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Newsletter 12-18-2020

Colin Powers
Colin Powers

Hi everyone. Thanks for subscribing. If you have the means, please consider becoming a paying member. If you have the inclination, please pass this newsletter around to others who might enjoy the read. Now, onto this week's edition of No Craic, Mad Craic, and Great Craic.

No Craic

(1) Over at the Financial Times, Robin Wigglesworth, Joe Rennison, and Robert Armstrong wrote up a deep-dive into America's "caste system for credit." Focused on the corporate side, they show why big firms (even visibly unhealthy ones) are getting bigger and bigger while an insolvency crisis threatens to engulf small and medium-sized outfits, many of which were more than viable prior to COVID 19, in 2021.  

Operationally, this has all come to pass due to the confluence of boom-times in the junk bond market and austerity-times in the bank lending market. Able to tap the former, many larger corporations have sailed through the pandemic via enormous issuances of long-term debt, regardless of the outstanding problems with their business models. Shunned by the loan officers of the country's banks, too small to play in capital markets, neglected by private equity vultures, and benefiting little from the Fed's "Main Street Lending Program", the little gals and guys, meanwhile, have been left scrambling for liquidity.

With the Paycheck Protection Program (part of the CARES Act from March) having run its course months ago, bankruptcy tolls for many of the country's small businesses in the months ahead. At the heights of the economy, meanwhile, we will likely see the spread of zombie corporations carrying debts of such a magnitude that they become too big to fail.

(2) You may have heard about or needed to use the Obamacare exchanges, where folks without employer-provided health insurance can purchase their own coverage. (Full disclosure, this is where your boy managed to secure a wonderful plan that includes, amongst other things, a $10,000 deductible...for this and other reasons, I only avail myself of medical services when my appendix sneakily tries to explode, etc.). You may have also heard politicians hail this market mechanism as a major reason why thirty million Americans, previously without health insurance, finally got coverage.  

In actuality, the exchanges have done precious little in integrating people into the broader insurance system.  Leaving aside all the other issues with them--the subsidization of a parasitic private insurance industry, the oligopolistic local market structures they institutionalize, the low-income thresholds that disqualify people from getting any break on the market-set monthly premiums--the exchange's effect on "uninsurance" has been marginal, paling in comparison to the effects of Medicare and Medicaid expansion.

Graph provided by Matt Bruenig, People's Policy Project

On any metric, Obamacare exchanges have been an abject failure. They reveal the indelible limits of any insurance reform initiative premised on getting markets to work better, and make clear that direct state intervention is the only real option for those trying to help people.

(3) Tax cuts for the rich have long been sold based on promises of growth and employment effects. Whatever impact they might have on inequality (whether in the short or long-term), advocates pledge that those cuts will inevitably grow the pie from which we all eat and thereby boost our collective welfare.

Yanni, la.

As it turns out, the growth and employment effects of trickledown policies such as these are, empirically speaking, bunk. While we may have all intuited that for a few decades or centuries now, David Hope and Julina Limberg's recent article, looking at fifty years of tax policy in OECD countries, makes it irrefutable.  

See Hope and Limberg link above for full article

(4) Our friends at Uber are making the case that those 100% for sure non-employees that they contract work out to be classified as essential workers. Indeed, just a month after spending hundreds of millions of dollars hoodwinking Californians into supporting Proposition 22 and after spending years making the legal case that drivers' work was "outside the usual course of Uber's business, which is serving as a technology platform for several different types of digital marketplaces"--the firm is now petitioning that their drivers are entitled to priority access to the vaccines.

Given previous assertions regarding drivers' inconsequentiality to his company's operations, this seems an odd tact for Dara Khorshorowshahi to take. Sure, his stumping for vaccines could just be that old noblesse oblige of his acting up. 'Tis the season of tiny Tim and all that, after all, so maybe he's just looking out for Joe Everyman.

Alternatively, it may be that his firm's viability directly hinges upon maximizing the surplus it extracts from underpaid taxi drivers flying around cities 24/7.  

(5) Two families--the Murdochs and Rothermeres--control an estimated 60.2% national newspapers circulation in the UK. Along side the Lebedevs, they also control three of the top five digital news publishers, and capture about 23% of all news-related web traffic.

Folks, I believe this is what they call the marketplace of ideas. Worry not of consolidation and concentration, this is but a sign of the cream rising to the top.

Visualization provided by the Press Gazette

Speaking of the UK, Bojo managed to give out $11 billion in COVID-19 related contracts (about 1/2 the whole pot) to associates and cronies of various sorts:

Grabbed from New York Times.

Glad to see Deloitte got another no-bid contract.

(6) Employees of Saudi Arabia's largest marine construction company--the Huta Marine Group--have gone on strike after not receiving their salaries for ten months. Most of these folks are legally precarious migrant laborers from South Asia and East Africa.

Exploitation such as is seen with the Huta Marine Group is neither aberrational nor incidental; it is, in fact, a structural element of economies throughout the Gulf. Outside financial mediation and oil and natural gas production, the economies of countries such as Saudi Arabia are now highly biased towards real estate speculation, infrastructure development, and what scholars more generally call the "built environment." Competitiveness and profit rates in these sectors hinge upon access to implicit subsidies--such as those represented by cheap, foreign labor.

No migrants=much less capital accumulation.    

(7) The richest 1% of the global population emit more than twice as much greenhouse gas as the poorest 50% do. Keep IG'ing you and your homeys jetsetting living your best life though!

You can read more about this tidbit and other climate disaster-related news in the UN Environment Programme's Emissions Gap Report 2020. Having given it a gander, it strikes me that nobody has been taking the much celebrated non-binding pledges locked in through the Paris Agreement very seriously.

If you came here for optimism, the authors of the doc did suggest that a green pandemic recovery could mitigate some of the damage on the way by cutting as much as 25% off projected 2030 emissions. Seems like something worth striving for, all the moreso when you consider that such a recovery could be financed almost cost-free: the annual interest on a U.S. Thirty Year treasury bond is currently 1.66%! Free money!

So what's the problem, then?

A mix of idiocy and corruption, blue dog Joe Manchin leading the way:

With fiscal discipline improbably remaining en vogue in the American gerontocracy, we are well and truly f'd.

Mad Craic

(8) Kellyanne Conway routinely submitted revisions to CDC guidelines as relates to "choirs and communion in faith communities", while Ivanka handled revisions related to "school." Their willingness to wade into these matters (and ultimately affect how policy was messaged) seems to stem from the fact that Conway has taken communion, while Ivanka has children who go to school.

Before you say, "Ha! Republican charlatans! Good thing the real experts are back!", please review the people making up the Biden administration, and the policy domains they have been assigned to cover. Mayor Pete's most meaningful experience re: transportation appears to be removing a traffic light near a school (at the recommendation of private consultants) and then deflecting blame when an eleven year-old child was killed shortly thereafter.

As a whole, team Biden sure does look a lot like a patronage system for political allies of dubious competency to me.  

Great Craic

(9) Below is a really cool map of the 2020 election done up by Randall Munroe. It shows where both candidates got their votes in a very enlightening way. Each of the little dots represents 250,000 votes.

(10) The Yasser Arafat Foundation has opened an archive of materials gathered by the UN Conciliation Commission in the aftermath of Israel's ethnic cleaning of Palestinians in 1948. For the first time, Palestinian refugees and their descendants can have a look at official documents related to their losses of property inside modern-day Israel, which total 1.359 million acres.

The archive had been classified up until now, with only the governments of Israel, Jordan, Egypt, and Syria (along with the PLO and the Arab League) able to examine it. The decision to open it up was informed by the Trump and Netanyahu governments' wanton disregard for international law and diplomatic norms, and in the hope that highlighting the magnitude of private loss might somehow make the plight of Palestine more legible to real estate dweebs like Jared Kushner. Per Nasser Qudwa:  

If the team behind the Trump Middle East plan was arrogant and ignorant enough to dismiss international law, UN resolutions and even Washington’s own diplomatic history, we thought there could be a chance that they would understand the value of private property and the rights of individual owners.

Wishful thinking on Qudwa's part, of course, as whitey tends to disregard the claims--public or private, collective or individual--of indigenous people out of principle. Alas, it is nice that victims can finally have a look at these.

Have a good weekend.


Colin Powers

Colin received his PhD from Johns Hopkins School of Advanced International Studies in 2020. He is a two-time Fulbright Fellow.