Ian Welsh

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

Week-end Wrap – Political Economy – November 28, 2021

by Tony Wikrent

 

Strategic Political Economy

Destroying Democracy Is Central to the Privatization of Public Goods

[Jacobin, via Naked Capitalism 11-22-2021]

 

How Delaware Became the World’s Biggest Offshore Haven

[Foreign Policy, via Naked Capitalism 11-21-2021]

 

The American Ruling Class Has Never Let Us Build Back Better

[Jacobin, via The Daily Poster, November 21, 2021]

The defeat of Reconstruction was the nation’s first failure to build back better, and it set the stage for the failures that followed. American austerity politics found their first full expression during this period, pivoting on an ideological turn to classical liberalism within the Republican Party. The events of the 1870s created a pattern of missed opportunities and reactionary blowback that has since been repeated time and again.”

 

Fighting the Inflation Profiteers

David Dayen, November 24, 2021 [The American Prospect]

Companies are raising prices well above increases in their costs. The only antidote is to finally take action against corporate power….

“Executives are seizing a once in a generation opportunity to raise prices,” reads a Wall Street Journal story explaining that around two-thirds of the largest publicly traded companies are showing profit margins higher today than they did in 2019, before the pandemic. Over 100 companies show profit margins of 50 percent or more above those 2019 levels…. Corporate executives are not hiding their handiwork; instead, they’re boasting about it in financial disclosures and earnings calls. “We have not seen any material reaction from consumers,” said the chief financial officer of Procter & Gamble, the world’s largest consumer goods company, which has hiked prices three times in the past year. “What we are very good at is pricing,” said Colgate-Palmolive’s CEO. “We find that taking several small price increases is more effective than one large price jump,” added the CFO of Unilever. Dollar Tree, a discount store which has the word “dollar” in its name, has decided to permanently set its price point at $1.25, stating specifically that the move is “not a reaction to short-term or transitory market conditions.”

 

Class war and economic disequilibrium

Big Business Declares War on Lina Khan

Matt Stoller [BIG, via Naked Capitalism 11-22-2021] A must-read (and especially insightful on factional conflict in the Republican Party). L 11-22

Open Thread

Please use to discuss topics unrelated to recent posts.

Fundraising Update

A little over 1 week in, and we’ve raised approximately $2,400. The first tier is at $5.000:

A longer article on the collapse of the USSR, putting everything I’m aware of together. In particular I want to discuss the steps Gorbachev took which seem like either gross stupidity or intentional destruction. The fall of the Soviet Union was studied in great detail by the Chinese Communist Party, and has informed their actions since.

Donations this year have been the slowest I remember, probably both because of Covid and doing the fundraiser around Thanksgiving. Of course, if you’re barely scraping by this year, you shouldn’t give, but if you can afford like my writing and can afford to, I’d appreciate it greatly.

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A Few Words On Thanksgiving

We all know the American myth of Thanksgiving: Pilgrims and natives feasting together, the natives having helped the Pilgrims survive.

We all know what came afterwards; the land theft, the blankets sick with smallpox, the ethnic cleansing and genocide.

Some years ago, I wrote a Thanksgiving post called “The Silver Lining of Thanksgiving Past.” I had done some research on the betrayal of the natives by the Pilgrims and found something interesting: the Pilgrims at that feast had opposed the evil done of the natives, some to such an extent they were excommunicated, a big deal in that time and at that place. It was new immigrants from England who, not remembering the help given by the natives, who had pushed thru the evil done against them. To these newcomers, the natives were pagan savages, but to those who knew them well and had feasted with them, they were friends and allies.


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So much has happened since then; so much evil and degradation. But perhaps when enjoying your Thanksgiving, remember the real spirit of it, that even at cost to themselves, the Pilgrims the natives helped tried to protect them.

Even if they failed, it matters that they tried, and is worth remembering.

Thanksgiving should be about the good things we are grateful for, even small ones In particular this year I’m glad that coffee shops are open again and that I’ve gotten back to reading books every day.

If there’s anything that’s been good for you this year you’d like to share, drop it in the comments.

 

The Terror Of Electronic Money

Electronic money is inherently authoritarian. (Bitcoin is authoritarian and deflationary, and deflation rewards first movers and the rich far more than normal people.)

A few weeks ago John Michael Greer noted that part of what happened during Covid is that people left the formal economy and joined in the informal one.

The strength of a government can, most simply, be measured by how much it can tax. The early absolutist monarchs spent much of their time figuring out how to tax people, something which was very difficult: they built bureaucracies largely to increase their income, so they could wage war better.

Cash money is always a problem to governments, because people can exchange it without registering the exchange. Granted, governments became very good at tracking money, but there were always ways to avoid the system, especially if you were smart and spent cash carefully. I’ve had multiple friends who worked for some period for cash under the table, especially the in the (old) gig economy and in restaurants.

Electronic money, whether done on a blockchain or not (though blockchains are terrible for privacy), with the removal of cash money, makes it almost impossible to escape the state’s taxation and makes many small exchanges not worth doing, since the fuss and expense of tax accounting is usually an immense pain.

So e-money is something governments really want more of, and it’s something that people who are concerned with real freedom, not theoretical freedom such as “rights” the government may or may not actually bother respecting, should be concerned every time they see a movement to restrict cash and move to e-money. Even partial moves, like India’ getting rid of larger bills, can be devastating, and if the informal economy is large enough, can be disastrous economically even if the government winds up with more taxes. (India’s experiment was bad for the Indian economy, as I expected.)


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Bitcoin is not “anonymous money”. Blockchains record every transaction. Cash is anonymous money, and anyone who tells you otherwise is a scam artist.

Computers and the telecom revolution, overall, have been bad for the freedom of most people, in very concrete ways; sometimes minute to minute ways, since they also allow for bosses to automatically monitor what workers are doing. Hell is micro-management, and this is moving out from warehouses, into white collar jobs. No one who isn’t powerful at work will have any real ability to dodge it.

I first noticed this at my last big corporate job, where every “automation” of clerical workers was really about control: every one reduced productivity but made workers jump thru automated hoops and made it easier for management to see exactly what each worker was doing.

None of this should be surprising. Advanced in communication technology always allow more control because they allow more knowledge to be centralized. This was true of writing and it’s true of computers. It used to be that if the boss wasn’t there and couldn’t justify a supervisor to stand over your shoulder, you had a fair bit of freedom to do the job your way, but now an algorithm watches you and managers can see real time dashboards.

My entire experience at work was that “Hell is micromanagement”, one of my best bad jobs was being a bike courier because back in the early 90s they couldn’t track where you were or what you were doing. They told you to pick up and deliver; as long as you did that on time, it was up to you how you did it, and when work was slow, no one was telling you to do make-work.

More and more this is going away; bosses are even putting tracking software on home computers for remote workers, and sometimes insisting on having cameras watching the workers.

Freedom isn’t just about the right to free speech and assembly or a speedy trial (rights we are losing anyway, in many countries) it is about the moment to moment experience of life, and the majority spend half their waking hours working. If work sucks, life sucks. And with e-money, you won’t even be able to opt out of the formal economy.

Welcome to Hell.

Identity: Political Concepts Chapter 4

Previous: Ideology

(Introduction and Table of Contents)

Identity is “when you’re cut, I bleed”, no ideology, religion, union, nation or political party can work without it. It is the glue that makes all politics and power possible.

Without identification, no ideology or legitimacy works. If you are a Christian and someone disrespecting the word of Christ doesn’t bother you, you won’t do anything about it. If you don’t think Jesus showed the way to salvation, you won’t act on his words or try and convert anyone, and if there hadn’t been Christians who did both those things, there would be no Christianity and no one would remember Jesus.

Likewise if it doesn’t make you angry when people cheat in an election, or when people aren’t able to elect politicians, you don’t believe in representative democracy in any way that matters: democracy spread because people believed in it and fought for it and in many cases died for it, just as all the Christian martyrs died.

In modern society we tend to think of identity in ethnic terms or in terms of personal shared characteristics: blacks and Chinese, and African-Americans and gays and trans people and women, white men, and perhaps as nationalism, “I am proud to be American. I always salute the flag and I thank our men and women who serve!”

But people can identify with almost anything including political parties and ideal such as voting, human rights, honor, nobility, and so on. Any ideology which does not have people who deeply care about it, believe in it and identify with it, will go nowhere, and if it once had such people, but the identification is gone, the ideology will die.

Legitimacy, even in the harshest of cases where it’s an autocrat and his band of soldiers ruling everyone else, rests on identity: “I am a servant of the KING,” or “I stand with my band of brothers” or in Feudalism “only the nobility have the right to rule, we are better and superior to peasants and money-grubbing merchants without honor!”

We identify with other people like us, it is true, but that encompasses far more than “we have the same skin color.” We identify with people who like what we like, who do what we do, who believe what we believe and who live like us.

You don’t need all of these things: Christians can identify with other Christians who have different skin color, live thousands of miles away and otherwise have different lives entirely: so long as they are Christian. The same is true of Islam, believers in democracy, or those who are for secularism and against religion.

Ideologies power legitimacy, but without identification with an ideology, there is no power behind an ideology, and thus no power behind legitimacy.

Identification, most simply, is produced by rituals. The classic rituals are the big religious ones, though for many people they have lost their power. A ritual creates an emotion and attaches it to something: most often people, objects or ideas.

The general idea in mass rituals is to have everyone doing and feeling the same thing at the same time, with the same focus. Think of the various forms of Christian ritual, with everyone focusing on the priest, the altar, the words of the Bible, singing together, praying together and so on. The more people move together, or focus on the same objects at the same time as they feel any emotion, the more they identify with the symbols and with other people who perform the same ritual.

A secular ritual is the concert, with people all focusing on the musicians, the music and moving, often dancing, together. Large sporting events, with human waves, and perhaps recitations of the “Oath of Allegiance” or the national anthem, have similar characteristics.

Rituals also include what sociologists call interaction rituals. Simple things: as a student you sit lower than your teacher and don’t speak unless the teacher gives permission. When you meet a friend you hug or shake hands and ask how you are and when you leave, you say goodbye and perhaps wish them well (and often hug again.) In Japan you might bow, with the depth of the bow determined by the relationship If you think these rituals don’t have power and emotions attached it’s simple to check: next time you meet a friend (or family member) you’d hug or shake hands with or bow, don’t. Don’t ask how they are, and when you decide to leave just turn around without a word and say nothing.

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Or stand up and start talking loudly when the teacher hasn’t given you permission to speak. Or stand too close to someone in an elevator, even. Or walk into the boss’s office and sit on his desk and say “Hey, Bob, how ya doin’.” Be sure to stare down at him. (Well, only do this if you’re OK with losing that job.)

Interaction rituals are usually low emotion, but they happen so often they create stories and relationships and identification: the teacher has the right to control the class, and when someone violates that, others are generally offended, or sometimes amused.

Implicitly or explicitly, all identification comes back to some sort of story, and an emotion attached to it. In the Catholic Mass, the last supper is re-enacted, and the participants because Christ’s disciples, with the priest taking the role of Christ. This ritual, in various forms, was powerful enough to enthrall most of Europe and various other regions of the worlds for almost two millennia.

Great rituals create powerfully charged symbolic objects: a Christian can simply think of the Cross, Jesus or the bible to experience the emotion again, and can perform small rituals alone, such as prayer, or the blessing of meals (which was common when I grew up, but seems to be much less common today.)

While rituals are more powerful when done with other people you can create identification while you are alone, as when reading a book or watching a movie. Great books and movies generate emotions about characters, ideas and symbols. If you don’t believe this, go to a comic convention (or social media) and insult a beloved comic book character. Completely fictional, but people CARE.

Such people have usually read hundreds of comic books or seen many movies and TV shows about the characters. They have strong emotions about those characters; they matter. Much as people who love Jesus have been told many stories about Jesus and had many emotions about Jesus, though religion often ads a belief that when something good happens their god made it happen, and that the god loves and cares for them. Unlike people in the world, a god’s love is often believed to be unconditional, something we otherwise get, perhaps, only from our mothers, and often not even from them.

Religious identification is, thus, identification on steroids, when it works,.

Often identification can be as simple as liking people who are like us: farmers from thousands of miles apart have some identification with each other. Likewise, go overseas where there is almost no one of your nationality, then meet a fellow citizen and you’ll find out how much identity nationality provides when you have an instant bond with someone based only on citizenship.

Just living in the same community, especially a small community, provides a lot of identification, because you know all the same people and places and grew up with very similar interaction rituals.

But a 5 foot tall black female who is a farmer in Nigeria has an identity in common with a 6 foot white male banker who lives in Norway if they’re both Christian or Muslim or Buddhist. A common identity could exist if both believe in human rights, or even if they both love the same author and books, or the same movies.

In essence, all identification makes things sacred: ideas, stories, characters, people (priests, the pope, rock stars, great scientists and novelists). Everything that happens to something sacred to you produces emotions. The pope is just some guy, but to a Catholic what he does is important: as Pope Francis is proving as I write, even Catholics who hate a pope are in a strong sacred relationship with him.

The American Constitution is just a bunch of words, but to many Americans it is sacred and if someone was to burn the original document they’d be offended. Even saying “no, people don’t have a right to happiness and aren’t equal, the Constitution is bullshit” would offend many and might get you punched.

Or burn a flag in many places in America: then run.

No idea has any political power without identification. No social group has any political power if the members do not identify with each other, because if they don’t, they won’t act together. A union dies not when it disbands, but when members break solidarity, which is why companies try and create “two tier” contracts where older employees are treated better than the new ones. A political party that has no partisans is a zombie, just waiting to be replaced.

Identification plus ideology is the creation of the sacred: of actions, ideas and people which must be treated in specific way. It is because of human rights that many are offended when they see someone beaten by police, and because of identification with authority that many others are pleased, “they must have had it coming, they should have obeyed.”

But, bottom line, just remember that identification is “when they are cut, I bleed”. If you don’t have an emotion when an idea, or person, or symbol is treated badly or well, then you aren’t identified with it. Without those emotions to drive action ideas, movements, political parties and ideologies have no ability to change the world, or even keep it as it is. When the objects which create emotions change, or the emotions themselves change, then the ideology has changed.

Identity and ideology are the base of all groups and coalitions; all political actors rely on and are created by story and identification: about how the world should be and create a group which feels the same.

Group action is the basic building block of politics, and it is that to which we will turn next.

Next: Groups and Coalitions

The Ongoing Depression Which Started in 2008

Back in 2009, I said that the bailout and inadequate stimulus would cause a depression which would last for at least a generation. I got a lot of the details wrong (inflation happened only in areas of interest to the rich, for example, till now) but that there would be a depression (ignored, by and large), oh yes.

How Bailing Out The Rich Caused a Depression

The Bailout Caused The Sucky “Recovery”

Bottom line is that in a capitalist system, people who make bad bets are supposed to go bankrupt. Other people get their assets at fire-sale prices, and those people see if they can do better. The entire financial industry, essentially without exception, made bad bets in the 2000s. They lost trillions, and they would ALL have gone bankrupt, even the ones, like Goldman Sachs, on the winning side, because the counter-parties would not have been able to pay. (A non-government bailout winning strategy would have involved huge positions in money and assets that go up in crises.)

When the stock market crashed in 29, the Fed did not bail everyone out. For generations that’s been assumed by many to be a mistake. It wasn’t. Government policy after the crash was a failure, but not keeping companies in business that should have gone bankrupt was the right thing to do, and it set up the recovery and good times you see in the chart above.


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We’re in a depression. We’ve been in a depression since 2008. Even “good years” have been shit. No one has re-ignited the economy, and it can’t be done while oligopolies rule the land, and private interests own government. This is the same mistake, by the way, that the Japanese made when their market crashed in the 80s, leading to what was called the “Bright Depression.” (Which is the analogy I used most often back in 2008/9 for what was to come.)

The anti-trust movement is absolutely essential to ending this. It’s not all that’s required: the power of the rich has to be shattered; they have to be forced to take their losses, and the Fed and Treasury (and foreign central banks and governments) have to stop propping them up.

Central banks have printed trillions keeping the rich afloat in the past 13 years. The entire economy, including the Chinese one, are, as my friend Stirling Newberry once noted, like patients on life support: they breathe fine, as long as we keep the power hooked up.

If we had let the rich lose everything, bailing out only those firms endangered thru little fault of their own, and used the opportunity to shatter the great oligopolies, then applied effective government support, we’d be doing far, far better now (notice the recovery from 29 starts in the 30s.)

And, since the smartest policy would have been a huge green buildout (something I was calling for back in the early 2000s) we’d also be in a better place with respect to climate change. Covid would have been handled better as well, since it wouldn’t have made Billionaires 70% richer in a year and a half, thus making it impossible for government to actually handle it properly, again, because government is owned by rich people and Covid is good for rich people.

You can have a good economy, or you can have a lot of billionaires. You can have a good economy, or you can have unregulated oligopolies. You can have a good economy, or you can have a government bought and owned by the rich. You can, as Brandeis pointed out, “have democracy in this country, or we can have great wealth concentrated in the hands of a few, but we can’t have both.”

Nothing in America can be fixed if the rich stay rich and powerful. Nothing in the EU can be fixed if Eurocrats remain completely dedicated to neoliberal ideas. (Britain is done, alas, I can see no path to recovery that doesn’t take at least a couple generations.)

Even countries like China are screwed by this, because the economy is a world economy, run on neoliberal lines. China is dedicated to industrial policy internally, but as part of a neoliberal world economy. They just want to take over value chains, so they can get more of the wealth and income from them.

All of this means that the ruling elite needs to be replaced wholesale, both to live in a good economy, and to mitigate the worst parts of climate change (stopping it is no longer possible under any realistic scenario I can imagine.)

It’s that simple.

Comment Moderation

Is back on for the time being. No ad-homs, no matter how justified you think they are. No sexism/racism, etc… I’m also going to be reluctant to let thru fights over vaccine denial, etc… In general, comments that are off topic or don’t add anything to the conversation will not be approved.

Make your comments on-topic and polite.

While comment moderation will sometimes be quick, there will be long periods without approval depending on my schedule (this Monday, for example, may show a huge gap.)


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