All posts filed under: Economics

Against an Unequivocally Bad Idea

I first heard the phrase “Universal Basic Income” when I was sitting in a Wesleyan sociology class. My classmates and I were discussing the American safety net, and one student proposed eliminating the whole system. “The safety net has so many programs, and to be honest, I don’t really understand them,” he said. “I’d rather just replace them with a UBI.” A few students concurred, and a short debate ensued. Universal Basic Income, or “UBI,” is a proposal to give every American a periodic check from the government. Everyone would receive the same amount, no strings attached. Although my classmate’s proposal had a certain cool-kid hipness to it, I was appalled. The current safety net does a tremendous amount of good, lifting millions of low-income people out of poverty every year. The fact that it isn’t easily understood by undergraduate sociology majors was pretty low on my list of concerns. After class ended, I largely forgot about our discussion. No mainstream politician was openly supporting UBI, and the impending rollout of something called “Obamacare” was …

Australia’s Population Ponzi Scheme

The current economic system in Australia is a Ponzi scheme based on maintaining positive GDP through migration. Populations of native species are plummeting and people are faced with increased job insecurity and housing costs, all of which are side effects of the Australian government’s ongoing drive for an ever increasing population. In the 35 years prior to 2005, Australia’s net overseas migration averaged around 70,000 per annum. But from 2005 this number was trebled, and ever since then Australia’s population has been increasing at the rate of an extra million people every three years. As a result, Australia has been a part of the on-average 68 percent fall in global wildlife populations between 1970 and 2016. Some Australian species’ numbers have plummeted by up to 97 percent, primarily due to habitat loss. The environmental havoc is justified as needed for the economy, but the evidence does not support this claim. In the 1950s and 1960s Australia had strong industry protection policies and a strong manufacturing industry, and therefore both migrant and non-migrant workers had good …

From “Who Gets What?” to “Who Are We?”

American politics can be conceptualized through two questions. The first is “Who gets what?” and the second is “Who are we?” Before and during the Cold War, the specter of fascism and then communism kept Americans aligned on fundamental questions of who we are. From the New Deal to the peak of the Cold War in the 1970s, questions of who we are were far less prominent than questions of who gets what. As Lee Drutman shows, the dividing line of politics was principally over economic issues. An unsteady class peace that took shape as “democratic pluralism”—the representation of workers throughout many realms of society—reigned. During this period unions were widely subscribed (35 percent in 1954) and served as a civic and associational pillar in American life. However, once the Cold War peaked, the dividing line in contemporary America became increasingly cultural, and the primary question in America shifted to “Who are we?” As the fear of foreign and existential threats retreated, so too did a sense of common identity and purpose. Without something to …

What Divides Us Is Class, Not Race

Black lives matter. It’s become a rallying cry for those seeking social and racial justice. These three words express the idea, symbolized by the death of George Floyd, that race defines the fault line fracturing our society. Racism doesn’t exist in a vacuum. It always has an economic context. When Brownshirts attacked Jewish shop owners in Nazi Germany, an opening act in one of history’s greatest genocides, they were acting on anti-Semitic propaganda that cast Jews as leeches sucking Germany’s lifeblood. This was an ugly and murderous lie. But it became attractive to those suffering amidst the reparations that had been imposed on Germany after World War I, and whose effects impoverished the country’s workers. The villains in today’s racism narrative tend to be cast as privileged, white middle-aged men—beneficiaries of a system that everyone can see is unfair. But the idea that the injustice baked into our economic systems can be reduced to race is false. For years, I was chief economist at one of Canada’s biggest banks. Since I stepped down from that …

The Coming Post-COVID Global Order

The COVID-19 pandemic has devastated economics in the West, but the harshest impacts may yet be felt in the developing world. After decades of improvement in poorer countries, a regression threatens that could usher in, both economically and politically, a neo-feudal future, leaving billions stranded permanently in poverty. If this threat is not addressed, these conditions could threaten not just the world economy, but prospects for democracy worldwide. In its most recent analysis, the World Bank predicted that the global economy will shrink by 5.2 percent in 2020, with developing countries overall seeing their incomes fall for the first time in 60 years. The United Nations predicts that the pandemic recession could plunge as many as 420 million people into extreme poverty, defined as earning less than $2 a day. The disruption will be particularly notable in the poorest countries. The UN has forecast that Africa could have 30 million more people in poverty. A study by the International Growth Centre spoke of “staggering” implications with 9.1 percent of the population descending into extreme poverty as …

Revisiting the Simon-Ehrlich Wager 40 Years On

It is 1980, and you are getting married. Your parents decide to celebrate your nuptials by inviting 100 guests to a wedding reception. The reception cost them $100 per person or $10,000 in total. Fast forward to 2018. Now it is you who is throwing a wedding reception for your child. The guest list has increased by 72 percent (some of the old folk are no longer around, but the cousins have exploded in number). That means that you are now catering to 172 people. The price per guest remained the same (suspend your disbelief and ignore inflation for now), and you expect to get a bill for $17,200. Instead, the bill comes to $4,816, which is less than half of what your parents paid for you. How is that possible, you ask the caterer? The caterer responds that for every one percent increase in attendance, the bill fell by one percent. And so, while the number of guests rose by 72 percent, your bill declined by 72 percent. Surely, things like that don’t happen …

Will Workers’ Wages Ever Go Up Again?

Self-employment, temporary employment, on-call work, home-based work, and telecommuting are becoming more common. In some countries, such as Australia, nearly half of the workforce falls into one of these categories. The growth in these types of employment opportunities is often attributed to the rise in app-based gig employers like Uber or Lyft. The employment contract signed by those working in the gig economy is very different from what workers in goods-producing industries had come to expect during most of the postwar era. Back then, for example, you knew when you were working. There were regularly defined work hours (normally 40 hours a week, assigned at a fixed time). These days, your gig employer practises just-in-time labour, putting you on perpetual standby. The company will call you when they need you, thanks. And they might need you for only 10 to 15 hours in a week. And don’t count on receiving much in the way of the non-wage benefits unions negotiated for most industrial workers in America. Get sick or need dental work as a part-time …

The Rule of the Masses

As cities burn across a divided United States of America, it is worth considering some of the conditions that foment the country’s increasingly radical politics. During the past few years, the United States has experienced a series of cultural shifts in which the public’s perception of numerous—primarily social—issues has been abruptly and dramatically altered. In a matter of months, the minority views of political activists become normalised while views which were previously tolerated in mainstream discussions are suddenly impossible to hold in public life. Though one would expect such shifts to occur gradually over many years and feature prominently in fierce public debate, the change always arises suddenly, at once a surprise to many who pride themselves on being informed about—and having a stake in—public life, and yet succeeding overwhelmingly against virtually no formal organised opposition. Moreover, these shifts are supported by private and public institutions which become, without warning, part of the vortex of mass opinion. I Writing between the two world wars that would shape the rest of his century and the beginning …

The Failure of Fusionism

Conservative parties throughout the West are in crisis. This may not be fully understood by simply looking at recent election results, as conservative parties have continued to win elections. But these parties are currently in a state of ideological flux, and their commitment to existing liberal democratic principles and institutions are in noticeable decay. The conventional perception of conservative parties as steady and secure governing hands has made way for a more volatile and agitated form of politics. Parties that have routinely positioned themselves as defenders of the established order have instead become actively hostile to it. Conservative parties, the Economist noted last year, are now “on fire and dangerous.” This phenomenon is most evident in the United States, where the Republican Party has become a wholly owned subsidiary of Donald Trump; a political actor guided solely by parochial instincts and personal narcissism, untethered to any intellectual understanding of his party’s traditions. The party’s convictions are now driven solely by fealty to the president, regardless of his actions. While Trump may be a singular figure, …

The Closing of the High Street Theatres

In his book, Think Like Amazon, John Rossman, the former director of Merchant Integration at the everything store, invokes Captain Ahab, “the monomaniacal character at the heart of Herman Melville’s Moby Dick.” Ahab, writes Rossman, is a man obsessed with the capture of a great white whale, and each of Amazon’s 560,000 employees worldwide—not to mention those eager to emulate Amazon’s success—should likewise be obsessed, but with perfection, customer satisfaction, and “becoming inspired to develop and expand beyond your current products, services and business model.” This isn’t, he reassures, the kind of obsession that takes Ahab and his ship to the bottom of the sea, “but it’s not bad to have people on board with a little Ahab in them… being ‘nice’ all the time can be a liability for your team.” The Amazon philosophy—more to the point, the Amazon practice—is to dominate every market into which it moves. The hyper-competitiveness cultivated by its executives, the voracious acquisition of every kind of product, and the refusal to be “nice” to staff all take their cue …