed sound bytes, phrases that are not specific.

What we need is well educated, not bought and paid for legislators who cannot be bought who are not crazy.

Speaking of which, both Halter and Lincoln were terrible on offshore outsourcing, but Halter was attacked by a U.S. Chamber of Commerce front group for offshore outsourcing, Lincoln was not. Add to that the SEIU has some policy agendas that really do not make sense....to U.S. labor, sorry, economically for the national workforce as a whole, they do not, although make great sense to increase SEIU membership....

I have a funny feeling that wouldn't fly too well in Arkansas.

Let's see if Lincoln now abandons her derivatives amendment or fights for it. She's going to lose, the deck is 100% stacked by conferees and last I read they literally may rewrite "financial reform".

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I think it was Daniel Schorr

(it might be somebody else) in an NPR interview around 2006 who said that as the middle class is destroyed, the political center is also destroyed.

And I've sensed for a while that American labor unions no longer possess a strong sense of industrial economics. For example, attacks on free trade are muted, or simply become demands for "fair trade." There is some, but not nearly enough, agitation on the role of speculative capital. And I can find no tracking of actual industrial economic statistics and indicators.

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tracking on industrial statistics, EIs and such

There are some at EPI who are but it's moved to kind of this Hodgepodge of groups who have organized, who are focused on the actual manufacturing, production economy as well as good paying jobs. I've tried to list their blogs on the left and I'll agree, labor generally is not focused enough on industrial/manufacturing statistics, macro econ, the U.S. workforce as a whole, union members or not...

But what is presented as "center", it's David Gergen, CNN pundit, politicians and so on who continually use these terms "left", "far left", "center", "right", "far right"...and it just masks corporations, their agenda and doesn't even articulate the issue at hand.

I'll take budget deficits as an example. I think this site is extremely concerned but not due to deficit spending, due to the ineffectual spending, it's not "Stimulate", it's not the most bang for the buck, it's not restructuring the U.S. economy in favor of long term growth and a stronger workforce, wages and so on...it's just spending! Much of it corporate welfare. But that is not differentiated in the media, right spending vs. just spending. It's just labeled some direction of the political field...
and nothing could be further from the truth of it.

Recently EPI economist really hammered on Chinese currency manipulation and of course...
got nowhere. Congress threatened, of course did nothing, despite the number of cosponsors of the bill being the majority. Obama administration (just plain laugh). Hillary went over to China with teddy bears and gushing positives while Shanghai opened another industrial center. Isn't it great that China buys our debt?

U.S. multinationals are assuredly not helping on Chinese currency manipulation, since they are making huge profits by offshore outsourcing our jobs, using Chinese slave labor and artificially low production costs they selling us back the crap courtesy of Mastercard and Visa.

The union split I don't think helped much (AFL-CIO/SEIU), but the SEIU is primarily services, a lot of it low skilled services whereas the manufacturing unions are more under the AFL-CIO and let's face it, they continually get hammered. I'm sure you've read the reports on the SEIU working against another local's (union) labor interests too, which is amazingly beyond the pale of reason.

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Service Unions & Public Employee Unions

Those are the only strong unions left and service union membership have been getting replaced more and more by technology. Service unions also have competition from non union labor forces working for non union companies.

The only times I ever hear about unions being involved in manufacturing is when they announce the factory is closing or moving to Mexico.

Meanwhile Public employee unemployment is right inline with that 3.2% out of work number at 3.4% for April 2010.

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2 Plutocrats Win In CA

Funny thing about both Whitman and Fiorina,
they both have links in HP and EBay back to
Radiant Info Systems. Carly has links to FoxConn. HP is a client of Radiant. Radiant
uses Indian prison labor to offshore U.S. Jobs. EBay is also listed as a client to Radiant on their webpages.

Will these become issues in the campaigns? Does using slave labor matter anymore? I really do not know, but I hope that the Brown and the Boxer campaigns make an issue the very worst kind of offshoring:slavery.

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Burton Leed

A fine and timely post

When I began my avocation in volunteer political activism many years ago, I read everything by and about Veblen that I could find. When reading him, I would have to stop every few minutes and marvel at the brilliance of the man, frequently finding myself astounded at the extraordinary depth of his comprehension of his subject.

I, of course, believe things are considerably worse than Tony posits, but then I've been following these things for a number of decades. While the corpoate mcnews -- and an "unnamed source" in the Obama Administration, proclaims that Organized Labor wasted $10 million in the Lincoln primary in Arkansas --- and credits Clinton's attacks on labor with her marginal victory --- and more likley scenario is that she will most likely lose the election, with the Republican candidate strongly winning, and then Lincoln will be employed by those who were previously paying her, but now will have shifted their financial donations to the new election victor.

That's the manner in which they now orchestrate and coordinate things. I recall from Reagan's 1980 victory over Carter, that the Reagan people donated heavily to the most extremist feminists and groups (the ones claiming all males are rapists, etc.) and when I approached an acquaintance who received their funds and explained it to her, she acted unphased about it, believing the money would aid her "cause."

Of course, it worked as it was supposed to, increasing their claims, further alienating voters, and adding to the votes for Reagan. They know how to manipulate things on a grandiose scale.

And they will eventually blame Organized Labor for (the corporate faux crat's) Lincoln's loss to a Republican, completely contradicting their earlier assertions --- not that it matters in her case --- while at least labor demonstrated something in the matter --- that the power elites or financial elites are simply too rich and too powerful and control too much to be overcome within a system they have completely gamed.

A recommendation to Tony: although sounding like a complete Veblen scholar and has probably already read this -- in case you haven't, please check out Rick Tilman's The Intellectual Legacy of Thorstein Veblen: unresolved issues --- a great and scholarly (and short) read.

Of course, one cannot guess at who that "unnamed source" might be, given that 100% of the Obama Administration is antiworker, antilabor and antiunion. (Although it should be safe to rule out President Obama's two daughters, I would imagine?)

I've always believed Obama would do exactly as he has. After all, he came from years teaching at the University of Chicago -- and that is Ground Zero for the antiworker, pro-global elites sentiments. (And lest anyone forget, originally and principally funded by one John D. Rockefeller.)

As one of the greatest (if not the greatest) thinker of the Western world said in his most pithy and brilliant fashion:

"What is, is wrong."

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Smearing Karl

Your article indicates a glaring example of a glib critique of Marx,revealing a near perfect unfamiliarity with the his work.What about the several hundred pages of Volume III of Capital wherein Marx analyzes the circulation of capital and posits the description of financal profit as fictitous capital?Or how about the following from Marx in Volume III:
The credit system, which has its focal point in the allegedly national
banks and the big money-lenders and usurers that surround them, is
one enormous centralization and gives this class of parasites a fabulous
power not only to decimate the industrial capitalists periodically but
also to interfere in actual production in the most dangerous manner—
and this crew know nothing of production and have nothing at all to
do with it.
— Marx, Capital, vol. 3, chap. 33
Yet you can say with a straight face:
gives us a far more powerful means of socio-economic analysis than Marxism does, which fails to distinguish between productive and predatory economic and social behaviors. Marxism’s obsession with ownership of the means of production blinds Marxists to the crucial differences and deadly conflict between real industry and predatory financial and monetary systems.
Next time you want to slander someone's thought,read it first.

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From another person that has read Political Economy and Marx

I agree with your point.

In fact the analysis by Marx is even more relevant today. Extensions of Marxist ideas by individuals like Alain Lipietz through works like 'The Enchanted World. Inflation, Credit and the Global Crises' offer an insight into the real roots of the crisis. Economists like Joseph Schumpeter (touted by rightist thinkers that claim to have read his works) agreed with the Marx view that the capitalist system tends to crisis but differed in terms of interpretation in the sense they could not agree that the system was doomed to collapse only that a 'crisis' is a precursor to a 'renewal' of the capitalist system. I tend to support the view that Marx deduced from his analysis.

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Obama Wants Another $50 Billion for Public Sector Jobs

The disparity between that request and the $15 billion jobs bill which was a tax credit for private sector jobs says it all.

We must maintain the 3.4% public sector unemployment at all costs to everyone.

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sorry, not tracking on this

There is no doubt, even now when some very focused direct jobs programs, along with some "retraining" could be done around the oil disaster as well as undersea research, or take cybersecurity, the grid, or even make power generators here in the U.S. as a direct jobs program, pick a program...they refuse to this this.

But I have no idea what you are talking about beyond unemployed just got their COBRA denied.

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From HuffPo: On Saturday

From HuffPo:

On Saturday night, the White House released a letter Obama sent to congressional leaders of both parties asking for nearly $50 billion in emergency aid to state and local governments to fend off "massive layoffs of teachers, police and firefighters" and to prevent a possible double-dip recession.

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right

Which again they won't focus on a directed, strategic direct jobs program or manufacturing, or trade, or....pick one.

You might look at worker costs in the Instapopulist, but once again, it should not be blame the public jobs as the culprit and you need to ask why is executive compensation preserved, even when the banks were bailed out. Why nothing on a direct jobs program, private sector, why nothing on outsourcing, why nothing on trade....the list is as long as your arm.

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Just Suck It Up I Guess

It seems that the middle class should just suck it up and say hey they bailed the bankers out now the public sector yet again and cheer that they left us out of the loop.

3.4% unemployment for the government sector, 7.6% for the financial sector so TARP never went to jobs either I guess. They keep saying most of the TARP has been paid back also. I think its a shell game though to appease the public - how would we know one way or the other?

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where are you getting this 3.4%

Not that I don't believe it but occupational unemployment rates are notoriously outdated, as in a year and of course they don't count the number dropped out.

But regardless they haven't done anything for the U.S. middle class beyond extend unemployment benefits, which only covers about 48% of the workforce.

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Doh

I only write those up in excruciating detail. But I do know STEM stats are distorted due to people being pushed out of the field and they count H-1Bs, L-1s in those statistics.

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And?

So are you saying that unemployment is actually higher in the government sector?

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doubt it

not unless they are using a lot of H-1Bs, foreign temporary guest workers and have illegals on the payroll.

But in STEM occupations, the unemployment rate is distorted. The occupational area is small enough and there are so many foreign guest workers it's enough to distort the rate.

But I still think your focus is skewed. It's more "good for them" and how come, what needs to happen to get the private sector to similar numbers. It's not "oh well, I'm suffering so they should suffer too". I think that's a wrong view.

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Thats Not My View

MY view is that a sector of the economy that has been untouched thus far from the 'bad' due to already having a chunk of the stimulus dedicated to it should not be viewed as a priority over other segments of the economy which are in far worse shape.

Since the original stimulus there has been a $15 billion dollar bill for the private sector which involves tax credits for hiring and now they want an additional $50 billion to avoid public sector layoffs?

Are you on record as saying this doesn't show where the administrations priorities are?

It seems that the opposite view is that the neglected private sector has to choose between bailing out the banks or bailing out the public sector but when either bill comes due it will be doled out to everyone.

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I can agree with that

I don't know how many posts were on this site about getting the most "bang for the buck" on "Stimulus" and how the "Stimulus" was not "stimulative". They just wouldn't do what was necessary, so we got spending, which can be stimulative, instead of a Stimulus program.

Now all of that money is gone and of course it did not create jobs because those bastards shipped money offshore, even used the Iraq war no-bid contractor structure, didn't invest, which a host of organizations (I liked the AAM plan the best, it was so well thought out, all GDP multipliers calculated), presented great plans to true Stimulus...

and on top of it, tar and feathered Keynesian when the damn thing was not Keynesian economics in the first place.

So, now I get where you're coming from. Right, those are tax dollar jobs, they are not growing the economy, they are not investing per say, they are not saving, including the middle class, i.e. the tax base....

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The Afghan Heart of Darkness

The U.S. Geological Survey has identified up to a $1Trillion in mineral wealth in Afghanistan. The question is how and who gets to mine it and profit from it. For America, it is either a road to war or peace.

The only successful subjugation of Afghanistan into an empire was by Alexander the Great who used the gold from the conquest of Persia to create satrapies among the Afghan. New archeological digs find the original Alexander gold coins in the Pashtun region.

Mineral wealth is either the way out of Afghanistan, or a way to dig into the mess even deeper. A way out of the quagmire is to employ the same Afghans fighting us to work the mines and provide security.

But the line of the Pentagon is that we have to 'defeat the Taliban' before the mineral wealth can be developed.

http://www.nytimes.com/2010/06/14/world/asia/14minerals.html?hp

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Burton Leed

what's the Poppy crop yearly value?

Poppies are their cash crop, and the Taliban will assuredly try to get to "mineral wealth", so the Pentagon maybe right on this one.

But we have another major underground economic threat to the U.S. and that's the Mexican Cartels. It's astounding how they have turned our national forests into polluting grow farms, destroying the land, all for marijuana, never mind all of the beyond belief violence and other problems.

What's the cash value yearly of Pot?

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Your thinking sounds a bit murky

Mineral wealth is either the way out of Afghanistan, or a way to dig into the mess even deeper. A way out of the quagmire is to employ the same Afghans fighting us to work the mines and provide security.

Your thinking (and others) mystifies me? According to the "official story" the attacks on 9/11/01 were perpetrated mostly by Wahabist Saudis.

You might try reading Brzezinski's memoirs (he was the National Security Council director under Carter who, with his Saudi buddies, relocated Wahibist Islamic fundamentalists from the region (especially Saudi Arabia) to the northern Afghan border to promote instability there -- and it worked -- destroying a secular government in Kabul, Afghanistan.

Beyond economic imperialism, there's no valid reason American forces and mercenaries should be murdering and pillaging in Afghanistan (let the Afghans kill the Taliban, or let them embrace them as they so see fit).

It was the Carter and Reagan Administrations who continued to finance the worst of the worst, the Mujahideen -- the precursors to the Taliban -- who then proceeded to murder all those academics, any teachers, professionals, etc., who were still in country and hadn't fled yet from the Soviet invasion.

It's been America leading the way in the modern destruction and murder in Afghanistan, and the sooner the illiterates and lowbrows who are educationally-challenged in Ameritard-land face up to that, the sooner this society will move towards a more ethical stance.

Please remember, Sharia Law has spread and increased dramatically in that area with the incurions and interference of America in that region --- an no civilized person would wish to see that!

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Value of Afghan Popy Crop

When you search the subject, the story of the aphid blight on the poppy crop appears. The poppy crop has increased steadily every year since 2002. Without the blight, Afghanistan would totally dominate the market.
Poppy crop is estimated at $65 Billion retail and $4 Billion raw.
I have never heard anyone propose the complete purchase and processing of the crop to morphine or other legal uses. The Taliban are the unspoken overlords of the crop. Mining could supplant poppies because of the value of the mineral wealth at a smelter level vs the very low value of the poppies to farmers. Poppy farmers turned miners could earn considerably more.
The lure of good salaries, low risk and the Islamic fatwah against heroin could turn the Taliban. Corrupt as the government's Poppy Lords are, the prospect of even greater wealth from mining could change things.

China paid off the Ministry with $30 million in baksheesh. The minister was fired, imagine that.
This is not the last we will see of the Chinese on the Afghan mining scene, especially if the U.S leaves without developing the mineral wealth. Bet that the Afghans will not develop their own mines. The minerals include gold, lithium, rare earth, and silver.

 

 

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Burton Leed

One wrinkle: what about the

One wrinkle: what about the influence of old-time industrial capital: Olin, Scaife, Cargill, Koch? That's industrial, but if anything, more authoritarian than the managerial regime.

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Sharia Dreamin'

"Please remember, Sharia Law has spread and increased dramatically in that area with the incurions and interference of America in that region --- an no civilized person would wish to see that!"

Sharia is so common in Northern Britain that routine divorces, murder trials, and most civil cases are handled by Sharia,in ethnic neighborhoods. Sharia is now arrived in the U.S. with many school districts refusing to enforce dress codes and special time-outs for morning and afternoon prayers.

So the question is not so much about Afghan poppies or mineral development conspiracies, but how well the afghanization of the U.S. is proceeding.
My preference is to allow local economies in Asia and make those economies as prosperous as possible locally. Or you could import those economies, like the poppy trade.

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Burton Leed

Great article. Veblen is so underrated and virtually forgotten..

...by "mainstream" economics. I am probably the person here (judging by what was said in the article and in some of the comments) that likes BOTH Veblen and Marx and is highly influenced by both. In my study of economics I have found hetreodox approaches to be the only ones that satisfactorily explain what is going on right now.

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"....under Capitalism, man exploits man. Under Communism it's just the opposite..."

---John Kenneth Galbraith