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Labor and the Economy

Labor and the Economy

A Sign Outside Mine #5, Warrior Met Coal, Brookwood, Alabama. May 5, 2021. Photo: Brett Wallace

This is an ongoing series about labor and the U.S. economy.

Friday morning, May 7, 2021.

The National Labor Relations Board began the post election objections hearing this morning with Amazon and the RWDSU. I listened in from Birmingham, Alabama where I continue to document the union drive, a historic union event that has been unfolding before our eyes.

Meanwhile, 40 miles south of Birmingham in Brookwood, Alabama, Mine workers from the United Mine Workers of America (UMWA) are still on strike at the Warrior Met Mine. This is the first strike at this mine in 40 years as the miners are fighting for a fair contract after pulling Warrior Met out of bankruptcy five years ago. My last post included my observations from the picket line. Stay tuned for a video I have coming out documenting this strike.

Warrior Met is not only growing its horrendous labor record and lack of compassion for its workers, but local environmentalists believe the company is polluting the many local creeks surrounding the mines boundary lines. Many of the workers live in the local community because Brookwood is and has always been a mining town.

Earlier this week, on Wednesday, May 5, I visited a spot under a railroad bridge where Texas Creek flows into Davis Creek nearby mine 7. Mine 7 is one of the underground mines in Brookwood owned and operated by Warrior Met. John Wathen, local creekkeeper for Hurricane Creek, dropped me a pin so I could easily find the site – which is about a 1/2 mile in from the train tracks. Upon viewing the creek, I saw the black substance that is polluting these creeks first hand. I also took a small sample of the water and soil. AL.com did some in-depth reporting on the situation the preceding day. You can read their article here.

Here is sample footage I took on Wednesday, May 5 under the railroad bridge where Texas Creeks flows into Davis Creek.

Locals in the neighborhood traced the source back to Texas Creek and noticed a black sheen pouring from the woods into the creek. They also noticed it coming over a spillway on Warrior Met’s property.

Warrior Met is an underground mine. Workers take an elevator 2,000 feet into the ground – these are deepest mines found anywhere in the country. While the mining takes place out of sight, what is visible is the waste from the process. One individual pointed me to a potential source of the substance – a gigantic mound of rock the size of a small ski mountain sitting atop a slurry that has been extracted from the mine during the coal mining process over the last 40 years.

Later that evening, I met up with Patrick Herring, who grew up near the creek and lives near it today. Patrick told me Warrior Met has not yet acknowledged their role in the situation. He has filed complaints with the EPA, Alabama Mining and Surface Commission, and other authorities to alert them of the situation.

I reached out to Warrior Met for a statement on the matter, but did not hear back yet. I will update this post with any further details.

You can follow news about the strike and the UMWA on Twitter.

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Labor and the Economy

Labor and the Economy

UWMA miners and Bamazon in solidarity on the picket line. Day 1 of the UMWA Strike, Warrior Met Coal, Brookwood, Alabama. April 2nd, 2021. Photo: Brett Wallace

This is an ongoing series about labor and the U.S. economy.

Sunday morning, April 4th, 20201. UMWA on Strike – I will update this post as events unfold.

While the Bamazon Union votes are validated and counted, more than 1,100 miners have gone on strike in Brookwood, Alabama. The miners are members of UMWA Local Unions 2245, 2397, 2368, and 2427 working at the Warrior Met Mine. The site, of which there are numerous mine sites, is about 30 miles south of where I am staying in Bessemer, Alabama. This is the first strike at this mine in 40 years and it’s over wages and working conditions as company executives and investors reap profits from the production of coal and methane.

The current UWMA collective bargaining agreement expired on April 1st, 2021. Miners went on strike at 10:30 pm that night. I spent Friday and Saturday at one of the mines meeting workers, joining the picket line, and documenting what’s happening on the ground.

UMWA International President Cecil E. Roberts stated, “We are working to reach a fair and equitable agreement that recognizes the hard work and significant sacrifices our members at Warrior Met made to save this company and these jobs.”

“Because of their productivity, these professional, experienced miners have brought the company out of bankruptcy and made Warrior Met the successful company it is today.”

Washing Station at site #5. Warrior Met Coal, Brookwood, Alabama. Photo: Brett Wallace.

I learned from miners that the site is open year-round except Thanksgiving and Christmas with workers on the job 6 days a week. This mine has stayed open throughout COVID-19 and workers were notified in a letter they were “essential” in case they were out after the 10:00 pm curfew.

There are specialty jobs at the mine site. For those going into the mine, the workers at the site I have visited told me they take cage 4 minutes below ground, then take man buses 45 minutes into the site. There are several jobs, executed in sequential orders, such as cutting, drilling, and rock bolting to extract the mine and secure the area. Another site I visited was mined out and now functions as a washing station before the pure coal is loaded onto CSX freight cars.

After the first night of the strike, when I got back to the hotel, I noticed 5 CSX trucks in the parking lot. These are CSX managers who have been brought in to run the trains because CSX union freight operators won’t take their trains over the picket line.

The Alabama State Police are present at several picket lines to keep the roads clear. Shuttle buses and school buses are transferring strikebreakers to portals to enter the mines. The picket lines are out 24/7 to discourage strikebreakers from crossing the line.

This company counts Apollo Global Management as an investor of which Leon Black (MoMA Director) founded. Hyperallergic has reported on Leon Black’s ties to Jeffrey Epstein and his departure from the MoMA Board.

Screenshot from https://www.apollo.com/our-business/private-equity

I will update this post with information on where you could send resources for the picket line. For now, here is the Facebook account for the union – https://www.facebook.com/UMWAunion

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Labor and the Economy

Labor and the Economy

Amazon Fulfillment Center, Bessemer, Alabama. Photo:Brett Wallace.

March 11th. I am driving to Bessemer, Alabama this morning to join and document the historic Amazon union drive at BHM1 Fulfillment Center. My focus will be on documenting what’s happening on the ground from the voices of workers. Follow the Bamazon Union for updates. I will share footage in the coming weeks and months.

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Labor and the Economy

Labor and the Economy

Brett Wallace, Still from video, Amazon Union Drive, 2021

This is an ongoing series about labor and the U.S. economy. Following my last post about Amazon’s anti-union efforts, I have created a video in support of the current union drive by Amazon workers in Bessemer, Alabama.

Amazon workers in Bessemer, Alabama are voting to unionize. They have until March 29 to decide whether they want to join the Retail, Wholesale, and Department Store Union, or RWDSU. Amazon employs over one million workers and is the second-largest employer in the United States. The company is pulling out all the stops to prevent a YES vote for the union.

For this video, I spent much of the last two weeks capturing ongoing rallies that were happening in New York City to support the workers in Bessemer. Such rallies have taken place all over the country. And, I have intertwined this new footage with other anti-Amazon events I have participated in and documented over the last two years, including Amazon’s attempt to move into New York City (a union city), their lack of protections for workers during COVID-19, and their firing of workers, such as Chris Smalls, now founder of The Congress of Essential Workers, who spoke out against their treatment of workers.

Before I end this post, I want to give a big shout-out to my colleagues in the Guggenheim Union for winning their first fair contract. This was a long arduous fight that went on for over a year. I am grateful to them for allowing me into their struggle and to capture part of it on video.

Members of the Guggenheim union outside the museum in Manhattan (courtesy Guggenheim Union). Source: Hyperallergic.

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Labor and the Economy

Labor and the Economy

Activists, community groups, and labor organizers protesting against Amazon’s HQ2 plans at City Hall, New York City. January 30, 2019. Photo: Brett Wallace.

This is an ongoing series about labor and the U.S. economy. Suggestions are welcome. For this post, I have included an update on what’s happening with the Amazon unionization effort in Bessemer, Alabama in the context of Amazon’s long-held war against workers organizing.

Amazon’s Long-Held War Against Worker Organizing

I took the photo above on the morning of January 30th, 2019 outside New York City Hall. It was a freezing day (sort of like this week has been). So cold that the camera shut off a few times on its own. The photo shows activists, labor organizers, and local coalition groups rallying on the steps of City Hall before the second oversight meeting between the city council and Amazon. Even though Amazon has avoided unions since its founding in 1995, you can see representatives from the Teamsters and RWDSU (Retail, Wholesale, and Department Store Union) in the photo, two of the biggest national unions supporting Amazon workers. The Teamsters represent the UPS drivers who help power Amazon’s distribution machine. The 5,805 Amazon workers in Bessemer, Alabama are voting on whether to join the RWDSU in late March.

During the 3-hour meeting, titled, “Does the Amazon Deal Deliver for New York City Residents?”, Amazon executives were rocked by both the city council and the audience of workers, activists, and labor coalitions, for their defiant anti-union stance. Brian Huseman, Amazon’s VP of Public Policy, fell back on the tired counter-argument of how Amazon is all about creating jobs. The question is what kind of jobs (in terms of safety, security, wages) and how are those workers treated? There are plenty of flaws in Huseman’s response if one asks those questions.

After the meeting adjourned, I vividly remember Huseman storming by me on his way out of the building. I was struck by the feeling that the HQ2 deal was dead in New York because it did not and could not deliver for residents or workers. Amazon is not the type of company that will bend to the needs of workers or communities – rather, it expects incentives from the communities it occupies.

HQ2 was an event that shined a light on Amazon’s defiant anti-union stance. I ended up turning my footage from that day and other Amazon-related events leading up to it into an artistic film, called HQ2. Since this time, Amazon has become more aggressive and coordinated to shut down workers from organizing.

What’s happening in Bessemer?

Amazon warehouse workers in its Bessemer, Alabama facility have been organizing to create a union since last fall. A rally was held last Saturday, February 6th, in support of the upcoming vote. Bernie Sanders showed his support by having 40 pizzas delivered to workers and union supporters. A few days later, on Monday, February 8th, 5,805 ballots were mailed out to workers in the Bessemer warehouse – a major step in the closely watched union organizing event. The 5,805 Amazon workers in Bessemer, Alabama have until March 29th to vote on whether to join the RWDSU. On March 30th, the votes will be counted.

The Bessemer warehouse opened in March 2020. And, given this recent opening, the union likely caught Amazon by surprise. The last union event at Amazon was in 2014. As Alex Press writes in the New Republic, looking at the Birmingham-Bessemer region, a former center of steel and iron, offers additional context behind the union activity that has taken hold in Bessemer.

“It’s pure David and Goliath, though maybe that doesn’t fully capture it. Bezos is worth $184 billion; the median household income in Bessemer is just over $30,000. One in four residents live in poverty. This is a man who has everything trying to crush a town.”1

Alex Press

Workers are fighting for their dignity – unable to communicate with Amazon over better wages, working conditions, and job security. This is also a fight connected to the movement for Black Lives and civil rights – the Times reports, “Many of the employees at the Amazon warehouse are Black, a fact that the retail union has used to focus on issues of racial equality and empowerment. And leading the organizing effort are about two dozen unionized workers from nearby warehouses and poultry plants, most of whom are also Black.”2

Nora De La Cour provides rich context on how the fight to unionize Amazon is a fight for racial justice. She writes, “If Amazon actually thought black lives mattered, the company would have already voluntarily recognized the union.” 3.

This is a closely watched union drive given the size of Amazon and the fact that it is has evaded unions for so long. An Amazon worker union would stand in sharp contrast to Amazon’s poor treatment of workers and the staggering wealth accumulated by Jeff Bezos ($90 billion in the pandemic alone).4 The ballots are due back on March 29 with the count beginning on March 30.

For more information about how a union election works and common union-busting tactics, check out this informative video from A More Perfect Union and labor reporter Kim Kelly.

Amazon’s History of Anti-Union Tactics

Over the last six years, Amazon has increasingly fought to undermine workers from organizing. The company believes that unions block the agility and speed that Amazon seeks in the era of rapid eCommerce order fulfillment and distribution at scale. In reality, a union would defend workers against Amazon’s aggressive strategy to squeeze costs out of its labor force by any means possible. In response to the union efforts in Bessemer, Amazon has created a full website and hashtag, #doitwithoutdues/, and posted flyers in bathrooms countering the benefits of union membership. This is not surprising given Amazon’s prior anti-union tactics.

In 2014, during an attempted union drive, Kellen Wadach, an Amazon manager in Delaware, created a false narrative about how his family was abandoned by his father’s union. The story was later disproved. The make-believe story remains an early example of how Amazon nurtures a culture that is hostile to union activity, enough for managers to rely on conjuring up fake stories to halt workers from organizing.

In 2018, Amazon sent a union-busting training video to Whole Foods management. It was then leaked by Whole Worker, a coalition of Whole Foods workers, to the media. The video is an instructional training video on union-busting, awkwardly branded and dressed up by HR with that gleeful background music and renders of cartoon-styled employees seen in tech explainer videos. In promoting Amazon’s direct connections with employees, the video states –

“We are not anti-union, but we are not neutral either. We will boldly defend our direct relationship with associates as best for the associate, the business, and our shareholders.”

– Amazon union-busting video leaked in 2019

Whole Foods has continued its fight against unions resorting to using heat maps and sentiment analysis to under potential union activity across its network of stores and labor force.

Who remembers when Amazon aired this commercial in the early days of the pandemic praising their employees as retail heroes?

No doubt this PR stunt was a reaction to employees speaking out about the unsafe warehouse conditions of working through the pandemic. The realities of Amazon’s fulfillment centers, such as the tracking and termination of workers or workers peeing in bottles and skipping bathroom breaks, are left out of this commercial. These centers are ground zero for the company’s worst labor abuses and the direct action and protest against such conditions.

As the pandemic spread and worsened from March to May 2020 Amazon workers spoke out about the unsafe working conditions they faced. One action was an open letter to Jeff Bezos signed by 5,210 Amazon workers outlining specific concerns and constructive recommendations of working through the pandemic. Other worker-led efforts of raising awareness to Amazon and pushing for facilities to be sanitized took place in Amazon warehouses in Staten Island, New York, and Shakopee, Minnesota. Amazon’s response was to fire the workers involved for raising awareness, demanding safer working conditions, and doing the right thing. Among those fired were Bashir Mohammed, who worked at the Shakopee warehouse for three years, and Chris Smalls, who worked at Amazon’s New York City warehouse for five years. Other employees fired for speaking out included Courtney Bowden, Gerald Bryson, and two leaders of Amazon Employees for Climate Justice (AECJ), Maren Costa, and Emily Cunningham.

Chris Smalls was fired on March 30, shortly after he organized a group of colleagues to leave the warehouse during lunch hour to protest the company’s lack of safety precautions during the pandemic. As it addressed allegations around the firing, Amazon touted its commitment to health and safety. Leaked notes by Amazon General Counsel David Zapolsky from an internal meeting where Jeff Bezos was present show Amazon’s abhorrent attempt to smear Smalls.

Two months later, on May 1, Smalls convened a protest at the Staten Island warehouse. Joined by nurses, transit workers, and former Amazon co-workers, he spoke out against the conditions he and his co-workers faced in the warehouse and how he was fired for ringing the alarm to protect workers. Chris continues to be a leading voice in the fight against Amazon’s growing power and has since gone on to launch the Congress of Essential Workers (T.C.O.E.W).

That same day, May 1st, Tim Bray, ex-VP, and Distinguished Engineer of Web Services resigned from Amazon based on the company’s treatment of warehouse workers and its firing of several leaders of Amazon Employees for Climate Justice (AECJ). Bray explained:

“And at the end of the day, the big problem isn’t the specifics of Covid-19 response. It’s that Amazon treats the humans in the warehouses as fungible units of pick-and-pack potential. Only that’s not just Amazon, it’s how 21st-century capitalism is done.5

Tim Bray

By October 2020 Amazon reported 19,816 workers had been infected by the virus. 6 The pressure from workers, officials, activists, and others eventually forced Amazon to do more to clean its facilities and take proper safety protocols. They had to if they wanted to recruit more workers. While other sectors and companies were devastated by the pandemic, the rise in eCommerce sales contributed to a massive hiring spree at Amazon in November.

Amazon’s latest anti-union, anti-organizing tactics in Bessemer, Alabama have gone beyond the new website, posting flyers in bathrooms, and conducting mandatory informational meetings to influence votes. Amazon tried to disrupt the union vote by pushing to require in-person votes, instead of a mail-in ballot – a request that was rejected by the NLRB. Amazon is not a pro-worker enterprise when you can order something to arrive at your doorstep tomorrow, but you have to vote on a union in-person.

Lee Fang reported this week that Amazon hired Russ Brown, an anti-union consultant to fight the union organizing efforts at the Bessemer warehouse. Brown is the CEO of RWP, a 3-person outfit, which markets itself as “the Nation’s premier full-service labor relations and management consulting team.” The company states that “third party interference makes business less productive and less competitive” and offers a range of services to protect employers like Amazon, including influencing employees during a union election campaign, strike preparation, and vulnerability assessments. This move comes after Amazon has hired FBI officials to improve its surveillance apparatus to protest the company against threats of antitrust, worker strikes, and other events disruptive to its business.

The recent announcement that Jeff Bezos was moving into Executive Chairman and Andy Jassey was to become the new Amazon CEO, was interesting timing. It could be read as a plan to distract from the union activity and/or as a move for Jeff Bezos to step back amid the intensifying antitrust scrutiny coming at the company from the European Union and Congress. Earlier this month, Tim Bray, the former executive who resigned from Amazon, penned a thoughtful response to the announcement outlining the legal challenges posed by antitrust legislation that will create more barriers for Amazon to navigate.

Despite Amazon’s efforts, the worker movement against Amazon continues to build. The movement of respect and dignity for workers who kept the economy running throughout the pandemic also continues to build. Last month, 1,400 workers at Hunts Point Produce Market in New York City walked off the job for a one-week militant strike that led to their successful contract negotiation. Like Amazon workers, these workers put themselves and their families at risk working through the pandemic.

My view – I support breaking up Amazon, and other big tech monopolies, given their unchecked accumulation of power and their abuse of this power against the workers that make their businesses – and the economy – run.

I plan to travel to Bessemer in the coming weeks to learn more from the local community and workers. Stay tuned.

Also, on a separate note, stay tuned for an exciting collaborative project, The Amazon Observatory. A core group of us – artists, researchers, activists – have been working to get the Amazon Observatory off the ground. The Observatory is an experimental, abolitionist virtual laboratory. It was established and works in solidarity with the fightback against Amazon’s growing power. It is made up of artists, researchers, and activists and combines their methods and approaches in order to share data and information, publish reports, curate and distribute artworks, support projects, and communicate with allies and the public. Stay tuned for more.

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Labor and the Economy

Labor and the Economy

Local 202 members on strike at Hunts Point Produce Market, Bronx, New York City, Thursday, January 21, 2021. Photo: Brett Wallace.

This is an ongoing series about labor and the U.S. economy. Suggestions are welcome. For brevity, I focused on three things in this update – 1) a 1970’s style militant strike in the Bronx, 2) Biden’s Economic Plan, and 3) Reddit vs. Wall Street.

1. Over 1,400 Workers Win Strike at Hunts Point for Wages and Respect
  • If you have ever eaten fresh produce in the New York area, it most likely came through Hunts Point. The Hunts Point Produce Market is the largest globally, serving about 60% of the fresh produce to restaurants and grocery stores in the New York area. The market, an industrial distribution hub based in the Bronx and a critical lifeline of fresh food to the city, remained open through the pandemic. It was shut down for seven days after Local 202 unionized warehouse workers walked off their jobs when contract negotiations with management broke down.
  • Last Saturday morning, around 10:15 am, I followed hundreds of cheering workers into the market as they went to vote, sign and ratify their three-year contract. The final result was 97% of workers voting in favor of the new agreement. While the newly ratified contract does not immediately include the $1.00 per hour raise they fought for, it does represent the largest wage increase they’ve received in the history of the union.
  • These workers fought hard for this victory by walking out on the 32 cent counter offer they were first offered, standing up for themselves amidst their management and the NYPD coming down on them, while inspiring the community around them with their fortitude. Their result shows the power that numbers of workers have when they fight hard and rally support for what they believe in. 
  • For more details, I encourage you to read the first-hand reports from Amir Khafagy and Luis Feliz Leon – both of whom I met on the picket line. You can also read my full post on the strike here.
  • I spent this week editing a short film on the strike based on my footage and conversations with workers as it unfolded. Stay tuned for more on that project.

Hunts Point Strike. Photo: © Brett Wallace 2021

2. Biden introduces ‘Made in America’ economic plan
  • During his inauguration speech, Biden announced a two-step plan to provide immediate pandemic relief, followed by a longer-term effort to rebuild the economy. First Rescue, then Rebuild. In my last update, I shared how Biden continues to commit to getting the next $1,400 payment (after the initial $600 December payment) out for those who qualify.
  • Last week, Biden issued new Executive Actions to accelerate pandemic relief in terms of food, expedited relief payments, and coordinated benefit delivery teams. To fund his plan and with interest rates as low as they are, Biden signaled an increase in Federal deficit spending funded by the Treasury department. In coordination, Janet Yellen, new Treasury secretary, announced her new priorities aligned to Biden’s plan — developing jobs and rebuilding the country’s infrastructure.
  • Part 2 of Biden’s plan will focus on rebuilding the economy.  It’s unclear how much of Biden’s plan will make it through Congress, but it is worth noting the intentions and levers of the plan. The plan includes a range of financial investments and emergency food and nutrition assistance.
  • We don’t know what the economy will look like after this pandemic. The financial establishment feels that we were in a good place in February 2020 (holding my head in my hands) and seeks that form of economic restoration. And, I have not seen Biden link the pandemic response, economic crisis, and environmental crisis to capitalism itself – which continues to boom and bust, again and again. So, one of the looming questions in my mind – how will Biden’s agenda go beyond just restoring the existing system to confront the structural problems, accelerated by neoliberalism, that have been assaulting working-families for decades- stagnant wages, pay disparities, wealth inequality, discrimination and disparities by race and gender, marginalized neighborhoods left out of recovery, post-industrial communities with no job mobility, the disparity in technology and educational resources, and others. I don’t know beyond thinking that Biden will need to be pulled further into confronting structural change from progressives and activists or fall back on stabilizing Wall Street. Here are the key levers to Biden’s plan that I’ve read about thus far.
  • Biden’s Rebuild Plan
    1. Jobs. Biden described his plan would create 18 million jobs over a four-year period by investing in infrastructure, manufacturing, innovation, research and development, and clean energy. This is a small dent in the jobs impacted by the pandemic. What will the scarring be on the labor market? Will the labor market recover enough to power the structural changes needed to reform capitalism or end it? And, for people who spend their whole lives working, how will they be better off? Will the plan create enough jobs to help alleviate the burdens facing working-families?
    2. Incomes. Biden states these will be “good-paying jobs.” What will these new jobs look like – in terms of wages, benefits, unionization? Hopefully, these are not more of the low-wage, high churn, non-union positions that companies such as Amazon boast about creating. See my earlier post on jobs and who’s hiring at scale.
    3. Biden’s “Made in America” initiative aims to direct large amounts of taxpayer money to reconstruct the “backbone of America labor” – think investments in WWII era Fordist manufacturing and the unions that power it. Biden claims not to accept the view that automation and globalization mean fewer good-paying jobs in America. And, he does not talk about the services economy and specific plans for it. In one example, Biden’s Made in America executive order seeks to redirect the increased procurement of supplies and services by the U.S. Government to American, not foreign, companies (overseen by the Office of Management and Budget). More American-made steel and iron to rebuild roads, bridges, ports, transferring American-made goods. It sounds grand given the complexity of today’s global supply chains and sourcing of components (just think about all the products that go into a vehicle). It will be interesting to see how the plan supports workers in the American supply chain. For example, in trucking, the most popular job in the country, the wages and collective power of independent owner-operator truckers has been under assault from corporate interests. On a related topic, the trade war and tariffs on imported goods from China will be interesting to watch regarding its impact on Made in America.
    4. Biden also indicated his plan would increase dramatic R&D investments in AI, biotechnology, and clean technology, where American innovation is being outpaced.
    5. Debt. What aggressive steps need to take to help millions of people who cannot pay for rent, mortgages, medical bills, food provisions, and student loans? This is where aggressive levers must be deployed that would be orthogonal to the capitalist system – massive debt write-downs and abolishments at scale, full employment, UBI with no strings attached.
    6. Biden shared the administration will provide flexible grants and low-cost capital to help the hardest-hit small businesses. There is no clear strategy here yet to get small businesses the help they need. As we now know, the rollout of Paycheck Protection Plan loans was unfairly distributed, favoring those businesses who already had access to the banks distributing the loans. p.s. as a part of this, what happens in the arts and cultural sector?
    7. Biden campaigned on raising corporate taxes throughout his campaign. What happens to the corporate tax rate? You may remember in the 2018 Tax Cut and Jobs Act, the corporate tax rate was lowered from 35% to 21%.
3. Occupy 2.0? The Reddit Rebellion Vs. Wall Street
  • The extreme volatility in stocks this week started from the subreddit channel, r/WallStreetBets. Now, the Wall Street establishment is up in arms after an online army of individual investors capitalized on some of its short-bets.1
  • Melvin Capital, a typical hedge fund, had an aggressive short position worth billions on Gamestop [NYSE: GME]. Enter the online army of individual investors, each with a few hundred or thousand dollars in their trading accounts, and a collective plan to aggressively purchase and hold Gamestop stock (and other Meme stocks). As Gamestop stock skyrocketed 400%, Melvin Capital lost billions. The army capitalized on Melvin’s short. This sounds like the emergence of a movement, an Occupy 2.0, to leverage capital’s own tools in its home arena – the free market.
  • Wall Street swiftly retaliated – as if the “free market” was not rigged enough. Robinhood, a brokerage firm claiming it democratizes finance, froze individual investors from trading Gamestop and other stocks. Other brokerage firms followed. Suddenly, everyday people could not trade, causing many to lose money and igniting public fury. This led to a wave of protest in the form of 1-star ratings on the Robinhood app until Google intervened. Wall Street (and Big Tech) demand deregulation when they are winning, but when they are getting burned, they shut people out of the system.
  • Robinhood’s main revenue comes from order flow payments from Citadel and others – it made $100 million in the first quarter of 2020. 2 When Melvin Capital went under, hedge funds Citadel and Point72, which is owned by billionaire art collector Steve Cohen, dropped $2.75 billion to save Melvin Capital. Citadel owns Melvin. And, a huge amount of Robinhood’s revenue comes from Citadel. This is the market manipulation that set off yesterday’s class-action lawsuits and congressional scrutiny.
  • The White House says “it should not be a surprise” that Citadel paid Janet Yellen, former head of the Federal Reserve, $810,000 for speaking at three events in the last few years.
  • This morning Robinhood took another billion-dollar injection from existing investors. These investors will receive additional equity in the company and will profit when Robinhood goes public (assumed to be this year).
  • It’s not hard to see how the online army and millions of Americans are furious and distrustful of the rigged, parasitical financial system – a system that does not produce or make anything while reaping the rewards of corporate breed divorced from the material reality most Americans live in. It does not matter to Wall Street if you lose all of your money. But, if a hedge fund loses all its money, Wall Street intervenes to manipulate the market. How do you want your “free” market? Open, heavily regulated, destroyed?

Recommended reading – Moira Weigel and Ben Tarnoff on the rising union movement in Silicon Valley. In addition, given all the news about vaccines, here is a piece from last year by Rob Larson on the racket of Bill Gates’s Philanthropy.

p.s. I’ll dive into the updates on Leon Black, Apollo management, and MoMA in a future update.

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