Week-end Wrap – Political Economy – February 14, 2021

by Tony Wikrent

Strategic Political Economy

“How The US Legalized Corruption”

[Indi Samarajiva, via Naked Capitalism Water Cooler 2-8-21]

“Americans have this thing called a fundraiser where you put a pile of bribes on a table, wave a wand of asparagus over it, and it just disappears. Access is still bought, but somehow because people ate food, it’s not corruption anymore. The press will literally report on the food. “In New York last weekend, $100,000 got donors a plate of grilled chicken and asparagus, a posed picture with President Trump in a palatial, 60-foot-long entryway, and a 20-minute group chat with the president. WTF is this? In any other country you wouldn’t report on the chicken, you’d report on the corruption.” (Details of a fund raiser dinner from the Washington Post).

Because this is all legal, Americans ignore how fucking insane it is. It’s just daylight bribery. This is what I mean when I say that America has legalized corruption. It’s not that your system is corrupt. Your system is corruption.

Property, Liberty, and the Rights of the Community: Lessons from Munn v. Illinois
Paul Kens [Buffalo Public Interest Law Journal, Volume 30 (2011)]

Abstract: When considering the extent to which the United States Constitution places a limit on government regulation of business, today’s historians and constitutional theorists treat the question as a matter of balancing economic liberty or property rights against government power. Moreover, modem scholars commonly maintain that this balancing formula represents the predominant tradition in constitutional history. Tracing it back to the tenants of Jacksonian democracy that emphasized distrust of government, they imply that constitutional history has developed as a straight line: always with an emphasis on individual liberty and always with a presumption that entrepreneurial liberty should be favored over governments’ power to regulate.

This paper will use the 1877 case Munn v. Illinois to demonstrate that prior to the late 1880s the paradigm for determining the constitution’s limits on government regulation of business was actually quite different. There is no doubt that the Court has always emphatically recognized the importance of property rights. Nevertheless, during the first century under the Constitution, it treated business regulation as a matter of balancing entrepreneurial liberty against the rights of the community. Furthermore, it consistently held that, because state economic regulations were an expression of popular sovereignty and rights of the community, they should be presumed to be valid.

Munn is significant because in the conventional narrative it is portrayed as a steppingstone in the straight line evolution of constitutional doctrine that emphasizes individual liberty. A closer look at the case and the events surrounding it will demonstrate, however, that the majority in Munn actually based its opinion on the traditional emphasis on rights of the community. It will further demonstrate that for more than a decade after the opinion the Supreme Court steadfastly clung to that traditional view. Even under persistent pressure to change.

Fear of the Few: John Adams and the Power Elite
Luke Mayville [Polity, Volume 47, Number 1, January 2015]

Abstract:The political thought that informed the design of the United States Constitution largely neglected the danger posed by socioeconomic elites. The writings of John Adams, I contend, are exceptional in this regard. Using Adams’s writings as a vantage point, this article exposes two important blind spots in mainstream Founding-era thought and the Constitution it informed. Whereas the likes of Hamilton and Madison insisted that majorities held the clear preponderance of power in republican America, Adams maintained that an elite of wealth, birth, and beauty retained overwhelming power even after the abolition of formal distinctions. And whereas Federalists sought security against the threat of majority tyranny, Adams’s principal fear was of aristocratic tyranny—specifically, the tendency of the elite few to undermine both popular representation and effective government.

 

The Thirty Tyrants: The deal that the American elite chose to make with China has a precedent in the history of Athens and Sparta

[Tablet, via The Big Picture 2-13-21]

The poisoned embrace between American elites and China began nearly 50 years ago when Henry Kissinger saw that opening relations between the two then-enemies would expose the growing rift between China and the more threatening Soviet Union. At the heart of the fallout between the two communist giants was the Soviet leadership’s rejection of Stalin, which the Chinese would see as the beginning of the end of the Soviet communist system—and thus it was a mistake they wouldn’t make.

The Biden Transition and the Fight for Real Hope and Change This Time

The Beltway Media Is Manufacturing Consent
Julia Rock, Andrew Perez, and David Sirota, February 9, 2021 [The Daily Poster]

How elite news outlets are working overtime to try to block families from getting the $2,000 survival check they were promised.

How establishment media is misleading on $75,000 cutoff for emergency support

David Dayen, February 10, 2021 [The American Prospect]

Economist Claudia Sahm, who I quoted extensively in my piece, wrote an even more thorough takedown of the Chetty paper.

But Claudia and I didn’t end up on the op-ed page of the New York Times, as Chetty and his fellow researchers did yesterday, given the space to present the research again and pre-emptively rebut critics. That they felt the need to do this shows that a real debate is forming. But the role of elite media is pushing through Chetty’s narrative is notable.

First 100: Defining Bidenomics

David Dayen, February 11, 2021 [The American Prospect]

At this moment, there are 18 million more people on continuing unemployment claims as there were a year ago. Over 11 million of them risk losing benefits in a month. This pain has been almost entirely concentrated in the low-wage sector, and by “low-wage” I mean making under $30,000 a year. Even now, as Federal Reserve chair Jerome Powell said yesterday, we have an unemployment rate at around the highs of the Great Recession, masked by misclassification and statistical error. And prior Fed pronouncements indicate that the bottom quartile has unemployment rates at the Depression level of 20 percent or more. That comes on top of a situation in America where we have the highest poverty rates in the developed world, and among the most threadbare safety nets….

A few years ago everyone was repeating this chart from Pavlina Tchernava, showing that the gains from economic growth after recessions used to go to the bottom 90 percent of the income scale, but that has completely reversed, to the extent that in the last economic cycle, more than 100 percent of the gains accrued to the top 10 percent. Part of what the Biden team is thinking through is how to learn from the failed recoveries of the past.

And therefore we have large deficits planned, with no concern about inflation. We have fiscal support flowing in beyond what the experts who engineered those bad recoveries say is needed to fill the “output gap.” Instead of just topping up enough to hit a statistical target, Biden’s team is buying recovery insurance in the hopes that enough of the money will leak out to support those who actually need it. This is how you get the familiar refrain of “the cost of doing too little is greater than the cost of doing too much.” It’s a popular approach as well.

Restoring balance to the economy

First 100: How Biden Must End Corporate-Run Industrial Policy

David Dayen, February 11, 2021 [The American Prospect]

If it wasn’t clear to everyone why China should be a priority before this week, the story I’ve previously covered about the global semiconductor shortage should clear that up. The global auto industry now expects $61 billion in losses because of the lack of computer chips, which dominate auto production these days (all the better to force authorized dealer repairs on the vehicles). This cannot be turned around quickly, as the lead time for semiconductors is half a year.

The reasons for this shortage perfectly explain why you don’t want to leave industrial policy to corporations acting in their own self-interest. COVID-related closures of auto factories led semiconductor producers to shift resources to consumer electronics, which were spiking in demand during lockdowns. This worked its way through the supply chain and created a shortage, as demand for autos was miscalculated. It takes a long time to build or reconfigure factories to ramp up capacity. And we don’t have that capacity here, because as much as 70 percent of all chips are made in Taiwan.

Corporations loved this centralization and just-in-time logistics when they profited from it, but the shortage has them begging the Biden administration to ramp up domestic production. So far the Biden team is mostly looking busy by conducting 100-day reviews. Meanwhile, China, whose relationship with Taiwan is fraught to put it mildly, is a decade ahead of the U.S. and counting in building a domestic semiconductor industry, using massive tax incentives to onshore chipmakers.

These supply chain vulnerabilities are scattered throughout industries. We took notice of them in medical supplies and prescription drugs when the pandemic first hit.

Can the Democrats Outlaw Forced Arbitration?

Harold Meyerson, February 11, 2021 [The American Prospect]

Earlier today, the House Judiciary Committee began its consideration of one bill that is extremely necessary and should also be extremely popular. The bill would ban corporations from imposing forced arbitration on their customers and workers….

It’s Easy to Fix Inequality: Tax the Rich

[Counterpunch, via LA Progressive 2-9-2021]

Economic Armageddon: The COVID Collapsed Economy

A Brutal Tally: Higher Ed Lost 650,000 Job Last Year

[Chronicle of Higher Education, via Naked Capitalism 2-8-21]

[Twitter]

Predatory Finance

OpenLux : the secrets of Luxembourg, a tax haven at the heart of Europe

[Le Monde, via Naked Capitalism 2-10-21]  In English.

To conduct this investigation, Le Monde has compiled a huge database that lists the beneficiaries of the 124.000 commercial companies registered in Luxembourg, i.e. their true owners, along with 3.3 million administrative acts and financial reports. These are documents that have recently been made public, but are only available on the Luxembourg trade register website. Le Monde was able to extract them in their entirety for analysis, in partnership with the Suddeutsche Zeitung in Germany, Le Soir in Belgium, McClatchy in the United States, Woxx in Luxembourg, IrpiMedia in Italy, and the OCCRP Consortium of investigative journalists.

Amsterdam ousts London as Europe’s top share trading hub

[Financial Times, via Naked Capitalism 2-11-21]

This is for you, Dad”: Interview with an Anonymous GameStop Investor

Matt Taibbi, February 6, 2021

I remember when the housing collapse sent a torpedo through my family. My father’s concrete company collapsed almost overnight. My father lost his home. My uncle lost his home. I remember my brother helping my father count pocket change on our kitchen table. That was all the money he had left in the world. While this was happening in my home, I saw hedge funders literally drinking champagne as they looked down on the Occupy Wall Street protesters. I will never forget that.

My father never recovered from that blow. He fell deeper and deeper into alcoholism and exists now as a shell of his former self, waiting for death.

This is all the money I have and I’d rather lose it all than give them what they need to destroy me. Taking money from me won’t hurt me, because I don’t value it at all. I’ll burn it down just to spite them.

This is for you, Dad.

In Response to “New York,” Re: GameStop

Matt Taibbi, February 6, 2021

The issue with the “artificial stimulants” isn’t that some form of rescue wasn’t necessary, but rather that the rescues that were implemented were both executed poorly and inherently unfair in design. From the TARP through the CARES Act to the now interminable programs of Fed purchases, bailouts led directly to massive booms for banks and financial asset-holders, while everyone else saw personal wealth decline. Market forces exist for some, but not others.

Perhaps some form of rescue was necessary, but there’s something odd going on when a bank executive can be looking at closing up shop one day, as many were last March, only to go on to secure record profits and over $30 million in personal compensation, with nothing changing in between but a bailout. Meanwhile, at the bottom of the economic spectrum, there were no such reversals of fortune. You lost your job, you got foreclosed on, that was it. As Vice-Chairman of Berkshire Hathaway Charlie Munger said all the way back in 2010, addressing individual homeowners who might want bailouts, “Suck it in and cope.” One $2000 check doesn’t change the pattern.

Genocide against the working class

“Public policy and health in the Trump era”

[The Lancet, via Naked Capitalism Water Cooler 2-11-21]

“Life expectancy in the USA was average among high-income nations in 1980, by 1995, it was 2·2 years shorter than the average of other G7 countries, and by 2018, the gap had widened to 3·4 years. The extent of difference can also be quantified as the number of missing Americans—ie, the number of US residents who would still be alive if age-specific mortality rates in the USA had remained equal to the average of the other six G7 nations. By this measure, in 2018 alone, 461 000 Americans went missing, an annual figure that has been increasing since 1980 (figure 2, appendix pp 2–3).38 Most of the US mortality excess is among people younger than 65 years. If US death rates were equivalent to those of other G7 nations, two of five deaths before age 65 years would have been averted. To put this number in context, the number of missing Americans each year is more than the total number of COVID-19 deaths in the USA in all of 2020.”

“Life Expectancy and Mortality Rates in the United States, 1959-2017”

[Journal of the American Medical Association, via Naked Capitalism Water Cooler 2-11-21]

From the Abstract: “Between 1959 and 2016, US life expectancy increased from 69.9 years to 78.9 years but declined for 3 consecutive years after 2014. The recent decrease in US life expectancy culminated a period of increasing cause-specific mortality among adults aged 25 to 64 years that began in the 1990s, ultimately producing an increase in all-cause mortality that began in 2010.”….

“During 2010-2017, midlife all-cause mortality rates increased from 328.5 deaths/100 000 to 348.2 deaths/100 000. By 2014, midlife mortality was increasing across all racial groups, caused by drug overdoses, alcohol abuse, suicides, and a diverse list of organ system diseases. The largest relative increases in midlife mortality rates occurred in New England (New Hampshire, 23.3%; Maine, 20.7%; Vermont, 19.9%) and the Ohio Valley (West Virginia, 23.0%; Ohio, 21.6%; Indiana, 14.8%; Kentucky, 14.7%). The increase in midlife mortality during 2010-2017 was associated with an estimated 33 307 excess US deaths, 32.8% of which occurred in 4 Ohio Valley states.”

From the Virginia Commonwealth University press release on the study: “‘The notion that U.S. death rates are increasing for working-age adults is particularly disturbing because it is not happening like this in other countries,” [ Steven Woolf, M.D., director emeritus of the VCU Center on Society and Health] said. ‘This is a distinctly American phenomenon.’”

Are conservative policies shortening American lives?

[Salon, February 10, 2021]

In 2013, a research team comprised of some of the nation’s top epidemiologists and demographers compared the health of Americans with the health of people in other high-income nations. They summarized their findings in the report’s title: “U.S. Health in International Perspective: Shorter Lives, Poorer Health.”

Compared to 16 other nations, the U.S. ranked dead last in life expectancy for males and second-to-last for females. Beyond that, the nation ranked at or near the bottom in nine broad areas, including injuries and homicides, drug-related deaths, heart disease, and diabetes. Lung disease was both more common and more deadly in the U.S. than in most of the comparison countries, while older adults were more likely to have arthritis than people in the United Kingdom, Europe, and Japan. The U.S. surpassed all other nations in its rate of infant death. It had the highest rate of new AIDS cases….

… a new line of research focusing on individual states, rather than the country as a whole… has found that states with more liberal policies have longer life expectancy rates than those with more conservative policies. If all states adopted policies similar to those of Hawaii, for example — including on labor, tobacco, and the environment — U.S. life expectancy would increase to such an extent that it would be on par with other high-income countries

“Hospitals’ Covid-19 heroics have them poised for power in the new Washington” [STAT, via Naked Capitalism Water Cooler 2-10-21]

“The hospital business is booming on Capitol Hill like never before. Lawmakers showered the industry with more than $275 billion last year, and handed hospitals wins even on seemingly unrelated issues. And Democrats’ agenda will almost certainly be better for their bottom lines. The Covid-19 pandemic has transformed the industry’s image in Washington, where large health care systems have long been vilified as corporate profit mongers instead of community caregivers. Now, more than two dozen lobbyists and consultants told STAT that they are keenly aware of just how much power the industry has accrued — and are prepared to seize the moment. ‘There is a time to ask for things you wouldn’t usually ask for,’ one health care lobbyist said, requesting anonymity because the individual was not authorized by clients to speak with reporters. ‘If you get straight A’s, it might be the time to ask your parents for a new iPhone. This is the time not to be shy. You’re kind of the golden children, but it’s not going to last forever.’ The one possible obstacle in hospitals’ glide path is President Biden. He has spoken fondly of Walter Reed National Military Medical Center, where he was treated for brain aneurysms; where his son Beau fought brain cancer; and where, as vice president, he made regular Christmas visits to injured troops. He supports a number of policies hospitals love, such as expanding Medicaid and making it cheaper for people to get insurance through Affordable Care Act exchanges. But glaringly, Biden left hospitals completely out of his proposal for Covid-19 relief, even as he lavished some $1.9 trillion on other priorities. Some of his campaign advisers were rankled by the health care industry’s seven-figure ad blitz against the public option, which ran during the Democratic primary season.”

The carnage of mainstream neoliberal economics

Goldman Is Evil But McKinsey Is Worse

[Naked Capitalism 2-7-21]

[Twitter, via Naked Capitalism 2-11-21]

Creating new economic potential – science and technology

Scientists develop transparent wood that is stronger and lighter than glass

[CBC, via Naked Capitalism 2-9-21]

German Institute Develops ‘Powerpaste’ That Stores Hydrogen Energy At 10x the Density of a Lithium Battery

[Hackaday, via Naked Capitalism 2-9-21]

How Steel Might Finally Kick Its Coal Habit

[Wired, via Naked Capitalism 2-8-21]

A Nairobi Entrepreneur Is Recycling Plastic Waste into Bricks That Are More Durable Than Concrete

[This Colossal, via Naked Capitalism 2-11-21]

Climate and environmental crises

“Company Behind NC Pipeline Spill Inspected Less Than 50% In 2019, Improperly Kept Records”

[Robbie Jaeger, via Naked Capitalism Water Cooler 2-8-21]

Information Age Dystopia

This is how we lost control of our faces

[MIT Technology Review, via Naked Capitalism 2-8-21]

[Twitter, via Naked Capitalism 2-9-21]

 

Regulation of Big Tech will decide the fate of Western democracies

[Business Insider, via Naked Capitalism 2-9-21]

What Jeff Bezos Hath Wrought

[New York Times (David L) L 2-9

Disrupting mainstream politics

The Democrats Have a Mandate. Why Won’t They Use It?

[Eudaimonia, via Naked Capitalism 2-8-21]

“Did the Democrats Misread Hispanic Voters?”

[Ruy Teixeira, The Liberal Patriot, via Naked Capitalism Water Cooler 2-8-21]

“Clearly, this constituency does not harbor particularly radical views on the nature of American society and its supposed intrinsic racism and white supremacy. Rather, this is a population that overwhelmingly wanted to hear what the Democrats had to offer on jobs, the economy and health care.” [Umm — that’s why they voted for Sanders.] “But the Democrats could not make the sale with an unusually large number of Latino voters in a year of economic meltdown and coronavirus crisis. This suggests there was an opportunity cost to the political energy devoted to issues around race which simply were not that central to the concerns of Hispanic voters and the more radical aspects of which were unpopular with these voters.”

Stacey Abrams and Lauren Groh-Wargo: How to Turn Your Red State Blue

Stacey Abrams and Lauren Groh-Wargo [New York Times, February 11, 2021]

As the world knows, President Biden won Georgia’s 16 electoral votes in November, and the January runoff elections for two Senate seats secured full congressional control for the Democratic Party. Yet the result wasn’t a miracle or truly a surprise, at least not to us. Years of planning, testing, innovating, sustained investment and organizing yielded the record-breaking results we knew they could and should. The lessons we learned can help other states looking to chart a more competitive future for Democrats and progressives, particularly those in the Sun Belt, where demographic change will precede electoral opportunity.

The Dark Side

How Fox News Will Fight a $2.7 Billion Suit About the 2020 Election

[Hollywood Reporter, via The Big Picture 2-11-21]

Will Fox News tell the American public that it’s high time for Donald Trump to shoulder the blame for his perpetual lying? That became a much more distinct possibility when Fox responded in court Monday to a $2.7 billion defamation lawsuit from voting technology company Smartmatic.

“NRCC finance chair: Republicans who voted for Trump impeachment will not be penalized”

[The Hill, via Naked Capitalism Water Cooler 2-12-21]

“Rep. Darin LaHood (R-Ill.), finance chair of the National Republican Congressional Committee (NRCC), on Thursday affirmed that the House lawmakers who voted to impeach former President Trump would still receive funding for their respective reelection campaigns. During a phone interview with Politico, LaHood said that gaining control of the House in 2022 was more important than punishing Republican lawmakers by depriving their campaigns of cash.” • Seems like the ideal outcome for Republicans would be a majority of Republicans voting to convict, but not two-thirds. Best of both worlds!

“Can There Ever Be a Working-Class Republican Party?”

[The New Republic, via Naked Capitalism Water Cooler 2-9-21]

In the twenty-first century thus far, something strange has been happening. Reaganite Republicans have continued cutting taxes to “unleash” “entrepreneurship,” but the rich people thus favored keep turning into Democrats. Loudoun County, Virginia, now the richest U.S. county, was until recently a rock-solid Republican place. George W. Bush won it by 16 points in 2000. But Barack Obama took an 8-point victory in 2008, Hillary Clinton won it by 17 in 2016, and Joe Biden won it by 24 in 2020—a 40-point shift in two decades. In the weeks leading up to December’s finance reports on the pair of Georgia Senate runoffs, the Democratic candidates, Jon Ossoff and Raphael Warnock, each raised more money than both of the Republican candidates. There are still vestiges of the old dispensation: One of the Republican candidates, Kelly Loeffler, wife of the chairman of the New York Stock Exchange, had donated $23 million of her own money. But in general Democrats now enter the political arena as the party of wealth….

The election of Donald Trump in 2016 was the triumph of a base that many in the Republican Party didn’t realize they had. “It feels to me like the party’s getting pushed into it,” said Julius Krein, an investor who publishes the quarterly review American Affairs, in an interview this winter. “Donors, especially, don’t want it to be a working-class party. And certainly the old guard not only doesn’t think of itself as such, but is quite hostile to that, and to any policy that could possibly lead in that direction. But it’s getting pushed there because all the elite are going to the Democrats.”

Trump’s administration worked out well for American workers, at least up until Covid hit in the spring of 2020. Unemployment was under 4 percent for most of 2018 and 2019. The good times reached even those to whom prosperity had historically been slowest to arrive. Unemployment among Black men, a whisker under 20 percent in March 2010, had fallen to around 5 percent in November 2019. According to The Economist, gains were concentrated in professions where workers had heretofore faced competition from immigrant labor, such as housekeepers and maintenance workers. The kitchen-table financial concerns of such people are, of course, no more familiar to most American opinion-formers than are the aisles of Sam’s Club. But the economic hand that Trump had to play in last fall’s elections was stronger than almost anyone outside of the working class understood, and the results—at least in terms of the swing-state popular vote—correspondingly closer….

“Democrats must show, in word and deed, how fraudulent the Republican party is when it claims to be the party of working families,” Sanders writes. “And, in order to do that, Democrats must have the courage to take on the powerful special interests who have been at war with the working class of this country for decades. I’m talking about Wall Street, the pharmaceutical industry, the health insurance industry, the fossil fuel industry, the military industrial complex, the private prison industrial complex and many profitable corporations who continue to exploit their employees.”