Peter L. Berger's Blog, page 569

Anti-Immigration Party to Score Record Win in Switzerland

Another week, another victory for an anti-immigration party in Europe. Politico Europe reports:

The populist, anti-immigrant Swiss People’s Party (SVP) is on course for a record win in a parliamentary election held Sunday, with media reports suggesting it could win a third of the seats.

Already the country’s largest party, the SVP won 28 percent of the vote, according to the broadcaster SRF, a rise in support of 1.5 percentage points since the last election, in 2011. That would give the party 65 seats in the 200-seat parliament. The ATS news agency says the SVP will win 64 seats.[..]The Swiss electoral system is complicated. The largest party does not form a government. Instead, the parliament will elect a seven-person government on December 9, with the make-up determined on the basis of proportionality and strategic deals struck between parties.Migration was the key topic in the election campaign, with Europe’s refugee crisis playing into the hands of the SVP. A poll in August found that 50 percent of Swiss voters wanted to close the country’s borders to keep out migrants.

Meanwhile, in France, a new poll shows the incumbent Socialist party falling to third place behind Les Républicains and the Front National. And in Sweden, Austria, and the Netherlands, as we wrote last week, there have also been gains, either in polling or in elections, for the far right lately.

But there’s at least one place where the “populists” have not been surging: Britain. There, the Conservatives largely co-opted UKIP’s rhetoric, and some of its policies, in the run-up to the last election. This wasn’t just good for the (victorious) Conservatives; it was good for Britain. There are distinct advantages to having the immigration issue be handled by mainstream parties, not least that they have more experience governing. When center-right parties have voiced concerns about immigration, it has generally been less radicalized and less racialized than when far-right parties have owned the issue. And at a time when distrust of establishment parties has been fraying politics across much of Europe, mainstream interest in the issue also lets citizens know that their elites aren’t ignoring their concerns. Finally, of course, there are electoral rewards to be reaped by the mainstream parties that can successfully address immigration, assuming they can avoid putting off other demographics in the process.Unfortunately, the UK is an outlier here. Across much of Europe, elites have been unable to embrace tough-on-immigration policies or unable to convince their electorates that they’re serious about maintaining these policies once in office. As a result, the radical fringes continue to prosper, in Switzerland and elsewhere.

Good and Bad News in China’s Latest Figures

China’s latest GDP figures are out, and they aren’t great—but beneath the surface, there’s some good indications about China’s future. Bloomberg has the story:

China’s economy expanded quicker than economists forecast in the third quarter as the services sector offset weaker manufacturing, keeping Premier Li Keqiang’s 2015 growth target within reach.

Gross domestic product rose 6.9 percent in the three months through September from a year earlier, the National Bureau of Statistics said Monday, beating economists’ estimates for 6.8 percent. While that was the slowest quarterly expansion since 2009, based off previously announced data, stabilization will ease fears of a deeper downturn for investors and central bankers from Tokyo to Frankfurt to Washington.Strength in services and consumption helped reduce the drag from weaker manufacturing and exports, showing the continuing transformation of the world’s second-largest economy. The pace of growth in the services sector quickened to 8.4 percent in the first nine months of the year, while so-called secondary industry — which includes manufacturing — weakened to a 6 percent expansion.

Like many of the reports coming out of China these days, this latest is a mix of good news and bad news.

In the first place, China’s growth continues to slow. There is some happy talk about how the GDP numbers aren’t as bad as feared. Yet, given the problems with Chinese statistics and the political sensitivity of the headline numbers, the figures to the right of the decimal point need to be treated with caution. We know growth has slowed substantially; we can’t be sure about the details.This figures also suggest that China’s economy really does seem to be changing, with the move away from manufacturing and heavy industry and towards services looking real. It’s a sign that China is beginning to edge away from a growth model that is reaching its limits. A giant economy selling widgets can’t keep growing at ten percent forever in a world that is growing at three percent. This shift away from manufacturing is a good sign for China, but it will spell trouble for other countries. Combined with the overall slowdown in growth, that shift is very bad for producers of commodities and raw materials around the world. The countries and companies that prospered by shipping iron ore, oil, tin, manganese, and other raw materials into the maw of China’s industrial economy are going to suffer as if China was having a hard landing. Demand for their exports will slow dramatically even if China’s overall growth stabilizes at a lower level. These effects will ripple across Africa and Latin America, as well as countries in southeast Asia whose manufacturing economies are closely tied to China’s. Nations like Australia and Canada can also expect some problems—though their more diversified economies are better positioned to take a hit.Finally, though greens will likely miss it, the shift from manufacturing to growth in services is an unalloyed good for the environment and it suggests that the gloom and doom predictions about humanity choking on growth are less likely to come true. Growth in the developing world is decoupling from energy usage, just as it did in advanced countries. Sophisticated economies move away from metal bashing toward much less environmentally-questionable activities like health care, oboe lessons, and software, and it is very good news that this is now happening in China. World economic growth and world environmental health aren’t on a collision course.

Karl Marx to the Rescue?

A people’s manias must be respected, because the time required to combat them is too precious to waste. Today, 50 percent of Americans would consider voting for the socialist Bernie Sanders for President—shocking in a country thought to be the land of unvarnished capitalism. Meanwhile, Donald Trump leads among Republican primary voters, although his message also flirts with anti-free market views, including negative positions on freer trade, immigration, and low marginal tax rates. Using the classical definition of capitalism as the standard—the free flow of capital and labor, respect for private property, and limited government (not just because government is inefficient, but because it builds on ideologies that risk war and revolution and subverts the free forces of the economy)—both Bernie Sanders and Donald Trump strike out on a continuum that a century ago included more extreme forms of nationalism and socialism, and that almost wrecked the capitalist system completely. The threat to capitalism “as we know it” is real and urgent.

Yet for those who were looking, this trend revealed itself already several years ago in the Occupy Wall Street and Tea Party movements. When the furor erupted, establishment Republicans and Democrats tried to play divide-and-conquer, each gingerly claiming one of the movements while mocking the other. But both drew from across the political spectrum because both shared common resentments, notably about the too-cozy relationship between business and government—called “corporate welfare” by Occupy Wall Street and “crony capitalism” by the Tea Party. With the dynamic structures of the American economy increasingly integrated—meaning government and business—it is hard to delineate where public ends and private begins. In whatever line of work a person pursues today, it is almost impossible to avoid government. Already in the 1940s, large corporations employed people to manage the sudden increase in federal regulations. Indeed, ten percent of all Americans working in 1940 were classified as “clerks,” compared to 1 percent in the 19th century. Government today looms even larger, through regulations, accreditation bodies, certifying agencies, and compliance protocols, making even small businesses de facto state-regulated. This doesn’t even include the new and dominant role of state purchasing power in industries such as health care, higher education, banking, and, perhaps soon, even financial advising. Activists blamed business for their troubles, but they also blamed government. In their minds “capitalism” now means a malign mingling of both, which is why Occupy Wall Street and the Tea Party targeted both.Rebellion is not a guarantee of independent thinking. On the contrary, it is sometimes merely a form of prejudice. Envy, after all, explains a lot of bad arguments about political economy. This was evident in the Occupy Wall Street and Tea Party movements, too. The Tea Party types tended to rank government as the greater enemy, and success for them would supposedly spell a freer market. The Occupy types tended to finger business first, and to them success spelled better but also more government, more regulation, in many cases all the way left to socialism. So there was, and remains, a difference here: right-wing populism wants to break the mingling between government and business, but left-wing populism wants to expand it—so long as government dominates the pairing. But both draw energy from the confusion that crony capitalism (or corporate welfare) is all that capitalism can be. Yet who can blame them for being confused?A stifling of productive energy now touches every phrase of the American worker’s lifecycle. Many Americans start out with neither money nor connections. To get a job they must pay the high fees of the higher-education college guild after having passed through the hands of the lower-education preparatory guild, which has its own numerous protections and provides generally poor service. After graduation people apply for jobs mostly in the established guilds, sometimes interning without pay, sometimes apprenticed for many years before they can make an adult living. If they forego this route to strike out on their own to build a business, they risk antagonizing some other guild that already controls that business though assorted barriers to entry, and that threatens to use government (through the recent explosion of licensing requirements, for example) to shut them down. If they shift their productive energy to private life and funnel it into creating children, they risk not being able to support those children, since higher education costs so much, as does the regulated daycare guild. Thus even procreation is partly blocked as a creative outlet. If they try to funnel their creative energies into volunteer community work—for example, in hospitals, hospices, or social services—the health care and social service guilds restrict what they can do, because they are not “credentialed,” leaving them with only the most boring or menial tasks. Blocked again.American life today thus leaves these people frustrated and emasculated. It has become harder to create and to produce; seemingly malevolent forces stifle them at every turn. They blame “capitalism” because that’s what policymakers call the American economic system, but few know what capitalism means other than a cozy relationship between business and the state. Life seems puzzling at best and darkly conspiratorial at worst. The urge to rebel mounts.Karl Marx understood such frustration. His first principle was that people want to fulfill themselves as human beings through meaningful productive activity. Feudalism stifled that urge, he argued, leading to revolution and a new era of capitalism. Capitalism, Marx famously thought, would eventually stifle people in its own way, leading to communism. On this point Marx was wrong, of course: Capitalism didn’t lead to communism, but rather to crony capitalism. In other words it led backwards, because crony capitalism is a form of feudalism.Crony capitalism is indeed a form of feudalism if one understands the definitions of the relevant terms. Marx divides human history into three stages: ancient, feudal, and capitalist. Although the stages differ in politics and culture, they share a common basis, as each represents a society of production, divided between owners and workers, with the latter frustrated in their ability to produce. For example, a man in the feudal era trying to start a business would have been blocked at every turn. The guilds and master craftsmen who controlled the making of that product, and who owned the craft tools, would have prevented him from getting a manufacturing license. Even if the man could get a license, he couldn’t get any workers because the serfs, his potential labor force, would be tied to the land. The man would have been a frustrated producer. With the capitalist revolution, it became possible for this man to build a business and produce. This is why Marx thought capitalism was liberating relative to what had come before it. But capitalism now has come full circle. People once again are frustrated. They want to produce, they want to create, but the organization of society keeps them from doing so.Thus, guilds today glom onto government to gain advantages while stifling competitors. Public employees enjoy sinecures and lucrative pensions that low-income private sector workers must finance themselves. The state dishes out favors to well-connected friends. Marx criticized similar behavior two centuries ago in his analysis of premodern forms of political economy, where classes, or “estates,” were few and far more rigid than they became in early modern capitalism.Nearly 500 occupational licensing laws limit work in almost 10 percent of all U.S. jobs. Many of these laws are politically motivated and have little to do with health and safety, serving more to keep low-income workers from breaking into entry-level trades. The scope of guild activity in the U.S. political economy increases dramatically when we include industries that not only use government regulations to burden newcomers or disadvantage competitors but also receive state and Federal subsidies. Education, energy, defense, automobiles, agriculture, insurance, finance, law, medicine, and (by definition) public service all fall under this category. Both Republicans and Democrats have their favorite protected businesses—for example, oil and gas among Republicans, education among Democrats. To work inside a regulated industry is to be insulated from market pressures; to be on the outside is to be economically vulnerable, to be at the mercy of these protected trades, and even to be forced through tax dollars to subsidize them.True, crony capitalism has always existed in America to one extent or another, or else Mark Twain would not have been able to make such literary hay during the first Gilded Age. But today it is much worse. In 1950, only 5 percent of U.S. workers needed to get some kind of state license to work; in 2008, 23 percent of U.S. workers needed to do so; in 2014, that number is closer to 30 percent. In the mid-1980s, about 800 professions were licensed in at least one state; today, at least 1,100 professions are.This is one reason so many Americans think they hate capitalism, even though they are actually suffering from a case of mistaken identity. Even worse, many Americans are now willing to deal with the plutocratic devil. Rather than desiring to kill “real, existing crony” capitalism, they decide to join up for lack of a viable alternative. They seek their place at the public trough, willing to wear the yoke of neo-feudalism in return for government assistance of one kind or another. This is because advanced capitalism, although an impressive wealth generator, places unique burdens on individual workers. It’s hard to belly up to that public trough all by one’s lonesome. In the 19th century, capitalism’s burdens were obvious: poor public health, unsafe workplaces, unfair compensation, child labor, and more. Under advanced capitalism, the burdens are more hidden, and many of them weigh heavy thanks precisely to the logic of collective action—as we shall see.Again, in a paradoxical way, Karl Marx is useful here. Marx hated capitalism, but he knew the weak points in the capitalism of his day better than most people. By extrapolating Marx’s ideas to contemporary life, we can locate the weak points in advanced capitalism. The goal is not to destroy the system but to shore it up, just as American leaders a century ago (Theodore Roosevelt comes to mind) patched the system to save the capitalism of their day.I have worked the midnight shift at my hospital for years. Over the years I have seen more divorced people, obese, sitting at the table alone, a gallon of ice cream for their only company. I have seen more single people working extra hours to pay for housing, wringing their hands, grown tired from their futile careers. I have seen more people with children missing from their lives, because they either don’t have children, because they work too many hours to see them, or because their family has succumbed to divorce, thanks to overweening financial pressures and their kids having been taken far away by someone who long ago stopped loving them. They fear no one will phone them when they’re old and gray. All of them are lonely.Mass loneliness is a new problem in the United States. Neither Tocqueville nor any of the other major observers of 19th-century America felt compelled to write about it. Mid-20th-century journalists, such as Vance Packard in A Nation of Strangers , were the first to comment on the phenomenon, while the psychology literature picked up on the issue only in the late 1970s, when an estimated 10 percent of the American population was thought to be lonely. Since then the problem has grown exponentially. In 1985, 10 percent of Americans had no discussion partner of any kind; by 2004, that number had increased to 25 percent. In 1985, 15 percent of Americans had only one person to talk to about a life problem, which even optimists call inadequate social support, since it makes a person very vulnerable to losing that lone relationship. By 2004, that number had increased to 19 percent. Half of all Americans today are lonely. Even people with friends have been affected, as the average number of people in a person’s social network dropped from three to two over the two-decade period.Marx foresaw this problem. The “alienation of man from man,” a problem he observed in the capitalism of his day, is embryonic of mass loneliness. He also understood something about women, whose role has clearly played into the loneliness problem. During the 20th century, capitalism encouraged the mass entrance of women into the workforce. Although feminists applauded the trend, capitalist organizations such as the National Association of Manufacturers also pushed women into work. Instead of paying one worker a “family wage”—meaning a wage sufficient to support a spouse and children—business could pay a worker less and force the spouse to work for the other part, thereby boosting a company’s earnings. As Marx observed, working women gave capitalists an opportunity to spread the value of the man’s labor-power over his whole family, basically giving the capitalist two workers for the price of one.We see the effects today. Between 1979 and 2007, the average annual hours worked by middle-income households rose from 3,007 to 3,335—a full 10 percent, a larger increase than for any other income group—with much of the increase a response to economic pressure. Indeed, the American labor force today works longer hours than in any other period in American history. Although the median income of the American middle-class has increased 34 percent over the past forty years (after adjusted for inflation), that income has often come through more time working—with partners often not seeing much of each other. For a single person without a partner to help defray the cost of housing, work hours also lengthened.Loneliness inevitably followed. Raising a family became a daunting economic prospect, with each parent spending less time with spouses or children. Sensing hell, many young people delayed starting families; in hell, many middle-aged people also divorced. In 1950, only 9 percent of American households consisted of one person living alone; today that number is 26 percent. Looked at from another angle, the average American household in 1971 was 3.2 persons; in 2011, it was 2.5 persons—a drop of 20 percent. Since 1850, the size of the average American household has shrunk by half.Suburban life and long commutes threw more hurdles into people’s paths, with every ten-minute increase in commuting time leading to a corresponding 10 percent reduction in the time a person can spend maintaining social ties. The majority of Americans today eat most of their meals alone. Even a third of all dinner meals are now eaten alone. Do capitalism’s supporters discuss this problem? It’s not even on their radar screen.The human mind has real need of contact at close intervals with people. Because no one can live happily in isolation, a caring industry emerged over the past half century, with the number of social workers, therapists, counselors, and coaches increasing 100-fold in the United States since 1950. Millions of lonely Americans today use these professional counselors to compensate for having no one to talk to about their everyday problems. As Marx’s theory predicted, capitalism has drawn friendship into its narrow orbit, with people paying others for conversational “services” once embedded in private family and religious communal life.Today, lonely Americans need these services, but the caring industry has a decidedly dark side. Mass loneliness is a weak spot in advanced capitalism that the caring industry shores up, but at the high price of people having increasingly lost control over a basic aspect of interpersonal relationships. To give advice and counsel, they must now be trained; to get advice and counsel, they must now pay. Early 20th-century capitalism caused visible social dislocations; early 21st-century capitalism now causes more hidden social-psychological dislocations. Of course material standards of living are vastly better now a century on for the vast majority of people; but are we any happier for all the stuff we have? Arguably not, because it’s just not as much fun for most people to play alone.Indeed, if millions of lonely people cannot get the mental health support they need through a capitalist system that targets governmental assistance to mental health, they will get it through crony capitalism. The Affordable Health Care Act was a crony capitalist piece of legislation that created new state bureaucracies and dispensed favors to the insurance companies, but it was a price many were willing to pay to get support for the caring industry, for the Act established parity between mental health and physical health. Meanwhile, capitalism’s supporters just ignore the problem.Many conservatives (and liberals) bemoan the decline of the American family. Marxists would argue that they have capitalism to blame, as capitalism turns all human beings into commodities and moves them around so that relationships fray. There is some truth to this statement, which was already uttered during 19th-century capitalism. But today, under advanced capitalism, an altogether different dynamic threatens personal relationships.On the surface, people today seem freer than ever to enter into relationships. Indeed, conventional scholarship views marriage today as a kind of inversion of the feudal experience. The aristocratic marriage in feudal society was all about property, while love belonged to a separate sphere if to any sphere at all; marriage under advanced capitalism is all about love, while the economy remains separate. According to the late economist Gary Becker, the family has become primarily a non-economic institution organized around love and companionship rather than an entity that fulfills vital economic needs.But only on the surface has love under advanced capitalism been walled off from the economy. In truth, capitalism now penetrates the domain of love more than before. Paradoxically, as love grows further removed from the economy, it is increasingly expressed through the compulsion of the never-ending acquisitive drive that underlies the entire capitalist system, which weakens personal relationships.Today’s technology of love provides a useful lead-in to understand this contradiction. Feudal aristocrats and 19th-century Americans may have tolerated bad breath or five pounds extra weight in their marriage partners because the “consumption” of a partner meant the consumption of a partner’s wealth or labor potential. Some imperfections could be forgiven. To invoke Marx, their behavior was consistent with the prevailing level of technology, as the lack of toothbrushes and toothpaste, and poor urban diets, for example, made perfection of the human commodity impossible. Improved technology under advanced capitalism has moved humanity a step closer to perfection; it has allowed people to subdivide themselves into what amounts to brands, to represent the best in those brands, and to appeal to each other as brands—hence the much-discussed phenomenon of assortative mating. Through the internet, improved technology has allowed for the marketing of and shopping for those brands on a mass scale. Technology has freed people from the bondage of necessity, as Marx predicted; it has given people more opportunity to get the love that (they think) they want.But such love has a compulsive alienated quality to it. Two people entering into a romantic relationship under advanced capitalism are merchandisers of their presumed distinctive qualities; each sees his or her qualities as a form of private property. Through exclusive ownership of these qualities, and a putative willingness to rent some of them to someone else, each seeks to secure a relationship. At the same time, that relationship threatens personal freedom, since each person in a relationship is supposed to remove himself or herself from the dating market. Why do people willingly surrender their freedom? To invoke Marx, “Political economy replies correctly: necessity, need. The other man is also a property owner, but he is the owner of another thing, which I lack and cannot and will not do without, which seems to me a necessity for the completion of my existence.”To obtain the other party’s desired qualities, a person entering into a romantic relationship today surrenders ownership of his or her qualities to another. Since the relationship was entered into by virtue of exclusive ownership of these qualities, these qualities represent more than just incidental traits; they are what the person thinks is worth loving in life. Surrendering exclusive ownership of these qualities represents more than just an alienation of property; it represents an alienation of the person who has allowed him or herself to be defined by those qualities. Essential qualities cease to belong to the person; they become external to the person; they become the private property of someone else—of the other person in the relationship, who now controls them. And to be robbed of essential private property is often infuriating, especially when, for one reason or another, one comes to believe that the other party got the better part of the exchange.Yet the alienation continues. People desirous of others’ qualities realize they are incomplete; the other person’s desired qualities must be had. Yet the person can’t have them except on loan in a relationship; they exist outside of the person. As Marx said, the other party is also a property owner, but he is the owner of another thing, which the first person lacks and cannot and will not do without. Again, the person suffers from alienation; again the person grows angry and frustrated. Both parties in the relationship suffer what Marx would call a “reciprocity in alienation.” Each needs the other, but also must surrender to the other.So love under advanced capitalism may be freer than before, but the “reciprocity in alienation” is more intense. Each person has qualities that satisfy the other’s needs; at the same time, each person has needs that require the other person’s qualities in order to be met. Advanced capitalism generates the qualities and the needs, albeit if only in people’s heads. To secure a relationship they compulsively supply their qualities and compulsively demand the qualities of others, submitting out of both egoistic need and necessity. The modern relationship thus often borders on the humiliating and the infuriating, and becomes a prescription for a passive-aggressive kind of chaos.It is hard to raise healthy children in this kind of environment. Under crony capitalism it is hard just to have children, because of cost. As relationships grow unstable, so does the home environment for whatever children are born. Almost a third of American children now live with one parent. Getting people to procreate amid the perception, if not always the reality, of severe economic pressure is hard enough to begin with; factor in the egoistic needs, and it becomes a daunting problem.One solution to the procreation problem is technology. Marx saw that capitalism had a way of creating machines that allowed it to resolve contradictions and sustain itself. The machine destroyed the family, Marx argued. To revive what the machine destroyed, man does not need a newfound reverence for tradition and the values long nurtured within it; on the contrary, he needs to work harder to perfect his power over nature. He needs even better machines. New reproductive technologies, such as “surrogate motherhood” and “vitrification” (egg freezing), now allow women to postpone reproduction into their forties and fifties, thereby taking the pressure off twenty-somethings and thirty-somethings to breed and enabling people to have children later in life.Have conservatives supported these technologies, let alone tried to subsidize them? No. Again, the Affordable Care Act is an example. For many middle-aged women trying to defray the cost of having a child, the crony capitalist component of the Act was worth the price, as the Act helped to spread the cost of such fertility services across the general population. These scientific methods of creating children cause problems in their own right, such as children being deprived of ever knowing their grandparents. (Marxists call the new problems that come after fixing old ones an expression of the “dialectical cunning of history.) But we need children. We need population.A solution to the problem of unstable relationships is to assist a greater variety of living situations, as opposed to hoping in vain for a return to the nuclear family, as many conservatives do. The average American today lives in a household of only three people; in 1850 household size was twice that figure. The decline in fertility accounts for part of the change, but all forms of cohabitation have suffered declines; the average household has fewer parents, fewer children, and fewer relatives than before. And also fewer strangers. In 1850, the average American lived with one non-family-member. Sharing households with unrelated individuals was a common practice in the 19th century that declined in the 20th. If our goal is to stabilize personal relationships for the benefit of children and to keep single adults from growing dependent on the state, then a greater variety of living arrangements deserve encouragement and support. Have economic conservatives acted on these concerns? No. But the Obama Administration has—for example, a new program that allows multiple persons, and not just spouses, to participate in a mortgage.When writing about capitalism’s intense division of labor, industrial laborers were Marx’s major focus. Assembly-line jobs may increase efficiency and productivity, but they also rob workers of their humanity, observed Marx. Knowledge workers in the service economy, on the other hand, drew little attention from Marx, and even less sympathy. “From the whore to the pope. There is a mass of such scum,” he wrote not so lovingly of service workers.Today, under advanced capitalism, these workers—for example, nurses, accountants, lawyers, software engineers, and middle managers—dominate the economy. Ironically, they suffer even more from occupational specialization than many factory laborers do. They went to college expecting to find interesting work, only to find routinized labor thrust upon them after graduation.Marx said only at home can a worker escape the division of labor and be himself. Yet this is not a viable option for many knowledge workers. Low-skilled, less-educated hourly wage earners typically work eight-hour days with weekends off, while well-educated, salaried knowledge workers, although enjoying more prestige and higher pay, stay at the office until their work is done, whether that comes at six p.m., eight, or midnight . Saturday can be just another workday for knowledge workers, and, unlike for the wage earner, a day that rarely comes with overtime pay. Beepers, cell phones, and email then follow them home. Between 1965 and 2003, leisure time in the United States increased for both men and women, but increased more among the less well-educated. That “higher incomes are associated with lower levels of leisure” surprised even the authors of this NBER working paper. Today, America’s less-educated workers often have more opportunity to escape the division of labor than many knowledge workers do.Knowledge workers trapped in the division of labor often pin their hopes on retirement, notably early retirement. This is why so many Americans fret about the solvency of Social Security and Medicare. Policymakers today face a choice between 1) keeping the age of eligibility the same while raising taxes on high-income workers, 2) keeping the age of eligibility the same while means-testing benefits, or 3), raising the age of eligibility while keeping benefits the same for all. Given retirement’s important role in helping people—especially frustrated knowledge workers—to escape the division of labor, all effort should be made to keep the age of eligibility the same, even if that means raising the payroll tax cap or means-testing benefits for millionaires.Some of capitalism’s defenders oppose raising the cap on payroll taxes to bolster Social Security. They argue that it siphons off productive capital and disadvantages young workers relative to seniors. They also note that it serves as one more example of wealth redistribution, which they oppose on principle. They are correct in theory, but social peace is worth the detour in productive capital. Today, 75 percent of Americans would prefer to raise taxes to keep benefits intact (a higher percentage than in Europe), which suggests that the trade-off is acceptable to both young and old.Fixing the retirement problem is key to suppressing crony capitalism, for the harshness of the division of labor is often what drives knowledge workers organized within guilds to demand more pay, over and above what is reasonable. This happens in the medical profession, of which I am a member. Many physicians today think of retirement even early on in their careers. They want to escape contemporary medicine’s intense division of labor, where they do one task very well, but over and over again. To insure that their retirements come off as planned, they must be very attentive to the money they make early on in their career trajectory, which means making even more money than doctors in the past made.A similar eagerness to escape the division of labor drives other knowledge workers. Uncertain whether Social Security will be there for them, they need to earn more. To do so they need government on their side; they need government to fix things on their behalf politically. Many public employees just skip the salary shenanigans and go straight to securing lucrative pensions for themselves, causing serious state budget deficits. Direct government intervention on the retirement issue, honest and above board, would lessen such behavior by allaying the fears of knowledge workers trapped in the division of labor, and who see in their wily behavior their only means of escape. And it would be much fairer to workers who don’t have the collective-action advantage of membership in a guild of some kind to help them push their way to the trough.Have capitalism’s supporters addressed this urgent problem of retirement? No, not really—at least not since IRAs and 401(k)s were created. If anything, they scare people with all their talk about further privatizing a portion of these programs, or changing their eligibility.Marx thought democracy under capitalism was a sham. He argued that it offered people the illusion of independence but the reality of dependence. He thought he was safe in attacking liberal democracy on this point because feudalism, which fosters even worse forms of dependency, stood in the past. He was wrong. Feudalism is a viable alternative to capitalism and liberal democracy. In the form of crony capitalism, it creates more dependency than anything arising from genuine liberal democracy.During the past century, the United States increasingly became a nation of dependent workers. Over 90 percent of Americans now work for someone else, whether an individual or, far more prevalent, some sort of formal partnership. Marx foresaw this trend and its consequences, noting how the independent farmer and the independent small businessman in the United States, the “basis of [America’s] whole political constitution,” were giving way to “giant farms” with employees and large factories with a “mass industrial proletariat.” Today, that proletariat includes millions of dependent knowledge workers.Under crony capitalism, these dependent workers exist in a great chain of fear that ascends upward to the highest echelons of the state. They often work for large companies, despite the fact that the average size of corporate enterprises has declined over the past forty-some years. While doing so, they must be clever, their minds must not be completely known; mystery as much as merit leads to advancement. They must wallow in a bog of insecurity, be careful about what they say, be careful about what they write in social media, be careful about what they sign and what campaigns they support, be careful about organizing politically, be careful about how they talk to their co-workers, because an employer, or a civil servant above that employer, stands over them, threatening their livelihoods. Inevitably they cringe and crawl and promise not to cause trouble and beg to be left alone. They learn adaptability, acquiescence, and obsequiousness. The underlying spirit of democracy is thus smothered one citizen at a time.Century-old legislative biases contributed to the rise of dependent employment. For example, only health insurance purchased through dependent employment is tax-deductible, which makes no sense at all. In the case of Social Security, the dependent employee pays only part of the payroll tax, while the self-employed must pay both the employer and employee portion. Dependent employees can also put more money away toward a pension—for example, through 401(k) plans or defined-benefit plans—than a self-employed person can. A new program forgives college student loans if graduates enter government or non-profit work (almost universally dependent employment) rather than for-profit work (which includes some self-employment). Another, often overlooked example: a parent (usually a woman) who stays home to raise and educate young children does not pay into Social Security and so can expect little in retirement beyond a mere half of a deceased spouse’s payment—yet there is hardly a better example to be found of penalizing a person working hard and productively for themselves and their immediate family. The tax structure, geared toward income rather than consumption, lets politicians give tax breaks to favored clients, who are typically large companies with many dependent workers.Many conservatives ignore these biases because, for them, government is “bad” and corporations are “good.” They ignore the threat crony capitalism poses to democracy, pretending that what is benignly private can really be protected from what is “public” in such circumstances. They confuse corporations with the basic elements of a free market. They have forgotten the political, social, and moral advantages of an economy composed of independent individuals.On top of this, they ignore the unique stresses that advanced capitalism places on people. All of this leaves thoughtful voters with little choice but to either support crony capitalism to gain some relief, while watching democracy’s slow-motion destruction, or to throw out all of capitalism, risking a destruction of both democracy and wealth. Each of these choices has its leading candidate in the coming presidential election. It’s a bad choice.

How Chinese Corruption Corrupts the World

The New York Times has an update on the U.S. trial of a Chinese billionaire from Macau accused of arranging a complex bribing scheme that funneled more than $1 million to a former president of the UN General Assembly and five others for assistance with various real estate deals.

Magistrate Judge Kevin N. Fox of Federal District Court in Manhattan ordered that the billionaire, Ng Lap Seng, may be released on a $50 million personal recognizance bond secured by $20 million in cash and an apartment he owns on East 47th Street, near the United Nations.

The judge added that Mr. Ng, a 68-year-old real estate magnate, must surrender all passports, be subject to GPS monitoring and be guarded by private security, which he will pay for.

China, like Russia, is a country based on a mix of Tammany Hall and Wild West capitalism. And like Russian oligarchs eager to stash their money where Putin can’t get at it, increasingly the Chinese mega-rich are trying to get their money where Xi can’t claw it back.

This presents tough questions for Western law enforcement. Neither Chinese nor Russian courts operate under clear legal norms, especially in cases that have political ramifications. So decisions reached by what are often kangaroo courts in these countries can’t be enforceable in the West without compromising our own adherence to the rule of law.On the other hand, there is no doubt that large numbers of people have enriched themselves through criminal means. And as these thieves and crooks (and in more than a few cases, murderers and thugs) use Western banks and legal protections to shelter their gains, there is a serious erosion of standards of morality and legality.It’s hard to get the balance right. Currently, the mix of offshore tax havens, devious bank transactions, shell companies and so on makes it easy for shady people to shelter ill gotten gains—and they use that wealth to buy influence in the outside world where far too many politicians and business interests don’t ask questions if the price is right. Both to fight corruption and to make it harder for drug lords and terrorists to launder money and shelter assets, we need significantly tighter standards for transparency in international finance.When we find evidence, as in this case, that exported money from China has been used in a corruption scheme aimed at subverting institutions outside China, then the hammer needs to come down hard.Overall, as we see in the FIFA case, and from the stench emanating from much of the UN and the IOC, an epidemic of corruption is sweeping through international institutions. Cracking down on the sources of that corruption, and putting crooks in the slammer, is a vital part of protecting the rule of law and the capacity of international institutions to serve the purposes for which they were built.

Wal-Mart Woes: Perils of the Minimum Wage Hike?

If advocates of a $15 national minimum wage were motivated by evidence rather than ideology, then Wal-Mart’s recent stock slide would give them pause. At least, so argues Jed Graham in a perceptive piece for Investor’s Business Daily:

Wal-Mart’s second profit warning in two months should be a wake-up call for the political left. If America’s largest private employer is struggling with its own pay increases, how will other businesses cope with even larger minimum-wage hikes?

Long the scourge of progressives for its relatively low wages, Wal-Mart (NYSE:WMT) announced early this year that it would unilaterally boost its own base wage, first to $9 an hour this past April and to $10 by February 2016. […]Wal-Mart’s stock price promptly suffered its sharpest one-day sell-off in a quarter century. Shares kept falling Thursday, and edged lower Friday afternoon.The stunning hit to profitability for the nation’s biggest retailer raises serious questions about the Democrats’ economic agenda to raise the minimum wage to $12 or $15 an hour, while asking low-wage employers to provide their workers with health insurance and paid sick leave.

Wal-Mart decided that it would trade profitability for employee retention, on the assumption investing further in its workforce would raise profits over the long run. But even raising base wages from $8 to $9 had a tremendous impact on its short-term profit margin. One can only imagine the way profitability would collapse if the company were forced to wage its minimum wage to $12—or $15, or whatever number Democrats are advocating three years from now. At some point, it would simply become impossible for the business to operate.

As we’ve argued again and again, the minimum wage—especially the federal minimum wage—is a blunt instrument. There are of course instances where companies’ base wages could and should be raised—as Wal-Mart is doing now, voluntarily. But this decision is best left up to management, not to federal regulators who know nothing about a company’s position or market strategy. Read Graham’s whole piece to see why federal action to double the cost of labor in a fragile economy could be devastating to American business.

Liberty’s Great Charter

China is canceling a proposed display of the Magna Carta. As Forbes details:

Chinese authorities have refused to allow a copy of the Magna Carta to be displayed at an exhibit at Beijing’s Renmin University, the Financial Times reports.

The exhibit was to be put on to honor President Xi Jinping’s visit to the U.K. next week. It had to be moved to the British ambassador’s residence at the last minute, where students are still welcome to view the historic document. The university simply never received the necessary permissions to display the document, which is credited with curbing the powers of the British monarchy, the FT said.[..]The term “constitution” has been a delicate one in China as of late since the popularization of the progressive movement known as “Constitutionalism.” The goal of the movement is to get the ruling Communist party to adhere to its own laws. Following a public campaign calling for authorities to reveal their assets, a prominent figure in the movement, lawyer Xu Zhiyong, was imprisoned for “disturbing public order.”

This past June marked the 800th anniversary of the “Great Charter of the Liberties” (Magna Carta Libertatum), signed by King John at Runnymede in 1215. As several debates around the anniversary demonstrated, it has become popular, particularly on the left, to espouse a brand of revisionist history that pooh-poohs the importance of the Magna Carta. It’s not that big of a deal, this argument goes: It was an unimportant deal that empowered dead, white, male, feudal lords, and its high time we discarded the “myth” of its being the foundation of constitutional liberty. (This New York Times op-ed by Prof. Tom Ginsburg, of the University of Chicago, gives us a flavor of the tone. Example: “In reality, Magna Carta was a result of an intra-elite struggle, in which the nobles were chiefly concerned with their own privileges.”)

It’s true that the charter established neither liberty for all nor democratic governance in one fell swoop. But attacking it on those grounds misses the point. Unlike the French or Soviet Revolutions, which tried to right all wrongs at once and start over (in the French case, literally resetting the calendar to “Year 1”), British-American history has been one of painful, incremental progress, often privileging the elite first, with widespread enfranchisement coming slower than it should. But it has worked. The rule of law, enshrined in the Magna Carta, was developed in subsequent revolutions in the UK, then the U.S., then abroad. It was a significant step forward—and its “myth” (if that’s the right word for how it’s been looked to by subsequent generations) still has great power today.

At least, so the Chinese government seems to think. President Xi’s government, which is in the midst of a major crack-down, has made sure to nix the Charter’s display. Maybe the autocrats know something the professors don’t?

Start the Countdown: Five Years Until Shamburgers?

The group of Dutch researchers that brought the world its first lab-grown hamburger (at a bargain price of $330,000) is hoping to bring its faux-beef goodness to the masses by 2020. When the team produced that first burger from scratch two years ago, it got mixed reviews on its taste but inspired plenty of excitement for its potential green benefits. Now, as the BBC reports, that same team is hard at work trying to commercialize that proto-meat:

“I am confident that we will have it on the market in five years,” he [Prof Mark Post] said. He explained it would be available as an exclusive product to order to begin with but would be on supermarket shelves once a demand had been established and the price comes down. […]

Prof Post and his team have made progress in the past two years – but to develop a commercial product in five years he decided he had to ramp up the research….Mosa Meat will employ up to 25 scientists, lab technicians and managers. One of the key objectives will be to find ways of mass producing the meat.The researchers will also investigate ways of making chops and steaks using 3-D printing technologies – but that is likely to take longer to commercialise.

Many environmentalists take umbrage with humanity’s carnivorous habits not only for the sake of the animals that we’re eating, but also for the extraordinary amount of resources that go in to raising and feeding livestock, not to mention the climate dangers of cows’ methane emissions.

All of those concerns could be taken care of in one fell swoop with these shamburgers. And in fact, if this technology can be scaled up, it’s estimated that factory-grown meat could use up 99 percent less land, 45 percent less energy, and emit between 78 and 96 percent fewer greenhouse gases. If that’s not news to stoke green optimism, we don’t know what is.The world’s population is growing and our planet’s climate is changing, and the question of how we’ll feed future generations is a serious one. But while green Malthusians have gone to great lengths spelling out just how doomed we all are, they’ve given much less thought and attention to the positive technological advances that are currently being developed. So bring on the lab-grown meat, we say! We only ask that while these researchers are finding ways efficiently to commercialize their product, they also work on making it taste better.

Watch the Metropolitan Opera—from Your Neighborhood

In a late September review of the Met’s performance of Verdi’s Otello, Nicholas M. Gallagher wrote in these pages, “In the end, the beauty of Verdi’s music and the pathos of Shakespeare’s plot overwhelms everything. The audience burst to their feat at the end of the performance in a long, spontaneous, standing ovation… I, too, joined them.” Now, you don’t have to take his word for it. As the AP reports, the Met will be broadcasting Otello to movie theaters around the world this weekend:

The Met’s HD broadcast will be shown live in movie theaters around the world starting at 1 p.m. EDT on Saturday. A list of theaters can be found at the Met’s website: http://www.metopera.org. In the U.S., it will be repeated on Wednesday, Oct. 21, at 6:30 p.m. local time.

Purists will tell you that opera in HD will never be the same as it is live. Well, sure—just as going to a football game in the stadium has a totally different feel to it than watching it on ESPN. But as millions of viewers around the country will tell you, that doesn’t mean you shouldn’t tune in on game day.

As Walter Russell Mead wrote after seeing Otello (yes, it was so good, we ran two articles about it), technology is changing the way we view opera in the 21st century:

The widespread adoption of supertitles (or, in the Met’s case, those wonderfully inconspicuous back of the seat panels that discreetly flash the libretto in English translation), has changed the relationship of the audience to the drama. More than ever before in its history, opera today is a dramatic performance; audiences chortle, weep, and gasp in response to events on the stage, and singers are under more pressure than ever before to act convincingly. At the same time, the dramatic improvements in sound and video recording quality mean that high-definition broadcast and recorded versions of great opera performances can be enjoyed at a reasonable price by people all over the country. Beyond that, the increasing affluence of American society means that more people have the leisure to cultivate pursuits like the opera—and the income to support the art of their choice.

Technology means that we have more distractions than ever, and more and more people are seeking out meaningful pursuits, such as hours-long immersion in great operas, that allows them to get away from mere distraction. Fortuitously, that same technology means you no longer have to live in a major city to be able to enjoy such opportunities. Whether you live in the exurbs of Atlanta or across the Atlantic ocean, anywhere there’s a movie theater, one of the world’s best opera houses is now just around the corner.

So, if you have a few free hours for culture this Saturday, read Gallagher’s review and then go see Otello. You won’t be sorry.

Russian Hackers Infiltrate Dow Jones Servers

The servers of Dow Jones & Co, Inc. were seriously compromised by Russian hackers last year, according to Bloomberg:

The Federal Bureau of Investigation, Secret Service and the Securities and Exchange Commission are leading an investigation of the infiltration…. The probe began at least a year ago, one of them said.

The breach is described by the people as far more serious than a lower-grade intrusion disclosed a week ago by Dow Jones, a unit of Rupert Murdoch’s News Corp. The company said last week that it was working with a cybersecurity firm and law enforcement after learning that hackers had sought contact and payment information of about 3,500 customers.

There has been a great deal of talk about China and cybersecurity lately, but less attention has been paid to Russia, perhaps because the Kremlin is busy engaging in more old-fashioned warfare, distracting analysts from its online activities. Yet, according to a Threat Assessment prepared for the Senate Armed Services Committee last February, hackers in Russia are the principal cyber threat to the United States.

This latest attack was not only cyber theft but also potentially part of an insider trading scheme. Hackers sought to gain access to material nonpublic information that they could then sell to investors or trade on themselves. Investigators say the attack highlights the challenges the internet poses to regulators looking to stop insider trading. But it doesn’t end there—indeed, this brave new online world presents all sorts of new limits, as well as powers, to businesses, regulators, and troublemakers of other sorts.

Administration: Iran Missile Test Violates UN Sanctions

Last weekend, Iran test-launched a long-range ballistic missile and today President Obama’s Administration has shot back—with a complaint lodged in the UN. The AP reports:

Iran’s recent ballistic missile test was “a clear violation” of U.N. sanctions, and the United States will seek action from the Security Council, U.S. Ambassador Samantha Power said Friday.

Power said that after reviewing available information, the United States has confirmed that the medium-range ballistic missile launched on Oct. 10 was “inherently capable of delivering a nuclear weapon.” She said this violated a U.N. Security Council resolution adopted on June 9, 2010 which imposed a fourth round of sanctions on Iran.It was Iran’s first missile test since the historic nuclear deal reached July 14 between Iran and world powers. While condemning the ballistic missile test, the Obama administration made clear that it is “entirely separate” from the nuclear deal, which is aimed at preventing Iran from developing atomic weapons.

The Administration, then, is hanging its hat on the difference between the deal and the implementing resolution; ballistic missile testing, it argues, are covered by the latter but not the former. On the one hand, the decision to do even this much is welcome—many expected the Administration to basically say “nothing to see here” and move on. On the other, it now remains to be seen what, if anything, U.S. officials will do beyond lodging this protest.

Overall, this underlines the increasingly apparent reality that the Iran deal isn’t making foreign policy easier for President Obama—and that is normally what we mean by calling something a foreign policy success. Both Iran and Russia seem to enjoy more freedom of action and more options after the deal than before, and they’re not using those options to cooperate with the U.S. In fact, as Lara Rozen reported in Al Monitor, diplomatic contact is set to drop off sharply:

[A]fter two years of negotiations at which large US and Iranian delegations were meeting almost every month at a high level, often at the ministerial level, it seems that the tempo, seniority and range of diplomatic contacts between the United States and Iran in the implementation phase could be reduced for now to what is anticipated to be quarterly meetings of the Joint Commission.

At the end of the day, Iran sees the deal less as a stage in reconciling with the U.S. than as a platform for intensifying its effort to remake the region, an effort that necessarily involves actions opposed to American, and Israeli, interests. That means less talking, and more missile tests.