Newsletter 5-7-2021

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) Janet Yellen (Treasury Secretary) and Jared Bernstein of the Council of Economic Advisers are steeling the Biden administration against deficit-financing the President's proposed $4 trillion American Jobs and Families Plans.

Arguing that all this new spending needs to be offset by equivalent income streams--despite infrastructure expenditures being likely to pay for themselves many times over in the long run by dint of their effects on growth (and, by extension, public revenues)--Yellen in particular seems unable to decouple herself from old fiscal orthodoxies. I guess you can take the economist out of MIT, but you can't take the MIT out of the economist.

Compounding matters further, mandating that a dollar come in for every dollar going out is going to make passing the aforementioned legislation exceedingly tricky, as the Democratic caucus remains deeply divided on corporate taxation and what to do with capital gains (especially in the Senate).

(2) With external debts totaling $7.4 billion scheduled to mature in 2021, Egypt is going to push on with the fiscal consolidation strategy it inaugurated in 2016 (upon the commencement of its Stand-By Arrangement with the IMF) in hopes of pleasing Moody's et alia. Per the budget briefing just delivered by Finance Minister Maiet to the House of Representatives, the goal is to bring Egypt's 2021 deficit down to 6.6% GDP, a reduction of 1.1% percentage points as compares to 2020. Though this would still leave Sisi's lot above the 3% deficit ceiling that the credit agencies prefer for emerging economies, the gambit is that the prospective reduction will suffice to signal the state's credibility as a borrower (and thereby keep the interest down on upcoming bond issues).

In terms of social consequence, Beesan Kassab at Mada Masr details how the proposed budget will see the Egyptian state fail yet again to honor constitutional obligations vis-a-vis health and education spending. (The Egyptian constitution dictates that the government allocate 3% GNP to healthcare expenditures and 6% GNP to education expenditures. The budget sketched by Maiet is set to apportion expenditures equivalent to 1.55% GNP for healthcare and 2.47% for education).

Planned outlays will also result in millions of Egyptians losing access to food subsidies and cash transfers. As for those not yet culled from the roster of welfare recipients, the real value of the subsidies/transfers they receive will also decline due to the government deciding not to adjust the programs for inflation.

(3) Over in Palestine, Israeli settlers, provided cover by the Israeli Defense Forces (IDF), have just raided and burnt to the ground hectares of olive trees in Burin, a village just south of Nablus. As of the end of March, the United Nations Office for the Coordination of Humanitarian Affairs had already recorded more than 200 incidents of settler violence in the West Bank for the year.

In Jerusalem, a hop skip and jump dead south from Nablus, Israeli mobs have taken to brutalizing Palestinians at random, while Israeli security forces are in the midst of violently putting down protests in Sheikh Jarrah. The protests in question have mobilized after a cynical court-order greenlit long-standing state plots aimed at evicting and seizing the properties of Sheikh Jarrah's Palestinian residents for Jewish resettlement.

In the video linked to here, you can see one prospective beneficiary of the mini ethnic cleansing, a recent arrival from what sounds to be Brooklyn, tell a Palestinian family that if he doesn't steal their home, someone else will.

(4) According to their tax filings in Luxembourg (where the firm books the majority of its European-based business), Amazon managed to pull in €44 billion in sales income in 2020 without paying a cent in corporate tax. This feat was achieved through an assortment of moderately clever auditing tricks, whereby the logistics' giant shifted around revenue/investment figures across its various affiliates and subsidiaries so to present itself as having made a €1.2 billion loss for the year.

(5) Morocco is consolidating its diplomatic opening with Israel through expanding bilateral commercial ties. Fruit of this labor, Israeli agribusiness Mehadrin has just agreed to lease 455 hectares of land in olde Maghreb for avocado cultivation as part of a new co-investment arrangement with local partners.

If one was wondering what compradorism looks like in a single sentence, I point you to the following statement found in this Eurofruit article:

According to Globes, Mehadrin is set to own 51 per cent of the (joint investment), with the plantation's maximum output estimated to be around 10,000 tonnes of avocados a year. These will be sold by Mehadrin and its partner, mainly in Europe, while produce unsuitable for export will be sold in Morocco.

(6) As twilight for the American misadventure in Afghanistan at last approaches, Alfred McCoy has published a long piece excavating the causes and consequences of the United States' devastating failures. Interestingly, McCoy highlights the extent to which opium production/trade informs both the US's Afghan successes in the 1980s (vis-a-vis the Soviet Union) and the catastrophe it has authored since 2001.  

Mad Craic

(7) At this point, there isn't much more to be said about the CIA's recent and rather remarkable attempt at recruiting woke millenials. It is the perfect artifact of our times.

Great Craic

(8) On Wednesday afternoon, the Biden administration gracefully announced that it would support waiving intellectual property protections for COVID-19 vaccines, and that it would work to see such a waiver agreed upon at the World Trade Organization.

This is very good if belated news. As Amy Kapczynski writes at the Law and Political Economy Project, vaccine production and vaccine scarcity are both man-made phenomenons, and wholly subject to political volition. Once an IP waiver is in place, Els Torreele, Jayati Ghosh, and Mariana Mazzucato project the vaccine supply will become sufficient to inoculate 60% of the world's population by year's end (and the whole world by 2022).  

(9) Paul Mattick has penned a fascinating read on Bidenomics and its ultimately futile attempt at resolving the endogenous crises of contemporary capitalism. I'll quote him at length here should you not have time to read his essay:

The various Biden plans, that is, represent only the latest form of the cleft in which American capitalism (and indeed global capitalism) has been stuck for some time: On the one hand, the decline in profitability and therefore in investment since the mid-1970s, resulting in a steady growth of individual, corporate, and national debt as the basis for continued economic functioning, suggests naturally that the central role of national governments should be safeguarding the welfare of the most successful businesses as the basis of economic “growth.” On the other hand, this means a declining availability of funds to manage the growing social misery caused by declining investment and to maintain the public goods on which private enterprise depends, such as roads, bridges, energy grids, health, or even breathable air and drinkable water. As capitalism continues its decline, requiring succor from a public-spirited state, it is unable to give the state the fiscal means required, as this would only speed its decline. Since 2008, the miraculous generation of money from nothing managed by the Federal Reserve Bank and other major central banks has injected enough credit into the financial system to keep it humming; but this does not fix America’s 10,000 collapsing bridges and tunnels or quell the advancing seas. Hence the political paralysis in which (in the US) Democrats and Republicans play the roles, respectively, of rational mobilizers of state resources to make up for the failures of the market system, and the spoilsports who point out that growth of the public sector hastens the demise of the private-property economy. They are damned if they do and if they don’t.

(10) Here's a video of some monkeys swimming. I didn't know they did that.

Have a great weekend.