Week-end Wrap – Political Economy – February 27, 2022
by Tony Wikrent
Ukraine — Russia
“Shipping braces for impact as Russia-Ukraine crisis intensifies”
[Freight Waves, via Naked Capitalism Water Cooler 2-24-2022]
“Military action could curtail ship movements in the Black Sea, a key transit point for dry bulk exports. In fact, Russian military exercises have already done so. VesselsValue analyzed ship-movement data and found that Russian naval maneuvers ‘visibly impacted traffic.; Russian and Ukrainian waters of the Black Sea and Sea of Azov were designated ‘listed areas’ by the insurance industry’s War Risk Council on Feb. 15, meaning higher war risk insurance premiums. According to BRS [brokerage], the Black Sea area was the world’s second-largest grain-exporting region in 2021, with 111.2 million tons of cargo; Russia and Ukraine accounted for 30% of global wheat exports, and Ukraine accounted for 16% of global corn exports. Ukrainian corn could be first in the line of fire. BRS noted that by the end of January, Ukraine had already exported 71% of wheat predicted for the current marketing period but just 32% of its predicted corn exports. Agribulk exports face risks on land as well, not just at sea. ‘An attack or land grab by Russia could sharply reduce grain production as farmers flee the conflict, agricultural infrastructure and equipment are damaged, and the region’s economy is paralyzed,’ said BRS. “A substantial part of Ukraine’s most productive agricultural land is in the east and therefore vulnerable to any potential Russian attack.’ According to Braemar ACM Shipbroking, this landside risk could affect the coming wheat marketing season. ‘The main grain-producing regions are notably located along the Russian border,’ said Braemar, which pointed out that the military threat coincides with the beginning of the spring wheat planting period.”
Putin Looks to Win Both the War & the Peace
Ian Welsh, February 25, 2022
The sanctions which are about to hit Russia are serious, but if they don’t include wheat, aluminum, energy, or maritime shipping or hit oligarchs by kicking them out of London and other European capitals, they aren’t really going to matter.
Putin has made fools of the Western elite class again. Yes, the intelligence was right, but it didn’t matter. He’s figured exactly out what the West will and won’t do. He calculated right, they calculated wrong….
Let’s be clear, China will never let the West choke out Russia because China knows that the US (and increasingly the EU) considers China the real enemy — once Russia is taken out, China’s next. If Russia goes down, China no longer has a secure back, or a secure source of oil, minerals, or food. With Russia, China has a good chance of winning the oncoming Cold War. Without it, China loses that war.
War in Ukraine: How we got here — and what may come next
[Grid, via The Big Picture 2-25]
Grid is Matthew Yglesias’ new platform.
The History of Economic Sanctions as a Tool of War
[Yale University Press Blog , via Naked Capitalism 2-25-2022]
Biden’s Ukraine Plans Face Wall Street Roadblock
David Sirota and Julia Rock [The Daily Poster, February 24, 2022]
...Biden faces a significant obstacle: corporate lobbyists’ success in shrouding the American finance industry in secrecy, which makes it far easier for Russian oligarchs and their business empires to evade economic sanctions.
The situation spotlights how America’s money-drenched political process can create national security challenges. In effect, Wall Street’s overwhelming power to shape U.S. regulatory policy — fueled by massive campaign contributions and an army of lobbyists — may defang some of the White House’s most potent economic weapons against an international adversary.
More than two decades ago, federal investigators warned Congress of potentially illicit streams of cash flowing from Russia into the opaque American financial system — and leaks of the so-called Panama Papers and Pandora Papers over the past few years suggest those flows have only increased, as have oligarchs’ attempts to evade sanctions.
Strategic Political Economy
The Mystery of the Declining U.S. Birth Rate
[EconoFact, via The Big Picture 2-21-2022]
The U.S. birth rate has fallen by 20% since 2007. This decline cannot be explained by demographic, economic, or policy changes.
Chris Hedge - What Fuels Right-Wing EXTREMISM?
….in Weimar the liberals the Social Democrats and [president Friedrich] Ebert are in charge. The nazis are polling in the single digits. [Then] you have the 1929 crash, and Ebert and the Social Democrats, instead of responding to the distress of the German people, seek to placate the international banking system [by] impos[ing] draconian forms of austerity including abolishing unemployment insurance… after the Reichstag fire the Social Democrats are terrified that the Nazis are going to lock them up and they all flee to Switzerland…. In Leipzig 100,000 people were in the streets protesting martial law….
I think we underestimate the legitimate rage on the part of a working class that was deeply betrayed, in particular by Bill Clinton, and that the rage is worse towards the Democrats because they pretended that they were watching out
for their interests.
“How Canada’s Freedom Convoy could be a wake-up call for the Teamsters”
[The Week, via Naked Capitalism Water Cooler 2-23-2022]
“The trucker convoy protests have little to do with traditional labor issues, and lots of Teamsters view them with disdain; many of those participating in the protests are nonunion owner-operators. The Ottawa convoy’s target is not the boss, but an elected federal government with an incentive to project strength by rejecting demands of a group that are damaging the economy. The disruption caused by the trucker protests was not sufficient to force the Canadian government into serious concessions, and they’re even less likely to do so in D.C. The Teamsters facing off against UPS, on the other hand, have better odds. The union is unlikely to officially support blockades due to potential liability, but legal mass pickets and community campaigns are likely, and it is possible to imagine some truckers (indeed, possibly some of the same truckers — there are, Sasha notes, labor unionists of all races, genders, and political orientations) taking matters into their own hands and shutting down access to major shipping corridors. With the union withdrawing its labor, militant disruptions, and public sympathy, the company could be forced into major concessions. Anyone hoping that the trucker convoys will turn into a durable expression of working-class power is deluding themselves, whether they be naive leftists who see a revolution around every corner, or conservative populists offering ludicrous pronouncements about the Republican Party being a “workers’ party.” But history sometimes takes strange courses, and it is possible to imagine that this display of economic disruption by anti-mandate truckers in Canada and the United States could be remembered as a wake-up call for labor.”
I think what Lambert Strether adds is more important: “In one of life’s little ironies, it’s the owner-operators who are leveraging control over the means of production for political ends. And if the Teamster leadership — and Big Labor generally — had an ounce of solidarity in their veins, they would have used their muscle on behalf of, say, PPE and paid time off for nurses (also unionized). In the face of a debacle like that, the upcoming UPS contract negotiations seem rather beside the point.”
How the Left Should Think About Inflation
James Galbraith [The Nation, via Naked Capitalism 2-21-2022]
In stating recently that “inflation is the Fed’s job,” President Biden gave compact expression to three radically false and politically suicidal propositions: 1. The past year’s price increases are part of a process that must be suppressed. 2. Anti-inflation policies are the preserve of the central bank. 3. The Federal Reserve can suppress inflation without also wrecking the economy, the president’s own program, his party, and his political prospects.
Let me offer three counter-propositions: 1. There is no compelling reason to raise interest rates, now or later. 2. Nevertheless, future price pressures are inevitable. 3. A progressive anti-inflation strategy is possible and necessary—one that supports jobs and living standards and doesn’t involve the Federal Reserve.
Why have prices risen this year? First of all, because world oil prices jumped in the spring of 2021, while supply chain troubles hit new car production and drove up used-car prices. Those were the big items.
The CIA and the New Dialect of Power
[American Affairs, via The Big Picture 2-26-2022]
Previous generations of CIA officers spoke an older dialect of power—the genteel, patrician, transatlantic accent of Franklin Delano Roosevelt, Jackie Onassis, Gore Vidal, and Katherine Hepburn. Like the new dialect of power, the transatlantic accent was used to distinguish the speaker from the masses. It was taught in boarding schools modeled on the British system, as the accent itself was modeled after the English. Many of the CIA’s initial recruits were brought up in such boarding schools, where, as Vicent Bevins points out, they inherited the upper-class imperial values of the British. [Emphasis by TW]
The British Seeds of American Decline
Michael Lind, July 31, 2012 [The Globalist]
And, a piece I wrote in March 2019:
Economics as Cultural Warfare: The Case of Adam Smith
Adam Smith’s ideas placed no value on industry, and it is therefore no real surprise that in those countries where Smith’s ideas came to dominate—such as USA and United Kingdom in the 1980s—entire national economies were deindustrialized, the working class destroyed, and the financial systems allowed to be reshaped and dominated by waves of dirty money, transforming them into crimonegnic environments.
Adam Smith was the voice of the British establishment and the newly minted British commercial oligarchy which vehemently opposed the idea that the United States should attempt to be anything other than producers and suppliers of basic agricultural commodities. According to Smith and his fellow apologists for British imperialism, any attempt to foster the growth of manufacturing industries and thus establish America’s economic independence from the powers and princes of Europe, was “unnatural”: a violation of the established order of Nature—and therefore a sinful exercise in economic inefficiency and waste of resources.
The carnage of mainstream neoliberal economics
Corporate pricing is boosting inflation — but we’re still buying
Vox, via The Big Picture 2-21-2022]
Corporations pass more than increased costs on to consumers.
“The Dirty Secret of Inflation: Corporations Are Jacking Up Prices and Profits”
John Nichols [The Nation, via Naked Capitalism Water Cooler 2-22-2022]
“History makes it clear that midterm elections are tough for the party that controls the White House and Congress. Voters take out their frustrations on those who are in positions of power. And that is doubly true in moments of economic turbulence, as Jimmy Carter and the Democrats learned in 1978, as Ronald Reagan and the Republicans learned in 1986, as Barack Obama and the Democrats learned in 2010. There have been only a few instances of a president’s seeing his party’s position in Congress improve in a midterm election. Yet, remarkably, one such moment did occur during the Great Depression. In the midterm election year of 1934, President Franklin Roosevelt put the blame for hard times on self-serving speculators, greedy bankers, and profiteering CEOs. Said FDR, “The fault lies with Wall Street.” Instead of letting corporate spin form the narrative of the Great Depression and the New Deal response to it, Roosevelt used his 1934 State of the Union address to speak “of those individuals who have evaded the spirit and purpose of our tax laws, of those high officials of banks or corporations who have grown rich at the expense of their stockholders or the public, of those reckless speculators with their own or other people’s money whose operations have injured the values of the farmers’ crops and the savings of the poor.” Throughout 1934, FDR never let up when it came to calling out speculators, monopolists, and price gougers. He promised that New Deal Democrats with increased congressional majorities would hold the bad actors to account. Voters approved. In November, they gave Democrats nine more seats in the House and nine more in the Senate, where the party achieved a rare supermajority.
To Fix the Supply Chain Mess, Take on Wall Street
[Washington Monthly, via The Big Picture 2-26-2022]
Financiers bent on short-term profits are largely responsible for America’s shortage of semiconductors and other key materials. Before we offer them more subsidies, how about demanding some accountability?
How big technology systems are slowing innovation
[MIT Technology Review, via Naked Capitalism 2-20-2022]
Nuance began in 1994 as a spinoff from SRI, a Stanford laboratory that had developed speech-recognition technology for the US government. ScanSoft was a Xerox spinoff. Before the two merged in 2005, speech recognition was constrained by computer processing power. Systems recognized only limited vocabularies, though they nevertheless proved useful in narrow commercial applications such as telephone customer support centers and transcription of medical records.
By the late 2000s, things had changed. As computers became more powerful, Nuance was able to develop a major innovation: “large vocabulary continuous speech recognition.” Now you could say anything about any topic, and the technology could accurately transcribe it in real time. Nuance used this technology in an app called Dragon Dictation, which Apple featured when it introduced the iPhone 3GS at its 2009 Worldwide Developers Conference. Once Apple validated the product, Samsung and all the other phone manufacturers wanted it.
More than money: The cost of monopolies in America
[WBUR, via Naked Capitalism 2-20-2022]
"More than money" is a week-long exploration of the hidden power of monopolies in the U.S., and the evolution of antitrust law over the past 200 years. The On Point series considers whether the country's view on monopolies — and its influence on democracy — is poised for a major change.
Wall Street Is Buying Starter Homes to Quietly Become America’s Landlord
[BusinessWeek, via The Big Picture 2-21-2022]
Private equity money is pouring into the Phoenix real estate market, turning first-time homebuyers into renters.
Investors bought a record share of homes in 2021. See where.
[Washington Post, via The Big Picture 2-21-2022]
An analysis of 40 major metro areas revealed unequal levels of investor activity, with southern cities and Black neighborhoods disproportionately affected.
Is There a Way Out of America’s Impossible Housing Mess?
[Slate, via The Big Picture 2-23-2022]
We have such a complicated system on both the housing finance side and the insurance side that up ’til now, nobody has really absorbed all of the losses. So if a house gets destroyed by a hurricane, the homeowner bears some of the losses, but the mortgage lender probably doesn’t even hold the mortgage on the books. So it’s the investor in the mortgage-backed security who will bear the loss. And for them, that’s a tiny part of their overall portfolio. They’re backed by the federal government- sponsored enterprises, and then you’ve got public insurance and private insurance. So as long as nobody bears most of the financial risk from climate, nobody really has an incentive to make better decisions.
Health Care Crisis
The Government Just Admitted An Inconvenient Truth
David Sirota and Aditi Ramswami [The Daily Poster, February 7, 2022]
Every now and then, federal officials admit some truths that are inconvenient to the corporations that own the government — and this latest admission is pretty explicit: Scrapping corporate health care and creating a government-sponsored medical system would boost the economy, help workers, and increase longevity.
Those are just some of the findings from the Republican-led Congressional Budget Office (CBO) in a new report that implicitly tells lawmakers just how the existing corporate-run health care system is immiserating millions of Americans — and how a Medicare for All-style system could quickly fix the catastrophe.
They're not capitalists - they're a criminal predatory class
Revealed: Credit Suisse leak unmasks criminals, fraudsters and corrupt politicians
[Guardian, via The Big Picture 2-26-2022]
Massive leak reveals secret owners of £80bn held in Swiss bank Whistleblower leaked bank’s data to expose ‘immoral’ secrecy laws Clients included human trafficker and billionaire who ordered girlfriend’s murder Vatican-owned account used to spend €350m in allegedly fraudulent investment Scandal-hit Credit Suisse rejects allegations it may be ‘rogue bank’
[Twitter, via Naked Capitalism 2-22-2022]
The Statement of the Source
[Süddeutsche Zeitung, via Naked Capitalism 2-21-2022]
The Suisse Secrets data were leaked anonymously to Süddeutsche Zeitung through a secure digital mailbox more than a year ago….
After reviewing the information, Süddeutsche Zeitung decided to share and collaboratively analyze the data with the Organized Crime and Corruption Reporting Project (OCCRP) and dozens of media houses around the world - including the UK's The Guardian, The New York Times and Le Monde in France. Süddeutsche Zeitung documents an excerpt the source's statement, which included the headline "why I did it":
"I believe that Swiss banking secrecy laws are immoral. The pretext of protecting financial privacy is merely a fig leaf covering the shameful role of Swiss banks as collaborators of tax evaders….”
[Organised Crime and Corruption Reporting Project, via Naked Capitalism 2-21-2022]
What is the Suisse secrets leak and why are we publishing it?
[Guardian, via Naked Capitalism 2-21-2022]
Restoring balance to the economy
How Starbucks Workers Turned the Tables On Union Busters
[Truthout, via Naked Capitalism 2-21-2022]
“How We Turned the Tables On Starbucks Union-Busters”
[Labor Notes, via Naked Capitalism Water Cooler 2-21-2022]
“Starbucks is spending millions upon millions of dollars to hire a huge law firm to train its managers to become experts in union-busting. You’d think they’d be better at it. Every store that files goes through the same basic steps of union-busting. The upside of this is that Starbucks workers can see what’s coming, and get creative. Our store prepared for the meeting not only by communicating with each other, but also by holding a Zoom meeting with baristas from other cities who’d already gone through the same experience. They walked us through what to expect and what kinds of things had worked best for them in throwing the union-busters off their game. So when we sat down for our meetings with our Store Manager, District Manager, and Regional Manager, we did so in solidarity. Our manager started off the meeting. This woman had spent a good part of the last election cycle talking about her left-leaning politics. She leads the Starbucks ‘Womens’ Alliance Network,’ a group designed to empower female Starbucks employees. She started our meeting by looking us all in the eyes and saying, ‘I don’t think you need a union.’ Over the next few hours they tried various tactics to try to sow doubt among us. They tried one of the arguments they’ve used frequently, which is that with a union we won’t be able to have baristas from other stores cover shifts at our store. In response, two people pointed to a New Jersey law that specifies that non-union workers can work in union settings. Our Regional Manager kindly thought of those workers and wondered, ‘How would that affect their experience? How would they feel working in an environment where their salary is different?’ One worker responded, ‘Well, I’d think that would just spark interest in them unionizing their store too.’ Clearly these managers were operating from a basic script; when we veered away from it, they unskillfully tried to return to it.” • Script-jamming. Driven by Zoom meetings. I hate to use the word “innovation”….
[Twitter, via Naked Capitalism Water Cooler 2-24-2022]
The Defeat of Progressive Movements in the Global South Made US Hegemony Possible
[Jacobin, via Mike Norman Economics 2-21-2022]
...for a time, the “lessons” of Vietnam appeared to provide opportunities for progressive forces to dismantle, or at least trim down, the US national security state and undermine the assumptions of American exceptionalism that undergirded it. Even more significantly, it seemed to many in the Global South that America’s sins in Indochina might allow even more far-reaching reforms, fundamentally readjusting a global economic system structured to keep much of the “Third World” in poverty.
Given that no such era of accounting has truly followed the wars in Iraq and Afghanistan, this earlier period, running roughly from the late 1960s to the early 1980s, looks even more remarkable now. Understanding why it came to an end, and in what way, is critical to understanding the present.
Climate and environmental crises
Climate change is warping our fresh water cycle – and much faster than we thought
[The Conversation, via Naked Capitalism 2-24-2022]
What It’ll Take to Get Electric Planes off the Ground
[Wired, via The Big Picture 2-24-2022]
The lithium-ion battery is good for moving cars short distances, but aviation requires longer-lasting power. Maybe we need to try other elements.
How the IBM 7094 Gave NASA and the Air Force Computing Superiority in the 1960s
[FedTech, via The Big Picture 2-22-2022]
The early mainframe model, powerful in its day, helped NASA control spacecraft for the Gemini and Apollo programs, and the Air Force used it for its Ballistic Missile Early Warning System.
Tesla Now Runs the Most Productive Auto Factory in America
[Bloomberg, via The Big Picture 2-21-2022]
Elon Musk’s California plant cranked out more cars than 70 competing facilities in North America. His next factories are even bigger….
Last year Tesla’s factory in Fremont, California, produced an average of 8,550 cars a week. That’s more than Toyota Motor Corp.’s juggernaut in Georgetown, Kentucky (8,427 cars a week), BMW AG’s Spartanburg hub in South Carolina (8,343) or Ford Motor Co.’s iconic truck plant in Dearborn, Michigan (5,564), according to a Bloomberg analysis of production data from more than 70 manufacturing facilities.
Not supposed to have world leading industry in socialist California, according to conservative / libertarian doctrinaires. I hope and expect Musk will come to regret his decision to build his massive new Tesla assembly plant in increasingly reactionary Texas.
The Money Printing Press That Is Chipmaker TSMC
[Next Platform, via The Big Picture 2-22-2022]
TSMC is itself a money making machine. If you double its capital expenses over three years it doubles its revenues and profits over five years.
Conservative / Libertarian Drive to Civil War
Erik Prince and an Army of Spies Keep Meddling in US Politics
[Jacobin, via Naked Capitalism 2-20-2022]
One Dead, Five Injured From Shooting at Black Lives Matter March
[Portland Mercury, via Naked Capitalism 2-21-2022]
In 1871, Congress Crafted a Law to Break the Klan. Today, It’s Targeting Trump.
Pema Levy [Mother Jones 2-25-2022]
...The Klan Act was Congress’ response to extreme political violence in the South, where former Confederates were bent on destroying the Republican Party and maintaining the antebellum racial hierarchy that Reconstruction sought to dismantle….
The law also granted the president the authority—which expired after one year—to temporarily declare martial law and suspend habeas corpus. In October 1871, Grant used this provision to send troops into South Carolina where, as Army Major Lewis Merrill had reported, Klan rule had created a “carnival of crime not paralleled in the history of any civilized community.” Meanwhile, Grant’s attorney general, Amos Akerman, used the new law to prosecute the Klan across the South. “By 1872, the federal government’s evident willingness to bring its legal and coercive authority to bear had broken the Klan’s back and produced a dramatic decline in violence,” Foner wrote. “So ended the Reconstruction career of the Ku Klux Klan.”….
The Klan Act seems to outlaw kinds of political violence pushed by Trump and carried out by his supporters, from intimidating voters and those campaigning for office to attacking federal officers performing their duties—including during the Capitol riot. Primus, who co-authored a law review article before the attack arguing that the act could play a role targeting modern-day election interference, now says that “the law they wrote covers the January 6 cases pretty well.”
“The January 6 cases are about trying to get legal relief against a set of people who used force to interfere with the orderly processes of federal governance—which is what the Klan Act is all about,” he says.
The (Anti)Federalist Society Infestation of the Courts
Amy Coney Barrett’s Long Game
[New Yorker, via Naked Capitalism 2-20-2022]
[Barrett article on Outline]
WC 2-22 podcasts at end