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U.S., China and eating soup with a fork

-The opinions expressed are the author’s own-

Are economists the world over using an outdated tool to measure economic progress?

The question, long debated, is worth pondering again at a time when two economic giants, the United States and China, are sparring over trade, currency exchange rates and their roles in the global economy.

In the run-up to U.S. mid-term elections on November 2, politicians from both parties, for different reasons, blamed trade with China for American job losses. China responded with irritation and hit back by accusing the U.S. of “out of control” printing of dollars tantamount to an attack on China with imported inflation.

Measured by Gross Domestic Product (GDP), the United States tops the list of countries. China overtook Japan in August to become number two. Depending on whose forecasts you believe, China will overtake the United States in 2020, 2035 or 2040 and therefore turn the 21st century into the long-predicted Chinese Century. It’s becoming conventional wisdom that the United States will play a reduced role on the world stage.

Crystal ball gazers might do well to remember that long-range forecasts have often been wrong in the past. At the turn of the 20th century, eminent strategists predicted that Argentina would be a world power within 20 years. In the late 1980s, Japan was seen as the next economic leader, on the strength of supposedly unstoppable progress. Forecasters extrapolated from past GDP growth rates.

They are widely used to compare standards of living in one country with those in another but critics say GDP is too narrow to be a realistic indicator. Joseph Stiglitz, the Nobel-prize winning American economist, has complained that world leaders make a fetish out of it and suffer from GDP-obsession.

John Robbins, a liberal author, says that using GDP as a measure of overall progress makes as much sense as “using a fork to eat soup.”

Why? GDP, developed in the 1930s, measures the total monetary value of all goods and services. It goes up whenever money changes hands, no matter whether that money is borrowed or on what it is spent. The billions it cost to clean up the Gulf of Mexico after this summer’s disastrous oil spill, for example, counted towards America’s GDP.

Viewed solely through its lens, Robbins says, someone treated for a complicated cancer while at the same time paying steep legal fees for a divorce is someone helping make GDP look good.

U.S., CHINA LOW ON HUMAN DEVELOPMENT INDEX
Where GDP fails is as a measure of living standards, particularly in a country like China which is both a manufacturing powerhouse and a Third World country where more than a third of its vast (1.3 billion) population live on less than $2 a day. GDP per capita is not a particularly reliable indicator either. It measures the average (not the median) which results in distorted figures in countries with great income inequality.

The Nobel-prize winning American economist who designed the gauge in the 1930s, Simon Kuznets, did not mean it to be an indicator of a nation’s overall well-being but that’s how it came to be seen widely. According to Stiglitz, this tends to land politicians in a dilemma. Their goal is to boost GDP but they also face demands from citizens for policies that lower GDP, from better security to anti-pollution measures.

Stiglitz chaired a commission, established by French President Sarkozy in 2008, that looked into different ways of measuring prosperity and produced a 300-page report last year that came up with a range of recommendations to measure both well-being and economic output. (The commission did not suggest dropping GDP). When, if and how widely they will be implemented is open to question.

In the meantime, those dissatisfied with GDP as the principal measure can compare its country rankings with the Human Development Index, a gauge that was adopted in 1990 by the United Nations and is compiled from data on life expectancy, education and GDP per person. On the 2009 index (this year’s will be released early in November) neither the U.S. nor China fare well.

The U.S. comes in 13th place (having dropped a slot from 2008) and China at 92nd, out of 182. A long way from the top. (You can contact the author at Debusmann@Reuters)-The opinions expressed are the author’s own-

Are economists the world over using an outdated tool to measure economic progress?

The question, long debated, is worth pondering again at a time when two economic giants, the United States and China, are sparring over trade, currency exchange rates and their roles in the global economy.

In the run-up to U.S. mid-term elections on November 2, politicians from both parties, for different reasons, blamed trade with China for American job losses. China responded with irritation and hit back by accusing the U.S. of “out of control” printing of dollars tantamount to an attack on China with imported inflation.

Measured by Gross Domestic Product (GDP), the United States tops the list of countries. China overtook Japan in August to become number two. Depending on whose forecasts you believe, China will overtake the United States in 2020, 2035 or 2040 and therefore turn the 21st century into the long-predicted Chinese Century. It’s becoming conventional wisdom that the United States will play a reduced role on the world stage.

Crystal ball gazers might do well to remember that long-range forecasts have often been wrong in the past. At the turn of the 20th century, eminent strategists predicted that Argentina would be a world power within 20 years. In the late 1980s, Japan was seen as the next economic leader, on the strength of supposedly unstoppable progress. Forecasters extrapolated from past GDP growth rates.

They are widely used to compare standards of living in one country with those in another but critics say GDP is too narrow to be a realistic indicator. Joseph Stiglitz, the Nobel-prize winning American economist, has complained that world leaders make a fetish out of it and suffer from GDP-obsession.

John Robbins, a liberal author, says that using GDP as a measure of overall progress makes as much sense as “using a fork to eat soup.”

Why? GDP, developed in the 1930s, measures the total monetary value of all goods and services. It goes up whenever money changes hands, no matter whether that money is borrowed or on what it is spent. The billions it cost to clean up the Gulf of Mexico after this summer’s disastrous oil spill, for example, counted towards America’s GDP.

Viewed solely through its lens, Robbins says, someone treated for a complicated cancer while at the same time paying steep legal fees for a divorce is someone helping make GDP look good.

U.S., CHINA LOW ON HUMAN DEVELOPMENT INDEX
Where GDP fails is as a measure of living standards, particularly in a country like China which is both a manufacturing powerhouse and a Third World country where more than a third of its vast (1.3 billion) population live on less than $2 a day. GDP per capita is not a particularly reliable indicator either. It measures the average (not the median) which results in distorted figures in countries with great income inequality.

The Nobel-prize winning American economist who designed the gauge in the 1930s, Simon Kuznets, did not mean it to be an indicator of a nation’s overall well-being but that’s how it came to be seen widely. According to Stiglitz, this tends to land politicians in a dilemma. Their goal is to boost GDP but they also face demands from citizens for policies that lower GDP, from better security to anti-pollution measures.

Stiglitz chaired a commission, established by French President Sarkozy in 2008, that looked into different ways of measuring prosperity and produced a 300-page report last year that came up with a range of recommendations to measure both well-being and economic output. (The commission did not suggest dropping GDP). When, if and how widely they will be implemented is open to question.

In the meantime, those dissatisfied with GDP as the principal measure can compare its country rankings with the Human Development Index, a gauge that was adopted in 1990 by the United Nations and is compiled from data on life expectancy, education and GDP per person. On the 2009 index (this year’s will be released early in November) neither the U.S. nor China fare well.

The U.S. comes in 13th place (having dropped a slot from 2008) and China at 92nd, out of 182. A long way from the top. (You can contact the author at Debusmann@Reuters)

James Saft

Iceland’s remarkable return to growth shows once again that in this crisis the best policy is often the one that will make international partners most angry.

Having been reviled and chastised when it refused to make good the outsize debts of its banks, Iceland this week capped a striking turnaround when it announced that its economy expanded by 1.2 percent in real terms in the most recent quarter, its first such rise in two years.

This is in stark contrast to Ireland, whose pliability and inability as a member of the euro zone to act unilaterally leaves it with a still crashing economy which must service ever more debt by making ever deeper cuts to public spending.

Iceland, which sailed into the crisis in 2008 as essentially a small fishing fleet with a massive hedge fund attached, looked its predicament square in the eye and followed a set of policies seemingly designed to tick off both its friends and enemies, doing its small but mighty best to beggar its neighbors by letting its currency crash, imposing capital controls and, crucially,  refusing to make whole the global creditors of its three failed international banks.

While an International Monetary Fund and multilateral package was eventually agreed, and a deal with Britain and the Netherlands over debts from Icesave Bank are currently being hammered out, Iceland’s leaders, at least the current ones, seem convinced that making bank creditors share its pain was the right course.

“The difference is that in Iceland we allowed the banks to fail. These were private banks and we didn’t pump money into them in order to keep them going; the state should not shoulder the responsibility,” Iceland’s president, Olafur Grimsson, said last month, tweaking the nose of EU officials who are insisting that Ireland make good all senior creditor calls on its own distended banking system.

“Bondholders should not rely on the government stepping in and bailing them out,” Iceland Central Bank governor Mar Gudmundsson said last week. “They should do their due diligence.”

“I think the Irish are accepting that they were probably too fast in guaranteeing the whole liabilities of banks. Now this is turning out to be a big burden because the assets of these banks turned out to be much worse than they thought.”

Indeed. Though Iceland has a 6.3 percent budget deficit this year, it is on track to soon record a surplus, while Ireland’s deficit this year is 32 percent if the cost of bank bailouts is included. Similarly, Iceland’s unemployment rate has fallen by almost a quarter to 7.3 percent, as against more than 14 percent in Ireland.

LEARNING FROM MAHATHIR
It is all strangely reminiscent of Malaysian leader Mahathir Mohamad, who attracted international condemnation when in 1998 he rejected IMF measures, instead pegging the ringgit to the dollar and imposing widespread capital controls. Your correspondent was among those who stroked his chin and said that Malaysia would rue the day it cut itself off from international capital, but of course this proved to be far off the mark.

Malaysia recovered robustly, foreign capital eventually flowed and more to the point, the country and its Asian neighbors learned the importance of being able to self-insure against the vagaries of global capital flows, leaving them by and large better prepared for the most recent crisis than the rest of the world.

While Mahathir was a strongman acting against international and internal advice, Iceland’s mulishness has been a model of democracy. In a March referendum 93 percent of voters rejected a deal with Britain and the Netherlands to repay 3.9 billion euros of Icesave losses. Even more striking, and a contrast with a singular lack of prosecutions elsewhere, was the decision of Iceland’s parliament to refer to the legal system  criminal charges surrounding the crash against former Prime Minister Geir Haarde.

To be sure, Iceland may have succeeded in rejecting the international consensus precisely because it is so small — many argue that a default by Irish banks would cause another global banking crisis costing far more than 30 or 50 percent of Irish GDP.

Quite possibly it would, but that does not mean that the policy of pretending that banks are not insolvent and loans not underwater is wise. The tepid, halting and largely jobless recovery argues that it is not, that debts need to be properly purged before both borrowers and lenders can play their respective roles.

Regardless, the great victory of Icelandic stubbornness is not just in its recovery but in winning a fairer division of the burden than in Ireland, Greece, or for that matter, the U.S.

(At the time of publication James Saft did not own any direct investments in securities mentioned in this article. He may be an owner indirectly as an investor in a fund. email: jamessaft@jamessaft.com)

Washington’s long con

There’s a scene in Ray Nagin’s Hurricane Katrina memoir from the Monday night after the storm in which twenty or thirty mysterious security guards, toting three guns apiece, suddenly descend upon the bombed out Hyatt city officials are using as a command center and commence measuring perimeters, laying down wires and barking orders. “We’re here to protect the mayor!” their apparent leader proclaims. “Everyone else leave!”

Nagin watches, “hallucination-like”, as his two preposterously outmanned bodyguards give the guards their best “Oh, hell no” glares, then politely asks the guards: “Who are you guys, and who sent you?” He has well-founded suspicions they are Blackwater mercenaries hired by the local business community, but the leader won’t divulge anything, so he and his staffers just keep asking the same questions of every guard they can corner, until the entire team suddenly vanishes en masse, “Ninja-like, as quickly and quietly as they arrived.”

Of the unnervingly frequent Bush Administration flashbacks I suffered reading Ron Suskind’sConfidence Men: Wall Street, Washington and the Education of a President, Nagin’s staredown of the elite hired guns is the one Obama never manages to repeat.

Instead the whole saga plays out like a more articulate slow-motion rehash of a memorable passage from an earlier Suskind book, in which an earlier inexperienced president in the afterglow of a crisis-fueled electoral victory listens to his economic advisers plot the next six months of tax breaks and “incentive package” announcements and finally asks, “What are we doing on compassion?”

(Silence.)

But Bush was a quicker study than his successor. By the end of Bush’s 2002 meeting with his economic advisers he has mastered the narrative they are concocting: the “spin” that the economy is bad is not “credible” enough to warrant compassion, but it is saddled with uncertainty—a malaise he identifies on his very own without cue as resulting from the twin ills of “SEC overreach” and the threat of Saddam Hussein’s continued rule in Iraq. By contrast, it takes 355 pages for Obama to complete a parallel metamorphosis, from compassion-infused campaigner to unprompted producer of his own brand of Beltway antilogic, by which he informs his advisers in the fall of 2009 he has learned to stop worrying about unemployment rate, since its historical magnitude is merely a rosy indicator of “productivity gains in the economy.”

By the time Obama reaches this epiphany, however, even Larry Summers is alarmed. In an uncanny rehash of Donald Rumsfeld’s ill-fated intervention to stop Bush from declaring “Mission Accomplished” in May 2003, he and the long-suffering Christina Romer try their damndest to talk some sense into the president. Ultimately, though, they just end up quitting—Romer because Summers appears to be the only guy with any clout in the Administration who seems capable of taking women seriously and that clout is clearly on the wane; Summers because his hysterically abusive management style has saddled him with the blame for the White House dysfunction whose ultimate orchestrator is much likelier Tim Geithner, whose convincing performance in the “inscrutable invincible shadow master” role pioneered by Dick Cheney will shock even readers who already despise the guy.

But it’s Geithner who gets to stay, despite a string of professional actions and inactions that universally invite the question: Who are you? Who sent you here? Who do you actually work for, and what makes him so untouchable he can get a tax cheat a job as overseeing, among other Treasury bureaus, the IRS? It’s conspicuously not Obama, whose modest directives Geithner greets with a relentless array of variations on the Bush team’s stony “compassion” silence. There’s the “slow walk”, in which a proposal sinks under the weight of excess proposing; “re-litigation”, in which the hit job gets outsourced to Summers, who prides himself at being able to win any debate no matter what side he’s arguing; outright insubordination, the method to which he resorts when Obama makes the irrefutably reasonable request for a plan to break up Citigroup; and a whole host of vicious cocktails of the three for use on trickier challenges, from the “Elizabeth Warren Strategy” he devised for gradually poisoning the White House career of the beloved bankruptcy law professor who designed the Consumer Protection Service Agency to the unmentioned hit job he did on the president’s mortgage relief bill, by which the Treasury Department ended up doling out a whole $2 billion of a $300 billion appropriation earmarked for assisting underwater homeowners.

The deadly mix of arrogance, ruthlessness and impunity Geithner radiates is of a magnitude so at odds with his adolescent physicality—as Mike Barnicle put it, “he has the eyes of the shoplifter”—that his public appearances invariably beg the question, who is the Dr. Evil to this clearly overcompensating loser son who is lucky to have more hair than Seth Green? Bob Rubin is just not that bad a guy, nor is Summers, whose larger-than-life obnoxiousness fills page after page of text, adding an amusing sideshow to an otherwise dreary story—a Fat Bastard, to continue the highly inappropriate Austin Powers analogy—but ultimately distracting from the greater mysteries of the much more elusive (and not “former”) Treasury Secretary. For instance: is there a single public figure with a basic understanding of finance who has demonstrated less concern about the financial system as Tim Geithner? Could Obama have chosen a Treasury Secretary whose judgment seemed more divorced from the so-called “reality-based community” than Geithner’s, without soliciting a nominee from the Cato Institute?

But I digress. I’d been asking those questions for three years before I read Confidence Men, and a big part of what makes Suskind such a compelling anti-Woodward is that he never loses his incredulity about this; on Tuesday night’s Daily Show he even suggested that he hopes the book might somehow inspire Geithner to go the way of General McChrystal. I don’t know how realistic this is, and here’s why.

I don’t know how common (or possible) this is anymore, but when I worked at the Wall Street Journal ten years ago it was rare for reporters to have time to read the papers (much less blogs, Twitter, Facebook, and other evil things that didn’t yet exist.) That’s what editors (and whoever was on breaking news duty that day) were for. Suskind seems to have maintained this blissful obliviousness to the chatter that would go on to envelope most journalists’ careers. Otherwise he might have avoided some of the glaring copy editing errors that have emboldened the professional pageview-cullers to run with the Obama Administration’s insipid attempts to discredit his narrative: no casual reader of finance blogs would ever mis-identify Erin Burnett as “Erin Burkett” or Fremont Investment & Loan as “Freemont.” Also, Pete Peterson was so obviously not a Reagan appointee. But who the hell cares? I actually felt vaguely ashamed noticing the errors in Confidence Men, because the same obsessive over-consumption of financial crisis porn that rendered dumb flubs like “Burkett” so conspicuous also accentuated the book’s much more remarkable trait: I hadn’t read any of it before. None of the scenes had been re-purposed from other crisis narratives (a la pretty much every other book on the topic) and more significantly, Suskind wasted no space engaging with whatever aggregate of those narratives he perceived to represent the “consensus” about what “credible” players believed to have transpired.

It is the custodians of that consensus who have of course over and over again during the past three years been inexplicably charmed by the likes of Geithner, despite reality’s tireless series of interventions in the self-aggrandizing fairytales he spends so much of his taxpayer-financed time spinning. The Washington media has gorged so hard on the “counterintuitive” fiction of how Tim Geithner, the bailout martyr no populist politician can resist dressing down in congressional hearings, actually saved us all from Great Depression II, that it has relinquished its capacity for legitimate intuition (or really, cognition.) It is only thus impaired that the consensusphere can paint Elizabeth Warren as a messianic cult leader, Wall Street as blameless for our economic malaise, the economy’s most daunting challenge as the failure of our politicians to effectively communicate the importance of deficit reduction, and whatever else serves Geithner’s mysterious agenda.

Thankfully Suskind has been sniffing around, filling his tape recorder with hard evidence that plenty of insiders with front-row seats on the whole ordeal have watched the crisis and its management play out with all the incredulity of the folks at home whose phone calls drove congress to pass a bill taxing TARP recipients’ bonus awards at 90%. As Suskind rightly points out of the meltdown itself, “the truth is that some had seen it coming a mile away. Foresight had not been wanting; it had been ignored.” In choosing to focus as much on the sort of people who respect reality as those liable to go along with Larry Summers’ strict order forbidding the Obama team from admitting he or anyone else in the Clinton economic team “did anything wrong” (by repealing Glass-Steagall, deregulating derivatives, etc.),

Suskind hammers home a lesson the Beltway cynistocracy really badly could do us all a favor by growing up and learning already: It didn’t need to happen this way. Plenty of smarter, wiser and more fundamentally decent people were standing on the sidelines, doing their best. Regardless of the presidency and regardless of the party. (One of the noteworthy traits shared by more wizened souls Obama chooses not to put in charge is how many were originally appointed-then-marginalized by the Bush White House: namely Sheila Bair, Bill Donaldson and Paul O’Neill.)

Some of the most gratifying voices belong to the legions of finance guys who didn’t act like total douchebags, who badly wanted Obama to take their industry down a few notches and channel FDR in the interest of the greater good. For every deluded oligarch whose blood pressure shot up fifteen points at the idea of giving up his bonus in exchange for a federal bailout, someone like Bank of America CEO Ken Lewis attempts to state the obvious: “If we spend another second talking about compensation we’ve lost our minds!” And for every wild-eyed anti-tax activist brandishing a semiautomatic at a town hall meeting, someone like Merrill Lynch No. 2 Greg Fleming pointing out that “based on the way things have gone, it’s ridiculous to think that taxes shouldn’t go up.”

The Goldman Sachs alumnus appointed to chair of the Commodity Futures Trading Commission, Gary Gensler, tries valiantly to play Joe Kennedy on derivatives reform, cleverly taking advantage when Tim Geithner—whom Suskind correctly observes “often appeared to understand financial markets better than [he] actually did”—botches his confirmation testimony by asserting his support for establishing exchanges for derivatives trading. Even the woefully ill-qualified “car czar”, leveraged buyout king Steve Rattner, emerges from Suskind’s narrative looking relatively clear-eyed and humane next to the technocratic inner circle they successfully convince to bail out Chrysler despite the data someone has marshaled to make the case that the automaker’s failure would be ultimately painless. (“There wasn’t one guy in that room who’d spent any serious time having beers with real workers,” fumes Rattner’s deputy Ron Bloom, a fellow Lazard investment banking alumnus turned union negotiator.)

What the Wall Street observers seem to believe that the confidence men clearly do not is that the government should not be on Wall Street’s side—that Obama ought to be ready to, in FDR’s immortal words, “invite their hate.” As BlackRock chairman Larry Fink—on whom Summers nurses an unseemly man crush—points out in a moment of candor, giving “confidence” to Wall Street generally involves spreading more misery around to everyone else. “Wall Street’s ‘confidence’ is buying back your shares; that does not add a job. Wall Street’s confidence is doing a merger; that destroys jobs.” At another point Summers justifies the radically expanding inequality that awards a quarter of the American GDP to just 1% of households every year—with a quarter of that in turn being reaped by the top 1% of the top 1%—on the basis that globalization has made markets more efficient, and the “truth” revealed in that evermore accurate price discovery process simply hurts, a theorem he calls: “Truth is kind of a disequalizer;” which is to say, “inequality is growing because people are getting closer to what they deserve.”

But radical inequality is actually violently inefficient, and massive concentrations of wealth virtually never migrate organically into the kinds of productive industries that create vibrant sustained economic growth; why risk it with all the precious metals and arbitrage strategies, tax shelters and venal politicians to plow one’s cash flows into? I’m not trying to be a firebrand here, those are just the basic facts of financial markets, truths with which Suskind, a Wall Street Journal veteran with more than a decade of basic corporate and financial reporting under his belt, is satisfyingly intimate. He hammers home the lunacy of Geithner’s single-commandment “First, do no harm” credo for contending with the financial system by reminding readers “Wall Street mocks Hippocrates. Doing harm is its business; destruction itself can be quite profitable.” You don’t need to have profited from it personally to recognize this, as Elizabeth Warren demonstrates in Suskind’s best scene, a post-interview chat following a Bloomberg TV appearance in which she observes that:

Tim and Larry’s whole plan is just like Argentina in the 1980s. There was this giant hole marked “Banks” and the government just dumped money in that hole, as much as they had, while they lied about it. That’s what Larry thinks: that the US is Argentina!

And at this epiphany, Warren bursts into a dramatic performance of “Don’t Cry For Me, Argentina”, inspiring a few fellow thespians waiting for the shuttle to join in and a small crowd to build before concluding plaintively that Summers “might understand things better as a woman.”

I let out a little cheer of solidarity in the bookstore cafe as I read this passage, then texted my sister about it. As Ta-Nehisi Coates pointed out about last week’s wave of early reports of the many complaints of workplace sexism Suskind had unearthed, the revelations adhere almost suspiciously to “my worst gut-level impressions of the White House.”

But Suskind’s much more thorough character studies end up corroborating your best gut-level impressions, of all the innumerable well-intentioned individuals who understood in September ‘08 what so many like them understood in September ‘01, that this was their chance to do their part to restore a bit of civility to a civilization that seemed otherwise hellbent on setting a world record in rot. And whether you choose to dwell on the depressing fact that they were stymied under a messianic warmongering Republican president the first time around and under a black Democrat with the middle name “Hussein” the second, or the more hopeful thought that Warren is still 22 years younger than Suskin’s impishly heroic male lead Paul Volcker, the lesson is the same; it’s still on. And the bad guys have been coddled for so long they might very well back down if someone stares hard enough.

The deludedly optimistic youth of America

Friday was a slightly-better bad day to be a young person in America. The morning’s unemployment said 14 percent of Americans 20-24 years old are now unemployed, down 0.7 points from September. Teenagers’ rate was similarly down, dropping 0.5 points to 24.1 overall.

But still—14 and 24.1 percent! Well above the national average of 9 percent, which isn’t exactly something the Millennials can look forward to.

And yet young people remain stubbornly optimistic. In a comprehensive new survey of 842 young people that Demos, a New York think tank, released this week, almost 69 percent of Americans 18-34 years old “believe the American dream is still achievable.” In other news, the average student debt for new graduates is now $25,250, larger than ever. (To be fair, this isn’t entirely recession-related. My debt was around $100,000 when I graduated, and that was a year and a half before Lehman went belly-up.)

Politicians are as deluded as young people. Rick Perry, in a slurry speech that’s better known for its delivery than its content, said last week that “our obligation is not only to provide children with the best environment to nurture, but to ensure every child inherits a land full of opportunity.” Mitt Romney and Herman Cain, meanwhile, are spending Friday at the “Defending the American Dream” summit. And the Dream dream affects Democrats too. Don’t forget about Barack Obama’s now-abandoned Win the Future campaign, which acknowledged that while things are awful, they could easily get better—if only we tried. A dysfunctional Congress scoffs at such a quaint notion.

A person prone to cynicism—(read: this author)—looks at this wishful thinking and blames it on demographics, which is to say blames it on politics. The perpetuation of the American Dream, despite all evidence suggesting the American Dream has died, is good politics in the way that Good Politics is almost always quite bad. It hijacks the American character while ignoring the American reality.

Our political culture’s pervasive discussion of the mystical American Dream appeals to two main demographics: parents and kids. Which is to say, it appeals to nearly everyone. Parents—the very people who mucked up the earth and refuse to do anything about it—want to believe their wrongs will be absolved. Kids, meanwhile, need some dream to hold on to, else they all take to occupying the streets.

Which, whoops. The streets are now occupied, making politicians’ pleas to Millennials more important now than in 2008. Barack Obama, after all, needed the young people to win back then, and he’ll need to rely on them even more in 2012. But will they show up, especially given Obama’s mixed record on the youth’s pet issues? Will unfounded optimism be enough to drive them to the polls? Or will the unemployment that has already put them on the couch keep them there come Election Day?

I dove into historical voting trends for answers…and found more confusion. There’s a very weak correlation between youth unemployment (I used 16-24 year olds) and their coming out to vote. See the chart below, where the blue line is the gap between registered and actual voters aged 18-24, and the red line is an average unemployment rate in the three quarters preceding a presidential Election Day. Some years, high youth unemployment means low youth turnout. Other years, it’s the other way around.

There have been plenty of people trying to make sense of Millennials in the last few weeks. Much of the rumination was launched by a New York Magazine cover story about how young Americans are readjusting their expectations in the recession. The thesis: expectations are being readjusted downward, but there isn’t much choice otherwise. And isn’t that what getting older is about?

The author is a close friend, and while she was writing the piece I told her that our generation should be named the Dayenus, after the Hebrew for, essentially, “it would’ve been enough.” Every Passover Jews sit around the table and tell the story of the exodus from Egypt, singing that it would’ve been alright if God had only freed them from slavery. The whole splitting the Red Sea thing was just gravy.

Demos’ data suggests that for young people it’s apparently enough just to be an American. Who cares about crippling student debt, a piddling employment rate, and a democracy that sometimes borders on farce? We live in a country that allows for a modicum of civil rights and has the wealth to at least make us entertain our dreams (if not achieve them). We can make do with that.

But dayenu can easily calcify into apathy. Presidential candidates are promising miracles; but young people, optimists though they are, may be done hoping for politicians to come and part the Red Sea. They’ve seen far too many drown in Washington’s red tape.

PHOTO: Graduating students listen to U.S. President Barack Obama speak at the University of Michigan commencement ceremony in Ann Arbor, Michigan May 1, 2010. REUTERS/Kevin Lamarque

The real cost of those Black Friday deals

Americans shop. It’s what we do. It’s who we are. We’re still an economy powered by consumer spending – 70 percent of it, in fact. It’s an article of faith, for some, that annual Thanksgiving celebrations not only include turkey, stuffing and cranberry sauce, but lining up in the cold and dark at their favorite store to snag a Black Friday bargain.

Maybe not this year.

Spurred perhaps by the growing national strength of the Occupy Wall Street movement, two emboldened Target workers, Anthony Hardwick, of Omaha, NE and Seth Coleman, a dockworker from Northfield, MN have collected 180,000 signatures protesting their employer’s unprecedented decision to open their stores to shoppers at midnight. Coleman delivered a bag of signatures gathered on-line to Target headquarters in Minneapolis earlier this week.

Coleman will be working at the Target store in Northfield on Thanksgiving Day, from 4 a.m. to 10:45 a.m. Then he’ll return 12 hours later, to make sure the shelves are stocked for the company’s first ever midnight opening for the Christmas rush, reported Minnesota Public Radio.

There is also some talk of retail workers taking a sick-out to protest retailers’ demands that they leave their own holiday meals in order to be work by midnight or earlier.

Retailers routinely excuse their escalating demands, such as this year’s ever-earlier Black Friday store openings, because their competitors are doing it. They’ll lose business, they argue, if they don’t follow the herd. Retailers defend all corporate decisions — no matter how detrimental they may be to their indispensible low-wage workers or how unpopular they may be with shoppers newly sensitized to the needs of the 99 percent. Retailers claim it’s alright because they have to protect shareholders’ interests by keeping profits high and hitting their quarterly projections.

But are American shoppers truly comfortable with the real price of these putative bargains? Is any sale item really worth knowing that your friends and neighbors, children and grandchildren working in retail, are toiling long, grueling hours for pennies?

Do you really want to drag them away from their own holiday tables to sell you one more item a little more cheaply?

Retail is an almost $4 trillion industry. It’s the nation’s third-largest, and it’s the country’s largest source of new jobs in an economy where many employers, even those sitting on record corporate profits, still refuse to hire.

But what’s the value of these jobs?

The median retail wage in 2010 was $8.90 for a cashier and $9.86 for a sales associate – down from $9.50 an hour in 2006, according to the Bureau of Labor Statistics. More than three-quarters of retail workers are older than 25, contradicting the popular belief that only teens living at home work retail for a little extra pocket money.

One-third of all retail workers are the sole income for their families, working for poverty-level wages. Many of them want to work full-time, but retail employers, who clearly have the upper hand in an era with few other available jobs, consistently and increasingly offer them only part-time positions without benefits. Part-time workers earn a third less than those employed full-time, despite the physical and emotional labor — and the skills and product knowledge that retail work requires — being identical.

With wages remaining so low, many full-time retail workers need food stamps to boost their incomes. In New York, those in support of higher wages joined a rally Monday evening — some 2,000 strong — to fight for the Fair Wages for New Yorkers Act, which would require all developers receiving government tax breaks to impose a minimum wage on the retail tenants of their stadiums, malls or conference centers, requiring them to pay $10 per hour with benefits and $11.50 per hour without.

In 2008, another crowd of 2,000 people gathered outside a WalMart in Valley Stream, NY. They’d been massing since midnight for a Black Friday sale, and by the time the doors were opened at 5:00 a.m., tempers had frayed. As shoppers literally stampeded in, they trampled a 34-year-old employee, Jdimytai Damour, to death.

We all want a bargain. But let’s all keep some sense of our values as well.

Photo: A view of a Wal-Mart.com store at the Topanga Plaza in Canoga Park, California, November 8, 2011. Two tiny Walmart.com stores are making Southern California malls their home for the holidays, launching the latest salvo in the war for online retail dominance. REUTERS/Fred Prouser

100 years and going strong; But has the ANC-led government done enough for its people?

By Isaac Esipisu

Although the role of political parties in Africa has changed dramatically since the sweeping reintroduction of multi-party politics in the early 1990s, Africa’s political parties remain deficient in many ways, particularly their organizational capacity, programmatic profiles and inner-party democracy.

The third wave of democratization that hit the shores of Africa 20 years ago has undoubtedly produced mixed results as regards to the democratic quality of the over 48 countries south of the Sahara. However, one finding can hardly be denied: the role of political parties has evidently changed dramatically.

Notwithstanding few exceptions such as Eritrea , Swaziland and Somalia , in almost all sub-Saharan countries, governments legally allow multi-party politics. This is in stark contrast to the single-party regimes and military oligarchies that prevailed before 1990.

After years of marginalization during autocratic rule, many African political parties have regained their key role in democratic politics by mediating between politics and society. Multi-partyism paved the way for genuine parliamentary opposition and the strengthening of parliaments in decision-making. However, several shortcomings still remain: many African political parties suffer from low organizational capacity and a lack of internal democracy.

Dominated by individual leaders, often times lifelong chairpersons and “Big Men”, youth and women remain marginalized within party structures.

There are five main types of political parties: Elite-based; mass-based; ethnicity-based; electoralist and movement parties. The ethnicity-based party seems to be most salient in Africa, while other types, although not completely absent, do not apply to Africa because they demand a high level of bureaucratic organization, professional electoral campaigns or distinct ideological positions.

Political parties in Africa can develop into truly democratic institutions when African leaders begin to promote bureaucratic organization, internal democracy, accountability and transparency.

Some of the shortcomings of African parties can be explained by the fact that most parties are relatively young, specifically designed to contest elections and therefore lack experience on party matters. They are not the product of social interest groups but largely formed by individuals whose main interest is access to power.

That is not the case with South Africa’s ruling Africa National Congress (ANC), which celebrated its 100th anniversary on the 8th of January, 2012.

ANC is among the oldest parties in Africa and since taking power in 1994 the party says it has made big strides in erasing the economic and social injustices caused by decades of oppression of the black majority by a white minority under apartheid.

Underpinning the economy is the most advanced infrastructure on the continent, the strongest banks and a well-developed rule of law and judicial system, making South Africa a stepping stone for investment in Africa’s quickly emerging states. One constant factor that has kept the ANC government on the fiscal straight and narrow and reassured investors has been the National Treasury, led since 1994 by just two finance ministers highly praised for their fiscal discipline.

The World Economic Forum’s Global Competitiveness Survey ranks South Africa as top in the world for its regulation of its security exchanges, number two in the world behind Canada for the soundness of its banks. It is also one of the easiest places for a firm to raise money by issuing shares.

The ANC, with its many internal problems and criticism of its leadership, has had a hands-off style of leadership when it comes to fiscal and monetary policy, something that many African ruling parties don’t do.

The ANC has also relied on labour for support and is not about to set in place reforms that would loosen one of the world’s most restrictive labour markets, even though economists said changes are needed to make it more competitive.

The ANC has done what many parties write in their manifestos but fail to implement. Do you think Africa needs more hands off parties like the ANC in running their economies? Are well entrenched and older parties good in running economies? What has the ANC done in improving people’s life in South Africa and is it enough?