Ian Welsh

The horizon is not so far as we can see, but as far as we can imagine

Month: August 2019

Jeffrey Epstein Commits Suicide

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On August 10, 2019

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Or should I say “suicide?”

Or perhaps he really did it and was encouraged.

I mean, I don’t know. But I do know that Epstein was, essentially, pimping teenaged girls to rich and powerful people, which is why he got away with it for so long, and why the first time they went after him, he got only a slap on the wrist.

Lots of important people are breathing easier today.

Feel free to use as as open thread as well.

The results of the work I do, like this article, are free, but food isn’t, so if you value my work, please DONATE or SUBSCRIBE.

Why We Need to End Banks and Shadow Banks

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On August 8, 2019

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Banks and various other financial companies have one important privilege: They can create money. When a bank lends you money, they don’t take it from another account and apply it to yours, they just put a number into a ledger, and voila, the money exists, created as debt.

Now, there are those who argue that creating all money as debt is stupid, but let’s move on from that and emphasize the important point:

Banks and other financial companies create money out of thin air.

Now, there are various caveats, and the amount they can create isn’t unlimited (though for practical purposes it’s close), but this is the bottom line.

They then get paid back by the people they loaned money to on money they created out of thin air.

It takes a special sort of genius to run a business which can actually create money, yet still lose money.

This chart gives an idea of how much genius:

I mean, you create the money out of nothing, and then you charge 17 percent returns (which underestimates the real rate of return, because of all the charges), and you still manage to cause a financial crisis because your liabilities wind up higher than your assets?

Wonderment aside, let’s circle back to the ability to create money.

Let’s say you’re Joe, guy who wants to start a business or buy a house. You go to a bank, and the bank decides whether you can do that.

Banks have the ability to create money in exchange for doing something: They decide who should get to do things. They give permission.

If a bank lends you 5o million, that’s the right to command 5o million dollars worth of other people’s labor: To hire them, or to buy the goods created by them. You get to choose what those people do.

Resources, especially people, aren’t infinite. Banks choose who gets to use them. The deal, spelled out is, “Give us the right to create money, and we’ll choose the people who do the most good with society’s resources to control those resources.”

And the banks have failed–over and over again they’ve failed. They don’t even actually make their returns (see 2007/8), let alone actually make good choices about how we should use our resources–with labour or other limited resources. I trust I don’t need to spell all of this out: Look at ecological collapse, climate change, and so on.

So banks, in their current form, shouldn’t have this incredible privilege, because they’ve repeatedly used it badly. This isn’t the first time, or even the second, or the tenth. Among others was the collapse of 1929 and the Great Depression, which effectively caused WWII. We thought we’d fixed the banking sector after that, and we were wrong, because rich people bought out government and undid all the fixes put in by FDR and the New Dealers.

So banks can’t be fixed, they do near apocalyptic damage, plus they suck at their actual job.

We need to find another way to give people permission to use scarce resources, including other people’s labor.

The results of the work I do, like this article, are free, but food isn’t, so if you value my work, please DONATE or SUBSCRIBE.

 

The Unfolding of Climate Change Catastrophe

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On August 6, 2019

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Globe on FireI want to keep this a very simple post.

There are three likely initial problems which will make the current situation turn into its first catastrophe.

I’m putting aside violent weather events like hurricanes.

The three are water, food, and other supply chain disruptions.

Water should be obvious. Aquifers are drying up, rainfall patterns will change, snowfall patterns will change, and glaciers are dying. This means that all our water sources are in play – groundwater, lakes, rivers, and streams. Many of these will just dry up. The annual cycle of rebuilding snowpacks and glaciers accounts for much of the world’s water.

The American Southwest will run out of water. Period. Most of India is borked, and so are vast parts of China, and so on. You need to do the research for wherever you live. Start by figuring out where your water comes from now and whether it is vulnerable.

Supply chains are a problem. It is barely an exaggeration to say that we have created the the most easily disrupted supply chain in world history. Things tend to be made or grown in a few specific areas, then shipped all over the world.

A severe climate shock which really wrecks food production will cause a huge rise in food prices, which will lead to various famines. That will lead to hoarding, looting, and violence.

But it needs to be emphasized that supply chains are a more general problem. Are you on a drug or medicine from which withdrawal will be ugly–or even deadly? This includes a lot of legal psychiatric drugs, including SSRIs and so on. Withdrawals are really ugly. Most people don’t have an extra supply. If the supply chain is disrupted, and at some point it almost certainly will be, you could be in a world of hurt.

Our capitalists, who are already killing people by raising prices on drugs like insulin, will, of course, capitalize on this and kill many more.

So these are the three most likely initial catastrophic scenarios. There are others like heatwaves and category 6 hurricanes and cyclones, but those tend to be localized. When water is scarce you have only days to live. When food is scarce a few weeks (you can go a week or two if you are healthy without any real problem, it’s just unpleasant.) And when medicines or other supplies you need go away, well, that may put you down or incapacitate you.

Look at your vulnerabilities in these areas, and if you can do something to mitigate them, please do.

The results of the work I do, like this article, are free, but food isn’t, so if you value my work, please DONATE or SUBSCRIBE.

Week-end Wrap – Political Economy – August 4, 2019

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On August 4, 2019

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Week-end Wrap – Political Economy – August 4, 2019

This post is by Tony Wikrent

 

Strategic Political Economy

Jeffrey Epstein, Trump’s Mentor and the Dark Secrets of the Reagan Era

[MintPress, via Naked Capitalism 8-1-19]

Starting first with mob-linked liquor baron Lewis Rosenstiel and later with Roy Cohn, Rosenstiel’s protege and future mentor to Donald Trump, Epstein’s is just one of the many sexual blackmail operations involving children that are all tied to the same network, which includes elements of organized crime, powerful Washington politicians, lobbyists and “fixers,” and clear links to intelligence as well as the FBI.

Some of the worst memories of my community organizing days in the 1980s involve my trying to convince people that the US’s industrial base was being destroyed by takeovers largely financed with money from organized crime. People just did not want to hear the details. They especially did not want to hear that St. Ronnie’s political career had been promoted by the mob. Amazingly, the people most resistant to these facts were the “organized” leftists in CPUSA and SWP. The communists and socialists almost invariably dismissed the details of these organized crime connections, and wanted only to discuss impersonal theoretical forces like “historical materialism” and “capitalist accumulation.” I came to detest talking to them.
 
For three decades now, I have occasionally referred to this issue of organized crime taking over the US industrial economy, and hypothesized that one major effect has never been studied: Replacing competent industrial management with the criminal mentality and inclinations of the mob-financed corporate raiders. It was Jon Larson at RealEconomics who, about 15 years ago, pointed me to Thorstein Veblen’s (The Theory of the Leisure Class) explanation of how “Leisure Class” predatory elites are “barbarians: who gain power through force and fraud: ‘The traits which characterise the predatory and subsequent stages of culture, and which indicate the types of man best fitted to survive under the régime of status, are (in their primary expression) ferocity, self-seeking, clannishness, and disingenuousness — a free resort to force and fraud.’” Veblen explained how the rise of criminal predators to economic power creates a pecuniary culture.

GND – An Opportunity Too Big to Miss

[Bill Mitchell], via Naked Capitalism 7-30-19]

“At the basis of the [standard neoclassical microeconomics] ‘solution’ is the belief that there is a trade-off between, say, environmental damage and economic growth (production). And the market failure skews that trade-off towards growth at the expense of environmental health. So all that is needed is some intervention (a tax) that will skew the trade-off back to something more preferable. The problem is that the whole idea that there is a trade-off between protecting our environment and economic production is flawed at the most elemental level.

There is no calculus (which underpins this sort of microeconomic reasoning) that can tell us when a biological system will die. The idea that we can have a ‘safe’ level of pollution, regulated via a price system, is groundless and should not form part of a progressive response. Carbon trading schemes (CTS) are neoliberal constructs which start with the presumption that a free market is the best way to organise allocation.”

Lamber Strether adds: ““Worth repeating: Mark Blyth says that ‘Markets cannot internalize their externalities on a planetary scale. They just can’t. It’s impossible.’” “
“Green New Deal: Candidate Scorecards”
[Data for Progress, via Naked Capitalism 7-31-19]

“Using a rubric of 48 essential Green New Deal components, we identify where each candidate: (1) addressed a component with a proposed federal policy or action; (2) acknowledged a component but lacked clear policy details, or; (3) did not include a component.” With handy chart.

Just 10 percent of fossil fuel subsidy cash ‘could pay for green transition’
[Guardian, via Naked Capitalism 8-2-19]

A Turning Point For US Power Generation
Global Risk Insights, August 03, 2019 [oilprice.com, via Mike Norman Economics]

For the first time in US history, renewable energies briefly generated more electricity than coal in April this year, according to the Institute for Energy Economics and Financial Analysis. This development is significant for US clean energy champions, environmental advocates, and a coal industry that has anchored US energy for much of the 20th Century. Renewable energy potential merits review of trends and evolving dynamics in a dramatically changing US energy sector.

New innovations and technologies, including large-scale shale extraction, has led to an abundance of domestic oil and gas. The cheap price of natural gas enabled it to surpass coal as America’s primary power source in 2016. Now, renewable energy sources (e.g., wind, solar, hydroelectric, and bioenergy) have shown capable of outperforming coal and are projected to bump it to third place for the long-term.

Natural gas and renewable energies are proving to be more efficient, cleaner and more cost-efficient than coal. Furthermore, the average US coal plant is approximately 40 years old, requiring costly maintenance and repairs. New coal plants are more expensive to build than renewable and natural gas counterparts…. Since 2014, six of the top ten US coal mining companies have at one time declared bankruptcy.

The Failure of Establishment Neoliberal Economics

“Ex-Corporate Lawyer’s Idea: Rein In ‘Sociopaths’ in the Boardroom”
Andrew Ross Sorkin [New York Times, via Naked Capitalism 7-31-19]

“A longtime lawyer for the insurance giant American International Group, Mr. Gamble worked alongside Richard Beattie, Simpson Thacher’s chairman at the time, to advise A.I.G. during the financial crisis of 2008 and in the years of litigation that followed…. [Gamble] has concluded that corporate executives — the people who hired him and that his firm sought to protect — ‘are legally obligated to act like sociopaths.’ … “The corporate entity is obligated to care only about itself and to define what is good as what makes it more money,’ he writes in the essay. ‘Pretty close to a textbook case of antisocial personality disorder. And corporate persons are the most powerful people in our world.’… Companies, he suggests, should ‘adopt a binding set of ethical rules, approved by stockholders and addressing the key ethical dimensions of corporate life” … Once the rules are in place, he writes, ‘any shareholder could sue the board of directors for violating the ethical rules — just as any shareholder can today sue the board of directors for violating the maximize rule.’”

[Jacobin, via Naked Capitalism 7-29-19]

“Billionaires are a politically active bunch…. Between 2001 and the end of 2012, 92 percent of the country’s hundred richest billionaires (combined wealth: $2.2 trillion) contributed to a political cause…. Yet they’re also eerily quiet…. As the trio of political scientists write, ‘many or most billionaires appear to favor, and quietly work for, policies that are opposed by large majorities of Americans’.”

Experts Say the DOJ Justification for T-Mobile/Sprint Merger Approval Is a Joke

[Vice, via Naked Capitalism 7-30-19]The Dangerous Austerity Politics of the Washington Post

Dean Baker [FAIR, via Naked Capitalism 7-30-19]

Predatory Finance

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Open Thread

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On August 3, 2019

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Use this post’s comments section to discuss topics unrelated to recent posts.

The results of the work I do, like this article, are free, but food isn’t, so if you value my work, please DONATE or SUBSCRIBE.

A Broken Media Is a Broken Society

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On August 2, 2019

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It is not possible to make good decisions without good information.

In a well functioning society, the media would be part of that system by providing accurate, useful information to the public.

That isn’t the media we have. Strictly speaking, we’ve never had that media, though some periods were better than others.

Let’s run through a few of the issues:

Man Bites Dog; If It Bleeds It Leads

The more we see something, the more of it we think exists. But the routine and normal doesn’t make sensational news.

The truth is that violent crime is at multi-generational lows, but most people don’t think that.

The truth is that the person who will hurt or molest your child is almost certainly not a stranger, but a family member, friend, or other trusted adult.

The truth is that terrorism is not a significant threat to Americans. You’re more likely to get hurt when you slip in your tub.

In almost all advanced, industrial societies, the greatest threat to your well-being, with very rare exceptions, comes from your own politicians and business leaders. They are the people who will hurt and kill you, and that’s simply the case. Even in times of war, this is true, because leaders usually caused the war.

The media does not reflect these facts and other similar ones. As such, it gives people an inaccurate picture of the world, which they then act upon and get disastrous results.

Fake News

There’s a lot of hysteria about fake news lately, but it’s about fake news from non-approved people.

It’s not that the media doesn’t lie its ass off, it’s that “OMG, other people are able to get their lies believed.” 72 percent of Americans didn’t think Saddam was behind 9/11 because the media didn’t lie. And who was one of the worst offenders? The New York Times, the apex of the establishment press.

So, yeah, when the media lies, or passes on what they know or suspect are lies, people get hurt, and badly.

Class Interests

Journalists at elite institutions used to be mostly working class. Now they are mostly university graduates, with a high concentration of Ivy League grads. The more senior you are, the more likely you went to an elite college.

You lunch with politicians and business leaders. You went to school with them. They are your friends. They are your people. You understand them.

Speaking from experience, it’s hard to write something mean about someone who’s really nice to you. People who want good press can be amazingly nice. Heck, there’s an entire industry of public relations people whose job it is to make people in the media like them. Some of them are very, very good at their jobs.

This gets even harder when you come from the same group and share the same experiences and beliefs.

This is part (but only part) of why Labour Leader Jeremy Corbyn gets lied about over three-quarters of the time in the press, per academic studies. The people reporting on him, and especially the editors and producers, genuinely despise his politics and think they are wrong, even evil. They want him destroyed. To them he’s practically Stalin or Hitler, and anything they do is justified in the name of defeating him.

A shared world view is a powerful thing. You don’t have to censor people who genuinely believe the same thing as their leaders.

Horse Race vs. Policy

Writing about who can win, rather than analyzing who would do what if they won, guts Democratic decision making. The media should support people choosing who would do those things they agree with, not simply act as if voting is a sport.

He Who Has the Gold Makes the Rules/Freedom of the Press Belongs to Those Who Own Won

If someone hires you to do something, they expect to get more from you doing it than they pay you. This is fundamental: You have a job because you are of benefit the person who controls the money. That is ALL.

Media conglomerates (and remember, they are very, very concentrated) are run by people who expect a return for their money. That doesn’t always mean direct cash. Robert Murdoch loves owning newspapers because newspapers control the news cycle: What newspapers write in the morning is what TV news discusses in the evening.

What is controlling the media cycle worth? Who cares if the newspaper doesn’t make much directly, anyone with other interests knows it’s just a loss leader.

Murdoch also used his newspapers as intelligence operations. He would have phone calls with beat reporters which went on for hours, learning everything they knew about their beats.

The ability to control, or at least strongly influence the public and to decide who gets publicity and who doesn’t, is valuable even when it doesn’t make a lot of money. Amazon CEO Jeff Bezos didn’t buy the Washington Post out of public spiritedness.

So even when the journalists, editors, and columnists resist what the publisher wants, the publisher gets their way. It’s just that simple. Those pundits and journalists who wrote against the Iraq war in the run-up to war lost their jobs or had their careers stall out. Phil Donahue had his show shut down, and his show had excellent ratings. It wasn’t about how much money Phil was making them directly: They wanted war, and he was in the way.

You don’t get to use the platform to attack the perceived interests of the people who control the platform.

This should be dead obvious.

The people who control the media have interests. They use media to promote those interests. They are all part of one big club, and while there is elite infighting, they are agreed on most fundamentals. To them, a Corbyn or Sanders is a far greater threat than a Trump or Boris Johnson. Heck, Trump gave them a huge tax cut. Johnson will gut worker’s rights.

They’re basically okay with both, they just find them distasteful people.

The Media Is Part of the Enemy

Perhaps that sounds harsh, but what can be said about an industry which helped ensure the Iraq war happened? An industry which covered for banker bailouts?

Yeah, they’re gushing money because the internet destroyed their business model. Yeah, that may lead to an even worse future (sure as hell Facebook and Google are pure evil), but they were never the good guys.

The media was the least malfeasant, and did some good when they were broken up into many pieces, when the American elite was much larger and less concentrated and had more internal differences, and when journalism was a working class job and most editors and reporters hated the people they reported on, rather than thinking they were part of the club.

Something similar could be done today. It would require legislation and some technological fixes, but it could be done. We could also impose rules that require context to deal with the problem of sensationalism, which would be an issue even with the best will in the world.

But none of this will happen unless it is forced, and it will only be forced if current elites are broken of their power.

Nothing lasts forever. Every elite falls. There will be chances.

The results of the work I do, like this article, are free, but food isn’t, so if you value my work, please DONATE or SUBSCRIBE.

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