Week-end Wrap – Political Economy – April 25, 2021

 Week-end Wrap – Political Economy – April 25, 2021

by Tony Wikrent

Strategic Political Economy

Plato, Aristophanes and Aristotle on Money-Lust, 399-380 BC
Michael Hudson, April 23, 2021 [Naked Capitalism]

Delphi’s warning that lust for monetary silver (philarguria) was the only thing that could destroy Sparta was echoed by Plato, Socrates and other philosophers accusing wealth addiction of leading to greedy and hubristic behavior that impoverished society at large. Creditors were singled out for reducing debtors to bondage and taking their land.

Near the outset of Plato’s Republic (1 at 331c-d, written c. 380 BC), Socrates (who was put to death nearly twenty years earlier, in 399) discusses the morality of repaying debts in circumstances where this would lead to anti-social consequences. Cephalus, a businessman living in the commercial Piraeus district, states the typical ethic that it is fair to pay back what one has borrowed. Socrates asks if it would be just to return weapons to a man who has become a lunatic. If a madman is intent on murder, Socrates asks, will not returning his weapon to him enable him to commit unjust acts? In view of the likely adverse social consequences, paying back such a creditor would be the wrong thing to do. It all depends on what creditors will do with their returns, and how their actions affect society. Book 8 of the Republic elaborates upon this discussion, describing how wealth leads its owners to act in ways detrimental to society.

Howard University’s removal of classics is a spiritual catastrophe

Cornel West and Jeremy Tate, April 19, 2021 [Washington Post]

Academia’s continual campaign to disregard or neglect the classics is a sign of spiritual decay, moral decline and a deep intellectual narrowness running amok in American culture. Those who commit this terrible act treat Western civilization as either irrelevant and not worthy of prioritization or as harmful and worthy only of condemnation.

Sadly, in our culture’s conception, the crimes of the West have become so central that it’s hard to keep track of the best of the West. We must be vigilant and draw the distinction between Western civilization and philosophy on the one hand, and Western crimes on the other. The crimes spring from certain philosophies and certain aspects of the civilization, not all of them.

‘Divisive’: How Corporate Media Dismiss Ideas Unpopular With Elites 

[FAIR, via Naked Capitalism 4-19-2021]

The carnage of mainstream neoliberal economics

Capitalism as a Suicide Cult 

[CounterPunch, via Naked Capitalism 4-24-20]

...the problems causing such widespread social misery are systemic, means that the solutions need to be so as well. To understand why, the difference between socialism and social welfare liberalism is that socialism requires a redistribution of power— from corporate executives and capitalist owners, to workers. A transfer of power, if not ownership, is what the New Deal accomplished. Conversely, welfare state liberalism subsidizes capitalism. One third of the recipients of food stamps (SNAP) who work, work at Walmart. Seventy percent work. SNAP is a subsidy of low wage employers, not its recipients.

The transfer of power of the New Deal was accomplished 1) through reforms that constrained business in its ability to rob people and crash the economy, and 2) through building public institutions that redistributed power from oligarchs and executives to workers. The Glass-Steagall Act of 1933 separated investment from commercial banking, thereby leaving investment banks to speculate with their own money. This effectively ended the financial mania that cascaded into the forced sales of bank ‘assets’ in the early years of the Great Depression. As readers know, Glass-Steagall was repealed in 1999. The result: a world-historical residential real estate bubble and the Great Recession.

Week-end Wrap – Political Economy – April 18, 2021

 Week-end Wrap – Political Economy – April 18, 2021

by Tony Wikrent

Strategic Political Economy

Michael Hudson: America’s Neoliberal Financialization Policy vs. China’s Industrial Socialism
Michael Hudson, April 15, 2021 [Naked Capitalism]

US West prepares for possible 1st water shortage declaration

[Associated Press, via Mike Norman Economics, April 17, 2021]

The Pandemic

India’s health system has collapsed
[Hindustani Times, via Mike Norman Economics, April 16, 2021]

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

Shifting Balance of Power?
Barry Ritholtz, April 16, 2021 [The Big Picture]

A massive shift is occurring in the labor market today, one that has been misinterpreted by economists of all stripes…. fear of the virus is a valid reason keeping people from low paying jobs requiring interaction with potentially deadly, infectious members of the public. “Who the hell wants to risk their lives for $8 an hour before taxes?” 

….I suspect it is something broader, more than merely the economic recovery being impacted by Covid. Maybe more of a significant change, perhaps even a secular reversal of the longstanding power dynamic between capital and labor.

“Investors lament being frozen out of Biden infrastructure plan” [Financial Times, via Naked Capitalism Water Cooler 4-13-21] “President Joe Biden’s ‘American jobs plan’, unveiled last month, calls for $2tn of investment in highways, electrical grids and other basic infrastructure. At the same time, the White House put forward corporate tax reforms that it said would generate enough money to pay for the investment spree within 15 years. That has disappointed some investors and asset managers who once expected public-private partnerships would be a lucrative financing opportunity.”

...By the late 1960s/early 70s, the economy began shifting. Rising inflation and the collapse of unions were but two factors impacting this once idyllic economy. The next the next half century saw an ongoing increase in corporate power, both politically and economically. There is a longer discussion to be had about how the Supreme Court of the United States made some truly boneheaded WTF?!? decisions – Corporations are people; money is speech? – as part of that ideologically driven shift. You can debate the jurisprudence or ideology behind these, but the results were a widespread decrease in the standard of living for many Americans. Political donations and lobbying that were once seen as corrupt graft became the norm. Thanks, SCOTUS!

Week-end Wrap – Political Economy – April 11, 2021

 Week-end Wrap – Political Economy – April 11, 2021

by Tony Wikrent

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

Podcast: Are We Winning A New Political Era? (Exclusive for Subscribers) Discussion with Anand Giridharadas

David Sirota [Daily Poster April 5, 2021]

Grassroots pressure has forced Joe Biden to discard parts of his past record — and may finally be ending the Reagan Era.

Beginning at 21:20: 

Having a debate about new bills, not being consumed by deficit anxiety… is a profound cultural turning point [that] augers en entirely different era…. We have to be mindful of how cultures change [and] hat it looks like when what you’ve been fighting for begins to bloom….

Four Ways of Looking at the Radicalism of Joe Biden

Ezra Klein [New York Times, April 8, 2021, via The American Prospect 4-9-2021]

Most discussions of the renewed ambitions of the Democratic Party focus on ideological trends on the left. The real starting point, however, is the institutional collapse of the right…. The long campaign against the ideological compromise that was the Affordable Care Act is central here, but so too was then-Speaker John Boehner’s inability to sell his members on the budget bargain he’d negotiated with President Barack Obama, followed by his refusal to allow so much as a vote in the House on the 2013 immigration bill. And it’s impossible to overstate the damage that Mitch McConnell’s stonewalling of Merrick Garland, followed by his swift action to replace Justice Ruth Bader Ginsburg, did to the belief among Senate Democrats that McConnell was in any way, in any context, a good-faith actor. They gave up on him completely.
The result is that Obama, Biden, the key political strategists who advise Biden and almost the entire Democratic congressional caucus simply stopped believing Republicans would ever vote for major Democratic bills….
The backdrop for this administration is the failures of the past generation of economic advice. Fifteen years of financial crises, yawning inequality and repeated debt panics that never showed up in interest rates have taken the shine off economic expertise. But the core of this story is climate. “Many mainstream economists, even in the 1980s, recognized that the market wouldn’t cover everyone’s needs so you’d need some modest amount of public support to correct for that moderate market failure,” Felicia Wong, the president of the Roosevelt Institute, said. “But they never envisioned the climate crisis. This is not a failure of the market at the margins. This is the market incentivizing destruction.”
…. Even beyond climate, political risks weigh more heavily on the Biden administration than they did on past administrations. This is another lesson learned from the Obama years. The Obama team had real policy successes: They prevented another Great Depression, they re-regulated the financial sector, they expanded health insurance to more than 20 million people. But Democrats lost the House in 2010, effectively ending Obama’s legislative agenda, and then they lost the Senate in 2014, and then Donald Trump won the White House in 2016, and then Democrats lost the Supreme Court for a generation.…
Even when Biden was running as the moderate in the Democratic primary, his agenda had moved well to the left of anything he’d supported before. But then he did something unusual: Rather than swinging to the center in the general election, he went further left. And the same happened after winning the election. He’s moved away from work requirements and complex targeting in policy design. He’s emphasizing the irresponsibility of allowing social and economic problems to fester, as opposed to the irresponsibility of spending money on social and economic problems. His administration is defined by the fear that the government isn’t doing enough, not that it’s doing too much.

Civic republicanism - The Puritan Ethic and the American Revolution

Umm, no, I’m not talking about the damn Republican Party here: I think it’s more accurate to start labeling that cabal of cravenly corrupt clowns the "(not)Republican Party." To promote this relabeling, let us ask: What is a republic? And, what type of economy should a republic have? To that end, here is one suggested reading. 

The Puritan Ethic and the American Revolution 

Edmund S. Morgan, “The Puritan Ethic and the American Revolution,” The William and Mary Quarterly, Vol. 24, No. 1 (Jan., 1967), pp. 3-43

One note before the excerpt: the transition, under liberalism, from political economy to economics and politics as two separate bodies of intellectual pursuit involved removing the questions of morality (ethics) from economic considerations: only market forces were the acceptable means for judging economic outcomes.

“The Ethic conveyed the idea of each man’s and woman’s “calling” in life. “The emphasis of [work or labor] was on productivity for the benefit of society. In addition to working diligently at productive tasks, a man was supposed to be thrifty and frugal. It was good to produce but bad to consume any more than necessity required. A man was but a steward of the possessions he accumulated. If he indulged himself in luxurious living, he would have that much less with which to support church and society. If he needlessly consumed his substance, either from carelessness or from sensuality, he failed to honor the God who furnished him with it.”

….

“The calling of a ruler, as the colonists and their Puritan forebearers saw it, was like any other calling: it must serve the common good; it must be useful, productive; and it must be assiduously pursued.”

….

The Puritan Ethic whether enjoined by God, by history, or by philosophy, called for diligence in a productive calling, beneficial both to society and to the individual. It encouraged frugality and frowned on extravagance. It viewed the merchant with suspicion and speculation with horror. It distrusted prosperity and gathered strength from adversity…. The merchants actually had more than a short-range interest at stake in their reluctance to undertake nonimportation. The movement, as we have seen, was not simply a means of securing repeal of the taxes to which merchants along with other colonists were opposed. The movement was in fact anticommercial, a repudiation of the merchant’s calling. Merchants, it was said, encouraged men to go into debt. Merchants pandered to luxury. Since they made more on the sale of superfluous baubles than on necessities, they therefore pressed the sale of them to a weak and gullible public. What the advocates of nonimportation demanded was not merely an interruption of commerce but a permanent reduction, not to say elimination, of it. In its place they called for manufacturing, a palpably productive, useful calling.

Is there a path here by which the evangelical christianists might be saved by prompting them to engage in an opposition to consumer culture and in favor of a more responsible stewardship of resources? 

Week-end Wrap – Political Economy – April 4, 2021

Week-end Wrap – Political Economy – April 4, 2021

by Tony Wikrent

Strategic Political Economy

The Biden Stimulus: If You Think Inflation is the Problem, Just Wait

[YouTube, March 1, 2021]

Very informative part is Blyth’s reply beginning at 4:06.

x

x

So essentially what we're doing is a 2 trillion dollar experiment in different theories of inflation. Why does that matter? The progressive side of the Democrats think of the world in this way: the fundamental problem [is that] wages for 60% of Americans haven't moved almost since the 1970s.  And up to the 50th percentile of the income distribution Americans earn $20 an hour or less. You can't run this country with that degree of working poverty.  That's what's behind the anger; that’s what’s behind the populism. We need to spend a lot of money to make the economy run hot. We don't need to worry about inflation because interest rates are low for a lot of reasons and there's been no inflation for 40 years. We can boost wages—and if we do, we stabilize the situation, and a lot of the bad shit we've been dealing with for the past several years will not come back.

On the other hand you have the deficit hawks, the Republicans, the centrist economists saying, no no , you'll have terrible inflation. They're essentially saying things are okay, and the reason you have populism is: yeah, there’s been some people who have been left behind, but there's a lot of racism there, and this is a cultural struggle. Really the economy is doing fine and this is far too much stimulus.

Now what you see there are basically people using economic arguments to bolster their priors. So if you think populism and the ills of the US is about low wages, you will say inflation is not a problem. If you don't think that then you don't say that it is a problem. I doubt that it’s really about people worried about inflation. But I worry because I buy the argument that wages matter. And I worry that if we don't try this in this moment you're not going to get wage growth—and if you don't get consistent wage growth over the next couple years the Democrats are dead when it comes around to the mid terms.

The minimum wage would be $44 per hour if it had grown at the same rate as Wall Street bonuses 

[Business Insider, via Naked Capitalism 3-30-21]

Abolitionists, Political Economists, and Capitalism

Abolitionists, Political Economists, and Capitalism 

James L. Huston

Journal of the Early Republic , Autumn, 2000, Vol. 20, No. 3 (Autumn, 2000), pp. 487-521

(resides on JSTOR)

The relationship between abolitionism and capitalism in the United States remains for historians a contentious subject. At the moment four general interpretations dominate. Neomarxists argue that abolitionism was the key movement that legitimated market social relations in the United States, in particular the supremacy of wage labor as the institutional means of fixing the economic position of manual labor. In this interpretation, the abolitionists wittingly or not paved the road for the conquest of industrial capitalism and oppression of the working class. Thomas Haskell offers a second approach, ideologically opposite the neomarxists, that found human sensitivity to others originating in market transactions: because individuals in a commercial economy learned to obey their promises when written down in legal contracts, they learned to deal with others without resorting to physical coercion, thereby inculcating a humanitarian sensibility. A third rendition emphasizes republicanism in abolitionist thought. Abolitionists were heirs of the American Revolution and republican thinking; their attack on slavery was based on denial of selfishness and an advocacy of public virtue. From this perspective, the abolitionists were anticapitalists because they denied the role of self-interest that lay at the core of capitalist thought and behavior. Finally, the evangelical interpretation insists that the abolitionists were Christian zealots and moralists, opposed to capitalism either because morality superceded the economic process or because they would not place the worship of mammon above worship of the deity. [1]

The main contenders at the present seem to be the neomarxist and evangelical renditions. In 1998 the publication of two important works showed how vividly these two interpretations clashed. Amy Dru Stanley insisted that abolitionists trumpeted the key doctrines of liberal capitalist doctrine: self- ownership, voluntary economic arrangements, social relations governed by contract, and the correctness of wage labor. "Legitimating wage labor was a central part of the abolitionist project, but never its sum total," she argued; "for most abolitionists, the autonomy expressed in wage labor was but an offshoot of the underlying right of property in the self that constituted the taproot of contract freedom." At the same time, the late Paul Goodman portrayed abolitionism as a reaction against capitalism (or the market transformation). "Abolition," he wrote, "was a struggle to impose on social and economic relations the moral principles that were rooted in Christian teachings." [2] This article seeks to refine historical understanding of the ties between abolitionism to the emerging capitalism of the United States in the nineteenth century and generally sides with Goodman's perspective. Abolitionists possessed a biblical political economy, not a classical liberal one....

[1] For the emphasis upon abolitionists' role in legitimizing wage labor in capitalism, see John Ashworth, Slavery, Capitalism, and Politics in the Antebellum Republic: Vol. I: Commerce and Compromise, 1820-1850 (New York, 1995), 82-84,131-81; David Brion Davis, The Problem of Slavery in the Age of Revolution, 1770-1823 (Ithaca, 1975), 45-47; and Davis, "Reflections on Abolitionism and Ideological Hegemony," American Historical Review, 92 (Oct. 1987), 797-812. For Thomas Haskell, see Haskell, "Capitalism and the Origins of the Humanitarian Sensibility," parts 1 and 2, American Historical Review, 90 (Apr. 1985) 339-61 and (June 1985), 547-66. For a treatment of abolitionism utilizing the republican synthesis, see Daniel J. Mclnerney, The Fortunate Heirs of Freedom: Abolition and Republican Thought (Lincoln, 1994). On the abolitionists and religion, consult John R. McKivigan, The War Against Proslavery Religion: Abolitionism and the Northern Churches, 1830-1865 (Ithaca, 1984); also, James Brewer Stewart, Holy Warriors: The Abolitionists and American Slavery (New York, 1976; 2d ed., 1996). A recent synthesis of work on reformers has reduced the stress on modernization that filled earlier works: Steven Mintz, Moralists and Modernizers: America's Pre-Civil War Reformers (Baltimore, 1995), xiv-xx, 9-10. 

[2] Amy Dru Stanley, From Bondage to Contract: Wage Labor, Marriage, and the Market in the Age of Slave Emancipation (New York, 1998), 20; see also 105, 160; Paul Goodman, Of One Blood: Abolitionism and the Origins of Racial Equality (Berkeley, 1998), xiv, 140.

Read entire article on JSTOR (Requires a subscription, which your local library might have. Most college and university libraries have subscriptions--you can go there and download it through their wireless internet connection.)

Week-end Wrap – Political Economy – March 28, 2021

 Week-end Wrap – Political Economy – March 28, 2021

by Tony Wikrent

Strategic Political Economy

Genocide. 

[Brasilwire, via Naked Capitalism 3-22-21]

In January of this year, a study published by the Center for Research and Studies on Health Law at the University of São Paulo, and NGO Conectas, proved that the spread of the coronavirus in Brazil was a government strategy. The same researchers now insist the president should be investigated for genocide.

In May 2020, the far-right president insisted that “only the weak, the sick and the elderly should be worried” about Covid-19. What sounded like denialism a year ago now reads like a candid admission…. No other country on earth had a head of state actively preventing their population from being vaccinated, whilst leaving the poorest unable to protect themselves through isolation.

A recent study in Brazil’s largest city São Paulo shows that those living in its poorest neighbourhoods are 3 times more likely to die of Covid-19 than those in its wealthiest.

A Better Path to Tech Reform? Felony Charges 

[Wired, via Naked Capitalism 3-24-21]

...there are two options to buy time, neither of which requires congressional action. It merely requires the government to apply regulatory tools that do not get used frequently, namely subjecting business executives to felony prosecution.

The first option is an antitrust case against Google led by the attorney general of Texas that alleges a price fixing conspiracy in digital advertising. The complaint names Facebook as a co-conspirator. Price fixing falls under Section 1 of the Sherman Act, significant because it does not require proof of harm. The attempt itself is a crime. And if, as has been alleged, there is evidence of an agreement for mutual legal defense, there may be a second count. When appropriate, executives can be subject to felony prosecution, punishable by up to three years in prison. Google denies any wrongdoing.

The Biden Justice Department has an opportunity to join the Texas case or to pursue its own case as a felony. DOJ can adds Google and Facebook executives to its criminal antitrust indictments. The situation warrants it, as the harms in question are the result of deliberate business choices. The threat of imprisonment might change the calculus for internet CEOs, creating for the first time an incentive to make the changes to their business model necessary to stop harm to public health, democracy, privacy, and competition….

The events of the past year have exposed structural flaws in the economy, the health care system, the electrical grid, and American politics. Some of these problems may appear to be less acute than the pandemic, but all require attention now. This poses a huge challenge for the Biden administration, which is hamstrung by 40 years of deregulation and underfunding of government institutions. They have to use every available tool.

Week-end Wrap – Political Economy – March 21, 2021

 Week-end Wrap – Political Economy – March 21, 2021

by Tony Wikrent

Strategic Political Economy

[Twitter, via Naked Capitalism 3-15-21]

x

The Dark Money “Ring” of Charles Koch and Leonard Leo Gets an Airing Before the U.S. Senate – Followed by a Mainstream Media News Blackout

Pam Martens and Russ Martens, March 15, 2021 [Wall Street on Parade]

Last Wednesday, March 10, a Subcommittee of the Senate Judiciary Committee held a hearing of critical importance to every American on the growing tsunami of dark money that is corrupting the U.S court system, up to, and including, the U.S. Supreme Court. Senator Sheldon Whitehouse (D-RI), who has written extensively on the corrupting influence of dark money on American democracy, chairs that Subcommittee on Federal Courts, Oversight, Agency Action and Federal Rights….

Had a truly objective Editorial Board at the Wall Street Journal taken the time to read the full written testimony of Lisa Graves, President of the Center for Media and Democracy, that was presented at this hearing, there would be no doubt in their minds that the Federal court system in the United States has been obscenely corrupted by dark money, coming predominantly from fossil fuels billionaire Charles Koch and his dark money network….

Graves’ courageous testimony named names and backed up her charges with hard facts. Graves explained the campaign to seat Amy Coney Barrett on the Supreme Court…. Graves writes that Leonard Leo, the Co-Chairman of the Koch-funded Federalist Society “sits at the hub of a secretive scheme to capture the courts and remake our laws, with a cadre of his confidantes and groups.” Graves says that “more than $400 million” was received by this dark money network between 2014 and 2018…. 

Graves explains the motive behind the involvement of the Federalist Society as follows:

“The Federalist Society is also stacked with corporate attorneys whose day jobs are to defend some of the biggest corporations in the world. Through its publications and events, the Federalist Society advances a pro-corporate agenda to limit the ability of Congress and federal agencies to regulate corporations and to thwart the mitigation of climate change under the guise of a merely neutral philosophy.”

Graves also provided written testimony on a memo that was sent by the Koch network to tout its success in getting the Trump administration to enact its agenda. Charles Koch’s late brother and long-time ally, David, had written in the memo: “Our efforts have been aligned with the Trump administration’s efforts to use Executive Orders to direct agencies and departments to dismantle regulatory overreach.”

Week-end Wrap – Political Economy – March 14, 2021

Week-end Wrap – Political Economy – March 14, 2021

by Tony Wikrent

Strategic Political Economy

Russia turns away from NASA, says it will work with China on a Moon base 

[Ars Technica, via Naked Capitalism 3-10-21]

Brazil's High Court Invalidates Lula's Convictions, Leaving Him Eligible to Run Against Bolsonaro

[greenwald.substack.com, via Naked Capitalism 3-10-21]

….this is increasingly becoming the playbook for neoliberal elites who are angry that the population has defied them by voting for those they oppose. Thwarted by the democratic process, elites now resort instead to subversions of democracy in the name of upholding it. The employ frivolous impeachments to remove the leader whose legitimacy they never accepted, lawfare designed to make governance impossible through endless investigations or even the unjust imprisonment of their political opponents, and a full-scale union with the corporate media which openly and shamelessly ceases to report and instead engages in tawdry political activism to destroy the leaders chosen by the disobedient population. Indeed, the oligarchical Brazilian media so openly and overwhelmingly favored Dilma’s impeachment that the steadfastly apolitical press freedom group Reporters Without Borders dropped Brazil to 104th in its annual press freedom rankings and warned that the Brazilian press’ abandonment of the journalistic function while agitating for Dilma’s removal was so severe that the Brazilian press itself endangered press freedom.

As neoliberalism destroys more and more lives around the world, leaving an endless array of social pathologies in its wake, power centers will seek out tactics to subvert the democratic will. The increasing insistence on censoring the internet and controlling the flow of information is one symptom of elite fear of popular rage and desperation. So, too, is the related attempt by corporate media outlets to regain their monopoly over news and discourse by discrediting anyone or anything which sits in opposition to them. And the playbook that resulted in Dilma’s removal from office less than eighteen months after Brazil elected her, followed by the unjust imprisonment of Lula to ensure he could not run and win again, is reflective of a pattern already emerging in the west: abusing the force of law, propaganda and state processes to destroy those whom the population was not supposed to elect.

The same ruling class fears motivate increasing attacks on anyone who effectively exposes the rot and deceit of their conduct. Just as the U.S. Government has imprisoned Julian Assange and exiled Edward Snowden, the Brazilian government is intent on imprisoning my source, Walter Delgatti, for the crime of exposing the truth (they also tried, unsuccessfully, to criminally prosecute me for the crime of doing the reporting that exposed the fraud of Lula’s prosecution).

The guardians of the ruling neoliberal order know their days are numbered and will become increasingly desperate to cling to power for as long as it can. The playbook used and just exposed in Brazil will be seen with greater frequency as a hated elite seek to weaken that which most threatens their interests: a discourse and a democracy they can no longer manipulate and control.

NYT Fails to Examine Its Participation in Brazil’s ‘Biggest Judicial Scandal’ 

[FAIR, via Naked Capitalism 3-10-21]

Week-end Wrap – Political Economy – March 7, 2021

Week-end Wrap – Political Economy – March 7, 2021

by Tony Wikrent

Strategic Political Economy

All futurism is Afrofuturism 

Noah Smith [Noahpinion, via Naked Capitalism 3-4-21]

A recent paper in The Lancet attempts to model how African population will change as women’s education and access to contraception (the two biggest things other than GDP that we know affect fertility) increase. They predict a population for Sub-Saharan Africa of about 3.4 billion by century’s end — only 0.8 billion lower than the UN median projection. That’s still an absolutely enormous fraction of humanity, and an even larger chunk of the young population.

Thus, the future of Africa is the future of humanity, despite the fact that Africa will experience a normal fertility transition and its population will eventually stabilize rather than explode. I don’t think people in the U.S. (or, probably, other regions) have come to grips with the full import of this.

But what happens to Africa is even more important, relative to the rest of the world, than these population numbers suggest! This is because Africa is still a mostly poor region. Economics teaches us that marginal utility — i.e. the amount life gets better when you get a little richer — is much higher for poor people. And with China and (to some degree) India industrializing successfully and seeing population growth slow, soon most of the extremely poor people in the world will probably reside in Africa.

Chinese vaccines sweep much of the world, despite concerns 

[AP, via The Big Picture 3-3-21]

China’s vaccine diplomacy campaign has been a surprising success: It has pledged half a billion doses of its vaccines to more than 45 countries. With just four of China’s many vaccine makers claiming they are able to produce at least 2.6 billion doses this year, a large part of the world’s population will end up inoculated not with the fancy Western vaccines boasting headline-grabbing efficacy rates, but with China’s humble, traditionally made shots.

Trends in Income From 1975 to 2018 

[Rand Corporation, via Naked Capitalism 2-28-21]

 We document the cumulative effect of four decades of income growth below the growth of per capita gross national income and estimate that aggregate income for the population below the 90th percentile over this time period would have been $2.5 trillion (67 percent) higher in 2018 had income growth since 1975 remained as equitable as it was in the first two post-War decades. From 1975 to 2018, the difference between the aggregate taxable income for those below the 90th percentile and the equitable growth counterfactual totals $47 trillion. 

Week-end Wrap – Political Economy – February 28, 2021

Week-end Wrap – Political Economy – February 28, 2021

by Tony Wikrent

Strategic Political Economy

Austerity and the Rise of the Nazi Party

Gregori Galofré-Vilà, Christopher M. Meissner, Martin McKee, and
David Stuckler
Economic History Association, published online by Cambridge University Press, 11 January 2021

We study the link between fiscal austerity and Nazi electoral success. Voting data from a thousand districts and a hundred cities for four elections between 1930 and 1933 show that areas more affected by austerity (spending cuts and tax increases) had relatively higher vote shares for the Nazi Party. We also find that the localities with relatively high austerity experienced relatively high suffering (measured by mortality rates) and these areas’ electorates were more likely to vote for the Nazi Party. Our findings are robust to a range of specifications including an instrumental variable strategy and a border-pair policy discontinuity design….

In this paper, we investigate the association between the austerity measures implemented by the German government between 1930 and 1932 and voters’ increased support for the Nazi Party. A growing literature studies the interactions between political preferences and fiscal policy with evidence that austerity packages are correlated with rising extremism (Alesina, Favero, and Giavazzi 2019; Bor 2017; Eichengreen 2015, 2018; Fetzer 2019; Ponticelli and Voth 2020)….

We also provide some novel quantitative estimates concerning the channels by which austerity mattered. To do so, we study the relationship between mortality rates and austerity. We find a plausible link, since where public spending on health care dropped more, mortality was higher. These places also saw a relatively large increase in Nazi support at the polls. Finally, looking at archival documents of Nazi propaganda, we document how Nazi leaders invoked austerity to attack Brüning and the Weimar Republic and how Brüning’s tax rises were seen as inefficient and unfair by the German masses. 

Eviction Moratorium Deemed Unconstitutional by Federal Judge in Texas

[Naked Capitalism 2-26-21]

Business Licensing and Constitutional Liberty
Amanda Shanor [The Yale Law Journal 314 (2016)]

….the Constitution is increasingly being invoked as a trump against certain types of economic regulation. My thesis is that the central arguments currently marshaled in favor of extending stringent judicial review to business licensing regulations are untenable. These lines of reasoning have no logical endpoint. Individual rights, on this view, could trump any manner of governmental regulation in favor of free-market ordering.

These business licensing cases raise deep and pressing questions about the purpose and scope of rights and constitutional judicial review more broadly today. Underlying these debates are competing conceptions of constitutional liberty. One view, perhaps the ascendant one, reflects free-market libertarian values, whereas others understand the First and Fourteenth Amendments to reflect ideals such as democratic self-governance, anti-subordination, or civic republicanism. Resolving disputes about the constitutional status of business licensing requires that we grapple with those deeper questions.

Week-end Wrap – Political Economy – February 21, 2021

Week-end Wrap – Political Economy – February 21, 2021

by Tony Wikrent

Strategic Political Economy

Nietzsche’s Marginal Children: On Friedrich Hayek.

Corey Robin [The Nation, May 7, 2013]

Why have marxists and socialists failed so spectacularly in opposing movement conservatism and neoliberalism?  I think one major factor is an intellectual infatuation with Nietzsche, which blinds them to Nietzsche’s oligarchical pedigree and mindset. This is why I believe we need a revival of the ideas and ideals of civic republicanism, because the issues always come down to republicanism versus oligarchical elites. 

The Nobel Prize–winning economist Friedrich Hayek is the leading theoretician of this movement, formulating the most genuinely political theory of capitalism on the right we’ve ever seen. The theory does not imagine a shift from government to the individual, as is often claimed by conservatives; nor does it imagine a simple shift from the state to the market or from society to the atomized self, as is sometimes claimed by the left. Rather, it recasts our understanding of politics and where it might be found. This may explain why the University of Chicago chose to reissue Hayek’s The Constitution of Liberty two years ago after the fiftieth anniversary of its publication. Like The Road to Serfdom (1944), which a swooning Glenn Beck catapulted to the bestseller list in 2010, The Constitution of Liberty is a text, as its publisher says, of “our present moment.”

But to understand that text and its influence, it’s necessary to turn away from contemporary America to fin de siècle Vienna. The seedbed of Hayek’s arguments is the half-century between the “marginal revolution,” which changed the field of economics in the late nineteenth century, and the collapse of the Habsburg monarchy in 1918. It is by now a commonplace of European cultural history that a dying Austro-Hungarian Empire gave birth to modernism, psychoanalysis and fascism. Yet from the vortex of Vienna came not only Wittgenstein, Freud and Hitler but also Hayek, who was born and educated in the city, and the Austrian school of economics….

Throughout his writing life, Nietzsche was plagued by the vision of workers massing on the public stage—whether in trade unions, socialist parties or communist leagues. Almost immediately upon his arrival in Basel, the First International descended on the city to hold its fourth congress. Nietzsche was petrified. “There is nothing more terrible,” he wrote in The Birth of Tragedy, “than a class of barbaric slaves who have learned to regard their existence as an injustice, and now prepare to avenge, not only themselves, but all generations.” Several years after the International had left Basel, Nietzsche convinced himself that it was slouching toward Bayreuth in order to ruin Wagner’s festival there. And just weeks before he went mad in 1888 and disappeared forever into his own head, he wrote, “The cause of every stupidity today…lies in the existence of a labour question at all. About certain things one does not ask questions.”

Beware Economists Warning Against “Too Much Stimulus” (Again)
Barry Ritholtz, February 18, 2021 [The Big Picture]

If you want to blame a specific school of thought for why the post-financial crisis recovery was so weak, start with the group who opposed a trillion dollar fiscal response to the GFC.

The Anti-Stimulus, Anti-Rescue crew have not learned anything from their prior mistakes. Not everyone who signed onto the full page advertisement taken on in the New York Times on January 9th, 2009 remain n the anti-stimulus camp. But there is a substantial overlap between those on the list below who opposed a more robust response to the GFC and a current group opposed a more robust response to the pandemic…. Here is the CATO Institute’s full page NYT ad from January 9, 2009:

Week-end Wrap – Political Economy – February 14, 2021

Week-end Wrap – Political Economy – February 14, 2021

by Tony Wikrent

Strategic Political Economy

“How The US Legalized Corruption”

[Indi Samarajiva, via Naked Capitalism Water Cooler 2-8-21]

“Americans have this thing called a fundraiser where you put a pile of bribes on a table, wave a wand of asparagus over it, and it just disappears. Access is still bought, but somehow because people ate food, it’s not corruption anymore. The press will literally report on the food. “In New York last weekend, $100,000 got donors a plate of grilled chicken and asparagus, a posed picture with President Trump in a palatial, 60-foot-long entryway, and a 20-minute group chat with the president. WTF is this? In any other country you wouldn’t report on the chicken, you’d report on the corruption.” (Details of a fund raiser dinner from the Washington Post).

Because this is all legal, Americans ignore how fucking insane it is. It’s just daylight bribery. This is what I mean when I say that America has legalized corruption. It’s not that your system is corrupt. Your system is corruption.

Property, Liberty, and the Rights of the Community: Lessons from Munn v. Illinois
Paul Kens [Buffalo Public Interest Law Journal, Volume 30 (2011)]

Abstract: When considering the extent to which the United States Constitution places a limit on government regulation of business, today's historians and constitutional theorists treat the question as a matter of balancing economic liberty or property rights against government power. Moreover, modem scholars commonly maintain that this balancing formula represents the predominant tradition in constitutional history. Tracing it back to the tenants of Jacksonian democracy that emphasized distrust of government, they imply that constitutional history has developed as a straight line: always with an emphasis on individual liberty and always with a presumption that entrepreneurial liberty should be favored over governments' power to regulate.

This paper will use the 1877 case Munn v. Illinois to demonstrate that prior to the late 1880s the paradigm for determining the constitution's limits on government regulation of business was actually quite different. There is no doubt that the Court has always emphatically recognized the importance of property rights. Nevertheless, during the first century under the Constitution, it treated business regulation as a matter of balancing entrepreneurial liberty against the rights of the community. Furthermore, it consistently held that, because state economic regulations were an expression of popular sovereignty and rights of the community, they should be presumed to be valid.

Munn is significant because in the conventional narrative it is portrayed as a steppingstone in the straight line evolution of constitutional doctrine that emphasizes individual liberty. A closer look at the case and the events surrounding it will demonstrate, however, that the majority in Munn actually based its opinion on the traditional emphasis on rights of the community. It will further demonstrate that for more than a decade after the opinion the Supreme Court steadfastly clung to that traditional view. Even under persistent pressure to change.

Fear of the Few: John Adams and the Power Elite
Luke Mayville [Polity, Volume 47, Number 1, January 2015]

Abstract:The political thought that informed the design of the United States Constitution largely neglected the danger posed by socioeconomic elites. The writings of John Adams, I contend, are exceptional in this regard. Using Adams’s writings as a vantage point, this article exposes two important blind spots in mainstream Founding-era thought and the Constitution it informed. Whereas the likes of Hamilton and Madison insisted that majorities held the clear preponderance of power in republican America, Adams maintained that an elite of wealth, birth, and beauty retained overwhelming power even after the abolition of formal distinctions. And whereas Federalists sought security against the threat of majority tyranny, Adams’s principal fear was of aristocratic tyranny—specifically, the tendency of the elite few to undermine both popular representation and effective government.

Week-end Wrap – Political Economy – February 7, 2021

Week-end Wrap – Political Economy – February 7, 2021

by Tony Wikrent

Strategic Political Economy

If There’s No Fear of Inflation, Why is GOP Against More Stimulus? – Rana Foroohar and Mark Blyth — Transcript here

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​​​​​​​Mark Blyth. ….arguing about deficits is just a footnote on the wider agenda of power for the sake of power. Why do they do this? Because they know that existentially Republicanism has run its course. As Rana just said, there’s only so much you can give to business before they’ve got everything, which is pretty much where we are now. There’s nothing more to give. We need huge amounts of infrastructure repair. We need huge amounts of social investment in the economy and elsewhere. And this is anathema to everything the Republicans have stood for and delivered on for the past 30 years, which is simply more money for me and to hell with the rest of you. So they’re not going to turn this around….

Rana Foroohar. I completely agree with that. And I think it actually brings up something I’m quite worried about, which is the fine line that the Biden administration has to walk right now in executing even part of their Build Back Better, Reward Work Not Wealth strategy, without creating such a bumpy ride from here to there that the Republicans can say, well, look, look what Joe Biden did. Now the markets have crashed... because if you think about what we’re trying to do, if we pull way back, this administration is trying to shift the American economy structurally from being an economy that is based on debt and asset price bubbles to one that is based on income and wage growth. And that’s a laudable goal. But it’s also like turning the Titanic.

….you might actually know when the markets crash that things are getting better in the U.S. economy because certain things have to be done. Raising taxes on companies, the labor share rising, some of the push for union labor that’s coming with the Defense Production Act. All of that is going to dampen profits. It’s going to frighten investors and the hot money is going to run.

Mark Blyth. ….the weird thing is there’s $18 trillion in negative yield and long-term government debt in the world today. Right. The existence of this is a bit like the existence of dark matter. It’s what binds the universe together. And if it exists, it means that all those other stories about hyperinflation, they simply can’t be true…. Because what it means is investors are willing to buy government debt at a loss. And if they’re willing to buy government debt at a loss simply because they want to purchase security, because they’re uncertain about the future, then by definition they cannot be expecting an inflation. Because if they were, they would insist on a higher interest rate, not a negative one….

….So let’s think about some of the models, that constrain us here. And I don’t mean sort of the fancy formal ones. I mean the informal ones in our heads. Most people do not understand that governments are not like households. Most people do not spend their time thinking about the difference between money and high-powered money, bank reserves, and all the rest of the stuff that makes government’s ability to finance itself qualitatively different from households, we’ve definitely love the household analogy… you’ve got to deal with the folk models in people’s heads. And the vast majority of Americans do not think that running up extra 15 trillion dollars in debt just because there’s a virus that’s taking out one in a hundred people is a good idea. And if you do that when it comes to the midterms, you’re going to pay an awful electoral price even if it is the right thing to do. 

Severe Dysfunction in Washington and Wall Street Puts the U.S. at Risk of Capital Flight

Pam Martens and Russ Martens: February 3, 2021 [Wall Street on Parade]

There is recent evidence that the U.S. is already seeing capital flight. According to a January 24 report from the United Nations Conference on Trade and Development, China beat out the U.S. in foreign direct investment inflows last year, receiving $163 billion versus $134 billion for the U.S. That was a radical change from 2019 when the U.S. received $251 billion in foreign direct investment versus $140 billion for China.

Capital flight could accelerate this year if the craziness in Congress and Wall Street continues. Just ask yourself this, would you want to invest in a country that had scenes of a bloody attempted coup of the government featured on the front pages of newspapers around the world? Would you want to risk your savings in a stock market that has ceased to perform its two key functions: a pricing mechanism for the value of companies and efficient allocation of capital to worthy businesses and industries.

Elon Musk Interview: 1-on-1 with Sandy Munro

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Elon Musk Discusses Build Quality Problems With Engineer Who Compared Model 3 To ‘A Kia In The ’90s’ 

[Jalopnik, via The Big Picture 2-4-21]

Progressives and leftists using a Marxian type of class analysis have failed to notice that Musk has accomplished something no one else has done in just over a century: achieve mass production of a new automobile in USA. While Musk’s relations with his employees leaves much to be desired, and his political views are anything but progressive, the fact is that Muck is providing a rare example of new technologies being implemented to create an economic phase shift. Those critics who point out that Musk’s companies depend on government support miss the point that government support is exactly what is needed to push the economy in new directions — in this case, ending our dependence on burning fossil fuels.  In their conversation, Musk and Munro discussed a number of topics that illustrate the analytical power of Veblen’s business versus industry paradigm: design of seats for passenger vehicles; wire harnesses; modern road design; and why getting an MBA prevents you from managing an industrial corporation competently. 

What happens when you take a manufacturing expert with decades of automotive engineering experience and put him in a room with a science nerd like Elon Musk? ….He recently sat down with one of Tesla’s biggest build-quality critics, manufacturing expert Sandy Munro, founder of the benchmarking consultancy Munro & Associates. Here’s what Musk had to say about large panel gaps and poorly designed body structures in what has to be one of the most epic technical interviews I’ve seen in a while…. 

Tesla’s CEO then fesses up to his company’s build-related mistakes and dives into why they’ve been happening….  “The organizational structure errors, they manifest themselves in the product,” he begins. “We’ve got probably the best material science team in the world at Tesla. Engineers would ask what’s the best material for this purpose...and they got like 50 different answers. And they’re all true individually, but they were not true collectively,” he admits.

“When you try to join all these dissimilar alloys...you’ve got gaps that you’ve got to seal, and you’ve got to join these things, and some of them need to be joined with rivets, some of them need to be joined with spot welds, some of them need to be joined with resin or resin and spot welds,” he continues. “Frankly, it looks like a bit of a Frankenstein situation when you look at it all together.” 

….The rest of the interview remains thoroughly nerdy. There’s discussion about cars’ natural frequencies, about how reducing polar moment of inertia by bringing mass toward the car’s center of mass yields better handling. There’s discussion about tolerance stack-up and how that leads Tesla to almost always err toward fewer pieces and Lego-like parts precision.

Munro mentions his company’s BMW i3 findings, lauding the German automaker’s excellent build quality for the carbon-fiber body. Musk replies that one of his major concerns about use of carbon fiber is that it has a vastly different coefficient of thermal expansion than aluminum or steel, and this can cause fitment issues when the vehicle is subjected to certain thermal environments.

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

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

by Tony Wikrent

The Impeachment and Trial of a Former President (PDF)

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

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

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

Strategic Political Economy

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

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

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

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

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

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

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

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

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

by Tony Wikrent

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

by Tony Wikrent

Liberalism and socialism are ineffective against capitalism

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

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

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

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

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

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

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

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

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

America Abandoned Its Economic Prophet. The World Embraced Him. 

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

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

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

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

by Tony Wikrent

Strategic Political Economy

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

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

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

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

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

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

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