Also:
50 Inventions you might not know were funded by U.S. government
22 Examples of federally supported innovation
Finally:
THE GREAT AMERICAN SCIENCE HEIST: How the Bayh-Dole Act Wrested Public Science From the People’s Hands
Monday, August 23, 2021
Capitalism didn't make the iPhone
Sunday, August 22, 2021
Saturday, August 21, 2021
Afghanistan: Media Mutes Peace Advocates
“Where are the anti-war voices?” [Popular Information]. “Yesterday’s newsletter detailed how the media is largely overlooking voices that supported Biden’s decision to withdraw from Afghanistan. Instead media reports are almost exclusively highlighting criticism of the withdrawal — often from people complicit in two decades of failed policy in Afghanistan. We have reason to believe that this is not an accident. On Wednesday, Popular Information spoke to a veteran communications professional who has been trying to place prominent voices supportive of the withdrawal on television and in print. The source said that it has been next to impossible:
I’ve been in political media for over two decades, and I have never experienced something like this before. Not only can I not get people booked on shows, but I can’t even get TV bookers who frequently book my guests to give me a call back…
I’ve fed sources to reporters, who end up not quoting the sources, but do quote multiple voices who are critical of the president and/or put the withdrawal in a negative light…. In so many ways this feels like Iraq and 2003 all over again.
From nakedcapitalism.com
Saturday, August 14, 2021
The Green Bank
(c) by Mark Dempsey
One of the most avid environmentalists I know recently sent me a Volt podcast about the proposal for a "Green Bank" in the Biden infrastructure bill. The written introduction to the interview with Green Bank advocate Reed Hundt contains the following:
"[Such a Green Bank] would not, contrary to some popular misconceptions, be an agency of the federal government, nor would it finance projects purely with federal money. Rather, it would be an independent, nonprofit entity that uses an initial grant of federal money to pull private capital off the sidelines and into climate-related projects. After the initial grant, the bank would be self-sustaining.
"The model has been tested: there are green banks in more than a dozen states, which have generated $5.3 billion in clean energy investment since 2011, including $1.5 billion in 2019 alone. And there are more than 20 states where the process of establishing a green bank has begun."
Hundt is critical of the Obama administration. They went small, constrained, short-range, when dramatic action was clearly required. He's much happier with Biden who is pursuing a variety of priorities simultaneously, rather than, a la Obama, one at a time.
However Mr. Hundt has some fundamental confusion. For example, for him, government contracting out roadwork is public/private partnership, and the ownership of the work product is unimportant. So...if it's a toll road (private) there's really no big deal difference between that and a toll-free (public) road?
Hundt also appears to believe a local government selling a bond so they can pave a road is the kind of thing the federal government needs to do. But local governments don't print the money. The federal government does. This is a big deal. It means the federal government does not have to "borrow" any money. Ever!
What are those Treasury bonds, then, if not borrowed money? Answer: They are dollars that bear interest, promising dollars later. It all boils down to dollars, in the end, and the federal government is the monopoly provider of dollars. It doesn't borrow in the conventional sense any more than someone getting a loan payable in autographs is "borrowing" as we usually think of it. It's pretty painless to pay a loan payment when you can print the means to repay it.
To Hundt, selling bonds is necessary. In reality it is not. Why not just print the money? Somehow "private money" must be "pulled in" or catalyzed for this Green Bank. His project must "raise money" in the private sector.
Quick question: where did that private sector get its dollars. What was the ultimate source? Could it be the monopoly provider of dollars?
In a strange side-track, the interviewer asks for reassurance from Hundt this won't be another Solyndra, without providing any context or understanding of what went on in that "debacle." Just to remind you: Solyndra was a solar panel company with some innovative technology. A "public/private partnership" (PPP) of venture capitalists who lent money with federal loan guarantees to give Solyndra enough money to start manufacturing.
Unfortunately, the Chinese had given their solar panel makers orders of magnitude more research money than the U.S, so Solyndra would have been obsolete when it began manufacturing on its original schedule. Solyndra asked the PPP for a delay to incorporate the new Chinese technology in their process. The private venture capitalists refused, insisted on their original deadline and cashed in the loan guarantee (~$500m) without any manufacturing. And ever after this is supposedly the demonstration that government is incompetent. But Solyndra wasn't a failure, it was the private sector's financial demands that made it shut down.
So...that's about the quality of this interview. It's based on Partial knowledge (PK).
Another PK incident: no one mentions an important "bank" precedent: the Reconstruction Finance Corporation. The RFC was a Herbert Hoover innovation that FDR used to fund big projects like the Tennessee Valley Authority, and the first Bay Bridge to San Francisco. In present dollars it made many more loans for infrastructure than the proposed "Green Bank." Eisenhower terminated the RFC.
More PK: To Hundt, deposits are somehow the basis of lending! Nope. Loans create deposits. Here's a typical loan in double entry bookkeeping:
Bank Borrower
Liability Asset Liability Asset
$1,000 Check Acct. IOU for $1,000 IOU for $1,000 $1,000 Checking account
Notice that at no point do deposits appear in this entry of the bank's business. Yes, because of regulation, banks need capital, but they do not lend the money on deposit.
This is not something I made up. Here's the Bank of England's paper that says the same thing: From its Quarterly Bulletin 2014 Q1: Money creation in the modern economy. Some excerpts: "Rather than banks receiving deposits when households save and then lending them out, bank lending creates deposits." "In normal times, the central bank does not fix the amount of money in circulation ‘multiplied up’ into more loans and deposits."
Another bizarre bit of PK: Transit & zoning somehow are separate questions for Hundt. Really? So having enough transit customers within a comfortable walk of the stops is not connected to the viability or success of transit? Perhaps we should send buses out to our rural areas too. The truth is that fully-used transit has one-eighth the impact of single-occupant autos, but low-density sprawl insures transit can never be financially viable. Not enough riders live within a comfortable walk of the stops. As a bonus, infrastructure for sprawl is roughly twice as expensive to maintain as compact infill infrastructure.
Anyway, as you can see Hundt's proposal is a dog's breakfast of partial knowledge. He actually believes the federal government must raise private money. The bankers tried to convince Lincoln to borrow money for the Civil War from them too--at 26% interest. Lincoln responded by ignoring their offer and issuing greenbacks.
Sadly, he's not alone. Even sophisticated, very well educated environmentalists believe that "tax & spend" is the pattern of government fiscal policy. But where would tax payers get dollars to pay those taxes if government (the monopoly provider of dollars) didn't spend them out into the economy first?
Logic dictates that "spend first, then retrieve some dollars in taxes" is the pattern of federal fiscal operation. And what do we call the dollars (or bonds) left out in circulation, not retrieved in taxes? Answer #1: the dollar financial assets of the private sector. Answer #2: National 'debt.' Both answers describe exactly the same thing.
This is analogous to a bank account. It's the depositor's asset, but the bank's liability. And what are we owed for those dollars that are national 'debt'? Answer: a dollar's worth of relief from an inevitable liability: taxes. Taxes make the money valuable.
"Deficit hawks" are like some con artist trying to persuade people to march down to their bank and demand it reduce its debt. That would reduce the size of their accounts too, but we're to ignore that.
So I'll be rooting for the success of Mr. Hundt's green bank, but praying for a little more financial sophistication than he displayed in this interview. Meanwhile, even a much bigger lender, FNMA, has got the "green" bug, although there's evidence it too is at least overstated.
Monday, August 2, 2021
Industrial Policy Coming Into Vogue After China Cleans US Clock by Using It
Industrial Policy Coming Into Vogue After China Cleans US Clock by Using It
Yves Smith, July 30, 2021 [from Naked Capitalism]
Actually, USA excels at industrial policy — when it tries it. In fact, it’s how USA was built. The entire electronics and computer industry exists today because the Office of Naval Research and the Army Ordnance Department deliberately decided to share the technology developed in government and government-funded labs during World War Two. The creation of an entire new industry can be traced to a single event – the Moore School lectures at University of Pennsylvania in August 1945.
There is a long tradition of the military being the driver for creating new technologies and industries. Metal cutting and forming machine tools developed at the national armories were deliberately seeded into civilian companies in the 1830s to 1850s. The Navy introduced systematized scientific knowledge of designing and building steam engines in the 1850s and 1860s, basically creating the profession of mechanical engineering. Radio Corporation of America was founded in 1919 at the instigation of the Navy as a silent partner. The Navy played the exact same role in the creation of Cray Research in the 1970s. In the 1950s through 1970s, the three major developments in aerodynamics — the area rule, supercritical wings, and winglets — were developed by NASA scientist Richard Whitcomb at Langley Research Center. In the 1950s, the frozen food industry was saved and put on a solid foundation by the efforts of USDA research labs. This is just a handful of examples from the hundreds, even thousands of examples of successful USA government industrial policies.
Every single technology in cell phones began as a USA government research program, as detailed by Mariana Mazzucato in her 2013 book The Entrepreneurial State: Debunking Public vs. Private Sector Myths.
But this history does not conform to the free market / free enterprise mythology favored by financiers and rentiers, so it really is not taught.
Yves Smith, July 30, 2021 [from Naked Capitalism]
Actually, USA excels at industrial policy — when it tries it. In fact, it’s how USA was built. The entire electronics and computer industry exists today because the Office of Naval Research and the Army Ordnance Department deliberately decided to share the technology developed in government and government-funded labs during World War Two. The creation of an entire new industry can be traced to a single event – the Moore School lectures at University of Pennsylvania in August 1945.
There is a long tradition of the military being the driver for creating new technologies and industries. Metal cutting and forming machine tools developed at the national armories were deliberately seeded into civilian companies in the 1830s to 1850s. The Navy introduced systematized scientific knowledge of designing and building steam engines in the 1850s and 1860s, basically creating the profession of mechanical engineering. Radio Corporation of America was founded in 1919 at the instigation of the Navy as a silent partner. The Navy played the exact same role in the creation of Cray Research in the 1970s. In the 1950s through 1970s, the three major developments in aerodynamics — the area rule, supercritical wings, and winglets — were developed by NASA scientist Richard Whitcomb at Langley Research Center. In the 1950s, the frozen food industry was saved and put on a solid foundation by the efforts of USDA research labs. This is just a handful of examples from the hundreds, even thousands of examples of successful USA government industrial policies.
Every single technology in cell phones began as a USA government research program, as detailed by Mariana Mazzucato in her 2013 book The Entrepreneurial State: Debunking Public vs. Private Sector Myths.
But this history does not conform to the free market / free enterprise mythology favored by financiers and rentiers, so it really is not taught.
Sunday, August 1, 2021
They Did It!
THEY DID IT!
— Peter Daou (@peterdaou) July 31, 2021
✔️NO eviction moratorium
✔️NO minimum wage hike
✔️NO filibuster reform
✔️NO court expansion
✔️NO medicare for all
✔️NO green new deal
✔️NO closing child cages
✔️NO end to oil drilling
✔️NO student debt help
✔️NO pandemic plan
✔️NO consequences for Trump officials pic.twitter.com/e9xEsxdVcD
My Letter to Speaker Pelosi (Feel free to write your own)
House Speaker Nancy Pelosi 8/1/2021
1236 Longworth H.O.B.
Washington, DC 20515
Dear Speaker Pelosi,
Thanks to Stephanie Kelton, I recently read your comment on Twitter: “Suppose…your child just decided they, ...[do] not want to go to college but you’re paying taxes to forgive somebody else’s obligations. You may not be happy about that." Ms Kelton remarked that the president ran on student loan forgiveness.
Although many dispute taxes for war, etc, no replies to your Tweet dispute your “PayGo” principle saying we need taxes to provision federal programs, or to pay student debt. “Tax and spend” resonates with most people who have to earn money before they can spend it. But that phrase is for currency users, not currency creators. Dollars retire the inevitable liability of taxes, so dollars are valuable (“taxes drive money”), but taxes do not, and cannot, provision federal programs. The federal government creates the money. And how could people pay taxes if the government didn’t spend the dollars out into the economy first? The real sequence for currency creators is “spend first, then retrieve some dollars in taxes.” Alone in the economy, the creator of currency is fiscally unconstrained. And what do we call the dollars not retrieved in taxes? Answer #1: the dollar financial assets of the population. Answer #2: National ‘debt.’ Both answers describe exactly the same thing.
“B...but if we just print money, we’ll get [gasp!] [hyper-]inflation!” is a common objection. First, we always “print” the money. Inflation comes and goes, irrespective of the money supply (typically reflecting shortages, like oil in the ‘70s). See this graph of money supply growth vs. consumer prices:
According to its own congressionally-mandated audit, the Fed issued $16 - $29 trillion in credit to the financial sector in 2007-8. Where was the inflation surge then?
So I urge you to consult with Ms. Kelton, and stop giving Americans invalid excuses for continuing to collect student debts. Forgiving the debts is not something taxes would pay anyway. Your excuses aren’t valid not just because your priorities are misplaced, but because you do not understand the power of government as a currency creator.
Regards,
1236 Longworth H.O.B.
Washington, DC 20515
Dear Speaker Pelosi,
Thanks to Stephanie Kelton, I recently read your comment on Twitter: “Suppose…your child just decided they, ...[do] not want to go to college but you’re paying taxes to forgive somebody else’s obligations. You may not be happy about that." Ms Kelton remarked that the president ran on student loan forgiveness.
Although many dispute taxes for war, etc, no replies to your Tweet dispute your “PayGo” principle saying we need taxes to provision federal programs, or to pay student debt. “Tax and spend” resonates with most people who have to earn money before they can spend it. But that phrase is for currency users, not currency creators. Dollars retire the inevitable liability of taxes, so dollars are valuable (“taxes drive money”), but taxes do not, and cannot, provision federal programs. The federal government creates the money. And how could people pay taxes if the government didn’t spend the dollars out into the economy first? The real sequence for currency creators is “spend first, then retrieve some dollars in taxes.” Alone in the economy, the creator of currency is fiscally unconstrained. And what do we call the dollars not retrieved in taxes? Answer #1: the dollar financial assets of the population. Answer #2: National ‘debt.’ Both answers describe exactly the same thing.
“B...but if we just print money, we’ll get [gasp!] [hyper-]inflation!” is a common objection. First, we always “print” the money. Inflation comes and goes, irrespective of the money supply (typically reflecting shortages, like oil in the ‘70s). See this graph of money supply growth vs. consumer prices:
According to its own congressionally-mandated audit, the Fed issued $16 - $29 trillion in credit to the financial sector in 2007-8. Where was the inflation surge then?
So I urge you to consult with Ms. Kelton, and stop giving Americans invalid excuses for continuing to collect student debts. Forgiving the debts is not something taxes would pay anyway. Your excuses aren’t valid not just because your priorities are misplaced, but because you do not understand the power of government as a currency creator.
Regards,
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