Higher Education, Wages, and Polarization

Barry Ritholtz posts Rob Valletta's article about Higher Education, Wages, and Polarization.

A post-graduate degree is an increasingly important part of the skill portfolio for individuals in the high-skill non-routine cognitive occupations. This finding should not be interpreted as implying that a college degree is an inadequate credential for labor market success. As shown in Figure 1, the wage gap for people with college degrees continues to be very high, and recent research has verified that a four-year college degree remains a sound financial investment for most workers (Daly and Bengali 2014, Abel and Deitz 2014).

Nevertheless, the findings in this Economic Letter appear to highlight an important role for new technologies and labor market polarization, with implications for the U.S. wage structure. Lindley and Machin (2013) report similar findings regarding the growing gap between graduate and college-only degree holders. They also show that the proportion of workers with post-graduate degrees rose more in occupations that experienced larger increases in computer use in recent decades. This reinforces the apparent link, or complementarity, between computer-based workplace technologies and the skills of workers with graduate degrees.

On the other hand, Beaudry, Green, and Sand (2013) present evidence that the importance of technological skills in the U.S. labor market has declined since the year 2000. This also corresponds to the period of relative stagnation in the wages of college-only versus post-graduate degree holders shown in Figure 1. Their evidence suggests that the growing wage gap for post-graduate degree holders reflects their direct competitive advantage over lesser-educated individuals in regard to well-paid jobs, rather than their skills complementing the evolving technological content of jobs. This view can also explain rising “underemployment” of young college graduates, defined as their tendency to work in jobs that do not strictly require a college degree (as in Abel, Deitz, and Su 2014 and Rampell 2014). Sorting out the specifics of enhanced versus diminishing reliance on technological advances in the workplace is a critical labor market issue that may have important implications for future U.S. education policies.

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As Department II is hollowed out by the advances in automation, and by off-shoring, workers are increasing divided (or polarised) between Department I and the service industries.

This raises a serious problem about the political consciousness of the working class. There are workers being crushed in the service industry by being employed at jobs that are below their capabilities. An there is the worker aristocracy who believe that individual effort and nerit got them their current job.

It would seem very hard to convince either group that a society run by workers on thorough-going democratic principles would ever be possible.

Such a society requires a social view of society rather than a competitive hive of individuals.

ginning of my post.

And here is the rest of it.

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For The Love Of Capital Income

Paul Krugman writes For The Love Of Capital Income.

Shorter Glenn Hubbard: Means-tested programs and tax credits are a terrible thing, because benefits that fall when your income rises discourage work. Also, we must save money by means-testing Social Security and Medicare.

The real point, of course, is that Hubbard is defending his pride and joy, the 2003 cuts in tax rates on dividends and long-term capital gains, which were supposedly designed to spur business investment. They didn’t — we have what amounts to a controlled experiment, because the dividend tax cut had no effect on closely held corporations, which can therefore be used as a control group. And what the comparison shows is that the tax cut didn’t boost investment or employment at all — all it did was boost payouts to shareholders.

And who were those shareholders? Glad you asked. According to the Tax Policy Center, two-thirds of the benefits from the dividend tax cut went to the top 1 percent; more than half went to individuals with incomes of more than a million dollars a year.

So who, exactly, has been waging class warfare?

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Class warfare is far more than accumulating capital through increased rents. It is about maintaining and strengthening the social relations between the classes.

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Let's end this domestic violence epidemic

John Rainford writes Let's end this domestic violence epidemic.

The inquiry, which is to report by February next year, will be led by the Supreme Court judge Marcia Neave. It is required to focus on practical solutions to what has, so far, largely been an intractable problem.

But while the Victorian royal commission is a good start, violence against women is not confined to Victoria, or any other state for that matter. It is a national problem that accounts for 40% of police time, costs the national economy $14 billion each year and affects more than one million children.

But with Tony Abbott federal minster responsible for women's policies and programs, an announcement of a strategy dealing with it is unlikely to be made any time soon.

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Any oppressive society is enforced by violence at all levels of society. Voilence permeates the whole of society. It is in the home, in the work-place, on public transport, on the roads, everywhere.

We live in an economic and political system that solves problems through violence.

This is why we are involved in wars in Iraq, Syria, and Afghanistan. Any political solution was not acceptable to the ruling class. They had to demonstrate naked, raw power in order to intimidate all others.

This logic then flows through the rest of society. To get my own way, I have to take it. There is no negotiation. Even if there is negotiation, it has to be seen as a zero-sum game.

The Other is the enemy. They cannot never be a friend. This is the poison that is destroying humanity.

When humanity needs global action to avoid extinction, we are fighting over the scraps like rabid dogs.

Seeing the Other as a human being is hard because it requires that confront and overcome the conditioning we have undergone, and that we no longer conform to the norms of society.

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Job Site of the Future: Unmanned Bulldozers and Drones for Routine Construction

Mike Shedlock writes about the Job Site of the Future: Unmanned Bulldozers and Drones for Routine Construction.

Why pay an expensive bulldozer driver for foundation work when a drone from the sky paired with an unmanned bulldozer on the ground can compute 3-D plans and do the job better and faster?

Construction workers move over. You are next to be unneeded, unwanted, and unloved.

The Wall Street Journal reports Drones’ Next Job: Construction Work.

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This will be a big blow to unskilled workers as well as trades-people. It will be a challenge to the militancy of the construction unions. They will face the same future as the metal-workers, the miners, and the auto-workers.

But this is an unstoppable development within Capitalism as capital replaces workers in Department II.

This also means that we should stop considering Department II as the nucleus of a worker's revolution.

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Why the whole world is watching Greece

Lee Sustar answers Why the whole world is watching Greece.

More recently, the Greek economy has seen a small recovery from its catastrophic collapse, achieving what's known as a "primary surplus"--economists' jargon for a government budget surplus prior to the repayment of debt. European banks and their regulators at the European Central Bank now claim that they're far healthier and thus no longer at risk of a possible "Grexit" from the euro.

But the bankers can't be trusted. This is the same bunch who told the world that everything was sound just before the financial crash of 2008. Given the interconnectedness of international finance, there's no way to know just how banks would be affected by SYRIZA's demand to renegotiate Greek debt.

There's another big worry for EU bureaucrats and European corporate bosses: The possibility that Greece could set a precedent for other countries by encouraging further left-wing protest against austerity policies that have seen governments across the EU slash budgets and push the costs of the economic crisis onto working people.

More than six years into the economic crisis, most European economies are stagnating. The political fallout has hit establishment parties of the centre left and centre right--for example, with the National Front making huge electoral gains amid dissatisfaction with the Socialist Party government of François Hollande. Far-right and nationalist groups in other countries have also gained in recent elections by scapegoating immigrants in general, and Muslims in particular.

In Spain, by contrast, the left-wing Podemos party, barely one year old, emerged as the most popular party in that country as the result of popular anger against the conservative government of Prime Minister Mariano Rajoy. A SYRIZA victory would boost Podemos' prospects and revive the left across the continent.

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So, SYRIZA is seen a threat by being a good example to working people throughout Europe.

But Golden Dawn is likely to get seats in the next parliament and will remain an ominous force, thanks to its well-documented connections to establishment right-wingers and military figures. Right-wing authoritarianism and fascism have deep roots in Greece, and these neo-Nazis will continue to present themselves as an alternative to people driven to desperation in the crisis.

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Capitalists are never to loathe to turn to the military or fascists in order to keep their power. I think this is the primary danger facing a SYRIZA government.

The key question was what such left-wing parties will do in office to mobilise workers struggles against a hostile state bureaucracy and capitalist class, with strikes, factory occupations, sit-ins at government ministries and the like. Such struggles are essential to fortify revolutionary and working-class organisation in what is certain to be a series of high-stakes confrontations with capital.

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As always, the primary objective of all working class political organisations is to overthrow Capitalism. The path to revolution has to be negotiated daily.

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Greece: If SYRIZA win, expect elite attacks

Lisa Mittendrein & Valentin Schwarz warn that If SYRIZA win, expect elite attacks.

European elites might instead choose to let SYRIZA come to power and then make it fail, either toppling the left government project as soon as possible with maximum pressure or attempting to corrupt the party. The latter would ensure the continuation of the austerity agenda, but also prevent leftists and movements across Europe from rallying behind SYRIZA and Greece.

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At least, people are not expecting a military coup. I thought this would have been likely given Greece's recent history.

Possibly the most serious strategy would be for the ECB to threaten to stop providing liquidity to Greek banks. Varoufakis describes this as a "nuclear weapon" which could bring the Greek banking sector down almost immediately.

It would be extreme, but not unthinkable: In December 2014, the ECB threatened to effectively cut off Greek banks unless the government complied with Troika wishes. Varoufakis is convinced that a SYRIZA government must be prepared for this form of blackmail if it is to last long enough to negotiate a new deal for Greece.

Despite all these challenges, there is still optimism among SYRIZA members. Although many consider it possible that their government could last only for a few weeks, they say their chances are better today than they would have been in 2012.

They see fractures within the neoliberal bloc that they can try to exploit, like the ECB’s fear of deflation, the position of Italy’s prime minister Matteo Renzi, and the recent conflicts within the French government.

By getting into government and implementing first measures, SYRIZA hopes to accelerate existing debates, especially within European social democracy and the trade unions.

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SYRIZA is fully cognizant of the extreme dangers that it faces in forming and maintaining a government. The best hope is that their supporters are in for the long fight. Then the government can rely on actions in the street to keep pressure up on the elites.

The elites always want a pacified population. They are continually worried about a population that regularly turn up to demonstrations and protests. An active population can be stirred up in a real revolution.

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Was the Civil Rights movement a revolution?

Dan Little asks: Was the Civil Rights movement a revolution?.

So if a revolution may be described as a fundamental change in the power relations in a society, brought about by the concerted effort of a large-scale collective movement, then indeed, the civil rights movement brought about a revolution in America. Doug McAdam's fine sociology of American race relations and the civil rights movement is right to call this an insurgency in Political Process and the Development of Black Insurgency, 1930-1970. It was an insurgency that was broadly based, passionately pursued, supported by effective regional and national organizations, and largely successful in achieving its most important goals.

It barely needs saying that this revolution is not complete. Tom Sugrue found a good phrase to capture the story in the title of his recent book, Not Even Past: Barack Obama and the Burden of Race. But further progress will build upon the cultural and structural changes brought about by these courageous and committed ordinary men and women in waging revolution against an oppressive social order.

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In fact, the Civil Rights movement would have the third American Revolution. The second one was the American Civil War in which two whole classes, the slave-owners and slaves, were obliterated, and a social relationship, that of slavery, was extinguished. The destruction of one entailed that of the other, for the social relationship cannot exist without the classes, and vice verse. This was truly a social revolution.

The first American Revolution changed the composition of one class while leaving the other classes untouched, and therefore the social relationships intact. The ruling class changed from being based in England to being based in the USA. This was a political revolution.

Following Little's argument, for the Civil Rights Movement to have been a revolution, the social relationships were changed, but the classes remained untouched. This does not seem to me to be a revolution like the other ones.

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Heroic class leadership: Lars T. Lih's ‘Lenin’

Doug Enaa Greene reviews Heroic class leadership: Lars T. Lih's ‘Lenin’.

Lenin’s third preoccupation was the growth of the bureaucracy and decline in culture. Lenin wanted to bring the advanced workers into the state. He also wanted to eliminate tsarist habits that he saw coming back into the organs of power. He hoped to raise the cultural level of the country through a large-scale campaign of mass education. Yet Lenin died before his ideas took off and the bureaucrats were able to take over.

It is at this point that Lih points out the paradox of Lenin. Lih recognises that Lenin was a supporter of political freedom, but once in power the Bolsheviks suppressed their opponents. Lih sees a link between these actions of the Bolsheviks and the later Stalin dictatorship. Lih believes that the Bolsheviks saw it as easier to spread their message through the organs of power than by persuasion. Although Lih doesn’t ignore the civil war context, it doesn’t seem that Bolsheviks’ actions were so much a short cut as finding a means to survive when surrounded by bayonets.

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Lenin's mistake was probably to gamble everything on an international Communist revolution. If the revolutions had been successful in Germany and Italy, then it was very likely the industrial and cultural backwardness of Russia could have been overcome without Stalinism. This would have been done through the transfer of knowledge and capital from the more advanced countries.

On the other hand, the Bolshevik's hand was forced through the protracted civil war and associated intervention by the Capitalist countries. Lack of political unity in the face of foreign invasion would have been fatal to the October Revolution. The intensity of the fighting across the whole country meant that ruthless decisions had to be made quickly, and implemented likewise.

In any event, the chance for sympathetic parties to develop their thinking was lost when they were suppressed. In a way, Venezuela's protracted period of dual power allows for a multitude of left-leaning parties to flourish. This allows for wide-ranging debates about how the Boliveran Revolution should proceed. And this allows parties to maintain their identity without being corrupted by careerists as happened with the Bolshevik Party under Stalin.

Trotsky recognised that not everyone developed at the same rate or in the same way. Most people would have to see and experience a Communist society in action before they could be convinced.

It would seem that a period of protracted dual power is necessary for a successful Communist Revolution. Yet this is not the case in Cuba. There only one party is allowed, but independents are permitted to stand for election. Indeed, about half of the elected representives are independents. This allows non-party people to participate in the political system.

However, it makes it difficult to develop politically outside of the offical party. And it can lead to ossification of the offical party as there is no competition in ideas and strategies. This is a price Cuba has to pay in the face of unrelenting attacks by the USA for any party, other the Communists, is very likely to subverted by the USA for the destruction of the Socialist system in Cuba.

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Jose Mourinho vs methodological individualism

Chris Dillow discusses Jose Mourinho vs methodological individualism.

The same can be true in other contexts.Granovetter's riot model (pdf) shows us that violent disorder can emerge not because all individuals are violent but simply if large numbers imitate a few others. Adam Smith's invisible hand theory says that a benign social order can emerge from individual self-interest. Marx's theory of exploitation shows how Christian Victorian gentleman can produce a viciously inegalitarian economy. Schelling's spatial segregation model shows how ethnic segregation can happen even if people aren't especially racist. And I suspect that non-sexist individuals can also generate a patriarchal society.

All these are examples of what Mourinho said — that aggregates can have properties which individuals do not. This can happen — as in my examples — because of emergence. Or — as in Mourinho's case — it can happen because a coach consciously shapes a team. And in other cases, it might be a mix of the two: Irving Janis's examples of groupthink, I suspect, arise partly from bad luck and partly bad leadership.

All this is a challenge to methodological individualism; what's the point of studying individuals' motives and rationality if these are not necessarily related to social phenomena?

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This is why revolutionaries should join a party because unified action can create something greater than the sum of the individuals. This is a phenomena that Trotsky noted during the Russian Revolution.

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As ICC launches Israel War Crimes Probe, PLO & Hamas Applaud

As ICC launches Israel War Crimes Probe, PLO & Hamas Applaud.

The Ministry of Foreign Affairs on Saturday said it welcomed the decision to open an initial probe on Israeli war crimes at the International Criminal Court.

The ministry said in a statement that the ICC decision was a positive and important step towards achieving justice and guaranteeing respect of international law.

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The violations of international law by Israel and the USA have been so egregious that they will ignore any findings by the ICC.

One should remember that the USA has been the only nation, so far, to have been found guilty of terrorism before the World Court. The US government just shrugged off the verdict and carried on.

There is no way to enforce such rulings against the USA short of all out nuclear war. And as long as Israel enjoys the patronage of the USA, Israel can continue to do the same.

The only power strong enough to take on the US government are the US citizeny. But they will not do this because they believe that they are guiltless and that the whole world has it in for them.

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