Week-end Wrap – Political Economy – January 21, 2024
by Tony Wikrent
Global power shift
China Is the World’s Sole Manufacturing Superpower
Richard Baldwin [VoxEU, via Naked Capitalism 01-17-2024]
...The US is the world’s sole military superpower. It spends more on its military than the ten next highest spending countries combined. China is now the world’s sole manufacturing superpower. Its production exceeds that of the nine next largest manufacturers combined. This column uses the recently released 2023 update of the OECD TiVA database to paint an eight-chart portrait of China’s journey to superpower status and the asymmetric impact that its dominance has had on global supply chains….
When it comes to gross production, China’s share is three times the US’ share, six times Japan’s, and nine times Germany’s. Taiwan, Mexico, Russia, and Brazil now have higher gross output than the UK. Canada is further down the ranking, in 15th place….
China’s dominance is less stark in exports (Figure 3), though the rise is equally amazing. In 1995 China had just 3% of world manufacturing exports, By 2020, its share had risen to 20%. The corresponding fall in the G7 share was less dramatic than for its share of production….
Figure 4, left panel, shows that the US relies far more on Chinese manufacturing production than vice versa. 2 While shocking at first sight, this should not be unexpected. It is natural that a country with 11% of the world output buys more from a country that produces 35% than vice versa, but the numbers are astounding. China was more exposed to US inputs before 2002, but the US has had greater exposure since then. In 2020, the US was about three times more exposed to Chinese manufacturing production than vice versa….
Robust growth in 2023: China maintains top position in global shipbuilding sector for 14 years
[news.cgtn.com, via Naked Capitalism comments 01-17-2024]
In the past 12 months, China's shipbuilding output reached 42.32 million deadweight tonnes (dwt), a year-on-year increase of 11.8 percent, accounting for 50.2 percent of the world's total.
The new orders rose 56.4 percent year on year to 71.2 million dwt during the period, taking up 66.6 percent of the world's total.
By the end of December, the volume of orders on hand was 139.39 million dwt, up 32 percent year on year, accounting for 55 percent of the world's total.
In 2023, five Chinese shipbuilding enterprises ranked in the global top 10 in output, seven in top 10 for new order volume, and six for holding orders, said the MIIT.
The US, Israel Have Lost Battlefield Control – Houthis Have Attacked US Destroyer, Hit Greek-US Owned Bulker; Iran Has Hit US Base in Kurdish Capital, Erbil
John Helmer [via Naked Capitalism 01-17-2024]
Oligarchy
Republicans are just servants, the root of our danger in America is the oligarchs
Peter Olandt, January 18, 2024 [Daily Kos]
Trump may have tapped into a large well-spring of racist, ignorant, rage but he neither created it nor is he essential to it. Getting rid of Trump does not rid ourselves of the people who are ultimately behind the January 6th, 2021 insurrection... Both Trump and corporate media are tools of American oligarchs. The Murdochs, Kochs, and Crows of the world are the real power, menace, and conspirators out to destroy America.
From the comments: GRAPH older but still relevant view of the Koch brothers’ extensive influence operations, by Hello1814
[TW: I flag this because I believe it — being DailyKos — reflects the awakening in public consciousness of the problem of oligarchy, and the ever lasting fight of oligarchy versus republicanism.]
Predators and Prey: Subverting Liberal and Populist Institutions: How the rich destroy populist movements from the inside
Thomas Neuburger, January 17, 2024
[This is a very important article that lays bare the fact that the political divisions in USA are largely artificial constructions aimed at preserving the institutional and social power of the reactionary rich. The issue of abortion, for example, was seized upon by Paul Weyrich — a full six years after the Roe v. Wade decision — as an effective means of driving religious conservatives to the polls to vote for (anti)Republicans. Another example of reactionary wealth creating then promoting a radicalized right wing agenda is the Second Amendment “gun rights” issue. In May 1977, after the leadership of the National Rifle Association had decided to retreat from politics by NRA headquarters from Washington DC to Colorado, radicals from the Second Amendment Foundation and the Citizens Committee for the Right to Keep and Bear Arms seized control of the NRA at its annual meeting. This is now known as the “Revolt at Cincinnati.” These groups were funded by Adolph Coors Foundation, the Koch brothers, and Richard Mellon Scaife and included on its board Richard DeVos, Peter Grace, and Jesse Helms. The crucial fact of USA politics over the past half century is that the “overton window” has been deliberately shifted by a conservative movement that is not at all organically spontaneous or democratically based.]
...George W. Bush and Karl Rove engineered an institutional takeover of faith communities. Note the roles of Ralph Reed, head of the unironically named Christian Coalition, and Richard Land in the passage below….
Richard Land was president of the Ethics & Religious Liberty Commission (ERLC), the public policy arm of the Southern Baptist Convention from 1988 to 2013. Land, through the ERLC, controlled the political arm of the Southern Baptist Convention. He was simultaneously part of the Rove machine.
Subverting Liberal Churches
One more example, so you can see the process. If you’re old enough to have seen the 1960s battles for civil rights and all those other freedoms (sexual, feminist, and so on), you remember the great religious leaders that movement produced and attracted.
Martin Luther King Jr., for example, was a Baptist minister (a reason for the subversion described above) and the first President of the Southern Christian Leadership Conference (SCLC).
The brothers Daniel Berrigan, a Jesuit priest, and Philip Berrigan, a Josephite priest, were strong pro-Movement activists and often jailed.
As Frederick Clarkson writes of the Movement’s Protestant contingents:
For much of the 20th century, the mainline Protestant churches maintained a vigorous “social witness.” That is what these Protestants call their views on such matters as peace, civil rights and environmental justice. While there was certainly conservative opposition to the development of these views, and to the activities that grew out of them, the direction of mainline Protestantism was clear. The churches became powerful proponents of social change in the United States. They stood at the moral and political center of society with historic roots in the earliest days of the nation. Indeed, they epitomize the very idea and image of “church” for many Americans….
In retrospect, it seems inevitable that powerful external interests would organize and finance the conservative rump factions into strategic formations intended to divide and conquer—and diminish the capacity of churches to carry forward their idea of a just society in the United States—and the world.
When the strategic funders of the Right, such as Richard Mellon Scaife, got together to create the institutional infrastructure of the Right in the 1970s and 80s, they underwrote the founding of the IRD [Institute on Religion and Democracy] in 1980 ….
The goal of the IRD is clear: to infiltrate, to neutralize, to control. The process, if you’re interested, is called “Steeplejacking.” For a book on this subject, the publisher says this (emphasis added):
An insider account by two ministers on the front lines of mainstream religion’s longtime shadow war against the religious right, Steeplejacking reveals how conservative renewal groups, backed by a right-wing organization called the Institute on Religion and Democracy [IRD], use social wedge issues like homosexuality to infiltrate mainline churches and stir up dissent among members of the congregation, with the goal of taking over the leadership of the church, and ultimately, the denomination. The book unmasks the covert methods that renewal groups and the IRD use to spread their propaganda[.]
The Right-Wing Media Takeover Is Destroying America
Michael Tomasky. January 19, 2024 [The New Republic]
The purchase of The Baltimore Sun is further proof that conservative billionaires understand the power of media control. Why don’t their liberal counterparts get it? ….
Smith wasted no time in showing his cards during his first meeting with the staff Wednesday. He was asked about a comment he made to New York magazine back in 2018, when he said, “Print media is so left wing as to be meaningless dribble.” (“Dribble”? Let’s hope he won’t be on the copy desk.) Did he feel that way about the Sun specifically? “In many ways, yes,” Smith said, adding that he wants the paper to emulate the local Fox affiliate, which is owned … by Sinclair….
I’ve been in the trenches of this fight for many years. Back in the George W. Bush era, the late Rob Stein, a Democratic insider and good friend of mine, mapped for the first time the conservative infrastructure in a PowerPoint presentation that became such a hot ticket in Washington liberal circles that The New York Times Magazine did a story about it. He showed, from looking over conservative groups’ 990s (because they were mostly all nonprofits), how much was spent on policy development, how much on field operations, how much on youth training, and how much on media. I don’t remember the numbers, but the media figure was high....
How different would things be out there in America if, 15 or 20 years ago, some rich liberal or consortium of liberals had had the wisdom to make a massive investment in local news? There were efforts along these lines, and sometimes they came to something. But they were small. What if, instead of right-wing Sinclair, some liberal company backed by a group of billionaires had bought up local TV stations or radio stations or newspapers all across the country?
Again, we can’t know, but we know this much: Support for Democrats has shriveled in rural America to near nonexistence, such that it is now next to impossible to imagine Democrats being elected to public office at nearly any level in about two-thirds of the country. It’s a tragedy. And it happened for one main reason: Right-wing media took over in these places and convinced people who live in them that liberals are all God-hating superwoke snowflakes who are nevertheless also capable of destroying civilization, and our side didn’t fight it. At all.
Who is Dr. Frankenstein? – Or, what Professor Hayek and his friends have done to science
Yuri Lazebnik, 2018 [ORGANISMS. JOURNAL OF BIOLOGICAL SCIENCES]
Figure 4. Mighty oaks from little acorns grow. An outline of the connections between people, doctrines, texts, and organizations mentioned in the text. Only some connections are shown to keep the graph readable. The names of the Mont Pelerin Society members are rimmed in blue. The names of doctrines are sandwiched between blue lines; texts are indicated by the titles within white rectangles. mOCD stands for market obsessive compulsive disorder (see text), which is manifested as the malaise of science, education, industry, politics, and some other activities. Note that the depicted individuals can identify themselves with diverse political movements and philosophies, but share the belief that the best way to organize society is by considering all human activities as economic market transaction, and by assuming that the market as the highest authority on what is good and what is not. For example, Ayn Rand, who was born in the city where I grew up, was not fond of Hayek's ideas but both agreed on the superiority of a free market and the need for what I call neo-morals (see text).
[TW: At the bottom, right “Follow your calling” replaced by “Follow market signals.” Neo-liberalism is an assault on the moral foundations of a republic. A ‘calling” was the Christian idea that a person’s life vocation should be a way to serve God by serving all of humanity. Not by following self-interests alone.]
Inequality Inc. How corporate power divides our world and the need for a new era of public action
Rebecca Riddell et al. [OXFAM International, via Mike Norman Economics, January 17, 2024]
Since 2020, the richest five men in the world have doubled their fortunes. During the same period, almost five billion people globally have become poorer. Hardship and hunger are a daily reality for many people worldwide. At current rates, it will take 230 years to end poverty, but we could have our first trillionaire in 10 years.
This report shows how a huge concentration of global corporate and monopoly power is exacerbating inequality economy-wide. Seven out of ten of the world’s biggest corporates have either a billionaire CEO or a billionaire as their principal shareholder. Through squeezing workers, dodging tax, privatizing the state and spurring climate breakdown, corporations are driving inequality and acting in the service of delivering ever-greater wealth to their rich owners. To end extreme inequality, governments must radically redistribute the power of billionaires and corporations back to ordinary people. A more equal world is possible if governments effectively regulate and reimagine the private sector.
The carnage of mainstream neoliberal economics
Pondering Neoliberalism
Peter Radford [via Mike Norman Economics, January 17, 2024]
But what about the resource side? Where did all this money go? Why, for example, can the Lebanese Armed Forces, not the wealthiest military in the world, have a dozen Brigades deployed on operations, as well as numerous independent regiments, whereas the British, with their massively greater resources and a larger Army, would be pushed to deploy two? And in this, the British are the norm, rather than the exception.
The paradox has no one single cause, but is probably due more than anything else to the move since the 1980s towards managing defence as budgets, rather than programmes. Let me expand on that slightly gnomic statement. In the private sector, it is accepted that companies can and will manipulate their financial statements to inflate their profits and minimise their losses where possible. It’s also accepted that there is a distinction between the financial picture (a company makes increased profits by selling off assets) and the reality (it is doing so in a desperate attempt to avoid going out of business.) In a world where only profits and the share price matter, it is at least a coherent strategy for the short term. If you think about it, it’s also a ridiculous strategy for the public sector, since what matters, and what the voters want, is output for the long term. But from the 1980s onwards, beginning in Britain and spreading rapidly, the idea of managing the defence programme in terms of budgets, and the “efficient” spending of money took over. This meant, in effect, abandoning the previous pattern of managing programmes for capability output, and managing them instead according to budgetary limits. And as time passed, the poisonous theories of management consultants about “efficiency” began to seep into the public sectors of a number of countries.…
Saving Bidenomics: Biden’s industrial policy program promises a massive shift from decades of neoliberal orthodoxy. Can it deliver inclusive gains in time?
[Boston Review, via The Big Picture 01-13-2024]
At a June 2023 assembly of business and community leaders in Chicago, President Biden outlined what has become a central theme of his reelection campaign. “Bidenomics,” the President declared, embracing the moniker for his economic policy agenda, represents a “fundamental break from the economic theory that has failed” for decades. The Reaganite commitment to unfettered market capitalism and an anemic public sector never delivered on the promise of equitable prosperity. “It failed the middle class,” he continued. “It failed America. It blew up the deficit. It increased inequity. And it weakened our infrastructure. It stripped the dignity, pride, and hope out of communities one after another.”
Senior Biden administration leaders have self-consciously styled Biden’s approach as a move away from the neoliberal presumptions of the Washington Consensus. This approach signals a major shift from decades of economic policy, with massive new public investment in infrastructure and green energy, a commitment to worker empowerment, and policies to promote competition and limit unhealthy concentrations of power in the market. It also revives the tradition of “industrial policy,” the basic premise that governments can and ought to restructure markets to better advance public goals and values.
How does the Fed control interest rates?
Kevin Drum [via The Big Picture 01-19-2024]
The Fed no longer relies on open market operations to influence interest rates. Instead, it just changes the rate it pays banks on their reserves.
Boeing Supplier Ignored Warnings Of “Excessive Amount Of Defects,” Former Employees Allege
David Sirota, et al., January 8, 2024 [The Lever]
Less than a month before a catastrophic aircraft failure prompted the grounding of more than 150 of Boeing’s commercial aircraft, documents were filed in federal court alleging that former employees at the company’s subcontractor repeatedly warned corporate officials about safety problems and were told to falsify records.
According to the court documents, the employee told a colleague that “he believed it was just a matter of time until a major defect escaped to a customer.”
The allegations come from a federal securities lawsuit accusing Spirit of deliberately covering up systematic quality control problems, encouraging workers to undercount defects, and retaliating against those who raised safety concerns. Read the full complaint here….
Spirit was established in 2005 as a spinoff company from Boeing. The publicly traded firm remains heavily reliant on Boeing…. Spirit and Boeing are closely intertwined. Spirit’s new CEO Patrick Shanahan was a Trump administration Pentagon official who previously worked at Boeing for more than 30 years, serving as the company’s VP of various programs, including supply chain and operations….
Profits And Payouts Over Passenger Safety
[The Lever, January 12, 2024]
While the companies responsible for the door plug that blew out of a plane in mid-air last week were cutting corners, outsourcing manufacturing, laying off employees, and working to evade expensive safety upgrades, they paid their top executives $817 million and showered Wall Street investors with $68 billion in dividends and stock buybacks over the past decade.
How Boeing Ruined the JetBlue-Spirit Merger
David Dayen, January 19, 2024 [The American Prospect]
The judge’s ruling in the case revealed all the deficiencies in the manufacturing and distribution of commercial air travel.
This week, the sixth-largest and seventh-largest U.S. airlines, JetBlue and Spirit, were denied the opportunity to merge. Stripped from context, it doesn’t sound like an earth-shattering development. But the ruling by Judge William Young, a Reagan appointee, signals the end of four decades of unstoppable waves of airline consolidation that have damaged passengers, workers, smaller communities, and commerce. More broadly, it’s another victory for the Biden Justice Department’s aggressive antitrust enforcers, who are drawing the line at additional concentration….
But if Spirit was subsumed into JetBlue’s fleet, it would likely not be replaced by other ultra-low-cost carriers (ULCCs) like Frontier or Allegiant, the judge concluded. It’s worth going through why he concluded that.
Airlines today simply cannot grow, because of a number of factors. There are shortages of both air traffic controllers and pilots, in large part because of voluntary retirements and buyouts during the COVID pandemic. But the bigger issue is that airlines can’t get their hands on any planes. Part of that is a supply chain issue, and part of it is a miscalculation of how many flights would be needed for increased post-pandemic demand. But mainly it’s because they’re all trying to source from one supplier….
The Airbus Advantage: Why Europe’s mixed economy produces safer planes than America’s financialized capitalism
Harold Meyerson, January 18, 2024 [The American Prospect]
...Boeing continually objected to what it said were Spirit’s high costs and inability to meet deadlines. As the workers on the shop floor and their union repeatedly noted, this led to rushed production and deficient oversight. Workers—members of the International Association of Machinists—had “great quality and safety concerns,” one union representative wrote to union leaders, but their concerns were routinely ignored by senior management, the Journal reported.
So how are work practices at Airbus different from those at Boeing? I’m not arguing that Airbus provides a panacea for 21st-century production; a chunk of their own production, for instance, is outsourced as well. But consider, for starters, who actually owns the two companies. Airbus’s four largest shareholders, in order, are the government of France, the government of Germany, the Capital Research and Management Company, and the government of Spain. Boeing’s four largest shareholders, in order, are The Vanguard Group, Vanguard Group subfiler, Newport Trust Company, and State Street Corporation (a bank and asset manager). In other words, Airbus’s largest shareholders are mainly politically accountable governments that must pay heed to such public concerns as air safety; Boeing’s are entirely investors in business for profits….
By the way, just how outsourced is Boeing production? Only yesterday, it was revealed the door plug that blew out of the Alaska Airlines plane wasn’t actually produced in Wichita. It was produced in Malaysia, where I very much doubt that workers’ concerns about speed of production and quality oversight have much impact on their managers. More significantly, the fact that the Malaysian production of the door plug didn’t come to light until yesterday—12 days after the blowout—suggests just how profoundly outsourcing can obscure the public visibility required for corporate accountability.
Dollar General Overcharges ‘Hundreds of Thousands’ of Customers, Lawsuit Alleges
Ramenda Cyrus, January 19, 2024 [The American Prospect]
The prices paid at the register do not match the price tags, according to a class action lawsuit working through the courts….
Dann told the Prospect that his firm has collected “thousands of pages” of public records that show the violations. Part of the case has to do with “weights and measures standards,” which are designed to prevent stores from undercutting their customers by ensuring that products sold are the proper size and weight claimed on the packaging. As Dann told the Prospect, Dollar General regularly fails state and federal weights and measures tests, at an average of 20 percent….
In September 2023, Missouri attorney general Andrew Bailey initiated a different lawsuit against Dollar General for pricing scams. As KOAM News reported, a joint investigation between the attorney general’s office and the Missouri Department of Agriculture Weights and Measures Division found that more than half of the inspected stores failed price accuracy checks, with discrepancies up to “as much as $6.50 per item.”
They’re not capitalists — they’re predatory criminals
The DOJ’s Incestuous Relationship with Jamie Dimon Is Captured in a Graphic from an Historic Lawsuit
Pam Martens and Russ Martens, January 18, 2024 [Wall Street on Parade] [Wall Street on Parade]
Everything that’s Dangerous about U.S. Banks Today in One Highly Readable Book
Pam Martens and Russ Martens, January 17, 2024 [Wall Street on Parade] [Wall Street on Parade]
Three Branches of U.S. Government Have Kept the Secrets of Jeffrey Epstein’s Money Man, Leslie Wexner, Locked Up Tight
Pam Martens and Russ Martens, January 12, 2024 [Wall Street on Parade] [Wall Street on Parade]
Information age dystopia
The World Depends on 60-Year-Old Code No One Knows Anymore
[PC Magazine, via The Big Picture 01-07-2024]
An alarmingly large portion of the world’s business and finance systems run on COBOL, and only a small community of programmers know it. IBM thinks Watson can help, but it’s not guaranteed.
Climate and environmental crises
2023’s billion-dollar disasters list shattered the US record for weather and climate disasters amid Earth’s hottest year on record
[The Conversation, via The Big Picture 01-14-2024]
The U.S. set an unwelcome record for weather and climate disasters in 2023, with 28 disasters that exceeded more than US$1 billion in damage each. While it wasn’t the most expensive year overall – the costliest years included multiple hurricane strikes – it had the highest number of billion-dollar storms, floods, droughts and fires of any year since counting began in 1980, with six more than any other year, accounting for inflation.
Buying Home and Auto Insurance Is Becoming Impossible
[Wall Street Journal, via The Big Picture 01-14-2024]
Huge losses from national disasters prompt industry to jack up prices and pull back from some markets; ‘worst possible scenario’ for consumers.
Democrats' political malpractice
It’s Time for Democrats to Make Some Enemies
Jason Linkins, January 20, 2024 [The New Republic]
...The New Republic’s editor, Michael Tomasky, in setting the table for this campaign season, has repeatedly stressed the need to name some enemies and pick some broad public fights with these foes… This can’t be the stuff of wonks and white papers—this is about emotions and morality, a gut punch to the bad guys….
...a slew of corporate enemies abound: junk-fee crooks; private equity goons; the gangsters of the pharmaceutical industry; banks plucking high overdraft fees out of the pockets of people living paycheck to paycheck; a small universe of price gougers, wage thieves, and consumer predators….
The fact that the Democrats are of two minds on the matter is emblematic of the asymmetry of America’s political warfare. Republicans can be counted on to speak with one voice, picking topics on a daily basis on which to do a Two Minutes Hate, keeping the right-wing media Wurlitzer filled with fresh sheet music to call the next dance. Democrats can’t match the GOP in terms of propaganda infrastructure, but they can marshal far more relevant and substantive topics of conflict than the Republican Party’s typical culture-war fare.…
Collapse of independent news media
How Fighting Monopoly Can Save Journalism
Phillip Longman, January 16, 2024 [Washington Monthly]
The collapse of the news industry is not an inevitable consequence of technology or market forces. It’s the result of policy mistakes over the past 40 years that the Biden administration is already taking measures to fix….
...it is a direct result of specific, boneheaded policy choices that politicians in both parties made over the past 40 years. By repealing or failing to enforce basic market rules that had long contained concentrated corporate power, policy makers enabled the emergence of a new kind of monopoly that engages in a broad range of deeply anticompetitive business practices. These include, most significantly, the cornering of advertising markets, which historically provided the primary means of financing journalism. This is the colossal policy failure that has effectively destroyed the economic foundations of a free press….
This tradition in America’s political economy found early expression in the Postal Act of 1792. Reflecting the founding generation’s belief that a democratic republic required an informed citizenry, the law stated that the largest and most crucial communications network of the era had to treat all users equally by offering the same prices and terms of service to everyone. It was the same principle that in much later debates over the governance of the internet would be known as “net neutrality.”….
Americans once again deployed extensive government interventions after monopolists gained control of a new communications network that had become essential to journalism by the mid-19th century. The dominant telegraph company of the day, Western Union, which fell under the control of the financier Jay Gould, and the dominant newswire provider, the Associated Press, became so intertwined that they were called “a double-headed monopoly.” ...
To reverse such concentrations of control over the information environment, Americans took myriad measures. As with the U.S. Postal Service, they enacted regulations that required, for example, that telegraph and telephone companies operate as utilities providing every user, or class of users, with the same prices and terms of service. Similarly, while granted an exemption from liability for the messages people sent over their wires, telecommunications companies were not allowed to pick and choose who got to send or receive what content. Americans also used antitrust enforcement and utility regulations to prohibit such companies from vertically integrating into adjacent lines of businesses, such as advertising and publishing. Finally, by the end of the 19th century, privacy laws in every state prohibited them from disclosing or otherwise misusing the personal data generated by their users….
New York City Is a Lot Safer Than Small-Town America
[Bloomberg, via The Big Picture 01-17-2024]
Rising homicide rates don’t tell the whole story. When you dig deeper into data on deaths, you’ll find the more urban your surroundings, the less danger you face.
‘Plain historical falsehoods’: How amicus briefs bolstered Supreme Court conservatives
[Politico, via The Big Picture 01-07-2024]
A POLITICO review indicates most conservative briefs in high-profile cases have links to a small cadre of activists aligned with Leonard Leo.
…...
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Public Christian schools? Leonard Leo’s allies advance a new cause A tight-knit group of activists tied to Leo’s nonprofit network are rallying around an Oklahoma effort to create a public Catholic school. (Politico, via The Big Picture 01-07-2024]
Home-schoolers dismantled state oversight. Now they fear pushback. Some states are considering new regulations amid efforts by school-choice advocates to give home-school families taxpayer funding. (Washington Post, via The Big Picture 01-07-2024]
Inside Saudi Arabia’s $3 Trillion Plan to Move Past Oil: The world’s largest oil exporter has a plan to transform its economy into a high-tech hub for global business. How investors can ride along. (Barron’s, via The Big Picture 01-06-2024]