January Round-up
Recently I’ve been thinking about this: If I want beautiful things to exist in the world, it’s up to me to support those things.
It’s in that spirit, then, that I’d like to talk for two seconds about the Criterion Channel. Though I’d heard of the Criterion Collection, I didn’t know they also had a streaming channel until about a year ago when a good friend of mine turned me onto it.
Now, I watch it nearly every day, and I’ve seen so many incredible, even life-changing, movies over the past year, (like Tampopo, Playtime, The Bad Sleep Well, Paris, Texas, The Player) nearly all of which I’d never even heard of before. (This isn’t all that surprising: Growing up, I rarely watched movies that didn’t have a title you could easily tack a “2” or “3” onto without losing much).
I’m even willing to take this one step further (for some reason) and gift you a free month if you’re interested. I know exactly how this sounds (I work in marketing), but this isn’t a weird promotion, I have ZERO connection to Criterion, and there’s no strings attached. I just love the channel so much that I want as many people as possible to get hooked into it. And yes, I’m aware that makes me sound like a raving lunatic. Oh, well.
So, if you’re interested, either reply to this email or leave a comment and let me know which email you want me to send the subscription to. And just to get out ahead of this thing in case it turns into a gold rush or something, I can only reasonably afford to do a few of these so it’ll have to be a first-come, first-served kind of a thing.
Anyway, round-up articles are below.
Enjoy!
Just a note: these articles weren’t necessarily published in January, I just happened across them this month (the Ross Perot clip at the bottom is the exception, I remembered it vaguely this morning and was curious to hear it again).
The Fed’s Doomsday Prophet Has a Dire Warning About Where We’re Headed
By Christopher Leonard at Politico about Thomas Hoenig, the retired former Federal Reserve official and the only one who consistently voted “no” to Ben Bernanke’s implementation of “Quantitative Easing” (the injecting of $3.5 TRILLION in new bills into the banking system over 6 years) following the financial crisis of 2008.
While Hoenig was concerned about inflation, that isn’t what solely drove him to lodge his string of dissents. The historical record shows that Hoenig was worried primarily that the Fed was taking a risky path that would deepen income inequality, stoke dangerous asset bubbles and enrich the biggest banks over everyone else. He also warned that it would suck the Fed into a money-printing quagmire that the central bank would not be able to escape without destabilizing the entire financial system.
On all of these points, Hoenig was correct. And on all of these points, he was ignored. We are now living in a world that Hoenig warned about.
Special Investigation: The Dirty Secret Behind Warren Buffett’s Billions
By David Dayen at The Nation about how “America’s folksiest billionaire” built his massive wealth through intentional investment in predatory, extractive, and tax-evading monopolies.
Buffett makes no secret of his fondness for monopoly. He repeatedly highlights the key to his personal fortune: finding businesses surrounded by a monopoly moat, keeping competitors at bay. “[W]e think in terms of that moat and the ability to keep its width and its impossibility of being crossed,” Buffett told the annual Berkshire Hathaway meeting in 2000. “We tell our managers we want the moat widened every year.”
America isn’t supposed to allow moats, much less reward them. Our economic system, we claim, is founded on free and fair competition. We have laws over a century old designed to break up concentrated industries, encouraging innovation and risk-taking. In other words, Buffett’s investment strategy should not legally be available, to him or anyone else.
Over the past 40 years, however, the United States has not only failed to build bridges across monopoly moats; it has stocked those moats with alligators. Two-thirds of all US industries were more concentrated in 2012 than in 1997, The Economist has documented. Since the Reagan era, the federal government has abandoned antitrust enforcement, with markets for products like eyeglasses, toothpaste, beef, and beer whittled down to a few suppliers. This consolidation has vastly inflated corporate profits, damaged workers and consumers, stunted economic growth, and supercharged economic inequality
Pretending Monopoly Has Nothing to Do With Inflation
By Paul Glastris at Washington Monthly on how mainstream (neoliberal) economists like Larry Summers have lined up to counter the Biden Administration’s claim that monopoly power fuels inflation.
Thanks to lax antitrust enforcement, four companies now control 55 to 85 percent of the markets for beef, pork, and poultry. Since the fall of 2020, the price of beef has risen by more than 20 percent, far higher than the inflation rate. At the same time, the profits of the meat-packing industry are up more than 300 percent. Consolidation is hardly limited to the meat industry. It is rampant throughout the economy. So too are recent corporate profit rates, as anti-monopoly researcher Matt Stoller has calculated.
But for argument’s sake, let’s say that the Post and the economists are right—that predatory pricing by oligopolistic firms isn’t driving the current inflation, but rather, “supply chain hiccups” as the Post editors say, brought on by pandemic induced labor shortages and high demand. The question is, why were the supply chains so fragile in the first place?
The answer is monopoly—in particular, the hollowing out of capacity as a result of industry consolidation and Wall Street’s demand for short term profits. Consider the case of semiconductors—crucial components in most of the products we use. As recently as a decade ago, America was producing vast numbers of cutting-edge semiconductors right here on our shores.
Since then, as Garphil Julien recently explained in the Washington Monthly, the federal government has allowed the biggest domestic manufacturer, Intel, to buy up or drive out most of its U.S. competitors. The firm then offshored or sold off its U.S. manufacturing capacity to reduce costs. That boosted Intel’s stock price and delighted investors. But it left the company with scant domestic capacity to increase supply when COVID-19 shut down Asian semiconductor factories. The falloff in semiconductor supply has led, in turn, to shortages of, and higher prices for, everything from cars to cell phones.
Speaking of Larry Summers
This Twitter thread by economist Hal Singer highlights how Summers has been incredibly wrong about nearly everything for decades now.
The next time Larry Summers pipes in on antitrust, or student loans, or anything really, it’s important to remember how wrong he’s been on prior policy matters.
This collection of Summers’ errors comes from Applebaum’s The Economist Hour. 1/n
Can a Company Patent the Basic Components of Psychedelic Therapy?
By Shale Love at Vice about one company’s attempt to monopolize the psychedelic therapy market through the use of overly broad patent applications.
The patent application, filed in 2020, for “treatment of depression and other various disorders with psilocybin," includes claims involving rudimentary facets of psilocybin-assisted therapy like having "a room with a substantially non-clinical appearance.” Other claims found in the application: "the room comprises soft furniture,” “the room is decorated using muted colors,” “the room comprises a high-resolution sound system,” and “the room comprises a bed or a couch.
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Compass Pathways has previously been criticized for its transition from a charity into a for-profit drug company. “Compass Pathways has relied on conventional pharmaceutical-industry tactics that could help them dominate the field, including blocking potential rivals’ ability to purchase drugs, filing an application for a manufacturing patent, and requiring contracts that give Compass power over academics’ research and are restrictive even by pharmaceutical-industry standards,” Olivia Goldhill wrote in a 2018 article for Quartz.
2021 Shkreli Awards
There’s some real gems in here.
The Lown Institute has issued its top ten list of the worst examples of profiteering and dysfunction in health care, named for Martin Shkreli, the price-hiking “pharma bro” that everyone loves to hate. This year we’re highlighting “innovative” profiteers, who have particularly creative ways of milking the health system for money.
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In 2008, a box of 30 Indocin suppositories, an arthritis treatment, sold for less than $200. In 2021, the same box was more than $10,000, Axios reported. How did this happen? The original owners of Indocin, Iroko Pharmaceuticals, raised the price a dozen times over the course of ten years; by 2018, the list price was $2,550. Then after the company was sold, the new owners Egalet doubled the price to about $5,000. And in May 2020, another company shift led to a new owner Assertio, and more price increases. The price as of October 1, 2021 was $10,350. That’s $345 for each suppository.
How Big Pharma Was Captured by the One Percent
By Alexander Zaitchik at The New Republic (published in 2018), about how neoliberal/libertarian economists aided Wall Street executives in their push to deregulate the pharmaceutical industry and monopolize government-funded medical research.
“Pharma was the perfect test case for a neoliberal project that celebrates markets, but is fine with large concentrations of power and monopoly,” says Edward Nik-Khah, a historian of economics who studies the pharmaceutical industry at Roanoke College. “Stigler and those influenced by his work had very sophisticated ideas about how to audit and slowly take over the agencies by getting them to internalize [their] positions and critiques. You target public conceptions of medical science. You target the agencies’ understanding of what they’re supposed to do. You target the very thing inputted into the regulatory bodies—you commercialize science.”
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Presidents from Reagan through Clinton continued to push legislation friendly to pharmaceutical manufacturers. The 1983 Orphan Drug Act provided extended licenses and tax waivers on drugs targeting rare and genetic diseases. A 1986 tech transfer bill established “Cooperative Research Centers” that gave industry a direct presence in federal labs, and established offices to assist in transferring the fruit of these labs to their new commercial partners. Under Clinton, who would consistently expand private access to government research, the FDA Act of 1997 opened the era of direct television drug marketing.
By the early 1990s, a new monster had emerged: an emboldened, triumphant, and fully financialized Pharma. It would help defeat Bill Clinton’s health reforms and go on to reshape the industry, not as something geared toward public needs, the high-risk development of breakthrough drugs, or even long-term profitability, but as a business focused narrowly on predatory value extraction: scooping up government-funded science, gaming the system to extend licenses and delay generic competition, and aggressively seeking short-term stock boosts through maximum pricing, mergers, acquisitions and takeovers.
Anti-monopoly Activism: Reclaiming Power through Racial Justice
Jeremie Greer and Solana Rice at Liberation in a Generation make the case that monopolies disproportionately harm minority communities—and give clear directions as to what we should do about it.
Humanity cannot be extracted from or ignored in economic debates. We at Liberation in a Generation know that racial justice is economic justice. Our friends at the Groundwork Collaborative coined the phrase, “we are the economy.” At its core, the economy is made up of people—consumers, workers, business owners, community members, politicians, and so many others. It is also influenced by human constructs, such as culture, religion, and of course racism.
Conversations about the economy are often overly technical, which removes the human impact of the discussion—an often intentional choice. These technocratic conversations are often overly academic and totally removed from the lived experiences of people who exist, day in and day out, within the economic systems being debated. Also, these technical conversations cover up the human pain and the racism responsible for that pain, often purposely. This is one way that racism is removed from economic discussions and debates.
This section attempts to have a human- and race-centric conversation about the real impact and consequences of monopolies in our economy. Here, we explore how monopolies take away our power and generally maintain systems of oppression, centering the cost to people of color and featuring real-life examples
How did your Congressperson’s stock trades beat the market?
A short Twitter thread from @unusual_whales documenting the outstanding trading performance of members of congress in 2021.
I have just released the full trading report on politicians in 2021. In short, many beat the market. They traded more than ever before. And they made numerous unusually timed trades, resulting in huge gains.
Gold country: A precious metal, a mining mega-corp and a captive workforce
By Nick Bowlin and Daniel Rothberg at High Country News about how a gold-mining mega-merger in Nevada completely reshaped the economy of Northern Nevada and had an outsized impact on the community.
In the final days of 2019, Ches Carney noticed something strange on the bulletin boards at the northern Nevada gold mines where he had worked for nearly three decades. Stores in the nearby town of Elko were playing holiday music, but Carney was upset: The labor union documents, normally posted to bulletin boards, had disappeared.
As a union steward for the International Union of Operating Engineers Local 3, he advocated for his co-workers in disputes with the company. Near the end of the year, the name on Carney’s paycheck changed from Newmont, one of the world’s largest metal miners and an operator of several unionized mines in the area, to something different: Nevada Gold Mines. When Carney confronted a supervisor about the missing union documents, he said he was essentially told that the union was no more and to get over it. The union, which first organized Newmont workers in 1965, negotiated a new contract for about 1,300 production and maintenance workers in early 2019. But by the end of that year, management stopped recognizing it. There was a new boss in town.
The Capital Sponge
Lyn Alden is a professional investor of some sort (I’m not totally sure what she does), and she puts out a regular newsletter. This one in caught my attention because she breaks down quite clearly (and in neutral language) the policy decisions over the last 40 years that made the US economy so dependent on forever-rising stock prices.
Each country generally has a set of political priorities, and those priorities can change over time. Compared to other developed nations, the US has favored its corporate sector above most else since the early 1980s, which made the US stock market an attractive sponge to absorb capital from everywhere.
As a result, the US stock market capitalization currently represents 61% of the global stock market capitalization, despite the fact that US GDP is only 23% of global GDP.
This also means, however, that the US economy is more reliant on consumer spending and external financing than most other developed countries. As a result, the “tail can wag the dog”, meaning that a drop in the stock market can negatively affect consumer spending, economic growth, and foreign investment to a greater extent for the US than other developed countries.
For example, public US equities now represent about 200% of US GDP, which is an all-time high.
If the stock market falls by one quarter, it would evaporate an amount of net worth that is equal to about half of the country’s GDP. That doesn’t mean GDP itself goes down by 50%, but it means that a massive amount of purchasing power relative to the size of the economy would go away if even that type of moderate price decline were to occur and remain down for a while.
Price Rankings by City of Price per Square Meter to Buy Apartment in City Centre (Buy Apartment Price)
We tend to think of housing costs in America as being astronomical, especially lately, but how do they stack up to other countries? The link above ranks 496 cities around the world by price per square meter of an apartment in the city center. City number one, apparently, is the Ugandan city of Kampala.
Ross Perot in 1992 on NAFTA and the “Giant Sucking Sound”
This is the famous clip from the presidential debate in ‘92 between George H.W. Bush, Bill Clinton, and Ross Perot. In this clip he’s explaining how the North American Free Trade Agreement (NAFTA) will destroy our industrial base and wreck havoc on our blue collar workforce by shipping jobs to a country with lax labor laws and no environmental protections, all in the name of inflating corporate profits.