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

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

John Maynard Keynes

"Life is a school of probabilities."

Walter Bagehot

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

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

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

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

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

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

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

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

Some thoughts  on 2019

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

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

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

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

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

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

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

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

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

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


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[Oct 08, 2019] Southwest Pilots Blast Boeing in Suit for Deception and Losses from -Unsafe, Unairworthy- 737 Max -

Notable quotes:
"... The lawsuit also aggressively contests Boeing's spin that competent pilots could have prevented the Lion Air and Ethiopian Air crashes: ..."
"... When asked why Boeing did not alert pilots to the existence of the MCAS, Boeing responded that the company decided against disclosing more details due to concerns about "inundate[ing] average pilots with too much information -- and significantly more technical data -- than [they] needed or could realistically digest." ..."
"... The filing has a detailed explanation of why the addition of heavier, bigger LEAP1-B engines to the 737 airframe made the plane less stable, changed how it handled, and increased the risk of catastrophic stall. It also describes at length how Boeing ignored warning signs during the design and development process, and misrepresented the 737 Max as essentially the same as older 737s to the FAA, potential buyers, and pilots. It also has juicy bits presented in earlier media accounts but bear repeating, like: ..."
"... Then, on November 7, 2018, the FAA issued an "Emergency Airworthiness Directive (AD) 2018-23-51," warning that an unsafe condition likely could exist or develop on 737 MAX aircraft. ..."
"... Moreover, unlike runaway stabilizer, MCAS disables the control column response that 737 pilots have grown accustomed to and relied upon in earlier generations of 737 aircraft. ..."
"... And making the point that to turn off MCAS all you had to do was flip two switches behind everything else on the center condole. Not exactly true, normally those switches were there to shut off power to electrically assisted trim. Ah, it one thing to shut off MCAS it's a whole other thing to shut off power to the planes trim, especially in high speed ✓ and the plane noise up ✓, and not much altitude ✓. ..."
"... Classic addiction behavior. Boeing has a major behavioral problem, the repetitive need for and irrational insistence on profit above safety all else , that is glaringly obvious to everyone except Boeing. ..."
"... In fact, Boeing 737 Chief Technical Pilot, Mark Forkner asked the FAA to delete any mention of MCAS from the pilot manual so as to further hide its existence from the public and pilots " ..."
"... This "MCAS" was always hidden from pilots? The military implemented checks on MCAS to maintain a level of pilot control. The commercial airlines did not. Commercial airlines were in thrall of every little feature that they felt would eliminate the need for pilots at all. Fell right into the automation crapification of everything. ..."
Oct 08, 2019 | www.nakedcapitalism.com

At first blush, the suit filed in Dallas by the Southwest Airlines Pilots Association (SwAPA) against Boeing may seem like a family feud. SWAPA is seeking an estimated $115 million for lost pilots' pay as a result of the grounding of the 34 Boeing 737 Max planes that Southwest owns and the additional 20 that Southwest had planned to add to its fleet by year end 2019. Recall that Southwest was the largest buyer of the 737 Max, followed by American Airlines. However, the damning accusations made by the pilots' union, meaning, erm, pilots, is likely to cause Boeing not just more public relations headaches, but will also give grist to suits by crash victims.

However, one reason that the Max is a sore point with the union was that it was a key leverage point in 2016 contract negotiations:

And Boeing's assurances that the 737 Max was for all practical purposes just a newer 737 factored into the pilots' bargaining stance. Accordingly, one of the causes of action is tortious interference, that Boeing interfered in the contract negotiations to the benefit of Southwest. The filing describes at length how Boeing and Southwest were highly motivated not to have the contract dispute drag on and set back the launch of the 737 Max at Southwest, its showcase buyer. The big point that the suit makes is the plane was unsafe and the pilots never would have agreed to fly it had they known what they know now.

We've embedded the compliant at the end of the post. It's colorful and does a fine job of recapping the sorry history of the development of the airplane. It has damning passages like:

Boeing concealed the fact that the 737 MAX aircraft was not airworthy because, inter alia, it incorporated a single-point failure condition -- a software/flight control logic called the Maneuvering Characteristics Augmentation System ("MCAS") -- that,if fed erroneous data from a single angle-of-attack sensor, would command the aircraft nose-down and into an unrecoverable dive without pilot input or knowledge.

The lawsuit also aggressively contests Boeing's spin that competent pilots could have prevented the Lion Air and Ethiopian Air crashes:

Had SWAPA known the truth about the 737 MAX aircraft in 2016, it never would have approved the inclusion of the 737 MAX aircraft as a term in its CBA [collective bargaining agreement], and agreed to operate the aircraft for Southwest. Worse still, had SWAPA known the truth about the 737 MAX aircraft, it would have demanded that Boeing rectify the aircraft's fatal flaws before agreeing to include the aircraft in its CBA, and to provide its pilots, and all pilots, with the necessary information and training needed to respond to the circumstances that the Lion Air Flight 610 and Ethiopian Airlines Flight 302 pilots encountered nearly three years later.

And (boldface original):

Boeing Set SWAPA Pilots Up to Fail

As SWAPA President Jon Weaks, publicly stated, SWAPA pilots "were kept in the dark" by Boeing.

Boeing did not tell SWAPA pilots that MCAS existed and there was no description or mention of MCAS in the Boeing Flight Crew Operations Manual.

There was therefore no way for commercial airline pilots, including SWAPA pilots, to know that MCAS would work in the background to override pilot inputs.

There was no way for them to know that MCAS drew on only one of two angle of attack sensors on the aircraft.

And there was no way for them to know of the terrifying consequences that would follow from a malfunction.

When asked why Boeing did not alert pilots to the existence of the MCAS, Boeing responded that the company decided against disclosing more details due to concerns about "inundate[ing] average pilots with too much information -- and significantly more technical data -- than [they] needed or could realistically digest."

SWAPA's pilots, like their counterparts all over the world, were set up for failure

The filing has a detailed explanation of why the addition of heavier, bigger LEAP1-B engines to the 737 airframe made the plane less stable, changed how it handled, and increased the risk of catastrophic stall. It also describes at length how Boeing ignored warning signs during the design and development process, and misrepresented the 737 Max as essentially the same as older 737s to the FAA, potential buyers, and pilots. It also has juicy bits presented in earlier media accounts but bear repeating, like:

By March 2016, Boeing settled on a revision of the MCAS flight control logic.

However, Boeing chose to omit key safeguards that had previously been included in earlier iterations of MCAS used on the Boeing KC-46A Pegasus, a military tanker derivative of the Boeing 767 aircraft.

The engineers who created MCAS for the military tanker designed the system to rely on inputs from multiple sensors and with limited power to move the tanker's nose. These deliberate checks sought to ensure that the system could not act erroneously or cause a pilot to lose control. Those familiar with the tanker's design explained that these checks were incorporated because "[y]ou don't want the solution to be worse than the initial problem."

The 737 MAX version of MCAS abandoned the safeguards previously relied upon. As discussed below, the 737 MAX MCAS had greater control authority than its predecessor, activated repeatedly upon activation, and relied on input from just one of the plane's two sensors that measure the angle of the plane's nose.

In other words, Boeing can't credibly say that it didn't know better.

Here is one of the sections describing Boeing's cover-ups:

Yet Boeing's website, press releases, annual reports, public statements and statements to operators and customers, submissions to the FAA and other civil aviation authorities, and 737 MAX flight manuals made no mention of the increased stall hazard or MCAS itself.

In fact, Boeing 737 Chief Technical Pilot, Mark Forkner asked the FAA to delete any mention of MCAS from the pilot manual so as to further hide its existence from the public and pilots.

We urge you to read the complaint in full, since it contains juicy insider details, like the significance of Southwest being Boeing's 737 Max "launch partner" and what that entailed in practice, plus recounting dates and names of Boeing personnel who met with SWAPA pilots and made misrepresentations about the aircraft.

If you are time-pressed, the best MSM account is from the Seattle Times, In scathing lawsuit, Southwest pilots' union says Boeing 737 MAX was unsafe

Even though Southwest Airlines is negotiating a settlement with Boeing over losses resulting from the grounding of the 737 Max and the airline has promised to compensate the pilots, the pilots' union at a minimum apparently feels the need to put the heat on Boeing directly. After all, the union could withdraw the complaint if Southwest were to offer satisfactory compensation for the pilots' lost income. And pilots have incentives not to raise safety concerns about the planes they fly. Don't want to spook the horses, after all.

But Southwest pilots are not only the ones most harmed by Boeing's debacle but they are arguably less exposed to the downside of bad press about the 737 Max. It's business fliers who are most sensitive to the risks of the 737 Max, due to seeing the story regularly covered in the business press plus due to often being road warriors. Even though corporate customers account for only 12% of airline customers, they represent an estimated 75% of profits.

Southwest customers don't pay up for front of the bus seats. And many of them presumably value the combination of cheap travel, point to point routes between cities underserved by the majors, and close-in airports, which cut travel times. In other words, that combination of features will make it hard for business travelers who use Southwest regularly to give the airline up, even if the 737 Max gives them the willies. By contrast, premium seat passengers on American or United might find it not all that costly, in terms of convenience and ticket cost (if they are budget sensitive), to fly 737-Max-free Delta until those passengers regain confidence in the grounded plane.

Note that American Airlines' pilot union, when asked about the Southwest claim, said that it also believes its pilots deserve to be compensated for lost flying time, but they plan to obtain it through American Airlines.

If Boeing were smart, it would settle this suit quickly, but so far, Boeing has relied on bluster and denial. So your guess is as good as mine as to how long the legal arm-wrestling goes on.

Update 5:30 AM EDT : One important point that I neglected to include is that the filing also recounts, in gory detail, how Boeing went into "Blame the pilots" mode after the Lion Air crash, insisting the cause was pilot error and would therefore not happen again. Boeing made that claim on a call to all operators, including SWAPA, and then three days later in a meeting with SWAPA.

However, Boeing's actions were inconsistent with this claim. From the filing:

Then, on November 7, 2018, the FAA issued an "Emergency Airworthiness Directive (AD) 2018-23-51," warning that an unsafe condition likely could exist or develop on 737 MAX aircraft.

Relying on Boeing's description of the problem, the AD directed that in the event of un-commanded nose-down stabilizer trim such as what happened during the Lion Air crash, the flight crew should comply with the Runaway Stabilizer procedure in the Operating Procedures of the 737 MAX manual.

But the AD did not provide a complete description of MCAS or the problem in 737 MAX aircraft that led to the Lion Air crash, and would lead to another crash and the 737 MAX's grounding just months later.

An MCAS failure is not like a runaway stabilizer. A runaway stabilizer has continuous un-commanded movement of the tail, whereas MCAS is not continuous and pilots (theoretically) can counter the nose-down movement, after which MCAS would move the aircraft tail down again.

Moreover, unlike runaway stabilizer, MCAS disables the control column response that 737 pilots have grown accustomed to and relied upon in earlier generations of 737 aircraft.

Even after the Lion Air crash, Boeing's description of MCAS was still insufficient to put correct its lack of disclosure as demonstrated by a second MCAS-caused crash.

We hoisted this detail because insiders were spouting in our comments section, presumably based on Boeing's patter, that the Lion Air pilots were clearly incompetent, had they only executed the well-known "runaway stabilizer," all would have been fine. Needless to say, this assertion has been shown to be incorrect.


Titus , October 8, 2019 at 4:38 am

Excellent, by any standard. Which does remind of of the NYT zine story (William Langewiesche Published Sept. 18, 2019) making the claim that basically the pilots who crashed their planes weren't real "Airman".

And making the point that to turn off MCAS all you had to do was flip two switches behind everything else on the center condole. Not exactly true, normally those switches were there to shut off power to electrically assisted trim. Ah, it one thing to shut off MCAS it's a whole other thing to shut off power to the planes trim, especially in high speed ✓ and the plane noise up ✓, and not much altitude ✓.

And especially if you as a pilot didn't know MCAS was there in the first place. This sort of engineering by Boeing is criminal. And the lying. To everyone. Oh, least we all forget the processing power of the in flight computer is that of a intel 286. There are times I just want to be beamed back to the home planet. Where we care for each other.

Carolinian , October 8, 2019 at 8:32 am

One should also point out that Langewiesche said that Boeing made disastrous mistakes with the MCAS and that the very future of the Max is cloudy. His article was useful both for greater detail about what happened and for offering some pushback to the idea that the pilots had nothing to do with the accidents.

As for the above, it was obvious from the first Seattle Times stories that these two events and the grounding were going to be a lawsuit magnet. But some of us think Boeing deserves at least a little bit of a defense because their side has been totally silent–either for legal reasons or CYA reasons on the part of their board and bad management.

Brooklin Bridge , October 8, 2019 at 8:08 am

Classic addiction behavior. Boeing has a major behavioral problem, the repetitive need for and irrational insistence on profit above safety all else , that is glaringly obvious to everyone except Boeing.

Summer , October 8, 2019 at 9:01 am

"The engineers who created MCAS for the military tanker designed the system to rely on inputs from multiple sensors and with limited power to move the tanker's nose. These deliberate checks sought to ensure that the system could not act erroneously or cause a pilot to lose control "

"Yet Boeing's website, press releases, annual reports, public statements and statements to operators and customers, submissions to the FAA and other civil aviation authorities, and 737 MAX flight manuals made no mention of the increased stall hazard or MCAS itself.

In fact, Boeing 737 Chief Technical Pilot, Mark Forkner asked the FAA to delete any mention of MCAS from the pilot manual so as to further hide its existence from the public and pilots "

This "MCAS" was always hidden from pilots? The military implemented checks on MCAS to maintain a level of pilot control. The commercial airlines did not. Commercial airlines were in thrall of every little feature that they felt would eliminate the need for pilots at all. Fell right into the automation crapification of everything.

[Oct 08, 2019] Job Growth Remains Slow in September

Oct 08, 2019 | economistsview.typepad.com

anne , October 04, 2019 at 09:24 AM

http://cepr.net/data-bytes/jobs-bytes/jobs-2019-10

October 4, 2019

Job Growth Remains Slow in September, but Unemployment Rate Falls to 3.5 Percent
By Dean Baker

Manufacturing employment hit a record low as a share of private sector employment.

The Bureau of Labor Statistics reported that the economy added 136,000 jobs in September, after adding 168,000 in August. The 157,000 average for the last three months is considerably slower than the 179,000 average for the last year, but this slowing is expected in a tight labor market.

The September job growth led to a 0.2 percentage point drop in the unemployment rate to 3.5 percent, a fifty-year low. The employment-to-population ratio (EPOP) rose 0.1 percentage point to 61.0 percent, a new high for the recovery that is 0.6 percentage points above the year-ago level.

The EPOPs for both prime-age (ages 25 to 54) men and women rose by 0.1 percentage point in September. The 74.0 percent rate for women is a new high for the recovery, although still below the peak of 74.9 percent hit in April of 2000. The 86.4 percent rate for men is 0.3 percentage points below the March level and 1.6 percentage points below the prerecession peak.

The unemployment rate for Hispanics fell to 3.9 percent, the lowest on record, 0.6 percentage points below the year-ago level. The unemployment rate for workers without a high school degree also fell sharply to 4.8 percent, 0.8 percentage points below the year-ago level. The share of unemployment due to voluntary quits, a measure of workers' confidence in their labor market prospects, jumped 1.7 percentage points to 14.6 percent, a level more typical for a strong labor market.

Other data in the household survey were more mixed. While the mean duration of unemployment spells edged down 0.1 weeks to 22.0 weeks, the median duration rose 0.5 weeks to 9.4 weeks. The share of long-term unemployed also rose by 2.1 percentage points to 22.7 percent.

The number of involuntary part-time workers edged down by 31,000. The number of workers choosing to work part-time also fell, dropping by 124,000 in September. The percentage of the workforce choosing to work part-time has been dropping over the last year, after rising sharply following the implementation of the ACA. This likely due to workers having greater difficulty getting health care outside of employment.

Another negative item is an increase in the number of multiple job holders, especially among women. The share of employed women who have multiple jobs rose to 5.9 percent, 0.5 percentage points above the year-ago level. The vast majority of these women report that they work a second job in addition to a full-time job.

The picture on the establishment side is more negative. Slower job growth is to be expected in a tighter labor market, but it has virtually stopped altogether on the goods-producing side. The goods-producing sector has added a total of just 2,000 jobs over the last three months, with construction adding 8,000 jobs, manufacturing adding 4,000, and mining and logging losing 10,000. A big part of this is the fallout from the trade war and the resulting drop in investment. Also, lower world oil prices are a big hit to the mining sector. The manufacturing share of private sector employment sunk to a new all-time low in September of 9.96 percent.

On the service side, job growth in the high-paying professional and technical services sector has slowed sharply in the last two months, added an average of 13,900, compared to an average of 23,900 over the last year. Restaurant employment has also slowed sharply, with the sector adding an average of just 1,500 jobs over the last four months. This should be expected in a tight labor market, where workers have higher-paying options. Retail lost 11,400 jobs in September, bringing its losses over the last year to 60,900, just under 0.4 percent of total employment.

A big job gainer in recent months is health care, which added 38,800 jobs in September after adding 37,200 in August. The sector has accounted for almost a third of job growth in the private sector over the last two months.

In contrast to the evidence of a tight labor market in the household survey, wage growth appears to be slowing slightly. The average hourly wage rose 2.9 percent over the last year, although the annualized rate of wage growth, comparing the last three months (July, August, September) with the prior three months (April, May, June), was a slightly higher 3.4 percent.

[Graph]

This is a generally positive report with some serious warning signs. The goods sector is very weak and likely to get weaker, according to a wide variety of measures of manufacturing. The evidence of slowing wage growth is also striking in a labor market with 3.5 percent unemployment.

[Oct 07, 2019] The Rich Really Do Pay Lower Taxes Than You

Oct 07, 2019 | economistsview.typepad.com

Fred C. Dobbs , October 06, 2019 at 09:23 PM

The Rich Really Do Pay Lower Taxes Than You
https://www.nytimes.com/interactive/2019/10/06/opinion/income-tax-rate-wealthy.html
NYT - David Leonhardt - October 6

Almost a decade ago, Warren Buffett made a claim that would become famous. He said that he paid a lower tax rate than his secretary, thanks to the many loopholes and deductions that benefit the wealthy.

His claim sparked a debate about the fairness of the tax system. In the end, the expert consensus was that, whatever Buffett's specific situation, most wealthy Americans did not actually pay a lower tax rate than the middle class. "Is it the norm?" the fact-checking outfit Politifact asked. "No."

Time for an update: It's the norm now.

For the first time on record, the 400 wealthiest Americans last year paid a lower total tax rate -- spanning federal, state and local taxes -- than any other income group, according to newly released data.

That's a sharp change from the 1950s and 1960s, when the wealthy paid vastly higher tax rates than the middle class or poor.

Since then, taxes that hit the wealthiest the hardest -- like the estate tax and corporate tax -- have plummeted, while tax avoidance has become more common.

President Trump's 2017 tax cut, which was largely a handout to the rich, plays a role, too. It helped push the tax rate on the 400 wealthiest households below the rates for almost everyone else.

The overall tax rate on the richest 400 households last year was only 23 percent, meaning that their combined tax payments equaled less than one quarter of their total income. This overall rate was 70 percent in 1950 and 47 percent in 1980.

For middle-class and poor families, the picture is different. Federal income taxes have also declined modestly for these families, but they haven't benefited much if at all from the decline in the corporate tax or estate tax. And they now pay more in payroll taxes (which finance Medicare and Social Security) than in the past. Over all, their taxes have remained fairly flat.

The combined result is that over the last 75 years the United States tax system has become radically less progressive.

The data here come from the most important book on government policy that I've read in a long time -- called "The Triumph of Injustice," to be released next week. The authors are Emmanuel Saez and Gabriel Zucman, both professors at the University of California, Berkeley, who have done pathbreaking work on taxes. Saez has won the award that goes to the top academic economist under age 40, and Zucman was recently profiled on the cover of Bloomberg BusinessWeek magazine as "the wealth detective."

They have constructed a historical database that tracks the tax payments of households at different points along the income spectrum going back to 1913, when the federal income tax began. The story they tell is maddening -- and yet ultimately energizing.

"Many people have the view that nothing can be done," Zucman told me. "Our case is, 'No, that's wrong. Look at history.'" As they write in the book: "Societies can choose whatever level of tax progressivity they want." When the United States has raised tax rates on the wealthy and made rigorous efforts to collect those taxes, it has succeeded in doing so.

And it can succeed again.

Saez and Zucman portray the history of American taxes as a struggle between people who want to tax the rich and those who want to protect the fortunes of the rich. The story starts in the 17th century, when Northern colonies created more progressive tax systems than Europe had. Massachusetts even enacted a wealth tax, which covered financial holdings, land, ships, jewelry, livestock and more.

The Southern colonies, by contrast, were hostile to taxation. Plantation owners worried that taxes could undermine slavery by eroding the wealth of shareholders, as the historian Robin Einhorn has explained, and made sure to keep tax rates low and tax collection ineffective. (The Confederacy's hostility to taxes ultimately hampered its ability to raise money and fight the Civil War.)

By the middle of the 20th century, the high-tax advocates had prevailed. The United States had arguably the world's most progressive tax code, with a top income-tax rate of 91 percent and a corporate tax rate above 50 percent.

But the second half of the 20th century was mostly a victory for the low-tax side. Companies found ways to take more deductions and dodge taxes. Politicians cut every tax that fell heavily on the wealthy: high-end income taxes, investment taxes, the estate tax and the corporate tax. The justification for doing so was usually that the economy as a whole would benefit.

The justification turned out to be wrong. The wealthy, and only the wealthy, have done fantastically well over the last several decades. G.D.P. growth has been disappointing, and middle-class income growth even worse.

The American economy just doesn't function very well when tax rates on the rich are low and inequality is sky high. It was true in the lead-up to the Great Depression, and it's been true recently. Which means that raising high-end taxes isn't about punishing the rich (who, by the way, will still be rich). It's about creating an economy that works better for the vast majority of Americans.

In their book, Saez and Zucman sketch out a modern progressive tax code. The overall tax rate on the richest 1 percent would roughly double, to about 60 percent. The tax increases would bring in about $750 billion a year, or 4 percent of G.D.P., enough to pay for universal pre-K, an infrastructure program, medical research, clean energy and more. Those are the kinds of policies that do lift economic growth.

One crucial part of the agenda is a minimum global corporate tax of at least 25 percent. A company would have to pay the tax on its profits in the United States even if it set up headquarters in Ireland or Bermuda. Saez and Zucman also favor a wealth tax; Elizabeth Warren's version is based on their work. And they call for the creation of a Public Protection Bureau, to help the I.R.S. crack down on tax dodging.

I already know what some critics will say about these arguments -- that the rich will always figure out a way to avoid taxes. That's simply not the case. True, they will always manage to avoid some taxes. But history shows that serious attempts to collect more taxes usually succeed.

Ask yourself this: If efforts to tax the super-rich were really doomed to fail, why would so many of the super-rich be fighting so hard to defeat those efforts?

Fred C. Dobbs said in reply to Fred C. Dobbs... , October 06, 2019 at 09:30 PM
(There is a graph that dominates this op-ed
that will not display in iExplorer, but
will appear using Edge, at the link above.)
Fred C. Dobbs said in reply to Fred C. Dobbs... , October 06, 2019 at 09:50 PM
NYT: The data here come from the most important
book on government policy that I've read in a
long time -- called "The Triumph of Injustice,"
to be released next week. The authors are
Emmanuel Saez and Gabriel Zucman ...

https://wwnorton.com/books/9781324002727

[Oct 07, 2019] Milton Friedman said "deficits were delayed taxes" Is this true?

Oct 07, 2019 | economistsview.typepad.com

anne -> Fred C. Dobbs... , October 06, 2019 at 05:33 PM

Seriously, what am I missing in failing to find that debt or the issuing of Treasury securities increases inequality? I will suppose I am wrong, since I want to understand the matter, but absent an explanation I will conclude I am right and the effect on inequality is of no significance. Corporate debt is another matter and here I understand that this increases inequality, but Treasury debt?
ilsm -> anne... , October 06, 2019 at 05:43 PM
I think (trying not to dwell on why Biden is not being arraigned) it has to do with financialization vice manufacturing focus of US "growth".

If material 'wealth' grows through imports..... that creates a large outflow of USD. To make safe places to put newly printed USD the government borrows from both the foreign holders of USD and top 1% US citizens who don't enough pay taxes.

How can Joe six pack who has a large negative net worth and loses to foreign imports get in on accumulating T Bills and FX arbitrage?

Just thinking.

Shorter: Milton Friedman sold US a bill of goods when he said "deficits were delayed taxes" on PBS when my kids were toddlers.

[Oct 06, 2019] Polarization of lawmakers and the US electorate

Oct 06, 2019 | economistsview.typepad.com

Fred C. Dobbs , October 05, 2019 at 07:38 PM

Polarization is not necessarily the problem.

'Altogether, there are 31 states (plus the District of Columbia) with party registration; in the others, such as Virginia, voters register without reference to party. Among the party registration states are some of the nation's most populous: California, New York, Florida, North Carolina, Pennsylvania, New Jersey, Arizona, and Massachusetts.

The basic facts: In 19 states and the District, there are more registered Democrats than Republicans. In 12 states, there are more registered Republicans than Democrats. In aggregate, 40% of all voters in party registration states are Democrats, 29% are Republicans, and 28% are independents. Nationally, the Democratic advantage in the party registration states approaches 12 million.' ...

Registering by Party: Where the
Democrats and Republicans Are Ahead http://www.rasmussenreports.com/public_content/political_commentary/commentary_by_rhodes_cook/registering_by_party_where_the_democrats_and_republicans_are_ahead

The most populous dozen states have enough electoral votes
to decide presidential elections. Most are in Dem hands,
but a few are not. However, many of the remaining
less populous states have electoral vote advantages
(2 more votes than they would have if electoral vote
distribution were strictly based on population) and
they are dominated by GOP voters.

It strikes me that the electorate is really dominated
by independent voters, not party-affiliated, and this
makes the process potentially much less polarized in
reality than some make it out to be. (yes, independent
voters are said to vote along party lines *anyway*, but
this is because there are effectively only two parties
to vote for, given that 'splinter' parties are practically
useless & ultimately disruptive.)

But it remains an interesting strategy to continue to
insist that polarization is on-going, increasing, and
will ultimately destroy US politics. It had better not.

likbez -> Fred C. Dobbs... , October 05, 2019 at 11:15 PM
"But it remains an interesting strategy to continue to insist that polarization is on-going, increasing, and will ultimately destroy US politics. It had better not."

You can deny that polarization is increasing.

Opposite sides now do not listen to each other and resort to war propaganda methods. This is visible on this blog too. Each side sing their own song, paying little or no attention to the arguments of the other side.

Another interesting sign of polarization is that on most important cases Congress votes now strictly along the party lines.

And in Congressional committees Demorats abuse their dominance to the extent previously impossible: Obsessed with Russiagate sad clown Schiff is a typical example here. Example of both polarization and degradation at the same time.

[Oct 05, 2019] A measure of U.S. manufacturing unexpectedly fell deeper into contraction, posting the weakest reading since the end of the last recession as a global slowdown and the U.S.-China trade war increasingly weigh on the sector

Oct 05, 2019 | economistsview.typepad.com

Joe , October 01, 2019 at 07:39 AM

Bloombergs version:

A measure of U.S. manufacturing unexpectedly fell deeper into contraction, posting the weakest reading since the end of the last recession as a global slowdown and the U.S.-China trade war increasingly weigh on the sector.

---
You heard he news. Doldrumming along.
Cars, end of cycle, Asians not buying US houses, Boeing, Global trade wars. And all of refusing to pay our government bills. Oil is back to 55$, been there for five yeas while CPI has been rising 1.5% a year, that signals a bit of deflation coming. A bouncing along with 1% real growth for a few quarters while dipping our toes in negative pricing.

[Oct 05, 2019] Another round of fake labor statistics

Oct 05, 2019 | economistsview.typepad.com

anne , October 04, 2019 at 09:24 AM

http://cepr.net/data-bytes/jobs-bytes/jobs-2019-10

October 4, 2019

Job Growth Remains Slow in September, but Unemployment Rate Falls to 3.5 Percent
By Dean Baker

Manufacturing employment hit a record low as a share of private sector employment.

The Bureau of Labor Statistics reported that the economy added 136,000 jobs in September, after adding 168,000 in August. The 157,000 average for the last three months is considerably slower than the 179,000 average for the last year, but this slowing is expected in a tight labor market.

The September job growth led to a 0.2 percentage point drop in the unemployment rate to 3.5 percent, a fifty-year low. The employment-to-population ratio (EPOP) rose 0.1 percentage point to 61.0 percent, a new high for the recovery that is 0.6 percentage points above the year-ago level.

The EPOPs for both prime-age (ages 25 to 54) men and women rose by 0.1 percentage point in September. The 74.0 percent rate for women is a new high for the recovery, although still below the peak of 74.9 percent hit in April of 2000. The 86.4 percent rate for men is 0.3 percentage points below the March level and 1.6 percentage points below the prerecession peak.

The unemployment rate for Hispanics fell to 3.9 percent, the lowest on record, 0.6 percentage points below the year-ago level. The unemployment rate for workers without a high school degree also fell sharply to 4.8 percent, 0.8 percentage points below the year-ago level. The share of unemployment due to voluntary quits, a measure of workers' confidence in their labor market prospects, jumped 1.7 percentage points to 14.6 percent, a level more typical for a strong labor market.

Other data in the household survey were more mixed. While the mean duration of unemployment spells edged down 0.1 weeks to 22.0 weeks, the median duration rose 0.5 weeks to 9.4 weeks. The share of long-term unemployed also rose by 2.1 percentage points to 22.7 percent.

The number of involuntary part-time workers edged down by 31,000. The number of workers choosing to work part-time also fell, dropping by 124,000 in September. The percentage of the workforce choosing to work part-time has been dropping over the last year, after rising sharply following the implementation of the ACA. This likely due to workers having greater difficulty getting health care outside of employment.

Another negative item is an increase in the number of multiple job holders, especially among women. The share of employed women who have multiple jobs rose to 5.9 percent, 0.5 percentage points above the year-ago level. The vast majority of these women report that they work a second job in addition to a full-time job.

The picture on the establishment side is more negative. Slower job growth is to be expected in a tighter labor market, but it has virtually stopped altogether on the goods-producing side. The goods-producing sector has added a total of just 2,000 jobs over the last three months, with construction adding 8,000 jobs, manufacturing adding 4,000, and mining and logging losing 10,000. A big part of this is the fallout from the trade war and the resulting drop in investment. Also, lower world oil prices are a big hit to the mining sector. The manufacturing share of private sector employment sunk to a new all-time low in September of 9.96 percent.

On the service side, job growth in the high-paying professional and technical services sector has slowed sharply in the last two months, added an average of 13,900, compared to an average of 23,900 over the last year. Restaurant employment has also slowed sharply, with the sector adding an average of just 1,500 jobs over the last four months. This should be expected in a tight labor market, where workers have higher-paying options. Retail lost 11,400 jobs in September, bringing its losses over the last year to 60,900, just under 0.4 percent of total employment.

A big job gainer in recent months is health care, which added 38,800 jobs in September after adding 37,200 in August. The sector has accounted for almost a third of job growth in the private sector over the last two months.

In contrast to the evidence of a tight labor market in the household survey, wage growth appears to be slowing slightly. The average hourly wage rose 2.9 percent over the last year, although the annualized rate of wage growth, comparing the last three months (July, August, September) with the prior three months (April, May, June), was a slightly higher 3.4 percent.

[Graph]

This is a generally positive report with some serious warning signs. The goods sector is very weak and likely to get weaker, according to a wide variety of measures of manufacturing. The evidence of slowing wage growth is also striking in a labor market with 3.5 percent unemployment.

[Oct 05, 2019] Everything is fake in the current neoliberal discourse, be it political or economic, and it is not that easy to understand how they are deceiving us. Lies that are so sophisticated that often it is impossible to tell they are actually lies, not facts

Highly recommended!
Oct 05, 2019 | economistsview.typepad.com

likbez -> anne... , October 05, 2019 at 04:40 PM

Anne,

Let me serve as a devil advocate here.

Japan has a shrinking population. Can you explain to me why on the Earth they need economic growth?

This preoccupation with "growth" (with narrow and false one dimensional and very questionable measurements via GDP, which includes the FIRE sector) is a fallacy promoted by neoliberalism.

Neoliberalism proved to be quite sophisticated religions with its own set of True Believers in Eric Hoffer's terminology.

A lot of current economic statistics suffer from "mathiness".

For example, the narrow definition of unemployment used in U3 is just a classic example of pseudoscience in full bloom. It can be mentioned only if U6 mentioned first. Otherwise, this is another "opium for the people" ;-) An attempt to hide the real situation in the neoliberal "job market" in which has sustained real unemployment rate is always over 10% and which has a disappearing pool of well-paying middle-class jobs. Which produced current narco-epidemics (in 2018, 1400 people were shot in half a year in Chicago ( http://www.chicagotribune.com/news/breaking/ct-met-weekend-shooting-violence-20180709-story.html ); imagine that). While I doubt that people will hang Pelosi on the street post, her successor might not be so lucky ;-)

Everything is fake in the current neoliberal discourse, be it political or economic, and it is not that easy to understand how they are deceiving us. Lies that are so sophisticated that often it is impossible to tell they are actually lies, not facts. The whole neoliberal society is just big an Empire of Illusions, the kingdom of lies and distortions.

I would call it a new type of theocratic state if you wish.

And probably only one in ten, if not one in a hundred economists deserve to be called scientists. Most are charlatans pushing fake papers on useless conferences.

It is simply amazing that the neoliberal society, which is based on "universal deception," can exist for so long.

[Oct 05, 2019] A Secretive Committee of Wall Street Insiders controls NY FED

Oct 05, 2019 | www.institutionalinvestor.com

A Secretive Committee of Wall Street Insiders Is the Least of the New York Fed's Concerns.

In July 17, Mary Callahan Erdoes, head of JPMorgan Chase & Co.'s $2.2 trillion asset and wealth management division, walked into the wood-paneled tenth-floor conference room at the Federal Reserve Bank of New York to address some fellow Wall Street luminaries -- Bridgewater Associates' Ray Dalio, Dawn Fitzpatrick of Soros Fund Management, short-seller Jim Chanos, and LBO kingpin David Rubenstein among them.

All are members of the Investor Advisory Committee on Financial Markets (IACFM) -- a forum to provide financial insight to the New York Fed. Chairing the meeting was New York Fed president John C. Williams, vice chair of the powerful, rate-setting Federal Open Market Committee, who was a year into his tenure.

Erdoes held forth at the meeting, which included a buffet lunch.

---

And so on.

This is us, we have a unexhaustable desire for these secret meetings to meet, so we vote, every year to convene them. If these secret meeting did not occur then we could never do a deal with the super wealthy and our precious will not be insured.
Reply Saturday, October 05, 2019 at 06:04 PM

[Oct 03, 2019] Infectious Narratives in Economics

Oct 03, 2019 | economistsview.typepad.com

anne , October 02, 2019 at 06:25 AM

https://www.bloomberg.com/news/articles/2019-10-01/robert-shiller-on-infectious-narratives-in-economics-excerpt

October 1, 2019

Infectious Narratives in Economics
By Robert Shiller - Bloomberg

"Narrative EconomicsHow Stories Go Viral & Drive Major Economic Events"

Concerns that inventions of new machines powered by water, wind, horse, or steam, or that use human power more efficiently, might replace workers and cause massive unemployment have an extremely long history, going back to ancient times. Aristotle imagined a future in which "the shuttle would weave and the plectrum touch the lyre without a hand to guide them." In such a world, "chief workmen would not want servants, nor masters slaves," he concluded.

Still, it wasn't until the 19th century, an era that brought innovations such as the water-powered textile loom, the mechanical thresher, and the Corliss steam engine, that concerns about technology-based unemployment took center stage. The narrative was particularly contagious during economic depressions when many were unemployed.

The phrase "technological unemployment" first appeared in 1917, but it started its epidemic upswing in 1928. The count for "technological unemployment" skyrockets in the 1930s in Google Ngrams, tracing a hump-shaped pattern, rising through time for a while and then falling, much as is regularly seen with infection diseases. The "technological unemployment" curve peaked in 1933, the worst year of the Great Depression.

Frequency of Appearance
Appearances in books, as a share of all words

[Graph]

It is curious that the narrative epidemic of technological unemployment began in 1928, a time of prosperity before the Great Depression. How did the epidemic start? In March 1928, U.S. Senator Robert Wagner stated his belief that unemployment was much higher than recognized, and he asked the Department of Labor to do a study. Later that month the department delivered the study that produced the first official unemployment rates published by the U.S. government. The study estimated that there were 1,874,030 unemployed people in the United States and 23,348,602 wage earners, implying an unemployment rate of 7.4%. This high estimated unemployment rate came at a time of great prosperity, and it led people to question what would cause such high unemployment amidst abundance.

A month later, the Baltimore Sun ran an article referring to the theories of Sumner H. Slichter, who in later decades became a prominent labor economist. In the article, readers are told that Slichter noted several causes of unemployment but said technological unemployment was "at present the most serious." The reason: "We are eliminating jobs through labor-saving methods faster than we are creating them." These words, alongside the new official reporting of unemployment statistics, created a contagion of the idea that a new era of technological unemployment had arrived. The earlier agricultural depression, with its associated fears of labor-saving machinery, began to look like a model for an industrial depression to follow.

Stuart Chase, who later coined the term the "New Deal," published Men and Machines in May 1929, during a period of rapidly rising stock prices. The real, inflation-corrected, U.S. stock market, as measured by the S&P Composite Index, rose a final 20% in the five months after the book's publication, before the infamous October 1929 crash. But concerns about rising unemployment were apparent even during the boom period. According to Chase, we were approaching the "zero hour of accelerating unemployment":

Machinery saves labour in a given process; one man replaces ten. A certain number of these men are needed to build and service a new machine, but some of them are permanently displaced.   If purchasing power has reached its limits of expansion because mechanization is progressing at an unheard of rate, only unemployment can result. In other words, from now on, the better able we are to produce, the worse we shall be off.  This is the economy of the madhouse.

This is significant: The narrative of out-of-control unemployment was already starting to go viral before there was any sign of the stock market crash of 1929.

During the week before the October 28–29 stock market crash, a national business show was running in New York in a convention center (since demolished) adjacent to Grand Central Station that many Wall Street people passed through to and from work. The show emphasized immense progress in robot technology in the office workplace. After the show moved to Chicago in November, the following description appeared in the Chicago Daily Tribune:

Exhibits in the national business show yesterday revealed that the business office of the future will be a factory in which machines will replace the human element, when the robot -- the mechanical man -- will be the principal office worker. 

There were addressers, autographers, billers, calculators, cancelers, binders, coin changers, form printers, duplicators, envelope sealers and openers, folders, labelers, mail meters, pay roll machines, tabulators, transcribers, and other mechanical marvels. 

A typewriting machine pounded out letters in forty different languages. A portable computing machine which could be carried by a traveling salesman was on exhibit.

By 1930 the crash itself was often attributed to the surplus of goods made possible by new technology. According to the Washington Post, "When the climax was reached in the last months of 1929 a period of adversity was inevitable because the people did not have enough money to buy the surplus goods which they had produced."

Fear of robots was not strong in most of the 1920s, when the word robot was coined. Historian Amy Sue Bix offers a theory to explain why this was so: The kinds of innovations that received popular acclaim in the 1920s didn't obviously replace jobs. If asked to describe new technology, people would perhaps think first of the Model T Ford, whose sales had burgeoned to 1.5 million cars a year by the early part of the decade. Radio stations, which first appeared around 1920, provided an exciting new form of information and entertainment, but they did not obviously replace many existing jobs. More and more homes were getting wired for electricity, with many possibilities for new gadgets that required electricity.

By the 1930s, Bix notes, the news had replaced stories of exciting new consumer products with stories of job-replacing innovations. Dial telephones replaced switchboard operators. Mammoth continuous-strip steel mills replaced steel workers. New loading equipment replaced coal workers. Breakfast cereal producers bought machines that automatically filled cereal boxes. Telegraphs became automatic. Armies of linotype machines in multiple cities allowed one central operator to set type for printing newspapers by remote control. New machines dug ditches. Airplanes had robot copilots. Concrete mixers laid and spread new roads. Tractors and reaper-thresher combines created a new agricultural revolution. Sound movies began to replace the orchestras that played at movie theaters. And, of course, the decade of the 1930s saw massive unemployment in the United States, with the unemployment rate reaching an estimated 25% in 1933.

It is difficult to know which came first, the chicken or the egg. Were all these stories of job-threatening innovations spurred by the exceptional pace of such innovations? Or did the stories reflect a change in the news media's interest in such innovations because of public concern about technological unemployment? The likely answer is "a little of both."

The "labor-saving machines" narrative was strongly connected to an underconsumption or overproduction theory: the idea that people couldn't possibly consume all of the output produced by machines, with chronic unemployment the inevitable result. The theory's origins date to the 1600s, but it picked up steam in the 1920s. It was mentioned in newspaper articles within days of the stock market crash of October 28–29, 1929.

The real peak of these narratives was in the 1930s, during which time they appeared five times as often as in any other decade, according to a search of Proquest's database of newspapers.

The topic now appears largely in articles about the history of economic thought, but it is worth considering why it had such a strong hold on the popular imagination during the Great Depression, why the narrative epidemic could recur, and the appropriate mutations or environmental changes that would increase contagion.

Today, underconsumption sounds like a bland technical phrase, but it had considerable emotional charge during the Great Depression, as it symbolized a deep injustice and collective folly. At the time it was mostly a popular theory, not an academic theory.

In the 1932 presidential campaign, Franklin Roosevelt ran against incumbent Herbert Hoover, who had been unsuccessful with deficit spending to restore the economy. Roosevelt gave a speech in which he articulated the already-popular theory of underconsumption. His masterstroke was putting it in the form of a story inspired by Lewis Carroll's famous children's book Alice's Adventures in Wonderland. In that book, a bright and inquisitive little girl named Alice meets many strange creatures that talk in nonsense and self-contradictions. Roosevelt's version of this story replaced his opponent with the Jabberwock, a speaker of nonsense:

A puzzled, somewhat skeptical Alice asked the Republican leadership some simple questions.

Will not the printing and selling of more stocks and bonds, the building of new plants and the increase of efficiency produce more goods than we can buy? No, shouted the Jabberwock, the more we produce the more we can buy.

What if we produce a surplus? Oh, we can sell it to foreign consumers.

How can the foreigners buy it? Why we will lend them the money.

Of course, these foreigners will pay us back by sending us their goods? Oh, not at all, says Humpty Dumpty. We sit on a high wall called a tariff.

How will the foreigners pay off these loans? That is easy. Did you ever hear of a moratorium?

On the face of it, underconsumption seemed to explain the high unemployment of the Great Depression, but academic economists never seriously embraced the theory, which had never been soundly explained.

The massive unemployment caused by the Great Depression set off serious social problems. For example, in the United States it caused the forced deportation (then called repatriation) of a million workers of Mexican origin. The goal was to free up jobs for "real" Americans. The popular narrative supported these deportations, and there was little public protest. Newspaper reports showed photos of happy Mexican Americans waving goodbye at the train station on their way back to their original home to help the Mexican nation.

The dial telephone also played an important part in narratives about unemployment and the associated underconsumption. During the Great Depression, there rose a narrative focus on the loss of telephone operators' jobs, and the transition to dial telephones was troubled by moral qualms that by adopting the dial phone one was complicit in destroying a job. Three weeks after dial phones were installed in the U.S. Senate in 1930, Senator Carter Glass introduced a resolution to have them torn out and replaced with the older phones. Noting that operators' jobs would be lost, he expressed true moral indignation against the new phones:

I ask unanimous consent to take from the table Senate resolution 74 directing the sergeant at arms to have these abominable dial telephones taken out on the Senate side .  I object to being transformed into one of the employees of the telephone company without compensation.

His resolution passed, and the dial phones were removed. It is hard to imagine that such a resolution would have passed if the nation had not been experiencing high unemployment. This story fed a contagious economic narrative that helped augment the atmosphere of fear associated with the contraction in aggregate demand during the Great Depression.

The loss of jobs to robots (that is, automation) became a major explanation of the Great Depression, and, hence, a perceived major cause of it. Even if the man hasn't lost his job yet, he will consume less owing to the prospect or possibility of losing his job. The U.S. presidential candidate who lost to Herbert Hoover in 1928, Al Smith, wrote in the Boston Globe in 1931:

We know now that much unemployment can be directly traced to the growing use of machinery intended to replace man power.   The human psychology of it is simple and understandable to everybody. A man who is not sure of his job will not spend his money. He will rather hoard it and it is difficult to blame him for so doing as against the day of want.

Albert Einstein, the world's most celebrated physicist, believed this narrative, saying in 1933 that the Great Depression was the result of technical progress:

According to my conviction it cannot be doubted that the severe economic depression is to be traced back for the most part to internal economic causes; the improvement in the apparatus of production through technical invention and organization has decreased the need for human labor, and thereby caused the elimination of a part of labor from the economic circuit, and thereby caused a progressive decrease in the purchasing power of the consumers.

By that time, people had begun to label labor-saving inventions as "robots," even if there were no mechanical men to be seen. One article in the Los Angeles Times in early 1931, about a year into the Great Depression, said that robots then were already the "equivalent of 80 million hand-workers in the United States alone," while the male labor force was only 40 million.

Though the technological unemployment narrative faded after 1935 (as revealed by Google Ngrams), it did not go away completely. Instead, it continued to exert some influence in the runup to World War II, until new narrative constellations about the war became contagious.

Many historians point to massive unemployment in Germany to explain the accession to power of the Nazi Party and Adolf Hitler in the election of 1933, the worst year of the Depression. But rarely mentioned today is the fact that a Nazi Party official promised that year to make it illegal in Germany to replace men with machines.

To go viral again, the labor-saving machines narrative needed a new twist after World War II, a twist that could seem to reinforce the newly rediscovered appreciation of human intelligence, and, ultimately, of the human brain. The narrative turned to the new "electronic brains" -- that is, computers.

anne -> anne... , October 02, 2019 at 06:29 AM
Correcting spacing:

Narrative Economics
How Stories Go Viral & Drive Major Economic Events
By Robert Shiller

[Oct 02, 2019] https://www.taxpolicycenter.org/briefing-book/what-tax-changes-did-affordable-care-act-make

Oct 02, 2019 | www.taxpolicycenter.org

Q. What tax changes did the Affordable Care Act make?

A. The Affordable Care Act made several changes to the tax code intended to increase health insurance coverage, reduce health care costs, and finance health care reform.

The Affordable Care Act (ACA) made several changes to the tax code intended to increase health insurance coverage, reduce health care costs, and finance health care reform.

To increase health insurance coverage, the ACA provided individuals and small employers with a tax credit to purchase insurance and imposed taxes on individuals with inadequate coverage and on employers who do not offer adequate coverage. To reduce health care costs and raise revenue for insurance expansion, the ACA imposed an excise tax on high-cost health plans. To raise additional revenue for reform, the ACA imposed excise taxes on health insurers, pharmaceutical companies, and manufacturers of medical devices; raised taxes on high-income families; and increased limits on the income tax deduction for medical expenses. Reply Wednesday, October 02, 2019 at 10:31 AM anne said in reply to anne... ACA tax provisions in effect in 2018 include the following:

A refundable tax credit for families to purchase health insurance through state and federal marketplaces.

A tax credit for small employers to purchase health insurance for their workers.

A tax on individuals without adequate health insurance coverage (the "individual mandate").

A tax on employers offering inadequate health insurance coverage (the "employer mandate").

Excise taxes on health insurance providers, pharmaceutical manufacturers and importers, and medical device manufacturers and importers.

An additional 0.9 percent Medicare tax on earnings and a 3.8 percent tax on net investment income (NII) for individuals with incomes exceeding $200,000 and couples with incomes exceeding $250,000.

Additionally, these ACA tax provisions are scheduled to take effect in the future:

An excise tax on employer-sponsored health benefits whose value exceeds specified thresholds (the "Cadillac tax") starting in 2022.

An additional limit on the medical expense deduction. Reply Wednesday, October 02, 2019 at 10:36 AM anne said in reply to anne... ACA Taxes and Credits for 2018

https://www.taxpolicycenter.org/sites/default/files/styles/original_optimized/public/4.8.8.png

[ This summary may be helpful to have. As far as I am aware, there is now no significant "public" criticism of Obamacare taxes. What criticism there is amounts to Republican political opposition to Obamacare which has had almost no voting resonance.

Democrats ran in support of Obamacare in the last congressional election, and this was considered a reason there is no Democratic control of the House of Representatives. Nonetheless, Republican political opposition to Obamacare continues. ] Reply Wednesday, October 02, 2019 at 10:49 AM anne said in reply to anne... Correcting:

Democrats ran in support of Obamacare in the last congressional election, and this was considered a prime reason there is [now[ Democratic control of the House of Representatives. Nonetheless, Republican political opposition to Obamacare continues even though the issue of protecting Obamacare evidently only helped Democrats in the latest national election. Reply Wednesday, October 02, 2019 at 03:00 PM anne said in reply to anne... https://www.nytimes.com/2019/09/25/health/employer-health-insurance-cost.html

September 25, 2019

Employer Health Insurance Is Increasingly Unaffordable, Study Finds
A relentless rise in premiums and deductibles is putting insurance out of reach for many workers, especially those with low incomes.
By Reed Abelson

Jessie McCormick had to quit her job to afford health care.

Ms. McCormick, 27, who has a heart condition, had an opportunity to move from part time to full time in her job at a small nonprofit in Washington. Working full time would qualify her for the firm's health plan.

But she calculated that her out-of-pocket costs would be at least $1,200 per month, about double the money she had left after paying her rent and utilities.

Instead, she quit her job last summer so her income would be low enough to enroll in Medicaid, which will cover all her medical expenses. "I'm trying to do some side jobs," she said.

Employers remain the main source of health insurance in the United States, covering about 153 million people. But premiums and deductibles are pushing employer-based coverage increasingly out of reach, according to a new analysis released Wednesday by the Kaiser Family Foundation, which conducts a survey of employers every year.

The average premium paid by the employer and the employee for a family plan now tops $20,000 a year, with the worker contributing about $6,000, according to the survey. More than a quarter of all covered workers and nearly half of those working for small businesses face an annual deductible of $2,000 or more.

The new data on employer coverage come as the Democratic presidential candidates debate sweeping reforms to diminish the role of private insurance in the American health system, including expanding the federal Medicare program to everyone or giving people the option to enroll in a government-run plan.

Many of the arguments for both systems center on expanding health insurance to more of the estimated 27 million people who lack it. But millions of people who already have coverage are deeply dissatisfied with the current system as well.

"For some reason, we like to focus on coverage when the issue for workers, people and the public generally is cost," said Drew Altman, the chief executive of the foundation. About 2,000 small and large businesses responded in detail to the survey.

Small employers in particular, and their workers, are struggling.

"Health insurance in the United States is incredibly prohibitive for small businesses," said Shalin Madan, the founder of a small investment advisory firm in Florida. He is not required to provide health insurance to his workers, because his business is too small and he outsources much of the work.

A policy for his own family, he said, runs about $2,000 a month ($24,000 per year), with a $13,000 deductible. "I'm out $37,000 before I see a return on investment, if you will," Mr. Madan said.... Reply Wednesday, October 02, 2019 at 10:58 AM EMichael said in reply to anne... I'd have to know how many family members and his county to give him credit for accurately quoting his costs.

I know a couple in Fl with two kids and their costs are not remotely close to his. And they receive no subsidy due to their income level. Reply Wednesday, October 02, 2019 at 11:18 AM anne said in reply to EMichael... I'd have to know how many family members and his county to give him credit for accurately quoting his costs....

[ The example makes no sense, but I did not realize that. I appreciate what I take as a necessary specific correction and caution about the article in all. There will be better articles. ] Reply Wednesday, October 02, 2019 at 11:44 AM anne said in reply to anne... A policy for his own family, he said, runs about $2,000 a month ($24,000 per year), with a $13,000 deductible. "I'm out $37,000 before I see a return on investment, if you will," Mr. Madan said....

[ Supposing we are considering a family of 4, this example does not make sense to me. The quoted cost is beyond any of which I am aware. The reporter needed to have checked this example but did not, and that means the article is problematic.

I appreciate this being called to my attention since I read the article, but neglectfully did not think through the example. ] Reply Wednesday, October 02, 2019 at 11:39 AM

[Sep 29, 2019] Deng famously declared it's all right if some advance before others

Sep 29, 2019 | economistsview.typepad.com

anne -> Plp... , September 28, 2019 at 09:18 AM

Branko loves his
Metric inequality

But it has limits

And internal system inequality
is very different
From inter system inequality

Deng famously declared it's all right if some advance before others
Internally

He understood development involved greater internal inequality at not just one initial stage
But at various stages ie domestic inequality
Is not constantly subject to improving Gini
On the path to the technical frontier ...


[ This is a very important comment. ]

[Sep 26, 2019] The real trouble with Capitalism: stupid/corrupt economists

Sep 26, 2019 | economistsview.typepad.com

Egmont Kakarot-Handtke , September 25, 2019 at 02:30 PM

ICYMI

The real trouble with Capitalism: stupid/corrupt economists
Comment on Chris Dillow on 'The trouble with capitalism'

For the full text (4950 characters) see here
https://axecorg.blogspot.com/2019/09/the-real-trouble-with-capitalism.html

Egmont Kakarot-Handtke

likbez -> Egmont Kakarot-Handtke ... , September 25, 2019 at 05:39 PM
Great, thank you !

I would argue that

(1) They are not stupid, they were simply bought

(2) This is not Capitalism, this is Neoliberalism.

But with those minor modifications you point stands: "The real trouble with Neoliberalism: bought/corrupt economists" ... "And this means that [neoliberal/neo-classical] economics is proto-scientific garbage."

Here is an extended quote from your comment so that people can more fully appreciate this line of thinking:

== quote ==

Chris Dillow quotes Martin Wolf: "What we increasingly seem to have is an unstable rentier capitalism, weakened competition, feeble productivity growth, high inequality and, not coincidentally, an increasingly degraded democracy."

Chris Dillow then sets out to explain the trouble with Capitalism: "The Bank of England has given us a big clue here. It points out that the rising profit share (a strong sign of increased monopoly) is largely confined to the US. In the UK, the share of profits in GDP has flatlined in recent years. Few, however, would argue that UK capitalism is less dysfunctional than its US counterpart. Which suggests that the problem with capitalism is not increased monopoly. So what is it? Here, I commend some brilliant work by Michael Roberts. Many of the faults Martin discusses have their origin in a declining rate of profit ― a decline which became acute in the 1970s but which was never wholly reversed."

The whole intellectual/moral misery of economists is contained in this paragraph. Chris Dillow's explanation starts with the "share of profits in GDP" and ends with the "rate of profit". Not only are these entirely different things but macroeconomic profit is not defined, to begin with.

The simple reason is that neither Chris Dillow nor Martin Wolf nor Michael Roberts knows what profit is.#1 This sad fate they share with Walrasians, Keynesians, Marxians, Austrians, and MMTers. The dirty secret of economics is that since Adam Smith/Karl Marx economists do not know what profit is.#2, #3

And this means that economics is proto-scientific garbage but economists have not realized it to this day.

... ... ...
== end ==

[Sep 25, 2019] After Chavez took power, Venezuelans told me that he had found that a critical subsidiary of the Venezuelan oil company PDVSA was basically a CIA shop.

Notable quotes:
"... One of the reasons that I doubt Biden's version of the story stems from my experience in Venezuela. After Chavez took power, Venezuelans told me that he had found that a critical subsidiary of the Venezuelan oil company PDVSA was basically a CIA shop. The names of CIA on the Board of Directors were not just ordinary CIA, but were recognizable figures at the very top. ..."
"... To me this is entirely plausible. Control of oil is critical to US global hegemony. And what better way to control foreign oil than to have trusted American asset sit on the BOD? ..."
Sep 25, 2019 | economistsview.typepad.com

JohnH -> JohnH... , September 25, 2019 at 03:45 PM

One of the reasons that I doubt Biden's version of the story stems from my experience in Venezuela. After Chavez took power, Venezuelans told me that he had found that a critical subsidiary of the Venezuelan oil company PDVSA was basically a CIA shop. The names of CIA on the Board of Directors were not just ordinary CIA, but were recognizable figures at the very top.

To me this is entirely plausible. Control of oil is critical to US global hegemony. And what better way to control foreign oil than to have trusted American asset sit on the BOD?

This brings us to Hunter Biden's appointment to Ukrainian energy giant Burisma. After the coup in 2014, why wouldn't Biden want a trusted asset on the board of the biggest natural gas producer in Ukraine? IOW it was unpublicized standard operating procedure.

[Sep 25, 2019] Capitalism, Alone: Four important -- but somewhat hidden -- themes by Branko Milanovic

Sep 25, 2019 | economistsview.typepad.com

anne , September 24, 2019 at 10:26 AM

https://glineq.blogspot.com/2019/09/capitalism-alone-four-important-but.html

September 24, 2019

Capitalism, Alone: Four important--but somewhat hidden--themes

I review here four important, but perhaps not immediately apparent, themes from my Capitalism, Alone. The book contains many other, more topical, subjects that are likely to attract readers' and reviewers' attention much more than the somewhat abstract or philosophical issues briefly reviewed here.

1. Capitalism as the only mode of production in the world. During the previous high point of the British-led globalization, capitalism shared the world with various feudal or feudal-like systems characterized with unfree labor: forced labor was abolished in Austria-Hungary in 1848, serfdom in Russia in 1861, slavery ended in the US in 1865, and in Brazil only in 1888, And labor tied to land continued to exist in India and to a lesser degree in China. Then, after 1917, capitalism had to share the world with communism which, at its peak, included almost a third of the world population. It is only after 1989, that capitalism is not only a dominant, but the sole, system of organizing production (Chapter 1).

2. The global historical role of communism. The existence of capitalism (economic way to organize society) throughout the world does not imply that the political systems must be organized in the same way everywhere. The origins of political systems are very different. In China and Vietnam, communism was the tool whereby indigenous capitalism was introduced (explained below). The difference in the "genesis" of capitalism, that is, in the way capitalism was "created" in various countries explains why there are at least two types of capitalism today. I am doubtful that there would ever be a single type of capitalism covering the entire globe.

To understand the point about the different origins, one needs to start from the question of the role of communism in global history and thus from the interpretation (histoire raisonéee) of the 20th century (Chapter 3).

There are two major narratives of the 20th century: liberal and Marxist; they are both "Jerusalem"-like in the Russian philosopher Berdiaff's terminology. They see the world evolving from less developed toward more developed stages ending in either a terminus of liberal capitalist democracy or Communism (society of plenty).

Both narratives face significant problems in the interpretation of the 20th century. Liberal narrative is unable to explain the outbreak of the First World War which, given the liberal arguments about the spread of capitalism, (peaceful) trade, and interdependence between countries and individuals that ostensibly abhor conflict should never have happened, and certainly not in the way it did -- namely by involving in the most destructive war up to date all advanced capitalism countries. Second, liberal narrative treats both fascism and communism as essentially "mistakes" (cul de sacs) on the road to a chiliastic liberal democracy without providing much of reasoning as to why these two "mistakes" happened. Thus the liberal explanations for both the outbreak of the War and the two "cul de sacs" are often ad hoc, emphasizing the role of individual actors or idiosyncratic events.

Marxist interpretation of the 20th century is much more convincing in both its explanation of World War I (imperialism as the highest stage of capitalism) and fascism (an attempt by the weakened bourgeoise to thwart left-wing revolutions). But Marxist view is entirely powerless to explain 1989, the fall of communist regimes, and hence unable to provide any explanation for the role of communism in global history. The fall of communism, in a strict Marxist view of the world, is an abomination, as inexplicable as if a feudal society having had experienced a bourgeois revolution of rights were suddenly to "regress" and to reimpose serfdom and the tripartite class division. Marxism has therefore given up trying to provide an explanation for the 20th century history.

The reason for this failure lies in the fact that Marxism never made a meaningful distinction between standard Marxist schemes regarding the succession of socio-economic formations (what I call the Western Path of Development, WPD) and the evolution of poorer and colonized countries. Classical Marxism never asked seriously whether the WPD is applicable in their case. It believed that poorer and colonized countries will simply follow, with a time lag, the developments in the advanced countries, and that colonization and indeed imperialism will produce the capitalist transformation of these societies. This was Marx's explicit view on the role of English colonialism in Asia. But colonialism proved too weak for such a global task, and succeeded in introducing capitalism only in small entropot enclaves such as Hong Kong, Singapore and parts of South Africa.

Enabling colonized countries to effect both their social and national liberations (note there was never a need for the latter in advanced countries) was the world-historical role of communism. It was only Communist or left-wing parties that could prosecute successfully both revolutions. The national revolution meant political independence. The social revolution meant abolishment of feudal growth-inhibiting institutions (power of usurious landlords, labor tied to land, gender discrimination, lack of access to education by the poor, religious turpitude etc.). Communism thus cleared the path for the development of indigenous capitalism. Functionally, in the colonized Third World societies, it played the same role that domestic bourgeoisies played in the West. For indigenous capitalism could be established only once feudal institutions were swept away.

The concise definition of communism is hence: communism is a social system that enabled backward and colonized societies to abolish feudalism, regain economic and political independence, and build indigenous capitalism.

3. The global dominion of capitalism was made possible thanks to (and in turn it exacerbates) certain human traits that, from an ethical point, are questionable . Much greater commercialization and greater wealth have in many ways made us more polished in our manners (as per Montesquieu) but have done so using what were traditionally regarded as vices -- desire for pleasure, power and profit (as per Mandeville). Vices are both fundamental for hyper-commercialized capitalism to be "born" and are supported by it. Philosophers accept them not because they are by themselves desirable, but because allowing their limited exercise allows the achievement of a greater social good: material affluence (Smith; Hume).

Yet the contrast between acceptable behavior in hyper-commercialized world and traditional concepts of justice, ethics, shame, honor, and loss of face, create a chasm which is filled with hypocrisy; one cannot openly accept that one has sold for a sum of money his/her right to free speech or ability to disagree with one's boss, and thus arises the need to cover up these facts with lies or misrepresentation of reality.

From the book:

"The domination of capitalism as the best, or rather the only, way to organize production and distribution seems absolute. No challenger appears in sight. Capitalism gained this position thanks to its ability, through the appeal to self-interest and desire to own property, to organize people so that they managed, in a decentralized fashion, to create wealth and increase the standard of living of an average human being on the planet by many times -- something that only a century ago was considered almost utopian.

But this economic success made more acute the discrepancy between the ability to live better and longer lives and the lack of a commensurate increase in morality, or even happiness. The greater material abundance did make people's manners and behavior to each other better: since elementary needs, and much more than that, were satisfied, people no longer needed to engage in a Hobbesian struggle of all against all. Manners became more polished, people more considerate.

But this external polish was achieved at the cost of people being increasingly driven by self-interest alone, even in many ordinary and personal affairs. The capitalist spirit, a testimony to the generalized success of capitalism, penetrated deeply into people's individual lives. Since extending capitalism to family and intimate life was antithetical to centuries-old views about sacrifice, hospitality, friendship, family ties, and the like, it was not easy to openly accept that all such norms had become superseded by self-interest. This unease created a huge area where hypocrisy reigned. Thus, ultimately, the material success of capitalism came to be associated with a reign of half-truths in our private lives."

4. Capitalist system cannot be changed. The dominion of hyper-commercial capitalism was established thanks to our desire to permanently keep on improving our material conditions, to keep on getting richer, a desire which capitalism satisfies the best. This has led to the creation of a system of values that puts monetary success as its top. In many ways it is a desirable evolution because "believing" in money alone does away with other traditional and discriminatory hierarchical markers.

In order for capitalism to exist it needs to grow and to expand to ever new areas and new products. But capitalism exists not outside of us, as a external system. It is individuals, that is, us, who, in our daily lives, create capitalism and provide it with new fields of action -- so much that we had transformed our homes into capital, and our free time into a resource. This extraordinary commodification of almost all, including what used to be very private, activities was made possible by our internalization of the system of values where money acquisition is placed on the pinnacle. If this were not the case, we would not have commodified practically all that can be (as of now) commodified.

Capitalism, in order to expand, needs greed. Greed has been entirely accepted by us. The economic system and the system of values are interdependent and mutually reinforcing. Our system of values enables hyper-commercialized capitalism to function and expand. It then follows that no change in the economic system can be imagined without a change in the system of values that underpins it, which the system promotes, and with which we are, in our everyday activities, fully comfortable. But to produce such a change in values seems, at present, to be an impossible task. It has been tried before and ended in the most ignominious failure. We are thus locked in capitalism. And in our activities, day in, day out, we support and reinforce it.

-- Branko Milanovic

[Sep 25, 2019] Lawrence Summers, MMT, and Helicopter money

Sep 25, 2019 | economistsview.typepad.com

im1dc , September 22, 2019 at 04:33 PM

Lawrence Summers, MMT, and Helicopter money

This is ALL complete Jabberwocky imo...

...but do see if you can make sense of anything written therein

https://www.bloomberg.com/news/articles/2019-09-22/a-long-despised-and-risky-economic-doctrine-is-now-a-hot-idea

"A Long-Despised and Risky Economic Doctrine Is Now a Hot Idea"

By Enda Curran and Ben Holland...September 22, 2019...1:00 AM EDT

> Next slump may see new central bank tools -- but less autonomy

> Helicopter money on horizon as Dalio, Fischer draw up plans

Paine -> Paine... , September 23, 2019 at 06:38 AM
The struggle between treasury control and central bank control is strategic not intra bureaucratic

The elected branches must directly face the consequences of adverse market outcomes

Soooooo

Those same branches must have the power to alter those market outcomes

kurt -> im1dc... , September 23, 2019 at 12:42 PM
Helicopter money makes complete sense when the Pols can be counted on to vote for low multiplier stimulus that is too small if it even exists. The Fed could just put $10k in everyone's bank account. It would lower the dollar and create a ton of demand for current goods rather than old paintings and cars.
JohnH -> kurt... , September 23, 2019 at 12:50 PM
LOL!!! Helicopter money makes complete sense when you can count on the Fed to give it to the banksters? I mean, what other distribution channel does the bankster-owned Fed have? Certainly not direct access to each of my bank accounts!
kurt -> kurt... , September 23, 2019 at 01:37 PM
Surprising nobody, my reply guy didn't read the article and also doesn't understand what helicopter money means.
JohnH -> kurt... , September 23, 2019 at 05:51 PM
Sure, sure, kurt. Where does the article spell out exactly how those $10K deposits will be made into everyone's bank account? Answer: it doesn't! kurt made it all up.

Sure, helicopter money may not be a bad idea, but the issue always boils down to implementation and distribution and you can be that it will be a dead letter the moment any such proposal lands on the desk of deficit hawks like Team Pelosi.

Lots of bright, desperate ideas have been proposed, but no one has a clue as to how it will happen. Its best chance for political success is for the money to be doled out to the usual suspects banksters and corporations.

Plp -> JohnH... , September 24, 2019 at 08:58 AM
Yes a socially acceptable distribution algorithm is needed

But once the system is designed and inplemented
why the FED why not the house

using the treasury


The house gets elected
Every two years

Of we need constraints
Build them into the algorithm itself

Not the discretionary node


The whole system should operate automatically unless the house intervenes

kurt -> Plp... , September 24, 2019 at 02:24 PM
Because doing what is right in a slump is nearly (read always) always politically impossible - especially since the emergence of the Right Wing psyops media.
kurt -> kurt... , September 24, 2019 at 02:28 PM
The 10k is from Brad Delong, not this article - but as a matter of reality, all discussions of "helicopter drop" central bank actions that I have ever read would result in either everyone getting the same amount - an amount that would be a huge marginal increase for poor people and not much for rich people - or for the recipients to be completely randomized. It doesn't work like fiscal to give it to the banks - which is exactly what happened with QE and negative real interest rates. Why? Because 1. bad animal spirits and 2. nothing to invest in without demand. This is pretty econ 201 level stuff, but you know some folks have an Ivy MBA so they must be much smarter than me with my BA and MA from state schools. Again - my reply guy proves he doesn't even understand the basics of what "helicopter drop" means and oddly has frequently lamented that the Fed didn't do it.....

[Sep 25, 2019] The share of U.S. households making at least $100,000 has more than tripled since 1967, when just 9 percent of all U.S. households earned that much (all figures are adjusted for inflation).

Sep 25, 2019 | economistsview.typepad.com

Paine , September 22, 2019 at 09:07 AM

"According to the most recent data from the U.S. Census Bureau,

The share of U.S. households making at least $100,000 has more than tripled since 1967, when just 9 percent of all U.S. households earned that much (all figures are adjusted for inflation).

In 2018, the share of households earning less than $50,000 (i.e., the lower class) dropped below 40 percent for the first time since the U.S. Census data on this metric started to be collected in 1967. Back then, 54 percent of households earned less than $50,000.

So the next time you hear someone allege that the economy is leaving an increasing share of American households behind or see a pundit bemoan the "shrinking middle class," take a closer look at the data and keep in mind that a "shrinking middle class" may actually be a sign of growing prosperity."

This is Cato crap. What are the real facts?

Plp -> Paine... , September 24, 2019 at 08:49 AM
No respondents

Well

First off the measure should be compensation per job hour, not per household

Households may increase income simply by selling more hours

[Sep 24, 2019] https://missingprofits.world/

Sep 24, 2019 | missingprofits.world


September, 2019

40% of multinational profits are shifted to tax havens each year
Researchers from the University of California, Berkeley and the University of Copenhagen estimate that close to 40% of multinational profits (more than $650 billion in 2016) are shifted to tax havens each year. This shifting reduces corporate income tax revenue by nearly $200 billion, or 10% of global corporate tax receipts.

Explore the map to see how much profit and tax revenue your country loses (or attracts) in this game for profits. The tax havens can be hard to find, but you can zoom in by pressing the full-screen button.

Click here for full screen

Non-tax havens (% of corporate tax revenue lost)

> 20%
> 8%
> 4%
< 4%
Tax havens

No data

About the research

Researchers from the University of California, Berkeley and the University of Copenhagen have produced a database showing where corporations book their profits globally. Exploiting these data, the authors develop a methodology to estimate the amount of profits shifted to tax havens by multinational companies and how much each country loses in profit and tax revenue from such shifting. Globally, multinational firms shifted more than $650 billion in profits to tax havens in 2016 and this shifting reduced global corporate tax receipts by close to 10%.

Multinational firms shift profits to tax havens to reduce their global tax bills. Take the example of Google: In 2017, Google Alphabet reported $23 billion in revenue in Bermuda, a small island in the Atlantic where the corporate income tax rate is zero. Globally, about $650 billion in profits are shifted to such tax havens by multinational from all countries.

You can explore the map to see which countries attract and lose profits in this shell game. By clicking on each country you can see the amount of profits shifted to tax havens and to which havens the profits were shifted. You can also see the implied loss of corporate income tax revenue. Some countries are marked in green; these are tax havens. For the tax havens we report how much profits they attract from high-tax countries and what the effective corporate income tax rate is.

The loss of profit is the highest for the (non-haven) European Union countries. U.S. multinationals shift comparatively more profits (about 60% of their foreign profits) than multinationals from other countries (40% for the world on average). The shareholders of U.S. multinationals thus appear to be the main winners from global profit shifting. Moreover, the governments of tax havens derive sizable benefits from this phenomenon: by taxing the large amount of paper profits they attract at low rates (less than 5%), they are able to generate more tax revenue, as a fraction of their national income, than the United States and non-haven European countries that have much higher tax rates.

Until recently, this research would not have been possible, because firms usually do not publicly disclose the countries in which their profits are booked, and national accounts data did not make it possible to study multinational corporations separately from other firms. But in recent years, the statistical institutes of most of the world's developed countries (including the key tax havens) have started releasing new macroeconomic data known as foreign affiliates statistics. These data allow to obtain a comprehensive view of where multinational companies book their profits, and in particular to estimate the amount of profit booked in tax havens globally. To further our understanding of this issue we need more and better data. In particular it would be desirable that all countries publish foreign affiliates statistics, and that these statistics be extended to always include information on taxes paid. Reply Monday, September 23, 2019 at 02:18 PM anne said in reply to anne... This map is a terrific tool, do explore. Every country is described in terms of tax revenue lost or the benefit of being a tax haven. For the United States the loss of tax revenue to tax havens is 17%. For Germany 29% (I had no idea).

... Reply Monday, September 23, 2019 at 02:24 PM point said in reply to anne... It may be had the USA not lowered its corporate tax rates toward zero the percentage lost could be higher.

Perhaps there would be a way to display the tax rates as well as the losses and gains. I presume the havens are even lower than the USA. Reply Monday, September 23, 2019 at 04:51 PM anne said in reply to point... It may be had the USA not lowered its corporate tax rates toward zero the percentage lost could be higher.

Perhaps there would be a way to display the tax rates as well as the losses and gains. I presume the havens are even lower than the USA.

[ Yes and yes, and I understand how to use the map now. ] Reply Monday, September 23, 2019 at 06:52 PM anne said in reply to anne... Correcting, yikes:

This map is a [terrific] tool, do explore. Reply Monday, September 23, 2019 at 06:51 PM anne said in reply to anne... Example, Netherlands collects 30% of its tax revenue as a tax haven which means collecting $90 billion yearly from abroad. (Do explore this map.) Reply Monday, September 23, 2019 at 02:33 PM anne said in reply to anne... United States loses $60.8 billion yearly in corporate taxes to tax havens or 17% of corporate taxes lost. Reply Monday, September 23, 2019 at 02:37 PM

[Sep 24, 2019] Education in the past and in neoliberal era

Sep 24, 2019 | www.nakedcapitalism.com

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The Failure of Higher Education: A Tale of Two Diplomas Posted on September 24, 2019 by Yves Smith By David Barber, a Professor of History at the University of Tennessee at Martin and is the author of A Hard Rain Fell: SDS and Why it Failed

I am struck by the variety of ways in which the actual spiritual state of Americans is denied by people who have every reason to know what that state is: our educators, artists, and politicians. It is hard for me to believe, for example, that educators do not know the sorry truth behind the lack of real education here. It seems very clear to me that until the educators themselves believe in what they teach, there is no hope for their students. But the educators cannot accept this, because in order to do so they would have to overhaul every aspect of their private lives, which effort would hurl them forever beyond the bounds of the academic life.

James Baldwin, 1961

The catastrophe which is education in this country is not new. For the majority of students in the United States, black students in particular, education has never meant anything more than a training to stay in one's place. Over the past several decades, however, with the American Empire in an accelerating free-fall, American education, ever the handmaiden of society's rich and powerful, has in tandem spiraled downward: our schools endlessly drill our children with boring and meaningless "worksheets"; we subsidize and celebrate the digital economy by "teaching" children with computers and computer programs; we script our teachers to guarantee a minimum of human interaction in the classroom; we strip our schools of art and music, making sure that our students never see beauty or truth in the world; and, of course, we drill our students for weeks and months on end with testing, and more testing, and still more testing, lest our students find any joy whatsoever in learning. In short, our schools dull the intelligence and curiosity of our young people such that they will never question the meaningless and unpleasant lives they will be forced to lead in a society that is everywhere falling apart around them.

In higher education, too, we see this dramatic narrowing of the already slim chances that any of our students will achieve a real education. Our state legislatures, in the most telling example, cut state support for higher education requiring that university administrations jack up tuition, tuition that rises far more rapidly than does inflation. Higher tuition yields both higher student debt and more students working twenty, thirty, or forty hours a week in paying jobs while they attend school. Our indebted students then must hew as closely as they possibly can to career paths which enable them to minimize and pay back their debts; and the long hours of minimum wage work taken on by our students all but guarantee that they cannot be serious students, cannot devote the hours they need to study and reflection, cannot, in short, do the work most necessary for them to become educated, mature, human beings. But then educated, mature human beings do not fit well into our global economy.

In the face of this disaster, our university faculty refuse to take any stand against the strangling of education in this country. We mouth words in our classrooms about truth, and the search for truth, and the value and necessity of honesty and ethics, and democracy, and responsible citizenship. Privately, we condemn the various assessment schemes we're compelled to carry out; privately, we denounce the rapid multiplication of educationally meaningless administrative and compliance positions on our campuses. And privately, we bemoan the ignorance of our students, their lack of curiosity and their lack of academic preparation. But when it comes to denouncing all the various assaults upon education occurring across the entire spectrum of our educational landscape, when we are compelled to speak to the reasons why our students enter our universities uneducated, and still more seriously, why they leave our universities uneducated, we lose our voice. As more than one of my colleagues has said to me in explanation of his silence: "I don't want to stick my neck out."


ambrit , September 24, 2019 at 7:22 am

As one who never finished the 'official' "education" process, I can look back and see that I was reacting to an almost subconscious realization that I was 'there' for the wrong reasons, according to the received wisdom of that, and every other, time. This disconnect between the 'ideal' of education and the 'reality' of the "Paper Chase," is perennial.

Historically speaking, a 'proper' higher education serves the purpose of producing a 'well rounded' person. Traditionally, that process was reserved for those with a high amount of disposable income; the children of the wealthy. The "lower orders" beavered on in technical colleges and apprenticeships. The odd 'special' case was made in the 'proper' universities for the exceptionally bright and the token 'charity' student. Call it an institutional case of virtue signalling.

Today, those two disparite streams of education have been melded into one almost monolithic bloc. The original utilitarian view of education, previously reserved for the 'technical' fields has invaded and corrupted the "higher" educational sphere. Now, everything has a "price." Presumably, that formulation also applies to the students enmeshed in the new, magisterial 'education' instrumentality. Roughly speaking, the 'students' are now the 'product' of the universities, not the education.

Finally, all this might be a socially 'agreed upon' process to short circuit the production of intellectually and emotionally 'well balanced' individuals. There is nothing more fear producing in any ruling elite than the prospect of an 'aware' public.

John Mc , September 24, 2019 at 8:45 am

As a consumer, and producer of higher education curricula over 20 years in academia, this article is spot on in how it describes the bezzle. And the area of specialization for me (family finance – human ecology) is the prototypical example of the Neoliberal university coaxing students into believing that incremental change, small bits of knowledge/courses will change their lives for our students for the better -- while large institutions continue to cheat, obscure malfeasance, and promote the administrative culture. Its sickening on so many levels.

It is sickening to experience (teaching and learning). And if we remembered more than we forget, it would take about 20 seconds to remember how the market has changed higher education in terms content (what is studied), how we study (crammage), and why we study. Lastly, if we imagine the exact same degree type for two different eras we can see the main focus very clear:

1. Tuition at Cal Berkley in 1970? Around 1K 2019 – more like 1K per credit hour.
2. Paying for your future assumes that we have a future (climate change, job market opportunities)
3. Debt peonage and rentier education squatting requires the right mix of desperation and time

When I think about the time/money/energy that is wasted in this country (not just in universities – anyone just has to spend 1 minute with someone who participates in fantasy football or sports gaming to see how out of wack we are as a culture and as a people.

The hollowed out spaces in universities are now more about pretending to be competent, maintaining the status quo -- each unit within departments competing against one another for resources and students rather than we are all in this together (for the student).

If education can be seen in the lens of abuse, we have the profiteers abusers, and the admin enables with chaos for everyone else.

Crazy

As Regina Spektor says: Living in Den of Thieves – its contagious

Loneprotester , September 24, 2019 at 8:54 am

What Barber is saying: Teaching is hard, and my students aren't very bright (look in a mirror, sir, neither are you). Revolutions are fun. Let's do that instead.

DJG , September 24, 2019 at 9:02 am

Yes, most people are educated, especially these days, to be conformist, to adopt the current economic fantasies, and to be highly verbal.

But Barber does himself no favors: What can he possibly mean by the American Church? I am detecting someone who has spent too much time in the U.S. South (Tennessee) where the "church" is those nice Methodists down the street. Along with some required singing of Amazing Grace. So what he may think of as an insightful critique of Americans' flexible morals doesn't get to the center of the problem. The American "church" is utilitarianism. Whatever one can get away with one gets away with. Actions have no consequences among the perfected.

And the mention of the Greeks by Barber and Deneen is gratuitous. Neither of them has much use for the Greeks and Greek philosophy. Each of them likely considers Greek philosophy mainly to be the support that makes the American Church intellectually legitimate.

I understand the moral problem of anyone trying to get an education in the U S of A these days. My alma mater is one of the main cheerleaders for fundamentialist free-market fantasy. (Alma mater: What an idea.) Yet the diploma is only a start: Education has to go throughout one's life, and sentimental education (is that even a "thing" here in the U S of A?) has to go on everyday for the rest of one's post-diploma life.

Anon , September 24, 2019 at 1:22 pm

Actually, the diploma is the end of the beginning. The start is "the first five" years of life (talk, read, sing) which is likely to expose the growing brain to stimuli that allows for future "discovery". The beginning of formal education (K-12), unfortunately for many, starts with poverty (25% of all school children) and impoverished school resources (including underpaid, over-worked teachers) that conspire toward an assembly-line methodology (testing, and more testing). Those who make it to college (honestly) are well-versed in manufacturing "acceptable" papers on topics not understood. But then the college curricula (more demanding than H.S.) and the concept of "critical thinking" (ignoring the social implications of 18-20 y.o.'s on their own) makes the idea of "learning how to learn" a difficult grasp. Some get it, some don't.

It is after getting the college diploma, and maybe of few years of travel (for pleasure or a job) that a much broader, mature perspective of the world (Plato) emerges. (Hopefully those Classics, or an introduction to NC, comes across your path.) It is then the real learning starts.

John Hacker , September 24, 2019 at 9:07 am

Thanks Yves. Education has been a tender spot for me. All i have are complaints. Please point me in the direction of some solutions.

funemployed , September 24, 2019 at 9:30 am

I agree wholeheartedly with your diagnosis (not to mention greatly appreciate your lovely prose), however, I think your theory of change as stated here – "force the issue and meaning of education before American society" – misses the mark.

I have spent the better part of 2 decades studying, first history, then education, with the goal of becoming an educator (accumulating no small amount of debt in the process). So long as I stuck to diagnosing the problem as you did here, and keeping my calls to arms strictly in the rhetorical realm, I was welcomed as an "ally" and fellow traveler by a not insignificant portion of my colleagues.

Unfortunately for my career (not to mention mental health), I wasn't satisfied with that, and began to delve and a very focused and specific way into the actual structure of educational systems, and looking for levers to gain the power necessary to change them (or, more specifically, to shift power from those who hold it to those who do not). That was when I learned just how thin of a gruel "allyship" really is in academia.

I think you are assuming educators have real power. They do not. Power, real power, comes from control over the material necessities and niceties of life. The primary social function of our educational institutions, from pre-k through endowed chairmanship is to sort people into an unequal society. If the "real issue and meaning of education" (i.e. creating the conditions and connections necessary for truly democratic life) were to take hold in such an institution, it would either destroy the institution or turn it into something else entirely.

I agree "an educated people" is indeed our only hope, because to me an educated people is synonymous with a democratic people. Indeed, I think education is the inevitable result of people getting together to solve problems nonviolently with a coequal distribution of power. Where it has truly taken root (e.g. Freedom schools in the 60s, the meetings organized by populist party at the turn of the 19th/20th century), it has had a material function and base that is diametrically opposed to the way virtually all today's "educators" earn their daily bread.

IMO, the way people become true "educators" – those who "force the issue and meaning of education before American society" – is by serving the educational function in a democratic movement. They are people who are delegated authority democratically (i.e. without coercion) by those they serve because they, in essence, are effective hubs for the uninhibited flow of social information. In other words, they are authentically democratic leaders, whose power is entirely dependent on maintaining trust because trust is fundamental to the uninhibited flow of social information, and the temptation to violate social trust is, well, why human societies have more drama than ant colonies.

You are a professor, and no doubt do a great deal of good for a great many students (I did a brief stint of that as well, and in no way am trying to undermine how valuable and rewarding it can be), but you will never be, in that role, an "educator" in the truly democratic sense because every one of your students knows you could, if you wanted, completely screw them over and there's not a family blogging thing they could do about it.

You can, however, be a real educator (i.e. democratic leader) in your spare time, and are in a unique and special institutional position to prepare future (and support present) real democratic educator/leaders to manage one hell of a clusterfamilyblog of a global civilizational collapse that is coming whether we want it to or not. I hope you will do so with a hard-nosed evaluation of the relationship between power, information flows, democracy, and the material world, as I fear anything less will be far from adequate.

John Mc , September 24, 2019 at 10:00 am

These comments appear to me to be the epitome of neoliberal doctrine:

1. People have everything they need to excel
2. Its never been easier to study as information has been democratized
3. Invocation of Maslow, ambient culture (interesting view of life-stage development for young adults too
4. Individualistic lens – "addressing the big issues of your time"

Maybe I read this wrong, or it started with "NC folk" – but there is no mention of:

Debt peonage
Administrative culture
Global Labor Markets
Real Costs for Students – Tuition Inflation (higher than healthcare costs over last 30 years)
– Parking predation
– Textbook Bezzles
– Adjunct – itus
– Pay to Play Tenure
– Darwinian death struggle among college units in departments (Survival = Resources)
– Forgetting – a major theme (making meaning of one's education) – moving onto CV building
Social Costs of Expensive Higher Education (delay family formation)
Long term wealth implications for this generation's graduates

Education is not a solitary event, with isolated moments of brainstorming and individualistic memes of hardwork. It is a system with millions of parts -- and these parts have been bent to serve our neoliberal masters in about every domain imaginable.

And in my experience, (as Yves says) this is not a bug in the system -- it was a feature of a system reboot designed especially for these outcomes

Tom Pfotzer , September 24, 2019 at 10:38 am

Last year I went to the local library book sale, and bought a stack of college textbooks – chemistry, physics, elec engineering, calc, etc. The stack was 3′ tall, and it cost me $26.

A few months ago, I downloaded the latest Linux & Java development workbench onto the computer I built from components sourced from Ebay/Amazon. Full, up-to-date, latest edition of Java development workbench on killer hardware $650, including 21″ monitor. Software and how-to materials all free. I have done this several times during my career, and it's never been easier or cheaper to do.

To glean those textbooks, all I have to do is read, do the probs at the back of the chapter. To build salable skills, all I have to do is think up a problem to solve, and write the software to solve it. Effort. Those two things – ID useful problem, and the marshalling of components to solve it – gives me demonstrable evidence of competency, and I can parlay that into a good job.

When I look a the amount of time expended on smart phones, Facebook, etc. I become less sympathetic about people's plight – in general. One counter-example: the 450-year systematic repression of blacks is one issue that merits societal redress.

And whether this cultural malady of victimhood is by design (by the "elites", for ex), or by circumstance, it is not mandatory . No one is making people watch TV. There are choices, and some are making different, better choices, and benefiting from it.

Visit http://www.coursera.org . Tell my why I would go into debt to get what I need when it's available (from many of the elite schools and professors) for free.

So, if taking initiative to address my own needs is what you call NeoLiberal, then I'm all for neoliberalism. I get confused about all the political classifications afoot these days, so I'm not real sure what bin I fit into, exactly.

Lastly, I doubt anyone could name 100 parts (types, not instances) of their educational experience, let alone millions. It's not nearly as complex as all that.

Ankara Fuller , September 24, 2019 at 11:21 am

While there a many areas where the web and libraries do indeed offer the curious and disciplined an opportunity to better themselves with book knowlege of software. Much of what we hope to understand about our world – fundamental research, and many speciality areas of knowlege require a 'craft' or hands on component that no amount of book reading can replace. Skill crafts of cabinetmakers, tailors, chefs and and product designers, or in my field of biology. Lab 'bench craft' is fundamental to learning: microbiology, molecular biology and much of fundamental physics requires labs. I understand from engineering friends that trial test rigs during university are also fundamental to locking in skills. Many areas of STEM require significant funds to back the student, because the study work loads make academic excellence really challenging, and part time jobs nearly impossible. I know, I worked 20 hours in a lab on weekends during much of my undergraduate. At graduate school the extra hours 'spare' ideally are spent working on one's bench craft as free slave labour to the senior ranking (i.e. higher skilled, greater knowledgeable senior scientists). In biology labs, there is almost a medieval apprentice, journeyman, master craftsman route of skill acquisition. There is as much an art to casting an agarose gel as there is in knowing the tweak of the 'recipe' for the molecular attributes desired. It is with great relief that I am not part of the US system, but sitting in a well funded more democratic (free) educational system in Europe. Our world needs to radically think how to put much ore cash into STEM and fundamental research. Incentivise school students (everywhere on planet) to commit the insane hours needed for genetics, molecular biology and all the other emerging areas of life sciences. It requires countries to overhaul education to allow curious minds regardless of family finances. I agree with many NC readers that wide systematic overhaul is needed to untangle many of these difficult and decaying situations (not just US).

divadab , September 24, 2019 at 11:36 am

Yes. It is still possible to get an education if you are self-motivated and self-disciplined. Either inside or outside the academy – and which academy is secondary. But in my view education requires teachers – this is missing from your model and a very important part of the Academy.

However, Credentialling is only available if you pay the price of attaching yourself to the academy. DOn;t worry – credentials are becoming less and less important as changing times and institutional decay make truly educated and adaptable people more and more important and the obedient credentialled irrelevent and useless.

jrs , September 24, 2019 at 2:42 pm

Only how many hundreds of job ads on Indeed use "do you have a bachelors degree" as a screening question? And straight into the circular disposal unit your digital submission goes if you don't.

Ah well pesky reality of the job market and all, sure does reduce philosophizing about "the pointlessness of credentials and formal education" down to size. And no my position is not that noone can succeed without credentials, just that it's obviously harder.

inode_buddha , September 24, 2019 at 11:40 am

I've never had an employer, in the last 35 years, who would give you any credibility for stuff you learnt on your own.

If it isn't on your school transcripts or a diploma, you don't get to negotiate with it. If you have great knowledge, acquired on your own, and use it on the job, you will get no mention of it, no credit, nada. They will keep taking until they are made to stop, and nary so much as a "thank you".

But that's just my experience of 35 years on the job.

jrs , September 24, 2019 at 2:45 pm

"I've never had an employer, in the last 35 years, who would give you any credibility for stuff you learnt on your own."

+1 and most WILL NOT give any credibility for class you take either, under no circumstances.

There are two things employers give weight to:
1) on the job experience
2) credentialing, not taking a class in this or that but having a bachelors or a masters. And this #2 is only as a screening device, #1 is still paramount, #2 can be used to screen out but seldom is it by itself an "in". Now there are unique circumstances, if you are still in your 20s, some will let you start out with just a degree as "you have to start somewhere", but after that age, no you need #1 and best to have #2 as well.

Jesper , September 24, 2019 at 3:15 pm

+1 on this as well. My experience is that either you have the knowledge certified by diploma or you are considered to know nothing about the subject & that is even more true when dealing with people with neither diploma nor knowledge of/in the subject matter. They use what little they know and what they know is to look at a diploma.
Ignoring opinions/knowledge from non-certified people is something actively taught at universities and especially at business schools – if things go wrong then the defense can be: He/she was the expert and had the diploma to show for it. People in positions of responsibility are experts at avoiding responsibility, credentials help to deflect blame/responsibility so it is often used.

IT has been slightly different, in the older days, but now it is settling in and even IT recruiters no longer need to take chances on the uncredentialled.

AndrewJ , September 24, 2019 at 2:35 pm

Plinking away on a keyboard may feel like you're doing "real work", but there's a lot more that's necessary to keep any kind of civilization going than developing a new Java app. Training yourself to do any of these myriad other tasks takes more capital, financial and otherwise, than the $700 you've laid out above. Not to mention that staring at a computer screen is profoundly unhealthy and not suitable work for us jumped-up monkeys.
But that's where we are now, aren't we? The only work that Americans think of as "good real work" these days is on a family-blogging computer, and everything else that keeps things going has had the living wage taken away from it and the training ignored.

jrs , September 24, 2019 at 3:00 pm

Everything is a waste of time if it's not improving one's usefulness to the economic system I guess you would argue. And whether it's spending time on facebook and smart phones, or taking care of old people, or raising kids, or engaging in political activism, or increasing one's understanding of the world, or volunteering, or hanging out with friends which Americans increasingly don't even have, or etc.. Because you know it's not just Facebook people spend time on.

This is the philosophy of a tool. Your soul was bought on the cheap and you don't even have the inner spirit to miss it.

Tom Pfotzer , September 24, 2019 at 10:14 am

As I re-read my piece a key question descended upon me. Since Maslow's hierarchy is a guide, or a possibility, it's not a given that someone ever will "self-actualize", or will do so in some socially- or ecologically-useful manner. So what happened to make you "self-acualize" in a direction that might include an NC and the values it espouses?

A parent? A book? A Ken Burns documentary? Did you decide one day to sail outside the safe harbors of conformity, and got swept – with malice afore-thought, and cocktail in hand – into the currents of worldliness?

This is a key question for you democratic educators, ref. funemployed above: "Where's the launch button?"

xkeyscored , September 24, 2019 at 11:56 am

When I first encountered Maslow, I was puzzled, thinking I was missing something profound. Now I'm simply amazed that he can be celebrated as an intellectual with penetrating insight for stating the obvious.
"Food, clothes and shelter
All the poor man asking for"
Misty in Roots

KiWeTO , September 24, 2019 at 12:47 pm

None of the answers I have received when younger, about how society was organized made any sense in justice or fairness. Thus, the quest for better answers began. If that is an awakening, then perhaps it is genetic. Some just seek to know more. Or perhaps more have had that curiosity defeated by society's need for conformity earlier. The quest for knowledge often is the lonelier path, for conforming to thr tribe brings fellowship and norms to follow. There is safety in the middle of the pack.

Now, having observed a better understanding of the intrinsic unfairness of societal arrangements and structures, the question turns to what nudges to the body may be possible to limit the damage we bring upon ourselves as a species to strive for better returns (profits? Benefits?) without the understanding of what "better" or "returns" means.

Smokers know smoking is bad, but the nicotine calls are here and now answered.
Feed scrollers know it doesn't improve their lives, but the hope for just a bit of pleasure keeps the finger scrolling.

As to the digital opiate of the masses, is it because they have been conditioned/addicted to lose their own agency to said opiate? Perhaps the very discussions here in NC is but a different flavour of the same digital opiate. Or to paraphrase Mulder, "The answer IS out there", and we just have to discover it.

Ted , September 24, 2019 at 10:15 am

The more things change Check out Thorstein Veblen, The Higher Learning in America (1918) or John Dewey The Public and its Problems and other works. Formal education, divorced as it is from the practices of everyday life, presents these sorts of problems as a feature, not a bug. That said, it has been my experience over the past 35 years that education can be and is world opening for many young students. I have also found that the problem often rests with the educator as much as it does the system of education. Well recognized philosophies of education underlay a fundamental split teaching practice, (e.g., transmission of "facts" versus enlivenment of knowing). Those that don't take the time to learn how to teach end up frustrated that the "system" is failing. That a tenured full professor is lamenting thus, just as Veblen did a century ago, is suggestive.

flora , September 24, 2019 at 10:31 am

The prof can complain about students, but I think the students know what's going on better than does the prof. The problems are much higher up the ladder than lowly students readiness for college humanities courses. I expect the students are learning a great deal that's not in the official curriculum. See:

https://www.wbir.com/article/news/local/ut-buyouts-over-past-10-years-top-24-million/51-548254549

and

https://www.knoxnews.com/story/news/politics/2018/01/02/congressman-duncan-disgusted-university-tennessee-buyouts/995413001/

Rod , September 24, 2019 at 11:04 am

tools for an economic system that prizes 'flexibility' (geographic, interpersonal, ethical
Learning tools to develope flexible ethics kind of creeps me out.
Yup, training up thinkers is tough, I agree.
I think this is corollary to the above article–and if you've been in the classroom any year for the past forty this should ring sickeningly familiar:

https://www.apmreports.org/story/2019/08/22/whats-wrong-how-schools-teach-reading

Susan the other` , September 24, 2019 at 11:56 am

I loved the book about Summerhill – the alternative education option in the UK (back in the 70s). Everyone was aghast because they thought it was remiss not to educate children rigidly. It never got traction here in the US. But last night there was a segment on alternative education in the UK, allowing children to go at their own pace, find their own interest and above all learn that they didn't need an intermediary (teacher basically) to learn – they could be successful autodidacts. It sounds like it is taking off in England. How nice. Summerhill is still alive and kicking – it advertises itself as a student democracy. Choose what you want to study. I certainly still like the idea because I had my nose in a book from about the age of 7. I always read what interested me and it has been a true pleasure. That's gotta be worth somthin.

Arizona Slim , September 24, 2019 at 12:35 pm

Permit me to add three more books to your recommendation:

1. The Teenage Liberation Handbook: How to Quit School and Get a Real Life and Education by Grace Llewellyn. I don't think this one's in print anymore.

2. The Underground History of American Education by John Taylor Gatto. Still in print. Here's the author's website: https://www.johntaylorgatto.com/

3. The Day I Became an Audidact by Kendall Hailey. As far as I can tell, no longer in print.

Enjoy your self-education outside the system, everyone!

xkeyscored , September 24, 2019 at 12:17 pm

From the OED:
educate, v. [f. L. ēducāt- ppl. stem of ēducāre to rear, bring up (children, young animals), related to ēdūcĕre to lead forth (see educe), which is sometimes used nearly in the same sense.] 1 To rear, bring up (children, animals) by supply of food and attention to physical wants. Obs. 2 To bring up (young persons) from childhood, so as to form (their) habits, manners, intellectual and physical aptitudes. b To instruct, provide schooling for (young persons). 3 To train (any person) so as to develop the intellectual and moral powers generally. 4 To train, discipline (a person, a class of persons, a particular mental or physical faculty or organ), so as to develop some special aptitude, taste, or disposition. b To train (animals).
It would seem that Prof. Barber bemoans the demise of meaning 3, if that ever was the purpose or function of our educational system.
Meanings 2 and 4 are alive and well. A special aptitude for narrow-minded submission is successfully cultivated, the more so as the academic ladder is scrambled up.

chuck roast , September 24, 2019 at 12:51 pm

But it's in Deneen's characterization of our students as "individuals without a past cultureless ciphers".
I get that.
Americans have no use for History (with a capital H). American History is trail of carnage and savagery on the scale of Attila and Hitler. Any discussion of History is replete with irony, exceptions and contradictions. Things that Americans do not do well, and things that you do not want rattling around in the heads of right-thinking citizens. Critical thinking could be the catastrophic result.
OK then! Well enculturated Americans know that we have an exceptional past and we are an exceptional people. But, History meh!
What we do have is a future. That's what America is all about. The wonderful, wonderful future with it's myriad fabulous possibilities. Really, you could wet your pants just thinking about it!

Walter Antoniotti , September 24, 2019 at 1:42 pm

Essay applies to the academically superior. One quarter the HS graduates. hat do you propose to do for the rest?

Paul Jurczak , September 24, 2019 at 2:41 pm

This is not a bug, it is a feature of modern Education-Industrial Complex. As per design, its product is indebted cubicle fodder.

Mike Gualario , September 24, 2019 at 3:58 pm

By 8th grade students are well versed in basic math and language arts. At that point the student and family should have a choice between a college bound liberal arts education or a technical education where they have a choice of several knowledge disciplines to choose to study during High school. That way kids who leave high school and are not college bound at least have one skill they can take anyplace in the USA and get a job.. Auto Mechanic, Diesel Mechanic, Marine Mechanic, Chef, Software Development, Website Development, Cosmetology, Adobe Creative Suite (video and photo editing), etc. Not all of those careers would be offered at every high school. But at least 2 or 3 at a minimum and more choices the better. After 12 years of state schooling students should have a skill or a plan to attend college to acquire that skill.

[Sep 23, 2019] Reminiscence of the Future... Something About Combat Use by smoothiex12

Notable quotes:
"... The United States hasn't "grown lazy and risk-averse"--and Breshidsky wouldn't know it even if explained--it was made such by Real Revolution in Military Affairs whose arrival through new technological means, operational concepts and new force structure , simply removed most (not all) "advantages", often grossly exaggerated, the United States thought it enjoyed for the last 30 years or so. ..."
Sep 17, 2019 | smoothiex12.blogspot.com

Leonid Bershidsky is (butt) hurt, badly. So, after Vladimir Putin's air and anti missile defense trolling yesterday--you can see (in Russian) Rouhani's and Erdogan's priceless reactions here:

https://i.ytimg.com/vi/fXpyH871l9I/0.jpg

whose biography you can read here , for some reason (wink, wink) takes it too personally and lets it rip in his piece at Bloomberg (another "fine" specimen of US "fair and balanced" propaganda outlet). Here is what bothers Mr. Bershidsky:

President Vladimir Putin's offer to sell Russian air defense systems to Saudi Arabia is about more than mere trolling, even though it caused laughter from Iran's President Hassan Rouhani. Putin was trying to persuade the entire Middle East that working with him is more effective than cooperating with the U.S. One could regard it as a kind of mafia-style protection offer: The new, more aggressive gangster on the block is making a bid because the current king of the streets has grown lazy and risk-averse.
One can almost feel Bershidsky's pain but the problem with this statement is not the fact that there is only one gangster in this story, and that is not Russia, but in the fact that Bershidsky, who hails from an army of brilliant (ahem) "influencers" with degrees in anything but applicable serious professional skills crucial for military and geopolitical analysis, has, as expected, misrepresented risk-aversion for the exercise of sound operational judgement.

The United States hasn't "grown lazy and risk-averse"--and Breshidsky wouldn't know it even if explained--it was made such by Real Revolution in Military Affairs whose arrival through new technological means, operational concepts and new force structure , simply removed most (not all) "advantages", often grossly exaggerated, the United States thought it enjoyed for the last 30 years or so.

Actually, one of the major reasons this had happened was the category of public with MBAs, stock trading, marketing, finances, banking and journalism backgrounds who could understand some financial bottom lines, for which they tirelessly worked, but had and continue (as Bershidsky so vividly demonstrates) to have huge difficulties with grasping technological, tactical, operational and strategic realities of our modern world.

Then, Bershidsky makes this bizarre assertion (one would expect it from an amateur):

In reality, it's the S-400 that Russia has been trying hard to sell to Saudi Arabia, so far without success. It has also offered the missiles to Qatar. Neither the S-300 nor the S-400 has seen any real combat use . Theoretically, and as seen in exercises, these are powerful weapons. But not even Syria's Bashar Al-Assad, who has had a few opportunities to use the S-300s he received from Russia last year, has done so.
First, Bashar Assad doesn't have full control of S-300 in Syria, at least not yet and it is Russia which defines S-300s use within her military and diplomatic agenda in Syria, not Syrians. It is an obvious fact, which was confirmed couple of days ago:
According to the report, Moscow has prevented three Israeli air strikes on three Syrian outposts recently, and even threatened that any jets attempting such a thing would be shot down, either by Russian jets or by the S-400 anti-aircraft missiles. The source cited in the report claims a similar situation has happened twice – and that during August, Moscow stopped an air strike on a Syrian outpost in Qasioun, where a S-300 missile battery is placed.
Unlike Israelis or US Military-Industrial-Media Complex Russians, when the deal is a very serious real kinetic military affair between Russia and nations which matter globally (US), or regionally (Israel), seldom runs around praising oneself and own capabilities, since this may adversely affect, usually behind the scene, diplomatic effort. It is one thing to show off salvos of 3M14 burning jihadists in their compounds in Syria, or reveal weapons, such as in Putin's speech on March 1, 2018, to cool the heads of some homicidal lunatics in D.C., totally another--describing everyday contingencies between all players in the region. In fact, Russia officially was very low key on that and that is understandable.
There is, however, a risible line in Bershidsky's "assertion" about S-300 and S-400 not seeing "any combat use". I would love to use Sergei Lavrov's meme here but I have to restrain myself, because at this stage it wouldn't help the situation. Evidently, Leonid Bershidsky who never spent a day in any serious military position, thinks that "combat use" is when things only "shoot". Well, there is one problem, well, actually two, with this assertion because from the get go he misses:

1. Both S-300 and S-400 systems were delivered to Syria with one thought in mind--to precisely prevent this "combat use" by means of deploying capability which drastically reduces tactical and operational options for all bogeys (Israel, ahem) to make them much more cooperative in a political, as opposed to combat, field. It worked, brilliantly in a strategic sense--with IAF being effectively pushed out of Syria's airspace, while reducing the number of its sorties drastically still. This is not to mention the fact that other systems, such as S1 and Tor M2s, not to mention a very well organized work of Battle Management Centers and Early Warning and Electronic Warfare systems, performing admirably by shooting down all, but one, jihadists' drones and missiles. That is real combat performance and a very impressive one. I will abstain from describing Trump's "very smart missiles" 70% of which (including, rumor has it, JASSM) had been taken down by Syrian Air Defense .

2. Now, most important--COMBAT record of the Soviet/Russian Air Defense systems. Discarding a fear of being called a Russian chauvinist, nationalist or accused of gloating (been there, done that), specifically for Bershidsky--combat record of Soviet/Russian AD systems is without equals in history. No one comes even close to a number of combat episodes Soviet/Russian systems took part in and came out victorious against bogeys. Not least among them is Israeli Air Force. I will quote from my latest:

While estimates vary wildly, approximately 1,737 U.S. aircraft (not counting helicopters) have been lost to hostile actions between 1961 and 1973 in South East Asia, largely over Vietnam.1 The majority of these losses were due to AAA (Anti-Air Artillery) and SAMs (Surface to Air Missiles). During almost 24 months of the Rolling Thunder operation the U.S. lost 881 aircraft; in 1967 alone, the United States lost 62 aircraft to SAMs while losing 205 to AAA. In 1973, during the 19-days long Yom Kippur War, the Israeli Air Force lost over 100 aircraft, most of them to SAMs.

This is just a highly abbreviated list of Surface-to-Air missiles engaging all kinds of aerial threats from high value attack and fighter jet aircraft, to bombers, to cruise missiles since the early 1960s. The feature which unifies all entries in this list is the fact that all these surface-to-air missiles and the targeting and launch systems for them were and are Soviet/Russian made.

Putting it in simpler, more straightforward language -- Soviet/Russian Air Defense systems, when used by skilled operators, have an unrivaled combat history. No other nation has a comparable record of the use of such systems in combat and thus of gaining such a combat experience.

For Bershidsky--all data was taken specifically from Western sources to avoid being accused of pro-Russian bias. Numbers do not lie, when confirmed. Those have been confirmed (unlike modern-day economic fuzzy data) and even at the lower end of estimates (not to mention a factor of often NON-Soviet/Russian manning of systems--in stochastic combat models multipliers less than 1 are introduced for degraded capability) make a dramatic impression.

So, in this case, one has to start thinking what this record means for new systems? It means an enormous array of data which is behind honing, design concepts, algorithms, sensors, targeting systems that is, which allow for steady improvements in capability. In the end, this was a major reason Turks "exchanged" F-35 for S-400. I am sure they were made privy to mathematical expectations and probabilities of success for various air attack scenarios against Turkey. They, obviously, loved what they heard and saw and now Turkish officers (the second team) are in Russia training for S-400. So, unless the whole Saudi (ARAMCO) oil facility attack is a false flag by Saudis themselves or by a triumvirate of purveyors of liberty and democracy in the Middle East, aka KSA, Israel and USA, there is pretty much only one thing Saudis can do about defending oil facilities against drone and missile attacks--get systems which work. I know, that makes Leonid Bershidsky's life miserable--after all, he dedicated his journo carrier to writing on things most of which he cannot grasp or doing a hack job for someone else's interests .

But in general, I am getting really tired when majors in marketing or broadcasting pretend to be "experts" in fields which are beyond their grasp. No wonder the West is in steep decline. Posted by smoothiex12

Labels: "combat use" , attack , butt-hurt , Israel , Leonid Bershidsky , oil fields , S-300 , S-400 , Saudi Arabia , Syria , trolling , Turkey , Vladimir Putin

Comments (Atom) For A Nice Shot Of Bourbon And A Good Cigar

Real Revolution In Military Affairs

Is comiing Soon My Book Is On Sale

It Is Here Saker's Review.

The above summary does not do justice to Martyanov's truly seminal book. I can only say that I consider this book as an absolutely indispensable "must read" for every person in the USA who loves his/her country and for every person who believes that wars, especially nuclear ones, must be avoided at all costs. Asia Times About The Book
In Losing Military Supremacy, his latest, groundbreaking book, crack Russian military-naval analyst Andrei Martyanov deconstructs in detail how, "the United States faces two nuclear and industrial superpowers, one of which fields a world-class armed forces. If the military-political, as opposed to merely economic, alliance between Russia and China is ever formalized – this will spell the final doom for the United States as a global power." My Blog List

[Sep 23, 2019] The small net import you hear on TV news is from refining imported crude 4.626 Mbbl/day in finished product for export and 3.295 Mbbl/day in crude exported

Sep 23, 2019 | economistsview.typepad.com

ilsm -> Fred C. Dobbs... , September 15, 2019 at 05:27 PM

Last week total crude inputs to US refineries 17.495 Mbbl/day. Domestic sourced crude 12.4 Mbbl/day.

US imported 6.725Mbbl/day of crude oil.

The small net import you hear on TV news is from refining imported crude 4.626 Mbbl/day in finished product for export and 3.295 Mbbl/day in crude exported.

https://www.eia.gov/petroleum/supply/weekly/pdf/table1.pdf week of 9/6/2019

As to "isolationist" I would rather not "run amok" in the Middle East. The US has been acting like a 'Juramentado........' whom US soldiers encountered fighting Moros in the Philippines.

[Sep 22, 2019] Neoliberalism Political Success, Economic Failure Portside by Robert Kuttner

Highly recommended!
The key to the success of neoliberal was a bunch on bought intellectual prostitutes like Milton Friedman and the drive to occupy economic departments of the the universities using money from the financial elite. which along with think tank continued mercenary army of neoliberalism who fought and win the battle with weakened New Del capitalism supporters. After that neoliberalism was from those departments like the centers of infection via indoctrination of each new generation of students. Which is a classic mixture of Bolsheviks methods and Trotskyite theory adapted tot he need of financial oligarchy.
Essentially we see the tragedy of Lysenkoism replayed in the USA. When false theory supported by financial oligarchy and then state forcefully suppressed all other economic thought and became the only politically correct theory in the USA and Western Europe.
Notable quotes:
"... The neoliberal counterrevolution, in theory and policy, has reversed or undermined nearly every aspect of managed capitalism -- from progressive taxation, welfare transfers, and antitrust, to the empowerment of workers and the regulation of banks and other major industries. ..."
"... Neoliberalism's premise is that free markets can regulate themselves; that government is inherently incompetent, captive to special interests, and an intrusion on the efficiency of the market; that in distributive terms, market outcomes are basically deserved; and that redistribution creates perverse incentives by punishing the economy's winners and rewarding its losers. So government should get out of the market's way. ..."
"... Now, after nearly half a century, the verdict is in. Virtually every one of these policies has failed, even on their own terms. ..."
"... Economic power has resulted in feedback loops of political power, in which elites make rules that bolster further concentration. ..."
"... The culprit isn't just "markets" -- some impersonal force that somehow got loose again. This is a story of power using theory. The mixed economy was undone by economic elites, who revised rules for their own benefit. They invested heavily in friendly theorists to bless this shift as sound and necessary economics, and friendly politicians to put those theories into practice. ..."
"... The grand neoliberal experiment of the past 40 years has demonstrated that markets in fact do not regulate themselves. Managed markets turn out to be more equitable and more efficient. ..."
"... The British political economist Colin Crouch captured this anomaly in a book nicely titled The Strange Non-Death of Neoliberalism . Why did neoliberalism not die? As Crouch observed, neoliberalism failed both as theory and as policy, but succeeded superbly as power politics for economic elites. ..."
"... The neoliberal ascendance has had another calamitous cost -- to democratic legitimacy. As government ceased to buffer market forces, daily life has become more of a struggle for ordinary people. ..."
"... After the Berlin Wall came down in 1989, ours was widely billed as an era when triumphant liberal capitalism would march hand in hand with liberal democracy. But in a few brief decades, the ostensibly secure regime of liberal democracy has collapsed in nation after nation, with echoes of the 1930s. ..."
"... As the great political historian Karl Polanyi warned, when markets overwhelm society, ordinary people often turn to tyrants. In regimes that border on neofascist, klepto-capitalists get along just fine with dictators, undermining the neoliberal premise of capitalism and democracy as complements. ..."
"... Classically, the premise of a "free market" is that government simply gets out of the way. This is nonsensical, since all markets are creatures of rules, most fundamentally rules defining property, but also rules defining credit, debt, and bankruptcy; rules defining patents, trademarks, and copyrights; rules defining terms of labor; and so on. Even deregulation requires rules. In Polanyi's words, "laissez-faire was planned." ..."
"... Around the same time, the term neoconservative was used as a self-description by former liberals who embraced conservatism, on cultural, racial, economic, and foreign-policy grounds. Neoconservatives were neoliberals in economics. ..."
"... Lavishly funded centers and tenured chairs were underwritten by the Olin, Scaife, Bradley, and other far-right foundations to promote such variants of free-market theory as law and economics, public choice, rational choice, cost-benefit analysis, maximize-shareholder-value, and kindred schools of thought. These theories colonized several academic disciplines. All were variations on the claim that markets worked and that government should get out of the way. ..."
"... Market failure was dismissed as a rare special case; government failure was said to be ubiquitous. Theorists worked hand in glove with lobbyists and with public officials. But in every major case where neoliberal theory generated policy, the result was political success and economic failure. ..."
"... For example, supply-side economics became the justification for tax cuts, on the premise that taxes punished enterprise. ..."
"... Robert Bork's "antitrust paradox," holding that antitrust enforcement actually weakened competition, was used as the doctrine to sideline the Sherman and Clayton Acts. Supposedly, if government just got out of the way, market forces would remain more competitive because monopoly pricing would invite innovation and new entrants to the market. In practice, industry after industry became more heavily concentrated. ..."
"... Human capital theory, another variant of neoliberal application of markets to partly social questions, justified deregulating labor markets and crushing labor unions. Unions supposedly used their power to get workers paid more than their market worth. Likewise minimum wage laws. But the era of depressed wages has actually seen a decline in rates of productivity growth ..."
"... Financial deregulation is neoliberalism's most palpable deregulatory failure, but far from the only one ..."
"... Air travel has been a poster child for advocates of deregulation, but the actual record is mixed at best. Airline deregulation produced serial bankruptcies of every major U.S. airline, often at the cost of worker pay and pension funds. ..."
"... Ticket prices have declined on average over the past two decades, but the traveling public suffers from a crazy quilt of fares, declining service, shrinking seats and legroom, and exorbitant penalties for the perfectly normal sin of having to change plans. ..."
"... A similar example is the privatization of transportation services such as highways and even parking meters. In several Midwestern states, toll roads have been sold to private vendors. The governor who makes the deal gains a temporary fiscal windfall, while drivers end up paying higher tolls often for decades. Investment bankers who broker the deal also take their cut. Some of the money does go into highway improvements, but that could have been done more efficiently in the traditional way via direct public ownership and competitive bidding. ..."
"... The Affordable Care Act is a form of voucher. But the regulated private insurance markets in the ACA have not fully lived up to their promise, in part because of the extensive market power retained by private insurers and in part because the right has relentlessly sought to sabotage the program -- another political feedback loop. The sponsors assumed that competition would lower costs and increase consumer choice. But in too many counties, there are three or fewer competing plans, and in some cases just one. ..."
"... In practice, this degenerates into an infinite regress of regulator versus commercial profit-maximizer, reminiscent of Mad magazine's "Spy versus Spy," with the industry doing end runs to Congress to further rig the rules. Straight-ahead public insurance such as Medicare is generally far more efficient. ..."
"... Several forms of deregulation -- of airlines, trucking, and electric power -- began not under Reagan but under Carter. Financial deregulation took off under Bill Clinton. Democratic presidents, as much as Republicans, promoted trade deals that undermined social standards. Cost-benefit analysis by the Office of Information and Regulatory Affairs (OIRA) was more of a choke point under Barack Obama than under George W. Bush. ..."
"... Dozens of nations, from Latin America to East Asia, went through this cycle of boom, bust, and then IMF pile-on. Greece is still suffering the impact. ..."
"... In fact, Japan, South Korea, smaller Asian nations, and above all China had thrived by rejecting every major tenet of neoliberalism. Their capital markets were tightly regulated and insulated from foreign speculative capital. They developed world-class industries as state-led cartels that favored domestic production and supply. East Asia got into trouble only when it followed IMF dictates to throw open capital markets, and in the aftermath they recovered by closing those markets and assembling war chests of hard currency so that they'd never again have to go begging to the IMF ..."
"... The basic argument of neoliberalism can fit on a bumper sticker. Markets work; governments don't . If you want to embellish that story, there are two corollaries: Markets embody human freedom. And with markets, people basically get what they deserve; to alter market outcomes is to spoil the poor and punish the productive. That conclusion logically flows from the premise that markets are efficient. Milton Friedman became rich, famous, and influential by teasing out the several implications of these simple premises. ..."
"... The failed neoliberal experiment also makes the case not just for better-regulated capitalism but for direct public alternatives as well. Banking, done properly, especially the provision of mortgage finance, is close to a public utility. Much of it could be public. ..."
Aug 25, 2019 | portside.org
The invisible hand is more like a thumb on the scale for the world's elites. That's why market fundamentalism has been unmasked as bogus economics but keeps winning politically. This article appears in the Summer 2019 issue of The American Prospect magazine. Subscribe here .

Since the late 1970s, we've had a grand experiment to test the claim that free markets really do work best. This resurrection occurred despite the practical failure of laissez-faire in the 1930s, the resulting humiliation of free-market theory, and the contrasting success of managed capitalism during the three-decade postwar boom.

Yet when growth faltered in the 1970s, libertarian economic theory got another turn at bat. This revival proved extremely convenient for the conservatives who came to power in the 1980s. The neoliberal counterrevolution, in theory and policy, has reversed or undermined nearly every aspect of managed capitalism -- from progressive taxation, welfare transfers, and antitrust, to the empowerment of workers and the regulation of banks and other major industries.

Neoliberalism's premise is that free markets can regulate themselves; that government is inherently incompetent, captive to special interests, and an intrusion on the efficiency of the market; that in distributive terms, market outcomes are basically deserved; and that redistribution creates perverse incentives by punishing the economy's winners and rewarding its losers. So government should get out of the market's way.

By the 1990s, even moderate liberals had been converted to the belief that social objectives can be achieved by harnessing the power of markets. Intermittent periods of governance by Democratic presidents slowed but did not reverse the slide to neoliberal policy and doctrine. The corporate wing of the Democratic Party approved.

Now, after nearly half a century, the verdict is in. Virtually every one of these policies has failed, even on their own terms. Enterprise has been richly rewarded, taxes have been cut, and regulation reduced or privatized. The economy is vastly more unequal, yet economic growth is slower and more chaotic than during the era of managed capitalism. Deregulation has produced not salutary competition, but market concentration. Economic power has resulted in feedback loops of political power, in which elites make rules that bolster further concentration.

The culprit isn't just "markets" -- some impersonal force that somehow got loose again. This is a story of power using theory. The mixed economy was undone by economic elites, who revised rules for their own benefit. They invested heavily in friendly theorists to bless this shift as sound and necessary economics, and friendly politicians to put those theories into practice.

Recent years have seen two spectacular cases of market mispricing with devastating consequences: the near-depression of 2008 and irreversible climate change. The economic collapse of 2008 was the result of the deregulation of finance. It cost the real U.S. economy upwards of $15 trillion (and vastly more globally), depending on how you count, far more than any conceivable efficiency gain that might be credited to financial innovation. Free-market theory presumes that innovation is necessarily benign. But much of the financial engineering of the deregulatory era was self-serving, opaque, and corrupt -- the opposite of an efficient and transparent market.

The existential threat of global climate change reflects the incompetence of markets to accurately price carbon and the escalating costs of pollution. The British economist Nicholas Stern has aptly termed the worsening climate catastrophe history's greatest case of market failure. Here again, this is not just the result of failed theory. The entrenched political power of extractive industries and their political allies influences the rules and the market price of carbon. This is less an invisible hand than a thumb on the scale. The premise of efficient markets provides useful cover.

The grand neoliberal experiment of the past 40 years has demonstrated that markets in fact do not regulate themselves. Managed markets turn out to be more equitable and more efficient. Yet the theory and practical influence of neoliberalism marches splendidly on, because it is so useful to society's most powerful people -- as a scholarly veneer to what would otherwise be a raw power grab. The British political economist Colin Crouch captured this anomaly in a book nicely titled The Strange Non-Death of Neoliberalism . Why did neoliberalism not die? As Crouch observed, neoliberalism failed both as theory and as policy, but succeeded superbly as power politics for economic elites.

The neoliberal ascendance has had another calamitous cost -- to democratic legitimacy. As government ceased to buffer market forces, daily life has become more of a struggle for ordinary people. The elements of a decent middle-class life are elusive -- reliable jobs and careers, adequate pensions, secure medical care, affordable housing, and college that doesn't require a lifetime of debt. Meanwhile, life has become ever sweeter for economic elites, whose income and wealth have pulled away and whose loyalty to place, neighbor, and nation has become more contingent and less reliable.

Large numbers of people, in turn, have given up on the promise of affirmative government, and on democracy itself. After the Berlin Wall came down in 1989, ours was widely billed as an era when triumphant liberal capitalism would march hand in hand with liberal democracy. But in a few brief decades, the ostensibly secure regime of liberal democracy has collapsed in nation after nation, with echoes of the 1930s.

As the great political historian Karl Polanyi warned, when markets overwhelm society, ordinary people often turn to tyrants. In regimes that border on neofascist, klepto-capitalists get along just fine with dictators, undermining the neoliberal premise of capitalism and democracy as complements. Several authoritarian thugs, playing on tribal nationalism as the antidote to capitalist cosmopolitanism, are surprisingly popular.

It's also important to appreciate that neoliberalism is not laissez-faire. Classically, the premise of a "free market" is that government simply gets out of the way. This is nonsensical, since all markets are creatures of rules, most fundamentally rules defining property, but also rules defining credit, debt, and bankruptcy; rules defining patents, trademarks, and copyrights; rules defining terms of labor; and so on. Even deregulation requires rules. In Polanyi's words, "laissez-faire was planned."

The political question is who gets to make the rules, and for whose benefit. The neoliberalism of Friedrich Hayek and Milton Friedman invoked free markets, but in practice the neoliberal regime has promoted rules created by and for private owners of capital, to keep democratic government from asserting rules of fair competition or countervailing social interests. The regime has rules protecting pharmaceutical giants from the right of consumers to import prescription drugs or to benefit from generics. The rules of competition and intellectual property generally have been tilted to protect incumbents. Rules of bankruptcy have been tilted in favor of creditors. Deceptive mortgages require elaborate rules, written by the financial sector and then enforced by government. Patent rules have allowed agribusiness and giant chemical companies like Monsanto to take over much of agriculture -- the opposite of open markets. Industry has invented rules requiring employees and consumers to submit to binding arbitration and to relinquish a range of statutory and common-law rights.

Neoliberalism as Theory, Policy, and Power

It's worth taking a moment to unpack the term "neoliberalism." The coinage can be confusing to American ears because the "liberal" part refers not to the word's ordinary American usage, meaning moderately left-of-center, but to classical economic liberalism otherwise known as free-market economics. The "neo" part refers to the reassertion of the claim that the laissez-faire model of the economy was basically correct after all.

Few proponents of these views embraced the term neoliberal . Mostly, they called themselves free-market conservatives. "Neoliberal" was a coinage used mainly by their critics, sometimes as a neutral descriptive term, sometimes as an epithet. The use became widespread in the era of Margaret Thatcher and Ronald Reagan.

To add to the confusion, a different and partly overlapping usage was advanced in the 1970s by the group around the Washington Monthly magazine. They used "neoliberal" to mean a new, less statist form of American liberalism. Around the same time, the term neoconservative was used as a self-description by former liberals who embraced conservatism, on cultural, racial, economic, and foreign-policy grounds. Neoconservatives were neoliberals in economics.

Beginning in the 1970s, resurrected free-market theory was interwoven with both conservative politics and significant investments in the production of theorists and policy intellectuals. This occurred not just in well-known conservative think tanks such as the American Enterprise Institute, Heritage, Cato, and the Manhattan Institute, but through more insidious investments in academia. Lavishly funded centers and tenured chairs were underwritten by the Olin, Scaife, Bradley, and other far-right foundations to promote such variants of free-market theory as law and economics, public choice, rational choice, cost-benefit analysis, maximize-shareholder-value, and kindred schools of thought. These theories colonized several academic disciplines. All were variations on the claim that markets worked and that government should get out of the way.

Each of these bodies of sub-theory relied upon its own variant of neoliberal ideology. An intensified version of the theory of comparative advantage was used not just to cut tariffs but to use globalization as all-purpose deregulation. The theory of maximizing shareholder value was deployed to undermine the entire range of financial regulation and workers' rights. Cost-benefit analysis, emphasizing costs and discounting benefits, was used to discredit a good deal of health, safety, and environmental regulation. Public choice theory, associated with the economist James Buchanan and an entire ensuing school of economics and political science, was used to impeach democracy itself, on the premise that policies were hopelessly afflicted by "rent-seekers" and "free-riders."

Click here to read how Robert Kuttner has been unmasking the fallacies of neoliberalism for decades

Market failure was dismissed as a rare special case; government failure was said to be ubiquitous. Theorists worked hand in glove with lobbyists and with public officials. But in every major case where neoliberal theory generated policy, the result was political success and economic failure.

For example, supply-side economics became the justification for tax cuts, on the premise that taxes punished enterprise. Supposedly, if taxes were cut, especially taxes on capital and on income from capital, the resulting spur to economic activity would be so potent that deficits would be far less than predicted by "static" economic projections, and perhaps even pay for themselves. There have been six rounds of this experiment, from the tax cuts sponsored by Jimmy Carter in 1978 to the immense 2017 Tax Cuts and Jobs Act signed by Donald Trump. In every case some economic stimulus did result, mainly from the Keynesian jolt to demand, but in every case deficits increased significantly. Conservatives simply stopped caring about deficits. The tax cuts were often inefficient as well as inequitable, since the loopholes steered investment to tax-favored uses rather than the most economically logical ones. Dozens of America's most profitable corporations paid no taxes.

Robert Bork's "antitrust paradox," holding that antitrust enforcement actually weakened competition, was used as the doctrine to sideline the Sherman and Clayton Acts. Supposedly, if government just got out of the way, market forces would remain more competitive because monopoly pricing would invite innovation and new entrants to the market. In practice, industry after industry became more heavily concentrated. Incumbents got in the habit of buying out innovators or using their market power to crush them. This pattern is especially insidious in the tech economy of platform monopolies, where giants that provide platforms, such as Google and Amazon, use their market power and superior access to customer data to out-compete rivals who use their platforms. Markets, once again, require rules beyond the benign competence of the market actors themselves. Only democratic government can set equitable rules. And when democracy falters, undemocratic governments in cahoots with corrupt private plutocrats will make the rules.

Human capital theory, another variant of neoliberal application of markets to partly social questions, justified deregulating labor markets and crushing labor unions. Unions supposedly used their power to get workers paid more than their market worth. Likewise minimum wage laws. But the era of depressed wages has actually seen a decline in rates of productivity growth. Conversely, does any serious person think that the inflated pay of the financial moguls who crashed the economy accurately reflects their contribution to economic activity? In the case of hedge funds and private equity, the high incomes of fund sponsors are the result of transfers of wealth and income from employees, other stakeholders, and operating companies to the fund managers, not the fruits of more efficient management.

There is a broad literature discrediting this body of pseudo-scholarly work in great detail. Much of neoliberalism represents the ever-reliable victory of assumption over evidence. Yet neoliberal theory lived on because it was so convenient for elites, and because of the inertial power of the intellectual capital that had been created. The well-funded neoliberal habitat has provided comfortable careers for two generations of scholars and pseudo-scholars who migrate between academia, think tanks, K Street, op-ed pages, government, Wall Street, and back again. So even if the theory has been demolished both by scholarly rebuttal and by events, it thrives in powerful institutions and among their political allies.

The Practical Failure of Neoliberal Policies

Financial deregulation is neoliberalism's most palpable deregulatory failure, but far from the only one. Electricity deregulation on balance has increased monopoly power and raised costs to consumers, but has failed to offer meaningful "shopping around" opportunities to bring down prices. We have gone from regulated monopolies with predictable earnings, costs, wages, and consumer protections to deregulated monopolies or oligopolies with substantial pricing power. Since the Bell breakup, the telephone system tells a similar story of re-concentration, dwindling competition, price-gouging, and union-bashing.

Air travel has been a poster child for advocates of deregulation, but the actual record is mixed at best. Airline deregulation produced serial bankruptcies of every major U.S. airline, often at the cost of worker pay and pension funds.

Ticket prices have declined on average over the past two decades, but the traveling public suffers from a crazy quilt of fares, declining service, shrinking seats and legroom, and exorbitant penalties for the perfectly normal sin of having to change plans. Studies have shown that fares actually declined at a faster rate in the 20 years before deregulation in 1978 than in the 20 years afterward, because the prime source of greater efficiency in airline travel is the introduction of more fuel-efficient planes.

The roller-coaster experience of airline profits and losses has reduced the capacity of airlines to purchase more fuel-efficient aircraft, and the average age of the fleet keeps increasing. The use of "fortress hubs" to defend market pricing power has reduced the percentage of nonstop flights, the most efficient way to fly from one point to another.

Robert Bork's spurious arguments that antitrust enforcement hurt competition became the basis for dismantling antitrust. Massive concentration resulted. Charles Tasnadi/AP Photo

In addition to deregulation, three prime areas of practical neoliberal policies are the use of vouchers as "market-like" means to social goals, the privatization of public services, and the use of tax subsides rather than direct outlays. In every case, government revenues are involved, so this is far from a free market to begin with. But the premise is that market disciplines can achieve public purposes more efficiently than direct public provision.

The evidence provides small comfort for these claims. One core problem is that the programs invariably give too much to the for-profit middlemen at the expense of the intended beneficiaries. A related problem is that the process of using vouchers and contracts invites corruption. It is a different form of "rent-seeking" -- pursuit of monopoly profits -- than that attributed to government by public choice theorists, but corruption nonetheless. Often, direct public provision is far more transparent and accountable than a web of contractors.

A further problem is that in practice there is often far less competition than imagined, because of oligopoly power, vendor lock-in, and vendor political influence. These experiments in marketization to serve social goals do not operate in some Platonic policy laboratory, where the only objective is true market efficiency yoked to the public good. They operate in the grubby world of practical politics, where the vendors are closely allied with conservative politicians whose purposes may be to discredit social transfers entirely, or to reward corporate allies, or to benefit from kickbacks either directly or as campaign contributions.

Privatized prisons are a case in point. A few large, scandal-ridden companies have gotten most of the contracts, often through political influence. Far from bringing better quality and management efficiency, they have profited by diverting operating funds and worsening conditions that were already deplorable, and finding new ways to charge inmates higher fees for necessary services such as phone calls. To the extent that money was actually saved, most of the savings came from reducing the pay and professionalism of guards, increasing overcrowding, and decreasing already inadequate budgets for food and medical care.

A similar example is the privatization of transportation services such as highways and even parking meters. In several Midwestern states, toll roads have been sold to private vendors. The governor who makes the deal gains a temporary fiscal windfall, while drivers end up paying higher tolls often for decades. Investment bankers who broker the deal also take their cut. Some of the money does go into highway improvements, but that could have been done more efficiently in the traditional way via direct public ownership and competitive bidding.

Housing vouchers substantially reward landlords who use the vouchers to fill empty houses with poor people until the neighborhood gentrifies, at which point the owner is free to quit the program and charge market rentals. Thus public funds are used to underwrite a privately owned, quasi-social housing sector -- whose social character is only temporary. No permanent social housing is produced despite the extensive public outlay. The companion use of tax incentives to attract passive investment in affordable housing promotes economically inefficient tax shelters, and shunts public funds into the pockets of the investors -- money that might otherwise have gone directly to the housing.

The Affordable Care Act is a form of voucher. But the regulated private insurance markets in the ACA have not fully lived up to their promise, in part because of the extensive market power retained by private insurers and in part because the right has relentlessly sought to sabotage the program -- another political feedback loop. The sponsors assumed that competition would lower costs and increase consumer choice. But in too many counties, there are three or fewer competing plans, and in some cases just one.

As more insurance plans and hospital systems become for-profit, massive investment goes into such wasteful activities as manipulation of billing, "risk selection," and other gaming of the rules. Our mixed-market system of health care requires massive regulation to work with tolerable efficiency. In practice, this degenerates into an infinite regress of regulator versus commercial profit-maximizer, reminiscent of Mad magazine's "Spy versus Spy," with the industry doing end runs to Congress to further rig the rules. Straight-ahead public insurance such as Medicare is generally far more efficient.

An extensive literature has demonstrated that for-profit voucher schools do no better and often do worse than comparable public schools, and are vulnerable to multiple forms of gaming and corruption. Proprietors of voucher schools are superb at finding ways of excluding costly special-needs students, so that those costs are imposed on what remains of public schools; they excel at gaming test results. While some voucher and charter schools, especially nonprofit ones, sometimes improve on average school performance, so do many public schools. The record is also muddied by the fact that many ostensibly nonprofit schools contract out management to for-profit companies.

Tax preferences have long been used ostensibly to serve social goals. The Earned Income Tax Credit is considered one of the more successful cases of using market-like measures -- in this case a refundable tax credit -- to achieve the social goal of increasing worker take-home pay. It has also been touted as the rare case of bipartisan collaboration. Liberals get more money for workers. Conservatives get to reward the deserving poor, since the EITC is conditioned on employment. Conservatives get a further ideological win, since the EITC is effectively a wage subsidy from the government, but is experienced as a tax refund rather than a benefit of government.

Recent research, however, shows that the EITC is primarily a subsidy of low-wage employers, who are able to pay their workers a lot less than a market-clearing wage. In industries such as nursing homes or warehouses, where many workers qualified for the EITC work side by side with ones not eligible, the non-EITC workers get substandard wages. The existence of the EITC depresses the level of the wages that have to come out of the employer's pocket.

Neoliberalism's Influence on Liberals

As free-market theory resurged, many moderate liberals embraced these policies. In the inflationary 1970s, regulation became a scapegoat that supposedly deterred salutary price competition. Some, such as economist Alfred Kahn, President Carter's adviser on deregulation, supported deregulation on what he saw as the merits. Other moderates supported neoliberal policies opportunistically, to curry favor with powerful industries and donors. Market-like policies were also embraced by liberals as a tactical way to find common ground with conservatives.

Several forms of deregulation -- of airlines, trucking, and electric power -- began not under Reagan but under Carter. Financial deregulation took off under Bill Clinton. Democratic presidents, as much as Republicans, promoted trade deals that undermined social standards. Cost-benefit analysis by the Office of Information and Regulatory Affairs (OIRA) was more of a choke point under Barack Obama than under George W. Bush.

"Command and control" became an all-purpose pejorative for disparaging perfectly sensible and efficient regulation. "Market-like" became a fashionable concept, not just on the free-market right but on the moderate left. Cass Sunstein, who served as Obama's anti-regulation czar,uses the example of "nudges" as a more market-like and hence superior alternative to direct regulation, though with rare exceptions their impact is trivial. Moreover, nudges only work in tandem with regulation.

There are indeed some interventionist policies that use market incentives to serve social goals. But contrary to free-market theory, the market-like incentives first require substantial regulation and are not a substitute for it. A good example is the Clean Air Act Amendments of 1990, which used tradable emission rights to cut the output of sulfur dioxide, the cause of acid rain. This was supported by both the George H.W. Bush administration and by leading Democrats. But before the trading regime could work, Congress first had to establish permissible ceilings on sulfur dioxide output -- pure command and control.

There are many other instances, such as nutrition labeling, truth-in-lending, and disclosure of EPA gas mileage results, where the market-like premise of a better-informed consumer complements command regulation but is no substitute for it. Nearly all of the increase in fuel efficiency, for example, is the result of command regulations that require auto fleets to hit a gas mileage target. The fact that EPA gas mileage figures are prominently disclosed on new car stickers may have modest influence, but motor fuels are so underpriced that car companies have success selling gas-guzzlers despite the consumer labeling.

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Bill Clinton and his Treasury Secretary, Robert Rubin, were big promoters of financial deregulation.

Politically, whatever rationale there was for liberals to make common ground with libertarians is now largely gone. The authors of the 2017 Tax Cuts and Jobs Act made no attempt to meet Democrats partway; they excluded the opposition from the legislative process entirely. This was opportunistic tax cutting for elites, pure and simple. The right today also abandoned the quest for a middle ground on environmental policy, on anti-poverty policy, on health policy -- on virtually everything. Neoliberal ideology did its historic job of weakening intellectual and popular support for the proposition that affirmative government can better the lives of citizens and that the Democratic Party is a reliable steward of that social compact. Since Reagan, the right's embrace of the free market has evolved from partly principled idealism into pure opportunism and obstruction.

Neoliberalism and Hyper-Globalism

The post-1990 rules of globalization, supported by conservatives and moderate liberals alike, are the quintessence of neoliberalism. At Bretton Woods in 1944, the use of fixed exchange rates and controls on speculative private capital, plus the creation of the IMFand World Bank, were intended to allow member countries to practice national forms of managed capitalism, insulated from the destructive and deflationary influences of short-term speculative private capital flows. As doctrine and power shifted in the 1970s, the IMF, the World Bank, and later the WTO, which replaced the old GATT, mutated into their ideological opposite. Rather than instruments of support for mixed national economies, they became enforcers of neoliberal policies.

The standard package of the "Washington Consensus" of approved policies for developing nations included demands that they open their capital markets to speculative private finance, as well as cutting taxes on capital, weakening social transfers, and gutting labor regulation and public ownership. But private capital investment in poor countries proved to be fickle. The result was often excessive inflows during the boom part of the cycle and punitive withdrawals during the bust -- the opposite of the patient, long-term development capital that these countries needed and that was provided by the World Bank of an earlier era. During the bust phase, the IMF typically imposes even more stringent neoliberal demands as the price of financial bailouts, including perverse budgetary austerity, supposedly to restore the confidence of the very speculative capital markets responsible for the boom-bust cycle.

Dozens of nations, from Latin America to East Asia, went through this cycle of boom, bust, and then IMF pile-on. Greece is still suffering the impact. After 1990, hyper-globalism also included trade treaties whose terms favored multinational corporations. Traditionally, trade agreements had been mainly about reciprocal reductions of tariffs. Nations were free to have whatever brand of regulation, public investment, or social policies they chose. With the advent of the WTO, many policies other than tariffs were branded as trade distorting, even as takings without compensation. Trade deals were used to give foreign capital free access and to dismantle national regulation and public ownership. Special courts were created in which foreign corporations and investors could do end runs around national authorities to challenge regulation for impeding commerce.

At first, the sponsors of the new trade regime tried to claim the successful economies of East Asia as evidence of the success of the neoliberal recipe. Supposedly, these nations had succeeded by pursuing "export-led growth," exposing their domestic economies to salutary competition. But these claims were soon exposed as the opposite of what had actually occurred. In fact, Japan, South Korea, smaller Asian nations, and above all China had thrived by rejecting every major tenet of neoliberalism. Their capital markets were tightly regulated and insulated from foreign speculative capital. They developed world-class industries as state-led cartels that favored domestic production and supply. East Asia got into trouble only when it followed IMF dictates to throw open capital markets, and in the aftermath they recovered by closing those markets and assembling war chests of hard currency so that they'd never again have to go begging to the IMF. Enthusiasts of hyper-globalization also claimed that it benefited poor countries by increasing export opportunities, but as the success of East Asia shows, there is more than one way to boost exports -- and many poorer countries suffered under the terms of the global neoliberal regime.

Nor was the damage confined to the developing world. As the work of Harvard economist Dani Rodrik has demonstrated, democracy requires a polity. For better or for worse, the polity and democratic citizenship are national. By enhancing the global market at the expense of the democratic state, the current brand of hyper-globalization deliberately weakens the capacity of states to regulate markets, and weakens democracy itself.

When Do Markets Work?

The failure of neoliberalism as economic and social policy does not mean that markets never work. A command economy is even more utopian and perverse than a neoliberal one. The practical quest is for an efficient and equitable middle ground.

The neoliberal story of how the economy operates assumes a largely frictionless marketplace, where prices are set by supply and demand, and the price mechanism allocates resources to their optimal use in the economy as a whole. For this discipline to work as advertised, however, there can be no market power, competition must be plentiful, sellers and buyers must have roughly equal information, and there can be no significant externalities. Much of the 20th century was practical proof that these conditions did not describe a good part of the actual economy. And if markets priced things wrong, the market system did not aggregate to an efficient equilibrium, and depressions could become self-deepening. As Keynes demonstrated, only a massive jolt of government spending could restart the engines, even if market pricing was partly violated in the process.

Nonetheless, in many sectors of the economy, the process of buying and selling is close enough to the textbook conditions of perfect competition that the price system works tolerably well. Supermarkets, for instance, deliver roughly accurate prices because of the consumer's freedom and knowledge to shop around. Likewise much of retailing. However, when we get into major realms of the economy with positive or negative externalities, such as education and health, markets are not sufficient. And in other major realms, such as pharmaceuticals, where corporations use their political power to rig the terms of patents, the market doesn't produce a cure.

The basic argument of neoliberalism can fit on a bumper sticker. Markets work; governments don't . If you want to embellish that story, there are two corollaries: Markets embody human freedom. And with markets, people basically get what they deserve; to alter market outcomes is to spoil the poor and punish the productive. That conclusion logically flows from the premise that markets are efficient. Milton Friedman became rich, famous, and influential by teasing out the several implications of these simple premises.

It is much harder to articulate the case for a mixed economy than the case for free markets, precisely because the mixed economy is mixed. The rebuttal takes several paragraphs. The more complex story holds that markets are substantially efficient in some realms but far from efficient in others, because of positive and negative externalities, the tendency of financial markets to create cycles of boom and bust, the intersection of self-interest and corruption, the asymmetry of information between company and consumer, the asymmetry of power between corporation and employee, the power of the powerful to rig the rules, and the fact that there are realms of human life (the right to vote, human liberty, security of one's person) that should not be marketized.

And if markets are not perfectly efficient, then distributive questions are partly political choices. Some societies pay pre-K teachers the minimum wage as glorified babysitters. Others educate and compensate them as professionals. There is no "correct" market-derived wage, because pre-kindergarten is a social good and the issue of how to train and compensate teachers is a social choice, not a market choice. The same is true of the other human services, including medicine. Nor is there a theoretically correct set of rules for patents, trademarks, and copyrights. These are politically derived, either balancing the interests of innovation with those of diffusion -- or being politically captured by incumbent industries.

Governments can in principle improve on market outcomes via regulation, but that fact is complicated by the risk of regulatory capture. So another issue that arises is market failure versus polity failure, which brings us back to the urgency of strong democracy and effective government.

After Neoliberalism

The political reversal of neoliberalism can only come through practical politics and policies that demonstrate how government often can serve citizens more equitably and efficiently than markets. Revision of theory will take care of itself. There is no shortage of dissenting theorists and empirical policy researchers whose scholarly work has been vindicated by events. What they need is not more theory but more influence, both in the academy and in the corridors of power. They are available to advise a new progressive administration, if that administration can get elected and if it refrains from hiring neoliberal advisers.

There are also some relatively new areas that invite policy innovation. These include regulation of privacy rights versus entrepreneurial liberties in the digital realm; how to think of the internet as a common carrier; how to update competition and antitrust policy as platform monopolies exert new forms of market power; how to modernize labor-market policy in the era of the gig economy; and the role of deeper income supplements as machines replace human workers.

The failed neoliberal experiment also makes the case not just for better-regulated capitalism but for direct public alternatives as well. Banking, done properly, especially the provision of mortgage finance, is close to a public utility. Much of it could be public. A great deal of research is done more honestly and more cost-effectively in public, peer-reviewed institutions such as the NIH than by a substantially corrupt private pharmaceutical industry.

Social housing often is more cost-effective than so-called public-private partnerships. Public power is more efficient to generate, less prone to monopolistic price-gouging, and friendlier to the needed green transition than private power. The public option in health care is far more efficient than the current crazy quilt in which each layer of complexity adds opacity and cost. Public provision does require public oversight, but that is more straightforward and transparent than the byzantine dance of regulation and counter-regulation.

The two other benefits of direct public provision are that the public gets direct evidence of government delivering something of value, and that the countervailing power of democracy to harness markets is enhanced. A mixed economy depends above all on a strong democracy -- one even stronger than the democracy that succumbed to the corrupting influence of economic elites and their neoliberal intellectual allies beginning half a century ago. The antidote to the resurrected neoliberal fable is the resurrection of democracy -- strong enough to tame the market in a way that tames it for keeps.


Robert Kuttner is co-founder and co-editor of The American Prospect, and professor at Brandeis University's Heller School. His latest book is The Stakes: 2020 and the Survival of American Democracy . In addition to writing for the Prospect, he writes for HuffPost, The Boston Globe, and The New York Review of Books.

Read the original article at Prospect.org.

Used with the permission. © The American Prospect, Prospect.org, 2019. All rights reserved.

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[Sep 19, 2019] Luke's Thought Dump Cute Perl Gem to Get the Minimum-Maximum Value

Notable quotes:
"... the comparison operators return 1 or 0 for true and false, respectively, which are then used by this code to index the array ref. ..."
Sep 19, 2019 | lukesthoughtdump.blogspot.com

Sunday, August 2, 2009 Cute Perl Gem to Get the Minimum/Maximum Value Saw this little nugget on #perl@irc.perl.org the other night. It determines the minimum of two values:

[$b, $a]->[$a <= $b]
It takes advantage of the fact that Perl doesn't have a Boolean return type for true or false, so the comparison operators return 1 or 0 for true and false, respectively, which are then used by this code to index the array ref.

To get the maximum of the two values, just flip the operator to >= Posted by Luke at

Labels: hacks , perl

[Sep 19, 2019] Form vs. substance in the neoliberal university

Highly recommended!
This is a classic catch 22 situation with this "oath" described below...
Also I think a lot of professors of neo-classical economics look like the member of Komsomol described below ;-) For them it is about opening new opportunities for advancement not about the truth and the level of corresponding to the reality of this pseudo-scientific neo-classical garbage, with the smoke screen of mathematics as a lipstick on the pig (mathiness)
Most such people will teach students complete garbage understanding that this is a complete garbage with a smile. Still, in in Soviet way it is possible for some to accept the position and work to undermine neo-classical economics acting within the institution using Aesopian language in lectures and papers.
The book Everything Was Forever, Until It Was No More The Last Soviet Generation (In-Formation) by Alexei Yurchak is a recommended reading for those who want to understand the perversion of neoliberal way of life in the USA today, as they mirror the perversions of Soviet life in a very uncanny way.
Notable quotes:
"... Consider an example from the contemporary United States. Today a number of private universities, colleges, and schools in several states require teachers and professors to take a "loyalty oath" to ensure that they do not "hold or foster undesirable political beliefs.... ..."
"... From a political standpoint she disagreed with the practice of taking loyalty oaths, and later, in her role as professor of the sociology of law, she voiced political positions counter to those mentioned in the oath and challenged the oath-taking practice itself. ..."
"... However, before she could do this, she first had to take the oath, understanding that without this act she would not be employed or recognized by the institution as a legitimate member with a voice authorized to participate in teaching, research, and the institution's politics (committees, meetings, elections, and so forth), including even the possibility to question publicly the practice of taking oaths. ..."
"... "The oath did not mean much if you took it, but it meant a lot if you didn't." ..."
"... However, "when a vote had to be taken, everyone roused -- a certain sensor clicked in the head: 'Who is in favor?' -- and you raised your hand automatically" (see a discussion of such ritualized practices within the Komsomol in chapter a). ..."
"... Participating in these acts reproduced oneself as a "normal" Soviet person within the system of relations, collectivities, and subject positions, with all the constraints and possibilities that position entailed, even including the possibility, after the meetings, to engage in interests, pursuits, and meanings that ran against those that were stated in the resolutions one had voted for. ..."
"... These acts are not about stating facts and describing opinions but about doing things and opening new possibilities. ..."
Sep 19, 2019 | www.amazon.com

Originally from: Everything Was Forever, Until It Was No More The Last Soviet Generation (In-Formation) by Alexei Yurchak

formal Shift

A general shift at the level of concrete ritualized forms of discourse, in which the formal dimension's importance grows, while the
informal, substantiative dimension opens up to new meanings, can and does occur in different historical and cultural contexts.

Consider an example from the contemporary United States. Today a number of private universities, colleges, and schools in several states require teachers and professors to take a "loyalty oath" to ensure that they do not "hold or foster undesirable political beliefs....

While the statutes vary, [these institutions] generally deny the right to teach to those who cannot or will not take the loyalty oath" (Chin and Rao 2003, 431 -32). Recently, a sociologist of law took such a loyalty oath at a Midwestern university when her appointment as a professor began.

From a political standpoint she disagreed with the practice of taking loyalty oaths, and later, in her role as professor of the sociology of law, she voiced political positions counter to those mentioned in the oath and challenged the oath-taking practice itself.

However, before she could do this, she first had to take the oath, understanding that without this act she would not be employed or recognized by the institution as a legitimate member with a voice authorized to participate in teaching, research, and the institution's politics (committees, meetings, elections, and so forth), including even the possibility to question publicly the practice of taking oaths.

Here, the informal, substantiative dimension of the ritualized act experiences a shift, while the formal dimension remains fixed and important: taking the oath opens a world of possibilities where new informal, substantiative meanings become possible, including a professorial position with a recognized political voice within the institution. In the sociologist's words, "The oath did not mean much if you took it, but it meant a lot if you didn't." 3 ^

This example illustrates the general principle of how some discursive acts or whole types of discourse can drift historically in the direction of an increasingly expanding formal dimension and increasingly open or even irrelevant informal, substantiative dimension. During Soviet late socialism, the formal dimension of speech acts at formal gathering and rituals became particularly important in most contexts and during most events.

One person who participated in large Komsomol meetings in the 1970s and 1980s described how he often spent the meetings reading a book. However, "when a vote had to be taken, everyone roused -- a certain sensor clicked in the head: 'Who is in favor?' -- and you raised your hand automatically" (see a discussion of such ritualized practices within the Komsomol in chapter a).

Here the emphasis on the formal dimension of organizational discourse was unique both in scale and substance. Most ritualized acts of "organizational discourse" during this time underwent such a transformation.

Participating in these acts reproduced oneself as a "normal" Soviet person within the system of relations, collectivities, and subject positions, with all the constraints and possibilities that position entailed, even including the possibility, after the meetings, to engage in interests, pursuits, and meanings that ran against those that were stated in the resolutions one had voted for.

It would obviously be wrong to see these acts of voting simply as informal, substantiative statements about supporting the resolution that are either true (real support) or false (dissimulation of support). These acts are not about stating facts and describing opinions but about doing things and opening new possibilities.

[Sep 18, 2019] The Obama Administration Destroyed Libya. Could Trump Make It Worse? by Ted Galen Carpenter

Notable quotes:
"... The United States also cannot resist the urge to meddle. Worse, U.S. officials seemingly can't even decide which faction it wants to back. Washington's official policy continues to support the GNA, which the United Nations recognizes as the country's legitimate government -- even though its writ extends to little territory beyond the Tripoli metropolitan area. President Donald Trump, however, had an extremely cordial, lengthy telephone conversation in April with Haftar and appeared impressed with Haftar's professed determination to combat terrorist groups and bring order and unity to Libya. Neither Libyan faction now seems certain about Washington's stance. ..."
"... One poster child for such continuing arrogance is Samantha Power, an influential national security council staffer in 2011 and later U.S. ambassador to the United Nations. In her new book, The Education of an Idealist , Power takes no responsibility whatever for the Libya debacle. Indeed, flippant might be too generous a term for her treatment of the episode. "We could hardly expect to have a crystal ball when it came to accurately predicting outcomes in places where the culture was not our own," she contends. American Conservative analyst Daniel Larison correctly excoriates her argument as "a pathetic attempt by Power to deny responsibility for the effects of a war she backed by shrugging her shoulders and pleading ignorance. If Libyan culture was so opaque and hard for the Obama administration to understand, they should never have taken sides in an internal conflict there. If the 'culture was not our own' and they couldn't anticipate what was going to happen because of that, then how arrogant must the policymakers who argued in favor of intervention have been?" ..."
"... Obama and company not only destroyed Libya, they also helped to unleash a wave of jihadis who are terrorizing vast swaths of west Africa, especially Mali and Burkina Faso. Their stupidity and lack of foresight is mind-boggling! ..."
"... I understand the role which the Obama administration played in getting the Libyan intervention started. However the major destruction of Libya's fragile structure of governance under Qaddafi was done by the French, Brits, and Italians. ..."
Sep 16, 2019 | nationalinterest.org

The United States cannot resist the urge to meddle. Worse, U.S. officials can't seem to decide which faction they want to back.

The Western-created disaster in Libya continues to grow worse. Fighting between Field Marshal Khalifa Haftar's so-called Libyan National Army (LNA) and the even more misnamed Government of National Accord (GNA) has intensified in and around Tripoli. The LNA boasted on September 11 that its forces had routed troops of the Sarraj militia, a GNA ally, killing about two hundred of them. That total may be exaggerated, but there is no doubt that the situation has become increasingly violent and chaotic in Tripoli and other portions of Libya, with innocent civilians bearing the brunt of the suffering.

An article in Bloomberg News provides a succinct account of the poisonous fruits of the U.S.-led "humanitarian" military intervention in 2011. "Libya is enduring its worst violence since the 2011 NATO-backed ouster of Muammar el-Qaddafi, which ushered in years of instability that allowed Islamist radicals to thrive and turned the country into a hub for migrants destined to Europe. Haftar had launched the war as the United Nations was laying the ground for a political conference to unite the country. It is now more divided than ever." The country has become the plaything not only of rival domestic factions but major Middle East powers , including Egypt, Saudi Arabia, Turkey, Qatar, and the United Arab Emirates. Those regimes are waging a ruthless geopolitical competition, providing arms and in some cases even launching airstrikes on behalf of their preferred clients.

The United States also cannot resist the urge to meddle. Worse, U.S. officials seemingly can't even decide which faction it wants to back. Washington's official policy continues to support the GNA, which the United Nations recognizes as the country's legitimate government -- even though its writ extends to little territory beyond the Tripoli metropolitan area. President Donald Trump, however, had an extremely cordial, lengthy telephone conversation in April with Haftar and appeared impressed with Haftar's professed determination to combat terrorist groups and bring order and unity to Libya. Neither Libyan faction now seems certain about Washington's stance.

Given the appalling aftermath of the original U.S.-led intervention, one might hope that advocates of an activist policy would be chastened and back away from further meddling in that unfortunate country. Yet, that is not the case. Neither the Trump administration nor the humanitarian crusaders in Barack Obama's administration who caused the calamity in the first place seem inclined to advocate a more cautious, restrained U.S. policy.

One poster child for such continuing arrogance is Samantha Power, an influential national security council staffer in 2011 and later U.S. ambassador to the United Nations. In her new book, The Education of an Idealist , Power takes no responsibility whatever for the Libya debacle. Indeed, flippant might be too generous a term for her treatment of the episode. "We could hardly expect to have a crystal ball when it came to accurately predicting outcomes in places where the culture was not our own," she contends. American Conservative analyst Daniel Larison correctly excoriates her argument as "a pathetic attempt by Power to deny responsibility for the effects of a war she backed by shrugging her shoulders and pleading ignorance. If Libyan culture was so opaque and hard for the Obama administration to understand, they should never have taken sides in an internal conflict there. If the 'culture was not our own' and they couldn't anticipate what was going to happen because of that, then how arrogant must the policymakers who argued in favor of intervention have been?"

The answer to Larison's rhetorical question is "extraordinarily arrogant." It is not as though prudent foreign-policy experts didn't warn Power and her colleagues about the probable consequences of intervening in a volatile, fragile country like Libya. Indeed, as Robert Gates, Obama's secretary of defense, confirms in his memoir, Duty: Memoirs of a Secretary at War , the Obama administration itself was deeply divided about the advisability of intervention. The Joint Chiefs of Staff, Vice President Joe Biden, and Gates were opposed. Among the most outspoken proponents of action were Power and her mentor, Secretary of State Hillary Clinton. Gates notes further that Obama was deeply torn, later telling his secretary of defense that the decision was a "51 to 49" call.

The existence of a sharp internal division is sufficient evidence by itself that Power's attempt to absolve herself and other humanitarian crusaders of responsibility for the subsequent tragedy is without merit. Indeed, it has even less credibility than Pontius Pilate's infamous effort to evade guilt. They were warned of the probable outcome, yet they chose to disregard those warnings.

Power, Clinton, Obama and other proponents of ousting Qaddafi turned Libya into a chaotic Somalia on the Mediterranean, and the blood of innocents shed since 2011 is on their hands. Given the stark split within the president's national security team, the Libya intervention was especially reckless and unjustified. The default option in such a case should have been against intervention, not plunging ahead.

The Trump administration should learn from the blunders of its predecessor and resist any temptation to meddle further. America does not have a dog in the ongoing fight between Haftar and the GNA, and we should simply accept whatever outcome emerges. Washington's arrogant interference has caused enough suffering in Libya already.

Ted Galen Carpenter, a senior fellow in security studies at the Cato Institute and a contributing editor at the National Interest , is the author of thirteen books and more than eight hundred articles on international affairs. His latest book is NATO: The Dangerous Dinosaur .


Druid 7 hours ago ,

The outcome in Libya is what the intent was - chaos, per the Yinon plan. The side effect of mass immigration to Europe was warned by Gaddafi! All was known, yet the destabilization war continued.

npbinni 8 hours ago ,

Obama and company not only destroyed Libya, they also helped to unleash a wave of jihadis who are terrorizing vast swaths of west Africa, especially Mali and Burkina Faso. Their stupidity and lack of foresight is mind-boggling!

dieter heymann 13 hours ago ,

Libya was and still is the case of a civil war into which foreign powers have intervened. The major parties of that war have always been the Tripolitanian West and the Cyrenaican East. Whoever is on top considers the others to be the rebels. That is how the demise of Qaddafi began. For him Benghazi was the rebel's nest which needed some cleaning. Nothing has changed. Haftar is the new Qaddafi.

I understand the role which the Obama administration played in getting the Libyan intervention started. However the major destruction of Libya's fragile structure of governance under Qaddafi was done by the French, Brits, and Italians.

Mark Thomason a day ago ,

You can always make things worse. It is one thing that Trump and friends are good at.

They don't consider that a criticism either, since they want what the rest of us consider worse -- more war, more enemies, more inequality in outcomes at home, more desperation at home giving more power to the haves over the have-nots.

redeemed626 2 days ago • edited ,

Mortimer Adler's "How to Read a Book" is a timeless classic that still applies to articles produced for electronic consumption. One of Adler's primary admonitions was to consider the author's expertise, credibility, and potential biases. With regard to this article, scrolling down to the end reveals the author's association with the Koch Brother financed Cato Institute. The Koch Brothers and their money have done more to destroy American democracy than any foreign tyrant or Presidential folly.

And oh, by the way, what did the Neocons and the Vulcans of the W Administration do to the entire Middle East other than create a contiguous geographic belt of Iranian Shiite influence from Tehran to Beirut?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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


kimyo , September 17, 2019 at 4:42 am

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

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

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

marku52 , September 17, 2019 at 1:35 pm

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

divadab , September 17, 2019 at 8:36 am

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

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

Dirk77 , September 17, 2019 at 9:12 am

+1

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

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

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

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

Dirk77 , September 17, 2019 at 8:59 am

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

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

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

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

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

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

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

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

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

Harry , September 17, 2019 at 1:44 pm

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

XXYY , September 17, 2019 at 2:57 pm

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

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

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

notabanker , September 17, 2019 at 9:24 pm

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

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

Tomonthebeach , September 17, 2019 at 11:29 am

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

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

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

Kevin , September 17, 2019 at 12:34 pm

Boeing subsidies:

Mike , September 17, 2019 at 3:22 pm

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

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

VietnamVet , September 17, 2019 at 3:57 pm

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

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

RBHoughton , September 17, 2019 at 8:40 pm

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

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

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

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

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

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

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

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

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

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

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

Sep 18, 2019 | www.nakedcapitalism.com

Trade

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

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

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

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

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

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

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

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

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

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

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

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

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

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

vk , Sep 18 2019 15:22 utc | 156

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

Let's see (again):

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

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

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

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

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

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

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


vk , Sep 18 2019 15:31 utc | 160

And the number's just changed:

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

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

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

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

You're chasing your own tail.

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

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

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

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

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

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

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

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

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

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

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

"Drones have fission heads carrying four precision bombs."

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

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

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

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

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

Seems about right. Statement by bevin is on target.

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

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

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

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

... ... ...

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

But the reaction did not fall neatly along party lines.

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

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

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

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

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

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

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

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

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

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

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

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

Posted on September 18, 2019 by Lambert Strether

Lambert here: More corruption in the professional class.

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

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

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

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

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

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

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

A Potent Business Model

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

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

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

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

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

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

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

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

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

From Retail Store to Mega-Mall

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

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

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

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

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

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

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

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

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

'The Search Was Manipulated'

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

A Revolving Door of Business Deals Funded by Taxpayers

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

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

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

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

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

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

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

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

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

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

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

Who's to Blame?

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

These criticisms leave a lot of context out.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

... ... ...

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

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

... ... ...

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

... ... ...

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


jonathanpulliam 2 days ago ,

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

Gary Sellars 3 days ago ,

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

... ... ...

Mephisto 3 days ago ,

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

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

jonathanpulliam Mephisto 2 days ago ,

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

Rudi Matich Mephisto 2 days ago ,

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

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

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

Swift Laggard II Rudi Matich 2 days ago ,

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

Gary Sellars Mephisto 3 days ago ,

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

Thats better...

Mephisto Gary Sellars 3 days ago ,

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

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

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

Gary Sellars Mephisto 2 days ago • edited ,

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

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

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

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

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

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

Swift Laggard II Mephisto 2 days ago ,

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

Mephisto Swift Laggard II 2 days ago ,

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

commit Mephisto 2 days ago ,

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

Mephisto commit 2 days ago ,

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

Redmond Mephisto 2 days ago ,

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

commit Redmond 2 days ago • edited ,

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

commit Mephisto 2 days ago • edited ,

> universally disliked all over Asia

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

Redmond 3 days ago ,

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

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

Swift Laggard II Redmond 3 days ago ,

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

Gary Sellars Swift Laggard II 3 days ago ,

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

Walter Tseng 3 days ago ,

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

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

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

Sep 17, 2019 | www.rogerfarmer.com

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

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

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

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

Sep 17, 2019 | economistsview.typepad.com

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

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

Elizabeth Schumacher - September 16

COLOGNE, Germany

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

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

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

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

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

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

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

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

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

Sep 17, 2019 | economistsview.typepad.com

Joe , September 16, 2019 at 12:11 PM


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

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

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

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

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

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

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

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

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

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

anne , September 15, 2019 at 11:33 AM

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

Branko Milanovic‏ @BrankoMilan

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

4:59 AM - 15 Sep 2019

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

Branko Milanovic‏ @BrankoMilan

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

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

4:59 AM - 15 Sep 2019

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

Branko Milanovic‏ @BrankoMilan

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

* Contradiction

4:59 AM - 15 Sep 2019

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

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

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

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

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

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

Sep 10, 2019 | www.lemonde.fr

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

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

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

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

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

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

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

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

[Sep 16, 2019] The Four Dynamics Of Bubbles

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

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

Financial bubbles manifest three dynamics :

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

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

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

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

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

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

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

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

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

This is driving the third dynamic of bubbles :

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

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

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

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

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

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

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

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

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

Sep 15, 2019 | www.moonofalabama.org

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

@1 steven t johnson

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

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

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

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

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

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

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

The Rise of Neo-Feudalism

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

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

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

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

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

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

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

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

The role of the Clerisy

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

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

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

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

The new geography of feudalism

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

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

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

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

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

Undermining the Third Estate

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

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

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

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

The Clerisy's War on the Middle Class

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

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

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

Political implications

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

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

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

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

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

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

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

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

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

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


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

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

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

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

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

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

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

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

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

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

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

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

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


GotAFriendInBen , 15 minutes ago link

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

Keyser , 41 minutes ago link

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

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

Alex Droog , 19 minutes ago link

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

Build-It-Well , 1 hour ago link

Have we learned anything?

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

Art_Vandelay , 1 hour ago link

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

pitz , 1 hour ago link

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

pump and dump , 1 hour ago link

Most of the ads for good jobs are fake.

pitz , 1 hour ago link

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

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

ZD1 , 1 hour ago link

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

Congress needs to abolish it.

Future Jim , 2 hours ago link

This seems to contradict the labor participation rate.

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

J S Bach , 2 hours ago link

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

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

The EveryThing Bubble , 2 hours ago link

It's all rigged folks

don't believe anything you read

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

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

anne , September 13, 2019 at 06:59 PM

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

September 12, 2019

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

When will the next recession arrive?

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

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

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

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

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

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

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

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

These narratives cluster around several issues:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Sep 15, 2019 | economistsview.typepad.com

anne , September 13, 2019 at 06:38 PM

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

September 6, 2019

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

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

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

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

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

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

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

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

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

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

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

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


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

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

Sep 14, 2019 | economistsview.typepad.com

anne , September 13, 2019 at 06:31 PM

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

September 10, 2019

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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


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

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


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

We need institutions run by and for common workng people

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

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

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

Nope
Not necessarily so

Dani has several popularly written papers on tis point

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Sep 14, 2019 | finance.yahoo.com

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

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

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

Krishnan Viswanathan @kxviswan123

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

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


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

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

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

Related: Yergin: Expect Extreme Volatility In Oil Markets

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

Ahmed Alsalman @AAlsalman91

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

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


More Attacks To Come?

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

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

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

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

By Michael Kern for Oilprice.com

More Top Reads From Oilprice.com:

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

Read this article on OilPrice.com

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

Sep 14, 2019 | finance.yahoo.com

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

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

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

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

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

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

So what happens now?

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

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

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

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

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

[Sep 13, 2019] The US Massively Underestimates the Trade War Blowback by Robert Berke

Notable quotes:
"... Trade wars and sanctions are economic weapons against rival regimes, and like actual military warfare, often lead to unanticipated and sometimes devastating blowback from the targeted regimes. ..."
"... At the same time, western companies were forced to withdraw from Russian mega-deals because of sanctions. The best-known example was Exxon, forced by sanctions to walk away from an Arctic joint venture with Russia's state-owned oil giant, Rosneft, where it had invested $3.2 billion. In their very first effort, the partners successfully drilled oil wells containing 750 million barrels. ..."
"... The trade war with China that has led to tariffs on billions of dollars in Chinese exports to the US, and as a result, Russia and China have moved even closer. It remains an absolute mystery why no one in the west had foreseen the blowback from economic warfare leading to an alliance between two of its most powerful adversaries. ..."
"... The US acts as if it has been blind-sided by the Russian/China moves, even though years before it undertook economic warfare against them, China, the world's largest energy importer, agreed to finance oil and gas multi-billion-dollar pipelines in neighboring Russia. Now Russia has become China's largest energy supplier, equaling or perhaps even surpassing its energy supplies to Europe. ..."
"... As stated by Global Village Space (GBS) , China and Russia rushed to aid Iran, with China replacing Total, in a 25-year deal estimated to be worth some $400 billions. With that, China inherits a bonanza, providing much needed finance and technology to a country that was and could again become one of the world's leading energy producers. China is looking to finance $280 billion to develop Iran's gas, oil and petrochemicals industries, along with $120 billion to improve transport and manufacturing, making it a key partner in China's Road and Belt program. ..."
"... The deal also gives China the right to buy any or all Iranian oil, gas, and petrochemicals products at a minimum guaranteed 12% discount to global benchmarks, plus an additional discount of 6-8% for risk adjusted compensation. Financing will proceed using local currencies, avoiding the costs of converting to a hard currency like the US dollar or the Euro, giving the Beijing yet another 10% cost advantage. ..."
"... In direct defiance of US sanctions against Iran, China has stepped into the breach, increasing its oil purchases from Iran while becoming Iran's major energy trade and finance partner. Like Russia, it seems that Iran is moving towards a military alliance with China. If the west worries about China's expansive moves in the South China Sea, along China's own borders, what to make then of China moving in on Hormuz, where some 30% of world oil is transited each day? ..."
"... It is well known that the US has been in secret meetings with Iran representatives, much to the dismay of the Saudi Arabia and Israel. As Bloomberg reports, after the G7 meeting, Trump publicly and repeatedly stated he was ready to meet with Iran's President, Hassan Rouhani. Bloomberg also reported that in a meeting with his Cabinet, Trump announced that he was ready to ease sanctions as a possible way to open negotiations between the two countries. Treasury Secretary Mnuchin agreed with the President, while National Security Advisor Bolton voiced strong opposition, that only one day later, led to his firing. Secretary of State Pompeo stated that Trump may meet on the sidelines of the upcoming UN meeting with Iran's President. ..."
"... The EU defence industry initiative, the ECB's money transfer service, the EU army (or defence collaboration :) are all longer term policies aimed at reducing the EU's reliance on systems that are controlled by the USA. ..."
"... Sanctions are the modern equivalent of siege warfare, only the target is a nation, not a city. ..."
"... John Bolton is clueless. He's a throwback to ruthless American competition and cowboy capitalism. And he appears to be an idiot. ..."
"... Consumer spending is going to struggle the rest of the year as it rebalances and manufacturing is heading to a full blown recession by December as auto companies try and get their balance sheets under control. ..."
Sep 13, 2019 | www.nakedcapitalism.com

Yves here. Even though most readers know the general point very well, that US trade and financial sanctions haven't brought targets to their knees, and had instead pushed them to find allies, but it's useful to have detail to flesh out the story. There are some bits one can quibble with, like the "annexation of Crimea" bit, and the US objectives for its sanctions against Russia. At least under the Obama Administration, the belief was that they would damage the economy severely and force a regime change.

By Robert Berke, an energy financial analyst with experience as a government consultant to the State of Alaska. Originally published at OilPrice

Trade wars and sanctions are economic weapons against rival regimes, and like actual military warfare, often lead to unanticipated and sometimes devastating blowback from the targeted regimes.

A prime example was President Obama sanctioning Russia over its annexation of Crimea. The sanctions were designed to block Russia from any access to western financing, aimed at causing a dire financial and economic crisis in Russia that would force it to relinquish Crimea and end support for Ukraine's breakaway territories.

In fact, the sanctions did cause Russia to enter a short-lived recession. But it also had other, much more drastic results for the West. It forced Russia to move closer to China, and Moscow saw Beijing as a great alternative to western financing for Russian industries.

At the same time, western companies were forced to withdraw from Russian mega-deals because of sanctions. The best-known example was Exxon, forced by sanctions to walk away from an Arctic joint venture with Russia's state-owned oil giant, Rosneft, where it had invested $3.2 billion. In their very first effort, the partners successfully drilled oil wells containing 750 million barrels.

As noted by Reuters, the withdrawal was costly:

Exxon will post an after-tax loss of $200 million as a result of pulling out of the Rosneft deal, but the true costs for the company run much deeper. Exploring and developing giant offshore fields in Russia was supposed to provide long-term growth for the company, and, in recent years, has seen falling reserves.

But the opportunity losses are likely to be far higher for Exxon, the company that famously missed the US shale revolution. The long-term deal with Rosneft, expected to continue for decades, included exploration for oil in the Black Sea, enormous shale resources in Western Siberia, and the development of three large blocks in the Arctic (Kara Sea).

The trade war with China that has led to tariffs on billions of dollars in Chinese exports to the US, and as a result, Russia and China have moved even closer. It remains an absolute mystery why no one in the west had foreseen the blowback from economic warfare leading to an alliance between two of its most powerful adversaries.

China's major state-owned oil companies and its Silk Road fund each became 10% partners in Russia's first major Arctic LNG (liquified natural gas), project in the Yamal Peninsula, undertaken with Novatek, Russia's largest independent gas producer. The project offers great prospects for enormous expansion.

The US acts as if it has been blind-sided by the Russian/China moves, even though years before it undertook economic warfare against them, China, the world's largest energy importer, agreed to finance oil and gas multi-billion-dollar pipelines in neighboring Russia. Now Russia has become China's largest energy supplier, equaling or perhaps even surpassing its energy supplies to Europe.

A similar scenario is taking place in the Persian Gulf where the US has withdrawn from the Iran nuclear deal, while imposing economic sanctions on Iranian oil exports. The French energy giant, Total, that in recent years has been a leading international oil company in that country, was forced to withdraw because of sanctions, just like Exxon in Russia's Arctic, it left billions of dollars on the table.

This may also answer the question as to why French Prime Minister Macron was so intent on inviting the Iranian Foreign Secretary to the recent G7 meeting in France. It's also no secret that French carmakers Peugeot and Renault are the main suppliers to Iran's auto assembly plants.

As stated by Global Village Space (GBS) , China and Russia rushed to aid Iran, with China replacing Total, in a 25-year deal estimated to be worth some $400 billions. With that, China inherits a bonanza, providing much needed finance and technology to a country that was and could again become one of the world's leading energy producers. China is looking to finance $280 billion to develop Iran's gas, oil and petrochemicals industries, along with $120 billion to improve transport and manufacturing, making it a key partner in China's Road and Belt program.

The deal also gives China the right to buy any or all Iranian oil, gas, and petrochemicals products at a minimum guaranteed 12% discount to global benchmarks, plus an additional discount of 6-8% for risk adjusted compensation. Financing will proceed using local currencies, avoiding the costs of converting to a hard currency like the US dollar or the Euro, giving the Beijing yet another 10% cost advantage.

GBS further reports that the security for these projects will include up to 5,000 Chinese security personnel on the ground in Iran to protects Chinese projects and to safeguard the transit of energy products from Iran to China, including security for the very strategic Hormuz Straits.

In direct defiance of US sanctions against Iran, China has stepped into the breach, increasing its oil purchases from Iran while becoming Iran's major energy trade and finance partner. Like Russia, it seems that Iran is moving towards a military alliance with China. If the west worries about China's expansive moves in the South China Sea, along China's own borders, what to make then of China moving in on Hormuz, where some 30% of world oil is transited each day?

If these are considered winning policies for the West, one has to ask what failure looks like.

The West is already slowly becoming aware of the blowback this disastrous policy has caused. Evidence for this can be found in Macron's efforts to persuade Trump towards a peaceful resolution with Iran.

It is well known that the US has been in secret meetings with Iran representatives, much to the dismay of the Saudi Arabia and Israel. As Bloomberg reports, after the G7 meeting, Trump publicly and repeatedly stated he was ready to meet with Iran's President, Hassan Rouhani. Bloomberg also reported that in a meeting with his Cabinet, Trump announced that he was ready to ease sanctions as a possible way to open negotiations between the two countries. Treasury Secretary Mnuchin agreed with the President, while National Security Advisor Bolton voiced strong opposition, that only one day later, led to his firing. Secretary of State Pompeo stated that Trump may meet on the sidelines of the upcoming UN meeting with Iran's President.

The firing of Bolton was immediately followed by a fall in the price of oil and gold. Allowing Iran to continue to increase supplies into already well supplied oil markets will add downward pressure on oil prices. For the Trump administration, this is not necessarily a bad thing unhappy consumers at the gas pump make for unhappy voters.

Similarly, the Trump Administration badly needs to move towards ending the trade war with China in order to calm global markets. The recent announcement of the resumption of trade talks between the US and China in October may provide an opportunity for a similar easing of tariffs and a path towards further resolution.

Although these actions could help to quell global tensions, it may be too late to reverse some of the serious damage caused by US-led economic warfare. Once China positions itself in Iran, it will not likely be interested in withdrawing from its new strategic position in the Middle East, that it gained as a result of US near sighted foreign policy.

Prior to the election, we may see a breakthroughs in the trade war, and the alleviation of sanctions with Russia, Iran, China, and perhaps even North Korea, but the US will almost certainly see the negative consequences from adversaries it helped to expand and strengthen.


The Rev Kev , September 13, 2019 at 5:48 am

Can't speak much about the effects of the Chinese sanctions but I know a little bit about the Russian ones. These Russian sanctions are biting hard but not the way they were intended and it is not only the big oil companies that are losing big. Since they kicked in Russia has lost about $50 billion in trade with the European Union which kinda stings. But in the same time frame, the European Union has lost about $240 billion.

Considering that fact that these sanctions were never for their benefit but for solidarity with the US, that is a very expensive price tag. The US lost only about $17 billion but I remember reading that after the sanctions kicked in, trade between the U and Russia actually increased. Europe is a big loser here, particularly with agriculture. When the EU sanctioned Russian products to the EU, the Russians did the same to them a few weeks later which came as a shock. Since then Russia has made huge investments into growing their own food crops and those markets will never come back again for the EU. As an example, Russia is once more a world leader in the production of wheat second only to the US and has learned the value of autarky.

You see these results in all sorts of areas as the country started phasing out imports and replacing them with domestically made products. They even started making marine engines out of necessity as they were denied purchase of foreign ones. People might remember how Russia was going to buy two specially built ships from France but France reneged under pressure from Washington.

France not only had to give back all the money the Russians paid but also had to compensate Russia for all related costs that the Russians made. In the end France paid Russia over a billion dollars which was triple what the Russians initially paid. And now the Russians are constructing their own ships of this class in the Crimea using the knowledge acquired from France. Perhaps it is things like this that has cause Macron to open up contacts with Russia once more in spite of what Washington demands.

https://www.rt.com/business/462291-putin-sanctions-eu-losses/

Add in the purchase of gold stocks, developing financial systems in case the US cuts Russia off from the SWIFT clearance systems, the development of weaponry that makes the deployment of nuclear missile systems in Europe futile, you realise that Washington has massively underestimated the response of counties like Russia, China and Iran and depended on unicorn wishes instead.

fajensen , September 13, 2019 at 7:03 am

But in the same time frame, the European Union has lost about $240 billion. Considering that fact that these sanctions were never for their benefit but for solidarity with the US, that is a very expensive price tag.

Well, Looks like Donald Trump let "The Swamp(tm)" run loose and they went and over-torqued the screws!

Some decision makers in within the EU have begun to see the US sanctions against everything and everyone as having the true goals of ablating EU's influence on the world while hampering EU-based businesses. There are initiatives and polices that hints at "cutting the cord" are quietly being introduced.

The EU defence industry initiative, the ECB's money transfer service, the EU army (or defence collaboration :) are all longer term policies aimed at reducing the EU's reliance on systems that are controlled by the USA.

The 'North Stream' pipeline and keeping the Iran deal kinda alive are more immediate and direct challenges, as was the total unwillingness to join in any of the planned military adventures involving Syria and Iran.

France is being rather open about about it. Possibly to test out on behalf of the EU what the USA is actually willing to do to exact revenge and enforce compliance, possibly also because opposing the USA in France remains a reliable way to win votes.

Carolinian , September 13, 2019 at 8:51 am

It's not just Trump. Our Congress is totally at the beck of special pleaders such as LNG exporters and arms companies. All seek to use the US economic weapon to further their own interests.

John A , September 13, 2019 at 7:17 am

Plus, Russia is determinedly GMO free. The more the US goes down the GMO route, the less likely the food trade with the EU – the European dogs wont eat GMO dogfood. Post Brexit perhaps, Britain will accept US foods, all the more reason to insist on a proper border if NI remains part of the 'UK'.

notabanker , September 13, 2019 at 9:43 am

It's not just GMO, but the level and quality of technocratic oversight. US government agencies are incapable of regulating anything in the private sector. While the EU is still greatly influenced by private money, it has not completely sold out.

rd , September 13, 2019 at 2:16 pm

The EU has effectively sidelined FAA on the the 737 MAX: https://www.heraldnet.com/business/boeing-737-max-jet-to-face-separate-test-by-eu-regulators/

What US airline would fly the 737 MAX if the FAA says go ahead but the EASA holds back on approval?

US regulatory capture has now become so blatant that the rest of the world is starting to ignore US regulators.

jackiebass , September 13, 2019 at 6:17 am

What is ignored by media is the harm sanctions inflict on the people living in these countries. I think it should be considered a crime against humanity and our leaders should be prosecuted. Sanctions are a weapon that is just as harmful as weapons to kill. We only seem to look at the economic effects and ignore the social effects.

Ander Pierce , September 13, 2019 at 9:13 am

Sanctions are the modern equivalent of siege warfare, only the target is a nation, not a city.

I've known in a vague intuitive way that US sanctions would alienate nations and isolate the US, it's useful seeing how exactly these sanctions are backfiring with more nuance!

John , September 13, 2019 at 7:15 am

What is the next step after you have sanctioned everything and everyone and the reaction is a shrug and a work around? Sanctions do have their bite, but they are, or are becoming, a more effective tool for global economic and political realignment than a means to accomplish their stated purpose.

Susan the other` , September 13, 2019 at 10:38 am

Good question. I am wondering the same thing. There is a vague pattern here with Russia, the most resource-rich oil producer. We don't want Russia to take off too fast. What can be left in the ground should be left in the ground. And maybe that was the existential threat posed by Exxon – a private, profit seeking US corporation geared to do everything fast in order to make their profits.

Just thinking about slamming the breaks on manufacturing and consumption and how this can make a mess of the oil industry if it is going for profits – race to the bottom (currently). Rather, anyone thinking straight would want to conserve oil, control it's production and marketing. John Bolton is clueless. He's a throwback to ruthless American competition and cowboy capitalism. And he appears to be an idiot.

Watt4Bob , September 13, 2019 at 7:18 am

There was a discussion of China's role in manufacturing drugs for Big Pharma on the news last night, truly frightening.

They've already been found to be selling us contaminated drugs, what happens when they refuse to deliver anything other than fentanyl?

I find it hard to understand how we're going to recover from the damage done by the short-sighted, wholesale outsourcing of our manufacturing to China.

Drake , September 13, 2019 at 10:52 am

Given the centrality of drugs to American life, we should categorize them as sensitive items of national security and declare a war on foreign drugs. That would brilliantly combine the failed policies of the past with the failed policies of the present. We could make exceptions for most-favored nations like Colombia or Afghanistan.

I'm not even sure how sarcastic I'm being. ;)

Chauncey Gardiner , September 13, 2019 at 12:53 pm

As in military conflicts, the fog of geoeconomic war together with partisan lens and poor leadership can prevent adversaries from developing an accurate assessment of reality. The writer has raised some examples that support his view pertaining to pushback, and he could be right as The Rev Kev so eloquently pointed out here WRT Russia. However, whether his article provides an accurate overview of the current state of play remains an open question IMO.

Setting aside deeply troubling questions about our national values and whether sanctions should ever be employed due to their very damaging effects on domestic populations, together with their evident past failure to realize policy goals, there are credible accounts that China is now confronting a U.S. dollar shortage; that China has significant issues in its financial system and economy; and that the people of China are seeing sharply rising food prices as a result of decreased supplies of pork and soybeans. These issues are being perceived as sufficient to cause China's leaders to be receptive to negotiating resolution of the current tariffs, trade, intellectual property, and investment impasse on terms favorable to the U.S. Whether this will be so remains to be seen, of course.

Sound of the Suburbs , September 13, 2019 at 2:27 pm

A multi-polar world became a uni-polar world with the fall of the Berlin Wall and Francis Fukuyama said it was the end of history. It was all going so well, until the neoliberals got to work. The US created an open, globalised world with the Washington Consensus. China went from almost nothing to become a global super power.

That wasn't supposed to happen, let's get the rocket scientists onto it. Maximising profit is all about reducing costs. China had coal fired power stations to provide cheap energy. China had lax regulations reducing environmental and health and safety costs. China had a low cost of living so employers could pay low wages. China had low taxes and a minimal welfare state.

China had all the advantages in an open globalised world. "The Washington Consensus was always going to work better for China than the US" the rocket scientists.

If the US left this running it would be China first and America second. PANIC!

marku52 , September 13, 2019 at 3:48 pm

It seems since about the Vietnam war era, US FP has been run by hubristic idiots with delusions of grandeur. Its foreign policy 101 that you never, never, set policy to drive your 2 largest rivals to alliance.

Yet these morons did exactly that. Since Trump, there have been many retirements form the State Dept.

And maybe that's not such a bad thing. They show no evidence of competence.

GF , September 13, 2019 at 3:50 pm

According to this linked article: https://www.bloomberg.com/news/articles/2019-09-13/russia-wants-to-rent-out-more-farmland-for-food-exports-to-asia

Russia is leasing out old collective farm lands that was abandoned in the eastern part of the country to Asian countries to farm and grow the export food products needed. It seems the collective farms were abandoned and now the Russian government is re-purposing the vast amounts of land available.

"Russia is now considering requests from Asian firms to farm another 1 million hectares (2.5 million acres) -- an area roughly the size of Jamaica, according to the head of a government agency."

It may be said that Trump's tariffs are the best things that could have happened to China and Russia.

notabanker , September 13, 2019 at 3:55 pm

If it leads to us not growing corn and soybeans, it may be a good thing for the US as well.

Andy Raushner , September 13, 2019 at 4:16 pm

Frankly, I think it has pushed up consumer spending and that is about it. In other words, this economy has overcapacity problems in the auto sector and its relation to junk corporate debt, is not good.

Consumer spending is going to struggle the rest of the year as it rebalances and manufacturing is heading to a full blown recession by December as auto companies try and get their balance sheets under control.

[Sep 13, 2019] Clowns, AI and layoffs

Sep 13, 2019 | www.nakedcapitalism.com

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

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

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

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

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

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

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

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

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

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

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

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

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

A New Arena for Competition (and Worse)

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

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

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

The secretary of state then wielded even stronger language in describing "aggressive Russian behavior in the A