I'm wondering how equality/fairness works into this. This is the other major attribute that the Washington consensus has undermined, but I can't see how it relates to the stability/flexibility tradeoff (the fact that social equality tends to correlate with stability in Western economies does not mean that this must always be the case).
Also, now that I think about it, I'm not sure that flexibility can always serve as a stand-in for efficiency. Did rail privatization in the UK make rail travel more efficient?
Just some random thoughts... The fact is that what we're experiencing right now is a top-down disaster. -Paul Krugman
In short, the UK trains got more efficient for some people. Not the employees nor the clients, possibly... Un roi sans divertissement est un homme plein de misères
The key point is that even in the cases where it does increase "efficiency", something else goes down - "stability" as I've named it - and the cost of that tradeoff is largely not taken into account.
The fact that the workers used to be using that time for other things - like going for walks in the woods with their families - doesn't count, because they weren't using it to make money. And only the time that is used to make money matters in this ideology.
- Jake If you only spend 20 minutes of the rest of your life on economics, go spend them here.
I think outsourcing is the key - what's apparent is that they've moved more workers into the unstable part of the economy.
There is some evidence that more economic activity than before takes place in "zone 3" however, but I'll have to try and look up the details before I make any particular claims.
On the scale of sector 2 enterprises, the sector 2 enterprise is the core and sector 3 enterprises serve as the ring. This system relies on federal unemployment insurance to see the "ring" employees through downturns while fobbing costs of increased unemployment contributions off onto the sector 3 corporation. This further enhances the profitability and resilience of the sector 2 enterprise, which contributes to their "blue chip" status in stock markets. The outsized salaries and bonuses for the occupants of the executive suite provide them with the resources for major political contributions that further reinforce their incumbency advantages. As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
Economics as a discipline doesn't seem to care to think about it and I'm not sure who has picked up the ball. And that to me is the root of the Washington consensus - and why it's hard to see our politicians overturning it.
Economics as a discipline doesn't seem to care to think about it and I'm not sure who has picked up the ball.
And that to me is the root of the Washington consensus - and why it's hard to see our politicians overturning it.
Hence the perpetual conservative laffer curve myth - that less taxes equal more income, and yes, a lot of them really believe that.
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Another aspect of privatisation is impoverishment of public services, or a gradual shift of those services towards a loss of their general availability.
Perhaps others can offer additional examples of peaceful redistributions, but the only ones that come to my mind are the Jubilee amongst the ancient Israelites and the potlatch type ceremonies among "native" cultures studied by late 19th and early 20th century anthropologists. Neither the French, the Russian nor the Chinese Revolutions exactly qualify as peaceful.
Indeed, the current crisis is arguably the result of the US elites being too successful in transferring wealth from the rest of the population to themselves. The means by which they have done so, bubbles and financialization, is collapsing of its own weight and all current efforts are directed to stopping that collapse without sacrificing their own wealth. So they are supporting creation of debt that will be a general obligation of the taxpayers, expecting that, as usual, they will be able to avoid those taxes. Unfortunately, this increasingly fails the smell test and thus does not inspire the necessary faith and confidence to do the trick.
The party of the elites could regress even further in their economic theory, resurrect and revivify Malthus and then proclaim that the unemployed, like the Irish during the hunger, cannot be saved and the kindest thing to do is to let them starve. However, they may not be left with enough of a society and economy to support a military that could protect their wealth. Most unfortunate. Oh, what to do?
They need to be saved from themselves.
As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
Progress is ALL about ensuring that power does not get - and stay - too concentrated. Today, we see when power via money gets too concentrated: we get a massive crisis. In the long run, we're all dead. John Maynard Keynes
Institutionally and culturally, they would probably be in category 2) in your scheme, but politically and economically, they're able to hold the rest of society hostage, so economically they work just like public companies that can raise their own taxes, have a gargantuan embezzlement problem and absolutely zero accountability.
Rather than type distinct from "sector 2" organisations, it is a social malignancy that follows when sector 2 organisations have too little check on their economic power.
And, indeed, since one of the features of deregulation is a removal on checks on the accumulation of monopoly power, in terms of power, as opposed to employment contracts, the privitisation plus deregulation movement is:
(1) -> (2) <- (3) I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
