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      in World Politics

      Justice in the US Is an Art Form

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      On any given day, US media will offer an abundance of reports on the sometimes strange workings of its justice system. This first week of January has proved to be rich in examples, with the high-profile cases of Ghislaine Maxwell and Elizabeth Holmes complemented by a host of stories about smaller cases over the antics of local judges or the ambiguity of legislation in particular states.

      The ultimate effect of these stories may appear to justify the remark made by Mr. Bumble, in Charles Dickens’ “Oliver Twist,” who cited the proverbial phrase, “the law is an ass.” Dickens painted Bumble as an appalling hypocrite and the hapless husband of a tyrannical wife. When told that “the law supposes that your wife acts under your direction,” Bumble correctly identifies the gap between the principles expressed in the law and reality. Reacting to the supposed “suppositions” of the law, Bumble wishes “that his eye may be opened by experience — by experience.”

      Judicial Creativity Makes the News

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      In this comic passage, Dickens identified one of the central problems of any system of law, the friction created when suppositions concerning human behavior meet the facts of actual human experience. In most people’s minds, the notion of equality before the law requires that the letter of the law be applied uniformly to everyone, regardless of circumstance. But justice requires two things not contained in the law. Application of the law should take into account variable circumstances. But it should also mobilize the human ability to treat language — the wording of the law — as the not quite reliable artifact all language tends to be. The latter seems to represent a formidable challenge.

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      A New York Times article with the title, “Language Mistake in Georgia Death Penalty Law Creates a Daunting Hurdle” exposes how the careless wording of a Georgia law has inverted its intended logic. At one point it quotes a pearl of wisdom from 2013 uttered by future Supreme Court Justice Brett Kavanaugh. “It is essential,” Kavanaugh opined, “that we follow both the words and the music of Supreme Court opinions.”

      Today’s Daily Devil’s Dictionary definition:

      Music:

      1. A sublime art form practiced in all human cultures that derives from the ability to modulate the pitch, rhythm and sympathetic resonance of sounds produced by both the human voice and the skillful manipulation of a wide variety of physical objects

      2. A useful metaphor that consists of using the art form’s absence of propositional content to make irresponsible assertions sound as if they reflect deep and serious reasoning

      Contextual Note

      Perhaps Kavanaugh imagines the US criminal justice system as something akin to the pre-Copernican universe in which the sun was believed to revolve around the Earth and where, at the summit of the heavens, one could hear the celestial music of the spheres. That is a far cry from the more accurate description of the law’s workings by Mr. Bumble, who wished the law might descend from its principled heights and open its eyes to deal with human experience.

      The verdict in the trial of Theranos founder Elizabeth Holmes confirmed the spectacular fall of a one-time darling of the techno-financial-political establishment and youthful billionaire. It also illustrates that while Kavanaugh’s imaginary legal music didn’t play much of a role in determining the verdict, a certain form of cultural mythology figured prominently.

      Under the headline, “EXCLUSIVE: Juror speaks out after convicting Elizabeth Holmes,” ABC News reports on how the jury’s deliberation reached a verdict that ended up blaming Holmes for bilking the millionaires and billionaires who invested in her company but found her innocent of conning a gullible public into purchasing a fraudulent product.

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      One of the jurors, Wayne Kaatz, described by ABC News as “a daytime Emmy-award-winning TV writer,” observed a phenomenon that any author of fiction and media professional would be expected to notice. “It’s tough,” Kaatz explained, “to convict somebody, especially somebody so likable, with such a positive dream.” He insisted that the jury “respected Elizabeth’s belief in her technology, in her dream.” He added that in their mind, Holmes “still believes in it, and we still believe she believes in it.” In US culture, believing in a “positive dream” is in itself an act of moral virtue. Believing in those whom you believe is nearly as good.

      Historical Note

      The idea of the American dream was first promoted by the businessman and historian James Truslow Adams. In his best-selling 1931 book “Epic of America,” he described it as the “dream of a land in which life should be better and richer and fuller for everyone, with opportunity for each according to ability or achievement.” Later commentators, according to music historian Nicholas Tawa, “would claim that the American Dream was mostly the quest for financial betterment and the accumulation of bigger and better material goods.” Truslow launched the phrase describing his “positive dream” just about the time Edward Bernays, the godfather of public relations, was consolidating the ideology that would underpin the growth of the consumer society in subsequent decades.

      Martin Luther King cleverly exploited the idea of the American dream in his famous “I have a dream” speech. Instead of putting it in a consumerist framework, Reverend King framed the black American’s dream in terms of future justice. The justice-inspired dream has consistently challenged Truslow’s consumerist version aggressively promoted by Bernays and the powerful agencies of Madison Avenue.

      In other words, even within the US justice system, it isn’t King’s dream of justice but Truslow’s consumerist model that dominates, unconsciously orientating the average American’s perception of the world. The vaunted personal belief in one’s money-making dream (and scheme) typically contains some wildly positive outcome for the world.

      In the case of Elizabeth Holmes, what the jury called a “positive dream” was the promise of an instantaneous deciphering of every citizen’s state of health thanks to a drop of blood produced with a pinprick. For the incomparably successful Elon Musk, it’s the return of the planet to ecological health thanks to expensive electric cars. Or, alternatively, the colonization of Mars when the emerging truth about the failure of electric cars to save the Earth offers humanity no other choice than to escape to another planet.

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      These generously optimistic beliefs held by brave entrepreneurs (funded by equally brave billionaires) may be seen to justify lying and other forms of skulduggery. After all, if you have a great idea and don’t accept to play hardball by aggressively promoting the dream you are intent on turning into reality, you will fail and return to the dustheap from which you came: the cohort of anonymous losers. The jury admired Holmes for trying, even though the effort required some serious lying to a gullible public. 

      In contrast, the jury had no trouble finding Holmes guilty of the much more serious crime of pulling the wool over the eyes of America’s nobility, the wealthy elite who agreed to back her dream with their cash. In a guest article for The New York Times, Vanity Fair’s Bethany McLean admits to hoping that justice would be served with the opposite verdict. She wanted Holmes “convicted on the charges of lying to patients but found not guilty of the charges that she defrauded investors.” McLean believes that they “should have done the homework that others who refused to give Theranos money did.”

      The A-list investors and political celebrities who backed Holmes’ dream had the means to do due diligence but, charmed by the music of the dream, didn’t bother. Worse, the confidence projected by such prestigious investors — including former Education Secretary Betsy DeVos, Henry Kissinger, Oracle’s Larry Ellison, James Mattis (Donald Trump’s future defense secretary), Rupert Murdoch and the Walton family — gave added credibility to the lies Theranos’ patients were subjected to.

      Holmes is now awaiting sentencing. She will probably serve significant time in prison, though that may be attenuated and her time in prison reduced thanks to the kind of prevailing sympathy that exists for those who believe in their dream (especially young white females). That sympathy may have been a factor in the lenient sentence given to sex-trafficker Jeffrey Epstein in 2008, though no jury was involved. Perhaps that’s just one feature of the music of the law that Justice Kavanaugh believes to be real, always ready to produce its seductive strains, at least in those moments when it isn’t braying like an ass.

      *[In the age of Oscar Wilde and Mark Twain, another American wit, the journalist Ambrose Bierce, produced a series of satirical definitions of commonly used terms, throwing light on their hidden meanings in real discourse. Bierce eventually collected and published them as a book, The Devil’s Dictionary, in 1911. We have shamelessly appropriated his title in the interest of continuing his wholesome pedagogical effort to enlighten generations of readers of the news. Read more of The Daily Devil’s Dictionary on Fair Observer.]

      The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More

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      in World Politics

      Energy crisis: Britain leans on gas shipments from Qatar to ease supply squeeze

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      Britain has tapped Qatar as an informal natural gas supplier of last resort in the face of soaring gas prices, The Independent has learned, after foreign secretary Liz Truss visited the Gulf nation in October.Pressure to ensure gas supply has mounted as prices have risen at record rates across the EU and UK. Pandemic production disruption, lack of UK storage capacity and slimmer stores in major EU economies have left many countries scrambling to top up supplies of natural gas this winter.Energy suppliers this week described soaring gas prices as a “national crisis” and industry estimates suggest that consumers could face a doubling of energy bills when the price cap is reviewed in April. The business secretary Kwasi Kwarteng, along with the Office of Gas and Electricity Markets (Ofgem) and energy suppliers, was set to continue crisis talks this week after failing to reach a solution.Two sources familiar with the talks have suggested nothing short of a radical intervention – such as scrapping VAT or green levies – will be enough to mitigate the hit to households. The Europe-wide energy crunch has seen Serbia curb supplies to consumers, and last week, Kosovo’s distribution system operator announced it would introduce rolling two-hour blackouts to conserve energy from Thursday. Major European economies France and Germany are also grappling with energy price spikes while the UK faces a twin problem of cost and safeguarding supply. Against a backdrop of diminished capacity to store gas domestically, the UK brokered an informal arrangement with Qatar to keep gas deliveries flowing, as it prepares for a full strategic partnership agreement in 2022.The government has denied that Qatar is performing a “formal” role as a supplier of last resort. But sources familiar with shipments into the Isle of Grain terminal near London, and the QatarEnergy co-owned South Hook LNG terminal in Wales, believe there has been an increase in shipments since MsTruss visited the gulf state for talks in October.The sources say these shipments are in addition to those agreed by contracts in place earlier in 2021.This effort is aimed at reducing dependence on Norway and the US. “It avoids putting our eggs in too few baskets,” according to a source with knowledge of the Qatar talks. Existing commercial relationships between Qatar and UK-based buyers, such as Centrica, make it easier for the government to encourage greater supply without saying that it has directly requested additional shipments, The Independent understands.Mr Kwarteng is also understood to have been party to some discussions with Qatari counterparts in recent months. A government spokesperson said: “Qatar continues to be a supplier of liquefied natural gas to UK buyers but is not a formal supplier of last resort and we have not requested or secured any additional shipments from the Qatari government.” Britain’s gas supply remains “absolutely secure” with enough delivery capacity to meet demand, the spokesperson insisted.Centrica declined to comment, while the government of Qatar did not respond to a request for comment. More

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      in UK Politics

      Crisps, PS5s and petrol: The year the UK ran out of everything

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      Boris Johnson hailed 19 July 2021 as “Freedom Day”, easing the last of the social restrictions imposed on the British public since the onset of the coronavirus pandemic 16 months earlier and drawing a line under some of the darkest days in our recent history.The vaccine rollout had been a triumph, Covid-19 appeared to be on the ropes, Gareth Southgate’s boys had done us proud at Euro 2020 and a summer heatwave had descended. What could go wrong?That question was answered just three days later, when eerie photographs of barren supermarket shelves began to appear on social media, forcing both the stores themselves and government ministers to urge shoppers not to engage in panic-buying in response to the apparent shortage of everyday goods.The phenomenon felt like a return to the bad old days of March 2020 and the very beginning of the pandemic, when frantic consumers raced to gather up as many six-packs of toilet rolls and bottles of hand sanitiser as they could carry to ensure plentiful supplies at home should society indeed collapse in the manner of a Netflix zombie movie.This fresh instalment of hysteria was blamed initially on a “pingdemic”, an explosion of notifications from the NHS Test and Trace app advising employees to self-isolate for 10 days after coming into contact with someone who has tested positive for the virus and therein causing chaos at workplaces across the country.With no exceptions made and official policy still one of “contact isolation” rather than “contact testing”, the UK economy was apparently being hard-hit by staff absences in response to the smartphone-issued quarantine orders, a problem affecting every sector, from retail and hospitality to transport, tourism and manufacturing, causing shifts to be rescheduled and services to run late or be cancelled altogether.But supermarket aisles left empty for the want of stackers or stock would prove to be merely the most immediately visible symptom of a range of issues that had been festering and were beginning to surface.Given the highly intricate and interconnected nature of the global supply chain, in which outsourcing is common and a single product is seldom manufactured, assembled, packaged and shipped by one outfit alone, the chaos being wrought by Covid was not simply confined to Britain but playing out across the map, with sickness absences at factories anywhere potentially leading to bottlenecks and delays everywhere.The NHS app was retooled to be less sensitive on 2 August, meaning fewer employees were unable to work at home, but still the problems persisted, prompting the pundits to look a little deeper for the root cause.An underlying shortage of HGV drivers was also clearly playing a part, a long-term headache already exacerbated by Brexit and worsened by the complications associated with the pandemic.The UK haulage industry estimated that Britain had lost 25,000 European lorry drivers in the wake of the EU membership referendum as they were forced to return to their countries of origin by tighter visa rules and the loss of free movement of labour principles.The three successive national lockdowns imposed in response to the Covid outbreak meanwhile meant that as many as 40,000 applicants to the DVLA in Swansea hoping to take a lorry driver’s test had been unable to do so, their forms piled high and gathering dust.Throw in an ageing workforce and British hauliers were facing a shortfall of as many as 100,000 drivers.Iceland’s managing director Richard Walker told BBC Radio 4’s Today programme in late August that the lack of drivers had to be addressed by the government and was “impacting the food supply chain on a daily basis”.“We’ve had deliveries cancelled for the first time since the pandemic began, about 30-40 deliveries a day,” he said. “Things like bread, fast-moving lines, are being cancelled in about 100 stores a day.”Asked whether he blamed Brexit for the situation, Mr Walker did not hesitate to say yes, branding Britain’s decision to leave the EU “a self-inflicted wound”.His sentiments were echoed by other supermarket bosses, members of the Shadow Cabinet and, eventually, even by transport secretary Grant Shapps and the Office of Budget Responsibility, the latter pointing to a 15 per cent fall in British trade with Europe as a contributor to the shortages.For Trades Union Congress general-secretary Frances O’Grady, the rapid growth of zero hours contracts and the “casualisation” of work through the gig economy was another key factor.“It’s not just about pay and conditions,” she said. “It’s about the business models that we have seen mushroom over the past 10 or 20 years.“Supply chains are in peril. That should be a wake-up call for all of us. The solutions are quite simple. It’s about evening up that collective bargaining power and about treating people with dignity and decency at work.”When the problems began to manifest anew in the shape of the flash fuel crisis of late September and early October, prompting drivers across the country to queue around the block for access to desolate service station forecourts, Mr Johnson’s Cabinet was forced to act.It drafted in Army drivers to ferry petrol deliveries from distribution terminals to the pumps under Operation Escalin (a Brexit emergency backup plan hurriedly retrieved from a drawer), begged retirees to get back in their cabs and offered temporary visas to European hauliers, who were, understandably, not particularly inclined to help out.That episode – propelled to an extent by some unhelpfully alarmist media coverage, centred around the inevitable shots of snaking lines of traffic – did eventually ease, but not before post-Brexit Britain had been likened to “boycotted Cuba” by Europe’s newspapers.From the disastrous disappearance of Haribo to the nightmarish prospect of a world with no Irn-Bru, Walkers Crisps or Weetabix, here is a reminder of some of the key products we ran dry of in 2021, the year we went without.HariboOne of the first victims of the HGV driver crisis was the German confectioner, who first reported supply issues on 2 July before the extent of the problem became frontpage news – a dire turn of events for Tangfastics loyalists.Trade magazine The Grocer reported that Haribo had told its wholesale and retail customers that it was “faced with several challenges throughout our supply chain including a shortage of drivers” but was “working flat out to manage the situation”. 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      in US Politics

      New York attorney general vows Trump investigation will proceed ‘undeterred’

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      New York attorney general vows Trump investigation will proceed ‘undeterred’Former president sues Letitia James on grounds of political bias in effort to halt inquiry into his business affairs

      Trump unnerved as Capitol attack investigation closes in
      The New York attorney general, Letitia James, said on Monday her investigation of Donald Trump’s business affairs would continue “undeterred”, despite Trump suing to stop it on grounds of political bias, “because no one is above the law, not even someone with the name Trump”.How Trump’s $50m golf club became $1.4m when it came time to pay taxRead moreThe New York Times first reported Trump’s lawsuit, filed in federal court in Syracuse, New York. It alleges that James, a Democrat, “is guided solely by political animus and a desire to harass, intimidate and retaliate against a private citizen who she views as a political opponent”.James is investigating whether the Trump Organization manipulated valuations of its real estate properties.In one such instance, as Trump ran for president in 2016, the Guardian reported on differing valuations of a golf club outside New York City. The headline: How Trump’s $50m golf club became $1.4m when it came time to pay tax.The Washington Post and other outlets have reported similar alleged practices at other Trump properties.Last year, investigators working for James interviewed Eric Trump, one of the former president’s sons and a Trump Organization executive. James went to court to enforce a subpoena and a judge forced the younger Trump to testify, after his lawyers canceled a deposition.In an investigation that could only result in civil charges, James recently said she would seek to question Donald Trump under oath.It is rare for law enforcement agencies to issue a civil subpoena for testimony from a person also the subject of a related criminal investigation, partly because the person could simply cite their fifth amendment right to remain silent.It is unlikely Trump’s lawyers would allow him to be deposed unless they were sure his testimony could not be used against him in a criminal case.Trump’s business and tax affairs are also the subject of a criminal investigation run by the Manhattan district attorney, Cyrus Vance, which has been in progress for more than three years. James joined that investigation in May.The Manhattan case includes a focus on whether the Trump Organization overstated the value of some real estate assets to obtain loans and tax benefits.In their lawsuit against James, who recently announced a run for governor of New York before stepping back, Trump and the Trump Organization claim the attorney general has violated their rights under the US constitution by pursuing a politically motivated investigation.Trump and the company pointed to public statements James made before she was elected as attorney general.The lawsuit also made a plainly political play of its own, echoing Trump’s language in office and on the campaign trail when it said: “Rather than diligently prosecuting actual crimes in the state of New York – which are steadily on the rise – James has instead allocated precious taxpayer resources towards a frivolous witch hunt.”Trump and the Trump Organization are seeking a court order barring the investigation from going forward.In a statement, Trump’s attorney, Alina Habba, said: “By filing this lawsuit, we intend to not only hold her accountable for her blatant constitutional violations, but to stop her bitter crusade to punish her political opponent in its tracks.”In her own statement, James said: “The Trump Organization has continually sought to delay our investigation into its business dealings and now Donald Trump and his namesake company have filed a lawsuit as an attempted collateral attack on that investigation.“To be clear, neither Mr Trump nor the Trump Organization get to dictate if and where they will answer for their actions. Our investigation will continue undeterred because no one is above the law, not even someone with the name Trump.”James also noted that in August 2020 she “filed a motion to compel the Trump Organization to provide … documents and testimony from multiple witnesses regarding several, specific Trump Organization properties and transactions.“Since then, the court has ruled in Attorney General James’ favor multiple times.”Last month, Trump’s former lawyer and fixer Michael Cohen – who served a three-year sentence for offences including campaign finance violations relating to a payoff to the porn star Stormy Daniels, who claims an affair with Trump – was asked about the prospect of Trump being indicted in the criminal investigation in Manhattan.Cohen said he was confident prosecutors could “indict Donald Trump tomorrow if they really wanted and be successful”.Asked if he was “confident you did help Donald Trump commit crimes”, Cohen told NBC: “I can assure you that Donald Trump is guilty of his own crimes. Was I involved in much of the inflation and deflation of his assets? The answer to that is yes.”In July, the longtime Trump Organization chief financial officer, Allen Weisselberg, pleaded not guilty to criminal charges in what a prosecutor in Vance’s office called a “sweeping and audacious” 15-year tax fraud.TopicsDonald TrumpUS politicsNew YorkUS taxationnewsReuse this content More

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      in UK Politics

      Government ‘not closing down businesses’ says Rishi Sunak – but no new help for firms hit by cancellations

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      Rishi Sunak insisted the government was “not closing down businesses” today as he cut short a trip to California amid a growing backlash from firms demanding more state support to weather a sharp rise in Covid cases.The chancellor resisted calls for more help as businesses reported an alarming drop-off in trade in response to the rapid spread of the omicron variant. He pointed to existing measures including business rates relief, a reduced rate of VAT and around £250m available through local authorities.“My immediate priority is to make sure that money gets to those businesses as quickly as possible,” he told US broadcasters. “I appreciate that it is a difficult time for the hospitality industry, that’s why I was on the phone earlier today with various industry leaders from the hospitality space.”The chancellor brought forward his return flight from California after facing mounting criticism that he was not in the country to oversee the financial response to a rapidly deteriorating situation.Industry groups issued a desperate plea for help during crisis meetings with senior Treasury officials on Thursday, expressing frustration that the government’s increasingly bleak public health messaging has not been matched with economic assistance.The chancellor is understood to have held one-on-one talks with three senior hospitality industry figures on Thursday but no package of state help for the sector has yet been announced. More

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      in US Politics

      Trump’s social media platform hits roadblocks as major political battle looms

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      Trump’s social media platform hits roadblocks as major political battle looms‘Truth Social’ purportedly plans to challenge Twitter and Facebook, platforms that have banned or curbed the ex-president Donald Trump’s plan to launch “Truth Social”, a special purpose acquisitions backed social media company, early next year may have hit a roadblock after US regulators issued a request for information on the deal on Monday.The request from the SEC and the Financial Industry Regulatory Authority for information from Digital World Acquisition Corp (DWAC), a blank-check SPAC that is set to merge with Trump Media & Technology Group, comes as a powerful Republican congressman, Devin Nunes, announced he was stepping out of politics to join the Trump media venture as CEO.The twin developments set the stage for a major political battle over Truth Social, a platform that purportedly plans to challenge Twitter and Facebook, social platforms that have banned or curbed the former president over his involvement in stoking the 6 January Capitol riot.The request for information relates to DWAC board meetings, policies about stock trading, the identities of certain investors and details of communications between DWAC and Trump’s social media firm. It comes three weeks after Democratic Senator Elizabeth Warren asked the SEC to investigate possible securities violations at the company.Warren quoted news reports that said DWAC “may have committed securities violations by holding private and undisclosed discussions about the merger as early as May 2021, while omitting this information in [SEC] filing and other public statements.”But investigations into the Trump project appear to predate Warren’s request.“According to the SEC’s request, the investigation does not mean that the SEC has concluded that anyone violated the law or that the SEC has a negative opinion of DWAC or any person, event, or security,” DWAC said in a statement.Last week, Reuters reported that Trump’s new company is trying to raise up to $1bn by selling shares to hedge funds and family offices at a price higher than the SPAC pre-merger valuation of $10 a share.It also comes as the launch of the Trump media venture failed to meet a November deadline to release an invitation-only beta version of the platform.In October, soon after the deal was announced, shares in DWAC soared by more than 1,200%, suggesting the implied value of the enterprise could reach $8.2bn. Trading in the company was halted 12 times as Trump fans pumped the stock on Reddit and StockTwits, pushing Trump’s 58% stake in the combined TMT-DWAC company to $4.8bn.DWAC shares were trading at $43.19 per share on Monday morning, down almost 3% on news of the filing, even as equity markets broadly were higher.According to a press release from Trump Media & Technology, the media operation will begin operations in the first quarter of next year, with Truth Social launching ahead of the 2022 midterm election and a potential subscription video on-demand service coming later.Milos Vulanovic, an expert in SPAC deals at the Edhec Business School in Nice, France, told the Guardian that Trump’s politically oriented media venture could bring “new investors who may not fully understand how SPACs work” into the market. “I don’t see why Trump-sponsored media couldn’t take 10% of the social media market and make huge money for Trump and his investors.”TopicsDonald TrumpSocial mediaDigital mediaUS politicsnewsReuse this content More

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      in US Politics

      Democrats need to admit that inflation is real – or voters will turn on them | Andrew Gawthorpe

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      Democrats need to admit that inflation is real – or voters will turn on themAndrew GawthorpeInflation is an issue of real concern to many Americans. It’s also a chance for Democrats to name and shame price-gougers Inflation is rapidly becoming a problem for the Democratic party and President Joe Biden. They need to get a grip on it before it imperils their wider agenda and sinks their chances of keeping control of Congress in the midterm elections next year. As they think about how to address it, one thing is certain: what they’ve been doing so far isn’t working. A recent poll found that two-thirds of Americans disapprove of how Biden is handling inflation, and the same number consider the issue “very important” in their evaluations of his presidency. Among those Americans concerned about the state of the economy, nearly nine in 10 ranked inflation as a reason why. Clearly something has to change.But inflation, a complicated product of economics and mass psychology, is also devilishly difficult to understand, and even more difficult to control. Presidents have few tools to tame it, and the ones they do have can backfire. The inflation of the 1970s crippled Gerald Ford’s presidency and was doing the same to Jimmy Carter until he opted for an extreme cure – installing a chair of the Federal Reserve who dramatically raised interest rates, stopping inflation but also plunging the economy into a deep recession which handed the White House to Ronald Reagan. These experiences left inflation with a reputation as a presidency-killer, with either the disease itself or the medicine taken to combat it ultimately killing the patient.Despite this, Democratic party elites have been slow to take the latest round of inflation as seriously as they should. American policymakers have not had to deal with levels of inflation as high as this for 30 years, and it shows. Many latched on to the message that inflation was “transitory”, a temporary consequence of the economy revving back into high gear as the country emerged from the coronavirus pandemic. Some liberals have even lashed out at those warning about rising prices, characterizing their concerns as an attempt to undermine support for Democrats’ plans to spend more to advance social welfare and combat climate change.Whatever the economic merits of the argument – and many economists still expect inflation to start falling soon – this response has been politically toxic. Democrats risk appearing out of touch on an issue of profound concern to many Americans. In order to change tack, they need to communicate to voters that they feel their pain and that they’re fighting to make things better.There are already signs that Democrats from the president on down are starting to get it. Biden recently gave a speech on the topic and announced the release of 50m barrels of oil from the US strategic petroleum reserve, an attempt to bring down gas prices at the pump. He also pointed the finger at oil companies for charging consumers high prices even as the wholesale price of oil has dropped over the past few weeks.But Democrats should also be doing more to point the finger at the businesses who are helping to foment the problem. The Wall Street Journal reports that companies in many different sectors are using this inflationary spike as a cover to raise prices faster than their costs, essentially betting that consumers won’t object when they already see prices rising all around them. According to the report, nearly two out of three big, publicly traded US companies have seen larger profit margins this year than in the same period in 2019. Inflation might be hurting consumers, but it’s a boom year for corporate America.Democrats ought to use all the tools of government to highlight and combat these abuses. As Biden has been finding out, public anger over inflation tends to be directed towards the incumbent president – and the only way to survive might be to redirect it at a more appropriate target. The presidential bully pulpit can be used to highlight corporate abuses and regulatory investigations, such as the one already announced by the FTC into the oil and gas sector, can hold industries to account and combat potentially illegal practices. Nor should Democrats stop there. They control both houses of Congress and should consider holding congressional hearings to name and shame particularly egregious price-gougers.Whether any of these measures will actually serve to lower prices is an open question. But the only responsible thing to do is try. Corporate price rises risk kicking off an inflationary spiral in which the initial reasons for rising prices become secondary to a general feeding frenzy, and anything that can be done to discourage it is healthy. Administration actions might also serve to dampen consumers’ expectations of future inflation, which will reduce the risk of a spiral. Because the media narrative is driven by inflation that has already happened, reassurance remains important even after prices have begun to stabilize.But even if we shouldn’t hold our breath for these actions to actually slow the rate of price increases, it’s important to show leadership on this issue for the simple reason that it’s what worried voters want and deserve. To be seen to be acting and pointing a finger at those to blame is smart politics, especially if this bout of inflation does indeed prove to be transitory and prices begin to fall next year.Meanwhile, corporate America has to decide if it really wants to undermine the Democrats and risk handing stewardship of the economy back to the party of Donald Trump. With the modern Republican party increasingly the party of incompetence and ignorance, self-restraint might be the better option. As Democrats should seek to remind the price-gougers, profiting less now will help everyone mightily down the road.
      Andrew Gawthorpe is a historian of the United States at Leiden University, and host of the podcast America Explained
      TopicsUS politicsOpinionDemocratsInflationEconomicsJoe BidenBiden administrationcommentReuse this content More

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      in US Politics

      What is happening with inflation in the US, and how worried should you be?

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      What is happening with inflation in the US, and how worried should you be?Why prices are rising, how long this might last, and why inflation is a psychological as well as an economic phenomenon Jobs are coming back, wages are rising, stock markets are hitting record highs. In many ways, the US economy is booming. And yet as we officially enter the holiday season, consumer confidence is at its lowest level in a decade. The reason? Inflation.The US inflation rate in October was the highest it has been since the early 90s, when Nirvana released Smells Like Teen Spirit and the Gulf war was just beginning.But should we really be worried? The Federal Reserve, and the Biden administration, think rising prices are “transitory” – caused by the hangover from the pandemic. Their critics are less sure.Inflation, especially during a global pandemic, is complicated. Here is what we know about inflation in the US.What is inflation?Inflation describes a general rise in the level of prices of all consumer goods and services. It is not specific to a particular good or service; rather it is a measure of when, broadly, things are more expensive than they were before.There are a handful of ways inflation is measured, though the Consumer Price Index (CPI) measured by the US Bureau of Labor Statistics is the most common system used to gauge inflation. The index looks at the prices of goods and services in cities and suburbs across the country, weighted depending on the proportion a good or service has in overall consumption. For example, food and housing is weighted more than clothing in the index.What’s happening with inflation?According to CPI numbers released in mid-November, prices in the US rose 6.2% in October compared with where prices were the same time last year. US core inflation, which does not include goods like energy and food whose supply is susceptible to external events, was 4.6% in October, its highest since 1991.Prices broadly increased in energy, housing, food, used and new vehicles and recreation. Price decreases for airline fares and alcoholic beverages were among the few price declines seen last month.The US is not the only country experiencing inflation – the UK, China and Germany have all also reported rising inflation in the last few weeks.The Fed has already taken steps to reduce inflation, ending some of its stimulus programs that saw it buying bonds to stimulate the economy. But the central bank has held off on its main tool to control inflation – adjusting interest rates – probably because doing so runs a higher risk of starting an economic recession.How worried should Americans be about inflation?Some economists have been pointing out that the inflation we are seeing now is just one piece of the pandemic’s impact on the economy, which overall has not been terrible.“There’s a lot of uncertainty. We don’t know what happens next. The past two years have been unprecedented and painful,” said Claudia Sahm, a senior fellow at the Jain Family Institute and a former Federal Reserve economist. “We’re going to have a bumpy ride.”Even though inflation was high in October, other figures like the strong increase in jobs and the surge in retail sales point to an overall good month for the US economy.“My baseline scenario is that as the pandemic is contained, which is happening as we get more vaccines out there, we will see inflation move back down to something that is very close to before Covid,” Sahm said. “I don’t think Covid has changed the underlying structure of the US economy.“I do take a lot of comfort that many people have the money to weather this storm, at least for now,” she said, citing the direct aid Americans got through stimulus checks and the child tax credit. “It really is upsetting to pay more for your groceries, but it’s really upsetting not to be able to walk home with the groceries in your cart.”Why is inflation happening?The pandemic has touched every inch of the US economy and has affected every American in some form, so there is no single reason inflation is happening.“When you look under the hood of the top-line numbers, there are a lot of stories,” Sahm said.The supply chain crisis has led to a shortage of cars, clogged shipping ports and overstuffed warehouses. Meanwhile, consumer demand has surged after plummeting in the early days of the pandemic.For example, a shortage of microchips has led to a slowdown in car manufacturing, which increased the sales – and ultimately prices – of used cars, Sahm said. Housing prices have gone up because renters feel comfortable moving again and rental owners feel comfortable charging higher rents.Some companies have not been hesitant to reap the benefits of increased consumer spending during the pandemic, raising prices and paying record compensation for the country’s top chief executives.Throughout the pandemic, the federal government boosted the economy through multiple trillion-dollar stimulus packages that gave money directly to families and employers, and the Federal Reserve policy lowered the interest rates and purchased bonds.What are the effects of inflation?The most obvious impact is that Americans are seeing higher prices whenever they go to the store, make investments in a house or car or pay their medical expenses. Some economists believe that the higher prices mean that some households will start slowing their spending as goods take up a larger portion of their budget.Inflation’s impact on people’s budgets will depend on whether wages can keep up with the rate of inflation. So far, it seems that wages are not keeping up with inflation, though industries that are recovering from severe pandemic losses, like hospitality, are seeing wage increases on pace with inflation.Inflation can also have a profound impact on politics as voters tend to blame the party in power for rising prices. So far, Republicans have been eager to blame Joe Biden for inflation, condemning him for overspending on government aid.“It’s a direct result of flooding the country with money,” the Senate minority leader, Mitch McConnell, told reporters in October.Democrats have taken the defensive, emphasizing that experts at the Federal Reserve believe the inflation will be short-lived and that pandemic assistance was necessary for the health and wellbeing of Americans during a crisis.“We are making progress on our recovery. Jobs are up, wages are up, home values are up, personal debt is down and unemployment is down,” Biden said the day October’s inflation numbers were released. “There is no question the economy continues to recover and is in much better shape today than it was a year ago.”How will it end?That’s the big question. Earlier this month the Fed chair, Jerome Powell, conceded that inflation had been “longer lasting than anticipated” and it was “very difficult to predict the persistence of supply constraints or their effects on inflation”. Economists expect the central bank to start raising rates next year in an attempt to tamp down price rises.But inflation is a psychological as well as an economic phenomenon. Fear of rising prices is already affecting consumers and could, perversely, lead to more price rises as consumers snap up goods fearing yet more rises in a market that is still constrained by supply chain problems.We will probably continue to be haunted by inflationary fears unless the price hikes do prove “transitory”. As the old economist joke goes: the best rate of inflation is the one no one notices.TopicsInflationEconomicsUS politicsnewsReuse this content More