Sunday, August 1, 2021

Week-end Wrap – Political Economy – August 1, 2021

Week-end Wrap – Political Economy – August 1, 2021

by Tony Wikrent

Strategic Political Economy

U.S. Population Growth, an Economic Driver, Grinds to a Halt 

[Wall Street Journal, via Naked Capitalism 7-26-2021]

America’s weak population growth, already held back by a decadelong fertility slump, is dropping closer to zero because of the Covid-19 pandemic.

In half of all states last year, more people died than were born, up from five states in 2019. Early estimates show the total U.S. population grew 0.35% for the year ended July 1, 2020, the lowest ever documented, and growth is expected to remain near flat this year.

Some demographers cite an outside chance the population could shrink for the first time on record. Population growth is an important influence on the size of the labor market and a country’s fiscal and economic strength.

I placed this under “Strategic Political Economy” because it exemplifies everything that is wrong with how almost everyone thinks of political economy. “How many people you have” is a holdover from feudalistic mercantile zero-sum economics. The real important measure of the health of a country is the productive power of human labor to sustainably transform nature into needed goods and services. This is Hamiltonian political economy in its essence. Science and technology. 

1791 Report to Congress on the Subject of Manufactures, most especially “Section II: As to an extension of the use of Machinery…” viz.:
“The employment of Machinery forms an item of great importance in the general mass of national industry. ‘Tis an artificial force brought in aid of the natural force of man; and, to all the purposes of labour, is an increase of hands…”

Hamilton is explicit on this issue: “To cherish and stimulate the activity of the human mind, by multiplying the objects of enterprise, is not among the least considerable of the expedients by which the wealth of a nation may be promoted.” And in his December 1790 Second Report on the Public Credit, Hamilton wrote, “the intrinsic wealth of a nation is to be measured, not by the abundance of the precious metals, contained in it, but by the quantity of the productions of its labor and industry….”

The more productive power, the better. If there is economic activity that is not productive — i.e, private equity, Wall Street and the City of London — then as the climate crisis worsens, it becomes ever more crucial to discourage, curtail, and even punish that useless economic activity. 

Having one person in the active labor force support three or four or more people is exactly where we want to go. With technology in hand, an entire factory producing a few hundred thousand light bulbs each day can be operated by a tea, of just a few dozen people. The real danger is allowing the rentiers and financier seize such a huge chunk of economic rewards, and convince us they deserve it because of their “hard work.” By such myths and means are we killing our own civilization. 

Update to Limits to Growth: Comparing the World3 Model with Empirical Data 

Gaya Herrington [KPMG, via Naked Capitalism 7-31-2021]

“The Deflationary Bloc”

[Phenomenal World, via Naked Capitalism Water Cooler 7-26-20]

“Despite taking place in different contexts, the processes which allowed for the formation of deflationary coalitions exhibited some common features: governments empowered rentiers, gave some citizens nominal gains as consumers, ensured access to certain classes of growth assets for powerful constituencies, and repurposed the institutions of “big government capitalism” to support financial deregulation. Redistributing gains away from workers, financial deregulation integrated global economies in a manner that allowed states to pursue growth strategies benefiting an exclusive class of rentiers. This new class supported deflationary policies long after inflation posed an imminent threat. In the United States, financial deregulation and its attendant deflationary political coalition were embedded in the politics of housing.”

We need to begin holding the PMC and elites personally responsible for policy outcomes….

Bankruptcy and elite impunity 

Cory Doctorow [Pluralistic, via Naked Capitalism 7-30-2021]

The total claims against the Sacklers add up to $2t, but they're only going to pay $4b. Though the sums are large, the pattern is an old one, and familiar to private equity watchers – after all, 3 in 10 US bankruptcies involve a PE firm flushing a company it ruined.

Tkacik reminds us of the last time the bankruptcy system breached public consciousness, when PE giant Apollo Global Management trashed Caesars Palace and asked a bankruptcy judge to let them keep the billions they embezzled.

For example: Bezos can claim the company he built has strict regulations to ensure driver and public safety, but in reality, the corporate structure he created, using contractors and outsources, results in exactly the opposite: 

Amazon Delivery Companies Routinely Tell Drivers To Bypass Safety Inspections 

[CNBC, via Naked Capitalism 7-31-2021]

American Education Is Founded on White Race Theory

[New Republic, July 29, 2021]

The conservative hysteria over critical race theory is ultimately a refusal to acknowledge that the country’s classrooms have always taught a white-centric view of U.S. history.

Industrial Policy Coming Into Vogue After China Cleans US Clock by Using It
Yves Smith, July 30, 2021 [Naked Capitalism]

Actually, USA excels at industrial policy — when it tries it. In fact, it’s how USA was built. The entire electronics and computer industry exists today because the Office of Naval Research and the Army Ordnance Department deliberately decided to share the technology developed in government and government-funded labs during World War Two. The creation of an entire new industry can be traced to a single event – the Moore School lectures at University of Pennsylvania in August 1945.

There is a long tradition of the military being the driver for creating new technologies and industries. Metal cutting and forming machine tools developed at the national armories were deliberately seeded into civilian companies in the 1830s to 1850s. The Navy introduced systematized scientific knowledge of designing and building steam engines in the 1850s and 1860s, basically creating the profession of mechanical engineering. Radio Corporation of America was founded in 1919 at the instigation of the Navy as a silent partner. The Navy played the exact same role in the creation of Cray Research in the 1970s. In the 1950s through 1970s, the three major developments in aerodynamics — the area rule, supercritical wings, and winglets — were developed by NASA scientist Richard Whitcomb at Langley Research Center. In the 1950s, the frozen food industry was saved and put on a solid foundation by the efforts of USDA research labs. This is just a handful of examples from the hundreds, even thousands of examples of successful USA government industrial policies.

Every single technology in cell phones began as a USA government research program, as detailed by Mariana Mazzucato in her 2013 book The Entrepreneurial State: Debunking Public vs. Private Sector Myths.

But this history does not conform to the free market / free enterprise mythology favored by financiers and rentiers, so it really is not taught.

The Pandemic

Israel says Pfizer Covid vaccine is just 39% effective as delta spreads, but still prevents severe illness 

[CNBC, via Naked Capitalism 7-25-2021]

“CDC mask decision followed stunning findings from Cape Cod beach outbreak” [ABC, via Naked Capitalism Water Cooler 7-30-21]

A week after the crowds descended upon Provincetown, Massachusetts, to celebrate the Fourth of July — the holiday President Joe Biden hoped would mark the nation’s liberation from COVID-19 — the manager of the Cape Cod beach town said he was aware of ‘a handful of positive COVID cases among folks’ who spent time there. But within weeks, health officials seemed to be on to something much bigger. The outbreak quickly grew to the hundreds and most of them appeared to be vaccinated. As of Thursday, 882 people were tied to the Provincetown outbreak. Among those living in Massachusetts, 74% of them were fully immunized, yet officials said the vast majority were also reporting symptoms. Seven people were reported hospitalized…. All indications now are that the Provincetown outbreak investigation is among the pieces of new evidence behind the CDC’s decision to ask Americans to once again put on their masks indoors, even if they are vaccinated.”

As coronavirus surges, GOP lawmakers are moving to limit public health powers 

[Washington Post, via Naked Capitalism 7-26-2021]

In some states, anger at perceived overreach by health officials has prompted legislative attempts to limit their authority, including new state laws that prevent the closure of businesses or allow lawmakers to rescind mask mandates. Some state courts have reined in the emergency and regulatory powers governors have wielded against the virus. And in its recent rulings and analysis, the U.S. Supreme Court has signaled its willingness to limit disease mitigation in the name of religious freedom….

The measures, as described by the Network for Public Health Law, include a North Dakota law that prohibits a mask mandate, even during an outbreak of tuberculosis, and a new Montana law that prohibits the use of quarantine to separate people who have probably been infected or exposed but are not yet sick. Many bills are modeled on legislation originally crafted by conservative think tanks and activist groups, according to state lawmakers who introduced them.

Among them is the American Legislative Exchange Council (ALEC), which has touted its model legislation aimed at reining in emergency powers so it is more “narrowly tailored to serve a compelling public health or safety purpose.”

How Covid vaccine incentives failed America

[MSNBC, via The Big Picture 7-30-2021]

America has a long history of requiring vaccinations. Why so much resistance when it comes to Covid?

….No longer can the country be held hostage to the stubbornness and selfishness of those who are making it impossible for America to move past the pandemic. And we’ve seen proof that mandates work in dislodging the holdouts.

Last week in France, where vaccinations hover around 40 percent, President Emmanuel Macron announced this exact policy would begin in August. Within 72 hours, more than 3 million people booked online vaccination appointments….

In the United States, however, it’s the responsible Americans who are being forced to change their behavior. In Los Angeles County, mask-wearing is again mandatory — even for those who are fully vaccinated. There’s a push to do the same in New York City, even though nationwide more than 99 percent of people still dying from Covid-19, and the overwhelming majority of those who are hospitalized, are not vaccinated. Since unvaccinated people cannot be trusted under the honor system to wear a mask in indoor settings, the rest of us have to go back to the way things were before vaccines became readily available.

Why should the Americans who have done the right thing for themselves, their families and their communities be forced to sacrifice on behalf of those who act as though their “personal choices” have no consequences?


[Twitter, via Naked Capitalism Water Cooler 7-30-21]


The Vaccine Aristocrats Matt Taibbi, TK News. I cannot forbear from quoting the lead:

On This Week With George Stephanopoulos this past Sunday, a bafflegab of Washington poo-bahs including Chris Christie, Rahm Emmanuel, Margaret Hoover, and Donna Brazile — Stephanopoulos calls the segment his “Powerhouse Roundtable,” which to my ear sounds like a Denny’s breakfast sampler, but I guess he couldn’t name it Four Hated Windbags — discussed vaccine holdouts.

Congress fails to extend federal eviction moratorium – which ends after July 31 – before going on recess 

[Business Insider, via Naked Capitalism 7-31-2021]

The carnage of mainstream neoliberal economics

One Step Forward, Two Steps Back in the Struggle Against Anti-Democratic Corporate Trade Rules 

[Foreign Policy in Focus, via Naked Capitalism 7-29-2021]

Restoring balance to the economy

Striking Alabama Coal Miners Taking Protest Back To New York 

[, via DailyPoster 7-31-2021]

Striking Alabama coal miners traveled to New York City this week to picket the corporate office of BlackRock, the largest shareholder in Warrior Met Coal, the Alabama company the workers have been on strike against since April. You can donate to their strike pantry here and read excellent coverage of the strike here.

How Unions and Their Allies Are Trying to Hold Amazon Accountable 

[Capital and Main, via DailyPoster 7-31-2021] 

“In California, labor advocates are supporting Assembly Bill 701, which would require all warehouse employers to provide workers with a written description of expected quotas, the number of tasks to be performed within a given time and potential adverse employment action. In other words, the employer has to share the metrics and the penalties for not meeting them.”

Climate and environmental crises

A Soil-Science Revolution Upends Plans to Fight Climate Change 

[Quanta, via Naked Capitalism 7-28-2021]

A new generation of soil studies powered by modern microscopes and imaging technologies has revealed that whatever humus is, it is not the long-lasting substance scientists believed it to be. Soil researchers have concluded that even the largest, most complex molecules can be quickly devoured by soil’s abundant and voracious microbes. The magic molecule you can just stick in the soil and expect to stay there may not exist….

The consequences go far beyond carbon sequestration strategies. Major climate models such as those produced by the Intergovernmental Panel on Climate Change are based on this outdated understanding of soil. Several recent studies indicate that those models are underestimating the total amount of carbon that will be released from soil in a warming climate. In addition, computer models that predict the greenhouse gas impacts of farming practices — predictions that are being used in carbon markets — are probably overly optimistic about soil’s ability to trap and hold on to carbon.

Nuclear power’s reliability is dropping as extreme weather increases 

[Ars Technica, via Naked Capitalism 7-25-2021]

Heat has been one of the most direct threats, as higher temperatures mean that the natural cooling sources (rivers, oceans, lakes) are becoming less efficient heat sinks. However, this new analysis shows that hurricanes and typhoons have become the leading causes of nuclear outages, at least in North America and South and East Asia. Precautionary shutdowns for storms are routine, and so this finding is perhaps not so surprising. But other factors—like the clogging of cooling intake pipes by unusually abundant jellyfish populations—are a bit less obvious.

Overall, this latest analysis calculates that the frequency of climate-related nuclear plant outages is almost eight times higher than it was in the 1990s. 


Institutionalists = Obstructionists

[Twitter, via Naked Capitalism Water Cooler 7-29-21]


Pelosi disputes Biden’s power to forgive student loans 

The Hill, via Naked Capitalism 7-29-2021]

Department of Injustice


[Intercept, via Naked Capitalism 7-26-2021]

Disrupting mainstream economics

Monetary Faith
Philip Pilkington

One immediate problem: not all investment is created equal. Too much bad investment that does not lead to the future production of goods and instead leads to mass bankruptcies might lead to inflation….

Market overconfidence is easy to study because stock analysts regularly publish their expectations. Actual earnings growth can vary widely from expectations.15 Financial market analysts, on average, forecast earnings growth at approximately thirteen percent a year. But the actual average earnings growth is around seven percent a year. In short, financial markets seem to think that firms will have roughly double the earnings growth that they actually experience.

It looks as if markets are not very good at pricing future outcomes. Since CEOs seem prone to overconfident mood swings too, it is hard to see any evidence that there is a channel from the money rate of interest, through the speculative markets, via the overconfident CEOs, all the way to the optimal rate of investment that keeps the economy running just right. Given the number of moving parts, the chance that an optimal rate of investment would arise in response to even a correctly estimated natural rate seems extraordinarily slim….

Perhaps economists should go right back to basics and think of the rate of interest as the classical economists did until the nineteenth century: as a distributional variable. From this perspective, the interest rate is simply the rate of increase of purchasing power held by those who hold savings in risk-free assets. This contrasts with both the rate of increase of purchasing power of those who own physical capital—the rate of profit—and the rate of increase of purchasing power of those who sell their labor—the rate of change of wages.

These three variables overlap with three social classes: rentiers, capitalists, and workers. These should not be thought of as distinct people or agents. Rather they are functions of their income sources. A person may be a worker when receiving wages and a rentier when accumulating a pension via the stock and bond markets. The question of where to set the interest rate then becomes a distributional matter: how much should rentiers’ income increase every year relative to the income of capitalists and workers?

The economist Luigi Pasinetti responded by defining a fair rate of interest, one stemming “from the principle that all individuals, when they engage in credit/debit relations, should obtain, at any time, an amount of purchasing power that is constant in terms of labor.”16 The idea is that the rate of increase of income for every class—rentier, capitalist, worker—should be tied to the productivity of the worker, that is, to the real wealth that the economy is able to produce given today’s level of technological development. Holding these rates constant to one another ensures that the income generated by the economy is distributed evenly. Setting the interest-rate policy rule then becomes simple:

 This rule is quite like the old Scholastic notion of a fair price. Marc Lavoie points this out when he writes:

Thus, in a world with no technical progress and no inflation, the nominal interest rate ought to be zero, as was argued by the Church at the time [i.e., the Middle Ages] when these conditions were roughly fulfilled.18


In other words, usury is only to be tolerated as a means to distribute some constant share of the growing economic pie to savers. This share is kept constant by assuming that it—together with wages and profits—only grows in line with the technical innovations that allow for more productive industry. The Scholastics may have had a cruder understanding of the macroeconomy than possessed today, but their instincts were correct. If it looks like a duck and quacks like a duck, then it is probably a duck. And if it looks like a yield on rentier assets and is spent like a yield on rentier assets, then it is probably a yield on rentier assets.

Information Age Dystopia

“Privacy Implications of Accelerometer Data: A Review of Possible Inferences”

[Association for Computer Machinery, via Naked Capitalism Water Cooler 7-30-21]

“It has been shown in experiments, however, that seemingly innocuous sensors can be used as a side channel to infer highly sensitive information about people in their vicinity. Drawing from existing literature, we found that accelerometer data alone may be sufficient to obtain information about a device holder’s location, activities, health condition, body features, gender, age, personality traits, and emotional state. Acceleration signals can even be used to uniquely identify a person based on biometric movement patterns and to reconstruct sequences of text entered into a device, including passwords. In the light of these possible inferences, we suggest that accelerometers should urgently be re-evaluated in terms of their privacy implications, along with corresponding adjustments to sensor protection mechanisms.”

A republic… if you can keep it

“Washington is a lobbying boom town under Biden”

[Roll Call, via Naked Capitalism Water Cooler 7-28-21]

“It’s worth noting that individual contribution limits, which adjust for inflation, are $2,900 per election this cycle.”

Lambert Strether: “Unlike, say, the minimum wage. Sometimes things are just so crystal clear, aren’t they?”

“Two Kinds of Pride in American Politics”

[Benjamin Studebaker, via Naked Capitalism Water Cooler 7-30-21]

“I’ve been thinking about pride’s role in politics. When I say pride, I am not talking about mere self-respect. I am thinking about vanity, about the insidious mistake of thinking we are superior to others when in fact we are their equals. This is pride in the grim, nasty, old-fashioned sense. I think there are two kinds of pride running amok today. One is associated with entrepreneurs, with those who consider themselves ‘self-made.’ The other is associated with professionals, with those who consider themselves ‘educated.” • Neither is correct, surely. More: “Both of these forms of pride have the same function–they enable rich and powerful people to justify contempt for the American worker. The entrepreneur scorns the worker for failing to figure out how to hustle, while the professional scorns the worker for failing to accept “knowledge” from the experts who possess it. On these two grounds, the worker is told that they are unworthy of the social goods which are necessary for any person to reach their potential. They are told that they cannot enjoy access to quality healthcare, affordable housing, true education, affordable energy, and even sustenance. They are blamed for the situations they are in, and no effort is made on their behalf. The Republican Party is dominated by entrepreneurs, and the Democratic Party is dominated by professionals. Neither party thinks the workers morally deserve access to a set of basic, fundamental economic rights. Both are deeply prideful and deeply wicked, in different ways. The proud Republican tells the worker to figure it all out on their own, while the proud Democrat tells the worker that their interests and needs cannot be a priority until they accept the “knowledge”. Caught between a rock and the hard place, the worker is condemned to endless toil, with no time and no energy left for escape. All the worker can do is persevere and hope for a brighter future, in this life or the next.”

“In the Race Against Nina Turner, GOP Donors Fund Shontel Brown”

[The Intercept, via Naked Capitalism Water Cooler 7-28-21]

“With Clinton and Sanders again pitted against each other, this time via state-level surrogates, the special election race for Ohio’s 11th Congressional District has been described as a reflection of “party tensions.” In addition to Clinton, Democratic establishment figures like Rep. Jim Clyburn, D-S.C., and well-funded super PACs have rallied behind Brown, while progressives like Rep. Alexandria Ocasio-Cortez, D-N.Y., and Justice Democrats have coalesced to support Turner. Undergirding these tensions are donors with long histories of support for Republican candidates who are now funding Brown’s campaign, either directly or via the political action committee Democratic Majority for Israel, a major backer of her campaign. Most notable among them is New England Patriots owner Robert Kraft, a close ally of Donald Trump who donated $1 million to Trump’s inauguration and has supported a slew of Republican candidates.”

Lambert Strether: “And there’s a long, long list of Republican donors. Why, it’s almost like liberal Democrat and Republicans are on the same team! (And you can just imagine the pearl-clutching if a Trump ally was donating to Turner. Yet, oddly, the major media are silent…)”

How Joe Biden Defanged the Left: The White House has used access to quiet would-be progressive critics.

Alexander Sammon,  July 26, 2021 [The American Prospect]

Recounts Obama enforcer Rahm Emmanual’s “veal pen.” 

How Biden Can Profitably Piss Off Republicans: Promoting good policy can also compel the GOP to defend the indefensible.

Eleanor Eagan, July 29, 2021 [The American Prospect]

Sunday, July 25, 2021

Week-end Wrap – Political Economy – July 25, 2021

 Week-end Wrap – Political Economy – July 25, 2021

by Tony Wikrent

The Pandemic

US sees COVID-19 cases surge by 224% in last three weeks as CDC director says the Indian ‘Delta’ variant now makes up 83% of all new infections 

[Daily Mail, via Naked Capitalism 7-21-2021]

‘I’m sorry, but it’s too late’: Alabama doctor on treating unvaccinated, dying COVID patients 

[, via Naked Capitalism 7-22-2021]

In the United States, COVID is now a pandemic of the unvaccinated, according to the head of the U.S. Centers for Disease Control and Prevention. In Alabama, state officials report 94% of COVID hospital patients and 96% of Alabamians who have died of COVID since April were not fully vaccinated….

“I try to be very non-judgmental when I’m getting a new COVID patient that’s unvaccinated, but I really just started asking them, ‘Why haven’t you gotten the vaccine?’ And I’ll just ask it point blank, in the least judgmental way possible,” she said. “And most of them, they’re very honest, they give me answers. ‘I talked to this person, I saw this thing on Facebook, I got this email, I saw this on the news,’ you know, these are all the reasons that I didn’t get vaccinated.

“And the one question that I always ask them is, did you make an appointment with your primary care doctor and ask them for their opinion on whether or not you should receive the vaccine? And so far, nobody has answered yes to that question.”

Republicans freak out because the delta variant they fostered is killing ... Republicans

Dartagnan, July 21, 2021 [DailyKos]

Let’s be clear on something: Variants to the COVID-19 virus are caused by allowing the virus to continue spreading among the unvaccinated, giving it more time and opportunity to mutate. The more unvaccinated people there are, the better the chance of a variant developing and spreading. That’s what led to this delta variant that’s now ravaging the vaccine-refusing Republican population in this country. In simpler terms, Republican intransigence and political pandering created and abetted the conditions that led to the spread of the delta variant and encouraged an environment that allowed it to flourish. And now that it’s disproportionately killing “their” people, in red-leaning states, Republican elected officials are desperately seeking—once again—to avoid the blame.

[Twitter, via Naked Capitalism Water Cooler 7-23-21]

You have to click through to see the math and the assumptions behind 80,000 Republican voters dying of COVID in Florida over the coming year.


“In-person voting really did accelerate covid-19’s spread in America”

[Economist, via Naked Capitalism Water Cooler 7-20-21]


Sunday, July 18, 2021

Week-end Wrap – Political Economy – July 18, 2021

 Week-end Wrap – Political Economy – July 18, 2021

by Tony Wikrent

The Epidemic

NEW From CDC“Community Profile Report July 8 2021” (PDF), “Rapid Riser” counties

[CDC, via Naked Capitalism Water Cooler 7-16-21]

Five undervaccinated clusters put the entire United States at risk 

[CNN, via The Big Picture 7-12-2021]

Clusters of unvaccinated people, most of them in the southern United States, are vulnerable to surges in Covid-19 cases and could become breeding grounds for even more deadly Covid-19 variants: Starting in Georgia and stretching west to Texas and north to Missouri + include parts of Alabama, Arkansas, Louisiana, Oklahoma and Tennessee. 

There’s A Stark Red-Blue Divide When It Comes To States’ Vaccination Rates 

[NPR, via The Big Picture 7-13-2021]

But surveys have shown Trump supporters are the least likely to say they have been vaccinated or plan to be. Remember, Trump got vaccinated before leaving the White House, but that was reported months later. Unlike other public officials who were trying to encourage people to get the shot, Trump did it in private. 

Least Vaccinated U.S. Counties Have Something in Common: Trump Voters 

[New York Times, via The Big Picture 7-13-2021]

The disparity in vaccination rates has so far mainly broken down along political lines. For nearly every U.S. county, both the willingness to receive a vaccine and actual vaccination rates to date were lower, on average, in counties where a majority of residents voted to re-elect former President Donald J. Trump in 2020. 

Strategic Political Economy

Newsmax anchor goes full death cult, suggests vaccines go against evolution and nature

[Twitter, via, Aldous J Pennyfarthing, July 12, 2021, Dailykos]


Sunday, July 11, 2021

Week-end Wrap – Political Economy – July 11, 2021

Week-end Wrap – Political Economy – July 11, 2021

by Tony Wikrent

Strategic Political Economy

Inside Operation Warp Speed: A New Model for Industrial Policy 

[American Affairs Journal, via The Big Picture 7-5-2021]

Operation Warp Speed was a triumph of public health policy. But it was also a triumph and validation of industrial policy. OWS shows what the U.S. government can still accomplish when it comes to tackling a seemingly unsolvable technological challenge. It demonstrates the strength of the U.S. developmental state, despite forty years of ideological assault.

A nice, timely historical review of one of the apocalyptic horsemen of that forty years of ideological assault. Note the shape-shifting use of political terminology by the horsie set. 

The End of Friedmanomics

The New Republic, June 17, 2021, via Avedon's Sideshow 6-30-2021]

….All of which makes a contemporary reading of Friedman’s Cape Town lectures a harrowing experience. His first speech was an unremitting diatribe against political democracy—an explicit rejection of, in Friedman’s words, “one person, one vote,” delivered to a nation in which more than half of the population was disenfranchised by race. Voting, Friedman declared, was inescapably corrupt, a distorted “market” in which “special interests” inevitably dictated the course of public life. Most voters were “ill-informed.” Voting was a “highly weighted” process that created the illusion of social cooperation that whitewashed a reality of “coercion and force.” True democracy, Friedman insisted, was to be found not through the franchise, but the free market, where consumers could express their preferences with their unencumbered wallets. South Africa, he warned, should avoid the example of the United States, which since 1929 had allowed political democracy to steadily encroach on the domain of the “economic market,” resulting in “a drastic restriction in economic, personal, and political freedom.”

….That this prescription found political purchase with the American right in the 1960s is not a surprise. Friedman’s opposition to state power during an era of liberal reform offered conservatives an intellectual justification to defend the old order. What remains remarkable is the extent to which the Democratic Party—Friedman’s lifelong political adversary—came to embrace core tenets of Friedmanism. When Friedman passed away in 2006, Larry Summers, who had advised Bill Clinton and would soon do the same for Barack Obama, acknowledged the success of Friedman’s attack on the very legitimacy of public power within his own party. “Any honest Democrat will admit that we are now all Friedmanites,” he declared in The New York Times….

Friedman responded to Brown in 1955 with “The Role of Government in Education,” an essay that called for the ostensibly race-neutral program of privatizing the school system by providing families with education vouchers that could be spent where parents wished. As in his essay on housing nine years before, Friedman appealed to the simple nineteenth-century logic of market competition and equilibrium to make his case. Public schools were a “monopoly” that put private schools at an unfair “disadvantage.” By transitioning from public schools to vouchers, families would enjoy a diversity of education options, and market competition over the quality of education would in time enhance the lot of students everywhere.

It was every bit as neat and tidy as Friedman’s case against rent regulations. But as Leo Casey has detailed for Dissent magazine, Friedman gave away the political game in a lengthy footnote. Though he insisted, “I deplore segregation and racial prejudice,” Friedman nevertheless believed in the right of the private market to develop “exclusively white schools, exclusively colored schools, and mixed schools.”

….“The Role of Government in Education” marks the earliest appearance of what remains Friedman’s most damaging belief—the idea that bigotry and violence could be forced out of public life by the magic of the market. Friedman would insist on this basic proposition again and again throughout his career. In 1972, he would go so far as to suggest that the free market could have put a stop to the war in Vietnam if people had really wanted it to end. Enough chemists would have refused to make napalm that the cost of producing the explosive would have become prohibitively high. This was the appropriate way to stop a war—not the crude “voting mechanism” of “the political system.”

….The financial crisis of 2008 should have demolished this thinking. Markets, the crash made clear, often simply don’t serve the public interest. But the Democratic leaders who ascended to power in the Obama administration had been educated at the height of Friedman’s intellectual hegemony. There simply weren’t many New Deal–style thinkers in the top echelons of the Democratic Party anymore. Obama was as intellectually serious as American presidents get, but his coterie of intellectuals had been working under Friedmanesque assumptions for so long that they could not adapt to the reality that events had discredited those assumptions. Obama ultimately devoted more political energy to reducing the long-term federal budget deficit than to combating economic inequality. A unique historical moment to reclaim political democracy became, instead, the era of bending the cost curve.

It’s the economic ideology, stupid. And, racism. So, it’s the racist economic ideology, stupid. 

Sunday, July 4, 2021

Week-end Wrap – Political Economy – July 4, 2021

 Week-end Wrap – Political Economy – July 4, 2021

by Tony Wikrent

Strategic Political Economy

Techno-Feudalism Is Taking Over 

Yanis Varoufakis [Project Syndicate, via Naked Capitalism 06-30-2021]

Then, after 2008, everything changed. Ever since the G7’s central banks coalesced in April 2009 to use their money printing capacity to re-float global finance, a deep discontinuity emerged. Today, the global economy is powered by the constant generation of central bank money, not by private profit. Meanwhile, value extraction has increasingly shifted away from markets and onto digital platforms, like Facebook and Amazon, which no longer operate like oligopolistic firms, but rather like private fiefdoms or estates.

That central banks’ balance sheets, not profits, power the economic system explains what happened on August 12, 2020. Upon hearing the grim news, financiers thought: “Great! The Bank of England, panicking, will print even more pounds and channel them to us. Time to buy shares!” All over the West, central banks print money that financiers lend to corporations, which then use it to buy back their shares (whose prices have decoupled from profits). Meanwhile, digital platforms have replaced markets as the locus of private wealth extraction. For the first time in history, almost everyone produces for free the capital stock of large corporations. That is what it means to upload stuff on Facebook or move around while linked to Google Maps.

“Democrats Raise Ethical Concerns Over GOP Donor’s $1 Million Funding of Border Deployment”

[, via Naked Capitalism Water Cooler 7-1-21]

“A billionaire’s $1 million donation to fund a South Dakota National Guard mission to the U.S.-Mexico border has raised questions of whether the military is effectively for hire, and Democrats in the state are investigating the legality of the issue, has learned. Willis and Reba Johnson’s Foundation, helmed by billionaire Willis Johnson, pledged $1 million to South Dakota to cover the estimated cost of deploying some 50 guardsmen to the border for up to two months, according to a state government email reviewed by”

This is exactly why I advocate replacing liberalism with civic republicanism, which is compelling in its clarity and simplicity: the rich are as much a danger to a republic as a standing army.

As James Madison wrote in his notes preparing for the Constitutional Convention: “If the minority happen to include all such as possess the skill and habits of military life, & such as possess the great pecuniary resources, one third only may conquer the remaining two thirds.”

Under liberalism, any individual has the “right” to amass as much property as they can. The rights of the community are decidedly secondary. Under civic republicanism, a properly functioning government breaks up any and all concentrated wealth, precisely because wealth, like power, corrupts, and, as we know too damn well, wealth buys power. Benjamin Franklin observed, “”There is nothing in its nature to produce happiness. The more a man has, the more he wants. Instead of its filling a vacuum, it makes one. If it satisfies one want, it doubles and trebles that want another way.” In laying down “good whig principles,” Franklin recognized the insidious nature of concentrated wealth to corrupt politics, and wrote “the poor man has an equal right, but more need, to have representatives in the Legislature than the rich one.”

Remember the liberal reaction to AOC’s comment that all billionaires is a failure of policy? 

The true purpose of taxation in a republic, therefore, is not to fund the government, but to tax away excess wealth, and maintain a semblance of economic equality among the citizens. Under no circumstance is any citizen to be allowed to become so wealthy that he or she feels they can afford a “donation” that determines the deployment of either state or federal military forces. Or steers the destiny of legislation. Or determines the effect of regulation.

Clear and simple.

After all, isn’t that, when you boil it down, what the slavery oligarchy did to drag the country into Civil War? And it’s where the reactionary rich, and their conservative and libertarian movements, are dragging us again.

Can Biden Build Back Better? Yes, If He Abandons Fiscal “Pay Fors" — Yeva Nersisyan and L. Randall Wray

[Levy Institute of Economics, via Mike Norman Economics, July 1, 2021]

President Biden’s proposals for investing in social and physical infrastructure signal a return to a budget-neutral policymaking framework that has largely been set aside since the outbreak of the COVID-19 crisis. According Yeva Nersisyan and L. Randall Wray, this focus on ensuring revenues keep pace with spending increases can undermine the goals internal to both the public investment and tax components of the administration’s plans: the “pay-for” approach limits our spending on progressive policy to what we can raise through taxes, and we will only tax the amount we need to spend.

Nersisyan and Wray propose an alternative approach to budgeting for large-scale public expenditure programs. In their view, policymakers should evaluate spending and tax proposals on their own terms, according to the goals each is intended to meet. If the purpose of taxing corporations and wealthy individuals is to reduce inequality, then the tax changes should be formulated to accomplish that—not to “raise funds” to finance proposed spending. And while it is possible that general tax hikes might be needed to prevent public investment programs from fueling inflation, they argue that the kinds of taxes proposed by the administration would do little to relieve inflationary pressures should they arise. Under current economic circumstances, however, the president’s proposed infrastructure spending should not require budgetary offsets or other measures to control inflation in their estimation.

Sunday, June 27, 2021

Week-end Wrap – Political Economy – June 27, 2021

Week-end Wrap – Political Economy – June 27, 2021

by Tony Wikrent

Strategic Political Economy

THE 50-100 PAY GAP: These 20 Harsh Facts About Income and Wealth Inequality Will Shock You 

[Capital & Main, via Naked Capitalism 6-22-2021]

Fourteen shocking facts on inequality and working Americans
● Worker hourly compensation increased just 17% from 1979 to 2019, while worker productivity increased more than 72% over the same time period.

● Had the income of the bottom 90% of Americans kept up with GDP growth, they’d have collectively taken home $2.5 trillion more in 2018. Over the 43 years since 1975 combined, the figure is $47 trillion.

● The wealth of the bottom half of families — roughly 64 million families — adds up to only 1% of total U.S. household wealth.

● The median white family has 41 times more wealth than the median Black family and 22 times more wealth than the median Latino family.

● In 2016, 72% of white families owned their home, compared to just 44% of Black families and 45% of Latino families.

● For the average American consumer, the share of their expenditures spent on health doubled from 1980 to 2018.

● Half of U.S. adults with lower incomes skipped necessary medical care such as doctor visits, recommended tests, treatments, follow-up care or prescription medications in the past year because of the high cost.

● Between 2008 and 2018, the number of states in which health insurance premiums and deductibles consumed at least 10% of median income increased from seven to 42.

● The price of education increased 600% more than incomes from 1980 to 2018.

● One in four Americans have no retirement savings — and those who do aren’t saving enough. The median retirement savings account of $120,000 for those approaching retirement (ages 55 to 64) will likely provide less than $1,000 per month over a 15-year retirement span.

● Social Security benefits have lost 30% of their buying power since 2000.

● Nearly 83 million adults — 34 percent of all adults in the country — reported that their household found it somewhat or very difficult to cover usual expenses such as food, rent or mortgage, car payments, medical expenses or student loans in the last seven days, according to survey research in November 2020.

● Nearly half of Black adults reported it was somewhat or very difficult to pay usual household expenses, nearly twice the rate among white adults and Asian adults (28%). A similar share (47%) of Latino adults reported such difficulties.

Sunday, June 20, 2021

Week-end Wrap – Political Economy – June 20, 2021

Week-end Wrap – Political Economy – June 20, 2021

by Tony Wikrent

Strategic Political Economy

The Lords Of Hell (And Their Slaves) 

Ian Welsh

Homelessness, despair and so on are required: without them people will not work at bad jobs. Indeed, without them many people would not work any more than required to feed and house themselves.

Now, understand clearly, rip a hole in your skull, and put this in: there is more food than needed and way more homes than homeless people in all developed countries and more food than needed to feed everyone in the world. We could easily feed and house everyone in the world. It is almost a trivial problem. We simply have to do it.

Industrialization plus modern agriculture produces more than we need, easily. Automation should mean that less and less hours needed working. We should be living in a paradise of free time and choice.

We do not because a small minority has captured power and enslaved the rest of us.

These people are monsters on every possible level, including their depraved indifference to what will happen to their children and grandchildren under environmental collapse and climate change.

We have a surplus, but it is generated in the stupidest ways possible: with planned obsolesence, soil degradation and pollution causing environmental collapse.

Matt Stoller: A Society Designed to Incentivize Criminal Behavior at the Highest Level

Washington’s Dangerous New Consensus on China (not paywalled)

Bernie Sanders [Foreign Affairs, via Naked Capitalism 6-18-2021]

The deck: “Don’t Start Another Cold War.”

The carnage of mainstream neoliberal economics

Many Americans moved to less pricey housing markets in 2020 

[AP, via The Big Picture 6-15-2021]

Many Americans who moved last year relocated to areas where homes were, on average, bigger and less expensive. On average, people who moved to a different city in 2020 ended up in a ZIP code where average home values were nearly $27,000 lower than in their previous ZIP code.

Sunday, June 13, 2021

Week-end Wrap – Political Economy – June 13, 2021

Week-end Wrap – Political Economy – June 13, 2021

by Tony Wikrent

Strategic Political Economy

[Twitter, via Naked Capitalism 6-11-21]



Vast Majority of Voters Want Higher Taxes on Wealthy, Corporations 

[Americans For Tax Fairness, via Daily Poster 6-12-2021]

Nearly 7 in 10 voters support raising taxes on the wealthy and corporations, according to a new poll from ALG Research, Hart Research, and Americans for Tax Fairness. Moreover, voters become more supportive of President Joe Biden’s economic plans when they are told they will be funded by taxes on the wealthy and corporations.

The Global South has lost $152 trillion through unequal exchange since 1960
Dylan Sullivan [Progress in Political Economy, via Mike Norman Economics, June 7, 2021]

Dependency and world-systems theorists have long argued that “unequal exchange” is a key driver of global inequality. Since wages and natural resource prices are much lower in the global South than the North, poor countries must export many more units of embodied labour and resources than they import in order to achieve a monetary balance of trade. This creates a constant transfer of labour and ecology from the periphery to the core, developing the latter but impoverishing the former.

In a recent paper in New Political Economy that I co-authored with Jason Hickel from the University of London, and Huzaifa Zoomkawala, a data analyst based in Karachi, we quantify the value that has been appropriated from the South through unequal exchange since 1960. To do this, we use a method developed by the economist Gernot Köhler. Köhler proposes that we can use purchasing power parity (PPP) exchange rates constructed by the World Bank to value the South’s exports at the North’s price level. By subtracting the actual market price that the South received for its exports from this figure, we can measure the commodities appropriated by the imperialist states, in terms of the Northern price of those commodities.

Using Köhler’s method, we find that in 2017 the ‘emerging and developing economies,’ as defined by the IMF, lost $2.2 trillion worth of goods to the ‘advanced economies.’ This represents an enormous loss for the South. These resources could have ended extreme poverty 15 times over, but instead they were transferred gratis to the core. This windfall is of enormous benefit to the centres of empire. For instance, in 2017 the US gained $2,634 per person through unequal exchange, while the average Australian citizen received $3,116 from the South. Since 1990, the North’s annual gains from unequal exchange have sat at 5.2% of GDP, considerably higher than the North’s annual growth rate. In other words, if not for imperialist plunder, aggregate income in the North would have been declining for decades. The extraordinary levels of material consumption currently enjoyed in the North are predicated upon exploitation and poverty in the periphery.

Figure 1 shows total value transfer since 1960. All up, the South has lost $62 trillion (constant 2011 dollars), equivalent to 97% of its 2017 GDP. If this surplus had been available to the South, it could have been reinvested in domestic economic development. If we assume this surplus would have grown at the same rate as Southern GDP, it would now be equivalent to $152 trillion.…

And don’t forget the RAND study that found in USA alone, the one percent have taken over $50 trillion from the bottom 90 percent since 1975Trends in Income From 1975 to 2018.