Sunday, December 29, 2019

Week-end Wrap – Political Economy – December 29, 2019

Week-end Wrap – Political Economy – December 29, 2019
by Tony Wikrent
Economics Action Group, North Carolina Democratic Party Progressive Caucus

99 GOOD News Stories You Probably DIDN'T Hear About In 2019
[via The Big Picture 12-23-19]

A giant among us has passed

William Greider – in memoriam – (1936 – 2019)
Tony Wikrent, December 28, 2019 [Real Economics]

William Greider, Journalist Who Focused on Economy, Dies at 83
[New York Times, via Naked Capitalism 12-27-19]
'A Stark Loss for American Journalism': Reporter and Author William Greider Dies at Age 83
[The Nation 12-27-19]

Strategic Political Economy

The Loss of Fair Play
Yves Smith, December 27, 2019 [Naked Capitalism 12-16-19]
This site regularly discusses the rise of neoliberalism and its consequences, such as rising inequality and lower labor bargaining rights. But it’s also important to understand that these changes were not organic but were the result of a well-financed campaign to change the values of judges and society at large to be more business-friendly. But the sacrifice of fair dealing as a bedrock business and social principle has had large costs.
We’ve pointed out how lower trust has increased contracting costs: things that use to be done on a handshake or a simple letter agreement are now elaborately papered up. The fact that job candidates will now engage in ghosting, simply stopping to communicate with a recruiter rather than giving a ritually minimalistic sign off, is a testament to how impersonal hiring is now perceived to be, as well as often-abused workers engaging in some power tit for tat when they can. 
But on a higher level, the idea of fair play was about self-regulation of conduct. Most people want to see themselves as morally upright, even if some have to go through awfully complicated rationalizations to believe that. But when most individuals lived in fairly stable social and business communities, they had reason to be concerned that bad conduct might catch up with them.... 
Another aspect of the decline in the importance of fair dealing is the notion of the obligations of power, that individuals in a position of authority have a duty to those in their sway. 
The abandonment of lofty-sounding principles like being fair has other costs. We’ve written about the concept of obliquity, how in complex systems, it’s not possible to chart a simple path though them because it’s impossible to understand it well enough to begin to do so. John Kay, who has made a study of the issue and eventually wrote a book about it, pointed out as an illustration that studies of similarly-sized companies in the same industry showed that ones that adopted nobler objectives did better in financial terms than ones that focused on maximizing shareholder value.
Imagining a World Without Capitalism
Yanis Varoufakis, December 27, 2019 [Project Syndicate, via Naked Capitalism 12-26-19]

Climate and environmental crises

In Asia Pacific the climate crisis is happening now, not in the future
[CNN, via Naked Capitalism 12-26-19]
“Lawyers are going to court to stop climate change. And it might just work”
[The Correspondent, via Naked Capitalism 12-24-19] 
“[C]ourt cases involving climate change were rare until midway through the 2000s. Since then, dozens of cases have been initiated revolving around climate change, with new cases peaking in 2017. In most cases, the targets are governments, but companies, banks and investors are also being summoned to account for the inadequacy of their climate policy. The legal principles invoked by climate cases are essentially universal in (western) legal systems: the polluter pays; it is forbidden to unnecessarily endanger others; high-risk activities require adequate preventive measures. What’s new is that the law is now being used as a potential tool to break through political deadlock and entrenched interests to tackle climate change.” • See Naked Capitalism on Juliana v. United States.
Cattle have stopped breeding, koalas die of thirst: A vet’s hellish diary of climate change 
[Sidney Morning Herald, via Naked Capitalism 12-26-19]

A South Florida town’s pioneering plan to fund retreat from sea rise 
[Tampa Bay, via Naked Capitalism 12-28-19]

It’s part of the town’s new comprehensive plan to address all aspects of climate change, from emissions to building codes to infrastructure. And the key to pulling it all off is explaining to its residents what’s happening, and how Surfside can — or can’t — help them.

When Prager first started to panic about the rising tides broaching her sea wall, she asked the town for help. Her sea wall is connected to a public one next door. Unlike all the surrounding sea walls, it hasn’t been elevated in decades.

She pushed the town to raise the public sea wall — and maybe hers, too. They’re evaluating raising the public wall, the last remaining city sea wall to be elevated.

Stanford Researchers Have an Exciting Plan to Tackle The Climate Emergency Worldwide
[ScienceAlert, via Naked Capitalism 12-28-19]
....Stanford researchers have come up with a plan.

Using the latest data available, they have outlined how 143 countries around the world can switch to 100 percent clean energy by the year 2050.

This plan could not only contribute towards stabilising our dangerously increasing global temperatures, but also reduce the 7 million deaths caused by pollution every year and create millions more jobs than keeping our current systems. The plan would require a hefty investment of around US$73 trillion. But the researchers' calculations show the jobs and savings it would earn would pay this back in as little as seven years. 
"Based on previous calculations we have performed, we believe this will avoid 1.5 degree global warming," environmental engineer and lead author Mark Jacobson told ScienceAlert.
[Nature, via Naked Capitalism 12-27-19]

[MIT Technology Review, via Naked Capitalism 12-27-19]
So far, cleaner technologies have mostly met rising energy demands, not cut deeply into existing fossil-fuel infrastructure, as the charts that follow make clear.... 
(The analysis is based on the UN climate panel’s “middle-of-the-road” scenario, which assumes that economic growth, population patterns, and other trends generally follow historic patterns.) If we stick to the average rate of clean energy additions during the last five years, it would take about 360 years to build a system of that size, Breakthrough’s Seaver Wang found. If we did it at the fastest rate in the last five years, it’d still take nearly 260 years.

The Carnage of Establishment Neoliberal Economics

My “Pickup Truck Price Index” Crushes “CPI for New Vehicles
[Wolf Street, via Naked Capitalism comments 12-23-19]

For the 1990 model year, the base MSRP of the F-150 XLT was $12,986. In the 2020 model year, it’s $34,160. That’s a price gain of 163%.

Let that sink in for a moment. Over the same period, the CPI for new vehicles (green line, right scale in the chart below) rose just 22%:

Note that from 1990 through 1998, the CPI for new vehicles closely tracked the price increases of the F-150. But this surge in CPI was too disturbing, apparently, and so the CPI methodology was enhanced with aggressive hedonic quality adjustments and other methods to bring CPI down, and it actually fell from 1997 through 2009, even as new vehicle prices were soaring.

A commenter on Naked Capitalism added: "Note the inherent class warfare aspect of the dynamic here: Technological advances are inherently deflationary, in that they allow a manufacturing worker to produce ever-more value-add per hour. In a fair world, said workers would share in that increased value-add via salary gains, which would largely offset the price increases of the higher-value-add products they and others produce."

'Cutting Social Security Is Murder': Flood of Public Outrage Greets Trump Proposal to Slash Benefits for Hundreds of Thousands
[Common Dreams, via Naked Capitalism comments 12-23-19]
The proposal received hardly any media attention when it was first published in the Federal Register in November. But recent reporting on the proposed rule change, as well as outrage from progressive Social Security advocates, sparked a flood of public condemnation and calls for the Trump administration to reverse course. 
Backlash against the proposal can be seen in the public comment section for the rule, where self-identified physicians, people with disabilities, social workers, and others have condemned the change as monstrous and potentially deadly. The number of public comments has ballooned in recent days, going from less than 200 to more than 1,700 in a week. 
The public comment period ends on January 17, 2020. Comments can be submitted here.

Latest Bid by France’s Macron to Quell Protests Over Neoliberal Pension Scheme Fails as Strikes Continue 
[Common Dreams, via Naked Capitalism 12-26-19]


Trump's trade war

The problem with world trade is not tariffs, but too much globalisation. Can Elizabeth Warren fix it? 
Dani Rodrik [South China Morning Post, via Naked Capitalism 12-25-19]
Today’s impasse between [China and USA] is rooted in the faulty paradigm I call “hyper-globalism”, under which the priorities of the global economy receive precedence over the priorities of the home economy. According to this model for the international system, countries must maximally open their economies to foreign trade and investment, regardless of the consequences for their growth strategies or social models.

This requires that national economic models – the domestic rules governing markets – converge considerably. Without such convergence, national regulations and standards will appear to impede market access. They are treated as “non-tariff trade barriers” in the language of trade economists and lawyers. China’s admission to the World Trade Organisation was predicated on the assumption that China would become a market economy similar to Western models.

This has clearly not happened. Meanwhile, in the United States and many other advanced economies, hyper-globalism has left behind communities devastated by offshoring and imports – creating fertile ground for nativist political demagogues to thrive.

Predatory Finance

Goldman Sachs Federally-Insured Bank Loses $1.2 Billion in Interest Rate Derivative Bets
Pam Martens and Russ Martens, December 26, 2019 [Wall Street on Parade]
A week before Christmas when Americans were focused on either the impeachment proceedings or holiday preparations, the Office of the Comptroller of the Currency (OCC) quietly released its quarterly report on the trading and derivative activities of Wall Street’s casino banks. It contained a humdinger in, literally, red ink. The report showed that Goldman Sachs Bank USA, which is, insanely, a federally-insured bank backstopped by the U.S. taxpayer that is part of the Goldman trading colossus, had lost $1.24 billion trading interest rate derivatives during the third quarter of this year. According to the Federal Deposit Insurance Corporation, the bank only holds $149.8 billion in deposits while the OCC reports it has $49 trillion in notional derivatives (face amount). (See Table 7 in the Appendix at this link.)....

If you want to understand the relevant history on why the New York Fed is currently throwing hundreds of billions of dollars each week at Wall Street’s trading houses, here’s a quick tutorial on the rapid financial collapse on Wall Street in 2008.

Health Care Crisis

People hate shopping for health insurance 
[Axios, via Naked Capitalism 12-25-19]

[New York Times, via Naked Capitalism 12-28-19]


Information Age Dystopia

New York City couldn’t pry open its own black box algorithms. So now what?
[Recode, via Naked Capitalism comments 12-22-19]
Algorithms and artificial intelligence can influence much of a city government’s operations. Predictive models and algorithms have been used to do everything from improving public school bus routes and predicting a home’s risk of fire to determining the likelihood of whether a child has been exposed to lead paint. In New York City, it’s publicly known that such systems have been used to predict which landlords are likely to harass their tenants, in the evaluation of teacher performance, and in the DNA analysis used by the criminal justice system, examples that were flagged by the research nonprofit AI Now.
The Rise of Biometric Authentication – The Rewards and Risks 
[Data Science Central, via The Big Picture 12-28-19]
[CBS, via Naked Capitalism 12-24-19] 
“Workers at Amazon facilities are twice as likely to be injured on the job as others in the warehousing industry, and those sprains, strains and worse are especially prevalent during the holiday shopping season, according to a report by labor advocates. For every 100 workers at Amazon facilities, nearly 11 were injured on the job in 2018, making it three times as dangerous as employment across the private sector, and twice as dangerous as warehouse work in general, according to the study from a coalition of more than 40 groups, including the National Employment Law Center and United for Respect.”

Creating new economic potential - science and technology

40 Years Ago, Doctors Vaccinated a Group of Children in Africa. Then Something “Incredible” Happened. 
[Mother Jones, via Naked Capitalism 12-27-19] 
In 1979, Danish anthropologist Peter Aaby, in his mid-30s, was studying malnutrition in the small West African country of Guinea-Bissau when the outbreak hit—a measles epidemic of horrific proportions. At least 20 percent of children under 5 years old who got measles that year would die. He and his colleagues began vaccinating, hoping to save the remaining healthy children. 
His team’s effort would lead to a remarkable discovery: The vaccinated children, about 1,500 of them, didn’t die—not from measles or any other condition. In a year, the kids’ mortality rate for all causes declined threefold compared to unvaccinated children. “This is strange,” he began to think. “Something incredible happened here.” 
Decades of research and hundreds of studies later, Aaby and a growing community of scientists now hypothesize that some vaccines may help children fight more illnesses beyond the “target” infection. “Your immune system is so smart—it’s just like a brain,” explains Christine Stabell Benn, a professor of global health at the University of Southern Denmark, and Aaby’s partner both in life and in research. “It learns something from the event [of getting a vaccine] that it can use in other situations.” The pair have observed this knock-on effect in children in Guinea-­Bissau who’ve gotten vaccines for tuberculosis (BCG), smallpox, and polio.

World’s First 3D Printed Community Minimises Homelessness in Mexico 
[ArchDaily, via Naked Capitalism 12-27-19] 
The world’s first 3D printed community is currently underway in a remote area in Mexico. The printer has been created as a solution to minimise homelessness and provide safe and adequate shelter for individuals. 
New Story, a not for profit organisation, which was founded five years ago, aims to provide adequate shelter/housing for people exposed to extreme poverty and unsafe housing. New Story, to date, have constructed 2,700 homes catering for 15,000 people located in areas such as Haiti, El Salvador, Bolivia and Mexico. For these homes they have used traditional construction methods and in the past two years have started to explore innovative construction solutions for faster building production that caters for the ever changing social housing sector and housing crisis.
[New Republic, via Naked Capitalism 12-28-19]
This is a very misleading title. Much more accurate would have been: How the base of the Democratic Party was radicalized by Obama's decision to side with the bankers against the people in the global financial crisis
[Politico, via Naked Capitalism 12-22-19]
Since the start of Biden’s campaign, he’s relied on a core group of half a dozen people.... But when the upper echelons of the Biden operation assemble at campaign headquarters in Philadelphia’s Center City, the group looks a lot like Biden: old and white and with long experience in Democratic party battles of a bygone era. 
The average age of those six—Steve Ricchetti, Mike Donilon, Ron Klain, Valerie Biden Owens, Bruce Reed and Anita Dunn—is 62. They are the key to understanding the big things about the Biden campaign: its centrist ideology, its old-fashioned view of the Democratic electorate, how the campaign came together and how Biden might govern. 
Like Biden, those advisers came up in politics during the Reagan revolution, when Democrats were often taught that they needed to be ideologically cautious to win. Like Biden, they are contemptuous of the revolutionary left. Like Biden, they like to think of the Democratic coalition as still anchored in the white working class....
Hey, hey! Heave ho! The establishment has got to go! 

Beginning with Biden and his crew of fuddy duddy obstructionists. 

Biden campaign's dangerous "steaming pile of crap" theory
nbbooks (Tony Wikrent) December 27, 2019 [DailyKos]
Arguing that Trump is a temporary aberration is not much different than revisionist historians (mostly — surprise! — neo-confederates) who argue that the Civil War could have been avoided if only Lincoln had been more conciliatory. Either you’re ignorant of the decades of political history leading up to the event, or you’re pushing a hidden agenda. Worst of all, you have to completely ignore the increasingly brazen authoritarianism and bigotry of our political opponents. It’s no coincidence that "Counties that hosted a 2016 Trump rally had 226% more hate crimes than counties that did not."

Glen Ford [Black Agenda Report 19 Dec 2019]
The catastrophic defeat of Jeremy Corbyn’s Labour Party in last week’s elections does, indeed, foreshadow what’s in store for Bernie Sanders if the U.S. ruling class believes the self-styled socialist has a real chance of winning the Democratic presidential nomination... a full-court, every-dirty-trick-and-lie-in-the-book campaign by British corporate media, working hand-in-glove with intelligence circles, the trans-Atlantic military industrial complex, and the pro-corporate wing of the [Democratic] Party....

The popular anti-corporate groundswell must be strangled in its cradle, the Democratic Party base. Corporate Democrats are, therefore, the first line of the oligarch’s defense....

Enemy Actions

Of the many impacts of the War on Christmas, Donald Trump’s decision to run for president seems the most consequential. In a 2016 interview, Eric Trump explained why his father ran for president (emphasis added):
He opens up the paper each morning and sees our nation’s leaders giving a hundred billion dollars to Iran, or he opens the paper and some new school district has just eliminated the ability for its students to say the Pledge of Allegiance, or some fire department in some town is ordered by the mayor to no longer fly the American flag on the back of a fire truck. Or, he sees the tree on the White House lawn has been renamed “holiday tree” instead of “Christmas tree.” I could go on and on for hours. Those are the very things that made my father run, and those are the very things he cares about. 
The War on Christmas is the backdrop for a world in which “political correctness” will be forever running amok, the left’s goal will always be to “destroy everything that is wholesome in our country and in our Judeo-Christian civilization,” and Democrats will be stuck in a perpetual state of trying to ban your favorite hobbies and foods. Of course, none of this is true. The slightest resistance to right-wing culture creep will always be framed as a direct assault on their way of life, even if that resistance is just a defense of the status quo. What, if anything, has the left learned after 15 years?
This issue is not going to be solved by messaging alone. I think the answer lies, at least partly, in reviving the concept of republicanism, including the ideas of civic virtue, the responsibility of citizens to be educated and vigilant, and the dangers of demagoguery. And pointing out, the Republican Party of today, and conservatism in general, is the very antithesis of republicanism.


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