Malfunctioning market signals
Cautionary lessons from Germany’s plight:
The shifting landscape raises pointed questions: Is an economy built on energy-hungry industries sustainable when fuel is very expensive? Can an export-driven strategy succeed when major trading partners are vulnerable to sanctions, and when countries are more keenly attuned to the security risks of globalized trade?
Some economists have argued that the German business models were partly based on an erroneous assumption and that cheap Russian gas wasn’t as cheap as it looked.
The economist Joseph Stiglitz, a Nobel laureate, said the market failed to accurately price in the risk — however unlikely it may have seemed at the time — that Russia could decide to reduce or withhold gas to apply political pressure.
It would be like figuring the costs of building a ship without including the cost of lifeboats.
“They didn’t take into account what could happen,” Mr. Stiglitz said.
Read more here.
Turning back the clock
The US Supreme Court’s decision to block regulation of carbon emissions at power plants is about more than power plants and more than climate change: it’s part of a long-term effort to return to the laissez-faire environment of the 19th century. Too bad we can’t turn back the climate clock, too.
In 1971, a lawyer who had represented the tobacco industry named Lewis F. Powell Jr. — whom President Richard M. Nixon would soon put on the Supreme Court — wrote a confidential memo for the U.S. Chamber of Commerce titled “Attack on American Free Enterprise System.” It is seen as an early call to action by corporate America and its ideological allies….
His memo set out a blueprint to fund a movement to turn public opinion against regulation by equating “economic freedom” for business with individual freedom. In line with that vision, wealthy elites financed a program to build political influence…
The prospect that the Republican-appointed supermajority on the court may be just getting started in assaulting the administrative state over the coming years is alarming those who say the United States needs regulations to have a civilized society.
“If you don’t have regulations, then the only people who will benefit will be those who, with no rules, will make more money,” said Marietta Robinson, a former Obama appointee on the Consumer Product Safety Commission who teaches about administrative agencies at George Washington University’s law school. “But it will be to the great detriment to the rest of us.”
Read more here.
Connecting the dots: fossil-fueled murder
Climate change, Ukraine – young activists are connecting the dots:
Watch the video HERE.
Read more here.
From vaccine apartheid to climate apartheid
The world could vaccinate everyone who wants be vaccinated, but hasn’t. Vaccine apartheid tells us something about how the world is (or isn’t) responding to the climate crisis, too:
But what is in retrospect perhaps the most concerning came in May 2021, when the International Monetary Fund calculated that the full cost of vaccinating the large majority of the world’s vulnerable people would be $50 billion — just 1 percent of the money spent by Congress on pandemic relief….
Faced with the choice — between one future in which everyone in the world was better off through expansive protection and one of more limited vaccination in which the rich were somewhat protected and others remained much more vulnerable — the wealthy nations of the world didn’t take the path that maximized overall protection and prosperity.
Read more here. Then think about how you can join with others to do something about it.
Oops!
Second thoughts about globalization … from the IMF (!):
Does globalization enhance resilience? Or does it have no effect? Or the opposite effect?
For the two major economic disruptions so far this century—the global financial crisis starting in 2008 and the COVID-19 pandemic starting in 2020—economists’ answers to those questions were largely wrong. As for the financial crisis, most of them underestimated the risks of financial globalization, and when it came to the pandemic, most overestimated the risks of sprawling, intricate production networks and trade globalization….
True confessions here.
Haiti: reparations in reverse – big time
A remarkable investigative series in the New York Times lays bare the roots of Haitian misery:
The first people in the modern world to free themselves from slavery and create their own nation were forced to pay for their freedom yet again — in cash.
Twenty-one years after Haiti’s revolutionary heroes declared their country’s independence, swearing to die before being put back in chains or living under French domination again, a squadron of French warships — equipped with some 500 cannons — loomed off Haiti’s coastline….
Haiti’s president, eager for the trade and security of international recognition, bowed to France’s demands. With that, Haiti set another precedent: It became the world’s first and only country where the descendants of enslaved people paid reparations to the descendants of their masters — for generations.
It is often called the “independence debt.” But that is a misnomer. It was a ransom.
The amount was far beyond Haiti’s meager means. Even the first installment was about six times the government’s income that year, based on official receipts documented by the 19th-century Haitian historian Beaubrun Ardouin.
But that was the point, and part of the plan. The French king had given the baron a second mission: to ensure the former colony took out a loan from young French banks to make the payments.
This became known as Haiti’s “double debt” — the ransom and the loan to pay it — a stunning load that boosted the fledgling Parisian international banking system and helped cement Haiti’s path into poverty and underdevelopment.
Read more here.
Chasing dirty money – 2
Econ4’s James Boyce and co-author Léonce Ndikumana write:
If the roof on your house is leaking so badly that you get mold on your walls, you don’t just try to clean up the mold. You also fix the roof. By the same token, it’s not enough to go after the wealth that corrupt oligarchs have stashed away.
Read more here.
Chasing dirty money
Casey Michel, author of American Kleptocracy, writes that the sanctions imposed in the wake of Russia’s invasion of Ukraine are not enough:
Absent significant domestic reforms in the West—reforms that should have been enacted long ago—sanctions targeted at the oligarchic and official figures close to Russian President Vladmir Putin risk inflicting little more than a flesh wound on Russia’s imperial kleptocracy.
Rampant financial anonymity in places like the U.S. makes it relatively easy for powerful rich people to evade sanctions. A Russian oligarch may have multimillion-dollar mansions in Washington, D.C.; or multiple steel plants across the Rust Belt; or a controlling stake in a hedge fund in Greenwich, Connecticut; or an entire fleet of private jets in California; or an array of lawyers setting up purchases at art houses around the country. And all of that wealth can be hidden—perfectly legally—behind anonymous shell companies and trusts that are enormously difficult to penetrate.
If Western policy makers hope to hold Putin’s cronies truly accountable, sanctions will have to be paired with pro-transparency reforms that can disassemble this web of secrecy. Western governments should start by ending anonymity in shell companies and trusts; demanding basic anti-money-laundering checks for lawyers, art gallerists, and auction-house managers; and closing loopholes that allow anonymity in the real-estate, private-equity, and hedge-fund industries. That is, if the sanctions are to retain their bite, the entire counter-kleptocracy playbook needs to be implemented—immediately.
Global transparency reform is essential because the people and entities who are bankrolling Moscow’s bloodshed don’t exist in some kind of geopolitical vacuum, limiting their grand larceny to Russia alone. They rely not simply on access to the Kremlin and its largesse, but also on Western financial-secrecy tools to hide and launder their illicit wealth, destabilize markets, and upend Western polities.
Read more here.
Dissecting the BoJo phenomenon
Excerpt:
How can someone with demonstrably questionable morals and a more than casual relationship with the truth reach such a powerful position? One word springs to mind: entitlement. Boris comes from a long succession of posh, upper-class, bumbling idiots who were destined for greatness only because no one has ever or will ever tell them they’re not. Boris went to Eton, a sort of Hogwarts for wankers, where you get taught Latin and tax avoidance whilst wearing full evening dress. These people have never spoken to a real person in their life, apart from perhaps their chauffeur. Then on to Oxford, where Boris Johnson was part of the infamous Bullingdon Club, a fun elite social club for the boys. Activities included smashing up restaurants and burning 50-pound notes in front of homeless people, allegedly. “But you know, it was great fun at the time.” And the British government is full of them, entitled arseholes — sorry, sorry — entitled assholes with a Bentley and a nanny making decisions for us all about things that they will never understand. Aristocrats running the fifth-largest economy in the world whilst allowing 30 percent of British children to live in relative poverty. Where the rich get richer and the poor literally get hungrier. Millionaires who spend their time in government giving tax breaks and P.P.E. contracts to their rich mates. Cannibals, self-serving parasites, tapeworms in tiaras, swimming through the intestines of the state, sucking all the goodness out of it for their own repugnant gratification.
Check out the full video rant here.
Plundering Africa
Léonce Ndikumana and Econ4’s James Boyce describe something you won’t find in economics textbooks:
In the imaginary world of a perfect market economy, natural resources would be a blessing and capital would flow to the countries where it is most scarce. Africa would be a net recipient. The Angolan people would prosper from the proceeds of oil extraction; Ivorians would thrive as the world’s top cocoa exporter (45 per cent of global production); and South Africans would enjoy the fruits of mineral abundance.
Yet, this is not happening. Natural resources are instead a hunting ground for quick wealth extraction and offshore accumulation. Cross-border capital flows are driven, not by relative scarcity in Africa, but by the relative secrecy available in foreign havens.
Read more here.
