Economics of War and Peace
A timely new video series from the Institute for New Economic Thinking (INET), featuring Econ4’s James Boyce:
Watch the videos here.
The war machine
The animated “teaser” for INET’s forthcoming video series on The Economics of War and Peace, featuring Econ4’s James Boyce:
Source: https://www.ineteconomics.org/perspectives/videos/the-war-machine
Mission-led industrial policy
Mariana Mazzucato writes in Finance & Development:
In the past, governments that pursued industrial policies attempted to build national champions by picking winners from among sectors or technologies, often with mixed results. Modern industrial strategy should be different. Instead of picking winners, it should “pick the willing” by setting clear missions—such as solving the climate crisis or strengthening pandemic preparedness—and then shaping economies and markets to accomplish them.
Read more here.
Confronting greedflation
Nick Hanauer – a deconstructor of mythologies peddled by his fellow rich people – writes about Kamala Harris’s attack on price-gouging:
Americans are spending more on virtually everything, from groceries to clothing to appliances. Headlines say those price increases are supposedly a mysterious economic force called “inflation.” But if you compare corporate profits in 2019 to the last four years, you’ll find corporations have gouged their way to an almost unbelievable $1.5 trillion in excess profits since 2020—that’s in addition to their pre-pandemic profit rates.
That means the average American household has paid an eye-popping $12,000 in higher prices solely to pump up quarterly corporate profit margins. To put that figure into perspective, $12,000 could buy the average American household more than two years’ worth of groceries.
Read more here.
Inflation follies
Jen Harris dissects the counterproductive Fed effort to fight inflation:
The Federal Reserve’s handling of inflation is souring the public on our economy, harming vulnerable Americans, slowing our fight against climate change — and hindering the fight against inflation itself.
For the past several months, the Fed has resisted lowering interest rates in an environment that clearly demands lower rates. Take its favored inflation measure, the Personal Consumption Expenditures price index. The Fed repeatedly stated that it would not lower rates until it had confidence the P.C.E. was headed back toward 2 percent. Yet we are already there: While the annualized P.C.E. stands at 2.5 percent, the three-month annualized P.C.E. is just 1.5 percent….
The inflation that has plagued both the United States and Europe since 2021 has come substantially from so-called supply-side factors, or shocks hampering the economy’s ability to churn out goods: a pandemic that closed plants, wars that raised prices of grain, climate change-induced crop failures that did the same, Houthi rebels launching drone attacks on one of the world’s busiest maritime choke points and so on. For many of those supply-side woes, higher rates are making matters worse. “The Fed’s main tool for lowering inflation,” as economist Mark Zandi told The Atlantic, “is actually doing the opposite.”
Consider housing. Rental housing recently accounted for an estimated two-thirds of the inflation above the Fed’s 2 percent target. The fix for too-high rents is to build more housing. Yet interest rates that push mortgages to historic highs are extremely counterproductive for new housing starts, because they make it more difficult and expensive for builders and developers to bankroll new construction.
Read more here.
The fruits of injury + condescension
As Michael Sandel explains, part of Trump’s appeal can be laid at the door of the Democrats:
To win back the trust of the voters they’ve lost, Democrats need to acknowledge that the neoliberal globalization project they and mainstream Republicans pursued in recent decades brought huge gains for those at the top but job loss and stagnant wages for most working people. The winners used their windfall to buy influence in high places. Government stopped trying to check concentrated economic power. The two parties joined forces to deregulate Wall Street….
By 2016, four decades of neoliberal governance had created inequalities of income and wealth not seen since the 1920s. Labor unions were in decline. Workers received a smaller and smaller share of the profits they produced. Finance claimed a growing share of the economy but flowed more into speculative assets (like risky derivatives) than into productive assets (factories, homes, roads, schools) in the real economy.
Rather than contend directly with the damage they had done, both political parties told workers to improve themselves by getting college degrees. The politicians said: What you earn will depend on what you learn; you can make it if you try. The elites who offered this advice missed the implicit insult it contained: If you’re struggling in the new economy, it’s your fault. This galling mix of economic injury and credentialist condescension helped propel Mr. Trump to the presidency.
Read more here.
Vibecession: The US economy in the Biden years
An evidence-based assessment by economist Robert Pollin:
The polling evidence on people’s perceptions about the economy are confusingly mixed. Thus, according to the most recent polls, most people respond that their own personal economic circumstances are in good shape. Most even say that conditions are good overall in their home states. But a majority do also still respond that, overall, the U.S. economy is in bad shape.
This pattern has been termed a “vibecession” — that people have a sense that the overall U.S. economy is in bad shape even while they themselves are fine, and even when, objectively, overall economic conditions, by standard measures, are indeed positive relative to the previous 50 years under neoliberalism. To cite now just the most basic relevant measures, the official U.S. unemployment rate, at 3.6 percent for 2023 and 3.8 percent for the first five months of 2024, is lower than at any comparable period over the past 54 years. The expansion of job opportunities has been across the board, in all economic sectors. Average real wages — that is, what you can buy with your paycheck, after adjusting for inflation — have also gone up across the board for the past 18 months, if only by about 1 percent.
I do need to emphasize that I am speaking in relative terms about the good economic conditions under Biden. Over his three years in office, Biden has certainly not reversed 50 years of pro-Big Business, anti-working-class policies under neoliberalism. As just one indicator, the average real wage — i.e. how much your wage can purchase, after controlling for inflation — was in 2023, at $28.90, almost exactly what it was in 1973. This is despite average labor productivity — what the average worker produces in a day — has more than doubled since 1973. This $28.90 average real wage today is also below a living wage standard throughout all U.S. regions, as measured by the MIT Living Wage Calculator.
Read more here.
Promising news on brownfields
The United States is dotted with up to a million brownfields — industrial and commercial properties polluted with hazardous substances. These sites are disproportionally concentrated near low-income communities and communities of color, according to the Environmental Protection Agency, and researchers predict that heavy rains and flooding due to climate change are likely to both spread and increase exposure to these contaminants.
For more than 15 years, Danielle Stevenson, who holds a PhD in environmental toxicology from the University of California, Riverside, has been pioneering a nature-based technique for restoring contaminated land, using fungi and native plants to break down toxins like petroleum, plastics, and pesticides into less toxic chemicals.
The usual way of dealing with tainted soil is to dig it up and cart it off to distant landfills. But that method is expensive and simply moves the problem somewhere else, Stevenson says, “typically to another state with less restrictive dumping laws.”
Read more here.
Coal fleece
It’s not only future generations who get screwed:
In Louisiana in February, an administrative law judge recommended that state regulators reject a request from two utilities that wanted to recover more than $180 million in fuel costs from ratepayers stemming from a coal-fired power plant that was shut down in 2021. The judge found that the utilities fed their customers high-cost power by burning coal sourced from a mine that they also owned. The utilities quadrupled the price of coal to recover an investment made to the mine, a practice that tripled the cost of electricity from their power plant, Dolet Hills Power Station.
Read more here.
