The Brunch Table

Just a sad little article from Der Spiegel about the lives of some former textile workers in North Carolina. The tone of bemused pity is what caught my attention:

Nicholas Gennett and Jeanie Moore say that they would have liked to take him along to Philadelphia to receive their award. Why? Because he is what they call a success story in their “Special Group of the Labor Force.” Johnson, an ailing man pushing 60, who works 15 hours a day so that he won’t lose his house, is their success story.

So the U.S. Journal of Religion and Society publishes a study suggesting that, around the world, religious belief in society is inversely proportional to social health. But it takes the London Times to report this. The conclusion is pretty grim:

None of the strongly secularized, pro-evolution democracies is experiencing high levels of measurable dysfunction…Indeed, the data examined in this study demonstrates that only the more secular, pro-evolution democracies have, for the first time in history, come closest to achieving practical “cultures of life” that feature low rates of lethal crime, juvenile-adult mortality, sex related dysfunction, and even abortion…The United States’ deep social problems are all the more disturbing because the nation enjoys exceptional per capita wealth…[but is] the least efficient western nation in terms of converting wealth into cultural and physical health.

It’s been really amazing to see so many writers making the connection between our return to 19th-century laissez-faire economics and the present disaster. A pure market can’t reliably set policy goals for the future, even when a relatively small public investment could generate great private wealth. Nothing illustrates this better than our failure to spend $50 million on dam repairs to save New Orleans from destruction.

The more complex industrial society gets, the less we can afford to rely on antique theories that’ve been preserved not because of their usefulness, but because they flatter certain powerful people.

I’ve said it before…Communism and laissez-faire were contemporaries, and they both share a peculiar 19th-century faith that people can build and maintain perfect systems. One has a fantasy government that magically obtains its own prices; the other has a fantasy market that magically makes its own laws. These ideas were new and challenging in the days when both were posed as viable alternatives to feudalism. But one busy and bloody laboratory of a century later, though, I think we can say that anyone pursuing these notions in their original form is either ignorant or self-serving.

The Great Depression and its accompanying war shocked us out of our previous romance with perfect markets. Today, Louisiana’s Governor Blanco–instead of displaying appropriate humility over the shockingly late and disorganized deployment of the National Guard–threatened her own rioting constituents with “battle-tested” troops “fresh back from Iraq.” From a world perspective, the situation is far smaller in scale, but the evidence of systemic flaws is no less damning.

I really recommend Robert Kuttner’s book Everything for Sale, an excellent industry-by-industry account of laissez-faire’s rise, fall, and rise in the United States. I’ve started re-reading it since I first got word that the dam broke.

An online discussion on the topic of David Mitchell’s prodigious Cloud Atlas led me to this post about post-hurricane Florida, in which we get a preview of what southern states might be like in future energy shortage conditions:

An underground economy quickly developed with ice as the pinnacular commodity. “People are fighting over ice!” she yelled into the phone. “I mean fist fights — right in the parking lots!”

“What are they doing with the ice?” I asked.

“It’s hot!” she cried.

“But the power’s out, so it will just melt in a few hours — right? Seems like ice would be a luxury item compared to food and just regular old water.”

“You don’t understand: WE NEED THAT ICE!” She cried. “Some of Germaine’s friends brought us ice from Naples in the back of their car” — such a trans-state delivery, I should point out, requires a three hour drive — “and when they got to our parking lot, people were clamoring to buy the ice from them before they got it up the stairs. This morning, David went to the store and there were police guarding the ice. They have to keep the hordes away. They’re scalping it in some places — for twenty bucks a pound!”

The extent to which order was deteriorating was surprising:

“Yeah — there was a truck coming down to Palm Beach with those army meals and some water, and it was hijacked. Taken before it got here.” Thus had Frances created modern-day brigandry right in the middle of suburban Florida.

Still, the post ends on a positive note, with the sort of heartwarming tale of neighborly generosity that we heard so much after the recent New York outage.

This article is the first time I’ve heard Cheryl’s Walmart theory repeated by a quoteable authority:

Walmart and Target, depending on your product market, control as much as 50% of the business in the United States (with Walmart expanding to the rest of the world aggressively). A large part of their success is based on being able to ship large amounts of product to stores located in the middle of nowhere at very low shipping prices. If it begins to cost more to ship goods, then it will cost more to sell the goods, and these store’s everyday low price strategy becomes ineffective.

Basically, transportation costs act as the ultimate limit to how big a business can grow. Economies of scale apply as you produce more stuff, but diseconomies of scale apply as you need to distribute more stuff. At some point, you will produce more stuff than you can profitably distribute, after which you can’t grow any more under existing conditions.

But if you could get somebody to subsizide your distribution costs–like, say, the United States armed forces–then there’s no limit to how big you can grow. In other words, the biggest big-box retailers are wholly dependent on current heavily-subsidized energy prices.

Devol, who is 78 and has clear memories of growing up with 11 brothers and sisters during the Depression, said it is easier to understand what is going on now “if you’ve been there before.”

A stunning profile of current conditions in southern Ohio.

I had some lean times after I moved up to Boston, but thanks to a good job and a low-overhead carfree lifestyle, my savings have been building back up over the past year or so. My relationship with Quicken has run hot and cold, but lately my financial strategy has mostly consisted of glancing at ATM receipts and brushing off the occasional thought that I should do something more productive with my spare change than leaving it in my checking account.

Lately, I’ve finally gotten around to doing some reading. The current inflation rate has been on the order of 2-3% lately, which means that money that you leave sitting around under the mattress or in a typical checking account is losing value at about that rate. Now, the way to make big money is to invest in volatile securities like stocks and mutual funds and the like, but I got burned quite a bit by them in the recent downturn. However, there are plenty of lower-risk savings products that will help your savings keep pace or exceed inflation while keeping your money relatively available to you if you need it.

The most common options are savings accounts, which are insured and generally allow ready access to your money; money market funds, which are not insured but also allow easy withdrawals; and certificates of deposit, which tend to offer better interest rates at the cost of only being able to withdraw your money after a specified amount of time (often 1-5 years).

If you check out bankrate.com (which is a pretty good reference on financial matters), you’ll see that current interest rates are pretty low. Most savings accounts only have something like 0.5% APY (annual percentage yield, the amount of interest you’re likely to earn on your initial deposit over the course of a year). However, there are a few online banks which are offering savings accounts around 2% APY, which is closer to the inflation rate. According to Bankrate, money market funds are also at around 2% APY right now. The interest rates on CDs depend on how long you’re willing to wait, from about 1.5% APY for a 1-year certificate to about 4% APY for a 5-year one.

(warning, pimping ahead) Last month, I finally opened a savings account with ING Direct, which is an online savings bank. They currently offer 2% APY on savings, with no minimum balance and no fees. The mailing they sent me gave me a bonus $25 just for opening the account and keeping some amount of money (again, no minimum) in there for a month. They don’t obviously offer that deal online, but they do have the PayPal-style thing where I can offer you the $25 bonus (and I get $10).

I’ve been very happy with my account so far–you can manage everything online, and you can easily transfer money between your ING savings account and your checking account at your local bank via EFT. I just got my first statement today (which is what reminded me about all of this), and I was pleasantly surprised at the amount of interest I’ve earned already. (OK, I’m done pimping)

There are several online banks that offer savings rates in that range, so I encourage you to check them out if you aren’t earning much interest on your money right now. And remember, if you’re carrying credit card debt right now, paying that off is usually the best investment you can make.

Here’s the most interesting statistic I’ve heard all week. (Never mind the wildfire stats, which the LA-area local news kept cheerfully plopping up onscreen–people killed, acreage burned, firefighters on duty, cost of firefighting, property damage, you name it–while being very stingy with the actual maps that told viewers like you how far they were from those up-to-two-hundred-foot-high, up-to-one-hundred-mile-wide, up-to-forty-five-mile-an-hour-travelling walls of fiery death. One came within a half-mile of our school at one point; at night it looked like something out of Lord of the Rings.)

Anyway, this article from the Economist tries to tally up the expense of American oil dependency, and comes up with this remarkable figure:

According to one American government estimate, OPEC has managed to transfer a staggering $7 trillion in wealth from American consumers to producers over the past three decades by keeping the oil price above its true market-clearing level.

Now, I’m not so sure that OPEC is actually able to act independently of the big Euro-American oil companies these days (I gather that the political independence of the OPEC countries is very restricted, compared to the 1970s, when Nasser’s Arab-Nationalist movement had real teeth.) But it’s the figure that fascinates me…

…it might go a long way towards explaining how the U.S. can pull in so much cash every year, but as a nation remain so (relatively) damn poor.

I’m staying with my uncle for a few days…he lives in a suburb of Philly. I’ve been talking with him about problem of chains and their drain on local tax dollars…he says that big-box retailers often buy the land their stores sit on, and then lease it to the local franchisee. Then, if the municipality tries to regulate them to boost local businesses or get more tax out of them, the big-box corporation threatens to sue under something called “takings law“–an old English law principle that says property owners can do what they like on their own land.

He also says that, on paper, a chain looks like a better tax revenue source than a local business, because they appear to have computerized, standardized systems for reporting payroll, profit, and so on. Naiive local politicians sometimes think that means more trustworthiness than a local outfit that works with cash and paper books, and they don’t realize that a national or transnational can easily enron their taxable local profit away.

His own town, he says, has pretty much given up trying to tax chains; their books keep breaking even–convenient, since profit is taxable and the IRS automatically audits a business that loses money seven years in a row. So half of the town government’s budget comes from income tax, which hurts poor people most.

I was reading The Great Good Place to Justina tonight as she worked on her puppets, and when I got to the part about restaurants trying to increase profit margins on every little thing (for example, pushing dessert wines instead of after-dinner coffee), it reminded her of this story. Apparently, Coca-Cola once ran a campaign to help restaurants combat “the water problem”–that is, the tendency of some people to prefer drinking unprofitable plain tap water rather than high-margin branded sugar water. More recently, the Sugar Association (!) has been trying to put the squeeze on the World Health Organization for advising people to watch their consumption of sugar-enhanced foods.

I just got John Gray’s False Dawn: The Delusions of Global Capitalism from the library, and while I haven’t read enough to judge the book as a whole, this sentence from the first chapter just struck me:

The free market created a new type of economy in which prices of all goods, including labour, changed without regard to their effects on society.

Exactly!

“I know that you share the president’s and my commitment to maintaining the full faith and credit of the U.S. government, especially at this critical time…”

Uh-oh.

Republicans will push to approve the Bush administration’s request for a higher debt limit, citing the need to protect the country’s excellent credit rating.

We have a credit rating. WE HAVE A CREDIT RATING? Fuck.