Ian Welsh

The horizon is not so far as we can see, but as far as we can imagine

Month: May 2019 Page 1 of 4

The Terrible Ethical Calculus of Catastrophe

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On May 31, 2019

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Let us say you know a catastrophe is coming, and you cannot stop it and thus save everyone.

What do you do?

You start making choices about who to save. Not just their lives, but their stuff and their power.

Catastrophes often lead to changes in societies, but sometimes they don’t.

The 1929 stock market crash, and the Great Depression lead to most of the rich losing their money and power. The end result was that the people running society changed, and that the post-war period was the best to be alive–in the developed world–in history.

This happened because Hoover and FDR did not believe in bailing out the rich, and FDR instituted the New Deal and 90 percent + marginal tax rates.

But while FDR didn’t think the rich should be protected, he did institute deposit protection for ordinary people. If you weren’t rich, you were covered.

The 2007/8 crash led to no such thing, because the priority was saving the rich. Obama, Bernanke, and Geithner went out of their way not just to keep the rich, rich, but to hurt ordinary people if necessary to do so. They deliberately hurt householders, when necessary, to help banks. (See David Dayen’s “Chain of Title” for all the grizzly details.)

Now, this is not to say that Treasury and the Fed should have just done nothing, like in 1929 (though if they had just followed the laws that were put in place after 1929, we would, in fact, be better off).

It is to say they chose to save rich people and not help most other people.

So the catastrophe led to a resumption of the status quo.

Except that it didn’t. It kicked the economy into shit-mode, and the result was Trump/Brexit and the general rise of the right. (Because all the major central banks and governments bailed out the rich and fucked everyone else.)

So, catastrophes happen, and a choice is made about who to protect and exalt, and that choice has consequences down the line.

(I am fundraising to determine how much I’ll write this year. If you value my writing and want more of it, please consider donating.)

Climate change will be no different. Who is protected (or survives through their own efforts) matters, because it determines who will be powerful later.

It is thus important not just to save people you like, but to make sure that bad actors like bankers and the current political elite are not saved: They must lose their money and power (and if that means they lose their lives you should be okay with that, because they sure don’t care if ordinary people lose theirs).

This is ethical, because who runs society, and for whom, determines how good the society is. When society was truly run for the majority, with the intention to spread the wealth, society was good (and where it was bad, as with minorities, it is because the wealth was not spread).

A society is good if it tries to take care of everyone and tamps down inequality, allowing only moderate inequality. (Does anyone really need to earn more than 20x the median income?)

In the days to come, we will have to make choices about who to protect and who to save. Remember that it’s worth taking some time out to choose who doesn’t keep their stuff, their power and, yeah, even their lives.

If this bothers you, remember that they are deciding if you live and die, and their record shows that they either don’t care if you die, or that they actively want you to.

We are moving into some very bad times. Whether society is good or bad afterwards will be determined by who takes power during catastrophe, and who loses power during catastrophe.

It can be us, or it can be a small elite who cares only about themselves.

Choose.

 

US Corn Crop Failure

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On May 30, 2019

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The weather catastrophe in the central United States had led to corn not being planted by the deadline. This is a serious problem. When you miss the deadline of May 20th, there’s little point in planting at all.


Viewed another way:

Corn is not a major food crop for Americans. It is, however, a major food crop for animals and is widely used (as fructose) in processed food.

(I am fundraising to determine how much I’ll write this year. If you value my writing and want more of it, please consider donating.)

Corn futures prices are already soaring. Expect that food prices in the fall and winter will be higher because of this.

The simplest initial scenario for events going Fubar due to climate change is actually a problem with food production. This situation isn’t big enough to be the trigger that sends everything spinning, but imagine a much larger crop failure (my go-to being monsoon failure), and world food prices spiking massively. Even if there is enough food, in theory, to feed everyone, many people won’t be able to afford it, and many places will have shortages.

This isn’t that event, but it is a harbinger. As my friend Stirling Newberry pointed out back in the 90s, the first result of climate change is more and worse extreme weather events.

In the meantime, please bear this particular spike in mind, as it’ll likely hit supermarkets this fall and winter.

Oncoming Recession and the Chinese/US Trade War

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On May 29, 2019

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Chinese and American flags flying together.

So, it’s been a long time since the last recession and indicators are turning negative. While this is never a science, odds are good for a recession in 2020 or early 2021 in the United States.

This is not due to the China/US trade war, but that conflict will make things worse. There is an argument for what Trump is doing. However, even if this has overall good effects for the US, in the long run there are significant dislocation costs when moving production back to the US and there are always going to be losers, because the US does sell a lot to China even if it has a trade deficit, and those people will lose markets. (Hello, soybean farmers!)

Meanwhile the Chinese are ratcheting up their rhetoric. Multiple newspapers have suggested embargoing rare-earths to the United States and this seems like a near certainty if there isn’t a deal soon.

Rare earths exist other places than China, but China has been able to mine them more cheaply than anywhere else, so no one has bothered to create significant production, as it isn’t profitable. China produces 80 percent of rare earths. So, if there is an embargo, other sources can be developed, but that will take time: again, dislocation costs.

The last time a rare-earth embargo happened, I noted that it was insane to have only one country producing all rare-earths and that sensible policy would subsidize production somewhere else just to avoid this scenario. But modern trade rules make subsidizing production of most items (except agriculture and defense) essentially illegal, so we have to wait for a crisis to do the sensible thing.

Chinese rhetoric around the trade war has become very serious, with the People’s Daily newspaper (official Communist newspaper) writing:

“We advise the U.S. side not to underestimate the Chinese side’s ability to safeguard its development rights and interests. Don’t say we didn’t warn you!”

…The expression “Don’t say we didn’t warn you!” is generally only used by official Chinese media to warn rivals over major areas of disagreement, for example during a border dispute with India in 2017 and in 1978 before China invaded Vietnam.

I’m going to discuss the oncoming new trade-era more in the future. For now, note that this isn’t just about Trump. Moves in this direction had already started under Obama (the Trans-Pacific Partnership was meant to isolate China).

(I am fundraising to determine how much I’ll write this year. If you value my writing and want more of it, please consider donating.)

What is different about Trump is that he prefers unilateral negotiations to multilateral (WTO) or plurilateral (a few countries).

This is not stupid. Out of anyone in a singular deal, the US will always be the stronger partner. It prevents other nations from ganging up on the giant, and trying to use numbers to make up for their weakness.

The US can almost always inflict more damage on any one other nation than that nation can on the US.

Again, not stupid; entirely rational and good negotiating tactics.The larger issue is that the US is, itself, dismantling a trade order created, largely, by the US. That trade order had significant disadvantages for the US working and middle classes, but it also was to their advantage geopolitically. The US chose who could industrialize or re-industrialize (its allies – Taiwan, Japan, Germany, South Korea), and so on.

This worked well for the US (not so much most other people) until the Americans got stupid and greedy under neoliberalism. Then, the US corporate class, looking at China, lost their heads: Especially as China went out of its way to make sure that various Americans made a lot of money helping China industrialize.

The difference, of course, is that China is the world’s natural leading power. Has been for most of the last two thousand years. China would be an actual competitor with the US, if it was allowed to get back onto its feet.

And it was.

As a Canadian, I have a dog in this fight. Canada is an American subject state, and we’ll be on the US’s side, because we won’t have a choice. Nor am I particularly a fan of how China is run.

But this is the cycle of great powers. There is always a new challenger, and the old Hegemon always resists (and is virtually always in a late Imperial stage of incompetence and corruption).

When giants clash, ants (you and me) are advised to beware.

Make money now, before the recession, if you can. If your income or wealth is tied to trade, try and mitigate your exposure.

Meanwhile, we may as well enjoy the show.

The Most Important Climate Change Graph You’ll Ever See

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On May 28, 2019

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This is why we won’t be stopping climate change, and why you must personally plan for it.

We are not going to start mitigating at 5 percent this year.

We are not going to start mitigating at 9 percent in 2029.

These are political non-starters. They will not happen. For whatever reason, probably because most decision makers are old and will die before the worst, and the rest are rich and think that their money will protect them, we have not and will not do what is needed until there is widespread catastrophe: Catastrophe which kills millions in the developed world and China.

And maybe not even then.

(I am fundraising to determine how much I’ll write this year. If you value my writing and want more of it, please consider donating.)

If you are not yourself old, and likely to die in the next ten to 20 years, or if you have dependents you wish to protect, you need to take this seriously and make plans.

As part of my recent essay collection, I wrote two new essays. One of them was a long article on how to evaluate your risk from future events, including climate change.

That essay starts on page 146, and if you read no other essays in the book, I’d appreciate it if you read that one.

You can get the book, in PDF or Epub format, here.

Even if you have little money, there are preparations and precautions you can make.

Start thinking about this now; start preparing now, because if you just react when catastrophe hits, your odds of surviving or avoiding the worst suffering go way down.

Start preparing also because when catastrophe hits, it is likely to do so by surprise and sooner than most mainstream estimates. The systems in question are not linear and we don’t properly understand all the feedback loops. It is very likely that there will be a point where change becomes geometric.

So, please, read and prepare (or just prepare).

2019 Fundraiser

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On May 27, 2019

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I am raising funds for 2019. The more funds I raise, the more I write.

DONATE OR SUBSCRIBE

The specific goals for this year are:

$5000—10 non fiction book reviews on books which are helpful to understand society.

$8000—Another 6 book reviews to the series.

$11,000—A booklet, “How To Think: Understanding the World.” A lot of people believe thinking ability is mostly about IQ, but intelligence, however it is measured, is only the ante. It’s possible to out-think much smarter people than oneself, because most people don’t know how to think, and good thinking about the world requires us to accept facts about the world which are painful.

This booklet will try to teach this sort of thinking.

Subscriptions will count triple compared to donations. Current subscriptions will be included in the count.

DONATE OR SUBSCRIBE

Week-end Wrap – Political Economy – May 26, 2019

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On May 26, 2019

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This post is by Tony Wikrent

Strategic Political Economy

The radical plan to change how Harvard teaches economics

[Vox, via The Big Picture 5-25-19]Harvard finally has someone who is challenging Bush Dubya’s economic guru Greg Mankiw in the teaching of introductory economics. Personally, I think Mankiw should be turned over to some impoverished country like Chad or Ecuador and tried for intellectual crimes against humanity. In the summer 2013 issue of Journal of Economic Perspectives, Mankiw published a paper entitled “Defending the One Percent.”  (pdf)

Raj Chetty, a prominent faculty member whom Harvard recently poached back from Stanford, this spring unveiled “Economics 1152: Using Big Data to Solve Economic and Social Problems.” Taught with the help of lecturer Greg Bruich, the class garnered 375 students, including 363 undergrads, in its first term. That’s still behind the 461 in Ec 10 — but not by much.

The courses could hardly be more different. Chetty has made his name as an empirical economist, working with a small army of colleagues and research assistants to try to get real-world findings with relevance to major political questions. And he’s focused on the roots and consequences of economic and racial inequality. He used huge amounts of IRS tax data to map inequality of opportunity in the US down to the neighborhood, and to show that black boys in particular enjoy less upward mobility than white boys.

Ec 1152 is an introduction to that kind of economics. There’s little discussion of supply and demand curves, of producer or consumer surplus, or other elementary concepts introduced in classes like Ec 10.

Will China play rare earths card in clash with US?
[Asia Times, via Naked Capitalism 5-21-19]

“An American chemicals company and an Australian miner want to build a new supply chain for rare earths that bypasses China. The plan by Blue Line Corp. and Lynas Corp. is aimed at shoring up supplies of important commodities caught up in the U.S.-China trade conflict, … highlighting how companies are growing more worried about the Washington-Beijing showdown” [Wall Street Journal]. “Production of rare earths is dominated by China, and some of the world’s biggest buyers are U.S. technology companies that use rare earths in a wide range of electronics, including military equipment. The White House has been reluctant to impose tariffs on China’s rare-earths shipments, but China has slapped higher tariffs on American shipments of the unprocessed minerals. Lynas has become the largest producer of rare earths outside China and runs a unique supply chain shipping rare earths from Australia to Malaysia for processing.”

“China Raises Threat of Rare-Earths Cutoff to U.S.” 

[Foreign Policy, via Naked Capitalism 5-22-19]

“U.S. oil refiners rely on rare-earth imports as catalysts to turn crude oil into gasoline and jet fuel. Permanent magnets, which use four different rare-earth elements to differing degrees, pop up in everything including ear buds, wind turbines, and electric cars. China supplies about 80 percent of the rare-earth elements imported by the United States, which are used in oil refining, batteries, consumer electronics, defense, and more. ‘It would affect everything—autos, renewable energy, defense, and technology,’ said Ryan Castilloux, the founding director of Adamas Intelligence, a strategic metals consultancy….Those concerns became a lot more tangible this week when Xi, accompanied by his point man for U.S. trade talks, visited a facility in the heart of China’s rare-earths industrial complex.”

“The devastating biological consequences of homelessness”
[Nature, via Naked Capitalism 5-25-19]

“Since 2013, a team led by Margot Kushel, director of the university’s Center for Vulnerable Populations, has followed a group of about 350 older homeless adults in Oakland, California, to determine why this group ages in hyper-speed. Although the participants’ average age is 57, they experience strokes, falls, visual impairment and urinary incontinence at rates typical of US residents in their late 70s and 80s.”

Unchecked corporate power: Forced arbitration, the enforcement crisis, and how workers are fighting back
[Economic Policy Institute 5-23-19]

A new report by Economic Policy Institute and the Center for Popular Democracy projects that in just five years, over 80 percent of private sector, non-union workers will be forced to sign away their right to take their employer to court when their employer violates their rights under the law.

In response, Representatives Jerry Nadler (D-NY) and Bobby Scott (D-Va.) and Senator Patty Murray (D-Wash.) have introduced the Restoring Justice for Workers Act―a crucial step toward shifting the balance of power back to working people. This new bill―if passed―would ban mandatory arbitration and class and collective action waivers.

Predatory Finance

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Open Thread

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On May 25, 2019

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Feel free to use the comments to this post discuss topics not covered in recent posts.

The Politics You’ve Got

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On May 24, 2019

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MANDOS POST

Take a look at Joe Biden: He appears to have, for now at least, considerable staying power in the Democratic primary opinion polls (although, of course, this may change as the actual primaries come through). If your model of political psychology can predict a strong core of popular support for Trump without also predicting a strong core of party grassroots support for Biden, you should really rethink it from the ground up. For a core of US voters, the presence of Trump in the White House is an unprecedented emergency and an enormous well of anxiety and real, day-to-day stress.

You can call it Trump Derangement Syndrome or whatever, but the feeling is there, and implicit in this feeling is that Trump is an anomaly, a hiatus in the proper march of American institutions, that should by rights have gone to Clinton, and if not, to one of Trump’s Republican primary competitors. And the advantage of Biden, from this perspective, is precisely that Biden presents an opportunity to force the recalcitrant portions of the Democratic party and, yes, the American left (insofar as it plays electoral politics), to once again choose explicitly whether it will acknowledge and ratify that feeling, or whether it will die on a hill of particular material policies to the neglect of vital institutional decorum.

But for many left-wingers, it seems that even to admit that this is the dynamic is too much to bear. It requires admitting that the Neera Tandens of the world do not merely represent a type of think tank class traitors in cahoots with the rich, but they are actually the genuine grassroots representatives of a large portion of American society, large enough to make a big difference as to who will win the primary and the presidency.

A similar dynamic is taking place in British politics. In its Corbynite incarnation, Labour sits now on the horns of dilemma, or worse: It is perceived as too “Brexity” by enough Remain voters to make a difference, and too “Remainy” for enough Leave voters to make a difference. (As of this writing, the votes for the EU parliament elections haven’t been counted yet, but it is likely that this dynamic will remain stable until any sort of general UK election.) No matter what it does, it is very likely now that the prospect of a truly left-wing prime minister of Britain is galloping off to the distance, when it once felt so close. Let us leave aside the issue of whether Brexit itself is or can be good policy with a good outcome for most people in the abstract; it’s rather fascinating how the Brexit issue is precisely designed to press on the most divisive and ambivalent internal left-wing wounds.

I get the impression from looking at Labour’s representatives online that there exists a core of them who really, desperately wish to change the channel, to austerity and the environment–but especially austerity–but however many “deaths of despair” there may be, that is not the issue. Brexit is. And future policy outcomes, even if not directly related to EU membership, have nevertheless (and for a long time) driven through the underlying cultural cleavage represented by Brexit. Only by choosing a side at the outset, rather than engage in constructive ambiguity (Brexit, but not too much, please), could Labour have avoided the current electoral dilemma and had a shot at dealing with austerity.

A Customs Union is not the issue. How soft or hard the “deal” is–is not the issue. Nationalization is not the issue. How the Eurozone treated Greece is not the issue. Not even Ireland is the issue. Rather, immigration, free movement, and Britain’s self-perception are the issues. That remains true even if austerity and economic breakdown may be one cause of the Brexit phenomenon. The issue is a deep cultural, social cleavage of worldviews.

But who knows? Perhaps information may come to light that disqualifies Joe Biden. Perhaps on a hard Brexit, Remain voters will quickly forget what they protested against, and rejoin the Labour austerity–reversal cause in a Britain hemmed in by closed borders. Perhaps they will do so even before Brexit, giving in to the referendum in the hopes of fighting for…rejoining the EU? Restoring free movement? These seem both risky assumptions at the moment. (Admittedly the former is less risky than the latter!)

So now, what my readers may tell me is that they want to deal with austerity and they want to fight the environmental crisis and save lives and so on. And I agree! But the road to those goals runs through co-operation with parts of society that may have a different listing of priorities. They are always going to exist in some form or another; true, full social unity of purpose will never exist. We’re going to have to find a modus vivendi with those for whom Trump represents a fundamentally-threatening aesthetic emergency (as well as a material one but that seems to be secondary here). And with those for whom Brexit is not a hurdle to be gotten over in pursuit of a more urgent domestic agenda, but rather both a pressing question of material well-being and an even more pressing question of cultural priorities. The alternative is to throw up one’s hands as say, “My way, or the highway to the apocalypse,” that the world is too emotionally decadent to be saved. That, too, is a choice. But not necessarily a good one.

You go with the politics you’ve got, not the politics you want. Some of you might complain that that is simply acquiescence. No, it isn’t–it’s about recognizing first where you are, before you figure out how you’re going to get where you want to be. And folks, you’ve taken too long to figure that out.

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