Something strange is going on in the world today. The global financial crisis that began in 2008 and the ongoing crisis of the euro are both products of the model of lightly regulated financial capitalism that emerged over the past three decades. Yet despite widespread anger at Wall Street bailouts, there has been no great upsurge of left-wing American populism in response. It is conceivable that the Occupy Wall Street movement will gain traction, but the most dynamic recent populist movement to date has been the right-wing Tea Party, whose main target is the regulatory state that seeks to protect ordinary people from financial speculators. Something similar is true in Europe as well, where the left is anemic and right-wing populist parties are on the move.
There are several reasons for this lack of left-wing mobilization, but chief among them is a failure in the realm of ideas. For the past generation, the ideological high ground on economic issues has been held by a libertarian right. The left has not been able to make a plausible case for an agenda other than a return to an unaffordable form of old-fashioned social democracy. This absence of a plausible progressive counternarrative is unhealthy, because competition is good for intellectual debate just as it is for economic activity. And serious intellectual debate is urgently needed, since the current form of globalized capitalism is eroding the middle-class social base on which liberal democracy rests.
THE DEMOCRATIC WAVE
Social forces and conditions do not simply “determine” ideologies, as Karl Marx once maintained, but ideas do not become powerful unless they speak to the concerns of large numbers of ordinary people. Liberal democracy is the default ideology around much of the world today in part because it responds to and is facilitated by certain socioeconomic structures. Changes in those structures may have ideological consequences, just as ideological changes may have socioeconomic consequences.
http://www.foreignaffairs.com/articles/136782/francis-fukuyama/the-future-of-history
Tuesday, January 31, 2012
Monday, January 30, 2012
Taxes/Dept (Family Budget)
..Sounds right, but it’s totally backwards. When the economy stumbles and family income stumbles with it, then sure, families have to tighten up. But this is precisely why government has to loosen its belt. That’s the whole point of countercyclical policy: When the private sector is contracting, the public sector temporarily expands, and vice versa. The analogy is wrong on both ends: When the private sector is humming along, and working families can maybe loosen their belts a bit, that’s when the government needs to tighten its belt."
"So if you widened the lens beyond direct federal taxes — to all taxes, including indirect, state and local taxes — the conclusion would likely be similar. Mr. Romney does not pay a lower tax rate than most Americans. He also doesn’t pay a much higher tax rate, despite being much more affluent." http://
"...taxes in the United States are quite low today, compared with past years or those in other countries. Most important, American taxes are not sufficient to pay for the programs that many people want, like Medicare, Social Security, road construction and education subsidies." http://www.nytimes.com/
The case for higher taxes: http://economix.blogs.nytimes.com/2011/05/27/the-case-for-higher-taxes/
http://economix.blogs.nytimes.com/2011/12/20/cutting-the-corporate-tax-rate-is-no-economic-panacea/
"It is not class warfare to suggest that the richest 1 percent of people in society pay one-third of their income to the federal government, as they did under Ronald Reagan. Keep in mind that dividends were taxable as ordinary income every year of his administration, and in the Tax Reform Act of 1986 he supported taxing capital gains as ordinary income as well." http://economix.blogs.nytimes.com/2011/08/23/what-the-rich-can-afford-in-income-tax/
Zuckerberg's Effective Tax Rate: 7.6% http://www.tax.com/taxcom/taxblog.nsf/Permalink/MSUN-8R7LKQ?OpenDocument
Thanks in part to federal tax breaks, corporations paid out just 12.1 percent of their 2011 profits in taxes, according to the Congressional Budget Office. That's well below the country's top marginal corporate tax rate of 35 percent -- and as The Wall Street Journal notes, it's the lowest percentage corporations have paid since 1972. During the two previous decades, a period that included the economic prosperity of the 1990s and the housing boom of the George W. Bush administration, corporations were paying an average percentage almost twice as high. The CBO's numbers undercut a popular conservative claim -- that the United States places a higher tax burden on its corporations than almost any other first-world nation -- and arrive at a time when national politicians are engaged in a fierce rhetorical battle over how much wealthy institutions and individuals should pay to the government.http://www.huffingtonpost.com/2012/02/03/corporate-profits-tax_n_1253007.html
"Cultural Marxism"
Newt Gingrich and the Future of the Right
http://campaignstops.blogs.nytimes.com/2012/01/29/newt-gingrich-and-the-future-of-the-right/?hp
By THOMAS B. EDSALLIn 1999, shortly after the Senate voted to acquit President Clinton on two charges of impeachment stemming from his affair with the intern Monica Lewinsky, Paul Weyrich — mastermind of the union of the Republican Party and the Christian right, a founder of the Heritage Foundation, the Moral Majority and the Free Congress Foundation — threw up his hands in despair.
In a letter to his ideological allies, Weyrich declared: “I no longer believe that there is a moral majority. I do not believe that a majority of Americans actually shares our values.”
Weyrich declared defeat:
What would Weyrich, who died in 2008, make of the fact that Newt Gingrich — who was himself having an adulterous affair during the Clinton impeachment proceedings (one of several conducted by the former speaker, according to his own testimony and a number of lengthy journalistic investigations, including this one and that one) — won the 2012 South Carolina Republican primary with a plurality of voters who described themselves as evangelical or born-again Christians?
Exit polls show that Gingrich beat Romney by 44-22 among born-again and evangelical Christians, and by 46-10 among voters who said the religious convictions of the candidates mattered “a great deal.” His margins were equally strong among supporters of (and sympathizers with) the Tea Party, a constituency that closely overlaps with religious conservatives.
In fact, the Gingrich campaign reveals the current state of the Christian right, its status anxieties, its desperation, its frustration and in particular its anger. The extreme volatility of Gingrich’s primary season bid reflects not only the success and failure of his own tactical maneuvers and those of his opponents, but also the ambivalence of the Republican electorate in choosing between ideology and pragmatism — an intra-party struggle dating back to the candidacy of Barry Goldwater in 1964.
In strategic terms, religious conservatives need to be motivated to turn out in high numbers. Republican consultants have developed tools to identify and inflame what they call conservative “anger points.”
The consultant who pioneered this work, Alex Gage, now works for the Romney campaign.
But it is Gingrich who is the quintessential “anger points” candidate.
Richard Land, the host of the nationally syndicated radio broadcast “For Faith & Family” and president of the Southern Baptist Convention’s Ethics & Religious Liberty Commission, noted as others have that Gingrich won the hearts of many devout voters two weeks ago when he exploded in anger as CNN’s John King asked him to respond to the claim made by his second wife, Marianne, that he had refused to give up his six-year affair with Callista Bisek and offered his wife the option of an “open marriage.”
Gingrich’s reply to King brought the audience to its feet, capturing one of the most deeply felt conservative “anger points” — hostility to the mainstream media:
Evidence in support of Land’s analysis can be found in a webcast on the Internet site of Don Wildmon’s American Family Association. On the site, Matt Barber, an aggressive promoter of a socially conservative agenda, voiced unalloyed joy over a video celebrating the Gingrich-King confrontation like a nature show. Barber describes
There are fewer and fewer “traditional” families in the United States; the number of secular voters is growing at a faster rate than the number of those who are religiously observant; women’s rights and homosexual rights have become broadly accepted; births outside of marriage are now routine among whites, Hispanics and African Americans.
While some religious conservatives are backing the former Pennsylvania senator Rick Santorum, many partisans on the moral values right have lined up behind Gingrich, including a good number who formerly sympathized with Michele Bachmann and Herman Cain. Joining Gingrich’s National Faith Coalition are Tim and Beverly LaHaye (Tim LaHaye is the author of “Battle for the Family” and Beverly LaHaye is the founder of Concerned Women for America, the largest women’s pro-family advocacy group in America); Dr. Jim Garlow, the California pastor who presides over the website ProtectMarriage.com, which backed the Proposition 8 campaign against gay marriage; and Don Wildmon, whose American Family Association website features his unshakeable commitment to “Strengthening Today’s Marriage and Family Movement.”
In South Carolina, we saw the consequences of this. Gingrich’s strength as the tribune of conservative rage at liberal elites trumped his long history of personal failings. He violated the very family values and the sanctity of marriage that social conservatives profess to believe in, but it was much more important that Gingrich was the enemy of their enemy.
It may well be that in this period of unprecedented moral upheaval, voters in Florida will decide differently from those in South Carolina. Under assault from his competitors on the topic of his multiple marriages, his ethical failings and his role as a Washington influence-peddler, Gingrich pulled in his horns. He seemed almost quiet. He has not been as effective a spokesman for the right’s “anger points,” which have propelled his success so far.
In the immediate aftermath of his South Carolina victory, Gingrich was riding high in Florida, where the next primary will be held on Tuesday. In three separate polls conducted on Jan. 23 and 24, Gingrich had a seemingly firm advantage, running ahead of Romney by margins of 8, 9 and 5 points.
Seeking to mute the building crescendo of assaults from his competitors, Gingrich abandoned the tactics of an insurgent in favor of those of a front-runner. Gone was the almost violently aggressive debate posture in favor of a surprisingly passive strategy.
“You know, there is a point in the process where it gets unnecessarily personal and nasty. And that’s sad,” Gingrich declared in the Jan. 23 debate in Tampa.
That is not what his potential supporters want to hear. They want red meat. The more Gingrich backed away, the less he stoked voter anger and the more his numbers dropped.
In the eight most recent polls reported by Real Clear Politics on Jan. 26, Jan. 27 and Jan. 28, Romney has pulled ahead, by 7 to 9 points, rising to an 11 to 16 point advantage on the 28th.
What does this political volatility say about the conservative movement and the Republican Party?
First, that although the Christian right is now in decline, it remains powerful, making up roughly 35 to 40 percent of the Republican primary electorate. But its preoccupations are less and less those of Americans taken as a whole. The Christian right might become increasingly marginalized and as the movement shifts to the periphery, it becomes more of a liability to the party than an asset.
Second, the Republican Party will, over time, struggle to develop a coherent moral stance that does not conflict with the leftward drift, both in values and behavior, of the electorate.
Gingrich’s swings from low to high to low to high to low — his success in South Carolina and his increasing desperation in Florida — suggest that his candidacy is more a burst of light before the candle dims than the latest iteration of a vital conservative insurgency.
The larger issue facing the Republican Party is how it will respond to political market forces, to the pressure of changes in public opinion. The party could open up beyond its core believers to accommodate old-school Republican moderates and hold on to its libertarians and still have decent size, strength and power.
But the country is going through a profound restructuring in moral and economic thinking and the danger for Republicans is that their current coalition might become obsolete. If the party doesn’t adapt, the alternative is that its power centers — the Christian right, anti-immigration forces, and proponents of policies that benefit the affluent at the expense of the less well-off — will refuse to adjust, in which case the party risks going the way of the Studebaker.
Thomas B. Edsall, a professor of journalism at Columbia University, is the author of the book “The Age of Austerity: How Scarcity Will Remake American Politics,” which was published earlier this month.
In a letter to his ideological allies, Weyrich declared: “I no longer believe that there is a moral majority. I do not believe that a majority of Americans actually shares our values.”
Weyrich declared defeat:
Cultural Marxism is succeeding in its war against our culture. The question becomes, if we are unable to escape the cultural disintegration that is gripping society, then what hope can we have?In the face of this onslaught of moral corruption, Weyrich counseled withdrawal from society at large. A “legitimate strategy for us to follow is to look at ways to separate ourselves from the institutions that have been captured by the ideology of Political Correctness, or by other enemies of our traditional culture,” he wrote. “We need to drop out of this culture, and find places, even if it is where we physically are right now, where we can live godly, righteous and sober lives.”
What would Weyrich, who died in 2008, make of the fact that Newt Gingrich — who was himself having an adulterous affair during the Clinton impeachment proceedings (one of several conducted by the former speaker, according to his own testimony and a number of lengthy journalistic investigations, including this one and that one) — won the 2012 South Carolina Republican primary with a plurality of voters who described themselves as evangelical or born-again Christians?
Exit polls show that Gingrich beat Romney by 44-22 among born-again and evangelical Christians, and by 46-10 among voters who said the religious convictions of the candidates mattered “a great deal.” His margins were equally strong among supporters of (and sympathizers with) the Tea Party, a constituency that closely overlaps with religious conservatives.
In fact, the Gingrich campaign reveals the current state of the Christian right, its status anxieties, its desperation, its frustration and in particular its anger. The extreme volatility of Gingrich’s primary season bid reflects not only the success and failure of his own tactical maneuvers and those of his opponents, but also the ambivalence of the Republican electorate in choosing between ideology and pragmatism — an intra-party struggle dating back to the candidacy of Barry Goldwater in 1964.
In strategic terms, religious conservatives need to be motivated to turn out in high numbers. Republican consultants have developed tools to identify and inflame what they call conservative “anger points.”
“They would love to see a false smarty pants decapitated by a real intellectual. He would tear Obama’s head off.”— Richard Land
But it is Gingrich who is the quintessential “anger points” candidate.
Richard Land, the host of the nationally syndicated radio broadcast “For Faith & Family” and president of the Southern Baptist Convention’s Ethics & Religious Liberty Commission, noted as others have that Gingrich won the hearts of many devout voters two weeks ago when he exploded in anger as CNN’s John King asked him to respond to the claim made by his second wife, Marianne, that he had refused to give up his six-year affair with Callista Bisek and offered his wife the option of an “open marriage.”
Gingrich’s reply to King brought the audience to its feet, capturing one of the most deeply felt conservative “anger points” — hostility to the mainstream media:
I think the destructive vicious negative nature of much of the news media makes it harder to govern this country, harder to attract decent people to run for public office. I’m appalled you would begin a presidential debate on a topic like that.The way Land sees it, Gingrich’s answer went beyond merely nodding toward the anti-media spirit among conservative Christian voters and reached forward instead to what they imagined would be an apocalyptic, nearly eschatological campaign between Obama and Gingrich. “They would love to see a false smarty pants decapitated by a real intellectual,” Land told me. “He would tear Obama’s head off.”
Evidence in support of Land’s analysis can be found in a webcast on the Internet site of Don Wildmon’s American Family Association. On the site, Matt Barber, an aggressive promoter of a socially conservative agenda, voiced unalloyed joy over a video celebrating the Gingrich-King confrontation like a nature show. Barber describes
footage of a lion chasing down a zebra. And then after the lion kills the zebra and looks up with his fur bloody, they switched back to a picture of Newt Gingrich with blood over his face. He had just made a meal out of John King.Gingrich is the first conservative presidential candidate to campaign on a package of traditional values from which he is exempting issues relating to personal sexual behavior. And there are reasons why this strategy worked on Jan. 21: The moral vision of the religious right is collapsing everywhere, including within its own ranks.
There are fewer and fewer “traditional” families in the United States; the number of secular voters is growing at a faster rate than the number of those who are religiously observant; women’s rights and homosexual rights have become broadly accepted; births outside of marriage are now routine among whites, Hispanics and African Americans.
While some religious conservatives are backing the former Pennsylvania senator Rick Santorum, many partisans on the moral values right have lined up behind Gingrich, including a good number who formerly sympathized with Michele Bachmann and Herman Cain. Joining Gingrich’s National Faith Coalition are Tim and Beverly LaHaye (Tim LaHaye is the author of “Battle for the Family” and Beverly LaHaye is the founder of Concerned Women for America, the largest women’s pro-family advocacy group in America); Dr. Jim Garlow, the California pastor who presides over the website ProtectMarriage.com, which backed the Proposition 8 campaign against gay marriage; and Don Wildmon, whose American Family Association website features his unshakeable commitment to “Strengthening Today’s Marriage and Family Movement.”
In South Carolina, we saw the consequences of this. Gingrich’s strength as the tribune of conservative rage at liberal elites trumped his long history of personal failings. He violated the very family values and the sanctity of marriage that social conservatives profess to believe in, but it was much more important that Gingrich was the enemy of their enemy.
It may well be that in this period of unprecedented moral upheaval, voters in Florida will decide differently from those in South Carolina. Under assault from his competitors on the topic of his multiple marriages, his ethical failings and his role as a Washington influence-peddler, Gingrich pulled in his horns. He seemed almost quiet. He has not been as effective a spokesman for the right’s “anger points,” which have propelled his success so far.
In the immediate aftermath of his South Carolina victory, Gingrich was riding high in Florida, where the next primary will be held on Tuesday. In three separate polls conducted on Jan. 23 and 24, Gingrich had a seemingly firm advantage, running ahead of Romney by margins of 8, 9 and 5 points.
Seeking to mute the building crescendo of assaults from his competitors, Gingrich abandoned the tactics of an insurgent in favor of those of a front-runner. Gone was the almost violently aggressive debate posture in favor of a surprisingly passive strategy.
“You know, there is a point in the process where it gets unnecessarily personal and nasty. And that’s sad,” Gingrich declared in the Jan. 23 debate in Tampa.
That is not what his potential supporters want to hear. They want red meat. The more Gingrich backed away, the less he stoked voter anger and the more his numbers dropped.
In the eight most recent polls reported by Real Clear Politics on Jan. 26, Jan. 27 and Jan. 28, Romney has pulled ahead, by 7 to 9 points, rising to an 11 to 16 point advantage on the 28th.
What does this political volatility say about the conservative movement and the Republican Party?
First, that although the Christian right is now in decline, it remains powerful, making up roughly 35 to 40 percent of the Republican primary electorate. But its preoccupations are less and less those of Americans taken as a whole. The Christian right might become increasingly marginalized and as the movement shifts to the periphery, it becomes more of a liability to the party than an asset.
Second, the Republican Party will, over time, struggle to develop a coherent moral stance that does not conflict with the leftward drift, both in values and behavior, of the electorate.
Gingrich’s swings from low to high to low to high to low — his success in South Carolina and his increasing desperation in Florida — suggest that his candidacy is more a burst of light before the candle dims than the latest iteration of a vital conservative insurgency.
The larger issue facing the Republican Party is how it will respond to political market forces, to the pressure of changes in public opinion. The party could open up beyond its core believers to accommodate old-school Republican moderates and hold on to its libertarians and still have decent size, strength and power.
But the country is going through a profound restructuring in moral and economic thinking and the danger for Republicans is that their current coalition might become obsolete. If the party doesn’t adapt, the alternative is that its power centers — the Christian right, anti-immigration forces, and proponents of policies that benefit the affluent at the expense of the less well-off — will refuse to adjust, in which case the party risks going the way of the Studebaker.
Thomas B. Edsall, a professor of journalism at Columbia University, is the author of the book “The Age of Austerity: How Scarcity Will Remake American Politics,” which was published earlier this month.
Saturday, January 28, 2012
Capitalism, Socialism, and Democracy by Joseph A. Schumpeter
My question: to what extent does Schumpeter understand Marxism as a "religion", and use religious allusions or metaphors to describe it?
To any mind not warped by the habit of fingering the Marxist rosary it should be obvious that their [social classes] relation is, in normal times, primarily one of cooperation and that any theory to the contrary must draw largely on pathological cases for verification." 19
"It was not by a slip that an analogy form the world of religion was permitted to intrude into the title of this chapter ["Marx the Prophet"]. In one important sense, Marxism is a religion. To the believer it presents, first, a system of ultimate ends that embody the meaning of life and are absolute standards by which to judge events and actions; and, secondly, a guide to those ends which implies a plan of salvation and the indication of the evil from which mankind, or a chosen section of mankind, is to be saved. We may specify still further: Marxist socialism also belongs to that subgroup which promises paradise on this side of the grave. I believe that a formulation of these characteristics by an hierologist would give opportunities for classification and comment which might possibly lead much deeper into the sociological essence of Marxism than anything a mere economist can say...The least important point about this is that it explains the success of Marxism." 5
But he was a prophet, and in order to understand the nature of this achievement we must visualize it in the setting of his own time. It was the zenith of bourgeois realization and the nadir of bourgeois civilization, the time of mechanistic materialism, of a cultural milieu which had as yet betrayed no sign that a new art and a new mode of life were in its womb, and which rioted in most repulsive banality. Faith in an real sense was rapidly..."
To any mind not warped by the habit of fingering the Marxist rosary it should be obvious that their [social classes] relation is, in normal times, primarily one of cooperation and that any theory to the contrary must draw largely on pathological cases for verification." 19
"It was not by a slip that an analogy form the world of religion was permitted to intrude into the title of this chapter ["Marx the Prophet"]. In one important sense, Marxism is a religion. To the believer it presents, first, a system of ultimate ends that embody the meaning of life and are absolute standards by which to judge events and actions; and, secondly, a guide to those ends which implies a plan of salvation and the indication of the evil from which mankind, or a chosen section of mankind, is to be saved. We may specify still further: Marxist socialism also belongs to that subgroup which promises paradise on this side of the grave. I believe that a formulation of these characteristics by an hierologist would give opportunities for classification and comment which might possibly lead much deeper into the sociological essence of Marxism than anything a mere economist can say...The least important point about this is that it explains the success of Marxism." 5
But he was a prophet, and in order to understand the nature of this achievement we must visualize it in the setting of his own time. It was the zenith of bourgeois realization and the nadir of bourgeois civilization, the time of mechanistic materialism, of a cultural milieu which had as yet betrayed no sign that a new art and a new mode of life were in its womb, and which rioted in most repulsive banality. Faith in an real sense was rapidly..."
Political Religions: the Right and Left of Truth
Political Religions: Right and Left of Truth
Geertz and the “mysterium tremendum”
--culture and history
Lakoff and Johnson: the metaphors we live by:
Lakoff and Johnson: the metaphors we live by:
1. Intro: Schumpter and "Marx the Prophet": Recognizing and labeling “the other”; Stiglitz: "Economic Fundamentalism".
Cold war narratives: Marxism vs. capitalism; good vs. evil; two classes; two parties.
Neo-classical economics and Any Rand: providing a mythic vision How does one become a "capitalist" the hardworker vs. the
The patriot, the evangelical, and the business man!
Money and a symbol of blessing (and sin): How does one become a "capitalist" the hardworker vs. the"welfare queen". see . 17-18 Schumpeter.
The "class war" metaphor
"Socialism", Obama, Racism, and "Freedom"--the Stalinist metaphor (communism as fascism): confusing Socialism with Fascism: example: the symbolic nature of the "individual mandate".
Cold war narratives: Marxism vs. capitalism; good vs. evil; two classes; two parties.
Neo-classical economics and Any Rand: providing a mythic vision How does one become a "capitalist" the hardworker vs. the
The patriot, the evangelical, and the business man!
Money and a symbol of blessing (and sin): How does one become a "capitalist" the hardworker vs. the"welfare queen". see . 17-18 Schumpeter.
The "class war" metaphor
"Socialism", Obama, Racism, and "Freedom"--the Stalinist metaphor (communism as fascism): confusing Socialism with Fascism: example: the symbolic nature of the "individual mandate".
2. Lessig and Chris Hedges can agree on something:
The alienation of Chris Hedges: prophet and analysis in "The Death of the Liberal class"
"Inverted Totalitarianism"
American anarchism and the historical narrative "Debt: the first 5 thousand years"
The marxist narrative in different clothing of how "capitalism" emerged: force, robbery subjugation of the masses. Before the "feudal" isms of Marx. An answer to Schumpeter. p. 18-19
the "war" and slavery metaphor on the Left
Money/debt as a symbol of greed
"Government" and the stateless society.
Occupy Wall Street and non-violent "occupation": Maus and the noble savage
3. The Progressive middle:
Lakoff and Johnson: the metaphors we live by:
"Waking up the Leviathon"
The "Third Way" experiment or dogma?
Richard Rorty: Revolution vs. incremental change: Michael Kazin
A tax break for voting?
healthy religion: William James Can "the Leviathon" be transformed?
"Inverted Totalitarianism"
American anarchism and the historical narrative "Debt: the first 5 thousand years"
The marxist narrative in different clothing of how "capitalism" emerged: force, robbery subjugation of the masses. Before the "feudal" isms of Marx. An answer to Schumpeter. p. 18-19
the "war" and slavery metaphor on the Left
Money/debt as a symbol of greed
"Government" and the stateless society.
Occupy Wall Street and non-violent "occupation": Maus and the noble savage
3. The Progressive middle:
Lakoff and Johnson: the metaphors we live by:
"Waking up the Leviathon"
The "Third Way" experiment or dogma?
Richard Rorty: Revolution vs. incremental change: Michael Kazin
A tax break for voting?
healthy religion: William James Can "the Leviathon" be transformed?
Lessig and Hedges
"The Leviathon" is the organic society of democratic government. To "wake it up" from the deceptions of its own making.
http://www.truthdig.com/avbooth/item/chris_hedges_and_lawrence_lessig_getting_money_out_of_politics_20120125/
http://www.truthdig.com/avbooth/item/chris_hedges_and_lawrence_lessig_getting_money_out_of_politics_20120125/
Friday, January 27, 2012
Interfuidity
People in the financial industry earned huge sums making loans that shouldn’t have been made, offering “affordability products”, Orwellian slang for means of selling homes at unreasonable prices that buyers could not afford. They failed to perform the core social duty of creditors, which is to make prudent judgments about whether loans are likely to be in the mutual interest of borrower and lender over the full term of the debt. http://news.mortgagecalculator.org/interview-with-interfluiditys-steve-waldman-the-government-has-chronically-oversubsidized-mortgage-lending-and-homeownership/
"Most bankers don’t understand themselves to be con artists. ...Bankers just think about making money. They work to attract cheap finance via suggestions of clever risk-management and cross guarantees. They try to cover themselves in case it all goes wrong. They persuade themselves in some big-picture way that the “system” in which they are participating in does some good, they rationalize away practices that might seem to be a bit sketchy. Every industry has its sausage factories, right?"
"It is with great unhappiness and reluctance that, after devoting years of my life to thinking about finance, I’ve concluded that financial systems are better characterized as large-scale disinformation systems and that disinformation is at the core of how they function, not some tumor that can be excised to restore the patient to good health." http://www.interfluidity.com/v2/2742.html
Tuesday, January 24, 2012
Sunday, January 22, 2012
IPhone economics
How U.S. Lost Out on iPhone Work
By CHARLES DUHIGG and KEITH BRADSHER
When Barack Obama joined Silicon Valley’s top luminaries for dinner in California last February, each guest was asked to come with a question for the president.
But as Steven P. Jobs of Apple spoke, President Obama interrupted with an inquiry of his own: what would it take to make iPhones in the United States?
Not long ago, Apple boasted that its products were made in America. Today, few are. Almost all of the 70 million iPhones, 30 million iPads and 59 million other products Apple sold last year were manufactured overseas.
Why can’t that work come home? Mr. Obama asked.
Mr. Jobs’s reply was unambiguous. “Those jobs aren’t coming back,” he said, according to another dinner guest.
The president’s question touched upon a central conviction at Apple. It isn’t just that workers are cheaper abroad. Rather, Apple’s executives believe the vast scale of overseas factories as well as the flexibility, diligence and industrial skills of foreign workers have so outpaced their American counterparts that “Made in the U.S.A.” is no longer a viable option for most Apple products.
Apple has become one of the best-known, most admired and most imitated companies on earth, in part through an unrelenting mastery of global operations. Last year, it earned over $400,000 in profit per employee, more than Goldman Sachs, Exxon Mobil or Google.
However, what has vexed Mr. Obama as well as economists and policy makers is that Apple — and many of its high-technology peers — are not nearly as avid in creating American jobs as other famous companies were in their heydays.
Apple employs 43,000 people in the United States and 20,000 overseas, a small fraction of the over 400,000 American workers at General Motors in the 1950s, or the hundreds of thousands at General Electric in the 1980s. Many more people work for Apple’s contractors: an additional 700,000 people engineer, build and assemble iPads, iPhones and Apple’s other products. But almost none of them work in the United States. Instead, they work for foreign companies in Asia, Europe and elsewhere, at factories that almost all electronics designers rely upon to build their wares.
“Apple’s an example of why it’s so hard to create middle-class jobs in the U.S. now,” said Jared Bernstein, who until last year was an economic adviser to the White House.
“If it’s the pinnacle of capitalism, we should be worried.”
Apple executives say that going overseas, at this point, is their only option. One former executive described how the company relied upon a Chinese factory to revamp iPhone manufacturing just weeks before the device was due on shelves. Apple had redesigned the iPhone’s screen at the last minute, forcing an assembly line overhaul. New screens began arriving at the plant near midnight.
A foreman immediately roused 8,000 workers inside the company’s dormitories, according to the executive. Each employee was given a biscuit and a cup of tea, guided to a workstation and within half an hour started a 12-hour shift fitting glass screens into beveled frames. Within 96 hours, the plant was producing over 10,000 iPhones a day.
“The speed and flexibility is breathtaking,” the executive said. “There’s no American plant that can match that.”
Similar stories could be told about almost any electronics company — and outsourcing has also become common in hundreds of industries, including accounting, legal services, banking, auto manufacturing and pharmaceuticals.
But while Apple is far from alone, it offers a window into why the success of some prominent companies has not translated into large numbers of domestic jobs. What’s more, the company’s decisions pose broader questions about what corporate America owes Americans as the global and national economies are increasingly intertwined.
“Companies once felt an obligation to support American workers, even when it wasn’t the best financial choice,” said Betsey Stevenson, the chief economist at the Labor Department until last September. “That’s disappeared. Profits and efficiency have trumped generosity.”
Companies and other economists say that notion is naïve. Though Americans are among the most educated workers in the world, the nation has stopped training enough people in the mid-level skills that factories need, executives say.
To thrive, companies argue they need to move work where it can generate enough profits to keep paying for innovation. Doing otherwise risks losing even more American jobs over time, as evidenced by the legions of once-proud domestic manufacturers — including G.M. and others — that have shrunk as nimble competitors have emerged.
Apple was provided with extensive summaries of The New York Times’s reporting for this article, but the company, which has a reputation for secrecy, declined to comment.
This article is based on interviews with more than three dozen current and former Apple employees and contractors — many of whom requested anonymity to protect their jobs — as well as economists, manufacturing experts, international trade specialists, technology analysts, academic researchers, employees at Apple’s suppliers, competitors and corporate partners, and government officials.
Privately, Apple executives say the world is now such a changed place that it is a mistake to measure a company’s contribution simply by tallying its employees — though they note that Apple employs more workers in the United States than ever before.
They say Apple’s success has benefited the economy by empowering entrepreneurs and creating jobs at companies like cellular providers and businesses shipping Apple products. And, ultimately, they say curing unemployment is not their job.
“We sell iPhones in over a hundred countries,” a current Apple executive said. “We don’t have an obligation to solve America’s problems. Our only obligation is making the best product possible.”
‘I Want a Glass Screen’
In 2007, a little over a month before the iPhone was scheduled to appear in stores, Mr. Jobs beckoned a handful of lieutenants into an office. For weeks, he had been carrying a prototype of the device in his pocket.
Mr. Jobs angrily held up his iPhone, angling it so everyone could see the dozens of tiny scratches marring its plastic screen, according to someone who attended the meeting. He then pulled his keys from his jeans.
People will carry this phone in their pocket, he said. People also carry their keys in their pocket. “I won’t sell a product that gets scratched,” he said tensely. The only solution was using unscratchable glass instead. “I want a glass screen, and I want it perfect in six weeks.”
After one executive left that meeting, he booked a flight to Shenzhen, China. If Mr. Jobs wanted perfect, there was nowhere else to go.
For over two years, the company had been working on a project — code-named Purple 2 — that presented the same questions at every turn: how do you completely reimagine the cellphone? And how do you design it at the highest quality — with an unscratchable screen, for instance — while also ensuring that millions can be manufactured quickly and inexpensively enough to earn a significant profit?
The answers, almost every time, were found outside the United States. Though components differ between versions, all iPhones contain hundreds of parts, an estimated 90 percent of which are manufactured abroad. Advanced semiconductors have come from Germany and Taiwan, memory from Korea and Japan, display panels and circuitry from Korea and Taiwan, chipsets from Europe and rare metals from Africa and Asia. And all of it is put together in China.
In its early days, Apple usually didn’t look beyond its own backyard for manufacturing solutions. A few years after Apple began building the Macintosh in 1983, for instance, Mr. Jobs bragged that it was “a machine that is made in America.” In 1990, while Mr. Jobs was running NeXT, which was eventually bought by Apple, the executive told a reporter that “I’m as proud of the factory as I am of the computer.” As late as 2002, top Apple executives occasionally drove two hours northeast of their headquarters to visit the company’s iMac plant in Elk Grove, Calif.
But by 2004, Apple had largely turned to foreign manufacturing. Guiding that decision was Apple’s operations expert, Timothy D. Cook, who replaced Mr. Jobs as chief executive last August, six weeks before Mr. Jobs’s death. Most other American electronics companies had already gone abroad, and Apple, which at the time was struggling, felt it had to grasp every advantage.
In part, Asia was attractive because the semiskilled workers there were cheaper. But that wasn’t driving Apple. For technology companies, the cost of labor is minimal compared with the expense of buying parts and managing supply chains that bring together components and services from hundreds of companies.
For Mr. Cook, the focus on Asia “came down to two things,” said one former high-ranking Apple executive. Factories in Asia “can scale up and down faster” and “Asian supply chains have surpassed what’s in the U.S.” The result is that “we can’t compete at this point,” the executive said.
The impact of such advantages became obvious as soon as Mr. Jobs demanded glass screens in 2007.
For years, cellphone makers had avoided using glass because it required precision in cutting and grinding that was extremely difficult to achieve. Apple had already selected an American company, Corning Inc., to manufacture large panes of strengthened glass. But figuring out how to cut those panes into millions of iPhone screens required finding an empty cutting plant, hundreds of pieces of glass to use in experiments and an army of midlevel engineers. It would cost a fortune simply to prepare.
Then a bid for the work arrived from a Chinese factory.
When an Apple team visited, the Chinese plant’s owners were already constructing a new wing. “This is in case you give us the contract,” the manager said, according to a former Apple executive. The Chinese government had agreed to underwrite costs for numerous industries, and those subsidies had trickled down to the glass-cutting factory. It had a warehouse filled with glass samples available to Apple, free of charge. The owners made engineers available at almost no cost. They had built on-site dormitories so employees would be available 24 hours a day.
The Chinese plant got the job.
“The entire supply chain is in China now,” said another former high-ranking Apple executive. “You need a thousand rubber gaskets? That’s the factory next door. You need a million screws? That factory is a block away. You need that screw made a little bit different? It will take three hours.”
In Foxconn City
An eight-hour drive from that glass factory is a complex, known informally as Foxconn City, where the iPhone is assembled. To Apple executives, Foxconn City was further evidence that China could deliver workers — and diligence — that outpaced their American counterparts.
That’s because nothing like Foxconn City exists in the United States.
The facility has 230,000 employees, many working six days a week, often spending up to 12 hours a day at the plant. Over a quarter of Foxconn’s work force lives in company barracks and many workers earn less than $17 a day. When one Apple executive arrived during a shift change, his car was stuck in a river of employees streaming past. “The scale is unimaginable,” he said.
Foxconn employs nearly 300 guards to direct foot traffic so workers are not crushed in doorway bottlenecks. The facility’s central kitchen cooks an average of three tons of pork and 13 tons of rice a day. While factories are spotless, the air inside nearby teahouses is hazy with the smoke and stench of cigarettes.
Foxconn Technology has dozens of facilities in Asia and Eastern Europe, and in Mexico and Brazil, and it assembles an estimated 40 percent of the world’s consumer electronics for customers like Amazon, Dell, Hewlett-Packard, Motorola, Nintendo, Nokia, Samsung and Sony.
“They could hire 3,000 people overnight,” said Jennifer Rigoni, who was Apple’s worldwide supply demand manager until 2010, but declined to discuss specifics of her work. “What U.S. plant can find 3,000 people overnight and convince them to live in dorms?”
In mid-2007, after a month of experimentation, Apple’s engineers finally perfected a method for cutting strengthened glass so it could be used in the iPhone’s screen. The first truckloads of cut glass arrived at Foxconn City in the dead of night, according to the former Apple executive. That’s when managers woke thousands of workers, who crawled into their uniforms — white and black shirts for men, red for women — and quickly lined up to assemble, by hand, the phones. Within three months, Apple had sold one million iPhones. Since then, Foxconn has assembled over 200 million more.
Foxconn, in statements, declined to speak about specific clients.
“Any worker recruited by our firm is covered by a clear contract outlining terms and conditions and by Chinese government law that protects their rights,” the company wrote. Foxconn “takes our responsibility to our employees very seriously and we work hard to give our more than one million employees a safe and positive environment.”
The company disputed some details of the former Apple executive’s account, and wrote that a midnight shift, such as the one described, was impossible “because we have strict regulations regarding the working hours of our employees based on their designated shifts, and every employee has computerized timecards that would bar them from working at any facility at a time outside of their approved shift.” The company said that all shifts began at either 7 a.m. or 7 p.m., and that employees receive at least 12 hours’ notice of any schedule changes.
Foxconn employees, in interviews, have challenged those assertions.
Another critical advantage for Apple was that China provided engineers at a scale the United States could not match. Apple’s executives had estimated that about 8,700 industrial engineers were needed to oversee and guide the 200,000 assembly-line workers eventually involved in manufacturing iPhones. The company’s analysts had forecast it would take as long as nine months to find that many qualified engineers in the United States.
In China, it took 15 days.
Companies like Apple “say the challenge in setting up U.S. plants is finding a technical work force,” said Martin Schmidt, associate provost at the Massachusetts Institute of Technology. In particular, companies say they need engineers with more than high school, but not necessarily a bachelor’s degree. Americans at that skill level are hard to find, executives contend. “They’re good jobs, but the country doesn’t have enough to feed the demand,” Mr. Schmidt said.
Some aspects of the iPhone are uniquely American. The device’s software, for instance, and its innovative marketing campaigns were largely created in the United States. Apple recently built a $500 million data center in North Carolina. Crucial semiconductors inside the iPhone 4 and 4S are manufactured in an Austin, Tex., factory by Samsung, of South Korea.
But even those facilities are not enormous sources of jobs. Apple’s North Carolina center, for instance, has only 100 full-time employees. The Samsung plant has an estimated 2,400 workers.
“If you scale up from selling one million phones to 30 million phones, you don’t really need more programmers,” said Jean-Louis Gassée, who oversaw product development and marketing for Apple until he left in 1990. “All these new companies — Facebook, Google, Twitter — benefit from this. They grow, but they don’t really need to hire much.”
It is hard to estimate how much more it would cost to build iPhones in the United States. However, various academics and manufacturing analysts estimate that because labor is such a small part of technology manufacturing, paying American wages would add up to $65 to each iPhone’s expense. Since Apple’s profits are often hundreds of dollars per phone, building domestically, in theory, would still give the company a healthy reward.
But such calculations are, in many respects, meaningless because building the iPhone in the United States would demand much more than hiring Americans — it would require transforming the national and global economies. Apple executives believe there simply aren’t enough American workers with the skills the company needs or factories with sufficient speed and flexibility. Other companies that work with Apple, like Corning, also say they must go abroad.
Manufacturing glass for the iPhone revived a Corning factory in Kentucky, and today, much of the glass in iPhones is still made there. After the iPhone became a success, Corning received a flood of orders from other companies hoping to imitate Apple’s designs. Its strengthened glass sales have grown to more than $700 million a year, and it has hired or continued employing about 1,000 Americans to support the emerging market.
But as that market has expanded, the bulk of Corning’s strengthened glass manufacturing has occurred at plants in Japan and Taiwan.
“Our customers are in Taiwan, Korea, Japan and China,” said James B. Flaws, Corning’s vice chairman and chief financial officer. “We could make the glass here, and then ship it by boat, but that takes 35 days. Or, we could ship it by air, but that’s 10 times as expensive. So we build our glass factories next door to assembly factories, and those are overseas.”
Corning was founded in America 161 years ago and its headquarters are still in upstate New York. Theoretically, the company could manufacture all its glass domestically. But it would “require a total overhaul in how the industry is structured,” Mr. Flaws said. “The consumer electronics business has become an Asian business. As an American, I worry about that, but there’s nothing I can do to stop it. Asia has become what the U.S. was for the last 40 years.”
Middle-Class Jobs Fade
The first time Eric Saragoza stepped into Apple’s manufacturing plant in Elk Grove, Calif., he felt as if he were entering an engineering wonderland.
It was 1995, and the facility near Sacramento employed more than 1,500 workers. It was a kaleidoscope of robotic arms, conveyor belts ferrying circuit boards and, eventually, candy-colored iMacs in various stages of assembly. Mr. Saragoza, an engineer, quickly moved up the plant’s ranks and joined an elite diagnostic team. His salary climbed to $50,000. He and his wife had three children. They bought a home with a pool.
“It felt like, finally, school was paying off,” he said. “I knew the world needed people who can build things.”
At the same time, however, the electronics industry was changing, and Apple — with products that were declining in popularity — was struggling to remake itself. One focus was improving manufacturing. A few years after Mr. Saragoza started his job, his bosses explained how the California plant stacked up against overseas factories: the cost, excluding the materials, of building a $1,500 computer in Elk Grove was $22 a machine. In Singapore, it was $6. In Taiwan, $4.85. Wages weren’t the major reason for the disparities. Rather it was costs like inventory and how long it took workers to finish a task.
“We were told we would have to do 12-hour days, and come in on Saturdays,” Mr. Saragoza said. “I had a family. I wanted to see my kids play soccer.”
Modernization has always caused some kinds of jobs to change or disappear. As the American economy transitioned from agriculture to manufacturing and then to other industries, farmers became steelworkers, and then salesmen and middle managers. These shifts have carried many economic benefits, and in general, with each progression, even unskilled workers received better wages and greater chances at upward mobility.
But in the last two decades, something more fundamental has changed, economists say. Midwage jobs started disappearing. Particularly among Americans without college degrees, today’s new jobs are disproportionately in service occupations — at restaurants or call centers, or as hospital attendants or temporary workers — that offer fewer opportunities for reaching the middle class.
Even Mr. Saragoza, with his college degree, was vulnerable to these trends. First, some of Elk Grove’s routine tasks were sent overseas. Mr. Saragoza didn’t mind. Then the robotics that made Apple a futuristic playground allowed executives to replace workers with machines. Some diagnostic engineering went to Singapore. Middle managers who oversaw the plant’s inventory were laid off because, suddenly, a few people with Internet connections were all that were needed.
Mr. Saragoza was too expensive for an unskilled position. He was also insufficiently credentialed for upper management. He was called into a small office in 2002 after a night shift, laid off and then escorted from the plant. He taught high school for a while, and then tried a return to technology. But Apple, which had helped anoint the region as “Silicon Valley North,” had by then converted much of the Elk Grove plant into an AppleCare call center, where new employees often earn $12 an hour.
There were employment prospects in Silicon Valley, but none of them panned out. “What they really want are 30-year-olds without children,” said Mr. Saragoza, who today is 48, and whose family now includes five of his own.
After a few months of looking for work, he started feeling desperate. Even teaching jobs had dried up. So he took a position with an electronics temp agency that had been hired by Apple to check returned iPhones and iPads before they were sent back to customers. Every day, Mr. Saragoza would drive to the building where he had once worked as an engineer, and for $10 an hour with no benefits, wipe thousands of glass screens and test audio ports by plugging in headphones.
Paydays for Apple
As Apple’s overseas operations and sales have expanded, its top employees have thrived. Last fiscal year, Apple’s revenue topped $108 billion, a sum larger than the combined state budgets of Michigan, New Jersey and Massachusetts. Since 2005, when the company’s stock split, share prices have risen from about $45 to more than $427.
Some of that wealth has gone to shareholders. Apple is among the most widely held stocks, and the rising share price has benefited millions of individual investors, 401(k)’s and pension plans. The bounty has also enriched Apple workers. Last fiscal year, in addition to their salaries, Apple’s employees and directors received stock worth $2 billion and exercised or vested stock and options worth an added $1.4 billion.
The biggest rewards, however, have often gone to Apple’s top employees. Mr. Cook, Apple’s chief, last year received stock grants — which vest over a 10-year period — that, at today’s share price, would be worth $427 million, and his salary was raised to $1.4 million. In 2010, Mr. Cook’s compensation package was valued at $59 million, according to Apple’s security filings.
A person close to Apple argued that the compensation received by Apple’s employees was fair, in part because the company had brought so much value to the nation and world. As the company has grown, it has expanded its domestic work force, including manufacturing jobs. Last year, Apple’s American work force grew by 8,000 people.
While other companies have sent call centers abroad, Apple has kept its centers in the United States. One source estimated that sales of Apple’s products have caused other companies to hire tens of thousands of Americans. FedEx and United Parcel Service, for instance, both say they have created American jobs because of the volume of Apple’s shipments, though neither would provide specific figures without permission from Apple, which the company declined to provide.
“We shouldn’t be criticized for using Chinese workers,” a current Apple executive said. “The U.S. has stopped producing people with the skills we need.”
What’s more, Apple sources say the company has created plenty of good American jobs inside its retail stores and among entrepreneurs selling iPhone and iPad applications.
After two months of testing iPads, Mr. Saragoza quit. The pay was so low that he was better off, he figured, spending those hours applying for other jobs. On a recent October evening, while Mr. Saragoza sat at his MacBook and submitted another round of résumés online, halfway around the world a woman arrived at her office. The worker, Lina Lin, is a project manager in Shenzhen, China, at PCH International, which contracts with Apple and other electronics companies to coordinate production of accessories, like the cases that protect the iPad’s glass screens. She is not an Apple employee. But Mrs. Lin is integral to Apple’s ability to deliver its products.
Mrs. Lin earns a bit less than what Mr. Saragoza was paid by Apple. She speaks fluent English, learned from watching television and in a Chinese university. She and her husband put a quarter of their salaries in the bank every month. They live in a 1,080-square-foot apartment, which they share with their in-laws and son.
“There are lots of jobs,” Mrs. Lin said. “Especially in Shenzhen.”
Innovation’s Losers
Toward the end of Mr. Obama’s dinner last year with Mr. Jobs and other Silicon Valley executives, as everyone stood to leave, a crowd of photo seekers formed around the president. A slightly smaller scrum gathered around Mr. Jobs. Rumors had spread that his illness had worsened, and some hoped for a photograph with him, perhaps for the last time.
Eventually, the orbits of the men overlapped. “I’m not worried about the country’s long-term future,” Mr. Jobs told Mr. Obama, according to one observer. “This country is insanely great. What I’m worried about is that we don’t talk enough about solutions.”
At dinner, for instance, the executives had suggested that the government should reform visa programs to help companies hire foreign engineers. Some had urged the president to give companies a “tax holiday” so they could bring back overseas profits which, they argued, would be used to create work. Mr. Jobs even suggested it might be possible, someday, to locate some of Apple’s skilled manufacturing in the United States if the government helped train more American engineers.
Economists debate the usefulness of those and other efforts, and note that a struggling economy is sometimes transformed by unexpected developments. The last time analysts wrung their hands about prolonged American unemployment, for instance, in the early 1980s, the Internet hardly existed. Few at the time would have guessed that a degree in graphic design was rapidly becoming a smart bet, while studying telephone repair a dead end.
What remains unknown, however, is whether the United States will be able to leverage tomorrow’s innovations into millions of jobs.
In the last decade, technological leaps in solar and wind energy, semiconductor fabrication and display technologies have created thousands of jobs. But while many of those industries started in America, much of the employment has occurred abroad. Companies have closed major facilities in the United States to reopen in China. By way of explanation, executives say they are competing with Apple for shareholders. If they cannot rival Apple’s growth and profit margins, they won’t survive.
“New middle-class jobs will eventually emerge,” said Lawrence Katz, a Harvard economist. “But will someone in his 40s have the skills for them? Or will he be bypassed for a new graduate and never find his way back into the middle class?”
The pace of innovation, say executives from a variety of industries, has been quickened by businessmen like Mr. Jobs. G.M. went as long as half a decade between major automobile redesigns. Apple, by comparison, has released five iPhones in four years, doubling the devices’ speed and memory while dropping the price that some consumers pay.
Before Mr. Obama and Mr. Jobs said goodbye, the Apple executive pulled an iPhone from his pocket to show off a new application — a driving game — with incredibly detailed graphics. The device reflected the soft glow of the room’s lights. The other executives, whose combined worth exceeded $69 billion, jostled for position to glance over his shoulder. The game, everyone agreed, was wonderful.
There wasn’t even a tiny scratch on the screen.
But as Steven P. Jobs of Apple spoke, President Obama interrupted with an inquiry of his own: what would it take to make iPhones in the United States?
Not long ago, Apple boasted that its products were made in America. Today, few are. Almost all of the 70 million iPhones, 30 million iPads and 59 million other products Apple sold last year were manufactured overseas.
Why can’t that work come home? Mr. Obama asked.
Mr. Jobs’s reply was unambiguous. “Those jobs aren’t coming back,” he said, according to another dinner guest.
The president’s question touched upon a central conviction at Apple. It isn’t just that workers are cheaper abroad. Rather, Apple’s executives believe the vast scale of overseas factories as well as the flexibility, diligence and industrial skills of foreign workers have so outpaced their American counterparts that “Made in the U.S.A.” is no longer a viable option for most Apple products.
Apple has become one of the best-known, most admired and most imitated companies on earth, in part through an unrelenting mastery of global operations. Last year, it earned over $400,000 in profit per employee, more than Goldman Sachs, Exxon Mobil or Google.
However, what has vexed Mr. Obama as well as economists and policy makers is that Apple — and many of its high-technology peers — are not nearly as avid in creating American jobs as other famous companies were in their heydays.
Apple employs 43,000 people in the United States and 20,000 overseas, a small fraction of the over 400,000 American workers at General Motors in the 1950s, or the hundreds of thousands at General Electric in the 1980s. Many more people work for Apple’s contractors: an additional 700,000 people engineer, build and assemble iPads, iPhones and Apple’s other products. But almost none of them work in the United States. Instead, they work for foreign companies in Asia, Europe and elsewhere, at factories that almost all electronics designers rely upon to build their wares.
“Apple’s an example of why it’s so hard to create middle-class jobs in the U.S. now,” said Jared Bernstein, who until last year was an economic adviser to the White House.
“If it’s the pinnacle of capitalism, we should be worried.”
Apple executives say that going overseas, at this point, is their only option. One former executive described how the company relied upon a Chinese factory to revamp iPhone manufacturing just weeks before the device was due on shelves. Apple had redesigned the iPhone’s screen at the last minute, forcing an assembly line overhaul. New screens began arriving at the plant near midnight.
A foreman immediately roused 8,000 workers inside the company’s dormitories, according to the executive. Each employee was given a biscuit and a cup of tea, guided to a workstation and within half an hour started a 12-hour shift fitting glass screens into beveled frames. Within 96 hours, the plant was producing over 10,000 iPhones a day.
“The speed and flexibility is breathtaking,” the executive said. “There’s no American plant that can match that.”
Similar stories could be told about almost any electronics company — and outsourcing has also become common in hundreds of industries, including accounting, legal services, banking, auto manufacturing and pharmaceuticals.
But while Apple is far from alone, it offers a window into why the success of some prominent companies has not translated into large numbers of domestic jobs. What’s more, the company’s decisions pose broader questions about what corporate America owes Americans as the global and national economies are increasingly intertwined.
“Companies once felt an obligation to support American workers, even when it wasn’t the best financial choice,” said Betsey Stevenson, the chief economist at the Labor Department until last September. “That’s disappeared. Profits and efficiency have trumped generosity.”
Companies and other economists say that notion is naïve. Though Americans are among the most educated workers in the world, the nation has stopped training enough people in the mid-level skills that factories need, executives say.
To thrive, companies argue they need to move work where it can generate enough profits to keep paying for innovation. Doing otherwise risks losing even more American jobs over time, as evidenced by the legions of once-proud domestic manufacturers — including G.M. and others — that have shrunk as nimble competitors have emerged.
Apple was provided with extensive summaries of The New York Times’s reporting for this article, but the company, which has a reputation for secrecy, declined to comment.
This article is based on interviews with more than three dozen current and former Apple employees and contractors — many of whom requested anonymity to protect their jobs — as well as economists, manufacturing experts, international trade specialists, technology analysts, academic researchers, employees at Apple’s suppliers, competitors and corporate partners, and government officials.
Privately, Apple executives say the world is now such a changed place that it is a mistake to measure a company’s contribution simply by tallying its employees — though they note that Apple employs more workers in the United States than ever before.
They say Apple’s success has benefited the economy by empowering entrepreneurs and creating jobs at companies like cellular providers and businesses shipping Apple products. And, ultimately, they say curing unemployment is not their job.
“We sell iPhones in over a hundred countries,” a current Apple executive said. “We don’t have an obligation to solve America’s problems. Our only obligation is making the best product possible.”
‘I Want a Glass Screen’
In 2007, a little over a month before the iPhone was scheduled to appear in stores, Mr. Jobs beckoned a handful of lieutenants into an office. For weeks, he had been carrying a prototype of the device in his pocket.
Mr. Jobs angrily held up his iPhone, angling it so everyone could see the dozens of tiny scratches marring its plastic screen, according to someone who attended the meeting. He then pulled his keys from his jeans.
People will carry this phone in their pocket, he said. People also carry their keys in their pocket. “I won’t sell a product that gets scratched,” he said tensely. The only solution was using unscratchable glass instead. “I want a glass screen, and I want it perfect in six weeks.”
After one executive left that meeting, he booked a flight to Shenzhen, China. If Mr. Jobs wanted perfect, there was nowhere else to go.
For over two years, the company had been working on a project — code-named Purple 2 — that presented the same questions at every turn: how do you completely reimagine the cellphone? And how do you design it at the highest quality — with an unscratchable screen, for instance — while also ensuring that millions can be manufactured quickly and inexpensively enough to earn a significant profit?
The answers, almost every time, were found outside the United States. Though components differ between versions, all iPhones contain hundreds of parts, an estimated 90 percent of which are manufactured abroad. Advanced semiconductors have come from Germany and Taiwan, memory from Korea and Japan, display panels and circuitry from Korea and Taiwan, chipsets from Europe and rare metals from Africa and Asia. And all of it is put together in China.
In its early days, Apple usually didn’t look beyond its own backyard for manufacturing solutions. A few years after Apple began building the Macintosh in 1983, for instance, Mr. Jobs bragged that it was “a machine that is made in America.” In 1990, while Mr. Jobs was running NeXT, which was eventually bought by Apple, the executive told a reporter that “I’m as proud of the factory as I am of the computer.” As late as 2002, top Apple executives occasionally drove two hours northeast of their headquarters to visit the company’s iMac plant in Elk Grove, Calif.
But by 2004, Apple had largely turned to foreign manufacturing. Guiding that decision was Apple’s operations expert, Timothy D. Cook, who replaced Mr. Jobs as chief executive last August, six weeks before Mr. Jobs’s death. Most other American electronics companies had already gone abroad, and Apple, which at the time was struggling, felt it had to grasp every advantage.
In part, Asia was attractive because the semiskilled workers there were cheaper. But that wasn’t driving Apple. For technology companies, the cost of labor is minimal compared with the expense of buying parts and managing supply chains that bring together components and services from hundreds of companies.
For Mr. Cook, the focus on Asia “came down to two things,” said one former high-ranking Apple executive. Factories in Asia “can scale up and down faster” and “Asian supply chains have surpassed what’s in the U.S.” The result is that “we can’t compete at this point,” the executive said.
The impact of such advantages became obvious as soon as Mr. Jobs demanded glass screens in 2007.
For years, cellphone makers had avoided using glass because it required precision in cutting and grinding that was extremely difficult to achieve. Apple had already selected an American company, Corning Inc., to manufacture large panes of strengthened glass. But figuring out how to cut those panes into millions of iPhone screens required finding an empty cutting plant, hundreds of pieces of glass to use in experiments and an army of midlevel engineers. It would cost a fortune simply to prepare.
Then a bid for the work arrived from a Chinese factory.
When an Apple team visited, the Chinese plant’s owners were already constructing a new wing. “This is in case you give us the contract,” the manager said, according to a former Apple executive. The Chinese government had agreed to underwrite costs for numerous industries, and those subsidies had trickled down to the glass-cutting factory. It had a warehouse filled with glass samples available to Apple, free of charge. The owners made engineers available at almost no cost. They had built on-site dormitories so employees would be available 24 hours a day.
The Chinese plant got the job.
“The entire supply chain is in China now,” said another former high-ranking Apple executive. “You need a thousand rubber gaskets? That’s the factory next door. You need a million screws? That factory is a block away. You need that screw made a little bit different? It will take three hours.”
In Foxconn City
An eight-hour drive from that glass factory is a complex, known informally as Foxconn City, where the iPhone is assembled. To Apple executives, Foxconn City was further evidence that China could deliver workers — and diligence — that outpaced their American counterparts.
That’s because nothing like Foxconn City exists in the United States.
The facility has 230,000 employees, many working six days a week, often spending up to 12 hours a day at the plant. Over a quarter of Foxconn’s work force lives in company barracks and many workers earn less than $17 a day. When one Apple executive arrived during a shift change, his car was stuck in a river of employees streaming past. “The scale is unimaginable,” he said.
Foxconn employs nearly 300 guards to direct foot traffic so workers are not crushed in doorway bottlenecks. The facility’s central kitchen cooks an average of three tons of pork and 13 tons of rice a day. While factories are spotless, the air inside nearby teahouses is hazy with the smoke and stench of cigarettes.
Foxconn Technology has dozens of facilities in Asia and Eastern Europe, and in Mexico and Brazil, and it assembles an estimated 40 percent of the world’s consumer electronics for customers like Amazon, Dell, Hewlett-Packard, Motorola, Nintendo, Nokia, Samsung and Sony.
“They could hire 3,000 people overnight,” said Jennifer Rigoni, who was Apple’s worldwide supply demand manager until 2010, but declined to discuss specifics of her work. “What U.S. plant can find 3,000 people overnight and convince them to live in dorms?”
In mid-2007, after a month of experimentation, Apple’s engineers finally perfected a method for cutting strengthened glass so it could be used in the iPhone’s screen. The first truckloads of cut glass arrived at Foxconn City in the dead of night, according to the former Apple executive. That’s when managers woke thousands of workers, who crawled into their uniforms — white and black shirts for men, red for women — and quickly lined up to assemble, by hand, the phones. Within three months, Apple had sold one million iPhones. Since then, Foxconn has assembled over 200 million more.
Foxconn, in statements, declined to speak about specific clients.
“Any worker recruited by our firm is covered by a clear contract outlining terms and conditions and by Chinese government law that protects their rights,” the company wrote. Foxconn “takes our responsibility to our employees very seriously and we work hard to give our more than one million employees a safe and positive environment.”
The company disputed some details of the former Apple executive’s account, and wrote that a midnight shift, such as the one described, was impossible “because we have strict regulations regarding the working hours of our employees based on their designated shifts, and every employee has computerized timecards that would bar them from working at any facility at a time outside of their approved shift.” The company said that all shifts began at either 7 a.m. or 7 p.m., and that employees receive at least 12 hours’ notice of any schedule changes.
Foxconn employees, in interviews, have challenged those assertions.
Another critical advantage for Apple was that China provided engineers at a scale the United States could not match. Apple’s executives had estimated that about 8,700 industrial engineers were needed to oversee and guide the 200,000 assembly-line workers eventually involved in manufacturing iPhones. The company’s analysts had forecast it would take as long as nine months to find that many qualified engineers in the United States.
In China, it took 15 days.
Companies like Apple “say the challenge in setting up U.S. plants is finding a technical work force,” said Martin Schmidt, associate provost at the Massachusetts Institute of Technology. In particular, companies say they need engineers with more than high school, but not necessarily a bachelor’s degree. Americans at that skill level are hard to find, executives contend. “They’re good jobs, but the country doesn’t have enough to feed the demand,” Mr. Schmidt said.
Some aspects of the iPhone are uniquely American. The device’s software, for instance, and its innovative marketing campaigns were largely created in the United States. Apple recently built a $500 million data center in North Carolina. Crucial semiconductors inside the iPhone 4 and 4S are manufactured in an Austin, Tex., factory by Samsung, of South Korea.
But even those facilities are not enormous sources of jobs. Apple’s North Carolina center, for instance, has only 100 full-time employees. The Samsung plant has an estimated 2,400 workers.
“If you scale up from selling one million phones to 30 million phones, you don’t really need more programmers,” said Jean-Louis Gassée, who oversaw product development and marketing for Apple until he left in 1990. “All these new companies — Facebook, Google, Twitter — benefit from this. They grow, but they don’t really need to hire much.”
It is hard to estimate how much more it would cost to build iPhones in the United States. However, various academics and manufacturing analysts estimate that because labor is such a small part of technology manufacturing, paying American wages would add up to $65 to each iPhone’s expense. Since Apple’s profits are often hundreds of dollars per phone, building domestically, in theory, would still give the company a healthy reward.
But such calculations are, in many respects, meaningless because building the iPhone in the United States would demand much more than hiring Americans — it would require transforming the national and global economies. Apple executives believe there simply aren’t enough American workers with the skills the company needs or factories with sufficient speed and flexibility. Other companies that work with Apple, like Corning, also say they must go abroad.
Manufacturing glass for the iPhone revived a Corning factory in Kentucky, and today, much of the glass in iPhones is still made there. After the iPhone became a success, Corning received a flood of orders from other companies hoping to imitate Apple’s designs. Its strengthened glass sales have grown to more than $700 million a year, and it has hired or continued employing about 1,000 Americans to support the emerging market.
But as that market has expanded, the bulk of Corning’s strengthened glass manufacturing has occurred at plants in Japan and Taiwan.
“Our customers are in Taiwan, Korea, Japan and China,” said James B. Flaws, Corning’s vice chairman and chief financial officer. “We could make the glass here, and then ship it by boat, but that takes 35 days. Or, we could ship it by air, but that’s 10 times as expensive. So we build our glass factories next door to assembly factories, and those are overseas.”
Corning was founded in America 161 years ago and its headquarters are still in upstate New York. Theoretically, the company could manufacture all its glass domestically. But it would “require a total overhaul in how the industry is structured,” Mr. Flaws said. “The consumer electronics business has become an Asian business. As an American, I worry about that, but there’s nothing I can do to stop it. Asia has become what the U.S. was for the last 40 years.”
Middle-Class Jobs Fade
The first time Eric Saragoza stepped into Apple’s manufacturing plant in Elk Grove, Calif., he felt as if he were entering an engineering wonderland.
It was 1995, and the facility near Sacramento employed more than 1,500 workers. It was a kaleidoscope of robotic arms, conveyor belts ferrying circuit boards and, eventually, candy-colored iMacs in various stages of assembly. Mr. Saragoza, an engineer, quickly moved up the plant’s ranks and joined an elite diagnostic team. His salary climbed to $50,000. He and his wife had three children. They bought a home with a pool.
“It felt like, finally, school was paying off,” he said. “I knew the world needed people who can build things.”
At the same time, however, the electronics industry was changing, and Apple — with products that were declining in popularity — was struggling to remake itself. One focus was improving manufacturing. A few years after Mr. Saragoza started his job, his bosses explained how the California plant stacked up against overseas factories: the cost, excluding the materials, of building a $1,500 computer in Elk Grove was $22 a machine. In Singapore, it was $6. In Taiwan, $4.85. Wages weren’t the major reason for the disparities. Rather it was costs like inventory and how long it took workers to finish a task.
“We were told we would have to do 12-hour days, and come in on Saturdays,” Mr. Saragoza said. “I had a family. I wanted to see my kids play soccer.”
Modernization has always caused some kinds of jobs to change or disappear. As the American economy transitioned from agriculture to manufacturing and then to other industries, farmers became steelworkers, and then salesmen and middle managers. These shifts have carried many economic benefits, and in general, with each progression, even unskilled workers received better wages and greater chances at upward mobility.
But in the last two decades, something more fundamental has changed, economists say. Midwage jobs started disappearing. Particularly among Americans without college degrees, today’s new jobs are disproportionately in service occupations — at restaurants or call centers, or as hospital attendants or temporary workers — that offer fewer opportunities for reaching the middle class.
Even Mr. Saragoza, with his college degree, was vulnerable to these trends. First, some of Elk Grove’s routine tasks were sent overseas. Mr. Saragoza didn’t mind. Then the robotics that made Apple a futuristic playground allowed executives to replace workers with machines. Some diagnostic engineering went to Singapore. Middle managers who oversaw the plant’s inventory were laid off because, suddenly, a few people with Internet connections were all that were needed.
Mr. Saragoza was too expensive for an unskilled position. He was also insufficiently credentialed for upper management. He was called into a small office in 2002 after a night shift, laid off and then escorted from the plant. He taught high school for a while, and then tried a return to technology. But Apple, which had helped anoint the region as “Silicon Valley North,” had by then converted much of the Elk Grove plant into an AppleCare call center, where new employees often earn $12 an hour.
There were employment prospects in Silicon Valley, but none of them panned out. “What they really want are 30-year-olds without children,” said Mr. Saragoza, who today is 48, and whose family now includes five of his own.
After a few months of looking for work, he started feeling desperate. Even teaching jobs had dried up. So he took a position with an electronics temp agency that had been hired by Apple to check returned iPhones and iPads before they were sent back to customers. Every day, Mr. Saragoza would drive to the building where he had once worked as an engineer, and for $10 an hour with no benefits, wipe thousands of glass screens and test audio ports by plugging in headphones.
Paydays for Apple
As Apple’s overseas operations and sales have expanded, its top employees have thrived. Last fiscal year, Apple’s revenue topped $108 billion, a sum larger than the combined state budgets of Michigan, New Jersey and Massachusetts. Since 2005, when the company’s stock split, share prices have risen from about $45 to more than $427.
Some of that wealth has gone to shareholders. Apple is among the most widely held stocks, and the rising share price has benefited millions of individual investors, 401(k)’s and pension plans. The bounty has also enriched Apple workers. Last fiscal year, in addition to their salaries, Apple’s employees and directors received stock worth $2 billion and exercised or vested stock and options worth an added $1.4 billion.
The biggest rewards, however, have often gone to Apple’s top employees. Mr. Cook, Apple’s chief, last year received stock grants — which vest over a 10-year period — that, at today’s share price, would be worth $427 million, and his salary was raised to $1.4 million. In 2010, Mr. Cook’s compensation package was valued at $59 million, according to Apple’s security filings.
A person close to Apple argued that the compensation received by Apple’s employees was fair, in part because the company had brought so much value to the nation and world. As the company has grown, it has expanded its domestic work force, including manufacturing jobs. Last year, Apple’s American work force grew by 8,000 people.
While other companies have sent call centers abroad, Apple has kept its centers in the United States. One source estimated that sales of Apple’s products have caused other companies to hire tens of thousands of Americans. FedEx and United Parcel Service, for instance, both say they have created American jobs because of the volume of Apple’s shipments, though neither would provide specific figures without permission from Apple, which the company declined to provide.
“We shouldn’t be criticized for using Chinese workers,” a current Apple executive said. “The U.S. has stopped producing people with the skills we need.”
What’s more, Apple sources say the company has created plenty of good American jobs inside its retail stores and among entrepreneurs selling iPhone and iPad applications.
After two months of testing iPads, Mr. Saragoza quit. The pay was so low that he was better off, he figured, spending those hours applying for other jobs. On a recent October evening, while Mr. Saragoza sat at his MacBook and submitted another round of résumés online, halfway around the world a woman arrived at her office. The worker, Lina Lin, is a project manager in Shenzhen, China, at PCH International, which contracts with Apple and other electronics companies to coordinate production of accessories, like the cases that protect the iPad’s glass screens. She is not an Apple employee. But Mrs. Lin is integral to Apple’s ability to deliver its products.
Mrs. Lin earns a bit less than what Mr. Saragoza was paid by Apple. She speaks fluent English, learned from watching television and in a Chinese university. She and her husband put a quarter of their salaries in the bank every month. They live in a 1,080-square-foot apartment, which they share with their in-laws and son.
“There are lots of jobs,” Mrs. Lin said. “Especially in Shenzhen.”
Innovation’s Losers
Toward the end of Mr. Obama’s dinner last year with Mr. Jobs and other Silicon Valley executives, as everyone stood to leave, a crowd of photo seekers formed around the president. A slightly smaller scrum gathered around Mr. Jobs. Rumors had spread that his illness had worsened, and some hoped for a photograph with him, perhaps for the last time.
Eventually, the orbits of the men overlapped. “I’m not worried about the country’s long-term future,” Mr. Jobs told Mr. Obama, according to one observer. “This country is insanely great. What I’m worried about is that we don’t talk enough about solutions.”
At dinner, for instance, the executives had suggested that the government should reform visa programs to help companies hire foreign engineers. Some had urged the president to give companies a “tax holiday” so they could bring back overseas profits which, they argued, would be used to create work. Mr. Jobs even suggested it might be possible, someday, to locate some of Apple’s skilled manufacturing in the United States if the government helped train more American engineers.
Economists debate the usefulness of those and other efforts, and note that a struggling economy is sometimes transformed by unexpected developments. The last time analysts wrung their hands about prolonged American unemployment, for instance, in the early 1980s, the Internet hardly existed. Few at the time would have guessed that a degree in graphic design was rapidly becoming a smart bet, while studying telephone repair a dead end.
What remains unknown, however, is whether the United States will be able to leverage tomorrow’s innovations into millions of jobs.
In the last decade, technological leaps in solar and wind energy, semiconductor fabrication and display technologies have created thousands of jobs. But while many of those industries started in America, much of the employment has occurred abroad. Companies have closed major facilities in the United States to reopen in China. By way of explanation, executives say they are competing with Apple for shareholders. If they cannot rival Apple’s growth and profit margins, they won’t survive.
“New middle-class jobs will eventually emerge,” said Lawrence Katz, a Harvard economist. “But will someone in his 40s have the skills for them? Or will he be bypassed for a new graduate and never find his way back into the middle class?”
The pace of innovation, say executives from a variety of industries, has been quickened by businessmen like Mr. Jobs. G.M. went as long as half a decade between major automobile redesigns. Apple, by comparison, has released five iPhones in four years, doubling the devices’ speed and memory while dropping the price that some consumers pay.
Before Mr. Obama and Mr. Jobs said goodbye, the Apple executive pulled an iPhone from his pocket to show off a new application — a driving game — with incredibly detailed graphics. The device reflected the soft glow of the room’s lights. The other executives, whose combined worth exceeded $69 billion, jostled for position to glance over his shoulder. The game, everyone agreed, was wonderful.
There wasn’t even a tiny scratch on the screen.
Wednesday, January 11, 2012
Keynes: the Return of the Master by Robert Skidelsky
"...let's get Keynes--and Keynesianism--right. In the US, more than in Britain, he is considered a kind of socialist. This is wrong. Keynes was not a nationalizer, nor even much of a regulator. He came not exactly to praise capitalism, but certainly not to bury it. He thought that, for all its defects, it was the best economic system on offer, a necessary stage in the passage from scarcity to abundance, from toil to the good life."
Friday, January 6, 2012
Debt: The First 5,000 Years by David Graeber
"The meaning of the Roman word libertas itself changed dramatically over time. As everywhere in the ancient world, to be "free" meant, first and foremost, not to be a slave. Since slavery means above all the annihilation of social ties and the ability to form them, freedom meant the capacity the make and maintain moral commitments to others. The English word "free", for instance is derived from the German root meaning "friend," since to be free meant to be able to make friends, to keep promises, to live within a community of equals....By the second century AD, however, this had begun to change. The jurists gradually redefined libertas until it became almost indistinguishable from the power of the master. It was the right to do absolutely anything, with the exception, again, of all those things one could not do." p. 203-4
Thesis/assumption: "Originally, human beings lived in a state of nature where all things were held in common; it was war that first divided up the world, and the resultant "law of nations," the common usages of mankind that regulate such matters as conquest, slavery, treaties, and borders, that was first responsible for inequalities of property as well." p.204
"This in turn meant there was no intrinsic difference between private property and political power--at least, insofar as that power was based in violence." 204
..allows us to understand precisely how Liberals like Adam Smith were able to imagine the world the way they did. This is a tradition that assumes that liberty is essentially the right to do what one likes with one's own property. In fact, not only does it make property a right; it treats rights themselves as a form of property...We are so use to the idea of "having" rights--that rights are something one can possess--that we rarely think about what this might actually mean."206
"This is the great trap of the twentieth century: on the one side is the logic of the market, where we like to imagine we all start out as individuals who don't own each other anything. On the other is the logic of the state, where we all begin with a debt [to parents, to cultural tradition, to the state, to God] we can never truly pay. We are constantly told that they are opposites, and that between them they contain the only real human possibilities. But it's a false dichotomy. States created markets. Markets require states. Neither could continue without the other, as least, in anything like the forms we would recognize today."
Ever wonder why Christian fundamentalists can relate to their Republican financial elites? Here's your answer, as explored by D. Graeber in Nietzsche's "The Gay Science" and the origins of "original sin": When life is conceived as a "gift" and a debt..."finally, with the impossibility of discharging the debt, people also come up with the idea that it cannot be paid off ("eternal punishment")...until all of a sudden we confront the paradoxical and horrifying expedient with which martyed humanity found temporary relief, that stroke of genius of Christianity: God sacrificing himself for the guilt of human beings, God paying himself back with himself, God as the only one who can redeem man from what for human beings has become impossible to redeem--the creditor sacrifing himself for the debtor, out of LOVE (can people believe that?), out of love for his debtor!"
"It is rather striking to think that the very core of the Christian message, salvation itself, the sacrifice of God's own son to rescue humanity from eternal damnation, should be framed in the language of a financial transaction."
Thesis/assumption: "Originally, human beings lived in a state of nature where all things were held in common; it was war that first divided up the world, and the resultant "law of nations," the common usages of mankind that regulate such matters as conquest, slavery, treaties, and borders, that was first responsible for inequalities of property as well." p.204
"This in turn meant there was no intrinsic difference between private property and political power--at least, insofar as that power was based in violence." 204
..allows us to understand precisely how Liberals like Adam Smith were able to imagine the world the way they did. This is a tradition that assumes that liberty is essentially the right to do what one likes with one's own property. In fact, not only does it make property a right; it treats rights themselves as a form of property...We are so use to the idea of "having" rights--that rights are something one can possess--that we rarely think about what this might actually mean."206
"This is the great trap of the twentieth century: on the one side is the logic of the market, where we like to imagine we all start out as individuals who don't own each other anything. On the other is the logic of the state, where we all begin with a debt [to parents, to cultural tradition, to the state, to God] we can never truly pay. We are constantly told that they are opposites, and that between them they contain the only real human possibilities. But it's a false dichotomy. States created markets. Markets require states. Neither could continue without the other, as least, in anything like the forms we would recognize today."
Ever wonder why Christian fundamentalists can relate to their Republican financial elites? Here's your answer, as explored by D. Graeber in Nietzsche's "The Gay Science" and the origins of "original sin": When life is conceived as a "gift" and a debt..."finally, with the impossibility of discharging the debt, people also come up with the idea that it cannot be paid off ("eternal punishment")...until all of a sudden we confront the paradoxical and horrifying expedient with which martyed humanity found temporary relief, that stroke of genius of Christianity: God sacrificing himself for the guilt of human beings, God paying himself back with himself, God as the only one who can redeem man from what for human beings has become impossible to redeem--the creditor sacrifing himself for the debtor, out of LOVE (can people believe that?), out of love for his debtor!"
"It is rather striking to think that the very core of the Christian message, salvation itself, the sacrifice of God's own son to rescue humanity from eternal damnation, should be framed in the language of a financial transaction."
Monday, January 2, 2012
The Illusion of Free Markets, by Bernard Harcourt 2011
"The grounding assumption of both early and contemporary liberal thought, then, is the core belief in the duality of free markets versus regulation. But as we have seen, the categories themselves fall apart under close scrutiny. These central notions of "natural order," "market efficiency," and "free markets"--as well as their inverse, "regulation," "discipline," or "heavily regulated markets"--are mere conceptual tropes that serve no useful analytical purpose. They hinder, rather than help. And they have had a devastating effect in the political sphere....We now come to the price--the price we pay for believing that the economy is the realm of natural orderliness and that the legitimate and competent sphere of government administration lies elsewhere, in policing and punishing. That steep price includes, first, naturalizing the regulatory mechanisms in our contemporary markets and thereby shielding the massive wealth distributions that occur daily; and second, massively expanding the carceral sphere."
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