Week-end Wrap – Political Economy – July 18, 2021
by Tony Wikrent
[CDC, via Naked Capitalism Water Cooler 7-16-21]
[CNN, via The Big Picture 7-12-2021]
Clusters of unvaccinated people, most of them in the southern United States, are vulnerable to surges in Covid-19 cases and could become breeding grounds for even more deadly Covid-19 variants: Starting in Georgia and stretching west to Texas and north to Missouri + include parts of Alabama, Arkansas, Louisiana, Oklahoma and Tennessee.
[NPR, via The Big Picture 7-13-2021]
But surveys have shown Trump supporters are the least likely to say they have been vaccinated or plan to be. Remember, Trump got vaccinated before leaving the White House, but that was reported months later. Unlike other public officials who were trying to encourage people to get the shot, Trump did it in private.
[New York Times, via The Big Picture 7-13-2021]
The disparity in vaccination rates has so far mainly broken down along political lines. For nearly every U.S. county, both the willingness to receive a vaccine and actual vaccination rates to date were lower, on average, in counties where a majority of residents voted to re-elect former President Donald J. Trump in 2020.
Strategic Political Economy
[Twitter, via, Aldous J Pennyfarthing, July 12, 2021, Dailykos]
This is the oligarchs’ “final solution” to finally eliminating all those pesky plebes who are constantly consuming resources the oligarchs prefer to hoard for themselves. It is the triumph of the oligarchs’ Malthusian pessimism over the optimism and progress of the Enlightenment and the creation of the USA as a self-governing republic constitutionally dedicated to promoting the General Welfare. It is a rejection of the classic Christian conception of humanity made in the image of the Creator, investigating and learning the laws of nature so that humanity can partake in the Divine by co-participating in the act of Creation through new science and technology that relieves human suffering and betters the human condition. That USA christianists are not in an uproar about these statements, shows how deeply the oligarchs’ corporations have corrupted USA christianity.
Dean Baker, CEPR, via Naked Capitalism Water Cooler 7-14-21]
“At the moment, at least two Democratic senators (Joe Manchin of West Virginia and Kyrsten Sinema of Arizona) seem unwilling to go along with voting to weaken the filibuster to allow voting rights measures to pass with a simple majority. As a result, it is hard to see how anything can pass. But, the Democrats can pass bills that involve appropriations with a simple majority through the reconciliation process. This is where the point that Brian made comes in, we can make voting rights about money. Suppose the next reconciliation bill included a provision that gave $1,000 per person to every adult living in a state where the districts are drawn by an independent commission, where basic provisions of access are guaranteed (e.g. two weeks of early voting, no excuse absentee voting), and where elections are run by career civil servants and cannot be overturned by elected officials. We should probably throw in some provisions about mandatory five-year prison terms for harassing or threatening election officials. This is a straight up appropriation bill, it’s not telling states what they have to do, so it should pass muster for reconciliation. It may be the case that Republican states will still insist on their voter suppression measures and rigged districts, and look to blow off the money, as they did with Medicaid expansion, but this would be a very different story.”
[Interfluidity, via Naked Capitalism Water Cooler 7-14-21]
“Market dirigisme is the name I give to a style of public policy I think we ought to use more. The idea is pretty simple. Governments form preferences over how the polity ought to be but currently is not. Often, what governments should do is to explicitly purchase the changes in behavior they desire from the general public…. Often when a central government wishes to change the polity, it tries to induce changes at the level of subsidiary governments, rather than via citizens and households….. There are deep problems with this style of center-to-subsidiary governance. It’s intuitively attractive, I think, due to a mistaken analogy between government subsidiarity to bureaucratic hierarchy. It feels “rational” or “logical” to work through the “chain of command” rather than have the center try to mess directly with with hundreds of millions of citizens about whose particular circumstances it knows little….A better approach is for the central government to alter the circumstances, and so the preferences, of the broad public. If we’d like denser communities, the central government can simply pay a subsidy to residents of communities growing denser. Elected officials of subsidiary governments no longer face conflicting incentives. If the subsidy is large enough to shift the preferences of the voters to whom local politicians are accountable, politicians will enact real change. If their supporters’ dispreference for density overwhelms the money, they won’t. The size of the subsidy can be set large enough to meet the central government’s objectives while still permitting some communities to opt out.”
The Biden Transition and the Fight for Real Hope and Change This Time
[The New Yorker, via Naked Capitalism Water Cooler 7-15-21]
“Since joining the Administration, at the start of March, Wu has been working full time on the order, which is lengthy and detailed. ‘There is an intellectual revolution here, which the President has embraced,’ Wu told me. ‘Part of that effort is to bring back antitrust as a popular movement, rather than as an abstract academic thing. I think we went through a long period in which it became more remote and abstract. But, as the President said, ultimately this is about creating an economy that works for everyone…. The way that the executive order names specific problems also reflects an effort on the part of Wu and his colleagues to make the most of a limited tool. Barack Obama issued a pro-competition executive order in the final year of his second term, but he left office before it could have much impact. Donald Trump signed all manner of executive orders, most of which are no longer in effect—either the courts struck them down or Biden reversed them after taking office. Wu and his colleagues are all too aware that this order, too, is likely to be challenged in the courts, where many judges have taken a restrictive view of the government’s power to promote economic competition. So, in drawing it up, they tried to address specific problem areas that are highly visible and subject to existing laws. ‘The whole approach of this executive order is to focus on areas where there are strong congressional authorities, often given during the New Deal or the nineteen-fifties and sixties, but which are not being fully used,’ Wu explained.”
The (Anti)Federalist Society Infestation of the Courts
From Qualified Immunity to Voting Rights, the Supreme Court Guts Civil Rights Laws
David Gans, director of the Human Rights, Civil Rights, and Citizenship Program at the Constitutional Accountability Center, July 16, 2021 [The American Prospect]
[US News, via Naked Capitalism Water Cooler 7-12-21]
“Private equity firms have come out of the pandemic red-hot, inking more than 2,300 deals in the first five months of 2021, an increase of 21.9% from the same period last year.
- The Blackstone Group
- The Carlyle Group
- Apollo Global Management
- CVC Partners
- Advent International
- Thoma Bravo
- TPG Capital
- Warburg Pincus
- Bain Capital
Frontline Investigates the Federal Reserve: Is It a Captured Regulator that’s Wrecking the U.S. Economy with Asset Bubbles?
Pam Martens and Russ Martens, July 11, 2021 [Wall Street on Parade]
This Tuesday evening [July 13], the PBS investigative program, Frontline, will broadcast a documentary covering its year-long investigation of the Federal Reserve’s bailouts of Wall Street, from the financial crisis of 2008 to the present….
Andrew Huszar, a former insider at the Federal Reserve Bank of New York, where the Federal Reserve has a serial habit of outsourcing its bailout programs for the mega banks on Wall Street (likely because it is literally owned by those same banks) will explain to viewers how he was “single-handedly responsible for directing the deployment of $1.25 trillion of Fed funds, and we did not see the knock-on benefits that we had hoped for the average American.”
Huszar is talking about the $1.25 trillion the Fed spent in buying up agency Mortgage-Backed Securities (MBS) following the 2008 financial crash on Wall Street. Despite the fact that the Fed saw no benefits accrue from that program to the average American, it doubled down on the same program during the pandemic, buying up $40 billion a month in agency MBS. The Fed’s current total of agency MBS on its balance sheet stands at $2.3 trillion as of last Wednesday. The custodian of the securities purchased in the Fed’s MBS program has been, from the outset, JPMorgan Chase, one of the largest owners of the New York Fed. The fact that the bank has received an unprecedented five felony counts from the Department of Justice since 2014 hasn’t changed the Fed’s mind about entrusting the bank with $2.3 trillion of its assets. (JPMorgan Chase admitted to all five felony counts.)
Pam Martens and Russ Martens, July 15, 2021 [Wall Street on Parade]
[Daily Poster, July 16, 2021]
Republicans are taking advantage of the White House’s refusal to invoke a law designed to make sure stimulus money isn’t used for tax breaks….
But rather than investing in underfunded schools and public services, some Republican-run states are instead funneling the cash to high-income households - and the Biden administration’s refusal to enforce the anti-tax-cut language in the federal legislation are providing a green light for Republicans to try to do even more.
The Arizona legislature recently passed a $1.9 billion income tax cut designed to benefit the wealthy, with 93 percent of the benefit going to the top 20 percent of earners, and over half going to the top 1 percent. Ohio passed $1.7 billion in tax cuts, over half of which will flow to the top five percent of earners and over a third of which will flow to the top one percent. And Wisconsin passed more than $2 billion in tax cuts, about three quarters of which will go to individuals who make $100,000 or more.
[No Mercy No Malice, via The Big Picture 7-13-2021]
25% of U.S. households are either unbanked or underbanked. Half of the nation’s unbanked households say they don’t have enough money to meet the minimum balance requirements. 34% say fees are too high. And, if you’re trying to get a mortgage, you’d better hope the house isn’t cheap.
The carnage of mainstream neoliberal economics
[New York Times, via Naked Capitalism 7-16-2021]
[Slate, via The Big Picture 7-12-2021]
When the dollar stores moved in, they started driving grocery stores out. Local grocers blamed it on what they called the Walmart effect. When Walmart Supercenters arrived in neighboring areas, offering huge selections of goods at low prices, people started driving to them rather than shopping locally. Smaller stores couldn’t compete. (Slate)
[The Brick House Cooperative, via Daily Poster July 14, 2021]
[Dollars & Sense, via Naked Capitalism 7-12-2021]
The process of taking money out of the company is evident in Figure 2 and Figure 3. “Free cash” is the term for the resources a company has available to spend after it has covered operations costs and the costs of maintaining existing equipment. The green bars in Figure 2 show the percentage of “free cash” that Boeing obtained from operations (i.e., selling planes created by the workers in the production process), which typically provided 40% to 80% of the cash Boeing was free to spend annually. (Boeing obtained the remaining percentage of “free cash” largely from new loans—like a lot of American households, Boeing borrows every year, though at a lower rate of interest than the typical consumer.)
In many years up until 2018, the corporation obtained the bulk of its “free cash” flow from operations, yet the falling blue line in Figure 2 indicates that Boeing only puts between 10% and 20% of its cash back into new equipment for production operations—known as “capital expenditures.” With roughly 60% coming from operations, and only 15% going back into operations, Boeing’s cash flow statements reveal a slow erosion of manufacturing capacity, as the company spends less and less on capital equipment of any kind. If this is how the U.S. capitalist class accumulates capital, then it’s no wonder capitalism in the United States isn’t doing well.
Figure 3. Shareholders vs. Production: How Boeing Spends Free Cash Flow
So, how does Boeing actually spend its “free cash”? The yellow bars in Figure 3 show the combined spending on dividends to shareholders and stock buybacks.
Climate and environmental crises
[Gizmodo, via Naked Capitalism Water Cooler 7-14-21]
“Wheat farmers across the country are facing lower yields as 98% of the country’s wheat crop is in areas experiencing drought. In the Northern Plains, the Department of Agriculture said Monday that farmers were projected to harvest their smallest crop of spring wheat—crops planted in the spring and harvested in the autumn—in 33 years. … The region is hardly alone; the USDA also said this week that 68% of the Pacific Northwest’s spring wheat was in ‘poor or very poor’ conditions. At this time last, only 6% of the region’s wheat crop was in this state. All told, the USDA found that 98% of the U.S. wheat crop is growing in areas hit by drought.”
[Slate, via The Big Picture 7-15-2021]
Restoring balance to the economy
[New York Times, July 13, 2021]
Google was fined 500 million euros, or $593 million, by French antitrust authorities on Tuesday for failing to negotiate a deal in “good faith” with publishers to carry news on its platform, a victory for media companies that have been fighting to make up for a drop in advertising revenue that they attribute to the Silicon Valley giant.
French officials said Google had ignored a 2020 order from French regulators to negotiate a licensing deal with publishers to use short blurbs from articles in search results. The case has been closely watched because it is one of the first attempts to apply a new copyright directive adopted by the European Union intended to force internet platforms like Google and Facebook to compensate news organizations for their content.
“When the authority imposes injunctions on companies, they are required to apply them scrupulously, respecting their letter and their spirit,” Isabelle de Silva, president of the French antitrust body, said in a statement.
Google has two months to come up with fresh ideas for compensating news publishers or risks further fines of up to €900,000, about $1.065 million, per day, the French authorities said.
Institutionalists = Obstructionists
[Axios, via Naked Capitalism Water Cooler 7-14-21]
“The Democrats’ “only chance of keeping the House” next year is if they redraw congressional lines to their advantage in New York and Illinois, Cook Political Report’s David Wasserman tells Axios’ Stef Kight…. The GOP is already poised to take advantage of its control of map-drawing in more states than Democrats. But Democrats have a chance to eliminate as many as seven Republican House seats in just New York and Illinois through redistricting in states they control.”
[The New Republic, via Naked Capitalism Water Cooler 7-15-21]
[Twitter, via Naked Capitalism Water Cooler 7-13-21]
Disrupting mainstream politics
[Current Affairs, via Naked Capitalism Water Cooler 7-15-21]
[Charlotte] Kelly is one of seven candidates running for Somerville City Council who has been endorsed by the Democratic Socialists of America (DSA). This slate of campaigns is bound not just by the idea of winning socialism in a general sense, but specific, concrete reforms to pave the way. To get there, the candidates demonstrate intricate knowledge of policy battles and embed themselves in community organizing, but it’s more than that, too: their proposals for the future drill down to the details. According to Spencer Brown, co-chair of Boston DSA, the election centers on three issues of daily life—affordable housing, climate change, and public safety—and in addressing those issues the DSA-endorsed candidates move seamlessly from broad-stroke abstractions to net zero stretch code and idling police cruisers. The slate in Somerville has the potential to translate the grand aim of socialism into the minutiae of city politics…. This upcoming election in Somerville also may have wider implications, both in the Boston area and nationally. All over the country, not just in big coastal cities but in places like Florida and Texas, socialists are running for municipal office. But even in the largest DSA chapter in the country—New York City—DSA put up six candidates in the June primary, contesting only 12 percent of the City Council (and only winning two races). Meanwhile in Chicago and Seattle, socialists make up about 10 percent of their respective city councils. But in Somerville, 64 percent of seats are being contested. The prospect of winning an outright majority represents, in the words of Seitchik, ‘a generational opportunity, the first time since World War II, the first time in 80 years, to be able to have a majority socialist City Council.’ In fact, as DSA’s national account recently corrected, the city of Richmond, California already has a majority-socialist City Council—an indication that what’s happening in Somerville is not as anomalous or isolated as it might at first seem.”
Matt Taibbi, July 15, 2021
Reed: No, it’s not new. Combating racism becomes a convenient alternative to attacking inequality and inequality, even those inequalities that appear or the manifest themselves as racial disparities. Because the struggle against racism is exactly parallel to the struggle against terrorism… It can go on forever, because the enemy is an abstraction that you can define however you want to define it, at the moment that you wanted to find it….
Black workers can’t just be workers. They got to have some special black thing about them. But I’m not denying that black workers are black, as much as workers. To keep with my prior illustration, black is the adjunctive, worker is the noun.
But the thing is always: how do we try to build the solidarities that we need to have, to change the society in the ways that make it better for everybody who lives in it, except Bezos, and those people? The practice of this performative race-first politics is completely disconnected from any sort of pragmatic questions like that.
It’s not only disconnected from such questions, it tends to be so essentially antagonistic to pursuit of such questions.
The real separation of powers in modern America: The left has unfair privilege in culture, and the right in politics.
FT, via Naked Capitalism 7-15-2021]
Comment by Michael Pettis: “Call me old fashioned, but I liked it better when the left cared more about the working classes than about culture.” To which Lambert Strether added: “To repeat, if you don’t put the working class first, you’re not on the left. You’re working on the rainbow of flavors to put in your freezer, just like Nancy Pelosi, ka-ching.”
The Dark Side
[Newsweek, via Naked Capitalism Water Cooler 7-15-21]
“Florida Democrats are calling out Republican Governor Ron DeSantis while asking the state’s attorney general for “clarity” about a law that the governor signed earlier this year criminalizing protesters blocking road traffic. Prompted by Black Lives Matter protests that swept the nation following the death of George Floyd last year, DeSantis signed the so-called “anti-riot” bill HB 1 in April, imposing potential criminal penalties for protesters who block roads while holding demonstrations. However, when large groups of Cuban Americans—a key Republican voter block in Florida—took to the streets and sometimes blocked them while holding demonstrations in solidarity with pro-democracy protests in Cuba this week, law enforcement did not intervene. Democrats quickly noted that no arrests were made on Tuesday when protesters blocked Florida State Road 826, also known as the Palmetto Expressway.”
[New York Times, via Naked Capitalism Water Cooler 7-13-21]
“People across the country may soon be able to sue abortion clinics, doctors and anyone helping a woman get an abortion in Texas, under a new state law that contains a legal innovation with broad implications for the American court system. The provision passed the State Legislature this spring as part of a bill that bans abortion after a doctor detects a fetal heartbeat, usually at about six weeks of pregnancy. Many states have passed such bans, but the law in Texas is different. Ordinarily, enforcement would be up to government officials, and if clinics wanted to challenge the law’s constitutionality, they would sue those officials in making their case. But the law in Texas prohibits officials from enforcing it. Instead, it takes the opposite approach, effectively deputizing ordinary citizens — including from outside Texas — to sue clinics and others who violate the law. It awards them at least $10,000 per illegal abortion if they are successful. ‘It’s completely inverting the legal system,’ said Stephen Vladeck, a constitutional law professor at the University of Texas at Austin. ‘It says the state is not going to be the one to enforce this law. Your neighbors are.’ The result is a law that is extremely difficult to challenge before it takes effect on Sept. 1 because it is hard to know whom to sue to block it, and lawyers for clinics are now wrestling with what to do about it.”
[Popular Info, via Naked Capitalism Water Cooler 7-13-21]
“A Popular Information investigation reveals that many of the entities behind the CRT panic share a common funding source: The Thomas W. Smith Foundation.”