2022-10-14 Kate Mackenzie - political econ of everything

Kate Mackenzie (@kmac): 1/ Interested in the political economy of climate+everything? Me, @70sBachchan & @phenomenalworld launched the Polycrisis project last Thursday with an awesome panel. Listen to @triofrancos @IrvingSwisher @TheStalwart discuss the Geopolitics of Stuff here: https://www.youtube.com/watch?v=6J5yBzsmdow

[You can READ a lightly edited transcript here: https://www.phenomenalworld.org/interviews/geopolitics-of-stuff/ ]

2/ We’re in a world of overlapping crises. Covid shutdowns & reopening, increasing disruptions from extreme climate, war, and dollar debt crisis. Chokepoints in supply chains that cause shortages and a violent rearranging of the global economy.

3/ These multiple global crises have exposed the fragile physical and political underpinnings of world trade. Persistent shortages and spiking energy bills are transferring the pain of distant crises to ordinary workers and consumers. What must be done?

4/ After 2008, everyone got to grips with finance and credit default swaps. Now we are faced with a “revenge of the real.” A world of shortages, blackouts, climate disruptions, & govts increasingly resorting to protectionism, price-caps, bans, rationing. Do they work?

5/ 2008 crash was dealt by Fed backstopping mkts. Now things are more challenging. “There's no grand unified equivalent to solving a problem of global stuff coordination, whether it's logistics, energy, or how to incorporate renewable energy onto the grid.” @TheStalwart

6/ ”... @tracyalloway & I spent 2021 on our podcast talking about lumber & used car prices. How there was a housing slowdown in 2010s, & all the lumber mills went out of business...now we are in a world where no one wants to hear your excuses about why inflation is 10% [...]”

7/ "The traditional macro world still exists. The Fed is still more or less in a traditional macro framework. We can talk all the time about supply chains, or idiosyncrasies of inflation in Europe, but there is less appetite for that now" @TheStalwart

8/ “Where does the pain point come in, when you're trying to apply these blunt macro instruments to the situation now? The situation with energy prices in Europe isn't solvable with interest rates. Everybody knows that ECB doesn't have the tools to address that” @TheStalwart

9/ “What happens when we apply these blunt macro instruments to a world that's suddenly fragmented and complex and reorganizing and re-architecting itself? To my mind, that tension between those two things is the interesting story right now.” -@TheStalwart

10/ Commodity markets are volatile. “We had three big oil price crashes in a matter of 7 years. The big 2014-2016 decline from triple digit oil prices to $25. A mini crash in 2018-19. And negative oil prices in April 2020.”

That volatility led to underinvestment @IrvingSwisher

11/ Manage the volatility of boom and bust with Strategic Petroleum Reserves stored inside the huge salt caves of Texas. We @employamerica proposed that Biden use SPR to reduce volatility & provide some certainty to producers to invest - @IrvingSwisher https://www.employamerica.org/researchreports/spr-esf-dpa/

12/ Can global south countries develop and industrialize off critical minerals? Unlikely says @triofrancos. "the fact that these markets are now linked to fighting climate change, and to the energy transition, doesn't mean that very much has changed about how they operate"

13/ Commodities are not a route to sustainable equitable development for countries. Revenues from extraction are volatile - they go through boom and busts. Extracting them is environmentally toxic. And with droughts, where is the water to process or transport them @triofrancos

14/ “there's a huge disparity between where raw materials come from and where the profit eventually ends up. I just learned this statistic recently. And it shocked me. The top 20% of the global population consumes the vast majority of industrial metals” @triofrancos

15/ "The global north is doing what they told the global south not to do for so long"
@triofrancos on the hypocrisy of rich countries pursuing industrial policy, nationalizations,& US flouting WTO rules against protectionism with IRA’s Make in America battery mineral provisions

16/EU & DC are throwing $ to mining companies, “cheap loans, direct venture capital. In EU, it's de-risking– all of these ways that make investments more lucrative and less risky. These are giveaways, with no public stakes or equity, without any public ownership.” @triofrancos

17/ "Can we use this moment to actually have more leverage in terms of ownership, stakes, and decision making, and even those scary words of “planning” and “coordination”? Are there things that we can do other than throw money at companies?" @triofrancos

18/ The model for 2022's energy crisis is 2020-21's masks and vaccine crisis. Shortages lead to bidding wars. And developing countries lose those bidding wars because richer countries can pay more for masks/vaccines/energy on a global market. @70sBachchan

19/ What do we get with bidding wars? Blackouts in Bangladesh.
Europe and Japan are much richer & are outbidding them for limited LNG cargos. Companies are breaking contracts to deliver gas to Bangladesh, paying small penalty & making 10X the $ selling to Europe -@70sBachchan

20/ So bcs of bidding war, there is a direct link between shortages, broken contracts and blackouts in developing countries. While the rich world has energy, ability to pay and issue debt on bond markets to the tune of 5-10% of their GDP and obtain scarce goods. @70sBachchan

21/India,Indonesia etc use their market power to get greentech from West. "I've got 300 million ppl in this country,if you want access to my market, here are conditions you must satisfy. You must transfer technology,so that we could move up the value ladder ourselves”@70sBachchan

22/"The neoliberal body of ideas that was used to lecture countries has shifted. The shift might lead to more collaboration with developing countries. In the end, there is a lot of interconnectedness that's not going to go away. We’ve crossed a certain Rubicon there" - Skanda

23/"The term industrial policy is a big umbrella. Almost anything can pass for industrial policy, if you call it that! Is a tax break for a company industrial policy? We did that before under neoliberalism.” Must have debates about its goals & political coalitions @triofrancos

It was a thrill to (attempt to) moderate a discussion among such a smart bunch of people on such important topics. Especially while kinda jetlagged. Thankyou! 🙏 https://twitter.com/kmac/status/1580643900170960896/photo/1

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