Week-end Wrap – Political Economy – March 6, 2022

by Tony Wikrent

Strategic Political Economy

[Twitter, via Naked Capitalism Water Cooler 3-1-2022]

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[Twitter, via Avedon’s Sideshow 4-6-2022]

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Putin the Apostate. We thought he would be our bastard. Then, he became his own bastard.

Matt Taibbi, February 28, 2022

I would like to point out that we already tried regime change in Russia. I remember, because I was there. And, thanks to a lot of lurid history that’s being scrubbed now with furious intensity, it ended with Vladimir Putin in power. Not as an accident, or as the face of a populist revolt against Western influence — that came later — but precisely because we made a long series of intentional decisions to help put him there…. I’ve been bitter in commentary about Putin in recent years because I never forgot the way the West smoothed his rise, and pretends now that it didn’t. It’s infuriating also that many of us who were critical of him from the start are denounced now as Putin apologists, I think in part because we have inconvenient memories about who said what at the start of his story. The effort to wipe that history clean is reaching a fever pitch this week. Before they finish the job, it seemed worth getting it all down….

 

The oligarch class was formalized in a stroke via a deal brokered at Davos in 1996…. The “relatively fair” privatization auctions were historic events. As my friends and former Moscow Times reporters Matt Bivens and Jonas Bernstein reported, “financiers” like Vladimir Potanin and Mikhail Khodorkovsky were loaned the capital to become controllers of, respectively, a third of the world’s nickel and a fourth of its cobalt, and 2% of the world’s oil reserves. Meanwhile murderous gangsters like Boris Berezovsky were gifted controlling stakes in companies like Aeroflot (from which he siphoned to a Swiss shell company roughly a third of its annual $400 million in revenues) and Russia’s seventh-largest oil concern, Sidanko.

Chartbook #91: What if Putin’s war regime turns to MMT? 

Adam Tooze, Chartbook

Russia’s Looming Economic Collapse

[The Atlantic, via The Big Picture 3-3-2022]

This is terra incognita for economic policy. No country has ever faced this kind of global freeze-out.

How Vladimir Putin Miscalculated the Economic Cost of Invading Ukraine 

[New Yorker, via The Big Picture 3-2-2022]

The Russian leader apparently failed to anticipate the unprecedented targeting of the Central Bank of Russia, a step that has battered the ruble and shaken the country’s financial system.

The West Weaponizes Russia’s Central Bank Against Putin

[Bloomberg, via The Big Picture 2-28-2022]

The sanctions have the potential to devastate the country’s economy and sow the seeds of Putin’s downfall.

Weaponizing Finance: To Punish Putin, the World Turned Finance Into a Weapon of War 

[Businessweek, via The Big Picture 3-4-2022]

Russia’s central bank became the main target on a front that could crater the country’s economy.

War in Ukraine threatens the global financial system 

Gillian Tett [Financial Times, via Naked Capitalism 3-5-2022]

Yves Smith’s contrary note is important: “The Great War ended the gold standard. Peter Temin argued persuasively that the effort to restore it is what caused the Great Depression.”

Wall Street Is Already Pouncing on Russia’s Cheap Corporate Debt

[Bloomberg, via Naked Capitalism 3-4-2022]

Five vile things Trump did to Zelensky and Ukraine that you forgot about

[Washington Post, via The Big Picture 3-3-2022]

“Trump acted against U.S. interests with the consequence of aiding Russian interests,” said Alexander Vindman, the former lieutenant colonel who testified dramatically against Trump.

Chart — Global Oil Supply, by Country

[via The Big Picture 3-3-2022]

“Wheat Prices Shoot to 14-Year High on Concerns over Conflict Between Russia and Ukraine”

[Farm Journal, via Naked Capitalism Water Cooler 3-3-2022]

“So, why are wheat prices seeing such momentum? Both Ukraine and Russia account for nearly 30% of the world’s wheat exports. It’s not just uncertainty about the crisis causing wheat prices to climb, but there’s also worries about infrastructure damage in Ukraine and whether it will hinder the country’s ability to export in the near future.”

It’s an Ill War That Blows No Good. Could this one have some positive outcomes (assuming we all don’t get incinerated)?

Robert Kuttner, March 4, 2022 [The American Prospect]

Globalization. The supply chain fiasco was one nail in the coffin of naïve globalization. The need to extricate Western banks and corporations from the Russian orbit is a second. National self-reliance is looking better and better again.

National Economic Planning. The flipside of ending corporate-led globalization. The U.S. needs to decide what we have to make domestically.

Patriotic Corporations. Before this war, banks and multinationals were telling national governments that extricating themselves from foreign commitments based on unacceptable behavior by the trading partner was either an impossibility or would take years. Now, everyone from Apple to Boeing is doing it in a matter of days.

More Transparent Capitalism. To isolate Russia’s economy, the Treasury found powers it wasn’t sure it had and was reluctant to use. There are plenty of kleptocrats right here in the USA. Having set this precedent, democratic governments can go after corrupt capitalists everywhere.

Smoking Out Oligarchs. British Prime Minister Boris Johnson, of all people, has introduced legislation that will require all property owners to be identified as people, no longer hiding their identity behind trusts or straws. That could become the international norm.

Controlling Crypto. One worry is that Putin will be able to evade financial controls by using cryptocurrencies. This strengthens the hands of the regulatory hawks and weakens the crypto enthusiasts in the administration.

Energy Transition. The spike in oil prices, the shortage of crude oil, the realization that OPEC won’t come to our rescue must accelerate the transition to renewable energy. It’s no longer just a contentious matter of addressing climate change, but of energy security.

The Elephant in the Courtroom 

[The New Yorker, via The Big Picture 3-5-2022]

 A curious legal crusade to redefine personhood is raising profound questions about the interdependence of the animal and human kingdoms.

Nature as a Mode of Accumulation: Capitalism and the Financialization of the Earth

[Monthly Review, via Naked Capitalism Water Cooler 3-4-2022]

Lambert Strether: Stylistically leaden, analytically well worth a read. “The project is a mad endeavor to create the institutional certainties of a smoothly-trading market where no such certainty is to be had.”

Professional management class clowns

“On cusp of Biden speech, a state of disunity, funk and peril”

[Associated Press, via Naked Capitalism Water Cooler 3-1-2022]

As Lambert Strether points out, the AP article itself is typical PMC pablum; Strether’s pointed remarks are what’s important. 

“Biden will step up to the House speaker’s rostrum to address a nation in conflict with itself. The country is litigating how to keep kids safe and what to teach them, weary over orders to wear masks, bruised over an ignominious end to one war, in Afghanistan, and suddenly plenty worried about Russian expansionism. A speech designed to discuss the commonwealth will be delivered to a nation that is having increasing difficulty finding much of anything in common.”

Lambert Strether: “Come on. 56% of the country supports mask mandates; it’s the PMC that’s “weary,” because they disproportionately don’t suffer Covid’s harms. Ditto Afghanistan. The press is “bruised” over Afghanistan because every Afghan in their collective Rolodex called them to get out when we finally admitted we lost the war, and they felt bad because they couldn’t do anything. And if the heartland cares about Ukraine, they sure aren’t willing to send their bodies over their to deal with the matter. This story isn’t really about the nation at all. It’s about AP’s right to prescribe the nation’s mood, by describing it (as Bourdieu would urge). There’s plenty of disunity to be had, not always along the lines AP draws, and some disunity is good anyhow. Is it good for their to be “unity” between Starbucks workers and management? How about between health care “consumers” and health insurance company executives? But AP never bleats about that….”

[Twitter, via Naked Capitalism 3-4-2022]

“Why Has Biden’s Approval Rating Crashed?”

Peter Daou, Direct Left, via Naked Capitalism Water Cooler 3-1-2022]

“Biden promised rich donors that ‘nothing would fundamentally change.’ He’s paying the price at the polls. And leftists predicted every bit of this…. Perhaps worst of all, Biden and Democratic leaders have been abject failures on the COVID-19 pandemic, opting for a negligent vaccine-only strategy and presiding over more deaths than Trump.”

Climate activists deflate tyres of SUVs in rich London neighbourhoods 

[London Economic, via Naked Capitalism 3-5-2022]

Neoliberalism requires a police state

Human Rights Lawyer Who Took on Chevron Put Under House Arrest: Steven Donziger Tells His Story

[Georgetown Law, via Naked Capitalism 3-4-2022]

 

The carnage of mainstream neoliberal economics

“Walmart Supercenters and Monopsony Power: How a Large, Low-Wage Employer Impacts Local Labor Markets” (PDF) 

Justin C. Wiltshire [Washington Center for Equitable Growth, via Naked Capitalism Water Cooler 3-1-2022]

“Crucially, I construct the pools of synthetic control donor counties from novel observations of counties where Walmart tried to open a Supercenter but was blocked by local efforts. I find Supercenter entry caused significant reductions in local aggregate employment and earnings. Retail employment concentration grew, as retail employment initially jumped up before reverting to pre-entry levels. In counties with a Supercenter, subsequent exogenous minimum wage increases led to significant growth in aggregate and retail employment. These results run counter to predictions for competitive labor markets, and indicate Walmart Supercenters gradually accumulated and exercised monopsony power in their local markets for labor, with negative consequences for workers.”

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This paper is the first to demonstrate the extent and impact of monopsony power exercised by WalmartSupercenters. I do this first by exploiting the rollout of Walmart Supercenters across the U.S., showing thatSupercenter entry into counties had effects on local labor markets that cannot justifiably be described as‘competitive’. I find that entry caused large and significant declines in overall local employment, earnings,and labor force participation, while the positive shock to retail employment was not long-sustained. I thenshow that an exogenous minimum wage increase yielded large employment gains where Supercenters werealready present, again inconsistent with competitive labor markets. These results admit negative spillovereffects on local labor markets that extend well beyond a Supercenter’s walls. My results also suggest thatminimum wage increases could actually yield employment gains if targeted at labor markets characterizedby low-wage monopsony power, in line with Azar et al. (2019).Throughout, I broadly retain the term ‘monopsony’ to ref

Why America Has Been So Stingy In Fighting Child Poverty

[NPR, via The Big Picture 2-27-2022]

For decades, many American economists were pretty much obsessed with trying to document the ways in which welfare programs discouraged work, or broke up families, or encouraged pregnancy, while ignoring all the benefits that society gets from having kids grow up in a more financially secure environment. Aizer, Hoynes, and Lleras-Muney analyze research papers in America’s top academic journals since the 1960s, and they find that prior to 2010, fewer than 27 percent of all articles about welfare programs even bothered to try and document their benefits.

The Real Reason the Pandemic Killed Small Restaurants 

[Slate, via Naked Capitalism 2-27-2022]

Predatory Finance

[Twitter, via Naked Capitalism Water Cooler 3-4-2022]

Do Stock Buybacks Really Shrink Capital Spending?

[Chief Investment Officer, via The Big Picture 3-1-2022]

Thanks to soaring corporate cash, capex has improved lately, but share repurchases still overshadow it.

The Real Reason Republicans Are Blocking Biden’s Fed Nominees. It has to do with Sen. Cynthia Lummis and special Wyoming-chartered depository institutions that take cryptocurrencies.

David Dayen, March 3, 2022 [The American Prospect]

…Lummis has an ulterior motive for raising the master account issue, one that she hasn’t been particularly shy about stating. For months, Lummis has been publicly lobbying for two crypto companies in Wyoming to get their own master accounts. Specifically, these firms are state-chartered non-banks intended to allow their customers to convert crypto assets into cash—but they need a master account in order to do that.

Effectively, these firms would become very similar to a bank, with full access to the Fed’s payment system, but without having to submit to federal regulation or even FDIC deposit insurance.

They’re not capitalists – they’re a criminal predatory class

Corporate Lawyers Fight Anti-Money Laundering Efforts

[DailyPoster March 4, 2022]

Last month, nearly 40,000 corporate lawyers representing the American Bar Association’s (ABA) Business Law Section wrote a comment to the U.S. Treasury Department, expressing their concerns about the department’s proposal to implement the Corporate Transparency Act — a measure designed “to help prevent and combat money laundering, terrorist financing, tax fraud, and other illicit activity.”

Restoring balance to the economy

New York Begins Rulemaking to Stop Corporate Profiteering 

David Dayen, March 4, 2022 [The American Prospect]

New York Attorney General Letitia James has announced that her office will write new rules under the state’s General Business Law aimed at preventing opportunistic price-gouging during a time of high inflation.

The effort builds on a growing body of evidence from corporate earnings calls that companies are using inflation as an excuse to raise prices well above input cost increases caused by supply chain disruptions. The announcement highlights these opportunistic price increases for beef, diapers, toothpaste, coffee, and other staples, as well as soaring profits from global ocean shipping and energy companies.

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

If Congress Can’t Boost Workers’ Rights, the Administration Will Go It Alone.
A new report lays out ways that federal agencies can increase worker power.

[The American Prospect, March 3, 2022]

Earlier this month, the Biden administration delivered a road map for advancing American workers’ rights in its Task Force on Worker Organizing and Empowerment report. Headed by Vice President Harris and Labor Secretary Marty Walsh, and composed of officials from 20 federal agencies, the task force recommended dozens of actions the federal government should take to promote union organizing and collective-bargaining rights through executive action rather than legislation. The report signals how the administration intends to make good on its commitment to increase worker power to reduce inequality and grow the middle class.

To Unify the Country, Biden Must Name Corporate Villains

Eleanor Eagan, March 4, 2022 [The American Prospect]

The lesson should be clear: In a crowded information environment, simply adopting populist policies—even entirely achievable ones—is not enough. Biden needs a populist communications strategy to match. To drive media coverage and get his agenda in front of even the most disengaged voters, Biden should start picking fights with specific corporate villains.

Although it was easy to miss among the references to various landmark bills, Biden’s State of the Union did include multiple, important promises when it comes to corporate accountability. He vowed to crack down on international shipping cartels that have raised prices by “as much as 1,000 percent and made record profits.” He promised new rules for nursing homes to “make sure [Americans’] loved ones get the care they deserve and that they expect,” and called out “Wall Street firms” for driving down quality and driving up costs in the nursing homes they acquire. He pledged action against consolidated meatpacking companies as well.

What Biden Should Do Now:  With his domestic agenda still bottled up, it’s time for some unconventional moves.

Harold Meyerson, March 4, 2022 [The American Prospect]

With Joe Manchin still consigning most of the Democrats’ domestic agenda to his own fetid dustbin, the party’s ability to meet the needs of its core constituents, much less the broader nation, has been eviscerated.

And it’s those core constituents, not just those feckless middle-of-the-roaders, who’ve been driving the drop in Biden’s support. In his Washington Post column today, E.J. Dionne has provided a deeper dive into the Post’s recent poll, which showed Biden’s overall approval rating to be an anemic 37 percent. Among the non-Republicans in the survey, support for Biden has fallen from 65 percent in April 2021 to 47 percent late last month. Among those non-Republicans, Biden’s support fell by 25 points in two crucial groups: non-whites and respondents under 40. It fell by 24 percent among those with household incomes under $50,000….

First, retire a chunk of student debt….

Second, go to Buffalo and make a speech backing the Starbucks baristas’ campaign to unionize, which has now spread to roughly 100 Starbucks outlets across the land. Moreover, the speech should really be directed at the entire millennial generation, which, when Gallup polled them last year, approved of unions at a stratospheric 77 percent rate.

Progressives Gain a Foothold in Texas

Alexander Sammon, March 2, 2022 [The American Prospect]

At first glance, Texas’s results look like a triumph for progressives, who came away with some major victories, and didn’t lose any top-priority races. The biggest breakthrough came by way of Texas’s 35th Congressional District, a gerrymandered deep-blue seat with pockets in Austin and San Antonio. Austin city councilman Greg Casar won the Democratic nomination outright, crushing the field with over 60 percent of the vote in a four-way contest….

Also notable was Casar’s disavowal of the Boycott, Divestment, and Sanctions movement on the campaign trail, which led to his breakup with DSA, a sign that after Nina Turner’s loss in Cleveland, progressives are steering clear of confrontation with the deep-pocketed Democratic Majority for Israel PAC….

Also yet to be seen is the role of Texas’s stringent new voter restriction laws. In both Harris and El Paso Counties, nearly 30 percent of mail-in ballots were flagged for disqualification, according to the Guardian US’s Sam Levine. That’s a stunningly high number, and gives a sense of just how impactful those laws will ultimately be. In a tightly contested general election, that could be more than enough to swing the outcome.

Predatory Finance

Johannes Beermann: Cash of the future 

[Bank of International Settlements, via Naked Capitalism 2-28-2022]

Lambert Strether notes: “Beermann is “the member of the Bundesbank Executive Board responsible for cash.” Worth a read.”

“Defi and Shadow Banking 2.0”

Cory Doctorow [Pluralistic, via Naked Capitalism Water Cooler 3-2-2022]

“Allen argues that defi repeats the sins of the original shadow banking system, and then makes them worse. Defi, after all, is the latest iteration of fintech, and as Riley Quinn is at pains to remind us, “fintech” is a euphemism for ‘unregulated bank.’ As with the shadow banking system, the point of defi is to offer traditional financial instruments outside of the traditional regulatory framework. As with the shadow banking system, defi’s instruments are complex. As with the shadow banking system, defi enables leverage, compensates for it with rigidity, and is thus vulnerable to bank runs. Defi’s pitch is that you don’t have to trust a regulated bank to play fair (which is compelling, as regulated banks are awfully sleazy). But defi replaces regulated banks with something even riskier: “new intermediaries who are often unidentified and unregulated.’”

Lambert Strether added: “Worth reading carefully and in full. Mentions this paper–“

“DeFi: Shadow Banking 2.0?” (PDF)

Hilary J. Allen [William and Mary Law Review].

From the Abstract: ” there is still time to prevent DeFi from becoming Shadow Banking 2.0. This Essay argues for precautionary regulation of DeFi, designed to limit its growth and to cordon off whatever remains from the established financial system and real-world economy. While proponents of DeFi will contend that this will limit innovation, this Essay argues that DeFi innovation has limited benefits for society. DeFi doesn’t aspire to provide new financial products and services – it simply aspires to provide existing financial products and services in a decentralized way (meaning, without intermediaries). This Essay will demonstrate that the DeFi ecosystem is in fact full of intermediaries and explain why full disintermediation of financial services is an entirely unrealistic aspiration. This Essay will then proceed from that finding to argue that if DeFi cannot deliver on decentralization, regulators should feel emboldened to clamp down on DeFi in order to protect the stability of our financial system and broader economy.”

Climate and environmental crises

Sea Level Rise Will Be Catastrophic—and Unequal

[Wired, via The Big Picture 3-1-2022]

A chilling new report predicts a foot of sea level rise in the US by 2050. But quirks of physics mean everyone will suffer in different ways.

Information age dystopia

“The Quiet Way Advertisers Are Tracking Your Browsing”

[Wired, via Naked Capitalism Water Cooler 3-1-2022]

“The exact configuration of lines and swirls that make up your fingerprints are thought to be unique to you. Similarly, your browser fingerprint is a set of information that’s collected from your phone or laptop each time you use it that advertisers can eventually link back to you. ‘It takes information about your browser, your network, your device and combines it together to create a set of characteristics that is mostly unique to you,’ says Tanvi Vyas, a principal engineer at Firefox. The data that makes up your fingerprint can include the language you use, keyboard layout, your timezone, whether you have cookies turned on, the version of the operating system your device runs, and much more. By combining all this information into a fingerprint, it’s possible for advertisers to recognize you as you move from one website to the next. Multiple studies looking at fingerprinting have found that around 80 to 90 percent of browser fingerprints are unique. Fingerprinting is often done by advertising technology companies that insert their code onto websites. Fingerprinting code—which comes in the form of a variety of scripts, such as the FingerprintJS library—is deployed by dozens of ad tech firms to collect data about your online activity.”

As Tanks Rolled Into Ukraine, So Did Malware. Then Microsoft Entered the War.

[New York Times, via The Big Picture 3-2-2022]

After years of talks about the need for public-private partnerships to combat cyberattacks, the war in Ukraine is stress-testing the system.

Is the cyberwar coming or is it already here? 

[Vox, via The Big Picture 3-2-2022]

Russia’s history of destructive cyberattacks in Ukraine is raising concerns about a cyberwar in the future.

The dark side

The Right’s Would-Be Kingmaker

[New York Times, via The Big Picture 2-27-2022]

Peter Thiel, one of Donald J. Trump’s biggest donors in 2016, has re-emerged as a prime financier of the Make America Great Again movement.

Politics

Volume 24: The 2018 Election, Who Projected It Best?”

[Lobby Seven, via Naked Capitalism Water Cooler 3-1-2022]

Lambert Strether summarizes: “Larry Sabato, and not narrowly. Looks like combining quantitative and qualitative analysis is a good idea.”

ABORTION RIGHTS’ BILL FAILS IN SENATE

[DailyPoster March 4, 2022]

One day before the start of Women’s History Month, the U.S. Senate voted to block the Women’s Health Protection Act — legislation to codify in federal law the right to an abortion ahead of likely Supreme Court action to overturn Roe v. Wade. The final count was 46-48, with West Virginia Sen. Joe Manchin the only Democrat to vote no.  Republican Sens. Susan Collins (Maine) and Lisa Murkowski (Alaska) also opposed the bill, despite long touting themselves as supporters of abortion rights. Sen. Bob Casey (D-Pa.) voted in favor of allowing debate on the bill — a surprise given his past support for anti-abortion measures. The vote occurred around the 6-month anniversary of passage of a controversial Texas law that bans abortions after six weeks of pregancy and effectively deputizes private citizens to enforce the law.

EPIPEN MANUFACTURER AGREES TO HEFTY SETTLEMENT

[DailyPoster March 4, 2022]

Earlier this week, the drugmaker Viatris Inc. — formerly Mylan — announced its agreement to pay a proposed $264 million settlement to resolve a lawsuit “alleging it engaged in a scheme to delay generic competition to its EpiPen allergy treatment,” according to Reuters. The litigation began in 2016 after Mylan drastically raised the EpiPen’s list price, and it accused Mylan and Pfizer — the medicine’s manufacturers — of trying to “maintain a monopoly over the market for the devices.” As The Intercept reported in September, West Virginia Sen. Joe Manchin’s daughter and former Mylan chief executive, Heather Bresch, worked directly with the head of Pfizer to artificially inflate EpiPen prices.

Conservative / Libertarian Drive to Civil War

Study: ‘Stand your ground’ laws linked to 11% rise in U.S. firearm homicides

[ Washington Post, via The Big Picture 2-27-2022]

Stand-your-ground laws are associated with an 11 percent increase in monthly firearm homicide rates, according to the new study, with especially striking jumps in Southern states that embraced stand-your-ground early on. That amounts to 700 additional homicides each year, according to the findings published Monday in JAMA Network Open, a peer-reviewed medical journal.