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Newsletter 12-4-2020

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) The generational cleavages bullocksing up the American economy/social order are a recurring theme here at The Political Economy of Everything headquarters. As part of our regular installments on the topic, I'd like to direct your attention to the tidy graph below, which shows how age-group ownership of equities has changed over time.

Boomers. stay. winning.

(2) As the trend is likely to hold throughout our current recovery, I'd also like to point you to the wee line graph below, which the folks at the St. Lous Fed put together in order to illustrate how different segments of the population fared in the aftermath of the 2008-2009 financial crisis. Per their findings, the bottom 50% of American households (in terms of net worth) took roughly a decade to recoup the wealth lost as a result of the great recession. In contrast, nearly everyone else bounced back to their pre-crisis position almost immediately. From there, the wealthiest percentiles began accumulating new wealth at a remarkably fast clip.

Lessons from 2008-2009 were certainly learned at the Fed itself. Like many central banks throughout the global north, it has taken on a very active role since the ruptures of mid-March, whether through the aggressive steps Jerome Powell et al made in stopping the economy's death spiral or through consistently advocating that Congress pass a fiscal stimulus designed to help people rather than equity markets.

The same cannot be said of the US's political leadership, of course (see: pathetic bipartisan stimulus package under discussion). As a result, I fear we may only be experiencing the birth pangs of our new gilded age at the moment.

(3) The UN Conference on Trade and Development (UNCTAD) has just published a report on the economic cost of Israel's siege on Gaza. Per usual, their analysis is rigorous, unapologizing, and devastating: according to their economists' calculations, the Gazan economy suffered losses exceeding $16.7 billion due to Israeli actions for the period stretching between 2007 and 2018. In terms of social consequence, Israel's policy of collective punishment has pushed Gaza's poverty rate to 56%; in the absence of closure and military operations, UNCTAD's team estimates that rate would be roughly 15% today.

In a related note, here's a clip of Neera Tanden, prospective director of the Biden White House's Office of Management and Budget, laughing creepily at a series of terrible jokes made by Bibi Netanyahu! As the time stamp on the video indicates, this stand-up routine cum hasbara session was held but a year after Israel's devastating 2014 assault on Gaza.

(4) Aurelie Ouss has a fascinating study in the most recent issue of the Journal of Public Economics. In it, she examines aspects of the American carceral state that typically garner little attention--namely, how it is financed and administered--and brings to light some of the perverse incentives that have led to our current juncture.

One of the article's most interesting takeaways is that though the costs of incarcerating an individual typically fall upon the state, it is county-level officials (i.e. judges) who typically determine sentencing. Due to this disjuncture between agency and financial responsibility, Ouss argues that local officials have been free to indulge their most punitive inclinations, cognizant, after all, that they themselves will never need to foot the bill in the final instance.

Now, for those salafists of American jurisprudence (i.e. 75% of law school graduates) who cannot suffer the thought that justice might be influenced by materialist considerations such as these, check the graph below. It captures this strange act of sorcery whereby California shifted some of the funding obligations for incarceration to the local/municipal/county level, and voila, incarceration rates dropped precipitously.

Perhaps those currently resisting the notion that money might have something to do with police violence--and that defunding/structurally reorganizing the boys in blue might therefore be the best way of getting at the heart of the matter--will find this compelling. Alternatively, they can continue to lecture everybody on how sloganeering hurts swing state blue dogs while promising that Biden-era racial bias trainings led by this grifter will get us to the place we need to be!

(5) Because the Obungler is stuck in my craw at the mo, I want to point you to Ryan Cooper's wonderful review of his memoir/tenure as President.

As we get further and further from the events, it is easy to forget how everything went down with the Troubled Asset Relief Program (TARP, i.e. the bank bailout of 2008), the Recovery Act of 2009 (i.e. the subsequent stimulus package), and the Home Assistance Mortgage Program (HAMP) and the Home Affordable Refinance Program (HARP) (i.e. Obama's home foreclosure policies). Reflecting on OB's recollections, Cooper's article lays bare the naivete and political stupidity that undergirded the White House's response to what may prove to be the most influential crisis of our lives. Below are his concluding remarks:

(Obama) considers and rejects some of the more radical options...arguing that things like "nationalization of the banks, or stretching the definitions of criminal statutes to prosecute banking executives ... would have required a violence to the social order, a wrenching of political and economic norms, that almost certainly would have made things worse."
In truth, letting 10 million people get thrown out of their homes to save a bunch of rich bankers from their own misdeeds did stupendous violence to the social order. Letting bankers get away with an assembly line production of document fraud was a severe wrenching of political and economic norms. It wouldn't have been a "stretch" of statutes to prosecute the thousands of Wall Street crimes — on the contrary, letting banks off with wrist-slap fines blew a ragged hole in the rule of law. It does not preserve our sainted norms and institutions to move heaven and earth to save job-killing financial parasites and then leave John Q. Homeowner twisting in the wind. The false assertion that doing so would have made things worse is straight out of The Rhetoric of Reaction.
We are still paying for Obama's faceplant on his most important task. An increasingly lunatic Republican Party took advantage of that failure to seize control of Congress, and eventually elected Donald Trump, who is currently attempting to overturn the election he lost. It sure seems unlikely that Obama's vice president Joe Biden will countenance the extreme action now necessary to preserve American democracy.
Obama had a golden opportunity to knit the country back together after a disastrous Republican presidency and a brief moment of Wall Street helplessness. He didn't do so because he couldn't stomach the radical action necessary to heal the nation's wounds and repair the social contract, and instead invented a lot of excuses why he had to sit on his hands and do nothing.
The name for such a person is a coward.

(6) No one should cry for zee Germans. It was their bankers, after all, who made lots of money financing private and public debts in Greece and the like only to turn around and brandish the recipients of their lending as the ones that were hopelessly irresponsible (and therefore deserving of bearing the brunt of the fallout once the whole operation came crashing down about a decade ago).

Nevertheless, this is a pretty tough beat: per the table below, Angie's government is losing more than a quarter of its tax revenues each year to a series of havens, most of which are EU member states.

Table drawn up by Gabriel Zucman et al

Mad Craic

(7) Joseph Szajer, major ally of Viktor Orban and representative of his rightwing (and virulently homophobic) Fidesz party in the European Parliament, has resigned from his post.

After helping rewrite the Hungarian constitution so that it protects "the institution of marriage as the union of a man and a woman", Szajer was caught fleeing from a 25-man orgy in Brussels this past weekend. It seems this has made his position in office untenable.  

Great Craic    

(8) I have nothing insightful to say on this visualization of global population density. It is very, very cool though:

Shoutout to Alasdair Rae

(9) India is (perhaps) witnessing the beginning of an important political mobilization. On November 26th, somewhere in the area of 250 million workers walked off the job. Organized by ten of the country's trade unions, the strike was motivated by "the anti-people, anti-worker, anti-national and destructive policies of the BJP government led by Prime Minister Narendra Modi."

Next, a huge group of farmers, driven by their opposition to three reform bills passed in September, descended on Delhi where they used tractors to break down police barriers and cause a ruckus more generally. As India's agriculturalists have not typically represented a revolutionary force--for reasons detailed by Thomas Crowley here--their activation (and potential alignment with the union movement) could set the stage for a major rebalancing of political power.


(10) The French have managed to stop Macron's government from going ahead with a security bill aiming to put significant limits on a citizen's right to film the police. If it had gone into law, Article 24 of the bill in question would have made the publication of images of on-duty police officers with the intent of harming their “physical or psychological integrity” punishable by a year in jail and fines up to 45,000 Euros. Alas, bold street action last Saturday--assembling upwards of 500,000 people for protests across the country--have held the day for now. Inspiring stuff.

Grotesque as the proposed legislation was in of itself, it created an even bigger furor by coming before parliament the same week that footage showing police beating and racially abusing Michael Zecler, a black man, went viral. It was also only a few weeks ago that the French police rather brutally removed a migrant camp home to 2000 asylum seekers in northern Paris.

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.