Sunday, February 16, 2020

Week-end Wrap – Political Economy – February 16, 2019

Week-end Wrap – Political Economy – February 16, 2019
by Tony Wikrent
Economics Action Group, North Carolina Democratic Party Progressive Caucus

Strategic Political Economy

“The U.S. Military Is Not Ready for a Constitutional Crisis” 
[The Atlantic, via Naked Capitalism 2-13-20] 
I spent nine years on active duty in the U.S. Navy. I served as an aircraft commander, led combat reconnaissance crews, and taught naval history. But the first thing I did upon joining the military, the act that solemnized my obligation, was swear an oath to support and defend the Constitution. How strange, then, that despite all of my training, the millions of taxpayer dollars devoted to teaching me how to fly, lead, and teach, not once did I receive meaningful instruction on the document to which I had pledged my life....
I had left the Navy and was in law school when news of the torture memo broke. This was the George W. Bush administration’s attempt to offer a legal justification for “enhanced interrogation.” I had been through Survival, Evasion, Resistance, and Escape (SERE) school, the military’s interrogation training program, from which these techniques had been adopted. I understood the “enhanced” methods described by the Bush-administration lawyers for what they were: torture.
At the time, I found it unconscionable that legal scholars would be complicit in underwriting our government’s disregard for the Geneva Conventions. But with the benefit of hindsight, though I still find the torture memo appalling, I can at least acknowledge that the Bush administration cared enough about the law to offer the pretense of legality. 
The current administration is not even trying. President Donald Trump openly flouts laws at home, while threatening to destroy cultural sites abroad (a blatant violation of the Geneva Conventions).
How State Capacity Drives Industrialization
[Palladium, 2-12-20, via reader of RealEconomics]
These “tools that make the tools” are a crucial piece of modern supply chains, and most advanced manufacturing would be impossible without them. The ability to produce machine tools domestically is one of the foundations of a deep industrial base. Recognizing this, the South Korean state encouraged Hyundai, a chaebol which built the first all-Korean automobile in 1975, to begin making machine tools for the growing domestic market. Since then, the South Korean machine tool industry has grown steadily alongside the Korean economy as a whole. Production today is slightly larger than the machine tool industry of the United States, a country more than six times as populous....
Korea’s story may be more extreme than most, but this type of state-led economic development is how every wealthy country on Earth has industrialized. The sole exception is Britain during the original Industrial Revolution.... Only the state can coordinate many different industries to produce a transformation at the scale of industrialization. 
Interesting: even some leading libertarians are beginning to admit society needs government to actively promote the general welfare, though of course, they won't use such terms. Probably, the spectre of China building a 1,000 bed hospital in ten days has scared the living crap out of them. The USA, by contrast, and thanks in no small part to the popularization of libertarian ideology, can't even maintain the infrastructure it already has. 

Thy Neighbor’s Solar Panels: When our peers take actions to preserve the planet, we’re more likely to follow suit. How the human instinct to conform could help us address the climate crisis.
[The Atlantic, via The Big Picture 2-12-20]


Predatory Finance 

In wake of Brexit, EU to put Cayman Islands on tax haven blacklist 
[Guardian, via Naked Capitalism 2-14-20]
Credit-Card Debt in U.S. Rises to Record $930 Billion 
[WSJ, via Naked Capitalism 2-13-20]

[Business Insider 2-12-20]
  • Credit-card debt in America has reached a record high of $930 billion, according to new Fed Reserve data first reported by the Wall Street Journal.
  • Serious credit-card delinquency rates — payments made 90 days or more past due — have also increased, particularly among those ages 18 to 29.
  • Millennials' difficulty in paying off their credit-card debt reflects their financial reality: an increasing cost of living that outpaces their income growth.
[Wolfstreet, via Naked Capitalism 2-14-20]

How America’s 1% came to dominate equity ownership
[FT, via Naked Capitalism 2-11-20]

The Carnage of Establishment Neoliberal Economics

It’s Kochs vs. Mercers in the Right’s Big Tech Brawl
[Businessweek, via The Big Picture 2-12-20]

White House budget doubles down on reorgs and benefit cuts
[Federal Times, via Naked Capitalism 2-11-20]
[CNBC, via Naked Capitalism 2-13-20]
[Business Insider, via Naked Capitalism 2-13-20]
The hidden design failure that’s costing consumers trillions 
[Fast Company, via Naked Capitalism 2-14-20]
The USA is a service economy, without the service

Restoring balance to the economy

California Considers Tax on Companies With Large CEO-Worker Pay Gaps
[Capital & Main, via Naked Capitalism 2-13-20]

The Survival of the ILWU at Stake! 
[Counterpunch, via Naked Capitalism 2-13-20]
A recent federal court decision in Portland, Oregon poses an immediate existential threat to the strongest union in the U.S. today, the ILWU, and ultimately to the labor movement as a whole. The International Longshore and Warehouse Union (ILWU), arguably one of the most militant unions in the U.S., has been hit with a union-busting $93.6 million dollar court-imposed fine for a secondary boycott deemed illegal under the 1947 Taft-Hartley Act. The plaintiff, International Container Terminal Services, Inc. (ICTSI) is owned by the third richest man in the Philippines, billionaire Enrique Razon Jr. and operates in 27 ports worldwide, mainly in poor, developing countries.
North Carolina AFL-CIO  picket in support of EPA employees on Febuary 18
North Carolina AFL-CIO  2-14-20
Click here to sign on support to the EPA Workers’ Bill of Rights.We’ll be taking this petition into the bargaining room – and the more names we have, the better our position for negotiations. 
Even if you ARE joining the rally, please sign the EPA Workers’ Bill of Rights. And then, share it with your friends and family! The more names we can get – from EPA workers and their families to environmental enthusiasts to local elected officials and advocacy organizations – the better! 
The EPA Workers’ Bill of Rights is a common-sense 10-point list of demands, including:
  • The right to full staffing levels
  • The right to conduct climate change research
  • The right to protect human health and the environment without fear of reprisal.

Health Care Crisis

[Kaiser Health News, via Naked Capitalism 2-9-20]

[Guardian, via Naked Capitalism 2-9-20]

[ProPublica, via Naked Capitalism 2-11-20]

Climate and environmental crises

In Somalia, an unprecedented effort to kill massive locust swarms with biocontrol 
lScience, via Naked Capitalism 2-14-20]
Several factors caused the massive outbreak. In May 2018, a cyclone hit the desert “empty quarter” of Oman, Yemen, and Saudi Arabia. After the unusual rainfall, vegetation flourished, and the well-fed locusts increased their population 400-fold over 6 months. Normally, the populations would shrink when plants die after the desert dries out again, and timely control efforts can prevent populations from booming.
In this case, however, a second cyclone hit in October 2018 and the population continued to increase—an estimated 8000-fold by March 2019. The locusts headed to southern Iran, crossing territory that hadn’t seen the insects in 50 years, and moved east into India and Pakistan. Last summer, many flew south with prevailing winds into Yemen, where civil war prevented any spraying of pesticides. The swarms moved to Ethiopia and Somalia in October 2019.
Compounding the problem, yet another cyclone unexpectedly hit the Horn of Africa in December 2019 and more breeding ensued. By the end of that month, growing swarms had entered Kenya. They reached Uganda and Tanzania in the past few days.
Climate change policies will continue to fall short unless we hand the mic to those most hurt by it 
[Guardian, via Naked Capitalism 2-13-20]
“There Are Rivers in the Sky Drenching the U.S. Because of Climate Change”
[Bloomberg, via Naked Capitalism 2-12-20] 
“Atmospheric rivers are narrow ribbons of concentrated moisture that originate in the Pacific and can flow thousands of miles before dropping rain and snow on land. Scientists are ramping up their research into the systems this winter fearful that warmer temperatures tied to climate change will boost the moisture they carry, supercharging them moving forward…. A study released in December by Scripps and the Army Corps of Engineers found that atmospheric rivers caused 84% of the flood damage suffered in 11 western states over 40 years through 2017. The average annual cost: $1.1 billion, according to the report.”

Neoliberalism requires a police state 

A Canadian Energy Company Bought an Oregon Sheriff’s Unit
Will Parrish, Alleen Brown, Febraury 12, 2020 [The Intercept]
Pembina was the sole funding source of a sheriff’s unit that monitored opposition to the proposed Jordan Cove natural gas pipeline and export terminal.
In fact, for nearly four years, Pembina was the sole funding source of a unit in the sheriff’s office dedicated to handling security concerns related to Jordan Cove — despite the fact that there is not yet any physical infrastructure in place to keep secure. The pipeline and terminal cannot begin construction without approval from the Federal Energy Regulatory Commission, which is scheduled to vote on whether to license the project in February. Yet between 2016 and 2020, the department’s liquid natural gas division, known as a “combined services unit,” spent at least $2 million of Pembina’s money. The energy company put the funding on hold in April 2019 but left open the possibility that the arrangement could be revived in the future. Pembina and the sheriff’s department are currently discussing how they may continue to work together, and Coos County Sheriff Craig Zanni said he expects the partnership to be renewed.

Information Age Dystopia

“ICE Is Using Location Data From Games and Apps to Track and Arrest Immigrants, Report Says” [Vice, via Naked Capitalism 2-11-20] 
“The Department of Homeland Security began purchasing location data in 2017 from Venntel, a Virginia-based company which markets itself as a ‘pioneer in mobile location information,’ according to the database of federal contracts. Since then, Immigration and Customs Enforcement (ICE) has purchased $190,000 in Venntel licenses and Customs and Border Protection (CBP) has spent over $1 million on the company’s products. The data is drawn from inconspicuous cell phone apps, like games and weather apps, that ask the user’s permission to access their location. But the data has been used by DHS to ‘help identify immigrants who were later arrested,’ and by CBP to identify cell activity in places such as remote desert areas on the Mexican border, according to the Journal, which said it both reviewed documents and spoke to people ‘familiar with the matter.
Why Google Did Android
Tim Bray [via Naked Capitalism 2-10-20]
Ironic: to preempt Apple from establishing a monopoly. 

An EU judge told Google it’s landed on Monopoly’s ‘Go to Jail’ square and reportedly threatened to increase its $2.6 billion antitrust fine 
[Business Insider. via Naked Capitalism 2-16-20]
Yves Smith adds: "Sadly, you have to read the WSJ version to learn this idea came from one of five judges, and there’s only one precedent for fines being increased, and then, it was not by much."
“Inside Documents Show How Amazon Chose Speed Over Safety in Building Its Delivery Network” [Pro Publica, via Naked Capitalism 2-13-20]

Collapse of Independent News Media

Can Journalism Be Saved?
[New York Review of Books, via Naked Capitalism 2-9-20]
Nicholas Lemann is a Professor at the Columbia ­Graduate School of Journalism and a staff writer at The New Yorker. His books include Transaction Man: The Rise of the Deal and the ­Decline of the American Dream and The Big Test: The Secret ­History of the American Meritocracy.
 (February 2020)
Then there is another option, imperfect like all the others, for saving journalism: direct government subsidy. Almost all American journalists react to this idea with a strong visceral recoil, especially now. But the severity of the situation demands subjecting our automatic assumptions to more careful scrutiny. Government support can be structured in many different ways; great portions of the independent truth-seeking activity in the United States are funded by the government, reasonably successfully, despite enormous built-in potential for political interference. The Federal Reserve employs many more professional research economists than any economics department. Public libraries, almost all the time, are permitted to acquire their books and research materials freely. University research—indeed, universities generally, including private universities—are overwhelmingly supported by the government, including when their work touches on politically controversial subjects. Most of the basic research establishing global warming as a phenomenon was conducted either by government employees (like James Hansen of NASA) or by government-funded researchers, despite the powerful political opposition to this kind of science.
Such government funding systems require several layers of built-in protection from the whims of elected officials. Usually these are peer-review mechanisms that determine where funding goes specifically and ensure that it cannot be cut off capriciously without warning. The administration and Congress fund the National Science Foundation and the National Institutes of Health, but they don’t directly approve each individual grant. Of course, this system isn’t perfect, but no other funding system is either. A 2009 report by Schudson and Leonard Downie Jr., the former executive editor of The Washington Post, suggested establishing a Fund for Local News, which would distribute money to appointed state boards that would review applications from news organizations.8 These could be newspapers, radio or TV stations, websites, startups—anybody who could do good work. The boards would make irrevocable multiyear grants, based on the applicants’ specific plans about what to cover, and could renew the grants (or not) based on the quality, reach, and influence of the coverage they funded. The media reform group Free Press, in a report published last year, called for the establishment of a Public Interest Media Endowment, which could distribute its funds either to state or local entities or to the federal Corporation for Public Broadcasting, with the requirement that the funds support original local reporting.9 Victor Pickard, in Democracy Without Journalism?, calls for the creation of a government-funded or -owned, employee-controlled category of local news organizations.
Stephen Gillers, in Journalism Under Fire, endorses Downie and Schudson’s proposal and appropriately protected public funding for journalism more generally. He also explores creating some form of legal distinction between professional and citizen journalists, so that the former could achieve the longed-for, but never attained, federal protection of our relationships with confidential sources. Gillers is a law professor; it’s unsurprising that, in the conversation as it stands now, policy solutions to journalism’s crisis usually come from outsiders, because journalists are so powerfully socialized to embrace a libertarian view of our work. That would be fine if the market had any meaningful chance of fixing the problem, but, for reporting with a public mission, it doesn’t.
“McClatchy files for bankruptcy, likely ending 163 years of family control and setting up more consolidation in local news” 
[Nieman Labs, via Naked Capitalism 2-14-20] 
“Let’s assume the bankruptcy, despite its non-complete pre-packedness, goes through according to plan and with relative speed. The New McClatchy would be controlled by Chatham Asset Management, a hedge fund that is currently the company’s largest shareholder and lender. Chatham hasn’t been as prominent a player in the American newspaper industry as Alden Global Capital, Fortress, or Apollo…. Chatham, though, has some other connections to the news business that sound a bit less high-minded. It is controlling owner of American Media, Inc., the company best known as the owner of the tabloid National Enquirer — not long ago seen engaging in a hush-money scheme with Donald Trump and some sort of…questionable relationship with the Saudis and the hacking of Jeff Bezos’ phone. The National Enquirer is currently a Chatham-controlled company.”
“McClatchy files bankruptcy to shed costs of print legacy and speed shift to digital” 
[McClatchy, via Naked Capitalism 2-14-20] 
Lambert Strtether observes: "McClatchy, then Knight Ridder, was the only news organization to get the Iraq WMDs story. The Post and The Times not only got it wrong, but shamefully propagandized for it, and published false stories. And so the virtuous are punished, and the guilty are rewarded."

Democratic Party leadership insists on suicide

Buttigieg calls on Democrats to "own" deficit reduction. I'm not kidding.
Bob Johnson, February 09, 2020 [DailyKos]

[CNBC, via Naked Capitalism 2-12-20] 
“Caruso-Cabrera, who became a CNBC contributor when she left the network in September 2018, serves as a member of the board of directors for financial services firm Beneficient. She will take a leave from her role as CNBC contributor for the duration of the campaign, a CNBC spokesperson said.”

“AIPAC Must Stop Bernie Sanders – at All Costs” [Haaretz, via Naked Capitalism 2-11-20] 

“About that Democratic Primary …”
James Kwak [Baseline Scenario, via Naked Capitalism 2-12-20]
...the national Democratic Party of the past thirty years has been a failure, both as policy and as politics...  Both Presidents Clinton and Obama turned their backs on redistribution and social solidarity, preferring the soaring rhetoric of growth and opportunity: maximizing overall economic growth while giving everyone the “opportunity” to participate in prosperity. But what we got was modest growth whose benefits were monopolized by the 1%, soaring inequality, and widespread economic insecurity. (For the numbers, see Chapter 2 of Take Back Our Party.) As a society, we have to recognize that growth is not the answer. What we should care about is the actual welfare of ordinary families: whether they can afford health care, whether they can afford a place to live, whether they can go to college, whether they can retire, and so on. Those are the things our economic platform should focus on—not the myth that a rising tide lifts all boats....
“Now, the issue on everyone’s minds is electability. Sure, we may want Medicare for All—but what most people want more than anything else is to defeat President Trump. And many people think that the most electable candidate is the most right-wing candidate. This is based on the theory of the median voter. The idea is that you can line up all voters on an ideological spectrum, and they will vote for the candidate who is closest to them—which means that we want to nominate someone in the middle (or, more accurately, someone just to the left of Trump). The median voter theory is nonsense. If it were true, Donald Trump would not be president today. Nor would the Republicans have a majority of the Senate, and a majority of governorships, and a majority of state legislatures. They have achieved this electoral success despite running far to the right of where most Americans stand on just about every issue—immigration, abortion, gay rights, taxes, you name it. We have to give people a reason to vote for us. The problem is, for decades, Democrats have not given people a reason to vote for them.”
The American Prospects is posting a chapter a day from Take Back Our Party: Restoring the Democratic Legacy by James Kwak. 
The rising tide was the theoretical basis for the “trickle-down economics” of President Ronald Reagan and the conservative revolution. In their view, the postwar American economy already suffered from too much redistribution; cutting taxes for the rich would encourage them to work, save, and invest, accelerating growth and therefore benefiting all people. But it was also the justification for the opposition’s New Democrat narrative of growth and opportunity. “This isn’t the time to get caught up in distributional politics,” Democratic Leadership Council Chair Charles Robb said in 1986—“it’s time to make the economic pie grow.”
Bill Clinton agreed. “The Democratic Party’s fundamental mission,” he wrote, is “to expand opportunity, not government; to recognize that economic growth is a prerequisite for expanding opportunity; to invest in the skills and ingenuity of our people in order to build shared prosperity.” In short, the key to making everyone better off is to encourage private-sector growth, while “expanding opportunity” to ensure that no one is left behind. Clinton’s primary domestic policy achievements included lower deficits, welfare reform, and financial deregulation, all traditional Republican goals; yet as long as economic growth was good for rich and poor alike, he could still claim that he was a champion of ordinary men and women.
[Chicago Reader, via Naked Capitalism 2-14-20] 
 “The chaos of recent weeks might give Sanders supporters their most potent argument yet. The Democratic Party has become so corrupt and dysfunctional that it can’t even perform the most basic function of a democracy: counting the votes. It is time to turn to new leadership. Or we can stick with the corporate Democrats and blame the Russians again when we lose to Trump.”
“Here They Come Again: The Kind of Neoliberal Democrats Who Prefer Trump to Sanders” 
[Adolph Reed, Common Dreams, via Naked Capitalism 2-12-20] 
 “I have no doubt that the Democratic liberals who fear that Sanders is ‘unelectable’ are genuine in their belief. They also want and need for him to be unelectable because for them the really significant divisions in the society must not be those between economic classes…. From the standpoint of those liberals tied to investor-class interests, a Trump victory in 2020, even if it were to raise a serious threat of authoritarianism, could be less disturbing than a Sanders-led, left-tacking political realignment. And, much as the Clinton administration’s liberal architects of welfare reform dismissed their left critics as tendentious and naïve—until those critics were proven right—liberals’ insistence that Sanders can’t win preempts, at least for now, questions about what they would do if he were to win the nomination. Would they support him? Would they follow Bloomberg, or someone else, on a third-party ticket? ‘From the standpoint of those liberals tied to investor-class interests, a Trump victory in 2020, even if it were to raise a serious threat of authoritarianism, could be less disturbing than a Sanders-led, left-tacking political realignment. We don’t know the answers to those questions, but I have my suspicions.”
“One of Klobuchar’s Biggest Backers Is ‘the Worst Company in the World'” 
[Daily Beast, via Naked Capitalism 2-13-20] 
 “But while the Minnesota senator has successfully parlayed her grandfather’s work in an Iron Range mine into working-class bona fides, some of Klobuchar’s most important longtime backers are billionaires and billion-dollar corporations. Chief among them: Cargill, the agriculture behemoth and the largest privately held company in the United States, which has donated a small fortune in campaign contributions over the course of Klobuchar’s political career.” • Cargill is a busy company. They’re also helping to burn down the Amazon rain forest (no matter what their PR says).

Blake Zeff's Twitter thread on Bloomberg buying democracy
February 13, 2020 [via Naked Capitalism 2-14-20]

“The Price of a Bloomberg Nomination Is Too Damn High” 
[Eric Levitz, New York Magazine, via Naked Capitalism 2-14-20] 
“Mike Bloomberg has offered blue America a Faustian bargain: Forfeit all credibility on the issues of money in politics and democratic reform, and he will spend whatever it takes to make the bad man in the White House go away. The market for what Bloomberg is selling is large and growing, thanks in no small part to the $300 million he’s already spent advertising it. Many rank-and-file Democrats — like so many disillusioned voters in democracies the world over — like the idea of hiring a no-nonsense, post-political businessman to fix their broken government (just, you know, a less ostentatiously racist one than America’s current CEO). Meanwhile, many Democratic elites see Bloomberg as a (slightly unsavory) savior who can single-handedly stop the party from nominating a supposedly unelectable socialist, provide its vulnerable first-term suburban House members with an ideal standard-bearer, and liberate the party from all resource constraints and fundraising headaches as it rides a rising tide of billionaire bucks back into power.”

Zack Beauchamp
✔@zackbeauchamp
· Feb 13, 2020

Replying to @zackbeauchamp
I genuinely don't understand how you could call yourself a progressive or liberal and conclude an authoritarian Republican is a better candidate than a social democrat with a long track record of progressive votes in Congress
10,599 Corporate Lawyers Have Donated to Buttigieg’s Campaign: Here Are the Dirty Little Secrets
Pam Martens and Russ Martens, February 10, 2020 [Wall Street on Parade]
Supporting the scenario that Buttigieg is a strawman for the diabolical Mike Bloomberg (who bought himself a third term as Mayor of New York City by financing the repeal of term limits and has now likely managed to insert himself onto the Democratic debate stage through a convenient rule change) is the fact that the Global Head of Public Policy at Bloomberg LP, the Wall Street data terminal and news outlet that is majority owned by Mike Bloomberg, is a bundler for Pete Buttigieg. The bundler is Didem Nisanci, who conveniently served as Chief of Staff at the Securities and Exchange Commission (SEC) from March 2009 to January 2013, the period after the financial crisis when the SEC failed to bring charges against any of the CEOs of the mega Wall Street banks that had brought on the greatest financial collapse since the Great Depression. As of September 14 of last year, Nisanci had contributed $2800, the maximum allowed by an individual to Buttigieg’s primary race. Prior to Mike Bloomberg throwing his own hat in the ring in November, Buttigieg had received additional contributions from other Bloomberg employees. 
Bloomberg’s wealth of $61.5 billion and ongoing income derives from the data terminals he leases to the Wall Street trading floors around the globe. He showed his fealty to the hands that feed him on Wall Street as Mayor of New York City, using his police force to brutalize and bloody Wall Street protestors and coming down like the Gestapo during the eviction of Occupy Wall Street from Zuccotti Park in Lower Manhattan. 
And now for the third scenario – knock Senator Elizabeth Warren out of the race. Around the same time last spring that Warren penned her scorching opinion piece at Medium on why it was critical to break up the giant tech firms Amazon, Google, and Facebook, bundlers connected to the three tech giants got busy pumping money into Buttigieg’s campaign. Ironically, this was the very thing Senator Warren was warning about in her Medium message.

Disrupting mainstream politics

Moderate Democrats have a duty to consider Sanders. He has a clear path to beating Trump. 
[USA Today, via Naked Capitalism 2-10-20]

“New Hampshire 2020: In Supreme Irony, the Horse Race Favors Bernie Sanders”
Matt Taibbi [Rolling Stone, via Naked Capitalism 2-12-20] 
“For Sanders supporters, the calculation has always been simpler: Are you bought off, or not? Just by keeping to the right side of that one principle, Sanders will hold his 20-to-30 percent and keep grinding toward victory, “narrow” wins or not. It’s a classic tortoise-and-hare story. When you know where you’re going, you tend to get there.”
Posted by Tony Wikrent at 8:44 AM

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