Wednesday, May 28, 2014

Don't Eat Chicken! (Piketty Picks Them Apart)

Or eat it at your peril.

I haven't eaten chicken regularly (unless I'm a guest where only it is served) in two decades - mirroring, as a matter of fact, the rise of Tyson Foods (remember how they so lavishly funded home-boy Willy as well as everyone else who would accept their filthy lucre?) and the overwhelming takeover of family farms by heavy-industry meat production.

As if it could get any worse.

The USDA’s assurances notwithstanding, many critics would like to know how, exactly, the new system is supposed to make our poultry supply safer, given two of its most notable features: a 25 percent increase in the speed of processing lines, coupled with a 40 percent decrease in the presence of government inspectors in our nation’s poultry plants. That’s a highly risky combination, says Christopher Leonard, whose recently published book, The Meat Racket, explores the rise of Tyson Foods and the evolution of the American poultry industry.

Last February, an investigation by Consumer Reports magazine found that 97 percent of all chicken breasts sold in American supermarkets harbored illness-causing bacteria, including E. coli and salmonella. Reshaping our poultry regulations along HIMP guidelines, Leonard says, would “clearly make the system less safe than it already is. The safety inspection regime is already strained to the point of breaking.”
It’s even harder to make the case that HIMP won’t affect the health of poultry workers, who, according to the U.S. Occupational Safety and Health Administration (OSHA), already report an injury rate that’s more than 50 percent higher than the injury rate for all U.S. workers. A recent study by the National Institute for Occupational Safety and Health (NIOSH) found that 42 percent of workers at one South Carolina plant showed evidence of carpal tunnel syndrome, attributable to the constant repetition of specific hand and wrist motions at certain speeds.

“Line speed affects the periodicity of repetitive and forceful movements, which are the key causes of musculoskeletal disorders,” wrote NIOSH director John Howard after the study had been completed. Ramp up line speed, and it seems inevitable that carpal tunnel — and line backups, like the ones Clements saw spilling meat onto the floor — will go up, too.
But for all the debate over HIMP’s potential impacts on consumer and worker safety, there’s no debating the reason the poultry industry would like to see the new system put in place: money. In America’s poultry plants, says former USDA inspector Alvin Sewell, “production rates are everything.”

Should HIMP rules become standardized across the nation, the maximum allowable speed of processing lines will rise from 140 to 175 birds per minute, translating into an extra $256 million a year for the industry. But poultry companies won’t be the only ones realizing a windfall from changing over to HIMP: by decreasing the presence of government inspectors on processing lines, the USDA estimates that it will cut its own personnel costs by as much as $90 million in the first three years after implementation.
And critics point out that while government inspection would go down under the revisions, poultry plants are being given permission to expand their use of powerful chemicals to kill off dangerous bacteria during processing. Under current law, poultry plants must formally request authorization from the USDA in order to subject their carcasses to antimicrobial baths, using powerful chemicals like chlorine and peracetic acid.

But under HIMP regulations, the USDA would simply issue a blanket pre-authorization to any and all poultry companies who decide to engage in the practice.

The land of the intentionally deaf (but hardly dumb) has weighed in with its concern trolling outdated worries (for the poor, poor rich). Piketty picks them apart.

Funny, isn't it, how the interests, who might lose a little bit of their staggering lately-acquired wealth to very slightly higher taxes (ask Warren Buffet, who favors them), are so highly in an uproar that they feel the need to bring in the lightweights like now thoroughly exposed (naked in fact) charlatan and expert on nothing but his own love life, David Brooks of the New York Times editorial staff, to seriously question the economics history as if he is well-versed enough on the relevant literature to ask anything more than puffball questions?

It's not a difficult read, but it helps if you want to understand its terms and implications.

“The entrepreneur inevitably tends to become a rentier, more and more dominant over those who own nothing but their labor,” economist Thomas Piketty writes in his explosive and unexpected best-seller “Capital in the Twenty-First Century.” “Once constituted, capital reproduces itself faster than output increases. The past devours the future.”

That warning – and Piketty’s signature inequality “r > g” – have drawn a volume of attention, admiration and scorn unmatched by any other recent economics volume. So we called up Piketty to react to the reaction.

“The idea that progressive taxation is politically infeasible is just wrong…” Piketty told Salon in a Monday interview. “I am not impressed by that kind of claim, because the same people one century ago would have said that the progressive income tax will never happen in the U.S. or elsewhere.”

Reached by phone in Paris, the newly famous professor pushed back against his critics on the left and right; considered how much education or migration can mitigate inequality; and defended his book’s signature policy proposal: an unprecedented global progressive wealth tax.

“I’m very sad if the book made some people depressed,” Piketty told Salon. “But I am not depressed.”
David Brooks… writes that “Piketty predicts that growth will be low for a century, though there seems to be a lot of innovation around. He predicts that the return on capital will be high, though there could be diminishing returns as the supply increases. He predicts that family fortunes will concentrate, though big ones in the past have tended to dissipate and families like the Gateses give a lot away. Human beings are generally treated in aggregate terms, without much discussion of individual choice.” What do you make of those critiques from David Brooks?
I do my best to respond to them in the book. As a general response, let me say that I don’t know what the future value of the growth rate and the rate of return will be.

It could be that we manage to get a lot higher growth that we’ve had in the past. It could be that we are all going to have so many children, and we are all going to be making so many new inventions, that the growth rate will be 4 or 5 percent, and will be as large as the rate of return. Or it could be that we don’t know what to do with capital anymore, and the rate of return will fall to the growth rate. You know, this could happen. But it would really be an incredible coincidence.

So in case this incredible coincidence happens, we will be fine. We will not need my other solution. And I will be very happy. All I am saying is that we should not bet on that. And we should make another plan, in case this incredible coincidence does not happen…

There is a lot of evidence suggesting that even if we try to promote innovation as much as we can, and even if we try to increase growth rate as much as we can – and I am certainly in favor of any policy going in this direction – that even if we do that, that’s not going to bring us to a 4 or 5 percent growth rate. We are still going to be somewhere between 1 and 2 percent, at least for productivity growth. And it’s not so easy to impact on population growth…

Maybe the total growth rate will not be 4 or 5 percent in the long run. Maybe it will be only 1 to 2 percent. I guess my main point in the book is that we should organize ourselves so as to be able to react to whatever happens.
So right now, what we see is that the top of the wealth distribution is rising at 6, 7 percent a year — more than three times faster than the size of the economy
. How far is this going to go? Is this going to stop somewhere? Yes, of course it will stop somewhere. But where exactly will it stop? I think nobody knows…

We should not just be waiting for natural forces to get us to the right place… There is no natural force that makes the rate of return and the growth rate of the economy coincide in the long run. And there is no natural force that prevents the concentration of wealth from rising to a high level. So I am not saying this will rise forever. This will stop somewhere. I am just saying that this somewhere can be very high, and there is no natural force that prevents this from happening.

So instead of just waiting and seeing, I am just saying we should have more transparency on wealth — more financial transparency, more democratic transparency on wealth dynamics — and then we will adjust the tax rate to whatever we observe…

If what we observe is that the top of the wealth distribution is not rising more than the average… we don’t need to have a sharply progressive tax rate at the top. But if the top of the wealth distribution is rising at 6, 7 percent a year, then don’t tell me that a 1 or 2 percent tax rate on top wealth will kill the economy. So we have to be very pragmatic on this. And most importantly, we need to have democratic and fiscal institutions that are able to produce the kind of information, and the kind of transparency, that will allow us to adapt to whatever we observe…

I don’t pretend that I can predict the future value of the growth rate or rate of return. I’m just looking at the data. And if the data changes in the future, and the top stops rising three times faster than the average, then I will be very happy to look at the data and to say it.

I don’t have any stake in this.

Now that you are a celebrity, would you consider running for office?

Oh no, not at all. That’s not part of my plan now.

On the question of global inequality: The new Purchasing Power Parities report from the World Bank’s International Comparison Program, while noting the result should be “interpreted with caution” due to methodological changes, finds that “The spread of per capita actual individual consumption as a percentage of that of the United States has been greatly reduced, suggesting that the world has become more equal.”…First, are you convinced by that result? And second, how do you see the relationship between global inequality and inequality within individual countries?

There has been a great reduction in global inequality over the past few decades — that’s for sure… That’s convergence between emerging countries and rich countries… a diffusion of technical knowledge and skills and operational knowledge — and that’s the most powerful force pushing in the direction of reducing inequality. So in principle, this could also work within [a] country, this same process of diffusion of knowledge and skill, but this requires a very inclusive educational institution, so that people with less skills can catch up…

What’s quite striking is that in spite of this convergence at the global level in terms of per capita GDP, the top of the distribution of wealth at the global level has been rising a lot larger than per capita income or output or wealth at the global level. This convergence — although they are very strong, they have been less strong than this “r bigger than g” at the global level…

[The book considers] the growth rate at the top of the global distribution of wealth… The top has been rising three times as large as the average. Which was not obvious to me before I did this computation. Because you could have that thought that the convergence force in terms of per capita GDP would dominate the “r bigger than g” effect.

The economist Suresh Naidu suggests… “if we’re aiming for politically hopeless ideas, open migration is at least as good as the global wealth tax in the short run, and perhaps complementary.” Does he have a point?
These are complementary positions. These are not substitutes. Yeah, I am in favor of migration. But I am also in favor of education. But at the same time I am in favor of progressive taxation. I think we need all of this. I think we don’t have to choose one.

The idea that progressive taxation is politically infeasible is just wrong… I am not impressed by that kind of claim, because the same people one century ago would have said that the progressive income tax will never happen in the U.S. or elsewhere

Sometimes things happen even when we don’t expect them to happen.

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