Category: Miscellaney Page 6 of 13

Asia Times, via Naked Capitalism 4-30-19]

….the West, as usual, ignored what was the absolutely key takeaway of the BRI forum: the deepening, on all fronts, of the Russia-China strategic partnership. It’s all here, in President Putin’s speech.

Putin emphasized “harmonious and sustainable economic development and economic growth throughout the Eurasian space.” He noted how BRI “rhymes with Russia’s idea to establish a Greater Eurasian Partnership, a project designed to ‘integrate integration frameworks’, and therefore to promote a closer alignment of various bilateral and multilateral integration processes that are currently underway in Eurasia.”

Putin could not have been more specific. “The Eurasian Union…has already signed a free-trade agreement with Vietnam and a provisional agreement with Iran, paving the way to the creation of a free-trade area. The preparation of similar instruments with Singapore and Serbia is nearing completion, and talks are underway with Israel, Egypt and India. We cooperate actively with the Shanghai Cooperation Organization and the Association of Southeast Asian Nations.”

Addressing the forum, Putin added another enticing dimension, with the China-driven Maritime Silk Road possibly joining the Russia-driven Northern Sea Route, “a global and competitive route connecting northeastern, eastern and southeastern Asia with Europe” will emerge.

Disrupting mainstream economics

Economists Are Learning to Love the Minimum Wage
[City Lab, via The Big Picture 4-29-19]

….two new papers provide powerful evidence that higher minimum wages in fact boost the conditions of workers—especially the least skilled and lowest paid among them—without doing broad economic harm.

The first paper is forthcoming in the prestigious Quarterly Journal of Economics and is currently available as a NBER working paper. (There is also a shorter, more reader-friendly research brief available.) It tracks the economic effects of more than 100 minimum-wage hikes across the country between 1979 and 2016.

Want to decrease suicide? Raise the minimum wage, researchers suggest

The 2016 campaign season brought to the surface awesome levels of political discontent. After the election, instead of wondering where that anger came from, most of the press quickly pivoted to a new tale about a Russian plot to attack our Democracy. This conveyed the impression that the election season we’d just lived through had been an aberration, thrown off the rails by an extraordinary espionage conspiracy between Trump and a cabal of evil foreigners.

This narrative contradicted everything I’d seen traveling across America in my two years of covering the campaign. The overwhelming theme of that race, long before anyone even thought about Russia, was voter rage at the entire political system.

The anger wasn’t just on the Republican side, where Trump humiliated the Republicans’ chosen $150 million contender, Jeb Bush (who got three delegates, or $50 million per delegate). It was also evident on the Democratic side, where a self-proclaimed “Democratic Socialist” with little money and close to no institutional support became a surprise contender.

The media doesn’t talk much about working-class America. But when it does, it mainly has one thing to say about it: that it’s entirely white, male, and very right-wing. All those things are lies….

Central to this story is the decline of labor reporting, once a mainstay of major dailies. Today, by contrast, as Martin puts it: “A conference gathering of labor/workforce beat reporters from the country’s leading newspapers could fit into a single booth at an Applebee’s.” Of the country’s top twenty-five newspapers, he notes, a majority no longer covers the workplace/labor beat on a full-time basis, and the landscape for such reporting appears to be even bleaker on television (one 2013 survey cited by Martin, for example, reveals that only 0.3 percent of network TV news in the years 2008, 2009, and 2011 covered labor issues).

Abigail Disney: What It’s Like to Grow Up With More Money Than You’ll Ever Spend
[The Cut, via The Big Picture 4-1-19]

In what ways did your dad change, other than having a jet?Actually, having a jet is a really big deal. If I were queen of the world, I would pass a law against private jets, because they enable you to get around a certain reality. You don’t have to go through an airport terminal, you don’t have to interact, you don’t have to be patient, you don’t have to be uncomfortable. These are the things that remind us we’re human….

How did the jet change your dad? It wasn’t just the plane, but it’s not a small thing when you don’t have to be patient or be around other people. It creates this notion that you’re a little bit better than they are. And for the past 40 years, everything in American culture has been reinforcing that belief. We say, “Job creators, entrepreneurs, these are the people who make America great.” So there are people walking around with substantial wealth who think that they have it because they’re better. It’s fundamental to remember that you’re just a member of the human race, like everybody else, and there’s nothing about your money that makes you better than anyone else. If you don’t know that and you have money, it’s the road to hell, no matter how much stuff you have around you….

They did a study at the Chronicle of Philanthropy years ago where they asked people who inherited money, “What amount of money would you need to feel totally secure?” And every single one of them, no matter what they had, named a number that was roughly twice what they inherited. So that’s what you need to know about money, right? If that is your primary measure of success or value in life, then good luck with that, because it will never feel good.

Thinking Beyond Monetary Policy and Banking Regulation to Manage the Next Economic Downturn [Roosevelt Institute, via Naked Capitalism 4-4-19]

Our corporate sector is broken. Corporations aren’t making productive investments or putting the more than $1 trillion of firm-level debt toward growth-inducing uses, such as research and development (R&D), capital investments, or better compensation for our workforce. Instead, they’re putting more and more funds, largely financed by debt, toward rewarding shareholders, which is reaching upwards of $2.9 trillion since 2012 through a combination of stock buybacks and takeovers of non-financial corporations….

… Irene Tung, from the National Employment Law Project (NELP), and I found that the restaurant industry spent more on payouts to shareholders, in the form of buybacks, than it made in profits—ultimately funding buybacks through debt and/or cash reserves. Buybacks actually totaled nearly 140 percent of net profits in the restaurant industry alone. “Leveraged buybacks”—the issuance of new corporate debt in order to fund stock buybacks—is more pervasive and contributes to the highly skewed economy we have today. McDonald’s, for example, could have paid each of its 1.9 million workers almost $4,000 more a year if the company redirected the money it spends on buybacks to workers’ paychecks instead….

Unless we fix our broken corporate sector—which means rectifying today’s high-profit, low-wage economy—banking regulation, securities laws, and monetary policy can only go so far. We need to think outside banking regulatory levers and instead implement solutions that encourage the kind of corporate behavior that prioritizes productive activities that grow the real economy—corporate behavior that supports higher wages, better jobs, and new business development, for example. To redirect our corporate sector to the productive, growth inducing activities we seek, we need to rein in corporate power by raising taxes on corporations, the financial sector, and capital; revamping our antitrust laws to break up concentrated and anticompetitive market power; and reforming the laws that govern corporate decision-making.

We also need policies to rebuild worker power. Workers are a key stakeholder within firms and across our economy at large, who play a critical role in generating corporate value. Bold policy solutions are necessary to rebalance economic power and ensure that workers—who are investing in companies with their own labor on a daily basis—have a voice in the firm and agency over their lives. This includes policies that give workers a say over how corporate boards are structured, including who sits on them. This also must include building countervailing power for workers by promoting workplace unionization, encouraging bargaining across industries, and protecting workers’ rights to engage in collective action—most notably, the right to strike.

….a wide and deep-ranging distinction between “business” and “industry” and a broad view of the nature of “institutions.”

Veblen discerned that the high command of the “institution” of modern capitalism was vested in the most powerful of financiers, who by controlling the flow of credit to important industries were able to manipulate them for their own ends… more directly concerned with the material contribution of society. In this high command was reflected most clearly and extremely the spirit of pure gain (monetary) or pecuniary profit, entirely abstracted from material efficiency or service.

On the other hand, the all-important “institution” making material progress was “technology,” the state of the industrial arts.

The industrial arts, in Veblen’s sense, were not only the arts proper but the habits, skills, transmission of skills, and the opportunity to develop and advance them. It was not physical capital or labor, let alone funds, which were to Veblen the great productive factor, but the cumulative growth of the technological habits of thought that comprised the machine process; without this intangible element physical instruments and labor would be of little use. Productivity was therefore an indivisible social phenomenon, not an individual one, a function of the given technology.

Economics in the real world

By 1935, Norway was on the brink. The Conservative-led government was losing legitimacy daily; the 1 percent became increasingly desperate as militancy grew among workers and farmers. A complete overthrow might be just a couple years away, radical workers thought. However, the misery of the poor became more urgent daily, and the Labor Party felt increasing pressure from its members to alleviate their suffering, which it could do only if it took charge of the government in a compromise agreement with the other side.

This it did. In a compromise that allowed owners to retain the right to own and manage their firms, Labor in 1935 took the reins of government in coalition with the Agrarian Party. They expanded the economy and started public works projects to head toward a policy of full employment that became the keystone of Norwegian economic policy. Labor’s success and the continued militancy of workers enabled steady inroads against the privileges of the one percent, to the point that majority ownership of all large firms was taken by the public interest. (There is an entry on this case as well at the Global Nonviolent Action Database.)

The one percent thereby lost its historic power to dominate the economy and society. Not until three decades later could the Conservatives return to a governing coalition, having by then accepted the new rules of the game, including a high degree of public ownership of the means of production, extremely progressive taxation, strong business regulation for the public good and the virtual abolition of poverty. When Conservatives eventually tried a fling with neoliberal policies, the economy generated a bubble and headed for disaster. (Sound familiar?)

Labor stepped in, seized the three largest banks, fired the top management, left the stockholders without a dime and refused to bail out any of the smaller banks. The well-purged Norwegian financial sector was not one of those that lurched into crisis in 2008; carefully regulated and much of it publicly owned, the sector was solid.

The Birth of Predatory Capitalism: How the Free World Took Four Giant Leaps to Self-Destruction
[Medium, via Mike Norman Economics 2-10-19]

Economics in the real world