Month: March 2024

Baltimore Bridge Crash, Sal Mercogliano on Odd Lots, the SS United States, and Kim Stanley Robinson

I can only explain three posts in one month with the fact that (one) I have a lot of ideas for posts stuck in different parts of my brain (I know that’s not how the brain works) that may be pushed back to the forefront by breaking news, (two) I have to write an exam, and I am procrastinating, and (three) Odd Lots routinely does this for me.  

As you likely know, a container ship crashed into the Key Bridge in Baltimore on Tuesday morning (March 25, 2024), causing all kinds of physical and economic damage. After the bridge collapsed, 8 people fell into the river; 2 were rescued, 2 have been confirmed dead, and 4 more are presumed to have died. The economic damage has implications close to home – the bridge served many many commuters, who are stuck waiting for alternate routes to be provided – and far afield – though relatively small, the Baltimore port handles lots of auto exports and imports; it is the primary port for exporting US coal; and it is apparently also important for coffee and sugar trade. The close-to-home consequences had an odd resonance for me – I grew up in Maryland, and my memories of many traffic reports on the Key Bridge over a childhood of listening to the radio have surfaced in the past two days, and the Key Bridge’s closure dovetails with recent bridge drama in the state I now live in, which created massive traffic turmoil in December and lasting traffic delays as the state has determined that the Washington Bridge has structural failings and must be rebuilt. The bigger national and international effects are mind-boggling in their scope. In a moment where global trade is in a heightened state of uncertainty with physical supply shocks to key commodities (oil, gas, grain) as well as attacks on trading vessels in the Red Sea, any physical damage to key port infrastructure will add to delays facing producers, retailers, and consumers, as well as costs for goods, materials, and time.

Of course, Odd Lots was right on it. Tracy Alloway and Joe Weisenthal had an interview with Sal Mercogliano ready within hours of the news of the crash, which is astounding turnaround. I only got around to listening to it yesterday, but learned a ton in the process. Among other things, Tracy and Joe asked Mercogliano about the physical elements of the crash, the legal elements of assigning liability in the wake of a crash like this one, the economic consequences for Baltimore commuters port workers, and both importers and exporters, and the likely lengthy timeline of reconstruction of a massive feat of engineering with no plans at hand for its redesign and construction in a moment of ever rising costs. You should listen! I learned a ton, despite having missed a lot of recent reporting in the past few years on container ship mishaps like the Ever Given’s mishap in the Suez Canal in 2021 and the grounding of the Evergreen in the Chesapeake Bay in 2022. This was largely by design; I had to hustle to publish a bunch since I was on the tenure clock and had had some unfortunately timed rejections/delays, and couldn’t indulge the schadenfreude impulses of a lot of left-ish Twitter to note how these developments were inevitable in late stage capitalism.

However… one of the things that Mercogliano brought up when the hosts asked him about why all of these recent container ship accidents have been coming to light struck me. He noted that the speeding up and massive increase in scale of trade over the past decades, compounded with the chronic under investment in infrastructure in recent decades renders many of these accidents practically inevitable. It makes sense. When a port serves increasing numbers of ships, which have increased in size to match demand for trade and technological advancements, and when that traffic has to move faster to meet consumers’ and businesses’ for ever more rapid fulfillment of orders to maintain status quo, more mistakes will be made, more crashes will happen, and infrastructure will fail more catastrophically. Biden’s announcement that the US’s federal government would pay the full bill for rebuilding the bridge is reassuring (though it will require Congress’s participation), given the physical costs, as well as the effects on the livelihood of the many port workers, but it also highlights the likely need for infrastructural improvement around the country for ports, bridges, roads, subway and train lines, and so much else.

At the same time, I can’t stop thinking about the demand side of that equation Mercogliano identified, and it’s made me think about a recent favorite book, Kim Stanley Robinson’s Ministry for the Future. I took a long time to read that one, too (blame the pandemic and everything else), but I finally finished it last summer, and one of the more striking developments KSR describes is the development of fast ships as an alternative to trans-oceanic flights when eco-terrorists begin to systematically take out private and commercial planes. To be clear: I don’t want eco-terrorists to start taking out planes, but I think this was a realistic assessment of what it would take to ground large numbers of airplanes and jets at the global level, and also what would prompt a move back to reviving fast ship technology. This wasn’t the first time I’d thought about KSR’s fast ships in the month of March, either; this story in NPR about the struggle to find a new home for the SS United States, which used to be the fastest ship in the world, and is currently hanging out in disrepair in Philadelphia, made me think about it back in early March. The US government helped pay for the ship, with the reasoning that the technology could be used for military purposes in the Cold War, though the ship was apparently mainly used for classy transit across the Atlantic in unprecedentedly short order (3 days, 10 hours, 40 minutes).

KSR’s protagonist Mary takes a new fast ship across the Atlantic when she has to go to the States to keep pestering central bankers to do more to facilitate the global transition from carbon, and she is amazed at how pleasant the voyage is. She can do work, she can enjoy the views, and the problem of jet lag disappears. She also realizes the central sin (if I may presume) of capitalism: the notion that everything had to be done as quickly as possible begat the creation of technology to enable ever faster fulfillment of wants and needs, and the environmental cost of that was what looked like an imminent global collapse. I think about this so often! Obviously there are certain services we want to complete as quickly as possible – medical interventions, provision of aid (food, water, electricity, fuel) etc. But so many of my wants are just that; I’m certainly guilty of ordering a lot of crap from Amazon at much faster speeds than could really be justified. At the same time, my tendency to drive (and so many others’), and to drive too fast, is related in major part to other demands on our time. What would it take to reduce people’s fears of punishment if they did not complete everything as quickly as technology allows, in favor of a more sustainably paced completion of tasks?

There’s no immediate solution to this. Institutional change is slow, and even for those with the luxury of jobs that allow for more time off and periods of working from home, it’s hard to resist generations of pressure to work as hard as possible. Changing consumption patterns is also a third rail of environmental policy. I know that we live in a second-best world at best (it’s usually more like we’re on our 10th best or worse) in terms of compromise and optimality of choices being debated, and I am generally on ‘team build more’ to deal with climate change. But those positive incentives to do the right thing are best matched with incentives not to do the bad things too; it’s part of what I really appreciate about the Inflation Reduction Act, every time I dig into its details. These are complicated tradeoffs, and I don’t have any answers, but these are some things I am often thinking about. But if anyone at the Department of Transportation, or the Biden administration, is reading, could you find a place to house the SS United States, and maybe put a few dollars into researching a revival of ocean liners? I would love that.

Industrial Policy, Hamilton and Deese, and Odd Lots and Shift Key

A dirty secret of mine is that I go through long periods of not listening to podcasts I know that I enjoy and learn a lot from in part because I know that they will tempt me (successfully) to buy books that I don’t have the time to read. My office shelves and bedroom floor overflow with books on a wide range of topics, many of which I haven’t cracked, that I’ve been clued into by Twitter mutuals, interviews I’ve listened to, or reviews I’ve read (did I cancel my London Review of Books subscription both because of piles of unread copies and also many more book purchases? I did!). So it’s notable that I’m letting myself listen to more engaging and informative podcasts about economic issues recently (in addition to music and comedy ones), in part because I’m feeling strong pulls to drop what I’m doing and read some of those acquired books (or buy some new ones) about topics more closely related to what I’m doing now.

One pair of podcasts that dovetail really nicely was Tracy Alloway and Joe Weisenthal’s Odd Lots interview with Christian Parenti about his relatively recent (2020) book Radical Hamilton, Hamilton’s views on developmentalism, and the history of industrial policy worldwide, and a two–part conversation between Jesse Jenkins and Robinson Meyer of Shift Key with Brian Deese, former economic advisor to the Biden Administration (in addition to a bunch of other high profile positions), about the Inflation Reduction Act, the Biden administration’s approaches to inflation, tensions between monetary policy and fiscal policy, and some nitty-gritty trade stuff related to electric vehicles (and more).

These podcast episodes are great – characteristically so! Hosts and guests on each are speaking to important topics in ways that translate technical and abstract information into engaging and comprehensible episodes. Tracy, Joe, Jesse, and Robinson all ask pointed questions that I would about the relative benefits of economic intervention, neo-mercantilism (the support of domestic industry to the potential disadvantage of economic competitors) in different ways, the track record of economic intervention on behalf of domestic industrial actors/institutions, and the tensions that result at the macro level from the interplay of policies (monetary, fiscal, financial) and sectoral interests (firms, households, rural, industrial) in important ways. They underscore the politics inherent to decisions to intervene or – crucially! – not, and highlight the historic integration of political interests, government practice, and industrial potential. Christian Parenti and Brian Deese for their part bring a wealth of nuanced insight from their respective experience digging into the history of US economic policy and the legacies of debates in Alexander Hamilton’s time, and crafting economic policy in the midst of crises that will survive partisan discord. I definitely recommend that you all listen in or read the transcripts if you can.

Listening to each episode highlighted the contradictions of both industrial policy and trade policy for globally interconnected economies (which is to say, all of them), but particularly from the point of view of the US. I’ve written about this myself in the past few years in a few areas. In a chapter I wrote for the book Debates in Monetary Macroeconomics (edited by Steven Pressman and John Smithin, published by Palgrave Macmillan in 2022), “The Ambiguous Effects of Targeting Current Account Surpluses,” I discussed historic debates about the value of promoting domestic production for export specifically in order to generate trade (or current account) surpluses, as well as current considerations for economies about the relative benefits of targeting trade surpluses from monetary, fiscal, and aggregate expenditure standpoints. Digging into the history of thought (which was fun!) meant going back to Adam Smith, who was generally pro-trade on efficiency grounds, and acknowledged the potential for exports to provide a ‘vent for surplus’ though which economies could offload output for which domestic demand was insufficient, and counterposing that with both earlier thinkers who had promoted mercantilist looking policies like protectionism, imperialism/colonialism in search of bullion, and other policies designed to promote domestic manufactures and Friedrich List’s later ideas about the benefits of fostering domestic industry through government support that might be called developmentalism. I also contrasted these ideas with John Maynard Keynes and Joan Robinson’s nuanced critiques of export-led growth. While Keynes’s essay “National Self-Sufficiency” is often described as a tribute to the promotion of economic self-reliance, it in fact argues that some nations (namely those with large economies) have the luxury of prioritizing domestic consumption, while others (smaller economies) may rationally target trade surpluses and promote domestic industries in order to stay afloat in order to access foreign currencies from those stronger economies. Joan Robinson, for her part, strongly critiqued ‘beggar thy neighbor’ polices (which I was delighted to hear Tracy ask about) given the inability of every economy to generate a trade surplus. My favorite chapter of Keynes’s General Theory may actually be the last one, where he talks about the destructive consequences of protectionism during the interwar period, and writing this chapter taught me that when many powerful economies (eg, the US and Japan) enact trade agreements with weaker partners, the larger economies tend to eschew trade protections that hurt the smaller economy, while allowing the smaller economies to enact protections against their stronger partners.

(These agreements can of course be revoked in the name of statecraft; the US famously suspended such an agreement for Ecuador in 2013 when Ecuador declined to extradite Julian Assange to the US when he was hiding in Ecuador’s embassy in London, and in later years, Ecuador’s subsequent president revoked Assange’s asylum in that building in part to revive trade relations with the US.)  

My own conclusion in the piece, if the title didn’t make it clear, is that targeting trade surpluses is sometimes beneficial and sometimes not. Large economies like the US shouldn’t be too worried about the size of the export deficits, since domestic demand more than compensates for the losses from trade. For smaller economies, the question is less clear; smaller economies are more mindful of their access to foreign currency reserves, and trade is one means of building those reserves up. Trade surpluses are also a good way to insulate against austerity measures from organizations like the IMF; Isabella Weber’s book How China Escaped Shock Therapy: The Market Reform Debate clearly demonstrated the value of large trade buffers in protecting economies from punishing conditionality from international financial organization.

Finally, I argued in the chapter – and I continue to think it! – that worrying about trade surpluses in ways that prevent attending to climate change is shortsighted. This last bit had me listening super intently to the part of Meyer and Jenkins’s conversation with Deese. The Biden Administration has included provisions in the IRA that many have critiqued as neomercantalist for how it denies fiscal support for the purchase of Chinese produced EVs and other technology that would lead to a decrease in carbon emissions overall. While I think that Deese may have avoided a key part of Jenkins and Meyer’s question about whether protectionism of US industry was more important than quickly implementing, I think he made an important point about the virtues of targeting output for both domestic and international demand. The promotion of domestic production isn’t mutually exclusive with demand for foreign output, and there are benefits, particularly if we conceive of climate change as a defense challenge, which is a trope that Tracy and Joe invoked early in their conversation with Christian Parenti. If we want to move out of the bad Prisoners’ Dilemma equilibrium of neoliberalism (decreased public spending and decreased domestic manufacturing except in a handful of manufacturing powerhouses) toward a better Prisoners’ Dilemma represented by Bidenomics (more domestic production around the world to meet the global challenges of climate change) targeted economic policies that benefit producers and households and that capitalize on both fiscal and monetary powers will all have to be deployed.

This is hardly the end of what I’m thinking about since listening to these podcasts, so more soon, hopefully! However, to briefly go back to the lede, listening to these episodes is leading me to buy more books (ahem, Radical Hamilton, and I definitely have my eye on Paper Soldiers after listening to another great Odd Lots episode interviewing Saleha Mohsin about the US dollar and its international power, which is definitely linked with the trade stuff described in this piece, that chapter I wrote, and other papers I’ve written recently) and also forcing me to finally read Trade Wars Are Class Wars, which I’ve read in bits and pieces since its publication back in 2020.

Travis Kelce, the IRA, and Funding for the Arts

The Tuesday after the Kansas City Chiefs won the Superbowl, Tatiana Siegel announced that a piece she had written for Variety was available, talking about how a movie produced by Travis Kelce for Radiant Media Studios was going to be funded in part by Biden’s Inflation Reduction Act (IRA). In brief, a producer of the movie, Mike Field, sold surplus tax credits he qualified for from green ventures he is involved with, and used that revenue to help fund Kelce’s movie. This piece set off a minor kerfuffle on X/Twitter, some of which related to Kelce’s cinematic and funding worthiness: why should Kelce make a movie, first of all, and why should Travis Kelce need help funding movies? Critics of the IRA’s primary mechanism of funding (the sale of tax credits to private firms rather than outright public spending) cried foul. This was derisking for Travis Kelce! Of course an administration fixated on private funding would use this law to greenwash movies by Taylor Swift’s boyfriend.

Setting aside Travis Kelce’s cinematic worthiness, there are two interesting questions at the heart of this. Why can’t the Biden Administration just give money directly to artists? Second, should we disregard novel means of funding the arts, or pursue new means to fund industries in a moment of identity crisis, if not total immolation?

Funding for the arts in the form of grants to states and non-profits has increased steadily since 2020. Recent legislation from the CARES act onward has included funding requests specifically for the arts. Members of congress who designed the CARES act specifically included $75 million in funding for the National Endowment for the Arts (NEA), 40% of which to be distributed as grants to state governments, and 60% of which to be distributed to non-profit institutions, to respond to challenges created by Covid, $75 million in funding for the National Endowment of the Humanities (NEH), 40% of which was destined for state governments, and 60% of which was to be distributed as competitive grants to at-risk communities, and $25 million to be appropriated to the Kennedy Center for the Performing Arts, $7.5 million to be distributed to the Smithsonian Institution, and $78,000 to the Institute of American Indian Arts, a public college tribal college that focuses on Native American Art. Businesses and non-profit institutions in the arts also qualified for the Paycheck Protection Act, and many workers in these sectors that were laid off qualified for expanded unemployment insurance; other legislation specifically targeted free-lance workers, by allowing them to apply for unemployment if they could not find work in the midst of the Coronavirus Pandemic. Since the CARES act, other legislation responding to Covid-19 has directly and indirectly supported the arts, more than doubling that funding in 2021 under the American Rescue Plan Act (ARPA) ($200 million in funding for the Institute of Museum and Library Services, $135 million for the National Endowment for the Arts, and $135 million for the National Endowment for the Humanities), and further increasing spending in 2023, with the IRA’s appropriations of $207 million each for the NEA and the NEH.

Though funding for these organizations have increased steadily since 2020, there is more space for funding in these industries, as rents have increased across the country and particularly in cultural hubs.

What about the creation of novel forms of support for arts and humanities institutions? One feature of the Coronavirus pandemic was an outpouring of novel forms of support for businesses and municipal governments in the form of back stops by the Federal Reserve, the US’s central bank. Under this program, the Federal Reserve committed to purchasing corporate bonds and municipal bonds from investors who feared that these institutions might default on their debt. The mere announcement of this program reduced funding volatility for corporate bonds and state bonds almost instantaneously. As a public backstop for the arts, these sort of measures would be an improvement over crowdfunding initiatives, under which private donations fill in for lost business, by creating larger buffers for cultural institutions. These initiatives could support either private capital for creative and artistic industries as well as municipal or federal bond initiatives for the arts, increasing the reach of these funding strategies.

There are more pedestrian ways supporting the arts and artists that are likely to benefit society as a whole. Grant programs exist for the arts; increasing the scope of these grants would be an excellent way of supporting the industries and institutions that give us joy, open our minds, and expand our horizons. Increasing unemployment support for freelancers would be another way to support artists. Particularly given recent layoffs in large media firms and institutions, more comprehensive support for artists would sustain their ability to contribute to our general welfare, as well as allowing them to cover the ever rising costs of living in the arts hubs of the US. More universal supports like comprehensive public health care and universal income grants would also go a long way to supporting artists, journalists, and anyone else in the country vulnerable to the industrial volatility clearly at work right now.

Novel approaches to supporting the arts – direct funding via Patreon or other crowd funding initiatives, backstopping of private and public arts spending, and (though they’re not my favorite) even block-chain tools like NFTs and more – matched with comprehensive and potentially boring fixes like grants to everyone, debt forgiveness, and universal health coverage would benefit everyone. Relieving funding pressure that economically and psychologically weigh on our abilities to flourish whether we are artists, journalists, or anyone else who is part of the rat race opens space for more experimentation at the individual and institutional levels. Comprehensive changes can exist alongside derisking strategies. In times of economic uncertainty, state and government officials should keep thinking and acting boldly to support the arts and those that make them, through direct spending initiatives and also through comprehensive plans like basic income. Who knows what artistic impulses may awaken if these measures succeed in being passed?