The Piketty Watch- Capital In the 21st Century Meets America

The Piketty Watch- Capital In the 21st Century Meets America

gordon-piketty-saez-389x400There is a stir in the hopelessness of mainstream economics and politics,  a spector rising(?) and in quite visible hands at the center of that stir is a book – again called Capital- but this time by an author called Thomas Piketty- a French Economist who studies inequality and has published plenty on the subject.

In a recent book he authored called Capital in the 21st Century it somehow of all places seems to have created an unusual ground swell in the USA. In fact I am sure the whack- a- mole response will soon be out in mainstream media as the book slowly meanders through the pathways of the press- Krugman gave it a nod,the  New Yorker gave it a review- and now some others seem to see some merit. If it dare take root and grow, it might just be the start of something worthwhile.


So here on I am launching the official Picketty watch- here is a Google Trend to monitor the progress. It is definitely on the rise- lets hope it will sustain. Today, the launch date- saw it correlated with the following search terms: World Bank GDP, and Inflation targets. Hmmm that might be telling, and it was also trending highest in guess which state? Washington DC! New York was second. This will be updated in real time- but I will also be providing weekly updates from Google Correlate (click here to see what states are searching for Piketty and what search terms he is correlated with). The revolution is indeed just a T-Shirt away- now I just got to get one!

And here for Doug Henwood from the Left Business Observer in the US, a listing of searches for Piketty over time by State. And below is a listing of searches for Freakonomics. The timeline for Freakonomics is a lot longer, but if one slides the dates back a bit on freakonomics to its first few months in publication, I would say it had a similar geographic pattern. Currently Piketty does not have enough time under his belt to do a proper comparisn, but it seems like Washington DC has more of an interest than the East coast.

And Here is the google dirt on Levitt’s popular book “Freakonomics” which for some reason my older brother bought for me for my 40th birthday- nine years ago- he is an engineer and would not read an economics book if I force fed it to him. So I have a better question for Doug is Picketty’s book the new book for brothers to get their economist brother for their 40th birthday. I wonder what I will get next year for my 50th? I will update the list.

My review of Piketty’s book

I hate to be negative as the book has a powerful message and it will do some good. It’s central focus on Income distribution as capital’s failing – is a great effort at explaining the flows and stock of wealth. However, given the reality of the actually existing capitalism we are living through- Piketty’s thesis is not capitals’ most critical flaw and therefore proves to be problematic on some fronts. Capitals central flaw is profit as it is constructed and socially defined by the big hammers of the social and cultural powers of economic wealth- which he only touches upon. If profit was forced to include all the externalities of capital’s destructive nature- there would be no profit to extract and hence never enough investment to keep the circuits flowing and the wealth piling up at the one end. (and that does not include the current debt explosion that has overtaken consumers and governments)

So the wealthy and their powers create this numerical accounting that allows profits to be defined with the current concretization. Piketty does a good job of linking the wealth and their cultural control, but does fail to clearly delineate how this wealth is created as much of the risk and the destruction of the living and dead labour, and the land is missing in the modern equations of profit.

The key to change is we need to have a proper accounting for profit and how value is created- it is not the wealth inequality that Marx foretold that destroys capital (although that is a trip wire along the pathway) it is the definition of profit and the accounting that we allow the regime of wealth to culturally control. The inequality and its instability could lead to a rationalizing of the irrational when it comes to profit and the current notions of value- but that is only an accelerator in starting a fire. However potentially that is his goal- to be a fire-starter- and making a point with the wealthy in this space- given the historical lens- does have an impact. But one does wonder- will change ever be forced from the current hands of the global wealth with such tactics? Even two world wars did little to alleviate much in the way of power sharing – the great post war era of 30 years or as we call it here in North America- the golden years of capital mentioned by Piketty- was just a temporary deal to share a bit of power and wealth to make more profit during the rebuilding phase of the post war era. So call me a deterministic fatalist- but at least I am being realistic!

On a more optimistic note, essentially this all could be cleared up with a proper statistical program and information that penetrates deep into the core of the machinations of profit and building of value. Sadly much of the truth telling machinery needed to measure and collect this information- is not available and will never be built- not with the current power in place. Information is indeed all powerful. The technology is here- and the informating ability is also here, and look big data is also starting to make a move to bring it all together.

But a true accounting is far far over the rainbow as it would take new information- and the will to informate, collect, collate, disseminate, educate, analyze, regulate and plan the scarcity we face and the sustainability we need. Yes plan- the varieties of capitalism are planning massively now to extract as much wealth from the system as it exists now- ( what do you think High frequency trading does- plans to avoid risk by controlling markets through super computing and information processing- designed by thousands of mathematical wizards who push and pull around $640 trillion worth of derivative vehicles as estimated by the bank of international settlements up from the $400 trillion prior to the financial crisis- if that is not planning to be too massive to fail I am not sure what is) then why can progressive change not bring forward a new version of a planning regime- one that defines profit and value with a much different perspective- one that indeed engages the information age with every megabyte of information possible to unleash a combination of the smarter machines, and the smarter workers to engage the future and its possibilities of sustainability and more sharing of the wealth.

So my assessment of Piketty- not quite spot on- but it does evoke the symbolism of guillotines of a time in the not so distant past in France and anything that scares the rich- is good during these times where given the gifts humanity has – so much more could be done- but it takes the tribe’s surplus resources to do that- and they are in the hands of the few.

The Limits of Women’s Work or Did Women just lose 400,000 Jobs- Employment Rates and the Great Recession

New Explorations into the Canadian Workforce

As part of a larger research project being coordinated by the Canadian Center for Policy Alternatives, entitled Working Across Canada, I have been volunteering my time researching various dimensions of labour markets in Canada with the intention of creating a new measure to evaluate the nature of employment quality- or as some call it at the International Labour Organization and elsewhere – a Good Jobs Index (I am not sure what to call it).  As I work through this project I thought it would be constructive to write up some of the more interesting findings that are uncovered along the way. I also thought it might be constructive to evaluate some new web based software that allow users to interact and explore data in which was loaded up for this project. This interactive aspect will hopefully allow readers a chance to dig deeper into the research and explore the data, slicing, dicing, rolling up and segmenting with ease and adventure. Just click on the included link below to interact with the data chart. (you can use the software online CLICK HERE, or you can download the reader here and use it offline.) Mainly I want to bring light to some of the data artifacts that are uncovered and try and fit some reasoning and limited analysis to the facts.

Part 1- The Limits of Women’s Work or Did Women just lose 400,000 Jobs- The Great Recession and Employment Rates in Canada

Employment, or having access to a means of the production is the key to a person’s survival and well-being within a market based economy. For women in many developed nations, the past thirty years have served as an unprecedented period of entry into the waged workforce of the formal economy. It has been heralded by some as the great exodus out of the chains of the informal economy into the “freedom” of the waged workforce- as one artist famously put it in the ‘70s, moving away from “being a slave of a slave”.

Examining chart 1 and comparing the employment rate of women over the past thirty years verifies that this transformation has been ongoing in a substantive and hurried process. Only briefly interrupted by two recessions the upwards rate of women workers into the formal economy marched steadily onward from less than 50% in the 70’s to an employment rate that has women workers now approaching that of men. After nearly thirty years of steady and consistent employment rate growth, the great recession of 2008 ravaged the economy and the velocity of change in women employment rates for prime age women aged 25-54, came to a very sudden halt. Upon hitting the employment wall- the rate has stalled for the last 6 years at a historic (non-war time) high of 77%. These past six years of stagnation has been the longest period of non- growth in the employment rate of women in more than 30 years. As we move through this unprecedented period, the question must be asked- are we witnessing a historical maximum for women’s employment in the Canadian workforce? Have we reached an upper bound of women workers in waged work?


If we are not at this upper bound, then much of what has been written about the great recession has to be rewritten as the pundits have forgot to mention the 400,000 plus jobs that women have lost during this period. Indeed if one is to run the trend for women workers using the employment rate and its robust growth rate over the past 15 years, then we can estimate with econometric forecasting that women have lost over 400,000 jobs during the past 6 years of stagnation. (See graph and calculations using an additive model of exponential smoothing to forecast an average expected Women’s Employment Rate of 83% which equate to roughly 400,000 jobs in 2014)  Suddenly the great recession seems much more traumatic for women and turns the popular notion of a “he-session”  coined by media depicting this great recession as being more difficult for men- on its head. (to explore this data visually click here)

The debate of who lost more, is of course a loaded question chalk full of the political dimensions of bias and would simply result in the divide and conquer mentality. So rather than focus on a gender divisive debate, given the numbers, one can conclude both genders have suffered greatly but differently. As can be seen in chart 1 women’s employment rate has been growing at a much higher rate over the past 30 years than men, as women entered into the waged workforce in droves.  The employment rate for men on the other hand has slowly declined over this period in a very awkward but evidently painful recession induced jagged downward trend. Each of the three major recessions over the past thirty years has been quite painful for both genders but for men it has meant a permanent adjustment to a lack of waged work for an increasingly larger proportion of the workforce.

Starting in the 70’s the employment rate of prime aged males was averaging above 91% – then after a massive carnage of job loss  in the early 80’s recession due to high interest rates and the beginning of the neo-con assault on workers, recovered to stabilize around 87% for much of the 80’s. After which the early 90’s recession took its toll and again male workers dropped off and recovered to stabilize at a lower 85% employment rate. Facing the great recession of 2008, males were hit quite suddenly with substantive jobless and they seem to have recovered ever so slightly to stabilize again at a lower rate at 83%. Obviously, given these are prime aged workers, many have to adjust to life without employment, as either discouraged workers or in some other activity (training, house husbands, return to school, early retirement). The focal point for men has been a three decade long adjustment to a lower and lower equilibrium of life without waged work.

Considering this 30 year linear climb for women, the velocity and scale of such growth over is historic and an impressive display of the market’s ability to find such space for waged workers during a neo-liberal era of uneven economic growth. Recall in retrospect that we are witnessing an almost doubling of the labour force for women in just 30 years- yet we have still maintained an unemployment rate of below ten percent (outside of the recessions and depending on how you measure unemployment). Of course as impressive as that sounds it says very little about the quality of a high proportion of jobs that were and continue to be created for women- more on that in another paper.

Since the end of the early 90’s recession, women have been entering into waged work at somewhat slower velocity then previous periods, however the acceleration is still positive and consistent up until the great recession hit in 2008 and then it flat lined. So the logic is clearly evident, we are either at a maximum of women’s grand entry into employment- or alternatively women have suffered massive loss of forgone jobs through the recession. This does not mean women actually lost all 400,0000 jobs, as in the case of men who actually did experience plenty of job loss, but it does mean that for women the pain of the recession was in terms of lost actual and potential jobs and was differently realized then men. That is women, were not hired, but most likely would have been, given the strength of the underlying historical trend in growth of women’s employment. And that loss actually does count as a dead weight loss to society given the strength of the relationship prior to the slowdown. In summary, we need to be mindful that lost opportunities must be factored into the damage the recession unleashed. Oddly enough if we look at the participation rate of women it is does not quite reflect this notion, in terms of proportion, or fluidity. As one would have expected a large increase in unemployment to match this employment flattening trend. However unemployment falls short of that which we would have expected and is only partially made up for in the pattern that was witnessed in the participation rate. So what does that mean- it means a whole lot of women workers either left the labour market in discouragement or indeed we have reached the height of women’s entry into the workforce? It is actually a very odd finding given the timing.

So what is going on?

Given the ongoing stagnation in the economy and recessionary winds it would be premature to say that women’s historical employment rate has peaked at 77%, a full five plus points below men. So that begs the question should we expect a difference between women and men employment rates?  Is there some systemic discriminatory disincentive to waged work operating independently or dependently on gender to explain such a difference?  One could suggest differences in job quality, pay rates, precarious work, career opportunity, and/or unwaged labour demands are all undoubtedly some factors.

You can explore the data yourself. Have a look and compare different age groups, participation rates, or other aspects of the labour force and see how these measures reacted in previous recessions. Of course the employment rate is different from that of the participation rate that is often used to measure waged workers participation into the workforce. Employment rate includes discouraged workers who fall into the numerator. Also recall that we are referring to relative increases, and as the population increases we will see more women enter into employment, but given the flatness over the past six years means that employment for women is constant with the total amount of people employed.

This is indeed a very big question and only the future holds clarity for outcomes, but if this current employment rate of 77% is to become a permanent fixture of the labour market for women and we have reached a maximum, then it will unleash some very massive changes in other areas of the labour market and society. All of which have been affected by the almost constant rate of increase in women’s commodification into the waged labour of the market, and the dynamics that are intricately woven through the fabric of society.  It will mean a lot of change on many other connected issues, and will have a significant slowdown in everything from day care to food items in the grocery store. We have become so accustomed to this  large ongoing change of the women into employment, that without that growth much will have to adjust to the  relative stability of natural population growth.

If we are not at this point, then we must reconsider and rewrite that the recession had a massive impact on the employment loss for women workers, and rather than being the “he-cession” that many labelled this last recession- it will mean over 400,000 jobs will have been lost by women workers- as that is what the trend would have predicted.

(Note- the employment rates above are measured for prime aged workers, between the ages of 25-54.  Other segments of the population are not considered, but you can explore them with the data software and compare click here. Other age groups over such long historical periods have flows out of the stock of employment that produces a greater variance due to retirement, returning to school, retraining, etc. The segment of the population aged 25-54 has the highest probability to be part of the waged workforce and therefore was used to guide the exploration process. This is not to discount the experiences of other aged workers, but simply to clarify the trends and bring more focus to a labour market in transition)


China’s Relocated Poor Struggle to Build New Lives

China-MassRelocation-305Over the past year has been actively organizing and setting up a research network to link Canadian and Chinese applied and academic researchers. The goal of the network will be to enhance the exchange of information and shared understanding of economics and labour markets issues that each country faces. The network will engage in a variety of activities including original research, translation of the latest research documentation,  publication of materials that are mutually agreed upon  and  dissemination of information. The focus however will be to establish better communication, dialogue and exchange of ideas and experiences.

As suggested  in this Radio Free Asia Video the trouble that lay ahead in China as 300 Million plus rural citizens are targeted to move to the urban is quite complicated.  More to come on this endeavor.