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.

Biden Can Go Bigger and Not ‘Pay for It’ the Old Way

Stephanie Kelton [New York Times, April 7, 2021]

Last week, President Biden introduced a $2.2 trillion infrastructure plan in a speech, calling it “a once-in-a-generation investment in America.” And on Wednesday, he and the Treasury Department outlined many of the package’s details, including how to “pay for” it. A close look at those so-called pay-fors, however, shows Democrats are thinking about fiscal responsibility the wrong way. They could be on the verge of sparking some unpleasant short-term overheating of the economy, in which price increases accelerate and the purchasing power of our dollars falls somewhat. If the final legislation were to grow much larger — toward the $10 trillion level many progressives in Congress are pushing — it could send such inflation soaring….

 

The key to responsibly spending vast sums of money lies in carefully managing the economy’s real productive limitations.… It’s easy to ramp up spending when there are millions of unemployed people who can be hired and plenty of domestic companies eager to supply the government with solar panels and electric vehicles. But what happens when it gets harder to find the idle things and people — construction workers, architects, machinery, raw materials and so on — needed to keep pace with an enormous revamp of our nation’s infrastructure? With the U.S. economy now improving, it would be irresponsible not to develop a rollout plan for those contingencies….

These mostly nontax inflation offsets could include industrial policies, like much more aggressively increasing our domestic manufacturing capacity by steering investment back to U.S. shores, using even more “carrot” incentives like direct federal procurement, grants and loans, as well as more “sticks” like levying new taxes to discourage the offshoring of plants. Reforming trade policies is another option: Repealing tariffs would make it easier and cheaper for American businesses to buy supplies manufactured abroad and easier for consumers to spend more of their income on products made outside of our borders, draining off some domestic demand pressures.

How Bidenomics Seeks to Remake the Economic Consensus 

[Wall Street Journal, via The Big Picture 4-8-2021]

Declaring end to neoliberalism, new thinkers play down constraints of deficits, inflation and incentives.

If you studied, practiced or wrote about economic policy in the past few decades you probably absorbed certain rules about how the world worked: governments should avoid deficits, liberalize trade and trust in markets. Taxes and social programs shouldn’t discourage work.

This canon came to be known globally as the “Washington consensus” and in the U.S. as neoliberalism. The latter label has always been more popular with its critics than its adherents. Nonetheless, by fusing the free-market foundations of classical liberalism with some redistribution and regulation, the term broadly described the economic policy of western leaders from Ronald Reagan and Margaret Thatcher through Bill Clinton and Tony Blair to George W. Bush, Barack Obama and David Cameron.

Neoliberalism has since fallen from grace under former President Donald Trump and now President Biden. But where Mr. Trump’s populism was never grounded in economics, Mr. Biden’s embrace of bigger government is: not the economics of the establishment but of left-wing thinkers in academia and think tanks and on Twitter.

Thank God Larry Summers was effectively frozen out by opposition from progressives. 

“Bidenomics, explained”

[Noah Smith, Noahpinion, via Naked Capitalism Water Cooler 4-5-21]

” it would be wrong to characterize his program as merely a grab bag of long-time Democratic policy priorities. Three approaches stand out above the maelstrom: 1. Cash benefits, 2. Care jobs, 3. Investment. Before I go on to discuss the justification for this new paradigm, I’d like to sum up all these “pillars” into one more-or-less cohesive vision of where I think Bidenomics is taking us. I think it’s aiming to create a two-track economy — a dynamic, internationally competitive innovation sector, and a domestically focused engine of mass employment and distributed prosperity….. I think Bidenomics, with its dual focus on research/investment/immigration and care jobs + cash benefits, is an attempt to boost both sectors of the economy at once — to make the export sector more productive while making the domestic sector better at spreading the wealth around. If there’s one unified characterization of the vision Bidenomics is creating for our future, I think that’s it.”

[Twitter,

 

Biden’s tax plan is about tackling the class warfare of the US elite

[Tax Research UK, via Naked Capitalism 4-10-21]

….tax havens have been used to mount an assault on the right of states to tax, and even if the damage has been better contained from about 2012 on it has not been reversed. When 70% of US foreign earnings are in tax havens there is something seriously wrong with corporate behaviour, which can only be explained by a desire to undermine the US tax system.

This has had a real cost, most especially on American labour, which has been asked to make up the tax shortfall…. Class warfare has taken place in the USA, and the wealth owning classes won. 20% of the overall US tax burden was shifted from the corporations largely owned by the wealthy onto working people. The tax haven assault was not only on the right of government to tax, it was also on the people of the world. As corporate profits have risen – and they have – corporate tax revenues have fallen….

It’s fair to say that Biden is not the first person to notice this. The US has been well behind the curve in doing so. Trump, of course, set out to make the situation worse. What Biden is doing is seeking to reverse a trend in US policy.

In doing so he is reversing Trump’s opposition to OECD plans to reform international taxation.

As Lambert Strether added: “Big if true.”

Biden and the Democrats Are Getting Serious About Raising Corporate Taxes [Truthout, via Naked Capitalism 4-7-2021]

Schumer gets his game changer

[The Hill, via Naked Capitalism 4-7-2021]

Yellen calls for minimum global corporate income tax

[AP, via Naked Capitalism 4-7-2021]

The carnage of mainstream neoliberal economics

Median Worker Makes $3,250 Less Per Year Than in 1979 Due to Decline in Unions

[TruthOut, via Naked Capitalism 4-9-21]

“Poor Rich Haiti” or How Imperialists and Local Oligarchy Have Sought to Destroy Agriculture in Haiti

[Black Agenda Report, via Naked Capitalism 4-6-21]

“Greece Launches Sale of Crete Port Stake”

[Maritime Logistics Professional, via Naked Capitalism Water Cooler 4-6-21]

“Greece on Monday launched a tender for the sale of a majority stake in a port on the island of Crete, a popular tourist destination in Europe…. Greece is also selling majority stakes in the ports of Alexandroupolis and Igoumenitsa in northern and western Greece, as part of a privatization scheme aiming to raise 1.8 billion euros ($2.11 billion) this year.”

“Portugal Envoy Urges US to Bid on Key Seaport as PRC Influence Grows”

[Voice of America, via Naked Capitalism Water Cooler 4-6-21]

“Analysts warn that unless the U.S. moves quickly, China will soon expand its control over a key Portuguese seaport. A month from now, the fate of a new terminal at the Port of Sines on Portugal’s southwestern coast is scheduled to be decided. Sines is ‘the first deep water port if you go from the United States to Europe, so it’s a very important infrastructure,’ Domingos Fezas Vital, Lisbon’s ambassador to the United States, said in a phone interview. In 2012, the People’s Republic of China acquired a stake in one of the four terminals at the port, drawing attention to Beijing’s strategic design. ‘We now have an international bid for a fifth terminal, which will be a second container terminal,’ Fezas Vital told VOA. ‘We would very, very, very much like to have American companies competing for this bid; I think it will be very important to have an American presence in Sines.’”

The costs of a secretive ‘wealth defense industry’ of shell companies, offshore tax havens, and empty luxury condos

[Boston Globe, via Naked Capitalism 4-6-21]

Meet the Highest Paid CEO in S&P 500, Paycom’s $211 Million Man

Wall Street Journal, via Naked Capitalism 4-7-2021]

Majority of World’s Flights Taken by a Small Minority of Elite Travelers

[Treehugger, via Naked Capitalism 4-4-2021]

“If You Sell a House These Days, the Buyer Might Be a Pension Fund”

[Wall Street Journal, via Naked Capitalism Water Cooler 4-6-21]

“The country’s most prolific home builder booked roughly twice what it typically makes selling houses to the middle class—an encouraging debut in the business of selling entire neighborhoods to investors….. From individuals with smartphones and a few thousand dollars to pensions and private-equity firms with billions, yield-chasing investors are snapping up single-family houses to rent out or flip. They are competing for houses with ordinary Americans, who are armed with the cheapest mortgage financing ever, and driving up home prices.”

“Ford, GM cutting more production ahead of White House meeting on chip shortage”

[Reuters, via Naked Capitalism Water Cooler 4-9-21]

“General Motors and Ford both said on Thursday they will cut more vehicle production due to a semiconductor chip shortage that has roiled the global automotive industry…. A U.S. auto industry group this week urged the government to help and warned that a global semiconductor shortage could result in 1.28 million fewer vehicles built this year and disrupt production for another six months.”

Serious enough for a White House meeting, hmmmm? Well, I hope someone remembers to bring up this from the 1992 campaign, regarding the issue of a national industrial policy:

“computer chips, potato chips, what’s the difference?”

— George H.W. Bush Sr. economic advisor, Michael Boskin.

Boskin is STILL a professor of economics at Stanford, apparently. Why?

You can send Boskin an email and remind him….

More change in the wind?

Restaurant Chains Debunk Their Lobbyists’ Arguments Against A $15 Minimum Wage

[DailyPoster April 5, 2021]

While restaurant lobbyists tell lawmakers it’s the “wrong time” for a wage hike, companies they represent are telling investors they can afford to pay higher wages.

.

“McDonald’s, Other CEOs Tell Investors $15 Minimum Wage Won’t Hurt Business” [Newsweek, via Naked Capitalism Water Cooler 4-5-21]

“Big restaurant chains are telling investors that a national minimum wage hike wouldn’t be a big deal—even as their corporate lobbying groups in Washington fight plans for a $15 minimum wage. ‘We share your view that a national discussion on wage issues for working Americans is needed—but the Raise the Wage Act is the wrong bill at the wrong time for our nation’s restaurants,’ the National Restaurant Association wrote in a letter to congressional leaders in February. ‘The restaurant industry and our workforce will suffer from a fast-tracked wage increase and elimination of the tip credit.’ The following day, a top executive at Denny’s, one of the association’s members, told investors that gradual increases in the minimum wage haven’t been a problem for the company at all. In fact, California’s law raising the minimum wage to $15 by 2023 has actually been good for the diner chain’s business, according to Denny’s chief financial officer, Robert Verostek.”

Restoring balance to the economy

A CFPB rule that was never promulgated could help American move their money out of big banks.

[Huffington Post, via The American Prospect 4-8-2021]

Information Age Dystopia

“Google Is Testing Its Controversial New Ad Targeting Tech in Millions of Browsers. Here’s What We Know.”

[Electronic Frontier Foundation, via Naked Capitalism Water Cooler 4-6-21]

“Today, Google launched an “origin trial” of Federated Learning of Cohorts (aka FLoC), its experimental new technology for targeting ads. A switch has silently been flipped in millions of instances of Google Chrome: those browsers will begin sorting their users into groups based on behavior, then sharing group labels with third-party trackers and advertisers around the web. A random set of users have been selected for the trial, and they can currently only opt out by disabling third-party cookies…. Right now, a site administrator has to make a conscious decision to include code from an advertiser on their page. Sites can, at least in theory, choose to partner with advertisers based on their privacy policies. But now, information about a user’s visit to that site will be wrapped up in their FLoC ID, which will be made widely available (more on that in the next section). Even if a website has a strong privacy policy and relationships with responsible advertisers, a visit there may affect how trackers see you in other contexts.”

“DoorDash Drivers Game Algorithm to Increase Pay”

[Bloomberg, via Naked Capitalism Water Cooler 4-6-21].

“Dave Levy and Nikos Kanelopoulos are trying to beat the algorithm. The two DoorDash drivers—Dashers, as the company calls them—are trying to persuade their peers to turn down the lowest-paying deliveries so the automated system for matching jobs with drivers will respond by raising pay rates. ‘Every app-based on-demand company’s objective is to constantly shift profits from the driver back to the company,’ Levy says. ‘Our objective is the reverse of that.’ Their main tool is #DeclineNow, a 40,000-person online forum that provides a view into a type of labor activism tailored for the gig economy. While there’s no reliable way to quantify its impact, #DeclineNow’s members say they’ve already increased pay for workers across the country, including in Pennsylvania’s Lehigh Valley, where Levy and Kanelopoulos live. But the effort raises difficult questions about the nature of collective action, and there are reasons to doubt whether using a company’s own software systems against it is a strategy that can prove effective for a sustained period of time.”

The Dark Side

“The Democratic Party’s Consultant Factory”

[The Intercept, April 6, 2021]

“The progress the party has made in diversifying its lower and mid-tier ranks means that it is not unrealistic to expect those operatives eventually move into the highest positions, both within the party committees and at the top-grossing firms. So far, the consulting ecosystem has absorbed these new voices with no disruption to business as usual, leaving in place a structure in which major Democratic Party firms spend part of their time working on behalf of candidates and the party, and the rest of their time working for corporate clients. Firms and operatives who reject that approach continue to be shut out, as the party’s position with working-class voters of all races continues to weaken.”

“Michael O Church’s Theory of 3 Class Ladders in America (Archive)”

[Michael Church, via Naked Capitalism Water Cooler 4-7-21]

Even better: An update from Church here, on the pathologies of corporate management.

The introduction: “Typical depictions of social class in the United States posit a linear, ordered hierarchy. I’ve actually come to the conclusion that there are 3 distinct ladders, with approximately four social classes on each. Additionally, there is an underclass of people not connected to any of the ladders, creating an unlucky 13th social class. I’ll attempt to explain how this three-ladder system works, what it means, and also why it is a source of conflict. The ladders I will assign the names Labor, Gentry, and Elite. My specific percentage estimates of each category are not derived from anything other than estimation based on what I’ve seen, and my limited understanding of the macroeconomics of income in the United States, so don’t take them for more than an approximation. I’ll assess the social role of each of these classes in order, from bottom to top. This is, one should note, an exposition of social class rather than income. Therefore, in many cases, precise income criteria cannot be defined, because there’s so much more involved. Class is more sociological in nature than wealth or income, and much harder to change. People can improve their incomes dramatically, but it’s rare for a person to move more than one or two rungs in a lifetime. Social class determines how a person is perceived, that person’s access to information, and what opportunities will be available to a person.”

NYPD “Goon Squad” Manual Teaches Officers To Violate Protesters’ Rights

[The Intercept, April 7, 2021]

Now a series of internal documents obtained by The Intercept shed new light on the police unit behind some of the most brutal repression of protests in the wake of George Floyd’s killing. The Intercept is publishing three of the public records with this story, including the SRG’s guidelines and manuals for its field force operations and bike squads.

Why The Republican Party Isn’t Rebranding After 2020

[FiveThirtyEight, via The Big Picture 4-10-2021]

Summary: the activists don’t want to; the base doesn’t want to; and 2020 was so very, very close, they think they can win in 2022 and 2024. 

….Trump would have won reelection had he done only about 1 percentage point better in Pennsylvania and Wisconsin and about 3 points better in Michigan. Republicans would still control the Senate had Republican David Perdue won about 60,000 more votes (out of nearly 4.5 million cast) against Democrat Jon Ossoff in Georgia’s Senate runoff. A slew of court rulings that forced the redrawing of House district lines in less favorable ways to the GOP helped the Democrats win several seats — otherwise, Republicans might have won back the House. Add all that up, and 2020 wasn’t that far from resulting in a Republican trifecta.

Also, Republicans did really well in state legislative races and gained ground among Black and Latino voters nationally (while still losing substantially among both groups)….

We should note that the Republicans are making some slight shifts. They are trying to describe their identity politics in terms of fighting “woke” people, “cancel culture” and critical race theory, instead of bashing Mexicans and Muslims as Trump did in 2016. The GOP is emphasizing the idea that it is a “working-class party,” even if its economic policy ideas don’t necessarily align with that mantra. And there is a clear effort in the party to promote other Republican politicians like Florida Gov. Ron DeSantis as presidential candidates — thereby allowing the party to move on from Trump by 2024.