Sunday, August 23, 2020

Week-end Wrap – Political Economy – August 23, 2020

Week-end Wrap – Political Economy – August 23, 2020
by Tony Wikrent

The Pandemic

[Twitter, via Naked Capitalism Water Cooler 8-20-20]
Estimated cost of recent epidemics/pandemics:
SARS (2003) - $40 billion
H5N1 (2006) - $40 billion
H1N1 (2009) - $45 billion
Ebola (2014) - $55 billion
COVID-19 (2020) - $8.8 TRILLION
Investing in public health preparedness is FAR cheaper than the economic impact of a pandemic.
3:57 PM · Aug 19, 2020
Something Remarkable Just Happened This August: How the Pandemic Has Sped Up the Passage to Postcapitalism
Yanis Varoufakis, August 22, 2020 [Lannan Foundation, via Naked Capitalism]
Following the crash of 2008, capitalism changed drastically. In their attempt to re-float the crashed financial system, central banks channelled rivers of cheap debt-money to the financial sector, in exchange for universal fiscal austerity that limited the middle and lower classes’ demand for goods and services. Unable to profit from austerity-hit consumers, corporations and financiers were hooked up to the central banks’ constant drip-feed of fictitious debt. 
Every time the Fed or the European Central Bank or the Bank of England pumped more money into the commercial banks, in the hope that these monies would be lent to companies which would in turn create new jobs and product lines, the birth of the strange world we now live in came a little closer. How? 
As an example, consider the following chain reaction: The European Central Bank extended new liquidity to Deutsche Bank. Deutsche Bank could only profit from it if it found someone to borrow this money. Dedicated to the banker’s mantra “never lend to someone who needs the money”, Deutsche Bank would never lend it to the “little people”, whose circumstances were increasingly diminished (along with their ability to repay any substantial loans), it preferred to lend it to, say, Volkswagen. But, in turn, Volkswagen executives looked at the “little people” out there and thought to themselves: “Their circumstances are diminishing, they won’t be able to afford new, high quality electric cars.” And so Volkswagen postponed crucial investments in new technologies and in new high quality jobs. 
But, Volkswagen executives would have been remiss not to take the dirt-cheap loans offered by Deutsche Bank. So, they took it. And what did they do with the freshly minted ECB-monies? They used it to buy Volkswagen shares in the stock exchange. The more of those shares they bought the higher Volkswagen’s share value. And since the Volkswagen executives’ salary bonuses were linked to the company’s share value, they profited personally – while, at once, the ECB’s firepower was well and truly wasted from society’s, and indeed from industrial capitalism’s, point of view....
My difference with fellow lefties is that I do not believe there is any guarantee that what follows capitalism – let’s call it, for want of a better term, postcapitalism – will be better. It may well be utterly dystopic, judging by present phenomena. In the short term, to avoid the worst, the minimum necessary change that we need is an International Green New Deal that, beginning with a massive restructuring of public and private debts, uses public financial tools to press the oodles of existing liquidity (e.g. funds driving up money markets) into public service (e.g. a green energy revolution).
“Meatpacking Companies Dismissed Years of Warnings but Now Say Nobody Could Have Prepared for COVID-19”
[ProPublica, via Naked Capitalism Water Cooler 8-21-20] 
“[A] ProPublica investigation has found that for more than a dozen years, critical businesses like meatpackers have been warned that a pandemic was coming. With eerie prescience, infectious disease experts and emergency planners had modeled scenarios in which a highly contagious virus would cause rampant absenteeism at processing plants, leading to food shortages and potential closures. The experts had repeatedly urged companies and government agencies to prepare for exactly the things that Smithfield’s CEO now claims were unrealistic…. Instead, the industry repeatedly expressed confidence in its ability to handle a pandemic, and when asked to plan, relied on a wait-and-see approach, records and interviews show.”

Decline of USA power

Dealing with America in Decline
[Valdai Discussion Club, via Naked Capitalism 8-17-20]
It would be too extravagant to pretend that the American factor in international politics does not exist. The country is the source of too many world problems, it influences too much because of its remaining power capabilities. Due to the fact that the United States is the only power in the world comparable to Russia militarily, Moscow’s interest in American affairs is quite understandable. This is not a matter of being “obsessed” with the United States an idea which can often be considered if one goes by the word-for-word opinions of Russian experts. Russia is hardly worried about the situation in America as such, even if the pre-election passions lead to new measures of economic pressure on Moscow. These measures, in themselves, do not threaten the Russian economy and society much. The dynamics of American foreign policy and the domestic state of this country are important for international security and stability.

Explaining that no one needs the collapse of the United States is a waste of time. All the arguments presented can be replaced by one: do not forget about the American nuclear arsenal and its fate if the country really becomes engulfed in a civil war. In fact, nothing else matters. If the United States seriously fails, no “power vacuum” in international affairs will arise – there will immediately be many willing or unwillingly willing to fill it.
[Twitter, via Naked Capitalism 8-21-20]
Adam Tooze
China now has more companies in the Fortune 500 than the US.
@ISABELNET_SA via @SoberLook

How Japan Talks About Security Threats 
[The Diplomat, via Naked Capitalism 8-19-20]

Mondoweiss, via Naked Capitalism 8-19-20]

Information Age Dystopia

How Northern California’s Police Intelligence Center Tracked Protests
[The Intercept, via Naked Capitalism 8-19-20]

Miami Police Used Facial Recognition Technology in Protester’s Arrest
[NBC Miami, via Naked Capitalism 8-19-20]

The Carnage of Establishment Neoliberal Economics

Companies spent $340 million on high-priced consultants to bust unions
Economic Policy Institute, August 11, 2020
Ensuring that workers have access to a union is one of the most effective ways to strengthen our nation's collapsing middle class. But instead of paying workers what they deserve, big name companies are spending huge sums of money on high-priced consultants to bust unions.

In a new report called “Fear at Work,” EPI examines the extent some employers go to block unions.... 
A $340 million industry of “union avoidance” consultants helps employers exploit the weaknesses of federal labor law to deny workers the right to collective bargaining. Over the past five years, employers using union avoidance consultants have included FedEx, Bed Bath & Beyond, and LabCorp, among others.

Economic disequilibrium

CEO compensation surged 14% in 2019 to $21.3 million: CEOs now earn 320 times as much as a typical worker 
[Economic Policy Institute, 8-21-20]
Last year, annual CEO compensation at the United States’ top 350 firms grew to an average of $21.3 million, a 14% increase, according to new analysis by EPI’s Lawrence Mishel and Jori Kandra.... In addition to the pay ratio, EPI data makes clear that from 1978 to 2019, CEO compensation grew by a staggering 1,167%. Meanwhile, the compensation of a typical worker rose just 13.7% during that entire period.
“The rich get richer” doesn’t even begin to tell the story these days. According to the Institute for Policy Studies, the wealth of the top 12 billionaires in the U.S. recently exploded to more than one trillion dollars — yes, 13 digits. The statistic, of course, is an eye-popping figure on its face, made even more so in light of the devastation in the broader economy due to the coronavirus pandemic. Since the pandemic first blew up in the U.S. back in March, the ‘Oligarchic Dozen’ has enjoyed a 40% surge in its combined wealth — or an increase of $283 billion.”

Using Koch Money, Cato Institute Has Led the Drumbeat to Denigrate and Privatize the U.S. Postal Service
Pam Martens and Russ Martens, August 19, 2020 [Wall Street on Parade]
The first thing you need to know about the right-wing Cato Institute is that it quietly began its life as the Charles Koch Foundation in 1974. The name was changed to the Cato Institute in 1977 according to the restated articles of incorporation. For decades, the Cato Institute enjoyed a taxpayer subsidy as a nonprofit while being secretly owned by a handful of men, two of whom were the fossil fuel billionaire brothers, Charles and David Koch – libertarians with a radical agenda. (David Koch died in August of last year.)

The second thing to know about the Cato Institute is that over the past 35 years, Koch-related foundations have pumped more than $22 million into its coffers to help Cato get out its messaging of killing off the following: Social Security; federally-subsidized school lunches; the minimum wage; collective bargaining; and, of course, the unionized U.S. Postal Service....

On April 28 of this year, Cato’s Chris Edwards wrote an OpEd for the New York Daily News calling for the privatization of the U.S. Postal Service, writing that “To survive and even thrive in the changing economy, the U.S. Postal Service should be moved to the private sector.” 
A year earlier, Edwards was testifying before the House Oversight Committee on how “Congress should privatize the USPS” and “allow entrepreneurs to compete in the postal industry.” (It should be noted that UPS and FedEx are already major competitors.) Edwards holds a Masters in Economics from George Mason University, another outpost of massive amounts of Koch money.
Political Tide Begins to Turn in Postal Service Crisis
David Dayen, August 17, 2020 [American Prospect]
A ridiculous and useless argument sparked on Twitter over the weekend about whether Bernie Sanders, somehow, is to blame for Trump’s commandeering of the Postal Service, through blocking appointments to the Board of Governors. This showed a lack of understanding of how the Board of Governors operates. I wrote this back in 2014 about the Board of Governors, a nine-member panel whose terms expire on a staggered basis. Even if President Obama got a full complement onto the board (and he didn’t, not because of Bernie Sanders holds, but because he didn’t fill the vacancies for many years to begin with, and didn’t prioritize the board when Democrats held the Senate), Trump would have been able to secure a majority by filling expiring seats.

Climate and environmental crises

California Reveals That the Transition to Renewable Energy Isn’t So Simple 
[Slate, via Naked Capitalism 8-20-20]
“Millions of Beetles Are Wiping Out Forests All Across the World”
[Bloomberg, via Naked Capitalism Water Cooler 8-17-20]
“A plague of tiny mountain pine beetles, no bigger than a grain of rice, has already destroyed 15 years of log supplies in British Columbia, enough trees to build 9 million single-family homes, and are chewing through forests in Alberta and the Pacific Northwest. Now, an outbreak of spruce beetles is threatening to devour even more trees in North America just as similar pests are decimating supplies in parts of Europe, creating a glut of dead and dying logs. The bugs are thriving as climate change warms winters that would normally keep them at bay, destroying a swath of the world’s timber supplies.”
‘Insanely hot’: Death Valley records world temperature record 
[Al Jazeera, via Naked Capitalism 8-18-20]

First ever double hurricane could hit the Gulf of Mexico
[ 8-21-20]

Next week for the first time on record, two hurricanes could hit the Gulf of Mexico at the same time. Twice before, in 1959 and 1933, two tropical storms have entered the Gulf at the same time. But never before have both been hurricanes
It might not go that way. Only one of the storm systems has yet strengthened into a tropical storm — a dangerous cyclone, but not yet a hurricane. The other remains a tropical depression, and its future is still unclear. But forecast models have suggested the possibility since at least Thursday (Aug. 20), and the storms are still following the path that would lead to double Gulf hurricanes....
The 2020 hurricane season has been extraordinarily busy, with Laura already a record setter today (Aug. 21) as the earliest "L" storm ever. (Tropical cyclones are named in alphabetical order as they achieve tropical storm strength.) This year also saw the earliest C, E, F, G, H, I, J and K storms, as Houston-based meteorologist Matt Lanza noted on Twitter. If tropical depression 14 becomes Marco, it will be the earliest M storm on record. (These records date back to the late 19th Century, and include storms from the era when tropical storms were numbered but not named.) 
The National Oceanic and Atmospheric Administration says that as climate change warms the oceans, strong hurricanes are likely to become more frequent than they were in previous years.
Derecho Flattens Iowa Corn
[, August 11, 2020]
On August 10, 2020, an unusually strong and long-lasting line of thunderstorms—a derecho—battered vast swaths of Iowa and the U.S. Midwest. More than a week after the storm, tens of thousands of Iowans were still without electric power, and many farmers were mulling whether they could salvage crops and repair grain silos before the coming harvest....
While large hail can quickly strip stalks and pulverize corn and soybean plants—leaving dark brown stripes across rural landscapes—much of the damage in August 2020 was caused by fierce winds that toppled stalks that were already heavy with maturing corn husks, explained Christopher Schultz, a NASA Marshall Space Flight Center meteorologist. However, the damage was not exclusively caused by wind. In some areas, small hail battered plants and sliced away leaves.
It is possible that some of the toppled plants still have intact roots and will continue to grow in the coming weeks; others could be used for silage or other purposes. But many experts anticipate severe losses and big challenges for harvesting and storing anything that remains. While damage estimates are evolving, agricultural economists project that the storm likely caused nearly $4 billion in damages, which would make it one of the costliest thunderstorm events on NOAA’s weather and climate disaster tracker for the past decade.
A Rush is On to Mine the Seabed, But the Effects are Unknown 
[The Maritime Executive, via Naked Capitalism 8-18-20]

Disrupting mainstream politics

Sixty Seconds to Self-Sabotage The DNC’s choice of who to feature speaks volumes about the party’s inability to see its own future.
Rebecca Traister [thecut, via Naked Capitalism 8-18-20]

Merger between Democratic Party and Republican Party at the national leadership level.
Lambert Strether [Naked Capitalism Water Cooler 8-19-20]
My current still-being-worked out theory goes like this: We really are looking at a merger between the (factions of) the Democrat Party and (factions of) the Republican Party at the national leadership level. (That makes Dionne’s “United Front” theory wrong, and Dionne himself a useful idiot; this realignment is not a temporary thing. Ditto Reich.) From around 2000 to 2016, the Democrat theory of change was the “coalition of the ascendant,” as theorized by Ruy Reixeira. This “coalition” was in fact ill-defined and quite fragile, and in fact was not Obama’s theory (though, naturally, we can only reverse engineer what he really believed). What Obama believed evolved into what I have labeled The Great Assimilation™, and began in 2008 with Obama’s revision to the Preamble of the Democrat platform, which stressed the requirement for a functional Republican Party in a two-party system. (Obama’s shorthand for this was waiting for “the fever to break,” the “fever” being right-wing populism.) Obama followed through on his vision of a functional Republican Party with his (disastrous) negotiation with Republicans on ObamaCare, where he treated the Republicans as a trusted interlocutor. (For those who came in late, Obama in 2009 had his boot on the Republican throat. He could have crushed them. Instead, he gave them a hand up, dusted them off, and let them right back in the game.)

Fast forward to March 2016, when Thomas Frank’s Listen, Liberal! was published. Frank — promptly ostracized along the Acela Corridor — had the nerve to point out the central contradiction of the Democrat Party under the “coalition of the ascendant” theory: The Democrat base was the PMC, but the Democrats also could not win without working class votes (and those voters had both values and interests at odds with the PMC, as the chart below shows). Some insiders thought that the way to resolve the contradiction was to jettison working class votes; as Schumer famously remarked: “For every blue-collar Democrat we lose in western Pennsylvania, we will pick up two moderate Republicans in the suburbs in Philadelphia, and you can repeat that in Ohio and Illinois and Wisconsin.” Then, in 2016, Sanders stuck a fork in the “coalition of the ascendant” by peeling off the Hispanic vote entirely. In the short term, liberal Democrat responded to the threat of populism from the left by immediately removing Sanders from any position of authority in candidate selection for 2020, by defenestrating Sanders’ candidate for DNC leadership, Ellison, and more centrally by removing all (100%) Sanders supporters from the all-important Rules and Bylaws Committee, where challenges to primary votes are adjudicated.

In the long term — and here, since internal Democrat deliberations are entirely informal and secretive, I speculate — liberal Democrats decided to achieve their majority not with the failed strategy of “the coalition of the ascendant,” but by jettisoning the working class entirely, and peeling off suburban Republican voters. (Black Democrat voters should take note; underneath all the “listen to Black women” foofrah, I doubt that liberal Democrats like being beholden to Black constituencies any more than they liked being beholden to the working class. For the nature of the Black people liberal Democrats do accept and respect, see Adolph Reed here; Reed is, I think, restating the idea of “the talented tenth.”) The key inflection point that signalled this strategic shift came in 2018 at John McCain’s funeral, where war criminal and torture advocate George W Bush. famously gave Michelle Obama candy; she later said, on the Today Show: “He’s my partner in crime at every major thing where all the ‘formers’ gather…. I love him to death. He’s a wonderful man, he’s a funny man.” (Somehow I can’t imagine Michelle Obama saying that about Bernie Sanders.)

Hence the presence of Republicans in the Democrat campaign (the Lincoln Project), and their dominance at the convention (Kasich, Whitman, Powell, Molinari, Cindy McCain., etc.), greatly in contrast to the minute given to, say, AOC, or Sanders supporters generally.

Now, one could argue that we are merely looking at a temporary alliance (indeed, a “United Front,” just as Dionne and Reich suggest). One might also argue that all that the Democrats want is a strong Republican party, a rational interlocutor, to whom one could extend the right hand of good fellowship without having it ripped off up to the shoulder. In neither case, liberal Democrats don’t actually want to assimilate Republicans. Here are some reasons why that’s not so: First, if liberal Democrats make suburban Republican voters part of their base, the Republican leadership must follow. Second, liberal Democrats and non-populist Republicans are ideologically more alike than different; both are neoliberals. Why not put the tribalism aside and share power? Especially when only the dirty populists are racists? Third, Republicans would bring to the Democrats a focus and ability to execute that liberal Democrats lack, and know they lack (a lot of Democrat jaws are dropping at the Lincoln Project’s work). Fourth, if Schumer (and Obama) are right, they have an electoral winner. And who doesn’t want to play for a winner?

Some consequences follow if I am correct: First, the working class is up for grabs. (Some of the more creative Republicans are figuring this out.) Second, the path forward for working class electeds is not through the Democrat Party; they are not wanted (this implies that I don’t think Sanders electoralism is viable, though I respect Sanders’ desire....
Joe Biden is already planning a failed presidency 
[The Week, via Naked Capitalism 8-20-20]
The great problem with the United States today is twofold: First, the country is falling to pieces under President Trump, the most corrupt and incompetent president in American history. Second, as I have argued at length previously, the U.S. has been suffering severe problems for decades that Trump leveraged to squirm into power. Deindustrialization, the opioid epidemic, poverty, inequality, and so on — these are the soil in which racist demagoguery grows. Obama threw homeowners under the bus to save the banks, endorsed austerity instead of full employment, and Republicans reaped the political benefit in 2010, 2014, and 2016. 
We see here a certain political trajectory that has ended in right-wing dictatorship on multiple occasions in other countries in the past. A country is being devoured from the inside by gangrenous capitalism. The status quo elites, who benefit from the rigged economy, are strong enough to throttle any reform effort from the democratic left. But they are not strong enough to fend off an anti-democratic attack from the right — or worse, they actively welcome it as the only way to avoid higher taxes and more regulation. As Dan O'Sullivan wrote after Trump was first elected, "This is all the result of kneecapping any attempt at reform of the system — the reform fails, the pain remains, only now it comes out sideways, through the only permissible path: the far right."
Again, the problem is fundamentally ideological; in this case, what you believe about austerity: 
[Twitter, via Naked Capitalism Water Cooler 8-20-20]
Stephanie Kelton
“When we get in, the pantry is going to be bare,” said Mr. Kaufman, who is leading Mr. Biden’s transition team. “When you see what Trump’s done to the deficit…all the deficits that he built with the incredible tax cuts. So we’re going to be limited.” 😞

“Would a Biden Victory Be a Win for the Working Class?” 
Michael Lind [Tablet, via Naked Capitalism Water Cooler 8-20-20]  
“The suggestion that a Biden administration would be pushed in a pro-worker direction out of fear of incurring the wrath of veterans of the Sanders campaign and the feckless Democratic Socialists of America could make a cat laugh. A Biden administration would be staffed by conventional, conformist, careerist retreads from the administrations of Bill Clinton and Barack Obama, representing the pro-Wall Street, anti-labor wing of the Democratic Party that has been dominant since the 1990s. Biden Democrats are likely to use a combination of social liberalism and fiscal conservatism to bring well-heeled Bloombergian independents and country-club Bush Republicans permanently into the Democratic coalition, accelerating its transformation into an alliance of affluent whites with members of minority groups who vote on the basis of race, not class. As long as enough well-off whites and African Americans and Hispanics vote for the centrist candidates of the Clinton-Obama-Biden machine, neoliberal Democrats have nothing to fear from ‘democratic socialist’ poseurs in pricey hipster neighborhoods and college towns.”
“Listen to Episode 160: Neither Snow Nor Rain Nor Chronic Lyme” (podcast)
[Trillbilly Worker’s Party, via Naked Capitalism Water Cooler 8-20-20] 
Terance: “People have been protesting in Louisville for 85 days over Breonna Taylor’s murder. 85 days. And the fact that the powers that be can just withstand that, and just not even respond to it, and be like “That’s nice, just keep doing your thing,” that tells me that we have to develop some sort of new way of applying leverage to them.”
What’s Up With White Evangelicals?
Steve Hochstadt [LAProgressive 8-22-20]
Why didn’t an irreligious and publicly immoral candidate present moral difficulties to a religious group which has traditionally emphasized the close connection of faith and character? Many skilled researchers and analysts have tried to understand how people who profess such devotion to Jesus and the Bible could see Trump as their prophet. I have no better explanation than anyone else.

I’m disappointed Hochstadt does not mention the obvious historical example of the white churches in the South leading up to, during, and after the Civil War. As the slavery issue grew more contentious in the 1830s and 1840s, the major protestant denominations in the country all broke apart: “The Presbyterians divided in 1837, the Methodists in 1844, and the Baptists in 1845.” [Gordon Rhea, Why Non-Slaveholding Southerners Fought]
In the North, the Christian churches succored and nurtured abolitionists, even after the 1850 compromises made abolitionists political outcasts from the Whig Party [James Brewer Stewart, Reconsidering the Abolitionists in an Age of Fundamentalist Politics, Journal of the Early RepublicVol. 26, No. 1 (Spring, 2006), pp. 1-23]  The Whigs may have slammed the door shut in their faces, but the abolitionists refused to compromise on the their principles. This, of course, was in stark contrast to the church leaders of the South, who curried the favor and support of the slaver oligarchs by twisting and mutilating scriptural precepts to create a doctrinal defense of slavery. There was never any point at which it was possible for the two sides to achieve "bipartisan" cooperation (recall that Lincoln's Secretary of State William Seward actually advised that war with the South could be headed off by going to war with Britain instead). The Whig Party, having discarded its moral backbone, collapsed and was replaced by the new Republican Party -- the only instance in American history in which a third party successfully displaced a legacy political party. This should be a clear warning to the Democratic Party leadership today that their continued opposition to progressive demands and activism will not end well. 
In the South, Rhea writes, “Churches were the center of social and intellectual life in the south. That was where people congregated, where they learned about the world and their place in it, and where they received moral guidance. The clergy comprised the community’s cultural leaders and educators and carried tremendous influence with slaveholders and non-slaveholders alike. What were Southern pastors, preachers, and religious leaders telling their flock? Southern clergy defended the morality of slavery through an elaborate scriptural defense built on the infallibility of the Bible, which they held up as the universal and objective standard for moral issues. Religious messages from pulpit and from a growing religious press accounted in large part for the extreme, uncompromising, ideological atmosphere of the time."
The same process of corruption has taken place today. Grasping for a way to get rid of Roosevelt and the New Deal, the entrenched wealthy of USA paid for surveys which found that, after the military, the churches were the most trusted institutions in USA. The wealthy then established foundations and programs to indoctrinate America's clergy with the historically false doctrine of the superiority of the "free enterprise" system as the foundation of the USA economic progress. (In fact, it was Alexander Hamilton's recognition that even entrepreneurs are reluctant and hesitant to try new ways of doing things, and therefore the government must systematically encourage the development and dissemination of of new science technologies, such as the Coast Survey of the 1820s, the canal building of state governments at the same time, and the railroad surveys and land grants of the 1850s and 1860s). Kevin Kruse details this corruption of American Christianity in his 2015 book, One Nation Under God: How Corporate America Invented Christian America
Unfortunately, many on the “left” today are openly hostile to organized religion, and have utterly failed to identify and oppose this operation of deliberate cultural warfare.  This, despite the clear historical record of the crucial leadership role of such as Rev. Martin Luther King Dr., Rev. Ralph Abernathy, the Southern Christian Leadership Conference, and, today, Rev. William Barber of North Carolina. I believe this problem of the left stems from the ideological zombiefication of marxists, that renders them unable — just like conservatives and libertarians — to acknowledge and analyze the failures of their ideology.

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