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Javier E

Breaking Silence, Richard Fuld Speaks on Love, Putin and 'Rocky' - NYTimes.com - 0 views

  • Explaining the origins of the financial crisis, Mr. Fuld avoided any mention of investment banks’ eagerness to issue subprime mortgages. (Lehman had an enormous portfolio of subprime loans.)“It’s not just one single thing,” Mr. Fuld said. “It’s all these things taken together. I refer to it as the perfect storm.”
  • At the root of the crisis, in his view, was the government’s push for homeownership. At the same time, hedge funds, private equity firms and sovereign wealth firms grew rapidly, supercharging the global financial system and driving up equity values, balance sheets, the volume of financial products and the need for financing, he said.“There was very little regulation or market supervision
  • Then in 2007, the Fed raised interest rates, essentially ending the housing boom it had encouraged, Mr. Fuld said.“The increased rates led to increased mortgage rates and payments, a huge number of residential foreclosures,” he said. “Banks wrote down and sold assets.”In the wake of this, companies began cutting costs and jobs, Mr. Fuld said, and it became “a self-fulfilling economic loop.”
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  • “I know you don’t want to hear this from me, but the wealthy are getting wealthier, and again, the belly of America is getting hurt,” he said. “Look, I’m a hard-core capitalist. But let’s be fair — capitalism only works if it starts at the top and filters down. If it doesn’t get down, we’re going to lose.”
  • “Taken together, they are fraying the fabric of our system,” he said.And once again, he pointed the finger at Washington, prompting the crowd to cheer
  • Mr. Fuld also quickly offered three data points that he suggested made it clear that Lehman could have survived, had the Fed not forced it to fail: “When Lehman was mandated into bankruptcy, we said our equity capital was $28 billion. Second, we had a Tier 1 capital ratio of 11 percent. Third, Lehman had unencumbered collateral of $127 billion.”
  • “It’s very easy to look back. As they said, hindsight is 20/20. There is no ‘if’ or ‘woulda coulda shoulda,’ ” he said. “You can only make a decision at any specific time with the best information that you think you have.”Going further, Mr. Fuld insisted that he could have saved the firm: “Lehman Brothers at the point of 2008 was not a bankrupt company.”
  • Asked what he could have done differently, he avoided answering directly, and instead said, “I think I missed the violence of the market and how it spread from one asset class to the next. Did we do everything we could? Did we fall prey to some other agendas? I’ll leave it at that.”
  • In the end, Mr. Fuld seemed hung up on the fate of his own firm, not the broader crisis that its bankruptcy helped ignite.
Javier E

The Dispossessed: An Ambiguous Utopia (Hainish Cycle Book 5) (Ursula K. Le Guin) - 0 views

  • instead of merely looking at it from outside. He took on two seminars and an open lecture course. No teaching was requested of him, but he had asked if he could teach, and the administrators had arranged the seminars. The open class was neither his idea nor theirs. A delegation of students came and asked him to give it. He consented at once. This was how courses were organized in Anarresti learning centers by student demand, or on the teacher’s initiative, or by students and teachers together. When he found that the administrators were upset, he laughed. “Do they expect students not to be anarchists?” he said. “What else can the young be? When you are on the bottom, you must organize from the bottom up!” He had no intention of being administered out of the course—he had fought this kind of battle before—and because he communicated his firmness to the students, they held firm. To avoid unpleasant publicity, the Rectors of the University gave in, and Shevek began his course to a first-cay audience of two thousand. Attendance soon dropped. He stuck to physics, never going off into the personal or the political, and it was physics on a pretty advanced level. But several hundred students continued to come. Some came out of mere curiosity, to see the man from the Moon; others were drawn by Shevek’s personality, by the glimpses of the man and the libertarian which they could catch from his words even when they could not follow his mathematics. And a surprising number of them were capable of following both the philosophy and the mathematics. They were superbly trained, these students. Their minds were fine, keen, ready. When they weren’t working, they rested. They were not blunted and distracted by a dozen other obligations. They never fell asleep in class because they were tired from having worked on rotational duty the day before. Their society maintained them in complete freedom from want, distractions, and cares. What they were free to do, however, was another question. It appeared to Shevek that their freedom from obligation was in exact proportion to their lack of freedom of initiative. He was appalled by the examination system, when it was explained to him; he could not imagine a greater deterrent to the natural wish to learn than this pattern of cramming in information and disgorging it at demand. At first he refused to give any tests or grades, but this upset the University administrators so badly that, not wishing to be discourteous to his hosts, he gave in. He asked his students to write a paper on any problem in physics that interested them, and told them that he would give them all the highest mark, so that the bureaucrats would have something to write on their forms and lists. To his surprise a good many students came to him to complain. They wanted him to set the problems, to ask the right questions; they did not want to think about questions, but to write down the answers they had learned. And some of them objected strongly to his giving everyone the same mark. How could the diligent students be distinguished from the dull ones? What was the good in working hard? If no competitive distinctions were to be made, one might as well do nothing. “Well, of course,” Shevek said, troubled. “If you do not want to do the work, you should not do it.” The boys went away unappeased, but polite. They were pleasant boys, with frank and civil manners. Shevek’s readings in Urrasti history led him to decide that they were, in fact, though the word was seldom used these days, aristocrats. In feudal times the aristocracy had sent their sons to university, conferring superiority on the institution. Nowadays it was the other way round: the university conferred superiority on the man. They told Shevek with pride that the competition for scholarships to Ieu Eun was stiffer every year, proving the essential democracy of the institution. He said, “You put another lock on the door and call it democracy.” He liked his polite, intelligent students, but he felt no great warmth towards any of them. They were planning careers as academic or industrial scientists, and what they learned from him was to them a means to that end, success in their careers. They either had, or denied the importance of, anything else he might have offered them.
  • Shevek touched her, silver arm with his silver hand, marveling at the warmth of the touch in that cool light. “If you can see a thing whole,” he said, “it seems that it’s always beautiful. Planets, lives. . . . But close up, a world’s all dirt and rocks. And day to day, life’s a hard job, you get tired, you lose the pattern. You need distance, interval. The way to see how beautiful the earth is, is to see it as the moon. The way to see how beautiful life is, is from the vantage point of death.”
  • instead of merely looking at it from outside. He took on two seminars and an open lecture course. No teaching was requested of him, but he had asked if he could teach, and the administrators had arranged the seminars. The open class was neither his idea nor theirs. A delegation of students came and asked him to give it. He consented at once. This was how courses were organized in Anarresti learning centers by student demand, or on the teacher’s initiative, or by students and teachers together. When he found that the administrators were upset, he laughed. “Do they expect students not to be anarchists?” he said. “What else can the young be? When you are on the bottom, you must organize from the bottom up!” He had no intention of being administered out of the course—he had fought this kind of battle before—and because he communicated his firmness to the students, they held firm. To avoid unpleasant publicity, the Rectors of the University gave in, and Shevek began his course to a first-cay audience of two thousand. Attendance soon dropped. He stuck to physics, never going off into the personal or the political, and it was physics on a pretty advanced level. But several hundred students continued to come. Some came out of mere curiosity, to see the man from the Moon; others were drawn by Shevek’s personality, by the glimpses of the man and the libertarian which they could catch from his words even when they could not follow his mathematics. And a surprising number of them were capable of following both the philosophy and the mathematics. They were superbly trained, these students. Their minds were fine, keen, ready. When they weren’t working, they rested. They were not blunted and distracted by a dozen other obligations. They never fell asleep in class because they were tired from having worked on rotational duty the day before. Their society maintained them in complete freedom from want, distractions, and cares. What they were free to do, however, was another question. It appeared to Shevek that their freedom from obligation was in exact proportion to their lack of freedom of initiative. He was appalled by the examination system, when it was explained to him; he could not imagine a greater deterrent to the natural wish to learn than this pattern of cramming in information and disgorging it at demand. At first he refused to give any tests or grades, but this upset the University administrators so badly that, not wishing to be discourteous to his hosts, he gave in. He asked his students to write a paper on any problem in physics that interested them, and told them that he would give them all the highest mark, so that the bureaucrats would have something to write on their forms and lists. To his surprise a good many students came to him to complain. They wanted him to set the problems, to ask the right questions; they did not want to think about questions, but to write down the answers they had learned. And some of them objected strongly to his giving…
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  • He found himself, therefore, with no duties at all beyond the preparation of his three classes; the rest of his time was all his own. He had not been in a situation like this since his early twenties, his first years at the Institute in Abbenay. Since those years his social and personal life had got more and more complicated and demanding. He had been not only a physicist but also a partner, a father, an Odonian, and finally a social reformer. As such, he had not been sheltered, and had expected no shelter, from whatever cares and responsibilities came to him. He had not been free from anything: only free to do anything. Here, it was the other way around. Like all the students and professors, he had nothing to do but his intellectual work, literally nothing. The beds were made for them, the rooms were swept for them, the routine of the college was managed for them, the way was made plain for them.
  • she was not a temporal physicist. She saw time naïvely as a road laid out. You walked ahead, and you got somewhere. If you were lucky, you got somewhere worth getting to. But when Shevek took her metaphor and recast it in his terms, explaining that, unless the past and the future were made part of the present by memory and intention, there was, in human terms, no road, nowhere to go, she nodded before he was half done. “Exactly,” she said. “That’s what I was doing these last four years. It isn’t all luck. Just partly.”
  • Shevek touched her, silver arm with his silver hand, marveling at the warmth of the touch in that cool light. “If you can see a thing whole,” he said, “it seems that it’s always beautiful. Planets, lives. . . . But close up, a world’s all dirt and rocks. And day to day, life’s a hard job, you get tired, you lose the pattern. You need distance, interval. The way to see how beautiful the earth is, is to see it as the moon. The way to see how beautiful life is, is from the vantage point of death.”
  • all. Odo wrote: “A child free from the guilt of ownership and the burden of economic competition will grow up with the will to do what needs doing and the capacity for joy in doing it. It is useless work that darkens the heart. The delight of the nursing mother, of the scholar, of the successful hunter, of the good cook, of the skillful maker, of anyone doing needed work and doing it well—this durable joy is perhaps the deepest source of human affection, and of sociality as a whole.” There was an undercurrent of joy, in that sense, in Abbenay that summer. There was a lightheartedness at work however hard the work, a
  • Fulfillment, Shevek thought, is a function of time. The search for pleasure is circular, repetitive, atemporal. The variety seeking of the spectator, the thrill hunter, the sexually promiscuous, always ends in the same place. It has an end. It comes to the end and has to start over. It is not a journey and return, but a closed cycle, a locked room, a cell. Outside the locked room is the landscape of time, in which the spirit may, with luck and courage, construct the fragile, makeshift, improbable roads and cities of fidelity: a landscape inhabitable by human beings. It is not until an act occurs within the landscape of the past and the future that it is a human act. Loyalty, which asserts the continuity of past and future, binding time into a whole, is the root of human strength; there is no good to be done without it. So, looking back on the last four years, Shevek saw them not as wasted, but as part of the edifice that he and Takver were building with their lives. The thing about working with time, instead of against it, he thought, is that it is not wasted. Even pain counts.
Javier E

Silicon Valley Powered American Tech Dominance-Now It Has a Challenger - WSJ - 0 views

  • Asian investors directed nearly as much money into startups last year as American investors did—40% of the record $154 billion in global venture financing versus 44%,
  • Asia’s share is up from less than 5% just 10 years ago.
  • That tidal wave of cash into promising young firms could herald a shift in who controls the world’s technological innovation and its economic fruits, from artificial intelligence to self-driving cars.
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  • The rise of China’s venture market “signifies a shift from a single-epicenter view of the world to a duopoly,” he says.
  • The surge also positions Asia’s investors to win stakes in markets that Western companies covet, or that have national security implications.
  • . “If you think that being the locus of invention gives you a boost to your GDP and so forth, that’s a deterioration of the U.S. competitive advantage.”
  • Although one of the biggest Asian investors is Japan’s SoftBank Group Corp. , which has tapped Middle Eastern money to create the world’s largest tech-investment fund, it is Chinese activity that is having the greatest impact.
  • China is creating unicorns—startups valued at a billion dollars or more—at much the same pace as the U.S., drawing on funding from internet giants like Alibaba Group Holding Ltd. and Tencent Holdings Ltd. as well as more than a thousand domestic venture-capital firms that have raised billions of dollars a year for the past few year
  • Chinese-led venture funding is about 15 times its size in 2013, outpacing growth in U.S.-led financing, which roughly doubled in that time period
  • Most Chinese-led investment so far has gone to the country’s own firms, the Journal analysis found. Many of them, like the Yelp equivalent Meituan-Dianping, are household names with millions of customers in China, yet virtually unknown elsewhere.
  • Many Chinese tech companies are “at this critical size that the China market alone is not enough to support their business and valuation,
  • Madhur Deora, chief financial officer for Paytm, one of India’s biggest e-payments firms, says the company approached Alibaba affiliate Ant Financial instead of U.S. backers for funding in 2015 because Chinese mobile-internet innovations are “way far ahead of anything that’s happened in the U.S.
  • One reason China’s push into new technologies worries many in the U.S. is that, unlike the hunt for good returns that underpins most Western venture finance, a lot of Chinese investment is driven by strategic interests, some carrying the specter of state influence.
  • China is pushing hard into semiconductors, for which the government has provided billions of dollars in public funding, and artificial intelligence, where Beijing in July set a goal of global leadership by 2030
  • Mr. Lee, the venture investor, predicts that in the next five to 10 years Chinese tech companies will become pacesetters for tech-related development, vying with the likes of Alphabet Inc.’s Google and Facebook for dominance in markets outside the English-speaking world and Western Europe.
  • “All the rest of the world will basically be a land grab between the U.S. and China,
  • “The U.S. approach is: We’ll build a better product and just win over all the countries,” says Mr. Lee. The Chinese approach is “we’ll fund the local partner to beat off the American companies.”
  • Asia’s rise as a startup financier is even starker in the biggest venture investments—those of $100 million or more. These megadeals have become an increasingly important part of venture finance as valuations have ballooned, with their proportion of deal volume growing from around 8% in 2007 to around half of the total last year.
  • In Southeast Asia, a flood of Chinese money into local startups—such as the $1.1 billion Alibaba-led investment into Indonesian online marketplace PT Tokopedia last year—is drawing the region closer to China
  • Chinese money is also playing a big role in India, which, with a population of 1.2 billion, has been described as the next big internet market. Chinese and Japanese investors each led nearly $3 billion in venture finance in India last year, ahead of the nearly $2 billion in deals led by U.S. investors
  • “Think of strategic investments and M&A as playing a game of go,” said Mr. Tsai, the Alibaba executive vice chairman, at the investor conference last year. “In a game of go the strategic objective is to put your pieces on the chessboard and surround your opponent.”
Javier E

Natural Gas, America's No. 1 Power Source, Already Has a New Challenger: Batteries - WSJ - 0 views

  • Vistra Corp. owns 36 natural-gas power plants, one of America’s largest fleets. It doesn’t plan to buy or build any more. Instead, Vistra intends to invest more than $1 billion in solar farms and battery storage units in Texas and California as it tries to transform its business to survive in an electricity industry being reshaped by new technology.
  • A decade ago, natural gas displaced coal as America’s top electric-power source, as fracking unlocked cheap quantities of the fuel. Now, in quick succession, natural gas finds itself threatened with the same kind of disruption, only this time from cost-effective batteries charged with wind and solar energy.
  • Natural-gas-fired electricity represented 38% of U.S. generation in 2019
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  • Wind and solar generators have gained substantial market share, and as battery costs fall, batteries paired with that green power are beginning to step into those roles by storing inexpensive green energy and discharging it after the sun falls or the wind dies.
  • President Biden is proposing to extend renewable-energy tax credits to stand-alone battery projects—installations that aren’t part of a generating facility—as part of his $2.3 trillion infrastructure plan, which could add fuel to an already booming market for energy storage.
  • renewables have become increasingly cost-competitive without subsidies in recent years, spurring more companies to voluntarily cut carbon emissions by investing in wind and solar power at the expense of that generated from fossil fuels.
  • the specter of more state and federal regulations to address climate change is accelerating the trend.
  • the combination of batteries and renewable energy is threatening to upend billions of dollars in natural-gas investments, raising concerns about whether power plants built in the past 10 years—financed with the expectation that they would run for decades—will become “stranded assets,” facilities that retire before they pay for themselves.
  • as batteries help wind and solar displace traditional power sources, some investors view the projects with caution, noting that they, too, could become victims of disruption in coming years, if still-other technological advances yield better ways to store energy.
  • most current batteries can deliver power only for several hours before needing to recharge. That makes them nearly useless during extended outages.
  • Duke Energy Corp. , a utility company based in Charlotte, N.C., that supplies electricity and natural gas in parts of seven states, is still looking to build additional gas-fired power plants. But it has started to rethink its financial calculus to reflect that the plants might need to pay for themselves sooner, because they might not be able to operate for as long.
  • To remedy that, Duke in public filings said it is considering shortening the plants’ expected lifespan from about 40 years to 25 years and recouping costs using accelerated depreciation, an accounting measure that would let the company write off more expenses earlier in the plants’ lives
  • It may also consider eventually converting the plants to run on hydrogen, which doesn’t result in carbon emissions when burned.
  • Much of the nation’s gas fleet, on the other hand, is relatively young, increasing the potential for stranded costs if widespread closures occur within the next two decades.
  • Gas plants that supply power throughout the day face the biggest risk of displacement. Such “baseload” plants typically need to run at 60% to 80% capacity to be economically viable, making them vulnerable as batteries help fill gaps in power supplied by solar and wind farms.
  • Today, such plants average 60% capacity in the U.S., according to IHS Markit, a data and analytics firm. By the end of the decade, the firm expects that average to fall to 50%, raising the prospect of bankruptcy and restructuring for the lowest performers.
  • “It’s just coal repeating itself.”
  • It took only a few years for inexpensive fracked gas to begin displacing coal used in power generation. Between 2011, shortly after the start of the fracking boom, and 2020, more than 100 coal plants with 95,000 megawatts of capacity were closed or converted to run on gas, according to the EIA. An additional 25,000 megawatts are slated to close by 2025.
  • Batteries are most often paired with solar farms, rather than wind farms, because of their power’s predictability and because it is easier to secure federal tax credits for that pairing.
  • Already, the cost of discharging a 100-megawatt battery with a two-hour power supply is roughly on par with the cost of generating electricity from the special power plants that operate during peak hours. Such batteries can discharge for as little as $140 a megawatt-hour, while the lowest-cost “peaker” plants—which fire up on demand when supplies are scarce—generate at $151 a megawatt-hour, according to investment bank Lazard.
  • Solar farms paired with batteries, meanwhile, are becoming competitive with gas plants that run all the time. Those types of projects can produce power for as little as $81 a megawatt-hour, according to Lazard, while the priciest of gas plants average $73 a megawatt-hour
  • Even in Texas, a state with a fiercely competitive power market and no emissions mandates, scarcely any gas plants are under construction, while solar farms and batteries are growing fast. Companies are considering nearly 88,900 megawatts of solar, 23,860 megawatts of wind and 30,300 megawatts of battery storage capacity in the state, according to the Electric Reliability Council of Texas. By comparison, only 7,900 megawatts of new gas-fired capacity is under consideration.
  • California last summer experienced the consequences of quickly reducing its reliance on gas plants. In August, during an intense heat wave that swept the West, the California grid operator resorted to rolling blackouts to ease a supply crunch when demand skyrocketed. In a postmortem published jointly with the California Public Utilities Commission and the California Energy Commission, the operator identified the rapid shift to solar and wind power as one of several contributing factors.
  • Mr. Morgan, who has closed a number of Vistra’s coal-fired and gas-fired plants since becoming CEO in 2016, said he anticipates most of the company’s remaining gas plants to operate for the next 20 years.
  • Quantum Energy Partners, a Houston-based private-equity firm, in the last several years sold a portfolio of six gas plants in Texas and three other states upon seeing just how competitive renewable energy was becoming. It is now working to develop more than 8,000 megawatts of wind, solar and battery projects in 10 states.
  • “We pivoted,” said Sean O’Donnell, a partner in the firm who helps oversee the firm’s power investments. “Everything that we had on the conventional power side, we decided to sell, given our outlook of increasing competition and diminishing returns.”
Javier E

How U.S. Firms Helped Africa's Richest Woman Exploit Her Country's Wealth - The New Yor... - 0 views

  • Among the businesses was the Swiss jewelry company, which records and interviews reveal was led by a team recruited from Boston Consulting. They ran it into the ground. Under their watch, millions of dollars in Angolan state funds helped finance the annual parties on the French Riviera.
  • When Boston Consulting and McKinsey signed on to help restructure Sonangol, Angola’s state oil business, they agreed to be paid in an unusual way — not by the government but through a Maltese company Ms. dos Santos owned.
  • PricewaterhouseCoopers, now called PwC, acted as her accountant, consultant and tax adviser, working with at least 20 companies controlled by her or her husband. Yet there were obvious red flags as Angolan state money went unaccounted for, according to money-laundering experts and forensic accountants who reviewed the newly obtained documents.
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  • When the Western advisory firms came into Angola almost two decades ago, they were viewed by the global financial community as a force for good: bringing professionalism and higher standards to a former Portuguese colony ravaged by years of civil war. But ultimately they took the money and did what their clients asked
  • “These guys hear about Isabel and they run like the Devil from the cross,” Eduardo Sequeira, head of corporate finance for Fidequity, a Portuguese firm that manages many of Ms. dos Santos’s companies, wrote in a 2014 email after the Spanish bank Santander turned down work with her.
  • “They are there as all-purpose providers of whatever these elites are trying to do,” he said. “They have no moral status — they are what you make of them.”
  • Global banks including Citigroup and Deutsche Bank, bound by strict rules about politically connected clients, largely declined to work with the family in recent years, the documents show.
  • Ms. dos Santos and her husband could face years in prison if convicted, according to the office of Angola’s president, João Lourenço. At the heart of the inquiry: $38 million in payments from Sonangol to a Dubai shell company hours after Angola’s new president announced her firing. Ms. dos Santos’s half brother is also facing corruption charges for helping to transfer $500 million from Angola’s sovereign wealth fund.
  • in their quest for fees, several have worked for authoritarian or corrupt regimes in places like China or Saudi Arabia. McKinsey’s business in South Africa was decimated by its partnership with a subcontractor tied to a political scandal that took down the country’s president.
  • The new leaks show the pattern repeating itself in Angola, where invoices point to tens of millions of dollars going to the firms. They agreed to be paid for Angolan government work by shell companies — tied to Ms. dos Santos and her associates — that were in offshore locations long used to avoid taxes, hide illicit wealth and launder money. The arrangement allowed her to keep a large portion of the state funds, the records show.
Javier E

Schumpeter - Big Oil has a do-or-die decade ahead because of climate change | Business ... - 0 views

  • Without the oil industry’s balance-sheets and project-management skills, it is hard to imagine the world building anything like enough wind farms, solar parks and other forms of clean energy to stop catastrophic global warming.
  • The question is no longer “whether” Big Oil has a big role to play in averting the climate crisis. It is “when”.
  • To cynics, all the climate-friendly noises amount to little in practice, since few people are ready to make carbon-cutting sacrifices that would force oil firms’ hand. But noises are sometimes followed by action. Should they be this time, the 2020s may be do-or-die for the oil industry.
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  • In Europe renewable energy prompted something almost as wrenching for a different sort of energy firm—utilities. Faced with an existential threat from wind and solar, fossil-fuel power producers such as Germany’s E.ON and RWE tore themselves apart, redesigned their businesses, and emerged cleaner and stronger.
  • Southern European firms like Spain’s Iberdrola and Italy’s Enel took renewables worldwide. Last year total shareholder returns from the reinvigorated European utilities left the oil-and-gas industry in the dust.
  • Some giants, like ExxonMobil and Chevron in America, continue to bet most heavily on oil
  • Others, among them Europe’s supermajors, Royal Dutch Shell, Total and BP, increasingly favour natural gas, and see low-carbon (though not necessarily zero-carbon) power generation as a way to prop up their business model as more cars and other things begin to run on electricity.
  • of a whopping $80bn or so of capital expenditure by Europe’s seven biggest listed energy firms last year, only 7.4%—less than $1bn each on average—went to clean energy.
  • capital spending on renewable energy, power grids and batteries will need to rise globally to $1.2trn a year on average from now until 2050, more than double the $500bn spent each year on oil and gas.
  • To help fund that, it reckons that oil-and-gas companies will need to divert $10trn of investments away from fossil fuels over the same period.
  • For now, oil executives show no appetite for such a radical change of direction. If anything, they are working their oil-and-gas assets harder, to skim the profits and hand them to shareholders while they still can. Oil, they say, generates double-digit returns on capital employed. Clean energy, mere single digits.
  • Big Oil has ways to make other high-risk, high-reward bets on clean energy. One is through venture capital. The OIES calculates that of 200 recent investments by the oil majors, 70 have been in clean-energy ventures, such as electric-vehicle charging networks. They have generally been small for now. But BP reportedly plans to build five $1bn-plus “unicorns” over the next five years with an aim of providing more energy with lower emissions
  • Another way is to back research and development in potentially groundbreaking technologies such as high-altitude wind energy, whose generating efficiency promises equally lofty profits.
  • As national climate commitments grow more stringent, governments may go on the warpath. UBS argues that it may be necessary for governments to “ban” the $10trn of oil-and-gas investments to reach net zero emissions by 2050
woodlu

Facebook flounders in the court of public opinion | The Economist - 2 views

  • “YOU ARE a 21st-century American hero,” gushed Ed Markey, a Democratic senator from Massachusetts. He was not addressing the founder of one of the country’s largest companies, Facebook, but the woman who found fault with it
  • Frances Haugen, who had worked at the social-media giant before becoming a whistleblower, testified in front of a Senate subcommittee for over three hours on October 5th, highlighting Facebook’s “moral bankruptcy” and the firm’s downplaying of its harmful impact, including fanning teenage depression and ethnic violence.
  • Facebook’s own private research, for example, found that its photo-sharing site, Instagram, worsened teens’ suicidal thoughts and eating disorders. Yet it still made a point of sending young users engaging content that stoked their anxiety—while proceeding to develop a version of its site for those under the age of 13.
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  • In 2018 a different whistleblower outed Facebook for its sketchy collaboration with Cambridge Analytica, a research organisation that allowed users’ data to be collected without their consent and used for political profiling by Donald Trump’s campaign. Facebook’s founder, Mark Zuckerberg, went to Washington, DC to apologise, and in 2019 America’s consumer-protection agency, the Federal Trade Commission, agreed to a $5bn settlement with Facebook. That is the largest fine ever levied against a tech firm.
  • Congress has repeatedly called in tech bosses for angry questioning and public shaming without taking direct action afterwards.
  • Senators, who cannot agree on such uncontroversial things as paying for the government’s expenses, united against a common enemy and promised Ms Haugen that they would hold Facebook to account.
  • Social media’s harmful effects on children and teenagers is a concern that transcends partisanship and is easier to understand than sneaky data-gathering, viral misinformation and other social-networking sins.
  • If Congress does follow through with legislation, it is likely to focus narrowly on protecting children online, as opposed to broader reforms, for which there is still no political consensus.
  • Congress could update and strengthen the Children’s Online Privacy Protection Act (COPPA), which was passed in 1998 and bars the collection of data from children under the age of 13.
  • Other legislative proposals take aim at manipulative marketing and design features that make social media so addictive for the young.
  • However, Ms Haugen’s most significant impact on big tech may be inspiring others to come forward and blow the whistle on their employers’ malfeasance.
  • “A case like this one opens the floodgates and will trigger hundreds more cases,” predicts Steve Kohn, a lawyer who has represented several high-profile whistleblowers.
  • One is the industry’s culture of flouting rules and a history of non-compliance. Another is a legal framework that makes whistleblowing less threatening and more attractive than it used to be.
  • The Dodd-Frank Act, which was enacted in 2010, gives greater protections to whistleblowers by preventing retaliation from employers and by offering rewards to successful cases of up to 10-30% of the money collected from sanctions against a firm.
  • If the threat of public shaming encourages corporate accountability, that is a good thing. But it could also make tech firms less inclusive and transparent, predicts Matt Perault, a former Facebook executive who is director of the Centre for Technology Policy at the University of North Carolina at Chapel Hill.
  • People may become less willing to share off-the-wall ideas if they worry about public leaks; companies may become less open with their staff; and executives could start including only a handful of trusted senior staff in meetings that might have otherwise been less restricted.
  • Facebook and other big tech firms, which have been criticised for violating people’s privacy online, can no longer count on any privacy either.
woodlu

Why Democrats' tax plans are such a mess | The Economist - 0 views

  • 0E BIDEN promised to pay for his big social-spending proposals by raising taxes on the rich and nobody else.
  • Now Democrats are rushing to find a big pot of money without raising headline rates of tax at all.
  • predicting that they would soon reach a compromise on a social-spending bill that would pass in both the House of Representatives and the Senate, where they cannot afford a single dissenting vote in their ranks.
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  • Kyrsten Sinema of Arizona,
  • satisfy two centrists:
  • Joe Manchin of West Virginia
  • desire for higher tax revenues without higher tax rates has left Democrats scrambling to make deep changes to how some levies work
  • new minimum tax on the biggest corporations’ accounting profits, which can exceed those declared to the tax authorities.
  • is a levy on
  • firms that buy back their own stock, a longtime bugbear on the left
  • a reform to the federal capital-gains tax that is designed to ensnare the ultra-rich. It would tax them annually on the paper gains of their investment portfolios, rather than when assets are sold, as under the current system
  • firms could avoid the tax attached to them by paying dividends instead.
  • no sound economic reason for penalising share buy-backs
  • A tax on the book profits of companies would outsource tax rules to unaccountable accounting bodies, reduce the efficacy of desirable tax deductions for investment and, by interfering with the ability to carry forward losses, play havoc with firms whose profits are volatile.
  • The “mark-to-market” capital gains tax is a messy attempt to rapidly extract enormous amounts from a tiny number of the very rich
  • proposal which is even more poorly designed, and which Mr Manchin is right to oppose
  • That would ultimately be bad for investment and the incentive to innovate, and would get in the way of the widespread ownership of equities.
  • straightforward result of their fragile control of Congress and the idiosyncrasies of two of their senators
  • failed to bring in straightforward reforms that raise revenue by enlarging the tax base
  • abolishing the egregious exemption that resets accrued capital gains to zero when owners die and pass on their estates.
  • Taxing capital gains at death, as Mr Biden first proposed, would raise more than $200bn over a decade—not far off the “several hundred billion” Democrats say the tax on investment portfolios would yield
  • lobbyists defeated the idea
  • also preserved the carried-interest loophole, which lets investment managers class their fees as lightly taxed capital gains, not income.
  • lifting the cap on an exemption from federally taxable income of money used to pay state and local taxes. Doing that would benefit the wealthy, narrow the tax base and subsidise high-tax states.
  • Mr Biden ignored the example of Europe. Its social spending is funded using broad-based and efficient taxes, most notably value-added tax, a levy on consumption
  • unfriendly to economic growth to begin with. Narrowing the target further—the capital-gains reform would apply only to billionaires and those with more than $100m in annual income sustained over three years
  • this tax would apply only to securities traded on public markets, with different rules for stakes in privately held firms, it would deter entrepreneurs from floating their companies on the stock exchange.
  • Democrats have pretended that raising taxes on businesses would have no negative effect on wages, contrary to the overwhelming consensus among economists.
  • The failure to agree on a tax plan carries echoes of doomed Republican attempts, under Donald Trump, to “repeal and replace” the Obamacare health-insurance system.
  • Democrats will have to confront the fact that permanently expanding the welfare state without damaging the economy means winning an argument for higher taxes, rather than always telling voters that some rich person will pay.
Javier E

Opinion | The 'Third Rail of American Politics' Is Still Electrifying - The New York Times - 0 views

  • white attitudes toward immigrants could be broken up into “five main classes or ‘immigrant archetypes’ that come to whites’ minds when they respond to questions about immigrants in surveys.”
  • The authors, describing in broad outline the various images of immigrants held by whites, gave the five archetypes names: “the undocumented Latino man” (38 percent), the “poor, nonwhite immigrant” (18.5 percent), the “high status worker” (17 percent), the “documented Latina worker” (15 percent) and the “rainbow undocumented immigrant” (12 percent).
  • We find the “undocumented Latino man” archetype is predicted to increase the probability of wanting to decrease immigration flows by a whopping 38 points, plus or minus 7 points. This archetype is joined near the bottom by the “rainbow undocumented immigrant” — “from every region in the world” — which increases that probability by 29 points.
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  • The authors identify the survey respondents who are most resistant to immigration:
  • These respondents are the oldest of any class and possess many of the traits typical of conservative southern whites. Many live in small towns or rural areas in the U.S. south and identify as Republicans. Further, many of them are retirees with low levels of education. Interestingly, these respondents live in the least diverse communities relative to all other classes as judged by the presence of few immigrants and ethnic/racial minorities in their ZIP codes, which highlights the subjective nature of immigrant archetypes.
  • The authors conducted a survey in which they explicitly provided information rebutting negative stereotypes of immigrants’ impact on crime, tax burdens and employment. They found that respondents in many cases shifted their views of immigrants from more negative to more positive assessments.
  • But shifts in a liberal direction on policies were short-lived, at best: “In sum,” Abascal, Huang and Tran wrote, the effects of the stereotype-challenging information “on beliefs about immigration are more durable than the effects on immigration policy preferences, which themselves decay rapidly
  • The decision to remove barriers to trade in goods and capital flows have had profound effects on immigration. Trade has meant the closure of businesses in developed countries that rely on low-skill labor. When these firms closed, they took their support for low-skill immigration with them.
  • The Republican Party was once the party of big business and the party that supported immigration as a source of cheap labor. What happened to turn it into the anti- immigration party?
  • corporate America’s need for cheap labor had been falling before the advent of Trump, and that that decline opened to door for Republican politicians to campaign on anti-immigrant themes.
  • These findings recommend caution when deploying factual information to change attitudes toward immigration policy.”
  • The ability of capital to move intensified this trend: whereas once firms needed to bring labor to their capital, they can now take their capital to labor. Once these firms move, they have little incentive to fight for immigration at home.
  • Finally, increased productivity, as both a product of and response to globalization, has meant that firms can do more with fewer workers, again decreasing demands for immigration. Together, these changes have led to less business support for immigration, allowing politicians to move to the right on immigration and pass restrictions to appease anti-immigration forces.
  • On the other side of the aisle, Democrats, in the view of Douglas Massey, a sociologist at Princeton, have failed to counter Republican opposition to immigration with an aggressive assertion of the historical narrative of the United Statesas a nation of immigrants, tapping into the fact that nearly all Americans are descendant from immigrants who arrived into a land they did not originally populate, and that despite epochs of xenophobia and restriction, in the end the US has been a great machine of immigrant integration that has benefited the United States and made us an exceptional nation.
  • the intertwined forces of climate change, state failure, violence, and criminal economics will greatly complicate efforts to create a counternarrative by producing surges of asylum seekers and refugees, which could be managed with effective immigration and border policies, but which under current circumstances instead serves to produce images of chaos along the southern border.
  • The question for the future of the broader consensus on immigration is whether Republicans can continue to be successful despite the anti-immigrant pandering that is largely out of step with the broad American consensus on immigration. If they are electorally successful — and there is reason to believe they will be, given forecasts for Democratic losses in 2022 — then this broad consensus might break down permanently and a large portion of the American public may follow their Republican leaders toward more fully adopting anti-immigrant ideology.
  • There are potentially tragic consequences if the Democratic Party proves unable to prevent anti-immigration forces from returning to take over the debate
  • The average undocumented immigrant has been in the U.S. for ten years The problems of the undocumented spill over onto the large population of U.S. citizens, who are the children, mates, relatives of the undocumented and whose lives are adversely affected by the increasingly repressive policy environment.
  • for all intents and purposes, most undocumented immigrants — and perhaps especially the Dreamers — are Americans deserving of full citizenship.
  • But these Americans are on the political chopping block, dependent on a weakened Democratic Party to protect them from a renewal of the savagery an intensely motivated Republican Party has on its agenda.
Javier E

Transcript: Ezra Klein Interviews Robinson Meyer - The New York Times - 0 views

  • Implementation matters, but it’s harder to cover because it’s happening in all parts of the country simultaneously. There isn’t a huge Republican-Democratic fight over it, so there isn’t the conflict that draws the attention to it
  • we sort of implicitly treat policy like it’s this binary one-zero condition. One, you pass a bill, and the thing is going to happen. Zero, you didn’t, and it won’t.
  • ROBINSON MEYER: You can almost divide the law up into different kind of sectors, right? You have the renewable build-out. You have EVs. You have carbon capture. You have all these other decarbonizing technologies the law is trying to encourage
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  • that’s particularly true on the I.R.A., which has to build all these things in the real world.
  • we’re trying to do industrial physical transformation at a speed and scale unheralded in American history. This is bigger than anything we have done at this speed ever.
  • The money is beginning to move out the door now, but we’re on a clock. Climate change is not like some other issues where if you don’t solve it this year, it is exactly the same to solve it next year. This is an issue where every year you don’t solve it, the amount of greenhouse gases in the atmosphere builds, warming builds, the effects compound
  • Solve, frankly, isn’t the right word there because all we can do is abate, a lot of the problems now baked in. So how is it going, and who can actually walk us through that?
  • Robinson Meyer is the founding executive editor of heatmap.news
  • why do all these numbers differ so much? How big is this thing?
  • in electric vehicles and in the effort, kind of this dual effort in the law, to both encourage Americans to buy and use electric vehicles and then also to build a domestic manufacturing base for electric vehicles.
  • on both counts, the data’s really good on electric vehicles. And that’s where we’re getting the fastest response from industry and the clearest response from industry to the law.
  • ROBINSON MEYER: Factories are getting planned. Steel’s going in the ground. The financing for those factories is locked down. It seems like they’re definitely going to happen. They’re permitted. Companies are excited about them. Large Fortune 500 automakers are confidently and with certainty planning for an electric vehicle future, and they’re building the factories to do that in the United States. They’re also building the factories to do that not just in blue states. And so to some degree, we can see the political certainty for electric vehicles going forward.
  • in other parts of the law, partially due to just vagaries of how the law is being implemented, tax credits where the fine print hasn’t worked out yet, it’s too early to say whether the law is working and how it’s going and whether it’s going to accomplish its goal
  • EZRA KLEIN: I always find this very funny in a way. The Congressional Budget Office scored it. They thought it would make about $380 billion in climate investments over a decade. So then you have all these other analyses coming out.
  • But there’s actually this huge range of outcomes in between where the thing passes, and maybe what you wanted to have happen happens. Maybe it doesn’t. Implementation is where all this rubber meets the road
  • the Rhodium Group, which is a consulting firm, they think it could be as high as $522 billion, which is a big difference. Then there’s this Goldman Sachs estimate, which the administration loves, where they say they’re projecting $1.2 trillion in incentives —
  • ROBINSON MEYER: All the numbers differ because most of the important incentives, most of the important tax credits and subsidies in the I.R.A., are uncapped. There’s no limit to how much the government might spend on them. All that matters is that some private citizen or firm or organization come to the government and is like, hey, we did this. You said you’d give us money for it. Give us the money.
  • because of that, different banks have their own energy system models, their own models of the economy. Different research groups have their own models.
  • we know it’s going to be wrong because the Congressional Budget Office is actually quite constrained in how it can predict how these tax credits are taken up. And it’s constrained by the technology that’s out there in the country right now.
  • The C.B.O. can only look at the number of electrolyzers, kind of the existing hydrogen infrastructure in the country, and be like, well, they’re probably all going to use these tax credits. And so I think they said that there would be about $5 billion of take up for the hydrogen tax credits.
  • But sometimes money gets allocated, and then costs overrun, and there delays, and you can’t get the permits, and so on, and the thing never gets built
  • the fact that the estimates are going up is to them early evidence that this is going well. There is a lot of applications. People want the tax credits. They want to build these new factories, et cetera.
  • a huge fallacy that we make in policy all the time is assuming that once money is allocated for something, you get the thing you’re allocating the money for. Noah Smith, the economics writer, likes to call this checkism, that money equals stuff.
  • EZRA KLEIN: They do not want that, and not wanting that and putting every application through a level of scrutiny high enough to try and make sure you don’t have another one
  • I don’t think people think a lot about who is cutting these checks, but a lot of it is happening in this very obscure office of the Department of Energy, the Loan Program Office, which has gone from having $40 billion in lending authority, which is already a big boost over it not existing a couple decades ago, to $400 billion in loan authority,
  • the Loan Program Office as one of the best places we have data on how this is going right now and one of the offices that’s responded fastest to the I.R.A.
  • the Loan Program Office is basically the Department of Energy’s in-house bank, and it’s kind of the closest thing we have in the US to what exists in other countries, like Germany, which is a State development bank that funds projects that are eventually going to be profitable.
  • It has existed for some time. I mean, at first, it kind of was first to play after the Recovery Act of 2009. And in fact, early in its life, it gave a very important loan to Tesla. It gave this almost bridge loan to Tesla that helped Tesla build up manufacturing capacity, and it got Tesla to where it is today.
  • EZRA KLEIN: It’s because one of the questions I have about that office and that you see in some of the coverage of them is they’re very afraid of having another Solyndra.
  • Now, depending on other numbers, including the D.O.E., it’s potentially as high as $100 billion, but that’s because the whole thing about the I.R.A. is it’s meant to encourage the build-out of this hydrogen infrastructure.
  • EZRA KLEIN: I’m never that excited when I see a government loans program turning a profit because I think that tends to mean they’re not making risky enough loans. The point of the government should be to bear quite a bit of risk —
  • And to some degree, Ford now has to compete, and US automakers are trying to catch up with Chinese EV automakers. And its firms have EV battery technology especially, but just have kind of comprehensive understanding of the EV supply chain that no other countries’ companies have
  • ROBINSON MEYER: You’re absolutely right that this is the key question. They gave this $9.2 billion loan to Ford to build these EV battery plants in Kentucky and Tennessee. It’s the largest loan in the office’s history. It actually means that the investment in these factories is going to be entirely covered by the government, which is great for Ford and great for our build-out of EVs
  • And to some degree, I should say, one of the roles of L.P.O. and one of the roles of any kind of State development bank, right, is to loan to these big factory projects that, yes, may eventually be profitable, may, in fact, assuredly be profitable, but just aren’t there yet or need financing that the private market can’t provide. That being said, they have moved very slowly, I think.
  • And they feel like they’re moving quickly. They just got out new guidelines that are supposed to streamline a lot of this. Their core programs, they just redefined and streamlined in the name of speeding them up
  • However, so far, L.P.O. has been quite slow in getting out new loans
  • I want to say that the pressure they’re under is very real. Solyndra was a disaster for the Department of Energy. Whether that was fair or not fair, there’s a real fear that if you make a couple bad loans that go bad in a big way, you will destroy the political support for this program, and the money will be clawed back, a future Republican administration will wreck the office, whatever it might be. So this is not an easy call.
  • when you tell me they just made the biggest loan in their history to Ford, I’m not saying you shouldn’t lend any money to Ford, but when I think of what is the kind of company that cannot raise money on the capital markets, the one that comes to mind is not Ford
  • They have made loans to a number of more risky companies than Ford, but in addition to speed, do you think they are taking bets on the kinds of companies that need bets? It’s a little bit hard for me to believe that it would have been impossible for Ford to figure out how to finance factorie
  • ROBINSON MEYER: Now, I guess what I would say about that is that Ford is — let’s go back to why Solyndra failed, right? Solyndra failed because Chinese solar deluged the market. Now, why did Chinese solar deluge the market? Because there’s such support of Chinese financing from the state for massive solar factories and massive scale.
  • EZRA KLEIN: — the private market can’t. So that’s the meta question I’m asking here. In your view, because you’re tracking this much closer than I am, are they too much under the shadow of Solyndra? Are they being too cautious? Are they getting money out fast enough?
  • ROBINSON MEYER: I think that’s right; that basically, if we think the US should stay competitive and stay as close as it can and not even stay competitive, but catch up with Chinese companies, it is going to require large-scale state support of manufacturing.
  • EZRA KLEIN: OK, that’s fair. I will say, in general, there’s a constant thing you find reporting on government that people in government feel like they are moving very quickly
  • EZRA KLEIN: — given the procedural work they have to go through. And they often are moving very quickly compared to what has been done in that respect before, compared to what they have to get over. They are working weekends, they are working nights, and they are still not actually moving that quickly compared to what a VC firm can do or an investment bank or someone else who doesn’t have the weight of congressional oversight committees potentially calling you in and government procurement rules and all the rest of it.
  • ROBINSON MEYER: I think that’s a theme across the government’s implementation of the I.R.A. right now, is that generally the government feels like it’s moving as fast as it can. And if you look at the Department of Treasury, they feel like we are publishing — basically, the way that most of the I.R.A. subsidies work is that they will eventually be administered by the I.R.S., but first the Department of the Treasury has to write the guidebook for all these subsidies, right?
  • the law says there’s a very general kind of “here’s thousands of dollars for EVs under this circumstance.” Someone still has to go in and write all the fine print. The Department of Treasury is doing that right now for each tax credit, and they have to do that before anyone can claim that tax credit to the I.R.S. Treasury feels like it’s moving extremely quickly. It basically feels like it’s completely at capacity with these, and it’s sequenced these so it feels like it’s getting out the most important tax credits first.
  • Private industry feels like we need certainty. It’s almost a year since the law passed, and you haven’t gotten us the domestic content bonus. You haven’t gotten us the community solar bonus. You haven’t gotten us all these things yet.
  • a theme across the government right now is that the I.R.A. passed. Agencies have to write the regulations for all these tax credits. They feel like they’re moving very quickly, and yet companies feel like they’re not moving fast enough.
  • that’s how we get to this point where we’re 311 days out from the I.R.A. passing, and you’re like, well, has it made a big difference? And I’m like, well, frankly, wind and solar developers broadly don’t feel like they have the full understanding of all the subsidies they need yet to begin making the massive investments
  • I think it’s fair to say maybe the biggest bet on that is green hydrogen, if you’re looking in the bill.
  • We think it’s going to be an important tool in industry. It may be an important tool for storing energy in the power grid. It may be an important tool for anything that needs combustion.
  • ROBINSON MEYER: Yeah, absolutely. So green hydrogen — and let’s just actually talk about hydrogen broadly as this potential tool in the decarbonization tool kit.
  • It’s a molecule. It is a very light element, and you can burn it, but it’s not a fossil fuel. And a lot of the importance of hydrogen kind of comes back to that attribute of it.
  • So when we look at sectors of the economy that are going to be quite hard to decarbonize — and that’s because there is something about fossil fuels chemically that is essential to how that sector works either because they provide combustion heat and steelmaking or because fossil fuels are actually a chemical feedstock where the molecules in the fossil fuel are going into the product or because fossil fuels are so energy dense that you can carry a lot of energy while actually not carrying that much mass — any of those places, that’s where we look at hydrogen as going.
  • green hydrogen is something new, and the size of the bet is huge. So can you talk about first just what is green hydrogen? Because my understanding of it is spotty.
  • The I.R.A. is extremely generous — like extremely, extremely generous — in its hydrogen subsidies
  • The first is for what’s called blue hydrogen, which is hydrogen made from natural gas, where we then capture the carbon dioxide that was released from that process and pump it back into the ground. That’s one thing that’s subsidized. It’s basically subsidized as part of this broader set of packages targeted at carbon capture
  • green hydrogen, which is where we take water, use electrolyzers on it, basically zap it apart, take the hydrogen from the water, and then use that as a fue
  • The I.R.A. subsidies for green hydrogen specifically, which is the one with water and electricity, are so generous that relatively immediately, it’s going to have a negative cost to make green hydrogen. It will cost less than $0 to make green hydrogen. The government’s going to fully cover the cost of producing it.
  • That is intentional because what needs to happen now is that green hydrogen moves into places where we’re using natural gas, other places in the industrial economy, and it needs to be price competitive with those things, with natural gas, for instance. And so as it kind of is transported, it’s going to cost money
  • As you make the investment to replace the technology, it’s going to cost money. And so as the hydrogen moves through the system, it’s going to wind up being price competitive with natural gas, but the subsidies in the bill are so generous that hydrogen will cost less than $0 to make a kilogram of it
  • There seems to be a sense that hydrogen, green hydrogen, is something we sort of know how to make, but we don’t know how to make it cost competitive yet. We don’t know how to infuse it into all the processes that we need to be infused into. And so a place where the I.R.A. is trying to create a reality that does not yet exist is a reality where green hydrogen is widely used, we have to know how to use it, et cetera.
  • And they just seem to think we don’t. And so you need all these factories. You need all this innovation. Like, they have to create a whole innovation and supply chain almost from scratch. Is that right?
  • ROBINSON MEYER: That’s exactly right. There’s a great Department of Energy report that I would actually recommend anyone interested in this read called “The Liftoff Report for Clean Hydrogen.” They made it for a few other technologies. It’s a hundred-page book that’s basically how the D.O.E. believes we’re going to build out a clean hydrogen economy.
  • And, of course, that is policy in its own right because the D.O.E. is saying, here is the years we’re going to invest to have certain infrastructure come online. Here’s what we think we need. That’s kind of a signal to industry that everyone should plan around those years as well.
  • It’s a great book. It’s like the best piece of industrial policy I’ve actually seen from the government at all. But one of the points it makes is that you’re going to make green hydrogen. You’re then going to need to move it. You’re going to need to move it in a pipeline or maybe a truck or maybe in storage tanks that you then cart around.
  • Once it gets to a facility that uses green hydrogen, you’re going to need to store some green hydrogen there in storage tanks on site because you basically need kind of a backup supply in case your main supply fails. All of those things are going to add cost to hydrogen. And not only are they going to add cost, we don’t really know how to do them. We have very few pipelines that are hydrogen ready.
  • All of that investment needs to happen as a result to make the green hydrogen economy come alive. And why it’s so lavishly subsidized is to kind of fund all that downstream investment that’s eventually going to make the economy come true.
  • But a lot of what has to happen here, including once the money is given out, is that things we do know how to build get built, and they get built really fast, and they get built at this crazy scale.
  • So I’ve been reading this paper on what they call “The Greens’ Dilemma” by J.B. Ruhl and James Salzman, who also wrote this paper called “Old Green Laws, New Green Deal,” or something like that. And I think they get at the scale problem here really well.
  • “The largest solar facility currently online in the US is capable of generating 585 megawatts. To meet even a middle-road renewable energy scenario would require bringing online two new 400-megawatt solar power facilities, each taking up at least 2,000 acres of land every week for the next 30 years.”
  • And that’s just solar. We’re not talking wind there. We’re not talking any of the other stuff we’ve discussed here, transmission lines. Can we do that? Do we have that capacity?
  • ROBINSON MEYER: No, we do not. We absolutely do not. I think we’re going to build a ton of wind and solar. We do not right now have the system set up to use that much land to build that much new solar and wind by the time that we need to build it. I think it is partially because of permitting laws, and I think it’s also partially because right now there is no master plan
  • There’s no overarching strategic entity in the government that’s saying, how do we get from all these subsidies in the I.R.A. to net zero? What is our actual plan to get from where we are right now to where we’re emitting zero carbon as an economy? And without that function, no project is essential. No activity that we do absolutely needs to happen, and so therefore everything just kind of proceeds along at a convenient pace.
  • given the scale of what’s being attempted here, you might think that something the I.R.A. does is to have some entity in the government, as you’re saying, say, OK, we need this many solar farms. This is where we think we should put them. Let’s find some people to build them, or let’s build them ourselves.
  • what it actually does is there’s an office somewhere waiting for private companies to send in an application for a tax credit for solar that they say they’re going to build, and then we hope they build it
  • it’s an almost entirely passive process on the part of the government. Entirely would be going too far because I do think they talk to people, and they’re having conversations
  • the builder applies, not the government plans. Is that accurate?
  • ROBINSON MEYER: That’s correct. Yes.
  • ROBINSON MEYER: I think here’s what I would say, and this gets back to what do we want the I.R.A. to do and what are our expectations for the I.R.A
  • If the I.R.A. exists to build out a ton of green capacity and shift the political economy of the country toward being less dominated by fossil fuels and more dominated by the clean energy industry, frankly, then it is working
  • If the I.R.A. is meant to get us all the way to net zero, then it is not capable of that.
  • in 2022, right, we had no way to see how we were going to reduce emissions. We did not know if we were going to get a climate bill at all. Now, we have this really aggressive climate bill, and we’re like, oh, is this going to get us to net zero?
  • But getting to net zero was not even a possibility in 2022.
  • The issue is that the I.R.A. requires, ultimately, private actors to come forward and do these things. And as more and more renewables get onto the grid, almost mechanically, there’s going to be less interest in bringing the final pieces of decarbonized electricity infrastructure onto the grid as well.
  • EZRA KLEIN: Because the first things that get applied for are the ones that are more obviously profitable
  • The issue is when you talk to solar developers, they don’t see it like, “Am I going to make a ton of money, yes or no?” They see it like they have a capital stack, and they have certain incentives and certain ways to make money based off certain things they can do. And as more and more solar gets on the grid, building solar at all becomes less profitable
  • also, just generally, there’s less people willing to buy the solar.
  • as we get closer to a zero-carbon grid, there is this risk that basically less and less gets built because it will become less and less profitable
  • EZRA KLEIN: Let’s call that the last 20 percent risk
  • EZRA KLEIN: — or the last 40 percent. I mean, you can probably attach different numbers to that
  • ROBINSON MEYER: Permitting is the primary thing that is going to hold back any construction basically, especially out West,
  • right now permitting fights, the process under the National Environmental Policy Act just at the federal level, can take 4.5 years
  • let’s say every single project we need to do was applied for today, which is not true — those projects have not yet been applied for — they would be approved under the current permitting schedule in 2027.
  • ROBINSON MEYER: That’s before they get built.
  • Basically nobody on the left talked about permitting five years ago. I don’t want to say literally nobody, but you weren’t hearing it, including in the climate discussion.
  • people have moved to saying we do not have the laws, right, the permitting laws, the procurement laws to do this at the speed we’re promising, and we need to fix that. And then what you’re seeing them propose is kind of tweak oriented,
  • Permitting reform could mean a lot of different things, and Democrats and Republicans have different ideas about what it could mean. Environmental groups, within themselves, have different ideas about what it could mean.
  • for many environmental groups, the permitting process is their main tool. It is how they do the good that they see themselves doing in the world. They use the permitting process to slow down fossil fuel projects, to slow down projects that they see as harming local communities or the local environment.
  • ROBINSON MEYER: So we talk about the National Environmental Policy Act or NEPA. Let’s just start calling it NEPA. We talk about the NEPA process
  • NEPA requires the government basically study any environmental impact from a project or from a decision or from a big rule that could occur.
  • Any giant project in the United States goes through this NEPA process. The federal government studies what the environmental impact of the project will be. Then it makes a decision about whether to approve the project. That decision has nothing to do with the study. Now, notionally, the study is supposed to inform the project.
  • the decision the federal government makes, the actual “can you build this, yes or no,” legally has no connection to the study. But it must conduct the study in order to make that decision.
  • that permitting reform is so tough for the Democratic coalition specifically is that this process of forcing the government to amend its studies of the environmental impact of various decisions is the main tool that environmental litigation groups like Earthjustice use to slow down fossil fuel projects and use to slow down large-scale chemical or industrial projects that they don’t think should happen.
  • when we talk about making this program faster, and when we talk about making it more immune to litigation, they see it as we’re going to take away their main tools to fight fossil fuel infrastructure
  • why there’s this gap between rhetoric and what’s actually being proposed is that the same tool that is slowing down the green build-out is also what’s slowing down the fossil fuel build-out
  • ROBINSON MEYER: They’re the classic conflict here between the environmental movement classic, let’s call it, which was “think globally, act locally,” which said “we’re going to do everything we can to preserve the local environment,” and what the environmental movement and the climate movement, let’s say, needs to do today, which is think globally, act with an eye to what we need globally as well, which is, in some cases, maybe welcome projects that may slightly reduce local environmental quality or may seem to reduce local environmental quality in the name of a decarbonized world.
  • Because if we fill the atmosphere with carbon, nobody’s going to get a good environment.
  • Michael Gerrard, who is professor at Columbia Law School. He’s a founder of the Sabin Center for Climate Change Law there. It’s called “A Time for Triage,” and he has this sort of interesting argument that the environmental movement in general, in his view, is engaged in something he calls trade-off denial.
  • his view and the view of some people is that, look, the climate crisis is so bad that we just have to make those choices. We have to do things we would not have wanted to do to preserve something like the climate in which not just human civilization, but this sort of animal ecosystem, has emerged. But that’s hard, and who gets to decide which trade-offs to make?
  • what you’re not really seeing — not really, I would say, from the administration, even though they have some principles now; not really from California, though Gavin Newsom has a set of early things — is “this is what we think we need to make the I.R.A. happen on time, and this is how we’re going to decide what is a kind of project that gets this speedway through,” w
  • there’s a failure on the part of, let’s say, the environmental coalition writ large to have the courage to have this conversation and to sit down at a table and be like, “OK, we know that certain projects aren’t happening fast enough. We know that we need to build out faster. What could we actually do to the laws to be able to construct things faster and to meet our net-zero targets and to let the I.R.A. kind achieve what it could achieve?”
  • part of the issue is that we’re in this environment where Democrats control the Senate, Republicans control the House, and it feels very unlikely that you could just get “we are going to accelerate projects, but only those that are good for climate change,” into the law given that Republicans control the House.
  • part of the progressive fear here is that the right solutions must recognize climate change. Progressives are very skeptical that there are reforms that are neutral on the existence of climate change and whether we need to build faster to meet those demands that can pass through a Republican-controlled House.
  • one of the implications of that piece was it was maybe a huge mistake for progressives not to have figured out what they wanted here and could accept here, back when the negotiating partner was Joe Manchin.
  • Manchin’s bill is basically a set of moderate NEPA reforms and transmission reforms. Democrats, progressives refuse to move on it. Now, I do want to be fair here because I think Democrats absolutely should have seized on that opportunity, because it was the only moment when — we could tell already that Democrats — I mean, Democrats actually, by that moment, had lost the House.
  • I do want to be fair here that Manchin’s own account of what happened with this bill is that Senate Republicans killed it and that once McConnell failed to negotiate on the bill in December, Manchin’s bill was dead.
  • EZRA KLEIN: It died in both places.ROBINSON MEYER: It died in both places. I think that’s right.
  • Republicans already knew they were going to get the House, too, so they had less incentive to play along. Probably the time for this was October.
  • EZRA KLEIN: But it wasn’t like Democrats were trying to get this one done.
  • EZRA KLEIN: To your point about this was all coming down to the wire, Manchin could have let the I.R.A. pass many months before this, and they would have had more time to negotiate together, right? The fact that it was associated with Manchin in the way it was was also what made it toxic to progressives, who didn’t want to be held up by him anymore.
  • What becomes clear by the winter of this year, February, March of this year, is that as Democrats and Republicans begin to talk through this debt-ceiling process where, again, permitting was not the main focus. It was the federal budget. It was an entirely separate political process, basically.
  • EZRA KLEIN: I would say the core weirdness of the debt-ceiling fight was there was no main focus to it.
  • EZRA KLEIN: It wasn’t like past ones where it was about the debt. Republicans did some stuff to cut spending. They also wanted to cut spending on the I.R.S., which would increase the debt, right? It was a total mishmash of stuff happening in there.
  • That alchemy goes into the final debt-ceiling negotiations, which are between principals in Congress and the White House, and what we get is a set of basically the NEPA reforms in Joe Manchin’s bill from last year and the Mountain Valley pipeline, the thing that environmentalists were focused on blocking, and effectively no transmission reforms.
  • the set of NEPA reforms that were just enacted, that are now in the law, include — basically, the word reasonable has been inserted many times into NEPA. [LAUGHS] So the law, instead of saying the government has to study all environmental impacts, now it has to study reasonable environmental impacts.
  • this is a kind of climate win — has to study the environmental impacts that could result from not doing a project. The kind of average NEPA environmental impact study today is 500 pages and takes 4.5 years to produce. Under the law now, the government is supposed to hit a page limit of 150 to 300 pages.
  • there’s a study that’s very well cited by progressives from three professors in Utah who basically say, well, when you look at the National Forest Service, and you look at this 40,000 NEPA decisions, what mostly holds up these NEPA decisions is not like, oh, there’s too many requirements or they had to study too many things that don’t matter. It’s just there wasn’t enough staff and that staffing is primarily the big impediment. And so on the one hand, I think that’s probably accurate in that these are, in some cases — the beast has been starved, and these are very poorly staffed departments
  • The main progressive demand was just “we must staff it better.”
  • But if it’s taking you this much staffing and that much time to say something doesn’t apply to you, maybe you have a process problem —ROBINSON MEYER: Yes.EZRA KLEIN: — and you shouldn’t just throw endless resources at a broken process, which brings me — because, again, you can fall into this and never get out — I think, to the bigger critique her
  • these bills are almost symbolic because there’s so much else happening, and it’s really the way all this interlocks and the number of possible choke points, that if you touch one of them or even you streamline one of them, it doesn’t necessarily get you that f
  • “All told, over 60 federal permitting programs operate in the infrastructure approval regime, and that is just the federal system. State and local approvals and impact assessments could also apply to any project.”
  • their view is that under this system, it’s simply not possible to build the amount of decarbonization infrastructure we need at the pace we need it; that no amount of streamlining NEPA or streamlining, in California, CEQA will get you there; that we basically have been operating under what they call an environmental grand bargain dating back to the ’70s, where we built all of these processes to slow things down and to clean up the air and clean up the water.
  • we accepted this trade-off of slower building, quite a bit slower building, for a cleaner environment. And that was a good trade. It was addressing the problems of that era
  • now we have the problems of this era, which is we need to unbelievably, rapidly build out decarbonization infrastructure to keep the climate from warming more than we can handle and that we just don’t have a legal regime or anything.
  • You would need to do a whole new grand bargain for this era. And I’ve not seen that many people say that, but it seems true to me
  • the role that America had played in the global economy in the ’50s and ’60s where we had a ton of manufacturing, where we were kind of the factory to a world rebuilding from World War II, was no longer tenable and that, also, we wanted to focus on more of these kind of high-wage, what we would now call knowledge economy jobs.That was a large economic transition happening in the ’70s and ’80s, and it dovetailed really nicely with the environmental grand bargain.
  • At some point, the I.R.A. recognizes that that environmental grand bargain is no longer operative, right, because it says, we’re going to build all this big fiscal fixed infrastructure in the United States, we’re going to become a manufacturing giant again, but there has not been a recognition among either party of what exactly that will mean and what will be required to have it take hold.
  • It must require a form of on-the-ground, inside-the-fenceline, “at the site of the power plant” pollution control technology. The only way to do that, really, is by requiring carbon capture and requiring the large construction of major industrial infrastructure at many, many coal plants and natural gas plants around the country in order to capture carbon so it doesn’t enter the atmosphere, and so we don’t contribute to climate change. That is what the Supreme Court has ruled. Until that body changes, that is going to be the law.
  • So the E.P.A. has now, last month, proposed a new rule under the Clean Air Act that is going to require coal plants and some natural gas plants to install carbon capture technology to do basically what the Supreme Court has all but kind of required the E.P.A. to do
  • the E.P.A. has to demonstrate, in order to kind of make this rule the law and in order to make this rule pass muster with the Supreme Court, that this is tenable, that this is the best available and technologically feasible option
  • that means you actually have to allow carbon capture facilities to get built and you have to create a legal process that will allow carbon capture facilities to get built. And that means you need to be able to tell a power plant operator that if they capture carbon, there’s a way they can inject it back into the ground, the thing that they’re supposed to do with it.
  • Well, E.P.A. simultaneously has only approved the kind of well that you need to inject carbon that you’ve captured from a coal factory or a natural gas line back into the ground. It’s called a Class 6 well. The E.P.A. has only ever approved two Class 6 wells. It takes years for the E.P.A. to approve a Class 6 well.
  • And environmental justice groups really, really oppose these Class 6 wells because they see any carbon capture as an effort to extend the life of the fossil fuel infrastructure
  • The issue here is that it seems like C.C.S., carbon capture, is going to be essential to how the U.S. decarbonizes. Legally, we have no other choice because of the constraints the Supreme Court has placed on the E.P.A.. At the same time, environmental justice groups, and big green groups to some extent, oppose building out any C.C.S.
  • to be fair to them, right, they would say there are other ways to decarbonize. That may not be the way we’ve chosen because the politics weren’t there for it, but there are a lot of these groups that believe you could have 100 percent renewables, do not use all that much carbon capture, right? They would have liked to see a different decarbonization path taken too. I’m not sure that path is realistic.
  • what you do see are environmental groups opposing making it possible to build C.C.S. anywhere in the country at all.
  • EZRA KLEIN: The only point I’m making here is I think this is where you see a compromise a lot of them didn’t want to make —ROBINSON MEYER: Exactly, yeah.EZRA KLEIN: — which is a decarbonization strategy that actually does extend the life cycle of a lot of fossil fuel infrastructure using carbon capture. And because they never bought onto it, they’re still using the pathway they have to try to block it. The problem is that’s part of the path that’s now been chosen. So if you block it, you just don’t decarbonize. It’s not like you get the 100 percent renewable strategy.
  • ROBINSON MEYER: Exactly. The bargain that will emerge from that set of actions and that set of coalitional trade-offs is we will simply keep running this, and we will not cap it.
  • What could be possible is that progressives and Democrats and the E.P.A. turns around and says, “Oh, that’s fine. You can do C.C.S. You just have to cap every single stationary source in the country.” Like, “You want to do C.C.S.? We totally agree. Essential. You must put CSS infrastructure on every power plant, on every factory that burns fossil fuels, on everything.”
  • If progressives were to do that and were to get it into the law — and there’s nothing the Supreme Court has said, by the way, that would limit progressives from doing that — the upshot would be we shut down a ton more stationary sources and a ton more petrochemical refineries and these bad facilities that groups don’t want than we would under the current plan.
  • what is effectively going to happen is that way more factories and power plants stay open and uncapped than would be otherwise.
  • EZRA KLEIN: So Republican-controlled states are just on track to get a lot more of it. So the Rocky Mountain Institute estimates that red states will get $623 billion in investments by 2030 compared to $354 billion for blue states.
  • why are red states getting so much more of this money?
  • ROBINSON MEYER: I think there’s two reasons. I think, first of all, red states have been more enthusiastic about getting the money. They’re the ones giving away the tax credits. They have a business-friendly environment. And ultimately, the way many, many of these red-state governors see it is that these are just businesses.
  • I think the other thing is that these states, many of them, are right-to-work states. And so they might pay their workers less. They certainly face much less risk financially from a unionization campaign in their state.
  • regardless of the I.R.A., that’s where manufacturing and industrial investment goes in the first place. And that’s where it’s been going for 20 years because of the set of business-friendly and local subsidies and right-to-work policies.
  • I think the administration would say, we want this to be a big union-led effort. We want it to go to the Great Lakes states that are our political firewall.
  • and it would go to red states, because that’s where private industry has been locating since the ’70s and ’80s, and it would go to the Southeast, right, and the Sunbelt, and that that wouldn’t be so bad because then you would get a dynamic where red-state senators, red-state representatives, red-state governors would want to support the transition further and would certainly not support the repeal of the I.R.A. provisions and the repeal of climate provisions, and that you’d get this kind of nice vortex of the investment goes to red states, red states feel less antagonistic toward climate policies, more investment goes to red states. Red-state governors might even begin to support environmental regulation because that basically locks in benefits and advantages to the companies located in their states already.
  • I think what you see is that Republicans are increasingly warming to EV investment, and it’s actually building out renewables and actually building out clean electricity generation, where you see them fighting harder.
  • The other way that permitting matters — and this gets into the broader reason why private investment was generally going to red states and generally going to the Sunbelt — is that the Sunbelt states — Georgia, Texas — it’s easier to be there as a company because housing costs are lower and because the cost of living is lower in those states.
  • it’s also partially because the Sunbelt and the Southeast, it was like the last part of the country to develop, frankly, and there’s just a ton more land around all the cities, and so you can get away with the sprawling suburban growth model in those citie
  • It’s just cheaper to keep building suburbs there.
  • EZRA KLEIN: So how are you seeing the fights over these rare-earth metals and the effort to build a safe and, if not domestic, kind of friend-shored supply chain there?
  • Are we going to be able to source some of these minerals from the U.S.? That process seems to be proceeding but going slowly. There are some minerals we’re not going to be able to get from the United States at all and are going to have to get from our allies and partners across the world.
  • The kind of open question there is what exactly is the bargain we’re going to strike with countries that have these critical minerals, and will it be fair to those countries?
  • it isn’t to say that I think the I.R.A. on net is going to be bad for other countries. I just think we haven’t really figured out what deal and even what mechanisms we can use across the government to strike deals with other countries to mine the minerals in those countries while being fair and just and creating the kind of economic arrangement that those countries want.
  • , let’s say we get the minerals. Let’s say we learn how to refine them. There is many parts of the battery and many parts of EVs and many, many subcomponents in these green systems that there’s not as strong incentive to produce in the U.S.
  • at the same time, there’s a ton of technology. One answer to that might be to say, OK, well, what the federal government should do is just make it illegal for any of these battery makers or any of these EV companies to work with Chinese companies, so then we’ll definitely establish this parallel supply chain. We’ll learn how to make cathodes and anodes. We’ll figure it out
  • The issue is that there’s technology on the frontier that only Chinese companies have, and U.S. automakers need to work with those companies in order to be able to compete with them eventually.
  • EZRA KLEIN: How much easier would it be to achieve the I.R.A.’s goals if America’s relationship with China was more like its relationship with Germany?
  • ROBINSON MEYER: It would be significantly easier, and I think we’d view this entire challenge very differently, because China, as you said, not only is a leader in renewable energy. It actually made a lot of the important technological gains over the past 15 years to reducing the cost of solar and wind. It really did play a huge role on the supply side of reducing the cost of these technologies.
  • If we could approach that, if China were like Germany, if China were like Japan, and we could say, “Oh, this is great. China’s just going to make all these things. Our friend, China, is just going to make all these technologies, and we’re going to import them.
  • So it refines 75 percent of the polysilicon that you need for solar, but the machines that do the refining, 99 percent of them are made in China. I think it would be reckless for the U.S. to kind of rely on a single country and for the world to rely on a single country to produce the technologies that we need for decarbonization and unwise, regardless of our relationship with that country.
  • We want to geographically diversify the supply chain more, but it would be significantly easier if we did not have to also factor into this the possibility that the US is going to need to have an entirely separate supply chain to make use of for EVs, solar panels, wind turbines, batteries potentially in the near-term future.
  • , what are three other books they should read?
  • The first book is called “The End of the World” by Peter Brannen. It’s a book that’s a history of mass extinctions, the Earth’s five mass extinctions, and, actually, why he doesn’t think we’re currently in a mass extinction or why, at least, things would need to go just as bad as they are right now for thousands and thousands of years for us to be in basically the sixth extinction.
  • The book’s amazing for two reasons. The first is that it is the first that really got me to understand deep time.
  • he explains how one kind of triggered the next one. It is also an amazing book for understanding the centrality of carbon to Earth’s geological history going as far back as, basically, we can track.
  • “Climate Shock” by Gernot Wagner and Marty Weitzman. It’s about the economics of climate change
  • Marty Weitzman, who I think, until recently, was kind of the also-ran important economist of climate change. Nordhaus was the famous economist. He was the one who got all attention. He’s the one who won the Nobel.
  • He focuses on risk and that climate change is specifically bad because it will damage the environment, because it will make our lives worse, but it’s really specifically bad because we don’t know how bad it will be
  • it imposes all these huge, high end-tail risks and that blocking those tail risks is actually the main thing we want to do with climate policy.
  • That is I think, in some ways, what has become the U.S. approach to climate change and, to some degree, to the underlying economic thinking that drives even the I.R.A., where we want to just cut off these high-end mega warming scenarios. And this is a fantastic explanation of that particular way of thinking and of how to apply that way of thinking to climate change and also to geoengineerin
  • The third book, a little controversial, is called “Shorting the Grid” by Meredith Angwin
  • her argument is basically that electricity markets are not the right structure to organize our electricity system, and because we have chosen markets as a structured, organized electricity system in many states, we’re giving preferential treatment to natural gas and renewables, two fuels that I think climate activists may feel very different ways about, instead of coal, which she does think we should phase out, and, really, nuclear
  • By making it easier for renewables and natural gas to kind of accept these side payments, we made them much more profitable and therefore encouraged people to build more of them and therefore underinvested in the forms of generation, such as nuclear, that actually make most of their money by selling electrons to the grid, where they go to people’s homes.
Javier E

Mob Justice at the Supreme Court - The Atlantic - 0 views

  • Friendship? This, not the bureaucratic payment-for-service model that Bonasera expects, is the basis for how Corleone’s world functions. The Godfather agrees to deal with Bonasera’s enemies, but in return for an unspecified future obligation. “Some day, and that day may never come,” he tells Bonasera, “I’ll call upon you to do a service for me.” This is understood to be more ominous and weighty than any monetary debt could be. But as the powerful know, the right to call in a future favor is priceless.
  • Thomas himself has echoed Crow’s just-friends line, maintaining that nothing is nefarious about his relationship with his benefactor. This is despite Thomas failing to mention any of this expensive largesse in his official financial disclosures over the years.
  • s much as Americans like to complain about bureaucracies, they operate by a set of published rules, and compliance with those rules is supposed to be transparent to the public. Disclosure promotes public confidence. The consent of the governed is obtained through trust that the system is fair and subject to meaningful oversight.
  • ...9 more annotations...
  • One sign of a failed state is that networks of favors and obligations among friends begin to subsume the formal institutional pathways of power in governmen
  • When rich businesspeople shower lavish favors on powerful jurists—at a moment when questions of economic inequality, business regulation, and corporate power are among the most divisive matters before the courts—can those jurists credibly say they do no service in return?
  • Crow’s firm did have business before the Supreme Court in 2004—a case from which Thomas did not recuse himself. This brings the Thomas-Crow relationship into a gray area in which no overt crime has occurred, but over which hangs a cloud of suggestive obscurity incompatible with democratic legitimacy.
  • when elites—both corporate and political—conduct their affairs through “friendly” exchanges of favors and gifts, the result is corruption that can render democracy nonfunctional.
  • As Gambetta has pointed out, even people who might seem insignificant can play a vital role in a Mafia-style system. They “may be short of cash but capable of returning valuable favors,” he writes. “Services not for sale elsewhere gain common currency here: votes, … bureaucratic dispensations, … selective privileges of all sorts.”
  • These favors are the great leveler between the rich and powerful and the network of people who “owe” them.
  • When Neil Gorsuch was nominated to the Supreme Court, he was part owner of a Colorado property that had languished on the market for two years. Shortly after his confirmation, Gorsuch and his co-owners sold it to the chief executive of a law firm with frequent business before the Court. Although Gorsuch declared the amount he earned from the sale on his ethics disclosure form (between $250,001 and $500,000), he notably left blank the name of the buyer. Since then, the law firm has argued at least 22 cases before Gorsuch and his colleagues; in the 12 cases where Gorsuch’s decision is recorded, he decided in favor of the firm’s clients eight times. A coincidence, perhaps. But if it was in any way a “bureaucratic dispensation” in return for taking a justice’s share of a white-elephant property off his hands, the public would never know. That’s the problem. Legitimacy has always been mostly a matter of appearances.
  • According to whistleblower documents obtained by Insider, Jane Roberts earned more than $10 million in commissions as a legal recruiter from 2007 to 2014, with clients including at least one firm that later appeared before her husband. The Supreme Court operates mostly on an honor system—which becomes untenable if lawyers appear to be seeking favor before the high court by enriching its members’ households, and if justices’ spouses can be plausibly accused of monetizing their proximity to official power.
  • “Friends of John were mostly friends of Jane, and while it certainly did not harm her access to top people to have John as her spouse, I never saw her ‘use’ that inappropriately,” one of Jane Roberts’s former colleagues told Insider. But another colleague saw her actions as corrupt and filed a whistleblower complaint. As part of her sworn testimony in that case, Jane summed up the modus operandi of the Supreme Court and its circle with a line that could have come straight from the Godfather’s lips: “Successful people have successful friends.”
woodlu

Labour v capital in the post-lockdown economy | The Economist - 0 views

  • Dissatisfaction rages in the post-lockdown economy. Households say that price-gouging companies are jacking up prices, contributing to an inflation rate across the rich world of 6.6% year on year.
  • Companies bat such accusations aside, believing that they are the truly wronged party. They complain that staff have become workshy ingrates who demand ever-higher wages
  • A “battle of the markups”, between higher wages and higher shop prices, is under way.
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  • economic output must flow either to owners of capital, in the form of profits, dividends and rents, or to labour, as wages, salaries and perks. Economists refer to this as the “capital” or “labour” share of GDP. Who has the upper hand in the post-lockdown economy?
  • First we calculate a high-frequency measure of the capital-labour share across 30 mostly rich countries.
  • In 2020 the aggregate labour share across this group soared (see chart 1). This was largely because firms continued to pay people’s wages—helped, in large part, by government-stimulus programmes—even as GDP collapsed. Advantage, labour.
  • More recently, however, the battle seems to have shifted in favour of capital.
  • most economists anyway argue that labour’s share is not a perfect gauge of economic fairness, since it is so hard to measure.
  • In the first camp is Britain. There, underlying wage growth is in the region of 5% a year, unusually fast by rich-world standards.
  • But corporations seem not to have much pricing power, meaning that they are struggling to fully offset higher costs in the form of higher prices.
  • Labour seems to be winning out at the expense of capital.
  • The second group consists of most other rich countries outside America.
  • There, neither labour nor capital seems able to triumph. After correcting for pandemic-related distortions Japan’s pay growth appears to be slowing to below 1% a year
  • Pay settlements in Italy and Spain are treading water, while wage growth in Australia, France and Germany remains well below where it was before the pandemic. Workers in these places are not really joining in with the inflationary party.
  • In Europe pre-tax profit margins, as measured in the national accounts, have risen in recent months but remain below where they were just before the pandemic.
  • In Japan the “recurring” profits before tax of large and medium-sized firms recently returned to pre-pandemic levels. The profits of smaller firms remain well below, however.
  • Here wage growth is rapid, at about 5% a year. But as shown in their most recent financial results, big listed American firms are doing a better job at protecting margins than analysts had expected.
  • A series of unusually large stimulus payments may mean that households are able to absorb the higher prices that companies impose.
  • Wages are rising, but nonetheless markups are responsible for more than 70% of inflation since late 2019,
  • In a recent report, analysts at Bank of America argue that greater pricing power helps explain why American equities have a higher price-earnings ratio than European ones.
  • Some economists wonder if workers will before long demand even higher wages to compensate for higher shop prices.
davisem

Anti-hacking boss at Russian cybersecurity firm faces treason charge - 0 views

  •  
    A manager at Russia's biggest cybersecurity firm in charge of investigating hacking attacks has been arrested, the company has said. Kaspersky Lab on Wednesday confirmed reports in Russia's respected Kommersant newspaper that Ruslan Stoyanov, the head of its computer incidents investigations unit, was arrested in December.
katyshannon

Europe-U.S. data transfer deal used by many firms ruled invalid | Reuters - 0 views

  • The EU's highest court struck down a deal that allows thousands of companies to easily transfer personal data from Europe to the United States, in a landmark ruling on Tuesday that follows revelations of mass U.S. government snooping.
  • Many companies, both U.S. and European, use the Safe Harbor system to help them get around cumbersome checks to transfer data between offices on both sides of the Atlantic. That includes payroll and human resources information as well as lucrative data used for online advertising, which is of particular importance to tech companies.
  • But the decision by the Court of Justice of the European Union (ECJ) sounds the death knell for the system, set up by the European Commission 15 years ago. It is used by over 4,000 firms including IBM (IBM.N), Google (GOOGL.O) and Ericsson (ERICb.ST).The court said Safe Harbor did not sufficiently protect EU citizens' personal data since the requirements of American national security, public interest and law enforcement trumped the privacy safeguards contained in the framework.
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  • EU citizens have no means of legal recourse against the misuse of their data in the United States, the court said. A bill is currently winding its way through the U.S. Congress to give Europeans the right to legal redress.
  • ECJ in its ruling referred to revelations from former National Security Agency contractor Edward Snowden, which included that the Prism program allowed U.S. authorities to harvest private information directly from big tech companies such as Apple (AAPL.O), Facebook (FB.O) and Google.
  • IBM (IBM.N) said it created commercial uncertainty and jeopardized the flow of data across borders.
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    Europe-U.S. data transfer deal ruled invalid by European courts, cited Edward Snowden in ruling
Javier E

The Families Funding the 2016 Presidential Election - The New York Times - 0 views

  • They are overwhelmingly white, rich, older and male, in a nation that is being remade by the young, by women, and by black and brown voters. Across a sprawling country, they reside in an archipelago of wealth, exclusive neighborhoods dotting a handful of cities and towns. And in an economy that has minted billionaires in a dizzying array of industries, most made their fortunes in just two: finance and energy.
  • Now they are deploying their vast wealth in the political arena, providing almost half of all the seed money raised to support Democratic and Republican presidential candidates. Just 158 families, along with companies they own or control, contributed $176 million in the first phase of the campaign
  • Not since before Watergate have so few people and businesses provided so much early money in a campaign, most of it through channels legalized by the Supreme Court’s Citizens United decision five years ago.
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  • But regardless of industry, the families investing the most in presidential politics overwhelmingly lean right, contributing tens of millions of dollars to support Republican candidates who have pledged to pare regulations; cut taxes on income, capital gains and inheritances; and shrink entitlement programs.
  • In marshaling their financial resources chiefly behind Republican candidates, the donors are also serving as a kind of financial check on demographic forces that have been nudging the electorate toward support for the Democratic Party and its economic policies. Two-thirds of Americans support higher taxes on those earning $1 million or more a year, according to a June New York Times/CBS News poll, while six in 10 favor more government intervention to reduce the gap between the rich and the poor. According to the Pew Research Center, nearly seven in 10 favor preserving Social Security and Medicare benefits as they are.
  • The donor families’ wealth reflects, in part, the vast growth of the financial-services sector and the boom in oil and gas, which have helped transform the American economy in recent decades. They are also the beneficiaries of political and economic forces that are driving widening inequality: As the share of national wealth and income going to the middle class has shrunk, these families are among those whose share has grown.
  • Most of the families are clustered around just nine cities. Many are neighbors, living near one another in neighborhoods like Bel Air and Brentwood in Los Angeles; River Oaks, a Houston community popular with energy executives; or Indian Creek Village, a private island near Miami that has a private security force and just 35 homes lining an 18-hole golf course.
  • More than 50 members of these families have made the Forbes 400 list of the country’s top billionaires, marking a scale of wealth against which even a million-dollar political contribution can seem relatively small. The Chicago hedge fund billionaire Kenneth C. Griffin, for example, earns about $68.5 million a month after taxes, according to court filings made by his wife in their divorce. He has given a total of $300,000 to groups backing Republican presidential candidates. That is a huge sum on its face, yet is the equivalent of only $21.17 for a typical American household, according to Congressional Budget Office data on after-tax income.
  • “The campaign finance system is now a countervailing force to the way the actual voters of the country are evolving and the policies they want,” said Ruy Teixeira, a political and demographic expert at the left-leaning Center for American Progress.
  • The accumulation of wealth has been particularly rapid at the elite levels of Wall Street, where financiers who once managed other people’s capital now, increasingly, own it themselves. Since 1979, according to one study, the one-tenth of 1 percent of American taxpayers who work in finance have roughly quintupled their share of the country’s income. Sixty-four of the families made their wealth in finance, the largest single faction among the super-donors of 2016.
  • instead of working their way up to the executive suite at Goldman Sachs or Exxon, most of these donors set out on their own, establishing privately held firms controlled individually or with partners. In finance, they started hedge funds, or formed private equity and venture capital firms, benefiting from favorable tax treatment of debt and capital gains, and more recently from a rising stock market and low interest rates
  • In energy, some were latter-day wildcatters, early to capitalize on the new drilling technologies and high energy prices that made it economical to exploit shale formations in North Dakota, Ohio, Pennsylvania and Texas. Others made fortunes supplying those wildcatters with pipelines, trucks and equipment for “fracking.”
  • The families who give do so, to some extent, because of personal, regional and professional ties to the candidates. Jeb Bush’s father made money in the oil business, while Mr. Bush himself earned millions of dollars on Wall Street. Some of the candidates most popular among ultrawealthy donors have also served in elected office in Florida and Texas, two states that are home to many of the affluent families on the list.
  • the giving, more broadly, reflects the political stakes this year for the families and businesses that have moved most aggressively to take advantage of Citizens United, particularly in the energy and finance industries.
  • The Obama administration, Democrats in Congress and even Mr. Bush have argued for tax and regulatory shifts that could subject many venture capital and private equity firms to higher levels of corporate or investment taxation. Hedge funds, which historically were lightly regulated, are bound by new rules with the Dodd-Frank regulations, which several Republican candidates have pledged to roll back and which Mrs. Clinton has pledged to defend.
  • And while the shale boom has generated new fortunes, it has also produced a glut of oil that is now driving down prices. Most in the industry favor lifting the 40-year-old ban on exporting oi
Javier E

Will the Republican Party Survive the 2016 Election? - The Atlantic - 0 views

  • In the 1996 presidential election, voter turnout had tumbled to the lowest level since the 1920s, less than 52 percent. Turnout rose slightly in November 2000. Then, suddenly: overdrive. In the presidential elections of 2004 and 2008, voter turnout spiked to levels not seen since before the voting age was lowered to 18, and in 2012 it dipped only a little. Voters were excited by a hailstorm of divisive events: the dot-com bust, the Bush-versus-Gore recount, the 9/11 terrorist attacks, the Iraq War, the financial crisis, the bailouts and stimulus, and the Affordable Care Act.
  • Putnam was right that Americans were turning away from traditional sources of information. But that was because they were turning to new ones: first cable news channels and partisan political documentaries; then blogs and news aggregators like the Drudge Report and The Huffington Post; after that, and most decisively, social media.
  • Politics was becoming more central to Americans’ identities in the 21st century than it ever was in the 20th. Would you be upset if your child married a supporter of a different party from your own? In 1960, only 5 percent of Americans said yes. In 2010, a third of Democrats and half of Republicans did.
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  • Political identity has become so central because it has come to overlap with so many other aspects of identity: race, religion, lifestyle. In 1960, I wouldn’t have learned much about your politics if you told me that you hunted. Today, that hobby strongly suggests Republican loyalty. Unmarried? In 1960, that indicated little. Today, it predicts that you’re a Democrat, especially if you’re also a woman.
  • Meanwhile, the dividing line that used to be the most crucial of them all—class—has increasingly become a division within the parties, not between them.
  • Since 1984, nearly every Democratic presidential-primary race has ended as a contest between a “wine track” candidate who appealed to professionals (Gary Hart, Michael Dukakis, Paul Tsongas, Bill Bradley, and Barack Obama) and a “beer track” candidate who mobilized the remains of the old industrial working class (Walter Mondale, Dick Gephardt, Bill Clinton, Al Gore, and Hillary Clinton).
  • The Republicans have their equivalent in the battles between “Wall Street” and “Main Street” candidates. Until this decade, however, both parties—and especially the historically more cohesive Republicans—managed to keep sufficient class peace to preserve party unity.
  • The Great Recession ended in the summer of 2009. Since then, the U.S. economy has been growing, but most incomes have not grown comparably. In 2014, real median household income remained almost $4,000 below the pre-recession level, and well below the level in 1999. The country has recovered from the worst economic disaster since the Great Depression. Most of its people have not. Many Republicans haven’t shared in the recovery and continued upward flight of their more affluent fellow partisans.
  • What was new and astonishing was the Trump boom. He jettisoned party orthodoxy on issues ranging from entitlement spending to foreign policy. He scoffed at trade agreements. He said rude things about Sheldon Adelson and the Koch brothers. He reviled the campaign contributions of big donors—himself included!—as open and blatant favor-buying. Trump’s surge was a decisive repudiation by millions of Republican voters of the collective wisdom of their party elite.
  • It’s uncertain whether any Tea Partier ever really carried a placard that read keep your government hands off my medicare. But if so, that person wasn’t spouting gibberish. The Obama administration had laid hands on Medicare. It hoped to squeeze $500 billion out of the program from 2010 to 2020 to finance health insurance for the uninsured. You didn’t have to look up the figures to have a sense that many of the uninsured were noncitizens (20 percent), or that even more were foreign-born (27 percent). In the Tea Party’s angry town-hall meetings, this issue resonated perhaps more loudly than any other—the ultimate example of redistribution from a deserving “us” to an undeserving “them.”
  • As a class, big Republican donors could not see any of this, or would not. So neither did the politicians who depend upon them. Against all evidence, both groups interpreted the Tea Party as a mass movement in favor of the agenda of the Wall Street Journal editorial page.
  • Owners of capital assets, employers of low-skill laborers, and highly compensated professionals tend to benefit economically from the arrival of immigrants. They are better positioned to enjoy the attractive cultural and social results of migration (more-interesting food!) and to protect themselves against the burdensome impacts (surges in non-English-proficient pupils in public schools). A pro-immigration policy shift was one more assertion of class interest in a party program already brimful of them.
  • The Republican National Committee made it all official in a March 2013 postelection report signed by party eminences. The report generally avoided policy recommendations, with a notable exception: “We must embrace and champion comprehensive immigration reform.
  • Republicans’ approval ratings slipped and slid. Instead of holding on to their base and adding Hispanics, Republicans alienated their base in return for no gains at all. By mid-2015, a majority of self-identified Republicans disapproved of their party’s congressional leadership
  • In 2011–12, the longest any of the “not Romneys” remained in first place was six weeks. In both cycles, resistance to the party favorite was concentrated among social and religious conservatives.
  • The closest study we have of the beliefs of Tea Party supporters, led by Theda Skocpol, a Harvard political scientist, found that “Tea Partiers judge entitlement programs not in terms of abstract free-market orthodoxy, but according to the perceived deservingness of recipients. The distinction between ‘workers’ and ‘people who don’t work’ is fundamental to Tea Party ideology.”
  • Half of Trump’s supporters within the GOP had stopped their education at or before high-school graduation, according to the polling firm YouGov. Only 19 percent had a college or postcollege degree. Thirty-eight percent earned less than $50,000. Only 11 percent earned more than $100,000.
  • Trump Republicans were not ideologically militant. Just 13 percent said they were very conservative; 19 percent described themselves as moderate. Nor were they highly religious by Republican standards.
  • What set them apart from other Republicans was their economic insecurity and the intensity of their economic nationalism. Sixty-three percent of Trump supporters wished to end birthright citizenship for the children of illegal immigrants born on U.S. soil—a dozen points higher than the norm for all Republicans
  • More than other Republicans, Trump supporters distrusted Barack Obama as alien and dangerous: Only 21 percent acknowledged that the president was born in the United States, according to an August survey by the Democratic-oriented polling firm PPP. Sixty-six percent believed the president was a Muslim.
  • Trump promised to protect these voters’ pensions from their own party’s austerity. “We’ve got Social Security that’s going to be destroyed if somebody like me doesn’t bring money into the country. All these other people want to cut the hell out of it. I’m not going to cut it at all; I’m going to bring money in, and we’re going to save it.”
  • He promised to protect their children from being drawn into another war in the Middle East, this time in Syria. “If we’re going to have World War III,” he told The Washington Post in October, “it’s not going to be over Syria.” As for the politicians threatening to shoot down the Russian jets flying missions in Syria, “I won’t even call them hawks. I call them the fools.”
  • He promised a campaign independent of the influences of money that had swayed so many Republican races of the past. “I will tell you that our system is broken. I gave to many people. Before this, before two months ago, I was a businessman. I give to everybody. When they call, I give. And you know what? When I need something from them, two years later, three years later, I call them. They are there for me. And that’s a broken system.”
  • Trump has destroyed one elite-favored presidential candidacy, Scott Walker’s, and crippled two others, Jeb Bush’s and Chris Christie’s. He has thrown into disarray the party’s post-2012 comeback strategy, and pulled into the center of national discussion issues and constituencies long relegated to the margins.
  • Something has changed in American politics since the Great Recession. The old slogans ring hollow. The insurgent candidates are less absurd, the orthodox candidates more vulnerable. The GOP donor elite planned a dynastic restoration in 2016. Instead, it triggered an internal class war.
  • there appear to be four paths the elite could follow, for this campaign season and beyond. They lead the party in very different directions.
  • Maybe the same message and platform would have worked fine if espoused by a fresher and livelier candidate. Such is the theory of Marco Rubio’s campaign. Or—even if the donor message and platform have troubles—maybe $100 million in negative ads can scorch any potential alternative, enabling the donor-backed candidate to win by default.
  • Yet even if the Republican donor elite can keep control of the party while doubling down, it’s doubtful that the tactic can ultimately win presidential elections.
  • The “change nothing but immigration” advice was a self-flattering fantasy from the start. Immigration is not the main reason Republican presidential candidates lose so badly among Latino and Asian American voters, and never was: Latino voters are more likely to list education and health care as issues that are extremely important to them. A majority of Asian Americans are non-Christian and susceptible to exclusion by sectarian religious themes.
  • Perhaps some concession to the disgruntled base is needed. That’s the theory of the Cruz campaign and—after a course correction—also of the Christie campaign. Instead of 2013’s “Conservatism Classic Plus Immigration Liberalization,” Cruz and Christie are urging “Conservatism Classic Plus Immigration Enforcement.”
  • Severed from a larger agenda, however—as Mitt Romney tried to sever the issue in 2012—immigration populism looks at best like pandering, and at worst like identity politics for white voters. In a society that is and always has been multiethnic and polyglot, any national party must compete more broadly than that.
  • Admittedly, this may be the most uncongenial thought of them all, but party elites could try to open more ideological space for the economic interests of the middle class. Make peace with universal health-insurance coverage: Mend Obamacare rather than end it. Cut taxes less at the top, and use the money to deliver more benefits to working families in the middle. Devise immigration policy to support wages, not undercut them. Worry more about regulations that artificially transfer wealth upward, and less about regulations that constrain financial speculation. Take seriously issues such as the length of commutes, nursing-home costs, and the anticompetitive practices that inflate college tuitio
  • Such a party would cut health-care costs by squeezing providers, not young beneficiaries. It would boost productivity by investing in hard infrastructure—bridges, airports, water-treatment plants. It would restore Dwight Eisenhower to the Republican pantheon alongside Ronald Reagan and emphasize the center in center-right
  • True, center-right conservative parties backed by broad multiethnic coalitions of the middle class have gained and exercised power in other English-speaking countries, even as Republicans lost the presidency in 2008 and 2012. But the most-influential voices in American conservatism reject the experience of their foreign counterparts as weak, unprincipled, and unnecessary.
  • “The filibuster used to be bad. Now it’s good.” So Fred Thompson, the late actor and former Republican senator, jokingly told an audience on a National Review cruise shortly after Barack Obama won the presidency for the first time. How partisans feel about process issues is notoriously related to what process would benefit them at any given moment.
  • There are metrics, after all, by which the post-2009 GOP appears to be a supremely successful political party. Recently, Rory Cooper, of the communications firm Purple Strategies, tallied a net gain to the Republicans of 69 seats in the House of Representatives, 13 seats in the Senate, 900-plus seats in state legislatures, and 12 governorships since Obama took office. With that kind of grip on state government, in particular, Republicans are well positioned to write election and voting rules that sustain their hold on the national legislature
  • Maybe the more natural condition of conservative parties is permanent defense—and where better to wage a long, grinding defensive campaign than in Congress and the statehouses? Maybe the presidency itself should be regarded as one of those things that is good to have but not a must-have, especially if obtaining it requires uncomfortable change
malonema1

Puerto Rico to audit power contract for Montana firm - BBC News - 0 views

  • Storm-ravaged Puerto Rico has promised a full audit of a $300m (£227m) deal won by a small electrical firm with Trump administration connections.A US House of Representatives committee is also scrutinising the contract.The chief executive of Whitefish Energy Holdings in Montana knows US Interior Secretary Ryan Zinke, while one of its investors has donated to Donald Trump.
  • Puerto Rico, a US territory whose 3.4 million residents are US citizens, was struck by two hurricanes in September - Irma and, later, the more-destructive Maria. The second storm all but wiped out the island's power grid.
  • The US Federal Emergency Management Agency (Fema) placed the US Army Corps of Engineers (USACE) in charge of "the immediate power restoration effort".When asked by BBC News about the contract, USACE spokeswoman Catalina Carrasco said on Monday "the US Army Corps of Engineers does not have any involvement with the contract between the Puerto Rico Electric Power Authority and Whitefish". She referred further questions to Prepa.
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  • A review of federal election data showed that a founding partner in HBC Investments, one of the two Texas firms that backs Whitefish Energy Holdings - had donated $2,700 to Mr Trump's presidential campaign, as well as $20,000 to a group that supported the White House bid. According to election data, the investor also gave $30,700 to the Republican National Committee in 2016 - after Mr Trump became the party's presumptive nominee.
  • When will power be restored?About 18% of customers have electricity as of Tuesday, according to the Pentagon.The Puerto Rican governor's goal is to have 30% restored by 30 October, 50% by 15 November and 95% a month later.
runlai_jiang

France labour: Firms to be fined over gender pay gap - BBC News - 0 views

  • French companies caught discriminating against women over pay will be given three years to close the gap or face fines under new labour proposals.
  • Larger firms - those employing at least 250 staff - would get the new software next year while firms employing between 50 and 249 staff would be affected from 2020.
  • Across the 28 EU member states, the average "unexplained" gender pay gap is a little higher than France's at 11.5%, according to Eurostat figures.
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  • Neighbouring Belgium has a gap of just 2.5% whereas for women in Lithuania, it is a staggering 24.2%.
krystalxu

London law firms feel chill from icy relations with Russia - 0 views

  • Linklaters singled out for criticism over Russia workPolitical climate has changed since Salisbury attackLaw firms waiting to see if words will be matched by action
krystalxu

Brexit could deprive British law firms of business in two ways - Due diligence - 0 views

  • English-qualified solicitors could find it harder to work on deals in Europe—and may find that is where their clients have gone
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