Pundits have lauded the Biden administration for replacing the free-market consensus with supply-side liberalism. But it is geopolitical tensions with China and labor’s weakness that have made elites feel comfortable with a milquetoast industrial policy.
ANDREJ MARKOVČIČ & NICK FRENCH
Even prior to his inauguration, there was talk that Joe Biden’s administration would mark a break with the neoliberal orthodoxy that has dominated both parties since the Ronald Reagan era. During the height of the pandemic, the president claimed that the “blinders have been taken off,” and his administration would have to address challenges that “may not dwarf but eclipse what FDR faced.”
The unexpectedly generous, albeit frustratingly temporary, COVID-19 relief package that Biden signed into law in March 2021 and, later, his passage of the Bipartisan Infrastructure Bill (BIB), the CHIPS Act, and the Inflation Reduction Act (IRA) seemed to confirm these initial estimates of his ambitions. The president has been, if not the second coming of Franklin D. Roosevelt, at least a Democrat in a different mold from that of either Bill Clinton or Barack Obama.
Perhaps the most distinctive feature of “Bidenism” is its embrace of what pundits have called “supply-side liberalism” or “supply-side progressivism”: giving the state a prominent role in directing investment in the form of tax incentives, direct subsidies, and tariffs to encourage domestic production of goods deemed strategically necessary. The IRA, for instance, offers subsidies for building renewable energy and green manufacturing; the CHIPS Act uses tariffs and subsidies to encourage domestic manufacturing of computer chips.
In April, Jake Sullivan, Biden’s national security advisor, outlined this new approach in remarks he delivered to the Brookings Institute think tank. The current administration, Sullivan claimed, was rejecting faith in “tax cutting and deregulation, privatization over public action, and trade liberalization as an end in itself” and instead “restor[ing] an economic mentality that champions building.”
What should socialists make of this turn away from neoliberal orthodoxy and the emergence of industrial policy? Biden’s ambitions do mark a step in the direction of rebuilding infrastructure and encouraging economic activity through government intervention. But this move away from the economic orthodoxy of the past forty years has not occurred as a result of the strength of the Left or any other progressive bloc. Despite the recent uptick in worker militancy, it is the weakness of organized labor and working-class political organizations that characterize the current moment.
Read full article at: https://jacobin.com/2023/07/joe-biden-supply-side-liberalism-industrial-policy/
In an area of study dominated by elite, white men, I am one of a small number of Black female economists in the United States. Black and Women’s History Months in the U.S. present an opportunity to uplift the issues that I am forced to grapple with as a Black woman and that I have chosen to study out of desire for change. Economists often ignore the double gap Black women face when it comes to salaries and wages; this group loses billions of dollars of what I term “involuntarily forfeited” compensation each year due to sexism and racism within the U.S. workplace.
The double gap endures not only due to sexist and racist employment practices, but also because proving this inequity is extremely challenging. While Black women may suspect they’re being underpaid compared to their white and/or male colleagues, it’s extremely difficult for most of us to know for sure, and if we don’t know, we can’t attempt to fix it.
I propose we stop waiting for our leaders to step up and instead flip the script ourselves: In this world of asymmetrical information and lack of national policies around pay transparency, Black women can turn among ourselves and begin to ask for more. I’m not suggesting it’s our problem alone to solve; we didn’t create it. I’m also not suggesting that you stick up your boss, since research shows when Black women assertively negotiate, employers don’t react well. I suggest that, when negotiating, you ask for 10 to 20 percent more than you would have. And keep doing this throughout your career.
I have a personal and professional investment in understanding why so much inequality pervades the economy. In the last few years, I’ve researched the salaries of white men and Black women with similar levels of educational attainment and experience in popular professions, and what I found was sobering.
Read the full article at: https://msmagazine.com/2023/03/29/black-women-equal-pay-work-ask-for-more-salary/
Within 24 hours of former President Donald Trump’s arrest on 34 overhyped felony counts related to hush-money payments made to conceal an extramarital dalliance, his re-election campaign raised $4 million, and he widened his lead in the Republican primaries to almost 30 percentage points. Yet a CNN poll also found that 60 percent of Americans approve of the indictment. These numbers are probably less important than they might appear. The trial will likely mobilize the base in both parties and pull swing voters in both directions—for a net effect of zero.
“The indictment does real harm to the American body politic.”
Even so, the indictment does real harm to the American body politic. It has already set off another Trump-centric media feeding frenzy, at the expense of issues far more serious than the former executive’s half-remembered infidelities, and it creates a dangerous precedent, further politicizing the judiciary and inviting escalation. Above all, it is a reminder that Trump has been investigated, impeached, and indicted not because of the crimes of which he is accused, but because he has dared to oppose the imperial foreign policy favored by elites.
Fans of the indictment insist that no man is above the law, not every case creates a precedent, and other countries indict their leaders. For example, former French President Nicolas Sarkozy was sentenced to jail, and France is still a democracy. But the Trump indictment is of a piece with other developments that should be cause for worry. Just to name one example, a few weeks before the former president’s arrest, Internal Revenue Service agents visited the home of journalist Matt Taibbi while he was testifying at a hearing of the House Select Subcommittee on the Weaponization of the Federal Government.
The IRS’s visit to the home of a prominent critic of the establishment on the same day he was testifying about government overreach is a highly unusual occurrence, and almost seems like the Biden administration flipping the bird to its critics. Outrageously, the mainstream and left media by and large have ignored the IRS bullying of Taibbi. Federal law enforcement has long been deployed in blatantly political ways against the activist left. Heterodox critics like Taibbi are now also targets, and there is ample evidence that it is also being wielded against the MAGA right.
Read the article at: https://compactmag.com/article/trump-s-real-crime-is-opposing-empire
Nathan Tankus is the research director of the Modern Money Network. He also writes the Notes on the Crises newsletter.
There has been more buzz about the trillion-dollar platinum coin since my last piece for FT Alphaville, where I argued that the Federal Reserve would have to accept the coin if the Treasury tried to deposit it.
Treasury Secretary Janet Yellen was asked by the Wall Street Journal about the trillion dollar platinum coin; she said the Federal Reserve might not accept the deposit, and further claimed that it isn’t legally obliged to, either.
She didn’t say that issuing a trillion-dollar coin is illegal, however. This, in and of itself, is remarkable. It suggests that while she isn’t comfortable with the platinum coin proposal, she does not want to completely close the door to it by claiming it is not a legal option at all.
More generally, the responses to my argument have highlighted a normally neglected part of the Fed’s responsibilities: its role as fiscal agent. The most substantive engagement came from writer Josh Barro, who argued that other end runs around the debt ceiling such as issuing low face value bonds were better because they don’t require the Fed’s reluctant co-operation. I disagree with this claim, but it is understandable why Barro believes it. Most people do not realise that the Fed’s fiscal agent responsibilities extend beyond providing bank accounts for the Treasury Department and processing payments for it.
As the longtime house historian of the New York Fed Kenneth Garbade has documented, “Treasury securities” are in practice a book-entry system administered by the Fed, even as they remain the Treasury’s liabilities. They are held in “securities accounts” and when a bank or insurance company wants to sell a Treasury security, they use the Fed’s “Fedwire Securities Service”. The book-entry system, incidentally, was introduced in response to a couple of crises, including the disappearance of $7.5mn of Treasuries in 1963 and threats to liquidity from an “insurance crisis” in 1970.
The Fed is also integrally involved in Treasury auctions. As its services website explains: “the Federal Reserve assists in the auction by accepting and processing tenders, issuing securities to the successful bidders and serving financial institutions.” The New York Fed administers all of the Fed’s open-market operations, trading with a select group of bond dealers called “primary dealers” who, in exchange, are required to bid on Treasury auctions.
In other words, if you’re trying to avoid requiring the close co-operation of the Fed or its regional banks as a fiscal agent, auctioning a Treasury security is the wrong strategy. It may sound like a process that is more independent from the Fed than depositing a high-face-value platinum coin, but this is a myth generated by neglect of the details of how the Treasury market works.
Additionally, as Bloomberg’s Treasuries reporter Elizabeth Stanton pointed out, there are a number of operational issues with trying to modify the Treasury auction schedule and issue new types of Treasury securities, especially ones that would be clouded with the same (at best) legal uncertainties as the coin. In contrast, depositing the trillion-dollar coin is operationally simple even if its legal uncertainties are different from any unconventional-Treasury-security-related gimmicks.
Bottom line: issuing a weird bond may be more attractive to DC pundits and play well with an audience that likes needless complexity, but when you examine it up close it is not actually a more viable or less risky option.
Nevertheless, Barro’s commentary brings up a few questions that need attention: how seriously does the Fed take its fiscal agent responsibilities, and does it believe it can pick and choose which responsibilities to carry out? Perhaps most explosively, does the Fed believe it can interfere with the White House’s determination that breaking the debt ceiling is the least unconstitutional option?
Put differently, do Fed officials believe that their judgment on constitutional questions supersedes the executive branch?
Interestingly, former Fed chair Alan Greenspan said a number of times behind closed doors that the Fed was not independent in its role as a fiscal agent. In 1995, for example, he said: “On the issue of how we deal with the Treasury in this government, as fiscal agent we involve ourselves in various types of support for the Treasury and that does in one sense impinge on the independence of this institution.” In 2004 he reiterated these comments, saying “there are a number of awkward relationships that we have in our role as fiscal agent, none of which to my knowledge has ever triggered any event that would be of concern to us”.
This brings me to my questions for Fed Chair Jay Powell, which I hope journalists will ask at the press conference on Wednesday. These questions are important; it matters if the leadership of the Fed believes that it’s their prerogative to decide whether the government defaults, or to interfere with Treasury issuance under any circumstances.
1) If the Treasury attempted to avoid default by depositing a trillion dollar coin at a regional Fed Bank, would the Fed’s Board direct that bank to reject the deposit of the coin?
2) Would the Fed fully co-operate with a Treasury attempt to avoid default by issuing consols or low-face-value, high-coupon bonds once the debt ceiling is reached?
3) If the Treasury attempted to avoid default by issuing more Treasury securities beyond the limit set by the debt ceiling, would the Fed interfere with their issuance in any way, including (but not limited to) its role as a fiscal agent?
I hope Powell gets asked these questions and answers them. They are profoundly important. The trillion dollar platinum coin — or the quirky Treasury bond proposals, for that matter — may seem silly. However, they have brought up fundamental constitutional questions which are very serious. Powell can clarify at tomorrow’s press conference that the Fed’s judgment does not supersede the President’s when it comes to questions of constitutional interpretation.
Original Article: https://www.ft.com/content/afb6ef8f-be7c-45ac-8a7d-56550b64fd9e
We live in the age of diversity ideology, a worldview that ostensibly aims to uplift the socially marginalized. Diversity ideology’s advocates present it as a grassroots movement propelled by the downtrodden, but it is now the rhetorical currency of big business, the military, the Central Intelligence Agency, universities, powerful philanthropic foundations, h.r. departments everywhere, the Democratic Party, even many Republicans.
Diversity as ideology shouldn’t be confused with diversity itself, which tends to engender tolerance, sophistication, and cosmopolitanism. On the contrary, diversity ideology is narrow and parochial. It is a divisive, hollowed-out form of progressivism used to distract and channel legitimate popular grievances into destructive, often petty squabbles. Elites and elite institutions find diversity ideology useful because it keeps the working class divided and distracted.
One of the more striking aspects of diversity ideology is reluctance to criticize it across most of the American left. This, even as corporations and the state have been increasingly open in their appeals to diversity ideology to legitimize profiteering, mass surveillance, and imperial warfare. Recall progressive congressman Jamie Raskin’s letter describing Moscow as “a world center of antifeminist, antigay, anti-trans hatred.” Nonetheless, on the activist left, the conviction remains that identity politics somehow add up to a more “inclusive” form of class struggle from below. In reality, the opposite is true: Diversity ideology offers a highly effective way to wage class war from above—a ruling-class strategy with a long pedigree in the United States.
Read the whole article at: https://compactmag.com/article/diversity-is-a-ruling-class-ideology