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

Week-end Wrap – Political Economy – September 1, 2019

by Tony Wikrent

How meritocracy became oligarchy

How Life Became an Endless, Terrible Competition
[The Atlantic, September 2019 issue]

Harvard, Princeton, Stanford, and Yale collectively enroll more students from households in the top 1 percent of the income distribution than from households in the bottom 60 percent. Legacy preferences, nepotism, and outright fraud continue to give rich applicants corrupt advantages. But the dominant causes of this skew toward wealth can be traced to meritocracy. On average, children whose parents make more than $200,000 a year score about 250 points higher on the SAT than children whose parents make $40,000 to $60,000. Only about one in 200 children from the poorest third of households achieves SAT scores at Yale’s median. Meanwhile, the top banks and law firms, along with other high-paying employers, recruit almost exclusively from a few elite colleges.

Strategic Political Economy

“Boeing’s Crashes Expose Systemic Failings”

[Der Spiegel, via Naked Capitalism 8-26-19]

Lambert Strether notes “This is brutal, a must-read.”

“It is impossible to tell the story of the 737 Max — indeed, the story of Boeing’s entire recent history — without taking a closer look at Airbus. The self-confident Americans underestimated their European competitor’s strength, not wanting to believe that Airbus’s ascent to become the world’s second-largest aircraft manufacturer was the kind of economic miracle that changed the entire game. Founded in 1970, massively subsidized by European governments and heavily promoted by an industry that was deeply invested in its success, Airbus was able to revolutionize the global passenger jet market in the course of just three decades. And then came the wonder of 1999, when Airbus received significantly more orders for its aircraft than did its American rival, despite the fact that Boeing had just merged with erstwhile competitor McDonnel Douglas a few years before….

“And this all comes at a time when the Airbus-Boeing duopoly has been developing cracks. The two may still be the world’s undisputed aerospace leaders, but companies in China, Russia and Japan are in the process of grabbing a bigger piece of the pie. Furthermore, it has become easier to build airplanes because a highly specialized global market of suppliers has developed that can deliver almost any part in the desired quality at the desired moment in time. The times when airplane construction was a calling card of unattainable technological excellence are coming to an end. Things are becoming more difficult, especially for Boeing.”

Outsourcing comes back to bite you in the ass. Every time. USA has “free traded” away the family jewels.

“The Cherokee Nation Nominated a Delegate to Congress as Stipulated in Treaties” 

[Teen Voguevia Naked Capitalism 8-26-19]

“The Cherokee Nation announced last week that it has, for the first time in its history, nominated a delegate to the United States Congress in accordance with provisions in treaties the tribe has with the federal government. In a Thursday press release, Principal Chief Chuck Hoskin Jr. nominated the Cherokee Nation’s vice president of government relations, Kim Teehee, for the job.”

The Failure of Establishment Neoliberal Economics

Business Roundtable Has A Lot to Prove
Barry Ritholtz, The Big Picture 8-26-19

For 47 years, the Business Roundtable has lobbied on behalf of corporate America. Much of that time, it maintained the fiction that the sole purpose of a corporation was to maximize profits on behalf of shareholders. This philosophy has been under assault for several years now, and this week the Business Roundtable announced it wants to put it to rest.In a widely circulated memo, the 200-member organization reversed itself, writing that “shareholder primacy” is no longer the sole purpose of a corporation. Instead, corporations must include a commitment to “all stakeholders,” which includes customers, employees, suppliers and local communities….But turning this aircraft carrier around won’t be easy, in large part because of the group’s own history. Indeed, the Roundtable has spent most of the past four decades advocating against the interests of those exact stakeholders. To cite some of the more notable examples:
— It fought the rise of labor unions and pro-union legislation;
— Helped to defeat antitrust bills;
— Prevented the formation of the Consumer Protection Agency;
— Opposed corporate governance changes to make boards of directors and CEOs more accountable to stockholders;
— Fought proper accounting of stock options given as compensation to executives and insiders;
— Opposed increases in the national minimum wage (it now favors increases);
— Lobbied to prevent restrictions on executive compensation;
— Fought legislation that would create cleaner energy and address climate change;
— Pushed for corporate income-tax cuts;
— Supported anti-consumer Supreme Court decisions, including the fiction that corporations are legal people, and that campaign donations equal speech.

Damodaran: From Shareholder wealth to Stakeholder interests: CEO Capitulation or Empty Doublespeak?

[Musings on Markets, via The Big Picture 8-27-19]
Nathan J. Robinson [Current Affairs, via Naked Capitalism 8-26-19]

“[T]his whole “my property is mine to do as I see fit” framework only holds up if you fail to think about the most basic complications. If my “choice” to use my property one way ends up damaging the planet we all live in, then why should I get unilateral decision-making power? [Brendan O’Neill] poses the question: Is Brazil a sovereign nation, or isn’t it? As far as the Amazon goes, the answer should be: Of course it isn’t….”

“Climate change as a problem is very difficult for many libertarians to deal with, because it poses a serious challenge to the individualistic view of property rights whereby I can simply ‘do as I please’ so long as I am not committing an act of violence against you. I suspect this is why so many libertarians are such vehement climate change deniers.”

[Counterpunchvia Naked Capitalism 8-30-19]

Approximately one third of billionaire wealth comes from inheritance. It is very hard to make the case for the economic utility of inherited wealth, and instead there is a strong case for the fact that it undermines social mobility and economic progress. It creates instead a new aristocracy who are rich simply because their parents were rich which is hard to see as a good thing.

Whether inherited or secured in other ways, extreme wealth takes on a momentum of its own. The super-rich have the money to spend on the best investment advice, and billionaire wealth has increased since 2009 by an average of 11 percent a year, far higher than rates ordinary savers can obtain….

My Oxfam colleague Didier Jacobs calculated a few years ago that another third of billionaire wealth comes from crony connections to government and monopoly. This could be for example when billionaires secure concessions to provide services exclusively from government, using crony connections and corruption. The Economist has developed a similar measure of crony capitalism with similar findings. What is clear it seems to me is that corruption and crony connections to governments are behind a significant proportion of billionaire wealth.

Almost all sectors of our global economy are also now characterized by monopoly power, as is detailed by Nick Shaxson in his great new book, the Finance Curse. Whether food, pharmaceuticals, media, finance, or technology, each sector is characterized by a handful of huge corporations. Decades of largely unquestioned mergers and acquisitions, where corporations have bought up competitors, have led to this.

Millennials are already in debt and without savings. After the next downturn, they’ll be in even bigger trouble.
[The Atlantic 8-26-19]

As they pitch toward middle age, they are failing to make it to the middle class, and are likely to be the first generation in modern economic history to end up worse off than their parents.

Dean Baker [Jacobinvia Naked Capitalism 8-28-19]

On trade policy, the media has a simple rule: when trade hurts the working class, it’s good for the economy. When it hurts the ruling class, it’s bad for the economy.

Predatory Finance

James Galbraith, August 23, 2019 [Project Syndicate]

In short, economic inequality is tied to the most unstable and unsustainable element of the world system, which is global finance. Achieving anything sustainably – especially, but not only, the reduction of extreme inequalities – requires a financial order that is broadly reformed and that can once again serve as a tool for other institutions and purposes, and not as their self-serving master. This is particularly important as humanity turns toward that other, more critical goal: the sustainability of human life on this planet. Global financial stability is a necessary step on the way to a clean-energy economy – as envisioned in the Green New Deal and similar proposals. At the end of the day, if we want to have a sustainable and civilized future, we need to get a grip on global finance.

Wall Street Prepares for the End of a Crucial Era

[Bloombergvia Naked Capitalism 8-27-19]

The end of LIBOR.

Mark Carney calls for global monetary system to replace the dollar

[FTvia Naked Capitalism 8-25-19]

The mainstream view is increasingly anachronistic for several reasons.

First and foremost, international linkages have risen dramatically over the past few decades, increasing the importance of cross border spillovers.6 Growing cross border trade means external demand has greater effects on domestic resource allocation and therefore inflation. The integration of low-cost producers into the global economy has imparted a steady disinflationary bias through its direct effect on prices. The expansion in global value chains has increased the synchronisation of producer prices across countries. Financial linkages have increased leading to a faster and more powerful transmission of shocks across countries. And globalisation has increased the contestability of markets, weakening the extent to which slack in domestic labour markets influences domestic inflationary pressures….

Monetary policy and financial stability shocks in advanced economies have become more prevalent and more potent, increasing the importance of “push” factors in driving capital flows. Bank research suggests that the spillover from tightening in US monetary policy to foreign GDP is now twice its 1990-2004 average, despite the US’s rapidly declining share of global GDP.

Financial instability in advanced economies also causes capital to retrench from EMEs to ‘safe havens’, as it did during the 2008 financial crisis and the 2011 euro-area crisis (Chart 6). Connally’s dictum “our dollar, your problem” has broadened to “any of our problems is your problem”.

Moreover, the structure of the global financial system – or the “pipes” – is increasingly amplifying capital outflows from EMEs when these push shocks occur. For EMEs, market-based finance has accounted for all the increase in foreign lending since the crisis, as bank lending has declined and FDI has stayed fairly constant (Chart 7).21 While this shift has brought welcome diversity to the financial system, it also reduces the sustainability of capital flows, as market-based flows are particularly sensitive to changes in global risk appetite and financial conditions. Investment fund flows are particularly flighty (Chart 8), especially under stress.

The increasing role of “push” factors and the “pipes” of the system means fast-reforming EMEs could soon be running to stand still in their quest for more sustainable capital flows (Chart 9). Bank researchers estimate that the growing shares of FX-denominated debt and market-based finance have increased the sensitivity of “Capital Flows-at-Risk” to push factors by 50% since the crisis, largely using up the selfinsurance purchased by EMEs….

And the most likely candidate for true reserve currency status, the Renminbi (RMB), has a long way to go before it is ready to assume the mantle. The initial building blocks are there. Already, China is the world’s leading trading nation, overtaking the US at the start of this decade.34

And the Renminbi is now more common than sterling in oil future benchmarks, despite having no share in the market prior to 2018.35 The greater use of the Renminbi in international trade is also leading to its growing use in international finance. This has been enabled by reforms to China’s monetary, foreign exchange, and financial systems that have liberalised and improve its financial market infrastructure, making the Renminbi a more reliable store of value.36

The Belt and Road Initiative could foster further take up of the Renminbi in both trade and finance. However, for the Renminbi to become a truly global currency, much more is required. Moreover, history teaches that the transition to a new global reserve currency may not proceed smoothly. Consider the rare example of the shift from sterling to the dollar in the early 20th Century – a shift prompted by changes in trade and reinforced by developments in finance.

[Bloombergvia Naked Capitalism 8-25-19]

“Sub-Saharan Africa has proven the most fertile ground for microlending through mobile devices. In 2018, there were 395.7 million mobile-money accounts in the region, or almost half of the world total; the $26.8 billion handled represents two-thirds of the total transactions, according to GSMA, which represents 750 mobile operators around the world…. By far, the dominant force is M-Pesa, the payments platform of Vodafone Plc’s Safaricom unit. … The option to deposit and borrow can be activated within the M-Pesa wallet… The expansion in consumer debt has an inevitable dark side. While yotal lending by banks grew 5% to 2.5 trillion shillings in the year ending June 2018, non-performing loans climbed 27% to 298 billion shillings, according to the central bank. Two-thirds of Kenyan borrowers are in debt stress—those caught in a debt spiral or those who have to sell an asset or reduce food spending to repay loans.” • Remember this?

Challenges for Monetary Policy by Federal Reserve Chair Jerome H. Powell, August 26, 2019

Federal Reserve Bank of Kansas City, Jackson Hole, Wyoming The Big Picture

We have much experience in addressing typical macroeconomic developments under this framework. But fitting trade policy uncertainty into this framework is a new challenge. Setting trade policy is the business of Congress and the Administration, not that of the Fed. Our assignment is to use monetary policy to foster our statutory goals. In principle, anything that affects the outlook for employment and inflation could also affect the appropriate stance of monetary policy, and that could include uncertainty about trade policy. There are, however, no recent precedents to guide any policy response to the current situation. Moreover, while monetary policy is a powerful tool that works to support consumer spending, business investment, and public confidence, it cannot provide a settled rulebook for international trade. We can, however, try to look through what may be passing events, focus on how trade developments are affecting the outlook, and adjust policy to promote our objectives.

Restoring balance to the economy

The state of labor on the 125th anniversary of Labor Day
[Economic Policy Institute 8-31-19]

This weekend, we celebrate the 125th anniversary of Labor Day and the rights workers have fought for—and won—over the last century and more. In a series of essays released in time for Labor Day, EPI experts remind us that we can’t take those rights for granted—and that we need to do more to ensure that allworkers are protected and have opportunities to earn a fair wage. Among our current challenges, we need to reverse policies that limit workers’ economic leverage, address weak and uneven wage growth, reverse the decline in the real value of the federal minimum wage, close persistent racial gaps in employment and wages, and reform an immigration system that allows employers to increase their profits by keeping migrant workers powerless and underpaid. Read the essays »

No Seat at the Table: Steven Greenhouse on Labor’s Silenced Voice 

[Capital & Mainvia Naked Capitalism 8-25-19]

But you do tell some hopeful stories of successful labor fights.

In my book I look at the decline of unions and how that’s hurt Americans. Then I devote several chapters to looking at models for rebuilding worker power. One of them is the Culinary Union in Las Vegas. While many unions have declined in size, the Culinary, which represents hotel casino workers, hotel housekeepers, dishwashers and waiters, has risen from 18,000 members to 60,000 members. (Disclosure: The Culinary Union is part of UNITE HERE, a financial supporter of this website.)

They did it by organizing and holding strikes and mobilizing members. They negotiated great contracts. Housekeepers in Las Vegas average over $19 an hour, compared to $11 around the nation. Housekeepers in Las Vegas are guaranteed a 40-hour week, so that means they make at least $760 a week, almost $40,000 [a year]. Many housekeepers in nonunion cities get only 25 or 30 hours a week and might make $18,000 a year.

Another model is the “#RedforEd” teacher strikes in these red states where teachers’ unions are quite weak. The teachers got fed up with year after year of wage freezes and having to pay more for health-care premiums. They used a new model of mobilization – Facebook pages, meetups – and created this powerful movement to fight back against austerity.

And what about the Immokalee, Florida tomato pickers who eventually led successful boycotts to change working conditions?

The tomato pickers in Florida were horribly exploited. Terrible sexual harassment. They made very little money. They worked in the very hot sun without clean water, without toilet facilities, without shade. Strikes didn’t work because it’s very hard for very poor laborers to go on lengthy strikes to beat corporations. They came up with the idea of boycotts against some of the biggest tomato buyers like Taco Bell. By pressuring these big companies through boycotts, they got the companies to pledge to pressure the tomato growers to pay better, to treat their workers better. That’s become a wonderful model…

Leaked Video of Engaged in Union Busting

[NC AFL-CIO 8-31-19]

AFL-CIO President Richard Trumka on the Value of Unions

[NC AFL-CIO 8-31-19]

The Automation Charade

[Logic, via Naked Capitalism 8-30-19]

Automation is both a reality and an ideology, and thus also a weapon wielded against poor and working people who have the audacity to demand better treatment, or just the right to subsist.

But if you look even closer, things get stranger still. Automated processes are often far less impressive than the puffery and propaganda surrounding them imply—and sometimes they are nowhere to be seen. Jobs may be eliminated and salaries slashed but people are often still laboring alongside or behind the machines, even if the work they perform has been deskilled or goes unpaid.

[CBCvia Naked Capitalism 8-28-19]

“It’s been more than three weeks since Jeff Willig got a call from his buddy Chris Sexton asking if he wanted to go stand in front of a moving train loaded with coal. ‘He called me and said, ‘Hey, they’re trying to load this train up. You want to stop this train?’ Willig told As It Happens guest host Helen Mann. ‘I said, ‘Absolutely.” The two friends are coal miners who have been been out of work since Blackjewel, the company that owned the Black Mountain mine near Cumberland, Ky., shut its doors suddenly in July and filed for bankruptcy. More than 1,100 miners in Kentucky, Wyoming, West Virginia and Virginia lost their jobs with no warning. They didn’t get paid for their last week of work, and their paycheques from the previous two weeks bounced. So when the miners got word that Blackjewel was quietly shipping a trainload of coal, worth at least $1 million US, out of Black Mountain — coal the miners took out of the ground — they decided to take matters into their own hands.”

“Capitalism Is Making Us Sick: A Q&A With Emily Guendelsberger About Her New Book, On the Clock”

[New York Magazinevia Naked Capitalism 8-28-19]

“Sarah Jones: What really struck me most about your book is that the jobs you held — at Amazon, and Convergys, and McDonald’s — were not jobs designed to let human beings be human beings. What sort of psychological effect does that have on workers? Emily Guendelsberger: That is the takeaway that I hope people have…. But I also wanted workers from these industries who read it to be able to recognize that it is all the same struggle. People in fast food should have common cause and solidarity with people who work at Amazon. I think the Fight for 15 has done a really great job of showing fast-food workers that this is one fight. It’s not just unionizing McDonald’s or just unionizing Burger King, it’s all fast food. And I think that the inescapability of the sort of computer business systems and timing and monitoring systems that I talk about in the book, I tried to draw sort of a thread between them….. The feedback I expected to get on the book was just people saying that millennials don’t have any work ethic, people don’t know how to work hard, it’s their own fault if they can’t keep these jobs, no one’s holding a gun to their head. But honestly the response that I’ve gotten from almost everybody who’s actually had one of these jobs is, wow, I didn’t realize it was this similar in other industries. I thought it was just my job that sucked.”

Health Care Crisis

[Vox], via Naked Capitalism 8-27-19]

“The grinding legislative gauntlet that produced Obamacare, combined with the decade-long Republican campaign of obstruction, sabotage, and legal challenge, has produced a grim realism. Senate Democrats recognize that failure is possible and the path to passage is slim. But they are cohering around a rough consensus on where the next bid at health reform should begin.”

Lambert Strether: “Apparently, Bill Clinton being impeached, followed by the Bush administration, didn’t make Democrats jaded or grim enough. Oh well, that’s blood under the bridge. More:”

“It starts with abandoning the political idealism behind the Affordable Care Act. Max Baucus, the powerful chair of the Senate Finance Committee, believed he could secure Republican votes with a hybrid public-private expansion based on Mitt Romney’s reforms in Massachusetts and slow, bipartisan negotiations. President Barack Obama, who still sought to make good on his promise to lead a more collegial political system, backed his plan. Everything about the ACA, from the policy to the messaging, reflected the belief that Republican support was possible.” • In other words, Democrats following the 2008 election were completely delusional, living in a fantasy world. And so naturally we turn to the very same people to fix the problem….

Climate and environmental crises

“The Frightening Spread of Toxic Algae” 

[The New Republic, via Naked Capitalism 8-29-19]

“Toxic algae is one of the quickest-spreading deadly effects of the climate crisis in the United States. As the Arctic’s glaciers melt and the Amazon’s rainforest burns, America’s lakes, rivers, and coastlines are being increasingly infiltrated by several different types of brightly colored, toxic algae bacterium that thrive in warm, nutrient-rich conditions. A report released by the Environmental Working Group earlier this month found toxic algae appearing in more bodies of water, at higher quantities, and earlier in the summer than ever before. It also found that ‘climate change is making things worse, as scientists predict that warming waters coupled with fertilizer and manure washing off farm fields during heavier and more frequent rains may accelerate the frequency and intensity of harmful algal blooms in freshwater.’”

Burning issue: how fashion’s love of leather is fuelling the fires in the Amazon

[Guardian, via Naked Capitalism 8-31-19]Major shoe company says it won’t buy Brazilian leather 

[TreeHugger, via Naked Capitalism 8-31-19]
[The Intercept, via Naked Capitalism 8-26-19]

“In 2015, the World Health Organization’s cancer research arm, the International Agency for Research on Cancer, classified glyphosate, an active ingredient in the herbicide Roundup, as a ‘probable carcinogen,’ setting off a global debate about the world’s most popular weedkiller. … [A]ccording to a recent trove of documents, the ongoing political assault on the IARC has been scripted in part by Monsanto, the St. Louis-based chemical and seed conglomerate that produces Roundup and Roundup-resistant crops. Roundup has been cash cow for the company since the 1970s, fueling billions of dollars in annual profits. Its use has skyrocketed in recent decades since the company developed genetically modified corn and other crops that are resistant to it; it is now the world’s leading herbicide.

“Lifecycle of a Leaf” 

[Current Affairs, via Naked Capitalism 8-28-19]

Input : Since like all other leaves, arugula starts as a seed, these seeds were likely extracted and bulk-sorted in a mechanized process using fossil fuel energy. Then they were shipped using diesel fuel to the field (input #2) in California or possibly Arizona, since 98 percent of packaged salad greens are grown within those two states. By this point, the ground has been stripped and prepared with internal combustion engine vehicles (#3) into which the seeds are planted with precision seeders (#4). Water is sprayed in vast quantities—agriculture uses 80 percent of California’s human-use water—through pumps powered typically by (you guessed it) fossil fuels (#5) until seedlings break the ground. Laborers traverse the field, sometimes with vehicles (#6), applying pesticides synthesized from—and manufactured with—petroleum (#7): herbicides to kill weeds, fungicides to kill fungus, and pesticides to kill insects and rodents. Petroleum-derived fertilizers (#8), too, have been applied in a mechanized process (#9). When they’re ready, the arugula leaves are cut with big diesel-fueled vehicles (#10) and transported to a processing facility that is powered by, most likely, coal (#11). There, the leaves are sorted on conveyors (#12), washed in industrial washers (#13), dried in industrial dryers (#14), and then packaged with machines (#15) into plastic (#16) containers.

Then the packaged greens are put on a truck (#17), then onto a diesel-powered, refrigerated train (#18), and shipped across the country to a grid-powered distribution center (#19) , let’s say Hunts Point, a sprawling food-warehousing complex in the Bronx. There they are moved with a forklift (#20) to a truck (#21) that takes them to a supermarket where they sit on a refrigerated shelf (#22), are then plopped in your basket, chucked in your electric refrigerator (#23), and partially consumed in exactly one meal before you forget about it.

Creating new economic potential – science and technology

[Twitter below, , via Naked Capitalism 8-28-19]

This photo blows my mind.It’s the surface of asteroid , taken by the @MASCOT2018 lander, deployed by the @haya2e_jaxa spacecraft. A real place, out there, in the dark.

And we’ve been there.

View image on Twitter

“Shipping wind turbines is not a breeze”

[Freight Waves, via Naked Capitalism 8-29-19]

“Blades are the most difficult components to transport, due to such variables as equipment model, length and route accommodation. As their length and height continue to grow, [Ben Wilemon, a BNSF Railway spokesperson] said, ‘routes that we previously used for shorter blades can sometimes not accommodate larger models, due to the physical size and capacity of certain areas on our network.’” • It takes a year of planning to ship a wind turbine!

“An introduction to the state of solar power in the U.S.” 

[Yale Climate Connection, via Naked Capitalism 8-27-19]

“Solar is a super-abundant resource, but its stepped-up use calls for fundamental changes in the way we generate, store, and use electricity. The dimensions and dynamics of an economy substantially fueled by renewable energy are just beginning to take shape.”

Danish official: US should learn from Denmark’s wind journey

[The Washington Post (tiered subscription model), via American Wind Energy Association 8-29-19]

Denmark has used wind energy to maintain grid reliability while lowering its energy costs, and the US should learn from its experience, writes Ida Auken, a member of the Danish parliament. “A smart and forward-looking economy should be focused on harvesting all the free energy we get from the sun and wind and use it for cars, industry and homes,” Auken writes.

Can Hydropower Deliver Enough Energy to Turn On the World?
[Machine Design Today 3-21-19]

According to the IRENA report, there are 38,664 hydropower plants across the world, totaling an installed capacity of 813 MW. 70% of the power is directed towards non-specified end-use, while the rest is divided among residential end-uses, agricultural use, and public or commercial use. Since 2010, 400 off-grid hydropower plants have been commissioned each year.

The job market for hydropower has also remained steady. Large hydropower employees 1.5 million people directly, a number which has been consistent since 2013. 63% work in either operation or maintenance across the large key markets of China, India, and Brazil. In small hydropower plants, 290,000 jobs were reported in 2017.

The Challenge of 3D Printing Medical Devices
[Machine Design Today 3-21-19]

Disrupting mainstream politics

Corporate Media Bias Against Sanders Is Structural, Not a Conspiracy

[Real News Network 8-27-19]

What the United States needs is a real discussion about the systematic structural bias against politicians and political movements that question corporate control over the news, say founders Jeff Cohen and Norman Solomon.

Bernie Sanders [Columbia Journalism Review, via Naked Capitalism 8-27-19]

“When we have had real journalism, we have seen crimes like Watergate exposed and confronted, leading to anti-corruption reforms. When we have lacked real journalism, we have seen crimes like mortgage fraud go unnoticed [but not by all! –lambert] and unpunished, leading to a devastating financial crisis that destroyed millions of Americans’ lives…. [T[wo Silicon Valley corporations—Facebook and Google—control 60 percent of the entire digital advertising market. They have used monopolistic control to siphon off advertising revenues from news organizations. A recent study by the News Media Alliance, a trade organization, found that in 2018, as newspaper revenues declined, Google made $4.7 billion off reporting that Google did not pay for.”

“FEC paralyzed by resignations as 2020 approaches” 

[Politico, via Naked Capitalism 8-27-19]

“The federal agency regulating campaign finance has been rendered powerless heading into the 2020 election cycle, with the resignation of another commissioner leaving it unable to punish violations of election law.”

[The Unbalanced Evolution of Homo Sapiens, via Naked Capitalism 8-26-19]

Information Age Dystopia

‘If you have an addiction, you’re screwed’ – How Facebook and social casinos target the vulnerable

[Reveal News, via Naked Capitalism 8-28-19]

“Reveal examines how Facebook is partnering with social casino games to monitor and analyze the behavior of vulnerable players. The companies are using big data and advanced software to predict which people will spend massive amounts of money on the games and then targeting these people with aggressive marketing. For some people, these games result in financial ruin…. And the kicker? She can’t win any money in the game. It’s not traditional gambling. Players can never cash out their virtual chips for real money. They’re paying only to buy more chips, which allows them to spend extra time in the game. “So this is, in some ways, pure addiction,” says Keith Whyte, executive director of the National Council on Problem Gambling. Social casino games, such as slot machines and poker games on Facebook and mobile devices, have become a $5 billion-a-year business, with revenues nearly as large as all the Las Vegas Strip casinos combined. But because the games are classified as entertainment, they are not subject to any gambling regulations. So there is nothing stopping tech companies from monitoring, analyzing – and targeting – those with addictive personalities.” Lambert Strether adds: “Nothing, especially not ethics or a sense of empathy.”

Enemy Actions

A comprehensive review of the revolving door between Fox and the Trump administration

[Media Matters, via The Big Picture 8-25-19]

How David Koch Changed the World

[New Republic, via The Big Picture 8-27-19]

[Bloomberg, via The Big Picture 8-27-19]

[Real News Network 8-27-19]

Seminal climate scientist Michael Mann, who was the target of a Koch-funded smear, explains how the Koch Brothers “almost single-handedly stymied climate action for decades.”


Open Thread


Why Labour Unions Matter(ed)


  1. ven

    Joan et al,

    Pertinent to many conversations here, is a recent interview by Chris Hedges with the author of a new book – “American Exceptionalism, American Innocence”.

    The preface to the book starts with a particularly apposite quote by William Baldwin:

    “The civilized have created the wretched, quite coldly and deliberately, and do not intend to change the status quo; are responsible for their slaughter and enslavement; rain down bombs on defenseless children whenever and wherever they decide that their ‘vital interests’ are menaced, and think nothing of torturing a man to death: these people are not to be taken seriously when they speak of the ‘sanctity’ of human life, or the ‘conscience’ of the civilized world.”

  2. Chiron

    “The interviewer, Liz Landers, perfectly epitomizes the maturity level of our media.“

    The child like maturity of the media became more obvious through the years, the Iraq War, the Russian conspiracy, is clear the Biden was the favorite but is too senile to run, the only option is Warren who won’t rock boat and already sweared loyalty to our Zionist Overlords.

  3. Hugh

    Meritocracy was always a con, a “I deserve what I got. You don’t.” It, of course, has nothing to do with libertarianism, also a con, whose mantra is “What I got is mine. What I got from the rest of you doesn’t count.” Still I found “How Life Became an Endless, Terrible Competition” irritating. It says, “No one should weep for the wealthy,” but then spends the rest of the article doing precisely that. It somehow gets around discussing an issue that is all about class without ever looking at it in class terms (and no, the occasional reference of “middle class” doesn’t count).

    It confuses the wealthy with the elites. It says that children of the “elite” have to work too hard to get their privileges, pretty much ignoring the importance of connections and heredity (whose bed they were born in) and implying that the rest of us work a lot less. It mentions legacies only in passing, an egregious oversight when you consider that rich idiots like Dubya got into Yale and the Harvard Business School and Trump got into UPenn and the Wharton School of Business.

    As some of us have been saying for years now, things like billionaires and American gun cult are signs of fundamental failures in our society.

    The media isn’t fooling anyone about free trade. It is simply doing its job of propagandizing, making it look like there is a reasonable (because it comes from them) alternative to what everybody else sees with their own two eyes. Americans know that free trade is a slogan for more Americans losing their jobs.

    Would you seriously believe anything Mark Carney has to say? From his wiki, “Carney began his career at Goldman Sachs before joining the Canadian Department of Finance. He later served as Governor of the Bank of Canada from 2008 until 2013, when he moved to his current post [Governor of the Bank of England]. His term is due to expire in January 2020. He is one of the contenders to succeed the current managing director of the International Monetary Fund, Christine Lagarde, who is nominated to serve as the next President of the European Central Bank.” The Renminbi as the world’s new reserve currency? You have to run trade deficits to get a lot of your currency out into the world economy for it to act as its reserve currency. China has for years explicitly manipulated the value of the renminbi to serve its own ends. It has one of the diciest banking systems on the planet. What could go wrong?

    “The grinding legislative gauntlet that produced Obamacare” was completely self-inflicted.

    “Corporate Media Bias Against Sanders Is Structural, Not a Conspiracy”, so when our overlords don’t even bother hiding their conspiracies, they become structural now?

    David Koch was thoroughly evil. So much like Trump, Jeffery Epstein, etc. he fit right into the New York social scene.

  4. bruce wilder

    “The civilized have created the wretched . . .”

    I sincerely hope that was the peerless JamesBaldwin and not the hapless actor, William Baldwin, writing.

    Hugh: Meritocracy was always a con, a “I deserve what I got. You don’t.”

    I do not think that is entirely true. There was a time during the Second World War and during the Cold War up thru the 1970s, when a general belief in the need to find and develop competence in administering and leading the institutions of the political economy — government, business corporations etc. — led to genuine efforts to feed the best and the brightest into elite channels of advancement — ruling class schools, deep training in corporate business for technical staff. The “legacy” students were still admitted as a matter of course, but room was made for more than packing peanuts. And, it was not just selection, it was an ethic.

    There was a very profound and in retrospect, unsubtle shift toward generalized corruption in the 1980s. Part of that is the credentializing, which legitimizes “I deserve what I got. You don’t” while ignoring the extent to which “what I got” has become not the by-product of production of value, but is instead the consequence of predation or parasitism, as the case may be.

    When the privileged liberal wrings his hands over an abstract “inequality” but cannot acknowledge the specific predatory practices driving the creation of Koch-type billionaire oligarchs or crime family businesses like Goldman Sachs, then we have the present political paralysis, where liberal reformers are unwilling to countenance doing anything to alter the “structures” that support class privilege and income.

  5. nihil obstet

    Meritocracy is a con. I find bruce wilder’s description of it as genuine efforts to feed the best and the brightest into elite channels of advancement pretty damning. Take children who seem able to thrive at a defined curriculum, tell them that they are better than the rest of the population, and hold the glittering prize for advancement in front of them. Who can seriously think that the result will be broad-based welfare and prosperity?

    This restricts the concept of “merit” to elite, advanced positions. If you say to the average person that you don’t believe in meritocracy, their response is likely to be “If you need brain surgery, do you want a butterfingered oaf? Don’t you want the best surgeon?” I got a lot of mileage three years ago by saying, “Yeah, I’d want Ben Carson. I just don’t want him to be president.” I believe in merit; I want the best teachers to teach, the best engineers to engineer, the best mechanics to check my HVAC system, even the best ditch diggers to dig ditches. But none of that is merit in today’s political discourse, unless of course you’re discussing monetary incentives, a whole other con game. “Merit” means rule, which in our political system means wealth. And that justifies all the inequality!

  6. bruce wilder

    It is a profoundly reactionary position to reduce the explanation of the value of performance to the qualities of an individual performer. That conceptualization is used by right-wingers to oppose the minimum wage: “some people are not worth $15 an hour and the policy condemns them to unemployment” goes the argument. And, at the other end of the spectrum, multi-million “compensation” is defended as due to “star” performers.

    These reactionary ideas hide the political power inherent in organizing bureaucracies to administer systems. The attachment of conservative economists to the myths of the magic Market is part of this hiding from the reality of Power — in the mythical market, all are equal and independent actors.

    Conservatives want hierarchy, of course — the feudal hierarchy of meritless, hereditary rank extracting wealth from the labor and misery of the hoi polloi. They want that hierarchy to be natural and unquestioned.

    To me, the question of who should be boss is like the question, “who should sing tenor in the choir?”. The answer to the latter question is, ” he who can sing tenor”. (Semi-quoting Henry Ford.).

    In a political economy importantly organized by bureaucracy, there is need for talent and expertise and deeply educated people — lots of them really thruout the hierarchy. But, performance of the system is a property of the system.

    The reactionary philosopher Nozick argued from the example of Wilt Chamberlain that just distribution was incompatible with any but the most minimal government. It was a crazy, stupid argument that ignored the ways in which the economic value of Wilt’s talents were a product of organization and organization’s technologies: professional sports, arenas, television.

    As humans, our power is in the organization of a deep division of labor in society. We need elites at the top to prudently direct and coordinate mutually beneficial exchange and highly decentralized decision-making. Instead, we have created a system that selects for greedy, amoral psychopaths and narcissists at the top and centralizes power and decision-making to facilitate predatory extraction.

    Ethics and the nature of “merit” in meritocracy are inseparable. “Meritocracy” as we know it is an apology for monstrous behavior and pretension.

  7. Willy

    There are a hundred reasons why power shouldn’t be allowed to concentrate, reasons why concentrated power is destructive to society. “Meritocracy” becomes yet another masking ruse for power pathology, because both the meritocracy (to a point) and the masking ruse (for a while) do work.

    I liked that Home Depot was a better one-stop big-box hardware store than Lowes, the defunct HomeBase, or any of my local chain stores. I came to always shop there first. But I also became oblivious to the fact that the chain was slowly backsliding into the becoming the K-Mart of hardware stores. It seems that in the continuous mindless boardroom drive for increased market share and short term profits, they were increasingly selling consumer grade garbage and service. I woke from my marketing/advertisement addled daze after I was realized I was finding far too many superior products for better prices at little local single store shops. I finally had to make the decision to avoid HD lumber, tile, paint and appliance departments entirely. Still, Home Depot parking lots seem relatively full so not everybody has figured this out yet.

    It seems “the system” creates a meritocratic climb, peak, then backslide towards mediocracy/idiocracy. I’ve seen this sort of thing happen everywhere from HMOs to places I’ve worked. It seems that without some kind of regulation mechanism that this is a natural human process in many areas.

  8. ven

    Bruce Wilder – thanks for picking that error up. Not concentrating!

    “Meritocracy” – is really a systemic justification of a pyramidal hierarchy, and provides us all with an illusion of equity. The system is essentially good, even if there are some rotten apples here and then. And if you are good enough, you will get promoted to the right level in the pyramid. Its close ally is social mobility.

    But being “good enough” is really about how effectively you serve the hierarchy above you. Eg. As a journalist your career won’t go very far in the hierarchy, if you are constantly breaking stories about government or corporate mendacity – Seymour Hersh and Chris Hedges are good cases in point.

    Meritocracy keeps us obedient and working hard to get the next pay cheque / promotion. And for children, it provides a veneer of equality of opportunity, without acknowledging the fact that the children of professional and elite classes have an inherent advantage over those from working classes.

  9. Willy

    @ven. My last comment is not to be confused with “meritocracy” working within a corporation or very large organization. It was meant to describe the life cycle of large business systems in a caveat emptor world where meritocracy is assumed by the mob.

    For individuals working inside the corporate world, meritocracy is often a con. It’s far easier to advance oneself by knowing (allying with) the right people and playing the right games. Those rules also apply if one is obviously brilliantly value-creative, because the PTB can often view you as a threat to their own status. Under those conditions it’s safest to be working directly with an ownership.

  10. nihil obstet

    @bruce wilder, I think you’re taking “meritocracy” to mean “organization of the economy by a specialized hierarchy educated for the positions,” rather like the French grandes ecoles career paths, and dismissing the meaning of “rule by the smartest individuals” as a right-wing corruption of “meritocracy”. I don’t agree. I think from the get-go “meritocracy” was embraced by a society where everyone is above average as a means of economic sorting of individuals, and a justification of extraordinarily unequal economic sorting.

    Why should a grocery clerk stocking shelves be paid less than the manager sitting in her office? I can’t think of any explanation that doesn’t depend on the notion that the manager is more valuable than the clerk. It’s not simply that the two functions differ. The performers of the two functions have radically different non-job-related positions in life. If meritocracy is simply about recognizing the superior shelf-stocker so that he will actually perform that function, it will not insist on that disparity.

    “Meritocracy” holds that there are significant differences in people’s abilities to perform functions. OK, the soprano can’t sing tenor, so the tenor should sing tenor. In meritocracy, the tenor is superior, prudently directing and coordinating the choir, and the soprano defers to him. Does that answer the question, “Who should be boss?” (I wouldn’t use that as my example, but in a discussion, o-oh yeaah, will I ever take the low-hanging fruit.)

    In general, there are more people with the abilities to do what we want done than we need. They will need training and experience to get there, but we should value multiple pathways over which they can come. You don’t get a better education at an elite school than you do at a solid state school. You’ll be taught by the teaching assistants of star professors, but they have to make sure than your classmates, George W. Bush and Donald Trump, pass as well. Elite schools are selling first row tickets and passes to the best cocktail parties. It’s what they call education.

    As far as solid public administration goes — the New Deal was created and run mostly by the graduates of non-elite schools: Harry Hopkins, Henry Wallace, Robert H. Jackson. And the British welfare state that we all wish we had was created by men who left school as children: Keir Hardie, Aneurin Bevan. These are the people that elite credentialing eliminates.

  11. anon y'mouse

    “(s)he who can” is largely determined by the social and financial capital available to be invested into a human being. except in our society, it is discussed and thought about as only resulting from the latent abilities and hard work of the individual person.

    thus they are not totally “meritless” aristocracy. they are self-perpetuating aristocracy who replicate themselves, as the poor also replicate themselves. to jump from one to the other requires more than hard work. and this kind of investment in the individual starts at, or even before birth. as the observation that poorer toddlers have vocabularies thousands of words fewer than richer children do (based on environment and how much parents talk to them), and that richer children retain much more of their knowledge over the school vacation period than poor children, due to additional enrichment exercises undertaken during that time.

    without an investment of some kind and opportunities (often obtained through social networks, thus social capital) to use, learn and even fail, you have no idea what individuals are genuinely capable of doing. vast numbers of the underclass may have at one time been capable of it, but the lack of finances and resources bars them from ever developing. so how do we genuine know who the “best ones” are, when we have ruled out so many potential “best ones” from ever being able to participate in the race (ugh, i hate “life as competition”) to begin with, and continually weed out as the process goes along. a lot of those weeded out lacked resources external to themselves, not internal. we have no real idea how to find the genuine internal abilities with all of these external factors playing such a hugely influential part.

    do you know that the ability to finish higher education is very largely determined by finances? very few of the poorer students who start the path from community college ever obtain higher degrees. why? because the need to pay for daily living takes over. they might indeed have the brains to, but other realities impinge and they must bail. and that is from direct, personal experience and interactions with admissions and other providers of higher education. ((they quoted that less than 10% who begin at community college will ever end up with a university degree, as an example))

  12. Hugh

    Elitism is a system of hereditary privilege, allegedly based on expertise. But you can reward expertise but without turning it into privilege by making sure everyone has the basics for a good life and limiting how much beyond that anyone should get.

    The tenor example is flawed because almost everyone is good in multiple areas and can be trained to be better in even more. There are almost no professions that are so particular and the abilities so innate that only a “tenor” will do.

    In my life, I have met many people in leadership roles who would not know real leadership if it kicked them in the ass. So I don’t think the merit argument works. If all it selects for are people who don’t lead or don’t know how to lead, what good is it?

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