America’s Playing Default Chicken

The Daily Escape:

Ice and clouds, Yellowstone Lake, Yellowstone NP, WY – May 2023 photo by Joethehiker

Wrongo doesn’t know about you, but he’s starting to think that the “bi-partisan” Debt Ceiling negotiations aren’t going to stave off a default on the US’ debt obligations.

Every talking head is still saying that at the last minute, Biden and McCarthy will agree to…something. Something that prevents a government shutdown, and a default on payments for the country’s outstanding debt.

But is that real or hopium? In any negotiation, the idea is to find a point (or multiple points) of leverage that bends the other side toward your viewpoint. That helps the two sides to meet at some place in the middle.

So who’s got the leverage in the current Debt Ceiling negotiation? No one. Biden surely has no leverage over the House Republicans. Republican Speaker McCarthy has some leverage over Biden but has little leverage with his own House members. The Senate leaders, Majority Leader Schumer and Minority Leader McConnell, who normally have leverage to help resolve Debt Ceiling standoffs, are bystanders in this game of Default Chicken.

We’re in a high stakes game of chicken because nobody can deliver their side to the table. Politico reports:

“White House aides privately estimate they may need to deliver as many as 100 Democratic votes to ensure an eventual debt limit deal can pass the narrowly divided House…”

But few Democrats will support the deep cuts to social programs that Biden might be forced to agree to. McCarthy knows that a portion of his GOP House members will vote against ANY compromise bill. House Republicans have already called the legislation they passed last month (lifting the Debt Ceiling in exchange for deep spending cuts) the floor, not the ceiling to the negotiation. Dan Pfeiffer quoted Rep. Matt Gaetz (R-FL):

“I think my conservative colleagues for the most part…don’t feel like we should negotiate with our hostage.”

So Gaetz thinks that Biden and the Democrats are his hostages. If they are, how do they negotiate with the terrorists on the other side?

The positions are clear. The White House is open to budget negotiations but opposed to debt ceiling brinkmanship. Republicans threaten default if their budget demands aren’t met. They’re planning to pull the pin on this grenade and then blame Democrats for making them do it.

Recent polling from ABC and The WaPo gives Democrats a narrow advantage: An equal number of voters from each party—78%—would blame the opposite party for default. While 37% of independents say they would blame Republicans and 29% would blame Biden, with 24% blaming both parties equally.

The Democrats’ negotiating position appears to put them in the worst of both worlds: If the Debt Ceiling is breached, the polls show that they will share the political fallout with Republicans. Otherwise, they may have to agree to significant cuts to crucial programs like welfare and food stamps, which will badly hurt them with their base.

Either way, the Dems will complain about the financial wreckage caused by Republican extremism, and hope voters agree with them. The simplest way out is to agree to a temporary debt ceiling increase as we have many times in the past, to allow both sides to continue negotiating.

Sadly, McCarthy and the House Republicans seem to prefer default to compromise. They’re using passing a new Debt Ceiling as leverage to cut spending for Social Security and Medicare while increasing the defense budget. That’s their idea of “fiscal responsibility”. Sure, our military budget is 10 times Russia’s and three times China’s, but Republicans want grandma to tighten her belt.

At the end of the day, we’re stuck playing Default Chicken: The US must pay the bills it has already incurred as they mature. McCarthy can’t be seen by House Republicans to be giving concessions to Biden. After all, they think their job is to save the country from excess spending, not from the consequences of default. Rep. Marjorie Taylor Greene (R-GA) said on Wednesday that no one in the House Republican conference is concerned about the potential of a US debt default:

“Regular Americans … don’t worry about the government shutting down.”

Negotiating with terrorists is very difficult. The pressure on Democrats to cave to Republican demands for massive spending cuts will become harder to resist. If somehow they do resist, chances are we’ll see America default on its debts.

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Saturday Soother – May 20, 2023

The Daily Escape:

Daffodils, Laurel Ridge, Litchfield CT – May 2023 photo by Dave King

The oil industry enjoys special economic status in the US. That is demonstrated by the tax breaks and outright subsidies we give them. Hannah Dunlevy notes that:

“In 2020, the explicit and implicit fossil fuel subsidies cost the United States $662 billion, around $2,006 per capita. Cutting just two tax breaks for the fossil fuel industry — the intangible drilling costs subsidy and the percentage depletion tax break — could generate $17.9 billion in government revenue over ten years, according to Congress’s non-partisan Joint Committee on Taxation.”

Biden’s fiscal year 2024 budget proposed cutting some of tax subsidies for oil and gas companies, which would save the US $31 billion over ten years. It will probably not survive the current Debt Ceiling and budget discussions.

One hidden subsidy that the oil industry enjoys is when wells are no longer productive – they are idled. If it’s no longer profitable to return idled wells to production, they need to be plugged. And the cost of plugging a well can be $100,000 or more.

The problem is that when wells start to decline, they are sold by Big Oil to smaller producers. When the well is sold, the plugging and cleanup liability passes to the new buyer. And often, the new buyer simply walks away from the uneconomic well, creating what the industry calls “orphaned wells”. But if a company doesn’t plug its wells before walking away, the cleanup costs will ultimately fall to taxpayers and current operators.

This has already happened with thousands of wells in California and may happen to millions more across the country. Pro Publica reports that there are more than two million unplugged oil wells scattered across the US. California is just the tip of the iceberg.

Petroleum reservoir engineer Dwayne Purvis laid out the reality at a recent conference. His research shows that more than 90% of the country’s unplugged wells are either idle or minimally producing and unlikely to make a comeback.

California is the canary in a coal mine. Shell and ExxonMobil recently agreed to sell more than 23,000 California wells which they owned through a joint venture, to a German asset management group IKAV for an estimated $4 billion. This means that a subsidiary of IKAV now owns about a quarter of California’s oil and gas production, largely in Kern and Ventura counties.

This ownership shift moves the subsequent environmental liability from Big Oil powerhouses to firms with smaller capitalization, increasing the risk that aging wells will be left orphaned, unplugged and leaking oil, brine and methane. For California and other states, this could repeat what was seen in coal mining, which led to taxpayers bearing all of the cleanup costs.

The oil industry has created layers of LLCs that are used to screen Big Oil from the dirty end of the oil business, like responsibility for cleaning up the messes that they make. And these firms can easily declare bankruptcy rather than pay for cleaning up orphan or idle wells.

ProPublica reports on an analysis by Carbon Tracker Initiative, a financial think tank that used the California regulators’ draft methodology for calculating the costs associated with plugging oil and gas wells and decommissioning them along with their related infrastructure.

The cost categories included plugging wells, dismantling surface infrastructure and decontaminating polluted drilling sites. That would cost California about $13.2 billion. Adding inflation and the price of decommissioning miles of pipeline could bring the total cleanup bill to $21.5 billion.

Meanwhile, Purvis estimates that California oil and gas production will earn only about $6.3 billion in future profits over the remaining course of operations; nowhere near sufficient to pay for the cleanup, even if those profits could be captured by the state.

That’s just California. These costs are what economists call “Externalities”. An externality is an indirect cost (or benefit) to a party (taxpayers) that arises as an effect of another party’s (Oil Companies) economic activity. The problem is that the price of their product doesn’t include the externalities. That means there is a gap between the profit of these corporations and the aggregate loss to society as a whole.

Republicans have a tried and true solution for this problem. Taxpayers pay the bills. We’re back to the “privatize profit, socialize the losses” game that corporations have played forever. Maybe the correct terminology should be socialism for the rich.

They prefer to call it keeping government off the backs of job creators.

Time to let go of California’s messy problem and find a few minutes to center ourselves before next week which will bring either financial Armageddon, or a diminished Biden. At the Fields of Wrong, we had a freeze last Wednesday that caused us to cover the newly planted vegetables and bring the Meyer Lemon tree indoors. Spring in Connecticut can always show up with a backtracking nod towards winter.

But on this rainy Saturday, grab a chair by a big window and listen to Debussy’s “Nuages” (‘Clouds’) from his “Trois Nocturnes”. Leopold Stokowski and the Philadelphia Orchestra made the first American recording of Debussy’s “Three Nocturnes” for a 1950 LP.

Here is the first “Nocturne”, a musical impression of slow-moving clouds:

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Links You Can Use

The Daily Escape:

Santa Rita prickly pear in bloom, AZ – May 2023 photo by Wilson Goodrich

Today Wrongo returns to his “Links you can use” format from several years ago.

First up, Bloomberg reports that Trump’s takeover of the GOP helped him to rewrite the rules on how primary delegates to the GOP presidential convention will be awarded. Since leaving office, Trump has gotten 10 more states to award delegates through winner-take-all primaries, even if the winner receives fewer than a majority of the votes. The number of winner-take-all states has grown from seven to 17.

Needless to say, if it’s crowded field and he gets the most votes, even if it’s only 30%, he’ll win.

Second, Republican governors have discovered that they’re getting significant political mileage out of championing people who have engaged in vigilante violence that dovetails with the GOP’s culture wars. Brian Klaas writes about the Right’s open embrace of political violence. In Texas, Governor Abbott has said that he was “looking forward” to pardoning Daniel Perry, who murdered a Black Lives Matter protester. Perry was sentenced to 25 years in prison. He had previously texted a friend that he “might have to kill” some people on his way to work.

Over the weekend, Florida Governor DeSantis tweeted his support for Daniel Penny (Perry and Penny?) after Penny killed the homeless Black man Jordan Neely, on NYC’s subway. DeSantis didn’t hold back:

Lots of dog whistles right there from the governor. NBC 4New York reported that the legal defense fund had raised more than $2 million after DeSantis tweeted the link to Penny’s donation page. This shows MAGAs have found another way to wealth and fame as Daniel Penny now joins Kyle Rittenhouse as a violent millionaire funded by the Republican Right.

Brian Klaas wrote about a study that shows “Who Supports Political Violence?”, conducted by Miles T. Armaly, Assistant Professor of Political Science at the University of Mississippi and Adam M. Enders, an Assistant Professor of Political Science at the University of Louisville. Their findings show some key traits that predict support for political violence:

Perceived victimhood is highly correlated with support for political violence. This is different from actual victimhood. While previous research found that people who are actually being oppressed are more likely to turn to violence, this study shows that it doesn’t really matter whether someone is actually being oppressed; instead, the feeling of being oppressed is sufficient.

This was the strongest predictor of support for violence.

The next strongest correlate was a sense of “white identity.” And the two interact, as those who buy into the Right-wing narrative that white people are under attack in America (due to their loss of social dominance), are also likely to be the same individuals who feel perceived victimhood.

Also, past military service is correlated with a predisposition for vigilante violence. People who previously served in the American armed forces were more likely to express support for political violence than those who have not. None of this is good news for the US.

Third, the Debt Ceiling negotiations are resuming today in the White House after House, Senate and White House negotiators met for three hours Saturday, and then reconvened on Monday. Benjamin Studebaker worries that Biden may be about to repeat Obama’s errors in negotiations with Republicans in 2011:

“Back in 2011…Obama faced the same problem…Biden now faces. Congressional Republicans refused to raise the debt ceiling unless Obama agreed to budget cuts….Obama….Instead…cut a deal. He signed the Budget Control Act of 2011. It committed the federal government to…enormous cuts. Over the course of 2012, it became clear that these cuts would cause serious damage to the economy. So…Obama negotiated another deal that would save most of the cuts for 2013. Over the course of 2013, the same arguments were made again, but this time Obama was unable to secure another delay, and the cuts took effect.”

Sounds like what we’re going through right now. In 2013, we escaped the economic disaster, but at the price of the Fed adding several rounds of Quantitative Easing leading to our current economic situation. If Biden agrees to cut spending, the economy will again be damaged.

And the Federal Reserve will be pressured to limit the damage via lower rates or flooding the market with more dollars.

Republicans will, of course, oppose tax increases. That means the Biden administration won’t be able to raise taxes to help offset the growing deficit or pay for future expenses. Therefore it has to rely on the Federal Reserve’s monetary policies. The weaker economy created by rate hikes is an economy where the current tax rates will generate less tax revenue. That creates more political pressure to cut spending.

All of these stories look like rinse, lather, repeat. And not to the nation’s benefit.

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Saturday Soother – May 13, 2023

The Daily Escape:

Sunset, Monument Valley, AZ – April 2023 panoramic photo by Rich Vintage Photography

The ripples from Trump’s appearance on CNN continue. Politico reports that: (brackets by Wrongo)

“Nearly under his breath….Trump said that he and…Putin “used to talk about” Moscow’s intention to launch [an] invasion in Ukraine.”

What’s Trump talking about? The invasion happened in February 2022, more than a year after Trump left office. In fact, Russia didn’t even begin massing troops on the Ukraine border until March 2021 while Trump was already at Mar-a-Lago. Russia’s troops were partially withdrawn by June 2021, although the military infrastructure was left in place. The second build-up began in October 2021, lasting until the invasion in February 2022.

Politico says that Trump mumbled at some point, that he and Putin discussed Russia’s intention to launch a second, larger incursion of Ukraine. Was Trump talking to Putin about a possible invasion of Ukraine after Trump left office? If so, what are the chances that Trump shared his news with Biden?

Today, let’s spend a bit more time on one of the reasons why we must rebuild our energy grid. Wolf Richter of Wolf Street writes that in 2022, electric vehicles (EVs) made their first visible dent in US gasoline consumption: (parenthesis by Wrongo)

“Gasoline consumption in the US dipped by 0.4% in 2022…(vs.2021) to 369 million gallons per day…. below where it had been in 2002, and down by 5.7% from 2019, and by 5.9% from the peak in 2018, according to data from the Energy Department…”

Wolf reminds us that employment grew in 2022 by 4.8 million. And miles driven by all passenger and commercial vehicles, including those powered by diesel, ticked up nearly 1% to 3.17 trillion miles in 2022, according to the Federal Highway Administration:

Miles driven still haven’t recovered to 2019 levels (-2.8%). That’s probably due at least in part to reduced commuting during the Covid Work From Home times. Now, many office workers are either working from home entirely, or are going into the office on some days and working at home on others.

So the data show that the economy grew and people drove more miles, but they bought less gasoline:

The above chart shows the impact of the various recessions on gasoline consumption.  The deep dip in 2020, and the 2021 recovery only brought gas consumption back to 2002 levels. Then they fell off again in 2022.

The question is why wasn’t there a further recovery in gas consumption from 2021 to 2022? One factor is the rising fuel economy of American vehicles. This started many years ago, and it continues today. But Richter says that the growth in ownership of EVs has dented US gasoline consumption:

“EV sales in 2022 grew to a share of about 7% of total new vehicle sales in the US. In California, EV sales in 2022 accounted for 17% of total sales. These numbers are starting to show up at the gas station as a decline in gasoline sales.”

Still a 7% share of market is small and for now, the impact on gasoline sales is also small in the US.

Another way to look at this is that while gas consumption declined, electricity sold to end-users in the US broke out of 15 years of stagnation and set a new record. The chart below shows that electric utilities have been a no-growth business for more than a decade, but now the volume of electricity sold is suddenly spiking:

Wrongo isn’t sure if these trends will continue, but continued growth in the number of EVs on America’s roads seems undeniable. EVs have lower energy costs and lower maintenance costs. That economic reality seems guaranteed to be sustained in the coming decades. The battery cost curve will continue to decline and the rare metals required in EV batteries are beginning to be helped by both new supply and changing battery chemistry.

Still, Wrongo isn’t a fan of EVs. Perhaps when EV charging stations become ubiquitous, he will reconsider. And there will be a place for the ICE engine for a very long time.

That’s enough for this week. It’s time for our Saturday Soother, where we disconnect from the crisis du jour and spend a few relaxing moments before charging headfirst into whatever next week brings. Here at the Mansion of Wrong, we’re off to the garden store to find vegetable plants for our puny garden.

It looks like a beautiful weekend in the northeast, so grab a chair outside and watch and listen to Manuel De Falla’s Danza from “La Vida Breve” (Life is Short or The Brief Life). It is from Falla’s 1905 opera. Here it is performed live at the ancient Roman Theatre in Cartagena Spain, by Paola Requena and Isabel MartĂ­nez who perform as the CarmesĂ­ Guitar Duo:

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About The Energy Grid

The Daily Escape:

Coyote Gulch, Escalante, UT – May 2023 photo by Chirag A. Patel

Wrongo and Ms. Right watched the Knicks vs. Miami and Ted Lasso rather than dipping into the political rally for Trump held by CNN. But other news outlets reported on it. Apparently, the live audience gave him a standing ovation as he entered the set. They laughed when he called E. Jean Carroll “a whack job” and belittled her claim of sexual assault:

Trump suggested that the US should default on its debt if Biden didn’t agree to the cuts that House Republicans want. He pledged to pardon many of those convicted in the Jan. 6 attempted coup. He refused to back Ukraine in its war against Russia.

For those who think that there’s an opening in 2024 among GOP partisans to either vote for someone other than Trump or gasp!, vote for a Democrat, you are sadly mistaken.

A big part of the press (obviously including CNN) just can’t bring itself to admit the truth about the current state of the Republican Party. And they don’t really see it as their job to engage in such denunciations, even to protect the nation.

America is chockfuckingfull of Republicans who are, as Hillary said, “deplorables”. And they’re not all in New Hampshire. It’s way past time for the press to acknowledge this sad fact.

But today, let’s talk about the US energy grid. Our transition from fossil fuels to a green energy future will require a huge investment in our current electric grid. This probably means we’ve understated the costs of America’s energy transition. From Haley Zaremba, at OilPrice: (emphasis by Wrongo)

“In order to keep up with the expansion of renewable energy production capacity, the United States will have to more than double the current size of the electric grid. Stimulus from both the public and private sectors are hitting their intended mark, and the clean energy sector is booming. However, much of the potential environmental benefits of electrification will be completely wasted if we don’t have the power lines and grid capacity to transmit that power from where it’s being produced to where the demand is concentrated.”

Zaremba quotes McKinsey, who say that building sufficient wind and solar farms to power the clean energy transition will require overcoming three major hurdles: Finding enough land at an affordable price, building up the power grid to support the influx of electricity, and fixing the archaic and inefficient permitting process that governs these processes.

America needs massive investment in our national energy simply to stand still, regardless of the source of electricity.

But it’s important to identify today the key energy sources of the future because that determines how we specify and build the upgraded grid. A grid based on renewable sources requires a denser network and more long distance direct current lines, while conventional grids need a relatively small number of very high capacity short distance alternating current lines (i.e. from a cluster of small modular nuclear reactors (SMRs) to the nearest city).

Either option is expensive and each brings its own set of regulatory issues. Zaremba notes that:

“Building power lines alone is an enormous bureaucratic hurdle that can take years to gain approval. The  average review of renewable energy projects takes about 3.5 years, but there are cases in which a single transition line took over a decade to be completed…”

According to the US DOE, the country will need 47,300 gigawatt-miles of new power lines by 2035. That represents a 57% expansion of the existing grid. And the real issue is the glacial pace of the bureaucratic review processes which underlie permitting and oversight of clean energy projects as well as grid expansion.

Zaremba closes with:

“Fixing the presently nightmarish permitting and approval system will be integral to decarbonizing the US economy…and making sure that the efforts already underway to decarbonize the nation’s energy mix are not squandered. It’s great that wind and solar capacity are being added at a record-breaking rate, but it’s all a waste if, once completed, there’s no permit allowing them to plug into the grid – or if there’s no grid at all.”

As if on cue, on Wednesday Biden signed on to Sen. Manchin’s (D-WVA) plan to speed the approval of some fossil fuel projects and to hasten the construction of new transmission lines. The NYT quotes John Podesta, Biden’s senior adviser for clean energy innovation:

“Right now, the permitting process for clean energy infrastructure, including transmission, is plagued by delays and bottlenecks…”

Manchin’s bill has some holding their noses because it is so pro-fossil fuel. But should it become law, perhaps the US government will be able to speed up approval for at least some of the green energy projects.

In summary, there’s lots to do and no sure way to get it all done.

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Is Default Preferable To Compromise?

The Daily Escape:

Wild Ocotillo blooms with Agave buds, Anza-Borrego Desert SP, CA – May 2023 photo by Paulette Donnellon

Yesterday, Biden met with the leadership of the Congress to discuss the debt ceiling and the dangers of default. Wrongo is writing this before we know what if anything concrete, comes out of that meeting.

This is the third time in twelve years that a Republican House majority has tried to use the debt limit to extort a Democratic president into adopting policies that the GOP failed to enact through normal political means. This time around, like the past two times, Republicans say they want spending cuts, but as Nate Cohn wrote in the NYT:

“The 2022 midterm campaign didn’t show evidence of a resurgent conservative passion for spending cuts either. The debt-deficit issue had such a low profile in the national conversation that a question about it wasn’t even asked in exit polling.”

But absent real news, let’s take a look at the Republican position as outlined in the bill McCarthy and the GOP passed in the House. They’re pushing to pair $4.5 trillion in spending cuts over a decade with a one year, one time, $1.5 trillion increase in the debt limit. Their plan achieves most of its savings with spending caps for discretionary spending — the part of the yearly budget that isn’t automatic (like Social Security payments) — but it doesn’t say which discretionary programs should be cut and which should be spared.

Their plan caps government spending at last year’s levels. This would be a decrease of ~ 9%. A yearly increase is capped at 1% annually for the next 10 years. This action would save approximately $3.2 trillion. They haven’t offered any detail about where the cuts would come from, and there is no inflation adjustment to the spending cap.

But since the GOP has said it plans zero cuts in the defense budget and that there will be no cuts for veterans or for border security, cutting everywhere else will be very deep. The NYT estimates that if those programs remained untouched, the GOP plan would cut the balance of federal spending by an amount of a 51% cut across the board.

Seems unrealistic.

Social Security checks could still be issued because a 1996 law provides a means of circumventing the debt limit. It allows the Treasury Department to pay Social Security benefits, along with Medicare payments, even if there is a delay in raising the debt ceiling. It allows for the Social Security and Medicare trust funds to be drawn down to keep those benefits flowing until the debt limit is raised, and the trust fund replenished. It also prohibits those funds from being used to pay for any other government programs.

In the past, the usual political rhythm of fiscal crises is that the GOP House stumbles around for a while, and then, right before the deadline, Senate Republicans and Mitch McConnell come off the sideline. They cut a deal with the Democratic president and pass the deal in the Senate with a big bipartisan majority. They then leave town with the hot potato squarely in the Speaker’s lap.

It’s questionable if this will happen in May, 2023.

Biden should address the nation after the Tuesday talks. How about an oval office address that lays out the facts, along with a call to action: Call your representatives and tell them to pass a clean debt limit bill. He could detail for the American people the cuts the GOP are demanding in return for raising the limit. He could also say that he is willing to negotiate in good faith on the budget with House Republicans as long as the debt ceiling is a separate matter.

The compromise might be to have a temporary debt ceiling increase to allow both to move forward together. Sadly, for McCarthy and the House Republicans, default seems to be preferable to compromise.

This is zero-sum politics with the highest stakes. At the end of the day, all paths lead to the same place: The US will need to find a way to pay the bills it has incurred as they mature.

The question is how much damage will have happened along the way.

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Sunday Cartoon Blogging – April 30, 2023

This month, Texas Senate Republicans passed three bills allowing religion into public schools. From Vox:

“The first, SB 1515, would require public schools to display the Ten Commandments in a “conspicuous place” in classrooms. The other bill, SB 1396, would permit public schools to set aside time for students and staff members to pray or read the Bible and other religious texts. The third, SB 1556, would give employees the right to pray or “engage in religious speech” while on the job.”

Some of this sounds unconstitutional. You can be certain that plenty of Texans will be happy to comply as maliciously as possible next fall.

The three bills now go to the Texas House for approval. They follow Texas’s SB 797, which took effect in 2021 and requires schools to display “In God We Trust” signs.

When the Texas Right say they want to bring religion back into public schools, they mean they want to make public schools more Christian. This flies in the face of America becoming noticeably less religious over the past 20 years:  Weekly service attendance and religious self-identification are both down 20% overall, which translates to about 50 million fewer Americans than two decades ago.

This is ironic: If religious identification is to increase, it will have to come from “importing” traditional believers from the global south. But few of them are white. So that’s a problem for Trumpism and the reactionary Right. On to cartoons.

State-sponsored religion is hard to swallow:

Biden announces he’s running:

How do young voters fit in the race between these geriatrics?

A certain debate this time:

House Republicans pass a debt ceiling bill:

McCarthy wonders why Biden won’t talk:

Daylight come and he got to go home:

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Late Stage Capitalism

The Daily Escape:

A 20 feet x 9 feet sign placed in Times Square, NYC in Sept. 2013. Created by Steve Lambert.

In yesterday’s column about Bed Bath and Beyond’s (BBBY) bankruptcy, Wrongo used the term “Late Stage Capitalism” to describe some of the factors that led to the firm’s demise. Several readers asked what Wrongo meant.

First, some history. A German economist named Werner Sombart seems to have been the first to use the term “Late Capitalism” around the turn of the 20th century. A Marxist theorist named Ernest Mandel popularized it in the 1960s. For Mandel, “late capitalism” described the economic period that started with the end of World War II and ended in the early 1970s, a time that saw the rise of multinational corporations, mass communication, and international finance.

In America the terms “Late Capitalism” and “Late Stage Capitalism” are used interchangeably. Late-stage capitalism is characterized by greed, corruption, and a focus on profits over people.

The current crisis of capitalism’s legitimacy stems from business pursuing the aberrant form of capitalism known as shareholder capitalism, which began in the 1970s. It causes firms to seek maximizing shareholder value as reflected in the current share price, at the expense of all other stakeholders and society.

Some of the problems with late-stage capitalism include wealth inequality, environmental destruction, and financialization. Financialization refers to the increase in size and importance of a country’s financial sector relative to its overall economy. In the US, the size of the financial sector as a percentage of GDP grew from 2.8% in 1950 to 21% in 2019. The financial services industry, with its emphasis on short-term profits, has played a major role in the decline of manufacturing in the US. Financialization has created “unproductive” capitalism. According to economist Michael Roberts: (brackets by Wrongo)

“…financialization is now mainly used as a term to categorize a completely new stage in capitalism, in which profits mainly come not from…production, but from financial [engineering]

Today, capitalism is no longer the heart of a free market. Algorithms run the stock and foreign exchange markets. Large players in these markets operate freely with the expectation that they will eventually be caught. They then pay off the DOJ or SEC, chalking up the fines to the cost of doing business.

Lobbyists on Capitol Hill curry favor with politicians. Companies then receive substantial tax breaks and move their ever larger profits to offshore tax havens. The revolving door between Wall Street and the banking sector allows former Federal Reserve Chairs to charge speaking fees of $500,000 and earn seats on the boards of the algorithmic trading firms. The Pentagon continues to benefit from budgetary increases while the profits of Boeing, Lockheed Martin, and other defense contractors continue to swell.

Late stage capitalism helped create the current distortion of wealth. From the wealthy one percent living in multiple homes and flying private, to the plight of the working poor in America. In a 2020 survey by Edelman, a marketing and public relations firm, 57% of people worldwide said that:

“capitalism as it exists today does more harm than good in the world”

When you have money, capitalism is your wing man. It opens doors to business leaders and helps develop political influence, all with the goal of amassing more wealth and power.

Late stage capitalism has allowed oligopolies and the oligarchs that run them, to rig the system in their favor. They’ve won Supreme Court cases, such as Citizens United v. FEC (2010), that give corporations the same speech rights as people, allowing them to spend millions on political ads to elect compliant politicians.

In recent years, capitalism’s shortcomings have become more apparent: Prioritizing short-term profits has sometimes meant that the long-term well-being of society and the environment has lost out. Indeed, if you judge by measures such as inequality and environmental damage, as economists Michael Jacobs and Mariana Mazzucato wrote in their book “Rethinking Capitalism”:

“…the performance of Western capitalism in recent decades has been deeply problematic…”

There’s also no denying that this strain of capitalism has led to increased economic growth worldwide, while lifting a significant number of people out of poverty. At the same time, its tenets of lowering taxes and deregulating business has done little to support investment in public services, such as crumbling public infrastructure, improving education and mitigating health risks.

Watch Paul Tudor Jones, a successful hedge fund manager describe why we need to rethink capitalism:

He’s concerned about capitalism’s laser focus on profits. He says that it’s:

“….threatening the very underpinnings of society.”

More people are aware of the term “late, or late-stage capitalism,” due to the growing wealth gap. People now have access to information that exposes the defects of capitalism, and the effects of political and elitist interference in the monetary policy of a country. There is a popular Reddit community devoted to it.

And calling something “late” implies the potential for significant change or revolution, A “late” period always comes near the end of something. Calling it “Late capitalism” says:

“…This is a stage we’re going to come out of at some point…”

Perhaps we’re on the cusp of society dictating that capitalism provide us with a more equitable way of life. Or maybe the wealth gap will continue to grow, and the corporations will continue to seize more power.

Whenever late-stage capitalism eventually comes to an end, you can be sure of one thing – it won’t be a soft landing.

 

Sources and reading list:

https://wrongologist.com/2023/04/bed-bath-and-beyond-another-retailer-bites-the-dust/

https://en.wikipedia.org/wiki/Werner_Sombart

https://www.theatlantic.com/business/archive/2017/05/late-capitalism/524943/

https://www.investopedia.com/terms/f/financialization.asp

https://www.linkedin.com/in/prof-michael-r-roberts/

https://www.fec.gov/legal-resources/court-cases/citizens-united-v-fec/

https://www.wiley.com/en-gb/Rethinking+Capitalism%3A+Economics+and+Policy+for+Sustainable+and+Inclusive+Growth-p-9781119120957

https://www.bbc.com/future/article/20210525-why-the-next-stage-of-capitalism-is-coming

https://www.edelman.com/sites/g/files/aatuss191/files/2020-01/2020%20Edelman%20Trust%20Barometer%20Global%20Report.pdf

https://www.reddit.com/r/LateStageCapitalism/

Alternative Views:

https://tomdehnel.com/crushing-the-myth-of-late-stage-capitalism/

https://www.nytimes.com/2023/04/20/opinion/american-capitalism-good.html

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Monday Wake Up Call- April 17, 2023

The Daily Escape:

Sunrise, Woodenshoe Tulip Festival with Mt. Hood in background, WA – April 2023 photo by Mitch Schreiber Photography

If you drink beer, you know that Bud Lite is terrible. Wrongo shares this opinion with the GOP, but for different reasons.

Wrongo hates the taste. Conservatives hate Bud Light because of a recent Bud Light promotion featuring influencer Dylan Mulvaney, a transgender woman. Mulvaney posted a sponsored video on her Instagram account announcing that Bud Light had sent her a customized beer can with her face on it.

Bud sent the can to Mulvaney in celebration of the first anniversary of her transition.

Some on the Right are calling the brew a “Woke Mind Virus”. But shouldn’t the real focus be on the MAGA Mind Virus? The Right has created a kind of Bud-lash fever: Some have machine gunned or crushed cases of the beer with heavy equipment. Then a person or persons moved on to making bomb treats at a Bud plant in Van Nuys, CA. Several Budweiser facilities across the nation have also been targeted with bomb threats.

Many on the Right call for a boycott of the bestselling beer in the country. If that sounds ludicrous, it’s because it is. It’s also indicative of where we are in America today.

Trans issues are front and center in the GOP-inspired culture war. Anti-trans sentiment is on display by many on the right, targeting children’s health, sports, drag shows, and health care. It’s seen throughout Conservative media. Anti-trans legislation is growing. And it’s even entering the mainstream. From Vox:

“Mainstream publications like the NY Times increasingly follow the lead of anti-trans agitators, treating what should be understood as a fundamental human rights battle more like a semantic “debate,” fixating on terminology and labels and medical minutiae, instead of humanizing trans and nonbinary people and their experiences.”

Vox reports that this has created a contentious situation at the Times. In February, contributors and members of the Times’s staff posted an open letter protesting the paper’s escalating bias toward anti-trans talking points.

But the Bud-lash fever may be breaking. The Daily Beast reported that on Saturday, the Twitter account for the National Republican Campaign Committee (NRCC) removed a fundraising post that trashed Bud Lite. Apparently, they realized that Anheuser-Busch isn’t some progressive company. In 2022, they gave the NRCC $464,505. The NRCC has decided that they like political donations more than they hate trans people.

Bud’s partnership with Mulvaney also triggered a nearly $5 billion drop in the Anheuser-Busch stock value as of last Wednesday.

On Friday, Anheuser-Busch released a tepid statement from its CEO, Brendan Whitworth, saying he is “responsible for ensuring every consumer feels proud of the beer we brew”:

“We never intended to be part of a discussion that divides people. We are in the business of bringing people together over a beer.”

The company cancelled an event in Missouri last week, citing safety concerns for its employees. Wrongo is against banning TikTok. Here’s a TikTok video of Bud Lite cans being crushed by a steam roller. Where else would we see news like this?

Boycotts are a tradition in America, so like all the others, this one will fade away. The difference with this one is how wound up Conservatives get about something as trivial as a one minute video that pitches Bud Lite.

Time to wake up America! These clowns will try to take you down in a hail of gun fire, saying it’s for God and Freedom, (loosely defined). They just can’t abide sharing the country (or political power) with people who aren’t just like them.

To help you wake up, watch and listen to “All I Ask of You” from the musical “Phantom of the Opera” which had its last Broadway performance yesterday. It opened on Broadway in January of 1988. Since then, Phantom has played almost 14,000 performances (the most in history) to more than 20 million people, grossing over $1.3 billion. An estimated 6,500 people have been employed by the production – including over 400 actors.

Here the song is performed by Michael Ball and Sarah Brightman (the original Christine) at London’s Royal Albert Hall Celebration for Andrew Lloyd Webber, who wrote the play:

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Sunday Cartoon Blogging – April 16, 2023

America is in a literal death spiral. The more mass shootings take place, the more innocent people die. And then more of America’s Republican politicians tell us that only more guns will solve the problem.

Republicans say that school shootings would be minimized if we would just hire a security guard to cover the door of every school. But with school budgets under pressure, where will the money come from to hire them? And how would the GOP’s plan for out-gunning the next mass shooter turn out?

We need to see mass shooting as a form of domestic terrorism. We’ve moved from having ten Constitutional Amendments that most of us cared deeply about to a place where the Right only really cares about the Second Amendment. Maybe we shouldn’t be all that surprised that there are so many Americans who care more about guns than they care about people.

For a certain group, that seems to be what America is all about. If they cared about freedom, nothing would be more of a priority than defending every person’s right to go about their daily lives without the threat of violence. If we really cared about the sanctity of human life, we would prioritize people over guns. On to cartoons.

The unholy trio who prioritize guns over people:

The GOP’s platform is turning into a cliff:

When your anti-human policy list is this long, you must be a Republican:

It isn’t a game:

Clarence is tracking mud into the Court:

Rep. Jim Jordan plans to investigate AG Bragg in NYC:

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