Week-end Wrap – Political Economy – July 9, 2023
by Tony Wikrent
Climate and environmental crises
World Registers Hottest Day Ever Recorded on July 3
[Reuters, via Naked Capitalism 7-5-2023]
6 southern Colorado counties, facing drought and thirsty neighbors, move to block water exports
[Colorado Sun, via Naked Capitalism 7-4-2023]
[Twitter, via Naked Capitalism 7-5-2023]
Global power shift
China Restricts Exports of Two Metals Used in High-Performance Chips
[Wall Street Journal, via Naked Capitalism 7-5-2023]
[Twitter, via Naked Capitalism 7-5-2023]
Peak China, a declining USA and the future of Africa
[SIPRI, via Naked Capitalism 7-7-2023]
Map of railroads in Africa built by China
Indonesia’s mineral export bans face hot global fire
[Asia Times, via Naked Capitalism 7-6-2023]
JAKARTA – Indonesia is under rising fire at the World Trade Organization and by the International Monetary Fund (IMF) for the government’s seemingly haphazard policy of banning mineral ore exports, a market intervention Jakarta insists is just and necessary to maximize its economic and industrial growth.
In a sharply worded statement accompanying its 2022 country report, the IMF called for Indonesia to phase out the restrictions and not extend them to other commodities. “The increasing use of trade measures and industrial policies may destabilize the multilateral trade system,” the IMF said.
Tax Havens Obscured at Least $1.4 Trillion of Foreign Investment in China
[Bloomberg, via Naked Capitalism 7-4-2023]
Eye-popping chart. Looks like over a third came from the Cayman Islands, population 68,136.
Finance, power, integration: The SCO welcomes a new 'Global Globe'
Pepe Escobar [The Cradle, via Mike Norman Economics, July 7, 2023]
Health care crisis
‘Public health has lost the war’: States legalize raw milk, despite public health warnings
[USA Today, via Naked Capitalism 7-4-2023]
Got COVID from a loved one who was at work? Their employer owes you nothing, California court rules
[CalMatters, via Naked Capitalism Water Cooler 7-7-2023]
“A Bay Area woodworking employee caught COVID on the job and brought it home during the height of the pandemic. His wife contracted the illness and her symptoms were severe – at one point, she needed a respirator to breathe. But she cannot claim workers’ compensation injuries from the infection, the California Supreme Court ruled today in answer to questions from a federal appellate court, because while doing so would be a moral good, that good is outweighed by the potential flood of litigation that would force businesses to close, tie up courts and send commercial insurance rates skyrocketing. ‘Recognizing a duty of care to nonemployees in this context would impose an intolerable burden on employers and society in contravention of public policy,’ associate justice Carol Corrigan wrote in the ruling. ‘These and other policy considerations lead us to conclude that employers do not owe a tort-based duty to nonemployees to prevent the spread of COVID-19.’ It was the second major loss for California employees seeking compensation for COVID infections passed to family members. Last year, a longtime employee of See’s Candies lost a workers’ comp claim after she contracted COVID and passed it to her husband, who died. Workers’ comp is inherently a bargain, Corrigan wrote in a unanimous opinion: Employees get some guarantee that they’ll be paid in the event of an injury suffered on the job, no matter whether they were at fault, and employers get to limit the amount and extent of that compensation.”
The pandemic’s true death toll
[The Economist, via Naked Capitalism Water Cooler 7-7-2023]
“These data make clear that covid-19 has led to the deaths of far more people than official statistics suggest (see our briefing). Measured by excess deaths as a share of population, many of the world’s hardest-hit countries are in Latin America. Although Russia’s official death tally suggests that it has protected its citizens tolerably well, its numbers on total mortality imply that it has in fact been hit quite hard by covid-19. Similarly, we estimate that India’s death toll is actually in the millions, rather than the hundreds of thousands. At the other end of the table, a handful of countries have actually had fewer people die during the pandemic than in previous years. Although excess-deaths statistics are the most comprehensive measure of the human cost of covid-19, they are only loosely tied to the number of people who have been infected with SARS-CoV-2. Because the virus is so much deadlier for older people than it is among the young, death tolls are heavily influenced by the age structure of a country’s population. ”
GRAPH Official global COVID deaths of 6.9 million versus estimated 31.3 million excess deaths
[Twitter, via Naked Capitalism Water Cooler 7-5-2023]
Airport of the future: a seamless, high-tech urban oasis
[Axios, via Naked Capitalism 7-3-2023]
“Many airports are quickly moving toward “touchless” technology using facial recognition, AI, automation and biometric scanners to smooth check-in and security or immigration clearances.”
[Lambert Strether: “Nothing about ventilation, filtration, CO2 monitoring, social distancing, toilets spreading aerosols, or variant sample collection.” ]
Suicide by neoliberalism
How Amazon transformed the EU into a planned economy
Cory Doctorow [Pluralistic, via Naked Capitalism 7-7-2023]
The US Middle Class’s Economic Anxiety Will Decide the 2024 Election
[Bloomberg, via Naked Capitalism Water Cooler 7-5-2023]
Note that yesterday’s Stats presented the Economic Optimism Index, where “51% of the respondents think the economy is in a recession.” That’s a lot. More: “The core premise of Bidenomics is that the middle shall come first. ‘Bidenomics is about building an economy from the middle out and the bottom up, not the top down,’ Biden said in a Chicago speech last week, laying out his vision of a boom fueled by a surge in government investment. Yet as he gears up his 2024 reelection campaign for a vote that’s now less than 18 months away, the president has a middle-class problem. Among the 100 million Americans with annual incomes between $45,000 and $180,000 and wealth between $100,000 and $1 million, polling commissioned by Bloomberg News shows persistent angst about the future. The post-pandemic surge in inflation and the Federal Reserve’s reaction — the fastest increase in interest rates since the 1980s — have combined to put the middle class in a financial vice grip. They pay more for everything — food, homes, cars, energy — while the end of the easy-money era means loans, too, are more costly. The bottom line: More than $2 trillion in wealth held by the middle class has been eliminated since the Fed started hiking, according to data compiled by economists at the University of California, Berkeley.”
A Return to Rentiership
Luke Goldstein , June 20, 2023 [The American Prospect]
A study from the Kansas City Fed found that upwards of 60 percent of inflation in 2021 could be accounted for by corporate profits.
DoorDash, Uber Eats and Grubhub Sue New York City Over Minimum-Wage Law
[Wall Street Journal, via Naked Capitalism 7-7-2023]
Gradually, Then Suddenly? Crisis Capitalism and Its Disavowals
Fabio Vighi, May 29, 2023 [thephilosophicalsalon.com]
Perhaps the best way to grasp the meaning of our New Normal is to frame it as the irreversible paradigm shift towards “crisis capitalism”. The key macroeconomic implication is that today’s capitalism no longer needs crises to enhance its capacity for growth; rather, it needs them to hide its chronic impotence. What changes is therefore the epistemic function of “crisis.” While in the past it led to new economic cycle, a crisis today serves to facilitate the aggressive management of socioeconomic decay….
The Share of Never Married 40-Year-OIds Hits a New Record High
Michael Shedlock , via Naked Capitalism 7-6-2023]
CRE Nightmare for CMBS Holders: Office Mortgage Delinquency Rate Has Biggest Six-Month Spike Ever. It’s just the Beginning
Wolf Richter [via Naked Capitalism 7-6-2023]
Monetary policy in the hands of the central banker sociopaths is advancing the class interests of the elites
Bill Mitchell [William Mitchell — Modern Monetary Theory, via Mike Norman Economics, July 5, 2023]
Disrupting mainstream economics
Death of an Economic Theory
David Dayen, July 7, 2023 [The American Prospect]
The remarkable changes in manufacturing construction over the past year, since the passage of two key Biden administration industrial-policy laws, is rapidly putting to rest a concept that has been embedded into the old understanding of the economy.
The concept is called “crowd-out,” and it asserts that increases in government involvement in a business sector lead to reductions in private spending in that sector. For decades in Washington, this was not just an economic theory but something of an iron law. The Penn Wharton Budget Model, which is heavily influential in Washington, maintains that any government investment will reduce private capital investment. The model continually rated Biden administration policies that directed public spending as reducing GDP and private productive capital.
Even government economic modelers regard government investment as wasteful by definition. As the Prospect noted in its special issue on economic modeling, the Congressional Budget Office explicitly assumes that public-sector investments are half as productive as investments in the private sector. If a private-sector investment returns 10 percent on an annual basis, public spending of the exact same amount is supposed to return 5 percent….
As the Treasury Department has pointed out, total manufacturing plant construction has doubled, and real spending on computer, electronics, and electrical manufacturing, which through CHIPS and the IRA is one of the most targeted areas for public investment, has almost quadrupled in a year, adjusted for the increase in construction costs. Deutsche Bank notes that 18 new semiconductor facilities started construction in the U.S. between 2021 and 2023. European leaders have pronounced themselves stunned by the loss of hydrogen production facilities to the U.S., because of the commitment to public investment through the IRA.
Manufacturing construction spending, as Council of Economic Advisers member Heather Boushey recently pointed out, is at a six-decade high.
A large government presence required for energy transition does not mean massive deficits are required
Bill Mitchell [William Mitchell — Modern Monetary Theory, via Mike Norman Economics, July 3, 2023]
A manufacturing investment supercycle is starting
Neil Irwin, Jun 16, 2023 [Axios, via Dayen, The American Prospect 7-7-2023]
...There is massive new investment taking place in U.S. heavy industry that's set to shape the economic landscape for years to come…. It is fueled by hundreds of billions of dollars allocated by the Biden administration's signature legislation — the Inflation Reduction Act, Bipartisan Infrastucture Law, and CHIPS and Science Act — as well as pent-up demand….
"We believe the U.S. is in the early stages of a manufacturing supercycle," wrote Joseph P. Quinlan, head of CIO Market Strategy at Merrill and Bank of America Private Bank, in a report this week….
- "It's really gotten the attention of the world," Quinlan tells Axios. "When you talk to companies in South Korea, Japan, Europe, all they want to talk about is building out a presence in the U.S."
By the numbers: As of April, spending on manufacturing construction — new factories — is tracking at a $189 billion annual rate, triple the average rate in the 2010s ($63 billion).
It’s Hamiltonian! It’s Jeffersonian! It’s Bidenomics!
Harold Meyerson, July 7, 2023 [The American Prospect]
The fifth and final element of Bidenomics is the overriding theory that informs the four preceding elements. It was best expressed to me by one White House official referencing the now famous graph that the Economic Policy Institute first published in 1994, showing that the nation’s level of productivity and the level of its median hourly wage rose in tandem from 1947 through 1979, and then, as productivity continued to rise, the median wage barely rose at all thereafter. “What Joe Biden is about,” the official said, “is closing that gap” so that the nation’s prosperity could be broadly shared, as, however imperfectly, it was when rates of unionization were high and New Deal legislation that boosted workers and constrained finance were still in place.
So where does all this place Bidenomics in the continuum of American economic history? The turn to industrial policy, to government support for domestic production, has ample antecedent in Alexander Hamilton’s Report on Manufactures, in the “internal improvements” for roads and canals championed by the Whig Party in the early 19th century, in Abraham Lincoln’s backing of a privately owned transcontinental railroad, in the tariff policies of the late 19th and early 20th century under which the U.S. became the world’s economic powerhouse, in the massive public infrastructure investment undertaken by the New Deal, and in the military Keynesianism of the Cold War.
The turn to Biden’s “middle-out” economics, to boosting the fortunes of American workers, is Jeffersonian in its concern for ordinary Americans. Even before America ceased to be the nation of small farmers whom Jefferson envisioned as the nation’s backbone, however, governments were using Hamiltonian means to produce Jeffersonian ends. Thus, the Homestead Act, enacted under Lincoln, in which the West was divided into small-farm-sized plots that immigrants from abroad and restless urbanites from East Coast cities could claim as their own provided they worked their patch of land. Thus also the labor legislation enacted under FDR, which gave workers a stake not in the land but in the bounty that their employer produced.
Hamiltonian in promoting productive domestic enterprises, Jeffersonian in its belief that the wealth those enterprises produce won’t trickle down of its own accord but requires giving workers the power to claim a share of that wealth as their own—those are the schools of thought that Bidenomics can claim as its antecedents.
The Biden Administration Begins Student Debt Relief Plan B
David Dayen, July 5, 2023 [The American Prospect]
The first thing to be said is that this is not Plan B as much as it is Plan A. Four years ago, when the Prospect first suggested that presidents have the authority to cancel student debt without further congressional approval, that was based on the Higher Education Act of 1965 (HEA), and the statutory language enabling the secretary of education to “compromise, waive, or release any title, claim, lien, or demand” on student debtors. It also specifically authorizes the department to waive equity claims, compromise “a debt in any amount,” and modify “any provision of a loan note.”
The White House instead used the HEROES Act of 2003, a law that gave the secretary the ability to “waive or modify” statutory or regulatory provisions to keep borrowers financially harmless from a national emergency like the pandemic. Because Donald Trump used this very statute to pause collection of student loan payments, the White House thought it might entice conservative justices.
The Simple Mistake That Almost Triggered a Recession
[The Atlantic, via The Big Picture 7-7-2023]
Leading economists said we’d need higher unemployment to tame inflation. Here’s why they were wrong.
Restoring balance to the economy
What the Teamsters Are Really About
Harold Meyerson, July 6, 2023 [The American Prospect]
As a strike at UPS looms, the union’s plans may encompass more than winning a good contract….
The new regime at the Teamsters, headed by President Sean O’Brien, clearly views its confrontation with UPS as crucial in itself, but also to its hopes to organize Amazon (and, who knows, maybe rival FedEx, too). Amazon workers have a very distinct set of needs. They’re disproportionately young, drawn to their jobs by the company’s higher-than-McDonald’s pay rates, and the great majority of them stay on the job for less than a year, so grueling are the pace and conditions of the work. Many of the things that union contracts customarily deliver—retirement benefits, health coverage, and so on—are of little if any importance to them. They’re there for the wages, and if the Teamsters can deliver major raises to their members at UPS—who are already paid several times what the Amazon workers make—that could make the task of unionizing these transient Gen Zers a little less daunting. It could also prompt FedEx workers to ponder why they’re making so much less than those UPS drivers schlepping the same kind of packages that they’re schlepping.
If the Teamsters can win that kind of victory at UPS, they’ll be better able to activate a slice of their membership to proselytize their Amazon peers—and who know who else? By having let their members know about what they’ve already won in the talks, they’re laying the groundwork for motivating members to a more militant posture, which they’ll need if they strike. A widely publicized big victory at UPS, then, is a precondition for the union’s future organizing.
In that sense, the Teamsters aren’t just bargaining—and if comes to that, they won’t just be striking—for their own members. Like the UAW of yore—and like no union since then—they’re bargaining for the American working class. That, as Joe Biden once said, is a big fucking deal.
Teamsters, UPS battle may be just a warmup for future Amazon fight, experts say
[The Hill, via Naked Capitalism 7-8-2023]
The new power couple taking on Wall Street: J.D. Vance and Elizabeth Warren
[Politico, via Naked Capitalism Water Cooler 7-7-2023]
“Sen. J.D. Vance — the Trump-backing former venture capitalist — is trying to lead Republicans in a new cause: cracking down on big banks. Following a Senate campaign in which he pledged to prioritize rural America over titans of industry, the Ohio lawmaker is using a seat on the Banking Committee to flex his populist bona fides, teaming up with Democrats including Sens. Elizabeth Warren of Massachusetts and Dick Durbin of Illinois on bills that the industry’s biggest players despise — while championing legislation that protects smaller banks. He’s taking a lead role in advancing bipartisan proposals that would penalize bank executives when their companies fail, make it harder for giant lenders to get bigger by acquiring other banks and rein in credit card fees. Along the way, he’s had some success in recruiting fellow Republicans to the cause — creating fresh headaches for big bank lobbyists, who are gearing up to fight the Vance-backed policies. Warren, who enlisted Vance to build GOP support for a bill to claw back compensation from executives of failed banks, said he’s been “terrific to work with.”
US private equity faces extra scrutiny under new merger review rules
[Financial Times, via Naked Capitalism 7-2-2023]
[TW: A report on the very negative reaction from corporate lawyers and private equity pirates to the new FTC rules reported in last week’s wrap. “Will make it impossible to finish deals” Uhh, yeah, that’s a GOOD thing. There should very, very few mergers or buyouts allowed, and almost all corporate conglomerations and private equity firms should be dismantled. Because, according to the the governing philosophy of civic republicanism, concentrations of economic power are always bad, because they so easily corrupt the political system. The (anti)Republican Party has imposed the doctrine of “big government is bad,” but has been paid to overlook “big” in regards to “free enterprise.” But there is a growing awareness among (anti)Republicans that this has been a big mistake. ]
Philippines writes off US$1 billion in farmer debt to boost food production
[Channel News Asia, via Naked Capitalism 7-8-2023]
Deforestation in Brazil’s Amazon region drops nearly 34% in Lula’s first 6 months
[Anadolu Agency, via Naked Capitalism 7-7-2023]
Information age dystopia / surveillance state
Take That, Internet Censors!
Matt Taibbi , via Naked Capitalism 7-6-2023]
STATE OF MISSOURI, ET AL. VERSUS JUDGE TERRY A. JOSEPH R. BIDEN JR., ET AL.
, via Naked Capitalism 7-6-2023]
Lambert showcased key sections yesterday in Water Cooler. If you have time, see particularly pages 90 to 119.
Judge limits Biden administration contact with social media firms
[Politico, via Naked Capitalism Water Cooler 7-5-2023]
“A federal judge in Louisiana ruled Tuesday that the Biden administration likely violated the First Amendment by censoring unfavorable views on social media over the course of the coronavirus pandemic, calling the efforts ‘Orwellian….
U.S. District Court Judge Terry Doughty also issued a sweeping preliminary injunction barring numerous federal officials and agencies — including Surgeon General Vivek Murthy, Health and Human Services Secretary Xavier Becerra, White House press secretary Karine Jean-Pierre and all employees of the Justice Department and FBI — from having any contact with social media firms for the purpose of discouraging or removing First Amendment-protected speech.The ruling and order from Doughty, an appointee of former President Donald Trump, are the latest developments in a long-running lawsuit spearheaded by Republican-led states alleging that the administration pressured social media companies to remove posts containing purported misinformation about the coronavirus, election security and other issues.”
[Lambert Strether: “Some thoughts: First, I doubt very much that this case would have been possible without the good efforts of Taibbi, et al., on the Twitter Files (released to them by Elon Musk, and good for him). Second, the plaintiffs include those eugenicist scum from some of the authors of the Great Barrington Declaration, Bhattacharya and Kulldorff, and doing anything to help them makes my skin crawl. Third, the First Amendment is more important (“Defend to the death,” etc., which Doughty uses as the epigraph for his opinion) then whether my skin crawls. After all, those evil clowns in the Censorship Industrial Complex would come for NC sooner or later (and indeed, with PropOrNot, they already tried).” ]
“State Of Missouri, Et Al. Versus Joseph R Biden Jr., Et Al.” (Case No. 3:22-Cv-01213) (PDF)
[Judge Terry A. Doughty, United States District Court, Western District of Louisiana, Monroe Division].
Strether’s screenshot of “Some choice bits”
The National Science Foundation’s ‘Convergence Accelerator Track F’ Is Funding Domestic Censorship Superweapons
Mike Benz [Foundation for Freedom Online, via Naked Capitalism Water Cooler 7-4-2023]
“[W]ith NSF censorship grantees like WiseDex, the end users of the government-funded tech product are the social media platforms who actually delete the flagged posts. With other NSF censorship grantees, like the Orwellianly named project “Course Correct”, the end-users of the government-funded tech censorship tools are politically like-minded journalists and fact-checkers who flag posts to social media platforms for deletion or demotion. There, the censorship laundering process works as follows:
…..“But it’s more than just names of US citizens in a wrongthink database for ordinary opinions expressed online. The ‘dynamic dashboard’ will also reveal relationship dynamics about the US citizens, who communities they are a part of, and who they influence and are influenced by… On a closing note, we stress that the NSF’s Track F censorship projects are still largely in their early or infant stages. Only a handful of Track F project like Course Correct have qualified for the additional $5 million in federal funding to fast-track them to full-fledged censorship juggernauts.”
Microsoft, OpenAI sued for $3B after allegedly trampling privacy with ChatGPT
[The Register, via Naked Capitalism Water Cooler 7-4-2023]
“Microsoft and OpenAI were sued on Wednesday by sixteen pseudonymous individuals who claim the companies’ AI products based on ChatGPT collected and divulged their personal information without adequate notice or consent. The complaint [PDF], filed in federal court in San Francisco, California, alleges the two businesses ignored the legal means of obtaining data for their AI models and chose to gather it without paying for it. ‘Despite established protocols for the purchase and use of personal information, Defendants took a different approach: theft,’ the complaint says. ‘They systematically scraped 300 billion words from the internet, ‘books, articles, websites and posts – including personal information obtained without consent.’ OpenAI did so in secret, and without registering as a data broker as it was required to do under applicable law.’ Through their AI products, its claimed, the two companies ‘collect, store, track, share, and disclose’ the personal information of millions of people, including product details, account information, names, contact details, login credentials, emails, payment information, transaction records, browser data, social media information, chat logs, usage data, analytics, cookies, searches, and other online activity. The complaint contends Microsoft and OpenAI have embedded into their AI products the personal information of millions of people, reflecting hobbies, religious beliefs, political views, voting records, social and support group membership, sexual orientations and gender identities, work histories, family photos, friends, and other data arising from online interactions.”
The Necessary Legal Changes To Deal With Deep Fakes
Ian Welsh, July 6, 2023
A deep fake is a picture or video of someone doing or saying something they didn’t. In the old days pictures and video were considered “proof”, it was easy to tell if they had been altered, as with the laughable removal of out-of-favour leaders from Soviet pictures.
With the advent of useful “AI’ making deepfakes has become easy, and it is destroying one of the ways we know the truth….
1. Making a deep fake of someone without their legal authorization must be both a criminal and civil offense, with jail time, not just fines, since in fines don’t work if someone expects to make more money than the cost of the fine.
2. Consent must be active. No contracts of adhesion, never in a EULA, always requiring an individual specific contract which is compensated….
5. All deep fakes must prominently say, in a way that cannot be missed (no fine print or credits) that they are deep fakes, probably a banner at the top or bottom of every part of the video where they appear, except in movies and tv shows, but even then they must start with a prominent announcement and end with one.…
Goodreads was the future of book reviews. Then Amazon bought it
[Washington Post, via Naked Capitalism Water Cooler 7-4-2023]
“Former employees said Amazon seemed happy to mine Goodreads for its user-generated data and otherwise let it limp along with limited resources. In Amazon’s more than 20-year history, the company has made dozens of acquisitions, and it is not unusual for it to try to cheaply acquire properties in markets that it wants to dominate, only to let them languish. Until recently, Amazon owned Book Depository and camera-enthusiast favorite DPReview, and it still operates discount marketplace Woot, collectibles website AbeBooks and movie database IMDb. Goodreads ‘hasn’t been all that well maintained, or updated, or kept up with what you would expect from social communities or apps in 2023,’ said Jane Friedman, a publishing industry consultant. ‘It does feel like Amazon bought it and then abandoned it.’ Amazon spokesperson Ashely Vanicek said that “By joining Amazon, Goodreads has accelerated their mission to delight customers with the help of Amazon’s resources and technology.'” • Both Book Depository and DPReview were great, but Amazon killed them. I’m sure they would kill IMDB if they could. Perhaps they’re not done torturing it.
This July 4th, Remember: Freedom is Good
Matt Taibbi. , via Naked Capitalism 7-5-2023]
Computer Speed Gains Erased By Modern Software
[Hackaday, via Naked Capitalism 7-5-2023]
Creating new economic potential - science and technology
DRC’s US$80B Grand Inga Dam project and how it can provide over 40% of Africa’s energy supply
Mark-Anthony Johnson, August 5, 2021 [Further Africa]
The Grand Inga Dam project is a proposed series of seven hydroelectric power stations near the Inga Falls in the DRC. The project is a colossal $80 billion enhancement of the existing 351 MW Inga 1 and 1,424 MW Inga 2 plants, which were completed in 1972 and 1982, respectively.
The Ultimate goal is to construct a complex capable of energy supply for the entire sub-Saharan region with a cumulative output capacity 42 GW electricity generation. Upon completion, the project would be the world’s largest power plant and would generate more than the world’s two biggest hydropower plants, Three Gorges in China and Itaipu in SouthAmerica, combined.
China uses laser for 10 times faster satellite-to-ground communication in major breakthrough
[South China Morning Post, via Naked Capitalism 7-5-2023]
Breakthrough quantum computer instantly makes calculations that take rivals 47 years
[The Telegraph, via Naked Capitalism 7-3-2023]
Democrats' political malpractice
Why Democrats Should Primary Biden
Jack Shafer [Politico, via Naked Capitalism Water Cooler 7-4-2023]
[The article is not as noteworthy as Lambert Strether’s comment:
My view is that the Democrat hive mind would prefer to have Biden totter along until it’s too late for a real challenger to enter the race — say, after Super Tuesday — and then slip a cog (or even be helped to slip a cog). Then the Democrat hive mind could nominate a new front runner by acclamation — much as happened on the Night of the Long Knives, when Obama dispatched Sanders. The hive mind quite liked that, and wants more of it. No more pesky voting! We need to rid ourselves of the notion that, as a governing class, Democrats (electeds, apparatchiks, strategists, operatives, NGOs, etc.) look downward to the base, even the PMC base. No, the various fractions of the base (more precisely, the engineered hates and fears embedded in fractions of the base; RussiaGate comes to mind) are assets, to be owned by whoever can afford to manipulate them. No, the Democrats look upward to the ruling class, which collectively and through layers of fixers and intermediaries, provides them with the necessary funding to manage those assets (various governing class entities being items in the ruling class portfolios). ]
[Twitter, via Naked Capitalism Water Cooler 7-4-2023]
Markets and Speech: Where Does the Public Reside?
Corey Robin [via Naked Capitalism 7-2-2023]]
On 303 Creative LLC v. Elenis.
Why Republicans Keep Calling for the End of Birthright Citizenship
Martha S. Jones, July 2, 2023 [The Atlantic]
Calls to undo birthright, though couched in terms of immigration reform, ultimately aim to undo a key precept of our democracy: equitable access to citizenship. Birthright sets an even bar when it comes to being a citizen—all those born here are subject to the same threshold test, no matter whom they descended from. It ensures that, for those born in the United States, citizenship will not be conferred depending on their politics, race, faith, culture, gender, or sexuality. Birthright safeguards those born here from political leaders who would mete out citizenship as a reward or withhold it as a punishment.
The wielding of citizenship as a weapon is precisely what the Fourteenth Amendment was designed to prevent. In 1868, birthright undid the Dred Scott decision. It ensured that the right of Black Americans to belong to this nation was neither open to debate nor susceptible to shifting political whims. Since its ratification, the Fourteenth Amendment has guaranteed the belonging of some of the most vulnerable among us, including generations of children born to immigrant parents. It has protected marginalized, despised, and unpopular people who, when born here, do not need to fear exile or banishment. Birthright citizenship has always been a solution rather than a problem, and our democracy depends on it remaining just that.
After gutting affirmative action, Republicans target minority scholarships
[MSNBC, via Naked Capitalism 7-5-2023] Here in Wisconsin.
Pro-choice Catholics fight to seize the narrative from the religious right
[Guardian, via Naked Capitalism 7-5-2023]
[TW: I have occasionally included works of new scholarship in political theory and constitutional law which seeks to restore civic republicanism. This past week, I have been reading articles on recovering the meaning of the General Welfare Clause, which necessarily includes a rebuttal of the conservative / neoconfederate / (anti)Federalist pet constitutional theories of originalism and enumerated powers. Since a basic principle of civic republicanism is promoting the general welfare, I believe these articles can also be included in the corpus of work seeking to restore civic republicanism.
[I believe these articles a part of a response to the reactionary project of remaking of the courts and USA jurisprudence. That remaking can be traced to the 1971 Powell memo but the major changes in the legal system began with Ronald Reagan elevating William Rehnquist to Chief Justice in 1988. Another major factor was the richly financed Leonard Leo and his (anti)Federalist Society.
[Until they were shocked by the Dobbs v. Jackson Women's Health Organization decision handed down last year, liberals and leaders of the Democratic Party have been blind to this reactionary project. Crippled by a large part of “the left” rejecting out of hand USA Constitutional law and political history as mere instruments of an oppressive and exploitative capitalist system tainted irremediably by slavery, liberals, Democrats and “the left” ignored the historical record of the fight within USA between republicanism and oligarchy. They mistakenly believed liberalism was a derivative of civic republicanism instead of seeing how much of liberalism — with its emphasis on “private property” and “individual liberty” — was shaped as an oligarchical response to civic republicanism and the rise of the American republic. Thus they were disastrously outflanked by the Rehnquist / Scalia / Thomas assault on the law and persistent undermining of the principles of civic republicanism.
[Nevertheless, some constitutional scholars and historians — such as those listed in the excerpts below — were quite aware of the reactionary assault on the USA justice system, and working to correct a historical record that had been hijacked by the conservative / neoconfederate / (anti)Federalist project. The liberal / Democratic / “left” response to “the right” is bound to fail until it incorporates the work of these constitutional scholars and historians.
[Moreover, as David Cole argues in “The Supreme Court Picks Its Battles,” [The New York Review, July 4, 2023], the reactionaries now sitting on the Supreme Court are sensitive, to some degree or another, to public opinion, and can be swayed, however much, accordingly.
June ended with far-reaching upsets for civil rights, but a closer look at the Supreme Court’s decisions across the 2022–2023 term suggests the justices are not immune to public scrutiny….
One measure of how much changed between the 2021–2022 term and the 2022–2023 term is how the Court ruled in cases in which the ACLU filed a brief. In the 2021–2022 term, the Court ruled for the side we favored only five times, all in fairly obscure cases, while ruling against our side thirteen times. In the 2022–2023 term, by contrast, the Court sided with the ACLU eleven times and against us in seven cases, and many of the victories were in the Court’s most consequential cases….
... the Court is a powerful institution in our democracy, and therefore must in some larger sense be answerable to the people. At the end of the day, its power resides in its legitimacy, and the justices are not immune from criticism. Had Americans accepted last term’s radical decisions without protest or criticism, it seems likely that this term’s cases would not have come out as favorably as they did. So for those of us who care deeply about our democracy and our rights, it is essential that we both praise the Court when it does the right thing and continue to raise our voices when it does not.
[Obviously, if general public opinion could be better informed by the work of the constitutional scholars and historians fighting against reactionary assault on the USA justice system, it is more likely to have an impact on the Court. ]
Reconsidering the Constitution’s Preamble: The Words that Made Us U.S. — University of Wisconsin Legal Studies Research Paper Series Paper No. 1718
David S. Schwartz, September 25, 2021 [37 Constitutional Commentary 2022]
[TW: Conservatives and originalists dismiss the Preamble to the U.S. Constitution as a “stylistic flourish with no operative legal significance,” but “the drafting history of the Preamble, observable by comparing the preambles in the Articles of Confederation, the Committee of Detail draft of the Constitution, and the Committee of Style's final version, demonstrate that the Framers considered the Preamble to be substantively meaningful.” There is room to debate the exact meaning of the Preamble — “it might be viewed as a rejection of compact theory, as an interpretive guide to the powers granted in the body of the Constitution, or as a source of implied powers.” But concluding that the Preamble is “a legally inoperative flourish has no basis as a matter of text or history.”
[In his 1833 three-volume Commentaries on the Constitution of the United States — long considered the most through and faithful exposition of Constitutional interpretation — Justice Joseph Story wrote that while the Preamble does not confer any “substantive power” on the national government, it does “expound the nature, and extent, and application of the powers actually conferred by the
constitution,” and should be used as a guide to interpreting the Constitution when “the terms of a given power admit of two constructions, the one more restrictive, the other more liberal.” Further, interpretation should be “governed by the intent of the power;” that is, Constitutional interpretation of federal powers should “promote” and not restrict — Story uses the word “defeat”” — that power. Schwartz writes,
“For Story, then, the preamble is an argument against strict construction of federal powers: a statement that the Constitution’s grants of powers are to be liberally construed, to promote such things as “the general welfare.”
[This is, of course, the exact opposite of the doctrines of conservatives and originalists such as William Rehnquist, Antonin Scalia, Clarence Thomas, and Samuel Alito, not to mention the entire (anti)Federalist Society. Schwartz makes the important point that
The argument that the preamble meant nothing more than a stylistic flourish ... was highly congenial to compact theorists, nullifiers, and secessionists.
[We have seen this throughout American history: the “domestic enemies” of the Constitution have tried repeatedly to have the Constitution reinterpreted in ways that limit and even abrogate the powers of the national government. Today, the “domestic enemies” of the Constitution want to dismantle “the administrative state” and allow “free enterprise” and “private property” free reign to foul our environment, alter our climate, exploit our labor, limit our economic prospects, mute our political participation, and surveil our lives.
[Schwartz ends by noting that at the time of ratification, the Anti-Federalists fully understood that the grand objectives proclaimed in the Preamble meant that the federal government was not at all strictly limited in its powers, but pointed to an expansive realm of implied powers, as Alexander Hamilton would argue in his February 1791 opinion in favor of establishing a national bank. ]
The Framers felt they had to clarify that the new government was a truly national government, and moreover, one based on republican principles—that is, authorized by the sovereign people, not by a grand interstate compact.
Significantly, nothing in the Preamble makes “limited enumerated powers” an object, or—pace Madison—an essential characteristic of the national government. The preamble does not list “federalism,” or “state sovereignty” or “balancing national powers with the rights of the states” among its great objects. [p. 10] ….
Federalists and Anti-Federalists during the ratification debates and early republic both understood the Preamble “as reinforcing a theory of sovereignty and national union that expanded the scope of national power, beyond either those powers that were enumerated or those powers that might be aggregated from that enumeration.” This nationalist reading, channeling the constitutional vision most acutely expressed by James Wilson, was thus a prominent reading—although so read with horror by Anti-Federalists—as Federalists in the early post-ratification years argued that the Preamble was indeed a legitimate source of implied powers. [pp. 11-12]
The Original Meaning of Enumerated Powers (pdf)
Andrew Coan and David S. Schwartz [Legal Theory Blog]
From the abstract:
The powers of Congress are limited to those enumerated in the Constitution and must not be construed as the equivalent of a general police power. This doctrine of “enumerationism” is the linchpin of a multi-decade conservative assault on the broad conception of federal powers recognized by the Supreme Court since 1937. The loudest champions of enumerationism are originalists. But even critics of originalism generally accept that enumerationism is rooted in the original public meaning of the Constitution. Indeed, it is difficult to think of a stronger—or broader—consensus on an important question of original meaning.
This Article challenges that consensus. Despite its wide acceptance, the originalist case for enumerationism is remarkably weak and undertheorized. At the same time, enumerationists have largely ignored strong arguments that the original public meaning of enumeration was indeterminate. The constitutional text nowhere says that the federal government is limited to its enumerated powers. To the contrary, several provisions—the General Welfare Clause, the Necessary and Proper Clause, and the Preamble—could plausibly be read to support a congressional power to address all national problems.
Recovering the Lost General Welfare Clause
David S. Schwartz [63 William & Mary Law Review 857 (2022)]
The General Welfare Clause of Article I, Section 8, Clause 1 of the Constitution enumerates a power to “provide for the common defense and general welfare.” A literal interpretation of this clause (“the general welfare interpretation”) would authorize Congress to legislate for any national purpose, and therefore to address all national problems— for example, the COVID-19 pandemic—in ways that would be precluded under the prevailing understanding of limited enumerated powers. But conventional doctrine rejects the general welfare interpretation and construes the General Welfare Clause to confer the so-called “Spending Power,” a power only to spend, but not to regulate, for national purposes.
This Article argues that both the text and the drafting history of the General Welfare Clause support reading it as a power to regulate on all national problems, such as environmental degradation, violence against women, and pandemic disease. It is only our superficial ideological commitment to enumerationism—the doctrine of limited enumerated powers—that causes us to depart from the most evident textual interpretation of the General Welfare Clause. Recovering the lost General Welfare Clause is particularly important at this moment in constitutional history, when a conservative and supposedly originalist Supreme Court is poised to greatly constrict federal power to respond to pressing national problems in service of a tendentious and badly one-sided account of Founding Era views on federalism….
[p. 867] ...Only after the repeated electoral triumphs of Jeffersonian Republicanism beginning in 1800-1801 did enumerationism become entrenched as constitutional dogma. Since the New Deal revolution in 1937, our constitutional order has continued to pay lip service to enumerationism, while making every effort to work around it. Most often, we try to shoehorn regulatory problems into the Commerce Clause….
[p. 870 ...Moreover, limited enumerated powers is not even a second-best mode of enforcing federalism limits. It is at best a third- or fourth-best mode. The Framers themselves apparently believed that process limits on legislation—such as a two-house legislature and a presidential veto—were more effective than “parchment
barriers” in the form of specified limits. But if paper barriers were desirable, then a better way to protect reserved state powers would be to enumerate limitations, rather than powers—a point that the Framers apparently understood, for example, in enumerating limits on Congress’s powers in Article I, Section 9.42
[p. 880] ...The drafters of the 1861 Confederate Constitution reworked Clause 1 to obviate a general welfare interpretation: “To lay and collect taxes, duties, imposts,
and excises, for revenue necessary to pay the debts, provide for the common defence, and carry on the government of the Confederate States.”….
[pp. 887-888] The enumeration in Article I, Section 8, originated with the Committee
of Detail draft, reported to the full Constitutional Convention on August 6, 1787. The Committee’s charge was to write up the numerous resolutions approved by the Convention in the form of a draft constitution… The resolution conforms to one of the primary purposes of calling the Constitutional Convention in the first place: to add legislative powers to what the Confederation Congress possessed.130 The Articles of Confederation had conferred several nontrivial powers on the Union, including powers to declare war, conduct certain foreign affairs functions, “appoint maritime and prize courts, coin money, fix the standards of weights and measures, regulate commerce and relations with Indian tribes, “establish[ ]” or “regulat[e ]” post offices, and incur debt. Passing these on to the new national government
was uncontroversial, and was approved unanimously. The “legislate in all cases” language following the semicolon was somewhat more controversial, but was nevertheless approved on July 17 by a solid 8-2 vote of the state delegations present…. The conventional view that the enumeration is exhaustive requires explaining away the Resolution 6 instruction to authorize Congress to legislate “in all cases for the general interests of the Union”….
[TW: Below is a partial list references in just one of the first footnotes in
“The Myth of the Constitutional Given: Enumeration and National Power at the Founding,” by Stanford University history professor Jonathan Gienapp (69 American University Law Review 2019, fn. 9, pp. 185-186):
David S. Schwartz, “A Question Perpetually Arising: Implied Powers, Capable Federalism, and the Limits of Enumerationism,” 59 Arizona Law Review. 573, 575–79, 581–84 (2017) (defining enumerationism and explaining its “powerful ideological hold” despite increasing criticism and evidence that it has been applied in ways that make it “meaningless”).
Jack M. Balkin, “Commerce,” 109 Michigan Law Review 1, 7–13 (2010) (arguing that the structural principle underlying the enumerated powers in Article I, Section 8 was designed to permit the national government to address genuinely federal problems that require coordination);
Calvin H. Johnson, “The Dubious Enumerated Power Doctrine,”(pdf) 22 Constitutional Commentary. 25, 31 (2005) (“Whatever the enumerated powers doctrine does . . . it cannot be taken seriously as prohibiting all implied or unexpressed powers or all broad readings of malleable terms.”);
Robert J. Kaczorowski, “Inherent National Sovereignty Constitutionalism: An Original Understanding of the U.S. Constitution,” 101 Minnesota Law Review 699, 701–04 (2016) (urging a refocusing on “inherent national sovereignty constitutionalism,” an understanding of the Constitution that “seems to have been forgotten,” which recognizes the flexibility of national power beyond the specific text of Article I, Section 8);
John Mikhail, “The Constitution and the Philosophy of Language: Entailment, Implicature, and Implied Powers,” 101 Virginia Law Review 1063, 1091–97 (2015) [hereinafter Mikhail, The Constitution and the Philosophy of Language] (parsing the Necessary and Proper Clause to argue that the Constitution’s text implies that Congress possesses many more implied powers than the expressly enumerated powers in Article I, Section 8);
Richard Primus, “The “Essential Characteristic”: Enumerated Powers and the Bank of the United States,” 117 Michigan Law Review. 415, 419–20 (2018) (examining the controversy surrounding the first Bank of the United States to uncover alternative understandings of the Constitution’s enumerated power at the Founding);
Heather Cox Richardson, July 8, 2023, Letters from an American
...The Fourteenth Amendment provides that “All persons born or naturalized in the United States and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside.”
The amendment also addressed the Dred Scott decision in another profound way. In 1857, southerners and Democrats who were adamantly opposed to federal power controlled the Supreme Court. They backed states’ rights. So the Dred Scott decision did more than read Black Americans out of our history; it dramatically circumscribed Congress’s power.
The Dred Scott decision declared that democracy was created at the state level, by those people in a state who were allowed to vote. In 1857 this meant white men, almost exclusively. If those people voted to do something widely unpopular—like adopting human enslavement, for example—they had the right to do so. People like Abraham Lincoln pointed out that such domination by states would eventually mean that an unpopular minority could take over the national government, forcing their ideas on everyone else, but defenders of states’ rights stood firm.
And so the Fourteenth Amendment gave the federal government the power to protect individuals even if their state legislatures had passed discriminatory laws. “No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws,” it said. And then it went on to say that “Congress shall have power to enforce, by appropriate legislation, the provisions of this article.”
The principles behind the Fourteenth Amendment were behind the 1870 creation of the Department of Justice, whose first job was to bring down the Ku Klux Klan terrorists in the South.
Those same principles took on profound national significance in the post–World War II era, when the Supreme Court began to use the equal protection clause and the due process clause of the Fourteenth Amendment aggressively to apply the protections in the Bill of Rights to the states. The civil rights decisions of the 1950s, 1960s, and 1970s, including the Brown v. Board of Education decision outlawing segregation in public schools, come from this doctrine. Under it, the federal government took up the mantle of protecting the rights of individual Americans in the states from the whims of state legislatures.
Opponents of these new civil rights protections quickly began to object that such decisions were “legislating from the bench,” rather than permitting state legislatures to make their own laws. They began to call for “originalism,” the idea that the Constitution should be interpreted only as the Framers had intended when they wrote it, an argument that focused on the creation of law at the state level….
The Most Baffling Argument a Supreme Court Justice Has Ever Made
Adam Serwer, July 7, 2023 [The Atlantic]
Midway through his concurrence with the Supreme Court’s decision to strike down affirmative action, Justice Clarence Thomas deploys one of the most absurd and baffling arguments ever put to paper by a justice.
In order to argue that the Framers of the Fourteenth Amendment did not intend to authorize racially specific efforts to alleviate inequality, Thomas finds himself forced to explain the existence of the Freedmen’s Bureau, which was reauthorized in 1866 by the same Congress that approved the Fourteenth Amendment. To square this circle, Thomas insists that the term freedmen was a “formally race-neutral category” and a “decidedly underinclusive proxy for race.”….
If “freedmen” were a “formally race-neutral category,” then the Fourteenth Amendment does not authorize race-conscious efforts to remedy racial discrimination, and affirmative action cannot be constitutional. As an originalist, Thomas is supposed to interpret the Fourteenth Amendment as it was understood at the time it was written. He is attempting to reconcile his philosophy of judicial interpretation with what the history actually says; the other originalist justices do not really try, perhaps aware of the awkwardness of doing so. The problem, though, is that Thomas’s interpretation is obviously incorrect. His efforts at reconciliation ultimately illustrate the extent to which “originalism” is merely a process of exploiting history to justify conservative policy preferences, and not a neutral philosophical framework.
Trump coup plotter John Eastman is finally facing real accountability
[Washington Post, via The Big Picture 7-7-2023]
Pay attention to the disbarment proceedings that lawyer John Eastman is facing in California. He manufactured the bogus theory behind Trump’s effort to overturn his 2020 election loss + could lose his law license.
[TW; I now refer to the GOP and its members as (anti)Republicans and the (anti)Republican Party, because they believe in a philosophy of governance that is repugnant to the original principles of civic republicanism on which USA was founded. The two major principles of civic republicanism are promoting the general welfare, and justice, as explained by Senator Charles Sumner in a speech on February 5 and 6, 1866, The Equal Rights of All: The Great Guaranty and Present Necessity, for the Sake of Security, and to Maintain a Republican Government; Speech in the Senate, on the proposed Amendment of the Constitution Fixing the Basis of Representation. (Here are excerpts.) (Anti)Republicans have openly and explicitly rejected the founding principle of promoting the general welfare as part of their attacks on the “welfare state.” See Randall G. Holcombe’s 1992 article arguing that the major improvement of the Confederate Civil War constitution was the elimination of the General Welfare mandate. Holcombe served on Florida Governor Jeb Bush's Council of Economic Advisors in Bush's 2016 presidential campaign. Also see Kentucky Sen. Rand Paul’s May, 2011 misinterpretation of James Madison, enumerated powers, and the General Welfare mandate.
[This is a philosophy of government that rejects civic republicanism, and the principle of promoting the General Welfare. (And it includes classic economic liberalism, which places individual liberty above community because, supposedly, the aggregate of individual decisions in “the market” is the most efficient and most fair way to allocate society’s resources. According to liberalism, such things as government planning, government industrial policy, or government investment “crowds out” the actions of individual decisions and thus derails the workings of “the market.”) So, it is basically an anti-government philosophy.
[If it were not obvious at the level of philosophical intuition, the past half-century of neo-liberalism shows clearly that an anti-government philosophy simply does not work very well when applied to the task of actually devising and executing government policies.
[So, it’s entirely to be expected that someone who believes an anti-government philosophy ends up committing sedition and treason. Eastman is the example in a long time:
In 2011, Eastman authored a misinterpretation of Spending Clause, enumerated powers, and the General Welfare mandate, posted at the Heritage Foundation website. His background? Eastman was a law clerk to Supreme Court Justice Clarence Thomas, and went on to found and direct the Claremont Institute's Center for Constitutional Jurisprudence. Eastman then became the presidential consul to Trump who devised the plan to have vice president Mike Pence reject the certification of 2020 presidential electors by a number of states. On March 28, 2022, federal judge David O. Carter of the United States District Court for the Central District of California ruled that there was enough evidence that Eastman, along with Trump, had "dishonestly conspired to obstruct the joint session of Congress on Jan. 6, 2021" and ordered Eastman to surrender over 100 emails to the House select committee investigating the US Capitol attack. Eastman is also one of the original antagonists who have attacked birthright citizenship, and has argued that vice president Kamala Harris is not eligible for the office because her parents were not USA citizens when she was born in Oakland, California. Eastman remains chairman of the (anti)Federalist Society's practice group on federalism and separation of powers.
[If Democrats had been paying attention to proper interpretation of these Constitutional issues at the time Eastman published his January, 2011 misinterpretation, might Eastman have been prevented from advancing to the sinecures from which he has roiled our body politic? ]