Saturday, December 3, 2022

Mourning The Late Jiang Zemin?

Former Chinese leader Jiang Zemin died at age 96 on Nov. 30, curiously just as the worst outbreak of demonstrations to happen in China since 1989 happened, probably now come to an end, as China both suppresses them, arresting some people based on phones and visual surveillance, as well as some loosening in certain locations of the zero covid policy. Jiang came to power initially in the immediate wake of Tienanman Square in 1989, reportedly pulled up the ranks by retired elders, the unofficial but powerful "Sitting Committee" of the Politburo. Someone with a record as a somewhat opportunistic technocrat, it was initially thought he would be weak, but he remained in power until 2002, and continued to hold the Chairmanship of the Military Commission until 2004, while somewhat weaker Hu Jintao had become General Secretary of the Party and also President. 

Indeed, in his efforts to centralize power totally on himself, the networks of those linked to other powerful figures he needed to put down were probably more allied to Jiang than to Hu. If there was a serious alternative to Xi, it was probably Jiang more than Hu, although obviously Jiang had become very old and ill. 

But his death does pose a difficult moment for Xi. Apparently the state funeral will be this coming Tuesday, Dec. 6. There has been a history of political trouble following the deaths of former leaders, with the Tienanman Square uprising following the death of former leader Hu Yubang. It is not that Jiang was all that liberal, indeed was probably less so than his successor, Hu. But many are indeed making unfavorable comparisons between him and Xi, with his regime being remembered for being more open and free and tied to the rest of the world, with China joining the WTO during his time, as well at the period experiencing solid and unbroken economic growth. China has become very isolated, even more so with the covid locdowns that have become the focus of recent demonstrations.

Probably Xi will be able to get through this without too much upheaval, especially with the demonstrations against the lockdowns apparently shut down.  Nevertheless, it is reported that this funeral has many people talking more openly about unhappiness with the current regime.

Barkley Rosser

Friday, December 2, 2022

Economic Policy After The Midterm Elecions

 Will economic policy change much aa a result of the midterm elecrtions? After all, the GOP has taken the House of Representatives, if only narrowly, with inflation and the economy supposedly the top issue, especially for those supporting the GOP. Will this reappearance of "divided government" have an impact on economic policy? My bottom line is probably not too much, although there is the serious possibility of some major drama and damage happening during this coming year.

On the matter of having "divided government," I must note that we already have been having that, if not in the way this is usually posed. While Dems nominally controlled both the White House and Congress, although only partially so in the Senate given the need for 60 votes to win on any issue not tied to the budget and thus able to managed by reconciliation (and even on those not necessarily, given two Dem senators not always supporting Dem budget-related proposals), what has been left out of such discussions has been the Supreme Court. It has been dominated strongly the past two years by serious conservatives appointed by GOP presidents who have taken an aggressive stance on overturning policies accepted by past presidents and Congresses dominated by both parties. An egregious example of this regarding economic policy has been the restricting of the EPA's ability to regulate pollution, a serious matter.

Of course a major reason the change of control of the House will not have all that much effect on inflationary policy is that the Fed is the lead entity on that, and I do not see the Fed changing its policy that much in response to the election, whatever one thinks of the Fed's policy. As it is they have been fairly sharply raising interest rates recently, with the value of the US dollar being quite strong, with this in fact beginning to show some signs of inflation beginning to slow down, if still much higher than most people would like it to be. And we now have hints from Powell that while the Fed is still intent on further interest rate increases, those may also begin to slow down somewhat, maybe only 50 basis points up in December rather than 75. Again, these considerations look disconnected from the election outcome.

Obviously where the House may be able to change economic policy somewhat involves fiscal policy, given the House role in budgetary policy. And they may in fact make efforts to reduce or eliminate funding for certain Biden admin initiatives, particularly some in the Inflation Reduction Act (IRA). As it is much of Biden's fiscal policy will not be affected. The probably somewhat inflatoinary ARPA is largely over, although there is still some disbursement of funds from it still happening. Also, the infrastructure and CHIPS acts seem to have some GOP support, so will probably be largely left alone.

What seems to be the top target in the IRA is funding for increasing the number of auditors in the IRS, with the GOP having put out all kinds of phony scare stories about these agents to be hired showing up armed at the doors of all kinds of middle class people. As it is, many of those to be hired are supposed to help out with such things as answering telephones, which most of the time now does not happen, with this sort of thing having become a problem due to many funding cuts in recent years for the IRS pushed by the GOP in Congress. In terms of enforcement the new agents are supposed to focus on higher income scofflaws as well as corporate ones, not middle or lower class ones. In any case, if the GOP-run House does succeed in cutting this funding, this will be inflationary due to reducing tax revenues. 

Another fiscal policy matter they might well push, although this is more likely to get blocked by the Senate or Biden veto is again cutting tax rates for higher income and wealthier people. This would also be inflationary if it gets implemented.

Arguably anti-inflationary would be cuts to Social Security and Medicare, although these are less likely to get passed, with I suspect some GOPs in Congress not wanting to get on board such cuts. But in fact cuts to Medicare might lead to higher costs rather than lower ones for recipients, and any changes to Social Security, if they were to happen, would probably take the form of raising the retirement age, only affecting Social Security outlays sometime in the future, not anytime soon.

Probably the only possibly anti-inflationary policy they would push might be for various policies to increase fossil fuel production in the US. These are likely to be blocked by veto if not the Senate, and would only have a fairly small impact some time in the future, given that as of now oil companies are sitting on lots of unused permits for drilling on public land. And one of the items the GOP loves to talk about a lot, the XL pipeline from Canada, would have zero impact on oil production in the US, and probably near zero even on production in Canada, as most of that oil gets out by other means anyway.

What the GOP in the House seems mostly obsessed with is having lots of hearings, with almost none of these having anything to do with economics, much less inflation in particular. Their top priority seems to be to expose the salacious contents of Hunter Biden's laptop, which like the 8 in a row Benghazi hearings will find nothing because there is apparently actually nothing on there about Joe Biden involving anything that actually happened, although that will provide lots of opportunities for GOP Reps to get on Fox News and its crazier cousins to promise that the next day will bring that witness that will surely show how bad Biden was. Hearings on Afghanistan, Fauci, and much else will also be similarly irrelevant to economic policy, although if they have hearings on trying to reduce immigration, well, like cutting funding for the IRS, this will likely be inflationary, not the opposite.

The possibility for drama involves the old saw matter of the debt ceiling, which the newly crazy GOPs in the House may well be willing to resist raising while making unacceptable demands to the point of triggering a default, which could indeed bring crashing financial markets and a global recession, with at least some degree of recession having non-trivial probability of happening anyway this coming year due both to Fed tightening as well as economic slowing in the rest of the world coming from China and the effects of the war in Ukraine. This suggests that a high priority for the Dems in Congress in the remainder of the lame duck session should be to use reconciliation to either substantially raise the debt ceiling or, better yet, just eliminate the darned thing that has been a damaging anachronism since almost the time it was instituted over a century ago, the only such thing on the planet. 

But, unfortunately, it seems that neither Biden nor any leading Dem in Congress, not even Bernie Sanders, seems at all interested in doing anything about this. Why they are so complacent on this I really do not know, although it seems they are all scared of some boogeyman of being viewed as "fiscally irresponsible."  But, as far as I am concerned, it looks to be utterly fiscally irresponsible to allow these incoming lunatics in the House the ability to wreak havoc on this matter. Deals were cut in the past in similar situations, as in 2011, and some Dems may think that the GOP will get blamed for any bad outcome on this.  But blaming GOP for a temporary government partial shutdown is one thing. Blaming them for a major recession is quite another, with blame for that, if it gets really bad and spills into 2024, much more likely to end up on the doorstep of the White House. What are they thinking?

Barkley Rosser

Wednesday, November 30, 2022

So Much For The Iran Nuclear Deal

 Sorry you have not seen me here for awhile. My laptop on which I am able to post here was out of commission, but now has been fixed.

Well, it was not the US beating Iran in the World Cup. It is that the Europeans, especially the British, French, and Germans, have had it with Iran over the combination of their bloody attempts to suppress the ongoing demonstrations over the law that women must wear the hijab, as well as Iran's overt supplying of Russia with drones to attack Ukraine. They have now come to oppose further negotiations with Iran over the JCPOA nuclear deal.  I do not see this changing barring major changes in the current situation.

Frankly, I think the leaders in Iran could just bend on this hijab law. Heck, it is not something in the Qur'an. But an Iranian friend of mine says they view this as a slippery slope situation. If they give on that, then they will just lose total control.

I think Biden could have just gone back in to the deal when he first got in to office, although there were some details that needed to be straightened out, given that the Iranians had also eventually gotten out of compliance. But I think it could have been done, with Biden being too cautious and looking over his shoulder at Congress. Once they got in to dragged out negotiations it just all went to heck, never could pin it down.

Of course, the underlying problem goes back to Trump withdrawing from the deal when Iran was adhering to it. He claimed he would get a better one, but, of course, did not do so.  The upshot was the replacement of the more moderate government with the current hardliners who are convinced they cannot get rid of their silly hijab law.  Bah!

Barkley Rosser

Sunday, November 20, 2022

The Anti-Racism of Fools

Antisemitism has long been intermingled with movements against injustice and elite control.  This is because the most widespread image in the mind of antisemites is the existence of a secretive cabal of Jews who control global finance and promote liberal-sounding ideas only because it serves their nefarious goals.  Hatred of Jews therefore deflects radical inclinations that might otherwise fuel movements against real domination.  This understanding was summed up in the expression that “antisemitism is the socialism of fools”, often voiced in socialist circles in the nineteenth and twentieth centuries.

Now that class is no longer regarded as the ur-oppression from which all others stem, new reservoirs of fools can be tapped to keep antisemitism in business.  This is apparent in the ongoing wave of anti-Jewish bigotry that masks itself as anti-racism.  Ye and Kyrie Irving are relatively easy examples to point to, since their foolishness is on display.  But even a much cleverer Dave Chappelle illustrates the anti-racism of fools trope.  Watch his recent SNL monologue closely, and you can see all the elements there—not only the winking references to Jewish collusion and control, but also the way sly attacks on Jews become a substitute for identifying and challenging the control of cultural institutions, and most of the rest of America, by the ultra-rich, who, for historical reasons, are nearly entirely white.  Like, why should the livelihood of any artist, which of course includes satirists, depend on patronage by corporate moguls?  The fool part is thinking you’ve pinpointed the problem by fantasizing about a conspiracy of Jewish moguls.

Being smart is not a defense against being stupid, and bigotry is always stupid.

Friday, November 11, 2022

The Audition Commodity

Richard Serra and Carlotta Fay Schoolman produced the video, "Television Delivers People" in 1973. It manifests a critique of television mass media that was subsequently defined by communications scholar, Dallas Smythe as the "audience commodity" but the outline of which had already been presented by him in 1951 in the Quarterly of Film, Radio and Television:

The troublesome fact is that under our uneasy institutional compromise by which the stations are publicly licensed and commercially operated, the effective, if not the legal, responsibility is divided. And the voice which speaks most often to the consumer is that of the advertiser. Is it any wonder that the consumer is confused and inarticulate in trying to express his judgment as to how these media should conduct themselves? Is it any wonder that our traditional view of our cultural values, including freedom of speech and freedom of the press, may be reshaped increasingly into the likeness of the cultural values of the advertisers?

Smythe's point was not that advertisements occupied the majority of the air time but the it was the advertiser who dictated what kind of programming was most conducive to attracting an audience that would respond positively to its commercial message. Advertisers would not settle for just any audience, but sought an audience of consumers -- consumers of its products. The exchange value of an audience would thus be determined by its propensity to consume the products advertised.

I'm not really interested in subsequent criticisms and defenses of Smythe's formulation because they are mostly concerned with minutiae over whether or not Smythe carried his analogy between audiences and workers too far (which he did, in my opinion, but that doesn't discredit the larger picture). In a 1977 paper, Smythe asked, rhetorically, "Am I correct in assuming that all non-sleeping time under capitalism is work time?" My answer to that would be no, but because it was a rhetorical question, there really would be no point in answering.

I briefly mentioned Smythe's audience commodity in talks I gave in the summer of 2021. I would like to go further now to articulate what the 21st century version of that audience commodity looks like. While there is still a traditional mass media component, a new element of media has emerged since the mid-1960s that has a "do-it-yourself" flavor of "pseudo-activity" -- to use Adorno's terms. The most recent iteration of this activity is so-called social media.

The sourcing of content is the most obvious feature of social media. Millions of amateurs crank out content for twitter, tik-tok, instagram, etc. daily in the hope of going viral and potentially monetizing their social media presence. The prospects of success in this effort are mediated by algorithms that are oblivious to the artistic or intellectual quality of the content that is promoted.

Although social media emerged in the period following the Indian Ocean Tsunami of December 26, 2004, its features evolved over the previous four decades and are discernable in, for example, motivational training, multi-level marketing, and academic publishing and conferencing. In all of these enterprises, participants perform work and/or produce content for no compensation other than the prospect of self promotion. Often they pay fees or costs to participate.

Like television broadcasters, social media platforms sell an audience to advertisers. Unlike television broadcasters, they do not produce content to attract that audience but instead provide an outlet for some portion of that audience to produce its own content, the bulk of which disappears into the virtual void. Alongside and augmenting the audience commodity is what I call an "audition commodity" of content producers throwing content against the wall in the hopes that something sticks.

In contrast to Smythe's audience commodity, the audition commodity does perform work albeit largely of the socially unnecessary kind. A small percentage of Twitter accounts are responsible for a large proportion of tweets and consequently of media views and advertising revenues. In 2019, Pew Research reported that 10% of tweeters are responsible for 80% of tweets. Nevertheless, it is the banter -- retweeting, quote tweeting, and commenting -- that lends an interactive patina to the medium.

Eighty-four percent of Google Scholar articles since 2021 mentioning audience commodity also mentioned social media, although those mentioning audience commodity constitute less than a quarter of a percent of articles that mention social media. Over three times that many articles pair social media and town square and over six times as many pair social media with marketplace of ideas and 50 times as many pair it with public space, albeit sometimes ironically or critically.

To recycle a paragraph from that year-old post about the marketplace of ideas:

Social media has created the illusion that anybody can become a celebrity in a viral heartbeat, as if the circuits of social media amplification were not as dominated by advertising, propaganda, and entertainment as any television network. What the competition of the market tests, though, is not the "truth" of ideas but their marketability. That is to say, their superfluity relative to truth.

Monday, October 31, 2022

The Humiliation Of Hu Jintao

 The recently completed onec-every-five-years Party Congress in China, which confirmed Xi Jinping for a third term as General Secretary of the party, punctuated his apparent assumption of essentially total power by humiliating his predecessor, Hu Jintao, in its final session. At the beginning, he was forced to leave the session, with two men clearly pulling on his clothing in a widely seen video to make him get up and go. It is unclear how much of this was reported to the Chinese public, but the English language Chinese media insisted that he left the meeting for health reasons.  Apparently his health is not all that great, but he was not obviously immediately ill when made to leave, and he was most clearly made to leave.

So, why this humiliation? The general view is that indeed it was Xi asserting his total control very clearly to everybody in the room and more widely.  Later that session pretty much all remaining allies of Hu in either the 24 member Politburo or its 7 member Standing Committee were removed and replaced by loyalists of Xi's, with this reportedly going further and deeper than expected, although it was expected.

Reports have tried to argue that rule by Xi is a great improvement over that by Hu, with this supposedly justifying this humiliation heaped upon him. Of course, China now has a higher GDP and larger military, with deep poverty eliminated in the last decade, and many scientific achievements occurring, along with a space program happening. But pretty much all of this probably would have happened if Hu had been in power over the past decade. Growth was rapid under his rule in 2002-2012, indeed more rapid than under Xi given the slowdown in growh in the last few years. Most of these activities and trends were already well in place and ongoing under Hu.  It is not clear Xi has added anything at all to any of it himself, aside from perhaps a greater acceleration of military buildup.

The latter has been accompanied by something not at all admirable, a more aggressive and hostile approach to neighboring countries.  This is supposed to justify Xi's assumption of total power and imposition of massive surveillance on citizens in a way unseen anywhere in the world ever. Fights are being picked with India, although there have been wars with India decades ago, all of which China won. The policy of expanding into the South China Sea, which international courts have ruled China does not own, was happening under Hu, but has been accelerated under Xi. Xi has also taken more direct control of Hong Kong, with the prospect that this economic golden egg is going to be severely damaged and stop producing what it did in the past, with the suppression of human rights now going on there, leafing to many fleeing.  And, of course, we have seen heightened threats against Taiwan, a place that is superior in every single regard in per capita terms to the Peoples' Republic, which seeks to control it and to it what it is now doing to Hong Kong.

All this is being emphasized further by Xi's first action after the Congress, to go to the Yan'an cave, a founding place of significance to the Communist Party. Xi there emphasized "arduous strruggle" as he did in his long speech at the Congress. But why should a nation not at war with neighbors and enjoying a still rapid growth into solidly middle income status, and moving into its higher levels, have to engage in "arducous struggle"? Why cannot people achieving a higher standard of living enjoy it? This is what goes on in democratic nations with high incomes. They do not threaten their neighbors and go around shutting down cities while super surveilling people.  China is increasingly going on a dark path as its leader becomes a totalitarian dictator whose bad decisions will not be countered by any checks or balances by anybody.  This is the phenomenon of degnerate autocracy, whose path and model is that set by Xi's pal, V.V. Putin in Russia, with his now clearly disastrous invasion of Ukraine.

I shall note two items that have been put forward in the media with little comment or questioning as supporting the claim that Xi is somehow some improved leader over Hu. One has to do with corruption and the other has to do with income inequality.  Supposedly Hu was very bad on both of these, Xi is a great improvement and a hard charging reformer on both. There is some basis for this, but it is seriously exaggerated.

The stronger case is on the matter of corruption. The pro-market and essentially capitalist reforms set in motion by Deng Xioaping did lead to the emergence of a wealthy elite, with this emergence accompanying an apparent increase in corruption. The trend to this was in place when Hu took power, and he did little to combat it. Xi very publicly engaged in an anti-corruption campaign when he took office. It has indeed led to some improvement in China's international ranking on this matter, with China moving from being the 80th to the 66th most corrupt nation in the world according to Transparency International, over the past decade. A major problem with this campaign is that it appears to have been heavily directed at critics of Xi, thus with this campaign also being part of his consolidation of personal power. These days one must be one of his cronies to get away with being corrupt, with there still being plenty of that around.

The matter of income inequality is less clear, with a not so good story involved.  When Hu took power in 2002, income inequality was rapidly increasing. He came in with a call to turn that around, and in fact he succeeded. He especially focused on the regional inequality and also the gap between the urban and rural populations.  He made moves to reduce taxes on farmers, and he also introduced in 2005 and old age pension program. Richard Easterlin has documented that citizens had been becoming less happy in China up to about 2005, with this turning around then and going the other way, coinciding with these reforms implemented by Hu. As it was it still took until 2008 for aggregate inequlality to peak with a Gini coefficient around .49. It then began to decline and did so quite noticeably to about a .47 level by 2012. This decline continued for three more years after Xi replace Hu to 2015, when it bottomed out at around .45. But since then it has returned to creeping upward, getting back up to about .46 most recently. So, Xi can claim to have a lower Gini than when he started, but this masks an unfortunate turnaround with a return to a gradually increasing income inequality under his rule.

It should be noted that while Hong Kong has much greater income inequality than mainland PRC, Taiwan has much greater equality, with a Gini in the low 30s.

A final matter that cuts in several directions, has been Xi's crackdown on high flying CEOs of major corporations. Arguably this is a move to increase income and wealth equality, although as noted already, income inequality is actually increasing again. It may also be directed at possible corruption, although it is not clear that all of those Xi is attacking are all that corrupt. It seems more that he wants to squash them as possible alternative power centers, and indeed a curious fact about the most recent Party Congress was the much greater absence of any executives from major private companies in China. The Party is clearly emphasizing a return to more of a command and state-centered mode of operation in the economy. This may not pay off so well, as many of these CEOs are leaders of the highest tech companies in the nation. Going after them may aggravate the clear slowdown in economic growth that is happening, with this also being driven by ongoing lockdowns that increase social control, as well as the collapse of the real estate sector in China. Xi Jinping's assumption of total power for an unclear time in the future may in fact lead to economic and social stagnation in China, with all this to be distracted from by calls for "arduous struggle" and aggressive actions towards neighboring powers. This is a sad and disturbing outcome.

Frankly, Hu Jintao looks to have been a more humanitarian and in many ways more effective leader than his successor. He did not deserve the humiliation he received.

Barkley Rosser

Tuesday, October 25, 2022

Are North Korean Workers Going To Annexed Portions Of Ukraine?

 Maybe. An October 21 report in NK Daily says so, with further speculation on this matter on blogs that cover North Korea. Supposedly Kim Jong Un agreed to this with V.V. Putin in their most recent meeting, with the number supposedly to be around 800-1,000, with the NK Daily report saying that they have actually been selected, and with Russia, China, and North Korea somehow agreeing that having these workers work in Russian-occupied annexed portions of Ukraine would not violate sanctions.  

I do not know what these workers will supposedly be doing. However, supposedly they will be going in November specifically to the Donbas area. I guess we shall see more about this, a curious development.

Barkley Rosser

Thursday, October 20, 2022

If GOP Wins Either House Of Congress, Dems Must Kill Debt Ceiling

 If that come to pass, especially if GOP takes both houses, presumably they will be able to do it in the lame duck session, assuming that Manchin and Synema stick with them on it, which one of them might not. But as a budget matter, it can pass by reconciliation, which avoids a filibuster. Can be passed with only 50 votes plus VP Harris in the Senate. There are several specific ways they can do it, with it not really mattering which they do, just that they are able to do it if this comes to pass, which looks highly likely at least with respect to the House of Representatives, if not definite.

We have seen the GOP play games with the debt ceiling in the past, most damagingly in 2011, although sometimes when they have done so, they have suffered negative political feedback.  Indeed, fear of that has in the past allowed "more reasonable" Republicans in the House, where these efforts seem to have always emanated from, to eventually cut some sort of not too bad deal with the administration before the plug got pulled and an actual market-damaging default happened. 

The problem now, as we pretty much all know, although this matter is not getting much attention, is that that on top of the general polarization, the House GOP members are becoming increasingly radical right, with a whole bunch of seriously crazy types likely to enter the House with this election, even if they do not take control.  The moderate GOPs are retiring or getting primaried out for insufficient Trumpiness, and a bunch of election deniers and QAnon followers and so forth will certainly be coming in. And if GOP takes the House, if Kevin McCarthy is even able to get himself elected Speaker rather than someone much further right, he will be under severe pressure from the extreme wing of the party to make seriously wild demands that would be very damaging to put in place, with the Biden admin going to be resisting hard, and with these bomb throwers more likely to be willing to go all the way to pushing an outright default, even possibly with the conscious plan of bringing about an economic crash they can blame on Biden in 2024.

The danger of this is really seriously high, and it needs to be nipped in the bud.  I understand that many think that somehow the debt ceiling is some sort of sacrosanct thing, having been around in some form or other for over a century.  But it is not. It has never made any sense and no other nation has anything like it, although some have rules limiting the sizes of budget deficits, a different thing. Several of us here, most certainly including me, have posted on this general matter numerous times in the past.  And we have long argued that the debt ceiling should simply be abolished. It serves no useful purpose, and only opens our governing process to serious mischief.  Heck, even though a default was avoided in 2011, it came close enough that it led to a debt downgrade for the US.

So, Dems, if you lose a house of Congress, eliminate the debt ceiling, please!

Barkley Rosser

Thursday, October 13, 2022

Iranian Demonsttations Spread to Oil Workers

 The death of a Kuidish-Iranian woman doe not wearing a hijab to cover her hair has led to weeks of demonstrations led by and mostly by young women especially in the Kurdish parts of Iran.  However, they have gained the support of young men as well, despite a severe crackdown by the authorities that has now killed over 100 of the protestors. 

The latest development that marks this becoming a more serious threat to the regime is that apparently the demonstrations have spread to at least some oil workers.  The oil industry is concentrated in the Khuzestan part of Iran on the Gulf, with a substantial number of the workers ethnically Arabs and Sunni Muslims in contrast to the majority Shia population, which both Persians and Azeris largely are, the two most populous ethnic groups in the nation, who together constitute over 90%. The Kurds are apparently mixed, some Sunni and some Shia.

Traditionally prior to the Islamic revolution, most oil workers belonged to the Communist Tudeh Party. They participated in the anti-Shah movement that led to the Islamic revolution. But in its aftermath, they were suppressed as was their party.  This has left them somewhat alienated.  Obviously given the importance of the oil industry to the Iranian economy, this appearance of them supporting the women demonstrators raises the ante.

In any case, the US should still negotiate a revival of the JCPOA nuclear deal with Iran, which would allow an increase in oil production and exports from Iran.  A deal has seemed very close for some time, but somehow as it looks to be almost ready to be agreed to, one side of the other comes up with some demand that looks unacceptable to the other. But maybe this can be overcome.

Barkley Rosser

Wednesday, October 12, 2022

Patagonia: Life Imitates Theory

 When Yvon Chouinard, the founder of Patagonia, completed the transfer of that company’s ownership to an environmental trust fund, it was front-page news across the country.  It came as something less than a shock to me, however, because I had described a very similar structure in a paper I wrote a few years ago about “pluralist social ownership”.

First, it’s interesting what Chouinard decided not to do.  He didn’t donate the company to a government agency, although that option is not quite as weird as it sounds.  Environmentally conscious landowners often donate parcels to park administrations or other government units, expressing their faith in the ability of the public sector to safeguard this type of resource and make it available for study and recreation.  If you don’t see the same sort of donations of companies like Patagonia, it’s because the track record of government in most other functions is much less impressive.

Chouinard also chose not to give Patagonia to its workforce.  This deserves a bit more attention, since many entrepreneurs have taken this course; some of the largest worker-owned firms were begun as normal, for-profit enterprises until the decision was made to put the workers in charge.  It’s a reasonable choice if the main motive of the private owner looking to divest is to benefit the workforce, but there is no reason why this has to be the dominant one, even for very socially conscious owners.  Chouinard is an example: he has earned a reputation for treating his employees very well, but his primary interest is environmental.

So instead he gave away the company to two environmental entities, one that holds all the voting shares (about 2% of equity) and another that will profit from the remainder.  This is perfectly reasonable, so long as these groups can be entrusted to adhere to this commitment.

Of course, if he had some other motive he could still have used the same general approach, but partnering with different organizations that shared his priorities.  If he were interested above all in gender equity he could have donated to gender equity trusts.  If the most important thing for him was to safeguard an indigenous culture, that type of trust could be endowed.  Or protecting the interest of a particular region, or promoting international cooperation, or, well, you name it.  Transferring ownership to a trust with a steadfast mission is an extremely adaptable approach, one that can accommodate a wide range of political and social values.

This is why I described what I called a “social equity fund” model in my paper.  The problem I was addressing was the form social ownership could take in a truly pluralist society, one with a mosaic of values and interests and not just one, however democratic the process for selecting it.  (I had reasons to doubt that a framework based on a monolithic conception of social interest would be compatible with democracy, but that’s a topic for another day.)  Investing ownership in a range of funds representing distinct groups and their values seemed to be the right approach.  Unlike state or even worker ownership, social funds could embrace a range of commitments as diverse as those found in society—truly a pluralist vision of social ownership.

The biggest problem with the Patagonia example, however, is that it was the work of a single individual, the firm’s founder and leader.  Chouinard is an exceptionally enlightened capitalist, but we can hardly count on the tender mercies of his peers.  This is why the indispensable step forward is to democratize the ownership shares of funds reflecting significant social interests.  This is the “socialist” part of the vision, in which most equity is progressively transferred from a minority of wealthy individuals to the funding system as a whole, and a mechanism for periodically allocating ownership to funds on a one-person, one-vote basis is established.

The paper discusses all this in some detail, including the regulatory framework such a system would require.

I hope Chouinard’s inventive solution to the problem of dedicating Patagonia to environmental values is recognized beyond environmentalist circles.  This points the way to a basic rethinking of how an economy can be owned and organized to advance social interests in a world in which such interests will inevitably be diverse and even sometimes in friction with one another.

Saturday, October 8, 2022

Degenerate Autocrats

 Yesterday I had Konstantin Sonin present a seminar at JMU on "The Degenerate Autocrat: Origins and Consequences of the Russia-Ukraine War." Sonin is a former Vice -Rector of the Higher Economic School in Moscow who had to leave suddenly in March due to his critical remarks about the regime and has since been fired from the faculty there. He is Dewey Distinguished Service Professor at the Harris School of Public Policy at U. of Chicago and has coauthored with Daron Acemoglu, who might get the Nobel on Monday.

Anyway, his argument is that longtime full autocrats become incompetent as their regimes degenerate because they increasingly appoint incompetent sycophants who give them bad information and do not warn them of problems with bad policy decisions they make. They accumulate these bad asvisers, often from old longtime cronies who become increasingly corrupt as well, because they are afraid anybody competent might move to overthrow them.  Putin in Russia with his stupid decision to invade Ukraine is the current leading example, but he had others from the past including Nicholas II's decision to join WW I, Hitler's decision to invade USSR, Mao's decision to carry out the Great Leap Forward, and Saddam Hussein's decision to invade Kuwait. 

So far post-Mao China has avoided this slide into incompetent degenerate autocracy. The system set up where leaders would step aside after serving for ten years avoided this problem. But now it looks that Xi Jinping is making the move to go to this system, taking a third five year term as leader, with no clear successor in sight.  This is a dangerous situation, with a number of recent decisions looking somewhat questionable and the economy slowing down, although there still continue to be some forward looking decisions and actions being made.  But the longer term prospects from this move do not look good.

Barkley Rosser

Friday, October 7, 2022

An Improvement In China's Human Rights Record In XinJiang?

 On Octobet 5, 2022, the Washington Post published a front section srtory, "Uyghyr crackdown eases, bu Xinjiang;s scars endure," by Eva Dou and Kate Cadell. While documenting ongoing human rights problems and a lack of transparency in Xinjiang province in China, including ongoing use of forced labor in prisons in industrial parks, in the wake of criticism of its record in that province by the UN, the article reports that it appears that China is no longer sending Uyghur and Kazakh Muslim minority members to infamous "reeducation" camps.  Indeed, many of these are now being closed entirely, with the story providing a photo of a former one, now closed, in Kashgar, second largest city in the province and a famous stop on the historic Silk Road.

I applaud this development and hope it continues.  Besides the UN criticism, I suspect that Xi Jinping is looking for some favorable news in anticipation of his bid to get a third five year term as Party Chair in the forthcoming CCP congress. I hope this new and improved policy continues beyond that event.

There continue to be other human rights problems in China. Repression of speech and political activity continues to increase in Hong Kong, with a resulting exodus of people happening. There continue to be auxiliary health and other issues associated with the strong lockdowns associated with the pandemic, although those have resulted in low rates of the disease itself happening. 

But I must note and applaud when there is an improvement in the human rights situation anywhere in this world where there is such a strong trend to more authoritarianism in so many places, including in the US.

Barkley Rosser

Monday, October 3, 2022

Putin Supporters In US Becoming Desperate

 Latest reports have after Putin annexed four oblasts in Ukraine the Ukrainian military making numerous gains in several of those and simply on a major roll that seems very unlikely to be stopped or even slowed down all that much, short of Putin using nuclear weapons. First Lyman was taken, now the last town the Russians held in Kharkiv oblast was taken. Ukrainian troops appear to be closing fast on both Kreminna and Svatavoe in Luhansk (or Lugansk) oblast, with most of northern Luhansk likely to be conquered if those two are conquered, which now looks likely very soon.

Supporters of Putin have argued that losing territory in the northeast was one thing, and they have also claimed that the Ukrainians have suffered major losses in this run, although they fail to provide any evidence of that. But they have said that Putin is willing to fall back there as long as he holds clearly important Kherson in the south, where there has long been a standoff after Ukraine made some gains and long announced a major counteroffensive. Putin moved many troops from the northeast to Kherson to hold off that loudly advertised counteroffensive, and it seemed to be working. But apparently there has been a breakthrough there as well now, with a tank attack on the northern end of the Kherson front breaking through and the frontline pushed down about 25 miles and still moving, with movement also happening on the southern end of that front also.  

It seems that the only place on the whole front where the Russians can make any favorable claims involves the weird case of Bakhmut in Donetsk oblast. There the Wagner Group has been trying to conquer it for the last three months, although it seems not to have much strategic importance in and of itself. But while they have failed to conquer it, they have managed to move forward a few meters from day to day, and apparently are continuing to do so, the only place this is happening on the entire front. This allows local TV in Russia to report on "gains," even though these gains seem not to ever lead to much of anything. Some speculate this odd campaign continues partly due to the boss of the Wagner Group, Prigozhin, is trying to increase his power in Moscow.

So we have the Russian position largely collapsing with Putin being humiliated by all this in the wake of his annexation of these territories where he is now massively losing territory.  How are his supporters reacting to all this? Pretty badly, hysterically even.

I had not watched him for a long time, but I decided earlier this evening to watch one of his more prominent US supporters, Fox News's Tucker Carlson, whose show is the most watched on cable news I believe, even now.  He is full in on supporting Putin and was coming across as indeed nearly hysterical this evening. There was no mention of any of these military gains by the Ukrainians, not a whisper.

Instead, he was all in on the Nordstream pipeline incident, charging that it "is obvious" that it was carried by the US, citing statements by SecState Blinken that and end to the Nordstream pipeline would be a "strategic blow" to Russia, not to mention emphasizing that Russia owns the pipeline. As it is, the US and the nations that use the pipeline have avoided making any specific accusations as indeed it is very difficult to prove or establish who might have done such a thing. 

It is reported that the nearby nations suspect it was done by Russia. As it is, Nordstream I has been repaired. With that the Swedes were apparently about to investigate the sites of the explosions to look for evidence about what happened, but the Russians began pumping gas through it, which blocks that. Big surprise that Tucker Carlson had nothing to say about that.

His argument then segued into predicting that this supposed behavior by the US is going to lead to a nuclear war between the US and Russia, somehow never noting that it is Russia and Russia alone that is threatening to use nuclear weapons. He seems to accept that Putin's annexations are justified and that indeed Putin using nuclear weapons in Ukraine would be some justified self-defense. He reported with outrage on reports that the US might sink the Black Sea fleet if Russia uses nuclear weapons, with the US doing this without using nuclear weapons, although Carlson never noted this last point. This possibility of nuclear war is all due to the US, even as the US is not threatening the use of nuclear weapons at all, only Putin and various commentators in Russia.

I have to say that I was taken aback at the intensity of his outrage over all this, the US supposedly definitely responsible for the now all done pipeline incident, and this supposed danger of the use of nuclear weapons.  I now understand why I see local people commenting in my local newspaper, the Harrisonburg Daily News Record, to the effect that not only is Russia winning the war, they deserve to win the war.  This is a pretty astounding spectacle, but then most of these people also continue to believe the Big Lie of Trump that he actually won the 2020 presidential election, a lie Carlson also plays a major role in continuing to push.

Barkley Rosser 

Thursday, September 29, 2022

Report From Moscow

 My wife, Marina, has returned from a two and a half week to Moscow to visit her 93 year old mother.  She almost got bumped from her Turkish Airlines flight out of Moscow through Istanbul, but her travel agent managed to get her back on.  Very glad she is back. Anyway, a few first hand current reports.

Yes, in terms of living standards, in Moscow most things are operating and there are plenty of goods in the stores, although prices are high. There is a major effort to have things seem "normal," lots of cooking shows on TV.  It is true that a lot of foreign goods are not available, although there are odd exceptions. Thus apparently French and Italian wines are available. Also, KFC is all over the place, although this would appear to be a franchise. Apparently Marriott hotels have been bought "for a dime" by the Saudis, who are now badly mismanaging them.

Many things are either not reported or reported very differently than over here. So supposedly the referenda on annexation were "transparent." People lined up to vote were shown on TV and there were some international observers testifying to this "transparency," from Syria, South Africa, and Brazil. No guns being pointed at anybody supposedly.

Yes, it was a big freakout when the partial mobilization was announced. One of her best friends had her son conscripted.  Apparently there is a known going price to get out of being conscripted: 5000 euros, yes, euros, not rmb/yuan or USD, and definitely not rubles, with the ruble/euro rate much worse in practice than the official rate.

My wife reminds me that there are still many "good and wise people" there, but unfortunately they are not in charge or having much say with those who are.

Oh, and a festschrift is being organized by the Russian Economic Federation for our old friend Victor Polterovich, now 85 years old and probably the most eminent economist in Russia at this time.

Barkley Rosser