Tuesday, February 12, 2008

Economics is largely bullshit

an uninterrupted rant-

My economics teacher would have me believe that the world is made up of small businesses, or perhaps more accurately, big businesses that act like small businesses. This is the theory. Capitalists justify expropriating excess profits because they are the ones who take the risks. In reality, risk is gone. Bankruptcy is profitable. Management walks away with millions while workers lose their savings. We watched a video explaining how outsourcing was actually a good thing because companies were then able to invest their extra profits back into the economy and create better, higher paying jobs. Right, tell that to the millions of people that work in the low-paying service industry after their high-paying manufacturing job went to some country that virtually enslaves their workers. My guess is that money the corporation saved went into the CEO's 5th or 6th new home. China's industrial boom has diverted social spending away from rural areas. It's also caused a massive human migration to the cities that has created a class of urban peasants that have little to no rights. They are expendable. You get sick, you lose your job. You lose your job, you don't eat. You have kids, they'd better know how to raise themselves. Migrants have to set up their own schools because their children are not allowed to go to city schools. This invisible class that fills up Chinese slums is roughly the same size as the population of the entire United States. India, Thomas Friedman's example of a success story, is going through similar times. While people like Friedman laud its "growth," farmers are killing themselves by the tens of thousands. Instead of offering support for rural development, the Indian government's neoliberal reforms are boosting the international private sector and encouraging the millions of peasant farmers to export their crops rather than feed themselves and their country. With little to no reasonable rural credit, they go into deep debt trying to compete with subsidized Western agriculture. Rather then pass on the debt to their family, they off themselves. Oh, and China too. Interestingly enough, one thing that we do actually export to China is cotton. As with Indian farmers, Chinese farmers can't compete with US subsidized cotton so they join the other peasant migrants and head to the slums of Beijing. Ain't "free trade" grand? Economists would have us believe so. And so would my economics teacher. And so would asshole columnists for the NY Times. It's interesting that when Cuba trades doctors for oil with Venezeula (talk about comparative advantage!), both countries are simply discounted by economists. When I questioned my instructor on how much influence the multi-billion dollar advertising industry has on the market, he basically said not much. He said that the ultimate decision is left up to the consumer and based on the consumer's needs. Yeah. 'Cause we needed those fucking zubaz, those fruity pebbles my mom would almost never buy, and that goddamned Hummer H2O!