Economic Inequality

August 7, 2014August 10, 2014

Gina Raimondo and wealth inequality

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The future of democracy is being threatened and will be determined by our response to the problem of ever increasing wealth inequality. As a very few generate exceptional profits from capital investments, the rest of us recede ever further into relative poverty. Democracy and the open society are under serious threat from snowballing capitalism, which buys elections and access to the political system at prices the average citizen cannot compete with. It is not science fiction to suggest that our children may be slaves in all but name to uncaring oligarchs in some dystopian future.

One of the problems reformers run into is the opaqueness of the financial world. Not only are the systems that govern financial transactions intentionally byzantine and unnecessarily complex, financial actors working within the system do everything they can to obscure who owns what assets, who is paying how much to whom, and by what pathways money tends to flow. Everyone who has seen a movie is familiar with the idea of “shell corporations” and “offshore accounts” as a way of hiding financial assets for nefarious purposes, but few of us are aware of how pervasive these and similar practices are in reality.

If we seek to put an end to ever increasing economic and political inequality and prevent future economic crises similar to or worse than our recent recession, then economic transparency is of the utmost importance. As Thomas Piketty says in his landmark (but far from perfect) Capital in the Twenty-First Century, “there should be clarity about who owns what assets around the world.” (page 518)

Piketty argues that the debate around growing inequality and the management of global capitalism is operating in the dark. We have no reliable data about who owns what and how much money they are making. A significant portion of the world’s wealth seems to be squirreled away into secret black market accounts. Without accurate data, we are flying blind and suggesting solutions to problems we don’t fully understand.

It is in this light that I see the actions of Treasurer Gina Raimondo as contrary to the public good. Raimondo, far from fighting for the rights and economic prosperity of all Rhode Islanders, seems more interested in veiling herself and her allies from financial scrutiny. For instance, Raimondo’s use of a blind trust, to hide her investments and income from scrutiny during her gubernatorial campaign, flaunts economic clarity and openness.

More problematic is the outrageous letter Raimondo sent to the RI Attorney General’s office, in which the treasurer maintains that revealing the amount of money Rhode Island pays to its hedge fund managers might put hedge fund managers at risk of kidnapping! From David Sirota at the International Business Times:

Citing the case of Eddie Lampert, an investor who was abducted in 2003 by ransom-seeking kidnappers, the letter to Assistant Rhode Island Attorney General Michael Field from Raimondo’s office further argued that disclosing too much information about financial fees and compensation could endanger the lives of hedge fund managers.

The amount of money people like Treasurer Raimondo make from their jobs as elected officials pales to insignificance when compared to the amount of money they generate from their capital investments. If people were given a true picture of how wealth is distributed, there would be outrage. This is why financial transactions and the ownership of assets is hidden, and why a new era of financial transparency is mandatory if we wish to preserve our democracy.

Otherwise, the only viable financial plan for those wishing to avoid economic serfdom may be the realization of Treasurer Raimondo’s worst fears: the kidnapping and ransoming of the 1%.

May 5, 2012May 5, 2012

May 5, 1886: The Bay View Massacre in Milwaukie, Wisc.

One topic that has been on my mind lately is the attempt to kill the 8-hour workday.

In many places in the private sector, anything less than a 10-hour day is derisively referred to as working “half-a-day”.

Purely by accident, I learned the May 5 is the anniversary of what is called the Bay View Massacre in Milwaukee, Wisc.

The gist is that on May 5, 1886, seven people, including a 13-year old boy, were shot and killed by National Guardsmen during a strike. The workers were striking for an 8-hour day.

The account on Wikipedia is pretty short.

http://en.wikipedia.org/wiki/Bay_View_Massacre

The strike started on May 1, with about 7000 workers. By May 4, the number had swollen t0 14,000. (I’m guessing that both numbers probably included sympathy protesters.) At that point, the Republican governor brought in 250 Guardsmen. The next day, he gave the order to “shoot to kill” any workers who tried to enter the grounds 0f the Milwaukee Iron Company, where the strikers worked.

On May 5, the strikers/protesters attempted to enter the grounds, and the Guardsmen opened fire. Seven people died.

This is the history of labor. Capital and property were often protected by deadly force. Capital held a monopoly on the force of “law and order”, so the latter were used, almost exclusively, to prevent workers from attempting to organize.

Given that Capital had a monopoly on the law, it’s a bit silly to suggest that workers had any sort of leverage or clout to negotiate better conditions on the basis of individual contracts. Yet this, I believe, is what the ‘right to work’ position suggests: that unions interfere with the ability of a company to enter a contract with an individual worker. Correct me if I’m wrong.

But the point is, when Capital controls the law, the worker has no basis for negotiation. A real, live, effective negotiation requires that both sides have something the other side wants. If a company is able to fire any worker asking for a better deal, there is no way to suggest that anything like an equal balance exists between the two negotiating parties. The company holds all the cards.

The only way workers can deal in anything like equal negotiations is if the workers are organized. That way, the company has some incentive to accept that workers have something like a roughly equal bargaining position.

In a world where even lawyers are finding themselves expendable, outsourceable, and lacking in bargaining power as they look for jobs, it’s really kind of silly to suggest that straight wage earners can negotiate with employers for better terms. In fact, this is one reason Republicans have fought Obama tooth and nail trying to derail any attempt to stimulate the economy: employers love it when unemployment is north of 8%. That effectively kills all ‘wage pressure.’

This means you get circumstances like we have: high unemployment, low wage growth, but phenomenal profits for corporations and executives. Just like we had in the 1880s.

And, as we’ve seen, Capital was willing to kill to maintain its position of dominance.

This is why I so vehemently object to current Republican policies: we tried it. People died. It didn’t work, unless you were a plutocrat. Create the same conditions, chances are we’ll get the same outcome.

January 4, 2012January 11, 2012

Finland Finland Finland, the country where I quite want to teach

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As it turns out, Monty Python was right: Finland isn’t just a great place for snack lunch in the hall…

It really does have it all: social democracy, smoked fish, and a public school system that American reformers are beginning to notice. Too bad they are noticing the wrong thing.

As many of you know, Finland is all the rage in education reform circles these days, particularly among those who don’t think that teacher unions and school governance are the primary problems facing American public schools. Finnish school children have done very well on international tests in recent years (far better than the middling U.S.), prompting a wave of visits to Scandinavia by American politicians and educators, and speaking tours by Finns here.

Most of the discussion has revolved around their model for the professionalization of teachers — kind of like Denver’s experiment on steroids — and on their lack of emphasis on standardized high-stakes testing and rote learning. All teachers in Finland must earn masters’ degrees from competitive graduate programs, are paid like professionals, and given responsibilities for curriculum and assessment that vastly exceed those of American teachers in the post-NCLB era.

The curriculum, meanwhile, de-emphasizes competition and tracking, and tends to be much more focused on creative play and vocational preparation than one generally finds in American schools (particularly urban ones). According to a recent article by Samuel Abrams in The New Republic, Finnish schools provide students with far more recess than their American counterparts — 75 minutes a day at the elementary level, compared to an average of 27 minutes in the U.S. They also mandate lots of arts and crafts, and more learning by doing.

American school reformers seem to see what they want to see in the Finnish success story. Liberals (if I can use that word in this context) point to their investment in early childhood education and parental leave policies, as well as the teacher autonomy discussed above. Conservatives point to the ability of Finnish schools to get high achievement out of students despite large class sizes, and regardless of background. If they can do it, they argue, why can’t our teachers? Of course, the ‘blame-the-teachers’ mantra is somewhat undermined by the fact that Finnish teachers are unionized at even higher levels than American teachers are, and also have tenure.

It is also undermined by the fact that levels of inequality and child poverty in the U.S. vastly exceed Finland’s — a critical point.

Anu Partanan, a Finnish journalist, published a thoughtful short piece in the Atlantic Monthly in late December 2011 on K-12 education in her country. The takeaway: most American observers have really missed (ignored) what’s at the core of Finnish school reform — equity.

Dissatisfied with the quality of Finnish public education at the end of the 1960s, in 1971 a government commission concluded that economic modernization could only take place if schools were improved. According to Abrams, Finland committed to reducing class size, boosting teacher pay, and requiring much more rigorous training for teachers.

While the US has focused primarily on ‘excellence’ since 1980 (based in part on the mistaken assumption that we had veered too far in the direction of equity since the mid-50s), Finland launched a concentrated effort to use public education to counteract inequality. It did this, based on the belief that equity would lead to excellence, and enable resource-poor Finland to compete in an increasingly globalized and post-industrial economy. This effort was supported by relevant social policies too.

Pasi Sahlberg, director of the Finnish Ministry of Education’s Center for International Mobility and author of the new book Finnish Lessons: What Can the World Learn from Educational Change in Finland?, told Partanan that the “main driver of Finnish education policy has been the idea that every child should have exactly the same opportunity to learn, regardless of family background, income, or geographic location. Education has been seen first and foremost not as a way to produce star performers, but as an instrument to even out social inequality.” At its core, Sahlberg says, this means that “schools should be healthy, safe environments for children. This starts with the basics. Finland offers all pupils free school meals, easy access to health care, psychological counseling, and individualized student guidance.”

While Partanan may not be an experienced observer of American politics and society, she is almost certainly correct that the way that American ‘reformers’ are viewing Finland’s success — ignoring the equity goals that are at the heart of it — demonstrates a kind of willful blindness to what is fundamentally wrong with the opportunity structure in the US, and how it undermines both the quality and distribution of public education.

The money quote:

“It is possible to create equality. And perhaps even more important — as a challenge to the American way of thinking about education reform — Finland’s experience shows that it is possible to achieve excellence by focusing not on competition, but on cooperation, and not on choice, but on equity.

The problem facing education in America isn’t the ethnic diversity of the population but the economic inequality of society, and this is precisely the problem that Finnish education reform addressed. More equity at home might just be what America needs to be more competitive abroad.”

It is unfortunate that so many of the moderates and liberals who formerly served as voices for equality of opportunity in public schools in the U.S. have fairly tripped over themselves — and others — to leap onto the bandwagon of ‘reform’ as its presently understood.

Originally posted on Chants Democratic blog.