Week-end Wrap – Political Economy – February 27, 2022

Week-end Wrap – Political Economy – February 27, 2022

by Tony Wikrent

Ukraine — Russia

“Shipping braces for impact as Russia-Ukraine crisis intensifies”

[Freight Waves, via Naked Capitalism Water Cooler 2-24-2022]

“Military action could curtail ship movements in the Black Sea, a key transit point for dry bulk exports. In fact, Russian military exercises have already done so. VesselsValue analyzed ship-movement data and found that Russian naval maneuvers ‘visibly impacted traffic.; Russian and Ukrainian waters of the Black Sea and Sea of Azov were designated ‘listed areas’ by the insurance industry’s War Risk Council on Feb. 15, meaning higher war risk insurance premiums. According to BRS [brokerage], the Black Sea area was the world’s second-largest grain-exporting region in 2021, with 111.2 million tons of cargo; Russia and Ukraine accounted for 30% of global wheat exports, and Ukraine accounted for 16% of global corn exports. Ukrainian corn could be first in the line of fire. BRS noted that by the end of January, Ukraine had already exported 71% of wheat predicted for the current marketing period but just 32% of its predicted corn exports. Agribulk exports face risks on land as well, not just at sea. ‘An attack or land grab by Russia could sharply reduce grain production as farmers flee the conflict, agricultural infrastructure and equipment are damaged, and the region’s economy is paralyzed,’ said BRS. “A substantial part of Ukraine’s most productive agricultural land is in the east and therefore vulnerable to any potential Russian attack.’ According to Braemar ACM Shipbroking, this landside risk could affect the coming wheat marketing season. ‘The main grain-producing regions are notably located along the Russian border,’ said Braemar, which pointed out that the military threat coincides with the beginning of the spring wheat planting period.”

Putin Looks to Win Both the War & the Peace

Ian Welsh, February 25, 2022

The sanctions which are about to hit Russia are serious, but if they don’t include wheat, aluminum, energy, or maritime shipping or hit oligarchs by kicking them out of London and other European capitals, they aren’t really going to matter.

Putin has made fools of the Western elite class again. Yes, the intelligence was right, but it didn’t matter. He’s figured exactly out what the West will and won’t do. He calculated right, they calculated wrong….

Let’s be clear, China will never let the West choke out Russia because China knows that the US (and increasingly the EU) considers China the real enemy — once Russia is taken out, China’s next. If Russia goes down, China no longer has a secure back, or a secure source of oil, minerals, or food. With Russia, China has a good chance of winning the oncoming Cold War. Without it, China loses that war.

Week-end Wrap – Political Economy – February 20, 2022

Week-end Wrap – Political Economy – February 20, 2022

by Tony Wikrent

Strategic Political Economy

“‘We conclude’ or ‘I believe?’ Study finds rationality declined decades ago”

[Phys.org, via Naked Capitalism Water Cooler 2-17-2022]

“Analyzing language from millions of books, the researchers found that words associated with reasoning, such as ‘determine’ and ‘conclusion,’ rose systematically beginning in 1850, while words related to human experience such as ‘feel’ and ‘believe’ declined. This pattern has reversed over the past 40 years, paralleled by a shift from a collectivistic to an individualistic focus as reflected by the ratio of singular to plural pronouns such as ‘I’/’we.’ ‘Interpreting this synchronous sea-change in book language remains challenging,’ says co-author Johan Bollen of Indiana University. ‘However, as we show, the nature of this reversal occurs in fiction as well as non-fiction. Moreover, we observe the same pattern of change between sentiment and rationality flag words in New York Times articles, suggesting that it is not an artifact of the book corpora we analyzed.’ ‘Inferring the drivers of long-term patterns seen from 1850 until 1980 necessarily remains speculative,’ says lead author Marten Scheffer of WUR. ‘One possibility when it comes to the trends from 1850 to 1980 is that the rapid developments in science and technology and their socio-economic benefits drove a rise in status of the scientific approach, which gradually permeated culture, society, and its institutions ranging from the education to politics. As argued early on by Max Weber, this may have led to a process of ‘disenchantment’ as the role of spiritualism dwindled in modernized, bureaucratic, and secularized societies.” What precisely caused the observed reversal of the long-term trend around 1980 remains perhaps even more difficult to pinpoint. However, according to the authors there could be a connection to tensions arising from changes in economic policies since the early 1980s, which may have been defended on rational arguments but the benefits of which were not equally distributed.”

See chart here. TW: 1980 was the Reagan “revolution.”

Rhodes Center Podcast: ‘How Efficiency Replaced Equality in US Policy”  Mark Blythe interview of Elizabeth Popp Berman

[Watson Institute for International and Public Affairs, via YouTube 2-13-2022]

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On this episode Mark talks with Elizabeth Popp Berman, Professor of Sociology at the University of Michigan, and author of Thinking Like an Economist: How Efficiency Replaced Equality in US Public Policy. In it, she explains how in the middle of the 20th century a new kind of economic thinking took hold among policymakers at all levels of government. It replaced bold visions of justice and equality with a more technocratic style, one whose goals could be summed up in one word: efficiency. Over the last half century this quest for efficiency has guided policies in everything from public education to defense to environmental management. It’s dominance is also reflected in the wild proliferation of MPA programs that exist in American universities today that have cost-benefit analysis at their heart. Elizabeth and Mark discuss where this thinking came from, and why it appealed (and continues to appeal) to so many policymakers. They also talk about what’s lost in this focus on efficiency, and why it isn’t the panacea its advocates claim.

The cost / benefit analysis of Robert McNamara’s Vietnam War Defense Department is an overlooked but important root of today’s neoliberal / conservative political economy. Being forced to find numerical measures of performance and efficiency especially had brutal effects on education and welfar and medical care. 

Week-end Wrap – Political Economy – February 13, 2022

Week-end Wrap – Political Economy – February 13, 2022

by Tony Wikrent

Strategic Political Economy

Thoughts on the Canadian Trucker “Freedom Convoys”

Lambert Strether, February 10, 2022 [Naked Capitalism]

Let me confess at the outset that, sadly, I have come to regard “freedom” as a tell for the expression of today’s brand of sociopathic and therefore highly adaptive libertarianism[1]. So, when I see “the Canadian truckers” (as I will call them) branded as a (highly replicable) “Freedom Convoy,” my back teeth start to itch….

If we ask ourselves what sort of trucker is able to drive their rig to Ottawa, stay there for days, and even render their truck dysfunctional[4], the answer is clear: Owner operators (that is, (100% – 64%) * 50% = 18% of all truckers).[5] Without real data, it’s impossible to be certain, but I’m not the only one who’s come to this conclusion. From Passage:

“It’s safe to assume that the people who made the trek to Ottawa aren’t the same people filing labour violation claims with the federal Labour Program. Rather than exploited workers in a deregulated industry, my guess is that the ‘truckers’ actually present in Ottawa were by and large self-employed owner-operators: the small contingent of wealthier small proprietors who have made out quite well in the new wild-west of for-hire trucking. It was a ‘revolt’ of the petit-bourgeoisie, financially backed[6] by wealthy right-wing grifters.

“This weekend’s idiotic pageantry was thus a political consequence of the decades-long class project to remake the trucking sector, a project which has dismantled a highly unionized industry, formerly made up of relatively well-paying and stable jobs, and replaced it with a poorly regulated labour market of hyper-competition among small owner-operators and other precariously-positioned workers.”

 ….Given that democidal elites are a parsimonious explanation for Covid policy in Canada as well as the United States, we can surmise that the Canadian truckers gave Trudeau and the Liberal Party the excuse and the cover to do what they have wanted to do all along….

One of those organizers was Pat King, a former organizer with the Western Canada separatist party Wexit. King gained notoriety after he helped organize a rally in Red Deer, Alberta, that turned violent, and thanks to his repeated attempts to weaponize his misunderstanding of the law to repeal Alberta’s COVID-19 measures. King is a prolific streamer, using his social media pages to warn of “Anglo-Saxon replacement” and to make disparaging remarks about immigrants and the LGBTQ community, per videos cataloged by Anti-Hate Canada….

TW: Best to read the entire essay, before getting to the excellent, precision targeted end. 

Facilitating Civic and Political Energies for the Common Good 

Ralph Nader [Counterpunch, via Naked Capitalism 2-6-2022] 

Corporate power stems not from votes (corporations don’t vote, yet) nor so much from the campaign money. It comes as a byproduct of the almost wholly unorganized populace not utilizing its powerful exclusive sovereignty (“We the People”) under our Constitution. In our country’s history, it is remarkable what a small percentage of people (often under one percent) when organized and representing broad public concerns, have achieved against all odds. (See my book, Breaking Through Power: It’s Easier Than We Think, 2016).

Resource Limits to American Capitalism & The Predator State Today (interview)

James Galbraith [GPE Newdocs, via Naked Capitalism 2-10-2022]

GALBRAITH:  ….the development of the system [described by Galbraith’s father] does start really in the early 1930s. It starts with Roosevelt’s New Deal. I mean, you had an earlier system which was very unstable; which went through an explosive period of growth in the 1920s and then collapsed. And the collapse didn’t go away. It lasted for four very long and painful years in which the factories were idle and the people on the farms couldn’t sell their products and then there was mass migration and all kinds of ecological disaster.

Then Roosevelt in the New Deal created an entirely different structure within which the American economy could function. And that was a federal project and it culminated in the vast industrial mobilization at the time of the Second World War.

FRIES: Let’s turn now to the shift from the form of American capitalism described by your father in The New Industrial State to what you describe in The Predator State as a corporate republic. So talk now about your argument that when weakened by adversity, the US model was destabilized from within and made vulnerable to fraud, predation, and looting.

GALBRAITH: Here’s another case where we can talk a little bit about convergence between the late Soviet model and what happened in the United States. In the Soviet Union when it was no longer profitable or no longer possible to produce in the previously existing structures, the people who had control of the assets liquidated them….

GALBRAITH: Well to begin with it wasn’t my father who directly advised the Chinese. Actually, I did that. In the 1990’s I had for four years a position in a consultancy under the United Nations Development Program as chief technical advisor to the State Planning Commission for Macroeconomic Reform. It was mostly an exercise in providing training and exposure to the people who were working there, rather than direct policy advice.

The interesting thing though is that when I got there in 1993, I got a whiff of a fact that I’ve later confirmed through the work of a young economist named Isabella Weber who has written on this in a very important book about China. The people I was dealing with were very, very familiar, especially, with the American experience with price control in the Second World War. Which was my father’s doing.

And the things that they knew about it were what he’d written about it. And they had his books. They’d been translated internally. They’d studied them. And so this fed into if you like the historic Chinese economic management. Which has always been about stabilizing prices, agricultural prices and then the new problem was industrial prices. And that’s where they drew on my father’s work.

That approach is completely opposite to the idea in Western economics that the prices are supposed to adjust. And that the markets are supposed to, you know, let them go up and down and do whatever. Now that’s just not the way it works.

In the thousands of years of Chinese history, the emperor has always bought the grain when it was cheap and sold it when it was expensive in order to keep the peasants from rising up in revolt. And by and large, it worked. So this is a big difference.

Week-end Wrap – Political Economy –February 6, 2022 by Tony Wikrent

 Week-end Wrap – Political Economy –February 6, 2022

by Tony Wikrent

Strategic Political Economy

Mark Blyth – Asset Manager Capitalism

Mark Blythe [Watson Institute of International and Public Affairs, February 2, 2022, via YouTube]

TW: After an excellent overview of the economic work focused on inequality, and the emergence of the concept of Asset Manager Capitalism, Blythe explains how this new form of capitalism is focused entirely on preservation of wealth, at the expense of entrepreneurship and increasing productivity. Asset Manager Capitalism also locks society into Piketty’s model equation of returns to capital increasing at the expense of returns to labor. Blythe then explains the very important consequences for the fight to stop climate change: the financiers will finance a green New Deal Deal, but only if governments eliminate entirely any risk of loss to investors. This is where the Federal Reserve comes in. In Blythe’s words: “You can get a transition, but forget the ‘just” part.” 

Notice Blythe’s discussion of the slide “Who actually owns capital?” This annihilates the presently reigning model of shareholder capitalism. In 1945, USA households directly owned 94 percent of USA corporate shares. Today, just three asset management firms — Blackrock, State Street, and Vanguard — own 20 percent of every company in the Standard & Poor’s 500 Index, and control 80 percent of all exchange traded funds (ETFs). 

Alexander Hamilton’s proposal that no one should ever have more than 30 votes in a company, no matter how many shares they own, is an obvious solution to this problem. No wonder hardly anyone knows about this aspect of Hamilton’s work. Under Asset Manager Capitalism, shares in a company are not the means of providing investment capital, but rather are assets to generate fees. 

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Credit Traders Lack Edge in Fed’s New Regime: The corporate bond market used to be the economy’s early warning signal. That’s no longer the case.

[Bloomberg, via The Big Picture 1-31-2022]

Citadel Securities: how the Wall Street outsider became ‘the Amazon of financial markets’ 

[Financial Times, via The Big Picture 1-31-2022]

Involved in more than 25 per cent of all US stock trades, and tipped to float, the company is the focus of SEC scrutiny 

“America Is Facing a Great Talent Recession”

[Bloomberg, via Naked Capitalism Water Cooler 2-4-2022]

“The deeper problem is that the talent model that has served America so well, especially since World War II, is breaking down. Korn Ferry, a human resources consultancy, warns that “the United States faces one of the most alarming talent crunches of any country” in its 20-country study. The institutions, practices and mind-set that enabled the U.S. to create a workforce capable of powering the world’s biggest and most dynamic economy are threatened by decay, disarray and disruption. And that is happening while China, a rival hostile power that poses an even greater challenge than the USSR once did, pulls ahead of it in world-defining technology. Once galvanized to action by the USSR’s launch of Sputnik, the U.S. now witnesses the equivalent of the launch of a dozen Sputniks from Beijing every year, with no corresponding response. In that respect, the Covid pandemic provides both a timely warning and a spur: a warning of what happens to a historically rumbustious economy when workers become scarce, and a spur to fixing America’s long-term talent and labor-supply problems while there is still time…. The country needs to add a new strand to educational reform: not just giving a helping hand to the poor or average performers but also identifying and nurturing the superstars who will help the U.S. beat back the challenge from Xi Jinping’s China.” • Yeah, that’s the trouble: Too much of a helping hand to the poor….