Long Overdue Policies that Look Obvious in the Age of Pandemic

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I’m not usually a fan of George Packer. But I keep coming back to this column, We Are Living in a Failed State. The coronavirus didn’t break America. It revealed what was already broken, which is something I might have written. It argued that this pandemic, to which the US responded like a corrupt poor country, was actually the third crisis of this century, and our responses to the previous two — 9/11 and the Iraq War, and the Wall Street crisis — simply brought this country to the place where Trump could loot it.

Like a wanton boy throwing matches in a parched field, Trump began to immolate what was left of national civic life. He never even pretended to be president of the whole country, but pitted us against one another along lines of race, sex, religion, citizenship, education, region, and—every day of his presidency—political party. His main tool of governance was to lie. A third of the country locked itself in a hall of mirrors that it believed to be reality; a third drove itself mad with the effort to hold on to the idea of knowable truth; and a third gave up even trying.

Trump acquired a federal government crippled by years of right-wing ideological assault, politicization by both parties, and steady defunding. He set about finishing off the job and destroying the professional civil service. He drove out some of the most talented and experienced career officials, left essential positions unfilled, and installed loyalists as commissars over the cowed survivors, with one purpose: to serve his own interests. His major legislative accomplishment, one of the largest tax cuts in history, sent hundreds of billions of dollars to corporations and the rich. The beneficiaries flocked to patronize his resorts and line his reelection pockets. If lying was his means for using power, corruption was his end.

Packer ends with a call for renewed solidarity.

But he might as well also call for a fix to all the failures of the past twenty years. Right now, mind you, Trump is failing, miserably, in part because he believes maximizing the opportunities for looting by his friends is all the policy he needs.

But the sheer scale of the crisis makes policies that long made sense for the United States more urgent and far easier to justify. I plan to keep a running list of those policies.

Medicare for All

No one has figured out how all the people put out of work by the shut-downs will pay for COVID-related health care. Trump has persisted in a plan to kill Obamacare, and some badly affected states never even expanded Medicaid.

Early reports suggested that Trump’s administration has claimed it is willing to pay hospital bill, so long as they pay those bills directly (thereby avoiding establishing a policy, I guess). But with so many people out of work and with hospitals reeling from the shut-down, the far better solution is to make Medicare available to all.

Universal Basic Income

The US government has been backing credit for big industry and tried, but failed, to provide free money for small businesses to keep their employees on staff. Instead, 26 million Americans have applied for unemployment, a sixth of all workers (and a third of all workers in MI, KY, and RI). Meanwhile, the Administration botched even a one-time $1,200 payment.

The government could better ensure that markets don’t crash entirely–and keep states from buckling as they try to serve all these unemployed people–if they simply gave a UBI to all people, as Spain has decided it will do. By keeping it, the US might be able to address the underlying inequality problems that have led to such a disproportionate impact of COVID on communities of color.

Decarceration

Closed spaces, generally, amount for a huge percentage of COVID cases and (in the case of nursing homes) deaths. ACLU just rolled out a paper that argues the models for COVID (which were originally based off other societies’ social patterns, including their prison system) underestimate the total number of deaths because they don’t account for the spread in our prisons.

COVID will remain lethal for long enough that states and the federal government will need to achieve some level of decarceration to prevent the prisons from becoming a source of spread to the wider community (as they have become in the localities with harder hit prisons).

In this case, even before COVID hit, there was bipartisan support to wean ourselves from overincarceration. Prisons will become less lucrative in conservative communities, especially as some states begin to end prison gerrymandering (which gives rural communities representation for prisoners who can’t vote, just like slavery did).

So now is the time to end incarceration for minor crimes, and improve the humanity of incarceration for those who need to be jailed.

Deindustrialization of the Food System

We’ll be lucky if we avoid famine conditions. That’s partly because our food system has the same institutional/retail split our toilet paper supply chain does, meaning the market for half of the food out there disappeared when restaurants and other institutional buyers shut down. That’s partly because bottlenecks in our food supply chain — most notably, thus far, meatpacking plants, but there will be others — have further undermined the market for our plentiful food production. And that’s partly because Trump’s farmer support, thus far, has emphasized direct payments that are effectively a continuation of his earlier bribery of farmers whose markets his trade war screwed, rather than purchasing up surpluses to provide to food banks.

Trump hasn’t shown an ability to get any other needed supplies where they’re needed; it’s unlikely he’ll do better with food.

Meanwhile, food supplies that bypass these commodity markets remain. We need to make this food supply chain more resilient and one way of doing so is to bypass the industrial bottlenecks.

Broadband as a Utility

When schools shut down, it suddenly became acutely visible how many Americans — both rural and urban — don’t have broadband. While some areas have gerry-rigged solutions (like driving wifi-enabled busses to poorer neighborhoods) to get some kids online and learning, that’s not possible everywhere. And even for adults, it takes broadband access to be able to social distance.

Trump is already talking about using infrastructure investments to get America working again. Extending basic broadband as a utility should be part of that.

Update: Arne Duncan describes what needs to happen for existing efforts to expand broadband access to be really effective.

Industrial Policy

Two months after we first identified shortages in necessary medical supply, we’ve barely managed to switch production to those necessary objects, even as entire factories were otherwise shut down. We’ve got shortages of not just testing kits, but the underlying supplies. We’ve got drug shortages too (and had them, even before the President started pitching miracle cures).

It’s long past time to admit that we do have an industrial policy — but right now, it’s focused on building the troubled F-35, not ensuring that the United States has the ability to build the things we need domestically, even if we interact openly with the rest of the world. This story uses the failed lithium battery investments Obama made, largely in Michigan, to talk about how we came to be unable to supply our own medical equipment.

We have an industrial policy. We just need to be willing to match that policy to our society’s real needs, not exporting warmongering.

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Three Things: Erasing, Erased, Erasure

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[NB: check the byline, thanks! /~Rayne]

There are so many more than three different items under this theme, I could write a book about this. But in the interest of time and resources, I’ll opt for simplicity.

You are being erased if you haven’t been already.

~ 3 ~

Writer and former business consultant Anand Giridharadas shared an excerpt yesterday from a financial adviser’s newsletter to clients.

Transcript:

[…] I just got a great leak that I want to share with you from someone’s financial adviser. You may have a financial adviser. This is a financial adviser trying to advise people what would happen to America if Elizabeth Warren was elected president. And by the way I think a lot of this would apply to Bernie Sanders if he was elected president as well. I think there’s a similarity. And so what would a Warren presidency do to markets. I just want to read some of this to you because it really is hilarious obviously in a way that these boring people did not intend.

And um, so they say, “We have been getting increasing inquiries to address the potential market of her policies as she has gained a lot of momentum over the last couple of weeks.”

And um, it says, “To be clear we do not get involved in political opinions.” To be clear. “So we did a surface level dive on her platform,” they say, “and our intention is to understand the market implications,” they say, and I quote, “Many of these policies are designed specifically to reduce corporate profits and earnings, and instead use those funds to benefit number one workers, number two the environment, number three those with lower incomes, and number four,” oh gosh,”women and minorities. It is important to understand that Warren’s policy goal is to reduce the retained earnings of businesses across multiple sectors and to benefit other parties as mentioned above. As such it is very reasonable statement that if Warren were elected and those policies were enacted it would likely be negative for the stock market because stock prices are an expectation of future earnings.” And so on and so forth.

“The policies would hurt corporate earnings universally,” it says, “although they would likely improve quality of life for many demographics at the expense of corporate profits. Whether that trade-off is positive or negative is not our place to say.” People, stocks, which is better? We don’t know. “We are simply focused on facts. Again, we do not get involved in political opinions,” it said. So now they break it down in case this is not obvious enough, good for people, bad for, for uh, stocks, in case that’s not obvious enough they break it down by policies. Let’s just go through that, shall we? Is that okay? You got time? I got time. I’m in a hoodie.

“Number one ban fracking. Warren wants to ban fracking for oil and gas based on environmental concerns.” Now they do a nice thing where they do who’s this negative for, who’s this positive for, super helpful. “Negative for energy companies and indices, positive for the price of oil/gasoline, supply would be reduced.” Uh, that’s interesting.

“Policy number two eliminate private prisons. Warren wants to end federal contracts to private prisons and withhold funding to make state and local governments do the same. Materially negative for private prison stocks,” ooh, that would be rough for them, yeah.

“Reinstate Glass-Steagall. Warren wants to reinstate the law that separated commercial banking and investment banking. Negative for the major investment banks — JPM, MS, BAC, GS, et cetera, as they would likely have to spin off retail banking operations.

Policy number four, increase taxes on the wealthy. Warren is advocating an ultra-millionaire tax on the 75,000 richest families in the U.S. along with other tax increases aimed at high earners. This could reduce disposable income. Negative for consumer discretionary retail sectors and lingerie stocks. She wants to double the national minimum wage,” they say, “from $7.25 to $15.00. Negative for the entire stock market, the entire stock market,” well, then maybe some more people would be able to buy stocks. “And small business margins. This would significantly compress corporate margins across industries and would result in a reduction of expected earnings for the S&P 500. Those negative effects would be some partially offset,” it goes on, “by more disposable income from minimum wage earners.

“Number six, Warren supports the Family Act, which would create paid national family and medical leave for up to 12 weeks. Negative for small businesses. For large corporations, not much of an impact.” Uh, you know, there we go.

“Number seven agribusiness, breaking up agribusiness.” In fact maybe even break up the word agribusiness into two separate words, agri and business. “Most of the country’s and world’s meat and agriculture production is concentrated in a few major companies. Warren wants to break up these vertically integrated agriculture and food companies. Negative for the agriculture sector, companies in the ag stocks as well as pesticide producers.” And so on and so on.

“The bottom line from a market standpoint is that these policies will be negative for stocks with some being downright negative for the broad markets. How negative would they be for stocks? No one knows exactly.” But this is where it gets interesting. “Again, this doesn’t mean these policies don’t have winners. These are policies designed to reduce retained corporate earnings in favor of other things Warren and her supporters deem more important. So voters will decide if they want to support that type of trade-off. Everyone has their hierarchy of what’s important.”

This is where it gets, we’re getting into Kant here, this is philosophy here in a financial advisor’s report. You gotta pay extra to get to this paragraph. “Everyone has their hierarchy of what’s important, and Warren is an unapologetic populist, who if in power would enact policies designed to reduce corporate earnings to benefit other stakeholders,” parentheses, “workers, the environment, et cetera.” So, I think like all people and the planet are (air quotes) other stakeholders.

“Regardless of your opinion of that strategy it is important to understand that investment accounts would likely be negatively affected under these policies, and if they become reality, we need to take steps to mitigate that damage. As we move closer to the election we’ll obviously be keeping close watch on the implications of the Democratic primary giving you market intelligence on what the headlines mean for stocks going forward.”

They also want to reiterate that this is not political.

It boggles the mind to think that workers, the environment, women and minorities are just sucking drains on the audience for which this opinion piece was written.

We’re roughly 75% of citizens and the entire natural physical world but we’re just an inconvenience drawing down on corporate profits.

We’re not 75% of human beings who’ve been driven over roughshod, had our labor stolen from us for compensation less than subsistence, and the steadily destroyed environment which all of us share and in which we live.

How easily we are erased from consideration by the plutarchy.

One upside: now we know with certainty the financial industry views Warren as both a serious contender for the Democratic nomination and a threat.

Downside: we know, too, that in spite of their B-school education the financial industry is still as dumb as a box of rocks, likely to trash the entire economy and the planet, because they can’t see outside of the rut they’ve been in forever, where only white men have capital and make economies. They are incapable of seeing the untapped promise for stock market growth and saving our planet, locked within more than two decades of stagnant wages, monopsonic job markets, and millennia of toxic colonization.

Note how health care wasn’t at all mentioned; the financial sector is incapable of seeing the benefits to the broader markets if businesses were freed of the burden of health insurance shopping and premium payments.

~ 2 ~

In 1986 I worked for a small machining business. My boss was a bigoted lecher, I’ll be frank. It wasn’t unexpected when he told me if I got pregnant while I worked for him he’d fire me. Fortunately having kids wasn’t yet in the cards for me and I could afford to ignore his misogyny though I couldn’t afford to quit.

In 1988 I applied for a job with a business that did custom manufacturing. I was offered the job but turned it down because their health insurance didn’t cover women’s reproductive care or maternity coverage and they didn’t expect to offer it any time soon, especially since I’d be only one of two women on staff. I took a job with a Fortune 100 company instead; their plan had women’s reproductive care and maternity coverage.

In 1989 my supervisor at that same employer told my older female co-worker he had a limited amount of money to offer his department staff of 10, two of which were male. “I have to give the boys raises because they have families to support.” Never mind that this older woman had teenagers at home, or that the rest of us junior female staff members assisted these two male staffers, or that we might have wanted families we couldn’t yet afford.

In 1993 I got pregnant the month the company fired my supervisor’s equally misogynist boss. I swear the egg waited to drop until I had a new female department head. She was understanding and considerate even though she’d never had any kids of her own.

In 1997 after three years in a new department, I became pregnant with my second child. My boss was itchy and weird throughout my pregnancy, increasingly so over time. You’d think a lawyer would know better than to ask every week during my seventh and eighth month when I was due and was I going to go on leave soon. I had to go to HR to ask for an intervention; I left a week before my scheduled delivery.

It’s not just my own experience; my sister ran into friction from her Fortune 500 employer while she was pregnant. Thankfully she had support from both HR and her union — just not the men she worked with. I can’t tell you how many female friends have likewise been harassed at work for being pregnant.

Don’t get me started about simple systemic problems. Ever tried to sit in one of these for several hours while eight months pregnant?

Academic Chair-Desk

When Elizabeth Warren said she was fired when her pregnancy became visible, I believed her. I am furious with news media outlets for entertaining the idea this was ever not true, or that this isn’t a continuing problem today.

[Let’s not forget the outlet which propelled the attack on Warren was the same one which was tasked with the original Trump dossier — Washington Free Beacon. Are they using material from a Warren dossier?

Let’s not forget, too, that outlets like CBS which continued to poke at Warren have had a wretched history of treating women poorly — or has everyone already forgotten Les Moonves and his nasty habits, including blackballing Janet Jackson for a wardrobe malfunction?]

Think back upon your education and work experience; how many times during K-12 education do you recall seeing a pregnant teacher? I never did any time between 1965 and 1978, and more than 85% of the teachers I saw were female, most of childbearing age. I don’t recall seeing a pregnant instructor during college at all.

How many times did you see a pregnant woman in the workplace? I didn’t until I was in my 30s and having kids myself.

And now my daughter has to put up with crap regarding reproductive health coverage, more than 30 years after I had to turn down a job for not having it as part of their benefits. Why has this not changed for the better? Why is it worse because our government  has now butted into the mix to make it worse rather than ensuring we all get the health care we need regardless of gender?

Why is the essential human fact that women need reproductive care or maternity coverage still something we must fight for against the plutocratic patriarchy which wants to deny it and erase us?

~ 1 ~

There’s a theory that stingy millennials are to blame for the sluggish economy, said financial news network CNBC, parroting investment firm Raymond James.

Are you fucking kidding me?

When 40% of Americans can’t muster $400 cash for an emergency, it’s not stinginess that they aren’t stimulating the economy.

When the reason so many Americans are strapped is because of debt, it’s not stinginess.

When 45 million American students and parents hold educational debt amounting to  ~$1.5 trillion — more than what Americans owe on their credit cards or auto loans — it’s not stinginess.

When minimum wage workers across the entire country can’t afford rent on 2-bedroom apartment, it’s not stinginess.

When 25% of Americans ages 18-64 report having problems paying medical bills, it’s not stinginess.

Somehow the financial sector including media dedicated to covering it have erased all the other reasons why millennials — Americans born between 1981-1996 (23-38 years old) — might not be able to fully participate in stimulating the economy.

Conveniently, the several hundred uber wealthy families represented at the far right of the interactive graphic in the tweet below don’t worry at all about erasure.


They own the erasers.

~ 0 ~

This is an open thread.

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The Orange Injector and the Troubling Tariffs

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[NB: Check the byline, thanks. /~Rayne]

He did it again. I am so fed up with this nonsense. This:

is yet another perfect opportunity for someone to game the market and do so in a big way.

Just look at this drop:

One needed only to short the market before it opened on Monday make huge amounts of money with no effort. And this time even the entire American market could have jumped on this; no more advance notice required apart from Trump’s Sunday and Monday tweets.

Believe me, the opportunity tempted me. I could see it coming. I only needed to short the NYSE:DIA using my pre-open trading access and I’d have raked in cash.

But it’s unethical; I can’t make money off people on the wrong side of Trump’s ridiculous foreign policy. It’s more like gambling on a steroid-doped horse and not true investment.

Nothing about Trump’s trade policy makes any sense (not that anything he does makes sense to a rational, ethical, sentient human being). What is the fundamental problem he wants to solve?

…Trump withdrew from the Trans-Pacific Partnership without ever proposing a replacement, and he appeared ready to do the same with the North American Free Trade Agreement (NAFTA). He imposed stiff levies on imported steel and aluminum, leading Canada, China, Mexico, and the European Union to slap the United States with retaliatory tariffs. At the same time, however, his administration ultimately agreed to a renegotiated NAFTA without major changes to the original agreement. It did the same for the U.S. free trade agreement with South Korea. So what signs could reveal his true intentions in 2019?

(source: Understanding Trump’s Trade War by Doug Irwin via Foreign Policy Winter 2019)

This entire paragraph operates on the assumption Trump acted in good faith on NAFTA.

This is the biggest mistake anyone can make about Trump, however. He has never done anything altruistic in his life. Every he’s done has been transactional. His lack of empathy for others combined with his selfish transactional nature precludes any good faith.

One need only look at his marriages to see his true self. He didn’t make any concerted effort to keep his vows, and when he’d obtained all he wanted from those relationships, he ditched his wives.

Even his Access Hollywood “grab them by the pussy” video revealed this: he believes that if one is a celebrity, one can do anything to a woman. In other words, the woman is receiving the attention of a celebrity in exchange for access to her body.

A transaction. Presence and access is consent as far as he’s concerned.

He is incapable of seeing anything he does as president as action on behalf of the country. In his mind the country already got what it wanted — his attention of a celebrity and his commitment to live in our house.

Rather like a second or third wife, we’re supposed to have gone into this relationship with our eyes open and have already received the best that we’ll get out of this deal. Meanwhile, he’s using our house for his personal aims.

And he’s using our relationship with major trading partners to shake them down for something to his benefit.

Re-read that paragraph from Foreign Policy again, only this time recognize the shakedown, the grift in between the lines. He received something from rattling NAFTA partners even if in the end it looks like nothing changed.

The New York Times published another expose on Trump’s finances based on transcripts of his IRS filings from 1985 to 1994. In the wake of the article there’s been a lot of chatter about how deeply in debt he was during the period these filings covered. But debt is just a number; it’s all in the accounting. The average American under the age of 40 is also deeply in debt if they’re buying a home, a car or two, and/or paying off the last of their tuition debt. Some of these debtors may tell you they made money and put it in the bank last year, though.

Trump was doing the same thing but at a much larger scale, only without the same consequences upon failure the average American would face:

Mr. Trump was able to lose all that money without facing the usual consequences — such as a steep drop in his standard of living — in part because most of it belonged to others, to the banks and bond investors who had supplied the cash to fuel his acquisitions. And as The Times’s earlier investigation showed, Mr. Trump secretly leaned on his father’s wealth to continue living like a winner and to stage a comeback.

Here’s the bit that jumped out at me from the NYT’s piece:

As losses from his core enterprises mounted, Mr. Trump took on a new public role, trading on his business-titan brand to present himself as a corporate raider. He would acquire shares in a company with borrowed money, suggest publicly that he was contemplating buying enough to become a majority owner, then quietly sell on the resulting rise in the stock price.

The tactic worked for a brief period — earning Mr. Trump millions of dollars in gains — until investors realized that he would not follow through. That much has been known for years. But the tax information obtained by The Times shows that he ultimately lost the bulk of the gains from his four-year trading spree.

Now Trump — or any of his partners/associates/financiers — no longer has to buy stock in a specific company to make money. He can use our house to act like a corporate raider. He can threaten to make or break a deal using the good faith and credit of the United States (instead of his own bad faith) and mess with the entire market.

In addition to Trump’s Sunday tweets. I suspect participants in the US and overseas markets in Asia and Russia could also have traded on Trump’s early Monday morning tweet:

This tweet is pure bullshit. There is nothing factual about it; it displays a gross ignorance about the trade deficit.

Putting aside the rational explanations about the trade deficit, the U.S. must keep in mind that China has been carefully negotiating its recovery after Mao Tse-tung’s Great Leap Forward and a realignment of mixed capitalist-communist system. It would be all too easy for the balance to shift reactively toward a more militarized communist system if it had an insufficient demand for its capitalist output.

But understanding this requires a degree of nuance beyond the grasp of the malignant narcissist-in-chief. He can only manage to ponder what’s in it for him.

Trump’s early Monday morning tweet would have been seen at these local times:

4:06 am Washington DC
6:06 pm Sydney Australia
5:06 pm Tokyo Japan
5:06 pm Seoul South Korea
4:06 pm Beijing PRC
11:06 am Moscow Russia

Ample time to jump in between the Sunday tweets and this Monday tweet if one was already holding index shares.

Those of use who didn’t trade on this information, though, went for a roller coaster ride on our hard-earned retirement savings and college funds as they plummeted Monday morning.

And because Trump is using our good faith and credit for his own aims, we can’t be absolutely certain he isn’t running some opaque con for a personal gain we know nothing about. We’re trapped in this vehicle for as long as he wants to run this scam.

And like some of the investors who loaned him money or contractors who worked for him in good faith in the past, we’ll end up holding the bag.

Just stop this crazy thing.

~ ~ ~

Oh, two more things:

First, Steve Bannon needs to be de-platformed. He is deliberately sowing anarchy across the globe by promoting white nationalism. Populism, he calls it, but it’s racist appeals encouraging insurrection and sedition against liberal democracy.

When he encourages Trump’s stupidity toward China it’s not because it’s helpful to the common good. He may say that Trump’s tariff threats are a benefit to the working class but Bannon has no fucking clue how manufacturing actually works. It’s all an abstraction to him that capital might reshore from investment in China to investment here.

Reality looks more like Lordstown, Ohio where General Motors just shut down a plant. The economic changes that led to the closure have been years in the making. It takes years and hundreds of millions in capital investment to plan a new product line to respond to trends in consumers’ tastes including the manufacturing processes required. We’re also in the midst of a massive sea change in transportation, with competing countries shifting entirely to electric cars within the next two decades.

But Trump can tweet damaging nonsense in seconds, smashing those carefully laid-out product manufacturing plans to smithereens.

Which may be the point considering Trump and his minions and financial backers are no fans of organized labor in the U.S.

I’m sure Bannon will assure the workers of Lordstown jobs will be there for them at any moment once the impending trade war with China has settled.

[Note: While I was drafting this post Trump tweeted that GM was selling the Lordstown plant to electric truck manufacturer Workhorse. Now Trump will look like a winner for badgering GM’s CEO Mary Barra when this deal was likely in the offing for some time. Really stupid move on Barra’s part because now he’ll use this as leverage — her call gave him presence and access.]

 

Second, it may be valuable to note that key problem children who have supported anarchic white nationalism through Trumpism in the US and Brexit in the UK have something in common:

Steve Bannon = former investment banker

Robert Mercer = former co-CEO of hedge fund

Rebekah Mercer = former trader at daddy’s hedge fund

Nigel Farage = former commodities trader

Arron Banks = owner, insurance company

Wilbur Ross = investment banker

Steve Mnuchin = former mortgage securities and hedge fund executive

Imagine them realizing they could make a shit ton of money by injecting planned volatility into the market using Trump (or Brexit) as their injector.

I wouldn’t be surprised if the entire Trump administration was in on this scam. Here’s U.S. Trade Reprepresentative Robert Lighthizer about Trump’s latest tariffs on Chinese goods:

“This was Trump acting out on a rainy Sunday in Washington with nothing on the public schedule,” he added. “To paraphrase Lenin: there are decades where nothing happens and there are weeks when decades happen…and then there is a single week in the Trump Presidency. What a time to be alive.”

Head, meet desk.

This is an open thread.

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Graphic: Quino Al via Unsplash (mod by Rayne)

Three Things: This Ain’t No Fooling Around

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[NB: The byline, check it as always. /~Rayne]

It may be April Fool’s Day but this isn’t a joke. We have some serious matters to tackle urgently today. Let’s get to them pronto.

But first, write down this number or add it to contacts, you’re going to need it:
Congressional switchboard (202) 224-3121

~ 3 ~
Mitch McConnell is expected to bring a Senate rule change to a vote, possibly today; he wants to shorten the amount of time for the Senate to debate nominees before approval 30 from hours to 2 hours. This move was approved by the Senate Rules Committee along party lines and is horribly anti-democratic (little d) as it provides an inadequate amount of time for both senators and their constituents to air problems with nominees and evaluate their suitability for office, which in some cases are lifetime appointments.

McConnell, the man who refused to allow a vote on an Obama SCOTUS nominee, claimed this rule change was necessary because of “‘unprecedented obstruction’ by Democrats.” What amazing projection.

The media also did a pissy job informing the public about this change.

Call your senators, tell them to vote NO on SRes 50. This rule change is unacceptable. You need to know they are fulfilling their role to advise and consent — and that role doesn’t mean rolling over and doing the White House’s bidding. If they don’t fully debate nominees’ qualifications, why do we even need the Senate?

~ 2 ~
And now for the perfect example why the previous rule change is unacceptable: Stephen Moore, economics hack extraordinaire, deadbeat father, and one of the reasons the GOP members of Congress have been especially jacked up since January 2017. McConnell doesn’t want a full debate about him.

This guy is Trump’s nominee for the Federal Reserve and he’s completely out of his depth. I’ll point you to economist Justin Wolfers for details, though — start at the top of his Twitter thread (click on the dte to open it):

And here:

Back when the 115th Congress was sworn in, the House GOP caucus was corralled into a closed door session. Few details have emerged but we know Moore was used to persuade the caucus members they were “no longer the party of Reagan” because popularism. This laid the opening for the POS tax cuts passed last year which were supposed to lead to all kinds of economic growth due to reinvestment. Psych! It was either a massive snow job by Moore on behalf of corporations or it was utter stupidity about the stickiness of corporate profits (they go into shareholders’ pockets, not reinvestment into workers or equipment).

If we ignore the red flags waving about Moore — including a $75,000 tax lien for 2014 income — the ridiculousness of the tax cuts points to Moore’s unsuitability for the Fed Reserve. He’s a complete hack who offers little more than a front to which the GOP can point to legitimize their ransacking the country.

Call your senators: No on Moore for Federal Reserve.

~ 1 ~
This sums up the problem:

A senior administration official with direct knowledge of the meeting described Trump’s stance: “He doesn’t want another single dollar going to the island.”

Puerto Rico is still in very bad shape 19 months after Hurricane Maria devastated the island. I can’t begin to do the scale of the additional problems inflicted on Puerto Ricans by the horrible management of financial aid. Please read this piece at the Washington Post for a better take on how bad things are:

Puerto Rico faces food-stamp crisis as Trump privately vents about federal aid to Hurricane Maria-battered island

The Bigot-in-Chief continues his deadly vendetta against Puerto Rican Americans still badly affected by Hurricane Maria’s devastation. He doesn’t want to send them any additional aid for reasons which are opaque to the rest of the country but are readily guessed at based on his past behavior.

— He couldn’t bother to do adequate pre-hurricane preparation; he sat on his goddamn fat ass and bitched about NFL players taking a knee rather than get off his ass and make sure Puerto Rico was prepared. We know he had ample time and instead he was either malignant in his duties or incompetent, take your pick.

— He had to be shamed by Hillary Clinton into dispatching the Navy’s hospital ship. The ship did not treat as many patients as it should have nor did it stay long enough. At least one entire ICU ward on the island died because medical attention didn’t get to the most obviously needy places fast enough.

— Under his watch management of disaster recovery services was totally botched, from water bottles sitting on the tarmac undelivered to electrical service contracts let to what appears were profiteering outfits unprepared to deal with the scale of the problems. So much money was wasted because of this gross incompetence.

— Too little attention was given to Puerto Rico’s businesses as critical national infrastructure. The entire country faced medical supplies shortages because manufacturers in PR were the only sources in the U.S. and they were ignored rather than treated as essential.

Three thousand Americans died after the hurricane; most of them died because of the fucked up and opaque personal agenda Trump has against Puerto Rico. More people may have been affected here on the mainland but I’ll bet there’s no way to record the impact.

Me, for example — I had to manipulate the schedule for major surgery back in early 2018 because the hospitals here in Michigan were reporting tight supplies of IV equipment made in Puerto Rico. Thank goodness it worked out, that I didn’t have another episode requiring transfusions and days of IVs. But I couldn’t help think of patients elsewhere across the country who were negatively impacted; there were reports of reusing disinfected IV equipment because supplies had run out.

Trump thinks Puerto Rico has received too much money already. I suspect Trump’s real issues are:

1) He has a personal bias against Puerto Rico because a Trump-branded golf course there failed in 2015;
2) He simply hates brown and non-English speaking people — just look at how he responds to situations where persons of color need help versus whites;
3) He doesn’t see Puerto Rico as part of the U.S.

American persons of color are highly aware of the treatment of Puerto Rico. How the White House and Congress respond to Puerto Rico shapes their opinion, and failure to do right by Puerto Ricans can affect these voters’ attitudes going into 2020.

But Puerto Ricans don’t have a senator, one might say. True — but it’s estimated 6% of the population left the island after the hurricane and more may still leave. They’ve been moving to Illinois, Texas, Louisiana, Florida, Georgia, Kentucky, and Wisconsin because it’s cheaper to live in these states than it is now in Puerto Rico. What a pity for GOP senators in those states up for re-election in 2020 who continue to vote against aid for Puerto Rican recovery — they’ll have more Democratic voters to contend with at the polls.

Call your senators — tell them to ensure Puerto Rico has more financial assistance for post-hurricane recovery. We owe it to our fellow Americans just as we would if they were in North Carolina, Florida, Texas, or California after a major disaster. We owe them for the failure to provide equal protection under the law before, during, and after the hurricane resulting in nearly as many Americans’ deaths as 9/11.

~ 0 ~
Lock and load, people, this ain’t no disco. Roll out to the phones. When you’re done you can use this as an open thread.

P.S. For those of you who aren’t on broadband or have challenges making calls, try sending a fax to your members of Congress. There are sites on line which offer free faxes to Congress; my personal favorite is FaxZero.com as they have the numbers for each member already listed. Just type up a short note — be sure to included your real name and address so they can verify your residency in their district/state — then follow the instructions at the site. I keep a blank letterhead template with address header for each of my members of Congress just for this purpose. All I have to do is fill in the body and send. I have a nice copy in my records of what I sent and when. But do keep in mind these fax services will send an email immediately after you press Send to validate your email address. Check the link the fax service emails before confirming.

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Vertical Demand Curve: When Your Money or Your Life Isn’t a Choice

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[NB: Byline — check it. /~Rayne]

Hold this thought: depicted above is a gun.

Like nearly every freshman student, I took my Economics 101 along with Intro to Business, Accounting 101, Intro to Marketing my first year of B-school.

This is when the indoctrination begins, when these squeaky-new eager beavers departing their teens are slowly steeped in the toxins of American-style business.

I was an older than average student, though, having switched majors after working for a few years before I returned to school. I’d seen and done things before I returned to the classroom, squinting often at a blackboard in disbelief.

My first econ prof was fairly young himself; he was also an avowed libertarian. Everything he taught was colored with the perspective that government was a bad thing. My younger cohort went along without questioning this view.

And yet our prof had a difficult time saying government was bad when introducing us to  supply and demand curves.

More supply, price goes down. More demand, price goes up. The degree to which the market is sensitive to price or demand is reflected in elasticity. Basic.

But then we were presented with the vertical demand curve — when the buyer will pay anything for the available supply, when demand is perfectly inelastic.

This is the model for business in which the supplier demands your money or your life, a gun to one’s head, “Give me all your money or you’re dead,” a perfectly inelastic demand curve.

Libertarian prof called this extortion. The dutiful 18- and 19-year-olds in class nodded their heads, fighting a yawn. From the look of them none had experienced this caliber of threat.

Prof made a departure from “government is bad,” by insisting this is the point when government should regulate the market. He said it was illegal to base an exchange on forfeiting every claim to rights including one’s life; we prohibit extortion.

This is why health care should be regulated, he said. I was a little skeptical at the time; this was smack in the middle of the Reagan years and there wasn’t a lot of regulation on health care per se. If you got cancer there weren’t many options no matter how much money you had; doctors cut it out or tried to zap it with a limited range of therapies.

The risk then wasn’t the cost as much as the gamble of effectiveness. I lost a dear friend to the after-effects of available therapy; they survived a bone marrow transplant in the early 1980s but their immune system failed.

Decades later we have a sizable number of therapies for illnesses which are effective and keep people alive, but the number of people who suffer from some of these illnesses are so low that these drugs aren’t profitable. The Food and Drug Administration has helped in these cases — until now.

The “gun” in the image above is a money-or-your-life situation for patients with Lambert-Eaton Myasthenic Syndrome (LEMS), who may require permanent hospitalization or suffocate and die without this drug called Firdapse.

Thanks to the FDA calling Firdapse an “orphan drug,” the company which owns its intellectual property rights will now charge $375,000 a year for this medication.

One patient in Iowa said she’s willing to pay something for the medication but a year’s therapy is three times what her house is worth. She doesn’t know if her health care insurance will cover it.

This isn’t even your money or your life now — she doesn’t have the money.

She’s gotten the business end of the gun without any warning, after having benefited from the drug for years.

This is worse than extortion; it’s a death sentence for anyone who isn’t a billionaire. Yes, billionaire because someone worth a million can pay for a little more than two years of this drug and that’s it.

Why Catalyst, the company which owns Firdapse’s intellectual property, even bothered to buy this drug is beyond me. If the three million patients who currently rely on this drug can’t afford it, there’s no profit to be made, no recouping the cost expended to buy the rights to the drug.

With only a couple thousand billionaires in the world I find it hard to believe enough of them will develop LEMS and pay for Firdapse to make the acquisition worthwhile.

It’s not just an unethical business, creating a gun to hold and fire against the heads of LEMS patients.

It’s really stupid business to aim an economic gun at one’s self.

I wonder all these years later how many former B-school students struggle with the vertical demand curve lessons once they enter the real world.

And I wonder what the supply curve looks like when it comes to insulin, the price of which has jumped dramatically over the last few years so that it has become your-money-or-your-life proposition for many diabetics.

At what point is insulin no longer profitable — after 10, 25, or 50% of insulin-dependent patients die because they can’t afford it, is it no longer profitable to make insulin?

Treat this as an open thread.

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A Neoliberal Argument for Medicare for All

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[NB: Note the byline, as always. /~Rayne]

The old white billionaire dudes lipping off about “un-American” expectations of fairness and equity in income distribution jogged something loose in me.

I’m so damned angry about their willingness to complain their ability to buy yet another fucking yacht may be diminished because the average working American has the chutzpah to demand health care for everyone on top of a living wage.

What really cheeses me off is the utter stupidity of these so-called business geniuses.

WHY ARE THEY IN THE HEALTH CARE BUSINESS AT ALL??

Let’s pick on Mr. Luxury Beverage’s business. His core competency is preparing beverages to meet Americans’ tastes in an appealing environment.

Why has he spent any of his corporation’s human resource dollars on health care programs? His corporation’s expertise is NOT health care or insurance; they’re only providing health care because competition for stable, healthy employees is tight and turnover costs a butt-load of money.

I know you’ll love that technical term ‘butt-load’ but seriously, turnover in low-wage jobs in which employers have invested considerable training eats away at profit margins. It can take a year or two for low-level employees to reach maximum productivity — like pouring the optimum level of crema on a double espresso and know the entire menu by heart while operating at full-speed during rush hour.

What does it cost the Luxury Beverage business if workers leave inside that first year because they can get health care elsewhere?

Ditto for Mr. Business News Provider. His core competency is gathering, reporting, distributing timely news preferred by businesses ahead of the rest of the competition; time matters greatly if stock trades on this corporation’s work product. Why is his corporation in the health care business at all?

And yet both disparate businesses — beverage purveyor and news distributor — expect a comparable level of health among their workforce. They aren’t factoring into SWOT analyses the possibility a competitor’s workforce might be more healthy and fit.

If we look at other industries like the automotive industry or construction, healthy workers who can handle physical demands becomes mission critical. Only so much work can be automated or eased with technology and equipment.

And yet the cost of negotiating and providing health care for their employees can be the difference between profitability and business failure.

The challenge is greater when competing with companies overseas as automakers do.  Health care costs for the Big Three here add a significant percentage to the cost of goods sold — far more than $2 billion a year — while their foreign competitors pay less because the costs is absorbed across all of society instead of their businesses’ experience. The costs are based on a population which has had uniform access to health care throughout their lives.

So why are industries which aren’t delivering health care in the business of providing health care at all?

It’s in the best interest of the country and its industries to use economies of scale to acquire good health care at lower cost, provide it to the entire country, so that the country’s businesses can focus solely on their core competencies as well as the features which differentiate them positively from competing overseas products.

This is exactly what the neoliberal “strong but impartial state” is for in concert with “free enterprise, the system of competition,” to provide what the people know is needed to establish economic justice, insure domestic peace, provide for the common defense against health and employment insecurity, promote the general welfare of all citizens and workers, while securing an optimum opportunity for businesses to compete.

The U.S. is going to spend $3.5 trillion on health care this year under this current system. This is nearly two times what comparable countries spend on average. It’s inflating the cost of everything we make and sell. Imagine the profits corporations could make and keep if they didn’t have to spend valuable time and resources on health care benefits management.

But, but socialism! — this is the immediate refrain offered as push back against institutionalizing health care as a federal program to be provided to all.

Do you see either Mr. Luxury Beverages or Mr. Business News Provider complaining about the federal government’s role in assuring baseline education across the country through its K-12 public school system? I would argue this is the most American federal program we have now or have ever had since its inception with the Pilgrims.

But socialized K-12 education!

Imagine having to argue as a presidential candidate that we can’t have education for all though this program has already directly benefited every business and our common defense in some way.

Imagine American corporations, each independently in isolation, spending billions each year on human resources to research and negotiate education programs as an offering for employees and their families. Ridiculous, right? It’d suffocate so many young businesses on the verge of scaling up.

But these old white male billionaires don’t see any problem with publicly-funded education for all which helped make them what they are today.

I can’t believe I’ve had to argue a neoliberal case for publicly-funded health care for all because a guy who grew up in public housing thinks such health care is “un-American.”

 

Treat this as an open thread.

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Let Them Eat (Starbucks’ Coffee) Cake

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A couple of older billionaire white dudes have been shooting off their mouths. One of them is partially clued in. The other one apparently lives on a different planet where the sky is a groovy coffee-colored plaid.

I’m sure I’m preaching to the choir when I point out these facts:

The links above include scolding by financial experts who say Americans need to do a better job of saving. But…

Don’t get me started on what college tuition and subsequent debt does to Americans’ ability to save.

We all know that health care costs have not improved and remain the leading cause of bankruptcy in the U.S. even though more Americans have health insurance under ACA.

And rich older white dudes are completely, utterly, hopelessly out of touch about the financial facts of life for nearly half of Americans let alone the next 2-3 deciles.

Like Wilbur Ross — our Commerce Secretary who lied about his assets and clearly knows nothing about Americans’ daily commerce — struggled to comprehend why federal employees might need to use a food bank after missing a paycheck.

Just get a loan, Ross thinks. Sure, sure, banks give signature loans to people without any collateral let alone a source of income all the time. Come on, Wilbur: would you invest in a bank offering those kinds of terms to the average Joe/Josephine off the street?

And then there’s Trump, who thinks we can just ask the grocer to extend some credit for an unspecified period of time. Right — a nationwide grocery chain clearing 1-3% a year in profits can afford to extend credit.

So goddamned clueless he is. I’m only surprised he didn’t tell furloughed federal workers he’d give them a 5% discount to play golf at one of his courses during their free time.

76-year-old billionaire Michael Bloomberg, who thinks he’s still young enough to run for president in 2020, trashed Sen. Elizabeth Warren’s wealth tax proposal as “probably unconstitutional,” thereby revealing his brain’s atrophy. If taxing higher levels of income wasn’t unconstitutional under Hoover, Roosevelt, Truman, Eisenhower, Kennedy, Johnson, Nixon, Carter, then it probably isn’t unconstitutional.

And then Seattle coffee magnate Howard Schultz popped off at Rep. Alexandria Ocasio-Cortez’ proposals to increase marginal tax rates on the uber-wealthy, calling her “a bit misinformed” and her proposal “un-American.”

Except the U.S. had higher tax rates on the wealthy, for most of the 20th century. The country could afford to build more infrastructure; it built a successful public school system and went to the moon. How nice for Schultz that he could grow up and become a young entrepreneur in that economic environment.

(Put a pin in here for future reference, as a reminder that Schultz not only called AOC “un-American” but Sen. Kamala Harris, too. It’s as if he has a problem with women of color…)

Schultz thinks he has become a billionaire all on his own, as if the increasingly fascist political system with its active suppression of younger, marginalized citizens played no role in his wealth accumulation.

As if the last two decades of stagnant wages due to employment monopsony, repressive Federal Reserve policies, and the real estate market haven’t helped line his pockets by assuring low-wage workers get locked in and unable to move to better paying jobs.

Schultz has been able to accumulate massive amounts of wealth on the backs of people who aren’t being paid living wages, out of the wallets of those whose limited resources allows them to buy a coffee but not a house or health care. He’s rolling in a sea of cash because minimum wage workers are living in little more than indentured servitude.

You know what’s really un-American?

An ungrateful and narrow-minded billionaire white dude who doesn’t think living wages and health care for everyone are fair, who thinks that higher taxes after his first $50 million are theft.

A purveyor of luxury beverage products unable to grasp the unselfish commitment it will take to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defense, promote the general Welfare, and secure the Blessings of Liberty for all the people.

At least Bloomberg sees the danger Schultz’s presidential candidacy poses to this country.

But Schultz isn’t in it for the country’s benefit. He’s in the race for himself. It’s clear he’s done the number crunching and determined that it’s cheaper to run for POTUS even if he were to cause Trump to win re-election. (I’ll bet he’s even figured out how to write off his exploratory trips around the country as a business expense.)

Because the campaign expenses are less than the cost to his personal wealth if he were taxed at a higher rate and if he were also forced to pay living wages to his workers.

What a pity Schultz hasn’t calculated how much more overpriced, excessively roasted coffee minimum wage workers can buy if they didn’t have to worry about health care expenses on top of their rent.

 

Treat this as an open thread.

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Before Trump Did Nothing When Mohammed bin Salman Went After Jamal Khashoggi, He Did Nothing When MBS Went After Alwaleed bin Talal

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There are a number of stories suggesting that the Trump administration will do nothing in response to the evidence that Mohammed bin Salman lured journalist Jamal Khashoggi to the Saudi consulate in Turkey to have him murdered and dismembered.

Trump has made a show of pretending to get to the bottom of things, while saying doing anything about it would hurt US-Saudi relations (meaning arms sales).

As outrage started to grow, MBS called Jared Kushner, with whom he has a close relationship sealed over all night conversations.

The White House said Wednesday that the powerful Saudi crown prince, Mohammed bin Salman, had spoken about Khashoggi the previous day with White House national security adviser John Bolton and Trump’s son-in-law and senior adviser Jared Kushner. Kushner and the crown prince, who is commonly referred to as MBS, are known to be close.

A former administration official told POLITICO that MBS had demanded the call earlier in the week after the top official at the U.S. Embassy in Riyadh asked MBS directly about the Khashoggi case. The crown prince denied any wrongdoing in his conversation with that embassy official, the former official said.

Neither the White House nor the State Department would comment on the Saudi crown prince’s demand or most other aspects of this story. But the former official said the crown prince’s insistence on talking directly to the White House indicates he is hoping to leverage his close ties with Kushner and others in Trump’s inner circle to avoid repercussions.

And the business community — including close Trump allies — seem prepared to head for an investors conference in Saudi Arabia in spite of the assassination.

But if it becomes clear that the prince ordered the assassination of Mr. Khashoggi or was connected to it in some way, it will provoke an outcry on Capitol Hill; embarrass American executives, dozens of whom are flocking to Riyadh for a conference next week where the crown prince is scheduled to speak; and put Mr. Kushner, who was once himself a newspaper publisher, in an extremely awkward position.

Among the prominent figures scheduled to take part are Jamie Dimon, the chief executive of JPMorgan Chase; Stephen A. Schwarzman, the chief executive of the Blackstone Group; and Dara Khosrowshahi, the chief executive of Uber.

Two other scheduled attendees have ties to Mr. Trump: Thomas J. Barrack Jr., a financier who is a friend of the president’s; and Dina H. Powell, a Goldman Sachs executive and former deputy national security adviser who worked closely with Mr. Kushner on Saudi Arabia and is a leading candidate to replace Nikki R. Haley as ambassador to the United Nations.

The Treasury Department said Mr. Mnuchin was still planning to attend.

While Congress has responded to this assassination by leveraging the Magnitsky Act, it seems the Administration would just like attention to the killing to fade.

Which really shouldn’t be a surprise.

The Administration did nothing last year when MBS targeted an even more prominent western-connected Saudi, Alwaleed bin Talal. Alwaleed was detained for 83 days by MBS until such time as he agreed to some kind of deal with the government, which may have involved handing over a substantial part of his fortune and acceptance of greater involvement in his business decisions.

Did you have to pay the government any money, did you have to hand over any land, did you have to surrender any shares?

When I say it’s a confidential and secret agreement, an arrangement based on a confirmed understanding between me and the government of Saudi Arabia, you have to respect that.

I’m a Saudi citizen. But I’m also a member of the royal family. The king is my uncle. Mohammed bin Salman is my cousin. So my interest is in maintaining the relationship between us and keeping it unscratched.

While Alwaleed is in no way a Saudi dissident, as Khashoggi was, he was a crucial cog not only in Saudi-US relations, but by virtue of his substantial investments in key US companies, in the US economy.

And western observers watched as MBS exerted some kind of influence over Alwaleed with only hushed complaints.

Far from criticizing the crackdown, Trump (and Jared, before the fact) appeared to sanction it.

Trump might do so not just because he has a fondness for authoritarianism. Starting fairly early in his presidential campaign, Trump had responded to Alwaleed’s criticisms of him with public mockery.

The Alwaleed-Trump tiff began in 2015, when candidate Trump called for curbing Muslim travel to the US in a bid to prevent terrorist attacks. Because of that, Alwaleed tweeted that the Republican front-runner was a “disgrace” and should bow out of the race. Mr. Trump responded that the prince was “dopey” and was seeking to “control our US politicians with daddy’s money.”

At one point, the future president tweeted a photo of Alwaleed alongside Megyn Kelly, then a Fox News correspondent who had clashed with Mr. Trump. It turned out that the image was a fake, and Mr. Trump falsely claimed that Alwaleed was “the co-owner of Fox News.” In fact, the prince had a stake in Fox’s (FOXA) sibling company, News Corp. (NWS), amounting to about 7 percent. He since has cut it drastically.

Alwaleed has countered Mr. Trump’s attacks by pointing out that he helped bail out the New York developer when the highly indebted Trump empire teetered on collapse in the early 1990s. First, the prince bought Mr. Trump’s 283-foot yacht for a bargain price of $18 million and with a partner bought out the Plaza, a storied New York hotel, which the Trump Organization owned.

Indeed, the Intercept reported that Jared provided intelligence from the Presidential Daily Brief to MBS on people he deemed disloyal to the regime.

In late October, Jared Kushner made an unannounced trip to Riyadh, catching some intelligence officials off guard. “The two princes are said to have stayed up until nearly 4 a.m. several nights, swapping stories and planning strategy,” the Washington Post’s David Ignatius reported at the time.

What exactly Kushner and the Saudi royal talked about in Riyadh may be known only to them, but after the meeting, Crown Prince Mohammed told confidants that Kushner had discussed the names of Saudis disloyal to the crown prince, according to three sources who have been in contact with members of the Saudi and Emirati royal families since the crackdown. Kushner, through his attorney’s spokesperson, denies having done so.

“Some questions by the media are so obviously false and ridiculous that they merit no response. This is one. The Intercept should know better,” said Peter Mirijanian, a spokesperson for Kushner’s lawyer Abbe Lowell.

On November 4, a week after Kushner returned to the U.S., the crown prince, known in official Washington by his initials MBS, launched what he called an anti-corruption crackdown. The Saudi government arrested dozens of members of the Saudi royal family and imprisoned them in the Ritz-Carlton Riyadh, which was first reported in English by The Intercept. The Saudi figures named in the President’s Daily Brief were among those rounded up; at least one was reportedly tortured.

While that story line of Trump’s response to the persecution was largely dropped as Alwaleed’s detention drew on early this year, I don’t doubt that Trump’s personal animosity to Alwaleed made him, if anything, at least comfortable if not enthusiastic about MBS’s power grab at Alwaleed’s expense. If so, MBS would have played to Trump’s own penchant for revenge to undercut what otherwise might have been more vocal criticism of the arbitrary treatment of a key international businessman (that said, the US made surprisingly little noise when MBS sidelined Mohammed bin Nayef, either).

And at that moment, MBS established that Trump would not interfere with any crackdown on opposition — because Trump has already bought into it.

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What Happened To The Cultural Elites: Changes in the Conditions of Production

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My series on Trumpian Motion concluded with the question “What happened to the cultural elites?”; meaning why did they not do a better job of resisting the conditions that produced Trump and the ugly Republican party. Of course there is no single answer, but there are several contributing explanations. It’s worth examining these partial explanations, if for no other reason than the hope that open discussion might lead to changes.

I use the term cultural elites in the sense of Pierre Bourdieu as explained in David Swartz’ book Culture and Power: The Sociology of Pierre Bourdieu. Swartz says Bourdieu believed that culture is largely created by cultural producers such as artists, writers, academics, intellectuals; movie and TV writers, actors and producers; and both social scientists and physical scientists. I assume today Bourdieu would include technologists, especially computer tech workers who design and produce web sites, games, and platforms and much else. The products of these workers shape our interactions with the world and society, and provide a structure through which we understand ourselves and our roles in society.

In the US we don’t have a separate category for intellectuals. We have experts, who have mastered a chunk of knowledge and are able to use it to advance that knowledge and to offer specific guidance where their knowledge is relevant. And we have pundits, who aren’t experts but who have great confidence in their ability to explain things to the rest of us. They too are cultural producers and maybe even cultural elites, people like Tom Friedman, and David Brooks and others I won’t mention; they aren’t all old, you know. There are plenty of these people scattered across the political and ideological spectrum.

In a section discussing the relationship between workers and intellectuals, based in large part on a book on French intellectuals Bourdieu wrote in the late 1980s,Swartz offers an idea that seems relevant to the issue of why cultural elites did not forcefully resist the rise of neoliberalism.

Finally, Bourdieu points to changes in the conditions of intellectual production as a source of ambiguity in political attitudes and behaviors among highly educated workers. He notes a significant decline in the numbers of French intellectuals working as self-employed artisans or entrepreneurs and their increasing integration as salaried employees within large bureaucratic organizations where they no longer claim full control over the means of their intellectual production. P. 239, cites omitted.

This change might encourage more aggressive efforts against the dominant culture, because cultural producers might rebel against their dominated status. But this seems more likely:

These new wage earners of research, [Bourdieu] charges, become more attentive to the norms of “bureaucratic reliability” than act as guardians of the “critical detachment from authority” afforded by the relative autonomy of the university. Moreover, their intellectual products bear the imprint of the “standardized norms of mass production” rather than those of the book or scientific article or the charismatic quality traditionally attached to the independent intellectual. P. 239-40, cites omitted.

This seems like a good partial explanation of the failure of cultural elites to respond to neoliberalism. It also partially explains a point Mike Konczal raised in his article Why Are There No Good Conservative Critiques of Trump’s Unified Government? And, it helps explain the rise of Trumpism as discussed here.

The trend Bourdieu describes is obvious in the US; in fact integration of research workers into the ranks of salaried workers seems even stronger than Swartz’ description. The trend is perhaps worse here because colleges and universities have become so infused with neoliberal business practices, primarily the use of adjuncts (the gig economy for teachers) who have little stability, little opportunity for sustained research, little protection from the gatekeepers of orthodoxy, and much less “critical distance from authority”. Nevertheless, I think (hope) there is still a large amount of independence in academia, especially among tenured faculty. That independence is centered around expertise in fields of study, where depth of knowledge in small areas is paramount. Many of those areas of study are far too specialized for the general public, and for policy-making.

Much of academic study is intermediated for the public and for policy-making by and through think tanks and similar groups. Of course, those organizations do some interesting research, but most of the worker’s time and energy is spent extracting useful ideas from the bowels of journals and academic books and rewriting it so that the rest of us can understand and maybe act on it.

These organizations are dependent on their rich donors, and don’t tolerate much from workers that conflicts with the interests of their donors. As an example, Barry Lynn was at New America Foundation, a prominent democratic think tank for years. He wrote often on the problems of monopoly and lack of competition in the US economy. Then he wrote an article critical of Google, one of the big sponsors of New America, and was driven out. He and a few of his associates started Open Markets Institute with funding from George Soros, another wealthy donor with his own agenda.

Charles and David Koch tried to take over the Cato Institute, which they funded, and which claims to be a libertarian think tank. This effort which was not completely successful, causing a lot of distress on the conservative side. Not much critical detachment from authority there.

Perhaps we should read this as an example of another phenomenon Bourdieu describes, the attempt to exchange cultural capital for economic capital. There is nothing inherently wrong with this of course. For example, in the university setting, getting tenure should involve both teaching and research. Competition for status and other resources in one’s field should be driven by these skills, and so should be a net gain. Good teachers and researchers should be rewarded with tenure and a steady income to support further study and teaching.

3It isn’t obvious that this will happen in the think tank world. Further it’s hard to imagine how the kind of competition we see in academic fields would work in the private sector, where there are powerful forces at work to limit the scope of intellectual activity and control access to influence.

There are similar patterns in other areas of cultural production: journalism, movies, TV, magazines, book publishing, and large parts of the music industry. Consolidation and business failures have increased the control of the few over cultural production. Where once there were many outlets for culture producers, today there are fewer, and most of them are more rigidly ideological.

It’s easy to see how people can lose their independence in these settings. They see themselves as brain workers, employees responding to the cues of their work environment, trying to do good work and advance themselves in a bureaucratic system. Institutional pressures dominate independent thinking critical of existing authority. It isn’t necessary to attribute bad motives to them to despair at the outcome.

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The New Bezzle

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John Kenneth Galbraith gave us the term “the bezzle” in his 1955 book The Great Crash, 1929. Galbraith saw that there was often a long time between a financial crime and its discovery. In the interim holders of the financial asset involved in the crime experiences “psychic wealth”, because they are unaware of the actual losses. Eventually, something changes, and they find out. The Bernie Madoff case is a good example. Until he was exposed after the Great Crash, his loser investors thought they had $57 billion in their accounts. Turns out they had net recoveries of about $10 billion on the $17 billion they invested. That puts the bezzle at $47 billion.

Here’s another example. In the Antebellum South, there were nearly 4 million slaves with a value estimated at between $3.1 and $3.6 billion. After the war, that value went to zero. What was the net worth of the slavers in the late 1850s? They thought they were rich enough to battle the Union on equal terms, but the value of slaves wasn’t nearly equal to the value of the steel mills and industry of the northern states.

The problem of identifying the value of capital interests is very difficult. In Capital in the Twenty-First Century Piketty acknowledges the problem, and selects a solution appropriate to his purposes: the market valuations of the many forms capital can take. Here’s an excellent essay discussing this choice and its critics. By using this definition, Piketty simply ignores the problem of the bezzle, which makes sense in the terms of his project. Using Galbraith’s definition I suspect it wouldn’t make make a difference.

But I think the term leads us to a broader definition. The Great Crash provides a good example of what that new definition should be. The current estimate is that the Great Crash resulted in the loss of nearly 30% of household net worth between 2007 and 2010. The average household lost nearly $50 thousand in net worth between 2007 and 2010 according to the GAO report. Page 27 in the .pdf. By 2013, when markets were functioning — let’s say normally — the GAO estimated total household paper wealth losses at $9.1 trillion. Report here.

A large part of this paper loss was the decline in financial assets which affected people directly and through their pensions and retirement plans. Another large part was the result of lower house prices, which left many people with mortgage debt higher than the new prices. Here’s a priceless sentence from the report:

Economists we spoke with noted that precrisis asset prices may have reflected unsustainably high (or “bubble”) valuations and it may not be appropriate to consider the full amount of the overall decline in net worth as a loss associated with the crisis.

I bet the millions of people who lost that money don’t really care what economists think now, because none of the economists who could have made this stick before the Great Crash said this when it would have mattered. Far from it: the economics tribe insisted that markets were all-knowing and perfect in their understanding, and spent their days explaining why this time was different.

This superficial description shows that these households are in the same position as Madoff investors and Southern slavers: they thought they had something they didn’t, and they changed their behavior based on it.

I can just hear Paul Krugman explaining that bubbles and bezzles are really hard to model, and that’s why no one studies them. That’s probably true. Also, so what? Here’s my clever idea: look for data and see what it tells us. It worked for Piketty, who found that the historical record showed that inequality increases when r > g. Piketty and Saez, and Gabriel Zucman who did the estimate on tax shelters, didn’t have a model. They did have dusty records and big computer skills, just like all their contemporaries.

I hope that somewhere in academia there are young economists who look at Piketty, Saez and Zucman and their colleagues and say “I could do that”. And it’s just not that hard. Here are some hints.

1. There’s a big pile of student loan debt that isn’t going to be repaid. How much of that is on the books of the US Treasury, and how much is private sector? How much in the latter category is delinquent? Who holds it and in what form? If it’s in trusts, there isn’t going to be any enforcement, and the losses will fall on the owners of the securities. If it’s in the hands of originators, what happens to their balance sheets as this stuff cascades into default?

2. Every month we see another big business crash and burn. Often they fail because they are held by private equity investment firms. The crashes mean that a lot of debt isn’t going to be repaid. How big is that likely to be, and who’s going to eat that loss?

3. For the past 8 years or so, investors have been chasing yield. There’s some Galbraith bezzle in this stuff. How much dreck is sitting in their portfolios?

4. What does the rest of the mortgage overhang and related RMBS look like?

5. How much money is there in organized crime? A big part of the profits filters into the economy in the form of some kind of investment. How much of it is in the stock market? What happens when or if that ever gets traced and seized?

6. In the same way, how much have oligarchs and politicians stolen from other nations and moved into world financial markets? What happens if we got serious about that?

7. Another form of points 5 and 6: Rich people have stashed as much as $32 trillion in overseas tax shelters. If people got serious about this, their governments could seize this money and/or impose huge taxes on it. Say half of it, $16 trillion, got sucked up by taxation and seizure, and was removed from the financial markets and banks where it sits. What would happen then?

So, economists, just how big is the bezzle?

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