Rana Foroohar and Mark Blyth: How Deep Will the Depression Get?

Yves here. There’s a lot to like about this interview with Rana Foroohar and Mark Blyth, yet there are some odd sour notes. For instance, Blyth repeats what is essentially a Democratic party stereotype about Trump voters, that they are Rust Belt victims of manufacturing loss. As we have repeatedly stressed, the average household income of Trump voters was substantially higher than that of Clinton voters: $72,000 versus $61,000. We’ve linked repeatedly to the Washington Post article, It’s time to bust the myth: Most Trump voters were not working class.

By Paul Jay. Originally published at TheAnalysis.net

Paul Jay

Hi, I’m Paul Jay, and welcome to theAnalysis.news podcast. Don’t forget; we need you to click the donate button if you haven’t already because, without your support, we can’t do this.

So, after the shit show debate and the ongoing warnings of a second or even third wave of the pandemic, I’m left with some questions.

First of all, does the shit show debate reflect an even more profound problem with the U. S. economy and political structures? Two, the financial and tech elites, how are they responding to the campaign, the debate? Have they bailed on the maniac or just doubling down on the Senate? How deep and how long will the recession, depression go? It looks like there could be more lockdowns. Four, if there is another full lockdown, which many scientists are saying will be necessary to contain the second, third wave. What, if any, are the limits of how much money the Fed can pump into the economy? What are the economic limits? What are the political limits? Six, how serious is the split over the new Fed money? Does Wall Street want a big new stimulus package? Are there really serious concerns about the U.S. dollar? And finally, seven, if we have time to get to it, is Wall Street getting the danger of the climate crisis? Will they do anything about it? Will they accept the government intervening in a serious way with regulations and massive investments in green infrastructure, including phasing out fossil fuel, not just relying on carbon capture, which is mostly what the Biden plan is about.

Now, joining me to break this down, our two guests that are not only brilliant analysts of all this, but they also have unique access to the minds of the lords of Wall Street.

First of all, Rana Foroohar who is a business columnist and an associate editor at the Financial Times. She’s also CNN’s global economic analyst. And her books include ‘Makers and Takers: The Rise of Finance in the Fall of American Business’ and ‘Don’t Be Evil:  How Big Tech Betrayed Its Founding Principles,’ and returning Mark Blyth is a political economist at Brown University. He researches the causes of stability and change in the economy. And as he told me, why people continue to believe stupid economic ideas despite buckets of evidence to the contrary.

So, first of all, Rana, let me ask you. So, first of all, your reaction to the debate and the bigger question, what does this tell us about the disarray in American politics, and why is there? Is there something going on in the U.S. economy and basic political structures that kind of give rise to this craziness?

Rana Faroohar

Well, thank you, Paul, for having me, and first, let me tune my earpiece so I can hear the Lords of Finance speaking to me. I was stunned by the debate. I mean, on one level, at the most surface level, the debate was just kind of this toxic mud-slinging wrestling match. You’ve likened it to Trump’s debating style in general to pro wrestling. I think that’s true. But I guess I would take a step back and say, all right, how did we get to a place where, frankly, anybody watching would be embarrassed as I was to be an American, although thankfully I have dual passports, but he’s a symptom.

I mean, we cannot forget that. He’s certainly done a lot of horrible things that I’m sure will dive into. But he’s a symptom of what I consider to be a problem in the political economy in the U.S. that’s been going on in its current form, you know, for 40 years. And I would peg that as the neoliberal shift, the Reagan Thatcher revolution, the sort of movement to the privatization of everything, but more particularly to the embracing of a kind of globalization and economic paradigm that holds the capital, labor and goods can all move freely and equally across the world. Well, capital can do that. Money can do that. Big companies can do that. People and goods can’t do that so easily. And that’s one of the reasons why we got many of the things that helped to bring Donald Trump to office, the hollowing out of the Rust Belt, the embrace of a set of neoliberal economic principles by both sides of the aisle. There was not a lot of air, as I wrote in my first book, between certain policies around trade and financial regulation within the Clinton administration, as there was during the Reagan period.

So there’s a kind of a sense that both sides of the aisle had sold out the American working class. That’s leading up to 2016. You have this con man in the form of Trump coming in, and he really does it, to my mind, he’s the perfect Melville con man character because he takes this sort of felt experience that people do have of hypocrisy on both sides of the political aisle. And then it just wraps it in this sort of welter of lies and somehow presents himself as an outsider.

Well, four years on, we see just how much of an entitled insider he is, and I think that the gig is up. I think The New York Times tax revelations put him under a lot of pressure. I think what you saw in that debate was a man cracking, and I’ll stop there and let Mark take over. But there’s a lot more to say.

Paul Jay

Go ahead, Mark.

Mark Blyth

I’m not sure I have anything to add to that. I pretty much agree with all of that. What would I add to this? So, first of all, let me fess up. I never watch the debates.

Rana Faroohar

Lucky you.

Mark Blyth

And something Nassim Taleb taught me years and years and years ago was if anything truly important happens, don’t watch the T.V. or read the newspapers. Three people will tell you all about it in excruciating detail the minute you wake up. And that’s exactly what happened. So once I learned this, I’m not watching this right.

But nonetheless, let me put a little gloss on what Rana has said there. There was a Rand report. Now Rand isn’t exactly bleeding heart liberals, as we know. And they did a report about ten days ago that said, if you kept all the taxes, the birthplace of 1980 and all the regulations and all those bad things we’ve gotten done away with, there wouldn’t have been a huge siphoning to the top. Now we know this, but they put a dollar figure on it. The dollar figure was 50 trillion dollars of wealth that is being generated and handed effectively to the maybe top 3 percent of the country. That is the biggest transfer of wealth in history. That’s what has gone on.

Now behind there’s something else alive, and this is something that Rana gets into in her book on tech, is that if you look across industries, profits are becoming more concentrated, particularly in certain sectors. And the rest of the economy, in a sense, lives off the crumbs of the contracts of these giant firms, which is why in part, we have so few good jobs being developed, so many people working multiple jobs, the explosion of part-time contract platform labor, et cetera, et cetera.

Now, why do I mention all of this is as a gloss? Because ultimately, the real puzzle of the debates is why he still has 40 percent. And he has 40 percent because, unfortunately, the future is not going to be kind to the left behind. He identified that constituency in 2015 and said, I am your voice. He then seamlessly went down to the border towns, called everyone a rapist and a murderer, and assembled another coalition and bolted that together. But for the people, who we have ourselves said, you definitely got sold out by neoliberalism. Yes, you definitely got screwed by your corporate elites, etc. It’s not as if it’s going to get any better, whether it’s through the green transition if it ever happens, whether it’s through the fact that manufacturing jobs are disappearing everywhere. They’re not coming back. So in a sense, what he’s doing is he’s doubling down on the only base he’s got, and they’re doubling down on him. And that is all about mobilization and anger and generating the anger and keeping it going. And if necessary, and this is the important part, shocking the system over a bridge in order to safeguard that result.

Paul Jay

Rana, go ahead.

Rana Faroohar

Well, it’s interesting. I agree with much of what Mark said. I guess I feel just almost for the sake of argument; I’m going to be a little more optimistic and say that I have been actually impressed with the way in which Biden, not that he was able to get any of this across in the debate, but I know talking to policymakers, the way he’s been able to bring a pretty wide variety of people under the tent in such a way that I do feel economically that folks within the Democratic Party on very different sides of issues are starting to talk to each other in ways that they weren’t before.

So you still have that kind of, you know, Summers Rubin center of the party in these conversations. But you also have Jared Bernstein; you have Heather Bouchet. You have a lot of people that are certainly farther to the left and have different ideas. I’ve also been impressed with how Biden has started, and this is very nascent, but I think it’s important, started to kind of connect some of the parts of the party that’s more concerned traditionally with identity and some that is more concerned about class and labor. And this has been a big dividing point for Democrats, that you’ve had a new and exciting generation of say, millennial socialist politicians like the AOCs of the World, that, you know, they’re kind of interested in the economy. They know something bad’s going down, but really, identity is their thing. And they’re communicating with their own social media followings along those lines. There’s a lot about race and gender. To me, that’s always been a sideshow and a distraction for the Democratic Party. Not that there aren’t issues of race to be talked about, but the real action is in class. But of course, that’s harder, traditionally, for the Democratic Party to get at because they have the same big corporate donors, not always the same, but many of the same big corporate donors as the Right, and you have the legacy of the Clintonian wing of the party that really didn’t want to go there.

Now you see Biden taking something like the idea of a green new deal, which came out of AOCs part of the camp. But instead of just going off and doing it alone as she did or with the environmental wing of the party, he’s bringing labor under the tent. He’s talking to the AFL-CIO and saying, all right, how could we potentially get coal miners involved in retrofitting solar panels? Now, I know this stuff all sounds very spiffy and snazzy, and it’s hard to do. I don’t want to underplay that, but I think just the way in which I start to see these aspects of the party coming together is a little bit of a cause for optimism for me.

Paul Jay

Well, just to throw in a little less cause for optimism and in some ways, maybe in other ways, it is. But it seems to me this is more a tactical alliance to defeat Trump and that there are really far greater and more profound differences in the different sections of the party, that everyone is just deciding to be more or less quiet about for now.

Like even to take Biden’s climate plan. I actually went through it with Robert Pollin, the Economist. And it’s really something when you really dig into what he’s proposing, it’s all based on carbon capture, not reducing the use of fossil fuel except very modestly with in terms of auto carbon emissions, it’s not nothing, but it’s not going to get us where we need to get to. But the reliance on a very unproven science of carbon capture and very little to almost no talk of phasing out fossil fuel. There’s talk of phasing out fossil fuel subsidies, but not phasing out fossil fuel.

So it seems to me that, yeah, there’s certainly a possibility for a real debate, assuming Biden wins with these different sections of the party. But I think the differences are pretty profound when it comes down to what the actual policy is going to be. Mark, what do you make?

Mark Blyth

So let me put up sort of a middle course between these two points. My question to Rana would be this. I agree with what you just said, but the key thing to me is, are they talking outside of the party, and are people listening?

So I’ll give you a piece of annex data. I got a couple of friends who are tradesmen, and I would identify them by telling you which trade. But I say to them, how many of your buddies knew you would’ve vote Democrat? And he looked at me, and we both start laughing.  And I said, why? Why is that? He says you know what Democrats mean to me? This is a direct quote, Black lives, Trans rights, and the environment.

Rana Faroohar

Interesting.

Mark Blyth

They don’t give a shit about people like me. That is how this is perceived, right. Now, you know this goes to the heart of this sort of decarbonization very, very narrow road that Biden is trying to negotiate. The Democrats, in general, are trying to negotiate.

We have to take a fundamental reality here that there are at least 13 states in the union, starting with Alaska going south down through New Mexico and up in Louisiana, going up to West Virginia, where the transportation, refinement, and otherwise processing of carbon and the river is what they do. And in order to actually execute any type of decarbonization strategy, you’re going to have to bribe the living hell out of every one of those states.

Paul Jay

Which is what they should do.

Mark Blyth

Funny way of doing it. Right. So, instead of which we do, it’s internal politics, and the party determined that we talk about the just transition, and we mustn’t reward these carbon polluters. Well, you have to deal with the fact that if you don’t actually get some of them on board, you’re never going to win another election.

Rana Faroohar

I’m so glad that you made that point, Mark because I hear that, too. And I had an interesting trip about a year and a half ago around the Carolinas looking at supply chains and textiles there. And I met a number of small and midsize sort of private business owners, a number of workers, a lot of white workers in the agricultural industry there. You know, honorable people couldn’t stand Trump as a person, particularly those that identify with military or veterans at all but voted for him. Why? Because they understand the hypocrisy of what the Democratic sell has been since the 90s, which is basically OK, China, if you let us give you banking services, we will send you all of our manufacturing jobs and outsource our innovation ecosystem to you. It’s amazing how clear, crystal clear, someone working in a cotton gin is on that point.

And I do think that Democrats still have a long way to go at getting ‘woke’ to those issues as ‘woke’ as they are too some other issues. But I also think that there are two things that are going to work, again, not immediately, but over the long haul in making that transition; one is that COVID-19 has basically just put on steroids all of the problems of neoliberalism because we talked about this myth that capital goods and people can all travel equally across borders. Well, we know capital can jump. Well, in the digital economy, data is the new oil. It’s the resource that everything is driven by. It can go across borders even more easily than capital. We are in the middle of time warping a transition into the digital economy that we kind of knew was going to take about 15, 20 years. We’re now going to wake up in 2 to 5 years, all that disruption that we’ve all been talking about in previous podcasts and saying, well, in about ten years, X, Y, and Z will happen. That’s going to happen. And here’s what it’s going to look like.

Sure, there’s a bunch of new businesses that are going to be formed out of this. They’re going to need less people, and they’re going to invest less. That means we’re going to get a jobless recovery. And I put recovery in quotation marks of a sort that is going to be entirely new. The math, the basic math is the U.S. is a 70 percent consumer spending economy. We have had a problem with middle-class income stagnation for 20 years. We’ve had a problem with working-class income stagnation for over 40 years. That’s going to be put on steroids. And I think that that is going to create the kind of alliances that, interestingly, you already see forming in the Black Lives Matter movement.

One of the reasons I’ll tell you that my white upper-middle-class daughter is out there marching in those protests is not just because she’s concerned about racial justice, which she is, but she’s concerned about her own economic future. And this is a privileged child. But she’s looking out and saying, oh, my God, what kind of college debt am I going to have? Whats the labor market going to look like? What are humans going to be able to do as opposed to robots? And I think that all that just got sped up in a way that is going to push some of these transitions.

Paul Jay

Mark.

Mark Blyth

I agree, and I’ll push it even farther. The digital transition is absolutely underway, and we see this in the geopolitics of the moment. We spoke about it a couple of years ago at tech conferences. We called it the splinter web. You either have a payments platform, or you don’t. You either have a way of protecting your data, or you don’t. And what we see now is particularly the E.U.s response. They finally woke up to the fact that they don’t have any digital platforms at the scale they’re massively behind. They’re selling 20th-century products like diesel engines. The world would no longer want them. And what are they doing? They’re doing data protection. It’s a protectionist move. We are basically about to sue our big corporates. Why? Because we’re disciplining them. China has already created the Great Firewall in the East and has corralled their companies. So the world splits up into these smaller areas, and it’s much easier for the right rather than the left to weaponize this as a kind of nationalist and geopolitical struggle of which this is a part. There’s a very 19th-century rendition of this whereby the container of hopes for civil protection always lies with the nation-state. And the weakness that neoliberalism has always had is assumed a subject and a set of interests that moves beyond the nation-state and has never really happened and is now, in a way, happening in such a way that it is creating both those alliances that you’re talking about. But it’s also creating a kind of very dangerous nationalist revisionism at the same time.

In the 1930s, in the midst of deep depression and the sort of unraveling of capitalism as it was in 1920, 1930, and all the things that went into the crash, there were kind of two possible ways that elites would respond. And much of the European elite and much of the American elite wanted some form of authoritarianism, fascism, suppress the resistance and rebellion amongst the workers and other parts of the population that were dispossessed by the crisis.

Paul Jay

Or you had an alternative, which was mostly in the U.S., FDR, New Deal, and such.

Biden claims he wants to be the most progressive administration since FDR. I don’t see that in what he’s really proposing as a policy. But that said, where are the American elites on this? The financial the tech elites?

These are really smart people. Frankly, they’re a lot smarter, I think than their counterparts in the 1930s’. They’re very informed. The leading ones got there because they were the best, at more or less what they do, even if what they do is not so good. But they’re smart.

Do they get that this is not the same kind?  This isn’t just about a business cycle; this is about several existential problems. Climate, from the tech side, like a jobless recovery. This is big-time when we’re talking out 10, 20, 30 years where A.I. and robots may go, this pandemic is far from over, and it’s probably one of many more to come.

There needs to be a real shift in how power is exercised, the role government plays. And I was reading BlackRock. I follow BlackRock a lot.

We got Larry Fink talking about climate change, and he’s very aware of the threat of climate. But the obvious conclusion from everything Larry and BlackRock says about climate is you need serious government intervention. But that’s the one thing they don’t want.

Rana Faroohar

Well, you’re getting it something really important which and this drives me crazy, frankly. I wrote a column about how in the context of education, which seems tangential but is actually connected to what you’re saying about climate change. Corporations are always kvetching that, oh, we need the government to train up a better 21st-century workforce, and then we could create jobs. Oh, we need the government to do something about climate, and then we’ll have certainty, and we can invest.

Guess what? You’ve been cutting the tax share of the government, of the public sector by offshoring and optimizing, as they say, taxes in a global race to the bottom as the private sector has gained power and wealth relative to the public sector for four decades now. So you have tied the hands of the politicians. You decimated the middle class, which would elect better politicians. So here we are. So I absolutely hate that hypocrisy. And I just think it’s egregious when business leaders complain in that way. I always try and turn the point around if I’m on T.V. and ask them about taxes and how much they pay.

But to go back to your first point about do the elites get it? Yeah, they absolutely get it. And let me give you a couple of examples. They get it, and they think they’re going to be able to weather the storm.

You know, Eric Schmidt, former chairman of Google, wrote a book with the head of his think tank a few years back. And the book, basically reading between the lines, said, you know what, they try to put a sunny slogan on it. But the message was technology, this tech revolution we’re going through, which is as Niall Ferguson has written, it’s kind of like the advent of the printing press. It makes things better ultimately, but you get 150 years of religious wars before that. That’s what Schmidt said in his book with Jared Cohen. He said, look, tech’s going to make things better in the long run, but in the short run, things are going to be really crazy. There’s going to be huge nationalism, conflict. They didn’t come out and quite say it this way, but this was the upshot. But the idea was in their minds that the biggest companies, the Googles, the Facebook’s, the Buydo’s, the Alibaba’s had become so big that they were like the East India Company now. They are sort of sovereign international states that float above the nation-state, as Mark was pointing out, and that they actually kind of formed their own consensus. You know, you’ve got the Washington consensus, maybe the Beijing consensus. We don’t quite know what that is yet. And then you got the Facebook consensus and the elites essentially, I think, believed that these corporations now have so much control and big tech does have way more control even than big finance did because it can actually influence our behavioral patterns because of surveillance, capitalism, and algorithmic behavioral manipulation.

They have so much control that they believe that they can move the levers now and simply weather the storm and come out to the other side of it. So that’s where they are.

Paul Jay

There’s really no wall anymore or distance between big finance and big tech, is there?

Rana Faroohar

Right.

Paul Jay

I mean, big tech is very financial lies, and more so if you look at who owns big tech, it’s essentially the big financial institutions are the biggest shareholders other than some individuals that helped start the things.

Rana Faroohar

Well, I think it’s a little deeper even than cross-shareholding because, you know, the biggest three shareholders in Google are still the top Googlers, Larry Page, Sergey Brin, and Eric Schmidt.

But what I think is so interesting is I think about it in terms of information asymmetry. So you go way back to Adam Smith, the father of modern capitalism, and he would have said that in order for any market system to function properly and fairly, you need to have an understanding on both sides from buyers and sellers of what the transaction actually is.

Well, as we well know from the great financial crisis and any number of debacles before that, you know, most of the time when you’re dealing with a big financial institution, they’ve got more information than you. That’s why they’re always winning, like the casino, the house always wins. Well, put that again on steroids in the era of big tech, because the major tech companies, as of yet, except in small ways, in places like France or Australia that are insisting on algorithmic auditing, they have total control of the black box in which the transactions in our increasingly digital world live. We don’t even know what we’re buying and selling. I mean, I’m giving data, and I have no idea what I’m getting back for it. I think I’m getting something free in quotation marks, a surge, the ability to do some silly social platform media thing. But what am I giving up? A whole hell of a lot. And it’s more when it gets combined with other people’s data.

Paul Jay

Mark, where do you think the financial preponderance of financial and big tech elites are on this election campaign? And how much control do they have about in the outcome?

Mark Blyth

Well, again, I’m not going to differ very much from what Rana just said at all. I’m not going to quote Smith. I’ll quote, Cains. Didn’t Eric Schmit ever read Cains, in the long run, we’re all dead. The long-run is a succession of short runs, which, if they are shitty enough, ends up, it sums to a not long run. So that’s an incredibly dangerous way to think about it.

To me. Although I’ll tell you a little story, I used to do when I did finance conferences with big finance. And so you know you have 25 of them in the room, all of a sudden the big money in the room and I would say the following, talking about politicians and the quality of political capital, it’s gone down over time, and that’s a big problem level. And it’s all right.

So how many of you folks would let the people that you run countries by funding them run money and your firm, and they would all burst out laughing? And then when the laughter died down, I would say, and now you can tell me what’s funny about that because ultimately your firms are dependent on the governments of those countries, the policies that they provide. And it was almost a moment of shame where they went. Oh, and this points to something that are Marxists colleagues have known for the longest time that while it’s irrational for any individual capitalist to maximize their short-run interests, it’s collectively suicidal. If the older there is no ideal collective looking at the long run, no matter how big you are, you’re most rational strategy is to grab what you can because you don’t control enough to make sure that you can dictate the final outcome. So that leads to this general suboptimally of choices which manifests itself in everything from taxes to green to decarbonisation across a whole series of areas.

Are they aware of this? Yes, they are. They all understand perfectly well. Do they have a solution? Yes, they do. Basically, the government should step up, and that’s never going to be allowed to happen.

Rana Faroohar

Indeed. And, you know, it’s fascinating. I think that’s why just to turn it to the markets for a minute, and I think that’s why there’s this weird bizarro world where essentially 50 percent of the biggest players in the global markets are in gold, and the other 50 percent are in stocks. Well, what is that about? Gold is, we basically think the world’s falling apart, and it is going to be the 1930s, again. Stocks are you know; we think that central bankers can keep this party going a little bit longer, and we’re going to stay here until the music is almost stopped playing.

And it’s just fascinating that there’s nothing in between right now.

Mark Blyth

Yeah, that’s a really great observation. That’s exactly right.

Paul Jay

If there is a bigger necessary lockdown, if the pandemic, not isn’t, well, first of all, it’s already the depression is already pretty deep and not recovering that quickly. But the scientists I’m reading, epidemiologists and such think that we’re really at the beginning of another big wave that might even be worse than the previous one. Even Foushee has said that. Some are saying the only way, and this might if Biden’s president be what’s put to him, the only way of really dealing with this is maybe another two-month national shutdown and mask regulation, and such.

How much financial support can the Fed do? Right now, the politics is kind of paralyzed, but how big can it go? Are there limits, economic limits to how much money the Fed can pump into the economy? What are the political limits might we see now? They might change, I guess, depending on the outcome of the election. Mark, you go first.

Mark Blyth

It’s not that I’m a science skeptic on this, but I think that what we tend to do is take whatever the public health authorities say at a given moment and project it forward. As the fox, forgetting that basically everyone revises that opinion on what’s going on every two weeks. So I don’t think that that’s a good thing. The most interesting thing for me just now is the fact that Andy Haldane, who’s the chief economist of the Bank of England and all run very smart person, is actually very bullish on the recovery for a host of reasons, in contrast to most of the people around them.

And another really interesting one is, again, the data from Sweden. Sweden has picked up in the U.S. press either to show that we all need to wear masks  or, alternatively, to show that you don’t need to wear masks. If you actually look at what they’re doing and what’s happening is very interesting. Their death rates are down to the single digits and are not moving. There’s no big spike in death, but there are an infection. And this makes perfect sense. If you think that the goal of a virus is to replicate, it can’t be too deadly. They tend to attenuate that effects over time, which is why they could become sort of endogenous to the population and survive in a less deadly form. So I’m very hesitant to say this is what’s going to happen, and that’s what’s going to happen because if we took honestly snapshots of what was the consensus every month since March, the plot charts coming out, that would be massively different all over the place.

So with that in mind, is there any limit to what the Fed can do? Well, also, almost 60 percent of invoicing and 50 percent of global reserves are in dollars, so long as the German and other export-led trade models depend upon the recycling of dollar amounts to the bond markets of the United States. So long as interest rates are at a seven hundred year low, which seems to be a not an aberration, but the real sort of mean revolution in the system, so long as we can’t generate inflation to save our lives because we’ve basically created hyper flexibility in labour markets and product markets on a global scale, then sure, yeah you can just continue.

I mean, you really can. I mean, Sebastian Mallaby has a piece of this in Foreign Affairs. Löw that to two years ago called Magic Money, and I think that he’s right. I actually have a piece coming out saying why he’s right, but he’s not entirely right, because a lot of this has to do with the Fed essentially giving markets of free option every 7 to 10 years and making the problem worse. But nonetheless, can we continue to do this? Absolutely, we totally can do this, so long as there’s no inflation in the system, and you’re not going to get a very high spike in interest rates. And I can’t imagine why you would see either of those. Then you’re going to continue to do this, which is part of the reason why half the market is in gold because that’s a perfectly rational response to a low inflation, low rate world that you think is fragile.

Rana Faroohar

Yeah, 100 percent. It’s so interesting. Two things to say in response to Mark. First of all, if Andy Haldane believes that I’m inclined to believe it, too. I think he’s the smartest policymaker around. I can already see the signs of a second wave in New York. I don’t know how it’s going to play out. And so I’m going to hold off on making a judgment call about that. But let me say a little bit about central banks and what they can and can’t do.

I think that if we had a Biden administration, for example, and you had him immediately reaching across the aisle, reaching across the ocean, kind of repairing some of our relationships with allies, basically rolling back some of the really stupid stuff that Trump has done, the end, and also rolling out some kind of reasonable fiscal plan to get us over the next 1 to 2-year hump of COVID, whatever, whatever it is in the U.S., then I think that central banks can probably do a lot. Because you have to realize that it’s somewhat about trust in the faith of the, you know, the good faith of the U.S. government and the dollar. And when you have Trump that goes way down, when you have a trade war with China in which we don’t have Germany and other European allies that have the same concerns on board, then that goes way down. I think that if we have a volatile environment, then you’ve got maybe five years for the dollar to be able to act like you have all the privileges of being the global currency. I think if you had smarter governance, you might have another 15 years of being able to have those privileges.

But make no mistake, and this is where I think Americans in particular sometimes get a little arrogant. We always have these conversations like it’s just about what we want to do. China has its own plan. It’s got its own grand plan, industrial policy. It’s rolling out digital RNB. It’s got its own sort of trade route that it’s trying to develop. It’s got its own relationships that it’s developing with Middle Eastern oil producers, weakening the dollar oil peg. Europe may come together. The euro may become some kind of more attractive alternative. All these things are now in flux. So you have this, these vectors that have nothing to do with what’s happening in the White House. And I think ultimately that will weaken the dollar relative to other currencies. And ultimately, I don’t think that’s a bad thing, because one of the reasons that we have the dysfunction that we do is that the dollar has this exorbitant privilege and allows us to behave incredibly badly in terms of debt. Wouldn’t be a bad thing to crack that. I kind of hope it doesn’t happen in 2 to 5 years in some disorderly way.

Paul Jay

There’s one truth. I think if one accepts the science, and I think most rational people do, there’s nothing more threatening to human society right now than the climate crisis. And with very few years left, apparently to deal with, we’re no doubt hitting 1.5, and we’re beyond not hitting it. We’re maybe beyond not hitting 2 degrees warming above pre-industrial averages. And scientists are saying that if things keep going the way, they are by the end of the century, we could not only be hitting 4, but there’s recent predictions of even 7 degrees. I mean, that’s an unlivable earth. Even as you approach 2 and 3 degrees, much of the people living in the south have to head north, whether the people of the north want to build walls or not.

The extent of the crisis is critical, and which most people who follow anything know, I don’t see any solution to this without US-China collaboration. It’s not going to happen through contention if there isn’t some serious global agreements on climate and not done in the context and atmosphere of the kind of rhetoric and threats that are going on now. I don’t see China isn’t going to respond because of threats. And as much as Trump’s anti-China hysteria, even Steve Bannon, who I believe is probably still in Trump’s ear, is actually called for military confrontation in the South China Sea.

Richard Haas from Foreign Affairs had an article recently where he says that the United States should give up its ambiguity on Taiwan and outright say that if China were ever to use military action towards Taiwan, that the United States will respond militarily. I mean, most people I’ve talked to that know people like Larry Wilkerson and others don’t believe it’s true that the United States actually would provoke because every war game they’ve ever played, Wilkerson says, ends a nuclear war. They’ve never played a war game that starts conventional and doesn’t end nuclear.

But all that being said, there’s no way to deal with climate without collaboration. And one thing that concerns me about Biden, again, reading his climate plan, his plan for reducing fossil fuel subsidies by governments, which he says he’ll do in the United States, but is to give the belt and road initiative countries an alternative form of financing, and in other words, to fight China over these alliances that China is building. And whether that’s a good idea for those countries or not, I don’t know. That’s a separate issue, but it’s all couched in this virulent anti-China rhetoric.

So what is the underpinnings of this rivalry? Why is that some people argue this is because it justifies massive military expenditure, which I think there’s truth to. But is there more going on? Why why is there this such underlying rivalry, which seems like it’s going to make it impossible to collaborate on climate?

Rana Faroohar

I can jump in on that. I think that there was a belief in foreign policy circles and in economic circles that once China opened up and once they were brought into the WTO and the traditional structures, Bretton Woods structures, et cetera, that they would become more prosperous and move towards liberal democracy.

I frankly haven’t been in and out of China for the last 20 years; never really saw that as a possibility. I just think it’s really quite arrogant. I mean, old country, five thousand, six thousand years of civilization, kind of with its own ideas about things. And so I was always curious that there weren’t more CEOs and asset managers and there were certainly military tacticians that would have sounded the alarm and have but saying, you know what, if it doesn’t go that way, what if basically at some point China decides it is independent of Western technology, it can run its own supply chains. It is a giant single market, much like the U.S. in the World War Two period that can go it alone. Then what?

Well, here we are. And I think China would have given another 5 to 10 years before it made its move. But Trump kind of threw the bomb in the middle of the big hypocrisy of the one world two systems paradigm. And so now we have decoupling that’s not just on the U.S. side, but very much on the Chinese side.

I had a fascinating conversation actually a couple of years ago with Kaifa Lee, who is a big Chinese venture capitalist. He helped start Google China. And he said, you know, we hope this doesn’t happen in the best Chinese investment community, but we are prepared for there to be decoupling. And we believe that it will be easier for China to make up what it still needs within the supply chain and innovation ecosystem, which is not much. I mean, it kind of owns a lot of that ecosystem right now. Just slap Chinese consumer brands on the top of it. Then it will be for America and the Western world to rebuild its entire supply chain because we kept the brands and all the I.P., but we didn’t keep that kind of manufacturing ecosystem. The military is obviously very worried about that. COVID has exposed the vulnerability of supply chains. So we’re going there no matter what. I do not think that the whole Council on Foreign Relations like let’s get a big super committee together and come up with a set of agreements on climate change that China and the U.S. can agree with. That’s not going to happen.

Here’s where I am somewhat optimistic. I think that it is possible for the world to become more regionalized, maybe a tripolar world, U.S., China, and Europe, with kind of different strengths and ecosystems to exist, to coexist. And in that model, I would look for optimism around climate change to come more from innovation, maybe state-driven innovation. China has done so much on wind and solar. You know, I think if we did in the U.S. and Europe is doing this to a certain extent, did a big push to incentivize research and development and five, six or seven areas of technology, including cleantech, we could probably really do a lot.

I mean, one small example, vertical farming. You probably never heard of this, but it’s about to be huge. This is basically the idea of growing food on walls that are controlled in minute ways by light and temperature. It means you don’t have to ship vegetables across the country and have them lose 50 percent of their weight, which was water anyway, and have a bunch of emissions. I’m looking for things like that. When I think about climate change, I’m not looking for some big new grand bargain.

Paul Jay

Mark.

Mark Blyth

So let’s put a couple of things on the table. The background assumption here, whether you like Biden’s climate policy or it’s going to amount to more than a hill of beans, is that he’s allowed to win. And it’s not far from clear for me this is the case because the tweeter in chief, if he loses, will continue to mobilize, delegitimate, fractionalize and polarize this country. With a set of forces that we’ve begun this shot by identifying have been 30, 40 years in the making.

So it’s not clear that you’re going to get a Biden victory or even the United States basically emerges from the next 12 months as a kind of credible and stable place to invest. Now, what the United States has done to make its money over the past 30 years was basically to invest in the protection of intellectual property rights, and by some estimates, about 80 percent of the value in global supply chains accrues directly to U.S. companies. The famous example being you make a seven hundred dollar iPhone in China, but 50 bucks of the value remains in China, and the rest basically is remitted not to California, but to a series of tax havens. But nonetheless, most of it goes back to the American side.

So that’s why you invest in American stocks because they grow faster, and they grow faster because of the IPR control. What is it that China wants to do? It wants to develop. It wants to become rich. What does that mean? That means it’s coming for Europe.

So there’s a real conflict of interest between these two, if you will, global business models.

Paul Jay

Hang on a sec. Say it again in a little easier way to get.

Mark Blyth

For the past 30 years, American firms have been globalizing, integrating U.S. and global supply chains, moving stuff to China. But how do you really make money is through the protection of their intellectual property rights? Think about Apple suing Samsung all the time. Think about the fact that when Apple sees a competitor, Google sees a competitor and buys it. It doesn’t like the competition. This gives them huge profit margins and also means they control most of the value in these big global supply chains.

And the way you protect this is with legal protections. Now, at the end of the day, China wants to develop. China wants to be rich. China basically doesn’t really care that much about those legal protections and goes out of its way to either buy tech, acquire tech, steal tech, spy on tech, paints concerns at universities in the United States about PRC of Chinese army representatives and labs, and so on and so forth. So not all of this is hysteria.

There is a direct threat to the American business model, which is heavily dependent upon global supply chains and the protection of intellectual property rights. This spells through to American capitalism were at large because the reason you want to buy American stocks is because American stock markets grow faster than everyone else. Why? Because they have the companies that have these intellectual property rights that make the outsized profits. China is a direct threat to that. So. there is conflict built into the system.

In terms of cooperation, China will cooperate with the E.U. If the United States continues to fractionalized politically. And now just basically as a kind of damage quasi autocracy that refuses to accept basic science on climate change, the world has already moved on, in many ways. There will be exactly those types of state-backed investments and very large scale projects that will take place in China on the E.U. and possibly between and across them. And they will be the ones that reap the returns on those new assets and those new inventions and those new intellectual property rights that everyone needs to deal with the already big scientific effects of global warming.

One example of how to think about this inclosing again, going back to these little finance talks, I would go from time to time. I would always say to financial audiences; I don’t understand why you folks don’t invest everything in green tech. And I would get these answers; about we don’t know, it’s incomplete, the government is exposing us to the risk, its too big, etc.. And I would say that you don’t understand, this is what bankers call a free option. And this is the one contract that you want. And here’s how it works. If you don’t invest and it doesn’t work, you still die. If you invest half of what you’ve got wisely and one thing works, and that helps, you’re going to make more money than God. If everybody collectively thinks the same way, then we might just get out of this mess. But if you only look after your own interest, you are guaranteeing your own extinction. And again, it’s that collective action problem at the base of capitalism.

What’s rational for any one firm to do or one company to do, it’s oftentimes collectively disastrous. And that’s what’s going on.

Paul Jay

Well, that’s a pretty good place to end, unless you want to add something, Rana?

Rana Faroohar

No, I think that’s perfect.

Mark Blyth

Do we have anything good to say? And can be like, can we go come on is there any light at the end of the tunnel?

Paul Jay

Yeah, go ahead.

Rana Faroohar

Yeah, actually, that’s good.

Mark Blyth

I mean, I’m huge on hydrogen. Who knew hydrogen was finally going to pay off? The E.U. put in I think 12 billion into hydrolyzers. Right. The Russians are all over this. They can use their pipelines to pipe blue hydrogen all the way to Western Europe.

Paul Jay

We need to do this again because the thing I’m about to say, in some ways, starts a whole new conversation. But Mark instigated this. This contradiction that you’re talking about, how it makes sense for individual tech and finance companies to pursue their short term interests, but it’s giving rise to chaos otherwise, which in normal times, I guess you could say there’d be time to evolve out of it. But given the time frame of climate, there’s just no time. There needs to be something dramatic and radical. Quickly, if the U.S. descends into the worst-case scenario, I guess we’re screwed. We will be hitting two and three degrees, and I guess we’ll have to see what that looks like.

But I think what you’re describing, Mark, is a kind of consciousness, a conclusion that’s really growing and it expresses itself. The pandemic is showing the advantages to public health care system that’s run by government. And certainly, if you compare, there is the pandemic results in Canada,  to the United States, the public health care system has done significantly better than the American. It’s pointing to socialistic solutions in everywhere you look.

I mean, that’s really what the New Deal was. It strengthened socialistic characteristics of the capitalist economy. And of course, the right despises this because they think any strengthening of those characteristics wakes people up to the advantages of it, which means people may say, well, we don’t just want public health care, we maybe we should have public banking, and that can go on from there. So I think we need to do another podcast about this. But Ranna, why don’t why don’t you conclude for us?

Rana Faroohar

Well, you know, I would just build on what you said. I do think that that’s another podcast. In the way, I think of it is that, you know, there tend to be economic pendulum shifts every half-century or so, give or take. And we had a pendulum shift. If you look at the period leading up to the 1929 market crash in the 30s’, that period in which the ten years or so before actually from the Spanish flu too 1929, OK, you had the Spanish flu first and then the market crash. We had a market crash and then the coronavirus. But that, that ten years was similar and that you had basically underlying problems that then central bankers papered over with debt. There was a huge asset bubble. There was a lot of technological change, shifting labor markets, demographic change, urbanization, lots of moving pieces. You eventually got a debt bubble, a market crash, the 30s’. And then from the 30s to the 70s, you had kind of another pendulum shift where there was a movement away from private sector power. There were certain curbs. You got the Glass-Steagall regulations. You know, these are sweeping generalizations, but they’re basically true. And you had the public sector getting more power. You had labor getting more power. That was over, as we know, with the Reagan Thatcher revolution in the 80s. And then we go pendulum shifting, and we get Trump, perhaps as the apex of all of that.

I think we are now in another pendulum shift. And I think that many of the things that we’ve been talking about could come to pass. And even though there are some big challenges, some big dangers, I think that it’s possible that with the right tweaks and incentives, we could get a shift finally between capital and labor. We could get a shift between the private sector and the public sector. We could see a conversation moving from consumers to more talk about citizens. I think all those things are possible, and we should come back and talk about it.

Paul Jay

And all those things are possible. If there isn’t some kind of Trump coup, assuming Biden actually wins the election, which sounds like he’s going to win the election. But whether that’s, he, I should say it sounds like he’s going to win the vote. It’s not clear he’s going to win the election. Anyway, thank you both very much, and let’s schedule another one soon. Thank you, Rana.

Rana Faroohar

Thanks to you both. Mark, you’re a rock star. Thanks. Thanks for having us, Paul.

Mark Blyth

Micro celebrity, that’s the term.

Paul Jay

And thank you for joining us on theAnalysis.News podcast.

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54 comments

  1. notabanker

    So we’ve gone from the Hampton’s are not defensible to they think they are going to whether the storm. And tacit admission they are international sovereign entities above nation states. 5 years to weaken the dollar. Gee, what’s the alternative?
    Good to know.
    She’s a great mouthpiece for the elite, gotta pay attention to this one. Blyth is the perfect counterpart to this.
    Thanks for posting this.

    Reply
    1. Oh

      Most elites (in their heart) are concerned about climate change, the huge class divide, black lives etc, etc. But when it starts to affect their luxurious lifestyle they can’t bear to let go of their materialism. So we get people like Rana who sing the tunes they like but that’s about it. Then it’s back to business as usual.

      Reply
      1. Yik Wong

        Yes! She’s signaling to any member of the 0.001% who for god knows what reason might be listening just where her loyalties lie — to international capitalism.

        anybody watching would be embarrassed as I was to be an American, although thankfully I have dual passports,

        She’s not even trying to create a dialog, it’s monolog to her audience (ala Spalding Gray). An audience who know what’s coming and are there to appreciate the delivery and be comforted in their life choice biases.

        Mark is Mark, but he has spent too much time in the Brown academic community. One advantage of class caste system in the UK for a guy like Mark is it helped keep him in closer to the working class. His co-host for most of his own podcast is a Hillary-bot, so it’s amazing he has even this much resilience to being fully acclimatized.

        Reply
        1. JBird4049

          I would be kinder to Rana Foroohar as people often look for something, anything, to give them hope. She is probably a well paid tool, but fact that the ruling class is being increasingly incompetent, even stupid, is a strong motivation to look.

          Reply
  2. epynonymous

    New section proposal – ‘Trillions buying billions’

    alternatively under the collapse watch

    Lloyds of London has lost billions the last few years, according to my usual casual research, yet they are being considered for permitting futher consolidation by UK regulatory agencies, according to last weeks news.

    I forget the other big one I heard of, to be totally honest, but I am sensing a new wave, a wave of trillions buying billions.

    We shouldn’t be surprised, but given the bankruptcies of physical retailers… this may be a new and entirely predicatable age of consolidation. We should be aware of this.w

    Reply
    1. drumlin woodchuckles

      Those of us mere thousandaires who wish to see the survival of minimillionaire, unimillionaire and thousandaire type smallish businesses survive the Great Buyup should patronise them as hard as we can within our own budgetary limits. They will have to charge higher prices for what they sell or do, because they won’t have the “ekonomeez uv skale” which are designed to advantage the Great Buyuppers. Paying those higher prices will be the price we pay, should we decide to accept it, for keeping a relict of smallish business alive in the teeth of the Great Buyup.

      An example of that would be buying something from NOmazon if there is still a NOmazon outlet which sells it. Or does it.

      Reply
  3. Watt4Bob

    The leading ones got there because they were the best, at more or less what they do, even if what they do is not so good. But they’re smart.

    This whole interview reminds me of nothing so much as Thomas Friedman, except instead of talking to taxi drivers, these folks are talking to oligarchs and their minions.

    But come on man, they’re smart.

    Reply
    1. ambrit

      Right. If they’re so smart, why are we contemplating civilizational suicide?
      The idea of weathering the storm is based on the assumption that there will be a safe haven from which the ‘anointed ones’ can venture forth from to pick up the pieces. Considering the magnitude of the potential problems, that is not a high order probability.
      Psychologically speaking, this kind of arrogance is “natural” and predictable. The system seems to self select for sociopaths at the apex. We all know how high that group’s empathy level is, much less their long term planning skills.

      Reply
      1. drumlin woodchuckles

        They secretly plan to survive the Great Dieoff in their Secret Bunkers of the New Adams and the New Eves. They plan to be able to survive in their Secret Bunkers until the Great Dieoff is finished and they can re-emerge with zero other humans surviving. They can then re-terraform the Earth to their very own class liking. And it will be THEIRS. all THEIRS.

        That is their secret plan. It does not include suicide for themseves. Only terracide for the rest of us. And then a restoration and resurgence for themselves.

        Let us hope someone among the doom-consigned has plans and preparations to survive the Great Dieoff here on the surface, and be ready to kill each and every one of the New Adams and New Eves when they emerge from their Secret Bunkers of the Elect.

        Reply
        1. Jeremy Grimm

          Killing all the New Adams and New Eves seems harsh. Just seal them into their bunkers so they can’t emerge. The bunkers might serve as ways to preserve some examples of our present technology for study in the future.

          Reply
          1. drumlin woodchuckles

            You are kinder and gentler.

            I will accept your method. IF! . . . the New Adams and New Eves can be guaranteed to die eventually inside the sealed up bunkers, with precisely not even one ever living to emerge.

            Reply
        2. cnchal

          Lets not get carried away. In their secret bunkers they need all kinds of mechanical equipment to keep their jail cell going and that stuff requires maintenanceor or it seizes up.

          When was the last time a billionaire changed the oil in his Land rover, Rolls or Ferrari all by himself? They don’t even know where to find the drain plug and if by chance they did, they would still be at the mercy of their mechanics.

          Reply
        3. ChuckTurds

          That wouldn’t be necessary, those people would most certainly not have the right stuff to survive on their own. They have no idea what physical labour is. No experience with growing crops, constructing structures, harvesting timber, mining, it’s all foreign to them. Unless they can train their robots to do it for them. But I think the techmology will not get there in time.

          Reply
          1. Fritzi

            Not a Chance.

            No, they will still be totally dependent on human Labor, Knowledge and skills they do not have themselves.

            And they do not have any actual Leadership skills of the sort needed to take or stay in charge under such conditions either.

            The only source of their power, their Money, will almost certainly be worthless, so it is basically only a Question of who among their former underlings will kill them and take over.

            The most common answer is their security guys, and I do think it will probably start out like that.

            The guys with guns take command.

            And it might well stay that way too, but I do not think it has to.

            There is some Chance that Brains might Triumph over Brawn in the longer run, there are certainly more valuable and irreplaceable skills.

            Just perhaps it will end up a technocracy, with some scientists and/or engineers in charge?

            Reply
            1. ambrit

              Trump is just the latest lesson in a series of Presidents that show that Politics is an Art. Science is a tool for the politicos. Businessmen are not guaranteed success in the realm of politics. The skill sets that lead to success in business do not fully map to the skill sets needed to be a successful politician, much less the skills that underlay the practice of science.
              History shows that the longest lasting “isolated” social units are generally religiously based. Surviving in a “bunker” environment is definitely an “isolationist” enterprise.

              Reply
    2. John Wright

      This could have been borrowed from Friedman:

      “Well, in the digital economy, data is the new oil. It’s the resource that everything is driven by.”

      I suspect vast numbers of humans are more concerned about having enough petrochemical energy to make their lives easier via machines, transportation, shipping and food supply.

      The digital economy is of little importance to them.

      Where do the Very Serious People go to get this group think implanted?

      Reply
      1. drumlin woodchuckles

        When the electricity stops, the data stops.

        Whatever it is that will keep the electricity going enough to keep the data going . . . . that keeps-the-electricity-going is what will be the new oil.

        But if you are the kind of person ( Deep Urbanite) who thinks milk comes from a carton and lettuce comes from a shrink-wrapped plasti-pak, then you are the kind of person who would think that data is the new oil.

        As Wise Old Indian once said: ” When the last can of catfood is gone from the last WalMart and from the last Amazon Fullfillment Center on Earth, then the White Man will learn he can’t eat money.”

        Reply
    3. Tom Doak

      I don’t think this is the same as the meritocracy patting themselves on the back for getting good grades.

      The problem is that people like Charles Koch and Bill Gates aren’t the kind of cartoonish Batman villain who makes the wrong move, or just another dumb CEO maximizing his stock options. They are smart like Rockefeller and Carnegie, using their millions to pave the way to billions by not only monopolizing their businesses and buying off the politicians, but taking the extra step of populating law schools and NGO’s with their devotees.

      The Kochs probably didn’t see the world burning up when they started their project, but they didn’t hit the brakes when they saw where it was headed; Gates and Musk and the rest of them certainly CAN see into that future, but believe they are so smart they’ll be able to save the world somehow. Or, somebody else will, while they are counting their billions.

      Reply
      1. drumlin woodchuckles

        The Gates may think he or some other MoneyLord will save the world.

        The Koch Lords plan to save themselves alone and only. They are both a “New Adam” kind of guy.
        They are the people that “plans” should be “made for” when they have gone into the bunkers.

        Reply
      2. Watt4Bob

        …Or, somebody else will, while they are counting their billions.

        The problem being they cannot be bothered to interrupt counting their billions.

        Sad when you consider that if Charles Koch, Bill Gates, Elon Musk, Mark Zuckerberg, Jeff Bezos, and Warren Buffet all had any interest in saving the world, we’d be at least half-way there by now.

        Having a commitment as opposed to an ‘interest‘ in saving the world is a sure-fire way to be un-invited to Davos, so that’s why we’re all stuck waiting for a miracle.

        Even oligarchs need some buddies to hang out with.

        Reply
  4. JuneZ

    There is support for the Foroohar and Blyth thesis of the effect of working class distress when one compares Trump voters with those of McCain and Romney votes by income.
    $100 thousand and over: Trump 47% Romney 54%
    Under $50 thousand: Trump 41% Romney 38%

    With Obama vs. McCain, the categories were different, so the same comparison can’t be made, but
    Obama got 55% or more of the votes of those with income under $50,000, vs McCain’s 43% or less. Clinton got 53% in 2016.

    Data from with date changed for other elections.

    Reply
    1. R

      Plus 1 for this… the majority of trump voters may well be higher income (republicans!)

      That doesn’t mean there aren’t still a lot of working class people frustrated by deindustrialisation that were energized to vote for him.

      Even a double digit percentile means a lot in an election.

      Then of course there’s the working class voters dems have lost who just stayed home.

      Reply
    2. Noone from Nowheresville

      so you’re saying more of the working class deplorables voted for Clinton and yet they are blamed for Trump’s win. Good to know.

      Gotta’ love how nebulous the word “deplorables” is. Tacitly understood to mean voting against one’s interests and for the “wrong” side regardless of well anything.

      It’s also funny that those with the least power as defined by operating system of The Machine are the ones most blamed for the poor optic outcomes. Even when, or perhaps despite, said outcomes are good for core memberships of the two-faced political coin social clubs.

      No purposeful policies choices here just bad deplorables who vote against their own interests. Stupid rabble. When The Jackpot comes it will be all their fault!!!!!!

      Sorry to see that Blyth is becoming infected. I hope he beats the disease.

      Reply
      1. drumlin woodchuckles

        Well, as William Gibson once said . . .

        ” The jackpot is already here. Its just not evenly distributed.”

        Reply
  5. edmondo

    If I wanted to watch a woman with TDS, I’d watch Rachel Maddow. What are these people going to do on November 3rd when Trump is gone and all the problems still exist? Please don’t tell me this is the new “left”.
    More globalism, down talking and “meritocracy” isn’t gonna heal this country. Looks like I should go long “Republicans 2024” because these people are clueless.

    Reply
    1. Oh

      So there’s a kind of a sense that both sides of the aisle had sold out the American working class. That’s leading up to 2016. You have this con man in the form of Trump coming in, and he really does it, to my mind, he’s the perfect Melville con man character because he takes this sort of felt experience that people do have of hypocrisy on both sides of the political aisle. And then it just wraps it in this sort of welter of lies and somehow presents himself as an outsider.

      Gee, Rana, how abou the hopey changey guy who set the whole thing up for Trump?

      Reply
    2. drumlin woodchuckles

      Yes, this is the new Left. Social Justice Safespace Warriors, Leftard WokeNazis, and the Pink KKK ( Pink Kitty Kap Klintonites) as far as the eye can see. This is the New Left.

      ( And a few Sparts and Trots and StalMaos and other legacy Marxists for Gulag Socialism).

      Sorry. I know you asked me not to tell you that.

      Reply
  6. Socal Rhino

    Re Yve’s comment and obviously not a large sample, but on daily walks I’ve noticed a lot of the yachts moored in Dana Point harbor are owned by working class folks.

    Reply
      1. Socal Rhino

        By the Trump flags, Historian. Intended as a non serious rebuttal to the notion of Trump’s appeal being working class. Not yachts by Monte Carlo standards surely. I do see a few of some really big ones now and then but they seem to anchor in deeper water away from the piers.

        Reply
      2. kgw

        Reminds me of the old adage: “A boat is a hole in the water that you throw your money into…”
        And, I might add, you think you can do it forever.

        Reply
        1. Socal Rhino

          I’ve heard that quote from multiple people advising to rent rather than own.

          Like certain brands of motor vehicles that you need to be flush to drive, or as a friend said, driving a Land Rover says I’m affluent enough to support a mechanic.

          Reply
      3. David in Santa Cruz

        Sarcasm has been the first casualty of 2020!

        Yves is of course correct. Michael Moore and even CNN reported in their 2016 post-mortems that the so-called “white working class” voter didn’t show up to vote! Nearly 10 million 2008 Obama voters were MIA from the polls. Why? Because neither party was looking out for their interests.

        All those cocktailing-platforms plastered with Trump regalia moored in Dana Point were financed by tax-cuts and capital gains, not wages and sweat — or at least not the wages and sweat of the people renting the slip…

        Reply
  7. JCC

    Personally I thought they both made some very good points. Although Rana’s comments on the elites coming together under Biden were anything but accurate and no “cause for optimism” – no one is coming together as far as I can tell. As Paul Jay says, it’s all about Trump and nothing else. But with a little luck, maybe Rana’s hopeful predictions at the end will start happening now.

    Reply
    1. ambrit

      The Obama Man completely dispelled the glamour of “Hope and Change” for me. I am firmly with Lambert on this one. Give us concrete material benefits and forget the “Confidence Fairy” prestivoxitation. (Sleight of voice.)
      So far, every time Biden has been pinned down on a subject, he has said that “nothing is going to change.” I take him at his word on that.

      Reply
  8. Richard Thompson

    Many epidemiologists have determined that Sweden was able to handle Covid the way it did because of the relatively low average number of people occupying a residence. It is just under 2 for Sweden and just short of 5 for the U.S. This also accounts for part of the rapid spread of the virus in poorer areas.
    Parag Khanna (The Future is Asian …) claims that the EU is now China’s largest trading partner followed by the 11 Asian counties surrounding China that would have made up the TPP. He says the U.S. is number 3. I’m not sure this is accurate but it points to one of the biggest dangers posed by Trump. He thinks and acts like we are the only players at the table ,while his actions make this less and less true as he drives potential allies away.

    I’m optimistic because at least millennials realize that climate change and income inequality are the big issues that will effect them. I don’t know what they’ll do about this but awareness proceeds action.

    Reply
  9. drumlin woodchuckles

    How deep will the depression get? As deep as the OverClass can make it get, as per the Andrew Mellon 2.0 Plan to distress all distressable assets for aquisition by the visible Upper Class and the invisible Over Class.

    Of course it may all get away from them, and get even deeper than they would like . . . deep enough to cave-in the wealth-upward money-pump pipelines by internal vacuum generated in-crushment. If that happens, those neo-2.0 peasants who are truly prepared for it might well be among the survivors.

    Suburbia could survive as the New Suburbistan . . . IF enOUGH suburbanites are prepared to become suburbistanis. Will they set up their Suburbistani Doomsteads in time? Will they get in secret silent touch with eachother to be able to provide Suburbistani leadership for the confused and lost suburbanites all around them? Will they have enough serious guns and ammo to exterminate all the looting arsonist mobs who would strangle the new emerging Suburbistan in its cradle?

    Reply
  10. VietnamVet

    These are the best of the meritocracy, an admitted “Micro celebrity”. But, they can’t admit the US federal government failed. The Western Empire fallen. A plague, climate change enhanced hurricane and firestorm destruction of towns, never ending wars, and an economic depression are all happening at once. No one is providing any practical, workable solutions, like a national public health system, to mitigate any of the horrible impacts. Next month’s election likely will be contested. Maybe things will return to normal in 2022 with tweaks and a for-profit vaccine, more likely not.

    Reply
  11. ptb

    thanks for the link.

    Radical decarbonization, if one is starting at US levels, can already be done even without the aid of new technology (think public transport, more rail/less truck, more modest floor plans, not doing mindbogglingly stupid crap like corn ethanol etc, nuclear energy, which isn’t great but hey). It’s all what they call a ‘non-starter’.

    Re: Biden – next eco friendly FDR – um no. First thing he’s gonna do in office – reach across the aisle – That’s exactly right.

    The questions of FED and international stuff are more immediate I think. They talk of a tripolar world with the EU. This was my hope too. But look at the EU’s impotence on the Iran sanctions, a topic on which it unequivocally rejected the US policies in principle. Perpetual fragmentation of EU would, instead, make it a bipolar world again. That is great news for the future of dollar printing, but not any other international concerns.

    Reply
  12. Sound of the Suburbs

    We are using 1920s economics and seeing 1920s problems.

    The globalists found just the economics they were looking for.
    The USP of neoclassical economics – It concentrates wealth.
    Let’s use it for globalisation.

    Mariner Eccles, FED chair 1934 – 48, observed what the capital accumulation of neoclassical economics did to the US economy in the 1920s.
    “a giant suction pump had by 1929 to 1930 drawn into a few hands an increasing proportion of currently produced wealth. This served then as capital accumulations. But by taking purchasing power out of the hands of mass consumers, the savers denied themselves the kind of effective demand for their products which would justify reinvestment of the capital accumulation in new plants. In consequence as in a poker game where the chips were concentrated in fewer and fewer hands, the other fellows could stay in the game only by borrowing. When the credit ran out, the game stopped”

    This is what it’s supposed to be like.
    A few people have all the money and everyone else gets by on debt.
    Wealth concentrates until the system collapses.

    Just wrap it in a new ideology, neoliberalism, and no one will notice its dodgy, old 1920’s neoclassical economics, which still has its old problems.

    Milton Freidman re-hashed 1920s neoclassical economics and managed to pass it off as something new.
    He didn’t fix any of its major problems.
    Putting some complex maths on top made it “scientific”.
    Wrapping it in a new ideology, neoliberalism, made it look brand new.
    These things don’t actually make a lot of difference.

    The economics of globalisation has always had an Achilles’ heel.
    The 1920s roared with debt based consumption and speculation until it all tipped over into the debt deflation of the Great Depression. No one realised the problems that were building up in the economy as they used an economics that doesn’t look at debt, neoclassical economics.
    Not considering private debt is the Achilles’ heel of neoclassical economics.

    No one realised the problems that were building up in the economy as they used an economics that doesn’t look at debt, neoclassical economics.
    As you head towards the financial crisis, the economy booms due to the money creation of bank loans.
    https://www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2014/money-creation-in-the-modern-economy.pdf
    The financial crisis appears to come out of a clear blue sky when you use an economics that doesn’t consider debt, like neoclassical economics.

    On a BBC documentary, comparing 1929 to 2008, it said the last time US bankers made as much money as they did before 2008 was in the 1920s.
    Bankers make the most money when they are driving your economy into a financial crisis.
    https://www.youtube.com/watch?v=vAStZJCKmbU&list=PLmtuEaMvhDZZQLxg24CAiFgZYldtoCR-R&index=6
    At 18 mins.
    The bankers loaded the US economy up with their debt products until they got financial crises in 1929 and 2008.
    No one realised the problems that were building up in the economy as they used an economics that doesn’t look at debt, neoclassical economics.

    Reply
    1. Sound of the Suburbs

      We are using 1920s economics and seeing 1920s problems.

      What is the fundamental flaw in the free market theory of neoclassical economics?
      The University of Chicago worked that out in the 1930s after last time.
      Banks can inflate asset prices with the money they create from bank loans.
      https://www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2014/money-creation-in-the-modern-economy.pdf
      Henry Simons and Irving Fisher supported the Chicago Plan to take away the bankers ability to create money.
      “Simons envisioned banks that would have a choice of two types of holdings: long-term bonds and cash. Simultaneously, they would hold increased reserves, up to 100%. Simons saw this as beneficial in that its ultimate consequences would be the prevention of “bank-financed inflation of securities and real estate” through the leveraged creation of secondary forms of money.”
      https://www.newworldencyclopedia.org/entry/Henry_Calvert_Simons
      Real estate lending was actually the biggest problem lending category leading to 1929.
      Richard Vague had noticed real estate lending balloon from 5 trillion to 10 trillion from 2001 – 2007 and went back to look at the data before 1929.

      Henry Simons and Irving Fisher supported the Chicago Plan to take away the bankers ability to create money.
      “Stocks have reached what looks like a permanently high plateau.” Irving Fisher 1929.
      This 1920’s neoclassical economist that believed in free markets knew this was a stable equilibrium. He became a laughing stock, but worked out where he had gone wrong.
      Banks can inflate asset prices with the money they create from bank loans, and he knew his belief in free markets was dependent on the Chicago Plan, as he had worked out the cause of his earlier mistake.
      Margin lending had inflated the US stock market to ridiculous levels.

      Margin lending inflates stock markets, due to the money creation of bank credit.
      Mortgage lending inflates real estate markets, due to the money creation of bank credit.

      The IMF re-visited the Chicago plan after 2008.
      https://www.imf.org/external/pubs/ft/wp/2012/wp12202.pdf

      As a CEO, I can use the company’s money to do share buybacks, to boost the share price; get my bonus and top dollar for my shares.
      What is there not to like?
      Share buybacks were found to be a cause of the 1929 crash and made illegal in the 1930s.

      What lifted US stocks to 1929 levels in 1929?
      Margin lending and share buybacks.
      What lifted US stocks to 1929 levels in 2019?
      Margin lending and share buybacks.
      A former US congressman has been looking at the data.
      https://www.youtube.com/watch?v=7zu3SgXx3q4

      Reply
      1. Sound of the Suburbs

        Luckily the Chinese are keeping their eye on the ball.

        Davos 2018 – The Chinese know financial crises come from the private debt-to-GDP ratio and inflated asset prices
        https://www.youtube.com/watch?v=1WOs6S0VrlA
        The black swan flies in under our policymakers’ radar.
        They are looking at public debt and consumer price inflation, while the problems are developing in private debt and asset price inflation.
        The PBoC knew how to spot a Minsky Moment coming, unlike the FED, BoE, ECB and BoJ.

        The Chinese know what to look out for to spot a financial crisis coming.
        This nice Chinese chap tried to warn the Americans the US stock markets was at 1929 levels at Davos 2018.
        https://www.youtube.com/watch?v=1WOs6S0VrlA
        The West’s experts couldn’t change the subject fast enough (49 mins.)
        He was trying to help, but they wouldn’t listen.

        What does a correction from 1929 levels look like?
        We have seen it before, we do know.

        Reply
        1. Rod

          thanks for this and your effort
          I know enough to be rattled
          My Mother had no good stories from her life during the GD

          Reply
          1. Rod

            https://www.youtube.com/watch?v=1WOs6S0VrlA

            The West’s experts couldn’t change the subject fast enough (49 mins.)
            He was trying to help, but they wouldn’t listen.

            He said very plainly, 3 times, that China Will Not let their Economy Collapse and have the mechanisms in place to prevent that already in 2018.
            He also learned that bringing a chart to Davos to prove your point was considered ‘Bad Form’ by this esteemed group.(49 min)

            Wow–Davos 2018 and they all fear something BAD from an ‘Unknown’ like blah, blah, blah, or a “Pandemic”.

            Reply
  13. cnchal

    > Rana Foroohar and Mark Blyth: How Deep Will the Depression Get?

    Mark Blyth

    It’s not that I’m a science skeptic on this, but I think that what we tend to do is take whatever the public health authorities say at a given moment and project it forward. As the fox, forgetting that basically everyone revises that opinion on what’s going on every two weeks. So I don’t think that that’s a good thing. The most interesting thing for me just now is the fact that Andy Haldane, who’s the chief economist of the Bank of England and all run very smart person, is actually very bullish on the recovery for a host of reasons, in contrast to most of the people . . .

    Rana Faroohar

    Yeah, 100 percent. It’s so interesting. Two things to say in response to Mark. First of all, if Andy Haldane believes that I’m inclined to believe it, too. I think he’s the smartest policymaker around.

    Perhaps the title of the article should be “Rana Foroohar and Mark Blyth have no idea and believe what the smartest person in the room believes

    No depression at all, and onwards and upwards towards ever moar gluttonous consumption and wealth inequality till the earth is a shrivelled husk of a planet. Then comes the depression.

    Reply
  14. Adams

    Challenging read, made more so by the transcription. “Cains?” Zach, Zach Carter you’re needed here. Whatever auto transcription was used doesn’t get Mark Blyth’s accent at all. Judged by this interview he could take elocution lessons from Uncle Joe.

    AI is artificial.

    Reply
  15. Generalfeldmarschall von Hindenburg

    You lost me out of the gate by revealing you get your info from WaPo-which is the establishments Other Leading Brand of NYT/MSNBC: “We’ve linked repeatedly to the Washington Post article, It’s time to bust the myth: Most Trump voters were not working class.”Well let me tell you a little story:

    OK – I managed to make around $28000 last year. Strictly blue collar. IN Portland if you don’t make 80k, you can go live in a tent on the sidewalk downtown. Used to be ‘professional’ until the knock on effects of 2008 killed my company. Being around 50 by that time, no one is going to hire you other than the lowest level occupations: bartending, driving… In 1982 I never saw the utility of ‘learning to code’, so I missed my chance to join the “I heart Science” techno-priesthood. A history degree with diamond cluster and silver stars is worth zero except as an entree to law (I already had a child and a mortgage, so taking on a half million dollars of additional debt was daunting)
    Having been red pilled by Noam Chomksy and Ward Churchill, my politics were doctrinaire Social-Democratic until Obama’s feckless reign. I understood what Hillary represented from reading Doug Henwood’s book, not Fox news. So 4 years of blitzkriegs in Syria, Lebanon and wherever else the neocons wanted to go.. didn’ appeal. And another 4 years of pouring national resources into an increasingly centralized ‘Smart’ technostate where your refrigerator will report your dietary habits to the NSA.
    Dystopia has arrived. A lot of people thought Trump would be a speedbump, but he just represents a different category of in-group ruling caste swine. The folks who put Trump over the top didn’t vote FOR him. They voted against a Clinton dynasty. You could see Duchess Chelsea being promoted as some sort of NGO wizard. The whole thing is a rotted sham. /Rant off
    “I have seen the future and it doesn’t work” – from Zardoz

    Reply

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