Author: Evan Rose

This Year Is Set To Be The Hottest In History – Congress Must Act Now

Posted on July 7, 2023

If there is not bold, immediate action to address the climate crisis, the quality of life that we are leaving our kids is very much in question.

The last eight years have been the eight hottest on record. This year is on track to be the hottest year in recorded history, and this Fourth of July might have been the hottest day in the past 125,000 years.

Climate change is ravaging the planet. We are now seeing floods, droughts, extreme weather disturbances and wild fires causing unprecedented damage. If there is not bold, immediate and united action by governments throughout the world, the quality of life that we are leaving our kids and future generations is very much in question.

In the short term, we will be looking at more melting of the Arctic ice caps, rising sea levels and increased flooding. We will experience more drought and a decrease in food production. We will see major damage caused by intense storms, tornadoes and other extreme weather disturbances. We will see a decline in economic activity and the migration of millions of people as a result of water shortages. We will see a major disruption in all forms of marine life as a result of warming sea water and the acidification of the oceans.

Over last few weeks we’ve gotten a glimpse of what this dystopian future could look like. The unprecedented forest fires in Quebec, preceded by massive fires in Nova Scotia, British Columbia and Alberta, have resulted in dangerously unhealthy air all across the United States. New York, Washington DC, Detroit, Chicago, Milwaukee and other cities have reported some of their worst air quality levels ever as people with chronic illness have been forced to remain indoors. Meanwhile, during this same period, Texas has experienced a record-breaking heat wave. In Corpus Christi the heat index, a measure of temperature combined with humidity, reached a 125F – close to the level at which humans are able to survive.

As a result of long-standing drought six western states that rely on water from the Colorado River have recently agreed to dramatically cut their water use. That river, which provides water for 40 million people and a $5tn-a-year agricultural industry, is drying up. The state of Arizona recently restricted future home-building in the Phoenix area due to a lack of groundwater, based on projections showing that wells will run dry under existing conditions.

Needless to say, climate change is not just an American issue. Despite the frightening impact of climate change on the United States, highly populated Asian countries are facing even worse challenges. Sea levels on China’s coastline have hit their highest on record for the second year in a row, rising more quickly than the global average. China’s coastal areas are home to approximately 45% of the country’s population of about 1.4 billion people, and contribute to over half of the country’s economic output. Major cities like Shanghai, Tianjin and Shenzhen are all located along the Chinese coast and could face catastrophic flooding in years to come – creating havoc with the entire Chinese economy.

Last year, India experienced a searing heat wave, during which parts of the country reached more than 120F. In 2022, India experienced its hottest April in 122 years and its hottest March on record. It experienced extreme weather on 242 out of 273 days between January and October 2022. Long-term projections indicate that Indian heat waves could cross the survivability limit for a healthy human resting in the shade by 2050. The impact of these continued heat waves will not only result in more deaths and disease in India but will increase poverty as a result of reduced economic output.

From June to October 2022, heavy rainfall in Pakistan caused flooding and landslides at a rate nearly 10 times the national 30-year average. The floods affected nearly 33 million people, damaged 4.4 million acres of agricultural land and killed 800,000 livestock. In the aftermath, rising food prices exacerbated already stressed levels of hunger and malnutrition in the country. The number of people experiencing severe hunger has more than doubled since the floods hit in June: today, 14.6 million people are experiencing severe hunger in Pakistan and the malnutrition rates are dire.

Climate change is taking a major human, economic and environmental toll in Europe, the fastest warming continent of the world. The year 2022 was marked by extreme heat, drought and wildfires. Based on country data submitted so far, it is estimated that at least 15 000 people died in Western Europe alone specifically due to the heat in 2022. Among those, more than 4600 deaths in Spain, more than 1000 in Portugal, more than 3200 in the United Kingdom, and around 4500 people died in Germany as a result of extreme heat.

As devastating as climate change has been for the United States, Europe, China and other developed countries, its impact is even worse for the poorest countries on earth who lack the resources to protect their inhabitants from the growing hunger, disease and migrations that droughts and floods are causing. Here are a few examples as reported by the UN World Food Program:

South Sudan’s temperatures are increasing at two and half times the global average. This has resulted in extreme weather events including four consecutive years of flooding that have left half the country underwater. The unprecedented flooding has swallowed large swathes of the country while other parts are grappling with devastating drought. Today, some 64% of the country’s population (7.7 million people out of 12 million total) are experiencing severe hunger.

In February of 2022, Madagascar was hit with four tropical cyclones. These storms destroyed infrastructure, decimated rice crops and left over 270,000 people in urgent need of food. Today, nearly 2 million people in Madagascar are experiencing hunger and are in need of humanitarian assistance.

In Somalia, there is no end in sight to the drought in that extremely poor country. Somalia has experienced five failed rainy seasons, drying up crops and killing livestock. This has resulted in 6.5 million people facing crisis levels of hunger.

It is no great secret that human beings are not particularly anxious to address painful realities – especially when it requires taking on powerful special interests like the fossil fuel industry. This time we must.

Our Earth is warming rapidly. We see this every day in every part of the world.

Drought, floods, forest fires and extreme weather disturbances are increasing. We see this every day in every part of the world.

Hunger, disease and human migrations are increasing. We see this every day in every part of the world.

Instead of denying this obvious reality, instead of doing the bidding of oil and coal companies, instead of fomenting a new cold war with China, members of Congress must develop an unprecedented sense of urgency about this global crisis. We must bring the world together NOW to address this existential threat. Failure to act will doom future generations to a very uncertain future. For the sake of our common humanity we cannot allow that to happen.

Why The Sierra Club’s Ben Jealous Is Targeting Red States

Posted on June 21, 2023

In the world of climate advocacy groups, the Sierra Club is perhaps best known as a grassroots, progressive heavyweight. For years, it has fought to close coal plants, one by one, and more recently the group has called on the Biden administration to do more to address climate change.

So it may come as a surprise that Ben Jealous—the former NAACP head who was recently appointed as the Sierra Club’s executive director—says he wants to revamp the organization to expand its presence in red states. As part of his agenda, the organization is opening up shop in conservative parts of the country—even as it goes through a round of layoffs. And Jealous has spent many of his early days in the new job on the road in rural and conservative places. “I’m focused on building an uncomfortably large coalition,” he tells me. “If you’re comfortable in your coalition, your coalition is too small.”

To understand the move, look no further than the Inflation Reduction Act (IRA), the landmark climate law enacted last year. The IRA has catalyzed billions of dollars in clean energy investment, much of which will go towards building clean energy infrastructure and manufacturing facilities in red states. To ensure that the money is well spent—and that the organization stays relevant—the Sierra Club needs to be on the ground everywhere. “Having a 50-state strategy is critical for us,” says Jealous. “In this moment, when the power grid will be changed in all 50 states, when we are building green industry in all 50 states, the Sierra Club must be as effective and impactful as possible in all 50 states.”

The strategy is a reflection of just how much the IRA has changed the dynamics of climate action in the U.S. Conservative estimates suggest the law will pump out nearly $370 billion in climate funding—and other estimates suggest the total could be much more. This money will catalyze clean-energy projects in states that have traditionally been skeptical of policies to address climate change and that are home to fewer traditional environmental watch dogs. Focusing on all 50 states will get the Sierra Club in the game on how that money is spent and who benefits from it.

In the close to a year since the IRA was unveiled, many climate and clean energy supporters have shifted strategies. Some of the most aggressive campaigners have criticized the Biden administration for doing too little. Select clean energy advocates have embraced once anathema proposals to streamline environmental laws, in hopes that it will allow for a faster build out of clean energy. And the American Clean Power Association (ACP), the leading trade group for clean energy, replaced senior leadership with ties to the Democratic Party with officials connected in Republican circles. “We have to make sure that the awful politics of [the IRA’s] passage don’t actually get in the way of it being implemented effectively,” says Jason Grumet, the former president of the Bipartisan Policy Center who now leads ACP.

Jealous does not mince words about how the IRA is shaping his strategy at the Sierra Club. The organization has a state director in every blue state, he says, but only in a third of red states. Building up a network of local activists helps create grassroots pressure on state and local energy and climate decisions, he says. And local Sierra Club offices on the ground in states will help identify the most important cases for the organization’s legal team to pursue as they seek to ensure that states are spending IRA money effectively. “Almost 90% of large scale renewable projects will be placed in red states,” says Jealous. “There is a need for us to really train and lead and support our activists in wielding those carrots and making sure that all the money gets out the door.”

On the surface, Jealous may seem like an unusual person to lead the Sierra Club through reforms that bring the organization further into red America. Jealous worked as a civil rights activist for decades before turning to politics. In 2016, he gave Bernie Sanders a full-throated endorsement, and, in 2018, he ran to serve as governor of Maryland with an unabashedly progressive agenda.

But his record—and importantly his civil rights work—may actually situate him well to reform the Sierra Club. In 2020, the group publicly denounced the racist beliefs of its founder John Muir. After an internal review the following year, the organization acknowledged that the legacy of that racism still persisted–and promised to do better. Nonetheless, Jealous’ predecessor resigned in the wake of the review, which also depicted sexism within the group.

Jealous, whose resume aligns well with the organization’s progressive base, offers the opportunity to turn over a new leaf. He told me a story of an older white woman in California who approached him after a Sierra Club event and told him that white activists should “just follow Black people.” (Jealous told her to “please, never give up your power.”)

The IRA and related Biden administration policies are also forcing green groups to reckon with related issues in their advocacy. A Biden-signed executive order mandates that 40% of the benefits from the IRA benefit historically disadvantaged communities and communities of color. Jealous sees the Sierra Club helping advance the environmental justice conversation with its cross-country network of on-the-ground activists that can support environmental justice fights. And he says he’s pushing for better engagement between project developers and communities. “We will also be working with environmental activists, convening environmental activists to have real brass tacks conversations about what it is going to mean to build a new power grid for the entire country,” he says.

I asked Jealous why he would take on the climate fight with so many years working on civil rights issues under his belt. Jealous described joining the Sierra Club as a coming home of sorts. Early in his career, he worked as a reporter in Mississippi covering environmental justice issues and later worked as an environmental organizer. “I had a need in my soul to focus on the most critical fight for humanity,” he says.

But, whatever his history working on environmental issues, it’s also fair to say that the IRA made the job more appealing. “One of the hardest things about being an American these last 50 years has been watching our nation go from a nation that prided itself on manufacturing to one defined by consumption,” he says. “The passage of the IRA is the greatest investment in American cities and American manufacturing that I’ve seen in my entire lifetime.” At the Sierra Club, Jealous says, he can help shape it.

How JFK Would Pursue Peace In Ukraine

Posted on June 6, 2023

Sixty years after Kennedy’s commencement address at American University, crucial lessons must still be learned about how to end dangerous conflicts in a nuclear world.

President John F. Kennedy was one of the world’s great peacemakers. He led a peaceful solution to the Cuban Missile Crisis and then successfully negotiated the Partial Nuclear Test Ban Treaty with the Soviet Union at the very height of the Cold War. At the time of his assassination, he was taking steps to end US involvement in Vietnam.

In his dazzling and unsurpassed Peace Speech, delivered exactly sixty years ago on June 10, 1963, Kennedy laid out his formula for peace with the Soviet Union. Kennedy’s Peace Speech highlights how Joe Biden’s approach to Russia and the Ukraine War needs a dramatic reorientation. Until now, Biden has not followed the precepts that Kennedy recommended to find peace. By heeding Kennedy’s advice, Biden too could become a peacemaker.

A mathematician would call JFK’s speech a “constructive proof” of how to make peace, since the speech itself contributed directly to the Partial Nuclear Test Ban Treaty signed by the US and Soviet Union in July 1963. Upon receipt of the speech, Soviet leader Nikita Khrushchev told Kennedy’s envoy to Russia, Averell Harriman, that the speech was the greatest by an American president since Franklin D. Roosevelt, and that he wanted to pursue peace with Kennedy.

In the speech, Kennedy describes peace “as the necessary rational end [goal] of rational men.” Yet he acknowledges that peacemaking is not easy: “I realize that the pursuit of peace is not as dramatic as the pursuit of war—and frequently the words of the pursuer fall on deaf ears. But we have no more urgent task.”

 

 

The deepest key to peace, in Kennedy’s view, is the fact that both sides want peace. It is easy to fall into the trap, warns Kennedy, of blaming a conflict only on the other side. It is easy to fall into the trap of insisting that only the adversary should change their attitudes and behavior. Kennedy is very clear: “We must reexamine our own attitude—as individuals and as a Nation—for our attitude is as essential as theirs.”

Kennedy attacked the prevailing pessimism at the height of the Cold War that peace with the Soviet Union was impossible, “that war is inevitable—that mankind is doomed—that we are gripped by forces we cannot control. We need not accept that view. Our problems are man-made—therefore, they can be solved by man.”

Crucially, said Kennedy, we must not “see only a distorted and desperate view of the other side.” We must not “see conflict as inevitable, accommodation as impossible, and communication as nothing more than an exchange of threats.” Indeed, said Kennedy, we should “hail the Russian people for their many achievements—in science and space, in economic and industrial growth, in culture and in acts of courage.”

Kennedy warned against putting a nuclear adversary into a corner that could lead the adversary to desperate actions. “Above all, while defending our own vital interests, nuclear powers must avert those confrontations which bring an adversary to a choice of either a humiliating retreat or a nuclear war. To adopt that kind of course in the nuclear age would be evidence only of the bankruptcy of our policy—or of a collective death wish for the world.”

Kennedy knew that since peace was in the mutual interest of the US and the Soviet Union, a peace treaty could be reached. To those who said that the Soviet Union would not abide by a peace treaty, Kennedy responded that “both the United States and its allies, and the Soviet Union and its allies, have a mutually deep interest in a just and genuine peace and in halting the arms race. Agreements to this end are in the interests of the Soviet Union as well as ours—and even the most hostile nations can be relied upon to accept and keep those treaty obligations, and only those treaty obligations, which are in their own interest.”

Kennedy emphasized the importance of direct communication between the two adversaries. Peace, he said, “will require increased understanding between the Soviets and ourselves. And increased understanding will require increased contact and communication. One step in this direction is the proposed arrangement for a direct line between Moscow and Washington, to avoid on each side the dangerous delays, misunderstandings, and misreadings of the other’s actions which might occur at a time of crisis.”

In the context of the Ukraine War, Biden has behaved almost the opposite of JFK. He has personally and repeatedly denigrated Russian President Vladimir Putin. His administration has defined the US war aim as the weakening of Russia. Biden has avoided all communications with Putin. They have apparently not spoken once since February 2022, and Biden rebuffed a bilateral meeting with Putin at last year’s G20 Summit in Bali, Indonesia.

Biden has refused to even acknowledge, much less to address, Russia’s deep security concerns. Putin repeatedly expressed Russia’s ardent opposition to NATO enlargement to Ukraine, a country with a 2,000-kilometer border with Russia. The US would never tolerate a Mexican-Russian or Mexican-Chinese military alliance in view of the 2000-mile Mexico-US border. It is time for Biden to negotiate with Russia on NATO enlargement, as part of broader negotiations to end the Ukraine war.

When Kennedy came into office in January 1961, he stated clearly his position on negotiations: “Let us never negotiate out of fear. But let us never fear to negotiate. Let both sides explore what problems unite us instead of belaboring those problems which divide us.”

In his Peace Speech, JFK reminded us that what unites the US and Russia is that “we all inhabit this small planet. We all breathe the same air. We all cherish our children’s future. And we are all mortal.”

New World Economy – The Global Banking Crisis In A time Of War, Geopolitical Tensions And Climate Shocks

Posted on March 19, 2023

The immediate question is whether Silicon Valley Bank’s failure is the start of a more general bank crisis. The rise of market interest rates caused by the Fed and European Central Bank’s tightening has impaired other banks as well. Now that a banking crisis has occurred, panics by depositors are more likely.

The banking crisis that hit Silicon Valley Bank (SVB) two weeks ago has spread. We recall with a shudder two recent financial contagions: the 1997 Asian Financial Crisis, which led to a deep Asian recession, and the 2008 Great Recession, which led to a global downturn.

The new banking crisis hits a world economy already disrupted by pandemic, war, sanctions, geopolitical tensions and climate shocks.

At the root of the current banking crisis is the tightening of monetary conditions by the Federal Reserve (the Fed) and the European Central Bank (ECB) after years of expansionary monetary policy. In recent years, both the Fed and ECB held interest rates near zero and flooded the economy with liquidity, especially in response to the pandemic.

Easy money resulted in inflation in 2022, and both central banks are now tightening monetary policy and raising interest rates to staunch inflation.

Banks like SVB take in short-term deposits and use the deposits to make long-term investments.

The banks pay interest on the deposits and aim for higher returns on the long-term investments. When the central banks raise short-term interest rates, rates paid on deposits may exceed the earnings on long-term investments. In that case, the banks’ earnings and capital fall. Banks may need to raise more capital to stay safe and in operation. In extreme cases, some banks may fail.

Even a solvent bank may fail if depositors panic and suddenly try to withdraw their deposits, an event known as a bank run. Each depositor dashes to withdraw deposits ahead of the other depositors. Since the bank’s assets are tied up in long-term investments, the bank lacks the liquidity to provide ready cash to the panicked depositors. SVP succumbed to such a bank run and was quickly taken over by the US government.

Bank runs are a standard risk but can be avoided in three ways. First, banks should keep enough capital to absorb losses. Second, in the event of a bank run, central banks should provide banks with emergency liquidity, thereby ending the panic. Third, government deposit insurance should calm depositors.

All three mechanisms may have failed in the case of SVB. First, SVB apparently allowed its balance sheet to become seriously impaired and regulators did not react in time. Second, for unclear reasons, US regulators closed SVB rather than provide emergency central bank liquidity. Third, US deposit insurance guaranteed deposits only up to $250,000, and so did not stop a run by large depositors. After the run, US regulators announced they would guarantee all deposits.

The immediate question is whether SVB’s failure is the start of a more general bank crisis. The rise of market interest rates caused by Fed and ECB tightening has impaired other banks as well. Now that a banking crisis has occurred, panics by depositors are more likely.

Future bank runs can be avoided if the world’s central banks provide ample liquidity to banks facing runs. The Swiss Central Bank provided a loan to Credit Suisse for exactly this reason. The Federal Reserve has provided $152-billion in new lending to US banks in recent days.

Emergency lending, however, partly offsets the central banks’ efforts to control inflation. Central banks are in a quandary. By pushing up interest rates, they make bank runs more likely. If they keep interest rates too low, however, inflationary pressures are likely to persist.

The central banks will try to have it both ways: higher interest rates plus emergency liquidity, if needed. This is the right approach, but comes with costs. The US and European economies were already experiencing stagflation: high inflation and slowing growth. The banking crisis will worsen the stagflation and possibly tip the US and Europe into recession.

Some of the stagflation was the consequence of Covid-19, which induced the central banks to pump in massive liquidity in 2020, causing inflation in 2022. Some of the stagflation is the result of shocks caused by long-term climate change. Climate shocks could become worse this year if a new El Niño develops in the Pacific, as scientists say is increasingly likely.

Yet stagflation has also been intensified by economic disruptions caused by the Ukraine War, US and EU sanctions against Russia, and rising tensions between the US and China. These geopolitical factors have disrupted the world economy by hitting supply chains, pushing up costs and prices while hindering output.

We should regard diplomacy as a key macroeconomic tool. If diplomacy is used to end the Ukraine war, phase out the costly sanctions on Russia, and reduce tensions between the US and China, not only will the world be much safer, but stagflation will also be eased. Peace and cooperation are the best remedies to rising economic risks.

Geopolitics Today

Posted on February 1, 2023

The new multilateralism should be based on globally agreed goals, notably the Paris Climate Agreement, the Biodiversity Agreement, and the Sustainable Development Goals.

There is universal assent that we are in a period of geopolitical tension and flux. In a rough chronology, 1815-1914 was the era of British hegemony, the not-so-peaceful Pax Britannica. What followed between 1914 and 1945 was a disastrous period of two world wars and the Great Depression. The end of World War II marked the rise of the United States as the new hegemon as well as the start of the Cold War between the United States and the Soviet Union. This period lasted from 1947 to 1989. The period from 1989 to around 2008 has been described (rightly or wrongly) as the unipolar world, with the United States widely regarded as the sole superpower. In the past decade or so we have entered a new geopolitical era, but of what kind?

There are at least five major theories about the current geopolitics. The first three are variants of the Hegemonic Stability Theory; the fourth is the important school of international realism. The fifth is my preferred theory of multilateralism, based on the pre-eminent importance of global cooperation to solve pressing global problems.

The Hegemonic Stability Theory, favored by American elites in politics, government, and academia, holds that the United States remains the world’s hegemon, the sole superpower, albeit a hegemon that is challenged by a rising competitor, China, and by a lesser but nuclear-armed competitor, Russia.

The Hegemonic Competition Theory, sometimes nicknamed the Thucydides Trap theory, holds that China’s rise has ushered in a period of confrontation between the United States and China, alongside the ongoing confrontation of the United States and Russia. The U.S.-China competition is analogized to that of Sparta and Athens in the Peloponnesian Wars, with China playing the role of Athens, the rising power in the fourth century BCE Hellenic world, challenging Sparta, the incumbent power.

The Hegemonic Decline theory focuses on the fact the United States is no longer willing or able to play the role of global stabilizer (if it ever did). According to this theory, our current period will be akin to the period of British decline after World War I and before the rise of American hegemony. The Hegemonic Decline theory holds that the waning of a hegemon leads to global instability.

The Realist theory holds that geopolitics is defined by great power politics, with China, the United States, the EU, Russia, and increasingly India, playing the role of the great powers, and sharing the world stage with regional powers (such as Brazil, Indonesia, Iran, Pakistan, and Saudi Arabia, among others).

The Multilateralist theory, to which I subscribe, holds that only global cooperation and multilateralism, organized around UN institutions, can save us from ourselves, whether from war, dangerous technologies, or human-induced climate change. Multilateralism is often dismissed as excessively idealistic because it calls for cooperation among nations, yet I will argue that it is in fact more realistic than the Realist theory.

Of course, there are several other important approaches to geopolitics, including Marxist theories focusing on the interests and power of globally mobile financial capital, Immanuel Wallerstein’s core-periphery theory, and Samuel Huntington’s clash-of-civilizations theory. These are all well-known and have been widely debated. For the sake of brevity, I will focus on the three hegemonic theories, realism, and multilateralism.

 

Economic Drivers of long-term Geopolitical Change

America was far and away the world’s leading power at the end of World War II. According to the estimates of historian Angus Maddison (2010), the United States produced 27.3 percent of global output (measured at international prices) as of 1950, though constituting only 6 percent of the world population (and today only 4.1 percent). The Soviet Union was the next largest economy, at roughly one-third of the United States, while China was third, at roughly one-sixth. The American advantage was not only in total GDP but in science, technology, higher education, depth of capital markets, sophistication of business organization, and quality and quantity of physical infrastructure. American multinational companies circled the globe to create global supply chains.

The U.S. predominance has gradually declined since 1950 mainly because other parts of the world have gradually caught up with the United States in advanced technologies, skills, and physical infrastructure. As theory predicts, globalization promoted the spread of scientific and technological know-how, higher education, and modern infrastructure. East Asia was the greatest beneficiary of globalization. East Asia’s take-off started with Japan’s rapid postwar rebuilding during 1945-1960, followed by its decade of income doubling in the 1960s. Japan in turn provided a roadmap for the four Asian Tigers (Korea, Taiwan, Hong Kong, and Singapore), which began their rapid growth in the 1960s, and then for China starting in the late 1970s with Deng Xiaoping’s reforms and opening of the country to the world. According to Maddison’s estimates, 16 major East Asian economies produced 15.9 percent of world output in 1950, 21.7 percent in 1980, and 27.8 percent in 1990. In the 1990s, India too began an era of economic opening and rapid growth.

When the Soviet Union dissolved in 1991, the United States did not face any major competitor for global leadership. While the Western European economy was broadly comparable in size to the American economy, Western Europe remained dependent on the United States for military security and was in any event a disjoint group of nations with foreign policies generally subordinate to the United States. East Asia had grown rapidly but was even less of a geopolitical force than Europe. According to IMF measurements, China’s GDP measured in constant international dollars was 17.5 percent of American GDP despite a population that was 4.6 times the size. Its per capita income was therefore a mere 3.8 percent of the U.S. according to the IMF estimates. China’s technologies and military capacity were decades behind those of the United States, and its nuclear arsenal was small. It is perhaps understandable that policymakers in Washington assumed that the United States would be the world’s sole superpower for decades to come.

What they failed to anticipate, of course, was the ability of China to grow rapidly for decades to come. Between 1991 and 2021, China’s GDP (measured in constant international dollars) grew 14.1 times, while the American GDP grew 2.1 times. By 2021, according to IMF estimates, China’s GDP in constant 2017 international prices, was 18 percent larger than U.S. GDP. China’s GDP per capita rose from 3.8 percent of the U.S. in 1991 to 27.8 percent in 2021 (IMF estimates in constant international dollars).

China’s rapid gains in output and output per person were underpinned by rapid Chinese advances in technological knowhow, capacity to innovate, quality education at all levels, and the upgrading and modernization of infrastructure. Naïve and sometimes racist American punditry has dismissed China’s success as nothing more than China stealing American know-how, as if the United States is the only society that can harness modern science and engineering, and as if it too doesn’t rely on scientific and technological advances made elsewhere. In fact, China has been catching up by mastering advanced technological knowledge and taking measures to become a major innovator in its own right.

Nor should we neglect the rising economic power of both India and Africa, the latter including the 54 countries of the African Union. India’s GDP grew 6.3 times between 1991 and 2021, rising from 14.6 percent of America’s GDP to 44.3 percent (all measured in international dollars). Africa’s GDP grew significantly during the same period, eventually reaching 13.5 percent of U.S. GDP in 2022. Most importantly in this context, Africa is also integrating politically and economically, with important steps in policy and physical infrastructure to create an interconnected single market in Africa.

In the past 30 years, three basic economic changes have transformed geopolitics. The first is that the U.S. share of global output declined from 21.0 percent in 1991 to 15.7 percent in 2021, while China’s rose from 4.3 percent in 1991 to 18.6 percent in 2021. The second is that China has overtaken the United States in total GDP and has become the leading trade partner for much of the world. The third is that the BRICS, constituting Brazil, Russia, India, China, and South Africa, have also overtaken the G7 countries in total output. In 2021, the BRICS had a combined GDP of $42.1 trillion (measured in constant 2017 international prices), compared with $41.0 trillion in the G7. In terms of combined population, the BRICS, with a 2021 population of 3.2 billion, is 4.2 times the combined population of the G7 countries, at 770 million. In short, the world economy is no longer American-dominated or Western-led. China is of comparable overall economic size to the United States, and the large middle-income countries are a counterweight to the G7 nations. It is notable that four G20 Presidencies in a row will be held by middle-income developing countries: Indonesia (2022), India (2023), Brazil (2024), and South Africa (2025).

 

Contrasting Visions of Geopolitics

As China has matched or overtaken the United States in economic size and has become the leading trade partner with many countries around the world, and as the BRICS have matched the G7 in overall economic size, a debate rages in the United States and globally about America’s changing role and power, and the implications for the future of global governance and international affairs. As mentioned above, there are five schools of thought, which I now review in greater detail.

The Hegemonic Stability theory remains the dominant school of thought in the United States, at least in the leadership circles and East Coast think tanks and academic centers. According to this view, the U.S. and the U.S. alone can maintain geopolitical hegemony and thereby provide stability to the world. When the United States speaks of the “rule-based order,” it is not speaking of the UN system or international law. It is speaking of an American-led order, in which Washington, in consultation with its allies, writes the global rules.

According to this view, China remains far behind the United States in all key categories of power: economic, military, technological, and soft power. Russia is viewed as a declining, nearly defunct, regional power—albeit one with a large nuclear arsenal. In this school of thought, the nuclear threat can be contained through counter-threats and deterrence. American hegemony will ensure that Russia will play no major geopolitical role in the future. This hegemonic vision, known as neoconservatism in the United States, finds its expression in a wide range of policies.

The war in Ukraine forms a central part of Washington’s strategy for continued U.S. hegemony. While American policymakers presumably bemoan the destruction and deaths in Ukraine, they also welcome the opportunity to push NATO’s eastward enlargement and bleed Russia through a war of attrition. The Washington policy elite is in no hurry to end the war.

Nor is it eager to look more deeply at the roots of the war, which was surely provoked in part by the United States in its battle with Russia for political and military influence in Ukraine. This competition turned red-hot after George W. Bush pushed NATO in 2008 to commit to enlarging to Ukraine and Georgia. This was part of a long-term game plan, outlined by Zbigniew Brzezinski in his 1997 book The Grand Chessboard, to end the ability of Russia to project its power towards Western Europe, the Eastern Mediterranean, or the Middle East.

Russia will presumably fight at all costs to prevent NATO enlargement to Ukraine. When Ukraine’s pro-Russian President Viktor Yanukovych—who favored Ukraine’s neutrality instead of NATO enlargement—was overthrown with American financial and logistical support in early 2014, the Russo-Ukrainian war broke out. Russia retook Crimea and pro-Russian separatists claimed part of the Donbas. The war has escalated since 2014, most dramatically with Russia’s invasion on February 24th, 2022. In turn, the G7 and NATO have committed to support Ukraine for as long as necessary, with the goal of weakening Russia in the long term.

In addition to funding and arming Ukraine, the United States has now adopted the strategy of containing China, that is, hindering China’s continued economic and technological progress. The containment policy vis-à-vis China mimics the American strategy vis-à-vis the Soviet Union between 1947 and 1991. The anti-China containment policies include tariff increases on Chinese products; actions to cripple high-tech telecoms Chinese enterprises such as Huawei and ZTE; bans on exports of high-end semiconductors and semiconductor manufacturing equipment to China; decoupling American supply chains from China; creating new trade blocs, such as the Indo-Pacific Economic Framework, that exclude China; and an “entity list” of Chinese companies that are, in one way or another, barred from U.S. finance, trade, and technology. On the military front, the United States is forming new anti-China alliances such as AUKUS, with the UK and Australia, in this case to create a new nuclear submarine fleet and base in Northern Australia to police the South China Sea. The United States is also aiming to step up its military support for Taiwan, in one neocon phrase: to turn Taiwan into a “porcupine.”

The main competing vision of geopolitics today is the Hegemonic Competition theory, focusing on the coming clash between the United States and China. This theory is really a variant of the Hegemonic Stability theory. It argues that the United States may lose its hegemonic status to China, and that in any event, a bitter competition of the two countries is virtually inevitable.

The main failing of the Hegemonic Competition vision is its belief that China wants to become, the next global hegemon. True, Chinese leaders do not trust the United States nor Europe, especially in view of China’s suffering at the hands of outside imperial powers during the nineteenth and twentieth centuries. China aims for a world in which the United States is not the hegemon. Yet there is little persuasive evidence that China wants to replace America as hegemon or could do so even if it so desired.

Consider that China is still a middle-income country, with decades ahead needed to become a high-income country. Consider too that China’s population will likely decline markedly in the decades ahead. In that context, China will also age markedly, with the median age rising from 47 years today to 57 years by 2100 according to UN projections. Finally, consider that China’s statecraft over centuries has never sought a global empire. The Middle Kingdom has always sufficed. China has not fought one foreign war in 40 years, and has just a few small overseas military bases, compared with the hundreds operated by the U.S. military.

Rather than China’s hegemonic aspirations, which I believe do not actually exist, the real problem is the so-called “Security Dilemma,” according to which both China and the United States misconstrue the defensive actions of the other side as being offensive, thereby falling into an escalatory mode. For example, as China builds its military in the South China Sea, in its view to protect its vital sea lanes, Washington interprets this as an aggressive action by China aimed at American allies in the region.

As the United States forms new alliances such as AUKUS and strengthens existing alliances, China regards these as blatant hegemonic attempts to contain China. Even when particular actions are truly defensive in nature—and not all of them are—they are readily misconstrued by the other side. This is indeed a major reason why the Thucydides Trap easily gives rise to war: not really because the two countries want war, but because they stumble into it by misinterpreting the actions of the other side.

The Hegemonic Decline theory is somewhat different. Instead of emphasizing the battle between China and the United States, this third theory emphasizes the implications of American hegemonic decline, which it takes for granted. The Hegemonic Decline theory starts with the idea that the world needs global public goods, such as macroeconomic stabilization policies, arms control, and common efforts against human-induced climate change. To ensure these public goods, according to this theory, a hegemon must bear the burden of providing the global public goods. In the nineteenth century, Britain underwrote Pax Britannica. Since 1950, the United States has supplied the global public goods. Yet with the gradual decline of the United States, there is no longer a hegemon to ensure global stability. Thus, we face a world of chaos, not because of U.S.-China competition, but because no country or region can coordinate global efforts to provide global public goods.

Charles Kindleberger, the MIT economic historian, was the originator and most persuasive proponent of the Hegemonic Decline theory, applying it to the Great Depression in his insightful book The World in Depression: 1929-1939 (1973). He argued that when the Great Depression hit, global cooperation was needed to address inter-country debts, failed banks, budget deficits, and the gold standard. Yet the UK was gravely weakened by World War I and the prolonged economic crisis of the late 1920s, and so was unable to act as a hegemon. The United States, alas, was not yet ready to take over that role, and would do so only after World War II.

All three hegemonic theories presume that hegemons are central to geopolitics and will remain so. The first assumes that the United States remains the hegemon; the second assumes that the United States and China are in competition to be the hegemon; and the third bemoans the absence of a hegemon just when we need one. This third theory, even though declaring the U.S. a has-been, is in some way still flattering it: après l’Etats Unis, le deluge.

The Realist theory denies the central role of hegemony, and perhaps would question whether America was ever truly the global hegemon. According to the realists, peace requires skillful balancing among the major powers. The essence of the realist theory is that no single power can or should presume to the rest; all need to manage their policies prudently to avoid provoking a conflict with the other powers. Leading realists such as Henry Kissinger and John Mearsheimer, for example, call for a negotiated end to the Ukraine War, arguing wisely that Russia is not going to disappear from the map, or from its geopolitical importance, and emphasizing that the war was partly provoked by the American misstep of crossing Russia’s redlines, notably regarding NATO enlargement to Ukraine and Georgia.

The realists argue for peace through strength, arming allies as necessary, and being on guard against aggressive actions by potential adversaries who cross American redlines. Peace, in the realist view, is achieved through the balance of power and the potential deployment of force, not through goodwill or high ideals. Deterrence matters. China is a competitor that must be matched economically, technologically, and militarily, but not necessarily a military foe. War can be avoided. The most famous historical model for the realists is Kissinger’s depiction of the Concert of Europe in the nineteenth century that kept the peace for most of the century.

The biggest challenge facing the realists is that maintaining a balance of power is very difficult when the relative capacities of the major powers is in great flux. The Concert of Europe broke down mainly because two major powers were on the rise economically. Germany surpassed Britain in GDP (on Maddison’s estimates) in 1908. The Russian empire was also growing economically, with a GDP about the size of Germany’s from 1870 onward. Britain feared Germany’s rise, and Germany feared a two-front war against Britain and Russia, which of course is exactly what transpired in 1914. According to many historians, Germany pressed for war in 1914 out of the conviction that delay would mean a more powerful Russia in the future.

 

Geopolitics as a Problem Solver?

The essential problem with these four prevailing geopolitical theories is they view geopolitics almost entirely as a game of winning and losing among the major powers, rather than as the opportunity to pool resources to face global-scale crises. The Hegemonic Decline theory recognizes the need for global public goods but holds that only a hegemon will provide those global public goods.

The Multilateralist theory starts from the premise that the world urgently needs geopolitical cooperation to solve global-scale challenges such as human-induced climate change and financial instability, and to avoid war among the major powers. The core of the multilateralist vision is the belief that global public goods can be provided cooperatively by the UN member states rather than by a single hegemon. The focus is on the constructive role of international law, international financial institutions, and international treaties, all under the framework of the UN Charter and Universal Declaration of Human Rights and supported by UN institutions.

This view is often argued to be unrealistic and dismissed as too idealistic. There are many plausible reasons for doubt: the UN is too weak; treaties are unenforceable; countries free ride on global agreements; and the veto power of the five permanent members of the Security Council (China, France, Russia, the United Kingdom, and the United States) paralyzes the UN. These points are true, but not decisive in my view. Cooperation can be strengthened if the case for it is better understood. Most importantly, neither the three hegemonic theories nor realism offer solutions to our global crises.

The Hegemonic Stability theory fails because the United States is no longer strong enough and interested enough to bear the burdens of providing hegemonic stability. In the late 1940s, the United States was ready to fund and support global public goods, including the establishment of the UN, the Bretton-Woods Institution, the GATT, the Marshall Plan, and others. Today, the U.S. does not even ratify the vast majority of UN treaties. It breaks GATT rules, shirks decarbonization, underfunds the UN and Bretton Woods institutions, and gives a pittance of its gross national income (0.16 percent) as foreign assistance.

The Hegemonic Competition theory fails because it presages conflict rather than solutions to problems. It is as best an explanation of global turbulence but not a strategy for peace, security, or global problem-solving. It is a predication of crisis. It is crucial to recall that both Sparta and Athens suffered from the Peloponnesian Wars.

The Realist approach is far more accurate, practicable, and useful than the hegemonic theories. Yet the Realist approach also suffers from three major weaknesses. First, while it calls for a balance of power to keep the peace, there is no permanent balance of power. Past balances quickly become current imbalances.

Second, as with the game theory that underpins Realism, both game theory and Realism underestimate the potential for cooperation in practice. In the Realist approach, non-cooperation among nations is assumed to be the only feasible outcome of geopolitics because there is no higher power to enforce cooperation. Yet in experimental game theory and in practical geopolitics, there is a lot more scope for successful cooperation (e.g., in the experimental Prisoner’s Dilemma game) than the theory predicts. This point has been emphasized for decades by Robert Keohane and was also emphasized by the late John Ruggie.

Third, and most importantly, Realism fails because it fails to solve the problem of global public goods, needed to address environmental crises, financial crises, health crises, and others. No single hegemon is going to provide the needed global investments. A global cooperative approach is needed to share the costs and spread the benefits widely.

The roadmap for achieving twenty-first-century multilateralism requires a separate essay. In short, twenty-first-century multilateralism should build on two foundational documents, the UN Charter and the Universal Declaration of Human Rights, and on the family of UN institutions. Global public goods should be financed by a major expansion of the multilateral development banks (including the World Bank and the regional development banks) and the IMF.

The new multilateralism should be based on globally agreed goals, notably the Paris Climate Agreement, the Biodiversity Agreement, and the Sustainable Development Goals. It should bring the new cutting-edge technologies, including digital connectivity and artificial intelligence, under the ambit of international law and global governance. It should reinforce, implement, and build on the vital agreements on arms control and denuclearization. Finally, it should draw strength from the ancient wisdom of the great religious and philosophical traditions. There is a lot of work ahead to build the new multilateralism, yet the future itself is at stake.

—

CIRSD

Melting Alaska Wants To Drill More Oil

Posted on January 31, 2023

If you wanted an example of the reason we’re still losing the fight to slow the earth’s heating, the proposed Willow oil project in Alaska should suffice.

This should be the no-brainer of all time. The ConocoPhillips plan for a massive new oil field development flies in the face of all climate science and reason. It would be producing huge quantities of oil for at least the next three decades—long past the point when scientists say we must stop using it (and long past the point when, with a serious effort to electrify transportation, we’d need it).

And it would do so in a place—Alaska—already warming faster than almost any place on the planet. Warming so fast that taxpayers are already having to pony up huge sums of money to relocate coastal villages inland. Emissions from the Willow project’s oil would cause $19.8 billion in climate damages; it would generate $3.4 billion in federal tax revenue, which is…a lot less.

How insane is this project? ConocoPhillips has said it may need to freeze the rapidly thawing ground with massive chillers in order to drill for the oil that will drive that melt even higher. “Where necessary we use cooling devices (thermosyphons) that can chill the ground enough in the winter to help it remain frozen through the summer,” ConocoPhillips Alaska spokeswoman Natalie Lowman explained, a sentence that historians (assuming there are some) will someday parse in an effort to understand exactly how off-track a civilization can go.

It would be an enormous step backward for the U.S. All the way back in 2015, when the Obama-Biden administration rejected the Keystone XL pipeline, the president said “America is now a global leader when it comes to taking serious action to fight climate change, Frankly, approving this project would have undercut that global leadership.” That’s far truer now—back then we hadn’t yet signed the Paris climate accords. Back then we hadn’t had the massive heatwaves in the Pacific Northwest, nor the massive fires in California, nor the massive floods in Pakistan. Back then Sudan hadn’t suffered through five straight dry rainy seasons. Back then large swaths of Alaska’s waterways had not yet turned orange from a warming-driven plankton bloom that threatens local drinking water supplies.

If you want numbers, an analysis from the Center for American Progress finds

the carbon emissions expected from Willow would negate the estimated 129 MMT of carbon emissions avoided by reaching the president’s goals of deploying 30 gigawatts (GW) of offshore wind energy by 2030 and permitting 25 GW of solar, onshore wind, and geothermal energy on public lands by 2025. Put another way, allowing the Willow project to proceed would result in double the carbon pollution that all renewable progress on public lands and waters would save by 2030.

President Biden has done good work for the climate—from the Inflation Reduction Act to the recent decision to protect Alaska’s Tongass National Forest. But physics doesn’t grade on a curve. When Interior Secretary Deb Haaland makes the call on this project, she’ll be deciding whether to put a truly massive slug of carbon dioxide into the air—co2 that will long outlive her, and all the rest of us.

She’ll come under huge pressure: as always, Alaska’s politicians, Democratic and Republican, want more drilling. The power structure is so pervasive that Alaska Public Media, when it ran a story on the fight, put it right next to a big notice thanking ConocoPhillips for its support.

The Willow complex is located on the National Petroleum Reserve, created many decades ago by people with foresight, who knew that the smart decision in the moment was to save the oil so we would be able to see if we needed it later. In 2023, the best and highest use of that oil is clearly to keep it in the ground. If we don’t reserve that oil, if instead we spill it into the air, we will pay a huge price. Alaska will pay more price than most (though those same politicians will do their bipartisan best to make all Americans share the cost of the damages.) We can’t keep doing this; this is clearly the place to stop. Deb Haaland, and Joe Biden, need to stand up to the pressure.

The “National Debt” Is No One’s Fault

Posted on January 30, 2023

On March 27, 2018, a group of economists from the conservative Hoover Institution published an op-ed declaring that A Debt Crisis is on the Horizon. They wrote:

For years, economists have warned of major increases in future public debt burdens. That future is on our doorstep…Unless Congress acts to reduce federal budget deficits, the outstanding public debt will reach $20 trillion a scant five years from now, up from its current level of $15 trillion…When treasury debt holders start to doubt our government’s ability to repay, or to attract future lenders, they will demand higher interest rates to compensate for the risk…Such high interest payments would crowd out financing of needed expenditures to restore our depleted national defense budget, our domestic infrastructure and other critical government activities…

About a week later, five former chairs of the White House Council of Economic Advisors—including Janet Yellen and Jason Furman—countered with an op-ed of their own. They titled it A Debt Crisis is Coming. But Don’t Blame Entitlements. Here’s their opening paragraph. Notice how it affirms rather than counters the core of the conservative argument.

A group of distinguished economists from the Hoover Institution, a public-policy think tank at Stanford University, identifies a serious problem. The federal budget deficit is on track to exceed $1 trillion next year and get worse over time. Eventually, ever-rising debt and deficits will cause interest rates to rise, and the portion of tax revenue needed to service the growing debt will take an increasing toll on the ability of government to provide for its citizens and to respond to recessions and emergencies. None of that is in dispute.

As a reader of The Lens, you know that when the debate is broadened to include voices like mine, all of that is in dispute. But among establishment figures on both sides of the political aisle, there is shared agreement that something must be done to address America’s looming debt problem.

Thus, the debate—such as it is—revolves around who’s policies got us into this (supposed) mess, what we should do about it, and how much time we have to address the so-called problem.

That debate will intensify tomorrow, when President Biden meets with House Speaker Kevin McCarthy (R-CA) to discuss raising the debt limit. McCarthy has made it clear that republicans are seeking (unspecified) spending cuts in exchange for their help in lifting the debt ceiling. Meanwhile, the White House says it’s in no mood to negotiate. The president wants a clean vote to raise the debt limit, and he has threatened to “veto everything” if Congress sends him a deal that includes spending cuts that would jeopardize the economic recovery.

It’s anyone’s guess as to how this ends. But one thing is clear: no one in either party seems to want to have an honest conversation with the American people. Already, lawmakers from both sides of the political aisle are talking and tweeting about how our (supposed) debt dilemma is mostly the fault of the other party.

You could argue that it’s endemic to our politics. I know from my time working for the democrats on the US Senate Budget Committee that messaging is everything and that politicians rarely stray from their talking points. There is also comfort in the familiar.

 

Pointless Finger-Pointing

It’s not that there isn’t a cohort of lawmakers who have been exposed to alternative ways of thinking about these issues. It’s that most of them haven’t figured out how to talk to the American people without starting from the shared premise that our nation is facing a serious debt problem. And once you concede that there’s a debt crisis, you have little choice but to identify the culprit.

Unfortunately, you find the same finger-pointing among economists.

For example, the conservative economists at the Hoover Institution pointed the finger at programs like Social Security and Medicare, singling them out as the main drivers of our (supposed) debt crisis:

As is well-known, our deficit and debt problems stem from sharply rising entitlement spending…To address the debt problem, Congress must reform and restrain the growth of entitlement programs and adopt further pro-growth tax and regulatory policies…If Congress acts now, it can avoid a fiscal collapse…It is time for action.

Not so fast, said the former CEA chairs who served under democratic administrations:

It is dishonest to single out entitlements for blame…[They] are not the primary cause of the recent jump in the deficit…The federal budget was in surplus from 1998 through 2001, but large tax cuts and unfunded wars have been huge contributors to our current deficit problem. The primary reason the deficit in coming years will now be higher than had been expected is the reduction in tax revenue from last year’s tax cuts, not an increase in spending.

In other words, our guy (President Clinton) presided over a balanced budget, and then your guy (President G.W. Bush) came in and piled on a bunch of debt with his tax cuts and “unfunded” wars in Iraq and Afghanistan. Yes, we’re in trouble, but it’s your fault, not ours.

It’s so counterproductive.

The pandemic gave us a brief reprieve from this pointless finger pointing, as democrats and republicans—working together—used fiscal deficits to shore up the balance sheets of families, businesses, and state & local governments. When reporters raised concerns about how much money the government was preparing to spend, President Trump dismissed any cause for alarm, explaining, “It’s $6.2 trillion and we can handle that easily because…it’s our money. It’s our currency.”

I hate to tell you, but he was right.

  


In the early phase of the pandemic, almost no one pointed a finger at the mounting fiscal deficit or the rise in the (so-called) national debt. Headlines like this one, proclaiming that we are all MMTers now, became commonplace. It started to feel like we might actually have an honest conversation about the limits to government spending.1

But now we are backsliding.

The debt ceiling fight has brought renewed attention to the anticipated path of future spending relative to income. The annual deficit already exceeds $1 trillion, and it is expected to rise sharply (for a variety of reasons, including the Federal Reserve’s hiking of interest rates) in the coming years.

Instead of opening up an honest dialogue about what this all means (and doesn’t mean) for the lives of everyday people, it’s back to finger-pointing.

 

 

We can go down this path for another half-century, trading barbs like, “Republicans only care about deficits when a Democrat is in the White House.” Or we can stop it and finally have an honest conversation.

How refreshing would it be to turn on the TV and find a member of Congress flipping the script? Pressed to share their ideas about how do deal with America’s “ballooning debt problem,” imagine hearing them riff from these talking points:

There is no debt crisis. Not today and not on the horizon.

The national debt poses no risk to our nation’s finances.

The so-called “debt” is just the dollars we spent but didn’t tax back.

It’s part of the broader US money supply.

It will not leave future generations with a lower standard of living or a crushing burden of debt and taxes.

It is nothing like running up your personal credit card.

We do not eventually need to “pay it off.”

That’s not a comprehensive list—feel free to add your own in the comments—and lawmakers would obviously need to be well equipped to defend each statement. It would take hard work, but it can be done!

How do I know? Because the (now former) Chairman of the House Budget Committee, John Yarmuth, has done it.

 

 

In Closing

There’s another reason why the finger-pointing is so frustrating. While democrats and republicans blame one another for “blowing up the deficit” with tax cuts, unfunded wars, spending on social programs, etc., the truth is that so much of what happens really just depends on the state of our economy.2

As MMT economist Eric Tymoigne shows in this recent article, deficits shrink in a booming economy (mostly because a progressive tax code substantially boosts tax revenue). Over time, if the deficit gets too small to support the private credit structure, it chokes off the boom. Unless something happens to recharge aggregate demand, the slowdown can evolve into recession. When that happens, the automatic stabilizersswing the other way, moving the deficit higher.

You can see this clearly in the data. When the unemployment rate is rising (blue line), the government budget tends to move more deeply into deficit (red line). Over the last year, the opposite happened. As President Biden likes to remind us, the fiscal deficit shrank from $2.6T to $1.4T last year. That was, in part, due to the ongoing economic recovery.

 

 

But what happens if the recovery falters, as most economists anticipate, sometime this year?

I would suggest that Democrats should be particularly cautious with the finger-pointing right now. Setting aside the fact that their rhetoric reinforces dangerous myths about the government’s finances, they should think about whether all of this bragging about shrinking the deficit is going to serve them well if/when the US economy tips into recession ahead of the next election. If that happens, then there’s a good chance the deficit will be increasing as we head into 2024.

So let’s stop the finger-pointing and improve the conversation. Here’s another talking point to get us started.

 

 

1- At its core, MMT is about replacing an artificial/imaginary/phony budget constraint with a real resource/inflation constraint.

2- In MMT parlance, it is driven by the net savings desires of the non-government sector.

Ben Jealous On Authoritative Brutality And How To End Racism In America

Posted on January 30, 2023

The nation is in shock over the vicious beating death of Tyre Nichols at the hands of police officers in Memphis, Tennessee. What’s even more perplexing is that the crime—all five officers have been charged with second-degree murder—was committed by five fellow Black men.

“It confuses a lot of people,” says Ben Jealous, author, advocate and former NAACP president. “A lot of people think abuse of policing is simply about racism. When we think about the Black experience with racism, it’s so traumatic for us as individuals that we often disconnect from its very colonial, authoritative system. The way kings built empires was to divide people in order to conquer them. The way they kept everybody in line, whether they were indentured Europeans or African slaves, was with authoritarian policing. This is an extension of that.”

Studies prove that officers who have a sense of higher authoritarianism, “results in you being killed even more than racism,” Jealous points out. He explores the root cause of racism and more in Never Forget Our People Were Always Free: A Parable of American Healing, inspired by Jealous’ own life experience of a biracial upbringing. “I was born on a bridge between Black and white, North and South, and even the old 13 colonies and the new world of California and the Pacific Rim,” Jealous declares. “And while much of my life that bridge has been on fire, never has it been more on fire than it is right now.”

Jealous’ book is a collection of parables that aim to heal America’s wounded heart and end the social caste system that established racism by strengthening the bonds among Americans of all races, creeds, colors and political ideologies. Jealous draws inspiring lessons and hope for restoring our country’s strength and unity from stories of his ancestors, and interweaves vivid anecdotes from family, friends, mentors, colleagues and strangers who have shaped his life’s mission and his faith in humanity.

“I grew up in a southern family with a long tradition of telling the same story over and over and over again, usually my grandparents. They were trying to teach you something,” shares Jealous. “So these are all stories with a lesson. They’re drawn from my lived experience and weave back into ancient history pretty fast. And maybe the hardest part is I had to dig into my own family history in order to really write this book.”

Living in the Chesapeake Bay area of Maryland, Jealous has been surrounded by conservative views, but his interactions have yielded a surprising conclusion. “Getting to know my neighbors better, fishing, drinking, and walking the dog with a lot of them who voted for Trump, what was top of my mind is how much we have in common: similar aspirations for our kids and values and families and a similar preference in whiskey,” he says. “The overwhelming majority of this country wants to be one nation, to see their kids raised with hope and have that hope turn into real prosperity. And that’s what this book is.”

One of the book’s most compelling parables centers around a minister/Ku Klux Klan member who had a nervous breakdown in the 1940s after participating in a heinous act. He left the klan and moved to a diverse area to regain his sanity, decency and command of his family. “This is a story that ultimately underscores the need for us to practice the Golden Rule,” Jealous notes, adding how the lesson was explained to him by the man’s son. “He said his dad would say, ‘ Any poor white man who has his hand on the neck of a Negro pulling them down in the ditch needs to recognize he’s down in the ditch with them. And a rich man walks down the middle of the road, laughing at them both.’ That’s ultimately what Dr. King was trying to teach us at the end of his life. Dr. King was not assassinated in the midst of a desegregation battle. Dr. King was assassinated trying to bring poor whites and poor Blacks together. That was the purpose of his Poor People’s Campaign.”

Jealous recalls how many leaders have lost their lives in that quest to unite Blacks and whites, including Black Panther’s Fred Hampton, who was assassinated in 1969 by the Chicago police department. “He was mostly focused on bringing poor whites and poor Blacks together through the Black Panther Party and the Young Patriots Organization,” Jealous exclaims. Another was NAACP leader Harry T. Moore, who was murdered in 1951 for his activism. “He was the president of Florida’s progressive party, which was seeking to unite whites and Blacks in Florida.”

At the end of this month, Jealous will become the first Black head of the Sierra Club, the nation’s oldest and largest environmentalist organization. “Our Black and Brown communities are the most likely to support environmental protection,” he shares. “Our family history is very close to the earth, historically we come from farms in rural communities. We come from Africa. We come from people who have been aware of their environment for centuries, even though we may have been for the last several decades in urban environments. And even there, we’re the most vulnerable to climate change. My hope with the Sierra Club is to build an even bigger coalition by opening the doors wider and making more strategic alliances with Black and Latino pastors and business people and those leading poor whites as well. The reality is, when it comes to planet Earth, we are truly all in the same boat. With climate change, we need to be doing everything we can to stop it. The fate of this planet is the fate of us all.”

At A Time Of Inflation, California Should Take A Bold Step To Tame Rising Health Care Costs

Posted on January 11, 2023

The word of the year for 2022 could have been “inflation.” Air travel prices rose nearly 40% from a year earlier. Grocery, housing, energy and other prices are also up. And once again, the cost of health care, which makes up nearly a fifth of our economy, is rising sharply.

Most health insurers in the individual market are expecting premium increases between 5% and 14% this year, according to Axios, and family out-of-pocket health care costs have jumped 10%.

But health care is different from other elements of the consumer price index. There is a way to control health care inflation while providing everyone with high-quality coverage.

Universal public financing of health care — often called single-payer coverage or “Medicare for all” — can cure what ails us both medically and financially.

Single-payer coverage would control health care inflation by eliminating the excessive profits and charges, outrageous drug prices and bureaucratic waste inherent in our current system of private health insurance.

Want proof? We have it.

The single-payer advocacy coalition Healthy California Now and the National Union of Healthcare Workers recently developed a household health care cost calculator for use by individuals and families who live in California. It’s designed to compare the costs associated with a single-payer program to current health care expenses.

So far, 4,000 households have tried it. Users enter their premium payments for the prior year, employer premium contributions, out-of-pocket expenses and annual income. The calculator then compares their costs under the current system to projected single-payer taxes at their income level.

Eighty-seven percent of those who used the calculator found average annual savings of more than $6,000 per household. Medicare beneficiaries were more likely to achieve net savings at a slightly lower average, $5,150 per household. The 13% of households that wouldn’t enjoy net savings generally had very low current premium and out-of-pocket expenses due to extremely generous health plans or annual incomes exceeding $350,000.

Take five minutes and try this exercise for yourself at Healthy California Now’s website.

The results are consistent with economic studies of single-payer health care systems. Most people save under single-payer for two reasons. First, single-payer actually lowers total costs while improving coverage by drastically cutting spending on profits and paperwork. Second, a single-payer insurance program is funded by a tax plan that everyone contributes to, so the burden increases at higher incomes and for corporations paying their share.

While divided government in Washington, D.C., will stop single-payer from moving onto the national stage anytime soon, California is a different story. Our leaders in Sacramento already have the initial steps out of the way, and they have the power to make single-payer a reality for the state.

The Healthy California for All Commission, formed by Gov. Gavin Newsom and the Legislature last year, defined a “unified financing” plan offering universal coverage and comprehensive benefits for everyone. Under this plan, out-of-pocket costs and cost-sharing would be eliminated. Rather than payments to private insurers, the funding would come from a progressive tax that can easily generate the necessary funds.

The tax plan used in the calculator includes a 2% sales tax on nonessential items plus a payroll tax that starts at incomes of at least $75,000 and a personal income tax that starts at $300,000 a year. Additional taxes would be levied on the state’s wealthiest individuals and corporate profits.

It’s true that some well-paid professionals would be at risk of paying more for single-payer coverage, and the super-wealthy would have to share some of the burden. But in exchange, all Californians would get a system that guarantees excellent coverage, including for long-term care, and a health plan that efficiently and equitably covers health care costs for everyone.

We can fight health care inflation while providing quality care for all, and California can show the way. The words on everyone’s lips this year should be “Medicare for all.”

Michael Lighty is an Oakland-based advocate of Medicare for all.
James G. Kahn is a professor emeritus at UC San Francisco.

The Trump Coalition Of MAGAs And Oligarchs Lives On, As Dangerous As Ever

Posted on January 9, 2023

The two parts of the Republican Party — the MAGA cultural warriors and the economic oligarchs — need each other.

The oligarchy — billionaires, top CEOs, and moguls of Wall Street — wants lower taxes (which requires less government spending) and fewer regulations. Most basically, it wants to continue to siphon off more of the economy’s total gains.

To do so, it needs the MAGA cultural warriors to keep America divided over non-economic issues (abortion, gay rights, immigration, voting rights, religious freedom) so most Americans won’t look up and see where all the money has gone.

And the MAGA warriors need the oligarchy’s money for their campaigns.

This was the coalition and the strategy Trump relied on. The oligarchy financed Trump Republicans. In return, the oligarchs got lower taxes and regulatory rollbacks, while Trump and his MAGAs distracted the public with culture wars and warriors.

Even though Trump is no longer president and Kevin McCarthy has been installed as Speaker, little has changed. The same MAGA-Oligarchic coalition is still aiming to siphon off the economy’s gains for the oligarchy while disguising its effort with culture wars that keep Americans angry and divided. The MAGAs, meanwhile, feed off oligarchic campaign money.

Yes, the congressional Republican Party is factious. But don’t mistake it for a civil war. In reality, as the MAGAs and oligarchs jockey for positions in the lead-up to the 2024 election, each is testing the other’s power — making small compromises and adaptations where necessary.

Look, for example, at the critical role played last week by two oligarchic SuperPACs bankrolled by billionaires — the Congressional Leadership Fund (CLF) and the Club for Growth. The Club for Growth describes itself as a “leading free-enterprise advocacy group” that promotes tax cuts and deregulation — pure oligarchy. CLF spent nearly $260 million during the 2022 election cycle, helping McCarthy and his allies win the House. Its top donors are billionaires — banking scion Timothy Mellon, Blackstone CEO Stephen Schwarzman, and Citadel CEO Kenneth Griffin, as well as the Koch network.

To win the House for Republicans in the midterms, these SuperPACs quietly swung primaries away from controversial candidates such as Madison Cawthorn in North Carolina and Joe Kent in Washington. This caused some anxiety among the MAGAs. So during negotiations for making McCarthy Speaker, the two SuperPACs agreed not to spend money in future open-seat primaries in safe Republican districts. A small concession.

To cinch the deal, McCarthy also promised to hold a vote on a budget that will balance the deficit in a decade and cap discretionary spending levels at fiscal 2022. This will require major spending cuts — thereby opening the way for more tax cuts and bigger tax loopholes. The oligarchs couldn’t be happier.

The fiscal deadlines looming this year over spending bills and an increase in the debt ceiling also favor the oligarch’s economic conservatism because they too may lead to reduced spending and create opportunities for tax cuts.

But they also pose a potential problem for the billionaires. If the deadlines result in government shutdowns or the serious threat of a default on the nation’s debt, the oligarchy could lose a boatload of money. So expect backroom negotiations between the oligarchs who don’t want economic chaos and the extreme MAGAs who would be happy with it. This bargaining will be a central drama inside the congressional Republican Party over the next nine months.

The House MAGAs will spend most of their energies on fiery culture war investigations — of Joe Biden, Hunter Biden, the FBI, the IRS, other Democrats, and alleged socialists and pedophiles. The fireworks will conveniently distract the public’s attention from the oligarch’s economic looting.

Trump continues to be the central force within this coalition of economic oligarchs and MAGA culture warriors.

Speaking to reporters after he became Speaker, McCarthy was effusive in thanking Trump, who backed him for Speaker (after McCarthy helped rescue Trump by visiting him at Mar-a-Lago soon after the attack on the Capitol). “I don’t think anybody should doubt his influence,” McCarthy said. “I was just talking to him tonight, helping get those final votes.”

The is the reality we’re in, folks. But it is not a cause for defeatism or cynicism. The Democratic Party under Joe Biden will continue to fight back. The rest of us must continue to try to get big money out of politics, make the electoral college irrelevant, and protect and expand voting rights.