Maximizing Shareholder Value Is (Literally) Killing Us

 

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We depend on the research and development efforts of pharmaceutical companies to develop treatments for the most dangerous diseases on the planet, but the largest of those companies appear more interested in financial engineering than creating lifesaving drugs.

As the death toll from the Ebola outbreak approaches 5,000, public attention has turned to the failure of the pharmaceutical industry to develop effective vaccines or treatments for the disease. World Health Organization director-general Margaret Chan lambasted the pharmaceutical industry, blaming the for-profit nature of the industry for its failure to invest in treatments for life-saving illnesses. “The R&D incentive is virtually nonexistent,” she said. “A profit-driven industry does not invest in products for markets that cannot pay.

What does the pharmaceutical industry invest in? For one thing, it is more profitable to treat chronic conditions that afflict the wealthy, such as erectile disfunction, than to cure life-threatening diseases that only need curing once. But there is also a deeper problem: pharmaceuticals are slashing their budgets for developing new drugs in favor of ramping up spending on financial engineering.

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Marching to Cap and Dividend: An Idea That Can Break The Political Gridlock

By Matson Boyd

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It was an awesome sight this September in Manhattan: hundreds of thousands marched together, calling for climate action, as blue banners swirled through the streets to represent the rising waters. Sister marches echoed all the way around our globe, from Paris to Melbourne to Rio, 162 countries in all. If protest energy is all we need to fight climate change, then success is surely at hand. But the task is daunting: we need internationally coordinated policy to keep fossil-fuels in the ground, and we need it fast. And keeping those fossil-fuels in the ground means dispossessing the oil-rich of trillions of dollars of wealth. This will not come easy.

 

The good news is that we have a very simple policy to rally around: keep most of the fossil-fuels in the ground, regularly auction off the rights to the small amount that can be safely removed, and return the proceeds to the people so that everybody gets a dividend check of the same amount. According to Bill Mckibben, we can safely put approximately 565 gigatons of carbon into the atmosphere between now and 2050. Anything more than that puts us into very dangerous territory. You want to be one of those people who takes some of the 565 gigatons out of the ground? Then you have to pay the rest of us for the right to do so, because that carbon allowance belongs to all of us. This is the core idea behind cap and dividend.


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Austerity: A Hammer Against The Commons

By Luke Pretz

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A mural by Diego Rivera in the Detroit Institute of Art

As you may know, the city of Detroit Michigan is struggling with bankruptcy. As is often the case in the current economic structure, the burden of the consequences of policy that favors big business and the owning class is put upon the workers and inhabitants of the city. In the case of Detroit, we see the long suffering inhabitants of the city subject to austerity policies, exemplified by cuts to social services, that are now favored by the wealthy elite who are often in the position to set policy. The impacts of lost pensions for city workers, the one-sided enforcement of back utility bills and the roll back of city services are clear: the working class inhabitants of the city suffer because of these cuts. Beyond the economic sacrifices demanded by the elites there has been clamoring for the sale of the Detroit Institute for Art’s collection to pay the city’s debt, a policy which has been pushed for by the city government, bond holders, auction houses, and creditors despite the wishes of those living in Detroit.

 

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The Economics Supports the Minimum Wage Movement

By Devika Dutt

Minimum Wage

Walmart has done it again. Despite paying its employees a wage only marginally above the Federal minimum wage of $ 7.25, Walmart continually seeks newer and craftier ways of reducing worker compensation. After requiring employees to purchase clothes that would meet the newly instituted dress code at their own expense, it has now decided to terminate health insurance coverage for about 30,000 part time workers. This gives a renewed legitimacy to the demand of workers, especially in the fast food industry, around the country and the world for a just compensation. One of the major successes of these movements (like Low pay is not okay and Fight for 15) is raising the minimum wage in Seattle to $15 an hour by 2015. In my estimation, in a time when inequality has been emerging as a major policy challenge all over the world, these movements are very welcome. Predictably, the naysayers have emerged out of their mansions, slamming down the drink they were nursing with a sense of urgency. And the usual suspects in terms of the arguments against a hike in minimum wage have been out in full strength. So, I think it would be worth my while to spell out the opposition, and argue why the arguments thus presented are fallacious.

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Beyond Wealth Inequality

By Amanda Page

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Academics have been mesmerized by Thomas Piketty’s new book, Capital.  Piketty covers a lot of ground in the Harry Potter sized tome, but the heart of the book is about growing wealth inequality. Piketty’s main recommendation for this problem is a global wealth tax. Observing the potential infeasibility of his suggestion, Capital may not be the best resource going forward.

Gar Alperovitz wrote America Beyond Capitalism almost a decade ago, yet its message still rings true today: wealth is unequally distributed and therefore some people possess less freedom.  (If you need proof that wealth is unequally distributed, well, that’s where Piketty’s work is useful.) Read more

Reflections on Popular Economics: An Interview with Juliet Schor

 

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Juliet Schor was a founding member of the Center for Popular Economics.  After earning her Ph.D. at the University of Massachusetts – Amherst, she taught in the Economics Department at Harvard University for 17 years.  In 2001 she joined the Sociology Department at Boston College.  Her books include The Overworked American, The Overspent American, and Plenitude: The New Economics of True Wealth. We asked her about her work with the Center for Popular Economics (CPE), the need for a “people’s economics”, and how the Left and the economics discipline have changed over the years.

Anders Fremstad: How did your work with the Center for Popular Economics (CPE) begin?

Juliet Schor: We founded CPE at a time when the corporate backlash to the gains from the 60s and 70s was building.  We heard a lot of discussion from progressive activists about their inability to fight back against the economic discourse that was coming from the corporate sector.  This was a moment when corporations were really on the offensive — taking out ads on the op-ed page of the New York Times with their point of view.  It was the corporate backlash and business’ attempts to create a new regime of accumulation, which eventually came about after 1979 with the move to neoliberalism.  We were seeing that happen, and we were trying to counter it with an alternative view of economics for people.

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Community Supported Agriculture and the Future of Farm Livelihoods

By Mark Paul

Mark Paul Food

Community Supported Agriculture (CSA) farms are expanding at a rapid pace, with operations in every state and a six-fold increase in farms since 2001, but it is questionable whether this innovative farming model is delivering the goods. Proponents claim CSAs are an active process of re-embedding market exchanges in social relations, with benefits to the local food economy that include the availability of healthy fresh local produce, sustainable agriculture production, increase in biodiversity, regional economic development through sustainable supply chains, and a vibrant community space that promotes the sharing of knowledge, ideas, and leisure. But is the CSA delivering on these promises?

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Conversations with Cuba: The Absurdity of Student Debt

By Ricardo Fuentes-Ramirez

I recently returned from a trip to Cuba, and among the most notable conversations I had was one with a Paladar owner and waiter. Paladares are private restaurants, usually family-run, which although once prohibited, were allowed during the Cuban Special Period crisis. I was a bit lost in western Havana, and ended up having lunch in this slightly over-priced restaurant. Due to the ambiance of the restaurant, I assumed the owner and workers were critical of the Cuban system, and would no doubt favor some sort of transition towards American style capitalism.

Upon hearing I was currently an economics student in the U.S., the waiter asked how student loans worked in the American system. I explained the U.S. is currently facing nothing less than a student debt crisis, where the vast majority of students graduate with some level of debt, the average level of debt has consistently been rising, many graduates struggle to find employment, and thus defaults on these loans have also been rising. The waiter asked if even doctors and lawyers faced this problem. I explained students who decide to study law, medicine, or go to graduate school also face the same dilemma, with total debt sometimes going over $100,000, and taking decades to payoff (if  you manage to pay it off). Read more

Economic Growth Benefits Capital Owners More than Workers in the U.S. and China.

By An Li

Growth is a top priority for economic policy makers, conservative economists, and businessmen. On June 11 2014, Wall Street took a downturn, the Dow broke a four-day string of record closing highs, and the S&P 500 showed its biggest daily percentage loss since May 20 as well, simply because the World Bank lowered its forecast of global economic growth by 0.4 percentage point – from 3.2% to 2.8%.

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Why are growth figures so important? Growth means the enlargement of the economy. And a larger economic pie is better than a smaller one for a country. It’s generally believed that faster economic growth will benefit the population of a country more than slower growth does.

Is that true? Does economic growth benefit the population of a country in an equal manner? In most cases, NO: the economic pie is divided unequally among a country’s population. In this sense, the U.S. and China, the biggest developed country and the biggest developing country, respectively, have something in common: capital owners get larger and larger shares of the economic pie, whereas the workers’ share of the pie has been shrinking since the early 1980s. Read more

Winner Take All: Soaring Inequality in the U.S. and Why It Matters

By Tim Koechlin

The United States is, by every reasonable measure, the most unequal of the world’s rich countries. And this is not a new development. For more than three decades, the U.S. has been suffering from a crisis of inequality. The Democrats have not taken this crisis seriously enough. The Republicans seem hell-bent on making it worse.

Evidence of extreme and rising economic inequality in the U.S. is quite overwhelming. In 1979, the top 1 percent earned about 9 percent of all income; in 2013, they earned 24 percent. The incomes of the top 0.1 percent have grown even faster. More than half of all economic growth since 1976 has ended up in the pockets of the top 1 percent. Meanwhile, the incomes of the shrinking middle class have stagnated, and the incomes of those with a high school education or less have fallen substantially. The purchasing power of the minimum wage has fallen by about 15 percent since 1979. One in five kids lives in poverty. Read more

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