The Federal Reserve Bank of San Francisco has published a paper entitled “Are Workers Losing to Robots?” There is little question that labor has lost a great deal of bargaining power over the last 4 decades. The Bank notes:
“A strong labor market and low unemployment traditionally help boost wages. But in the past two decades, the labor share—the portion of national income going to workers—has declined from about 63% in 2000 to 56% in 2018. This decline accelerated during the Great Recession, and the labor share has remained at historically low levels, even with strong employment growth in recent years.
“One possible cause of the decline in the labor share is that workers have lost bargaining power over the years. The late economist Alan Krueger highlighted several contributing factors, such as declines in union membership, increased outsourcing and offshoring, and noncompete clauses that hinder workers’ mobility across employers and regions (Krueger 2018).
“Another factor to consider is automation. Businesses have more options to automate hard-to-fill positions now than in the past. With rapid advances in robotics and artificial intelligence, robots can perform more jobs and tasks that required human skills only a few years ago. The steady decline in the relative prices of robots and automation equipment over the past few decades have made it increasingly profitable to automate. In this environment, workers may be reluctant to ask for significant pay raises out of fear that an employer will replace their jobs with robots.”
The graph below shows how much labor’s share of national income has declined over the years. The green line shows how much of that decline would be lessened without the effects of automation. Automation clearly has an effect, but the real cause of the decline is the process of globalization which sends jobs overseas.
Protests in Hong Kong escalated as a protester was shot in the chest with live ammunition by riot police. Today was the 70th anniversary of the founding of the People’s Republic of China and the event was celebrated in Beijing by a massive military parade. But the Hong Kong protesters wanted today to mark a sorrowful event and participated in various funeral rites. The Guardian describes the protests:
“Tuesday’s marchers had already defied a police ban to turn out in large numbers. Organisers wanted to mark the 70th anniversary of communist China as a day of mourning not celebration, and tens of thousands came out in response.
“’We want to show people this is not a happy anniversary,’ said Richard Hung, who works in the technology sector. ‘The CCP [Chinese Communist party] has killed or injured so many millions of people already. We have come out today, because if we don’t, we may not have another chance.’
“For the first few hours, the main march through the city centre was peaceful, with protesters dressed largely in black singing ‘glory to Hong Kong’, scattering paper money used for funeral offerings, and scrawling protest slogans on streets, bus stations and shops seen as pro-Beijing.
“Graffiti included anti-China messages mocking the day’s celebrations across the border, calls for freedom and democracy, and a warning with a prophetic ring that has become a protest staple: ‘if you burn, we burn with you’.
“Many families and young children were among the crowds at first. ‘You can see, we don’t have any protective gear,’ said Terrence, a logistics worker walking with his eight-year-old daughter. ‘We want freedom, and don’t want to belong to China.’”
The protests are an embarrassment to President Xi, but it seems as if the central government in Beijing does not know how to respond. The shooting of a protester will undoubtedly make a resolution much more difficult. US President Trump congratulated President Xi and made no mention of the protests in Hong Kong.
I will not be posting Saturday or Sunday. I am officiating at the wedding of the son of my old college roommate, and I do not want the outside to intrude upon this joyous occasion.
” Taken together, the reduction in refugee admissions and the new restrictions on where they may resettle represent another blow to the US’s ability to aid the world’s most vulnerable populations, even as the number of refugees worldwide has soared. The number of refugees worldwide approximately doubled between 2012 and 2018 to more than 20 million, according to the UN High Commissioner for Refugees.”
The quota for refugees is the lowest in US history and signals a profound shift away from the historical values of the American people. Additionally, many of the 18,000 slots are already reserved for certain groups: ” The administration will reserve 5,000 slots for refugee persecuted on the basis of religion, and 4,000 spaces for Iraqis who assisted U.S. forces in that country. Another 1,500 refugee placements will be set aside for residents of Guatemala, El Salvador and Honduras, according to the document.”
“First, an economy with wealth taxes can raise the same amount of revenue as one with capital income taxes (keeping all other tax rates constant) with less distortion. The result is a reduction in the misallocation of capital, yielding higher average wages, consumption, and welfare. Second, welfare gains are relatively evenly distributed, with newborns of all entrepreneurial ability groups preferring the wealth tax economy. The gains become smaller with age and are negative for older individuals, especially those with high wealth. Third, allowing pensions to rise with average labor income (BB reform) yields somewhat lower average welfare gains but spreads the gains to the vast majority of the population.” (p. 31)
“Overall, our analysis lends strong support to the consideration of wealth taxation as a more desirable alternative to capital income taxation, as it has the potential to improve aggregate productivity, grow the economy, reduce consumption inequality, and improve welfare for large parts of the US population.” (p. 52)
The US Census Bureau has released a report that indicates that income inequality in the US is greater than at any time over the last 50 years. The report shows that overall incomes grew last year but that the incomes of the rich rose substantially because of the tax cuts of 2017 and the incomes of the very poor did not rise much at all. The economic effects of these changes affected different regions of the US in different ways. According to the Associated Press:
“The areas with the most income inequality last year were coastal regions with large amounts of wealth — the District of Columbia, New York and Connecticut — as well as areas with great poverty: Puerto Rico and Louisiana.
“Utah, Alaska, Iowa, North Dakota and South Dakota had the most economic equality.
“Three of the states with the biggest gains in inequality from 2017 to 2018 were places with large pockets of wealth: California, Texas and Virginia. But the other six states were primarily in the heartland: Alabama, Arkansas, Kansas, Nebraska, New Hampshire and New Mexico.”
Even though incomes for all groups rose last year, the increase was not significant. The Washington Post reports: ” Though the gap between the richest and poorest expanded, the nation’s median household income topped $63,000 for the first time. However, after adjusting for inflation, it’s roughly the same as it was 20 years ago.” What is most troubling about the report is that this expansion of income inequality occurred after 10 years of consecutive GDP growth and historically low unemployment. “Trickle-down” does not seem to be trickling down.
Pakistani Prime Minister Imran Khan is planning another appeal to the international community on the issue of Kashmir. The appeal comes because India stripped Kashmir of its special status in the Indian constitution, sparking fears in Pakistan that India intended to flood Kashmir with Hindus, changing the demographic character of the region. Khan’s appeal comes as pressures in Kashmir are growing for a confrontation with India. According to Reuters:
“Khan has appealed to Kashmiris to give him the chance to sway the international community and he is scheduled to address the United Nations General Assembly in New York on Friday, but patience appears to be in short supply in Pakistani Kashmir.
“’We are all waiting for the United Nations…to see if the world can help us. Otherwise, we will try to break the LOC border,’ said Habib Urhman Afaqi, the president of the Jamaat-e-Islami political party for the district of Kotli, near the LOC. He said tens of thousands of men around the region were organizing by word of mouth and social media.
“’We are preparing people, emotionally, and collectively we will be ready to fight on 27 September,’ Afaqi said.”
The United Nations has released a new report on the state of the world’s oceans and cryosphere (those parts of the planet that are frozen–sea ice, permafrost, and the like). The report is quite detailed and very alarming: “Ocean surface temperatures have been warming steadily since 1970, and for the past 25 years or so, they’ve been warming twice as fast” and sea levels are rising quickly because of ice melting on Greenland and Antarctica. The report also identifies a threat that has yet to receive a great deal of attention: marine heat waves. National Public Radio outlines that threat:
“‘It’s sort of remarkable that prior to 2012 [or] 2013, nobody had thought about heat waves in the ocean,’ says Andrew Pershing, chief scientific officer at the Gulf of Maine Research Institute in Portland, Maine. ‘And then, in 2012 we had a huge event here in the Northwest Atlantic, and the Gulf of Maine was right at the center of it. It was a real surprise.’
“The abnormally hot water affected animals that live off the coast of Maine, including lobster and other creatures that are crucial to the local fishing economy. What’s more, it quickly became clear that the state wasn’t alone.
“‘Subsequently, these kind of heat wave events have kind of popped up all over the ocean,’ Pershing says. ‘We’ve actually had three major heat waves in the Gulf of Maine — 2012, 2016 and 2018 — and now we’re looking at repeat heat waves in the northern Pacific; Australia’s had some repeat heat waves. So it’s really becoming a part of the conversation in oceanography.'”
A lot of the damage to the oceans is already baked into our future. NPR reports: “Some marine impacts of climate change will unfold in the coming years no matter what. Accelerating sea level rise, for example, will threaten billions of people and present an existential threat to millions who live in Indigenous coastal communities that are flood-prone and rely on fishing.” The oceans remain one of the most unprotected parts of the planet. National Geographic points out how far away we are from protecting the oceans well:
National sovereignty remains a profound obstacle to the safeguarding of the oceans.
The Pew Research Center has conducted a fascinating poll in the US about the level of trust that Americans have in their institutions. Trust is perhaps the most important component of political legitimacy and it is an attribute that once lost is difficult to regain. The degree of distrust is actually quite staggering:
“…a third or more of Americans think that unethical behavior is treated relatively lightly – that is to say, wrongdoers face serious consequences only a little of the time or less often. Indeed, majorities believe that members of Congress (79%), local elected officials (57%), leaders of technology companies (55%) and journalists (54%) admit mistakes and take responsibility for them only a little of the time or none of the time. Some 49% say the same of religious leaders.”
These results are deeply unsettling. If citizens do not believe that their leaders are ethical, it raises all sorts of questions about how they determine the ethical basis for their own behaviors.
to save succeeding generations from the scourge of war, which twice in our lifetime has brought untold sorrow to mankind, and
to reaffirm faith in fundamental human rights, in the dignity and worth of the human person, in the equal rights of men and women and of nations large and small, and
to establish conditions under which justice and respect for the obligations arising from treaties and other sources of international law can be maintained, and
to promote social progress and better standards of life in larger freedom,
AND FOR THESE ENDS
to practice tolerance and live together in peace with one another as good neighbours, and
to unite our strength to maintain international peace and security, and
to ensure, by the acceptance of principles and the institution of methods, that armed force shall not be used, save in the common interest, and
to employ international machinery for the promotion of the economic and social advancement of all peoples,
Mr. Trump made extensive criticisms of China’s trade policies, many of which he has made in previous speeches. But the comments were quite pointed and the audience was more diverse than for his speeches in the US.
The British Supreme Court has ruled that Prime Minister Boris Johnson’s decision to suspend Parliament was illegal. The Court held that the Prime Minister had suspended the Parliament for “no good reason” which riases the possibility of another suspension if the Prime Minister comes up with an acceptable reason. Johnson suspended the Parliament until 14 October so that there could be no debate on Brexit while he finalized his plans for the EU deadline of 31 October. Johnson was defiant, but it is not clear what the next steps may be. The EU has remained adamant that there will not be any revision to the agreement forged by the former Prime Minister May. There is no likelihood of a snap election before 31 October. A “no-deal” Brexit seems to be most probable.
Nothing more needs to be said. Greta Thunberg spoke for us all.
Stewart M. Patrick and Kyle L. Evanoff have written a very good essay on the process of globalization that has been ongoing for the last five centuries. They take the occasion of Ferdinand Magellan’s circumnavigation of the planet to measure the processes of change attendant to globalization. Some of those processes, such as economic growth, have been beneficial. Others, such as the racism that underpinned the destruction of indigenous communities, have been painfully detrimental. Their conclusion is straightforward and powerful:
“What has not changed in equal measure is our collective mindset about the world. Five centuries after Magellan embarked on his voyage, humanity still clings to anachronistic dreams and obsessions of geographic mastery, economic exploitation, and planetary dominance. We have yet to come to terms with the practical realities and ethical obligations of life on an integrated planet. To survive and thrive on a world that has grown both smaller and more interconnected, humanity needs to adopt a more mature approach to globalization. This new, planetary politics should recognize that cosmopolitanism—the conviction that humans belong to a single community, united by a common morality—is not simply an ideal. It is an imperative that must inform how we delineate societies, respond to new technologies, manage the global economy, view and treat each other, interact with the natural world, and countless other aspects of political life.”
The conclusion is hardly novel, but it is one that appears to become truer by the day even as our willingness to accept the conclusion seems to diminish.
Patrick Cockburn has written an excellent essay on the significance of the attacks on the Saudi Arabian oil facilities. He doesn’t dwell on whether Iran or the Houthis launched the attack, but rather points out the power that new technologies have given to ostensibly weaker powers.
“Debate is ongoing about whether it was the Iranians or the Houthis who carried out the attack, the likely answer being a combination of the two, but perhaps with Iran orchestrating the operation and supplying the equipment. But over-focus on responsibility diverts attention from a much more important development: a middle ranking power like Iran, under sanctions and with limited resources and expertise, acting alone or through allies, has inflicted crippling damage on theoretically much better-armed Saudi Arabia which is supposedly defended by the US, the world’s greatest military super-power.
“If the US and Saudi Arabia are particularly hesitant to retaliate against Iran it is because they know now, contrary to what they might have believed a year ago, that a counter-attack will not be a cost-free exercise. What happened before can happen again: not for nothing has Iran been called a ‘drone superpower’. Oil production facilities and the desalination plants providing much of the fresh water in Saudi Arabia are conveniently concentrated targets for drones and small missiles.
“In other words, the military playing field will be a lot more level in future in a conflict between a country with a sophisticated air force and air defence system and one without. The trump card for the US, Nato powers and Israel has long been their overwhelming superiority in airpower over any likely enemy. Suddenly this calculus has been undermined because almost anybody can be a player on the cheap when it comes to airpower.”
How the world will adjust to this shift in the configuration of power remains to be seen. Those who support massive spending on armaments will likely deny that anything has changed. That attitude is roughly analogous to the attitude of the great powers toward the transformation of warfare brought about by industrialization prior to World War I. It is always a mistake to fight the last war.
Another weekend; another protest in Hong Kong. The Chinese government is beginning to turn the screws on protesters, as it uses a number of techniques to identify them, such as through bus passes. There were more reports of Molotov cocktails and other acts of vandalism as the protesters also try to escalate the pressure. There is one more weekend before the 70th anniversary of the Revolution in China. Beijing would much prefer that the anniversary not be marked by protests, and if there is to be a crackdown, it would likely occur soon.
Protests are also occurring in Egypt, despite a six-year ban on demonstrations. The protesters are opposed to the continued rule by General Abdel-Fatah al-Sisi who has ruled as a dictator since overthrowing the government of Mohamed Morsi in 2013. The Egyptian government responded harshly to the protests which caught many by surprise. The protests occurred in the context of a serious economic slowdown which was caused, in part, by an austerity program enforced by the International Monetary Fund. The protests appear to be spontaneous and there does not seem to be any single group coordinating them.
“Although the study did not analyze the causes of declines, it noted that the steep drop in North American birds parallels the losses of birds elsewhere in the world, suggesting multiple interacting causes that reduce breeding success and increase mortality. It noted that the largest factor driving these declines is likely the widespread loss and degradation of habitat, especially due to agricultural intensification and urbanization.
” Other studies have documented mortality from predation by free-roaming domestic cats; collisions with glass, buildings, and other structures; and pervasive use of pesticides associated with widespread declines in insects, an essential food source for birds. Climate change is expected to compound these challenges by altering habitats and threatening plant communities that birds need to survive. More research is needed to pinpoint primary causes for declines in individual species.”
Some bird species, such as raptors and geese, have experienced population increases because of directed activities to protect them. Scientific American published the graph below to show the differences among species.
“Gerald Feierstein, the former U.S. Ambassador to Yemen, suggested the assault on the Abqaiq oil processing facility — a devastating attack by drone or cruise missile that disrupted 5% of the world’s oil supply — shows Iran didn’t believe Trump would strike back with real force.
“’Clearly, the Iranians look inclined to test the Trump administration, to call Donald Trump’s bluff, if you will, to see if he really has the will to really go all the way, ‘ Feierstein said.
“Trump in June said America was ‘cocked and loaded’ to attack Iran after a drone was downed. Then he supposedly called off an attack because casualty estimates made him sad (maybe he was up late watching the analog scene in The American President?). Then he fired Bolton.
“Iran was naturally emboldened by all of this, and unlikely to be impressed by Trump’s Sunday tweet that America is ‘locked and loaded.’
“Every time he makes one of these empty boasts, he makes actual bloodless solutions more elusive. Trump’s mouth keeps forcing Trump’s presidency into dilemmas Trump’s brain can’t untangle. The Iran mess is one of the worst.”
The danger is that Mr. Trump’s language no longer provides any guidance to other countries. But that language does have an effect on American domestic opinion. Mr. Trump may find himself caught between domestic expectations of strong military action and a belief within American adversaries that Mr. Trump will never follow through. At some point, Mr. Trump may decide that he needs to satisfy domestic demands, to the surprise of adversaries who expected little action.
On Friday many in the world will begin to participate in a climate strike in order to force actions to reduce greenhouse gas emissions. Students are being asked to skip class on Friday and there are a large number of demonstrations planned for Saturday. The strike is planned to place pressure on participants in the UN Climate Action Summit which begins on 23 September. One of those demonstrations is planned for Boston on 20 September and the schedule for the Boston event is as follows:
10am – 11:30am: Community Events at City Hall Plaza 11:30am – 1pm: Rally at City Hall Plaza 1pm – 1:30pm: March to Massachusetts State House 1:30pm – 2:30pm: Action at Massachusetts State House
The Daily Hampshire Gazette ran an article about the activists in Western Massachusetts and interviewed several people about their concerns. One of those interviewed was Naomi Johnson, 17, at Amherst-Pelham Regional High School :
Why are you going to the climate strike? I’m going because I have faith that huge strike actions can rile the public and bring climate change to the forefront of government policy. Climate change’s greatest adversary is ignorance; there are millions of people in the United States who see rising temperatures and increasing natural disasters, but simply don’t see the connection between these events and the climate crisis, or possibly simply deny that climate change is a problem or real. Activists have done a lot in the past by striking — the New Deal, the civil rights movement. I believe that can happen again.
When it comes to climate change, what issue or issues are you most focused on and why? I’m most focused on the corrupt corporations side of climate change and convincing our government to take action against big business. Modern climate change denial is fueled by a heartless desire for fossil fuel industry profit, and those industries relentlessly bribe politicians to ensure that their interests stay a top priority over the welfare of the people.
Just 100 companies are responsible for 70 percent of all carbon emissions; just imagine the changes we could make if we forced those companies to become sustainable through government action.
Do you worry about how your future could be affected by climate change? I try to stay calm about my future by completely avoiding the topic. Sure, I can tell you about where I want to go to college, but don’t ask me about my career in 10 years. All I can think of then is the unimaginable suffering we’re facing without drastic action, the sacrifices I’ll have to make as I fight — because I will never stop fighting — and how much hope we’ll have left if nothing gets done now. I want kids, but won’t have them if the apocalyptic future we face comes to fruition. Hopefully the future I’m imagining will never come to pass.
Ironically, today US President Trump revoked “California’s power to enforce more stringent limits on vehicle carbon pollution than the federal government.” Under such obstreperous resistance, activism is probably the only course of action available to US citizens.
Israel’s election was so close that we probably will not see a government formed for several weeks. Israeli Prime Minister Netanyahu’s party and coalition partners failed to achieve a clear majority. But the opposition parties, led by Benny Gantz and the Blue and White Party, also failed to gain a solid majority in the Knesset. Time describes the deadlock:
“As pre-election polls had predicted, Netanyahu’s right-wing Likud party together with allied right-wing nationalist and religious parties fell well short of securing the 61 seats required for a parliamentary majority. But so did his principal opponent Benny Gantz, who leads the nominally centrist party Blue and White. With 91% of the votes counted, Blue and White had 32 seats, with Likud on 31. It remains to be seen which of the two leaders Israel’s President Reuven Rivlin, who occupies a largely ceremonial role, will ask to form a coalition.”
The uncertainty surrounding the outcome of the election is undoubtedly having an effect on President Trump’s decision-making process on Iran. Netanyahu has been a strong advocate of attacking Iran, but, absent some blatant act by Iran, such strong action would be difficult to justify.
The attack on Saudi Arabian oil facilities has ramped up tensions between the US and Iran. The rhetoric of US President Trump was especially provocative: “Saudi Arabia oil supply was attacked. There is reason to believe that we know the culprit, are locked and loaded depending on verification, but are waiting to hear from the Kingdom as to who they believe was the cause of this attack, and under what terms we would proceed!” Much will depend on what the investigation of the attack reveals, but initial comments from some officials, such as US Secretary of State Mike Pompeo, clearly identify Iran as the attacker.
Initial reports were that the Houthi rebels in Yemen launched a drone attack on the Saudi installations. The Houthi have been a part of a coalition in Yemen that struggles for control of Yemen, a civil war that has been ongoing since 2011. The civil war became an international war in 2015 when Saudi Arabia and the United Arab Emirates began bombing what they regarded as rebels acting as a proxy for Iran. The US has supported Saudi Arabia with intelligence, logistical support, and mid-air refueling. The US has also sold a large amount of military equipment to the Saudi Kingdom: “Saudi Arabia is America’s No. 1 weapons buyer. Between 2013 and 2017, Riyadh accounted for 18 percent of total U.S. arms sales or about $9 billion.” The Saudi-led attacks against Yemen have led to a massive humanitarian crisis:
“That war has long since devolved into a humanitarian catastrophe. The United Nations stopped counting its civilian death toll two years ago, when it hit 10,000. An independent estimate by the Armed Conflict Location and Event Data Project, which tracks conflicts worldwide, found that nearly 50,000 people, including combatants, died between January 2016 and July 2018. The war has also left more than 22 million people—75 percent of the population of Yemen, already one of the poorest countries in the world—in need of humanitarian aid.”
The US is an ally to a state which is conducting a war that is indefensible. The Human Rights Council of the United Nations issued a report on the war in Yemen and the laws of war on 27 September 2019. It concluded that “The Group of Experts found patterns of continued violations by all parties to the conflict, as civilians continued to be killed and injured by the fighting and to suffer violations of their most basic human rights.”
Iran is assumed to be an ally of the Houthis, although the specific details of the relationship are not at all clear. Bruce Reidel of the Brookings Institute characterized the relationship: “With their own cities under constant aerial bombardment, the Houthis are firing missiles at Riyadh and Abu Dhabi, with Tehran’s technological assistance. The war costs Tehran a few million dollars per month, while it costs Riyadh $6 billion per month.”
The context of the attack on the Saudi oil facilities is therefore quite complicated. It may be the case that Iran did indeed sponsor the attack, just as the US has sponsored the Saudi attacks on Yemen since 2015. Does an Iranian attack on Saudi Arabia represent a dramatic change in the dynamics of the conflict?
The answer to that question is actually quite straightforward. The US broke the nuclear deal with Iran. Under the Obama Administration the US signed the agreement and that signature was a sovereign declaration that the agreement would be honored unless its terms were violated. There is no evidence that Iran violated the agreement nor has the US asserted a violation. Moreover the Iranians adhered to the agreement for a full year after the US violated it.
But the US went further than simply leaving the agreement. With absolutely no legal basis for doing so, the US then implemented sanctions against Iran, threatening all other states with the loss of the US market if they traded with Iran. For most other states, the loss of the US market was a more severe penalty than the loss of the Iranian market, although it appears as if the Chinese continue to buy Iranian oil. The effects on the Iranian economy and the Iranian people has been devastating. The Arab Weekly describes the pain:
“As Iran’s revenues from oil exports, which used to account for approximately 40% of its income, began to nosedive, Rohani condemned the United States for waging “economic terrorism” against his country. The effect of America’s economic squeeze has been resounding on the Iranian economy, which is forecasted by the World Bank to shrink approximately 5% this year.
“When the nuclear deal was signed in 2015, the Iranian rial was trading at 32,000 to the US dollar. Today, it is more than five times that. Last year, currency exchanges were forced to close as the government attempted to control depreciation with a failed effort to fix the rate to 42,000 rials to the dollar. Now, Iran is mulling legislation that would cut four zeroes from its currency by moving from transactions in rials to tomans (one toman is worth ten rials).”
But perhaps more importantly, the US move kept almost 2 million barrels of oil a day from the market. Apparently, damaging the world petroleum market and all who rely on it is an acceptable price to pay to punish Iran.
The Iranian attack on Saudi Arabia should therefore be viewed as a retaliation. The US took Iranian oil off the market through non-violent but nevertheless illegal moves. Iran is trying to take Saudi Arabian oil off the market using violent but, within the laws of war, with legal violence. The Iranian attack should be viewed in this context.
Interestingly, however, Iran still holds some significant cards. The US can attack Iran and defend Saudi Arabia and Israel. But any US attack on Iran would roil the oil market significantly. Higher oil prices would damage President Trump’s chances of re-election. Iran will probably accept military damage, but it can disrupt oil supplies any number of ways. We shall see what Trump decides. If I were a betting person, I would predict that the US will more likely use cyberwarfare, not military action.
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