Daily Clips: February 8th, 2016

Why economists don’t know how to think about growth: At Evonomics there is a really interesting interview with Fritjof Capra, an Austrian physicist. Capra, like Nick Hanauer, argues that we need to judge economic success not on “quantitive growth” (like GDP, unemployment etc) and instead focus on qualitative indicators like poverty, healthy, and education.

If this leap makes you uncomfortable, you’re not alone. For a very long time, economics has been analyzed through quantitative lenses. This is a mistake, says Capra, because an economy is like an ecology and “ecologists use multiple indicators to map the interplay of growth and decay, of expansion and maturation.” Such thinking can and should be applied to economics, he argues.

Capra also believes that neoliberal economists are obsessed with quantitative growth “which is manifestly unsustainable.” He warns that “we urgently need to shift to criteria of qualitative growth and development, most of which are non-financial, to overcome our multi-faceted global crisis.”

Bernie and the New Left: There is a “generation gap as wide as the Grand Canyon” which has opened up between the Democratic Party and American liberalism, says Harold Meyerson. Why is that so?

One reason is that “there’s been the emergence of a distinct civi left, as the nation’s big cities have come under Democratic control. Today, 27 of the nation’s 30 largest cities have Democratic mayors, the greatest partisan imbalance, possibly, since before the advent of Jacksonian democracy.” Meyerson argues that “in city after city, with variations based on the cities’ demographics, these coalitions tend to consist of immigrant rights and advocacy groups; civil rights organizations; environmental activists, and – usually the main funders and key player – unions.”

The author also points out that the future looks bright for socialism in America. In 2011, a Pew Research Center poll showed that “49 percent of Americans under 30 had a positive view of socialism – more than had a positive view of capitalism.” And in 2015 that number has increased. Now, 56 percent of Democrats held a favorable view of socialism.

These numbers make a lot of sense when you consider the state of contemporary capitalism. The economic collapse of 2008 was catastrophic to the lives of many young Americans. Moreover, having only one banker jailed leaves younger generations with a sense of injustice and a feeling that the game is rigged. That’s because it is.

Hillary is going to have a hard time fighting off this new wave of liberalism. We know she will not embrace socialism. The best she can hope to do is criticize the current instantiation of capitalism as being “incomplete” and “rigged.” That’s going to be a hard sell, as she continues to be funded by those institutions holding up our capitalist structure.

Who gets a raise in this economy?

Among those full-time workers who are seeing healthy wage growth, those who switch jobs are doing particularly well. According to ADP’s data, full-time workers who changed jobs saw their paychecks increase an average of 4.5 percent, an improvement over the 3.9 percent average that covers all full-time workers. (In one extreme illustration of the power of switching jobs, the salary of one Alabama engineer increased by 31 percent over 4 years by changing jobs every six to 12 months.) This effect was even stronger in the midwest and northeast, where full-time-job switchers saw over 5 percent wage growth.


Nick Cassella

Comments are closed.