Saturday, July 24, 2021

"I want to thank every Amazon employee and every Amazon customer because you guys paid for all of this…." -Jeff Bezos (by Heather Cox Richardson)

 


On July 20, 1969, American astronauts Neil Armstrong and Edwin “Buzz” Aldrin became the first humans ever to land, and then to walk, on the moon.

They were part of the Apollo program, designed to put an American man on the moon. Their spacecraft launched on July 16 and landed back on Earth in the Pacific Ocean July 24, giving them eight days in space, three of them orbiting the moon 30 times. Armstrong and Aldrin spent almost 22 hours on the moon’s surface, where they collected soil and rock samples and set up scientific equipment, while the pilot of the command module, Michael Collins, kept the module on course above them.

The American space program that created the Apollo 11 spaceflight grew out of the Cold War. The year after the Soviet Union launched an artificial satellite in 1957, Congress created the National Aeronautics and Space Administration (NASA) to demonstrate American superiority by sending a man into space. In 1961, President John F. Kennedy moved the goalposts, challenging the country to put a man on the moon and bring him safely back to earth again. He told Congress: “No single space project in this period will be more impressive to mankind, or more important for the long-range exploration of space; and none will be so difficult or expensive to accomplish.”

A year later, in a famous speech at Rice University in Texas, Kennedy tied space exploration to America’s traditional willingness to attempt great things. “Those who came before us made certain that this country rode the first waves of the industrial revolutions, the first waves of modern invention, and the first wave of nuclear power, and this generation does not intend to founder in the backwash of the coming age of space. We mean to be a part of it—we mean to lead it,” he said.

[T]here is new knowledge to be gained, and new rights to be won, and they must be won and used for the progress of all people…. We choose to go to the moon in this decade and do the other things, not because they are easy, but because they are hard, because that goal will serve to organize and measure the best of our energies and skills….”

But the benefits to the country would not only be psychological, he said. “The growth of our science and education will be enriched by new knowledge of our universe and environment, by new techniques of learning and mapping and observation, by new tools and computers for industry, medicine, the home as well as the school.” The effort would create “a great number of new companies, and tens of thousands of new jobs…new demands in investment and skilled personnel,” as the government invested billions in it.

“To be sure, all this costs us all a good deal of money…. I realize that this is in some measure an act of faith and vision, for we do not now know what benefits await us.”

Seven years later, people across the country gathered around television sets to watch Armstrong step onto the moon and to hear his famous words: “That's one small step for [a] man, one giant leap for mankind.”

President Richard Nixon called the astronauts from the White House: “I just can't tell you how proud we all are of what you have done,” he said. “For every American, this has to be the proudest day of our lives…. Because of what you have done, the heavens have become a part of man's world…. For one priceless moment in the whole history of man, all the people on this Earth are truly one…in their pride in what you have done, and…in our prayers that you will return safely to Earth.”

And yet, by the time Armstrong and Aldrin were stepping onto the moon in a grand symbol of the success of the nation’s moon shot, Americans back on earth were turning against each other. Movement conservatives who hated post–World War II business regulation, taxation, and civil rights demanded smaller government and championed the idea of individualism, while those opposed to the war in Vietnam increasingly distrusted the government.

After May 4, 1970, when the shooting of college students at Kent State University in Ohio badly weakened Nixon’s support, he began to rally supporters to his side with what his vice president, Spiro Agnew, called “positive polarization.” They characterized those who opposed the administration as anti-American layabouts who simply wanted a handout from the government. The idea that Americans could come together to construct a daring new future ran aground on the idea that anti-war protesters, people of color, and women were draining hardworking taxpayers of their hard-earned money.

Ten years later, former actor and governor of California Ronald Reagan won the White House by promising to defend white taxpayers from people like the “welfare queen,” who, he said, “has 80 names, 30 addresses, 12 Social Security cards and is collecting veteran’s benefits on four non-existing deceased husbands.” Reagan promised to champion individual Americans, getting government, and the taxes it swallowed, off people’s backs.

“In this present crisis, government is not the solution to our problem; government is the problem,” Reagan said in his Inaugural Address. Americans increasingly turned away from the post–World War II teamwork and solidarity that had made the Apollo program a success, and instead focused on liberating individual men to climb upward on their own terms, unhampered by regulation or taxes.

This week, on July 20, 2021, 52 years to the day after Armstrong and Aldrin stepped onto the moon, former Amazon CEO Jeff Bezos and four passengers spent 11 minutes in the air, three of them more than 62 miles above the earth, where many scientists say space starts. For those three minutes, they were weightless. And then the pilotless spaceship returned to Earth.

Traveling with Bezos were his brother, Mark; 82-year-old Wally Funk, a woman who trained to be an astronaut in the 1960s but was never permitted to go to space; and 18-year-old Oliver Daemen from the Netherlands, whose father paid something under $28 million for the seat.

Bezos’s goal, he says, is not simply to launch space tourism, but also to spread humans to other planets in order to grow beyond the resource limits on earth. The solar system can easily support a trillion humans,” Bezos has said. “We would have a thousand Einsteins and a thousand Mozarts and unlimited—for all practical purposes—resources and solar power and so on. That's the world that I want my great-grandchildren's great-grandchildren to live in.”

Ariane Cornell, astronaut-sales director of Bezos’s space company Blue Origin, live-streamed the event, telling the audience that the launch “represents a number of firsts.” It was “[t]he first time a privately funded spaceflight vehicle has launched private citizens to space from a private launch site and private range down here in Texas. It’s also a giant first step towards our vision to have millions of people living and working in space.”

In 2021, Bezos paid $973 million in taxes on $4.22 billion in income while his wealth increased by $99 billion, making his true tax rate 0.98%. After his trip into the sky, he told reporters: “I want to thank every Amazon employee and every Amazon customer because you guys paid for all of this…. Seriously, for every Amazon customer out there and every Amazon employee, thank you from the bottom of my heart very much. It’s very appreciated.”

—by Heather Cox Richardson


Notes: 

https://www.businessinsider.com/jeff-bezos-space-flight-passenger-revealed-wally-funk-2021-7

https://www.businessinsider.com/blue-origin-auction-spacecraft-jeff-bezos-winner-seat-astronaut-2021-6

https://www.businessinsider.com/jeff-bezos-launches-to-space-blue-origin-first-human-spaceflight-2021-7

https://www.washingtonpost.com/business/2021/06/08/wealthy-irs-taxes/

https://www.businessinsider.com/jeff-bezos-thanks-amazon-customers-for-paying-trip-to-space-2021-7

 


Tuesday, July 20, 2021

$205 Billion Bezos and Three Other Passengers Were Launched Today in an 11-Minute Space Flight 63 miles above the Earth or What Bezos Could Not See and Ignores by Glen Brown

 


Everyone on planet earth knows Bezos flew into space today. He had a magnificent view of Our earth. What he could not see (and continues to ignore) are America's political and economic repression, economic insecurities and crises: its poverty, hunger, homelessness, unemployment, government deregulation, gun violence, racial injustice, climate emergency, crumbling infrastructures, LGBTQ discrimination, student debt, rising college costs, depleted social services, destruction of retirement pensions, damaged child-care system and faulty mental-health care, refugee and immigration disaster, exorbitant-privatized health care, U.S. tax code for the wealthy elite and income gap between the wealthy plutocracy and everyone else, to name just a few.



New Open Seat in Illinois Supreme Court and Other District Seats will be Expensive and Hotly Contested by Eric Krol

 


Newly redrawn Illinois Supreme Court districts mean there's an open seat in the northern and far western suburbs that’s expected to be fought over next year in a high-dollar battle key to determining which party controls the judicial branch. Four county judges and a North Shore mayor already say they're in or considering a run for the new 2nd District job, and more candidates could emerge in the coming months.

The would-be justices will have to win support from voters in Lake, Kane, McHenry, Kendall and DeKalb counties. First up is the primary election in late June 2022, with the Democrat and Republican victors then squaring off in the November general election.

The seat is one of two spots up for grabs on a court where Democrats hold a 4-3 edge, and the campaigns will unfold after both sides shattered Illinois spending records on a judicial contest in fall 2020. Illinois Republicans and their business allies scored a big win when voters rejected retention for then-Justice Tom Kilbride of Rock Island in the 3rd District, who was backed by trial lawyers and labor unions. The district has been tweaked to make it more Democrat-friendly, but for Republicans, the 2022 contests may represent the party’s best shot at regaining a toehold in state government.

“This could end up being one of the most interesting and consequential races on the ballot,” said Kent Redfield, professor emeritus of political science at the University of Illinois at Springfield. “If you’ve got an interest in maintaining some relevance politically, the court might be the way to go.”

While the justices don't carry anywhere near a high profile as that of the governor, U.S. senators, Chicago mayor, or legislative leaders, the high court's decisions have far-reaching impacts on the state's residents. During the last decade or so, the state Supreme Court has tossed from the ballot a question on whether politics should be taken out of redistricting, ruled unconstitutional a law cutting government worker pensions and threw out limits on medical malpractice damages in civil lawsuits.

“It’s had a Democratic tilt. Elect a Republican and we’ve got a court that might be more friendly to business,” Redfield said. “You could lock up the Supreme Court until the next remap in 2031.”

 

How we got here:

The state Supreme Court boundaries hadn't been redrawn since 1964. After weeks of behind-the-scenes chatter, Democrats unveiled a new judicial map on May 25, six days before the scheduled adjournment. The court redistricting plan then quickly passed the House and Senate on the strength of Democratic votes.

Republicans decried the move as a sham designed to allow Democrats to maintain and perhaps expand their political advantage on the court. Democrats said the new boundaries reflect that Illinois is a more diverse state than it was 60 years ago. They also pointed to shifts in where people live and the need for districts to have equal population numbers.

The sudden judicial redistricting was done about six months after voters in the far southern suburbs and parts of central Illinois dealt Democrats a stinging defeat by voting not to retain Kilbride. He lost after millions of dollars were spent by Republican groups linking him to then-Democratic House Speaker Michael Madigan, who was embroiled in a Commonwealth Edison federal corruption probe that played a big role in ending his reign. Madigan has denied wrongdoing and not been charged, though his former top confidants have been.

The retention result meant the 3rd District seat would be up for election in 2022, and if Republicans won, they would capture the court and overturn the Democrats' 4-3 advantage.

But the recently approved map creates a new playing field. Democrats start out with a near guarantee of three seats on the court because the Illinois Constitution requires that three justices be elected in Cook County, which is heavily Democratic. Republicans can reasonably lay claim to two downstate seats in Districts 4 and 5. 

That leaves the 2nd and 3rd Districts as the swing territory. Justice Michael J. Burke, a DuPage County resident who was appointed last year to succeed the retiring Justice Robert Thomas, had been expected to run for the 2nd District seat. But the new map moved DuPage to the 3rd District, and now that’s the seat Burke is expected to pursue, leaving the 2nd District spot wide open.

 

What the political terrain looks like:

Until Gov. J.B. Pritzker signed the new judicial boundaries into law last month, the 2nd District was made up of 13 counties --- all but one of the collar counties, the counties that bordered Wisconsin and a few other northern Illinois counties, totaling 3.2 million people, according to a legislative analysis. The new 2nd District is made up of just five counties: Lake, Kane, McHenry, Kendall and DeKalb, totaling 1.77 million people.

Just how Democratic the new 2nd District depends on the election used to measure it. Democrat Joe Biden scored 55.9% to 42.1% for then-President Donald Trump in those five counties last year. In 2018, Democrat Pritzker bested then-Republican Gov. Bruce Rauner by just 2 percentage points. Both Pritzker and Biden took all but McHenry County. In 2014, Rauner bested then-Gov. Pat Quinn by 23 percentage points in those five counties.

The Pritzker-Rauner contest is probably the most apt comparison, given that 2022 is not a presidential year, and the governor's race is once again on the ballot. Republicans are unlikely to have a self-funding billionaire candidate opposing Pritzker. But the GOP also won't have to deal with Rauner's unpopularity, and now Pritzker has to run on his record. Democratic turnout could be helped by a pro-union statewide referendum asking voters to ban laws that interfere with collective bargaining rights.

"It's a leaning Democratic district, with Kane and Lake, judging by the two largest counties," said Mark Guethle, Kane County Democratic chairman. Lake made up 40.6% of voters in the November 2018 election, with Kane in second at 27.5%.

Mark Shaw, the Lake County Republican chairman, said if the GOP can pick up both the 2nd and 3rd District seats, some issues thought to be decided, such as pension reform and legislative redistricting, potentially could be open to review.

“The fact that we could see a shift in control of the court is kind of amazing,” said Shaw, who’s also the state party co-chairman… (New Open Seat in Illinois Supreme Court will be Expensive and Hotly ContestedThe stakes are high, candidates are lining up by Eric Krol).

 

Sunday, July 18, 2021

Georgia Representative John Lewis by Heather Cox Richardson

 


A year ago tonight [July 17], Georgia Representative John Lewis passed away from pancreatic cancer at 80 years old. As a young adult, Lewis was a “troublemaker,” breaking the laws of his state: the laws upholding racial segregation. He organized voting registration drives and in 1960 was one of the thirteen original Freedom Riders, white and Black students traveling together from Washington, D.C., to New Orleans to challenge segregation. “It was very violent. I thought I was going to die. I was left lying at the Greyhound bus station in Montgomery unconscious,” Lewis later recalled.

An adherent of the philosophy of nonviolence, Lewis was beaten by mobs and arrested 24 times. As chairman of the Student Nonviolent Coordinating Committee (SNCC—pronounced “snick”), he helped to organize the 1963 March on Washington where the Reverend Martin Luther King, Jr., told more than 200,000 people gathered at the foot of the Lincoln Memorial that he had a dream. Just 23 years old, Lewis spoke at the march. Two years later, as Lewis and 600 marchers hoping to register African American voters in Alabama stopped to pray at the end of the Edmund Pettus Bridge in Selma, mounted police troopers charged the marchers, beating them with clubs and bullwhips. They fractured Lewis’s skull.

To observers in 1965 reading the newspapers, Lewis was simply one of the lawbreaking protesters who were disrupting the “peace” of the South. But what seemed to be fruitless and dangerous protests were, in fact, changing minds. Shortly after the attack in Selma, President Lyndon Baines Johnson honored those changing ideas when he went on TV to support the marchers and call for Congress to pass a national voting rights bill. On August 6, 1965, Johnson signed the Voting Rights Act authorizing federal supervision of voter registration in districts where African Americans were historically underrepresented.

When Congress passed the Voting Rights Act, just 6.7 percent of Black voters in Mississippi were registered to vote. Two years later, almost 60% of them were. In 1986, those new Black voters helped to elect Lewis to Congress. He held the seat until he died, winning reelection 16 times.

Now, just a year after Representative Lewis’s death, the voting rights for which he fought are under greater threat than they have been since 1965. After the 2013 Shelby County v. Holder decision of the Supreme Court gutted the Voting Rights Act by taking away Department of Justice supervision of election changes in states with a history of racial discrimination, Republican-dominated state legislatures began to enact measures that would cut down on minority voting.

At Representative Lewis’s funeral, former President Barack Obama called for renewing the Voting Rights Act. "You want to honor John?” he said. “Let's honor him by revitalizing the law that he was willing to die for.” Instead, after the 2020 election, Republican-dominated legislatures ramped up their effort to skew the vote in their favor by limiting access to the ballot. As of mid-June 2021, 17 states had passed 28 laws making it harder to vote, while more bills continue to move forward.

Then, on July 1, by a 6-3 vote, the Supreme Court handed down Brnovich v. Democratic National Committee, saying that the state of Arizona did not violate the 1965 Voting Rights Act when it passed laws that limited ballot delivery to voters, family members, or caregivers, or when it required election officials to throw out ballots that voters had cast in the wrong precincts by accident.

The fact that voting restrictions affect racial or ethnic groups differently does not make them illegal, Justice Samuel Alito wrote. “The mere fact that there is some disparity in impact does not necessarily mean that a system is not equally open or that it does not give everyone an equal opportunity to vote.”

Justice Elena Kagan wrote a blistering dissent, in which Justices Stephen Breyer and Sonia Sotomayor joined. “If a single statute represents the best of America, it is the Voting Rights Act,” Kagan wrote, “It marries two great ideals: democracy and racial equality. And it dedicates our country to carrying them out.” She explained, “The Voting Rights Act is ambitious, in both goal and scope. When President Lyndon Johnson sent the bill to Congress, ten days after John Lewis led marchers across the Edmund Pettus Bridge, he explained that it was “carefully drafted to meet its objective—the end of discrimination in voting in America.” It gave every citizen “the right to an equal opportunity to vote.”

“Much of the Voting Rights Act’s success lay in its capacity to meet ever-new forms of discrimination,” Kagan wrote. Those interested in suppressing the vote have always offered “a non-racial rationalization” even for laws that were purposefully discriminatory. Poll taxes, elaborate registration regulations, and early poll closings were all designed to limit who could vote but were defended as ways to prevent fraud and corruption, even when there was no evidence that fraud or corruption was a problem. Kagan noted that the Arizona law permitting the state to throw out ballots cast in the wrong precinct invalidated twice as many ballots cast by Indigenous Americans, Black Americans, and Hispanic Americans as by whites.

“The majority’s opinion mostly inhabits a law-free zone,” she wrote.

Congress has been slow to protect voting rights. Although it renewed the Voting Rights Act by an overwhelming majority in 2006, that impulse has disappeared. In March 2021, the House of Representatives passed the For the People Act on which Representative Lewis had worked, a sweeping measure that protects the right to vote, removes dark money from politics, and ends partisan gerrymandering. Republicans in the Senate killed the bill, and Democrats were unwilling to break the filibuster to pass it alone.

An attempt simply to restore the provision of the Voting Rights Act gutted in 2013 has not yet been introduced, although it has been named: the John Lewis Voting Rights Advancement Act. Only one Republican, Alaska senator Lisa Murkowski, has signed on to the bill.  

Yesterday, the chair of the Congressional Black Caucus, Representative Joyce Beatty (D-OH), was arrested with eight other protesters in the Hart Senate Office Building for demanding legislation to protect voting rights.

After her arrest, Beatty tweeted: “You can arrest me. You can’t stop me. You can’t silence me.”

Last June, Representative Lewis told Washington Post columnist Jonathan Capehart that he was “inspired” by last summer’s peaceful protests in America and around the world against police violence. “It was so moving and so gratifying to see people from all over America and all over the world saying through their action, ‘I can do something. I can say something,’” Lewis told Capehart. “And they said something by marching and by speaking up and speaking out.”

Capehart asked Lewis “what he would say to people who feel as though they have already been giving it their all but nothing seems to change.” Lewis answered: “You must be able and prepared to give until you cannot give any more. We must use our time and our space on this little planet that we call Earth to make a lasting contribution, to leave it a little better than we found it, and now that need is greater than ever before.”

“Do not get lost in a sea of despair,” Lewis tweeted almost exactly a year before his death. “Do not become bitter or hostile. Be hopeful, be optimistic. Never, ever be afraid to make some noise and get in good trouble, necessary trouble. We will find a way to make a way out of no way.”

—-

Notes:

Capehart: https://www.washingtonpost.com/opinions/2020/06/10/john-lewis-black-lives-matter-protesters-give-until-you-cannot-give-any-more/

https://www.usnews.com/news/best-states/articles/2021-07-02/17-states-have-passed-restrictive-voting-laws-this-year-report-says

https://www.supremecourt.gov/opinions/20pdf/19-1257_g204.pdf

 


Saturday, July 17, 2021

What Can the Decline of the Roman Empire and the End of European Feudalism Tell Us about Covid-19 and the Future of the West by John Rapley

 


“Early in 2020, after a mysterious coronavirus emerged out of China and then raced across the globe, a quiet new year took a screeching turn. Stark images of ventilated patients in Italian hospital hallways soon filled our newsfeeds. Panic erupted across the West. One after another, governments that had been telling their citizens everything was fine suddenly screamed at everyone to shelter in place and avoid all human contact. It felt like the modern world had just met its Black Death.

“With no living memory of such scenes, Western audiences reached for the timeless literature of apocalypse to make sense of it all. But whereas ancient traditions of end times blamed spiritual causes for the collapse of civilisations, we, being the moderns that we are, opted for what we imagined to be a ‘scientific’ discourse – the so-called genre of collapsology. Although some modern scholars, such as Edward Gibbon, Oswald Spengler and Arnold Toynbee, retained essentially spiritual explanations for civilisation decline, while embedding them in empirical ground, those who would shape our interpretation of COVID-19 came from a different tradition, one that took inspiration from Thomas Malthus’s 1798 thesis about the natural consequences of human development.

“Neo-Malthusians credited environmental feedback loops, not moral failings, for regime collapse. In the 1960s and ’70s, works by Paul Ehrlich and Donella Meadows et al argued that the world’s population was growing so fast it would soon outstrip resource supplies, leading to (among other things) widespread food shortages. More recently, Jared Diamond wrote of the role that environmental depletion and diseases played in the fall of civilisations, and his theory that the collapse of Easter Island resulted from overexploitation of the natural environment has enjoyed particular resonance. For its part, the COVID-19 pandemic revived old theories about the role that diseases played in regime collapse, and we were reminded that plagues had laid low the Roman Empire and destroyed European feudalism.

“Except, that wasn’t what happened. At least, not quite the way supposed.

“The thesis that environmental stresses cause regime collapse remains a topic of great debate. We can start just with the cases mentioned above. The alarmist warnings in the 1970s about overpopulation soon gave way not to concerns about food shortages, but about the problems caused by global overproduction of food, which was driving down food prices and accelerating the urbanisation of the developing world. Regarding Diamond’s book about Easter Island, pretty much from the get-go it faced strong criticism for its questionable evidence. For similar reasons, many historians of the Roman Empire doubt that the plague played a part in its downfall. As for the Black Death, in much of Europe it didn’t end feudalism but actually reinforced it. More generally, measured by the scale of the loss in human life as a proportion of the total population in the affected areas, 19th-century epidemics of cholera, and the flu pandemic of 1918, all took a far greater toll in the Western world than COVID-19. Yet you’d be hard-pressed to find hints of regime stress in response to any of them.

“Still, the scholars who make a case for the civilisational impact of epidemics might be on to something. For starters, the link between empires and disease is quite strong, with cholera, tuberculosis, syphilis, bubonic plague, smallpox and other diseases all fanning out across the trade routes of empire. Tellingly, when one contrasts the responses to the COVID-19 pandemic of, say, China and Western countries, it seems plausible that this pandemic could hasten the relative decline, if not the fall, of the West. But given that China and the West confronted the same plague, why have the outcomes differed so wildly? Fortunately, history offers some insights.

An exogenous shock must encounter a vulnerability to bring down a regime

“Let’s return to the Black Death of 14th-century Europe. The thesis that the plague ended feudalism starts with the fact that Europe’s labour supply dropped suddenly and sharply. This then augmented the bargaining power of the labouring classes, altering their relations to the nobility. But as mentioned, in much of Europe, and particularly in the east, the nobility responded by then reinforcing feudal bonds. However, in other places, the legal system permitted the renegotiation of the relationship between lords and producers. For example, in England, the evolution of Common Law had created a framework that made it possible for land tenure to change from feudal to market-based relations. As a result, when the Black Death caused an agrarian crisis, English society produced new forms of tenancy, thereby accelerating the decline of feudalism. In effect, English feudalism had a vulnerability to exogenous shock that was not present in other parts of Europe.

“As it happens, the thesis that an exogenous shock must encounter a vulnerability to bring down a regime happens to fit the case of the Roman Empire. Recent historiography attributes that empire’s fall not to plagues but to the Hunnish invasions. Importantly, though, the sudden incursion of the Huns didn’t itself signal the Roman Empire’s collapse. The Huns emerge into the historical record in the 4th century, but it would be another century before they toppled the empire – which is to say, the exogenous shock alone didn’t change anything. Until well into the 5th century, the Romans dealt with the Huns as they had always done with frontier invaders, using a combination of repression and negotiation to neutralise the threat. But in the mid-5th century, at around the time of the empire’s greatest economic output, its reckless expansionism multiplied the conflicts on its borders, such that it could no longer concentrate its firepower on one foe. Thus, the vulnerability did not result from Rome’s internal weakening, as the Gibbon thesis had maintained. It actually came at the point when the empire was at its peak in both economic output and, it would appear, hubris.

“That an empire’s strength might actually be its weakness, creating vulnerabilities to exogenous shocks that didn’t exist in earlier stages of its history, bears consideration in light of the comparatively poor performance of Western countries in dealing with the COVID-19 pandemic. Even more importantly, it could help us chart the likely long-term geopolitical impacts of the pandemic. While far more devastating in human lives, the 1918 flu pandemic did little economic harm to Western societies. In contrastCOVID-19 plunged today’s West into an economic slump that will set back growth, in some cases by years, hastening its decline relative to China and much of the erstwhile global periphery. All told, the same exogenous shock, a very different outcome: COVID-19 seems to have found a vulnerability that did not exist in the West in 1918 – and does not exist in much of the Western world’s former periphery.

“When the COVID-19 pandemic hit and countries went into lockdown, markets crashed. To keep their markets and economies afloat, Western governments began raining cash, borrowing trillions of dollars and adding an average fifth of gross domestic product to national debts. The result was dramatic. Instead of the feared New Great Depression, Western economies by and large experienced short recessions, followed by sharp rebounds. Markets, meanwhile, scaled unprecedented heights. The economic firepower of the Western world was shown to be seemingly limitless. When contrasted with the relatively modest expense incurred by governments in response to the 1918 flu pandemic, observers noted how much more Western countries could now do than before. Richer than ever, and with deep pools of capital, governments enjoyed the luxury of being able to spend heavily to protect their citizens and preserve their economies.

“But if that appears to be a sign of strength, it might also reveal a weakness. Consider an analogy. I once had a conversation with an Irish colleague in which I marvelled at how, in the space of little more than a generation, Ireland had transformed from a poor country into a rich one. ‘Correction,’ he said, ‘we’re a high-income country, we’re not yet rich,’ going on to explain that it would take many more generations to actually accumulate the wealth in endowments, investment funds and the like that characterise rich countries. And the thing about wealth is that, when you have it, you have to keep spending to preserve it. Suppose, for example, that one year you earned $1 million. You could spend it, enjoying the high life, but running the risk alluded to by my colleague – that, if in the next year you lost your job or business, you’d be back down to zero. So instead, you could invest it, say, by building a house. That way you’d have capital you could live off if hard times returned. But you’d also have incurred other expenses – repair bills, utility charges, property taxes, decorating costs, and the need to buy and replace furnishings.

“Empires also entail ongoing costs. The richer an empire becomes, the more it must spend to preserve that wealth. As the Roman Empire expanded into virgin lands, it built up the massive estates that enabled it to accumulate its endowment of capital, much of which survives to this day in roads, ruins and aqueducts. But those lands were virgin only to the Romans. Other people already lived there, and as they were beaten back or enslaved by the Romans, resistance to the empire inevitably grew. Rebellions were thus a constant feature of frontier life. That created the need for a standing military and the tax revenues to sustain it.

“For most of the history of its empire, Rome was able to concentrate military forces on comparatively disorganised and weak opponents and, coupled with diplomatic measures such as subsidies, thereby neutralise the threats. However, as the empire grew richer, not only did it make more enemies, but those enemies had the capacity to more effectively withstand Roman assaults because they’d been increasingly exposed to Roman military and administrative technologies, and had accumulated wealth from trading across the imperial frontier (the Vindolanda tablets revealed just how much of a frontier garrison’s food was sourced from across the frontier). The very wealth of the empire was what had produced this vulnerability.

Today’s immigration bolsters Western capital, plugging the labour shortages that are emerging

“The modern West shows a similar arc. At the time of the 1918 pandemic, most of the world outside Europe and its then ‘white dominions’ (Canada, Australia, New Zealand) and the former colonies of the United States were either colonies of one of the European empires, notionally independent but in an economically subservient status (China, Latin America), or struggling to resist Western assimilation (Japan, the Ottoman Empire). Nationalism was embryonic in the Asian and African colonies, but it would be the 1930s, and especially during the Second World War, before it began to significantly challenge European dominance. In terms of its share of global output, the West was still rising, its peak to come only after the war when the US used a set of institutions (NATO, the World Bank and IMF, the United Nations) to effectively unify Western countries into a confederal empire – a model not unlike that used in the late Roman Empire, in fact. The flow of capital in the world economy came from the global periphery to the West. Firms in New York, London, Paris and other Western cities banked the surpluses. Meanwhile, the population of the Western world was young and growing, meaning that the vast majority of its people were either in or about to enter the workforce. In short, the West was still ascendant, and busily accumulating its wealth.

“At the turn of the millennium, the West (developed OECD countries) accounted for four-fifths of global economic output. Since then, with the erstwhile periphery of the global economy rapidly rising as the net flow of capital shifted in its favour for the first time, that share has been declining, suggesting that the highwater mark reached 20 years ago was in fact the peak of the West. Some contemporary commentators, recalling that the wealth of the peak Roman Empire attracted the barbarian invasions, warn that we face a similar fate today if we don’t act urgently. Spotting the foe among immigrants from the global periphery, Right-wing politicians who want to close the borders find support from scholars such as Niall Ferguson, who, in accounting for Islamist terrorism in Western countries, has written that immigrants today resemble the invaders of Rome in that they ‘have coveted [Europe’s] wealth without renouncing their ancestral faith … Like the Roman Empire in the early 5th century, Europe has allowed its defences to crumble.’ This, he says, ‘is exactly how civilisations fall’. It sounds reasonable but it’s not true.

“Invasion was the proximate cause of one civilisation’s fall, not the underlying cause. To begin with, the argument that modern immigration amounts to an exogenous shock is feeble at best. The invasions that toppled Rome were large-scale military assaults organised by external actors. Today, aside from a very small share of illegal immigration, the influx is fragmented and managed almost entirely by the importing state. If you doubt how extensive that state’s control is, spend a day with an undocumented immigrant. More importantly, the invasions of antiquity seized capital, especially when the invaders obtained land and any loot they could find. Today’s immigration actually bolsters Western capital, plugging the labour shortages that are emerging amid ageing populations.

“The more significant analogy is to the vulnerability to exogenous shock that comes from having accumulated so much wealth. The location of that vulnerability today is entirely different, though. Over the previous generation, as economic growth has slowed in Western countries, wealth has started growing faster than income. And whereas wealth once depended on income, now for much of the population income depends on wealth. This is especially true for the share of the population that is retired, which in Western societies averages around a fifth. Since a drop in wealth entails a loss of income for wealth-holders, that gives the state a very strong incentive to preserve the value of that wealth. This incentive is further strengthened by the fact that the retired share of the population tends to be the most engaged in politics (illustrating Machiavelli’s rule that today’s losers constitute a more formidable political constituency than tomorrow’s winners).

“What threatens that wealth, which is held largely in real estate and pension funds, is not a foreign invasion whose purpose is to seize those assets, as happened to Rome. For all the talk of fearmongering and xenophobia, we would have to be facing something like organised raids by undocumented immigrants hacking into share-registries and appropriating the assets of pension funds for Ferguson’s analogy to be remotely apt. Nor for that matter is the threat a disease outbreak that reduces the agricultural income of land, as was the case for Europe’s medieval nobility. The coronavirus pandemic ravaged Western people and societies but, as has been much discussed, the performance of stock markets has continued to be great for owners. Nevertheless, in the response of markets to the year’s events, there might be a clue to the vulnerability of the West, one that COVID-19 helped to expose and possibly exacerbate.

“Consider the difference between market crashes today and those of history. When in 1929 the stock market collapsed, the Great Depression followed. Then, after the massive government wartime spending that John Maynard Keynes himself said was the first major successful experiment with fiscal stimulus, the economy took off. But it wouldn’t be until the 1950s that the stock market returned to the levels it had reached in 1929.

“In contrast, over the past 30 years or so, Western countries have used a different set of tools when addressing market crashes, be they in stocks, bonds or real estate. They have pumped monetary stimulus directly into asset markets, and have targeted fiscal stimulus less at protecting incomes than at preserving asset values by, for example, bailing out banks or providing tax breaks for property purchases. After all, governments had committed themselves to the neoliberal dogma of fiscal prudence and were, if anything, cutting spending. So, while the economy has chugged along sluggishly, asset markets have repeatedly bounced right back. Those two outcomes might not be unrelated to one another. By inflating asset values, monetary stimulus amid fiscal austerity raises fixed costs and steers investment away from productive activities, thereby inhibiting economic growth. In other words, whereas government stimulus programmes once kickstarted economic growth, today they tend to protect accumulated wealth. Western societies spend a lot of money just to stay rich.

COVID-19 did not topple the West. But it might have hobbled it in its competition with the global South

“The massive fiscal and monetary response to the COVID-19 pandemic looks no different. When Western economies were forced into lockdown, their governments borrowed some $17 trillion in order to keep businesses and consumers afloat, and to shore up asset values. For now, the size of the tab doesn’t overly concern economists. Western countries have carried higher debt loads in the past and, with interest rates expected to remain ultra-low for years, the cost of servicing the debt remains very manageable. The problem, rather, is what the debt is used for.

“Returning to the analogy of the million-dollar year and the house you built with it, the difference between fiscal stimulus then and fiscal stimulus now is arguably the difference between taking out a loan to add a sundeck or swimming pool to the house, and taking out a loan to repair flood damage. The first will augment the house’s value, the second merely preserves it. Last year’s massive stimulus was not designed for a new era of economic growth. It was heavily oriented towards just keeping businesses and the economy afloat. But the risk is that, by bailing out many firms that added little dynamism to the economy, Western countries will lock in a Japanification of the economy, a syndrome that first emerged after Japan’s 1989 crash, characterised by chronic anemic economic growth. In the global periphery, debt-fueled investment tends to increase output and productivity more than is the case in Western countries, where much borrowing is essentially geared to keeping us in the lifestyles to which we’ve grown accustomed. The odds are therefore good that the response to the pandemic will only reinforce the long-term trend, of future growth being increasingly skewed towards the periphery. COVID-19 did not topple the West. But it might have hobbled it in its competition with the rising economies of the global South, most of which were once colonies of, or subservient regimes to, Western countries.

“The wealth of the Roman imperial economy lay in land. Owned by the 10th of society that comprised the nobility, its revenues were taxed to support the military, whose job it was to protect the asset from outsiders. The wealth of today’s Western economy lies in financial markets, and is owned mostly by the top 10th of society that belong to the global 1 per cent. A wider group than one might suppose, since it includes almost any homeowner with a defined benefit pension, this is effectively the modern nobility. Although it faces no threat from invasion, the cost to society of preserving it in its current state might be getting as onerous as that of the late Roman Empire.” (Aeon).

 

John Rapley is a political economist at the University of Cambridge, as well as a senior fellow at the Johannesburg Institute for Advanced Study. His latest book is Twilight of the Money Gods: Economics as a Religion and How it all Went Wrong (2017). He lives in London and Johannesburg.

 


Friday, July 16, 2021

An Updated Report about Public Pensions in the U.S. from the National Public Pension Coalition

 


Last month we reached out with news about how certain states’ legislative sessions went. Now, most other states NPPC works with have also finished up, so we’re back in your inbox with part II.

Arizona - While much of the Arizona legislature’s attention this year focused on the ongoing partisan 2020 election audit, there were efforts to weaken retirement security in the state. House Bill (HB) 2138 would impact all employees at the three state-run universities, allowing everyone in the Arizona State Retirement System (ASRS) to switch to the Optional Retirement Program, a defined-contribution plan. The bill was removed from the House Government and Elections Committee agenda in February due to a lack of support.

Colorado - In Colorado, the legislature passed Senate Bill (SB) 205, an appropriations bill for the state’s fiscal year beginning on July 1, 2021. The legislation included a $225 million payment into the Public Employees’ Retirement Association (PERA), which was part of a compromise measure known as SB 200 that passed in 2018. As part of SB 200, the state increased employer and employee contributions, capped cost-of-living adjustments (COLAs) at 1.5% for retired public employees, and increased eligibility requirements. In exchange, the legislature would then allocate an annual $225 million payment into the pension system. However, as a result of the pandemic-induced economic crisis, Colorado did not make its contribution to PERA last year.

Connecticut - On June 23, Governor Lamont signed a two-year budget into law. The budget includes two appropriations designed to lower the state’s unfunded liabilities. The first is a $63 million payment that Connecticut will make towards its unfunded liabilities, and the second will be an additional $1 billion payment for the unfunded liabilities at the end of the 2021 fiscal year.

Kansas - For years, Kansas has been clawing back the effects of the disastrous Brownback tax cuts, which put the state in economic turmoil and underfunded the state’s pension system, the Kansas Public Employees Retirement System (KPERS). Unfortunately, in 2021, lawmakers passed yet another tax cut bill after having a budget surplus last year. It’s too early to tell if this will impact KPERS in the future in terms of funding.

Additionally, there were several bills related to KPERS. HB 2405 authorized another $500 million in pension obligation bonds to help further pay down the KPERS unfunded liability. Secondly, HB 2243, which was an omnibus KPERS related policy bill that included tweaks to the Kansas Deferred Retirement Option Program (also known as DROP); codifying the Governor’s funding allotment in 2020 to the KPERS Death and Disability Fund; and syncing up specific KPERS provisions with recent changes at the federal level. Both of these bills passed and were signed into law.

At the end of the legislative session, there was an attempt to amend a thrift savings proposal into another bill during a debate on the Senate floor. This effort was unsuccessful. However, the comments made by several senators during the debate serve as a reminder that some pension opponents in the legislature would like to convert future public employees to a defined-contribution system.  

New Hampshire - In New Hampshire, there were several bills introduced relating to the New Hampshire Retirement System (NHRS). HB 390 would have re-amortized the Unfunded Actuarial Accrued Liability, which would have had negative effects on both city and municipality budgets, but was defeated in committee. HB 497 would have allowed school districts to exempt chief administrative officers from compulsory participation in NHRS. It was defeated in the House by voice vote. HB 173, which requires the NHRS Independent Investment Committee to report investment fees, passed the legislature and was signed into law by Governor Sununu on April 26th.

Oklahoma - The Oklahoma legislative session presented several threats to public employee retirement. The first was SB 1009, a bill that would change the composition of the Oklahoma Firefighters Pension and Retirement System's (OFPRS) board. SB 1009 would have rewarded more board seats to political appointees while taking away seats held by firefighters. This bill was defeated in committee. The second was HB 2293, which threatened to nullify $26 million in federal matching funds, which would have cost the Teachers’ Retirement System (TRS) $28 to $37 million. Due to the efforts by Keep Oklahoma’s Promises, HB 2203 was watered down to have almost no effect on TRS.

Texas - This year, the Texas legislature passed SB 321 impacting the state’s Employees Retirement System (ERS). SB 321 will enroll newly hired public employees in ERS into a less secure cash-balance retirement plan instead of a defined-benefit pension. It will also require newly hired public employees to contribute 6% of their pay into ERS instead of the current percentage of 9.5%, increase the employer contribution rate from 7.4% to 9.5%, and appropriate a yearly payment of $350 million into ERS through 2053 to shore up the system’s funding. The bill will take effect on September 1, 2021.

Thank you for your commitment to public employees and for advocating for the secure and dignified retirement they deserve. To receive the most up-to-date news on pensions, be sure to follow us on Twitter and like us on Facebook.

In Solidarity,

Bridget Early

Executive Director, National Public Pension Coalition