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Biden's Response to Corporate Power & Navigating The Current Goldilocks Economy.
Examining the Energy-Complexity Spiral.
Here is what we will be getting into today:
Biden Taking Action to Address Corporate Power.
Exploring Biden’s "Goldilocks Economy": A Strange Place of Demand and Supply Shock.
How Increased Complexity in Energy Production Leads to Diminishing Returns and Higher Costs
Let's Get To It!
Title: Bill Clinton Has Left the Building.
Here are the key highlights:
In his State of the Union address, President Joe Biden called for a shift away from the neoliberal mentality that has dominated politics in recent decades. Neoliberalism refers to market oriented reform policies such as eliminating price controls, deregulating capital markets, lowering trade barriers. He emphasized that the focus of politics should be on delivering for people, rather than appeasing corporate interests. This represents a stark contrast to the political approach of the Clinton administration in the 1990s.
One of the key themes of Biden's speech was the problem of monopoly power and the undue influence of corporations over our lives. Biden cited examples of government intervention that have improved people's lives, including the creation of roads, electricity, and old age benefits.
Biden proposed several measures to tackle big businesses, including capping insulin prices, banning non-competes, and limiting overdraft and credit card late fees. These proposals are significant because they directly challenge the power and profits of Wall Street Democrats and the airline industry, who have reacted negatively to them.
Biden's proposals include introducing competition in hearing aids, stronger antitrust laws against big tech, unionization laws, domestic production subsidies, and bans on hidden fees charged by banks, hotels, airlines, and entertainment companies.
Proposals to tackle monopolies and unfair practices by big businesses have provoked strong reactions from Wall Street Democrats and other corporate interests, with some attacking specific aspects of Biden's plan. However, it is important to ensure that Biden's words are followed up with action to truly address corporate power and its corrupting influence over society.
Recent developments, including Apple's decision to kill off Dark Sky, Pennsylvania pension funds being asked to ditch Wall Street money managers, and private equity assets becoming problematic in a downturn, are making it clear that monopolies are no longer as secure as they once were. These events and actions taken by both private and public entities are making the environment for monopolies increasingly difficult.
Private equity assets have become problematic during economic downturns due to their high levels of debt and lack of liquidity. Some firms are hesitant to write down these assets for fear of damaging their reputation and fundraising efforts. In response, there is a growing trend towards greater oversight of private equity and other big business practices.
Senator Todd Young's comments on the FTC's noncompete proposal have breathed new life into lawmaker efforts to tackle monopolies and unfair business practices. He has proposed legislation to restrict noncompete agreements used unfairly by companies with significant market power. The proposed law aims to prevent anti-competitive tactics used by businesses to maintain dominance in certain industries.
Title: The state of Bidenomics.
Here are the key highlights:
The state of the U.S. economy is in a strange place with a positive demand shock and negative supply shock. The positive demand shock has led to high employment and fast wage growth, while the negative supply shock from the Ukraine War has added to inflation and dampened economic activity.
Despite predictions of a recession, unemployment is at its lowest since the 1960s and job openings are at their highest since records began. It is unclear whether the current economy is due to the Federal Reserve's interest rate hikes or other factors such as Biden's policies, but Biden deserves credit for the current "goldilocks economy".
The Fed's decision to raise rates quickly to combat inflation caused asset prices to go down and mortgage rates to go up. Biden's re-nomination of Jerome Powell as the Federal Reserve Chair gave him confidence to make these decisions, while his easing of sanctions on Venezuela and allowing India access to Russian oil at a deep discount contributed to increased oil production and lower prices. Biden supported offshore drilling and leasing federal lands for oil extraction as well as investing in solar and wind power technologies, all of which contributed to stabilizing inflation levels without sacrificing economic growth.
The US economy has rebounded under President Biden's term, but there are lasting scars from two years of high inflation. The U.S. economy is still facing challenges, particularly in the area of wages which have not kept up with inflation, leaving the middle class feeling left behind.
President Biden has proposed policies such as guaranteeing a living wage and passing the PRO Act, but these may not pass due to Republican control of the House. The best way for the president to help is by continuing his efforts to increase investment and keep inflation low. Staffing federal agencies with pro-union people could also help increase labor's share of income. Biden needs to take a whole-of-government approach to tackle project delays and excess costs to make real investments possible.
Even though Biden's investment-boosting policies have yet to take effect, passing the IRA, CHIPS Act, and Bipartisan Infrastructure Law are positive steps towards increasing investment. It may take time for investments to be seen, as it did after the passage of the Interstate Highway Act in 1956. High construction costs in America lead to delays, which further increase costs and stifle investment. America's system is set up to stifle investment, and Biden must tackle barriers preventing development and push for permitting reform on all levels of government. Only then can America begin investing again in earnest.
Website: Our Finite World
Title: The Fatal Flaw Of The Renewable Revolution
Here are the key highlights:
The energy-complexity spiral suggests that there are diminishing returns to added complexity in solving energy problems, which can lead to an increase in the cost of energy production due to diminishing returns. This can make renewable energy sources like wind turbines and solar panels less affordable.
Recent trends in the global economy have revealed a shift towards lower complexity due to several factors, including diminishing returns from innovations, limits to growth in complexity, and reduced available energy supply leading to simplification.
There has been a significant rise in energy costs across the OECD countries, with electricity prices spiking, as well as prices of coal and natural gas. OECD countries consist of richer countries like the US, most European countries, Japan, Australia, and Canada, & some others. High energy costs have caused financial strain on citizens in OECD countries. Total energy costs began spiking relative to GDP in 2022, pushing many economies into recession as citizens cut back on non-essentials to save money.
Coal extraction limits are being reached due to flat production since 2011 and high shipping costs. Utilities are moving towards other types of electricity generation, such as wind or solar power, due to the lack of growth in coal production. Natural gas production has not kept up with rising demand for imports from many directions, and prices are highly variable depending on production location and shipping. Europe has been taking chances on low spot market prices for natural gas, but this approach can backfire due to lack of infrastructure to produce and ship natural gas profitably.
The tightening of world coal supplies could have major implications for the global economy if it leads to recession or war as complexity limits and energy production limits are reached. However, the Maximum Power Principle suggests that some economies may eventually access new energy sources if they can be accessed cheaply enough. Further research into the changes in the use of electricity is necessary to better understand how these changes affect economic growth and environmental sustainability across the globe.
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