Israel and Palestine: A Seemingly Never-Ending Conflict

When Donald Trump had decided to move the US embassy from Tel Aviv to Jerusalem it happened to the dismay of many Palestinians, who had been protesting extensively against Israeli authorities controlling them in a chokehold, which is most severely the case in Gaza. Gaza is a densely populated strip of land, which is suffering from severe economic isolation coming from the heavy Israeli sanctions, control of borders, airspace, sea access and finances. Israel had justified this stance because of the fact that the Hamas, which has effectively controlled Gaza since 2006, had sent rocket fire and suicide missions targeted at Israel and not recognizing the state of Israel. But the strength of force is often quite one-sided, because the overarching power in the form of an occupying army and economic controls are exclusive to Israel.

Border protests in Gaza have begun in March 30 of this year and demanded that Palestinian refugees and their descendants be given the right to return to Israel and now to oppose the movement of the US embassy to Jerusalem. The outcome of the border protest thus far is that 111 Palestinian protesters (mostly children) had been killed and 12,000 had been injured. In comparison, 1 Israeli soldier had been wounded and none killed.

There is a bad catch-22 in Gaza, because as long as Hamas does not recognize the state of Israel and angry Palestinians are protesting against their blockade, Prime Minister Netanyahu has the excuse to crackdown militarily. But quieting down is also not a viable option given the continued chokehold of the Israeli authorities. For Hamas, the end game is to return to pre-1967 borders, which was the year when Israel had taken the West Bank and Gaza, which are territories that it effectively controls (despite the Israeli withdrawal from Gaza in 2005). This is not so realistic given that there are so many Jewish settlements interspersed in the West Bank. The end game for Netanyahu’s Israel is to build more settlements in the West Bank and suppress any discontent in Gaza with military presence if necessary.

This attitude is merely a recipe for a further never-ending conflict, which reaches back as early as the late-19th century, when the number of Jewish settlers (mostly from Europe being shaped by Zionism) increased, thus competing for spaces with the Arab population. The conflict intensified with the declaration of the state of Israel (following on the heels of the Holocaust), the conquest of territories beyond what the UN mandate had provided, the 1967 conquest of Gaza, West Bank, Sinai and Golan Heights, and various Intifada (Palestinian protest, resistance) since the 1980s.

With regard to the resolution to the conflict, the bygone era where peace was possible seem far away. Gone are the 1990s, when Yitzhak Rabin (Israeli prime minister) and Yassir Arafat (Palestinian Liberation Organization chief) sat down to sign the Oslo Accords, which allowed for the creation of a Palestinian political authority which was recognized by Israel. Gone are the early-2000s, when there was some chance to negotiate a two-state solution during the Camp David Summit. Now there are no pretenses of compromise, as Hamas refuses to recognize Israel, and right-wing Netanyahu’s hold on power over the past decade has made any overtures to compromise impossible. The Trump presidency has added more fuel to the fire, as he gave the American right-wing evangelical voters and rich Jewish donors to his campaign (especially Sheldon Adelson) what they wanted: the cancellation of the Iran nuclear deal, which they hope could weaken Iran’s increased regional influence (like in Yemen, Iraq, Syria or Lebanon); and now the movement of the US embassy to Jerusalem, which sends the message to the Palestinians that what the international community regards as a politically divided city really belongs to Israel.

The lack of an even-handed approach by the US (which was never even-handed given the huge military aid to Israel and the refusal of UN security council sanctions against Israeli transgressions such as on the settlements) will result in more conflict, as the weaker side (Palestinians) receive no fair stake in the table. Lacking a stake, they feel they have nothing to lose by protesting, fighting Israeli security authorities, carrying out suicide attacks and throwing Molotov cocktails. The deteriorating economic situation, following the original Israeli withdrawal of 2005, the election victory of Hamas in 2006 and the Israeli blockade and sanctions, had created a veritable humanitarian crisis. The only thing that props up the Gaza economy is foreign aid, chiefly from US, EU and the Arab League.

Outside observers might argue in Samuel Huntington fashion that the driver of conflict is religious and cultural. Jews and Muslims can’t get along with each other based on different interpretations of sacredness. But this is a rather strange explanation as the Northern Irish who were divided by sectarian lines (Protestant-Unionist vs Catholic-Republican) reconciled with the Good Friday Agreement and no one would nowadays claim that these religious divisions are salient.

While it is true that the Jew and Muslim divide was the beginning of the conflict and became the socially reinforced mental divisions in daily interaction, the real trouble comes from the question of who wields political power. In a peaceful state, the multitude of factions, tribes and interests rotate in power, emphasize national unity when holding political power and respect the rights of the political minority. In a civil-war state, the political leaders of one group mark themselves off from another group, and then argue that the other group has no right to exist, or at least not in this given territory. Another problem is the endless cycle of retaliation, as the death of one of my relatives needs to be avenged by the death of your relative. The cycle of hatred and violence can only be broken if powerful external actors broker a peace, and when the internal actors, i.e. their political leaders, believe that it is possible to negotiate peace and a lasting two-state solution. But with an erratic Trump foreign policy such a rational foreign policy appears to be unfeasible.

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Warpath in Iran vs. Peace in Korea?

In a rather confusing turn of events, we might see a resolution to the Korea conflict, but might be drifting into war over Iran. There are very different strategic considerations which would favor each political outcome, but there is sufficient evidence to suggest that the arbitrary behavior of US president Trump plays a substantial role in this uncertainty in international relations. Pre-existing political fault lines in addition to short-term political calculations of Trump will shape how the contemporary political challenges are dealt with, and it will really be anybody’s guess how it will turn out.

Up until last year, we had been contemplating the escalation toward a world war based on the heated verbal exchange between North Korean leader Kim Jong-un and Donald Trump (Liu 2017). Kim was threatening to attack a US island, while Trump had responded with off-the-cuff remarks to inflict ‘fire and fury’ on the North Koreans (which was not incidentally the chosen title for the Michael Wolff expose book of the Trump administration), then doubled down in the UN speech by promising to inflict the “total destruction” of North Korea if “rocket man” didn’t know how to behave himself, i.e. continue to do ballistic missile and nuclear tests.

But in a surprising turn of events, Kim decided to de-escalate. Now that he had acquired nuclear capacity, he thought he would have an effective bargaining chip to get South Korea and the Americans to hand them more economic concessions. Another argument is that the mountain where the atomic tests have taken place has collapsed, thus making it technically difficult to continue the tests (McCurry, 25 April 2018). Kim promptly cancelled all future nuclear tests and scheduled a meeting with the South Korean president Moon Jae-in on the Demilitarized Zone (indicating the continuing war status between both Koreas).  Moon is eager for hammering out a peace agreement, very much unlike his predecessors. It was the first meeting of each country’s leader since 2007, when there were futile talks to get the North Koreans away from nuclear weapons. Perhaps this time it will be an earnest attempt toward reconciliation, though we should not forget that it cannot be in Kim’s interest to surrender toward reunification.

Any attempt toward reunification would be led by South Korea, which not only has the larger relative population, but also the economic wealth to support a deeply impoverished population in the north. It would be similar to German reunification, though the burden on the south will be larger, as the west to east population ratio in Germany was 3-1 while in the south-north in Korea is only 2-1. In the first stage of reunification, West Germany sent its civil servants to occupy the bureaucratic positions held by East Germans. They then created a “Treuhandfond”, which took over the unproductive East German industries and sold them off, which resulted in massive job cuts, which was quite a bad welcome of East Germans to capitalism.

To cushion the difficult economic adjustment, the federal government also imposed a solidarity tax on West German taxpayers, which has generated 343 billion euros in subsidies to East Germany, a large portion of which is concentrated on paying welfare, maintaining city services, strengthen universities and build infrastructure. West German taxpayers are hoping to get rid of the solidarity tax nearly 30 years since inception, yet East German economy per capita is only 72% of West German levels, so it is hard to argue for less support to the East (though the critic of the West is that a declining fraction of the solidarity tax is flowing to benefit the East, and more goes toward other projects and budget consolidation, Chase, 9 November 2017).

The Koreas are still quite far off from contemplating reunification, but it won’t come cheaply. And if Kim is unwilling to hand over power, it will take some time before reunification is possible. It could just be that the Kim regime is temporarily bluffing to buy themselves some more time until they have developed a new nuclear testing site. But Donald Trump sells himself as the savior by agreeing to meet with Kim in Singapore in June. Secretary of State Mike Pompeo has already traveled to Pyongyang for a personal encounter with Kim to prepare the ground for meeting between the two leaders. The goal is to denuclearize the Korean peninsula and declare an end to the Korean War, which is still happening on the books (and sometimes Korean soldiers along the DMZ get killed because of altercations).

For China, a denuclearized Korean peninsula may be hailed as a good outcome, which could contribute to more stability in their backyard. On the other hand, the prospect of good North Korea-US relations and potential reunification could push US troops up to the Yalu river along the border of China. Russia has had to make that experience after all the former Warsaw Pact countries have joined NATO (exceptions are Belarus and Ukraine, though the latter now has a pro-western government with active NATO collaboration). China will, therefore, hope to continue having a place in the bargaining table.

If the picture in Korea is slightly optimistic, then why is it deteriorating in Iran? The 2015 Iran nuclear deal (Joint Comprehensive Plan of Action), which was negotiated by Iran along with the US, UK, France, Germany, Russia, China and the EU, had required Iran to give up its nuclear program, enrich very limited amounts of uranium (primarily for industrial purposes) and allow full monitoring by foreign agencies. In exchange, the economic sanctions on Iran would be lifted. From the US perspective, the deal was negotiated by President Barack Obama and his secretary of state John Kerry. In the campaign trail, most Republican presidential candidates, including Trump had vowed to overturn the Iran nuclear deal, because they thought that the restrictions on uranium enrichment were not strict enough. They had bemoaned the time limit on the provisions (gas centrifuges are restricted for 13 years). But clearly this was an excuse. The Iran nuclear deal had just been cancelled by the US. Why is Trump so hawkish on Iran?

First, he had fired Stephen Bannon as personal adviser and appointed John Bolton as national security adviser, which gives an indication of wanting to be more confrontational. Bannon represented the white nationalist wing, which campaigned for domestic nation-building and shunning foreign political interventions. These vague promises generated the enormous primary and general election support for Trump, which put him into the White House. Bolton, on the other hand, has been calling for war against Iraq and later against Iran. He openly touts regime change in the Middle East. Any sane leader would keep him as far away from any position of power as possible, but George W. Bush and now Donald Trump have put him in charge. Second, the budget request, which increased the public budget deficit to over $1 trillion, included enormous funding increases for the military. Why would you invest in the military if not for war?

A third important factor is related to geo-political considerations of Israel and Saudi Arabia. Both countries hate the Iranian regime, and think that their outsize political influence, military/ logistical/ financial support in Lebanon, Syria, Bahrain, Yemen and Iraq have undermined the interests of Israel and Saudi Arabia. Israeli prime minister Benjamin Netanyahu has openly torpedoed the Iran nuclear deal, seeing it as unwarranted support for an enemy regime. The US has traditionally sided with Israel and Saudi Arabia, which was no different from the Obama administration, though Obama was often willing to ignore the hawkish positions of their allies in the region.

Fourth, Iran had converted their oil transactions from the US dollar to the euro (Jalili, 18 April, 2018), which could undermine the reserve currency power of the US dollar. When Saddam Hussein quit the US dollar in favor of the euro in 2000, he was invaded by the US only three years later upon which oil trade became reported in dollar again (Liu 2014). To some extent, the US had to blame itself for this step, because continued US sanctions, which the EU had long ago lifted created more currency uncertainty between the Iranian rial and the dollar, so it was more predictable for the Iranians to switch their trade accounts to the euro.

But what are the prospects for war? It appears to be much slimmer than in the case of Iraq.  First, Iraq was a weaker military power than Iran. Iraq only had 25 million people when it was invaded, while Iran stands at 80 million. Second, during the Iraq invasion the Bush administration could still cobble a multinational coalition of troops from 46 countries, including big countries like UK, Japan, Spain and Italy.

But who will support a war with Iran now? When Trump won the elections, German chancellor Angela Merkel promptly gave a speech to assert that the EU had to rely more on its own and less on the US. Trump’s disparaging comments on NATO were driving her statement. French President Emmanuel Macron would favor continued rapproachment with Iran, partly because of the Iranian shift to euro trading. The Iraq War had not been in the interest of the EU, but now it will be even less so. China and Russia have already indicated their continued support for the Iran agreement.

The key link will be the EU. EU foreign commissioner Federica Mogherini issued a statement supporting the continuation of the Iran nuclear deal. Foreign minister of Iran, Javad Zarif, had been dispatched to Europe to confirm the continuation of the nuclear deal. Some critics suggest that the deal can’t be kept alive without the support of the US, but the Paris climate accord also continues without the US. The crucial player is the EU, which by refusing to surrender on the terms of the agreement can neutralize US actions. Trump might be expecting that the Iranian regime will break the agreement and enrich uranium, which would give Trump the justification to start an Iran War. The irony can’t be lost on observers. Step one: give up the agreement. Step two: motivate Iran to enrich uranium. Step three: declare war on Iran. Pour out the gas canister, light the fire and burn down the building, while blaming it all on the other party. This is how deranged the US political leader is.

What will be the ripple effect of the US pulling out of the Iran deal on North Korea? What signals are sent to Kim Jong-un? Trump thinks that the crackdown on Iran will remind Kim to be compliant with Trump’s request for denuclearization, but if anything the opposite incentive is created. By abrogating on an international agreement, there will also be no reassurance for Kim that his compliance with US demands will not result in a US abrogation. This might kill any multilateral agreements to solve the Korea crisis.

One can only hope that the international problems in Iran and North Korea can be contained to manageable levels, though this sounds only feasible when all parties take on a more rational frame. It is startling that one wishes back Henry Kissinger (despite the many deaths he was, in part, responsible for causing all over the world) in an era of Donald Trump.

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The Gates-Buffett-Bezos-Zuckerberg Bullshit Job Creation Act

I had this rather strange dream that I had been summoned to meet the country’s richest people (Gates, Buffett, Bezos, Zuckerberg) and put in charge of a giant fund endowed by them to create a giant basic income program funded from the successive sale of half of the stocks held by these individuals (which generates close to $200 billion, which still leaves them with nearly the same amount in net worth). But because they also believed that people had to be made useful they made the receipt of this basic income dependent on people doing “something useful”. They would leave the details of the program to me.

I was sweating as I approached the boardroom, where I was supposed to give a powerpoint and distribute an accompanying document, which outlines my plans for the many low-wage workers and unemployed individuals, whose basic economic needs could now be fulfilled with the basic income. To gain more legitimacy, the inactive Congress, which, thus far, can agree on fully funding a military budget to fight foreign wars and give tax breaks to the rich, but not on benefiting the working class with better social policy, had also sent a small delegation (including Senator Bernie Sanders) to attend the meeting. Politicians were hoping to use the oligarch money to codify this donation as law, and perhaps even expand the program at a federal level. At least that is what Sanders hoped to do, co-sponsoring this legislation in the senate.

I was even asked to propose what to call the law. I was baffled for a while but then replied confidently, “The Gates-Buffett-Bezos-Zuckerberg Bullshit Job Creation Act”. I could see the laughter in each of the oligarch’s faces. Zuckerberg had objected that he wanted to be somewhat more low-key, but I had insisted on that name, because it should be clear where that money had come from. There is a little bit of self-deception here, because any person can only get rich by taking advantage of many customers and workers, so I was aware that the money of the oligarchs is returning the money they had taken from society, but I was willing to stroke their egos for the good cause.

Gates was more troubled by the latter half of the name. I then briefly summarized the research of the anthropologist David Graeber (2018), who had remarked that the vast majority of jobs that are created in the contemporary service economy are regarded as utterly useless to the workers and the society. These may be telemarketers, PR lobbyists, corporate lawyers or financial accountants. Take any service and then find things to do for people rather than how to help the society (like collecting garbage, curing patients or teaching students). I understood that Gates was funding projects worldwide, where he thought that by curing basic diseases via better sanitation and access to medicine in poor countries that the people will help others after having themselves helped. It was hard to drill into his head that the vast majority of jobs are utterly useless to society, but that conservative political norms would prohibit us to call out the bullshit jobs for what they are.

While by using the names of the oligarchs I was lying and flattering their conscience, I decided to be brutally honest about the intention of what my proposal was going to do. My first preference was to get a universal basic income grant, which would place absolutely no restrictions on what people could and could not do with the money. But the oligarch requirement was for the people to do something “useful”. The funders were also not interested in giving every person in the country the basic income, but selected their targets to be the bottom fifth of the income distribution. I suppose they were hoping that the politicians would jump at it and have the state fund a basic income for the rest of the population. Only Sen. Sanders gave me an approving nod, when revealing my intentions.

So what kind of bullshit jobs did I plan for the masses? Everyone would be given a basic income grant, but they have to show up once a month in a local gathering, which may happen in a church, school or any other institution and report what they have done this past month. Some people may do a formal powerpoint, others just talk about it, but it has to be a coherent oral presentation of at least 10 minutes. There is no restriction on what one can report on. You can compose rap songs and impress the 20 people in the gathering with your rap skills. You can cut your own and your neighbor’s grass and show images of having done so. You can go kite-fishing and try to teach others the technique of how to do it. You can go on a Harley Davidson biking trip with your buddies and show videos and photos of your exploits. You can go bird watching in the forest and explain the different features of birds. You can volunteer in an after-school program teaching kids how to read. You can write a crime fiction, and read the most salient passages to the group. You can go the Muslim hajj in Mecca or walk Santiago de Compostela in Spain as Catholic, and share your religious experience.

To make sure you don’t get bored, the computer assigns you to a new group of 15-20 people all over the country. For people with severe disabilities, there is the option to restrict meetings to within one’s living area, but for the rest of the basic income recipients they will be required to travel, and when their location for the next meeting is disclosed, they also receive a plane/ rail/ bus ticket funded by the oligarchs to reach that location, including two nights of accommodation in a budget hotel. When the presentations are finished, there would be a funded restaurant meal for all participants before taking off later that afternoon or the next day.

Some people might counter that there really is no bullshit job that people are subjected to. After all, if I only have to share what I am passionate doing to strangers, then this cannot be considered bullshit work, right? Yes, but the fact that you are required to report back to them or otherwise risk losing your benefit makes it a bullshit job. A more ideal version of the basic income would be to do whatever you want to without having to be accountable to others.

But that design could still satisfy the funders, who want their beneficiaries to still do something useful. I did not want people to go through unnecessary busywork like emptying trash cans on the ground and then picking it up again. I did not want to hire an army of security guards, who would stand around building entrances looking at each other. I did not want to put people into administrative offices, so they can be glued to a desk, shuffle papers pretending to be busy, and obsessively check out their emails and Facebook. Even the useful work which lacks enough people doing things like advocating for homeless persons or alcohol addicts, I would have trouble forcing people to do it. If they decided to do it on their own account, because they now get the basic income grant, all the better.

So I think I have a proposal that satisfies the big funders while giving people still enough freedom to do what they want. The funders asked me to leave the room, and I waited half an hour in the hallway. When I was called back in, Bezos said, “You’re fired.” It came a bit as a shock, and my mind was looking for potential responses, but all I could think of were lawyers coming up with counter-arguments. The Socratic method. Where is the Socratic method? But the big smile on his face made me feel at ease. Buffett replied, “Relax, Jeff is just pulling your leg. You’re hired.” I was pulled a Donald-Trump.

In the background of this big room, there was a big flatscreen TV with CNN running. The camera honed in on President Trump during a press announcement, “Nobody takes more care of the little people than me. I take care of the little people. Believe me. No one can do that better than- And I am telling you, we are going to do this huge program, fully funded. We have this program fully funded. Trust me. No one has done before what I am about to do now. People are like ‘Donald Trump can’t do this thing. He is not going to be able to do this thing.’ But they are wrong. They will say wrong things. The mainstream media will tell lies and go on a witch hunt against me. They are doing a witch hunt. They say it’s Russia, Vladimir Putin. I got along really well with Putin. We negotiate, and I get along very well with Putin. So are you ready for it? Are you ready? I, Donald J. Trump, am going to announce the creation of a universal basic income. We want to do the universal basic income [when reading these three words, one can see this is the only time Trump is on script and he says it slower than the rest of his speech]. You know what the best thing about it is? The best thing? I came up with it. You know, I should be getting the Nobel Prize for it. The Nobel Prize.”

We all had a great laugh.

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The Charismatic Musician: Nile Rodgers

I had previously pointed out that Elton John, whose career spanned several decades was a talented musician, who had derived much of his emotional energy from live performances (Liu 2018). For social theorists, the greatest satisfaction comes from a theoretical prediction that is more generalizable, and I have made it easy for myself by picking another interesting and fascinating musician and producer Nile Rodgers. There are some commonalities and some differences in each of their characteristics, but they are not so different overall.

John is white British, while Rodgers is black American. John plays the piano and integrates it into pop music, while Rodgers plays the guitar (his Fender ’59) and is associated with funk, disco and the early version of Hip Hop. John composed the music (with the help of his friend Bernard Taupin) and became a solo artist, which Rodgers also did with the help of his friend and bassist Bernard Edwards. But Rodgers musician career in the funk band Chic was disrupted by the Disco Sucks movement in 1979, which he described in his autobiography as an uprising of white male rock fans against disco music, which was attached to racial minorities, women and gays. Rodgers continued writing and producing music, first for black artists (like Sister Sledge and Diana Ross), followed by mainly white artists (David Bowie, Duran Duran and Madonna being the most prominent ones).

John and Rodgers also shared their proclivity for drugs and alcohol, which had nearly destroyed their lives. Once they reached their mid-40s, their bodies could no longer handle that lifestyle and they checked into rehab, and as such got another lease on life. Most importantly, John and Rodgers had shared an obsession with their musical work. John would spend a balanced time recording songs in the studio and doing live performances in concerts, which he thought had also saved his life, because otherwise he would have spent even more time getting wasted. Rodgers did very few live performances, and focused most of his energy in the recording studio putting together the music and working with other artists.

To become an expert, one would have to spend a lot of time doing the same things and gradually become very good at what one is doing. Rodgers and his colleague Edwards had come up with the idea that the music they were writing contained some deep hidden meaning, which is the amalgamation of their musical influences and thinking about producing new music with it. But they never really specified what they meant by this deep hidden meaning. To some extent, it becomes difficult to verbalize the creative process, which from the consumer end can only be judged by the product.

Funk and disco music, which brought many people regardless of their skin color onto the dance floor. What is the secret sauce? Firstly, it is the combination of the guitar and the bass, which were complementing each other very well, which is also related to the fact that Rodgers and Edwards very terrific musicians. Second, the guitar has a constant strumming pattern, focusing the picket on three strings and frequent scratches, which means to lift the finger slightly from the strings, but still touching them. The mix of normal strumming with scratches, and the constant repetition of the 4 chord structure produced the very attractive tune that would take people out onto the dance floor. Third, while there were lyrics and singers, those would be secondary to the combination of guitar, bass and drums (with the occasional electric piano or violin tossed in between).

Even in the music writing process, Rodgers usually single-handedly writes the songs with some input by Edwards to make it even more appealing while Sister Sledge and the Chic singers were just handed the final product to perform. With many of the other musicians Rodgers had worked with, there was more interchange and input of the musicians, because the general song idea would come from the artist, but it was still Rodgers who would take the clay and form it into shape.

The creative process with David Bowie is a case in point. Bowie took out his guitar and played a country-music style riff, which he wanted to call “Let’s Dance”. Rodgers freaked out and said this can’t possibly be played. He asked Bowie to play the riff again, so that Rodgers could write it down and reflect on it. Rodgers then went to his room, picked up the guitar, looked at the chords that Bowie played him, and began experimenting. When he liked what he composed. he played it to Bowie, who was immediately impressed (which shows the great musical quality of Bowie, who could tell the difference between what music could work and what would not). They immediately hired a band and recorded the song and the album on the spot, and the end result is “Let’s Dance”.

Madonna had also made a deep impression on Rodgers. When they first met in the studio they sat in the room and listened to Madonna’s previous records. Rodgers reflected on the harmony of the instruments and the style of Madonna’s voice, but when they were finished listening, Madonna looked very seriously at Rodgers and said, “If you don’t love all my music, then we can’t work together.” That came as a great shock to Rodgers as each side had just agreed to sign a record deal (which provided very hefty royalties to Rodgers once the album became a hit record). Rodgers said, “I don’t love all of your music, but once we are finished recording I will love all of them.” That was apparently enough to reassure Madonna. Madonna was a very decisive musician, often making verbal abuses to Rodgers’ recording team when things were not done her way. One important disagreement was with respect to the selection of the lead single, which would become the name of the album. Rodgers thought “Material Girl” should be the lead single, while Madonna insisted on “Like a Virgin”. Both songs became great hits, but because it was Madonna’s album her view prevailed.

But musicians rarely made a mistake when they had decided to collaborate with Rodgers. Rodgers had a great sense of what music would catch fire and which didn’t, and that is what defines a great musician. Most musicians in their old age begin to take it easy. They might still be performing to get a thrill, but it would be the old songs that become heated up, just like Billy Joel, who stopped composing new things in the early 1990s. But for the workaholic Nile Rodgers that was inconceivable. In 2013, his hit single “Get Lucky” that came out of collaboration with Daft Punk and Pharrell Williams brought him back to prominence. Daft Punk, the two French musicians in robot outfit, had approached Rodgers, and they were eager to collaborate with Rodgers, thus bringing the funk back alive (it was never really dead, maybe dormant over some stretches of time). “How did you make the Chic record?”, Daft Punk had asked Rodgers. Rodgers took the basic riff for Get Lucky and created two guitar riffs recorded separately, but played alongside each other, thus producing the distinctive four-chord structure in Get Lucky (for which I recommend listening to the long version on the album, not the radio version, see here). What I find remarkable about “Get Lucky” is that the lyrics is awful (sorry Pharrell), but it is the instrumental which makes it so worthwhile listening to. There, indeed, is a deep hidden meaning.

The decisiveness and quickness with which Rodgers had justified his choice of chords and structures to the song (“Good Times” by Chic was composed the night before it was recorded) he had explained with respect to the competitive music business, where you have to get things right immediately, because there wasn’t the advanced technology that allows for the easy recording and manipulation of the music. But this quickness may also just be a reflection of the musical genius of Rodgers. Even Elton John did not take much time to compose his songs. He would get the lyrics faxed over by Taupin, and he would sit on the piano just hitting the keys, and either figuring the song out in 15 minutes or throw away the lyric.

Rodgers was once asked in an interview about how he thought about talent and genius, and he used the Albert Einstein metaphor, who created the relativity theory in his mid-20s, and then spent the rest of his life defending it. There is not much space for creativity and it has to be fully exploited. Rodgers is now well into his 60s, but he can talk about his formative time at Chic in the late-1970s as if it just happened yesterday.

Thus, to be defined as a musical genius- the charismatic musician- it is not enough to be a good and passionate instrumentalist (though, no doubt a prerequisite), but one has to have a quick, discriminatory taste and judgment, and also be connected to the right networks at the right time. For posterity, the benefit comes in the form of addicting music. (My personal Nile Rodgers playlist is here).

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Hungarian Elections and Viktor Orban

This Sunday Hungarians were asked to vote in the parliamentary elections, which the national-conservative Fidesz party won with a larger majority, thus retaining their two-thirds constitutional majority. The ruling prime minister, Viktor Orban, had done so much to consolidate his power and shut out and weaken the power of unfavorable institutions or fill them with his associates. The seeming invincibility of Fidesz has resulted in a strange electoral coalition among all the opposition parties (Jobbik, the socialists or MSZP and Green LMP) in the mayoral election of the southern town of Hodmezovasarhely, which led to the victory of Peter Marik-Zay, who led the grass-roots Country for All movement (Witte 2018). Such electoral coalition is unlikely to be repeated at the national level, where Orban’s Fidesz had controlled the levers of government since 2010.

What explains Orban’s political power? The first reason, as indicated above, is the fracturing of the political opposition. There are two smaller parties (the Greens and the Christian KDNP, the latter of which sits as junior partner in the coalition), and two larger opposition parties, including the socialist MSZP and the right-wing, anti-immigrant Jobbik. It is rather unlikely for the MSZP and Jobbik to enter a broad electoral coalition given their philosophical disagreements. The second reason is that the credible alternative to Fidesz, the MSZP had itself been discredited by corruption and bad economic management during the 2008 economic crisis, which happened during its rule from 2002 to 2010. Jobbik, which contested its first election in 2006, may be considered a credible right-wing challenger, running on a platform of ethnic nationalism, and gaining 20% of the vote in 2014. But even here, Orban outgunned the anti-immigrant platform of Jobbik by harping on law and order, such that Jobbik has to shift to left-wing economic policies to get popular attention.

The third reason is the somewhat successful economic record of the Fidesz-led administration, which feeds its job growth primarily from subsidies in the EU budget for economically weak regions in the EU (from which poorer countries like Hungary benefit disproportionately). This is all the more ironic given that his declared enemies are an all-powerful Brussels and the liberal cabal financed by George Soros, a Hungarian-American investor and philanthropist. That is perhaps the fourth reason for Orban’s political power: he permanently agitates against some external enemies, whether it is the liberal establishment elite, the European bureaucrats or the refugees that “invaded” Hungary via the Balkan route in 2015 and 2016. Among a frightened and angry electorate that feels left behind by economic globalization and the rapid pace of change in a neo-capitalist society, which was communist for two generations, this agitation seems to work quite well. The fifth reason is that Orban’s pan-Hungarianism, which resulted in the handing out of hundreds of thousands of Hungarian citizenships to ethnic Hungarians in neighboring countries boosted the electoral fortunes of Fidesz, which receives almost all the overseas votes (95%).

I want to explore a sixth reason, which is related to the charisma and dogged determination for power of Viktor Orban. He has been the face of Fidesz since it fought its first election in the post-communist era in 1990. It was not clear initially that Orban would become a power-hungry politician. During his university days he wanted to be an academic intellectual. He was born into a rural lower middle class family in 1963 and was interested in communism, but his military service had disillusioned him from communism.  In 1988, at the age of 24 he became one of the founding members of Fidesz, the Alliance of Young Democrats, which initially only admitted people below the age of 35. The vision was clear: usher in liberal democracy into the decaying communist structures.

There were two factors that favored the end of Hungarian communism: first, Mikhail Gorbachev’s takeover of power in the Soviet Union in 1985 displaced the old generation that had grown up under the yoke of Stalin and initiated liberal reforms in the economy and the polity, which was a signal to the other Warsaw Pact countries that the Soviet Union, which still had hundreds of thousands of military troops stationed in Eastern Europe, would not use violence to suppress communist regime critics. That was a huge blow to all communist leaders from Honecker in Germany to Ceausescu in Romania. Orban himself became emboldened enough during a speech in the reburial of Imre Nagy on June 16, 1989, the tragic Hungarian leader, who was felled in 1956 by invading Soviet tanks which crushed the Hungarian uprising, to demand free elections and the removal of Soviet troops from Hungary. That speech brought Orban much fame in the country and perhaps made him the undisputed leader of Fidesz. In fact, Orban has been the only Hungarian party leader, who has consistently fought every single election since 1990.

The second reason was that Hungary became known for its goulash-communism approach, especially during the long rule of Janos Kadar, who was supposed to be a Soviet henchman after crushing the Hungarian uprising. The essence of goulash communism is to retain broad state ownership over the economy, but relax some central controls by allowing individuals to trade in the market, which resulted in a somewhat consumer-oriented marketplace. In the political sphere this meant that there was some freedom of speech (as long as critique was not directly addressed at the ruling government) and even freedom of travel. As such, it was not too far fetched for Hungary to transition into a capitalist democracy once Soviet control relaxed.

In the fall of 1989, Orban had accepted a Soros-funded scholarship to study politics in Pembroke College, Oxford. It is all the more ironic that Orban would turn so drastically against his funder in order to score political points. But only four months into the course (which really means after 8 weeks of courses, or one trimester- Michaelmas), Orban disrupted his studies to contest as leader of Fidesz in the first parliamentary elections scheduled in 1990. With only 9%, Fidesz only became the fifth-largest party, and Orban became opposition leader. In the following elections in 1994, Fidesz only received 7% of the vote. Orban realized that he had to change his strategy.

Instead of promoting liberal democracy (which had de-facto been achieved with the introduction of elections), Orban shifted to a more right-wing nationalist platform, which fellow party leaders Peter Molnar, Gabor Fodor and Zsuzsanna Szelenyi disagreed with. These more liberal leaders then left the party, leaving the party to Orban. Was Orban a plain racist, who was using his early support for liberalism as an excuse to become elected to power and then promote an anti-immigrant, anti-foreign agenda? I have not found any evidence in favor of this reasoning, but we can state that the rightward shift of Fidesz came from Orban’s belief that political power can only be attained when voters can agitate against an external enemy. Carl Schmitt would have been proud of Orban.

The following exchange that is quoted in BBC (2018) is quite instructive

“We were sitting in the Angelika cafe, across the Danube from parliament,” economist Peter Rona remembers. Orban was describing how he wanted to turn Fidesz into a modern conservative party, but Rona warned of the danger of abandoning the “modern” at the first sign of electoral trouble.

“‘I will not fall into that trap, but if necessary, so be it,’ replied Orban, to my surprise. What mattered to him was to win power, and keep it, at any cost.”

Orban’s electoral strategy to channel the mass resentment against foreign investors, who were not interested in the unproductive socialist-era factories, resulting in a rise in unemployment, and gained sufficient electoral support in the 1998 elections to win power despite fewer electoral votes (because of winning more constituencies, especially the rural ones). Upon election, Orban pushed for lower taxes and lower social insurance contributions. He abolished university tuition fees and reintroduced universal maternity benefits. However, the Fidesz government also continued budget consolidation from the previous administration and did not reverse the privatization begun under the previous administration, which is in line with the liberal economic policy preferred by the EU (which Hungary was about to join) and the IMF.

Orban promptly lost the next elections in 2002 and was pushed into opposition (Fidesz got the most seats, but the socialists formed a coalition with the Free Democrats). This had enraged Orban so much that he vowed not only to return to power later on but also to change the institutions to make it difficult for the other opposition parties to defeat him again. So much for his avid demand for democracy from his student days in the 1980s! Orban doubled down on the national identity agenda, hired a communications guru to talk like the common man and received generous funding from his former schoolfriend Lajos Simicska to finance the next elections (Simicska’s companies were then handsomely rewarded with generous government contracts once Fidesz returned to power). Fidesz was defeated again in 2006. The next opportunity for power came with the 2010 elections after the poor handling of the financial crisis in 2008 of the socialist government (unemployment increased, while corruption charges against high administration officials blew up).

Once back in power, Orban went to the EU and demanded more time to tackle the budget deficit, but was rejected by Brussels, which fueled his rage against the EU. To plug the budget hole, Orban increased taxes on foreign companies, a bank transaction tax and mobile phone charges. He also forced a conversion of private pensions into public pensions, which immediately made funds available for the administration. A 5.5% of GDP budget deficit in 2011 was lowered to 1.6% in 2015. His economic agenda was to reduce unemployment with the help of public works schemes financed by the EU. The emigration of unemployed workers also helped reduce tensions in the domestic labor market, though it created a brain drain of higher skilled talent. Employment was further boosted by slashing welfare for the long-term unemployed, though family benefits continued to increase in the hope of countering the low birth rate (which increased from 1.34 to 1.44 from 2010 to 2015). The government implemented a flat tax and a very high VAT, following in line with liberal policy prescriptions. What endeared voters to Fidesz was that the majority of the tax increases (with the exception of VAT, which is a consumption tax) were focused on foreign banks and commercial chain stores rather than the general population (Financial Observer).

To realize his power consolidation, Orban instituted a new constitution, which stressed nation state and family. The Constitutional court was weakened, the TV and radio news media were put under direct state control, and ethnic Hungarians in neighboring countries were given citizenship. Orban also purged opponents and critics in the civil service, state companies, schools and hospitals. NGOs were put under tight supervision, and the Soros-funded flagship university Central European University is threatened with outright expulsion, which motivates the university officials to open up a branch in Vienna. Finally, electoral reform reduced the parliamentary seats from 386 to 199 and abolished second-round runoff elections, which has so far favored Fidesz.

In a mature and consolidated democracy one would think that rabid nationalism won’t work, but even this cozy assumption has been shattered by Brexit and the Trump elections. Western capitalist countries seem to have a problem to deliver a basic standard of living for the masses. In the Hungarian case, it might be true that greater western corporate investments have created growth and needed jobs (especially from Austrian and German firms), but a more market-driven labor market also means more uncertainty relative to the experience of communism. To some extent, Hungarian nationalism provided the same mantle of rhetorical protection to the population that state socialism used to provide, even as the nationalist mantle claims to fundamentally oppose state socialism. But this similarity is not so surprising insofar as both ideologies deny the premise of liberalism and the primacy of individual rights.

Orban’s electoral strategy worked and his coalition government retained a two-thirds majority in the 2014 elections. The opposition worked together to field single candidates against Fidesz as opposed to split the opposition vote, which benefits Fidesz. Even though there was an electoral coalition between the socialists, the Together Party, the Democratic Coalition, the Dialogue for Hungary and the Liberal Party, it wasn’t enough to break the electoral control of Fidesz. The center-left bloc also did not include a coalition with the right-wing Jobbik, which had received 23 seats on its own right (primarily via the proportional party list rather than first-past-the-post constituency).

The next test to the Hungarian government was the influx of refugees over the course of 2015, which escalated in the fall of that year. Orban announced in June 2015 that it would construct a border fence with Serbia, where most of the Iraqi and Syrian refugees on the West Balkan route were trying to head toward western Europe (i.e. Austria, Germany and Sweden). The EU had criticized that step, but Hungary claimed that Serbia was not part of the EU and also not part of Schengen. The flow had intensified going into the fall, reaching 30,000 a week in September (compared to 2-3,000 in May), and refugees were forcibly trying to cross the border, which induced Hungarian police to use teargas and batons to halt the flows. In October, Orban announced the closure of the border with Croatia, an EU member, but not part of Schengen.

But it just wasn’t physically possible to halt the strong flows, which resulted in people flooding the train stations in Budapest. Hoping to remove these refugees, the government encouraged the refugees to move onto Austria. Fortunately for Orban, the widely publicized photos of an infant death in Syria and the suffocation of dozens of refugees on the back of an unventilated truck in Austria had convinced both the Austrian and the German chancellor to temporarily open up the borders and admit a large number of refugees.

In December 2015, Hungary challenged EU plans to distribute the asylum seekers across Europe, which would have provided relief to the main refugee-takers in the EU. In March 2016, the government declared a state of emergency, which has been extended to today. 60 refugees per day were permitted in 2016. In February 2018, the government announced to only take in 2 refugees per day, while deporting most of the rest of the refugees. In the mean time, the border fence kept on being reinforced with barbed wire, heat sensors, video cameras and armed police patrol (Nelson 2018). There are many refugees who are trapped in the Serbian-Hungarian border, receiving poor supplies of food in camps without much protection from the winds during the winter season.

From an electoral standpoint, will Hungarians punish their ruling government for the handling of the refugee crisis? This is the first election since the refugee crisis, and the polls have not suggested any dips for Fidesz, which means that the tough anti-refugee position paid off for Orban. In contrast, Austrian chancellor Faymann’s party lost the first round of the presidential elections, which had increased the pressure against him to resign, which he promptly did in May 2016. Chancellor Merkel’s CDU and the SPD coalition partner in Germany dramatically lost voter support in the fall 2017 elections, which explains in part why it took so long for them to form another new government. The right-wing parties (FPO and AfD) gained a lot of electoral support, though in Austria, the FPO was surpassed by the conservative OVP, which ran an anti-refugee, anti-immigrant campaign, thus resulting in an “Orbanization” of the political process in Austria.

The 2018 electoral campaign in Hungary continues on the anti-refugee sentiment, which is driven by both Fidesz and Jobbik, but given that those themes don’t differ, I doubt that Jobbik can substantially gain in the vote share. Jobbik is somewhat more progressive in social policy, demanding much higher minimum wages, full pensions after 40 years of work for everyone (only for women in the Fidesz program), and the modernization of the education and health systems. Fidesz pushes for higher pensions, family tax allowances and a modern village program to boost the rural vote.

The socialist party does not mention the refugees at all and focuses on bread and butter issues, i.e. higher wages, tax credits for low-income households, inflation indexation for pensions, higher family allowance and gas/ electricity subsidies for poor households. If refugees are a main driver for electoral shifts, we can’t find that they would work to the detriment for Orban. The major weakness in the Orban strategy, which the opposition is hammering him on, is political corruption, which results in the loss of national funds to Orban’s political cronies. But such corruption is not out of line with other eastern European countries or his socialist predecessors.

It may be stated that the electoral success for Orban lies in his ability to manipulate the electorate with a strong anti-immigrant and national identity platform, which is additionally bolstered by his hardline stance during the refugee wave, his persistent verbal attacks against the liberal elites abroad (especially the EU, that finance most of the country’s infrastructure projects, and George Soros, who had financed his Oxford studies), economic policies that favor families and the lower middle class, especially in rural areas, the weakness/ internal division of the political opposition, and making the democratic control institutions (primarily the media and the supreme court) compliant to the government.

For the immediate future we cannot realistically expect a democratic awakening for Hungary nor for any other Eastern European country, which had suffered from various national trauma (from Austria, Germany or the Soviet Union), and recently escaped the comforts of state socialism to be plunged into what Francis Fukuyama alleged to be the end of history, i.e. the triumph of liberal democracy (or neoliberal capitalism for people on the political left). Nationalism is cleverly combined with selective liberalization and a family-oriented welfare state, while the socialist opposition is discredited in part by the state socialist past and the lack of credibility for implementing neoliberal reforms of privatization and deregulation.

But how sustainable is Orban’s strategy? There is a certain economic contradiction in the Fidesz project, which is chiefly related to demographics. Over the short-term, Hungary and other post-socialist states have benefited from western corporate investments into a cheap but (thanks to state socialism) highly educated population/ labor force, but any long-term economic gains are dependent on a population growth strategy, which is not compatible with the anti-immigrant policies of the government. The pro-natalist policies have slightly increased the birth rate but insufficient to halt population decline. In addition, as long as there is a wage and living standard gap between the rich west and the poor east, eastern Europe will continue to lose workers, which in some cases is permanent. To the extent that it is the young and educated people, who prefer to work in Germany than in their native Hungary, population decline is compounded by labor force decline. The implication is that once the easy avenues for growth disappear, then population decline will be felt in the form of economic decline, in which case the argument for limiting foreign migration become even more acute, though there won’t be many scapegoats left to blame.

For arrogant western liberal elites lecturing down on the democratic deficiencies of Hungary and their political cousins in Poland (which are undoubtedly concerning and ought to be criticized), they should be reminded not only of the specific historical context of eastern European, but also the electoral upheaval in their own country, which delegitimate democratic political and social institutions. Donald Trump wants a giant military parade. Donald Trump wants to build a giant border wall to keep out immigrants (even as their numbers are pretty stagnant and in some cases declining). Donald Trump congratulates Vladimir Putin on his re-election (without any credible alternative candidate) and Xi Jinping on ending his term limit in power, and maybe the US should do something like that too.

Thus, Orban and other more authoritarian leaders, who prefer not to surrender their power are vindicated in their strategy, as the liberal political order continues to crumble. Though to be clear, I still find it unlikely that Orban will push for a complete abolition of democracy, so long as curtailments of democratic institutions to retain his power monopoly are sufficient and as long as the EU continues to act as external constraint. Though the paradox in the latter is that the harsher the EU cracks down on the Hungarian government, the more the EU will be delegitimated in the eyes of the electorate that feel closer to Budapest than to Brussels.

In other words, Hungary and the “Orbanization” of politics in the absence of progressive alternatives is the new normal.

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Low Productivity Service Jobs in an Automated Economy

In a raging debate on whether machines and robots will wipe out all jobs, the judge is still out. The economic forecasters strongly believe in the possibility of displacing anywhere between 10 to about 50% of all jobs given the advancements of robotics and artificial intelligence. Other scholars argue that rising productivity pushes down costs, which raises consumer savings, which then become redeployed in other economic areas, which creates new jobs, especially in the service sector.

A decline in the overall unemployment rate and a modest decline in the number of long-term unemployed that have been excluded during the era of “jobless recovery” might suggest that the capitalist economy has not exhausted all means of generating new jobs for people.  This positive labor market trend may be limited by the fact that we are simply waiting for another major economic bubble to burst, perhaps this time in China. But even if we assume that the optimists are correct and we have found a sustainable job recovery, the headwinds lie in the quality of new jobs that are created.

The expansion of a digital labor market interestingly takes the form of low-wage work, like Uber, Lyft, Mechanical Turk or Task Rabbit. Online mediated services undermine the potential for social solidarity, because they lack the face-to-face interaction which is required to create sympathy and a worker organization. As such, any firm rents that these internet platforms generate will unlikely be shared with the workers.

The vast bulk of jobs that exist even in the non-digital economy, like being a substitute teacher in high school, care worker in a veteran’s hospital or a food service worker in a big company, are also rather poorly paid and unionization has been difficult. Progressive political forces have pushed for a higher minimum wage to ensure a socially acceptable standard of living for these low-paid workers. It certainly makes no sense for a single mother to receive 7.25 dollars an hour, when despite her full-time work half the income already goes to childcare, let alone paying for rent and food. The dismantling of basic welfare programs (like AFDC, Aid for Families with Dependent Children) has removed any last economic cushion for the lower class confronting a very bad labor market.

The capitalists’ response to a higher minimum wage is that payment of wages above total worker productivity would result in a cutback in hiring. Naturally we have to ask ourselves how much of the low-payment of wages is linked to worker productivity and how much to the monopsony power of the company. (A monopsony is where the buyer of labor services has a lot of power, because that employer is an employer of last resort, and there are not many other jobs available.) In the case of Walmart, the giant bonuses for managers and the Walton owners suggests that many workers can gain additional thousands of dollars a year without turning up a loss for the company (profits might even increase with reduced turnover and training costs, as well as a spillover effect of larger wages in similar retail companies raising aggregate demand in the economy).

But let us assume that the capitalist is right and that any higher payment of wages for workers in the service sector would induce Baumol’s cost disease, i.e. higher wages have to be compensated by higher product prices. Professors in universities are a classic example: the highly recognized professional status has allowed professors to command increased incomes, which has to be passed down to students facing increased tuition (which increases even more with cuts in state subsidies for public colleges). But what might work for the professor might not work so well for the food-service worker, where automation potential exists, or it might not work for strange service sector jobs like dog walkers, whose high prices lead to substitution with one’s own labor (people walk their own dog instead of hiring someone else).

The key problem in the Baumol cost “disease” (a notably pejorative label) is that workers in those occupations with rising wages experience no increase in labor productivity. Auto workers don’t suffer from such cost disease, because the continuous innovation in production methods, especially the use of industrial robots, results in rising productivity, which would justify rising wages. (Given the lack of political power of the auto unions, who have been battered by outsourcing and automation, productivity rises are often not even matched by rising wages, but instead rising profits for shareholders and executives.)

But it seems to be that rising productivity is not desirable for two different reasons: service decline and technological displacement. In the first case, think of Massive Open Online Courses that can displace brick-and-mortar education. In the latter case, most teachers might have 30 students in a classroom and they won’t be teaching more than 2-3 courses a semester. And that ratio has never really changed over time. But the online education revolution has promised to give more and more people an education where one teacher can teach tens of thousands of students.

But the initial enthusiasm for MOOCs has by now abated. It might come back later, but the issue seems to be that universities are still controlling the conferral of degrees, which is restricted to the brick-and-mortar experience. Another factor is that a functioning educational experience cannot do away with the personal encounters with teachers. As someone, who has spent his entire life inside the walls of the education system, I can confirm that the entire value-added of my educational experience comes from my direct interaction with teachers and professors, some of which became my mentors. I have once enrolled in a MOOC, watched a few videos, but did nothing else, and there is no penalty to it. Productivity rises in education, thus, make no sense, and might even diminish the quality of education.

On the other hand, the food service sector, custodians, cashiers or the border control officials at airports or any other perfunctory service job, where the things that customers want to have done for them require no specialized attention, but where robots and artificial intelligence have not gotten around to do them yet, productivity rises could make sense. In some cases, the low wages accompanying those sectors might discourage the increased diffusion of robot innovation. There might come a time of technological breakthrough, which will reduce the cost of robots, upon which the technological displacement of those service workers becomes feasible.

But a rising minimum wage in the low-productivity service sector could accelerate the employer demand for service automation. At this point, very few people would suggest that perfunctory service jobs cannot be automated. Some right-wingers might use this situation as evidence for not wanting to raise the minimum wage, but naturally the premise of their argument is quite absurd: heads, you work a miserable, low wage job. Tails, you have no job. The cruelty of this economic logic creates the kinds of economic dislocation that creates political monsters like Donald Trump, Brexit, nationalism, racism and xenophobia.

In some sense, we should celebrate the fact that agricultural and manufacturing work have become more and more productive, which means that we can have material goods and food without having to work that much. As such, we can only slot most people into low-productivity service jobs, which don’t have much wiggle room for higher wages. In the mean time, the high cost of living still requires us to earn sufficiently high wages to afford the services that we need (services are especially expensive in health care and education, where the Baumol cost disease is the most acute). Given that we have a laborist political economy, which forces people to make a living from wage work, we are trapped in a contradiction of rising productivity across most industries and too many low wage jobs for most people in the service sector. And the solution of rising productivity for service workers creates a new unemployment problem.

Defenders of the status quo will counter that the solution has to be to slot more people into higher-skilled jobs. After all, the economic evidence shows skill-biased technological change, which means that high skilled workers, whose work is not (yet) automated, continue to command higher returns to their skills. I am certainly not opposed to a mass education and training program, but it is simply wishful thinking to suggest that training and education will solve our fundamental problem of economic inequality. The entire point of advanced technology is that we don’t need more than 10-15% of the workforce that does a highly-skilled occupation.

Shortening the work week would certainly make sense to distribute these high-productivity jobs across a larger amount of people, and that might defuse some of the economic anxieties. If that solution is not so feasible (as it does not do anything for people, who are still trapped in low-productivity service occupations), then a massive expansion of social services, which lowers the general cost of living, or a universal basic income are ways out of the problem. If we had free health care and free higher education and really cheap housing, then it doesn’t matter if you only make 7 bucks an hour, because the important stuff you get for free. Critics of the enlarged welfare state will counter that we have to collectively pay for these services with higher taxes, but in a functioning progressive tax system the burden of the spending would be shifted from workers to capitalists, who really can’t complain about the neat profits they have made with increased automation and outsourcing to cheaper labor countries.

The expansion of social welfare, including a universal basic income, implies that we would maintain poorly paid employment, but if we wanted to make sure that all people shall somehow benefit from a high productivity economy with low employment in highly productive sectors and high employment in less productive sectors, then I see few alternatives available to us.

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From Wage Labor to a Gift Economy: Contradiction of Capital Accumulation

While reading Profit and Gift in the Digital Economy by Dave Elder-Vass (2016), I was reminded of a contradictory development within modern capitalist economies. We are shifting from an economy based on wage labor, which simultaneously fueled production and consumption, which has been keeping the capital accumulation regime going, to an economy based on unilateral gifts given by individuals to powerful monopoly corporations, who have to pay us virtually nothing in return, thus feeding a cycle of growing income inequality, reactionary populism and frustration with the status quo among what Donald Trump described as the “forgotten men and women”. Declining purchasing power among consumers in developed countries subsequently pushes down rates of economic growth, which will produce not only a crisis of legitimacy but also a crisis of accumulation. To understand this contradiction we have to remind ourselves of the major trends happening in the economy.

The digital revolution implies greater dependence on major monopoly capitalist firms like Amazon, Apple, Google, Facebook and Microsoft. They get to consume a greater share of our attention, and can control the channels of a giant networked customer base (as opposed to e.g. Halal food carts), thus earning more profits than any other firm can. Amazon is a giant bazar displacing the big retail competitors. Apple/ Microsoft are giant suppliers of computers, smartphones and what forms the hardware of consuming many online services. Google is a giant library, which contains all of the world’s knowledge with steadily improving algorithms. Google also runs Youtube, which is a way to access our media entertainment. Facebook is a giant social network that we use to keep in touch with people and share silly thoughts and experiences with others in the network.

In addition to the monopoly power of these internet giants increasing, the invention of self-driving cars, self checkout kiosks, free media streaming (as opposed to buying CDs, DVDs etc.), automated warehouses, software in the service sector and robots in factories implies a mass displacement of mostly routine jobs, which are not growing since the last great recession of 2008 (see graph). Considering the fact that the labor force is continuously growing, the absence of routine jobs means that there will be more frustrated unemployed and underemployed workers, who will vote for the next Donald Trump that hails from some corner in the country. Capitalism is built on labor-saving technology, which pushes out the frontier of production, while eliminating old jobs with the potential promise of creating jobs elsewhere in the chain.

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Source: St. Louis Federal Reserve

Managerial and professional positions may be on the rise, and if we follow the “bullshit job” argument by David Graeber (2013), they can technically be endlessly extended. What he is referring to is the growth of unproductive service jobs that don’t exist to feed, clothe and shelter us, but to entrap us in extended periods of busyness, e.g. advertising, contract lawyers, financial services, education and health care administration, human resources or public relations (see graph). While some may object that these are all necessary aspects to a modern economy, one should be reminded that many health care jobs don’t contribute to the health and welfare of the citizenry. The lack of an efficient single-payer health care system bloats up profits and administrative expenses in the US.


Source: Michael Roberts

But while we may be inclined to criticize these jobs, our laborist political economy (“work or starve”) convinces us that given the strong force of automation coming down our way, we should defend these jobs as long as possible, no matter how useless they are. As long as we can convince some powerful employer to buy our labor services, we should shut up and be grateful that we can get the means to fill up the gas tanks and keep the lights on at home, even if we perceive our job as socially meaningless. That is how absurd our economic system has become.

The devalorization of labor (either in the form of displacement of expensive, organized labor or in the maintenance of deskilled, low-cost workers with little or no rights) is also connected to an increasing donations/ gifts. Amazon Mechanical Turk, Uber, Google, Facebook, Youtube and Wikipedia are useful representations of this gift economy. But what do I mean by gifts? One may argue that gifts are given in exchange for another favor from that person in the future. Think of lobbyists bribing politicians to make them pass a law friendly to the lobbyists’ industry. But gifts may also be given without any expectation of return. Think of giving the street beggar some small change. For most of us engaging in the internet economy, donating our time for free, we never expect any monetary returns, even as the platforms we are on and their investors make money like there is no tomorrow. Let’s take a look at what I will call the “unilateral gift economy”.

In Amazon Mechanical Turk, one can fill out surveys or complete any tasks that can be done online, which are demanded by requesters. Pay is often very low, in part because there are so many MTurkers (supply) relative to requests (demand). A recent paper by Dube et al. (2018) found that there is substantial monopsony power by MTurk requesters. A monopsony is a market condition where there is only one buyer (i.e. Amazon). Monopsony power is reflected in the inelastic labor supply, which means that regardless of what the price is, the number of MTurkers does not change. In a very elastic labor supply situation small price changes result in substantial shifts in the labor supply. There are simply too many MTurkers, who are desperate for any job that they accept any compensation even if very low.

Now you might object that MTurk sounds like just another job, because responding to a request means work and that becomes compensated even if that is not enough to live on. In a technical economic sense those critics are right. But from a critical perspective, isn’t it also true that once one becomes so absorbed in doing MTurk jobs with so little compensation that MTurkers might use reasons other than making money and paying bills to continue doing it? Subjectivity is very important here. Scholz (2016) reported surveys/ interviews of MTurkers, who participated on the platform because filling out surveys would “benefit science”. These are MTurkers, who used a higher non-economic rationale to justify why they continue to do a lousily-paid job.

Uber is another example of a job, whereby the sheer scale of the number of drivers in the industry pushes down the total compensation in the industry (Schor and Attwood-Charles, n.d.). Subsequently, many Uber drivers that I had encountered were not using earning money as a primary reason to drive, but their ability to communicate with customers, being out of the house, having something to do. As such, drivers are pre-emptively undervaluing their labor, and consent to the unilateral transfer of gifts to the powerful company. It turns out that Uber has also developed algorithms to encourage their drivers to drive more hours to hit certain earning targets, which becomes the gamification of work. Perceive what you are doing as entertainment or fun competition and not work, which eases the unilateral gift transfer to Uber.

Google seems to deliver users the best of all worlds: access to the world’s combined knowledge for free. Even just 30 years ago, knowledge was concentrated in a few minds and a few education institutions. Encyclopedia Britannica and Brockhaus were encyclopedias that were compiled by some very educated people, who then have their works read by an audience of other educated people. But Wikipedia and Google open up knowledge to anyone with an internet connection. Now, we can critique that only educated people will look for interesting information, while others will search for computer games and online porn. But that is beside the point. The key point is that the free receipt of information is not so free.

The famous saying is that if the product does not cost anything you become the product. That is the world of Google, Facebook and Youtube. The economic success of Google despite the free offering of their product is the targeted advertising that is made possible by tracing any online web searches to your individual account. My entire web search history is tied to Google Chrome and I am always logged in with my email account. That is very convenient, because all of my web searches and bookmarks can be pulled up anytime and anywhere that I am logged in. If I have recently searched for neckties, then lo and behold I will see many commercials of neckties on the sidebar. As a result, advertisers who are greedy for user data to target their products to potential customers know that they have to advertise via Google and may even pay a premium to do so. Thus, Google takes a huge chunk of the globally available online ad revenues.

Elder-Vass (2014: 189) claims that Google is embedded in both the capitalist and the gift economy, which does make sense. Targeted ads make Google capitalist, while the free user service and the need to please users with fancy, convenient features make it part of the gift economy. But this demarcation does not allow us to weigh which economic aspect dominates. To the extent that users are providing free data to Google, which profits indirectly from users, the users are uncompensated workers, thus providing a giant gift to Google.

A similar principle exists for Facebook, which is perhaps even more pernicious than Google in aggregating information on individual users. While Google has to infer my tastes and preferences indirectly via my search preferences, any Facebook comment, like/ hate/ love/ disgust etc., sharing of link and inputting of personal data into the profile produces a very explicit and direct expression of my tastes and preferences. Thus, Facebook is as good if not better poised than Google to profit from individual user data.

In the case of Youtube, our video preferences get saved to an individual account, which is often tied to the Google account, and as such it ensures that we constantly watch things on Youtube. In that sense, it is similar to Facebook, Twitter or Gmail in that it can permanently occupy our attention space, which confronts us with more commercials, which showers Youtube with even more profits. While writing this post, I listen to my favorite pop song playlist, getting advertisements in regular intervals (perhaps every 2-3 videos). Video content creators might be put in a position to earn a share of the advertising royalties in pay-per-view agreements. But video creators have to individually negotiate that with Youtube if they want to get any royalties. In the absence of such agreements, Youtube collects all the revenues. It can, therefore, not be surprising that many hobby video creators (e.g. people doing Jackass-style stunts, share their family cooking recipes, or just tell stories) just treat their activity as an entertaining hobby that will enliven the life of their viewers (i.e. a gift) rather than a way to earn royalties.

Music producers, in a classic “if you can’t fight them, join them” manner, had first tried to sue Youtube for copyright infringement for posting music videos, but then realized that it was too stressful/ uneconomic to force removal every time someone uploaded a bootlegged copy of a song. Youtube could not be held to account for such copyright infringement so long as it removed unlawful use of copyrighted songs when told to remove them. The music producers (there are only very few, and the official music videos are sponsored in VEVO) are back to making money, though the total revenues in the music industry have declined, making artists more dependent on live performances to make a living.

Among all of the major examples of the online gift economy (with capitalist underpinnings), only Wikipedia is unambiguously not for profit. It is not listed in the stock market, and is operated by the non-profit Wikimedia Foundation. When going to the Wikipedia page (which had been very useful to me in many of my investigative blogs), you will find the regular pleas for donations from users. There are no ads, and thus no other way to generate revenues to keep the staff which maintains and hosts the site. But it is precisely because of the pure gift economy ethos that all the Wikipedia contributors (which is, again, anyone with internet/ computer access) will ask for nothing more than the feeling of benefiting the community with knowledge in their respective areas of expertise as opposed to any material compensation, as was the case with contributors to other professionally curated encyclopedias. One donates his/ her time and knowledge to contribute to publicly available knowledge, and this is a pure gift economy.

So what are the implications of these three large forces? These forces include (1) the intensification of monopoly capitalism with the giant internet providers; (2) the decline of routine and productive jobs; and (3) the rise of a unilateral gift economy to the benefit of these monopoly companies.

Concerns about surveillance are certainly becoming louder. In China, the social credit system bars people with unpaid financial debts to purchase flight or train tickets (TodayOnline 2018). Facebook is drawing intense public scrutiny for allowing Cambridge Analytica to draw on Facebook profile data for political influencing in the 2016 presidential elections (Tam and Real 2018). When the trolls take over or the state with its own controlling needs, then civil society is besieged because it is unlikely that such a large, complex social network can be democratically held accountable. The few thousand employees in Silicon Valley, who create the products that we all need, hold tremendous amounts of power over the rest of us, who cannot afford to quit Gmail or Facebook for fear of becoming a social isolate. Citizens groups might want to pressure lawmakers and the internet giants themselves to subscribe to a code of conduct that will avoid excesses in surveillance and opinion manipulation, but I doubt how effective that can be.

With respect to the economic forces a play here, we are reminded of the contradiction of capitalism. The growth of monopoly internet firms reflects not the initial failure of capitalism but its success, because it is the objective of firms to control the entire market. Rockefeller had attempted this by consolidating the oil and railroad industry, and in today’s economy it means the control over the digital information channels, but also the centralized controls over the productive portions of our economy (extraction, manufacturing and agriculture). The fact that Silicon Valley firms are swimming in cash should be a source of happiness if that wealth can feasibly trickle down to the rest of us. But the decline of productive/ routine jobs and the rise of the gift economy (i.e. our contributions of time and data to internet companies) imply that there is no such trickle down to be expected.

On the contrary, the existence of a homelessness crisis in cities like San Francisco and Los Angeles indicates a microcosm of a failing social economy. As the tech giants continue to attract more investor capital and grow their user networks, they attract a few thousand engineers form the elite universities, who use their high salaries to buy the scarce attractive residencies in the Bay Area, thus driving up home and rental values for everyone living there, even poor people with minimum wage jobs that have lived in the Bay Area for their entire life. No wonder there is a homelessness crisis. The internet monopoly firms’ drive to accumulate capital is an utter success, but this will be the utter failure as the lack of broad purchasing power in the economy will diminish any future sources of growth, which can by itself negatively affect investor animal spirits and push down ad revenues for these internet giants. Add to that demographic aging and decline, and I can hardly see how the economic growth mantra shall continue indefinitely.

From the perspective of social theory, the unilateral gift economy is even worse than Marxist labor exploitation, because labor is at least compensated for part of their labor, but now we are being paid nothing for any information that we hand to the internet giants.

What is to be done? We certainly know that the endless accumulation of academic credentials or a massive jobs program are no longer sensible tools to ensure broad-based economic benefits. The removal of mass routine production jobs is probably for good. Even as we still have unmet needs in public infrastructure (roads and rail lines have been left to decay), these are temporary priming the pump mechanisms that won’t generate sustainable full employment.

I would also argue that we should stop second-guessing about finding new mass employment industries, because the goal in life is not to have a job for its own sake. Reasonable policies would be to increase paid vacation benefits and shorten weekly work hours so that we can distribute work that is not automated to a broader set in the population. This step might have to to be financed from profits, though- as Kalecki (1943) noted- a full employment equilibrium might produce higher profits as both production and consumption increases. If the market does not generate full employment (as it never does), then the state might have to step in by creating public employment financed by the giant revenues from the internet firms. Because how likely is it that Facebook will hire millions of social media app developers, which it could easily afford at the moment?

In the absence of the full employment option, there are still two other alternatives: Jaron Lanier (2013) is a supporter of so-called micro-payments, which means that we are no longer treated as Facebook’s and Google’s consumers, who are passively benefiting from their service, but we are treated as workers, deserving of financial compensation for inputting our data. To the extent, that we are wasting more and more hours of the day with those internet companies, the survival of the masses might be made possible via these micro-payments. The difficulty lies in the indeterminancy of “fair” compensation levels. Should you just be paid a flat-rate for owning an account (which almost works like a basic income), or should you be paid for the number of likes/ views you get on your post? What happens to very poor people lacking stable internet access, or people who are not voyeuristic enough to display all their life stories on social media or use other non-internet sources for gathering information? Therefore, I think that micro-payments are an interesting idea, but hard to define in practice.

So far we are still assuming that we can rely on a market mechanism to ensure the fair distribution of economic resources. But I find that perspective deeply troubling, because in a market the best networked people will earn the most income compared to those with fewer networks, thus continuously reproducing socially undesirable concentrations of wealth. Mark Zuckerberg (2017), CEO of Facebook, knows that he is not going to create millions of Facebook jobs to cushion the social dislocation of low-wage jobs or lack of jobs, so he supported the universal basic income (UBI), which is in part financed by a wealth tax that would burden people like himself and other similarly situated people. Zuckerberg frames this position as allowing people to experiment with entrepreneurship the same way he has.

It is probably true that there are a lot of people working boring jobs to keep their pensions and health care, while they really want to become independent entrepreneurs like Zuckerberg. But there are also people, who want to take it easy, spend more time with the family and work a job without the threat of being fired becoming an existential threat. But that is not inconsistent with the principle of a UBI. Only when a basic income is conditional, as with the conditional cash transfers in developing countries requiring parents to send their children to be vaccinated and to school, can we mandate desirable behavioral traits on benefit recipients. But conditional cash transfers, even if well intentioned, are still constraining the behavior of individuals.

UBI will decouple economic survival from work and wage labor and has the positive side effect that we don’t have to intervene in the labor market to ensure more job opportunities. We also don’t have to get bogged down by complicated evaluations of how many likes or how many web searches we do to get “fair” compensation. The only question that arises is whether s UBI can weaken the pillars of capitalism, which is based on the exploitation of wage labor. But to some extent, if the only economic benefit that individuals can generate is like Wikipedia, where we gift our knowledge to the broader world community, and not producing food or cars, then it should be possible to subsidize this gifting, which is not based on economic greed but the love of sharing information with others. Payment for service as opposed to payment for time can negatively influence professional autonomy (Crouch 2015). Take, for instance, the doctor, who gets more money for prescribing more medical tests to patients even if they are not medically necessary as opposed to a doctor, who gets paid a fixed salary, and autonomously decides to prescribe tests in accordance to what he/she thinks is necessary for the patient’s health.

This would suggest that it is okay for Facebook, Google, Wikipedia and co. not to sponsor our free work for them as long as those wealthy and powerful entities pay their taxes to fund a universal basic income. The question is merely whether the state actors can be convinced to embrace that solution.

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