Ellen Brown - FDR Knew Exactly How to Solve Today’s Unemployment Crisis

FDR Knew Exactly How to Solve Today’s Unemployment Crisis

by Ellen Brown, December 17, 2020

A self-funding national infrastructure bank modeled on the “American System” of Alexander Hamilton, Abraham Lincoln, and Franklin D. Roosevelt would help solve not one but two of the country’s biggest problems.

Millions of Americans have joined the ranks of the unemployed, and government relief checks and savings are running out; meanwhile, the country still needs trillions of dollars in infrastructure. Putting the unemployed to work on those infrastructure projects seems an obvious solution, especially given that the $600 or $700 stimulus checks Congress is planning on issuing will do little to address the growing crisis. Various plans for solving the infrastructure crisis involving public-private partnerships have been proposed, but they’ll invariably result in private investors reaping the profits while the public bears the costs and liabilities. We have relied for too long on private, often global, capital, while the Chinese run circles around us building infrastructure with credit simply created on the books of their government-owned banks.

Earlier publicly-owned U.S. national banks and U.S. Treasuries pulled off similar feats, using what Sen. Henry Clay, U.S. statesman from 1806 to 1852, named the “American System” – funding national production simply with “sovereign” money and credit. They included the First (1791-1811) and Second (1816-1836) Banks of the United States, President Lincoln’s federal treasury and banking system, and President Franklin Roosevelt’s Reconstruction Finance Corporation (RFC) (1932-1957). Chester Morrill, former Secretary of the Board of Governors of the Federal Reserve, wrote of the RFC:

[I]t became apparent almost immediately, to many Congressmen and Senators, that here was a device which would enable them to provide for activities that they favored for which government funds would be required, but without any apparent increase in appropriations. . . . [T]here need be no more appropriations and its activities could be enlarged indefinitely, as they were, almost to fantastic proportions. [emphasis added]

Even the Federal Reserve with its “quantitative easing” cannot fund infrastructure without driving up federal expenditures or debt, at least without changes to the Federal Reserve Act. The Fed is not allowed to spend money directly into the economy or to lend directly to Congress. It must go through the private banking system and its “primary dealers.” The Fed can create and pay only with “reserves” credited to the reserve accounts of banks. These reserves are a completely separate system from the deposits circulating in the real producer/consumer economy; and those deposits are chiefly created by banks when they make loans. (See the Bank of England’s 2014 quarterly report here.) New liquidity gets into the real economy when banks make loans to local businesses and individuals; and in risky environments like that today, banks are not lending adequately even with massive reserves on their books.

A publicly-owned national infrastructure bank, on the other hand, would be mandated to lend into the real economy; and if the loans were of the “self funding” sort characterizing most infrastructure projects (generating fees to pay off the loans), they would be repaid, canceling out the debt by which the money was created. That is how China built 12,000 miles of high-speed rail in a decade: credit created on the books of government-owned banks was advanced to pay for workers and materials, and the loans were repaid with profits from passenger fees.

Unlike the QE pumped into financial markets, which creates asset bubbles in stocks and housing, this sort of public credit mechanism is not inflationary. Credit money advanced for productive purposes balances the circulating money supply with new goods and services in the real economy. Supply and demand rise together, keeping prices stable. China increased its money supply by nearly 1800% over 24 years (from 1996 to 2020) without driving up price inflation, by increasing GDP in step with the money supply.

HR 6422, The National Infrastructure Bank Act of 2020

A promising new bill for a national infrastructure bank modeled on the RFC and the American System, H.R. 6422, was filed by Rep. Danny Davis, D-Ill., in March. The National Infrastructure Bank of 2020 (NIB) is projected to create $4 trillion or more in bank credit money to rebuild the nation’s rusting bridges, roads, and power grid; relieve traffic congestion; and provide clean air and water, new schools and affordable housing. It will do this while generating up to 25 million union jobs paying union-level wages. The bill projects a net profit to the government of $80 billion per year, which can be used to cover infrastructure needs that are not self-funding (broken pipes, aging sewers, potholes in roads, etc.). The bill also provides for substantial investment in “disadvantage communities,” those defined by persistent poverty.

The NIB is designed to be a true depository bank, giving it the perks of those institutions for leverage and liquidity, including the ability to borrow at the Fed’s discount window without penalty at 0.25% interest (almost interest-free). According to Alphecca Muttardy, a former macroeconomist for the International Monetary Fund and chief economist on the 2020 NIB team, the NIB will create the $4 trillion it lends simply as deposits on its books, as the Bank of England attests all depository banks do. For liquidity to cover withdrawals, the NIB can either borrow from the Fed at 0.25% or issue and sell bonds.

Modeled on its American System predecessors, the NIB will be capitalized with existing federal government debt. According to the summary on the NIB Coalition website:

The NIB would be capitalized by purchasing up to $500 billion in existing Treasury bonds held by the private sector (e.g., in pension and other savings funds), in exchange for an equivalent in shares of preferred [non-voting] stock in the NIB. The exchange would take place via a sales contract with the NIB/Federal Government that guarantees a preferred stock dividend of 2% more than private-holders currently earn on their Treasuries. The contract would form a binding obligation to provide the incremental 2%, or about $10 billion per year, from the Budget. While temporarily appearing as mandatory spending under the Budget, the $10 billion per year would ultimately be returned as a dividend paid to government, from the NIB’s earnings stream.

Since the federal government will be paying the interest on the bonds, the NIB needs to come up with only the 2% dividend to entice investors. The proposal is to make infrastructure loans at a very modest 2%, substantially lower than the rates now available to the state and local governments that create most of the nation’s infrastructure. At a 10% capital requirement, the bonds can capitalize ten times their value in loans. The return will thus be 20% on a 2% dividend outlay from the NIB, for a net return on investment of 18% less operating costs. The U.S. Treasury will also be asked to deposit Treasury bonds with the bank as an “on-call” subscriber.

The American System: Sovereign Money and Credit

U.S. precedents for funding internal improvements with “sovereign credit” – credit issued by the national government rather than borrowed from the private banking system – go back to the American colonists’ paper scrip, colonial Pennsylvania’s “land bank”, and the First U.S. Bank of Alexander Hamilton, the first U.S. Treasury Secretary. Hamilton proposed to achieve the constitutional ideal of “promoting the general welfare” by nurturing the country’s fledgling industries with federal subsidies for roads, canals, and other internal improvements; protective measures such as tariffs; and easy credit provided through a national bank. Production and the money to finance it would all be kept “in house,” without incurring debt to foreign financiers. The national bank would promote a single currency, making trade easier, and would issue loans in the form of “sovereign credit.” ’

Senator Henry Clay called this model the “American System” to distinguish it from the “British System” that left the market to the “invisible hand” of “free trade,” allowing big monopolies to gobble up small entrepreneurs, and foreign bankers and industrialists to exploit the country’s labor and materials. After the charter for the First US Bank expired in 1811, Congress created the Second Bank of the United States in 1816 on the American System model.

In 1836, Pres. Andrew Jackson shut down the Second U.S. Bank due to perceived corruption, leaving the country with no national currency and precipitating a recession. “Wildcat” banks issued their own banknotes – promissory notes allegedly backed by gold. But the banks often lacked the gold necessary to redeem the notes, and the era was beset with bank runs and banking crises.

Abraham Lincoln’s economic advisor was Henry Carey, the son of Matthew Carey, a well-known printer and publisher who had been tutored by Benjamin Franklin and had tutored Henry Clay. Henry Carey proposed creating an independent national currency that was non-exportable, one that would remain at home to do the country’s own work. He advocated a currency founded on “national credit,” something he defined as “a national system based entirely on the credit of the government with the people, not liable to interference from abroad.” It would simply be a paper unit of account that tallied work performed and goods delivered.

On that model, in 1862 Abraham Lincoln issued U.S. Notes or Greenbacks directly from the U.S. Treasury, allowing Lincoln’s government not only to avoid an exorbitant debt to British bankers and win the Civil War, but to fund major economic development, including tying the country together with the transcontinental railroad – an investment that actually turned a profit for the government.

After Lincoln was assassinated in 1865, the Greenback program was discontinued; but Lincoln’s government also passed the National Bank Act of 1863, supplemented by the National Bank Act of 1864. Originally known as the National Currency Act, its stated purpose was to stabilize the banking system by eradicating the problem of notes issued by multiple banks circulating at the same time. A single banker-issued national currency was created through chartered national banks, which could issue notes backed by the U.S. Treasury in a quantity proportional to the bank’s level of capital (cash and federal bonds) deposited with the Comptroller of the Currency.

From Roosevelt’s Reconstruction Finance Corporation (1932-57) to HR 6422

The American president dealing with an economic situation most closely resembling that today, however, was Franklin D. Roosevelt. America’s 32nd president resolved massive unemployment and infrastructure problems by greatly expanding the Reconstruction Finance Corporation (RFC) set up by his predecessor Herbert Hoover. The RFC was a remarkable publicly-owned credit machine that allowed the government to finance the New Deal and World War II without turning to Congress or the taxpayers for appropriations. The RFC was not called an infrastructure bank and was not even a bank, but it served the same basic functions. It was continually enlarged and modified by Pres. Roosevelt to meet the crisis of the times until it became America’s largest corporation and the world’s largest financial organization. Its semi-independent status let it work quickly, allowing New Deal agencies to be financed as the need arose. According to Encyclopedia.com:

[T]he RFC—by far the most influential of New Deal agencies—was an institution designed to save capitalism from the ravages of the Great Depression. Through the RFC, Roosevelt and the New Deal handed over $10 billion to tens of thousands of private businesses, keeping them afloat when they would otherwise have gone under ….

A similar arrangement could save local economies from the ravages of the global shutdowns today.

The Banking Acts of 1932 provided the RFC with capital stock of $500 million and the authority to extend credit up to $1.5 billion (subsequently increased several times). The initial capital came from a stock sale to the U.S. Treasury. With those modest resources, from 1932 to 1957 the RFC loaned or invested more than $40 billion. A small part of this came from its initial capitalization. The rest was financed with bonds sold to the Treasury, some of which were then sold to the public. The RFC ended up borrowing a total of $51.3 billion from the Treasury and $3.1 billion from the public.

Thus the Treasury was the lender, not the borrower, in this arrangement. As the self-funding loans were repaid, so were the bonds that were sold to the Treasury, leaving the RFC with a net profit. The RFC was the lender for thousands of infrastructure and small business projects that revitalized the economy, and these loans produced a total net income of over $690 million on the RFC’s “normal” lending functions (omitting such things as extraordinary grants for wartime). The RFC financed roads, bridges, dams, post offices, universities, electrical power, mortgages, farms, and much more–all while generating income for the government.

HR 6422 proposes to mimic this feat. The National Infrastructure Bank of 2020 can rebuild crumbling infrastructure across America, pushing up long-term growth, not only without driving up taxes or the federal debt, but without hyperinflating the money supply or generating financial asset bubbles. The NIB has growing support across the country from labor leaders, elected officials, and grassroots organizations. It can generate real wealth in the form of upgraded infrastructure and increased employment as well as federal and local taxes and GDP, paying for itself several times over without additional outlays from the federal government. With official unemployment at nearly double what it was a year ago and an economic crisis unlike the U.S. has seen in nearly a century, the NIB can trigger the sort of “economic miracle” the country desperately needs.

Week-end Wrap – Political Economy – December 20, 2020

 Week-end Wrap – Political Economy – December 20, 2020

Strategic Political Economy

America’s Survival Depends on Bankrupting the Republican Party
Thom Hartmann: [via LA Progressive 12-18-2020]

Large parts of the Republican base now join conspiracists in the misguided belief that vaccine manufacturers are participating in mind-control experiments and that public health measures like masks are “un-American,” while we’re being sickened and dying from the highest rates of COVID-19 infection and death in the developed world.

Republicans on the Supreme Court even say the founders of our republic and the framers of the Constitution would never go along with preventing churches and synagogues from holding superspreader events during a pandemic, but, like so many things GOP, it’s a lie.

In 1798, President John Adams signed the first public health care legislation—it was to pay for medical care and hospitalization not just for the Navy but also for civilian sailors. And both he and President George Washington had participated in quarantine events during epidemics in the summers of 1793 and 1798, and both promoted inoculation against smallpox.

From 1790 to 1800, Philadelphia was the nation’s capital. When the yellow fever epidemic of 1793 recurred in 1798, that city’s board of health, with no objections raised by President John Adams or any member of Congress, ordered a block-by-block evacuation of parts of Philadelphia….

Since the election of Ronald Reagan, Republicans have damaged America more in 40 years than our worst enemies could have dreamed of by other means….

They have rigged elections by making it hard to vote, seditiously tried to overturn the 2020 election, promoted racial and religious bigotry and violence, destroyed our public school systems, gutted our unions, and rewritten our tax system to screw the middle class.

Click through to read Hartmann’s proposed six actions that can hasten the GOP’s exit from the stage of world history. 

These Six Steps Can Stop Republican Treason

[Thom Hartmann, December 16, 2020, YouTube]

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LA Progressive

[Twitter, via Naked Capitalism Water Cooler 12-15-20]

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Marianne Williamson
@marwilliamson
The more I learn about the current epidemic of white supremacist groups, the clearer it becomes: we’re losing these people as children. Despair among our youth breeds vulnerability to ideological capture by psychotic forces. If our love doesn’t claim them, hate will.
12:50 AM · Dec 15, 2020

“Chris Arnade: Dignity, Poverty, Faith, & Seeking Respect in Back Row America” (podcast)

[The Moral Imagination, via Naked Capitalism Water Cooler 12-16-20]

“In the second half of the conversation we discuss faith, redemption, and atonement, and how the front row’s empiricist, cold, secular rationalism scientific doesn’t do justice to the complexities of human life, suffering, and the desire for meaning, dignity, and respect. Arnade argues that ‘atheism is an intellectual luxury that is wrong’ and that ‘front row’ scientism lacks epistemic humility, and has a false view of science and certainty. Arnade shows that each person, no matter our state, is a subject, and not simply an object to be manipulated or problem to be solved. And that many of our deepest problems cannot be solved by technical means alone, but are philosophical and cultural problems—not of the poor—but of the elite.”

Week-end Wrap – Political Economy – December 13, 2020

Week-end Wrap – Political Economy – December 13, 2020

by Tony Wikrent

Strategic Political Economy

An Ominous Sign: Americans Have Begun Stealing Food To Survive

[ZeroHedge, via Mike Norman Economics 12-11-20]

Authored by Daisy Luther via The Organic Prepper blog,

If you’ve been waiting for a sign that things are really bad economically in the United States, here it is. Americans who never would have contemplated shoplifting before are stealing food to survive…. I wrote the other day about how the response to the pandemic has destroyed the personal finances of American families. An area that deserves more attention is food insecurity…. More than 50 million people are suffering from food insecurity in the United States right now, a number that has leaped dramatically due to the response to the coronavirus….

Twenty percent of Americans are now turning to food banks to help keep their families fed. And according to a report in the Washington Post, the shoplifting of food and other essential items is increasing significantly….

The result is a growing subset of Americans who are stealing food to survive.

Shoplifting is up markedly since the pandemic began in the spring and at higher levels than in past economic downturns, according to interviews with more than a dozen retailers, security experts and police departments across the country. But what’s distinctive about this trend, experts say, is what’s being taken — more staples like bread, pasta and baby formula.

“We’re seeing an increase in low-impact crimes,” said Jeff Zisner, chief executive of workplace security firm Aegis. “It’s not a whole lot of people going in, grabbing TVs and running out the front door. It’s a very different kind of crime — it’s people stealing consumables and items associated with children and babies.” (source)

“Stealing to survive: More Americans are shoplifting food as aid runs out during the pandemic”

[Washington Post, via Zero Hedge 12-10-20]

“Alex graduated with a master’s degree in May and was immediately in a bind: no job, no money and, with much of the country still shut down, little hope that anything would change. She’d spent most of her $1,200 stimulus check on rent, and used what little she had left to buy groceries. Everything else — vitamins, moisturizer, body wash — she said she shoplifted from a Whole Foods Market a few miles from her apartment in Chicago. ‘It was like, I could spend $10 and get a couple of vegetables or I could spend $10 on just a box of tampons,’ said Alex, 27, who asked to be identified by her middle name to speak candidly. She has a job now, earning $15 an hour, but still struggles to make ends meet. She says she continues to shoplift — something she’d never done before the pandemic — every few weeks. She says she moves through the store mostly unnoticed. Usually, she said, she picks up a few bulky vegetables — a bunch of kale, maybe, or a few avocados — to disguise the pricier items she slips into her bag at the self checkout. ‘I don’t feel much guilt about it,” she said. ‘It’s been very frustrating to be part of a class of people who is losing so much right now. And then to have another class who is profiting from the pandemic — well, let’s just say I don’t feel too bad about taking $15 or $20 of stuff from Whole Foods when Jeff Bezos is the richest man on Earth.'”

U.S. Billionaire Wealth Surges Past $1 Trillion Since Beginning of Pandemic — Total Grows to $4 Trillion 

[Institute for Policy Studies, via Naked Capitalism 12-12-20]

Disrupting Mainstream Economics

Everything We’ve Learned About Modern Economic Theory Is Wrong 

Bloomberg , via Naked Capitalism 12-12-20] 

[Ole Peters is] A physicist by training, his theory draws on research done in close collaboration with the late Nobel laureate Murray Gell-Mann, father of the quark. He’s also won over two noted thinkers in the world of finance — Nassim Nicholas Taleb and Michael Mauboussin — not to mention a groundswell of enthusiastic supporters in the Twittersphere. His beef is that all too often, economic models assume something called “ergodicity.” 

….Peters takes aim at expected utility theory, the bedrock that modern economics is built on. It explains that when we make decisions, we conduct a cost-benefit analysis and try to choose the option that maximizes our wealth.

The problem, Peters says, is the model fails to predict how humans actually behave because the math is flawed.

Week-end Wrap – Political Economy – December 6, 2020

Week-end Wrap – Political Economy – December 6, 2020

by Tony Wikrent

Strategic Political Economy

“This Is a Revolution, Sir” 

[Jacobin, via Naked Capitalism 12-2-20]

Workers in India last week launched a general strike that brought out an estimated 250 million people, arguably the largest in human history. Now, they’re joining hands with farmers to protest Narendra Modi’s pro-corporate, far-right agenda.

Anti-Populism with Thomas Frank (podcast)

[The Dig, via Naked Capitalism 11-30-20]

Lambert Strether: “...if you want to understand why Frank has been blackballed by liberal Democrats and won’t (at least as I heard him say on Useful Idiots) be writing on politics any more, this is the podcast episode for you.”

Transcript is at: Thomas Frank: How the Democratic Party Became a Vehicle of Aristocracy​​​​​​​

[ScheerPost, 12-4-2020]

And Martin Luther King actually knew this history. The reason he knew it–it’s not, you know, hard to figure out–there was a famous historian of the South back in those days, his name was C. Vann Woodward, who wrote about this. You know, he wrote book after book after book about this story. C. Vann Woodward was a classic Southern liberal, and for him populism was the only bright spot in Southern history between the end of the Civil War–or I should say the end of Reconstruction, and then the present day in the 1960s, when he was writing populism. Was the only moment when there was even a glimmer of hope that Blacks and whites could get together in some kind of common action.

And Martin Luther King knew this history pretty well. And so he’s at this triumphant moment in Montgomery, Alabama, and he’s giving this speech. And he does this amazing shoutout to the populist movement of the 1890s. And he talks about how it threatened the Bourbon Democrats of the South, and how they instituted Jim Crow as a response to populism. So, to reinforce this idea of white solidarity, so that they could go to the, you know, to the poor white farmer who had nothing–you know, who was basically starving, almost–and say to this guy, well, you know, at least you’re a white person. So you’re better than these other people. And it’s one of King’s great moments. You can watch the speech on YouTube. But he says–I don’t want to spoil it, but you should go and watch the speech, because it’s absolutely fantastic. And he says, you know, the poor white farmer, when his stomach growled and his family called out for food, “he ate Jim Crow, a psychological bird that told him that no matter how bad off he was,” he was still better than these other people. It’s one of his beautiful moments…. 

Well, the first step is to actually listen to those people rather than just decide that they need to be punished. Which is overwhelmingly the attitude among the sort of liberal commentariat. You know, that these people are bad people who there’s something dark and wrong with their souls, and we should not offer them anything; that’s obviously, you know, an enormous blunder. What you have to do is– [Laughs] win some of those people back. The way you do it is, you know, you were talking about, by and large, working-class people; this is the famous white working class, and my emphasis is on the working-class side of that.

And what’s funny is watching all these sort of liberals here in Washington, D.C. spin their wheels and say, well, what could a party of the Left offer working-class people? They can’t even imagine. You know, and it’s like, dude, look at history. Parties of the Left are supposed to be about working-class people. It’s incredibly easy to come up with things that a party of the Left would do for working-class people. For one thing, universal health care. For another thing–I mean, this one just seems like a no-brainer–make it easy for them to form labor unions again. Once you do that, it’ll start to, you know, people start to think differently, they start to bargain. It changes people’s attitudes about their whole life. I mean, I think of making school good and accessible and cheap again. You know, all of those things. You go right down the list of, you know, Martin Luther King and the Freedom Budget; you know, make sure [that] the housing is affordable. These are all no-brainers, in my opinion, that the Democratic Party could do.

Now, it’s going to be difficult; it’s going to be hard, but at least they can make a stand. A guy like Joe Biden is–at least he’s, he’s not Hillary Clinton, calling people “deplorables.” This is a guy that likes to speak to blue-collar audiences. You know, he likes to hang around in union halls and stuff like that. It’s not that hard for him to make the case to these people. But he’s got to understand the strategy of it, and the long-term direction that his party has been going in, if he wants to turn it around. 

Week-end Wrap – Political Economy – November 29, 2020

Week-end Wrap – Political Economy – November 29, 2020

by Tony Wikrent

Strategic Political Economy

For What Are America’s Wealthy Thankful? A Worsening Culture War 

Matt Taibbi, TK News, via Naked Capitalism 11-26-20]

….From the “vast right-wing conspiracy” through the “basket of deplorables” to now, the Democratic message increasingly focuses on the illegitimacy of the ordinary conservative voter’s opinion: ignorant, conspiratorial, and racist, so terrible that the only hope is mass-reprogramming by educated betters.

On the other hand, Republicans from Goldwater to Trump have warned that coalitions of “marauders” from the inner cities and “bad hombres” from across the border are plotting to use socialist politics to seize the hard-earned treasure of the small-town voter, with the aid of elitist traitors in the Democratic Party.

Spool these ideas endlessly and you get culture war. Any thought that it might abate once Trump left the scene looks naive now….

This is what happens when the very wealthy stop having a stake in the outcome of a country’s future. Having long ago stopped investing in ameliorative programs to keep cities and small towns alive, they stop bothering with unifying national legends, too, letting long-simmering divisions rise….

...we’re now back to corporate-sponsored tales of half against half. What’s always forgotten is who’s paying for these messages. We have two donor-fattened parties that across decades of incompetence have each run out of convincing pitches for how to improve the lives of ordinary people. So they’ve settled into a new propaganda line that blames voters for their problems, with each party directing its base to demonize the other’s followers. Essentially, in the wake of Trump, the political class is accepting the inevitability of culture war, and urging it on, as something preferable to populist revolt.

Divided Societies In Decline Use Scapegoats To Re-Unify

Ian Welsh, November 24, 2020

America is moving towards a cold, and perhaps hot war with the rising superpower and the last superpower (China and Russia). At home, passions are hot and at some point some groups are going to be chosen as the “bad Americans. The traitors.” Some part of the elite (a small part) will be thrown to the dogs, and so will many of the powerless.

This doesn’t happen in all great powers in decline, to be sure. But it’s common play and it has powerful people other than Thiel pushing it. They see America’s decline and its disunity and they are looking for a way to turn the decline around or at least distract Americans from the actual authors of the decline (that would be people like Thiel) towards scapegoats.

Know Your Enemies

Ian Welsh, November 23, 2020

An enemy is someone who means you harm and has the means to inflict it…. You must know who wants to harm you and has the means. Let’s start here:

“If America’s distribution of income had remained the same as it was in the 3 decades following the second world war… A low-income American earning $35K this year would be earning $61K. A college-educated worker now earning $72K would be earning $120K.”

Everyone responsible for this is your enemy, unless you’re in somewhere between the top 4% to top 10%….

So the people who are responsible have robbed you of a million or more dollars, and a good, prosperous life. These people had names. It started with with intellectuals like Milton Friedman and the oligarchs who funded economics departments to overturn the economic orthodoxy the old order ran on. It moved onto politicians, executive and CEOs. Margaret Thatcher, and Reagan; then Blair and Clinton, who made their victory complete. Thatcher understood that it was Blair who made her victorious, until Labour accepted “There Is No Alternative” they could have simply undone almost everything she did. Clinton, cutting welfare and smashing blacks and poor people in the face with punitive jail sentences, was Reagan’s heir more than George Bush Sr. ever was.(Biden, of course, was there for all of it and supported almost every shitty piece of it. Enemy. If you can’t manage “enemy, but perhaps not as bad an enemy as Trump, you can’t think.”)

Now, here’s another fact: wage theft is almost equal to ALL other theft combined, except (get this) it isn’t considered a crime. That’s right, when your boss steals from you, it’s a civil/regulatory matter! Who’s the enemy?

The Epidemic

Over 900 Mayo staff have gotten COVID-19 in past two weeks 

[Post-Bulletin, via Naked Capitalism 11-23-20]

Week-end Wrap – Political Economy – November 22, 2020

Week-end Wrap – Political Economy – November 22, 2020

by Tony Wikrent

China Emerges Victorious in Trump’s Trade War

China scores victory as 15 Asian nations sign world’s biggest free-trade deal 

[South China Morning Post, via Naked Capitalism 11-16-20]

The Regional Comprehensive Economic Partnership accounts for about one-third of the world’s population and economy, but does not include the United States

East Asia Decouples from the United States: Trade War, COVID-19, and East Asia’s New Trade Blocs (PDF)

Petersen Institute for International Economics, via Naked Capitalism 11-20-20]

Lambert Strether: As Michael Pettis points out, the RCEP members are all net exporters. So who buys the goods?

KT Chong commented in the Weekend Wrap on Ian Welsh last week:

America has not yet realized: [with] the signing of the RCEP, China has effectively prevailed in — i.e., “won” — the open trade and economic war with the US.

With RCEP and the entire Asia Pacific as its economic and free trade sphere, China has maneuvered into an economic and strategic position in which it will have very little to fear from being decoupled or even sanctioned by the US. Now America and its Western allies will no longer be able to defeat China through trade, decoupling, sanctions or any economics means. With RCEP, China’s economic future is secured…. This will be the longest-lasting legacy of the Trump administration: starting and then losing the trade and economic war with China, in just three years, and now China’s rise to economic supremacy is all but certain.

RCEP set to supercharge the New Silk Roads 

Pepe Escobar [Asia Times, via Naked Capitalism 11-16-20]

Week-end Wrap – Political Economy – November 15, 2020

Week-end Wrap – Political Economy – November 15, 2020

by Tony Wikrent

America is an undeveloping state

Trump Is Staging A Coup — Why Are Dems Not Sounding The Alarm?

David Sirota, November 10, 2020

Most ominously of all, Republican lawmakers in Pennsylvania, Georgia, Wisconsin, Michigan and Arizona are already insinuating the results may be fraudulent, even though they haven’t produced any evidence of widespread fraud.

Why is public perception so important? Because as Ohio State University law professor Edward Foley shows in a frighteningly prescient 2019 article, legislatures could use the public perception of fraud to try to invoke their  constitutional power to ignore their states’ popular votes, reject certified election results and appoint slates of Trump electors.

Trump is attempting a coup in plain sight

Ezra Klein, November 7, 2020 [Vox]

[Twitter, via Heather Cox Richardson 11-9-2020]

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The Empire Strikes Back

The Democrats Are Already Back on Their Bullshit: The party is back to what it does best: blaming the left for its failures.

Paul Blest, November 6, 2020 [discourseblog]

Rep. Jim Clyburn, the third-ranking Democrat in the House who represents deep-blue Charleston, SC, implied during the call that if the Democrats talk about Medicare for All or really anything that would remotely seem like the they might try to improve people’s lives once they’re in power, it would be disastrous in Georgia, where the party is trying to secure a Senate majority by taking two seats off Republicans in January runoffs.

This is despite the fact that most of the incumbent freshman members who co-sponsored Medicare for All—many of them not exactly self-described progressives, aside from Katie Porter, the most successful of the bunch—all won their races….

One thing centrist Democrats might consider is that in a lot of places, their brand is absolute garbage even if their policies are well-liked. How else do you explain a 23-point victory for a $15 minimum wage in Florida and a three-and-a-half point loss for Biden, who supported it? How do you square a 67% defeat of right-to-work in Missouri in 2018 along with a six-point loss for Claire McCaskill? What is the lesson from voters casting ballots for recreational weed in Montana and South Dakota, and medical weed in Mississippi, despite those states all going for Trump by double-digits? It’s not the fault of trans people, socialists, or Black Lives Matter.

The Democrats are struggling in these places for the same reason they’re beginning to get successfully primaried from the left, at the local, state, and federal level, in the urban centers they’ve ruled forever. They have not learned the lesson of why Bernie Sanders was such a force in the last two primaries even if he ultimately came up short, or the lesson of why Alexandria Ocasio-Cortez resonates with so many people. 

Corporate Democrats Are Attacking So-Called Far-Left Policies

Senator Bernie Sanders, November 11, 2020 [USA Today, via David Sirota’s Weekly Poster 11-13-2020]

With the blame game erupting, corporate Democrats are attacking so-called far-left policies like Medicare for All and the Green New Deal for election defeats in the House and the Senate. They are dead wrong.

Here are the facts:

►112 co-sponsors of Medicare for All were on the ballot in November. All 112 of them won their races.

►98 co-sponsors of the Green New Deal were on the ballot in November. Only one of them have lost an election.

It turns out that supporting universal health care during a pandemic and enacting major investments in renewable energy as we face the existential threat to our planet from climate change is not just good public policy. It also is good politics. According to an exit poll from Fox News, no bastion of socialism, 72% of voters favored the change “to a government-run health care plan” and 70% of voters supported “increasing government spending on green and renewable energy.”

Week-end Wrap – Political Economy – November 8, 2020

Week-end Wrap – Political Economy – November 8, 2020
by Tony Wikrent

x

x

The 277 Policies for Which Biden Need Not Ask Permission 

[The American Prospect, via Naked Capitalism 11-5-20]

FAST FACTS:

• We found 277 policies that can be enacted through executive branch powers in the Biden-Sanders unity task force document.
• 48 of the policies, or 17 percent, are rollbacks of Trump-era policy changes.
• Immigration (78 policies), Climate Change (54 policies), and the Economy (54 policies) have the most potential executive actions.

Week-end Wrap – Political Economy – November 1, 2020

Week-end Wrap – Political Economy – November 1, 2020

by Tony Wikrent

See something? Report voter suppression and obstacles to voting.

[Twitter, via Naked Capitalism Water Cooler 10-8-20]

“State Fact Sheets”

[Georgetown University, via Naked Capitalism Water Cooler 10-30-20]

“[F]act sheets for all 50 states explaining the laws barring unauthorized private militia groups and what to do if groups of armed individuals are near a polling place or voter registration drive.”

The Pandemic

Mark Meadows: U.S. ‘not going to control’ COVID-19 as nation adds 83,718 new cases 

[UPI, via Naked Capitalism 10-26-20]

“An Oral History of the Day Everything Changed”

Garrett Graff [Wired, via Naked Capitalism Water Cooler 10-29-20]

“On March 11, 2020, the coronavirus pandemic seemed to crystallize in the national consciousness. Americans look back on the turning point.” • Interviews with Mark Cuban, Carolyn Maloney, Elise Stefanik, Douglas Brinkley, Scott Van Pelt, Dan Pfeiffer, Claudia Sahm, Peter Tuz. Gabriella Orr, Philip Rucker, Liz Cheney, and Royce Young, among others; PMCs and upwards. However, Our elites obviously don’t read Naked Capitalism:

• January 23: China Coronavirus Watch: Updated – Another Chinese City Locked Down to Prevent Spread.
• January 28: Coronavirus: Not Looking Good
• January 29: Dr. Victor Shih: Coronavirus MUCH Worse Than SARS

So, arguably, for the truly alert, March 11 was not the day everything changed, but January 23. (And our elites don’t read Taleb either; Joseph Norman, Yaneer Bar-Yam, and Nassim Nicholas Taleb published Systemic risk of pandemic via novel pathogens – Coronavirus: A note on January 26, 2020.) So the question becomes: Why were our elites so oblivious? 

Week-end Wrap – Political Economy – October 25 2020

 Week-end Wrap – Political Economy –  October 25 2020

by Tony Wikrent

VOTE!

See something? Report voter suppression and obstacles to voting.

[Twitter, via Naked Capitalism Water Cooler 10-8-20

Strategic Political Economy

The Enemies Briefcase
Andrew Cockburn [Harpers, November 2020, via Wall Street on Parade 10-18-20]

At some point in the first term, however, experts surmise that an even more secret briefing occurs, one that has never been publicly acknowledged. In it, the new president learns how to blow up the Constitution.

The session introduces “presidential emergency action documents,” or PEADs, orders that authorize a broad range of mortal assaults on our civil liberties. In the words of a rare declassified official description, the documents outline how to “implement extraordinary presidential authority in response to extraordinary situations”—by imposing martial law, suspending habeas corpus, seizing control of the internet, imposing censorship, and incarcerating so-called subversives, among other repressive measures. “We know about the nuclear briefcase that carries the launch codes,” Joel McCleary, a White House official in the Carter Administration, told me. “But over at the Office of Legal Counsel at the Justice Department there’s a list of all the so-called enemies of the state who would be rounded up in an emergency. I’ve heard it called the ‘enemies briefcase.’ ”

These chilling directives have been silently proliferating since the dawn of the Cold War as an integral part of the hugely elaborate and expensive Continuity of Government (COG) program, a mechanism to preserve state authority (complete with well-provisioned underground bunkers for leaders) in the event of a nuclear holocaust. Compiled without any authorization from Congress, the emergency provisions long escaped public discussion—that is, until Donald Trump started to brag about them. “I have the right to do a lot of things that people don’t even know about,” he boasted in March, ominously echoing his interpretation of Article II of the Constitution, which, he has claimed, gives him “the right to do whatever I want as president.” He has also declared his “absolute right” to build a border wall, whatever Congress thinks, and even floated the possibility of delaying the election “until people can properly, securely, and safely vote.”

 

Rochester AFL-CIO Calls for General Strike if Trump Steals Election 

[Payday Report, via Naked Capitalism 10-19-20]

Evo Morales’s Party’s Massive Victory Is a Rebuke to US Elites Who Hailed the Coup 

[Jacobin, via Naked Capitalism 10-20-20]

Week-end Wrap – Political Economy – October 18, 2020

Week-end Wrap – Political Economy –  October 18, 2020

by Tony Wikrent

VOTE! 

See something? Report voter suppression and obstacles to voting.

[Twitter, via Naked Capitalism Water Cooler 10-8-20]

The Epidemic

Steps for Reducing COVID Transmission 

[GoogleDoc) Cyrus Maher [UCSF, via Naked Capitalism 10-11-20]

Lambert Strether’s intro: “This is the must-read for the week. It’s not only a review of the literature, it’s packed with useful, pragmatic information, and very simply and clearly written. Slide 11: Aerosol FTW; slide 20: the “Swiss Cheese” model; plus a series of slides on preventing exposure, reducing exposure, and improving your odds if you are exposed starting at slide 24; see especially slide 48. (Caveat lector: There is a pitch to enroll in UCSF’s clinical trial.)”

Inside the Fall of the CDC 

[Pro Publica, via Naked Capitalism 10-11-20]

Lambert Strether notes: “ the first real explanation, nine months after the fact, of the CDC Covid testing debacle* (originally blamed on contractors, IIRC). My preference for coverage priorities would be: 1) Neoliberal hollowing out; 2) the testing debacle; and 3) political interference, because the first two corrode the clout of the CDC and lead to the third, and this article reverses that order, but it’s nevertheless very good. NOTE * Casting doubt on the ability of the PMC to regulate itself, exactly like the ObamaCare MarketPlace launch debacle. PMC professional associations also have this issue.”

Strategic Political Economy

How Deep Will the Depression Get? – Paul Jay interview of Rana Foroohar and Mark Blyth

[thenanalysis.news, October 8, 2020, via comments on Ian Welsh 10-12-20]

...do the elites get it? Yeah, they absolutely get it. And let me give you a couple of examples. They get it, and they think they’re going to be able to weather the storm….  But the idea was in their minds that the biggest companies, the Googles, the Facebook’s, the Buydo’s, the Alibaba’s had become so big that they were like the East India Company now. They are sort of sovereign international states that float above the nation-state, . . . and that they actually kind of formed their own consensus... these corporations now have so much control and big tech does have way more control even than big finance did because it can actually influence our behavioral patterns because of surveillance, capitalism, and algorithmic behavioral manipulation….

“. . .I used to do . . . finance conferences with big finance. [so I] have 25 of them in the room, all of . . . the big money in the room and I would say the following, talking about politicians and the quality of political capital, ‘it’s gone down over time, and that’s a big problem’

” ‘So how many of you folks would let the people that you [put in office to] run countries by funding them, run your money and your firm?’ and they would all burst out laughing. And then when the laughter died down, I would say, and now you can tell me what’s funny about that because ultimately your firms are dependent on the governments of those countries, the policies that they provide. And it was almost a moment of shame where they went. . . . this points to something that our Marxists colleagues have known for the longest time that while it’s irrational for any individual capitalist to maximize their short-run interests, it’s collectively suicidal.”

Nerdgasm—Thoughts on Tesla's Battery Day

Like many, I was looking forward to what Elon Musk would say about what is easily the most critical and expensive part of building an electric vehicle—the batteries. The presentation was literally breath-taking. Several times I found myself holding my breath as I tried not to miss any important details. Musk and company had gone to great lengths to simplify their descriptions of what they were attempting. Unfortunately for me, I hadn't taken a Chemistry course since 1966 so I found myself fishing in some forgotten waters. Fortunately, it was easy to watch repeats on YouTube so eventually the requisite understanding returned. (I needed four tries ;-)

There is really no sustainable energy future without effective storage. Anyone who has ever lost their electricity knows that life gets extremely difficult VERY fast. Yes, I know humans survived without electricity in hazardous places such a North Dakota in winter. But those people were unusually hardy, strong, and clever. Even so, preparations for winter began the first days of spring. If you had trees, you chopped wood. Trees are stored energy. Unfortunately, there aren't many trees in North Dakota. Fortunately, there are energy sources that will sustain human life up there—lignite coal and then after the 1950s, oil and natural gas. Now that burning fossil fuels has become a big no-no, North Dakota also has abundant wind power but harnessing it as a practical matter requires storage.

Energy storage has been the big scary boogieman since the invention of fire. We like to treat the problem socially the same way we treat hauling out the trash and for many of the same reasons—it is UGHLEE. Clear-cut forests, oil refineries and tank farms, and the like smell funny and in myriad ways are offensive if not serious health hazards. Storage is especially tricky when the energy is electricity. Electricity moves at roughly the speed of light. With tiny exceptions, therefore, electricity must be used the instant it's produced. While this nearly instantaneous speed is easily electricity's most useful characteristic, it seriously hampers more widespread adoption of renewable energy.

Week-end Wrap – Political Economy – October 11, 2020

Week-end Wrap – Political Economy –  October 11, 2020
by Tony Wikrent

Dear Readers — I had no choice but to abandon Blogger this past week. The workaround to the miserable new version of Blogger, suggested by a reader two weeks ago, simply would no longer work. So, sorry that this post comes a good bit later in the day than past posts.  

VOTE!

See something? Report voter suppression and obstacles to voting.

[Twitter, via Naked Capitalism Water Cooler 10-8-20]

Strategic Political Economy

“Encyclical Letter Fratelli Tutti of The Holy Father Francis On Fraternity And Social Friendship”

[The Vatican, via Naked Capitalism Water Cooler 10-7-20]

From the section “Re-envisaging the social role of property”:

119. In the first Christian centuries, a number of thinkers developed a universal vision in their reflections on the common destination of created goods.[91] This led them to realize that if one person lacks what is necessary to live with dignity, it is because another person is detaining it. Saint John Chrysostom summarizes it in this way: “Not to share our wealth with the poor is to rob them and take away their livelihood. The riches we possess are not our own, but theirs as well”.[92] In the words of Saint Gregory the Great, “When we provide the needy with their basic needs, we are giving them what belongs to them, not to us”.[93]

120. Once more, I would like to echo a statement of Saint John Paul II whose forcefulness has perhaps been insufficiently recognized: “God gave the earth to the whole human race for the sustenance of all its members, without excluding or favouring anyone”.[94] For my part, I would observe that “the Christian tradition has never recognized the right to private property as absolute or inviolable, and has stressed the social purpose of all forms of private property”.[95] The principle of the common use of created goods is the “first principle of the whole ethical and social order”;[96] it is a natural and inherent right that takes priority over others.[97] All other rights having to do with the goods necessary for the integral fulfilment of persons, including that of private property or any other type of property, should – in the words of Saint Paul VI – “in no way hinder [this right], but should actively facilitate its implementation”.[98] The right to private property can only be considered a secondary natural right, derived from the principle of the universal destination of created goods. This has concrete consequences that ought to be reflected in the workings of society. Yet it often happens that secondary rights displace primary and overriding rights, in practice making them irrelevant.

Week-end Wrap – Political Economy – September 27, 2020

Week-end Wrap – Political Economy – September 27, 2020
by Tony Wikrent

Slouching toward denouement 

Capitulation Will Not Halt Trump’s Coup
David Sirota, September 24, 2020

An important review of political events last week. Yoy may not agree with Sirota's interpretation, but his analyses has proven correct repeatedly. Remember that Sirota accurately outlined the future course of American politics in his 2008 book, The Uprising: An Unauthorized Tour of the Populist Revolt Scaring Wall Street and Washington. 

After Democrats spent the weekend signaling surrender on the Supreme Court vacancy and suggesting they have no appetite to fight over the judiciary or threaten to expand the court, Trump on Wednesday declared that he may not agree to a peaceful transfer of power, and he openly admitted that he is trying to rush through a judicial nominee so that the court can give him a second term. He suggested that he will “get rid of the ballots” and “there won't be a transfer, frankly. There'll be a continuation."

....Amid this onslaught, Democrats are behaving as if you can stop a coup merely by telling people to vote in an election where their ballots might get thrown out.  But the lesson here is the converse: Democrats’ culture of learned helplessness is no match for authoritarianism.

If opposition party [Democratic Party] lawmakers don’t stop imagining a return to normalcy and brunch — and if millions of Democratic voters don’t start immediately demanding that their party’s leaders begin fighting to stop Trump’s court pick right now — then whatever is left of American democracy is probably finished....

The Crescendo Of The GOP’s War On Democracy
What we see in this sequence of events is the simultaneous and horrifying culmination of the different kinds of “by any means necessary” pathologies that define each party. On the Republican side, this pathology is a relentless amoral quest for power that originally led the party into the realm of voter suppression and that now has resulted in a GOP president openly working to end democracy.

There is no pretense. There is no deception. This is a right-out-in-the-open attempt to destroy the system that lets voters choose their governmental leaders — and that initiative is happening not only in Washington, but in the states.

“According to sources in the Republican Party at the state and national levels, the Trump campaign is discussing contingency plans to bypass election results and appoint loyal electors in battleground states where Republicans hold the legislative majority,” The Atlantic reported yesterday....

The Democrats’ Learned Helplessness
This pathology has been long in the making. For years now, Democratic politicians have come to know that a generation of liberals raised on The West Wing and MSNBC roundtables has been inculcated to not merely tolerate selling out — but to laud it as an act of political savvy. If abandoning, say, pledges to support unions and helping the GOP grind workers into the dust theoretically helps a Democrat outmaneuver a Republican in a swing-state election, the Democratic voter is led to believe that this move must be Good, Smart and worthy of applause. Respect for institutions, bipartisanship and manners is more important than outcomes. 

Ironically, this capitulation-lauding mindset that prioritizes winning hasn’t actually won much — it has corresponded with some of the largest Democratic electoral losses in modern history, allowing the rise of the Republican fascism that now threatens to destroy our country.

David Sirota: Democrats Have Power To Play Hardball, Too 

David Sirota, September 20, 2020

Week-end Wrap – Political Economy – September 20, 2020

Week-end Wrap – Political Economy – September 20, 2020

by Tony Wikrent 

  If this is the last Wrap for a while, this is the reason: “Google, nobody asked for a new Blogger interface”  [TenFourFox Development, via Naked Capitalism Water Cooler 9-17-20]  

“I’m writing this post in what Google is euphemistically referring to as an improvement. I don’t understand this. I managed to ignore New Blogger for a few weeks but Google’s ability to fark stuff up has the same air of inevitability as rotting corpses…. 

When I copy and paste an entire post, such as from RealEconomics (where I write it using Blogger) to IanWelsh or into email for distribution ALL THE LINKS ARE DESTROYED ! ! ! !  They still appear as links, but the URLs all go to the Blogger page I am writing on. HOW DID THIS MAJOR PROBLEM GET THROUGH QUALITY CONTROL? Is there any Quality Control? This is beyond crappification. This renders the new Blogger useless! 

Strategic Political Economy

Frederick Soddy’s Debt Dynamics [Economics from the Top Down, via Naked Capitalism 9-13-20]

In the field of ecological economics, Frederick Soddy looms large. Born in 1877, Soddy became a chemist and eventually won a Nobel prize for work on radioactive decay. Then he turned his attention to economics. Between 1921 and 1934, Soddy wrote four books that looked at how money relates to the physical economy. For his ground-breaking work, Soddy was rewarded with deafening silence.... Like a good natural scientist, Soddy insisted that human society is constrained by the laws of physics. Humans survive, he noted, by consuming natural resources. Exhaust these resources and we’re done for.

Think of humans (and our economy), says Soddy, like a machine. We transform energy into physical work. Like all machines, we’re bound by the laws of thermodynamics, which say that you can’t get something for nothing. Energy output requires energy input. That means humans are forever dependent on natural resources.

Now comes the problem. Our biophysical stock of resources — what Soddy called ‘wealth’ — is bound by the laws of thermodynamics. But money — which Soddy called ‘virtual wealth’ — is bound only by the laws of mathematics. Money can grow forever. Natural resource extraction cannot. This mismatch, Soddy claimed, is the root of most economic problems.

The People, NO—Thomas Frank's new book on anti-Populism

Thomas Frank is a brave man. He has decided to discover how the political movement of Populism has been degraded into a term of slander. This is a project long overdue because only a tiny fraction of those who use the term populism have any idea that this was once a fiercely debated set of ideas passionately believed by many people struggling to solve extremely difficult problems. In my experience, most people worldwide with a university education believe that a populist is an ignorant hick who is terrified of learning and modernity—a bad person to be shunned.

Like Frank, I believe that is a terrible, historically inaccurate, lie. Unfortunately that's the conventional "wisdom". Correcting this terrible ignorance requires far more patience than I have. When confronted with people with fancy degrees from name colleges who wrongly use the word populism to demonstrate their intellectual horsepower, I find it difficult to contain my rage. The reason is that their definitions of Populism bears almost zero relationship with the historical movement that invented the term. Frank got a Ph.D. from the University of Chicago so believes that these rotten examples of useless protoplasm can be reasoned with. The People, NO doesn't pull many punches. It is lovingly crafted—a graceful result of thousands of hours of hard work. Whether that is enough to change any minds...we'll see. But we can hope because real Populism is probably the only system of organized thought that has any chance of addressing the serious problems facing humanity these days.

Waiting for packages was a well-practiced skill of my youth. It was an unavoidable hazard of my small town life. I wanted to read Thomas Frank's latest book on the history of Populism, The People, NO, badly enough to go through the rituals of preordering and I still had a five-week wait. The reasons I wanted a first crack at this book include:

• I have tried to read everything Frank has written ever since I got hooked by reading his The Conquest of Cool. Frank's writing is graceful, accurate, nuanced and complex without lapsing into pretentiousness. In Conquest, he tries to explain how and why the political and cultural passions of the 60s quickly faded into a costume show. As a survivor of the antiwar movement, I had seen multiple examples of exactly that phenomenon including in myself—long hair, bell-bottomed jeans, Red Wing work boots, army surplus shirts, etc. I was especially impressed when he wrote, "If I got it wrong, remember, I wasn't there." Yes, but he still got it very right. There's a lot to be said for diligent research.
• Kansas is Frank's home. Over the years he has reminded us that historically, the Sunflower State can lay legitimate claim to having birthed the People's Party. And even though I have spent most of my life in Minnesota, Kansas has played an out-sized role in developing my own Populist inclinations. My father came from Kansas and his father farmed his whole life. My great grandfather came to Kansas from Sweden in 1873, the very year the USA would return to the gold standard after the Civil War—triggering the nasty agricultural depression that would essentially last until the outbreak of WW I. But he had two years of horticultural studies at the University of Lund so he not only survived, but had six 160 acre farms to distribute to his children after my great grandmother died during the Spanish Flu pandemic in 1918. Meanwhile, my mother's parents were struggling to keep their tiny farm alive in central Minnesota. This grandfather was a voracious reader and spent a significant fraction of his meager disposable income buying the Appeal to Reason and later, the Little Blue Books, both published in Girard Kansas.

Week-end Wrap – Political Economy – September 13, 2020

Week-end Wrap – Political Economy – September 13, 2020
by Tony Wikrent

Strategic Political Economy

Some graphs and comments for LABOR DAY
Tony Wikrent September 7, 2020 [Real Economics]

Industrial Revolutionaries: To understand how to revitalize our economy, you only have to look back to the founders.
Ganesh Sitaraman, September 10, 2020 [The American Prospect]

As policymakers discuss what industrial policy should look like today, the four traditions in American industrial policy offer important lessons. First and foremost, any public policy that shapes or structures a sector of the economy is an industrial policy, even the Jacksonian approach, which rejects strategic planning in any coherent sense. The choice to let powerful individuals and corporations pursue the industries they want, structure them how they want, and lobby government for ad hoc policy changes is just as much of an industrial policy as anything else, albeit not a very good one. Indeed, the “return” of industrial policy is better described as a rejection of the Jacksonian tradition.
For those who advocate for a new industrial policy, the Hamiltonian tradition offers a natural starting point. But the risks inherent in the Hamiltonian approach should be particularly concerning at this moment. There is already a pervasive view that the system is rigged, captured and corrupted by the powerful. Industry concentration in sector after sector is at an apex, bringing economic and geographic inequality with it. Applying the Hamiltonian approach in narrow areas, like determining supply chain needs or the production of public-health materials in a crisis, is both inevitable and desirable. But the agenda for contemporary Hamiltonians must be more than advocating for industrial policy; it must also be designing policies to prevent regulatory capture, whether as a function of lobbying, the revolving door, or personal friendships and elite culture. Failure to do so threatens greater inequality of wealth and power, and with it, the possibility of oligarchy or another populist backlash. 

The Madisonian and Franklinian traditions, meanwhile, are in serious need of revival. Massive public spending in research and development, a public option for broadband and postal banking, and network infrastructure regulation, from tech platform rules to net neutrality, could provide a new foundation for discoveries and commerce. At the same time, antitrust enforcement and the revival of separation-of-function regimes in tech, telecom, banking, agriculture, pharmaceuticals, and other sectors will revitalize competition, enhance innovation, reduce the power of rent-seeking lobbyists, and ensure a more equitable economy through all regions of the country. These two traditions also work together as a system: Government-funded research and regulated network infrastructure provide the foundation and keep the country investing in a longer-term future; a competitive ecosystem sits atop that base, pursuing innovation in a manner that doesn’t concentrate wealth or power. 

The challenge for Madisonians and Franklinians is that their traditions have been deliberately attacked for decades by Jacksonians, so much so that they are largely forgotten, and if remembered, much maligned.

Some graphs and comments for LABOR DAY

For Labor Day today, David Sirota wrote:

if we hope to ever rebuild an economy that works for everyone, we’re going to need many more workers in unions and a much stronger labor movement.

and posted this graph:

Sirota continued:

This graph comes from the Economic Policy Institute — it shows the relationship between union density and the percentage of national income going to the richest 10 percent of Americans. As you can see, the larger the share of the American workforce that’s unionized, the lower the share of national income goes to the super-rich — and vice versa.

I would like to reinforce Sirota's point by adding a graph from Thomas Piketty's Capital in the Twenty-First Century, page 24.

Clearly, there are four shifts that occur:

• Around 1928, when income inequality stops rising;
• Around 1940, when income inequality begins to be overcome; 
• Around 1945, when this improvement ends and income inequality remains about the same for the next three decades; and
• Around 1980, when income inequality suddenly begins to worsen.

Week-end Wrap – Political Economy – September 6, 2020

Week-end Wrap – Political Economy – September 6, 2020
by Tony Wikrent

RIP David Graeber

David Graeber, Caustic Critic of Inequality, Is Dead at 59
[New York Times 9-4-20]

Anthropologist David Graeber, the man behind ‘We are the 99%’ slogan, dead at 59

[RT, via Mike Norman Economics 9-3-20]

Graeber's 2001 book, Debt: The First 5000 Years, ruthlessly slaughtered one of the most sacred cows of mainstream economic orthodoxy -- that barter was the first means of economic transactions. Graeber conclusively marshaled the archaeological and anthropological evidence that debt older than both barter and cash. Unsurprisingly, orthodox economists have ignored Graeber's work to this day. 

R.I.P. David Graeber
Ian Welsh, September 5, 2020

At age 59, he had probably another 10 years and two or three books, possibly important, in him. 

De Gaulle quipped that “the graveyards are full of indispensable (people)” and mostly he’s right, most people’s deaths don’t matter much to anyone who didn’t know them. Someone will replace them who will do about as good a job. But an intellectual or artist worthy of the name is, in some sense, indispensable. There are works they will not do, and if they don’t do them no one will. 

I didn’t know Graeber, and I can’t claim to be personally sad. But he had important work still to be done, and no one will do it now. And without him to defend Debt from its attackers, it will lose luster and importance (because it’s the sort of book which must be destroyed by status-quo defenders, as it suggests capitalism is not what it claims to be.)

Manners, Deference, and Private Property: Or, Elements for a General Theory of Hierarchy
pdf, by David Graeber, 2007

Strategic Political Economy

Oligarchy and Democracy From the Civil War to the Present
Bill Moyers interview of Heather Cox Richardson, August 3, 2020 [CommonDreams]

Yes, the Civil War brought an end to the slave order of the South and the rule of the plantation oligarchs who embodied white supremacy. But the Northern victory was short lived — Southern ideals spread quickly to the West.

HEATHER COX RICHARDSON: And in that West, they discover a land that is already susceptible to the idea of racial and gendered hierarchies, because it has its own history of them. And it’s a place out there where the new American system happens to be a really fertile ground for the Confederate ideology to rise again. And that’s exactly what happens with the extractive industries in the West that encouraged the heavily capitalized cattle markets, for example, or mining industries, or later oil, or even agribusiness. You have in the West a development of an economy and, later on, a society that looks very much like the pre-Civil War South. And over the course of the late 19th century, that becomes part of the American mythology, with the idea that you have the cowboy in the West who really stands against what Southerners and Northern Democrats believe is happening in Eastern society, that a newly active government is using its powers to protect African Americans and this is a redistribution of wealth from taxpayers to populations that are simply looking for a government handout. That’s language that rises in 1871, and that is still obviously important in our political discourse.... 

But the image that has obtained in our textbooks and in our popular culture is the American cowboy, who is beginning to dominate American popular culture by 1866. And that cowboy — a single man, because women are in the cowboy image only as wives and mothers, or as women above the saloons in their striped stockings serving liquor and other things — is a male image of single white men. Although, again, historically a third of cowboys were people of color. It’s a single white man working hard on their own, who don’t want anything from the government. Again, historically inaccurate. The government puts more energy into the American plains than it does any other region of the country. But–