Showing posts with label China. Show all posts
Showing posts with label China. Show all posts

Thursday, September 16, 2010

Net Neutrality Vital To Free Speech

net neutrality world logoImage via Wikipedia

Net Neutrality Absolutely Vital to Assuring Progressive Free Speech

The mass media remains one of the most powerful forces blocking social and economic progress in the 21st century.

It is because of the mass media that tens of millions of Americans are convinced that budget deficits are more important than the lives ruined by unemployment, or that Social Security won't be there for them when they retire. Or that their government's occupation of Afghanistan and its hundreds of military bases around the world, are protecting the "national security" of U.S. citizens.

All of these destructive myths -- and many more -- could be dispelled within a relatively short time if there were a free marketplace of ideas, instead of the "free press for those who own it" model currently in place.

Of course, other falsehoods would persist for much longer; ideas, once widely accepted, can have great inertia. But during the last two decades the Internet has introduced a degree of competition in the world of mass communications, which although still quantitatively small, is nonetheless unprecedented.

An interactive process has been set in motion with the Internet and the blogosphere acting as a check on the mass media -- sometimes breaking important news that would otherwise go unnoticed or unreported in systems with direct censorship such as China and also in limited democracies like the United States; and sometimes influencing the journalists who produce the mass media.

This process has the potential for accelerating with the development and spread of Internet technology, for example to Internet television; and of course with advances in literacy and education.

This is rare in the history of technology, and especially in the technology of communications. Almost all prior innovations -- radio, television and motion pictures -- have mostly made it easier for the few to control the many -- like pilotless drone military planes.

This progressive contribution of the Internet is reliant on the principle of "net neutrality": that Internet service providers treat all packets of data the same. An individual blogger's challenge to The Washington Post can be downloaded by anyone at the same speed as the content of the multi-billion dollar corporate newspaper itself. Intelligent readers can decide for themselves who is correct.

The Federal Communications Commission has been considering what its role and rules should be for enforcing net neutrality, and in early August Google and Verizon put forth their own proposal on these issues.

These two big corporations, along with others, are likely to have a considerable influence on the FCC and Congress, and their proposal has elicited a torrent of criticism. It exempts wireless and other "online services" from net neutrality, and has other big loopholes.

There is now a clear and present danger that the road will be paved to a fragmented Internet where service providers can determine what people will see on the Web, and carve out a "non-neutral" sector. As Sen. Al Franken, D-Minn., has noted, defending net neutrality is "the First Amendment issue of our time." America's great concentrations of wealth -- more concentrated than at any time since the 1920s -- already dominate the Internet. But not nearly as much as they dominate the vast majority of information that Americans receive from more monopolized info-tainment news outlets such as TV, radio and what remains of the newspaper industry.

A coalition of organizations including MoveOn.org, Color of Change, Free Press and Credo Action is calling on Americans to lend a hand and preserve this one remaining mass medium of free speech and equal rights, before it is remade in accordance with corporate needs. We the people need the Internet as we know it is the essential tool in ongoing battle of ideas.

It is time to fight for it.
Mark Weisbrot is Co-Director of the Center for Economic and Policy Research (CEPR), in Washington, DC.
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Tuesday, July 27, 2010

. The Great Decoupling of Corporate Profits from Jobs

Robert Reich of the Roosevelt National Advisor...Image via Wikipedia

The Great Decoupling of Corporate Profits from Jobs

Second-quarter earnings reports are coming in, and they're making Wall Street smile. Corporate profits are up. And big American companies are sitting on a gigantic pile of money. The 500 largest non-financial firms held almost a trillion dollars in the second quarter, and that money pile is growing larger this quarter.  Profits that plummeted in the recession have bounced back. Big businesses have recovered almost 90 percent of what they lost.
So with all this money and profit, they'll start hiring again, right? Wrong - for three reasons.
First, lots of their profits are coming from their overseas operations. So that's where they're investing and expanding production.
GM now sells more cars in China than it does in the US, but makes most of them there. The company now employs 32,000 hourly workers in China. But only 52,000 GM hourly workers remain in the United States - down from 468,000 in 1970.
GM isn't just hiring low-tech assembly workers in China. Last week the firm broke ground there on a $250 million advanced technology center to develop batteries and other alternative energy sources.
You and I and other American taxpayers still own over 60 percent of GM. We bought GM to save GM jobs, remember?
GM officials say no American taxpayer money is being used to expand in China. But money is fungible. Because of our generosity, GM can now use the dollars it doesn't have to spend in the United States meeting its American payrolls and repaying its creditors, for new investments in China.
Second, big U.S. businesses are investing their cash in labor-saving technologies. This boosts their productivity, but not their payrolls.
Last Friday, for example, Ford reported a $2.6 billion second-quarter profit. The firm is already more than two-thirds the way to equaling its record 1999 profits. But due to labor-saving technologies, Ford now has half as many employees as it did a decade ago.
Wall Street analysts are happy with Ford's "commitment to keeping capacity in check," according to the Wall Street Journal. Ford shares rose 5.2 percent Friday. "Keeping capacity in check" is the Street's way of saying "no new hiring." In fact, the Street is advising investors to sell the stocks of companies that talk openly of expanding capacity.
Finally, corporations are using their pile of money to pay dividends to their shareholders and buy back their own stock - thereby pushing up share prices.
Last Friday, GE announced it would raise its dividend by 20 percent and reinstate its share-buyback plan. It's GE's first dividend increase since the company cut its dividend in early 2009. As a result, GE shares are up more than 5% in the past few days.
Bottom line: Higher corporate profits no longer lead to higher employment.  We're witnessing a great decoupling of company profits from jobs. 
The next supply-side economist who tells you companies need more incentive (i.e. lower taxes) before they'll hire is living on another planet.
The reality is this: Big American companies may never rehire large numbers of workers. And they won't even begin to think about hiring until they know American consumers will buy their products. The problem is, American consumers won't start buying against until they know they have reliable paychecks.
Robert Reich is Professor of Public Policy at the University of California at Berkeley. He has served in three national administrations, most recently as secretary of labor under President Bill Clinton. He has written twelve books, including The Work of Nations, Locked in the Cabinet, and his most recent book, Supercapitalism. His "Marketplace" commentaries can be found on publicradio.com and iTunes.
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Thursday, March 11, 2010

Wage Suppresion Key to Greenspan World View

Alan GreenspanImage via Wikipedia

Published on Thursday, March 11, 2010 by The Guardian/UK
Inside Alan Greenspan's Nightmare
News that wages are rising in China is greeted with dread by those who share Greenspan's unwarranted fear of rising inflation

by Mark Weisbrot

Alan Greenspan had a dream, or rather a nightmare. Greenspan seems to have woken up in a cold sweat one morning in fear that the period of "disinflationary pressures" that had kept inflation low since the 1990s was about to end. This was 2007, when he published his autobiographical economic treatise, The Age of Turbulence. Despite his well-known love for economic data, and poring over the latest reports from every statistical agency, he did not realise that he was sitting on a housing bubble of epic proportions. Not seeing the bubble (he also missed the prior stock market bubble that accumulated and burst on his watch, causing the 2001 downturn), he could not know that it would soon collapse and cause a very ugly recession, in which inflation would be irrelevant.

This by itself should be enough to question the wisdom of central bankers, since the evidence for both of these world-historic asset bubbles was blindingly obvious once they had reached a certain size. But Greenspan's nightmare is scary for other reasons, some of which will become increasingly relevant as the world economy recovers.

As Greenspan details in his book, the reason for his nightmare is that the world was depleting its stock of hundreds of millions of unemployed people, including those of the former Soviet Union and also in rural China. In other words, "too many" of them had become employed, and this was allowing for wages of factory workers in China to rise. So long as China had a huge mass of unemployed, wages were held in check, and - according to Greenspan - competition from low-wage production there held down wages in the rest of the world, including even rich countries like the United States. All good! Until the nightmare started.

Is there something wrong with this picture, that one of the world's most powerful economic decision makers (at the time), dreads the decline of mass unemployment and rising wages among people making 80 cents an hour? What, then, is the purpose of economic development, if not to raise living standards for poor people? Some may dismiss Greenspan's values as unrepresentative - he was, after all, a devotee of the extreme libertarian writer Ayn Rand. And his autobiographical narrative is rather unusual: although we learn about his love of baseball, music (he attended the Julliard School), and how he became interested in economics, there is something missing. Most public figures of his stature, and even most economists, would have offered at least a perfunctory paragraph about how his economic thinking was aimed at helping those at the bottom of the social ladder - whether true or not. Greenspan didn't bother.

But unfortunately Greenspan is not an outlier but a moderate among central bankers. What is worse, their perverse world view has a hugely disproportionate influence on reporting and discussion of economic issues. As the press has recently reported, wages in China are again rising, due to the additive effect of the global economic recovery and the world's most effective economic stimulus programme, which enabled China to plough right through the world recession with 8.7% growth in 2009. The reports are somewhat less negative than they were a few years ago, but Greenspan's nightmare is everywhere: a dreaded "labour shortage" is forcing Chinese wages up and this will add to inflation. It is not clear what is wrong with a "labour shortage" being resolved in the way that markets resolve other shortages: ie the price of labour goes up until quantity supplied matches quantity demanded.

"China has drained its once vast reserves of unemployed workers in rural areas and is running out of fresh labourers for its factories," reports the New York Times. "Personnel managers here say they are also abandoning the informal tradition of not hiring anyone over 35 - they say they are now hiring workers up to 40 years old, and sometimes older, despite concerns about whether they can keep up week after week with the rapid pace of Chinese assembly lines."

"Managers can no longer simply provide eight-to-a-room dorms and expect labourers to toil 12 hours a day, seven days a week," says Business Week.

There is more, but we wouldn't want to give Alan Greenspan a heart attack.

To its credit, the Times recognises the positive aspect of rising wages for Chinese workers and also notes that the Obama administration, which has complained about the Chinese yuan being undervalued, should welcome this development. An increase in Chinese wages, to the extent that it raises the price of the country's exports, has the same impact as an appreciation of the yuan.

But the reality is that the Obama administration, as well as Congressional leaders, are not really serious about a more competitive dollar. If they were, they could push down the value of the dollar worldwide, rather than trying to blame the Chinese for our overvalued currency. But they don't do that because the Greenspan/Wall Street view prevails: anything that lowers inflation is good, whether it's an overvalued dollar, cheap imports from repressed overseas labour, or US workers' wages stagnating, as they have, for decades.

All this despite the fact that the non-partisan Congressional Budget Office projects inflation over the next 10 years averaging less than 1.7% annually - lower than any decade for more than half a century. Imaginary threats of inflation could turn out to be one of the more real threats to the United States' economic recovery.
© 2010 Guardian News and Media Limited

Mark Weisbrot is Co-Director of the Center for Economic and Policy Research (CEPR), in Washington, DC.

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