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3/16-17 News Roundup & OT

The Progressive Wing Posted on by

The Ides of March have come and gone.

The Impacts of Green New Deals on Latin America

In response to an accelerating climate crisis, activists and policymakers have in recent years urged governments to move away from fossil fuels and at the same time create new clean energy jobs, particularly for workers in the oil, gas, and coal sectors. These proposals fall loosely in the category of “Green New Deals,” which references the government stimulus packages launched by Franklin Delano Roosevelt to rescue the U.S. economy during the Great Depression of the 1930s. While some of these Green New Deals are market-driven reform packages with an emphasis on decarbonization, others propose more significant economic and social transformations.

The European Green Deal, initiated at the end of 2019, aims to combine a transition to clean energy with an emphasis on economic equity. A similar initiative in the United States, associated most visibly with a resolution introduced at the beginning of 2019 by Rep. Alexandria Ocasio-Cortez (D-NY) in the House and Sen. Ed Markey (D-MA) in the Senate, has inspired some elements of the Biden administration’s economic stimulus bills as well as some stand-alone legislation that has not yet passed Congress. In 2020, the South Korean government made a Green New Deal part of its official policy with an emphasis on boosting renewable energy and creating jobs in that sector.

The Global South is both present and absent from these initiatives. It is absent in that mainstream Green New Deals focus on the reactivation of economic growth in their own countries or regions, and the global South is scarcely mentioned. And yet the Global South is very much present as well, for many of the materials required in clean energy infrastructure come from this vast region. In other words, Green New Deals depend on a resource flow from lower-income countries without taking responsibility for the possible impacts that may have on local or transnational ecosystems and societies.

Latin America plays a disproportionate role in this resource flow. For centuries, the continent submitted to the extensive extraction of precious metals and other valuable resources by colonial powers, what Uruguayan writer Eduardo Galeano described as the “open veins of Latin America.”

That era is not over. Since 1970, according to a 2020 article in the journal Dialogos, the extraction of resources from Latin America has increased fourfold, greater than the global average. A significant portion of these resources leaves the continent as exports.

A transition away from fossil fuels currently requires a vast amount of minerals to build the infrastructure of renewable energy. According to the World Bank, the extraction and refining of minerals such as lithium, graphite, and cobalt will increase by 500 percent by 2050. More than 50 percent of the world’s supply of lithium, a key component in solar panels and the batteries in electric cars, can be found in the Lithium Triangle, a vast area of salt flats spanning Argentina, Bolivia, and Chile. Meanwhile, nearly 40 percent of the world’s copper, another key component in “sustainable” energy infrastructure, can be found in Peru and Chile.

“The majority of Latin American economies import at a higher price than they export,” points out Miriam Lang of the Universidad Andina Simon Bolivar in Ecuador in a recent workshop cosponsored by the Ecosocial Pact of the South and Global Just Transition. “In other words, they are decapitalizing in material terms without generating positive economic returns. This reinforces the idea of an unequal ecological and economic exchange.”

The increase in extraction of natural resources from Latin America—fossil fuels but also minerals like lithium and raw materials like balsa wood—has a direct and negative impact on the communities where the extraction takes place. “This energy transition is being promoted to avoid the natural disaster of climate change,” notes Esperanza Martinez, a biologist and lawyer with Ecological Action in Ecuador. “But in the Global South we see that these actions have nothing to do with natural disasters. These are manmade disasters.”

The extraction, for instance, has taken a huge toll on the natural world. Biodiversity has declined worldwide since 1970 at a rate of 68 percent, according to the World Wildlife Fund. But the figure for Latin America and the Caribbean is an astonishing 94 percent.

Enrique Viale, the president of the Argentine Association of Environmental Lawyers, draws a parallel to the development debates of the 1970s when the countries of Latin America were pushed toward making considerable sacrifices in the name of economic growth. “Today, in the name of the energy transition, everything is approved,” he says. “We’re going to build new nuclear plants: because of the energy transition. We’re going to do offshore oil and gas drilling: in the name of the energy transition. All for the energy transition of the Global North, we are going to sacrifice our territory yet again. Before it was in the name of development, and now it’s in the name of the energy transition.”

Meanwhile in the Global North, the Green New Deals recognize the urgency of climate change and the necessity of combining economic justice with decarbonization. But they do not propose complete economic transformation. “I would call the European Green Deal a passive revolution,” observes Ulrich Brand, head of the Research Network Latin America at the University of Vienna. “It’s an attempt by elites to change the resource base of the economy, the energy base, without changing the power structure or the dominant logic of capitalist growth and accumulation.”

As it stands, the transitions envisioned by the Green New Deals run the risk of simply shifting the burdens of tackling climate change from vulnerable communities in the north to those in the south. “We can’t just shift zones of sacrifice around,” notes Rajiv Sicora, senior policy advisor for U.S. Rep. Jamaal Bowman (D-NY). “To eliminate them altogether, we’ll need global cooperation on genuinely democratic models of development.”

The U.S. Green New Deal

The Green New Deal in the United States is largely aspirational. It has appeared in the form of a nonbinding resolution in Congress but not as a piece of legislation. It has influenced parts of the Biden administration’s climate policies, but the most significant portions of that agenda have not passed Congress. And it serves as a rallying cry for U.S. progressives—and a lightning rod of criticism from the right wing—though it translates into very different programs depending on which activists you consult.

“There are some ways that the Green New Deal has already made a tangible contribution,” Rajiv Sicora reports. “The Biden administration has set some ambitious goals, though they’re not in line with a U.S. fair-share approach to global emissions nor do they deal with the climate debt to the Global South. The administration, for instance is trying to get to fully renewable electricity generation by 2035. Another direct influence is the Civilian Climate Corps, which is modeled on the Civilian Conservation Corps of the New Deal that put unemployed young men during the Depression to work building parks, planting trees, and doing ecological restoration projects. Alexandria Ocasio-Cortez played a central role in defining what that proposal would look like if it were implemented.”

The administration, he continues, “has also placed a genuine emphasis on environmental justice, at least within borders of the United States. It has set a goal of distributing at least 40 percent of the benefits of climate investments to historically marginalized communities, those who have borne the brunt of the impacts of extraction and the combustion of fossil fuel, and the other harms and injustices of our economy.” This Justice40 initiative, he adds, “synthesizes decades of work by the environmental justice movement led by Black, Brown, and Indigenous communities in the United States.”

Although the administration has yet to push its major economic bill, Build Back Better, through Congress, it did manage to pass an infrastructure bill last year. “They’re trying to claim that this infrastructure bill is climate-friendly,” Sicora adds. “But it invests more in car and highway infrastructure than in public transit, which is outrageous.”

He contrasts the administration’s approach with the more transformative Green New Deal, “which uses an emergency framework and stresses the importance of improving the material lives of everyday people and the need to fundamentally restructure our economy. The Green New Deal envisions creating millions of unionized jobs. To do this, we have to mobilize a holistic government response over the next decade.”

The differences between the more transformative Green New Deal and the Biden administration begin with the scale of funds. Bernie Sanders, when he ran for president in 2020, “put out a detailed and visionary Green New Deal platform that called for investing $16 trillion over 10 years,” Sicora continues. “President Biden in contrast started out with a $2 trillion proposal that was part of his signature legislation, Build Back Better.” The climate spending in that bill has been reduced to $550 billion, and still the Democratic Party has not managed to get Build Back Better passed in Congress. “And the leadership of the Democratic Party has not had a strategy to mobilize people at a grassroots level to push for this, or to overcome the resistance of corporate-backed Senators,” he adds.

Another major difference involves the drivers of the transition. For the Biden administration, the private sector is the leading edge of the efforts to scale up wind and solar. For advocates of a Green New Deal, “the public sector should be the driver of this transition,” Sicora explains. “The public sector can do it faster, and ensure high standards and democratic participation. We can develop the economic planning capacity to phase down fossil fuels at the same time as we scale up renewables.”

This emphasis on the public sector extends to three bills associated with the Green New Deal: on public housing, on cities, and on public schools. Sicora has worked closely on the schools bill. “Every school in this country should be safe, comfortable, and zero-carbon,” he says. “But right now, school facilities across the country are literally falling apart, and health harms and climate disasters are an everyday threat to Black, Brown, and low-income students. Public schools, as Rep. Bowman says, are the heartbeat of our communities. They’ve suffered from neglect and disinvestment for decades, but it’s hard to think of a single institution that touches the lives of more people.”

The three bills also illustrate the organizing strategy of Green New Deal advocates. “We’re also talking about what coalitions we need to pull together to win radical change,” he concludes. “We need teachers fighting alongside workers who would benefit from retrofitting schools and alongside student climate activists. Even if these bills aren’t close to passage right now, we can use them as powerful organizing tools, and we’ve seen those coalitions start to come together to push for related funding in the Build Back Better package.”

The European Green Deal

The European Green Deal, first introduced in December 2019, promises “economic growth decoupled from resource use” and envisions increasing the share of renewables to 40 percent of overall energy use, renovating 35 million buildings to make them more energy efficient while creating 160,000 new Green jobs in the construction sector, and boosting organic farming as part of a “Farm to Fork” program that aims to make agricultural production, distribution, and consumption more sustainable.

The EU has pledged to spend as much as 30 percent of its long-term budget, which would amount to around $700 billion, to reduce carbon emissions by 2030. As part of the plan, a Carbon Border Adjustment Mechanism would effectively apply a tariff on carbon-intensive goods coming into the EU. A Just Transition Mechanism of around $85 billion over six years would help poorer regions of the bloc meet the plan’s goals. Within this mechanism, a “public sector loan facility” would combine grants from the EU budget with financing from the European Investment Bank.

“I see the Green Deal in continuity with the Green economy formulated after the financial crisis of 2008-9,” observes Ulrich Brand. “It is explicitly a growth strategy to transform the EU into a just and wealthy society with a modern, resource-efficient competitive economy. It is a growth strategy designed to give Europe a competitive edge.”

This is not, Brand is quick to add, a complete transformation of the European economy. “It is an attempt to transform the energy basis of the economy but not its political economy,” he explains. “For instance, the plan is to have a certain number of electric cars by 2030, which means it’s not about restructuring the whole transportation system.” Also, the success of the plan is predicated on large-scale resource extraction from the Global South.

More progressive versions of the Green Deal exist in Europe that differ from the official policy in four important respects. First, more progressive versions put the state, rather than private capital, at the center of restructuring the economy. Second, in place of a paternalistic approach, the more progressive versions insist on a just transition in which workers secure good jobs, particularly those in high-carbon certain industries that are being restructured or phased out. Third, not only should the economy be electrified but also certain branches such as automobiles, air transport and the chemical sector should be reduced and reorganized. Although there is some consensus around such reorganization, Brand notes, there is more disagreement about challenging the growth imperative of capitalist economics.

Read the rest here.

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3/1-3 News Roundup & Open Thread

The Progressive Wing Posted on by

How the State of the Union Became One of the Weirdest Nights in American Politics

More than a century ago, Woodrow Wilson gave the first in-person presidential address to Congress since Thomas Jefferson ended the practice in 1801. The new tradition stuck and eventually became the template for the president’s annual “message to Congress.” It was Franklin Roosevelt who coined the phrase, “the State of the Union” in one of those speeches, and by the late 1940s, it had become our national shorthand for the speech. The 20th century transformed what had been, for most of American history, a staid, written report into a giant annual spectacle of presidential majesty and congressional hooting and hollering.

In recent years, thanks to the increasingly commingled worlds of politics and popular entertainment, the annual State of the Union address has evolved into an even grander and creakier spectacle: a nationally broadcast circus of government whose uncanny resemblance to an awards show or grand fund-raising gala has only grown as its cast of characters expanded. Today, the State of the Union functions as a kind of political Super Bowl, Oscars, Met Gala and Rotary Club dinner all in one. As self-serious as amateur theater and as monumental as a coronation, it is one of the weirdest evenings in American life. Only habituation makes it seem normal, and even habit has its limits.

National politicians have always had a kind of fame, but the rise of social media thrust politics into a realm of popular celebrity and turned the campy solemnity of the State of the Union into mere farce. Even the lowliest members of the House of Representatives used to sit at some statesmanlike remove from us, democratic avatars of actual constituencies, yes, but also a kind of abstraction. Now, via social media, we are privy to their passing thoughts, their workout routines and workplace rivalries, their classical American infatuations with crackpot theories. There was once something edifying and even a little mystical about virtually the entire American national government gathering in one place for a grand and unabashedly imperial spectacle. No longer. It has all the mystery and half the charm of a slapped-together awards show, a too-familiar crowd of celebrities who spend the evening alternating between looking overly enthusiastic and terribly bored.

For most of the past century, presidents have given the address in January or February. President Biden’s has been postponed until March. This delay has been attributed to the Covid pandemic, to the ratings competition of the Winter Olympics, and to the hope that last-minute politicking might rescue a few pieces of Mr. Biden’s legislative agenda from obdurate Republican opposition and the dogged lack of cooperation from Democratic Senators Joe Manchin and Kyrsten Sinema. This hope is almost certainly doomed. Mr. Biden will march down the gauntlet of glad-handing members of Congress with his approval ratings at one of their lowest points, a tenacious pandemic, national worry over rising prices and a generally poisonous national mood, not to mention a terrifying Russian invasion of Ukraine that the administration and its European allies could predict but not forestall, and whose course could become more volatile and unpredictable.

A rival nuclear power starting a shooting war in Europe just a few days earlier presents the kind of circumstance in which a State of the Union address could hypothetically be vital. But it is still likely destined to merely be bland news cycle chum. The chatterboxes on the cable channels and the pundits in the political press will debate the “expectations” for the speech, and we will all earnestly pretend to wonder whether our president — older now than Ronald Reagan was when he left office — will be able to summon some heretofore unobserved rhetorical genius to conciliate our sick and tired nation.

I hope that he will subvert expectations deliberately. Mr. Biden’s intrinsic political genius is his ability to act as a mourner and as a bearer of bad news. His greatest act of political bravery was to tell America, after 20 years of lies, that the war in Afghanistan was over and lost, and then to mostly keep quiet and stick to his guns. The stakes are much lower for a gaudy speech like the State of the Union, but he should really do the same. Go up the hill, deliver a dull litany of bullet points, get to bed early and consign this silly ritual to C-SPAN, where it belongs.

In 1796, writing to his great friend, Filippo Mazzei, an Italian physician, farmer, pamphleteer and gunrunner for the American Revolution, Thomas Jefferson complained of the great changes in America since its independence. “In place of that noble love of liberty and republican government which carried us triumphantly thro’ the war, an Anglican, monarchical and aristocratical party has sprung up,” he wrote, lamenting the adoption of British “forms” of pomp and circumstance, especially by the executive and judicial branches. Mazzei’s enthusiasm overcame his discretion, and he promptly dispatched copies of Jefferson’s observations to friends around Europe. They were published in French and Italian, and then made their way back across the Atlantic to the United States, where they reputedly caused a personal rift with George Washington, whose regal presidency — complete with annual addresses to joint sessions of Congress, which Jefferson considered far too similar to a British monarch’s “speech from the throne” — was understood to be a target of Jefferson’s contempt.

Jefferson’s dream of a nation of independent yeoman farmers was a fantasy even in his own time (not to mention a bit hypocritical — can anyone imagine the squire of Monticello driving a horse and plow through 40 rocky acres of Appalachian Virginia?), but his hostility toward the monarchical trappings of an imperial presidency was not wrong. His dream would be undone as America became a continental empire, then a hemispheric power, then an overseas empire and a great industrial and military titan. The centrality and power of the presidency could only increase as America evolved into a modern, bureaucratic state. It was inevitable, with the advent of modern mass broadcast communications, that the president would become a figure of enormous cultural significance as well. By the 1930s, presidents were everywhere on the radio; by the 1960s and the gilded, media-centric presidency of John F. Kennedy, they were culturally ubiquitous, singular synecdoches for America itself.

We are too close to these people now. Pomp can stand a little silliness; it may even require it. But it can’t survive absurdity. The advent of social media ruined celebrity by imitating proximity, and the transformation of politicians into ruined celebrities further destroyed politics. To see an actor whom you only know from movies and glossy magazines glide down a red carpet once or twice a year in a wild dress and borrowed jewels is to be astonished; to live with her everyday eructations of bad musical opinions and worse food photographs is to be annoyed. Likewise in politics. Our ostensible leaders are social media addicts like the rest of us, only more so. Their court rituals and pagan traditions have lost all of their high masonic mystery. We find ourselves watching a regional industry dinner, the sorry spectacle of insiders wallowing in self-congratulation over rubber chicken amid too much applause.

The form is exhausted. Mr. Biden has largely avoided the more ostentatious imperial vibes of his office, in part because he is the least telegenic president since George H.W. Bush. He has none of Ronald Reagan’s actorly charm; he cannot mimic Bill Clinton’s gregarious air of a debauched but beloved country preacher; he lacks Mr. Bush’s jingoistic cheerleading, Mr. Obama’s grandiosity, Mr. Trump’s nasty but effective comic timing. If he were wise, he would embrace his relative plain-spokenness and dislike of spectacle and diminish this absurd tradition.

The founders themselves imagined a new constitutional convention every few generations; perhaps every hundred years is also a good time to come up with new binding national political rites. We could do away with the speech entirely, and simply give out more civic medals for ordinary workers — the supposedly essential Americans whose daily, unseen labor makes the country run even as they are steadily alienated from mass politics and the highflying economy. Otherwise, the speech will continue to be more tendentious, reality-show entertainment. Will Sam Alito mouth off again? Will Nancy Pelosi do another ironic clap? Who will leap to applaud which lines, and who will sit on their hands? Enough is enough. Make the State of the Union boring again. We have been sufficiently entertained.

I would add that choosing to deliver the SOTU when Texas has a major primary….that’s also odd.

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2/28 News Roundup & OT

The Progressive Wing Posted on by

Larry Summers Shares the Blame for Inflation

“Any honest Democrat will admit that we are now all Friedmanites,” Larry Summers wrote in The Times in 2006. Mr. Summers comes from a family of left-leaning economists who saw Milton Friedman as a “devil figure.” But as he moved into the upper echelons of the family profession, Mr. Summers came to have “great admiration” for the conservative thinker and his work.

The transformation reflects how elite economists in both parties reached a rough accord on the importance of free markets, free trade, and restrained regulation. Each side believed they could harness these forces for liberal or conservative ends. And there was little disagreement about the means.

Virtually every American feels the consequences of this today, whenever we visit a grocery store with empty shelves, or do a double-take at the price of an appliance. For decades, economists like Mr. Summers advanced policies like globalization, deregulation, and markets that valued efficiency over competition. They promised that these trends would deliver lower prices. And they did, for a time. But they also left the system vulnerable. During the pandemic, when demand burst beyond what the system could handle, prices for shipping soared, ports clogged, trucks and railroads lacked manpower, and underinvested companies scrambled for logistics workarounds and warehouse space. Increased shipping and distribution costs have undeniably raised prices.

Mr. Summers has been focused on a different story, warning that government spending could increase inflation. With prices rising at the fastest rate in 40 years, he has been lauded for making the right call. “Does the WH owe Larry Summers an apology?” Politico asked last November.

The problem with this reading is that the economy hasn’t really overheated. Real gross domestic product and employment are still lower than prepandemic projections, according to government statistics. Yes, consumer spending patterns have shifted from services to goods, but that began two years ago; the fact that our supply chains still cannot adjust reflects a bigger problem with how they were designed.

Mr. Summers’s claims don’t express an economic truth. They seem designed to deflect blame. A leading economic adviser in the Clinton and Obama presidencies, Mr. Summers is prominent among the fraternity of mainstream economists who are deeply implicated in building the system at the heart of our current predicament, and setting up our economy for failure. If engineers constructed a bridge this prone to collapse, they’d be fired. But with our accountability-free elites, being an economist means never having to say you’re sorry.

Mr. Summers built an early reputation as an economic wunderkind, earning tenure at Harvard at age 28. Stagflation in the late 1970s had sent New Deal-style Keynesianism into retreat, and thrust into prominence Friedman’s vision of a marketized economics that catered to the whims of large corporations. As Friedman asserted, also in The Times, the sole social responsibility of business is to increase profits. Cut regulations, cut taxes, and allow companies to structure markets, people like Friedman maintained, and watch the economy take off.

During Mr. Summers’s formative years, this logic became the dominant current of economic thought. Mr. Summers spent a year under conservative economist Martin Feldstein in the Reagan administration; his generation “re-emphasized the importance of markets and the failures of government,” according to Mr. Summers’s mother, also an economist.

As under secretary for international affairs in Bill Clinton’s Treasury Department, Mr. Summers was at the forefront of encouraging developing nations to open their markets, a kind of enforcer of globalization. Later, as Treasury secretary, he helped facilitate China’s entry into the World Trade Organization and argued that the United States should give China “permanent normal trade relations” (or P.N.T.R.) status. Mr. Summers told the Senate Banking Committee in 2000, “It is difficult to discern any disadvantage to the United States” from the policy.

During the Carter era moves were made toward deregulation in transportation services like trucking and rail. In the Clinton years, a little-remembered law called the Ocean Shipping Reform Act of 1998 helped carry that over to ocean ships. Mr. Clinton also continued a trend toward economic concentration that began in the Reagan administration. If Mr. Summers opposed the deregulation and consolidation that occurred during his tenures with Mr. Clinton and Barack Obama, I have found no evidence that he said anything about it. In fact in 2001, he stated that “the goal is efficiency, not competition.”

U.S. financial services, which under P.N.T.R. pried open the Chinese market, grew enormously powerful in this period, too. Mr. Summers fought the regulation of derivatives and pushed Congress to eliminate the separation of investment and commercial banks. Where finance accounted for 15 percent of corporate profits in the U.S. economy before the 1970s, it grew to 43 percent by 2002, after this economic restructuring. Later, when runaway financial innovations (including the derivatives Mr. Summers did not want to regulate) collapsed the world economy, Mr. Summers, as Mr. Obama’s chief economic adviser, pushed for banks to be protected with bailouts, maintaining the status quo.

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.

The gamble of such a system paid off, for a while. In 2005, Mr. Summers’s longtime collaborator Jason Furman best explained the philosophy when he pronounced retail behemoth Walmart a “progressive success story,” in part because of its ability to deliver low prices. “There is little dispute that Wal-Mart’s price reductions have benefited the 120 million American workers employed outside of the retail sector,” Mr. Furman wrote. That seemed to override everything else: low wages, competitors driven out of business, manufacturing jobs shipped overseas, communities hollowed out across America.

The trade-off was clear: sacrifice resiliency, wage security, and community for the promise of a five-dollar pack of tube socks. And the Summers-Furman side initially delivered: Prices for consumer goods, at least, did fall. Assuring these low prices became an important goal; while some liberals wanted to bring back manufacturing jobs to the United States or maintain reserves of vital goods, the threat of higher costs was enough to keep the system in place.

But the adherents of hyper-efficiency do not seem to have emphasized what might happen if there was a breakdown anywhere in the system. Economists spat out their models and assured us that very little could stop the global production engine. But their models did not adequately contemplate the physical world. And that’s why the system Mr. Summers and Mr. Furman helped build was so primed for collapse, and why the low prices, intended to be the compensation for increased inequality and left-behind regions, vanished in a matter of months.

The policies many of these economists championed during the decades leading up to the pandemic are the policies responsible for the supply chain’s fragility. When disruptions hit the center of global production in China, they spread across the entire world. Specialized facilities producing most of a particular good or component can easily produce shocks with even a small loss of output.

Shipping deregulation passed during the Clinton administration helped lead to ever-larger container vessels that can only dock at certain U.S. ports, further narrowing bottlenecks. The twin ports of Los Angeles and Long Beach are responsible for about 40 percent of all seaborne imports in the United States; by early January, 105 ships were awaiting entry offshore, and import volume had fallen, despite the increased demand, for four straight months. Trucking deregulation has similarly contributed to bottlenecks, as long hours, poor working conditions and inadequate wages have made it next to impossible for port truckers to stay in the industry.

The financier-above-all approach Mr. Summers helped entrench made things worse. Preferences for lean inventories meant there were no reserves when things spun out of control as the pandemic hit. Precision scheduled railroading, a Wall Street tactic of cutting back on service and spare capacity to maximize profits, made it difficult for rail lines to handle rising demand.

Economists often seem to assume corporate self-interest will sort this out, that the prospect of more sales will create urgency to move supply. But concentration along key nodes of the supply chain (three ocean carrier alliances control most shipping, two railroads control eastern routes and two others control western ones) have brought skyrocketing profits to the companies at the center of the chaos. The shipping industry earned twice as much in the first three quarters 2021 as it did in the entire period between 2010 and 2020.

Similarly, big businesses are announcing in earnings calls that they are using this opportunity to lock in higher prices, well above rising input costs. Estimated profits for S&P 500 firms rose nearly 50 percent in 2021. Bigger businesses also circumvented supply chain issues by demanding that suppliers fulfill their orders first, raising costs for smaller rivals. The supply chain mess, in other words, has also been a consolidation event, harming workers and communities.

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.

Mr. Summers seems to acknowledge, at least partially, the extent to which his economic school of thought was responsible for the fragility of the supply chain. In a 2020 interview with The American Interest, he acknowledged the need to develop industrial capacity in the U.S. “In general, economic thinking has privileged efficiency over resilience, and it has been insufficiently concerned with the big downsides of efficiency,” Mr. Summers said. “Going forward we will need more emphasis on ‘just in case’ even at some cost in terms of ‘just in time.’ ”

But it’s not enough for him to simply acknowledge the downsides of efficiency. There is a live debate over how to solve the problem going on right now, as the Biden administration takes the first steps toward prioritizing resilience by attempting to re-regulate shipping companies, encourage competition to weaken corporate pricing power, and support domestic manufacturing. Mr. Summers shouldn’t be an obstacle to this effort or even an interested bystander, watching it unfold; he should be an active enthusiast for cleaning up the mess he made.

More comments, news, perspectives after the jump. This also serves as an open thread.

2/23-24 News Roundup & Open Thread

The Progressive Wing Posted on by

https://www.commondreams.org/news/2022/02/22/bernie-sanders-denounces-russia-indefensible-invasion-ukraine

Sen. Bernie Sanders on Tuesday called for the U.S. and its allies to impose heavy sanctions on Russian President Vladimir Putin and other oligarchs in the country as he condemned Moscow’s escalating military aggression toward Ukraine.

“Vladimir Putin’s latest invasion of Ukraine is an indefensible violation of international law, regardless of whatever false pretext he offers,” Sanders (I-Vt.) said in a statement. “There has always been a diplomatic solution to this situation. Tragically, Putin appears intent on rejecting it.”

In addition to backing sanctions, Sanders said preparations must be made to accommodate refugees displaced by the conflict and called for investments in a global clean energy transition to fight the climate crisis and disempower “authoritarian petrostates” worldwide.

Sanders’ remarks came after U.S. President Joe Biden—in concert with officials in the United Kingdom and the European Union—moved to impose new economic sanctions on Russia following the Kremlin’s deployment of troops into two breakaway territories in eastern Ukraine, which Putin on Monday formally recognized as independent.

To prevent Putin’s effort to expand his country’s presence in the Donbas region from descending into a broader military conflict, peace advocates in the U.S. and abroad continue to urge the Biden administration to double-down on diplomatic efforts, as Common Dreams reported earlier Tuesday.

“The United States,” said Sanders, “must now work with our allies and the international community to impose serious sanctions on Putin and his oligarchs, including denying them access to the billions of dollars that they have stashed in European and American banks.”

“The U.S. and our partners must also prepare for a worse scenario by helping Ukraine’s neighbors care for refugees fleeing this conflict,” Sanders continued, alluding to the possibility that Russian lawmakers’ approval of the use of military force outside the country could lead to a full-fledged war.

In the wake of recent developments in Ukraine, oil prices surged to nearly $100 per barrel on Tuesday, the highest in more than seven years, and European gas futures spiked by as much as 13.8%.

While the U.S. fossil fuel industry is expected to benefit from Germany halting approval of the Nord Stream 2 pipeline due to Russia’s recent actions, people in Europe—already struggling with skyrocketing energy bills—are bracing for even higher costs in the case that Moscow restricts gas exports.

“In the longer term,” said Sanders, “we must invest in a global green energy transition away from fossil fuels, not only to combat climate change, but to deny authoritarian petrostates the revenues they require to survive.”

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