Financialization, Inflation, and DC

In the Washington Post, Steven Pearlstein recently discussed how investors have moved from investing in production to investing in finance. As a result, we see rapidly expanding investments not in commodity production -- like in the production of wheat, corn, coffee, and other food items, as well as housing, oil, and natural gas -- but in commodity futures, betting on changes in the markets for these commodities. The expansion of investments in and profits from finance, as opposed to production, is called financialization. As I discussed earlier, financialization is not new (it has been growing since the 1970s), but now financialization is quite extensive. According to U of Michigan sociologist Greta Krippner, financial sector profits rose from 10-15% of total profits in the US economy in the 1950s-1960s to more than 40% of total profits in 2001. The popularity of financial investments and the self-fulfilling belief that increasing profits from these investments will continue indefinitely is driving up the prices of the commodities themselves. According to Pearlstein:

Little did you know that it’s no longer the supply and demand for companies, houses, office buildings, natural gas or wheat that sets prices. More likely it’s the supply and demand for the futures, swaps and other derivative instruments linked to those things.

Now, as a result of financialization, prices are not so tied to real supply and demand for things, so we see new levels of inflation in food and real estate prices. This is particularly distressing for those living on low incomes in the US and in the developing world. The DC area is experiencing this too. This graph shows the increase in consumer prices in the Washington-Baltimore area since 2001 (Bureau of Labor Statistics data):





Financialization does not seem to be going away. How will those living in poverty deal with increasing prices? What will happen to those who have lost their jobs and their housing? Or could financialization go away? Would supply and demand for things themselves reappear? Would investment in the production of things expand? Since so many pension funds invest in finance, what would happen to pension funds? What might replace financialization?

Thanksgiving, Sports, and Ward 6

Thanksgiving is a day of many activities, including sports. Sociologists explore many aspects of sports and society. Just one example is the work by U of Minnesota sociologist Doug Hartmann. In his article "Sport as Social Intervention," Hartmann examines the interest among policymakers in midnight basketball and other programs that use sports as a tool to lure "at-risk" youth away from crime and back to school. In this article, he discusses one particularly successful program that goes far beyond offering only sports programs. Hartmann notes that midnight basketball programs too often are just ways that athletic administrators can obtain some funding for their limited sports facilities in an era of cuts to school budgets and to social services. He also warns policymakers not to expect too much from such programs. When expecting too much,

such misunderstandings can actually serve to reinforce and exacerbate the problems faced by at-risk urban youth by deflecting public attention away from deeper social sources of their problems. 'If we are not cautious,' as Jay Coakley has put it, such programs '... may unwittingly reaffirm ideological positions that identify young people, especially young people of color as 'problems' and then forget that the real problems are deindustrialization, unemployment, underemployment, poverty, racism, and at least twenty years of defunding social programs that have traditionally been used to foster community development in ways that positively impact the lives of young people.'

In the 1970s, Friendship House next to the SE Library and the Eastern Market Metro provided a wide range of programs for youths and their families that dealt with this range of "real problems" that they faced and still face today. Are young people of color in Ward 6 considered only as "problems"? Are sports the only programs provided to poor youths to succeed within massively unequal Ward 6 and society more generally of today?

Gentrification of Yesteryear

Things have been really busy. Wanted to share something quickly. The Capitol Hill area experienced gentrification -- the replacement of lower-income residents with higher-income and often professional residents -- in the 1960s and then again in the late 1970s. In his excellent Between Justice and Beauty: Race, Planning, and the Failure of Urban Policy in Washington, D.C., Howard Gillette cites a Washington City Paper article from 1988, which reported that all of DC lost "8 percent of the city's middle-class taxpayers since 1975, with increases of 5 percent among the poor and 7 percent among the wealthiest city residents." By 1992, the Washington Post reported a drop in the number of poor households and "increased disparities between rich and poor in Washington and the metropolitan area." While my blog has been interrupted, gentrification has not.

Friendship House and Cesar Chavez

The Friendship House sought to organize/empower the poor so that the poor themselves could work to end poverty. In the public housing projects and in other activities, the Friendship House employees talked about various social movements. For example, in 1973, the Ellen Wilson Dwellings saw a movie about migrant workers to encourage them to join the boycott against Safeway (the nationwide boycott involving Cesar Chavez against Safeway and A&P to force them to make certain that farm workers received adequate compensation). Around the same time, African American firefighters visited Potomac Gardens to ask their support (which may have been related to the Oakland's Black Firefighters Association formed in 1973, as discussed in this PBS video). Here is a film maker seeking to make an updated version of such a film that public housing residents might have seen:


It is interesting that public housing residents seemed more politically integrated in the 1970s. Is this true? Why do you think this is?

A View of Public Housing from Within