[p2p-research] Fwd: More on the Supply and Demand Curve

[Paul D. Fernhout]

Eugen Leitl wrote:
> On Sun, Jul 05, 2009 at 01:27:24PM -0500, Kevin Carson wrote:
> 
>> Like you, I found comparisons of U-6 unemployment to Great Depression
>> levels compelling.  But on further investigation, I found there was
>> less to it than meets the eye.  The 25% peak for the GD, in fact,
>> refers to something like current U-3 measures; by U-6 measures, GD
>> unemployment peaked at around 35-40%.
> 
> It is not out of question we'll get this low, though I hope not.
> Arguably many factors are a lot of worse than 80 years ago, though
> of course the current situation is hard to compare to then.
>  
>> http://www.economicpopulist.org/content/u3-and-u6-unemployment-during-great-depression

Kevin, thanks for the great link. Comments there point out various 
similarities and differences.

Eugen, yes, you are right, it is hard to compare, as there are things better 
than then (more of a social safety net and more technology, and more home 
equity and credit cards to scrape by on) but also some things that are 
worse. So, things will be different this time in the USA than the 1930s 
(when the big issue was a demand for socialism). It seems like in Western 
Europe, with a stronger social safety net, things are much better positioned 
for dealing with this crisis. Of course, the USA has a lot of nuclear bombs, 
weaponized plagues, and killer robots, so a social crisis in the USA (where 
I am) poses some of the same worries to Western Europe as when the USSR 
disintegrated (some of those on this list outside the USA might otherwise 
would be justifiable in gloating a little right now, or feeling at least 
some Schadenfreude, even for a moment). I feel that both the USSR and the 
USA lost the Cold War, and it is just taking longer for the USA to fall. I 
think that is also part of what we are seeing now, an economy and society 
hollowed up by excessive military spending and imperial ambitions.

One thing that is different (worse) for families in the USA now is that, due 
to rising expectations as well as some rising prices like for real estate, 
most mainstream US families rely on two incomes to cover their expenses, 
doubling the risk of the family going under financially if someone gets sick 
or loses a job.

Here is a book about that, and an excerpt of a comment posted there:
   "The Two Income Trap"
http://www.amazon.com/Two-Income-Trap-Middle-Class-Mothers/dp/0465090826
"""
... For one thing, in many ways the integration of women into the workplace 
and the rise of the two income family has not had the positive effect one 
might have hoped it would. Because so many families are now two income 
dependent they have become trapped and are more financially vulnerable than 
previous generations. Many families use all of the income they receive from 
both husband and wife, and barely get by. As a result, any interruption of 
the income flow can result in disaster. One telling statistic: today's 
two-income family earns 75% more money than its single-income counterpart of 
a generation ago, but actually has less discretionary income once their 
fixed monthly bills are paid. ... At one time, families could count on 
stay-at-home mothers as a kind of financial safety net if disaster struck. 
If dad lost his job or some other financial problem arose, mom could go to 
work either fulltime or part-time to help tide the family over until the 
crisis abated. But today, when so many families are dependent on two 
incomes, families are at a frightening risk should any financial crisis 
arise in the family. The authors do propose some modest solutions, but its 
doubtful many of their suggestions would ever be implemented on anything 
more than a limited basis. Among their suggestions are rate caps on credit 
cards and open-access public schools, but none of their suggestions can 
truly provide a fix for the problem.
"""

Part of the argument there is that two-income families have bid up the 
general cost of living for everyone (especially by bidding up the prices for 
homes and college and, I'd add, health care and consumer goods).

People focus on the rich-poor divide, but two of the bigger divides in US 
society right now are also one-income families versus two-income families, 
and economic differences across the generations (which are related to a 
rich-poor divide, but not exactly the same). Thus we see, say, riots in 
Greece because twenty-something educated young adults can't get good jobs 
while older Greeks won't (or can't) work less hours.

This is not to be against anyone working at any job they want. This is just 
to point out a systemic implication of two-income families in a capitalist 
economy, especially in the face of rising automation. Rather than women 
joining the paid work force, we should have better seen men leaving the paid 
work force and automation picking up the slack (and a one-for-one exchange 
of jobs between men and women for any women who really wanted jobs). That 
would have required a basic income or other approach to spread the wealth of 
industry nationally and then globally, though. Instead, wages have been 
mostly frozen for most jobs since the 1970s, both from the flood of people 
entering the work force and from rising automation, a trend counterbalanced 
only by demand for US exports and rising expectations (new houses are much 
bigger now, for example).

From:
   "Generation F*cked: How Britain is Eating Its Young"
   Broken original link: http://adbusters.org/the_magazine/71.php?id=274#
   http://mathewgross.com/node/1407
"""
   “The reason our children’s lives are the worst among economically 
advanced countries is because we are a poor version of the USA,” he said. 
“So the USA comes second from bottom and we follow behind. The age of 
neo-liberalism, even with the human face that New Labour has given it, 
cannot stem the tide of the social recession capitalism creates.”  ...
   The economic impact of baby boomers is certainly no surprise to those in 
the city, who have long described the boomer charge through the decades as 
the “pig in the pipeline.” As Channel 4’s economics correspondent Faisal 
Islam observed, “They embraced social liberalism, flower power and a large 
state when they were teenagers, and low taxes, a smaller state and 
loadsamoney individualism in their period of high disposable income. Then on 
the realisation of their own mortality, up goes spending on the health 
service and pensions. Fifty to 64 year-olds also have the largest carbon 
footprints – 20 percent bigger than other age groups – yet the climate 
change phenomenon will not affect them. Perhaps we are seeing the scary 
sight of a generation that has been rather brutal in getting its own way 
squeezing everything it can out of its children.”
   Or, as Conservative MP David Willetts, put it: “A young person could be 
forgiven for believing that the way in which economic and social policy is 
now conducted is little less than a conspiracy by the middle-aged against 
the young.” ...
"""

That's a little bit missed in arguing "Why Post-Capitalism is Rubbish".

I don't know how it will play out. But I don't feel the jobs are coming back 
to the USA in any significant numbers. Thus, people may find more and more 
benefit in creating their own goods and services through peer production (if 
they have the abilities and resources) which acts a little as a form of 
wealth distribution (spreading wealth to peers away from those with 
mainstream jobs at companies whose services and products are avoided). But 
that will only put more pressure to destroy regular jobs and shift the 
economy more towards bartering or alternative currencies, putting more 
pressure on the mainstream economy to fail faster.

US government policy is pretending there is not a serious structural problem 
with the entire economy from automation and outsourcing and the end of the 
US's advantage after WWII as the only intact industrial base and all the 
German scientists (like Einstein) it imported. The implied subtext of the 
news is that things will supposedly get back to usual with some small 
temporary one-time stimulus and some green jobs. Both are good ideas (a 
small stimulus is somewhat like a basic income, and we need to green the 
economy); neither is enough to deal with the scale of the structural problem 
IMHO.

Is much of the USA heading for peer production as a survival strategy 
whether it wants it or not? :-) It is sad if that is what it takes, because 
a lot of people will get hurt in an involuntary transition, including those 
who for reasons of disability or age or having dependents have little to 
directly offer a peer economy.

Things may be much worse in some ways than the 1930s in a worst case 
situation. Back in the 1930s, most people had a relative with a farm, so 
they had a place to use sweat equity to grow food. Back in the 1930s, most 
people knew more about how to make the things they used in every day life, 
or knew someone who knew. Standards were lower then, too, so making a log 
house or a candle was more approachable, whereas what percent of the 
population today knows how to make fiberglass insulation or a lightbulb? So, 
even if people can revive old skills that don't take as much know-how or 
complex equipment, it will be a much bigger adjustment than in the 1930s, 
when even many of the best of homes still had outhouses and outdoor water pumps.

Still, there are a lot of suburban lawns that could be torn up when people 
get hungry enough:
   http://www.sustainablegardeningblog.com/archives/160
   http://lawnstogardens.wordpress.com/
Our little bit of free software towards that end:
   http://www.gardenwithinsight.com/

So, some parts of the economic restructuring will go harder; some parts will 
go easier.

--Paul Fernhout
http://www.pdfernhout.net/