Noonan’s Incoherent Blame Game

** Robin's Book Report # 71
A reading list by Robin Kaiser-Schatzlein
------------------------------------------------------------
Agenda
-New Article
-Letters from You
-The Economic Situation
-Bedside Table
-Reading list

An FYI: I am starting a Patreon to fund this newsletter which I hope will be ready in the coming month. I want the letter to continue to be free in some capacity (as it has been for three years), but also would love to devote more time to the letters. And people over the years have asked me to open an avenue for donations, which I never got around to. Also, the business model of journalism is collapsing and subscription newsletters are an alternative.

In addition to all that, I have been working on a new set of appropriated paintings, and am excited to send those out at as thank you gifts to people who donate to the Patreon. Anyways, onward!


New Article Alert


Last week, a review I wrote about Thomas Piketty’s new book Capital and Ideology (https://newrepublic.com/article/157576/thomas-piketty-new-book-plan-fix-economy-review) was put online. It’ll be in the June print issue of the New Republic, and is my first print article in a national magazine. Pretty exciting. (This is the tweet thread with additional thoughts (https://twitter.com/robinsreport/status/1258052487115923458) )


In the article, I focus on Piketty’s idea that private property inhibits the equitable distribution of resources. I tend to agree with him, as you’ll see, but see some pretty tall obstacles to overcome. Our culture has a deep rooted faith in the power of private property and its ability to protect individuals from infringement by the state. But that protection only applies to a small group of people. It invisibly allows power to stay concentrated in the hands of those already in power, most often wealthy whites. Distributing power and resources more equally would require wresting power from the hands of those people, and that is a political project that is larger than I can comprehend. However, we’ve had more equal distribution before in our history. The New Deal used the power of the state to directly divert resources to working people. It created jobs, and offered old-age pensions and safety net programs. Then in the 1970s, the government was encouraged to stop spending money on working
people and the middle classes, and things got really lopsided. To me, this means that private property, private wealth, and private power needs to be regularly curtailed and deprioritized in order to make space for everyone else.


What might this look like? Piketty suggests a capital grant to everyone at 25, of about $125,000. Also, temporary ownership of property, intellectual property, and wealth including financial assets. Increased taxes on top-earners. The big problem with taxes though: tax avoidance. Something I didn’t get to in the article is that we can avoid this problem pretty easily. The government creates money and then has to decide how it will wend its way into society. The paradigm for our unequal times is that they make it available to banks, who lend it to businesses, who pay their suppliers, employees, and others with it. This is stupid and makes it obvious why corporate monopolies have so much money and why workers have so little; the businesses just kept the money. Taxing it back is one solution, but another, much more simple solution is to just give the money directly to people, either through government jobs guarantees, expanded welfare programs, universal healthcare, universal education, or
Piketty’s capital grants. If we want a better world, we have to demand direct spending and then insist on taxation to set limits on the concentration of wealth.


On a personal note, I'm finding that it's not that fun to write about economics. I do it to better understand the concepts and because it is important these topics are not left to people who are beholden to worthless outdated theories, enamoured with business and economics, or herd animals. But still it can be a little lonely, because I'm not in an academic community that might discuss these topics more readily. So please, if you are inclined to discuss, let’s do it!


Letters from You

David:


I just finished reading this [here’s a review of Chaos (https://www.theguardian.com/books/2019/jul/07/chaos-charles-manson-cia-secret-history-sixties-tom-oneill-dan-piepenbring-review) ]. Highly recommend


[This is David’s reading list for March from his blog (https://www.dflovett.com/blog/what-read-march-2020) , which I recommend checking out]


Nathan:


Great newsletter! Thanks for summing up some things I thought and giving me new things to think about (and read).


The last books I got really into were Chaos, the CIA-Charles Manson rabbit hole, and Say Nothing, the Patrick Radden Keefe IRA yarn.


Michelle:


Man, you and I are on the same page about all this stuff. I have a bad case of schadenfreude, too, although I‘m old enough to realize that my dreams of change for the better resulting from this crisis are just that, dreams. Oh, yuck. I’m finding myself more frightened by the day. This reopening stuff is not sitting well.


Your piece on the shadow banks was great (https://newrepublic.com/maz/article/157455/shadow-banks-back-still-big-fail) . Thanks for reminding us about them. Of the other links, the only one I’ve dared click through so far was the piece about Prospect Park (https://nplusonemag.com/online-only/online-only/a-walk-in-the-park/) , which I enjoyed. In 1987, I fact-checked a sweet piece about the experience of place, written by Alger Hiss’s son Tony. I still vividly remember taking the subway out to Prospect Park (one of his featured places), and having a wonderful time walking around. It was my first time there. This was in the day when brownstones on St. Mark’s Place could be had for $35,000. The park didn’t feel dangerous, in the way that Central Park did back then. It just seemed ignored. What another world that was. Anyway, if you want to have a look, it’s


https://archives.newyorker.com/newyorker/1987-06-22/flipbook/044/


If the link doesn’t work, just log in and go to the archive and search Tony Hiss. It’s part 1 of a two-part article published in 1987. It’s not earth-shakingly brilliant, but might provide another stress-free virtual visit to the park.

============================================================

The Economic Situation

-Private Equity Looted Retail Stores, And Now They’re Bankrupt


This is a bit of news I mentioned the possibility of a couple newsletters ago, and has captured some popular attention. It’s unlikely the bankruptcies of these companies will mean much. They will file, cut out on payments to shareholders and possibly employees, and then maybe reemerge under new private equity owners. All three crumbled because they had been ** bought and gutted already by private equity companies (https://www.nakedcapitalism.com/2020/05/retail-bankruptcies-bailouts-put-spotlight-on-private-equity.html)
, and honestly, I think most industry analysts were just counting down the minutes to implosion, even before the crash. ** Private equity was the worst in the case of J Crew (https://ourfinancialsecurity.org/2020/05/jcrew-private-equity-fact-sheet/)
. The ** PE firm bought the (https://prospect.org/coronavirus/private-equity-firms-profit-covid-19-j-crew/)
clothing store, sold the brand name rights to a shell company they owned in the Cayman Islands, and looted the rest of the company. J Crew was a house that had been essentially relieved of all its joists and beams. And then came a hurricane.


The message is that any business with lots of high-interest junk bonds can’t survive


-Unemployment Infrastructure is Embarrassing


** This story (http://v)
about the Hawaiian unemployment system is embarrassing. Apparently the computer system hasn’t updated since the eighties.


-Homeownership Could Consolidate Further


** Investors are betting (https://www.wsj.com/articles/wall-street-bets-virus-meltdown-gives-landlords-a-chance-to-grow-11589189405)
that home management companies will be able to buy even more suburban houses in coming years, and rent them out to people. When you consider ** this story (https://www.nytimes.com/2020/03/04/magazine/wall-street-landlords.html)
from NYT Magazine earlier this year, this is a very scary proposition.


-Who's to blame? Class Analysis Grows Incoherent


Class analysis is a mess. In a truly moronic column by Peggy Noonan over at the WSJ, she desperately tries to frame the conflict in the US right now as one between pampered, out of touch scientists and journalists (who I guess are fine with the shutdown lasting forever) against poor people who are anxious to get back to work. The first problem is obvious: most working people support the limitations of the shutdown. The second is less clear. Noonan tells us there is a “class element in the public debate,” which she doesn’t go on to describe but rather to invent and then criticize. To her:


“Since the pandemic began, the overclass has been in charge—scientists, doctors, political figures, consultants—calling the shots for the average people. But personally they have less skin in the game. The National Institutes of Health scientist won’t lose his livelihood over what’s happened. Neither will the midday anchor.”


Wait, what? How again are scientists, doctors, and journalists part of the problem? (I'll leave politicians and consultants out of this.) She refers to them as the “managerial elite” (a terrible right-wing appropriation of Barbara and John Enhrenreich’s “professional managerial elite” coinage from the 1970s). Noonan is making the argument that “professionals” are blind to the plight of working people, and thus are imperiling their livelihoods. Poor folks in red states, she claims, know better. They understand that keeping the economy open might mean, “hundreds of thousands could die and the American economy is damaged but still stands, in which case there will be fewer economic casualties—fewer bankruptcies and foreclosures, fewer unemployed and ruined.” The implication is that professionals are out to cause massive “economic casualties,” which doesn’t make any sense. What are economic casualties anyways? And didn't the overclass rescue the economy by backstopping the financial sect
or?


Now, I have made similar type arguments in different settings, that the professional class is out of touch, but this is unhinged. Poor people, if they are anxious to get back to work (which we don’t know because she never substantiates this claim) are surely anxious because for decades the GOP has gutted worker protections, compensation, and the social safety net to such an immense degree that most people have no choice but to go back to work because they have no savings and probably no healthcare without work. This doesn’t mean that they want to. The only evidence to the contrary are the totally astroturfed protests across the country, that are sponsored by the owners of big businesses, who are more than excited to get the economy running again. In fact, the class of people that Noonan conveniently ignores in her columns are these business owners, who are more than willing to sacrifice workers' lives for the sake of their continued operation. They're the ones with less skin in the game:
they often aren’t interacting with customers and coworkers. Their money is at stake, but not their health. Actually, the whole point of the article is a covert defense of the cynical business class that paid for these protests.


But my head is spinning trying to resolve this gross right-wing misappropriation of the problems of the “managerial elite.” If doctors, scientists, and journalists don’t convey the information and define the terms of the proper response to the crisis, who will? The answer is not the honest, hard-working poor people who have tragic homelives that Noonan pretends to defend. It is the right-wing, anti-worker business class that has for decades pillaged this country, and continues to do so today.


-Praytell, What Does The Stock Market Say?


The stock market has disambiguated from reality, as many people are noting. If you study the actions taken by the Federal Reserve, you can see why. The main ways of funding the large corporations that compose the stock market have all been guaranteed and backstopped by the Fed (e.g. repurchase agreements, junk bonds, and other commercial paper). Before traders knew the Fed would take such decisive, wide-spread action, the stock market tanked. But the Fed acted swiftly and the markets rebounded. Unfortunately, how the stock market performs says little about how the society is doing, as argued in this ** informative New York Times article. (https://www.nytimes.com/2020/05/10/business/stock-market-economy-coronavirus.html)
(Good note: “Economists who have studied the performance of stock markets over time say there’s relatively little evidence that economic growth matters to the outcome of the market at all.”) One reason is because the stock market is composed of a bunch of monopolistic corporations, which means that their profits are little affected by what is happening in the real world. They control the market, and for the most part, determine the outcomes. “These highly valued firms — Microsoft, Amazon and Apple, are each worth more than $1 trillion — now account for one-fifth of the market value of the index,” the article says, “the highest level in 30 years.” So for example, if Amazon or Apple needs a private or public market bail-out, their bargaining position means the money they demand is very cheap. They don’t pay the same costs everyone else does.


Also,


“the giant companies that make up the S&P 500 operate under very different circumstances than the nation’s small businesses, workers and cities and states. They are highly profitable, hold significant sums of cash and have regular access to public bond markets. They’re far more global than the typical American family firm. (Roughly 40 percent of the revenues of S&P 500 companies come from abroad.)”


Which is to say that the stock market reflects the moves of the global market. It wasn’t always this way, “during the 1950s and 1960s, it was easier to link the health of the largest American companies with the broader health of the country, partly because their enormous payrolls helped fuel the expansion of the middle class.” Now employers just extract cash, hold it in Ireland and contribute very little to our society. They employ basically no one, “the two most highly valued companies in the country in 1962 — AT&T and General Motors — employed nearly 1.2 million people combined. Last year, the two largest companies in the S&P 500 — Microsoft and Apple — employed 280,000.”


The last problem is that the people who care most about the stock market are people with financial assets, and these people tend to vote in higher numbers. ** This is why politicians are so obsessed with the stock market (http://inthesetimes.com/article/22504/stock-market-real-economy-disconnect-unemployment-poverty-coronavirus-trump)
. It tells us what people with financial assets think, which is surely of note, but obviously has very little to say about the feelings of people who are on unemployment and facing a black-hole of unpayable debts.


Our association of the stock market with financial crashes is just outdated, and reflects the news stories that we read about the stock market crash in 1929. The stock market indicated something was clearly wrong, whereas other indicators were more ambiguous. The response in the last hundred years hasn’t been to avoid economic calamity, it has been to create ways to make sure the stock market doesn’t crash, which the health of the stock market right now proves has been achieved quite successfully.

Reading list

Bedside table


Inspired by my friend David’s blog post, I am going to now include “Bedside Table” because I read a lot of books, but I almost never finish them. This has discouraged me from putting them on my list, but shouldn’t! Curious what you have half-read too.


An American Childhood

By Annie Dillard


Within the Context of No Context

By George W.S. Trow


What’s Wrong With Economics: A Primer for the Perplexed

by Robert Skidelsky


Globalist: The End of Empire and the Birth of Neoliberalism

By Quinn Slobodian


Secrets of the Temple: How the Federal Reserve Runs the Country

by William Greider


Travels in Siberia

by Ian Frazier
Articles


** My Appetites (https://www.vulture.com/2020/05/jerry-saltz-my-appetites.html)

On eating and coping mechanisms, childhood and self-control, criticism, love, cancer, and pandemics.

By Jerry Saltz (New York Magazine)


This is a really excellent memoir piece by Jerry Saltz, which deals with his early home life:


“I have no memory of any hot cooked meals in our home. Cooking wasn’t something you did. There was only eating. Our refrigerator was stocked with Oscar Mayer bologna, corned beef, tongue, salami, and roast beef. There was mayonnaise, ketchup, peanut butter, and other things I don’t remember....


Once a week, a Polish maid came in to clean the house and make a large pot of something called “grub” — a gray mealy mix of rice, lentils, peas, hamburger meat, and other stuff. It was placed in the fridge, and we heated it up anytime we wished. There were no dinner hours; we ate alone, with each other, at the table, in our rooms, in the basement, wherever. We never went out to dinner as a family. Paul would come down to the dining-room table wearing only tighty-whities, eat grub with his fingers while sitting on the back of the chair, drinking a beer, talking about getting stoned, and being racist. We all had do not disturb signs on our doors. So did my parents.”


On his early writing career, begun at 40, when he took his wife Roberta Smith’s job at the Village Voice:


“By the time I finally got the job she’d once had at the Voice, she was writing for the Times. She started reading my work. After going through a batch of pieces, she walked into my office and put a stack of my reviews down on my desk. I thought she was going to praise me. Instead she said, “If you don’t get better, I’m going to kill myself!”


** Smeeze into Your Elbow!                    (https://nplusonemag.com/online-only/online-only/smeeze-into-your-elbow/)

I fear that we’re about to see a sharp decline in the number of TikTok videos being made by hospital employees

by Sophie Pinkham (n+1)


I’ve been watching a bit of TikTok and this essay clarifies most of my feelings.

** The Pandemic Is the Time to Resurrect the Public University (https://www.newyorker.com/culture/cultural-comment/the-pandemic-is-the-time-to-resurrect-the-public-university)

By Corey Robin (The New Yorker)


Robin writes about the difficulties facing universities like the one he teaches at, Brooklyn College. Elite schools have big endowments and will do fine. Their facilities make good hygiene possible. Underfunded public universities are a different story. “Sending students, professors, and workers back to campus, amid a pandemic, simply because colleges and universities need the cash,” he writes, “is a statement of bankruptcy more profound than any balance sheet could ever tally.” And while public universities are real engines of social mobility, we chronically underfund them. Without investment, our attempts at equality are misguided. “This is the song of culture in our society,” he writes, “The bass line is wealth and profit; the melody is diversity and opportunity.”

“** How Profit and Incompetence Delayed N95 Masks While People Died at the VA (https://www.propublica.org/article/how-profit-and-incompetence-delayed-n95-masks-while-people-died-at-the-va)
”

Federal agencies have hired contractors with no experience to find respirators and masks, fueling a black market filled with price gouging and multiple layers of profiteering brokers. One contractor called them “buccaneers and pirates.”

by J. David McSwane (ProPublica)


Sad but hilarious story of a man failing to profit off the pandemic. Seemed similar to ** this story (https://nyti.ms/2SEOoEF)
of Jared Kushner’s task force full of incompetent elite hedge fund dinguses royally fucking up the search for PPE, and devolving to corruption.


** Buybacks And Bailouts (https://www.npr.org/2020/04/29/848079558/episode-995-buybacks-and-bailouts)

By Kenny Malone and Robert Smith (Planet Money)


The investor Chamath Palihapitiya argued on CNBC that we should have let the airlines fail. He’s right. Watch the original clip ** here (https://www.youtube.com/watch?v=NvEWez59fbI)
.


The basic question at hand here is, Does anyone deserve to fail in this crisis? The answer is yes. Companies that spent the last ten years tossing off money to their executives and shareholders, instead of holding money for research or a crisis, knew what they were doing. They were taking risks, which is only a risk if it has consequences. Hedge funds too, were leveraged way beyond what was safe, and if major corporations like airlines fail it would be primarily hedge funds who would be wiped out first, which is how things are supposed to work. When a company goes bankrupt, the investors, speculators, and shareholders lose first. Then the pensions holders, workers, and suppliers. If these companies are rotten anyways, bailing them out only protects the hedge funds a little longer, allowing them to loot the company a little more, until the firm finally collapses.
Thanks for reading!

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