An obvious reason brought up for this is lower wages, but merely pay alone doesn’t quite get to the heart of the labor disparity.  Consider the following observation about the iPhone’s screen:

One former executive described how the company relied upon a Chinese factory to revamp iPhone manufacturing just weeks before the device was due on shelves. Apple had redesigned the iPhone’s screen at the last minute, forcing an assembly line overhaul. New screens began arriving at the plant near midnight.

A foreman immediately roused 8,000 workers inside the company’s dormitories, according to the executive. Each employee was given a biscuit and a cup of tea, guided to a workstation and within half an hour started a 12-hour shift fitting glass screens into beveled frames. Within 96 hours, the plant was producing over 10,000 iPhones a day.

“The speed and flexibility is breathtaking,” the executive said. “There’s no American plant that can match that.” [emphasis mine]

Dorms? Long days? People waking you up whenever they feel like it? Sounds like college minus the fun parts.  Or prison…

The emphasis on flexibility is interesting in the total contrasting lack of it for the labor force. Literally living at your job, required to be available at all hours, you can imagine how much compensation people in the states would expect for this arrangement — and they would have good reason to do so, as they’d have no life outside of work.  Sock it away for another day I guess…wait, what’s that? They only make $17 a day?

This being a tech company we’re talking about, it’s not like it’s all super-routine work. Mere numbers can’t explain everything, right?

Though Americans are among the most educated workers in the world, the nation has stopped training enough people in the mid-level skills that factories need, executives say.

Any ideas what they mean by “mid level” skills?  And who previously did the training, if it has stopped?

Protectionist sentiment looks at this and chalks it up the the free market gone crazy.  As usual, it’s a bit more complicated — as in, “what free market?”.  Back to the issue of the screens, this time the initial decision to use glass rather than plastic:

When an Apple team visited, the Chinese plant’s owners were already constructing a new wing. “This is in case you give us the contract,” the manager said, according to a former Apple executive. The Chinese government had agreed to underwrite costs for numerous industries, and those subsidies had trickled down to the glass-cutting factory. It had a warehouse filled with glass samples available to Apple, free of charge. The owners made engineers available at almost no cost. They had built on-site dormitories so employees would be available 24 hours a day. [emphasis mine]

Aggressive government channeling of the means of production, as undertaken by the ruling Communist Party of China, playing capitalism’s tune.  The irony could choke a horse.

The article goes on to describe another supplier, Foxconn (yes, that Foxconn…), and their “city” (didn’t we try that concept before?).  Needless to say, Foxconn spokespeople brushed off the human rights and screwing-out-of-pay concerns.

Though the gist of the article is meant as a U.S.-centric concern, the primary thing I think about on this isn’t domestic in nature.  What does jump out at me is how, despite the admissions of the front office people how important to the end product these workers are, they have such negligible leverage.  They know the product yet would surely starve if they attempted to buy it, due not to mere numbers but to a system that deliberately keeps them at the bottom, unable to meaningfully organize and without the means to potentially adapt their skills to break away endeavors (think about it: without IP and bottom of the barrel wages in a closed market, how do you keep people in a job getting desperate enough to where the backlash takes the form of threatened mass suicide?).  Throwing off those chains and seizing their rights would, due to the long term gains in standard of living, work out better for all of us.

Well, except maybe Tim Cook & the Chinese government.

Now, as a particular method of stabilization there is merit. But the strategy itself has nothing particularly of value to spontaneous market order.  To say that X is worth Y amount of currency is still to set a fixed price, even if the variable X is replaced by a quantity of gold; in other words, there is nothing particularly Laissez-faire about such a policy. Even if you claim a policy that the value will henceforth NEVER for any reason be changed, politics will always find a way to change it — and honestly, the total freezing of value doesn’t strike me as inherently making sense anyway.

Gold, in my interpretation, is not itself an intrinsic use, but a signal, a canary in the proverbial coal mine — if people more want to hold shiny rocks than currency, then your currency and the economy that goes with it is screwed.  What I fall back on effectively is an open market in currency that in practice pegs itself to labor, because what I see as the most important issue is not that money fluctuates.  Of course money fluctuates, it even did so before its creation at all, as different people engaging in barter valued different things as equivalent to different other quantities of different items.  Money moves, that is unavoidable.  The true issue, from my interpretation, is why money moves (currently it moves in ways designed to serve state-connected banking interests, which the mainstream Left then inaccurately thinks of as private, thus the result of the free market gone crazy), and how well or not it tracks productivity.  In a rapidly moving economy with explosive growth, faster than usual expansion of money strikes me as reasonable, as long as it tracks with the pace of activity.  If, in contrast, activity is limited to shuffling around of the same few lumps of debt, as is the case now with modern state-capitalism, with little or no attachment to growth, then no, the monetary supply should not grow, because nothing is being created.  As I’ve asserted previously, with a spontaneous market order with regard to currency, over time money would attach itself not to gold, nor to vague state promise that government swears to rob enough people to cover all denoted debts — which is impossible, as if they remotely attempted it there would be war (note how persistently across demands regardless of size debt balloons. You show people how expensive the modern state is to pay for all that is promised through it, they will balk at the price tag, period) — but to a measurement of labor, adjusted for efficiency by default simply to keep things honest.  Want more money? Make more shit.  Want less in the system?  Then eat more of what you kill.

Where we’re at right now, there is in practice a huge class divide where a few people have access to cheap money for gambling, while the rest of us are stuck with expensive credit to paper over bills, if anything.  Assertions that this is simply the way things are, as opposed to intentional result, are false.

+4…

Well, ask and you shall receive apparently, because I was just greeted with the following headline: “Census: 1 in 2 Americans is poor or low-income“:

Squeezed by rising living costs, a record number of Americans — nearly 1 in 2 — have fallen into poverty or are scraping by on earnings that classify them as low income.

The latest census data depict a middle class that’s shrinking as unemployment stays high and the government’s safety net frays. The new numbers follow years of stagnating wages for the middle class that have hurt millions of workers and families.

“Safety net programs such as food stamps and tax credits kept poverty from rising even higher in 2010, but for many low-income families with work-related and medical expenses, they are considered too `rich’ to qualify,” said Sheldon Danziger, a University of Michigan public policy professor who specializes in poverty.

They even mentioned rising cost of living, ffs!

This fact of the working poor flushes the lie on the Right that poverty is just a matter of lazy people who don’t want to work.  The rise in costs and wages not keeping up with inflation throws a monkey wrench in the Yglesias/Krugman type mainstream liberal claim that there somehow isn’t enough inflation.  But also, notice how thanks to the convergence of the two more people are falling into the poor-but-not-poor-enough-for-help category.

Given that, contrary to common portrayal, the current economy has jack squat to do with a natural market order due to corporate welfare and the regular state intervention in finance, the purpose served by social spending is as a form of revolt insurance — “hey, minimally attached people, we have an offer for you!  You refrain from questioning or attempting to dismantle this system, and we’ll give you some scraps to make the injustice a little more bearable. Deal?” This essentially history-book conservative scheme, save the occasional skirmish, has served its purpose longer than could have been expected.

Now?  This is what a scalability problem looks like.  How do you bribe half the country?

Shorter Washington Examiner: “Here, have yet more proof the Fed is hard-drive-in-a-clothes-dryer-full-of-nails corrupt”

The latter cites as a source the Federal Reserve audit co-signed in the Senate by noted right-wing whackjob Bernie Sanders.  Matt’s institutional analysis (if you can call it that. Can you?) seems limited to either Benevolent Planner Does Good or Benevolent Planner Commits an Error.  The idea that an institution can be inherently self-serving contrary to its stated purpose — that is, Planner Is Not Benevolent & Mercilessly Screws You For Their Benefit — is just nowhere. Stick to sports.

The Federal Reserve and four other powerful central banks threw a lifeline Thursday to Europe’s struggling banks.

The European Central Bank — along with the Fed, the Bank of England, the Bank of Japan and the Swiss National Bank — announced a coordinated plan to pump dollars into Europe’s financial system.  The aim: Provide U.S. dollars to European banks that need the currency to fund loans and repay debt. [...] U.S. stocks rallied as did European markets. Britain’s FTSE 100 (UKX) gained 2.1%, the DAX (DAX) in Germany added 3.2% and France’s CAC 40 (CAC40) rose 3.3%.

Consider for a moment the scope of intervention here.  Virtually an entire continent is being bailed out, yet the gains aren’t particularly crazy even for the megabanks who were the entire point of the intervention. From there, it was already a given the real economy would receive jack squat, but when the effects at the top are likely to be wiped out in a week there’s really nothing to ask for in the first place.

That’s the rub over economic issues that are clearly structural in nature: when you deny that reality, anything you do in response is always Not Enough.

Ben S. Bernanke, the Federal Reserve chairman, offered a new twist on a familiar subject Thursday, revisiting the question of why growth continues to fall short of hopes and expectations.

Mr. Bernanke, speaking at a luncheon in Minneapolis, offered the standard explanations, including the absence of home construction and the deep and lingering pain inflicted by financial crises. He warned again that reductions in government spending amount to reductions in short-term growth.

Then he said something new: Consumers are depressed beyond reason or expectation.

Oh, sure, there are reasons to be depressed, and the Fed chairman rattled them off: “The persistently high level of unemployment, slow gains in wages for those who remain employed, falling house prices, and debt burdens that remain high.”

However, Mr. Bernanke continued, “Even taking into account the many financial pressures that they face, households seem exceptionally cautious.” Consumers, in other words, are behaving as if the economy is even worse than it actually is. (emphasis mine)

People have been slammed by yet another bubble bursting, and harder than in recent history due to the Financialization of Everything.  Even people with jobs are in poverty at rates big enough for media attention.  Most real gains have stayed at the top for a long time.  Oh, yeah, and while unemployment stays high and people struggle with all that debt there’s a new report about record corporate profits seemingly every other day.  A few well-connected people, with the help of the state, are doing just fine.

Bitter?  Depressed?  Gee, you think?

I’ve got an idea for job creation of my own, by the way: hire people to fill Bernanke’s office with cement.

Employees want to get paid as much as possible for as little work as possible.  Business owners want to pay employees as little as possible for as much work as possible, and spend as little on other inputs as possible while getting as high an asking price as possible from the resulting product or service.  Suppliers of those other inputs want as much money as they can get for as little effort on their end as they can muster.  Consumers want to pay as little as they can to get as much as they can.  The mechanism by which all these preferences are hashed out is called a “market”.

This comment probably came from a knee-jerk “screw the libruls!” sentiment.  Yet, how is a market supposed to function when one of the participants is expected to fall on their sword?

Maybe this is just a sign that I’m privileged and I’ve got mine or something, but I wouldn’t trade the good craft brews of today for the piss beers of yesteryear (okay they still dominate the market somehow, but their grip is slipping) just to get the good union jobs back. Hell, I’d rather work at New Belgium than Coors. The New Belgium brewery, while not a union shop, is about as green as any brewery in the country, and I’m not sure but I think an environmentally friendly outfit that makes high quality, unique American beer somehow represents the liberal ethos better than mega-corporations who employ union workers.

Maybe there is a way to make unions and a highly fluid, highly competitive market work together. It just isn’t the old model of corporate or state-backed unionism we’ve become accustomed to for the past seventy years.

On the first point — that brewing horse piss under a conglomerate just because it’s a unionized conglomerate isn’t a choice I’d side with — I completely agree.

As for the latter part, that there is (or that the perception even exist of) this divide to speak of is another telltale sign of the trade-off that organized labor made in acquiescing to state capitalism.  Thanks to how the brewing business was regulated after prohibition, large-scale operations were all that could really exist, so there were few opportunities for diversification.  Brewery labor, like the rest of organized labor, accepted a system where concentration of production was maintained and encouraged in exchange for a better cut of the gains.  Ever since a major barrier to entry was dropped, small craft brewers are nipping at this market.  A few thoughts on that:

• As Kain observes, many of the emerging brewers, contrary to the modern labor assumption about small-scale non-union shops, are rather progressive (not “progressive” politics, I’m talking forward thinking, caring and whatnot).  Unless there’s actual proof that someone working for, say, Sierra Nevada is really worse off than someone that works for SABMillerCoors I don’t see reason for complaint.
• There’s a conversation going on there in comments about profit and surplus value in a competitive market.  The underlying raw economics makes sense: in a perfectly competing market, surplus is eaten. It’s not like the radical libertarian call for letting the free market eat the rich came out of nowhere.  Yet even if all distorting factors were removed, I strongly doubt the beer market would approach dueling fruit stands.  Besides, we’re still thinking of this in large scale terms by seeing no ground between them and this Homo Economicus scenario.  Whatever did remain would be just fine for…
• Co-ops!  If the workers are the owners, then there’s no middle step between them and the market.  Who needs the bureaucratic state-nudged form of labor organizing when there isn’t a boss to negotiate with in the first place?

Right now, we have a market concentrated in a couple hands that just happen to employ union labor.  I think to see a competitive market as somehow a threat to the gains of labor is to accept as inevitable a framework that was anything but.  Respecting beer and respecting labor can and will be one in the same in the long run.  In the meantime, no one should have to drink horse piss, regardless of how much people are being paid to bottle it.

BTW: the multi-tiered distribution system — laws that enshrine middlemen affiliated with the macros as gatekeepers between craft brews and retailers — could stand a rethink too.  How many great beers aren’t getting the exposure they deserve because some distributor is thinking “seriously, fuck those guys” over shelf space?

[...]the slightest glance at their record shows they love them some Keynesian economics as long as the spending goes to the right things, by which they mean war & its related pork.  Their public stance is purely P.R. stunt.

Judson Phillips, head of “Tea Party Nation”, fairly recently:

If we decided to build a couple of new carriers, thousands of workers would be hired for the shipyards.  Thousands of employees would be hired for the steel mills that would provide the steel for the hull and various sub contractors would hire thousands.  Do you know what that means?

It means they would receive paychecks and go out and spend that money.  That would help a recovery.  That is a shovel ready project!

Increasing spending for the military does a couple of things.  It not only not only stimulates the economy, it protects our nation.  That is a better investment than say spending money on teaching Chinese prostitutes how to drink responsibly. [emphasis mine]

Resurrect Keynes from the grave, give him a uniform, combat boots, and an M-16, and have him bark a few jingoistic notes about blood and country…you still have before you Zombie Keynes.

Props.

[...] Obama could always just solve the crisis with a pair of magical platinum coins. Sure, that sounds preposterous, but Yale’s Jack Balkin argues that this is actually a perfectly legal strategy. Here’s the logic: Under law, there’s a limit to how much paper money the United States can circulate at any one time, and there are rules that limit how many gold, silver and copper coins the Treasury can mint. But the Treasury is explicitly allowed to mint however many platinum coins it wants and can assign them whatever value it pleases. So the Mint makes a pair of trillion-dollar platinum coins. The president orders the coins to be deposited at the Federal Reserve. The Federal Reserve moves this money into Treasury’s accounts. And just like that, Treasury suddenly has an extra $2 trillion to pay off its obligations in the near term without issuing new debt.

This crap deads itself by simply asking one question: “what would stop the government from minting a 100 trillion dollar platinum coin then?”  Value has to have some form of grounding otherwise no one has reason to believe it, and if no one believes the value of something then the value becomes by default (no pun intended) zero.  The problem is not one of money (fiat currency can be endlessly created), but of value; there’s a point past which additional creation of currency strikes the big players in collecting it as reason to stop accepting it as payment.  You want to see where that point is?  Watch what happens when August 2nd comes and goes, the U.S. government will cross that line fairly quick.

Oddly enough, despite the oncoming creation of a fuckton of new “liquidity” as they frantically scramble to fill the now-obvious gaps (the structural issues with any institution that regularly spends 40% more than they have in resources doesn’t seem to be a popular topic for the various talking heads and pundits; their loss…), there is the inescapable fact exploding the assumptions on monetary policy that the state and its largest benefactors lean on for survival: there’s already plenty of money in the system.  It’s just concentrated in a few hands.  On purpose.  If the nature of political power were somehow to reverse itself, the resulting policy would be a massive claw-back from high finance (after all, they exist due to political favor anyway, and as a result their gains are morally equivalent to armed robbery, thus void).  The privilege, ideally, should simply be abolished, but barring that it would be completely justified to require fee for the service, and give the proceeds of it to those who were robbed in the first place.  That this isn’t a possibility shows why politics is a black hole.

+…hell if I know.