All posts filed under: Economics

The Permanence of Segregation

[It] is sentimental and romantic to assume that any education or any example will ever completely destroy the inclination of human nature to seek special advantages at the expense of, or in indifference to, the needs and interests of others. ~Reinhold Niebuhr Spatial geographers and demographers tell us that segregation occurs whenever the proportions of two or more populations are not homogenous throughout a defined space. Plant and animal species are therefore usually—but not always—segregated; people, too, in societies throughout the world, are usually—but not always—segregated according to language, cultural difference, religion, nationality, educational background, political allegiance, and socioeconomic status. To be sure, none of this means that demographic patterns are fixed. Empirical evidence shows,1 for example, that American suburbs are more diverse than ever; recent evidence from England and Wales, too, suggests that ethnic mixing in neighborhoods and schools is increasing rather than decreasing.2 Rates of mixed marriages and cross-cultural exchanges, too, have everywhere increased. Yet one can acknowledge these demographic developments and still plainly observe that spatial configurations of segregation are everywhere recognizable; …

Anti-Colonialism’s Bad History

Prevailing academic theories of race relations hold that wealth and power differences between groups of people arose from social, economic, and legal systems created to benefit one group of people over another. One of those systems, we are told, was colonialism. Hence the renewed interest in European imperialism and calls to “decolonize” everything from education and beauty to music and health. “Renewed” because this is, of course, not the first time that colonialism has been blamed for the vast wealth and power differences readily observable in the world today. The story starts with Karl Marx. Marx admired capitalism, which he credited with destroying feudalism and the “idiocy” of rural life. The fly in the capitalist ointment, as Marx saw it, was competition, which he thought would drive down profits. To remain profitable, he averred, capitalists would be compelled to squeeze laborers’ wages, thus “immiserating” the working class. The more rational economic system Marx envisaged would do away with competition and replace it with central planning. That was a big mistake, but not the only one. Between …

What Happened to Social Democracy?

In a world that seems to be divided between neoliberal orthodoxy and identitarian dogmas, it is possible to miss the waning presence of traditional social democracy. Born of the radical Left in Marx’s own time, social democrats worked, sometimes with remarkable success, to improve the living standards of working people by accommodating the virtues of capitalism. Today, that kind of social democracy—learned at home from my immigrant grandparents and from the late Michael Harrington, one time head of the American Socialist Party—is all but dead. This tradition was, in retrospect, perhaps too optimistic about the efficacy of government. Nevertheless, it sincerely sought to improve popular conditions and respected the wisdom of ordinary people. In its place, we now find a kind of progressivism that focuses on gender, sexual preference, race, and climate change. Abandoned by traditional Left parties, some voters have drifted into nativist—and sometimes openly racist—opposition while more have simply become alienated from major institutions and pessimistic about the future.1 The revolution in class relations Social democracy was a product of the inequities of …

The Risk of Inflation

Several prominent investors have been voicing concerns lately over the potential for return of consumer price inflation sometime over the next several years, with the latest commentator being Michael Burry of The Big Short fame. While inflation is by no means assured this decade, the risk factors for it are rising. It’s worth being aware of the history of inflation in the United States and what may cause it in the years ahead. Consumer price inflation is a broad rise in prices of everyday goods, and is often driven by a notable increase in the broad money supply combined with limitations in key supply chains and scarcity of essential commodities. *   *   * For this article, it helps to define two types of money. The first type is the broad money supply, which refers to the national sum of physical currency in circulation, checking accounts, savings accounts, certificates of deposit, and similar cash-equivalents. For the United States, this figure is approximately $19.5 trillion. The second type of money is the monetary base, or base money, …

Environmentalism, Trumpism, and the Working Class

The inauguration of President Biden as the 46th US President hasn’t produced quite the catharsis that Democrats (and others) had hoped for. After only a few months of one-party rule in Washington, DC—and the sputtering finale of impeachment—there should be fear among Democrats that attention will return to the signs of real damage done to the progressive/liberal project in the wake of its collision with the Trump train. The shifting of both American political parties into one another’s former political spaces has been head-spinning. The trend of Republicans turning into the party of labor and Democrats becoming a party of capital looks to continue in the 2020s—something few people outside of Pat Buchanan and Ross Perot would have guessed 30 years ago. And it turns out that the promise of a Democrat-voting bloc made up of well-educated whites, blacks, and the growing Hispanic population delivering a decades-long progressive era in American politics is not coming to pass. For nearly 20 years, this promised “coalition of the ascendant” has coalesced but failed to ascend. In 2009, …

COVID-19 and the Ongoing Global Workplace Revolution

For most of the recent past, economic geography has shifted to ever-larger cities across the globe. By the end of the last decade, many were convinced that we were entering a supreme era of the glittering, high-rise “superstar” city that would inevitably swallow all the best bits of the economy, and serve as unparalleled centers of tech, culture, political activism, and global trade. Globally, the ranks of city-dwellers more than doubled over the last 40 years, from 1.5 billion in 1975 to 3.5 billion according to data from the OECD. Yet now this urban-centric pattern may be slowing, and even reversing. Three critical factors are at play here. First, of course, the pandemic has weakened the appeal of urban life by the very logic of social distancing and higher levels of infections and fatalities. The second factor has been an alarming uptick in urban crime and disorder, particularly in the United States but elsewhere as well. Finally, there has been a move to dispersed and online work, which enables people and companies to shift their …

An Optimistic Outlook on 2021

The outlook, scientist Peter Turchin tells the Atlantic’s Graeme Wood, is bleak. Turchin thinks we are looking at another five years—or more likely a decade—of misery. And as 2020 draws to a close, modern civilization does appear to resemble a metaphorical dumpster fire. It really has been a terrible year, possibly the worst most people can remember. Every morning seemed to bring a new global damage report—an endlessly spreading pandemic, mounting death tolls, economies cratered by lockdowns, rising unemployment, racial inequality and civil unrest, spiraling political polarization, election turmoil in the United States, and bushfires in Australia. Countless people are ending the year feeling much further behind than they were on New Year’s Eve 2019. “Surely 2021 can’t be worse than 2020?” feels like wishful thinking. 2020 has felt particularly punishing, at least in part because the decade that preceded it was astonishingly hopeful and productive according to almost every metric of human progress. Extreme poverty was dramatically reduced, from 18 percent of the global population to just 8.6 percent. More than 158,000 people climbed …

Corruption: Greasing the Wheels of the World

One December evening in the late ’90s, I met a friend in a Moscow restaurant. I drank two zero-alcohol beers that night—an eccentric posture, in a Russian-Georgian restaurant—and then drove back to my borrowed flat in a car lent to me by my successor as the FT’s Moscow Correspondent. In Russia, no alcohol is permitted at all when driving—a law fashioned, it would seem, to allow the city’s GAI (Gosurdarstvennaya Aftomobilnaya Inspektsiya, or state traffic police) to supplement their low pay. As I was passing one of the new luxury hotels, a thick bundle of clothes propelled on boots and topped with a badged fur shapka waved his stick before my windscreen and motioned me to pull over. He told me to wind down my window, and stuck his head in. “Dikhnite!” (“Breathe!”) he instructed. Then he smiled, stepped back, saluted, and told me to get out of the car. He asked for my passport, and as he looked at it he told me I had been drinking. Yes, I admitted, but only zero-alcohol beer. …

The Search for a Politics of Community

After COVID-19—when that moment finally arrives—will be a bleak time for most. Debts must be reckoned with; cuts must be made; seasons of possibly violent political struggle will not be avoided. But COVID-19 monopolises so much news media time and content, that it has frozen or put out of most minds large social and political issues with which democracies will have to contend in due course. They may have to deal with them to remain democracies. One of these, which still intrudes into the news, is the migrant issue. Last week, a Kurdish-Iranian family drowned in the English Channel, reportedly forced onto a frail boat for a desperate voyage to the UK. The pity of this tragic incident, which claimed the lives of two adults and three children, kept it in the news for a couple of days. Then the migrant issue receded again. Still, it waits. “The West,” Israeli political scientist Martin Van Creveld has observed, “is rather like a besieged castle, the waves battering against the walls. They [the 80 percent of the …

The Failing Business Model of American Universities

Put yourself in the shoes of the average college graduate today. It took you longer than expected to complete your “four-year degree” and you are almost $30,000 in debt. You are desperately searching for a job in your field before your student loan payments run you into the ground, assuming your rent and car payments don’t get you there first. The generations before you had student loan debt too, but not nearly to the same degree of an ever-present threat. How did you end up here, and what do you do now with the worldwide COVID-19 pandemic? The business model adopted by our academic institutions is increasingly at odds with those seeking higher education and with the broader society as well. It is undesirable to have entire generations unable to participate in the economy, and as of June 2020, contribute a staggering $1.67 trillion to the national debt according to the National Reserve. This is more than auto loan debt and almost twice the amount of credit card debt in the US. It is crucial …