Monday, July 10, 2023

A critique of Bidenomics in Phong Bui's Brooklyn Rag, and Phong's letter to readers, after Prigozhin.  I'm not going to go over my sociology/genealogy of intellectual hipsterdom, even though Jamie Merchant's essay appears under an ad for an exhibition of luxury commodities made by an insufferably pretentious schmuck, in a luxury boutique owned by a clueless fop, in a town with an economy fueled almost entirely by the "oll bidness". 

Grey Anderson and Thomas Meaney in the NYT: "NATO  secures American influence in Europe on the cheap". I'm not sure that NATO allies won't end up with more power than the US wants.

It's always good to see interesting things in the mainstream press.

Merchant, "The Economic Consequences of Neo-Keynesianism".

Criticism of the new orthodoxy has been scarce, but not completely absent. In a blog for the New Left Review, the sociologist Dylan Riley threw cold water on the whole prospect of Bidenomics. Taking the March bailout of Silicon Valley Bank as a point of departure, Riley claimed that “the SVB collapse is a beautiful, almost paradigmatic, demonstration of the fundamental structural problem of contemporary capitalism: a hyper-competitive system, clogged with excess capacity and savings, with no obvious outlets to soak them up,” and that “the current vogue for ‘industrial policy’ will do nothing to address this underlying issue.” Consequently, socialists have no business supporting Bidenomics or any other industrial policy for that matter: instead, “the commanding heights of the economy…must be seized all at once.”4 

Despite helpfully solving the problem of socialist strategy, Riley’s polemic provoked a flurry of rote Keynesian responses criticizing his ultraleft politics and emphasizing the role of demand as a policy variable. Writing for New York magazine, Eric Levitz pointed to the high rate of US profits, as measured by the US Bureau of Economic Analysis, as evidence against Riley’s contention that overcapacity is suppressing them. “More broadly, overcapacity cannot exist in anything but a relative sense,” he added, “the world does not have more productive capacity than is required to satisfy all the wants and needs of its 7.8 billion people.” The problem, Levitz suggested, is one of “inadequate demand.”5 Similarly, the economist J.W. Mason criticized the theoretical basis of Riley’s overproduction story, claiming that it—unjustifiably—takes demand as a static variable, just as, conversely, mainstream economics usually takes supply as a given factor, unalterable by human activity. Besides, political realities should trump political purism. Rather than dismissing Bidenomics from the standpoint of some idealized socialist movement, progressive activists should welcome it as the flawed but long-awaited arrival of post-neoliberal governance, which for better or worse will form the terrain of political conflict in the years to come. And in the end, isn’t any climate policy better than none?6 

Considering the content of the IRA, that's actually debatable. The IRA— billed by its cheerleaders as “the most important climate action in U.S. history”—provides billions in tax credits to generate domestic consumer demand for US-made electric vehicles, along with a host of other measures to incentivize emission reductions and clean energy manufacturing. It also hands out truly massive subsidies to the oil and gas industries, locking in continued windfall profits for oil oligarchs—“courageous visionaries,” in the words of US Energy Secretary Jennifer Granholm—and environmental degradation at the public’s expense for decades to come.7 At the moment, it is unclear if the legislation’s decarbonization measures will even balance out the historic pipeline permit it just handed to the fossil fuel industry not just to continue, but to escalate its campaign to doom human civilization. Beyond the IRA, the speed with which the Biden administration has approved new drilling projects has left even Trump’s cretinous lackeys of industry in the dust.8 

That’s not all, though. A key feature of the IRA is its brazen protectionism for US electric automobile manufacturing, which predictably set off alarm bells in Brussels and Seoul, whose exports the Act is explicitly meant to shut out. As a plainly mercantilist policy with the goal of raising US growth at the expense of its competitors, the IRA is already triggering an international arms race toward general mercantilism, with the European Union rushing to implement its own protectionist subsidies. The South Korean government, already acting against its own economic interests to accommodate the US’s trade war against China, was shocked by the US’s apparent willingness to economically decimate a critical ally in its anti-China coalition.9 It has since enacted a new round of subsidies for its domestic industries and is currently considering even bigger ones. Japan is following suit.10 With the IRA’s beggar-thy-neighbor consequences, the US is happily forming a circular firing squad with its supposed “allies,” with signs afoot that a global race to the bottom in protectionism is already underway. This makes the prospects for global cooperation on the climate crisis even bleaker than they already were.11 

There's a lot more.

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