August 10th, 2020

Ships in Port

UNEMPLOYMENT

It's been over a week since Congress allowed the Federal Pandemic Unemployment Compensation scheme to lapse, and negotiations over an extension have reached a gridlock. But even prior to its end, access to the enhanced benefit was far from equal across the country—a host of administrative and practical hurdles in states like Florida and Alabama prevented scores of applicants from receiving aid.

The absence of a functional and unified federal unemployment scheme is a characteristic feature of America's patchy safety net. In a 1987 paper, Edwin Amenta, Elisabeth S. Clemens, Jefren Olsen, Sunita Parikh, and Theda Skocpol trace the history of this decentralized structure through a comparative analysis of 1930s UI legislation in Wisconsin, New York, Massachusetts, Ohio, and Illinois.

"The states, not the federal government, were the units that debated health and unemployment insurance bills and passed workers' compensation and mothers' pension laws during the Progressive Era and after. The debates surrounding unemployment insurance provide considerable insight into the political dynamics of industrial society. More than any other component of welfare policy, the states' response to unemployment politicized antagonisms between capital and labor. Moreover, the emergence of unemployment as a legitimate target for state action entailed both the development of a politically viable interpretation of the cause of unemployment, and decisions concerning the appropriate extent of the government's intervention in the economy.

Neither organized labor nor political parties have been identified as important shapers of Social Security. But, as we have seen, a programmatic political alliance between organized labor and the Democratic party did shape generous unemployment insurance in New York, and the influence of labor, mediated by Democratic parties, also mattered in Massachusetts, Ohio, and even Illinois. Moreover, in Wisconsin, the 1932 unemployment benefits law grew out of patterns of administrative-led political bar- gaining established in the Progressive Era. This bargaining included organized labor and its political allies, the Milwaukee Socialists; it also occurred in a partisan context marked by the strong influence of Progressive Republicans. In short, if we examine politics at the state level, we discover that organized labor and political parties (as actors and as organizational structures) played a much more important role in the shaping of American unemployment insurance than nationally focused research reveals."

Link to the piece.

  • A report from the New York State Department of Labor provides a legislative history of UI following the passage of the Social Security Act in 1935, with an appended chronology of significant legislative changes on the federal and state level. Link. And two Congressional Research Service reports summarize the structure of the current federal system, including that of the Unemployment Trust Fund which supports states in the case of insolvency. Link and link.
  • In a 1990 paper, Steve Valocchi examines the internal dynamics of the unemployed workers movement in the 1930s US: "The movement's inability to change its organizational form in the face of early New Deal reforms led to the precipitous decline in protest activity in 1934." Link.
  • "Governments shape the meaning of unemployment through policies and public declarations. Some kinds of joblessness come to 'count' as unemployment while others do not." In a 2004 book, Philip Baxandall situates categories of unemployment in Hungary within the country's changing political context. Link.
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August 3rd, 2020

Nocturnal Pasture

OFFSHORING

Much research has documented the vast sums of "missing wealth" stored in tax havens, and detailed its implications for inequality, fiscal policy, and economic growth. Less present in the discussion is the institutional and political history of these offshore financial centers.

In a 2017 paper, VANESSA OGLE recounts the making of what she terms the offshore "archipelago"—the various institutions that, outside of the core of powerful nation-states, became central to the international financial system. From the paper:

"Contemporary definitions of tax havens are often too static to capture the more fluid and multifaceted legal constellation among such sites as they appear to the historian. In the age of empire, the natural state of affairs entailed legal unevenness. This world was made up of centralized nation-states, multiethnic land empires, overseas empires with their colonies, protectorates, settlements, and dominions, as well as 'informal empire' with its regimes of extraterritoriality and legal pluralism. Local administrations in overseas territories had considerable leeway in drafting company and bank laws or tax codes and accounting standards for these respective entities and sub-entities. Legal and political unevenness greatly benefited tax avoidance on a global scale.

As empires came undone, an archipelago-like landscape of distinct legal spaces re-created some of the unevenness that had characterized the nineteenth century. Yet in the twentieth century, this offshore world and the unevenness it offered existed in and for a world order in which bounded, homogeneous national state spaces and generally sizable nation states had eventually become the norm. The New Deal, the European welfare state, decolonization, and the Bretton Woods system were state-based and government-driven projects. The offshore world emerged on a more significant scale precisely at the moment when these state-based projects began to assume their greatest importance. It consisted of tax havens, flags of convenience registries, offshore financial markets and banking institutions, and special economic zones. This landscape allowed free-market capitalism to flourish on the sidelines of a world increasingly dominated by larger and more interventionist nation-states."

Link to the piece.

  • Antonio Coppola, Matteo Maggiori, Brent Neiman, and Jesse Schreger recalculate global capital flows, accounting for cross-border financing and tax havens: "We find that portfolio investment from developed countries to firms in large emerging markets is dramatically larger than previously thought. The national accounts of the United States, for example, understate the U.S. position in Chinese firms by nearly $600 bn, while China’s official net creditor position to the rest of the world is overstated by about 50 percent." Link.
  • Drawing on interviews with key informants from banks, shell companies, foreign real estate, and investor citizenship programs, Alexander Cooley and J. C. Sharman argue that "professionals in major financial centers serve to lower the transaction costs of transnational corruption by senior foreign officials." Link.
  • Daniela Gabor and Cornel Ban's 2017 paper on the political economy of shadow banking. Link. And Jan Fichtner's 2016 "anatomy" of the Cayman Islands offshore financial center. Link.
  • The 2011 book The New Fiscal Sociology, edited by Isaac Martin, Ajay Mehrotra, and Monica Prasad, marks and collects interdisciplinary research in the comparative history and politics of taxation. Link.
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July 27th, 2020

Avey From Cane

PUBLIC HEALTH FEDERALISM

Catastrophic deficiencies in the federal response to the Covid-19 pandemic have led to renewed discussion over federalism and its discontents. The divergence among state responses to the crisis in the absence of federal guidance has produced analyses of Trump’s unique, “narrow” sense of federalism, pronouncements of “a new era of federalism,” and hopes for a solidarity-minded “civic federalism.”

In a 1997 article, health law professor JAMES G. HODGE JR. analyzes the impact of state-centric “new federalism” jurisprudence on the government’s ability to realize public health goals. Hodge places new federalism in the context of decades of increasing intrusion by the federal government on states’ power over public health policy:

"The impact of new federalism on the field of public health law is seen in the history of public health regulation. The metamorphosis of public health regulation from purely local to predominantly national means resulted from increased federal presence in the field corresponding to a deemphasis on traditional federalism. It is an inescapable conclusion that an increased federal presence shifted public health goals. National public health priorities dominate local ones. New federalism restrains the federal intrusion on state public health powers by requiring Congress to operate within the constraints of the political process. As a result, state police powers exercised in the interest of public health are strengthened emphatically by the political process confining federal authority to enter the field."

Full paper available here.

  • In an article published this April, Hodge reassesses federal vs. state public health powers in light of disparate responses to the pandemic: "Americans are left wondering, 'which level of government is actually in charge here?' In the face of a pandemic like Covid-19, the answer under principles of federalism is increasingly clear: neither." Link.
  • "American federalism—with its fissures and fractures—haunts the state of emergency." A March post from Phillip Rocco. Link. (See also Rocco's recent post on fiscal federalism in Notes on the Crises.) Along similar lines: Rocco, Daniel Béland, and Alex Waddan on the fiscal barriers to pandemic response. Link. And Nicole Huberfeld, Sarah H. Gordon, and David K. Jones argues that the pandemic has magnified the state-level inequities fostered by federalism. Link.
  • For another view on the relationship between federalism and public health: A 2014 paper by Adam Varvel on the West Nile outbreak of 1999. Link. See also: A post-SARS policy brief on the impact of federalism on international health regulations. Link.
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July 20th, 2020

Dramatic Fire

CENTRAL BANKS AND CLIMATE

Common wisdom around central bank independence (CBI) is increasingly a matter of debate. Before the Covid-19 crisis, a growing number of scholars and commentators have proposed means by which central banks can address looming climate catastrophe—either by integrating new risks into their assessments, or by promoting more active resource allocation—and argued that central bank's attention to climate risk has focused too squarely on financial stability.

In a 2018 working paper, SIMON DIKAU and ULRICH VOLZ outline how, despite the "second-best" nature of this kind of intervention, the shift is already occurring:

"Allocating financial resources toward or away from certain sectors and companies implies favoring certain segments of the economy over others and appears to be incompatible with our modern understanding of independent central banks. Nonetheless, many central banks in emerging and developing economies have resorted to these policies as viable, second-best solutions to promote sustainable development and green investment. The notion of the neutrality of monetary policy has come under intense scrutiny more recently, not least in the context of discussions about the distributional consequences of the negative interest and quantitative easing policies adopted by major central banks. It is apparent that central banks in developing and emerging economies especially, and in Asia in particular, have been at the forefront of using a broad range of instruments to address environmental risk and encourage green investment."

Full paper available here.

  • On VoxEU, Markus K. Brunnermeier and Jean-Pierre Landau on the applicability of central banking tools for the climate crisis: "The conventional wisdom on monetary policy is that it has no impact on long-term growth; its influence is mostly felt on a 1.5 to 2.5 years horizon. By contrast, climate change is all about the long term; effects and policies materialize and matter over several decades." Link.
  • An IMF report by Pierpaolo Grippa, Jochen Schmittmann, and Felix Suntheim surveys the field: "Climate change will affect monetary policy by slowing productivity growth (for example, through damage to health and infrastructure) and heightening uncertainty and inflation volatility." Link.
  • As governor of the Bank of England, Mark Carney gave an oft-cited 2015 speech, proposing a scheme of physical risks, liability risks, and transition risks. Link. And Jean Boivin argues for abandoning CBI in the face of Covid. Link.
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July 13th, 2020

Through The Fields

ORGANIZED NETWORKS

Michael Mann's four volume magnum opus, The Sources of Social Power, analyzes the history of human societies from antiquity to the present. Theoretically, the work's major contribution is the so-called IEMP model, which examines historical shifts through the relations between ideological, economic, military, and political power. In Mann's work, no single source of power takes analytical precedence over any other.

From the third volume:

"We may distinguish distributive from collective power—that is, power exercised over others, and power secured jointly through cooperation with others. Power may also be authoritative or diffuse. The former involves commands by an individual or collective actor and conscious obedience by subordinates, and the latter spreads in a relatively spontaneous and decentered way. Finally, it can be extensive, organizing large numbers of people over far-flung territories, or intensive, mobilizing a high level of commitment from a limited group of participants. The most effective exercise of power is collective and distributive, extensive and intensive, authoritative and diffuse. That is why a single source—say, the economy or the military—cannot alone determine the overall structure of societies.

The four power sources offer distinct organizational networks and means for humans to pursue their goals. But which means are chosen, and in which combinations, depends on interaction between what power configurations are historically-given and what emerge interstitially within and between them. This is the main mechanism of social change in human societies, preventing any single power elite from clinging indefinitely onto power. The sources of social power and the organizations embodying them are promiscuous. They weave in and out of each other in a complex interplay between institutionalized and emergent, interstitial forces."

Link to the introduction.

  • "The expansion of global networks seems to weaken local interaction networks more than national ones." In a 2011 paper, Mann complicates popular analyses of globalization. Link.
  • Collected reflections on Mann's work, with commentary from Robert Brenner, John Hobson, and David Laitin, among many others. Link.
  • "The oligarchic regime of the Roman conquest state was maintained as long as political, military, and ideological power were controlled by the same aristocratic collective. Once military power broke from political and ideological constraints, the rule of the collective was replaced by warlords and monarchs." Walter Scheidel draws on Mann's framework in his comparative history of ancient Rome and China. Link.
  • "Michael Mann can confidently say that the relationship between revolutions and geopolitical pressures is 'as consistent a relationship as we can find in macrosociology.' Yet no such correlation exists in Latin America." Miguel Angel Centeno challenges Mann's conclusions with a history of Latin American nation-states. Link.
 Full Article

July 6th, 2020

Desert Walk

GOLD RUSH

Historically, the expansion of the American frontier symbolized a unity between political liberty and economic growth, at the same time as it justified the violent expropriation that continues to define the country's racial and distributional politics.

In a 1998 article, environmental historian DONALD J. PISANI analyzes these dynamics through the monopolization of California's mining industry, arguing that legislation enacted during the California Gold Rush shaped the trajectory of property relations in the American West.

From the piece:

"Those who flocked to California at the end of the 1840s carried with them strong ideas about the nature of property, the right of American citizens beyond the pale of law to govern themselves, and the power of American citizens to make their own rules concerning the acquisition and use of public lands—including those containing mineral deposits. Nevertheless, Congress had authorized the sale of lead and copper lands. Would it now authorize the sale of gold-bearing land to the highest bidders? This was the question that faced the U.S. Army in California when gold was discovered in January 1848.

In the late 1840s and early 1850s, free mining provided reasonably equal access to wealth. But during the 1850s, as corporations increasingly dominated mining, the law changed from encouraging economic democracy to protecting capital. Perhaps the best example was the legal permission to "follow the vein." Initially California's mining camp codes limited hardrock miners to part of a vein, often one hundred feet. As early as 1852, however, Nevada County modified its laws to encourage miners to follow a vein downward to any depth and in any direction, even if they tunneled under an adjoining claim. The new laws were designed to protect investors from financial loss when only the tail end of an out cropping was located within their claim. For decades after the golden years of the mining industry had passed, these monopolies enjoyed disproportionate power in the legislature."

Link to the open access article.

  • "War and emancipation brought profound change not only to the lives of enslaved people but also to broader patterns of economic development, forms of governmental activity, and, above all, property relations." Emma Teitelman examines the "transregional wave of land enclosures" that took place during reconstruction. Link. (Stay tuned for Teitelman's forthcoming piece in Phenomenal World.)
  • Paul Gates' History of Public Land Law Development offers a comprehensive account of legislation regulating the use of the public domain. Link.
  • "The claim club or squatters' association has long occupied a place in western history. No historian, however, has fully explored the social interactions in these frontier groups." Allan G. Bogue examines the dynamics within the squatters associations which proliferated across the West in the early 19th century. Link. And Alan Derickson's excellent book tells the history of hardrock miners' self-organized health and welfare programs, which emerged in the following decades. Link.
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June 30th, 2020

Rooftops

DEVELOPMENT AND SOCIAL POLICY

Brazil's Bolsa Familia is widely credited with lifting more than 20 million people out of extreme poverty, making it a global model for anti-poverty initiatives. Developed as part of a broader theory of equitable development, it serves as the basis for ongoing efforts to expand the social welfare system for the country’s poor and working class.

In a 2017 book, economist LENA LAVINAS takes a critical approach to Brazilian social policy. Examining the relationship between social policy and financial markets, Levinas argues that, despite its successes, the strategy of "social developmentalism" in Brazil unwittingly entrenched both unequal growth and the stagnation of social protection.

From the book:

"The twenty-first century seemed poised to pluck Brazil from its history of underdevelopment. After suffering through two decades (1980–2003) of low growth and considerable macroeconomic instability, Brazil—in step with the rest of Latin America—was ready to begin a series of rosy years. In the new developmental strategy, the missing link on the way to social cohesion, so the argument went, would emerge with the advent of mass consumption. In Brazil, as in the rest of Latin America, the core impediment to the expansion of a mass consumption society resided (above all else) in the absence of mechanisms for boosting consumption in the context of low productivity and the persistent oversupply of labor.

Performance in terms of the provision of public facilities has not tracked remotely close to the vitality of the market. It does, however, reveal welfare inequities that the market obscures. Through this prism, the upward social mobility observed in Brazil in the years spanning 2003–2014 failed to even come close to promoting a true expansion of the country’s middle classes. Social policy served as collateral to access financial markets through credit. In Brazil, the market has universalized access to color TVs and fridges among those in the lowest income quintile. Treated water, however, to say nothing of adequate sanitation, remains a luxury, the province of few."

Link to the publisher's page.

  • A 2018 by Lavinas details one of the book's arguments—"the collateralization of social policy." Link. And a 2013 paper by Lavinas examines the broad adoption of conditional cash transfer schemes throughout Latin America. Link.
  • In a 2014 paper, Michael McCarthy examines union attempts to control pension fund investment. Link. Another paper by Natascha van der Zwan on the financial politics of occupational pensions. Link. See also: McCarthy's book Dismantling Solidarity, on these same themes. Link.
  • Marie Gottschalk's book The Shadow Welfare State examines the American "private-sector safety net." Link. See also: Frank R. Dobbin's 1992 paper "The Origins of Private Social Insurance: Public Policy and Fringe Benefits in America, 1920-1950." Link.
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June 24th, 2020

Running Horse

LABOR IN CHINA

In her 2007 book, Against the Law: Labor Protests in China's Rustbelt and Sunbelt, sociologist CHING KWAN LEE paints an intricate portrait of the two segments of the Chinese working class that have most acutely experienced the country's changing political economy: laid-off and retired workers in China’s industrial rustbelt, and young migrant factory workers in the export-oriented sunbelt.

From the preface:

"Although unemployment and exploitation can be found in many places and at different times, peculiarities of China’s postsocialist conditions have engendered features of labor politics that defy conventional categorization. First, the law, fledgling legal institutions, and the rhetoric of legal rights are central to labor protests throughout China, even though very few workers actually believe in the effectiveness of the regime’s ideology of law-based government. Second, leading to the formation of neither a national labor movement nor representative organizations, the several thousand worker protests that erupted every year throughout the 1990s took the prevailing form of localized, workplace-based cellular activism. With workers blocking traffic in the streets, lying on railroads, or staging sit ins in front of government buildings, these demonstrations presented a palpable threat to social stability, at least in the eyes of the national leadership. What must be emphasized, however, is that workers’ cellular activism has thus far rarely escalated into large-scale, coordinated, cross-regional unrest.

What, then, is the nature of working-class agitation in this period of marketization and globalization? Above all, I have found that the communist regime’s strategy of accumulation, in the form of what I term 'decentralized legal authoritarianism,' both generates the impetus for and places limits on working-class protests in this period of market reform. This larger political economic context of reform shapes not only collective mobilization by workers but also popular rebellion in general, and therefore is a key to understanding the institutional foundations of China’s economic dynamism and sociopolitical tensions."

Link to the publisher's page.

  • "Labour strikes in China are always launched by unorganized workers rather than by trade unions." Feng Chen on China's quadripartite wage setting system. Link.
  • "This chapter investigates the role of social networks during China's most dynamic period of urban protest (1919–1927) in Shanghai." A 2007 book chapter by Elizabeth Perry. Link. See also: Perry's groundbreaking 1993 book on Chinese labor politics in the early 20th century, and her 1980 analysis of peasant rebellions in Huaipei from 1845–1945. Link and link. ht Julian G.
  • Meg Rithmire reviews regional approaches to Chinese political economy, asking: "How have local governments differently interpreted and implemented national reform policies? What explains different decision-making regarding investments and growth strategies? And how have different local growth strategies beget different socioeconomic consequences?" Link.
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June 18th, 2020

Phenomenal Works: Mehrsa Baradaran

Banking between states and markets

Mehrsa Baradaran is a Professor of Law at UC Irvine. Her research situates the American banking system within a dense network of legal, historical, and political relationships. Her first book, How the Other Half Banks, exposed the vast disparities in access to credit generated by the financial deregulation of the 1970s. The solution to these disparaties, the book argues, is restoring the system of postal banking which was foundational for American democracy. Baradaran's 2017 book, The Color of Money, investigates the institutional factors perpetuating the racial wealth gap. The book forcefully argues that in a segregated economy, black banks suffered from the same poverty they were meant to mitigate. Her writing urges scholars, practitioners, and the public to reenvision banking as a public good.

Baradaran is a contributing editor to Law and Political Economy, where she writes about federal banking regulations, exploitative banking practices, and the development of racial capitalism in the United States. She is co-editor at Just Money, a forum for research and policy analysis which views money as a legal entity. Her recent popular articles have also been featured in The Atlantic, the New York Times, and the Washington Post. She tweets here.

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June 15th, 2020

Green Stripe

GUARD LABOR

As debate and discussion continues over reforms to US policing, attention has been drawn to the share of municipal and state budgets dedicated to police departments. While a useful proxy of governmental priorities, these budgets only tell part of the complex story of the role and function of police in society.

In a their 2008 book chapter titled "The Enforcement-Equality Trade Off," ARJUN JAYADEV and SAMUEL elaborate the role of what they term "guard labor"—the labor units "devoted to the maintenance of order."

From the chapter:

"In order to maintain order, all societies allocate resources to defence, policing, surveillance, contractual monitoring and other activities that sustain the property rights and other claims that characterise status quo institutions. Data from the United States indicate a significant increase in its extent in the USA over the period 1890 to the present. Cross-national comparisons show a significant statistical association between income inequality and the fraction of the labour force that is constituted by guard labour, as well as with measures of political legitimacy (inversely) and political conflict.

Continental European welfare states devote considerably less resources to the maintenance of order than do the English-speaking economies. A possible explanation is that these economies divert fewer resources from directly productive uses to guard labour by undertaking larger transfers of claims on resources in the form of social expenditures and higher wages."

Link to the report.

  • For more on guard labor, link to a 2019 newsletter, in we shared Jayadev's classic 2006 paper with Samuel Bowles on guard labor. Also shared in that letter, a 2014 Times op-ed by Bowles and Jayadev on the subject, with an unbeatable infographic comparing the US' share of guard labor to other rich nations.
  • See Jayadev's paper "Estimating Guard Labor" for more on the employment statistics behind their analysis. Link. And link to a 2018 blog post on police and prison spending in the US and Europe. Link.
  • For more on the relationship between the labor market and policing and prisons, see this recent paper by Seth Prins and Adam Reich. Link. See also a 2002 paper by Eric Gould et al on crime rates and labor market opportunity from 1979-1997. Link.
  • "Inequality and Guard Labor, or Prohibition and Guard Labor?" by Vincent Geloso and Vadim Kufenko. Link.
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