Almost harvest time

We are in the stage of the business cycle where the ruling class can either (A) take the massive piles of capital that have accumulated at the top and reinvest it in humans and infrastructure that supports humans. OR  (B) they can light a big fire, loot what they can, and have cops punch anyone who objects. 

We almost always get option B. We are getting option B. The reason it feels this intense is because the money pile is exceptionally high this time and it looks about ripe for harvesting. 

The hundreds of billions of dollars companies are investing in AI now account for an astonishing 40 per cent share of US GDP growth this year. And some analysts believe that estimate doesn’t fully capture the AI spend, so the real share could be even higher.  

AI companies have accounted for 80 per cent of the gains in US stocks so far in 2025. That is helping to fund and drive US growth, as the AI-driven stock market draws in money from all over the world, and feeds a boom in consumer spending by the rich.

Since the wealthiest 10 per cent of the population own 85 per cent of US stocks, they enjoy the largest wealth effect when they go up. Little wonder then that the latest data shows America’s consumer economy rests largely on spending by the wealthy. The top 10 per cent of earners account for half of consumer spending, the highest share on record since the data begins.

The plutonomy is permanent

Here's David Dayen on the "K shaped economy."  It's a phenomenon that, as he points out in the article, has been understood for a long time now. But its acceleration coming out the other side of the pandemic has brought us to a place of acute pain for many, even as that pain isn't well reflected in the numbers measuring the overall economy. 

How can we hold together the concepts of soft employment numbers, higher inflation, and climbing retail sales? You can search for reasons to explain why U.S. consumers are lying, spending with abandon even as they despise the economic picture. Or you can simply reject the average and look to the differences within the income distribution. If you do, you reveal the K-shape: Consumer spending is being driven by the top 10 or 20 percent, and unemployment, food insecurity, and gloominess are driven by everyone else. Both groups are experiencing inflation, but only the lower-income earners truly feel it. Higher-income folks are happy to spend more money on goods and services, bolstered by fat wallets and stock portfolios.

This is not that novel an analysis—like I said, Citigroup, among many others, figured it out 20 years ago—but it has huge implications. First, on inflation, if the primary buyers of goods and services (the richest 20 percent) are not price-sensitive, there is no reason to moderate prices to ensure that customers have an ability to pay. If inflation is not going to meaningfully reduce volume of sales, you can keep marking up higher. This is consistent with the story of higher corporate earnings, with companies “raising prices when they can.”

The same companies are also finding ways to ditch workers, moving to “human-light” operations, in the bloodless parlance of corporate-speak. Some of this reflects productivity gains from automation, but much is out of the necessity of doing more with less, because investment is seen as folly with Trump changing his mind every few seconds on policies where companies need certainty to invest. CEOs are also drunk on DOGE-ing their workforces, aping what the administration did to its federal workforce this year. The results of grinding remaining employees to the bone are likely to be unsustainable, but the spending appetites of wealthy consumers will conceal this.

Is it "likely to be unsustainable," though?  I'm not so sure. That the economy runs entirely on wealth circulating only among the wealthy as they trade on increasingly abstract speculative assets is pretty much taken for granted at this point.  The 21st Century has been characterized by one massive calamity after another and yet no amount of human suffering has managed to shake us off this path.  It's certainly why your democracy, such as it is, doesn't seem to be hooked up to anything that matters anymore. I can't see any reason it won't just go on like this forever, really. 

Popping in with a couple of overdue book reviews

For whatever reason, I've taken up a project of transferring several years backlog of book notes I've had sitting in a spreadsheet onto more fleshed out reviews for Goodreads, an app I've been on forever but never really got into using.  What is the purpose? Who even knows?

Anyway, in the process of going through these, I hit upon a couple titles I read in 2021 that seemed to pair well for a blurb here. Especially, so if one is in the mood to think about where we've been and where the US political economy has been and where it might be going a week out before, "the most important election of our lifetimes" again. 

Anointed With Oil: How Christianity and Crude Made Modern America by Darren Dochuk (2019)

This is a sweeping history of the American oil industry with a focus on its peculiar relationship to American Christianity. The book describes political and religious tensions throughout the history of oil between the rationalizing paternalistic ecumenism of the major firms vs the independent libertarian evangelism of the wildcatters.It's a division we can recognize as threaded through the long Hamiltonian vs. Jeffersonian archetypes of American political economy although I don't recall Dochuk stating this in the book. 

In part, it explains why we see the inheritors of the Rockefeller and Pew fortunes involved in supporting liberal-ish causes today through legacy NGOs while a contrasting strain of evangelical cosmology can fold concepts like “peak oil” and climate change into their expectation that the Apocalypse is near and the fact they feel fine about that. 

For an example of the latter, here is Dochuk writing about Ernest Manning, Premier of Alberta in the 1950s and an evangelical thought leader. 

Manning, like Aberhart before him, held to a dispensational premillennialist view, which encouraged him to decode signs of societal strain as evidence that Christ’s return was nigh. His eschatology grafted onto contemporary theories of petroleum geology. At that moment, M. King Hubbert, a founder of the social movement known as Technocracy, which underscored the importance of engineers in the management of society and had ties to Social Credit, crafted his theory of “peak oil” holding that US domestic production would crest by 1971, then steadily decline. This prediction confirmed Manning’s belief that the world was entering its last phase. Not only did time seem to be running out on America - God’s City On A Hill - but it was now favoring non-Christians located in the very place to which Christ would return: the Middle East. His response was twofold: first, to train Western Christians’ eyes on the Middle East, where rising oil production and politics seemed to portend Christ’s return, and second, to extract expeditiously whatever oil was left under their soil before their dispensation expired. In Manning’s scheme, wildcatters offered North Americans a last glimmer of hope: they alone had the courage to find new reserves and inspire patriots with pure capitalist drive.

In other words, the rational response to “peak oil” was to keep on producing oil as quickly as possible. The mere prospect of a cataclysm is not necessarily going to cause a change in behavior. Which is why, now, as the climate crisis worsens in ways that more and more Americans can feel in their daily lives, the policy response from a rather loud faction of our body politic continues to be an unreserved chant of, “Drill, baby, drill!” 

Anyway, in his conclusion, Dochuk entertains the notion that the wildcatters have "won" their battle with the patricians. Or at least, it appears their political and religious expression has retained a surprising power and resonance. Here is the key graph there.

Battered by oil’s bloody cut-throat system, yet determined to follow their calling, they clung to a personal trust in the supernatural, which came with a transaction. Place your faith in a higher being and honor his rules for holy living, the logic read, and ride the capricious offerings of the earth and the markets to heavenly fulfillment - no matter the heavy human (and ecological) costs. Place your trust in a God who giveth and taketh suddenly, but who is always there, and watch (and feel) the pain of oil’s boom-bust cycles and ever-present maladies melt away in the face of his saving grace. Our current age, in which the fluctuations of economy have intensified on a global stage and during which the inequalities of capitalist society have calcified, has only emboldened that ethic all the more. Its promises of spiritual and, in unpredictable moments, financial returns on the magical, miraculous workings of oil, its allowances for stark enigmas and contradictions in the modern condition - between hope and futility, empowerment and despair, hyperwealth and utter poverty - and its panic to drill, find and sell redemption before the Messiah returns have proved more than prescient and resilient.

 

Ages of American Capitalism: A History Of The United States by Jonathan Levy (2021)

A history of the United States from colonial times up until the time of the 2008 financial crisis. Much in the way Taylor Swift divides her career into eras, Levy breaks the American economy up into “ages.” There is an Age of Commerce (1660 until 1860), an Age of Capital (1860 to 1932) an Age of Control (1932 to 1980) and the Age of Chaos which we, presumably, are experiencing now. 

After acknowledging the elusiveness of a proper definition of capital, Levy settles on this phrase: “The process through which a legal asset is invested with pecuniary value, in light of its capacity to yield a future pecuniary profit.” The political push and pull over the nature and direction of those investments; the tension between short term hoarding and long term redistribution is central to his narrative. 

Obviously, this is a story told on a big sprawling scale. But it’s one well worth diving into for students of US history. One doesn’t need a whole lot of background in economics to access it. Rather than get too far into the discussion, here are a few items I wrote down in my notes as I read. 

1) Levy’s commentary on Herman Melville’s The Confidence Man illustrates that a "booming" market in short term speculation is fundamentally the same thing as a stagnant economy. 

Melville’s novel parses three contradictory desires and emotional states. His analysis was correct: the capitalist credit cycle of boom and bust, only just emerging in his day, is motivated by a contradictory drive of speculative investment. The contradiction consists in the fact that while credit-fueled and energetic speculation can lead to genuine capitalist investment booms, instigating wealth-generating enterprise, individuals can also succumb to the temptations of short-term speculation alone, in which, benefiting from the transactional liquidity of capital markets, they simply move their bets in and out of assets, confidently seeking short term gain. But speculations may not fix on objects of investment long enough for long-term economic development to happen. Capital just spins its top. And the speculative desire to leave all potential investment options open is only a fantasy. For if all options are kept open, but never exercised nothing actually ever happens. 

2) Nostalgia is also a symptom of stagnation. 

Capitalism demands an orientation of economic life toward the future, and so the constant urge to look back, and nostalgically stamp past ages “golden” is probably some kind of psychic compensation for the unremttingness of that demand, especially in moments when, to many, it feels difficult to muster a positive vision about the future. 

3) By the time of the 1970s neoliberal turn, capacity for a coherent collective economic policy was diminished by a politics of alienation, fractionalization and “individual practitioners of narcissism.” 

The federal government simply did not have the mechanisms at hand to master inflation. There was no notion of a unified public interest on the basis of which to act anyway. Instead the polity was splintering into Nixon’s Silent Majority, black nationalists, “back to the land” farmers, white ethnic revivalists (including neo-Confederates), Friends of the Earth, pro-live evangelical “family values” Christians, radial lesbians, international bankers, advocates of Indian sovereignties, Business Roundtable CEOs, black women activists of the National Welfare Rights Organization, white nationalist Vietnam veterans, and last but not least, individual practitioners of narcissism. 

4) Finally, this book (along with Malcolm Harris’s Palo Alto later on. I may post about that one too, eventually.) drove home for me the huge impact Herbert Hoover has had on the American political economy of the 20th Century and beyond. Ideologically, Hoover was the equivalent of today's centrist Democrats. He believed the nation's business leaders should contribute to progress. But he wanted that to happen through public-private partnership or at his polite request. 

On the telephone and at two White House conferences, the president personally pleaded with the corporate executives of the largest, most regulated industries to increase capital investment expenditures. In 1930 railroads and utilities obliged. Yet everywhere else, especially in residential construction, fixed investment kept falling. Hoover recognized that during the 1920s, corporate profits had run ahead of wages, and he believed that high wages would stabilize spending, a good thing. “The first shock,” he declared, “must fall on profits and not wages.” Whether because of Hoover’s promptings or not, the nation’s largest employers agreed not to slash wages, even as they continued to fire their less desirable employees, a pattern that would persist. Proudly, Hoover said the agreements were, “not a dictation or interference by the government with business.” Rather they were the result of “a request from the government that you co-operate in prudent measure to solve a national problem.” The president boasted, “This is a far cry from the arbitrary and dog-eat-dog attitude of the business world of some thirty for forty years ago.” Hoover believed his “associational state” transcended the Jacksonian sphering of public and private, state, and market, which under the banner of equal commercial opportunity, had withered state action throughout the Age of Capital. But he drew one line in the sand. He would not coerce capitalists to invest. 

This is famously the path to failure. And yet it has persisted as canon for respectable politicians and pundits far and wide. Case in point, here is Joe Biden in 2021 taking the Hoover approach with insurers and utility companies after Hurricane Ida. 

“I’m calling on the insurance companies at this critical moment. Don’t hide behind the fine print and technicality. Do your job. Keep your commitment to your communities you insure,” he continued. “Do the right thing. Pay your policy holders what you owe them to cover the cost of temporary housing in the midst of a natural disaster. Help those in need. That’s what all of us need to do.” 

Biden also expressed that, throughout the week, he’d expressed that same message to local officials and utility and energy company representatives during virtual meetings.

How has that approach worked out?

A Louisiana State University survey last year found that 17% of Louisiana homeowners reported their provider canceled their policy. Sixty-three percent of policyholders said the cost of their insurance coverage increased from the prior year, the survey found. 

There was roughly a 10% to 12% increase in homeowners’ insurance costs last year in the United States, said Mark Friedlander, spokesperson for the Insurance Information Institute, a nonprofit industry association.

You can't just ask these people to be nice. You have to force them. These “commitments to community” Biden imagines exist in corporate America are more tenuous than ever, if they even existed at all. And today’s political leaders, having abandoned the lessons of the New Deal, are less equipped to deal with that reality as a result.

Economic indicators

I did see the signs. I tried to tell you.

Hey it's August 1 and still no Halloween candy stocked in the Rouses? Must be a recession coming

— skooks (@skooks) August 1, 2024

And now, look. 

U.S. stocks saw their third-straight trading day of heavy declines as recession fears continued to mount and Wall Street abandoned a popular trade that had helped counter high interest rates.

The Dow Jones Industrial Average was down roughly 900 points or nearly 2.5% Monday morning, while the S&P 500 declined 2.3% and the tech-focused Nasdaq fell 2.5%.

On Friday, the Bureau of Labor Statistics reported worse-than-expected jobs data, showing the U.S. unemployment rate had climbed to 4.3% and that the economy had added just 114,000 jobs

 Always trust financial advice from this website and its affiliated social media.

Folding up the con-profits

One of the interesting things about the recession* we're headed into is the specific way the non-profit sector is going to implode. 

Earlier this year, the National Eating Disorders Association (NEDA) abruptly laid off its entire helpline staff. The announcement came just two weeks after the helpline workers voted to form a union, Helpline Associates United (HLAU). Workers were informed that they were being replaced by an artificial-intelligence chatbot named Tessa.

NEDA, the largest nonprofit organization dedicated to providing support to people struggling with eating disorders, launched the helpline in 1999. The organization claimed that the layoffs were unrelated to the success of the union effort—a claim that the workers and the Communications Workers of America (CWA), the union representing them, categorically dismissed. Rather than having a phone helpline staffed by human workers, the association planned to run an online chat helpline operated exclusively by Tessa.

Incidentally, that's the A.I. bubble in a nutshell right now.  Capital is always looking for new and innovative ways to operate more efficiently ... um... intimidate workers into submission.  Does the chatbot even work?  What a ridiculous question. Everyone knows that's not even the point. 

Helpline staff continued their work when NEDA did a soft launch of the bot in late May. But within days, major problems emerged. People shared stories on social media about their disturbing experiences with Tessa; in one case, it dispensed weight loss advice. But shortly before NEDA planned to entirely eliminate the phone helpline and transition to Tessa on June 1, the organization announced that it would shut down both the helpline and the chatbot. NEDA no longer offers any resources by phone or online chat.

Who cares if a robot can actually replace the workers or not. Who cares if the job even gets done at all! This is far from the last we'll see of this phenomenon. So many ostensibly do-good missions will be thrown in the trash just so that workers can be punished as management hoards what's left of all the drying up donor cash.  And that cash is definitely drying up. This is very likely just the beginning.

 

* Yes let's call it that. We can argue about the technical "health of the economy" metrics in a different post later. But the short version is, in this economy people have been abandoned. Housing and health care costs are up. The COVID era safety net measures have been yanked away. Wealth concentration is worse than ever. Union density is lower than ever. And nobody has any belief that there's a better future ahead. The fact that stock prices haven't totally tanked doesn't help most of us. The fact that unemployment is low doesn't mean people have jobs that actually sustain them. 

And now the shocking conclusion

Great big publicly funded corporate downsizing and stock priming scam that any idiot could have told you was going to be a scam turns out to indeed have been a scam. 

But now, DXC appears to be scaling back those ambitions. Records show that as of last year, the Virginia-based company had hired just 300 local workers. The company is only occupying three of the 10 floors it leased in the granite Poydras Street skyscraper that bears its name, and is actively seeking to sublet four of those floors.

And last month, Commissioner of Administration Jay Dardenne signed a May agreement between Louisiana Economic Development and DXC that ended an $18.6 million incentive package because of DXC's repeated failure to meet job creation and payroll benchmarks.

The terminated agreement and DXC's lackluster hiring underscore the challenges New Orleans leaders have faced in recent years trying to lure major employers to the city and then keep them here.

"This was going to be a really big thing," said Peter Ricchiuti, a business professor at Tulane University, of the DXC deal. "When you get a big company like this, it spins off other tech entrepreneurs. Even just having a smaller footprint, giving back office space, is not encouraging."

It was never "going to be a really big thing." It was a scam from the beginning and anybody who was not being paid to believe otherwise could see it from the beginning.

Double punishment

The economy is teetering precariously on the brink of recession now.  We'll just go ahead and mention that this is a deliberate policy goal. Hopefully I'll have time to say more about that later.  For now, it's worth noting that the policy choice is not only being made at the Fed where they're leaning hard on the monetary lever.  But it has also already been enacted on the fiscal side as well by a feckless President Biden and the Democratic controlled congress. 

In other words, the United States is currently undergoing a great deal of austerity. Indeed, President Biden has repeatedly bragged that the government will reduce deficits by about $1.5 trillion this fiscal year.

By itself, this austerity will have negative effects on the economy, including job loss and wage reductions, which is not at all good. But it should also substantially ease the pressure on Powell to hike so quickly. With fiscal policy pressing hard on the economic brakes, there is less reason for him to be doing the same thing, especially because the Fed can’t affect half the reasons inflation is happening except by making them worse. There is also no reason for President Biden to listen to advisers who reportedly want to counter the effects of canceling some student loan debt by restarting remaining student loan payments. Since we’ve had no payments on these loans for over two years, from a current policy baseline this would translate into even more austerity, in the form of a substantial tax hike on approximately 30 million people.

There’s also a looming health insurance price spike coming this fall, as subsidies for Affordable Care Act exchanges expire. When asked whether he was concerned about this severe inflationary action, Senator and Emperor for Life Joe Manchin (D-WV) responded, “you gotta start paying down debt” to fight inflation, and “there’s only so many dollars to go around” to … prevent inflation in health insurance rates. The Fed shouldn’t be aiding and abetting steel-trap logic like this by pushing very hard with its economic lever in the same direction to bring investment, hiring, consumer spending, and economic activity to a halt.

And, of course, after the Republicans take back control of Congress this fall (and assuming the Supreme Court continues its radical agenda of dismantling the state entirely) the prospects for doing anything besides accelerating the pace of this double punishment are slim to none. 

It seems like forever ago but we did say at the start of the Biden Administration that these were the stakes.  

This is all so so much cart before the horse. If Biden and the current Congress fail to pass the PRO Act and the For The People voting rights reform, then the resurgent right is going to burn everything down in a few years. https://t.co/ZOWbBa6I3e

— skooks (@skooks) March 27, 2021

How is all that going?

Just mashing buttons

Logistical supply of goods and services is not a magical thing that just happens. Americans' extremely limited understanding of economics and markets (it's all done by some invisible hand of God or something!) is one reason why people can't get their heads around what "inflation" is. It's also what gums up the works politically such that the only possible policy response is for the democratically unaccountable bankers at the Federal Reserve to just mash a button.  What does the button do, though?  David Dayen says it pretty well. 

In fact, the rationing doesn’t stop with formula and vaccines; it’s our formal economic policy. Federal Reserve interest rate hikes to stop inflation are designed to “tamp down demand,” a euphemism for throwing people out of work in the hopes that millions will lack enough money to buy things. The current strategy is to ration our way through inflation, despite the fact that interest rates can’t end lockdowns in China or halt the war in Ukraine, the primary current drivers of the price squeeze.

What this comes back to is that public policy has relied—absurdly—on belief in an automatic process of capitalism, where shortages not only shouldn’t but cannot happen. When that internalized promise is not kept, people get really damn angry about it, and they should. They should know that it’s the result of decades of bad policy: monopolization, centralization of production, lax regulatory response. Until we recognize this deficiency and start re-engineering policy to ensure the general welfare, that anger will reap a whirlwind in November and beyond.

An angry "whirlwind" whipped up through a public deliberately kept ignorant by an aloof ruling class indifferent to its suffering is not going to be a good time for anybody.  But don't worry. They've got another button to mash on if that starts to get out of hand.  It's the one that buys more cops. 

WASHINGTON — President Joe Biden on Friday urged states and cities to use unspent money from last year’s $1.9 trillion Covid relief package to fund crime prevention programs and hire police officers.

The president stressed the need for more funding of public safety programs at a White House event with mayors and law enforcement officials.

“To every governor, every mayor, every county official, the need is clear, my message is clear: Spend this money now; use these funds we made available to you; prioritize public safety,” Biden said. “Do it quickly before the summer, when crime rates typically surge.”

COVID numbers are already going up, the supply of masks and vaccines is running low, and the Democrats just decided it was more important to spend $40 billion on a war in Europe. Now, as the Fed prepares to deliberately induce a recession, the President wants to spend money already allocated for COVID relief on a war at home. It's going to be an interesting summer. 

What does "the economy" do?

David Dayen, writing in today's New York Times about generational supervillain Larry Summers, comes up with this concise little summary of US economic policy as espoused by both ruling parties over the past 50 years or so.

Mr. Summers was not especially novel in his preferences. He fit within an economist consensus that has largely governed the country since the late 1970s. The free trade consensus enabled corporate executives to chase cheap labor and centralize production. The just-in-time consensus pushed companies to only order what’s needed to pass on to customers, with inventories seen as unnecessary costs. The bigger-is-better consensus encouraged mergers and market dominance. The deregulatory consensus breaks worker power and greases the whole system. The Wall Street consensus lets investors dictate adherence to everything else, demanding ever-higher profits and returns that flow not into reinvestment but to them, in the forms of stock buybacks and dividends.

Suck the life out of workers all around the globe so that a very small class of asset owners can hoard the wealth that is extracted. The rest of this article is an explanation of how this strategy stretched itself thin and became vulnerable to real world "supply chain disruptions" caused by events like global pandemics and climate change. "Resilience" is a popular political buzzword these days but we do not use it to talk about becoming a more resilient society. Instead we mostly talk about "risk shifting" in order to keep the wheels of this machine greased by the blood of the poor.  

You don't even have to put your NYT down today in order to see that in action.  This, for example, is from another feature article. 

Poor nations are far more exposed to climate risks than rich countries. Between 2010 and 2020, droughts, floods and storms killed 15 times as many people in highly vulnerable countries, including those in Africa and Asia, as in the wealthiest countries, the report said.

That disparity has fueled a contentious debate: what the industrialized nations most responsible for greenhouse gas emissions owe developing countries. Low-income nations want financial help, both to defend against future threats and to compensate for damages they can’t avoid. The issue will be a focus when governments meet for the next United Nations climate summit in Egypt in November.

“Climate change is the ultimate injustice,” said Ani Dasgupta, the president of the World Resources Institute, an environmental group. “People with the fewest resources, those least responsible for the climate crisis, bear the brunt of climate impacts.” He added, “If you don’t live in a hot spot, imagine instead a roof blown away, a village well overwhelmed by salt water, a failed crop, a job lost, a meal skipped — all at once, again and again.”

Too often, we write and think about these issues, the climate, the pandemic, even  "the economy" as unitary existential questions rather than the contentious political matters they actually are.  Political action is required to break the power of the wealth hoarding class and empower people to build a fairer society. Otherwise the status quo will cause millions to suffer ever more intensely. As Dayen writes, 

The bottom line is that a system without redundancy and flexibility, which assumes that the corporate executives who control it are doing everything in their power to prevent it from breaking, is simply unsustainable.

The shocks will only continue until we reverse course on this prevailing consensus. Democrats put their faith in an economics profession that is far too distant from on-the-ground realities to grasp the consequences of globalization, monopolization, financialization, deregulation, and just-in-time logistics. They failed to recognize how things could crumble because of the vulnerability they engineered.

No country can be perfectly self-sufficient; imports and shipping will still exist. But we can ensure some stability through bringing back manufacturing of critical goods to our shores, while maintaining productive capacity and strategic reserves. Public utility regulation can ensure smoother flow of goods, and competition policy can eliminate price gouging. And infrastructure investments like we’re currently embarking on can force open bottlenecks.

Economists will howl that losing efficiency will raise costs. Those words ring hollow in the face of the highest inflation in 40 years. Broken systems raise costs far faster than resilient ones.

"The economy" as it is currently designed seeks to isolate the wealthy few from the rising costs of "broken systems" by shifting those costs onto the shoulders of the many poor.  That is the first thing that has to change.  Simply put, we cannot have true resilience until we have justice.

Well, then

Listening to irate New York hedge fund billionaire Leon Cooperman on CNBC right now lamenting people "sitting at home getting their checks from the government, trading their stocks."

“This fair share is a bullshit concept," he shouts. "It’s a way of attacking wealthy people." pic.twitter.com/zFW6o1MFND

— Jake Offenhartz (@jangelooff) January 28, 2021

Hey at least there's still a way to attack wealthy people.  (Don't worry they'll fix that soon enough.)

The game is stopped

The thing about the stock market being a big absurd bubble that doesn't have anything to do with measuring actual value in the economy is that everyone knows that already and it is boring to point it out. The interesting point lies instead in how obvious it is that no one will ever do anything about it and nothing will ever change.

We've reached a fundamental terminus of development. There is no real economy to return to anymore. We don't create wealth at all. We just concentrate it through arbitrage and "disruption" and recycled imaginary capital. And so public policy isn't what we traditionally understood it to be anymore. It's not about promoting growth or fighting inflation. Instead it is all about rigging the system to protect the hoarded assets. Everything is frozen in place and the churn of the markets is just an illusion. If the bubble "pops" there's literally nothing there. The bubble cannot fail us anymore. We can only fail the bubble. 

And again the really interesting thing is people know this. Even people who don't have an academic sense of how the economy works understand it intuitively. That's why this whole Gamestop fiasco isn't shocking anyone into action. If this had happened at a less broken stage, the point would have been to expose the absurdity of the system so it can be shamed into reform. But everybody already knew the system was rigged. We were way past the point where shock or satire would make any difference.

It's like that thing where Donald Trump became President. You'd think that would have been a wake up call indicating something was deeply flawed with our version of democracy. But what it really demonstrated was that there wasn't anything there to rescue either and that everyone knew it. That's what Gamestop and AMC going "to the moon" is like. It's like just letting Donald Trump be President. It just shows that everyone knows it's all rot anyway.

The latest shock

Was it a coup? Is it still a coup? Will it be a coup? Who is a terrorist? Should we use that word at all?  What color is the "threat level"?  Are we frightened enough? Who knows? Does it matter? 

At the end of the day somebody is going to make a lot of money building a bigger and scarier surveillance apparatus. That's what's really important. 

Defense contractor Booz Allen Hamilton made an undisclosed strategic investment in Tracepoint, a technology startup with Baton Rouge roots. 

Tracepoint LLC, a digital forensics technology startup in New Orleans, was co-founded by Baton Rouge-based disaster response business Plexos Group and several other experts in the field in 2012. 

Plexos Group CEO David Odom said that the investment "affirms the unique value this growing company brings to the cybersecurity industry." Plexos Group develops new companies and invests in startups as part of its market strategy, according to the company. 

Tracepoint conducts background screening for employment, tenants, credit checks and drug and alcohol testing.

The new economy is built on shock-driven paranoid reaction.  Can't do anything to stop the pandemic-depression causing people to lose jobs and homes and descend into despair.  But we sure can invest in keeping an eye on them.

Noblessse Oblige

It's not quite the techno-feudal state we're headed toward just yet but it is beginning to take on some of those characteristics. 

If there’s anything that substantiates the allegation that the United States is a failed state, it is Bill Pulte’s Twitter mentions. To read them is to grasp the cruelty and irrationality of American capitalism.

For five full decades, the nation has undergone a systematic, large-scale upward redistribution of wealth. Meanwhile, for reasons ranging from public relations to personal gratification and absolution, the rich are occasionally obliged to engage in a little charity, which is acceptable to them so long as it is in the amount and to the beneficiary of their choosing. Public records reveal that Bill Pulte donates exclusively to Republican candidates — a bleeding heart in the streets, a fiscal conservative in the sheets.

Disquieting in ordinary times, the spectacle of Twitter philanthropy is bone-chilling during the COVID-19 crisis, when an uneven and insufficient government economic response has left tens of millions of people high and dry.

Stimulus for some

Now seems like a terrific time to place more capital into the no-doubt soon to be booming indoor golf arcade business. 

After construction delays caused by money trouble at its corporate parent, work on the Drive Shack driving-range complex at the site of the former Times-Picayune building on Howard Avenue appears to be back on track.

The "golf-entertainment" venue, which is being built on a site owned by developer Joe Jaeger and partners, has been beset by difficulties since it was announced two-and-a-half years ago, the latest being a series of lawsuits by contractors demanding payment on overdue bills that had stacked up during the coronavirus pandemic.

But on Monday, Drive Shack's New York-based owner said it had sold its Rancho San Joaquin golf course, located in Irvine, California, for $34.5 million, giving it funds to continue work on the stalled $29 million New Orleans project as well as a mini-golf venture in Dallas known as The Puttery.

Seems a bizarre decision but, then, it is their money...

Wait, what's that?  Oh sorry, no, turns out that it's also public money.   (from 2018)

The developers who want to turn the former Times-Picayune building on Howard Avenue in New Orleans into a three-story indoor golf attraction received final approval Tuesday (Aug. 14) on a plan that basically freezes their property taxes for a dozen years.

The Industrial Development Board, which must sign off on such tax incentives, agreed to lock in land and building values for Drive Shack. The 62,000-square-foot, $29 million facility will include 90 golf ball hitting bays, a restaurant, bar, arcade and conference rooms. To the rear of the building, 183,000 square feet of artificial turf will cover the driving range. Plans call for 265 parking spaces on the property and additional off-site parking under the Broad Street overpass.

Still, who are we expecting will want to spend money on this amusement?  Even after (if!) we arrive at a moment when people generally feel safe going to crowded indoor venues again, will anyone even be able to afford it?  Maybe Drew Brees?  But we read here that he is already building his own private Drive Shack so I guess he is out. 

According to the breathless TMZ report, “Drew's new pad is coming with ALL the bells and whistles … from private access to a bar/lounge to a golf simulator room."

The likely answer is, a lot fewer people will be able to afford to pay for anything. And that in turn leads to a lot more fewer people able to pay for things.  And that can get... very bad. 

But as lockdowns have been lifted in most of the country and businesses have been able to reopen, that supply shock has waned, only for a new problem to emerge: weak demand. In other words, a supply shock has been replaced by a shock to demand.

Some of the weakness in demand is because we’re on the verge of a classic recessionary cycle: Since the stimulus payments to unemployed workers ended in July, people either have less money to spend or are worried about spending it, which means businesses have less revenue, which makes them cut back on hiring and investment, which means less spending.

One very simple solution to this would be to just give people money so they can buy things.  It's what you do when you want to.. stimulate.. the economy.  Is that what we want to do? Besides, given that we've already decided to give a great big tax subsidy to Drive Shack and its developers, there should be no problem loading up their potential customers as well.  You would think it is but, the evidence of that sure is scarce.  Or at least it changes day-to-day. 

We're never coming back from this

Not sure if it's really sinking in for people yet, but "the economy" on the other side of COVID just isn't going to have as many full time jobs as it did before. 

There are still 10.7 million fewer people with jobs than there were in February before the pandemic, although just over half of the jobs lost in March and April have now been recovered. At this rate, it would take the economy another 16 months to gain back those jobs, although economists say that job gains get more difficult for every month that the recession lasts.

All 10.7 million of those jobs are not coming back.  That isn't part of the plan. The bosses have already won the pandemic and are going to be fine without most of us.

We aren't in the early, completely catastrophic early days of the crisis anymore. People making above $60k are basically back to work, according to the Opportunity Insights Data. The group that is still badly struggling is low-wage service workers. pic.twitter.com/XSRhjokFTc

— Jordan Weissmann (@JHWeissmann) October 1, 2020

What's left to do now is for the rest of us to "just get used to" the new slightly shittier normal. Which is why, even today, as the nation woke up the news that the President himself has tested positive for the virus, the push is on to end the emergency and impose a sense that the current state of affairs is just the way we live now and that it's time to get on with that.  

Which is why, despite Nancy Pelosi's performative "optimism" that the Trump diagnosis changes the political dynamic, the thing to understand is that help is not on the way.  The US economy... insofar as what it can produce for the benefit of poor and working class people... slid completely off the edge of help in 2008 and has not been brought back from that.  The pandemic is just another step in normalizing the status to which most of us have been relegated.  We're never coming back from this.  We aren't really even expected to.

The problem

This is an article about the advance of workplace surveillance technologies.  Paranoid, profit-driven bosses are able to marshal a terrifying array of all seeing and all knowing machines to gain complete and intimate knowledge of workers' actions, associations and habits in order to predict and manipulate their behaviors.  We live in hell.

But we have always lived in hell.  Your boss may have super powerful computers and cameras to track you with now but the impetus to control and squeeze the absolute most value out of workers is a practice that stretches back to slavery.

In 1750, wealthy slave owners in Jamaica and Barbados would meticulously track and manage enslaved workers in order to maximize their productive output. What business schools today call “scientific management” actually has its very roots in the trans-Atlantic slave trade. Plantation owners were determined to extract every last bit of labor they could get from enslaved workers, meticulously tracking, documenting, and analyzing their every move in order to maximize productivity and profit. According to Harvard Business School researcher Caitlin Rosenthal, these techniques were then adopted widely in the United States after a slave owner named Thomas Affleck advanced those surveillance techniques to include “sophisticated calculations” that “measure productivity in a standardized way,” thus allowing “planters to determine how far they could push their workers to get the most profit.” After years of capitalist development, the plantation owners and capitalist executives of today are armed with more intelligent technology that can, in a millisecond, do what Affleck once did with only his eyes and a hand-written spreadsheet. High-tech corporate monitoring of workers today undoubtedly stems from this legacy of meticulous and detailed tracking of enslaved workers in order to extract the most profit from them, and to quell potential rebellion and collective action.

And, of course, the COVID crisis has provided yet another opportunity to expand these practices. Bosses conflate their own desire to track workers' movements with the public health concern over "contact tracing" in order to deploy new and intrusive technologies.  The bosses win the pandemic again.

Anyway the real reason I flagged this article is that it contains a single paragraph that can be cut out and inserted into any story about any social and political conflict going on in the United States in the 21st Century and it will serve as the essential context for what is really being fought over.

Due to advances in workplace technology following World War II, the productivity of the workforce has skyrocketed. Yet wages grew to a lesser extent until 1973, when output soared and wages stagnated even further. Since 1978, CEOs’ salaries have increased by 970 percent, making nearly 300 times more than their average worker. While companies are increasing their profit with these technologies, workers aren’t seeing any corresponding increase in their wages. Instead, those profits are going directly into the pockets of corporate executives.

We may live in hell and have always lived in hell, but the specific bit of hell we're in right now extends from our failure to overcome this problem in particular.  One might expect a situation like that to become unsustainable the longer it persists.  And *gestures widely at everything around us unraveling* could indicate that, yeah, it's not holding up so well at the moment.  The new surveillance technologies are one response meant to hold the fraying system together. They may work too! But, until the underlying is resolved, more draconian and frightening responses than even this will undoubtedly appear.

Just remember 2020 was the good year

After the current golden age ends it starts to get really dicey.

Scott, of PAR, worries of a crisis in New Orleans, in particular. At the end of July, supercharged unemployment benefits of $600 a week on top of the state’s cap of $247 a week will end. Evictions have resumed after being suspended for months. The Paycheck Protection Program funds for many businesses are being exhausted, and the customer base for a significant chunk of New Orleans’ economy, tourists, have vanished.

“You could end up with both a financial crisis for government services and also a real struggle for the human condition,” Scott said.

The Dread Index

A little over a week ago, in keeping with the (obviously very well thought out, very safe and successful) "Phase 2" reopening process, the First and Second City Courts of New Orleans once again began accepting evictions filings from landlords. The response was...  impressive.

Last week, some courts and justices of the peace accepted eviction requests, but didn’t begin assigning them court dates. Badon waited until Tuesday, the first full day after Edwards’ order lifted.

Badon said his clerks on Tuesday received 63 requests for evictions, compared to about 25 on a normal day.

And that's after having turned away an apparently sizeable number of landlords who are still constrained by the federal rules that pause evictions on certain properties until August 25.  The city courts had been urged to push back their moratorium to match the federal guidelines but they decided to move ahead anyway.

It's hard to know what the reasoning is there. But there has obviously been pressure from property owners. We know they've been talking to the mayor, at least. In this interview back in April she was already talking about the coming eviction crisis in terms of having to "find a balance" with the needs of "our landlords."

She must have still been thinking about "our landlords" this week when she extended the deadlines for short term rental license applications and permit extensions. This extension even applies to STR licenses that were set to expire anyway due to a recent change in city regulations. It's basically using COVID as an excuse to keep STRs operating even while we are allowing people to evicted from their homes. That's one hell of a way to strike a "balance."

Anyway thanks to these policy decisions our leadership has made on purpose, a wave of evictions is coming soon.

NEW ORLEANS, La. (WVUE) - As the coronavirus pandemic persists it is feared that many low-income families in Louisiana and around the country could face eviction soon and as a result homelessness.

The Center for Planning Excellence of Baton Rouge and Urban Footprint released their analysis of the housing crisis amid the pandemic.

Camille Manning-Broome is President of the Center for Planning Excellence.

“In Louisiana, our development patterns are increasing the likelihood of this, of homelessness and high-risk burden because many areas your combined housing and transportation costs had up to more than 50 percent of your income,” Manning-Broome said.

The analysis found that Louisiana ranks 3rd in the nation for having a high risk for evictions due to job losses. Further it says 130,000 households across Louisiana are at risk of evictions and it shows the parishes most in need of rental assistance beyond July 31 when federal protections and assistance expire are in order of need, Orleans, Jefferson, East Baton Rouge, Caddo, Lafayette, St. Tammany, Tangipahoa, Calcasieu, Ouachita, and Bossier.

For further context, here is a cheering analysis of the Census Bureau's "Household Pulse" survey which finds:

Based on the Household Pulse Survey results released on June 17, which examined responses between June 4 and June 9, almost one-third of all households expect to experience a loss of employment income over the coming four weeks. Fully 10 percent of American families—that’s 25 million, half of which have children at home—did not have enough food to eat in the prior week. Even more disturbing, one in five households—over 50 million in total—are doubtful that they will be able to afford sufficient food in the coming month. And of the nation’s 65,000,0000 renters, almost 20 percent were unable to pay their rent last month and an even higher percentage—close to 30 percent—doubt that they will be able to pay their rent in the coming month. 

This week, another one million plus new unemployment claims were filed.  So it's staggering to think how many households are currently trying to calculate, according to their savings if they have any, how much time they might have between the day they are laid off and the day they are evicted. Call it the Dread Index.  And it's a frighteningly short number now that the courts are ready to hear evictions again.

Just remember these are the good times

According to Nouriel Roubini, it only gets worse from here.

Specifically, Roubini argues that the massive private debts accrued during both the 2008 crash and COVID-19 crisis will durably depress consumption and weaken the short-lived recovery. Meanwhile, the aging of populations across the West will further undermine growth while increasing the fiscal burdens of states already saddled with hazardous debt loads. Although deficit spending is necessary in the present crisis, and will appear benign at the onset of recovery, it is laying the kindling for an inflationary conflagration by mid-decade. As the deepening geopolitical rift between the United States and China triggers a wave of deglobalization, negative supply shocks akin those of the 1970s are going to raise the cost of real resources, even as hyperexploited workers suffer perpetual wage and benefit declines. Prices will rise, but growth will peter out, since ordinary people will be forced to pare back their consumption more and more. Stagflation will beget depression. And through it all, humanity will be beset by unnatural disasters, from extreme weather events wrought by man-made climate change to pandemics induced by our disruption of natural ecosystems.

There is also some hopey talk in there about a “more inclusive, cooperative, and stable international order" emerging out of the cataclysm. But I would counter that argument by gesturing blithely toward the entire history of everything. Our political and economic system doesn't build a better world out of disaster. Instead it ruthlessly exploits opportunities extract every last bit of value out of whoever is being murdered for the greater profit of whoever is holding power.

To illustrate this, I always return to the "existential" problem of Louisiana's sinking coast. Ravaged by decades of fossil fuel extraction and sea level rise, it has reached a "tipping point" beyond which, we now know, it cannot be saved.

The study does not include a map showing what the new boundary of open water will be. But Törnqvist said he expects the eventual shoreline will parallel what's known as the Baton Rouge Fault, an east-west line where land heights today are at about 15 feet above sea level. For the New Orleans area, that would be along the North Shore, somewhere near Interstate 12.

Törnqvist said the biggest question now is how long the state's wetlands will last, and what can be done to slow their disappearance.

"I don't think this is going to happen in my lifetime," he said, pointing out that he just turned 58. "But my daughter turns 10 next week, and a lot of these things are going to happen in her lifetime. I'm not saying that when she is old, we'll have no wetlands at all, but we will have massive changes."

How old were you when you first learned Louisisina would sink into the sea if nothing was done about it? I remember I was about the same age Törnqvist's daughter is now. That was during the 1980s, a very long time ago. What's been done since then? Not much. How old were you when you understood nothing would ever be done?

It would have to be about the time you started watching Louisiana politics.  Our public policymakers only know how to do one thing and that is protect and enable oil and gas extraction no matter the cost.  Which is why, this month, in the midst of a public health crisis, on the precipice of an economic collapse, at the same time we're learning the coast is as good as sunk, the legislature is hard at work, cutting taxes on oil companies and protecting them from lawsuits. It's all they're capable of.

Is this sustainable?  Probably, yes.  I mean, no, the Louisiana coast isn't but that's beside the point.  The system of extraction is what matters and that can go on and on as long as the demands of the extractive regime are met. Eventually no one will be able to live here. But the infrastructure that pulls the oil out of the ground can be maintained so that's what we're going to do.  The consequences of this for "society" are irrelevant. Conditions can get infinitely shitty for the vast majority of people as long as the protected ruling class can sustain itself. And we've learned over and over, that's the point of all of this.  Anyway,  these are the good times. Enjoy them while you can.

"Slow, complicated death"

I don't think anyone has gotten to the bottom of the Bayou Steel closure yet. Governor John Bel sounds very certain that the Trump tariffs are the main cause.  There might be some truth to that claim but we don't have the information we need to assess it thoroughly.  Early reports about the closure (and the Governor's comments) suggested that Bayou's business depended heavily on the availability of imported scrap metal.  But in days since, that assertion hasn't been satisfactorily flushed out.

That doesn't mean the tariff isn't a catalyst. But the scrap metal supply line might be an oversimplification of how.   We read here that steel producers have suffered under the tariff due to the resulting "uncertainty."

The imposition of section 232 tariffs in March 2018 -- 25% on most steel imports and 10% on aluminum -- was supposed to protect domestic producers from cheap imports from China and elsewhere, but the main effect on the market has been to raise the sense of uncertainty, which has been seen mostly in declining inventories by steel-trading middlemen who account for the bulk of the steel market.

Anyway, the mechanics of the tariff's role here are still not very well defined. That's particularly true in the case of Bayou Steel where the company's ownership is being deliberately coy about the closure in what looks like a strategy to avoid compensating workers for the suddenness of their job loss.  Why the Governor isn't being more aggressive on that front, we do not know.  One would think standing up for laid off workers would be a higher political priority than issuing disputable statements about the Trump tariffs. He may be on the right track with the latter course, but it's a much more confusing public fight to pick than just standing up for workers in crisis.

At least the Trump ogres, in their response to John Bel, actually identify the vulture capitalist private equity firm that has been picking the company apart this whole time.  Of course, they say it like that's a good thing.

Bayou Steel folded like a cheap tent under the weight of a leveraged buyout by Wall Street vultures picking the carcass of a highly inefficient and antiquated plant.

That's a Trump Administration spokesperson telling us basically that American jobs deserve to be zorched by Wall Street and the Governor hasn't said a word against that because he too believes all things must bow to the "efficiency" of the market.  If only we would get rid of Trump and his "D.C. style politics" we get back to the bi-partisan work of handing out huge state subsidies to heavy industry.  That's how the economy is supposed to work, right? John Bel seems to think so.  His opponents definitely think so too. Their only real beef with him is they would prefer to be the person handing out the favors themselves.

This guy also seems to think so.

Jeff Sands, an investor who specializes in rescuing midsized companies near collapse, said he had tried contacting Black Diamond officials last week, including Stephen Deckoff, the firm's co-founder and managing principal, as well as the lawyer handling the bankruptcy, Christopher Ward, of Polsinelli PC in Delaware, who said initially on Monday that he couldn't remember exchanging emails with Sands.

But even he isn't that optimistic.

Sands said that since the company is now in bankruptcy proceedings, he feels the prospect of keeping it going has dimmed.

"I’m cynical," he said. "It will likely just die a slow, complicated death.

"We’ll follow and bid but the odds of it happening quick enough to keep the customers, workforce and vendors is slim."

So that's cheerful. Even in the best case scenario Sands, or an investor like him, moves in to "rescue" Bayou Steel, probably through a regimen of job and benefit cuts plus a renewed package of state tax exemptions.  The alternative is slow, complicated death, though so, what would we prefer?