Month: May 2021

by Tony Wikrent

Strategic Political Economy

“Economic Warfare: What Can World War One Tell us about 21st Century Conflicts?”

Jonathan Kirshner is a Professor of Political Science and International Studies at Boston College, and the Stephen and Barbara Friedman Professor of International Political Economy Emeritus in the Department of Government, Cornell University. By the late 1920s France had Europe’s most powerful army, much of the world’s gold, and was an active and aggressive practitioner of economic warfare. Within a decade, however, tragically, and even shamefully, France could barely be roused to rise to its own self-defense. The stark difference between 1930 and 1940 is attributable to a radical polarization of French politics and an embrace of “the age of unreason” that paralyzed the country’s foreign policy practice. Kirshner explains how the shocking six week military collapse in autumn 1939 was prefigured by the destruction of French democracy in the six years before the German invasion. After the 1936 political collapse, the French upper classes openly opposed new Socialist Prime Minister Leon Blum with the slogan, “Better Hitler than Blum.” The United States today appears on a similar course of decline.

Capitalism versus Democracy: Sam Seder interviews Prof. Timothy Kuhner

Georgia State University Law Professor Timothy K. Kuhner author of Capitalism v. Democracy: Money in Politics and the Free Market Constitution explains the history of campaign funding scandals, economic power and political exclusion, the choice between Milton Friedman and John Rawls in Buckley Valeo, why the right wing majority on the Supreme Court treats Thomas Paine the same as the Koch brothers, the function of the Supreme Court has been to protect private capital, restricting the scope of campaign finance regulation, bizarre free market ideology has run amok and campaign finance reform and overturning American oligarchy.

Predatory Finance

Financial Speculation Is About More Than GameStop Day Traders

David Dayen, May 4, 2021 [The American Prospect]

The real speculation is happening at the top of the market, through skyrocketing merger transactions and increases in the power of the biggest companies…. There is currently a frenzy of M&A activity, and while the SPAC craze did make this worse by increasing prices for private companies, deal making has continued even as SPACs tailed off. The first four months of 2021 saw $1.77 trillion in global transactions, higher than any other year in history. “It’s the busiest I’ve ever known it,” said one industry veteran to the Financial Times. Deals have surged among tech startups too, which in recent years has been a prelude to more mergers as those founders pursue an exit strategy. The Biden administration has provided little resistance to merger activity, which gives budding monopolists the signal that they will have no problems building their empire. In particular, private equity is thundering, with $1.6 trillion in spare capital to play with. Mega-deals of over $10 billion are rising, and major sales, like Apollo Global Management’s purchase of AOL and Yahoo from Verizon, have consummated in recent days.

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Open Thread

By Ian Welsh

On May 8, 2021

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Use comments to discuss topics unrelated to recent posts.

Basic Puppy Meditation

By Ian Welsh

On May 7, 2021

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I’ve written about a variety of meditation types over the years. Here’s one of the best.

Imagine that you are hugging a puppy. (Kitten if you prefer.) Imagine your arms holding it against your chest, it’s warmth, it licking your face, and its tail wagging.

Now, just keep imagining holding the puppy, and intend to notice when you are doing something else: when you start thinking or feeling something other than puppy holding.

When you do, pat yourself on the back, pet the puppy, and go back to holding the puppy.

Do this every day, for as long as you want to, or whenever you’re feeling bad and want to feel good.

I assure you, this is a perfectly legitimate meditation that trains three very important meditation abilities.

Plus, puppies!

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Who Deserves the Good Things in Life?

By Ian Welsh

On May 5, 2021

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On Wall Street, they have sayings. One of them is that they “eat what they kill.”

They mean this in a good way — that they earn their money by making the right bets or by landing the big clients. That money is theirs: They went and got it.

Of course, one could see it in another way: All the businesses, Private Equity, for example, has destroyed, buy buying them, paying themselves, loading the businesses up with the debt, and then letting them go under.

They earned that money by killing. ToysRUs for example, which was making a profit until they loaded it up with debt to pay for their takeover and the bonuses they gave themselves.

Or, say, causing the 2008 financial crisis, which had a bill that has to be at least 100 trillion and involved millions of people losing their jobs, homes, livelihoods, and in many cases, lives.

Finance, that is to say, demonstrably does more damage to everyone else than it does good, but it pays very very well, especially now that they own every government, so central banks are willing to print trillions of dollars to socialize their losses, while letting them keep the money they stole.

They don’t even actually win bets: If, in 2008, they had taken their losses, they would have all gone out of business.

It’s just a scam; a matter of brute force. They can print money and borrow money at rates ordinary people will never see and government makes sure they never take real losses and that markets go up no matter what is happening to the economy.

Then, there are the studies that show that the more money someone has, the worse their behaviour — the more sociopathic and less generous. Poorer people give more to charity as a percentage of income or wealth than rich people, which makes sense, as most rich people are rich because they care about money more than anything else.

The simple fact is that people like nurses, teachers, janitors, garbage pick up, farm workers, and factory floor workers are who create most value. On the intellectual and creative side, the designers, engineers, scientists, and other creators are the ones who create value, not the suits. In fact, suits often reduce value: It isn’t engineers and designers who wanted planned obsolesence (19th century engineers fought it bitterly) or to remove the right to repair.

Most financiers don’t even finance creation any more; they finance destruction. Most managers are, at best, a wash, any random person would do about as well and maybe better (management literature shows this clearly, it isn’t in dispute). As for CEOs, higher compensation correlates to worse performance, and during the 40s through the 70s, before the massive rise in CEO compensation, had far more growth than our era. CEOs eat what they kill, is all. They control who gets paid what, so they pay themselves the most. It has nothing to do with merit, except if merit means “you deserve whatever you get.”

“You deserve whatever you get.”

That’s really what we mean by merit, today, isn’t it?

Not, “you contributed to society,” or even, often enough, “you contributed to your organization,” but “whatever you have the power to seize, at whatever cost to anyone else, is what you deserve.”

It’s not even about “whatever you can get legally.” Wall Street’s entire 2000s run was based on extensive fraud, they then, with the help of Obama, stole millions of houses using fradulently signed statements. Wall Street currently makes huge amounts of money by front-running investors, simply paying to get faster access and information.

So much for deserve, as we use it.

My personal take is that there are awards that should definitely be merit based. Medals, titles, and so on. A lot of positions should only go to those who have shown they “deserve” them, though our ideas of what that means are really warped when the entire media weeps about how Hillary Clinton was “the most qualified candidate in history,” when she had displayed both terrible judgment (Iraq, Libya, pushing Trump) and incompetence (losing two campaigns as front runner, bungling Hilary-care.)

But I am heterodox. I don’t like incentives. I don’t think people should get more for doing more, because I think incentives usually warp behaviour in horrible ways.

Instead, in a surplus society, we should just ensure everyone has good quality of what they need: housing, healthcare, food. Take the fear and greed away, and send them to work without the whip of hunger. In such a world, oddly, by not doing what we do now, you’d see some of what orthodox economics says should happen, happen. For example, picking up garbage would be highly paid, because it’s not fun (though it is useful).

Let money buy anything that doesn’t matter: A fancy vacation, a TV so high-definition it looks like reality, a set of five-million thread count sheets so smooth you barely feel them, or an animatronic bear that loves you, really.

Deserve, in a surplus society, is really about FEAR. People who spend their entire lives operating from fear do not create good societies.

No one needs or deserves to be a billionaire (and if anyone ever did, it’s someone like Jonas Salk, not Bill Gates or Jeff Bezos.) Having such people costs far more than money, as Bill Gates has proven by restricting vaccines.

Forget deserve. Give everyone a good life, and see what world people who aren’t scared create.

We’ve tried everything else. Maybe it’s time to try and run a society not based on fear.

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The Most Radical Statement I’ve Ever Read

By Ian Welsh

On May 4, 2021

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From Dr. Robert Tabash, in Bethlehem:

The poorest deserve the best.

I stared, stunned at this for a while, because it’s absolutely 180 degrees from how we do things. To do this would be a complete repudiation of our entire society, and every society of which I am aware.

I stumbled across it in the replies to this tweet, on the same general theme.

One of the oddest but most widely held beliefs among people here on Twitter is that poor people should live in ugly places, and the poorer the uglier. When I make the claim that we should build more beautiful for our poorest, I seem to be making a heretical statement. pic.twitter.com/bDdNpXk9UR

— Wrath Of Gnon (@wrathofgnon) April 30, 2021

It’s hard to say much about this, because it’s almost impossible to imagine a world in which we do this.

Of course, this comes from Christians, and it’s why I have contempt for most modern Christians, especially evangelicals.

Christ was a radical. Unbelievably radical. “As you have done to these, the least of mine…” and telling the rich to sell all their possessions and give them to the poor. Real Christianity, the path of Jesus, not all the crap accreted about Christianity, is perhaps the most radical, and hardest, in the world.

This is why most “Christians” don’t follow Jesus’s clear instructions: Doing so is hard. That’s fine, I don’t either. But I also don’t call myself a Christian.

But put the Christianity aside, if you can, and marvel just in the idea of a world completely topsy turvy to the one in which we live, where those who are poorest; those who are weakest, get the best, because they are the ones who need it most, and we care for each other.

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Week-end Wrap – Political Economy – May 2, 2021

By Tony Wikrent

On May 2, 2021

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Strategic Political Economy

“The Free Market is Dead: What Will Replace It?”

[Chris Hughes, Time, via Naked Capitalism Water Cooler 4-27-21]

Significant because it’s Time, of all places.

But corporate America’s newfound support for more public investment is not a temporary phenomenon. We are witnessing the most profound realignment in American political economy in nearly forty years. President Ronald Reagan summed up the conventional wisdom that reigned from the mid-1970s onward in the United States: “Government is not the solution to our problem, government is the problem.” Economists, policymakers, and everyday Americans alike generally accepted that markets, unfettered and free, are the best way to create economic growth…. That ideology began to crack after the Great Recession, and in the wake of the coronavirus pandemic, it has collapsed. The rise of ethno-nationalism on the right and democratic socialism on the left testify to the growing disillusionment with the conventional wisdom of how government and economics are supposed to work. It’s not just the fringes questioning free market orthodoxy in a time of disease. Cross-partisan supermajorities of Americans want some of the biggest companies of America to be broken up, significantly higher minimum wages, a wealth tax on billionaires, and believe significantly more public investment is required to create economic growth. We have had regulations, public investment, and macroeconomic management to varying degrees throughout American history. What makes this moment different is that Americans across parties, class, and educational background are using a new framework to think about how we create prosperity.”

“What’s behind the growth slump? Takeaways from census data”

[Associated Press, via The Big Picture 4-28-2021]

“The U.S. population grew to 331 million, a 7.4% growth rate from the last time the Census Bureau counted every person in the country, in 2010. Those may sound like big numbers, but it’s actually the second slowest rate of population growth the census has ever recorded, just behind the 7.3% growth in the 1930s. That decade’s slowed growth was rooted in the Great Depression. Our past decade’s sluggish rate had similar beginnings in the long shadow of the Great Recession. The drawn-out recovery saw many young adults struggling to enter the job market, delaying marriage and starting a family. That dealt a blow to the nation’s birthrate. Then the pandemic hit last year and made matters worse. But while U.S. population growth recovered after the Great Depression, demographers are not optimistic it will pick up anytime soon. Most forecast even slower population growth in the decades to come. Americans are getting older — the median age in the U.S. is 38, up one year from 37 in 2010. Immigration had been dropping even before the pandemic effectively shut it down. And many Republicans have largely turned against the idea of immigration, legal or illegal, a new political barrier to the country adding more population quickly. ‘Unlike the Great Depression, it’s part of a process where we’re likely to keep having slow growth,’ said William Frey, a demographer at the Brookings Institution in Washington, D.C. That has potentially grim consequences for the nation’s future.”

“…we’re likely to keep having slow growth…” Why? Just because population growth slows down? What most people do not realize is that a transition to an economy free of fossil fuel dependencies — if done in time to meet the challenges of climate change — will require some of the fastest economic growth in recorded human history. What do you think it’s going to look like as we replace the 1.5 billion motor vehicles in the world with electric vehicles? Do you want to do that over 30 or 10 years, or over the next ten? Or sooner? In fact, the faster the growth, the faster will we be changing the economy to meet the challenge of climate change. Frey is obviously stuck in a old paradigm of economic thinking. A huge challenge is going to be to managing world-wide economic growth rates of ten to fifteen percent for about 15 or 20 years, then transitioning to near zero-growth rates after the world’s economy and transportation systems have been rebuilt on a carbon free basis.

How Humanity Gave Itself an Extra Life

[New York Times, via The Big Picture 5-1-2021]