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The Belly Button Theory of Economics August 26, 2008

Posted by rogerhollander in Belly Button Theory of Economics, Political Essays (Roger).
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The Belly Button Theory of Economics

 

(This was submitted to and rejected by the “Los Angeles Times.”  Arguing that they could not compete with the low wages and health benefits given to its employees by Wal-Mart, three major supermarket chains in Southern California locked out their workers, who refused to accept the cutbacks.  I have to admit that I thought my metaphor was pretty clever and catchy, but it obviously failed to convince the “Times” oped editor.)

 

Call it the belly button theory of economics, if you will.  Every one knows there are two types of umbilicals: innies and outies.  Well, when all is said and done, all complexities aside, doesn’t one’s economy simply break down into what comes IN and what goes OUT?

 

Let’s talk about the ordinary working person.  She earns from her job (IN), and she meets her needs and pleasures by making purchases (OUT).  The well-being of her “economy” depends upon there being at least enough IN to take care of all the OUT.

 

One might be tempted to say that both are equally important, that is income (IN) and the cost of things (OUT).  Here is where I would argue that many economists miss the boat.  I believe that what one does through her work to acquire the means to live (IN) is fundamental, whereas the cost of things (OUT), while important, is secondary.  Think of is this way.  If you are unemployed you sure appreciate a good bargain, but what you really need is a good job.

 

There can also be a “dialectic” relationship between IN and OUT.  Take health care.  It is something we purchase (an OUT).  However, for millions of Americans, their health care comes as a benefit attached to their work (an IN).  In other words, health insurance as a benefit is an IN that offsets the cost of health care, an OUT.

 

That is why I believe it is so important for all working people that in the current labor dispute that grocery giants — Safeway, Vons, Ralph’s and Albertsons — do not succeed in their efforts to cut drastically the wages (IN) and health benefits (IN) of their workers.  They argue that this is necessary in order to compete with the Wal-Mart super stores, who pay their workers substantially less in wages and benefits (cf. Nickel and Dimed, Barbara Ehreneich’s classic study where she tried over a large period of time and failed to be able to live on Wal-Mart wages).  Wal-Mart does this by keeping its prices (OUT) lower than anyone else.  Interestingly, and here is that dialectic at work again, Wal-Mart is able to offer such low prices (OUT) by pressuring its suppliers to cut labor costs (their workers’ IN) in order to provide Wal-Mart with its goods at cut rate prices.

 

In the end, you see, it always boils down to IN(come).  Of course, the worker is also a consumer and naturally loves low prices.  We all appreciate a bargain, and who can blame us?  But if the price of bargains is that, in the long run, we don’t have a living wage (IN) that meets our needs to provide for our expenses (OUT), then the bargain is, in effect, no bargain.  It is a cruel trick disguised as a bonus.

 

Human beings are by nature, first and foremost, producing animals.  We produce the means by which we survive and thrive.  Only then are we able to “consume.”  I am no great fan of capitalism because it treats human labor as a commodity, just one more expense for the capitalist along with things such as materials, rents and other overhead costs.  But as long as capitalism exists, working people have no choice but to demand wages and benefits that meet their fundamental needs.  Health care, along with food and shelter, is one of the most basic of human needs.  Because the United States government, the only one in the world of industrial nations (with the possible exception of South Africa), has not seen fit to provide universal health coverage for its people, then this need for most of its working people gets fulfilled through employer health care plans.  It is not an “extra.”

 

I have spoken with shoppers crossing the picket lines at the supermarkets, fellow working people, who justify their non-support of the grocery workers on the basis that they too must pay part of their health care costs (“If I can’t have it, you can’t have it either”).  This sad lack of worker solidarity is a product of the divide and conquer strategy of the supermarket chains, and it is in contrast to the solidarity the chains themselves have shown by sharing their profits amongst themselves, possibly in violation of anti-trust legislation.  How ironic that the supermarket industry is turning around that famous dictum to read: “chains of the world unite, you have nothing to lose but your workers!”

 

Think of this the next time you are tempted to support them by shopping in one of the on-strike or locked out supermarket chains.

Free Trade May Not be Fair Trade: The Pacts are Always Biased Toward the Economically Stronger Nations August 26, 2008

Posted by rogerhollander in Free Trade, Political Essays (Roger).
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 (I had been asked by its organizers to try to arrange for Canadian representatives to the “Hemispheric Conference of Parliamentarians” that took place in Quito in 2002.  The subject of the conference was free trade and the impact it would have on Latin American countries.  I spoke by phone with the offices of several Canadian New Democratic Party (N.D.P.) MPs, without success.  Not being a member of any parliament myself, I was therefore invited by the organizers to be an official observer of the Conference.

 

There were members of parliaments from most Latin American Countries in attendance, including supporters of the Chávez government in Venezuela and oppositionist Senators from embattled Colombia.  Meeting them and hearing their opinions was what I found most interesting.  I was put up at a small hotel with some of the other attendees, and I had lunch with the executive assistant of an Ecuadorian congressman whose name was, no kidding, Fidel Castro.

 

Several months later I was in Los Angeles studying much of the material I had brought back from the Conference and thinking about what I had learned.  The article that follows, which was published as an opinion piece in the “Los Angeles Times,” November 20, 2003, was a result of this experience.  It was picked up and reproduced by a number of Internet web sites – including a porno [!] site which I suppose must have only seen and misunderstood the word “trade.”)

 

By taking a look at how free trade works, we can see why virtually every labor, ecological and anti-poverty organization in Latin America is strongly opposed to the proposed Free Trade Area of the Americas, which is the subject of this week’s Miami gathering of trade ministers from Western Hemisphere nations.

 

The critics see thing this way: Let’s say that the Newcastle mining industry in Britain can produce a ton of coal at the cost of $10, which it sells on the domestic market.  The industry thrives.  At the same time, coal mining in Pennsylvania is just as efficient, but with transportation and British import tariffs the cost to export coal to Britain would be $15 a ton.  No deal.  But the Pennsylvania mining interests, desperate for export markets, have powerful lobbyists in Congress, which in turn enacts the “Coal Law,” providing a government subsidy of $5 a ton.  Further, with a free-trade agreement between the U.S. and Britain abolishing the $2-a-ton tariff, there would be a net gain of $7 a ton for the Pennsylvania mining industry.  Now its actual – if artificial – cost of production is $8 an exported ton, $2 cheaper than the $10-a-ton Newcastle coal.  Voila!  Coals to Newcastle.  Goodbye Newcastle mining industry.  Hello massive British unemployment.

 

The logic is simple.  There are two ways to “protect” local industry: import tariffs and export subsidies.

 

Free trade eliminates tariffs, giving the economic advantage not only to those producers that are more efficient production-wise (largely because they are more capitalized) but also to those industries blessed with governments capable of delivering massive subsidies.  In other words, to the already industrial and wealthy nations.

 

Coal miners in Newcastle may not have to worry about my hypothetical example, but corn growers in Mexico have every reason to panic.

 

Grains are to Mexico as coal was to Newcastle.  Since the initiation of the North American Free Trade Agreement among the U.S., Canada and Mexico in 1994, the earnings of Mexican growers of corn, wheat and rice, along with beans, have plummeted, while the cost to the Mexican consumer has risen by 257%.

 

Mexico, the land where corn was first domesticated centuries ago, is now importing “cheap” subsidized U.S. agribusiness corn.  Coals to Newcastle indeed.

 

With a dramatic difference in industrialization (70 U.S. tractors, for example, for every Mexican tractor) and the powerful agricultural lobby in Washington maintaining enormous subsidies, it is no wonder that Mexican farmers cannot compete once the protective tariffs are eliminated.

 

In theory, free trade should make everyone more competitive, replacing the inefficient with the efficient.  The idea is that everyone should do what they are best at and purchase from their neighboring countries what those countries do best.  Everyone gains.

 

In theory.

 

In reality, for historical and geopolitical reasons, what Third World countries are “best at” is having their natural resources extracted and exported to the industrialized nations (which in turn sell back manufactured products at high cost) and having their populations exploited for cheap labor.

 

Advocates of free trade – the already developed industrialized nations and those in the Third World countries who do their bidding – argue in the abstract, taking advantage of words with positive connotations such as “free” and “trade.”  In the real world, however, economics is not a matter of ideology but rather of production and markets and the intervention of government. Bilateral agreement between unequal partners are inherently biased in favor of the stronger – and the greater the disparity, the greater the bias.

 

This is exactly the situation that exists between the U.S. and Latin American Republics.

 

The World Trade Organization treaties and the proposed Free Trade Area of the Americas are characterized by undemocratic processes, such as secret and semi-secret pre-agreements and unrealistic deadlines, and economic blackmail including threats to withhold the International Monetary Fund and World Bank funding upon which the weaker nations’ governments have become dependent.  Rapidly expanding U.S. military presence worldwide only serves to reinforce the economic hegemony.

 

The impoverished nations of the Western Hemisphere have much to fear from the proposed trade agreement.

 

 

The Constitution is Unconstitutional August 22, 2008

Posted by rogerhollander in Political Essays (Roger), The Constitution is Unconstitutional.
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(I recently got a hold of a copy of the United States Constitution, and I read it from cover to cover – it’s not that long a document.  I remember having had to memorize the preamble when I was a student.  It is quite an idealistic statement; and it is too bad that neither the Constitution itself nor the general thrust of our nation’s history come near to living up to it.  In my humble opinion, of course.)

 

 

They bought and sold human flesh, had a profound mistrust of anyone who didn’t own real property, and were misogynist to the core.  Their only redeeming characteristics were a healthy disdain for organized religion and feudal nobility.  Surely you will recognize their names: Nicholas Gilman, Jonathan Dayton, George Clymer, Richard Basset, Daniel of St. Thomas Jenifer, and Richard Dobbs Spright, et. al. 

 

Stumped?

 

Signers of the Constitution of the United States.  Our revered Founding Fathers.

 

In high school they had us memorize the Preamble to the Constitution, an eminently noble document; and I can only speculate whether it might have been the intention of its authors, perhaps unconsciously, for its stunning idealism to lull the reader into a state of tranquility so as to lose sight of some of what followed.

 

It jumps right out at you on page one of the United States Constitution – Article I, Section 2, “Representatives and direct Taxes shall be apportioned among the several states … according to their respective numbers, which shall be determined by adding to the whole Number of free Persons …three fifths of all other Persons.” “Other Persons?”  What could our noble Founding Father possibly have meant by that?  Oh, yes, I forgot: slaves.  Today we call them Afro-Americans.

 

The meaning and impact of counting of slaves (those “Other Persons” so dearly important to the nation’s economy at the time) is often misunderstood.  It is not, as it appears on the surface, that slaves were considered two fifths less than human.  It’s worse than that.  Much worse.  The Constitution allocated to its resident slaves not three-fifths, but rather zero rights.  As human beings they were “worth” nothing, not three fifths.  The reason they jacked them up to three fifths of a person in the Constitution was only so that those who governed the Southern slave states –their Masters – could have a larger number of representatives in the House of Representatives (where a state’s number of representatives is determined by that state’s population).  This, of course, had the effect of giving the Southern slave states more political power.  Three fifths of the slaves’ bodies were thereby enshrined in the Constitution so that those who rule them could have more power to deny their very existence as human beings, consider them property, and deny human rights not only to their bodies, but to their minds and souls as well.

 

It was a classic and tragic case of adding insult to injury.

 

The Civil War and the Fourteenth Amendment put an end to that little indignity, but, there are others.  The disenfranchisement of women, for example, until the Nineteenth Amendment put an end to that political peccadillo in 1920, seven years after the guys gave themselves the right to dun our paychecks with the Sixteenth Amendment.  You can see where the priorities lie.

 

Whereas in recent years Americans have become painfully aware of the Constitutionally ordained method for choosing their president through the arcane and Byzantine Electoral College and the winner-take-all principle of presidential primaries (thereby in effect potentially disenfranchising up to 49.9% of the voters in any given state), there exists what in my estimation is the most unjust and undemocratic principle written into our Constitution, and it is still there, and hardly anyone ever notices the implications, and it is virtually unamendable.  I refer to the institution of the Senate of the United States of America.

 

There it is again in Article I.  Section 3 reads simply, “The Senate of the United States shall be composed of two Senators from each State …”   Fifteen of the most undemocratic words you will ever read.  Perhaps only second to the President him or herself (some day), the U.S. Senate has emerged as one of the most powerful institutions in the country.  Its responsibilities are roughly parallel to those of the House of Representatives (known, significantly, as the “lower” house), but its powers to “advise and consent” on Presidential appointments give the Senate a great deal of extra leverage.  And given that there are nearly five times the number of Representative than Senators, it gives each individual Senator just that much more power.

 

Consider how radically undemocratic is the United States Senate.  California with a population of roughly thirty five million gets two measly Senators.  One for every seventeen and a half million citizens.  Wyoming, with its population of a half million, gets the same number as senators as California, one for every two hundred and fifty thousand citizens.  That gives the Wyoming voter seventy times more senatorial power than the California voter.  Not exactly consistent with the “one person one vote” principle.  How this works in practice is even scarier.  Traditionally Southern and rural states have been able to frustrate the will of the majority of Americans through its manipulation and control of the Senate.  Their members accrued seniority and exercised power though the Senate’s inviolable Old Boy seniority system.  This phenomenon was to a great extent responsible, for example, of maintaining racial segregation in the United States from the end of Reconstruction in the 1870s until the Supreme Court stepped in 1954, and the Civil Rights Movement pressured the Congress into enacting the Civil Rights Act of 1964.

 

That has been the practice.  In theory it could be even worse.  The population of the United States is approximately 290 million.  The largest 25 states (population-wise) make up a full 240 million of that (the population of California and Texas and New York combined is roughly equivalent to the population of the 32 smallest states: in the Senate, 6 votes versus 64).  Therefore, representatives (overwhelmingly male and White to this day) of little more than 50 million Americans could in theory constitute a majority in the Senate and frustrate the will of the remaining 240 million.  While it may never reach this extreme, it has and will continue to give drastically disproportionate power to a minority of Americans.

 

And guess what?  It will probably never change.  The British and Canadians, our two closest ideological neighbors, have made the British House of Lords and the Canadian Senate – their two “upper houses” – into largely ceremonial bodies.  We could do the same, you exclaim.  Thank God for the Amendment provision.  Think again.  I am no constitutional scholar, but what can Article V. of the Constitution mean if not an undemocratic Senate in perpetuity?  It reads, “…no State, without its Consent, shall be deprived of its equal Suffrage in the Senate.” (my emphasis).  Can you imagine in your wildest dreams a State giving up its Senatorial votes?  I have nothing against Wyoming, but really.

 

I choose to judge the Constitution by its own Preamble, which reads in part, “We the people of the United States, in order to … establish Justice.”  They capitalized “Justice.”  A nice touch, but I would prefer the substance to the image.

 

You will not find political parties mentioned in the Constitution, but they soon appeared in full force with the election of the second U.S. President, John Adams in 1796.  By and large there have always been two predominant parties, although they have changed names and philosophies over the years.  This has had the effect of limiting choice and discriminating against visionary points of view.  It certainly has favored moneyed interests, given the huge costs of election campaigning, and the lack of teeth in campaign spending legislation.  The Founding Fathers would have had no problem with this.  They were big on property and money.  It just took them a few years to get their act together.  Historians and politicians and pundits speak proudly of our two party system.  Along with our perfect self-correcting Constitution, they say, it provides for stability. 

 

Oh, in this era of Clintonian “Republicrat-ism” and King Bush the Second’s hijacking of the presidency, how one longs for a little political instability.

 

And, what is more, nowhere in the Constitution do we see the words “checks and balances,” that principle we were taught in high school civics classes that the Constitution reflects in creating the three branches of government: Executive, Legislative, and Judicial.  This is the principle that is supposed to guarantee democracy forever and make revolutionary change anachronistic. What it doesn’t account for is a single political party gaining effective control over the three branches.  It’s bad enough when a single party controls both the Congress and the Presidency, which combine to make and enforce our Laws, including laws about how we vote, how electoral districts are drawn, how population is counted, etc. (was anyone surprised that President George W. Bush didn’t veto the redistricting legislation that gave the Republican party additional seats in his home state of Texas?).  But when the Supreme Court is in their back pocket as well (in 2000 they stopped the vote count in Florida when their boy was ahead), is there really that much left of our treasured Constitutional Democracy?

 

Our country was born in revolution.  Today “revolution” is a dirty word.  We have been indoctrinated into believing that our Constitution protects us forever and ever against tyranny and injustice. 

 

Here’s what the Declaration of Independence says:

 

“We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness … That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness … when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security.”

 

Did I read the word “duty?”  Did I just see the Declaration of Independence telling us that revolution is not only the People’s right but their duty?

 

Al Gore, not exactly a wild-eyed left wing radical communist, in a Martin Luther King Day speech a couple of years ago, made just that argument about the current George W. Bush government, that it may have rendered our democracy despotic beyond democratic repair.  It is a speech worth reading.

 

Many treat the United States Constitution the way fundamentalist Christians treat the Bible, that is, as an infallible document.  This ignores the reality that it is human beings collectively who, for better or for worse, control their own destiny.  As Shakespeare said, “It is not in the stars.”  No political system, including and especially democracy in a world of capitalist economics, is infallible.  The deeper truth that we must not forget is that the price of liberty lies not in a piece of paper, however elegant, but in eternal vigilance.

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