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

Week-end Wrap – Political Economy – May 18, 2019

Week-end Wrap – Political Economy – May 18, 2019

This post is by Tony Wikrent

Strategic Political Economy

The Pivot Point

[Craig Murray, via Naked Capitalism 5-17-19]

The massive economic shock following the banking collapse of 2007–8 is the direct cause of the crisis of confidence which is affecting almost all the institutions of western representative democracy. The banking collapse was not a natural event, like a tsunami. It was a direct result of man-made systems and artifices which permitted wealth to be generated and hoarded primarily through multiple financial transactions rather than by the actual production and sale of concrete goods, and which then disproportionately funnelled wealth to those engaged in the mechanics of the transactions.

It was a rotten system, bound to collapse. But unfortunately, it was a system in which the political elite were so financially bound that the consequences of collapse threatened their place in the social order. So collapse was prevented, by the use of the systems of government to effect the largest ever single event transfer of wealth from the poor to the rich in the course of human history. Politicians bailed out the bankers by using the bankers’ own systems, and even permitted the bankers to charge the public for administering their own bailout, and charge massive interest on the money they were giving to themselves. This method meant that the ordinary people did not immediately feel all the pain, but they certainly felt it over the following decade of austerity as the massive burden of public debt that had been loaded on the populace and simply handed to the bankers, crippled the public finances.

The mechanisms of state and corporate propaganda kicked in to ensure that the ordinary people were told that rather than having been robbed, they had been saved.

How Turkey Defied the U.S. and Became a Killer Drone Power
[Intercept, via Naked Capitalism 5-16-19]

Turkey now rivals the U.S. and the U.K. as the world’s most prolific user of killer drones, according to a review by The Intercept of reported lethal drone strikes worldwide. (Other countries that have reportedly killed people with drone-launched weapons include Israel, Iraq, and Iran.) The technology has been used by Turkey against ISIS in Syria and along Turkey’s border with Iraq and Iran, where ever-present Turkish drones have turned the tide in a decades-old counter-insurgency against the Kurdistan Workers’ Party, or PKK.

While the U.S. was the foremost operator of armed, unmanned aerial vehicles (UAVs) in the world for more than a decade, launching the first drone attack in 2001, today more than a dozen countries possess this technology. The U.K., Israel, Pakistan, Saudi Arabia, the UAE, Egypt, Nigeria, and Turkey have all used armed UAVs to kill targets since 2015. Efforts by Washington to control proliferation through restrictions on drone exports have failed to slow down a global race to acquire the technology. Meanwhile, the U.S. has set a precedent of impunity by carrying out hundreds of strikes that have killed civilians over the last decade.

Turkey’s Anka drone showcased during a ceremony at Turkish Aerospace Space Industries Inc., near Ankara on July 16, 2010.

The U.S. Has Been Eclipsed in Every Sphere But War

Glen Ford [Black Agenda Report 5-16-19]

The U.S. 5G eclipse by China is permanent, rooted in the systemic mayhem of the imperial economic (dis)order. Although the U.S. virtually invented the Internet as a byproduct of military technology, the early U.S. global hi-tech lead was squandered in the chaotic and criminally wasteful corporate capitalist game of all-or-nothing. As recounted by the South China Morning Post (“How US went from telecoms leader to 5G also-ran without challenger to China’s Huawei”) the U.S. refused to set national standards for mobile carriers, allowing tech companies to choose between wireless networks like TDMA, CDMA and GSM. Since 1987 — the year Huawei was founded — Europe has mandated that all its wireless systems use the GSM standard. But the Americans allowed U.S. corporations to wager billions of dollars and hundreds of thousands of competing jobs on rival mobile systems. The deregulation of U.S. telecommunications in 1996 further fueled the high-tech capitalist pandemonium. “The US was like the Wild West,” said Thomas J. Lauria, a former AT&T employee, telecoms analyst and author of the book The Fall of Telecom. “Europe managed itself more contiguously than the US, they did not have a lot of disparate networks and picked the [GSM] standard that everyone had to agree to.”

We could lose the 5G race to China, warns US Department of Defense
[ZDNEt, 4-5-19]

A new report on the risks and opportunities presented by the introduction of 5G networks by the Defense Innovation Board – an arms-length consultation panel of the US Department of Defense focusing on technology and innovation – suggests “China has taken the lead in 5G development through a series of aggressive investment and spectrum-allocation initiatives”.

Charles. W. Freeman [, via Naked Capitalism 5-13-19]

The message of hostility to China these efforts send is consistent and apparently comprehensive. Most Chinese believe it reflects an integrated U.S. view or strategy. It does not.

There is no longer an orderly policy process in Washington to coordinate, moderate, or control policy formulation or implementation. Instead, a populist president has effectively declared open season on China. This permits everyone in his administration to go after China as they wish. Every internationally engaged department and agency – the U.S. Special Trade Representative, the Departments of State, Treasury, Justice, Commerce, Defense, and Homeland Security – is doing its own thing about China.

“We froze the salaries of 20 executives – and it improved the lives of 500 employees” 

[Guardian, via Naked Capitalism 5-16-19]

“Raising wages in the midst of a business turnaround was not easy. We needed our executive team to buy into a vision of business success where every employee had a fair shot at success. It worked. Our business has tripled over the past five years. Our minimum wage is now approaching $16.50 per hour and last year we broadened profit sharing to all levels of the company. I share my story at CareCentrix so that politicians and the public remember the role and responsibility of the business community in contributing to the success of the American Dream, and so that business leaders understand that an investment in the workforce is one of the best financial decisions to make.”

Predatory Finance

Bank of England warned prosecution could destablise Barclays

[Financial Times, via Naked Capitalism 5-15-19]Billions in dirty cash helped fuel Vancouver, B.C.’s housing boom

[McClatchy, via Naked Capitalism 5-13-19]

…a dirty-money probe that estimates more than $7 billion Canadian ($5 billion U.S.) was laundered through the western Canadian province of British Columbia last year. The startling findings from two reports released by the provincial government Thursday illustrate how a torrent of suspicious cash has fueled casinos, luxury car sales and real estate in the Pacific Coast region.

“The amount of money being laundered in B.C. is more than anyone predicted,” Finance Minister Carole James told reporters Thursday.

In real estate alone, an estimated C$5 billion may have been laundered last year in the province, equivalent to 4.6% of all transactions by value in that period, according to one of the reports. In the Vancouver region, where housing prices rose more than 70% in five years, “I certainly believe that money laundering played a part,” James said…. It estimated that dirty money pushed B.C. home prices 3.7% to 7.5% higher than they would be in the absence of laundering.

A string of investigations commissioned by Premier John Horgan’s government have slowly been revealing in recent months how Vancouver and the surrounding area has become a hub for dirty money, tax evasion, and a place to park foreign cash of unknown origin — no questions asked. One out of five B.C. properties are bought in cash; over the past two decades, C$212 billion in property has been bought in cash. The true owners can’t be identified for the vast majority of C$28 billion in B.C. residential property held by legal entities.

EU fines banks more than €1bn for foreign exchange cartel
[Financial News May 16, 2019]

The European Union’s executive arm has fined five banks close to €1.1bn for collusive behaviour in the $5.1tn-a-day foreign exchange markets. Barclays, Citigroup, JPMorgan, MUFG Bank and Royal Bank of Scotland were all given multimillion-euro fines.

Citigroup bore the brunt of the penalties, with its share amounting to €311m. RBS was fined €249m, while JPMorgan agreed to pay €229m and Barclays is paying €210m. MUFG is paying roughly €70m….

The traders’ behaviour, which included exchanging information on their risk positions and their plans for trades, and occasionally co-ordinating their trading strategies, took place from as early as 2007 through to 2013.

As Regulators Squirm in their Seats at Hearing, JPMorgan and Citigroup Get Slapped with More Rigging Charges by EU
Pam Martens and Russ Martens, May 17, 2019 [Wall Street on Parade]

Here’s Why You Can’t Trust the Federal Reserve’s Financial Stability Report
Pam Martens and Russ Martens, May 16, 2019 [Wall Street on Parade]

The Office of Financial Research (OFR), created under the Dodd-Frank financial reform legislation of 2010, publishes a Financial Stability Report; the Financial Stability Oversight Council (F-SOC), also created under Dodd-Frank legislation, publishes an annual report to call attention to any emerging threats to financial stability; and, not to be left out, the Federal Reserve has decided it needs to have its own say in its own Financial Stability Report – ostensibly to make it appear that it’s on top of the threats emanating from its charges on Wall Street – which it decidedly is not.

Another reason the Fed may want its own Financial Stability Report is to create the illusion that things have dramatically changed in the structure of the Wall Street mega banks since the financial collapse of 2008 when the Fed secretly funneled $29 trillioninto the collapsing hulks of the mega banks it was supposed to be prudently regulating, in order to prop them back up.

JPMorgan Chase Owns $2.2 Trillion in Stock Derivatives; Two-Thirds the Total for All Banks
Pam Martens and Russ Martens: May 15, 2019 [Wall Street on Parade]

Climate and environmental crises

German Failure on the Road to a Renewable Future Der Spiegel

The so-called Energiewende, the shift away from nuclear in favor of renewables, the greatest political project undertaken here since Germany’s reunification, is facing failure. In the eight years since Fukushima, none of Germany’s leaders in Berlin have fully thrown themselves into the project, not least the chancellor. Lawmakers have introduced laws, decrees and guidelines, but there is nobody to coordinate the Energiewende, much less speed it up. And all of them are terrified of resistancefrom the voters, whenever a wind turbine needs to be erected or a new high-voltage transmission line needs to be laid out.

Analysts from McKinsey have been following the Energiewende since 2012, and their latest report is damning. Germany, it says, “is far from meeting the targets it set for itself.” ….But the grand transformation has lost its way. The expansion of wind parks and solar facilities isn’t moving forward. There is a lack of grids and electricity storage — but for the most part there is a lack of political will and effective management. The German government has dropped the ball.

The German government made a key mistake when it announced the end of the nuclear era in Germany eight years ago: It announced it was turning away from nuclear power, without simultaneously initiating the end of coal.

Wind turbines and solar panels were installed across the country — but the coal-fired power plants kept operating. The government set up a clean energy system alongside the dirty one. But why? Because Berlin was afraid of do anything that might harm a single company or voter.

‘No other option’: Climate change driving many to flee Guatemala
[Al Jazeera, via Naked Capitalism 5-13-19]

“Major Oil Companies Bankroll Paris Accord Bill Opponents By 3-to-1 Margin”

[MapLight, via Naked Capitalism 5-14-19],  and
[MapLight, via Naked Capitalism 5-14-19]

History Repeats Itself as Corporations Join Big Green to Craft Market-Based Climate Plan
[The Real News Network 5-15-19]

A decade ago, corporations teamed up with environmental groups to create the US Climate Action Partnership. Now they’ve formed the CEO Climate Dialogue, which again will push market-based solutions to the climate crisis.

Column: States, feds must unlock grid for clean energy growth
[Union of Concerned Scientists, via American Wind Energy Association 5-13-19]

Gridlock preventing transmission operators from updating their networks is a pervasive issue in the US and one that must be overcome to help the nation transition to a clean energy future, writes Mike Jacobs, a senior energy analyst with the Union of Concerns Scientists. “[W]hile we now have commitments for significant offshore wind development, the details of how we’ll effectively move that energy to the onshore grid and ultimately to customer demand remains unresolved,” he notes.

Former coal worker finds fruitful career in wind energy
[CBS News, via American Wind Energy Association 5-13-19]

Eric Ritchie, a former coal miner from West Virginia whose family has worked in coal for generations, has successfully transitioned to a new career in wind energy with Invenergy. “We have everything we need to be a competitor to some of the Midwest states — Texas and some of those states that are going largely renewable,” he says, noting the industry can help make West Virginia “important” again.

Analysis: Larger ships needed to support offshore-wind sector

[Bloomberg, via American Wind Energy Association 5-13-19]

Offshore wind is taking off worldwide, and companies such as MHI Vestas Offshore Wind and General Electric are builder larger machines, creating a gap in the ships capable of transporting and installing large turbines and components, according to this Bloomberg analysis. Installation companies must keep pace with demand and may use ships originally designed for offshore oil and gas projects, says Vattenfall Head of Offshore Wind Michael Simmelsgaard.

Let Them Eat Promises

No patient left behind

[CNN, via Naked Capitalism 5-17-19]

“A federal judge blasted UnitedHealthcare last month for its “immoral and barbaric” denials of treatment for cancer patients. He made the comments in recusing himself from hearing a class-action lawsuit because of his own cancer battle — and in so doing thrust himself into a heated debate in the oncology world…. That includes insurance companies. [Dr. William Hartsell, [American Society for Radiation Oncology (ASTRO)]’s vice chairman for health policy] said a recent study showed that about two-thirds of cancer patients were initially denied proton treatment by their insurers: ‘If you have a patient, say with esophageal cancer, they can’t wait four months for a decision on treatment.’

Medical Insurance Companies Can Decide Who Lives and Dies – RAI with Wendell Potter (4/7)
[[The Real News Network 5-15-19]

Whistleblower Wendell Potter says the death of a young woman denied care by the insurance company he worked for was a turning point in his life; he says these practices are still taking place under the Affordable Care Act – on Reality Asserts Itself with Paul Jay

Goldman Sachs: First $1 million drug treatment likely in 2019
[Goldman Sachs 5-13-19]
Dr. Zeke Emanuel is the brother of former Chicago mayor Rahm Emanuel. Dr. Zeke Emanuel was an important influence on the development and passage of the Affordable Care Act, aka Obamacare. 

With pharmaceutical drug pricing increasingly in the political spotlight, the issue may present a rare opportunity for bipartisan action, says oncologist and public health expert Dr. Zeke Emanuel, an architect of the Affordable Care Act and chair of the Department of Medical Ethics and Health Policy at the University of Pennsylvania. In Emanuel’s view, meaningful reform will need to incorporate two principles — value-based pricing (linking the price of a drug to the health benefit it produces) and determining a drug’s total affordability to the system, he explained during a recent episode of Talks at GS. Regardless of the policy approach, Emanuel predicts that events will push the drug pricing issue further into focus this year: “In 2019, we are likely to have the first million dollar drug treatment. I think that will send a shock wave through the system. And I think it is going to galvanize people. We just can’t spend a million dollars for a drug treatment.”

Information Age Dystopia

“How Online Shopping Makes Suckers of Us All”

[The Atlantic, via Naked Capitalism 5-16-19]
I was going to pass by this and leave it out of the wrap, but Lambert Strether’s comment at the end is just too damn funny and insightful.

“Our ability to know the price of anything, anytime, anywhere, has given us, the consumers, so much power that retailers—in a desperate effort to regain the upper hand, or at least avoid extinction—are now staring back through the screen. They are comparison shopping us. They have ample means to do so: the immense data trail you leave behind whenever you place something in your online shopping cart or swipe your rewards card at a store register, top economists and data scientists capable of turning this information into useful price strategies, and what one tech economist calls ‘the ability to experiment on a scale that’s unparalleled in the history of economics.’ In mid-March, Amazon alone had 59 listings for economists on its job site, and a website dedicated to recruiting them.”

Lambert Strether’ observes: “That’s great. What could go wrong with an enormous experiment on consumers run by mainstream economists?”

[Weather Underground, via Naked Capitalism 5-14-19]

 “America has an Achilles’ heel. It lies on a quiet, unpopulated stretch of the Mississippi River in Louisiana, 45 miles upstream from Baton Rouge. Rising up from the flat, wooded west flood plain of the Mississippi River are four massive concrete and steel structures that would make a pharaoh envious: the U.S. Army Corps of Engineers’ greatest work, the two billion-dollar Old River Control Structure (ORCS). The ORCS saw its second highest flood on record in March 2019, and flood levels have risen again this week to their fifth highest level on record. While the structure is built to handle the unusual stress this year’s floods have subjected it to, there is reason for concern for its long-term survival, since failure of the Old RIver Control Structure would be a catastrophe with global impact.”

“If the Old River Control Structure Fails: A Catastrophe With Global Impact”

[Jeff Masters, Weather Underground] (part one; part two), via Naked Capitalism 5-17-19] . A must-read.

“America became the world’s greatest economy because it had a wealth of natural resources. But those goods needed the world’s greatest network of navigable rivers—the Mississippi River system—on which to be transported. Naturally, that network of rivers needed a port at the ocean, to regulate the flow of goods into and out of the country. Between Baton Rouge and New Orleans, the Lower Mississippi River has four of the fifteen largest ports in America. Those ports handle over 60% of all U.S. grain exports to the world, thanks to the barges moving downriver. Going upriver, those barges transport the petrochemicals, fertilizers, and raw materials essential for the functioning of U.S. industry and agriculture…. If the Old River Control Structure (ORCS) were to fail, barge navigation might be interrupted for weeks and possibly months…. Closure of the Mississippi to shipping would cost the economy $295 million per day, said Gary LaGrange, executive director of the Port of New Orleans, during the great flood of 2011. Closure for multiple months would cause a cascade of impacts across a broad sector of the U.S. economy, multiplying costs…. There are simply not enough trucks and trains in the country to make up for the barge capacity lost, and even if there were, the cost of doing so would be prohibitive… Failure of the ORCS and the resulting loss of barge shipping that might result could well trigger a global food emergency. The U.S. is one of the world’s largest exporters of grain, and 60% of that grain is transported to market by barges travelling on the Lower Mississippi River. A multi-month interruption in the supplies of more than half of U.S. grain to the rest of the world can be expected to cause a spike in global food prices, and potentially create dangerous food shortages in vulnerable food-insecure nations.”

Restoring balance to the economy

[The Hill, via Naked Capitalism 5-12-19]
Looks like it’s S1414. Here are the co-sponsors.

[New York Magazine, via Naked Capitalism 5-13-19]

…for many years, Amazon was operating with a negative cash flow, which means that the firm was receiving less money than it was spending. But this business model, which shareholders and investors on Wall Street really love now, doesn’t fit within the way antitrust regulation or law conceives of firms.

Conservative antitrust theory has said that predatory pricing — underpricing goods so that other firms can’t compete — is irrational and unsustainable, because shareholders will punish firms that are unprofitable. But with the rise of big unprofitable companies like Amazon and Uber, this kind of market-disciplining effect no longer exists. Traditional orthodox antitrust theory does not map onto current corporate reality….

All the vendors and sellers that interact with Amazon have to sign a binding mandatory arbitration clause, which means that if they have any legal dispute with Amazon or even if they think that Amazon is violating trademark or copyright or tax laws, they have to arbitrate that issue with Amazon directly. This means that even if they’re suffering, their only meaningful way of vindicating their rights is in private, so we wouldn’t know the outcome, or even if arbitration was happening. Even more egregious is that Amazon also tells them to waive their ability to file a class arbitration, where a number of vendors and merchants would come together against Amazon.

Because of this, most merchants and sellers that are relatively small, which is the majority of companies that work with Amazon, simply can’t bring claims against the company, because the amount of money necessary to do so is totally prohibitive.

Larry Hanley Was a Transformational Labor Leader. He Will Be Missed.
[In These Times 5-9-19]

Amalgamated Transit Union (ATU) International President Larry Hanley…. was deeply proud of the coalitions with public transit riders that his union pioneered, starting in Chicago. I recall him describing that work at an AFL-CIO Executive Council meeting a few years before the Chicago Teachers Union popularized bargaining for the public good. Larry understood that if transit workers united with the riders, they could not be stopped. This meant fighting to expand the benefits of mass transit and keep fares low, as much as it meant higher pay or benefits.

The Green New Deal Needs Labor’s Support. We Asked Sara Nelson How To Get It.
[In These Times 5-9-19]

The president of the flight attendants union says stopping climate change and defending workers are part of the same fight….

What would it take to build more labor movement support for the Green New Deal?
SN: Make labor central to the discussion, including labor rights, labor protections and labor expertise. We must recognize that labor unions were among the first to fight for the environment because it was our workspaces that had pollutants, our communities that industry polluted. Let’s not dismiss the labor movement. Let’s recognize and engage the infrastructure and experience of the labor movement to make this work.

We need the airline industry to engage as well. According to an industry analysis, the airline industry has, for the last 40 years, improved fuel efficiency at a rate equivalent to taking 25 million cars off the road each of those years….

What are the biggest lies opponents of the Green New Deal tell workers?
SN: The biggest lie is that the Green New Deal resolution is legislative policy and that it imposes certain strict requirements—for example with air travel, that every plane will stay on the ground in 10 years. There is not a flight attendant or pilot or anyone in aviation who actually believes that aviation is going to be grounded. That’s simply not true. The opposite is true. This resolution seeks to promote technological advancements and policies that will keep flights in the air.

Sara Nelson’s Art of War
[The New Republic 5-13-19]

The flight attendant union leader knows how to strike fear in the heart of bosses—and not just in the airline industry.

The most powerful labor leader in the country right now…. Nelson has fast become a rising star in the labor movement, as well as one of its most unapologetically militant voices. As the head of a union that represents nearly 50,000 flight attendants at 20 airlines, she reacted to the government shutdown in January with dire concern for both her membership and the passengers they are charged to protect, and—unlike many of her peers in union leadership—decided to do something drastic to fix it. It was her call for a general strike, delivered during her acceptance speech for the 2019 AFL-CIO MLK Drum Major for Justice Award on Sunday, January 20, that was widely credited for jump-starting the endgame of President Donald Trump’s brutal five-week shutdown. When I met with her not long after the shutdown had concluded, she explained that she was moved to action in part because she found the government’s refusal to take care of back pay for the federal workers to be simply “wrong, completely immoral.”

Hmmm: morality as an economic consideration. I’m sure this makes mainstream neoliberal and conservative economists very unhappy.

Not just about oil: Bank of North Dakota reports its 15th consecutive year of record profits
[Public Banking Institute 5-18-19]

The Bank of North Dakota has released its 2018 annual report, in which it announces its 15th consecutive year of record profits with $159 million in net earnings. The state’s return on investment at the Bank was a dramatic 18 percent. Its consistent success in the face of an oil bust that has crippled most oil states shows that the BND’s success is not, as critics contend, “all about oil.” Its stellar record stands on its own and attests to a more efficient business model than its private competitors.

The report contains important details for public banking advocates. BND’s press release states:
“The report’s theme, ‘ROI,’ highlights the Bank’s returns to the state in its first 99 years. Since the initial investment of $2 million in 1919, BND has returned more than $1 billion to the state through the general fund, infrastructure, disaster relief and other special programs. That doesn’t account for the thousands of North Dakota residents who have benefited from its agricultural, business, home and student loans.

Creating new economic potential – science and technology

Stephen Mraz, May 8, 2019 [Machine Design Today]

For about the past 15 years, the Defense Advanced Research Projects Agency, better known as DARPA, has been challenging the entire engineering community to do something incredibly difficult. It also offers a cash prize to the team or individual that was best at completing the task; if no one completes the task, DARPA keeps its prize money.

The first challenge, for example, called for robotic vehicles to travel a 150-mile defined route over rough terrain country all on their own. No help from anyone. The winning team would take home a $1 million prize. None of the robotic entrants made it any farther than about 7.25 miles….

There are currently three challenges in various stages:

The Spectrum Challenge tasks teams to devise strategies that will let radio networks use artificial intelligence and machine learning to best determine how the radio-frequency spectrum will be used moment-to-moment while avowing interference and exploiting opportunities. The winner will take home $3.5 million. The finals are this year, Oct 23, at the LA Convention Center. It is free and open to the public. (Hope it’s on TV.)

The Subterranean Challenge asks teams to come up with hardware and algorithms to map, navigate, and search underground environments including tunnels, urban undergrounds, and caves. Teams can build hardware, develop a virtual device, or both. The final event will be held 2021 and the winner could haul in $3.5 million if it wins in both categories.

The Launch Challenge is pushing teams to figure out how to launch into space what customers want launched, when they want it launched, and from the site of the customer’s choosing—all for a reasonable price. DARPA has already got it down to three teams, so early next year, teams will get details of the launch site 30 days before take-off. Payload and LEO orbit info will come two weeks out from take-off. Teams that manage to put a payload into the right orbit will win $2 million. Within weeks after the first flight, teams will be tasked with sending a different payload into a different orbit from a different launch site…. For details on the DARPA challenges, click here.

Mechanization of agriculture in USA was the wonder of the world, and no small part was played by state agricultural associations, funded by state governments, which incentivized technological development in exactly the way DARPA is doing so today.  This includes the development of steam powered tractors (pictured below), then tractors using kerosene, naphta, and finally, gasoline. The annual advertising booklets published by manufacturers of agricultural equipment and tractors usually included at least a page devoted to listing the prizes and awards won by that manufacturer.

Picture of medallion won by Geiser Machine Company at the 1884 Pennsylvania State Fair, in Geiser’s 1889 catalog of steam traction engines and farm equipment. 
Photograph from Geiser’s 1910 catalog of steam traction engines and farm equipment. 

Thailand selects contractors to build 220km/h line
[Railway Age 5-15-19]

The government of Thailand has selected a group of 13 companies led by the Chareon Pokphand Group (CP) conglomerate for a public-private partnership to develop a $US 6.8bn 220km/h railway between three of the country’s most important airports.

Buenos Aires opens rebuilt Mitre commuter line
[Railway Age 5-15-19]

Argentinean president Mauricio Macri officially opened the new elevated section of the Retiro Mitre – Tigre line on May 10, commenting in his speech that it is the first new railway viaduct built in the city in a century.

JR East Alfa-X Shinkansen train begins tests
[Railway Age 5-15-19]

East Japan Railway (JR East) unveiled its Alfa-X Shinkansen test train at the railway’s maintenance centre in Rifu, Miyagi prefecture, on May 10, ahead of the start of testing the following day.

Information Age Dystopia

[VentureBeat, via Naked Capitalism 5-15-19]

[Vice, via Naked Capitalism 5-15-19]


Disrupting mainstream politics

“Did Changes in Economic Expectations Foreshadow Swings in the 2018 Elections?” 

[Liberty Street Economics (Federal Reserve Bank of New York), via Naked Capitalism 5-17-19]

“After examining the persistence of polarization in expectations using voting patterns from the presidential election in our previous post, we explore here how divergence in expectations may have foreshadowed the results of the midterm elections. Using the Survey of Consumer Expectations, we show that economic expectations deteriorated between 2016 and 2018 in districts that switched from Republican to Democratic control compared to districts that remained Republican.”

If The Democrats Don’t Offer Real Change In People’s Lives, Things Can Get Even Worse Than Trumpism
[DownWithTyranny 5-17-19]

As Biden and other centrist candidates share their fantasies of bipartisanship, the Democratic Party seems unable to recognize the seriousness of the moment. It is only luck that the right has not yet found a skilled autocrat. Palin was clueless, and Trump is his own worst enemy. He is a historically weak president who lacks even a passing understanding of how to use the power of the office effectively.

It is chilling to look at the damage Trump has done and envision how much more extensive it could be. Imagine a Donald Trump who doesn’t spend all his time golfing, watching TV, beefing on Twitter, and refusing to learn anything. Imagine a Donald Trump who is disciplined, focused, articulate, and impossible to laugh off as a buffoon. Imagine a Donald Trump who appointed shrewd Cabinet officials instead of people he recognizes from TV. Imagine a Donald Trump who doesn’t give every important task in his White House to one of his vapid children.

Imagine what that person could accomplish with the support of a pliant Republican Senate and conservative-packed Federal judiciary. Democrats may get one more chance to govern before a competent authoritarian emerges from the right; that opportunity cannot be frittered away on four years of West Wing cosplay under the delusion that the GOP will have an “epiphany” and cooperate.

The past few years of democratic backsliding leave the country at a fork in the road, and the Democratic Party has an opportunity to influence what happens next. It will not do so with empty promises to unite Americans.

Support to Resistance: Strategic Purpose and Effectiveness (PDF)
Will Irwin [Joint Special Operations University Press, via Naked Capitalism 5-13-19]

Page 2: “Joint doctrine defines a resistance movement as an ‘organized effort by some portion of the civil population of a country to resist the legally established government or an occupying power and to disrupt civil order and stability.’” Hmm. Newsweek has a summary.


The Sanders-AOC Bill to Cap Interest Rates At 15% Is Too High


“It Doesn’t Have to Be This Way: The Collected Essays of Ian Welsh”



    This is the lie. I don’t give a damn what conservatives say or think about this. They are not part of the discussion so we should not react to them or even discuss this with them. They’re irrelevant, so to include them and react to them only serves to allow them to redirect an honest discussion into a misdirecting reactionary circle jerk.

    The biggest lie is that the Green New Deal resolution is legislative policy and that it imposes certain strict requirements—for example with air travel, that every plane will stay on the ground in 10 years. There is not a flight attendant or pilot or anyone in aviation who actually believes that aviation is going to be grounded. That’s simply not true. The opposite is true. This resolution seeks to promote technological advancements and policies that will keep flights in the air.

    This statement necessarily implies that the Green New Deal will bolster growth and thus even more planes will be blighting our skies in ten years rather than fewer due to the implementation of sustainable technologies.

    There is a limit to efficiency and we’ve almost reached it. Growth has been justified, from the “green” perspective at least, up to this point by promoting technological efficiency as the physicist Tom Murphy informs in the article below.

    Can Economic Growth Last?

    Given that two-thirds of our energy resource is burned in heat engines, and that these cannot improve much more than a factor of two, more significant gains elsewhere are diminished in value. For instance, replacing the 10% of our energy budget spent on direct heat (e.g., in furnaces and hot water heaters) with heat pumps operating at their maximum theoretical efficiency effectively replaces a 10% expenditure with a 1% expenditure. A factor of ten sounds like a fantastic improvement, but the overall efficiency improvement in society is only 9%. Likewise with light bulb replacement: large gains in a small sector. We should still pursue these efficiency improvements with vigor, but we should not expect this gift to provide a form of unlimited growth.

    On balance, the most we might expect to achieve is a factor of two net efficiency increase before theoretical limits and engineering realities clamp down. At the present 1% overall rate, this means we might expect to run out of gain this century. Some might quibble about whether the factor of two is too pessimistic, and might prefer a factor of 3 or even 4 efficiency gain. Such modifications may change the timescale of saturation, but not the ultimate result.

  2. Hugh

    Re economic expectations, it is a never-ending source of amazement and exasperation to me that economists, politicians, and pundits cite economic data as if they were invoking some kind of religious object to absolutely, positively prove that the economy, and therefore people, must be doing better. So shut up and be happy. But in labor statistics, that I know best, the numbers they cite so reverently every month on unemployment, jobs, and wages, –it is obvious to me they don’t know and don’t care what these numbers refer to or that they have little or no reference to where people actually live. So unemployment does not mean people without a job. Job growth is touted in months where in the real world jobs are lost. No one points out that a crap job counts as much as a good job. Or that the last year of solid, not spectacular, job growth not counting quality which is never measured was in 2014 –even as the population has increased since then. Or that real, i.e. seasonally adjusted wages have only been increasing very slowly while costs to workers have been going up and their quality of life has been going down.

  3. bruce wilder

    Trump’s Trade War with China continues to get media attention without much explanation or critical understanding.

    It is a reflection of where the U.S. is as a country that trade policy is just one issue among many crying out for central direction and leadership — Tony’s post today lists several, past and future — and the best we are getting from the superannuated centre-left is a shrug.

    And, yes Virginia, saving the world will probably require giving up routine air travel. And, coal. And, oil. The first lie was obscuring the extent to which all energy use would have to be radically reduced. The second is the extent to which radically different infrastructure would be necessary to create a decent standard of living with radically less energy consumption, even when that consumption is fed from “renewable” sources. (And, no, not steampunk medieval-ism)

    The reason we need a “green new deal” is to organise such a radical change in direction and methods.

    Lying about your ultimate objectives to subvert and overcome reactionary opposition is standard operating procedure in any kind of movement politics. But, in an important respect it cannot work for the movement to respond intelligently to climate change, resource depletion, ecological collapse precisely because the radical nature of the agenda is job 1. The historic New Deal commenced by burying the gold standard in no uncertain terms: overnight, gold money and gold debt was made illegal. There was some political theatre to console gold’s fan base: there was an official price of gold and tons of gold were showily secured at Ft Knox, of course.

    If we are to do anything effective, we have to commit to it as if we really believe fossil fuel use must end in the foreseeable future.

  4. bruce wilder

    Edward Burmila’s rant at The Nation, quoted in the post’s link to Down With Tyranny, is a well done answer to late imperial lesser-evilism.

    Apparently, the idea that politics is about policy remains the opinion of no more that 20% of the electorate. For everyone else, it is about “values” and “identity” and the impression a politician leaves you with after 30 seconds or ten minutes of suspended disbelief meeting with ritual empathy.

  5. S Brennan

    “Talking to the Law Student With a Novel Theory About Amazon’s Power” – New York Magazine

    Nothing new here, anti-trust always has precluded predatory pricing, however, anti-trust laws have not been enforceable since Bill Gates was able to put Bush [the 2nd] into office and have the case against MicroSoft dismissed through executive action at the Justice Dept.

  6. Seattle Resident

    @S Brennan

    How did Gates put Bush the dummer into the White House? Wasn’t it more like Gore’s flecklessness in the face of a fraudulent Florida vote count, not to mention that he was a lousy campaigner?

  7. Anthony K Wikrent

    This is what I love about this place: comments that are jewels of incisiveness and conciseness.

    bruce wilder: “The historic New Deal commenced by burying the gold standard in no uncertain terms: overnight, gold money and gold debt was made illegal.”

    Thank you b w!

  8. KT Chong

    So Trump has forced Google, Intel and other US tech companies to cut off business relations with Huawei, which will effectively cripple Huawei outside China.

    China can retaliate by cutting off rare earth minerals to America. Sure, America will be able to find substitutes – but not fast enough (it will take a few years to find replacements for China’s rare earth supplies) and certainly not at the same volumes right away. I read that without the constant supplies of crucial rare earths from China, America will not even be able to maintain its high-tech military hardware or manufacture new missiles to sustain its never-ending bombings and wars in the Middle East.

    To win this trade war, China must be willing to take the hurt. For example: China can dump US debts/treasuries, work with Russia to adopt an alternative to SWIFT, which will create economic chaos in America and drive hyperinflation for Americans. Dumping US treasuries will hurt China and devalue China’s remaining holdings of US debts, BUT it will hurt America MORE. If Chin wants to win, then it must be willing to take the pains – as long as Americans will suffer MORE pains. Unfortunately, the only way for China to win may be through attrition, (which has always been how China wins wars historically.)

    However, based on what I’ve seen, China lacks the resolve to do what is necessary to win the trade war.

  9. KT Chong

    Just to be clear: China had tried to cut off rare earth supplies to America and Japan during the Obama years, but the WTO ruled against China and forced China to supply rare earths to America and Japan.

    Of course, it may be a different situation now that Trump has blocked American tech businesses from supplying Huawei. It’d be unreasonable for the WTO to rule that it’s okay for Trump to do it but not okay for China to do the same with rare earths.

  10. Ian Welsh

    The WTO can’t force China to do anything if China doesn’t want to, any more than it can force the U.S. to.

    And the WTO brass are really unhappy with Trump now anyway.

  11. Hugh

    Maybe I’m missing something but if China sold US Treasuries which it had already purchased, it would take a loss, or at least, a smaller profit on them. The yuan would gain strength which would hurt Chinese exports.

    As a rule, in trade wars as in depressions, exporters get hurt more than importers, producers more than buyers.

    Never use Russia in an economic discussion. Its economy is pissant compared to players like the US, China, Europe, and Japan. Its financial sector is a joke. The reason why Russian oligarchs went through places like Cyprus is because they knew they couldn’t trust the Russian banking system while they could trust Cyprus because it uses English law in its banking system. Parenthetically, this is why Trump’s dealings with Russian oligarchs back in the aughts certainly involved moneylaundering because real estate is one of the few sectors where there is little or no oversight for money transfers.

    As I so often say, the US is the world’s hegemon and the dollar is the world’s reserve currency. You may not like this. I often don’t. But back at the time of the 2008 financial meltdown, the Fed acted as the central bank to the world through its dollar swaps programs. Much as I dislike the Fed and some of the ways the swap programs were run, it is the only entity that could, and more importantly would, have acted to keep the rest of the world’s financial system from going splat. No other central bank (Europe, China, and Japan) had the ability, and even say the Chinese had had that ability, there is nothing in the last 2500 years of their history, and everything to the contrary, that they would have acted to save anyone’s skin other than their own.

  12. KT Chong

    I brought up Russia because Russia had already developed an alternative to SWIFT. SWIFT gives America tremendous power over international banking and finance. China will have to find a way to neutralize/overcome that America’s monopoly ASAP, and Russia’s money transfer network is already readily available.

  13. KT Chong

    Hugh, China would take a loss if it dump US treasuries, which I why I had said that “China must be willing to take the hurt… BUT it will hurt America MORE” to win the trade war.

    Two weeks ago, I saw an NBC segment about how the recent economic growth of US has been entirely fueled by debt increases. So, if China creates chaos in the US bond market, it will disrupt the debt-fueled US economic growth.

    Yes, certain measures and countermeasures will hurt China, but it will hurt America MORE. It’s a trade war: China will be hurt either way. So far, China’s only reaction to the trade war is to respond to tariffs with (LESS) tariffs. China can’t win if it uses only defensive actions and keeps the fight to just tariffs. If China remains on the defense and continues to take ONLY defensive actions, then China will lose. China needs to flip the table and take some active and aggressive actions. Yet it seems to me that China either lacks the resolve to win, or it thinks Trump will just go away.

  14. KT Chong

    Correction: “…it will NEED TO FIND WAYS TO disrupt the debt-fueled US economic growth,” by targeting the debt market. Will it hurt China? Yes, of course it will, but then it is about hurting American MORE.

    Right now, all the pundits on NBC, CNN, Bloomberg, WSJ, are feeling safe that, “oh, China won’t do anything with its US treasuries – because it will hurt China as well!” Let’s send them some surprises.

    It’s not just about the treasures. The current US economic growth is fueled by debts. It’s to hurt that economic growth.

  15. Hugh

    I might support a trade war or at least unilateral changes on the US side if there was some inkling of an industrial policy behind it. But Trump’s trade war is BS. I think US workers should not hold their breath on any repatriation of jobs back to the US.

    Debt is largely an illusion. If you are on a desert island, would you rather have a stack of Treasuries or the tools, sheets, tents, etc. those Treasuries bought? I think too there is a confusion here between a trade accounts deficit and federal deficits/debt.

  16. KT Chong

    Another venue for China to leverage, retaliate and target:

    Again, targeting that segment will hurt China, but now this must be the consideration for China if it wants to win: does it hurt China or America MORE? If it hurts America more, than it has to be a part of China’s arsenal in the trade war.

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