South By North Strategies, Ltd.

The Austerity Class Regnant

Writing in The Nation, Ari Berman explains “how the austerity class rules Washington.”

The austerity class testifies frequently before Congress, is quoted constantly in the media by sympathetic journalists and influences policy-makers and elites at the highest levels of power. They manufacture a center-right consensus by determining the parameters of acceptable debate and policy priorities, deciding who is and is not considered a respectable voice on fiscal matters. The “balanced” solutions they advocate are often wildly out of step with public opinion and reputable economic policy, yet their influence endures, thanks to an abundance of money, the ear of the media, the anti-Keynesian bias of supply-side economics and a political system consistently skewed to favor Wall Street over Main Street.
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Taken together, the various strands of the austerity class form a reinforcing web that is difficult to break. Its think tanks and wonks produce a relentless stream of disturbing statistics warning of skyrocketing debt and looming bankruptcy, which in turn is trumpeted by politicians and the press and internalized by the public. Thus forms what Washington Post blogger Greg Sargent calls a Beltway Deficit Feedback Loop, wherein the hypothetical possibility of a US debt crisis somewhere in the future takes precedence over the very real jobs crisis now.

Around The Dial – November 2, 2011

Economic policy reports, blog postings, and media stories of interest:

• Dean Baker has some ideas for the super committee.
• Gordon Lafer thinks about the meaning of Occupy Wall Street.
• Random Samplings reports on the financing of state and local governments.
• Brad DeLong wonders why the European Central Bank dislikes central banking.
• Jonathan Gruber takes issues with “another bogus attack on Obamacare.”

What About Artisanal Employment?

Free Exchange reports on one possible future source of middle-income jobs…

IT’S been one of the hottest economic questions for at least the last few decades: what sort of jobs will provide a comfortable, secure, middle-class lifestyle for the next generation of Americans? America still has a vibrant manufacturing industry, but it no longer offers large numbers of desirable jobs. During a panel at last week’s Buttonwood conference Harvard economist Larry Katz had an answer. He reckons that future “good” middle-class jobs will come from the re-emergence of artisans, or highly skilled people in each field. Two examples he mentioned: a contractor who installs beautiful kitchens and a thoughtful, engaging caregiver to the elderly. He reckons the critical thinking skills derived from a liberal arts education give people who do these jobs an edge. The labour market will reward this; the contractor who studied art history or the delightful caregiver with a background in theatre will thrive.

Remaking The American Economy

New York magazine profiles Mitt Romney’s business career and his role in establishing the leveraged-buyout industry. 

… Economists believe there was a clear connection between the labor-market changes in the early nineties and the great profits that soon followed. “Could we have had the productivity boom without displacement? My answer would be no,” says Frank Levy, an MIT economist.
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The trouble, Levy believes, was that this new shareholder-value-driven system had no built-in mechanism of regulation, and its incentives geared CEOs toward shortsightedness and recklessness. “Any profit-making organization was going to take advantage of the opportunities to lower costs and become more efficient by taking advantage of foreign producers and installing technology, both of which meant losing jobs,” he says. “But decision-makers fully exploited at every turn the market power that they had. The question is, why were we so willing to exploit everything?”
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The obvious answer is financial reward. But there may have been a cultural component, too. By the time Mitt Romney left Bain Capital for good, in 1999, American CEOs looked very different from the predecessors he had met in the seventies …. More and more, they were pure meritocrats—well-educated, well-compensated, moving frequently between jobs and industries, trained to look ruthlessly for efficiency everywhere. They look a great deal more, in other words, like Mitt Romney.

Around The Dial – November 1, 2011

Economic policy reports, blog postings, and media stories of interest:

• Christina Romer thinks “Ben Bernanke needs a Volcker Moment.”
• Businessweek profiles an intellectual architect of Occupy Wall Street.
• Brad Plumer explains why “it’s been a bad year to graduate for college.”
• Dean Baker explains (again) why the Social Security system isn’t in crisis.
• The NY Times profiles Mario Draghi, the new head of the European Central Bank.