economics: capitalism

Originally posted at Reports from the Economic Front.

Defenders of capitalism in the United States often choose not to use that term when naming our system, preferring instead the phrase “market system.”  Market system sounds so much better, evoking notions of fair and mutually beneficial trades, equality, and so on.  The use of that term draws attention away from the actual workings of our system.

In brief, capitalism is a system structured by the private ownership of productive assets and driven by the actions of those who seek to maximize the private profits of the owners.  Such an understanding immediately raises questions about how some people and not others come to own productive wealth and the broader social consequences of their pursuit of profit.

Those are important questions because it is increasingly apparent that while capitalism continues to produce substantial benefits for the largest asset owners, those benefits have increasingly been secured through the promotion of policies – globalization, financialization, privatization of state services, tax cuts, attacks on social programs and unions – that have both lowered overall growth and left large numbers of people barely holding the line, if not actually worse off.

The following two figures come from a Washington Post article by Jared Bernstein in which he summarizes the work of Thomas Piketty, Emmanuel Saez and Gabriel Zucman. The first set of bars shows the significant decline in US pre-tax income growth.  In the first period (1946-1980), pre-tax income grew by 95 percent.  In the second (1980-2014), it grew by only 61 percent.

This figure also shows that this slower pre-tax income growth has not been a problem for those at the top of the income distribution.  Those at the top more than compensated for the decline by capturing a far greater share of income growth than in the past.  In fact, those in the bottom 50 percent of the population gained almost nothing over the period 1980 to 2014.

The next figure helps us see that the growth in inequality has been far more damaging to the well-being of the bottom half than the slowdown in overall income growth.  As Bernstein explains:

The bottom [blue] line in the next figure shows actual pretax income for adults in the bottom half of the income scale. The top [red] line asks how these folks would have done if their income had grown at the average rate from the earlier, faster-growth period. The middle [green] line asks how they would have done if they experienced the slower, average growth of the post-1980 period.

The difference between the top two lines is the price these bottom-half adults paid because of slower growth. The larger gap between the middle and bottom line shows the price they paid from doing much worse than average, i.e., inequality… That explains about two-thirds of the difference in endpoints. Slower growth hurt these families’ income gains, but inequality hurt them more.

A New York Times analysis of pre-tax income distribution over the period 1974 to 2014 reinforces this conclusion about the importance of inequality.  As we can see in the figure below, the top 1 percent and bottom 50 percent have basically changed places in terms of their relative shares of national income.

The steady ratcheting down in majority well-being is perhaps best captured by studies designed to estimate the probability of children making more money than their parents, an outcome that was the expectation for many decades and that underpinned the notion of “the American dream.”

Such research is quite challenging, as David Leonhardt explains in a New York Times article, “because it requires tracking individual families over time rather than (as most economic statistics do) taking one-time snapshots of the country.”  However, thanks to newly accessible tax records that go back decades, economists have been able to estimate this probability and how it has changed over time.

Leonhardt summarizes the work of one of the most important recent studies, that done by economists associated with the Equality of Opportunity Project. In summary terms, those economists found that a child born into the average American household in 1940 had a 92 percent chance of making more than their parents.  This falls to 79 percent for a child born in 1950, 62 percent for a child born in 1960, 61 percent for a child born in 1970, and only 50 percent for a child born in 1980.

The figure below provides a more detailed look at the declining fortunes of most Americans.   The horizontal access shows the income percentile a child is born into and the vertical access shows the probability of that child earning more than their parents.   The drop-off for children born in 1960 and 1970 compared to the earlier decade is significant and is likely the result of the beginning effects of the changes in capitalist economic dynamics that started gathering force in the late 1970s, for example globalization, privatization, tax cuts, union busting, etc.  The further drop-off for children born in 1980 speaks to the strengthening and consolidation of those dynamics.

The income trends highlighted in the figures above are clear and significant, and they point to the conclusion that unless we radically transform our capitalist system, which will require building a movement capable of challenging and overcoming the power of those who own and direct our economic processes, working people in the United States face the likelihood of an ever-worsening future.

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

Late last year Covergirl announced a new spokesmodel, a 17-year-old named James Charles. Their Instagram announcement currently boasts over 53,000 likes, though the comments on the post were decidedly mixed. They ranged from “I will never buy another (coverGIRL) because of this” to  “love love love” and “the world is coming to equality and acceptingness.”

Meet @JamesCharles: makeup artist, boundary breaker, and the newest COVERGIRL! Spread the word by regramming using #COVERGIRLJames.

A photo posted by COVERGIRL (@covergirl) on Oct 11, 2016 at 7:03am PDT

In my circles, the overwhelming response was enthusiasm. Charles’ ascendance to Covergirl status was evidence that gender flexibility was going mainstream. And, I suppose it is.

I am always suspicious, though, of corporate motives. Covergirl’s decision to feature Charles does serve to break down the gender binary, but it does other things, too. Most notably, if makeup companies could convince boys and men that their product is as essential for them as it is for girls and women, it would literally double the size of their market.

That this hasn’t happened yet, in fact, is evidence of the triumph of gender ideology over capitalism. Either companies have decided that there’s (almost) no market in men or men have resisted what marketing has been applied. It’s an impressive resistance to what seems like an obvious expansion. There’s just no money in men thinking their faces look just fine as they are; the fact that we’ve allowed them to do so thus far is actually pretty surprising when you think about it.

If Covergirl had its way, though, I have no doubt that it would make every 17-year-old boy in America into a James Charles. Such a change would contribute to breaking down the gender binary, at least as we know it (though no doubt there are more and less feminist ways of doing this). Of course, if it was advantageous to do so, Covergirl would claim that it had something to do with feminism. But, I wouldn’t buy it.

Lisa Wade, PhD is an Associate Professor at Tulane University. She is the author of American Hookup, a book about college sexual culture; a textbook about gender; and a forthcoming introductory text: Terrible Magnificent Sociology. You can follow her on Twitter and Instagram.

Last month one media behemoth, AT&T, stated it would purchase another, Time Warner, for $85.4 million. AT&T provides a telecommunications service, while Time Warner provides content. The merger represents just one more step in decades of media consolidation, the placing of control over media and media provision into fewer and fewer hands. This graphic, from the Wall Street Journal, illustrates the history of mergers for the latest companies to propose a merger:

The purchase raises several issues regarding consumer protections – particularly over privacy, competition, price hikes, and monopoly power in certain markets – and one of these is related to race.

A third of the American population identifies as Latino, African American, Asian American, and Native American, yet members of these groups own only 5% of television stations and 7% of radio stations. Large-scale mergers like the proposed one between AT&T and Time Warner exacerbate this exclusion. Minority-owned media companies tend to be smaller and mergers make it even harder to compete with larger and larger media conglomerates. As a result, minority-owned companies close or are sold and the barriers to entry get raised as well. The research is clear: media consolidation is bad for media diversity.

After the #OscarsSoWhite controversy, the Academy of Motion Picture Arts and Sciences committed to increasing diversity on screen and technology companies have vowed to increase their workforce diversity, but such commitments have done relatively little to improve representation. Such “gentlemen’s agreements” are largely voluntary and are mostly false promises for communities of color.

Advocacy groups and federal authorities should not rely on Memorandum of Understandings to advance inclusion goals. When the AT&T/Time Warner deal gets to the Federal Communications Commission, scrutiny in the name of “public interest” should include the issue of minorities’ inclusion in both the media and technology industries. As a diverse nation struggling with ongoing racial injustices, leaving underrepresented communities out of media merger debates is a disservice not only to those communities, but to us all.

Jason A. Smith is a PhD candidate in the Public Sociology program at George Mason University. His research focuses on race and the media. He recently co-edited the book Race and Contention in Twenty-first Century U.S. Media (Routledge, 2016). He tweets occasionally.

Flashback Friday.

Previously marketed to women, skin lightening, bleaching, and “fairness” creams are being newly marketed to men.  The introduction of a Facebook application has triggered a wave of commentary among American journalists and bloggers.  The application, launched by Vaseline and aimed at men in India, smoothes out blotches and lightens the overall skin color of your profile photo, allowing men to present a more “radiant” face to their friends.

The U.S. commentary involves a great deal of hand-wringing over Indian preference for light skin and the lengths to which even men will go to get a few shades lighter.  Indians, it is claimed, have a preference for light skin because skin color and caste are connected in the Indian imagination.  Dating and career success, they say further, are linked to skin color.  Perhaps, these sources admit, colorism in India is related to British colonialism and the importation of a color-based hierarchy; but that was then and, today, India embraces prejudice against dark-skinned people, thereby creating a market for these unsavory products.

The obsession with light skin, however, cannot be solely blamed on insecure individuals or a now internalized colorism imported from elsewhere a long time ago.  Instead, a preference for white skin is being cultivated, today, by corporations seeking profit.  Sociologist Evelyn Nakano Glenn documents the global business of skin lightening in her article, Yearning for Lightness.  She argues that interest in the products is rising, especially in places where “…the influence of Western capitalism and culture are most prominent.”  The success of these products, then, “cannot be seen as simply a legacy of colonialism.”  Instead, it is being actively produced by giant multinational companies today.

The Facebook application is one example of this phenomenon.  It does not simply reflect an interest in lighter skin; it very deliberately tells users that they need to “be prepared” to make a first impression and makes it very clear that skin blotches and overall darkness is undesirable and smooth, light-colored skin is ideal.  Marketing for skin lightening products not only suggests that light skin is more attractive, it also links light skin to career success, overall upward mobility, and Westernization.  Some advertising, for example, overtly links dark skin with saris and unemployment for women, while linking light skin with Western clothes and a career.

The desire for light skin, then, isn’t an “Indian problem” for which they should be entirely blamed. It is being encouraged by corporations who stand to profit from color-based anxieties that are overtly tied to the supposed superiority of Western culture.  These corporations, it stands to be noted, are not Indian.  They are largely Western: L’Oreal and Unilever are two of the biggest companies.  The supposedly Indian preference for light skin, then, is being stoked and manufactured by companies based in countries populated primarily by light-skinned people.  As Glenn explains, “Such advertisements can be seen as not simply responding to a preexisting need but actually creating a need by depicting having dark skin as a painful and depressing experience.”

Before pitying Indian seekers of light-skin, condemning the nation for colorism, or gently shaking our heads over the legacies of colonialism, we should consider how ongoing Western cultural dominance (that is, racism and colorism in the West today) and capitalist economic penetration (that is, profit through the cultivation of insecurities around the world) contributes to the global market in skin lightening products.

Originally posted in 2010; crossposted at BlogHer.

Lisa Wade, PhD is an Associate Professor at Tulane University. She is the author of American Hookup, a book about college sexual culture; a textbook about gender; and a forthcoming introductory text: Terrible Magnificent Sociology. You can follow her on Twitter and Instagram.

It’s all harmless political shenanigans until a racist mob murders Vincent Chin.

It’s amazing how the new figureheads of both major parties are now pretending to oppose globalization, outsourcing, and the corporate “free trade” agenda that they both have spent their professional lives furthering. It wasn’t long ago that I taught in my stratification class that this agenda was the one thing we could be sure both parties and the big money behind them wouldn’t give up. Never say never, but I’m still pretty sure that’s still true.

There are humans that are hurt by this agenda, but most of them aren’t Americans. If politicians want to talk about slave labor, exploitation, and environmental degradation in the new manufacturing centers of the world, then I would be happy to listen to them talk about the harmful effects of those practices “here at home” too. But if they just want to bash China, then that’s racist, and no thank you.

Case in point, Pennsylvania Senator Bob Casey at the Democratic National Convention the other day. Here’s his speech, followed by some of the text and my comments:

Casey quoted his father, the former governor:

The sweat and blood of working men and women who built Pennsylvania forged the industrial revolution in our country, and outproduced the world.

How touching, attributing the industrial revolution the efforts of the working class and not the capitalists. It reminds me of when another Pennsylvania governor, Democrat Robert Pattison, reached across the aisle, helping out Republican industrialists by lending them the National Guard to attack striking steelworkers.

I assume today’s Democratic politician will now go on to recognize the working class of today’s manufacturing centers, who, through their sweat and blood, are outproducing the world and building the middle class in their countries. Oh right, Senator Casey is an American.

What about Donald Trump? Donald trump says he stands for workers, and that he’ll put American first, but that’s not how he’s conducted himself in business. Where are his, quote, tremendous products made? Dress shirts: Bangladesh. Furniture: Turkey. Picture frames: India. Wine glasses: Slovenia. Neckties: China. China! Why would Donald Trump make products in every corner of the world, but not in Altoona, Erie, or here in Philadelphia? Well, this is what he said, quote, outsourcing is not always a terrible thing. Wages in America quote, are too high. And then he complained about companies moving jobs overseas because, quote, we don’t make things anymore. Really? … [examples of stuff made in America]. Donald Trump hasn’t made a thing in his life, except a buck on the backs of working people. If he is a champion of working people, I’m the starting center for the 76ers! The man who wants to make America great, doesn’t make anything in America! If you believe that outsourcing has been good for working people, and has raised incomes for the middle class, then you should vote for Donald Trump. … We need to making good paying jobs for everyone here at home, so that everyone who works hard can get ahead and stay there.

The great conflict of our time is between “China” and “working people”? Maybe we should all link arms and together put down striking Chinese workers to keep the price down on our iPhones and Wal-Mart junk.

The Democratic National Convention was very on-message. In Hillary Clinton’s acceptance speech the next day, she said:

If you believe that we should say “no” to unfair trade deals, that we should stand up to China, that we should support our steelworkers and autoworkers and homegrown manufacturers — join us.

She gave no definition of what it means to “Stand up to China,” though her website says she will insist on trade deals that raise wages and create good-paying jobs (presumably in the US). That’s not important — the important thing communicated to her audience is she’s against China and for American workers. Then she went through the same list of Trump production locations that Casey did, before concluding, “Donald Trump says he wants to make America great again – well, he could start by actually making things in America again.” The current U.S. trade deficit in goods (as opposed to services) is about $62 billion — per month. Virtually all Americans are dependent on imported goods (including, apparently, Clinton, whose Nina McLemore suits are made from European and Asian fabrics). No major politician is seriously against this. Trump hiring U.S. workers to make his ties would make about as much difference as Clinton buying clothes with U.S. fabrics, which is basically none. It’s just symbolism, and the symbolism here is “China is bad.” Unless you join this kind of talk with explicit concern for the suffering and exploitation of Chinese workers, this just feeds American racism.

Decades later, Vincent Chin’s murder still resonates with me. There is debate about whether racism was the real motivation behind his murder, and it wasn’t as simple as a random lynch mob. Despite the legend, it is not the case that the auto workers just killed him because they falsely believed he was Japanese. But a witness at the bar said they blamed him for them being out of work before they fought. She said:

I turned around and I heard Mr. Ebens say something about the “little motherfuckers.” And Vincent said, “I’m not a little motherfucker,” and he said, “Well, I don’t know if you’re a big one or a little one.” Then he said something about, “Well, because of y’all motherfuckers we’re out of work.”

After losing the first round, Ronald Ebins and his stepson, Michael Nitz, hunted Chin down and killed him with a baseball bat, a crime for which they ultimately served no jail time.

My 8-year-old Chinese immigrant daughter, who learns all about how racism and bullying are bad and MLK is great in her neoliberal public American elementary school, is routinely offended and hurt by the China-bashing she hears from Democrats as well as Trump (she supported Bernie but is willing to back Hillary to stop Trump).

Hillary says we should protect our children from having to listen to Trump’s nastiness — she even has ad on that, which I’ve personally witness liberals tearing up over:

So, what about the people making speeches at the Democratic convention, spitting out the word China! like it’s a disease? “What example will we set for them?”

If the new normal of politics is both parties bashing foreigners  while they pretend to oppose globalization — and then pursuing the same policies anyway (which, face it, you know they will), then what have we gained? It seems to me there is a small chance Clinton will negotiate better trade deals to the benefit of workers (U.S. or Chinese), alongside a much greater chance that her rhetoric will stoke nativism and racism. Trump’s megaphone may have drawn the White supremacists out from under their rocks, but the new anti-TPP Hillary is bellowing the same obnoxious chauvinism.

Philip N. Cohen is a professor of sociology at the University of Maryland, College Park, and writes the blog Family Inequality, where this post originally appeared. He is the author of The Family: Diversity, Inequality, and Social Change. You can follow him on Twitter or Facebook.

According to this graphic by NPR, “truck driver” is the most common occupation in most US states:

But truck driving isn’t what it used to be. In 1980, truckers made the equivalent of $110,000 annually; today, the average trucker makes $40,000. What happened to this omnipresent American occupation?

At the Atlantic, sociologist Steve Viscelli describes his research on truckers. He took an entry level long-haul trucking job, interviewed workers, and studied its history. He found that the industry had essentially eviscerated worker pay, largely by turning truckers into independent contractors, misleading them about the benefits of this arrangement, and locking them into punitive contracts.

Viscelli argues that few truckers are fully informed as to what it means to be an independent contractor, at least at first. Trucking companies sell them on the idea that they’ll be their own boss and set their own hours, but they don’t emphasize that they will pay significantly more taxes, their own expenses, and the lease on a truck. Viscelli interviews one man who took home the equivalent of 50 cents an hour one week; another week he’d ended up owing the company $100. As independent contractors, he writes, truckers “end up working harder and earning far less than they would otherwise.”

If truckers want to get out of these contracts, the companies can hold their lease over their heads. Truckers sign a years-long contract to lease their truck along with a promise not to work for anyone else. If the contract is violated, the worker is on the hook for the entire lease. This could be tens of thousands of dollars, so the trucker can’t afford to quit. He’s no longer working, in other words, to make money; he’s just working, sometimes for years, to avoid debt.

The decimation of this once strongly middle class job is just one story among many. Add them all up — all of those occupations that no longer provide a middle class income, and the rise of lower paying jobs — and you get the shrinking of the middle class. Since 1970, fewer and fewer Americans qualify as middle income, defined as a household income that is between two-thirds of and double the median, or middle, household income.

You can see it shrink in this graphic by Deseret News using data from the Pew Research Center:

Part of the reason is that we have transitioned to an industrial economy to one that offers jobs primarily in service (low paying) and knowledge/information (high paying), but the other part is the restructuring of work to increasingly benefit owners, operators, and investors over workers. As the middle class has been shrinking, the productivity of American workers has been climbing, but the workers haven’t been the beneficiaries of their own work. Instead, employers have just been taking a larger and larger share of the value added that workers produce.

Figure from the Wall Street Journal with data from the Economic Policy Institute:

Between 1948 and 1973, productivity and wages increased at close to the same rate (97% and 91% respectively), but between 1973 and 2014, productivity has continued to climb (increasing by 72%), while wages have not (increasing by only 9%).

This is why so many Americans are struggling to stay afloat today. We’ve designed an economy that makes it ever more difficult to land in the middle class. Trucking isn’t the job it used to be, that is, because we aren’t the country we used to be.

Lisa Wade, PhD is an Associate Professor at Tulane University. She is the author of American Hookup, a book about college sexual culture; a textbook about gender; and a forthcoming introductory text: Terrible Magnificent Sociology. You can follow her on Twitter and Instagram.

Wealth inequality in the U.S. is extreme, but global wealth inequality, illustrates a video by The Rules, is even more stunning. Some facts:

• The top 20% control 80% of the world’s wealth.
• The richest 2% control more wealth than the bottom half of the world’s population.
• The richest 300 people on earth have more wealth than the poorest 3,000,000,000.
• 200 years ago, rich countries were three times as rich as poor countries. Today, they are eighty times richer.
• Rich countries give $130 billion dollars worth of aid to poor countries every year, but they extract $2 trillion each year thanks to global economic rules.

Here are their sources; or watch the four minute video:

The Rules wants to reveal and challenge the laws that govern our global economy. It is a distinctly sociological project, looking at how factors outside of individuals — or, in this case, countries — shape lives. Shaped strongly by the richest countries in their own best interest, rules governing the trading of goods and money are determining the economic solvency and future of countries.

When those rules are invisible, it can seem like struggling countries are just poorly managed or culturally problematic when, in fact, the rules ensure that the deck is stacked against them.

Hat tip to Martin Hart-Landsberg.

Lisa Wade, PhD is an Associate Professor at Tulane University. She is the author of American Hookup, a book about college sexual culture; a textbook about gender; and a forthcoming introductory text: Terrible Magnificent Sociology. You can follow her on Twitter and Instagram.

Yep. Economics majors are more anti-social than non-econ majors. And taking econ classes also makes people more anti-social than they were before. It turns out, there’s quite a bit of research on this, nicely summarized here.  Econ majors are less likely to share, less generous to the needy, and more likely to cheat, lie, and steal.

In one study, for example, economists Yoram Bauman and Elaina Rose noted the consistent finding that econ majors were less generous and asked whether the effect was do to selection (people who are anti-social choose to take econ classes) or indoctrination (taking econ classes makes one more anti-social). They found that both play a role.

Students at their institution — University of Washington — were asked at registration each semester if they’d like to donate to WashPIRG (a left-leaning public interest group) and ATN (a non-partisan group that lobbies to reduce tuition rates).  Bauman and Elaina crunched the data along with students’ chosen majors and classes. They found that econ majors were less likely to donate to either cause (the selection hypothesis) and that non-econ majors who had taken econ classes were less likely to donate than non-majors who hadn’t (the indoctrination hypothesis).

What should we make of these findings?

Sociologist Amitai Etzioni takes a stab at an answer. He argues that neoclassical economics isn’t a problem in itself. Instead, the problem may be that there are no “balancing” classes, ones that present a different kind of economics. In other part of the academy, he argues — specifying social philosophy, political science, and sociology– there is “a great variety of approaches are advanced, thereby leaving students with a consolidated debasing exposure and a cacophony of conflicting pro-social views.”

Being exposed to a variety of views, including ones that question the premises of neoclassical economics, may be one way to make economists more honest and kind. And doing so isn’t just about sticking one to econ, it’s an issue of grave seriousness, as the criminal and immoral behavior of our financial leaders is exactly what triggered a Great Recession once… and could again.

Cross-posted at Pacific Standard.

Lisa Wade, PhD is an Associate Professor at Tulane University. She is the author of American Hookup, a book about college sexual culture; a textbook about gender; and a forthcoming introductory text: Terrible Magnificent Sociology. You can follow her on Twitter and Instagram.