Louis Proyect: The Unrepentant Marxist

March 12, 2019

The Boeing 737 Max 8: a case-study in uncreative destruction

Filed under: computers,disasters,economics,unemployment,workers — louisproyect @ 6:26 pm

Wreckage at the scene of an Ethiopian Airlines crash near Addis Ababa, Ethiopia, on Monday. (AP Photo/Mulugeta Ayene)

On October 29, 2018, a Boeing 737 Max 8 belonging to Lion Air in Indonesia crashed into the Java Sea 12 minutes after take-off. All 189 passengers and crew members were killed instantly. It is extremely unusual for planes to suffer such accidents in clear weather after having reached their cruising altitude. Flight experts concluded that the pilots were not adequately trained in the Maneuvering Characteristics Augmentation System (MCAS), a robotics technology that lowers the nose of a plane to prevent a stall. Although there is no definitive judgement on exactly what happened, it appears to be a combination of inadequate training for the pilots and a malfunctioning MCAS.

On Sunday, another 737 Max 8 owned by Ethiopian Airlines had the same kind of accident resulting in the death of 157 passengers and crew members. In the aftermath of the tragedy, this has led to Australia, China, Germany, France, Indonesia, Ireland, Malaysia, Singapore, and the United Kingdom grounding the planes.

Looking at these two horrible tragedies that will make me think twice about getting on a plane again, I keep thinking of the title of Gabriel Garcia Márquez’s classic “Chronicle of a Death Foretold”. In essence, the use of MCAS is akin to an experimental, driverless car owned by Uber killing a pedestrian who was jaywalking on a dark road in Tempe, Arizona on May 18, 2018. The back-up driver, who was supposed to keep a sharp eye on the road to prevent such an accident, was watching reruns of the reality TV show “The Voice” at the time.

Despite such incidents (there have been 4 fatalities already), the bourgeoisie is determined to push ahead since the savings in labor costs will make up for the collateral damage of dead pedestrians. While I am skeptical that completely driverless cars will ever become the norm for Uber or Lyft, I can see people with little driving experience being paid minimum wage just to be a back-up to the computer system—as long as they don’t watch TV on the job. (Fat chance with such a boring job.)

This morning Donald Trump tweeted about the airline crash. “Airplanes are becoming far too complex to fly. Pilots are no longer needed, but rather computer scientists from MIT. I see it all the time in many products. Always seeking to go one unnecessary step further, when often old and simpler is far better. Split second decisions are….”

To begin with, the issue is not planes becoming too complex. It is rather that they are becoming too simple in terms of the amount of deskilling the airlines favor. As for the issue of replacing human labor with robots, he is all for it—reflecting the priorities of a ruling class bent on driving down wages.

In a US News and World Report article titled “The Race Is On After Feds Pave Way for Driverless Trucks”, we learn:

The most optimistic analysts project that trucks with empty cabs and a computer at the wheel will travel on U.S. highways in as little as two years with no escort or safety driver in sight now that the Trump administration has signaled its willingness to let tractor-trailers to become truly driverless.

The U.S. Department of Transportation this month announced that it will “no longer assume” that the driver of a commercial truck is human, and the agency will even “adapt the definitions of ‘driver’ and ‘operator’ to recognize that such terms do not refer exclusively to a human, but may in fact include an automated system.”

Already, automated truck developers such as Embark and TuSimple have made freight deliveries where the computer takes control on the highway, overseen by a human “safety driver.” Companies have also successfully tested “platooning,” where a truck with a human driver leads a convoy of as many as five computer-driven trucks following at close distance to reduce drag and save fuel.

The technologies promise big savings, with driverless trucks potentially slashing 40 percent from the cost of long-haul freight – much of it in saved labor expenses – and platooning cutting 10 to 15 percent in fuel costs.

If it is good for cars and trucks, why not airplanes?

Two years before the Indonesian 737 crash, the Guardian published an article titled “Crash: how computers are setting us up for disaster” that it clearly anticipated. Interestingly enough, it was not even a Boeing plane that was discussed in the article. It was an Airbus 330 that had the same kind of systems as the Boeing NCAS. With pilots much more used to relying on automation than manual control of the plane, they failed to override the system that was forcing the plane to plunge into the Atlantic Ocean on June 1, 2009 at about 125 miles an hour. Everyone on board, 228 passengers and crew, died instantly.

While pilots flying to major airports will continue to be highly paid, the wages of those working for regional airlines has fallen drastically. In 2010, the Guardian reported on “A pilot’s life: exhausting hours for meagre wages”. They lead a decidedly unglamorous life:

Many are forced to fly half way around the country before they even begin work. Others sleep in trailers at the back of Los Angeles airport, in airline lounges across the country or even on the floors of their own planes. Some co-pilots, who typically take home about $20,000 (£12,500) a year, hold down second jobs to make ends meet.

All that will change when airplanes go the route of driverless cars as the NY Times reported last July in an article titled “Are You Ready to Fly Without a Human Pilot?” In the same fashion that Trump backed driverless trucks, the move toward pilotless planes seems inexorable:

Regulators are already taking steps toward downsizing the role of humans on the flight deck. The bill to reauthorize the Federal Aviation Administration included language to provide funding to study single-pilot operations for cargo planes, a move that the Air Line Pilots Association opposed. Captain Canoll said that a single-pilot aircraft must be safe to fly without anyone at the controls in case the pilot takes a bathroom break or becomes incapacitated.

At the recently concluded World Economic Forum, there was a big focus on artificial intelligence and robotics. On the website, you can find breathless articles about “Meet Stan: the robot valet that parks your car at the airport” and “US companies created a record number of robot workers in 2018”. In a Washington Post article on the WEF, the title betrayed a certain unease about the replacement of human beings by robots: The aristocrats are out of touch’: Davos elites believe the answer to inequality is ‘upskilling’. It cited Blackstone CEO Stephen Schwarzman about how to keep the masses docile: “The lack of education in those areas in digital is absolutely shocking. That has to be changed. That will very much lessen the inequalities that people have in terms of job opportunities.”

What world are these people living in? Schwarzman has a 32-room penthouse in 740 Park Avenue and spent $5 million for his birthday party in 2017. He just made a gift of $1 billion to MIT to launch a new school for Artificial Intelligence. Is that supposed to create jobs? Maybe for someone with an MIT degree who will go to work writing software to replace the people working for Jeff Bezos’s slave labor-like warehouses with machines but what is someone out of a job at an Amazon warehouse then supposed to do? Apply to MIT?

The handwriting is on the wall. The USA is moving into a two-tiered system. In places like NYC, Boston, San Francisco, Seattle and Portland, you get people working in high-tech industries that in contrast to the Fordist model of the 1930s employ far fewer bodies. Meanwhile, in Detroit, Cleveland, and other places where Fordism once held sway, the jobs are there if you are willing to work at Walmarts, at local hospitals emptying bedpans or as guards in a jail or prison. Class divisions between those with advanced technology skills and those left out will only increase, leading to the kind of showdown taking place in France between the neoliberal state and the Yellow Vests.

You get a feel for the Two Americas reading a March 7th NY Times article titled “Thousands of New Millionaires Are About to Eat San Francisco Alive”:

In cities like Oakland and Berkeley and San Francisco, millennials obsess over Alexandria Ocasio-Cortez’s Twitter and attend Democratic Socialists of America meetings. But the socialist passion doesn’t seem to have impacted the city’s zeal for I.P.O. parties, which the party planning community says are going to surpass past booms.

Jay Siegan, a former live music club owner who now curates private entertainment and music, is gearing up. He has worked on events for many of the I.P.O. hopefuls, including Uber, Airbnb, Slack, Postmates and Lyft.

“We see multiple parties per I.P.O. for the company that is I.P.O.ing, as well as firms that are associated to them,” Mr. Siegan said. Budgets for start-up parties, he said, can easily go above $10 million. “They’re wanting to bring in A-list celebrities to perform at the dinner tables for the executives. They want ballet performers.”

The only comment I would add to this tale of two cities is that it would not be surprising if some of these high-flying technology workers might also plan to vote for Bernie Sanders. They probably don’t feel happy about living in a city where their wealth has driven up the cost of housing to the point that homelessness is an epidemic. Whether President Sanders can do much about these class divisions is open to debate.

The replacement of human labor by machinery has been described as “creative destruction”. The assumption is that the temporary pain is worth it since there will always be the growth of new jobs. As my seventh grade social studies put it, the invention of the automobile put the blacksmith out of work but it created far more jobs in a Ford plant.

On May 12, 2010, the New York Times ran an article by economics editor Catherine Rampell titled The New Poor: In Job Market Shift, Some Workers Are Left Behind that focused on the largely middle-aged unemployed who will probably never work again. For example, 52 year old administrative assistant Cynthia Norton has been working part-time at Walmart while sending resumes everywhere but nobody gets back to her. She is part of a much bigger picture:

Ms. Norton is one of 1.7 million Americans who were employed in clerical and administrative positions when the recession began, but were no longer working in that occupation by the end of last year. There have also been outsize job losses in other occupation categories that seem unlikely to be revived during the economic recovery. The number of printing machine operators, for example, was nearly halved from the fourth quarter of 2007 to the fourth quarter of 2009. The number of people employed as travel agents fell by 40 percent.

But Ms. Rampell finds the silver lining in this dark cloud:

This “creative destruction” in the job market can benefit the economy.

Pruning relatively less-efficient employees like clerks and travel agents, whose work can be done more cheaply by computers or workers abroad, makes American businesses more efficient. Year over year, productivity growth was at its highest level in over 50 years last quarter, pushing corporate profits to record highs and helping the economy grow.

The term “creative destruction” might ring a bell. It was coined by Werner Sombart in his 1913 book “War and Capitalism”. When he was young, Sombart considered himself a Marxist. His notion of creative destruction was obviously drawn from Karl Marx, who, according to some, saw capitalism in terms of the business cycle. With busts following booms, like night follows day, a new round of capital accumulation can begin. This interpretation is particularly associated with Volume Two of Capital that examines this process in great detail. Looking at this material, some Marxists like Eduard Bernstein drew the conclusion that capitalism is an infinitely self-sustaining system.

By 1913, Sombart had dumped the Marxist commitment to social revolution but still retained the idea that there was a basis in Karl Marx for upholding the need for “creative destruction”, a view buttressed by an overly positive interpretation of this passage in the Communist Manifesto:

The bourgeoisie cannot exist without constantly revolutionizing the instruments of production, and thereby the relations of production, and with them the whole relations of society. Conservation of the old modes of production in unaltered form, was, on the contrary, the first condition of existence for all earlier industrial classes. Constant revolutionizing of production, uninterrupted disturbance of all social conditions, everlasting uncertainty and agitation distinguish the bourgeois epoch from all earlier ones.

By the 1930s, Sombart had adapted himself fairly well to the Nazi system although he was not gung-ho like Martin Heidegger or Carl Schmitt. The wiki on Sombart notes:

In 1934 he published Deutscher Sozialismus where he claimed a “new spirit” was beginning to “rule mankind”. The age of capitalism and proletarian socialism was over and with “German socialism” (National-Socialism) taking over.

But despite this, he remained critical. In 1938 he wrote an anthropology text that found fault with the Nazi system and many of his Jewish students remained fond of him.

I suspect, however, that Rampell is familiar with Joseph Schumpeter’s use of the term rather than Sombart since Schumpeter was an economist, her chosen discipline. In 1942, he wrote a book titled Capitalism, Socialism and Democracy that, like Sombart, retained much of Karl Marx’s methodology but without the political imperative to destroy the system that utilized “creative destruction”. He wrote:

The opening up of new markets, foreign or domestic, and the organizational development from the craft shop and factory to such concerns as U.S. Steel illustrate the same process of industrial mutation–if I may use that biological term–that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one. This process of Creative Destruction is the essential fact about capitalism. It is what capitalism consists in and what every capitalist concern has got to live in. . . .

The wiki on Schumpeter claims that this theory is wedded to Nikolai Kondratiev’s “long wave” hypothesis that rests on the idea that there are 50 year cycles in which capitalism grows, decays and enters a crisis until a new round of capital accumulation opens up. Not only was the idea attractive to Schumpeter, it was a key part of Ernest Mandel’s economic theories. Unlike Schumpeter, Mandel was on the lookout for social agencies that could break the cycle and put development on a new footing, one based on human need rather than private profit.

Returning to Rampell’s article, there is one dimension entirely missing. She assumes that “creative destruction” will operate once again in order to foster a new upswing in the capitalist business cycle. But how exactly will that manifest itself? All the signs point to a general decline in business activity unless there is some kind of technological breakthrough equivalent to the computer revolution that fueled growth for decades. Does anybody believe that “green manufacturing” will play the same role? I don’t myself.

One thing does occur to me. Sombart’s book was written in 1913, one year before WWI and was even titled eerily enough “War and Capitalism”. One wonders if the Great War would be seen as part and parcel of “creative destruction”. War, after all, does have a knack for clearing the playing field with even more finality than layoffs. Schumpeter wrote his book in 1942, one year into WWII. My guess is that he did not theorize war as the ultimate (and necessary?) instrument of creative destruction but history will record that WWII did introduce a whole rafter of new technology, including aluminum, radar, nuclear power, etc., while bombing old modes of production into oblivion. What a great opportunity it was for capitalism to rebuild Japan, especially after firebombing and atomic bombs did their lovely work.

In my view, there’s something disgusting about this “creative destruction” business especially when it is articulated by a young, pro-capitalist Princeton graduate like Catherine Rampell who wrote for Slate, the Village Voice and other such b-list publications before crawling her way up into an editorial job at the NYT. She clearly has learned how to cater her reporting to the ideological needs of the newspaper of record, growing more and more reactionary as the crisis of capitalism deepens.

March 6, 2013

Caught in the sequestration web

Filed under: financial crisis,unemployment — louisproyect @ 5:57 pm

Two days ago I got a letter from NY State Unemployment telling me to show up for an appointment next week to certify for extended benefits after my current benefits expire on August 14th. I got a chuckle out of the work search record I was supposed to bring with me. There were 10 rows, one for each prospective employer you contact each week.

Aren’t these people aware that once you reach the age of fifty or so, the chance of getting a job in your field is about the same as winning the American Idol contest? The NY Times reported on February 2nd:

In the current listless economy, every generation has a claim to having been most injured. But the Labor Department’s latest jobs snapshot and other recent data reports present a strong case for crowning baby boomers as the greatest victims of the recession and its grim aftermath.

These Americans in their 50s and early 60s — those near retirement age who do not yet have access to Medicare and Social Security — have lost the most earnings power of any age group, with their household incomes 10 percent below what they made when the recovery began three years ago, according to Sentier Research, a data analysis company.

Their retirement savings and home values fell sharply at the worst possible time: just before they needed to cash out. They are supporting both aged parents and unemployed young-adult children, earning them the inauspicious nickname “Generation Squeeze.”

New research suggests that they may die sooner, because their health, income security and mental well-being were battered by recession at a crucial time in their lives. A recent study by economists at Wellesley College found that people who lost their jobs in the few years before becoming eligible for Social Security lost up to three years from their life expectancy, largely because they no longer had access to affordable health care.

“If I break my wrist, I lose my house,” said Susan Zimmerman, 62, a freelance writer in Cleveland, of the distress that a medical emergency would wreak upon her finances and her quality of life. None of the three part-time jobs she has cobbled together pay benefits, and she says she is counting the days until she becomes eligible for Medicare.

In the meantime, Ms. Zimmerman has fashioned her own regimen of home remedies — including eating blue cheese instead of taking penicillin and consuming plenty of orange juice, red wine, coffee and whatever else the latest longevity studies recommend — to maintain her health, which she must do if she wants to continue paying the bills.

“I will probably be working until I’m 100,” she said.

This morning I went to the Unemployment website to file a weekly claim and found this bit of news there:

ALERT: Federal cuts to extended unemployment benefits (beyond 26 weeks)

Updated March 1, 2013

Beginning with the week ending April 7th, federal government budget cuts known as sequestration could affect your unemployment insurance benefits.  If you are receiving regular UI benefits you will NOT see any change.  However, if you are receiving federal extended unemployment benefits that start after 26 weeks, the federal government has directed us to reduce your payments by 10.7% beginning that first week in April.  New York State has no control over these cuts in benefits and no ability to waive or reduce the level of cuts.  If you are going to be affected, you will receive a letter during the month of March telling you your exact benefit amount.  Please check this website for the most up to date information concerning the sequestration cuts.  And please be aware that our telephone call center agents do not have any more up to date information, so it is best to use our webpage, Facebook page or contact the United States Department of Labor at 1-866-487-2365, the White House at 202-456-1414 or your member of Congress at 202-224-3121.

What this means is that the 14 weeks of extended benefits I am eligible for after August 14th will be cut from $404 to $360. Now as it turns out my situation is not as dire as most facing such cuts. My wife is a full-time professor who makes a decent income, while I am collecting Social Security payments of $2400 per month. But what if I was 58 instead of 68, single, and living in a typical Manhattan apartment that rents $2000 per month for a studio? That easily could have been me.

Gawker has been running a series on the unemployed, including this tale of woe from someone who had been working in information technology for 9 years:

One evening, four months later, in January, 2010, I got a call at home from work, which was unusual. I was told that my position would be eliminated in favor of contractors, who would develop an e-commerce platform in house. The department head thanked me for my five years of work (it was actually 9, but she didn’t know that; she had only started six months before) and that was that. I kept updating the blogs in the normal way, but someone seemed to notice the snarky tone that the blogs suddenly seemed to take, and complained to the company. I got a phone call asking if I knew what the blogs were, and who updated them. I told them that I no longer worked there and did not normally give out advice for free, but that if there were domains out there that they owned and had control of, it might be considered a liability.

I have not held a full-time job since. I am either “overqualified” (too old), “lack proper qualification” (I have no degree) or I “don’t fit the company culture” (am not pretty enough to be a marketing director).

I have been staving off the sheriff by making crappy landing-page type websites for fly-by-nights that want to increase their Google rankings on their real websites, or by working phone banks, or by playing standup bass in bluegrass bands. There has not been a single month in the last two years where I have made more than $1200. My modest mortgage payment is $1198. My three children and I are living on a $420 SNAP benefit. My wife, who does actually have a degree, got a part time, temp job at the local library after they laid off all the regular employees and hired temps. She left about six months after the paychecks stopped.

Meanwhile the stock market keeps breaking records.

Maybe that’s a function of the New New Economy:

NY Times March 3, 2013
Recovery in U.S. Is Lifting Profits, but Not Adding Jobs

With the Dow Jones industrial average flirting with a record high, the split between American workers and the companies that employ them is widening and could worsen in the next few months as federal budget cuts take hold.

That gulf helps explain why stock markets are thriving even as the economy is barely growing and unemployment remains stubbornly high.

With millions still out of work, companies face little pressure to raise salaries, while productivity gains allow them to increase sales without adding workers.

“So far in this recovery, corporations have captured an unusually high share of the income gains,” said Ethan Harris, co-head of global economics at Bank of America Merrill Lynch. “The U.S. corporate sector is in a lot better health than the overall economy. And until we get a full recovery in the labor market, this will persist.”

The result has been a golden age for corporate profits, especially among multinational giants that are also benefiting from faster growth in emerging economies like China and India.

These factors, along with the Federal Reserve’s efforts to keep interest rates ultralow and encourage investors to put more money into riskier assets, prompted traders to send the Dow past 14,000 to within 75 points of a record high last week.

While buoyant earnings are rewarded by investors and make American companies more competitive globally, they have not translated into additional jobs at home.

Other recent positive economic developments, like a healthier housing sector and growth in orders for machinery and some other durable goods, have also encouraged Wall Street but similarly failed to improve the employment picture. Unemployment, after steadily declining for three years, has been stuck at just below 8 percent since last September.

With $85 billion in automatic cuts taking effect between now and Sept. 30 as part of the so-called federal budget sequestration, some experts warn that economic growth will be reduced by at least half a percentage point. But although experts estimate that sequestration could cost the country about 700,000 jobs, Wall Street does not expect the cuts to substantially reduce corporate profits — or seriously threaten the recent rally in the stock markets.

“It’s minimal,” said Savita Subramanian, head of United States equity and quantitative strategy at Bank of America Merrill Lynch. Over all, the sequester could reduce earnings at the biggest companies by just over 1 percent, she said, adding, “the market wants more austerity.”

As a percentage of national income, corporate profits stood at 14.2 percent in the third quarter of 2012, the largest share at any time since 1950, while the portion of income that went to employees was 61.7 percent, near its lowest point since 1966. In recent years, the shift has accelerated during the slow recovery that followed the financial crisis and ensuing recession of 2008 and 2009, said Dean Maki, chief United States economist at Barclays.

Corporate earnings have risen at an annualized rate of 20.1 percent since the end of 2008, he said, but disposable income inched ahead by 1.4 percent annually over the same period, after adjusting for inflation.

“There hasn’t been a period in the last 50 years where these trends have been so pronounced,” Mr. Maki said.

At the individual corporate level, though, the budget sequestration could result in large job cuts as companies move to protect their bottom lines, said Louis R. Chenevert, the chief executive of United Technologies. Depending on how long the budget tightening lasts, the job cuts at his company could total anywhere from several hundred to several thousand, he said.

“If I don’t have the business, at some point you’ve got to adjust the work force,” he said. “You always try to find solutions, but you get to a point where it’s inevitable.”

The path charted by United Technologies, an industrial giant based in Hartford that is one of 30 companies in the Dow, underscores why corporate profits and share prices continue to rise in a lackluster economy and a stagnant job market. Simply put, United Technologies does not need as many workers as it once did to churn out higher sales and profits.

“Right now, C.E.O.’s are saying, ‘I don’t really need to hire because of the productivity gains of the last few years,’ ” said Robert E. Moritz, chairman of the accounting giant PricewaterhouseCoopers.


August 18, 2012

President Obama and extended unemployment benefits

Filed under: Obama,Social Security,unemployment — louisproyect @ 9:30 pm

My 21-year career at Columbia University was bookended by two bouts of unemployment, the first an outcome of losing a technical writing position at Kidder-Peabody (three years later the firm was liquidated) and the most recent a function of my duties no longer being needed. At the age of 67 becoming redundant is not so bad, especially when you become entitled to severance pay and unemployment benefits.

Back in 1991 it was a real horror show. When you get to be 46 the job hunt becomes far more difficult even for a computer geek. You are too old to be competing with recent computer science grads of Carnegie-Mellon willing to work for half the salary you expect and too young to retire. I used to get up each morning and lie in bed for an hour brooding over my prospects.

Yesterday’s NY Times reported on the gloomy prospects for the middle-aged white-collar unemployed in California:

“A lot of people don’t come here until they’ve spent some time at home licking their wounds,” Ms. Polson said. “By the time they get here, the hardest thing is for them to check their ego at the door. They think they can do it alone. Their pride hasn’t been hurt enough yet.”

But most of the time, that changes rather quickly.

Mr. Reeves lost his job at a distribution company in 2008. He had been laid off once before, a few years earlier, and assumed this time would be just the same — a few weeks of searching before finding a new job. But after two years, he had just one interview. His unemployment checks stopped coming long ago, and food stamps are a part of his life now.

Eventually, he moved into his mother’s home here, where he wakes up most mornings by 6 and walks to the library every weekday. Tuesdays, though, are reserved for the group.

“The only thing I can do is get out of the house and keep looking,” he said. “I can’t allow myself to get lazy, because giving up would just make me more depressed.”

A surprisingly sensitive portrayal of the white-collar unemployed can be found in the 2010 The Company Men that was likely influenced by Death of a Salesman as I pointed out in my review:

In many ways, I could not help but think of Arthur Miller’s Death of a Salesman when watching this film. Miller, a committed Marxist, understood the depths of the illusions that “company men” (salarymen in Japan) had in the system. In that unforgettable scene between Willy Loman and his boss (who I played in a high school production mounted by Fred Madeo, a radical who taught English there), Willy cries out, “You can’t eat the orange and throw the peel away – a man is not a piece of fruit.”

The same kind of scene takes place between Woodward and Salinger, some months after Woodward’s firing. Woodward pleads with his old boss to give him a job as international sales rep at a huge pay cut. Salinger tells him that he is too old and urges him to retire and enjoy days at the beach or playing golf. When Woodward replies that he can’t afford to, Salinger tells him that is too bad. His Board of Directors would not allow him to hire Woodward for the job. A few days later Woodward locks himself in his garage and turns on his engine to commit suicide through carbon monoxide poisoning, the same way that Willy Loman went.

The NY Times article mentioned: “roughly half the group still receives unemployment checks, and many have had multiple extensions to take them to the maximum of 99 weeks. Others were forced off the unemployment rolls this spring, when California did not meet the complex requirements for the extended benefits. Far more will lose their benefits within the next few months.”

After reading this my immediate reaction was to wonder how long my benefits would last. I was assured of 26 weeks but hoped that I could get the extended benefits that would last for another 26 weeks and maybe for the 99 weeks that the Californians would get. It also struck me that for the first time I could begin to see how some people “voted their pocketbook” based on which candidate’s policies were most in their immediate interest. For the average person who believed that Syria was east of Afghanistan and that fracking was a way to cook chicken, becoming unemployed would tend to focus the mind on which candidate was for extended benefits. I had not followed Obama’s statements on this carefully but was under the impression that he favored maintaining the extended benefits and the dirty, filthy Republicans opposed it.

A cursory examination on the Internet revealed that extended benefits would be ending this year so I was shit out of luck. Those dirty, filthy Republicans deserved to rot in hell—not that I could get myself to vote for the slimy occupant of the White House.

Upon further examination I came to the conclusion that all of them should rot in hell. They should create a new layer—the tenth circle of hell—for the lying, conniving, and murderous politicians who have one interest and one interest only: how to screw the 99 percent on behalf of the 1 percent.

In February of this year a deal was struck between the White House and the Republican Party leadership. In exchange for their support of extending the payroll tax cut, the President would agree to terminate extended benefits. The reason he relented on extended benefits epitomize his cynicism and his disregard for the common people foolishly expecting “hope” and “change”.

On February 14th the Christian Science Monitor reported on the backroom deal that brought extended benefits to an end:

“All the parties have agreed to some reduction,” says Pete Davis of Davis Capital Investment Ideas, who watches Congress for Wall Street and is a former tax economist on Capital Hill. “It’s a tough issue.”

The breakthrough came Monday, when the House Republican leadership said it would agree to extend the temporary payroll-tax cut through the end of the year without the need for “pay-fors.” Now, with the resolution on Tuesday of two other issues – the extension of unemployment benefits and extension of the “doc fix” for Medicare – lawmakers can tell their constituents that the legislation can pass without triggering gridlock.

“There is good reason to reach agreement on this early in the election year,” says Mr. Davis. “When you shift from 99 weeks to 79 weeks, you get a big lump of people who drop out of the labor force,” he explains. This results in a lower “headline” unemployment rate – an advantage for an incumbent [emphasis added.]

I am not sure what the business of 79 weeks is about but according to the NY State Department of Labor website, I do not qualify for a single week of extended benefits. Since NY State is a lot more “liberal” than most states, I imagine that 26 weeks will be the limit across the board.

But what is of real interest here is the perception that a lower “headline” unemployment rate will be an advantage for the incumbent. In order words, when people drop out of the labor market, they no longer are counted as part of the unemployed—the so-called “discouraged” job seeker.

In the very month that Obama cut this deal, Cardiff Garcia—a Financial Times blogger produced a graph that took the discouraged into account. When you include them, the unemployment rate is 10.3 percent, not 8.5. That’s about the same as it was in July 1937—for comparison’s sake.

Kevin Drum, who writes for Mother Jones and is a rank apologist for the President (Redundant? Sorry…), tried to explain away the numbers in this graph:

I suppose either measure could make sense depending on what you’re most interested in. There’s probably always a small segment of the labor force that’s only barely interested in working, and that decides to stay home with the kids or write the great American novel given even the slightest incentive.

What a fucking moron, as if people who have left the workforce includes substantial numbers of those who just “decide” to stay at home with the kids or write the great American novel. You can bet that if John McCain had been elected President in 2008 and the unemployment rate is what it is today that the liberal punditry would be screaming about the real unemployment rate.

The other thing worth pointing out is that the payroll tax cut can potentially lead to the underfunding of the Social Security system and hence the likelihood that efforts to “reform” it will grow apace under Obama’s likely second term.

Commondreams, a website that will in all likelihood urge a vote for Obama, pointed out:

Since its inception under President Franklin D. Roosevelt, the Social Security program has been premised on a simple contract: Americans pay into the program’s trust fund over years of paychecks through the payroll tax. In return, when they retire, they receive monthly benefits.

The payroll tax cut changes that. Instead being a protected program with its own stream of funding, Social Security, by taking money from general revenue, becomes more akin to other government initiatives such as Pentagon spending or clean-air regulation — programs that rely on income taxes and political jockeying for support.

“All of a sudden Social Security will have to compete with every other program, whereas before it had its own dedicated revenue,” said Nancy Altman, co-director of Social Security Works, an advocacy group. “It’s breaking the kind of firewall that has always existed between the trust fund and the operating fund.”

She added: “The biggest concern is that this was done without any hearings, without any apparent regard for the impact on Social Security.”

I suppose that all this makes sense in a twisted fashion. After being hailed as potentially the new FDR, Obama is doing everything he can to gut two of the New Deal’s most highly regarded reforms: unemployment insurance and Social Security. Just as it took a Richard Nixon to go to China, it takes a “liberal” to fulfill the historic mission of the Republican Right to dismantle what’s left of the welfare state.

While the unemployment rate is not what it was at the height of the Great Depression (over 25 percent) and while the safety nets are stronger than they were at that time as well, there is nothing more demeaning than to be out of the workforce. The word depression has a greater psychological resonance than recession. It conveys both an economic and personal slump. Fortunately for me, my current status has little of the pain associated with my last bout of unemployment and in Kevin Drum’s terms, I can be described as one who is “barely interested in working.” That being said, I have no interest in “staying home with the kids” since me and the missus have none and are perfectly content having none. Nor does the idea of writing “the great American novel” have any appeal for me, although it did 30 years ago after separating myself from the Socialist Workers Party.

Being unemployed (or being retired) affords me the possibility of deepening my understanding of how this horrible system works and writing poison pen letters to the miserable bastards who rule it. For that, I am not at all depressed and feel rather cheerful, like a tot on Christmas Eve.

January 2, 2012

The Company Men

Filed under: Film,financial crisis,unemployment — louisproyect @ 10:10 pm

I shied away from “The Company Men” in 2010 because it sounded too much like “Up in the Air”, the repellent George Clooney vehicle about corporate downsizing. Both films were far more concerned about the unemployed executive than the average factory worker, but clearly we are in a different period than when John Ford made “Grapes of Wrath” (Ford was a Republican.)

But after seeing “Margin Call”, another movie about rich white guys losing their jobs, I decided to give “Company Men” a try since “Margin Call” had persuaded me that a decent film can be made about such people. After all, I was a well-paid victim of downsizing at Goldman-Sachs–sort of a three percenter–and I am not that much of a prick, at least most of the time.

I watched “The Company Men” last night on Showtime, a premium cable station (it is also available from Netflix) and can report that it is very good, even if it pulls its punches at the end. This review contains spoilers throughout so if you haven’t seen the film, read no further.

Set in 2009, “The Company Men”, like “Margin Call”, begins with men and women learning that they are being terminated. Bobby Walker (Ben Affleck) is one of those affected. As a sales manager for a shipbuilding firm that is suffering declining profits, he is to be sacrificed at the altar of quarterly earnings reports.

At an executive committee meeting, Gene McClary, a senior vice-president played by Tommy Lee Jones, lashes into the CEO James Salinger (Craig Nelson) for not having a long-term view of the company’s mission and breaking the social compact made with the employees in more prosperous times. He is the same kind of character played by Kevin Spacey in “Margin Call”, a firm believer in the fiction that capitalism is a system that can work for the benefit of exploiter and exploited alike.

Craig Nelson, who is the veteran of a thousand b-movies and television shows, is cast perfectly here. A victim apparently of a coup d’age who I did not even recognize, he has just the right combination of gravitas and CEO imperiousness to lend his character the proper believability.

Soon to go after Bobby Walker is Phil Woodward, a long-time employee in his early 60s who started out as a welder on the factory floor. Chris Cooper, one of Hollywood’s finer actors and an outspoken liberal like Ben Affleck, plays Woodward.

In many ways, I could not help but think of Arthur Miller’s “Death of a Salesman” when watching this film. Miller, a committed Marxist, understood the depths of the illusions that “company men” (salarymen in Japan) had in the system. In that unforgettable scene between Willy Loman and his boss (who I played in a high school production mounted by Fred Madeo, a radical who taught English there), Willy cries out, “You can’t eat the orange and throw the peel away – a man is not a piece of fruit.”

The same kind of scene takes place between Woodward and Salinger, some months after Woodward’s firing. Woodward pleads with his old boss to give him a job as international sales rep at a huge pay cut. Salinger tells him that he is too old and urges him to retire and enjoy days at the beach or playing golf. When Woodward replies that he can’t afford to, Salinger tells him that is too bad. His Board of Directors would not allow him to hire Woodward for the job. A few days later Woodward locks himself in his garage and turns on his engine to commit suicide through carbon monoxide poisoning, the same way that Willy Loman went.

A good twenty-five years younger than Woodward, Ben Affleck’s Bobby Walker has a lot more going for him it would seem, especially in his own view. As the owner of a Porsche, membership in a country club, and all the other accouterments of a job paying $180,000 per year, he assumes that things will fall into place. When his wife demands that he sell the Porsche, he reluctantly accedes. Later on, when she stops paying dues to the country club without his knowledge, he is whisked from the golf course unceremoniously. When he confronts his wife about her action, she defends herself by saying that he had refused to drop his membership voluntarily so what else could she do? They needed to pay the rent (they had lost their McMansion) and put food on the table. He remonstrated: without the country club membership, he would be less than a man.

The scenes involving an unemployed Woodward and Walker on job interviews have amazing authenticity—trust me, I’ve been there. These are a couple of guys who despite being on the lowest rungs of the totem pole still expected to be treated with kid gloves. During an interview with an outplacement specialist provided by his former employer, the woman keeps referring to Woodward as “Phil” until he asks her if she knows him. Looking at him quizzically, she asks why. He replies that since they have not been properly introduced, he wonders why she is calling him by his first name.

Walker is even less inclined to suffer such slights. After being kept waiting for two hours by an overweight female African-American interviewer who while sipping on a soft drink tells him that he is probably not what they are looking for, he explodes. He curses her out and tells her to lay off the soft drinks because she needs to lose 25 pounds.

Director and screenwriter John Wells, who has a background as executive producer of TV shows like “The West Wing” and “ER”, understands how people like Bobby Walker tick. The character graduated from Penn State and used his good looks and charm to advance rapidly in the business world. This is exactly the sort of person who would be outraged by an African-American woman having power over his economic position and his racism is palpable.

The film ends on an unaccountably upbeat note. After losing his own job, Gene McClary (Tommy Lee Jones) decides to start his own boutique shipbuilding company and hires Walker as his top sales guy. The film ends with them looking out the window on the piers hopefully. This Capraesque touch makes no sense at all since not only did the economic crisis make such a venture unlikely, it also assumes that the U.S. can be returned to its gloried past as a manufacturing power.

Back in 2008 I wrote about my experiences at Goldman-Sachs after the 1987 financial crisis left me in a precarious situation not unlike these characters:

In 1988, after about two and a half years on the job at Goldman-Sachs, I received a zero percent salary increase. I heard through the grapevine that if you didn’t get a raise, it would be a good idea to dust off your resume.

After getting my zero percent increase, I resigned from Goldman and consulted for a couple of years until I crash-landed at Columbia University, where I have been for about 18 years. In my first year at Columbia, I was picking up a coffee and muffin in the Business School cafeteria when I was stunned to see Jimmy Primavera sitting at a table in blue jeans, work boots and a flannel shirt. Jimmy had been the manager of trading systems at Goldman, where he had worked for 20 years or so. Like a lot of Goldman veterans, Jimmy had no college degree and joined the firm right out of the army. Not long after Rick Adam arrived, word went out that they were trying to get rid of managers with last names ending in a vowel. During a job interview at Bear-Stearns, I had run into another manager who had gotten the boot from Goldman and who was there interviewing as well. He was a Greek-American who felt like he had been stabbed in the back. Guys like him and Jimmy used to work 60 hours a week and were gung-ho believers in the firm.

When I asked Jimmy what he was doing at Columbia, he said that he was washing windows and without missing a beat added that he was not kidding. [He had suffered the same fate as the Ben Affleck character.] He told me about the bloodbath that had left him and the Greek-American jobless.

One morning they came in and tried to log into PROFS, an IBM mainframe email system that predated the Internet. If the word PROFS rings a bell, that’s because it is what Oliver North used for communications during the Iran-Contra conspiracy. The Senate Investigating Committee subpoenaed the PROFS tapes and got the goods on Reagan’s boys.

Jimmy and about a dozen other managers and senior employees found that their login wasn’t working. What could be wrong? They soon found out. One by one, they were called into personnel to discover that their services were no longer needed and were then escorted back to their desk by security guards. After they put their belongings into cartons, they were escorted out of the building and put into a long string of town cars and driven home.

At some point, everybody who has been through such humiliating and economically devastating experiences will band together and make the one-percent of America responsible for them pay for their actions. Since the 99 percent is much more humane than the bastards who run this country, we will be much more merciful toward them and will probably adopt the measures proposed by Leon Trotsky in “If America should go Communist”:

As to the comparatively few opponents of the soviet revolution, one can trust to American inventive genius. It may well be that you will take your unconvinced millionaires and send them to some picturesque island, rent-free for life, where they can do as they please.

October 1, 2010

99’er unimpressed with liberal talking points

Filed under: media,Obama,unemployment — louisproyect @ 7:24 pm

Mignon Veasley-Fields

This is a portion of last night’s “The Ed Show” on MSNBC. The host Ed Schultz, like all the others on this cable news station, has the same relationship to Obama that Fox had to George W. Bush. Their job each evening is to deliver the talking points of the Obama administration (the TARP money saved us from a Depression, ad nauseam) while painting Sarah Palin and the Tea Party as some kind of fascist threat. Schultz is particularly obnoxious because he tries to ooze this folksy populist charm while serving up White House propaganda. Last night he ran into somebody who was in no mood for the bullshit, a middle-aged Black woman named Mignon Veasley-Fields whose unemployment will be cut off after 99 weeks, the outer limit that Democrats have failed to extend. She will tell Schultz that she does not plan to vote in November.

* * * *

SCHULTZ: Joining me now is 99er Mignon Veasley-Fields, who has vowed not to vote in November. That was our last interview on this program a few weeks ago.

Mignon, the Democrats tried to do it. Is that going to be enough? Do you change your mind? Do the NOVOs now get back engaged and get in the process? What do you think?

MIGNON VEASLEY-FIELDS, “99ER”: Well, Ed, yes, we have committed that we are trying now to encourage our fellow 99ers to vote for either party of their choice. However, Ed, yesterday was very disappointing for us.

And even though we are trying to tell them to vote, many of them are not going to vote. Even though the NOVOs [NOVO’s are 99’ers who pledge not to vote for any politician who failed to vote for an extension] says to go ahead and do this. They were disillusioned by what they saw on the Senate floor yesterday.

We are very grateful for Senator Stabenow, for her effort, but we thought it was just sort of put together really quickly, like a dog and pony show in order to get us to vote for them.  This is the sentiment across this nation. And so —

SCHULTZ: But Mignon, if the Republican had not stood up, this would had gone through and you would have had the votes, and you would have gotten an extension. It`s the Republicans. Why take it out on the Democrats, the majority party, that time and time again has been there for the unemployed?

VEASLEY-FIELDS: Well, you know, Ed, we have gone back in the history of the tiers [tiers are a schedule of benefits]. We, as 99ers, are trying to figure this out ourselves.

What has happened is we can remember the time in which the Republicans said, sure, get another tier, use the stimulus fund. And the Democrats said, no, we need to find sourcing for unemployment.

So now we`re thinking back on that and we`re realizing it`s not the Republicans. It was the Democrats that caused us to be in this situation that we`re in. We want the Democrats to come back before this election, and we want them to come back and rectify this, Ed.

SCHULTZ: Well, they won`t do it. They`re going to be out until the middle of November. And the president has said — asked you to engage. That`s not enough?

VEASLEY-FIELDS: We are engaging. The NOVOs has given our commitment to encourage American 99ers to vote. We have finally come — we`ve conceded to that. However, our president, we do need to hear from him.


VEASLEY-FIELDS: You know, Senator Whitehouse, he explained a 99er, and we want to be clear with the American people what a 99er really is.

The presentation that they showed yesterday is not a 99er. It is an unemployed person, but not a 99er.

The 99ers who have been without benefits for over eight months is a 99er on the street; a 99er that is living in his car, her car with her children; a 99er who is laying out on a park bench somewhere; a 99er who has moved in with their 90-year-old parents because they have nowhere else to go; a 99er who is in their apartment in the dark, in the cold, that will be coming soon.

That`s the real 99er, Ed. A 99er who is hounded by bill collectors every day that they live; a 99er whose foreclosure is on its way. We have a 99er friend right now who has paid on her house for 17 years, Ed, and was just sent papers to tell her that it was time for her to go.

SCHULTZ: Well, Mignon, as a broadcaster, and as an advocate for American workers, I have to tell you that I`m at a loss. I mean, I did everything I could, and it`s — we`re stuck and it`s unfortunate.

And I hope that the — I think the unemployed people in this country can save the majority. I really do. And I hope —


SCHULTZ: — they engage, and I think President Obama deserves to work with the majority for another 24 months. And if they don`t get it done then, then make a decision in `12.

But, I mean, Bush had eight years. You mean to tell me the progressives can`t give this president, you know, 48 months? It just amazes me. So —

VEASLEY-FIELDS: Well, Ed, what I`m saying is this — is that we need some help. We absolutely need help. It`s gone past understanding that.


VEASLEY-FIELDS: What it is we have to have someone come in and help us. We need to hear from our president.

SCHULTZ: Mignon, good to have you with us tonight.


SCHULTZ: Thank you for fighting. Thanks for standing up. And I appreciate your time.


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