Sunday, August 5, 2018

Week-end Wrap - August 4, 2018

Week-end Wrap - August 4, 2018
by Tony Wikrent
Economics Action Group, North Carolina Democratic Party Progressive Caucus

by Tony Wikrent, July 25, 2018 [Real Economics]
The irony, of course, is that many of the rich people who are jetting around the world using aerodynamic design principles developed and introduced by the government, are conservative and libertarian ideologues who insist that government can't do anything right!
Capitalism Killed Our Climate Momentum, Not �Human Nature�
by Naomi Klein, August 3, 2018 [Intercept, via Naked Capitalism 8-4-18]
Klein is responding to the full-magazine article, "Losing Earth," by Nathaniel Rich, in the Aug. 5, 2018, issue of the New York Times Magazine
According to Rich, between the years of 1979 and 1989, the basic science of climate change was understood and accepted, the partisan divide over the issue had yet to cleave, the fossil fuel companies hadn�t started their misinformation campaign in earnest, and there was a great deal of global political momentum toward a bold and binding international emissions-reduction agreement. Writing of the key period at the end of the 1980s, Rich says, �The conditions for success could not have been more favorable.� 
....My focus is the central premise of the piece: that the end of the 1980s presented conditions that �could not have been more favorable� to bold climate action. On the contrary, one could scarcely imagine a more inopportune moment in human evolution for our species to come face to face with the hard truth that the conveniences of modern consumer capitalism were steadily eroding the habitability of the planet. Why? Because the late �80s was the absolute zenith of the neoliberal crusade, a moment of peak ideological ascendency for the economic and social project that deliberately set out to vilify collective action in the name of liberating �free markets� in every aspect of life. Yet Rich makes no mention of this parallel upheaval in economic and political thought. 
....what becomes clear when you look back at this juncture is that just as governments were getting together to get serious about reining in the fossil fuel sector, the global neoliberal revolution went supernova, and that project of economic and social reengineering clashed with the imperatives of both climate science and corporate regulation at every turn.
This is exactly the point I tried to make in response to another New York Times story, in my Facebook feed, The Democratic Party Picked an Odd Time to Have an Identity Crisis. This is also why I disagree with those on the left who argue that the present bigotry and inequality of USA was "baked in" from the start because of the intent by the founders was to create a new nation based on the rule of wealthy elites such as themselves:
What is maddening about most MSM articles and opinion pieces like this is that they completely ignore the 3/4 century effort by concentrated wealth to change the ruling philosophy of political economy in USA. Did the Foundation for Economic Education accomplish nothing? Has there been no effect from the billions of dollars poured into the Heritage Foundation, the American Enterprise Institute, the Reason Foundation and other conservative / libertarian apparatus? Was the Mont Pelerin Society a mere debating club? Accept the view that the reactionary rich have engaged in a war of ideas - in cultural warfare, to put it bluntly - to destroy the ideas of good government and collective action, and our current condition of soaring wealth inequality and collapsing social investment begins to look much different.

Alliance for Economic Justice holding three workshops in Charlotte to train activists
A year ago, Democratic progressives in the Wilmington area joined with local labor unions to host three presentations by labor activist, Les Leopold, author of Runaway Inequality: An Activist's Guide to Economic Justice (the first chapter is available in pdf here). State caucus member George Vlasist writes,
"We were so impressed with his analysis and his ability to explain complicated economic concepts in layman's terms, that we invited him down to do a book tour in Wilmington. The tour was a great success; he spoke to about 200 people at three different events, including a large public event at the ILA Hall, and held a press conference with our D-7 Congressional candidate. As a result, we formed an organization, Alliance for Economic Justice, to work on reversing runaway inequality. The Alliance includes activists from the local labor movement, the NAACP, local churches, both UNCW and Cape Fear CC, as well as progressive Dems. We see ourselves as part of a statewide and national movement that has coalesced around the ideas in the book. In NC the work is being coordinated by organizers from the CWA and the state AFL-CIO."
One of Leopold's 2017 presentations in Wilmington was videotaped, and posted on Youtube. It has been edited for brevity, and is very powerful because it clearly explains how skyrocketing CEO pay was coupled with suppression of employee pay by the corporate raiders who, immediately following the decriminalization of predatory financial practices by the Reagan regime, were allowed to purchase and loot entire companies (for example, stock buybacks were illegal before Ruinous Ronnie Reagan became Prez). Leopold also explains that almost every other issue of concern to progressives has its roots in the disastrous collateral damage caused by this economic injustice. 

The three workshops are scheduled for August 23, August 30, and September 6, 5:30pm-8pm, at the Latin American Coalition Workers Collaborative Center, 4305 Monroe Road, Charlotte, NC 28205
Email to RSVP. 

by Richard V. Reeves and Katherine Guyot, July 25, 2018 [Brookings, via Naked Capitalism 7-29-18]

Obama Treasury Secretary Tim Geithner runs lending scam against poor people
by Libby Watson, July 2, 2018 [Splinter, via Avedon's]

The one area where progressive Democrats differ markedly from regular Democrats is economics. What Geithner is doing now is simply unacceptable, but entirely coherent with what he did as Obama's Treasury Secretary to save Wall Street and the financial system after the Global Financial Crisis of 2007-2008. Watson writes:
The Washington Post has a detailed and devastating report, published Sunday evening, about the predatory lending activities of Mariner Finance, a company �owned and managed by a $11.2 billion private equity fund controlled by Warburg Pincus,� of which Geithner is president. Cool job, Tim! 
So what does Mariner Finance do? It mails checks to poor people, hoping they�ll cash them without reading the fine print�which reveal sky-high interest rates and a clause forcing the lendee to pay the company�s legal fees should it be forced to sue them for their debts.
It is especially maddening that there are many Democrats who are still puzzled and angered by such attacks on Obama and his administration, since predatory finance has been identified and condemned for decades, and its decriminalization decried. For example, in his 2010 book, The Big Short: Inside the Doomsday Machine (W.W. Norton), Michael Lewis, writes, regarding the beginnings of the subprime securitization market in the last half of the 1990s:
Subprime mortgage lending was still a trivial fraction of the U.S. credit markets�a few tens of billions in loans each year�but its existence made sense, even to Steve Eisman. �I thought it was partly a response to growing income inequality,� he said. �The distribution of income in this country was skewed and becoming more skewed, and the result was that you have more subprime customers.�
A few pages later, Lewis quotes Vincent Daniel, Eisman�s market analyst, who was beginning to closely examine the subprime market in 1997:
What first caught Vinny�s eye were the high prepayments coming in from a sector called �manufactured housing.� (�It sounds better than �mobile homes.��) Mobile homes were different from the wheel-less kind: Their value dropped, like cars�, the moment they left the store. The mobile home buyer, unlike the ordinary home buyer, couldn�t expect to refinance in two years and take money out. Why were they prepaying so fast? Vinny asked himself. �It made no sense to me. Then I saw that the reason the prepayments were so high is that they were involuntary.� �Involuntary prepayment� sounds better than �default.� Mobile home buyers were defaulting on their loans, their mobile homes were being repossessed, and the people who had lent them money were receiving fractions of the original loans. �Eventually I saw that all the subprime sectors were either being prepaid or going bad at an incredible rate,� said Vinny. �I was just seeing stunningly high delinquency rates in these pools.� The interest rate on the loans wasn�t high enough to justify the risk of lending to this particular slice of the American population. It was as if the ordinary rules of finance had been suspended in response to a social problem. A thought crossed his mind: How do you make poor people feel wealthy when wages are stagnant? You give them cheap loans. 
Those last two sentences are crucial. A bit later in Lewis's book, Eisman is attending a conference of sub-prime lenders, trying to understand their motives.
. . . . [Eisman] attended a lunch organized by a big Wall Street firm. The guest speaker was Herb Sandler, the CEO of a giant savings and loan called Golden West Financial Corporation. �Someone asked him if he believed in the free checking model,� recalls Eisman. �And he said, �Turn off your tape recorders.� Everyone turned off their tape recorders. And he explained that they avoided free checking because it was really a tax on poor people�in the form of fines for overdrawing their checking accounts. And that banks that used it were really just banking on being able to rip off poor people even more than they could if they charged them for their checks.�
Eisman asked, �Are any regulators interested in this?� 
�No,� said Sandler. 
�That�s when I decided the system was really, �Fuck the poor.��
(You can read my entire review of The Big Short, at Michael Lewis: The Big Short + Obama�s Mistake.)

"Fuck the poor" has basically been USA national economic policy since Ronald Reagan convinced enough Americans that letting "free markets' run roughshod over their fellow citizens was "morning in America." Unfortunately, Bill Clinton and the Democratic Party made themselves complicit by deciding to ignore the ill effects of this policy in order to attract as much campaign financing from the financial criminals and predators of Wall Street as the Republican Party was getting. 

A bit later, in her article last week, Avedon excerpts from Matt Stoller to put Geithner's current malfeasance in perspective by noting his position as president of the Federal Reserve Bank of New York before he became Obama's Treasury Secretary:
It's always good to remember that Tim Geithner should take much responsibility as the architect of our current woes. He wrote an autobiographical book to "explain" how he, an indifferent student who grew up entirely ordinary just happened to become the hero of the 2007 financial crisis, and, as Matt Stoller noted, nothing about that story rings true. The Con-Artist Wing of the Democratic Party: The most consequential event of this young century has been the financial crisis. But is the party of Obama ready to come to terms with its own role in the disaster? [...] You see the same rhetorical tricks and traps as we move to Geithner's tenure as president of the New York Federal Reserve, which began in 2003. Much of the discussion of Geithner's book and his time in office is essentially a rehash of the strategies pursued during the bailouts. As with the hot money flows, Geithner pretends he was part of the solution, not the cause of the problem. But Geithner also played a huge role in the run-up of leverage in the financial system, a role he lies about when discussing his time at the Fed. Geithner served at the New York Fed until 2008, and this region was the center of the financial universe, the place where profits from the boom were husbanded and collected. The New York Fed regulated Citigroup, a massive systemic risk requiring multiple bailouts and obscure financial supporting arrangements. Thus, lying about his tolerance for this run-up in leverage, and about his distance from the financial industry, is critical in painting a later portrait of a cautious but savvy crisis manager." Countries that took Geithner's advice did poorly, and those who ignored it did just fine. And then Obama put him in charge of our economy.
Near the end of her Splinter article on Geithner's current scam, Watson writes:
Is Geithner�s firm ashamed of its investment in and management of this vile business? Of course not. Warburg Pincus told the Post that �Mariner Finance delivers a valuable service to hundreds of thousands of Americans who have limited access to consumer credit.� Worse still, Mariner representatives described the company as fulfilling a �social need.�

How the Dominant Business Paradigm Turns Nice People into Psychopaths
by Lambert Strether, August 1, 2018 [Naked Capitalism]

"Free" computers for incarcerated prisoners come with steep costs, such as eye-bleeding online transaction fees
by Wanda Bertram and Peter Wagner, July 24, 2018 [Prison Policy Initiative, via Naked Capitalism 7-29-18]

Stock Buybacks Are Starving the Economy
by Annie Lowrey, July 31, 2018 [via Naked Capitalism 8-1-18]
A new report finds that big companies could have given their workers thousands of dollars� worth of raises with the money they spent on their own shares.
The once illegal practice of companies purchasing their own shares is pulling money away from employee compensation, research and development, and other corporate priorities�with potentially sweeping effects on business dynamism, income and wealth inequality, working-class economic stagnation, and the country�s growth rate. Evidence for that conclusion comes from a new report by Irene Tung of the National Employment Law Project (NELP) and Katy Milani of the Roosevelt Institute, who looked at share buybacks in the restaurant, retail, and food industries from 2015 to 2017.
....Buybacks occur when a company takes profits, cash reserves, or borrowed money to purchase its own shares on the public markets, a practice barred until the Ronald Reagan administration. (The regulatory argument against allowing the practice is that it is a way for companies to manipulate the markets; the regulatory argument for it is that companies should be able to spend money how they see fit.) In recent years, with corporate profits high, American firms have bought their own stocks with extraordinary zeal. Federal Reserve data show that buybacks are now equivalent to 4 percent of annual economic output, up from zero percent in the 1990s. Companies spent roughly $7 trillion on their own shares from 2004 to 2014, and have spent hundreds of billions of dollars on buybacks in the past six months alone.

How much might workers have benefited if companies had devoted their financial resources to them rather than to shareholders? Lowe�s, CVS, and Home Depot could have provided each of their workers a raise of $18,000 a year, the report found. Starbucks could have given each of its employees $7,000 a year, and McDonald�s could have given $4,000 to each of its nearly 2 million employees.
�Workers around the country have been pushing for higher wages, but the answer is always, �We can�t afford it. We�d have to do layoffs or raise prices,�� Tung said. �That is just not true. The money is there. It�s just getting siphoned out of the company instead of reinvested into it.�
[As I have argued a number of times, Republican tax cuts actually result in financial crashes and industrial decline because too low a tax rate encourages taking profits out of a company:
With high taxes, the only way to retain the bulk of the wealth created by a business is by reinvesting it in the business -- in plants, equipment, staff, research and development, new products and all the rest. But if tax rates are low, then there is more incentive to pull the wealth out, by declaring it as profits that are taxed at what turns out to be too low a rate. In other words, low taxes create an incentive for profit taking, not for business expansion and capital investment.]

By Tripling Its Stock Buybacks, Apple Robs Workers And The Economy
[Forbes, via Naked Capitalism 8-3-18]

The Summer 2018 issue of The American Prospect thoroughly debunks the Trump tax cuts
Here are just some of the links to the articles in the issue:
The Two Biggest Lies in Donald Trump's Tax Plan MATT GARDNER The tax plan was always going to be a huge giveaway to corporations. And the individual tax cuts were always heavily tilted to the top.
How the Tax Act Embodies the Republican Culture of Corruption SETH HANLON The Tax Act is a Christmas tree of special-interest tax breaks. The only thing more corrupt than the substance was the way it was enacted.
The Koch Brothers' Best Investment KAYLA KITSON How a $40 million political outlay yields a $500 million tax cut.
Talking Taxes with the Voters GUY MOLYNEUXT he more people learn about the Tax Act, the less they like it.
The Broad Support for Taxing the Wealthy STANLEY GREENBERG Why Democrats should run on rolling back the tax cut and raising taxes on the rich
The Democrats' Response HAROLD MEYERSON Far from giving Republicans bragging rights, the Tax Act presents Democrats with a potent line of attack. But can they stay united when they put forth their own alternatives?
Why the Tax Act Will Not Boost Investment DEAN BAKER Will lower corporate taxes generate an investment boom? The evidence suggests not.
The Curse of Stock Buybacks WILLIAM LAZONICK For the past three decades, the overriding priority of American corporations has been paying their shareholders. That�s just what they�ve done with their tax cut.
Raises and Bonuses: The PR Fraud WILLIAM RICE Republicans and corporations tried to convince Americans that their employees would be rewarded. But only 4 percent of workers have gotten bonuses or raises.
Demonizing the IRS to Protect Tax Evaders DAVID CAY JOHNSTON Weakening tax enforcement combined with new complexity invites evasion and massive illicit tax savings for the rich.
Massive Spending Cuts: The Tax Act's Hidden Costs JOSHUA HOLLAND Republicans rediscovered the peril of the enlarged deficit�as a pretext for gutting social spending.
How the Tax Act Undercuts Health-Care Reform PAUL STARR Ending the individual mandate will inflate premiums in the Obamacare marketplaces�especially for the middle class.
Accelerating the Death of Real Jobs KATHERINE V.W. STONE The Tax Act adds insidious new incentives to turn more jobs into casual contract work.
The Tax Act Actually Promotes Off-Shore Tax Tricks REUVEN AVI-YONAH The Tax Act creates additional incentives to shift income offshore for purposes of tax avoidance, and what is worse, it creates incentives to shift actual jobs.
Worsening Inequality HEATHER BOUSHEY and GREG LEISERSON The Tax Act worsens inequality both in the tax changes and in the program cuts used to address the resulting deficit.
The Harm to Affordable Housing ALYSSA KATZ By cutting rates for the wealthy, the Tax Act slashes the value of the Low-Income Housing Tax Credit.
Penalizing Marriage for the Poor JORDAN ECKER Incredibly, the Tax Act actually punishes low-income people for getting married.
What Else Could We Do with $1.9 Trillion? JON RYNN If we spent that money on infrastructure rather than tax cuts for the rich, we would get better economic performance and more good jobs.
Want to Expand the Economy? Tax the Rich! NICK HANAUER If Democrats want to win big in November, they must do more than just renounce trickle-down economics. They need to replace it.
Principles for Tax Reform ROBERT KUTTNER The 2017 Tax Act not only harmed most Americans, but upstaged true, overdue reforms. Here are some key elements, as themes for both politics and policy.

The Michael Hudson Report: The �Next� Financial Crisis and Public Banking as the Response
by Yves Smith, August 2, 2018 [Naked Capitalism]
In this interview, Hudson begins be describing how GDP accounting is deeply flawed because of such things as counting higher fees and penalties paid to banks as positive contributions to GDP, rather than a negative, i.e. an increase in overhead expense. 

Dante Dallavelle: OK. So we have prominent economists and policymakers, like Geithner, Bernanke Paulson, etc., making the point that we need not worry about a future crisis in the near term, because our regulatory infrastructure is more sound now than it was in the past, for instance before 2008. I know you�ve talked a lot about the weak nature of financial regulation both here at home in the United States and internationally. What are the shortcomings of Dodd Frank? Haven�t recent policies gutting certain sections of the law made us more vulnerable, not less, to crises in the future? 
Michael Hudson: Well, you asked two questions. First of all, when you talk about Geithner and Bernanke � the people who wrecked the economy � what they mean by �more sound� is that the government is going to bail out the banks again at public expense. 
It cost $4.3 trillion last time. They�re willing to bail out the banks all over again. In fact, the five largest banks have grown much larger since 2008, because they were bailed out. Depositors and companies think that if a bank is so crooked that it grows so fast that it�s become too big to fail, they had better take their money out of the local bank and put it in the crooked big bank, because that�s going to be bailed out � because the government can�t afford to let it go under.

Michael Hudson: The best way to think about this is that suppose that back in 2008, Obama and Wall Street bagman Tim Geithner had not blocked Sheila Bair from taking over Citigroup and other insolvent banks. She wrote that Citigroup had gambled with money and were incompetent, and outright crooked. She wanted to take them over.
Now suppose that Citibank would had been taken over by the government and operated as a public bank. How would a public bank have operated differently from Citibank? 
For one thing, a public entity wouldn�t make corporate takeover loans and raids. They wouldn�t lend to payday loan sharks. Instead they�d make local branches so that people didn�t have to go to payday loan sharks, but could borrow from a local bank branch or a post office bank in the local communities that are redlined by the big banks.
A public entity wouldn�t make gambling loans for derivatives. What a public bank would do is what�s called the vanilla bread-and-butter operation of serving small depositors, savers and consumers. You let them have checking accounts, you clear their checks, pay their bills automatically, but you don�t make gambling and financial loans. 
Banks have sort of turned away from small customers. They�ve certainly turned away from the low-income neighborhoods, and they�re not even lending to businesses anymore. More and more American companies are issuing their own commercial paper to avoid the banks. In other words, a company will issue an IOU itself, and pay interest more than pension funds or mutual funds can get from the banks. So the money funds such as Vanguard are buying commercial paper from these companies, because the banks are not making these loans. 
So a public bank would do what banks are supposed to do productively, which is to help finance basic production and basic consumption, but not financial gambling at the top where all the risk is. That�s the business model of the big banks, and some will lose money and crash like in 2008. A public bank wouldn�t make junk mortgage loans. It wouldn�t engage in consumer fraud. It wouldn�t be like Wells Fargo. It wouldn�t be like Citibank. This is so obvious that what is needed is a bank whose business plan is not exploitation of consumers, not fraud, and isn�t gambling. That basically is the case for public ownership.

Bill Black: Mankiw Whiffs on �Learning the Right Lessons from the Financial Crisis�
by Yves Smith, August 1, 2018 [Naked Capitalism]
Black is attacking a recent New York Times book review by H. Gregory Mankiw,  �Learning the Right Lessons From the Financial Crisis.� Mankiw teaches economics at Harvard and was chief economist for President Dubya Bush. Mankiw is also the author of the most widely used introductory economics textbooks, which have been criticized as "indoctrination" for being highly skewed in favorably discussing only neoliberal classical economics. The book Mankiw reviewed is by Laurence M. Ball.
Ball, and Mankiw, however, have failed to present an honest account of the lessons we need to learn from the crisis. The reason they have failed is the same that Ball attributes to former Treasury Secretary Paulson � doing the right thing would require Ball and Mankiw to admit that their neoclassical ideologies led them to teach bad economics and terrible economic policies that helped produce the criminogenic environment that caused the 2008 financial crisis. They would have to admit that they actually had no relevant expertise or experience in understanding or preventing such criminogenic environments. They would have to admit that they ignored George Akerlof and Paul Romer�s warnings about �looting� in their famous 1993 article. Recall that Mankiw was the official discussant when Akerlof and Romer presented their paper and that his classic example of unintentional self-parody of neoclassical nostrums was his infamous remark as discussant that �it would be irrational for savings and loans [CEOs] not to loot.� Like Paulson, Mankiw and Ball know that if they embraced and taught the real lessons of the 2008 financial crisis about elite fraud and predation, their neoclassical peers� would pillory them for their heresy.

Wall Street�s Dark Pools Get a Bonanza Wrapped as Reform by the SEC
By Pam Martens and Russ Martens, July 25, 2018 [Wall Street on Parade]
The Securities and Exchange Commission (SEC), which has had two separate Wall Street lawyers at its helm for the past five years (under both the Wall Street- friendly Obama administration as well as the current Trump administration), has released a 558-page document that attempts to pass itself off as reforming Wall Street�s Dark Pools. Instead, it simply tinkers around the meaningless edges of reform. 
Dark Pools are trading venues that should not exist in an efficient, transparent and honest securities market. They are effectively unregulated stock exchanges being run internally by some of the biggest Wall Street banks on Wall Street: The same banks (like Citigroup, JPMorgan Chase, Goldman Sachs and Merrill Lynch) that have been serially charged with abusing their customers. 
Instead of sending their stock trades to the New York Stock Exchange or another independent stock exchange, the big Wall Street banks route the customers� trades to their internal trading venue � raising enormous conflicts of interests which the SEC fully acknowledges in its rule-making document. The SEC uses the old canard that liquidity will be harmed if it doesn�t continue to allow these outrageous conflicts to exist.

How Did Koch Industries� Law Firm Grab Control at the White House?
by Pam Martens and Russ Martens: July 30, 2018 [Wall Street on Parade]
....despite the majority of contributions from the Jones Day law firm�s partners flowing to the Hillary Clinton presidential campaign during 2015-2016, an unprecedented 12 of its lawyers headed to important posts in the Trump administration in one fell swoop on January 20, 2017 � Trump�s inauguration day.
Equally disturbing, in May of last year, the National Law Journal reported that the former Jones Day lawyers, now firmly entrenched in the corridors of power in the Federal government, had �received a blanket waiver clearing them of ethical conflicts,� and allowing them �to take up some matters they may have worked on in prior jobs.�
That might come in handy for White House Counsel Don McGahn and his Chief of Staff, Ann Donaldson, both of whom hail from Jones Day. They previously represented Freedom Partners, the Koch Industries front group. Freedom Partners quickly provided the Trump administration with a list of regulations it wanted gutted � like the Paris Climate accord (which Trump revoked on June 1, 2017) and numerous EPA rules � and threatened those lawmakers who didn�t get on board, writing that �Freedom Partners will hold lawmakers who oppose regulatory relief accountable for their positions.� 
In addition to Jones Day, which has been a lead law firm for Koch Industries� mergers and acquisitions for years, Freedom Partners is also a stand out for how many of its former employees ended up in the Trump administration. SourceWatch reported in April that another dozen people who previously worked at Freedom Partners are now working in the Trump administration. Among that group was Marc Short, former Freedom Partners President, who became Director of Legislative Affairs for Trump, pushing through many of the directives on the Freedom Partners� list of demands. Short stepped down this month from his post.

The Koch Government: These 44 Trump Officials Have Close Ties to Right-Wing Billionaire Brothers
[Public Citizen, via Naked Capitalism 8-3-18].

Trump is going to use America�s strong economic numbers to ensure a GOP midterm victory 
[NBC, via Naked Capitalism 8-1-18].
I don't think arguing about the state of the economy is going to persuade anyone to vote differently. The commentary in the excerpt is by Lambert of Naked Capitalism, and he identifies the real problem: some Democrats are painting themselves into a corner by insisting that Trump has initiated a trade war that is going to cause an economic calamity, but the statistics show the economy humming along. The thing is: the statistics are highly flawed, and do not capture the reality of a destroyed working class, and a middle class that is circling the drain. But the time to have that discussion was immediately after the 2007-2008 Global Financial Crisis; by 2012, Democrats did not want any discussion about how miserable -- and miserly -- the Obama "recovery" actually was. Democrats relied on grossly flawed national economic statistics to defend the Obama recovery, and missed the historic opportunity to force the economics profession to abandon its infatuation with neoliberalism
�[T]here�s enough substance in the numbers and in the nearly 3 percent growth rate for the five complete quarters he�s been president that a salesman as good as Trump can sell the success. Democrats were left to grumble about the rich benefiting most, and the mainstream press pointed to farmers hurrying silos of soybeans to China ahead of looming tariffs. But others recognized the seriousness of 4.1 percent growth. The Twitter feeds of House Minority Leader Nancy Pelosi (D-Calif.), and potential presidential candidates like Sens. Cory Booker (D-N.J.), and Kamala Harris (D-Calif.), were silent on the numbers�. The president can help elect Republicans with the economic numbers because the 2018 midterms are going to be all about Trump.� � If indeed the midterms are nationalized, that�s not a bad tactic for the Republicans to use. Of course, I don�t think a �You�ve never had it so good!� message is full of win, because the material conditions of most voters don�t support that, but given Trump�s well-deserved reputation for puffery, voters might well convert his triumphalism into �Things are way better than the nay-sayers said they would be.� And (modulo an October crash) they�d be right.

Details of Koch operations against the Democratic Party, from the Koch annual confab in Colorado Springs
by DownWithTyranny, August 1, 2018 []
Note the Koch operatives have decided that Alexandria Ocasio and the Congressional campaign of Kaniela Ing in Hawaii are the "biggest threat[s]" to their libertarian dictatorship.
Reports leaking out of the Koch shindig indicate that the network is interested in bolstering the Republican wing of the Democratic Party-- the Blue Dogs and New Dems who accept key Koch ideology-- against progressives like Bernie and the new crop of Democrats coming up, like Ro Khanna, Pramila Jayapal, Alexandria Ocasio, Randy Bryce, Rashida Tlaib, Jess King-- and in Hawaii, Kaniela Ing, who they are already working furiously against in favor of a gaggle of Republicans pretending to be Democrats. They have identified Ing as the biggest threat to their program in America. One Koch operative told me that if Ing gets into Congress "with that girl from the Bronx"... the trajectory of American politics could change for decades... We will never allow him to win there [and that] is already set in stone. He's toast... If we can destroy someone like Ing in the bluest state in the nation, redirecting the Democratic Party will not be that difficult... Sanders and Warren and their noisy little movement isn't going anywhere."
Expect the Kochtapus to ramp up tens of millions in spending to run dirty ads against Ocasio, Ing, and other progressives in the Democratic Party. A way must be found to limit the free speech of the very wealthy, probably by creating cultural norms and expectations similar to those which limit the free speech of military officers. This will probably involve a renewal of the classical republican ideals which  held that the greatest threats to a republic were a standing army, and a cabal of the richest. First and foremost, of course, is the elimination of the Roberts Court's fatal Citizens United decision.

DownWithTyranny has a long excerpt from a report from Phillip Elliott for Time which included this important tidbit:
Tim Phillips, the President of Americans for Prosperity, a day later explained why his group decided not to campaign against vulnerable Democratic Sen. Heidi Heitkamp and instead chose to run a low-cost digital ad thanking her for her vote to roll back some bank regulations. Her rival, Rep. Kevin Cramer, is bad on issues core to the Koch ideology, especially his support for the Export Import Bank.

The Radical Left�s Agenda Is More Popular Than the Mainstream GOP�s
by Eric Levitz, August 2, 2018 [New York Magazine, via Naked Capitalism 8-3-18].
New public opinion research from Data for Progress (DFP) spotlights this reality. In partnership with Yougov Blue, the progressive think tank polled a variety of left-wing economic policy ideas that have long been deemed too radical to merit pollsters� attention or congressional scrutiny. Some of these ideas have recently won the support of the Democratic Party�s most left-wing lawmakers; others lie beyond the bounds of Bernie Sanders�s political imagination. 
And virtually all of them are more popular than the mainstream Republican Party�s economic agenda. 
Take government drugs (�please): DFP and YouGov asked voters, �Would you support or oppose having the government produce generic versions of life-saving drugs, even if it required revoking patents held by pharmaceutical companies?� 
Respondents approved of that idea by a margin of 51 to 21 percent. The proposal enjoyed the approval of a majority of Trump voters, and actually garnered more support in (stereotypically conservative) rural zip codes than in urban ones.
Levitz then explains that the USA government has a power to use patents similar to the power of eminent domain, citing a 2016 Washington Post op-ed by medical and legal scholars from Yale and Harvard University.
As the price of new hepatitis drugs was skyrocketing in 2016, the Obama administration had the power to override privately held patents and order the production of generic versions of the breakthrough pharmaceuticals. All available evidence suggests that there would have been broad public support for such a move.... The fact that this was never even discussed is a reflection of the pharmaceutical lobby�s influence, not the American public�s deep belief in the inviolability of intellectual property rights.
Two other "radical" policy ideas with popular support that are not even being discussed by political, media, and economic elites, according to the Data for Progress research:

56 percent support for �the creation of a publicly-owned internet company to fill coverage gaps in rural, urban, or remote areas that currently lack robust Internet access.�

55 percent support �the federal funding of community job creation for any person who can�t find a job.�
The graph below is from the Data for Progress website:

Levitz concludes:
It is virtually impossible to comprehend how the U.S. Congress could have spent most of 2017 trying to pass regressive tax cuts and draconian reductions in federal health-care spending � amid overwhelming public opposition amongRepublican voters, and a literal public-health emergency concentrated in GOP-controlled regions of the country � without stipulating that economic elites and business interests currently dominate the American political system.

JP Morgan Chase employee granted patent for "Dynamic Game Deployment"
by Pam Martens and Russ Martens: July 31, 2018 [Wall Street on Parade]
The patent might not be creepy for the owner of a video game arcade but JPMorgan Chase is the largest bank in America � with a global footprint and an unprecedented three Federal felony counts to which it has pleaded guilty in the past four years. The first two counts came in 2014 for looking the other way at Bernie Madoff�s Ponzi scheme as the bank watched hundreds of billions of dollars come and go through his business account at the bank, but never for the payment of securities he was supposed to be trading for clients. The next felony count came in 2015 for being one of multiple banks engaged in rigging the foreign exchange market
The patent was approved on January 16 of this year under the title of �Dynamic Game Deployment.� Under �Background� for the patent, it says this: �Interactive games or challenges can be an effective tool to motivate/incentivize users, employees, etc., to achieve various goals or objectives.� 
....These statements caught our eye because one of the biggest concerns of Federal regulators is the culture of Wall Street and why its minions seem to be hopelessly incentivized to engage in abusing customers and illegal activities. JPMorgan�s culture has been so bad that two trial lawyers Helen Davis Chaitman and Lance Gotthoffer, published a book on the subject, comparing the bank to the Gambino crime family.... 
With JPMorgan having more software developers than Google, a tech budget more than five times its stock market regulator�s total budget to police all of Wall Street, and a steady history of settling regulatory lapses on the cheap and getting deferred prosecution agreements for criminal felony counts from the U.S. Justice Department, who among us still believes that Wall Street is a free/efficient market place?

The fightback against the bitcoin energy guzzlers has begun 
by Stepehn Armstrong, July 31, 2018 [Wired, via Naked Capitalism 8-4-18].
It is hard to believe how much electricity is required to power the computers that solve the cryptological puzzles on which are based the blockchain cryptocurrencies such as Bitcoin. So much electricity is sucked up by these operations that they distort energy markets for entire regions. Now local governments are being forced to react. �Upstate NY (cheap hydropower), Iceland (geothermal) and China are all pushing back against bitcoin miners..."
Thanks to nearby Niagara Falls, Plattsburgh has a quota of cheap electricity available at a low rate - 2.7 cents/kwh for residential or five cents/kwh for industrial use � against a US average of seven or eight cents. The general rule of thumb for those wanting to compete with Chinese miners is to keep electricity costs at four cents or less, according to Shone Anstey, co-founder of Blockchain Intelligence Group. And so Plattsburgh�s prices have attracted cryptominers to the region since late 2016 and the city now hosts two large miners, six medium-sized operations and hundreds of hobbyists. This added nearly $10 to residents electricity bills for January. 
Read, a former economist, says his main concern is that � unlike traditional industries or even server farms � the electricity demand of cryptomines don�t correspond to jobs or investment in the city. �Per MW of capacity, cryptominers create one one-hundredth of the jobs we would typically see from an industrial user with the same power needs,� he argues. �Typically, if a company moves into the area they�ll build a factory � that takes six months, offers jobs and invests them in the area. Cryptominers can come and go in a weekend � it�s the most footloose industry I�ve ever seen, the most energy intensive industry and the least labour intensive.�

The city struck back in March, banning the launch of new bitcoin mining firms for 18 months and asking the local power regulator - the New York State Department of Public Service - for permission to raise electricity rates for existing miners. In May and June, the Department agreed - allowing Plattsburgh and neighbouring counties to impose extremely high-density load tariffs on bitcoin cryptocurrency miners.

�Why your city government should buy your local newspaper� 
[The Week, via Naked Capitalism 7-30-18].
�Journalism is not that expensive. Even small cities could easily muster up enough cash to get a municipal paper started�. Here�s how it could work: A municipality would set up a public journalism corporation operating on an independent, nonprofit basis, and seed it with some public revenue� For obvious reasons of journalistic independence, we wouldn�t want this under the direct management of the city government. Overall control could be in the hands of an independent board, perhaps half appointed by the government and half elected by the paper�s employees; or perhaps elected by the general citizenry, or some other method. The point is that the city would own the paper, but not control it directly, to avoid the appearance (or reality) of political influence. Funding would be locked in over a long period, and the city government would be legally forbidden from pulling funding over unfavorable coverage. Ideally, revenues from subscriptions and advertising would cover ongoing expenses. It might take a couple years of subsidies to reach that point, but it�s not impossible. Many local papers cored out by capitalists were funding themselves easily � the owners just preferred to take a quick one-time payout and destroy the business rather than collect 1 percent profits over time.�

Accidents at Amazon: workers left to suffer after warehouse injuries
by Michael Sainato, July 25, 2018 [The Guardian, via Naked Capitalism 7-27-18]. 

THE DIRTY DOZEN: 2018 Employers Who Put Workers and Communities at Risk
Amazon is at the top of the list. Number ten is Tesla. 

UPS Teamsters Take On Two-Tier Pay Structure 
[Labor Notes, via Naked Capitalism 7-30-18]. 
�There are no flashy special effects in Tyler Binder�s 12-minute video, �Why the UPS 2018 contract sucks!� No stirring soundtrack, no animation, no laugh track. It�s just him and his whiteboard, explaining in plain language how the tentative agreement would affect every group of workers. But the video went viral. Just two weeks after he uploaded it, it had 90,000 views on Facebook and 50,000 on YouTube�. What�s so bad about this pact? For starters, it would undercut the full-time drivers who deliver packages by allowing UPS to create a second tier of drivers at a much lower wage. UPS is forecasting $6 billion in profit this year. Already a vast underclass of low-paid part-timers do much of the inside work�sorting, loading, and unloading parcels. But till now, package delivery jobs have been sacrosanct.� 

Mass. legislature reaches compromise on clean energy bills
The Sun (Lowell, Mass.)/The Canadian Press/State House News Service (7/31) [via American Wind Energy Association 7-31-18]
The Massachusetts legislature has reconciled a combination of House and Senate bills regarding clean energy and issued a compromise bill that would increase the state's Renewable Portfolio Standard by 1% until the end of 2019. After that, it would increase 2% annually until the end of 2029.

Gov. Cuomo urges interior secretary to embrace N.Y. offshore wind
The Hill (7/30) [via American Wind Energy Association 7-31-18]

New York hopes to add 2.4 gigawatts of new installed offshore wind capacity by 2030 and the federal government "has an opportunity to play a significant role in this success story," wrote Gov. Andrew Cuomo in a letter to Interior Secretary Ryan Zinke. "Instead of trying to revive the fossil fuel industry, I call on you to join us in our efforts to build a 21st century clean energy economy," he wrote.

US ramping up wind development ahead of PTC phaseout
CleanTechnica (7/27) [via American Wind Energy Association 7-30-18]
The US is expected to add more than 30 gigawatts of new installed wind capacity before the scheduled phaseout of the wind energy Production Tax Credit begins in 2021, says MAKE Consulting. The report notes challenges and drivers affecting the industry, such as growing demand from commercial and industrial buyers.

Wind turbine engineers work toward 15 MW systems of the future
IEEE Spectrum, [via American Wind Energy Association 7-27-18]
Wind turbine technology is advancing to make larger, higher capacity wind turbines such as an 8.8 megawatt turbine by Vestas Wind Systems. Turbines of 15 MW could be on the horizon, but making the system lighter remains a challenge.

Boeing struggling to decide how to replace 757
by Alex Derber, Jul 12, 2018 [Aviation Week and Space Technology]
....three years after Boeing ruled out a reengined 757, it still has not signed off on the only alternative program: a clean-sheet design termed the new midsize airplane (NMA). The NMA is intended to plug a capacity gap in the 220-270-seat bracket across the Boeing and Airbus product lines. This gap sits roughly between the capacities of the manufacturers� largest narrowbodies, the Boeing 737-10 and Airbus A321neo, and their smallest widebodies: the 787-8 and A330-800. Intended range for the new aircraft is about 5,000 nm. 
Boeing predicts a demand for 4,000 aircraft in this size and range bracket, and would expect to claim at least half the market following the NMA�s entry into service in 2025 or 2026. Those numbers would add up to twice the sales of the 757, but Boeing so far seems unable to reconcile challenges surrounding the NMA�s configuration and pricing.

Two Politicos Leading NASA Is A Bad Idea
[Aviation Week & Space Technology 7-31-18]
The Trump administration�s decision to ignore administrator Bridenstine�s request for a deputy with a deep technical and operational experience is troubling.

Noise And Emissions Are Central Issues For Resurgent Supersonics
by Guy Norris and Graham Warwick [Aviation Week & Space Technology 7-31-18]
Difficulty finding suitable engines is fueling pressure to set less stringent noise and emissions standards for supersonic aircraft.
Amtrak to invest $370 million over 3 years in new equipment
[Railway Age 7-30-18]
A $370-million investment in new equipment during a three-year period will allow Amtrak to double its engineering efforts along the Northeast Corridor.

Excavation of Seattle's East Link Bellevue tunnel completed 5 months ahead of forecast
[Railway Age 7-23-18]
The tunnel is 1,985 feet long. Neither a tunnel borer nor cut and cover was used. Details of its excavation were posted on, along with a two minute video:
The tunnel, which is 12 to 30 feet below Bellevue�s surface, isn�t being dug by a boring machine, like Bertha, or cut-and-cover. Instead, Sound Transit crews are using sequential excavation method (SEM), which removes small amounts of soil at a time with an excavator and iron girders. As the soil is removed, concrete is sprayed along the tunnel�s edge. Then crews continue lining the tunnel with support equipment and concrete.

SNCF of France awards �3bn next-generation high-speed TGV contract
by  Kevin Smith, July 26, 2018 [International Railway Journal]
The board of directors of SNCF Mobility have approved a contract worth �2.7bn with Alstom for the supply of 100 next-generation TGV high-speed trains. 
The new Avelia Horizon trains have been developed jointly by Alstom and French National Railways (SNCF) since 2016 and will operate throughout France, with delivery set to take place between 2020 and 2023. The project is expected to create 4000 jobs across the French rail industry over the next 10 years with 10 of Alstom�s French plants set to contribute. The new trains will consist of two compact power cars and articulated double-deck coaches. The design of the train increases passenger areas by 20% and will enable SNCF to accommodate up to 740 passengers in the highest capacity configuration... Avelia Horizon has a maximum speed of 350km/h compared with 320km/h for a TGV Duplex, a maximum output of 8MW and a maximum axleload of 17 tonnes.

Manila subway construction to begin this year
[Railway Age, 8-2-18]
The secretary of the Philippines Department of Transportation Arthur Tugade confirmed at a press briefing on August 1 that major construction will begin on the first underground metro line in Manila by the end of this year, earlier than previously scheduled. Full Article

The New Face of the Motor City
[Machine Design, July 31, 2018]
A shining example of Michigan's manufacturing renaissance, Baker Industries used innovation and new technology to expand its client base and succeed even when times were tough. Full article
by Chokedee Kaewsang and Jeff Kerns, July 19, 2018 [Machine Design]
Based on an interview with Chokedee Kaewsang, deputy secretary general of Thailand�s Board of Investment. Thailand plans to become a manufacturing powerhouse by offering very lucrative tax breaks, one of the few economic development tools that does not incur the wrath of neoliberals. Thailand had a population of 68.9 million souls in 2016. 
In 2016, Thailand ranked 14th on the Global Manufacturing Competitiveness Index by Deloitte Touche Tohmatsu Limited and the U.S. Council, and is projected to rank the top 15 in 2020. 
Thailand ranked the sixth largest commercial vehicle manufacturer in the World in 2016.
Thailand is a growing robotics market in Asia, ranked eighth in the Global Supply of Industrial Robots in 2015. 
Thailand was ranked the second largest global producer and exporter of hard disk drives (HDD). 
Thailand�s machinery industry has seen substantial growth in recent years. According to the Machinery Intelligence Unit,5 in 2016, exports of machinery and parts reached $7.7 billion. The largest sector was industrial machinery with an export value of 77%, followed by agricultural machinery at 13% and machine tools at 10%.
Six Reasons Copper Demand is Set to Soar
[Machine Design, August 2, 2018]
The estimated global market for copper in 2023 is about $172 billion, according to analysts at Matmatch, a materials database company in Germany. Full article

Trump�s pick to head White House science office gets good reviews
[Science, via Naked Capitalism 8-2-18].

Mike Pompeo�s Plan to Deny China Exclusive Rights to the Indo-Pacific Region
[The National Interest, via Naked Capitalism 8-2-18]. 
Where Is the Left Wing�s Foreign Policy? [The New Republic, via Naked Capitalism 8-2-18].

New York Times USA map of 2016 presidential election results, precinct by precinct
by Matthew Bloch, Larry Buchanan, Josh Katz, and Kevin Quealy, July 25, 2018 [New York Times]
This is a truly amazing achievement of internet data graphics.

The Market Police - Review of Globalists: The End of Empire and the Birth of Neoliberalism
by J. W. Mason, June 1, 2018 [The Boston Review]
Review of Globalists: The End of Empire and the Birth of Neoliberalism, by Quinn Slobodian,
(Harvard University Press, 2018, $35 hardcover)

Mason points to the fact that neoliberalism is actually a rejection of the idea of the United States as a self-governing republic:
The Federalist Papers open by Alexander Hamilton�s observation that U.S. independence offers an experiment to decide �whether societies of men are really capable or not of establishing good government from reflection and choice.� Slobodian�s neoliberals are, in effect, those whose answer is: not.
In July 2016, I tried to explain this in detail by focusing on the Constitutional mandate to promote the General Welfare, in The Historical Context of Mercantilism, Republicanism, Liberalism and Neoliberalism.
....the past half-century of theoretical and policy dominance by neoliberalism has been a colossal social experiment in replacing the public virtue of republicanism, with the economic liberalism of a market economy. By any measure I care about, the experiment has been a disastrous failure. A solid majority of citizens have repeatedly told pollsters they desire an end to a dependence on fossil fuels, and a solution to the problem of climate change, but no effective responses have been delivered from a political system held in thrall to neoliberal ideas. The very idea of government intervention into the economy to achieve such goals is held by the neoliberal ideologues to be a mis-allocation of resources and an encroachment by government on the "liberties of the people" But if the citizens cannot use their government�the government that supposedly derives its powers from their consent, and which therefore professes its sovereignty to reside in the people�to impose their will on "the market," then what instrument do they have to decide their own destiny?

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