The Legacy of Paul Volcker

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Paul A. Volcker, who died Sunday in New York at the age of 92, was remembered for helping shape American economic policy for more than six decades, particularly as the Fed chair who tamed inflation in the 1970s and ‘80s.

Mr. Volcker arrived in Washington as America’s postwar economic dominance was beginning to crumble and devoted his professional life to wrestling with the consequences, write the NYT’s Binyamin Appelbaum and Robert D. Hershey Jr.

As a Treasury Department official under Democratic and Republican presidents, Mr. Volcker waged a long, losing struggle to preserve the post-World War II international monetary system.

In his last official position, as chairman of President Barack Obama’s Economic Recovery Advisory Board, he persuaded lawmakers to impose new restrictions on big banks — a controversial measure known as the Volcker Rule.

His defining achievement, however, was his success in ending an extended period of high inflation after President Jimmy Carter chose him to be the Fed chair in 1979. He delivered shock therapy, pushing interest rates as high as 20 percent, the WSJ writes, driving the economy into a deep recession but making him one of the most successful central bankers in history.

“Volcker’s mantra, one he told me again and again through 2008-9, was that in a crisis the only asset you have is your credibility,” Austan Goolsbee, an economist at the University of Chicago’s Booth School and a former chairman of the Council of Economic Advisers, tweeted.

That quality is one of the best reasons to mourn the loss of Mr. Volcker, writes the WaPo Opinion section: “Unlike so many other public officials, he was unusually — perhaps uniquely — willing to be unpopular.”

Mr. Volcker was not sanguine about the future when he talked to Andrew last year. “I’m not good,” he said as Andrew walked into his Manhattan apartment, and he wasn’t referring only to his health.

“We’re in a hell of a mess in every direction,” he said. “Respect for government, respect for the Supreme Court, respect for the president, it’s all gone.”

Ahead of his testimony before a congressional committee tomorrow, a former senior manager at Boeing is speaking about the concerns he had with the production of the 737 Max airplane.

Four months before the first of two deadly crashes of a 737 Max, the manager, Ed Pierson, approached an executive at the company, saying he was worried that the plane was riddled with production problems and potentially unsafe, David Gelles of the NYT reports.

The Max has been grounded since March, shortly after the second crash.

Employees at the Renton, Wash., factory where the 737 Max is produced were overworked, exhausted and making mistakes, Mr. Pierson told Mr. Gelles. Damaged parts, missing tools and incomplete instructions were preventing planes from being built on time. Executives were pressuring workers to complete planes despite staff shortages and a chaotic factory floor.

“Frankly right now all my internal warning bells are going off,” Mr. Pierson said in an email to the head of the 737 program last year that was reviewed by The NYT. “And for the first time in my life, I’m sorry to say that I’m hesitant about putting my family on a Boeing airplane.”

Mr. Pierson called on Boeing to shut down the Max production line last year. But the company kept producing planes and did not make major changes in response to his complaints. During the time when Mr. Pierson said the Renton facility was in disarray, it built the two planes that crashed and killed 346 people.

“The suggestion by Mr. Pierson of a link between his concerns and the recent Max accidents is completely unfounded,” a Boeing spokesman, Gordon Johndroe, said in a statement.

Amazon has gone to court to accuse President Trump of using “improper pressure” on the Pentagon to harm Amazon’s chief executive, Jeff Bezos — whom it calls the president’s “perceived political enemy,” writes the NYT’s Kate Conger.

That pressure was intended to divert a multibillion-dollar cloud computing contract to its rival, Microsoft, Amazon said in a legal complaint unsealed yesterday in U.S. Court of Federal Claims in Washington. Amazon, which has the country’s largest cloud computing provider, Amazon Web Services, had been considered the front-runner for the Joint Enterprise Defense Infrastructure project, known as JEDI.

But the Defense Department reviewed outdated submissions from the company and overlooked key technical capabilities, Amazon claimed. Those errors tipped the scales in favor of Microsoft, which won the contract in October, Amazon said.

In its complaint, Amazon said the president “launched repeated public and behind-the-scenes attacks” on the contract and the company, the WSJ reports. It would be improper for a president to intervene in the awarding of a contract, according to experts on federal contracting.

As American factories shift toward automation, jobs are requiring more advanced skills, and workers can no longer get by without higher education, writes the WSJ’s Austen Hufford.

Manufacturers are on track to employ more college graduates in the next three years than workers with less education, according to an analysis of federal data.

“U.S. manufacturers have added more than a million jobs since the recession, with the growth going to men and women with degrees,” Mr. Hufford writes. “Over the same time, manufacturers employed fewer people with at most a high-school diploma.”

• Manufacturing jobs that require the most complex problem-solving skills grew 10 percent between 2012 and 2018. But jobs requiring the least declined 3 percent in that same period.

“Investments in automation will continue to expand factory production with relatively fewer employees,” Mr. Hufford writes. “Jobs that remain are expected to be increasingly filled by workers from colleges and technical schools, leaving high-school graduates and dropouts with fewer opportunities.”

Capitalism is in a state of crisis, thanks to a lack of revenue, and it can be resolved only by a substantial increase in taxation, Joseph Stiglitz, Todd Tucker, and Gabriel Zucman write in Foreign Affairs.

“No successful market can survive without the underpinnings of a strong, functioning state,” they write.

Total tax revenue in the U.S. shrank over the last two decades, to approximately 28 percent of national income today from about 32 percent in 1999. This has led to “crumbling infrastructure, a slowing pace of innovation, a diminishing rate of growth, booming inequality, shorter life expectancy, and a sense of despair among large parts of the population.“

Opponents of tax increases claim that corporate investment is the engine of growth, the authors write. “In the real world, however, there is no observable correlation between capital taxation and capital accumulation.”

The authors propose “a bold new regime of domestic and international taxes”:

• “Only a far more progressive tax code will provide the necessary level of revenue.”

• “Eliminate special provisions that exempt dividends, capital gains, carried interest, real estate, and other forms of wealth from taxation.”

• “A wealth tax, such as the one recently proposed by Elizabeth Warren, the Democratic U.S. senator from Massachusetts who is currently running for president.”

• “To curb the evasion of income and wealth taxes, countries will have to cooperate much more with one another.”

• “A global minimum tax should be instituted to set a floor on how low would-be tax havens could drop their rates.”

Yumi, a baby-food delivery start-up, announced today that it has raised $8 million in a fund-raising round.

Investors in the round include the founders of Allbirds, Casper, Harry’s, SoulCycle, Sweetgreen, Uber and Warby Parker, and the C.E.O. of Blue Bottle Coffee.

Yumi delivers meals that are high in nutrients and low on fructose and are tailored to a child’s age and developmental stage.

The company will use the capital to expand nationwide and develop proprietary software, which would allow the company to create personalized meal plans and educational content.

The round brings the company’s total funding to $12.1 million, Yumi said; other investors include August Capital, Brand Foundry and Day One Ventures.

• Yumi was founded in 2017 by Angela Sutherland and Evelyn Rusli, a former New York Times and DealBook reporter, with a focus on the importance of what children eat in their first 1,000 days.

As part of a major overhaul at HSBC, Samir Assaf, the global banking and markets chief, will become the bank’s chairman of corporate and institutional banking. Georges Elhedery and Greg Guyett will take over as co-heads of the unit.

Morgan Stanley is cutting around 1,500 jobs worldwide.

Away, an online luggage seller, said its C.E.O., Steph Korey, was stepping down.

Fox News said Bill Hemmer, one of the network’s longest-serving news anchors, would replace Shepard Smith as host of its afternoon news hour.


• NortonLifeLock, the $16 billion consumer-software company, has attracted deal interest from a handful of companies including a rival, McAfee. (WSJ)

• Tiger Global Management, one of Juul’s earliest boosters, slashed its valuation of the e-cigarette start-up to $19 billion, another sign investors are re-evaluating one-time Silicon Valley darlings. (WSJ)

• SoftBank’s Vision Fund has agreed to sell its stake in Wag Labs back to the struggling dog-walking start-up. (NYT)

• Goldman Sachs is arranging a $1.75 billion line of credit for WeWork, the first step in SoftBank’s plan to bail out the office-sharing company. (Bloomberg)

• Merck and Sanofi, two of the world’s biggest drugmakers, struck multibillion-dollar deals aimed at bolstering their lineups in the fiercely competitive cancer drug market. (WSJ)

• A federal judge told lawyers fighting over T-Mobile’s bid to acquire Sprint to skip their customary opening arguments so they could start questioning witnesses, a sign he is seeking a speedy trial. (WSJ)

• Pentagon officials have stepped up talks with Japan to choose a U.S. fighter jet over one from BAE Systems, a British rival. (FT)

Politics and policy

• Records from hundreds of interviews with people who were directly involved in the war in Afghanistan reveal they could not shake their doubts about the strategy and mission. (WaPo)

• A long-awaited report by the Justice Department’s inspector general criticized aspects of the early stages of the F.B.I.’s Russia investigation but essentially exonerated former bureau leaders of President Trump’s accusations that they engaged in a politicized conspiracy to sabotage him. (NYT)

• Mayor Pete Buttigieg will disclose his management consulting clients, open his fund-raisers to reporters and reveal the names of people raising money for his presidential campaign. (NYT)


• House Democrats are said to have narrowed the articles of impeachment against President Trump, which are expected to be unveiled today, to abuse of power and obstruction of Congress. (NYT)


• Congress is taking aim at China in a defense-policy bill at the same time that the Trump administration is seeking to negotiate a trade pact with Beijing. (WSJ)

• The agriculture secretary, Sonny Perdue, said that the U.S. was unlikely to impose new tariffs on Chinese goods on Dec. 15. (Bloomberg)

• Democratic lawmakers are close to an agreement with the White House on revisions to the United States-Mexico-Canada Agreement; an announcement could come today. (NYT)


• New York is becoming more of a global technology hub, as industry giants tap into the work force of a region long known as a banking and media stronghold. And Democrats who torpedoed Amazon’s plans to set up a second headquarters in the city are finding their stance could come back to bite them. (Bloomberg, Politico)

• Comcast plans to spend $2 billion on its Peacock streaming service in the platform’s first two years. (Bloomberg)

• The E.U. has approved a 3.2 billion euro ($3.55 billion) fund to promote the research and development of batteries. (FT)

• Major nonprofits and other organizations critical of Big Tech are pledging millions to groups that are taking on corporate giants. (NYT)

Best of the rest

• Blackstone’s Jon Gray and his wife are giving $10 million to the University of Pennsylvania to support 10 low-income students from New York City annually. (Bloomberg)

• A look at Citigroup’s sweeping renovation of its Manhattan headquarters. (Bloomberg)

• Big brands and online start-ups are finding that consumers generally prefer buying household staples in a single shopping trip over enrolling in subscription services. (WSJ)

• The first mission to remove space junk from Earth’s orbit is expected to launch in 2025 as part of an initiative to clean up more than 3,000 defunct satellites. (Bloomberg)

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