Week-end Wrap – Political Economy – March 21, 2021

by Tony Wikrent

Strategic Political Economy

[Twitter, via Naked Capitalism 3-15-21]

The Dark Money “Ring” of Charles Koch and Leonard Leo Gets an Airing Before the U.S. Senate – Followed by a Mainstream Media News Blackout

Pam Martens and Russ Martens, March 15, 2021 [Wall Street on Parade]

Last Wednesday, March 10, a Subcommittee of the Senate Judiciary Committee held a hearing of critical importance to every American on the growing tsunami of dark money that is corrupting the U.S court system, up to, and including, the U.S. Supreme Court. Senator Sheldon Whitehouse (D-RI), who has written extensively on the corrupting influence of dark money on American democracy, chairs that Subcommittee on Federal Courts, Oversight, Agency Action and Federal Rights….

Had a truly objective Editorial Board at the Wall Street Journal taken the time to read the full written testimony of Lisa Graves, President of the Center for Media and Democracy, that was presented at this hearing, there would be no doubt in their minds that the Federal court system in the United States has been obscenely corrupted by dark money, coming predominantly from fossil fuels billionaire Charles Koch and his dark money network….

Graves’ courageous testimony named names and backed up her charges with hard facts. Graves explained the campaign to seat Amy Coney Barrett on the Supreme Court…. Graves writes that Leonard Leo, the Co-Chairman of the Koch-funded Federalist Society “sits at the hub of a secretive scheme to capture the courts and remake our laws, with a cadre of his confidantes and groups.” Graves says that “more than $400 million” was received by this dark money network between 2014 and 2018….

Graves explains the motive behind the involvement of the Federalist Society as follows:

 

“The Federalist Society is also stacked with corporate attorneys whose day jobs are to defend some of the biggest corporations in the world. Through its publications and events, the Federalist Society advances a pro-corporate agenda to limit the ability of Congress and federal agencies to regulate corporations and to thwart the mitigation of climate change under the guise of a merely neutral philosophy.”

Graves also provided written testimony on a memo that was sent by the Koch network to tout its success in getting the Trump administration to enact its agenda. Charles Koch’s late brother and long-time ally, David, had written in the memo: “Our efforts have been aligned with the Trump administration’s efforts to use Executive Orders to direct agencies and departments to dismantle regulatory overreach.”

And for the potential of corporate lawyers as federal judges:

‘I’ve Been Targeted With Probably the Most Vicious Corporate Counterattack in American History’

[Esquire, via Naked Capitalism 3-19-21]

Donziger is a human rights lawyer who, for more than 27 years, has represented the Indigenous peoples and rural farmers of Ecuador against Texaco—since acquired by Chevron—which was accused of dumping at least 16 billion gallons of toxic waste into the area of the Amazon rainforest in which they live. Cancer is now highly prevalent in the local population. Some have called it the “Amazon Chernobyl.” They first filed suit in New York in 1993, but Texaco lobbied, successfully, to move the proceedings to Ecuador. In 2011, the team of Ecuadorian lawyers Donziger worked with won the case, and Chevron was ultimately ordered to pay $9.8 billion.

But for Donziger, that was nowhere near the end. Chevron, a $260 billion company, went to a New York federal court to sue him under a lesser-known civil—non-criminal—provision of the Racketeering Influenced and Corrupt Organizations (RICO) Act. They later dropped their demands for financial damages because it would have necessitated a jury trial. That is something Donziger has been unable to get. Instead, Judge Lewis A. Kaplan, a former corporate lawyer whose clients included tobacco companies, became Donziger’s judge-and-jury in the RICO case. He heard from 31 witnesses, but based his ruling in significant part on the testimony of Albert Guerra, a former Ecuadorian judge whom Chevron relocated to the U.S. at an overall cost of $2 million. Guerra alleged there was a bribe involved in the Ecuadorian court’s judgement against Chevron. He has since retracted some of his testimony, admitting it was false.

But Kaplan, who refused to look at the scientific evidence in the original case, ruled the initial verdict was the result of fraud. And he didn’t stop there. He ordered Donziger to pay millions in attorneys fees to Chevron and eventually ordered him to turn over decades of client communications, even going after his phone and computer. Donziger considered this a threat to attorney-client privilege and appealed the ruling, but while that appeal was pending, Kaplan slapped him with a contempt of court charge for refusing to give up the devices. When the U.S. Attorney for the Southern District of New York declined to prosecute the case, Kaplan took the extraordinary step of appointing a private law firm to prosecute Donziger in the name of the U.S. government. The firm, Seward & Kissel, has had a number of oil-and-gas clients, including, in 2018… Chevron. Kaplan bypassed the usual random case-assignment procedure of the federal judiciary and handpicked a judge to hear the contempt case: Loretta Preska, a member of the Federalist Society, among whose major donors is… Chevron.

Meet the “New Koch Brothers” – the Hedge Fund Activists Wrecking America’s Green New Deal
Lynn Parramore, March 14, 2021 [Institute for New Economic Thinking, via Naked Capitalism]

Economist William Lazonick, who has written extensively on how businesses do business, explains that this becomes a big problem when we need innovative companies to make stuff we all need. “Companies grow and do things like create new technology, not because of stock market games,” he explains, “but because they develop their capabilities and invest in their people. And they can’t do this when hedge fund managers are calling all the shots and telling them to direct all the profits to shareholders.”

Unfortunately, in the U.S., there is a widespread and very stupid idea — no less a person than Jack Welch, the former head of GE, called it “the dumbest idea in the world” — that it’s ok for people who do nothing but buy and sell shares of a company’s stock to boss it around and pocket all its profits. It really makes no sense, but it permeates American business schools.

A republic begins to die when it tolerates big inequalities in wealth and income. 

Louis D. Brandeis, 1941: We can have democracy in this country, or we can have great wealth concentrated in the hands of a few, but we can’t have both.

How Unfair Property Taxes Keep Black Families From Gaining Wealth

[Businessweek, via The Big Picture 3-14-21]

Flawed assessments for America’s $500 billion in annual property taxes hit Black neighborhoods hardest.

The carnage of mainstream neoliberal economics

The Great Wall Street Housing Grab

[New York Times, via Naked Capitalism Water Cooler 3-19-21]

From earlier in March: “Strategic Acquisitions was but one of several companies in Los Angeles County, and one of dozens in the United States, that hit on the same idea after the financial crisis: load up on foreclosed properties at a discount of 30 to 50 percent and rent them out. Rather than protecting communities and making it easy for homeowners to restructure bad mortgages or repair their credit after succumbing to predatory loans, the government facilitated the transfer of wealth from people to private-equity firms. By 2016, 95 percent of the distressed mortgages on Fannie Mae and Freddie Mac’s books were auctioned off to Wall Street investors without any meaningful stipulations, and private-equity firms had acquired more than 200,000 homes in desirable cities and middle-class suburban neighborhoods, creating a tantalizing new asset class: the single-family-rental home. The companies would make money on rising home values while tenants covered the mortgages.”

The IRS Is Letting Rich People Fleece Everyone Else

David Sirota [Weekly Poster 3-20-2021]

…new Internal Revenue Service figures compiled by Syracuse University researchers show that in the last eight years, there has been a 72-percent drop in the number of audits of those making more than $1 million. In all, 98 percent of those making more than $1 million did not face an audit last year.

Similarly, there has also been a 55-percent drop in the number of audits of America’s largest corporations. In 2012, almost all corporate giants were audited. In 2020, however, almost two thirds of those corporations were not subjected to audits….

…the report showed that the agency failed to recover more than 60 percent of the $4 billion in back taxes owed by those making more than $1.5 million.

At the same time, overall enforcement has been hobbled by draconian budget reductions that have resulted in 43 percent fewer IRS revenue agents and 26 percent fewer IRS criminal investigators in the last decade, according to the Syracuse data.

Between 2010 and 2018, the IRS’s budget has been slashed by more than 20 percent, and its enforcement budget has been cut by 24 percent, according to the Center on Budget and Policy Priorities.

Amazon and the Breaking of Baltimore

[New York Times, via TheDailyPoster 3-14-2021]

“Over the past four decades, deindustrialization, the rise of the tech economy and the weakening of antitrust enforcement have sorted the country into a small number of winner-take-all cities and a much larger number of left-behind cities and towns. Once, wealth and prosperity were spread out across the country. In the 1960s, the 25 cities with the highest median incomes included Cleveland, Des Moines, Milwaukee and Rockford, Ill. By the middle of the last decade, virtually all of the top 25 were on the coasts. Meanwhile, the gap between wealthy and poorer regions has grown much wider. In 1980, only a few sections of the country had median incomes that were more than 20 percent above or below the national average. Today, big chunks of the country fall into those extremes. The imbalance is unhealthy at both ends of the spectrum. In one set of places, it produces congestion and unaffordability; on the other, blight and stagnation.”

Information Age Dystopia

The government’s lawyers saw a Google monopoly coming. Their bosses refused to sue. FTC memos suggest Obama-era regulators passed on an opportunity to rein in Google when the company still had viable competitors.

[Politico, via The Daily Poster 3-18-2021]

The Revolt Against the 30% Mafia

Moe Tkacik [Marker, via Naked Capitalism 3-18-21]

Starting in San Francisco, American cities and later whole states began enacting extremely simple regulations designed to soften the financial blow of a malign force choking America’s most vulnerable businesses with extreme commissions. The bills passed too quickly for lobbyists to festoon them in loopholes or deliberately ambiguous language, and they were such obvious no-brainers that copycat bills eventually passed in some 73 municipalities, in the end saving probably thousands of merchants from financial ruin.

The laws were the delivery app fee caps, which for the most part placed 15% limits on the commissions DoorDash, Uber, and Grubhub could charge restaurants during the pandemic. These laws cut restaurants’ delivery app bills in half in the cities that passed them, saving any restaurant that did a substantial amount of delivery app business thousands of dollars a month…. But the caps also represented the start of a grassroots revolt against the 30% Mafia, an unimaginative label I’ll use for the increasingly unimaginative syndicate of Silicon Valley gatekeepers who’ve made a business model of charging businesses from booksellers to hotels 30% of their top-line revenues for the privilege of existing on the internet….

Alas, Steve Jobs raised no such flags when he founded the 30% Mafia upon debuting the iPhone, when he elected to round the 27% he used to charge record labels for selling iTunes up to an even 30% for developers who wanted to sell iPhone software applications in the official App Store. At the time, he euphemistically referred to it as the “agency model” ….

Interestingly, the policy arguments Democrats have deployed in the service of opposing a clampdown on the 30% Mafia appear to be warmed-over Tea Party talking points, as Arizona Democrat César Chávez acknowledged in his speech announcing his opposition to the bill, in spite of his reluctance to side with conservative organizations like “ALEC or the Goldwater Institute.” Indeed, over the past two weeks, Alec Stapp, a veteran of the ALEC/Goldwater-adjacent Mercatus Center at the Koch Industries-bankrolled George Mason University who now directs technology policy at the proudly “neoliberal” Progressive Policy Institute, has published white papers bashing both the delivery app fee caps and the Arizona law.

Creating new economic potential – science and technology

In Boost for Renewables, Grid-Scale Battery Storage Is on the Rise

[Yale Environment 360, via The Big Picture 3-15-21]

Driven by technological advances, facilities are being built with storage systems that can hold enough renewable energy to power hundreds of thousands of homes. The advent of “big battery” technology addresses a key challenge for green energy — the intermittency of wind and solar.

High Speed Rail development by country (1976-present)

[Twitter, via Naked Capitalism 3-20-21]

“Report: So You Want to Do an Infrastructure Project”

[Niskanen Center, via Naked Capitalism Water Cooler 3-17-21]

“Over the last few generations, American infrastructure construction costs have exploded, even as many peer countries spend a fraction of what the U.S. does on the same bridge or tunnel or high-speed rail line. The difference in costs often boils down to domestic state capacity: bureaucracies in East Asia and Continental Europe tend to be better-staffed and more empowered to make professional decisions. The details are naturally more complicated, but the pattern is nonetheless clear: the countries with the lowest infrastructure costs are also the countries where the state acts swiftly, with mechanisms that limit the lag between financing and construction. If infrastructure is truly on the agenda, we must not be afraid to draw lessons from how other countries maximize their bang for their buck, and thus to avoid repeating the mistakes made in our own recent history.”

Liberals ain’t same as progressives

“Liberal Think Tanks Outline Steps to Resuming Student Loan Payments in September”

[The Intercept, via Naked Capitalism Water Cooler 3-17-21]

….the March 15 memo — from the Center for American Progress, New America, the National Association of Student Financial Aid Administrators, the Institute for College Access and Success, and the Pew Charitable Trusts — spells out steps for recollecting payments from tens of millions of borrowers.

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

“Bernie Sanders Has A Secret Weapon In Pushing Democratic Policy Through Senate”

[HuffPo, via Naked Capitalism Water Cooler 3-19-21]

“Dauster is Democrats’ top lawyer on the Senate Budget Committee, which Sanders chairs. For the past two months, Dauster constructed Democrats’ legal argument in defense of raising the minimum wage to $15 an hour without a single Republican vote. As Democrats try to navigate a 50-50 majority in the Senate, their only hope of passing some of their biggest policies — short of blowing up the Senate’s 60-vote threshold needed to move legislation past a filibuster — is through a process called budget reconciliation. It’s a limited legislative maneuver that allows bills to pass with a simple majority, as long as they have a direct impact on the federal budget and don’t raise the deficit outside a certain time period. It’s Dauster’s job to argue that Democrats’ proposals fit that framework. His first test was a big one: including a $15 minimum wage in the American Rescue Plan, the $1.9 trillion COVID-19 relief bill President Joe Biden signed into law this month. It didn’t happen.” So why the beat sweetener now? “But Dauster still believes it should have, and he believes it could work next time. He demonstrated out-of-the-box thinking that opened a new path for Democrats as they strategize around their next big pieces of legislation.”

The Dark Side

“‘A direct response’: How Trump’s 2020 loss is dictating the future of elections in battleground states”

[ABC, via Naked Capitalism Water Cooler 3-19-21]

“In Ohio and North Carolina, where former President Donald Trump triumphed in November, the GOP-controlled legislatures seem content to maintain the status quo. To date, no bills regarding access to ballots have been proposed in either state. The same cannot be said of places where electoral defeats doomed Trump’s reelection bid. In Arizona, Georgia, Pennsylvania, and New Hampshire, an attempted overhaul of the voting system is well underway, with hundreds of bills being introduced to slash expanded voting regulations that found favor in recent years and at the height of the coronavirus pandemic, like expanded access to absentee and early voting. The divergent fate of voting rights in similar swing states reflects a worrisome trend for voting-rights supporters: Where Trump lost, Republicans are seeking to rewrite the rule book in their favor, regardless of how down-ballot candidates performed. In states that Trump won — nothing.”

I Spent 25 Years Monitoring Domestic Terrorism for the U.S. Government — No One Listened

Daryl Johnson [Newlines Magazine, via The Big Picture 3-14-21]

From the U.S. Army to DHS to ATF, I tracked the growing threat posed by white supremacists and anti-government extremists. I was asked why I even bothered

Less than a year after assembling this analytical team, I authored the 2009 DHS report on right-wing extremism meant for law enforcement only. It was subsequently leaked to the press and a political backlash ensued, the aftermath of which scuttled my unit’s work at DHS.

The Republican Party and conservative media were offended by the term “right-wing extremist” (a legitimate term used in the counterterrorism community and academia) and objected to a vague definition of it that they intentionally misconstrued, claiming it was an attack on conservatism, the GOP, and the newly formed Tea Party, a grassroots populist movement that coalesced in opposition to Barack Obama’s presidency and what it saw as the administration’s radical leftist agenda.

The American Legion, too, was angry that my findings raised the prospect of returning veterans becoming targets of recruitment by right-wing extremists. No one on the right wanted to hear that the U.S. threat environment was shifting from homegrown Muslim extremists aligned with al Qaeda to violent, right-wing extremists. As is customary with inconvenient intelligence, my work was politicized, and my team was dissolved.

“If you think you’re sure the GOP has never hacked an election, then you don’t know the saga of Don Siegelman, Alabama’s last Democratic governor”

Jennifer Cohn [Medium, via Naked Capitalism Water Cooler 3-19-21]

“Later that year, 44 attorneys general, including both Democrats and Republicans, prevailed upon the House Judiciary Committee to investigate whether Bush’s DOJ had charged and prosecuted Siegelman as an act of political retribution. Following that effort, a bipartisan coalition of 75 attorneys general asked then Attorney General Eric Holder to investigate the prosecution of Siegelman’s case. Former vice president Al Gore helped raise funds for Siegelman’s appeal. None of it worked. Holder, whose former law firm had helped protect Rove’s emails kept on an private RNC server, instead fired a DOJ whistleblower who said that she had observed the prosecution coaching Nick Bailey, its key witness. (Another whistleblower reportedly decided to remain silent out of fear that he’d suffer the same fate or worse.)”