Fantastic work here. Your analyses (and I’ve only read two of your articles so far, and your comment on Ed Zitron’s Shareholder Supremacy article) strike me as right on. I am looking forwards to exploring your ideas more deeply.
I’ve just discovered you and your work and I’m gobsmacked. Really interesting! I have so many questions that I could post on all of your posts, but here’s one to start: In your account of two major elements of the Neoliberalism you describe, you say, “Low-tax, big-deficit Reaganomics had two effects on the economic environment. The first was the high deficits required high unemployment to suppress inflation. High unemployment for most of the twenty years after 1973 meant a nearly continuous labor surplus. Under these conditions labor has no market power and organized labor became impotent and never recovered. “
Later you describe Biden’s industrial investment initiatives as more “Trickle-down economics.”
But isn’t one important result of these investments that unemployment has dropped significantly? Labor power appears to be increasing, if unevenly. Isn’t this possibly a somewhat countervailing development in addressing the 40+ year bipartisan plague of neoliberalism? It has not been possible yet to address the tax code for all sorts of reasons both internal to the Dem coalition (Manchin and Sinema) and external. But is it not possible that these sorts of policies would gain traction in the next Biden administration, depending, of course, on Dem control of Congress?
So, I think you are right that shareholder value still rules the capitalist day, but is it fair to dismiss Biden’s industrial policy as a potential key piece of a post-neoliberal policy?
I am not sure on how much Biden's investment initiatives have resulted in jobs. My understanding is that much of it is financing for big projects that take a long time to get permitted and constructed, much less become operational.
Biden's initiatives are trickle down in the sense that they are handouts to business to incent them to invest in domestic industry. It once was that American business did not need to be bribed to invest in their own country. The reason for this is low taxes, legal stock buybacks, and a financial bias in inflation control strategy that results in higher financial returns. Capital-intensive industry requires a lot of investment in "hard" or productive capital that earns a 4.5-5% real return. Financial investments are competitive with that Since so much more must be risked for capital-intensive projects, business is loath to invest unless the expected return is unrealistically high.
The New Dealers solved this problem by maintaining tax and other policy that kept financial returns low, making investment in job-creating industry the only game in town, so executives played it even though the money was a lot less, but the power and prestige was still there and that is enough.
Today companies can buy their own stock instead of doing real investment (and it juices option compensation). If you google s&p 500 earnings and buybacks you can find the S&P data excel workbook which gives buyback data. It shows over the last six years over 99% of earnings have gone to stock buybacks and dividends, leaving almost nothing left over to invest.
Correct!!! Yeah, my view is its just a label thrown onto a faux ideology that's really just the the policy alignments of a constellation of special interest groups and supposed shifts are just the throwing of small bones because there's too much discontent or -- while pretending its part of a shift but its really just small self interested (and ham fisted) act -- doing things like the CHIPS Act and China because enough of the consternation perceives a threat***. But both this constellation's coherence and its grip are weakening, its structures may depend on the planetary economic design it set up, if places around the world start leaving its game then we'll, in my guess, see much of what it is just fade away as its major structures (in in the senses and aspect they are now, specific orgs will still literally exist but some may truly disappear) couldn't survive a US current account crisis and inability to fund the federal deficit.
***I once read this letter from Marx about "Cosmopolitans", and he said the ones he was referring to are social groups who become distinct social groups, the social group that roughly makes up much of an imperial structure's transnational bourgeoisie, its petite bourgeoisie, and other categories of its human element, along with those who would aspire to join them. And he made some interesting comments about how they can tacitly coordinate like an pre history tribe would to collectively steer the great ship of the empire towards war with a rising or recalcitrant power, like the pre historical tribe would attack another tribe that appeared in the area based off instinct. I'd have to remember what those arguments are though...
Fantastic work here. Your analyses (and I’ve only read two of your articles so far, and your comment on Ed Zitron’s Shareholder Supremacy article) strike me as right on. I am looking forwards to exploring your ideas more deeply.
Thanks!
I’ve just discovered you and your work and I’m gobsmacked. Really interesting! I have so many questions that I could post on all of your posts, but here’s one to start: In your account of two major elements of the Neoliberalism you describe, you say, “Low-tax, big-deficit Reaganomics had two effects on the economic environment. The first was the high deficits required high unemployment to suppress inflation. High unemployment for most of the twenty years after 1973 meant a nearly continuous labor surplus. Under these conditions labor has no market power and organized labor became impotent and never recovered. “
Later you describe Biden’s industrial investment initiatives as more “Trickle-down economics.”
But isn’t one important result of these investments that unemployment has dropped significantly? Labor power appears to be increasing, if unevenly. Isn’t this possibly a somewhat countervailing development in addressing the 40+ year bipartisan plague of neoliberalism? It has not been possible yet to address the tax code for all sorts of reasons both internal to the Dem coalition (Manchin and Sinema) and external. But is it not possible that these sorts of policies would gain traction in the next Biden administration, depending, of course, on Dem control of Congress?
So, I think you are right that shareholder value still rules the capitalist day, but is it fair to dismiss Biden’s industrial policy as a potential key piece of a post-neoliberal policy?
I am not sure on how much Biden's investment initiatives have resulted in jobs. My understanding is that much of it is financing for big projects that take a long time to get permitted and constructed, much less become operational.
Biden's initiatives are trickle down in the sense that they are handouts to business to incent them to invest in domestic industry. It once was that American business did not need to be bribed to invest in their own country. The reason for this is low taxes, legal stock buybacks, and a financial bias in inflation control strategy that results in higher financial returns. Capital-intensive industry requires a lot of investment in "hard" or productive capital that earns a 4.5-5% real return. Financial investments are competitive with that Since so much more must be risked for capital-intensive projects, business is loath to invest unless the expected return is unrealistically high.
https://mikealexander.substack.com/p/the-capitalist-crisis
The New Dealers solved this problem by maintaining tax and other policy that kept financial returns low, making investment in job-creating industry the only game in town, so executives played it even though the money was a lot less, but the power and prestige was still there and that is enough.
https://mikealexander.substack.com/p/how-economic-culture-evolves
Today companies can buy their own stock instead of doing real investment (and it juices option compensation). If you google s&p 500 earnings and buybacks you can find the S&P data excel workbook which gives buyback data. It shows over the last six years over 99% of earnings have gone to stock buybacks and dividends, leaving almost nothing left over to invest.
Yes, That all makes sense. This is a very powerful analysis.
Correct!!! Yeah, my view is its just a label thrown onto a faux ideology that's really just the the policy alignments of a constellation of special interest groups and supposed shifts are just the throwing of small bones because there's too much discontent or -- while pretending its part of a shift but its really just small self interested (and ham fisted) act -- doing things like the CHIPS Act and China because enough of the consternation perceives a threat***. But both this constellation's coherence and its grip are weakening, its structures may depend on the planetary economic design it set up, if places around the world start leaving its game then we'll, in my guess, see much of what it is just fade away as its major structures (in in the senses and aspect they are now, specific orgs will still literally exist but some may truly disappear) couldn't survive a US current account crisis and inability to fund the federal deficit.
***I once read this letter from Marx about "Cosmopolitans", and he said the ones he was referring to are social groups who become distinct social groups, the social group that roughly makes up much of an imperial structure's transnational bourgeoisie, its petite bourgeoisie, and other categories of its human element, along with those who would aspire to join them. And he made some interesting comments about how they can tacitly coordinate like an pre history tribe would to collectively steer the great ship of the empire towards war with a rising or recalcitrant power, like the pre historical tribe would attack another tribe that appeared in the area based off instinct. I'd have to remember what those arguments are though...