Archive for the 'Economics' Category

Why China Will Not Rule the World

Saturday, November 5th, 2022

The China Boom; Why China Will Not Rule the World, Ho-fung Hung 2016

The China Boom <><> <> <> <> Ho-fung Hung

Hong Kong born Hung is a sociologist who has studied capitalism and Chinese history extensively. This book sites the many studies and research about the rise of modern China, its politics, economics, its capitalist development, and its place in the global world order. Here is a short summary of his conclusions.

Amid the late twentieth-century rise of global neoliberalism, under which the United States and Europe shifted to financial expansion, debt-driven consumption, and reliance on imported manufactured goods from low-wage countries, China eschewed central economic planning and absorbed substantial foreign-capital accumulated during the industrial takeoff of its Asian neighbors, particularly those of Chinese diasporic origins, turning itself into a dynamic center of export-driven capitalism…It is apparent that China has no intention of or capacity for transforming the global neoliberal order because the China boom has been relying heavily on transnational free trade and investment flow. China also makes significant contribution to the perpetuation of U.S. global dominance through its addiction to U.S. public debt.


Mao and Deng

..SOEs (State Owned Enterprises) and state control of the marketing of agricultural products as a means to speed up rural surplus extraction and industrial capital accumulation began in certain KMT (Kuomintang) controlled areas before 1949. What the CCP (Chinese Communist Party) did after 1949 was to expand this state-owned sector to the whole economy and to collectivize agriculture, turning the state into the sole agent of capital accumulation. As a consequence, China managed to build an extensive network of heavy industries and infrastructure despite its international isolation in 1949-1979. It also successfully defended its sovereignty and geopolitical security vis-a-vis both the United States and the Soviet Union. The Mao period in China represented the culmination of a century of the state elite’s quest for state-led industrialization…the expansion of KMT-controlled state enterprises, the successful land reform, and the rise of state-directed rural cooperatives that facilitated agriculture-to-industry surplus transfers in Taiwan can be seen as a mild variation of SOEs and the People’s Commune in Mao China. This continuity attests to Immanuel Wallerstein’s provocative formulation that “actually existing socialist countries” emerging in mid-twentieth century were always part of the capitalist world system and that their socialist system has been little more than a strategy of rapid capital accumulation and industrial catch up under the strong hands of mercantilist states.

In retrospect, many Deng and post-Deng reform measures would not have been that successful had it not been for the legacies of the Mao era. The SOEs and infrastructure constructed in Mao times, though moribund and unprofitable at the advent of reform, were important foundations for the capitalist takeoff during the reform period. For example, many foreign companies investing in China did not start from scratch but began as joint ventures with preexisting SOEs. At the same time, many SOEs developed into sizeable transnational capitalist corporations with financial and policy support from the state, though ownership changed from the state by itself to other combinations — for example public listing but with the government owning a majority share. Most of China’s biggest corporations today originated in the Mao era or were built on state assets developed in that era…It is not surprising that many other former socialist countries in Russia and Eastern Europe have also witnessed a similar predominance of state corporations.

Other Mao-era legacies include the restriction of rural-urban migration by means of the household registration system and public investment in rural education and rural health care in the People;s Communes. These policies created a generation of literate and healthy rural laborers available in great numbers for private, export-oriented enterprises as well as TVEs (Township and Village Enterprises) from the 1980s on. The self reliance policy in the Mao period prevented the large-scale external borrowing in the 1970s that many other developing or socialist countries indulged in, thus sparing China from the international debt crisis in the 1980s that brought large setbacks to the developing world and the Soviet bloc.

China has not challenged U.S. global dominance despite its leader’s postures and its nationalist press’s rhetoric. On the contrary, it has been a key force in helping perpetuate U.S. global dominance. China’s SOEs have been transformed into U.S. style capitalist corporations, many of them with the aid of Wall Street financial firms, and floated in overseas stock markets such a Hong Kong and New York. China’s export-oriented growth relies on the United States and Europe, the two biggest markets for its manufactured goods, and China’s exports to both places have been paid for mostly in U.S. dollars. The massive flow of U.S. dollars into China in the form of trade surplus impels China to invest addictively in U.S. Treasury bonds as the most liquid and largest US dollar-denominated store of value.Since 2008, China has replaced Japan as the biggest foreign creditor to the United States, and such financing enables the United States to continue living and fighting beyond its means. This investment in U.S. Treasury bonds in turn facilitates the perpetuation of the global dollar standard, which has been the single most important foundation of U.S. global power. The foreign exchanges brought in by China’s export sector have been the foundation of the state banks’ profligate creation of liquidity that fuels fixed-asset investment. In short, the China boom relies on the global free market instituted and warranted by the United States. It is thus far from China’s interest to undermine the global neoliberal status quo and U.S. leadership in it.

Any readjustment of the structure of capitalist development in China will have to involve an increase in domestic consumption’s share in GDP and a corresponding reduction in export and investment’s share…such restructuring must be associated with a profound redistribution of wealth and income that will let average households share a larger slice of the pie of the expanding economy, reducing the advantages that the state has been offering to the export sector and state enterprises, both of which have been protected by the entrenched interests in the political process. Such readjustment, coupled with the cleaning up of existing bad debts in the system, will inevitably bring a slowdown in economic growth through either a disorderly hard landing or an orderly soft landing…Although such a slowdown is inevitable and normal in the adjustment and rebalancing process, it is unknown whether existing political institutions in China can withstand it.

Billionaire libertarians, Empirical free Economics and Ideologically driven Law attempt to destroy Democracy

Saturday, September 17th, 2022

Democracy in Chains; The Deep History of the Radical Right’s Stealth Plan for America, Nancy,MacLean, 2017

Started immediately after the end of WWII with the founding of the “think tank” the Mont Pelerin Society in Switzerland in 1947 and the influence of the Austrian school of economics via Ludwig von Mises and Friedrich Hayek on the economics department at the University of Chicago, a radical right movement that is best known as “neoliberalism” rose in America. Neoliberalism seeks to privatize all government run programs to reduce the state’s influence on capitalism by eliminating price controls, deregulating capital markets, and lowering trade barriers.


The most influential economists of this movement are the well known Milton Friedman and the little known James Buchanan both Chicago school of Economics trained and both of whom won Nobel prizes for their work. To best appreciate the dangers to democracy of their fact free, empirical free ideologies one need only look at the experience of Chile after the CIA assisted overthrow of the democratically elected government in 1973, the death of President Allende and the long disastrous Pinochet dictatorship. Friedman advised the coup government on the privatization of public government programs including the national retirement program. Friedman’s reputation was badly tarnished by these efforts. Buchanan’s influence was most felt in the creation of a new democracy free constitution for Chile which has yet to be replaced. Buchanan’s reputation was largely unaffected by his work in Chile.

“…for Buchanan, the end justified the means. Chile emerged with a set of rules closer to his ideal than any in existence, Built to repel future popular pressure for change. It was “a virtually unamendable charter,” in that co constitutional amendment could be added without endorsement by super majorities in two successive sessions of the National Congress, a body radically skewed by the over representation of the wealthy, the military, and the less popular political parties associated with them. Buchanan had long called for binding rules to protect economic liberty and constrain majority power, and Chile’s 1980 Constitution of Liberty guaranteed these as never before.

From its founding, some in the the US have been obsessed with protecting the rights of minorities – slave owners til the Civil War and the 19th Century robber barons thereafter. Central to all these efforts is the advocacy of states rights. The confederation of states failed because the central government was too weak. In negotiating the new Constitution, Madison fought hard with slave owning southerners. The result is the current division of powers between the executive, the legislative, and the judiciary. The senate was created with 2 senators per state serving 6 year terms. This equality of all states regardless of population was an attempt to protect the smaller southern states from the political influence of the larger. Slave owners also negotiated that the millions of slaves should have 3/5 vote each (to be exercised by the owners). Then whenever civil rights issues came before the senate, the filibuster was invented and built into the system to assure that a minority of senators could stop any legislation. Not satisfied, the minority continues effort to disenfranchise voters to protect their power.

<> <> Harry Flood Byrd Sr. <>John C Calhoun

Maclean spends some time recounting the history and influence of slavery defender John C. Calhoun, 1782-1850, who can justifiable be considered the father of the radical right in America. Calhoun forged the filibuster as a senate tool in 1841. The supreme court ruled in Brown v. Board of Education in 1954 that all schools must be racially integrated. Senator Harry Flood Byrd of Virginia who politically ran Virginia was determined that Virginia’s schools would never be integrated. To get around the Federal ruling. Byrd offered a plan that all public schools in Virginia would be sold to private owners who would continue to operate then as segregated schools and that the state would offer vouchers to parents to pay for the new private schools. When parents, business owners, and other Virginia residents realized the potential impact of this plan on Virginia’s future they rose up to defeat the plan. Byrd reign as power broker for Virginia ended with this debacle. Buchanan arrived to head the economics department of the U of V in 1956, while this battle was ongoing. Buchanan favored the failed private school plan.

Enter billionaire Charles Koch:

The sense of intellectual and even ethical superiority to others may help explain why Charles Koch bypassed Milton Friedman to make common cause with the more uncompromising James Buchanan. Koch referred to Friedman and the rest of the post-Hayek Chicago school of economics he led, as well as to Alan Greenspan, as “sellouts to the system”. Why? Because they sought to “make government work more efficiently when the true libertarian should be tearing it out at the root.” They actually tried to help government deliver better results, which could only prolong the disease. Koch believed that only in its “radical, pure form,” without compromise, would the ideas “appeal to the brightest, most enthusiastic, most capable people.”

The Koch focus introduced heavily deceptive practices such as the crab walk to confuse, dividing constituencies to target groups that might be more open to deceptive tactics like pretending changes are needed to preserve a program when the goal is actually to eliminate the program altogether – social security, medicare, etc. Lying is now acceptable behavior if it advances your goals.

We just need to look at Citizen’s United – corporate spending on elections is free speech, Voting Rights Act of 1965 – Section 4 is unconstitutional – Section 5 requires re authorization, repeal of Roe V Wade – States rules apply to see that the focus on appointing ideological judges to federal courts is paying big dividends to the radical right. One former judge says recent pro corporate decisions amounts to a “privatization of the Justice System“.

Sun Yat-sen, Lenin and China’s long term plans for sole global hegemony

Sunday, July 31st, 2022

The Long Game; China’s Grand Strategy to Displace American Order, Rush Doshi, 2021

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László Ladányi was a Hungarian Jesuit who lived in China from 1936 until his expulsion by the Communists in 1949. He moved to Hong Kong where he published China News Analysis from 1953 til 1982 when he retired to write books. China News Analysis was the only English language coverage of events from a closed China and based on published speeches and other high level official sources. He covered Mao’s paranoid machinations from the Great Leap Forward where Ladányi predicted 50 million Chinese deaths from starvation to the Cultural Revolution.

Rush Doshi adopted much of the research methodology of Ladányi in preparing this book which is a study of Chinese foreign policy (political, economic and military) from Deng Xiaoping to the present. Doshi notes that China inherited its nationalism from Sun Yat-sen and the Chinese century of humiliation at the hands of the west and the desire to return China to its historic role as the Central Kingdom surrounded by tribute bearing smaller states, and its political structure, the Chinese Communist CCP from Lenin.

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In 1973 Chinese Premier Zhou Enlai visited Washington in preparation for Nixon’s visit to China. Zhou asked a young American member of the delegation “Do you think China will ever become an aggressive or expansionist power?” The American answered “No.” and Zhou said “Don’t count on that. It is possible. But if China were to embark on such a path, you must oppose it…And you must tell those Chinese that Zhou Enlai told you to do it.”

The book highlights significant events that caused Chinese leaders to reevaluate their policy focus. The first was a trifecta of events from 1989 to 1991, The Tiananmen Square Massacre, overseen by Deng and widely criticized by the United States and the West; The Gulf War to expel Iraq from Kuwait, which shocked China with the technical superiority of the Americans and the speed with which the war concluded; and the collapse of the Soviet Union. Following the collapse and the end of the cold war, China focused much more on the United States and after Tiananmen started to be more sensitive to human rights concerns of the liberal West even though these concerns dated at least as early as the Chinese annexation of Tibet. China also acquired a new respect for the military technical superiority of the US as demonstrated in the Gulf War.

When Deng Xiaoping became Premier, he followed the example of Singapore as a model of a democracy free capitalist economic system open to western investment and engagement under an authoritarian rule pioneered by Singapore prime minister Lee Kuan Yew.
The era from China opening to the United States and the West for investment and trade was given a central policy directive from Deng “Tao Guang Yang Hui” or “hide capabilities and bide time”, applying to political, economic, and military policy as directed by the CCP. During the US Kosovo war a Chinese military leader reiterated:

“what the PLA should do” in response to “the rise of military intervention” by the United States was to remember that “our approach is Tao Guang Yang Hui” He elaborated, “As a military, this means…vigorously developing ‘shashoujian’ equipment, [and following the principle of],’whatever the enemy is most afraid of, we develop that’.”

Second, at the political level, the trifecta and China’s strategic adjustment led Beijing to reverse its position on joining regional institutions. Memoirs of Chinese ambassadors are explicit on China’s need to join institutions to blunt American power in three ways: (1)stalling the institutions so they couldn’t become functional; (2) using them to constrain US freedom of maneuver; and (3) using them to reassure neighbors so they wouldn’t join a US-led balancing coalition…Even s, these efforts were taken consistent with Tau Guang Yang Hui’s principle of avoiding claims of leadership, which meant China refrained from launching new institutions; moreover, Deng himself had said that China’s diplomatic voice would grow loader once Tao Guang Yang Hui was retired.

Finally, the trifecta also shaped Chinese international economic policy…China raised new concerns in Beijing about its vulnerability to US leverage, and blunting these became the focus of Chinese efforts. China not only focused breaking economic sanctions, it also sought to secure MFN (most-favored-nation) status on a permanent basis, or permanent normal trading relations (PNTR). The goal was not to limit China’s dependence on the United States but to reduce the discretionary exercise of US economic power…It also pushed for WTO membership, hoping it would further tie Washington’s hands.

China limited its military expansion during this time to the development of mines, missiles, and conventional silent submarines. Their largest fleet in the world of silent submarines could surface right next to a US aircraft carrier without detection. In 1973, 75 year old Zhou Enlie was suffering from bladder cancer which Mao had ordered Zhou’s doctors to not reveal or treat, when he lamented that China had not yet acquired an aircraft carrier.

In 1992, after the Soviet Union collapse, a PLA delegation visited a new Soviet carrier, the Varyag, then under final construction in Ukraine on the Black Sea. China chose not to acquire it. Then five years later China’s top leaders changed their minds and launched a plan to acquire the Varyag that is worthy of a movie.

Xu Zengping joined the PLA in 1971 and left in 1980 to found a trading company that he claimed made him wealthy. Xu’s wife was a basketball player on China’s national team that played alongside Yao Ming’s mother. PLAN Vice Admiral He Pengfei recruited Xu to serve as the military’s intermediary in the Varyag purchase.

Consistent with Tao Guang Yang Hui, Xu knew he needed to deceive the world about his wealth, intentions, and government connections. Xu created the persona of an outlandish tycoon who wanted to use the carrier as a floating casino in Macao. Xu set up a shell company and spent $1 million to acquire licenses to operate the casino in Macao. Xu then bought one of the most expensive villas in Hong Kong for $30 million.

In October 1997, Xu went to Kiev to negotiate with the Ukrainian owners of the Varyag. The private owners acquired the Varyag during the massive neoliberal privatization of Soviet public assets after the collapse in 1991. After months of parties and millions in bribes, the owners finally agreed to sell the Varyag to Xu for $20 million. But Xu also needed the blueprints and the engines which were beyond Chinese capabilities to build at the time. The engines had already been installed but Xu got fake documents showing that the engines had been removed. Xu received 45 tons of blueprints and documents and the engines and then set out on the arduous process of moving the ship to Dalian China.

In all the government of China spend $120 million and in March 2002, the Varyag arrived in Dalian where it was rust protected and left in December 2005. Even the original Soviet name and markings were left on the carrier.

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Then, in response to the Global Financial Crisis of 2008, which Chinese leaders took as a clear indication of the weakening of the US and the West, Chinese foreign policy entered a new more aggressive direction. The top level decision to build a carrier fleet was made in 2009. The Varyag was completed, renamed Liaoning , and commissioned on 25 September 2012.

After the 2008 Global Financial Crisis, China began to emphasize building regional order. It no longer felt the need to constrain itself fowir fear of rattling Washington or the wider region. The capabilities that carriers were know for were now fully in line with China’s own strategic objectives, which leaned increasingly toward enforcing maritime sovereignty and cultivating the ability to intervene regionally. And so, China entered the ranks of carrier-fielding great powers.

…the 2008 Global Financial Crisis caused a much bigger shift. China’s assessment of the relative power gap with the United States fell significantly and President Hu then officially revised Tao Guang Yang Hu by stressing “Actively Accomplishing Something” in his 2009 address.

In 2012 Wang Jisi, dean of Peking University’s School of International Relations wrote:

“Unlike East Asia, there is no U.S. led regional military alliance among the countries to the west, and there is no possibility that one will arise”…Instead, China had abondant resources and a continental vacuum in that direction, as well as the surplus capacity and dollar reserves to fill it with pipelines, railways, highways, and even overland Internet infrastructure that would reduce China’s dependence on the sea and bind the region tighter to China.

In 2013 Xi would launch the Belt and Road Initiative (BRI)

Mao’s Cultural Revolution began in 1966 and ended with Mao’s death in 1976. It impacted virtually all Chinese leaders from Deng to the present. Two stories of auto-didactic education are featured in this book:

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On March 16, 2013, Chinese diplomat Wang Yi was formally promoted to minister of foreign affairs. The urbane but fierce defender of Chinese interests was sometimes known as a “silver fox” for both his “looks and his diplomatic wiles.” but he was also brilliant and diligent. After graduating high school during the Cultureal Revolution, Wang Li was sent to labor on a farm in northeast China for eight long years. A former classmate of his recalls that Want Li “did not waste his time” but engrossed himself in literature and history entirely on his own direction. When the Cultural Revolution ended , Wang Li’s diligence paid off, and he earned a spot at Bejing International Studies University, where he dedicated himself to Japanese language studies.

Wang Li married the daughter of Quian Jaidong an underling of Zhou Enlai and member of China’s first overseas delegations to the Geneva conference in the 1950s. Quian Jaidong became China’s UN ambassador in 1980.

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On January 16,2016, The Asian Infrastructure Investment Bank (AIIB) was declared “open for business” and a grey haired enthusiast for English literature, Jin Liqun was elected its first president…Jin grew up in an educated but poor family with what was then an unusual passion for English literature. When he was sent to labor in the countryside for a decade during the Cultural Revolution, he spend three quarters of his meager annual salary and what little time he had after a day’s work in the fields continuing that pursuit. “I was outfitted with a worn out Remington typewriter and a copy of Webster”, he said later, as well as a radio he kept tuned to the BBC that gave his English a trace of the “standard BBC accent of the 1970s.” When the Cultural Revolution abated, the twenty nine year old autodidact won a seat at the Beijing Institute of Foreign Languages, excelled in graduate work, and was offered a faculty position…It was not to be. That same year, China joined the World Bank, and English speakers were needed to staff its new office in Washington…He spent a dozen years at the World Bank and then the Asian Development Bank, rising to become its first Chinese vice president, and developed a resume and Rolodex in multilateral finance no other Chinese official could match. When China decided to build its own development bank, Jin was the logical choice.

Another remarkable story about a misfit coming out the Cultural Revolution was previously blogged.

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On October 18. 2017, General Secetary Xi Jinping, in a 3 1/2 hour 30,000 word speech announced the next great change in Chinese foreign policy.

The speech announced a “new era”, put forward timetables for China’s rejuvenation in 2049, promised greater Chinese activism in global governance, called for a “world-class” military, committed China to becoming a “global leader in innovation,” and declared that China would “become a leading country in comprehensive national strength and international influence.”
Like other changes in China’s grand strategy, this shift toward greater global ambition was driven by what Beijing saw as the West’s irreversible decay and decline. In 2016…the United Kingdom voted to leave the European Union, and Donald Trump was elected president of the United States. From China’s perspective–which is highly sensitive to changes in perception of American power–these to events were shocking. The world’s most powerful democracies were withdrawing from the international order they had helped erect, creating what China’s leadership and foreign policy elite has called a “period of historic opportunity” to expand the country’s strategic focus from Asia to the wider globe and its governance systems.

The New Deal, FDR, Truman, LBJ, can Biden reclaim the legacy?

Tuesday, July 19th, 2022

Going Big, FDR’s Legacy, Biden’s New Deal, and the Struggle to Save Democracy, Robert Kuttner, 2022

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Economics Nobel Laureate Joseph E Stiglitz wrote the forward

The (Great) Depression should have taught us that markets are not stable and efficient–high levels of unemployment could persist for a very long time. We should not have to have had the Great Recession (2008) to relearn the lesson…We should not have had to watch the anemic recovery from the Great Recession, the result of too little fiscal policy and too much reliance on monetary policy, to have relearned that lesson.

The simplistic neoliberal ideology, which triumphed in both parties…held that downsizing government, including deregulation, privatization, and outsourcing government activities to the private sector, would lead to greater prosperity, (and)…all would benefit. Some half century later, we should declare this neoliberal experiment has been a failure, with lower growth and the benefits of that limited growth going overwhelmingly to those at the top.

Jimmy Carter, Bill Clinton, and Barack Obama each embraced neoliberal ideology to devastating effect. Biden is the first president since 1984, including Republicans that has not appointed Robert Rubin (of Goldman Sachs and Citigroup) or a protege of Rubin, like Larry Summers, to the inner circle of power.

Bill Clinton and Barack Obama took the Democratic Party deeper into the neoliberal wilderness, obsessing about budget balance, making alliances with Wall Street, and driving working-class voters into the arms of the Tea Parties and then Trump.

Stunningly, Biden jettisoned the entire set of neoliberal orthodoxies that had hobbled Democratic presidents since Jimmy Carter. Gone was the idea that deficits necessarily caused high interest rates and inflation. Gone was any illusion that we needed tax breaks for the rich in order to promote private investment. Public investment was needed at a large scale precisely because private investment had failed to serve the real economy and had enriched mainly manipulators, traders, and monopolists…It fell to Biden and his economic team to revise the globalist ideology in favor of coherent policies to rebuild American leadership in industry, technology, and supply chains, sacrificing free trade norms where necessary.

There is immense latent public support for the use of activist government to better the situation of ordinary people. Foreign policy adventures, such as Vietnam, Iraq, and Afghanistan, can serve as distractions from domestics issues that play to Democratic strength, and can wreck the unity of the coalition needed to pursue domestic progressivism. So, obviously, can racism and continuing legacy of slavery and segregation. But the big challenge is political economy.

Biden needs to go beyond what even FDR achieved in containing a corrupted capitalist system, because that system today is the wellspring of so much policy failure, and so much political and economic inequality, as well as the corruption of too many Democratic leaders, all of which kindles support for Trumpism.

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In the standard Roosevelt narrative, FDR restores hope. And he then goes about restoring the economy, using powers of government to put people back to work, and devising new public entities to accomplish what the private sector had bungled. He increases the prestige of the public sector and public solutions. He uses public deficits to restore purchasing power. He virtually invents a national system of social insurance with the Social Security Act. He puts government on the side of worker’s right to organize with the Wagner Act, and then regulates wages and hours directly with the 1938 Fair Labor Standards Act.

Ordinarily, the Treasury Department is the home of the most conservative officials of an administration. Democratic presidents, seeking to reassure financial markets typically place Wall Street veterans at the Treasury. This was the practice of Johnson, Carter, Clinton, and Obama. But the Roosevelt Treasury was the home of radicals. The most radical was Harry Dexter White, the top U.S. government architect of the postwar global financial system. White was a close collaborator of the the chairman of Bretton Woods conference, John Maynard Keynes.

The Democratic defensive unease on national security policy combined with the unfinished business of racial justice to destroy Johnson’s presidency. The Vietnam debacle also shattered the New Deal coalition and the hopes of progressive Democrats for half a century.

As the Obama administration and the Fed did the bidding of the biggest banks, (Elizabeth) Warren and the oversight panel would become one of two sources of loyal opposition, calling for a far more radical, Rooseveltian approach. The other was the FDIC, which was the last regulatory hawk in laissez-faire Washington, because its trust fund had to be tapped to pay depositors when an insured bank failed. The chair of the FDIC was a tough and savvy regulator named Sheila Bair…The financial collapse should have set up Obama to orchestrate a resurrection the the New Deal–the containment of the toxic tendencies of private finance, the expansion of government to do what markets could not, and the use of the crisis as an object lesson…Most of what he did propped up the banking system rather than cleaning it out or seriously re-regulating finance. Obama’s obsession with deficit reduction made the recovery far too slow.

The serial forms of deregulation that finally crashed the economy in September 2008 had been building and accumulating for several decades. Three earlier crashes, harbinger of the general collapse of 2008, had been contained because the degree of leverage, opacity, conflicts of interest, deregulation, non-supervision, and above all interpenetration had not quit reached the level of the early 2000s. But each was a clear warning that went unheeded.

The 1990s S&L collapse saw the conviction of more than a thousand executives. The Crash of hedge fund Long Term Capital Management in 1998 led to no reforms. The dot-com and energy crash of 2000 also led to no reform.

Kuttner spends some time on the explosion of private equity and the toxic effect on nursing homes, newspapers creating “news desserts” throughout the country, and retail.

Kuttner also talks about the the collateralized loan obligation CLO that have replaced the discredited CDO behind the 2008 crash The US market for CLOs excedes $850 billion in 2022.

If the New Deal proposition is that government can be effective in solving problems and helping ordinary people, climate change makes that harder to pull off, because worsened climate events are baked in for years to come. Even if Biden does everything right, the everyday experience of extreme climate events will intensify.

Kuttner concludes with a discussion of the importance of the upcoming 2022 midterm elections. Only three Presidents over the last 100 years have seen their party increase its control of both houses of congress in the midterm elections; Roosevelt in 1934 because of the popularity of his programs; Clinton in 1998 because the Republicans overreached in trying to impeach him; and George W. Bush in 2002 because of the shock of the 9/11 attacks. Can Bidden become the fourth in 2022?

Tech can regenerate Rural Heartland America’s Economy

Friday, April 22nd, 2022

Dignity in a Digital Age; Making Tech Work for all of Us, Ro Khanna, 2022

(Frederick) Douglass’s vision informs this book, which, at its heart is an attempt to imagine how technology can advance democratic patriotism, which is predicated on respecting the dignity of every American. The book shares Douglass’s faith that we can be a composite nation– that we can embrace a holistic, resplendent American identity that is more than just a formal contract among citizens. It offers a blueprint for structuring the technology revolution to empower left-behind Americans, regardless of their background, so they have a stronger voice in our economic and political life, building thriving communities, and are on more equal footing to participate in the dynamic process of developing our national culture.

We have looked thus far at how to respect dignity in a digital age domestically by focusing on distributing jobs, empowering workers, cultivating our freedoms, protecting online rights, creating deliberative forums, and including a multiplicity of voices in science policy.

This era calls for an Essential Workers Bill of Rights…The framework would promise livable wages, benefits, and bargaining rights for workers. It envisions giving employees a voice in shaping automation and pushing back against intrusive surveillance and abusive supervisors–a particular challenge in a remote and distributed workplace, which makes organizing difficult. Until all workers reap the benefits of their hard word and are treated with dignity, the promise of the digital age remains unfulfilled.

but nearly 80 percent of venture capital funding goes to only three states, California, New York, and Massachusetts. While California had nearly 4,000 VC deals and New York 1,400 in 2019, the state of West Virginia had only one.

A policy of creating new tech hubs should begin with the most promising locations and then gradually expand…Each hub would specialize in a few technologies based on their regional assets and expertise. The cutting edge fields would include quantum computing, data science, clean energy, cybersecurity, robotics, electronics manufacturing, and synthetic biology.

According to a Harlem Capital report, as of 2019, three are only two hundred startups led by Black or Brown founders that received more than $1 million in funding, and the total investment in these Black or Brown led start-ups is just $6 billions over nearly a decade. (Total VC funds deployed are $130 billion annually) The capital wealth gap is not just based on legacy assets but on a current, ongoing racial wealth generation gap.

The moral case for prioritizing workers is that they’ve been denied the gains they’ve helped create, and dignity that they’ve deserved, for multiple decades now. But the dollars and cents economic rationale is straightforward as well. While paying workers more may not maximize short-term shareholder value, in the way that stock buybacks or dividend payments do, it will lead to more consumer spending.

What they (Silicon Valley techies) may see as mundane and easily automated tasks actually are skilled ones, requiring dexterity, balance, judgment, practice, patience, precision, mapping, and a specific attention to detail.

Joel Rogers, a law professor at University of Wisconsin famously laid out the “high road” strategy, arguing that firms that foster worker participation and develop worker talent will generate more wealth compared to firms that use a top-down, command model to get the most out of their workers at the cheapest wage. Rogers argued that “shared prosperity”, “environmental sustainability”, and workplace democracy were “necessary complements, not tragic tradeoffs”, in maximizing revenue growth.

He (Gary Backer) said that the fuel for modern economic growth are investments in on-the-job training, health, information, and research and development. In fact, Becker argued that human capital, which is the “knowledge, information, ideas, skills, and health of individuals”, is “over 70 percent of the total capital in the United States.”

The ultimate design of Apple and Google’s Covid app is consistent with many of my Internet Bill of Rights principles, and it is an example of technology designed to meet these standards. The app requires a use to consent before any data is collected, and it offers an easy-to-understand explanation of how the data will be used. There is no centralized database, negating the major risk of data theft in a breach or the need for deletion. If someone is Covid positive, then they receive a digital code from their local health department to enter into their phone, which sends an anonymous exposure alert to every user in contact with them while they are infectious. Apple and Google both prioritized the need for interoperability so the app can work across platforms on any smartphone in the world. They made a concerted effort to minimize the data collected and committed not to have access to the data.

If tech companies are serious about promoting constructive dialogue, they should work with behavioral scientists, political theorists, psychologists, and mental health professionals to experiment with new designs. Software engineers should not only optimize for attention with like and share buttons, but to also prioritize for engagement with a wide range of perspectives. They could construct platforms for instance, that incentive users to participate in diverse online communities. Pushing opposing material to users can motivate them to become even stronger proponents of their ideologies…The key is to foster open-communications, and not simply self-affirmation.

The best we may be able to hope for in an imperfect democracy is a plurality of online forums for political conversations that (a) demonstrate a threshold respect for our agency as participants by not engaging in data extraction, (b) are transparent in terms of both their speech standards and the priorities of their algorithms, and (c) comply with legitimate restrictions on unlawful speech consistent with our First Amendment jurisprudence.

An Indiana University study that analyzed millions of tweets during the 2016 presidential election concluded that bots are a large contribute to the spread of misinformation and conspiracies. They share fabricated stories, make salacious content trend, and overwhelm investigatory teams with volume that makes it hard to find the offending postes. Most shockingly, the presence of fake accounts helps explains why “over 86% of shares and 75% of comments on German political Facebook from October 2018 to May 2019 were Alterative fur Deutschland content” even though the far-right party never “exceeded 15% of public support in polls during this time period”.

The Federal Reserve – An Unaccountable Central Bank for Wealthy Risktakers Only – Waiting for the Global Meltdown

Wednesday, March 30th, 2022

The Lords of Easy Money; How the Federal Reserve Broke the American Economy Christopher Leonard, 2022


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Life at the zero bound pushes banks way down the yield curve. What does a bank have to lose? A risky bet beats nothing. And this is not just a side effect of keeping rates at zero, “That’s the whole point.” Hoenig (Tom Hoenig was the long time president of the Federal Reserve Bank of Kansas City) explained many years later. “The point was to get people willing to take greater risk, to get the economy started. But it also allocated resources. It allocates where that money goes.”…When cash is pushed out onto the yield curve, it leads to the second big problem that Hoenig warned about in 2010: something called an asset bubble. The housing market that collapsed in 2008 was an asset bubble. The dot-com stock market crash of 2000 was the bursting of an asset bubble.

One of his (Ben Bernanke) central ideas was that the Fed hadn’t acted boldly enough back in the 1930’s. The central bank had actually worsened the Depression by tightening the money supply, The solution, Bernanke believed, was to to be as aggressive as possible after a crash. He had spent many years thinking up new ways that the Fed could boost economic growth even after pushing interest rates to zero. He didn’t see the zero bound as an inviolable limit, but just another data point.

To execute quantitative easing, a trader at the New York Fed would call up one of the primary dealers, like JP Morgan Chase, and offer the buy $8 billion worth of Treasury bonds from the bank. JP Morgan would sell the Treasury bonds to the Fed trader. Then the Fed trader would hit a few keys and tell the Morgan banker to look inside their reserve account. Voila, the Fed had instantly created $8 billion out of thin air, in the reserve account, to complete the purchase. Morgan could, in turn, use this money to buy assets in the wider marketplace.

Starting in November (2010), the Fed traders did this transaction over and over again until they had created several hundred billion dollars inside the Wall Street reserve accounts…The primary dealers were not just selling the Treasury bills and mortgage bonds that they happened to have on hand…Instead the Fed set up a conveyor belt of sorts, which used the primary dealers as middlemen. The conveyor belt began outside the Fed, with hedge funds that were not primary dealers. These hedge funds could borrow money from a big bank, buy a Treasury bill, and then have a primary dealer sell that Treasury bill to the Fed for a profit. Once the conveyor belt was up and running, it began magically transforming bonds into cash. The cash didn’t stay safe and sound inside the reserve accounts of primary dealers. It started flowing out into the banking system, looking for a place to live.

He (Hoenig at the FOMC meeting in Sept. 2010) pointed out that the deep malaise in American economic life wasn’t caused by a a lack of lending from banks. The banks already had plenty of money to lend. The real problem lay outside the banking system, in the real economy where the deep problems were festering, problems that the Fed had no power to fix. Keeping interest rates at zero, and then pumping $600 billion of new money into the banking system–money that had nowhere to go but out into risky loans or financial speculation–wasn’t going to help solve the fundamental dysfunction of the American Economy.

During the 1980’s, Hoenig and his colleagues in Kansas City were left to sort out the long-term problems the Fed’s short-term thinking created during the 1970s. The biggest mess they cleaned up was the failure of Penn Square, a bank in Oklahoma that had extended a chain of risky energy loans during the 1970s. When Penn Square failed, it almost took down the entire U.S. banking system with it. It also illuminated a second important pattern that would harden in the coming years. The Fed didn’t just stoke asset bubbles. It found itself on the hook to bail out the very lenders who profited most off a bubble as it rose. Some banks, the Fed was about to discover, had grown too large and too interconnected to fail.

Around 2014 or 2015, (Vicki) Bryan (corporate analyst) noticed that she could bring new revelations (about corporate misbehavior) to the market, but it didn’t seem to matter anymore. “It’s been a result of what the Fed stated to do in 2010, and continued to do later,” she said. “You’ve got an artificial bottom, and the higher part of that bottom is set by the Fed. So you can’t lose in this market. And if you can’t lose, it’s not really a market,” Bryan said.

In 2008, the market imploded thanks to an exotic debt product called the collateralized debt obligation, or CDO. The CDO was a package of home loans (or derivatives contracts based on home loans) stacked together and sold to investors. The CDO made the housing crash possible by creating a seamless assembly line that allowed mortgage brokers to create risky subprime home loans that were quickly packaged and sold to investors, which in turn allowed the mortgage brokers to extend yet more new loans. At that time, the lowly CLO (collateralized loan obligation) was the undernoticed stepchild of the debt markets. There were only about $300 billion worth of CLOs during the Global Financial Crisis of 2008, while in 2006 alone about $1.1 trillion of new CDOs were issued. But the important thing about CLOs was that they didn’t suffer nearly the losses that CDOs suffered.

The pension funds had been settling on a low return from safe corporate bonds, because those bonds were standardized…The bonds were regulated by the SEC and traded on exchanges…The CLO solved this problem. It would standardize leverage loans in ways that make the pension funds feel safe…This meant that a pension could order CLO chunks,…picking between the AAA, mezzanine, and equity slices of the package.

Financial engineering was key to Rexnord’s strategy. Rexnord, like any corporation, responded to the environment in which it operated. And that environment, starting in 2012, was dominated by the influence of ZIRP (zero-interest-rate-policy)…The management team’s biggest maneuvers had to do with leveraged loans and rising stock prices rather than conveyor belts or ball bearings…He (Rexnord employee John Feltner) believed,…that a job at Rexnord might provide him a narrow pathway to a stable middle-class life. All the financial engineering encourage by ZIRP was supposed to make that belief come true. The company owed $1.9 billion and it paid $88 million on interest costs in 2015, which was more than the $84 million it earned in profits…in 2015 Rexnord’s board of directors authorized Adams and his team to buy back $200 million in stock. In 2016, the company bought back $40 million of its own stock. In 2020, the company …bought back another $81 million…In 2016, he (Adams) was paid $1.5 million but the following year he was paid $12 million, mostly in stock awards, and in 2018 he would earn $6 million.

But Rexnord’s stock buybacks were seen by the Fed, as a means to an end. It was OK if CEOs used debt to help engineer multimillion-dollar paydays, as long as the prosperity was eventually dispersed through the “wealth effect” (Cosmic Lie) to neighborhoods like the Feltners’…Rexnord had decided to close the ball-bearing factory and move its production to Monterrey, Mexico. (Feltner lost his job.)

By the end of 2018, the U.S. market for CLOs was about $600 billion double the level a decade earlier…The value of the Dow Jones Industrial Average rose by 77 percent between 2010 and 2016. One hedge-fund trader…described the frothy stock market of 2016 as being like the crowded deck of the the Titanic as it sank…It was getting crowded because people had nowhere better to go.

This money flowed out into the system, and it pushed all the major financial institutions to search for yield. Many wall street traders saw clearly what was happening, and they developed a nickname for it: “the everything bubble.”

By 2016, they (negative interest bonds) accounted for 29 percent of all global debt. About $7 trillion worth of bonds carried negative rates…Bond investors were so desperate to find a safe haven for their cash that they willing to pay a fee to governments like those of German and Denmark to safeguard it.

Hoenig said “You had seven years of basically zero-interest rates. Now what happens in an economic system over seven years. The entire market system develops a new equilibrium–around a zero rate. An entire economic system. Around a zero rate. Not only in the U.S. but globally. It’s massive. Now think of the adjustment process to a new equilibrium at a higher rate. Do you think it’s costless? Do you think no one will suffer? Do you think there won’t be winners and losers?”

Excess bank reserves were about 135,000 percent higher than they had been in 2008. The Fed’s balance sheet was about $4.5 trillion, about five times its level in 2007. Interest rates had been pinned at zero for nearly seven years.

In response to the 2020 Covid epidemic, congress passed the CARES act worth $2 trillion in relief funds:

People who owned businesses were given tax breaks worth $135 billion, meaning that about 43,000 people who earned more than $1 million a year each got a benefit worth $1.6 million. By and large, these billions of dollars were quietly absorbed into corporate treasuries and personal bank accounts around the county. The wildly unequal distribution of money was not made public until months later, after The Washington Post won an open-records lawsuit that made the information public.

The market hit its low point in mid-March, when the Treasury market collapsed. But between that day and middle of June–in just three months–the market’s value surged by 35 percent. By then, stocks were trading at the same value they had when restaurants, movie theaters, hotels, and cruise ships were operating at full capacity. The average monthly returns on leveraged loans were restored as early as April. By August, so many new investment-grade bonds were issued that the previous record, set in 2017, was broken.

The bailout of 2020–the largest expenditure of American public resources since WWII–solidified and entrenched an economic regime that had been quietly and steadily constructed, largely by the Federal Reserve, during the previous decade. The resources from this bailout went largely to the entities that were strengthened by the policies of ZIRP and QE. It went to large corporations that used borrowed money to buy out their competitors. It went to the very richest of Americans who owned the vast majority of assets; it went to the riskiest of financial speculators on Wall Street, who used borrowed money to build fragile positions in global markets; and it went to the very largest U.S. banks, whose bigness and inability to fail was now an article of faith.

And all of this happened at a moment when Americans were more distracted, more beleaguered, and more financially distressed than at any moment in modern history. It was difficult to even comprehend the impact of what had happened. But the impact would make itself visible in the months, years, and likely decades to come.

By the end of 2020, companies issued more than $1.9 trillion in new corporate debt, beating the previous record that was set in 2017…A zombie company was a firm that carried so much debt that its profits weren’t enough to cover its loan costs. The only thing that kept zombie companies out of bankruptcy was the ability to roll their debt perpetually. During 2020, nearly two hundred major publicly traded companies entered the ranks of the zombie army…These weren’t just marginal or risky firms, but included well-known firms like Boeing, ExxonMobil, Macy’s, and Delta Airlines.

In many important ways, the financial crash of 2008 had never ended. It was a long crash that crippled the economy for years. The problems that caused it went almost entirely unsolved. And this financial crash was compounded by a long crash in the strength of America’s democratic institutions. When America relied on the Federal Reserve to address its economic problems, it relied on a deeply flawed tool. All the Fed’s money only widened the distance between America’s winners and losers and laid the foundation for more instability. This fragile financial system was wrecked by the pandemic and in response the Fed created yet more new money, amplifying earlier distortions. The long crash of 2008 had evolved into the long crash of 2020. The bills had yet to be paid.

Christopher Leonard is also the author of Kochland

Davos – Billionaire Bubble and how to whitewash deadly greed

Wednesday, March 23rd, 2022

Davos Man; How the Billionaires Devoured the World, Peter S. Goodman, 2022


The Robber Barons of the late nineteenth century — industrialists like Andrew Carnegie, and financiers like J.P, Morgan — were by and large satisfied with their wealth as an end in itself. Davos Man’s appetite for affirmation operates on a different level. He is not content with owning homes the way that most people own socks. He pretends that his interests are the same as everyone else’s. He seeks gratitude for his exploits, validation as the product of a just system in which he is a guardian of the public interest, even as he devours all the sources of sustenance. He argues that his own prosperity is a precondition for broader progress, the key to vibrancy and innovation.

We will track five key specimens — Bezos, Dimon, Benioff, Schwarzman, and Fink…

They had benefited from public goods financed by taxpayers — the schools that educated their employees, the internet, developed by publicly funded research; the roads, the bridges, and the rest of modern infrastructure, which enabled commerce — and then deployed their lobbyists, accountants, and lawyers to master legal forms of tax evasion that starved the system.
They had transferred wealth from the public to themselves by rewriting the tax code in their favor, leaving government too weak to protect the population from the pandemic. And now they were deploying their resulting resources in the service of charity while demanding adulation.

In 2014, its first year on the market, Sovaldi racked up sales of $10.3 billion. But its price was so high that state governments — which covered much of the bill for Medicaid patients — were prescribing it only for the most serious cases. Roughly seven hundred thousand Medicaid patients suffered from hepatitis C, but less than 3 percent were able to obtain the drug.
The next year, Gilead sold nearly $14 billion worth of another hepatitis C drug, Harvoni, which had a price tag of $94,500, for a twelve week course.
These two blockbusters largely explained how Gilead was able to direct more than $26 billion into buying back its own shares between 2014 and 2016, just as needy patients were being priced out of affording its medicines. Gilead was exploiting tax loopholes to stash its lucre overseas, neatly avoiding taxes on nearly $10 billion in profits.
In January 2017, Gilead’s then CEO, John Milligan flew to Switzerland for the World Economic Forum, where he participated in a panel discussion entitled “Rebuilding Trust in the Healthcare Industry”…This setup adhered to the central Davos masquerade, in which each participant gets to pose as a concerned citizen. Rather than critically questioning people who have profited from a system that treated patients like suckers, Eisen invited her panel of pharmaceutical executives to offer counsel as those dedicated to improving the State of the World.
Mulligan, whose compensation that year exceeded $15 million, was asked about controversy over Gilead’s pricing of hepatitis drugs. He acknowledged trouble, but cast it as a messaging problem — not the result of an exploitative business model. “We didn’t deal with it well, he said. “We didn’t talk about it enough.”
This was a classic Davos Man maneuver, minimizing his role in human suffering by confessing to communications mishaps, or a misunderstanding…accepting blame for the lessor crime of poor word choices, while diverting attention from the far more serious issues of patients dying for a lack of affordable medicines.

Between 2006 and 2015, eighteen large American pharmaceutical companies distributed 99 percent of their profits to shareholders via dividends and purchases of their own shares. The $516 billion they collectively lavished on shareholders exceeded the $465 billion they dedicated to research and development.

Same as ever, Davos man was dictating the course of policy in the service of Davos Man. The result was a humanitarian tragedy in poor countries — a wave of unremitting death — along with the potential prolonging of the pandemic everywhere. So long as some countries lacked vaccines, the coronavirus was supplied a chance to yield variants that would require additional immunization. The protection of Davos Man’s profits took precedence over the saving of lives.

Reagan had begun the push to dismantle government and distribute the savings via tax cuts, turning trickle-down into the central principle of economic policy. Successive administrations representing both parties had denigrated social welfare spending and catered to the shareholder class while tolerating inequality as a by-product of prosperity. Clinton had celebrated the restorative powers of cutting budget deficits, while affirming the logic that innovation required unlimited rewards.He and Obama had centered their economic designs on finance and technology, allowing Davos Man to add zeros to his net worth. They had relegated antitrust law to the history books. George W. Bush had sacrificed government on the altar of the tax-cutting gods, further gutting social programs.
Davos man had not been some accidental beneficiary of this ideological shift. He was the driver, financing campaigns, deploying lobbyists and lawyers who promoted the Cosmic Lie (trickle-down), while demonstrating his supposed benevolence via philanthropy and pledges for stakeholder capitalism.
Trump had simply gone further than his predecessors, distributing an even larger bonanza of tax cuts that favored the billionaire class, while placing the state itself in the control of corporate interests…In words and deeds, Biden signaled that he was no threat to Davos Man, and his dominant hold on American governance.

And when the resulting anger built to cataclysmic proportions, threatening the liberal democratic order and globalization — the underpinnings of their affluence — they had conjured up novel ways to pretend to make amends, to placate the aggrieved without sacrificing anything of great value. They had erected philanthropic foundations to broadcast their benevolence. They had concocted stakeholder capitalism to display their empathy. They had adopted the language of change without yielding power to labor movements, regulators, activist shareholders, or other groups that actually had a stake in what transpired.

Davos Man would have us believe in the false binary choice at the heart of his grift — that we either accept globalization as we have known it for decades, or we throw in our lot with the Luddites operating in the thrall of backward ideas. This frame is not only false but dangerous. It invites those who have not shared in the benefits of globalization to demand its opposite — nationalism, nativism, parochialism, and ignorance. If globalization run by Davos Man gives way to the destruction of globalization, and the pursuit of tribal interests, the world will be poorer, more violent, and less able to summon the cooperation needed to solve the most complex problems, from pandemics to climate change.

The Living Planet Earth – Gaia and Solaris

Friday, February 18th, 2022

The Nutmeg’s Curse; Parables for a Planet in Crisis, Amitav Ghosh, 2021

Out of these processes of subduing and muting was born the idea of “nature” as an inert entity,a conception that would in time become a basic tenet of what might be called “official modernity”. This metaphysic, fundamentally an ideology of conquest, would eventually become hegemonic in the West, and it it now shared by the entire global elite: within its parameters the idea that a volcano can produce meaning; or that a nutmeg can be a protagonist in history, can never be anything other than a delusion or a “primitive superstition”. To envision the world in this way was a crucial step toward making an inert Nature a reality. As Ben Ehrenreich observes; “Only once we imagined the world as dead could we dedicate ourselves to making it so.”


Standing Rock Protest against the Dakota Access Pipeline – Camp became a prayer camp because its lands are a site of ancestral knowledge

Now, as humanity faces the possibility of a future in which living will indeed have turned into a battle for survival, it is becoming increasingly clear that Indigenous understandings of terraforming were, in fact, far more sophisticated than those of today’s techno-futurists.

Exhaustion is a metaphor that occurs often in science fiction stories about terraforming. Swarms of aliens go off to conquer another planet because their own is “exhausted”. It is the same presumption that impels billionaires to plan the conquest of Mars, now that the Earth is “exhausted”…what the Earth is really exhausted of is not its resources, what it has lost is meaning.

He (Tennyson) sees the ascent of his “crowning race” as coming about by the severing of every kind of earthly tie, through the overcoming of everything that links humanity to other creatures and animals. He even proposes what we might call an “end of history” or an “end of the world”…This is man’s final ascent, when all creation ends and he is united with God.

As we watch the environmental and biological disasters that are now unfolding across the Earth, it is becoming ever harder to hold onto the belief that the planet is an inert body that exists merely to provide humans with resources. Instead, the Earth’s responses are increasingly reminiscent of the imaginary planet after which the Polish science fiction writer Stanislaw Lem named his brilliant novel, Solaris: when provoked by humans, Solaris begins to strike back in utterly unexpected and uncanny ways.

James Lovelock; “Long ago the Greeks…gave to the Earth the name Gaia or, for short, Ge. In those days science and technology were one and science although less precise, had soul. As time passed this warm relationship faded and was replaced by the frigidity of schoolmen. The life sciences, no longer concerned with life, fell to classifying dead things and even to vivisection…Now at least there are signs of a change. Science becomes holistic again and rediscovers soul, and theology, moved by ecumenical forces, begins to realize that Gaia is not to be subdivided for academic convenience and that Ge is much more than a prefix.”

Other-than-human beings, forces, and entities, both manmade and earthly, could be pursuing their own ends, of which humans know nothing. Gaia, at once bountiful and monstrous, has now assumed a new avatar: Solaris.

It is this compressed time frame (the last 30 years) that has made sure that non humans too are no longer as mute as they once were. Other beings and forces–bacteria, viruses, glaciers, forests, the jet stream– have also unmuted themselves and are now thrusting themselves so urgently on our attention that they can no longer be ignored or treated as elements of an inert Earth.

So the true question then is not whether non humans can communicate and make meaning; rather we must ask: When and how did a small group of humans come to believe that other beings, including the majority of their own species, were incapable of articulation and agency? How were they able to establish the idea that non humans are mute, and without minds, as the dominant wisdom of the time?

The reason why coal powered mills began to edge out their water-powered competitors in the early nineteenth-century was not that coal was cheaper or more efficient. Water powered mills were just as productive, and far cheaper to operate than coal-fired mills. It was for social rather than technical reasons that steam-powered machines prevailed: because, for example, coal-mills allowed mill owners to locate their factories in densely crowded cities, where cheap labor was easily available. “The steam engine” writes Malm,”was a superior medium for extracting surplus wealth from the working class, because, unlike the waterwheel, it could be put virtually anywhere”…In short, steam, and thus coal won out over water precisely because it empowered the dominant classes and was better suited to their favored regime of property.

The role that fossil fuels play in war making is another, monstrously vital, aspect of their enmeshment with structures of power and forms of violence…Today the Pentagon is the single largest consumer of energy in the United States–and probably in the world…A single non-nuclear aircraft carrier consumes 5,621 gallons of fuel per hour; in other words, these vessels burn up as much fuel in one day as a small midwestern town might use in a year…In the 1990s the three branches of the US military consumed approximately 25 billion tons of fuel per year. This was more than a fifth of the country’s total consumption, and “more than the total commercial energy consumption of nearly two thirds of the world’s countries.”…Indeed, the predicament of the US Department of Defense is a refraction of the quandary that now confronts the world’s status quo powers: how do you reduce your dependence on the very “resources” on which your geopolitical power is founded?

Viewed from this perspective, climate change is but one aspect of a much broader planetary crisis: it is not the prime, cause of dislocation, but rather a cognate phenomenon. In this sense climate change, mass dislocations, pollution, environmental degradation, political breakdown, and the Covid-19 pandemic are all cognate effects of the ever increasing acceleration of the last three decades. Not only are all these crises interlinked–they are all deeply routed in history, and they are all ultimately driven by the dynamics of global power.

Just as the Lakota, repeatedly displaced by wars and the rising of dammed waters, were herded into ever shrinking reservations, so too are the refugees of today’s geopolitical wars being forced into zones of containment in North Africa, the Sahara, Mexico, Central America, and islands like Nauru. They too are casualties in a conflict that is not recognizable as war, in the sense defined by Western legal theorists. Yet the parallels with the biopolitical wars of the past are perfectly clear to many indigenous peoples–thus the title of Nick Este’s powerful account of the environmental struggles of the Lakota and their kin Our History is the Future.

Since the adoption in 1989 of the Washington Consensus, the ideologies and practices of settler colonialism have been actively promoted, in their neoliberal guise, by the world’s most powerful countries, and have come to be almost universally adopted by national and global elites. It is those settler-colonial practices that are now being implemented by China, in Xinjiang; by Indonesia in Papua; and by India,in Kashmir and in many of its foreign regions.

And surely it is no accident that today there exists a technology of last resort that many believe will ultimately work in favor of the neo-Europes: geo-engineering. As novel as it may seem, geoengineering is nothing other than terraforming carried literally into the stratosphere; it should by rights be called “strato-forming”. Today some of the richest and most powerful people, and institutions, in the West are openly promoting geo-engineering. Their enthusiasm makes it impossible to forget that “from the mid-eighteenth century onward, modern science explicitly supported empire, defining strategies for colonization.”

This is the great burden that now rests upon the writers, artists, filmmakers, and everyone else who is involved in the telling of stories: to us falls the task of imaginatively restoring agency and voice to non humans. As with all the most important artistic endeavors in human history, this is a task that is at once aesthetic and political–and because of the magnitude of the crisis that besets the planet, it is now freighted with the most pressing moral urgency.

Pope Francis; “A true ecological approach always becomes a social approach, it must integrate questions of justice in debates on the environment, so as to hear both the cry of the earth and the cry of the poor.”

Pax Britannica, Pax Americana, Pax Zhōngguó, The Last World Empire?

Friday, January 28th, 2022

To Govern the Globe, World Orders & Catastrophic Change, Alfred W. McCoy, 2021

Indeed, the Iberian (Spain and Portugal) vision of expansive sovereignty — acquisition of terrain by conquest and oceans by exploration — would continue under Dutch and British hegemony, illustrating the capacity of these global systems to survive the empires that created them…Thanks to the British and Dutch decisions to strip their colonial subjects of civil liberties and carry the transatlantic slave trade to new heights, the Iberian hierarchy of human inequality would, in all its cruelty and tragedy continue.

In the years following the (Dutch) East India Company’s founding in 1602, the city’s (Amsterdam) dynamism led to a host of financial innovations that soon made it… “the clearinghouse of world trade”. The new Bank of Amsterdam took deposits, transferred funds trans nationally and later stored vast quantities of precious metals in its vaults, helping make the city “Europe’s reservoir of gold and silver coin.” The Chamber of Maritime Insurance offered coverage for dozens of dangerous destinations, while the newspaper Amterdamsche Courant gave the city’s merchants critical information about the prices of goods arriving from those distant shores. Amsterdam also built the world’s first stock exchange, where up to five thousand met to trade more than four hundred commodities around a central courtyard that became “the nerve center of the entire international economy.”

William III Mary II

William’s (of Orange) reign also witnessed a modernization of the British economy along Dutch lines, exemplified by the founding of the Bank of England, the London Stock Exchange, and a profusion of private banks, insurance companies, and joint stock firms.

Coal was the catalyst for an industrial revolution that fused steam technology with steel production to make Britain master of the world’s oceans

Each step in slavery’s eradication was foreshadowed by a new stage in Britain’s use of coal-fired energy–including the introduction of steam power in mills and mines by the time Parliament banned the slave trade in 1807; the development of mobile steam engines for land and sea transport prior to the Later, abolition of West Indies slavery in 1833; and the adoption of coal powered steam power in almost all British industries by the 1850’s, when the Royal Navy’s anti-slavery patrols reached their coercive climax. Later, new forms of fossil energy — electricity and internal combustion engines — would render even the coerced labor of the imperial age redundant.

By the end of the nineteenth century, the Swedish physicist Svante Arrhenius would publish the first report on the capacity of industrial emission to cause global warming. By countless hours of painstaking manual calculations, he predicted with uncanny prescience and considerable precision “the temperature in the arctic regions would rise about 8 degrees to 9 degrees C., if the [carbon dioxide] increased 2.5 or 3 times its present value.”

Britain was the world’s preeminent power for more than a century, but its dominance nevertheless evolved through two distinct phases. From 1815 to 1880 it largely oversaw an “informal empire” with a loose hegemony over client states worldwide. In the period of “high imperialism” from 1880 to 1940, however the empire combined informal controls in countries like China, Egypt, and Iran with direct rule over colonies in Africa and Asia to encompass a full half of all humanity.

Parliament rescinded mercantilist laws that had protected British commerce for centuries, starting with the abolition of the (British) East India Company’s monopolies on Asian trade.

British engineers built the world’s first major central power plant at Deptford, London in 1888, capable of lighting two million electric bulbs. As electrical plants spread quickly, their generators were powered by the first coal-fired steam turbines…tying a knot between coal and electricity that persists to this day.

By century’s end (19th), discoveries (Iran, Indonesia, Burma) had created a sufficient supply of oil to enable a shift from steam to internal combustion engines in ships, trains, automobiles, and ultimately, aircraft.

Eleanor Roosevelt Universal Declaration of Human Rights

In fulfilling this commitment to human rights (The UN’s Universal Declaration of Human Rights 1948), the United States would face some exceptional challenges. Unlike earlier imperial powers, it was, after all, a former colony with a long history of slavery and a succeeding system of racial segregation that would compromise its commitment to those principle at home. As its global power grew during these postwar decades, Washington would cultivate anti-Communist allies among authoritarian leaders in Asia, Africa, and Latin America, tacitly endorsing torture and repression in their lands. Even as the US practiced racial segregation at home and backed ruthless dictators abroad, civil society groups worldwide would continue to fight for human rights, just as African Americans would struggle for their civil rights at home, making this universal principal a defining attribute of Washington’s world order, almost in spite of itself.

By the time Washington’s world order was fully formed in the late 1950’s, the unequal power of its nuclear-armed bombers, its countless overseas military bases, and its covert interventions in the affairs of countless nations coexisted tensely with a new world order, epitomized by the UN, that was meant to protect the sovereignty of even small states and promote universal human rights. This underlying duality of Washington’s version of world power would manifest itself in numerous contradictions during its 70 years of global hegemony.

Washington’s visionary world order took form at two major conferences — at Breton Woods, New Hampshire, 1944 where 44 Allied nations forged an international financial system exemplified by the World Bank, and at San Francisco in 1945, where they drafted a charter for the UN that created a community of nations. The old order of competing empires, closed imperial trade blocs, and secret alliances would soon give way to an international community of emancipated colonies, sovereign nations, free trade, and peace through law. In essence, the UN charter’s many clauses rested on just two foundational principles that would soon become synonymous with Washington’s world order; inviolable national sovereignty and universal human rights.

Between 1945 and 2000, the US intervened in 81 consequential elections worldwide, including eight times in Italy, five in Japan, and many more in Latin America. Between 1958 and 1975, military coups, many of them American sponsored, changed governments in three dozen nations — a quarter of the world’s sovereign states — fostering a distinct “reverse wave” in the global trend toward democracy.

George Kennan supported covert operations

George Kennan, State Department official later called the creation of the CIA with authorization to conduct covert operations “The greatest mistake [he] ever made.

President Truman tried to limit the newly created CIA to intelligence gathering only with no authorization for covert activities. Allen Dulles maneuvered Frank Wisner into position as OPC Chief and by 1952 OPC was operating 47 overseas stations and employed 3000 people. It specialized in the black arts of espionage sabotage, subversion, and assassination. When Eisenhower became president in 1953, Kermit Roosevelt led the overthrow of the elected President of Iran and installation of the Shaw.

Throughout its rise to world power from 1820 to 1870, Britain increase its share of gross world product by just 1 percent per decade, while America’s rose by 2 percent during its accent from 1900 to 1950. By contrast, China was increasing its slice of the world pie at an extraordinary pace of 5 percent from 2000 to 2020.

…the accounting firm PriceWaterhouseCoopers calculated that China’s economic output had already surpassed America’s in 2014 and was on a trajectory to become 40 percent larger by 2030.

Across Europe, hypernationalist parties like the French National Front, Greece’s Golden Dawn, Alternative for Germany, and the British Independence Party won voters by cultivating nativist reactions to just such trends, often attacking the economic globalization that had become a hallmark of Washington’s world order. Simultaneously, a generation of populist demagogues won power in nominally democratic nations around the world — notably Viktor Orban in Hungary, Vladimir Putin in Russia, Recep Tayyip Erdogan in Turkey, Narendra Modi in India, Rodrigo Duterte in the Philippines, and of course, Donald Trump in the United States.

While a weakening of Washington’s global reach seems likely, the future of its world order is still unclear. At present, China is the sole state to have most (but not all) of the requisites to become a new global hegemon. Its economic rise coupled with its expanding military and growing technological prowess under the “Made in China 2025” program, has given it many of the elements fundamental to superpower status…Yet, as the 2020s began, no state seemed to have both the full panoply of power to supplant Washington’s world order and the skill to establish global hegemony. Indeed, apart from its rising economic and military clout, China has a self referential culture, recondite non roman script (requiring 4000 characters instead of 26 letters), nondemocratic political structures, and a subordinate legal system that will deny it some of the chief instruments for global leadership.

Successful imperial transitions driven by the hard power of guns and money also require the soft power salve of cultural suasion if they are to achieve sustained and successful global domination. During its near century of hegemony from 1850 to 1940, Britain was the exemplar par excellence of soft power, espousing an enticing political culture of fair play and free markets that it propagated through the Anglican church, the English language and its literature, mass media such as the British Broadcasting Corporation, and it virtual creation of modern athletics (including cricket, soccer, tennis, rugby, and rowing). Similarly, US military and economic domination after 1945 was made more palatable by the appeal of Hollywood films, civic organizations like Rotary international, and popular sports like basketball and baseball. On the higher plane of principle, Britain’s anti-slavery campaign invested its global hegemony with moral authority, just as Washington’s advocacy of human rights lent legitimacy to its world order…China still has nothing comparable. Both its communist ideology and its popular culture are avowedly particularistic.

China has been a command economy state for much of the past century, and as such has developed neither the legal culture of an independent judiciary nor an autonomous rules-based order complementary with the web of law that undergirds the modern international system.

Xi Jiping – Zhōngguó (China) is translated as Middle Kingdom

If, however, Bejing’s potentially immense infrastructure investments, history’s largest by far, succeed in unifying the commerce of three continents, then the currents of financial power and global leadership may indeed flow, as if by natural law, toward Beijing. But if that bold project falters or ultimately fails, then for the first time in five centuries, the world could face an imperial transition without a clear successor as global hegemon.

From scientific evidence, it seems clear that, for the first time in seven hundred years, humanity is facing another cumulative, century long catastrophe akin to the Black Death of 1350 to 1450 that could once again rupture a global order and set the world in motion…If the “Chinese century” does indeed start around 2030, it is unlikely to last long, ending perhaps sometime around 2050 when the impact of global warning becomes unmanageable. With its main financial center at Shanghai flooded and its agricultural heartland baking in insufferable heat, China’s days as a global power will be numbered.

Given that Washington’s world system and Beijing’s emerging alternative are largely failing to limit carbon emissions, the international community will likely need a new form of collaboration to contain the damage. In the years following the Paris climate accord, the current world system — characterized by strong nation-states and weak global governance at the UN — has proven inadequate to the challenge of climate change. The 2019 Madrid climate summit failed to forge a collective agreement for emission reduction sufficient to cap global warming to 1.5C, largely due to the obstruction of major emitters like Australia, Brazil, China, India, and the United States. Any world order, whether Washington’s or Beijing’s that is based on primacy of the nation-state will probably prove incapable of coping with the political and economic crisis likely to arise from the appearance of some 275 million climate refuges by 2060 or 2070.

Deep Medicine – Wellness in a very complex universe and web of life

Friday, November 5th, 2021

Inflamed; Deep Medicine and the Anatomy of Injustice, Rupa Marya & Raj Patel, 2021

Truly holistic health must contend with the elements that continue to make people unwell, locating the disease-causing entities in social structures and the grave misunderstandings that created them. Systems that position humans as supreme over the entire web of life, settler over Indigenous, a singular religion over all other-world views, male over female and nonbinary understandings of gender, white over every other shade of skin — these must be dismantled and composted. We must reimagine our wellness collectively, not simply as individuals or communities but in relation to all the entities that support the possibility of healthy lives. These relaionships, precisely because they are vital for health, are worthy of our care.
The problem is when inclusion becomes enclosure — when the radically transformative projects, theories, and futures led by Indigenous and poor people are sterilized by liberalism, and when the language and other signifiers of revolution are co-opted and incorporated into some giant soup of civil rights struggles…For those living in settler societies, the work of being in solidarity specifically with Indigenous-led movements is particularly critical. The collapse of ecological, social, and bodily health is an outcome of over six hundred years of cosmological warfare.
Forging new forms of solidarity is not easy. It requires abandoning colonial ties and creating new relations with other fugitives. Reconnecting relations that colonialism sundered is simultaneously a personal and political project. Colonialism reproduces itself through a hegemony that has been widely internalized. Transcending it won’t require just therapy, or antiracist book clubs, or some individual process of self-scrutiny. It will involve a collective journey to new forms of exchange and relations.


Yosemite Valley and Falls

The romance of the wilderness (the National Parks) was created through the erasure of the people who knew how to live sustainably in a specific place, often for thousands of years…Removing this taint (native inhabitants) on the landscape would have severe consequences not only for the people but for the entire ecosystem: the invention of the pristine wilderness inaugurated an era of catastrophic forest fires.

Inflammation is triggered when tissues and cells are damaged or threatened with damage. A complex and intricately coordinated response of the immune system, inflammation mobilizes resources to ultimately heal what has been injured. In a healthy, balanced system, once the mending has occurred, inflammation subsides. When the damage keeps coming, the repair cannot fully happen, leaving the inflammatory response running. A system of healing then turns into one that creates more harm.
As we explore inflammation in this book, we will sometime use the language of the body in analogy. So salmon are to rivers as hearts are to blood vessels. They both function as nutrient pumps in systems of circulation. We sometimes proceed by simile; dams are like vascular obstructions. We are not above metaphor. Trade routes for example, are colonialism’s arteries, moving people, capital goods, and diseases around the world system, and connecting bodies, societies, geographies, and ecologies. The metaphor helps us to show that inflammation is systemic and that the systems are linked. But we aren’t making a literary arguments so much as a medical one. The inflammation in your arteries and the inflammation of the planet are linked, and the causal connections are becoming increasingly clear; your physiological state is a reaction to social and environmental factors. Racial violence, economic precarity, industrial pollution, poor diet, and even the water you drink can inflame you.

The stories of interference in the ancient relationships between land, water, humans, and salmon demonstrates how interconnected these all are and how technological arrogance can crate downstream problems when we work to outsmart the ecologies we belong to. A disruption in one part of the web of life, within a few short decades, ends up eroding the vitality of the whole system. But the good news is that ecologically guided reparation starting at one point of the web can bring vitality back to the whole…And that ecological restoration must start with the people who were integrated into the ecology before colonialism, and who are still here working on these solutions.

The (Covid) pandemic revealed in stark terms the reality of how environmental and social injustice affects health, and also the deeper truth that under a colonial cosmology, many humans have been made disposable.

Unfortunately, we are rushing headlong into a crisis of colonial capitalism in which pollution deaths soar, driven by a climate crisis, like the Covid pandemic, in which a few profit greatly while billions suffer…Absent a serious diagnosis of the climate crisis and its impact on the exposome and our bodies, medicine will continue to treat the symptoms but will miss the opportunity for a cure.

Learning to listen must be the work of settlers on colonized land, of modern societies that treat the Earth as a thing to be exploited, and of health care workers, as we increasingly encounter existential threats from forest fires, pandemics, catastrophic floods, and global warming–all signs that we are critically out of balance.

Through his investments, (Bill) Gates owns 97,933 hectares (242,000 acres) of arable land, making him the largest farmland owner and occupant of stolen territory in the United States.

After the Bolivian coup to assure US extractive rights to lithium needed for his electric cars, Elon Musk tweated: “We will coup whoever we want! Deal with it.”

Colonial capitalism suppresses the equitable distribution of resources, expending great energy–through extraction, border construction, incarceration, and the creation of supremacist cosmologies and institutions–to maintain a structure that prioritizes individuals over communities. Without the networking-capacity benefits of communities, society under colonial capitalism is more vulnerable to the shocks and failures of systems within systems, which we see with pandemics, raging wildfires, and stock market volatility.

Normally, pro-inflammatory activity is self limited, turning off once homeostasis is achieved. Sustained activation means that an inflammatory stimulus is chronic or the response simply fails to stop. When it continues unabated, it produces the inflammation that is a hallmark of neurodegenerative conditions such as Alzheimer’s, Parkinson’s, Huntington’s, multiple sclerosis, and amyotrophic lateral sclerosis.

The planet, our own bodies, and our consciousness are wired for the care of others. But capitalist economic and social systems teach us to restrict the set of beings whom we’re prepared to recognize as people, and to suppress the urge to care, unless money might be made from it. They misdirect our attention and obfuscate our capacity to recognize one another, and the care we need.
Humans have broken the world. The air that renders neurological disease more likely has to be cleaned. Industrial agriculture has massively degraded the land, and it will take a profound shift in priorities to reverse the killing of the flora, fauna, and fungi beneath our feet. In the United States, as elsewhere in the world, waterways are being polluted by agriculture and fossil fuels, and the defenders of that water are being attacked.

Unlearning capitalist cosmology cannot be done alone, as a project of individual therapy. It is not about an individual decision to “be kind” or to “be antiracist.” Rather it’s about the solidarity of political communities, of networks of people, engaged in systemic change. A decolonial idea of care extends not just to other humans but to all relations in the web of life.


Water Protectors at Standing Rock

When I (Rupa) went to Standing Rock, I saw a glimpse of another way of being in community, which allowed us to reconnect to that pluripotency that has been broken by colonialism…It was as if time were standing still and we were back in the era of colonial conquest. I had already known this conceptually, but it was there that I really understood in every cell of my body that colonialism is an ongoing project that reproduces itself across generations. It never stopped. For the system to continue, its power relations must be re-created every day, and that re-creation occurs because individuals are coerced, voluntarily agree, or simply cannot imagine how not to participate in the rules set out before us.