Tag Archives: economics: capitalism

Overwork And Its Costs: The U.S. in International Perspective

On average, U.S. workers with jobs put in more hours per year  than workers in most OECD countries. In 2012, only Greece, Hungary, Israel, Korea, and Turkey recorded a longer work year per employed person.

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A long work year is nothing to celebrate. The following chart, from the same Economist article, shows there is a strong negative correlation between yearly hours worked and hourly productivity.

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More importantly, the greater the number of hours worked per year, the greater the likelihood of premature death and poor quality of life.  This reality is highlighted in the following two charts taken from an article by Angus Chen titled “8 Charts to Show Your Boss to Prove That You Can Do More By Working Less.”

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In sum, we need to pay far more attention to the organization and distribution of work, not to mention its remuneration and purpose, than we currently do.

Martin Hart-Landsberg is a professor of economics at Lewis and Clark College. You can follow him at Reports from the Economic Front.

Why Income Inequality Will Likely Keep Getting Worse

Thomas Piketty has just published a massive new book tackling the explosive growth in income inequality.  Here’s what it looked like in Europe and the United States in 2010 (source):
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A New York Times review of the book, Capital in the Twenty-First Centurybegins as follows:

What if inequality were to continue growing years or decades into the future? Say the richest 1 percent of the population amassed a quarter of the nation’s income, up from about a fifth today. What about half?

To believe Thomas Piketty of the Paris School of Economics, this future is not just possible. It is likely…

His most startling news is that the belief that inequality will eventually stabilize and subside on its own, a long-held tenet of free market capitalism, is wrong. Rather, the economic forces concentrating more and more wealth into the hands of the fortunate few are almost sure to prevail for a very long time.

Piketty’s pessimistic view is based on his argument that income generated from capital normally grows faster than the economy or income from wages.  This means that the private owners of capital benefit disproportionately from growth, which makes it easier for them to increase their asset holdings and by extension future income.  And, since wealth and income translate into political power, we face a self-reinforcing dynamic leading to ever growing inequality.

This suggests that embracing a system based on maximizing the returns to private owners of capital is a mistake for the great majority of working people. A recent study by the investment bank Credit Suisse provides more evidence for this conclusion.  As Michael Burke explains,

The study… shows that long-term growth rates of GDP in selected industrialized economies are negatively correlated with financial returns to shareholders.

That is, the best returns for shareholders are from countries where GDP growth has been slowest, and vice versa. Where growth has been strongest, shareholder returns are weakest…

The negative correlation [seen in the chart below] does not prove negative causality. But it does support the theory which suggests that the interests of shareholders are contrary to the interests of economic growth and the well-being of the population.

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All this information is worth keeping in mind the next time business and political leaders tell us that the key to our well-being is boosting business confidence, the market, or private returns on investment.

Cross-posted at Reports from the Economic Front.

Martin Hart-Landsberg is a professor of economics at Lewis and Clark College. You can follow him at Reports from the Economic Front.

Is Massive Financial Risk the New Recipe for Success?

Do Millennials really carry more debt than their parents and grandparents did at their age? Yes, according to a new study by sociologist Jason Houle.  ”In order to participate in society and gain economic independence,” he writes, “many young adults today must take a massive financial risk.”  Or, as he puts it, “out of the nest and into the red.”

The graph below compares the amount of debt held by three generations in young adulthood (adjusted for inflation and controlled for other variables). Notice that the median debt load has grown, but the average debt load has grown much faster. This means that, while debt has grown over all, averages are also pulled up by a small number of young people that have really high levels.

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Some evidence suggests that high debt individuals may be coming from lower income families. They take on debt as young people because the adults in their lives have already maxed out. They can’t count on their parents, for example, to take out a second mortgage on the house in order to pay for their college education. So, if they want to go to college, they have to take on the debt themselves.

Houle’s analysis, however, also shows that the kind of debt has changed across the three generations. The pie charts below reveal that the proportion of debt accounted for by home or car loans has shrunk, while the proportion accounted for by education loans and unsecured debt, like credit cards, has risen.

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Moreover, Houle argues that this profile of generation Y’s debt is class specific:

The more advantaged are able to take on debt that helps them pursue a middle class lifestyle and build their wealth, while the less advantaged must take on debt to pay their bills and keep their heads above water.

So, is massive financial risk the new recipe for success?

For some, the answer may be yes. But for many, the gamble does not pay off. Students that take out college loans, for example, are more likely to drop out of college than those who have a parent that can pay. The combination of school loans and minimum-wage jobs can add up to a lifetime of economic insecurity. But, without other resources, not risking at all almost guarantees failure in this economy.  For this reason, Houle argues, the availability of credit and acquisition of debt may be just another driver of income and wealth inequality.  It’s a disturbing story that you can read in more depth here.

Lisa Wade is a professor of sociology at Occidental College and the author of Gender: Ideas, Interactions, Institutions, with Myra Marx Ferree. You can follow her on Twitter and Facebook.

Gillette, Stymied by Beards, Heads South

I always love a good behind-the-scenes marketing story and last month NPR reported that Proctor & Gamble is facing falling men’s razor sales as beards have become more fashionable.  Their response?  To put more pressure on men to shave other parts of their bodies.

Always a glutton for punishment, I set out to discover just how they were going to try to convince men to do this… and I was not disappointed.

Gillette has hired models to convince men to shave, well, their whole body.  A slightly longer ad featuring three of them begins with the question, “What do you say to a guy who grooms everything?”  To which they answer, “Yaaaaaaay!”  No really.

This is the sexual objectification of male bodies.  The use of threats like “you’ll be disgusting to women if you don’t do what we say” is a form of social control.   One point for capitalism over its long-enduring opponent in the male hygiene and grooming market: gender ideology.

Cross-posted at BroadBlogs.

Lisa Wade is a professor of sociology at Occidental College and the author of Gender: Ideas, Interactions, Institutions, with Myra Marx Ferree. You can follow her on Twitter and Facebook.

“Businesses are Swimming in Money”: More Profit Protection Will Not End the Recession

One conventional explanation for our economic problems seems to be that our businesses are strapped for funds.  Greater business earnings, it is said, will translate into needed investment, employment, consumption and, finally, sustained economic recovery.  Thus, the preferred policy response: provide business with greater regulatory freedom and relief from high taxes and wages.

It is this view that underpins current business and government support for new corporate tax cuts and trade agreements designed to reduce government regulation of business activity, attacks on unions, and opposition to extending unemployment benefits and increasing the minimum wage.

One problem with this story is that businesses are already swimming in money and they haven’t shown the slightest inclination to use their funds for investment or employment.

The first chart below highlights the trend in free cash flow as a percentage of GDP.  Free cash flow is one way to represent business profits.  More specifically, it is a pretax measure of the money firms have after spending on wages and salaries, depreciation charges, amortization of past loans, and new investment.  As you can see that ratio remains at historic highs.  In short, business is certainly not short of money.

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So what are businesses doing with their funds?  The next chart looks at the ratio of net private nonresidential fixed investment to net domestic product (I use “net” rather than “gross” variables in order to focus on investment that goes beyond simply replacing worn out plant and equipment).  The ratio makes clear that one reason for the large cash flow is that businesses are not committed to new investment.  Indeed quite the opposite is true.

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Rather than invest in plant and equipment, businesses are primarily using their funds to repurchase their own stocks in order to boost management earnings and ward off hostile take-overs, pay dividends to stockholders, and accumulate large cash and bond holdings.

Cutting taxes, deregulation, attacking unions and slashing social programs will only intensify these very trends.  Time for a new understanding of our problems and a very new response to them.

Cross-posted at Reports from the Economic Front.

Martin Hart-Landsberg is a professor of economics at Lewis and Clark College. You can follow him at Reports from the Economic Front.

Opinions on Economic Inequality Driven by Ideology, not Income

A majority of both Democrats and Republicans believe that economic inequality in the U.S. has grown, but they disagree as to its causes and the best solutions, according to a new survey from the Pew Research Center.  While 61% of Republicans and 68% of Democrats say inequality has widened, only 45% of Republicans say that the government should do something about it, compared to 90% of Democrats.  A study using the General Social Survey has confirmed the findings.

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Republicans and Democrats also disagree about what the best interventions would be.  At least three-quarters of Democrats favor taxes on the wealthy and programs for the poor, but 65% of Republicans think that helping the poor does more harm than good.Screenshot (25)

The differences may be related to beliefs about the cause of poverty.  Republicans are much more likely to endorse an individualist explanation (e.g., people are poor because they are lazy), whereas Democrats are more likely to offer a structural explanation (e.g., it matters where in the class structure you begin and how we design the economic system).

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Interestingly, answers to these questions vary much more by political affiliation than social class.  Using data from the survey, I put together this table comparing the number of percentage points that separated the average answers to various questions.  On the left is the difference by political party and, on the right, income (click to enlarge).

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Clearly political affiliation drives opinions on the explanation for and right solutions to income inequality more so than income itself.

This is a great example of hegemony.  A hegemonic ideology is one that is widely supported, even by people who are clearly disadvantaged by it.  In this case, whatever you think of our economic system, it is pretty stunning that only there is only a six point gap between the percent of high income people saying it’s fair and the percent of low income people saying so.  That’s the power of ideology — in this case, political affiliation — to shape our view of the world, even going so far as to influence people to believe in and perhaps vote for policies that are not in their best interest.

Cross-posted at Pacific Standard.

Lisa Wade is a professor of sociology at Occidental College and the author of Gender: Ideas, Interactions, Institutions, with Myra Marx Ferree. You can follow her on Twitter and Facebook.

Teachers Offered Personal Loans to Buy School Supplies

If you’re looking for just one image that says a thousand words about what’s wrong with America, here’s a contender.  It is a screenshot of the website for the Silver State Schools Credit Union:

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Yep, it’s an invitation to K-12 teachers to go into debt to do their job.

Speechless.

Lisa Wade is a professor of sociology at Occidental College and the author of Gender: Ideas, Interactions, Institutions, with Myra Marx Ferree. You can follow her on Twitter and Facebook.

My Two Cents on Feminism and Miley Cyrus

We’re celebrating the end of the year with our most popular posts from 2013, plus a few of our favorites tossed in.  Enjoy!

Oddly, three high profile female musicians find themselves in a public debate about what it means to be a feminist.  We can thank Miley Cyrus for the occasion.  After claiming that the video for Wrecking Ball was inspired by Sinead O’Connor’s Nothing Compares to You, O’Connor wrote an open letter to the performer.  No doubt informed by Cyrus’ performance at the VMAs, she argued that the music industry would inevitably exploit Cyrus’ body and leave her a shell of a human being.  Amanda Palmer, another strong-minded female musician, responded to O’Connor.  She countered with the idea that all efforts to control women’s choices, no matter how benevolent, were anti-feminist.

I keep receiving requests to add my two cents.  So, here goes: I think they’re both right, but only half right.  And, when you put the two sides together, the conclusion isn’t as simple as either of them makes it out to be.  Both letters are kind, compelling, and smart, but neither capture the deep contradictions that Cyrus – indeed all women in the U.S. – face every day.

Cyrus in Wrecking Ball:

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O’Connor warns Cyrus that the music industry is patriarchal and capitalist.  In so many words, she explains that the capitalists will never pay Cyrus what she’s worth because doing so leaves nothing to skim off the top.  The whole point is to exploit her.  Meanwhile, her exploitation will be distinctly gendered because sexism is part of the very fabric of the industry.  O’Connor writes:

The music business doesn’t give a shit about you, or any of us. They will prostitute you for all you are worth… and when you end up in rehab as a result of being prostituted, “they” will be sunning themselves on their yachts in Antigua, which they bought by selling your body…

Whether Cyrus ends up in rehab remains to be seen but O’Connor is, of course, right about the music industry. This is not something that requires argumentation, but is simply true in a patriarchal, capitalist society.  For-profit industries are for profit.  You may think that’s good or bad, but it is, by definition, about finding ways to extract money from goods and services and one does that by selling it for more than you paid for it.  And media companies of all kinds are dominated at almost all levels by (rich, white) men. These are the facts.

Disagreeing, Palmer claims that O’Connor herself is contributing to an oppressive environment for women.  All women’s choices, Palmer argues, should be considered fair game.

I want to live in a world where WE as women determine what we wear and look like and play the game as our fancy leads us, army pants one minute and killer gown the next, where WE decide whether or not we’re going to play games with the male gaze…

In Palmer’s utopia, no one gets to decide what’s best for women.  The whole point is to have all options on the table, without censure, so women can pick and choose and change their mind as they so desire.

This is intuitively pleasing and seems to mesh pretty well with a decent definition of “freedom.”  And women do have more choices – many, many more choices – than recent generations of women. They are now free to vote in elections, wear pants, smoke in public, have their own bank accounts, play sports, go into men’s occupations and, yes, be unabashedly sexual.  Hell they can even run for President.  And they get to still do all the feminine stuff too!  Women have it pretty great right now and Palmer is right that we should defend these options.

So, both are making a feminist argument.  What, then, is the source of the disagreement?

O’Connor and Palmer are using different levels of analysis.  Palmer’s is straightforwardly individualistic: each individual woman should be able to choose what she wants to do.  O’Connor’s is strongly institutional: we are all operating within a system – the music industry, in this case, or even “society” – and that system is powerfully deterministic.

The truth is that both are right and, because of that, neither sees the whole picture.  On the one hand, women are making individual choices. They are not complete dupes of the system.  They are architects of their own lives.   On the other hand, those individual choices are being made within a system.  The system sets up the pros and cons, the rewards and punishments, the paths to success and the pitfalls that lead to failure.  No amount of wishing it were different will make it so.  No individual choices change that reality.

So, Cyrus may indeed be “in charge of her own show,” as Palmer puts it.  She may have chosen to be a “raging, naked, twerking sexpot” all of her own volition.  But why?  Because that’s what the system rewards.  That’s not freedom, that’s a strategy.

In sociological terms, we call this a patriarchal bargain.  Both men and women make them and they come in many different forms. Generally, however, they involve a choice to manipulate the system to one’s best advantage without challenging the system itself.  This may maximize the benefits that accrue to any individual woman, but it harms women as a whole.  Cyrus’ particular bargain – accepting the sexual objectification of women in exchange for money, fame, and power – is a common one.  Serena Williams, Tila Tequila, Kim Kardashian, and Lady Gaga do it too.

We are all Miley, though.  We all make patriarchal bargains, large and small.  Housewives do when they support husbands’ careers on the agreement that he share the dividends.  Many high-achieving women do when they go into masculinized occupations to reap the benefits, but don’t challenge the idea that occupations associated with men are of greater value.  None of us have the moral high ground here.

So, is Miley Cyrus a pawn of industry patriarchs?  No.  Can her choices be fairly described as good for women?  No.

That’s how power works. It makes it so that essentially all choices can be absorbed into and mobilized on behalf of the system.  Fighting the system on behalf of the disadvantaged – in this case, women – requires individual sacrifices that are extraordinarily costly.  In Cyrus’ case, perhaps being replaced by another artist who is willing to capitulate to patriarchy with more gusto.  Accepting the rules of the system translates into individual gain, but doesn’t exactly make the world a better place.  In Cyrus’ case, her success is also an affirmation that a woman’s worth is strongly correlated with her willingness to commodify her sexuality.

Americans want their stories to have happy endings.  I’m sorry I don’t have a more optimistic read.  If the way out of this conundrum were easy, we’d have fixed it already.  But one thing’s for sure: it’s going to take collective sacrifice to bring about a world in which women’s humanity is so taken-for-granted that no individual woman’s choices can undermine it.  To get there, we’re going to need to acknowledge the power of the system, recognize each other as conscious actors, and have empathy for the difficult choices we all make as we try to navigate a difficult world.

Cross-posted at Pacific Standard.

Lisa Wade is a professor of sociology at Occidental College and the author of Gender: Ideas, Interactions, Institutions, with Myra Marx Ferree. You can follow her on Twitter and Facebook.