‘People Have Had Enough of Experts’

Shelia Dow | February 06 2017 | Instititute for New Economic Thinking

As part of our ongoing symposium “Experts on Trial”, Professor Sheila Dow argues that if voters have grown contemptuous of economists’ expertise, that’s because economics has been misrepresented as a technical subject separate from politics and moral judgments

“People in this country have had enough of experts.” Thus the response of key ‘Brexit’ campaigner Michael Gove when confronted with the long list of expert bodies, such as the IMF, that were making the economic case for Britain to remain in the EU.

This is a shocking statement, particularly coming from a highly-educated former Minister of Education. As professional economists, we see ourselves as contributing to society precisely through our expertise. Yet, Gove was picking up on a trend in public discourse that gained further momentum during the US presidential election campaign, of disregarding expert opinion. Nor is it a transitory phenomenon. Empirical evidence of the gulf between expert and lay opinion on economic policy in the US has been provided by Sapienza and Zingales (2013), a gulf which was not affected when the lay subjects were made aware of expert opinion.

Out of the discourse on expertise have emerged two sequential characterisations of the zeitgeist: a “post-democratic” era which begat a “post-truth” era.

The “post-democratic” label described the trend for important policy decisions to be made on the basis of expert opinion rather than any democratic process. It refers to institutional arrangements that explicitly put executive power in the hands of experts, such as independent central banks and the European Fiscal Compact (see further Pühringer, forthcoming). The democratic deficit is further compounded by the extent to which policy-making institutions have been captured by vested interests (Morgan 2017). Seen in this light, some of the political developments of 2016 can be seen as attempts to reassert democracy.

But out of that effort has also arisen what is characterised as a “post-truth” era, implying that truth is popularly regarded as irrelevant to shaping the outcome of the democratic process. Assertions which “feel right” but have no basis in fact are accepted as valid on the grounds that they challenge the elite and its vested interests. Of course, this raises the question of what truth is, with a potential conflict between the understanding of experts and the understanding of the individual voter based on experience. Thus, for example,economists may claim that an economy is strong while individual experience is of economic vulnerability and hardship. If economic expertise is to contribute to policy debate, then the scope for different understandings needs to be addressed. But far from implying that any assertion is legitimate, this scope underlines the importance of justification of understanding, by reason and experience.

Where does this leave the economist as expert?

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How America Lost Its Identity

Holger Stark | January 26 2017 | Spiegel

Megalomania & Small-Mindedness

Reporter Holger Stark spent the past four years as DER SPIEGEL’s Washington correspondent during a time in which the country changed radically enough to elect Donald Trump as its president. What led this once mighty nation into decline?

Donald Trump at a rally in North Carolina in October

On a frigid January evening one year ago, I was standing in a line of around 1,000 people in Burlington, Vermont, to see Donald Trump. I reported my very first story on the United States in 1991 and had been living in the country since 2013. I thought I knew the country well. But on that evening in January, I realized that I had been mistaken.

Burlington lay under a blanket of snow and next to me in line stood Mary and Tim Loyer, both wrapped in dark-blue parkas. Mary was unemployed and her son Tim had a job at a bar. Both told me they were Bernie Sanders supporters. Tim said he was particularly bothered by the power held by large companies, that the division of wealth was unfair and that people like him no longer had opportunities to improve their lives. It was the anthem of the working class.

When asked what he found attractive about Trump, Tim said: “Bernie and Trump are the only politicians who say what they’re thinking and do what they say,” as his mother Mary nodded along. Hillary Clinton, by contrast, is corrupt, he said. In an election pitting Trump against Clinton, Tim said he would not vote for Clinton. Again, Mary nodded.

At the entrance, security personnel patted us down and asked if we were planning on voting for Trump. Only those who said yes were allowed to proceed.

When Trump began speaking, a demonstrator stood up and yelled that Trump was a racist. The candidate paused, shook his fist and demanded that security throw the protester out. “Keep his coat. Confiscate his coat,” Trump said from the stage. It was 21 degrees Fahrenheit (-6 degrees Celsius) outside. Trump snarled as his fans jumped to their feet hooting and jeering. One was reminded of a lynch mob.

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How We the People Were Screwed by Obama’s Bogus “Recovery”

Mike Whitney | February 02 2017 | Counterpunch

It’s amazing how Obama was able to dupe the American people into believing that the weakest expansion in the postwar era, was an “economic recovery.” Frankly, it boggles the mind.

Think about it for a minute: Productivity, business investment, personal consumption, inflation and growth have all been either sputtering-along at half speed or at historic lows for the entire period, and yet, President Flimflam has been out taking bows and high-fiving for his stellar performance as premier steward of the world’s biggest economy. It’s ridiculous. The whole storyline is completely fake.

So let’s settle this once and for all. The economic machinations that transpired under Obama cannot be accurately called a ‘recovery’, which is merely the public relations handle he used to conceal what was really going on below the surface.

And what was going on below the surface?

Why structural adjustment of course. The economy was being rejiggered in a way that deliberately kept growth weak (by withholding fiscal stimulus) in order reduce upward pressure on wages that would have pushed inflation higher forcing the Fed to raise rates. That may sound complicated, but it’s actually a very simple and straightforward way to keep inflation at bay.

But why would Obama deliberately want to slow growth merely to keep inflation low?

It’s obvious, isn’t it? Because if inflation began to rise, then the Fed would be forced to raise rates and stop shoveling trillions of dollars to the big Wall Street investment banks which, by the way, happened to be drowning in red ink at the time. In other words, the economy was deliberately strangled in order to save the banks. But then you probably knew that already, didn’t you?

Continue reading How We the People Were Screwed by Obama’s Bogus “Recovery”

“The End of Employees”

Naked Capitalism | February 03 2017 

The Wall Street Journal has an important new story, The End of Employees, on how the big company love of outsourcing means that traditional employment has declined and is expected to fall further.

Some key sections of the article:

Never before have American companies tried so hard to employ so few people. The outsourcing wave that moved apparel-making jobs to China and call-center operations to India is now just as likely to happen inside companies across the U.S. and in almost every industry.

The men and women who unload shipping containers at Wal-Mart Stores Inc. warehouses are provided by trucking company Schneider National Inc.’s logistics operation, which in turn subcontracts with temporary-staffing agencies. Pfizer Inc. used contractors to perform the majority of its clinical drug trials last year….

The shift is radically altering what it means to be a company and a worker. More flexibility for companies to shrink the size of their employee base, pay and benefits means less job security for workers. Rising from the mailroom to a corner office is harder now that outsourced jobs are no longer part of the workforce from which star performers are promoted…

For workers, the changes often lead to lower pay and make it surprisingly hard to answer the simple question “Where do you work?” Some economists say the parallel workforce created by the rise of contracting is helping to fuel income inequality between people who do the same jobs.

No one knows how many Americans work as contractors, because they don’t fit neatly into the job categories tracked by government agencies. Rough estimates by economists range from 3% to 14% of the nation’s workforce, or as many as 20 million people.

As you can see, the story projects this as an unstoppable trend. The article is mainly full of success stories, which naturally is what companies would want to talk about. The alleged benefits are two-fold: that specialist contractors can do a better job of managing non-core activities because they are specialists and have higher skills and that using outside help keeps companies lean and allows them to be more “agile”.

The idea that companies who use contractors are more flexible is largely a myth. The difficulty of entering into outsourcing relationships gives you an idea of how complex they are. While some services, like cleaning, are likely to be fairly simple to hand off, the larger ones are not. For instance, for IT outsourcing, a major corporation will need to hire a specialist consultant to help define the requirements for the request for proposal and write the document that will be the basis for bidding and negotiation. That takes about six months. The process of getting initial responses, vetting the possible providers in depth, getting to a short list of 2-3 finalists, negotiating finer points with them to see who has the best all-in offer, and then negotiating the final agreement typically takes a year. Oh, and the lawyers often fight with the consultant as to what counts in the deal.

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Living in Switzerland ruined me for America and its lousy work culture

Chantal Panozzo | February 1, 2016 | Vox

I was halfway through a job interview when I realized I was wrinkling my nose. I couldn’t help myself. A full-time freelance position with a long commute, no benefits, and a quarter of my old pay was the best they could do? I couldn’t hide how I felt about that, and the 25-year-old conducting the interview noticed.

“Are you interested in permanent jobs instead?” she asked.

“I could consider a permanent job if it was part-time,” I said.

She looked at me like I was speaking a foreign language and went right back to her pitch: long commute, full-time, no benefits. No way, I thought. Who would want to do that? And then it hit me: Either I had become a completely privileged jerk or my own country was not as amazing as I had once thought it to be. This wasn’t an unusually bad offer: It was just American Reality.

Now that I’m back, I’m angry that my own country isn’t providing more for its people

Before I moved to Switzerland for almost a decade, American Reality was all I knew. I was living in a two-bedroom apartment making $30,000 a year in a job where I worked almost seven days a week with no overtime pay and received 10 days of paid time off a year.

In other words, for the hours worked, I was making minimum wage, if that. The glamour of this job was supposed to make up for the hours, but in reality, working every weekend is a ticket to burnout — not success.

My husband and I were so accustomed to American Reality that when he was offered an opportunity to work in Switzerland, we both thought about travel and adventure — not about improving our quality of life. It hadn’t occurred to us that we could improve our quality of life simply by moving.

But without realizing it, or even asking for it, a better life quality came to us. And this is why, now that I’m back, I’m angry that my own country isn’t providing more for its people. I will never regret living abroad. It taught me to understand another culture. And it taught me to see my own. But it also taught me something else — to lose touch with the American version of reality.

Here are seven ways living abroad made it hard to return to American life.

1) I had work-life balance

The Swiss work hard, but they have a strong work-life balance. According to data from the Organisation for Economic Co-operation and Development, the average Swiss worker earned the equivalent of $91,574 a year in 2013, while the average American worker earned only $55,708. But the real story is that the average American had to work 219 hours more per year for this lesser salary.

Which brings us to lunch. In Switzerland, you don’t arrive to a meeting late, but you also don’t leave for your lunch break a second past noon. If it’s summer, jumping into the lake to swim with the swans is an acceptable way to spend your lunch hour. If you eat a sandwich at your desk, people will scold you. I learned this the hard way.

“Ugh,” said Tom, a Swiss art director I shared an office with at a Zurich ad agency. “It smells like someone ate their lunch in here.” He threw open the windows and fanned the air.

“They did. I ate a sandwich here,” I said.

Tom looked at me like I was crazy.

“No. Tomorrow you’re having a proper lunch. With me,” he said.

The next day, exactly at noon, we rode the funicular to a restaurant where we dined al fresco above Zurich. After lunch, we strolled down the hill. I felt guilty for being gone for an hour and a half. But no one had missed us at the office.

Lunchtime is sacred time in Switzerland. When I was on maternity leave, my husband came home for lunch to help me care for our daughter. This strengthened our marriage. Many families still reunite during weekdays over the lunch hour.

Weekends in Switzerland encourage leisure time, too. On Sundays, you can’t even shop — most stores are closed. You are semi-required to hike in the Alps with your family. It’s just what you do.

he author and her daughter in Urnaesch, Switzerland, watching the cows come home. (Brian Opyd)

2) I had time and money

The Swiss have a culture of professional part-time work, and as a result, part-time jobs include every benefit of a full-time job, including vacation time and payment into two Swiss pension systems. Salaries for part-time work are set as a percentage of a professional full-time salary­ because unlike in the United States, part-time jobs are not viewed as necessarily unskilled jobs with their attendant lower pay.

During my Swiss career, I was employed by various companies from 25 percent to 100 percent. When I worked 60 percent, for example, I worked three days a week. A job that is 50 percent could mean the employee works five mornings a week or, as I once did, two and a half days a week. The freedom to choose the amount of work that was right for me at varying points of my life was wonderful and kept me engaged and happy.

When I took only 10 days for a trip to Spain, my colleagues chastised me for taking so little time off

Often, jobs in Switzerland are advertised with the percentage of work that is expected. Other times, you can negotiate what percentage you would like to work or request to go from working five days a week to four days a week, for example. There is normally little risk involved in asking.

Continue reading Living in Switzerland ruined me for America and its lousy work culture

Facts That Our War-Happy Leaders Would Like To Keep Hushed Up

Paul Buchheit | January 23 2017 | Common Dreams

Just because it’s not being reported, doesn’t mean it isn’t happening. (Photo: U.S. Army Lt. Col. Mike Brady, Task Force Cyclone, 38th Infantry Division Public Affairs)

Donald Trump said, “I’m going to make our military so big, so powerful, so strong, that nobody — absolutely nobody — is gonna mess with us.”

Simple-minded but deadly thinking at the top derives from influential groups and individuals who think we have to KILL to keep the rest of the world in line. The compliant mainstream media scares us into accepting wars and drone killings overseas, military-style defenses on our own streets, surveillance of our private lives. For the war-happy leadership of America, certain realities are better left unsaid, or at most reported quickly and quietly.

1. Terrorist Acts in the U.S. Were More Common 40 Years Ago

Terrorist acts are deadly, but the panicky reports of mainstream news sources scare us more than they should, as when a FOX reporter called ISIS “the single biggest threat in [America’s] 200-year history.”

This graphic derived from the Rand Corporation’s terrorism database shows that the frequency of terrorist acts was greatest in the 1970s and 1980s. CNN notes that “There were literally hundreds of terrorist bombings, shootings and hijackings in States during the 1970s.”

2. Violent Crime Is Down — Except Where Young Men are Left to Languish and Die

The rate of violent crime has been consistently dropping since 1993. Except in places like Chicago, where nearly half of young black men are neither working nor in school.

The New York Times summarizes the effects of constant media scares: “Americans are primed, when they hear a loud bang or screams, or see a crowd break into a run, to think in terms of mass killings and active shooters. Yet crime statistics show that over all, violence in the United States is as low as it has ever been, and experts say the fear far exceeds the risk.”

Continue reading Facts That Our War-Happy Leaders Would Like To Keep Hushed Up

How American Life Continued to Deteriorate in 2016

Paul Buchheit | January 16 2017 | Common Dreams

Recent studies show America at or near the bottom among developed countries in disposable income poverty, income and wealth inequality, safety net provisions, employment, economic mobility, life expectancy, infant mortality, and the well-being of children. (Photo: Maryland GovPics / Flickr)

The reality of the disposable American has been building up in recent years, and new evidence keeps pouring in. Now the potential exists for greater suffering under the rule of a billionaire Cabinet that is far, far removed from average workers and renters and homeowners.

First the “Upside” — 5% of Us Are Millionaires 

Depending on the source, America has anywhere from 7 million to 13.5 million millionaires — about 5% of U.S. adults, and about a 40% increase in just six years. At the other end, 90% of us have gained NOTHING since 1997, and at least half of us NOTHING since 1980.

New Evidence of an Overall Collapse 

Recent studies show America at or near the bottom among developed countries in disposable income poverty, income and wealth inequality, safety net provisions, employment, economic mobility, life expectancy, infant mortality, and the well-being of children. We’ve run the table. The better part of America is equivalent to a third-world country.

Neglecting the Most Vulnerable Among Us 

We have fallen far as a nation when a half-million of our children under the age of four are taking anxiety drugs, and when the great majority of American families have to spend over 10% of their income just to send their four-year-olds to pre-school. And the “American Dream” for our kids? According to one careful study, they only have about half the chance that they had fifty years ago.

Racist Gap-Widening 

Today just 100 individuals own as much wealth as the entire Black population of America. Even a middle-aged African-American with a graduate degree has only about the same odds of becoming a millionaire as a white person with a high school diploma. The common misperception is that Black youths turn to drugs at a disproportionate rate. Not true. According to the American Journal of Public Health, “drug-use disorders were most prevalent among non-Hispanic Whites, followed by Hispanics, then African Americans.” Yet “racial/ethnic minorities are disproportionately incarcerated, especially for drug crimes.”

Finding a Stable Job is Becoming Impossible for Much of America 

Continue reading How American Life Continued to Deteriorate in 2016

Bill Black: Not 4 Sale – Why the Corrupt, Worker-Hating New Democrats Must Be Purged

Naked Capitalism | January 26 2017

By Bill Black, the author of The Best Way to Rob a Bank is to Own One and an associate professor of economics and law at the University of Missouri-Kansas City. Jointly published with New Economic Perspectives

This article explains three critical reasons why the Democratic Party’s leaders are far more insane than all but a few Democrats understand. It focuses on the leaders of the Democratic National Committee (DNC) and the New Democrats. The DNC leadership is composed of New Democrats. Debbie Wasserman Schultz had to resign in disgrace when the leaks proved that she was putting the DNC’s thumbs on the scale to favor Hillary Clinton (a New Democrat) in the presidential nomination contest against Bernie Sanders. Wasserman Schultz also took large contributions from big finance and, until she faced the prospect of a serious primary challenger, she supported efforts by predatory lenders to use Congress to bar the regulators from stopping their abuses.

Donna Brazile, a New Democrat, now runs the DNC. In this article, I show that Brazile denounced Democrats who refused to cheer President Bush’s invasion of Iraq (and his “Mission Accomplished” declaration) as so disloyal that when their country needed them they went “AWOL.” Not satisfied with that libel, she added the homophobic smear that voters would view Democrats who failed to cheer Bush’s lies and invasion as “effete.” Best of all, she said that Democrats should take as their role models Paul Wolfowitz, Richard Perle, and Frank Gaffney – Bush’s “chicken hawks” that devised the campaign of lies that led to the disastrous invasion of Iraq. Gaffney is now spreading hate of Muslims – and advising President Trump.

Continue reading Bill Black: Not 4 Sale – Why the Corrupt, Worker-Hating New Democrats Must Be Purged

Alibaba founder Jack Ma has a brutal theory of how America went wrong over the past 30 years

Jim Edwards | January 19 2017 | Business Insider 

(Jack Ma.WEF)

DAVOS, Switzerland — Alibaba founder Jack Ma thinks America went wrong over the past 30 years by focusing too much on war and Wall Street. Speaking at the World Economic Forum on Wednesday, Ma was asked about globalisation and the reaction to it represented by the election of Donald Trump as US president.

He responded that back when Thomas Friedman published “The World Is Flat” in 2005, globalisation looked like “a perfect strategy” for the US: “We just want the technology, and the IP, and the brand, and we’ll leave the other jobs” to other countries like Mexico and China, he said.

“American international companies made millions and millions of dollars from globalisation,” Ma said.

As an example of just how much was available, Ma said, “When I graduated from university I tried to buy a beeper, and it cost me $250. My pay at the time was $10 a month.”

Continue reading Alibaba founder Jack Ma has a brutal theory of how America went wrong over the past 30 years

The Continued Collision Between Trump and the Fed

Ian Welsh | January 10 2017

As I noted before, the Fed and the Trump admin are on a collision course. More evidence:

Fed minutes show many officials think they may need to accelerate rate hikes if fiscal raises demand over sustainable levels

— Sam Fleming (FT) (@Sam1Fleming) January 4, 2017

The Fed’s argument is that the unemployment rate is low enough that it is at the natural rate of employment which doesn’t cause wage-push inflation. As of December, that was 4.7%.  (There are tons of problems with this, but we’ll ignore most of them, what matters is what the Fed thinks.)

I am old enough to remember when an unemployment rate of 5% was considered a scandal, but no matter.

The fact is that the people who elected Trump aren’t feeling good.  To make them feel good Trump is going to have get the official unemployment rate lower than it is now, at least under 4%, and hopefully to 3% or lower and hold it there for some time, at least 2 or 3 years.

This stuff takes time to ripple thru the economy, and it takes time for a tight labor market to push employers both to raise wages and to hire people who they consider marginal.

If the Federal Reserve raises rates if Trump’s policies (“fiscal”, in the above) start to work, they will be making sure he can’t deliver to his constituency.

This is a direct collision course.

Now let me say something simple.  The Federal Reserve, for over 30 years, has deliberately crushed wages. This was policy.  Policy.

Continue reading The Continued Collision Between Trump and the Fed