Economy

Bernie Sanders is the bottomless cup of bad ideas. He keeps refilling it. Take his latest venti, a law that says everybody gets to work thirty-two hours for forty hours pay. That’s a magical 25 percent pay increase. His next trick is to pull free steak dinners out of a hat. What do you think would actually happen if such Bernie’s law were passed, enforced and found constitutional? (None of those would actually happen, of course.) The immediate effects would be another 25 percent price increase for labor-intensive products, a huge burden on low-income consumers and an additional incentive to replace more expensive workers with machines and computers.

Argentina has spent most of its 200-year history in deficit; no other country currently owes the International Monetary Fund a greater sum of money. The new finance minister, who entered government with President Javier Milei earlier this month, has been stark in making the point: ‘Out of the last 123 years, Argentina ran a fiscal deficit in 113... we have come to solve the addiction to fiscal deficits.’  Milei’s government is wasting little time carrying out what it calls ‘shock therapy’. The official value of the peso, Argentina’s currency, has been halved against the US dollar. Why might a government want to weaken its own currency, pushing up the price of imported goods for consumers?

Even the best-run companies have occasional leadership crises. But if you asked ChatGPT to come up with a blockbuster boardroom-bloodbath movie scenario, I doubt it would propose anything as extreme as this week’s events in its own San Francisco-based parent company, OpenAI. Chief executive and co-founder Sam Altman was fired last week for failing to be ‘consistently candid’ with OpenAI’s board, though no one was prepared to say what he had not been candid about. By Monday he had a new job leading AI research at Microsoft, OpenAI’s 49 per cent shareholder. One inside source claimed 743 of OpenAI’s 770 staff had signed a letter supporting him and many of them would follow him to Microsoft.

It’s a familiar response whenever the National Weather Service warns of a Category 5 hurricane, a life-threatening winter blizzard or some other looming natural disaster. Government officials urge local citizens to seek shelter immediately, while promising that area police will keep guard to ensure that looters do not use the emergency to rob boarded-up homes and abandoned stores. Today, Americans are being warned to brace for another kind of storm, one involving not the weather but their personal finances.

With the current inflation rate still well above the Federal Reserve’s 2.0 percent target, it is only natural that critics of President Biden’s Inflation Reduction Act (IRA) treated its recent one-year anniversary as an opportunity to once again stress that the bill never had anything to do with inflation. Biden himself has finally admitted as much. But what has received almost no attention is the degree to which big spending programs like the IRA — whose estimated cost has already spiraled up from $384.9 billion to $1.5 trillion — will further erode America’s social safety net. Especially the Medicare hospital insurance fund (Medicare Part A), which its trustees say will be depleted in 2031, and Social Security, which runs out of money just three years later, in 2034.

Small companies will face massive fines for not checking the papers of everyone they hire. Landlords will be put out of business for renting rooms to anyone without permission to be in the UK. With its Rwanda policy stalled, and with the numbers of illegal immigrants still at record highs, the government has a big new idea for trying to stem the numbers of people coming into the country. It will get small businesses to police the system. The only trouble is, that will damage the economy, and we will all suffer from that.  The government’s latest big idea for controlling immigration is to make it a lot harder for anyone who is here illegally to work or find somewhere to live.

Cockburn has been mulling over in his mind a gloomy new report about his retirement prospects. “In a July poll conducted jointly by Axios and Ipsos,” the Hill writes, “29 percent of workers under fifty-five answered a retirement query with, ‘I don’t think I will ever retire.’ Asked why not, three-quarters of the never-retire group said they could not afford to stop working. A smaller share said they didn’t want to.” With inflation doing a number on folks’ 401ks and future inflation fears rising, Cockburn is not surprised by people’s responses to this poll (except for those who don’t want to stop working — seek mental evaluation). Still, he wonders: what does our future workforce look like if it’s composed of geriatric personnel refusing or unable to retire?

Walmart has reportedly stopped using Yellow as the shipping company stares down bankruptcy and a major strike by the International Brotherhood of Teamsters. Craig Fuller of FreightWaves tweeted that Walmart was one of Yellow’s largest customers, meaning their exit will cost the company dearly. The implosion of Yellow could magnify the impact of any potential IBT strike against UPS, which alone could have ground the US economy to a halt. Yellow had received a $700 million federal loan during the Covid pandemic, but has run into challenges paying it back, and the New York Times reports that the company had $1.5 billion in debt in March 2023.