Thursday, October 27, 2016

Did You Know The Poor Have Gained The Most Wealth In The Past 200 Years?

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"You might think the rich have become richer and the poor even poorer. But by the standard of basic comfort in essentials the poorest people on the planet have gained the most....Inequality of financial wealth goes up and down but over the long term it has been the more important standard of basic comfort in consumption, inequality within and between countries has fallen nearly continuously."

- Deirdre N. McCloskey, 'Equality, Liberty, Justice and Wealth', The NY Times,, BU-6, Sept. 4

McCloskey puts forward an interesting premise, but once one reads two thirds through her piece it becomes clear it is yet more Neoliberal propaganda based on precious little evidence.  Start with the nonsense of a "basic comfort" gauge - i.e. comparing the downtrodden masses today with those in the early 1800s living in "tents and mud huts". Are you kidding me? Is THAT really the standard for economic elevation we're going to adopt? For a professor of economics it is incredible McCloskey wouldn't appreciate fully that one must use the living standards of the time - not how the lowest were 200 years ago. Else, one ends up comparing apples and oranges, chalk with cheese.

Indeed, if the poor masses have it so great today why are they flooding Europe en masse trying every which way to escape from their lousy economic environs - whether in South Sudan, Bangladesh, Mexico, Cuba, Honduras or wherever, e.g.
calais, migrant, britain, welfare, economic, immigration, population ...
African migrants congregate near Calais to try to make a break through the "Chunnel" to get to Great Britain

Make no mistake that most of these people are economic migrants, which they will admit  to if pressed. They want to get to nations where they perceive increased opportunity, never mind that may well turn out to be a mirage.  Though most attention has focused on fleeing Syrians, in fact the biggest wave is from Africa and this is no surprise because it is experiencing the biggest population explosion.

As noted in the 2015 WSJ piece, 'Humans, Lions Struggle to Co-Exist', Aug. 8-9, p. A7:

"Africa's human population is the fastest growing in the world. In roughly the same period as the lion decline (42 percent over 21 years), the number of Africans has doubled to nearly 1.2 billion people. The population will double again to 2.5 billion by 2050 according to the United Nations."

In fact, short of a global catastrophe (Avian flu, new Ebola outbreak?) , it is projected to reach 5.8 billion by 2100. That means nearly 1 of every 2 people on Earth will be African. Where will the resources be to support them? The jobs? The water? The life quality? Fact is, that population growth is unsustainable and means either vast numbers will perish, likely of disease, war or famine - or they will do everything they can to go to places with greater opportunity and resources- like Europe and the U.S.

Thomas Malthus grasped that an increasing population was unsupportable unless it had access to resources: food, minerals, materials for building, etc., beyond subsistence. He also observed this must be the case given that population grows geometrically (2, 4, 8, 16 etc.) and food production only arithmetically (2, 4, 6, 8). In effect, at some point the population growth becomes so great that the available foodstuffs can no longer support it and one has a crash or dieout.  This is a primary reason for the mass migration movement today, which is also a symptom of endemic poverty.. People understand that they have only one of two choices: starve over the long run or try to get to a place where they might have work, economic security...enough food to eat.

Already, as the preceding image shows, European locations are being swarmed by desperate Africans, from Eritrea, Uganda, Somalia, Nigeria and other countries - as well as by Syrians seeking to escape their civil war. And this doesn't include the tens of thousands also headed for the southern U.S. border, often crossing the Atlantic to Brazil then  going through to Central America. (See the recent TIME on the new migrant influx).

At the core of these human floods is one condition: overpopulation. The population of African nations, for example, is vastly outpacing the ability of those nations to provide jobs or even basic resources. And because these populations consume the scarce resources there are, it means that for their subsistence they are creating ecologic havoc.

That Niger person may not have a Chevy Grand Cherokee belching out 6 tons of CO2 a year but he or she is raiding forests (e.g. for wood to render charcoal for fuel) and thereby decimating the primary carbon "sink". All totaled, between 1990 and 2005 Niger lost 34.9% of its forest cover or around 679,000 hectares. Meanwhile, the total rate of animal habitat conversion for the same interval amounted to 25. 7 percent.

I bring population up because McCloskey as part of her Neolib PR tract  writes:

"Look at the astonishing improvements in China since 1978 and in India since 1991"

But does she seriously believe these economic improvements would have materialized without severe policies to cut back on population?  Take the case of China, for example. It rejected  the world's opprobrium  to implement  a "one child only"  policy.  It opted to do this to contain its numbers so as to strive for higher life quality for all its people. The proof 'is in the pudding' as they say, and if anyone doubts it they merely have to look at the size of China's middle class which now is vastly greater than the U.S. And when you travel to Europe, If you do, you will see Chinese tourists all over- from Jungfraujoch in Switzerland, to Bratislava, Slovakia, to Vienna, Austria and Prague.  There is NO way that many well off Chinese would be turned into globe trotters had the population policy not been changed to provide a more favorable resources to population ratio.

And let's get it straight that lower fertility rates in correlation with greater material abundance and financial status is not peculiar to China.  India by virtue of its mass sterilization policy (attributed to reducing its population by at least a half billion over 30 years)  is also such a success story. It made possible  at least a significant Indian middle class roughly on a par with China's.

McCloskey asks: "What then caused the Great Enrichment?"

And like a true believer, a true Neoliberal acolyte, she writes:

"Not exploitation of the poor but investment, not existing institutions but a mere idea, which the philosopher and economist Adam Smith called 'the liberal plan of equality, liberty and justice.' In a word, it was liberalism, in the free market European sense."

Just give them "equality before the law and equality in social justice and leave them alone", and magical things will happen. 

Which, of course, is codswallop. Because what she is referring to isn't anything other than Neoliberalism and even Adam Smith recognized the need to keep it under control lest resources get out of balance. Smith wrote in his superb book, 'An Inquiry Into The Wealth Of Nations':,

"There are needs in a civilized society that a barbaric one refuses to address" and "What improves the circumstances of the greater part can never be regarded as an inconvenience to the whole". If one reads his 2-volume work carefully, it is clear Smith is not at all exalting or proposing the distorted Neoliberal system at work in the world today. That system disavows economic security provided by the state-  and extols "free" markets ex machina, which are really coercive markets. What Smith advocated was but something more in line with Rhine capitalism.  As the authors of Capitalism vs. Capitalism have noted, the Rhine economies in the 1970s-80s (with large doses of socialist behavior) actually exceeded American cowboy capitalism in productivity for most of the 70s, 80s. Evidently, some ethic of redistributive sharing works, as even Adam Smith acknowledged in his quote above.

Thus the Rhine model of capitalism built in redistribution to benefit those left behind (say the victims of today's trade pacts)  via higher taxation, which U.S. Neoliberals disavowed. Meanwhile, Matt Miller in his book,  The Tyranny of Bad Ideas, has pointed out that all the so-called European "welfare state" economies (e.g. Denmark, Norway, Sweden etc.) fared much better than the neo-liberal, market dominated U.S. during the great recession. They provided the resources for their citizens to be more resilient, and also their higher formal tax structures prevented the sort of macro-scale deficiencies we still see in the U.S. where infrastructure is crumbling, public pensions are under-funded.

In the U.S. capitalist system, it is more rank commercialized competition that prevails - and that engenders a perpetual destruction that ravages precious resources.  These resources include higher quality (i.e. higher EROEI, or energy returned on energy invested) energy sources. Because of population beyond the bio-capacity limit, and especially higher consumption in the Neoliberal economic West, we are headed to a state of degraded energy assets, massive debt and poverty. See e.g.

In  a small nation like Barbados, with few natural resources, each must be maximized. There isn't the quantity to allow duplication or other squandering in wasteful competition. In the U.S., the exact opposite holds. Huge amounts of resources are yearly squandered in competitive games- that have only one or a few 'winners'. In effect, the 400-odd  billionaires counted in this country have emerged at the expense of vast finite resources being destroyed forever.

McCloskey also insists we can "improve the conditions of the working class" by "raising low productivity". She claims "enabling human creativity" is what has mainly worked.  In a sense, this is true, but that enabling hasn't been consistent or equally distributed for a number of reasons. One of them is the variability of productivity owing to the variability in the energy sources to drive it.

Thus, McCloskey ignores the history of productivity advances, and what's really  been behind them. Northwestern University's Robert Gordon has posited that the Industrial  Revolution (at the turn of the 19th century) had a vastly bigger effect on productivity, economic growth than the so-called "PC revolution" in the 20th. Think about it! The former meant transition from the impossibly laughable energy of whale oil to kerosene, coal etc., a mammoth jump in the EROEI of available energy sources. The latter transpired over a period of roughly 20 years over which the EROEI of oil actually decreased from 16:1 to roughly 10:1.

So no wonder even millions of computers were not able to match the sheer change in productive output that accompanied the Industrial Revolution- and within the scope of the latter's purview we include the internal combustion engine, electricity, and indoor plumbing.  How can we attain the corresponding drivers of productivity today? We can't without new sources of energy.

Gordon  argued, and he's correct, that by the time the digital revolution got under way- say in the 80s- the big payoff in productivity began shrinking.  In this context no amount of "creativity" would matter because ultimately creativity also is contingent on energy capacity to make the new creative concepts work. Meanwhile, the PC-computing payoff basically has "come and gone" dissipating by 2004, when EROEI reached below 10:1 and fracking began as a last desperate effort to snare the vestigial ""riches" of oil - along with deep sea drilling.

What might change the equation? Well, nuclear fusion power, but don't look for it anytime soon. See, e.g.

 The mistake the Neoliberal species called "homo economicus"  continues to make, then, is confusing advancing technology with adequate, high quality energy supply needed to actually leverage creative processes into widespread use for the benefit of all.
The Neoliberal cornucopians like McCloskey get it wrong because they don't take such factors into account nor do they see population growth for the toxin it is, and can't put 2 plus 2 together to see how it leads to the Malthusian nightmare (not necessarily on Paul Ehrlich's timetable).  All of this comes back to net energy which is that energy humans need to survive. If the oil taken from the ground, say by fracking, only has a ratio of 1:1 (for energy produced to energy consumed) then it is useless to extract it. The same amount of oil-energy you are using up to get it, is basically what it carries. There is no net gain.

It is the periodic net gains made possible by higher grade energy sources  that have allowed humans to reproduce and thrive in many places around the globe.  But there has always been a critical balance between the given energy capital and the rate of human consumption. Too little, productivity languishes, too much and existing energy sources become scarce or degraded and productivity still languishes.

It is currently the erosion of net gain (reflected in ever lower GDP)  that will eliminate a majority of  humans. Right now, with humans consuming nearly the equivalent of 1.6 Earths per year there is no way even a population of 7.3 billion can be sustained - far less squeezed into an area the size of Texas as the dimwit Bret Stephens once claimed. (WSJ, 'The Tyranny of a Big Idea', Nov. 3, 2015).
The Neoliberalism McCloskey worships only succeeds because it basically rigs itself against the citizens with fewer assets. This increases inequality, and worse, consolidates the power of the richest on the political system, especially in the U.S. This is why one can have laws which protect profiteers, such as corporations in Denver who refuse to build affordable housing because it doesn't redound to their profit demands or benefit. This leads to deplorable conditions like that shown below:
Michael Lee, 38, looks at a water bottle his daughter Kayah Lee, 6, brought back as her mom, Cristal Olko, 32, and sister, Kemani Lee, 3, look on at the A homeless family crowds into a corner of an Aurora, CO shelter. A food shortage at the shelter meant it had to seek outside assistance. How is Neoliberalism benefiting them?

The affordable  housing situation is so dire in the Denver area (as it is in others, e. g. Miami, San Francisco), that the city must hold a lottery every fall to award 700 to 1000. Section 8 vouchers.  Without such vouchers, a Denver resident would need an income five times the median existing one just to own a home at the median price. He or she would need three times the income to rent - given a median rent in the area of $1700/ month. Do the math for a Walmart clerk or Starbucks barista and see how that works out. And what of the 1.5 million Americans who live on only $2 per day, as reported in Project Censored's No. 5 most concealed story?  (Colorado Springs Independent, Oct. 26- Nov. 1, p. 24)

Here in Colorado Springs the  affordable housing situation isn't much better. The median home price at $262,500 - while less than Denver's ($345,000)  - is still beyond the reach of service sector workers. The mean apartment rent has spiked to $991/ month,  leaving many others in the cold.

What is Neoliberalism doing to rectify this situation? Well, nothing, because as McCloskey writes it's premise is "to leave people alone once laws for social dignity" are in place, oh as well as "equality under the law" (as I've shown, a total farce, given it doesn't exist in practice).  If the laws themselves are predicated on coercive markets instead of genuine free markets, this is a myth. To quote Charles Reich, Opposing the System, Crown Books, 1995, p. 22:

"A free market produces results that favor the health of society as a whole, because an essential balance is maintained. But in a coercive market, the balance is destroyed, the earning power of work and the standard of living of workers declines, and society as a whole is devastated while those with economic power gain an ever more unbalanced share of the nation's economic wealth."

Adam Smith, if he saw McCloskey's paean to the Neoliberal idiom would be turning over in his freaking grave.

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