Republicans increasingly express fear that Trump’s trade war with China will harm the U.S. economy

The New York Times reports:

The trade war between the United States and China showed no signs of yielding on Thursday, as Steven Mnuchin, the Treasury secretary, told lawmakers there was no clear path to resolution and Beijing blasted the administration over its approach.

Mr. Mnuchin, who has tried to avoid calling the trade tensions with China a “war,” said talks with Beijing had “broken down” and suggested it was now up to China to come to the table with concessions. President Trump, speaking in Brussels on Thursday, described the trade talks with China as a “nasty” battle.

The Chinese, meanwhile, accused the United States of “acting erratically” and said the administration had “blatantly abandoned the consensuses that two sides have reached and insisted on fighting a trade war with China.”

Republicans and Democrats on the House Financial Services Committee showed little patience for Mr. Mnuchin’s answers about the lack of progress, repeatedly pressing him about whether there was a strategy to resolve the trade war and expressing concern that it was starting to hurt parts of the economy. [Continue reading…]

How Silicon Valley fuels an informal caste system

Antonio García Martínez writes:

California is the future of the United States, goes the oft-cited cliché. What the US is doing now, Europe will be doing in five years, goes another. Given those truthy maxims, let’s examine the socioeconomics of the “City by the Bay” as a harbinger of what’s to come.

Data shows that technology and services make up a large fraction of citywide employment. It also shows that unemployment and housing prices follow the tech industry’s boom-and-bust cycle. Amid the current boom, a family of four earning $117,400 now qualifies as low-income in San Francisco. Some readers laughed when I wrote in a memoir about working at Facebook that my six-figure compensation made me “barely middle class.” As it turns out, I wasn’t far off. With that credential, consider this rumination on bougie life inside the San Francisco bubble, which seems consistent with the data and the experience of other local techies.

San Francisco residents seem to be divided into four broad classes, or perhaps even castes:

The Inner Party of venture capitalists and successful entrepreneurs who run the tech machine that is the engine of the city’s economy.

The Outer Party of skilled technicians, operations people, and marketers that keep the trains belonging to the Inner Party running on time. They are paid well, but they’re still essentially living middle-class lives—or what lives the middle class used to have.

The Service Class in the “gig economy.” In the past, computers filled hard-for-humans gaps in a human value chain. Now humans fill hard-for-software gaps in a software value chain. These are the jobs that AI hasn’t managed to eliminate yet, where humans are expendable cogs in an automated machine: Uber drivers, Instacart shoppers, TaskRabbit manual labor, etc.

Lastly, there’s the Untouchable class of the homeless, drug addicted, and/or criminal. These people live at the ever-growing margins: the tent cities and areas of hopeless urban blight. The Inner Party doesn’t even see them, the Outer Party ignores them, and the Service Class eyes them warily; after all, they could end up there. [Continue reading…]

How the pharmaceutical drug economy became a racket controlled by Wall Street

Alexander Ziachik writes:

Donald Trump’s plan to lower prescription drug prices, announced May 11 in the Rose Garden, is a wonky departure for the president. In his approach to other signature campaign pledges, Trump has selected blunt-force tools: concrete walls, trade wars, ICE raids. His turn to pharmaceuticals finds him wading into the outer weeds of the 340B Discount program. These reforms crack the door on an overdue debate, but they are so incremental that nobody could confuse them with the populist assault on the industry promised by Trump the candidate, who once said big pharma was “getting away with murder.”

With his May 11 plan, Trump is, in effect, leaving the current pharmaceutical system in place. Increasingly, its most powerful shareholders are the activist managers of the hedge funds and private equity groups that own major stakes in America’s drug companies. They hire doctors to scour the federal research landscape for promising inventions, invest in the companies that own the monopoly licenses to those inventions, squeeze every drop of profit out of them, and repeat. If they get a little carried away and a “price gouging” scandal erupts amid howls of public pain and outrage, they put a CEO on Capitol Hill to endure a day of public villainy and explain that high drug prices are the sometimes-unfortunate cost of innovation. As Martin Shkreli told critics in 2015 of his decision to raise the price of a lifesaving drug by 5,000 percent, “this is a capitalist society, a capitalist system and capitalist rules.” That narrative, that America’s drug economy represents a complicated but beneficent market system at work, is so ingrained it is usually stated as fact, even in the media. As a Vox reporter noted in a piece covering the May announcement of Trump’s plan, “Medicine is a business. That’s capitalism. And we have seen remarkable advances in science under the system we have.”

This is a convenient story for the pharmaceutical giants, who can claim that any assault on their profit margins is an assault on the free market system itself, the source, in their minds, of all innovation. But this story is largely false. It owes much to the rise of neoliberal ideas in the 1970s and to decades of concerted industry propaganda in the years since.

In truth, the pharmaceutical industry in the United States is largely socialized, especially upstream in the drug development process, when basic research cuts the first pathways to medical breakthroughs. Of the 210 medicines approved for market by the FDA between 2010 and 2016, every one originated in research conducted in government laboratories or in university labs funded in large part by the National Institutes of Health. Since 1938, the government has spent more than $1 trillion on biomedical research, and at least since the 1980s, a growing proportion of the primary beneficiaries have been industry executives and major shareholders. Between 2006 and 2015, these two groups received 99 percent of the profits, totaling more than $500 billion, generated by 18 of the largest drug companies. This is not a “business” functioning in some imaginary free market. It’s a system built by and for Wall Street, resting on a foundation of $33 billion in annual taxpayer-funded research. [Continue reading…]

Chinese investment in the U.S. has plummeted 92% this year

CNN reports:

Chinese investment in the United States nosedived in the first five months of 2018 amid mounting tensions between the world’s two largest economies.
For years, Chinese companies pumped growing amounts of money into the United States, deepening ties between the countries.

But Chinese investment totaled only $1.8 billion between January and May. That’s a 92% drop compared to the same period in 2017, and the lowest level in seven years, according to a report released Wednesday by Rhodium Group, a research firm that tracks Chinese foreign investment.

The dramatic decline comes as the fight between Washington and Beijing over trade escalates, and US regulators increase their scrutiny of Chinese acquisitions. [Continue reading…]

Climate change can be stopped by turning carbon dioxide pollution into gasoline

The Atlantic reports:

A team of scientists from Harvard University and the company Carbon Engineering announced on Thursday that they have found a method to cheaply and directly pull carbon-dioxide pollution out of the atmosphere.

If their technique is successfully implemented at scale, it could transform how humanity thinks about the problem of climate change. It could give people a decisive new tool in the race against a warming planet, but could also unsettle the issue’s delicate politics, making it all the harder for society to adapt.

Their research seems almost to smuggle technologies out of the realm of science fiction and into the real. It suggests that people will soon be able to produce gasoline and jet fuel from little more than limestone, hydrogen, and air. It hints at the eventual construction of a vast, industrial-scale network of carbon scrubbers, capable of removing greenhouse gases directly from the atmosphere.

Above all, the new technique is noteworthy because it promises to remove carbon dioxide cheaply. As recently as 2011, a panel of experts estimated that it would cost at least $600 to remove a metric ton of carbon dioxide from the atmosphere.

The new paper says it can remove the same ton for as little as $94, and for no more than $232. At those rates, it would cost between $1 and $2.50 to remove the carbon dioxide released by burning a gallon of gasoline in a modern car.

“If these costs are real, it is an important result,” said Ken Caldeira, a senior scientist at the Carnegie Institution for Science. “This opens up the possibility that we could stabilize the climate for affordable amounts of money without changing the entire energy system or changing everyone’s behavior.” [Continue reading…]

Under Trump, ‘America First’ really is turning out to be America alone

Susan B. Glasser writes:

The Canadian Prime Minister, Justin Trudeau, was less than forty-eight hours away from hosting the biggest diplomatic gathering of his career when I spoke with one of his top advisers on Wednesday afternoon. Trudeau’s team was searching for strategies to salvage the annual G-7 summit with the American President, Donald Trump, and leaders of five of the world’s other large democratic economies—all of them close allies of the United States, and all of them furious with Trump. “Look, he personally decided he wanted to be fighting with everybody,” the Trudeau aide told me, referring to Trump. “Maybe he thinks it’s in his best interests to be combative and fighting.”

For close to a year and a half, Trudeau and his counterparts have employed various strategies to try to head off conflict with the volatile American President, from flattery to stonewalling to hours of schmoozing on the golf course. But in recent weeks Trump has confounded their efforts, unleashing a tit-for-tat trade war with allies, blowing up the Iran nuclear deal over European objections, and walking away from a deal with Canada and Mexico to overhaul NAFTA, all while lavishing praise on the North Korean dictator with whom he hopes to reach an accord next week. Adding insult to injury, Trump even cited an obscure national-security provision to justify the tariffs, as if America’s closest friends had suddenly become its biggest enemies. As a result, the G-7 meeting that Trudeau will host on Friday and Saturday was shaping up to be the most contentious, and possibly the most consequential, since the summits began, in 1975.

Trump’s chief economic adviser, Larry Kudlow, told the White House press corps on Wednesday that this was all just a “family quarrel,” but, if so, it’s one ugly fight. As Kudlow acknowledged the rift, Trudeau and France’s President, Emmanuel Macron, were meeting to plot strategy, and everyone was wondering why Trump, who is often described as averse to face-to-face conflict, had chosen the weeks preceding the annual G-7 summit to punch his allies in the face. In the days leading up to the meeting, Trump had tense phone calls with Trudeau, Britain’s Prime Minister, Theresa May, and Macron, who has been especially humiliated by the series of adverse decisions after flying to Washington to lobby Trump personally. All of them appear to fix blame on Trump himself. “We’ve gotten used to unorthodox behavior from your President,” the Trudeau adviser said.

For his part, Trump seems to relish the confrontation he has unleashed and is spoiling for more. [Continue reading…]

IKEA unveils ambitious climate goals

GreenBiz reports:

Swedish furniture giant IKEA has promised to outlaw single-use plastic products across its entire product range and in-store eateries by 2020 and ensure zero emission home deliveries as standard by 2025, as part of a sweeping set of new sustainability goals.

The firm also promised to design all its products in line with circular principles and using renewable and recycled materials, and reduce the climate footprint of its wares by an average of 70 percent per product by 2030.

IKEA announced its new global commitments today, as the next step towards its target of becoming a circular and climate-positive business by 2030.

The plan implies major investments in greener supply chains and a wholesale switch to an ultra-low emission fleet within seven years. [Continue reading…]

‘Carbon bubble’ could spark global financial crisis, study warns

The Guardian reports:

Plunging prices for renewable energy and rapidly increasing investment in low-carbon technologies could leave fossil fuel companies with trillions in stranded assets and spark a global financial crisis, a new study has found.

A sudden drop in demand for fossil fuels before 2035 is likely, according to the study, given the current global investments and economic advantages in a low-carbon transition.

The existence of a “carbon bubble” – assets in fossil fuels that are currently overvalued because, in the medium and long-term, the world will have to drastically reduce greenhouse gas emissions – has long been proposed by academics, activists and investors. The new study, published on Monday in the journal Nature Climate Change, shows that a sharp slump in the value of fossil fuels would cause this bubble to burst, and posits that such a slump is likely before 2035 based on current patterns of energy use.

Crucially, the findings suggest that a rapid decline in fossil fuel demand is no longer dependent on stronger policies and actions from governments around the world. Instead, the authors’ detailed simulations found the demand drop would take place even if major nations undertake no new climate policies, or reverse some previous commitments. [Continue reading…]

World dangerously underestimating economic cost of climate change, study finds

HuffPost reports:

Leading global forecasts widely underestimate the future costs of climate change, a new paper warns.

The findings, to be released Monday in the Review of Environmental Economics and Policy, say projections used by the United Nations Intergovernmental Panel on Climate Change rely on outdated models and fail to account for “tipping points” ― key moments when global warming rapidly speeds up and becomes irreversible.

The IPCC, established in 1988, is the leading international body for assessing climate change, and took on an expanded role after every country on Earth signed the Paris Agreement, the first global pact to cut greenhouse gas emissions. By relying on inaccurate economic models, the organization is misleading policymakers around the world about the risks of climate change, according to the researchers at the Environmental Defense Fund, Harvard University and the London School of Economics who co-authored the paper. [Continue reading…]

How a Eurasian steppe empire coped with decades of drought

By Diana Crow

The bitterly cold, dry air of the Central Asian steppe is a boon to researchers who study the region. The frigid climate “freeze-dries” everything, including centuries-old trees that once grew on lava flows in Mongolia’s Orkhon Valley. A recent study of the tree-ring record, published in March, from some of these archaic logs reveals a drought that lasted nearly seven decades—one of the longest in a 1,700-year span of steppe history—from A.D. 783–850.

Decades of prolonged drought would have killed much of the grass that the Orkhon Valley’s domesticated horses relied upon. Yet the dominant steppe civilization of the era, an empire of Turkic horse nomads called the Uyghurs, somehow survived nearly 60 years of the drought, a period about seven times longer than the Dust Bowl that devastated the central U.S. in the 1930s.

Based on surviving Chinese and Uyghur documents from the drought years, the study’s authors concluded that the Uyghurs survived by diversifying their economy and using international diplomacy to boost trade.

Rather than driving the Uyghurs to plunder neighboring territories—as other steppe empires tended to do—the drought led them to take advantage of their location on the Silk Road and reinvent their economy. The Uyghurs’ relatively peaceful strategies seem to have staved off total collapse for a surprisingly long time. “They were champs,” says physical geographer and study co-author Amy Hessl of West Virginia University.

Prior to this paper, no one knew that the Uyghurs faced an “epic drought,” Hessl says. The recognition that they did may change the way historians interpret the social, political, and economic strategies of the Uyghurs.

[Read more…]