Sunday, March 15, 2020

Week-end Wrap – Political Economy – March 15, 2020

Week-end Wrap – Political Economy – March 15, 2020
by Tony Wikrent
Economics Action Group, North Carolina Democratic Party Progressive Caucus

Health Crises

The comprehensive Ars Technica guide to the coronavirus
[Ars Technica, via Naked Capitalism 3-13-20]

WORTH REPEATING: In 2018, Trump fired the entire US pandemic response team. [Twitter, via Naked Capitalism Water Cooler 3-12-20]
These were the experts with decades of experience dealing with precisely the kind of situation we are in today. Trump did not replace them. He eliminated the positions.
Snopes: TRUE - The Trump administration fired the U.S. pandemic response team in 2018 to cut costs.
Rear Adm. Timothy Ziemer abruptly departed from his post leading the global health security team on the National Security Council in May 2018 amid a reorganization of the council by then-National Security Advisor John Bolton, and Ziemer’s team was disbanded. Tom Bossert, whom the Washington Post reported “had called for a comprehensive biodefense strategy against pandemics and biological attacks,” had been fired one month prior.

It’s thus true that the Trump administration axed the executive branch team responsible for coordinating a response to a pandemic and did not replace it, eliminating Ziemer’s position and reassigning others, although Bolton was the executive at the top of the National Security Council chain of command at the time.

[New York Magazine, via Naked Capitalism 3-13-20] 
What we are seeing right now is the collapse of civic authority and public trust at what is only the beginning of a protracted crisis. In the face of an onrushing pandemic, the United States has exhibited a near-total evacuation of responsibility and political leadership — a sociopathic disinterest in performing the basic function of government, which is to protect its citizens. 
Things will get worse from here. According to a survey of epidemiologists released yesterday, the coronavirus outbreak probably won’t peak before May.... 
Trump is, of course, the last man in the world you would want in charge right now. In an extremely illuminating interview with Gabriel Debenedetti published this morning, Obama’s Ebola czar Ron Klain described his response to that threat, which he suggested was a relatively good model for how the U.S. might have responded to this one. That response began with 10,000 public-health workers sent to fight and investigate the disease. This administration has sent none, which means it has been, practically speaking, flying blind about the nature of the coronavirus and the challenges it represents to public-health systems. In fact, it’s worse than that; for all intents and purposes, the administration hasn’t been flying at all, spending the last three months sitting by entirely idle and indifferent, rather than scaling up testing regimes, issuing protocols, and preparing for a major surge of patients by developing contingency plans to expand hospital capacity around the country wherever it became needed.
“The Dismantled State Takes on a Pandemic”
[The New Republic, via Naked Capitalism 3-13-20]
Conservatives won their war on Big Government. Their prize is a pandemic.
Lambert Strether of Naked Capitalism pointed to this amazing passage:
“As a clinician like yourself,” [Robert Redfield, the director of the Centers for Disease Control and Prevention] said in his answer, “I guess I anticipated that the private sector would have engaged and helped develop it for the clinical side.” He finished his response with more bewilderment: “I can tell you, having lived through the last eight weeks, I would have loved the private sector to be fully engaged eight weeks ago.”
Lambert Strether continued: 
Here were two men wondering aloud why reality had failed to conform to their ideology. Where was the private sector, exactly, during these eight weeks? How odd that these companies, whose only responsibility is to their shareholders, had failed to make up for the incompetence of this administration.

This is a remarkable parallel to this exchange between Alan Greenspan and Henry Waxman in 2008 after the Crash:

“I made a mistake in presuming that the self-interests of organizations, specifically banks and others, were such as that they were best capable of protecting their own shareholders and their equity in the firms,” Greenspan said. Referring to his free-market ideology, Greenspan added: “I have found a flaw. I don’t know how significant or permanent it is. But I have been very distressed by that fact.”
Back to the New Republic article“The Dismantled State Takes on a Pandemic” 
“This is how conservatives govern now, and even eight years of comparatively competent management by a liberal presidential administration was not enough to stem the larger trend of private negligence and public disinvestment. In its 2019 annual report on American public health funding, Trust for America’s Health calculated that ‘the CDC’s budget fell by 10 percent over the past decade (FY 2010–19), after adjusting for inflation.”
Lambert Strether noted: "Neatly overlapping with the Obama administration, and an (almost) open admission that liberals are as complicit in dismantling government as conservatives."

Continuing with the New Republic article“The Dismantled State Takes on a Pandemic” 
Indeed, a lot of the conservative project of corrupting or starving government agencies depends on an almost touching belief in the resiliency of the institutions liberalism built in the twentieth century. Even the people dismantling the government probably believed, at some level, that the CDC could effectively address a massive public health crisis even though its new director was unqualified and its budget had declined for years. Despite its grip on power, the conservative movement cannot adapt to the circumstances created by its victory over the state. It didn’t occur to the right that a more terrifying series of words than “I’m from the government, and I’m here to help” would turn out to be “I’m from the government, and I guess I anticipated that the private sector would have engaged.”
Matt Gaetz Wore a Gas Mask to Mock Coronavirus Concerns. Now He’s in Quarantine. Mother Jones, via Naked Capitalism 3-11-20]
Coronavirus: Why systemic problems leave the US at risk 
[BBC, via Naked Capitalism 3-14-20]
....estimated 11 million people in the country who are "undocumented".
No US citizenship means no US health insurance. Even the language of Barack Obama's Affordable Care Act makes it very clear that undocumented immigrants are excluded....
"Being undocumented it's hard to get medical attention. There's the aspect of presenting yourself to the legal system at medical facilities and that runs the risk of deportation," he says. "My family may not be criminals, but they sure are undocumented and seeing a doctor scares them."
For everyone in the US, whether they are undocumented or not, there is also the huge expense involved in even just seeing a doctor.
More than 27 million people in America have no medical insurance at all, a number that has been growing dramatically during the Trump presidency.... But there are tens of millions more who are classed as being "underinsured" - having basic insurance that often only covers a fraction of the cost of any check ups or treatment.

[Twitter below, via Naked Capitalism Links 3-11-20]
China is emerging as a global public goods provider as the US proves unable and unwilling to lead.

This is an important development, and if the trend continues, it’s one with potentially serious consequences for the US role in the world. 

South Korea’s coronavirus response is the opposite of China and Italy – and it’s working 
[South China Morning Post, via Naked Capitalism 3-14-20]
To encourage participation, testing is free for anyone referred by a doctor or displaying symptoms after recent contact with a confirmed case or travel to China. For anyone simply concerned about the risk of infection, the cost is a relatively affordable 160,000 won (US$135). Testing is available at hundreds of clinics, as well as some 50 drive-through testing stations that took their inspiration from past counterterrorism drills and can screen suspected patients in minutes.
“This country has a universal health-coverage system for the whole population and the economic burden for testing is very low,” said Kim Dong-hyun, president of the Korean Society of Epidemiology. “Tests are conducted for free if you have proper symptoms.”
[Twitter below, via Naked Capitalism Links 3-12-20]

Last night, @JoeBiden expressed concern over the potential cost of Medicare for All & the security of people’s health plans. I recognize these arguments because I helped craft them when I ran PR as an insurance exec. As a result, I feel obligated to set the record straight. (1/5)

Replying to
First, VP Biden suggested Medicare for All would cost an extra $35 trillion. That’s not right. A new peer-reviewed Yale study found that it would *save* U.S. taxpayers $450 billion annually by eliminating waste & industry greed. You can read it here
Down pointing backhand index

[Twitter, , via Naked Capitalism 3-13-20]

I did the math: a full battery of coronavirus testing costs at minimum $1,331.

I also did the legal research: the Administration has the authority to make testing free for every American TODAY.

I secured a commitment from a high-level Trump official that they’d actually do it.

What Do We Do When the Coronavirus Bankrupts the Health Insurance Industry
[CEPR, via Naked Capitalism 3-10-20]

[Politico, via The Big Picture 3-10-20]
Industry lobbyists successfully blocked attempts this week to include language in the $8.3 billion emergency coronavirus spending bill that would have threatened intellectual property rights for any vaccines and treatments the government decides are priced unfairly.
 Drug companies’ power to dictate terms as Congress struggles to address the growing U.S. outbreak is another sign of the uphill battle that likely awaits any broader bipartisan drug-pricing legislation. Both Democrats and Republicans have tried and failed in recent months to advance bills that would crack down on costs.
The pharmaceutical industry not only killed the intellectual property provision in the coronavirus package, but it got language added into the bill that prevents the government from delaying a medicine’s development over concerns about its affordability.
[Mint Press via Naked Capitalism 3-14-20] 
The classification of coronavirus planning meetings was first covered by Reuters, which noted that the decision to classify was “an unusual step that has restricted information and hampered the U.S. government’s response to the contagion.” Reuters further noted that the Secretary of the Department of Health and Human Services (HHS), Alex Azar, and his chief of staff had “resisted” the classification order, which was made in mid-January by the National Security Council (NSC), led by Robert O’Brien — a longtime friend and colleague of his predecessor John Bolton. 
Following this order, HHS officials with the appropriate security clearances held meetings on coronavirus response at the department’s Sensitive Compartmentalized Information Facility (SCIF), which are facilities “usually reserved for intelligence and military operations” and — in HHS’ case — for responses to “biowarfare or chemical attacks.” Several officials who spoke to Reuters noted that the classification decision prevented key experts from participating in meetings and slowed down the ability of HHS and the agencies it oversees, including the Centers for Disease Control and Prevention (CDC), to respond to the crisis by limiting participation and information sharing.
Why the U.S. is so far behind on coronavirus testing 
James G. Kahn, Jeffrey Sachs, Anders Fremstad, Robert Reich, Robert Pollin, Leonard Rodberg, Emmanuel Saez, Gabriel Zucman, Alison Galvani, Gerald Friedman, [Hopbrook Institute, via Naked Capitalism 3-9-20] 
“We believe the available research supports the conclusion that a program of Medicare for All (M4A) could be considerably less expensive than the current system, reducing waste and profiteering inherent in the current system, and could be financed in a way to ensure significant financial savings for the vast majority of American households…. Compared with the current system, Medicare for All would achieve considerable savings on administration and by reducing payments to monopoly drug companies and hospital networks. Within a few years of operation, M4A could save hundreds of billions of dollars per year from these sources. Additional savings will come when a rational healthcare finance system allows needed investments in coordinated care and preventive care, as well as reductions in fraudulent billing. …. Most important, Medicare for All will reduce morbidity and save tens of thousands of lives each year.”
Now look at House Speaker Nancy Pelosi's demands for treating COVOD19. Here's the greatest irony, soon to be tragedy:  if Pelosi and the Democrat Establishment had passed #MedicareForAll when they had the chance, all the measures she calls for would already be in place.

Corey Robin tweeted, the lack of a competent public health response is the result of “generations of concerted disinvestment and comprehensive disrepair… That is a bipartisan world, and it needs to go.... Radicalism is the most realistic program.”

Payments on mortgages to be suspended across Italy after coronavirus outbreak
[Reuters, via Naked Capitalism 3-11-20]
This is an example, if one is needed, of why sovereign national governments should and must have supreme power over the national economy. 

Strategic Political Economy

(inteview) [Naomi Klein, Vice]. 
Klein: “The “shock doctrine” is the political strategy of using large-scale crises to push through policies that systematically deepen inequality, enrich elites, and undercut everyone else. In moments of crisis, people tend to focus on the daily emergencies of surviving that crisis, whatever it is, and tend to put too much trust in those in power. We take our eyes off the ball a little bit in moments of crisis…. The shock really is the virus itself. And it has been managed in a way that is maximizing confusion and minimizing protection. I don’t think that’s a conspiracy, that’s just the way the U.S. government and Trump have utterly mismanaged this crisis. Trump has so far treated this not as a public health crisis but as a crisis of perception, and a potential problem for his reelection. It’s the worst-case scenario, especially combined with the fact that the U.S. doesn’t have a national health care program and its protections for workers are abysmal. This combination of forces has delivered a maximum shock. It’s going to be exploited to bail out industries that are at the heart of most extreme crises that we face, like the climate crisis: the airline industry, the gas and oil industry, the cruise industry—they want to prop all of this up. … In The Shock Doctrine I talk about how this happened after Hurricane Katrina.”
Common Dreams, via Naked Capitalism 3-11-20]

The Carnage of Establishment Neoliberal Economics

Distribution of Household Wealth in the U.S. since 1989
[Board of Governors of the Federal Reserve System, via The Big Picture 3-10-20]

Young Americans say billionaires do more harm than good, study shows
[Washington Post 3-13-20]
...Anand Giridharadas, author of “Winners Take All: The Elite Charade of Changing the World.” But the Pew data, he says, suggest that young Americans are concluding that billionaires have amassed their wealth “through their rigging of the tax code, through legal political bribery, through their tax avoidance in shelters like the Cayman Islands, and through lobbying for public policy that benefits them privately.”
The financial situation of young Americans also explains some of their suspicions toward the ultrawealthy. In 2016, the median household headed by a person younger than 35 had a net worth of about $11,000, which is lower, in real terms, than the net worth of a comparable younger generation in the 1980s. Those smaller nest eggs are due, in part, to things like massive student loan debt owed to the people and institutions at the opposite end of the financial spectrum.
“The billionaire class is ‘up there’ because they are standing on our backs pinning us down,” Giridharadas said.
How Working-Class Life Is Killing Americans, in Charts 
[New York Times, via The Big Picture 3-9-20]

Enemy Actions

“A New Conservative Think Tank Challenges ‘Market Fundamentalism'” 
[National Review, via Naked Capitalism 3-11-20]

“Oh My God, It’s Milton Friedman for Kids”
[Slate, via Naked Capitalism 3-9-20]
What interested me a lot was the fact that Packard actually came up with the Choose Your Own Adventure idea in the 1960s and took it to publishers, but nobody thought it was a good idea! They all said, “This is weird. It’s a game, not a book.” Then 10, 12 years later, when he did it again, all the publishers said, “This is amazing, you’re a genius.” So clearly, something deep changed in American culture.... 
I don’t usually write about Choose Your Own Adventure [laughs]—what I usually write about is the history of economic thought. Anyone who studies economists like Milton Friedman and other neoliberal economists who exploded in popularity around that time knows that for them choice is everything, it’s the only thing. The world is just individuals floating around, in an ahistorical space. Reading this, I’m like, “Oh my God, it’s like Milton Friedman for kids.”
“Palliative Liberalism Can’t Cure Our Ailing Working Class”
Michel Lind [The American Conservative, via Naked Capitalism Water Cooler 3-9-20]
“Worst of all, three of these schools of thought seek to respond to working-class populist rebellions by offering workers the chance to become something other than workers, as though there were something shameful and retrograde about being an ordinary wage earner. Many champions of education as a panacea want to turn wage earners into professionals. Advocates of universal capitalism want to turn wage earners into investors. Antimonopolists want to turn wage earners into small business owners.”
[Washington Post, via The Big Picture 3-13-20]

Predatory Finance

Treasury Market Turmoil At Most A Symptom — Brian Romanchuk
[Bond Economics, via Mike Norman Economics 3-14-20]
There has been major disruptions in Treasury market liquidity, with it being very difficult to sell off-the-run bonds. My initial reaction to these stories is that this is the typical complaining you get from people in any overly-specialised field when something slightly atypical happens. My argument is the worst case interpretation is that this is a reaction to one or major entities' balance sheets blowing sky high. Alternatively, this is just what happens when too many people take finance academics too seriously, and build their entire business model around the premise of markets always being liquid and orderly 24/7. That was always a stupid assumption, and so this is just reality intruding on that fantasy.
Pam Martens and Russ Martens: March 14, 2020  [Wall Street on Parade]
Since the Fed began its repo loan operations on September 17, the tally of the Fed’s cumulative loans to Wall Street’s trading firms comes to more than $9 trillion (using the Fed’s own Excel spreadsheet of the data; you have to manually remove the Reverse Repo dollar amounts.) 
According to the Fed audit conducted by the Government Accountability Office (GAO), from December 12, 2007 to July 21, 2010, a period spanning more than 31 months during the worst financial crisis since the Great Depression, the Fed’s cumulative loans to Wall Street tallied up to $16.1 trillion. (See chart below from the GAO audit.) 
And here we are today, when everyone from Fed Chairman Jerome Powell to bank analyst Mike Mayo is telling the public that the banks have plenty of capital and yet the Fed has pumped out 56 percent in six months of the amount it funneled to the Wall Street banks over 31 months during the 2008 financial crisis.
This is how America and Britain are maximising coronavirus deaths
[Medium, via Mike Norman Economics 3-12-19]
If you search on the web for the term ‘coronavirus bloodbath’, you’ll notice that the headlines are not about the mass deaths of vulnerable people that are inevitable on the sort of bungling business-as-usual trajectory adopted by the likes of President Donald Trump and Prime Minister Boris Johnson.  
The headlines are about stocks. Shares. Wall Street. The economy. Oil. Growth. Business. Banks. Finance.

Climate and environmental crises

Fact Sheet: Fossil Fuel Subsidies: A Closer Look at Tax Breaks and Societal Costs
[Environmental and Energy Study Institute, via Mike Norman Economics 3-14-20]
According to this article, subsidies to the fossil fuel industries provided the cheap energy which grew our economy so well for over a hundred years. They now say that fossil fuel companies no longer need the subsidies but renewables still do.
[Anthropocene, via Naked Capitalism Water Cooler 3-11-20]
“Ride-hailing trips on services such as Uber and Lyft create about 70 percent more pollution on average than the trips they replace, according to the analysis by the Union of Concerned Scientists. ‘In communities across the country, ride-hailing is increasing vehicle travel, climate pollution, and congestion,’ the authors write. Since Uber’s debut a decade ago, the ride-hailing and sharing industry has grown explosively around the world. These services are making it easier than ever to keep your car at home or not buy one in the first place. But they are a climate problem for two reasons, the report states. One is that they increase the number of car trips overall, by steering people away from walking, biking, taking public transport, or just skipping the trip. The other reason is that ride-hailing increases the number of miles a car travels to get from place to place between passengers.”

Information Age Dystopia

[Twitter, via Naked Capitalism 3-9-20]

Welcome to the future...

The Met Police set up live facial recognition cameras in east London. One passerby who didn't want to have his face scanned and so covered up his face was issued a £90 fine.

A Botnet Is Taken Down in an Operation by Microsoft
[New York Times, via The Big Picture 3-11-20]
Microsoft organized 35 nations on Tuesday to take down one of the world’s largest botnets — malware that secretly seizes control of millions of computers around the globe. It was an unusual disruption of an internet criminal group, because it was carried out by a company, not a government.
Zero Trust Information
[Stratechery, via The Big Picture 3-13-20]
An insiders look at information flow on the internet, and the impossibility of securing it, and the solution found.
You can draw a direct line from this tweet thread to widespread social distancing, particularly on the West Coast: many companies are working from home, traveling has plummeted, conferences are being canceled. Yes, there should absolutely be more, but every little bit helps; information that came not from authority figures or gatekeepers but rather Twitter is absolutely going to save lives. 
What is remarkable about these decisions, though, is that they were made in an absence of official data. The President has spent weeks downplaying the impending crisis, and the CDC and FDA have put handcuffs on state and private labs even as they have completely dropped the ball on test kits that would show what is surely a significant and rapidly growing number of cases.

Creating new economic potential - science and technology

Hong Kong’s Mass Transit Railway deploys robot to clean trains and stations
[Railway Age 3-13-20]
Hong Kong’s Mass Transit Railway (MTR) is deploying 20 Vaporized Hydrogen Peroxide (VHP) robots to deep clean trains at depots as well as stations to improve protection against the spread of coronavirus.
The VHP Robot was developed jointly by MTR and Avalon Biomedical, a Hong Kong biotechnology company. The robots are designed to automatically spray hydrogen peroxide solution, which is atomised to a specific concentration to ensure that disinfectants penetrate small gaps which are difficult to reach during normal cleaning.

Scientists Find a Way to Make Hydrogen Fuel Production 25x More Efficient 
[Science Alert, via Naked Capitalism Links 3-13-20]
[Jacobin, via Naked Capitalism Water Cooler 3-11-20]
“Too many react to the present situation with self-pity when, after five decades of political marginalization, awe is more appropriate…. We should fight to the end for Bernie Sanders’s campaign, on the off chance that we might win a new beginning. And then, win or lose, we should be prepared to fight some more. As the great reformer Tony Benn put it, ‘There is no final victory, as there is no final defeat. There is just the same battle. To be fought, over and over again. So toughen up, bloody toughen up.'”
Life After Bernie
[Politco 3-6-20]
DSA: “This isn’t about the success of one person, it’s about the success of a movement. Bernie is building a movement that will be able to take power back. It’s just a matter of time.”

Democratic Party Prognosis: Death by Centrism

Role of a Wall Street Law Firm in the Joe Biden Resurgence Raises Alarms for Progressives
Pam Martens and Russ Martens, March 11, 2020 [Wall Street on Parade]

...Paul, Weiss, Rifkind, Wharton & Garrison LLP... has not only been a major donor to the Biden campaign but it was simultaneously a major donor to the campaigns of the four presidential candidates who dropped out of the race and then endorsed Biden at critical moments in his miraculous resuscitation.... 
Donors from Paul Weiss rank as the 12th largest donor to the Joe Biden campaign with a tally of $168,412. Paul Weiss was the top donor to Senator Cory Booker’s presidential campaign, sluicing $151,102 into his campaign coffers. Senator Amy Klobuchar, who hails from Minnesota – pretty far from the law firm’s Wall Street focus – received $76,932 from Paul Weiss, making it her third largest donor in her presidential bid.
Pete Buttigieg, who was the former Mayor of South Bend, Indiana – about as far from Wall Street as one can get, received $133,261 from those generous folks at Paul Weiss, making it his seventh largest donor.
And, finally, there was presidential candidate Kamala Harris, the junior Senator from California, who received the sizeable sum of $193,873 from the folks at Paul Weiss, ranking them her second largest campaign contributor.

Joe Biden’s Success Shows We Gave Obama a Free Pass 
[New York Times, via Naked Capitalism Links 3-8-20]
We refuse to talk about how President Obama’s failure to deliver transformational changes may have fed voter disaffection in 2016....

As president, Mr. Obama enjoyed extraordinarily high approval ratings among African-Americans, even as black unemployment remained high. His personal popularity notwithstanding, African-Americans’ ratings of public policy, race relations and the state of the country declined over his presidency. 
In 2009, 71 percent of African-Americans thought Mr. Obama’s election was “one of the most important advances for blacks.” By the summer of 2016, that number had dropped to 51 percent. In 2012, only 20 percent of African-Americans believed that the country was “headed in the wrong direction,” but by 2016 that number had risen to 48 percent
Finally, 52 percent of African-Americans said that Mr. Obama’s policies had not gone far enough to improve their situation by 2016, an increase from the 32 percent who said this during his first year as president.

“Joe Biden’s secret governing plan” 
[Axios, via Naked Capitalism Water Cooler 3-9-20] 
“Biden advisers describe a Return to Normal plan — a reversal of President Trump’s unorthodox, improvisational style. Biden wants known, trusted people around him — many from the Obama years.”
  • Sen. Elizabeth Warren as Treasury secretary could help unite the party.
  • Jamie Dimon — chairman and CEO of JPMorgan Chase, and mentioned over the years as a potential presidential candidate — would also be considered for Treasury.
  • Anne Finucane, vice chairman of Bank of America, is another possibility for Treasury.

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