Week-end Wrap – Political Economy – August 18 2024
by Tony Wikrent
Strategic Political Economy
The world will lose $4.7 trillion of revenue in the next decade to tax havens. How did we get here?
[The Business Standard, via Naked Capitalism 08-16-2024]
American Pharmaceutical Companies Aren’t Paying Any Tax in the United States
Brad W. Setser and Michael Weilandt [CFR, via Naked Capitalism 08-16-2024]
It is an undisputed fact that American pharmaceutical prices are the highest in the world…. However, those high prices do not translate into high reported profits in the United States. Rather the contrary: large pharmaceutical companies generally report losing money in the U.S….
So high prices strangely seem to correlate with large losses. This, of course, is a clear sign that pharmaceutical companies live in a world marked by transfer pricing and tax arbitrage….
The average effective tax rate paid in the U.S. (so U.S. tax paid versus global profit) was only 3 percent from 2018 to 2022, well below the typical effective tax paid in the US before the Tax Cuts and Jobs Act (see the work of Senator Wyden and his staff for more details).
A Very Good Sign: Kamala Harris Is Going Right at Corporate Greed
Nick Hanauer, August 16, 2024 [The New Republic]
… Greedy CEOs have milked the average American household for $12,000 since the pandemic. As a businessman, I can explain how they’re doing it. ...if you compare corporate profits in 2019 to the last four years, you’ll find corporations have gouged their way to an almost unbelievable $1.5 trillion in excess profits since 2020—that’s in addition to their pre-pandemic profit rates.
That means the average American household has paid an eye-popping $12,000 in higher prices solely to pump up quarterly corporate profit margins. To put that figure into perspective, $12,000 could buy the average American household more than two years’ worth of groceries….
Over the last two years, CEOs learned they could get away with padding their profits by keeping prices high. We have really great evidence that this is what’s been happening, because CEOs admitted this is what’s been happening.
For example, Procter & Gamble chief financial officer Andre Schulten bragged during a 2023 earnings call that even though the company’s input costs to make diapers had decreased, they were still keeping consumer prices high….
This corporate embrace of price gouging is a new and troubling development in American capitalism. And this is an area I know something about.
I’ve founded, financed, and/or run 43 different companies, spanning a dozen different industries…. I’m deeply acquainted with all the tricks of the trade when it comes to corporate profit margins.
But I’ve never seen executives exult in raising prices like this….
The chasm between corporate costs and profits has never been greater in my lifetime:
- Combined wholesale and retail margins have increased by 25 percent from pre-pandemic times.
- Food and beverage retailers’ profit margins have risen by 29 percent from the pre-pandemic norm.
- And consumer prices have skyrocketed 3.4 times over producer costs over the past year.
Immediately before the pandemic, corporate profits were 9.7 percent of the total gross domestic product. From 2020 to 2023, they spiked to an average 11.2 percent of annual GDP. The disparity between those two numbers amounts to a jaw-dropping $1.5 trillion more of our economy that was transferred over to corporate profits in the last four years.
That money was picked directly from the pockets of American families, who each paid $12,000 more to plump the profit margins of corporations (and that’s not even counting the excess APR rates that have cost the average credit card user $946 over the same four-year period)….
Global power shift
[BNE Intellinews, via Naked Capitalism 08-15-2024]
Gaza / Palestine / Israel
How Pro-Israel Groups Shape Global Media Coverage of Palestine
[Declassified UK, via Naked Capitalism 08-17-2024]
Oligarchy
'Turning Into the Super PAC Election': Outside Spending Tops $1 Billion for 2024
Brett Wilkins, August 16, 2024 [CommonDreams]
Empowered by the U.S. Supreme Court's 2010 Citizens United v. Federal Election Commission ruling allowing unlimited independent financial contributions to support political campaigns, outside spending during the current election cycle has hit a record $1 billion, according to a report published Thursday by the watchdog group OpenSecrets.
"Super PACs and other outside groups that can raise and spend unlimited sums of money have poured about $1.1 billion into 2024 federal elections as of August 15—nearly twice what similar groups spent over the same period in the 2020 presidential election cycle when independent expenditures hit an all-time record," OpenSecrets said.
"More than half of all outside spending during the 2024 cycle— about $585.8 million—has gone into the presidential election, which saw an especially expensive Republican presidential nominating contest," the group added.
Trump Asked for $1 Billion to Do Big Oil's Dirty Work. Meet the Billionaire Making It Happen
Jessica Corbett, August 13, 2024 [CommonDreams]
The carnage of mainstream neoliberal economics
‘Neoliberal capitalism’ has contributed to the rise of fascism, says Nobel laureate
[ABC Australia, via Naked Capitalism Water Cooler 08-14-2024]
About Joseph Stiglitz’s new book, “The Road to Freedom: Economics and the Good Society.” More: “He spends a lot of time talking about the economic freedoms that are required for the majority of people to flourish. He talks about the importance of someone’s ‘opportunity set‘ — the set of options available to someone during their life, given the resources at their disposal — and how it determines their freedom to act, and what can be gained by good economic and social systems that provide someone with the freedom to live up to their potential. ‘People who are barely surviving have extremely limited freedom,’ he writes. ‘All their time and energy go into earning enough money to pay for groceries, shelter, and transportation to jobs … a good society would do something about the deprivations, or reductions in freedom, for people with low incomes. It is not surprising that people who live in the poorest countries emphasise economic rights, the right to medical care, housing, education, and freedom from hunger. They are concerned about the loss of freedom not just from an oppressive government but also from economic, social, and political systems that have left large portions of the population destitute.” “‘When you understand economic freedom as freedom to act, it immediately reframes many of the central issues surrounding economic policy and freedom,’ he says.”
Unequal exchange of labour in the world economy
[Nature, via Naked Capitalism Water Cooler 08-13-2024]
The Abstract: “Researchers have argued that wealthy nations rely on a large net appropriation of labour and resources from the rest of the world through unequal exchange in international trade and global commodity chains. Here we assess this empirically by measuring flows of embodied labour in the world economy from 1995–2021, accounting for skill levels, sectors and wages. We find that, in 2021, the economies of the global North net-appropriated 826 billion hours of embodied labour from the global South, across all skill levels and sectors. The wage value of this net-appropriated labour was equivalent to €16.9 trillion in Northern prices, accounting for skill level. This appropriation roughly doubles the labour that is available for Northern consumption but drains the South of productive capacity that could be used instead for local human needs and development. Unequal exchange is understood to be driven in part by systematic wage inequalities. We find Southern wages are 87–95% lower than Northern wages for work of equal skill. While Southern workers contribute 90% of the labour that powers the world economy, they receive only 21% of global income.”
The one weird monopoly trick that gave us Walmart and Amazon and killed Main Street
Cory Doctorow [Pluralistic, via Naked Capitalism 08-16-2024]
Walmart didn't just happen. The rise of Walmart – and Amazon, its online successor – was the result of a specific policy choice, the decision by the Reagan administration not to enforce a key antitrust law….
The law that Reagan neutered? The Robinson-Patman Act, a very boring-sounding law that makes it illegal for powerful companies (like Walmart) to demand preferential pricing from their suppliers (farmers, packaged goods makers, meat producers, etc). The idea here is straightforward. A company like Walmart is a powerful buyer (a "monopsonist" – compare with "monopolist," a powerful seller). That means that they can demand deep discounts from suppliers. Smaller stores – the mom and pop store on your Main Street – don't have the clout to demand those discounts. Worse, because those buyers are weak, the sellers – packaged goods companies, agribusiness cartels, Big Meat – can actually charge them more to make up for the losses they're taking in selling below cost to Walmart.
Reagan ordered his antitrust cops to stop enforcing Robinson-Patman, which was a huge giveaway to big business. Of course, that's not how Reagan framed it: He called Robinson-Patman a declaration of "war on low prices," because it prevented big companies from using their buying power to squeeze huge discounts….
Writing in The American Prospect, Max M Miller and Bryce Tuttle – a current and a former staffer for FTC Commissioner Alvaro Bedoya – write about the long shadow cast by Reagan's decision to put Robinson-Patman in mothballs:
https://prospect.org/economy/2024-08-13-stopping-excessive-market-power-monopoly/
They tell the story of Robinson-Patman's origins in 1936, when A&P was using preferential discounts to destroy the independent grocery sector and endanger the American food system. A&P didn't just demand preferential discounts from its suppliers; it also charged them a fortune to be displayed on its shelves, an early version of Amazon's $38b/year payola system:
https://pluralistic.net/2022/11/28/enshittification/#relentless-payola
They point out that Robinson-Patman didn't really need to be enacted; America already had an antitrust law that banned this conduct: section 2 of the the Clayton Act, which was passed in 1914. But for decades, the US courts refused to interpret the Clayton Act according to its plain meaning, with judges tying themselves in knots to insist that the law couldn't possibly mean what it said. Robinson-Patman was one of a series of antitrust laws that Congress passed in a bid to explain in words so small even federal judges could understand them that the purpose of American antitrust law was to keep corporations weak….
RealPage Has Been Accused of Price-Fixing Rents. Now It’s on the Offensive
[Wired, via The Big Picture 08-11-2024]
The software company has pushed back hard against claims that its algorithms helped make rent in the US too damn high. Property owners and managers aren’t entirely convinced.
Online sports betting hurts consumers
[Slow Boring, via The Big Picture 08-11-2024]
Boeing Is the Canary in the Trickle-Down Coal Mines
[Civic Skunk Works, via Naked Capitalism Water Cooler 08-13-2024]
“The most tragic thing about all of this is that Boeing had more than enough money to invest in a strong union workforce that hewed to the multiple safety redundancies that the company used to bake into its manufacturing process. It could have spent enough money to ensure that every plane with the Boeing name printed on its side was perfectly safe — the same way Boeing had ensured that rock-solid safety record for 70 years before the company began cutting corners — and still turned a profit. How do I know this? Because over just the last ten years, Boeing has returned some $59 billion dollars in profit to shareholders, in the form of $20 billion in dividends and the rest in stock buybacks. That’s tens of billions of dollars that used to go to wages, benefits, and safety precautions that the company instead chose to hand off to investors with no strings attached. All Boeing got in return for those offloaded profits was an artificially high stock price that didn’t reflect the increasingly poor quality of the product the company was selling.”
Predatory finance
[X-Twitter, via Naked Capitalism Water Cooler 08-12-2024]
I just found out that the price of wheat right now is about the same as it was in 1972. $4.86 a bushel. A loaf of bread in 1972 cost 25 cents.Bread has gone up by a factor of ten since then, but the farmer has gotten none of that money. Something is seriously wrong with a system where those who produce our food can barely afford to buy it themselves without going deeper and deeper into debt every year.A bushel of wheat can make at least 50 loaves of bread, which means the cost of the wheat in a loaf of bread is only about ten cents. In other words, we could pay our farmers double, and the price of bread would barely rise.As President I am going to transform our system of ag regulations and farm subsidies so that farmers get their fair share and can thrive. #Kennedy24
They’re not capitalists — they’re predatory criminals
Monopoly Round-Up: The 2024 CNBC Shadow Campaign to Fire Lina Khan
Matt Stoller [BIG, via Naked Capitalism 08-12-2024]
Restoring balance to the economy
[CNN, via Naked Capitalism 08-14-2024]
Robert Kuttner, August 16, 2024 [The American Prospect]
Kamala Harris, as widely previewed, gave her first major economic address today. Two key themes were cutting housing costs and resisting corporate price-gouging of consumers. She also proposed restoring the refundable Child Tax Credit and topping it up to $6,000 a year for new parents in the first year, as a baby bonus….
Harris’s general emphasis on price-gouging is a policy area where government can make a huge constructive difference without spending large sums. It is good economics and smart politics on several counts….
Third, the approach recasts the struggle as ordinary people vs. predatory corporations rather than impersonal forces, with Harris in the role of champion of beleaguered consumers.
Is Harris right on the economics? A detailed study by Groundwork Collaborative found that corporate concentration and increased profits accounted for more than half of the inflation felt by consumers in 2022 and 2023….
The turn to pocketbook progressivism by both Biden and Harris has one great thinker and political strategist in common, and that is Sen. Elizabeth Warren. Early in Biden’s administration, Warren was a source of both ideas and people. Some of Biden’s best and most effective appointees were part of Warren-world. They include Rohit Chopra, who heads the Consumer Financial Protection Bureau, which was Warren’s idea, and FTC Chair Lina Khan, who resurrected antitrust. To the extent that there has already been progress against opportunistic price hikes, the CFPB and the FTC get a lot of the credit.
Former Warren senior staffer Bharat Ramamurti, formerly part of Biden’s National Economic Council, has now joined Harris’s economic team as a senior economic adviser….
A Safety Net for Unemployed Workers
Julie Su, August 16, 2024 [American Prospect]
The job market is strong. Now is the perfect time to fix the unemployment system….
In its current form, unemployment insurance is unable to deliver the safety net that America needs. Too many workers continue to fall through the system’s cracks. Recent data reveals that fewer than 3 in 10 unemployed workers received benefits in 2023. Workers of color feel this most acutely, and study after study shows they are more likely to be out of work but less likely to receive benefits….
YOU LOVE TO SEE IT: Press A Button, Get A Human
[The Lever, August 17, 2024]
The Consumer Financial Protection Bureau will issue new rules about how banks and financial institutions can use chatbots and artificial intelligence programs that can be time-consuming and burdensome, to deter customers from obtaining refunds or canceling unwanted services, with the goal of maximizing profits. The agency will also require banks to allow customers to reach a human by clicking a single button in order to avoid “doom loops,” where a caller is trapped in a maze of menu options and automated recordings.
These moves come as part of the Biden administration’s “Time Is Money” initiative, which seeks to crack down on overly long hold times, excessive paperwork, and other forms of bureaucracy that use up people’s time. Banks have increasingly implemented chatbots to answer customer service questions, because they’re more cost-effective than hiring human customer service representatives at call centers. However, these chatbots run the risk of breaking the law by misleading people into thinking that they are talking to an actual person, providing inaccurate information, and not protecting customers’ privacy….
Mass-ive Money From Millionaires
Massachusetts’ “Millionaire’s Tax” brought in nearly $2.2 billion for the state in its first year, exceeding earlier estimates of between $1.6 and $2.1 billion. In November 2022, 52 percent of voters approved the Fair Share Amendment, which imposes an additional 4 percent tax on incomes above $1 million. Unlike most states, Massachusetts’ income tax laws are set by the state’s constitution, requiring voters to approve a constitutional amendment rather than legislators voting on a bill. The amendment went into effect on Jan. 1, 2023.
Unlike most states that have a tiered set of income tax brackets, Massachusetts imposes a flat 5 percent income tax rate on incomes under $1 million, while everything over $1 million gets taxed at 9 percent. The threshold for the tax will be adjusted each year to account for inflation.
While just 0.6 percent of households make enough to qualify for this tax, they account for 22 percent of the state’s taxable income. According to a 2022 analysis from the University of Minnesota, Massachusetts is tied with California as the third-most unequal state in the country for income inequality.
Ed Zitron [via Naked Capitalism 08-14-2024]
Last week, in the midst of the slow, painful collapse of the generative AI hype cycle, something incredible happened.
On Monday, a Federal Judge delivered a crushing ruling in the multi-year-long antitrust case filed against Google by the Department of Justice. In 300-pages of dense legal text, Judge Amit Mehta confirmed in excruciating detail the length and breadth of what all of us kind-of-sort-of-knew — that Google has a monopoly in search and online “general text advertising.”
The ruling precisely explains how Google managed to limit competition and choice in the search and ad markets. Documents obtained through discovery revealed the eye-watering amounts Google paid to Samsung ($8 billion over four years) and Apple ($20 billion in 2022 alone) to remain the default search engine on their devices, as well as Mozilla (around $500 million a year), which (despite being an organization that I genuinely admire, and that does a lot of cool stuff technologically) is largely dependent on Google’s cash to remain afloat.…
Campaign Address in Portland, Oregon on Public Utilities and Development of Hydro-Electric Power
Franklin Delano Roosevelt [The American Presidency Project, via Naked Capitalism 08-16-2024]
[FDR:] When I became Governor, I found that the Public Service Commission of the State of New York had adopted the unwarranted and unsound view that its sole function was to act as an arbitrator or a court of some kind between the public on the one side and the utility corporations on the other. I thereupon laid down a principle which created horror and havoc among the Insulls and other magnates of that type.
I declared that the Public Service Commission is not a mere judicial body to act solely as umpire between complaining consumer or the complaining investor on the one hand, and the great public utility system on the other hand. I declared that, as the agent of the Legislature, the Public Service Commission had, and has, a definitely delegated authority and duty to act as the agent of the public themselves.
Health care crisis
WHO declares mpox outbreaks in Africa a global health emergency as a new form of the virus spreads”
[Associated Press, via Naked Capitalism Water Cooler 08-15-2024]
“The World Health Organization declared the mpox outbreaks in Congo and elsewhere in Africa a global emergency on Wednesday, with cases confirmed among children and adults in more than a dozen countries and a new form of the virus spreading. Few vaccine doses are available on the continent. Earlier this week, the Africa Centers for Disease Control and Prevention announced that the mpox outbreaks were a public health emergency, with more than 500 deaths, and called for international help to stop the virus’ spread. ‘This is something that should concern us all … The potential for further spread within Africa and beyond is very worrying,’ said WHO director-general Tedros Adhanom Ghebreyesus. The Africa CDC previously said mpox, also known as monkeypox, has been detected in 13 countries this year, and more than 96% of all cases and deaths are in Congo. Cases are up 160% and deaths are up 19% compared with the same period last year. So far, there have been more than 14,000 cases and 524 people have died.”
From the Folks Who Brought You the Death Panel Algorithm
Maureen Tkacik, August 16, 2024 [American Prospect]
Three executives from an AI ploy to deny health care to seniors are buying a troubled mega-practice from the bankrupt Steward Health….
Information age dystopia / surveillance state
Hidden data could reveal if an AI model was trained on copyrighted material
[Imperial College, via Naked Capitalism 08-17-2024] Copyright traps.
Advice from DEFCON: Turn off Bluetooth and WiFi
[NDTV , via Naked Capitalism 08-14-2024]
AI Gone Wrong: An Updated List of AI Errors, Mistakes and Failures
[Tech.co, via Naked Capitalism 08-17-2024]
Creating new economic potential - science and technology
Cleaning up the aging brain: Scientists restore brain’s trash disposal system
[Science News, via Naked Capitalism Water Cooler 08-16-2024]
“Alzheimer’s, Parkinson’s, and other neurological disorders can be seen as ‘dirty brain’ diseases, where the brain struggles to clear out harmful waste. Aging is a key risk factor because, as we grow older, our brain’s ability to remove toxic buildup slows down. However, new research in mice demonstrates that it’s possible to reverse age-related effects and restore the brain’s waste-clearing process. ‘This research shows that restoring cervical lymph vessel function can substantially rescue the slower removal of waste from the brain associated with age,’ said Douglas Kelley, PhD, a professor of Mechanical Engineering in the University of Rochester Hajim School of Engineering and Applied Sciences. ‘Moreover, this was accomplished with a drug already being used clinically, offering a potential treatment strategy.'”
Democrats' political malpractice
[X-Twitter, via Naked Capitalism Water Cooler 08-13-2024]
In the coming days, Harris plans on releasing a policy platform “focused on lifting up the middle class.” Two of her advisors are former BlackRock investors. A third is a Ford lobbyist who served as a legislative dir. for Rahm Emanuel.
Thomas Frank: “UTTERLY POINTLESS” to Teach Liberals Their Mistakes
[Thomas Frank, YouTube, via Naked Capitalism Water Cooler 08-12-2024]
Conservative / Libertarian / (anti)Republican Drive to Civil War
'Method to His Madness': Sanders Warns Trump Is Setting Stage for Election Denial
Brett Wilkins, August 13, 2024 [CommonDreams]
Trump Allies Hit With Ethics Complaint for Pushing Election Conspiracy
Edith Olmsted, August 16, 2024 [The New Republic]
The former chair of the Fulton County Board of Elections filed an ethics complaint Friday against three of the Georgia State Election Board’s members, accusing them of breaking the law in their efforts to help Donald Trump disrupt the presidential election….
Woolard described an instance on July 12, when Jeffares, Johnston, and King had hurriedly organized a private meeting, away from the public and the two other board members, to pass two election rules pitched by Georgia Republican Party Chair Jeff Koons.The first rule required county election boards to post daily ballot counts online, and the second increased the number of partisan monitors during the vote-counting process. Woolard argued that their quorum-lacking rendezvous that day had violated the Open Meetings Act, which requires meetings to be open to the public and for all board members to be given due notice.
These Swing State Election Officials Are Pro-Trump Election Deniers
[Rolling Stone, via The Big Picture 08-11-2024]
At least 70 pro-Trump conspiracists are election officials in key battleground counties — and they are poised to make a giant mess on Election Day.
Georgia Board Grants Local Officials New Power Over Certifying Elections
[New York Times, via The Big Picture 08-11-2024]
Across the country, conservative organizations and allies of former President Donald J. Trump have sought to grant local election officials more authority over the certification process.
Climate change deniers make up nearly a quarter of US Congress
[The Guardian, via The Big Picture 08-11-2024]
Climate denialists – 23 in Senate and 100 in House – are all Republicans and make US an outlier internationally
31% of Republicans say vaccines are more dangerous than diseases they prevent
[Ars Technica, via The Big Picture 08-11-2024]
Elon Musk’s misleading election claims have accrued 1.2 billion views on X, new analysis says
[NBC News, via The Big Picture 08-11-2024]
The nonprofit Center for Countering Digital Hate said that Musk’s debunked claims are spreading widely and do not appear to be subject to X’s Community Notes fact-checking system.
Civic republicanism
[TW: Last week, a reader suggested a series “to help us accurately determine who the assholes are.” By great serendipity, a couple days later David Sirota and his colleagues at The Lever posted the first podcast in a series of ten on the “Master Plan” of a small number of reactionaries to not just reverse the New Deal, but to also transform American democracy by creating institutional obstacles to the workings of democracy and the influence of working people on politics. Basically, this can be viewed as a history of how the principles of civic republicanism were attacked and discarded. The shift away from civic republicanism was not natural and self-generative. Rather its was cultivated, nurtured, and extremely well funded by the reactionary rich. This history stands in stark contrast to the notion, so popular among those “on the left,” that USA has always been be run for and by the rich. If that were true, why have the rich spent so much time and money trying to change the system? ]
[The Lever, August 12, 2024]
More than a year in the making, Master Plan traces the covert actions of powerful operatives and ideologues stretching from Watergate through the Citizens United decision and today’s Supreme Court scandals. Over 10 audio episodes, David Sirota and a team of reporters unearth a trove of documents and recordings to lay bare a colossal American crime story unfolding in plain sight — the theft of democracy itself.
[TW: The first full video focuses on the corrupt decision by President Richard Nixon to expand federal price supports for milk in exchange for millions of dollars in campaign contributions from the dairy industry. It includes excerpts from the White House tape recording of then Treasury Secretary John Connally proposing the corruption, and discussions with Nixon and Nixon aide John Haldemann. The next video will focus on tobacco industry lawyer Lewis Powell and his “Powell Memo” proposing a concerted effort by business executives to mold public opinion in favor of “free enterprise.” ]
[TW: The campaigns to introduce the ideas of Friedrich von Hayek and Ludwig von Mises are detailed in a number of books on the history of neoliberalism:
Fones-Wolf, Elizabeth, Selling Free Enterprise: The Business Assault on Labor and Liberalism, 1945-60 (Urbana and Chicago, University of Illinois Press, 1994);
Klein, Naomi, The Shock Doctrine: The Rise of Disaster Capitalism (New York, Knopf, 2007)
Maclean, Nancy, Democracy in Chains: The Deep History of the Radical Right's Stealth Plan for America, New York City, Viking Press (2017);
Martin, Isaac William, Rich People's Movements: Grassroots Campaigns to Untax the One Percent (Cambridge, Oxford University Press, 2011);
Mayer, Jane, Dark Money: The Hidden History of the Billionaires Behind the Rise of the Radical Right, (New York, Doubleday, 2016);
Mirowski, Philip, and Plehwe Dieter, eds. The Road from Mont Pèlerin: The Making of the Neoliberal Thought Collective (Cambridge, Mass., Harvard University Press, 2009);
Phillips-Fein, Kim, Invisible Hands: The Making of the Conservative Movement from the New Deal to Reagan (New York, W.W. Norton & Co., 2009); American Liberty League more than half of the league's funds for 1935 came from less than two dozen bankers and businessmen.
Lars Cornelissen, “ ‘How can the people be restricted?”: the Mont Pèlerin Society and the problem of democracy, 1947–1998,” 2017, History of European Ideas
ABSTRACT
Drawing upon archival material, this article offers an overview and discussion of the manner in which the topic of representative democracy was addressed during conferences of the Mont Pèlerin Society in the period between 1947 and 1998. I contend that the most common critique of democracy amongst MPS members was that democratic politics has the tendency to lead to interventions in the economy, thus distorting or even destroying the market mechanism. Yet most members were simultaneously convinced that democracy is a necessary condition of individual liberty, which meant that democracy, rather than being either a mere nuisance or an irredeemable obstacle that must be rejected wholesale, posed a genuine problem for them. Whilst at MPS conferences a myriad of solutions to the problem of democracy was explored, one such solution was suggested most often and theorized most thoroughly, namely the imposition of constitutional limits on popular power; a proposal that often amounted to an attempt radically to circumscribe citizens’ influence on the legislature.
Yves Steiner, “The Neoliberals Confront the Trade Unions,” Chapter 5 in Mirowski and Plehwe Dieter, eds. The Road from Mont Pèlerin: The Making of the Neoliberal Thought Collective
[TW: My summary and notes
[Hayek thought the most difficult issue the neoliberals needed to confront was organized labor. Hayek argued that the legal legitimacy and protection given to labor unions in the US, Britain, France, Germany and other countries was leading to “the institutionalization of a quasi-corporatist regime” [p. 182] and crippling the price mechanism of the “free market” in regard to labor. “…if there is to be any hope a return to a free economy, the question of how the trade-unions can be appropriately delimited by law as well as in fact, is one of the most important of all the questions which we must give our attention,” Hayek wrote in 1949.
[Others such as Franz Bohm and Leonard Miksch believed that there must be a program to “change the ideology of the workers” so that they would accept both lower pay, and the sanctity of private control of companies. As Steiner puts it, “The ideological integration of unions into the operation of the free society threatened to transgress the limits of their involvement in economic activities, and in particular, in the firm, the very heart of capitalist enterprise.” [p184] Labor “participation in the structures of management was understood as harboring all manner of dangers. Economically speaking, their interventions could disturb business investment—and thus earnings—by substituting political criteria (maintaining employment, employee purchase power, etc.) for economic rationality.” [p. 188]
[See Lars Cornelissen, “ ‘How can the people be restricted?”: the Mont Pèlerin Society and the problem of democracy, 1947–1998,” 2017, History of European Ideas
[Hayek asked Fritz Machlup to speak on the issue of organized labor at the founding meeting of the Mont Pelerin Society in April 1947. Machlup had been advising the American Chamber of Commerce on labor issue. Aat that time, the ACC president was United Fruit Corp. president William K. Jackson. Stein entirely neglects to delve into United Fruit’s notorious history, which includes backing coups in South America, and smuggling guns and narcotics in partnership with organized crime, including the Sicilian mafia. This blinkered ignoring of the criminality of many “free marketers” is a major weakness of this otherwise excellent scholarship on the origins of neoliberalism.
[Another major mistake is ignoring the patronage of Europe’s “black nobility,” such as Max von Thurn und Taxi (scion of the extremely wealthy family that ran the postal service used by European monarchs and nobility to communicate amongst themselves); Otto von Habsburg heir to the throne of the Austro-Hungarian empire; Sir John Clapham (senior official of the Bank of England, and president of the British Royal Society from 1940-46); and Count Richard Coudenhove-Kalergi (one of the 20th centuries most egregious monarchists and a principal mover behind limiting the sovereignty of European nations by pushing for European “integration.” Von Thurn was general secretary of the Mont Pelerin Society in from 1976 to 1988.
[Much more attention needs to be focused on the association between neoliberals and members of the Black nobility, and the clear propensity of neoliberal “free market” policies to create massive neo-feudal inequalities of wealth, income, and political power. In other words, resurrect oligarchy. I do not think this is so much the result of a conscious desire by neoliberals to destroy the USA as a republic from within, as it is natural result of promoting a vision of the economic organization of society based on a preference for hierarchies and order. The political economy of civic republicanism is innately hostile to hierarchies and order, because it is based on a belief that every human individual is capable of reason and inventing. Contrast this to the system as its is now, where a very small number of “entrepreneurs” are given the funding to “create more wealth.” ]
[TW: David Harvey discusses Karl Polanyi's critique of the neoliberal ideas of Hayek, Friedman and other members of the Mont Pelerin society. Polanyi believed that neoliberal political economy leads inevitably to an authoritarian society.
David Harvey, A Brief History of Neoliberalism (Oxford University Press, 2005)
“This history of neoliberalization and class formation, and the proliferating acceptance of the ideas of the Mont Pelerin Society as the ruling ideas of the time, makes for interesting reading when placed against the background of counter-arguments laid out by Karl Polanyi in 1944 (shortly before the Mont Pelerin Society was established). In a complex society, he pointed out, the meaning of freedom becomes as contradictory and as fraught as its incitements to action are compelling. There are, he noted, two kinds of freedom, one good and the other bad. Among the latter he listed ‘the freedom to exploit one’s fellows, or the freedom to make inordinate gains without commensurable service to the community, the freedom to keep technological inventions from being used for public benefit, or the freedom to profit from public calamities secretly engineered for private advantage’. But, Polanyi continued, ‘the market economy under which these freedoms throve also produced freedoms we prize highly. Freedom of conscience, freedom of speech, freedom of meeting, freedom of association, freedom to choose one’s own job’. While we may ‘cherish these freedoms for their own sake’,—and, surely, many of us still do—they were to a large extent ‘by-products of the same economy that was also responsible for the evil freedoms’.33 Polanyi’s answer to this duality makes strange reading given the current hegemony of neoliberal thinking:
"The passing of [the] market economy can become the beginning of an era of unprecedented freedom. Juridical and actual freedom can be made wider and more general than ever before; regulation and control can achieve freedom not only for the few, but for all. Freedom not as an appurtenance of privilege, tainted at the source, but as a prescriptive right extending far beyond the narrow confines of the political sphere into the intimate organization of society itself. Thus will old freedoms and civic rights be added to the fund of new freedoms generated by the leisure and security that industrial society offers to all. Such a society can afford to be both just and free.34"
Unfortunately, Polanyi noted, the passage to such a future is blocked by the ‘moral obstacle’ of liberal utopianism (and more than once he cites Hayek as an exemplar of that tradition):
“Planning and control are being attacked as a denial of freedom. Free enterprise and private ownership are declared to be essentials of freedom. No society built on other foundations is said to deserve to be called free. The freedom that regulation creates is denounced as unfreedom; the justice, liberty and welfare it offers are decried as a camouflage of slavery.35”
The idea of freedom ‘thus degenerates into a mere advocacy of free enterprise’, which means ‘the fullness of freedom for those whose income, leisure and security need no enhancing, and a mere pittance of liberty for the people, who may in vain attempt to make use of their democratic rights to gain shelter from the power of the owners of property’. But if, as is always the case, ‘no society is possible in which power and compulsion are absent, nor a world in which force has no function’, then the only way this liberal utopian vision could be sustained is by force, violence, and authoritarianism. Liberal or neoliberal utopianism is doomed, in Polanyi’s view, to be frustrated by authoritarianism, or even outright fascism.36 The good freedoms are lost, the bad ones take over.
Polanyi’s diagnosis appears peculiarly appropriate to our contemporary condition. It provides a powerful vantage point from which to understand what President Bush intends when he asserts that ‘as the greatest power on earth we [the US] have an obligation to help the spread of freedom’. It helps explain why neoliberalism has turned so authoritarian, forceful, and anti-democratic at the very moment when ‘humanity holds in its hands the opportunity to offer freedom’s triumph over all its age-old foes’.37 It makes us focus on how so many corporations have profiteered from withholding the benefits of their technologies (such as AIDS drugs) from the public sphere, as well as from the calamities of war (as in the case of Halliburton), famine, and environmental disaster. It raises the worry as to whether or not many of these calamities or near calamities (arms races and the need to confront both real and imagined enemies) have been secretly engineered for corporate advantage. And it makes it all too clear why those of wealth and power so avidly support certain conceptions of rights and freedoms while seeking to persuade us of their universality and goodness. Thirty years of neoliberal freedoms have, after all, not only restored power to a narrowly defined capitalist class. They have also produced immense concentrations of corporate power in energy, the media, pharmaceuticals, transportation, and even retailing (for example Wal-Mart). The freedom of the market that Bush proclaims as the high point of human aspiration turns out to be nothing more than the convenient means to spread corporate monopoly power and Coca Cola everywhere without constraint. With disproportionate influence over the media and the political process this class (with Rupert Murdoch and Fox News in the lead) has both the incentive and the power to persuade us that we are all better off under a neoliberal regime of freedoms. For the elite, living comfortably in their gilded ghettos, the world must indeed seem a better place. As Polanyi might have put it, neoliberalism confers rights and freedoms on those ‘whose income, leisure and security need no enhancing’, leaving a pittance for the rest of us. "
Seven Years in Prison for Playing the Cello in New York?
Liza Featherstone, August 15, 2024 [The New Republic]
The trumped-up contempt charges against a climate protester are only the latest example of extreme punishments for peaceful protests….
As if these examples weren’t bad enough, the fossil fuel industry is attempting to codify criminal penalties for some forms of climate protest. Pressed by industry donors, Congress has been working to broaden preexisting laws against destroying pipelines—a felony mandating up to 20 years in prison—with more expansive language extending such penalties to people who “[impair] the operation of” pipelines. Indigenous and other environmental activists rightly fear that the whole range of pipeline protests—from sacred rituals to Willie Nelson concerts—could be effectively outlawed. Exxon Mobil, Koch, and other bad actors have been lobbying hard for this, even as peaceful pipeline protesters are already finding themselves facing stiff prison sentences.
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