Browsing articles in "Uncategorized"
Nov 16, 2023

How plutocrats opt out of democracy

In a review of Crack-Up Capitalism by Quinn Slobodian, Daniel Immerwahr highlights the political consequences of tax havens and other capital-friendly enclaves – or loopholes – in the world economy:

For market radicals, it’s been a liberation. Although traditionally they’ve dreamed of a borderless world, now they’re seeking an intricately bordered one. “If we want to increase freedom,” the billionaire venture capitalist Peter Thiel has advised, “we want to increase the number of countries.” The more jurisdictions there are, the thought goes, the easier it is to go sovereignty shopping.

For Slobodian, however, this isn’t liberation but “secession.” Corporations and the rich, by channeling their activities into small, exceptional spaces, have escaped the reach of states. The result is a “radical form of capitalism” that evades public accountability—or even scrutiny. An economy of zones, islands, and enclaves also means, Slobodian contends, a “world without democracy.”

Read more here.

Nov 11, 2023

Private ughuity

Yes, as through this world I’ve wandered
I’ve seen lots of funny men;
Some will rob you with a six-gun,
And some with a fountain pen.

– Woody Guthrie, The Ballad of Pretty Boy Floyd

The modern-day counterpart to plunder of Dust Bowl farmers goes by the anodyne name of “private equity.” Two new books rip off the veil to explain how it works. Reviewing them, Kim Phillips-Fein breaks it down:

Private equity firms create nothing and provide no meaningful services—on the contrary, they actively undermine functional companies. Far from creating jobs, companies owned by private equity see the number of people they employ shrink by an average of more than 4 percent within the first two years after purchase—if they survive at all…. one in five large companies taken private in a debt-financed deal declares bankruptcy within a decade.

The authors describe private equity funds running the companies they purchase into the ground. A common maneuver, for instance, is to mandate that a newly acquired hospital or factory sell off its buildings and land—even if the business has no reason to do so other than to pay back the debt the fund incurred to purchase it. In the long term, this means the company is left to pay rent on the same properties it once owned. Often it’s stuck paying property taxes, insurance, and upkeep despite no longer owning the property.

Other tactics include forcing acquired companies to pay “dividend recapitalizations,” in which they borrow to pay dividends to new owners, or myriad advisory and management fees…. The acquired companies find themselves weighed down by costs they had never borne before.

When the Carlyle Group purchased ManorCare, the second-largest nursing home chain in the United States, for example, the first thing it did was require ManorCare to sell its real estate. This allowed Carlyle to recoup the money it had borrowed to finance the deal, but forced the chain to pay nearly $500 million in rent annually to keep using its buildings. It was also saddled with $61 million in “transaction fees,” followed by an additional $27 million over nine years in advisory fees. To cover these new costs, ManorCare faced intense pressure to scrimp on patient care, laying off hundreds of workers. Its health code violations rose by more than 25 percent between 2013 and 2017. At the same time, it forced patients to undergo pointless therapies that Medicare would cover, sometimes with absurd consequences—as in the case of an eighty-four-year-old man who was brought to group therapy even after he became verbally unresponsive and his doctor had authorized end-of-life care. Nonetheless, ManorCare declared bankruptcy in 2018.

Private equity seeks out low-wage industries (food service, retail, health care, and security are its largest sectors) in which the consumers are unlikely to complain and in which it can economize brutally without fear of lawsuits. Many of the companies purchased by private equity funds are those that cater to the poor, sick, and vulnerable: payday loan companies, ambulance companies, hospitals, nursing homes, hospices. A slew of prison services (food, collect phone calls, health care, ankle monitors, even debit cards given to prisoners upon release) are provided by companies owned by private equity firms.

The books are Plunder: Private Equity’s Plan to Pillage America by Brendan Ballou and These are the Plunderers: How Private Equity Runs – and Wrecks – America by Gretchen Morgenson and Joshua Rosner. Read the review here.

Sep 25, 2023

Paradise paved

Reviewing a new book by Henry Grabar, Bill McKibben writes:

By square footage, there is more housing for each car in the US than there is housing for each person. This devotion to the storage of automobiles comes with many costs… in Grabar’s words,

in the rent, in the check at the restaurant…. It was hidden on your receipt from Foot Locker and buried in your local tax bill. You paid for parking with every breath of dirty air, in the flood damage from the rain that ran off the fields of asphalt, in the higher electricity bills from running an air conditioner through the urban heat-island effect.

All this amounts to a subsidy to drivers in the hundreds of billions of dollars.

Read more here.

Sep 16, 2023

Real people are complex

From an interesting Boston Review forum:

A large body of empirical and experimental work shows that moral and social considerations strongly shape economic and political preferences. These preferences often do not align with standard economic views about self-interest, incentives, and “rationality.” For example, many progressives have been stumped as to why so many of Donald Trump’s voters would take positions that appear to be against their so-called self-interest. Yet, to researchers studying moral psychology, Trumpian narratives on social spending, immigration, trade, and climate change all use a common frame of reciprocity violations that stimulates moral outrage and motivates collective behavior. The typical progressive strategy of appealing to self-interest (cuts in social spending will hurt you, immigration and trade are good for the economy, climate change is bad) is thus doomed to fail because people are not processing these issues in narrow self-interested cost-benefit terms, but rather as issues of moral fairness. Only when progressives begin addressing issues in those terms will they stand a chance of reconnecting with these voters.

Read more here.

Aug 15, 2023

A big win in Montana

A ruling in a lawsuit brought by young people in the state of Montana makes history:

A group of young people in Montana won a landmark lawsuit on Monday when a judge ruled that the state’s failure to consider climate change when approving fossil fuel projects was unconstitutional….

“As fires rage in the West, fueled by fossil fuel pollution, today’s ruling in Montana is a game-changer that marks a turning point in this generation’s efforts to save the planet from the devastating effects of human-caused climate chaos,” said Julia Olson, the founder of Our Children’s Trust, a legal nonprofit group that brought the case on behalf of the young people. “This is a huge win for Montana, for youth, for democracy, and for our climate. More rulings like this will certainly come.”

Read more here.

Aug 8, 2023

What’s wrong with this picture?

If you can’t see it, you’re either rich or a neoclassical economist:

Read more here.

Aug 5, 2023

How to steal $47 trillion

A new study from the RAND corporation reveals some startling numbers:

In 2020, the RAND Corporation, a think tank in Santa Monica, California, released a study with the humdrum title “Trends in Income From 1975 to 2018.” RAND itself resides at the center of America’s establishment. In the decades following its founding after World War II, it was largely funded by and served the needs of the military-industrial complex. Daniel Ellsberg was working at RAND when he leaked the Pentagon Papers, which he had access to because RAND possessed several copies.

Incredibly enough, this dreary-sounding paper describes what might be the largest material theft since human civilization began. It examines a simple question: If U.S. income inequality had remained at its 1975 level through 2018, how much more money would the bottom 90 percent of Americans have made during these 43 years? Put another way, how much additional wealth flowed to the top 10 percent during this time, thanks to increased income equality?

If you have a butt, you should hold onto it, because the answer is 47 TRILLION DOLLARS.

Read more about how it happened here.

Jul 13, 2023

Positive developments for a change

Scientists are discovering how to harvest electricity from the air:

A team of engineers at the University of Massachusetts Amherst has recently shown that nearly any material can be turned into a device that continuously harvests electricity from humidity in the air. The secret lies in being able to pepper the material with nanopores less than 100 nanometers in diameter. The research appeared in the journal Advanced Materials.

And inventing ultra-white paint that cools buildings and reflects solar heat into space:

Xiulin Ruan, a professor of mechanical engineering at Purdue University, didn’t set out to make it into the Guinness World Records when he began trying to make a new type of paint. He had a loftier goal: to cool down buildings without torching the Earth.

In 2020, Dr. Ruan and his team unveiled their creation: a type of white paint that can act as a reflector, bouncing 95 percent of the sun’s rays away from the Earth’s surface, up through the atmosphere and into deep space. A few months later, they announced an even more potent formulation that increased sunlight reflection to 98 percent.

Read more here and here.

Jun 25, 2023

Beyond ‘deliverism’

The widespread assumption among progressives that the way to win robust support is simply to deliver economic improvements in people’s lives – an assumption reminiscent of commodity fetishism – is fatally flawed. It’s not that economic improvements aren’t important, it’s just that people need something more:

Solving the authoritarianism challenge requires a progressive program and organizing strategy that speak directly and persuasively to the wave of unhappiness and despair and are rooted in the texture of everyday life—what people actually talk about, care about, and worry about. Such an approach will continue to foreground economic security and rights, but it must also affirm other aspects of human flourishing that have long been emphasized by diverse social movements, including the importance of collective care, community, belonging, and solidarity. The task for progressives at this historical juncture is not to find the magic message or to deliver more popular policies. Rather, it is to offer a compelling, energizing, persuasive vision of the good life and to organize mass-based organizations through which people shape and live out those values in the here and now.

Read more here.

Jun 14, 2023

Another good reason to end fossil fuel addiction

Those with the oil make (and break) the rules:

President Biden vowed during his quest for the White House to make the Saudi crown prince, Mohammed bin Salman, a “pariah” over the killing and dismemberment of a dissident. He threatened the prince again last fall with “consequences” for defying American wishes on oil policy.

Lindsey Graham, the Republican senator, called Prince Mohammed, the oil-rich kingdom’s de facto ruler, a “wrecking ball” who could “never be a leader on the world stage.” And Jay Monahan, the head of golf’s prestigious PGA Tour, suggested that players who joined a rival Saudi-backed league betrayed the victims of the Sept. 11 terrorist attacks — carried out by hijackers who were mostly Saudi citizens.

Now, their words ring hollow.

Mr. Biden, visiting Saudi Arabia last year, fist bumped Prince Mohammed when they met and regularly dispatches officials to see him — including his secretary of state, Antony J. Blinken, this past week. Senator Graham grinned next to the prince — known by his initials M.B.S. — during a visit to Saudi Arabia in April. Also this week, Mr. Monahan jolted the world of professional golf by announcing a planned partnership between the PGA and the upstart Saudi-backed LIV Golf league, suddenly giving the kingdom tremendous global influence over the sport.

“It just tells you how money talks because this guy sits on top of this oil well and all this money, so he can basically buy his way out of everything,” said Abdullah Alaoudh, the Saudi director for the Freedom Initiative, a rights group in Washington and a vocal opponent of the monarchy.

Read more here.