Generation Leftover
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Posts Tagged: economy
“Hello, Missy, Fuck You”
The Problem
Everything You Heard About the Deficit Falling Is Wrong
Most of the media bought the notion that somehow the deficit had magically halved. Let’s look at the math.
If it’s too good to be true, it probably isn’t. Especially if it involves math, the Treasury Department, and two disparate political camps championing two different economic doctrines that came of age decades ago.
So went the telling of the deficit story last week. Most of the media bought the notion that somehow the deficit had magically halved to $682 billion from around $1.1 trillion last year, based on not even examining the Treasury Department’s own reports before promoting that gleeful and surreal conclusion.
When the Congressional Budget Office (CBO) announced that the deficit underwent some kind of Fastest Loser diet, Keynesian types were thrilled that their philosophy was validated. The magic number proved that government fiscal stimulus will ultimately boost the economy. (Leave aside that John Maynard Keynes was actually an asset manager and successful speculator.) Thus, budgetary cuts are not necessary.
Where there is truth to this (austerity never helped anyone but those not affected by it), ignoring the fact that certain federal fiscal stimulus plans were used as reasons to increase overall debt in the form of treasury securities that banks use as reserve to buoy the banking system—and thus the stock market—and not the general economy, does economics and more importantly, the country, a disservice.
On the other hand, the free-market types also considered this a triumph of their philosophy. By not overly regulating the market (score another one for watering down the already tepid Frank-Dodd Act), the economy is marching back to normal.
Again, this does their notion a disservice because a true free-marketer would be against the Federal Reserve propping up the treasury (and thus debt) market by buying lots of treasuries, and allowing banks to park more treasuries on their books to the tune of $1.5 trillion worth) and toxic assets (in the form of buying $85 billion of them from banks who had them rotting on their books allowing banks to free up space to speculate in other ways).
Those debates, in all their generalities, will continue on. Meanwhile, there’s the matter of what sparked the latest phase of debates over big vs. small (rather than Wall Street-coddling vs. population-stimulating). -the deficit figure, that number that measures what the government takes in vs. what it spends, and what it shows, is that neither bank stimulus nor populace stimulus has changed very much in the past three years.
First, a hat tip to Karl Denninger at Market Ticker for boldly going where much of the media seemed too complacent or clueless to go. According to Denninger, since September 28, 2012, “there has been a net $762.6 billion of new debt added to the federal balance sheet, not the $488 billion the Treasury Department claims.” In addition, Social Security and Medicare are almost $90 billion in the hole this year already.
He writes that Treasury’s own cash statement indicates that, “At the current run rate over the four calendar months … the deficit on a cash basis this year is $1.188 trillion” compared to $1.210 trillion last year, which is about the same. If you include figures through the end of April, that same run rate produced a deficit of about $1.307 trillion.
I was truly puzzled by the new figure and more so by how much of the media and various Krugmanites tend to lump all fiscal stimulus into a population helping category, without noting that certain forms help the banking system more than the population. To be sure, stimuli like extended unemployment programs help families make ends meet while seeking better opportunities, but programs like HAMP barely make a dent in peoples’ foreclosure-related problems, while enabling banks to benefit from more aggregate support.
What seemed odder is that the deficit has always been reported as the total of those debts/expenditures relative to revenues, and simple logic says that those debts/expenditures haven’t dropped, and revenues haven’t increased by what is reported near a $500 billion shift….
One is tempted (if one cared to probe for a nanosecond) to ask what the Treasury Department didn’t include, but its math doesn’t work even if it didn’t exclude anything. Take its own report, the Monthly Treasury Statement which compiles activity from the start of the current fiscal year (October 2012) through April 2013.
A very cursory look at this report clearly reveals some items that don’t actively support the report’s optimistic subtitle.
Take Table 1. The numbers show that there have been $1.603 trillion in budget receipts so far for fiscal year 2013 vs. $2.090 trillion in outlays. This indeed produces a value for a current deficit (outlays minus receipts) of -$487 billion.
The same table also shows there were $1.383 trillion in receipts for the same period in 2012 and $2.1 trillion (about the same as this year) in outlays. Combining those figures, we do get a comparative deficit this time last year of -$719 billion. Okay, so far, it’s on point with the headline’s cheer.
However, just below Table 1 comes some small print. The Treasury Department appears to have changed some accounting methods. The small print reads: “The deficit figure differs by $2.23 billion due mainly to revisions in the data following the release of the Final Monthly Treasury Statement.” There’s no clarity about how those revisions changed numbers, and the changes are small in the scheme of things, so let’s raise an eyebrow and move on for now—to the good part.
Even if we pretend those changes don’t matter and even if the rest of this year’s receipts come in 16 percent greater than they did last year (which on average is what this table is indicating so far), we’d still get a total of $1.603 trillion receipts plus an expected $1.234 trillion. That equals $2.614 trillion in total receipts for 2013. Remember that number for a moment.
Now, consider that even if the rest of this year’s expenditures remain flat to last year’s (like the first part of the year indicated), there would be $3.5 trillion in outlays for 2013. If we subtract that $3.5 trillion in outlays from $2.614 trillion in receipts, we get a total deficit of approximately $886 billion; certainly not the $642 billion the CBO recently announced.
But there’s more. There’s Table 2.
According to Table 2, those expenditures actually won’t be flat, instead they will be higher, by about $184 billion, to reach $3.684 trillion.
Subtracting $3.684 trillion from $2.614 trillion, we get a total expected deficit of approximately $1.069 trillion—or about the same as it has been over the last couple of years—and again not the $642 billion that the media spread, and that Krugmanites consider reflective of fiscal stimulus working for the overall economy.
There’s a danger in working with numbers. They can be massaged and bent and faked and shrouded with suppositions. But, that’s not the case here. This is a case of simple addition and subtraction using Treasury’s own report. Doing so reveals a discrepancy between the recent headline deficit number and the one in the report. The issue here isn’t whether government stimulus works or not (nor how it was designed and who it really helps most beneath associated political rhetoric), but about why people can be so eager to be right about the nature of the forest, they ignore the fact that they are running smack into a tree right in front of them. Let’s at least agree about the tree, and move on from there.
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The Internet Is Slaying the Middle Class
In “Who Owns the Future?” Jaron Lanier examines how the Web eliminates employment and job security, along with revenues that give the economic middle stability.
Jaron Lanier is a computer science pioneer who has grown gradually disenchanted with the online world since his early days popularizing the idea of virtual reality. “Lanier is often described as ‘visionary,’ ” Jennifer Kahn wrote in a 2011 New Yorker profile, “a word that manages to convey both a capacity for mercurial insight and a lack of practical job skills.”
Raised mostly in Texas and New Mexico by bohemian parents who’d escaped anti-Semitic violence in Europe, he’s been a young disciple of Richard Feynman, an employee at Atari, a scholar at Columbia, a visiting artist at New York University, and a columnist for Discover magazine. He’s also a longtime composer and musician, and a collector of antique and archaic instruments, many of them Asian.
His book continues his war on digital utopianism and his assertion of humanist and individualistic values in a hive-mind world. But Lanier still sees potential in digital technology: He just wants it reoriented away from its main role so far, which involves “spying” on citizens, creating a winner-take-all society, eroding professions and, in exchange, throwing bonbons to the crowd.
This week sees the publication of “Who Owns the Future?,” which digs into technology, economics and culture in unconventional ways. (How is a pirated music file like a 21st century mortgage?) Lanier argues that there is little essential difference between Facebook and a digital trading company, or Amazon and an enormous bank. (“Stanford sometimes seems like one of the Silicon Valley companies.”)
Much of the book looks at the way Internet technology threatens to destroy the middle class by first eroding employment and job security, along with various “levees” that give the economic middle stability.
“Here’s a current example of the challenge we face,” he writes in the book’s prelude: “At the height of its power, the photography company Kodak employed more than 140,000 people and was worth $28 billion. They even invented the first digital camera. But today Kodak is bankrupt, and the new face of digital photography has become Instagram. When Instagram was sold to Facebook for a billion dollars in 2012, it employed only 13 people. Where did all those jobs disappear? And what happened to the wealth that all those middle-class jobs created?”
“Future” also looks at the way the creative class – especially musicians, journalists and photographers — has borne the brunt of disruptive technology.
The new book – which has drawn a rave in the New York Times — has already received a serious challenge from Evgeny Morozov in the Washington Post. The Internet-skeptic author of “To Save Everything, Click Here: The Folly of Technological Solutionism” challenges Lanier’s proposed solution that regular people be rewarded in micropayments when their data enriches a digital network.
But more important than Lanier’s hopes for a cure is his diagnosis of the digital disease. Eccentric as it is, “Future” is one of the best skeptical books about the online world, alongside Nicholas Carr’s “The Shallows,” Robert Levine’s “Free Ride” and Lanier’s own“You Are Not a Gadget.”
We spoke to the dreadlocked, Berkeley-based author from the road, where he’s on a massive book tour.
You talk early in “Who Owns the Future?” about Kodak — about thousand of jobs being destroyed, and Instagram picking up the slack — but with almost no jobs produced. So give us a sense of how that happens and what the result is. It seems like the seed of your book in a way.
Right. Well, I think what’s been happening is a shift from the formal to the informal economy for most people. So that’s to say if you use Instagram to show pictures to your friends and relatives, or whatever service it is, there are a couple of things that are still the same as they were in the times of Kodak. One is that the number of people who are contributing to the system to make it viable is probably the same. Instagram wouldn’t work if there weren’t many millions of people using it. And furthermore, many people kind of have to use social networks for them to be functional besides being valuable. People have to, there’s a constant tending that’s done on a volunteer basis so that people can find each other and whatnot.
So there’s still a lot of human effort, but the difference is that whereas before when people made contributions to the system that they used, they received formal benefits, which means not only salary but pensions and certain kinds of social safety nets. Now, instead, they receive benefits on an informal basis. And what an informal economy is like is the economy in a developing country slum. It’s reputation, it’s barter, it’s that kind of stuff.
So instead of somebody paying money to get their photo developed, and somebody getting a part of a job, a little fragment of a job, at least, and retirement and all the other things that we’re accustomed to, it works informally now, and intangibly.
Yeah, and I remember there was this fascination with the idea of the informal economy about 10 years ago. Stewart Brand was talking about how brilliant it is that people get by in slums on an informal economy. He’s a friend so I don’t want to rag on him too much. But he was talking about how wonderful it is to live in an informal economy and how beautiful trust is and all that.
And you know, that’s all kind of true when you’re young and if you’re not sick, but if you look at the infant mortality rate and the life expectancy and the education of the people who live in those slums, you really see what the benefit of the formal economy is if you’re a person in the West, in the developed world. And then meanwhile this loss, or this shift in the line from what’s formal to what’s informal, doesn’t mean that we’re abandoning what’s formal. I mean, if it was uniform, and we were all entering a socialist utopia or something, that would be one thing, but the formal benefits are accruing at this fantastic rate, at this global record rate to the people who own the biggest computer that’s connecting all the people.
So Kodak has 140,000 really good middle-class employees, and Instagram has 13 employees, period. You have this intense concentration of the formal benefits, and that winner-take-all feeling is not just for the people who are on the computers but also from the people who are using them. So there’s this tiny token number of people who will get by from using YouTube or Kickstarter, and everybody else lives on hope. There’s not a middle-class hump. It’s an all-or-nothing society.
Right, and also I think part of what you’re saying too is that it’s still in most ways a formal economy in that the person who lost his job at Kodak still has to pay rent with old-fashioned money he or she is no longer earning. He can’t pay his rent with cultural capital that’s replaced it.
Yeah, well, people will say you can find a place to crash. People who tour right now will find a couch to crash on. But, you know, this is the difference … I’m not saying that there aren’t ever benefits, like yeah, sometimes you can find a couch. But as I put it in the book, you have to sing for your supper for every meal. The informal way of getting by doesn’t tide you over when you’re sick and it doesn’t let you raise kids and it doesn’t let you grow old. It’s not biologically real.
Actually, can we stick with photography for a second? If we go back to the 19th century, photography was kind of born as a labor-saving device, although we don’t think of it that way. One of my favorite stories, which might be apocryphal — I can’t tell you for sure that this is so, although photographers traded this story for many years. But the way the piece of folklore goes is that during the Civil War era, and a little after, the very earliest photographers would go around with a collection of photographs of people who matched a certain archetype. So they would find the photograph that most closely matched your loved one and you’d buy that because at least there would be representation a little like the person, even if it was the wrong person. And that sounds just incredibly weird to us.
And then, you know, along a similar vein at that time early audio recordings, which today would sound horrible to us, were indistinguishable between real music to people who did double blind tests and whatnot. So the thing is, why not just paint the real person, because painting was really a lot of work. It takes a long time to paint a portrait. And you have to carry around all the paints and all that, and you could just create a stack of photos and sell them. So in the beginning photography was kind of a labor saving device. And whenever you have a technological advance that’s less hassle than the previous thing, there’s still a choice to make. And the choice is, do you still get paid for doing the thing that’s easier?
People often say, well, in Rochester, N.Y. — which is a town that kind of lived on the photography business — they had a buggy whip factory that closed down with the advent of the automobile. The thing is, it’s a lot easier to deal with a car than to deal with horses. I love horses, but you know, you have to feed them, and they poop a lot, and you have to deal with their hooves. It’s a whole thing. And so you could make the argument that a transition to cars should create a world where drivers don’t get paid, because, after all, it’s fun to drive. And it is. And they’re magical.
And so there could really easily be, somebody could easily have asserted that photography is so much easier than painting and driving cars is so much easier than horses that the people who do those things — or support it –shouldn’t be paid. Working in a nice environment — if you go to Sweden and you visit the Saab factory, it’s really nice. Why should you even be paid to do anything?
We kind of made a bargain, a social contract, in the 20th century that even if jobs were pleasant people could still get paid for them. Because otherwise we would have had a massive unemployment. And so to my mind, the right question to ask is, why are we abandoning that bargain that worked so well?
Right. Well, until about the year 2000 or so, some jobs had been destroyed by new technology. This goes back to the industrial revolution and earlier. But more jobs were created than those destroyed. So what changed?
Of course jobs become obsolete. But the only reason that new jobs were created was because there was a social contract in which a more pleasant, less boring job was still considered a job that you could be paid for. That’s the only reason it worked. If we decided that driving was such an easy thing [compared to] dealing with horses that no one should be paid for it, then there wouldn’t be all of those people being paid to be Teamsters or to drive cabs. It was a decision that it was OK to have jobs that weren’t terrible.
So it wasn’t inherent in the technology. In other words, there’s nothing inherently different about digital technology or the Internet than there is with factory technology or the assembly line or these other technological shifts that have developed?
Yeah. I mean, the whole idea of a job is entirely social construct. The United States was built on slave labor. Those people didn’t have jobs, they were just slaves. The idea of a job is that you can participate in a formal economy even if you’re not a baron. That there can be, that everybody can participate in the formal economy and the benefit of having everybody participate in the formal economy, there are annoyances with the formal economy because capitalism is really annoying sometimes.
But the benefits are really huge, which is you get a middle-class distribution of wealth and clout so the mass of people can outspend the top, and if you don’t have that you can’t really have democracy. Democracy is destabilized if there isn’t a broad distribution of wealth.
And then the other thing is that if you like market capitalism, if you’re an Ayn Rand person, you have to admit that markets can only function if there are customers and customers can only come if there’s a middle hump. So you have to have a broad distribution of wealth. So there’s no reason technically for any technology to ever create a job. In other words, we could have had motor vehicles, and we could have had film cameras, we could have had all these technologies without any formal jobs. We just had a social contract in which we decided that we’d allow formal jobs in factories and in drivers and in users of cameras and creators of cameras and film.
It was all a social construct to begin with, so what changed, to get to your question, is that at the turn of the [21st] century it was really Sergey Brin at Google who just had the thought of, well, if we give away all the information services, but we make money from advertising, we can make information free and still have capitalism. But the problem with that is it reneges on the social contract where people still participate in the formal economy. And it’s a kind of capitalism that’s totally self-defeating because it’s so narrow. It’s a winner-take-all capitalism that’s not sustaining.
Well, a lot of your book is about the survival of the middle class in the digital age, the importance of a broad middle class as we move forward. You argue that the middle class, unlike the rich and the poor, is not a natural class but was built and sustained through some kind of intervention. Has that changed in the last decade or two as the digital world has grown?
Well, there’s a lot of ways. I mean, one of the issues is that in a market society, a middle class has always required some little artificial help to keep going. There’s always academic tenure, or a taxi medallion, or a cosmetology license, or a pension. There’s often some kind of license or some kind of ratcheting scheme that allows people to keep their middle-class status.
In a raw kind of capitalism there tend to be unstable events that wipe away the middle and tend to separate people into rich and poor. So these mechanisms are undone by a particular kind of style that is called the digital open network.
Music is a great example where value is copied. And so once you have it, again it’s this winner-take-all thing where the people who really win are the people who run the biggest computers. And a few tokens, an incredibly tiny number of token people who will get very successful YouTube videos, and everybody else lives on hope or lives with their parents or something.
One of the things that really annoys me is the acceptance of lies that’s so common in the current orthodoxy. I guess all orthodoxies are built on lies. But there’s this idea that there must be tens of thousands of people who are making a great living as freelance musicians because you can market yourself on social media. And whenever I look for these people – I mean when I wrote “Gadget” I looked around and found a handful – and at this point three years later, I went around to everybody I could to get actual lists of people who are doing this and to verify them, and there are more now. But like in the hip-hop world I counted them all and I could find about 50. And I really talked to everybody I could. The reason I mention hip-hop is because that’s where it happens the most right now.
So when we’re talking about the whole of the business – and these are not 50 people who are doing great. Or here’s another example. Do you know who Jenna Marbles is? She’s a super-successful YouTube star. She’s the queen of self-help videos for young women. She’s kind of a cross between Snooki and Martha Stewart or something. And she’s cool. I mean, she kind of helps girls with how to do makeup, and she’s irreverent. She’s had a billion views.
The interesting thing about it is that people advertise, “Oh, what an incredible life. She’s this incredibly lucky person who’s worked really hard.” And that’s all true. She’s in her 20s, and it’s great that she’s found this success, but what this success is that she makes maybe $250,000 a year, and she rents a house that’s worth $1.1 million in L.A.. And this is all breathlessly reported as this great success. And that’s good for a 20-year-old, but she’s at the very top of, I mean, the people at the very top of the game now and doing as well as what used to be considered good for a middle-class life. And I don’t want to dismiss that. That’s great for a 20-year-old, although in truth, in my world of engineers that wouldn’t be much. But for someone who’s out there, a star with a billion views, that’s a crazy low expectation. She’s not even in the 1 percent. For the tiny token number of people who make it to the top of YouTube, they’re not even making it into the 1 percent.
The issue is if we’re going to have a middle class anymore, and if that’s our expectation, we won’t. And then we won’t have democracy.
You mentioned a minute ago that there’s about 50 in hip-hop. What kind of estimate did you come up with for music in general?
I think in the total of music in America, there are a low number of hundreds. It’s really small. I wish all of those people my deepest blessings, and I celebrate the success they find, but it’s just not a way you can build a society.
The other problem is they would have to self-fund. This is getting back to the informal economy where you’re living in the slum or something, so you’re desperate to get out so you impress the boss man with your music skills or your basketball skills. And the idea of doing that for the whole of society is not progress. It should be the reverse. What we should be doing is bringing all the people who are in that into the formal economy. That’s what’s called development. But this is the opposite of that. It’s taking all the people from the developed world and putting them into a cycle of the developing world of the informal economy.
You say early in the book, “As much as it pains me to say so, we can survive only if we destroy the middle classes of musicians, journalists, photographers.” I guess what you seem to be saying here is the creative classis sort of the canary in the digital coal mine.
Yes. That’s precisely my point. So when people say, “Why are musicians so special? Everybody has to struggle.” And the thing is, I do think we are looking at a [sustainable] model.
We don’t realize that our society and our democracy ultimately rest on the stability of middle-class jobs. When I talk to libertarians and socialists, they have this weird belief that everybody’s this abstract robot that won’t ever get sick or have kids or get old. It’s like everybody’s this eternal freelancer who can afford downtime and can self-fund until they find their magic moment or something.
The way society actually works is there’s some mechanism of basic stability so that the majority of people can outspend the elite so we can have a democracy. That’s the thing we’re destroying, and that’s really the thing I’m hoping to preserve. So we can look at musicians and artists and journalists as the canaries in the coal mine, and is this the precedent that we want to follow for our doctors and lawyers and nurses and everybody else? Because technology will get to everybody eventually.
It wasn’t too long ago that it was unskilled people on assembly lines who answered phones or bank tellers and it’s just crept up in the decades since. You’ve mentioned a few times this sort of digital utopianism that still emanates from Silicon Valley. Where does that kind of thinking come from and why does it exist despite all the evidence to the contrary?
Well, it’s an orthodoxy now. I have 14-year-old kids who come to my talks who say, “But isn’t open source software the best thing in life? Isn’t it the future?” It’s a perfect thought system. It reminds me of communists I knew when growing up or Ayn Rand libertarians. It’s one of these things where you have a simplistic model that suggests this perfect society so you just believe in it totally. These perfect societies don’t work. We’ve already seen hyper-communism come to tears. And hyper-capitalism come to tears. And I just don’t want to have to see that for cyber-hacker culture. We should have learned that these perfect simple systems are illusions.
Speaking of politics, your concerns are often those of the political left. You’re concerned with equality and a shrinking middle class. And yet you don’t seem to consider yourself a progressive or a man of the left — why not?
I am culturally a man on the left. I get a lot of people on the left. I live in Berkeley and everything. I want to live in a world where outcomes for people are not predetermined in advance with outcomes.
The problem I have with socialist utopias is there’s some kind of committees trying to soften outcomes for people. I think that imposes models of outcomes for other people’s lives. So in a spiritual sense there’s some bit of libertarian in me. But the critical thing for me is moderation. And if you let that go too far you do end up with a winner-take-all society that ultimately crushes everybody even worse. So it has to be moderated.
I think seeking perfection in human affairs is a perfect way to destroy them. It just doesn’t work. So my own take on it is, actually another way I’ve been thinking about it lately is a balance of magisteria. “Magisteria” was the term that Stephen Jay Gould described science and religion. And I’ve been thinking that way about money and politics, or computers and politics, or computers and ethics. All of these things are magisterial, where the people who become involved in them tend to wish they could be the only ones.
Libertarians tend to think the economy can totally close its own loops, that you can get rid of government. And I ridicule that in the book. There are other people who believe that if you could get everybody to talk over social networks, if we could just cooperate, we wouldn’t need money anymore. And I recommend they try living in a group house and then they’ll see it’s not true.
My cyber-friends think if you can just come up with a perfect scheme, that some perfect digital scheme will solve all the problems. My belief is that if we deal with all of these things, they can balance out each other to prevent the worst dysfunctions of each one from happening. And at minimum if we can just have enough distribution of clout in society so it isn’t run by a tiny minority, then at the very least it gives us some room to breathe. And that’s the minimum requirement. Maybe not the ideal.
So what we have to demand of digital technology is that it not try to be a perfect system that takes over everything. That it balances the excess of the other magisteria. And that is doesn’t concentrate power too much, and if we can just get to that point, then we’ll really be fine. I’m actually modest. People have been accusing me of being super-ambitious lately, but I feel like in a way I’m the most modest person in the conversation. I’m just trying to avoid total dysfunction.
Let’s stick with politics for one more. Is there something dissonant about the fact that the greatest fortunes in human history have been created with a system developed largely by taxpayers dollars? Military research and labs at public universities. And many of the people whom the Internet has enriched have become libertarians who earnestly tell you that they are “socially liberal and fiscally conservative,” and resist progressive taxation because of it.
Yeah, no kidding. I was there. I gotta say, every little step of this thing was really funded by either the military or public research agencies. If you look at something like Facebook, Facebook is adding the tiniest little rind of value over the basic structure that’s there anyway. In fact, it’s even worse than that. The original designs for networking, going back to Ted Nelson, kept track of everything everybody was pointing at so that you would know who was pointing at your website. In a way Facebook is just recovering information that was deliberately lost because of the fetish for being anonymous. That’s also true of Google.
Near the end of the book you talk about the changes in the book business. It doesn’t sound pretty. What’s going on there and what have you learned as someone who has now written several books?
I don’t hate anything about e-books or e-book readers or tablets. There’s a lot of discussion about that, and I think it’s misplaced. The problem I have is whether we believe in the book itself.
To me a book is not just a particular file. It’s connected with personhood. Books are really, really hard to write. They represent a kind of a summit of grappling with what one really has to say. And what I’m concerned with is when Silicon Valley looks at books, they often think of them as really differently as just data points that you can mush together. They’re divorcing books from their role in personhood.
I’m quite concerned that in the future someone might not know what author they’re reading. You see that with music. You would think in the information age it would be the easiest thing to know what you’re listening to. That you could look up instantly the music upon hearing it so you know what you’re listening to, but in truth it’s hard to get to those services.
I was in a cafe this morning where I heard some stuff I was interested in, and nobody could figure out. It was Spotify or one of these … so they knew what stream they were getting, but they didn’t know what music it was. Then it changed to other music, and they didn’t know what that was. And I tried to use one of the services that determines what music you’re listening to, but it was a noisy place and that didn’t work. So what’s supposed to be an open information system serves to obscure the source of the musician. It serves as a closed information system. It actually loses the information.
So in practice you don’t know who the musician is. And I think that’s what could happen with writers. And this is what we celebrate in Wikipedia is pretending that there’s some absolute truth that can be spoken that people can approximate and that the speaker doesn’t matter. And if we start to see that with books in general – and I say if – if you look at the approach that Google has taken to the Google library project, they do have the tendency to want to move things together. You see the thing decontextualized.
I have sort of resisted putting my music out lately because I know it just turns into these mushes. Without context, what does my music mean? I make very novel sounds, but I don’t see any value in me sharing novel sounds that are decontextualized. Why would I write if people are just going to get weird snippets that are just mushed together and they don’t know the overall position or the history of the writer or anything? What would be the point in that. The day books become mush is the day I stop writing.
Let’s close with music then. You’re a longtime musician and composer. You’re a collector of obscure and archaic instruments. How does your interest in music and especially pre-modern acoustic music shape your thinking and your life as well?
Well, the original way I got into it is very personal. It’s just that my mother died when I was young, and she was a musician. My connection to her. I got involved in more and more unusual music because I didn’t want that connection to become something that was too static. It had to be constantly changing or it would become a cliché. So that’s how I got into it.
But as far as the connection to computers, the thing to me is that I’ve always been intrigued with music interface. Musical interfaces are such profoundly better user interfaces than anything we’ve done with a digital computer. They have better acuity. They create more opportunities for virtuosity. They work with the human body more profoundly, the nervous system. I mean good musical instruments. And I’ve just been intrigued by them. It made me realize that just because something is the latest, newest thing that seems like the cleverest thing we can do at the moment doesn’t make it better.
So to realize how much better musical instruments were to use as human interfaces, it helped me to be skeptical about the whole digital enterprise. Which I think helped me be a better computer scientist, actually.
Did your life as a musician show you some of the things that you ended up excavating in “Gadget” and the new book?
Sure. If you go way back I was one of the people who started the whole music-should-be-free thing. You can find the fire-breathing essays where I was trying to articulate the thing that’s now the orthodoxy. Oh, we should free ourselves from the labels and the middleman and this will be better.
I believed it at the time because it sounds better, it really does. I know a lot of these musicians, and I could see that it wasn’t actually working. I think fundamentally you have to be an empiricist. I just saw that in the real lives I know — both older and younger people coming up — I just saw that it was not as good as what it had once been. So that there must be something wrong with our theory, as good as it sounded. It was really that simple.
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The Internet Is Slaying the Middle Class
In “Who Owns the Future?” Jaron Lanier examines how the Web eliminates employment and job security, along with revenues that give the economic middle stability.
Jaron Lanier is a computer science pioneer who has grown gradually disenchanted with the online world since his early days popularizing the idea of virtual reality. “Lanier is often described as ‘visionary,’ ” Jennifer Kahn wrote in a 2011 New Yorker profile, “a word that manages to convey both a capacity for mercurial insight and a lack of practical job skills.”
Raised mostly in Texas and New Mexico by bohemian parents who’d escaped anti-Semitic violence in Europe, he’s been a young disciple of Richard Feynman, an employee at Atari, a scholar at Columbia, a visiting artist at New York University, and a columnist for Discover magazine. He’s also a longtime composer and musician, and a collector of antique and archaic instruments, many of them Asian.
His book continues his war on digital utopianism and his assertion of humanist and individualistic values in a hive-mind world. But Lanier still sees potential in digital technology: He just wants it reoriented away from its main role so far, which involves “spying” on citizens, creating a winner-take-all society, eroding professions and, in exchange, throwing bonbons to the crowd.
This week sees the publication of “Who Owns the Future?,” which digs into technology, economics and culture in unconventional ways. (How is a pirated music file like a 21st century mortgage?) Lanier argues that there is little essential difference between Facebook and a digital trading company, or Amazon and an enormous bank. (“Stanford sometimes seems like one of the Silicon Valley companies.”)
Much of the book looks at the way Internet technology threatens to destroy the middle class by first eroding employment and job security, along with various “levees” that give the economic middle stability.
“Here’s a current example of the challenge we face,” he writes in the book’s prelude: “At the height of its power, the photography company Kodak employed more than 140,000 people and was worth $28 billion. They even invented the first digital camera. But today Kodak is bankrupt, and the new face of digital photography has become Instagram. When Instagram was sold to Facebook for a billion dollars in 2012, it employed only 13 people. Where did all those jobs disappear? And what happened to the wealth that all those middle-class jobs created?”
“Future” also looks at the way the creative class – especially musicians, journalists and photographers — has borne the brunt of disruptive technology.
The new book – which has drawn a rave in the New York Times — has already received a serious challenge from Evgeny Morozov in the Washington Post. The Internet-skeptic author of “To Save Everything, Click Here: The Folly of Technological Solutionism” challenges Lanier’s proposed solution that regular people be rewarded in micropayments when their data enriches a digital network.
But more important than Lanier’s hopes for a cure is his diagnosis of the digital disease. Eccentric as it is, “Future” is one of the best skeptical books about the online world, alongside Nicholas Carr’s “The Shallows,” Robert Levine’s “Free Ride” and Lanier’s own“You Are Not a Gadget.”
We spoke to the dreadlocked, Berkeley-based author from the road, where he’s on a massive book tour.
You talk early in “Who Owns the Future?” about Kodak — about thousand of jobs being destroyed, and Instagram picking up the slack — but with almost no jobs produced. So give us a sense of how that happens and what the result is. It seems like the seed of your book in a way.
Right. Well, I think what’s been happening is a shift from the formal to the informal economy for most people. So that’s to say if you use Instagram to show pictures to your friends and relatives, or whatever service it is, there are a couple of things that are still the same as they were in the times of Kodak. One is that the number of people who are contributing to the system to make it viable is probably the same. Instagram wouldn’t work if there weren’t many millions of people using it. And furthermore, many people kind of have to use social networks for them to be functional besides being valuable. People have to, there’s a constant tending that’s done on a volunteer basis so that people can find each other and whatnot.
So there’s still a lot of human effort, but the difference is that whereas before when people made contributions to the system that they used, they received formal benefits, which means not only salary but pensions and certain kinds of social safety nets. Now, instead, they receive benefits on an informal basis. And what an informal economy is like is the economy in a developing country slum. It’s reputation, it’s barter, it’s that kind of stuff.
So instead of somebody paying money to get their photo developed, and somebody getting a part of a job, a little fragment of a job, at least, and retirement and all the other things that we’re accustomed to, it works informally now, and intangibly.
Yeah, and I remember there was this fascination with the idea of the informal economy about 10 years ago. Stewart Brand was talking about how brilliant it is that people get by in slums on an informal economy. He’s a friend so I don’t want to rag on him too much. But he was talking about how wonderful it is to live in an informal economy and how beautiful trust is and all that.
And you know, that’s all kind of true when you’re young and if you’re not sick, but if you look at the infant mortality rate and the life expectancy and the education of the people who live in those slums, you really see what the benefit of the formal economy is if you’re a person in the West, in the developed world. And then meanwhile this loss, or this shift in the line from what’s formal to what’s informal, doesn’t mean that we’re abandoning what’s formal. I mean, if it was uniform, and we were all entering a socialist utopia or something, that would be one thing, but the formal benefits are accruing at this fantastic rate, at this global record rate to the people who own the biggest computer that’s connecting all the people.
So Kodak has 140,000 really good middle-class employees, and Instagram has 13 employees, period. You have this intense concentration of the formal benefits, and that winner-take-all feeling is not just for the people who are on the computers but also from the people who are using them. So there’s this tiny token number of people who will get by from using YouTube or Kickstarter, and everybody else lives on hope. There’s not a middle-class hump. It’s an all-or-nothing society.
Right, and also I think part of what you’re saying too is that it’s still in most ways a formal economy in that the person who lost his job at Kodak still has to pay rent with old-fashioned money he or she is no longer earning. He can’t pay his rent with cultural capital that’s replaced it.
Yeah, well, people will say you can find a place to crash. People who tour right now will find a couch to crash on. But, you know, this is the difference … I’m not saying that there aren’t ever benefits, like yeah, sometimes you can find a couch. But as I put it in the book, you have to sing for your supper for every meal. The informal way of getting by doesn’t tide you over when you’re sick and it doesn’t let you raise kids and it doesn’t let you grow old. It’s not biologically real.
Actually, can we stick with photography for a second? If we go back to the 19th century, photography was kind of born as a labor-saving device, although we don’t think of it that way. One of my favorite stories, which might be apocryphal — I can’t tell you for sure that this is so, although photographers traded this story for many years. But the way the piece of folklore goes is that during the Civil War era, and a little after, the very earliest photographers would go around with a collection of photographs of people who matched a certain archetype. So they would find the photograph that most closely matched your loved one and you’d buy that because at least there would be representation a little like the person, even if it was the wrong person. And that sounds just incredibly weird to us.
And then, you know, along a similar vein at that time early audio recordings, which today would sound horrible to us, were indistinguishable between real music to people who did double blind tests and whatnot. So the thing is, why not just paint the real person, because painting was really a lot of work. It takes a long time to paint a portrait. And you have to carry around all the paints and all that, and you could just create a stack of photos and sell them. So in the beginning photography was kind of a labor saving device. And whenever you have a technological advance that’s less hassle than the previous thing, there’s still a choice to make. And the choice is, do you still get paid for doing the thing that’s easier?
People often say, well, in Rochester, N.Y. — which is a town that kind of lived on the photography business — they had a buggy whip factory that closed down with the advent of the automobile. The thing is, it’s a lot easier to deal with a car than to deal with horses. I love horses, but you know, you have to feed them, and they poop a lot, and you have to deal with their hooves. It’s a whole thing. And so you could make the argument that a transition to cars should create a world where drivers don’t get paid, because, after all, it’s fun to drive. And it is. And they’re magical.
And so there could really easily be, somebody could easily have asserted that photography is so much easier than painting and driving cars is so much easier than horses that the people who do those things — or support it –shouldn’t be paid. Working in a nice environment — if you go to Sweden and you visit the Saab factory, it’s really nice. Why should you even be paid to do anything?
We kind of made a bargain, a social contract, in the 20th century that even if jobs were pleasant people could still get paid for them. Because otherwise we would have had a massive unemployment. And so to my mind, the right question to ask is, why are we abandoning that bargain that worked so well?
Right. Well, until about the year 2000 or so, some jobs had been destroyed by new technology. This goes back to the industrial revolution and earlier. But more jobs were created than those destroyed. So what changed?
Of course jobs become obsolete. But the only reason that new jobs were created was because there was a social contract in which a more pleasant, less boring job was still considered a job that you could be paid for. That’s the only reason it worked. If we decided that driving was such an easy thing [compared to] dealing with horses that no one should be paid for it, then there wouldn’t be all of those people being paid to be Teamsters or to drive cabs. It was a decision that it was OK to have jobs that weren’t terrible.
So it wasn’t inherent in the technology. In other words, there’s nothing inherently different about digital technology or the Internet than there is with factory technology or the assembly line or these other technological shifts that have developed?
Yeah. I mean, the whole idea of a job is entirely social construct. The United States was built on slave labor. Those people didn’t have jobs, they were just slaves. The idea of a job is that you can participate in a formal economy even if you’re not a baron. That there can be, that everybody can participate in the formal economy and the benefit of having everybody participate in the formal economy, there are annoyances with the formal economy because capitalism is really annoying sometimes.
But the benefits are really huge, which is you get a middle-class distribution of wealth and clout so the mass of people can outspend the top, and if you don’t have that you can’t really have democracy. Democracy is destabilized if there isn’t a broad distribution of wealth.
And then the other thing is that if you like market capitalism, if you’re an Ayn Rand person, you have to admit that markets can only function if there are customers and customers can only come if there’s a middle hump. So you have to have a broad distribution of wealth. So there’s no reason technically for any technology to ever create a job. In other words, we could have had motor vehicles, and we could have had film cameras, we could have had all these technologies without any formal jobs. We just had a social contract in which we decided that we’d allow formal jobs in factories and in drivers and in users of cameras and creators of cameras and film.
It was all a social construct to begin with, so what changed, to get to your question, is that at the turn of the [21st] century it was really Sergey Brin at Google who just had the thought of, well, if we give away all the information services, but we make money from advertising, we can make information free and still have capitalism. But the problem with that is it reneges on the social contract where people still participate in the formal economy. And it’s a kind of capitalism that’s totally self-defeating because it’s so narrow. It’s a winner-take-all capitalism that’s not sustaining.
Well, a lot of your book is about the survival of the middle class in the digital age, the importance of a broad middle class as we move forward. You argue that the middle class, unlike the rich and the poor, is not a natural class but was built and sustained through some kind of intervention. Has that changed in the last decade or two as the digital world has grown?
Well, there’s a lot of ways. I mean, one of the issues is that in a market society, a middle class has always required some little artificial help to keep going. There’s always academic tenure, or a taxi medallion, or a cosmetology license, or a pension. There’s often some kind of license or some kind of ratcheting scheme that allows people to keep their middle-class status.
In a raw kind of capitalism there tend to be unstable events that wipe away the middle and tend to separate people into rich and poor. So these mechanisms are undone by a particular kind of style that is called the digital open network.
Music is a great example where value is copied. And so once you have it, again it’s this winner-take-all thing where the people who really win are the people who run the biggest computers. And a few tokens, an incredibly tiny number of token people who will get very successful YouTube videos, and everybody else lives on hope or lives with their parents or something.
One of the things that really annoys me is the acceptance of lies that’s so common in the current orthodoxy. I guess all orthodoxies are built on lies. But there’s this idea that there must be tens of thousands of people who are making a great living as freelance musicians because you can market yourself on social media. And whenever I look for these people – I mean when I wrote “Gadget” I looked around and found a handful – and at this point three years later, I went around to everybody I could to get actual lists of people who are doing this and to verify them, and there are more now. But like in the hip-hop world I counted them all and I could find about 50. And I really talked to everybody I could. The reason I mention hip-hop is because that’s where it happens the most right now.
So when we’re talking about the whole of the business – and these are not 50 people who are doing great. Or here’s another example. Do you know who Jenna Marbles is? She’s a super-successful YouTube star. She’s the queen of self-help videos for young women. She’s kind of a cross between Snooki and Martha Stewart or something. And she’s cool. I mean, she kind of helps girls with how to do makeup, and she’s irreverent. She’s had a billion views.
The interesting thing about it is that people advertise, “Oh, what an incredible life. She’s this incredibly lucky person who’s worked really hard.” And that’s all true. She’s in her 20s, and it’s great that she’s found this success, but what this success is that she makes maybe $250,000 a year, and she rents a house that’s worth $1.1 million in L.A.. And this is all breathlessly reported as this great success. And that’s good for a 20-year-old, but she’s at the very top of, I mean, the people at the very top of the game now and doing as well as what used to be considered good for a middle-class life. And I don’t want to dismiss that. That’s great for a 20-year-old, although in truth, in my world of engineers that wouldn’t be much. But for someone who’s out there, a star with a billion views, that’s a crazy low expectation. She’s not even in the 1 percent. For the tiny token number of people who make it to the top of YouTube, they’re not even making it into the 1 percent.
The issue is if we’re going to have a middle class anymore, and if that’s our expectation, we won’t. And then we won’t have democracy.
You mentioned a minute ago that there’s about 50 in hip-hop. What kind of estimate did you come up with for music in general?
I think in the total of music in America, there are a low number of hundreds. It’s really small. I wish all of those people my deepest blessings, and I celebrate the success they find, but it’s just not a way you can build a society.
The other problem is they would have to self-fund. This is getting back to the informal economy where you’re living in the slum or something, so you’re desperate to get out so you impress the boss man with your music skills or your basketball skills. And the idea of doing that for the whole of society is not progress. It should be the reverse. What we should be doing is bringing all the people who are in that into the formal economy. That’s what’s called development. But this is the opposite of that. It’s taking all the people from the developed world and putting them into a cycle of the developing world of the informal economy.
You say early in the book, “As much as it pains me to say so, we can survive only if we destroy the middle classes of musicians, journalists, photographers.” I guess what you seem to be saying here is the creative classis sort of the canary in the digital coal mine.
Yes. That’s precisely my point. So when people say, “Why are musicians so special? Everybody has to struggle.” And the thing is, I do think we are looking at a [sustainable] model.
We don’t realize that our society and our democracy ultimately rest on the stability of middle-class jobs. When I talk to libertarians and socialists, they have this weird belief that everybody’s this abstract robot that won’t ever get sick or have kids or get old. It’s like everybody’s this eternal freelancer who can afford downtime and can self-fund until they find their magic moment or something.
The way society actually works is there’s some mechanism of basic stability so that the majority of people can outspend the elite so we can have a democracy. That’s the thing we’re destroying, and that’s really the thing I’m hoping to preserve. So we can look at musicians and artists and journalists as the canaries in the coal mine, and is this the precedent that we want to follow for our doctors and lawyers and nurses and everybody else? Because technology will get to everybody eventually.
It wasn’t too long ago that it was unskilled people on assembly lines who answered phones or bank tellers and it’s just crept up in the decades since. You’ve mentioned a few times this sort of digital utopianism that still emanates from Silicon Valley. Where does that kind of thinking come from and why does it exist despite all the evidence to the contrary?
Well, it’s an orthodoxy now. I have 14-year-old kids who come to my talks who say, “But isn’t open source software the best thing in life? Isn’t it the future?” It’s a perfect thought system. It reminds me of communists I knew when growing up or Ayn Rand libertarians. It’s one of these things where you have a simplistic model that suggests this perfect society so you just believe in it totally. These perfect societies don’t work. We’ve already seen hyper-communism come to tears. And hyper-capitalism come to tears. And I just don’t want to have to see that for cyber-hacker culture. We should have learned that these perfect simple systems are illusions.
Speaking of politics, your concerns are often those of the political left. You’re concerned with equality and a shrinking middle class. And yet you don’t seem to consider yourself a progressive or a man of the left — why not?
I am culturally a man on the left. I get a lot of people on the left. I live in Berkeley and everything. I want to live in a world where outcomes for people are not predetermined in advance with outcomes.
The problem I have with socialist utopias is there’s some kind of committees trying to soften outcomes for people. I think that imposes models of outcomes for other people’s lives. So in a spiritual sense there’s some bit of libertarian in me. But the critical thing for me is moderation. And if you let that go too far you do end up with a winner-take-all society that ultimately crushes everybody even worse. So it has to be moderated.
I think seeking perfection in human affairs is a perfect way to destroy them. It just doesn’t work. So my own take on it is, actually another way I’ve been thinking about it lately is a balance of magisteria. “Magisteria” was the term that Stephen Jay Gould described science and religion. And I’ve been thinking that way about money and politics, or computers and politics, or computers and ethics. All of these things are magisterial, where the people who become involved in them tend to wish they could be the only ones.
Libertarians tend to think the economy can totally close its own loops, that you can get rid of government. And I ridicule that in the book. There are other people who believe that if you could get everybody to talk over social networks, if we could just cooperate, we wouldn’t need money anymore. And I recommend they try living in a group house and then they’ll see it’s not true.
My cyber-friends think if you can just come up with a perfect scheme, that some perfect digital scheme will solve all the problems. My belief is that if we deal with all of these things, they can balance out each other to prevent the worst dysfunctions of each one from happening. And at minimum if we can just have enough distribution of clout in society so it isn’t run by a tiny minority, then at the very least it gives us some room to breathe. And that’s the minimum requirement. Maybe not the ideal.
So what we have to demand of digital technology is that it not try to be a perfect system that takes over everything. That it balances the excess of the other magisteria. And that is doesn’t concentrate power too much, and if we can just get to that point, then we’ll really be fine. I’m actually modest. People have been accusing me of being super-ambitious lately, but I feel like in a way I’m the most modest person in the conversation. I’m just trying to avoid total dysfunction.
Let’s stick with politics for one more. Is there something dissonant about the fact that the greatest fortunes in human history have been created with a system developed largely by taxpayers dollars? Military research and labs at public universities. And many of the people whom the Internet has enriched have become libertarians who earnestly tell you that they are “socially liberal and fiscally conservative,” and resist progressive taxation because of it.
Yeah, no kidding. I was there. I gotta say, every little step of this thing was really funded by either the military or public research agencies. If you look at something like Facebook, Facebook is adding the tiniest little rind of value over the basic structure that’s there anyway. In fact, it’s even worse than that. The original designs for networking, going back to Ted Nelson, kept track of everything everybody was pointing at so that you would know who was pointing at your website. In a way Facebook is just recovering information that was deliberately lost because of the fetish for being anonymous. That’s also true of Google.
Near the end of the book you talk about the changes in the book business. It doesn’t sound pretty. What’s going on there and what have you learned as someone who has now written several books?
I don’t hate anything about e-books or e-book readers or tablets. There’s a lot of discussion about that, and I think it’s misplaced. The problem I have is whether we believe in the book itself.
To me a book is not just a particular file. It’s connected with personhood. Books are really, really hard to write. They represent a kind of a summit of grappling with what one really has to say. And what I’m concerned with is when Silicon Valley looks at books, they often think of them as really differently as just data points that you can mush together. They’re divorcing books from their role in personhood.
I’m quite concerned that in the future someone might not know what author they’re reading. You see that with music. You would think in the information age it would be the easiest thing to know what you’re listening to. That you could look up instantly the music upon hearing it so you know what you’re listening to, but in truth it’s hard to get to those services.
I was in a cafe this morning where I heard some stuff I was interested in, and nobody could figure out. It was Spotify or one of these … so they knew what stream they were getting, but they didn’t know what music it was. Then it changed to other music, and they didn’t know what that was. And I tried to use one of the services that determines what music you’re listening to, but it was a noisy place and that didn’t work. So what’s supposed to be an open information system serves to obscure the source of the musician. It serves as a closed information system. It actually loses the information.
So in practice you don’t know who the musician is. And I think that’s what could happen with writers. And this is what we celebrate in Wikipedia is pretending that there’s some absolute truth that can be spoken that people can approximate and that the speaker doesn’t matter. And if we start to see that with books in general – and I say if – if you look at the approach that Google has taken to the Google library project, they do have the tendency to want to move things together. You see the thing decontextualized.
I have sort of resisted putting my music out lately because I know it just turns into these mushes. Without context, what does my music mean? I make very novel sounds, but I don’t see any value in me sharing novel sounds that are decontextualized. Why would I write if people are just going to get weird snippets that are just mushed together and they don’t know the overall position or the history of the writer or anything? What would be the point in that. The day books become mush is the day I stop writing.
Let’s close with music then. You’re a longtime musician and composer. You’re a collector of obscure and archaic instruments. How does your interest in music and especially pre-modern acoustic music shape your thinking and your life as well?
Well, the original way I got into it is very personal. It’s just that my mother died when I was young, and she was a musician. My connection to her. I got involved in more and more unusual music because I didn’t want that connection to become something that was too static. It had to be constantly changing or it would become a cliché. So that’s how I got into it.
But as far as the connection to computers, the thing to me is that I’ve always been intrigued with music interface. Musical interfaces are such profoundly better user interfaces than anything we’ve done with a digital computer. They have better acuity. They create more opportunities for virtuosity. They work with the human body more profoundly, the nervous system. I mean good musical instruments. And I’ve just been intrigued by them. It made me realize that just because something is the latest, newest thing that seems like the cleverest thing we can do at the moment doesn’t make it better.
So to realize how much better musical instruments were to use as human interfaces, it helped me to be skeptical about the whole digital enterprise. Which I think helped me be a better computer scientist, actually.
Did your life as a musician show you some of the things that you ended up excavating in “Gadget” and the new book?
Sure. If you go way back I was one of the people who started the whole music-should-be-free thing. You can find the fire-breathing essays where I was trying to articulate the thing that’s now the orthodoxy. Oh, we should free ourselves from the labels and the middleman and this will be better.
I believed it at the time because it sounds better, it really does. I know a lot of these musicians, and I could see that it wasn’t actually working. I think fundamentally you have to be an empiricist. I just saw that in the real lives I know — both older and younger people coming up — I just saw that it was not as good as what it had once been. So that there must be something wrong with our theory, as good as it sounded. It was really that simple.
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Austerity Kills: Crippling Economic Policies Causing Global Health Crisis
Economist David Stuckler and physician Sanjay Basu examine the health impacts of austerity across the globe in their new book.
The following is reprinted from the Democracy Now! interview,“Why Austerity Kills: From Greece to U.S., Crippling Economic Policies Causing Global Health Crisis.“
In their new book, “The Body Economic: Why Austerity Kills,” economist David Stuckler and physician Sanjay Basu examine the health impacts of austerity across the globe. The authors estimate there have been more than 10,000 additional suicides and up to a million extra cases of depression across Europe and the United States since governments started introducing austerity programs in the aftermath of the economic crisis. For example, in Greece, where spending on public health has been slashed by 40 percent, HIV rates have jumped 200 percent, and the country has seen its first malaria outbreak since the 1970s. An economist and public health specialist, Stuckler is a senior research leader at Oxford University. Dr. Basu is a physician and epidemiologist who teaches at Stanford University. “Had austerity been organized like a clinical trial, it would’ve been discontinued given evidence of its deadly side effects,” Stuckler says. “There is an alternative choice that we found in the historical data and through the present recessions: When we place people and their health at the center of economic recovery, it can help get our economy back on track faster and yield lasting dividends to our society.”
Amy Goodman: “Early last month, a triple suicide was reported in the seaside town of Civitanova Marche, Italy. A married couple, Anna Maria Sopranzi, who was 68, and Romeo Dionisi, [who was] 62, had been struggling to live on her monthly pension of around 500 euros [around $650 a month], and had fallen behind on rent.
“Because the Italian government’s austerity budget had raised the retirement age, Mr. Dionisi, a former construction worker, became one of Italy’s esodati (exiled ones)—older workers plunged into poverty without a safety net. On April 5, he and his wife left a note on a neighbor’s car asking for forgiveness, then hanged themselves in a storage closet at home. When Ms. Sopranzi’s brother, Giuseppe [Sopranzi, who was] 73, heard the news, he drowned himself in the Adriatic.”
Those are the opening lines to a startling recent article in The New York Times headlined “How Austerity Kills.” The authors of the piece, David Stuckler and Dr. Sanjay Basu, have just published a new book looking at the health impacts of austerity across the globe. The authors estimate there have been more than 10,000 additional suicides and up to a million extra cases of depression across Europe and the United States since governments started introducing austerity programs in the aftermath of the economic crisis. In Greece, where spending on public health has been slashed by 40 percent, HIV rates have jumped 200 percent, and Greece has seen its first outbreak in malaria since the 1970s.
David Stuckler is an economist and public health specialist. He’s a senior research leader at Oxford University. Dr. Sanjay Basu is a physician and epidemiologist. He teaches at Stanford University. Together, they’ve written this new book, out today, called The Body Economic: Why Austerity Kills—Recessions, Budget Battles, and the Politics of Life and Death.
We welcome you both to Democracy Now! I’m glad you could both be together in one place, being at Stanford and being at Oxford. David, let’s begin with you. Lay out the thesis of this book.
David Stuckler: We’ve been studying how recessions affect people’s health over the past decade, looking at the Great Depression through the East Asian financial crisis, right through to the present Great Recession. And what we found is that recessions hurt. Unemployment, job loss, foreclosure, unpayable debt are risks to health. But what ultimately matters is how politicians respond. And when they make large cuts to social supports, social protections, they can turn recessions into severe epidemics.
Amy Goodman: So, explain. Give us examples in countries. I mean, this horrific story I just described of this triple suicide, the couple and then her brother. Talk about what people—what happens when policies go one way or the other.
David Stuckler: Greece is in the middle of a public health disaster, as you mentioned. To meet budget deficit reduction targets set by the so-called troika—the International Monetary Fund, the European Central Bank and European Commission—Greece has cut its health sector by more than 40 percent. At a time when homelessness is escalating and austerity has further driven up youth unemployment, we’ve seen HIV infections jump, concentrated in injection drug users. The malaria outbreak was linked to the cut in mosquito-spraying prevention programs, creating an outbreak that’s much more costly to control than the short-term money saved by reducing the budget. Healthcare access has declined substantially. The majority of people who have lost access are pensioners who have contributed to the system their entire lives. And these are just a few of the many health effects seen in Greece, mirrored in Spain, Italy and, to some extent, the U.K. and the U.S.
Amy Goodman: We were just talking before the show about one of the suicides in Spain that became very well known. I wanted to turn to a clip. At the time, we were talking to a formerDemocracy Now! producer, María Carrión, about this case that occurred in Spain. The woman, David, was named?
David Stuckler: Amaia Egaña. It was a case of Spain’s eviction suicides. Spain has a system where when people’s homes are foreclosed, even if they default on their home, they’re still liable to pay back the debt. So people are plunged into poverty and arrears at the same time, without support. We’ve seen this trigger large rises in suicides. Spain, Italy and Greece are at the high end of increases in economic suicides.
Amy Goodman: So, Amaia Egaña was 53 years old. She jumped from a balcony to her death as she was about to be evicted. María Carrión appeared on the show to talk about Amaia’s suicide.
María Carrión: Amaia is a former city council member in a town—the town of Barakaldo in the Basque Country. And her case is especially tragic because she actually didn’t share just how bad off the situation was even with her husband. So, most people had no idea that there was a whole—there had been a repossession and an eviction process. She was so desperate and so ashamed of the situation that she jumped out of her balcony, her fourth floor apartment, as court employees came to evict her. This comes two weeks after police found a man dead in his apartment as they went in to evict him from his home after repossession.
And—but, you know, the movement to stop these evictions and repossessions has been working very hard on this for almost two years, and this is just the watershed. This has been the one situation that has actually forced government and the opposition and banks to come to the table and talk about real reform. Before this, you had these evictions taking place—500 orders every single day—silently. And thanks to the 15M movement—this is—was the Occupy movement in Spain just over a year ago—the platform against evictions was incredibly energized. And so, they have been able to stop hundreds of evictions.
But those are evictions of people who come to them and who say, you know, “My home is being repossessed. I’m facing eviction. Can you help me?” There are a lot of people like Amaia who did not do this, out of perhaps a sense of guilt or embarrassment. And so, her case is really representative and emblematic of what has gone wrong in Spain with, you know, thousands of people being left homeless after repossession and eviction.
Amy Goodman: David Stuckler, you were in Spain when Amaia killed herself.
David Stuckler: I was at a conference with the Barcelona Public Health Agency. The meeting got cut short as protests erupted onto the streets of Barcelona. People were outraged at the eviction-suicide of Amaia, at the hardship perpetuated by deep budget cuts under the Rajoy government in Spain.
Amy Goodman: On April 4, 2012, a 77-year-old retired Greek pharmacist named Dimitris Christoulas shot and killed himself near the Greek Parliament after writing a note that blamed his suicide on the economic crisis. His daughter Emi spoke at his funeral and said his act had been deeply political.
Emi Christoulas: [translated] You found it unacceptable that they were killing our freedom, our democracy, our dignity. You found it unacceptable as they tightened the harsh noose of economic austerity and apartheid around us, to the unacceptable act of surrendering our independence and the keys to the country. It was unacceptable to you that Greece did not acknowledge its children and its children did not recognize their own country. You found the bestiality of capitalism unacceptable, that it infiltrated our lives and no one tried to stop it. Then, you made your decision to become the fear, the death, the memory, the sorrow of our ruined lives.
Amy Goodman: Sanjay Basu, you have found more than 10,000 additional suicides and up to a million extra cases of depression across Europe and the United States. Since when? How did you come up with these figures?
Dr. Sanjay Basu: Right. One of the major questions we asked here: Is this inevitable during a recession? Recessions are bad times. Could this just be the recession’s effects as opposed to austerity’s effects? And so, what we did is used so-called natural experiments. We compared regions and countries since the beginning of the recession, and even beforehand, to control for people’s pre-existing conditions, pre-existing mental health and alcoholism and so forth, and also compared areas that faced the same economic shock but had different policy responses. And looking at those as comparative cases, we could find that, in fact, during recessions, inevitably suicides or alcoholism didn’t increase, but rather, it was after austerity, in particular. And controlling for other factors that could statistically explain this, austerity consistently came up as a key trigger not just for suicides, but for alcohol, stress-related heart attacks and other major causes of death.
Amy Goodman: Now, this is the key point here, is the difference—I mean, people can say, “Well, hard times lead to, you know, very painful decisions that people make.”
Dr. Sanjay Basu: Mm-hmm.
Amy Goodman: But that you’re saying that even in equally difficult situations, when countries opt for another solution, the public health of that community changes.
Dr. Sanjay Basu: Correct. We can look, for example, at Iceland as a contrast. Now, Greece and Iceland are very different socially, politically and economically, but Iceland serves as a nice case in point right now. They had faced a debt at 800 percent of GDP, the largest banking crisis in history compared to the size of the economy.
Amy Goodman: When their banks failed, their three top banks failed.
Dr. Sanjay Basu: Correct, all three major banks failed. And they had invested, of course, in U.S. mortgage-backed securities. After this, the Iceland politicians decided to do something truly unique as compared to the rest of Europe. They actually put the austerity plan to a public vote. And the public voted that instead of paying off bankers’ debts immediately through public cuts, they would instead do it gradually. They would still bail out their banks, but over the course of time and with great pace towards preserving their social safety net. And indeed what Iceland ended up doing was maintaining some of the healthiest standards in the world and the highest level of happiness.
Amy Goodman: We were just joined by the Icelandic Parliamentarian Birgitta Jónsdóttir onDemocracy Now! here in New York—she had just come in from Iceland—talking about how Iceland recovered from the collapse of its banking system. A part of what the country did, as you said, was to preserve its universal healthcare system.
Birgitta Jonsdottir: Actually, everybody has the same access to health and education. So even I, as an MP, ended up in a hospital in November, and I got exactly the same treatment as the woman working in the factory or in McDonald’s or Domino’s. And I like that. I love that. I think that is so important. And so, we pay just about the same amount of taxes as U.S. taxpayers. We don’t have to live in this insurance jungle. So we just, you know—and that was actually one of the first things they wanted to slash down, the IMF—no surprise.
Amy Goodman: They preserve their healthcare system.
Dr. Sanjay Basu: Mm-hmm. And indeed she highlights one of the key issues here, which is that there’s a great misunderstanding around debts and deficits. When we face a liquidities crisis, meaning that there’s a collapse in demand in the system, we actually find, quite robustly, through peer-reviewed journals and consistent with those of our colleagues, that stimulus early on does not actually produce higher, longer-term debts, but it generates the revenue and the building of the economic cycle that allows us to pay off those longer-term debts. By contrast, these short-term cuts end up so slowing the economic cycle that we find both economic and public health devastation as a result.
Amy Goodman: After break, I want to talk about the U.S., but, David Stuckler, you said you looked at the labor policies of places like Sweden and Finland in times of recession.
David Stuckler: It’s a remarkable case study. It alludes to what Sanjay mentioned earlier. Sweden faced a large banking crisis. Unemployment jumped by more than 10 percentage points. And yet suicides fell steadily. What we learned is that when politicians managed the consequences of unemployment well, they were able to prevent a mental health crisis. The specific programs we found are called active labor market programs. These help the newly unemployed link to caseworkers, develop an action plan and return into jobs. They treat unemployment like the pandemic it is. It not only saves money on healthcare bills, but even pays for itself by helping spur economic recovery.
Amy Goodman: We’re going to talk about what choices the United States is making, with David Stuckler and Sanjay Basu. Their book is called The Body Economic: Why Austerity Kills. Stay with us.
[break]
Amy Goodman: The Centers for Disease Control and Prevention recently revealed the suicide rate in people aged 35 to 64 rose by nearly 30 percent over the past decade, to 17.6 deaths per 100,000. The biggest increase was seen for men in their fifties, where the suicide rate increased 50 percent. Overall, suicides are now a greater cause of death in the United States than car accidents.CDC Director Thomas Frieden recently spoke to PBS NewsHour.
Dr. Thomas Frieden: We don’t know what specifically is causing it, but the trend has been consistent. And, if anything, our numbers would underestimate the gravity of the problem. And, of course, even one death from suicide is a terrible tragedy, and many of them are preventable. We know that in times of financial stress, there is generally an increase in suicides. We also know that this is a generation that grew up at a time when they expected more than some have been able to achieve in their lives, and also that they’re stressed with what their kids are going through and what their parents are going through. So it’s, in some ways, the sandwich generation.
Amy Goodman: That’s CDC Director Thomas Frieden on PBS. We’re joined by David Stuckler and Sanjay Basu. They are authors of The Body Economic: Why Austerity Kills. David Stuckler is a senior research leader at Oxford University, and Sanjay Basu is an assistant professor of medicine and epidemiologist at Stanford University. If you could respond, Dr. Basu, to Dr. Frieden’s comment?
Dr. Sanjay Basu:Yeah, I certainly agree with Dr. Frieden’s comment. And what we have found in our research is that these suicide rate spikes seem to correspond quite closely to state-level unemployment rates. And in particular, when we do these long-term studies that track individuals before the recession, during the recession and after, we can control for their pre-existing mental health statistically, and we find that it’s the new unemployment that seems to trigger new onset of depression and suicide, particularly among our most vulnerable, adults over 50, who, when they lose a job, are often discriminated against or have a very hard time finding new work. There’s a great deal of shame, and also it’s quite hard for our healthcare system to access those individuals, given the degree of barriers that they have, social barriers, to accessing mental healthcare.
Amy Goodman: I mean, the point for people to understand in this country is, what’s unusual for us, compared to other countries, is that when we lose our jobs, we lose our health insurance.
Dr. Sanjay Basu: Absolutely. And we do have some safety nets in the form of Medicaid, Medicare, but it’s quite true that there are some large holes in that system, as has been repeated time and time again.
Amy Goodman: During an interview on Fox News in February, Republican Senator Lindsey Graham of South Carolina suggested slashing healthcare to stop scheduled sequester cuts from, quote, “destroying the military.”
Sen. Lindsey Graham: The commander-in-chief thought—came up with the idea of sequestration, destroying the military and putting a lot of good programs at risk. Here’s my belief. Let’s take “Obamacare” and put it on the table. You can make $86,000 a year in income and still get a government subsidy under “Obamacare.” “Obamacare” is destroying healthcare in this country. People are leaving the private sector because their companies can’t afford to offer “Obamacare.” If you want to look at ways to find $1.2 trillion in savings over the next decade, let’s look at “Obamacare.” Let’s don’t destroy the military and just cut blindly across the board.
Amy Goodman: David Stuckler, can you respond to Senator Graham?
David Stuckler: Austerity in health is a false economy. The cliché, an ounce of prevention is worth a pound of cure, is really true. New York City officials learned this the hard way in the early 1990s, when they cut TB prevention programs by $120 million but ended up with a drug-resistant TB outbreak that cost more than $1.2 billion to control. What we found is that smart investments in public health can have a return on investment, for each dollar, of up to $3.
Amy Goodman: So, talk about the healthcare system, Dr. Sanjay Basu, how sequester fits in, and also just what Lindsey Graham was talking about, “Obamacare.”
Dr. Sanjay Basu: So, I’m not a politician and—but I do analyze data. And I think, in looking comparatively among OECD countries, you see a lot of false claims about the U.S. health system. Why is it that we cost so much more and seem to be getting less? I think comparing our country to other OECD stations provides some sense of what—
Amy Goodman: You’re talking about European countries?
Dr. Sanjay Basu: European, as well as Japan, Australia and so forth. And you can see a lot of the myths by just looking at the data. So, what are the theories? The theory is, for example, maybe it’s just American obesity. Well, actually, the costs started well before American obesity and doesn’t seem to correspond actually statistically to obesity. Maybe it’s that we have an older population, but not so. Switzerland actually pays more in nursing home care. Japan has an older population, yet they still pay less while getting more in terms of health. Maybe it’s just technology. We do a lot of research and development. But, in fact, if you look at the Securities and Exchange Commission data, the R&D pharmaceutical industry, while making—
Amy Goodman: Research and development of the pharmaceutical companies.
Dr. Sanjay Basu: Sure. While they make a higher percent profit as a percentage of revenue than any other Fortune 500 industry at the moment, they actually spend almost double on marketing as compared to research and development. And while we do use more technology and we do tend to have some higher costs from technology, it doesn’t actually explain the majority of the bundle.
What you do see, on the other hand, if you just look at the raw data, is that we get more—we get more incentives in order to test the people who are covered, in order to bill more. And there’s a lot of companies making quite a bit of money on that margin. You can go to one hospital across town and be charged double or more of what another hospital has on a different side of town. But it’s not like a consumer market. If I’m in a car accident, I can’t say to the surgeon, “Hold my hand there for a moment before sewing it back on. I’m just going to go across town and compare prices for a minute.”
So healthcare is a different kind of industry, in which we have what is classically called “market failure” by the Nobel Prize winner Kenneth Arrow back in the ’60s, but people ignored his work. I think what we really have is a system where we confuse inequality with choice. The majority of our costs come from common conditions in a small number of patients who have complications of diabetes, heart failure, hypertension. And we need more primary care prevention rather than paying for the ICU care.
Amy Goodman: I wanted to go back, and this is a theme you follow in The Body Economic, to the Depression. Going back to the Great Depression and the New Deal, this is President Franklin Delano Roosevelt speaking in 1933.
President Franklin Delano Roosevelt:It is three months, my friends, since I have talked with the people of this country about our national problems. But during this period, many things have happened. And I am glad to say that the major part of them have greatly helped the well-being of the average citizen.
In the short space of these few months, I am convinced that at least four million have been given employment, or saying it another way, 40 percent of those seeking work have found it. That does not mean, my friends, that I am satisfied or that you are satisfied that our work has ended. We have a long way to go, but we are on the way.
We come to the relief, for a moment, of those who are in danger of losing their farms or their homes. I have publicly asked that the foreclosure on farms and cattles and homes be delayed until every mortgagor in the country has had full opportunity to take advantage of federal credit. And I make the further request that if there is any family in the United States about to lose its home or its farm, that family should telegraph at once, either to the Farm Credit Administration or the Home Loan Corporation in Washington, requesting their help.
Amy Goodman: That was President Franklin Roosevelt in 1933. I think this is going to be very interesting for a lot of people listening and watching this today. David Stuckler, the choices made then and the choices being made today?
David Stuckler: Completely different. Roosevelt took bold steps, at a time when debt was 180 percent of GDP, to boost financial relief to the newly unemployed, to save Americans from homelessness. And we’ve studied the effects of his landmark program, the New Deal, on health. And what we found is that, comparing the states, the red and blue states, that pushed it to different degrees—the blue states tended to go further with the New Deal than the red states—led to a polarization in public health outcomes across the U.S. The greater relief spending implemented under the New Deal helped reduce suicides, reduced tuberculosis and pneumonias, and was in fact the biggest and one of the most effective public health programs on U.S. soil.
Amy Goodman: When you hear politicians today saying, “We’ve got to cut ‘Obamacare.’ We’ve got to cut healthcare in this country,” talk about what you found, what it means for the economy to invest in public health.
David Stuckler: Investing in public health is a wise choice in good times and an urgent necessity in the worst of times. Had austerity been organized like a clinical trial, it would have been discontinued, given evidence of its deadly side effects. There is an alternative choice that we found in the historical data and through the present recessions, that when we place people and their health at the center of economic recovery, it can help get our economy back on track faster and yield lasting dividends to our society.
Amy Goodman: The issue of the West Nile outbreak, can you talk about that?
Dr. Sanjay Basu: Mm-hmm. Down in Bakersfield in California, there was a suspicion about why crows were dropping from the sky and people were also showing up in hospitals. A variety of theories were posited, ranging from polio to heat stroke, but in fact it amounted to a West Nile outbreak that, through a number of our colleagues’ research, it was found that the abandoned and foreclosed homes had stagnant water in old swimming pools and in other locations that were breeding mosquitoes. And this led to a rather large West Nile outbreak. Indeed, the reason why it was discovered was something called the California Encephalitis Project, a group of public system laboratories that work in concert with the CDC. And ironically, after helping to control that outbreak, they were closed due to budget cuts.
Amy Goodman: I want to turn to the issue of drug abuse. A recent film by Vice has brought renewed attention to the drug crisis in Greece, particularly the use of the new drug called sisa. This is Haralampos Poulopoulos, head of KETHEA, the main anti-drug center in Greece.
Dr. Haralampos Poulopoulos: Sisa is a form of crystal methamphetamine. They use amphetamines and some other liquids, sometimes battery liquids, to produce this drug. It’s very dangerous for the health of the users. I think the main reason for the increase of sisa is the changes of the attitudes of drug users during the crisis. They are more self-destructive. We have 27 percent unemployment, 62 percent the young people under 25. We didn’t finish yet with the crisis. We are in the middle of the crisis.
Amy Goodman: Haralampos Poulopoulos, head of the main anti-drug center in Greece. David Stuckler, talk about that, and also relate it to here, as we wrap up.
David Stuckler: This is a devastating situation we’re seeing in Greece with a drug crisis escalating at a time when drug prevention budgets are being cut. With gaping holes in social safety nets from austerity, people are becoming desperate, turning to the means of self-harm. We’ve seen drug use and infected needles spread HIV, creating rise of more than 200 percent, leading to an epicenter of HIV/AIDS spread in Europe.
What we can learn from these mistakes, and areas where we see successes in policy, is that recessions can hurt, but austerity kills. When politicians make smart choices to protect people during hard times, it doesn’t happen at expense of recovery but can help put our societies back on track to a happier, healthier future.
Amy Goodman: And here in the United States, how that translates into policy?
David Stuckler: Currently, we’re facing and implementing a large sequester in the U.S. While it’s too early to see the full health consequences, what we are seeing is the Women, Infants, Children’s health program, which provides nutritional subsidies to women, will be forced to reduce those subsidies from 600,000 pregnant women. And that program has been linked to reducing infant mortality. We’re also seeing large cuts to public housing budgets at a time when 1.4 million homes are still in foreclosure. We are concerned that, if done rapidly and indiscriminately, that budget cuts in the U.S. could create a repeat of the disasters that we’re seeing in Europe.
Amy Goodman: Final comment, what most shocked you in writing The Body [Economic], Sanjay Basu?
Dr. Sanjay Basu: You know, coming from the public health field, we have something called the “precautionary principle,” which is that when a idea or policy is controversial, we should first do whatever protects people the most. And what we’re doing is entirely the opposite. We’ve essentially had a massive untested experiment. That experiment has failed, and it sounds like it’s quite deadly, given all the data through history.
Amy Goodman: I want to thank you both for being with us. Sanjay Basu is an epidemiologist at Stanford University. David Stuckler, Oxford University. Their new book, out today, The Body Economic: Why Austerity Kills—Recessions, Budget Battles, and the Politics of Life and Death.
Reprinted with permission from Democracy Now!.
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Austerity Kills: Crippling Economic Policies Causing Global Health Crisis
Economist David Stuckler and physician Sanjay Basu examine the health impacts of austerity across the globe in their new book.
The following is reprinted from the Democracy Now! interview,“Why Austerity Kills: From Greece to U.S., Crippling Economic Policies Causing Global Health Crisis.“
In their new book, “The Body Economic: Why Austerity Kills,” economist David Stuckler and physician Sanjay Basu examine the health impacts of austerity across the globe. The authors estimate there have been more than 10,000 additional suicides and up to a million extra cases of depression across Europe and the United States since governments started introducing austerity programs in the aftermath of the economic crisis. For example, in Greece, where spending on public health has been slashed by 40 percent, HIV rates have jumped 200 percent, and the country has seen its first malaria outbreak since the 1970s. An economist and public health specialist, Stuckler is a senior research leader at Oxford University. Dr. Basu is a physician and epidemiologist who teaches at Stanford University. “Had austerity been organized like a clinical trial, it would’ve been discontinued given evidence of its deadly side effects,” Stuckler says. “There is an alternative choice that we found in the historical data and through the present recessions: When we place people and their health at the center of economic recovery, it can help get our economy back on track faster and yield lasting dividends to our society.”
Amy Goodman: “Early last month, a triple suicide was reported in the seaside town of Civitanova Marche, Italy. A married couple, Anna Maria Sopranzi, who was 68, and Romeo Dionisi, [who was] 62, had been struggling to live on her monthly pension of around 500 euros [around $650 a month], and had fallen behind on rent.
“Because the Italian government’s austerity budget had raised the retirement age, Mr. Dionisi, a former construction worker, became one of Italy’s esodati (exiled ones)—older workers plunged into poverty without a safety net. On April 5, he and his wife left a note on a neighbor’s car asking for forgiveness, then hanged themselves in a storage closet at home. When Ms. Sopranzi’s brother, Giuseppe [Sopranzi, who was] 73, heard the news, he drowned himself in the Adriatic.”
Those are the opening lines to a startling recent article in The New York Times headlined “How Austerity Kills.” The authors of the piece, David Stuckler and Dr. Sanjay Basu, have just published a new book looking at the health impacts of austerity across the globe. The authors estimate there have been more than 10,000 additional suicides and up to a million extra cases of depression across Europe and the United States since governments started introducing austerity programs in the aftermath of the economic crisis. In Greece, where spending on public health has been slashed by 40 percent, HIV rates have jumped 200 percent, and Greece has seen its first outbreak in malaria since the 1970s.
David Stuckler is an economist and public health specialist. He’s a senior research leader at Oxford University. Dr. Sanjay Basu is a physician and epidemiologist. He teaches at Stanford University. Together, they’ve written this new book, out today, called The Body Economic: Why Austerity Kills—Recessions, Budget Battles, and the Politics of Life and Death.
We welcome you both to Democracy Now! I’m glad you could both be together in one place, being at Stanford and being at Oxford. David, let’s begin with you. Lay out the thesis of this book.
David Stuckler: We’ve been studying how recessions affect people’s health over the past decade, looking at the Great Depression through the East Asian financial crisis, right through to the present Great Recession. And what we found is that recessions hurt. Unemployment, job loss, foreclosure, unpayable debt are risks to health. But what ultimately matters is how politicians respond. And when they make large cuts to social supports, social protections, they can turn recessions into severe epidemics.
Amy Goodman: So, explain. Give us examples in countries. I mean, this horrific story I just described of this triple suicide, the couple and then her brother. Talk about what people—what happens when policies go one way or the other.
David Stuckler: Greece is in the middle of a public health disaster, as you mentioned. To meet budget deficit reduction targets set by the so-called troika—the International Monetary Fund, the European Central Bank and European Commission—Greece has cut its health sector by more than 40 percent. At a time when homelessness is escalating and austerity has further driven up youth unemployment, we’ve seen HIV infections jump, concentrated in injection drug users. The malaria outbreak was linked to the cut in mosquito-spraying prevention programs, creating an outbreak that’s much more costly to control than the short-term money saved by reducing the budget. Healthcare access has declined substantially. The majority of people who have lost access are pensioners who have contributed to the system their entire lives. And these are just a few of the many health effects seen in Greece, mirrored in Spain, Italy and, to some extent, the U.K. and the U.S.
Amy Goodman: We were just talking before the show about one of the suicides in Spain that became very well known. I wanted to turn to a clip. At the time, we were talking to a formerDemocracy Now! producer, María Carrión, about this case that occurred in Spain. The woman, David, was named?
David Stuckler: Amaia Egaña. It was a case of Spain’s eviction suicides. Spain has a system where when people’s homes are foreclosed, even if they default on their home, they’re still liable to pay back the debt. So people are plunged into poverty and arrears at the same time, without support. We’ve seen this trigger large rises in suicides. Spain, Italy and Greece are at the high end of increases in economic suicides.
Amy Goodman: So, Amaia Egaña was 53 years old. She jumped from a balcony to her death as she was about to be evicted. María Carrión appeared on the show to talk about Amaia’s suicide.
María Carrión: Amaia is a former city council member in a town—the town of Barakaldo in the Basque Country. And her case is especially tragic because she actually didn’t share just how bad off the situation was even with her husband. So, most people had no idea that there was a whole—there had been a repossession and an eviction process. She was so desperate and so ashamed of the situation that she jumped out of her balcony, her fourth floor apartment, as court employees came to evict her. This comes two weeks after police found a man dead in his apartment as they went in to evict him from his home after repossession.
And—but, you know, the movement to stop these evictions and repossessions has been working very hard on this for almost two years, and this is just the watershed. This has been the one situation that has actually forced government and the opposition and banks to come to the table and talk about real reform. Before this, you had these evictions taking place—500 orders every single day—silently. And thanks to the 15M movement—this is—was the Occupy movement in Spain just over a year ago—the platform against evictions was incredibly energized. And so, they have been able to stop hundreds of evictions.
But those are evictions of people who come to them and who say, you know, “My home is being repossessed. I’m facing eviction. Can you help me?” There are a lot of people like Amaia who did not do this, out of perhaps a sense of guilt or embarrassment. And so, her case is really representative and emblematic of what has gone wrong in Spain with, you know, thousands of people being left homeless after repossession and eviction.
Amy Goodman: David Stuckler, you were in Spain when Amaia killed herself.
David Stuckler: I was at a conference with the Barcelona Public Health Agency. The meeting got cut short as protests erupted onto the streets of Barcelona. People were outraged at the eviction-suicide of Amaia, at the hardship perpetuated by deep budget cuts under the Rajoy government in Spain.
Amy Goodman: On April 4, 2012, a 77-year-old retired Greek pharmacist named Dimitris Christoulas shot and killed himself near the Greek Parliament after writing a note that blamed his suicide on the economic crisis. His daughter Emi spoke at his funeral and said his act had been deeply political.
Emi Christoulas: [translated] You found it unacceptable that they were killing our freedom, our democracy, our dignity. You found it unacceptable as they tightened the harsh noose of economic austerity and apartheid around us, to the unacceptable act of surrendering our independence and the keys to the country. It was unacceptable to you that Greece did not acknowledge its children and its children did not recognize their own country. You found the bestiality of capitalism unacceptable, that it infiltrated our lives and no one tried to stop it. Then, you made your decision to become the fear, the death, the memory, the sorrow of our ruined lives.
Amy Goodman: Sanjay Basu, you have found more than 10,000 additional suicides and up to a million extra cases of depression across Europe and the United States. Since when? How did you come up with these figures?
Dr. Sanjay Basu: Right. One of the major questions we asked here: Is this inevitable during a recession? Recessions are bad times. Could this just be the recession’s effects as opposed to austerity’s effects? And so, what we did is used so-called natural experiments. We compared regions and countries since the beginning of the recession, and even beforehand, to control for people’s pre-existing conditions, pre-existing mental health and alcoholism and so forth, and also compared areas that faced the same economic shock but had different policy responses. And looking at those as comparative cases, we could find that, in fact, during recessions, inevitably suicides or alcoholism didn’t increase, but rather, it was after austerity, in particular. And controlling for other factors that could statistically explain this, austerity consistently came up as a key trigger not just for suicides, but for alcohol, stress-related heart attacks and other major causes of death.
Amy Goodman: Now, this is the key point here, is the difference—I mean, people can say, “Well, hard times lead to, you know, very painful decisions that people make.”
Dr. Sanjay Basu: Mm-hmm.
Amy Goodman: But that you’re saying that even in equally difficult situations, when countries opt for another solution, the public health of that community changes.
Dr. Sanjay Basu: Correct. We can look, for example, at Iceland as a contrast. Now, Greece and Iceland are very different socially, politically and economically, but Iceland serves as a nice case in point right now. They had faced a debt at 800 percent of GDP, the largest banking crisis in history compared to the size of the economy.
Amy Goodman: When their banks failed, their three top banks failed.
Dr. Sanjay Basu: Correct, all three major banks failed. And they had invested, of course, in U.S. mortgage-backed securities. After this, the Iceland politicians decided to do something truly unique as compared to the rest of Europe. They actually put the austerity plan to a public vote. And the public voted that instead of paying off bankers’ debts immediately through public cuts, they would instead do it gradually. They would still bail out their banks, but over the course of time and with great pace towards preserving their social safety net. And indeed what Iceland ended up doing was maintaining some of the healthiest standards in the world and the highest level of happiness.
Amy Goodman: We were just joined by the Icelandic Parliamentarian Birgitta Jónsdóttir onDemocracy Now! here in New York—she had just come in from Iceland—talking about how Iceland recovered from the collapse of its banking system. A part of what the country did, as you said, was to preserve its universal healthcare system.
Birgitta Jonsdottir: Actually, everybody has the same access to health and education. So even I, as an MP, ended up in a hospital in November, and I got exactly the same treatment as the woman working in the factory or in McDonald’s or Domino’s. And I like that. I love that. I think that is so important. And so, we pay just about the same amount of taxes as U.S. taxpayers. We don’t have to live in this insurance jungle. So we just, you know—and that was actually one of the first things they wanted to slash down, the IMF—no surprise.
Amy Goodman: They preserve their healthcare system.
Dr. Sanjay Basu: Mm-hmm. And indeed she highlights one of the key issues here, which is that there’s a great misunderstanding around debts and deficits. When we face a liquidities crisis, meaning that there’s a collapse in demand in the system, we actually find, quite robustly, through peer-reviewed journals and consistent with those of our colleagues, that stimulus early on does not actually produce higher, longer-term debts, but it generates the revenue and the building of the economic cycle that allows us to pay off those longer-term debts. By contrast, these short-term cuts end up so slowing the economic cycle that we find both economic and public health devastation as a result.
Amy Goodman: After break, I want to talk about the U.S., but, David Stuckler, you said you looked at the labor policies of places like Sweden and Finland in times of recession.
David Stuckler: It’s a remarkable case study. It alludes to what Sanjay mentioned earlier. Sweden faced a large banking crisis. Unemployment jumped by more than 10 percentage points. And yet suicides fell steadily. What we learned is that when politicians managed the consequences of unemployment well, they were able to prevent a mental health crisis. The specific programs we found are called active labor market programs. These help the newly unemployed link to caseworkers, develop an action plan and return into jobs. They treat unemployment like the pandemic it is. It not only saves money on healthcare bills, but even pays for itself by helping spur economic recovery.
Amy Goodman: We’re going to talk about what choices the United States is making, with David Stuckler and Sanjay Basu. Their book is called The Body Economic: Why Austerity Kills. Stay with us.
[break]
Amy Goodman: The Centers for Disease Control and Prevention recently revealed the suicide rate in people aged 35 to 64 rose by nearly 30 percent over the past decade, to 17.6 deaths per 100,000. The biggest increase was seen for men in their fifties, where the suicide rate increased 50 percent. Overall, suicides are now a greater cause of death in the United States than car accidents.CDC Director Thomas Frieden recently spoke to PBS NewsHour.
Dr. Thomas Frieden: We don’t know what specifically is causing it, but the trend has been consistent. And, if anything, our numbers would underestimate the gravity of the problem. And, of course, even one death from suicide is a terrible tragedy, and many of them are preventable. We know that in times of financial stress, there is generally an increase in suicides. We also know that this is a generation that grew up at a time when they expected more than some have been able to achieve in their lives, and also that they’re stressed with what their kids are going through and what their parents are going through. So it’s, in some ways, the sandwich generation.
Amy Goodman: That’s CDC Director Thomas Frieden on PBS. We’re joined by David Stuckler and Sanjay Basu. They are authors of The Body Economic: Why Austerity Kills. David Stuckler is a senior research leader at Oxford University, and Sanjay Basu is an assistant professor of medicine and epidemiologist at Stanford University. If you could respond, Dr. Basu, to Dr. Frieden’s comment?
Dr. Sanjay Basu:Yeah, I certainly agree with Dr. Frieden’s comment. And what we have found in our research is that these suicide rate spikes seem to correspond quite closely to state-level unemployment rates. And in particular, when we do these long-term studies that track individuals before the recession, during the recession and after, we can control for their pre-existing mental health statistically, and we find that it’s the new unemployment that seems to trigger new onset of depression and suicide, particularly among our most vulnerable, adults over 50, who, when they lose a job, are often discriminated against or have a very hard time finding new work. There’s a great deal of shame, and also it’s quite hard for our healthcare system to access those individuals, given the degree of barriers that they have, social barriers, to accessing mental healthcare.
Amy Goodman: I mean, the point for people to understand in this country is, what’s unusual for us, compared to other countries, is that when we lose our jobs, we lose our health insurance.
Dr. Sanjay Basu: Absolutely. And we do have some safety nets in the form of Medicaid, Medicare, but it’s quite true that there are some large holes in that system, as has been repeated time and time again.
Amy Goodman: During an interview on Fox News in February, Republican Senator Lindsey Graham of South Carolina suggested slashing healthcare to stop scheduled sequester cuts from, quote, “destroying the military.”
Sen. Lindsey Graham: The commander-in-chief thought—came up with the idea of sequestration, destroying the military and putting a lot of good programs at risk. Here’s my belief. Let’s take “Obamacare” and put it on the table. You can make $86,000 a year in income and still get a government subsidy under “Obamacare.” “Obamacare” is destroying healthcare in this country. People are leaving the private sector because their companies can’t afford to offer “Obamacare.” If you want to look at ways to find $1.2 trillion in savings over the next decade, let’s look at “Obamacare.” Let’s don’t destroy the military and just cut blindly across the board.
Amy Goodman: David Stuckler, can you respond to Senator Graham?
David Stuckler: Austerity in health is a false economy. The cliché, an ounce of prevention is worth a pound of cure, is really true. New York City officials learned this the hard way in the early 1990s, when they cut TB prevention programs by $120 million but ended up with a drug-resistant TB outbreak that cost more than $1.2 billion to control. What we found is that smart investments in public health can have a return on investment, for each dollar, of up to $3.
Amy Goodman: So, talk about the healthcare system, Dr. Sanjay Basu, how sequester fits in, and also just what Lindsey Graham was talking about, “Obamacare.”
Dr. Sanjay Basu: So, I’m not a politician and—but I do analyze data. And I think, in looking comparatively among OECD countries, you see a lot of false claims about the U.S. health system. Why is it that we cost so much more and seem to be getting less? I think comparing our country to other OECD stations provides some sense of what—
Amy Goodman: You’re talking about European countries?
Dr. Sanjay Basu: European, as well as Japan, Australia and so forth. And you can see a lot of the myths by just looking at the data. So, what are the theories? The theory is, for example, maybe it’s just American obesity. Well, actually, the costs started well before American obesity and doesn’t seem to correspond actually statistically to obesity. Maybe it’s that we have an older population, but not so. Switzerland actually pays more in nursing home care. Japan has an older population, yet they still pay less while getting more in terms of health. Maybe it’s just technology. We do a lot of research and development. But, in fact, if you look at the Securities and Exchange Commission data, the R&D pharmaceutical industry, while making—
Amy Goodman: Research and development of the pharmaceutical companies.
Dr. Sanjay Basu: Sure. While they make a higher percent profit as a percentage of revenue than any other Fortune 500 industry at the moment, they actually spend almost double on marketing as compared to research and development. And while we do use more technology and we do tend to have some higher costs from technology, it doesn’t actually explain the majority of the bundle.
What you do see, on the other hand, if you just look at the raw data, is that we get more—we get more incentives in order to test the people who are covered, in order to bill more. And there’s a lot of companies making quite a bit of money on that margin. You can go to one hospital across town and be charged double or more of what another hospital has on a different side of town. But it’s not like a consumer market. If I’m in a car accident, I can’t say to the surgeon, “Hold my hand there for a moment before sewing it back on. I’m just going to go across town and compare prices for a minute.”
So healthcare is a different kind of industry, in which we have what is classically called “market failure” by the Nobel Prize winner Kenneth Arrow back in the ’60s, but people ignored his work. I think what we really have is a system where we confuse inequality with choice. The majority of our costs come from common conditions in a small number of patients who have complications of diabetes, heart failure, hypertension. And we need more primary care prevention rather than paying for the ICU care.
Amy Goodman: I wanted to go back, and this is a theme you follow in The Body Economic, to the Depression. Going back to the Great Depression and the New Deal, this is President Franklin Delano Roosevelt speaking in 1933.
President Franklin Delano Roosevelt:It is three months, my friends, since I have talked with the people of this country about our national problems. But during this period, many things have happened. And I am glad to say that the major part of them have greatly helped the well-being of the average citizen.
In the short space of these few months, I am convinced that at least four million have been given employment, or saying it another way, 40 percent of those seeking work have found it. That does not mean, my friends, that I am satisfied or that you are satisfied that our work has ended. We have a long way to go, but we are on the way.
We come to the relief, for a moment, of those who are in danger of losing their farms or their homes. I have publicly asked that the foreclosure on farms and cattles and homes be delayed until every mortgagor in the country has had full opportunity to take advantage of federal credit. And I make the further request that if there is any family in the United States about to lose its home or its farm, that family should telegraph at once, either to the Farm Credit Administration or the Home Loan Corporation in Washington, requesting their help.
Amy Goodman: That was President Franklin Roosevelt in 1933. I think this is going to be very interesting for a lot of people listening and watching this today. David Stuckler, the choices made then and the choices being made today?
David Stuckler: Completely different. Roosevelt took bold steps, at a time when debt was 180 percent of GDP, to boost financial relief to the newly unemployed, to save Americans from homelessness. And we’ve studied the effects of his landmark program, the New Deal, on health. And what we found is that, comparing the states, the red and blue states, that pushed it to different degrees—the blue states tended to go further with the New Deal than the red states—led to a polarization in public health outcomes across the U.S. The greater relief spending implemented under the New Deal helped reduce suicides, reduced tuberculosis and pneumonias, and was in fact the biggest and one of the most effective public health programs on U.S. soil.
Amy Goodman: When you hear politicians today saying, “We’ve got to cut ‘Obamacare.’ We’ve got to cut healthcare in this country,” talk about what you found, what it means for the economy to invest in public health.
David Stuckler: Investing in public health is a wise choice in good times and an urgent necessity in the worst of times. Had austerity been organized like a clinical trial, it would have been discontinued, given evidence of its deadly side effects. There is an alternative choice that we found in the historical data and through the present recessions, that when we place people and their health at the center of economic recovery, it can help get our economy back on track faster and yield lasting dividends to our society.
Amy Goodman: The issue of the West Nile outbreak, can you talk about that?
Dr. Sanjay Basu: Mm-hmm. Down in Bakersfield in California, there was a suspicion about why crows were dropping from the sky and people were also showing up in hospitals. A variety of theories were posited, ranging from polio to heat stroke, but in fact it amounted to a West Nile outbreak that, through a number of our colleagues’ research, it was found that the abandoned and foreclosed homes had stagnant water in old swimming pools and in other locations that were breeding mosquitoes. And this led to a rather large West Nile outbreak. Indeed, the reason why it was discovered was something called the California Encephalitis Project, a group of public system laboratories that work in concert with the CDC. And ironically, after helping to control that outbreak, they were closed due to budget cuts.
Amy Goodman: I want to turn to the issue of drug abuse. A recent film by Vice has brought renewed attention to the drug crisis in Greece, particularly the use of the new drug called sisa. This is Haralampos Poulopoulos, head of KETHEA, the main anti-drug center in Greece.
Dr. Haralampos Poulopoulos: Sisa is a form of crystal methamphetamine. They use amphetamines and some other liquids, sometimes battery liquids, to produce this drug. It’s very dangerous for the health of the users. I think the main reason for the increase of sisa is the changes of the attitudes of drug users during the crisis. They are more self-destructive. We have 27 percent unemployment, 62 percent the young people under 25. We didn’t finish yet with the crisis. We are in the middle of the crisis.
Amy Goodman: Haralampos Poulopoulos, head of the main anti-drug center in Greece. David Stuckler, talk about that, and also relate it to here, as we wrap up.
David Stuckler: This is a devastating situation we’re seeing in Greece with a drug crisis escalating at a time when drug prevention budgets are being cut. With gaping holes in social safety nets from austerity, people are becoming desperate, turning to the means of self-harm. We’ve seen drug use and infected needles spread HIV, creating rise of more than 200 percent, leading to an epicenter of HIV/AIDS spread in Europe.
What we can learn from these mistakes, and areas where we see successes in policy, is that recessions can hurt, but austerity kills. When politicians make smart choices to protect people during hard times, it doesn’t happen at expense of recovery but can help put our societies back on track to a happier, healthier future.
Amy Goodman: And here in the United States, how that translates into policy?
David Stuckler: Currently, we’re facing and implementing a large sequester in the U.S. While it’s too early to see the full health consequences, what we are seeing is the Women, Infants, Children’s health program, which provides nutritional subsidies to women, will be forced to reduce those subsidies from 600,000 pregnant women. And that program has been linked to reducing infant mortality. We’re also seeing large cuts to public housing budgets at a time when 1.4 million homes are still in foreclosure. We are concerned that, if done rapidly and indiscriminately, that budget cuts in the U.S. could create a repeat of the disasters that we’re seeing in Europe.
Amy Goodman: Final comment, what most shocked you in writing The Body [Economic], Sanjay Basu?
Dr. Sanjay Basu: You know, coming from the public health field, we have something called the “precautionary principle,” which is that when a idea or policy is controversial, we should first do whatever protects people the most. And what we’re doing is entirely the opposite. We’ve essentially had a massive untested experiment. That experiment has failed, and it sounds like it’s quite deadly, given all the data through history.
Amy Goodman: I want to thank you both for being with us. Sanjay Basu is an epidemiologist at Stanford University. David Stuckler, Oxford University. Their new book, out today, The Body Economic: Why Austerity Kills—Recessions, Budget Battles, and the Politics of Life and Death.
Reprinted with permission from Democracy Now!.
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Moyers/Winship: Corporate Greed Is Poisoning America — Literally
As long as there are insufficient checks and balances on big business and its powerful lobbies, we are at their mercy.
From BillMoyers.com:
At the end of a week that reminds us to be ever vigilant about the dangers of government overreaching its authority, whether by the long arm of the IRS or the Justice Department, we should pause to think about another threat—the threat of too much private power obnoxiously intruding into public life.
Think of inadequate inspections of food and the food-related infections which kill 3,000 Americans each year and make 48 million sick. A new study from Johns Hopkins shows elevated levels of arsenic—known to increase a person’s risk of cancer—in chicken meat. According to the university’s Center for a Livable Future, “Arsenic-based drugs have been used for decades to make poultry grow faster and improve the pigmentation of the meat. The drugs are also approved to treat and prevent parasites in poultry… Currently in the U.S., there is no federal law prohibiting the sale or use of arsenic-based drugs in poultry feed.”
And here’s a story in The Washington Post about toxic, bacteria-killing chemicals used in poultry plants to clean more chickens more quickly to meet increased demand and make more money. According to Amanda Hitt, director of the Government Accountability Project’s Food Integrity Campaign, “They are mixing chemicals together in these plants, and it’s making people sick. Does it work better at killing off pathogens? Yes, but it also can send someone into respiratory arrest.”
So far, the government has done next to nothing. No research into the possible side effects, no comprehensive record-keeping on illnesses. “Instead,” the Post reports, “they review data provided by chemical manufacturers.” What’s more, the Department of Agriculture is about to allow the production lines to move even faster, by as much as 25 percent, which means more chemicals, more exposure, more sickness.
Think of that and think of the 85,000 industrial chemicals available today – only a handful have been tested for safety. Ian Urbina writes in The New York Times, “Hazardous chemicals have become so ubiquitous that scientists now talk about babies being born pre-polluted, sometimes with hundred s of synthetic chemicals showing up in their blood.”
Think, too, of that horrific explosion of ammonium nitrate in the Texas fertilizer plant. Fifteen people were killed and their little town devastated. The magazine Mother Jones noted, “Inspections are virtually non-existent; regulatory agencies don’t talk to each other; and there’s no such thing as a buffer zone when it comes to constructing plants and storage facilities in populated areas.” For years, the Fertilizer Institute, described as “the nation’s leading lobbying organization of the chemical and agricultural industries,” resisted regulation and legislators went along. People can lose their lives when federal or state government winks at bad corporate practices — 4,500 workplace deaths annually at a cost to America of nearly half a trillion dollars.
As Salon’s columnist and author David Sirota observes, “If all this data was about a terrorist threat, the reaction would be swift — negligent federal agencies would be roundly criticized and the specific state’s lax attitude toward security would be lambasted. Yet, after the fertilizer plant explosion, there has been no proactive reaction at all, other than Texas Republican Gov. Rick Perry boasting about his state’s ‘comfort with the amount of oversight’ that already exists.”
Finally, consider this story from ProPublica’s investigative reporter Abrahm Lustgarten about a uranium company that wanted a mining project in Texas that threatened to pollute drinking water. The EPA resisted — until the company hired as its lobbyist the Democratic fundraiser and fixer Heather Podesta, a favorite of the White House. Her firm was paid $400,000, she pulled the strings, and presto, the EPA changed its mind and said yes, go ahead and do your dirty work. In fact, ProPublica found that “the agency has used a little-known provision in the federal Safe Drinking Water Act to issue more than 1,500 exemptions allowing energy and mining companies to pollute aquifers, including many in the driest parts of the country.”
Of course, in a free society we’ll always be debating the role of government and its agencies. What are the limits, when is government oversight necessary and when is it best deterred? But it’s not only government that can go too far. As long as there are insufficient checks and balances on big business and its powerful lobbies, we are at their mercy. Their ability to buy off public officials is an assault on democracy and a threat to our lives and health. When an entire political system persists in producing such gross injustice, it is making inevitable wholesale defiance.
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Moyers/Winship: Corporate Greed Is Poisoning America — Literally
As long as there are insufficient checks and balances on big business and its powerful lobbies, we are at their mercy.
From BillMoyers.com:
At the end of a week that reminds us to be ever vigilant about the dangers of government overreaching its authority, whether by the long arm of the IRS or the Justice Department, we should pause to think about another threat—the threat of too much private power obnoxiously intruding into public life.
Think of inadequate inspections of food and the food-related infections which kill 3,000 Americans each year and make 48 million sick. A new study from Johns Hopkins shows elevated levels of arsenic—known to increase a person’s risk of cancer—in chicken meat. According to the university’s Center for a Livable Future, “Arsenic-based drugs have been used for decades to make poultry grow faster and improve the pigmentation of the meat. The drugs are also approved to treat and prevent parasites in poultry… Currently in the U.S., there is no federal law prohibiting the sale or use of arsenic-based drugs in poultry feed.”
And here’s a story in The Washington Post about toxic, bacteria-killing chemicals used in poultry plants to clean more chickens more quickly to meet increased demand and make more money. According to Amanda Hitt, director of the Government Accountability Project’s Food Integrity Campaign, “They are mixing chemicals together in these plants, and it’s making people sick. Does it work better at killing off pathogens? Yes, but it also can send someone into respiratory arrest.”
So far, the government has done next to nothing. No research into the possible side effects, no comprehensive record-keeping on illnesses. “Instead,” the Post reports, “they review data provided by chemical manufacturers.” What’s more, the Department of Agriculture is about to allow the production lines to move even faster, by as much as 25 percent, which means more chemicals, more exposure, more sickness.
Think of that and think of the 85,000 industrial chemicals available today – only a handful have been tested for safety. Ian Urbina writes in The New York Times, “Hazardous chemicals have become so ubiquitous that scientists now talk about babies being born pre-polluted, sometimes with hundred s of synthetic chemicals showing up in their blood.”
Think, too, of that horrific explosion of ammonium nitrate in the Texas fertilizer plant. Fifteen people were killed and their little town devastated. The magazine Mother Jones noted, “Inspections are virtually non-existent; regulatory agencies don’t talk to each other; and there’s no such thing as a buffer zone when it comes to constructing plants and storage facilities in populated areas.” For years, the Fertilizer Institute, described as “the nation’s leading lobbying organization of the chemical and agricultural industries,” resisted regulation and legislators went along. People can lose their lives when federal or state government winks at bad corporate practices — 4,500 workplace deaths annually at a cost to America of nearly half a trillion dollars.
As Salon’s columnist and author David Sirota observes, “If all this data was about a terrorist threat, the reaction would be swift — negligent federal agencies would be roundly criticized and the specific state’s lax attitude toward security would be lambasted. Yet, after the fertilizer plant explosion, there has been no proactive reaction at all, other than Texas Republican Gov. Rick Perry boasting about his state’s ‘comfort with the amount of oversight’ that already exists.”
Finally, consider this story from ProPublica’s investigative reporter Abrahm Lustgarten about a uranium company that wanted a mining project in Texas that threatened to pollute drinking water. The EPA resisted — until the company hired as its lobbyist the Democratic fundraiser and fixer Heather Podesta, a favorite of the White House. Her firm was paid $400,000, she pulled the strings, and presto, the EPA changed its mind and said yes, go ahead and do your dirty work. In fact, ProPublica found that “the agency has used a little-known provision in the federal Safe Drinking Water Act to issue more than 1,500 exemptions allowing energy and mining companies to pollute aquifers, including many in the driest parts of the country.”
Of course, in a free society we’ll always be debating the role of government and its agencies. What are the limits, when is government oversight necessary and when is it best deterred? But it’s not only government that can go too far. As long as there are insufficient checks and balances on big business and its powerful lobbies, we are at their mercy. Their ability to buy off public officials is an assault on democracy and a threat to our lives and health. When an entire political system persists in producing such gross injustice, it is making inevitable wholesale defiance.
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The 4 Big Ways That Insatiable Corporate Hunger for Profits Has Devastated American Life — and the World Along with It
Big business is making its way around the world like a modern-day Attila the Hun, pillaging and despoiling the planet.
The damage caused by the relentless corporate drive for profits has become more clear in recent years. In the most important areas of American life, devastating changes have occurred:
Health Care: Almost half of the working-age adults in America passed up doctor visits or other medical services because they couldn’t afford to pay. The system hasn’t supported kids, either. A UNICEF study places the U.S. 26th out of 29 OECD countries in the overall well-being of its children.
Education: Student loan balances increased by 75% between 2007 and 2012.
Household Wealth: Median wealth fell by 66% among Hispanic households and 53% among black households between 2005 and 2009, mainly because of the mortgage banking collapse. Almost half of Americans have ZEROwealth, with their assets surpassed by debt.
Water and Food: Life-giving seeds and drinking water have been increasingly treated as products to be bought and sold.
All these areas of life have been degraded by a free-market system that has thrived on publicly-funded research, infrastructure, and defense. Yet in a brazen show of hypocrisy, major corporations have ignored all the problems they’ve caused, choosing instead to cut their taxes in half despite doubling their profits, to hold 60% of its cash offshore, to eliminate workers rather than create jobs, and to reduce the pay of their remaining employees.
An Apple executive explained: “We don’t have an obligation to solve America’s problems.”
Calling Themselves ‘Multinationals’: No Allegiance to Anyone
Big business has found its Utopia, a world in which millions of people are willing to work for a fraction of U.S. salaries.
In this dream world of global capitalism, young people are going from zero income on the farm to a few dollars a day on a 12-hour factory shift, and as a result, based on the World Bank’s poverty threshold of $1.25 per day, they’re no longer “in poverty.” So the media piles on praise for free markets. The Economist proclaimed that “poverty is declining everywhere.” The Washington Post gushed that “a billion people have been lifted from poverty through free-market competition.”
But the reality is very different. Inequality continues to grow, both between and within countries. Poverty levels haven’t changed much in 30 years, with almost half of humanity, up to three billion people, living on less than $2.50 a day. A quarter of the world’s children - over 170 million kids under age five – are growing up stunted because of malnutrition.
The World Bank estimates the total cost for a successful attack on malnutrition would be approximately $10.3 to $11.8 billion annually. Apple alone underpaid its 2012 taxes by $11 billion, based on a 35% rate.
It may be time to update the company’s quote: “We don’t have an obligation to solve the world’s problems.”
Even if there were no obligation to help solve the world’s problems, there IS an obligation to pay for global energy consumption and infrastructure usage and industrial pollution. Yet a review of 25 multinational companies shows clear negligence in meeting that responsibility. The 25 companies, with almost a half-trillion dollars in 2011-12 income, paid just 8% in taxes to the U.S. and 9% to foreign countries. A 35% tax — paid to ANY country or countries — would have generated another $90 billion over two years, four times the amount needed to battle malnutrition.
Even Worse Than Not Paying: Making the World Pay for Them
A recent study estimated that toxic pollution affects the health of more than 100 million people, shortening their productive life spans by 12.7 years on average. A related study concluded that in 2010 over 8 million individuals were at risk of exposure to industrial pollutants at 373 toxic waste sites in three low-income countries (India, Indonesia, and the Philippines).
Some of our largest multinational companies hold top positions on the federal contractor misconduct list, which recognizes corporate environmental, ethics, and labor violations. Oil spills are common. Underdeveloped countries like Nigeria have been ravaged by oil production. Big firms are buying up farmland in more than 60 developing countries. Most perversely, multinationals are working hard to pass trade agreements, such as the Trans-Pacific Partnership, which would actually dismantle environmental protections.
Absurd as it once seemed, a 1991 quote from the World Bank’s Larry Summers now comes back to haunt us: “Just between you and me, shouldn’t the World Bank be encouraging more migration of the dirty industries to the LDCs (lesser developed countries)?…I’ve always thought that underpopulated countries in Africa are vastly under polluted.”
And as big business makes its way around the world like a modern-day Attila the Hun, pillaging and despoiling, it has the U.S. military covering its back with 900 overseas bases in 130 nations. If one of the countries kicks up a fuss, the corporations can just move on to the next one.
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The 4 Big Ways That Insatiable Corporate Hunger for Profits Has Devastated American Life — and the World Along with It
Big business is making its way around the world like a modern-day Attila the Hun, pillaging and despoiling the planet.
The damage caused by the relentless corporate drive for profits has become more clear in recent years. In the most important areas of American life, devastating changes have occurred:
Health Care: Almost half of the working-age adults in America passed up doctor visits or other medical services because they couldn’t afford to pay. The system hasn’t supported kids, either. A UNICEF study places the U.S. 26th out of 29 OECD countries in the overall well-being of its children.
Education: Student loan balances increased by 75% between 2007 and 2012.
Household Wealth: Median wealth fell by 66% among Hispanic households and 53% among black households between 2005 and 2009, mainly because of the mortgage banking collapse. Almost half of Americans have ZEROwealth, with their assets surpassed by debt.
Water and Food: Life-giving seeds and drinking water have been increasingly treated as products to be bought and sold.
All these areas of life have been degraded by a free-market system that has thrived on publicly-funded research, infrastructure, and defense. Yet in a brazen show of hypocrisy, major corporations have ignored all the problems they’ve caused, choosing instead to cut their taxes in half despite doubling their profits, to hold 60% of its cash offshore, to eliminate workers rather than create jobs, and to reduce the pay of their remaining employees.
An Apple executive explained: “We don’t have an obligation to solve America’s problems.”
Calling Themselves ‘Multinationals’: No Allegiance to Anyone
Big business has found its Utopia, a world in which millions of people are willing to work for a fraction of U.S. salaries.
In this dream world of global capitalism, young people are going from zero income on the farm to a few dollars a day on a 12-hour factory shift, and as a result, based on the World Bank’s poverty threshold of $1.25 per day, they’re no longer “in poverty.” So the media piles on praise for free markets. The Economist proclaimed that “poverty is declining everywhere.” The Washington Post gushed that “a billion people have been lifted from poverty through free-market competition.”
But the reality is very different. Inequality continues to grow, both between and within countries. Poverty levels haven’t changed much in 30 years, with almost half of humanity, up to three billion people, living on less than $2.50 a day. A quarter of the world’s children - over 170 million kids under age five – are growing up stunted because of malnutrition.
The World Bank estimates the total cost for a successful attack on malnutrition would be approximately $10.3 to $11.8 billion annually. Apple alone underpaid its 2012 taxes by $11 billion, based on a 35% rate.
It may be time to update the company’s quote: “We don’t have an obligation to solve the world’s problems.”
Even if there were no obligation to help solve the world’s problems, there IS an obligation to pay for global energy consumption and infrastructure usage and industrial pollution. Yet a review of 25 multinational companies shows clear negligence in meeting that responsibility. The 25 companies, with almost a half-trillion dollars in 2011-12 income, paid just 8% in taxes to the U.S. and 9% to foreign countries. A 35% tax — paid to ANY country or countries — would have generated another $90 billion over two years, four times the amount needed to battle malnutrition.
Even Worse Than Not Paying: Making the World Pay for Them
A recent study estimated that toxic pollution affects the health of more than 100 million people, shortening their productive life spans by 12.7 years on average. A related study concluded that in 2010 over 8 million individuals were at risk of exposure to industrial pollutants at 373 toxic waste sites in three low-income countries (India, Indonesia, and the Philippines).
Some of our largest multinational companies hold top positions on the federal contractor misconduct list, which recognizes corporate environmental, ethics, and labor violations. Oil spills are common. Underdeveloped countries like Nigeria have been ravaged by oil production. Big firms are buying up farmland in more than 60 developing countries. Most perversely, multinationals are working hard to pass trade agreements, such as the Trans-Pacific Partnership, which would actually dismantle environmental protections.
Absurd as it once seemed, a 1991 quote from the World Bank’s Larry Summers now comes back to haunt us: “Just between you and me, shouldn’t the World Bank be encouraging more migration of the dirty industries to the LDCs (lesser developed countries)?…I’ve always thought that underpopulated countries in Africa are vastly under polluted.”
And as big business makes its way around the world like a modern-day Attila the Hun, pillaging and despoiling, it has the U.S. military covering its back with 900 overseas bases in 130 nations. If one of the countries kicks up a fuss, the corporations can just move on to the next one.
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Shocker: Republicans Fight Obama Plan to Privatize the Hugely Popular, Cheap Energy Source of the TVA
Obama’s scheme to sell off the Tennessee Valley Authority gets push-back from Tennessee Republicans who know the benefits of a publicly-owned facility.
Buried within the fine print of the 2014 Obama budget is a startling bit of history-changing policy. The government, the administration says, should consider selling off the Tennessee Valley Authority, one of the nation’s largest publicly operated—that is, “socialist”—institutions, and the largest public power provider in the country.
The TVA is a non-profi, free-standing public authority established by the Roosevelt administration during the Depression—a very large utility, if you like. It provides 165 billion kilowatt hours of power to 9 million Americans, has $11.2 billion in sales revenue, employs more than 12,500 people, and provides other educational, training and related services (such as navigation and land management, flood control, and economic development) to the people in the states and region around the Tennessee river basin.
Strikingly, it’s the free-market Republicans who object to this proposed privatization. Senator Lamar Alexander, a Tennessee Republican who has vehemently opposed government tax credits and subsidies for renewable energy, calls the proposal “one more bad idea in a budget full of bad ideas,” and fears that privatization would lead to higher energy costs for his constituents.
Congressman John L. Duncan, Jr., another Tennessee Republican, says privatization is “something that has been proposed in the past and been determined to be a very bad idea.” Senator Richard Shelby, Republican of Alabama (a state also served by the TVA), says he will “carefully study any proposals to restructure TVA” in order to make sure that it won’t result in a price hike. And Tennessee’s other Republican Senator, Bob Corker, is clear: “I doubt this idea gains much traction.”
If we didn’t know better, we might think the administration has decided to call the Republicans’ bluff on the issue of “socialism”—a strategy that, however, seems to be beyond the clever quotient of the Obama political team.
The basic problem is that this “socialist” institution is immensely popular. It has given the people of the region good service for roughly eight decades, and its prices are lower than those of many private corporations. An analysis by the U.S. Energy Information Administration found that consumers in Alabama and Tennessee pay considerably less for power than the national average. The low rates, former TVA Chairman S. David Freeman suggests, have earned TVA “the ‘mother love’ of a politically conservative region.”
Even among environmental groups—which often criticize the TVA for, among other things, its continued use of coal and nuclear power plants—there is little appetite for privatization. The Tennessee chapter of the Sierra Club holds that privatization would be a mistake, potentially allowing new private corporate owners to “liquidate its assets by selling off TVA’s public lands along the Tennessee River and tributaries.”
So why is the Obama administration pursuing a sell-off? Mainly for short-sighted budget appearances. Privatizing public assets like the TVA will generate some near-term revenue and help pay down a (very) small fraction of the nation’s debt. The White House also claims the TVA will likely have to issue more debt securities in the future in order to raise money to modernize its aging infrastructure, which would—in a purely accounting sense—slightly increase the deficit. This is an odd worry, since the TVA is, and would continue to be, entirely self-funded at no cost to the taxpayer, and the new debt is simply to finance the kind of updating and modernizing any major corporation routinely does.
Most Americans do not realize that public ownership like that involved in the TVA, and a cornerstone of much decried “socialism,” can be found in communities in every state in the nation. For one thing, there are more than 2,000 public electric utilities—many in conservative rural areas—and, like the TVA, they are popular among local residents and politicians. Succesful public ownership of vital transportation facilities (such as roads, ports and airports) is also common. And, of course, roughly a third of the nation’s total land surface (and the minerals beneath and forests above) is owned and managed by the government.
Around the world, there are also thousands of highly successful examples of so-called socialism like the TVA. Public enterprises operate advanced high-speed rail networks in many countries. Public ownership of significant or controlling shares of airlines is also common. More than 200 public and semi-public banks, along with over 80 funding agencies, account for a fifth of all bank assets in the European Union. Faster and more widely available Internet access is provided in many countries where public corporations exist side by side with private companies, and public telecommunications companies are also common around the world.
Most Americans are clearly not nearly as ready as citizens of other countries to think about public ownership at this scale—or even at the scale of the TVA. On the other hand, stranger things have happened. Possibly one day the United States might catch up with the kinds of practical things being done in many parts of the world—or even, for that matter, with what Republicans representing areas served by the Tennessee Valley Authority think makes sense.
