Week-end Wrap – Political Economy – February 28, 2021
by Tony Wikrent
Strategic Political Economy
Gregori Galofré-Vilà, Christopher M. Meissner, Martin McKee, and
Economic History Association, published online by Cambridge University Press, 11 January 2021
We study the link between fiscal austerity and Nazi electoral success. Voting data from a thousand districts and a hundred cities for four elections between 1930 and 1933 show that areas more affected by austerity (spending cuts and tax increases) had relatively higher vote shares for the Nazi Party. We also find that the localities with relatively high austerity experienced relatively high suffering (measured by mortality rates) and these areas’ electorates were more likely to vote for the Nazi Party. Our findings are robust to a range of specifications including an instrumental variable strategy and a border-pair policy discontinuity design….
In this paper, we investigate the association between the austerity measures implemented by the German government between 1930 and 1932 and voters’ increased support for the Nazi Party. A growing literature studies the interactions between political preferences and fiscal policy with evidence that austerity packages are correlated with rising extremism (Alesina, Favero, and Giavazzi 2019; Bor 2017; Eichengreen 2015, 2018; Fetzer 2019; Ponticelli and Voth 2020)….
We also provide some novel quantitative estimates concerning the channels by which austerity mattered. To do so, we study the relationship between mortality rates and austerity. We find a plausible link, since where public spending on health care dropped more, mortality was higher. These places also saw a relatively large increase in Nazi support at the polls. Finally, looking at archival documents of Nazi propaganda, we document how Nazi leaders invoked austerity to attack Brüning and the Weimar Republic and how Brüning’s tax rises were seen as inefficient and unfair by the German masses.
[Naked Capitalism 2-26-21]
Business Licensing and Constitutional Liberty
Amanda Shanor [The Yale Law Journal 314 (2016)]
….the Constitution is increasingly being invoked as a trump against certain types of economic regulation. My thesis is that the central arguments currently marshaled in favor of extending stringent judicial review to business licensing regulations are untenable. These lines of reasoning have no logical endpoint. Individual rights, on this view, could trump any manner of governmental regulation in favor of free-market ordering.
These business licensing cases raise deep and pressing questions about the purpose and scope of rights and constitutional judicial review more broadly today. Underlying these debates are competing conceptions of constitutional liberty. One view, perhaps the ascendant one, reflects free-market libertarian values, whereas others understand the First and Fourteenth Amendments to reflect ideals such as democratic self-governance, anti-subordination, or civic republicanism. Resolving disputes about the constitutional status of business licensing requires that we grapple with those deeper questions.
Predatory Capitalism in the Time of COVID19
[Twitter, via Naked Capitalism Water Cooler 2-23-21]
Yves Smith, February 24, 2021 [Naked Capitalism]
[Washington Post, via Naked Capitalism 2-27-21]
Chapter 11 filings were up nearly 20 percent in 2020 compared with the previous year, court records show…. Bankruptcies filed by entertainment companies in 2020 nearly quadrupled, and filings nearly tripled for oil and gas companies, doubled for computer and software companies and were up 50 percent or more for restaurant owners, real estate companies and retailers, compared with 2019, data from the research firm show. There were 5,236 Chapter 11 filings in 2019, but 6,917 last year, a tally at least 30 percent higher than any of the previous four years.
[Vice, via Naked Capitalism 2-21-21]
But parent company Kroger appears to be doing just fine—better than fine, even. Kroger’s profits shot up 90% during the first two quarters of 2020, according to the centrist Brookings Institution think tank, and the company announced a stock buyback initiative totaling up to $1 billion in September.
[The DailyPoster 2-25-2021]
Walmart, McDonald’s, and other name-brand corporations are trying to block their shareholders from voting to make worker protections permanent….
The paid sick leave resolutions, coordinated by the Interfaith Center on Corporate Responsibility (ICCR), a shareholder advocacy organization, have been filed at CVS, Dollar General, Kohl’s, Kroger, McDonald’s, Walmart, and Yum! Brands (which owns KFC, Taco Bell and Pizza Hut). The efforts are part of an attempt to force companies that have made a point of calling their employees “essential” to put their money where their mouth is.
“These companies have been saying day after day that their employees matter, that their employees are essential,” sad Nadira Narine, senior program director at the ICCR. “The best way to show that they mean that is to extend a paid leave benefit.”
In response to the proposals, every single company except Dollar General asked the Securities and Exchange Commission (SEC) to agree that they do not need to put the resolutions to shareholders for a vote this spring. In four of the cases, the SEC has sided with the company, while two decisions are still outstanding.
[Twitter, via The DailyPoster 2-25-2021]
Health Care Crisis
Dems’ Gift To Health Insurance Predators
Instead of enacting a universal Medicare for All health care system that would save the United States and its citizens hundreds of billions of dollars annually, temporarily expanding Medicare or championing a promised “public option,” Democrats are rallying behind a health care proposal that will funnel tens of billions of dollars to corporate health insurance companies even as they are already experiencing record profits and jacking up premiums, while continuing to deny claims.
Democrats’ current plan will lower people’s premiums, but only on a temporary basis. It will also not stop insurers from passing on huge out-of-pocket costs to enrollees if they need medical care, nor does it improve the quality of people’s health insurance. Indeed, it will push people onto state exchanges where one in six in-network medical claims were denied in 2019.
The proposal would be a boon for the health insurance industry, which has specifically lobbied for the new subsidies….
On the other hand, according to the Congressional Budget Office, Medicare for All legislation in Congress could ultimately save $650 billion annually, while covering all Americans and ensuring they no longer have to worry about expensive deductibles or copays or narrow insurance networks that act as barriers to care.
[David Michaels, NJ.com, via Naked Capitalism Water Cooler 2-23-21]
“Q. So the federal Centers for Disease Control has set no standard for ventilation? Not even for schools?
A. That’s right. There are private groups that put out voluntary standards, but there are no actual standards for ventilation right now….
Q. You think the government should be setting air standards for workplaces and requiring N95s or other respirators?
A. Yes. What we’re asking the CDC to do is recognize this means of transmission is an important one, and modify its guidance to reflect this. That will be important because OSHA is likely to be issuing an emergency temporary standard for workplaces within the month. It will point to CDC guidelines and say, follow this. And if the guidelines are out of date, they will be less protective.”
The carnage of mainstream neoliberal economics
Robert Reich [The Guardian, via Naked Capitalism 2-21-21]
The Electric Reliability Council of Texas, which manages the flow of electric power, exempted affluent downtowns from outages, leaving thriving parts of Austin, Dallas and Houston brightly lit while pushing less affluent precincts into the dark and cold.
Texas Froze by Design James K. Galbraith, Project Syndicate L 2-23
Harvard Kennedy School’s William Hogan is credited with designing the Texas energy market. As Texans froze and their water pipes burst, he reportedly remarked that the state’s energy market has functioned as designed. Hogan is right, which says a lot about how some economists think….
Texas had a self-enclosed energy grid, cut off from interstate commerce and thus exempt from federal regulations. What better place, what better product, to prove the virtues of a competitive, deregulated system? So, economists proposed a free market: let generating companies compete to deliver power to consumers through the common electrical grid. Freely chosen contracts would govern the terms and the price. Competition would maximize efficiency, and prices would reflect fuel costs and the smallest possible profit margin….
[Wall Street Journal, via The Big Picture 2-25-21]
Those deregulated Texas residential consumers paid $28 billion more for their power since 2004 than they would have paid at the rates charged to the customers of the state’s traditional utilities, according to the Journal’s analysis of data from the federal Energy Information Administration….
“If all consumers don’t benefit from this, we will have wasted our time and failed our constituency,” then-state Sen. David Sibley, a key author of the bill to deregulate the market, said when the switch was first unveiled in 1999. “Competition in the electric industry will benefit Texans by reducing monthly rates,” then-Gov. George W. Bush said later that year.
Restoring balance to the economy
Jerri-Lynn Scofield, February 22, 2021 [Naked Capitalism]
[Bloomberg, via The DailyPoster 2-26-2021]
“Three House Democrats are pushing legislation that would repeal the carried-interest tax break used by fund managers to reduce the levies they owe to the Internal Revenue Service. The bill would close the carried-interest tax break and require many hedge-fund and private-equity managers to pay higher ordinary income-tax rates, rather than the lower rates on capital gains.”
Climate and environmental crises
[Twitter, via Naked Capitalism Water Cooler 2-23-21]
Fabian Flues [OpenDemocracy, via Naked Capitalism, February 25, 2021]
….Energy Charter Treaty (ECT), a little-known international agreement signed without much public debate in 1994. The treaty binds more than 50 countries, and allows foreign investors in the energy sector to sue governments for decisions that might negatively impact their profits – including climate policies. Governments can be forced to pay huge sums in compensation if they lose an ECT case.
Information Age Dystopia
Matt Stoller [BIG, via Naked Capitalism 2-21-21]
Facebook is engaged in a giant crime spree to steal ad money. A battle over speech in Australia shows what top executives really think of the rule of law.
Matt Taibbi, TK News. Today’s must-read., via Naked Capitalism 2-24-21]
Before the New Year, a cease-and-desist letter from Dominion Voting Systems went out to Fox, the Epoch Times, OAN, Newsmax, and others, demanding an end to evidence-free claims about their company. It worked, as even OAN retreated, and Newsmax, tail between its legs, broadcast a two-minute statement to “clarify” that it had no evidence for claims of election fraud made against the companies Dominion and Smartmantic.
This is exactly how the existing system is supposed to work, in a legal framework that still makes the cost of broadcasting provable deceptions prohibitive to deep-pocketed companies like Fox. Libel and defamation laws are imperfect, but effective. If the massive Fox audience were driven further underground, that tool would no longer be worth much.
However, those gunning for the removal of Fox, Newsmax, and other outlets are clearly not interested in getting there by way of the law. They want to take advantage of the hyper-concentration of power among media distributors — the tech giants like Apple and Amazon that can zap a massively successful app like Parler overnight, and the confederation of cable carriers like Comcast, AT&T, and Verizon that hold dominion over broadcast networks.
We have to ask politicians like Eshoo and critics like Sullivan and Boot: where exactly do they want massive conservative audiences to go, if Fox is removed from the air? By any rational standard, having them watch Fox is way down the list of worst-case scenarios.
Glenn Greenwald, via Naked Capitalism 2-24-21]
[The Register, via Naked Capitalism 2-23-21]
According to public radio station KJZZ, unidentified whistleblowers within the Arizona Department of Corrections revealed the software problem, which is said to have been known by department IT leaders since 2019.
The software, ACIS (Arizona Correctional Information System), implemented in 2019 at a cost of $24m by IT biz Business & Decision, North America, is said to contain a module for calculating the release dates of inmates.
The module's code, however, hasn't been able to adapt to Arizona Senate Bill 1310, a state law signed in June 2019 to allow non-violent inmates in Arizona to earn credits toward early release as a reward for participating in state-run education and rehabilitation programs.
The software can neither recalculate sentences to account for early release credits nor help identify inmates who qualify for such programs, thereby keeping people in prison who shouldn't be there and frustrating efforts to reduce the state's prison population….
The KJZZ report suggests fixing the calculation problem would take 2,000 hours of developer time, which appears to be billed at a rate of about $1,137 per hour, based on the screenshot of a Department of Corrections contract amendment included with the report. It's claimed that more than 14,000 bugs have been identified in ACIS since the software was implemented.
The Biden Transition and the Fight for Real Hope and Change This Time
Andrew Perez and David Sirota [The Daily Poster 2-26-2021]
Despite a Senate official’s roadblock, the VP can clear a path to fulfill Dems’ $15 minimum wage promise, according to a blueprint circulating on Capitol Hill.
[New York Times, via Naked Capitalism Water Cooler 2-22-21]
Four major groups are backing the effort, spanning a range of Democratic-leaning interests: Third Way, a centrist think tank; End Citizens United, a clean-government group; the Latino Victory Fund; and Collective PAC, an organization that supports Black Democratic candidates.
They are said to be working with at least three influential bodies within the House Democratic caucus: the Congressional Black Caucus, the Congressional Hispanic Caucus and the New Democrat Coalition, a group of centrist lawmakers. The groups have retained a Democratic consulting firm, 270 Strategies, to conduct interviews and analyze electoral data.
Looks more like the Democratic Party establishment throwing itself a pity party than a real attempt to debubblize and reach out. They can save their money by just watching these presentations by local and state Democratic Party officials in North Carolina and Wisconsin:
[Neighbors on Call, January 15, 2021]
After their losses in 2016, Wisconsin Democrats and activists worked together to start winning. And it worked! Let’s find out how they did it! Join Ben Wikler (Chair of the Democratic Party of Wisconsin and a former leader of MoveOn.org) and Nellie Sires (Executive Director, DPW) in conversation with Dr. Aimy Steele, 2020 candidate for NC House District 82, with introductions by Sydney Batch, former NC House Representative for District 37.
[Progressive Caucus of the North Carolina Democratic Party]
On Saturday, December 19, 2020, the Progressive Caucus of the North Carolina Democratic Party hosted a presentation by Elaine Berry, the campaign manager for Ricky Hurtado’s successful election in District 63 of the North Carolina House of Representatives. Hurtado is the first Latinx legislator elected to the North Carolina general assembly. And, he defeated a Republican incumbent, making this one of only two races that the Democratic Party was able to flip in the general assembly.
[Slate, via Naked Capitalism Water Cooler 2-24-21]
“At the moment, Democrats in Washington appear to be in danger of sleepwalking their way toward a major policy and public relations debacle. The problem? With tax season underway, millions of Americans who lost their jobs thanks to the coronavirus crisis might soon discover that they unexpectedly owe thousands of dollars to the IRS. Lawmakers could prevent this wave of surprise tax bills by adding a fix to the $1.9 trillion coronavirus relief package that’s currently moving through Congress. But so far, efforts to do so seem to be stalling out. A senior Democratic aide told me that, as of now, he thought the chances legislators would act were ‘slim to none,’ and described the failure as ‘political malpractice.’ While unemployment benefits have long been considered taxable income, recipients are often unaware of that fact until it’s time to file. Under normal circumstances, this is not necessarily a disaster, since people tend to stay on unemployment for relatively short stints of time. But the past year has been different. A historic number of households fell back on unemployment insurance to survive the pandemic, and some have collected well over $10,000 or even $20,000 in aid thanks to the enhanced benefits Congress enacted.”
The Dark Side
Republicans believe Democrats cannot legitimately win an election
Heather Cox Richardson, February 21, 2021 [Letters from an American]
On ABC’s This Week this morning, Representative Steve Scalise (R-LA) refused to admit that Democrat Joe Biden had legitimately won the 2020 presidential election.
It’s hard to overestimate how dangerous this lie is. It convinces supporters of the former president that they are actually protecting American democracy when they fight to overturn it. Jessica Watkins is one of 9 members of the right-wing paramilitary group the Oath Keepers indicted for their actions on January 6. Yesterday, her lawyer told the court that Watkins behaved as she did because she believed that then-President Donald Trump would use the military to overturn what he falsely insisted was the rigged election….
Republican Party leadership launched the idea that Democrats could not win an election legitimately all the way back in 1986. They began to examine the made-up issue of voter fraud to cut Democrats out of the electorate because they knew they could not win elections based on their increasingly unpopular policies.
In 1986, Republicans launched a “ballot integrity” initiative that they defended as a way to prevent voter fraud, but which an official privately noted “could keep the black vote down considerably.” In 1993, when Democrats expanded voter registration at certain state offices—the so-called Motor Voter Law—they complained that the Democrats were simply trying to enroll illegitimate Democratic voters in welfare and unemployment offices.
In 1994, Republicans who lost elections charged that Democrats only won through voter fraud, although then, as now, fraud was vanishingly rare. In 1996, House and Senate Republicans each launched year-long investigations into what they insisted were problematic elections, one in Louisiana and one in California…. In 1998, the Florida legislature passed a voter ID law that led to a purge of voters from the system before the election of 2000….
After 2000, the idea that Democrats could win only by cheating became engrained in the Republican Party as their increasing rightward slide made increasing numbers of voters unhappy with their actual policies.
The idea that Democrats cannot legitimately win an election has been part of the Republican leadership’s playbook now for a generation, and it has worked: a recent survey showed that 65% of Republicans believe the 2020 election was plagued by widespread fraud, although election officials say the election was remarkably clean.
David Sirota [The Daily Poster 2-22-2021]
Early in 2020, a powerful health care industry group that delivered large donations to Cuomo’s political machine drafted legislative language to shield those executives from legal consequences if their cost-cutting, profit-maximizing decisions endangered nursing home residents’ lives. Cuomo slipped that language into New York’s state budget and then did not support repealing it when critics warned that removing a lawsuit deterrent to corporate misbehavior was jeopardizing lives. Instead, his administration withheld data about how many nursing home residents were dying under the immunity regime.
Despite the warnings about the immunity law’s effects in New York — which were later buttressed by a report from New York’s Attorney General — U.S. Senate Republicans lifted New York’s language and dropped it into their own legislation last year. Indeed, as The DailyPoster first reported, those Republican legislative proposals included word-for-word passages from Cuomo’s corporate immunity law.
[Twitter, via Naked Capitalism 2-25-21]
Thomas Neuburger [Originally published at DownWithTyranny!, Naked Capitalism, February 23, 2021]
The new evidence comes by way of a deathbed confession by a former NYPD policeman who gave a letter to his family saying that he, the FBI and the NYPD were responsible for the assassination. His role, he claimed, was to make sure that Malcolm X’s security detail was previously arrested so that there would be no door security at the ballroom where the civil rights activist was speaking the night he was murdered.
[Forbes, via Naked Capitalism 2-25-21]