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.

5 Undeniable Long-Term Trends Shaping Society’s Future

[Visual Capitalist, via The Big Picture 1-5-21]

China’s Real Threat is to America’s Ruling Ideology 

[Palladium, via Naked Capitalism 1-3-21]

China, however, rejects liberal democracy—the idea that leaders should be chosen on a one-person, one-vote basis—even as an ideal or ultimate destination. As Daniel Bell explains in The China Model: Political Meritocracy and the Limits of Democracy, Chinese leaders have implemented a system in which government officials are selected and promoted based on examinations, performance reviews, and the meeting of objective criteria at lower levels. Its political qualification is not electoral support, but party membership and loyalty…. 

China is not simply passing the U.S. in overall GDP. Other measures one might use to measure the health of society also indicate that leaders in Beijing have been doing a better job than those in Washington in recent years. Are dictatorships more conflict prone at home? China’s murder rate is a fraction of that of the U.S., and the country has practically none of the rioting and political violence Americans have gotten used to. Are dictatorships more likely to menace countries abroad? China has not been to war since 1979, while the U.S. has been at war almost every year since that date. Are dictatorships less innovative? In 2020, China passed the U.S. in publications in the natural sciences, and its children score higher than American students on IQ tests and international standardized exams. While in 2008, the U.S. recorded over 16 times as many international patents as China, already by 2018 the gap had shrunk to 2.4 times as many, with trend lines indicating that China could surpass the U.S. before long.

With the American post-war liberal consensus having staked much of its legitimacy on providing better results, China’s development is an ideological threat regardless of how benevolent its rulers might theoretically be….

While most Americans will never experience a ride on a Chinese bullet train and remain oblivious in differences in areas like infrastructure quality, major accomplishments in highly visible frontiers like space travel or cancer treatment could drive home the extent to which the U.S. has fallen behind. Under such conditions, the best case scenario for most Americans would be a nightmare for many national security and bureaucratic elites: for the U.S. to give up on policing the world and instead turn inward and focus on finding out where exactly our institutions have gone wrong.

China’s Dreams of Self-Reliance Still Depend on Japan Inc.

[Washington Post, January 6, 2021]

 A key part of Beijing’s economic blueprint for the next five years is to bolster high-end manufacturing of machines, 5G equipment and semiconductors for use in the domestic market. State funding is increasingly being targeted toward these industries. The government also wants to upgrade internal supply chains and maintain its role as the world’s factory floor. China is by far the largest end-user of industrial robots, but the number of robots installed per 10,000 employees remains relatively low.

In some sectors like 5G, China has doubtless made significant progress. However, the country will continue to rely on Japanese companies for the high-tech niche of manufacturing for a while to come. Consider this: Chinese suppliers command more than 80% of the market share for simple-task linear and Cartesian robots used in the plastics industry. But when it comes to articulated robots, which have more complex multi-axis movements, foreign makers manufacture droves more in and for China, according to CLSA Ltd. analysts. Such machines accounted for over 60% of sales. Japan is one of the largest exporters of industrial robots….

The fact remains that there’s a significant technology gap. More than 75% of reducers, a kind of gear, are imported from Japanese companies like Nabtesco Corp. and Harmonic Drive Systems Inc., according to analysts from HSBC Holdings Plc. These components account for over a third of the cost of industrial robots made in China, compared to 12% for one from Japan…. Fanuc Corp., whose yellow robots pepper factory floors making products for companies like Apple Inc., reported that sales in China rose 29% in the first nine months of 2020.  

The Epidemic

The Plague Year 

[The New Yorker, via Naked Capitalism 1-3-21]

Lambert Strether’s introduction: “A retrospective, very much in the New Yorker style, well worth reading in full. In the author’s view, there were three chances to contain the infection: when the CDC could not get into China in early January, the CDC’s “testing fiasco,” and masking. Trump does not come off well in the third and in subsequent events, rightly. (One might also ask, as the article does not, what happened to the “principle of association” that De Tocqueville wrote made America exceptional; it doesn’t seem to scale.)”

USDA: Government checks constituted 40% of farmers’ income in 2020 

[Marketwatch, via The Big Picture 1-5-21]

Farmers received $46.5 billion from the government, the largest direct-to-farm payment ever. That includes $32.4 billion in assistance through CARES act payments to farmers. Additional support comes from more traditional revenue loss programs due to low commodity prices, compensation for trade disruptions resulting from tariff battles and conservation programs assistance.

The carnage of mainstream neoliberal economics

Trump will have the worst jobs record in modern U.S. history. It’s not just the pandemic. 

[Washington Post, via Naked Capitalism 1-9-21]

No, Austin Won’t Become Silicon Valley 2.0 

[Texas Monthly, via The Big Picture 1-9-2021]

Appalled by the sky-high rents and wealth inequality of today’s San Francisco region, the other tale is that the tech industry itself is the real villain. Having eaten the Bay Area alive, and now in the process of spitting out the bones of a once-dynamic city, it looks for its next meal.  The same rapacious billionaires are moving on to fresh prey in still-groovy Central Texas, which is destined to turn into another smoking cultural wasteland.

Anti-union consultants do creepy, scummy work

[DailyKos, January 9, 2021]

A recent report from Motherboard’s Lauren Kaori Gurley shows some of the creepy things these union-busters do, like keeping dossiers on workers. Gurley got leaked internal documents from one such anti-union campaign, and:

“According to documents obtained by Motherboard, IRI union avoidance consultants regularly gathered information about 83 rank-and-file hospital employees' personality, temperament, motivations, ethnicity, family background, spouses' employment, finances, health issues, work ethic, job performance, disciplinary history, and involvement in union activity in the lead-up to a union election. Each employee was then given a rating for how likely the company believed they were to vote for the union.”

Disrupting mainstream economics

Best of Mankiw: Errors and Tangles in the World’s Best-Selling Economics Textbooks

Peter Bofinger, former member of the German Council of Economic Experts [Naked Capitalism January 4, 2021]

Mankiw has been lambasted a number of times by Adbusters, the Canadian group  which originated the call for mass protests that became Occupy Wall Street. Also see Toxic Textbooks: “Mankiw’s textbook seems an ideal place to look for clues as to how both the economics profession and the public which it educates became so ignorant, misinformed and unobservant of how economies work in the real world.” The problem with the leadership of the Democratic Party at the state and national levels is not the caricature of maliciousness that the Trumpists believe, and which the Republicans have used to “feed red meat to their base,” but merely that the leadership has been taught, and believes and swills, the snake oil Mankiw peddles. Below, just a small sample of Bofinger’s detailed take-down of Mankiw. Click through and read to see all the charts and graphics:

As “Principle 1” of a total of ten, students are taught that a more unequal distribution of income leads to higher economic output. Mankiw adds: “This is the one lesson concerning the distribution of income about which almost everyone agrees. (Mankiw 2015, p. 429).

But there is no evidence for this. OECD data on income distribution (measured by the Gini index for net household income) show very high inequality in very poor countries such as South Africa, Chile, Mexico, Turkey or Bulgaria. In contrast, the economically very powerful Scandinavian countries – measured by gross domestic product per capita – are characterized by very low inequality of household incomes.

The Prophet of Maximum Productivity: Thorstein Veblen’s maverick economic ideas made him the foremost iconoclast of the Age of Iconoclasts.

[New York Review, January 14, 2021 issue]

How a weekly Twitter poll crushed the S&P 500 in 2020 

[Yahoo Finance, via The Big Picture 1-4-21]

….at the beginning of 2020, before the pandemic’s retail frenzy erupted, Ramp Capital — one of Finance Twitter’s biggest anonymous accounts — set out to run an experiment: What happens when you put up $10,000 of your own money and ask more than 190,000 followers on Twitter to vote on a stock to buy or sell each week? The answer in 2020 is that you beat the S&P 500 by more than 1,300 basis points.

Court says Uber can’t hold users to terms they probably didn’t read 

[ars technica, via Naked Capitalism 1-6-21]

Lambert Strether comments: Has the makings of an important precedent. The Massachusetts Supreme Judicial Court is highly respected and its views carry a lot of weight in other jurisdictions.

Information Age Dystopia

The 1996 Law That Ruined the Internet 

Steve Waldman [The Atlantic, via Naked Capitalism 1-3-21] Section 203.

The Electronic Frontier Foundation describes Section 230 as “one of the most valuable tools for protecting freedom of expression and innovation on the Internet.” The internet predated the law. Yet the legal scholar Jeff Kosseff describes the core of Section 230 as “the twenty-six words that created the internet,” because without it, the firms that dominate the internet as we have come to know it could not exist. Maybe that would be a good thing.

Services such as Facebook, Twitter, and YouTube are not mere distributors. They make choices that shape what we see. Some posts are circulated widely. Others are suppressed. We are surveilled, and ads are targeted into our feeds. Without Section 230 protections, these firms would be publishers, liable for all the obscenity, defamation, threats, and abuse that the worst of their users might post. They would face a bitter, perhaps existential, dilemma. They are advertising businesses, reliant on reader clicks. A moderation algorithm that erred on the side of a lawyer’s caution would catch too much in its net, leaving posters angrily muzzled and readers with nothing more provocative than cat pics to scroll through. An algorithm that erred the other way would open a floodgate of lawsuits.

But the internet is not Facebook or Twitter, and it shouldn’t be. Fifteen years ago the major social-media platforms barely existed. Was the internet better or worse? The online public square, now dominated by Twitter, was then constituted of independent blogs aggregated by user-curated feeds. Bloggers are publishers, legally responsible for their posts, but the blogosphere was not noted for its blandness. White-hot critique was common, but defamation and abuse were not—except in unmoderated user comments, for which bloggers could disclaim responsibility, thanks to Section 230.

A Monster Wind Turbine Is Upending an Industry G.E.’s giant machine, which can light up a small town, is stoking a renewable-energy arms race.

[New York Times, via The Big Picture 1-4-21]

The prototype is the first of a generation of new machines that are about a third more powerful than the largest already in commercial service. As such, it is changing the business calculations of wind equipment makers, developers and investors.

The G.E. machines will have a generating capacity that would have been almost unimaginable a decade ago. A single one will be able to turn out 13 megawatts of power, enough to light up a town of roughly 12,000 homes.

The turbine, which is capable of producing as much thrust as the four engines of a Boeing 747 jet, according to G.E., will be deployed at sea, where developers have learned that they can plant larger and more numerous turbines than on land to capture breezes that are stronger and more reliable.

Restoring balance to the economy


Ryan Grim [Bad News, via Naked Capitalism 1-3-21]

On Monday, the House will vote on the rules package, but the proposed version was made public Friday, and it includes two significant wins for progressives….  through the Congressional Progressive Caucus and its co-chairs, Pramila Jayapal and Mark Pocan, made clear to leadership early on that reform was the price of their votes the next time. And progressives won some changes to the rules. Under the new package, PAYGO won’t apply to “measures to prevent, prepare for, or respond to economic or public health consequences resulting from the COVID–19 pandemic; and...measures to prevent, prepare for, or respond to economic, environmental, or public health consequences resulting from climate change.” Those are exemptions wide enough for a caravan of dump trucks filled with Fort Knox gold to drive through.

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

Raimondo selected for Biden’s Commerce secretary [Politico, via Naked Capitalism 1-8-21] Pension-gutterventure capitalistprivate equity goon…

Why Progressives Should Care About The Commerce Secretary 

[Revolving Door Project, via Naked Capitalism 1-8-21]

Biden chooses Boston Mayor Walsh as Labor secretary 

[Politico, via Naked Capitalism 1-8-21]

What Joe Biden can learn from Ulysses S. Grant 

[The Week, via Naked Capitalism 1-8-21]

…. this is not the first time that an American government has faced an epidemic of right-wing terrorism threatening the very foundation of democracy. The same thing happened during Reconstruction after the Civil War, when President Ulysses S. Grant faced a white supremacist insurrection in the South led by the first Ku Klux Klan. Congress gave Grant sweeping powers to put down the insurrectionists, and together with Attorney General Amos T. Akerman, he successfully snapped the neck of the Klan in a matter of months….

Akerman and Solicitor General Benjamin H. Bristow got to work. Because most state courts and juries in the South were unreliable, they set up federal courts with juries from outside the region. KKK terrorists were tracked down, arrested, indicted, tried, and punished by the thousands. In one instance, Akerman convinced Grant to suspend habeas corpus in one exceptionally Klan-infested region of South Carolina and send in federal troops, who arrested hundreds of KKK members and caused thousands of others to flee the state.

All this successfully broke the Klan, which largely disappeared for more than 40 years. In "terms of its larger purposes — restoring order, reinvigorating the morale of Southern Republicans, and enabling blacks to exercise their rights as citizens….

It's important to note the punishments for KKK terrorists were exceedingly modest by modern standards. One Klan leader got just two years in prison in Albany, and while one United States attorney "secured nearly 700 indictments in Mississippi … most escaped with suspended sentences and the threat of sterner punishment if violence resumed," Foner writes. The current criminal justice system is primarily oriented around vindictive cruelty and warehousing the lower class, which is why absurd multi-decade sentences are so common today. But the length of prison sentences is largely beside the point when it comes to disrupting this kind of insurgent group (or crime of any kind, for that matter). The point is to destroy the social tissue of rebellion — by demonstrating that crime will indeed be punished, by seizing the property and weapons of the insurrectionists, by disrupting their communications, by forcing them to put down arms or flee underground, and so on.

And by making them convicted criminals, they lose their right to vote.

The Reconstruction of America: Justice, Power, and the Civil War’s Unfinished Business
David W. Blight [Foreign Affairs, January/February 2021]

President-elect Biden Announces Economic Team 

[C-SPAN, via Naked Capitalism 1-8-21]

The day of the insurrection, Thomas Frank gave an extended two hour interview on the history of populism and anti-populism

Bad Faith with Brianna Joy Gray and Virgil Texas, January 6, 2021[via Naked Capitalism Water Cooler 1-7-2021]

McConnell, Pelosi homes vandalized after $2,000 relief fails 

[Associated Press, via Naked Capitalism 1-3-21]

Trumpist insurrection

“The Police’s Tepid Response To The Capitol Breach Wasn’t An Aberration” [FiveThirtyEight, via Naked Capitalism Water Cooler 1-8-2021]

“Between May 1 and November 28, 2020, authorities were more than twice as likely to attempt to break up and disperse a left-wing protest than a right-wing one. And in those situations when law enforcement chose to intervene, they were more likely to use force — 34 percent of the time with right-wing protests compared with 51 percent of the time for the left. Given when this data was collected, it predominantly reflects a difference in how police respond to Black Lives Matter, compared with how they respond to anti-mask demonstrations, pro-Trump extremists, QAnon rallies, and militia groups.”

Picture of sound tower at Trumpist riot January 6, 2021

Lambert Strether asks: First, I’ve been on that lawn during Occupy; it’s not big. The crowd is not large for a protest crowd in DC, and not that dense. (A large crowd would surround the Washington Monument reflecting pool, in the background.) Second, the class and cultural markers shown by the crowd’s clothing are interesting; not a lot of North Face parkas or backpacks. Third, who the heck permitted that sound system tower contraption? (I think I see speakers on it.) When Congress is deliberating inside? 

Black cops recount their day fighting 'racist ass terrorists' at Capitol

[DailyKos, January 09, 2021]

“That was a heavily trained group of militia terrorists that attacked us,” said [one of the officers], who has been with the department for more than a decade. “They had radios, we found them, they had two-way communicators and earpieces. They had bear spray. They had flash bangs ... They were prepared. They strategically put two IEDs, pipe bombs in two different locations. These guys were military trained. A lot of them were former military”….

“I got called a nigger 15 times today,” the veteran officer shouted in the rotunda to no one in particular. “Trump did this and we got all of these fucking people in our department that voted for him. How the fuck can you support him?”

“I cried for about 15 minutes and I just let it out.”

F*** You, Ted Cruz: You un-American, anti-democracy, lying sack of sh*t 

[Arc, via The Big Picture 1-8-21]

Liar or believer? Republican politicians and media figures spout falsehood after Trump-supporting falsehood. Do they really believe it? Are they cynically going along with claims they know have no basis in reality? Ted Cruz does not. He is lying…. 

There’s no doubt that the Republican Senator from Texas is fully aware that Trumpist claims of mass voter fraud are complete and utter bunk. He’s a Harvard-educated attorney, clerked for Chief Justice William Rehnquist, and taught law at UT Austin. He knows that Team Trump lost 61 court cases in their effort to overturn state election results, winning only one (a Pennsylvania case with no effect on the outcome). He knows, contra Trump’s whining, that lack of standing is a perfectly legitimate reason for courts to reject a case. And he knows that the time for legal challenges is over now that states have recounted and audited their votes, and certified Electoral College results.

But he’s still voting to reject electors from states Joe Biden won when Congress officially counts them on January 6, which before this year had been properly treated as a formality.

Cruz’s official statement, which 10 other GOP Senators signed on to, shows he’s aware that it’s bullshit. The joint statement does not level accusations of voter fraud. It does not present a lick of evidence (because there isn’t any). Its entire rationale is the existence of allegations. Seriously. 

With the Capitol riot the Trumpists have become a de facto third party

[The Guardian, via Naked Capitalism 1-9-21]

Big business especially has been burning its bridges to the White House in the wake of the Covid-19 disaster and Trump’s chaotic war on constitutional government.

The most sensational defection involves that bedrock Republican institution, the National Association of Manufacturers. While the riot was in progress, they called upon Pence to use the 25th amendment to depose Trump. Of course, they had been happy enough during the first three years of his regime to enjoy the colossal tax cuts, comprehensive rollbacks of environmental and labor regulation, and trade sanctions on China, but the last year brought the unavoidable recognition that the White House was wildly incapable of managing major national crises or ensuring basic economic and political stability.

The goal is to realign power within the party more closely with traditional capitalist power centers such as NAM and the Business Roundtable as well as with the Koch family, long uncomfortable with Trump. However, there should be no illusion that “moderate Republicans” have suddenly been raised from the grave; the emerging project will preserve the core alliance between Christian evangelicals and economic conservatives and presumably defend most of the Trump-era legislation….

Democrats may gloat at the prospect of an open civil war among Republicans, but their own divisions have been rubbed raw by Biden’s refusal to share power with progressives. The best hope for the left will be sweeping electoral reforms that roll back Republican voter restrictions and accelerate the racial and generational turnover of the electorate. But Mitch McConnell’s chief legacy, a far-right supreme court, may be an insuperable obstacle.

Grover Norquist: Fourteen Points for Reviving America

I include Norquist only to show how inflexible and doctrinaire he remains. The conservative and libertarian movements are basically brain dead at this point. 

Pull Back the Curtain on Trump’s Call to Georgia Election Officials and Out Pops the Kochtopus

Pam Martens and Russ Martens, January 5, 2021 [Wall Street on Parade]

Among those on the call as an apparent advisor to Trump was attorney Cleta Mitchell, who at no point suggested to Trump that what he was saying might be illegal. Mitchell is a long-time law partner at Foley & Lardner…. both Mitchell and Foley & Lardner have been variously advancing, and mopping up for front groups working to advance the agenda of the fossil fuels conglomerate, Koch Industries, for a very long time…. 

Foley & Lardner, employed three attorneys working as lobbyists for a Koch Industries affiliate, Koch Companies Public Sector, LLC in Madison, Wisconsin in 2011. The Koch-related lobbyists were Ray Carey, Jason Childress and Kathleen Walby. According to our sources, the Koch game plan was privatization of municipal operations.

Mitchell, herself, was a former lobbyist at the federal level in years 2005 through 2008 for the Alliance for Charitable Reform, a project of The Philanthropy Roundtable, another tax-exempt organization. Donors Trust and Donors Capital Fund, two dark money groups which also have Charles Koch’s fingerprints all over them, were spun off from the Philanthropy Roundtable in 1999. (See our report: Koch Footprints Lead to Secret Slush Fund to Keep Fear Alive.)

Mitchell is listed on Steve Bannon’s charity, Citizens of the American Republic, as an officer of the organization, holding the position of Secretary. Bannon and others were charged in August by the Department of Justice with bilking donors out of hundreds of thousands of dollars through that charity.

Misinformer of the Year: Fox News

[Media Matters, via The Big Picture 1-8-21]

The right-wing network has promoted coronavirus misinformation an estimated 13,551 times on its weekday programs over the course of the pandemic. No one contemplated that a major national news source would try to stymie the response — or that the outlet could convince the president to take its side against the government’s public health experts. That’s what Fox News did this year. And its lies had a deadly impact.

How the Insurgent and MAGA Right are Being Welded Together on the Streets of D.C. 

[Belling Cat, via The Big Picture 1-8-21]

A vast constellation of American right-wing groups converged on Washington D.C. to protest what they falsely believe to be a stolen US Presidential election. The organizations include numerous violent extremist groups like the Proud Boys. Its the result of the merger between run of the mill MAGA supporters, white supremacists, and neo-Nazis. 

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