Sunday, May 31, 2020

Week-end Wrap – Political Economy – May 31, 2020

Week-end Wrap – Political Economy – May 31, 2020
by Tony Wikrent

[Twitter, via Naked Capitalism Water Cooler 5-29-20]
Here's video of the first person alleged to have taken a hammer to the AutoZone window, which activists immediately suspected was a provocation. Black gloves, black boots, black clothes (not unkempt like antifa, no offense), nice gas mask. Who is this guy? 

View image on Twitter

Strategic Political Economy

General Electric Co. is turning out the lights on an iconic part of its business.
[Wall Street Journal, via Naked Capitalism Water Cooler 5-28-20]
Trump's revival of American manufacturing....
“General Electric Co. is turning out the lights on an iconic part of its business. The company is getting out of making lightbulbs…. selling a unit that defined GE for nearly a century and was its last direct link to consumers. The company will sell its lighting business to Massachusetts-based Savant Systems Inc., a seller of home-automation technology in a transaction that values the unit at around $250 million.... That hardly makes the business a financial heavyweight, but the sale is the latest sign of the transformation of the American manufacturing landscape and a big marker in the changes at GE. The company has been selling off industrial units to pare down its debts, making GE smaller but also making it more reliant on an aviation unit that now faces tough prospects under the coronavirus pandemic.”

Sunday, May 24, 2020

Week-end Wrap – Political Economy – May 24, 2020

Week-end Wrap – Political Economy – May 24, 2020
by Tony Wikrent
Progressive Caucus of the North Carolina Democratic Party

Strategic Political Economy

The Big Failure of Small Government
Maria Mazzucato [Project Syndicate, via Naked Capitalism 5-22-20]
Effective governance, it turns out, cannot be conjured up at will, because it requires investment in state capacity....
Decades of privatization, outsourcing, and budget cuts in the name of “efficiency” have significantly hampered many governments’ responses to the COVID-19 crisis. At the same time, successful responses by other governments have shown that investments in core public-sector capabilities make all the difference in times of emergency. The countries that have handled the crisis well are those where the state maintains a productive relationship with value creators in society, by investing in critical capacities and designing private-sector contracts to serve the public interest....
Unfortunately, for the last half-century, the prevailing political message in many countries has been that governments cannot – and therefore should not – actually govern. Politicians, business leaders, and pundits have long relied on a management creed that focuses obsessively on static measures of efficiency to justify spending cuts, privatization, and outsourcing....
Vietnam’s successful approach to COVID-19 has emerged as a striking contrast to the US and UK responses. Among other things, the Vietnamese government was able to amass low-cost testing kits very quickly, because it already had the capacity to mobilize academia, the army, the private sector, and civil society around a common mission. Rather than simply outsourcing with few questions asked, it used public research and development funding and procurement to drive innovation. The resulting public-private collaboration enabled rapid commercialization of kits, which are now being exported to Europe and beyond.
New Zealand is another success story, and not by coincidence. After initially adopting the outsourcing mantra in the 1980s, the New Zealand government changed course, embracing a “spirit of service” and an “ethic of care” across its public services, and becoming the first country in the world to adopt a wellbeing budget. Owing to this vision of public management, the government adopted a “health first, economy second” approach to the current crisis.
[Huffington Post, via Naked Capitalism 5-21
Tax evasion, to pick just one crime concentrated among the wealthy, already siphons up to 10,000 times more money out of the U.S. economy every year than bank robberies. In 2017, researchers estimated that fraud by America’s largest corporations cost Americans up to $360 billion annually between 1996 and 2004. That’s roughly two decades’ worth of street crime every single year. As the links between corporations and regulators become increasingly incestuous, the future will bring more crude-soaked coastlines, price-gouging corporate behemoths and Madoff-style Ponzi schemes. More hurdles to suing companies for poisoning their customers or letting bosses harass their employees. And more uniquely American catastrophes like the opioid crisis and the price of insulin.

Monday, May 18, 2020

Too much spare time under quarantine??

Someone just figured out that it was possible to build a GOOGOL:1 gear reduction set using 186 Lego gears. Think of it this way. For every person you know who cannot add or explain the difference between a million and a billion, there is likely someone who does this sort of math for FUN. (Bell-shaped curve and all ;-) For extra fun, open this in YouTube and follow the comments. There's a bunch of math nerds out there!

Unfortunately, math nerds can only help a little with a problem like the Covid19 outbreak. In order to do good science, we need rigorous methods of collecting data—something made functionally impossible without widespread and highly accurate testing. We don't even make generic Advil in USA anymore. Those mass-produced accurate tests?—WAY harder. A safe and effective vaccine?—may never happen. Even treatments to control symptoms are still only in the imagining stage.

What this means is this is a disease that we are just going to have to learn to live with. Unfortunately, the folks in the businesses of managing meaningful social change such as political leaders are almost entirely populated by scientifically and mathematical illiterates who believe that major human problems are best addressed by scolding. It may be possible to organize a kindergarten that way but a global infectious pandemic?—probably not.

Sunday, May 17, 2020

Week-end Wrap – Political Economy – May 17, 2020

Week-end Wrap – Political Economy – May 17, 2020
by Tony Wikrent

Strategic Political Economy

The storm we can’t see
[WaPo, via Naked Capitalism 5-11-20] A must read.
Four relatively narrow policy questions hint at the difficulties ahead. First, the bailout: After the initial $349 billion allotment vanished in days, Congress threw an additional $320 billion into the Paycheck Protection Program, the effort to keep small-ish businesses from firing employees for roughly eight weeks. That just means companies, including many I’ve spoken to, are planning June layoffs. Will Washington put another $670 billion into the PPP just to keep those small businesses afloat through July?
....Third, states and cities are going broke, thanks to the costs of responding to the crisis — from unemployment claims to boosting hospital capacity and purchasing protective equipment — as well as the collapse of income, sales and meal tax payments. New York City says it will need $7.4 billion in federal aid, and the state faces a $13 billion shortfall; Alaska’s budget gap might top $1 billion; Colorado’s, $3 billion. The impact on California’s finances has been termed, simply, “beyond crazy.” That will be true for every single state, every single county, every single city, village and town in the country. Unlike the federal government, which can deficit spend with abandon, state and local governments must balance their budgets, meaning these holes must be closed, immediately, by federal aid, budget cuts or tax increases....
Addressing the Great Depression took enormous creativity and agility by Franklin Roosevelt’s New Dealers; it required massive new social programs, employment efforts that transformed the country and targeted individual industries, right down to literally paying writers to write about the Great Depression. The federal response to that crisis also underscores how large and long the U.S. government’s present-day interventions might need to be. When FDR ran for reelection in 1936 — four years into his New Deal — unemployment still stood above 16 percent, and rural electrification, a cornerstone of the New Deal’s economic development efforts, would take more than a decade to unfold.
It’s clear that we as a country need to be thinking in terms of tens of trillions of dollars of federal effort over the next decade. Planning in terms of weeks and $1,200 stimulus payments certainly helps now, but it’s no Marshall Plan. Every hour and day that the federal government fails to recognize the scale of this problem, the problem gets worse — and the solutions will be harder and more expensive.
by Rep. Pramila Jayapal [CommonDreams, via Naked Capitalism 5-13-20]
Our response here in Congress must match the true scale of this devastating crisis. The Heroes Act—while it contains many important provisions—simply fails to do that.

Wednesday, May 13, 2020

We need a radically different model to tackle the COVID-19 crisis - James Galbraith

Dr. Galbraith just emailed me permission (11:16 AM 2020 May 13) to repost his article in full. Originally posted on Defend Democracy Press​​​​​​​, May 12, 2020.

James K. Galbraith

The Current Situation in the United States: May 2020
James K. Galbraith

Two weeks ago week the US death toll from Covid-19 exceeded that of US soldiers in Vietnam, 1955-1974. On May 1 the one-day toll reached a new high, greater than that in New York City on September 11, 2001.  Meanwhile economic output has collapsed and over thirty million Americans had filed unemployment claims as of April 30, 2020. On the public health front, testing remains inadequate, contact tracing non-existent, treatment options appear stalled and millions remain uninsured.  The federal bailouts have worked well in one way only: to spur a modest revival of stocks and to forestall massive defaults on bonds.

The failures of the public health system border on sabotage. Test kits were available from the WHO in January; the US elected not to use them. The first production of tests from the CDC was botched.  Testing was deliberately limited as community transmission grew, so that the virus escaped from early containment that might have been possible. Lockdowns and quarantines came late, were poorly organized and weakly enforced. Supplies of PPE were not allocated to hospitals and health care providers according to need; the Defense Production Act was not deployed in timely and effective manner to ramp up home production; no effective federal system to manage international medical supply chains exists to this day. While some firms have no doubt done their best, reports of profiteering and scams are rampant.

The push to reopen the economy is a further mark of failure. As food supply workers were not properly protected, unacceptable levels of sickness and workplace contamination have occurred, notably in meat. Food banks are in crisis, while milk, eggs and other perishables are wasted. State governments facing fiscal catastrophe press businesses to reopen on terms that cannot be profitable, because capacity is constrained for health reasons. The openings are calculated to force workers off of unemployment insurance, which can be revoked if they decline to return to risky jobs. Many smaller businesses are deciding not to reopen; they will face bankruptcy instead and disappear. Although evictions and foreclosures are technically deferred, many landlords have ignored this and in any event rent, mortgages, utility bills and other debts continue to accrue.

Sunday, May 10, 2020

Week-end Wrap – Political Economy – May 10, 2020

Week-end Wrap – Political Economy – May 10, 2020
by Tony Wikrent

The Risks - Know Them - Avoid Them
[ErinBromage, via Mike Norman Economics 5-8-20]
We know most people get infected in their own home. A household member contracts the virus in the community and brings it into the house where sustained contact between household members leads to infection.
But where are people contracting the infection in the community? I regularly hear people worrying about grocery stores, bike rides, inconsiderate runners who are not wearing masks.... are these places of concern? Well, not really. Let me explain....
Remember the formulae: Successful Infection = Exposure to Virus x Time
....Ignoring the terrible outbreaks in nursing homes, we find that the biggest outbreaks are in prisons, religious ceremonies, and workplaces, such a meat packing facilities and call centers. Any environment that is enclosed, with poor air circulation and high density of people, spells trouble.
Some of the biggest super-spreading events are:
  • Meat packing: In meat processing plants, densely packed workers must communicate to one another amidst the deafening drum of industrial machinery and a cold-room virus-preserving environment. There are now outbreaks in 115 facilities across 23 states, 5000+ workers infected, with 20 dead. (ref)
  • Weddings, funerals, birthdays: 10% of early spreading events
  • Business networking: Face-to-face business networking like the Biogen Conference in Boston in March.
As we move back to work, or go to a restaurant, let’s look at what can happen in those environments.

Restaurants: Some really great shoe-leather epidemiology demonstrated clearly the effect of a single asymptomatic carrier in a restaurant environment (see below). The infected person (A1) sat at a table and had dinner with 9 friends. Dinner took about 1 to 1.5 hours. During this meal, the asymptomatic carrier released low-levels of virus into the air from their breathing. Airflow (from the restaurant's various airflow vents) was from right to left. Approximately 50% of the people at the infected person's table became sick over the next 7 days. 75% of the people on the adjacent downwind table became infected. And even 2 of the 7 people on the upwind table were infected (believed to happen by turbulent airflow). No one at tables E or F became infected, they were out of the main airflow from the air conditioner on the right to the exhaust fan on the left of the room. (Ref)
Workplaces: Another great example is the outbreak in a call center (see below). A single infected employee came to work on the 11th floor of a building. That floor had 216 employees. Over the period of a week, 94 of those people become infected (43.5%: the blue chairs). 92 of those 94 people became sick (only 2 remained asymptomatic). Notice how one side of the office is primarily infected, while there are very few people infected on the other side.

Sunday, May 3, 2020

Week-end Wrap – Political Economy – May 3, 2020

Week-end Wrap – Political Economy – May 3, 2020
by Tony Wikrent
Economics Action Group, North Carolina Democratic Party Progressive Caucus

Strategic Political Economy

Organizing for Survival in New York City
[Commune, via Naked Capitalism 4-26-20]

China Spends $600 Billion To Trump America’s Economy
[Forbes, May 1, 2020]
Ten years from now, when economists mull the exact moment the U.S. ceded the future to China this week’s events are sure to top the list of time-stamp candidates. 
This was the week, after all, when Chinese President Xi Jinping tossed another 4 trillion yuan, or $565 billion, at an economy taking devastating coronavirus blows.... 
Within the same 24 hours during which Xi’s announced a nearly $600 billion plan to build even more airports, railways and power grids, Senate Majority Leader McConnell gave the thumbs down to comparable upgrades to America’s economic hardware. “Infrastructure is unrelated to the coronavirus pandemic that we're all experiencing and trying to figure out how to go forward,” McConnell said. 
Music to Xi’s ears. The trillions of dollars his government lavished on the “Made in China 2025” extravaganza is already positioning China to lead the future of artificial intelligence, automation, micro-processing, renewable energy, robotics, self-driving vehicles, you name it. And Trump made it easy for Xi. As China prepares for the global economy it will confront in 2025, Trump is making coal great again.
Why Mitch McConnell Wants States to Go Bankrupt David Frum, April 25, 2020 [The Atlantic]
Note this is by former Bush Jr. speech writer Frum, so represents thinking inside the Republican party elites.
State bankruptcy is not some passing fancy. Republicans have been advancing the idea for more than a decade. Back in 2011, Jeb Bush and Newt Gingrich published a jointly bylined op-ed advocating state bankruptcy as a solution for the state of California. The Tea Party Congress elected in 2010 explored the idea of state bankruptcy in House hearings and Senate debates. Newt Gingrich promoted it in his run for the 2012 Republican presidential nomination.... A bankruptcy is not a default.... A default is a sovereign act. A defaulting sovereign can decide for itself which—if any—debts to pay in full, which to repay in part, which debts to not pay at all. Bankruptcy, by contrast, is a legal process in which a judge decides which debts will be paid, in what order, and in what amount....
Since 2010, American fiscal federalism has been defined by three overwhelming facts.
First, the country’s wealthiest and most productive states are overwhelmingly blue. Of the 15 states least reliant on federal transfers, 11 are led by Democratic governors. Of the 15 states most reliant on federal transfers, 11 have Republican governors.
Second, Congress is dominated by Republicans. Republicans controlled the House for eight of the last 10 years; the Senate for six. Because of the Republican hold on the Senate, the federal judiciary has likewise shifted in conservative and Republican directions.
A state bankruptcy process would thus enable a Republican Party based in the poorer states to use its federal ascendancy to impose its priorities upon the budgets of the richer states.

Regional compacts on #COVID19
[Twitter, via Naked Capitalism Water Cooler 4-28-20]
The fabric of the Union begins to unravel under the pressure of Trump's incompetence and Republican intransigence.

Friday, May 1, 2020

Federal funds must go to state and local governments

Over $3 trillion in emergency spending has been authorized by Congress in the past month, with another $6 trillion plus in money creation and lending powers given to the Federal Reserve. Judged solely by its size, this has been an impressive response.

There are two crucial facts to note and questions to ask:

1. Little of these trillions of new dollars has gone to help the people and businesses who need it most. Why?
2. In the discussion of these emergency spending measures, why is there no one asking: How are we going to pay for it? 

The answers to these two questions are pretty much the same: The United States is no longer a republic ruled by the Constitutional mandate to promote the General Welfare. As even former President Jimmy Carter has observed, the USA has become a plutocratic oligarchy, and the federal government has been mutated to protect and promote the wealth, power, and privilege of plutocrats and their retainers.

Ben Mathis-Lilley, Slate’s chief news blogger, argues that even the retainers are beginning to understand: The Coronavirus Is Showing Members of the Professional Class That the Government Doesn’t Work for Them Either.
...government programs in the United States—even those supported by the purportedly pro-government party—are not designed to solve problems. Rather, they are designed to solve a given problem only to a degree—and that degree can’t require an amount of spending that would necessitate financial sacrifice on the part of high-income taxpayers. This is not a leftist conspiracy theory, but the overt position of the party’s leaders, who believe they will not be able to achieve crucial voting margins in upscale suburbs if they authorize too much taxation and spending....