This Week:

Quote of the Week

Good Economic News: Front Page. Bad Economic News: Huh? OR It’s the Economy, Editor!

Thinking Dialectically (Part 2 in the who-knows-how-many part “How Not To Get Depressed” Series)

Greetings,

In this issue I give some tips for thinking dialectically. Because Karl Marx is so well-known, and he talked a lot about “dialectical materialism,” there is a tendency to think that anybody who talks about dialectics is a communist. Not so. Likewise, I quote Leon Trotsky this week, but it’s just because I think the way he explains one particular point is the best I could find. This does not mean that I am a “Trotskyist” (whatever that might mean). In fact, as soon as you take someone’s name and put an “-ist” after it, you leave the realm of thinking and enter the realm of faith. Now, faith is not a bad thing, but faith combined with politics is a recipe for totalitarianism, in my mind.

Both systems theory – which I talked about two weeks ago – and dialectics stress the importance of integrating information and seeing the “big picture.” I am aware of the irony in attempting to explain dialectics by breaking it into a set of separate “key points.” But that’s the problem with language – it’s too limited to allow us to really express what is going on in our brains. So, I’ll go ahead and tear this concept apart, and hope that the parts can fit together in your brains afterwards. If not, the fault is mine.

The Notes is a bit heavy on the theory this week. I think I’ll do some catching up on “issues” next week, just for a change of pace. We’ll see.

Until then, keep on working for justice,

Nygaard

"Quote" of the Week:

From a report on the U.S. economy in the Baltimore Sun of September 5:

“Normally, in this part of a growth cycle, businesses are spending their growing profits on expanding, updating and improving their business. This creates more jobs, which puts some stress on the job market, which leads to higher wages, which increases consumption. But that's not happening with the profits made in this cycle.

“Steve Hanke, a Johns Hopkins economist who was on Ronald Reagan's original Council of Economic Advisers, says businesses are keeping this money because they are not sure what the future will bring.

“‘I think the nub of the problem is derived from the so-called war on terrorism,’ he says. ‘The manner in which this war is being prosecuted ... creates a great deal of uncertainty, which runs like a cancer through the economy.’”

Good Economic News: Front Page. Bad Economic News: Huh?
Or: It’s the Economy, Editor!

Choices, choices. During an election season, news editors face important choices in reporting on one of the issues that invariably is of major concern to every voter: The economy. So it was disappointing to see the choice made by the Star Tribune (Newspaper of the Twin Cities!) this past week. The first choice was on Labor Day. The second choice was on Thursday. I’ll look at the second choice first.

On Thursday, September 9th, the banner headline at the top of Page One was “Economy Regains Traction; Federal Reserve Chairman Alan Greenspan Delivered an Upbeat Report to Congress.” (This is the second Star Trib story I’ve written about recently with “upbeat” in the headline. The Star Trib really likes the word “upbeat.”)

The story reported that Greenspan had said on Wednesday “that the economic expansion had ‘regained some traction’ after the slowdown this summer...” (Greenspan had earlier referred to the slowdown as a “soft patch” in an otherwise healthy economy.) Well, Mr. Greenspan is a powerful person, so it’s appropriate to report his views, but it would also be appropriate to report his track record on these sorts of predictions about economic performance.

For example, as economist Dean Baker pointed out last month, referring to newspaper reports of another “upbeat” utterance from the Chairman: “in the fall of 2000 and right into 2001, Alan Greenspan and other top Fed officials continued to say that the economy was doing fine, even as it was sinking into a recession. It would have been helpful to note this recent track record when reporting these assessments and to present the views of economists with different opinions.”

This was a reprint but, in fairness to the New York Times, although they were also mostly “upbeat,” at least they did include the following, at the very end of the article: “Some analysts were startled at Mr. Greenspan's apparent conviction that the ‘soft patch’ is almost over. ‘As much as we would like to be optimistic,’ Ian Shepherdson, chief United States economist at High Frequency Economics in Valhalla, N.Y., wrote in a newsletter to clients, ‘we found Mr. Greenspan unconvincing.’” The Star Trib edited out this mild dissent from its “upbeat” reprint, for reasons which I do not know.

Now for the first unfortunate choice made by the Star Trib. On Labor Day the JOBS NOW Coalition and the Minnesota Budget Project released an important report called “Wage Outlook in Minnesota Labor Day 2004.” This report paints a picture that is quite different from that painted by Mr. Greenspan. Not a word about this important report appeared in the Star Trib – the region’s newspaper of record. Since it was never reported – and since the way the JOBS NOW folks report the facts offers a little economics education – I’ll give a few highlights here. (To read the full report for yourself, go to http://www.mncn.org/bp/swm04wages.htm.)

“In the past eight business cycles, the share of corporate income growth going to corporate profits averaged 21 percent, and an average of 79 percent of corporate income growth went to worker compensation. In this business cycle, the pattern has reversed: 85 percent of corporate income growth has gone to corporate profits and only 15 percent to workers.

“Higher profits mean higher stock prices, but most of these gains have gone to upper-income Americans. While it’s often argued that we’re all investors now, the truth is that most families own at most a few thousand dollars worth of stocks. In fact, the bottom 80 percent of Americans own less than 11 percent of all stocks. For most workers it is wages, not stock prices, that largely determine living standards.

“A minimum wage sets a standard for wages at the low end and thus plays an important role in determining the wages of the state’s overall workforce, especially for workers with only a high school education and those living in rural areas. The high point in the purchasing power of the minimum wage was 1968 when it was $1.60. The minimum wage would be $8.46 per hour if it had kept pace with inflation, rather than the $5.15 it is today. Approximately 450,000 workers in Minnesota earn less than the inflation-adjusted minimum wage of $8.46 an hour.

“There is strong support among Minnesotans for raising the minimum wage. According to a poll done by the Minnesota Center for Survey Research, 81% of Minnesotans believe the current minimum wage of $5.15 per hour is too low.”

This Minnesota report is connected to a major national report, “The State of Working America.” I’ll have more on this in a future Nygaard Notes.

Thinking Dialectically (Part 2 in the who-knows-how-many part “How Not To Get Depressed” Series)

Two weeks ago, in Part 1 of this series, I talked about how I think in terms of systems, and how nothing really “causes” anything else because everything is connected. I talked about the importance of context, and how we simultaneously affect the world we live in and are affected by the world we live in. I think of “systems” as basically what the world is. The question is, how do you think about such a complex and interrelated set of systems? The answer, I think, is the idea of dialectics. In other words, systems is the “what.” Dialectics is the “how.”

What is Dialectics?

Dialectics is a lot of things to a lot of people. If you look it up, it can be pretty intimidating, since you pretty quickly run into such heavyweights as Socrates and Engels and Lao Tzu, whom most of us haven’t read. There’s Karl Marx, of course, with his dialectical materialism. And how about Charles Darwin – you’ll want to think about dialectical biology, won’t you? Well, maybe not. Instead of doing all that reading, here’s the brief Nygaard Notes summary of the key points of the dialectical method:

1. THE WORLD IS DYNAMIC. Everything is always changing, is always in movement and flux. In a sense, this is a part of the definition of dialectics: it’s a way of thinking about how things change. Conventional thinking is based largely on description: Where is it? How big is it? What color is it? Et cetera. In “The ABC of Materialist Dialectics,” Leon Trotsky pointed out that this type of thinking is inadequate in explaining the world, by saying that “it wishes to content itself with motionless imprints of a reality which consists of eternal motion.” Or (and Trotsky refers here to conventional thinking as “vulgar;” whatever...): “Dialectical thinking is related to vulgar in the same way that a motion picture is related to a still photograph. The motion picture does not outlaw the still photograph but combines a series of them according to the laws of motion.”

2. UNITY OF OPPOSING FORCES. Every thing (every object and every process) is made up of opposing forces/opposing sides. On some levels this is obvious. Every political party has an opposition, for example. And every person has a “good” side and a “bad” side. Fire can burn down your house or it can cook your food. Even in the physical world, objects are filled with tensions. Atoms are always trying to split apart, but electromagnetism tries to hold them together. And so on. The thing that’s hard for a lot of people to accept is that something can be what it is and – at the same time – be what it is not. If you can’t accept this idea, then you are far more likely to accept things “as they are,” because, well, that’s how they are.

Some Marxist types like to talk about “opposites” and “contradictions.” I don’t like to talk that way, but I see what they are saying. The point here is that a person, or a social system, is composed of parts, not all of which are happy with things as they are. In this sense, everything contains within it the seeds of change.

3. TRANSFORMATION. Things change little by little, until they change so much that they suddenly become something else. That is, they are transformed. Water is heated, and undergoes a gradual, and quantitative, change: it gets hot and just keeps getting hotter. Then, suddenly, it gets too hot and undergoes a qualitative change, and becomes steam. As Jack Lucero Fleck puts it on the excellent website Dialectics for Kids: “What happens is that the two opposing forces in a process of change push against each other. As long as one side is stronger than the other side, change is gradual. But when the other side becomes stronger, there is a turning point – an avalanche, a birth, a collapse, a discovery...”

4. UNFOLDING. When one thing combines with another thing, something new comes into being. Then that new thing combines with something else, and another new thing is born. Some dialectics people express this by saying that “change moves in spirals, not circles.” Frederick Engels talked about the “negation of the negation.” I don’t agree with Engels on this – or at least I don’t agree with his phrasing. When two things combine, it’s not as simple as “negation.” Maybe it’s a new sort of “affirmation.” Or maybe the result is so different it has little relationship to the original components. The point is that we have to keep looking at all these new and constantly unfolding things and figure them out. And to remember that those things, too, will combine with other things and keep changing.

5. INCLUDE EVERYTHING. Everything relevant, that is. The more you are able to consider all aspects of a problem, or an issue, the more likely you are to figure it out. Doesn’t this sound obvious? It may be, but it’s not easy to do. For all sorts of reasons, really smart people often fall short in their analysis of a problem – and their proposed solution then fails – because there are things that they won’t, or can’t, see. We all have our blind spots, due to our identities and upbringings, among other things. These blind spots make it difficult or impossible for us to really understand what is going on. That’s why any real solutions, especially to political or social problems, need to be worked on by the largest and most diverse group of people possible: one person’s blind spot is another person’s area of expertise. (This is yet another argument for democracy, you might notice.)

In summary, then, here are the tools to use when trying to think dialectically. Just remember that:

* Everything is always changing;
* The changes come from the conflict between opposing forces;
* Things change both quantitatively and qualitatively;
* The future will unfold in ways we can’t yet know, and;
* Your thinking should take into account as much of this as possible.

That’s a lot, but if you practice thinking this way, I think you’ll see that it works pretty darned good (as some of us in Minnesota like to say).

Well, all this theory is fine, but what does it have to do with not being depressed? The fact is that how you think affects how you act. So, if you really come to understand the universe as composed of systems, and if you think dialectically, then you are bound to act differently than you did before. But, how? And why should you care? That’s what I plan to talk about in future parts of this series.