Sunday, January 31, 2021

Week-end Wrap – Political Economy – January 31, 2021

 Week-end Wrap – Political Economy – January 31, 2021

by Tony Wikrent

The Impeachment and Trial of a Former President (PDF)

Congressional Research Service, via Naked Capitalism 1-27-21]

Here’s the full list of Biden’s executive actions so far 

[NBC, via Naked Capitalism 1-27-21]

Strategic Political Economy

This is How You Recover From Fascism — and America’s Not Doing Any of It

Umair Haque, January 26, 2021 [Medium, via The Big Picture 1-29-21]

….Fascism always has economic roots. Always. American pundits still don’t want to discuss that, because then they’d have to admit they were wrong about the economy for decades — and they’ll never do that, because then they’ll look like the fools they are.

Think about Germany. How did “it” happens here? Because the Weimar Republic fell into poverty. The average German, expecting a stable and secure life of relative prosperity, instead experiences sudden, sharp, downward mobility. Old racial hatred suddenly resurfaces. The Jews were blamed for the travails of the average good German — they have always been the enemy within. Who else was responsible for all this poverty and despair and ruin — except the hated minorities who had always been poisoning us from the inside?

That’s exactly the story of modern day America, too. The American middle class finally began to implode around 2010, after have a century of stagnating wages, while costs like healthcare and education and food and housing exploded year after year. The average American — the white one — expected the life he or she was promised: a suburban dream of easy, thoughtless prosperity. Instead, what they got was blighted cities, an opioid epidemic, half of all Americans trapped in “low wage service jobs,” trips to the doctor that cost as much as a house. They experienced just what Weimar Germans — sudden, sharp downward mobility. They might have tried to hide it by buying McMansions on credit, but the economic facts tell the true story: the average American by 2015 or so lived in a new underclass, couldn’t raise a tiny amount to pay for an emergency, lived pay check to paycheck, and died in massive debt.

What happened? Americans, like Germans before them, were seduced by old hatreds. And these hatreds weren’t even that old: America was still an apartheid state until 1971. Americans blamed their woes on minorities — Mexicans, Latinos, Blacks, Muslims, anyone not in or from the good and pure white majority. All those minorities were scapegoated as animals and vermin and terrorists and so on. The cheerleader of all this hatred was Donald Trump, who rode it all the way to the Presidency.

How do you solve this problem — that fascism has roots in economic stagnation and implosion? You solve it with a Marshall Plan…. American needs a Marshall Plan to recover from fascism. Last time, it was Europe that needed to totally rebuild. This time, it’s America. A land of decrepit, ruined…everything. Schools that look like fallout shelters, hospitals that have closed down, towns that have no transport links, whole communities that can’t access investment, entire regions without decent jobs. America needs a Marshall Plan to rebuild itself, because economic ruin is always what is at the root of fascism, and therefore, taking away the poverty that breeds and rebreeds ancient hatreds is the single truest vaccine against fascism there has ever been.

Sunday, January 24, 2021

Week-end Wrap – Political Economy – January 24, 2021

 Week-end Wrap – Political Economy – January 24, 2021

by Tony Wikrent

The Biden Transition and the Fight for Real Hope and Change This Time

The Biden Recovery Plan and the Disarray of Economic Theory: The pandemic had one good effect. It sidelined a lot of bad economic thinking.

Robert Kuttner, January 19, 2021 [The American Prospect]

….Among the many bad policy ideas of recent Democratic regimes, both as economic theory and as political strategy, was the conceit that public spending needed to be “paid for.” In other words, new taxes were required to finance all new spending once the Great Recession was over….

On the question of what changed in the economy to create long-term low inflation, and by extension low interest rates, most economists offer two basic answers. The first is that the economy had never fully recovered from the Great Recession when the pandemic depression hit.

The second explanation is the demolition of labor bargaining power and the rise of globalization. And of course the two are connected….

At some point, also, it would be smart to finance some of the public spending with tax reform, for the sake of greater income equality. Simply repealing the Trump tax cuts would provide about $2 trillion that would make the economy less unequal and provide funds for public investments—which would make it still more equal.

Economist Robert Pollin of UMass Amherst, a sometime adviser to Bernie Sanders, proposes that we raise some $300 billion a year from a financial-transactions tax, which could support urgently needed public outlays such as green investment.

With the Treasury paying just 1.837 percent to borrow money for 30 years, it also would make sense for the government to borrow a lot more money with longer maturities. That way, we could lock in very low interest rates….

A related question is whether the government can just keep borrowing as much as it needs, without interest rates rising. In the past century, we’ve had three tests of that proposition. During World War II, the Fed and the Treasury made a deal… In the wake of the financial collapse of 2008, the Fed again bought bonds to the tune of several trillions of dollars… The current borrowing to deal with the COVID depression is occurring in similar circumstances. Simon Johnson, the MIT economist who was formerly chief economist of the IMF, says, “The lack of a recovery is the problem, not the debt.”​​​​​​​  

Here’s An Idea: Put People To Work & Print Money To Pay Them 

[Heisenberger Report , via Naked Capitalism 1-22-21]

The nation’s infrastructure is in disrepair (to put it generously), food banks need staffing, vaccine rollout needs scaling up, testing needs to be expanded, and the health care system needs all the help it can get right now.

The point (in case it’s somehow unclear) is simply the following. There’s no shortage of critical jobs that need doing. There are millions upon millions of jobless Americans. And the US issues the world’s reserve currency.

You don’t need to be a quant to work out this equation. The federal government should just put people to work doing the jobs that desperately need to get done. You don’t have to worry about how to pay them, because you print money.

Hilariously (or not, depending on what you find funny) there are legions of economists and pundits out there who will tell you that isn’t feasible.

And what is their job? What do they do to contribute to society? Do they build bridges when the bridges aren’t sturdy anymore? Do they staff food banks when millions of families are lined up for miles because they’re starving? Do they go and help the government test and trace in an effort to bring an end to the worst public health crisis since the Spanish Flu?

In most cases, the answer is obviously “no.” Instead, they spend their days explaining to everyone else why something like, say, a federal jobs guarantee isn’t a viable proposition.

Sunday, January 17, 2021

Week-end Wrap – Political Economy – January 17, 2021

Week-end Wrap – Political Economy – January 17, 2021

by Tony Wikrent

Liberalism and socialism are ineffective against capitalism

Prop 22 Is Here, and It’s Already Worse Than Expected

Alexander Sammon, January 9, 2021 [The American Prospect]

Just a handful of weeks have passed since California’s Proposition 22, a new labor standard concocted by Silicon Valley venture capitalists to lock rideshare and food delivery drivers out of basic employee wages, benefits, and protections, went into effect. It has arrived with a bang.

Already, companies beyond just the usual digital suspects have embraced the new law, which creates a third category of worker for those toiling in the gig economy, neither full-time employees nor independent contractors. That means no eligibility for state unemployment insurance, no guaranteed state minimum wage, stripped-down worker protections, no overtime pay, no sick leave, no workplace discrimination protection, and no right to collectively bargain.

A large number of historians have explained how capitalism and liberalism go hand in hand: self-interest is the bases of the market pricing mechanism. But they usually shy away from addressing a crucial problem that at an underlying philosophical level, liberals are simply not capable of resisting extreme capitalism and its pathologies. Similarly, socialists, Marxists, and communists are philosophically incapable of resisting conservatism and neoliberlism. Philip Mirowski and Corey Robin have some really excellent articles on this; Mirowski in particular explains why von Mises’ conception of markets as a super calculator of value is philosophically impervious to any and all assaults by the left.

I concluded years ago the only way you make conservatism and neoliberalism vulnerable philosophically is to jettison modernity’s separation of politics from economics, and return to a conception of political economy. And then, ask the simple and obvious question: what are the proper principles and policies of political economy for a republic?

… the duty of a republic [is] to control "the selfishness of mankind ... ; for liberty consists not in the permission to distress fellow citizens, by extorting extravagant advantages from them, in matters of commerce or otherwise." Because it was commonly understood that "the exorbitant wealth of individuals" had a "most baneful influence" on the maintenance of republican governments and "therefore should be carefully guarded against..."  — Gordon Wood, The Creation of the American Republic. pages 63-64.

What does it mean to “Promote the General Welfare”? Certainly it should include focusing on increasing the purchasing power earned by the nation’s workers. This would be “demand side” economics, instead of the supply side of focusing on giving more money to already rich investors and waiting for it to “trickle down” on the masses below. Demand side economics was a major issue in the 1930s through 1950s. Coming out of the First Great Depression was recognition by all except conservatives and rich reactionaries that the underlying cause of the Depression had been the failure to fairly distribute income, and hence buying power: working people simply were not being paid enough for them to purchase all that could be produced.  The most progressive and militant labor unions, led by the Congress of Industrial Organization (CIO), framed this demand side issue as “under-consumption.” The most militant union, the United Auto Workers (UAW) — led by Walter Reuther, probably the greatest union leader in American history — began its November 1945 strike against General Motors by demanding a 30-cent an hour wage under the slogan, “Purchasing Power for Prosperity.” This is firmly in the uniquely American economics tradition of the Doctrine of High Wages, which has been written out of mainstream economics.

Only by reviving the ideas of civic republicanism can we avert liberalism’s inability and unwillingness to oppose the depredations of capitalism.

America Abandoned Its Economic Prophet. The World Embraced Him. 

James Galbraith [Foreign Policy, via Naked Capitalism 1-16-21]

Galbraith’s discussion of the legacy of his father is useful for tearing at the fabric of illusions of today’s failed capitalism. But note that the Galbraithian solution is not to oppose the depredations of capitalism as contrary to the principles of civic republicanism, but to merely build up organized labor as a countervailing power to giant corporations. The rapacious nature of capitalism, embodied so brutally in California’s Proposition 22, is not addressed at all. 

Sunday, January 10, 2021

Week-end Wrap – Political Economy – January 10, 2021

Week-end Wrap – Political Economy – January 10, 2021

by Tony Wikrent

Strategic Political Economy

“In all very numerous assemblies, of whatever characters composed, passion never fails to wrest the sceptre from reason. Had every Athenian citizen been a Socrates; every Athenian assembly would still have been a mob…. The sincere friends of liberty who give themselves up to the extravagancies of this passion are not aware of the injury they do their own cause.” — The Federalist No. 55, [13 February 1788], by James Madison or Alexander Hamilton. Example below:


The American tragedy of our time is that the Republican Party is not republican at all. The Republican Party is, to be honest, anti-republican.

Leftists are ignoring some priceless wisdom by dismissing the republic’s founding as merely one group of rich patricians replacing another group. If we ditched liberalism and returned to (small "r") republicanism we could curb capitalism because any large concentration of wealth would be suspect and have to be broken up, just for being large: 

A free People are kept so by no other Means than an equal Distribution of Property; every Man who has a Share of Property having a proportionable Share of Power; and the first Seeds of Anarchy, which for the most part ends in Tyranny, are produced from hence, that some are ungovernably rich, and many more are miserably poor; that is some are Masters of all Means of Oppression, and others want all the Means of Self-defence. — Cato's Letter No. 3, Thomas Gordon (November 19, 1720)​​​​​​​

“In Wake Of Prop 22, Albertsons Shifting In-House Delivery Jobs To Gig Work” [HuffPo, via Naked Capitalism Water Cooler 1-8-20]

“One of the largest grocery chains in the U.S. has decided to end much of its in-house delivery service, outsourcing the work to third-party companies like DoorDash that rely on independent contractors to drop off food to customers on the cheap. Unions representing workers at Albertsons say the chain’s decision will end up degrading good delivery jobs by putting the work on a “gig” model. Independent contractors tend to bear many of the costs of employment, providing their own vehicles and covering wear and tear, while forgoing traditional work benefits like health coverage and a retirement fund….. While Albertsons did not cite the new California law known as Proposition 22 for the decision, several major California markets will be impacted by the policy change. Prop 22 makes it easier for companies like DoorDash to classify their drivers as independent contractors.” 

Lambert Strether noted the failure of the California liberal Democrat establishment, including Kamala Harris, to fight Prop 22.

Sunday, January 3, 2021

Week-end Wrap – Political Economy – January 3, 2021

Week-end Wrap – Political Economy – January 3, 2021

by Tony Wikrent

How the Police Killed Breonna Taylor 

[New York Times, via Naked Capitalism 12-31-20]

“The Times’s visual investigation team built a 3-D model of the scene and pieced together critical sequences of events to show how poor planning and shoddy police work led to a fatal outcome.”

A stunning visualization of the police raid, including footage of investigation interviews with officers. The ineptitude uncovered is gross and flagrant. Only the most biased and pro-authoritarian can fail to see the incident as a massive over-reaction by police who were on some sort of psychological thrill ride based on being able to actually shoot at a live target. 

The Georgia Senate Race

Perdue’s Time as Dollar General CEO Marked by Charges of Wage Theft, Race and Sex Discrimination

[Capital and Main, via LA Progressive 12-31-2020]

Dollar General, which he ran between 2003 and 2007, rests on a business model of offering low-cost goods at rock-bottom prices while paying workers poorly. The stores, ubiquitous in low-income neighborhoods, are generally understaffed and have become magnets for crime, according to a recent investigation. The corporate dictum that wages remain at 5% of gross sales “placed us at the bottom of a low-paying industry,” Cal Turner Jr., the son of Dollar General’s founder, told ProPublica.

Perdue presided over a more than 30-fold increase in the number of employee lawsuits filed against the company, according to a Capital & Main review of court filings. While he worked at the firm, 2,494 individual employment cases were filed charging the company with gender and racial discrimination, rampant wage theft, failure to provide medical leave and other workplace violations. In the four years leading up to Perdue taking the helm, 76 employment cases were filed in federal court.

In a just society — such as christianists claim to desire — corporate leaders like Purdue would have been curbed, broken, bankrupted and punished by the legal system, not elevated to the highest public offices in the republic. 

Strategic Political Economy

Neoliberal Champion Larry Summers Opens Mouth, Inserts Both Feet

Matt Taibbi, December 28, 2020

Lawrence Summers, the former Treasury Secretary under Bill Clinton, director of the National Economic Council under Barack Obama, president of Harvard, and Chief Economist at the World Bank, wrote a post-Christmas editorial for Bloomberg entitled, “Trump’s $2000 Stimulus Checks are a Big Mistake.” ...The genesis of this Summers article is a perfect tale in microcosm about how America’s intellectual elite manages to lose elections to people like Donald Trump. It’s a two-step error. First, they put people like Summers in charge of economic policies. Then, they let them talk in public….

Of course, these same people often believe in jaw-droppingly enormous levels of public aid. Think of the $20 billion in taxpayer funds that went to rescue currency traders in 1995 (presented in the media as a bailout of “Mexico”), the massive IMF bailouts of Asia and Russia in the late nineties, and especially the multi-trillion-dollar Fed-fueled rescues of the finance sector both after 2008, and now (“We’re not going to run out of ammunition,” explained Fed chief Jerome Powell). Other examples include giving companies like Goldman, Sachs 100 cents on the dollar on debts owed them by AIG in that bailout, or the $3.625 billion private intervention to save one crackpot hedge fund called Long Term Capital Management in 1998.

The operating principle in most of those cases was that financial institutions must not be allowed to take crippling losses, even if those losses were the fault of the companies in question, because such a decision might trigger (pick one or more) “a chain reaction,” “catastrophic losses throughout the system,” “graver economic consequences,” the “spread” of investor “flu,” etc., etc.

The thinking of these experts changes, however, the instant the question shifts to rescuing individuals affected by something like the 2008 crash, or the current pandemic. Suddenly we learn that resources are scarce, and the commitment of public money to rescue mere People With Problems risks “moral hazard.”