Heads, looters win; tails, the planet loses
As fracking firms go bankrupt, the bosses bank their winnings and leave taxpayers on the hook for cleaning up their mess:
The day the debt-ridden Texas oil producer MDC Energy filed for bankruptcy eight months ago, a tank at one of its wells was furiously leaking methane, a potent greenhouse gas, into the atmosphere. As of last week, dangerous, invisible gases were still spewing into the air.
By one estimate, the company would need more than $40 million to clean up its wells if they were permanently closed. But the debts of MDC’s parent company now exceed the value of its assets by more than $180 million.
In the months before its bankruptcy filing, though, the company managed to pay its chief executive $8.5 million in consulting fees…
Read more here.
Who knew?
From the IMF’s Finance & Development magazine:
For decades, humanity has tried to run economies, indeed whole societies, as though they were complicated machines that just needed tinkering and control of a few key levers to obtain optimum performance. But lately, we have begun to see the error of such thinking. The myopic behavior and narrow focus on efficiency and shareholder financial returns that have dominated political and economic decision-making for decades have yielded somewhat efficient but largely fragile systems stripped of resilience.
Read more here.
America’s caste system
Isabel Wilkerson writes:
Throughout human history, three caste systems have stood out. The lingering, millenniums-long caste system of India. The tragically accelerated, chilling and officially vanquished caste system of Nazi Germany. And the shape-shifting, unspoken, race-based caste pyramid in the United States. Each version relied on stigmatizing those deemed inferior to justify the dehumanization necessary to keep the lowest-ranked people at the bottom and to rationalize the protocols of enforcement….
As we go about our daily lives, caste is the wordless usher in a darkened theater, flashlight cast down in the aisles, guiding us to our assigned seats for a performance. The hierarchy of caste is not about feelings or morality. It is about power — which groups have it and which do not. It is about resources — which groups are seen as worthy of them and which are not, who gets to acquire and control them and who does not. It is about respect, authority and assumptions of competence — who is accorded these and who is not.
As a means of assigning value to entire swaths of humankind, caste guides each of us often beyond the reaches of our awareness. It embeds into our bones an unconscious ranking of human characteristics and sets forth the rules, expectations and stereotypes that have been used to justify brutalities against entire groups within our species. In the American caste system, the signal of rank is what we call race, the division of humans on the basis of their appearance….
Thus we are all born into a silent war game, centuries old, enlisted in teams not of our own choosing. The side to which we are assigned in the American system of categorizing people is proclaimed by the team uniform that each caste wears, signaling our presumed worth and potential. That any of us manages to create abiding connections across these manufactured divisions is a testament to the beauty of the human spirit.
Read “America’s Enduring Caste System” here.
Making America Sick Again
The data tell the story.
Read more here.
Racism: missing in action in Econ 101
Tim Koechlin writes:
Why are white people in the US richer than African Americans? If an ECON 100 student (or an economics major) has a rich answer to this question, it is unlikely that they learned it from their intro to economics textbook.
With this yawning silence, mainstream economics leaves a profoundly important economic question unanswered. But more than this, the mainstream narrative obscures, ignores and erases many of the essential ways in which the long history of racism in the US has produced and reproduced enduring racial inequality. And more still, it celebrates the power of markets to “punish” and minimize “discriminatory behavior.”
Read more here.
Rethinking work
Half of the world’s work isn’t paid – and therefore isn’t counted in the usual measures of income and economic growth. Nancy Folbre breaks it down this neat video:
Source: Institute for New Economic Thinking. Read more about why definitions of family income can mislead here.
From bean count to body count
Siddhartha Mukherjee reflects on what the pandemic can tell us about the state of American medicine – and the role of flawed economics in the nation’s vulnerability:
To what extent did the market-driven, efficiency-obsessed culture of hospital administration contribute to the crisis? Questions about “best practices” in management have become questions about best practices in public health. The numbers in the bean counter’s ledger are now body counts in a morgue.
For decades, consultants had taught the virtues of taut business practices. “Slack”—underutilized resources, inventory waiting to be put to use—was shunned. I spoke to David Simchi-Levi, an M.I.T. professor who studies supply-chain economics and how enterprises respond to disasters. “Cost is easy to measure,” he told me. “But resilience is much harder.” So we reward managers for efficiencies—and overlook any attendant fragilities. His view can be summarized simply: we’ve been overtaught to be overtaut.
“We’ve been teaching these finance guys how to squeeze,” Willy Shih, an operations expert at Harvard Business School, told me, emphasizing the word. “Squeeze more efficiency, squeeze cost, squeeze more products out at the same cost, squeeze out storage costs, squeeze out inventory. We really need to educate them about the value of slack.”
Read more here.
What would Keynes do?
Reviewing two fine new books on Keynes, Jeffrey Sachs asks what the great economist would have advocated in response to today’s pandemic:
For the first time in modern economic history, we have deliberately shut down much of the economy to break the transmission of COVID-19. We display the intellectual confusion of the moment by labeling as “stimulus” the legislation to pay workers and firms during this shutdown period. This is not stimulus, but income maintenance during a temporary society-wide quarantine.
What would Keynes recommend? He would surely advocate a strong role of government to deploy the tools of public health, including testing, tracing, and isolating infected individuals. He would have ingenious schemes for restarting the economy once the virus itself is defeated. Public investments would be a large part of the response. Most importantly, he would urge that we act as an “organized community for common purposes.” The COVID-19 pandemic should rouse us, Keynes would insist, from the depths of our neoliberal fantasies. With tens of thousands of tragically and unnecessarily lost lives, with a for-profit health system that does not ensure basic public health, Keynes would bid us to launch a new era of economic and social justice, using the powers of government for our health, well-being, and economic needs, while respecting and protecting the individual. In this, Keynes would speak directly to both our hearts and heads, as he did to his own generation with such abiding and lasting wisdom, decency, and insight.
Read more here.
Pandemic in the food system
Michael Pollan on the sickness in our food supply:
A momentous question awaits us on the far side of the current crisis: Are we willing to address the many vulnerabilities that the novel coronavirus has so dramatically exposed? It’s not hard to imagine a coherent and powerful new politics organized around precisely that principle. It would address the mistreatment of essential workers and gaping holes in the social safety net, including access to health care and sick leave—which we now understand, if we didn’t before, would be a benefit to all of us. It would treat public health as a matter of national security, giving it the kind of resources that threats to national security warrant.
But to be comprehensive, this post-pandemic politics would also need to confront the glaring deficiencies of a food system that has grown so concentrated that it is exquisitely vulnerable to the risks and disruptions now facing us. In addition to protecting the men and women we depend on to feed us, it would also seek to reorganize our agricultural policies to promote health rather than mere production, by paying attention to the quality as well as the quantity of the calories it produces. For even when our food system is functioning “normally,” reliably supplying the supermarket shelves and drive-thrus with cheap and abundant calories, it is killing us—slowly in normal times, swiftly in times like these. The food system we have is not the result of the free market. (There hasn’t been a free market in food since at least the Great Depression.) No, our food system is the product of agricultural and antitrust policies—political choices—that, as has suddenly become plain, stand in urgent need of reform.
Read more here.
After the pandemic
James K. Galbraith muses on the shape of the future economy:
The contradiction between normality and public health is on people’s minds; the impossibility of returning to the previous abnormal-normal has not yet settled in. It will, in due course. At that point, the question of alternatives will have to be faced.
Read more here.
