by Tony Wikrent
Economics Action Group, North Carolina Democratic Party Progressive Caucus
Strategic Political Economy
Lessons for the Green New Deal from the Economic Mobilization for World War Two (PDF deck) [Josh Mason, via Naked Capitalism 3-2-20]
Why so much direct public investment?
- Private sector unwilling/unable to bear risk, especially in newer industries
Lessons for Green New Deal
- Decarbonization may call for large direct investment by public sector as opposed to shifting private investment via prices/subsidies
- Public role largest in new industries/technologies
- Public role not just to provide resources, but to solve coordination problems and to bear risk
Third lesson: Full employment is powerful force for redistribution
- 1940s saw the largest compression of incomes in US history as in most advanced countries
- Lowest paid groups (African Americans, agricultural workers) gained most
- Very little direct redistribution – all about labor market
Summary – Three lessons from wartime mobilization:
- Rapid economic transitions require larger role for direct public investment
- Output, employment are more elastic than conventional estimates of potential assume
- Full employment is powerful force for income compression, even without explicit redistribution
Predatory Finance
Alexander Hamilton’s Creations Are in Uncharted Territory: The slide below 1% suggests the Fed has lost control and has troubling implications for the long-term economic outlook.
John Authers, March 4, 2020 [Bloomburg, via The Big Picture 3-5-20]
…what happened on Super Tuesday in the bond market was truly historic. The G-7’s finance ministers and central bankers talked in the morning, produced a statement that the market found disappointing, and then the Federal Reserve announced an emergency interest rate cut…. An emergency cut is intended to deal with extreme financial conditions….
The long-term outlook is now of drawn-out deflationary stagnation. We can see this from another amazing development — the drop in the 30-year yield to a negative level in real terms. In other words, its yield is less than the average inflation rate that can be derived from the inflation-linked bond market. Nothing like this has ever happened before:
On top of that, at 8:45 a.m. that very morning, the New York Fed had pumped $100 billion in 1-day repo loans into the trading houses on Wall Street, $8.6 billion short of what the trading houses had sought to borrow. Even at the peak of the repo loan crisis that began on September 17, 2019 and through the end of January 2020, the Fed had never pumped out $100 billion in 1-day repo loans on a single day. Yesterday, the Fed pumped out another $100 billion in 1-day repo loans against demand for $111 billion – further evidence that Wall Street firms are in need of liquidity.
This is the first time since the financial crisis of 2008 that the Fed has been making repo loans to Wall Street. The Fed is also purchasing $60 billion a month in U.S. Treasury bills, which many folks on Wall Street consider the fourth round of quantitative easing (QE). The Fed deployed QE1, QE2, and QE3 following the 2008 financial collapse on Wall Street to further ease interest rates on top of cutting its Fed Funds rate to the zero-bound….
The 10-year U.S. Treasury note has lost 37 percent of its yield in the past 10 days. For the first time in 149 years, it is trading below a yield of one percent. This morning at 8:58 a.m. it was trading at a yield of 0.9456.
The Great Depression is considered the worst financial crisis in the history of the United States. The financial collapse in 2008 is ranked second to that. And yet during the Great Depression which spanned the 1930s, the 10-year yield was in the 2 to 3 percent range.
That statistic alone strongly suggests that despite the Fed secretly throwing $29 trillion cumulatively to bail out Wall Street banks and their derivatives following the crash of 2008, the United States has never actually returned to a self-sustaining economy.
Reddit Has Become the Gospel of Personal Finance
[Quartz, via Naked Capitalism 3-5-20]
The Carnage of Establishment Neoliberal Economics
Colombia’s barter markets: no money = no ‘free trade’ deal banning food
The tradition of bartering goes back to before the Spanish introduced money, but became crucial for native Colombians’ diet after a 2011 free trade deal with the United States. The indigenous soon found out that no trade deal is free when the government banned the commercial use of non-patented seeds.
This blanket ban included endemic food crops that are part of the diet of indigenous communities’ diet who wouldn’t dare patent a seed they believe belongs to Mother Earth. In order to preserve their diet and prevent the extinction of endemic crop species, indigenous nations throughout Colombia strengthened their bartering practices in response.
Most Americans Point to Circumstances, Not Work Ethic, for Why People Are Rich or Poor
[Pew Research Center, via The Big Picture 3-3-20]
How Hard Will the Robots Make Us Work?
[The Verge, via Naked Capitalism 3-2-20]
“An automation crisis has already arrived. The robots are here, they’re working in management, and they’re grinding workers into the ground. The robots are watching over hotel housekeepers, telling them which room to clean and tracking how quickly they do it. They’re managing software developers, monitoring their clicks and scrolls and docking their pay if they work too slowly. They’re listening to call center workers, telling them what to say, how to say it, and keeping them constantly, maximally busy. While we’ve been watching the horizon for the self-driving trucks, perpetually five years away, the robots arrived in the form of the supervisor, the foreman, the middle manager. These automated systems can detect inefficiencies that a human manager never would — a moment’s downtime between calls, a habit of lingering at the coffee machine after finishing a task, a new route that, if all goes perfectly, could get a few more packages delivered in a day. But for workers, what look like inefficiencies to an algorithm were their last reserves of respite and autonomy, and as these little breaks and minor freedoms get optimized out, their jobs are becoming more intense, stressful, and dangerous.”
“The University of California, Santa Cruz, issued termination letters on Friday to 54 graduate students who have been waging a months-long strike for a cost-of-living-adjustment amid soaring rents. The firings came as graduate students at the University of California, Davis, and University of California, Santa Barbara, began their own cost-of-living strikes in solidarity. One of their demands is that all UC Santa Cruz graduate workers who participated in strike activities be restored to full employment status. The 54 UC Santa Cruz graduate students who received termination letters on Friday are just a fraction of the 233 graduate student instructors and teaching assistants who have refused to submit nearly 12,000 grades from the fall quarter since December. This month, the students’ grading strike expanded, as teaching assistants refused all teaching duties and research assistants refused additional work. Some classes and office hours have been canceled because of the strike.”
Health Care Crisis
“Public Health and Law Experts Issue Guidelines for U.S. Response to Coronavirus Transmission” [Yale Law School] (open letter), via Naked Capitalism 3-4-20]
“‘This is a test of our society’s basic principles of fairness. It will be a disgrace if social status and income determine whether a person can get care or follow public health guidelines,’ said Scott Burris, the Director of Temple Law School’s Center for Public Health Law Research.”
An unprecedented shift in human population is one reason why more diseases originate in Asia and Africa. Rapid urbanization is happening throughout Asia and the Pacific regions, where 60% of the world already lives. According to the World Bank, almost 200 million people moved to urban areas in East Asia during the first decade of the 21st century….
Migration on that scale means forest land is destroyed to create residential areas. Wild animals, forced to move closer to cities and towns, inevitably encounter domestic animals and the human population. Wild animals often harbor viruses; bats, for instance, can carry hundreds of them. And viruses, jumping species to species, can ultimately infect people.
Eventually, extreme urbanization becomes a vicious cycle: More people bring more deforestation, and human expansion and the loss of habitat ultimately kills off predators, including those that feed off rodents. With the predators gone – or at least with their numbers sharply diminished – the rodent population explodes. And as studies in Africa show, so does the risk of zoonotic disease.
California orders insurers to waive out-of-pocket costs for coronavirus testing
Climate and environmental crises
[Common Dreams, via Naked Capitalism 3-1-20]Offshore oil and gas accidents, deaths spike amid Trump administration’s regulatory rollbacks
Russian Arctic shipping up 430 percent in three years
Creating new economic potential – science and technology
“On a plot of land rented from a rural village on the Malaysian side of the island of Borneo, the group has proved it at small scale. Every six to 12 months, a farmer shaves off one foot of growth from these nickel-hyper-accumulating plants and either burns or squeezes the metal out. After a short purification, farmers could hold in their hands roughly 500 pounds of nickel citrate, potentially worth thousands of dollars on international markets. Now, as the team scales up to the world’s largest trial at nearly 50 acres, their target audience is industry. In a decade, the researchers hope that a sizable portion of insatiable consumer demand for base metals and rare minerals could be filled by the same kind of farming that produces the world’s coconuts and coffee.”
NASA drops mind-blowing 1.8 billion-pixel Mars landscape panorama that might make you cry
[CNET, via Naked Capitalism 3-5-20]
Virginia Poised to Embrace Clean Energy Future
[American Wind Energy Association, 06 March 2020]
The Virginia Senate today passed the Virginia Clean Economy Act, after the House of Delegates approved the bill yesterday. Governor Ralph Northam is now clear to join leaders in the General Assembly in allowing the state’s energy system to unlock the enormous economic and environmental potential renewable energy sources can bring to the Commonwealth.
The Virginia Clean Economy Act will create a state renewable energy portfolio system (RPS) program, similar to those already implemented in 29 other states, Washington, DC and Puerto Rico. The Virginia RPS requires that 30% or more of Virginia’s electricity comes from renewable energy sources by 2030. By 2050, the Act requires that 100% of Virginia electricity will be zero-emissions – a goal Governor Northam advocated for during his election campaign.
The Act includes measures to harness wind and solar power, expand consumer ownership through rooftop solar, and reduce energy waste through mandatory efficiency standards. Notably, the legislation also includes a 5.2-gigawatt offshore wind target, one of the largest state commitments to offshore wind to date and one with the potential to power up to 1.5 million Virginia homes.
AWEA: Wind Energy Now Top Source of Renewable Electricity
[American Wind Energy Association, 27 February 2020]
Wind energy is now the top source of renewable electricity generation in the country according to the U.S. Energy Information Administration, surpassing hydroelectric generation in 2019 for the first time in history. Annual wind generation totaled 300 million megawatt hours (MWh) in 2019, exceeding hydroelectric generation by 26 million MWh.
Politics
“Why Southern Democrats Saved Biden”
Mara Gay [New York Times, via Naked Capitalism 3-6-20]
(Gay was the lone member of the Times Editorial Board to endorse Sanders.)
My friends in New York, many of them Elizabeth Warren or Bernie Sanders supporters who see Mr. Biden as deeply uninspiring, were mystified. But after traveling through the South this past week, I began to understand. Through Southern eyes, this election is not about policy or personality. It’s about something much darker. Not long ago, these Americans lived under violent, anti-democratic governments. Now, many there say they see in President Trump and his supporters the same hostility and zeal for authoritarianism that marked life under Jim Crow….
“People are prideful of being racist again,” said Bobby Caradine, 47, who is black and has lived in Memphis all his life. “It’s right back out in the open.”
….Joe Biden is no Barack Obama. But he was somebody they knew. “He was with Obama for all those years,” Mr. Caradine said. “People are comfortable with him.” Faced with the prospect of their children losing the basic rights they won over many generations, these voters, as the old Chicago political saw goes, don’t want nobody that nobody sent.
They were deeply skeptical that a democratic socialist like Mr. Sanders could unseat Mr. Trump. They liked Ms. Warren, but, burned by Hillary Clinton’s loss, were worried that too many of their fellow Americans wouldn’t vote for a woman.”
Lambert Strether comments: “it’s not clear why the Democrat Establishment hands control over the nomination to the political establishment in states they will never win in the general; the “firewall” in 2016 didn’t work out all that well, after all. As for Jim Crow, we might do well to remember that Obama destroyed a generation of Black wealth his miserably inadequate response to the foreclosure crisis, and his pathetic stimulus package kept Black unemployment high for years longer than it should have been. And sowed the dragon’s teeth of authoritarian reaction as well.”
[Twitter, , via Naked Capitalism 3-6-20]
We need each other. Main Street and Wall Street must come together.We are
The question in this election is simple: which side are you on?The side of Wall Street or working people?
nytimes.com/2020/03/04/bus
If someone does not yet understand that Wall Street is a principal mechanism by which the one percent loot the rest of the country, they simply do not want to understand, and should not be counted as a political ally.
450.org
Excellent stump speech in Flint for Bernie by Cornell West. Couldn’t have said it better myself. The crowd was expected to be mostly black. Bernie had prepared his own speech to address the ex[ected mostly black corwd but when they determined the crowd was mostly white, they handed the mic to Cornell West instead. Yes, the crowd was mostly white, signaling the Dem establishment has quarantined the black community and demanded they vote for Biden. I predict Biden will take Michigan by hook & crook and Florida is an in-the-bag landslide for him. The election in November will be canceled so it’s really a moot point anyway, but, if you think about it, all of this is just to get Trump reelected again so a November election isn’t really necessary. The people, black people included and black people especially, have already spoken and they are saying they want four more years of Trump. So be it.
https://www.youtube.com/watch?v=tACugT02btg&feature=youtu.be&t=4506
anon
Obama pulled a huge con on minorities (and many liberal whites as well) and Biden is continuing the con. Being the first black president’s Vice President was Biden’s smartest career move. He would be a non-entity otherwise.
Buzzard
Low-information voters are not limited to any particular skin color.
KT Chong
Democrats will likely lose the House too in November. Ruth Bader Ginsburg will not survive another four years of Trump, which means Trump will get to replace her seat on the Supreme Court. Feminists, social justice warriors and woke identitarians will have a meltdown. It is gonna be entertaining and glorious. I can’t wait. As much as I dislike conservatives and Republicans, I also enjoy the tears of feminists, SJW and woke identitarians.
Ivory Bill Woodpecker
Hate, hate, and more hate. You lot keep making a strong case for the Horseshoe Theory. 🙄
Benjamin
@Ivory Bill Woodpecker
Says the guy who openly despises large numbers of his fellow countrymen.
Ivory Bill Woodpecker
Hate and contempt are different things, Benjamin. 😉
anon
Dallas County asks to recount Super Tuesday election results after 44 thumb drives discovered
https://www.wfaa.com/mobile/article/news/politics/dallas-county-asks-to-recount-election-after-44-thumb-drives-discovered/287-84e19400-81bc-4256-bcb3-e25df380d699
different clue
Black Biden supporters in the Southern Primary states have risked all by supporting Biden. They may lose all by getting Biden nominated in order to lose the election to Trump.
Ah well . . . I cry them a river.
DMC
The NY Times piece on the metal-accumulating plants is an astoundingly hopeful bit of news. This gives the potential to reclaim vast areas contaminated with metals(usually in the form of salts) that have resulted from mining or industrial negligence. There’s a TED talk somewhere with a mycologist explaining that we could be tailoring fungi to accomplish a large number reclamation tasks including wide-spread radioactivity, like the area around Chernobyl.
Zachary Smith
Excellent set of links, but the one I like most was the one about hyperaccumulating plants. A quick search found some of these rare things are deep-rooted trees. Fascinating stuff.
Hugh
Just remember the economy is strong. Who cares if 2019 was the worst year for job creation in the last six? Is it really important that the Fed is running a $100 billion dollar a day repo program because the banks are all so shaky that they are afraid to lend to each other? Or that as the Martens note, the Fed is running a $60 billion dollar QE4 T-bill buy back program too? Or that the 10 year T-bill has dropped below 1% for the first time in since forever? Or that the Fed made an extremely unusual (i.e. panicked) and unusually large cut (1/2 %) to its already low interest rate (around 1.5%) Or that the coronavirus has only begun to disrupt the economy? Or that the response to the virus has been so half-assed and inept? Or that it looks like we’re going to have two candidates with clinical dementia squaring off and rambling at each other in November? Just keep repeating the economy is strong, the economy is strong. It obviously isn’t but the repetition might take your mind off everything else.
Z
Sloppy Joe …
https://www.realclearpolitics.com/video/2020/03/08/sky_news_host_marvels_at_joe_biden_gaffe_montage_not_enough_popcorn_in_the_world_for_biden-trump_debate.html
Z
Hugh
Jesse Jackson endorsed Bernie Sanders. Meanwhile Kamala Harris endorsed DCW Biden. It’s like all of the so-called next generation of Democratic “leaders” are sticking with the Old, and in Biden’s case senile, Guard and are very deliberately disconnecting themselves from Millennials, you know the people they will need to get elected to anything beyond where they currently are. And not just disconnecting but dissing them and their issues.
The coronavirus, and there will be other outbreaks like it in the future, is a huge klaxons-blaring wake up call for a public healthcare system, like Medicare for All. The current response to the virus has been piecemeal and completely bungled at every step and turn.
450.org
Italy just reported 133 deaths from COVID-19 in one day. Italy is collapsing. Soon, America will be too as well as China.
I’m not too worried though, because, afterall, Donnie’s uncle was one of the most if not thee most renowned MIT professors in history and Donnie is, consequently, a great scientist himself because it’s in the blood don’t you know.
Iran being affected as it has been and at the levels within the hierarchy it’s been affected is a red flag which potentially points to this being biological warfare.
https://nypost.com/2020/02/28/israeli-scientists-claim-to-be-weeks-away-from-coronavirus-vaccine/
Hmmm…..
China is considering this angle. No doubt Iran is considering it also. What would China do if after investigating this thoroughly they determined that in all likelihood, Israel is responsible for COVID-19? I’m guessing it would be the end of Israel as we know it and Jews worldwide would start to be arrested and rounded up.
Lex
My in-laws were dairy farmers. 400 head and about 60 calves most of the time. Bulk/wholesale milk is sold by the pound. My FIL has told me that the price he could get when he started in the late 70’s is the same price farmers can sell for now, give or take a few cents. Except now you can’t buy a truck for $5,000 or a tractor for less than $100K. The little town in W MI they live in used to be full of dairy farms and they were on the large size. Now there are only a few and the only way the economics work is to be huge and generally supplement with contracted pig or chicken farming.
Stirling S Newberry
You are fighting the last war.
This is not the last war.
https://www.cnn.com/2020/03/08/investing/oil-prices-crash-opec-russia-saudi-arabia/index.html
This is.
Stirling S Newberry
I sit
Alone today,
Watching as the grey men of politics
Order u another round of borscht
From the elder sellers of the fordotten brews
This is not warfare as the knew it,
Where interests rates
And some flummery with expected jobs reports will do the trick,
An this the slow boat to hell.
Oil has collapsed,
And all the money lies in that,
Or gossamer stand-ins for it.
We even live in palaces owned by banks.
Because every day
We go to work
On what the Americans call “gas”
From our fortresses of gloom.
So this is another word where the obscenely rich
Fight it out
With their brothers
Not realizing
What decay live with the rot
Of spires to the sun.
Stirling S Newberry
It is the magic of roundness. Time never goes to sleep in a digital world. While we, in America, slept, the cracks came in the oil market. And oil, since world war one, has been the basis for the fortunes of lucre. Not oil directly, but the substructure of all of the economies of the world. Because from any point to any other point, there lives a line for what it takes to ship any one thing to another. Whether it is fragile like a human being or party like a shipment of commodities. We do not think about this much, but every billionaire in every nook and cranny lives his life on how much oil he shaves off the world.
This is most true of the technological revolution, which strips away protons and sends electrons to transmit their information. A movie theater is loaded with protons, but a television screen is free of its mass and spin. Every dollar, pound, euro, yuan, and franc, is based upon how much money can be saved by doing things one way rather than another. A vast edifice of construction in complication. You, the reader, live as you live because you were born or could emigrate to where the profits of economy are in bloom. Working your way up as a country took 50 years from beginning to end, China is the last place to do that, but other economies follow along in their waste. It is the cycle of economic development as we know it for the last 100 years. Along the way oil replaced coal, and it was an event that we now call the “great depression.”
What we have just realized, is that the superstructure of interest, work, and money, is still based on the underpinnings of a real economy. The reason the stocks are valuable is that looking at any economy you can disjoint its workings, and introduce some economy which eventually gets back to oil. Even if it does not seem like it does at 1st glance.
But the oil business is run by human beings, and they want wealth and power just the way any group of humans do when they command the soul’s spigot of profit. And profit is the word of God.
Before we were talking about little things, such as a pandemic, or how to maintain profitability for certain sectors. But this is an illusion, the real fight is when the oil-based economics moves and rumbles. The entire world shakes.” This is not the end nor the beginning of the end.” Only the waking up of poor dinosaurs watching a meteor hurtle to the ground.
Ché Pasa
The Making Lemonade Approach to The Outbreak
I’ve been seeing/hearing more and more chatter lately that The Outbreak is a perfect opportunity to break from the deplorable past and enter into a new –and long-delayed — era of limited consumption, limited travel, closer communities, peace, justice, and a better future.
Wow. That was fast. It’s as if this is the global catastrophe some of the nihilist/idealists have been anxiously awaiting so as to imagine and propose something different, The World of Tomorrow — as it was meant to be.
We will live in smaller communities where most everyone knows everyone else; we will stop building and driving cars and stop flying in airplanes; we will require and use far less energy in our own lives, and industry will be reduced sufficiently to eliminate and ultimately reverse atmospheric carbon loading; yes, a lot of people will die but most of them are old and they would die anyway.
And I think back to the last global pandemic — the Spanish flu that (I believe) helped bring an end to WWI — and what sort of idealism emerged from the wreckage of war and disease, and the post war-and-pandemic reality was actually like (not so great), and what it led to (Great Depression -> WWII in a direct line), and where post-WWII idealism led. We’re there now, no?
Things are always supposed to be better after the apocalypse. Aren’t they? And the reality?
The surviving Old Men from the past seem intent on something else.
450.org
The circuit breakers kicked in today on Wall Street otherwise stocks would have already plummeted to zero. I’ll never forget a conversation I had with my brother approximately a year prior. Because of my decision ten years prior to extract myself from the borg and refuse to enable it any further to the extent one can do that without ceasing to exist, my situation is dicey and tentative. We are, quite literally, living on the edge of financial disaster. My extended family of origin feels smug about this because they all feel, or felt I should say, that they are/were comfortable and secure economically, especially in comparison to me. Black sheep and all of that family political bullsh*t. Any way, because of this, my brother asked me when I visited, “aren’t you scared?” I responded that yes, of course, I’m scared, we’re scared meaning my wife and I, but then again, we all should be scared and not just my wife and me. I informed my brother that he and his wife should also be scared and every member of our family and in fact many people who consider themselves solidly middle class should be terrified because soon enough they will see just how tentative their secure existence really is. He didn’t let on, but I know internally he laughed at what I said. He dismissed it as absurd. He scoffed at the notion because he is superior to me and mine as his bank account has aptly shown over the years. Here we are. COFEFE-19 turns out to be the great equalizer. COFEFE-19 is leveling the playing field. It doesn’t play favorites and it’s revealing just how fragile the global system really is. There is no such thing as secure in this brave new world unfolding before us and just as money can’t buy you love, it most assuredly can’t buy you a rain check from COFEFE-19.
450.org
Incredible dress down. Perfect. I couldn’t have said it or presented it better myself. He nails it. He unequivocally proves without saying so that the Dem establishment obviously is helping Trump get reelected. I can think of no other reason for such insanity.
https://www.youtube.com/watch?v=AaKOsBlb1Gg
Willy
While it wouldn’t be crazy to assume that Trump and Biden would make a silent agreement to never get into it over who’s the more “establishment”, it also wouldn’t be crazy to assume that the DNC is hastily trying to build an animatronic version of Biden.
So what do you think Trump’s gonna do when the robot head flops off? It’ll be a landslide of biblical proportions. Is the DNC gonna be able to blame the Russians? Is Rachel Maddow gonna have to do another three more years of sideshows explaining how Russia was behind Robot Joe?
Hugh
The historic decline in T-bill yields represents a significant flight to safety. The stock and oil market shocks are a major vote of no-confidence in the world economy in face of the coronavirus.
Tony Wikrent
Stirling Newberry writes: “Along the way oil replaced coal, and it was an event that we now call the “great depression.”
Stirling, I would love to see you write something more detailed on this. It sounds like an vital period of history that needs you to share your insight so I can understand it in its full implications.
different clue
And while Stirling Newberry is at it, perhaps he can explain why he said that the Cambodians ” asked for” the Nixon bombing.