Israeli jets have attacked the Gaza Strip for a fourth day, with raids on a number of Hamas government buildings and security installations.
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Institute the 30 hour work week, i.e. a 6-hour work day. That means four instead of three shifts. It would give people time to actually be citizens, time to volunteer, raise children, develop themselves and their capabilities. It would allow the absorption of returning soldiers and employ the laid-off and others.
It has been more than 100 years since the fight for a shorter work week. The new millennium presents us with a new opportunity to develop human creativity.
The suggestion has garnered 32 votes so far, and need an additional 868 vote to make it into the second round of consideration.
We would encourage all readers to register to the site and give her idea a vote.
History, Marx believed is a continuous process – that is, a cumulative unfolding of events which do not merely change the faces of the actors, but alters the relations they enter into even as they may imagine they are performing the same old play.
Speculators in the stock market, however, very often imagine it ruled by regularities – cycles, patterns, waves – in which the same events play themselves out again and again across an equities landscape which never fundamentally changes.
They have a rule for this: “Only fools believe it is different this time.”
Of course, it may be a matter of your time horizon: we leave home each day and return to find everything pretty much as we remembered it; but we return to our childhood home and find everything just seems so much smaller than we recalled – if it is there at all.
The median price of a single family home in 1950 was around $3000.
By 2005, a single family home fetched about $264,000.
Blogger Cassandra asks us to consider which of these two prices is the normal one; and, what, if anything, we take for granted in the economy today can be considered normal, as well:
In Japan, “normal” meant that in 2004 residential real estate prices were roughly 30% of late 1980s or early 1990s prices. In Germany , though nominal prices might be similar in many places to those prevailing two decades ago, the real price destruction would be probably be similar to Japan’s. But what is “normal” for economic growth? Or what is “normal” for aggregate US consumption? Or the amount of debt a typical household can sustain? What is the “normal” leverage for a bank, or the normal return on equity o a listed company? What is a normal share of GDP for corporate profits in an economy experiencing deep recession? What is “normal” for sustainable government budget deficits? What is the normal income multiple of a banker or CEO to a policeman, a professional baseball player to a school-teacher or a doctor to a nurse? What is the normal amount of due diligence a bank should do before extending a loan and what is normal for the amount Honeywell Industries will earn per-share in the coming years?
During the time from 1950 to 2008 Washington’s role in the economy has increased several magnitudes, and with this intervention, debt has increased phenomenally, as has the financial sector and prices generally.
Seen one way, price levels for all goods has increased to the astounding heights we currently take for normal.
But, since Marx reminds us history is a continuous process, we cannot afford to ignore the growth of the other factors in the equation – government intervention, public and private debt, and the bloated financial sector.
The latter – financials – is mostly dead; public and private debt continue to hover over us like some massive Sword of Damocles; and, government, whose growth accounts for much of the debt, and much of the growth of the financial sector, is teetering on the icy edge of disaster.
Now, what is normal? With all the changes to the economy between 1950 and 2005 is is clearly unknowable what the “real” price of a single family home is now, much less to assume that it fall somewhere on a curve between the beginning of the housing bubble and when it burst in 2005 or so.
But, let’s add another complication:
Oops! Another complication: Change in labor productivity 1950 -2004
According to Erik Rauch, “the number of weekly hours needed to produce the 1950 worker’s output declined by almost one hour per year until the mid-1970’s, and has been declining by about half an hour per year since then.”
Rauch estimates, “An average worker needs to work a mere 11 hours per week to produce as much as one working 40 hours per week in 1950.”
Which implies, all things being equal, the actual “real” median price of a home built in 1950 (the price measured in the actual expenditure of human working time) may have declined to as little as $825.00.
That’s EIGHT HUNDRED TWENTY-FIVE DOLLARS, not $264,000.
For pretty much the price of your congressman’s shabby, not ready for Wall Street, ill-fitting, rumpled, J C Penny’s quality business suit, you could have a three bedroom, two bath, McMansion on a cul-de-sac in Culver City.
So, even if we assume government statistic on productivity are correct – and there is evidence they are not – clearly home prices have significantly further to fall.
Deflation: a good idea whose time has come.
From Martin Wolf, chief economics commentator for the Financial Times:
“This, in short, is a time for humility. Why did we [economists] mostly get ‘it’ so sensationally wrong? How did something that looks increasingly like the precursor of a slump creep up on almost all of us this year? It is a pretty good question. It is a pretty embarrassing one, too. It is one everybody I meet now asks.”
Perhaps, because you economists are a bunch of worthless, over-rated toadies to power, trapped in a bizarre make-believe world of your own construct.
Here is something which may come as a bit of a surprise to you: we need a big and growing government, according to Randall Wray:
Private sector-led expansions are (almost) inherently unsustainable because they generate growing debt burdens that eventually must be reversed … It is clear that what we need now is job creation, growth of income (especially wages), and debt relief–all of which will put household finances on better footing. We need public infrastructure investment–not private investment–as well as more (and better) public services. Virtually all economists now favor a bigger role for government, however, most see this as a temporary fix. What I am arguing here is that we need a big and growing government–the ratchet–to generate a sustainable growth path. So while I (mostly) agree with Paul Krugman on the nature and causes of the early postwar boom, I do not think we ever banished the tendency toward stagnation. We just hid it behind an unsustainable debt binge.
From what we can parse here, it appears the Mr. Wray believes our economy cannot grow on its own, and needs big and growing government to compel growth.
He gives, as his reason for this big and growing government, that, left to its own devices, the economy cannot deliver jobs, higher wages and income, and the reduction of debt – and has a pronounced tendency toward stagnation.
Since the Great Depression – we think that is his time line – this natural tendency of the economy to stagnate has been hidden by the unsustainable growth of debt.
We are not sure what is wrong with stagnation, in that case: Reduce the work week, slash government, and everything would be just fine.
The money you give won’t just save a life, it’ll save a lifestyle
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Well, there are two really simple answers to this problem:
1) Work fewer hours – while workers in other wealthy countries can count on 4-6 weeks a year of vacation, workers in the United States are guaranteed no paid time off. As a result, the average work year in the United States involves almost 20 percent more hours than the work year in Western European countries. As fringe benefits a shorter work year can be more family friendly and also we can be less polluting if we take the benefits of our productivity growth in leisure instead of income.
2) Support growth in the developing world – back in the good old days economists used to think that capital should flow from rich countries to poor countries so that they could build up their capital stock and infrastructure at the same time that they fed and clothed their populations. This thinking conveniently disappeared from view when the United States began to run large trade deficits in the late 90s.
And, it doesn’t take Washington intervening in capital markets, busily buying every kind of asset to protect billionaires from themselves.
It doesn’t take a trillion dollar in new expenditures by Washington to bail out every banker or state government with sob story.
All it takes is for you to work less, and the residence of the Kibera slums to live a better life.