economics – Anarres Project for Alternative Futures

Welcome to the Great Pandemic Depression

By Arun Gupta (March 23, 2020)

I wrote this days ago saying an economic contraction of 10% or more and an unemployment rate of 20%. Only now are investment banks worth hundreds of billions of dollars considering we are in a depression. I haven’t seen anyone acknowledge what is obvious: The same economic denialism is going on now as in 2008. Then, as now, we were told, “No recession.” Then “soft landing.” Then “V-shaped downturn and recovery.” That’s the current line from the Nazi Carnival Barker. Except it’s delusional at best, and a flagrant lie at worst. We are looking at months of economic inactivity and tens of millions unemployed.

Welcome to the Great Pandemic Depression.

If you are feeling stunned and disoriented by what is happening with the Great Pandemic, that’s because we have become embroiled in a war in just days.

We may be looking at a death toll in the millions just in the United States. We are probably looking at an economic depression. We are certainly looking at a disruption and reordering of society and social relations in a way that hasn’t happened since World War Two. That had a profound effect by with 10% of the population being shipped off to war, re-tooling the entire economy, and upending social relations, particularly around gender and race, in ways that rippled through society for decades. We don’t know if this will be on that scale, but we are now in a war society and economy with a malignant narcissist in command.

In this post, I want to focus on the economy. The economic fallout will be as bad as the Great Recession, and we may be headed for a depression. A recession is defined as two out of three quarters of economic contraction, but there is no accepted definition for a depression. So I define a depression as an economic contraction of more than 10% and a peak unemployment rate of 20% or more. This article is informative on the economic impact, but like virtually all reporting on the pandemic, it is behind the curve.

Let’s get ahead of the curve. It is likely many if not most states and big cities will shut down all schools, bars, and restaurants this month. Even if many states, particularly reactionary Red States, don’t enact blanket quarantines, it’s likely a majority of the population will be living under state-imposed self-isolation within weeks as the big states and municipalities do this.

Even before such drastic measures, the airline, hospitality, music, sports, film and TV industry, the entire travel and leisure industry, were trapped between shutting down and collapsing. Global supply chains will be severely disrupted with most of the advanced economies shutting down as well.

Meanwhile, China’s attempts to get its economy up and running again were faltering even before other industrialized countries were hit hard.

There will both be a huge drop in consumption for all but basic goods — food, water, medicine, medical supplies, stay-at-home entertainment — and a huge drop in demand as tens of millions of workers are idled. This will become a feedback loop. People will hoard savings as they hoard toilet paper because they are unsure of how long they need to ride out the storm and hold onto savings, putting off all unnecessary purchases. Consumption will plummet for non-emergency goods, rippling through the supply chain from extraction to manufacturing to sales to shipping. We are talking apparel, electronics, furniture, cars and trucks, consumer durable goods (apart from things like freezers that have all sold out).

One example. In February, car sales in China were at 21% of levels the year before. Let me repeat that. China recorded only one-fifth of the car sales from a year ago. Their techno-authoritarian state

Auto manufacturing, parts, dealers, repairs, and so are about a $1 trillion industry in the U.S., nearly 5% of the nation’s GDP. The energy sector has crashed as well, anticipating an economic free-fall and because of the price war between the Saudis and Russia. Trump has been acting as if everything is great because gas will be cheap, while ignoring the carnage, but even by his murderous logic low gas prices are bad for the economy. High oil prices are more beneficial to the U.S. economy because of the domestic oil and gas production boom that has become a significant employer throughout the supply chain, from drilling and equipment to chemicals, transport, and storage. (I am not saying fracking is good; it should be banned. But this is another economic blow).

Auto insurance accident claims have already declined significantly, indicating people are driving much less. If they aren’t going to work, kids aren’t going to school, they aren’t leaving the house, and huge amounts of wealth are being destroyed in the stock market crash, how likely is it people will be buying houses?

So there goes another huge leg of the economy: home construction, home sales, moving, and goods to outfit homes. Then there is the restaurant industry, which employs around 15 million people. Who knows how many might eventually be laid off, but it’s likely to be enormous both from direct closures, self-isolation, social distancing, and knock-on effects of reduced employment and spending.

All of this will ripple through the financial sector, especially in terms of loans and corporate debt. The Fed has unleashed nearly all of its tools, both Zero Interest Rate Policy and Quantitative Easing, but it’s having little effect because it’s not a financial crisis. Interestingly, one former banking regulator, Sheila Blair, says the Fed is not using its tools to shore up entire industries, which she says would help businesses and consumers.

If this wasn’t bad enough, state and local governments will be hard hit by declining sales tax and income tax revenue. So will mass transit systems by declining ridership and revenue. Meanwhile healthcare systems will be overtaxed and may collapse in some areas. Manufacturing will suffer as well as inventories build up. Less production and consumption will also mean less material moving, so warehousing, shipping, and trucking will all be dealt blows.

This is already worry that weaknesses and breaks could eventually appear in food supply chains. What happens if supermarkets become hotbeds of infection? They are likely to given the enormous foot traffic and all the people handling goods. Imagine if workers start coming down sick and others are too afraid to show up to work. This is deeply worrisome for obvious reasons.

And the fact a murderous psychopath is running the show doesn’t provide any comfort.

The Left Needs to Think About the Political-Economic Future in Six Months

By Joe Lowndes (March 21, 2020)

Tucker Carlson is being cheered by some liberals for calling out NC Sen. Richard Burr for insider trading.

Burr should be investigated for this, to be sure. But this is consistent with Carlson’s right-wing nationalism more generally – just as it was Pat Buchanan’s before him. However, it will matter in a new way in coming months I think – and in ways that the left should be paying close attention.

The economy is unquestionably going to continue to collapse at the top and the bottom in coming months. When the presidential campaign season begins in earnest this summer, when things may really spin out of control and suffering really increases, it is easy to imagine real pressure from below on the Biden campaign to call for greater economic reorganization that would include heavy taxation on the top brackets and more redistribution in the form of major healthcare reform, debt cancellation, relief, etc. (the return of Sandersism).

Trump will have to outflank this. As the livelihood and lives of members of his electoral base fall apart, they will need to hear him demonize some elites in their defense along with the nationalism he always draws on – more border control, more crackdown on immigrants, more hostile language about China, etc..

This will be where Carlson will be crucial. His distinct framing of politics – a combination of xenophobia, racism, authoritarianism, and full-throated defense of working-class Americans; broadcasted to his massive nightly audience – is exactly what Trump will need to beat Biden.

We should all really be thinking about what the political-economic landscape looks like in two, four and six months and how we should respond. The right surely is.

Uneasy Prosperity

By Mark Naison (July 26, 2018)

Those who think that the low official unemployment rate signals a return to prosperity for working class and middle class Americans or that it guarantees Donald Trump’s re-election in 2020 are not seeing what I am seeing on the ground.

In the working class neighborhood of Eastern Long Island where we have a home ( we are the only dual residence family on our block) almost every house has 4-6 cars parked in front of it, meaning that families are doubling or tripling up or taking in boarders. This has been going on for more than ten years, but you actually see MORE cars parked in front of houses than you did five years ago, even though the unemployment rate is lower. And this is not just a sign of the Latinization if the neighborhood. White, Black and multiracial families also have multiple cars in their driveways.

What is going on? Some of this is the result of inflation-in the past year, food and gas prices have gone up, and medical expenses have skyrocketed. But the major reason is wage stagnation and the disappearance of stable, high paying jobs. Everyone, young middle aged and old, has to piece together multiple jobs in a “gig economy” to assure themselves of the basic necessities of life and have little left over to afford homes and apartments on their own.

The profound sense of economic unease this inspires contributes to the tense and volatile political atmosphere in the nation. It also explains why some working class and middle class people who voted for Barack Obama turned around and voted for Donald Trump.

The majority of people in the country are struggling economically and are worried about where we are heading

That is our reality in 2018, no matter what statistics tell us

To quote Bob Dylan:

“It’s tough out there. High water everywhere”

Interview: Alexander Riccio

Alexander Riccio is a labor organizer based in Corvallis, Oregon. He co-hosts the podcast LabourWave Revolution Radio and is currently collaborating with the Common Space Collective on a project to revive the commons in the Willamette Valley.

What are the sorts of experiences that led you to become a union organizer?

I am asked this question, or a variation of it, a lot and I find it’s very difficult to answer. I think this is because when people ask, ‘how did you become an activist’ or ‘how did you become an organizer’ they seem to actually be asking ‘what is the secret to change people from being passive to active?’ At the risk of disappointing such earnestness, I do not think there is a secret formula we can learn that will magically turn people into activists or organizers. The process by which someone becomes who they are is one which covers an entire lifetime. While I believe there are cataclysmic moments, or events, that inevitably occur in a person’s life that will change the course of their personal trajectory, I think these are often less important occasions in a person’s development than we might like to believe. The experiences of everyday life are the ones that shape a person, and these often take on the appearance of monotony or lull, so much so that we tend to neglect how important such everyday life is for shaping a person’s perspective and steering them towards a life of passivity or action.

For me, I grew up primarily in a working-class house raised by a single-mother. My class background is complicated, because there were years where my mother re-married and her spouse slowly rose up the class ladder during their marriage. So I remember in one year I moved six times across three different states from apartment to apartment, and then we began moving less and our moves turned from one apartment to another to one condo to a rental house to a mortgaged home. There were years of stability, and then those years changed again to precarious living.

My experience as an adult has been one of precariousness to a slow and steady improvement in my class conditions (though not in a linear way) to where now I am modestly comfortable, but still very much a part of the working-class. All of this, which likely seems unremarkable, I think is tremendously important for the development of my political worldview.

I also grew up in a home where abuse at the hands of a former step-father was very common, which forced me to encounter the true ugliness of what some might refer to as “toxic masculinity.” I call it patriarchy. This was part of my everyday experience, and all of these things have shaped me and ultimately steered me toward organizing.

There were momentous events, as well, that directed me to organizing. Again, I don’t think on the whole these events were as important as the experiences of my everyday life, but they were still significant. The most significant single event, I believe, which guided me toward organizing was Occupy Wall Street. OWS sprang to life when I was twenty-three years old, working in a pizza restaurant where I made $8.50 an hour and had no healthcare (which was a particular challenge for me as I have chronic asthma). No one had to convince me that we live in a class society, but until OWS no one was saying things like “We are the 99%.” Once I heard that slogan it clicked for me that my material conditions as a wage-earner with no social safety net was a political relationship.

At the time of Occupy I was not yet ready to dive into activism and be a part of the movement, but I visited the encampments in Atlanta a couple of times and listened to people talk about a range of topics, from police brutality to the oppression of women to the dominance of the ruling class (the 1%), and then shortly after my visits the entire Occupy movement was brutally crushed by police. It was shocking to me at the time, and I realize in hindsight how naive I must have been to be shocked, but seeing the news for a week-straight of encampment after encampment being broken up by police and people getting the shit kicked out of them is something I’ll never forget. If you ever want to see me get ruffled, which I’m typically a pretty calm person, just tell me about how much “freedom” we have in the US to criticize our government.

I had to process what happened during Occupy for a while, I feel like at least a year, and then it became clear to me that I needed to get involved.

Who would you consider your organizing heroes and what did you learn from them that inspires you?

I’ve been very privileged in that I’ve had many great mentors who have helped guide me as an organizer. To sort of break the fourth wall here, two of my mentors who were quite honestly the biggest influences in my organizing are Tony Vogt and Joseph Orosco, the founders of the Anarres Project and two professors I had serve on my graduate school committee when I was a student. I also want to acknowledge Dr. Robert Thompson and Dr. Allison Hurst as great influences on me and my politics.

To me, there are two sides to the question of who are my “organizing heroes.” On the one side, there are those whose writings and political engagements have been inspiring and influential for me, and on the other side there are those who I have organized alongside that have inspired me and given me reason for hope. I feel that the latter are more foundational.

I’m impressed by the work of Jane McAlevey, Ursula le Guin, David Graeber, and many others. But, to sound a bit corny, my heroes are the ordinary people that I get to work alongside regularly. I’ve lived in Corvallis, Oregon now for over four years and I’ve been able to engage and work with so many people, and I continue to encounter new folks who are considerate and care about changing the world.

What inspires me the most is meeting someone and then getting to witness their own political development. I can’t tell you how many times I’ve met someone who is completely new to organizing, and maybe thinks politics is a matter of voting for either a Democrat or Republican, and then have witnessed them become radicalized and tremendous leaders. It happens all the time.

These experiences help recharge my energy, because it reminds me that there are potential radicals everywhere and people are capable of enormous personal growth. As well, the vast majority of people that I’ve engaged with in political conversations, even when at first they’ve seemed like a conservative or apologist for the status quo, have proven to be incredibly sensitive and compassionate. Nurturing those qualities of compassion and sensitivity is a primary task for organizers. If we approach organizing from a framework where we recognize people as dynamic and not static, that they’re politics are not fixed but always changing, then we can begin to start recognizing, as John Holloway puts it, “the rebellion in each and every one of us.”

Since we’re all potential agents of change, then we don’t really need to rely on the heroics of a few individual people to inspire us, and really we probably limit ourselves when we’re searching for those few famed heroes because likely the heroes we’re searching for are right in front of us all along.

What gives you hope for the future?

In addition to the things I’ve said about every person’s extraordinary capacity for change, what gives me hope is the fact that capitalism is not stable. Its power seems inescapable, but in fact the systems of domination we all live under are unstable and have many weaknesses.

I always make the following point when people slip into despair and fatalism, which is a particularly big problem for Leftist intellectuals (the ghost of Foucault perhaps): if capitalism were so absolutely powerful then why is it necessary to keep innovating techniques of surveillance and social control? In fact, why is it necessary for all the police and policing if the status quo were so total?

I make this point to highlight that capitalism is always having to conspire new ways of trying to control people because we are always rebelling against it, and as far back as written history one finds that there is a constant rebellion by ordinary people against any system of domination they live under. Silvia Federici points out that capitalism itself emerged as a counter-revolution to explosive liberation movements happening in the 16th and 17th centuries.

Maybe it’s just as plausible as any other claim about human nature to suggest that part of human nature is the refusal to be oppressed? The tendency latent in humans to refuse their subordination is something that continues to fuel my commitment to organizing, because while the future is not predetermined something we can reasonably assume as a given is that people will continue to fight against any forms of injustice we collectively encounter. Because of the human drive toward rebellion, capitalism is not stable. So that’s hope. The harder challenge is how to maximize such refusal into something at the scale we need to overturn this rotten system.

What do you think are the most significant obstacles to social/economic justice in the future?

I genuinely believe that the vast majority of people are capable of personal growth stimulated by their empathy for others, but what we encounter today is an incredibly isolating society where public space is steadily shrinking and the opportunities for people to connect with one another on a face-to-face basis are disappearing. When we are alienated in such a way, it becomes incredibly easy for people to dehumanize each other, because we don’t have to see each other’s lives and experiences as fundamentally human. In other words, attaining justice will require that we begin recognizing each other as human beings.

Part of how power is embodied is through the display of who gets to be considered human and who doesn’t. Within feminist theory there is the concept of “interpretative labor,” where what these thinkers have explored is how people who are oppressed are constantly in the position of having to identify the emotional needs of their oppressors. Oppressed people do this as a strategy for survival.

What this means is that we’re constantly looking through the gaze of the powerful in order to empathize with their so-called plight (consider here the despicable notion of the “white man’s burden” coined by Rudyard Kipling used as a pretext for invading foreign countries).

I remember one specific conversation I had in a classroom where I began talking about how difficult the labor and life of a farmworker is and how CEOs of big banks are not creating socially valuable goods that we can actually eat, and therefore we should be paying farmworkers more than CEOs when someone immediately said, “But those CEOs have hard jobs, and it can be really stressful to be a CEO.” What about the stress for the worker in the fields being paid poverty wages?

Coming back to my original point, I think these struggles to be recognized as human are really rooted in the structures of everyday life and the inability for people to have regular meaningful contact with one another. If we could start creating spaces where people can come together to relate to each other as humans, then I think we’ll begin making progress on these fronts.

Take up space.

Take it all.

I think one of our immediate tasks in fighting capitalism is to transfer as much private space as possible into public space, and as much public space as possible into the commons. And when we begin to start thinking about the commons, we can really enlarge our collective imagination about just what these spaces might look like and what they could mean. Common spaces could be seed exchanges and community gardens, open software programs and a collectively owned internet, they could be communes or cooperative workplaces, land trusts for sustainable farming or housing, and they could even be cooperatively owned laundry mats with free libraries and free educational classes.

The absence of shared spaces really fatigues our social movement energies, and I think if we begin to start creating spaces which can be for the purpose of organically reproducing our movement energies and relating to one another on a human level then we can shatter our collective alienation and really build a better world.

What books or movies would you recommend people study to learn about organizing and social change?

There are so many great books to read, but I’ll share a few that have been particularly impactful for me. John Holloway’s In, Against, and Beyond Capitalism; Jane McAlevey’s No Shortcuts: Organizing for Power; adrienne maree brown’s Emergent Strategies; Our Word is Our Weapon a collection of works by the Zapatistas, David Graeber’s The Democracy Project; Andrew Cornell’s Oppose and Propose; Grace Lee Bogg’s The Next American Revolution; and for a great encyclopedia of key radical terms and ideas I love the collection Keywords for Radicals: The Contested Vocabulary of Late-Capitalist Struggle.

For movies, the series Trouble put out by sub.media is spectacular and I love the films, Tout Va Bien with Jane Fonda and Z directed by Costa-Gavras. I also really like movies like It and A Bug’s Life because they have very clear messages on inequality and the power of collective action— just think about it.

But for all the great books and films one can learn about social movements, nothing really beats the education you’ll receive by getting involved with a group, whether that means joining an existing group or creating a new one. So for folks that are looking to gain more insights and education on how social change happens, the best way is to put yourself out there and start forming relationships with people in your area that are passionate like you are. I know for many this is daunting because we can feel like we don’t know enough, we’re not educated on political matters, we don’t have anything to say or our own original ideas, and we don’t have the experience all of which may make one feel very insecure. But, speaking as an organizer, I can guarantee you that you’re not alone in this feeling and the people that present themselves as super confident, cool, and knowledgeable on every little thing often are full of shit because we’re all really trying to figure this out as we go. Like the Zapatistas say, “walking we ask questions.”

(Interview with Joseph Orosco, February 2018)

OK Maybe The Markets Are in a Downturn

By Arun Gupta (February 10, 2018)

If you care about what’s happening in the financial markets, now is the time to panic. But then again, if you care, you are probably in the top 10% in terms of wealth in America as they own 84% of the stock.

On Monday, I shrugged at the 4% drop in the markets in one day as there was nothing unusual about that in historical terms. But things change fast in such a volatile market. The major indices were unable to make a recovery on Tuesday and Wednesday, and have now plunged to new lows, putting them into correction territory. That means a drop of 10%. If they drop 20%, that is the definition of a bear market, though in the last 20 years the two major bear markets saw brutal downturns, with a 50% drop in the S&P500 from 2000-02, and then a 60% drop from 2007-09.

A 10% drop is a long way from that, but indicators are looking ugly. This can turn out well, actually, as Trump has tied his fortunes so closely to the market, a downturn will hurt his and Republicans political standing.

Effects on the economy should be muted because it is doing about as well as a kleptocratic neoliberal system can be expected to do. But if the markets keep falling, going into a 30% or more decline, then it’s likely unemployment will increase. Which Trump will, of course, blame on immigrants, Democrats, Obama, and antifa.

On a personal note, I find the financial markets to be infinitely more fascinating than sports. About the worst thing that happens in sports are white bros rioting, as in Philadelphia. But the financial markets stoke wars and revolutions, topple governments, create widespread social and ecological chaos. It’s ugly, but it’s a lot more interesting, to me at least, than events like the Stupid Bowl.

Capitalism Isn’t Collapsing…Yet

By Arun Gupta (February 6, 2018)

If you are hoping capitalism is going to implode because the markets tanked today, don’t hold your breath.

The drop on Monday, February 5, in percentage terms was far from historic. If you look at the first picture, a six-month chart of the Dow Jones Industrial Average, it looks like it fell off a cliff. 1175 points sounds big, but it’s only a 4.6% loss.

Now look at the third picture. Today’s loss is nowhere close to the 20 biggest drops in history, the lowest of which was about 7%. I saw one report that said today’s drop barely cracked the top 300 in terms of single-worst daily losses.

The second picture tells the real story. This chart starts in 1987, right before the Black Monday crash that obliterated 22% of market value in one day. And it goes up to the present, a 31-year span. At the far left, you can barely see the blip that was the 1987 crash.

Since tangerine dumpster fire squeaked into the Oval Office by his tiny hands, the DJIA has jumped 45%. That’s a yuuuge run in just 14 months. But look at the middle of the 31-year chart, starting in January 1995. That’s the beginning of the “irrational exuberance” phase of the Clinton-Summers-Rubin-Greenspan market. It peaked in March 2000.

During that five-year stretch the Dow Jones nearly tripled, gaining almost 200%. In the same period, the Nasdaq soared nearly 600%. That 45% gain suddenly looks like a lot less.

So while the Trump bump happened fast, this type of rise is not unusual in the era of neoliberalism and financialization that began with Reagan. The explosion of financial instruments like options, futures, derivatives — which play an important role for capitalists to hedge risk — increase stock price movements, whether up or down, as do trading algorithms.

Financialization is marked by bubbles and crises, so it’s natural to conclude one is inflating right now. And capitalism can be thought of as a bubble going back centuries. But there isn’t a sign of a catastrophic bubble on the horizon. There have been lots of predictions of a global bubble over the last decade: property values, emerging markets, government debt, energy prices, but there are no impending signs of disaster as there was in the later stages of the last two major bubbles: the internet/tech bubble and the housing bubble. The internet bubble wiped out about $6 trillion in value, while the financial crisis cost something like $22 trillion. The first caused a mild recession that was worsened by the 9/11 attacks, and the second, well, the global economy still hasn’t recovered from that. Though the .01% engineered it to increase their wealth at the expense of the rest of humanity and the planet.

It’s also worth remembering that these bubbles didn’t pop overnight. The Internet bubble took about 18 months to go from peak to trough, while the housing bubble, in the stock market at least, had a decline of nearly two years. This downturn is not even two weeks old.

Currently, the only obvious bubble is cryptocurrencies, and that’s popped. It’s shed 65% of its value in two months, around $550 billion. All cryptocurrencies combined are now worth barely $300 billion. While everyone should enjoy some schadenfreude at the expense of the libertarian cryptoassholes who’ve taken a beating in their Bitcoin as they dream of a disruptive currency that would eliminate the state, an $850 billion bubble is a dot in a $76 trillion global economy.

As for what will happen, I don’t have a crystal ball. But if you look at the bottom of the first chart, there are two indicators from February 5 (relative strength indicator and stochastics) that have plunged, which indicate the market is in an oversold condition. It can keep going down, but the Dow is unlikely to drop much further. In technical terms, the 200-day moving average is around 22,800, and at that point a lot of big banks, technical traders, quants, hedge funds will pour in money seeking short-term profits. That alone would likely stabilize the markets. And lo and behold, the next day, Tuesday, February 6, the markets jumped, erasing half the losses of the previous day.

There are numerous problems with the U.S. economy — such as low savings rates, widespread poverty, stagnation in wage growth, extreme bullishness and complacency in the markets, perception of inflation affecting the bond market, the budget deficit and government debt — but these are nothing new or severe enough to trigger a general economic crisis. There is no existential problem evident that means this downturn is the start of a gut-wrenching years-long plummet on the scale of the internet and housing bubbles that spilled over into the global economy. Most likely this will be forgotten about in a few weeks.

The only prediction I’ll make is my analysis will upset left-wing collapsitarians who pin their political hopes on the deus ex machina of a breakdown in capitalism because they lack any hope in being able to achieve progress through collective mass action.