Sunday, August 25, 2019

Week-end Wrap - Political Economy - August 24, 2019

Week-end Wrap - Political Economy - August 24, 2019
by Tony Wikrent
Economics Action Group, North Carolina Democratic Party Progressive Caucus

Strategic Political Economy

Give No Heed to the Walking Dead
[The Scholar’s Stage, via Naked Capitalism 8-18-19]
The People's Republic of China is wealthier than any rival America has faced. Its leaders are convinced of the malignance of the United States. Their ambitions are global, their ideology hostile, and their military forces optimized to "fight and win wars" with America and the democratic nations that surround it. The challenge is daunting—and it exists because of us. The Sino-American relationship of 2019 is the acrid fruit of "engagement." 
Engagement is dead. Yet like dead growth lumped to living branch, the men and women who crafted the disaster linger with us. In twitter whispers and podcast chatterings their murmurs grow. Engagement did not fail, we hear. It never was about remaking China in the first place. We never thought the Chinese would come to share our systems, values, or priorities. Engagement was about something else entirely.... 
Here is Bill Clinton, explaining to the American voters why the People's Republic deserves a seat at the W.T.O.:
By joining the W.T.O., China is not simply agreeing to import more of our products. It is agreeing to import one of democracy's most cherished values, economic freedom. The more China liberalizes its economy, the more fully it will liberate the potential of its people -- their initiative, their imagination, their remarkable spirit of enterprise. And when individuals have the power, not just to dream, but to realize their dreams, they will demand a greater say....

The broader problem with the Haas formula ("shape what China does") is that China's political behavior cannot be divorced from the economic and political structures that produce it. As China's newest white paper eagerly reminds us, demanding the PRC reform its SOEs is demanding that it transform the fundamentals of its government, of which those SOEs are a critical part. Asking them to dismantle mercantilist policies and halt IP theft is asking them to abandon the economic model (what Xi would call "the path of socialism with Chinese characteristics") that their social system (in the Marxist tinged theory of the CPC, China's social "superstructure") is built upon. Dialing down the ambitions and capabilities of the PLA would have meant dismantling a keystone of Party ideology, identity, and organization.
The Population Bust: Demographic Decline and the End of Capitalism as We Know It
Foreign Affairs, via Naked Capitalism 8-18-19] Not paywalled.
Just as much of the world has come to see rapid population growth as normal and expected, the trends are shifting again, this time into reverse. Most parts of the world are witnessing sharp and sudden contractions in either birthrates or absolute population. The only thing preventing the population in many countries from shrinking more quickly is that death rates are also falling, because people everywhere are living longer.

The Failure of Establishment Neoliberal Economics

Business Roundtable Redefines the Purpose of a Corporation to Promote ‘An Economy That Serves All Americans’
[Business Roundtable, via Naked Capitalism 8-20-19]
Corporate America & the Rules of Capitalism
Barry Ritholtz, August 20, 2019 [The Big Picture 8-20-19]

Sunday, August 18, 2019

Week-end Wrap - Political Economy - August 17, 2019

Week-end Wrap - Political Economy - August 17, 2019
by Tony Wikrent
Economics Action Group, North Carolina Democratic Party Progressive Caucus

[TomDispatch, via Naked Capitalism 8-16-19]

How the Supreme Court Is Rebranding Corruption — Ciara Torres-Spelliscy
Ciara Torres-Spelliscy [via Mike Norman Economics 8-8-19]
Summary of "Deregulating Corruption," (pdf) Harvard Law & Policy Review, Vol. 13, No. 2, 2019
From its very first term, the Roberts Supreme Court has been rebranding the meaning of the word “corruption” both in campaign finance cases as well as in white-collar crime cases. And in Kelly v. United States (better known as the Bridgegate case), the Supreme Court may do even greater damage to the concept of corruption.

What has the Roberts Supreme Court done to corruption? I discuss this in my recent Harvard Law & Policy Review article, “Deregulating Corruption,” and in my soon to be released book, Political Brands. First, they have narrowed the meaning of the word in a series of election law cases that address the constitutionality of various campaign finance laws. In cases like Citizens United v. FEC, which allowed corporations the First Amendment right to spend an unlimited amount of money on political ads, and McCutcheon v. FEC, which allows the rich to support as many congressional candidates as they want with contributions, the Roberts Supreme Court has ruled 5-4 that “corruption” only means quid pro quo exchanges.

This approach to corruption sets the Roberts Supreme Court apart from other Supreme Courts. For over a century, previous Supreme Courts upheld campaign finance laws and other regulations which try to keep graft and political intimidation at bay precisely because as the Supreme Court recognized in Ex parte Yarbrough in 1884, “[i]n a republican government like ours, where political power is reposed in representatives of the entire body of the people, chosen at short intervals by popular elections, the temptations to control these elections by violence and by corruption is a constant source of danger…. no lover of his country can shut his eyes to the fear of future danger from both sources…”

Even the Rehnquist Supreme Court—no bastion of liberals— was more thoughtful about political corruption than the Roberts Court is. For example, in 2003, the Rehnquist Supreme Court ruled in FEC v. Beaumont that there is a “public interest in ‘restrict[ing] the influence of political war chests funneled through the corporate form.’ …; ‘[S]ubstantial aggregations of wealth amassed by the special advantages which go with the corporate form of organization should not be converted into political ‘war chests’ which could be used to incur political debts from legislators.’”

In a twin 2003 decision, McConnell v. FEC, the Rehnquist Court asserted that the “crabbed view of corruption”—which would limit the term to actual quid pro quo corruption—“ignores precedent, common sense, and the realities of political fundraising.” The Roberts Court has rapidly put that capacious concept of political corruption in exile and knocked down nearly every campaign finance law it has been asked to review. (The Supreme Court left in place a ban on foreigners spending in US election and a ban on judges personally asking donors for money, but these are the exceptions that prove the rule.)

But wait, there’s more. The Roberts Supreme Court has also rebranded corruption by changing what counts as white-collar crimes. In Skilling v. US (a case brought by disgraced ex-CEO of Enron Jeff Skilling challenging his 24-year prison sentence for defrauding the company’s shareholders), the Supreme Court agreed with Skilling that he should not have been charged with honest services fraud because his crimes did not involve a bribe or a kickback. This Supreme Court decision led to Skilling getting 10 years shaved off of his original sentence. He was released from jail in 2018 and left his halfway house in 2019. He is now a free man.

Also in the criminal context, the Roberts Supreme Court invalidated the conviction of ex-Governor of Virginia Bob McDonnell. McDonnell, who had money troubles while he was Governor of Virginia, accepted money and gifts from a businessman named Jonnie Williams who wanted to sell his tobacco pills (I’m not making any of this up) to Virginia employees. The Governor set up a few meetings for Williams and once touted a bottle of the tobacco pills in a meeting.

In McDonnell v. US, the Supreme Court decided that none of what Governor McDonnell did was “an official act,” and thus he could not be guilty of a quid pro quo exchange with Williams. No one disputed that Williams had given the governor lots of money. What the Supreme Court didn’t buy was that the Governor did enough in return for the largess to constitute a crime.
Tom Hickey, who posted this at Mike Norman Economics, asks further:
Corruption isn’t a partisan matter. Both Democratic and Republican politicians have been accused of abusing their offices for private gain. And using the Roberts Supreme Court cases to their advantage is equally bipartisan....Is the intent to install plutonomy, the oligarchy of wealth, under the veneer of representative democracy? 
Interestingly, in Western liberal "democracies", the oligarchy of wealth called plutonomy is institutionally formalized through the "sanctity of private property," which includes hereditary transfer of ownership through inheritance, establishing a wealthy elite in power across generations. Looks more like neo-feudalism.

The Failure of Establishment Neoliberal Economics

Lambert Strether adds: "It’s actually even worse than that since the commonly-cited measure of CEO pay lowballs it. See How the SEC Enabled the Gross Under-Reporing of CEO Pay. It looks as if the EPI used the conventional method for stock option valuation, which means the picture is even worse than they indicate."

Life, Deferred: Student Debt Postpones Key Milestones for Millions of Americans
August 16, 2019 [openDemocracy, via Naked Capitalism 8-16-19]

Sunday, August 11, 2019

Week-end Wrap - Political Economy - August 10, 2019

Week-end Wrap - Political Economy - August 10, 2019
by Tony Wikrent
Economics Action Group, North Carolina Democratic Party Progressive Caucus

Strategic Political Economy

Trump, Tax Cuts and Terrorism
Why has the Republican Party become a systematic enabler of terrorism?
Paul Krugman [New York Times, via DailyKos 8-6-19]
But racism isn’t what drives the Republican establishment...their exploitation of racism has led them inexorably to where they are today: de facto enablers of a wave of white supremacist terrorism. 
The central story of U.S. politics since the 1970s is the takeover of the Republican Party by economic radicals, determined to slash taxes for the wealthy while undermining the social safety net. 
With the arguable exception of George H.W. Bush, every Republican president since 1980 has pushed through tax cuts that disproportionately benefited the 1 percent while trying to defund and/or privatize key social programs like Social Security, Medicare, Medicaid and the Affordable Care Act. 
This agenda is, however, unpopular. Most voters believe that the rich should pay more, not less, in taxes, and want spending on social programs to rise, not fall. 
So how do Republicans win elections? By appealing to racial animus. This is such an obvious fact of American political life that you have to be willfully blind not to see it....
In effect, then, the Republican Party decided that a few massacres were an acceptable price to pay in return for tax cuts. I wish that were hyperbole, but the continuing refusal of G.O.P. figures to criticize Trump even after El Paso shows that it’s the literal truth.
If You Only Read One Thing Today, Read Paul Krugman: "Trump, Tax Cuts and Terrorism"
xaxnar [DailyKos 8-6-19]
One wonders why John Hickenlooper is still warning of the dangers of extreme leftist socialism. One wonders why Joe Biden still thinks the GOP will come to its senses if Trump is gone. One wonders when Nancy Pelosi and the rest of the Democratic leadership will realize we have a bigger problem than just Trump. 
If you are prepared to read more than one thing, read Kevin Drum, who spelled this out a year ago at Mother Jones.
Today, the Republican Party exists for one and only one purpose: to pass tax cuts for the rich and regulatory rollbacks for corporations. They accomplish this using one and only method: unapologetically racist and bigoted appeals to win the votes of the heartland riff-raff they otherwise treat as mere money machines for their endless mail-order cons.

Thursday, August 8, 2019

The triumph of the squares

The 50th anniversary of the first moon walk has caused me a full-blown geek-out. I remember the space race with fondness. Aerospace was the biggest story out there. The 50s and 60s saw an explosion of technological growth. Some favorites of mine from that era include the F-104, the U-2, the SR-71, the Boeing 707, 727, and 747—the "jet age" planes that changed travel and even music by democratizing flight.

I "graduated" from my Erector Set stage straight into model airplanes—the ones that flew and made a bunch of noise. And even though the space race was on, I was never seduced into model rocketry. It was expensive and the available examples didn't do much—restricted as they were by the same sort of regulations as fireworks (which where I lived were essentially outlawed.)

Real-world rockets were kind of boring as well. The most notorious of the test pilots out at Edwards Air Force Base (Chuck Yeager) even labeled the early astronauts as nothing more than "spam in a can." After all, the first "American" in space was a chimp. But that wouldn't last long. The original astronauts were extremely competent test pilots and before long, they were demanding greater control of their missions.

Even so, I was far more interested in the flight testing at Edwards where they pushed the limits of supersonic flight with real airplanes like fighters jets. But soon, they eventually embraced rocketry with the incomparable X-15. They had to. If you want to set speed and altitude records, eventually you run out of atmosphere where air-breathing power-plants simply do not work. The X-15 was insanely fast, complex and dangerous. It wasn't going to be piloted by a chimp. In fact, these things required the skills of the best pilots we could find. And I had a favorite—Neil Armstrong.

Armstrong was a superb pilot. On one mission a failure of a new instrument caused him to fly nearly 50 miles beyond where he was supposed to turn back to Edwards. His propulsion was spent so he was flying a glider with the aerodynamic performance (4:1 glide ratio) of a brick. He nursed that X-15 back to Edwards coming over the lake bed at less than 100'. This would be the same guy who landed on the moon with less than 30 seconds worth of fuel.

His degree in aeronautical engineering came from Purdue. This is NOT a school that grants engineering degrees to goof-offs. In fact Purdue would contribute a serious fraction of the top engineers to the space program. The rest mostly came from State Universities in the USA Midwest like Michigan.

He grew up in Wapakoneta, Ohio about an hour north of Dayton—the home of the Wright Brothers. His father paid for a ride in a Ford Tri-motor at 6. He soloed an airplane on his 16th birthday (the legal minimum age) and spent much of his childhood building model airplanes. This last fact is what endeared him to me. I too built model airplanes which were insanely difficult to get to fly well. The problem is that models and real airplanes conform to the same laws of nature which means to indulge in this hobby, it really helps to learn things like fluid dynamics, lightweight structures, and drag coefficients. You know—kid stuff.

Yes that is me with a model that required at least 150 hours to build. Didn't fly very well—too little power and too much paint.

Flying is something that only happens on the boundaries of perfection. You can get 15,000 things right and one wrong and your precious airplane is a flaming heap. Good pilots are followers of check lists—as diligent on the 1000th time through as the first. They read the operator's manuals. They know what all those switches do. They understand that dishonesty and corner-cutting could end their lives.

Armstrong was notorious for insisting on understanding every part of his aircraft. He wanted to know what everything was supposed to do and what it COULD do in an emergency. But even better, he understood that flying is a team effort and it was critical for every member of the team to take their jobs seriously. Here's what he says about the people who built Apollo.
Armstrong: Each of the components of our hardware were designed to certain reliability specifications, and for the majority, to my recollection, had a reliability requirement of 0.99996, which means that you have four failures in 100,000 operations. I've been told that if every component met its reliability specifications precisely, that a typical Apollo flight would have about [1,000] separate identifiable failures. In fact, we had more like 150 failures per flight, [substantially] better than statistical methods would tell you that you might have.

I can only attribute that to the fact that every guy in the project, every guy at the bench building something, every assembler, every inspector, every guy that's setting up the tests, cranking the torque wrench, and so on, is saying, man or woman, "If anything goes wrong here, it's not going to be my fault, because my part is going to be better than I have to make it." And when you have hundreds of thousands of people all doing their job a little better than they have to, you get an improvement in performance. And that's the only reason we could have pulled this whole thing off.

The Triumph of the Squares

Nearly a year after the landing of Apollo 11, NASA head Thomas Paine gave a commencement address at Worcester Polytechnic Institute where he declared that the successful moonshot was a triumph of the squares, the validation of the values of "Squareland" which he listed as foremost a profound faith in reason. It was "outward looking and mathematical," was "time oriented...and deeply concerned with future consequences." It "accepts as true only rational facts and theories which predict future events with mathematical precision under rigorous standards of reproducibility. Only Squareland's rationality could ensure the "crops yield, lights light, bridges carry loads, children avoid polio, and men walk on the moon." In fact. to Squarelanders, a solid definition of "truth" might be "that which successfully takes two men to the moon."

This speech made me groan and roll my eyes. On one hand, going to the moon really DID require the "square" virtues that Paine so celebrated. Beside, I was clearly a prototypical "square" (see photo above.) Building airplanes sort of demands squareness. I was also the son of a small-town clergyman—building airplanes was one way of staying above the reproach of the church ladies. On the other hand, this speech set off the scolds who assumed that "square" virtue included an unquestioning support of the Vietnam War, a marked preference for booze over pot, white shirts and neck ties, and above all, short hair for men.

Unfortunately, the space race had been sold as Cold War macho and a real-live Nazi named Wernher von Braun was chosen to head the effort. So the link between the space race and unbridled militarism was pretty damn short. NASA was acutely aware of this problem. It was one of the reasons that Neil Armstrong was chosen to take the first step—he was the only civilian pilot to have reached his advanced status. This turned out to be an excellent choice. In the goodwill tour following the moon landing, he charmed his listeners around the world into believing that this was a triumph of human (not American) genius. The reason this worked is because Armstrong deeply believed it was true.

But while the moon landing was clearly a triumph of the squares, the squares would not triumph. By 1972 the Apollo program was ended and no human has gone beyond low-earth orbit since. The can-do attitude of Apollo has so completely disappeared from American culture that many now actually believe the landing was a hoax. It is probably more accurate to call Apollo "Peak Square" because the vast majority of my fellow citizens in 2019 look on a profound faith in reason as a weird psychological disorder.

BBC calling

In the summer of 1970, I found myself in UK. I kept running into people who wanted to talk about the moon landing. Most of them were very well informed. I had to scramble to keep up at times. One night in London, a waitress in a pub sat down next to me and asked if I was the American space expert she had overheard. I humbly admitted I was probably who she was looking for but I was FAR from being an expert. Then she asked, "How did they know how long the burn for the lunar insertion midflight correction should be? And how did they know they were pointing the engine in the right direction?" I didn't have a canned response so I pulled out my understanding of inertial navigation. It wasn't a very good answer but she seemed to understand, smiled and went back to work. I was left wondering just how a random London barmaid knew enough to even ask such good questions.

In 1978, PBS would air a 10-part series called Connections starring a fascinating storyteller named James Burke. (There was a companion coffee-table book by the same name). Burke had carved out an awesome assignment for himself. He wanted to explain the products of the modern world (computers, plastics, powered flight, etc.) in such a way that his listeners would understand how their world came to be. It was absolutely brilliant. Episode #1 The trigger effect traced the development of a modern city like New York back to the invention of the plow. The nine that would follow were equally good. Somewhere along the way we are informed that Burke was the man who covered Apollo for BBC.

AHA! That explained why the Brits knew so much about the moon landing—at least partly. So in the near-infinity of Apollo 11 at 50 coverage on YouTube, I went looking to see if I could find any of Burke's descriptions. I found a good one—an hour of Apollo highlights.

Just in case you need a reminder of how utterly lame the Apollo coverage was on USA corporate media, here is an example from ABC. I am pretty sure all the CBS and ABC coverage of the whole mission can be found at YouTube.

Of all the footage of the Apollo 11 mission that I have uncovered in the past few months, the following may be my favorite. It was done by NASA and has even more in capsule footage than the recently released Blu-Ray of Apollo 11. Of course, the new version has far superior imagery because restoration techniques are so much better. But this one is narrated by Wernher von Braun himself and the technique he used is to compare the 1969 effort against the description of a trip to the moon from Jules Verne's 1865 From Earth to the Moon.

As for the speculation that the Apollo program could provide a template for how this nation should take on the challenges of climate change, my responses are:

It might work
  • If we can restock our seriously depleted supply of "squares."
  • If we can find leadership that understands that this problem will be at LEAST 1000 times more difficult than the moon landing—and that's the best reason to do it.
The HILL looked at this possibility in more depth: Apollo as model for climate change.

Sunday, August 4, 2019

Week-end Wrap - Political Economy - August 3, 2019

Week-end Wrap - Political Economy - August 3, 2019
by Tony Wikrent
Economics Action Group, North Carolina Democratic Party Progressive Caucus

Upcoming events

August 7: Film Screening of Zero Weeks with Congresswoman Adams (Charlotte)
[NC AFL-CIO 8-2-19]
The award-winning documentary film Zero Weeks explores the crisis of unpaid leave in America. Immediately following the screening of the film will be a discussion featuring leaders working on paid leave for all.
September 2: Charlotte Labor Day Parade
[NC AFL-CIO 8-2-19]

September 19-20: 62nd Annual NC AFL-CIO Convention (Charlotte)[NC AFL-CIO 8-2-19]

Strategic Political Economy

Jeffrey Epstein, Trump’s Mentor and the Dark Secrets of the Reagan Era
[MintPress, via Naked Capitalism 8-1-19]
Starting first with mob-linked liquor baron Lewis Rosenstiel and later with Roy Cohn, Rosenstiel’s protege and future mentor to Donald Trump, Epstein’s is just one of the many sexual blackmail operations involving children that are all tied to the same network, which includes elements of organized crime, powerful Washington politicians, lobbyists and “fixers,” and clear links to intelligence as well as the FBI.
Some of the worst memories of my community organizing days in the 1980s involve my trying to convince people that USA’s industrial base was being destroyed by takeovers largely financed with money from organized crime. People just did want to hear the details. They especially did not want to hear that St. Ronnie’s political career had been promoted by the mob. Amazingly, the people most resistant to these facts were the “organized” leftists in CPUSA and SWP. The communists and socialists almost invariably dismissed the details of these organized crime connections, and wanted only to discuss impersonal theoretical forces like “historical materialism” and “capitalist accumulation.” I came to detest talking to them.

For three decades now, I have occasionally referred to this issue of organized crime taking over the USA industrial economy, and hypothesized that one major effect has never been studied: replacing competent industrial management with the criminal mentality and inclinations of the mob-financed corporate raiders. It was Jon Larson at RealEconomics who about 15 years ago pointed me to Thorstein Veblen’s (The Theory of the Leisure Class) explanation of how “Leisure Class” predatory elites are “barbarians: who gain power through force and fraud: “The traits which characterise the predatory and subsequent stages of culture, and which indicate the types of man best fitted to survive under the rĂ©gime of status, are (in their primary expression) ferocity, self-seeking, clannishness, and disingenuousness — a free resort to force and fraud.” Veblen explained how the rise of criminal predators to economic power creates a pecuniary culture.

GND - An opportunity too big to miss

[Bill Mitchell], via Naked Capitalism 7-30-19]
“At the basis of the [standard neoclassical microeconomics] ‘solution’ is the belief that there is a trade-off between, say, environmental damage and economic growth (production). And the market failure skews that trade-off towards growth at the expense of environmental health. So all that is needed is some intervention (a tax) that will skew the trade-off back to something more preferable. The problem is that the whole idea that there is a trade-off between protecting our environment and economic production is flawed at the most elemental level.

There is no calculus (which underpins this sort of microeconomic reasoning) that can tell us when a biological system will die. The idea that we can have a ‘safe’ level of pollution, regulated via a price system, is groundless and should not form part of a progressive response. Carbon trading schemes (CTS) are neoliberal constructs which start with the presumption that a free market is the best way to organise allocation.” 
Lamber Strether adds: "Worth repeating: Mark Blyth says that “Markets cannot internalize their externalities on a planetary scale. They just can’t. It’s impossible.” "