Fed economist questions conventional wisdom
Check out this from senior Federal Reserve economist Jeremy Rudd:
Mainstream economics is replete with ideas that “everyone knows” to be true, but that are actually arrant nonsense. For example, “everyone knows” that:
• Aggregate production functions (and aggregate measures of the capital stock) provide a good way to characterize the economy’s supply side;
• Over a sufficiently long span—specifically, one that allows necessary price adjustments to be made—the economy will return to a state of full market clearing; and,
• The theory of household choice provides a solid justification for downward-sloping market demand curves.
None of these propositions has any sort of empirical foundation; moreover, each one turns out to be seriously deficient on theoretical grounds.
$2.3 trillion down the drain
On top of the human costs, the 20-year US war in Afghanistan came with a huge financial price tag:
Source: The Costs of War Project.
War, like famine, brings suffering to many, but to some it means profits. Read who lined their pockets here.
What would $163 billion a year buy us?
The U.S. Treasury Department reports that tax evasion by the top one percent amounts to $163 billion per year:
The wealthiest 1 percent of Americans are the nation’s most egregious tax evaders, failing to pay as much as $163 billion in owed taxes per year, according to a Treasury Department report released on Wednesday.
A really big idea
In his new book, Ours, Peter Barnes lays out a really big idea:
Universal property is a birthright belonging equally to all. It is a complement to private property, not a replacement. In one form or another, it represents the interests of future generations and all living persons together.
We need universal property because markets today are grievously out of balance. They consistently over-reward a small minority of wealth owners at the expense of the majority of humans and nature. Universal property would correct that imbalance and transform the way markets behave.
Read more about it here.
Heads they win, tails the government pays the tab
Bob Pollin and Econ4’s Jerry Epstein dissect free-market hypocrisy to show how bailouts backstop the wealthy and the powerful:
The most basic tenet undergirding neoliberal economics is that free market capitalism—or at least some close approximation to it—is the only effective framework for delivering widely shared economic well-being….
In reality neoliberalism has depended on huge levels of government support for its entire existence. The global neoliberal economic order could easily have collapsed into a 1930s-level Great Depression multiple times over in the absence of massive government interventions…. Bailouts have not only repeatedly rescued neoliberal capitalism during periods of crisis, but they have also, as a result, reinforced neoliberalism’s most malignant tendencies. In 1978, just prior to neoliberalism’s rise, the CEOs of the largest 350 U.S. corporations earned $1.7 million, 33 times the $51,200 earned by the average private-sector non-supervisory worker. As of 2019 the CEOs were earning 366 times more than the average worker, $21.3 million versus $58,200
This curious conjunction—theoretical disdain for government alongside practical reliance on it—has amounted to champagne socialism for big corporations, Wall Street, and the rich and “let-them-eat-cake” capitalism for most everyone else.
Read more here.
How inequality spreads Covid
Here’s a glaring example from Thailand:
Thailand went for months without a single confirmed case of local transmission, but the epidemic has now radiated from luxury nightclubs that cater to powerful and wealthy men to the warrens of slums that hug Bangkok’s highways and railroad tracks. In these cramped quarters, social distancing is impossible. Infections have also spread to prisons, construction camps and factories.
“The rich people party and the poor people suffer the consequences,” said Sittichat Angkhasittisiri, a neighborhood chairman in Bangkok’s largest slum, Khlong Toey, where the coronavirus has infected hundreds of people….
The people of Khlong Toey are vital to making Bangkok run. They deliver the packages and the takeout meals, their motorbikes weaving past Mercedes tightly sealed from the heat and the haze. They build the glass-sheathed condominiums and the malls that seem to materialize like mushrooms after the monsoons. Their vast market feeds Bangkok its vegetables, fruits and wriggling seafood.
Unemployment, already high because of Thailand’s pandemic-closed borders, has soared in Khlong Toey. To survive, some families have sold the vaccine registration cards they received as residents of a high-risk neighborhood.
Thailand has yet to fully start nationwide mass vaccinations, and less than 2 percent of the population is fully inoculated. A few wealthy Bangkok residents have boasted on social media about buying vaccination cards from the city’s most desperate residents.
“The rich who are already privileged are stepping on the poor,” Ms. Mariam said. “They believe their money can buy anything.”
Read more here.
Mixed news for the climate
First the good news:
A nun, an environmental lawyer, pension fund executives, and the world’s largest asset manager. These were among the unusual collection of rebels who claimed a series of startling victories this week against some of the world’s biggest and most influential fossil fuel companies.
Now the bad:
Despite President Biden’s pledge to aggressively cut the pollution from fossil fuels that is driving climate change, his administration has quietly taken actions this month that will guarantee the drilling and burning of oil and gas for decades to come….
In a paradox worthy of Kafka, ConocoPhillips plans to install “chillers” into the permafrost — which is thawing fast because of climate change — to keep it solid enough to drill for oil, the burning of which will continue to worsen ice melt.
Read more here and here. And for more on Kafka in the Arctic, here.
Feeding America
In the Rio Grande valley, feeding America has a bitter taste:
Many undocumented farm workers have been toiling in the fields for years, pay taxes and have American children, yet enjoy few labor rights, have extremely limited access to occupational health services and live under the constant threat of deportation.
In truth, farm workers here are never harassed while working in the fields, which advocates say suggests a tacit agreement with growers to ensure America’s food supply chain isn’t disrupted by immigration crackdowns. It’s everywhere else that these essential workers, who kept toiling throughout the pandemic, are not safe.
Read more here.
America’s living wage shortage
As the economic recovery gathers steam, some employers are complaining about a shortage of workers. What they really mean, Heidi Sheirholz writes, is a shortage of workers at the low wages they want to pay:
There are lots of anecdotal reports swirling around about employers who can’t find workers. Just search “worker shortages” online and a seemingly endless list of stories pops up, so it’s easy to assume there’s an alarming lack of people to fill jobs. But a closer look reveals there may be a lot less to this than meets the eye…. Employers post their too-low wages, can’t find workers to fill jobs at that pay level, and claim they’re facing a labor shortage.
Read more here.
CEOs versus workers
During the pandemic, the CEOs of many top corporations saw their take-home pay soar. Topping the list:
Hilton CEO Christopher Nassetta pocketed the largest rigged-pay package. “Adjustments” to his stock awards inflated the hotelier’s total compensation to $55.9 million, 1,953 times as much as the company’s median worker pay of $28,608.
Read more here.
