Urbana.org All Things New Blog - economics

Across the digital tracks

Mon, 14 Sep 2009 09:57:00 -0600

I've been offline all week in the 21st century, with a broken computer. (Right now I'm standing at a kiosk in a library.) While these things happen, this difficult week has opened my eyes to the problems of folk who don't have computer access for real.

This week, I

Couldn't pay my bills or do some banking business I needed to do;
Couldn't do my homework (which consisted of posting a reply to a reading);
Couldn't find out when to head to the bus stop;
Couldn't register for a conference I need to attend; and
Couldn't check the status of my computer's reparis.

This is not a navel-gazing complaint. Rather: since I enrolled in grad school, I've been repeatedly unnerved by the sheer gap in privilege between the world I now am part of, and the world of my neighborhood, which is mostly below-working-class.

During the several years I've lived in south Madison,

I've been burgled,
I've had cops run through my front yard with drawn handguns,
I've gotten to know drug dealers and prostitutes at a personal level (the former used to plow the snow from my driveway, frustrating my simple attitudes about drug dealers).

I have as neighbors alcoholics, mentally disabled folk, underemployed folk, unemployable folk, convicted felons, and registered sex offenders. They're all here, because their problems (self-imposed or not) combine to push them into poorer, across-the-tracks neighborhoods like mine.

And throughout this time, I've never been unintentionally offline. I've always participated in the broader world, courtesy of the internet. But this last week has helped me understand my neighbors better, understanding above all the isolation of poverty.

I don't consider myself poor, although the government might consider me so, due to their hard-and-fast charts for measuring these things. I don't consider myself poor because we're here by choice (the location is convenient), and our low income is a function of choice (working for InterVarsity; working for our church, etc.). In an information age, in an age where most jobs require computer literacy (even applying for jobs at Wal-Mart means sitting at computer terminals to fill out forms), being stuck outside the information world is more consequential than I'd previously understood.

Signs: Bank Failures

Sat, 12 Sep 2009 02:01:00 -0600

The FDIC lists 64 bank failures in the first seven months of 2009. That’s more than all the rest of this decade combined (49, including no failures at all in ’05 and ’06).

Most of these failures have been small local banks, heavily exposed to either the mortgage bubble (Sunbelt, especially) or the collapse of manufacturing (the Eastern Midwest).

There is something particularly alarming about a bank failure, because it whispers about our economic security in ways mass layoffs don’t.

How should Christians think and feel about bank failures?

Pictured: A run on the bank in 1907, from the New York Public Library

Arab Wealth, Arab Democracy?

Thu, 20 Aug 2009 02:01:00 -0600

The Economist is running a special feature on the Arab world, which is worth reading in its entirety. As a teaser, check out these observations from the lead article:

The political instability of the Arab world is in turn connected to another problem: the missing glue of nationhood. Many years ago an Egyptian diplomat, Tahsin Bashir, called the new Arab states of the Middle East “tribes with flags” (though he exempted Egypt). His point still holds. In countries as different as Lebanon and Iraq, ethnic, confessional or sectarian differences have thwarted programmes of nation-building.

That is why Iraq fell apart into Sunni, Shia and Kurdish fragments after the removal of Saddam despite decades of patriotic indoctrination. Syria could follow suit if the minority Alawi sect of the ruling Assad family were somehow to lose control of this largely Sunni country. Sudan has seen not one but two civil wars between its Arab-dominated centre and the non-Arab minorities in its south and west.

Now, there is an assumption here, and that is that democracy and prosperity find better soil in Nation-States, especially ones that successfully transcend clan and tribe. The Economist, which is largely a hymnal in praise of global capitalism, seems to be channeling the spirit here of Ferdinand Tönnies, and his distinction between Community and Civil Society (usually known by the German names Gemeinschaft and Gesellschaft).

Specifically, following Tönnies, the Economist suggests that democracy requires a civil society that can trump loyalties to clan. I don’t dispute that, but there’s got to be more. And indeed, the Economist points out oil.

Wars can happen anywhere. What makes the Middle East especially prone to them? Just count the ways. First is oil. In the late 1990s Mr bin Laden wrote a letter to Mullah Omar, the leader of the Afghan Taliban, in which he pointed out that 75% of the world’s oil was found in the Persian Gulf region and that “whoever has dominion over the oil has dominion over the economies of the world.” So long as that remains broadly true, the interests of energy-hungry powers from near and far will continue to grind against each other there.

That can't be the whole story. Missing here is any discussion of religion, following the Economist's general vision that capitalism is secular in the sense that capitalism belongs to the world. One need only point to the incredible capitalist engine that is the UAE to see Muslim wealth creation, even if much of the wealth there is actually created by foreigners and non-Muslims.

"It's like one of the jobs Roosevelt gave people"

Tue, 18 Aug 2009 16:39:00 -0600

As a fairly poor freelance writer/graduate student with a fairly modest but doable and predictable income, I’m somewhat insulated from the recession.

Which is more than I can say for this neighborhood, a mixture of blue-collar and below-blue collar owners, renters and drifters: a shrinking economy has been truly hard on the working poor.

Handimen are begging to mow my lawn (which is small enough that the lawncare companies don’t even advertise around here), and scrap metal collectors (Southeast Asian women, mostly) go through our trash for cans; and many others are underemployed at Taco Bell etc.

One of my neighbors, in the construction trades, hasn’t had work for some time, so was really happy even for the lousy job he’s got: on call at a cheese factory forty miles away. He’s got to be there by 4:30 in the morning if he wants a good shot at getting some hours.

“You try to be one of the first four in line,” he told me last night. “If you’re down around eighth, there’s no way you’ll get in that day.” How many people show up, I ask: “forty or fifty.”

Forty or Fifty, in line for day-wages repackaging returned cheese; no guarantees about tomorrow—“It’s like one of the jobs Roosevelt gave people,” he joked, while looking at my kitchen clock. “Got to go to bed.”

Roosevelt’s jobs—the CCC, the WPA, and the CWA among others—were backbreaking work for the unemployed. In the case of the CCC, the employees were young men in camps, with the wages being sent home to hungry families. This was the stuff of poverty. And it’s the stuff today’s underclasses could use.

Maybe it's always been that way. I don't know. But I haven't always cared, and I do now.

From Nation-Building to Market-Building

Tue, 11 Aug 2009 02:01:00 -0600

Writing in Mittelweg (in German), German Sociologist Theresa Wobbe takes a look at an important change in the process of European integration: gone are the days in which poorer members of the European Union and its predecessors were built into equal participants. The philosophy was that a continent of highly developed nations would serve everyone on the continent, so the rich countries taxed themselves for the purpose of building up the poor countries.

And it’s worked, most notably in countries on Europe’s geographical periphery, like Ireland, Latvia, and Portugal. Economically backward countries are now able to stand on their own two feet.

But a subtle change in values is emerging, Wobbe says; perhaps it’s a consequence of the success of the policies: we’re no longer talking about building a community of nations; we’re now talking about building a European society.

The difference is a lowering of national and regional identities in favor of creating a new sense of European –ness. The trick is that this is not merely nationalism at a higher scale: the purpose is to create a bigger internal market. That is, rather than building up (relatively poor) Slovakia so that the now (relatively) rich Slovakia may help everyone else prosper, we’re now talking about turning Slovaks into better consumers of the European market.

The key here is that the new, supranational scale of Europe/European Union no longer has as a goal a guarantee of continent-wide political access to a continent-wide citizenship; rather: it’s about continent-wide equality of economic opportunity.

If that’s the case, if Wobbe is right, what we’re seeing here is a new form of society-building, one in which identities and loyalties are entirely stripped of place—of geographical belonging. Slovaks aren’t wished to be the best Slovaks possible; rather Slovaks are wished to be just as economically productive as anyone else.

When Your Culture is Wrong

Fri, 17 Jul 2009 02:01:00 -0600

Now that General Motors is out from bankruptcy, with the US Government owning enormous amounts of the company, they’re putting out ads about reinventing themselves.

But putting out new cars is far easier than changing corporate culture. It’s slow work, thankless and worse, and, importantly for those forced to issue quarterly reports, unquantifiable. How can you measure changes in how people think? The Times of London reports:

Fritz Henderson, the carmaker’s chief executive, said that he was determined to bring about a profound culture change in the company.

He announced a flatter organisational structure, stripping out layers of management, shedding 35 per cent of the company’s salaried executives, and eliminating its regional operating structure.

Admitting that “the culture at GM has been an impediment to change”, Mr Henderson said that he and other senior managers would travel every month to meet suppliers, customers, employees and dealers.

Are these the right actions? In particular, I have no idea. But it’s remarkable for a company to admit they’re wrong, in the sense that they don’t have the capacity to rule the world because of internal dysfunctions. Just admitting that is a huge step, but certainly not enough. Many managers around the world have run up against brick walls in trying to change corporate culture.

My question: do any readers have experience with corporate culture reform attempts?

[photo: credit sxc.hu member photo_mana]

What makes for a state school?

Wed, 15 Jul 2009 02:01:00 -0600

Here’s a nice look at recession, courtesy of globalhighered. To figure out how recessions impact universities, Moody’s published a report looking at several variables, from enrollment to endowments.

The key chart shows enrollment surges during recessions:

But globalhighered’s Susan Robertson asks a very revealing question:

Is the University of Sydney, or the University of Wisconsin-Madison, public or private given that both receive around 14-18% of their core budget from government funding?

As with globalization’s impact on everything from national boundaries to legal definitions: the more advanced the economy, the more integrated it is. If a state school gets 89% of its money from its endowment, is it still a state school?

Out in the real world

Fri, 12 Jun 2009 18:25:00 -0600

Having left my region for a week for vacation, I feel like I’ve gotten a better sense of the broader situation in the United States: Madison, Wisconsin is insulated from much of the recession (and often from reality itself), and some time on the west coast has disburdened me of the cheer.

I was all over western Washington state, from central-city Seattle, seeing where my wife used to work, to my Grandmother’s assisted living facility in an immigrant neighborhood, to depressed logging communities on the Olympic peninsula, to fancy vacation towns and seedy military towns on the sound—I saw a lot in a few days. And nearly everywhere I saw signs of stress I’m not used to seeing in normally thriving places.

Good thing the AP has come out with a nifty interactive toy for county-by-county numbers, balanced with short video profiles of assorted folks. Check it out, and don’t miss the last video profile, of the Green Bay repo man:

"It's the greatest thing in the world to get up in the morning and say, oh, he lost his job. We’ll see him down the road in a little bit."

Heroin ODs and the Taliban

Mon, 25 May 2009 11:41:00 -0600

Heroin overdose rates are going way up in Wisconsin, and probably elsewhere in the United States, because of prices on the market.

A new report by the (local) Dane County Narcotics and Gang Task Force notes that cocaine, the biggest killer for many years, has gotten a lot more expensive, due to the escalating narco-wars in Mexico.

Meanwhile, Heroin, a derivative of Poppies (the flowers that put Dorothy to sleep in the Wizard of Oz), is Afghanistan’s largest export, and funds much of the Taliban’s budget in its ongoing wars in South and Central Asia. That itself is fairly significant of a moral objection: when you shoot up the Taliban make money.

Heroin may get more expensive for a short while, as US and Afghan forces seized a hundred tons of heroin and poppy products the other day. But competing poppy production is also present in Colombia and Southeast Asia, so heroin is not going away any time soon.

In the spring of 2001, when their biggest threat was international outrage over the demolition of ancient Buddhist statues, the Taliban decreed heroin production un-Islamic, according to this report from June 2001 in the Telegraph of London. Today, that principled stance is on hold, as the Taliban need more money.

[photo credit: Bayer brand Heroin, from Wikipedia]

It's Veggie Time

Fri, 15 May 2009 02:01:00 -0600

My share of Robert Pierce’s farm began last week. It’s our annual Community Supported Agriculture (CSA) share, which we buy in advance.

Mr. Pierce is a small-scale farmer at various plots along the southern tier of Madison, Wisconsin, and his produce is affordable and really good. What buying from him does that’s significant for the purposes of this blog, is to combine various food-ethical issues, yet stripped of even a whiff of elitism.

After all, you can’t really be an elitist when you’re buying collard greens from a stand in a parking lot. Maybe you can, but this isn’t it.

Mr. Pierce is a native of Madison’s largely black south side. During the Vietnam War he was exposed to some chemicals that gave him allergies to processed food upon his return. He picked up gardening instead, which eventually grew into a career.

As the food movement has grown around us, from the organic food, the local food, the slow food, and other movements, each has picked up upper-class adherents, commensurate with the relative cost of the food (as compared with high-fructose corn syrup-drenched processed foods).

Over the years, as quality produce has become harder to come by on a budget, the providing of such food to inner cities has become a bit of a justice issue.

But for now, during Wisconsin’s short and intense growing season, I will enjoy Mr. Pierce’s bounty.

"Forget keeping your hands clean"

Fri, 08 May 2009 02:01:00 -0600

The problem of purity involves everything we touch. Recently, in discussing my retirement savings account with my father, I expressed the problem thus: inasmuch as my account is an index account, denominated in US dollars, its purpose is to match the performance of the US economy. Accordingly, inasmuch as I hope to benefit, in the future, from this account, I am morally implicated in the performance of the US economy.

Looking at Jesus’ permission to his disciples to pay taxes to the evil empire, I extrapolate: I am hoping to gain from the sum total of economic activity, the bulk of which is not being done unto Christ.

It’s a moral problem that relates to all of how we are to relate to the world. If we aren’t willing to entirely withdraw from the world, we have to be willing to touch unclean meat, figuratively speaking.

My father proposed that purity was to be measured differently, and that I ought to forget trying to keep my hands clean; purity is stronger and more flexible than petty rules.

Muslim Banks and Magic Banks

Thu, 30 Apr 2009 02:01:00 -0600

Even as the global credit collapse of 2008 is still undergoing investigation, with apparent trigger mechanisms (the US mortgage market, among others) separated from merely incidental developments (such as the price of wheat), one factor has repeatedly unnerved me: the sheer complexity of global finance.

I flatter myself to have a citizen’s grasp of several basic issues, from currency rates to free trade issues. But it has become clear that no citizen can possibly have an adequate grasp of the goings-on, by which I mean a grasp sufficient to inform a thinking voter’s opinions. It’s too complicated.

The fact that some of the leaders of the world’s banks hardly understand some of the issues leads Jeremy Harding of the London Review of Books to suggest that the elite financial world is behaving more and more like magic and magicians and less like the economics we learned in 101 classes and textbooks.

Contrasting the major international financiers with sharia-compliant Islamic banking, and it’s the nominally secular banks that appear cultic, and the devout banks that appear coldly rational:

Since the credit crunch not many people trust the sophisticated keepers of the modern money culture; in this sense the rise of sharia-compliant products is also a challenge to the unofficial, polytheist faith of offshore Britannia: the worship of markets in general and financial markets in particular.

One of the central differences between the Islamic and conventional approaches to finance is that our own cults – which may well see a revision before the end of this crisis – ascribe supernatural powers to money. Cult specialists are at great pains to understand and control how it works, but admit that it does so in magical ways that go beyond the effects of human commerce (for the markets, too, have magical attributes, including innate goodness). Whatever we want from money, we suspect, as devotees, that in the end it will always behave as it sees fit.

What’s going on here is a story of performance: Sharia-compliant banks (which vary widely and use differing notions of interest, usury and capital) have plain outperformed conventional banks over the last year. And in a disenchanted world, that's the only banking that matters. But if we are no longer disenchanted – if there's a new mystery cult in charge, it should be less than responsive to a competing ideology.

As someone who has no intention of joining a Muslim bank, I nevertheless see incredible stories—far beyond the drudgery of numbers—in play here. I’m not sure what it all means, and I cannot evaluate Harding’s treatment of HSBC Amanah and others, but his suggestion that cult-like superstition is in operation in the global centers of commerce rings plausible.

How to Make Capitalism Our Own

Fri, 17 Apr 2009 02:01:00 -0600

The always-interesting Vinoth Ramachandra is asking that ancient question: Is Capitalism Christian? It's a question that needs to be asked every few years, but the question presumes, first of all, that capitalism has a universal shape.

I've got a different question: how can Christians shape the capitalism we have?

But first, here's Ramachandra. After acknowledging capitalism’s human potential:

"Insofar as capitalism encourages such values as creativity, innovation, personal responsibility and freedom from the overbearing weight of governmental control, it is surely to be welcomed by Christians,"

Ramachandra then proceeds to point out the potential for abuse:

"but … this presupposes an overarching moral framework in place that is not itself determined by markets."

Fair enough. There should be little controversy about the need for rule of law, if capitalism is to be just. But that’s hardly a revolutionary idea: communism failed, it can be argued, because it failed to take human nature into account: people will always look for a way to cheat the system.

Here’s my equally non-revolutionary take—really an invitation for your comment: Is Capitalism Christian? Of course—yes and no alike. The harder question is: How can Christians contribute to a just capitalism?

It all revolves around the question of sin. Capitalism is a human artifact, and is therefore susceptible to sinful abuse. The same holds for democracy, agriculture, sports, and music.

So here’s my question: given Capitalism’s potential for good and evil alike, Christians’ great contribution can be the acquired skill of living with contradictions and tensions.

Christians live in the dual realities of salvation and decay. We see the life-giving work of the Holy Spirit in our lives and the deadly drive toward evil in our very bellies. We experience these contradictions at once, and that can be the Christian contribution to Capitalism: a faith in human potential (entrepreneurialism) balanced by a wariness of sin (cheating the system, for instance).

But that’s academic: how shall we actually live in these tensions? How do we shape capitalism?

What do we need to actually do? As in, baby steps?

The Gender of Recession?

Thu, 09 Apr 2009 16:18:00 -0600

The question alone is terribly fascinating and important: are the stimulus packages around the world biased toward men-as-breadwinners?

In Blätter, a German policy journal (English summary here; scroll down to Blätter) Alexandra Scheele finds the various national stimulus packages being enacted with an overemphasis on heavy manufacturing and manual labor, at the expense of newer industries that have emerged in recent years, including newer forms of work (non-traditional hours; less than 40 hour workweeks during early childhood years, etc.).

It seems that recession tends to hit male breadwinners with unemployment, and female breadwinners with underemployment, yet the policy responses globally have focused on the former. Furthermore, Scheele points out, women-dominated industries (caretaking, etc.) have been largely ignored.

Her main point seems to be that the recession is proving to be a parallel recession in the prestige of female work.

A G-20 Bestiary

Wed, 01 Apr 2009 10:24:00 -0600

I’ve always been a secret fan of big diplomatic events like the G-20 summit in London. Perhaps it’s a nerdy version of the World Cup, including needy divas, loose cannons, and people in the streets.

But it’s also important. The leaders of the 20 leading economic powers will be looking at ending the global recession and fixing the creaking mechanisms of global finance. Hugely significant ideas are on the table, from re-doing global regulatory structures, to replacing the dollar as the global reserve. This is no mere circus.

Al Jazeera English has a decent 2:43 breakdown of the issues, players, and tensions in the G-20 summit, which has begun today: