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

Week-end Wrap – Political Economy – May 24, 2020

by Tony Wikrent


Strategic Political Economy

The Big Failure of Small Government
Maria Mazzucato [Project Syndicate, via Naked Capitalism 5-22-20]

Effective governance, it turns out, cannot be conjured up at will, because it requires investment in state capacity….

Decades of privatization, outsourcing, and budget cuts in the name of “efficiency” have significantly hampered many governments’ responses to the COVID-19 crisis. At the same time, successful responses by other governments have shown that investments in core public-sector capabilities make all the difference in times of emergency. The countries that have handled the crisis well are those where the state maintains a productive relationship with value creators in society, by investing in critical capacities and designing private-sector contracts to serve the public interest….

Unfortunately, for the last half-century, the prevailing political message in many countries has been that governments cannot – and therefore should not – actually govern. Politicians, business leaders, and pundits have long relied on a management creed that focuses obsessively on static measures of efficiency to justify spending cuts, privatization, and outsourcing….

Vietnam’s successful approach to COVID-19 has emerged as a striking contrast to the US and UK responses. Among other things, the Vietnamese government was able to amass low-cost testing kits very quickly, because it already had the capacity to mobilize academia, the army, the private sector, and civil society around a common mission. Rather than simply outsourcing with few questions asked, it used public research and development funding and procurement to drive innovation. The resulting public-private collaboration enabled rapid commercialization of kits, which are now being exported to Europe and beyond.

New Zealand is another success story, and not by coincidence. After initially adopting the outsourcing mantra in the 1980s, the New Zealand government changed course, embracing a “spirit of service” and an “ethic of care” across its public services, and becoming the first country in the world to adopt a wellbeing budget. Owing to this vision of public management, the government adopted a “health first, economy second” approach to the current crisis.

[Huffington Post, via Naked Capitalism 5-21

Tax evasion, to pick just one crime concentrated among the wealthy, already siphons up to 10,000 times more money out of the U.S. economy every year than bank robberies. In 2017, researchers estimated that fraud by America’s largest corporations cost Americans up to $360 billion annually between 1996 and 2004. That’s roughly two decades’ worth of street crime every single year. As the links between corporations and regulators become increasingly incestuous, the future will bring more crude-soaked coastlines, price-gouging corporate behemoths and Madoff-style Ponzi schemes. More hurdles to suing companies for poisoning their customers or letting bosses harass their employees. And more uniquely American catastrophes like the opioid crisis and the price of insulin.

An interview with Philip Mirowski [Jacobin, via Naked Capitalism 5-17-20]

Neoliberals really believe that people are inherently bad cognizers — they can’t work their way out of their problems just by thinking. Of course, that sounds like a very negative doctrine: i.e., telling us that people are incapable of understanding the nature of their problems and pursuing their own democratic ends.

But for the neoliberals, there’s an upbeat answer: the market. And they have changed the meaning of what a market is from earlier economic thought which tended to treat it as an allocation of scarce resources…. This is important, because it means that people have to be brought to understand politically that they have to, in a sense, concede that the market knows more than they do. So, they have to adjust their hopes, their fears, to what the market tells them is necessary. This point binds together a lot of sub-schools of neoliberalism….

There’s an assumption that neoliberalism arose to oppose authoritarianism — and I’m sure that’s how figures like Hayek thought about it. But as Thomas Biebricher points out, the real problem is that their theory has no imagination of how they’re going to get people in general to accept their “reforms” when, of course, they’re not going to like any of them, because they won’t understand how the market knows more than they do. This puts the neoliberals in a bind: How are they going to achieve their political objectives? So, they’re driven, essentially, to concede that authoritarianism is the only practical way they are going to triumph….

The neoliberals talk among themselves, too, and already at this stage of the crisis there are discussions of what they see as current political successes…. They see the gutting of FDA controls over drugs, the boosting of privatized telemedicine, which is something that they’ve proposed for a long time — seeking to get rid of the idea that a poor person ought to be able to see a doctor face-to-face. They also see these developments as blocking a state-run, single-payer system in the United States — they believe the crisis made it less likely than before.

They also like the idea that this is turning pharma into a “heroic” sector, after there had been a lot of political pushback against pharma and it was getting a bad rap. That’s all being undone now. They love the idea that this crisis is inadvertently causing a reengineering of higher education. They have long argued that higher education is just something that most people can’t afford to have. Now, what’s going to happen is widespread distance education, even at elementary levels. It’s promoting homeschooling, something they’ve always been in favor of. It’s boosting the privatization of elementary education, so that’s great . . . They like the idea that an inadvertent effect of the crisis is to kill the US Postal Service. These are the sorts of projects they’ve long had on the back burner. And now they see, “this is our chance.”

“Dominant religions in the U.S., county by county”
[The Big Think, via Naked Capitalism Water Cooler 5-19-20]

“A map shows the dominant religion in each of the United States’ counties. Evangelicals dominate the most areas geographically. Catholics are the majority faith in densely populated areas.” Handy map:

Conservative / Libertarian Drive to Civil War

Democratic governors hit with flurry of legal challenges to coronavirus lockdowns
[Politico, via Naked Capitalism 5-18-20]

….legal challenges are continuing to pile-up across the country — even as governors who extend their state’s shelter-in-place orders begin peeling back some restrictions. The plaintiffs are business owners, aggrieved private citizens, pastors and in some cases, state legislators and legislatures.

The targets? Almost always Democratic governors or their top health appointees.In Texas, for example, the pressure has come from the top down. There, state Attorney General Ken Paxton on Tuesday threatened the leaders of three major metro areas — Austin, Dallas and San Antonio — with legal action if they don’t roll back parts of their local stay-at-home orders….

Litigants in some cases, like one lawsuit in Virginia challenging a ban on religious gatherings, even have the backing of the Department of Justice, where Barr has said he won’t hesitate to intervene when he sees undue burden on civil liberties.

“These are very, very burdensome impingements on liberty. We’re looking carefully at a number of these rules that are being put into place,” Barr told conservative radio host Hugh Hewitt last month. “And if we think one goes too far, we initially try to jawbone the governors into rolling them back or adjusting them. And if they’re not and people bring lawsuits, we file a statement of interest and side with the plaintiffs.”

How Will the State Respond to Increasingly Forceful Protests? A Preliminary Look at the Road to Rebellion in America.
Thomas Neuburger [Downwithtyranny May 18, 2020]

No one is talking about investigating, arresting, spying on or bringing to trial those making these death threats. The protests were warned, however, that they “could be charged with brandishing if they are threatening to others.” Instead of being shut down and arrested, they forced a government shutdown — a fleeing, if you will — and the protest went off as planned.

(As a mental exercise, imagine the response by police and others if the protesters had been black.) …Now consider this, a pre-Covid 2020 wage strike at UC Santa Cruz:

Both of these events are rebellious acts, one by the right in protest of the government of Michigan’s Covid-19 shutdown order, the other by graduate teaching assistants who “walked off the job and withheld grades to demand an $1,412 increase to their cost of living stipend.”

Only one threatened violence though, and that one threatened quite a bit of it. Yet the state handled the wage strike much more aggressively than it handled the side that threatened death and brought guns to their events.

America’s Looming COVID-Civil War
[Downwithtyranny May 19, 2020]

The Anti-Social Behavior Of People Living In Counties Trump Won, Is Steepening The Curve And Spreading The Contagion
[Downwithtyranny May 23, 2020]

Now, for four weeks running, counties newly designated with a high prevalence of COVID-19 cases were more likely to have voted for Trump than for Hillary Clinton in the 2016 presidential election, according to our analyses. In the latest week of this monitor, such counties favored Trump by a 12% margin in 2016, and, as in recent weeks, they are also much less urban and less racially diverse than places where the coronavirus was most prevalent in March and early April.”


Economic Armageddon

[Calculated Risk, May 19, 2020, via David Dayen, The American Prospect 5-20-20]

Merrill Lynch economists put out a note this morning: Nordic Lessons. Here are a few brief excerpts:

“The outbreak began at the end of February in Denmark and Sweden. … Since then the two countries have diverged significantly in terms of health care outcomes. As of May 18, Denmark had 95 deaths per million people, while Sweden (363 per million) has had among the highest COVID-19 mortality rates in the world.  This difference points to a large healthcare benefit from lockdown policies. What about the economic costs?

+The paper finds that consumer spending dropped by 25% in Sweden and by 29% in Denmark. The 4pp difference between the two declines quantifies the cost of lockdown policies. While 4% of consumer spending is not trivial, it is a small share of the total decrease in consumer spending. Therefore the data indicate that most of the slowdown occurred due to voluntary social distancing rather than lockdown policies.”

Reopening reality check: Georgia’s jobs aren’t flooding back

[Politico, via Naked Capitalism 5-22-20]


[Federal Reserve Bank of Atlanta, via Naked Capitalism Water Cooler 5-19-20]

 “The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2020 is -41.9 percent May 19, up from -42.8 percent on May 15. After this morning’s new residential construction report from the U.S. Census Bureau, the nowcast of second-quarter real gross private domestic investment growth increased from -69.4 percent to -66.0 percent.”

“16 May 2020 Initial Unemployment Claims 2,438,000 This Week” 

[Econintersect, via Naked Capitalism Water Cooler 5-21-20]

“The pandemic has so far caused a 38,918,000 job loss….. The four-week rolling average of initial claims is 1275 % higher than one year ago (versus the 1510 % higher last week) — and is higher than any historical value for this data set.”

A prolonged depression is guaranteed without significant federal aid to state and local governments
Economic Policy Institute, May 19, 2020

The incredibly steep recession we’re currently in is guaranteed to torpedo state and local governments’ ability to collect revenues. Further, nearly all of these governments are tightly constrained—both by law as well as by genuine economic constraints—from taking on large amounts of debt to maintain spending in the face of this downward shock to their revenues. The result will be intense pressure for large cutbacks in public spending by state and local governments in coming years. Such cutbacks would be absolutely devastating to the cause of restarting the economy and allowing people to find jobs, even if the virus has completely abated.

We know how devastating these cutbacks would be because we have lived through the mistake of allowing them to drag on growth in the quite recent past. State and local governments became relentless anti-stimulus machines during most of the recovery from the Great Recession of 2008–2009.

[The Counter, via Naked Capitalism 5-20-20]

Mortgage delinquencies surge by 1.6M in April, the biggest monthly jump ever

[USA Today, via Naked Capitalism 5-22-20]


Progressive Policies into the Breach

A New Deal for a New Reality: Relief, Recovery, and Reform
Progressive Caucus of the NC Democratic Party
An impressive collection of recommended policies, presented in short, bullet point format, with scores of links. 

In this new reality of a pandemic, where disinformation campaigns and political machinations are destroying our democracy, we are focusing the work of the Progressive Caucus of the NC Democratic Party (PCNCDP) to support a New Deal for a New Reality, to ensure that government spending is driven by the needs of the people instead of corporations and special interests… Our goal is to achieve racial, social and economic justice for the people of North Carolina and the country by fighting concentrations of economic and political power, and the laws and practices that enable them. We are modeling our efforts on the tenets of FDR’s New Deal and his targets of Relief, Recovery, and Reform.

We Can Prevent a Great Depression. It’ll Take $10 Trillion.
[The Atlantic, via Naked Capitalism 5-19-20]

When you add it all up—the $3 trillion already spent, the $3 trillion now required, and trillions more to accelerate the U.S. recovery—the total price tag for averting another Great Depression could be about $10 trillion.

That number is a stunner, but so is the crisis. The U.S. economy is $22 trillion—or at least it was before the crisis. If the federal government spends $10 trillion over the next, say, four years, that would mean a fiscal shot of about 10 percent of total economic activity over that period. In an economy where one in five Americans are out of work and several industries have no clear path to normalcy, it’s not ludicrous to think that the appropriate fiscal medicine for an unprecedented crisis will amount to a tenth of GDP over several years.

North Dakota businesses dominated the PPP. Their secret weapon? A century-old bank founded by radical progressives.
Washington Post, May 15, 2020

Small businesses there secured more PPP funds, relative to the state’s workforce, than their competitors in any other state — more than $5,000 per private-sector worker as of May 8, according to a Washington Post analysis.

America’s One Public Bank Is Number One in Saving Small Businesses
Harold Myerson, May 19, 2020 [The American Prospect]

It’s America’s one publicly owned bank—the Bank of North Dakota, established in 1919 by the state government, then headed by onetime socialist and forever leftist Governor A.C. Townley, and never yet privatized in the 101 years since. The Bank is the reason why North Dakota has distributed more funds per worker (more than $5,000) through the PPP program than any other state, according to a survey conducted by The Washington Post….

As soon as Congress established the PPP program, the Bank put local banks in touch with the Small Business Administration and various political leaders, and, the Post reports, bought some of the local banks’ loans to spread out the risks and the costs, thereby enabling those banks to keep on lending. In the rest of the United States, by contrast, PPP funds trickled down through private banks that had no larger partner willing to offset their loans or help them get and distribute more adequate levels of funding.

The lesson of North Dakota, apparently, is that the best way to help small-scale capitalism is through large-scale socialism.

Sanders Bill Would Expand Medicare During Covid-19 Crisis Instead of Costlier Plan to Prop Up Private Insurers
[CommonDreams, via Naked Capitalism 5-17-20]

“No one in this country should be afraid to go to the doctor because of the cost—especially during a pandemic.”

Grover Norquist’s Dismantled State Struggles to Respond

Congress Objects to the Bailout It Approved
David Dayen, May 20, 2020 [The American Prospect]

….Mnuchin and Powell are the architects of the bailout, the real bailout, the one that’s gotten almost no attention over the past couple months. They are assembling corporate lending facilities, the first of which just started buying shares linked to low-grade corporate bonds last week. These facilities dwarf the amount of money reserved for any other recipient in the CARES Act, and as I’ve been mentioning, the money cannon has already succeeded in protecting the investor class from fallout from the pandemic. It’s called “liquidity” or “market functioning” but it’s best thought of as insurance that only an elite class can buy…. the blame for this lies fully at the feet of Congress. They built this money cannon, and they deferred to Treasury and the Fed on virtually all of the terms. If they wanted to foreground employee retention they could have said so. If they didn’t like it they could have voted against the bill…. Mnuchin, in fact, pointed out that the airline bailout has a job retention component, which is true, because Congress wrote that directly into the bill. If you want a policy outcome, put it in writing. If not, don’t expect regulators to fight your battles for you.

 There was another interesting section with Sen. Chris Van Hollen (D-MD) where he correctly questioned why the Fed was buying junk bonds, many of which were already under stress before the crisis hit. Powell’s answer was slippery (he claimed he was only buying bonds of companies that had slipped into junk bond status, which doesn’t seem to be true), but earlier he pretty well explained it: “We want to be a backstop for those markets.” This isn’t the profile of a crisis manager and it’s why ultimately the Fed rescue won’t work, at least not for the general population. Congress can set parameters, even ban junk bond purchases if they want. It can direct money where it’s most needed. It can act. In its absence, you just get investor class protection.

Corporations preparing investor-state dispute settlements for COVID19 looting
For years, progressive trade reformers have singled out one piece of the modern trade agenda above almost all else: investor-state dispute settlement (ISDS). This provision, which came to prominence in the original NAFTA agreement, allows corporations to sue entire countries for costing them money when laws or regulations change. The cases are heard in extrajudicial tribunals composed of three corporate lawyers. And they can cause severe stress on smaller governments, who are held up for cash. I wrote back in 2016 about how financiers were using ISDS to make bets, funding lawsuits or buying companies with the sole purpose of filing a claim. The idea is to lock in a low level of regulation or extract cash if any country dares to try to protect their citizens.

Trump severely minimized ISDS in the updated NAFTA agreement, USMCA. But it still exists in over 3,000 binational and multilateral trade agreements. While countries are in the midst of revising model agreements or even dissolving ISDS, it still exists in enough texts to threaten virtually every country that trades (in other words every country).

Which is why it’s so unbelievably shocking to see corporate lawyers actively discussing having foreign investors use ISDS to challenge countries over their coronavirus lockdown measures, and try to extract “expected future profits” from them. So far this is at the level of discussion, albeit from recognized stalwarts like Quinn Emanuel, Ropes & Gray, Sidley, Debevoise, Hogan Lovells, Dechert, and Alston & Bird. This could take the form of a utility company suing a country over being forced to provide clean water; expropriation of private hospitals during emergency spikes in patients; requirements to provide affordable COVID-19 treatments and vaccines; mandated rent and mortgage relief; or just locking down and preventing businesses from opening.

‘Hard stop’: States could lose National Guard virus workers

[Politico, via Naked Capitalism 5-20-20]

More than 40,000 National Guard members currently helping states test residents for the coronavirus and trace the spread of infections will face a “hard stop” on their deployments on June 24 — just one day shy of many members becoming eligible for key federal benefits, according to a senior FEMA official.

The official outlined the Trump administration’s plans on an interagency call on May 12, an audio version of which was obtained by POLITICO. The official also acknowledged during the call that the June 24 deadline means that thousands of members who first deployed in late March will find themselves with only 89 days of duty credit, one short of the 90-day threshold for qualifying for early retirement and education benefits under the Post-9/11 GI bill.

Republicans Poised to Dismantle the Economy’s Main Support
David Dayen, May 21, 2020 [The American Prospect]

[Common Dreams, via Naked Capitalism 5-22-20]


“Most of the discussion around the spread of SARS-CoV-2 has concentrated on the average number of new infections caused by each patient. Without social distancing, this reproduction number (R) is about three. But in real life, some people infect many others and others don’t spread the disease at all. In fact, the latter is the norm, Lloyd-Smith says: “The consistent pattern is that the most common number is zero. Most people do not transmit.’ That’s why in addition to R, scientists use a value called the dispersion factor (k), which describes how much a disease clusters. The lower k is, the more transmission comes from a small number of people. … Estimates of k for SARS-CoV-2 vary…. But in a recent preprint, Adam Kucharski of LSHTM estimated that k for COVID-19 is as low as 0.1. “Probably about 10% of cases lead to 80% of the spread,” Kucharski says…. If k is really 0.1, then most chains of infection die out by themselves and SARS-CoV-2 needs to be introduced undetected into a new country at least four times to have an even chance of establishing itself… .Meatpacking plants are likely vulnerable because many people work closely together in spaces where low temperature helps the virus survive. But it may also be relevant that they tend to be loud places, Knight says. The report about the choir in Washington made her realize that one thing links numerous clusters: They happened in places where people shout or sing. And although Zumba classes have been connected to outbreaks, Pilates classes, which are not as intense, have not, Knight notes. “Maybe slow, gentle breathing is not a risk factor, but heavy, deep, or rapid breathing and shouting is.”

Black Americans dying of Covid-19 at three times the rate of white people

[Brookings Institution, via Naked Capitalism Water Cooler 5-22-20]

“Now, for four weeks running, counties newly designated with a high prevalence of COVID-19 cases were more likely to have voted for Trump than for Hillary Clinton in the 2016 presidential election, according to our analyses. In the latest week of this monitor, such counties favored Trump by a 12% margin in 2016, and, as in recent weeks, they are also much less urban and less racially diverse than places where the coronavirus was most prevalent in March and early April.”

[Pro Publica, via Naked Capitalism Water Cooler 5-19-20]

 “I can only imagine how I would feel if I got a call telling me that I had been in close contact with a COVID-19 patient — shocked, a little scared and possibly a bit in denial. But after spending a week talking to contact tracing experts across the country, and taking an online course as well, I think I’d also feel one more thing: empowered. Here’s why.”

Lambert Strether commented: “I woudn’t feel empowered if testing and treatment were not free, and if I had paid leave. What none of the test-and-trace people seem to be grasping is that alone in the world, the health care system in the United States is organized around making a profit.”

“Lockdown Delays Cost at Least 36,000 Lives, Data Show” 

[New York Times, via Naked Capitalism Water Cooler 5-20]

“If the United States had begun imposing social distancing measures one week earlier than it did in March, about 36,000 fewer people would have died in the -coronavirus outbreak, according to new estimates from Columbia University disease modelers.”

The Interpreter: a mind-blowing Covid conversation

[New York Times, via Naked Capitalism 5-23-20]
Kerala is the state on the western side of the southern tip of India, with a population of 33.4 million about the size of California (39.5 million) but with one tenth of the land area. Kerala has had only four deaths from COVID19, compared to 3,630 deaths in California. An Indian political scientist at Johns Hopkins University identifies the USA political response as the major difference. 

We can think about three things that matter. One is: Does the state actually have the ability to do something when something like the coronavirus happens? But the second is: Even if the state has the ability to do something, does it actually do it when it needs to?

You have to have a political will that aligns with the capacity. You have to have some basic understanding within the system that, regardless of who the party in power is, a certain basic political will is going to be exercised, to make the state do the things it’s supposed to do when the crisis hits….

 Kerala and Tamil Nadu, I would argue, were very clever about thinking about low-resource initiatives — things you could do without relying on stockpiled resources…. They were making sure they were taking temperatures of people entering the country, having them give detailed histories of where they had been, and whether there was any contact with someone symptomatic, putting into place isolation and surveillance.

They may not have masks or ventilators, but they have people. And so they’ve made them into health census takers. They’ve made them into track-and-trace investigators. Into people who stand in airports taking temperatures. They’ve taken the resource that they have and put it to good use….

Very early on, Kerala started to have the feeling of a class-based dynamic, in which what is to be discussed is: “How do we create a solid welfare state? How do we come to an understanding about the basics of society that everybody needs?” Which is very different from when you think about politics as “It’s my group now in power, how can I use this time to enrich my group and help my group get ahead?”

After the 2016 election, you see this in hyperdrive, a politics of identity now deciding who should and who shouldn’t get the benefits of a state intervention in a time of crisis. Everything that Trump and his team seem to be doing is protecting those that matter to his voting base. There seems to be an idea that these are blue states, with demographics that they don’t need to worry about. Whereas “their” states are going to be fine. That, to me, is identity politics and ethnic politics thinking.

[Guardian, via Naked Capitalism 5-21-20]“How Private Equity Is Ruining American Health Care”

[Bloomberg, via The Big Picture 5-21-20]

 “Back at [the California Skin Institute (CSI)], the company’s front-office staff was working the phones, calling patients in some of the worst-hit areas and reminding them to show up for their appointments, even for cosmetic procedures such as Botox injections to treat wrinkles. During the videoconference, [CEO Greg] Morganroth argued that offering Botox in a pandemic wasn’t so different from a grocery store allowing customers to buy candy alongside staples…. Morganroth’s defense of pandemic Botox might seem odd, but it made perfect sense within the logic of the U.S. health-care system, which has seen Wall Street investors invade its every corner, engineering medical practices and hospitals to maximize profits as if they were little different from grocery stores. At the center of this story are private equity firms, which saw the explosive growth of health-care spending and have been buying up physician staffing companies, surgery centers, and everything else in sight… One paradox of the Covid-19 pandemic has been that even as the virus has focused the entire country on health care, it’s been a financial disaster for the industry. And so, while emergency room doctors and nurses care for the sick—comforting those who would otherwise die alone, and in some cases dying themselves—private equity-backed staffing companies and hospitals have been cutting pay for ER doctors. These hospitals, like the big medical practices, make a large portion of their money from elective procedures and have been forced into wrenching compromises. For investors with capital, on the other hand, the economic fallout from the virus is a huge opportunity. Stay-at-home orders have left small practices more financially strained than they’ve ever been. That will likely accelerate sales to private equity firms.”

[Common Dreams, via Naked Capitalism 5-22-20]COVID-19 Planning: Is It Time to Nationalize Big Pharma?

[Counterpunch, via Naked Capitalism 5-17-20]

Collapse of Independent News Media

[via The Big Picture 5-19-20]

“On the Spotify-Joe Rogan Deal and the Coming Death of Independent Podcasting”

[Matt Stoller, BIG, via Naked Capitalism Water Cooler 5-20-20]

“To explain Spotify’s strategy, I analogized the current podcast market to the web in the mid-2000s. As the web used to be, today podcasting is an open market, with advertising, podcasting, and distribution mostly separated from one another. Distribution happens through an open standard called RSS, and there’s very little behavioral ad targeting. I’m asked on fun weird podcasts all the time; podcasting feels like the web prior to the roll-up of power by Google and Facebook, with a lot of new voices, some very successful and most marginal, but quite authentic. So what is Spotify trying to do? First, Spotify is gaining power over podcast distribution by forcing customers to use its app to listen to must-have content, by either buying production directly or striking exclusive deals, as it did with Rogan. This is a tying or bundling strategy. Once Spotify has a gatekeeping power over distribution, it can eliminate the open standard rival RSS, and control which podcasts get access to listeners. The final stage is monetization through data collection and ad targeting. Once Spotify has gatekeeping power over distribution and a large ad targeting business, it will also be able to control who can monetize podcasts, because advertisers will increasingly just want to hit specific audience members, as opposed to advertise on specific shows.”

The Carnage of Establishment Neoliberal Economics

Tipping Point: Thomas Piketty’s new history of global inequality.” 

[The Nation, via Naked Capitalism Water Cooler 5-21]

One of the world’s foremost critics of capitalism, Thomas Piketty was making the case for moderation, or as he put it, a more lasting ‘radicality.’ ‘The false radicality of saying, ‘We’ll talk about it later, after the collapse of the current economic system’ or ‘We don’t want any form of private property in the socialist or communist system we have in mind’—this is actually a very cheap radicality,” Piketty insisted. ‘It’s a radicality that doesn’t scare anyone. The elimination of very small types of private property doesn’t at all correspond to what’s being asked or what is desirable from the point of view of individual emancipation.’ A socialist future that allows for small-scale bakeries and restaurants might not be so bad, Piketty argued.”

Managing Decline: The Economy of Value Extraction
[American Affairs, via The Big Picture 5-23-20]

REVIEW ESSAY – How the Looting of the Business Corporation Became the U.S. Norm and How Sustainable Prosperity Can Be Restored, by William Lazonick and Jang-Sup Shin, Oxford University Press, 2019

We’re talking about how we share the “gains of innovation”—if companies reinvest, they share those gains with employees in the form of greater employment security, higher incomes, and greater benefits. When they simply distribute excess cash (or, worse, borrow in order to distribute), they are favoring shareholders above all others. We’ve been leaning that way since the 1980s, but the size and proportions of the distributions are getting a little ridiculous. That’s where buybacks come in. In good times, companies use them to increase demand for their shares in the market, in order to prop up the prices of those shares. That’s drawn a horde of greedy outsiders—primarily hedge funds and institutional investors—who have con­spired, not through plotting but simply through their actions—to keep the buyback machine well oiled….

In doing so, they deprive companies of the ability to summon what Lazonick and Shin call “the social conditions of innovative enterprise”—strategic control, organizational integration, and finan­cial commitment. It’s a persuasive story that can be summarized as “if you spend all the money on supporting your share price, you aren’t going to have much left to position the company for the future.”

Burger King, Subway and Privatization: Who is Samuel Doria Medina?
[Kawsachun Coca, via Naked Capitalism 5-19-20]

Doria Medina was a government minister during the neoliberal period in the 90s and is now the leader of Unidad Nacional, the second-largest party in Bolivia’s legislature. When he was in government he proclaimed, “I’ll privatize one state company every week”, and his privatizing zeal has remained throughout his political career. At a recent rally with Añez he declared, “No more state companies!”. An interesting issue to focus on, considering it sunk his 2014 presidential election campaign when he called for 50% of Bolivia’s oil and gas company YPFB to be privatized. Studies at the time showed that Bolivia would have lost $2.3 billion in revenue in just one year had foreign companies taken control of half of Bolivia’s most important natural resource. He came second in that election, but with a dismal 24% to Evo’s 61%.


Michael Pollan [New York Review of Books, via Naked Capitalism 5-17-20]

How did we end up here? The story begins early in the Reagan administration, when the Justice Department rewrote the rules of antitrust enforcement: if a proposed merger promised to lead to greater marketplace “efficiency”—the watchword—and wouldn’t harm the consumer, i.e., didn’t raise prices, it would be approved. (It’s worth noting that the word “consumer” appears nowhere in the Sherman Anti-Trust Act, passed in 1890. The law sought to protect producers—including farmers—and our politics from undue concentrations of corporate power.)1 The new policy, which subsequent administrations have left in place, propelled a wave of mergers and acquisitions in the food industry. As the industry has grown steadily more concentrated since the 1980s, it has also grown much more specialized, with a tiny number of large corporations dominating each link in the supply chain. One chicken farmer interviewed recently in Washington Monthly, who sells millions of eggs into the liquified egg market, destined for omelets in school cafeterias, lacks the grading equipment and packaging (not to mention the contacts or contracts) to sell his eggs in the retail marketplace.2 That chicken farmer had no choice but to euthanize thousands of hens at a time when eggs are in short supply in many supermarkets.

Creating new economic potential – science and technology

Meltblown procedure: Producing coronavirus mask filter fleece
[Deutsche Welle, via Naked Capitalism 5-19-20]

Medical mouth-nose protection masks and and other high-quality protective masks always have a special filter fleece built in. This fleece is produced using the so-called meltblown process.

The Reifenhäuser family company, with its subsidiary Reicofil in Troisdorf near the former German capital of Bonn, is one of the world market leaders for machines capable of manufacturing such special nonwovens….

“Our polypropylene has a melting point of 160 degrees Celsius. The air is about 250 degrees. The hot air and the hot melt meet there under extreme acceleration,” Frey says.
The air hits the plastic threads at about 300 meters (980 feet) per second. In a normal atmosphere, that’s almost the speed of sound. However, because the air stream hits the plastic threads from two sides and chaotic vortex states occur in a very small area, the relative speed acting on the endless liquid plastic threads is multiplied.

For a short time, they are accelerated to almost 40,000 kilometers per hour (24,855 miles per hour) — faster than the orbital speed of the International Space Station (ISS). This makes the threads — also known as filaments — incredibly thin.

“At the same time, we must prevent the filaments from breaking off,” says engineer Frey. “It is fascinating when you think that this plastic can withstand these conditions and that we are able to manufacture such a product with consistent quality.”

Viruses are much, much smaller still

So the engineers use physical tricks, such as exploiting the tendency of small particles to attach themselves to surfaces. “One is diffusion caused by Brownian molecular motion, combined with inertia. The particle attaches to the surface as it travels through. It hits a filament and gets caught on it because of frictional or intermolecular forces,” explains Frey. “Forces between molecules are important when we think in terms of viruses.”

But that still wouldn’t be enough to filter viruses out of the air.

Scientists Made a Mouse That’s 4 Percent Human

[Popular Mechanics, via Naked Capitalism 5-21-20]“The Soil Talks Back”
[Weizmann Institute, via Naked Capitalism Water Cooler 5-19-20]

“The narrow strip of soil around the plant’s root teems with millions of microorganisms, making it one of the most complex ecosystems on earth. To determine whether the composition of this “root microbiome” triggers changes within the plant, postdoctoral fellow Dr. Elisa Korenblum and other members of a team headed by Prof. Asaph Aharoni of Weizmann’s Plant and Environmental Sciences Department, created a hydroponic set-up in which they split the roots of tomato seedlings in two. In a series of experiments, the researchers placed one side of the split roots in vials, progressively diluting the soil suspensions several times. Each dilution altered the soil’s microbial composition and reduced the diversity within the microbial community, so that the different suspensions ended up containing root microbiomes with high, medium and low diversity levels. The other side of the roots was submerged in a vial with a clean, soil-free solution. If the soil microbes communicate with the plant, one would expect to detect signs of their messages on both sides of the root system. That was exactly what the scientists found…. ‘Our ultimate goal is to decipher the chemical language – one could call it ‘Plantish’ – used by plants and the soil to interact with one another,’ Korenblum says. ‘Azelaic acid is probably one of the ‘words’ of this language.’”


Climate and environmental crises

Climate change is turning parts of Antarctica green, say scientists

[Guardian, via Naked Capitalism 5-21-20]

“Cold War satellites inadvertently tracked species declines”
[Science, via Naked Capitalism Water Cooler 5-20-20]

“When the Soviet Union launched Sputnik into orbit in 1957, the United States responded with its own spy satellites. The espionage program, known as Corona, sought to locate Soviet missile sites, but its Google Earth–like photography captured something unintended: snapshots of animals and their habitats frozen in time. Now, by comparing these images with modern data, scientists have found a way to track the decline of biodiversity in regions that lack historic records.”

Democratic Party leadership insists on suicide

House Democratic Leadership only opposes primary challenges when they are from the left
[Twitter, via Naked Capitalism Water Cooler 5-19-20]

Jonathan “Boo and Vote” Cohn
House Democratic Leadership only opposes primary challenges when they are from the left, I see.


The Dark Side

Even the death of family members does not give Trump supporters pause
“‘They don’t give him enough credit’: the voters who back Trump, even through the pandemic” [Guardian, via Naked Capitalism Water Cooler 5-19-20]

“Few people understand the terrible cost of the coronavirus like Lee Snover, a Republican party chair in one of the key swing counties that could determine whether Donald Trump is reelected as president in November. Snover, who helped deliver an upset victory for Trump in 2016 in Northampton county, Pennsylvania, lost her father to the virus this spring. Her husband fell critically ill, too, spending 17 days in an intensive care unit before recovering. Her mother, a cancer survivor, was also in intensive care for eight days before emerging. Trump stands accused of driving up the coronavirus death toll by downplaying the public health threat and urging the country to ‘reopen’ too quickly. But Snover does not see the president as having failed her family. ‘I don’t think people give him enough credit,’ she said. ‘If you think about what a businessman he was, and how much he loved that booming economy, do you know how hard it was for him to shut the country down? That was hard. So I give him credit for that.’”

The alternate reality of Libertarian zombies
Matt Stoller [Twitter, via Naked Capitalism 5-16-20]

At a moment when we lack the ability to produce life-saving medical equipment, here are libertarians explaining why current lax regulations on market power are great: “The American economy is competitive, innovative, and serves consumers well.”


FDR’s New Deal Worked. We Need Another One.
Noah Smith, May 15, 2020 [Bloomberg, via The Big Picture 5-19-20]

Claims that the programs adopted in the 1930s lengthened the Great Depression don’t hold up.

But efforts to emulate FDR’s success are hampered by a loud minority who claim that the New Deal itself was a policy mistake. One such example is conservative talk-show host Ben Shapiro, who recently argued that the New Deal prolonged the Great Depression rather than shortening it….

Shapiro cites an editorial by economists Harold Cole and Lee Ohanian, who have been advancing this revisionist idea for decades. This minority view probably is wrong. Cole and Ohanian base their case on a particular macroeconomic theory that has been effectively discredited. Called New Classical theory, it postulates that economic fluctuations are caused by technological factors beyond government control; if there’s a depression, it’s not because of a wave of bank failures or a crisis of confidence, but simply because technological progress slowed down. This sort of model inevitably leads Cole and Ohanian to conclude that any attempt to stabilize the economy with government policy leads to distortions that can only make things worse. But New Classical theory, which was never plausible to begin with, was long ago debunked both empirically and theoretically as a general description of how recessions work. Recent work by economic historians has found little evidence that changes in the rate of technological progress had any significant impact during the Depression.

The critical subtext for Trump’s rage against mail-in ballots is that he wants the minority to rule
Dan Froomkin, May 21, 2020

Political reporters from our top news organizations aren’t falling for Donald Trump’s transparently deceitful campaign to demonize mail-in voting, but they aren’t exactly calling it out for what it is, either…. what they’re not doing is putting this latest attempt at voter suppression in its essential context: as part of a massive Republican program to create the possibility of minority rule….

But now the question is: Beyond calling it out in the news columns, should reporters portray it simply as a [political] dispute — or as an outrage and a travesty of justice? ….Exposing and expressing outrage over voter suppression has to do with whether you believe in the most fundamental principles of democracy, whether you believe in equality, whether you think lies should flourish, and, at the end of the day, whether you think elected officials should be held accountable


May 23rd US Covid Data


May 24th US Covid Cases


  1. Plowhard

    So who do you think the DNC sacrificial pigeon is going to be, after Biden “drops out”? Dilbert man still thinks it will be Kamala. 4chan thinks it will be Michelle Obama.

  2. Plowhard

    Well since I seem to have the floor…

    How many of you are aware that hydroxychloroquine must be taken with zinc to have any effect on covid? How many of these (pharmaceutical industry paid for) studies tested that protocol?

  3. Chipper

    A lot here (thanks, Tony, you always have such good stuff), but I think the scariest thing for me is that private equity firms are buying up medical practices. I mean, I already knew about climate change and covid-19, but I was not aware of that one.

  4. Zachary Smith

    So who do you think the DNC sacrificial pigeon is going to be, after Biden “drops out”?

    Curious remark, especially when even Fox has quite a different prognosis.

    “The latest Fox News Poll finds voters trust Biden to do a better job than Trump on health care by 17 points, coronavirus by 9, and relations with China by 6,” Fox News reported. “In the 2020 ballot test, Biden leads Trump by 48-40 percent.

    Surely somewhere on the Chlorox One A Day bottle they direct users to take only a single pill per day.

    How many of you are aware that hydroxychloroquine must be taken with zinc to have any effect on covid?

    I notice you forgot to include a link to an authoritative source to inform us of how you are so certain zinc “must” be part of the dosage.

    As a result of in vitro evidence suggesting zinc sulfate may be efficacious against COVID-19, our hospitals began using zinc sulfate as add-on therapy to hydroxychloroquine and azithromycin. We performed a retrospective observational study to compare hospital outcomes among patients who received hydroxychloroquine and azithromycin plus zinc versus hydroxychloroquine and azithromycin alone. Methods: Data was collected from electronic medical records for all patients being treated with admission dates ranging from March 2, 2020 through April 5, 2020. Initial clinical characteristics on presentation, medications given during the hospitalization, and hospital outcomes were recorded. Patients in the study were excluded if they were treated with other investigational medications. Results: The addition of zinc sulfate did not impact the length of hospitalization, duration of ventilation, or ICU duration.

  5. Z

    Biden damaged his most valuable political asset when he got plastic surgery: his smile. I’d imagine that he has spent many hours in the mirror trying to regain that.

    Besides that and sliding into dementia, his political career long record of serving the rich and powerful at the expense of the working class (particularly blacks), his support of the Iraq War and the regime change in Libya, his nepotistic corruption, his slavishness to Wall Street, his life long habit of lying and dishonesty, his creepy groping of females (some of them children), and the fine-tuned drug cocktail he is on to walk the tightrope between being a doddering fool and a physically aggressive bully, you got to admit that the DNC and the demo-zombies got themselves a pretty strong candidate there.


  6. Z

    If the colleges don’t open up in the Fall, there’s going to be millions more young people with no income. I’d imagine that our rulers would like to avoid that.


  7. Z

    In regards to the lack of social distancing, there’s a certain justification and a cold logic to it for young people. They are least likely to get die from it, they’re going to be facing a lot of environmental problems during their lifetime that very well could shorten their lifespans and effect the quality of their life, and the people who are most likely to die from its spread are the ones who have done the most to damage their futures and still refuse to, broadly speaking, to rectify it by voting for a candidate who offered to fight for tuition forgiveness and universal healthcare.

    It makes sense for them. Only got so many years to live, might as well enjoy the ones when you are most likely to have the most fun, they were raised in a very selfish “me-first” world, and the less people, especially the elderly who are the ones who are most resistant to social and political change, the better for them.

    Party on! I don’t blame them.


  8. Hugh

    Younger people often haven’t been beaten up enough yet by life to learn the value of thinking things through. For older people, the likelihood is that they have. I think we all could use a refresher course in social responsibility.

    I would agree that it isn’t just 3 years of Trump but 40 years of neoliberalism that have destroyed our capacity to act effectively to do anything that benefits the lower 80% of us.

  9. Z

    The danger with Trump was precisely this: that something would happen that he wouldn’t have the capacity to handle, an event that would be too large for him, a crisis that he would be too emotionally immature and intellectually incapable of managing. Those weaknesses have come to fore with the coronavirus and we get looted and PRed instead of getting government that rises to benefit the country as a whole.

    Trump has no vision. He’s only got instincts.

    Trump is not a man without some natural strengths though, despite the many advantages he inherited. Some of his strengths are his ability to read character, particularly loyalty, though he’s certainly not infallible in that judgment, and also to be wise enough to only get involved in situations in which he has an advantage. When he comes to the plate he’s already bribed the umpire to shrink the strike zone and he’s only going to swing at pitches in his wheelhouse. That works in the private sector.

    Those strengths don’t necessarily translate well to government service though. While you might have the leverage of dangling a big raise to immediately motivate your employees to take on difficult assignments and responsibilities, you don’t have that leverage as much in the public sector. And while you have more power to pick and choose what you get involved in in private business, you have much less control of what you’re dealing with when you’re running a country. You can choose to stay out of ground wars of aggression, but you can’t opt out of a pandemic.

    Not that it would be much better if their dancing partners on the other side of the aisle were in the Oval Office (see GFC 2008, Obama, Head PR Man for the Point Zero One Percent).


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