Ian Welsh

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

Month: May 2020

Week-end Wrap – Political Economy – May 3, 2020

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On May 3, 2020

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by Tony Wikrent
Economics Action Group, North Carolina Democratic Party Progressive Caucus

Strategic Political Economy

Organizing for Survival in New York City

[Commune, via Naked Capitalism 4-26-20]China Spends $600 Billion To Trump America’s Economy
[Forbes, May 1, 2020]

Ten years from now, when economists mull the exact moment the U.S. ceded the future to China this week’s events are sure to top the list of time-stamp candidates.

This was the week, after all, when Chinese President Xi Jinping tossed another 4 trillion yuan, or $565 billion, at an economy taking devastating coronavirus blows….

Within the same 24 hours during which Xi’s announced a nearly $600 billion plan to build even more airports, railways and power grids, Senate Majority Leader McConnell gave the thumbs down to comparable upgrades to America’s economic hardware. “Infrastructure is unrelated to the coronavirus pandemic that we’re all experiencing and trying to figure out how to go forward,” McConnell said.

Music to Xi’s ears. The trillions of dollars his government lavished on the “Made in China 2025” extravaganza is already positioning China to lead the future of artificial intelligence, automation, micro-processing, renewable energy, robotics, self-driving vehicles, you name it. And Trump made it easy for Xi. As China prepares for the global economy it will confront in 2025, Trump is making coal great again.

Why Mitch McConnell Wants States to Go BankruptDavid Frum, April 25, 2020 [The Atlantic]
Note this is by former Bush Jr. speech writer Frum, so represents thinking inside the Republican party elites.

State bankruptcy is not some passing fancy. Republicans have been advancing the idea for more than a decade. Back in 2011, Jeb Bush and Newt Gingrich published a jointly bylined op-ed advocating state bankruptcy as a solution for the state of California. The Tea Party Congress elected in 2010 explored the idea of state bankruptcy in House hearings and Senate debates. Newt Gingrich promoted it in his run for the 2012 Republican presidential nomination…. A bankruptcy is not a default…. A default is a sovereign act. A defaulting sovereign can decide for itself which—if any—debts to pay in full, which to repay in part, which debts to not pay at all. Bankruptcy, by contrast, is a legal process in which a judge decides which debts will be paid, in what order, and in what amount….

Since 2010, American fiscal federalism has been defined by three overwhelming facts.

First, the country’s wealthiest and most productive states are overwhelmingly blue. Of the 15 states least reliant on federal transfers, 11 are led by Democratic governors. Of the 15 states most reliant on federal transfers, 11 have Republican governors.

Second, Congress is dominated by Republicans. Republicans controlled the House for eight of the last 10 years; the Senate for six. Because of the Republican hold on the Senate, the federal judiciary has likewise shifted in conservative and Republican directions.

A state bankruptcy process would thus enable a Republican Party based in the poorer states to use its federal ascendancy to impose its priorities upon the budgets of the richer states.

Regional compacts on #COVID19
[Twitter, via Naked Capitalism Water Cooler 4-28-20]
The fabric of the Union begins to unravel under the pressure of Trump’s incompetence and Republican intransigence.



Grover and the Bathtub Barry Levinson [Huffington Post, December 6, 2017]

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Federal Funds Must Go to State and Local Governments

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On May 2, 2020

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(Guest Post by Tony Wikrent)

Over $3 trillion in emergency spending has been authorized by Congress in the past month, with another $6 trillion plus in money creation and lending powers given to the Federal Reserve. Judged solely by its size, this has been an impressive response.


There are two crucial facts to note and questions to ask:


1. Little of these trillions of new dollars has gone to help the people and businesses who need it most. Why?
2. In the discussion of these emergency spending measures, why is there no one asking: How are we going to pay for it? 

The answers to these two questions are pretty much the same: The United States is no longer a republic ruled by the Constitutional mandate to promote the General Welfare. As even former President Jimmy Carter has observed, the US has become a plutocratic oligarchy, and the federal government has been mutated to protect and promote the wealth, power, and privilege of plutocrats and their retainers.

Ben Mathis-Lilley, Slate’s chief news blogger, argues that even the retainers are beginning to understand: The Coronavirus Is Showing Members of the Professional Class That the Government Doesn’t Work for Them Either.

…government programs in the United States–even those supported by the purportedly pro-government party–are not designed to solve problems. Rather, they are designed to solve a given problem only to a degree–and that degree can’t require an amount of spending that would necessitate financial sacrifice on the part of high-income taxpayers. This is not a leftist conspiracy theory, but the overt position of the party’s leaders, who believe they will not be able to achieve crucial voting margins in upscale suburbs if they authorize too much taxation and spending….

A bewildering array of socio-economic schools of analysis offer explanations for why the American political system no longer responds to the demands and aspirations of most Americans, from the libertarian argument that there is not enough capitalism, to the Marxist argument that the problem is capitalism itself.

We do not have time for an academic debate, however. This is a deadly pandemic that has caused an economic collapse faster and deeper than the collapse of the 1929-1933 Great Depression. The remarkably fast responses by Congress show that the political capacity to act promptly exists. What needs to be done now is to redirect that political capacity away from serving the plutocrats almost exclusively, to actually benefiting the American people, and to try to redirect as much as possible of the $3 trillion already passed, and the new $1 trillion package now being discussed, directly into the hands and pockets of the American people and small businesses. [1]

This requires a fast and massive mobilization of political factions that can outweigh and counteract the lobbyists and special interests which serve the plutocrats. There are hundreds of progressive and liberal political action and interest groups, each pursuing their unique agenda, but past experience instructs us it will require too much time and effort to get them out of their silos to cooperate together.

There is one faction that could probably be mobilized quickly to act as a counterweight to the political power of the plutocrats: almost 19,000 state elected officials, and over half a million elected officials of counties, cities, townships, and villages. Plus tens of thousands of appointed officials of the health, human services, finance, budget and other departments of these local governments.

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Open Thread

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On May 2, 2020

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As usual, feel free to use the comments to discuss topics unrelated to recent posts.

May 1st US Covid Data

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On May 1, 2020

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A little delayed, but here it is.

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.

It’s Impossible to Overstate How Broken America Is

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On May 1, 2020

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I know I’ve been pounding this issue, but…

New: The Capitol physician told Republican staffers today the Senate lacks the capacity to test all 100 senators when it comes back Monday. Instead the Senate will test people who are sick. Test will take 2+ days.

Come on!!

They can’t even manage proper testing for 100 Senators!?

This is genuine failed state stuff.

As best I can see, the US has been coasting on institutions and infrastructure built primarily by the Lost, GI and Silent generations. Every generation after that has been drawing down the American patrimony. Almost nothing works properly that wasn’t built or at least started by those generations.

Modern elites, with a few exceptions, are simply rent extractors, financial elites competing to eat as much of the pie as possible.

Even most of the stuff that Boomers and later generations take credit for wasn’t actually created by them: Texas Instruments invented the modern GUI, not Gates or Jobs. The internet was invented by pre-Boomers, excepting Tim Berners-Lee (who created the world wide web which sits upon it.) Microchips were invented by the GI generation and improved by Silents.

But when the elites can’t even protect themselves? When they can’t even put together 100 tests for some of the most powerful people in the country? That’s insane. That’s straight failed state stuff.

The only reason the US merely a failing state, as opposed to a failed state, is because of the work put in by people who are mostly dead now. This is a straight “living off the principle” problem.

Meanwhile, the Covid crisis is being used as an opportunity to increase the top .1 percent’s control of the population, even at the cost of reducing the size of the economy (and not in smart ways, but in ad-hoc “fuck small business owners and workers” ways.)

More on that later.

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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