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August 26th, 2020

↳ History

Banks, Bubbles, Profits

An interview with Richard Westra

Richard Westra is University Professor at the Institute of Political Science, University of Opole, Poland and international Adjunct Professor of the Center for Macau Studies, University of Macau. His research focuses on the philosophical underpinnings of economic phenomena, with an emphasis on financialization, globalization, and neoliberalism. His many writings also consider the politics of states of exception, legalization of politics, and the study of global apartheid.

Alongside Robert Albritton, Makoto Itoh, and Thomas Sekine, Westra traces his intellectual lineage to Japanese political economist Kozo Uno (1887–1977). Arising largely out of debates about the nature of the transition from feudalism to capitalism in Japan, Uno’s thought responds to a need to comprehend social-economic forms displaying “mixed” characteristics—mixed modes of production (i.e. feudal societies with capitalist characteristics or vice versa) and mixed economies (i.e. socialistic economic forms internal to capitalist economies or vice versa), as well as “capitalist” economic activity in pre-capitalist societies. Both Uno and Westra’s work is therefore concerned with reconciling the “law-like” aspects of economic phenomena with the contingency of empirical history. The task of analytically articulating these mixes necessitates a theoretical understanding of capitalism in its most pure and general form.

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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 22nd, 2020

Laws of the Land

Property rights and extraction in the mineral frontier

“The Mining Law of 1872,” reported California Democrat Alan Lowenthal in May 2019, "is one of the most obsolete laws still on the books.” At a hearing before the House Subcommittee on Energy and Mineral Resources, Lowenthal was rehearsing a longstanding critique of antiquation against hard rock mineral legislation—a law to privatize federal mineral lands that has remained in place since the nineteenth century.

For decades, this statute has come under scrutiny, with Congressional hearings on its merits held under every President since George H. W. Bush. Two objections are raised consistently. The first is that, in contrast to developers in other extractive industries, hard rock mining corporations may purchase Western mineral lands from the federal government for the minuscule price of \$5.00 per acre, and are charged no royalties on the resources they extract. This nearly 150-year-old arrangement remains a major gift to multinational corporations: in 1994, the US Interior Department sold about 1,949 acres in Nevada to the Barrick Resources Corporation. The land contained 30 million ounces of gold, which was valued at \$380 per ounce. Sold for just under \$10,000, the land was worth billions. A small royalty commensurate to those of other extractive enterprises would by now have generated hundreds of millions of dollars for the public.

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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 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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June 8th, 2020

The Burning

POLICE UNIONS

As commentators and policymakers have scrambled to find explanations for and responses to the unprecedented uprisings against police brutality across the United States, interest in the role of police unions in local politics has soared. Recent research into the question joins a decades-long debate in the labor movement over the distinctive character of police associations—not only as regards their power relative to the public, but also their political strength relative to the rest of the public sector.

A 2017 research paper by CATHERINE FISK and L. SONG RICHARDSON examines the evolution of US police unions, analyzes their impact on policymaking, and evaluates the efforts of cities to reform police departments over the past fifty years.

From the piece:

"Police officers formed local unions in various cities in the 1940s, and some police unions affiliated with national labor federations. However, well into the 1960s, police departments routinely fired officers who attempted to unionize, and courts upheld the power of cities to ban officers from joining unions. In the absence of legal rights to unionize or bargain collectively, government employee unions became adept at securing their members’ interests through political activity and negotiating informal agreements with public officials. Unions succeeded in gaining a lasting foothold in American police departments in the late 1960s. Not surprisingly, they negotiated for contractual protections against discipline and lobbied legislators to incorporate these protections in legislation. They opposed constitutional criminal procedure restrictions on police conduct and sought to block civilian oversight of police discipline. The legacy of the 1960s is collective bargaining agreements which make it difficult to investigate and punish officers to this day."

Link to the report.

  • "Cities which have low levels of police protections are also less likely to experience police abuse. Local-level politics does not have a salient effect on the level of police protections, but state labour laws have a significant impact on the level of protections which officers receive." Findings from a novel police protection index drawing on data from the US's 100 largest cities. Link. And a 2008 paper by Samuel Walker looks at, among other things, the relationship between the civil rights movement and the growth of police unions. Link.
  • Analyzing the consequences of a 2003 Florida Supreme Court decision which increased unionization among sheriffs' deputies, Dhammika Dharmapala, Richard McAdams, and John Rappaport find that "collective bargaining rights led to a substantial increase in violent incidents." Link.
  • A recent paper by Michael Zoorob looks at the electoral impact of the Fraternal Order of Police. Link.
  • "Until 1919, the AFL refused to charter police unions. The 1897 AFL convention rejected an application from a police group in Cleveland, explaining that 'it is not within the province of the trade union movement to organize policemen, no more than to organize militiamen, as both are often controlled by forces inimical to the labor movement.'" Joseph Slater's 2004 book recounts the tensions between police and the early American labor movement. Link.
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June 2nd, 2020

Clouds, Sun, Sea

UNREST AND POLICY

This week has seen policymakers, scholars, and the public debate the meaning of collective violence. While political and media discourse often fails to examine the long-term effects of social unrest, a vast literature grapples with the mechanisms that link protests and uprisings with institutional change.

A 1978 book by JAMES W. BUTTON integrates a vast amount of interviews, archival sources, and statistical data to analyze the public response to the US urban uprisings of the 1960s. Focusing the analysis on three federal agencies—the (now-dismantled) Office of Economic Opportunity, HUD, and the DOJ—the book suggests that the 1960s riots were understood by policymakers as political demands.

From the introduction:

"Although domestic collective violence has played a prominent role in American history, few other episodes of urban violence in this country's history have been as dramatic as the black riots of the 1960s. As a result, the causes, precipitating events, and participants of the outbursts have been thoroughly studied over the past several years. Yet what is remarkable about this extensive analysis is the almost complete neglect of the political effects or consequences of these pervasive disorders. By concentrating instead on the factors that may have caused the riots, most investigators have implicitly reflected a normative bias concerning the disutility of domestic violence for affecting social and political change.

The fundamental purpose of this study is to evaluate some of the political consequences of the urban black riots of the 1960s and early 1970s, focusing on responses of the executive branch of the federal government. In fulfilling such a task, it asks: did the riots affect executive officials' decisions and ultimately federal public policy? Did the federal executive branch respond differently to the initial, less intense riots (1963-1966) than it did to the later, more severe disorders (1967-1968) and, if so, why? how have national executive responses to urban rioting been affected by the local political and environmental context and by local reactions to such violence? And how do public officials tend to view the role of violence in American society?"

Link to the book page.

  • A new article by Omar Wasow examines the relationship between violent and nonviolent protests, media, public opinion, and policy alignment from the Civil Rights Era, and in particular on Nixon's election in 1968. Link. And a 2018 paper by Shom Mazumder looks at the persistent effects of Civil Rights protects on political attitudes. Link.
  • A 1978 paper by sociologist Charles Tilly on collective violence: "Historically, collective violence has flowed regularly out of the central political processes of western countries. People seeking to seize, hold, or realign the levers of power have continually engaged in collective violence as part of their struggles." Link.
  • In a 2007 article, historian Michael Kazin asks: "Many of the conditions thought to have precipitated the eruption of civil violence in the 1960s either persist or have grown worse. What accounts for the absence of civil violence on American streets?" Link. And a new book by Mike Davis and Jon Wiener looks at the 1960s in Los Angeles. Link.
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May 12th, 2020

The Giant

GREATER SHAPE

Public opinion and policymaking

Covid is changing popular attitudes towards the public sector, prompting many commentators to anticipate a new period of welfare expansion. Others are more skeptical, noting that public opinion undergoes rapid fluctuations, which rarely resolve into a new equilibrium.

Like its forebear in debates over the 1981 Meltzer-Richards model, the present discussion assumes a strong relationship between public opinion and policymaking. A 2012 book by political scientist MARTIN GILENS demonstrates the flaws underlying this assumption.

From the book:

"Democracy is commonly understood to entail a substantial degree of political equality. This ideal of political equality is perhaps impossible to fully achieve in the face of economic inequality—in every democracy citizens with greater resources are better able to shape government policy. But the degree of political inequality in a society tells us much about the quality of the society’s democracy. I aim to document and explain patterns of representation in the United States over the past few decades by examining the relationship between the policy preferences expressed by the American public and the policies adopted by decision makers in Washington. To do so I have assembled a dataset of survey questions reflecting the policy preferences of hundreds of thousands of Americans at different income levels on all sorts of government policies—from raising the minimum wage, to restricting abortions, to sending U.S. troops to Bosnia.

When preferences across income groups diverged, only the most affluent appeared to influence policy outcomes. Representational inequality was spread widely across policy domains, with a strong tilt toward high-income Americans on economic issues, foreign policy, and moral/religious issues, and only modestly greater equality of responsiveness to the middle class and the poor in the social welfare domain. Even this partial exception to the dominance of the affluent was accounted for by the fortuitous confluence of preferences between middle-class citizens and powerful interest groups on issues like health care, education, and Social Security. Yet the importance of political conditions in shaping responsiveness means that our political destiny is not predetermined. The obstacles to enhancing representational equality in America are considerable, but the costs of not doing so are considerable as well."

Link to the publisher's page.

  • Jacob Hacker and Paul Pierson's much-cited Winner Take All Politics outlines the mechanisms of policy influence in the US. Link.
  • A new paper by Matias López et. al examine the economic and social factors which shape elite attitudes towards redistribution in Brazil. Link. h/t Paul
  • "In 1893, the historian Frederick Jackson Turner famously argued that the American frontier fostered individualism. We investigate this thesis by tracking the frontier between 1790–1890 and constructing a novel, county-level measure of total frontier experience (TFE). Long after the closing of the frontier, counties with greater TFE exhibit more pervasive individualism and opposition to redistribution." Samuel Bazzi, Martin Fiszbein, and Mesay Gebresilasse on the historical roots public opinion. Link.
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May 4th, 2020

Security for the People

ADVANCE CAUSE

Ethics in mitigation

Following the comparative success of South Korea and Singapore to flatten the Covid-19 curve, governments around the world have been discussing the merits and feasibility of tech-aided contact tracing systems. (Whether these comparative public health successes are actually attributable to such systems remains a point of debate.) In the US context, app-based tracing proposals have been floated by various think tanks, and Apple and Google have released protocols for their design.

Privacy concerns are paramount, as are questions of efficacy and the opportunity costs of new mitigation tools. In a white paper last month, Danielle Allen, Lucas Stanczyk, Glenn Cohen, Carmel Shachar, Rajiv Sethi, Glen Weyl, and Rosa Brooks examined the ethical and legal bases of pandemic mitigation.

From the paper:

"We are currently in the initial stage of facing the spread of an epidemic, with clear emergency needs to secure our health system while seeking to minimize lives lost and ensure that all patients, including the dying, are treated with dignity. We have to fend off a near-term catastrophe, and in that regard we are in our 'triage' moment. We are currently making triage decisions across all sectors of society.

Securing our health infrastructure and minimizing loss of life requires changing the trajectory of transmission through screening, testing, contact tracing, mobility restrictions, and social distancing. Whereas contact tracing and individualized quarantine and isolation suffice in non-pandemic circumstances, community quarantine and isolation become necessary under pandemic conditions in order to address the emergency. Here the challenging questions are to create the right package of temporarily adjusted norms, regulations, and laws around rights of mobility and association, and to determine whether the relevant packages of norms, regulations, and laws are best."

The authors propose guidelines for decision procedures that promote mitigation without violating civil liberties, justice, democratic institutions, or the "material supports of society." Link to the paper. h/t David Grant

  • An evolving list of projects using personal data for Covid-19 response. Link.
  • From a 2019 paper on the efficacy of contact tracing and epi models: "A major concern identified in future epidemics is whether public health administrators can collect all the required data for building epidemiological models in a short period of time during the early phase of an outbreak." Link. A 2018 paper on contact tracing's role in the 2014-2015 Ebola outbreak in Liberia. Link.
  • Previously shared in this newsletter, a technical paper for the Decentralized Privacy-Preserving Proximity Tracing (DP-3T) protocol. The tweet-length summary from researcher Michael Veale: "Health authorities learn nothing about users. Users learn nothing about other users. Users learn if they were too close to others who tested positive. Governments learn nothing about users. No-one is coerced: everything based on genuine, voluntary consent." Link to the paper. (And link to a comic strip explanation of how it works.)
  • An excellent blog post from Ross Anderson at Cambridge's Department of Computer Science and Technology on contact tracing in the real world. Link. See also "Apps Gone Rogue: Maintaining Personal Privacy in an Epidemic." Link.
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