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What If The Fed Bought Out The Oil Industry?

Progressive economist, Robert Pollin, gives us his take on the causes and remedies of the current inflationary spiral, and what both the Fed and the Biden Administration can do about it. Then, Ralph welcomes back, Greg LeRoy, from Good Jobs First, the organization that tracks corporate handouts, to update us on taxpayer giveaways to the EV industry, billionaire sports franchise owners, and how the recent abortion bans may hurt those state’s economies.

Robert Pollin is Distinguished University Professor of Economics and Co-Director of the Political Economy Research Institute at the University of Massachusetts-Amherst. He is also the founder and President of PEAR (Pollin Energy and Retrofits), an Amherst, MA-based green energy company operating throughout the United States.

Re Joe Manchin discussion, here is the link to Robert Pollin’s West Virginia Green Energy study.

They have also done similar studies for seven other U.S. states.

 

The Federal Reserve could very easily say, “We are going to create a green investment program, at a level sufficient to meet the climate challenge. And therefore, for example, we will buy bonds from state governments, from municipalities, all of which are going to investing in the green energy transfer transformation.” We could do it at the level of $4 trillion. They’ve already proven they can do that. Or you could even do it on a much more modest but still massively impactful level to advance a green transition agenda. The Fed has the capacity to do that.

Robert Pollin, Co-Director of the Political Economy Research Institute at the University of Massachusetts-Amherst

On the one hand, why should private companies get subsidized at all? On the other hand, if we are going to meet the emission reduction targets and face the climate emergency, we have to do it within capitalism. Because we’re not going to have another system in the next eight years. So, my view is that we can subsidize companies in exchange for very stringent standards to which they have to adhere.

Robert Pollin, Co-Director of the Political Economy Research Institute at the University of Massachusetts-Amherst

Greg LeRoy is the founder and Executive Director of Good Jobs First, a non-profit, non-partisan research center on economic development incentives and

corporate accountability. Good Jobs First maintains three unique national databases on subsidies and two wide-ranging databases on corporate misconduct. He has been training and consulting for state and local governments, associations of public officials, labor-management committees, unions, community groups, tax and budget watchdogs, environmentalists, and smart growth advocates more than 30 years.

 

We have to back up and remember that we should never assume these things “work.” And I put the word “work” in quotes because the truth is— and people who make their living helping companies shake down governments will admit this if you ask them— incentives almost never determine where companies actually choose to expand or locate. They don’t, because they can’t, because state and local taxes are a microscopic cost variable for the average company.

Greg LeRoy, founder and Executive Director of Good Jobs First

There is a Left/Right coalition pushing an interstate compact right now. There’s been bills introduced in 13 states by a lovely mixture of libertarian and progressive state legislators advocating for this. There is a Left and Right consensus on this issue. The problem is the squishy Centrists in both parties, frankly, who were impossible to move. But this would set up a mechanism through which the states could cooperate. And that’s inherently subversive.

Greg LeRoy, founder and Executive Director of Good Jobs First

 

We’ve reached the stage now where anybody who calls our economy a capitalistic economy is not up to date. It’s a government-guaranteed corporate capitalist economy.

Ralph Nader

7 Comments

  1. David Faubion says:

    The idea of a national buyout of some major fossil fuel corporations is timely. Even if we are in a seller’s market and the fossil industry is way overvalued, Biden ought to flex his executive and reconciliation powers to at least give some public exposure. Just the effort would have some effect on the conversation..

  2. Demetrio says:

    Havin lived in a country with socialized oil and utilities, I can tell you socialism doesn’t work.

  3. Don Harris says:

    Having lived in a country controlled by capitalism, I can tell you capitalism doesn’t work either.

    Both capitalism and socialism have more flaws than positive features and both ignore the only “ism” worth paying attention to- realism.

  4. David Hutchinson says:

    Russia was provoked by Aegis Ashore facilities. ADMIT IT, and move on–then you won’t need the sanctions. Even if they hadn’t been provoked, sanctions don’t work. Look at the new alt trading-bloc WORLD that’s forming up. The sad fact of the matter is THE OUTSIDE matters, globalization takes forever to slow down. We have to, somewhat unfortunately, re-link up with the outside world. Climate action’ll take money…right now arrays all over the US can’t get panels…guess why? (sanctions) If the panels could get here yesterday, though, we’d still need buku $ to further adapt to climate disruption. I don’t think strictly an internal philosophy will save us (as much as I wish it would). Car manufacturing in Germany may hit skids due to sanctions that’ll restrict supplies…needed by outfits that fashion aluminum items and glass items. I’m not saying anyone here really existentially NEEDS bmw replacement parts, but that’s a simple problem [the value’s high right now–trade it in for something else [M4A is more needed than Amazon]]. Yes, all our service jobs here otoh (which is all we do now) ARE BUILT ON TOP OF A “SIMPLER” THING CALLED MANUFACTURING. If you can get NO warranties on all the TVs/laptops and lawnmowers sold at Walmart, who will buy’em? And then concomitantly…what jobs will be left even at Walmart?? AFAICS America’s service economy is fragile like that, hence actually [as a sociological phenomenon] more complex?

    No, I think the 3rd party will have to get the big issues right: war, sanctions, and Covid. Give me a “lovely mixture of libertarian and progressive state legislators” agreeing on these items! Biden’s Covid posture IS NOT addressing spread of infection. Rightness on the biggies is a HARD thing to face, but globalism’s got us too integrated with the OUTSIDE for us kids not to start playing fair with the neighbors’ kids (guess the “adults” already have a couple acres and a garden?). Many govs on the outside are seeing regime change in Ukraine->Russia->China for what it is…harebrained (while they’re also at the same time threatened by panicked isolationists). We best hope and pray they can keep thinking straight is all I can say. That big opposed-to-us-bloc can save the biosphere somewhat as we know it a few more decades…as soon as we get our poop together and help it out (hey, cause we met that dude, and he is us).

    Nevertheless, there can and should be tons of jobs weatherizing. Plus OF COURSE tons of jobs in healthcare [what we need to do is BE like Cuba]. I would say typed-in-money leads to trouble if it doesn’t in the future come to represent something-of-value-created [IOW in the future the bucks’ll still be out there, but so will be the new assets they were for]. The plan to get the Fed to buy the state bonds doesn’t seem any crazier than typing in $4 Trillion for Covid relief (the destination of that dough did for sure, though, end up crazy (but it needn’t have)). We’re in a big pretend game wherein medical answers are oh so well known, while all the drama projected is over how to stop the big scapegoat. Phoney, phoney, phoney. It’s completely the other way around: in the real world of COPING there’s no need for that scapegoat, while governments and too many scientists are shirking when it comes to the truly complex issues posed by the pandemic.

    Re Covid, please check out this from 7/13/22 “New Biden BA.5 ‘Plan’ Openly Abandons Metrics for Preventing Infection, Butchers Mask and Ventilation Policy” https://www.nakedcapitalism.com/2022/07/new-biden-ba-5-plan-openly-abandons-metrics-preventing-infection-butchers-mask-and-ventilation-policy.html

    and also this from 6/22/22 which to me is a little more direct: “Fast and Furious Omicron New Variants Defy Explanation, and Don’t Bode Well for Future Either” https://www.nakedcapitalism.com/2022/06/fast-and-furious-omicron-new-variants-defy-explanation-and-dont-bode-well-for-future-either.html

  5. Ben Leet says:

    There’s a new web page available from economists at U.C. Berkeley called Realtime Inequality, and it shows income growth from 1976 to present day, 2022. Since 1976 the lower-earning 50% of adults saw their average incomes grow from about $15,000 to about $20,000/year – up $5,000 in 46 years. The next 40%, from the 50th to 90th percentile, saw their incomes grow from $55,000 to $92,000 – up $37,000. And the top 10% saw their income grow from $154K to $407K, average – up $253,000. The average growth for all was “up $43,000”. The head economists have been working on the inequality details for almost 2 decades. “Striking It Richer” was the title of their annual reports. This shift of income distribution resulted in a 14% shift and loss to the lower-earning 90%, which today is about $3 trillion/year, and that comes to $22,600 per household/year for the 117 million households comprising the lower 90%. I looked at ITEP.org, Who Pays Taxes in America for a summary of average income amounts; the lower 20% – $14,400, the 20-40 percentiles’ average – $33,800, the 40-60 group – $55,500, the 60 – 80 group $90,800. Now add $22,600 to those averages, and we are back in the world of 1976. Carter’s running for president, Gerald Ford is wearing a WIN button on his coat. Incomes for all households had doubled between 1946 and 1976 (inflation adjusted or real), all income levels gained at mostly the same rate. It is pretty insane now, in 2020 to 2021, that corporate equities gained so much; take a look at this Fed graph — https://fred.stlouisfed.org/series/BOGZ1LM193064005Q — it shows a gain of nearly $20 trillion in a 21 month period, 2020 Q1 to 2021 Q4. How much is $20 trillion, it’s about the total national income for either 2020 or 2021. The savings rate was extraordinarily high for 12 months of Covid, before the vaccines were administered, it average 19.0% of all income, about $3.7 trillion. Now add in the $4 trillion that Pollin talks about, contributed by the Fed, about $8 trillion in all — but the total gain was $20 trillion. Financial assets (stocks) are bid up and up, creating an asset bubble, and we also have a housing price bubble. The housing bubble is almost at the same level today as it was in 2006. The value increase of corporate equities, $20 trillion, divided among all US households is $153,000 per household. This is more than the net worth of over half of US households, which is around $120,000. The total “household net worth” says the Fed’s Flow of Funds, page 2, is just under $150 trillion, which is $1.1 million per household. And the lower-saving 40% own just 0.2% of all net worth, shows a study from the Credit Suisse bank’s Global Wealth report (Databook, page 136, to be precise). The Fed and the Realtime Inequality show that the lower 20% have rising incomes and wealth lately. Realtime shows average wealth per adult is about $12,000 in the lower 50%. But the lower 40% have much less than that. That’s a lot of detail — the main point is that we have severe inequality of income and wealth, and it’s having a bad effect. I write a blog, Economics Without Greed, Part Two, http://benL88.blogspot.com