From David Ruccio

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Evidence thus far suggests that low-wage workers, most of whom can’t perform their labor remotely, are more likely to either lose their jobs (because of shutdowns, especially in leisure and hospitality) or be forced to continue to work in close proximity to others (either coworkers or customers), and therefore are more likely to contract coronavirus.
Moreover, if and when the economy recovers, employers are likely to adopt labor-saving technologies and other forms of automation in sectors outside the work-from-home economy. What that means is that many of the low-wage jobs lost in this downturn will never come back.

From David Ruccio
It’s now an almost daily occurrence: Donald Trump starring in the White House pandemic briefings, flanked by business executives—from Walgreens, CVS, Target and a host of laboratory, research, and medical-device corporations—to form a mutual admiration society.* The various scientists, public-health experts, and emergency personnel, the ones people want to hear from, are accorded third rank.
And American workers are nowhere to be seen—or heard—even when, as on 24 March, Trump decided to speak for them as wanting nothing more than “to get back to work.”
The fact is, while millions and millions of workers have been furloughed or laid off in recent weeks, waiting desperately to receive financial assistance, many more continue to be forced to have the freedom to labor for

From David Ruccio
In the United States and around the world, governments are responding to the twin pandemics—of novel coronavirus and escalating unemployment—with massive bailouts. Not unlike what happened more than a decade ago, after the global crash of 2007-08.
But there seems to be something different this time around—not only because of the speed of both the viral contamination and the economic meltdown, but also as a reaction to the terms of the bailout that was enacted in the midst of the Second Great Depression.
Here, for example, is Peter S. Goodman reflecting on the response in Britain and the European Union:

During the last crisis, the global financial catastrophe of 2008, the authorities protected corporate interests above those of ordinary people, many economists assert.

From David Ruccio

The Labor Department on Thursday reported the number of American workers filing new claims for jobless benefits last week rose to 3.28 million from 282,000 a week earlier. Nothing in the 53-year history of the series comes close. In the worst week of 2009, when the job market was reeling, initial claims hit 665,000.

Worse, the millions in new claims don’t reflect all the people who were pushed out of jobs last week as the novel coronavirus crisis emptied out Main Streets, shut businesses down, and impelled many other corporations to curtail their operations and furlough or lay off workers whom they directly or indirectly employ.
As Quoctrung Bui and Justin Wolfers explain,

be aware that these numbers come with some pretty important caveats. In particular, this

From David Ruccio
By now, many readers will have seen or heard Donald Trump’s call for the country to get back to work within the next couple of weeks, accompanied by a slew of other insidious and irresponsible remarks along the same lines—from business executives, politicians, and pundits, including ex-Goldman Sachs CEO Lloyd Blankfein, Texas Lt. Gov. Dan Patrick, and Fox News. 
What can one say in response to such a blatant disregard for workers’ lives, all in an attempt to protect capitalism, restore private profits, and goose the stock market? Yesterday, Jack Amariglio, Professor of Economics Emeritus from Merrimack College, came up with the perfect rejoinder. . . 

My modest proposal (no satire implied): 
All those 1/10th-ers of the 1% and their political lackeys who are calling

From David Ruccio
Capitalist crises are neither predictable nor do they stem from a single cause. Instead, at least as I see it, the possibility of a crisis is always there but the causes and triggers are all historical and therefore multiple and varied.
Sometimes, crises in capitalism stem from difficulties in extracting more surplus from workers and a resulting fall in corporate profit rates; at other times, they are caused by the bursting of speculative bubbles and a run on funds within the financial sector; and, as seems to be the case this time around, many corporations relied on cheap money and extended their indebtedness way beyond their ability to pay in the event of an unexpected “shock” (like the novel coronavirus pandemic and, in the United States, by the Trump

From David Ruccio

Motto
In the dark times, will there also be singing?
Yes, there will be singing.
About the dark times.
– Bertolt Brecht
( trans. John Willett, from the Svendborg Poems)

I’ve been on a bit of a hiatus for the past two months (the last real post, aside from daily cartoons, was back in January). But readers have encouraged me to get back in the game and resume my “occasional” commentary on economics, culture, and society.
Right now, in these dark times—as the number of confirmed cases of and deaths from the novel coronavirus pandemic, in the United States and around the world, continues to soar—we’re focused on immediate measures, individually and socially, to stay safe. And, of course, capitalist economies are in meltdown, not only in stock markets, but with massive

From David Ruccio
Economic inequality in the United States and around the world is now so obscene, and has convinced more and more people to do something about it, that the business press has initiated a campaign to deny its very existence.
They and the folks they represent are losing the battle of public opinion. And they’ve decided to do something about it.
First up was the Economist, the “newspaper” of record for liberal capitalism [ht: sk], claiming that new research undermines the pillars of the seemingly universal belief that “inequality has risen in the rich world.” Yes, as I have documented from the very beginning on this blog (e.g., here, here, and here), there are plenty of mainstream economists who have attempted to prove that inequality isn’t really a problem—either because

From David Ruccio

The idea that GDP numbers don’t tell us a great deal about what is really going on in the world is becoming increasingly widespread.

David Leonhardt, in reflecting the emerging view, has argued that GDP doesn’t “track the well-being of most Americans.”
Now, we’d expect that someone like socialist Democratic candidate Bernie Sanders would question the extent to which the low unemployment numbers, associated with economic growth, hardly tells the whole story about the condition of the American working-class.
Unemployment is low but wages are terribly low in this country. And many people are struggling to get the health care they need to take care of their basic needs.
But even centrist candidates Joe Biden and Pete Buttigieg are making the case that the headline

From David Ruccio

There is a specter haunting capitalist development around the globe.
In fact, the latest Human Development Report begins by naming that menacing apparition:
The wave of demonstrations sweeping across countries is a clear sign that, for all our progress, something in our globalized society is not working.
Different triggers are bringing people onto the streets: the cost of a train ticket, the price of petrol, political demands for independence.
A connecting thread, though, is deep and rising frustration with inequalities.
If anything, that’s an understatement. It’s not just “something” that is wrong; contemporary capitalism as a whole is not working, except for a tiny—but quite powerful—group at the top. The rest of us are being subjected to what can only be called

From David Ruccio

There aren’t many ways ordinary Americans have a say in what happens to the surplus that determines their fate.
Most of the surplus in the United States is appropriated by the boards of directors of large corporations. But most employees are excluded from the decisions in their workplaces about what’s done with that surplus. Their local communities, where the corporations operate, don’t have much of a say either.
That leaves federal taxes. Corporate income taxes are pretty much the only way the nation—and therefore its citizen-workers—can lay claim to a share of the surplus, which it can then use to finance government programs.
Given the tremendous growth in corporate profits in recent decades—including in recent years, during the recovery from the Second Great

From David Ruccio
If there ever was an argument in support of Medicare for All it’s this: despite spending more on health care than any other country, the United States has seen increasing mortality and falling life expectancy for people ages 25 to 64, who should be in the prime of their lives.
A new report published in the Journal of the American Medical Association paints a bleak picture: overall life expectancy in the United States, which had increased for most of the past 60 years, has actually fallen for three consecutive years. But this is not just a recent trend. U.S. life expectancy began to lose pace with other countries in the 1980s, and, by 1998, had declined to a level below the average life expectancy among Organisation for Economic Cooperation and Development

From David Ruccio
Well that didn’t go so well. . .
Still, Elon Musk’s new Cybertruck would appear to be the perfect design for America’s contemporary dystopia. Its bullet-proof stainless steel alloy panels and transparent metal glass are tailor-made to keep its elite occupants safely guarded from attack. And even though the windows obviously need considerable improvement before production begins, and “despite ‘no advertising & no paid endorsement’,” Tesla has already received almost 150 thousand orders for the truck.
Clearly, there’s a lot of surplus available—in cash and loans—to the small group at the top of the U.S. wealth pyramid to purchase such vehicles.

In fact, as we can see from the chart above, auto loans comprise more than 50 percent of the installment loan debt of the top

From David Ruccio
Emmanuel Saez and Gabriel Zucman begin their new book, The Triumph of Injustice: How the Rich Dodge Taxes and How to Make Them Pay, with the moment in 2016 during the first presidential election debate between Donald Trump and Hillary Clinton when the former Secretary of State challenged the reality-show celebrity about how little he had paid in federal income taxes over the years. Trump proudly admitted it: “That makes me smart.” And Clinton, for all her carefully crafted technocratic proposals to fix the tax code, failed to effectively respond to Trump.
Jump ahead three years, and the issue of wealth inequality in America has risen to the top of the political agenda. Clinton lost the election, Trump is probably not worth what he has claimed, but the nation’s wealth

From David Ruccio
Obscene levels of economics inequality in the United States are now so obvious they’ve become one of the main topics of public and political discourse (alongside and intertwined with two others, the climate crisis and the impeachment of Donald Trump).*
Most Americans, it seems, are aware of and increasingly incensed by the grotesque and still-growing gap between a tiny group at the top—wealthy individuals and large corporations—and everyone else. And this sense of unfairness and injustice is reflected in both the media and political campaigns. For example, Capital & Main, an award-winning nonprofit publication that reports from California, has launched a twelve-month long series on economic inequality in America, “United States of Inequality: 2020 and the Great

From David Ruccio

Across American universities, corporations, and financial institutions, researchers are honing computer models designed to predict the winner in the November 2020 presidential election in which Donald Trump will face a Democratic candidate still to be determined.

One such set of models, developed by Moody’s Analytics, which focuses on the electoral college (and not the national popular vote), predicts a convincing victory for Trump. Moody’s based its projections on how consumers feel about their own financial situation (the so-called pocketbook model), the gains the stock market has achieved during Trump’s time in office (the stock-market model), and the prospects for unemployment (the unemployment model).*
As I see it, there are two fundamental problems with

From David Ruccio
I cringe when I listen to or watch these interviews. But here it is, with the Real News Network.
The interview was based on my recent blog post, “Economics of poverty, or the poverty of economics.”

[embedded content]
I also want to recommend a recent piece by Ingrid Harvold Kvangraven [ht: ms], who argues that

The interventions considered by the Nobel laureates tend to be removed from analyses of power and wider social change. In fact, the Nobel committee specifically gave it to Banerjee, Duflo and Kremer for addressing “smaller, more manageable questions,” rather than big ideas. While such small interventions might generate positive results at the micro-level, they do little to challenge the systems that produce the problems.
For example, rather than challenging

From David Ruccio
Yesterday, the winners of the 2019 winners of the so-called Nobel Prize in Economics were announced. Abhijit Banerjee, Esther Duflo, and Michael Kremer were recognized for improving “our ability to fight global poverty” and for transforming development economics into “a flourishing field of research” through their experiment-based approach.
The Royal Swedish Academy of Sciences declared:
This year’s Laureates have introduced a new approach to obtaining reliable answers about the best ways to fight global poverty. In brief, it involves dividing this issue into smaller, more manageable, questions–for example, the most effective interventions for improving educational outcomes or child health. They have shown that these smaller, more precise, questions are often best

From David Ruccio

On behalf of millions of young people striking on behalf of climate justice, 15-year-old Greta Thunberg excoriated world leaders for “moving forward with the same bad ideas that got us into this mess.”
Our civilization is being sacrificed for the opportunity of a very small number of people to continue making enormous amounts of money. . .
Until you start focusing on what needs to be done rather than what is politically possible, there is no hope. We cannot solve a crisis without treating it as a crisis.
We need to keep the fossil fuels in the ground, and we need to focus on equity. And if solutions within the system are so impossible to find, maybe we should change the system itself.
Much the same applies, of course, to the economic system that generates such

From David Ruccio
The American Dream is dead. Long live the American Dream!
Let me explain. The official American Dream, the one that has been produced and disseminated at least as far back as the transition from the farm to the factory (in other words, since the late-nineteenth century), lies in tatters. Americans have long been encouraged to believe that everyone gets what they deserve—and, with equal opportunity, those who start at the bottom have a real chance of working their way to the top. Within generations, all workers had a chance to “make it.” And, between generations, children would likely be better off than their parents.
That promise—let’s call it the capitalist American dream—is now in tatters. It is dead and (almost) buried.
It’s not the first time, of course, that the

From David Ruccio

From David Ruccio
The same day I wrote that capitalism was coming apart at the seams, indicated by the shocking disparity between the compensation of corporate CEOs and workers, the Business Roundtable published its new statement of purpose of a corporation.* The 180 or so corporate executives who signed the statement declared that all their stakeholders, not just owners of equity shares, were important to their mission.
Many business pundits, such as Andrew Ross Sorkin, greeted the new statement as a sign that the era of shareholder democracy (what he refers to as “shareholder primacy”) had finally come to an end and that a “significant shift” in corporate responsibility to society would be ushered in. Readers, however, had their doubts, most of them echoing JDK’s response to Sorkin’s

From David Ruccio

American capitalism is coming apart at the seams.
Truth be told, it’s been coming apart for decades now—and that trend has only continued during the recovery from the worst crash since the 1930s.

A good indicator of the shredding of the U.S. economic and social fabric is the difference in the level of compensation of Chief Executive Officers of major American corporations compared to that of the average worker. While they labor, workers create value, some of which they receive back in the form of compensation; the rest of what they produce is the surplus, which is appropriated by the boards of directors of the enterprises that hire the workers. The boards also hire CEOs, to supervise the production of the surplus, who in turn get a cut of the surplus. In other

From David Ruccio

Richard Reeves is right about one thing: time is crucial to capitalism’s legitimacy. The premise and promise of capitalism are that the future will be better than the present. And “if capitalism loses its lease on the future, it is in trouble.”
The fact is, things are not getting better for the vast majority of American workers. They’re falling behind. For example, as is clear in the chart above, the labor share in the U.S. nonfarm business sector has fallen more than 13 percent since early 2001—and there’s no indication that trend will be reversed anytime in the foreseeable future.
Time is clearly running out on capitalism.
It’s not as though Americans are unaware of this and other related trends, such as the looming climate crisis.*

Back in 2014, most Americans

From David Ruccio
It’s time to get back to blog writing—after a 6-month hiatus during which I taught my final two courses at the University of Notre Dame (A Tale of Two Depressions and Marxian Economic Theory) and prepared for my retirement (which involved, among other things, sorting through, packing up, and moving decades of “stuff”). Now, after 38 years of teaching, I am officially Professor of Economics Emeritus. But, rest assured, I plan to continue this blog and other writing projects. 
For the first time in almost four decades (aside from a few research sabbaticals), I don’t face the prospect of returning to campus and teaching economics. But, I can’t help it, I still worry about what millions of students in the United States and around the world will learn—or at least be

From David Ruccio

They keep promising, ever since the recovery from the Great Recession started more than eight years ago, that the share of national income going to American workers will finally begin to increase. But it’s not. 
Sure, profits continue to rise. And so is the stock market. But not what workers receive.
In fact, as is clear from the magnified section of the chart above, the labor share has actually been declining in recent quarters—even as the unemployment rate has fallen about as far as it’s going to go.*
But you don’t have to believe me. Even the Wall Street Journal has noticed this trend.
Labor’s share of domestic income has been declining since 1970 and has barely recovered in this expansion from lows last seen when the U.S. was pulling out of the Great

From David Ruccio

Mainstream economists continue to insist that workers benefit from economic growth, because wages rise with productivity.
Here’s the argument as explained by Donald J. Boudreaux and Liya Palagashvili:

Firms cannot afford a misalignment of their workers’ pay and productivity increases—the employees will move to other firms eager to hire these now more productive workers. Higher economy-wide productivity, after all, means that workers add more to the bottom lines of employers throughout the economy. To secure the services of these more-productive workers, firms bid up worker pay. This competition for labor services is what links pay to productivity.
Except, of course, the link between wages and productivity has been severed for decades now, going back to the

From David Ruccio

It should perhaps come as no surprise that, as capitalism has been called into question and socialism generated increasing interest during the past decade, capitalism’s defenders have resorted to a long historical view. Look, they say, how capitalist growth has decreased poverty and led to improvements in people’s lives around the globe. Just stick with it and all will eventually be well. 
That’s why, as Jason Hickel points out, the above infographic, based on sketchiest of data going back to 1820, is one of Bill Gates’s favorites. Or why Deirdre McCloskey never tires in scolding the critics of capitalism that “the Great Fact of modern life, the most surprising secular news since the domestication of plants and animals, is the rise of real income per head.”
The past

From David Ruccio
 
How else to put it? The levels of economic inequality in the United States are obscene. 
According to the latest data from the World Inequality Database, the share of pre-tax income captured by the top 1 percent of Americans is an astounding 20.1 percent, while the bottom 50 percent are forced to make due with only 12.6 percent. And the distribution of wealth is even more unequal: the top 1 percent own 37.2 percent but the bottom 50 percent of Americans hold no net wealth at all.
And, if present trends continue—with corporate profits growing and the Trump administration in power—economic inequality is only going to get worse.
It’s no wonder, then, that Dani Rodrick argues that the Democratic Party will face a critical test in the next U.S. presidential election:

From David Ruccio
If you listened to or read the text of President Trump’s State of the Union speech Tuesday night, you might have been surprised by the explicit mention of socialism.
Here, in the United States, we are alarmed by new calls to adopt socialism in our country. America was founded on liberty and independence — not government coercion, domination, and control. We are born free, and we will stay free.
Or maybe not—since just last year the Council of Economic Advisers apparently found it necessary to issue a report, on the cusp of the midterm elections, to push back against the fact that “socialism is making a comeback in American political discourse.” And Fox News is engaged in its own campaign against socialism, since “support for Karl Marx’s collectivist ideas is steadily