From David Ruccio

Marketplace’s Kai Ryssdal is no class warrior. Far from it. But after Donald Trump’s chief economic adviser Larry Kudlow spent considerable time during a recent interview celebrating the latest statistics about economic growth, jobs, and wages and minimizing the effects of the trade tariffs, Ryssdal was encouraged to challenge him: 
Ryssdal: Look, sir, really with all respect that’s easy for you to say sitting here on the second floor of the West Wing of the White House.
Kudlow: Now, don’t class warfare me or anything like that.
OK, let’s not class warfare him. Let’s just do some simple calculations. In June, hourly wages (for production and nonsupervisory workers in the private sector) rose at an annual rate of 2.7 percent. Prices (as measured by the Consumer Price

From David Ruccio
The liberal establishment continues to mourn the death of truth. Everyone else is moving on.
Every day, it seems, one or another liberal—pundit, columnist, or scholar—issues a warning that, in the age of Donald Trump, we now live in a post-truth world. In their view, we face a fundamental choice: either return to a singular, capital-t truth or suffer the consequences of multiple sets of beliefs, facts, and truths.
For example, just the other day, Keith Kahn-Harris [ht: ja] (in the Guardian) noted the “sheer profusion of voices, the plurality of opinions, the cacophony of the controversy,” which in his view “are enough to make anyone doubt what they should believe.” It’s what he calls “denialism”: the transformation of the “private sickness” of self-deception into the

From David Ruccio
In a recent article, Dan Falk [ht: ja] identifies a fundamental problem in contemporary physics:
many physicists working today have been led astray by mathematics — seduced by equations that might be “beautiful” or “elegant” but which lack obvious connection to the real world.
What struck me is that, if you changed physics and physicists to economics and economists, you’d get the exact same article. And the same set of problems. 
Economists—especially mainstream economists but, truth be told, not a few heterodox economists—are obsessed with mathematics and formal modeling as the only correct methods for achieving capital-t truth. Mathematical modeling for them represents the best, most scientific way of producing, disseminating, and determining the veracity of

From David Ruccio

Most Americans are not loading sixteens tons of coal. But they are, even in the midst of the recovery from the Second Great Depression, sinking deeper and deeper into debt.
According to a recent analysis by Reuters [ht: ja], the bottom 60 percent of income-earners have accounted for most of the rise in consumption spending over the past two years even as their finances have worsened.* The data show the rise in expenditures has outpaced before-tax income for the lower 40 percent of earners in the five years through mid-2017, while the middle 20 percent has just about stayed even. However, the upper 40 percent—especially the top fifth—has increased its financial cushion, deepening income inequality and leaving those at the bottom in an increasingly precarious financial

From David Ruccio
In international human rights law, a “forced disappearance” occurs when a person is secretly abducted or imprisoned by a state or political organization (or by a third party with the authorization, support, or acquiescence of a state or political organization), followed by a refusal to acknowledge the person’s fate and whereabouts, with the intent of placing the victim outside the protection of the law.
The most infamous forced disappearances have occurred in Spain (during and after the Civil War), Chile (after the coup by General Pinochet in 1973), Argentina (during the so-called Dirty War from 1976 to 1983), and the United States (as part of the so-called War on Terror).
Now, Donald Trump’s Council of Economic Advisers (pdf) is attempting to carry out a forced

From David Ruccio
Back in June, Neil Irwin wrote that he couldn’t find enough synonyms for “good” in an online thesaurus to describe the jobs numbers adequately.
I have the opposite problem. I’ve tried every word I could come up with—including “lopsided,” “highly skewed,” and “grotesquely unequal“—to describe how “bad” this recovery has been, especially for workers.

Maybe readers can come up with their own adjectives to illustrate the plight of Americans workers since the Second Great Depression began—something that captures the precipitous decline in the labor share during the past decade (from 103.3 in the first quarter of 2008 to 97.1 in the first quarter of 2018, with 2009 equal to 100).
But perhaps there’s a different approach. Just run the numbers and report the results. That’s

From David Ruccio
Nicola Headlam is, I think, right with respect to “how the rules of the economy are set”:
“Somehow, someone, somewhere made these rules up. They aren’t laws of nature.” And they determine “who’s got what and where and why”.
The question is, how do we teach economics so that that message gets through?
Aditya Chakrabortty [ht: ja] reports on one way of doing it—a makeshift classroom in a converted church, with nine “lay people” and two facilitators (Headlam and Anne Hines, who are donating their time), in the Levenshulme area of Manchester, England.
Part of what makes the course interesting, at least to me, are the participants:
Those doing the Levenshulme crash course don’t look like your typical seminar room attendees. Not only are they decades older; all but one is a

From David Ruccio
Ambassador Nikki Haley’s decision last week to withdraw the United States from the United Nations Human Rights Councilis remarkable. The United States is the first nation in the body’s 12-year history to voluntarily remove itself from membership in the council while serving as a member.
Some have alleged that the timing of Haley’s decision is conspicuous. “The move,” read the second paragraph of a CNN report on Haley’s decision, “came down one day after the Office of the U.N. High Commissioner for Human Rights slammed the separation of children from their parents at the US-Mexico border as ‘unconscionable.’”
It’s true the Trump administration has been threatening to leave the Council for much of the past year. And the condemnation of the administration’s policy of

From David Ruccio

The premise and promise of the Republican tax cuts—officially, the Tax Cuts and Jobs Act—are that lower corporate taxes would lead to increased investment and thus more jobs and higher wages for American workers.
We all knew at the time that the logic was a sham. As I explained last August, one of the likely outcomes of the kind of corporate tax cuts Donald Trump and his fellow Republicans supported—and, as we saw, eventually rammed through—would be an increase in inequality. That’s because, since corporations aren’t facing any kind constraint in profits or their ability to borrow beyond their current profits, we likely wouldn’t see more investment, but instead some combination of more mergers and acquisitions, more payouts to shareholders, and more distributions of

From David Ruccio

The goal of mainstream economists is to get everybody to work. As a result, they celebrate capitalism for creating full employment—and worry that capitalism will falter if not enough people are working.
The utopian premise and promise of mainstream economic theory are that capitalism generates an efficient allocation of resources, including labor. Thus, underlying all mainstream economic models is a labor market characterized by full employment.

Thus, for example, in a typical mainstream macroeconomic model, an equilibrium wage rate in the the labor market (Wf, in the lower left quadrant) is characterized by full employment (the supply of and demand for labor are equal, at Lf), which in turn generates a level of full-employment output (Yf, via the production

From David Ruccio

Liberals like to talk about all kinds of social ills and identity-laden tensions—but not class struggle. That’s their persistent and enduring blindspot.
Except, it seems, when it comes to Donald Trump. 
Thomas B. Edsall is a good example. Over the years, he’s produced a series of solid, insightful surveys of liberal research and analysis on a wide variety of economic and political topics. But he hasn’t written much if anything about class—until his latest, titled “The Class Struggle According to Donald Trump.”
And, to give him credit, Edsall is right about one thing:
Trump campaigned as the ally of the white working class, but any notion that he would take its side as it faces off against employers is a gross misjudgment.
But his view of class struggle is sorely

From David Ruccio
Forget Bitcoin. It’s the underlying technology, blockchain, that is generating the most excitement. Even utopia!
Bitcoin is a digital currency that was invented in 2009 by a person (or group) who called himself Satoshi Nakamoto. His stated goal was to create “a new electronic cash system” that was “completely decentralized with no server or central authority.” After cultivating the concept and technology, in 2011, Nakamoto turned over the source code and domains to others in the bitcoin community, and subsequently vanished.

While Bitcoin (and other so-called cryptocurrencies, such as Ethereum, Ripple, and the other 1500 or so other such currencies) have generated a great deal of media attention (for their novelty, their ability to permit transactions beyond

From David Ruccio

The premise and promise of capitalism, going back to Adam Smith, have been that global wealth would increase and serve as a benefit to all of humanity.* But the experience of recent decades has challenged those claims: while global wealth has indeed grown, most of the increase has been captured by a small group at the top. The result is that an obscenely unequal distribution of the world’s wealth has become even more unequal—and, if business as usual continues, it will turn out to be even more grotesquely unequal in the decades ahead. 
The alarm was most recently sounded by Michael Savage, in the Guardian, who cited a projection produced by the House of Commons library to the effect that, if trends seen since the 2008 financial crash were to continue, then the top 1%

From David Ruccio

First there was the Great Gatsby curve. Then there was the Proust index. Now, thanks to Neil Irwin, we have the Marx ratio.
Each, in their different way, attempts to capture the ravages of contemporary capitalism. But the Marx ratio is a bit different. It was published in the New York Times. Its aim is to capture one of the underlying determinants of the obscene levels of inequality in the United States today—not class mobility or the number of years of national income growth lost to the global financial crash. And, of course, it takes its name from that ruthless nineteenth-century critic of mainstream economics and capitalism itself.

Now, to be clear, there are lots of ratios than can be found in Marx’s critique of political economy—for example, the rate of

From David Ruccio
The majority of government expenditures in the United States go towards social insurance and means-tested transfers.* And the good news is, they work.
According to recent report by Bruce D. Meyer and Derek Wu, Social Security cuts the poverty rate by a third—more than twice the combined effect of the five means-tested transfers. Among those transfers, the Earned-Income Tax Credit and food stamps (officially, the Supplemental Food Assistance Program) are most effective. All programs except for the tax credit sharply reduce deep poverty (below 50 percent of the poverty line), while the impact of the tax credit is more pronounced at 150 percent of the poverty line. For the elderly, Social Security single-handedly slashes poverty by 75 percent, more than 20 times the

From David Ruccio

Maarten Vanden Eynde, The Invisible Hand (2015)*

We hear it all the time. On a regular basis. Having to do with pretty much everything.
Why is the price of gasoline so high? Mainstream economists respond, “it’s the market.” Or if you think you deserve a pay raise, the answer again is, “go get another offer and we’ll see if you’re worth it according to ‘the market’.”

Alternatively, if you want to solve a particularly pressing problem—such as climate change, widespread unemployment, or Third World poverty—mainstream economists’ usual answer is “let markets handle it.”**

Markets have a magical, quasi-mystical status within mainstream economics. They are both the original starting-point and far-reaching conclusion of mainstream economic theory. What I mean, first,

From David Ruccio

The usual suspects have attacked Bernie Sanders’s proposal for the federal government to guarantee a job paying $15 an hour and health-care benefits to every American worker “who wants or needs one.” 
According to Robert J. Samuelson, “The proposal would add to already swollen federal budget deficits. . .Then there’s inflation. The extra spending and higher wages might push prices upward.”
After listing a number of other “unavoidable” problems, Samuelson concludes:
Americans are suckers for great crusades that make the world safe for the pursuit of happiness. In this context, Sanders’s job guarantee seems a masterstroke. The chronically unemployed need jobs; and states and localities have large unmet needs for public and quasi-public services. It’s a bargain made in

From David Ruccio

From the very beginning, the area of mainstream economics devoted to Third World development has been imbued with a utopian impulse. The basic idea has been that traditional societies need to be transformed in order to pass through the various stages of growth and, if successful, they will eventually climb the ladder of progress and achieve modern economic and social development.
Perhaps the most famous theory of the stages of growth was elaborated by Walt Whitman Rostow in 1960, as an answer to the following questions: 
Under what impulses did traditional, agricultural societies begin the process of their modernization? When and how did regular growth become a built-in feature of each society? What forces drove the process of sustained growth along and determined

From David Ruccio

Does anyone really need any additional evidence of the lopsided nature of the current recovery? 
Employers certainly don’t. They’re managing to hire additional workers, thus lowering the unemployment rate. But they don’t have to pay the workers they hire much more than they were getting before, with wages barely staying ahead of the rate of inflation. As a result, corporate profits continue to grow.
Clearly, what we’re seeing remains a one-sided recovery: employers are getting ahead—and their workers are still being left behind.
According to the latest report from the Bureau of Labor Statistics, total nonfarm payroll employment increased by 164,000 in April, thus reducing the headline unemployment rate to 3.9 percent and the expanded or U6 unemployment rate (which

From David Ruccio

While Amazon let it slip last week that its Prime program—the annual membership that offers discount pricing and free 2-day shipping—now tops 100 million members, there’s another number people might be curious about: the company’s average annual wage, which Amazon revealed in compliance with a new regulation that asks companies to show a comparison between an average worker’s wage and the salary of their CEO.

Amazon has reported an average compensation for its varied, mostly warehouse (and now, with Whole Foods, grocery store), workers at $28,446 a year. The federal government defines its poverty guideline for a family of four to be $25,100. So, Amazon’s average wage falls easily within 150 percent of the poverty line—and stands at about one-half of the median

From David Ruccio

From the beginning, mainstream macroeconomics has been a battleground between the visible and the invisible hand.
Keynesian macroeconomics, represented on the left-hand side of the chart above, has an aggregate supply curve with a long horizontal section at levels of output (Y or real GDP) below full employment (Yfe). What this means is that the aggregate demand determines the actual level of output, which can be and often is at less than full employment (e.g., when AD falls from AD1 to AD2, output to Y1, and prices to P2), with no necessary tendency to return to full employment and price stability. Therefore, according to Keynesian economists, the visible hand of government needs to step in and, through a combination of fiscal and monetary policy, move the economy

From David Ruccio
The history of capitalism is actually a combination of two histories: it’s a history of employers attempting to hire workers and develop new technologies to make profits and expand the reach of capitalism; it’s also a history of workers banding together to improve wages and working conditions and imagine ways of moving beyond capitalism.
The World Bank’s World Development Report, currently in draft form, comes down firmly on the side of employers and their historical role.
The theme of the 2019 report is the “changing nature of work.” As envisioned by the reports authors,
Work is constantly being reshaped by economic progress. Society evolves as technology advances, new ways of production are adopted, markets integrate. While this process is continuous, certain

From David Ruccio
As federal deficits and debt grow, they end up receiving, not paying for, a larger and larger share of federal expenditures.
Tax cuts and spending increases enacted by Republicans over the past four months will lead to wider than previously expected budget deficits, according to the Congressional Budget Office. The federal budget deficit would total $804 billion this year, 43 percent higher than it had projected last summer, and exceed $1 trillion a year starting in 2020.
Larger deficits will, of course, add to the national debt: debt held by the public will hit $28.7 trillion at the end of fiscal 2028, or 96.2 percent of gross domestic product, up from 78 percent of GDP in 2018.
Those estimates assume current law will remain in effect, meaning Congress would allow

From David Ruccio     
“. . . ten years on, U.S. capitalism has created the conditions for renewed instability and another, dramatic crash.”
The economic crises that came to a head in 2008 and the massive response—by the U.S. government and corporations themselves—reshaped the world we live in.* Although sectors of the U.S. economy are still in one of their longest expansions, most people recognize that the recovery has been profoundly uneven and the economic gains have not been fairly distributed.
The question is, what has changed—and, equally significant, what hasn’t—during the past decade?

Let’s start with U.S. stock markets, which over the course of less than 18 months, from October 2007 to March 2009, dropped by more than half. And since then? As is clear from the chart above,

From David Ruccio

50 years ago, Martin Luther King Jr. was assassinated, just days after joining a march of thousands of African-American protestors down Beale Street, one of the major commercial thoroughfares in Memphis, Tennessee. King and the other marchers were demonstrating their support for 1300 striking sanitation workers, many of whom held placards that proclaimed, “Union Justice Now!” and “I Am a Man.” 
The night before his assassination, King told the striking sanitation workers and those who supported them: “We’ve got to give ourselves to this struggle until the end.  Nothing would be more tragic than to stop at this point in Memphis. We’ve got to see it through.” He believed the struggle in Memphis exposed the need for economic equality, social justice, and human dignity

From David Ruccio

For the first time in American history, students in more than half of all U.S. states are paying more in tuition to attend public colleges or universities than the government contributes.
The privatization of public education has been under way for decades but this inflection point was hastened by deep cuts states made to their higher-education appropriations in the midst of the Second Great Depression.

For the United States as a whole, according to a new report from the State Higher Education Executive Officers Association, students and their families were forced to come up with almost half (46.2 percent) of total educational revenue for public colleges and universities in 2017. They had to pay only 28.8 percent of the total in 1992, a share that had risen to 36.2

From David Ruccio

Millennials may be the largest, best educated, and most diverse generation in U.S. history. But they’re also generation screwed. As a result, they’re more likely than their elders to think of themselves as working-class and less likely to identify as middle-class.  
The large downshift in class identity among young adults is explained by the fact that they are being left behind—with lower earnings, fewer jobs, more part-time employment, and a higher unemployment rate than any other generation in the postwar period.

And while it is true that recent college graduates make more than young workers with a high-school diploma, the annual real wages of both groups have declined since 2009.
So, it should come as no shock that most Millennials have nothing saved for

From David Ruccio
It was Paul Samuelson who, in 1997, declared with morbid optimism that “Funeral by funeral, economics does make progress.”*
What Samuelson presumed is that, over time, wrong ideas would be killed and laid to rest and better ideas would flourish, thus creating the foundation for progress in economic thought.
That’s what I consider to be the epistemological utopianism of mainstream economic thought: using the correct scientific methods, the work that economists do gets closer and closer to the Truth—the singular, incontestable, capital-t truth. It used to be the case (for Samuelson and many others, such as fellow Nobel laureates Kenneth Arrow, Gerard Debreu, and Paul Krugman) that mathematical models represented the best way of making progress (inspired by a particular

From David Ruccio

I have been arguing, since 2016 (e.g., here, here, and here), that one of the likely outcomes of the kind of corporate tax cuts Donald Trump and his fellow Republicans have supported—and, as we saw, eventually rammed through—would be an increase in inequality. That’s because corporations would likely use a portion of their higher profits to engage in stock buybacks, leading to an increase in stock prices. And stock ownership in the United States is already grotesquely unequal. Therefore, the rise in equity prices would disproportionately benefit the small group at the top of the wealth pyramid. 
And that’s exactly what is happening. As CNN Money reports, U.S. corporations have showered Wall Street with $214 billion of stock buyback announcements so far this year.

From David Ruccio
The dystopia of the American healthcare system certainly invites a utopian response—a ruthless criticism as well as a vision of an alternative.
As I showed last week, the left-wing response involves a critique of the conditions and consequences of the capitalist organization of U.S. healthcare and the fashioning of a radical alternative. Single-payer, which uses tax revenues to finance the purchase of adequate healthcare services for everyone, is one possibility. On top of that, it is necessary to expand the diversity of healthcare providers, which would include more democratic, cooperative or worker-owned healthcare enterprises.
That’s how activists, educators, and policymakers informed by heterodox economics can begin to rethink the U.S. healthcare system. What