Skewed priorities

More on the skewed priorities of the austerity age.  From Ezra Klein at the Washington Post:

The pay freeze for [American] federal workers will raise about $60 billion over 10 years. It’s necessary, the president said, because these are times “where all of us are called on to make some sacrifices.”

Contrast that with the tax cuts for income over $250,000, which benefit workers doing much better than the average federal employee and cost about $700 billion over 10 years.

Yeah, but that’s different.  They’re already loaded.


Student Protests

I was reading Mark Fisher‘s piece on “Kettle Logic” last night, and thinking:

there is surely an unavoidable generational dimension to the current situaiton. Witness Paxman’s patronising treatment of young protesters on Newsnight last week. Transformed from attack dog rentasneer into the kindly, avuncular advocate of capitalist realism, Paxman “explained” to the teenagers that, yes, it’s unfair that he received an education completely gratis and that they will have to pay thirty grand, but sadly, that’s just how things are – there’s no money left. Generational affiliation here is a matter of political decision. I effectively belong to Paxman’s generation in that I too received higher education completely free of charge. But the issue is question is whether one finds it conscionable to stand by while the young systematically denuded of the “privileges” that we took for granted. It’s true that higher education has been massively expanded over the past thirty years, but that isn’t the fault of the young. They are the victims of an ill-thought and poorly planned out experiment in the expansion of the sector which successive governments have pursued on the grounds that the UK would need more graduates in order to be internationally “competitive”. It’s not even as if the young have the alternatives to higher education that once existed. So here they are: the ConDemned, and it’s down to us whether we stand with them or watch them get further sold out and abandoned.

Because student protests seem to have a different tone to them than other forms of “identity”-affiliated protests. As Emily pointed out in chat, people with privilege often construct their identity against the Other in ways that make true solidarity and empathy difficult.

But students? Well, most of us can relate to the young even when we are no longer young. We’ve been kids, idealistic and angry, even when we haven’t been kids in a while. It’s a more porous barrier than race, gender, hell, even class.

So even aside from the visuals like these:

British schoolgirls holding hands around a police van, covered in graffiti. There is resonance to the image of the young people in the streets that transcends the usual lines drawn between the protesters and the rest of us, shrugging “Suck it up” as we walk by. And there’s something about cuts to education–education that used to be free to all, rich or poor–that transcends so many of those lines. It’s a rallying cry. It’s spectacular, and very real.

Culture itself is resisting

A beautiful image from Italy of students using mock books to cover themselves in a protest.  The description at Wu Ming Foundation:

Students and teachers on the war path. Riots and demonstrations all over the country. High schools and universities occupied by the students. Violent clashes with the police in front of the Senate. Berlusconi’s education reform is encountering blatant opposition, and the fact that the government is in crisis makes the movement raise its multifarious head even more. This afternoon, in Rome, students confronted the cops while carrying shields with book titles on them. The meaning was: it is culture itself that’s resisting the cuts; books themselves are fighting the police. It was in this incendiary midst that our novel Q showed up, and in good company to boot: Moby Dick, Don Quixote, Plato’s The Republic, [Gilles Deleuze and Felix Guattari’s] A Thousand Plateaux… These pictures appeared on the websites of the most important daily papers.

Closed circuits

Further to the previous post about the disparity between record profits and high unemployment, a good post from Frank Pasquale about the closed circuits of spending among the super rich in the US.

The economy has now reached a “new normal” of soaring profits and stalled employment. Why aren’t stock market gains, bank bonuses, and rising CEO pay translating into more jobs for American workers?

Firms could be buying more labor-saving technology or speeding up production. They may also be investing overseas. Brazil, India, and China have more growth potential than the US. As Keynes stated, “Owing to [a developed economy’s] accumulation of capital already being larger . . . the opportunities for further investment are less attractive unless the rate of interest falls at a sufficiently rapid rate.” While American securities markets have long been reputed to be far more transparent and law-governed than “developing” markets, the gap may not seem so great nowadays. This will be a painful transition for the U.S., all the more so due to our repeated failure to follow stabilizing models of industrial policy. But it is an overdue “rebalancing” of global economic flows.

More troubling is the possibility that buying power is being segregated by the very wealthy into closed circuits of spending and investment (among themselves). Inequality has now become so extreme that it’s difficult to imagine how, say, America’s Fortunate 400 could spend their money.

Pasquale goes on to argue that spending among the super-rich consists primarily of finance financing itself, with little flow-through to the rest of the economy besides the comparatively limited trickle from luxury markets.  Go read the rest.

“The invisible hand belongs to a thief”

Melissa at Shakesville in reference to this New York Times story:

The nation’s workers may be struggling, but American companies just had their best quarter ever.

American businesses earned profits at an annual rate of $1.66 trillion in the third quarter, according to a Commerce Department report released Tuesday. That is the highest figure recorded since the government began keeping track over 60 years ago, at least in nominal or non-inflation-adjusted terms.

Corporate profits have been going gangbusters for a while. Since their cyclical low in the fourth quarter of 2008, profits have grown for seven consecutive quarters, at some of the fastest rates in history.

Trickle down works!  Even though it doesn’t!  At all!  Work!  So yes, whatever the ruling economic/politico/media class have to say, this has nothing to do with there not being profits – no, it’s about screwing workers further, exacting more productivity from an ever-decreasing amount of workers.

Consider that in relation to the ever-increasing number of people in prison or the military, mostly from the US’s poorest communities of colour, and it becomes clear: multinational state-supported capitalism doesn’t need us as workers, at least not workers paid enough for a living wage.  The contradiction signaled by the NYT’s first line – “The nation’s workers may be struggling, but American companies just had their best quarter ever” – shows that “austerity” is a fundamentally false, constructed problem.

Tax those who are making such outrageous profits, propped up the rest of us, and the public coffers would be just fine.  And then put the money back into public works (and hence public employment), because it is clear the private sector has no need for workers.

Debt Culture Never Really Went Away

Originally published at this ain’t livin’.

One consequence of the credit crunch was a reduction in available credit, and a tendency among pundits and the like to claim that the days of free and easy credit were over. That’s definitely true, to some extent, but in another sense, it’s not. Debt culture is very much alive and well and it seems like a number of lenders have not learned from their mistakes. Exploitative lending still flourishes, after a brief period of suppression. It’s almost like people think that making the same mistakes twice won’t result in exactly the same outcome.

I’ve really been struck by this recently when examining the crisis in college funding. College students are finding it harder and harder to afford college, with rising tuition/fees and grants not really keeping pace with college costs. Student loans are available, but they usually aren’t sufficient, and some students find loans out of reach, or are intimidated by the sheer volume of debt involved. I had to borrow a comparatively small amount to go to college, despite attending expensive schools, because I went in an era when there were more grants. If I was enrolling in college this year, being faced with the kind of financial aid packages being offered, I’m not sure I could afford to take on that level of debt.

Student loans aren’t the only debt taken on by students. At least student loans are, at least in theory, an investment. They come with very low interest and generous repayment terms. In an ideal world, the amount will start to seem pretty negligible as students work on paying it off. It’s hard at first to make payments right out of college with poor job opportunities, but over time, the seemingly insurmountable sum of the monthly payment starts to seem more reasonable. Of course, we don’t live in an ideal world. A lot of college graduates can’t get jobs at all, not even poor ones, and a lot of students are forced to take on so much debt that the payments really are impossible. And you can’t escape student loans. They will persist through bankruptcy and pretty much everything else, except in very rare circumstances.

Many students also find themselves deep in credit card debt. There are a number of reasons for this. Some students take on credit cards because it’s the only way to afford college. They can’t pay for books and other supplies without buying on credit. They also can’t repay their cards because they’re in school and struggling to make it as it is, so the debt mounts, and mounts, and they pay huge service charges. Other students enter college, are presented with a smörgåsbord of credit cards, and take up the offers right and left, treating them like free money.

It’s easy to get trapped that way if you have never managed your own finances or interacted with people who have. The money is abstract and has no meaning because you swipe a card and get things. Want, take, have, as it were. Then the bill comes due and everything changes, suddenly that money is very real, but it’s too late. The bills mount over the months, you keep buying ‘just little things’ and you end up very, very deep in debt to creditors who charge extremely high interest and get extremely aggressive, because they want your money.

Allegedly, one of the reforms proposed for the financial system was a crackdown on predatory lending practices. I’ve written about abusive and predatory lending before, but I didn’t spend a lot of time in that piece talking about college students. Credit card companies prey on college students, and I am really not exaggerating; when you have multiple tables for credit card applications right at orientation, it’s a big problem. Some students avoid them, others are familiar with credit cards and finances and can handle it, others have only ever thought about money in the abstract and they end up in deep trouble, cheered along by a smiling representative who says ‘sign here, you don’t really need to read that closely.’

Some colleges offer orientation workshops and classes to incoming students, covering financial issues. I attended a few when I started college and what I was struck by was the fact that people least likely to need those classes were the most likely to be in them. Most of my fellow students in those classes had had their own bank accounts for a long time, had established credit histories, had worked through high school, were very familiar with handling finances, with debt, and with using money wisely.

Meanwhile, I ran into students outside of class who had never had bank accounts before and whipped out an array of credit cards at every opportunity. I’m not interested in concerntrolling or lecturing people on how to live, so I rarely said anything, but I often wondered about the consequences of profligate spending and where these students would find themselves after graduation, with hundreds of dollars due on credit cards every month before the student loan payments even came due. It’s hard to dig yourself out of that hole, once you’re in it. You can work, endlessly, and pay down the cards, but meanwhile, you don’t have enough money to live on, so you keep using the cards. It’s hard to understand, before you fall in it, how deep that hole is.

A lot of people simplistically talk about austerity and how people ‘just have to spend less’ but it’s not always that simple. It’s not always possible to cut your spending down. If you’re already living on the bare minimum, perhaps already receiving government assistance, where exactly are you supposed to cut? How are you supposed to get ahead when even a tiny unexpected expense throws everything off? You have to repair the car because you can’t get to work otherwise, you have to go to the doctor’s for pneumonia, you have to take time off for whatever reason, and you’re trapped in an endless cycle that’s impossible to escape.

I worry about our college students who have been victimised by predatory lending and their ability to survive after college in this grim economy, I really do.