Week-end Wrap - Political Economy - July 27, 2019

Week-end Wrap - Political Economy - July 27, 2019
by Tony Wikrent
Economics Action Group, North Carolina Democratic Party Progressive Caucus

Strategic Political Economy

These journalists exposed the corruption that led to Puerto Rico’s mass protests
[CNN, via Naked Capitalism 7-24-19]

The World’s Biggest Lawsuit, Juliana v. United States, will force US government to stop climate change
Lambert Strether, July 25, 2019 [Naked Capitalism]

Juliana v. United States is a big and complicated case that has now advanced through two administrations. The original complaint was filed in September 2015; Judge Ann Aiken of Oregon district court rejected the government’s motion to dismiss the case in November 2016.... The American Bar Association, in “Can Our Children Trust Us with Their Future?,” describes the scale of the case and the stakes:

The 2016 ruling in Kelsey Cascadia Rose Juliana v. USA is one of the greatest recent events in our system of law. (See Opinion and Order, Case No. 6:15-cv-01517-TC, US District Court for Oregon, Eugene Division. Anne Aiken, Judge, filed 11/10/16.) A group of children between the ages of eight and nineteen filed suit against the federal government, asking the court to order the government to act on climate change, asserting harm from carbon emissions. The federal government’s motion to dismiss was denied. Although I am not involved in the case, I am a lifelong environmentalist, and I teach environmental law (to non-law students). This case is a shining example of what law can be. This case gives me hope that we will not continue to cooperate in our own destruction, and future generations will be able to rely on us to uphold the spirit of the law and purpose behind government....

So Juliana v. United States is a lawsuit that’s being sponsored and facilitated by Our Children’s Trust, which is a nonprofit organization in Eugene, Oregon, that’s been working on atmospheric climate litigation to try to deal with the climate crisis for a while. So our lawsuit was filed in August of 2015, with 21 plaintiffs from all over the country that each have their own complaint, as part of a large declaration that gives a standing to sue the U.S. Federal Government. And basically, we’re asserting that the U.S. Federal Government has known since 1960 that climate change could be potentially disastrous. We have proof from administrations going back all the way to the Johnson administration, saying that they knew climate change could be an issue and they knew that fossil fuel infrastructure was causing it. And the U.S Federal Government still chose to take direct action to continue to perpetuate the fossil fuel industry and the U.S. fossil fuel economy that we have. 

And we’re asserting that by taking that direct action, they’ve disproportionately put the rights of young people at risk, and the rights of life liberty and property as promised to us in the Constitution....

....
From The New Yorker, in “The Right to a Stable Climate Is the Constitutional Question of the Twenty-first Century“:

Judge Aiken had found that the plaintiffs had standing to sue because they had demonstrated three things: that they had suffered particular, concrete injuries; that the cause of their injuries was “fairly traceable” to the government’s actions; and that the courts had the ability, at least partially, to remedy these injuries. On the first two parts of standing, the government’s case is weakening by the minute, owing especially to the growing body of attribution science—studies published in peer-reviewed journals that directly link extreme weather events, such as huge hurricanes and raging wildfires, to climate change. “Evidence to meet the standing burden has gotten much stronger,” Ann Carlson, an environmental-law professor at U.C.L.A., told me....

.... 

Here is a lawyerly disquistion on the public trust doctrine from the American Bar Association, “Climate Change Litigation: A Way Forward“, with citations and everything....

CBS reporter Steve Croft, in “The climate change lawsuit that could stop the U.S. government from supporting fossil fuels,” interviews Julia Olson, an Oregon lawyer, and the executive director of the NGO, Our Children’s Trust, which initiated Juliana:

“[Olson] began constructing the case eight years ago out of this spartan space now dominated by this paper diorama that winds its way through the office.”

OLSON : So this is a timeline that we put together… [D]uring President Johnson’s administration, they issued a report in 1965 that talked about climate change being a catastrophic threat. Every president knew that burning fossil fuels was causing climate change. 

Fifty years of evidence has been amassed by Olson and her team, 36,000 pages in all, to be used in court.

OLSON: Our government, at the highest levels, knew and was briefed on it regularly by the national security community, by the scientific community. They have known for a very long time that it was a big threat. 

KROFT: Has the government disputed that government officials have known about this for more than 50 years and been told and warned about it for 50 years? 

OLSON: No. They admit that the government has known for over 50 years that burning fossil fuels would cause climate change. And they don’t dispute that we are in a danger zone on climate change. And they don’t dispute that climate change is a national security threat and a threat to our economy and a threat to people’s lives and safety. They do not dispute any of those facts of the case.Steve Kroft: So you’ve got them with their own words. 

OLSON: We have them with their own words. It’s really the clearest, most compelling evidence I’ve ever had in any case I’ve litigated in over 20 years. 

30,000 pages. It looks like there’s a reason Juliana has survived as long as it has.

Week-end Wrap - Political Economy - July 20, 2019

Week-end Wrap - Political Economy - July 20, 2019
by Tony Wikrent
Economics Action Group, North Carolina Democratic Party Progressive Caucus

Strategic Political Economy

"Can the Left Even Understand Why the Right is winning?" 

Philip Mirowski, who has detailed the history of the "neoliberal thought collective," the Mont Pelerin Society, posted the first draft of a new paper,  "Can the Left Even Understand Why the Right is winning?" It can be viewed if you register with www.academia.edu and Mirowski grants you permission. Explaining the rise of Trump and a conservatism that is increasingly open about its bigotry,  Mirowski rejects the "bromidic term ‘populism’" and points instead to

the recent bounty of exceptional work on the history of neoliberalism [including] Quinn Slobodian, Globalists (Harvard, 2018); Wendy Brown, Undoing the Demos (Zone, 2015); Thomas Biebricher, The Political Theory of Neoliberalism (Stanford, 2018); Nancy MacLean, Democracy in Chains, (Viking, 2017); Melinda Cooper, Family Values (Zone, 2017); and Jessica Whyte, The Morals of the Market, (Verso, 2019). 

Mirowski observes:

...it seems many activists on the left hold out few ambitions for any sort of ‘fusionist’ project themselves, and instinctively shy away from an explicit political economy, and therefore have not been capable of understanding the relative unity of the forces arrayed against them. If someone suggests otherwise, the tendency has been to disparage such thinking as tainted by ‘conspiracy theories’....

The biggest intellectual failure of the left is its demonstrated incapacity to theorize the role and significance of markets. Curiously, unlike the most sophisticated neoliberals, much of the left still buys into the myth of the government vs. the market. That is, they imagine a separate entity called government existing outside of something called ‘the market’, with the former possessing the wisdom to identify ‘market failures’ and rectify them with judicious ‘regulation’.

After discussing how neoliberals themselves have not agreed on any exact definition of "markets" -- perhaps intentionally ("to render political action by the masses so difficult as to be permanently stymied, both by restricting the franchise but also by the strategic production of ignorance, which renders political understanding inchoate") -- Mirowski gets to his key critique of the left's ignorance concerning neoliberalism:

There are two very important facts about neoliberals that the left needs to take to heart: [1] They do not believe in laissez faire, but are unrepentantly constructivist about government—that is, they acknowledge the tenet that their minions must occupy the government at whatever level (local, national, transnational) and in whatever ways are deemed effective to bring about the sort of ‘reforms’ they believe are urgent; and [2] They take seriously the epistemic premise that people are generally imperfect cognitive beings, and that (their definition of) The Market knows more than any human being ever could about the world. Both principles may seem rather paradoxical given their publicly stated doctrines, something that numerous writers have explored in detail.  But those on the Left seem especially incapable of taking either one seriously, and thus to attain understanding how these two principles interact. 

Ever since Hillary Clinton lost a presidential election that was uniquely hers to lose, I have thought it almost comical that we have Democratic Party elites and liberal leaders who, on one hand, have repeatedly rejected the argument that the creation and promotion of movement conservatism amounts to a dedicated conspiracy by wealthy reactionaries with manifold ties to Wall Street, and on the other hand, have been almost hysterical in their insistence that the election was stolen from Hillary by a conspiracy run by Vladimir Putin and his Russian minions. Why they reject the one conspiracy theory but embrace the other, is not too difficult to understand, in the context of the USA political system's utter dependency on the rich for campaign contributions.

During my community organizing days in the 1980s, when I was with a radical group within the Democratic Party trying to stop NAFTA, I repeatedly encountered an unwillingness among leftists to even consider direct political action targeting specific individuals responsible for political atrocities. This unwillingness to "name names" approached hysteria when facts were presented that much of the USA industrial base was being bought and looted by "leverage buyout" corporate raiders with significant financial backing from organized crime. I remain of the opinion that this unwillingness to face these facts was a reflection of personal and institutional cowardice to confront the immense political power of Wall Street, and the potentially violent retribution of organized crime. Especially by the late 1980s, when it was clear to those willing to see that Wall Street and organized crime had pretty much merged. (See for example the conclusion by Catherine Austin Fitts, managing director of Dillon, Read & Co. at the time, that the $25 billion buyout of  RJR Nabisco in 1989 only made sense if Kohlberg Kravis and Roberts -- and whoever KKR actually was acting on behalf of -- needed to launder billions of dollars of dirty money).

My group was also tracking a number of different economic metrics that by the mid-1990s clearly indicated that we had lost -- and lost big. The significant ones I remember was that the dollar amount of mergers and acquisitions had eclipsed measures such as private expenditures on new plant and equipment, total national research and development spending, and total national capital expenditures.

Today, I think the same type of unwillingness to "name names" is reflected in the insistence that there are no solutions because the real problem is overpopulation. My three decades of political fighting is informed by my apparently unusual historical reading on the USA Whig Party that gave way to the Republican Party in the 1850s, and the "American School" political economy of that now forgotten faction in USA political history. (It is highly instructive that the Wikipedia entry on the American School is flagged for possible violation of "neutral point of view.") One of the key tenets of American School economists was their explicit and often fierce rejection of the "overpopulation" doctrine of British East India Company apologist Thomas Malthus.

Week-end Wrap - Political Economy - July 13, 2019

Week-end Wrap - Political Economy - July 13, 2019
by Tony Wikrent
Economics Action Group, North Carolina Democratic Party Progressive Caucus

Alarming after-effects of Republican budget cutting in North Carolina 
Savage tick-clone armies are sucking cows to death; experts fear for humans 

[ars technica, via Naked Capitalism 7-13-19]

Ravenous swarms of cloned ticks have killed a fifth cow in North Carolina by exsanguination—that is, by draining it of blood—the state’s Department of Agriculture and Consumer Services warned this week.... 

The tick—the Asian longhorned tick, or Haemaphysalis longicornis—was first found terrorizing a sheep in New Jersey in 2017 and has established local populations in at least 10 states since it sneaked in. Its invasive sweep is due in large part to the fact that a single well-fed female can spawn up to 2,000 tick clones parthenogenetically—that is, without mating—in a matter of weeks. And unlike other ticks that tend to feast on a victim for no more than seven days, mobs of H. longicorni can latch on for up to 19 days.

The state government is North Carolina no longer has any capability to respond to this type of new public health threat - the Republicans who took control of the state legislature in 2010 eliminated the  Public Health Pest Management Section -- which included the state’s tick control and research programs -- in their 2011 budget. 

Strategic Political Economy

Top 1% Up $21 Trillion. Bottom 50% Down $900 Billion.
Matt Bruenig June 14, 2019 [peoplespolicyproject.org, via Naked Capitalism 7-11-19]

Recently, the Federal Reserve released a new data series called the Distributive Financial Accounts, which combine the Financial Accounts and the SCF to provide quarterly estimates of the distribution of wealth in America that do sum to the aggregates in the Financial Accounts. The series goes back to 1989, the first year the modern SCF was administered and runs to the fourth quarter of 2018, the last quarter for which there is Financial Accounts data. 

The insights of this new data series are many, but for this post here I want to highlight a single eye-popping statistic. Between 1989 and 2018, the top 1 percent increased its total net worth by $21 trillion. The bottom 50 percent actually saw its net worth decrease by $900 billion over the same period.

“Americans Shouldn’t Have to Drive, but the Law Insists on It” 

[The Atlantic, via Naked Capitalism 7-10-19] 

“[T]he legal framework governing American life enforces dependency on the automobile. To begin with, mundane road regulations embed automobile supremacy into federal, state, and local law. But inequities in traffic regulation are only the beginning. Land-use law, criminal law, torts, insurance, vehicle safety regulations, even the tax code—all these sources of law provide rewards to cooperate with what has become the dominant transport mode, and punishment for those who defy it. Let’s begin at the state and local levels. A key player in the story of automobile supremacy is single-family-only zoning, a shadow segregation regime that is now justifiably on the defensive for outlawing duplexes and apartments in huge swaths of the country. Through these and other land-use restrictions—laws that separate residential and commercial areas or require needlessly large yards—zoning rules scatter Americans across distances and highway-like roads that are impractical or dangerous to traverse on foot. The resulting densities are also too low to sustain high-frequency public transit.”

Disrupting mainstream economics

AOC Is Making Monetary Policy Cool (and Political) Again 

[New York Magazine, via Naked Capitalism 7-11-19]

There’s a strong case that the most important economic policy decisions of the past decade have been at the Federal Reserve. In the wake of the 2008 financial crisis, America’s central bank decided which troubled financial institutions would live and which would die, created a public option for short-term corporate financing, manipulated asset prices by creating artificial demand for various securities, provided an unlimited supply of dollars to some cash-strapped European nations (but not to others), and began deliberately suppressing economic growth in 2015, on the grounds that the U.S. could not sustain an official unemployment rate of below 5 percent without triggering runaway inflation. 

All these decisions had profound consequences for the global economy; and that last one might very well have cost the Democratic Party the last presidential election by slowing economic growth in 2016. 

And yet, the Fed’s policies attracted scant attention from the mainstream media or elected Democrats. An unthinking reverence for the central bank’s political independence kept the American public ignorant of — and unelected bureaucrats, unaccountable for — exercises of discretion that helped determine the availability of jobs, cost of credit, and distribution of wealth in the United States. Conservative Republicans may have been willing to threaten Fed governors with violence if they didn’t start fighting non-existent inflation — but liberal Democrats barely made a peep as Janet Yellen’s rate hikes needlessly jeopardized the job prospects of low-income workers (and Hillary Clinton). 

Fortunately, the 2018 midterms brought some new Democrats to town. And the new generation is woke on monetary policy.

When Federal Reserve chair Jerome Powell testifed before the House Wednesday, Team Blue’s freshmen lawmakers posed some of the hearings most incisive questions.

Week-end Wrap - Political Economy - July 6, 2019

Week-end Wrap - Political Economy - July 6, 2019
by Tony Wikrent
Economics Action Group, North Carolina Democratic Party Progressive Caucus

I tremble for my country when I reflect that God is just

What a Pediatrician Saw Inside a Border Patrol Warehouse
[The Atlantic, , via Naked Capitalism 7-5-19]

Dolly Lucio Sevier evaluated dozens of sick children at a facility in South Texas. She found evidence of infection, malnutrition, and psychological trauma.

At Ursula, however, the children Sevier examined—like the panting 2-year-old—were “totally fearful, but then entirely subdued,” she told me. She could read the fear in their faces, but they were perfectly submissive to her authority. “I can only explain it by trauma, because that is such an unusual behavior,” she said. Sevier had brought along Mickey Mouse toys to break the ice, and the kids seem to enjoy playing with them. Yet none resisted, she said, when she took them away at the end of the exam. “At some point,” Sevier mused, “you’re broken and you stop fighting.”

....Border Patrol has long maintained that it is not equipped to handle children, who are supposed to be transferred into the custody of the Office of Refugee Resettlement within three days. After that, many kids are housed in licensed child-care facilities that look more like the average public school than a jail. The federal government has attributed slow transfers to the sharp uptick in the number of migrants at the southern border; in May, 144,200 migrants were taken into custody—the highest monthly total in 13 years.

Days before Sevier’s visit, reports of poor conditions at a similar facility in Clint, Texas, drew outrage around the country. Kevin McAleenan, the acting head of the Department of Homeland Security, told reporters the outcry was based on “unsubstantiated allegations regarding a single Border Patrol facility.”
But his own agency’s watchdogs soon contradicted him—the problems are not restricted to Clint.

Predatory Finance

Sun, Sand, and the $1.5 Trillion Dark Offshore Economy 

Bloomberg Businessweek, via The Big Picture 7-6-19]

The British Virgin Islands is home to more than 400,000 companies that hold $1.5 trillion in assets.... Even though he helped get it up and running, Geluk doesn’t have permission to scan the whole database. In fact, only two people, a pair of unnamed employees of the BVI’s Financial Investigation Agency, are able to search the entire system, which holds details on about 600,000 owners who have directly or indirectly controlled companies here. It’s thought that roughly a third of all offshore companies globally are registered in the BVI....

The BVI’s place in the dark offshore economy was illuminated by the 2016 Panama Papers leak, in which 11.5 million documents from the law firm Mossack Fonseca were released by the International Consortium of Investigative Journalists. The disclosures sparked probes worldwide into money laundering, sanctions violations, and tax avoidance, and it didn’t pass without notice that more than half the companies outed in the leak were registered in the BVI. (The scandal should have been called the BVI Papers, more than a few people suggested.) It was clear from the disclosures that BVI regulation was inadequate, and that remains a concern today: Last year, BVI regulators conducted only four on-site inspections of financial firms.