Archive for February, 2011

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One more chapter in the biggest environmental justice case in history

February 15, 2011

Happy Valentine’s Day: a court in Lago Agrio, Ecuador, has ordered Chevron to pay $9 billion in compensation for damages wrought by Texaco during its time operating in a section of the Ecuadorian jungle about the size of Rhode Island. The case was filed in 1993 and surely won’t end with this ruling, as Chevron has already vowed to appeal. There are further legal complications given that Chevron has no assets in Ecuador and thus any reparations must be enforced by U.S. courts. Still, this is a pretty major step in the right direction.

Want more background on the case? I have two books to recommend: one academic and one photographic. And, of course, an excellent documentary.

Aside from that stuff, my uber-glib summary is: think the Erin Brockovich story, only with worse environmental degradation, worse health impacts, a much more complex legal environment thanks to cross-border issues, and – most importantly – vastly bigger power imbalances between the plaintiffs and defendant.

ADDENDUM: Here’s a breakdown of what the damages are supposed to go towards, courtesy of the Wall Street Journal:

  • $5.39 billion — To restore polluted soil
  • $1.4 billion — To create a health system for the community
  • $800 million — To treat sick people affected by pollution
  • $600 million — To restore polluted sources of water
  • $200 million — To recover native species
  • $150 million — To transport water from other sites to supply the community
  • $100 million — To create a community cultural reconstruction program
  • Total: $8.64 billion

Plus, I believe, a 10% legal fee that is supposed to go mostly to the Frente de Defensa de la Amazonía, the Ecuadorian organization that has taken the lead on representing the plaintiffs (and also helping organize them, and publicize the case domestically and internationally).

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Occupational licensing on the rise; unions on the decline

February 9, 2011

A couple days ago, a front-page story in the Wall Street Journal laid out a case that the licensing of occupations – that is, the regulation of various jobs by prohibiting people from performing them unless they have a government license earned by passing specific education, training, or testing requirements – has gotten out of control, restricting competition and raising prices for consumers. The article gives all sorts of examples of ridiculous occupations for which one must be licensed by a state government to legally practice, including florists, interior designers, hairdressers, and cat groomers. These kinds of stories are easy to come by, and they’ve set the blogs aflame (Matt Yglesias in particular loves this issue). Moreover, it’s all easy fodder for libertarians, the Cato Institute, or anyone who wants to build a case against regulatory policy writ large.

Here’s one aspect of the issue I find most provocative. Occupational licensing might be viewed as a form of worker protection that, unlike unions, is very much on the rise. According to a 2009 NBER study by Morris Kleiner and Alan Krueger, far more workers are currently in licensed occupations – nearly 30 percent of the labor force – than are members of labor unions – about 12 percent (though the overlap is considerable; 45 percent of licensed workers are also unionized). In an intriguing Reuters piece, Felix Salmon makes a pseudo-progressive case that licensed occupations are the service economy’s version of a unionized workforce:

…state licensing is part of what a post-industrial economy looks like: post-industrial employment is, in the aggregate, more highly skilled and more consumer-facing. And that requires a different regulatory apparatus than an economy that largely takes place on a factory floor. So it should come as no surprise that more and more workers require a license these days… [licensing laws] are, in a sense, a form of worker protection which is acceptable to Republicans — think of them as unions for people who hate unions.

I’m not entirely sure what I think of licensing as a whole – more on that later – but I am sure that it’s a poor replacement for unions. It’s true that working in a licensed occupation comes with a wage benefit – Kleiner and Krueger estimate it to be 18 percent, which is comparable or even slightly higher than the wage benefit of private-sector unions. But that’s where the similarities end, even in pure labor market terms. Licensed occupations and labor unions are qualitatively different in at least these ways:

  • Federal vs. state: Labor law regarding unions exists at the federal level and applies, at least theoretically, to all U.S. workers. Most of the action in occupational licensing is at the state level, and different states have vastly divergent licensing laws. This has obvious implications for labor mobility and…
  • Effect on wage differential: Unions narrow the wage differential between different workers in different places working the same jobs. Indeed, this is a major goal of labor unions and one that has been so challenged by the global economy – equal work for equal pay within a sector, across regions, across demographic categories, etc. means fewer opportunities for wage arbitrage (i.e. a “race to the bottom” in wages). Licensing has no such effect, and arguably might increase variance in wages within a sector.
  • Collective action: The type of collective action that licensing encourages is narrow and occupation-based, compared to the broader collective action that exists under progressive unions. (My historical knowledge is a bit shaky here, but I’ll still share this thought I had: one might compare licensed occupations to the guild-style unions of the AFL earlier in the 20th century, before its merger with the CIO: i.e., regressive forces that sought to protect its members to the exclusion of others in the working class. Indeed, this seems to be a major thrust of much of the criticism of licensing.)
  • Employee voice: Concomitant with the above, unions bring all sorts of benefits aside from simple wage gains. Grievance processes and other formalized conduits for employee voice are not at issue at all with licensed occupations. One might posit that skilled service workers have less need for such benefits; but I’ve yet to see a serious argument that workers should have less voice.
  • Competition between occupations: Also related to the collective action item, licensing occupations results in nasty competition between related occupations. Interior designers have been fighting to be licensed (and succeeded in Florida) in part because the licensed occupations of architects and engineers have encroached on their ability to do the work they see as theirs. Similar turf battles exist between, say, dentists and dental hygienists. The ultimate result is pressure for all occupations in a given field to become licensed lest they become extinct once “competing” professions become licensed first.
  • Type of workers protected: By its very nature, licensing protects skilled occupations. Kleiner and Krueger find that some 45 percent of workers in licensed occupations have at least an undergraduate college degree. Unskilled workers – the very workers for whom unions are most important – are not only left out of this labor-market institution, they are arguably actively hurt by it. Some folks (Dean Baker comes to mind) would likely argue that licensing is basically a kind of protectionism that favors the relatively wealthy and skilled segments of the working force at the expense of the relatively poor and unskilled – especially in an era of globalization in which “free trade” means exposing unskilled workers to global competition while simultaneously sheltering skilled workers.

That’s a lot of differences, but it’s the last one I find more stark. To be sure, not all skilled workers in licensed occupations are high-wage. But if one views unions as vehicles for the working class to better their lives and enter the middle class – rather than as narrow interest groups protecting already inflated wages for a small segment of workers – occupational licensing is clearly a poor substitute.

I’ll have more on this in a following post, once I decide more clearly what I think about licensing and its effect on quality vs. restricted competition. I should leave off with a full disclosure, which is that Morris Kleiner, one of the leading scholars on this issue, is a professor of mine and I’m currently enrolled in a very relevant class of his entitled “Public Policies of Work and Pay.” I believe, but am not sure, that Kleiner would agree with the thrust of this post; perhaps an update on that will be forthcoming as well.

Flying Whale

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Firdos and Tahrir

February 8, 2011

Tumblr_lfyhanYdob1qdxs88o1_500I’m very taken with this photo comparison, as are many folks.  I’ve poked around enough to know that the zoomed out shot of the square in Baghdad was available from Reuters all along.  Why, then, were there news reports comparing this event to the fall of the Berlin Wall?  Why was only the cropped shot published or streamed on TV?  At what level did the deception take place?

Lucky for me, the New Yorker decided to take on the myth of Firdos Square last week.  The article pretty decisively dismisses the circulating stories about the entire event being staged by US psychological operations teams. Rather than the government, it was the media that created the lie.

Primed for triumph, they were ready to latch onto a symbol of what they believed would be a joyous finale to the war. It was an unfortunate fusion: a preconception of what would happen, of what victory would look like, connected at Firdos Square with an aesthetically perfect representation of that preconception.

We’re all relatively accustomed to the myth-making that happens when history is reinterpreted with the benefit of hindsight.  In the article, Wilson Surratt, senior executive producer in charge of CNN’s control room in Atlanta that day, says that “at some point, you’ve got to trust the viewer to understand what they’re seeing.”  But should the viewer really have to ask whether they’re being shown a deliberately cropped frame that hides a dissonant context?  The article’s author, Peter Maass, writes:

Propaganda has been a staple of warfare for ages, but the notion of creating events on the battlefield, as opposed to repackaging real ones after the fact, is a modern development.

And I would add, one that we’re not well equipped to protect ourselves from.

There is another question embedded in the article–about whether the event itself–as it really happened, not as it was falsely reported back home–was impacted by the presence of the media.  Any of us who have ever smiled for a camera or cheered when the video swung our way know that the answer is yes.  But the implications for responsible journalism are less obvious to me.

Thoughts?

Jonas

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Gotta say it

February 5, 2011

In an earlier comment, I wrote that:

we tend to view history through dual lenses of linearity and progress, forgetting that many of our greatest fights suffered deep, deep set-backs–even after we thought they were won.  Given the turn in our nation’s politics as evidenced by last November’s elections, studying up on the South’s reversals after Reconstruction seems unfortunately timely.

I wasn’t expecting rape to be up for redefinition.

For those who missed the uproar this past week, House Republicans introduced the No Taxpayer Funding for Abortion Act, the aim of which is to ban federal funds from being used to subsidize abortions, with a few exceptions.  While not a policy move I agree with, I can respect the effort.

The exceptions are the normal ones–incest, life of the woman is in danger, or forcible rape.  Wait, what?  Forcible rape, you say?  What’s that?

Does that mean that statutory rape or coercive rape–when the victim is underage or unconscious or it can’t be proven that she fought back “quite hard enough”–are no longer always considered “real rape?”

Yep.  But thanks to the quick response of many organizations and individuals from all over the country, the modifier on “rape” has been dropped from the bill.  But the fact that it was up for debate at all is a wearying reminder of the non-linearity of progress.

Rape is defined by lack of consent.  Period.  We shouldn’t ever need to return to that discussion.

The effort by this bill’s authors to create a hierarchy of rape in their attempt to limit abortion is completely unacceptable.

Work on the legislation you feel like you need to work on, friends.  But find another way to do it.  This tactic is not ok now, and it never will be.

Jonas

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The (myth of the) American Dream

February 5, 2011

I’ve been meaning to write this since watching Obama deliver the State of the Union last Tuesday.

Toward the end, refering to Joe Biden and John Boehner sitting behind him, he said:

…but we believe in the same dream that says this is a country where anything is possible. No matter who you are. No matter where you come from.  That dream is why I can stand here before you tonight. That dream is why a working-class kid from Scranton can sit behind me. That dream is why someone who began by sweeping the floors of his father’s Cincinnati bar can preside as Speaker of the House in the greatest nation on Earth. That dream — that American Dream.

From what I know, the two of them–and Obama himself–are pretty good examples of the American Dream.   They weren’t born into perfect circumstances and have still managed to become incredibly powerful in adulthood.  It’s just too bad that they are the exception, not the rule.  For most people, most of the time, the American Dream is out of reach.

Two things.  First, lest those of us who are inspired by the Obamas, Bidens, and Boehners feel lonely, we’re not.

The figure below contrasts the average US perception of mobility and inequality with the average response of 27 comparison countries (from the International Social Survey Programme).  Click to enlarge.

I find this data absolutely incredible.  I don’t quite know what to say other than that it makes my point about the myth of mobility quite nicely.  (Well, either that or Americans have managed to create a special mobility-and-equality-conducive environment that they are keeping secret from the rest of the world.  I’ll get to why that’s not the case in another post.)

Secondly, this news story serves as a reminder that the structures that keep just anyone from achieving the American Dream are real.

Late last month, a mother was sentenced to 10 days in jail (she originally faced up to 10 years) for falsifying records to get her daughters into a better school.

Poe [the superintendent] said residency disputes are usually resolved after parents prove that they live in the district, pay tuition or remove their kids from the schools.  This marked the first time that one of their residency challenges went before a jury in criminal court. Poe said prosecuting this case was meant to send a message.

“If you’re paying taxes on a home here… those dollars need to stay home with our students,” Poe said.

However, family and friends of Williams-Bolar call this an unfair case of selective prosecution.

I don’t know the case beyond the various news stories about it, and the NPR interview with the superintendent makes a pretty compelling case for why this situation went to court while prior cases haven’t.  But if you believe education is one of the best “ways out,” it highlights one of the many structures that limit real generational mobility at a large scale.

(As an aside, one of the worst things about this story is that the mother has been working to get her teacher’s license.  Now that she has a felony on her record, she probably won’t be granted licensure.)

On a slightly different note, I’ve been reading a fair amount of migration history that points to where some of the idea of the American Dream came from.  And also where it went.

More on that later.

Jonas

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Greg Mankiw’s fascinating, bizarre, twisted logic

February 4, 2011

I have the privilege of taking a macroeconomics class that uses a textbook by Greg Mankiw, former economic adviser to George W. Bush. Which has been kind of weirdly enjoyable, because Mankiw presents such a caricature of economics that it’s really easy to pinpoint weaknesses of the field. His text, for instance, offers absolutely no critique of GDP – he mentions that GDP doesn’t cover the informal sector, but makes no mention of why GDP might be a problematic measure of national well-being.

Here a couple choice things from the textbook we’re using and his Principles textbook, which I found online. First, from the latter:

International trade in goods and services can improve the economic well-being of a country’s citizens. Trade is, in some ways, a type of technology. When a country exports wheat and imports textiles, the country benefits as if it had invented a technology for turning wheat into textiles. A country that eliminates trade restrictions will, therefore, experience the same kind of economic growth that would occur after a major technological advance.

This has got to be the weirdest and least compelling defense of Ricardian comparative advantage I have ever read.

On why capital does not flow to poor countries:

Poor nations have not only lower levels of capital accumulation… but also inferior production capabilities… a second reason capital might not flow to poor nations is that property rights are often not enforced. […] Whichever of these two reasons is correct, the challenge for poor nations is to find ways to reverse the situation. If these nations offered the same production efficiency and legal proetctions as the U.S. economy, the direction of international capital flows would likely reverse. The U.S. trade deficit would become a trade surplus, and capital would flow to these emerging nations. Such a change would help the poor of the world escape poverty.

I like how Mankiw manages to, in one stroke of ingenious logic, blame poor countries for being poor and for perpetuating the U.S. trade deficit.

Less humorous and more indicative of the nature of this textbook are Mankiw’s “Four Most Important Unresolved Questions of Macroeconomics,” with which he closes the book:

  1. How should policymakers try to promote growth in the country’s natural level of output?
  2. Should policymakers try to stabilize the economy?
  3. How costly is inflation, and how costly is reducing inflation?
  4. How big a problem are government budget deficits?

These all seem like real issues, to be sure, but contrast Mankiw’s list with a list in Macroeconomics in Context, an introductory textbook that attempts to present a more holistic economics curriculum. This book ends with a chapter called “Macroeconomic Challenges for the Twenty-First Century” and addresses:

  • Macroeconomics and human development: the relationship between economic growth and human development; human development when there is already “enough”
  • Macroeconomics and ecological sustainability: the relationship between economic growth and global population problems, resource depletion, pollution, and climate change

Economics as a means, not an end: perhaps that’s part of what Mankiw is missing.

Flying Whale

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The caring neoliberal

February 4, 2011

A while back, Jonas brought to my attention a couple posts by Ryan Avent and Mike Konczal making the case that neoliberals are really more concerned about the poor than progressives are – it’s just that they care about the global poor and not just the domestic poor. This is a pretty potent argument, and certainly one that’s well-supported by almost any introductory macroeconomics textbook available (I say almost because there is at least one exception).

Before going any further I should acknowledge that Avent’s post in particular is actually mostly about what leftists should and shouldn’t think about organized labor. Obviously, I have thoughts on that too, but that’s not the aspect of this conversation I want to talk about here. What I want to talk about is this, from Avent:

…I think that current neoliberals think of themselves as more honestly egalitarian than traditional leftists, based on their international view of developments in human welfare. The past few decades have witnessed an unprecedented reduction in global poverty thanks to liberal reforms in China and India. Countries containing twice the population of the currently developed world are now hurtling toward middle-income status, thanks to trade, thanks to deregulation, and thanks to the introduction of market reforms.

And Konczal:

…there is an argument that neoliberals have a claim on really being concerned about labor, because they care about labor on a global scale, that the nation-state where you happen to be born isn’t a suitable location to determine boundaries for justice.

The key to the argument, really, is that last sentence of the quote from Avent. For neoliberals to claim to be “more concerned” about the poor than progressives requires a belief that neoliberal policies – for simplicity, let’s lump into that potent phrase the Washington Consensus of liberalization, privatization, and deregulation, tempered very slightly by the kind of softness for human development indicators espoused by the World Bank of recent history – actually make the world’s poor better off.

That’s the major sticking point. It’s not that progressives only care about the domestic poor and would take improved outcomes for the American working class at the expense of the working class in the global South. (That might describe a particular kind of parochial liberal or working-class perspective, but not a truly progressive one, in my opinion.) It’s that progressives don’t buy that the basic package of policies advocated by neoliberals are actually doing anything to benefit the world’s poor – or, at least, that they’re not doing enough. It’s an argument about policy, not an argument about who cares about the global working class more.

Avent’s argument takes as self-evident that it’s trade, deregulation, markets, etc etc that have caused the rise in living standards in, for example, China and India. But there’s certainly an argument to be made that this is hideously simplified and potentially misleading, if not outright wrong. China and India are growing, sure; trade in some form has a lot to do with it, sure. But are China and India growing in particularly equitable ways, ways that improve standards of living for a majority of their populations? Are the specific kinds of trade and market policies advocated by neoliberals the ones that have accounted for that growth? Are these countries growing and improving because of neoliberal policies, despite neoliberal policies, or something in between?

I confess to knowing less than I should about China and India. But I do know that neoliberal policies have not improved the situations of most developing countries from the end of World War II until today. It’s a tired but still relevant argument that those countries that have grown the most have done so partly because at some point in their history they rejected neoliberal doctrine and the fetish for a quick transition to free markets and an open economy. Is the progressive who criticizes neoliberals by citing these historical (and current!) examples just trying to make sure the U.S. working class gets its fair share of the pie? I don’t think so. Do neoliberals really care about the global working class? I don’t know. What I do know is that their policy prescriptions have historically been a pretty terrible way of expressing whatever care and concern they might feel.

Flying Whale