Net Republican control of state governments, 1978-2015

I will take the bait

Hillary Clinton is an astute campaigner. In a Facebook Q&A the other day, she was asked about the Black Lives Matter protestors who interrupted Bernie Sanders and Martin O’Malley. The moderator asked her the same question those protestors had posed to her rivals: How would she “begin to dismantle structural racism in the United States"?

Her answer was deft:

Black lives matter. Everyone in this country should stand firmly behind that. We need to acknowledge some hard truths about race and justice in this country, and one of those hard truths is that that racial inequality is not merely a symptom of economic inequality. Black people across America still experience racism every day.

Like any good politician, Clinton knows what her audience wants to hear. She also knows how to put her opponent on the back foot. Because how could Bernie Sanders respond to that? What's he going to say -- racial inequality is merely a symptom of economic inequality? He's not going to say that. Nobody would.

Well, get ready for a hot take, ladies and gentlemen, because that’s exactly what I’ll say here. Angry responses can be addressed to the comments box at the bottom.

***

Here’s my question to the angry commenters. If racial inequality isn’t merely a symptom of economic inequality, what is it a symptom of?

I already feel like I can hear the answer: it's a symptom of hundreds of years of slavery, colonialism, Jim Crow, and urban apartheid.

Yes. But what were slavery, colonialism, Jim Crow, and urban apartheid if not extreme forms of economic inequality?

What was the point of England’s colonization of Ireland if not to impose a lucrative “economic inequality” on its victims? Was the urban apartheid of Haussmann’s Paris not the “symptom” of nineteenth century economic inequality? 

And what exactly do you think all those African slaves were doing in the American South?

To quote Barbara Fields:

Probably a majority of American historians think of slavery in the United States as primarily a system of race relations—as though the chief business of slavery were the production of white supremacy rather than the production of cotton, sugar, rice and tobacco. One historian has gone so far as to call slavery ‘the ultimate segregator’. He does not ask why Europeans seeking the ‘ultimate’ method of segregating Africans would go to the trouble and expense of transporting them across the ocean for that purpose, when they could have achieved the same end so much more simply by leaving the Africans in Africa.

No one dreams of analyzing the struggle of the English against the Irish as a problem in race relations, even though the rationale that the English developed for suppressing the ‘barbarous’ Irish later served nearly word for word as a rationale for suppressing Africans and indigenous American Indians. Nor does anyone dream of analyzing serfdom in Russia as primarily a problem of race relations, even though the Russian nobility invented fictions of their innate, natural superiority over the serfs as preposterous as any devised by American racists.

It’s true, of course, that racial inequality is due to hundreds of years of slavery, colonialism, Jim Crow, and urban apartheid – to white supremacy. But to say so is merely to recount how one particular form of economic inequality came about. Just as the story of English imperialism is merely a history of how Ireland, even fifty years after winning independence, still found itself the poorest country in all of capitalist Europe.

***

What Hillary Clinton is really hinting at when she says that racism can’t be reduced to “economic inequality” is racial animosity. I can’t think of what else she could mean. The new generation of radicals on Twitter like to talk about “structural” racism or “institutional” racism – but behind the verbal bravado, what they, too, are really referring to is racial animosity.

So let’s talk about interpersonal animosity, because it’s certainly not irrelevant here. That Texas trooper in the Sandra Bland video I still can’t bring myself to watch – I would be shocked to learn that he’s not a violent racist. Forget “structural” racism for a minute. Let’s talk about plain old-fashioned racism. Let’s stipulate the obvious: the archetypal “hick Texas bigot cop” really doesn’t like black people.

But can that explain why Sandra Bland ended up dead? I doubt it, because there’s a lot of people the archetypal hick Texas bigot cop doesn’t like. He hates the nose-pierced vegans in Austin. He hates the liberal Jewish foundation executives in New York. He  hates the Harvard WASPs who write about structural racism. He hates Nancy Pelosi.

But none of those groups is likely to turn up dead in his jail cell – not as likely as a black man or a black woman.

If freedom means anything, it means the freedom to go about your life without having to worry about all the people who hate you. Because let’s be honest: lots of people hate each other. Yankees fans hate Red Sox fans. Brocialists hate identitarians. Nancy Pelosi probably hates that Texas cop just as much he hates her. So do the nose-pierced vegan and the Harvard WASP.

But the Texas bigot doesn’t have to worry about ending up dead because some people hate him. Blacks in this country don't enjoy the same luxury. If that’s not due to “economic inequality,” what is it due to? What could possibly account for that difference?

Is it just a coincidence that the rate of incarceration for blacks is six times the rate for whites – and that the rate for whites who didn’t graduate high school is, likewise, six times the rate for whites who did? Is that not due to economic inequality? Is it a coincidence that the white incarceration rate is almost four times greater in poor Idaho than in rich Connecticut? Or that so far just this year, cops in Oklahoma (population: 3.9 million) have killed 29 people, 18 of whom were white – more than the entire English police force (population: 53 million) has killed in the last decade?

***

The connections between economic stratification and ascriptive hierarchy, between social structure and subjective affect – these issues are not new and, believe it or not, Twitter, they weren’t even born in the antebellum American South.

Here’s Karl Marx in 1870, advising an activist friend in America about the Irish question:

England now possesses a working class divided into two hostile camps, English proletarians and Irish proletarians. The ordinary English worker hates the Irish worker as a competitor who lowers his standard of life. In relation to the Irish worker he regards himself as a member of the ruling nation and consequently he becomes a tool of the English aristocrats and capitalists against Ireland, thus strengthening their domination over himself. He cherishes religious, social, and national prejudices against the Irish worker. His attitude towards him is much the same as that of the “poor whites” to the Negroes in the former slave states of the U.S.A.. The Irishman pays him back with interest in his own money. He sees in the English worker both the accomplice and the stupid tool of the English rulers in Ireland.

This antagonism is artificially kept alive and intensified by the press, the pulpit, the comic papers, in short, by all the means at the disposal of the ruling classes. This antagonism is the secret of the impotence of the English working class, despite its organization. It is the secret by which the capitalist class maintains its power.

As a social theorist, Marx unfortunately lacked the subtlety of, say, a Hillary Clinton. His simplistic solution was for the Irish to free themselves from their English landlords in Ireland -- and unite with the English workers in England. 

Sophistry on Greece: An Anthology

1.  "The Problem Was That Greece Failed To Implement The Program."

2.  "Greece Is Different. Public Debt Was Growing Even In The Good Years."

3.  "But Look At How Much Greece Spends On Pensions."

4.  "It's Not About Demand. Greece Doesn't Export."

Here’s my prediction of what happens if Greece votes No

Well, it's not really a prediction, just my best guess about both sides’ next moves and the considerations they’ll be taking into account. Like most guesses about the future, it’s probably wrong, but hopefully illuminating. (If there's a Yes vote, I have no idea what will happen, except that Varoufakis will resign and the Eurogroup offer will be signed.)

***

Immediately after the No vote, Greece demands that the ECB restore full liquidity to the banking system (as any normal lender of last resort is supposed to do). A threat is made -- either publicly stated or implicit but communicated to the Eurozone authorities -- that if this doesn't happen, Greece will immediately issue a parallel currency redeemable against future tax payments.

At that point the ECB has to decide what to do. It won't make the decision without clear guidance from the political authorities, because the issuance of a parallel currency is a major step -- albeit potentially reversible -- towards a Grexit.

So the EU will have to decide which outcome is least unpalatable to it. Of course, neither is desirable from its point of view. If it complies and restores ELA, the bank panic ends, cash controls can be lifted, and a calm atmosphere can proceed in which Syriza can negotiate for a better deal -- now armed with a democratic mandate and a public admission from the IMF that the existing deal on the table was not sustainable.

Obviously that would be a terrible outcome from the EU's perspective. It would be perceived (rightly) as a major political victory for Syriza.

So the EU might refuse to restore bank liquidity. In that case Greece will issue the parallel currency.

In my view, the best way to do this is in the form of tradable tax credits redeemable starting in, say, a year. (See here and here.) A fresh batch of these would be allocated immediately to citizens and firms. These credits are obviously worth something: every retailer can use them to pay his VAT, every individual can use them to pay his payroll tax, etc. (Greek businesses have to pay VAT tax every three months, so these credits will come in handy.) Since they're tradable and valuable, Greeks will be willing to buy these credits for euros, albeit at a discount, mainly reflecting the risk that the drachma will be introduced at some point and the tax credits redenominated. As a result, the credits would be a form of money whose supply would be under the Finance Ministry's control. The result, if it works the way it's supposed to, would be Greece's ability to stimulate aggregate demand and increase economic output, which it can't do as long as the ECB has a monopoly over issuance of means of payment. In Milton Friedman’s terminology, the tax credits would accelerate the velocity of euros inside the Greek banking system.

There has been some talk about the technical and logistical difficulties of quickly changing over Greece’s electronic payments system or distributing currency to ATMs. But as I see it, no such complicated operations are needed. Greece can mail every household a paper check worth, say, 600 euros of future tax relief. Individuals can take the check to a currency exchange [SEE UPDATE BELOW], like the ones at the airport, and exchange it for, say, a 300 euro check, which they can then deposit at their bank. (Banks are closed for withdrawals but they’re happy to take deposits!) 

At that point, 300 real euros will be transferred in the usual way, electronically, from the currency exchange’s (Greek) bank to the customer’s (Greek) bank, and 300 euros will be credited to the customer’s account. The individual can spend the money using a debit card -- debit cards are working normally for domestic transactions -- or make (limited) currency withdrawals. Afterward, the currency exchange can sell the tax credits to business and individuals. Again, the point is that the velocity of money is increased, which increases GDP. And Greece can print as many of these credits as it thinks prudent.

So the EU's decision about whether to comply with Syriza's post-referendum threat will depend on how it views this parallel currency scenario: is it better or worse, from its point of view, than the Syriza-negotiating-triumph victory?

Of course, the upside of the parallel currency for the EU is that it doesn’t hand Syriza a major immediate victory. The obvious downside is that it would clearly be a big step towards Grexit. Moreover, it's a step that allows Syriza to keep its promise to voters not to take Greece out of the eurozone: there would still be euros in Greek bank accounts and the Bank of Greece would still be hooked up to the Eurosystem payments network.

The EU has put on a brave face about not really caring about Grexit, but behind the scenes it is deeply divided. Many on the Right, in Germany and Northern Europe generally, seem OK with the idea. (In fact, Schaeuble himself recently mentioned the possibility of a parallel currency in Greece.) But many others, on the center-left and in Southern Europe, privately view the prospect with horror. Francois Hollande, in particular, is now panicking. All along he assumed that Germany would never push things this far; he thought that if he privately and politely urged Berlin to go easy it would listen to him. Now the masks have come off and France is scrambling. God only knows what Renzi et al are feeling.  

So if  the EU takes this path -- if it denies Greece bank liquidity and forces it to introduce a parallel currency -- the immediate outcome would be a political crisis within the Franco-German core the likes of which haven't been seen in many decades.

Even worse is what might happen after the immediate crisis. If a major expansion of the effective Greek money supply does what one would expect it to -- stimulates the Greek economy -- this would be a real nightmare for the Eurozone, for reasons that are too obvious to explain. In many ways, it would really be the worst of all possible worst-case scenarios, politically speaking. And economically speaking, there is the question of what the markets' reaction would be in Spain, Italy, et al., which until now have weathered the Greek crisis OK.

Of course, the eurozone could retaliate against Greece and shut off its access to the payments network, or achieve the same thing by drastically reducing ELA, thus kicking it out of the euro. Politically speaking, this would presumably require a unanimous vote of the EU heads of state at the European Council. (If the ECB took this step over clear French opposition, I think the European project would be effectively over, at least for many years.)

Obviously it would be terrible for Syriza (and the whole country) if Greece were forced out of the euro. It would cause an appalling economic collapse, a visible humanitarian crisis in a NATO country. But in a sense it would also let Syriza off the hook: Hey, we tried our best to fight austerity within the euro, the voters agreed with us, and then the evil Europeans kicked us out.

So a lot depends on three things, in ascending order of importance:

(1) how smoothly Greece can roll out the currency issuance;

(2) how much it would stimulate the economy;

(3) above all, the Europeans' perceptions of (1) and (2).

The risks are high for both sides, but I think Greece is in a stronger position than most people think. Again, I’m probably wrong.

UPDATE:  Actually, this could be done without middlemen. Banks could accept and deal in the credits directly. 

Rise of the robots

[UPDATE: Despite what the chart title says, this actually shows employment in "industry," which includes mining, utilities, and transport along with manufacturing. Sorry for the slip.]

What are the most important issues for people of color?

Luckily, we don't have to guess! For decades, Gallup has been asking Americans this very question on a regular basis.

Here's how it works. A Gallup interviewer asks a respondent: "What do you think is the most important problem facing this country today?" The respondent volunteers up to three answers, and the interviewer records the responses word-for-word. Then, the data wizards at Gallup group together all the basically similar answers under a single heading (such as "Ethical-Moral-Religious Decline") and count the results.

Got it? Great! Let's see what the numbers say.

The most recent Gallup poll asking this question was conducted on March 5-8, 2015. There were 203 respondents who said they were something other than non-Hispanic whites. Of these, 105 were non-Hispanic blacks and 61 were Hispanic, the rest being Asian or something else. (For those who would point out the fairly small size of this sample, I enthusiastically invite them to obtain a larger one by combining several polls together -- and be sure to report what you find in the comments!)

What follows is the number of respondents of color who volunteered each issue as their first answer***.

In first place, by a pretty wide margin, we have "Unemployment/Jobs" (24 respondents). Then "Politicians" (17 respondents). In third place we have what Gallup called "The Economy (General)" (17 respondents). After that comes "Immigration/Illegal Aliens" (12 respondents, 5 of whom were non-Hispanic blacks; the number of Latinos was not specifically recorded). And in fifth place we've got "Health Care/Hospitals" (10 respondents).

I’d like to point out three other noteworthy items: (1)"Race Relations," as Gallup terms it, was the most important issue for 6 respondents. (2) The criminal justice system was most important for 5 respondents. And (3) elections or election reform was most important for 3 respondents.

As you might imagine, with such an open-ended question the total number of distinct answers was large -- 34 in total, as recorded by Gallup. So to help make sense of them all, I'm going to consolidate them into 10 larger categories of my own design, ordered from biggest to smallest.

For no particular reason, I'm going to call the first category "Bernie Sanders Issues." And I'm going to place Race Relations + Criminal Justice + Election Reform under the single heading, "Race."

Behold: the Vox populi!!

[UPDATE: Note that these are raw numbers, not percentages! The sample size is almost an even 200, so to get a percentage, just halve each number.]

*** As for the second-choice responses, there's not much news there. 156 of the respondents declined to give a second choice, and the top answer, "Health Care/Hospitals" was chosen by only 5 respondents. Nobody gave a third choice.

Uber deserves a fair chance in the marketplace

A while back, you might remember, the formidable Mike Konczal made a splash with a piece in the Nation titled “Socialize Uber.” His argument was simple: most of the capital used by Uber – the cars, the auto insurance – is paid for by the workers. Yet the workers don’t get any of the profits. (Actually, Uber probably doesn’t make any profits yet, but it collects something like $2 billion a year from drivers; it then blows most of that on marketing and lobbying.)

So the obvious answer is right there in the title: Socialize Uber. The company should be run as a worker cooperative.

At that point, Joe Wiesenthal of Business Insider posted a comment to Mike’s Facebook wall asking a reasonable question: “How do you go about turning Uber into a collective?” In response, I offered this:

the simplest way to turn Uber into a collective is just for cities to adopt regulatory codes for ridesharing that only permit ridesharing by worker-owned firms. Uber would then seamlessly transition into becoming a software provider.

Why am I posting this now, months later? One reason is that Mike just asked me to. But another reason is that I’d like to expand a little on the economics of this idea.

Suppose you were to pitch this concept – municipal laws that require ridesharing companies to be driver cooperatives – to Travis Kalanick, Uber’s charming CEO. I’m guessing he’d be opposed to it. But it's hard to see on what grounds he could object. Uber has always claimed that it doesn’t actually employ its drivers. Rather, the drivers are simply plucky entrepreneurs, and Uber merely sells a service that connects those entrepreneurs to customers via a sophisticated proprietary software system. Uber promises investors that it will soon be making mega-profits, but it also claims those profits merely represent a return on its technology and risk-bearing. Certainly the money doesn’t come from exploiting Uber’s workers. What workers? No, no – you see, the drivers are merely Uber’s business partners, and you can't exploit your business partner.

Well, in that case Kalanick should have no objection to what I’m proposing. Once these laws are passed, Uber can continue to sell its innovative software services at whatever price the market will bear, a price it will obviously set so as to ensure it is fully compensated for the technology and risk-bearing it’s already supplied. (Or, at least, it will hope the market will bear that price.) Except that now, Uber will be transacting with genuine business partners – worker cooperatives who are free to purchase software and service from the company (or one of its many competitors) in a free-market business transaction. Now it will be the workers who democratically set their own fares, determine their own work rules, and, of course, pocket any profits. And since Uber claims it already sets fares with the best interest of drivers in mind, it should have no reason to worry about losing its fare-setting control to them.  

Marx famously wrote that under capitalism, “the owner of money must meet in the market with the free laborer, free in the double sense, that as a free man he can dispose of his labor-power as his own commodity, and that on the other hand he has no other commodity for sale, is short of everything necessary for the realization of his labor-power.” Perhaps soon, Uber, the owner of money, will have a taste of what it’s like to engage in that sort of “free” transaction: in this case, meeting in the market with a transactor who owns all the labor-power necessary for that money’s realization.

Or, to quote the Old Man again, this time addressing an 1864 meeting of workers on the subject of labor cooperatives:

The value of these great social experiments cannot be overrated. By deed instead of by argument, they have shown that production on a large scale, and in accord with the behests of modern science, may be carried on without the existence of a class of masters employing a class of hands; that to bear fruit, the means of labor need not be monopolized as a means of dominion over, and of extortion against, the laboring man himself; and that, like slave labor, like serf labor, hired labor is but a transitory and inferior form, destined to disappear before associated labor plying its toil with a willing hand, a ready mind, and a joyous heart.

P.S.: In case anyone was wondering, there are many precedents for laws excluding certain kinds of owners from particular industries. Many states forbid corporations from engaging in certain kinds of farming; many exclude for-profit companies from certain kinds of gambling and credit counseling businesses; and federal restrictions on foreign ownership exist in a wide range of industries.