Sunday, November 24, 2019

Week-end Wrap – Political Economy – November 24, 2019

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

Strategic Political Economy

Mike Pompeo scorns the law because powerful men like him never have to follow it
Robert Fisk [Independent, via Naked Capitalism 11-22-19]

Dylan Ratigan: The Super Rich Have No Country. 
[YouTube, via Naked Capitalism 11-22-19]
“This is a 2 hour tour de force nailing down the failures of the media and Democrats on the GFC. Great explanation of the whole GFC too.”
[Common Dreams, via Naked Capitalism 11-22-19]

The Carnage of Establishment Neoliberal Economics

[Atlantic, via Naked Capitalism 11-21-19]
“A passion for affordability” became one of the company’s new, unloved slogans, as did “Less family, more team.” It was enough to drive the white-collar engineering union, which had historically functioned as a professional debating society, into acting more like organized labor. “We weren’t fighting against Boeing,” one union leader told me of the 40-day strike that shut down production in 2000. “We were fighting to save Boeing.”

....Stonecipher, who promptly affirmed: “When people say I changed the culture of Boeing, that was the intent, so that it’s run like a business rather than a great engineering firm.” A General Electric alum, he built a virtual replica of GE’s famed Crotonville leadership center for Boeing managers to cycle through....

The company that once didn’t speak finance was now, at the top, losing its ability to converse in engineering... It wasn’t just technical knowledge that was lost, Aboulafia said. “It was the ability to comfortably interact with an engineer who in turn feels comfortable telling you their reservations, versus calling a manager [more than] 1,500 miles away who you know has a reputation for wanting to take your pension away. It’s a very different dynamic. As a recipe for disempowering engineers in particular, you couldn’t come up with a better format.” ....
“If in fact there’s a reverse takeover, with the McDonnell ethos permeating Boeing, then Boeing is doomed to mediocrity,” the business scholar Jim Collins told me back in 2000. “There’s one thing that made Boeing really great all the way along. They always understood that they were an engineering-driven company, not a financially driven company . If they’re no longer honoring that as their central mission, then over time they’ll just become another company.”
[Business Insider, via Naked Capitalism 11-22-19]

How Neoliberal Thinkers Spawned Monsters They Never Imagined
Lynn Parramore [Institute for New Economic Thinking, , via Naked Capitalism 11-20-19]
Neoliberalism thus aims to de-regulate the social sphere in a way that parallels the de-regulation of markets.

Concretely this means challenging, in the name of freedom, not only regulatory and redistributive economic policy but policies aimed at gender, sexual and racial equality. It means legitimating assertions of personal freedom against equality mandates (and when corporations are identified as persons, they too are empowered to assert such freedom). Because neoliberalism has everywhere carried this moral project in addition to its economic one, and because it has everywhere opposed freedom to state imposed social justice or social protection of the vulnerable, the meaning of liberalism has been fundamentally altered in the past four decades.

That’s how it is possible to be simultaneously libertarian, ethnonationalist and patriarchal today....

Hayek really believed that markets and traditional morality were both spontaneous orders of action and cooperation, while political life would always overreach and thus required tight constraints to prevent its interventions in morality or markets. It also needed to be insulated from instrumentalism by concentrated economic interests, from aspiring plutocrats to the masses. The solution, for him, was de-democratizing the state itself. He was, more generally, opposed to robust democracy and indeed to a democratic state. A thriving order in his understanding would feature substantial hierarchy and inequality, and it could tolerate authoritarian uses of political power if they respected liberalism, free markets and individual freedom....

We need to understand why reaction to the neoliberal economic sinking of the middle and working class has taken such a profoundly anti-democratic form. Why so much rage against democracy and in favor of authoritarian statism while continuing to demand individual freedom? What is the unique blend of ethno-nationalism and libertarianism afoot today? Why the resentment of social welfare policy but not the plutocrats? Why the uproar over [American football player and political activist] Colin Kaepernick but not the Panama Papers [a massive document leak pointing to fraud and tax evasion among the wealthy]?

....corporate dominance of elections becomes possible when political life as a whole is cast as a marketplace rather than a distinctive sphere in which humans attempt to set the values and possibilities of common life. Identifying elections as political marketplaces is at the heart of Citizens United.
These critiques of neoliberalism are always welcome, but they inevitably leave me with irritated and dissatisfied with their failure or unwillingness to mention the political philosophy of republicanism as an alternative, or even a contrast.

The key is found in Brown's statement " It also needed to be insulated from instrumentalism by concentrated economic interests, from aspiring plutocrats to the masses. The solution, for him [von Hayek], was de-democratizing the state itself. He was, more generally, opposed to robust democracy and indeed to a democratic state."

Contrast this to
 Federalist Paper No. 10, Madison's famous discourse on factions. Madison writes that 1) factions always arise from economic interests ["But the most common and durable source of factions has been the various and unequal distribution of property."], and 2) therefore the most important function of government is to REGULATE the clash of these factions ["The regulation of these various and interfering interests forms the principal task of modern legislation, and involves the spirit of party and faction in the necessary and ordinary operations of the government."

In a very real sense, neoliberalism is an assault on the founding principles of the American republic.

Which should not really surprise anyone, since von Hayek was trained as a functionary of the Austro-Hungarian empire. And who was the first secretary of the Mont Pelerin Society that von Hayen founded to promote neoliberalist doctrine and propaganda? Non other than Max Thurn, of the reactionary Bavarian Thurn und Taxis royal family.

Economic disequilibrium

[Capital & Main, via Naked Capitalism 11-18-19]

[Capital & Main, via Naked Capitalism 11-22-19]

[Graphic below via The Big Picture 11-21-19]

OK Obama, It’s Time to Cancel Centrism
[TruthDig, via Naked Capitalism 11-22-19]
Centrists are terrified that if the Democratic nominee is far to the left of Biden and Obama, they will be forced to coalesce around a candidate who represents a threat to the establishment of which they are a part. The unflappable Sanders brushed aside Obama’s criticism in an interview with The New York Times, saying, “When I talk about raising the minimum wage to a living wage, I’m not tearing down the system. We’re fighting for justice.”

....American politics have tilted our economic system so far in favor of wealthy elites—and this has been by and large a bipartisan project—that establishment lawmakers are really the ones guilty of “tearing down” a modest (if flawed) system that once upon a time distributed riches more fairly....

The billionaire Wall Street executive Leon Cooperman has complained bitterly about his pariah status, saying, “What is wrong with billionaires? You can become a billionaire by developing products and services that people will pay for,” as if that’s all it took for him to gather his disgustingly large fortune. Cooperman conveniently left out the unfair tax rates, offshore tax havens, taxpayer subsidies and all the other ways in which the government rigs the system to favor people like him at our expense. He denounced Warren’s wealth tax, saying, “I believe in a progressive income tax and the rich paying more. But this is the fucking American dream she is shitting on.”

Raj Chetty in 14 charts: Big findings on opportunity and mobility we should all know
[Brookings, January 11, 2018]
From a couple years ago, but the charts are stunning and graphic evidence of the calcification of economic opportunity in USA, as we lose our grasp on the republic and devolve into a plutocracy managed by a "professional class" oligarchy.  Why would anyone want to preserve this status quo if they're not members of the ruling elite?

[New York Times 11-17-19]
....FedEx’s founder and chief executive, Frederick Smith, who repeatedly took to the airwaves to champion the power of tax cuts. “If you make the United States a better place to invest, there is no question in my mind that we would see a renaissance of capital investment,” he said on an August 2017 radio show hosted by Larry Kudlow, who is now chairman of the National Economic Council....

FedEx’s financial filings show that the law has so far saved it at least $1.6 billion. Its financial filings show it owed no taxes in the 2018 fiscal year overall. Company officials said FedEx paid $2 billion in total federal income taxes over the past 10 years.... 
As for capital investments, the company spent less in the 2018 fiscal year than it had projected in December 2017, before the tax law passed. It spent even less in 2019. Much of its savings have gone to reward shareholders: FedEx spent more than $2 billion on stock buybacks and dividend increases in the 2019 fiscal year, up from $1.6 billion in 2018, and more than double the amount the company spent on buybacks and dividends in fiscal year 2017.... 
FedEx’s use of its tax savings is representative of corporate America. Companies have already saved upward of $100 billion more on their taxes than analysts predicted when the law was passed. Companies that make up the S&P 500 index had an average effective tax rate of 18.1 percent in 2018, down from 25.9 percent in 2016, according to an analysis of securities filings... From the first quarter of 2018, when the law fully took effect, companies have spent nearly three times as much on additional dividends and stock buybacks, which boost a company’s stock price and market value, than on increased investment.
And, from the comments to the NYT article:
My friend is a FedEx driver, or so I thought. He wears a FedEx uniform and drives a FedEx truck, but he works for a third party delivery service. He said he’s the lucky one. FedEx classified his colleagues delivering FedEx packages as independent contractors, gig workers with no worker’s compensation if they get hurt or need major rehabilitation. They can be fired at will without the right to unemployment insurance as a buffer to homelessness while they look for a new position. The gig drivers don’t have paid family leave or sick days, so they better bank a nest egg small business owners who to amass. But alas, they aren’t small business owners, they’re gig workers making Smith and other oligarchs rich. Attire is the only thing robber barons change from one generation to the next.
“Is Your Employer Stealing From You?” 
[GQ, via Naked Capitalism 11-18-19]
“Wage theft isn’t one of the crimes most prosecutors and politicians refer to when they talk about getting “tough on crime,” but it represents a massive chunk of all theft committed in the U.S. A 2017 study by the Economic Policy Institute (EPI) found that in the ten most populous states, an estimated 2.4 million people lose a combined $8 billion in income every year to theft by their employers. That’s nearly half as much as all other property theft combined last year—$16.4 billion according to the FBI. And again, EPI’s findings are only for ten states. According to the institute, the typical worker victimized by minimum-wage violations is underpaid by $64 per week, totaling $3,300 per year. If its figures are representative of a national phenomenon, then EPI estimates that the yearly total for American wage theft is closer to $15 billion.”

Predatory Finance

Federal Reserve minutes of Federal Open Market Committee meeting of October 29-30, 2019
[via Wall Street on Parade, November 21, 2019]
“The staff presented two potential approaches for conducting repo operations if the Committee decided to maintain an ongoing role for such operations. Under the first approach, the Desk would conduct modestly sized, relatively frequent repo operations designed to provide a high degree of readiness should the need for larger operations arise; under the second approach, the FOMC would establish a standing fixed-rate facility that could serve as an automatic money market stabilizer. Assessing these two approaches involved several considerations, including the degree of assurance of control over the federal funds rate, the likelihood that participation in the Federal Reserve’s repo operations could become stigmatized, the possibility that the operations could encourage the Federal Reserve’s counterparties to take on excessive liquidity risks in their portfolios, and the potential disintermediation of financial transactions currently undertaken by private counterparties. Regular, modestly sized repo operations likely would pose relatively little risk of stigma or moral hazard, but they may provide less assurance of control over the federal funds rate because it might be difficult for the Federal Reserve to anticipate money market pressures and scale up its repo operations accordingly. A standing fixed-rate repo facility would likely provide substantial assurance of control over the federal funds rate, but use of the facility could become stigmatized, particularly if the rate was set at a relatively high level. Conversely, a standing facility with a rate set at a relatively low level could result in larger and more frequent repo operations than would be appropriate. And by effectively standing ready to provide a form of liquidity on an as-needed basis, such a facility could increase the risk that some institutions may take on an undesirably high amount of liquidity risk.”

[Below Twitter, , via Naked Capitalism 11-19-19]
How 37 U.S. banks became just four megabanks in the space of two decades 

[Los Angeles Times, via Naked Capitalism 11-18-19] 
“Former Federal Reserve Chairman Ben Bernanke says some Wall Street executives should have gone to jail for their roles in the financial crisis that gripped the country in 2008 and triggered the Great Recession…. Bernanke said he thinks that in addition to the corporations, individuals should have been held more accountable…. “It would have been my preference to have more investigations of individual actions because obviously everything that went wrong or was illegal was done by some individual, not by an abstract firm,” Bernanke said.” Asked if someone should have gone to jail, the former Fed chairman replied, “Yeah, I think so.” He did not, however, name any individual he thought should have been prosecuted, and he noted that the Federal Reserve is not a law-enforcement agency.”
Lambert Strether comments: "Thanks, Obama. Liberal Democrats frothing and stamping about the rule of law should consider this. Nobody takes them seriously about the rule of law, because when they had the chance to enforce it — and the country would have been with them, all the way, across the politcal spectrum — they didn’t govern. And all the people so derelict in their duty are still in charge, respected party elders, and very well-paid opinion-havers."

Restoring Balance to the Economy

New Jersey Gov. Phil Murphy orders a task force to set up a public bank
[Public Banking Institute 11-18-19]
On Wednesday, November 13, NJ Gov. Phil Murphy moved forward on his campaign pledge to create a state-owned bank by signing an executive order for a 14-member “Public Bank Implementation Board.” Tasks assigned to the Board include developing a business plan, consulting with public banking experts, and holding at least three public meetings. The Board must release its plan within a year.

Climate and environmental crises

In the Great Lakes’ most productive fishing grounds, algae-fueled dead zones are eroding livelihoods
[Chicago Tribune, via Naked Capitalism 11-18-19]
After decades of pollution, habitat degradation, overfishing and numerous waves of invasive species, Lake Erie is still the most productive fishery in the Great Lakes and among the most valuable natural resources in the United States. Its reputation as the most fertile fishing ground in the region is owed to its warm, shallow waters that allow algae, the base of the aquatic food chain, to thrive. The algae serves as the base of the food chain for small fish and is among the reasons why Lake Erie, which only holds 2% of the Great Lakes water volume, cradles roughly 50% of the fish.

Global heating supercharging Indian Ocean climate system 
[Guardian, via Naked Capitalism 11-20-19]

[ORNL DAC, via Naked Capitalism 11-21-19]

[Nautilus, via Naked Capitalism 11-21-19]
“Peatlands have been a repository for eons and a source of hearth fuel for thousands of years. They’ve been known as a carbon sink for about a century, certainly since the 1890s when carbon dioxide was understood to be a greenhouse gas. Peatlands cover just 3 percent of the earth’s land surface yet hold five times more carbon dioxide than forests, which cover 31 percent of the land surface. In Europe, peatlands contain five times more CO2 than forests…. Peatlands are waterlogged landscapes—from bogs to wetlands to swamps—composed of various plants. Peat is the coarse soil, which we know from our potting mixes, that makes up the surface. Because the underlying plants haven’t decayed in the watery areas, they contain huge amounts of carbon, fixed in them by photosynthesis. As a result, peatlands play an important role as carbon sinks, keeping excessive greenhouse gases out of the atmosphere.”
“Coal Knew, Too” 
[Huffington Post, via Naked Capitalism 11-22-19]
In August, Chris Cherry, a professor in the Department of Civil and Environmental Engineering at the University of Tennessee, Knoxville, salvaged a large volume from a stack of vintage journals that a fellow faculty member was about to toss out. He was drawn to a 1966 copy of the industry publication Mining Congress Journal; his father-in-law had been in the industry and he thought it might be an interesting memento.\ 
Cherry flipped it open to a passage from James R. Garvey, who was the president of Bituminous Coal Research Inc., a now-defunct coal mining and processing research organization. 
“There is evidence that the amount of carbon dioxide in the earth’s atmosphere is increasing rapidly as a result of the combustion of fossil fuels,” wrote Garvey. “If the future rate of increase continues as it is at the present, it has been predicted that, because the CO2 envelope reduces radiation, the temperature of the earth’s atmosphere will increase and that vast changes in the climates of the earth will result.”

Economics in the real world

“Many Americans Over 65 Face Economic Insecurity, Even If They’re Healthy”
[Bloomberg, via Naked Capitalism 11-19-19]
“The majority of Americans living alone are at risk of not being able to pay for basic needs. That’s according to new estimates of financial insecurity among Americans 65 and older from the Gerontology Institute at the University of Massachusetts Boston. The Elder Index calculated by the university and other researchers tracks the income needed for older adults in good health. It shows that on average a single person without a mortgage requires $21,012 per year to pay for basic needs, or $31,800 per couple. Regional price variations change the estimates significantly.”

Health Care Crisis

“The Effect of Large-scale Health Coverage Expansions in Wealthy Nations on Society-Wide Healthcare Utilization” 
Adam Gaffney, Steffie Woolhandler, David Himmelstein [Journal of General Internal Medicine, via Naked Capitalism 11-21-19]
From the abstract: “We reviewed the effects of 13 universal coverage expansions in capitalist nations on physician and hospital utilization, beginning with New Zealand’s 1938 Social Security Act up through the 2010 Affordable Care Act in the USA. Almost all coverage expansions had either a small (i.e., < 10%) or no effect on society-wide utilization. However, coverage expansions often redistributed care—increasing use among newly covered groups while producing small, offsetting reductions among those already covered. We conclude that in wealthy nations, large-scale coverage expansions need not cause overall utilization to surge if provider supply is controlled. However, such reforms could redirect care towards patients who most need it." 

Information Age Dystopia

A Paranoid Guide to Fighting the ‘Bugging Epidemic’ 
[Amnesty International, via Naked Capitalism 11-22-19]

[Jalopnik, via Naked Capitalism 11-18-19] 
“Some surveys predicted only a few percentage points increase in [Vehicle Miles Traveled (VMT)] in a self-driving car future. Others, upwards of 90 percent. “[Mustapha Harb’s] advisor, Professor Joan Walker, had an idea. What if they hired chauffeurs to drive random people around? The chauffeur, Walker outlined, will do the driving for you. And, just like the most optimistic AV future of fully autonomous robot cars zooming around, you don’t even have to be in the car. ‘All these things the self-driving car can do for you in the future,’ Harb summarized, ‘a chauffeur can do for you today.’… Using 13 volunteers (a very small sample size due to budgetary constraints) from the San Francisco Bay Area who owned cars, Harb and his team studied their travel patterns using GPS trackers on their cars and phones for one week, then gave them a chauffeur for a week who would drive the participants’ personal vehicles for them….. The subjects increased how many miles their cars covered by a collective 83 percent when they had the chauffeur versus the week prior…. To put these findings in perspective, when researchers looked into the impact Uber and Lyft have had on urban congestion, they reported an increase in VMT in the single digits. San Francisco, which has seen some of the largest percentage increase of cars driving around in its downtown thanks to Uber and Lyft, had an increased VMT of 12.8 percent.”

[No Mercy, No Malice 11-15-19]
Facebook is now squarely in the red and a net negative for society. The social network held the promise of enhancing our time here, via connection, and has delivered on much of that. However, most time enhancement has been negated, as the social network is depressing our teens and endangering our most precious asset, girls. Teen suicide has skyrocketed — up 77% for older teen girls and up 151% for younger teens (research by colleague Jonathan Haidt).

There are many factors, but ground zero is the nuclear weapons we’ve put in girls’ hands to objectify them, perpetually undercut their self-esteem, and enable them to bully each other relationally, 24/7. Hospital admissions due to self-harm are up 50% for 15-19-year-old girls and up 200% for 10-14-year-old girls. At Facebook, a sociopath is wallpapered over by a 700-person corporate communications department and a $2 billion beard (Sheryl Sandberg).
The Dow, GDP, the Iowa polls. We are studying to the wrong tests. There is nothing more important for the future of the country, our society, and the planet than the health and wellbeing of girls. Think about this. The S&P is up 23% YTD, and the number of girls that decide to take their own life is up 151%. Three times more of them self-harm. The pursuit of money at the expense of girls’ wellbeing is the ultimate perversion of our society.

Collapse of a free press

“How the Charleston Gazette-Mail overcame bankruptcy, layoffs and management changes to double digital subscriptions” 
[Poynter, via Naked Capitalism 11-18-19] 
“But the changes that got the Gazette-Mail there were also fairly simple – a tightened paywall, aggressive subscription offers, collaboration across departments, national partnerships and a newsroom that’s starting to embrace its role in saving itself.” 
Lambert Strether: "This is very interesting. Local newspapers do not have to die (though local ownership is important)."

“The Urgent Need for Worker-Owned Media” 
[Current Affairs, via Naked Capitalism 11-18-19] 
 “The [Deadspin] writers wanted money too, and the owners were just the kinds of scummy vulture capitalists who don’t actually understand the companies they buy… I am reminded here of Maureen Tkacik’s excellent reporting on Boeing, where a similar thing had happened. The people in charge of the company had no idea how it ran or how to make airworthy planes… The biggest threat to journalism today is not “technology.” Journalists can innovate ways to use technology to produce excellent new work, and even to get people to pay for it. The big problem is ownership: The journalists don’t own the companies. … If we are to stand a chance of having quality independent media, we must build the worker-owned, reader-funded model.
How the Collapse of Local News Is Causing a ‘National Crisis’ 
[Nieman Lab, via Naked Capitalism 11-22-19]

The collapse of the information ecosystem poses profound risks for humanity
[The Guardian, via The Big Picture 11-20-19]
The viral spread of misinformation, widening news deserts and the proliferation of fake news will threaten life as we know it 

Disrupting mainstream politics

[Twitter below, via Naked Capitalism 11-18-19]
I want to be the party of the New Deal again.

The party of the Civil Rights Act,
the one that electrified this nation and fights for all people.

For that, many would call us radical.
But we aren’t “pushing the party left,”
we are bringing the party home.

“Why Los Angeles Teachers Endorsed Bernie” (interview) 
Arlene Inouye [Jacobin, via Naked Capitalism 11-19-19]
“We wanted to shape history this time, rather than have it shape us. We learned from the process in 2016 about what happens when our national affiliates — NEA [National Education Association] and AFT [American Federation of Teachers] — do an early endorsement of a candidate — Hillary Clinton — without having a sense of the pulse of the membership. Fortunately, this year the affiliates have learned from that experience, and they are surveying members and providing candidate forums for input.”
What to do if you’re exposed to tear gas 
[Popular Science, via Naked Capitalism 11-21-19]

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