Power for the People

The central idea is simple: people join together through some form of public, community or employee-owned business to meet local needs and thereby regain a measure of local economic democracy and control. Partly self-help, partly community mobilization, and partly sketches for future system-wide expansion, community wealth-building efforts can be found in virtually every region of the country. The range of efforts is vast. Community wealth-building institutions include community development corporations, community development financial institutions, social enterprises, community land trusts, employee-owned enterprises, and cooperatives. All pool capital in ways that create new jobs and anchor jobs in communities.

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Massey, they contended, was simply too dangerous to be in business. But their pleas fell on deaf ears. The company plugs along, despite its shoddy environmental and safety records, churning out profits for its parent company, Alpha Natural Resources.

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Here, then, is a simple question that, for some curious reason, no one bothers to ask, no less answer: How much are we spending on national security these days? With major wars winding down, has Washington already cut such spending so close to the bone that further reductions would be perilous to our safety?

In fact, with projected cuts added in, the national security budget in fiscal 2013 will be nearly $1 trillion -- a staggering enough sum that it’s worth taking a walk through the maze of the national security budget to see just where that money’s lodged.

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The broad goal is democratized ownership of the economy for the “99 percent” in an ecologically sustainable and participatory community-building fashion. The name of the game is practical work in the here and now—and a hands-on process that is also informed by big picture theory and in-depth knowledge.

Thousands of real world projects -- from solar-powered businesses to worker-owned cooperatives and state-owned banks -- are underway across the country. Many are self-consciously understood as attempts to develop working prototypes in state and local “laboratories of democracy” that may be applied at regional and national scale when the right political moment occurs.

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A few highlights:

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In the best of times, small business owners complain about taxes and regulations, and that is starting to happen again.

As we scour the economic landscape for any data point, no matter how tiny, that will help us glean some sense of what the future holds, the fact that business owners might be seeing an uptick in consumer demand could be significant. This is especially true after the disappointing April jobs numbers released 10 days ago provoked a new round of mild panic about U.S. economic prospects.

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That nebulous word "stuff" is significant. It asks us to see all exports as the same and to refrain from making nuanced value judgments about what exactly we're shipping overseas. In this coldblooded view, a job-creating export is a job-creating export, and that's as far as any conversation should go.

At first glance, such reductionism seems logical, rational, even boringly uncontroversial. But two recent news items highlight how in a globalized economy, there are troubling consequences that come from the particular kind of export economy we're building.

The first bit of news came from the Washington Post, which this week reported that "the Obama administration is crafting a proposal that could make it easier to export firearms and other weapons." Though the Homeland Security and Justice Departments say the new rules could make it easier for terrorist and drug cartels to further arm themselves, the White House is nonetheless citing the "stuff" theory of exports to ignore the objections.

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Long Op-Ed short, Brooks says "cyclicalists" (unnamed) think we should deficit-spend our way to prosperity, because, according to Brooks, they believe that "the level of government spending is the main factor in determining how fast an economy grows." (No one actually believes this.) But according to Brooks, all of our problems are "structural," which is to say that the reason we have mass unemployment and debt and growing wealth disparity is because of "technological change" and crappy schools. And "special-interest deals" in the tax code.

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The fact that the Occupy movement is unprecedented is quite appropriate. After all, it’s an unprecedented era and has been so since the 1970s, which marked a major turning point in American history. For centuries, since the country began, it had been a developing society, and not always in very pretty ways. That’s another story, but the general progress was toward wealth, industrialization, development and hope. There was a pretty constant expectation that it was going to go on like this. That was true even in very dark times.

I’m just old enough to remember the Great Depression. After the first few years, by the mid-1930s -- although the situation was objectively much harsher than it is today -- nevertheless, the spirit was quite different. There was a sense that “we’re gonna get out of it,” even among unemployed people, including a lot of my relatives, a sense that “it will get better.”

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Generally speaking, we like to see evidence that the "animal spirits" of Americans are reviving. As Keynes has taught us, demand stokes the fires of a capitalist economy. In that regard, any sign that Americans are ready and willing to buy cars or plunk down their dollars for an education or pull out their credit cards is encouraging.

But only if we can actually afford it. Which brings us to a sobering quote in the middle of the Bloomberg story.

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But it's becoming increasingly clear that growth and prosperity are threatened by the declining share of income going to the non-wealthy over the last 35 years.

Friday's disappointing jobs report confirms that "the job creators" should be fired, since they only created 115,000 new jobs in April, which isn't even enough to employ new entrants to the workforce. And while the unemployment rate ticked down from 8.2 to 8.1 percent, that's only because more unemployed people gave up and left the labor market entirely. Romney advisor Eric Fehrnstrom (Mr. Etch-A-Sketch) blames President Obama, and he even pretends his candidate cares that "people are so discouraged they are dropping out of the workforce all together."

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Friday’s jobs report for April was even more disappointing than March. Employers added only 115,000 new jobs, down from March’s number (the Bureau of Labor Statistics revised the March number upward to 154,000, but that’s still abysmal relative to what’s needed). We need well over 250,000 new jobs per month in order to begin to whittle down the vast number of jobs lost in the Great Recession. At least 125,000 new jobs are necessary each month just to keep up with an expanding population of working-age people.

With only 115,000 jobs in April, the hole is getting even deeper.

Most observers pay attention to the official rate of unemployment, which edged down to 8.1 percent in April from 8.2 percent in March. That may sound like progress, but it’s not. The unemployment rate dropped because more people dropped out of the labor force, too discouraged to look for work. The household survey, from which the rate is calculated, counts as “unemployed” only people who are actively looking for work. If you stop looking because the job scene looks hopeless for you, you’re no longer counted.

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The Institute of Supply Management’s non-manufacturing index fell to a four-month low in April (53.5, down from 56 in March – still positive territory but just barely). New orders dropped to their lowest level in six months.

That doesn’t bode well, especially when combined with other recent data. The Commerce Department reports that the economy as a whole has slowed from the last quarter of 2011 when it was expanding at an annual rate of 3 percent, to 2.2 percent for the first quarter of this year. And last month’s unemployment report showing only 120,000 new jobs in March was downright alarming.

What’s going on? Europe is sliding into recession, and gas prices are still high. But the real problem lies closer to home. Cuts in government spending are reducing domestic demand precisely at the time when consumers are reaching the end of their ropes and can’t spend more.

Consumers did all the spending they could in the first quarter. Household purchases increased 2.9 percent between January and March. That was the biggest increase since the last quarter of 2010.

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Although capitalists would prefer we think otherwise, human ingenuity created capitalism—not the other way around. And work long precedes the existence of the capitalist system of jobs. Like music and art, work is intrinsic to the human condition. It is essential not just to our survival but to our progress as a species. It is something we do naturally, regardless of the economic and political systems in place at any given time or place in human history.

Of all the systems that contain and define our lives, perhaps the most opaque is the job system. While it is common for us to think about our individual job—or the lack thereof—it is rare that we consider the job system itself. It seems to us that humans have always been either employers or employees -- and we always will be. It’s the ultimate TINA (There Is No Alternative).

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Your latest book is a sweeping economic history of America. In a nutshell, how did America become such an economic powerhouse?

Well, it did so as a result of collaboration between the government and the private sector and, increasingly in the 20th century, the nonprofit, academic research sector. It’s quite a different story in reality from the tale that is sometimes told of how capitalism grew up without controls in the United States, and then with the New Deal it came under regulation. In fact, the government both at the federal and the state level was deeply involved with projects for promoting the industrialization of the United States and the creation of a capitalist market from the administration of George Washington onward.

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If you've heard it once from your Fox-watching uncle, you've probably heard it a hundred times. "The government never did anything for me, dammit," he grouses. "Everything I have, I earned. Nobody ever handed me anything. I did it all on my own. I'm a self-made man."

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Britain’s Office for National Statistics confirmed on Wednesday that in the first quarter of this year Britain’s economy shrank .2 percent, after having contracted .3 percent in the fourth quarter of 2011. (Officially, two quarters of shrinkage equal a recession.) On Monday, Spain officially fell into recession for the second time in three years. Portugal, Italy and Greece are already basket cases, and it seems highly likely France and Germany are also contracting.

Why should we care? Because a recession in the world’s third-largest economy (Britain), combined with the current slowdown in the world’s second-largest (China), spells trouble for the world’s largest.

Remember – it’s a global economy. Money moves across borders at the speed of an electronic impulse. Wall Street banks are enmeshed in a global capital network extending from Frankfurt to Beijing. That means that, notwithstanding their efforts to dress up balance sheets, the biggest U.S. banks are more fragile than they’ve been at any time since 2007.

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More precisely Noah gives us a survey of the work of academic economists on this topic, and his book has the advantages and some limitations of that genre.  Among the advantages are a neutral  tone and a balanced treatment of many controversial questions. A limitation is that the surveyor brings nothing of his own to the table – neither critical perspective nor new information. This is a very good book about what other people think.

After preliminaries dealing with mobility, Noah, a staff writer at the New Republic, offers a short discussion of race, gender and family structure. He takes it as a given that civil rights, female liberation and changing marriage norms did not actively bring about income changes for the groups involved in those movements.  Instead, Noah accepts the prevalent view of economists that larger forces were at work and that minorities, women and families were affected by, but not principal actors in, the drama of rising inequality.

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Suddenly, the four-week moving average, a gauge designed to smooth out all that weekly noise, was up to its highest point since January. Coming on top of a weaker-than-expected labor report for March, signs that industrial production growth is slowing, and continued softness in housing, the conventional wisdom on the state of the economic recovery took a swift turn for the bearish. The New York Times and Wall Street Journal immediately published nearly identical articles, "Fears Rise That Economic Recovery May Falter in the Spring," and "Economic Signals Stir Worries."

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