Posts Tagged “Economics”

08w14:4 The Shameful Minimum Wage

by timothy. 3 Comments

Honestly, if a business can’t afford to pay all its employees a livable wage, than that business should be considered a fail. What are businesses for? (The wrong answer is to say the enrichment of the owners at the expense of the employees, because that’s like Marxism or something, and we’re supposed to be past all that).

I remember when I was working for a minimum wage in Halifax, feeling both totally exploited and humiliated into enforced poverty. Further, the business had like 6 people on the payroll when it only really needed three. That’s where I got the idea that mismanagement should never be an excuse to pay people peanuts. And why I have no sympathy for the business owners who claim raising the minimum wage would be too hard on them. They’re not paying themselves a minimum wage are they?

My greater concern for raising the minimum wage is this society’s capacity to maintain an unfair status quo. As is pointed out in this article, adjusted for inflation, today’s Ontario minimum wage is equivalent to what it was thirteen years ago. I’ve noticed in the past that whenever the minimum wage goes up, so do the prices at Tim Hortons, (which I consider to be an unofficial index of inflation). So the gains of the working poor are immediately offset to erase them. The article begins by pointing out that the Ontario minimum wage went up last week. This week Tim Hortons had signs at its counters saying the prices of some menu items would rise next week. Two weeks ago, the Go Train commuter system rose its ticket prices too.

So, in 2010, when the minimum wage rises to $10 and hour, count on 1.60 coffees (rather than the current 1.42 lg) at your national coffee chain, and corresponding ticket prices across our belle province and sun-shiny country. – Timothy

Wage Ain’t Nothing But A Number | Jaime Woo
“Last week, minimum wage was raised to $8.75 an hour in the first of three scheduled increases. According to the arguments provided in the media (and on Torontoist), an increased minimum wage is necessary to help people make ends meet, but could force businesses to cut jobs to accommodate the increased costs. From a numbers point of view, the raise was a necessary antidote to the minimum wage being frozen at $6.85 from 1995 to 2003. Using the Consumer Price Index for Toronto, $8.75 adjusted for inflation ends up being $6.85 in 1995 dollars. Businesses caught off-guard by this year’s minimum wage increase must be pretty naïve to not realize that, after eight years of locked minimum wage rates, a correction was coming. However, each increase (or decrease) of the minimum wage by the government must be justified as the costs come off the back of the employers.”

08w14:3 The Superclass

by timothy. 0 Comments

The rise of the superclass | Laura Miller
“‘Davos man’ is an epithet coined by the conservative scholar Samuel Huntington to describe the very specific type that attends the conference. These are people who, as Huntington wrote, ‘have little need for national loyalty, view national boundaries as obstacles that thankfully are vanishing, and see national governments as residues from the past whose only useful function is to facilitate the elite’s global operations.’ […] Rothkopf’s credible, if not especially original argument in ‘Superclass’ is that over the past several decades a ‘global elite’ has emerged whose connections to each other have become more significant than their ties to their home nations and governments. They schmooze regularly at conferences like Davos, go to the same schools, serve together on corporate and nonprofit boards, and above all do business with each other constantly — to the point that they have become a kind of culture in themselves, a ‘class without a country,’ as Rothkopf puts it. Furthermore, these people are ‘the new leadership class for our era.’ […] In the concluding pages of ‘Superclass’ it becomes increasingly difficult to dispel the impression that you have just read what amounts to a 380-page business card. Many recent nonfiction books on ‘current affairs’ are little more than that. Organized around a catchy concept and extensively researched by underlings, they win their authors jobs in think tanks and speaking engagements at corporate workshops and conferences — all of which pay much, much more than anyone can expect to make on a book. There are a handful of important ideas in ‘Superclass,’ it’s true, but many of them have been gleaned from other, more original thinkers. There are also a lot of facts and statistics, presumably gathered by Rothkopf’s assistants.”

08w14:2 Immanuel Wallerstein's Commentary for 1 April 2008

by timothy. 0 Comments

Immanuel Wallerstein’s Commentary No. 230

“Wall Street is Really Predicated on Greed”

It is not I who is saying that Wall Street is really predicated on greed, but Stephen Raphael. And who is Stephen Raphael? He is a former member of the Board of Bear Stearns, the Wall Street bank that collapsed last month. And where did Raphael say this? In an interview with the Wall Street Journal, which is more or less the house journal of Wall Street. And what was Raphael’s point? It was to explain (or was it to excuse?) the collapse of the firm. “This could happen to any firm,” he said.

Yes, indeed it could. And it did. Meanwhile, while this was happening, the chairman of the firm, Jimmy Caynes, was nonchalantly playing bridge in a tournament. Not too smart for a greedy banker. As a result, he lost most of his personal fortune, and another greedy firm, JPMorgan Chase, came in like a vulture and made a killing. Oh, incidentally, some 14,000 employees of Bear Stearns are, or will soon be, out of a job.

Is then capitalism nothing but greed? No, there are other things to it, but greed plays a very big role. And greed, by definition, works for some at the expense of others. So, some firms are going bankrupt these days – on Wall Street, and elsewhere in the world – and others are not. The United States as a country is going bankrupt, and others are not. The United States doesn’t call it that, but that is the truth of it.

Is it always like this? No, not always. Just half the time. Let us review how Wall Street and the United States got into this particular disastrous corner. It all started out well – for Wall Street and for the United States in 1945. The war was over. The war was won. And the United States was the only industrial power whose factories were intact, untouched by wartime damage. There were destroyed cities elsewhere, and actual hunger in Europe and Asia.

The United States was set to do well, and it did do well, very well. It could outproduce the world, and get the rewards. It made a deal with the Soviet Union – we call it rhetorically Yalta – so that there would be no nuclear wars that could really damage the United States. And, at home, the big manufacturers made a deal with the big unions so that there would be no destructive strikes to interfere with the profitable production. Rosy times loomed, and the standard of living went up dramatically. Actually, the years after the war proved to be fairly rosy times for most of the world. It was the moment of the greatest expansion of production, of profit, of population, and yes of general welfare in the history of the capitalist world-economy. The French called it the “thirty glorious years.”

Must all good things come to an end? Well, cyclically, in the five hundred years of the modern world-system, I fear this has always been true. When everyone begins to cash in on economic expansion, the rate of profit has to go down. Profit from production depends on relative monopolization of the leading industries. But if too many countries have steel factories or auto factories (the leading industries of the times), there is too much competition. And, despite all the nonsensical slogans, competition is not good for capitalists. It reduces the profits.

And when profits get hit too hard, the world-system enters into one of its periodic periods of stagnation. This happened circa 1970. And, in case you hadn’t noticed, things have not been rosy since then, despite once again all the nonsensical slogans. What happens in a period of worldwide economic stagnation? The factories begin to move out of the erstwhile locales (like the United States, but also Germany, France, Great Britain, and Japan) to other countries (like South Korea, India, Brazil, and Taiwan) in search of lower costs of production. It seems good for the new places of steel and auto production, but it means layoffs in the old centers of production.

But runaway factories are not the whole story. What do big capitalists do, if they want to make money, in times of lower profits from production? They start to shift their money from productive enterprises to financial enterprises. That is to say, they begin to speculate. And, in a time of speculation, greed knows no limits. So we have junk bonds and takeovers and subprime mortgages and hedge funds and all those curious things with curious names. It seems that even Robert Rubin, one of the really big people in the financial world, admitted recently that he doesn’t know what a “liquidity put” is.

The underlying story – from 1970 on – has been that of debt, greater and greater debt. Corporations borrow, individuals borrow, states borrow. They all live above their real incomes. And, if you’re in a position to borrow (it’s called credit), you can live high on the hog, as they say. But debts have a small downside. At some point, you’re expected to repay debts. If you don’t, there is a “debt crisis” or a “bankruptcy” or, if you’re a country with a currency, a dramatic decline in the exchange rate.

This is what we call a bubble. And if you blow up a balloon long enough, no matter how good it feels, at some point the balloon bursts. It is bursting now. And everyone is frightened, as well they might be. When the bubble really bursts, it is really painful. The thing is, it is usually more painful for some than for others, even if it is painful for everyone.

At the moment, it might turn out to be most painful for the United States – as a country, and for its capitalists, and above all for its ordinary citizens. It seems the United States has been spending not billions of dollars but trillions of dollars on some wars in the Middle East it has been losing. And it seems that even the wealthiest country in the world doesn’t have in its coffers trillions of dollars. So it has borrowed them. And it seems that its credit in 2008 is not as good as it was in 1945. It seems that the creditors are today reluctant to throw good money after bad. It seems that the United States might be going bankrupt, like Bear Stearns.

Will the United States be bought out by China or by Qatar or by Norway, or by a combination of all of them at $2 or even $10 a share? What will happen to those very expensive toys that the United States keeps buying, like military bases in a hundred countries, and those airplanes and ships and superduper guns the United States constantly orders to replace yesterday’s toys? Who will feed the people on the breadlines?

Come back next decade, and let me know.

by Immanuel Wallerstein

[Copyright by Immanuel Wallerstein, distributed by Agence Global. For rights and permissions, including translations and posting to non-commercial sites, and contact:, 1.336.686.9002 or 1.336.286.6606. Permission is granted to download, forward electronically, or e-mail to others, provided the essay remains intact and the copyright note is displayed. To contact author, write:

These commentaries, published twice monthly, are intended to be reflections on the contemporary world scene, as seen from the perspective not of the immediate headlines but of the long term.]

08w12:3 The Street on Welfare

by timothy. 3 Comments

Society has always benefitted from unpaid or underpaid labour; in the past it was blatant slavery, but when that became unfashionable (and unprofitable contrasted to the production offered by machines rather than muscles) the emphasis shifted to calling unpaid labour ‘volunteers’ and nowadays, the most obvious example of all, ‘interns’. But since it is so unpalatable to recognize this as a contemporary form of slavery, we euphemize it away, and consider that we don’t have a slavery class, although there are many people working for a legally determined absolute minimum wage. In other words, we had to be legally coercive to get people paid for basic services. So now it’s officially illegal to not pay people below a certain amount, but this amount is so low that it’s guaranteed to keep the recipient poor. That way, there’s a lot more money available (which could otherwise go to the volunteers, interns, and making the minimum a livable wage) to those in the upper levels of management.


(graph via Richard Florida’s Blog)

And when those in the upper levels of management over-reach, no problem. Privatize the profits and socialize the losses. As true in Canada as it is in the USA.

Meanwhile, I’m busy at my underpaid job and still carrying student loan debt on my account books from a decade ago.

– Timothy

The Street on Welfare | E. J. Dionne Jr.
“Never do I want to hear again from my conservative friends about how brilliant capitalists are, how much they deserve their seven-figure salaries and how government should keep its hands off the private economy. The Wall Street titans have turned into a bunch of welfare clients. They are desperate to be bailed out by government from their own incompetence, and from the deregulatory regime for which they lobbied so hard. They have lost “confidence” in each other, you see, because none of these oh-so-wise captains of the universe have any idea what kinds of devalued securities sit in one another’s portfolios. So they have stopped investing. The biggest, most respected investment firms threaten to come crashing down. You can’t have that. It’s just fine to make it harder for the average Joe to file for bankruptcy, as did that wretched bankruptcy bill passed by Congress in 2005 at the request of the credit card industry. But the big guys are “too big to fail,” because they could bring us all down with them.”

08w03:5 Life is better in Venezuela

by timothy. 0 Comments

Life After the Bubble Burst | Ken O. Burtch
“This is a strange economic time in Canada. While the unemployment rate is the lowest in many years (CTV), Statistics Canada reports that 2/3rds of aged 25-54 Canadians are underemployed or are working under substandard conditions (CTV). According Robert Wright (as discussed in my Linux Startup book), the post World War II generation has exploited both their parents and their children for material gain. During the time of the Great Depression in the 1930’s, Canadian families pumped over 1 trillion dollars into the next generation so they wouldn’t do without. The baby boomer generation, with its hedonistic world-view, retired on the money instead of reinvesting it in the future, leaving Generation X with high unemployment, unpaid education debt, lower income and higher cases of suicide. As more and more older people retire from the work force, the true damage to the Canadian economy is slowly being being unmasked. A friend of mine with a university degree who moved to Venezuela recently returned to Canada because he couldn’t find work in South America. After trying for two years to get a job which paid enough to support his family, he announced that things were worse in Canada than Venezuela. He return to Venezuela…the cost of living was cheaper there.”
// article date: 17 April 2006

07w44:2 Richard Florida on Toronto

by timothy. 0 Comments

Wake up, Toronto – you’re bigger than you think | Richard Florida

…and don’t forget this superficial assessment by Leah McLaren who explains to the moneyed hipsters that Richard Florida matters by stating:

“Both husband and wife are tall, slim and dressed to minimalist perfection – the ideal complement to an airy house furnished in contemporary classics by Corbusier and Starck.”

McLaren’s write-up was appended to the print version in italics my friends. In other words: what these two gorgeous people have to say matters because they’re young, rich, and fashionable. Leah McLaren approves. We can only hope that Mr. Florida will hob-knob with people who have less money than he does, i.e. this city’s other creative class.

07w43:4 A comparison between USA & Japan

by timothy. 0 Comments

Immanuel Wallerstein’s Commentary No. 219, Oct. 15, 2007:

“Japan, the United States, and the World-Economy”

Sometimes startling and revealing news items are buried in the back pages of the news media. On October 3, The New York Times ran a small table in its business section about access to the internet. It listed ten countries with strong economies and showed two figures for each: average speed of broadband connections in megabytes a second, and price per month of service (one megabyte a second). The country that was fastest and cheapest was Japan (61.0 and $0.27). The runner-up was South Korea (45.6 and $0.45).

What was interesting about this table was how the United States stood in relation to Japan. The United States at 4.8 was fourteen times slower than Japan and at $3.33 twelve times more expensive. It is piquant to note that France, so frequently scorned in the United States for its economic backwardness, while not up to Japan’s level, was over three times faster than the United States (17.6) and half as expensive ($1.64).

The explanation of this enormous discrepancy is the relation to the capitalist market of enterprises in Japan and in the United States. For Japan to be what the Times calls a “broadband paradise,” Japanese enterprises have had to make heavy investments and give deep discounts to customers. They do this on the theory that disregarding short-term profits and pouring billions into long-term projects will pay off eventually. This was the philosophy that allowed Japan to create one of the two fastest railway lines in the world – the Shinkansen. Its only competitor in this field is France’s TGV. The United States, as everyone knows, has a miserable train system known as Amtrak, which hardly anyone uses and is always losing money.

The two crucial differences between Japan and the United States is that U.S. corporate executives are under great pressure to justify any capital expenditures that might eat into this year’s returns, and that the U.S. government is unwilling to give financial incentives to companies to help finance long-term investment.

The reasons for both are obvious. U.S. corporations today are dominated by a speculative ethos, in which top personnel turnover is constant and buyouts ever on the horizon. This year’s bottom line is all that matters to a CEO who may not be in a position to profit from next year’s bottom line (not to speak of next decade’s bottom line). And the U.S. government is spending all its money on military investment and tax breaks for the very wealthy. There is nothing left over for long-term capitalist investment. The Japanese are instead investing in a “once-in-a-century transformation,” according to Kazuhiko Ogawa, general manager of the network strategy section at Nippon Telegraph & Telephone.

The bubble in U.S. stocks may possibly continue for a little while longer. But in a decade, the United States may be embarrassingly far behind the Japanese (and the South Koreans, and even the French) in informatics, which everyone is always saying is one of the key sectors of today’s capitalist economy.

This is the way that hegemonic decline builds on itself. The leading country concentrates on the short-term situation, and overinvests in unfruitful military expenditure. Speculation replaces innovation as the source of profits. And before one knows it, the others (in this case the Japanese, but not they alone) speed ahead controlling the technology of the future. This is what the United States did when it was, oh so long ago, an ascending economic power.

The only way to turn this around, even partially, is a major cultural shift in the United States. George W. Bush is not at all ready even to think about it. Are Hillary Clinton or Barack Obama ready to exert their leadership in this direction? Nothing is less sure.

by Immanuel Wallerstein

[Copyright by Immanuel Wallerstein, distributed by Agence Global. For rights and permissions, including translations and posting to non-commercial sites, and contact:, 1.336.686.9002 or 1.336.286.6606. Permission is granted to download, forward electronically, or e-mail to others, provided the essay remains intact and the copyright note is displayed. To contact author, write:

These commentaries, published twice monthly, are intended to be reflections on the contemporary world scene, as seen from the perspective not of the immediate headlines but of the long term.]

07w43:1 Fuck the Young eh?

by timothy. 0 Comments

Why is Vancouver eating its young? Nothing cool about that | David Beers
“Nowadays in Vancouver, if, like me, you are middle-aged and own your digs, it can seem cruel to invite younger adults over for dinner, a taunt to those whose incomes are relentlessly outstripped by real-estate inflation. Even worse, you begin to sense that you and your guests are on opposite sides of a political divide. You are, after all, a member of the generation that is asking the young to endure and solve global warming, but what have you done for them lately, besides pouring fine wines in a heritage home of the sort they can never aspire to have? Much as the real-estate windfall graced middle-aged Vancouverites like myself, rising resource commodities prices have helped B.C.’s Liberal government run surpluses in the billions of dollars for several years now. But, for the young, the same government has more than doubled university tuition fees since 2001. And it’s given its MLAs a fat raise while refusing to up the minimum wage to $10 from $8. To add insult, the Liberals let employers pay a ‘training wage’ of just $6 an hour to workers starting out, most of whom, of course, are young. Spiralling housing and education costs. Low entry wages, weak public transit, kids living on the street and greenhouse emissions spewing away. If these seem vexing “issues” to older people, the young tend to bundle them as “boomer legacies,” burdens unfairly shifted onto them, says opinion researcher Angus McAllister. Politicians ignore at their own peril this way that youth filter politics, he suggests.” [emp mine, obviously]

Raging against the tyranny of CanLit | Stephen Marche
“Now, in the middle of prize season and the authors’ festival, the differences between the two literary capitals couldn’t be starker to me. Brooklyn is so, so young and Toronto is so, so old: It felt like moving from a frenetic day care to an old folks’ home. […] Literature in Toronto is something your smartest aunt does once she’s cozied up in her favourite sweater. And the work therefore is less exciting. The popular novels here are generally ponderous, draped in sanctimony over suffering and history, melodramas in exotic settings. One thing you are not going to get out of a novel on the Giller list or indeed the best-seller list is a good laugh. […] Setting is everything in Canadian fiction. Plots don’t matter much. There are only a few plots anyway: recovering from historical or familial trauma through the healing power of whatever (most common); uncovering historical or family secrets and thereby achieving redemption (close second); coming of age (distant third place). The characters are mostly the same: The only thing that changes is the location of the massacred grandmother, what kind of booze the alcoholic father drinks himself into fits with, what particular creed is being revealed, in deft and daring ways, as both beautifully transcendent and oppressive. Innovation, whether in language or form, is a dirty word. […] If you think I’m being extreme, just look at recent comments by Ellen Seligman, the publisher of McClelland and Stewart, one of the most powerful people in Canadian publishing. Her response to the Giller list this year struck me as a devastating assessment of where we stand: “I don’t think prizes are necessarily for young writers,” she said in The Globe. It is a remarkable sentence. There are two ways to read it. 1) Young writers don’t write well enough to deserve prizes. 2) Even if they do write well enough, only old writers deserve attention. Because that is what the Giller is, a massive dollop of attention. Seligman says it openly: Only books written by old people are worth serious attention. The danger is that the Giller, like the CBC, will become just another institution for boomer self-congratulation.” [emp mine]

06w47:1 Cool Economics

by timothy. 0 Comments

As I mentioned in the Goodreads sent out on October 16th, I’ve prepared a transcript of the Ideas episode Economics and Social Justice, which was released today as a podcast.

Despite Mr Sacco’s acceptably flawed English, I found this to be a remarkably good listen, and I especially liked his take on what the Toronto School would call the Economics of Positional Goods. By this I mean that Mark Kingwell has been known in the past year to talk of positional goods which is borrowing from the work of his fellow University of Toronto philosophy colleague Joseph Heath, who presented on his book, The Rebel Sell two years ago with his co-author Andrew Potter, a transcript of which I made available on Goodreads some time ago and herein again for obvious thematic reasons.

In addition, because Sacco mentions in his presentation that there is a strong incentive in our culture toward stupidity, since it makes you a more pliable consumer, I was reminded of Alvin Toffler’s talk which was broadcast on TVO’s Big Ideas on September 30th. His talk was for his new book, Revolutionary Wealth where he argued that we have formed a new civilization, one I would argue which is unhealthily obsessed with the pursuit of a string of digits; Sacco would argue that we have tied our identity to these digits, administered by banks and governments, and see them as measures of our potency. Toffler argues that our society’s structures have fallen out of sync, where business is moving at an extreme rate, adapting readily to and creating change in our world but education is the dinosaur, not having kept up the pace and still teaching a curriculum designed to produce efficient factory and corporate workers.

Sacco thinks we need to invest in ourselves – that is educate ourselves – in order to remove ourselves from the rat race of competitive consumption which is tied to what he calls the economics of identity. What’s a little shocking is how this new and cool theory of economics – the economics of identity – is really rather old school. In an essay found in his Collected Works (which I tried to get on Goodreads last year but they wouldn’t let me), Northrop Frye wrote:

Still, the problem of leisure and boredom is an educational problem. Education may not solve it, but nothing else will. Schools, churches, clubs, and whatever else has any right at all to be called educational, need to think of educating for leisure as one of our central and major social needs. And education is a much broader business than studying certain subjects, though it includes that. Television, newspapers, films, are all educational agencies, though what they do mostly is more like dope peddling than like serious education. Education reflects the kind of society we have. If society is competitive and aggressive and ego-centered, education will be too; and if education is that way, it’ll produce a cynical and selfish society, round and round in a vicious circle. Intelligent and dedicated people can break this circle in a lot of places if they try hard.

What makes boredom boring? It’s not just a matter of not being busy enough. Take a girl who’s dropped out of college because the slick magazines told her she wasn’t being feminine unless she threw her brains away. What with running a house and three children and outside activities, she hasn’t a minute of free time, but she’s bored all the same. Being bored is really the feeling that there’s something missing inside oneself. When someone gets that feeling, his instinct is to feel that something outside him can supply what’s missing. This is what inspires the chase for what are called status symbols. A man struggles to get an expensive car or a mink coat for his wife in the hope that people will judge him by these things instead of by himself. One trouble with these things is that they wear out so fast. In fact, our economy partly depends on their wearing out fast. As soon as anything is recognized to be a status symbol, it begins to look silly, and we have to start chasing something else. Suppose a man wants to collect pictures, not because he likes pictures, but because it’s an approved thing to do. He’s soon fold that certain kinds of pictures are fashionable and others aren’t. But as soon as he’s got his house filled with canvases a hundred feet square covered with red paint, the fashion changes to pop art, and there he is with last year’s model of status symbols. It’s the same with all the distracting activities. A man is bored because he bores himself.

That was circa 1963. When Sacco speaks of ‘compensatory consumption’ he’s really talking about people trying to buy their way out of boredom.

But, you know, we do buy our way out of boredom all the time: we buy computers to do websites and Goodreads with, and we buy books to read which stimulate and educate. An Educated Imagination is what Pier Luigi Sacco is really calling for, and to that end here is some content by which to further that pursuit. – Timothy


Economics and Social Justice | CBC Ideas
“Pier Luigi Sacco teaches the economics of culture in Venice. He’s interested in concepts of post-industrial economics, co-operative enterprise and game theory. In a discussion recorded in Vancouver, he and social commentator Avi Lewis, talk about changing theories of economics as key to narrowing the gap between rich and poor.”Podcast link:

The Rebel Sell | Andrew Potter and Joseph Heath
“So the desire to conform, this idea that we’re all trying to conform, fails to explain the compulsive nature of consumer behavior, why we keep spending more and more, even though we’re all over extended, even though it doesn’t bring anybody any happiness in the long run. So the question is why do we lay the blame for consumerism on those who are struggling to keep up with the Jones’? Because the fault would actually appear to lie with the Jones’. They’re the ones who started it all, by trying to one-up their neighbors. It’s their desire to stand out from the crowd, to be better than everyone else, that is responsible for ratcheting up consumption standards in their community. In other words, it’s the non-conformists, not the conformists, who are driving consumer spending.”

Revolutionary Wealth | Alvin Toffler
“The co-author, Alvin Toffler, came through Toronto recently promoting the latest book in which the Tofflers again divine the shape of things to come. The book’s title is Revolutionary Wealth and is an attempt to show how our traditional economic categories are subject to changes wrought by digital technologies. If you suffer from future shock already, this talk is not likely to assuage it.”

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emailed by Timothy on Monday 20 November 2006 @ 10:15 PM