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The more things change in the USA casino capitalism the more they stay the same

Cruise to Frugality Island for stock holding  401K Lemmings

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“When the capital development of a country becomes a by-product
of the activities of a casino, the job is likely to be ill-done.”

John Maynard Keynes

"Life is a school of probabilities."

Walter Bagehot

Note: Some thoughts  on 2019  added on Jan 3, 2019.

Neoliberal economics (aka casino capitalism) function from one crash to another. Risk is pervasively underpriced under neoliberal system, resulting in bubbles small and large which hit the economy periodically. The problem are not strictly economical or political. They are ideological. Like a country which adopted a certain religion follows a certain path, The USA behaviour after adoption of neoliberalism somewhat correlate with the behaviour of alcoholic who decided to booze himself to death. The difference is that debt is used instead of booze.

Hypertrophied role of financial sector under neoliberalism introduces strong positive feedback look into the economic system making the whole system unstable. Any attempts to put some sand into the wheels in the form of increasing transaction costs or jailing some overzealous bankers or hedge fund managers are blocked by political power of financial oligarchy, which is the actual ruling class under neoliberalism for ordinary investor (who are dragged into stock market by his/her 401K) this in for a very bumpy ride. I managed to observe just two two financial crashed under liberalism (in 2000 and 2008) out of probably four (Savings and loan crisis was probably the first neoliberal crisis). The next crash is given, taking into account that hypertrophied role of financial sector did not changes neither after dot-com crisis of 200-2002 not after 2008 crisis (it is unclear when and if it ended; in any case it was long getting the name of "Great Recession").

Timing of the next crisis is anybody's guess but it might well be closer then we assume. As Mark Twain aptly observed: "A thing long expected takes the form of the unexpected when at last it comes" ;-):

This morning that meant a stream of thoughts triggered by Paul Krugman’s most recent op-ed, particularly this:

Most of all, the vast riches being earned — or maybe that should be “earned” — in our bloated financial industry undermined our sense of reality and degraded our judgment.

Think of the way almost everyone important missed the warning signs of an impending crisis. How was that possible? How, for example, could Alan Greenspan have declared, just a few years ago, that “the financial system as a whole has become more resilient” — thanks to derivatives, no less? The answer, I believe, is that there’s an innate tendency on the part of even the elite to idolize men who are making a lot of money, and assume that they know what they’re doing.

As most 401K investors are brainwashing into being "over bullish", this page is strongly bearish in "perma-bear" fashion in order to serve as an antidote to "Barrons" style cheerleading. Funny, but this page is accessed mostly during periods of economic uncertainty. At least this was the case during the last two financial crisis(2000 and 2008). No so much during good times: the number of visits drops to below 1K a month.

Some thoughts  on 2019

It was clear that 2017 stock market run was detached from fundamentals. Mostly speculative run. And the current stock market decline could well happen three months aerler or three month later but it was in the cards. It is difficult to estimate the power of inertia in such speculative runs. Also layoffs and decline of the standard liming of workers and lower middle class still can continue to improve the balance sheet until "Yellow Vests" moment stops them.

Jobs created now are mostly "inferior" low paid or temp/contractor jobs and the numbers just mask the cruel reality of the USA job market.

Which in reality is dismal, especially for young and old workers. several more or less paid specialties disappeared in 2018 due to automation (cash office worker is one). automatic cashier is supermarkets are also now more visible.  So spontaneous cases of vandalism, killings of coworkers and other form of "action of desperation" (as well as the rate of death from opioids -- which is yet another form of the same) would not be too surprising in such an atmosphere. Even with the power of the current national security state. Trump is playing with fire trying to cut on food stamps and implementing some other action in this program of "national neoliberalism" which is in internal policy is almost undistinguishable from neofascism.  He risk facing "Macron situation" sooner or later.

In any case at some point Minsky moment should arrive for the stock market. I am not sure that the current decline is that start of such an event. It might be postponed further down the line for a year or two.  But it will eventually come.  We can only guess what form it might take, but with the current Apple troubles and valuations of tech sector I think it might take the form of something similar to dot-com bubble deflation No.2

I do not see Amazon, Google, Facebook and Microsoft and other tech high flyers completely immune to the stock crash of 50% magnitude or more. For example, Google is overly dependent on advertising revenue which can grow only by strangulating small sites owners which use it as the advertizing platform (which it successfully implements fro several years now). But at some point owners might revolt and start dropping it for Microsoft or other platform.  Facebook might face a backlash, if people understand that selling data about them in the part of the business model, not an aberration.

One of the most unexplainable things that happened in 2018 was dramatic fall of oil prices in the Q4. This was quite surprising (and destructive) after the period of little or no capital investment in the new fields for three years or so.  Shale oil production increases in the USA are only possible if junk bonds can be produced along with it. Junks bonds that will never be paid. With the current debt load and prices below $50 most of the USA shale oil companies are zombies. Most if not all of thenm are losing money.  Only return of ~$70 oil prices can save them, if anything at all. WSJ touched this topic recently.

So this surprising fall of oil prices (from around $70 to around $43 WTI) looks connected to the speculations in the "paper oil" market.

Financialization allows for oil price to be completely detached from fundamentals for a year or even two (Saudis need over $80 I think to balance the budget, I think; this represents "fair price" as they are one of the three largest producers).

But you will never know this unless there are shortages at gas stations. The difference is covered by inflated statistics from IEA and similar agencies as well as "paper oil" -- future contracts which are settled in dollars.

This is the reality of "casino capitalism" ( aka neoliberalism ) with its rampant and destructive financialization.


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[Sep 18, 2019] FAA Hoist on Its Own Boeing 737 Max Petard Multiagency Panel to Issue Report Criticizing Agency Approval Process, Call for Cer

Notable quotes:
"... The aim of the panel, called the Joint Authorities Technical Review, was to expedite getting the 737 Max into the air by creating a vehicle for achieve consensus among foreign regulators who had grounded the 737 Max before the FAA had. But these very regulators had also made clear they needed to be satisfied before they'd let it fly in their airspace. ..."
"... The FAA hopes to give the 737 Max the green light in November, while the other regulators all have said they have issues that are unlikely to be resolved by then. The agency is now in the awkward position of having a body it set up to be authoritative turn on the agency's own procedures. ..."
"... the FAA had moved further and further down the path of relying on aircraft manufactures for critical elements of certification. Not all of this was the result of capture; with the evolution of technology, even the sharpest and best intended engineer in government employ would become stale on the state of the art in a few years. ..."
"... Although all stories paint a broadly similar picture, .the most damning is a detailed piece at the Seattle Times, Engineers say Boeing pushed to limit safety testing in race to certify planes, including 737 MAX ..The article gives an incriminating account of how Boeing got the FAA to delegate more and more certification authority to the airline, and then pressured and abused employees who refused to back down on safety issues . ..."
"... In 2004, the FAA changed its system for front-line supervision of airline certification from having the FAA select airline certification employees who reported directly to the FAA to having airline employees responsible for FAA certification report to airline management and have their reports filtered through them (the FAA attempted to maintain that the certification employees could provide their recommendations directly to the agency, but the Seattle Times obtained policy manuals that stated otherwise). ..."
"... On Monday, the Post and Courier reported about the South Carolina plant that produced 787s found with tools rattling inside that Boeing SC lets mechanics inspect their own work, leading to repeated mistakes, workers say. These mechanic certifications would never have been kosher if the FAA were vigilant. Similarly, Reuters described how Boeing weakened another safety check, that of pilot input. ..."
"... As part of roughly a dozen findings, these government and industry officials said, the task force is poised to call out the Federal Aviation Administration for what it describes as a lack of clarity and transparency in the way the FAA delegated authority to the plane maker to assess the safety of certain flight-control features. The upshot, according to some of these people, is that essential design changes didn't receive adequate FAA attention. ..."
"... But the report could influence changes to traditional engineering principles determining the safety of new aircraft models. Certification of software controlling increasingly interconnected and automated onboard systems "is a whole new ballgame requiring new approaches," according to a senior industry safety expert who has discussed the report with regulators on both sides of the Atlantic. ..."
"... For instance, the Journal reports that Canadian authorities expect to require additional simulator training for 737 Max pilots. Recall that Boeing's biggest 737 Max customer, Southwest Airlines, was so resistant to the cost of additional simulator training that it put a penalty clause into its contract if wound up being necessary. ..."
"... Patrick Ky, head of the European Union Aviation Safety Agency, told the European Parliament earlier this month, "It's very likely that international authorities will want a second opinion" on any FAA decision to lift the grounding. ..."
"... Most prominently, EASA has proposed to eventually add to the MAX a third fully functional angle-of-attack sensor -- which effectively measures how far the plane's nose is pointed up or down -- underscoring the controversy expected to swirl around the plane for the foreseeable future. ..."
"... It's hard to see how Boeing hasn't gotten itself in the position of being at a major competitive disadvantage by virtue of having compromised the FAA so severely as to have undercut safety. ..."
"... has Boeing developed a plan to correct the trim wheel issue on the 787max? i haven't seen a single statement from them on how they plan to fix this problem. is it possible they think they can get the faa to re-certify without addressing it? ..."
"... Don't forget that the smaller trim wheels are in the NG as well. any change to fix the wheels ripples across more planes than just the Max ..."
"... The self-inflicted wound caused by systematic greed and arrogance – corruption, in other words. Boeing is reaping the wages of taking 100% of their profits to support the stock price through stock buybacks and deliberately under-investing in their business. Their brains have been taken over by a parasitic financial system that profits by wrecking healthy businesses. ..."
"... Shareholder Value is indeed the worst idea in the world. That Boeing's biggest stockholder, Vanguard, is unable to cleanup Boeing's operations makes perfect sense. I mean vanguards expertise is making money, not building anything. Those skills are completely different. ..."
"... One maxim we see illustrated here and elsewhere is this: Trust takes years to earn, but can be lost overnight. ..."
Sep 18, 2019 | www.nakedcapitalism.com

The FAA evidently lacked perspective on how much trouble it was in after the two international headline-grabbing crashes of the Boeing 737 Max. It established a "multiagency panel" meaning one that included representatives from foreign aviation regulators, last April. A new Wall Street Journal article reports that the findings of this panel, to be released in a few weeks, are expected to lambaste the FAA 737 Max approval process and urge a major redo of how automated aircraft systems get certified .

The aim of the panel, called the Joint Authorities Technical Review, was to expedite getting the 737 Max into the air by creating a vehicle for achieve consensus among foreign regulators who had grounded the 737 Max before the FAA had. But these very regulators had also made clear they needed to be satisfied before they'd let it fly in their airspace.

The JATR gave them a venue for reaching a consensus, but it wasn't the consensus the FAA sought. The foreign regulators, despite being given a forum in which to hash things out with the FAA, are not following the FAA's timetable. The FAA hopes to give the 737 Max the green light in November, while the other regulators all have said they have issues that are unlikely to be resolved by then. The agency is now in the awkward position of having a body it set up to be authoritative turn on the agency's own procedures.

The Seattle Times, which has broken many important on the Boeing debacle, reported on how the FAA had moved further and further down the path of relying on aircraft manufactures for critical elements of certification. Not all of this was the result of capture; with the evolution of technology, even the sharpest and best intended engineer in government employ would become stale on the state of the art in a few years.

However, one of the critical decisions the FAA took was to change the reporting lines of the manufacturer employees who were assigned to FAA certification. From a May post :

Although all stories paint a broadly similar picture, .the most damning is a detailed piece at the Seattle Times, Engineers say Boeing pushed to limit safety testing in race to certify planes, including 737 MAX ..The article gives an incriminating account of how Boeing got the FAA to delegate more and more certification authority to the airline, and then pressured and abused employees who refused to back down on safety issues .

As the Seattle Times described, the problems extended beyond the 737 Max MCAS software shortcomings; indeed, none of the incidents in the story relate to it.

In 2004, the FAA changed its system for front-line supervision of airline certification from having the FAA select airline certification employees who reported directly to the FAA to having airline employees responsible for FAA certification report to airline management and have their reports filtered through them (the FAA attempted to maintain that the certification employees could provide their recommendations directly to the agency, but the Seattle Times obtained policy manuals that stated otherwise).

Mind you, the Seattle Times was not alone in depicting the FAA as captured by Boeing. On Monday, the Post and Courier reported about the South Carolina plant that produced 787s found with tools rattling inside that Boeing SC lets mechanics inspect their own work, leading to repeated mistakes, workers say. These mechanic certifications would never have been kosher if the FAA were vigilant. Similarly, Reuters described how Boeing weakened another safety check, that of pilot input.

One of the objectives for creating this panel was to restore confidence in Boeing and the FAA, but that was always going to be a tall order, particularly after more bad news about various 737 Max systems and Boeing being less than forthcoming with its customers and regulators emerged. From the Wall Street Journal :

As part of roughly a dozen findings, these government and industry officials said, the task force is poised to call out the Federal Aviation Administration for what it describes as a lack of clarity and transparency in the way the FAA delegated authority to the plane maker to assess the safety of certain flight-control features. The upshot, according to some of these people, is that essential design changes didn't receive adequate FAA attention.

The report, these officials said, also is expected to fault the agency for what it describes as inadequate data sharing with foreign authorities during its original certification of the MAX two years ago, along with relying on mistaken industrywide assumptions about how average pilots would react to certain flight-control emergencies .

The FAA has stressed that the advisory group doesn't have veto power over modifications to MCAS.

But the report could influence changes to traditional engineering principles determining the safety of new aircraft models. Certification of software controlling increasingly interconnected and automated onboard systems "is a whole new ballgame requiring new approaches," according to a senior industry safety expert who has discussed the report with regulators on both sides of the Atlantic.

If the FAA thinks it can keep this genie the bottle, it is naive. The foreign regulators represented on the task force, including from China and the EU, have ready access to the international business press. And there will also be an embarrassing fact on the ground, that the FAA, which was last to ground the 737 Max, will be the first to let it fly again, and potentially by not requiring safety protections that other regulators will insist on. For instance, the Journal reports that Canadian authorities expect to require additional simulator training for 737 Max pilots. Recall that Boeing's biggest 737 Max customer, Southwest Airlines, was so resistant to the cost of additional simulator training that it put a penalty clause into its contract if wound up being necessary.

It's a given that the FAA will be unable to regain its former stature and that all of its certifications of major aircraft will now be second guessed subject to further review by major foreign regulators. That in turn will impose costs on Boeing, of changing its certification process from needing to placate only the FAA to having to appease potentially multiple parties. For instance, the EU regulator is poised to raise the bar on the 737 Max:

Patrick Ky, head of the European Union Aviation Safety Agency, told the European Parliament earlier this month, "It's very likely that international authorities will want a second opinion" on any FAA decision to lift the grounding.

Even after EASA gives the green light, agency officials are expected to push for significant additional safety enhancements to the fleet. Most prominently, EASA has proposed to eventually add to the MAX a third fully functional angle-of-attack sensor -- which effectively measures how far the plane's nose is pointed up or down -- underscoring the controversy expected to swirl around the plane for the foreseeable future.

A monopoly is a precious thing to have. Too bad Boeing failed to appreciate that in its zeal for profits. If the manufacturer winds up facing different demands in different regulatory markets, it will have created more complexity for itself. Can it afford not to manufacture to the highest common denominator, say by making an FAA-only approved bird for Southwest and trying to talk American into buying FAA-only approved versions for domestic use only? It's hard to see how Boeing hasn't gotten itself in the position of being at a major competitive disadvantage by virtue of having compromised the FAA so severely as to have undercut safety.


kimyo , September 17, 2019 at 4:42 am

Boeing Foresees Return Of The 737 MAX In November – But Not Everywhere

Even if Boeing finds solutions that international regulators can finally accept, their implementation will take additional months. The AoA sensor and trim wheel issues will likely require hardware changes to the 600 or so existing MAX airplanes. The demand for simulator training will further delay the ungrounding of the plane. There are only some two dozen 737 MAX simulators in this world and thousands of pilots who will need to pass through them.

has Boeing developed a plan to correct the trim wheel issue on the 787max? i haven't seen a single statement from them on how they plan to fix this problem. is it possible they think they can get the faa to re-certify without addressing it?

marku52 , September 17, 2019 at 1:35 pm

Don't forget that the smaller trim wheels are in the NG as well. any change to fix the wheels ripples across more planes than just the Max

divadab , September 17, 2019 at 8:36 am

The self-inflicted wound caused by systematic greed and arrogance – corruption, in other words. Boeing is reaping the wages of taking 100% of their profits to support the stock price through stock buybacks and deliberately under-investing in their business. Their brains have been taken over by a parasitic financial system that profits by wrecking healthy businesses.

It's not only Boeing – the rot is general and it is terrible to see the destruction of American productive capacity by a parasitic finance sector.

Dirk77 , September 17, 2019 at 9:12 am

+1

Shareholder Value is indeed the worst idea in the world. That Boeing's biggest stockholder, Vanguard, is unable to cleanup Boeing's operations makes perfect sense. I mean vanguards expertise is making money, not building anything. Those skills are completely different.

Noel Nospamington , September 17, 2019 at 10:41 am

Shareholder value does what it intended to do, which is to maximise stock value in the short term, even if it significantly cuts value in the long term.

By that measure allowing Boeing to take over the FAA and self-certify the 737-MAX was a big success, because of short term maximization of stock value that resulted. It is now someone else's problem regarding any long term harm.

Dirk77 , September 17, 2019 at 8:59 am

Having worked at Boeing and the FAA, this report is very welcome. One thing: federal hiring practices in a way lock out good people from working there. Very often the fed managing some project has only a tenuous grasp is what is going on.

But has the job bc they were hired in young and cheap, which is what agencies do with reduced budgets. That and job postings very often stating that they are open only to current feds says it all.

So deferring to the airline to "self-certify" would be a welcome relief to feds in many cases. At this point, I doubt the number of their "sharpest and best intended" engineers is very high.

If you want better oversight, then increase the number and quality of feds by making it easier to hire, and decrease the number of contractors.

Arthur Dent , September 17, 2019 at 10:54 am

I deal with federal and state regulators (not airplane) all the time. Very well meaning people, but in many cases are utterly unqualified to do the technical work. So it works well when they stick to the policy issues and stay out of the technical details.

However, we have Professional Engineers and other licensed professionals signing off on the engineering documents per state law. You can look at the design documents and the construction certification and there is a name and stamp of the responsible individual.

The licensing laws clearly state that the purpose of licensing is to hold public health and safety paramount. This is completely missing in the American industrial sector due to the industrial exemptions in the professional engineering licensing laws. Ultimately, there is nobody technically responsible for a plane or a car who has to certify that they are making the public safe and healthy.

Instead, the FAA and others do that. Federal agencies and the insurance institute test cars and give safety ratings. Lawyers sue companies for defects which also helps enforce safety.

Harry , September 17, 2019 at 1:44 pm

But how can individuals take responsibility? Their pockets arn't deep enough,.

XXYY , September 17, 2019 at 2:57 pm

One maxim we see illustrated here and elsewhere is this: Trust takes years to earn, but can be lost overnight.

Boeing management and the FAA, having lost the trust of most people in the world through their actions lately, seem to nevertheless think it will be a simple matter to return to the former status quo. It seems as likely, or perhaps more likely, that they will never be able to return to the former status quo. They have been revealed as poseurs and imposters, cheerfully risking (and sometimes losing) their customers' lives so they can buy back more stock.

This image will be (rightfully) hard for them to shake.

notabanker , September 17, 2019 at 9:24 pm

So people are going to quit their jobs rather than fly on Boeing planes? Joe and Marge Six-Pack are going to choose flights not based on what they can afford but based on what make of plane they are flying on? As if the airlines will even tell them in advance?

There are close to zero consequences to Boeing and FAA management. Click on the link to the Purdue Sacklers debacle. The biggest inconvenience will be paying the lawyers.

Tomonthebeach , September 17, 2019 at 11:29 am

FAA & Boeing: It's deja vu all over again.

From 1992 to 1999 I worked for the FAA running one of their labs in OKC. My role, among other things, was to provide data to the Administrator on employee attitudes, business practice changes, and policy impact on morale and safety. Back then, likely as now, it was a common complaint heard from FAA execs about the conflict of interest of having to be both an aviation safety regulatory agency and having to promote aviation. Congress seemed fine with that – apparently still is. There is FAA pork in nearly every Congressional district (think airports for example). Boeing is the latest example of how mission conflict is not serving the aviation industry or public safety. With its headquarters within walking distance of Capitol Hill, aviation lobbyists do not even get much exercise shuttling.

The 1996 Valuejet crash into the Florida swamps shows how far back the mission conflict problem has persisted. Valuejet was a startup airline that was touted as more profitable than all the others. It achieved that notoriety by flying through every FAA maintenance loophole they could find to cut maintenance costs. When FAA started clamping down, Senate Majority Leader Daschle scolded FAA for not being on the cutting edge of industry innovation. The message was clear – leave Valuejet alone. That was a hard message to ignore given that Daschle's wife Linda was serving as Deputy FAA Administrator (the #2 position) – a clear conflict of interest with the role of her spouse – a fact not lost on Administrator Hinson (the #1 position). Rather than use the disaster as an opportunity to revisit FAA mission conflict, Clinton tossed Administrator Hinson into the volcano of public outcry and put Daschle in charge. Nothing happened then, and it looks like Boeing might follow Valuejet into the aviation graveyard.

Kevin , September 17, 2019 at 12:34 pm

Boeing subsidies:

Mike , September 17, 2019 at 3:22 pm

Nothin' like regulatory capture. Along with financialized manufacturing, the cheap & profitable will outdo the costly careful every time. Few businesses are run today with the moral outlook of some early industrialists (not enough of them, but still present) who, through zany Protestant guilt, cared for their reputations enough to not make murderous product, knowing how the results would play both here and in Heaven. Today we have PR and government propaganda to smear the doubters, free the toxic, and let loose toxins.

From food to clothing, drugs to hospitals, self-propelled skateboards to aircraft, pesticides to pollution, even services as day care & education, it is time to call the minions of manufactured madness to account. Dare we say "Free government from Murder Inc."?

VietnamVet , September 17, 2019 at 3:57 pm

This is an excellent summary of the untenable situation that Boeing and the Federal Government have gotten themselves into. In their rush to get richer the Elite ignored the fact that monopolies and regulatory capture are always dangerously corrupt. This is not an isolated case. FDA allows importation of uninspected stock pharmaceutical chemicals from China. Insulin is unaffordable for the lower classes. Diseases are spreading through homeless encampments. EPA approved new uses of environmentally toxic nicotinoid insecticide, sulfoxaflor. DOD sold hundreds of billions of dollars of armaments to Saudi Arabia that were useless to protect the oil supply.

The Powers-that-be thought that they would be a hegemon forever. But, Joe Biden's green light for the Ukraine Army's attack against breakaway Donbass region on Russia's border restarted the Cold War allying Russia with China and Iran. This is a multi-polar world again. Brexit and Donald Trump's Presidency are the Empire's death throes.

RBHoughton , September 17, 2019 at 8:40 pm

NC readers know what the problem is as two comments above indicate clearly. Isn't the FAA ashamed to keep conniving with the money and permitting dangerous planes to fly?

Boeing just got a WTO ruling against Airbus. It seems that one rogue produces others. Time to clean the stable and remove the money addiction from safety regulation

The Rev Kev , September 17, 2019 at 11:26 pm

I think that I can see an interesting situation developing next year. So people will be boarding a plane, say with Southwest Airlines, when they will hear the following announcement over the speakers-

"Ladies and gentlemen, this is your Captain speaking. On behalf of myself and the entire crew, welcome aboard Southwest Airlines flight WN 861, non-stop service from Houston to New York. Our flight time will be of 4 hours and 30 minutes. We will be flying at an altitude of 35,000 feet at a ground speed of approximately 590 miles per hour.

We are pleased to announce that you have now boarded the first Boeing 737 MAX that has been cleared to once again fly by the FAA as being completely safe. For those passengers flying on to any other country, we regret to announce that you will have to change planes at New York as no other country in the world has cleared this plane as being safe to fly in their airspace and insurance companies there are unwilling to issue insurance cover for them in any case.

So please sit back and enjoy your trip with us. Cabin Crew, please bolt the cabin doors and prepare for gate departure."

Arizona Slim , September 18, 2019 at 6:32 am

And then there's this -- Southwest is rethinking its 737 strategy:

https://www.youtube.com/watch?v=IoRPhfARWkg

[Sep 18, 2019] Gee, didn't we have this advantage once? Thanks, neoliberals!

Sep 18, 2019 | www.nakedcapitalism.com

Trade

"The Trade War Spurs China's Technology Innovators Into Overdrive" [ Industry Week ]. "In Shenzhen's glitzy financial district, a five-year-old outfit creates a 360-degree sports camera that goes on to win awards and draw comparisons to GoPro Inc. Elsewhere in the Pearl River Delta, a niche design house is competing with the world's best headphone makers. And in the capital Beijing, a little-known startup becomes one of the biggest purveyors of smartwatches on the planet. Insta360, SIVGA and Huami join drone maker DJI Technology Co. among a wave of startups that are dismantling the decades-old image of China as a clone factory -- and adding to Washington's concerns about its fast-ascending international rival.

Within the world's No. 2 economy, Trump's campaign to contain China's rise is in fact spurring its burgeoning tech sector to accelerate design and invention. The threat they pose is one of unmatchable geography: by bringing design expertise and innovation to the place where devices are manufactured, these companies are able to develop products faster and more cheaply ." •

Gee, didn't we have this advantage once? Thanks, neoliberals!

[Sep 18, 2019] >War With Iran Would Be a Catastrophic Miscalculation by James Howard Kunstler

Notable quotes:
"... some people did some things ..."
"... some people will do nothing ..."
Sep 18, 2019 | russia-insider.com

Sep 16, 2019 Welcome to the world where things don't add up. For instance, some people did some things to the Saudi Arabian oil refinery at Abqaiq over the weekend. Like, sent over a salvo of cruise missiles and armed drone aircraft to blow it up. They did a pretty good job of disabling the works. It is Saudi Arabia's largest oil processing facility, and for now, perhaps months, a fair amount of the world's oil supply will be cut off. President Trump said "[we] are waiting to hear from the Kingdom as to who they believe was the cause of this attack, and under what terms we would proceed!" Exclamation mark his.

How many times the past few years has our government declared that "we have the finest intelligence services in the world." Very well, then, why are we waiting for the Kingdom of Saudi Arabia to tell us who fired all that stuff into Abqaiq? Whoever did it, it was unquestionably an act of war. And, of course, what are we going to do about it? (And what will some people do about it?)

Let's face it: the USA has had a hard-on for Iran for forty years, ever since they overthrew their shah, invaded the US embassy in Tehran, and took fifty-two American diplomats and staff hostage for 444 days. On the other hand, the Arabians and Iranians have had a mutual hard-on for centuries, long before the Saud family was in charge of things, and back when Iran was known as Persia, a land of genies, fragrant spices, and a glorious antiquity (while Arabia was a wasteland of sand populated by nomads and their camels). The beef was formerly just about which brand of Islam would prevail, Sunni or Shia. Lately (the past fifty years) it has been more about the politics of oil and hegemony over the Middle East. Since the US invaded Iraq and busted up the joint, the threat has existed that Iran would take over Iraq, with its majority Shia population, especially the oil-rich Basra region at the head of the Persian Gulf. The presence of Israel greatly complicates things, since Iran has a hard-on for that nation, too, and for Jews especially, often expressed in the most belligerent and opprobrious terms, such as "wiping Israel off the map." No ambiguity there. The catch being that Israel has the capability of turning Iran into an ashtray.

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The world has been waiting for a major war in the Middle east for decades, and it might have one by close of business today. Or perhaps some people will do nothing . The Iran-backed Houthi rebels of Yemen supposedly claimed responsibility for the attack. That's rich. As if that rag-tag outfit has a whole bunch of million-dollar missiles and the knowledge and capacity to launch them successfully, not to mention the satellite guidance mojo. A correspondent suggests that the missiles were fired from a pro-Iranian military base in Iraq, with the Houthis brought in on flying carpets to push the launch buttons.

President Trump is trumpeting America's "energy independence," meaning whatever happens over there won't affect us. Well, none of that is true. We still import millions of barrels of oil a day, though much less from Saudi Arabia than before 2008. The shale oil "miracle" is hitting the skids these days. Shale oil production has gone flat, the rig-count is down, companies are going bankrupt, and financing for the debt-dependent operations is dwindling since the producers have demonstrated that they can't make a profit at it. They're trapped in the quandary of diminishing returns, frontloading production, while failing to overcome steep decline curves in wells that only produce for a couple of years.

It's also the case that shale oil is ultra-light crude, containing little heavier distillates such as diesel and aviation fuel (basically kerosene). Alas, American refineries were all built before shale oil came along. They were designed to crack heavier oil and can't handle the lighter shale. The "majors" don't want to invest their remaining capital in new refineries, and the many smaller companies don't have the ability. So, this makes necessary a high volume of oil swapping around the world. Without diesel and aviation fuel, US trucking and commercial aviation has a big problem, meaning the US economy has a big problem.

With the new crisis in the Middle East, benchmark West Texas Intermediate oil is up from around $55-a-barrel to just over $60 at the market open (European Brent crude is just above $70). That's a pop, but not a spectacular one, considering that a whole lot more damage might ensue in the days ahead. China, Korea, and Japan stand to lose bigly if the players in the Middle East really go at it and bust up each other's assets. If that happens, the world will never be the same. You can kiss the global economy goodbye for good. Let's hope some people don't do something.

[Sep 18, 2019] My hypothesis is this: the USA/Saudi Arabia are too embarassed to admit their anti-aircraft weapons and systems are useless against puny drones and created a big, subterranean enemy in the form of Iran in order to avoid public embarassment.

Notable quotes:
"... the attack dented the image of invincibility of Aramco's infrastructure ..."
"... Saudi Military stated the Aramco facilites were attacked with 18 missiles and 7 drones. They state cruise missiles were used. However, now they state the attack was simply "backed" by Iran. The weapons were all Iranian design. ..."
"... That Iran is backing the Houthis we already knew and nobody doubts. But those drones and missiles didn't come from Iranian territory nor were they operated by Iranian personel. It's a free market world, and everybody can buy weapons from anybody. ..."
"... The GOAL of exaggerating the attack could be to simply increase oil prices or to justify war with Iran. Tensions with Iran will be elevated for weeks, if not months. That will mean higher oil prices than otherwise. ..."
"... The timing is also suspicious because it comes just before the Israeli election and just after John Bolton was dismissed. ..."
"... Russian oil experts say 3 to 6 months to repair damage from strike as components must come from Europe according to TASS. As the remains of the uavs have been recovered their effective range can be determined. I suspect they were launched from within Saudi territory. ..."
"... It is embarrassing to the Saudis because they scarcely bother to unpack the weapons the US sends them-at premium prices - and dare not allow any of their countrymen to learn how to use them. And it is embarrassing to the Americans because they understand all this and ship over arms that don't work simply to ensure that those petrodollars circulate. ..."
"... Hence the current campaign to convince us that Iran was responsible. Mind you, that propaganda is only effective so long as the American people don't really believe it because, if they did, they might demand war (you can imagine Pelosi, Schumer and Biden insisting on it) and Washington doesn't want that. Jingoism isn't about fighting it's about threatening. ..."
Sep 18, 2019 | www.moonofalabama.org

vk , Sep 18 2019 15:22 utc | 156

@ Posted by: Jackrabbit | Sep 18 2019 14:50 utc | 149

Let's see (again):

1) USA: that would only help if Trump was decided to go to a hot war against Iran. By his declarations since yesterday, we already know that isn't going to happen. He didn't even jump to the "Iran did it!" bandwagon right away. He said he increased sanctions against Iran -- but Iran is already sanctioned to the maximum by the USA, so that's empty rhetoric.

2) Israel: wars in Israel only work as an election boost to the incumbent Prime Minister when Israel emerges with a clear victory. ...

3) Saudi Arabia: it has a 188 billion barrel reserve to cover up for the losses for a couple of days, so they benefited a little bit from the 20% price rise. But so did everybody else -- including enemies of the USA, such as Russia and Venezuela. Besides, the attack dented the image of invincibility of Aramco's infrastructure, and Saudi Arabia's image as a neofascist ideal State.

4) Iran: Iran can block the Hormuz Strait -- a much more benign and cheap way to stop Saudi oil from being exported. If Iran attacks its neighbors' oil infrastructure, then it kind of states it's fair game for its neighbors to attack theirs. This is bad move for Iran from a purely game theory standpoint, let alone from the geopolitical one.

5) Masters of the Universe: yes, the oil price went up 20% in one day. But let's remember that even a USD 100.00 a barrel isn't that impressive from a historical standpoint: when the Iraq invasion happened, the barrel reached USD 300.00. Yes, a selected elite benefited a lot from this, but the USA didn't become a capitalist utopia because of that. We must not overestimate the effects of oil prices on capitalism and, specially, on the USA: the West is in terminal decline for a myriad of factors, not because of one silver bullet. Higher oil prices won't save the West.

My hypothesis is this: the USA/Saudi Arabia are too embarassed to admit their anti-aircraft weapons and systems are useless against puny drones and created a big, subterranean enemy in the form of Iran in order to avoid public embarassment.

The Houthis are telling the truth, and they will do more attacks if the Saudis don't stop with theirs and settle for peace.


vk , Sep 18 2019 15:31 utc | 160

And the number's just changed:

Saudi Military: Attack on Saudi Aramco Facilities Were "Unquestionably Sponsored by Iran"

The headline calls that the Saudi Military stated the Aramco facilites were attacked with 18 missiles and 7 drones. They state cruise missiles were used. However, now they state the attack was simply "backed" by Iran. The weapons were all Iranian design.

That Iran is backing the Houthis we already knew and nobody doubts. But those drones and missiles didn't come from Iranian territory nor were they operated by Iranian personel. It's a free market world, and everybody can buy weapons from anybody.

Jackrabbit , Sep 18 2019 15:47 utc | 163
vk @156

You're chasing your own tail.

US and Saudis say that over 20 missiles and drones were used in the attack. They say that this showed that Iran did the attack or participated in the attack because the Houthi only claim to have used 10 drones.

Peter AU 1 and I have said that it's possible to account for the excess damage as an attempt to exaggerate damage caused by the Houthi attack.

The GOAL of exaggerating the attack could be to simply increase oil prices or to justify war with Iran. Tensions with Iran will be elevated for weeks, if not months. That will mean higher oil prices than otherwise.

The timing is also suspicious because it comes just before the Israeli election and just after John Bolton was dismissed.

And despite Trump's backing away from his asinine "locked and loaded" comment, war with Iran is still very possible. The Iraq War started 18 months after 9-11.

the pessimist , Sep 18 2019 16:02 utc | 168
Russian oil experts say 3 to 6 months to repair damage from strike as components must come from Europe according to TASS. As the remains of the uavs have been recovered their effective range can be determined. I suspect they were launched from within Saudi territory.
vk , Sep 18 2019 16:05 utc | 170
Another official version came up. This time, from the Saudi military itself:

Saudi Arabia accuses Iran of sponsoring oil-plant attack, says it 'couldn't have originated in Yemen'

Their main argument is that the attacks came "from the north".

If that's true, then the question remains: why didn't the Saudi radars detect it? Either b is lying, or the Saudi military is lying.

It's really hilarious at this point: the attack caught the West so low-guarded and stunned them so much that they can't even come up with a unified official narrative.

karlof1 , Sep 18 2019 16:12 utc | 172
Houthi Armed Forces Spokesman is at this moment tweeting a series of statements explaining how the last attack was done that includes drone capabilities and types of munitions used!!!!!!!!!!! An example:

"Drones have fission heads carrying four precision bombs."

bevin , Sep 18 2019 16:19 utc | 175
Given that the entire relationship between the USA and the KSA is an elaborate protection racket the failure of all those high priced systems to protect the oil fields against Ansrullah drones is particularly embarrassing.

It is embarrassing to the Saudis because they scarcely bother to unpack the weapons the US sends them-at premium prices - and dare not allow any of their countrymen to learn how to use them. And it is embarrassing to the Americans because they understand all this and ship over arms that don't work simply to ensure that those petrodollars circulate.

Hence the current campaign to convince us that Iran was responsible. Mind you, that propaganda is only effective so long as the American people don't really believe it because, if they did, they might demand war (you can imagine Pelosi, Schumer and Biden insisting on it) and Washington doesn't want that.
Jingoism isn't about fighting it's about threatening.

And, now that 57 varieties of Israeli Fascism are squabbling about whether the Prime Minister goes to jail for theft, even that distraction is no longer useful.

the pessimist , Sep 18 2019 16:29 utc | 177
Statement from the Iranians "Saudi press conference shows they are clueless about how attack was executed and know nothing about the military capabilities of their adversary".

Seems about right. Statement by bevin is on target.

[Sep 18, 2019] Middle East Mystery Theater: Who Attacked Saudi Arabia's Oil Supply?

Notable quotes:
"... Committee members Sen. Tom Udall (D-N.M.) and Sen. Tim Kaine (D-Vir.) explicitly announced their opposition to war with Iran. And prominent war powers critic Sen. Jeff Markley (D-Ore.) quipped that, "[b]ack when Presidents used to follow the Constitution, they sought consent for military action from Congress, not foreign governments that murder reporters," referring to the assassination of Saudi-American journalist Jamal Khashoggi. ..."
"... "Diplomacy by Twitter has not worked so far and it surely is not working with Iran. The president needs to stop threatening military strikes via social media," said Sen. Ben Cardin (D-Mary.) in response to a question from the National Interest . "The attack on Saudi Arabia is troubling whether it was perpetrated by Houthi rebels or Iran. The U.S. should regain its leadership by working with our allies to isolate Iran for its belligerent actions in the region." ..."
"... "The U.S. should not be looking for any opportunity to start a dangerous and costly war with Iran. Congress has not authorized war against Iran and we've made it crystal clear that Saudi Arabia needs to withdraw from Yemen," he continued. ..."
"... Sen. Chris Murphy (D-Conn.) has long been a critic of Saudi Arabia's war in Yemen, proposing a successful bill to cut off U.S. support for the Saudi-led war effort. (He did not have enough votes to override the veto.) After the attacks, he wrote a long Twitter thread explaining how "the Saudis sowed the seeds of this mess" in Yemen. ..."
"... "It's simply amazing how the Saudis call all our shots these days. We don't have a mutual defense alliance with KSA, for good reason. We shouldn't pretend we do," Murphy added. "And frankly, no matter where this latest drone strike was launched from, there is no short or long term upside to the U.S. military getting more deeply involved in the growing regional contest between the Saudis and Iranians." ..."
"... "Having our country act as Saudi Arabia's bitch is not 'America First,'" said Democratic presidential candidate Tulsi Gabbard, invoking a popular Trump slogan. Sen. Rand Paul (R-Ken.), who had invoked Trump's antiwar message in a public feud with Rep. Liz Cheney (R-Wyo.) over the weekend, took to CNN to warn against striking Iran. ..."
"... "This is a regional conflict, that there's no reason the superpower of the United States needs to be getting into bombing mainland Iran. It would be a needless escalation of this," he told journalist Jake Tapper. "Those who loved the Iraq War, the Cheneys, the Boltons, the Kristols, they all are clamoring and champing at the bit for another war in Iran. But it's not a walk in the park." ..."
"... "In order to have clean ships by the first of January next year, all the world's shipping fleet from about now until the end of the year are busy emptying their tanks of heavy sulphur fuel oil and filling their tanks with low sulphur fuel oil, which is the new standard," Latham explained, claiming that the attack could have taken up to 20 percent of the world's desulphurization capacity out of commission. ..."
"... "This little accident was designed to be maximally disruptive to the world's oil market. It could not have happened at a worse time." "But what is really interesting is in Amsterdam this morning, I saw that for fuel oil -- the sulphurous stuff -- the price went down," Latham continued, speculating that international powers might delay the new environmental regulations by months and inadvertently drive down the price of oil in the long run. ..."
"... On Sunday, Trump tapped into emergency U.S. oil reserves, in order to stabilize prices. It's not clear, however, that the United States has enough oil to cope with wider attacks on energy infrastructure. "If the Iranians did this, they have shown they have pretty immense capabilities clearly," Parsi told the National Interest . "In the case of a full-scale war, imagine what this will do for the global economy. It's not that difficult to imagine what that will do to Trump's re-election prospects. I think that is something Trump understands." ..."
Sep 18, 2019 | nationalinterest.org

Retired Lt. Col. Daniel L. Davis pointed out that the puncture marks do not actually show the origin of the attack. "Missiles can fly from almost anywhere. They have the ability to maneuver! And certainly drones can, too," the Defense Priorities senior fellow told the National Interest . "There hasn't been the time to do an actual analysis on the ground, so let's wait and see."

Mark Latham, managing partner at the London-based analysis firm Commodities Intelligence, told the National Interest that the puncture marks pointed to a cruise missile with no explosive warhead. Removing the payload would allow the missile to carry more fuel and launch from farther away from its target.

... ... ...

"Mr. X is a sophisticated fellow. He's sourced some Iranian cruise missiles. He's removed the explosive payload. He's replaced the explosive payload with fuel," he said. "So this isn't your twenty dollar Amazon drone. This is a sophisticated military operation."

"The culprit behind the Abqaiq attack is most definitely the Islamic Republic, either directly or through one of its proxies," argued Varsha Koduvayur, a senior research analyst at the Foundation for the Defense of Democracies.

"The attack fits the pattern of Iran signaling to the Gulf states that if it can't get its oil out, it will cause their oil exports to become collateral damage," Koduvayur told the National Interest . "It's because of how strong our coercive financial tools are that Iran is resorting to attacks like this: it's lashing out."

Violating an Obama-era agreement to regulate Iran's nuclear research program, the Trump administration imposed massive sanctions on Iran's oil industry beginning in May 2018. The goal of this "maximum pressure" campaign was to force Iran to accept a "better" deal. Since then, Iranian forces have captured a British oil tanker and allegedly sabotaged tankers from other countries.

There were some signals that Trump was planning to use the ongoing United Nations General Assembly in New York to open a new diplomatic channel with Iran, especially after the firing of hawkish National Security Advisor John Bolton. But the weekend attack sent Trump into reverse.

"Remember when Iran shot down a drone, saying knowingly that it was in their 'airspace' when, in fact, it was nowhere close. They stuck strongly to that story knowing that it was a very big lie," he said in a Monday morning Twitter post, referring to a June incident when Iranian and American forces almost went to war. "Now they say that they had nothing to do with the attack on Saudi Arabia. We'll see?"

He also hinted at a violent U.S. response.

"There is reason to believe that we know the culprit, are locked and loaded depending on verification, but are waiting to hear from the Kingdom as to who they believe was the cause of this attack, and under what terms we would proceed!" Trump wrote on Sunday.

"Saudi Arabia is not a formal treaty ally of ours, so there are no international agreements that obligate us to come to their defense," John Glaser, director of foreign-policy studies at the CATO Institute, stated. "This does not amount to a clear and present danger to the United States, so no self-defense justification is relevant. He would therefore need authorization from Congress."

Members of the Senate Foreign Relations Committee had mixed reactions to the attack.

Sen. Lindsey Graham (R-S.C.) proposed putting "on the table an attack on Iranian oil refineries" in order to "break the regime's back." His press office did not respond to a follow-up question from the National Interest asking whether the president would have the authority to do so.

Amy Grappone, spokeswoman for Sen. Todd Young (R-Ind.), told the National Interest that the Senator "will support an appropriate and proportionate response" after "studying the latest intelligence pertaining to Iran's malign activities, including these recent attacks in Saudi Arabia."

Sen. Bob Menendez (D-N.J.), the ranking Democrat on the committee, condemned the attack with a backhanded insult towards Saudi Arabia. "Despite some ongoing policy differences with the kingdom, no nation should be subjected to these kinds of attacks on it soil and against its people," he wrote on Twitter, declining to name Iran as the culprit.

Committee members Sen. Tom Udall (D-N.M.) and Sen. Tim Kaine (D-Vir.) explicitly announced their opposition to war with Iran. And prominent war powers critic Sen. Jeff Markley (D-Ore.) quipped that, "[b]ack when Presidents used to follow the Constitution, they sought consent for military action from Congress, not foreign governments that murder reporters," referring to the assassination of Saudi-American journalist Jamal Khashoggi.

"Diplomacy by Twitter has not worked so far and it surely is not working with Iran. The president needs to stop threatening military strikes via social media," said Sen. Ben Cardin (D-Mary.) in response to a question from the National Interest . "The attack on Saudi Arabia is troubling whether it was perpetrated by Houthi rebels or Iran. The U.S. should regain its leadership by working with our allies to isolate Iran for its belligerent actions in the region."

"The U.S. should not be looking for any opportunity to start a dangerous and costly war with Iran. Congress has not authorized war against Iran and we've made it crystal clear that Saudi Arabia needs to withdraw from Yemen," he continued.

Asked how he would vote on a declaration of war, the senator told the National Interest : "Let's hope it does not come to that. Congress has not authorized war against Iran. The majority voted to engage them diplomatically to slow their nuclear ambitions. The international community is ready to work with the U.S. again to ease economic pressure on Iran in exchange for their restraint. We are at a dangerous precipice."

In a statement emailed to the National Interest and posted to Twitter, Sen. Tim Kaine (D-Va.) was even more direct: "The US should never go to war to protect Saudi oil."

Sen. Chris Murphy (D-Conn.) has long been a critic of Saudi Arabia's war in Yemen, proposing a successful bill to cut off U.S. support for the Saudi-led war effort. (He did not have enough votes to override the veto.) After the attacks, he wrote a long Twitter thread explaining how "the Saudis sowed the seeds of this mess" in Yemen.

"It's simply amazing how the Saudis call all our shots these days. We don't have a mutual defense alliance with KSA, for good reason. We shouldn't pretend we do," Murphy added. "And frankly, no matter where this latest drone strike was launched from, there is no short or long term upside to the U.S. military getting more deeply involved in the growing regional contest between the Saudis and Iranians."

But the reaction did not fall neatly along party lines.

"Iran is one of the most dangerous state sponsors of terrorism. This may well be the thing that calls for military action against Iran, if that's what the intelligence supports," said Sen. Chris Coons (D-Del.) in a Monday interview with Fox News. Others pointed out that attacking Iran would contradict Trump's own principles.

"Having our country act as Saudi Arabia's bitch is not 'America First,'" said Democratic presidential candidate Tulsi Gabbard, invoking a popular Trump slogan. Sen. Rand Paul (R-Ken.), who had invoked Trump's antiwar message in a public feud with Rep. Liz Cheney (R-Wyo.) over the weekend, took to CNN to warn against striking Iran.

"This is a regional conflict, that there's no reason the superpower of the United States needs to be getting into bombing mainland Iran. It would be a needless escalation of this," he told journalist Jake Tapper. "Those who loved the Iraq War, the Cheneys, the Boltons, the Kristols, they all are clamoring and champing at the bit for another war in Iran. But it's not a walk in the park."

Davis agreed with Paul's assessment. "There's too many people who have lost touch with understanding what war is all about. They think it's easy," he told the National Interest . "Just imagine this. What we go ahead and do this, and Iran makes good on their threats, and American warships get sunk in the Gulf?" "This is not America's fight," he concluded. "The American armed forces are not on loan as a Saudi defense force."

"There's another claim that the impact on oil markets is sufficient to impact the vital U.S. interest in the free flow of energy coming out of that region, but that argument quickly descends into absurdity when we remember that the Trump administration has been trying to zero-out Iranian oil exports, for a host of spurious reasons," Glaser told the National Interest . "Washington is also aggressively sanctioning Venezuela, making it harder for Caracas to bring oil to market, too. If we really cared about the supply of oil, we wouldn't be doing this."

In any case, the attack may not have affected oil markets in such a straightforward way. Latham says that the attack struck an oil desulphurization facility. At the moment, desulphurized fuel is in high demand from the shipping industry, which is rushing to comply with new international environmental regulations.

"In order to have clean ships by the first of January next year, all the world's shipping fleet from about now until the end of the year are busy emptying their tanks of heavy sulphur fuel oil and filling their tanks with low sulphur fuel oil, which is the new standard," Latham explained, claiming that the attack could have taken up to 20 percent of the world's desulphurization capacity out of commission.

"This little accident was designed to be maximally disruptive to the world's oil market. It could not have happened at a worse time." "But what is really interesting is in Amsterdam this morning, I saw that for fuel oil -- the sulphurous stuff -- the price went down," Latham continued, speculating that international powers might delay the new environmental regulations by months and inadvertently drive down the price of oil in the long run.

On Sunday, Trump tapped into emergency U.S. oil reserves, in order to stabilize prices. It's not clear, however, that the United States has enough oil to cope with wider attacks on energy infrastructure. "If the Iranians did this, they have shown they have pretty immense capabilities clearly," Parsi told the National Interest . "In the case of a full-scale war, imagine what this will do for the global economy. It's not that difficult to imagine what that will do to Trump's re-election prospects. I think that is something Trump understands."

Matthew Petti is a national security reporter at the National Interest.

[Sep 18, 2019] Neoliberalism in action: Another School Leadership Disaster Private Companies Work an Insider Game to Reap Lucrative Contracts

Notable quotes:
"... By Jeff Bryant, a writing fellow and chief correspondent for Our Schools , a project of the Independent Media Institute. He is a communications consultant, freelance writer, advocacy journalist, and director of the Education Opportunity Network, a strategy and messaging center for progressive education policy. His award-winning commentary and reporting routinely appear in prominent online news outlets, and he speaks frequently at national events about public education policy. Follow him on Twitter @jeffbcdm. produced by Our Schools , a project of the Independent Media Institute. ..."
"... One of the first school districts to become entangled in the conglomeration of firms Wise and Sundstrom assembled was Nashville, which in 2016 chose Jim Huge and Associates to help with hiring a new superintendent. The following year the board hired Shawn Joseph, whom Huge had recommended. ..."
"... Shortly after Joseph arrived in Nashville, according to local News Channel 5 investigative reporter Phil Williams, he began pushing the district to give $1.8 million in no-bid contracts to Performance Matters, a Utah-based technology company that sells "software solutions" to school districts. ..."
"... In addition to pushing Performance Matters, Williams reported, Joseph gave an "inside track" to Discovery Education, a textbook and digital curriculum provider and another company he and his team had ties to from their work in Maryland. ..."
"... By June 2018, Nashville school board member Amy Frogge was questioning Joseph about possible connections these vendors might have to ERDI. A district audit would confirm that ERDI's affiliated companies -- including Performance Matters, Discovery Education, and six other companies -- had signed contracts totaling more than $17 million with the district since Joseph had been hired. ..."
"... "Too often, national search firms are also driven by money-making motives and/or connections with those seeking profit," Frogge contended. That conflict of interest is a concern not only in Nashville but also in other districts where school leaders with deep ties to education vendors and consultants have resulted in huge scandals that traumatized communities and cost taxpayers millions. ..."
Sep 18, 2019 | www.nakedcapitalism.com

Posted on September 18, 2019 by Lambert Strether

Lambert here: More corruption in the professional class.

By Jeff Bryant, a writing fellow and chief correspondent for Our Schools , a project of the Independent Media Institute. He is a communications consultant, freelance writer, advocacy journalist, and director of the Education Opportunity Network, a strategy and messaging center for progressive education policy. His award-winning commentary and reporting routinely appear in prominent online news outlets, and he speaks frequently at national events about public education policy. Follow him on Twitter @jeffbcdm. produced by Our Schools , a project of the Independent Media Institute.

In July 2013, the education world was rocked when a breaking story by Chicago independent journalist Sarah Karp reported that district CEO Barbara Byrd-Bennett had pushed through a no-bid $20 million contract to provide professional development to administrators with a private, for-profit company called SUPES Academy, which she had worked for a year before the deal transpired. Byrd-Bennett was also listed as a senior associate for PROACT Search, a superintendent search firm run by the same individuals who led SUPES.

By 2015, federal investigators looked into the deal and found reason to charge Byrd-Bennett for accepting bribes and kickbacks from the company that ran SUPES and PROACT. A year-and-a-half later, the story made national headlines when Byrd-Bennett was convicted and sentenced to prison for those charges. But anyone who thought this story was an anomaly would be mistaken. Similar conflicts of interest among private superintendent search firms, their associated consulting companies, and their handpicked school leaders have plagued multiple school districts across the country.

In an extensive examination, Our Schools has discovered an intricate web of businesses that reap lucrative school contracts funded by public tax dollars. These businesses are often able to place their handpicked candidates in school leadership positions who then help make the purchasing decision for the same businesses' other products and services, which often include professional development, strategic planning, computer-based services, or data analytics. The deals are often brokered in secrecy or presented to local school boards in ways that make insider schemes appear legitimate.

As in the Byrd-Bennett scandal, school officials who get caught in this web risk public humiliation, criminal investigation, and potential jail time, while the businesses that perpetuate this hidden arrangement continue to flourish and grow.

The results of these scandals are often disastrous. School policies and personnel are steered toward products that reward private companies rather than toward research-proven methods for supporting student learning and teacher performance. School governance becomes geared to the interests of well-connected individuals rather than the desires of teachers and voters. And when insider schemes become public, whole communities are thrown into chaos, sometimes for years, resulting in wasted education dollars and increased disillusionment with school systems and local governance.

While media accounts generally frame these scandals as examples of corrupt school leaders who got caught and brought to justice, reporters rarely delve into the corporate-operated enterprises that undergird the whole system.

A Potent Business Model

Months before Byrd-Bennett's conviction, another individual connected to the Chicago scandal, SUPES co-owner Gary Solomon, pleaded guilty to wire fraud charges related to a scheme that diverted over $5 million in public money from the Chicago contracts into his private pocket.

Solomon, who had been forced out of a previous job as a high school administrator after he was accused of racist comments and "preying" on female students, cofounded SUPES -- along with sister companies PROACT Search and Synesi Associates -- with his former student Thomas Vranas, who also pleaded guilty to charges stemming from the Chicago deals.

Although Solomon and Vranas got caught and were convicted for their scheme, they nevertheless stumbled on a potent business model that combined PROACT's superintendent search services with SUPES Academy professional development programs and consulting by Synesi Associates to help districts "implement reform strategies." Combining leader recruitment with leadership training and consulting gave Solomon and Vranas three ways into a business relationship with a school district and multiple ways to upsell clients into more expensive new contracts.

New administrators PROACT helped place in leadership roles could be reliable allies for pitching professional development services to the district. School districts that had employed SUPES might be more inclined to hire PROACT for a leadership search. And Synesi would have an inside track for its consulting services. Further, any of the firm's school leader contacts who became idle between full-time jobs, which often happens in this profession, would be able to work for the firm as "associates."

School districts may have welcomed this arrangement as a form of "one-stop shopping" for their needs, but it's not hard to see how it could lead to conflicts of interest and a veil for fraud.

Chicago was not the only district that fell for the pitch. Shortly after news of the Byrd-Bennett scandal broke, school districts in DeKalb County , Illinois; Fayette County (Lexington), Kentucky; and Lancaster , Pennsylvania ended their contracts with PROACT.

In Iowa City, Iowa, a local reporter found the district had a contract with Synesi Associates to conduct an audit of the district and then hired PROACT to recruit candidates for a vacant director position. At the same time, superintendent Stephen Murley took 34 days off work to do paid consulting for those two organizations and for SUPES Academy.

In St. Louis , superintendent Kelvin Adams started consulting for SUPES shortly after the school board awarded a $125,000 contract to the firm, Sarah Karp and Melissa Sanchez reported. The district also awarded a $16,500 no-bid deal to Synesi.

But Solomon and Vranas did not invent this money-making strategy, nor did it die when they were convicted and sent to jail.

From Retail Store to Mega-Mall

In June 2016, the Chicago Sun Times reported that in the wake of the Byrd-Bennett scandal, parts of SUPES Academy were purchased by Joseph Wise and his partner David Sundstrom. Their Chicago-based firm Atlantic Research Partners (ARP) had already gotten at least $5 million in recent business from Chicago schools. (Sundstrom would later contend ARP rescinded the agreement to acquire SUPES and that the "only remaining connection between the companies" was a licensing of training material.)

Wise founded ARP with Sundstrom in 2007 after both had been ousted from their jobs in the Duval County, Florida, school district due to alleged "serious misconduct." According to the ARP website, the project's mission was to launch a "teacher-training program focused on instructional coaching and school capacity-building."

Around the same time ARP was acquiring parts of SUPES, the company also merged with Jim Huge and Associates, a firm with deep experience in school superintendent and other talent searches. Huge had also served as chief strategy officer for PROACT Search. The announced rationale of the merger was "to maximize seamless delivery of the intensive executive services to schools and school leaders."

Undoubtedly, what Wise and Sundstrom assembled was similar to the three-part business model Solomon and Vranas put together. What was different, though, was Wise and Sundstrom would expand on the model with their subsequent acquisition of Education Research and Development Institute (ERDI).

According to Louisiana school teacher and wily blogger Mercedes Schneider , Sundstrom registered an entity called ERDI Partners as a business with a Florida address in 2017.

But an entity called ERDI had been in existence since at least 2005 when an article in Education Week described the company as an intermediary organization bringing together school administrators and education vendors to help companies improve the products and services they offer school systems. Specifically, ERDI arranged get-togethers by paying superintendents consulting fees plus expenses to travel to conferences at luxury resorts where they would meet with company representatives. The companies, in turn, underwrote the conferences with substantial fees paid to ERDI.

Critics of ERDI argue that the company's model for paying school administrators for their advice on education products inevitably leads to conflict of interest issues when those administrators are presented with offers to purchase products promoted by ERDI.

Byrd-Bennett had a relationship with ERDI dating back to at least 2014 and was listed as senior advisor on the firm's website while she was employed as Chicago schools' CEO.

With the acquisition of ERDI, Wise and Sundstrom could transform their business model from a lone retail operation to a mega-mall of education vendors of all kinds.

'The Search Was Manipulated'

One of the first school districts to become entangled in the conglomeration of firms Wise and Sundstrom assembled was Nashville, which in 2016 chose Jim Huge and Associates to help with hiring a new superintendent. The following year the board hired Shawn Joseph, whom Huge had recommended.

Shortly after Joseph arrived in Nashville, according to local News Channel 5 investigative reporter Phil Williams, he began pushing the district to give $1.8 million in no-bid contracts to Performance Matters, a Utah-based technology company that sells "software solutions" to school districts.

Williams found Joseph had spoken at the company's conference and he had touted the company's software products in promotional materials while he was employed in his previous job in Maryland. Williams also unearthed emails showing Joseph began contract talks with Performance Matters two weeks before he formally took office in Nashville. What also struck Williams as odd was that despite the considerable cost of the contract, district employees were not required to use the software.

In addition to pushing Performance Matters, Williams reported, Joseph gave an "inside track" to Discovery Education, a textbook and digital curriculum provider and another company he and his team had ties to from their work in Maryland. With Joseph's backing, Discovery Education received an $11.4 million contract to provide a new science, technology, engineering, art, and math (STEAM) program even though a smaller company came in with a bid that was a fraction of what Discovery proposed.

By June 2018, Nashville school board member Amy Frogge was questioning Joseph about possible connections these vendors might have to ERDI. A district audit would confirm that ERDI's affiliated companies -- including Performance Matters, Discovery Education, and six other companies -- had signed contracts totaling more than $17 million with the district since Joseph had been hired.

Frogge also came to realize that all these enterprises were connected to the firm who had been instrumental in hiring Joseph -- Jim Huge and Associates.

"The search that brought Shawn Joseph to Nashville was clearly manipulated," Frogge told Our Schools in an email, "and the school board was kept in the dark about Joseph's previous tenure in Maryland and his relationships with vendor companies."

Frogge said some of the manipulation occurred when the search firm told school board members that disputes among current board members -- over charter schools, school finances, and other issues -- indicated the district was "'too dysfunctional' to hire top-level superintendents and therefore needed to hire a less experienced candidate."

But previous investigations of school leadership search firms conducted by Our Schools have found companies like these frequently forego background checks of prospective candidates they recommend, promote favored candidates regardless of their experience or track record, and push board members to keep the entire search process, including the final candidates, confidential from public scrutiny.

"Too often, national search firms are also driven by money-making motives and/or connections with those seeking profit," Frogge contended. That conflict of interest is a concern not only in Nashville but also in other districts where school leaders with deep ties to education vendors and consultants have resulted in huge scandals that traumatized communities and cost taxpayers millions.

In the Youngstown City School District in Ohio, CEO Krish Mohip became mired in questions about his role as a paid consultant for ERDI while the district had a $261,914 contract with a partner company of ERDI. Under calls for his resignation, Mohip left before his contract was up.

Beaufort County School District in South Carolina became the subject of an FBI investigation because of contracts with ERDI and 30 other companies connected to the firm while superintendent Jeff Moss worked as a paid consultant for ERDI. He resigned from the district two years before his contract was up.

In Pittsburgh, superintendent Anthony Hamlet drew scrutiny when reporters found the district spent more than $14 million on dozens of no-bid contracts to firms connected to ERDI at the same time Hamlet was serving as a paid consultant with the company.

In Baltimore County, Maryland, Shaun Dallas Dance made national headlines when he was convicted of perjury committed during his time as superintendent of the district. Dance had concealed $4,600 he'd been paid by ERDI. After Dance participated in confidential meetings with vendors at an ERDI conference, the district extended contracts from companies connected to the firm.

Obviously, school board members could avoid these conflicts by avoiding leadership search firms and consultants connected to ERDI. But that is easier said than done.

After Baltimore County's troubles with Dance, it hired the independent firm Ray and Associates to conduct a search to find an interim leader. The search resulted in six finalists, from which the board chose Verletta White. Shortly after she took the job, the board's ethics review panel found she had violated financial disclosure rules and "used the prestige of her office or public position for private gain" by accepting compensation from ERDI.

Indeed, superintendent search firms frequently fail to find conflicts of interest and other problems in the candidate background checks they conduct. And some of these firms operate side businesses that also lead to conflict of interest issues.

A Revolving Door of Business Deals Funded by Taxpayers

One of the largest superintendent search firms in the United States, Schaumburg, Illinois-based Hazard, Young, and Attea (HYA), is part of the ECRA Group , a consulting firm providing an array of services to schools.

ECRA claims to have worked with over 1,000 districts, but a close examination of how the company worked with a number of school districts in Illinois reveals how the firm uses a revolving-door business model in which its search service rotates administrators into and out of leadership positions while the company uses those leadership connections to successfully upsell districts into expensive long-term consulting contracts funded by taxpayers.

ECRA's business relationships with Oak Park Elementary District 97 in Illinois go back to at least 2010 when it was hired to help replace outgoing superintendent Constance Collins. With HYA's help , the district hired Albert Roberts. In 2013, during Roberts' tenure, school board minutes show the district considered a plan to hire ECRA to analyze the district's achievement data at a cost of $74,000 a year. The following year, the district hired ECRA to produce an analysis of the achievement gap between white and nonwhite students in the district. Board minutes from 2015 show the district continuing to work with ECRA.

When Roberts retired, District 97 used HYA again for a superintendent search that resulted in hiring Carol Kelley. Kelley currently appears in ECRA's marketing literature touting the firm's Strategic Dashboard, which District 97 apparently employs.

Former superintendent Collins was hired to lead Round Lake District 116, also in Illinois, just before HYA and ECRA acquired the district's superintendent search and strategic planning contracts. Under her tenure, Round Lake paid ECRA $75,918 for consulting services in 2016 , 2017 , and 2018 . Collins retired from Round Lake in 2018, but, according to her LinkedIn page, she became an HYA associate in 2017. She also serves on the advisory board of ECRA, according to her bio at a nonprofit for developing school leaders.

Another Illinois district, Niles Township High School District 219, placed its superintendent on administrative leave after it became known she was the daughter of the president of ECRA, which had a contract with the district worth $149,419 and $120,389 in the final two years of her tenure. (She claimed that relationship with ECRA dated to before she was made superintendent, but she decided to resign anyway.)

Huntley Community School District 158, also in Illinois, had contractual arrangements with ECRA dating to at least 2009 when John Burkey was superintendent. When Burkey resigned in 2017, District 158 hired HYA to find a new superintendent at a cost of $17,500. At the end of a hiring process in which HYA kept all finalists confidential , District 158 announced it had hired Scott Rowe. Under his leadership, District 158 spent $94,980.11 on ECRA in 2018 alone.

One more example in Illinois: Evanston/Skokie School District 65 has hired ECRA for a variety of consulting services since at least 2010 when it paid the firm $22,737.50, according to state records, to survey the district's administrators. By 2013, Evanston/Skokie considered ECRA a "long-standing partner" and hired the firm to help pick its new superintendent. Outgoing superintendent Hardy Murphy also recommended the district hire the firm for teacher appraisal work.

Based on HYA's recommendations , Evanston/Skokie hired Paul Goren in 2014, and under his tenure, checks continued to flow to ECRA's consulting business, including $129,855.92 in 2015 . However, Goren's tenure was troubled and brief, and in 2019 he resigned with a $100,000 severance package. A local reporter noticed that unmentioned in the district's settlement statement was that under his leadership "the district's own progress reports [showed] declines in test scores across all groups of students and district losing ground against its own five-year targets."

ECRA's own leadership has also been embroiled in conflict of interest issues. Current ECRA president Glenn "Max" McGee resigned from his last superintendent job, in Palo Alto, California after an outside investigation found the district had mishandled claims of sexual assault. With a payout of roughly $150,000, McGee, on his way out the door, recommended the district hire HYA to conduct the search for his replacement, just after he had accepted the offer to become leader of ECRA. The district went with McGee's recommendation.

When asked whether this relationship among McGee, ECRA, and the Palo Alto district was a possible conflict of interest, McGee told Our Schools in a phone call that he "stayed out of the search" to fill his old position. Of his replacement, Don Austin from nearby Palos Verdes Peninsula Unified School District in California, McGee admitted being an acquaintance of "many years."

Who's to Blame?

When controversies arise over superintendents and contracts with outside services, private firms that are responsible for pushing these hiring and outsourcing decisions are quick to blame school board members who signed off on the decisions. And critics of public schools frequently use these scandals to argue that democratically elected school boards are dysfunctional and need to be scrapped for other governance structures.

These criticisms leave a lot of context out.

First, being a school board member is customarily a part-time job paying very little money. And school board members are elected to serve as representatives of parents and voters, not to be experts on school finance and administration.

"School board members, although often well intentioned, are sometimes too unqualified and uninformed to exercise effective oversight of spending, and board members are not aware of the personal relationships and personal interests that may be driving decisions by administrative leaders," Nashville board member Frogge explained.

Also, there are multiple ways superintendents can keep board members in the dark about the inner workings of contractor relationships and district operations.

"From the beginning, Joseph surrounded himself with those who promoted him, including organizations he hired to 'train' the board," Frogge explained. "Joseph also prohibited all district employees from speaking to school board members, which prevented board members from recognizing leadership problems during the early days of his tenure. When board members finally began to confront Joseph about problems, including disturbing financial irregularities and his failure to follow board policy, Joseph lied to board members, exacted retribution from those questioning him, and stirred up controversy to distract from the issues at hand."

That said, Frogge noted school boards have alternatives to using private search firms that promote tainted candidates willing to feed the search firms' side businesses.

"School board members need to become better informed and more savvy about profit motives and organizations that seek to influence their selection," she wrote. "School boards can instead opt to hire a local school boards association (for example, the Tennessee School Boards Association) or a local recruiter with a reputation for personal integrity to conduct a search. They can also choose to hire from within."

How school boards decide to avoid conflicts of interest with school leaders and outside consulting firms is "critical" according to Frogge because decisions that are driven by these insiders "can lead to catastrophic outcomes for students and staff."

Among those negative outcomes are increased community acrimony, wasted education funds, and career debacles for what could perhaps have been promising school leaders.

In the case of Joseph and Nashville, controversies with his leadership decisions strongly divided the city's black community, and taxpayers were stuck with a $261,250 bill for buying out the rest of his contract. As a result of the fallout, Joseph lost his state teaching license, and he vowed never to work in the state again.

In the meantime, HYA continues to win contracts for high-profile superintendent searches, and ERDI's conferences bringing school leaders and vendors together continue to sell out .

[Sep 18, 2019] China did the right thing: it shut down "free market" theologician maskeraling as economics from the academia

After 2008 free market economists should be treated at their face value: as academic charlatans. Now they are treated as goods which are past their shelf life in China and that's a progress.
Notable quotes:
"... The Chinese don't need, and don't want, a bunch of arrogant pro-US intellectuals giving them lectures. I can't say I blame them. ..."
"... No, that is because after WW2 the US was the only major economy left standing that hadn't been wrecked, and they were in the box seat to set the agenda post Bretton-Woods (and cement for themselves the leading dominant role). The USD is being used increasingly as a cudgel to enforce US hegemony, and that will lead much of the world to seek alternatives. It's happening now, slowly at first, and will only gain speed from here. ..."
Sep 18, 2019 | nationalinterest.org

During my last visit I stopped by the offices of what remained of the Unirule Institute of Economics. The well-respected organization was formed in 1993 by six economists, most importantly Mao Yushi (no relation to Mao Zedong) and Sheng Hong. My organization, the Cato Institute, gave the former the 2012 Milton Friedman Prize for Advancing Liberty to honor his work on behalf of human freedom. Now retired at the age of ninety, Mao Yushi paid a price for activism. Noted his award citation, Mao "has faced severe punishment, exile, and near starvation for remarks critical of a command-based economy and society." The late Liu Xiaobo, a Nobel laureate, said of Mao: his "bravery is worthy of our respect."

However, despite the hardship of its founder, Unirule was no revolutionary political organization. Its name stood for "universal rules," essentially the rule of law. Its focus was moving toward a more market-oriented economy. The group's work was scholarly, performed by economists and academics. Its publications were high-brow, its books often published in China. Unirule's international contacts were mainstream and focused on economic reform.

That Unirule prospered demonstrated how far the PRC had come from the bad old days under Mao Zedong. Economic integration with the West by no means delivered a libertarian China. Still, the increasingly vibrant private economy expanded personal autonomy, opening up space absent since the PRC's founding seventy years ago.

As for politics, other than the question of the Chinese Communist Party's monopoly of power, most issues could be at least discussed and sometimes debated in academic and other settings. A vaguely independent media developed, which reported on misdeeds of local governments and officials. Although this slightly diluted authoritarianism might have appeared to be weakness to a few who pined for the days of the Cultural Revolution, the system offered a release valve for people who had no control over their rulers.

That gave CCP officials additional ideas to consider and solutions to employ. Unirule sponsored lectures, ran conferences, and published books. The group consulted with both local governments and state companies. Even the national authorities appeared to respect if not necessarily love Unirule. (In 1980 the government even invited Nobel Laureate Milton Friedman to Beijing to get his advice.) Asked Jude Blanchette, at the Center for Strategic and International Studies: "Without independent voices offering alternative viewpoints, how can China's leaders make effective decisions."

Allowing discussion -- if not exactly dissent -- also might have drained away some of the dissatisfaction that otherwise would have accumulated against the regime. The pervasiveness of corruption and intensity of resulting public disgust highlighted the threat both from and to Communist rule, which came much more from the natural consequences of the monopoly of power rather than from the expression of discontent with that monopoly.

However, Xi Jinping's ascension to head of both party and government became a dramatic political inflexion point...

... ... ...

The state agency which sponsored it dropped the affiliation. Newspapers stopped running articles by its staffers. Discussions of its activities on social media, including the Chinese phenomenon WeChat, were blocked. Venues cancelled Unirule events. The website was closed down. Then the organization was twice pushed out of professional spaces. Last year the landlord, under pressure from regulators, welded the office door shut with staffers still inside; they had to call the police for rescue. About ten employees and a mass of books, papers and files ultimately crammed into a small apartment ten floors up in an aged apartment building in a distant suburb.

The group's latest book, a collection of academic papers, is ready for publication but was rejected by the PRC's information overseers. The process has been transferred from state to party, ensuring that everything will be assessed for its propaganda value. More seriously, Unirule's business license was cancelled, a move the group was fighting. Sheng said he planned to focus on economic research if the CCP interdict took hold.

... ... ...

A few weeks after my visit Unirule's life appears to have run out. The group announced that the local government had declared it to be "unregistered and unauthorized." Although Unirule plans to fight the diktat in court, Sheng admitted that it had essentially no chance of prevailing and has begun the liquidation process. "We no longer have any space for survival," Sheng told the Wall Street Journal . He previously noted that Unirule had been careful to follow the rules, so the Xi regime wished for the reformers to "disappear by ourselves." Apparently Xi or someone else high up grew tired of waiting.

... ... ...

Doug Bandow is a senior fellow at the Cato Institute. A former special assistant to President Ronald Reagan, he is the author of several books, including Foreign Follies: America's New Global Empire .


jonathanpulliam 2 days ago ,

Come to think of it, why ISN'T Boeing's CEO in jail??

Gary Sellars 3 days ago ,

The Chinese don't need, and don't want, a bunch of arrogant pro-US intellectuals giving them lectures. I can't say I blame them.

... ... ...

Mephisto 3 days ago ,

Nixon's initiative to integrate China with the USA was the biggest strategic mistake the US ever did. It did not lead to democratization, but rather helped build a powerful totalitarian Orwellian state.

China clearly has a long term strategic plan how to become the world leader, and to this end, it steals western technology, locks other nations into dept traps, builds fifth columns in other countries, uses propaganda and cultural subversion. It is not yet too late to withdraw all western investment from China and to isolate the country. Due to the behavior of the CCP, it has very few actual friends.

jonathanpulliam Mephisto 2 days ago ,

PRC China & the U.S. share one thing at least in common, they lack dignity

Rudi Matich Mephisto 2 days ago ,

The strategic plan and task to defeat capitalism had been handed over to China after the Soviet Union has failed in this endeavor because economically it was no match for capitalist USA, plus it did not integrate science and technological innovation which without it capitalism can not be defeated.

China has achieved economic quantity and quality, and is heading towards full scientific and technological superiority over capitalist USA in the long run.

In this way socialism through science defeats and overtakes capitalism. Science and more science, the only way to defeat capitalism.

Swift Laggard II Rudi Matich 2 days ago ,

China is a hard core capitalist state. Even state ownership is state capitalism

Gary Sellars Mephisto 3 days ago ,

"Due to the behavior of the USA, it has very few actual friends."

Thats better...

Mephisto Gary Sellars 3 days ago ,

out of the 3 countries - USA, Russia, China - most of the world is clearly happy with USA having the leading role, because it is the least evil. Yes, USA is not perfect, Trump is not a great leader (to say it diplomatically), they have made mistakes (the invasion of Iraq etc), but they are still much better than USSRv2.0 or totalitarian China.

Even in Asia, China is widely disliked due to its arrogant and bullying behavior. The Japanese, the Koreans, the Vietnamese, the Indonesians, none of them really like China.

The fact, that US dollar is the leading currency has much to do with the world public perception of the stability of the country. Ie all countries believe the US is the most stable country. So China will have real trouble convincing the world that yuan is better. I do not believe that China will become a leading power anytim soon.

Gary Sellars Mephisto 2 days ago • edited ,

You can keep telling yourself that, but its a crock and we non-Americans know it only too well. Dishonesty and an inability to face truth seems to be an American trait, and the corruption is only growing worse as the US declines.

"The Japanese, the Koreans, the Vietnamese, the Indonesians, none of them really like China"

News for you buddy. None of these nations like each other... LOL!! You ever hear Koreans talking about the Japanese? Now that's hatred...

" The fact, that US dollar is the leading currency has much to do with the world public perception of the stability of the country."

No, that is because after WW2 the US was the only major economy left standing that hadn't been wrecked, and they were in the box seat to set the agenda post Bretton-Woods (and cement for themselves the leading dominant role). The USD is being used increasingly as a cudgel to enforce US hegemony, and that will lead much of the world to seek alternatives. It's happening now, slowly at first, and will only gain speed from here.

Pound Sterling used to dominate the world, now where is it? In the future, people will say the same of the greenback.

Swift Laggard II Mephisto 2 days ago ,

speak for yourself; don't speak for Asian nations. How many have joined AIIB, or BRI? What you believe about China is irrelevant

Mephisto Swift Laggard II 2 days ago ,

https://www.pewresearch.org...
it is interesting, that China is least popular in Asia with its direct neighbors

commit Mephisto 2 days ago ,

It would be interesting to know how the research was made and who they ask.

Mephisto commit 2 days ago ,

I traveled for 1 year across Asia - SE Asia, Thailand, Vietnam, Cambodia, Laos, Indonesia and 5 months across china. China is almost universally disliked all over Asia due to its arrogant behavior. And even the famous Chinese investments are increasingly being perceived as a form of Chinese neocolonialism and rejected
https://www.washingtonpost....

Redmond Mephisto 2 days ago ,

You know how African-Americans commit all sorts of violent crimes, hate speech, and racist slurs just because they were victims of racial discrimination in America decades ago? It's the same justification for violence Chinese mainlanders commit against everyone else just because they suffered from century of humiliation. I'm suspecting that the CCP/PLA is being coached by the black lefists in the US who have deep hatred against their perceived WASP establishment. The pattern of angst and diatribes are almost the same.

commit Redmond 2 days ago • edited ,

IDK, the trade war and other US actions against China are pretty recent. They have good reasons to hate your establishment. No need to look into past.

commit Mephisto 2 days ago • edited ,

> universally disliked all over Asia

In the survey you posted above, China is more popular than the USA in Indonesia. Other countries like Malaysia, Laos, Bangladesh, North Korea are missing. Also, people generally tell to English speaking foreigners what they expect they want to hear. If the survey was made by Chinese, the results would be different.

Redmond 3 days ago ,

The answer is simple and obvious. Democracy and rule of law means that they all go to jail. In all post-authoritarian shifts, the judicial branch of the government goes into overdrive, prosecuting past leaders for their crimes. They're really stuck to authoritarianism no-matter how hard they want democracy.

The CCP is just like a mafia. You won't get in unless you have blood in your hands, and death is the only way out (unless you can defect to another country and if you can stomach your immediate family members going to jail for you).

Swift Laggard II Redmond 3 days ago ,

what rule of law are you talking about? do you practice it in your own country?

Gary Sellars Swift Laggard II 3 days ago ,

Law of the Jungle. It's all that the Washingtonian primitives understand...

Walter Tseng 3 days ago ,

China is doing just great. Its citizens are enjoying a quality of life unprecedented in China's history (even the author do not dispute this). So why should a democratic majority 89% (PEW) happy individuals must suffer for the selfish few?

History has shown that intellectuals make lousy leaders but great at fomenting chaos + rebellions. And everyone knows that "soft-spoken criticisms", when weaponized, can kill millions just as effectively as a nuclear bomb!

[Sep 17, 2019] A Requiem for the Fiscal Theory of the Price Level by Roger E. A. Farmer

Sep 17, 2019 | www.rogerfarmer.com

Our results have profound implications for the idea that the financial markets are Pareto efficient which I explore here in my paper on asset pricing in perpetual youth models. In that paper I assume that monetary and fiscal policy are passive to generate realistic asset market volatility. My paper with Pawel shows that the same results can be generated in a realistic OLG model even when monetary and fiscal policy are active.

The way out of this apparent degeneracy of theory is to adopt an idea I first advocated in my book on self-fulfilling prophecies . The way that people form beliefs must be modeled as a new fundamental with the same methodological status as preferences, technologies and endowments.

Our paper makes a mockery of the attempt to ground neoclassical theory in 'fundamentals'.

[Sep 17, 2019] Much has justifiably been made of President Trump's blustering, bullying approach to trade policy, which has already had catastrophic effects on many American farmers. Now, Trump's trade war with China is having similarly disastrous repercussions internationally. One need look no further than longtime US ally Germany, a prosperous country now facing its first major recession since Chancellor Angela Merkel took power 13 years ago.

Sep 17, 2019 | economistsview.typepad.com

Fred C. Dobbs , September 16, 2019 at 08:39 AM

A German recession made with American parts
https://www.bostonglobe.com/opinion/2019/09/16/german-recession-made-with-american-parts/MMcb6eH26Awy7KUs5ewZ5L/story.html?event=event25 via @BostonGlobe

Elizabeth Schumacher - September 16

COLOGNE, Germany

Much has justifiably been made of President Trump's blustering, bullying approach to trade policy, which has already had catastrophic effects on many American farmers. Now, Trump's trade war with China is having similarly disastrous repercussions internationally. One need look no further than longtime US ally Germany, a prosperous country now facing its first major recession since Chancellor Angela Merkel took power 13 years ago.

A bit of context: Germans value stability above all else. That the German word for debt – Schuld – is also the word for guilt, is a linguistic testament to a deep cultural truth. Debt is considered so shameful that Germans don't have real credit cards, will rent for decades instead of buying property, and are comfortable living with a rapidly decaying infrastructure that simply would not fly in other wealthy European countries.

Part of the reason behind Merkel's record-tying four electoral victories is that Germans are not prone to asking questions when everything seems to be working fine, and their economy -- built on excessive exports and domestic austerity -- has, thus far, served them well. The 2008 financial crisis hit German businesses hard, but unemployment barely increased. For nearly two decades now, Germany has survived by capitalizing on other countries' spending and exporting job cuts to its trade partners.

Indeed, Germany's trade surplus in 2018 was the largest in the world for the third year running, reaching $299 billion and accounting for over 8 percent of GDP. ...

With the US-China spat driving the cost of materials up and the number of orders for exported goods down, the key German sectors of manufacturing, trade, services, and construction have contracted so quickly and sharply that business leaders could hardly believe the numbers were true.

Yet, according to Germany's highly-regarded IFO Institute's Business Climate Index, there is good reason to believe these sectors have "not a single ray of light" for the immediate future.

( https://www.ifo.de/sites/default/files/2019-08/ku-2019-08-pm-gesch%C3%A4ftsklima-EN_0.pdf )

Despite Washington's justifiable concerns over data security, Merkel's government has invited Huawei to build up Germany's woeful digital infrastructure and is planning a massive EU-China summit for when Berlin takes over the rotating European presidency in 2020. ...

[Sep 17, 2019] Amid the settlement of Treasury coupon auctions and the influx of quarterly corporate tax payments, the rate on overnight repurchase agreements soared by 153 basis points to 3.80%, the largest daily increase since December, based on ICAP pricing.

Sep 17, 2019 | economistsview.typepad.com

Joe , September 16, 2019 at 12:11 PM


https://www.bloomberg.com/markets/rates-bonds/government-bonds/us

One of the key U.S. borrowing markets saw a massive surge Monday, a sign the Federal Reserve is having trouble controlling short-term interest rates.

Amid the settlement of Treasury coupon auctions and the influx of quarterly corporate tax payments, the rate on overnight repurchase agreements soared by 153 basis points to 3.80%, the largest daily increase since December, based on ICAP pricing.

---------
The would be Treasury trying to tilt the curve, deposit short borrow long. Finance, in general, is rescaling to accommodate the next 2 trillion in debt while rolling over trillions of 'Uncle can do it later' debt. A quick downturn, readjustment, and the 'Uncle do it later' payments to the wealthy will continue.

This is common, our progressive tribe has moles who suddenly rush off and do a deal with the wealthy leaving the rest of us in the dark.

Paine -> Joe... , September 16, 2019 at 02:01 PM
The end time nears
Joe , September 17, 2019 at 06:08 AM
https://thehill.com/blogs/blog-briefing-room/news/461692-cost-for-recent-government-shutdowns-estimated-at-4b

Repo Squeeze Threatens to Spill Over Into Funding Markets
By Stephen Spratt
September 17, 2019, 3:19 AM PDT Updated on September 17, 2019, 5:24 AM PDT
Cross-currency basis, FX forwards, eurodollar futures shift
Sale of $78 billion in Treasuries led to sudden cash squeeze
----------------

Treasury is ahead of finance in paying for the 'Uncle do it later' trick. The short rate has jumped 10 basis points, not much but there was a reading on the overnight market of 7%. This may mean nothing, but more likely means higher consumer credit charges. W have to pay for 'Uncles later'.

[Sep 17, 2019] The reincarnation of the idea of Soviet Nomenklatura on a new level in a different social system

Highly recommended!
Sep 17, 2019 | economistsview.typepad.com

anne , September 15, 2019 at 11:33 AM

https://twitter.com/BrankoMilan/status/1173204669356740608

Branko Milanovic‏ @BrankoMilan

Homoploutia, a concept I introduce in "Capitalism, Alone". In today's liberal capitalism, it is common that the same people are rich *both* in terms of capital they own and earnings they receive. This was almost unheard of in classical capitalism where capitalists seldom doubled as wage workers.

4:59 AM - 15 Sep 2019

anne -> anne... , September 15, 2019 at 11:47 AM
https://twitter.com/BrankoMilan/status/1173204677611196416

Branko Milanovic‏ @BrankoMilan

So here, using @lisdata, you have a nice illustration of advanced capitalist countries where people in the top decile by capital and labor income increasing coincide (right end) and Brazil and Mexico where they do not.

https://pbs.twimg.com/media/EEgPbuWXsAEays-.jpg:large

4:59 AM - 15 Sep 2019

anne -> anne... , September 15, 2019 at 11:49 AM
https://twitter.com/BrankoMilan/status/1173204681184751617

Branko Milanovic‏ @BrankoMilan

Note the ambivalence * of homoploutia: in some sense it is desirable (and risk-reducing) that capitalists also work, or that high earners possess capital too. But in another way, it makes inequality-reducing policies more difficult.

* Contradiction

4:59 AM - 15 Sep 2019

likbez -> anne... , September 16, 2019 at 09:03 PM
Yes, under neoliberalism like under Bolshevism, your social position is not determined solely by the capital you own. It is also determined by the position you hold in the industry or government (and your earnings/wages are derivative of that).

So we see the reincarnation of the idea of Soviet Nomenklatura on a new level in a different social system. The term can still serve its purpose, and IMHO is better than "Homoploutia."

It is also interesting that older middle-class folk, who due to their private savings, 401K, Roth and ISA accounts, SS pension (say $6K-7K a month for a couple), and sometimes government or industry pension are formally millionaires (with some multimillionaires) are not generally viewed as belonging to the upper 10%. They are looked at as an aberration by the most sociologists.

That's because they are now retired and no longer hold any meaningful for the upper 10% level position in the industry or government. In other words, they do not belong to Nomenklatura. Or more correctly no longer belong to Nomenklatura (for those who retired from high level positions)

And, correspondingly, often are treated as junk in the neoliberal society.

[Sep 17, 2019] What is a fair pension system? by Thomas Piketty

Sep 10, 2019 | www.lemonde.fr

Even if the timing remains vague and the conditions uncertain, the government does seem to have decided to launch a vast reform of the retirement pensions system, with the key element being the unification of the rules applied at the moment in the various systems operating (civil servants, private sector employees, local authority employees, self-employed, special schemes, etc).

Let's make it clear: setting up a universal system is in itself an excellent thing, and a reform of this type is long overdue in France. The young generations, particularly those who have gone through multiple changes in status (private and public employees, self-employed, working abroad, etc), frequently have no idea of the retirement rights which they have accumulated. This situation is a source of unbearable uncertainties and economic anxiety, whereas our retirement system is globally well financed.

But, having announced this aim of clarification and unification of rights, the truth is that we have not said very much. There are in effect many ways of unifying the rules. Now there is no guarantee that those in power are capable of generating a viable consensus in this respect. The principle of justice invoked by the government seems simple and plausible: one Euro contributed should give rise to the same rights to retirement, no matter what the scheme, and the level of salary or of earned income. The problem is that this principle amounts to making the inequalities in income as they exist at present sacrosanct, including when they are of mammoth proportions (under-paid piece work for some, excessive salaries for others), and to perpetuating them at the age of retirement and dependency which is in no way particularly "fair".

Aware of the difficulty, the High Commissioner Jean-Paul Delevoye's Plan stipulates that a quarter of the contributions will continue to be allocated to "solidarity', that is to say, for example, to subsidies for children and interruptions of career, or to finance a minimum retirement pension for the lowest salaries. The difficulty is that the way this calculation has been made is highly controversial. In particular, this estimate purely and simply takes no account of social inequalities in life expectancy. For example, if a low wage earner spends 10 years in retirement while a highly-paid manager spends 20 years, we have forgotten to take into account the fact that a large share of the contributions of the low wage earner serves in practice to pay the retirement of the highly-paid manager (which is in no way compensated for by the allowance for strenuous and tedious work)

More generally, there are naturally multiple parameters to be fixed to define what one considers to be "solidarity". The government's proposals are respectable but they are far from being the only ones possible. It is essential that a broad public debate take place and that alternative proposals should emerge. The Delevoye Plan for example provides for a replacement rate equal to 85% for a full career (43 years of contributions) at Minimum Wage level. This rate would then very rapidly fall to 70%, to only 1.5 Smic (Minimum Wage) before stabilising at this precise level of 70% until approximately 7 Smic ( 120,000 Euros gross annual salary). This is one possible choice, but there are others. One could thus imagine that the replacement rate would go gradually from 85% of the Smic to 75%-80% around 1.5 – 2 Smic, before gradually falling to around 50%-60%, approximately 5-7 Smic.

Similarly the government's project provides for a financing of the system by a retirement contribution of which the global rate would be fixed at 28.1% on all the gross incomes below 120,000 Euros per annum, before falling suddenly to only 2.8% beyond this threshold. The official justification is that retirement rights in the new system would be capped at this wage level. The Delevoye Report goes as far as congratulating themselves because the super-managers will nevertheless be subject to this contribution (which will not be capped) of 2.8%, to mark their solidarity with the older generations. In passing, once again no account is taken of the salaries between 100,000 Euros and 200,000 Euros which usually correspond to very long life expectancies and which benefit greatly from the contributions paid by the lower waged with shorter life expectancies. In any event, this contribution of 2.8% to solidarity by those earning over 120,000 Euros is much too low, particularly given the levels of remuneration; their very legitimacy is open to challenge.

More generally it is perhaps time to abandon the old idea according to which reduction of inequalities should be left to income tax, while the retirement schemes should content themselves with reproducing them. In a world in which fabulous salaries and questions of retirement and dependency have taken on a new importance, the most legible norms of justice could be that all levels of salary (including the highest) should finance the retirement scheme at the same rates (even if the pensions themselves are capped) while leaving to income tax the task of applying higher levels to the top incomes

To be clear: the present government has a big problem with the very concept of social justice. As everyone knows, it has chosen from the outset to grant huge fiscal gifts to the richest (suppression of the wealth tax (the ISF), the flat tax on dividends and incomes). If today it does not demand a significant effort from the most privileged it will have considerable difficulty in convincing the public that its pension reform is well-founded.

[Sep 16, 2019] The Four Dynamics Of Bubbles

Notable quotes:
"... In our current economy, corporations have sunk $2.5 trillion in buying back their own stocks because this generates the highest work-free return. This reflects two realities: ..."
"... Thanks to the Federal Reserve and other central banks injecting trillions of dollars of nearly free credit into the financial sector, corporations can borrow billions of dollars to play with at near-zero rates that are historically unprecedented. ..."
"... Recall the basic mechanism of stock buybacks: By reducing the number of shares outstanding, sales and profits go up on a per share basis -- not because the company generated more revenues and profits, but because the number of shares has been reduced by the buybacks. ..."
"... A bubble economy is a sick economy, for bubbles are proof there is too much capital chasing too few productive uses for that capital. ..."
Sep 16, 2019 | www.zerohedge.com

by Tyler Durden Mon, 09/16/2019 - 17:45 0 SHARES Authored by Charles Hugh Smith via The Daily Reckoning,

Financial bubbles manifest three dynamics :

The one we're most familiar with is simple human greed , the desire to exploit a windfall and catch a work-free ride to riches.

The second dynamic gets much less attention. Financial manias arise when there is no other more productive, profitable use for capital. And these periods occur when there is an abundance of credit available to inflate the bubbles .

Humans respond to the incentives the system presents: If dealing illegal drugs can net $20,000 a month compared with $2,000 a month from a regular job, a certain percentage of the workforce is going to deal drugs.

In our current economy, corporations have sunk $2.5 trillion in buying back their own stocks because this generates the highest work-free return. This reflects two realities:

  1. Corporations can't find any other more productive, profitable use for their capital than buying back their own shares (enriching the managers via stock options and the 10% of American households who own 93% of the stocks).
  2. Thanks to the Federal Reserve and other central banks injecting trillions of dollars of nearly free credit into the financial sector, corporations can borrow billions of dollars to play with at near-zero rates that are historically unprecedented.

So borrow billions at 2.5%, pour it all into buying back your own stock and reap the gains as your stock rises 10%.

Recall the basic mechanism of stock buybacks: By reducing the number of shares outstanding, sales and profits go up on a per share basis -- not because the company generated more revenues and profits, but because the number of shares has been reduced by the buybacks.

(Note to New Green Deal advocates: If corporations reckoned they could earn more by investing the $2.5 trillion in alternative energy projects rather than stock buybacks, they would have done so.)

As various sources have outlined, corporate stock buybacks have been the primary driver of higher stock prices.

This is driving the third dynamic of bubbles :

As the bubble continues inflating beyond any rational valuation, rational investors throw in the towel and join the frenzy . Once again, this willingness to abandon rationality is partly fueled by greed and also by a dearth of other more attractive investments.

A bubble economy is a sick economy, for bubbles are proof there is too much capital chasing too few productive uses for that capital.

The Fed and other central banks have created trillions of dollars, yuan, euros and yen for corporations and financiers to play with and, to a lesser degree, for homebuyers to play with via low mortgage rates and federal guarantees on mortgages.

As a result, the housing bubble is the one regular folks can play. And despite claims that it's not a bubble because of organic demand, housing is definitely in a bubble, along with stocks and bonds, art, etc.

When you create trillions of dollars, yuan, euros and yen out of thin air, you create the incentives to inflate bubbles. When your real economy is sick and offers few productive uses for all this excess capital, that only adds fuel to the speculative fire.

Here's the problem : All bubbles burst, regardless of other conditions. Creating more trillions won't change this, adding more gamblers to the casino won't change this, claiming a bubble economy is healthy won't change this and promising a trade deal with China won't change this.

All of America's bubbles will pop, and sooner rather than later. The stock market moves a bit faster than the housing and bond markets, but the bubbles that are visible in every market will all burst, much to everyone's dismay.

We can add a fourth dynamic of bubbles: Nobody believes bubbles can burst until it's too late to get out unscathed.

[Sep 15, 2019] Conflicting groups within the elite often represent difficult types of capital

Sep 15, 2019 | www.moonofalabama.org

sad canuck , Sep 15 2019 21:29 utc | 36

@1 steven t johnson

Agree with respect to points 1 and 2 but is at least Kotkin's is a bit more insightful than the recent Markovits book on meritocracy. In the latter, Markovits divides the entire country into middle class and elites, with the owners and Kotkin's clerisy combined and subject to the same structure, rewards and stresses.

Never a mention of capital or ownership of the means of production. Guess one should not be shocked that a Yale professor considers himself elite, but a little surprising that he does not understand that he serves at the pleasure of the owners. That's a club and he's not in it as the comic-laureate Carlin would say. A little class consciousness goes a long way.

[Sep 15, 2019] Americar real Conflict in Trump era is between the two factions of neoliberal elites: financial oligarchy (and associated with them Silicon Valley Moduls) and old manufacturing elite

This is the conflict between financial elite and Silicon Valley modules against traditional manufactures and extractive industries like oil, gas, coil, iron ore, etc.
Notable quotes:
"... The First Estate, once the province of the Catholic Church, has morphed into what Samuel Coleridge in the 1830s called "the Clerisy," a group that extends beyond organized religion to the universities, media, cultural tastemakers and upper echelons of the bureaucracy. The role of the Second Estate is now being played by a rising Oligarchy, notably in tech but also Wall Street, that is consolidating control of most of the economy. ..."
Sep 15, 2019 | dailycaller.com

A recent OECD report , is under assault, and shrinking in most places while prospects for upward mobility for the working class also declines.T

he anger of the Third Estate, both the growing property-less Serf class as well as the beleaguered Yeomanry, has produced the growth of populist, parties both right and left in Europe, and the election of Donald Trump in 2016. In the U.S., this includes not simply the gradual, and sometimes jarring, transformation of the GOP into a vehicle for populist rage, but also the rise on the Democratic side of politicians such as Sens. Bernie Sanders and Elizabeth Warren, each of whom have made class politics their signature issue.

(RELATED: Bernie Sanders Says Middle Class Will Pay More In Taxes)

The Rise of Neo-Feudalism

Today's neo-feudalism recalls the social order that existed before the democratic revolutions of the 17th and 18th Century, with our two ascendant estates filling the roles of the former dominant classes.

The First Estate, once the province of the Catholic Church, has morphed into what Samuel Coleridge in the 1830s called "the Clerisy," a group that extends beyond organized religion to the universities, media, cultural tastemakers and upper echelons of the bureaucracy. The role of the Second Estate is now being played by a rising Oligarchy, notably in tech but also Wall Street, that is consolidating control of most of the economy.

Together these two classes have waxed while the Third Estate has declined. This essentially reversed the enormous gains made by the middle and even the working class over the past 50 years. The top 1% in America captured just 4.9 percent of total U.S. income growth in 1945-1973, but since then the country's richest classes has gobbled up an astonishing 58.7% of all new wealth in the U.S., and 41.8 percent of total income growth during 2009-2015 alone.

In this period, the Oligarchy has benefited from the financialization of the economy and the refusal of the political class in both parties to maintain competitive markets. As a result, American industry has become increasingly concentrated. For example, the five largest banks now account for close to 50 percent of all banking assets, up from barely 30 percent just 20 years ago. (RELATED: The Biggest Bank You've Never Heard Of)

Warren Buffett, Jeffrey Immelt, Charles Schwab and Jamie Dimon, at Georgetown University. Chip Somodevilla/Getty Images.

Warren Buffett, Jeffrey Immelt, Charles Schwab and Jamie Dimon, at Georgetown University. Chip Somodevilla/Getty Images.

The concentration numbers in tech are even more frightening. Once a highly competitive industry, it is now among the most concentrated . Like the barbarian chieftains who seized land after the fall of Rome, a handful of companies -- Facebook , Google , Apple, Microsoft and Amazon -- have gained total control over a host of markets, from social media to search, the software operating systems, cloud computing and e-commerce. In many key markets such as search, these companies enjoy market shares reaching to eighty or ninety percent.

As they push into fields such as entertainment, space travel, finance and autonomous vehicles, they have become, as technology analyst Izabella Kaminska notes, the modern-day "free market" equivalents of the Soviet planners who operated Gosplan, allocating billions for their own subjective priorities. Libertarians might point out that these tech giants are still privately held firms but they actually represent , as one analyst put it, "a new form of monopoly power made possible by the 'network effect' of those platforms through which everyone must pass to conduct the business of life."

The role of the Clerisy

The new feudalism, like the original, is not based simply around the force of arms, or in this case what Marx called "the cash nexus." Like the church in Medieval times, the Clerisy sees itself as anointed to direct human society, a modern version of what historian Marc Bloch called the "oligarchy of priests and monks whose task it was to propitiate heaven." This modern-day version of the old First Estate sets down the ideological tone in the schools, the mass media, culture and the arts. There's also a Clerisy of sorts on the right, and what's left of the center, but this remains largely, except for Fox, an insignificant remnant.

Like their predecessors, today's Clerisy embraces an orthodoxy, albeit secular, on a host of issues from race and gender to the environment. Universities have become increasingly dogmatic in their worldview. One study of 51 top colleges found the proportion of liberals to conservatives as much as 70:1, and usually at least 8:1. At elite liberal arts schools like Wellesley, Swarthmore and Williams, the proportion reaches 120:1.

Similar attitudes can be seen in virtually all other culturally dominant institutions, starting with Hollywood. Over 99 percent of all major entertainment executives' donations went to Democrats in 2018, even though roughly half the population would prefer they keep their politics more to themselves. (RELATED: Here Are Reactions From Democrats, Liberal Celebrities To The Mueller Testimony)

The increasing concentration of media in ever fewer centers -- London, New York, Washington, San Francisco -- and the decline of the local press has accentuated the elite Clerisy's domination. With most reporters well on the left, journalism, as a 2019 Rand report reveals, is steadily moving from a fact-based model to one that is dominated by predictable opinion. This, Rand suggests has led to what they called "truth decay."

The new geography of feudalism

The new feudalism increasingly defines geography not only in America but across much of the world. The great bastion of both the Oligarchy and high reaches of the Clerisy lies in the great cities, notably New York, London, Paris, Beijing, Shanghai, Tokyo, San Francisco, Los Angeles and Seattle. These are all among the most expensive places to live in the world and play a dominant role in the global media.

Yet these cities are not the progressive, egalitarian places evoked by great urbanists like the late Jane Jacobs, but more closely resemble the "gated" cities of the Middle Ages, and their equivalents in places as diverse as China and Japan. American cities now have higher levels of inequality, notes one recent study , than Mexico. In fact, the largest gaps ( between the bottom and top quintiles of median incomes are in the heartland of progressive opinion, such as in the metropolitan areas of San Francisco, New York, San Jose, and Los Angeles. (RELATED: Got Income Inequality? Least Affordable Cities Are Also the Bluest)

In some of the most favored blue cities, such as Seattle , Portland and San Francisco , not only is the middle class disappearing, but there has been something equivalent of "ethnic cleansing" amidst rising high levels of inequality, homelessness and social disorder. Long-standing minority communities like the Albina neighborhood in Portland are disappearing as 10,000 of the 38,000 residents have been pushed out of the historic African-American section. In San Francisco, the black population has dropped from 18% in the 1970s to single digits and what remains, notes Harry Alford , National Black Chamber of Commerce president, "are predominantly living under the poverty level and is being pushed out to extinction."

This exclusive and exclusionary urbanity contrasts with the historic role of cities. The initial rise of the Third Estate was tied intimately to the " freedom of the city . " But with the diminishing prospects for blue-collar industries, as well as high housing costs, many minorities and immigrants are increasingly migrating away from multi-culturally correct regions like Chicago , New York, Los Angeles and San Francisco for less regulated, generally less "woke" places like Phoenix, Dallas-Ft. Worth, Houston, Atlanta and Las Vegas.

Yet even as the middle-class populations flee, poverty remains deeply entrenched in our big cities, with a rate roughly twice that of the suburbs. The much-celebrated urban renaissance has been largely enjoyed by the upper echelons but not the working classes. In the city of Philadelphia , for example, the "center city" income rose, but citywide between 2000 and 2014, for every district that, like downtown, gained in income, two suffered income declines. Similarly, research shows that the number of high poverty (greater than 30 percent below the poverty line) neighborhoods in the U.S. has tripled since 1970 from 1,100 to 3,100.

Undermining the Third Estate

The impact of the rising Clerisy and Oligarchs poses a direct threat to the future of the Third Estate. On the economic side, relentless consolidation and financialization has devastated Main Street. In the great boom of the 1980s, small firms and start-ups powered the economy, but more recently the rates of entrepreneurship have dropped as mega-mergers, chains and on-line giants slowly reduced the scope of opportunities. Perhaps most disturbing of all has been the decline in new formations among younger people.

This phenomenon is most evident in the tech world. Today is not a great time to start a tech company unless you are in the charmed circle of elite firms with access to venture and private equity funds. The old garage start-up culture of Silicon Valley is slowly dying, as large firms gobble up or crush competitors. Indeed, since the rise of the tech economy in the 1990s, the overall degree of industry concentration has grown by 75 percent.

Like the peasant farmer or artisan in the feudal era, the entrepreneur not embraced by the big venture firms lives largely at the sufferance of the tech overlords. As one online publisher notes on his firm's status with Google:

If you're a Star Trek fan, you'll understand the analogy. It's a bit like being assimilated by the Borg. You get cool new powers. But having been assimilated, if your implants were ever removed, you'd certainly die. That basically captures our relationship to Google.

The Clerisy's War on the Middle Class

For generations, the Clerisy has steadfastly opposed the growth of suburbia, driven in large part by the aesthetic concerns –the conviction that single-family homes are fundamentally anti-social– and, increasingly, by often dubious assertions on their environmental toxicity. In places like California, the United Kingdom, Australia and Canada, government policies discourage peripheral construction where home ownership rates tend to be higher, in favor of dense, largely rental housing.

This marks a dramatic turnaround. During the middle of the 20th Century, ownership rates in the United States leaped from 44 percent in 1940 to 63 percent in the late 1970s. Yet in the new generation this prospect is fading. In the United States, home ownership among post-college millennials (aged 25-34) has dropped from 45.4 percent in 2000 to 37.0 percent in 2016, a drop of 18 percent from the 1970s, according to Census Bureau data . In contrast, their parents and grandparents witnessed a dramatic rise of homeownership from 44 percent in 1940 to 63 percent 30 years later.

But the Clerisy's war on middle- and working-class aspiration goes well beyond housing. Climate change policies already enacted in California and Germany have driven millions into "energy poverty." If adopted, many of the latest proposals for such things as the Green New Deal all but guarantee the rapid reduction of millions of highly productive and often well-paying energy, aerospace, automobile and logistics jobs.

Political implications

The war of the Estates is likely to shape our political landscape for decades to come. Parts of the Third Estate –those working with their hands or operating small businesses– increasingly flock to the GOP, according to a recent CityLab report. Trump also has a case to make with these workers, as real wages for blue-collar workers are now rising for the first time in decades. Unemployment is near record lows not only for whites but also Latinos and African-Americans. Of course, if the economy weakens, he may lose some of this support. (RELATED: Trump Blasts Media For 'Barely' Covering 'Great' Economy, Low Unemployment)

But the emergence of neo-feudalism also lays the foundation for a larger, more potent and radicalized left. As opportunities for upward mobility shrink, a new generation, indoctrinated in leftist ideology sometimes from grade school and ever more predictably in undergraduate and graduate school, tilts heavily to the left, embracing what is essentially an updated socialist program of massive redistribution, central direction of the economy and racial redress.

Antifa members in Berkeley, California. AFP/Getty/Amy Osborne.

Antifa members in Berkeley, California. AFP/Getty/Amy Osborne.

In France's most recent presidential election, the former Trotskyite Jean-Luc Melenchon won the under-24 vote, beating the "youthful" Emmanuel Macron by almost two to one. Similarly in the United Kingdom, the birthplace of modern capitalism, the Labour Party , under the neo- Marxist Jeremy Corbyn , won over 60 percent of the vote among voters under 40, compared to just 23 percent for the Conservatives. Similar trends can be seen across Europe, where the Red and Green Party enjoys wide youth support.

The shift to hard-left politics also extends to the United States– historically not a fertile area for Marxist thinking. In the 2016 primaries , the openly socialist Bernie Sanders easily outpolled Hillary Clinton and Donald Trump combined. A 2016 poll by the Communism Memorial Foundation found that 44 percent of American millennials favored socialism while another 14 percent chose fascism or communism. By 2024, these millennials will be by far the country's biggest voting bloc .

In the current run-up to the Democratic nomination these young voters overwhelming tilt toward Sanders and his slightly less radical colleague Warren, while former Vice President Joe Biden retains the support of older Democrats. The common themes of the "new" Left, with such things as guaranteed annual incomes, rent control, housing subsidies, and free college might prove irresistible to a generation that has little hope of owning a home, could remain childless, and might never earn enough money to invest in much of anything. (RELATED: Bernie Sanders Says 'Health Care For All' Will Require Tax Increases)

At the end, the war of the estates raises the prospect of rising autocracy, even under formally democratic forms. In his assessment in "Democracy in America ," Alexis de Tocqueville suggests a new form of tyranny -- in many ways more insidious than that of the monarchical state -- that grants favors and entertainments to its citizens but expects little in obligation. Rather than expect people to become adults, he warns, a democratic state can be used to keep its members in "perpetual childhood" and "would degrade men rather than tormenting them."

With the erosion of the middle class, and with it dreams of upward mobility, we already see more extreme, less liberally minded class politics. A nation of clerics, billionaires and serfs is not conducive to the democratic experiment; only by mobilizing the Third Estate can we hope that our republican institutions will survive intact even in the near future.

Mr. Kotkin is the Presidential Fellow in Urban Futures at Chapman University and the executive director of the Center for Opportunity Urbanism. His next book, "The Coming Of Neo-Feudalism," will be out this spring.


The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller.

[Sep 15, 2019] Wall Street Ignores Cyclical Jobs Growth Downturn As Employment Indicator Hits Great Recession Levels

Notable quotes:
"... Most of the ads for good jobs are fake. ..."
"... Instead of submitting a general application, as used to be the case in the past, and have the ability to work with the company to find the role that works best. HR has ruined a lot of good companies and their recruiting processes by going to rigid job descriptions instead of just hiring smart people and letting them work. ..."
Sep 15, 2019 | www.zerohedge.com

The Economic Cycle Research Institute's (ECRI) Lakshman Achuthan recently sat down with CNBC's Michael Santoli to discuss the jobs growth downturn. Keep in mind, this conversation was held on Wednesday, several days before Friday's disappointing jobs report.

Achuthan told Santoli there's a " very clear cyclical downturn in jobs growth, there's really no debating that, and it looks set to continue ."

Achuthan said January 2019 marked the cyclical peak in jobs growth, has been moving lower ever since, and the trend is far from over. Both nonfarm payrolls and the household survey year-over-year growth are in cyclical downturns, he said. While the economic narratives via the mainstream financial press continue to cheerlead that the consumer will lift all tides thanks to the supposedly strong jobs market, Achuthan believes the downturn in jobs growth will start to "undermine consumer confidence." And it's the loss in consumer confidence that could tilt the economy into recession.

He also said when examining cyclically sensitive sectors of the economy, there are already "questionable jobs numbers," such as a significant surge in the construction unemployment rate.

Achuthan said nonfarm payroll growth has plunged to a 17-month low, and the household survey is even weaker. He said the top nonfarm payroll line would be revised down by half a million jobs in the coming months, which would underline the weakness in employment.

Achuthan emphasized to Santoli that ECRI's recession call won't be "taken off the table. We've been talking about a growth rate cycle slowdown. We're slow-walking toward -- some recessionary window of vulnerability -- we're not there today -- but this piece of the puzzle [jobs growth downturn] is looking a bit wobbly. This is the main message that Wall Street is missing."

As Wall Street bids stocks to near-record highs on "trade optimism" and the belief that the consumer will save the day, in large part because of solid jobs growth. ECRI's Leading Employment Index, which correctly anticipated this downturn in jobs growth, is at its worst reading since the Great Recession .

And Wall Street's bet today is that the Fed can achieve a soft landing – as in 1995-96 – when it started the rate cut cycle the same month the inflation downturn was signaled by the U.S. Future Inflation Gauge (USFIG) turning lower.

However, this time around, the inflation downturn signal arrived in September 2018, the moment when the Fed should have started the cut cycle. With a ten-month lag in the cut cycle, belated rate cuts have always been associated with recession.

And now it should become increasingly clear to readers why President Trump has sounded the alarm about the need for 100bps rate cuts, quantitative easing, and emergency payroll tax cuts - it's because he's been briefed about the economic downturn that has already started.


GotAFriendInBen , 15 minutes ago link

Actually, MSM cheerleads rate cuts as the cure-all, instead of throwing shoes at Powell

Keyser , 41 minutes ago link

How do you continue to have jobs growth when the country is at full employment?

Typical ******** from C-NBC...

Alex Droog , 19 minutes ago link

The network that employs dotards like Jim Cramer to cheerlead the lemmings.

Build-It-Well , 1 hour ago link

Have we learned anything?

https://soundcloud.com/daniel-sullivan-505714723/little-saigon-report-170-have-we-learned-anything

Art_Vandelay , 1 hour ago link

I don't agree with him that the Fed can do anything to correct this, nor do they have an incentive to do so. The Fed is not on the consumer's side. They will appropriate funds to whoever they want to, just like 08, and give the middle finger to everyone else.

pitz , 1 hour ago link

Job quality is horrible, particularly for US citizen STEM workers. This has been the case since the downturn that began in the late 1990s. Trump needs to fully cancel the OPT program and almost eliminate the H-1B program. Major employers don't even bother considering US citizen STEM talent before they hire foreign nationals.

pump and dump , 1 hour ago link

Most of the ads for good jobs are fake.

pitz , 1 hour ago link

Yes, but they don't bother to come out and tell you its a fake ad. One of the tragedies of the online job application process is that it forces a person, with little to no knowledge of a company and its internals, to pick, out of potentially hundreds of roles, which one would be best for them.

Instead of submitting a general application, as used to be the case in the past, and have the ability to work with the company to find the role that works best. HR has ruined a lot of good companies and their recruiting processes by going to rigid job descriptions instead of just hiring smart people and letting them work.

ZD1 , 1 hour ago link

Congress first established the H-1B program with the The Immigration Act of 1990. It was supposed to be temporary.

Congress needs to abolish it.

Future Jim , 2 hours ago link

This seems to contradict the labor participation rate.

https://fred.stlouisfed.org/series/CIVPART

J S Bach , 2 hours ago link

"Wall Street Ignores Cyclical Slave Growth Downturn As Enslavement Indicator Hits Great Recession Levels"

Ahhh... what truth a few seconds of editing can convoke.

The EveryThing Bubble , 2 hours ago link

It's all rigged folks

don't believe anything you read

[Sep 15, 2019] What People Say About the Economy Can Set Off a Recession

Notable quotes:
"... The probability that a recession will come soon -- or be severe when it does -- depends in part on the state of ever-changing popular narratives about the economy. These are stories that provide a framework for piecing together the seemingly random bits of information that one picks up from friends, the news or social media. ..."
"... The last recession 10 years ago was exceptionally severe, and it is worth examining closely for insights into how the spread of economic narratives drove human behavior. ..."
"... It now appears that while Sept. 15, 2008, was a logical moment for the start of a panic, that's not really what happened. That was when Lehman Brothers, an old-line investment bank, failed, and while this was a major economic event, the evidence suggests that it did not foster a viral narrative among the broad population. ..."
"... Since Lehman was an investment bank, and did not accept deposits from small savers, most people weren't much moved by its demise. Instead, the big change seems to have come on Sept. 25, 2008. That was when the government seized Washington Mutual -- a giant savings and loan association, known as WaMu, that had suffered a sudden mass exodus of depositors -- and sold its assets to JPMorgan Chase for $1.9 billion. ..."
"... Roosevelt's memorable words, "The only thing we have to fear is fear itself," became, in Mr. Bush's Rose Garden speech, "Anxiety can feed anxiety." The New York Times noted that parallel then. It seemed to many people, in real time, that the Great Depression might be repeating itself. ..."
"... Even before Mr. Bush's speech, Great Depression narratives had been emerging strongly. For example, the number of articles in the ProQuest News & Newspapers database containing the words "Great Depression" rose fivefold from 2007 to 2008. The term, with its emotional resonance, had exploded into an epidemic. ..."
"... But the Great Depression narrative is still alive, though it does not dominate at the moment. President Trump's exuberant speeches, if one believes them, still encourage big spending and confidence. Yet older, troubling narratives are waiting to become viral again. ..."
"... New crises that shake up the economy often surprise economists because no exogenous cause appears to be a sufficient explanation for a downturn. People begin to suddenly frame current events in the context of stories they had heard many times before. ..."
"... This may seem puzzling until we realize that an old narrative has renewed itself in an epidemic, and people have begun to respond reflexively in their day-to-day decisions. If enough people begin to act fearfully, their anxiety can become self-fulfilling, and a recession, sometimes a big one, may follow. ..."
Sep 15, 2019 | economistsview.typepad.com

anne , September 13, 2019 at 06:59 PM

https://www.nytimes.com/2019/09/12/business/recession-fear-talk.html?emc=rss&partner=rss

September 12, 2019

What People Say About the Economy Can Set Off a Recession
By Robert J. Shiller

When will the next recession arrive?

Economists are evaluating such factors as President Trump's endlessly shifting tariff policy, the monetary policy of the Federal Reserve and other central banks, and such "leading indicators" as the yields in the bond market.

It is good to look at these things. They provide insights about the state of the markets and the economy, but they have severe limitations as forecasting tools. This approach will not produce a definitive advance reading of a major shift from growth to contraction: a recession.

Forecasting such a shift is extremely difficult. But if we are to have a chance at success, it is critical to insert into the discussion another factor entirely: an examination of the popular narratives that may be infecting individual economic decision-making.

The probability that a recession will come soon -- or be severe when it does -- depends in part on the state of ever-changing popular narratives about the economy. These are stories that provide a framework for piecing together the seemingly random bits of information that one picks up from friends, the news or social media.

For consumers these narratives affect decisions on whether to spend or save, whether to take a demanding or an easy job, whether to take a risk or stick with something safer. For businesspeople the prevailing narratives affect deliberations on whether to hire more help or lay off employees, whether to expand or retrench or even start a new enterprise.

For most people, such important decisions are fraught with ambiguity and uncertainty. Hardly any of us have precise formulas to decide our plans. So we allow ourselves to be influenced by the emotions, theories and scripts suggested in the stories we hear from others.

Fortunately, the widespread digitization of text, combined with enhanced capabilities for natural-language processing, is beginning to give us new insights into the history of economic narratives. We are beginning to develop a new economics, one that studies these changing economic stories and metaphors systematically.

In my new book, I describe narratives that can periodically surge into epidemics and are capable of changing the economy's direction or of turning small booms and recessions into big ones.

These narratives cluster around several issues:

Changes in the current environment may cause a subtle mutation in these perennial stories, causing them to go viral and sometimes increasing their contagious effects or extending the period in which they expand. Much as epidemiologists study infectious diseases, we economists can study the spread and transformation of these powerful stories.

The last recession 10 years ago was exceptionally severe, and it is worth examining closely for insights into how the spread of economic narratives drove human behavior.

It now appears that while Sept. 15, 2008, was a logical moment for the start of a panic, that's not really what happened. That was when Lehman Brothers, an old-line investment bank, failed, and while this was a major economic event, the evidence suggests that it did not foster a viral narrative among the broad population.

Since Lehman was an investment bank, and did not accept deposits from small savers, most people weren't much moved by its demise. Instead, the big change seems to have come on Sept. 25, 2008. That was when the government seized Washington Mutual -- a giant savings and loan association, known as WaMu, that had suffered a sudden mass exodus of depositors -- and sold its assets to JPMorgan Chase for $1.9 billion.

That event was often seen to resemble the Great Depression and the collapse of the banking system in 1933. People feared the possibility of spreading bank failures and therefore of personal tragedies.

The public was transfixed when President George W. Bush spoke from the White House Rose Garden on Oct. 10, 2008, about the risk of a serious economic downturn.

While Mr. Bush did not utter the word "depression," he used language that closely resembled that of the first inaugural address of President Franklin D. Roosevelt in 1933, perhaps the worst time of the Great Depression.

Roosevelt's memorable words, "The only thing we have to fear is fear itself," became, in Mr. Bush's Rose Garden speech, "Anxiety can feed anxiety." The New York Times noted that parallel then. It seemed to many people, in real time, that the Great Depression might be repeating itself.

Even before Mr. Bush's speech, Great Depression narratives had been emerging strongly. For example, the number of articles in the ProQuest News & Newspapers database containing the words "Great Depression" rose fivefold from 2007 to 2008. The term, with its emotional resonance, had exploded into an epidemic.

In contrast, other big historical events, like the panic of 1907, have been almost totally forgotten by the public and are unlikely to develop into a big new epidemic.

But the Great Depression narrative is still alive, though it does not dominate at the moment. President Trump's exuberant speeches, if one believes them, still encourage big spending and confidence. Yet older, troubling narratives are waiting to become viral again.

New crises that shake up the economy often surprise economists because no exogenous cause appears to be a sufficient explanation for a downturn. People begin to suddenly frame current events in the context of stories they had heard many times before.

This may seem puzzling until we realize that an old narrative has renewed itself in an epidemic, and people have begun to respond reflexively in their day-to-day decisions. If enough people begin to act fearfully, their anxiety can become self-fulfilling, and a recession, sometimes a big one, may follow.

Robert J. Shiller is Sterling Professor of Economics at Yale.

[Sep 15, 2019] Thomas Piketty's New Book Brings Political Economy Back to Its Sources

Sep 15, 2019 | economistsview.typepad.com

anne , September 13, 2019 at 06:38 PM

https://promarket.org/thomas-piketty-new-book-brings-political-economy-back-to-its-sources/

September 6, 2019

Thomas Piketty's New Book Brings Political Economy Back to Its Sources
In the same way that Capital in the Twenty-First Century transformed the way economists look at inequality, Piketty's new book Capital and Ideology will transform the way political scientists look at their own field.
By Branko Milanovic

Thomas Piketty's books are always monumental. Some are more monumental than others. His Top Incomes in France in the Twentieth Century: Inequality and Redistribution, 1901–1998 (published in French as Les hauts revenus en France au XXe siècle) covered more than two centuries of income and wealth inequality, in addition to social and political changes in France. His international bestseller Capital in the Twenty-First Century (Le capital au XXI siècle) broadened this approach to the most important Western countries (France, the United States, United Kingdom, and Germany). His new book Capital and Ideology (to be published in English in March 2020; already published in France as Capital et idéologie) broadens the scope even further, covering the entire world and presenting a historical panorama of how ownership of assets (including people) was treated, and justified, in various historical societies, from China, Japan, and India, to the European-ruled American colonies, and feudal and capitalist societies in Europe. Just the mention of the geographical and temporal scope of the book suffices to give the reader an idea of its ambition.

Before I review Capital and Ideology, it is worth mentioning the importance of Piketty's overall approach, present in all three of his books. His approach is characterized by the methodological return of economics to its original and key functions: to be a science that illuminates the interests and explains the behaviors of individuals and social classes in their quotidian (material) life. This methodology rejects the dominant paradigm of the past half-century, which increasingly ignored the role of classes and heterogeneous individuals in the process of production and instead treated all people as abstract agents that maximize their own income under certain constraints. The dominant paradigm has emptied almost all social content from economics and presented a view of society that was as abstract as it was false.

The reintroduction of actual life into economics by Piketty and several other economists (not entirely coincidentally, most of them are economists interested in inequality) is much more than just a return to the sources of political economy and economics. This is because today, we have vastly more information (data) than was available to economists a century ago, not only about our own contemporary societies but also about past societies. This combination between political economy's original methodology and big data is what I call "turbo-Annales," after the French group of historians that pioneered the view of history as a social science focusing on the broad social, economic, and political forces that shape the world. The topics that interested classical political economy and the authors associated with the Annales School can now be studied empirically, and even econometrically and experimentally -- things which they could not do, both because of the scarcity of data and unavailability of modern methodologies.

It is within this context that, I believe, we ought to consider Piketty's Capital and Ideology. How successful was his approach, applied now to the world and over a very long time-horizon?

"The dominant paradigm has emptied almost all social content from economics and presented a view of society that was as abstract as it was false."

For the purposes of this review, I divide Piketty's book into two parts: the first, which I already mentioned, looks at ideological justifications of inequality across different societies (Parts 1 and 2 of the book, and to some extent Part 3); the second introduces an entirely new way of studying recent political cleavages in modern societies (Part 4). I am somewhat skeptical about Piketty's success in the first part, despite his enormous erudition and his skills as a raconteur, because success in discussing something so geographically and temporally immense is difficult to reach, even by the best-informed minds who have studied different societies for the majority of their careers. Analyzing each of these societies requires an extraordinarily high degree of sophisticated historical knowledge regarding religious dogmas, political organization, social stratification, and the like. To take two examples of authors who have tried to do it, one older and one more recent: Max Weber, during his entire life (and more specifically in Economy and Society), and Francis Fukuyama in his two-volume masterpiece on the origins of the political and economic order. In both cases, the results were not always unanimously approved by specialists studying individual societies and religions.

In his analysis of some of these societies, Piketty had to rely on somewhat "straightforward" or simplified discussions of their structure and evolution, discussions which at times seem plausible but superficial. In other words, each of these historical societies, many of which lasted centuries, had gone through different phases in their developments, phases which are subject to various interpretations. Treating such evolutions as if they were a simple, uncontested story is reductionist. It is a choice of one plausible historical narrative where many exist. This compares unfavorably with Piketty's own rich and nuanced narrative in Top Incomes in France in the Twentieth Century.

While I am somewhat skeptical about that first part of the book, I am not skeptical about the second. In this part, we find the Piketty who plays to his strength: bold and innovative use of data which produces a new way of looking at phenomena that we all observe but were unable to define so precisely. Here, Piketty is "playing" on the familiar Western economic history "terrain" that he knows well, probably better than any other economist.

This part of the book looks empirically at the reasons that left-wing, or social democratic parties have gradually transformed themselves from being the parties of the less-educated and poorer classes to become the parties of the educated and affluent middle and upper-middle classes. To a large extent, traditionally left parties have changed because their original social-democratic agenda was so successful in opening up education and high-income possibilities to the people who in the 1950s and 1960s came from modest backgrounds. These people, the "winners" of social democracy, continued voting for left-wing parties but their interests and worldview were no longer the same as that of their (less-educated) parents. The parties' internal social structure thus changed -- the product of their own political and social success. In Piketty's terms, they became the parties of the "Brahmin left" (La gauche Brahmane), as opposed to the conservative right-wing parties, which remained the parties of the "merchant right" (La droite marchande).

To simplify, the elite became divided between the educated "Brahmins" and the more commercially-minded "investors," or capitalists. This development, however, left the people who failed to experience upward educational and income mobility unrepresented, and those people are the ones that feed the current "populist" wave. Quite extraordinarily, Piketty shows the education and income shifts of left-wing parties' voters using very similar long-term data from all major developed democracies (and India). The fact that the story is so consistent across countries lends an almost uncanny plausibility to his hypothesis.

It is also striking, at least to me, that such multi-year, multi-country data were apparently never used by political scientists to study this phenomenon. This part of Piketty's book will likely transform, or at least affect, how political scientists look at new political realignments and class politics in advanced democracies in the years to come. In the same way that Capital in the Twenty-First Century has transformed how economists look at inequality, Capital and Ideology will transform the way political scientists look at their own field.


Branko Milanovic is a senior scholar at the Stone Center on Socio-Economic Inequality at the Graduate Center, City University of New York.

[Sep 14, 2019] Is it better to be poor in a rich country or rich in a poor country?

Sep 14, 2019 | economistsview.typepad.com

anne , September 13, 2019 at 06:31 PM

https://news.cgtn.com/news/2019-09-11/Should-we-worry-about-income-gaps-within-or-between-countries--JTDcnKWvII/index.html

September 10, 2019

Should We Worry About Income Gaps Within or Between Countries?
The rise of populist nationalism throughout the West has been fueled partly by a clash between the objectives of equity in rich countries and higher living standards in poor countries. Yet advanced-economy policies that emphasize domestic equity need not be harmful to the global poor, even in international trade.
By DANI RODRIK

At the beginning of classes every autumn, I tease my students with the following question: Is it better to be poor in a rich country or rich in a poor country? The question typically invites considerable and inconclusive debate. But we can devise a more structured and limited version of the question, for which there is a definitive answer.

Let's narrow the focus to incomes and assume that people care only about their own consumption levels (disregarding inequality and other social conditions). "Rich" and "poor" are those in the top and bottom 5 percent of the income distribution, respectively. In a typical rich country, the poorest 5 percent of the population receive around 1 percent of the national income. Data are a lot sparser for poor countries, but it would not be too much off the mark to assume that the richest 5 percent there receive 25 percent of the national income.

Similarly, let's assume that rich and poor countries are those in the top and bottom 5 percent of all countries, ranked by per capita income. In a typical poor country (such as Liberia or Niger), that is around 1,000 U.S. dollars, compared to 65,000 U.S. dollars in a typical rich country (say, Switzerland or Norway). (These incomes are adjusted for cost-of-living, or purchasing-power, differentials so that they can be directly compared.)

Now, we can calculate that a rich person in a poor country has an income of 5,000 (1,000 x 0.25 x 20) U.S. dollars while a poor person in a rich country earns 13,000 (65,000 x 0.01 x 20) U.S. dollars. Measured by material living standards, a poor person in a rich country is more than twice as well off as a rich person in a poor country.

This result surprises my students, most of whom expect the reverse to be true. When they think of wealthy individuals in poor countries, they imagine tycoons living in mansions with a retinue of servants and a fleet of expensive cars. But while such individuals certainly exist, a representative of the top 5 percent in very poor countries is likely to be a mid-level government bureaucrat.

The larger point of this comparison is to underscore the importance of income differences across countries, relative to inequalities within countries.

At the dawn of modern economic growth, before the Industrial Revolution, global inequality derived almost exclusively from inequality within countries. Income gaps between Europe and poorer parts of the world were small. But as the West developed in the 19th century, world economy underwent a "great divergence" between the industrial core and the primary-goods-producing periphery. During much of the postwar period, income gaps between rich and poor countries accounted for the greater part of global inequality.

From the late 1980s onward, two trends began to alter this picture. First, led by China, many parts of the lagging regions began to experience substantially faster economic growth than the world's rich countries. For the first time in history, the typical developing-country resident was getting richer at a faster pace than his or her counterparts in Europe and North America.

Second, inequalities began to increase in many advanced economies, especially those with less-regulated labor markets and weak social protections. The rise in inequality in the United States has been so sharp that it is no longer clear that the standard of living of the American "poor" is higher than that of the "rich" in the poorest countries (with rich and poor defined as above).

These two trends went in offsetting directions in terms of overall global inequality – one decreased it while the other increased it. But they have both raised the share of within-country inequality in the total, reversing an uninterrupted trend observed since the 19th century.

Given patchy data, we cannot be certain about the respective shares of within- and between-country inequality in today's world economy. But in an unpublished paper based on data from the World Inequality Database, Lucas Chancel of the Paris School of Economics estimates that as much as three-quarters of current global inequality may be due to within-country inequality. Historical estimates by two other French economists, François Bourguignon and Christian Morrison, suggest that within-country inequality has not loomed so large since the late 19th century.

These estimates, if correct, suggest that the world economy has crossed an important threshold, requiring us to revisit policy priorities. For a long time, economists like me have been telling the world that the most effective way to reduce global income disparities would be to accelerate economic growth in low-income countries. Cosmopolitans in rich countries – typically the wealthy and skilled professionals – could claim to hold the high moral ground when they downplayed the concerns of those complaining about domestic inequality.

But the rise of populist nationalism throughout the West has been fueled partly by the tension between the objectives of equity in rich countries and higher living standards in poor countries. Advanced economies' increased trade with low-income countries has contributed to domestic wage inequality. And probably the single best way to raise incomes in the rest of the world would be to allow a massive influx of workers from poor countries into rich countries' labor markets. That would not be good news for less educated, lower-paid rich-country workers.

Yet advanced-economy policies that emphasize domestic equity need not be harmful to the global poor, even in international trade. Economic policies that lift incomes at the bottom of the labor market and diminish economic insecurity are good both for domestic equity and for the maintenance of a healthy world economy that provides poor economies a chance to develop.


Dani Rodrik is Professor of International Political Economy at Harvard University's John F. Kennedy School of Government.

Paine -> anne... , September 14, 2019 at 07:22 AM
Yes yes yes


Trade and income distribution are related but the relationship can be determinative lay shaped by domestic institutions and country wide foreign trade policy

We need institutions run by and for common workng people

And foreign trade policy to shape impact patterns on domestic households in a pro common working people pattern

Too many well meaning Cosmo humanists assume the corporate message to be binding

A r
Trade off between foreign poor and domestic wage earners
Was part of global progress

Nope
Not necessarily so

Dani has several popularly written papers on tis point

Let's hope Anne can link to some of hem for us

likbez -> anne... , September 14, 2019 at 06:38 PM
Dani Rodrik is wrong. The idea that poor in the USA live better then top 5% in the most poor counties is a kind of persistent neoliberal myth that needs to dispelled.

1. Purchase party essentially means that in poor countries dollar is overvalued twice or more. Which means that $5K in poorest countries is close to $10 or even $15K in the USA and other Western countries.

2. Access to education and medical care is incomparable. In the USA most poor live without medical insurance. That put them in severe disadvantage with top 5% of a poor country.

3. Top 5% in poor countries typically own very comfortable apartments, in many cases far superior to what is available in the USA even for middle income families. Cost of the rent on two bedroom apartment in the large city in poor countries is typically 5-10 times less then in the USA. Taking into account very low quality of apartment complexes in the USA, the apartments in poor countries for top 5% might well belong to luxury apartment class in the USA. I know for sure that in the capital of Tajikistan (2017 GDP per Capita: $777) they are better.

The low 5% in the USA actually live in the third world country with considerable level of segregation from the rest of population as for apartments in which they live (look housing of the low paid retail and WalMart employees for actual data; their standard of living is just horrible, especially for single mothers with children)

3. Level of education. Top 5% in poor country are mostly university educated or better. Low 5% in the USA and other Western countries usually are functionally illiterate.

https://brandongaille.com/us-literacy-rate-and-illiteracy-statistics/

1. 32 million adults can not read in the United States equal to 14% of the population.
2. 21% of US adults read below the 5th grade level.
3. 19% of high school graduates can not read.
4. 85% of juveniles who interact with the juvenile court system are considered functionally illiterate.
5. 70% of inmates in America's prisons can not read above the fourth grade level.

4. Military industrial complex and Wall Street had taken ordinary Americans for a ride much like in the UK during the days of British Empire.

Which for one thing means that due to lack of affordable public transportation you need to own a car outside major metropolises. Which drops you standard of living. You will be fleeced three times: first by used car dealerships, then by insurance companies (low credit rating and high risk of default means high premium) and then repair shops which in some cases are really criminal enterprises exploiting the most poor and vulnerable parts of the population. Parts who has no access to quality cars.

Top 5% in poor countries has access to new small and midsize Japanese models (like Corolla, Nissan Juke, etc )

Also Rodrik method of calculation of income of top 5% of population is highly questionable. He never tried to verify his calculation with actual statistic of distribution of incomes in say top 10 poorest countries in the world (the list includes three the xUSSR "stans"; for them top 5% earns probably at least $20K a year, if not more )

IMHO for poor countries the income of the top 5% is probably two to four times higher then Rodrick estimate due to extreme values of GINI coefficient for such countries. Top 5% on such countries are mostly represented by people working for foreign companies (compradors), high level professionals and high level government employees. For the latter the salary is just the top of the iceberg of the real income.

[Sep 14, 2019] $100 Oil Drone Strikes Halt Half Of Saudi Crude Production

Sep 14, 2019 | finance.yahoo.com

Half of Saudi Arabia's oil production has gone offline following a surprise drone strike.

Drones attacked Abqaiq facility in Saudi Arabia and the Khurais oil field run by Saudi Aramco early Saturday morning, the kingdom's interior ministry said , sparking a massive fire at a crude processing plant essential to global oil supplies.

The closure will impact nearly 5 million barrels of crude processing per day , affecting 5 percent of the world's daily oil production. And while Aramco is confident that it can recover quickly, if it can't, however, the world could face a production shortage of as much 150MM barrels per month. An outcome which could send oil prices into the triple digits.

Krishnan Viswanathan @kxviswan123

Supply loss from KSA may be as high as 150 MM barrels/month. Oil may hit $100.

33 11:15 AM - Sep 14, 2019 Twitter Ads info and privacy
24 people are talking about this


Houthi rebels-- who are backed by Iran in a yearlong Saudi-led battle in Yemen-- have apparently asserted responsibility for the strikes and pledged that more assaults can be expected in the future.

A Houthi spokesperson explained, "We promise the Saudi regime that our future operations will expand and be more painful as long as its aggression and siege continue," adding that the attack involved ten drones.

The Iran-backed Houthis have recently been behind a number of assaults on Saudi pipelines, vessels and other energy infrastructure as tensions grow in the region.

Related: Yergin: Expect Extreme Volatility In Oil Markets

There have been no details on the severity of the damage but Agence France-Presse quoted interior ministry spokesperson Mansour al-Turki as saying that there were no human casualties as a result of the attack.

Ahmed Alsalman @AAlsalman91

# Buqayq city view as # Aramco facilities burn. Very likely to be an attack of some sort as gunshots are also heard. # SaudiArabia # Saudi # arabtwitter

44 11:26 PM - Sep 13, 2019 Twitter Ads info and privacy
61 people are talking about this


More Attacks To Come?

This latest strike highlights the risk posed by the Houthis to Saudi Arabia's oil infrastructure as tensions between the groups continues to escalate.

The growing power of the Houthis' drone operations is likely to reignite the debate on where the militant group is securing these weapons. It could very well be that the group has weaponized noncombatant drones, or in a darker scenario, they are receiving the militarized drones from Iran.

A Saudi-led coalition has been at war with the Houthi movement in Yemen since March 2015. The Iranian-backed rebels hold the funding, Sana'a, and other areas in the Arab world's most impoverished nation.

The battle has created one of the world's worst humanitarian crisis. The violence has pressed Yemeni citizens to the brink of starvation. And the death toll has soared to more than 90,000 individuals since 2015, according to the US-based Armed Conflict Location & Event Data Project, which tracks the conflict.

By Michael Kern for Oilprice.com

More Top Reads From Oilprice.com:

IHS Markit: US Natural Gas Prices To Fall To 50-Year Low
The US Massively Underestimates The Trade War Blowback
European Carmakers Face Perfect Storm

Read this article on OilPrice.com

[Sep 14, 2019] Attack on Saudi Oil Plant Is What Everyone Feared Oil Strategy

Sep 14, 2019 | finance.yahoo.com

(Bloomberg) -- Middle East geopolitics have come back with a vengeance to hit the oil market. What everybody feared has happened. An attack has penetrated the defenses of Saudi Arabia's massive Abqaiq oil processing facility, the heart of the kingdom's oil production and export infrastructure, causing an unknown amount of damage. Crude prices will react and emergency stockpiles will be tapped.

Fires at the plant were brought under control within hours, but the flow of crude from Saudi Arabia, the world's biggest exporter, will almost certainly be affected, although we don't yet know by how much or for how long. Traders who have shrugged off tensions in the Middle East for months will respond to this attack when markets open on Monday.

The height of the price spike will depend on how much we know about the extent of the damage and how long it will take to repair. An absence of information will lead traders to assume the worst.

The Abqaiq crude processing plant is the single most important facility in the Saudi oil sector. In 2018 it processed about half of the kingdom's crude oil production, according to a prospectus published in May for the state oil company's first international bond. That's roughly 5 million barrels a day, or one in every 20 barrels of oil used worldwide.

Abqaiq is more important to the Saudi oil sector than the kingdom's Persian Gulf export terminals at Ras Tanura and Ju'aymah, or the Strait of Hormuz that links the Gulf to the Indian Ocean and the high seas. Crude can be diverted away from the Persian Gulf and Hormuz by pumping it across the country to the Red Sea through the East-West oil pipeline. But it cannot bypass Abqaiq. The East-West pipeline starts at Abqaiq and output from the giant Ghawar, Shaybah and Khurais fields is all processed there, so an attack on the facility will impact crude flows to export terminals on both coasts.

The latest attack comes just months after drones, allegedly launched from Iraq by Yemen's Houthi rebels, targeted pumping stations on the oil pipeline. The damage caused by that earlier attack was minimal, but highlighted the vulnerability of Saudi Arabia's oil infrastructure, even when located hundreds of miles from the country's borders.

So what happens now?

Saudi Arabia will probably seek to maintain export levels as much as possible by supplying customers from stockpiles. It holds crude in storage tanks in the kingdom, as well as at sites in Egypt, Japan and the Netherlands. But it has been running its crude hoard down since the beginning of 2016 and it is now back at levels not seen since 2008, according to data from the Joint Organisations Data Initiative. That means the kingdom has much less to draw on than it did three years ago.

The attack will also test stockpiles in oil-consuming countries. Members of the International Energy Agency are required to hold 90 days' worth of oil imports in emergency stocks and those will be pressed into service if the outage at Abqaiq is prolonged. Non-member countries like China and India have also been building up their own emergency reserves. Those, too, will be pressed into service.

Neighboring countries who, just days ago, were being exhorted to stick to output quotas agreed in December will now pump as much as they can to make up for any losses from Saudi Arabia. The United Arab Emirates, Kuwait and Iraq will all boost output as much as they are able. But the one country with lots of spare capacity, Iran, won't see any easing of the restrictions placed on its oil sales by the U.S. Quite the opposite. Its support for the Houthi rebels in Yemen, who have claimed responsibility for the attack on Abqaiq, will ensure that any easing of the pressure being exerted on it remains a distant prospect.

To contact the reporter on this story: Julian Lee in London at jlee1627@bloomberg.net

To contact the editors responsible for this story: Alaric Nightingale at anightingal1@bloomberg.net, Steve Geimann

[Sep 13, 2019] Clowns, AI and layoffs

Sep 13, 2019 | www.nakedcapitalism.com

Bugs Bunny , September 13, 2019 at 4:25 pm

Clowns should be increasingly used in redundancy (layoff, firing) meetings until it becomes the norm and employers start to compete with each other to offer the best clown redundancy experience and promote it as a benefit.

It would also create clown jobs, which would probably require more clown schools, meaning that the tuition prices would go through the roof and young people dreaming of becoming redundancy clowns would either have to come from wealth or take out massive clown loans to fund their education for clown universities and grad schools. Shareholders can only take so much top line costs and Wall Street pressure would force corporations to improve return on investment and reduce redundancy clown labor expenses. Sadly, redundancy clowns would find themselves training their own replacements – HB1 clowns from "low cost" countries. Employers would respond to quality criticisms of the HB1 clown experience by publishing survey results showing very similar almost ex-employee satisfaction with the new clowns.

Eventually, of course, redundancy clowns will be replaced by AI and robots. It's just the future and we will need to think about how to adapt to it today by putting in place a UBI for the inevitable redundant redundancy clowns.

[Sep 13, 2019] The Pompeo Doctrine How to Seize the Arctic's Resources, Now Accessible Due to Climate Change

Notable quotes:
"... Harry S. Truman ..."
Sep 13, 2019 | www.counterpunch.org

Usually a forum for anodyne statements about international cooperation and proper environmental stewardship, the lid was blown off the latest Arctic Council meeting in May when Pompeo delivered an unabashedly martial and provocative speech that deserves far more attention than it got at the time. So let's take a little tour of what may prove a historic proclamation (in the grimmest sense possible) of a new Washington doctrine for the Far North.

"In its first two decades, the Arctic Council has had the luxury of focusing almost exclusively on scientific collaboration, on cultural matters, on environmental research," the secretary of state began mildly. These were, he said, "all important themes, very important, and we should continue to do those. But no longer do we have that luxury. We're entering a new age of strategic engagement in the Arctic, complete with new threats to the Arctic and its real estate, and to all of our interests in that region."

In what turned out to be an ultra-hardline address, Pompeo claimed that we were now in a new era in the Arctic. Because climate change -- a phrase Pompeo, of course, never actually uttered -- is now making it ever more possible to exploit the region's vast resource riches, a scramble to gain control of them is now officially underway. That competition for resources has instantly become enmeshed in a growing geopolitical confrontation between the U.S., Russia, and China, generating new risks of conflict.

On the matter of resource exploitation, Pompeo could hardly contain his enthusiasm. Referring to the derision that greeted William Seward's purchase of Alaska in 1857, he declared:

"Far from the barren backcountry that many thought it to be in Seward's time, the Arctic is at the forefront of opportunity and abundance. It houses 13% of the world's undiscovered oil, 30% of its undiscovered gas, and an abundance of uranium, rare earth minerals, gold, diamonds, and millions of square miles of untapped resources."

Of equal attraction, he noted, was the possibility of vastly increasing maritime commerce through newly de-iced trans-Arctic trade routes that will link the Euro-Atlantic region with Asia. "Steady reductions in sea ice are opening new passageways and new opportunities for trade," he enthused. "This could potentially slash the time it takes to travel between Asia and the West by as much as 20 days Arctic sea lanes could come [to be] the 21st century's Suez and Panama Canals." That such "steady reductions in sea ice" are the sole consequence of climate change went unmentioned, but so did another reality of our warming world. If the Arctic one day truly becomes the northern equivalent of a tropical passageway like the Suez or Panama canals, that will likely mean that parts of those southerly areas will have become the equivalents of uninhabitable deserts.

As such new trade and drilling opportunities arise, Pompeo affirmed, the United States intends to be out front in capitalizing on them. He then began bragging about what the Trump administration had already accomplished, including promoting expanded oil and gas drilling in offshore waters and also freeing up "energy exploration in the Arctic National Wildlife Refuge ," a pristine stretch of northern Alaska prized by environmentalists as a sanctuary for migrating caribou and other at-risk species. Additional efforts to exploit the region's vital resources, he promised, are scheduled for the years ahead.

A New Arena for Competition (and Worse)

Ideally, Pompeo noted placidly, competition for the Arctic's resources will be conducted in an orderly, peaceful manner. The United States, he assured his listeners, believes in "free and fair competition, open, by the rule of law." But other countries, he added ominously, especially China and Russia, won't play by that rulebook much of the time and so must be subject to careful oversight and, if need be, punitive action.

China, he pointed out, is already developing trade routes in the Arctic, and establishing economic ties with key nations there. Unlike the United States (which already has multiple military bases in the Arctic, including one at Thule in Greenland, and so has a well-established presence there), Pompeo claimed that Beijing is surreptitiously using such supposedly economic activities for military purposes, including, heinously enough, spying on U.S. ballistic missile submarines operating in the region, while intimidating its local partners into acquiescence.

He then cited events in the distant South China Sea, where the Chinese have indeed militarized a number of tiny uninhabited islands (outfitting them with airstrips, missile batteries, and the like) and the U.S. has responded by sending its warships into adjacent waters. He did so to warn of similar future military stand-offs and potential clashes in the Arctic. "Let's just ask ourselves, do we want the Arctic Ocean to transform into a new South China Sea, fraught with militarization and competing territorial claims?" The answer, he assured his listeners, is "pretty clear." (And I'm sure you can guess what it is.)

The secretary of state then wielded even stronger language in describing "aggressive Russian behavior in the Arctic." In recent years, he claimed, the Russians have built hundreds of new bases in the region, along with new ports and air-defense capabilities. "Russia is already leaving snow prints in the form of army boots" there, a threat that cannot be ignored. "Just because the Arctic is a place of wilderness does not mean it should become a place of lawlessness. It need not be the case. And we stand ready to ensure that it does not become so."

And here we get to the heart of Pompeo's message: the United States will, of course, "respond" by enhancing its own military presence in the Arctic to better protect U.S. interests, while countering Chinese and Russian inroads in the region:

"Under President Trump, we are fortifying America's security and diplomatic presence in the area. On the security side, partly in response to Russia's destabilizing activities, we are hosting military exercises, strengthening our force presence, rebuilding our icebreaker fleet, expanding Coast Guard funding, and creating a new senior military post for Arctic Affairs inside of our own military."

To emphasize the administration's sincerity, Pompeo touted the largest NATO and U.S. Arctic military maneuvers since the Cold War era, the recently completed " Trident Juncture " exercise (which he incorrectly referred to as "Trident Structure"), involving some 50,000 troops. Although the official scenario for Trident Juncture spoke of an unidentified "aggressor" force, few observers had any doubt that the allied team was assembled to repel a hypothetical Russian invasion of Norway, where the simulated combat took place.

Implementing the Doctrine

And so you have the broad outlines of the new Pompeo Doctrine, centered on the Trump administration's truly forbidden topic: the climate crisis. In the most pugnacious manner imaginable, that doctrine posits a future of endless competition and conflict in the Arctic, growing ever more intense as the planet warms and the ice cap melts. The notion of the U.S. going nose-to-nose with the Russians and Chinese in the Far North, while exploiting the region's natural resources, has clearly been circulating in Washington. By August, it had obviously already become enough of a commonplace in the White House (not to speak of the National Security Council and the Pentagon), for the president to offer to buy Greenland.

And when it comes to resources and future military conflicts, it wasn't such a zany idea. After all, Greenland does have abundant natural resources and also houses that U.S. base in Thule. A relic of the Cold War, the Thule facility, mainly a radar base, is already being modernized , at a cost of some $300 million, to better track Russian missile launches. Clearly, key officials in Washington view Greenland as a valuable piece of real estate in the emerging geopolitical struggle Pompeo laid out, an assessment that clearly wormed its way into President Trump's consciousness as well.

Iceland and Norway also play key roles in Pompeo's and the Pentagon's new strategic calculus. Another former Cold War facility, a base at Keflavik in Iceland has been reoccupied by the Navy and is now being used in antisubmarine warfare missions. Meanwhile, the Marine Corps has stationed several hundred combat troops at bases near Trondheim, Norway, the first permanent deployment of foreign soldiers on Norwegian soil since World War II. In 2018, the Pentagon even reactivated the Navy's defunct Second Fleet, investing it with responsibility for protecting the North Atlantic as well as the Arctic's maritime approaches, including those abutting Greenland, Iceland, and Norway. Consider these signs of heating-up times.

And all of this is clearly just the beginning of a major buildup in and regular testing of the ability of the U.S. military to operate in the Far North. As part of Exercise Trident Juncture, for example, the aircraft carrier Harry S. Truman and its flotilla of support ships were sent into the Norwegian Sea, the first time a U.S. carrier battle group had sailed above the Arctic Circle since the Soviet Union imploded in 1991. Similarly, Secretary of the Navy Richard Spencer recently announced plans to send surface warships on trans-Arctic missions, another new military move. (U.S. nuclear submarines make such journeys regularly, sailing beneath the sea ice.)
This article first appeared on TomDispatch. More articles by:Michael T. Klare

[Sep 12, 2019] Amazing; I had no idea Betsy Voss advocate of for-profit charter schools (privatizing education) and The New Curriculum and Eric Prince (advocate for privatizing war) are brother and sister. Blood will tell.

Sep 12, 2019 | thenewkremlinstooge.wordpress.com

Mark Chapman September 3, 2019 at 12:23 pm

Amazing; I had no idea Betsy Voss – advocate of for-profit charter schools (privatizing education) and The New Curriculum – and Eric Prince (advocate for privatizing war) are brother and sister. Blood will tell.

Profiteering is naked and in the open now in the west, and public systems increasingly favour the wealthy – if you want better, you should be ready to pay for it. I guess that's what all those tax cuts were about – shifting a burden off of the wealthy, so that now public services are pay-as-you-go because the government can't afford to provide them for everyone. However, tax cuts also favoured the wealthy – gee, it almost makes you think the class system is coming back, dunnit?

Jen September 3, 2019 at 2:58 pm
I recall Jeremy Scahill mentioning in his book on Blackwater (before it started changing its name faster than you can change your socks) that Erik Prince was related to Betsy deVos. This was long before Scahill turned his own name and reputation into mud when he walked out of a London conference back in 2012 or 2013 because the Syrian nun Agnes Mariam de la Croix, who was known to support President Assad at the time, was a guest speaker at the conference.

[Sep 11, 2019] The "japanification" of America begins

Sep 11, 2019 | www.moonofalabama.org

vk , Sep 11 2019 19:18 utc | 18

US Fed 'boneheads' should cut interest rates to zero or less – Trump

The "japanification" of America begins. I've stated in this blog more than once that, if the USA falls, it certainly won't fall like the USSR. The USSR had a very peculiar economic system, where the PCSU was both the government and the economy: once Gorbachev destroyed his party, he destroyed the Soviet Union.

The USA, on the other side, is a capitalist economy, which means its "center of command" is a diffuse web of oligarchic capitalists who govern "in the shadows".

The government of a capitalist society is only one of the many institutions that, in a diffused fashion, preserves the "market anarchy" (domesticated chaos) that is indispensable for the existence of capitalism.

America, therefore, is more lika an onion than a jenga tower: if you destroy (peel) one layer, you still have many more.

Therefore, if the USA collapses, it will probably do so through a gradual descent into fragmentation and anarchy in a process that will take decades and maybe centuries, in an analogous form as the Roman Empire in the West.

... ... ...

Today, Sept. 11, is a date that marks two ends:

1) the end of any pretenstions left of a socialist wave in Latin America after the first one -- Cuba, 1959 -- was successful (so far, the first and only). The CIA masterfully learned from its mistakes in the island nation and successfully (and brutally) crushed Latin American socialism;

2) the beginning of the end of the "End of History" era. After the WTC fell, the USA would begin the invasions of Afghanistan and Iraq, in what would be the last time the USA acted as the "king of Nations".

What should've been -- after a wonderful victory in Iraq -- turned out to be a Pyrric endeavor, as Iran successfully resisted, the rest of the ME didn't budge, and the whole thing turned into a trillionaire black hole that drained the American coffers, spiked its debt rates and culminated with the 2008 crisis.


[Sep 11, 2019] Almost 40% -- or some $15 trillion -- of the world's foreign direct investment is "phantom capital" designed to minimize the tax bills of multinational firms, according to a study published by the International Monetary Fund.

Sep 11, 2019 | www.moonofalabama.org

Sergei , Sep 11 2019 19:11 utc | 17

Almost 40% -- or some $15 trillion -- of the world's foreign direct investment is "phantom capital" designed to minimize the tax bills of multinational firms, according to a study published by the International Monetary Fund.

Such investments -- which are now equivalent to the combined GDP of China and Germany -- have surged about 10 percentage points in the past decade despite targeted global attempts to curb tax avoidance, an IMF and University of Copenhagen study found. The capital typically passes through empty corporate shells that have no real business activity.

"FDI is often an important driver for genuine international economic integration, stimulating growth and job creation and boosting productivity," the report said. But phantom capital is "financial and tax engineering" that "blurs traditional FDI statistics and makes it difficult to understand genuine economic integration."

Almost half of the world's phantom capital is hosted by Luxembourg and the Netherlands, according to the report, with just 10 economies holding more than 85% of such investments.

"Luxembourg, a country of 600,000 people, hosts as much FDI as the U.S. and much more than China," the report said. "FDI of this size hardly reflects brick-and-mortar investments in the minuscule Luxembourg economy," whose $4 trillion in FDI comes to $6.6 million a person.

"Unsurprisingly," the study found, an economy's exposure to phantom FDI increases with the corporate tax rate.

https://www.bloomberg.com/news/articles/2019-09-09/tax-dodgers-phantom-cash-makes-up-40-of-foreign-investment

[Sep 10, 2019] Neoliberal Capitalism at a Dead End by Utsa Patnaik and Prabhat Patnaik

Highly recommended!
This is a Marxist critique of neoliberalism. Not necessary right but they his some relevant points.
Notable quotes:
"... The ideology of neoliberal capitalism was the promise of growth. But with neoliberal capitalism reaching a dead end, this promise disappears and so does this ideological prop. ..."
"... The ex ante tendency toward overproduction arises because the vector of real wages across countries does not increase noticeably over time in the world economy, while the vector of labor productivities does, typically resulting in a rise in the share of surplus in world output. ..."
"... While the rise in the vector of labor productivities across countries, a ubiquitous phenomenon under capitalism that also characterizes neoliberal capitalism, scarcely requires an explanation, why does the vector of real wages remain virtually stagnant in the world economy? The answer lies in the sui generis character of contemporary globalization that, for the first time in the history of capitalism, has led to a relocation of activity from the metropolis to third world countries in order to take advantage of the lower wages prevailing in the latter and meet global demand. ..."
"... The current globalization broke with this. The movement of capital from the metropolis to the third world, especially to East, South, and Southeast Asia to relocate plants there and take advantage of their lower wages for meeting global demand, has led to a desegmentation of the world economy, subjecting metropolitan wages to the restraining effect exercised by the third world's labor reserves. Not surprisingly, as Joseph Stiglitz has pointed out, the real-wage rate of an average male U.S. worker in 2011 was no higher -- indeed, it was marginally lower -- than it had been in 1968. 5 ..."
"... This ever-present opposition becomes decisive within a regime of globalization. As long as finance capital remains national -- that is, nation-based -- and the state is a nation-state, the latter can override this opposition under certain circumstances, such as in the post-Second World War period when capitalism was facing an existential crisis. But when finance capital is globalized, meaning, when it is free to move across country borders while the state remains a nation-state, its opposition to fiscal deficits becomes decisive. If the state does run large fiscal deficits against its wishes, then it would simply leave that country en masse , causing a financial crisis. ..."
"... The state therefore capitulates to the demands of globalized finance capital and eschews direct fiscal intervention for increasing demand. It resorts to monetary policy instead since that operates through wealth holders' decisions, and hence does not undermine their social position. But, precisely for this reason, monetary policy is an ineffective instrument, as was evident in the United States in the aftermath of the 2007–09 crisis when even the pushing of interest rates down to zero scarcely revived activity. 6 ..."
"... If Trump's protectionism, which recalls the Smoot-Hawley tariff of 1931 and amounts to a beggar-my-neighbor policy, does lead to a significant export of unemployment from the United States, then it will invite retaliation and trigger a trade war that will only worsen the crisis for the world economy as a whole by dampening global investment. Indeed, since the United States has been targeting China in particular, some retaliatory measures have already appeared. But if U.S. protectionism does not invite generalized retaliation, it would only be because the export of unemployment from the United States is insubstantial, keeping unemployment everywhere, including in the United States, as precarious as it is now. However we look at it, the world would henceforth face higher levels of unemployment. ..."
"... The second implication of this dead end is that the era of export-led growth is by and large over for third world economies. The slowing down of world economic growth, together with protectionism in the United States against successful third world exporters, which could even spread to other metropolitan economies, suggests that the strategy of relying on the world market to generate domestic growth has run out of steam. Third world economies, including the ones that have been very successful at exporting, would now have to rely much more on their home market ..."
"... In other words, we shall now have an intensification of the imperialist stranglehold over third world economies, especially those pushed into unsustainable balance-of-payments deficits in the new situation. By imperialism , here we do not mean the imperialism of this or that major power, but the imperialism of international finance capital, with which even domestic big bourgeoisies are integrated, directed against their own working people ..."
"... In short, the ideology of neoliberal capitalism was the promise of growth. But with neoliberal capitalism reaching a dead end, this promise disappears and so does this ideological prop. To sustain itself, neoliberal capitalism starts looking for some other ideological prop and finds fascism. ..."
"... The first is the so-called spontaneous method of capital flight. Any political formation that seeks to take the country out of the neoliberal regime will witness capital flight even before it has been elected to office, bringing the country to a financial crisis and thereby denting its electoral prospects. And if perchance it still gets elected, the outflow will only increase, even before it assumes office. The inevitable difficulties faced by the people may well make the government back down at that stage. The sheer difficulty of transition away from a neoliberal regime could be enough to bring even a government based on the support of workers and peasants to its knees, precisely to save them short-term distress or to avoid losing their support. ..."
"... The third weapon consists in carrying out so-called democratic or parliamentary coups of the sort that Latin America has been experiencing. Coups in the old days were effected through the local armed forces and necessarily meant the imposition of military dictatorships in lieu of civilian, democratically elected governments. Now, taking advantage of the disaffection generated within countries by the hardships caused by capital flight and imposed sanctions, imperialism promotes coups through fascist or fascist-sympathizing middle-class political elements in the name of restoring democracy, which is synonymous with the pursuit of neoliberalism. ..."
"... And if all these measures fail, there is always the possibility of resorting to economic warfare (such as destroying Venezuela's electricity supply), and eventually to military warfare. Venezuela today provides a classic example of what imperialist intervention in a third world country is going to look like in the era of decline of neoliberal capitalism, when revolts are going to characterize such countries more and more. ..."
"... Despite this opposition, neoliberal capitalism cannot ward off the challenge it is facing for long. It has no vision for reinventing itself. Interestingly, in the period after the First World War, when capitalism was on the verge of sinking into a crisis, the idea of state intervention as a way of its revival had already been mooted, though its coming into vogue only occurred at the end of the Second World War. 11 Today, neoliberal capitalism does not even have an idea of how it can recover and revitalize itself. And weapons like domestic fascism in the third world and direct imperialist intervention cannot for long save it from the anger of the masses that is building up against it. ..."
Aug 25, 2019 | portside.org
Originally from: Monthly Review printer friendly
The ideology of neoliberal capitalism was the promise of growth. But with neoliberal capitalism reaching a dead end, this promise disappears and so does this ideological prop.

Harry Magdoff's The Age of Imperialism is a classic work that shows how postwar political decolonization does not negate the phenomenon of imperialism. The book has two distinct aspects. On the one hand, it follows in V. I. Lenin's footsteps in providing a comprehensive account of how capitalism at the time operated globally. On the other hand, it raises a question that is less frequently discussed in Marxist literature -- namely, the need for imperialism. Here, Magdoff not only highlighted the crucial importance, among other things, of the third world's raw materials for metropolitan capital, but also refuted the argument that the declining share of raw-material value in gross manufacturing output somehow reduced this importance, making the simple point that there can be no manufacturing at all without raw materials. 1

Magdoff's focus was on a period when imperialism was severely resisting economic decolonization in the third world, with newly independent third world countries taking control over their own resources. He highlighted the entire armory of weapons used by imperialism. But he was writing in a period that predated the onset of neoliberalism. Today, we not only have decades of neoliberalism behind us, but the neoliberal regime itself has reached a dead end. Contemporary imperialism has to be discussed within this setting.

Globalization and Economic Crisis

There are two reasons why the regime of neoliberal globalization has run into a dead end. The first is an ex ante tendency toward global overproduction; the second is that the only possible counter to this tendency within the regime is the formation of asset-price bubbles, which cannot be conjured up at will and whose collapse, if they do appear, plunges the economy back into crisis. In short, to use the words of British economic historian Samuel Berrick Saul, there are no "markets on tap" for contemporary metropolitan capitalism, such as had been provided by colonialism prior to the First World War and by state expenditure in the post-Second World War period of dirigisme . 2

The ex ante tendency toward overproduction arises because the vector of real wages across countries does not increase noticeably over time in the world economy, while the vector of labor productivities does, typically resulting in a rise in the share of surplus in world output. As Paul Baran and Paul Sweezy argued in Monopoly Capital , following the lead of Michał Kalecki and Josef Steindl, such a rise in the share of economic surplus, or a shift from wages to surplus, has the effect of reducing aggregate demand since the ratio of consumption to income is higher on average for wage earners than for those living off the surplus. 3 Therefore, assuming a given level of investment associated with any period, such a shift would tend to reduce consumption demand and hence aggregate demand, output, and capacity utilization. In turn, reduced capacity utilization would lower investment over time, further aggravating the demand-reducing effect arising from the consumption side.

While the rise in the vector of labor productivities across countries, a ubiquitous phenomenon under capitalism that also characterizes neoliberal capitalism, scarcely requires an explanation, why does the vector of real wages remain virtually stagnant in the world economy? The answer lies in the sui generis character of contemporary globalization that, for the first time in the history of capitalism, has led to a relocation of activity from the metropolis to third world countries in order to take advantage of the lower wages prevailing in the latter and meet global demand.

Historically, while labor has not been, and is still not, free to migrate from the third world to the metropolis, capital, though juridically free to move from the latter to the former, did not actually do so , except to sectors like mines and plantations, which only strengthened, rather than broke, the colonial pattern of the international division of labor. 4 This segmentation of the world economy meant that wages in the metropolis increased with labor productivity, unrestrained by the vast labor reserves of the third world, which themselves had been caused by the displacement of manufactures through the twin processes of deindustrialization (competition from metropolitan goods) and the drain of surplus (the siphoning off of a large part of the economic surplus, through taxes on peasants that are no longer spent on local artisan products but finance gratis primary commodity exports to the metropolis instead).

The current globalization broke with this. The movement of capital from the metropolis to the third world, especially to East, South, and Southeast Asia to relocate plants there and take advantage of their lower wages for meeting global demand, has led to a desegmentation of the world economy, subjecting metropolitan wages to the restraining effect exercised by the third world's labor reserves. Not surprisingly, as Joseph Stiglitz has pointed out, the real-wage rate of an average male U.S. worker in 2011 was no higher -- indeed, it was marginally lower -- than it had been in 1968. 5

At the same time, such relocation of activities, despite causing impressive growth rates of gross domestic product (GDP) in many third world countries, does not lead to the exhaustion of the third world's labor reserves. This is because of another feature of contemporary globalization: the unleashing of a process of primitive accumulation of capital against petty producers, including peasant agriculturists in the third world, who had earlier been protected, to an extent, from the encroachment of big capital (both domestic and foreign) by the postcolonial dirigiste regimes in these countries. Under neoliberalism, such protection is withdrawn, causing an income squeeze on these producers and often their outright dispossession from their land, which is then used by big capital for its various so-called development projects. The increase in employment, even in countries with impressive GDP growth rates in the third world, falls way short of the natural growth of the workforce, let alone absorbing the additional job seekers coming from the ranks of displaced petty producers. The labor reserves therefore never get used up. Indeed, on the contrary, they are augmented further, because real wages continue to remain tied to a subsistence level, even as metropolitan wages too are restrained. The vector of real wages in the world economy as a whole therefore remains restrained.

Although contemporary globalization thus gives rise to an ex ante tendency toward overproduction, state expenditure that could provide a counter to this (and had provided a counter through military spending in the United States, according to Baran and Sweezy) can no longer do so under the current regime. Finance is usually opposed to direct state intervention through larger spending as a way of increasing employment. This opposition expresses itself through an opposition not just to larger taxes on capitalists, but also to a larger fiscal deficit for financing such spending. Obviously, if larger state spending is financed by taxes on workers, then it hardly adds to aggregate demand, for workers spend the bulk of their incomes anyway, so the state taking this income and spending it instead does not add any extra demand. Hence, larger state spending can increase employment only if it is financed either through a fiscal deficit or through taxes on capitalists who keep a part of their income unspent or saved. But these are precisely the two modes of financing state expenditure that finance capital opposes.

Its opposing larger taxes on capitalists is understandable, but why is it so opposed to a larger fiscal deficit? Even within a capitalist economy, there are no sound economic theoretical reasons that should preclude a fiscal deficit under all circumstances. The root of the opposition therefore lies in deeper social considerations: if the capitalist economic system becomes dependent on the state to promote employment directly , then this fact undermines the social legitimacy of capitalism. The need for the state to boost the animal spirits of the capitalists disappears and a perspective on the system that is epistemically exterior to it is provided to the people, making it possible for them to ask: If the state can do the job of providing employment, then why do we need the capitalists at all? It is an instinctive appreciation of this potential danger that underlies the opposition of capital, especially of finance, to any direct effort by the state to generate employment.

This ever-present opposition becomes decisive within a regime of globalization. As long as finance capital remains national -- that is, nation-based -- and the state is a nation-state, the latter can override this opposition under certain circumstances, such as in the post-Second World War period when capitalism was facing an existential crisis. But when finance capital is globalized, meaning, when it is free to move across country borders while the state remains a nation-state, its opposition to fiscal deficits becomes decisive. If the state does run large fiscal deficits against its wishes, then it would simply leave that country en masse , causing a financial crisis.

The state therefore capitulates to the demands of globalized finance capital and eschews direct fiscal intervention for increasing demand. It resorts to monetary policy instead since that operates through wealth holders' decisions, and hence does not undermine their social position. But, precisely for this reason, monetary policy is an ineffective instrument, as was evident in the United States in the aftermath of the 2007–09 crisis when even the pushing of interest rates down to zero scarcely revived activity. 6

It may be thought that this compulsion on the part of the state to accede to the demand of finance to eschew fiscal intervention for enlarging employment should not hold for the United States. Its currency being considered by the world's wealth holders to be "as good as gold" should make it immune to capital flight. But there is an additional factor operating in the case of the United States: that the demand generated by a bigger U.S. fiscal deficit would substantially leak abroad in a neoliberal setting, which would increase its external debt (since, unlike Britain in its heyday, it does not have access to any unrequited colonial transfers) for the sake of generating employment elsewhere. This fact deters any fiscal effort even in the United States to boost demand within a neoliberal setting. 7

Therefore, it follows that state spending cannot provide a counter to the ex ante tendency toward global overproduction within a regime of neoliberal globalization, which makes the world economy precariously dependent on occasional asset-price bubbles, primarily in the U.S. economy, for obtaining, at best, some temporary relief from the crisis. It is this fact that underlies the dead end that neoliberal capitalism has reached. Indeed, Donald Trump's resort to protectionism in the United States to alleviate unemployment is a clear recognition of the system having reached this cul-de-sac. The fact that the mightiest capitalist economy in the world has to move away from the rules of the neoliberal game in an attempt to alleviate its crisis of unemployment/underemployment -- while compensating capitalists adversely affected by this move through tax cuts, as well as carefully ensuring that no restraints are imposed on free cross-border financial flows -- shows that these rules are no longer viable in their pristine form.

Some Implications of This Dead End

There are at least four important implications of this dead end of neoliberalism. The first is that the world economy will now be afflicted by much higher levels of unemployment than it was in the last decade of the twentieth century and the early years of the twenty-first, when the dot-com and the housing bubbles in the United States had, sequentially, a pronounced impact. It is true that the U.S. unemployment rate today appears to be at a historic low, but this is misleading: the labor-force participation rate in the United States today is lower than it was in 2008, which reflects the discouraged-worker effect . Adjusting for this lower participation, the U.S. unemployment rate is considerable -- around 8 percent. Indeed, Trump would not be imposing protection in the United States if unemployment was actually as low as 4 percent, which is the official figure. Elsewhere in the world, of course, unemployment post-2008 continues to be evidently higher than before. Indeed, the severity of the current problem of below-full-employment production in the U.S. economy is best illustrated by capacity utilization figures in manufacturing. The weakness of the U.S. recovery from the Great Recession is indicated by the fact that the current extended recovery represents the first decade in the entire post-Second World War period in which capacity utilization in manufacturing has never risen as high as 80 percent in a single quarter, with the resulting stagnation of investment. 8

If Trump's protectionism, which recalls the Smoot-Hawley tariff of 1931 and amounts to a beggar-my-neighbor policy, does lead to a significant export of unemployment from the United States, then it will invite retaliation and trigger a trade war that will only worsen the crisis for the world economy as a whole by dampening global investment. Indeed, since the United States has been targeting China in particular, some retaliatory measures have already appeared. But if U.S. protectionism does not invite generalized retaliation, it would only be because the export of unemployment from the United States is insubstantial, keeping unemployment everywhere, including in the United States, as precarious as it is now. However we look at it, the world would henceforth face higher levels of unemployment.

There has been some discussion on how global value chains would be affected by Trump's protectionism. But the fact that global macroeconomics in the early twenty-first century will look altogether different compared to earlier has not been much discussed.

In light of the preceding discussion, one could say that if, instead of individual nation-states whose writ cannot possibly run against globalized finance capital, there was a global state or a set of major nation-states acting in unison to override the objections of globalized finance and provide a coordinated fiscal stimulus to the world economy, then perhaps there could be recovery. Such a coordinated fiscal stimulus was suggested by a group of German trade unionists, as well as by John Maynard Keynes during the Great Depression in the 1930s. 9 While it was turned down then, in the present context it has not even been discussed.

The second implication of this dead end is that the era of export-led growth is by and large over for third world economies. The slowing down of world economic growth, together with protectionism in the United States against successful third world exporters, which could even spread to other metropolitan economies, suggests that the strategy of relying on the world market to generate domestic growth has run out of steam. Third world economies, including the ones that have been very successful at exporting, would now have to rely much more on their home market.

Such a transition will not be easy; it will require promoting domestic peasant agriculture, defending petty production, moving toward cooperative forms of production, and ensuring greater equality in income distribution, all of which need major structural shifts. For smaller economies, it would also require their coming together with other economies to provide a minimum size to the domestic market. In short, the dead end of neoliberalism also means the need for a shift away from the so-called neoliberal development strategy that has held sway until now.

The third implication is the imminent engulfing of a whole range of third world economies in serious balance-of-payments difficulties. This is because, while their exports will be sluggish in the new situation, this very fact will also discourage financial inflows into their economies, whose easy availability had enabled them to maintain current account deficits on their balance of payments earlier. In such a situation, within the existing neoliberal paradigm, they would be forced to adopt austerity measures that would impose income deflation on their people, make the conditions of their people significantly worse, lead to a further handing over of their national assets and resources to international capital, and prevent precisely any possible transition to an alternative strategy of home market-based growth.

In other words, we shall now have an intensification of the imperialist stranglehold over third world economies, especially those pushed into unsustainable balance-of-payments deficits in the new situation. By imperialism , here we do not mean the imperialism of this or that major power, but the imperialism of international finance capital, with which even domestic big bourgeoisies are integrated, directed against their own working people.

The fourth implication is the worldwide upsurge of fascism. Neoliberal capitalism even before it reached a dead end, even in the period when it achieved reasonable growth and employment rates, had pushed the world into greater hunger and poverty. For instance, the world per-capita cereal output was 355 kilograms for 1980 (triennium average for 1979–81 divided by mid–triennium population) and fell to 343 in 2000, leveling at 344.9 in 2016 -- and a substantial amount of this last figure went into ethanol production. Clearly, in a period of growth of the world economy, per-capita cereal absorption should be expanding, especially since we are talking here not just of direct absorption but of direct and indirect absorption, the latter through processed foods and feed grains in animal products. The fact that there was an absolute decline in per-capita output, which no doubt caused a decline in per-capita absorption, suggests an absolute worsening in the nutritional level of a substantial segment of the world's population.

But this growing hunger and nutritional poverty did not immediately arouse any significant resistance, both because such resistance itself becomes more difficult under neoliberalism (since the very globalization of capital makes it an elusive target) and also because higher GDP growth rates provided a hope that distress might be overcome in the course of time. Peasants in distress, for instance, entertained the hope that their children would live better in the years to come if given a modicum of education and accepted their fate.

In short, the ideology of neoliberal capitalism was the promise of growth. But with neoliberal capitalism reaching a dead end, this promise disappears and so does this ideological prop. To sustain itself, neoliberal capitalism starts looking for some other ideological prop and finds fascism. This changes the discourse away from the material conditions of people's lives to the so-called threat to the nation, placing the blame for people's distress not on the failure of the system, but on ethnic, linguistic, and religious minority groups, the other that is portrayed as an enemy. It projects a so-called messiah whose sheer muscularity can somehow magically overcome all problems; it promotes a culture of unreason so that both the vilification of the other and the magical powers of the supposed leader can be placed beyond any intellectual questioning; it uses a combination of state repression and street-level vigilantism by fascist thugs to terrorize opponents; and it forges a close relationship with big business, or, in Kalecki's words, "a partnership of big business and fascist upstarts." 10

Fascist groups of one kind or another exist in all modern societies. They move center stage and even into power only on certain occasions when they get the backing of big business. And these occasions arise when three conditions are satisfied: when there is an economic crisis so the system cannot simply go on as before; when the usual liberal establishment is manifestly incapable of resolving the crisis; and when the left is not strong enough to provide an alternative to the people in order to move out of the conjuncture.

This last point may appear odd at first, since many see the big bourgeoisie's recourse to fascism as a counter to the growth of the left's strength in the context of a capitalist crisis. But when the left poses a serious threat, the response of the big bourgeoisie typically is to attempt to split it by offering concessions. It uses fascism to prop itself up only when the left is weakened. Walter Benjamin's remark that "behind every fascism there is a failed revolution" points in this direction.

Fascism Then and Now

Contemporary fascism, however, differs in crucial respects from its 1930s counterpart, which is why many are reluctant to call the current phenomenon a fascist upsurge. But historical parallels, if carefully drawn, can be useful. While in some aforementioned respects contemporary fascism does resemble the phenomenon of the 1930s, there are serious differences between the two that must also be noted.

First, we must note that while the current fascist upsurge has put fascist elements in power in many countries, there are no fascist states of the 1930s kind as of yet. Even if the fascist elements in power try to push the country toward a fascist state, it is not clear that they will succeed. There are many reasons for this, but an important one is that fascists in power today cannot overcome the crisis of neoliberalism, since they accept the regime of globalization of finance. This includes Trump, despite his protectionism. In the 1930s, however, this was not the case. The horrors associated with the institution of a fascist state in the 1930s had been camouflaged to an extent by the ability of the fascists in power to overcome mass unemployment and end the Depression through larger military spending, financed by government borrowing. Contemporary fascism, by contrast, lacks the ability to overcome the opposition of international finance capital to fiscal activism on the part of the government to generate larger demand, output, and employment, even via military spending.

Such activism, as discussed earlier, required larger government spending financed either through taxes on capitalists or through a fiscal deficit. Finance capital was opposed to both of these measures and it being globalized made this opposition decisive . The decisiveness of this opposition remains even if the government happens to be one composed of fascist elements. Hence, contemporary fascism, straitjacketed by "fiscal rectitude," cannot possibly alleviate even temporarily the economic crises facing people and cannot provide any cover for a transition to a fascist state akin to the ones of the 1930s, which makes such a transition that much more unlikely.

Another difference is also related to the phenomenon of the globalization of finance. The 1930s were marked by what Lenin had earlier called "interimperialist rivalry." The military expenditures incurred by fascist governments, even though they pulled countries out of the Depression and unemployment, inevitably led to wars for "repartitioning an already partitioned world." Fascism was the progenitor of war and burned itself out through war at, needless to say, great cost to humankind.

Contemporary fascism, however, operates in a world where interimperialist rivalry is far more muted. Some have seen in this muting a vindication of Karl Kautsky's vision of an "ultraimperialism" as against Lenin's emphasis on the permanence of interimperialist rivalry, but this is wrong. Both Kautsky and Lenin were talking about a world where finance capital and the financial oligarchy were essentially national -- that is, German, French, or British. And while Kautsky talked about the possibility of truces among the rival oligarchies, Lenin saw such truces only as transient phenomena punctuating the ubiquity of rivalry.

In contrast, what we have today is not nation-based finance capitals, but international finance capital into whose corpus the finance capitals drawn from particular countries are integrated. This globalized finance capital does not want the world to be partitioned into economic territories of rival powers ; on the contrary, it wants the entire globe to be open to its own unrestricted movement. The muting of rivalry between major powers, therefore, is not because they prefer truce to war, or peaceful partitioning of the world to forcible repartitioning, but because the material conditions themselves have changed so that it is no longer a matter of such choices. The world has gone beyond both Lenin and Kautsky, as well as their debates.

Not only are we not going to have wars between major powers in this era of fascist upsurge (of course, as will be discussed, we shall have other wars), but, by the same token, this fascist upsurge will not burn out through any cataclysmic war. What we are likely to see is a lingering fascism of less murderous intensity , which, when in power, does not necessarily do away with all the forms of bourgeois democracy, does not necessarily physically annihilate the opposition, and may even allow itself to get voted out of power occasionally. But since its successor government, as long as it remains within the confines of the neoliberal strategy, will also be incapable of alleviating the crisis, the fascist elements are likely to return to power as well. And whether the fascist elements are in or out of power, they will remain a potent force working toward the fascification of the society and the polity, even while promoting corporate interests within a regime of globalization of finance, and hence permanently maintaining the "partnership between big business and fascist upstarts."

Put differently, since the contemporary fascist upsurge is not likely to burn itself out as the earlier one did, it has to be overcome by transcending the very conjuncture that produced it: neoliberal capitalism at a dead end. A class mobilization of working people around an alternative set of transitional demands that do not necessarily directly target neoliberal capitalism, but which are immanently unrealizable within the regime of neoliberal capitalism, can provide an initial way out of this conjuncture and lead to its eventual transcendence.

Such a class mobilization in the third world context would not mean making no truces with liberal bourgeois elements against the fascists. On the contrary, since the liberal bourgeois elements too are getting marginalized through a discourse of jingoistic nationalism typically manufactured by the fascists, they too would like to shift the discourse toward the material conditions of people's lives, no doubt claiming that an improvement in these conditions is possible within the neoliberal economic regime itself. Such a shift in discourse is in itself a major antifascist act . Experience will teach that the agenda advanced as part of this changed discourse is unrealizable under neoliberalism, providing the scope for dialectical intervention by the left to transcend neoliberal capitalism.

Imperialist Interventions

Even though fascism will have a lingering presence in this conjuncture of "neoliberalism at a dead end," with the backing of domestic corporate-financial interests that are themselves integrated into the corpus of international finance capital, the working people in the third world will increasingly demand better material conditions of life and thereby rupture the fascist discourse of jingoistic nationalism (that ironically in a third world context is not anti-imperialist).

In fact, neoliberalism reaching a dead end and having to rely on fascist elements revives meaningful political activity, which the heyday of neoliberalism had precluded, because most political formations then had been trapped within an identical neoliberal agenda that appeared promising. (Latin America had a somewhat different history because neoliberalism arrived in that continent through military dictatorships, not through its more or less tacit acceptance by most political formations.)

Such revived political activity will necessarily throw up challenges to neoliberal capitalism in particular countries. Imperialism, by which we mean the entire economic and political arrangement sustaining the hegemony of international finance capital, will deal with these challenges in at least four different ways.

The first is the so-called spontaneous method of capital flight. Any political formation that seeks to take the country out of the neoliberal regime will witness capital flight even before it has been elected to office, bringing the country to a financial crisis and thereby denting its electoral prospects. And if perchance it still gets elected, the outflow will only increase, even before it assumes office. The inevitable difficulties faced by the people may well make the government back down at that stage. The sheer difficulty of transition away from a neoliberal regime could be enough to bring even a government based on the support of workers and peasants to its knees, precisely to save them short-term distress or to avoid losing their support.

Even if capital controls are put in place, where there are current account deficits, financing such deficits would pose a problem, necessitating some trade controls. But this is where the second instrument of imperialism comes into play: the imposition of trade sanctions by the metropolitan states, which then cajole other countries to stop buying from the sanctioned country that is trying to break away from thralldom to globalized finance capital. Even if the latter would have otherwise succeeded in stabilizing its economy despite its attempt to break away, the imposition of sanctions becomes an additional blow.

The third weapon consists in carrying out so-called democratic or parliamentary coups of the sort that Latin America has been experiencing. Coups in the old days were effected through the local armed forces and necessarily meant the imposition of military dictatorships in lieu of civilian, democratically elected governments. Now, taking advantage of the disaffection generated within countries by the hardships caused by capital flight and imposed sanctions, imperialism promotes coups through fascist or fascist-sympathizing middle-class political elements in the name of restoring democracy, which is synonymous with the pursuit of neoliberalism.

And if all these measures fail, there is always the possibility of resorting to economic warfare (such as destroying Venezuela's electricity supply), and eventually to military warfare. Venezuela today provides a classic example of what imperialist intervention in a third world country is going to look like in the era of decline of neoliberal capitalism, when revolts are going to characterize such countries more and more.

Two aspects of such intervention are striking. One is the virtual unanimity among the metropolitan states, which only underscores the muting of interimperialist rivalry in the era of hegemony of global finance capital. The other is the extent of support that such intervention commands within metropolitan countries, from the right to even the liberal segments.

Despite this opposition, neoliberal capitalism cannot ward off the challenge it is facing for long. It has no vision for reinventing itself. Interestingly, in the period after the First World War, when capitalism was on the verge of sinking into a crisis, the idea of state intervention as a way of its revival had already been mooted, though its coming into vogue only occurred at the end of the Second World War. 11 Today, neoliberal capitalism does not even have an idea of how it can recover and revitalize itself. And weapons like domestic fascism in the third world and direct imperialist intervention cannot for long save it from the anger of the masses that is building up against it.

Notes
  1. Harry Magdoff, The Age of Imperialism (New York: Monthly Review Press, 1969).
  2. Samuel Berrick Saul, Studies in British Overseas Trade, 1870–1914 (Liverpool: Liverpool University Press, 1960).
  3. Paul A. Baran and Paul M. Sweezy, Monopoly Capital (New York: Monthly Review Press, 1966).
  4. One of the first authors to recognize this fact and its significance was Paul Baran in The Political Economy of Growth (New York: Monthly Review Press, 1957).
  5. Joseph E. Stiglitz, " Inequality is Holding Back the Recovery ," New York Times , January 19, 2013.
  6. For a discussion of how even the recent euphoria about U.S. growth is vanishing, see C. P. Chandrasekhar and Jayati Ghosh, " Vanishing Green Shoots and the Possibility of Another Crisis ," The Hindu Business Line , April 8, 2019.
  7. For the role of such colonial transfers in sustaining the British balance of payments and the long Victorian and Edwardian boom, see Utsa Patnaik, "Revisiting the 'Drain,' or Transfers from India to Britain in the Context of Global Diffusion of Capitalism," in Agrarian and Other Histories: Essays for Binay Bhushan Chaudhuri , ed. Shubhra Chakrabarti and Utsa Patnaik (Delhi: Tulika, 2017), 277-317.
  8. Federal Reserve Board of Saint Louis Economic Research, FRED, "Capacity Utilization: Manufacturing," February 2019 (updated March 27, 2019), http://fred.stlouisfed.org .
  9. This issue is discussed by Charles P. Kindleberger in The World in Depression, 1929–1939 , 40th anniversary ed. (Oakland: University of California Press, 2013).
  10. Michał Kalecki, " Political Aspects of Full Employment ," Political Quarterly (1943), available at mronline.org.
  11. Joseph Schumpeter had seen Keynes's The Economic Consequences of the Peace as essentially advocating such state intervention in the new situation. See his essay, "John Maynard Keynes (1883–1946)," in Ten Great Economists (London: George Allen & Unwin, 1952).

Utsa Patnaik is Professor Emerita at the Centre for Economic Studies and Planning, Jawaharlal Nehru University, New Delhi. Her books include Peasant Class Differentiation (1987), The Long Transition (1999), and The Republic of Hunger and Other Essays (2007). Prabhat Patnaik is Professor Emeritus at the Centre for Economic Studies and Planning, Jawaharlal Nehru University, New Delhi. His books include Accumulation and Stability Under Capitalism (1997), The Value of Money(2009), and Re-envisioning Socialism(2011).

[Sep 10, 2019] What s wrong with you people ?

Mar 11, 2014 | independentaustralia.net

[Sep 10, 2019] The Siren Song of Economic Opportunity

Notable quotes:
"... When the issues of poverty and inequality came up, a common neoliberal dodge was to invoke the Horatio Alger myth -- that in America, with hard work one can, or should be able to, raise oneself up by one' bootstraps. This switches the question from security ..."
"... As it happens, mobility has declined over the long term in the United States, but that aside, it's a two-way street. The escalator of life runs in both directions. Moreover, it's a separate issue from that of poverty or inequality. One can have more mobility and the same or worse poverty or inequality. The rising tide goes out as well as in. ..."
"... The neoliberal remedy for poverty and inequality is commonly held to be education, because workers lack the requisite skills to earn a living wage. It's kind of their fault. All that's needed is some reasonable public expenditure. No deeper structural factors are at issue. This mindset is contradicted now in two ways. ..."
Sep 10, 2019 | portside.org

Originally from: The Sunset of Neoliberalism

When the issues of poverty and inequality came up, a common neoliberal dodge was to invoke the Horatio Alger myth -- that in America, with hard work one can, or should be able to, raise oneself up by one' bootstraps. This switches the question from security made possible by the public sector to an individual responsibility for economic mobility.

As it happens, mobility has declined over the long term in the United States, but that aside, it's a two-way street. The escalator of life runs in both directions. Moreover, it's a separate issue from that of poverty or inequality. One can have more mobility and the same or worse poverty or inequality. The rising tide goes out as well as in.

The neoliberal remedy for poverty and inequality is commonly held to be education, because workers lack the requisite skills to earn a living wage. It's kind of their fault. All that's needed is some reasonable public expenditure. No deeper structural factors are at issue. This mindset is contradicted now in two ways.

First, the idea of education as an essential, missing ingredient is being supplanted by the idea that what's at issue is power , both political and economic . The wealthy control streams of income and institutions of credentialization that could be rerouted, via taxation, to finance education ("free college") that has an equalizing effect on wealth and enhances economic security.. .

[Sep 09, 2019] Jeffrey Epstein His Accomplices, His Victims, His Powerful and Possibly Official Entanglements

Epstein scandal does not begin and does not ends with Epstein. It was pioneers by Meyer Lansky and OSS. It was continued by J. Edgar Hoover and
Sep 08, 2019 | jessescrossroadscafe.blogspot.com
Jeffrey Epstein: His Accomplices, His Victims, His Powerful and Possibly Official Entanglements
"Yet, as this report will show, all of these rings -- and more -- were connected to the same network that involved key figures linked to the Reagan White House and linked to Roy Cohn -- revealing the true scope of the sordid sexual blackmail operations and sex rings that involved the trafficking of children within the U.S. and even in Central America for their exploitation by dangerous and powerful pedophiles in the United States.

Appalling for both the villainous abuse of children itself and the chilling implications of government by blackmail, this tangled web of unsavory alliances casts a lurid light on the political history of the United States from the Prohibition Era right up to the present day and the Age of Trump, a fact made increasingly clear as more and more information comes to light in relation to the Jeffrey Epstein case."

Whitney Webb, Too Big to Fail: Government By Blackmail

"For we wrestle not against flesh and blood, but against principalities and powers, against the rulers of the darkness of this world, against spiritual wickedness in high places."

Ephesians 6:12

Posted by Jesse at 6:09 PM Email This BlogThis! Share to Twitter Share to Facebook Share to Pinterest

Category: blackmail , bullet or the bribe , political corruption

[Sep 09, 2019] What's the True Unemployment Rate in the US? by Jack Rasmus

Highly recommended!
Notable quotes:
"... The real unemployment rate is probably somewhere between 10%-12%. ..."
"... The U-6 also includes what the labor dept. calls involuntary part time employed. It should include the voluntary part time as well, but doesn't (See, they're not actively looking for work even if unemployed). ..."
"... But even the involuntary part time is itself under-estimated. I believe the Labor Dept. counts only those involuntarily part time unemployed whose part time job is their primary job. It doesn't count those who have second and third involuntary part time jobs. That would raise the U-6 unemployment rate significantly. The labor Dept's estimate of the 'discouraged' and 'missing labor force' is grossly underestimated. ..."
"... The labor dept. also misses the 1-2 million workers who went on social security disability (SSDI) after 2008 because it provides better pay, for longer, than does unemployment insurance. That number rose dramatically after 2008 and hasn't come down much (although the government and courts are going after them). ..."
"... The way the government calculates unemployment is by means of 60,000 monthly household surveys but that phone survey method misses a lot of workers who are undocumented and others working in the underground economy in the inner cities (about 10-12% of the economy according to most economists and therefore potentially 10-12% of the reported labor force in size as well). ..."
"... The SSDI, undocumented, underground, underestimation of part timers, etc. are what I call the 'hidden unemployed'. And that brings the unemployed well above the 3.7%. ..."
Sep 09, 2019 | www.counterpunch.org

The real unemployment rate is probably somewhere between 10%-12%. Here's why: the 3.7% is the U-3 rate, per the labor dept. But that's the rate only for full time employed. What the labor dept. calls the U-6 includes what it calls discouraged workers (those who haven't looked for work in the past 4 weeks). Then there's what's called the 'missing labor force'–i.e. those who haven't looked in the past year. They're not calculated in the 3.7% U-3 unemployment rate number either. Why? Because you have to be 'out of work and actively looking for work' to be counted as unemployed and therefore part of the 3.7% rate.

The U-6 also includes what the labor dept. calls involuntary part time employed. It should include the voluntary part time as well, but doesn't (See, they're not actively looking for work even if unemployed).

But even the involuntary part time is itself under-estimated. I believe the Labor Dept. counts only those involuntarily part time unemployed whose part time job is their primary job. It doesn't count those who have second and third involuntary part time jobs. That would raise the U-6 unemployment rate significantly. The labor Dept's estimate of the 'discouraged' and 'missing labor force' is grossly underestimated.

The labor dept. also misses the 1-2 million workers who went on social security disability (SSDI) after 2008 because it provides better pay, for longer, than does unemployment insurance. That number rose dramatically after 2008 and hasn't come down much (although the government and courts are going after them).

The way the government calculates unemployment is by means of 60,000 monthly household surveys but that phone survey method misses a lot of workers who are undocumented and others working in the underground economy in the inner cities (about 10-12% of the economy according to most economists and therefore potentially 10-12% of the reported labor force in size as well). The labor dept. just makes assumptions about that number (conservatively, I may add) and plugs in a number to be added to the unemployment totals. But it has no real idea of how many undocumented or underground economy workers are actually employed or unemployed since these workers do not participate in the labor dept. phone surveys, and who can blame them.

The SSDI, undocumented, underground, underestimation of part timers, etc. are what I call the 'hidden unemployed'. And that brings the unemployed well above the 3.7%.

Finally, there's the corroborating evidence about what's called the labor force participation rate. It has declined by roughly 5% since 2007. That's 6 to 9 million workers who should have entered the labor force but haven't. The labor force should be that much larger, but it isn't. Where have they gone? Did they just not enter the labor force? If not, they're likely a majority unemployed, or in the underground economy, or belong to the labor dept's 'missing labor force' which should be much greater than reported. The government has no adequate explanation why the participation rate has declined so dramatically. Or where have the workers gone. If they had entered the labor force they would have been counted. And their 6 to 9 million would result in an increase in the total labor force number and therefore raise the unemployment rate.

All these reasons–-i.e. only counting full timers in the official 3.7%; under-estimating the size of the part time workforce; under-estimating the size of the discouraged and so-called 'missing labor force'; using methodologies that don't capture the undocumented and underground unemployed accurately; not counting part of the SSI increase as unemployed; and reducing the total labor force because of the declining labor force participation-–together means the true unemployment rate is definitely over 10% and likely closer to 12%. And even that's a conservative estimate perhaps." Join the debate on Facebook More articles by: Jack Rasmus

Jack Rasmus is author of the recently published book, 'Central Bankers at the End of Their Ropes: Monetary Policy and the Coming Depression', Clarity Press, August 2017. He blogs at jackrasmus.com and his twitter handle is @drjackrasmus. His website is http://kyklosproductions.com .

[Sep 08, 2019] Academic freedom sometimes takes very perverted forms in a neoliberal university

Sep 08, 2019 | www.unz.com

Miro23 , says: September 7, 2019 at 9:28 am GMT

Speech is controlled by political correctness. Someone behind the scenes decides what is acceptable and what is not, what is desirable or not, and even what is permissible. You make one 'mistake' and you are out; from the teaching positions at the universities, or from the media outlets.

And what is permissible is becoming truly weird. These are comments on an article over at http://www.thecollegefix.com "Poll: 73 percent of Republican students have withheld political views in class for fear their grades would suffer".

https://www.thecollegefix.com/poll-73-percent-of-republican-students-have-withheld-political-views-in-class-for-fear-their-grades-would-suffer/

[MORE]

Blackbeagle Mark

I'm ABD (all but dissertation) in Econometrics because my adviser was a Marxist nutcase from the London School of Economics. I couldn't fight the communists forever; not when they held all the cards.

Reply: Medina-Merino

I left my PhD program in Anthropology when on a "field trip" , my advisor and his idiotic tie-dyed moron of a wife (former student of his) crawled into my tent on the first night of a 2 week research project in black leather bondage harnesses and informed me it was time for me to join them in a "night of pure pleasure".

Fast forward I got up, got into my car, drove through the night back to campus, parked outside of the Dean's office, stormed in with wide-blood-shot-eyes when he arrived in his 700-Series turbo-charged Special Edition BMW and told him I wanted to file a complaint against Professor "Bondo" and when he (Dean Bozo) did not respond to my request in over a week, I withdrew from my program (ABD also) before the "Drop Deadline" so I could get full refund of my hard-earned TENS OF THOUSANDS of tuition dollars and used the money to secure an attorney (who I later learned was on-the-take for the University's own legal counsel office of "Equity & Fairness") until I ran out of money and then left town to take a position in Scotland on a research team studying Celtic migrations to the Northern Coast of the Iberian Peninsula, known for centuries unofficially as the "Celtic Coast". I loved my work and worked with some amazing and HONEST and RESPECTFUL colleagues.

I learned a big lesson from this EFFIN nightmare be verrrrrrrrrrrrrrry careful of whose hands you find your career in there are a lot of filthy, abusive, corrupt "faculty" and even more dishonest and disingenuous and despicable "administrators" in the contemporary academy and many have brass name-plates on their doors and hold do-nothing-but-damage-to-the-lives-of those who are often powerless against their callous and deliberate abuses.

Even today, on my sleepless nights I can still hear Mr. Chips rustling in his grave

I went on to hold positions of academic renown in Europe and Latin America and eventually returned to the US when I knew I would be able to secure adjunct positions in the US and Canada and Puerto Rico to support myself and my family, whose lives I was able to maintain in a stable trajectory throughout this horror!

Revenge is sweet however today when I receive requests from my former "institution of higher learning" I respond in the SASE
"NEVER WILL I EVER GIVE YOU ONE CENT FOR NOT HAVING PROTECTED ME FROM ABUSE AT THE HANDS OF DR. "BONDO" YEARS AGO!" Even today, he is part of campus lore and is whispered about in hushed tones.

What happened to the "prof" he died of very painful brain cancer (poetic justice) and his idiot wife went full-tilt into drugs and is sitting in a pool of her own pee in a very dismal geriatric ward. And the "Dean"? He is likewise awaiting his last days in his luxury condo in Santa Barbara, CA surrounded by like-minded Lutheran do-gooders holding prayer circles and burning incense and rubbing crystals for each of their pathetic selves

[Sep 07, 2019] conservancy.umn.edu

Sep 07, 2019 | conservancy.umn.edu

Knuth: Well, certainly it seems the way things are going. You take any particular subject that you are interested in and you try to see if somebody with an American high school education has learned it, and you will be appalled. You know, Jesse Jackson thinks that students know nothing about political science, and I am sure the chemists think that students don't know chemistry, and so on. But somehow they get it when they have to later. But I would say certainly the students now have been getting more of a superficial idea of mathematics than they used to. We have to do remedial stuff at Stanford that we didn't have to do thirty years ago.

Frana: Gio [Wiederhold] said much the same thing to me.

Knuth: The most scandalous thing was that Stanford's course in linear algebra could not get to eigenvalues because the students didn't know about complex numbers. Now every course at Stanford that takes linear algebra as a prerequisite does so because they want the students to know about eigenvalues. But here at Stanford, with one of the highest admission standards of any university, our students don't know complex numbers. So we have to teach them that when they get to college. Yes, this is definitely a breakdown.

Frana: Was your mathematics training in high school particularly good, or was it that you spent a lot of time actually doing problems?

Knuth: No, my mathematics training in high school was not good. My teachers could not answer my questions and so I decided I'd go into physics. I mean, I had played with mathematics in high school. I did a lot of work drawing graphs and plotting points and I used pi as the radix of a number system, and explored what the world would be like if you wanted to do logarithms and you had a number system based on pi. And I had played with stuff like that. But my teachers couldn't answer questions that I had.

... ... ... Frana: Do you have an answer? Are American students different today? In one of your interviews you discuss the problem of creativity versus gross absorption of knowledge.

Knuth: Well, that is part of it. Today we have mostly a sound byte culture, this lack of attention span and trying to learn how to pass exams. Frana: Yes,

[Sep 07, 2019] Trumpism Is Bad for Business

Sep 07, 2019 | economistsview.typepad.com

anne , September 05, 2019 at 03:28 PM

https://www.nytimes.com/2019/09/05/opinion/trump-economy.html

September 5, 2019

Trumpism Is Bad for Business
It's hard to make plans when the rules keep changing.
By Paul Krugman

With each passing week it becomes ever clearer that Donald Trump's trade war, far from being "good, and easy to win," is damaging large parts of the U.S. economy. Farmers are facing financial disaster; manufacturing, which Trump's policies were supposed to revive, is contracting; consumer confidence is plunging, largely because the public (rightly) fears that tariffs will raise prices.

But Trump has an answer to his critics: It's not me, it's you. Last week he declared that businesses claiming to have been hurt by his tariffs should blame themselves, because they're "badly run and weak."

As with many Trump statements, one immediate thought that comes to mind is, how would Republicans have reacted if a Democratic president said something like that? In this case, however, we don't have to speculate.

As some readers may recall, back in 2012 Barack Obama made the obvious and true point that businesses depend on public investments in things like roads and education as well as on their own efforts. Referring to those public investments, he said, "You didn't build that." The usual suspects pounced, taking the line out of context and claiming that he was disrespecting entrepreneurs; Mitt Romney made this claim a centerpiece of his presidential campaign.

Attacks on Obama as being anti-business were, of course, made in bad faith. Trump, however, really is denouncing businesses and blaming them for the problems his policies have created. And tariffs aren't the only policy area where Trump and American business are now at odds.

Some of Trump's most consequential actions involve his frantic efforts to dismantle environmental regulation. Unlike tariffs, this may at first sound like something business would want.

It turns out, however, that many businesses want to keep those regulations in place. Major oil and gas producers oppose Trump's relaxation of rules on emissions of methane, a potent greenhouse gas. Major auto producers have come out against Trump's attempt to roll back fuel efficiency standards. In fact, in a move that has reportedly enraged Trump, several companies have reached an agreement with the state of California to stick with Obama-era rules despite the change in federal policy.

When Trump won his upset victory in 2016, many investors assumed that his rule would be good for business. And he did indeed give corporations a huge tax cut -- which has almost entirely been used for higher dividends and stock buybacks, with workers getting essentially nothing.

Aside from the tax cut, however, it's becoming increasingly clear that Trumpism is bad for business. Or more precisely, it's bad for productive business.

Imagine yourself as the head of a business that plans and expects to be around for a long time. Sure, you'd like to pay less in taxes and not have to comply with costly regulations. But you also want to invest in your company's future. And to do that, you need some assurance that the rules of the game will be stable, so that whatever investments you make now aren't suddenly made worthless by future shifts in policy.

The big complaint business has about Trump's trade war isn't just that tariffs raise costs and prices, while foreign retaliation is cutting off access to important markets. It is that businesses can't make plans when policy zigzags in response to the president's whims. They don't want to invest in anything that relies on a global supply chain, because that supply chain might unravel with Trump's next tweet. But they can't invest on the assumption that Trump's tariffs will be permanent, either; you never know when or whether he'll declare victory and surrender.

Environmental policy, it turns out, is similar. Business leaders aren't do-gooders, but they are realists. Most of them understand that climate change is happening, that it's dangerous, and that we'll eventually have to transition to a low-emissions economy. They want to spend now to secure their place in that future economy; they know that investments that worsen climate change are bound to be long-run losers. But they'll hold off on investing in our energy future as long as conspiracy theorists who consider global warming a gigantic hoax -- and/or vindictive politicians determined to erase Obama's achievements -- keep rewriting the rules.

To be fair, however, some kinds of business do thrive under Trumpism -- namely, businesses that aren't in it for the long run, operations whose strategy is to take the money and run. These are good times for mining companies that rush in to extract whatever they can, leaving a poisoned landscape behind; for real estate speculators sponsoring dubious ventures that take advantage of newly created tax loopholes; for for-profit colleges that leave their students with worthless degrees and crippling debt.

In other words, under Trump it's springtime for grifters.

But to say the obvious, these smash-and-grab operations aren't the kinds of business we want to thrive. Put it this way: Remaking the U.S. economy in the image of Trump University isn't exactly making America great again.

likbez -> anne... , September 06, 2019 at 11:15 PM
Krugman became too superficial to read and take seriously. He is now mostly neoliberal propagandist and Clinton wing of Dems stooge not the analyst.
As for his optimistic take on business realism " Business leaders aren't do-gooders, but they are realists. Most of them understand that climate change is happening, that it's dangerous, " compare with John Kenneth Galbraith "People of privilege will always risk their complete destruction rather than surrender any material part of their advantage." and "The sense of responsibility in the financial community for the community as a whole is not small. It is nearly nil."


Why Professor Krugman thinks that "Aside from the tax cut, however, it's becoming increasingly clear that Trumpism is bad for business. Or more precisely, it's bad for productive business." and not to Wall Street and Silicon valley is unclear to me.

Even a perverted way of protecting domestic manufactures that Trump clearly practice is better then nothing.

[Sep 07, 2019] https://nyti.ms/34oBGOz

Sep 07, 2019 | nyti.ms


NYT - Neil Irwin - September 4

There is at least one bull market underway: in recession fears.

It's apparent in how ordinary Americans are thinking about the economy. In August, consumer sentiment suffered its biggest drop since 2012, and Google searches for the term "recession" surged to their highest levels in more than a decade.

There are also signs that business activity is slackening. The factory sector is slowing worldwide, and according to a closely watched survey released Tuesday, American manufacturing began contracting in August for the first time since 2016.

So how worried should Americans really be? The answer isn't as simple as either "run for the hills" or "everything is fine."

Rather, based on financial market moves and the economic data available so far, a period of sluggish growth looks more likely than an outright recession.

It might be painful in industries directly affected by the trade wars and the global manufacturing slowdown. But those sectors are a relatively small share of the economy. Even as the risk of recession has clearly increased in the last several weeks, there are also sources of resilience that have every chance of proving powerful enough to keep the decade-long expansion going.

The economy could experience a rough patch without tilting all the way into recession, which the National Bureau of Economic Research defines as "a significant decline in economic activity spread across the economy, lasting more than a few months," and normally visible in a wide range of indicators.

We recently explored the ways a recession could happen in 2020. But it's worth asking the opposite question: What are the reasons to think that the long expansion can continue despite endless trade wars, a slowing global economy and turbulent markets?

In this benign scenario for the year ahead, strong consumer spending powers the economy forward; the economic damage from the trade wars remains mostly confined to the manufacturing and agriculture sectors; and the Federal Reserve's shift toward easier money since the start of 2019 kicks in with its usual delayed effects.

American consumers have been the drivers of the expansion this year, increasing their spending even as businesses display more caution. Because consumer spending accounts for a much larger share of the economy than business investment does, that has propelled overall growth.

The Labor Department will release its monthly reading on the job market on Friday, but so far in 2019 things have been pretty good for American workers.

The unemployment rate has now been 4 percent or lower for more than a year. The longer that persists, the more employers may be forced to adjust their operations in ways that favor longer-term growth: by offering better pay and benefits, by investing in productivity-enhancing equipment, and by investing in training for workers who might lack traditional qualifications or have a checkered work history.

If business investment drops severely, it could translate into layoffs and a weaker labor market and thus weaker consumer spending. But there are recent episodes in which business investment shrank but consumer spending kept growing.

For example, from mid-2015 to mid-2016, there was a huge pullback in business investment, caused by falling commodity prices and a slowing global economy. Yet personal consumption expenditures rose 2.7 percent in that 12-month period, about the same rate as now, which kept the American economy as a whole out of recession.

Similarly, consumer spending kept rising despite a steep pullback in business spending after the dot-com crash in 2000 and 2001. That helped make the 2001 recession mild by historical standards -- and it probably wouldn't have been classified a recession at all if the Sept. 11, 2001, terrorist attacks hadn't taken place.

There is plenty of reason to think, in other words, that American consumers will be resilient even amid business pessimism.

Of course, that is true only so long as any business pullback is moderate and temporary. And so the optimistic story for the economy in the coming year also relies on some measure of peace in the trade wars.

One pattern evident since the trade skirmishes began in earnest in early 2018 has been that businesses are able to adapt to moderate tariffs reasonably well. Through some combination of relocating supply chains, raising prices, taking a hit to profit margins, or forcing suppliers to take a hit to profits, they manage to keep the direct economic effect manageable.

The risk for the future is less about a 15 percent tariff on this or that particular imported good, but rather a roiling series of open-ended trade wars on multiple fronts that could trigger a breakdown in international commerce.

But the good news is that the trade war has so far had the most direct impact on manufacturing and commodity-related industries, which are a moderate share of the overall economy. As of August, only 8.5 percent of American jobs were in manufacturing.

In effect, the shift of the United States economy toward service industries over the last two generations may have left it better able to endure a global trade and manufacturing slowdown, particularly compared with export-reliant countries like China and Germany.

Finally, there is the Federal Reserve.

While lots of attention is being paid to whether or how much the Fed will cut interest rates in the immediate future, the reality is that monetary policy affects the economy with long lags. Moreover, it's not just actual interest rate adjustments that matter -- it is how markets perceive the future direction of policy that affects how hard or easy it will be for businesses and consumers to get money.

So, for example, as the Fed raised its target for interest rates in 2017 and 2018, the cost for businesses seeking to borrow money rose even faster. The effective rate on BBB-rated corporate debt -- a proxy for borrowing costs of moderately risky companies -- rose to 4.8 percent in December 2018 from 3.4 percent in September 2017.

One way of interpreting the slowdown in business spending this year is as a delayed result of that higher cost of corporate borrowing percolating through the economy.

But in early 2019, the Fed signaled a slower path of future interest rate increases, and this summer it began cutting rates. That has driven the rate on BBB-rated bonds down to 3.3 percent. Perhaps the reverse will happen as those lower rates percolate through the economy and companies find it easier to justify new projects.

The same applies to consumer home buying, another key economic driver. Mortgage rates spiked in 2018 and have plummeted lately, which could bode well for housing in the months ahead.

There are a lot of risks out there, and it makes sense for C.E.O.s and ordinary consumers to be wary of what the future could hold. But for now, a gloomy economic future remains a far-from-certain possibility.


Reply Thursday, September 05, 2019 at 01:31 PM

Paine said in reply to Fred C. Dobbs... Dauntless household spending
will re elect the Donald ?

Liberals in agony again Reply Friday, September 06, 2019 at 08:59 AM

likbez said in reply to Paine... > Dauntless household spending will re elect the Donald ?

Don't you think that China tariffs might put an end to household spending boom ? :-)

Rampant military spending (aka military Keynesianism ) might help to re-elect Donald...

But the main help will come from neoliberal democrats who are afraid of Sanders or Tulsi victory more the defeat from Trump.

As a second war party they actually do not need to win the elections. MIC in close cooperation with the Wall Street will feed them quite nicely in any case. Reply Friday, September 06, 2019 at 11:05 PM

[Sep 07, 2019] Top Wealth in the United States: New Estimates and Implications for Taxing the Rich

Sep 07, 2019 | economistsview.typepad.com

anne , September 05, 2019 at 02:10 PM

https://www.law.nyu.edu/sites/default/files/Top%20Wealth%20in%20the%20United%20States%20-%20Zwick.pdf

July 19, 2019

Top Wealth in the United States: New Estimates and Implications for Taxing the Rich
By Matthew Smith, Owen Zidar and Eric Zwick

Abstract

This paper uses administrative tax data to estimate top wealth in the United States. We build on the capitalization approach in Saez and Zucman (2016) while accounting for heterogeneity within asset classes when mapping income flows to wealth. Our approach reduces bias in wealth estimates because wealth and rates of return are correlated. Overall, wealth is very concentrated: the top 1% holds as much wealth as the bottom 90%. However, the "P90-99" class holds more wealth than either group after accounting for heterogeneity. Relative to a top 0.1% wealth share of more than 20% under equal returns, we estimate a top 0.1% wealth share of [15%] and find that the rise since 1980 in top wealth shares falls by [half]. Top portfolios depend less on fixed income and public equity, depend more on private equity and housing, and more closely match the composition reported in the SCF and estate tax returns. Our adjustments reduce mechanical revenue estimates from a wealth tax and top capital income shares in distributional national accounts, which depend on well-measured estimates of top wealth. Though the capitalization approach has advantages over other methods of estimating top wealth, we emphasize that considerable uncertainty remains inherent to the approach by showing the sensitivity of estimates to different assumptions.

[Sep 07, 2019] Thomas Piketty's New Book Brings Political Economy Back to Its Sources

Sep 07, 2019 | economistsview.typepad.com

anne , September 06, 2019 at 01:10 PM

https://promarket.org/thomas-piketty-new-book-brings-political-economy-back-to-its-sources/
September 6, 2019

Thomas Piketty's New Book Brings Political Economy Back to Its Sources
By Branko Milanovic

In the same way that Capital in the Twenty-First Century transformed the way economists look at inequality, Piketty's new book Capital and Ideology will transform the way political scientists look at their own field.
Thomas Piketty's books are always monumental. Some are more monumental than others. His Top Incomes in France in the Twentieth Century: Inequality and Redistribution, 1901–1998(published in French as Les hauts revenus en France au XXe siècle) covered more than two centuries of income and wealth inequality, in addition to social and political changes in France. His international bestseller Capital in the Twenty-First Century(Le capital au XXI siècle) broadened this approach to the most important Western countries (France, the United States, United Kingdom, and Germany). His new book Capital and Ideology (to be published in English in March 2020; already published in France as Capital et idéologie) broadens the scope even further, covering the entire world and presenting a historical panorama of how ownership of assets (including people) was treated, and justified, in various historical societies, from China, Japan, and India, to the European-ruled American colonies, and feudal and capitalist societies in Europe. Just the mention of the geographical and temporal scope of the book suffices to give the reader an idea of its ambition.

Before I review Capital and Ideology, it is worth mentioning the importance of Piketty's overall approach, present in all three of his books. His approach is characterized by the methodological return of economics to its original and key functions: to be a science that illuminates the interests and explains the behaviors of individuals and social classes in their quotidian (material) life. This methodology rejects the dominant paradigm of the past half-century, which increasingly ignored the role of classes and heterogeneous individuals in the process of production and instead treated all people as abstract agents that maximize their own income under certain constraints. The dominant paradigm has emptied almost all social content from economics and presented a view of society that was as abstract as it was false.

The reintroduction of actual life into economics by Piketty and several other economists (not entirely coincidentally, most of them are economists interested in inequality) is much more than just a return to the sources of political economy and economics. This is because today, we have vastly more information (data) than was available to economists a century ago, not only about our own contemporary societies but also about past societies. This combination between political economy's original methodology and big data is what I call "turbo-Annales," after the French group of historians that pioneered the view of history as a social science focusing on the broad social, economic, and political forces that shape the world. The topics that interested classical political economy and the authors associated with the Annales School can now be studied empirically, and even econometrically and experimentally -- things which they could not do, both because of the scarcity of data and unavailability of modern methodologies.

It is within this context that, I believe, we ought to consider Piketty's Capital and Ideology. How successful was his approach, applied now to the world and over a very long time-horizon?

"The dominant paradigm has emptied almost all social content from economics and presented a view of society that was as abstract as it was false."

For the purposes of this review, I divide Piketty's book into two parts: the first, which I already mentioned, looks at ideological justifications of inequality across different societies (Parts 1 and 2 of the book, and to some extent Part 3); the second introduces an entirely new way of studying recent political cleavages in modern societies (Part 4). I am somewhat skeptical about Piketty's success in the first part, despite his enormous erudition and his skills as a raconteur, because success in discussing something so geographically and temporally immense is difficult to reach, even by the best-informed minds who have studied different societies for the majority of their careers. Analyzing each of these societies requires an extraordinarily high degree of sophisticated historical knowledge regarding religious dogmas, political organization, social stratification, and the like. To take two examples of authors who have tried to do it, one older and one more recent: Max Weber, during his entire life (and more specifically in Economy and Society), and Francis Fukuyama in his two-volume masterpiece on the origins of the political and economic order. In both cases, the results were not always unanimously approved by specialists studying individual societies and religions.

In his analysis of some of these societies, Piketty had to rely on somewhat "straightforward" or simplified discussions of their structure and evolution, discussions which at times seem plausible but superficial. In other words, each of these historical societies, many of which lasted centuries, had gone through different phases in their developments, phases which are subject to various interpretations. Treating such evolutions as if they were a simple, uncontested story is reductionist. It is a choice of one plausible historical narrative where many exist. This compares unfavorably with Piketty's own rich and nuanced narrative in Top Incomes in France in the Twentieth Century.

While I am somewhat skeptical about that first part of the book, I am not skeptical about the second. In this part, we find the Piketty who plays to his strength: bold and innovative use of data which produces a new way of looking at phenomena that we all observe but were unable to define so precisely. Here, Piketty is "playing" on the familiar Western economic history "terrain" that he knows well, probably better than any other economist.

This part of the book looks empirically at the reasons that left-wing, or social democratic parties have gradually transformed themselves from being the parties of the less-educated and poorer classes to become the parties of the educated and affluent middle and upper-middle classes. To a large extent, traditionally left parties have changed because their original social-democratic agenda was so successful in opening up education and high-income possibilities to the people who in the 1950s and 1960s came from modest backgrounds. These people, the "winners" of social democracy, continued voting for left-wing parties but their interests and worldview were no longer the same as that of their (less-educated) parents. The parties' internal social structure thus changed -- the product of their own political and social success. In Piketty's terms, they became the parties of the "Brahmin left" (La gauche Brahmane), as opposed to the conservative right-wing parties, which remained the parties of the "merchant right" (La droite marchande).

To simplify, the elite became divided between the educated "Brahmins" and the more commercially-minded "investors," or capitalists. This development, however, left the people who failed to experience upward educational and income mobility unrepresented, and those people are the ones that feed the current "populist" wave. Quite extraordinarily, Piketty shows the education and income shifts of left-wing parties' voters using very similar long-term data from all major developed democracies (and India). The fact that the story is so consistent across countries lends an almost uncanny plausibility to his hypothesis.

It is also striking, at least to me, that such multi-year, multi-country data were apparently never used by political scientists to study this phenomenon. This part of Piketty's book will likely transform, or at least affect, how political scientists look at new political realignments and class politics in advanced democracies in the years to come. In the same way that Capital in the Twenty-First Century has transformed how economists look at inequality, Capital and Ideology will transform the way political scientists look at their own field.


Branko Milanovic is a senior scholar at the Stone Center on Socio-Economic Inequality at the Graduate Center, City University of New York.

[Sep 07, 2019] New Keynesian economic theory is wrong.

Sep 07, 2019 | economistsview.typepad.com

Joe , September 05, 2019 at 07:52 PM

https://www.project-syndicate.org/commentary/central-banks-flawed-economic-theory-by-roger-farmer-2019-09

When the Fed or the ECB raises rates, New Keynesian economic theory predicts that the hike will eventually lead to a decrease in inflation, and that the path from point A to point B will inevitably be accompanied by higher unemployment. But my own research suggests that New Keynesian economic theory is wrong. After all, if the Fed were to raise the short-term rate slowly and support equity markets with a guarantee to purchase a broad-based exchange-traded fund at a fixed price, there is no reason why the rate increase should cause higher unemployment.

----

Roger Farmer dumping on the Fed. Somehow a lot of economists have figured out that 'Uncle cannot do it later'.

I have a different disagreement. First I note that the Fed always follows the One Year Treasury, it is in the charts, that chart cannot be avoided. Second, once Treasury has started the rate cycles, it is all over, we will complete the rate cycle, including a down turn. This has been the case since 1980, likely earlier.

So, why do we fake it? For what purpose, except to say something stupid like Uncle can fix it later. We always end up in the same place, imbalances that need correction, Treasury has to take its losses. All the fakery does no one any good.

[Sep 07, 2019] The end of Mankiw and his Phillips Curve

Sep 07, 2019 | economistsview.typepad.com

Egmont Kakarot-Handtke , September 05, 2019 at 11:34 AM

The end of Mankiw and his Phillips Curve
Comment on David Glasner on 'Mankiw's Phillips-Curve Agonistes'

Gregory Mankiw starts his history of the Phillips Curve with gossiping and name dropping: "The economist George Akerlof, a Nobel laureate and the husband of the former Federal Reserve chair Janet Yellen, once called the Phillips curve 'probably the single most important macroeconomic relationship.' So it is worth recalling what the Phillips curve is, why it plays a central role in mainstream economics and why it has so many critics. The story begins in 1958, when the economist A. W. Phillips published an article reporting an inverse relationship between unemployment and inflation in Britain. He reasoned that when unemployment is high, workers are easy to find, so employers hardly raise wages, if they do so at all. But when unemployment is low, employers have trouble attracting workers, so they raise wages faster. Inflation in wages soon turns into inflation in the prices of goods and services."

David Glasner immediately spots the fatal mistake of Mankiw's account: "I must note parenthetically that, as I have written recently, a supply-demand framework (aka partial equilibrium analysis) is not really the appropriate way to think about unemployment, because the equilibrium level of wages and the rates of unemployment must be analyzed, as, using different terminology, Keynes argued, in a general equilibrium, not a partial equilibrium, framework." Unfortunately, David Glasner then gets lost in supply-demand-equilibrium blather.

The Phillips Curve (better: Bastard or NAIRU Phillips Curve) is the centerpiece of standard employment theory. Economists get employment theory wrong for 200+ years.#1-#5

The materially/formally inconsistent NAIRU Phillips Curve has to be replaced by the correct macroeconomic Employment Law which is shown on Wikimedia.#6

From this equation follows:
(i) An increase in the expenditure ratio ρE leads to higher employment L (the Greek letter ρ stands for ratio). An expenditure ratio ρE greater than 1 indicates a budget deficit = credit expansion, a ratio ρE less than 1 indicates credit contraction.
(ii) Increasing investment expenditures I exert a positive influence on employment.
(iii) An increase in the factor cost ratio ρF=W/PR leads to higher employment.

The complete employment equation contains in addition profit distribution, the public sector, and foreign trade.

Items (i) and (ii) cover Keynes' familiar arguments about aggregate demand. The factor cost ratio ρF as defined in (iii) embodies the macroeconomic price mechanism. The fact of the matter is that overall employment INCREASES if the AVERAGE wage rate W INCREASES relative to average price P and productivity R. Roughly speaking, price inflation is bad for employment and wage inflation is good. This is the exact OPPOSITE of what microfounded supply-demand-equilibrium economics teaches.

The testable Employment Law tells one that the best policy to stabilize employment on a high level is a price inflation of zero and a wage inflation equal to productivity increases. The 2 percent inflation target has always been political idiocy based on defective theory.

Egmont Kakarot-Handtke

#1 NAIRU, wage-led growth, and Samuelson's Dyscalculia
https://axecorg.blogspot.com/2015/01/nairu-wage-led-growth-and-samuelsons.html

#2 Keynes' Employment Function and the Gratuitous Phillips Curve Disaster
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2130421

#3 NAIRU and the scientific incompetence of Orthodoxy and Heterodoxy
https://axecorg.blogspot.com/2017/02/nairu-and-scientific-incompetence-of.html

#4 Full employment, the Phillips Curve, and the end of Gaganomics
https://axecorg.blogspot.com/2018/04/full-employment-phillips-curve-and-end.html

#5 For more details of the big picture see cross-references Employment/Phillips Curve
http://axecorg.blogspot.com/2015/08/employmentphillips-curve-cross.html

#6 Wikimedia AXEC62 Employment Law
https://commons.wikimedia.org/wiki/File:AXEC62.png

[Sep 06, 2019] Nebraska Farmers Union president calls Trump's approach to China a 'huge unforced error' TheHill

Sep 06, 2019 | thehill.com

The president of the Nebraska Farmers Union ripped President Trump on Wednesday over his escalating trade war with China, calling it a "huge unforced error."

John Hansen said that even though China has been engaging in unfair trade practices for some time and needed to be reigned in, Trump's decision to impose high tariffs on Beijing along with other trading partners has hurt the United States. "The U.S. should have isolated China from the rest of the world as they started on this effort," Hansen told Hill.TV. "Instead, unfortunately, the president has isolated the U.S. from most of the rest of the world economy."

"It was a huge unforced error so there's that issue," he added.

Hansen said Trump's trade policies haven't gotten to the "nuts and bolts of how do we go about the business of making sure that farmers get paid a fair price for what they produce."

[Sep 06, 2019] Understanding Literacy Numeracy

Level 4/5 is the ability to read complex information and glean information from it, or in numeracy, the ability to do algebra and above. You will note that only about 1 in 10 function at this level. The vast majority function at about 6th to 8th grade competency.
Sep 06, 2019 | www.cdc.gov

this is from Understanding Literacy & Numeracy

[Sep 04, 2019] Jeffrey Epstein Was Just Another Stooge For The Elite By Richard Enos

This is just a hypothesis. Where are the facts ? The only facts that we have is that Epstein always got a "special treatment" and the Maxwell and other accomplices were not arrested as is usually ion such cases -- when prosecution tries to find "the weakest link" that starts telling the story and will implicate others.
Aug 30, 2019 | crushlimbraw.blogspot.com

In most circles, the mystery of exactly how Epstein made his fortune was shrugged off as simply part of his personal mystique. Epstein played the role of enigmatic billionaire 'to a T', able to exude the persona of a man who could use his charm and wit to get anything he wanted without revealing many of the nuts and bolts of how he rose to that position. He claimed that he would only advise people whose personal wealth was over a billion, yet any 'evidence' that he moved money around and made investments within the established industry markets were small-time and insignificant.

... ... ...

Steve Pieczenik, who has a storied history as a psychiatrist and a terrorism expert with important roles in foreign affairs with many U.S. administrations said the following about Jeffrey Epstein in the video below:

I want to talk about the Epstein pedophilia ring, what it really is, is a Mossad Israeli operative ring which goes back decades and decades. Jeff Epstein was picked out by the Mossad as the proper agent of influence, because, number one, he was grandiose, two, he had some intelligence and he was so narcissistic that they could manipulate him up and down and create a false front for him, which involved the fact that he had multi-million dollars, multi-billion dollars. But to make sure that Jeffrey Epstein was working properly, they had an operative from the Mossad who was named Maxwell, the daughter of Robert Maxwell, one of the greatest crooks in the world, who was an Israeli Mossad operative. When he died in 1991, he was either killed or he died, he was one of the biggest contributors to Israeli national security than anybody else. What the Israelis did, under the tutelage of two brilliant Mossad chiefs, both of whom used pedophilia as a honey trap to encapsulate any one of our operatives in America. Jeff Epstein was a willing operative.

He willingly was involved in pedophilia, the Israelis knew that, they created his story line, they made believe he was a billionaire, Wexner was the theoretical backup man to him. Acosta, the Secretary of Labor, was correct when he said that Epstein got off of the prosecutor's indictment in Florida because he worked in the intelligence service. And it was not only the Mossad who was involved, clearly the CIA was involved.

Blackmailer And Intelligence Operative

In the clip below from the Collective Evolution Show on CETV (you can watch the full episode as part of your free 7-day trial here ), Joe and I discussed not only Epstein's role as a blackmailer and intelligence operative, but the fact that he is nothing more than one person in a long line of people who have stepped in to play a role in these child sex blackmailing operations.

Connecting Epstein's operations to current CIA and Mossad programs and then further back even before the CIA existed, where these operations were formally being run by the American mafia and other powerful figures, reveals important patterns that help us piece together more accurately exactly what is happening in our world. If there is anything to pay attention to regarding Epstein's death, it is the level of desperation on the part of these powerful forces to squelch public attention around their very real organized criminal conspiracy that operates between intelligence, government, law enforcement, mainstream media and others, in which innocent women and children are taken, raped, and sometimes even tortured and killed as mere casualties of the self-serving power struggles amongst factions of world power.

[Sep 04, 2019] BlackRock Sees Supply and Demand Driving Municipal Bond Rally [Video]

Sep 04, 2019 | finance.yahoo.com

Sep.04 -- Sean Carney, head of municipal strategy at BlackRock, discusses the municipal bond market posting its best returns since 2014. He speaks with Bloomberg's Taylor Riggs in this week's "Muni Moment" on "Bloomberg Markets."

[Sep 04, 2019] Starving Seniors How America Fails To Feed Its Aging naked capitalism

Sep 04, 2019 | www.nakedcapitalism.com

https://eus.rubiconproject.com/usync.html

https://acdn.adnxs.com/ib/static/usersync/v3/async_usersync.html

https://c.deployads.com/sync?f=html&s=2343&u=https%3A%2F%2Fwww.nakedcapitalism.com%2F2019%2F09%2Fstarving-seniors-how-america-fails-to-feed-its-aging.html <img src="http://b.scorecardresearch.com/p?c1=2&c2=16807273&cv=2.0&cj=1" /> By Laura Ungar, who health issues out of Kaiser Health News' St. Louis office, and Trudy Lieberman, a journalist for more than 45 years, and a past president of the Association of Health Care Journalists. Originally published by Kaiser Health News .

MEMPHIS, Tenn. -- Army veteran Eugene Milligan is 75 years old and blind. He uses a wheelchair since losing half his right leg to diabetes and gets dialysis for kidney failure.

And he has struggled to get enough to eat.

Earlier this year, he ended up in the hospital after burning himself while boiling water for oatmeal. The long stay caused the Memphis vet to fall off a charity's rolls for home-delivered Meals on Wheels , so he had to rely on others, such as his son, a generous off-duty nurse and a local church to bring him food.

"Many times, I've felt like I was starving," he said. "There's neighbors that need food too. There's people at dialysis that need food. There's hunger everywhere."

Indeed, millions of seniors across the country quietly go hungry as the safety net designed to catch them frays. Nearly 8% of Americans 60 and older were "food insecure" in 2017, according to a recent study released by the anti-hunger group Feeding America. That's 5.5 million seniors who don't have consistent access to enough food for a healthy life, a number that has more than doubled since 2001 and is only expected to grow as America grays.

While the plight of hungry children elicits support and can be tackled in schools, the plight of hungry older Americans is shrouded by isolation and a generation's pride. The problem is most acute in parts of the South and Southwest. Louisiana has the highest rate among states, with 12% of seniors facing food insecurity. Memphis fares worst among major metropolitan areas, with 17% of seniors like Milligan unsure of their next meal.

And government relief falls short. One of the main federal programs helping seniors is starved for money. The Older Americans Act -- passed more than half a century ago as part of President Lyndon Johnson's Great Society reforms -- was amended in 1972 to provide for home-delivered and group meals, along with other services, for anyone 60 and older. But its funding has lagged far behind senior population growth, as well as economic inflation.

The biggest chunk of the act's budget, nutrition services, dropped by 8% over the past 18 years when adjusted for inflation, an AARP report found in February. Home-delivered and group meals have decreased by nearly 21 million since 2005. Only a fraction of those facing food insecurity get any meal services under the act; a U.S. Government Accountability Office report examining 2013 data found 83% got none.

With the act set to expire Sept. 30, Congress is now considering its reauthorization and how much to spend going forward.

Meanwhile, according to the U.S. Department of Agriculture, only 45% of eligible adults 60 and older have signed up for another source of federal aid: SNAP, the food stamp program for America's poorest. Those who don't are typically either unaware they could qualify, believe their benefits would be tiny or can no longer get to a grocery store to use them.

Even fewer seniors may have SNAP in the future. More than 13% of SNAP households with elderly members would lose benefits under a recent Trump administration proposal.

For now, millions of seniors -- especially low-income ones -- go without. Across the nation, waits are common to receive home-delivered meals from a crucial provider, Meals on Wheels, a network of 5,000 community-based programs. In Memphis, for example, the wait to get on the Meals on Wheels schedule is more than a year long.

"It's really sad because a meal is not an expensive thing," said Sally Jones Heinz, president and CEO of the Metropolitan Inter-Faith Association , which provides home-delivered meals in Memphis. "This shouldn't be the way things are in 2019."

Since malnutrition exacerbates diseases and prevents healing, seniors without steady, nutritious food can wind up in hospitals, which drives up Medicare and Medicaid costs, hitting taxpayers with an even bigger bill . Sometimes seniors relapse quickly after discharge -- or worse.

Widower Robert Mukes, 71, starved to death on a cold December day in 2016, alone in his Cincinnati apartment.

The Hamilton County Coroner listed the primary cause of death as "starvation of unknown etiology" and noted "possible hypothermia," pointing out that his apartment had no electricity or running water. Death records show the 5-foot-7-inch man weighed just 100.5 pounds.

A Clear Need

On a hot May morning in Memphis, seniors trickled into a food bank at the Riverside Missionary Baptist Church, 3 miles from the opulent tourist mecca of Graceland. They picked up boxes packed with canned goods, rice, vegetables and meat.

Marion Thomas, 63, placed her box in the trunk of a friend's car. She lives with chronic back pain and high blood pressure and started coming to the pantry three years ago. She's disabled, relies on Social Security and gets $42 a month from SNAP based on her income, household size and other factors. That's much less than the average $125-a-month benefit for households with seniors, but more than the $16 minimum that one in five such households get. Still, Thomas said, "I can't buy very much."

A day later, the Mid-South Food Bank brought a "mobile pantry" to Latham Terrace, a senior housing complex, where a long line of people waited. Some inched forward in wheelchairs; others leaned on canes. One by one, they collected their allotments.

The need is just as real elsewhere. In Dallas, Texas, 69-year-old China Anderson squirrels away milk, cookies and other parts of her home-delivered lunches for dinner because she can no longer stand and cook due to scoliosis and eight deteriorating vertebral discs.

As seniors ration food, programs ration services.

Although more than a third of the Meals on Wheels money comes from the Older Americans Act, even with additional public and private dollars, funds are still so limited that some programs have no choice but to triage people using score sheets that assign points based on who needs food the most. Seniors coming from the hospital and those without family usually top waiting lists.

More than 1,000 were waiting on the Memphis area's list recently. And in Dallas, $4.1 million in donations wiped out a 1,000-person waiting list in December, but within months it had crept back up to 100.

Nationally, "there are tens of thousands of seniors who are waiting," said Erika Kelly , chief membership and advocacy officer for Meals on Wheels America. "While they're waiting, their health deteriorates and, in some cases, we know seniors have died."

Edwin Walker, a deputy assistant secretary for the federal Administration on Aging, acknowledged waits are a long-standing problem, but said 2.4 million people a year benefit from the Older Americans Act's group or home-delivered meals, allowing them to stay independent and healthy.

Seniors get human connection, as well as food, from these services. Aner Lee Murphy, a 102-year-old Meals on Wheels client in Memphis, counts on the visits with volunteers Libby and Bob Anderson almost as much as the food. She calls them "my children," hugging them close and offering a prayer each time they leave.

But others miss out on such physical and psychological nourishment. A devastating phone call brought that home for Kim Daugherty, executive director of the Aging Commission of the Mid-South , which connects seniors to service providers in the region. The woman on the line told Daugherty she'd been on the waiting list for more than a year.

"Ma'am, there are several hundred people ahead of you," Daugherty reluctantly explained.

"I just need you all to remember," came the caller's haunting reply, "I'm hungry and I need food."

A Slow Killer

James Ziliak , a poverty researcher at the University of Kentucky who worked on the Feeding America study, said food insecurity shot up with the Great Recession, starting in the late 2000s, and peaked in 2014. He said it shows no signs of dropping to pre-recession levels.

While older adults of all income levels can face difficulty accessing and preparing healthy food, rates are highest among seniors in poverty. They are also high among minorities. More than 17% of black seniors and 16% of Hispanic seniors are food insecure, compared with fewer than 7% of white seniors.

A host of issues combine to set those seniors on a downward spiral, said registered dietitian Lauri Wright , who chairs the Department of Nutrition and Dietetics at the University of North Florida. Going to the grocery store gets a lot harder if they can't drive. Expensive medications leave less money for food. Chronic physical and mental health problems sap stamina and make it tough to cook. Inch by inch, hungry seniors decline.

And, even if it rarely kills directly, hunger can complicate illness and kill slowly.

Malnutrition blunts immunity, which already tends to weaken as people age. Once they start losing weight, they're more likely to grow frail and are more likely to die within a year, said Dr. John Morley, director of the division of geriatric medicine at Saint Louis University.

Seniors just out of the hospital are particularly vulnerable. Many wind up getting readmitted, pushing up taxpayers' costs for Medicare and Medicaid. A recent analysis by the Bipartisan Policy Center found that Medicare could save $1.57 for every dollar spent on home-delivered meals for chronically ill seniors after a hospitalization.

Most hospitals don't refer senior outpatients to Meals on Wheels, and advocates say too few insurance companies get involved in making sure seniors have enough to eat to keep them healthy.

When Milligan, the Memphis veteran, burned himself with boiling water last winter and had to be hospitalized for 65 days, he fell off the Metropolitan Inter-Faith Association's radar. The meals he'd been getting for about a decade stopped.

Heinz, Metropolitan's CEO, said the association is usually able to start and stop meals for short hospital stays. But, Heinz said, the association didn't hear from Milligan and kept trying to deliver meals for a time while he was in the hospital, then notified the Aging Commission of the Mid-South he wasn't home. As is standard procedure, Metropolitan officials said, a staff member from the commission made three attempts to contact him and left a card at the blind man's home.

But nothing happened when he got out of the hospital this spring. In mid-May, a nurse referred him for meal delivery. Still, he didn't get meals because he faced a waitlist already more than 1,000 names long.

After questions from Kaiser Health News, Heinz looked into Milligan's case and realized that, as a former client, Milligan could get back on the delivery schedule faster.

But even then the process still has hurdles: The aging commission would need to conduct a new home assessment for meals to resume. That has yet to happen because, amid the wait, Milligan's health deteriorated.

A Murky Future

As the Older Americans Act awaits reauthorization this fall, many senior advocates worry about its funding.

In June, the U.S. House passed a $93 million increase to the Older Americans Act's nutrition programs, raising total funding by about 10% to $1 billion in the next fiscal year. In inflation-adjusted dollars, that's still less than in 2009. And it still has to pass in the Republican-controlled Senate, where the proposed increase faces long odds.

U.S. Rep. Suzanne Bonamici, an Oregon Democrat who chairs the Civil Rights and Human Services Subcommittee, expects the panel to tackle legislation for reauthorization of the act soon after members return from the August recess. She's now working with colleagues "to craft a strong, bipartisan update," she said, that increases investments in nutrition programs as well as other services.

"I'm confident the House will soon pass a robust bill," she said, "and I am hopeful that the Senate will also move quickly so we can better meet the needs of our seniors."

In the meantime, "the need for home-delivered meals keeps increasing every year," said Lorena Fernandez, who runs a meal delivery program in Yakima, Wash. Activists are pressing state and local governments to ensure seniors don't starve, with mixed results. In Louisiana, for example, anti-hunger advocates stood on the state Capitol steps in May and unsuccessfully called on the state to invest $1 million to buy food from Louisiana farmers to distribute to hungry residents. Elsewhere, senior activists across the nation have participated each March in "March for Meals" events such as walks, fundraisers and rallies designed to focus attention on the problem.

Private fundraising hasn't been easy everywhere, especially rural communities without much wealth. Philanthropy has instead tended to flow to hungry kids, who outnumber hungry seniors more than 2-to-1, according to Feeding America.

"Ten years ago, organizations had a goal of ending child hunger and a lot of innovation and resources went into what could be done," said Jeremy Everett, executive director of Baylor University's Texas Hunger Initiative. "The same thing has not happened in the senior adult population." And that has left people struggling for enough food to eat.

As for Milligan, he didn't get back on Meals on Wheels before suffering complications related to his dialysis in June. He ended up back in the hospital. Ironically, it was there that he finally had a steady, if temporary, source of food.

It's impossible to know if his time without steady, nutritious food made a difference. What is almost certain is that feeding him at home would have been far cheaper.

[Sep 04, 2019] Economists had 'a far greater sense of confidence in their analyses than I have found to be warranted. They were best kept down with the surplus furniture and the rats

Sep 04, 2019 | www.economist.com

"Few economists worked at the Federal Reserve in the early 1950s. Those who were on the staff of America's central bank were relegated to the basement, at a safe remove from the corridors where real decisions were made.

Economists had their uses, allowed William McChesney Martin, then the Fed's chairman. But they also had 'a far greater sense of confidence in their analyses than I have found to be warranted'. They were best kept down with the surplus furniture and the rats." • Indeed!

[Sep 04, 2019] Remember, it was the academics that got this started in the wrong direction, arguably

Sep 04, 2019 | www.nakedcapitalism.com

Warren: "Monopolist's Worst Nightmare: The Elizabeth Warren Interview" [The American Prospect].

Warren: "Remember, it was the academics that got this started in the wrong direction, arguably."

[Sep 03, 2019] Well, Stuxnet os that's what Iran got for not upgrading their Windows 95 :-)

Sep 03, 2019 | www.yahoo.com

yesterday

Well, that's what Iran gets for not upgrading their Windows 95 OS.

[Sep 02, 2019] Where is Margaret Thatcher now?

Highly recommended!
Sep 02, 2019 | www.nakedcapitalism.com

ambrit , , August 31, 2019 at 11:55 am

Thatcher was an English politico. It is not what she said, but what she did that counts. She is probably down in Dante's Inferno, Ring 8, sub-rings 7-10. (Frauds and false councilors.) See, oh wayward sinners: http://danteworlds.laits.utexas.edu/circle8b.html

The Rev Kev , , September 2, 2019 at 12:37 am

Ring 8, sub-rings 7-10? She will probably find Milton Friedman in the basement there.

ambrit , September 2, 2019 at 7:09 am

Ah, you think that Milton should be at the bottom, eh? Then, I hope that he knows how to ice skate. (He was the worst kind of 'class traitor.' [His parents were small store owner/managers.])

Ring 8 of the Inferno is for 'frauds' of all sorts, sub-rings 7-10 are reserved for Thieves, Deceivers, Schismatics, and Falsifiers. Maggie should feel right at home there.

[Sep 02, 2019] Did the plato proction arrives for the US shale oil ? No US C+C output in June 2019 was 12,082 kb/d and in Dec 2018 US C+C output was 12,038 kb/d, so output has risen, but not by much

Sep 02, 2019 | peakoilbarrel.com

Watcher x Ignored says: 08/31/2019 at 1:48 pm

Some intriguing consumption stuff.

Pop on over to the BP spreadsheet and find the regional consumption tab. For some regions there are countries broken out and for others, not. But on this tab you can get granularity on what kind of oil, what constituent part of crude, was consumed.

Japan. The population decline is actually pretty recent -- only since 2010. Their decline in consumption is popularly attributed to population reduction, and I have gotten this wrong, too, but consumption decline has been since 1995 with population gain for 15 of those years. In more detail, their consumption decline is not gasoline. They have increased gasoline burn since 1995. (The Prius is the 2nd most popular car in Japan and it first went on sale in 1997, so Prius didn't kill gasoline burn, which has increased).

It's middle distillates and Fuel Oil that are way down. Stuff that fuels big commercial engines. That's what has fallen. Fuel Oil is more than maritime bunker fuel. It powers big stuff. There was a sharp uptick of Fuel Oil consumption . . of 44% in 2012 because it was Fuel Oil that was called on to generate electricity when all the reactors were shut down during the quake panic. But the reactors returned and Fuel Oil resumed its decline.

One last thing that could blow all those paras out of the water. Japan had until recently more refinery capacity than internal consumption. It's a lot like Singapore. The crude comes in and product exports and this seems to somehow corrupt all measurements. The govt recently shut down many of the refineries. It wasn't voluntary. Gov't ordered. Now Japan has to import fuels, not just crude. Quite a lot. Which likely confuses the consumption measurements further.

shallow sand x Ignored says: 08/31/2019 at 4:02 pm
Ron.

I see in EIA short term energy outlook that they are predicting US to average 12.3 in 2019 and 13.3 2020.

Also predicting July, 2019 will be 11.7.

So, first 7 months of 2019 would be average of a little over 11.9.

Which means as of 8/1/19 EIA expects last 5 months US will average around 12.8?

Wonder what info they have that we don't?

Stephen Hren x Ignored says: 08/31/2019 at 7:12 pm
Ok I read this blog quite regularly but now I'm confused. US oil production has actually fallen since the start of the year?

Dennis, can you respond to that? I thought I was just reading in the last post that the current completion rate in the Permian was enough to raise production for five more years or so. July is probably skewed because of the hurricane, but what gives?

GuyM x Ignored says: 09/01/2019 at 7:35 am
It's definitely slowing. See my first post on June monthly production. When you add all the states with shale production, there is no growth from May to June. Yes, July should be down significantly due to the hurricane, but I expect no growth from shale.

Dennis sees an increase, Ron sees it plunging. I see it flat for a few months, and slowly trending down. Pick your poison.

Dennis Coyne x Ignored says: 09/01/2019 at 3:56 pm
GuyM,

Yes the increase is pretty small for tight oil over the next 5 years only an average annual rate of increase of 344 kb/d for US tight oil from 2019 to 2024 for the flat completion rate scenario. This is a far cry from the 1620 kb/d increase in US tight oil output from Dec 2017 to Dec 2018, a factor of 4.7 times slower on average than the rapid rate of increase in 2018.

Dennis Coyne x Ignored says: 09/01/2019 at 8:25 am
Stephen Hren,

No US C+C output in June 2019 was 12,082 kb/d and in Dec 2018 US C+C output was 12,038 kb/d, so output has risen, but not by much. Yes a flat completion rate could lead to a rise in tight oil output until 2025, though conventional output could fall to offset this. Conventional output has been falling of late as fewer new conventional wells have been completed for the past 6 months.

shallow sand x Ignored says: 09/02/2019 at 8:35 am
Guy.

If $75-80 WTI would hold for awhile (6 months +) drilling would resume in conventional fields lower 48 at higher levels in my opinion.

Might be able to stem the decline, but I doubt there would be significant growth until WTI got back to 2012-14 (early) levels.

Hard to believe we were paid $99.25 per barrel in June, 2014!

Freddy x Ignored says: 08/31/2019 at 5:39 pm
The current financial strain on shale producers is likely to intensify as many companies that took on debt after the 2016 oil slump face large debt maturities in the next four years. As of July, about $9 billion was set to mature throughout the remainder of 2019, but about $137 billion will be due between 2020 and 2022, according to S&P.
Seems that there will be more bancurupt filings in the years to come.
PeterEV x Ignored says: 09/01/2019 at 2:09 pm
Here is the 2019 version of the graph above from:
https://corporate.exxonmobil.com/-/media/Global/Files/outlook-for-energy/2019-Outlook-for-Energy.pdf

What is interesting is the footnotes. The first one says: " The supply of existing oil production naturally declines at an **estimated 7 percent per year** without further investment. Significant investment is needed to offset this natural decline and meet the projected demand growth." The 7 percent figure caught my eye.

Also see the footnote about the switch over to Biofuels but Biofuels are such a very small amount.

Here is the graph:

Hickory x Ignored says: 09/01/2019 at 2:17 pm
The footnote that catches my eye is- Biofuels grows more than 70%.
That is a horror show for the global environment.
Things like species extinction.
PeterEV x Ignored says: 09/01/2019 at 4:04 pm
Agreed, but it's so miniscule on the graph. In 2040, it would never be able to power much.
Watcher x Ignored says: 09/01/2019 at 1:18 pm
Continuing to look at the Regional Consumption tab from the World Stat stuff.

There is this category called Others. BP defines it as:

" 'Others' consists of refinery gas, liquefied petroleum gas (LPG), solvents, petroleum coke, lubricants, bitumen, wax, other refined products and refinery fuel and loss."

This is not trivial afterthought. This is over 20% of the total oil consumption for nearly all countries/regions. 24% for the whole world, and that deserves a !!!

It's 41% for India, also deserving a !!! I happen to know this derives from LPG, a hugely popular transportation fuel in India.

China, 30%.
US 22.6%

India's total oil consumption last year was 5.9%. Light distillates had 10% growth, gasoline 8.9%. Others, 6%. EVs and hybrids did nothing to gasoline burn there, which you would expect for such a narrow niche product for rich people in year-round warm cities. They didn't drive much anyway. And of course rural driving is a big thing in India, per the recent item about political campaigns travelling place to place by road.

China's total oil consumption last year was +5.6%. Light distillates +7.3%. Kerosene/jet fuel + 14% (!!!) Others, 7.1%.
And ditto.

As noted above Japan's consumption drop has been from lost economic activity, not population, and it burns more gasoline today than in 1995, so Prius didn't do much there. Their big loss is in middle distillates, because they shut down a lot of factories. Repeat, population ROSE in Japan up to 2010. Only since then has it fallen and middle distillate consumption (and Others consumption) has been falling steadily since 1995, even when population was rising.

First you lose your economy, then you lose your food.

(Caveat about refinery exports from previous comment)

[Sep 02, 2019] To me it seems like the DUCS that was good have now been used,

Sep 02, 2019 | peakoilbarrel.com

Freddy x Ignored says: 09/01/2019 at 4:24 pm

From the EIA monthly I see the US oil and condensate production was:
April 12. 123 Mbpd
May 12. 115 Mbpd ( – 8 000 bpd / 0,1%)
June 12. 082 Mbpd ( – 33 000 bpd/ 0,3%).
Will be very i teresting to see the production for July and August including new pipeline capacity. To me it seems like the DUCS that was good have now been used, Baker Hughes drill statistick document number of riggs still go down. In January EIA and Rystad believed US oil production would reach 13 Mbpd in 4th Quartile 2019, the truth is this might already be below 12 Mbpd . As they told the growth in US shale have be funded by borrowed money , now investors have far from get back what they where promissed, they are pissed off
Ovi x Ignored says: 09/01/2019 at 8:19 pm
Attached are charts for World, OPEC and Non-OPEC C + C up to May 2019.

World production down is by 2,958 kb/d from peak.
Opec is down by 3,037 kb/d.
Non-OPEC is down by 1,252 kb/d

https://www.eia.gov/beta/international/data/browser/#/?pa=00000000000000000000000000000000002&f=M&c=ruvvvvvfvtvnvv1urvvvvfvvvvvvfvvvou20evvvvvvvvvnvvuvs&ct=0&tl_id=5-M&vs=INTL.57-1-AFG-TBPD.M&cy=201406&vo=0&v=H&start=201201&end=201905

Ovi x Ignored says: 09/01/2019 at 8:21 pm
OPEC

Ovi x Ignored says: 09/01/2019 at 8:21 pm
Non-OPEC

Hugo x Ignored says: 09/02/2019 at 2:57 am
How can production be falling, consumption increasing and stocks remain the same?
Jeff x Ignored says: 09/02/2019 at 4:05 am
Patience young padawan. 🙂

First, stocks don't remain the same. There is a time lag of several months between production in OPEC/MENA and stock change in US meaning that excess production in late 2018 impacted US stocks in the spring (see for example these two figures from Art: https://pbs.twimg.com/media/ECW_IhNXsAweltI.png https://pbs.twimg.com/media/ECkcTfzXkAE5uED.png ).

There is no good real time data, at least not publicly available, on global stocks but US stocks have declined so far this year ( https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=WCESTUS1&f=W ). It seems to me that we are starting to see the effect now on lower OPEC production (cut or whatever reasons) and LTO not growing as fast as forecasted.

A quote from IEA's last OMR ( https://www.iea.org/newsroom/news/2019/august/economic-woes-hold-sway-over-geopolitics.html ): "If the July level of OPEC crude oil production at 29.7 mb/d is maintained through 2019, the implied stock draw in 2H19 is 0.7 mb/d, helped also by a slower rate of non-OPEC production growth." Note that this assumes LTO-growth in US causing the market to be oversupplied next year

The market sentiment is currently bearish on oil for whatever reason (US LTO growth, economic slowdown, etc.), you can see this on the yield curve that Art provides, the curve has become more flat ( https://pbs.twimg.com/media/EDENJx2XUAIR5lC.png:large ). I find the herd mentality of the oil market interesting and would not be surprised if the herd changes direction in a not too distant future. The big question mark I see is what will happen with the Iran-deal if/when stocks continue to decline.

Ovi x Ignored says: 09/02/2019 at 7:43 am
Gold has been out of favour for quite a while. Suddenly in June 2019, it started to rise from around 1250 to 1500 today. Why? Wish I knew.
Iron mike x Ignored says: 09/02/2019 at 10:19 am
Lower world wide interest rates is one reason. Worries about a global recession is another.
Ovi x Ignored says: 09/02/2019 at 7:35 am
Non-OPEC without U.S.

Tony Eriksen x Ignored says: 09/02/2019 at 8:05 pm
Dennis,

EIA STEO forecasts US crude oil production of 12.95 mbd at Dec 2019 and splits it into
Alaska 0.49
GoM 2.12
L48 10.34
https://www.eia.gov/outlooks/steo/data/browser/#/?v=9&f=M&s=0&start=201501&end=202012&map=&linechart=~PAPRPAK~PAPRPGLF~PAPR48NGOM&id=&ctype=linechart&maptype=0

My Dec 2019 guess is 0.45 mbd for Alaska, partly due to majors exiting Alaska
https://ca.finance.yahoo.com/news/bp-exit-alaska-60-years-172226498.html

My Dec 2019 guess is 1.95 mbd for GoM
https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MCRFP3FM2&f=M
https://www.offshore-mag.com/production/article/14034424/gulf-of-mexico-oil-production-forecast-for-record-year

My Dec 2019 guess is 10.10 mbd for L48, Permian being the main reason for the 0.4 mbd increase from June. The STEO data browser also forecasts a 0.4 mbd change from Jun 2019 to Dec 2019 for L48.
https://www.eia.gov/outlooks/steo/data/browser/#/?v=9&f=M&s=0&start=201501&end=202012&map=&linechart=~~~PAPR48NGOM&id=&ctype=linechart&maptype=0
The L48 Jun production of 9.7 mbd is derived from the latest EIA monthly production. (12.08 (total US)-1.91 (GoM) – 0.46 (Alaska) = 9.71 mbd)
https://www.eia.gov/petroleum/production/

My guess for US crude production in Dec 2019 is 12.5 mbd which is less than EIA STEO 12.95 mbd

Tony Eriksen x Ignored says: 09/02/2019 at 3:11 am
Why does Texas oil production data differ between EIA and Texas RRC?

EIA shows Texas crude making a new peak of 5.0 mbd in May 2019. In Dec 2018, it was 4.9 mbd.
https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MCRFPTX2&f=M

RRC shows peak of 4.7 mbd in Dec 2018 and down to 4.1 mbd in May 2019.
https://www.rrc.state.tx.us/oil-gas/research-and-statistics/production-data/texas-monthly-oil-gas-production/

Watcher x Ignored says: 09/02/2019 at 11:03 am
BTW Norway, the darling of alternative transport.

2018 oil consumption growth 5.1% Not broken out by distillate portion.

Ivan Kudder x Ignored says: 09/02/2019 at 11:35 am
Talking about Norway:

https://oilprice.com/Energy/Energy-General/Busting-The-Myth-Of-The-Worlds-Hottest-Electric-Car-Market.html

PeterEV x Ignored says: 09/02/2019 at 1:16 pm
Even though Norway is "the darling of alternative transport", EV sales are still a small part of their transportation mix. All-electric 7.8%, Plug-In hybrids, 3.6%, and Hybrids 4.0%. Without the impact of EVs, their consumption would likely have been higher.
Tony Eriksen x Ignored says: 09/02/2019 at 6:28 pm
It looks like Nick Cunningham, the author of the article below, reads peakoilbarrel.com

"The more important point is that the oil industry is slowing down more generally.

Most oil forecasters expected explosive production growth to continue through this year and into 2020. But with June U.S. production at 12.082 mb/d, output is only about 80,000 bpd above levels seen at the end of 2018. In other words, growth has been pretty slow this year.

Financial stress is really setting in, forcing drillers to cut back. The rig count fell by 12 in the last week of August, part of an ongoing slide since reaching a peak late last year. Bankruptcies are on the rise. As the Wall Street Journal notes, an estimated 26 U.S. oil and gas companies have declared bankruptcy this year, which is close to the full-year 2018 total. More are expected.

Worse, there is a tsunami of debt that comes due in the years ahead. According to the WSJ, roughly $9 billion worth of debt was set to mature over the second half of 2019. But a whopping $137 billion in debt matures between 2020 and 2022, a massive total that stems from the huge debt issuance following the oil market meltdown a few years ago. A serious reckoning is just around the corner."

https://oilprice.com/Energy/Energy-General/Oil-Production-Growth-In-US-Grinds-To-A-Halt.html

[Sep 02, 2019] USA Oil Production by Ron Patterson

Images removed. See original post for full content.
Aug 31, 2019 | peakoilbarrel.com

The Real Reason Why US Oil Production Has Peaked

Raymond James recently estimated that over the last three years the U.S. decline rate for oil has doubled from 1.6 to 3.2 million barrels per day. The drilled but uncompleted well inventory ("DUC") is back to normal, so the number of wells being drilled and the number of wells being completed is now about the same. We need over 12,000 new horizontal oil wells completed each year to hold production flat and the number of completed wells will need to go up each year.

The U.S. Energy Information Administration ("EIA") forecast at the beginning of this year was that the U.S. shale oil plays were just getting started and that production would increase by at least 2 million barrels of oil per day ("MMBOPD") each year for several more years.

Now if you believe that U.S. shale production will increase by 2 million barrels per day each year for several more years, then I have a bridge that I think you might be interested in. But let's just play "what if", or what if it really did increase by 2 million barrels per day for the next five years.

According to the EIA's Drilling Productivity Report, December 2018 shale production, all basins, was 8,232,750 barrels per day and the legacy decline, for all basins, averaged 6.14 percent per month or 505,737 barrels per day.

Legacy decline of over one million barrels per day would be a crippling requirement of shale producers. But not to worry, that is simply not going to happen. Now total US production did increase by two million barrels per day 2018. In fact, according to the EI.s Monthly Energy Review, US production increased by 2,064,000 barrels per day in 2018. But for the first 7 months of 2019, total US production has declined by 54,000 barrels per day.

USA production appears to have hit a snag. July production is now below November 2018 production.

In my opinion, legacy decline in shale production has reached a point where new production only replaces legacy decline. In fact, legacy decline may have reached a point where it is crippling shale oil production.

Those who have followed this blog for years know that Texas oil production is reported by the Texas Railroad Commission. But their data is very slow coming in, sometimes it is more than a year before all the data has come in. However, Dean Fantazzini, Energy economist, Deputy Head of MSU's Chair of Econometrics and Mathematical Methods in Economics, has developed a program that uses the vintage data to make a pretty good estimate of the actual data. His past corrected data has been relatively accurate.

If Dr. Fantazzini's data is correct then Texas peaked in December 2018 and has declined by 280,000 by June.

All the below charts were created from the EIA's Drilling Productivity Report. The data is through September 2019 and the last few months is, of course, an estimate. Historically the estimate for those last few months has been overestimated.

Notice the last six months is pretty much a straight line. That is because most of it is just an estimate.

It looks like the Permian is pretty much the story as far as US shale is concerned.

The Permian is now just over 50% of total US shale production.

Permian Legacy Decline has been slowly rising and now sits at about 6%.

Eagle Ford has the highest legacy decline rate, now about 8.5% per month.

It looks like shale production, outside the Permian, has pretty much hit the wall. Pay no attention to those last four months. They are just the EIA's wild ass guess.

In conclusion: Very high legacy decline, now over 6% per month, is shale's Achilles heel. Of course, there are other problems as well. Bankruptcies are rampant, running out of sweet spots and the price of oil is just not high enough. It appears that the USA has peaked, or peaked until the price of oil rises at least $20 a month.

And check this one out:

Oil and Gas Bankruptcies Grow as Investors Lose Appetite for Shale


GuyM x Ignored says: 08/31/2019 at 8:46 am

EIA monthlies to June
https://www.eia.gov/petroleum/production/

Dean's charts self correct after a couple of months. Good estimates. Red Queen is already catching up. And, it will catch up faster the next six months from June, as most of the independents have severely cut back on capex.

Your Wall Street journal link has a firewall. Never mind, I got through. Good post.

Tom x Ignored says: 08/31/2019 at 2:30 pm
where do you see that independents have severely cut back on CAPEX?

Grateful for more information/links.
Cheers

Ron Patterson x Ignored says: 08/31/2019 at 3:38 pm
I googled "Shale Capex Cuts" and got about a dozen hits of shale capex cuts. Just three of them are below.

US Shale Operators Cut CAPEX, Up Production
https://www.rigzone.com/news/us_shale_operators_cut_capex_up_production-01-mar-2019-158282-article/

Montage Resources reduces drilling, cuts 2019 Capex
https://www.kallanishenergy.com/2019/08/08/montage-resources-reduces-drilling-cuts-2019-capital-spending/

US Shale Firms Cut CapEx, Up Production
https://www.aogdigital.com/energy/item/8981-us-shale-firms-cut-capex-up-production

GuyM x Ignored says: 08/31/2019 at 3:50 pm
https://csimarket.com/stocks/single_growth_rates.php?code=EOG&capx

https://rbnenergy.com/surprise-surprise-part-3-eandps-paring-capex-despite-strong-2018-profits-2019-prices

It's widespead, simply google.

Pioneer has not only reduced its capex, it's reduced its workforce by 25%. Apache has given up on the Alpine High, their biggest capex. It's 90 % gas, how stupid can you get? Yadda, yadda, Yadda. Just google the company for capex, and put 2nd quarter 2019. Voila!

Your sure to get a positive statement from the company, but just concentrate on the capex going forward. For example, we're losing money had over fist, translates to reduced operating expenses will provide an increased return for 2019. Get serious. None of these companies are going to say, we are screwed.

EOG could make it, most of the rest are totally screwed.

Mike Sutherland x Ignored says: 09/02/2019 at 7:43 pm
Even EOG will get pulled under the waves, probably sooner than later. All those wells, all of them, deplete at breakneck pace.
Matt Mushalik x Ignored says: 08/31/2019 at 9:08 am
My latest post uses data from the BP Statistical Review published in June 2019

26/8/2019
2005-2018 Conventional crude production on a bumpy plateau – with a little help from Iraq
http://crudeoilpeak.info/2005-2018-conventional-crude-production-on-a-bumpy-plateau-with-a-little-help-from-iraq

Krishnan Viswnathan x Ignored says: 08/31/2019 at 10:04 am
Reminds me of what Khalid Falih said about shale.

"I have no doubt in my mind that U.S. shale will peak, plateau and then decline like every other basin in history," Al-Falih told reporters at OPEC's Vienna headquarters. "Until it does I think it's prudent for those of us who have a lot at stake, and also for us who want to protect the global economy and provide visibility going forward, to keep adjusting to it."

Dr. Raymond Pierrehumbert will be proven right belatedly.

https://slate.com/technology/2013/02/u-s-shale-oil-are-we-headed-to-a-new-era-of-oil-abundance.html

GuyM x Ignored says: 08/31/2019 at 10:10 am
Yeah, he was right. I could never imagine West Texas could ever support the lofty imaginations.
Hugo x Ignored says: 08/31/2019 at 10:06 am
The article does say US production still has an up side, but prices would have to be higher.

If there is not enough supply then oil prices will obviously go higher as the did in 2003-2005 and in 2012-13.

US drilling rig count is very low at the moment being only 742, at it's highest recently the US could have 1,400 drilling rigs working.

1,400 drilling rigs will certainly complete enough wells so new supply would exceed decline rates. When oil prices are over $100 as they were in 2012 and the number of drilling rigs are 1,400 then you can wake me up.

Dennis Coyne x Ignored says: 09/01/2019 at 6:03 pm
Hugo,

You want to focus on horizontal oil rigs. The count was as high as 1100, but many of those rigs were lower power rigs no longer economic to operate, a lot of the current rigs are higher power and far more efficient at drilling 3300 meter laterals commonly drilled today.

Dennis Coyne x Ignored says: 09/02/2019 at 8:36 pm
Hugo,

Go to pivot table at page below, then select horizontal oil wells.

https://rigcount.bhge.com/na-rig-count

Mike Sutherland x Ignored says: 09/02/2019 at 8:12 pm
Holy f*ck Hugo, you are a raving lunatic. The oil prices can't go higher, otherwise there will be a repeat of 2008. Clearly you are incapable of learning from the past.
Dennis Coyne x Ignored says: 09/02/2019 at 8:35 pm
Mike Sutherland,

2008 financial crisis had very little to do with high oil prices as proven by recovery during 2011 to 2014 during a period of high oil prices.

Toñito de España x Ignored says: 08/31/2019 at 11:21 am
Hello, i m from spain.

Ron, you say that we are reaching the physical limits and then in the end you say that if it goes up $ 20 we can produce more, is it a contradiction?

Ron Patterson x Ignored says: 08/31/2019 at 12:28 pm
Yeah, there is sort of a contradiction there. Sorry about that. But we are seeing the physical limits hit in much of the world, regardless of the price. But if oil hits $80 to $100 a barrel, a lot more shale could be produced. But that will not change things in the long run. It could delay peak oil by a year or two.

[Sep 02, 2019] The 2008 oil price shock was a warning. Where are we 10 years later? Are we on a path away from oil?

Essentially we hybrids you can cut consumption in half for personal transportations. That's a lot of oil saved. Also hybrids have much smaller battery then EV and as such use it more efficiently.
Sep 02, 2019 | peakoilbarrel.com

Matt Mushalik x Ignored says: 09/01/2019 at 3:47 am

(1) Oil fired power plants were phased out after the 1st (US peak 1970 allowed OPEC to impose embargo) and 2nd oil crisis (peak oil in Iran 1975) not because of a planned, voluntary transition
(2) Hirsch's slow mitigation. The 2008 oil price shock was a warning. Where are we 10 years later? Are we on a path away from oil?
(3) EV maintenance cost must include replacement batteries in the car and in your garage (to store power from solar panels – drive less in winter). The inverter for my solar panels lasted only 5 years
(4) EV s recharged from grid are mainly coal power driven
(5) The era of cheap, easy oil ended in the early 2000s (when the North Sea peaked), before the Iraq war

16/3/2013
Iraq war and its aftermath failed to stop the beginning of peak oil in 2005
http://crudeoilpeak.info/iraq-war-and-its-aftermath-failed-to-stop-the-beginning-of-peak-oil-in-2005

Hickory x Ignored says: 09/01/2019 at 11:34 am
"EV s recharged from grid are mainly coal power driven"

Not in the USA, where coal makes up less than 25% of electricity generating capacity, down from 40% in less than 10 years (primarily due to replacement with tight nat gas production).

And some states, like the biggest in the country, get less than 5% electricity from coal, imported from neighboring states via the grid.

[Sep 02, 2019] A Question of Character naked capitalism

Sep 02, 2019 | www.nakedcapitalism.com

I'm not sure the end of homogeneity was the driver of diminished respect for what was once called character. In the US, I hazard that a bigger factor was the widespread acceptance of libertarian/neoliberal values. As we've documented, that world view was marketed aggressively and very successfully by a loosely coordinated but well funded right wing campaign, whose seminal document was the Powell Memo of 1971 which laid out the vision and many of the tactics for their war on the New Deal and the community values that supported it. For instance, it would have been well-nigh impossible for a Mike Milken, who'd gone to prison for securities law violations (and was widely believed to have engaged in considerably more questionable conduct) to have rehabilitated himself to the degree he did.

From Amar:

John McArthur, in memoriam

He was one of a kind -- and his kindness and empathy (a much used word I know) was unbounded. It touched all from dining and custodial staff to taxi drivers. My parents apart, few other people have had such an influence on me. (And he did me the honor of reading everything I read: every book every article, every draft, the pages a sea of yellow highlight)

He was also astute, ruthless and got things done. His mind was extraordinary and his reading voracious and eclectic -- although you would never guess it from his aw shucks manner and country bumpkin style.

I first actually talked to him in my second year as assistant professor. We had a long long lunch at his corner table in the faculty club. We talked about everything -- except why we were having lunch. At the end he said, "Perhaps you'd like to know why i asked you to lunch. Well I've been reading your stuff and I wanted to put a face to the writing, to know who this person was who was writing this stuff."

A few days later a copy of Knight's Risk Uncertainty and Profit arrived in interoffice mail with one of John's classic handwritten notes, which went something along the following lines. "I think this will suit the way you think of the world."

I had never encountered the book in my doctoral studies, and it was revelatory.

We had lunches, lasting 2-3 hours nearly every year for the last 20 years after I left HBS. Always at the Charles ("If we ate at HBS there would be someone stopping by every minute" he said. At the Charles it was only every 10 minutes. And of course he knew every single waiter and waitress by name).

The stories he told at the lunches.. Such a pity he did not put his wisdom into a memoir. But that was not his way.

John, RIP.

ambrit , August 31, 2019 at 12:34 am

The benefits of a "classical" education.
One of the main supports of the 'civilized' social interactions that you observe here 'Down South' is a stubborn refusal to put a price on everything. It is not universal, but it lingers in pockets of calm salted among the storms of modern living.
Welcome to the South.

Carolinian , August 31, 2019 at 10:04 am

I have some neighbors who are the opposite of me politically (in fact most of my neighbors) but are wonderfully nice people on a personal level. Some of us who grew up here have had the opposite experience of Yves and lived for awhile in the North where all that politeness is dismissed as a false front.

Which in many cases it is, but the usefulness of all that unthinking social glue should not be dismissed out of hand. After decades of elites in thrall to Ayn Rand the country may be in need a few of those social norms that beatnik rebels in the 1950s found so stultifying. Perhaps the most amazing thing about Epstein was how all those rich people around him thought that his three teenager a day habit was perfectly acceptable.

bassmule , August 31, 2019 at 10:47 am

I don't know anything about anything, but after living in the Northeast for my whole life I spent 10 years in North Carolina. After a decade, I realized that I was never going to stop being a Yankee, and that I detested "Southern courtesy" which mostly involved people telling me to "Have a Blessed Day!"

I take part of this back: My favorite item of Southern Courtesy is that you can slander anyone as long as you end the sentence with " bless his heart!"

Seriously, it's a different culture, and not one that I was ever comfortable with.

[Sep 02, 2019] I see EVs and modern ICE vehicles as too complicated, even though they seem quite reliable for a few hundred K Km.

Sep 02, 2019 | peakoilbarrel.com

Paulo x Ignored says: 09/02/2019 at 8:24 am

I see EVs and modern ICE vehicles as too complicated, even though they seem quite reliable for a few hundred K Km. My God, even modern tire valve stems have batts and transmitters linked to idiot displays because people are now too stupid to check their tire inflation. Valve stem price $200 $300 per? Extrapolate to battery and propulsion software, (proprietary software), that stops all future jobber replacement parts beyond belts and fluids.

Anyway, I have a rebuilt 1981 Westfalia that looks and runs like a dream. It is worth more than I have invested in it, in fact it is currently worth 7X what my showroom condition 2005 GMC work truck is worth, (The truck with 150,000 Km on it and maintained to new condition). The most complicated system on the Westie is a resistor pack "running" some intake temp sensors to adjust mixture mix on startup. My electronic tech buddy was looking to fix a friends jeep last week. The horn wouldn't work. He thought it was .well, a horn. No it isn't. It is a sending unit that transits to a brain box that sends a signal to a device that says, "Make horn noise now". Computerised, of course. My Father- in-law had some kind of Buick that would flash the occasional warning light about a door. Price to swap out the module? $900. Excess complexity needless complexity.

I keep seeing a modern Mad Max in my head. Instead of an insanely laughing Mel Gibson hot wiring a fuel tanker we'll see a meter toting nerd testing leads and wires and asking if anyone can read this damn code?

islandboy x Ignored says: 09/02/2019 at 9:38 am
Paulo, your meter toting nerd is more likely going to be a nerd with a laptop, an OBD port dongle and a Controller Area Network Bus (CANBUS) sniffing setup, fuming about a strange (proprietary) implementation of the CANBUS protocol. My undestanding of the CANBUS arrangement is that all devices are attached to the Controller Area Network (CAN) and assigned a unique id. In the case of the friend's jeep, pressing the horn button results in a packet being sent across the CAN addressed to the horn. All devices on the network receive the packet but only the horn responds to it and switches on. I assume a second packet would switch it off.

The theory is that CANBUS should allow a single network/power cable to daisy chain to all the devices in the vehicle and control them, as opposed to having, for example, several wires to control three speed wipers with intermittent wiping as well. It remains to be seen how well CANBUS will stand the test of time but, it is likely to see increased adoption, especially with EVs.

Hickory x Ignored says: 09/02/2019 at 10:54 am
Hi Paulo,
I share your concern about vehicles becoming too complex to fix with local skill/local machine, etc. I used to handle many repair tasks myself when younger, but things have become a complicated spaghetti mess under hood.
And of course, this problem affects just about all kinds of vehicles built in past 3-4 decades. I'd guess well over 95% of the vehicles running around on the roads are 'fragile' due to complexity of the systems. EV maybe less so, since there are simply less systems at play.
A guy in Germany has over 900,000 km on a Tesla. I'm guessing he had had to have the battery pack changed out, but didn't see that info.

Another issue along these lines is the energy supply line.
With Petrol, there a very complicated system to get the juice from the source rock to the target tank. Such as a refinery.
That looks very fragile to me.
Reliance on that kind of complex system in a chaotic world is very risky.
The supply line for electricity can be just as complex, but just like you point out the possibilities with the Westfalia, I point out that the electricity supply line can also be much simpler. If you have some equipment (dry solid material with no moving parts- PV panels, inverter, wiring/plug), your personal or local supply change for transport juice can be very short, and durable.

[Sep 01, 2019] The Unsustainability of Inequality by James K. Galbraith

Notable quotes:
"... First, rising inequality reflects the economic rents captured in resource extraction and production, whether by the owners of those resources or by financiers acting as parasitic middlemen. Second, inequality fosters the extravagant excesses that some now call plutonomy – an economic system in which a small group, the ultra-wealthy, accounts for a large share of total consumption. Under such conditions, a rising tide lifts only yachts, and competitive consumption creates an escalating pattern of what Thorstein Veblen, perhaps the greatest American economist, called conspicuous waste. Lastly, rising inequality is a good indicator of financial instability, which increases the probability of an impending crash. ..."
nepal24hours.com

Rising inequality is symptomatic of a wide range of economic and political problems that are standing in the way of achieving a just and sustainable society. But for all the concern about the income and wealth gap within countries in recent years, there has been surprisingly little acknowledgement of the forces actually driving the trend.

"Sustainability" is a relatively new organizing principle in global policy. It is new partly because economists have long been largely hostile to the very idea. Postwar neoclassical growth theories deliberately ignored resource and environmental limits, disparaged and disdained ecologists, and promised what was effectively impossible: perpetual growth fueled by unlimited resources, the free disposal of wastes, and never-ending technological progress. Early warnings – notably the Club of Rome's pathbreaking 1972 report, The Limits to Growth – were ridiculed. More recently, the science of limits has gained acceptance, but most economists remain preoccupied with growth.

But there is at least one dimension of unsustainability that not even economists can overlook: inequality. Income and wealth disparities, along with other forms of inequality, are relevant to sustainability for at least three reasons.

First, rising inequality reflects the economic rents captured in resource extraction and production, whether by the owners of those resources or by financiers acting as parasitic middlemen. Second, inequality fosters the extravagant excesses that some now call plutonomy – an economic system in which a small group, the ultra-wealthy, accounts for a large share of total consumption. Under such conditions, a rising tide lifts only yachts, and competitive consumption creates an escalating pattern of what Thorstein Veblen, perhaps the greatest American economist, called conspicuous waste. Lastly, rising inequality is a good indicator of financial instability, which increases the probability of an impending crash.

For all these reasons, understanding and controlling the rise of inequality is an ecological, socioeconomic, and political imperative. It is, in other words, a sustainability issue.

MEASURE FOR MEASURE

To get a grip on economic inequality, we must overcome two major sources of confusion. On the theoretical side, mainstream economics treats inequality largely as a byproduct of supply and demand in "labor markets." It is thus regarded as a "microeconomic" phenomenon, driven on the demand side by technological change, and on the supply side by a barely observable quantum that goes by the name of human skill.

When economists write about policies that affect inequality, they tend to work within this market framework. The labor market may be local, regional, or – at the very most – national. Proposed policies focus mainly on the characteristics and capabilities of individuals and how they can improve their positions in the market. These matters are undoubtedly important, particularly when it comes to education and health, but they ignore the broader "macroeconomic" forces – booms and busts, interest rates and debt, exchange rates and commodity prices – that affect individuals, firms, economic sectors, and entire countries.

On the empirical side, there is a question of information: What can we know from the available data? Most of the data we have come from surveys, and most surveys focus on households. These data are relevant for judging economic welfare – and also for thinking about how people with different characteristics (age, gender, race, education, and so on) interact with markets. Yet householders are not employees, and their income is not the same as the wages paid for particular kinds of work. So, data collected on households are several steps away from production, pay, and the forces of structural change.

When it comes to international and comparative analysis, there is yet another problem: surveys are expensive. More surveys are conducted in stable rich countries than in unstable poor ones. And they can be conceptually inconsistent, because the questions differ according to the choices made by those managing the surveys. Are we measuring income? Expenditure? Before or after tax? As with all surveys, the only answers one gets are to the questions asked.

An alternative approach that has become popular in recent years is to consult income-tax records. But these data are even more sparse and inconsistent than surveys, and such records are not available for all countries (indeed, not all countries have an income tax). So, in the effort to measure inequality within countries and around the world, there has long been less signal than noise.

INEQUALITY BY THE NUMBERS

For the past two decades, my students and I have been working on ways to address these measurement shortcomings. We have sought out payroll records that cover a diverse range of countries over many years, and in broadly consistent terms. With these data, we can measure economic inequalities in the structure of pay, which then allows us to estimate the associated inequalities of household income, both across countries and through time.

To explain the philosophy behind this approach, I often refer to a line from the American philosopher Charles Sanders Peirce's essay "The Fixation of Belief":

Kepler undertook to draw a curve through the places of Mars [ ] and his greatest service to science was in impressing on men's minds that this was the thing to be done if they wished to improve astronomy; that they were not to content themselves with inquiring whether one system of epicycles was better than another, but that they were to sit down to the figures, and find out what the curve, in truth, was.

We have attempted to follow this advice, and we have had a fair amount of success. Our measures have proven to be largely reliable and consistent with the existing survey record, while also sensitive to known historical events: wars, revolutions, and the like. Moreover, we have been able to look for patterns at the regional and even global level.

What would consistent patterns beyond the national level imply? I believe they are prima facie evidence that the main source of change in various forms of inequality lies in transnational developments, not in local conditions. To understand the problem of inequality, then, we need to study common developments across a continental or even global economic space.

As it happens, we have identified patterns showing a consistent gradient in levels of income inequality across both space and time. If one looks across space, there are not too many surprises. Income inequality within countries and regions rises as one moves from north to south, reflecting the concentration of advanced industry and middle-class welfare states in countries that were once the seats of empire. In Europe, inequality also rises as one moves from "East" to "West," reflecting the legacy of state socialism.

Moreover, countries in close proximity, and with similar income levels and neighborly diplomatic and trade relations, have relatively similar levels of inequality – as one can see very clearly in maps. Common sense tells us that if they did not have similar levels of inequality, regional migration patterns would sooner or later even things out.

Likewise, patterns of inequality change over time. In particular, there is a general movement toward higher inequality from the 1980s until 2000, after which inequality begins to stabilize. So far, all of this is what one would expect, which attests to the quality of the data. Our attempt to capture a much broader picture of inequality across the world has not been misguided.

WAVES OF INEQUALITY

These movements show, quite plainly, that levels of inequality once widely associated with the Third World are now quite generalized globally. The First World has not become poorer, but it has grown much less equal. There are a few exceptions, of course, and they should not come as a surprise. Measures of inequality in Denmark or Finland, for example, are not far from where they were a generation back. And some countries in Central and Eastern Europe – the Czech Republic stands out – have low levels of inequality (though higher than under their severe post-war communist regimes).

Now, consider another interesting pattern: the temporal movement of inequality within countries is very similar to that between countries. If one takes a standard measure of inequality between countries (not weighted for population, lest China and India dominate the data), one finds that it has risen both between and within countries at the same time. Again, this no surprise: rich countries comprise relatively wealthy people, whereas the people of poor countries are poorer. In a global economy, when inequality between people changes, it is natural that the inequalities between their respective countries change in a similar way.

But here it is important to remember that we are picking out the movement of inequality within countries, measured separately using national statistics, and standardized by an international statistical bureau. There are about 155 countries in our most recent data set, and the predominant patterns across all of them tell the essential story. From 1963 to 1971, no particular trend stands out. There is a bump in inequality within countries in 1973, followed by a modest decline. For much of the world – for poorer countries and poorer peoples alike, though not for the troubled rich – the 1970s were a time of growth and progress.

Then comes a key turning point. Beginning in 1981, inequality starts rising in waves around the world, increasing relentlessly until 2000, at which point the waves subside. In this era, the first major wave is dominated by Latin America and Africa, and subsequent waves are driven by the collapse of the Soviet Union and the associated regime changes in Eastern Europe. Finally, economic liberalization in Asia fuels another wave that culminates in the 1997 Asian financial crisis. From 2000, the rise in inequality slows, and inequalities even decline in parts of the world, including Latin America, China, and the Russian Federation.

A TALE OF FINANCIAL HISTORY

The message contained in these numbers is neither subtle nor obscure. This is a story about the relationship between debtors and creditors in the world economy. Under the post-World War II Bretton Woods framework, stability prevailed – until the system collapsed in 1971, when the United States ended the dollar's convertibility into gold. In 1973, the oil shock and a commodity boom led to a surge in credit in Latin America and elsewhere as countries took on commercial-bank debt to sustain growth in the face of higher fuel prices. As developing countries grew, their middle classes expanded and inequalities declined.

All of that ended in 1981 with the start of a worldwide debt crisis that emanated from monetary-policy changes in the US, where interest rates shot up to 22%. No longer able to pay their debts, developing countries were forced to pursue austerity measures and to abandon their independent industrial development strategies. Commodity prices collapsed, as did the Soviet bloc – much of it heavily indebted – a decade later. The Asian crisis of 1997 rounded out this period.

Inequality at the global level peaked in 2000. In the wake of the dot-com bust and the attacks of September 11, 2001, the US Federal Reserve cut interest rates, and China, growing strongly and now a member of the World Trade Organization, increased its commodity purchases worldwide. Prices and credit conditions improved, and for a while global inequality stopped rising.

The trends in inequality over this period are in keeping with the commonsense insights of Simon Kuznets back in 1955. Kuznets surmised that inequality would rise sharply during the initial stages of economic development, and then decline at later stages. China and India reflect this pattern, but for other developing countries in Asia and Latin America, industrialization and urbanization have been far enough advanced for decades that rapid growth reduces inequality and depression increases it. In a very few rich countries – notably the US and the United Kingdom – rapid growth increases inequalities, because it concentrates income in globally dominant sectors, especially finance and high technology.

So, in the rough history presented above, there are two key elements to consider: the structure of the underlying economies and the effects of booms and busts on that structure. Global forces for boom and bust have tended to affect individual countries and their people in proportion to their ability to resist them. Countries with strong institutions that were able to maintain independence and manage their own affairs fared the best. Those that could not defend themselves against global forces were periodically ravaged by them. In our time, this is the difference between, say, China and Mexico.

These global forces can be identified by the big turning points. The first was the breakdown of Bretton Woods and the rush to private debt in the 1970s. The second was the debt crisis of the 1980s, which was followed by the collapse of oil and commodity prices, and then of Soviet-style socialist governments, and then by liberalization in Asia, culminating in the 1997 crisis – but not in China, which was poised for another decade of double-digit growth. The third big turning point occurred in 2000, when lower interest rates, higher commodity prices, and modest advances in social-welfare policies and national economic development strategies helped to reduce inequality and poverty in Latin America and Russia, while in China, too, inequalities peaked and started to decline.

In Europe, events played out somewhat differently. European countries did not reject neoliberal ideology and re-embrace social-welfare policies after 2000. The introduction of the euro was followed by nearly a decade of easy credit terms, which fueled a boom in housing and commercial construction in Spain, Ireland, Portugal, and Greece (where the boom included the 2004 Olympics, among other projects). This period was not unlike the 1970s in Latin America. But as Herbert Stein, a chairman of the White House Council of Economic Advisers under Richard Nixon and Gerald Ford, famously observed, "If something cannot go on forever, it will stop." In 2009, the global financial crisis brought the happy early days of the euro to an abrupt end.

REIN IT IN

What the available evidence demonstrates is that economic inequality has been regulated over time by the behavior of global finance. The data even show that changes in levels of inequality within the smaller, open economies are closely related to exchange-rate movements. When currencies become overvalued, their countries are vulnerable to Dutch disease – eroding the competitiveness of industry – and to financial crisis. Financial crises and devaluations quickly reestablish the high level of inequality that human-development programs were meant to overcome.

Inequality is thus irreducibly a global and, contrary to what many economists like to think, macroeconomic issue. Labor-market considerations are secondary, crowded out by the dominant macro movements described above. As such, the only way to address inequality effectively is to bring the forces of financial instability, debt peonage, and predatory austerity under control. These forces can be tempered by financial regulation, a function of rich-country governments and central banks. But regulators are of course subject to capture by big finance, and central-bank mandates – whether to target full employment or only price stability – were drafted in an age of national economic policymaking. National central banks – as also the European Central Bank – are not set up to consider their policies' effects on peoples beyond their jurisdictional boundaries.

To be sure, there is still much that nation-states around the world can do to fight inequality when conditions permit. Useful measures include raising the minimum wage, strengthening trade unions, establishing social-insurance schemes, and building infrastructure and providing public goods. The problem is that these forms of progress can be – and regularly are – erased by financial crises and the subsequent imposition of severe austerity. This means that the capacity to reduce inequalities sustainably depends on the capacity for insulation from external financial pressures. However difficult it may be, the rest of the world needs to protect itself from the destabilizing forces of global finance.

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.

James K. Galbraith is Chair in Government/Business Relations at the Lyndon B. Johnson School of Public Affairs, University of Texas at Austin. His most recent books are Inequality: What Everyone Needs to Know and Welcome to the Poisoned Chalice: The Destruction of Greece and the Future of Europe.

[Sep 01, 2019] On the continuing devaluation of the college degrees

Sep 01, 2019 | www.nakedcapitalism.com

Andy Raushner , August 31, 2019 at 4:17 pm

Its just from slow growth and the Boomer deleveraging era. Its a global phenom and its impacts are global into the cultural realm. The college degree boom is a great example of this phenom. It was really based on the surge in consumer debt boom after WWII boosting these supply chains in the US to increased consumption to GDP and reduced manufacturing, which fell in real terms during the 1950-2000 period.

This created traditionally required college degree jobs into a nexus that was originally based around the Baby Boomer generation and strengthened afterwards. Once growth petered in 2007(and we developed a oversupply since 2000) we now have too many people with college degrees.

Even the rich aren't as rich as they were in 2007. Real profits are struggling this cycle and are showing up with weak job growth this year. The unemployment rates flaws are showing up this cycle as well, as total numbers mean little compared historically than the potential that is lowest unemployment can go.

Based on that, the current level of labor market saturation seems to be at a late 70's cycle level. In otherwards, if you adjust the population growth and total size this cycle is doing no better than the Carter era top in 1979 .then we see the whining.

Both the Reagan and Bush II era expansions were a bit better and probably onto a intro of a "boom".

Obviously it is noticeably the Korean, Vietnam and Tech era booms which would require unemployment to fall below 3% to reach, maybe down to 2.5%, which tells you something about potential unemployment drop peaks.

[Aug 31, 2019] US policy after WWII may not be corrupt in the sense of illegal, but it certainly seems corrupt in the sense of morally repugnant as it was designed to preserve welath disparty (especially with the USSR and Asia) which was the result of WWII

As it translated into similar impulses in internal policy, which led to neoliberalism and restoration of the rule of fiancial oligarchy within the USA. The USA experiment with democracy was actually over in 1945
Aug 31, 2019 | www.nakedcapitalism.com

Ian Perkins , August 31, 2019 at 10:37 am

'Sanders has said that we live in a "corrupt political system designed to protect the wealthy and the powerful." Warren said it's a "rigged system that props up the rich and powerful and kicks dirt on everyone else."'
Yet the rest of the article focuses almost entirely on internal US shenanigans. When it comes to protecting wealth and power, George Kennan hit the nail on the head in 1948, with "we have about 50% of the world's wealth but only 6.3 of its population. This disparity is particularly great as between ourselves and the peoples of Asia. In this situation, we cannot fail to be the object of envy and resentment. Our real task in the coming period is to devise a pattern of relationships, which will permit us to maintain this position of disparity."

This, which has underpinned US policy ever since, may not be corrupt in the sense of illegal, but it certainly seems corrupt in the sense of morally repugnant to me.

shinola , August 31, 2019 at 11:09 am

Approaching from the opposite direction, if someone were to say "I sincerely believe that the USA has the most open & honest political system and the fairest economic system in human history" would you not think that person to be incredibly naive (or, cynically, a liar)?

There has been, for at least the last couple of decades. a determined effort to do away with corruption – by defining it away. "Citizens United" is perhaps the most glaring example but the effort is ongoing; that Weiner op-ed is a good current example.

JBird4049 , August 31, 2019 at 8:35 pm

Shinola, I'm reminded of the statement "Raymond Shaw is the kindest, bravest, warmest, most wonderful human being I've ever known in my life." in the movie Manchurian Candidate . Much of what is said today just pops out as prepackaged propaganda.

It was possible twenty, thirty, forty years ago to make a reasonable case that the federal government, as well as many of the state and municipal ones, were fairly honest and functional. It is still possible that the writer believes what he wrote, but I think saying that the belief that our system is rigged is mere irresponsible cynicism is at best an example of charming naïveté and more likely cynical propagandistic fiction itself.

[Aug 29, 2019] The Great Switch The Geo-Politics of Looming Recession by Alastair Crooke

Notable quotes:
"... Fortunately, we have some help. Adam Tooze is a prize-winning British historian, now at Columbia University, whose histories of WWII ( The Wages of Destruction ) – and of WWI ( The Deluge ) tell a story of 100 years of spiraling; 'pass-the-parcel' global debt; of recession (some ideologically impregnated) , and of export trade models, all of which have shaped our geo-politics. These are the same variables, of course, which happen to be very much in play today. ..."
"... But first, as Tooze notes, the 'pattern' starts with Woodrow Wilson's observation in 1916, that "Britain has the earth, and Germany wants it". Well, actually it was also about British élite fear of rivals (i.e. Germany arising), and the fear of Britain's élites of appearing weak. Today, it is about the American élite fearing similarly, about China, and fearing a putative Eurasian 'empire'. ..."
"... The old European empires effectively 'died' in 1916, Tooze states: As WWI entered its third year, the balance of power was visibly tilting from Europe to America. The belligerents simply could no longer sustain the costs of offensive war. The Western allies, and especially Britain, outfitted their forces by placing larger and larger war orders with the United States. By the end of 1916, American investors had wagered two billion dollars on an Entente victory (equivalent to $560 billion in today's money). It was also the year in which US output overtook that of the entire British Empire. ..."
"... Wilson was the first American statesman to perceive that the United States had grown, in Tooze's words, into "a power unlike any other. It had emerged, quite suddenly, as a novel kind of 'super-state,' exercising a veto over the financial and security concerns of the other major states of the world." ..."
"... "Americans, meanwhile, were preoccupied with the problem of German recovery. How could Germany achieve political stability if it had to pay so much to France and Belgium? The Americans pressed the French to relent when it came to Germany, but insisted that their own claims be paid in full by both France and Britain. Germany, for its part, could only pay if it could export, and especially to the world's biggest and richest consumer market, the United States. The depression of 1920 killed those export hopes. Most immediately, the economic crisis sliced American consumer demand precisely when Europe needed it most." ..."
"... Britain actually chose the course of deflation and austerity. Pretty much everybody else however, chose to devalue their currency (relative to gold), instead. But American leaders of the 1920s weren't willing to accept this outcome . They did not want their industry and markets disturbed by a flood of cheap French and German products. In 1921 and 1923 – just as today in respect to China – America raised tariffs, terminating a brief experiment with freer trade undertaken after the election of 1912. "The world owed the United States billions of dollars, but the world was going to have to find another way of earning that money than selling goods to the United States". ..."
"... "Between 1924 and 1930, world financial flows could be simplified into a daisy chain of debt. Germans borrowed from Americans, and used the proceeds to pay reparations to the Belgians and French. The French and Belgians, in turn, repaid war debts to the British and Americans. The British then used their French and Italian debt payments to repay the United States, who set the whole crazy contraption in motion again. Everybody could see the system was crazy." Only the United States could fix it. It never did. ..."
"... The flip side to this fixation with a dollar "as good as gold" was not just the inter-war hardship of a war-ravaged Europe, but also the threat of American markets flooded with low-cost European imports: German steelmakers and shipyards underpricing their American competitors with weak marks. Such a situation also prevailed after World War II when the US acquiesced in the undervaluation of the Deutsche mark and yen precisely to aid German and Japanese recovery. ..."
"... Hitler dreamed of conquering Poland, Ukraine, and Russia as a means of gaining the resources to match those of the United States, Tooze argues. "The vast landscape in between Berlin and Moscow would become Germany's equivalent of the American West". Hitler's original aim, Tooze suggests, was more that of a highly modernised and industrial first Reich – a Carolingian 'empire', such as that instigated by the Franks after the Fall of Rome. ..."
"... Although configured differently, the German National Socialist dream of a 'modern' Caroligian empire still underpins an EU vision of Europe today, as its lineal descendent. ..."
"... It is precisely this paradox on which Trump has 'zeroed-in', in order to mobilise his base towards a new view of Europe, as a predatory trade rival. The US, faced by a rising China, is retrenching into a Hobbesian world where hard 'power' is paramount, and will thus be increasingly unsympathetic to European liberal, moral-concern narratives. ..."
"... Here is the point: The EU initially would never have come into being, without America's covert political engineering . And Europe was, (and still is), consequently founded on the premise of unreserved US benignity towards the EU. But that key premise no longer holds: Can a Europe on the cusp of recession successfully manage to balance away from a US now focused on trade war toward Eurasia? ..."
"... A substantive global recession may set the whole 'crazy debt contraption' in motion again. But this time, amplified by a collapsing oil price, toppling Middle Eastern states, etc. Everybody can see the system is crazy. The United States could fix it, but it never will. ..."
"... It has weaponised the financial system so thoroughly that the US will never yield on the dollar status. The question is, do China and Russia have the political will – and capability – to assume the task of mounting a different financial order? ..."
"... In 1916, the US output surpassed that of the entire British Empire. Ninety-eight years later, US output supremacy (in PPP terms) came to an end. China surpassed America. Will a more fractured, increasingly belligerent US domestic polity be able to fix the financial order, as the latter careers from one extreme to a disordered, sanctioned and tariffed other? America most likely, will once again be wedded to a "conservative" [i.e. Hobbesian] vision of pursuing its own future. ..."
Aug 26, 2019 | www.strategic-culture.org

Is the prospect of looming global recession merely an economic matter, to be discussed within the framework of the Great Financial Crisis of 2008 – which is to say, whether or not, the Central Bankers have wasted their available tools to manage it? Or, is there a wider pattern of geo-political markers that may be deduced ahead of its arrival?

Fortunately, we have some help. Adam Tooze is a prize-winning British historian, now at Columbia University, whose histories of WWII ( The Wages of Destruction ) – and of WWI ( The Deluge ) tell a story of 100 years of spiraling; 'pass-the-parcel' global debt; of recession (some ideologically impregnated) , and of export trade models, all of which have shaped our geo-politics. These are the same variables, of course, which happen to be very much in play today.

Tooze's books describe the primary pattern of linked and repeating events over the two wars – yet there are other insights to be found within the primary pattern: How modes of politics were affected; how the idea of 'empire' metamorphosed; and how debt accumulations triggered profound shifts.

But first, as Tooze notes, the 'pattern' starts with Woodrow Wilson's observation in 1916, that "Britain has the earth, and Germany wants it". Well, actually it was also about British élite fear of rivals (i.e. Germany arising), and the fear of Britain's élites of appearing weak. Today, it is about the American élite fearing similarly, about China, and fearing a putative Eurasian 'empire'.

The old European empires effectively 'died' in 1916, Tooze states: As WWI entered its third year, the balance of power was visibly tilting from Europe to America. The belligerents simply could no longer sustain the costs of offensive war. The Western allies, and especially Britain, outfitted their forces by placing larger and larger war orders with the United States. By the end of 1916, American investors had wagered two billion dollars on an Entente victory (equivalent to $560 billion in today's money). It was also the year in which US output overtook that of the entire British Empire.

The other side to the coin was that staggering quantity of Allied purchases called forth something like a war mobilization in the United States. American factories switched from civilian to military production. And the same occurred again in 1940-41. Huge profits resulted. Oligarchies were founded; and America's lasting interest in its outsize military-security complex was founded.

Wilson was the first American statesman to perceive that the United States had grown, in Tooze's words, into "a power unlike any other. It had emerged, quite suddenly, as a novel kind of 'super-state,' exercising a veto over the financial and security concerns of the other major states of the world."

Of course, after the war – there was the debt. A lot of it. France "was deeply in debt, owing billions to the United States and billions more to Britain. France had been a lender during the conflict too, but most of its credits had been extended to Russia, which repudiated all its foreign debts after the Revolution of 1917. The French solution was to exact reparations from Germany".

"Britain was willing to relax its demands on France. But it owed the United States even more than France did. Unless it collected from France -- and from Italy and all the other smaller combatants as well -- it could not hope to pay its American debts."

"Americans, meanwhile, were preoccupied with the problem of German recovery. How could Germany achieve political stability if it had to pay so much to France and Belgium? The Americans pressed the French to relent when it came to Germany, but insisted that their own claims be paid in full by both France and Britain. Germany, for its part, could only pay if it could export, and especially to the world's biggest and richest consumer market, the United States. The depression of 1920 killed those export hopes. Most immediately, the economic crisis sliced American consumer demand precisely when Europe needed it most."

Wars are frequently followed by economic downturns, but in 1920-21, US monetary authorities actually sought to drive prices back to their pre-war levels through austerity. They engineered a depression. They did not wholly succeed, but they succeeded well enough. When the US opted for massive deflation, it thrust upon every country that wished to return to the gold standard, an agonizing dilemma. Return to gold at 1913 values, and you would have to match US deflation with an even steeper deflation of your own – and accept mass unemployment as the consequence – or devalue.

Britain actually chose the course of deflation and austerity. Pretty much everybody else however, chose to devalue their currency (relative to gold), instead. But American leaders of the 1920s weren't willing to accept this outcome . They did not want their industry and markets disturbed by a flood of cheap French and German products. In 1921 and 1923 – just as today in respect to China – America raised tariffs, terminating a brief experiment with freer trade undertaken after the election of 1912. "The world owed the United States billions of dollars, but the world was going to have to find another way of earning that money than selling goods to the United States".

That way was found: (you can guess it) – more debt. Germany resorted to the printing press. (Printing money was the only way Germany could afford to rearm in anticipation of the WWII sequel to the First WW). The 1923 hyper-inflation that wiped out Germany's savers, however also tidied up the country's balance sheet. Post-inflation Germany looked like a very creditworthy borrower.

"Between 1924 and 1930, world financial flows could be simplified into a daisy chain of debt. Germans borrowed from Americans, and used the proceeds to pay reparations to the Belgians and French. The French and Belgians, in turn, repaid war debts to the British and Americans. The British then used their French and Italian debt payments to repay the United States, who set the whole crazy contraption in motion again. Everybody could see the system was crazy." Only the United States could fix it. It never did.

Why? Because "[a]t the hub of the rapidly evolving, American-centered world system, there was a polity wedded to a conservative vision of its own future" [as global hegemon], Tooze opines .

The flip side to this fixation with a dollar "as good as gold" was not just the inter-war hardship of a war-ravaged Europe, but also the threat of American markets flooded with low-cost European imports: German steelmakers and shipyards underpricing their American competitors with weak marks. Such a situation also prevailed after World War II when the US acquiesced in the undervaluation of the Deutsche mark and yen precisely to aid German and Japanese recovery.

Fast forward to today – and here lies the root of Trump's economic Zeitgeist. The US fear has returned in a new iteration: America's global primacy is being overtaken, this time by China.

The austerity of the 1920s, and the depression that followed, eviscerated governments throughout Europe. Yet the dictatorships that replaced them were not, as Tooze emphasizes in The Wages of Destruction , reactionary absolutisms; rather, they aspired to be modernizers. And none more so, than Adolf Hitler. Tooze writes: "The originality of National Socialism was that, rather than meekly accepting a place for Germany within a global economic order dominated by the affluent English-speaking countries, Hitler sought to mobilize the pent-up frustrations of his population to mount an epic challenge to this order.

Hitler dreamed of conquering Poland, Ukraine, and Russia as a means of gaining the resources to match those of the United States, Tooze argues. "The vast landscape in between Berlin and Moscow would become Germany's equivalent of the American West". Hitler's original aim, Tooze suggests, was more that of a highly modernised and industrial first Reich – a Carolingian 'empire', such as that instigated by the Franks after the Fall of Rome.

Although configured differently, the German National Socialist dream of a 'modern' Caroligian empire still underpins an EU vision of Europe today, as its lineal descendent.

After WWII, a weakened, and chastened Europe definitively turned away from raw 'power'; or to put it a little differently, it moved beyond power towards a different style of 'empire'. Still Carolingian in essence – that is, with a centralized command (in the Frankish style), overseeing a self-contained world of laws and rules and tightly regulated cooperation.

But, with the post-war ethos of 'never again', it evolved into a millenarian project, grounded in Kant's 'Perpetual Peace' – and of his 'compelling' logic of global governance as the only solution to the brutal politics of Hobbesian anarchy, (though Kant also feared that the "state of universal peace" made possible by world government would be an even greater threat to human freedom than the Hobbesian international order, inasmuch as such a government, with its monopoly of power, would become "the most horrible despotism").

So, Europe lives a "postmodern system" that does not rest on a balance of power, but on "the rejection of force" and on "self-enforced rules of behaviour". In the "postmodern world," wrote Robert Cooper (himself a senior EU official): "raison d'état and the amorality of Machiavelli's theories of statecraft have been replaced by a moral consciousness" in international affairs.

The result is a paradox. The US solved the 'Kantian paradox' for the EU of its Liberal rejection of power politics through providing security, which rendered it unnecessary for Europe's supranational government to provide it. Europeans did not need power to achieve peace, and neither have they needed power to preserve it.

It is precisely this paradox on which Trump has 'zeroed-in', in order to mobilise his base towards a new view of Europe, as a predatory trade rival. The US, faced by a rising China, is retrenching into a Hobbesian world where hard 'power' is paramount, and will thus be increasingly unsympathetic to European liberal, moral-concern narratives.

Here is the point: The EU initially would never have come into being, without America's covert political engineering . And Europe was, (and still is), consequently founded on the premise of unreserved US benignity towards the EU. But that key premise no longer holds: Can a Europe on the cusp of recession successfully manage to balance away from a US now focused on trade war toward Eurasia?

What might a looming recession then portend? The pendulum will (almost certainly) now swing to the other extreme from the 1920s. Trump is a zero-interest, bail-out man. But this extreme swing in the opposite direction, however, is likely induce similar rounds of 'daisy-chain' sloughing-off of toxic debt onto someone – anyone – else; of competitive devaluation, and attempted deflation-export.

A substantive global recession may set the whole 'crazy debt contraption' in motion again. But this time, amplified by a collapsing oil price, toppling Middle Eastern states, etc. Everybody can see the system is crazy. The United States could fix it, but it never will.

It has weaponised the financial system so thoroughly that the US will never yield on the dollar status. The question is, do China and Russia have the political will – and capability – to assume the task of mounting a different financial order?

Why did the US not fix the system in the inter-war years? Because, Tooze tells us (in coded terms), the system had proved a gold-mine for the weapons-manufacturing oligarchs, and America was mightily taken with the unfolding prospect of its leading the world: the 'American century' ahead.

Also, before WWI, Tooze writes in The Deluge , the ability of the US to act was hindered by its ineffective political system; dysfunctional financial system, and uniquely violent racial and labor conflicts. "America was a byword for urban graft, mismanagement and greed-fuelled politics, as much as for growth, production, and profit".

Well the two 'world wars' – as principal weapons' provider – did not make that situation much better. Oligarchic fortunes and influence blossomed. The interwar years saw the intersection of certain oligarchic interests with that of organized crime in America, and WWII saw the linking of the Italian mafia into US foreign operations – and thus to the US political class.

In 1916, the US output surpassed that of the entire British Empire. Ninety-eight years later, US output supremacy (in PPP terms) came to an end. China surpassed America. Will a more fractured, increasingly belligerent US domestic polity be able to fix the financial order, as the latter careers from one extreme to a disordered, sanctioned and tariffed other? America most likely, will once again be wedded to a "conservative" [i.e. Hobbesian] vision of pursuing its own future.

[Aug 28, 2019] there are far fewer manufacturing workers overall, with about 7.5 million jobs lost since 1980.

Aug 28, 2019 | www.moonofalabama.org

Don Bacon , Aug 27 2019 22:36 utc | 208

@ Formerly T-Bear 203

a farmer has at least 3 PhD qualifications just to contend in the business

No need for a tongue-in-cheek, you're on track, if manufacturing food is akin to other manufacturing.
. . .from last year

August 2018, The fall of employment in the manufacturing sector
Today's manufacturing output is at least 5 percent greater than it was in 2000, but it has become much more capital intensive and much less labor intensive. Accordingly, workers in the sector are more likely to have at least some college education than their counterparts of years past. But there are far fewer manufacturing workers overall, with about 7.5 million jobs lost since 1980.


What is most responsible for the manufacturing job losses? Rising trade with China is often cited as a possible culprit. But competition from China only accounts for about a fourth of the decline in manufacturing during the 2000s. This theory is further eroded by the fact that local markets that did not compete with Chinese imports also saw employment declines.
A skills mismatch -- the gap between the skills workers have and the skills employers need -- has also contributed to the decline of manufacturing employment.
Prime age men and women with less than a high school degree have been hit particularly hard by changes to manufacturing employment. As the manufacturing sector has shifted from low-skilled to high-skilled work, workers who possess higher skill levels (e.g., engineers, computer programmers, software developers, etc.) have become more sought after than before. . . here


And the US supply of STEM graduates for any technical profession seems to be wanting. Meanwhile we must recognize that employment is not directly tied to the economy, given mechanization.

[Aug 26, 2019] A new assessment of the role of offshoring in the decline in US manufacturing employment

Notable quotes:
"... What has caused the rapid decline in US manufacturing employment in recent decades? This column uses novel data to investigate the role of US multinationals and finds that they were a key driver behind the job losses. Insights from a theoretical framework imply that a reduction in the costs of foreign sourcing led firms to increase offshoring, and to shed labour." [link above] ..."
"... It looks like 'free' trade fundamentalists like Krugman are going to have to revisit their ideology... ..."
"... How pathetic can Democrats get with thier anti-worker policies ..."
"... Late 90's US corporations went whole in to industrializing [extreme low wage] China... FOREX, federal deficits, ignoring the US worker, etc. were in the [sympathetic] mix. There is a chicken, which egg is not important. ..."
"... Personally, I think that Trump is exploiting the distress of the working stiff and not doing anything for him. Meanwhile, the Democratic leadership has shown callous indifference toward the working stiff so Trump gets their votes, because at least he will acknowledge that there's a problem unlike kurt and his ilk. ..."
Aug 26, 2019 | economistsview.typepad.com

JohnH , August 23, 2019 at 03:37 PM

"A new assessment of the role of offshoring in the decline in US manufacturing employment," by Christoph Boehm, Aaron Flaaen, Nitya Pandalai-Nayar 15 August 2019
What has caused the rapid decline in US manufacturing employment in recent decades? This column uses novel data to investigate the role of US multinationals and finds that they were a key driver behind the job losses. Insights from a theoretical framework imply that a reduction in the costs of foreign sourcing led firms to increase offshoring, and to shed labour." [link above]

It looks like 'free' trade fundamentalists like Krugman are going to have to revisit their ideology...

As for kurt, expect him to continue to deny the fact that 'free' trade has cost a significant number of jobs and caused enough economic disruption to tilt the election to Trump in 2016.

Further, expect the Democratic leadership to continue to tout the benefits of 'free' trade without acknowledging its severe adverse effects, both economically and politically. And of course, as long as they never acknowledge the adverse effects, they will never have to address it which will allow Trump to continue to bludgeon them on the issue.

How pathetic can Democrats get with thier anti-worker policies


ilsm -> JohnH... , August 23, 2019 at 04:47 PM
Late 90's US corporations went whole in to industrializing [extreme low wage] China... FOREX, federal deficits, ignoring the US worker, etc. were in the [sympathetic] mix. There is a chicken, which egg is not important.

The US worker lost in the evolutions. Aside from Trump who has tried anything for the US working stiff?

JohnH -> ilsm... , August 23, 2019 at 05:06 PM
Personally, I think that Trump is exploiting the distress of the working stiff and not doing anything for him. Meanwhile, the Democratic leadership has shown callous indifference toward the working stiff so Trump gets their votes, because at least he will acknowledge that there's a problem unlike kurt and his ilk.
ilsm -> JohnH... , August 24, 2019 at 04:39 AM
Like Andrew Jackson taking on Charleston on Nullification?

[Aug 26, 2019] Wolf Richter: World Trade Skids for First Time Since Financial Crisis

Notable quotes:
"... "The US economy is dominated by services, such as finance, healthcare, information services (such as telecoms), professional services (such as computer programming, lawyering, and engineering), housing, and myriad others. And despite the manufacturing slowdown, services are growing at a solid pace. About 70% of what consumers spend their money on is on services, leaving the US as the cleanest dirty shirt." ..."
"... How about this: a good number of the "services" are so parasitic that it cuts down on not only the desire but the ability to buy goods. ..."
"... automobiles have become as expensive as were homes thirty years ago. Those prices have gone up. Wages have stagnated and now are regressing as a function of purchasing power. ..."
Aug 26, 2019 | www.nakedcapitalism.com

That this year-over-year decline is still so tame, despite the explosive trade-war rhetoric, pandemic threatened and actual tit-for-tat tariffs, and even tech embargos, is largely due to companies having found ways to brush off the rhetoric, dodge some of the tariffs, shift parts of their supply chains around, or push up the tariffs into their supply chains.

By comparison, what happened during the Global Financial Crisis was a "collapse" of world trade when companies – uncertain if the banking system would still stand the next day – shut down their ordering process. This was when American consumers lost their jobs by the millions and curtailed their spending, and when car sales collapsed. From September 2008 through the trough in May 2009, the World Trade Monitor index had plunged 17.5%.

But so far in 2019, there are no signs that the American consumer has pulled back. And despite the trade war, the index has declined only 3.1% so far from the one-month peak.

The US economy is dominated by services, such as finance, healthcare, information services (such as telecoms), professional services (such as computer programming, lawyering, and engineering), housing, and myriad others. And despite the manufacturing slowdown, services are growing at a solid pace. About 70% of what consumers spend their money on is on services, leaving the US as the cleanest dirty shirt.

China.

China is experiencing a slowdown in exports that started last fall. In recent years, exports continued to rise from September through June. But not this time. Exports to the rest of the world fell 3.5% from September 2018 through June 2019, according to the World Trade Monitor data for China, which I converted to a three-month moving average to smoothen out the vary large month-to-month ups and downs of the data. The regular spikes in the chart are related to the Chinese New Year. Note the 24% plunge during the Financial Crisis:


Summer , August 26, 2019 at 9:57 am

"The US economy is dominated by services, such as finance, healthcare, information services (such as telecoms), professional services (such as computer programming, lawyering, and engineering), housing, and myriad others. And despite the manufacturing slowdown, services are growing at a solid pace. About 70% of what consumers spend their money on is on services, leaving the US as the cleanest dirty shirt."

That is one way to interpret what is happening. How about this: a good number of the "services" are so parasitic that it cuts down on not only the desire but the ability to buy goods.

ambrit , August 26, 2019 at 10:10 am

The author might make a connection between new auto sales and GDP, but here "in the trenches," disposable income has been draining off into higher than wage growth inflation in basic services and healthcare costs. Who can afford a new car when surprise medical bills absorb the resources once earmarked for long term durable domestic goods? Plus, automobiles have become as expensive as were homes thirty years ago. Those prices have gone up. Wages have stagnated and now are regressing as a function of purchasing power.

Duck1 , August 26, 2019 at 11:02 am

So we are a banking crisis away from that wile e coyote chart move? DB, looking at you. Until then we sing the stagflation chops (but there is no inflation, right, wages stagnate as prices rise).

ambrit , August 26, 2019 at 11:52 am

" that wile e coyote chart move." is the ACME of snark!

Susan the other` , August 26, 2019 at 11:14 am

How else do we end the automobile economy? Seems like this "slowdown" is going about it very gingerly. We'll still be driving cars for the next decades, just fewer of them. In order to really but the brakes on we have to create a viable alternative. Which we can do, but we don't seem willing to offer the alternative until the use of cars has been subdued. Are we letting commuters down slowly or are we letting the oil industry down slowly, so as not to topple the entire manufacturing scaffold of the world economy?

ambrit , August 26, 2019 at 11:50 am

This will be a paradigm shift in the American socio-political system. Since at least the First World War period, the hallmark of American culture has been personal mobility. First with trains, and later with automobiles, the average American could relatively easily pull up stakes and move off to some perceived better place. Prior to this, most people were constrained in their movements by the modes of transport, and the relative costs of those movement systems. Rural people who had never been farther than the local county courthouse town were the norm. A radical relocalization is in the offing.

[Aug 26, 2019] In an environment of secular stagnation in the developed economies, central bankers' ingenuity in loosening monetary policy is exactly what is not needed.

Notable quotes:
"... Europe and Japan are currently caught in what might be called a monetary black hole – a liquidity trap in which there is minimal scope for expansionary monetary policy ..."
"... "There are strong reasons to believe that the capacity of lower interest rates to stimulate the economy has been attenuated – or even gone into reverse." Good to see that some prominent economists are finally willing to say what I've been pointing out for the past five years. ..."
"... A much better idea for central banking, negotiate the seigniorage fee, up front, then let the central banker do its thing with no interference until the contract expires. Just admit, upfront, central bankers are a creation of government, serve government, let's at least do it twice as efficient as the boomers done it. Screw up half as often! Why not! ..."
Aug 26, 2019 | economistsview.typepad.com

anne , August 23, 2019 at 04:44 PM

https://www.project-syndicate.org/commentary/central-bankers-in-jackson-hole-should-admit-impotence-by-lawrence-h-summers-and-anna-stansbury-2-2019-08

August 23, 2019

Whither Central Banking?
In an environment of secular stagnation in the developed economies, central bankers' ingenuity in loosening monetary policy is exactly what is not needed. What is needed are admissions of impotence, in order to spur efforts by governments to promote demand through fiscal policies and other means.
By LAWRENCE H. SUMMERS and ANNA STANSBURY

CAMBRIDGE – The world's central bankers and the scholars who follow them are having their annual moment of reflection in Jackson Hole, Wyoming. But the theme of this year's meeting, "Challenges for Monetary Policy," may encourage an insular – and dangerous – complacency.

Simply put, tweaking inflation targets, communications strategies, or even balance sheets is not an adequate response to the challenges now confronting the major economies. Rather, ten years of below-target inflation throughout the developed world, with 30 more expected by the market, and the utter failure of the Bank of Japan's extensive efforts to raise inflation suggest that what was previously treated as axiomatic is in fact false: central banks cannot always set inflation rates through monetary policy.

Europe and Japan are currently caught in what might be called a monetary black hole – a liquidity trap in which there is minimal scope for expansionary monetary policy . The United States is one recession away from a similar fate, given that, as the figure below illustrates, there will not be nearly sufficient room to cut interest rates when the next downturn comes. And with ten-year rates in the range of 1.5% and forward real rates negative, the scope for quantitative easing and forward guidance to provide incremental stimulus is very limited – even assuming that these tools are effective (which we doubt).

These developments seem to lend further support to the concept of secular stagnation; indeed, the issue is much more profound than is generally appreciated. Relative to what was expected when one of us (Summers) sought to resurrect the concept in 2013, deficits and national debt levels are far higher, nominal and real interest rates are far lower, and yet nominal GDP growth has been far slower. This suggests some set of forces operating to reduce aggregate demand, whose effect has only been partly attenuated by fiscal policies.

Conventional policy discussions are rooted in the (by now old) New Keynesian tradition of viewing macroeconomic p