From: Tony Wikrent 2nbbooks@gmail.comSubject: Week-end Wrap – Political Economy – December 15, 2019

Date: December 15, 2019 at 12:27 PMTo: undisclosed-recipients:;

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Week-end Wrap – Political Economy – December 15, 2019by Tony WikrentEconomics Action Group, North Carolina Democratic Party Progressive Caucus

This is an abbreviated version of the post at Real Economics and Ian Welsh

Strategic Political Economy

The Economy of Evil [Historicly, via Naked Capitalism 12-11-19]

Benito Mussolini became Prime Minister in October 1922. Nazis rose to power in 1933 in Germany. Mussolini conveneda meeting of his cabinet and immediately decided to privatize all the public enterprises. On December 3, 1922, theypassed a law where they promised to reduce the size and function of the government, reform tax laws and also reducespending. This was followed by mass privatization. He privatized the post office, railroads, telephone companies, andeven the state life insurance companies. Afterward, the two firms that had lobbied the hardest: Assicurazioni Generali(AG) and Adriatica di Sicurtà (AS), became a de-facto oligopoly. They became for-profit enterprises. The premiumsincreased, and poor people had their coverage removed.

In January 1923, Mussolini eliminated rent-control laws. His reasoning ought to be familiar since that is the samereasoning used in many contemporary editorials against rent control laws. He claimed rent control laws prevent landlordsfrom building new housing. When tenants protested, he eliminated tenants' unions. As a result, rent prices increasedwildly in Rome, and many families became homeless. Some went to live in caves. Once more, these policies allowedlandlords to increase their profit and holdings while they severely hurt the poor.

To remove "government waste," Mussolini removed the federal government from remote areas in Italy. This meant thatrural farmers, peasants, and workers no longer had the protection of the federal government against abuse fromagribusiness. Instead, they were entirely under the mercy of big businesses.

Hitler's economic policy was Mussolini's policy on steroids.... In 1934, Nazis outlined their plan to revitalize the Germaneconomy. It involved reprivatization of significant industries: railways, public works project, construction, steel, andbanking. On top of that, Hitler guaranteed profits for the private sector, and so, many American industrialists and bankersgleefully flocked to Germany to invest.

The Nazis had a thorough plan for deregulation. The Nazi's economist, stated," The first thing German business needs ispeace and quiet. It must have a feeling of absolute legal security and must know that work and its return are guaranteed.The interferences In a business which occurred at first, perhaps as a result of too much zeal, have become intolerable."

Emmanuel Macron Wants to End France’s Welfare State [Jacobin, via Naked Capitalism 12-9-19]

....other major mobilizations have failed to bring success, most significantly past battles against pension reforms in 2003and 2010. But the protracted resistance to neoliberalism really has had a lasting impact — explaining why France’swelfare state has proven much more resilient than those of nearly all other Western countries. To the despair of itsdomestic elite and of high-ranking bureaucrats in the European Union and OECD, France tops the table for governmentspending as a share of GDP; at nearly 55 percent, its spending level ranks ahead of all Scandinavian countries and standsabout 10 percent higher than Germany and the OECD average.

Macron’s presidency, overwhelmingly supported by the French capitalist class and its European counterparts, was fromthe outset meant to bring that “French exception” to an end. The first year and a half following his election looked as ifhe would succeed. A wave of tough neoliberal reforms swept across nearly all areas of economic and social activities: theschool system has been subjected to a “choice” agenda, while rail and public transport have been opened up to“competition” and sold off to the private sector.

The “Fixing Capitalism” HeadfakeYves Smith, December 11, 2019 [Naked Capitalism]

The officialdom has been shaken out of its Versailles 1788-level complacency by much-derided “populist” revolts, andmore recently, 1848-like revolts, including a general strike in France. It has been revealing, and not in a good way, to seepeople who ought to know better serve up tepid reform programs.... the coercive nature of capitalism has only gottenmore intense in the neoliberal era as social safety nets have been gutted. As we pointed out in 2013:

more intense in the neoliberal era as social safety nets have been gutted. As we pointed out in 2013:

One issue I’ve long been bothered by is the libertarian fixation on the state as the source of coercive power. The strongform version is that the state is the only party with coercive power (and please don’t try denying that a lot of libertarianssay that; there are plenty of examples in comments in past posts). Libertarians widely, if not universally, depict marketsand commerce as less or even non-coercive.

What is remarkable is how we’ve blinded ourselves to the coercive element of our own system.

....Martin Wolf of the Financial Times, but an earlier this week, How to reform today’s rigged capitalism, was likeHamlet without the Prince. It followed up on an earlier article, which focused on what he saw as the causes of risinginequality: falling productivity growth, stagnating innovation, rising debt levels and finanicization, concentratedcorporate power, which in turn fosters rentierism and tax evasion.Notice what was missing? The fall in labor organization and bargaining power. The deliberate and successful attack on amuscular and effective state. It may seem hard to believe, but as recently as the 1960s, people went into public servicenot for the revolving door opportunities but to make a difference and in senior positions, for the prestige.

Needless to say, resetting the balance of power between workers and capital, by improving labor rights and strengtheningsocial safety nets, is barely to be found on Wolf’s list of fixes.

Class war and economic disequilibrium

44 Percent of U.S. Workers Earn $18,000 Per Year [The Stranger, via Naked Capitalism 12-8-19]

“U.S. Employers Spend $340 Million a Year Busting Unions” [Vice, , via Naked Capitalism 12-12-19]

“A new report on employer opposition to union campaigns released today by the Economic Policy Institute (EPI) foundthat employers spend hundreds of millions of dollars a year against union organizing efforts, and were charged withbreaking federal labor laws in 41.5 percent of union campaigns in 2016 and 2017. While the authors of the report, whogained access to unfair labor complaints through FOIA requests, could not comment on specific cases, they say the newlyorganized tech industry is no exception.”

The blood of poor Americans is now a leading export, bigger than corn or soy[Boing Boing, via Naked Capitalism 12-11-19]

Restoring balance

“Samsung VP gets jail term for attempting to break up labor union” [Korea Herald, via Naked Capitalism 12-13-19]

“Friday’s ruling is the first since a document dubbed the “S Group labor strategy” first surfaced in 2013, raisingallegations the conglomerate deliberately targeted labor unions. Kang was charged with obstructing labor union activitiesat Everland from June 2011 to March 2018 based on the group’s labor management scheme. He is also suspected ofillegally collecting the personal information of labor union members and their families as well as putting them undersurveillance.”

“File an Information Request with Every Grievance” [Labor Notes, via Naked Capitalism 12-13-19]

“It is a good practice to attach an information request to each grievance. Additional requests may be made based on thematerial initially provided or on employer contentions during the grievance. Continuous requests add leverage for theunion. Over time, managers come to understand that if they violate the contract, they will be hit not only by a grievancebut also by enforceable demands for sizable amounts of data, often including sensitive records. Whenever possible,demand correspondence between the employer and involved parties. In a grievance over subcontracting, for example, askfor letters, emails, and text messages between the employer and the subcontractor. Following grievance meetings, reviewthe employer’s arguments and demand that the employer back up its contentions.”

Predatory Finance

Misunderstanding Volcker Yves Smith, December 10, 2019 [Naked Capitalism]

Paul Volcker, the former Federal Reserve chairman often called “Tall Paul” for his 6’7″ stature, is dead at 92. Volckerplayed an outsized role in shifting the prevailing economic model from one dominated by labor to one dominated bycapital. As Mark Blyth put it in a recent talk, the late 1970s and early 1980s, the rise of the “independent” central banker,which Volcker exemplified, was a core element in the economic regime change after the moneyed classes saw workers as

which Volcker exemplified, was a core element in the economic regime change after the moneyed classes saw workers asbeing too empowered and revolted. His fixation with reducing inflation favored investors over workers, and loweredlabor’s wage share of GDP. As as we’ll see, Volcker sought to achieve that end....

Volcker’s starchy manner, lack of pretentiousness, and skepticism of bank claims of virtue made him old school. But heplayed a central role in ushering a Brave New World that was nevertheless better for financiers and rentiers thaneveryone else.

“Super-Rich Families Pour Into $787 Billion Private Debt Market” [Bloomberg, via Naked Capitalism 12-10-19]

“Direct loans to far-flung oil exploration projects, luxury real estate projects, private equity-backed businesses, and cash-intensive tech startups can pay yields more than twice as big as the junk-bond market. That’s lured the likes of theDenisenko family and other members of the global elite such as former Los Angeles Dodgers owner Frank McCourt Jr.Stockholm-based Proventus Capital, which spun off from the family office of Swedish financier Robert Weil, is investingon behalf of wealthy clients, as well as institutional investors, in the market. More commonly, family offices areinvesting in the private credit market through funds. The Pritzker family, which owns the Hyatt hotel chain, and the Bill& Melinda Gates Foundation Trust have also put money into funds that invest in private distressed debt, tax filingsshow. Spokesmen for McCourt and the Gates Foundation Trust declined to comment. Requests for comment from thePritzker family weren’t immediately returned. Private credit has boomed globally as banks, under pressure fromregulators since the global financial crisis to reduce risk, have pulled back from lending to smaller, potentially morevulnerable companies.”

Congress Held a Hearing on the Fed’s Bailout of the Repo Market: Here’s Why You Haven’t Heard About ItPam Martens and Russ Martens: December 10, 2019 [Wall Street On Parade]

BIS Drops a Bombshell: Four U.S. Mega Banks Are Core of Repo Loan CrisisPam Martens and Russ Martens: December 9, 2019 [Wall Street On Parade]

...the Bank for International Settlements (BIS) dropped a bombshell report that torpedoed the Federal Reserve’s officialnarrative on what has caused the overnight lending market (repo loan market) on Wall Street to seize up since September17, leading to more than $3 trillion in cumulative loans from the New York Fed as lender of last resort.... The BIS reportdropped the bombshell that the “US repo markets currently rely heavily on four banks as marginal lenders.” Curiously,the BIS report was too timid to name the banks.

As Wall Street On Parade has regularly pointed out, there are more than 5,000 Federally-insured banks and savingsassociations in the U.S. but the bulk of the assets, derivatives and risk to U.S. financial stability are concentrated at just ahandful of Wall Street’s “universal” banks — those making high risk trading gambles while also owning federally-insured, deposit taking banks. Ranked by assets, as of June 30, 2019, those are the bank holding companies of JPMorganChase, Bank of America, Citigroup, Wells Fargo, Goldman Sachs Group, and Morgan Stanley. Those six Wall Streetbanks hold $8.9 trillion of the $18.56 trillion in assets at the 5,213 federally-insured banks and savings associations in theU.S. That’s six banks holding 48 percent of the total assets of 5,213 banks.

The Carnage of Establishment Neoliberal Economics

“What if the foundational theories about how to run a company have been corrupted?”[Quartz, via Naked Capitalism 12-11-19]

For example: “After digging through the archives at HBS, [professors Todd Bridgman and Stephen Cummings]discovered that Wallace Donham, the former dean who popularized the case study beginning in the 1920s, later decidedit was too limited in scope. In reading Donham’s writing and his correspondence with the philosopher Alfred NorthWhitehead, in particular, it became clear to the researchers that Donham sincerely believed the case study’s decision-forcing exercise—designed to channel students’ mental energy toward hypothetically improving profits at a singlebusiness—was too indifferent to societal consequences and equality among workers.”

Climate and environmental crises

The world’s supply of fresh water is in trouble as mountain ice vanishes [National Geographic, The Big Picture 12-14-19

“1.9 billion people at risk from mountain water shortages, study shows” [Nature, via Naked Capitalism 12-10-19]

“A quarter of the world’s population are at risk of water supply problems as mountain glaciers, snow-packs and alpinelakes are run down by global heating and rising demand, according to an international study. The first inventory of high-altitude sources finds the Indus is the most important and vulnerable “water tower” due to run-off from the Karakoram,Hindu Kush, Ladakh, and Himalayan mountain ranges, which flow downstream to a densely populated and intensivelyirrigated basin in Pakistan, India, China and Afghanistan…. The study says 1.9 billion people and half of the world’s

irrigated basin in Pakistan, India, China and Afghanistan…. The study says 1.9 billion people and half of the world’sbiodiversity hotspots could be negatively affected by the decline of natural water towers, which store water in winter andrelease it slowly over the summer.”

“Glimmers of Hope Appear for Brazil’s Toxic Water” [Bloomberg, via Naked Capitalism 12-13-19]

“The Tiete and the under-served slums on its banks are just one window into Brazil’s sanitation system, deemed amongthe worst in the world. The state-run infrastructure serves only half of the nation’s 200 million population. Some 33million don’t have access to drinkable water. The years of under investment are harming the country’s health andimpeding economic development. But the situation may be about to change. The nation’s politicians are weighinglegislation to privatize the sector, a move that could open it up to $200 billion of investments.”

Lambert Strether adds: "Worked in Chile. Oh, wait…"

“Permafrost Hits a Grim Threshold” [Counterpunch, via Naked Capitalism 12-9-19]

“For tens of thousands of years the Arctic’s carbon sink has been a powerful dynamic in functionality of the EarthSystem. However, that all-important functionality has been crippled and could be permanently severed. According tonew research based upon field observations conducted from 2003 to 2017, a large-scale carbon emission shift in theEarth System has occurred. The ‘entire Arctic’ now emits more carbon than it absorbs, a fact that can only be describedas worse than bad news. ‘Given that the Arctic has been taking up carbon for tens of thousands of years, this shift to acarbon source is important because it highlights a new dynamic in the functioning of the Earth System,’ says SusanNatali at Woods Hole Research Center in Massachusetts (Source: Thawing Permafrost Has Turned the Arctic Into aCarbon Emitter, NewScientist, Oct. 21, 2019).”

As the Arctic melts, China and Russia struggle for control [Wired, via Naked Capitalism 12-13-19]

In August, satellites scanning the Arctic circle noticed a remarkable transformation: the region’s ice receded to such anextent that islands, previously submerged beneath glaciers, were now visible. The climate crisis has opened up new landthat can be exploited for political and economic gain.

Last month, a Russian navy expedition chartered these five new islands, which are located in Novaya Zemlya and theFranz Josef Land archipelago. This marks yet another coup in the region for Russia, a forerunner in making use of thechanging Arctic landscape.

According to the Russian Geographical Society, between 2015 and 2018, more than 30 new islands, capes and bays havebeen discovered in the region. The latest discovery includes an island as large as 54,500 square metres – an areaequivalent to the size of more than seven football pitches.

The Arctic is a region of global political and economic importance – its ocean connects Asia, Europe and North America.Around ninety per cent of international trade takes place within these three continents. The region hosts massive stores ofuntapped resources, including a large portion of the world’s buried petroleum.

“Hot Earth Rebels” [New Left Review, via Naked Capitalism 12-12-19]

Long interview with Extinction Rebellion member: “The starting point was the need to find a more effective form ofprotest than what we’d all been doing to date. Pretty much none of this came out of our own innovative thinking. It wasabout looking at the research, adding up the facts. Conventional A-to-B marches don’t work: millions of us demonstratedagainst the Iraq War and it didn’t make any difference. A key piece of research was Erica Chenoweth and MariaStephan’s Why Civil Resistance Works. They take data from hundreds of 20th-century social movements and analysewhat they did right and what they did wrong. The most successful ones, those that had their demands met, used forms ofdecentralized, non-violent civil disobedience—large-scale direct action. The tipping-point, Chenoweth and Stephanfound, was to get 3.5 per cent of the population involved.”

Health Care Crisis

Where the Frauds Are All Legal Elisabeth Rosenthal[New York Times, via Naked Capitalism 12-9-19]

Much of what we accept as legal in medical billing would be regarded as fraud in any other sector. I have been circlingaround this conclusion for this past five years, as I’ve listened to patients’ stories while covering health care as ajournalist and author. Now, after a summer of firsthand experience — my husband was in a bike crash in July — it’s timeto call out this fact head-on.

Information Age Dystopia

Information Age Dystopia

This Man May Be Big Tech’s Biggest Threat[New York Times 12-8-19]

Antitrust investigations are coming at tech from all sides: the Justice Department, U.S. trade regulators and stateattorneys general. But there’s a potentially bigger threat to the industry’s practices and profits. Representative DavidCicilline, the chairman of the subcommittee that oversees antitrust law, has an ambitious goal, reports Steve Lohr of theNYT. He’s trying to build evidence, and a bipartisan consensus, for changing the laws.

Antitrust had been dormant in Congress for years. But under Mr. Cicilline, a Rhode Island Democrat, the panel hasopened an investigation, held hearings and collected thousands of documents into possible anticompetitive practices byGoogle, Facebook, Apple and Amazon. Antitrust experts say this is the most serious congressional inquiry into potentialanticompetitive corporate behavior in decades.

The stagnant incomes of middle-class workers and the growing wealth gap in the U.S. are at least partly related to anincreasing concentration of economic power, and in particular, the market clout of the tech giants, Mr. Cicilline has cometo believe.His panel plans to complete its investigation and publish its findings and recommendations early next year. The prospectfor legislative action hinges on several unknowns. The most significant include what the subcommittee finds, the 2020election results and the strength of public support for curbing the tech giants.

“She installed a Ring camera in her children’s room for ‘peace of mind.’ A hacker accessed it and harassed her 8-year-old daughter.” [WaPo, via Naked Capitalism 12-13-19]

“Several Ring users nationwide have reported that their security systems were also infiltrated by hackers who harassedthem through the camera’s two-way talk function. (Ring is an Amazon product. Amazon chief executive Jeff Bezos ownsThe Washington Post.) A spokesperson for Ring told The Post in a statement early Thursday that what happened to theLeMays ‘is in no way related to a breach or compromise of Ring’s security.’ The ‘bad actors’ behind the attacks ‘often re-use credentials stolen or leaked from one service on other services,’ the spokesperson said. Ring has addressed the otherreports of hacking with similar statements.” • Lol, “in no way related” is doing a lot of work, there. Maybe the entireproduct line is a bad idea?

Creating new economic potential - science and technology

Successful Flight of World's First Commercial Electric Airplane[PRNewswire, via Aviation Week and Space Technology 12-11-19]

VANCOUVER, British Columbia, Dec. 10, 2019 /PRNewswire/ -- Harbour Air, North America's largest seaplane airlineand magniX, the company powering the electric aviation revolution, today announced the successful flight of the world'sfirst all-electric commercial aircraft. The successful flight of the ePlane, a six-passenger DHC-2 de Havilland Beavermagnified by a 750-horsepower (560 kW) magni500 propulsion system, took place on the Fraser River at Harbour AirSeaplanes terminal in Richmond (YVR South) this morning. The plane was piloted by Harbour Air CEO and founderGreg McDougall. This historic flight signifies the start of the third era in aviation – the electric age.

I have a personal fascination with the Pacific Northwest, and around 2005 traveled on the Alaska state marine ferry up the InsidePassage to Juneau and back to Bellingham. Bush pilots and aircraft are a legendary presence in the region, which is very sparselypopulated north of Vancouver and Victoria, and thus very ill suited for building rail systems. This is the perfect initial application ofelectric motors for aviation.

Comparing Lithium-Ion and Lead-Acid Batteries[Machine Design Today 12-8-19]

Comparing the two batteries’ performance in keeping forklifts up and running seems to tilt the choice in a definitivedirection.Comparing the two batteries’ performance in keeping forklifts up and running seems to tilt the choice in adefinitive direction.

High Capacity Light Rail in Ottawa[Railway Age 12-8-19]

The Confederation Line (Line 1) opened to revenue passengers on Sept. 14, 2019. The name reflected the original hopeof starting service in 2017, the 150th anniversary of Canada becoming a nation. The project cost an estimated C$2.1billion, making it the largest infrastructure project in Ottawa’s history. The bulk of the cost was for construction, as mostof the property needed was publicly owned.

Democratic Party leadership insists on suicide

Biden tells GOP voters to stay Republican because "we need a Republican Party"Neapolitan, December 08, 2019 [Daily Kos] I think it's very, very interesting that 1) this made the rec list, and 2) the overwhelming majority of comments agreed with the diarist'sattack on Biden. The Democratic Party leadership is obviously ignoring the discontent among the Party's activist base.

In the latest addition to the ongoing saga of “He still doesn’t get it and probably never will,” ex-VP and currentDemocratic Presidential candidate Joe Biden told a Buzzfeed reporter that Democrats shouldn’t be able to amass toomuch political power because there needs to be a balanced force pushing the other way, and the Republican Party is thatforce:

...[I]f you hear people on the rope line saying, ‘I'm a Republican,’ I say, ‘Stay a Republican.’ Vote for me but stay aRepublican, because we need a Republican Party."

Yes. Despite the fact that conservatives currently control the White House, and the US Senate, and the Supreme Court,and they’re either allowing, or conspiring with, hostile foreign entities to decide the upcoming election, and they’reworking overtime to suppress the vote everywhere, and they’re gerrymandering the hell out of any district they can, andthey’re busy stacking the courts to give themselves an unfair multi-decade advantage, and they’re deploying the noveltactic of stripping power from any Democrat who does manage to get into office, and they’re rapidly removing as manyconsumer and environmental protections as possible in the false name of deregulation, and they’re as a party supportingthe most venal, corrupt administration in history, and they’re continuing to refuse to address the doom-filled specter ofclimate change to keep Big Energy money coming in, and they’re intentionally harming immigrants and women andchildren and LGBTQ people because that’s how they get off, and they’re generally moving toward fulfilling somebiblical prophecy of Armageddon—Biden feels they should keep a goodly amount of political power because “we need aRepublican Party”.

Why the Democratic Party Acts The Way It DoesA book review of The New Democrats and the Return to Power by Al FromReviewed by Matt Stoller, Nov 6, 2014 [Medium]Sadly, still on target five years later.

Sadly, still on target five years later.

The litany of excuses is long. Democratic candidates were arrogant. The White House failed to transfer money, or stumpeffectively. The GOP caught up in the technology race, or the GOP recruited excellent disciplined candidates. Everythingis put on the table, except the main course — policy. Did the Democrats run the government well? Are the lives of votersbetter? Are you as a political party credible when you say you’ll do something?

This question is never asked, because Democratic elites — ensconced in the law firms, foundations, banks, and mediaexecutive suites where the real decisions are made — basically agree with each other about organizing governancearound the needs of high technology and high finance....

The theory in this book is simple. The current generation of Democratic policymakers were organized and put in powerby people that don’t think that a renewed populist agenda centered on antagonism towards centralized economic power isa good idea. The book, however, is not written by a populist liberal reformer. It’s written by one of the guys who put thecurrent system in place.

Disrupting mainstream politics“Meet the legal minds behind Trump’s impeachment” [Politico, via Naked Capitalism 12-13-19]

A Progressive’s Guide to Choosing Between Bernie and Warren [Medium, via Naked Capitalism 12-13-19]

“Dangerous Spaces” [Verso, via Naked Capitalism 12-11-19]

From the UK, but relevant here: “We have quickly discovered that door-knocking is horrible and brilliant, fraught withrisk and potential. On the doorstep, no one cares what pronoun you prefer or whether you have social anxiety. It is a kindof political primal scene. Just you and a stranger. They can slam the door. They can call you a terrorist. They cancomplain about Jeremy Corbyn or Brexit or immigrants or their landlord, or assholes like you turning up unannounced,or about all of this at once. They can listen to your patient explanation or your frustrated ramble. They can laugh in yourface. They can invite you into their homes, forcing you to make a snap decision about your potential safety in theirdomestic space. You always say yes. They can offer you a cuppa or ask for a sticker or introduce you to their nan. Theycan commiserate with you at the state of the world. They can change their minds and you can change yours. Often, inthese conversations, a soundbite is rehearsed (‘I just don’t see Corbyn as a leader’), and we can see the way that mediarhetoric becomes woven into the demotic. But while there’s no real talking back to Rupert Murdoch, on the doorstepthere is sometimes the chance to contest his logic with some of our own.