The Zero Room

At the Campaign for America's Future, Dave Johnson has a comprehensive roundup of the Sanders “Economic Plan” Controversy. The controversy is practically non-existant outside of the left wing of the Republican Party, i.e. the Clinton/Obama/Clinton Democrats. The plan is pretty much what you'd expect from a New Dealer, as Chomsky characterises Sanders. It's a welcome change from policies that have created the post-GFC malaise, but hardly radical or historically unprecedented.

As you'd expect, economists with intelligence and integrity like Bill Black and Jamie Galbraith did their best to introduce some reason to public discourse, while journalists on the economics beat largely ignored tham and scrambled to stake out a position that they could defend as balanced. As you'd also expect, but nonetheless disappointingly, Paul Krugman lined up with those he would usually deride as Very Serious People (VSPs). I generally enjoy Krugman. He's witty and articulate, and performs a useful service against Republican politicians beloved of VSPs such as Ron Paul, Paul Ryan, Rand Paul, and Ryan Rand. (Hang on; I think one of those isn't a real person. Maybe more than one.)

Sadly, Krugman is not inclined to entertain ideas outside the range of opinions between Clinton and Bush, or if you prefer, Clinton and Bush (or Bush). And those issues upon which "moderate" Republicans and Democrats agree do not for Krugman count as contestable issues; they are part of the built-in political furniture. In this sense, he's as much a VSP as anybody. If he wasn't, he wouldn't be doing his job.

The New York Times' readership is the one percent. It makes sense therefore to maintain that real economic injustice is the work of the one-tenth of one percent. "It's not you, dear reader, it's those cads who buy the TImes but don't read my column who are to blame." Magnifying marginal distinctions, dismissing the significant, and excluding the challenging comes with the territory.

As a commentator, Krugman is a Jerry Seinfeld at a time which requires a Bill Hicks. In the second term of the Sanders presidency, I will be happy to read his wry observations about airline food and the latest crazy things Senator Ivanka Trump has been saying. In the meantime…

[I'm archiving for posterity a few articles I wrote for a now-defunct website. This is the second, from February 2014; here is the first, and the third.]

Distance learning just isn’t worth as much as on-campus tuition. That’s the opinion of Professor Jim Barber, vice-chancellor of the University of New England and self-satirist of note; or at least that’s what his opinion appears to be if one engages in a little speculative reading between the lines. He has just announced his intention to charge significantly less for online than on-campus courses. Moreover, in a stroke of breathtaking audacity, the money foregone will not be lost from the UNE administrative budget, and certainly not from executive salaries; Professor Barber is taking it from his students. From 2014, external students undertaking distance education will be exempt from the Students Services and Amenities Fees (SSAF). As for the subsequent defunding of student services, well tough luck.

“University students around the country are increasingly voting with their feet and not showing up to class,” says Barber, while making the very cuts that will make showing up to class even less desirable, “yet we continue to slug them for our services whether they use them or not. This is a pretty inefficient way to run any enterprise let alone a service industry.” (University of New England, 2013).

Barber proclaimed at a conference last year that “unbundling” is “where best practice is heading pedagogically. MOOCs [Massively Open Online Courses] are an extreme example in a bigger movement towards unbundling of services. Excellence in the business of higher education will increasingly mean individualised levels of service delivery, so pay for what you want and as you go.” (Streak, 2013).

Even before one begins to speculate over the prospect of pay-as-you-go lavatories for the recklessly profligate micturators on campus, it may seem extraordinary that a v-c would explicitly boast that his own institution deliberately aims to be the no-frills Ryanair of the higher education “service industry”. Nevertheless he maintains that “while most traditional universities around the world continue to press their governments for more funding, UNE is trying to move in the other direction.” (University of New England, 2013). UNE's staff and students just aren't worth the money, according to Professor Barber, and such naked contempt for students and staff alike is not as rare among university administrators as you might think.

In the US, San Jose State University has been leading this allegedly inexorable unbundling by outsourcing course delivery to proprietary MOOC providers. When asked whether this might lead to a decline in the quality of the education his students receive, SJSU's president merely deadpanned “It could not be worse than what we do face to face.” (Bady, 2013).

Such disdain for the practices of “traditional universities” is common throughout the world wherever Thatcherite principles of governance have taken hold. The “self-hating state”, to use George Monbiot's incisive term, “renounces its powers. Governments anathematise governance. They declare their role redundant and illegitimate. They launch furious assaults upon their own branches, seeking wherever possible to lop them off.” (Monbiot, 2013). It is therefore hardly surprising that when the self-hating state determines the regulatory environment in which universities operate, the state's attributes are reproduced in the self-hating university.

As Simon Marginson (2013) observes, the self-hating Australian government “prefers automatic economic mechanisms that remove the need to make and defend arguable policy positions”. In its turn the self-hating Australian university disavows any intrinsic purpose or values, and therefore any responsibility for the social consequences of its operations. It is merely a commercial service provider - shapeless clay to be moulded by the economically rational student-customer to suit their interests.

Two policy pumps maintain this pedagogical vacuum: Income-Contingent Loans (ICLs), and the Demand Driven Model (DDM). These and/or similar mechanisms pertain to an increasing number of other countries; the differences between them are interesting, but arguably increasingly marginal, so for simplicity the Australian example will be taken as broadly representative.

The pioneering implementation of Income Contingent Loans was Australia’s Higher Education Contribution Scheme (HECS). It was adopted in 1989 as a resolution to the tension between greater participation in higher education (spurred in part by the abolition of tuition fees in the 1970s), and the Hawke/Keating Labor government’s “considerable fiscal parsimony”, to quote the charmingly diplomatic chief architect of HECS, Bruce Chapman (1997).

To be politically palatable, HECS necessitated a reframing of public education as an individual good rather than a social good. In this way it could be argued that public funding of higher education is a form of progressive taxation: If, broadly speaking, the better educated are the better paid, it is unfair to tax the poor to fund the rich. To the counter-argument that higher education is an important way for the poor to improve their lot in life, “HECS' defining feature - income contingent repayment” (Chapman, 1997) appeared to be the perfect have-your-cake-and-eat-it rejoinder.

Indeed many commentators have marvelled at the “elasticity” of tuition pricing wherever income contingent loans are available, particularly in the wake of the unprecedented tuition hikes of 2010 in the United Kingdom. But in the Australian Universities’ Review, Emory McLendon (1997) posited a persuasive explanation for the ease with which students transitioning from high school to university accept the prospect of deferred fees: “The key word is deferred and the key factor is being 18 years old. […] A young student would tend to view the deferred payment of HECS in a similar light as a superannuation payout. It is simply too far into the future to be of great concern.”

Rachel Wenstone, vice-president of the UK National Union of Students suggests another explanation for demand-side price elasticity and “increased participation”, even in the face of the 2010 tripling of tuition fees: “With more than a million young people unemployed in the UK, some may feel like their options are somewhat limited and that choosing a situation which involves huge debt is the only way to enhance their employment options.” (Garner, 2013).

Nonetheless, consensus on tuition price elasticity is far from universal. In response to sectoral labour market shortages in the mid-nineties, the incoming Howard government introduced a tiered fee structure, with the intention that the price differential between disciplines would offer an incentive for students to enter those professions with the greatest demand for new skilled labour. Bruce Chapman was appalled. Recall that his scheme was designed to recoup the cost of higher education along economically rational, user-pays, free market lines. In his eyes, these changes were “not coherent, nor […] based on a well-defined set of economic principles” and charging inexpensively-trained lawyers more than expensively-trained nurses was “arguably poor economics” (Chapman & Nicholls, 2013). A genuine free market ideologue would sit back and allow the wages of nurses to rise in response to demand. Of course, to the nominal free market ideologues in government, the overriding principle is that free markets are fine for the plebs, but when the interests of employers are threatened, the free market can go fly a kite. Chapman clearly missed the memo.

While proponents of a commercialised higher education system point to growing participation rates in recent decades as a measure of its beneficial effects (at least on employment prospects), it is far from clear whether and to what degree this is the case. Longitudinal studies of the long-term effects of university study on either the individual or society are virtually impossible to use as a basis for policy prescription when the university is in a state of constant crisis and reinvention. The benefits that have accrued to the graduate of a generation ago cannot reasonably be assumed to apply to the graduate of today’s radically changed system.

To anybody involved in higher education prior to the reintroduction of tuition fees, the suggestion that one might attain a Bachelor of Business in Convention and Event Management, that economics would be taught as a component of business studies rather than vice versa, or that publicly funded universities would be teaching rank pseudoscience, would be considered laughable. However vocationalism and a business-centric view of the world is a logical consequence of user-pays tuition with a primary focus on financial return on a student’s “investment”.

Outside the small number of elite institutions that carry on the task of educating a privileged few, the majority of universities have embraced the pursuit of the “three Ms” of New Public Management (NPM): markets, management, and measurement. Lee Parker (2013) identifies this as “a clear example of goal displacement, whereby the financial resourcing of university missions and operations has become the end in itself.” Far from freeing each university to develop a unique character, and providing incentives for higher education to diversify and specialise, the result of commercialisation is quite the opposite. “Operating in a global marketplace and reflecting NPM, universities inevitably converge, presenting often-times homogeneous brands, missions, product and service offerings, and general organisational profiles.” (Parker, 2013)

Even so, you may ask, isn’t it undeniable that student-consumers are indeed “voting with their feet”, and that there must be some degree of declining demand behind the oft-repeated claim that there is a “crisis in the humanities”? As noted above, the apples vs. oranges obstacle to meaningful comparison of today’s universities to those of a generation ago makes quantifying any such effect problematic, and formal research with the aim of critically evaluating this contention is thin on the ground. American statistician Nate Silver recently dipped his toe into the quagmire and has tentatively concluded that “the relative decline of majors like English is modest when accounting for the increased propensity of Americans to go to college. In fact, the number of new degrees in English is fairly similar to what it has been for most of the last 20 years as a share of the college-age population.” (Silver, 2013). While this may be seen as some comfort to proponents of traditional academia, the more troubling corollary of this observation is that it seems quite likely that the liberal (indeed liberating) education that one would have expected to receive at university a generation ago remains just as much the preserve of elites as ever.

That the much-lauded increased participation in higher education, and avowed concern for students of “low socioeconomic status” (SES), is principally directed towards addressing the skilled labour requirements of industry brings to mind an adage from Earl Shorris, founder of the Clemente Course in the Humanities: “the poor are so often mobilized and so rarely politicized.” (Shorris, 1997). As Noam Chomsky notes, self-funded education is “one important way to implement the policy of indoctrination of the young. People who are in a debt trap have very few options.” (Chomsky, 2011). The combination of tuition fees and student loans effectively serves as a sin tax on the kind of education that produces politically empowered human beings rather than docile employees.

References

• Bady, A. (2013). The MOOC Moment and the End of Reform. Retrieved from http://thenewinquiry.com/blogs/zunguzungu/the-mooc-moment-and-the-end-of-reform/
• Chapman, B. (1997). Conceptual issues and the Australian experience with income contingent charges for higher education. The Economic Journal, 107, 738–751.
• Chapman, B., Nicholls, J. (2013) Higher Education Contribution Scheme (HECS). Asia and the Pacific Policy Studies (APPS) Working Paper Series 02/2013, May 2013.
• Chomsky, N. (2011). Academic Freedom and the Corporatization of Universities. [Lecture transcript]. University of Toronto, Scarborough, April 6, 2011. Retrieved from http://chomsky.info/talks/20110406.htm
• Garner, R. (2013). Tuition fees no object: Record numbers of students enrol at UK universities. The Independent. Retrieved from http://www.independent.co.uk/student/news/tuition-fees-no-object-record-numbers-of-students-enrol-at-uk-universities-9013696.html
• Marginson, S. (2013) Labor’s failure to ground public funding. Tertiary Education Policy in Australia. Centre for the study of Higher education, University of Melbourne.
• McLendon, E. (1997). HECS and the farmer’s son. Australian Universities' Review, 20(1), 4.
• Monbiot, G. (2013). The Self-Hating State. Retrieved from  http://www.monbiot.com/2013/04/22/the-self-hating-state/
• Parker, L. D. (2012). From Privatised to Hybrid Corporatised Higher Education: A Global Financial Management Discourse. Financial Accountability & Management, 28(3), August 2012, 0267-4424
• Shorris, E. (1997). As a weapon in the hands of the restless poor. (On the Uses of a Liberal Education). Retrieved from  http://clementecourse.org/docs/restlesspoor.pdf
• Silver, N. (2013). As More Attend College, Majors Become More Career-Focused. New York Times. Retrieved from http://fivethirtyeight.blogs.nytimes.com/2013/06/25/as-more-attend-college-majors-become-more-career-focused/?partner=rss&emc=rss
• Streak, D. (2013). Speakers' comments from regional universities conference. Retrieved from http://www.run.edu.au/cb_pages/news/conference_speakers_comments.php
• University of New England. (2013). UNE unbundles Student Services and Amenities Fee. Retrieved from http://blog.une.edu.au/news/2013/12/06/une-unbundles-student-services-and-amenities-fee/

This week, I have entirely caught up on 2015! Next week will be January and February 2016, before uni starts the week after.

• ‘On the first day of Christmas, my true love gave to me’ … a bunch of econ charts! — Jared Bernstein and Ben Spielberg in the Washington Post. My pick of these:
  
• The Melting Away of North Atlantic Social Democracy — Brad DeLong in Talking Points Memo: Supply-and-demand tells us that when the economy's wealth-to-annual income ratio varies, the rate of profit should vary in the opposite direction. But history tells us that the rate of profit sticks at 5% per year, across eras with very different wealth-to-annual-income ratios. Piketty, however, does not tell us why. Perhaps this is because at a technological level capital does not empower and complement but rather competes with and thus substitutes for labor. Perhaps this is because of successful rent-seeking by the rich who control the government and get it to award them monopoly rents. Perhaps it is because of a social structure that leaves wealth holders believing that a 5% per year is the "fair" rate of profit and are unwilling to underbid each other.
• The road to the workhouse — Frances Coppola is rightly outraged by punitive sanctions imposed on UK benefit claimants: The workhouse ethic was that work is a moral imperative: people who have no work are morally defective and must be forced to work as a "correction". If they refuse to work, they must be severely punished. The DWP's sanctions regime looks uncomfortably similar. The sick, disabled, mentally ill and unemployed are treated like criminals even though they have committed no crime. A strict penal regime is imposed on them, with extremely harsh punishments for minor transgressions of unfair and arbitrary rules. These punishments affect not only their own health but the health of those dependent on them. Not unlike workhouses, really.
• AIPE: 8000 students in limbo as Sydney college has its registration cancelled — Eryk Bagshaw, Sydney Morning Herald: A former student of the college, Helen Fielding, told Fairfax Media she was coached over the phone by agents to sign up for a $19,600 diploma of Human Resources Management. The 21-year-old grew up in foster care and has an obvious intellectual disability. "I'm not good at reading," she said at her housing commission flat outside Newcastle.
• Home is where the cartel is — Steve Randy Waldman: If you buy a home in San Francisco today, the last thing you want to happen is for the housing affordability problem to be solved next year. If apartment prices become reasonable, you’d find yourself with a huge financial loss and an underwater mortgage. […] High rents are like poverty at the Brookings Institution, a problem we claim we desperately want to solve but don’t really want to solve because the things we would have to do to solve it would be costly and disruptive to the people whose interests get termed “we” in a sentence like this one.
• The Sneaky Way Austerity Got Sold to the Public Like Snake Oil — Lynn Parramore of the Institute for New Economic Thinking interviews Orsola Costantini of same: How do we stop powerful players from co-opting economics and budgets for their own purposes? Our education system is increasingly unequal and deprived of public resources. This is true in the U.S. but also in Europe, where the crisis accelerated a process that was already underway. When children don’t get good educations, the production of knowledge falls into private control. Power gets consolidated. The official theoretical frameworks that benefit the most powerful get locked in.
• Why Philanthropy Actually Hurts Rather Than Helps Some of the World’s Worst Problems — George Joseph, In These Times: Zuckerberg can legally offer the bulk of his "philanthropy" to any for-profit recipients he wants and still receive public acclaim for "gifting" his fortune. We're seeing the rise of a new, horizontal philanthropy - the rich giving directly to the rich - at a level that's completely unprecedented.
• It's official — benefits and high taxes make us all richer, while inequality takes a hammer to a country's growth — Lee Williams, the Independent: Thanks to the OECD report, we find that the very thing that the sacrifices of austerity were made to preserve – the growth of the economy – is the very thing they are destroying. Neo-liberal, laissez-faire capitalism extends inequality, we already knew that. But now we have the evidence that inequality harms, rather than encourages growth.
• 'Free Basics' Will Take Away More Than Our Right to the Internet — Vandana Shiva, Common Dreams: The Monsanto-Facebook connection is a deep one. The top 12 investors in Monsanto are the same as the top 12 investors in Facebook, including the Vanguard Group. The Vanguard Group is also a top investor in John Deere, Monsanto’s new partner for ‘smart tractors’, bringing all food production and consumption, from seed to data, under the control of a handful of investors. […] Smart Tractors from John Deere, used on farms growing patented Monsanto seed, sprayed and damaged using Bayer chemicals, with soil and climate data owned and sold by Monsanto, beamed to the farmer’s cellphone from Reliance, logged in as your Facebook profile, on land owned by The Vanguard Group. Every step of every process right up until the point you pick something up off a supermarket shelf will be determined by the interests of the same shareholders. More here.
• Why Are Universities Fighting Open Education? — Elliot Harmon at Common Dreams: Though universities tout [patented] technology transfer as a way to fund further education and research, the reality is that the majority of tech transfer offices lose money for their schools. At most universities, the tech transfer office locks up knowledge and innovation, further expands the administration (in a sector that has seen massive growth in administrative jobs while academic hiring remains flat), and then loses money.

This week, I have been mostly reading:

• The Guantánamo in New York You’re Not Allowed to Know About — Arun Kundnani, The Intercept: Mahdi Hashi, a young man of Somali origin who grew up in London, had never been to the United States before he was imprisoned in the 10-South wing of the Metropolitan Correctional Center in lower Manhattan in November 2012, when he was 23. For over three years, he has been confined to a small cell 23 hours a day without natural light, with an hour alone in a slightly larger indoor cage. He has had no physical contact with anyone. Apart from occasional visits by his lawyer, his human interaction has been limited to brief, transactional exchanges with guards and a monthly 30-minute phone call with his family.
• Full employment is a tenet of classic social democracy – but is it still applicable? — Nick Srnicek and Alex Williams in the New Statesman: While Jeremy Corbyn’s opponents have presented him as a throwback to an old-left style of politics, in fact he has been the only one to recognise the changed realities of the UK in the 21st century. Creating a mental health position in his shadow cabinet, questioning the utility of the Trident nuclear programme and NATO, calling for social support for the self-employed – all these reveal a politics that is very aware of contemporary Britain and its discontents. Meanwhile, his opponents’ prevailing thinking appears mired in the past: a cold-war fascination with obsolete security communities, fond nostalgia for the 1990s, and increasingly punitive attempts to create good workers when good jobs no longer exist.
• Trying to simulate the human brain is a waste of energy — Peter Hankins in Aeon: It’s as though we decided to build a Tardis immediately, on the basis of the knowledge we have about it now – call it the ‘Blue Box’ project. We know it’s blue, squarish, probably uses electricity for some purposes, makes a whooshy noise, travels in time and is bigger on the inside; let’s get started! Of course, we have no idea how the last two things (the time travel and the strange geometry) are done, but then the brain also does things – subjective experience, intentionality, personhood, to name three – that currently seem to be beyond the reach of either science or philosophy.
• The Basic Income Guarantee: what stands in its way? — Tom Streithorst guestblogging for Frances Coppola: Fear of scarcity is built into our DNA. For the Basic Income Guarantee to seem viable for most people, they need to learn that demand, not supply, is the bottleneck of growth. We need to recognise that money is something humans create, not something with fixed and limited supply. With Quantitative Easing, central banks created money and gave it to the financial sector, hoping it would stimulate lending. Today, even mainstream figures like Lord Adair Turner, Martin Wolf and even Ben Bernanke recognize that “helicopter drops” of money into individuals’ bank accounts could have been more effective. Technocrats are beginning to recognise the practicality of Basic Income. […] The Basic Income Guarantee solves the problem of demand, stimulates the economy, increases corporate profits, gives workers more freedom, and provides a safety net to the most vulnerable. It is economically sound and politically savvy. But the very rich don’t fear unemployment, they fear redistribution and they will be the most significant force against the implementation of the Basic Income Guarantee.
• The Fed Raises Rates--by Paying the Banks — Marty Wolfson in Dollars & Sense: Under current Chair Janet Yellen, the Federal Reserve has shown a genuine concern about unemployment, but it is still trapped in its assumptions: There is a “maximum feasible” level of employment. Above that level (or below the corresponding rate of unemployment) inflation will exceed its 2% target. The conclusion from these assumptions is that the Fed should raise interest rates to prevent employment from exceeding the “maximum feasible” level. Instead, the Fed should adopt a real full- employment target: a job for everyone who wants to work. It should adopt a “minimum feasible” target for inflation: the lowest possible rate compatible with full employment. We need a policy perspective in which economic justice for workers is a higher priority than paying the banks.
• Working Paper: The Upward Redistribution of Income: Are Rents the Story? — Dean Baker from CEPR says yes: This paper argues that the bulk of this upward redistribution comes from the growth of rents in the economy in four major areas: patent and copyright protection, the financial sector, the pay of CEOs and other top executives, and protectionist measures that have boosted the pay of doctors and other highly educated professionals. The argument on rents is important because, if correct, it means that there is nothing intrinsic to capitalism that led to this rapid rise in inequality, as for example argued by Thomas Piketty.
• Good things happen at full employment — Jared Bernstein in the Washington Post: Dean Baker and I have long contended that at full employment, pressures from labor costs […] mean that firms either have to find new efficiencies, raise prices or start cutting into profit margins. Since they’d generally rather avoid the latter two, full employment can lead to higher productivity growth.
• A Missed Opportunity of Ultra-Cheap Money — Peter Eavis, NYT: [William A. Galston, a former adviser to President Bill Clinton and now a senior fellow at the Brookings Institution] in particular lamented the failure to set up a government-backed infrastructure bank in recent years. “This will go down as one of the great missed opportunities,” he said. Public investment spending as a share of overall economic activity has fallen to lows not seen since the 1940s, according to an analysis by James W. Paulsen of Wells Capital Management.
• Beyond social mobility — Chris Dillow: A simple thought experiment will tell us that social mobility is nothing like sufficient. Imagine a dictator were to imprison his people, but offer guard jobs to those who passed exams, and well-paid sinecures to those who did especially well. We'd have social mobility - even meritocracy and equality of opportunity. But we wouldn't have justice, freedom or a good society. They all require that the prisons be torn down.
• CEO pay still out of control and diverging again from workers’ earnings — Bill Mitchell: Two things caught my attention among other things last week. The Australian Tax Office (ATO) released the – 2013-14 Report of Entity Tax Information – which tells us about the total income and tax payable was for 2013-14 tax year for 1539 Australian and foreign companies operating in Australia with incomes above $A100 million. The rather startling revelation is that 579 of the largest Australian companies including Qantas did not pay any tax at all in that financial year. The second (unrelated but pertinent) report was released last week by the British Chartered Institute of Personnel and Development (CIPD) – The power and pitfalls of executive reward: a behavioural perspective – which found that the increasing gap between British CEO earnings and their employees is unrelated to company performance and reflects “self-serving tendencies”.
• Dear Parents: Everything You Need to Know About Your Son and Daughter’s University But Don’t — Ron Srigley in the Los Angeles Review of Books: First, [sessional contract staff] are not scholars but employees. They think of administrators as people they work for rather than people who work for them by supporting their teaching and research. Second, they are vulnerable and therefore remain mostly silent about critical matters. If a sessional instructor complains publicly about her institution or its declining standards, she will do so only once. […] Finally, the very act of employing, empowering, and often elevating such people denigrates real scholars and scholarship by definition. If a person who knows next to nothing of what you know can do what you do just as well as you do it, then what is the value of what you know?
• Finland's hugely exciting experiment in basic income, explained — Dylan Matthews in Vox: The idea is to see what happens to a community under a basic income, rather than just to individual people. Having a whole town get benefits could have cascading effects as households escape poverty, as some people use the income guarantee as insurance so they can take risks and form companies, as universities see increased enrollment from people better able to afford supplies, etc. "If people in a smaller area are getting the benefits, their behavior vis-a-vis other people will change, employers and employees will change their behavior, encounters between clients and their street-level bureaucrats (social workers, employment offices, etc.) will change, and the interplay between different bureaucracies will change," Kangas says.
• Love from mom and dad … but who gains from Mark Zuckerberg’s $45bn gift? — Linsey McGoey in the Guardian: As if sensing that our newfound effervescence had fizzled rather abruptly, a crack team of management scholars and business journalists took up arms, manning airwaves and TV stations and the open-planned domiciles of new media startups funded by tech entrepreneurs based in Hawaii – and tried to cheer us with a single message. You’re right, they conceded. It’s not charity. But here’s the thing: it’s better than charity. It’s a new, radical movement that we like to call “philanthrocapitalism” – and it’s going to make you all rich. How, you might ask? By giving more philanthropy to the wealthy.
• The IMF Changes its Rules to Isolate China and Russia — Michael Hudson: A nightmare scenario of U.S. geopolitical strategists is coming true: foreign independence from U.S.-centered financial and diplomatic control. China and Russia are investing in neighboring economies on terms that cement Eurasian integration on the basis of financing in their own currencies and favoring their own exports. They also have created the Shanghai Cooperation Organization (SCO) as an alternative military alliance to NATO. And the Asian Infrastructure Investment Bank (AIIB) threatens to replace the IMF and World Bank tandem in which the United States holds unique veto power.
• The world of threats to the US is an illusion — Stephen Kinzer in the Boston Globe: I recently asked a United States Navy officer what threats he believed the United States might confront in the future. To my astonishment, he answered, “Venezuela.” The South American country is in political crisis and careening toward bankruptcy. Its combat navy counts six frigates and two submarines, none of them seaworthy. Yet last month President Obama designated Venezuela an “extraordinary threat to US national security.” The search for enemies can lead to odd places.
• Piketty and the Australian exception — John Quiggin at Crooked Timber: Australia’s relatively equal distribution of income and wealth depends on a history of strong employment growth and a redistributive tax–welfare system. Neither can be taken for granted. […] The move towards a patrimonial society already happening in the US is evident at the very top of the Australian income distribution. As in the US, the claim that the rich are mostly self-made is already dubious, and will soon be clearly false. Of the top 10 people on the Business Review Weekly (BRW) rich list, four inherited their wealth, including the top three. Two more are in their 80s, part of the talented generation of Jewish refugees who came to Australia and prospered in the years after World War II. When these two pass on, the rich list will be dominated by heirs, not founders.