The shortages of catastrophe

Many people have noted how a tiny group of billionaires have increased their share of the world’s wealth during the coronavirus pademic.

A blogger named Umair Haque pointed out that this is no coincidence. There are shortages of all kinds of thing across the economy, driven by the pandemic.  This has driven up prices, mainly to the benefit of corporate monopolies and other big businesses, and of the multi-billionaires who control them.

The shortages ripping across the economy are forcing up prices dramatically — and weirdly. The prices, for example, of used cars are skyrocketing. Clothes and food have gotten dramatically more expensive, from what I can see. And of course electronics — well, good luck getting them.

But this isn’t inflation. Sorry, armchair economists. I know that American pundits love to spout seriously on this issue — but they’re wrong. Inflation is a “wage price spiral.” This is something very, very different. Your income isn’t going up, at least not nearly as much as prices are. And prices are going up because of what economists call an “exogenous shock” — an act of God, or in this case, at least, an act of humankind.

These are shortages of catastrophe. They’re caused by what Covid did to global supply chains. It happened something like this — I’ll oversimplify to make the point easy to grasp. For a year or so, the world plunged into lockdown. Demand ground to a halt for many, many things. Retail stores closed in a tidal wave.

And then as lockdown was lifted, demand began to rise. But by this point, global supply chains — which operate on a “just in time” principle — were wrecked, shut down for too long, unable to cope again with normal levels of wants and needs. 

[snip]

Covid’s ripped the global economy apart — but the next wave of shocks coming our way are going to be much, much bigger. Think about climate change. Electronics were already expensive due to microchip shortages as Covid increased demand, but then there was a fire at one of the main suppliers of microchips in the world.

What is climate change going to do? Cause megafires, megafloods, megatyphoons. And yet increasingly, our civilization’s production of stuff is centralized. Your iPhones come from a few megafactories, and so do all those big TVs, cars, even medicines, food, and clothes. That reflects the mega corporations who make megaprofits from all these products — centralization in production reflects centralisation in profits.

One fire took out the factory which supplies much of the world’s microchips. Now imagine what happens as climate change intensifies, and megafires, megafloods, and megatyphoons become the norm. All that centralised production is at severe risk. Maybe this year the iPhone factory burns down, maybe next year, the Tesla factory does. And so on.

But that — massive risk to production — is just one effect. There’s also a massive and heightened risk to distribution. Think how fast Covid shut down distribution — it’s one reason things are more expensive now. Sending things by boats and planes and trucks is harder in an age of lockdowns and checks and so forth. But now imagine what happens if a megatyphoon takes out this shipping lane, or that fleet of super carriers. Or what happens if a mega flood makes that entire region — which products have to travel through — impassable. Or what happens as ports begin to drown.

Disease, drought, floods and storms would disrupt international trade no matter what the trading system.  But global supply chains are much more fragile than they need to be because of the neoliberal drive to prioritize cost-cutting and short-term profits over stability and sustainability. 

In fact, there would probably be breakdowns in that delicate system even without climate- or disease-related crises.

Matt Stoller on toleration of corporate crime

Matt Stoller is a journalist whose specialty is business monopoly.  He is the author of Goliath: the 100-year war between monopoly power and democracy. 

In a recent interview, he talked about how much better off we Americans would be if our government simply enforced the law against rich and powerful individuals and corporations.

So I’m reading this book, Empire of Pain [by Patrick Radden Keefe], which is on the opioid crisis … … … And it’s a really fun read. It’s not just a good story, it’s actually fun.  I mean, it’s this depressing topic, but it’s actually not a depressive book, which is very hard to do.

I think it’s a really amazing story about modern America and how our economic order works.  Because it’s basically the story of heroin dealers.  The Sackler family, they made Oxycontin knowing that it was addictive, that it was very similar to heroin.  And they induced a prescription drug and then [there was a] heroin crisis.

And they knowingly did it, but they didn’t do it alone.  They did it by taking advantage of a corrupt political system.  They hired corrupt actors and they also corrupted others.

They corrupted the FDA.  They hired Mary Jo White, who you and I know well as Obama’s SEC chair, but she was working for the Sacklers in the mid- 2000s as was Rudy Giuliani, Eric Holder.

There were some Virginia federal prosecutors who had the Sacklers dead to rights probably with felony charges, mail fraud, wire fraud, so on and so forth.  And they were going to bring those charges against the executives at the firm and then they were going to flip to the Sackler family themselves.

How you flip the mob, you start with the mid-level guys and then you go the way up. They were going to do that.

And Mary Jo White actually went over their heads, went to the political people and got them off the case basically. … … …

And just kind of at every stage, Mary Jo White has been helping really the bad guys here. … … …

This happened in lots of different ways. McKinsey was helping them. I mean, we know this. They funded lots of think tanks in DC.  We know why we have a heroin epidemic and it’s not because people just like drugs.

It’s because we allowed the Sackler family to turn our doctors into pill pushers.  And we did it by allowing them to corrupt our politics.  And these are people who should be in jail.

And people like Mary Jo White should be in jail. And the McKinsey consultants who helped set up this heroin epidemic should be in jail, but they’re not. 

And it’s because we have a broad crisis with the rule of law as applied to the powerful.

The system is rigged

Here are some links to articles I found interesting, and maybe you will, too.

Just How Rigged Is the ‘Rigged Game’? by Matt Taibbi for TK News.  “The Division of Light and Power, the new book by Dennis Kucinich, is an epic story of American corruption.”

Interview With Dennis Kucinich on His New Book, The Division of Light and Power, by Matt Taibbi for TK News.  “The former Presidential candidate on his new book, the ‘Punch and Judy show’ of partisan politics and how ‘people move into the system and, instead of changing the system, the system changes them’.”

Dennis Kucinich was a city councilman and mayor of Cleveland, a congressman and a candidate for the Democratic nomination for President.  He was widely ridiculed during his political career, but mostly proved right. 

In his new book, he tells of his 10-year struggle to prevent the Cleveland Electric Illuminating Company (CEI) from taking over the municipally-owned electric power company, Muny Light, in order to remove competition and jack up prices.

CEI manufactured Muny blackouts before holidays, blatantly defied federal laws requiring CEI to provide backup power in case of such blackouts, refused to allow Muny to build lines through its territory to obtain backup power from other utilities, used bought-off pols to help artificially lower the valuation of Muny, and even used its power as an advertiser to obtain editorial review authority over local radio copy involving the company.

Because the decision about whether or not to keep Muny was a no-brainer for any Cleveland resident without a larger financial interest in the deal — as Muny didn’t pay dividends or giant packages to executives, it was able to offer rates 20% below CEI, low enough that Cleveland crafted its pitch to outside businesses around its low energy rates — CEI needed to blast cash at institutions to win allies for its cause.

When that didn’t work, it appeared to use its influence to get rid of critics, like WERE radio host Steve Clark, fired after reporting CEI had asked the state for a rate hike in the same year it was reporting a $40 million profit.  [snip]

Kucinich resists smear campaigns, a recall attempt, every conceivable kind of financial squeeze, and even an assassination plot in refusing to sell Muny Light.

Eventually Mayor Kucinich was faced with a choice of selling Muny Light or defaulting on payments of city bonds.  He chose to default, which plunged Cleveland into bankruptcy.  But years later, Cleveland has come back, Muny Light is a valuable asset and most Clevelanders admit Kucinich made the right decision.

The following is from the interview.

MT: The book starts with a really interesting epigraph about fighting City Hall from City Hall, where you say that in order to fight City Hall, you have to first find where it is.  City Hall is not just the physical structure, but the banks, the real estate combines, the investor-backed utilities . . .

Dennis Kucinich: And the mob.

MT: And the mob, right. So, today, nationally, where is City Hall, for people interested in fighting it? You’ve been in congress. What are some of those forces that are major players that people maybe don’t think about as much?

Dennis Kucinich: You have to look at Wall Street. We have a finance economy now.  Look at the arms manufacturers.  Our monetary system changed over 100 years ago.  The monetary system was privatized. 

‘Economies of fail’ and the vaccine rollout

How Monopolists Slowed the Vaccine Rollout, and Small Business Speeded It Up by Matt Stoller for BIG.  “CVS and Walgreens Didn’t Deliver.  Small pharmacies did.”

Glenn Greenwald on the real threat to democracy

Monopolists Mark Zuckerberg, Sundar Pichai, Tim Cook and Jeff Bezos

The Threat of Authoritarianism in the U.S. Is Very Real and Has Nothing To Do With Trump by Glenn Greenwald.  “The COVID-driven centralization of economic power and information control in the hands of a few corprorate monopolies poses enduring threats to political freedom.”

The curse of Amazon

When I moved to Rochester, N.Y., in 1974, one of the attractions was the number of excellent individually-owned bookstores.   Later on the Borders bookstore chain opened a store here, and I was delighted at their huge selection of books.   The smaller new-book stores went out of business, one by one, but I accepted that s the price of progress.

Click to enlarge.

Borders was pushed aside by Barnes & Noble.   Now Barnes & Noble is losing sales and operating at a loss.  Unless something changes, local bookstores will be replaced by Amazon.

What’s wrong with that? you may ask.  Amazon provides low prices and excellent customer service.  What difference does the lack of a physical store make?

What’s wrong is that Amazon treats its employees like work animals or like machines.   I read an article today about how Amazon has patented wristbands for tracking what employees do with their hands, presumably so they don’t put something in the wrong bin or pause to scratch their noses.

Amazon hasn’t said when, whether or how the new system will be implemented, but employees already are subjected to an inhuman work pace that is determined and monitored by computer.

I don’t want to buy the lowest possible price if it comes at the price of human misery.   I’d hate to see a new Amazon facility in western New York.

Sometimes I give in and buy through Amazon.   This is wrong of me, because I’m helping to make its monopoly power more complete.   But in the total scheme of things, my decisions as a consumer make little difference.  It is the government’s responsibility, not mine, to enforce the anti-trust laws, and make and enforce decent labor standards.

Martin J. Sklar on corporate liberalism

The giant business corporation is a type of institution which has made possible economic growth and creation of wealth on a scale never before seen in history.  It also is a concentration of economic and political power that is dangerous to a free and democratic nation.

One of the great issues of American public policy, for more than a century, has been how we the people can get the benefit of the corporate form of organization without allowing it to swallow up everything else in American life.

Marty Sklar, a college classmate of mine at the University of Wisconsin in the 1950s, went on to become a historian whose field of study was this issue.  I didn’t keep in touch with him after college, but I recently read magazine articles paying tribute to him as a historian on the occasion of his death.  I was intrigued enough to get a copy of his major book, which is out of print.

The Corporation Reconstruction of American Capitalism, written in 1988, is about the debate over corporate monopoly and anti-trust law in the era when corporations first came to dominate the U.S. economy.

It covers roughly the same period and issues as Altgeld’s America, but in a very different way.  Ray Ginger’s book is about the hurly-burly, corruption and violence of street-level politics and labor struggles in Chicago, while Sklar’s book is about high-level discussion of public policy.

American statesmen saw that corporate trusts and monopoly represented a dangerous concentration of power, which farmers, laborers and independent business owners could not withstand.  But at the same time, these same corporations increased economic efficiency and productivity and raised the American material standard of living to a level never before seen.

I remember Marty in his college student days as a strongly committed left-wing radical.  But in his book, he seems well-content with the workings of American capitalism and American statesmanship.