Category Archive: Interviews

1. Brazil and the World System

   November 28, 2025 9:19 pm Comments Off on Brazil and the World System

   As the world’s seventh largest economy, poised between Western and Eastern power blocs, Brazil is at the forefront of contemporary debates on geopolitics, development, and the green transition. Its political landscape remains dominated by the clash between the left-pragmatism of the ruling Workers’ Party (PT) and the right-populism of bolsonarismo: the former attempting to establish a more equitable growth model under constrained conditions, the latter reactivating some of the darkest elements of the country’s authoritarian past. 

   Among the partisans of the PT who are grappling with this fraught situation, Fernando Haddad has a unique ability to move between theory and practice, combining his academic background in philosophy with his experience in government—having served as Minister of Education from 2005 to 2012 and Mayor of São Paulo from 2013 to 2017. When Lula was prevented from running for president in 2018, Haddad stood in his place, winning 47 million votes yet losing to Bolsonaro by a significant margin. Upon Lula’s return to office three years ago he was appointed Minister of Finance, and he has since tried to balance the party’s progressive program with the demand to shrink the deficit in the wake of the pandemic. 

   Here, Haddad talks to Daniel Denvir about the rise of the far right, the implications of Great Power rivalry, the necessity of multilateralism, and the prospects for a country like Brazil in the current global conjuncture, as well as his latest book The Excluded Third (2024). This is an edited transcript of an interview that first appeared on Denvir’s podcast, The Dig. 

   An interview with Fernando Haddad

   Daniel Denvir: What is it about the crisis of neoliberalism—and the broader crises of the US-led liberal international order—that has fueled an explosion of far-right populism in so many countries throughout the Americas and Europe? And within this panorama, what makes the rise of bolsonarismo distinctive?

   Fernando Haddad: The rise of the far right is a global phenomenon because the crisis of neoliberalism is a global phenomenon. When the structures of the 20th century that mitigated the effects of capitalism or promoted some form of emancipation—the Soviet system, national developmentalism, social democracy, the welfare state—began to come apart, neoliberalism imposed itself as the final alternative. 

   Witnessing the collapse of these structures, the global left offered nothing new. And now, as neoliberalism has fallen into crisis, the left has again failed to reposition itself or advance its program. That’s because, in a way, we are still mourning the past rather than building the future. Instead of imagining new structures, we are stuck at the funeral of the old ones. In this political vacuum, the far right has seen an extraordinary opportunity to ascend. It thrives in these conditions because it finds strawmen to blame—which is the most cunning way to win hearts and minds for a project that is fundamentally destructive. 

   How exactly this played out was contingent upon local circumstances. In Brazil, it took the form of a deeply unqualified ex-army captain who had emerged from the shadows of the military dictatorship and had spent his entire career advocating a return to authoritarianism. It was Bolsonaro who, because of certain unique factors—including the assassination attempt during his election campaign—was able to rise to power with the help of far-right populist discourse. On a global scale, I believe such victories are a result of this crisis of neoliberalism and the failure of the left to respond. 

   dd: Let’s look at some of the left’s responses in recent years. In Europe, we’ve seen populist methods used by parties like La France Insoumise and Podemos with varying levels of success; in the US we had a similar experience with Bernie, although we have never had our own party vehicle for reasons that are particular to this national context. In Brazil, the PT was the mass party of the late-20th-century left, which led the struggle against the dictatorship and is now leading the resistance against the far right. At this dangerous political moment, during what is generally thought to be a post-mass-party era, how should the left think through the strategic problems of party organization and form? 

   FH: Before Lula was elected in 2022, we spent seven years out of power, which was a consequence of two factors. The first was a parliamentary coup against President Dilma in 2016. Up to then, Latin America had a long history of violent military assaults on democratic institutions; but this coup was of a completely different order, since it took place entirely within democratic institutions, and its only objective was to remove the PT from power. 

   The second factor was the decision to bar Lula from running in the 2018 presidential election, which he certainly would have won, because of the “Operation Car Wash” allegations. This is a well-known story. Operation Car Wash began as an anti-corruption investigation but soon became a political weapon used to stop Lula from winning the presidency. So I ended up running as the presidential candidate instead. It was crucial for the PT to put up a fight in that election to show that we were still able to compete in the political arena. Even in defeat, we made it to the second round and won about 45 percent of the vote. 

   The Bolsonaro government was an utter disaster, and once Lula was exonerated he was finally allowed to run again in 2022. Yet it was very difficult to compete against the far right when they held state power and were willing to use every possible means to retain it. So we were compelled to form an alliance with Brazil’s democratic center-right. Before Bolsonaro came onto the scene, our main electoral opponents were the PSDB, the center-right party that was central to the country’s democratization process. Unlike Bolsonaro, the former PSDB president Fernando Henrique Cardoso was a very civil and cultured person with a basic commitment to democratic values. So we built an alliance with such forces that allowed us to defeat the far right and return to government. As a result of forging that coalition, our present program has some elements that could be described as centrist, but at the same time its aim is to recover the social rights that had been suppressed by bolsonarismo: increasing the minimum wage, fighting hunger, protecting the autonomy of universities, guaranteeing freedom of expression, and so on. The current PT government is moving towards social demands that were not on the agenda of our previous ones, such as taxing the super-rich to redistribute income.

   dd: How does left populism in the US and Europe compare to the example of the PT? The PT is obviously the dominant force on the Brazilian left, but there are also other parties like PSOL, with whom the PT has had both a cooperative and a conflictual relationship. 

   FH: I believe that the left must return to the discussion of social classes, and in this regard the PT has a very important characteristic: it is not a dogmatic party. The PT is a pragmatic party that seeks to interpret our historical reality and act in accordance with it. Its roots are in the trade union movement in the ABC region of the state of São Paulo, which is the most industrialized part of Brazil. But more recently it has opened up to other social groups. Today we have many people who, to use the traditional jargon, simply cannot sell their labor power to capital, and must find other ways to survive since capitalism no longer provides them with such opportunities. The PT has tried to establish a bond with this new “precariat.” They are not the same as blue-collar workers; in many cases they are people who want to get blue-collar jobs but are prevented from doing so by these historical constraints. We have also tried to build links with another emerging group, namely the creative class. There is a vast literature on this category that Italian theorists call the “cognitariat,” whose labor power is more of a creative force than a productive one. In my view we should not give up on a class analysis of such actors, who are as significant as the industrial proletariat even though their character is distinct. 

   I often read writers like Hardt and Negri and who refer to “the multitude.” But when you speak of the multitude you tend to lose sight of the specificities of these groups who have a particular class perspective, even if it is not a homogeneous one. The emancipatory struggle today depends on developing this understanding that the non-property classes are far from homogeneous. They have different political, aesthetic, cultural standpoints—and the role of politics is to give them a common project. This won’t emerge mechanically from economic conditions; it will only come about through the activities of a party like the PT. 

   dd: So, in other words, a particular party form is the expression of a particular composition of the working class at a particular conjuncture. That’s where you would start your analysis of the different political forces on the Brazilian left?

   FH: Yes. I think we must escape the dogmatism of traditional class theory. The idea that there is one unified class that represents the interests of humanity cannot withstand historical scrutiny. Under capitalism, only the propertied classes are homogeneous. They can coordinate with one another almost through telepathy. They spontaneously know which interests to defend. It is as if they could do without politics. For us it is different. Non-propertied classes must face up to various dilemmas that cannot be resolved by the intervention of any single, universal class subject. To advance the shared interests of humanity we need more politics, not less: more ingenuity, more inventiveness, more socialist imagination than we had a century ago.

   dd: How did your experience over the past decade, first seeing Lula sent to prison and then losing the presidential race to a far-right extremist, lead you to write The Excluded Third: Contribution to a Dialectical Anthropology? The book explores the basis of social and cultural antagonisms and how they might be overcome through emancipatory struggle. You’re a Minister of Finance, of course, but you’re also a trained philosopher. What sort of philosophical inquiry did you feel was required at this particular moment?

   FH: My political experience allowed me to think through the issue of sociability, which I brought together with my academic research to produce The Excluded Third. Its basic argument is that the reason anthropology seems to be a conservative discipline is that most anthropologists do not accept contradiction as a central element in thinking about human sociability, whereas we can arrive at a different view if we use the Hegelian categories of identity, difference, and contradiction. Applying these terms to the natural or biological sciences is a big mistake. But if you view them as dimensions of human intersubjectivity, you realize that they capture the way people choose to live with each other. Were it not for the concepts of identity and difference, for example, injustices like slavery would be a logical impossibility. If human beings saw themselves as equals, they would simply dominate nature without dominating each other. 

   This problem of human sociability is one of the issues that separates liberals from socialists. For socialists, economic inequality is a fact of contradiction rather than simply a mark of difference. When you conceive of an emancipatory project, you have to recognize that there is a contradiction in capitalism between owners and non-owners, while at the same time accepting that among non-owners there are differences that can only be overcome by politics—that there won’t be any natural alignment between non-owners due to the simple fact that they are the dominated rather than the dominating class.

   An emancipated society would also involve a different kind of relationship to nature, one that places more emphasis on the ecological and less on the economic. It would require forms of organization, forms of production, which respect both the differences between people and between humanity and the environment. This new society can only be forged when politics creates the conditions for overcoming our present set of contradictions. So the starting point is to return to social classes, to go back to discussing what produces contradiction and what produces difference. This is an invitation to put dialectics back on the agenda. To think dialectically is to think that human sociability is founded on these premises, which are not the premises of reflective thought but of intersubjective relations. 

   dd: José Dirceu, one of the founders of the PT, recently referred to the current Lula administration as a “center-right government.” What do you make of that assessment and the broader contradiction to which it speaks? On the one hand, it seems clear that a broad front is needed to resist the far right, especially given that Congress is controlled by your political adversaries, which in various ways reflects the deeper balance of power within Brazilian society. On the other hand, there is still an urgent need for a left-wing program to fundamentally transform Brazil and, in doing so, address the root causes of far-right reaction.

   FH: I disagree with Dirceu’s statement. Of our five governments, I would say that this is the most left wing. I have absolutely no doubt about this. We have set in motion a profound shift in this country’s economic agenda. 

   Let me cite some examples. This is the first time that, in making a fiscal adjustment, the government has demanded that the rich contribute. On every previous occasion, those who paid for these adjustments were people earning the minimum wage, people reliant on social welfare. Now, while we have accepted the need to deal with the budget deficit after the pandemic, we have insisted that it should be financed by the rich. Never before have we put so much stress on the issue of inequality. The PT has always been a champion in the struggle against poverty, and our previous administrations have been praised for this. But on the issue of inequality we have evolved, so that it is now at the center of our political agenda. 

   From an environmental point of view, this is also the most progressive Brazilian government to date. We are leading the global debate on financing the preservation of tropical rainforests, on creating a coalition around a fair carbon market, on taxing the super rich during our presidency of the G20—proposals that were never on the table until now. We have also fought hard on the question of multilateralism and the need for regional integration, to prevent the world from returning to a bipolar situation. So in my view, President Lula’s third term will be recognized as his most progressive, and I hope the fourth one will be even more so. 

   dd: How do you see the geopolitical and geo-economic power that the BRICS wield, or might potentially wield in the future? Do you think the BRICS could create alignment among countries of the Global South on the need for an alternative global political and economic order that would confront the deeply entrenched inequalities of the US-dominated world system? 

   I’m thinking back 70 years to the Bandung Conference in Indonesia, the inauguration of a Third Worldist politics that was able to transcend differences between monarchies, democracies, and socialist states. Then as now, neo-colonial power imposed unequal relations of exchange and dependency upon formerly colonized nations. So could the BRICS echo or learn from that experiment? Could we see a new, coherent project emerging between Brazil, Russia, India, China, and South Africa? 

   FH: I think we need to be realistic about what the BRICS can accomplish, although I also understand that we have to explore all the bloc’s possibilities. First of all, the BRICS have the primary function of strengthening the G20. Were it not for them, the G7 would dominate all the geopolitical debates of our time. So the BRICS are able to prevent the G7 from pretending to speak for all of humanity, as if there were no other relevant players. Their mission in that respect is to demonstrate that the world has changed and that there are new political actors who need to be respected. If there is any hope of reforming international organizations into ones that reflect these changes which have taken place over the past 40 years, the BRICS will be a vital part of that task. 

   Another dimension is the BRICS’ relationship to the Third World. Here it remains unclear what role China will play. It is a country in transition, and there are two paths that it could take. The more optimistic one would be a kind of socialism for the 21st century, while the less optimistic view, in the progressive camp at least, is that China has already become a traditional capitalist country.

   It may be the case that China represents merely another ordinary national project, like that of so many other countries which have risen to become the global hegemon, from Spain to the Netherlands to England to the United States. If China simply intends to take the place of the current hegemonic power, I think the Third World will be undercut, and we will have a situation where the traditional international division of labor continues to dictate the rules. 

   But if China embarks on a more ambitious, more generous project, involving technology transfers and a new approach to the global industrial geography which offers greater opportunities for developing countries—a more democratized alternative to the current division of labor—then there could be a different outcome. So whether China is a proto-capitalist or proto-socialist country is a question that history has not yet answered, and the answer will depend not only on the Chinese Communist Party, but also on the emerging classes in China and the kind of relations they want their country to cultivate with other states.  There is a lot of speculation about this, but I would say that the future of China is central to most of the significant political issues that remain unresolved today.

   dd: In terms of China’s relationship with the rest of the world, and whether it takes up the crisis-ridden role of the US as global hegemon, you mentioned the importance of technology transfers. I was looking at some reporting in Phenomenal World which showed how Chinese firms have committed over $227 billion across 461 Green manufacturing projects in 54 countries since 2011, with 88 percent of investment occurring just since 2022. In inflation-adjusted dollars, this sum is larger than the $200 billion Marshall Plan. So is there a real possibility here that China could relate to other countries in a way that the West never has, allowing them to create their own development models by making green tech transfers and opening factories—EV factories, for instance—overseas?

   FH: Again, this is a question that history will have to answer. The possibility exists for countries to be integrated in totally unprecedented ways. But the export of capital from a rich country to a developing or even an underdeveloped one is not an original feature of our time. It has been happening since the end of the 19th century. The industrial revolution—especially the second industrial revolution, with the arrival of the steam engine and the railways—involved an enormous export of capital that drew even very backward regions into the orbit of capitalism. Brazil underwent significant industrialization as a result, funded by the income from exporting coffee to Europe and the United States. It was one of the countries with the most economic growth between 1930 and 1980. So there is nothing novel about foreign investment starting these cycles of development in semi-peripheral or peripheral countries. 

   Today, we could start to see something qualitatively new, not just a reproduction of the growth cycles of the past, but this will depend on how China intends to engage with its economic partners: whether there is a more egalitarian development process across the planet or whether national prerogatives win out. This, in turn, will hinge on the geopolitical developments that take place as China’s economy continues its ascent on the global stage. 

   dd: We don’t yet know where China’s green development model is heading and what that will mean for the future of the world system, but we do know that Brazil’s economic relationship with China has played a fundamental role in remaking its economy since the turn of the millenium. Lula took office in 2003 amid an unprecedented global commodities boom: a super cycle driven by rapid Chinese development that demanded vast quantities of raw materials from countries like Brazil. That commodities boom gave the PT government the fiscal space to redistribute wealth to poor Brazilians while registering impressive levels of GDP growth, which was a historic achievement. But at the same time, this process contributed to Brazil’s deindustrialization and reprimarization, meaning that primary good exports and agribusiness rather than manufacturing exports came to dominate the economy.

   What is your assessment of that contradictory trajectory and how to deal with the dominance of agribusiness in Brazil today? Economically, the present order seems to militate against a more sustainable and equitable development model, while politically it seems to provide the material basis for some of the most reactionary and anti-democratic forces in Brazilian politics. None of this is easy to change, however, because the government is highly constrained and the economy needs export revenue in foreign currency.

   FH: At the center of your question is the international division of labor. In this division, the higher order activities with greater value added are based in a few regions of the world—the core of capitalism—where you have a concentration of the creative forces I mentioned earlier. In these places, in addition to regular profits, capital can earn a super profit—whose character is similar to rent—which is extracted from activities that add knowledge to production. This dynamic generates a permanent flow of profits from less developed regions to more developed ones. Just as wealth is concentrated among a few social classes, it is also concentrated in a few countries. 

   I think the issue that needs to be debated here is whether the Chinese project of development is compatible with this historical pattern. The nature of the Chinese economic system, its social character, not only bears on domestic relations between Chinese workers and elites, whether there is a relationship of domination between them; it also has implications for China’s relations with the rest of the world. It is possible that China will simply reproduce the asymmetry between core and periphery, and the world economy will remain stratified. 

   In this context, Brazil needs to advance a national development plan—one that prevents this process of reprimarization of our economy and tries to assert our competitive advantages, especially around clean energy and critical minerals, so that we can think again about re-industrializing the country. But in my view this is not possible without partnerships in areas such as technology, which can allow us to re-industrialize while fulfilling our goals of adding greater value to what we produce domestically. 

   dd: Your ministry has been developing a new green industrialization plan. Here in the United States, Biden’s Democratic Party rolled out a green industrial policy of its own, which was in many ways an important break with neoliberal orthodoxy, but it was also woefully insufficient. It was excessively indirect in terms of financing, relying on tax credits rather than direct expenditures, let alone public ownership, and it was fundamentally bound up with the new Cold War with China. Under Trump, significant parts of this program are being dismantled. What can we learn from this experience? How do Brazil’s current efforts compare to those of Biden in the US? 

   FH: Right now Brazil is thinking in terms of global finance. We are hoping to create global instruments for financing the ecological transition which could enable new forms of development that are not restricted to specific regions. When Brazil talks about taxing the super rich, we do not simply mean that each nation state should place additional taxes on its wealthiest citizens, for today their fortunes are no longer national but global. We have 3,000 families who have accumulated wealth of R$15 trillion, or around US$3 trillion. So we must find financial mechanisms to place even a fraction of this wealth in the service of a global project of ecological transformation, to fight back against deprivation, against misery, against a lack of opportunities. 

   If we don’t take this step, if we don’t start building some kind of architecture of international governance, with a budget of its own as well as a vision of the future, I think we will make the mistake of believing that inter-state and inter-capitalist competition are capable of meeting today’s vast humanitarian challenges. 

   dd: Tech companies are the most powerful on earth, and their CEOs are the richest people who have ever lived. In the United States it’s become frighteningly clear that the tech oligarchy finds its political expression an authoritarian fascism. 

   The role of AI in the US economy is particularly astounding. AI investments, according to the FT, account for 40 percent of US GDP growth this year and 80 percent of US stock gains. What do you make of the role of US tech in the global economy? What sort of challenges does it pose for a left political project like that of the PT in Brazil? And lastly, to zoom out a little, some Marxists make the argument that the tech companies have ended capitalism as we know it and replaced it with a new domain of “technofeudalism,” driven by rents rather than profits. Others like Evgeni Morozov reject this view. I’m curious what your position is.

   FH: Nation-states must have the courage to regulate the tech sector in their own territories, which is what Brazil has done by sending a bill to the National Congress to regulate digital competition. It would introduce minimum levels of competition to ensure that Brazilian companies and capital do not become easy prey for these multinationals. 

   What’s most intriguing about the tech giants is that they insist on rules that are absolutely incompatible with the principles they claim to uphold. They praise liberalism and free competition, while at the same time challenging the type of bill we’ve drafted and demanding preferential treatment, as if their enormous power weren’t enough of a privilege in itself.

   Since knowledge has become a factor of production—a development of the post-war period, which intensified from the 1980s onwards—we have seen new enclosures to protect the monopolies of the digital economy. This allows the tech companies to attain super profits in the form of rent, yet it bears no resemblance to the feudal world, none at all. It is rather the quintessence of capitalism: its most advanced stage. Capitalism has commodified land, labor, and money—Polanyi’s three “fictitious commodities”—and has now entered a phase where it is commodifying knowledge itself. In my academic work I describe this phase as “super industrial.” This is not a feudal world but one of total commodification, where capitalism has been raised to the level of paroxysm. While I understand the rhetorical appeal of the “technofeudalism” thesis, I think this term confuses more than it illuminates the present situation.

   dd: Let’s turn back to geopolitics and geo-economics. If the US and China can’t work together to rebalance the global economy, foster geopolitical stability and disarmament, and support a just energy transition—if the US instead continues to wage a New Cold War—then we’re obviously heading in the wrong direction. Amid the broader crisis of the liberal international order, the genocide in Gaza, Trump’s tariff wars, the US attacks on boats off Latin America’s coastline, the proxy war between the West and Russia, and so on, what is your vision for a new global order? How might we begin to build it? 

   FH: In the Cold War era, the Soviet Union posed a military threat to the United States but not an economic one; it was never a global player in the struggle for control of markets. Then, when an economic rival finally emerged, it was the unarmed nation of Japan, which could threaten American hegemony economically but not militarily. China, by contrast, is a much bigger challenge for the US because it combines military power with economic might. A repolarization of the world around these two powers could have even more disastrous effects for humanity than previous conflicts, which were ultimately solved without a resort to hot war.

   The conflict that the Trump administration seems to want to ignite would be a clash without historical precedent. This is why the civilizing forces of the world are betting so much on multilateralism as a possible antidote. In Brazil the government has fought hard for an agreement between the European Union and Mercosur to create alternative trade routes. I believe it is essential to create such alternative poles which can prevent repolarization from taking place.

   We’ve seen how the United States has dealt with the rise of China’s economic and military power, but how China itself responds will also have implications for the entire planet. If there is merely a struggle for hegemony, a struggle for power, I think many difficulties will lie ahead; but if China is open to a different approach—a geopolitical rebalancing that implies concessions even for those who have no power, a spirit of compromise that involves international solidarity and generosity—then perhaps we can face some of the problems presented by national borders, problems that are impossible to solve as long as borders are seen as insurmountable barriers. There is clear a role here, both political and pedagogical, for global progressive forces.

   dd: I want to conclude with a big picture question. How do you navigate all the inevitable contradictions and compromises of being finance minister of a BRICS country that must pursue a reformist program hemmed in by structural constraints at both the domestic and global levels, while also remaining a Marxist and a socialist, with a vision of a post-capitalist horizon that can sometimes feel very, very far away?

   FH: If you dream of a better world, if you imagine that humanity will not stop at its current stage, that it will seek alternative forms of social organization that allow people to develop as global citizens, then you cannot prevent yourself from confronting the practicalities of the present. I always keep in mind that as well as being accountable to others, I have to be accountable to myself when I leave the offices I hold. In none of my previous positions, whether as Minister of Education, as Mayor of São Paulo, or now as Minister of Finance, have I found myself in a situation where 20 years later I’ll look back and feel ashamed of the decisions I made in light of the principles and values that I defend. So I’ll continue to push the wagon where I think it should go. It may go faster or slower, but I know I’m pushing in the right direction.

2. The Belt and Road 2.0

   September 19, 2025 6:16 pm Comments Off on The Belt and Road 2.0

   Chinese firms are going out.

   As the US withdraws from green tech industries and pressures its allies to follow suit, Chinese firms are stepping in to power the developing world’s green transition. A new report from the Net Zero Industrial Policy Lab at Johns Hopkins University, co-authored by NZIPL Fellow Xiaokang (Harold) Xue and Senior Policy Fellow at LSE’s Grantham Research Institute on Climate Change & the Environment Mathias Larsen, previews the insights from a comprehensive database on Chinese overseas investments in clean tech manufacturing. The scale is staggering. Chinese firms have committed over $227 billion across 461 green manufacturing projects in 54 countries since 2011—with 88 percent of investment occurring just since 2022. In inflation-adjusted dollars, this sum is larger than the $200 billion Marshall Plan.

   At the moment when climate action is most urgent, and clean energy is becoming the cheapest source of power globally, the US is walking away from the ambition to lead or even participate in that transition. Meanwhile, China has surged green investment domestically and built end-to-end control of green supply chains: solar, batteries, EVs, wind turbines, green hydrogen. And its firms are bringing this capacity to the developing world, with over 75 percent of these projects located in global South countries eager for industrial capacity.

   In a report based on Xue and Larsen’s research, Bloomberg’s David Fickling contrasted the two trends: “Right now, Beijing is offering cheap, clean power, employment, trade and a route to prosperity. Washington is offering tariffs, policy chaos, White nationalist memes and South Korean workers in shackles after a raid on an EV battery factory. This is no way to win the grand strategic contest of the 21st century.”
   
   Tim Sahay, the Co-director of NZIPL and co-author of the Polycrisis newsletter spoke with Mathias Larsen about the new research and what it tells us about the developing shape of the global green transition and this pivotal moment in global economic history.

   An interview with Mathias Larsen

   TIM SAHAY: China’s total dominance in green technologies has provoked anxiety in many countries among policymakers, analysts, and captains of industry—overcapacity and dumping are the watchwords of the moment. One prescription in response has been that China should set up green factories abroad, rather than send out ships laden with green goods. So is that happening?

   ML: What our research demonstrates is, in summary, a massive increase of Chinese outward investments in the manufacturing of clean technologies. This both supports the host countries’ development and supports a global green transition.

   There are five key takeaways. The first is the scale of investments: more than $200 billion, toward $250 billion, with a rapid increase since 2022. It’s nearing $100 billion a year, which is around the same amount that China gave in infrastructure loans when that peaked in 2018. In comparison, the Marshall Plan by the US after the Second World War was around $200 billion in total. The Marshall Plan locked Europe into US technologies and standards, so when we see sums of this size, we can ask whether it will potentially have a similar effect in the future. 

   To put this in perspective, China’s domestic investments in green manufacturing were $340 billion in 2024. Compared to $70 billion in outwards green FDI, that’s a fifth. It’s the same ratio in terms of stock, where there’s about a trillion of investments in green manufacturing domestically. Now this stock here is getting past $200 billion, also a fifth.

   The second crucial point is the speed of the increase. The Belt And Road Initiative was primarily infrastructure loans, which peaked in 2018 at around $100 billion per year. That figure fell off a cliff, and there was a valley from 2020 to 2022, with basically no outbound Chinese investments or loans at all. And from 2022, we see a rapid increase in the FDI that we are tracking. While numbers for 2025 suggest a stagnation, the pattern may end up near this prior level, around $100 billion a year. So we can clearly call this BRI 2.0.

   

   The third point is the status of the projects. Most of the projects we’ve identified here are not actually operational yet, meaning actual production capacity will come online within a year or two. That is the point at which we should see the actual impacts of the projects, both on the host country’s development and in terms of the global dissemination of these technologies.

   The fourth point is around the technologies themselves. These investments cover most green technologies, with over half being solar and battery technologies. That means that China’s total dominance of green tech, which we are all increasingly familiar with, is globalizing. (There’s a little bit less wind in the mix, but it’s still part of the picture.)

   The fifth point is the breadth of that globalization: These investments are taking place across all continents.

   

   

   And just a couple of words on the scope of this new database. It covers Chinese companies investing in foreign countries, meaning it does not include other countries’ firms nor Chinese domestic investments. And it counts investments and not loans, which were the previous type of foreign engagements we know as the Belt and Road Initiative. We also focus on manufacturing, not power generation, and specifically we focus on clean technology manufacturing. Prior work tracking these kinds of investments has been less comprehensive—it gave us a hunch that China was doing this kind of foreign direct investment, but didn’t give any clear indication of the action scale and ramifications of that investment.

   TS: What are the motivations of private Chinese firms “going out” and internationalizing their supply chains? To what extent is it a private capitalist firm-driven strategy versus a host-country developmentalist strategy?

   ML: There are certain countries that get a lot out of these investments, which are clearly part of their own development strategy. But what we see most clearly from this data is that there are basically three motives for the Chinese companies at play.

   The first is access to the host country market. Many countries realize that green tech is becoming a large share of their economies, and that simply importing clean tech will have negative consequences on industries and employment and so on, and therefore they put in tariffs and local content requirements to ensure that some parts of the value chains are inside the countries. That’s the case in Brazil, for example.

   The second reason is access to third-party markets. As big markets like the US and the EU put up high tariffs on direct imports from China, Chinese cleantech firms invest in manufacturing in places that have access to these markets. Morocco is an important example here, because it has free trade agreements with the US and the EU.

   The third is access to raw material inputs. As this manufacturing scale grows, so does the need for the raw materials for it—nickel, cobalt, lithium, and so on. Mining is one part of that, but processing also increasingly takes place in host countries. Indonesia is the major example, where a country bargains with China to capture a larger share of the value of the manufacturing supply chain.

   TS: How should we interpret what this overseas green manufacturing push means for China’s role in the global green transition?

   ML: These overseas Chinese investments are straightforwardly good for climate. They can play a key role in advancing the global dissemination of clean technologies driving down prices, and increasing the pace at which these clean technologies are deployed. Whether these manufacturing investments create overcapacity is essentially a question of whether there are profits to be made from the investments—not a concern about whether these technologies are needed, because obviously we need to scale up the pace of deployment to meet the goals of the Paris Agreement.

   

   The impact on host country development and decarbonization will be heavily dependent on those countries’ domestic political economy and policymaking space. These investments create a window of opportunity for host countries to conduct industrial policy to advance domestic developmental goals—some have done a good job at that, some have done a less good job.

   Another dynamic to consider is what this means regarding China’s role in finance for the global South. As mentioned, BRI lending decreased dramatically, and was replaced by the “Small and Beautiful” strategy—shifting away from financing for large infrastructure projects, and toward smaller scale and more lucrative projects and sectors. (It was basically more Small than Beautiful.) So the scale we are witnessing is meaningful, and arguably a good thing for the pace of development and the green transition—as many global South countries are in near debt distress or fearful of getting there. Over-indebtedness is, of course, not a problem with foreign direct investment, as any loans related to these projects sit on the balance sheets of the Chinese firms and not the host country.

   Then there is global trade. China currently has a $1 trillion current account surplus. If manufacturing moves abroad, this might, to some degree, reduce this surplus. Right now, cleantech only represents 5 percent of Chinese exports, but it’s a growing figure. The trend of “going out” might limit direct exports from China, and reduce some of these imbalances in the Chinese economy.

   TS: What has been the role of the Chinese state in supporting this private sector BRI 2.0 ? Is there a lot of planning, funding, coordination, and implementation?

   ML: BRI 1.0 was entirely state-driven. Projects were organized by the Chinese government and the given host country. They were then operationalized by financing from Chinese policy banks, Chinese state-owned commercial banks, Chinese state-owned insurance companies like Sinosure, and then largely constructed by Chinese state-owned construction companies. It was all hands of the state on both sides. The loans would be sovereign-backed or tied to revenue sources from commodity sales, and so on.

   By contrast, this BRI 2.0 phenomenon is all private. It’s the private companies that raise the capital themselves to do investments. Projects are certainly encouraged by host countries because they want this type of FDI, but typically they aren’t being subsidized in any way by the host countries or the Chinese state.

   Given the vast and widely studied state support for the BRI, this is kind of surprising! In all the talks I’ve had with Chinese banks doing this type of lending and principal, they do not appear to have, at any meaningful scale, given loans to Chinese private companies to make these kinds of overseas green manufacturing investments. We can take the example of Build Your Dreams (BYD), which did a partial listing in Hong Kong to finance their overseas investments; they didn’t get the money from the China Development Bank. This is a very clear contrast in the role of the state across the first BRI and what we are showing with this data.

   What may be most surprising to outside observers is what I found in my interviews: Chinese government officials themselves may not be aware of the full range and aggregated total of these private sector green investments overseas. Individual ministries, like the Ministry of Commerce, of course give approvals to firms going out, but those approvals are done at the project-level. If the Chinese government itself is not tracking or coordinating such a massive surge of outward green manufacturing investment, it’s unlikely that this private sector-led BRI 2.0 is being coordinated at the government-to-government level.

   TS: How do recipient countries view Chinese green manufacturing investments, compared to Western alternatives. What recommendations would you give for the EU, for example, in their response to China’s financing overseas? Should it be competition, should it be collaboration?

   ML: I think it’s important to understand at the outset that in large part Chinese companies are not doing these kinds of investments as a matter of preference—they would prefer to maximize their profits by manufacturing their product inside China and then exporting it.

   It is only because host countries put conditions against Chinese imports that firms are forced to make these investments. As mentioned, host countries recognize that imports of new technologies from China represent a potential danger for their own industrial base, plans for further industrialization and development, employment, and so on. Manufacturing FDI from China, by contrast, can be seen as a potential opportunity to use these investments for industrialization, employment, and development goals. The crucial question is if and how the host country is able to make use of that opportunity. 

   How are host countries responding to maximize their own benefit from these investments? What principles and conditions should be demanded of Chinese investors? And how should new countries potentially receive these investments position themselves in global supply chains? What kind of requirements should they make for Chinese investors? Future analysis of this massive scale of planned investments should be oriented towards these questions.

3. Land Value Politics

   September 18, 2025 6:11 am Comments Off on Land Value Politics

   The rise to power of a new urban progressive politics has been a hallmark of the Trump era. From the City Council of Los Angeles and the Board of Alderman of Chicago to the State Legislatures in Sacramento, Springfield, and Albany, the basic assumptions about what cities do and who they serve are undergoing a historic revision. Nowhere is this clearer than in New York City, where the two-term assemblymember and self-described democratic socialist Zohran Mamdani defeated former Governor Andrew Cuomo in securing the Democratic Party nomination for the city’s mayoral election. Having organized a whirlwind primary campaign of 40,000 volunteers on the promise of freezing rents for the city’s 1 million rent-stabilized apartments, Mamdani now confronts a nearly united power structure of real-estate developers, corporate landlords, and hedge-fund and private equity financiers who have already raised over $30 million for the former governor. This patently ruling-class opposition argues that raising local revenues and strengthening tenant protections will provoke an exodus of capital and entrepreneurs from the Big Apple. “If we fail to mobilize,” read a recent invitation to an emergency donors meeting, “the financial capital of the world risks being handed over to a socialist this November. We cannot—and will not—let that happen.”

   Underlying this debate about the future of American cities is the assumption that what city government can do is limited by what private enterprise is willing to tolerate in terms of regulation and taxation. Yet as Daniel Wortel-London, an historian of New York City, argues, this conception of the source of profits and revenues for public services underestimates the expansive potentialities for a kind of urban growth not hostage to the preferences of the largest private owners. Currently visiting assistant professor at Bard College, Wortel-London recently published The Menace of Prosperity, a history of development politics in New York City from the Civil War period to the 1980s that shows how the growth of America’s largest metropolis forced a broadening of debate about where city revenues should originate and what services the city should provide.

   By allowing city governments to participate in profitable activities, and using the earnings of public enterprise to subsidize money-losing services, urban reformers at the turn of the last century saw a path for reducing tax burdens on working people and fostering an inclusive form of growth. But as racial and class-based segregation began to undermine the self-sufficiency of public enterprise, and as the public sector became dependent on taxing corporations and the wealthy, a new kind of urban politics emerged in the post-World War II era, coming to a head in the financial crisis of the 1970s. Today, those who warn of capital flight in response to a potential Mamdani administration continue to invoke the so-called “urban crisis” of that decade. Interviewing Daniel Wortel-London is Kim Phillips-Fein, the Robert Gardiner-Kenneth T. Jackson Professor of History at Columbia University, and author of Fear City, a history of New York City’s post-war financial crisis.—A.Y. Elrod

   An interview with Daniel Wortel-London

   Kim Phillips-Fein: The title of your book, The Menace of Prosperity, may be surprising to some readers. How would prosperity be a menace for New York, or for any city?

   Daniel Wortel-London: The title refers to the fact that every economic activity comes with costs. What appears like growth and prosperity can hide costs that ultimately undermine economies. If we think of economic activity as depending on a deeper layer of resources, any activity which depletes those resources is uneconomic. This is what the economist Herman Daly referred to as “uneconomic growth.”

   This creates costs for governments that need to both subsidize industry while cleaning up its mess. What this suggests is that fiscal crises and underdevelopment derive not only from the absence of growth, but also from its presence. Industry is fiscally dependent on policies meant to reduce the costs it imposes on the public, like welfare spending, or provide services for labor that households are unable to provide, such as childcare or public education or healthcare. This creates a cycle of mutual dependence and underdevelopment.

   Kim Phillips-Fein: The people from whom cities receive their revenue can come to exercise a disproportionate amount of power. That’s one of the menaces of prosperity that you point to—certain forms of growth not only have economic costs, but political ones too.

   The opening of your book discusses the fiscal crisis of the seventies. The city was on the edge of bankruptcy, and there were protests and fear about what the future would hold. But then you reveal that this was not in fact the 1970s, but the 1870s, when New York also had a fiscal crisis. What was the cause of this budget crisis, and was it similar to the fiscal crisis a hundred years later? Why do fiscal crises so often plague cities?

   Daniel Wortel-London: I structured the book around fiscal crises so as to give a sense of New Yorkers’ “fiscal imagination”—the way groups understand the costs and benefits of different development strategies. In the 1870s, one out of five American cities went bankrupt. This was partly a national issue: the market in railroad and municipal securities had collapsed. But at the city level, many local development decisions went awry. New York depended on property revenue, and it had tried to raise property tax revenue through the early nineteenth century by raising property values. The city sold public land, spent money on street improvements, and went into debt to finance grand infrastructure projects.

   After the stock market collapse, banks asked for their money back and New York couldn’t pay up. This led to a large revolt against debt-financed improvements during the 1870s, both from “good government” folks (who felt that a lot of that earlier spending had been corrupt) and worker activists in groups like the Knights of Labor, who felt that cities were subsidizing speculative industries at the expense of workers.

   This dynamic occurred again in the 1930s, when both the city and financial interests went into debt promoting real estate. Banks invested in real-estate speculation, and when the real-estate market collapsed the speculators couldn’t pay back their loans. The result was that the banks called in their loans and the cities cried default, setting in motion a new crisis. So again, New York’s fiscal crisis of the thirties was in part the result of these flawed development strategies. The 1970s are somewhat similar. In the years following the Second World War, New York changed policy tack, promoting white-collar industries and corporate headquarters at the expense of working-class manufacturing jobs, a strategy that arguably deepened the city’s fiscal crisis, making it more difficult to survive the broader economic downturn of the 1970s.

   Kim Phillips-Fein: You refer to the economist Henry George as one of the key advocates for a different fiscal imaginary for the city, especially in his 1886 mayoral campaign—one of the great working-class populist moments in the city’s history (and certainly a predecessor to Zohran Mamdani’s current campaign). What was Henry George’s fiscal imaginary?

   Daniel Wortel-London: Henry George emerged as a major figure during the golden age of American antitrust, roughly the forty years spanning the 1880s to the 1910s. This was also the period of the rebirth of labor republicanism—when the question of workers and producers’ equal citizenship was a driving force in national politics. It was during this time that American workers sought to reorganize the economy around productive enterprises and away from speculative investment and its manipulation of prices and values.

   George applied these ideas to the urban setting, arguing that the way cities were trying to raise land values was in fact costing them enormously. His logic was that raising the value of land makes it harder for employers to erect factories and for workers to build homes. Taken from households and producers, rents on land were already burdensome. Any municipal effort to raise land values would only increase this burden—a self-defeating strategy for encouraging enterprise. High land values also encouraged industrial depressions because it meant that landlords were drawing money away from the real economy of production, and from the pockets of productive workers. This money tended to be poured into speculative investments, which led to economic calamity as the 1870s had shown. In this way, as George’s 1879 book title made famous, “progress and poverty” were coterminous.

   Henry George argued that by taxing its full value, land—the ultimate requirement for enterprise—would be liberated from control by speculators and therefore cheaper for use as housing or for building the factories that would generate employment. With underlying values largely an accident of location, the rent on land was in effect the earnings of a natural monopoly, received irrespective of the efforts of the owner. This logic of natural monopoly motivated much of city politics during the Gilded Age and Progressive Era, with Georgists forming groups like the New York Tax Reform Association and the Municipal Ownership League devoted to fulfilling this project. Without speculatively inflated land values, and with public control of municipal franchises like buses and ferries, city life would be free to grow without industrial depressions caused by excessive debt burdens and high rents.

   George sought to unite workers, small businesses, and productive capitalists against speculative financiers and parasitic landlords. He earned support not only from a small fraction of homeowners and capitalists, who felt they were being taxed too much, but also from what we can name as early-progressive city officials who saw the city’s reliance on high land values a detriment for city planning. This kind of broad coalition almost propelled George to the mayoralty in 1886, and serves as a precursor to the coalition behind La Guardia and even Mamdani today.

   Kim Phillips-Fein: This is a reminder of the heterogeneous nature of economic thinking in the late nineteenth century, prior to the left’s consolidation around Marxism later in the twentieth century. What are the possibilities today for different ways of thinking about political economy? What are the alternative development strategies?

   Daniel Wortel-London: Another model would be expansive public ownership. Many reformers in the late-nineteenth century provided economic arguments for such ownership. Owning profitable enterprises in transit and power, they argued, could help the city earn some profits while providing better services than those provided by the private sector. And by generating its own profits, the city would have less need to tax the worker or homeowner. American progressives often looked to European cities like Frankfurt, which generated huge profits through public ownership with low tax rates of not only sewage and transportation but of museums, baths, and employment agencies. They argued that American cities should be run as businesses—as publicly-owned enterprises in which each citizen would be a shareholder, and which directed the collectively-generated wealth of the metropolis towards the economic development of the whole. This was a direct challenge to the liberal model of economic development, by which the private sector earns profits and the public sector provides public services. For municipal ownership advocates, you could lower taxes if the public sector did both.

   Kim Phillips-Fein: Let’s move to the 1930s and the next major fiscal crisis—the Great Depression. The New York City Housing Authority, the first public housing authority in the country, was founded at this time. Federal funding for public housing only began later. At the beginning, it was totally free of federal financing.

   I had always imagined that it was Mayor Fiorello H. La Guardia, the populist reformer who governed New York during the New Deal, who pressured the federal government to invest in the city’s housing. But you show that actually there was a constituency that wanted the housing authority to operate independent of the federal government.

   Daniel Wortel-London: Public housing was another area where profitable public ownership was promoted as a development strategy for cities. New York had been promoting private housing development for the wealthy and some small homeowners all through the 1920s. This didn’t save the city from a fiscal crisis—it led to vacant lots, empty apartments, and, when values fell, closed banks.

   Public housing, advocates argued, represented a superior development strategy. Not only would construction jobs and lower rent aid the economy but, thanks to high demand, banks could invest in building housing and rely on repayment by way of the rents charged to tenants without the danger of vacancies. This was, remember, a moment that saw both the failure of the private housing market alongside the success of public authorities, most famously the initial Port Authority of New York and New Jersey. The Holland Tunnel had been built and partly paid for itself, just through toll revenues. And there were people saying that we could pay for housing the same way, with rent revenues.

   The original housing advocates wanted a mix of incomes in public housing. This way, the earnings on the higher rents paid by the better-off would help cross-subsidize the lower rents paid by the poor. A lot was riding on whether or not there would be enough rent to collect in total for self-sufficient public housing, and mixed income was a solution to that problem. But as so often happens, mainstream liberals insisted that the private sector provide for middle-income residents, leaving public housing as a money-losing operation restricted only for the poor.

   After the crash, the suburban real-estate sector was begging the federal government for bailouts to help build housing for middle-income owners, which it eventually did receive via FHA-insured loans. They didn’t want to have to deal with any competition from public housing—and soon they didn’t need to. Something similar happened in cities themselves. During the ’30s, some economists and later policymakers made the argument that real-estate values weren’t enough for fiscal solvencies. They argued that cities needed to attract income generating firms and individuals to the city. This required reducing some land values to make it more affordable for development—just as Henry George had argued. But the city wound up purchasing land from bankrupt owners at high values and then selling it at a pittance to developers for “urban renewal.” So once again, private developers were allowed to pocket profits, while the city hoped that tax revenues would be generated from their developments.

   Kim Phillips-Fein: By the late ’20s, all five boroughs were developing, albeit unevenly. By the postwar years, the basic questions of construction, growth, infrastructure, and expansion had been addressed. Where does Robert Moses—the “power broker,” as biographer Robert Caro dubbed him, whose name is synonymous with urban renewal in postwar New York—come into the picture?

   Daniel Wortel-London: Robert Moses comes out of an older understanding of urban economic development. He drew from ideas that were common sense in the 1920s, if not earlier, which is that if you promote infrastructure development—bridges, subways, or highways—city land will become more accessible. Moses gained power in the ’30s to act on this, but there were already people advocating for a more fine-grained approach, targeted toward specific firms and sectors and not just relying on infrastructure. Moses was able to adapt to this strategy while maintaining his older obsessions with highway and bridge construction.

   Kim Phillips-Fein: Moses is a bridge between the earlier paradigm of investing in infrastructure and the postwar move to attracting white-collar corporate tourism, rather than industry. The Lincoln Center on the Upper West Side is an example of the kind of land development for the purposes of gaining revenue—attracting high-income people, bringing tourists into the city, and the like. What other white-collar visions of the city existed? And what changed in terms of the city’s tax structure in the ’60s?

   Daniel Wortel-London: Both John Lindsay, who was mayor between 1966 and ’73, and his predecessor Robert Wagner, mayor from 1954 to ’65, were advocates of the welfare state and tireless advocates of the city’s corporate transformation. Today we’re used to these things as being contradictory, but postwar liberals didn’t think so.

   During the postwar period bodies like the Regional Plan Association of New York, along with realty groups like the Real Estate Board of New York, worked with these mayors to promote the city as a corporate headquarters. The city combined this development strategy with an expanded welfare state by taxing firms in order to pay for social services. In the eyes of liberal policymakers, promoting corporate headquarters alongside a larger welfare state was not a contradictory position. The wealthy would pay for welfare. Progress would pay for poverty.

   In the 1960s, some neighborhood activists did lead efforts to remodel the city’s economy around its neighborhoods, rather than its central business district. Jane Jacobs made the case for a radically decentralized urban economy and railed against what she called “catastrophic money.” Black activists in Harlem and Bed-Stuy argued that their communities were akin to colonies in the sense that all local industries were white-owened, and that the money made in those neighborhoods flowed out. For his part, Lindsay did little to promote local ownership, as these activists had advocated for. He provided some aid for Black businesses but ignored the more radical elements of these demands.

   It’s not the case that the city’s white-collar transformation emerged from the conservatism of the 1970s; it dates back as far as Wagner and Lindsay. The balancing act between corporate growth and welfare-state expansion was fiscally fragile and politically unsustainable, as it remains today.

   Kim Phillips-Fein: How did corporate reconstruction and welfare-state expansion eventually come to a head during the financial crisis of the 1970s, and how do we draw a line of continuity from earlier crises to that of the ’70s?

   Daniel Wortel-London: We’re used to thinking of the fiscal crisis as the outcome of either an over-generous welfare state or of larger economic issues beyond the city’s control. But the city’s flawed development strategies certainly had a part to play.

   Corporate firms’ commitment to profit rather than place, together with their orientation toward national rather than local markets, made them liable to move from the city at the first opportunity —which they did in large numbers in the early 1970s. Those corporations that did stay were vulnerable to recession by virtue of their involvement and exposure to global financial fluctuations—and this, by extension, made city finances more vulnerable.

   New York’s massive debts largely took the form of corporate welfare: New York’s “capital budget debt,” economist William K. Tabb complained, “owes far more to the banker-real estate developer agencies—the Housing Finance Administration, the Urban Development Corporation—than it does to helping the poor, more to subsidizing commuters than to helping the unemployed get jobs.”

   The city’s costly welfare services were not so much a driver of the fiscal crisis as they were a downstream product of the private sector’s irresponsibility and their power to pay low wages, charge high rents, and deny investment to needy communities. In all these ways, the city’s obsession with attracting and retaining corporations and raising realty values had backfired.

   Kim Phillips-Fein: Your book captures the constriction of the fiscal imagination at this moment of austerity and defeat. The cuts of the ’70s inspired many protests, such as the occupation of the North Williamsburg fire station, Engine 212, in a campaign to keep it open, or the demonstrations at Hostos Community College in the South Bronx.

   But there was also a world of alternative economic thinking at this moment, from public banks to worker cooperatives, that just lacked a popular movement to back it. The popular mobilizations at the time were very defensive and localized, focused on preserving the welfare state—saving a specific hospital, program, or school. In some ways, one might say they became a trope for liberalism as a response to Reaganism: a call to maintain institutions but not to change, improve, or expand them.

   Daniel Wortel-London: Exactly. I argue that the scope of alternatives and responses in the 1970s was more limited than it had been in previous crises. The politics and costs of private growth were better understood in the 1870s than they were a century later. The sheer inertia of New York’s postwar developmental policies, weighing the city down with sunk costs in the form of repair bills and interest charges, had made dramatic shifts in economic development policy more difficult than in the past. Most liberal policymakers focused on expanding their city’s welfare state rather than questioning the economic development strategies that helped finance it—a gap which echoed what Judith Stein called the broader “poverty of liberal economics” during the 1970s. There’s also more of a focus on restricting growth in the name of quality-of-life among many professional-class liberals—except for white-collar growth, of course—which has contributed to some of our current dilemmas as Derek Thompson and Ezra Klein discuss in their book “Abundance.”

   There were other factors, too, contributing to the narrowness of the era’s fiscal imagination. Many white homeowners had been subsidized through Federal aid, low tax assessments, and municipal support for local infrastructure. Their subsidies often didn’t appear on the city’s budget, but welfare spending did. The changing demographics of the city also played into things. The Black population of New York counted for less than 5 percent in the 1930s; by 1970, it was 21 percent. Many white homeowners assumed that the welfare payments to racial minorities was responsible for the city’s bankruptcy, and businesses were quite happy to go along with such a view that deflected blame from themselves for the city’s fiscal crisis.

   After the fiscal crisis, some things changed and others didn’t. The welfare state got slashed and the idea of responsive government committed to public welfare was stigmatized. The city’s older commitments to corporate reconstruction, on the other hand, continued. And that’s roughly where we are now.

   So rather than seeing our era of “neoliberalism” as marking a novel turn towards economic logic, we should see it as a continuation of an older, very narrow fiscal imaginary established under liberal auspices—the assumption that only by attracting and taxing wealthy firms and individuals can we develop our economy and pay for social goods.

   Kim Phillips-Fein: Let’s talk about Zohran Mamdani, the Democratic nominee for New York City’s mayor who won the primary on a democratic-socialist agenda. How could Mamdani propose a new fiscal imaginary to realize his program?

   You’ve argued that where the city gets its revenue influences who the government is answerable to. Today, New York’s personal income tax has placed a disproportionate weight of the city’s budget on the high incomes of a very small number of people. While it’s not as vast as some suggest, it’s still significant. What does this mean?

   Daniel Wortel-London: I think Mamdani’s fiscal imaginary echoes some threads of alternative economic thinking today—he talks about monopoly, the need for public ownership, municipal grocery stores, and efforts to build more housing under nonprofit and public models. He talks about “abundance” in the form of public excellence: the state should take a lead role in providing for citizens in a way that is professional, efficient, and effective.

   At the same time, he’s not trying to displace finance as the city’s economic base or reindustrialize the city. He’s not talking about public ownership of profitable utilities. Rather, he’s largely trying to make the city more affordable. Nonetheless, there are a few economic strategies which can help him to do this.

   A big example here is public banking, which he already supported as a state assemblyman. The City of New York deposits billions of dollars in Wall Street banks that invest in polluting and militaristic enterprises while extracting wealth from low income neighborhoods, which in turn leads to economic underdevelopment. Public banking could allow taxpayer money to be reinvested in the city in the form of affordable housing and aid for employers offering well-paying jobs.

   The city also has an enormous power of procurement: it spends billions on contracts with private enterprises, and this money could be shifted towards different sectors. Cooperatives, for example, typically offer longer-term jobs with higher pay for workers, while providing higher-quality goods at lower prices for consumers than their conventional counterparts. And they do so, moreover, under far more democratic and equitable conditions than conventional privately owned firms. In this way, as Ethan Miller has written, cooperatives demonstrate that “it is possible to build real livelihoods while also building another paradigm of social values.” And by using his administration to help build these livelihoods, Zohran can provide the material grounding for expanding his political constituency.

   Kim Phillips-Fein: I love your point about the excellence of city services; one of Mamdani’s central slogans is that buses will not only be free, but also fast.

   It’s a truism in city policy that cities are creatures of the state. They are fundamentally different from state governments, let alone the federal government, in that they are responsible for providing a range of services—from fire, police, primary and secondary education, basic infrastructural maintenance (streets, lights), libraries, parks, cultural life, and even healthcare. Cities are expected to provide all this while wielding very little fiscal power. They almost always need permission from a higher level of government, usually the state, to raise or impose taxes.

   Cities are also thought to be weaker because people often don’t belong to them in the way that they do states and, especially, nations. It’s not difficult for someone to move out of city limits while keeping their job in that city. People are mobile and this constrains cities in the taxes they can impose and the services they can provide. It’s also clear that massive spending programs need to be taken on by higher levels of government who can impose taxes required for long-term financing. New York can’t pay for Medicaid alone.

   At the same time, one of the major themes of your book is that cities are not entirely creatures of the state. They’re not as dependent on the state and the federal government, as is often assumed, and there’s a lot they can do independently, especially when it comes to public ownership. Cities are also not as dependent on economic elites in building political movements.

   Daniel Wortel-London: Cities have more economic agency than they’re often given credit for and progressives like Mamdani, if he comes to office, have power to wield it.

4. Sacrifice Zones

   September 4, 2025 3:35 pm Comments Off on Sacrifice Zones

   Since Donald Trump announced in July that the US would impose 50 percent tariffs on Brazilian imports, there has been much speculation about the future of Brazil’s foreign trade, both with China and the US. One particular area of focus is the US interest in the exploitation of Brazil’s strategic minerals, as Gabriel Escobar, interim US ambassador to Brazil, made clear at a recent meeting with representatives of the mining industry. In the context of the domestic effort to develop a national policy on Critical Minerals, Finance Minister Fernando Haddad has indicated that critical minerals could be one possible area of trade with the US.

   Among the critical minerals now in focus are rare earths, a set of seventeen metals with high magnetization capacity, essential for the production of electronic components, batteries, and wind turbines, which make up the most advanced hub in tech innovation and a key component in the race for energy transition. Another area of growing demand is the military, where these metals are used for creating the strong magnetic fields necessary for drones and ballistic missiles. Not surprisingly, a recent discovery of rare earth deposits in Poços de Caldas, in the state of Minas Gereis in Brazil’s southeast, has already attracted more than 100 exploration requests to the National Mining Agency (ANM).

   Daniel Tygel is a former councilman for Caldas, a city close to Poços de Caldas, equally rich in critical-mineral reserves. A key figure in the movement against rare-earth extraction in southern Minas Gerais, Tygel spoke with Rosa Magazine and Phenomenal World about the topic.

   Here we present a summarized edition of the interview, which first appeared as a podcast published by Rosa. The discussion ranges from the environmental impacts that rare-earth mining entails, especially in “sacrifice zones” like Minas Gerais, to the geopolitical tensions that fuel such mining. The conversation was attended by the editors of Rosa Magazine, Arthur Hussne, Lucas Braga, Marcela Vieira, and Marina Bedran; Luciana Dias Bauer, founding lawyer of JusClima; Stélio Marras, anthropologist and professor at the Institute of Brazilian Studies at the University of São Paulo (IEB-USP); and Hugo Fanton, editor at Phenomenal World.

   An interview with Daniel Tygel

   Marina Bedran: How do today’s mining practices in Minas Gerais differ from earlier periods? What is unique about the exploitation of rare earths?

   Daniel Tygel: We are on the volcanic plateau of southern Minas Gerais, or the Poços de Caldas volcanic plateau, which is a gigantic crater. Thanks to the volcanic activity of the past, the region today is home to very special fauna and flora. The land has high levels of acidity, containing heavy metallic elements like uranium, which attracted mining attention early on, even before Brazil developed its nuclear industry. This mining, closely linked to the military dictatorship and carried out at breakneck speed, was a source of national pride.

   We are the largest open-pit uranium reserve on the planet, home to 100 million tons of heavy metals, of radioactive metals. Thanks to anxieties about radioactive waste, enthusiasm for new energy sources has a long provenance in the state, dating back forty years. Caldas has been celebrated as the future because it exported uranium to Brazil and the world. Now, once again, the region is being coveted because of the green energy revolution and NATO’s renewed military interest.

   The rare earths here were discovered in the 1990s by a group of Japanese researchers. The discovery did not originally attract much attention, even as China had pronounced its stakes in rare earth minerals as early as 1992. It would take until much later for four Australian companies to show interest in the area.

   With the crimes taking place in Brumadinho and Mariana, the question of dams in Brazil has gained prominence. Companies have adopted phrases such as “green mining,” which does not use explosions or dams and contributes to the energy transition. In this new phase, it is small companies that are approaching the environmental licensing process. This is something very different, because it seems that they have expertise in Brazilian legislation, communication, and co-opting regional powers and communities. But these companies, even though they are small, are already publicly traded. With so much geopolitical interest surrounding rare earths, smaller companies are ready to be taken over by traditional mining companies with greater operational capacity. The two companies that are most advanced in environmental licensing here in the region have capital of USD 20,000, which is totally inadequate. The big geopolitical question is, who will take control of these smaller companies. It is said that, on its own, this region can supply 10–20 percent of the world’s demand for rare earths.

   Marcela Vieira: There is coordinated action by companies to legitimize these projects. For example, students at the public school in Poços de Caldas are taking classes on rare earth extraction and how it will bring more progress to the city with minimum environmental damage. The people teaching these classes are not affiliated with the school or the city government; they are people from the company itself. Given this, who can we turn to?

   DT: The only thing that can stop a mining project of this size is the local community proving that we are not a sacrifice zone. In ancient, pre-medieval cities, when they killed a calf to collect its blood and save the harvest, the calf was sacrificed for the good of everyone. The only one who could try to escape this fate was the calf itself, by crying out loudly. Unfortunately, this is our situation. There is a long history of clashes with mining companies, and we have had some great victories. In this case, however, the companies will be trying to move as quickly as possible. It’s part of their strategy to make communities feel that there is no way to fight back because there is nothing else to be done. Our strategy is to say that there is indeed something to be done, there are still a number of steps to be taken.

   There are two major regulatory fields: mining law and environmental law. In practice, this means that any new projects need to undertake two distinct administrative processes: acquiring the mining concession and obtaining environmental licensing. Mining law is a fait accompli because it is based on the premise that the subsoil is the responsibility of the federal government. Those who inhabit or own the land above do not own the minerals below. The National Mining Agency (ANM) has already granted mining rights in cities like Poços de Caldas, Caldas, Andradas, and Águas da Prata. There are guaranteed mining rights underground even on the land where Caldas’ main church is located. Once ascertained, companies are under no obligation to even disclose the fact that they’ve gained legal access to a particular area, arguing that the location is a “trade secret.” Gaining rights on its own, however, is not enough to begin extraction.

   Environmental rights relate to what happens on the ground, not just underneath it. The law inscribes protections for certain areas, such as traditional communities, urban areas, and “permanent protection areas.” That’s where the trouble starts. Often, when the municipality is asked to issue a certificate of use and location—the only formal statement the municipality makes—companies say they already have the right to mine. But this is not true because they also have to get the permission of the Environmental Protection Council, which issues the opinion that supports the city’s decision. If there is local mobilization, it is possible to put pressure on municipal authorities, especially the executive branch, to negotiate the granting of this certificate of use and location. Caldas has already issued the certificate to the company Meteoric, and Poços de Caldas has issued a certificate to Viridis. But there is a petition underway in Poços de Caldas that asks the mayor to listen to the public and review his decision, because every administrative act of the Executive Branch is subject to self-regulation, so it is possible to revoke or suspend the certificate of use and location. Therefore, if there is mobilization to make a certain aspect related to this mining unpopular, it is possible to create mechanisms for negotiation.

   But there is a timing problem: these two mining activities will peak during the next municipal election process, and the burden will begin later, in the following administrations, six to eight years from now. The peak bonus is during the construction of the ore treatment plant, which absorbs a large workforce for about ten months, which will coincide precisely with the election process. For example, there are 1,000 direct jobs during the construction process in Poços and another 1,000 in Caldas, but after that, during operation, this falls to 170 direct jobs. That is very little. Compare it with Alcoa, for example, where for 500,000 tons of ore there are 600 workers. Here there will be 180 workers to exploit ten times more, five billion tons.

   At this point, we have to resort to mobilizing and raising awareness among the population so that they realize that the gains are not that significant. Caldas has been home to mining for a long time and its Human Development Index (HDI) has not grown in relation to Campestre, to take one example, which is a municipality of the same size and has invested in coffee, a product whose gains are renewed over several harvests and which brings far less environmental destruction.

   In terms of stopping these projects, we need to organize impact studies from technical experts. Another path is to appeal to the Public Prosecutor’s Office, although this is difficult as it usually won’t take action until the damage has already happened. The central element in all of this is time. The company is in a hurry, so we need to buy time so that people can better understand what this mining process is all about.

   Luciana Bauer: There seem to be speculative bubbles around critical minerals. In addition, there is an ongoing arms race for which these minerals are essential. How should Brazil be considered in this context?

   DT: Brazil ranks second in the world in known rare earth reserves. The BRICS countries, now with the addition of Vietnam, possess most of the reserves of these so-called critical minerals. And there is a lot of speculation going on because it is being seen as a “new oil,” and an opportunity to make a lot of money from fluctuations.

   Brazil is practically invisible in the international media, despite our weight in terms of wealth, GDP, population, and even market share. I am struck by the way Brazil is sidelined, and this has to do with our growing relationship with China and with the logic of BRICS, of so-called multilateralism. We are in a very dangerous zone: global governance mechanisms are failing, but new structures, such as BRICS, are unable to provide direction or replace existing multilateral organizations.

   The mining of rare earths cannot be separated from geopolitical competition with China. The world is militarizing at a rapid pace, within NATO in particular. These countries are now desperately seeking to manufacture more weapons in more locations. Until recently, Brazil was considered a reliable place for this task, but thanks to its membership in BRICS, that is no longer the case. It certainly raises the question of whether Brazil might even, one day, be a target of military threats from NATO. I cannot rule this out.

   At present, there is enough international dialogue to keep this off the table, but we also have an elite that works against our country. This weakens us in tougher negotiation processes, such as the one we are now facing with Trump’s tariffs. Within Brazil, there are those who play against us, and this makes it very difficult for us while facilitating their strategy of divide and conquer. Brazil is still considered, despite its strength, a banana republic, very susceptible to outside influence. With this degree of fragility in the international context, the fact that we have a mountain of wealth in critical minerals puts us in a position of great vulnerability. This is the dialogue I have been trying to have with the Presidency of the Republic. We need to create negotiating tables that treat territories as stakeholders, not as sacrificial zones. We cannot just be exporters of primary commodities, because technology will not necessarily be transferred here. It is an extremely complex production chain.

   Lucas Braga: What is Brazil’s perspective on the relationship between public policy and geopolitics?

   DT: We are in a very delicate situation as a country, and our elections are being closely monitored, with social media companies directly involved in the electoral process. So, how do we position ourselves?

   We need to build negotiating tables where Brazil can get a little closer to China, because alone we are not strong enough. If, as a nation, we were more cohesive, we could also move forward with Mercosur, the common market for the South. Otherwise, we will remain a colony, allowing ourselves to be exploited from all sides.

   Unfortunately, that is what I have seen so far. The National Bank for Economic and Social Development stance has been this: any company that wants to exploit us is welcome. But we could have a better approach. We could seek a gradual policy to reduce the export of raw lithium and rare earths and begin to stimulate industrialization processes within the country . On the other hand, from an environmental point of view, I don’t know what this represents. Would there be a reduction in the use of oil? No. Basically, an additional energy source is being added to boost the economy.

   Arthur Hussne: What are the main things currently influencing mining companies exploring Brazilian rare earths?

   DT: Time is a major factor. There is a feeling among the economic elite that if Brazil does not give the green light now, the country will miss the boat, and become weighed down by environmental concerns. The elite want to benefit from the new economic cycle rooted in rare earths, including the possibilities for military use and artificial intelligence.

   Brazil’s Congress is absolutely opposed to any national interest. The structure that was built to give a very large slice of the budget to the Legislative Branch broke the government’s negotiating capacity because now congressmen don’t even want to take on a ministry. Today, a congressman receives millions of reais in amendments to maintain his base, so what interest would he have in getting involved with the executive branch, something that requires much more effort? There are congressmen here in the region who even have their own programs, such as “Mais Genética” (More Genetics), with amendment money. What interests the congressman is how much he can funnel toward his base in order to guarantee his election in the next cycle. So Brazil is very vulnerable.

   In light of this, it might be that the best way forward is in getting closer to China, at least in regards to the critical minerals policy they have adopted, which abandons leaching and ammonium sulfate and includes strong environmental protection in relation to mining. Here, municipalities could at least form a rare earth consortium and only grant use and location to those who offer the best proposal, those who deliver more in terms of the production chain and environmental protection. But no one wants to work on this because mining is seen as a source of easy and quick money.

   LB: What are the repercussions in terms of pollution from rare earth mining in Brazil and, more specifically, in Poços de Caldas?

   DT: The impacts are enormous. Very soon we will have mineral pipelines for carrying materials to ports for export. A mineral pipeline uses enormous amounts of water, similar to what a city of 300,000 inhabitants uses. (Poços de Caldas has 200,000 people.) So this is a major problem.

   Three million liters of water are already used monthly just for the washing process, which generates traces of heavy metals and cumulative radioactive material. Every day, 20,000 tons will be generated in Poços de Caldas and the same amount in Caldas. In terms of transport, we estimate 700 truck trips per day, in each of the cities, between a particular mine and a processing unit. And there is seasonal variation: at one time of year it rains a lot, which makes transportation impossible for several days; and in the dry season, it can inflate the number of trips up to 1,200, with dust that is impossible to control. And this dust will carry heavy metals, which have the potential to cause serious neurological damage to people living and working in the area. It is a material that has a much greater impact on the nervous system than pesticides. Our region is a volcanic area with a lot of water. We are the water tank of Rio Grande do Sul, and we are sent to Argentina. The transport of heavy metals will make it impossible to use this water, because there is no treatment to clean it of such metals.

   LB: BRICS is considering creating commodity exchanges, including for grains. Could this be replicated for rare earths, given that the bloc would collectively have around 80 percent of the world’s reserves?

   DT: I don’t know. The BRICS debate around rare earth mining is not happening publicly, largely because Trump is so volatile. I was surprised at the BRICS summit in Rio de Janeiro at how little was said about rare earth mining. We had a meeting with the Minister of Science and Technology, Luciana Santos, with the Minister of the Environment, Marina Silva, with the offices of the Ministries of Mines and Energy, Industry and Trade, and Finance. We said that it is necessary to establish some form of dialogue with the population, to seek technological alternatives, so that the population is an interested party in this process, but so far nothing has happened. There is R$ 45.8 billion in financing from the BNDES for the group of companies in the critical minerals sector, and no resources for the organization of the territories, for universities and researchers, and for the population to organize itself and know what is happening.

   Caldas has an annual budget of R$ 70 million. These mining companies have forecast gross revenues of around R$ 6 billion per year. How can we have a negotiating table between the municipality and a company like this? We need the support of the federal government to set up a dialogue, and to think about building a rare-earth technology hub, which could innovate so as not to fall prey to “greenwashing.” That way, we can have some sovereignty, including with regard to the volume of minerals exploited and the kinds of technology we’d like to see transferred so that a national industry can start developing. Unfortunately, I currently see just the opposite: a huge rush to explore the region and prepare for mining on the one hand, and the passivity of the federal government—and even of BRICS—on the other.

5. Voting for Justice

   August 20, 2025 2:50 pm Comments Off on Voting for Justice

   On June 1, Mexicans voted to overhaul the country’s judicial system. The judicial elections were called to fill 881 positions in the federal judiciary, implementing the plans set forth by a constitutional reform approved in 2024. This is the first judicial election of its kind in Mexican history, and it has redefined the composition of the ministers of the Supreme Court of Justice of the Nation (SCJN), the magistrates of the electoral and circuit courts, and district judges throughout the country.

   Until now, Bolivia had been the only country in the world which established the right to elect its highest national ranking judicial officials through a popular vote, a result of its 2009 constitutional referendum during Evo Morales’s first term. In the United States and Switzerland, the judicial election systems are limited to the local level. In most Latin American countries, there are intense debates around the politicization of justice, the democratization of judicial structures, and the use of the law to legitimize political persecution. This is a phenomenon known as “lawfare,” which has been key to explaining the judicialization of conflicts and the persecution of political figures, leaders of social movements, and ideological currents opposed to the regimes in power. Brazil, Colombia, Ecuador, and Argentina are cases in point.

   In Mexico, the reform initiative that led to the elections was supported by the ruling government, led by the Movimiento de Regeneración Nacional (Movement for National Regeneration, Morena) who saw it as a bid for democratization in the fight against a corrupt judicial system. To this end, the judicial elections represented a political and legal strategy aimed at reshaping the judicial system at all levels, local and federal. Debates have since raged around the de-professionalization of judicial careers and its impact on the political and economic stability of the country. Amid polarization and disinformation campaigns, the judicial elections were chaotic—characterized by the absence of public financing, rampant disrespect of political parties, and subsequent sanctions. The National Electoral Institute (INE) found that an average of 13 percent of the citizenry (almost 13 million people) went to the polls. This was a very low turnout, especially when compared to the 61 percent turnout achieved in the 2024 national elections.

   Ahead of the election, Pablo Uc spoke to José María Soberanes Díez, a jurist with experience at the Supreme Court of Justice and an expert on Mexican constitutional reform. In the following interview, Soberanes critically examines the implementation of the judicial reforms, reflecting on the country’s long-term legal-political process which led to the elections. He surveys the potential scenarios that may arise from the election results—among them, the rising political power of Morena, which seems to have formalized its influence across Mexico’s judicial structure.

   An interview with José María Soberanes

   PABLO UC: The recent judicial elections have changed the way in which judicial positions in Mexico are filled, transforming the entire structure of the judicial power of the country. What was the political context that gave rise to the judicial reform initiative—approved in September 2024—which led to the June 1 elections?

   josé maria soberanes: Discussion around the initiative traces back a long time, mainly as a response to a series of disagreements between the former President of Mexico, Andrés Manuel López Obrador (AMLO), and the judiciary, in particular the Supreme Court of Justice of the Nation (SCJN). AMLO pursued a vision of politics that was not very institutional—he went so far as to say “to hell with the institutions”—while the SCJN insisted on institutional guidelines, through which it systematically blocked many of the projects pursued by the executive.

   Although AMLO had promoted the idea of reforming the judiciary as part of a political project against corruption, in the early years he held back—the beginning of AMLO’s presidency coincided with the arrival of Arturo Saldívar as head of the SCJN in 2018, with whom he was politically aligned. In fact, Saldívar resigned from the position in 2023 to join Morena, first as part of Claudia Sheinbaum’s campaign and subsequently as general coordinator of policy and government in the presidency. In the latter position, he worked closely with Sheinbaum’s team to become one of the main drivers and designers of the judicial reform.

   During AMLO’s administration, the government carried out a minor version of that reform. At the same time, the federal judiciary reached a series of decisions that upset the president. AMLO argued that they were “paralyzing” his large infrastructure projects and works—which had been accused of damaging the environment—as well as the electoral reforms he had promoted in 2023—which the SCJN ruled unconstitutional for failing to follow proper legislative procedures. This confrontational climate intensified, coinciding with the early termination of Saldívar as president of the SCJN and the arrival of Minister Norma Piña to the position. Piña was the first woman to preside over this body and soon became a target of the federal executive.

   Faced with rulings that opposed his interests, AMLO considered Plan A to transform the judiciary, a constitutional reform that failed to reach a qualified majority in the Congress of Deputies. Then he attempted Plan B, a set of legal reforms without constitutional reforms, which were challenged by the SCJN. Finally, once he had the necessary legislative majority after the national election of 2024, he went for Plan C, a reform at the constitutional level. This plan seemed difficult to achieve—a constitutional reform in Mexico demands two-thirds approval from the legislative branch. But as a result of the political reorganization following the 2024 national elections, in which Morena won a controversial over-representation in the Chamber of Deputies, the reform easily cleared the benchmark and was approved in less than forty-eight hours. The reform then found approval in the Senate Chamber, thanks to a sudden change in the decision of a senator from an opposing party, and finally by the majority of the state legislatures.

   After the speedy approval process, the reform was published on September 15, a non-business day, when the Official Gazette of the Federation is not usually published. It was published with a small nuance—a staggered renewal, so that with the elections of June 2 the SCJN and half of the magistrates and judges would be contested, leaving the other half up for election in 2027.

   PU: How did those opposed to the reform react, and what happened once it was approved?

   JMS: Once it was confirmed that the reform could move forward, which would replace all positions in the judiciary, the judicial branch announced its decision to go on an indefinite strike in August. There was pressure from the executive regarding the suspension of their pay. The only ones who did not go on strike were the ministers of the SCJN. 

   After the reform’s approval, there was a debate around whether or not it was possible to challenge it. While the judiciary rarely intervened in matters related to constitutional reforms, there were two options for potential challenges—alleging a constitutional controversy or alleging unconstitutionality. The opposition parties filed an action before the SCJN arguing that the reform was unconstitutional. But there was a problem—the question of whether or not the Constitution could be unconstitutional had never been raised. The SCJN dealt with it very quickly at the beginning of November 2024, but the ruling party had already warned that the SCJN’s resolution would not be heeded.

   Thus, the challenge was submitted to a vote: seven justices of the court considered the action of unconstitutionality to be admissible, while four were against it. Since a minimum of eight votes was required for it to succeed, the process concluded at that point and the reform continued unchallenged. Gradually, the courts began to reopen.

   After it was clear that the reform would not be ruled unconstitutional, the process of the replacement of judicial branch officials commenced. The Senate drew from a raffle to determine which positions would be voted on in June 1 elections, and which would be voted on in 2027. It was a painful process, and nearly half of the judges and magistrates (1,683 active judges in the country) resigned from their positions, with many arguing that they had obtained their place through professional means rather than popular campaigns. Some resigned immediately, and others decided to wait until the end of August 2025 and abstain from the election process. Eight of the eleven SCJN ministers also resigned.

   PU: Once the reform was approved, what were the legal and political procedures that paved the way for the election? Mexican voters were summoned to the polls on June 1. What did they encounter, in an election which had no precedents?

   JMS: After the reform was approved, candidates were nominated and selected between October 2024 and February 2025. The three branches of government—legislative, executive, and judicial—formed committees to register and evaluate nominees. Except in the case of the judicial branch committee, in all cases the selection would have considered the minimum requirements for the position and candidates’ professional profile. Based on this, the lists of candidates were sent to the Senate in February 2025.

   Once the National Electoral Institute (INE) received the lists, they prepared ballots that were distinct from past elections. Mexican election ballots usually display the logos of political parties, and voters mark the party of their preference. In the case of the ballots for the June 1 election, the names of all the candidates for judges, magistrates, and ministers appeared instead of the political parties.

   Each citizen received six ballots with a complete list of candidates, split by gender. For the SCJN election, for example, five women and four men were elected as a principle of gender equity. In this case, a voter needed to list nine numbers from a list of sixty-one names. It was a complicated voting procedure. Given the limited budget of the INE after a historic cutback, the election opted to use voting centers instead of traditional ballot boxes. Votes were counted not by citizens but by INE, and a repeat of a candidate’s number invalidated a ballot. Voter turnout expectations were low, given popular disinterest and little knowledge around those running for office.

   PU: How did INE educate citizens about the election process? And what is your read on the judicial candidates’ campaigns, which took place during a short period from March 30 to May 28?

   JMS: The INE set up a platform and posted resumes of each candidate for voters to see. But this requires a lot of time for the average citizen—there were hundreds of resumes to examine. The campaigns did not allow private nor public financing—each candidate needed to self-raise. Although the INE did establish a ceiling for personal campaign expenses, there was an oversight that tried to limit or regulate such expenses. In any case, campaigns utilized social media platforms, videos on Tik Tok, and the like. Instead of demonstrating their judicial philosophy or legal project, they sought to be funny and likable. There was limited campaigning around the real issues of the position and the capacities of the candidates to fulfill the role.

   PU: What do you see as the main risks of the election, especially when considering the hegemonic role of Morena and the role of interest groups, including organized crime?

   JMS: Political parties are the only organizations with a structure capable of mobilizing large numbers of voters on election day. Even before the election, it was already known that political parties were designing and distributing lists for voters to copy on election day. Although I am not certain about this, I think it’s plausible, especially given how party machinery works. I don’t believe these elections would be the exception.

   I don’t know anything about organized crime, but it does seem logical to me that these groups have been more interested in influencing this election than the average citizen. Operating in illicit activities makes you more likely to confront the judicial structure. If organized crime or special interests were to finance candidates, it could of course threaten the impartiality of a judge. In general, I believe that the election could weaken judicial independence.

   PU: Once the new judiciary is established after this election, what will be the role of a body such as the Judicial Disciplinary Court and the Judicial Administration Body, which will replace the Federal Judiciary Council?

   JMS: Until now, the Federal Judiciary Council was in charge of administration and discipline of the judiciary. Now, we will have two separate bodies for each function. With the Judicial Disciplinary Court, any person or authority will be able to denounce officials of the judiciary. But here the risk is that the Judicial Disciplinary Court could sanction judges or magistrates for voting against the political interests of the executive branch. The sanctions, which can range from suspension to dismissal, can condition the impartiality of judges and magistrates and seep into the entire judicial structure. It could affect the highest ranks, because it can sanction the members of the SCJN. The Judicial Disciplinary Court will be composed of five members who were also elected at the ballot box on June 1. It is one of the least discussed institutions, given the importance of the SCJN, but now it is something we are going to question—will the high court of the republic be the Supreme Court or the Judicial Disciplinary Court?

   PU: In Mexico and across the region, the critical issues revolve around immigration, security, trade, and human rights. How will the restructuring of the judiciary affect these issues?

   JMS: I am worried about what it means for human rights in Mexico. The main guarantee for a victim is the amparo—protection of rights in the Constitution—and the judiciary is responsible for protecting these rights. If the judiciary becomes politicized or loses impartiality, this bears risks on the guarantee of human rights.

   For example, a study of Bolivia, which similarly held a popular election for its judiciary, examines sentencing before and after the change of judicial regime. Two general trends were found: first, sentences had become more punitive, i.e., the number of convictions had increased; and second, sentences were more favorable to the state, giving the state the upper hand in a conflict against private parties.

   It will now become very difficult to grant an amparo for a human rights violation. I think the amparo is the most important issue in the debate around the reform—the loss of the ability of ordinary citizens to defend themselves against the arbitrariness of the state. Beyond a conservative political perspective, or the particular defense of some judicial authority, or an opposition to anti-corruption changes, this is the issue that worries me the most.

   PU: The official results of the election were announced by INE in mid-June. How did you read these results, and what are the main challenges that the new judiciary will face once it takes office in September 2025?

   JMS: Let’s consider the complexity of the voting process. There were more invalid votes (10.8 percent of the total votes cast) than those achieved by the candidate who earned the most votes in the election—Hugo Aguilar Ortiz (4.9 percent), the next president of the SCJN—the candidate who earned the second most votes—Lenia Batres Guadarrama (4.7 percent)—combined. In other words, 1 million ballots were annulled, far exceeding the previous record of 5.4 percent in 2009.

   The general turnout was very low, between 12.57 percent and 13.32 percent of the total voting population. This was low not only when compared to the presidential election, which always has a higher turnout, but also when compared to the midterms. More than 85 percent of voters decided not to vote.

   Why did this occur? There were controversies regarding the profiles of the candidates, but it’s important to recall that this was the responsibility of the three branches of the union, not INE. This is something that could be changed. In some states they are reforming the system so that only the state electoral organization is responsible for a serious and rigorous evaluation.

   The challenges to the already elected positions show several inconsistencies. In Veracruz, there was an elected candidate who is currently in prison. INE could not do much, because the lists were already compiled for the ballots. But there are people who should not be candidates, both for their lack of preparation and experience, but also for legal reasons. The other big issue was the use of the lists distributed by political parties in order to encourage citizens to vote for their candidates. This undermines democracy, it prevents a free and secret vote.

   When the lists given by the party in power, Morena, completely overlap with the election results, what we see is a “formalization” of a previous selection. It seems that the results were already known beforehand—candidates associated with the political party in power that promoted and approved the reform won. This was not a citizens’ election, it was a partisan election, and this is worrisome.

   The immediate judicial scenario, so far, has been frivolous. There have been no transformative, substantive agendas put forward. Instead, the changes have been at the surface-level, such as eliminating the mandatory use of robes by the judges of the SCJN, and opting instead for traditional indigenous costumes as an expression of multicultural inclusion. The new members of the SCJN will soon have to define the value of legal precedents and the SCJN’s decisions of the past 100 years. Perhaps they resort to a jurisprudence that omits the weight of precedents considered a criteria of a favored social class, and they instead elect to start from scratch. But starting from scratch could leave the country without a legal compass. The first sentences of this upcoming September will determine the value that the magistrates will give to jurisdictional precedent and, in turn, the future of the new judiciary.

6. An Ungovernable Country

   July 25, 2025 3:15 am Comments Off on An Ungovernable Country

   With the onset of the Washington Consensus in the 1980s, Brazil’s economy began grinding to a halt. The extraordinary growth that had set it apart in the decades after the Second World War quickly came undone as public investment receded, demand dropped, and deindustrialization set in. For the economist Luiz Carlos Bresser-Pereira, this resulted in a state of “near stagnation,” from which Brazil is still yet to recover. 

   Getting beyond this state of affairs will require the adoption of new macroeconomic and industrial policies, he argues. To that end, Bresser-Pereira has developed a theory of a “new developmentalism.” Key to the theory is the idea that the exchange rate is of maximum importance for the competitiveness of domestic industry and investment. 

   At 91, Bresser-Pereira remains one of the most important intellectuals in the country. A professor at the Getúlio Vargas Foundation since 1959, he is an economist, political scientist, business administrator, and lawyer. He was Minister of Finance (1987) in the José Sarney administration and Minister of Federal Administration and State Reform (1995–98) and Minister of Science and Technology (1999) in the administration of Fernando Henrique Cardoso. Since leaving public office, he has devoted himself exclusively to academic life. 

   Phenomenal World editors Hugo Fanton and Maria Fernanda Sikorski spoke with Bresser-Pereira in late June about the political and economic situation in Brazil amid Lula’s third term. The interview, conducted before the announcement of a 50 percent tariff on Brazilian exports to the United States, provides an overview of new developmentalism, and analyzes the consequences of Brazil’s semi-colonial position in the global market, as well as the obstacles to structural change in the national economy.

   Interview with Luiz Carlos Bresser-Pereira

   Hugo Fanton: Yesterday, the National Congress overturned the presidential decree that increased the rates of the Tax on Financial Operations (IOF). Can we begin with your analysis of the relationship between the executive and legislative branches during Lula’s third presidential term?

   BRESSER-PEREIRA: In the case of the IOF, Congress revoked the presidential decree that imposed a tax increase. The government needs to raise taxes because fiscal spending is—necessarily—very high. The lack of support from the legislature is a problem in itself, but in addition, the volume of amendments is immense and impacts the federal government’s ability to direct fiscal spending and make public investments of greater quantity and quality. 

   Since 2015, when Congress approved an amendment to the Constitution that made parliamentary amendments mandatory, Brazil has become an ungovernable country, or at least almost so. The electoral system for the Federal Legislature uses proportional representation but, absurdly, it uses open lists. This results in a huge proliferation of candidates, and makes running in an election very expensive, which in turn usually leads to the election of elitist parties. Created by the 1988 Constitution, this model only became governable because of the so-called “coalition presidentialism.”1 The term, coined by political scientist Sérgio Abranches, refers to the way in which the president of Brazil forms parliamentary majorities. In a system characterized by extreme multipartyism (in the 2022 elections, 23 parties were elected to the Chamber of Deputies), legislative support for the government depends on agreements (often spurious) and alliances between parties with heterogeneous positions on the political spectrum.

   In most developed countries, the party that wins the executive election has a majority in Congress; if it is not absolute, then it is at least substantial, allowing it, with a few alliances, to implement its political agenda. Because of the open list system, this rarely happens in Brazil. Coalition presidentialism has been the solution; the president usually does not have a majority in Congress, but he can buy deputies—literally buy them. The government only releases funds from parliamentary amendments if it has support in Congress. From 2015 onwards, however, members of Congress have become increasingly “independent” from the president, and so governing the country has become extremely difficult.2Dilma Rousseff began her second presidential term in January 2015 already under pressure. December of that year was marked by a definitive break with the government by the majority of the Chamber of Deputies, chaired by Eduardo Cunha, who initiated impeachment proceedings against Dilma. At the same time, also in 2015, Congress approved the first Constitutional Amendment (No. 86/2015) that made parliamentary amendments mandatory—the next decade would be marked by numerous other measures aimed at increasing the legislature’s interference in the public budget.  Sérgio Abranches addresses this problem of governability in a recent interview with Valor Econômico. He says that Brazil has a dysfunctional Congress that only looks after its own interests and has no concern for the public interest. Most deputies and senators work simply to defend their own prerogatives and ensure their re-election. 

   MARIA SIKORSKI:  It is Congress that advocates austerity because it imposes fiscal surplus rules on the government, but sees no problem with amendments.

   BP: Congress is not in favor of austerity. That’s just talk. Orthodox economists are in favor of it, but Congress, even though it speaks in the name of orthodoxy, absolutely does not want to raise taxes or cut spending.

   MS: The theory of new developmentalism advocates a form of fiscal adjustment that allows public accounts to be balanced without harming social spending and investment. Along the same lines, in your book, In Search of Lost Development, you advocate a fiscal rule model that adopts nominal (rather than primary, as is usually the case) targets, i.e., that includes interest payments in the account and also includes a target for public investment. Given this, what is your assessment of the fiscal framework implemented by the government in 2023, which adopts primary result targets and has a surplus bias, determining that the rate of growth of expenditures must always be lower than that of revenues?

   BP: The spending cap previously in place was absurd; no civilized country would impose such a cap. Now that a new fiscal framework has been proposed to replace the cap, a lot more is at stake: the government also needs to ensure the feasibility of the increase in social spending promised by Lula’s campaign. Haddad has been incredibly skillful in achieving both of these things in the face of an uncooperative parliament.

   That said, a higher primary surplus target should be achieved through both spending cuts and tax increases. The Brazilian government has a constitutional responsibility for health and education spending and a growing commitment to social assistance spending—not only because the population is aging, but also because the volume of income transfers has grown significantly since the pandemic, making programs such as the Bolsa Família no longer as inexpensive as they initially were. Meanwhile, the Brazilian tax burden has remained virtually unchanged: since the 2000s, it has hovered around 32 percent. It needs to increase. Many argue that Brazil’s tax burden is very high, but this is not true. In the case of countries that have never had the burden of social welfare, this might be true. But we do have it, albeit modestly: the Unified Health System is the greatest achievement of Brazilian democracy. 

   In addition, the budget also needs to make space for public investment. Historically, attempts to solve the problem of infrastructure investment through concessions, public-private partnerships, and privatization have failed. The privatization of monopolistic sectors, such as infrastructure in general, makes no sense. The fact is that without raising taxes, maintaining social spending and resuming public investment is impossible. This issue of tax increases, though, is incredibly hard to raise. Fernando Haddad is trying, but yesterday, for example, Congress overturned the tax review he attempted to implement. 

   hf: In addition to fiscal disputes, Lula’s third term has also been marked by clashes over monetary policy. Lula himself has repeatedly criticized the high (and, during much of his current term, rising) basic interest rate. What is your take on the Central Bank’s performance so far?

   BP: Why are interest rates high in Brazil? Nakano and I were the first to seriously discuss this issue, back in 2002, when we published an article showing that our real interest rate was much higher than the international rate plus country risk. We argued that, since financial liberalization made it difficult for the national currency to depreciate, this interest-rate differential existed to attract foreign capital. That was, in practice, the moment when I broke with Fernando Henrique Cardoso’s economists—all of them, except André Lara Resende, perfectly neoliberal. Since then, my explanation for high interest rates has always had two factors: first, the need to attract capital and second, the political power of the Brazilian financial-rentier system. 

   Recently, however, I published an analysis in Valor Econômico adding another idea (which deserves more serious research): in addition to political and economic factors, interest rates in Brazil are high because they have become customary. I identify two historical facts that are essential to the creation of this custom. The most important, in my view, happened in 1964, with the military coup.

   The military reinstated the savings account system and decided that these investments would be remunerated at a real—not nominal—interest rate of 6 percent per year. Today, to give you an idea, many capitalists in the global North are happy with 3 percent. Real interest rates of 6 percent per year were absolutely incompatible with the nature of savings accounts, but no one questioned the decision. Since the 1930s, there had been a usury law (still in force today) that criminalized the charging of real interest rates above 12 percent per year. Apparently, paying half that for a fixed-income product with virtually no risk seemed great. 

   The second historical fact dates back to redemocratization. The text of the 1988 Constitution set a maximum limit of 12 percent a year for real interest rates, reinforcing the usury law criterion. The adoption of a constitutional ceiling for interest rates was the work of my dear friend Fernando Gasparian, who fought hard for this during the constitutional convention. Congress ended up approving the cap, but with an annual rate of 12 percent. This illustrates how complicated the issue was: on the one hand, there was a limit, but on the other, the limit was extremely high! 

   But even though the limit was high, the issue did not go unnoticed. The financial market protested, economists said it was not compatible with the country’s macroeconomic reality, and after a while, the article was eventually removed from the Constitution. From that clash onwards, high interest rates became the norm. That is why I say it is a matter of habit: in Brazil, real interest rates of 4 or 6 percent are absolutely commonplace. The result is a huge capture of public assets: resources that could be used for productive investment are diverted to the financial market. 

   There are two fundamental captures of Brazilian public assets. Interest is by far the most important. The other is the result of the privileges of the public bureaucracy. When I was carrying out administrative reform as a minister under Fernando Henrique, I tried to limit this second problem. At the time, I came up with the idea of using the salaries of Supreme Court justices, without any perks, as a ceiling for public service remuneration. We managed to apply this for some time, but the perks soon reappeared—this time, of course, duly “legalized” by the Supreme Court. In any case, the privileges of the high bureaucracy are pocket change compared to interest.

   MS: Continuing with the topic of monetary policy, what about the current inflation target? Should it be higher? 

   BP: It should be higher, without a doubt. Inflation is not a good thing, but 5 percent inflation is normal in a country like Brazil. The economy is capable of adjusting to this level, which would even allow for reasonable adjustments in relative prices. This would make the Central Bank’s job easier. 

   You asked me what I thought about the Central Bank’s actions. Although this latest interest rate hike was somewhat abrupt, I think Galípolo did more or less what he had to do, because inflation was rising. As we discussed, the Central Bank’s work is constrained by factors that determine a kind of floor for Brazilian interest rates. This floor also has another consequence. There are countries that fight inflation by raising real interest rates from 0 or 1 percent to 3 percent, for example. Although this is a large increase, it is only two or three percentage points. In Brazil, to combat inflation, the real interest rate is raised by four or five percentage points. 

   MS: Why is the transmission of monetary policy weak?

   BP: You can do all the econometric studies you want, but this is a consequence of the factors that establish the basis for real interest rates. Instead of talking about transmission mechanisms, I usually put the question in simpler terms: it’s one thing to go from 1 percent, it’s another thing to go from 5 percent.

   MS: In 2023 and 2024, Brazil’s average annual growth was 3.3 percent, with an average per capita growth of 2.9 percent. This is much higher than the figure recorded in the period from 2015 to 2022, when GDP was almost stagnant, with an average annual growth of 0.2 percent. How do you interpret this recovery?

   BP: Since 1999, after leaving Fernando Henrique’s government, I have been talking about the near stagnation of the Brazilian economy. But the 2.9 percent per capita growth you pointed out cannot be called near stagnation. This figure surprised economists in general. Projections have failed multiple times in the last three years because it is a really difficult issue to explain. 

   Unlike in previous periods, the last ten years have been relatively free from Dutch Disease, largely because the price of commodities exports is not high, which means that the exchange rate hasn’t risen significantly and so domestic industry has remained competitive. Prior to that, Brazil did experience two recent cycles of Dutch Disease: the first, which began in the last decade of the last century, ended in the middle of the first decade of this century, and the second ended in 2015. Since then, the cycle has stalled and the exchange rate has remained at a reasonable level for industry; it has neither increased nor contracted. Unless I am mistaken, the industry’s share of GDP is more or less stable at around 11 percent.

   That said, regarding growth in 2023 and 2024, the only explanation I can come up with right now is that increased fiscal spending has led to increased demand. Under the Bolsonaro administration, and thanks to the pandemic, public spending increased substantially. Under the current Lula administration, there has been another increase to meet campaign promises. These are demand-side factors that provide a greater stimulus to the economy. 

   The problem is that, if this analysis is correct, it could foster a populist outlook for the economy. Although the short-term results are positive, eventual mismanagement of public accounts could end up not only reversing these effects but also undermining the very possibility of adopting a long-term development project.3N.E.: Historical cycles of economic populism in Brazil, on the left and right, have been analyzed by Bresser-Pereira at various points in his intellectual career. The book Populismo econômico: ortodoxia, desenvolvimentismo e populismo na América Latina (Economic Populism: Orthodoxy, Developmentalism, and Populism in Latin America), edited by the interviewee and published in 1991, is a seminal work that can be consulted (<)a href='https://www.bresserpereira.org.br/books/populismo-economico/000-populismo-economico.pdf'(>)here(<)/a(>). The budget needs to account for expenses such as those that have marked the recent period, but not only that. We spoke earlier about the importance of a small nominal deficit—not zero, but small—rather than a large primary surplus for development. The primary result, although it has some logic in terms of imposing limits on public debt growth, also has the ideological element of hiding interest. I advocate the adoption of the nominal result as a criterion because it is obviously essential that we pay less interest. But it is also important that there is fiscal space for public investment. 

   hf: Could you talk more about the relationship between exchange-rate policy and development in Brazil?

   BP: Between 1950 and 1980, Brazil grew extraordinarily. After Japan, it was the fastest-growing country in the world. The exchange rate was controlled during this period. Tariffs were one of the main mechanisms. Since the 1958 tariff law, we have adopted very high tariff barriers, which have acted as an instrument of currency depreciation. Before that, we used import-control mechanisms, currency auctions, and exchange-rate control systems.

   Of all the variables that influence economic development, in my view, the exchange rate is one of the most important. The most important is the rate of profit: without profit, there is no capitalism. There must be a reasonable rate of profit for there to be investment. The interest rate is important, of course, but, as we discussed, the Central Bank operates within a certain framework. In short, the government needs an exchange-rate policy. 

   There are two main causes for currency appreciation above the healthy limit for domestic industry. One is Dutch Disease, which is cyclical in nature. The other, also central to the theory of new developmentalism, is the current account deficit. When there is a current account deficit, there is necessarily a corresponding appreciation of the exchange rate, because it means that, in liquid terms, there is more capital coming in than going out. 

   The current account deficit must be reduced in some way. It is possible to reduce it without an inflow of capital by reducing reserves. But assuming that the government does not intend to touch the reserves, the country needs to adopt a policy aimed at eliminating the current account deficit. If the current account is consumption, a current account deficit is extra consumption. In other words, the country is consuming more than it produces. Eliminating the deficit therefore means tightening the belt. This means reducing wages. This is something that can only be done at the beginning of a government’s term, never at the end. 

   It turns out that in Brazil (and in Latin America in general), there is a religious belief that a current account deficit is good because it means being able to increase foreign savings. At the beginning of Fernando Henrique’s administration, the question of what development strategy was to be adopted was a big issue. The answer was very simple: increase foreign savings. One of the fundamental pillars of the new development, however, is to show that there is no sustainable growth with foreign savings, because this appreciates the exchange rate and undermines the competitiveness of domestic industry. 

   I recently published a new book, called National Project Against Near Stagnation (2025), arguing two things. First, the Ministry of Finance must recognize that Brazil is susceptible to the Dutch Disease—even if it is not manifesting itself now—and therefore, if there is a new cycle of commodity price increases, it must do its best to prevent damage to industry. Second, the Ministry of Finance should have at least a small department dedicated to exchange rate policy, i.e., that the ministry should be concerned with having a reasonable degree of control over the exchange rate. 

   So far in Lula’s third term, however, nothing has been done in this regard, mainly because the government already faces so many problems with the “market” that an exchange-rate policy of any kind could become another source of conflict. There is a mistake, however, in this political calculation: it is impossible to win over the financial market. The government has just learned a lesson in this regard. 

   ms: In this context, how do you analyze the current government’s resumption of industrial policy, represented by programs such as Nova Indústria Brasil (New Industry Brazil) and the new Growth Acceleration Program (PAC)? Can this be interpreted as a first step toward the adoption of a national development project in a broader sense?

   BP: Industrial policy can only be made affordable with the application of tariffs. In this respect, customs tariffs are the most important industrial policy in the history of capitalism. Every developed country, starting with England, developed by adopting high customs tariffs. But in Brazil and Latin America, the brainwashing carried out by economic liberalism was so brutal that it made economists forget this. They continue to argue in favor of industrial policy, but they do not include tariffs in their framework. It’s ridiculous. Without tariffs, industrial policy is nothing more than subsidies. Tariffs are not expensive: they are a tax that you create. Not to be used like Trump, of course, but it is a tool that can be used by Brazil. 

   I support the government, but I can’t say that it is trying to spearhead a development project. Brazil continues to be dominated by economic liberalism. The United States itself abandoned this type of ideology some time ago, Europe is more or less on the same path, but we remain trapped by it. 

   Brazil has not had a development policy for a long time. The military had one. Getúlio Vargas had one. But since the 1980s—with some exceptions during Lula’s first terms, because there was a major effort to expand social policy, although this did not exactly constitute a development strategy—we have not had a development policy. 

   hf: Do current historical conditions make it impossible to pursue a growth agenda, as Brazil did so successfully until the 1980s?

   BP: I don’t think they make it impossible, but I am convinced that Brazil will only emerge from this situation—which in my view is still one of near stagnation—when it abandons liberalism. Although there has been some growth in the last three years, the fact is that there is no such thing as a genuine development project simply because there is no liberal development project: the liberal project is to do nothing. Our trade and financial liberalization has been a disaster. In addition, there is a question of political economy: governments go through elections, they face Congress. For a development project to be viable, society as a whole must be united around it. 

   ms: When Lula was elected, the president of the United States was Joe Biden, who wanted to make the country “a modern supply-driven economy,” in the words of Janet Yellen.

   BP: Clearly developmentalist.

   ms: Exactly. But two years later, halfway through Lula’s presidential term, Trump took office. Do you think there was a break in the dynamic of Brazil’s external integration between the Biden and Trump administrations? 

   BP: In this recent period, there has been a political shift in the United States. If, in the 1980s, there was a neoliberal shift, between 2017 and 2022 there was a fundamentally developmentalist shift, mainly due to China’s success. In my view, this is the most important factor to consider. I don’t see a major break between Biden and Trump. It could be said that the shift continues today, but in Trump’s case, I prefer to characterize his politics as interventionist. It is a chaotic administration—so much so that it has earned the nickname TACO (Trump Always Chickens Out)4 In Portuguese, “Trump always cowers.”—constantly backtracking on its decisions.

   hf: Does this developmental shift in the United States change the conditions for policy-making in Brazil?

   BP:  It is to be expected that, as usual, after eight or ten years, Brazil will realize that economic liberalism does not work. Lula and Haddad know this very well, but it is important that Congress—which has become oriented toward rentierism—understands this issue, as well as business leaders. Then, perhaps, the conditions would be in place for a development project to be formed, though this will take time. Brazil’s reaction is always very slow. This is because we are a colony. 

   Until 1822, Brazil was a colonial country. Then, until 1930, it was semi-colonial. It became an independent country in the 1930s, though only until 1990, when Brazil, which had previously been subject to England and France, became subject to the United States. It was a return to semi-colonial status. 

   And since the 1990s, neoliberalism has been the fundamental instrument of imperialism to prevent Brazil’s development. There was a last attempt at development during the Sarney administration (1985–90). I, who was Minister of Finance for a little over seven months, ended up being defeated, to some extent, by the developmentists themselves. Sarney no longer wanted to make fiscal adjustments, and I saw that I had no chance of remaining in the government, so I left. And then, in a year and a half and in grand style, Maílson [da Nóbrega] led Brazil into a period of hyperinflation. In the last month of the Sarney administration, inflation was at 82 percent.

   Returning to the subject, it is Brazil’s status as semi-colonial country that explains its slow and submissive economic culture, happy to adopt foreign values—in this case, neoliberal values. For a submissive country, getting rid of these values is a slow and difficult process, whereas the country that subjugates, being a metropolis, can do so more quickly.

   hf: How might your concept of the new developmentalism illuminate a path forward for Brazil?

   BP: I formulated a detailed answer to this question in the appendix to my book O novo desenvolvimentismo (The New Developmentalism), published last year. There, I start with the 1970s because I believe that was the last decade in which the Brazilian economy adequately grew. It could be said that during Lula’s first terms in office, the country grew reasonably well, but this was in large part thanks to the commodity boom. In my view, two fundamental issues separate the current economic conditions from those that were driving growth into the 1970s.

   The first is that since the 1970s, public investment has fallen sharply—because public savings have fallen sharply. In the 1970s, public savings stood at around 4 percent. By the early 1980s, this figure had plummeted to -2 percent. In other words, in that period alone, there was a six percentage point drop, which is crazy. The impact of this on Brazilian growth was enormous. Public savings are important because the state needs to be able to save in order to invest, especially in monopolistic sectors like infrastructure. I am not advocating nationalization in general, but I do believe that the state should invest in monopolistic sectors. 

   The second is the dynamics of the exchange rate. There was a lot of privatization in the 1980s, which contributed to a reduction in public investment and, in theory, should have stimulated the private sector to increase its investment rate. But public investment fell and the private sector remained the same, with no increase at all. This is due to the exchange rate. The exchange rate appreciated so much that, at various times, it made private investment unviable. If, for the public sector, the fiscal issue is the key variable, for the private sector, it is the exchange rate. That is why it is necessary to have an exchange-rate policy that takes into account both the current account deficit and possible cycles of Dutch Disease. 

   In macroeconomic terms, the new developmentalism advocates for a decent exchange-rate policy that keeps the exchange rate reasonably competitive for industry and substantially higher public investment. 

   Other than that, from a political economy perspective, a national development project—in Brazil, Latin America, or any underdeveloped country—must necessarily be anti-imperialist, because it must combat economic liberalism. Furtado and Prebisch were anti-imperialist. They were at the Economic Commission for Latin America and the Caribbean (ECLAC), a United Nations (UN) agency, so they used terms like “center” and “periphery,” but the fight was against economic liberalism—against the empire, therefore. 

   Look, I myself believe that the market is better than the state at coordinating the entire economic system of competitive companies. But we must understand that this is not enough, that the state needs to intervene moderately in the economy to develop and direct development. And that implies adopting an anti-imperialist policy. The import-substitution policy in Brazil was anti-imperialist. Since we ceased to be independent, however, the main instrument of imperialism to block our development has been economic liberalism.

   hf: Is it necessary to address the issue of dependency?

   BP: After I left Fernando Henrique’s government, I decided to reread Dependency and Development in Latin America. It was only then that I really discovered what associated dependency was. Soon after, I published an article called “From ISEB and ECLAC to Dependency Theory,” the inaugural work of my critique of dependence theory. 

   The historical fact that confused Fernando Henrique, as it had previously confused Hélio Jaguaribe, was this: at the time of import substitution, Brazilian anti-imperialists—or nationalists—said that the United States—the “center”—was against Brazil’s industrialization. However, starting in the 1950s, large American companies began to invest in Brazil, followed by European and Japanese companies. Given this, how could one explain that the center was against the industrialization of the periphery? Jaguaribe attempted an answer, and ten years later, Fernando Henrique concluded the reasoning as follows: if the role of imperialism is to prevent the industrialization of underdeveloped countries, the fact that companies from the “center” were investing in Brazil could only mean that there was no imperialism, because these companies were helping the country to industrialize.

   It is linear reasoning; not dialectical, not intelligent. The big mistake in this explanation is that it ignores the fact that American companies and the American state are not the same thing. Companies need profits and seek profits wherever they can. When Brazil and other countries in Latin America adopted a policy of industrialization through import substitution, they raised customs tariffs sharply. This caused foreign companies to lose market share. The only way for these foreign companies to recover part of this market was to invest in the industry of these countries. However, private American business interests and the interests of the US government did not, of course, perfectly align. And the government was not (and is not) interested in the industrialization and development of Brazil. For me, this is the blind spot in Fernando Henrique’s dependency theory. Apart from that, in practice, it also became clear that growth based on foreign savings does not work.

7. Experiments in American Unions

   July 16, 2025 7:52 pm Comments Off on Experiments in American Unions

   What has become of the “hot labor summers” of the Biden years? Since Workers United publicly launched its organizing drive at Starbucks in August 2021, the union has won in 618 of the 727 stores where representation elections occurred. Since the Amazon Labor Union (ALU) won its election in April 2022, it has affiliated with the International Brotherhood of Teamsters, which claims 10,000 members at ten Amazon facilities across the US. In February 2024, United Auto Workers President Shawn Fain announced a $40 million, two-year organizing drive to expand the union’s presence among the predominately unorganized US auto assembly and parts makers clustered in the South, which led to the UAW winning elections at Volkswagen and GM-Ultium, both in Tennessee.

   However, despite the apparent upsurge in labor militancy in recent years, the share of the US workforce represented by labor unions declined during the Biden administration—from 10.3 percent in 2021 to 9.9 percent in 2024. Starbucks has fired workers for their union sympathies at 120 stores, according to government filings by Workers United, and has repeatedly refused to bargain with the union. Amazon has fired leaders of the ALU and countless others across the country, and regularly threatened to do so where workers have sought legal recognition. Both Mercedes-Benz and Ford-BlueOval, the Kentucky battery factory joint venture, have responded to workers’ petitions for union representation by firing the leaders organizing the effort. Having mustered the conviction to engage in collective bargaining, American workers today habitually confront corporate offices committed to discriminatory retaliation in the form of firing, disciplinary action, threats, and refusals.

   Correcting such “inequality of bargaining power” between workers and employers was the original purpose of the National Labor Relations Act (NLRA), sponsored by New York Senator Robert Wagner and passed by Congress in 1935. The language of that statute made it national policy to “encourag[e] the practice and procedure of collective bargaining.” Workers lacking “full freedom of association or actual liberty of contract,” the law’s preamble explained, impeded the public interest in economic progress “by depressing wage rates and the purchasing power of wage earners.” The entire history of labor’s decline from the 1950s through the period of neoliberalism—from the age of McCarthyism to Trump—can be understood through the fate of this statute.1The NLRA has been amended twice. The 1947 Taft-Hartley amendments restricted bargaining tactics such as secondary boycotts, expanded employer rights to fight against unions, and legalized state-level bans on union-shop contract language (so-called “right-to-work” laws.) The 1959 Landrum-Griffin amendments required unions to submit accounting statements to the Department of Labor and further regulated their internal governance. During the 1960s and 1970s, repealing Taft-Hartley and strengthening penalties against employers’ violations repeatedly produced high-profile legislative showdowns. During the 1990s and 2000s, attempts to revive the NLRA continued to be a central partisan issue, most recently with Obama’s campaign support for the Employee Free Choice Act (EFCA) and Biden’s campaign support for the Protecting the Right to Organize (PRO) Act.

   For decades since, it has been pro forma, a “best practice” of the corporate HR Department, to violate the Act on the assumption that delaying any hearings and appealing any decisions that result will maintain the status quo of unilateral managerial control. In the second Trump administration, this trend has reached its local terminus in the five-month hiatus at the National Labor Relations Board (NLRB) without quorum. In March, the White House nominated for the position of NLRB General Counsel, the agency’s staff director, Crystal Carey, a partner at the management-side labor law firm Morgan Lewis whose clients include Amazon, Apple, SpaceX, and Trader Joes. In July, the US Chamber of Commerce prematurely announced, before the White House itself, the administration’s nominations for the empty NLRB seats—one a career agency official and the other chief counsel for labor relations at Boeing, a company whose nonunion growth has had infamous consequences for airline safety.

   At a moment when all national political rhetoric is uttered in reference to “the working class,” the actual institutions that embody workers’ organized power have become incongruously absent from the journalistic scene. As the old New Deal system affords workers a narrowing sliver of opportunity for collective bargaining, many of the big fights today are taking place outside the NLRB process, in labor-led legislative struggles, among worker centers in alliance with unions, or in state-level public sectors. To discuss this situation, and what workers have been doing in the new age of working-class politics, Phenomenal World spoke with Benjamin Fong, the Associate Director for the Center for Work and Democracy at Arizona State University, which earlier this year published a comprehensive report on alternative organizing strategies beyond the NLRB.

   An interview with Ben Fong

   ANDREW ELROD: The National Labor Relations Board was created by the National Labor Relations Act to enforce labor law in the private sector—receive and investigate charges of alleged violations, issue complaints, and certify unions. What is the status of the NLRB today and its role as a regulator in capital-labor conflict? How did it transform under the Biden administration?

   BEN FONG: Though it is still formally available to most workers, the NLRB has been hugely skewed by the anti-union practices of corporate America. Employers campaign aggressively against the union, illegally fire or threaten to fire workers, and litigate who is eligible to participate in the election, thereby manipulating the size and scope of the bargaining unit. The chances of successfully seeking an election and bargaining a contract without a strike are in reality really slim.

   Take the example of Amazon: a highly publicized election took place at one of its fulfillment centers in 2022 in Staten Island. It was a remarkable campaign, but the company has still not recognized the union and is nowhere near bargaining. Instead, Amazon’s legal team actively delays the process until momentum dies and the workers fragment. Though originally intended to protect workers’ ability to undertake collective action, today’s NLRA primarily benefits employers.

   Another obstacle for unions is the sheer cost required for Board certification, which is how workers can use the law to obligate an employer to recognize their union. Some estimate that the cost of organizing a single worker through the NLRB election process is something like $3,000. If a union’s got a strong organizing department, it might be closer to $1,000 per worker—that’s the per-worker cost of a union recognition campaign: organizers’ salaries, printed and digital materials, office rent, etc. With a labor force of 145 million workers in the US, increasing union density by just 1 percent would require organizing roughly a million and a half new workers, not accounting for labor market growth. Even taking the lower estimate, that puts the cost of a 1 percent union density increase at a billion and a half dollars.

   Biden’s NLRB made a number of changes that were great for labor. It processed elections far quicker and therefore benefited trade unions. It passed the Cemex decision and the various joint employer decisions.2Issued in August 2023, the Board’s decision in (<)em(>)Cemex Construction Materials Pacific, LLC(<)/em(>) obligates employers to either commence bargaining immediately or promptly petition for an election when a union demonstrates majority support for representation. If the employer commits an unfair labor practice during the resulting election, the Board will dispense with the election and order the employer to recognize and bargain with the union. The Board’s joint-employer rules extend NLRA obligations over companies that control subcontractors to the employees of those subcontractors. The NLRB issued a notice of proposed rulemaking on joint employer status in September 2022, issued the final rule in October 2023, only for the Eastern District of Texas to strike it down in March 2024. The NLRB issued two joint-employer complaints against Amazon in August and September 2024, with hearings and subsequent complaints scheduled for March and August. In September 2024, Amazon, represented by the law firm Hunton Andrews Kurth, sued the NLRB in the Eastern District of Texas alleging it to be an unconstitutional agency. But even under Biden, numbers from the Bureau of Labor Statistics reflect union density decline. This means that labor’s problems are not only partisan—the existing system harms labor even under a friendly administration and will do so especially under a hostile Republican one.

   The impracticality of organizing through the NLRB should lead us to consider two things. First, the scale of existing organizing commitments is nowhere near what it would take to actually address labor’s issues. For example, after a remarkable strike in 2023 the new UAW administration announced a commitment of $40 million for organizing over two years. This is a real transformation of the UAW, but it is hardly enough to keep up with labor market growth—remember, a conservative estimate is $1 billion annually. In 2022, AFL-CIO President Liz Shuler set an organizing target of one million members over ten years. That’s a goal that, if met, simply assures labor’s continued decline.

   In addition to putting existing commitments in a different light, I think what the resource question also shows is that labor needs to find new avenues of possibility in organizing, because it does take a tremendous commitment of resources—much more than is being committed right now. That money also needs to be used in smarter ways that render greater gains given the financial outlay.

   AE: How have workers begun to organize around the constraints of the NLRB?

   BF: In our report we review five strategies, each with a representative case study or two. There’s an additional section on what we call “promising innovations”—fairly unique experiments in worker empowerment that don’t fit neatly into any existing strategy. The first strategy we review is sectoral bargaining backed by legislation, which has been pioneered most prominently in recent years by the Service Employees International Union (SEIU). This refers to instances where an existing union has enough political power, or builds enough political power, to successfully lobby for a legal framework that allows the union to represent some new category of workers. A more recent example of this is California’s Fast Food Wage Board, which is an extension of SEIU’s decade-old Fight for $15 campaign.

   Fight for $15 grew out of a broader SEIU initiative called the Fight for a Fair Economy, which was part of a renewed attempt within SEIU to devise new organizing efforts in the aftermath of the financial crisis. As the name implies, the Fight for $15 campaign was an effort to get local $15 minimum wage ordinances widely passed. Fast food was a key target of the campaign from the beginning. In 2021 and 2022, SEIU led a push in the California legislature for AB 257, which was successful in creating a Fast Food Council. The powers of the board, as enacted in AB 257, were pretty sweeping: to issue, amend, or repeal any rules and regulations necessary to establish minimum fast food working standards. In the entire state of California it affected more than half a million workers. The industry mobilized against this while SEIU was pushing for further legislation to hold corporate and franchise owners jointly liable for workplace abuses (at the moment, the parent company is often not responsible for what happens in franchise cases). This would have been a huge blow to the power of major corporations in the fast food industry. But in 2023 SEIU drew back that bill in exchange for an immediate wage bump.

   In the political back and forth, the replacement legislation kept the Fast Food Council. This is an agency that exists in California. There are two fast-food worker representatives on it and two SEIU staff members, as well as business representatives and government officials. This is a classic corporatist arrangement, wherein representatives of government, business, and labor all sit on a common board and try to negotiate industry standards. Certain left labor elements have raised concerns around similar kinds of sectoral arrangements in other industries. While SEIU is very good at novel campaigns, they have been criticized for failing to involve their rank and file at a decision-making level. Political deals at that level almost by necessity cannot not involve the 500,000 people who are not already organized into a union.

   But the vociferous reaction against AB 257 by the restaurant industry suggests that the union had identified a real point of leverage within the industry. The resulting board is not necessarily aimed at winning a union on the front end, but leveraging the Fast Food Council to create something like a really large, semi-public sector unit on the back end. So this campaign wasn’t just successful at raising the minimum wage for fast food workers in California to $20 an hour—it also opened the way for leveraging that Council to create some kind of actual union apparatus. Because under the current NLRA, and without a joint-employer law, there’s no legal framework wherein you could create something like a large fast food workers union within the entire state of California.

   AE: In the report, you suggest that the Fast Food Council was partially inspired by a very different industry—long-term home care, which is largely Medicaid-financed home health aides, often family members, reimbursed by the state. How did that earlier experience in representing long-term healthcare workers inform the union’s strategies?

   BF: Home care work is an interesting case, because it’s a non-congregate workplace, and oftentimes people’s direct employers are individual patients. It is also semi-public in nature, given the predominance of Medicaid reimbursements for home care workers. SEIU looked at this in the late-90s and early 2000s, when it was reconsidering national organizing strategies. From a traditional union organizing perspective, it doesn’t make much sense to target individuals as employers. But given the predominance of public funds that goes to this workforce, SEIU concluded that the state could bargain directly with the entire sector of workers to improve their working conditions.

   The first place they successfully executed this was on the West Coast, with legislation in California, Oregon, and then Washington. It was a slow process. When the home care union in Washington, SEIU 775, first formed, it was a couple thousand people. But it eventually grew to represent something like 95 percent plus of the home care sector in the state. That was a huge win. Through these laws granting bargaining rights to these quasi public-sector unions, lots and lots of home care workers have unionized with SEIU. Home care union membership today is 75,000 in California, 50,000 in Oregon, and 50,000 in Washington.

   During the Andy Stern years of SEIU, home care worker organizing accounted for most of the gains in the union. The key point of leverage lay in creating some kind of state infrastructure whereby you might imagine the possible formation of a union through means other than an NLRB election. Here they expanded the public sector bargaining framework as it stands for existing unions to a new class of workers. And I think the hope with the Fast Food Council is that it can create a similar kind of state infrastructure also leveraged for the creation of a large quasi-public sector union.

   AE: What about areas where these legislative approaches to sectoral bargaining are not possible? What if the employers are already organized on paper but not bargaining centrally?

   BF: Legislation to create sectoral bargaining arrangements is only practicable in blue states and municipalities like New York and California. There’s certainly less experimentation on behalf of workers who don’t live in those areas, but you do see some unique and powerful examples. One that we spotlight in the report is Arizona Educators United, AEU—the driving force behind the 2018 teacher strike in that state, which was the last teachers strike to occur during that wave of momentum in 2018, before the Red for Ed movement shifted to blue cities. The sequence was West Virginia, Oklahoma, and then Arizona that year.

   The actual teachers union in Arizona is the Arizona Education Association, the AEA, which traditionally holds the lobbying relationship with the State of Arizona. The AEU was a parallel teachers group that started on Facebook and went on to create an external grassroots structure which undertook a remarkable organizing drive. In the space of eight weeks, AEU won a strike authorization vote from 57,000 educators. This was at a time when a majority of Arizona teachers weren’t members of the union—just 20,000 out of 60,000 total teachers in the state. But basically everyone in the industry voted in the strike authorization. The strike itself lasted six work days. Before the strike, the state wasn’t willing to consider anything more than a 1 percent pay increase, and afterwards, they won a 20 percent pay increase.

   What we found interesting about AEU is that it was, on the one hand, a clear example of what happens when you have very smart, dedicated rank-and-file leaders interested in organizing people around very immediate fights. On the other hand, it didn’t really fit the classic model of the rank-and file-strategy as it’s been articulated by many different left labor commentators. The classic articulations of the rank-and-file strategy are about fixing representation gaps within unions, with a dedicated core of rank-and-file organizers leading their union to be more militant. While the AEA was supportive of the drive from the beginning, that support was a very secondary consideration in the action.

   So we think the AEU mobilization presents a kind of interesting test case for rank and file theorists: it brought a whole bunch of people that weren’t in the union into the process of strike preparation, rather than attempt new organizing on the back of a successful contract campaign or an internal election win. How does that happen? We argue it speaks to the power of rank-and-file mobilization in the kind of unconstrained spaces where organized labor is traditionally very weak.

   It was interesting to look at membership bumps in years after the 2018 teachers strike wave. In Arizona, you saw a 10 percent membership bump the next year. I don’t think that’s lasted, but a lot has happened in the meantime that can’t be pinned on the effects of the 2018 strike. So as inspiring as the Arizona teacher strike was, it also presents something of a cautionary tale. After the settlement, the energy of the teacher’s strike sort of went in two ways. The first was that AEU started a national organization, National Educators United, which was an attempt to maintain that external grassroots structure outside of formal union governance. This didn’t really grow beyond its original Arizona members. The other, more successful way was toward a ballot initiative, Prop 208, which was an initiative to tax the rich to fund public education. This was the union’s preferred path. I remember Joe Thomas, who was the president of the union at the time, saying “Okay, we did this now let’s go get some signatures for this ballot initiative.” They had that in their back pocket from the beginning. It was successful in 2020, and the teachers won a tax increase of 3.5 percent on income above $250,000.

   But the Arizona Supreme Court struck down the initiative and reversed the victory. The ballot campaign was successful, but demonstrations of rank-and-file power and legislative maneuvering through ballot initiatives are two different processes. At the end of the day, Arizona teachers didn’t control the latter, and so, thanks to the legislature and the courts, the practical gains that were won through those means have essentially been reversed.

   AE: The construction industry seems to sit interestingly between these two poles—the completely open-shop fast food industry on one end and on the other, K–12 public education, where collective bargaining has been legally protected in many places. Construction is one of the oldest unionized industries but, unlike many traditional labor strongholds, it’s an industry that today has more employment than ever. There has been no job loss due to “de-industrialization” in construction.

   At the same time, most of the growth of construction employment has been outside of the unions. The building trades today are islands of collective bargaining, centered on large commercial and government projects, surrounded by an ocean of individual bargaining in private residential projects. That nonunion market is characterized by often-fraudulent employment arrangements and a real race to the bottom in terms of wages and standards. And it’s begun to flood into commercial projects where unions survive.

   BF: Construction is an industry that highlights yet another important development in national labor strategy: the cooperative relationship between trade unions and workers’ centers. Take the example of Minneapolis. As in many cities, Minneapolis’s construction workforce is bifurcated: the downtown urban development projects are largely unionized while the suburban and exurban smaller projects are a lot of fly-by-night contractors employing a predominantly immigrant workforce. The industry is divided and the building trades understandably don’t really know how to organize in the latter context. Many of these construction contractors are deeply unreliable.

   This is where worker centers can potentially play a role. The particular construction industry case study we looked at was Centro de Trabajadores Unidos en La Lucha (CTUL), a worker center founded in 2007 in Minneapolis. Traditionally, worker centers are thought to engage the vulnerable workers that unions either don’t or can’t organize.

   What’s interesting about CTUL is the relationship they’ve built with the area’s labor unions and the organizing niche they’ve filled to bridge the different labor markets dividing union from nonunion employers. To do this, they borrowed from a campaign by the Coalition of Immokalee Workers to organize tomato pickers in Florida. This is the strategy of “worker-driven social responsibility,” which consists of developing industry codes of conduct. The name “worker-driven social responsibility” has become common to distinguish these projects from “corporate social responsibility” campaigns where the employers develop the codes without workers’ independent participation.

   In Minneapolis, CTUL has developed industry codes for the area’s construction industry through a separate organization, the Building Dignity and Respect Standards Council, which is a membership organization for developers in the Twin Cities. The BDR Standards Council drafts priorities for the construction industry, working with both nonunion workers and with the unions. They get developers to agree to certain standards that are then enforced through monitoring and compliance organizations. Many of the standards are simply the law, but the monitoring and compliance allows the BDR Standards Council to bring violations to the city, which can then enforce the law where previously these parts of the industry were invisible to the authorities.

   AE: How do they get the agreement? I could envision a worker center in a very different place, Houston for example, where there’s no desire on the part of an employer to acquiesce to any standard, much less voluntary monitoring by a potential whistle blower. 

   BF: Looking back to the classic iterations of these social responsibility campaigns, such as the tomato pickers in Immokalee, Florida, it’s primarily a brand image problem. For the tomato pickers, the brands were some of the biggest grocery and food service companies—Kroger, Walmart, Taco Bell, et cetera. The campaign was successful through attempting to tarnish the brand images of these big corporations and getting them to agree to industry standards that are pennies for these big corporations. In the case of Immokalee, it was literally a penny a pound extra that the companies agreed to pay. Dairy farm workers who supply Ben and Jerry’s had a similar tactic: they got Ben and Jerry’s to agree to sourcing standards. You attack the brand until they recognize their ethical responsibilities.

   But as your question implies, this is also the essential problem with worker-driven social responsibility. You can only get so much from tarnishing a company’s brand at the end of the day. In Florida’s tomato fields, it did absolutely raise working conditions. But it didn’t give the workers a union. The gains were pretty minimal and limited. A similar thing is happening with the BDR Standards Council in Minneapolis. In construction, people don’t relate to real-estate developers in the same way that they do to Taco Bell, right? The leverage of the “corporate campaign” is pretty minimal and the amount of possible change even more limited.

   The interesting innovation here is not the standards themselves, but how those standards help consolidate an industry to make it organizable. The level of competition is so low in some of these exurban and suburban construction developments that the trade-off for getting in trouble with the city for workplace abuses is enough that the construction companies are willing to sign these agreements. It effectively edges out the worst low-road contractors and brings standards up in the unorganized parts of the construction market. But importantly for our study, the marginal improvements under the codes also make it more possible for unions to consider organizing in that part of the market.

   To understand how this works, it helps to know a little bit of Minneapolis’s recent labor history. One of CTUL’s early campaigns was a corporate campaign against large retailers for their janitorial subcontracting standards. They had a campaign on Target, which was contracting with something like twenty-six different janitorial services. This was a nightmare from a union organizer’s perspective—this is why large corporations pursue such workplace fissuring in the first place, to keep out unions and drive down labor costs. As a worker center, CTUL could go after parent companies in the way that unions can’t, given the ban on secondary boycotts and all the constrictions of the NLRA. You see these kinds of things in a lot of cities: NGO-driven worker centers organizing corporate campaigns to raise the floor for certain sets of workers or industries. That’s nothing new. This is what CTUL did in getting Target, among other companies, to sign certain contracts around working standards for their janitorial staff.

   The codes themselves aren’t anything revolutionary. But what CTUL saw after they got Target to agree to contracting standards for their janitorial companies was that the set of twenty-six subcontractors had whittled down to just four companies. The codes drove out the worst fly-by-night janitorial contractors, and at this point, SEIU Local 26, with whom CTUL has a solid relationship, decided to go in and try to unionize the janitors. They did, and they were successful in organizing those janitors into the local.

   Creating the same dynamic is one goal of the BDR Standards Council. Industry codes of conduct aren’t providing much leverage at the end of the day. What they do provide enough leverage to do, however, is to get out some of the worst low road contractors so as to provide a situation where a workforce is potentially more organizable. You could say it’s an attempt to use local state capacity around enforcement to create better conditions for unionization. And in that sense, it’s similar to SEIU’s sectoral bargaining efforts in California.

   CTUL is pretty unique among worker centers for having developed really good relationships with unions. They’re constantly talking to the building trades, as they have with SEIU Local 26. There’s a partnership there that allows a kind of leverage for unions. And it speaks to the kind of possibilities that a diverse organizational ecosystem in certain municipalities can produce.

   AE: Thinking across all of these examples, those that resulted in the growth of durable workers’ power are ultimately those where workers were able to organize themselves and conduct strikes. But reminding us of this truth doesn’t quite help us understand how to make mass collective action happen. And in suggesting other approaches—worker-driven social responsibility or corporatist political deals or minority unionism—we lose sight of the kind of power that can actually arrest our drift into the kind of anarchy that defines much of the American economy these days.

   BF: One important thing to emphasize is that this is a survey of existing practices, of what unions or worker organizations are attempting to do to empower workers outside of just running more NLRB recognition campaigns. None of the strategies currently being employed by unions or workers offer the single key to labor revitalization, and none of them is wholly promising on its own. There are always conditions. The home care worker organizing that the SEIU did in the nineties and early aughts was remarkably successful in one sense, but it was limited to the West Coast—it was rebuffed in Ohio, Wisconsin, and Michigan.

   Nevertheless, it is important to understand the sort of strategies being developed on the ground and the creative ways in which the floor on labor organizing is being raised for certain groups of workers who were until recently unorganized. If you look at the case of the CWA’s tech worker organizing project, which we do, you could say that they were successful in organizing Zenimax (a Microsoft contractor) workers because they were adequately prepared for a strike. That’s true. But that project, through the Alphabet Workers Union, also had 1 percent of the salaries of Google employees to help fund the Zenimax organizing. That’s an interesting set of conditions made possible by tweaking the minority union form a bit. Something new was possible where it wasn’t before.

   The hope in pointing to these things is to start a larger strategic conversation about labor’s impasse. So much of the discussion about organized labor’s problems concerns traditional tactics: how to organize better or worse, given existing constraints of employer retaliation and repression. That’s one very important part of the conversation, but it’s not the only part of the conversation. Labor’s been playing a losing game, arguably for forty years now. And the hope is to entertain strategic reconsiderations that aren’t so much highlighted in academic and popular labor discussions. What we hope to do in each case is not to hold them up as a shining example that we ought to follow. It is to say that under certain conditions this works and to understand those conditions. What are the conditions under which it might be possible to scale and what are the conditions under which it might become something sustainable over time so that it can endure during fallow periods?

8. Common Characteristics

   July 10, 2025 6:31 am Comments Off on Common Characteristics

   For the United States and its allies, China’s rise from a low-cost manufacturing center to the world’s leading industrial and frontier tech power poses a fundamental challenge to the post-war international order. Intensifying competition over supply chains for critical technologies and strategic sectors reflects a broader struggle to shape the global landscape. For many countries in the global South, China is both an economy-shaping importer and a potential model for sovereign development.

   To explore these questions, Phenomenal World editor Maria Sikorski spoke with Xiaoyang Tang, Chair and Professor of the Department of International Relations at Tsinghua University in Beijing and an expert at the China Forum. Their conversation covered China’s development trajectory, the complexities of its state-business relations and their influence on foreign economic engagement, its role in global governance, and its responses to recent geopolitical and geoeconomic shifts.

   An interview with Xiaoyang Tang

   Maria Sikorski: Outside observers have characterized the Chinese development by contrasting it to the “Washington Consensus.” However, in your writing—including your 2021 book—you challenge the notion of a singular “Beijing consensus” by introducing the idea of coevolutionary pragmatism. What does this concept tell us about China’s own history of development, and its approach to other developing nations?

   xiaoyang tang: The Washington Consensus adopted a strict logic of causal mechanisms and attempted to generalize them—it stipulates static variables that should lead to specific results. It identifies a cause-and-effect relationship between factors such as the free market and economic growth.

   The Chinese experience suggests that viewing economic development through this analysis is overly simplistic—and that culture, existing economic institutions, historical economic institutions, style of educational system, form of government, and so on, all must move together in a country’s modernization process.

   I find that the concept of coevolutionary pragmatism best explains this multidimensional and interactive relationship. The form of government is not a determinant factor in economic growth; it is correlated to it. For the economy to grow, the form of government must fit its current economic conditions, and it must adapt as the economy grows. In this type of multidimensional relationship, there is no fixed model for either the government or the economic structure that leads to development. Instead, you have a pragmatic view on how to adjust different factors operating inside a broader system to seek a better functioning relationship between all of them at each stage of development. In contrast to the prescriptions of the Washington Consensus, the search for the right combination of variables will be dynamic across national contexts and across time.

   That is what China has been doing for the last forty or fifty years. Experimentalism and gradual change allowed China to find its fitting combination at each historical period.

   MS: How does China’s history shape its approach to international development and finance? What guides Chinese infrastructure projects abroad and economic cooperation through trade and foreign direct investment?

   XT: When you talk about international development and finance, infrastructure building, trade, and investment all come down to the question of modernization. All non-Western countries were and are forced to follow the Western path because Western modernization had enormous impacts on productive power, and no country could resist it. China learned this over a century-long period. With the 1978 market reforms, China understood that to modernize itself, it needed to foster economic productivity by operating in the global market and placing a new emphasis on infrastructure and technology. China’s approaches to trade, investment, and infrastructure building are all related to this modernization process—to increase productivity through the world market, there must be enough infrastructure to support commodity, labor, and information flows. This exchange of labor, commodities, and information allows production and the economy to scale up, fostering industrialization, which further stimulates the market to expand. This is what drives the Chinese approach to foreign economic engagement.

   MS: Your work has focused on Chinese affairs in Africa. Can you explain how this broad view of Chinese economic development has impacted its activities on the African continent? To what extent has Chinese engagement succeeded in fostering industrial development and structural transformation in Africa, as opposed to merely finding sinks for overcapacity or securing raw materials?

   XT: My research on Sino-African relations began with observing economic partnerships on the ground. At the beginning of the twenty-first century, Sino-African economic cooperation grew so much that it attracted worldwide attention from policymakers, economic actors, and researchers, and I was among the first that had a chance to do field research in the region. I went to Africa for the first time in 2007, and have been working on this for almost twenty years.

   As the most underdeveloped continent in the world, Africa has considerable potential but faces numerous challenges. Many colonial powers and former superpowers, such as the US and the Soviet Union, worked in Africa with various approaches to their bilateral relationships, but they did little to facilitate African development.

   China is now Africa’s number one trade partner; India is number two. This is a story about South-South cooperation broadly, which has to do with the emerging global economic structure. In the twenty-first century, developed economies like Europe and the US share little, if any, common interests with Africa. Their engagement there is limited to providing some aid in exchange for oil and other natural resources.

   When China started working with African nations, though natural resources were an important aspect of cooperation, they were not the only factor. China’s very significant investment in the mining sector, for example, is still less than half that of its Western counterparts. Historic diplomatic ties from the period of decolonization have critically informed these partnerships, and Africa’s incipient industrialization can help Chinese growth. Increasing moves from Western governments to decouple from Chinese trade and saturation in domestic markets force China to seek new growth opportunities. If African countries industrialize, they can become powerful economic partners.

   China invests in infrastructure, assists local factories to establish processing industries for agriculture and the extractive sectors, invests in capacity building and education, and shares the lessons it has learned from its own experience. In Zambia and Malawi, for instance, China-Africa Cotton Co. not only cultivates cotton but has established textile mills and oilseed extraction plants.1Xiaoyang Tang, “Adaptation, innovation, and industrialization: the impact of Chinese investments on skill development in the Zambian and Malawian cotton sectors,” (<)em(>)Journal of Chinese Economic and Business Studies(<)/em(>) 19:4 (2021): 295–313. DOI: 10.1080/14765284.2021.1943734 A decade ago, China Nonferrous Metals Corporation was already developing a mineral processing industrial zone in Zambia’s Chambishi region to enhance the value of raw copper exports.2Deborah Bräutigam, Xiaoyang Tang, “‘Going Global in Groups’: Structural Transformation and China’s Special Economic Zones Overseas,” (<)em(>)World Development(<)/em(>) 63 (2014): 78–91.

   MS: How does the African experience compare to that of other regions in the world where China is conducting economic and diplomatic activities? In the case of Latin America, China is a significant trade partner, but its rapid economic development has also been associated with the “reprimarization” of domestic economies to supply primary products like soya, beef, and raw minerals, and so on.

   XT: Latin America is quite different from Africa. The region used to have much more advanced industrial levels than China, but has experienced deindustrialization over the past decades—a process that was underway even before China’s rise. Latin America’s deindustrialization was driven by the adoption of neoliberal policies in the 1980s and 1990s, when countries abandoned the old structuralist approaches to development. These patterns are extremely different from African countries, many of whom have never had advanced levels of industrial activity. Sociopolitical structures also differ dramatically, as does productivity mechanization, and labor relations in the primary sectors like mining and agriculture. The Latin American puzzle is nothing like the industrialization from scratch underway in many African countries—Latin American nations in many cases already have a modern structure, and now, due to policy changes, they want to revive their industrialization.

   I would say that China’s engagement with Latin America has accelerated in the past decade because Chinese industrialization has reached a level that matches that of Latin America, surpassing the region in some sectors but not in others—Brazil’s airplane manufacturing sector, for instance, is ahead of China’s. That means both partners can find more opportunities to work together. The electric vehicle sector offers a clear example: China has large productive capacities, and Latin America has huge markets. Chinese investment in the region, such as building EV plants, can help revive Latin America’s industry. Ten years ago, this was simply not possible—China’s auto industry was still at a very low level. Now, having reached a high level, it can afford to invest in projects like the railway connecting Brazil to Peru and the Chancay port, investments that enable Latin America to export even more to Asia, thereby reducing its reliance on the Panama Canal and the US market. I think these are the new trends for China and Latin America. At a more similar industrial level, both regions can now find new complementarities.

   MS: When talking about Sino-African and Sino-Latin American relations, you emphasized economic cooperation as the core aspect. How do Chinese state institutions and businesses coordinate or diverge in their foreign engagement approaches? How do Chinese businesspeople and Party officials understand and interpret China’s role in global affairs?

   XT: Chinese stakeholders or players cannot be simply divided between public and private ones. In China, there is a lot of competition, even within the so-called public sector. State-owned enterprises like Sinopec and ChinaOil compete with each other; entire provinces compete with each other. Meanwhile, the so-called private sector is not so private. Huawei is one obvious example. It’s a privately-owned company that even tries to distance itself from the Chinese government because of reputational and legal issues abroad. However, the US and other Western governments still see its critical technology as a relevant factor of the Chinese economy, and that shapes how the company operates worldwide. Not only Huawei but Alibaba, Tencent, even BYD—all of them are privately-owned companies, but critical components of the Chinese economic system. Therefore, when these companies invest overseas, for example, they are certainly representing China’s image and contributing to China’s policy.

   Take the Belt and Road Initiative (BRI), which has quite a loose and broad strategy. When Chinese companies invest in places like Brazil and Colombia, that can be counted as part of the BRI. This is how complex and diverse the Chinese system is. At the same time, to the outsider observer, Chinese activity is understood as completely unified because all these actors have similar views of development. When the government wants to promote international cooperation, it relies on state- and privately-owned companies to implement its projects, and when they take part in such projects, it means they’re part of Chinese foreign policy. China is a unity with many complexities and diversities; it’s not simply divided by public and private sectors.

   MS: In what ways is China simultaneously working within and attempting to reform the existing international order? Both in terms of global governance and its institutions and in terms of trade practices and investment.

   XT: China works with a wide range of international institutions, whether they are part of the post-war international order or organizations aimed at reforming global governance. It keeps participating in the UN system to strengthen multilateralism, peace, and security. It is a major shareholder in the IMF and the World Bank—although China is not satisfied with these institutions, as they are obviously promoting Washington-dominated views. It remains a member of the WTO despite trade conflicts and the US’s campaign over recent years to weaken its authority. Still, China is exploring ways to work with Europe and other countries to (hopefully) reinstall the trade order—but with the current US president, there are reasons to be pessimistic about outcomes for the next four years.

   China’s goal is to make the whole international environment more favorable to economic development—not only for a small number of advanced countries, but for all of them. Consistent with this coevolutionary pragmatist approach, China engages in efforts to expand the global governance horizon, by joining BRICS, establishing Asian Infrastructure Investment Bank and supporting the Shanghai Cooperation Organization. To reach the goal of economic development, you need different variables working together, which is why China doesn’t have a single, straightforward plan to preserve or reform the existing global order. Instead, pragmatism leads to working within existing institutions while experimenting with new ones. Experimentalism and gradualism also guide this approach to global governance.

   MS: How would you characterize China’s evolving foreign policy, particularly toward the global South, in light of dramatic geopolitical and trade conflict? What are the inflection points or lessons learned that will shape China’s next phase of foreign engagement?

   XT: For the past twenty years, China has attached a lot of importance to working with the countries of the global South. In 2024, around 34 percent of China’s exports went to BRICS+, Africa, ASEAN, and Central Asian nations—surpassing its exports to the US, Europe, and Japan, which accounted for a combined 32 percent. To a significant degree, the “rest of world” export markets—fostering South-South engagement—can now meet China’s major interests.

   Global South countries have common visions, shared histories, and a more equitable and friendly attitude when partnering up, so China finds that it is much easier to keep working with them. South-South relations also have much more potential than North-South ones. The US and Europe today have problems of their own—their economies face challenges, and their political stability is in question. While the global South still has many high-risk regions, several countries have demonstrated stability and a willingness to embrace Chinese foreign investment for common development. Given this scenario, Chinese foreign policy will continue to engage with the global South not only in economic terms but also by fostering mutual trust and encouraging cultural exchanges.

   MS: How do you understand China’s responses to US trade restrictions in light of its development strategy?

   XT: In Trump’s first term, China’s response to new US tariffs focused on diversifying trade partners. But in his second term, the situation is now different. Trump is no longer targeting just China—at least not yet. He is instead pursuing a full-scale tariff war against all varieties of US economic partners, in order to instrumentalize the chaos and make new bilateral trade deals.

   Trump’s strategy assumes the existing order can be disrupted and individual countries can be directly threatened and forced to accept new terms because of the size of the US market. Meanwhile, China wants to use its own case to show the world that it should not be coerced by Trump. China does not fear the trade war, but it is also not close to turning its back on the US. If the US wants to fight, China will take measures in turn. But if they want to negotiate, China is open—as long as it’s an equal negotiation with mutual respect.

   The message China wants to send to all other countries, from the Europeans to the global South, is this: Most of us benefit from the global market and depend on it for further growth. The international trade order is what allows us to promote economic productivity and welfare. We will therefore stick to international cooperation. We understand the global order needs adjustments, but they must be done with mutual respect—not a condescending, unilateral attitude.

   China wants its actions to illustrate this to the world. And that’s what has been seen in the Geneva negotiations between the Chinese vice-premier and the US Treasury secretary.

9. Energy and the One Big Beautiful Bill

   June 20, 2025 5:58 pm Comments Off on Energy and the One Big Beautiful Bill

   As US policymaking has ground against fiscal rules with increasing frequency since 2008, the “budget fight” has become an existential trial of each successive presidential administration. This spring, the second Trump administration found its coalition fractured by a set of competing demands on fiscal policy: extending the 2017 tax cuts, which expire this year; exempting income from tips, overtime, and social security benefits; raising expenditures on the Departments of Defense and Homeland Security; and increasing the deduction on state and local taxes—all while somehow reducing the deficit to satisfy a small number of genuine fiscal hawks in the Republican Party, without touching either Social Security or Medicare, defense of which has been central to Trump’s appeal. 

   Within this complex negotiation sits the centerpiece of the last government: the Inflation Reduction Act and its array of tax credits intended to accelerate the US transition to clean electricity generation and greater electricity usage. While cutting the annual cost of these credits is small in comparison to extending the 2017 tax cuts—about $50 billion raised against $350-$400 billion lost in annual revenues—the scale and scope of corporate investment in clean electricity generation and manufacturing of clean energy equipment has shaped a group of Republicans large enough to influence the negotiations. While the House’s version of the FY2026 budget all but eliminated the energy credits, on June 17 the Senate partially restored a portion of them. At the same time, the House offered tax breaks for affluent tax-payers in high-tax (i.e. coastal) states that the Senate has not. To meet congressional budget rules set in April, both chambers have sharply reduced spending on SNAP, Medicaid, and the IRA clean energy credits themselves—results that would stall progress on the US energy transition and intensify economic distress for millions of Americans. 

   “The budget,” Austrian sociologist Rudolf Goldscheid wrote in 1917, “is the skeleton of the state stripped of all misleading ideologies.” In the short term, the House bill represents about $500 billion in annual borrowing between 2026 and 2028. This is more than double the $150 billion in near-term annual borrowing proposed in 2021 under the Build Back Better Act, and six times the total increase to the national debt the CBO projected for that bill over ten years—reflecting the asymmetrical politics of US deficit debates. This budget will fund lower taxes, increased military expenditures, and increased immigration policing, while eliminating access to medical care for millions. 

   To walk us through how we got here, and detail the struggle inside the GOP over Trump’s One Big Beautiful Bill, Phenomenal World spoke with Ted Fertik, Vice President for Manufacturing and Industrial Policy at the Bluegreen Alliance, a coalition of labor unions and environmental groups focused on policies to foster a high-road clean economy.

   An interview with Ted Fertik

   JACK GROSS: Can you tell us about how the Inflation Reduction Act works? What channels did it establish to implement its goals, what have its impacts been so far, and what has changed since January?

   TED FERTIK: The IRA’s provisions that affect green industry are delivered through two channels: grants and loans, and tax credits. Together with the climate-related grant programs passed in the earlier Bipartisan Infrastructure Law (BIL), like the publicly-funded EV charger program, the Biden administration created altogether—somewhere on the order of—$100 billion worth of grant programs. By comparison, the IRA’s tax credits are expected to reach over $500 billion by 2032.

   There were dozens of grant and loan programs, including higher-profile initiatives like the Environmental Protection Agency’s Greenhouse Gas Reduction Fund (GGRF), the Department of Energy’s Industrial Demonstrations Program, and the expanded Loans Program Office (LPO). The GGRF was designed to give $27 billion in grants to nonprofit lending institutions—it essentially provided capital for nonprofit green banks, creating a large multiplier effect. The Industrial Demonstrations Program was about $6 billion in grants for first or near-first of a kind commercial deployments of emissions-reducing technologies in industries like steel, cement, aluminum and other energy-intensive processes. The LPO was given four different credit authorities, totaling $400 billion, to do things like credit guarantees as well as outright loans to companies.

   This money was nearly all committed. While the House version of the “One Big Beautiful Bill”  includes provisions rescinding unobligated funds for IRA grant programs, the Biden administration obligated—that is, entered into contracts for—somewhere around 90 percent of the IRA and BIL grant program funds.Those contracts are with for-profit corporations, nonprofit organizations, or in some cases subsidiary government entities. The Congressional Budget Office (CBO) score on how much the House version of the reconciliation bill will reduce expenditures by rescinding the unobligated funds is not very much: for all of those programs it’s around six billion. Of that, about $2.5 billion is the LPO’s remaining lending authority. That is all that remains from the $100 billion the Congress authorized and appropriated in 2021 and 2022.  It’s still too soon to draw up the balance sheet on the grants. Some of these projects are undoubtedly going to continue. But we face a real problem in the agencies; empty Washington offices can make life very difficult for the grantees. On the loans, it does not seem like the administration is intending to interfere with deals that have closed—like the multi-billion dollar loan agreements with StarPlus, the Stellantis-Samsung joint venture in Indiana. And while the House bill was designed to prevent new loans, the Senate version—at the instigation of Energy Secretary Chris Wright—preserves some of the LPO’s loan authority, which Wright believes can help spur a new build-out of nuclear power.

   JG: A lot of what we’re seeing at the agencies is targeting lower-profile, business-friendly programs. Does it tell us anything that they are putting entrepreneurs in the crosshairs?

   TF: EPA Administrator Lee Zeldin, the former congressman from Long Island, seems determined to make his name on dismantling the Greenhouse Gas Reduction Fund. The Trump administration is claiming malfeasance and the right to recoup the money—basically $20 billion of the $27 billion. They are fighting to do this in court and through administrative means. Secretary of Energy Chris Wright is pursuing his vision of “energy dominance.” He comes out of the fracking industry, and aggressively propagandizes against solar and wind as intrinsically bad for the grid, because of the intermittency of their generating capacity. So he is dismantling DOE’s Office of Clean Energy Demonstrations and cancelling dozens of contracts, those with major multinational companies included. This approach is a combination of DOGE-inspired cost-cutting and ideological opposition to anything that has decarbonization as a goal. But at the same time he sees a role for nuclear, geothermal—so-called “clean firm” power—and the energy section of the Senate Finance draft very much reflects his views.

   Andrew elrod: What has the geography of business investment in the energy transition looked like since 2022? Where are we seeing the commitments that have been made, in terms of states and districts?

   TF: When we talk about geography, the tax credits are a bigger source of business investment than the grants and loans. For the most part, the tax credits are “as of right” as opposed to the grants, which are competitively won—meaning if you meet the requirements you are able to claim the credit, either against your tax liability or as income. They are intrinsically scalable: just like the Earned Income Tax Credit, Congress has not established a cap on the number of recipients that can claim the IRA tax credits. That applies for corporations claiming investment credits, like the 45X Advanced Manufacturing Production Credit, and individuals claiming consumer credits on residential solar panels or electric vehicles. If you’re eligible, you can claim it. 

   The full suite of IRA credits was initially scored by the Congressional Budget office at $270 billion over ten years. They have subsequently proven to be much, much bigger than that: the CBO and Joint Committee on Taxation scores are now much larger, around $825 billion over ten years. That reflects a ton of uptake, from new electric vehicles being purchased, to battery, solar, and wind installation, to the development of supply chain facilities for all these where production and assembly is scaling accordingly. The deployment of zero carbon generation technologies has been much more rapid than expected in 2022. So there absolutely is a boom in clean energy taking place right now in the US. 

   There’s no question that in terms of the political geography, the vast majority of the investment has flowed to predominantly Republican areas of the country. And it’s not close—credible estimates put it at about 70 or 80 percent. There are different estimates of these investments in terms of scale, but without a doubt it represents several hundred billion dollars in business spending and several hundred thousand direct jobs downstream of the IRA. 

   Solar and wind tend to be rolled out in rural areas that are often more Republican—that’s where the land is. But the geography also reflects the fact that US manufacturing has become quite concentrated in the Southeast, in large part because these Republican states have “right to work” laws that outlaw union-shop contracts and weaken collective-bargaining rights. Several of the tax credits, including the key credits for deploying clean electricity, integrate labor standards into the credits themselves—especially in the form of the prevailing wage and apprenticeship bonus credit—creating a huge incentive to utilize union labor or meet union standards on the construction side. On the manufacturing side, there is no such bonus credit for hiring union labor to operate these facilities. That said, traditional manufacturing powerhouses like Michigan, Ohio, and Indiana have also seen huge investments linked to IRA tax credits, especially in connection with batteries and electric vehicles.

   

   If you listen to what the Republican opponents of the IRA like Chip Roy are saying, they do not deny that there are jobs connected to the programs of the IRA. In May, for example, thirty-nine right-wing House Republicans—essentially the Freedom Caucus, plus some extras— signed a letter of protest that said during 2024, “solar represented 61 percent of all new electricity generation in our nation, with more expected this year,” and that wind generation “is expected to increase 11 percent” above 2023 by the end of the year. They say these shifts in the fuel mix are “because of these subsidies,” and then claim those jobs are “distortions in the US energy sector”—that the government has put its thumb on the scale in favor of otherwise noncompetitive technologies. They know that killing the credits will kill jobs, they just imagine that those jobs can be recouped in other industries. The 2023 Congress even used this rhetoric in legislation: “Repeal Market Distorting Green Tax Credits” was Title III of one of their bills. They would like to see a return to a “natural” state of market allocation.

   AE: As if oil and natural gas do not benefit from dozens of industry-specific deductions—the 15 percent “depletion allowance” for “independent producers” being the most famous, but cheaper oil and gas leasing on public lands is another obvious one.1The bill passed by the House on May 22 expands IRA credits for producers of renewable diesel, ethanol, natural gas, and hydrogen.

   Just this week we saw the Senate Finance draft exempt oil and gas from the minimum corporation tax, a benefit no other kinds of tax-paying corporations get.

   TF: Obviously it’s a deluded view, but the point is that not even the opponents of the “Green New Scam” dispute that there is a boom in these industries going on, with a lot of investment and a lot of jobs tied to it. 

   If you look at electric vehicles and batteries, nearly every player in the industry has secured very large loans from LPO. This is the same program through which Tesla once received its famous loan. More recent prominent loans include the $2.2 billion loan to the Ultium joint venture between GM and LG, focused on battery cells. GM interestingly just repaid that loan by refinancing it internally, and that was connected to three facilities, two of which are UAW-organized—in Lordstown, Ohio, and in Spring Hill, Tennessee. 

   When you think of a place like Lordstown, Ohio, it’s a pretty classic case of a town with once-concentrated unionized manufacturing jobs being severely hit by decades of deindustrialization. Today, Lordstown is represented in Congress by Republicans: David Joyce in the House of Representatives, and in the Senate by newcomers Bernie Moreno and John Husted, who took JD Vance’s seat. The IRA credits provide some meaningful hope of contributing to the revitalization of a place like Lordstown. It was a big fight by the UAW to get those workers incorporated into the broader contracts the UAW has with the Big Three.

   

   The batteries assembled at Ultium facilities like the one in Lordstown are benefiting from the 45X Advanced Manufacturing credit. Furthermore, the vehicles GM manufactures that utilize the Ultium platform are themselves currently eligible for the 30D Clean Vehicle tax credit, which has strict sourcing requirements attached to it. So the consumer-facing tax credit is providing a demand pull to these investments in domestically-made batteries by way of its sourcing requirements, and where the manufacturers respond to that demand they can claim a producer-facing credit.

   This is also an instructive example because David Joyce, who does not necessarily have a history of being a vocal supporter of clean energy, and who is in a district that votes for Republicans by over 60 percent, has nevertheless publicly called for a softer touch on IRA repeal, as in a March letter by Republicans to Ways and Means Chair Jason Smith. That reflects a very straightforward political-economic impact of the IRA, where substantial investments in a member of Congress’s backyard has made them cautious about ideologically motivated policymaking that would harm those investments and jobs. 

   AE: How are industries responding to the new tax and subsidy environment? Can we call it a new political economy?

   TF: Basically every electric utility in the country is taking advantage of the IRA. As a result, the utility industry has been one of the very prominent voices defending the tax credits. There is a fear that repealing the Clean Electricity credits could lead to surging electricity prices in much of the country. Renewables developers are making use of technology-neutral clean energy tax credits, both the production credit and the investment credit.2Inside the Washington Beltway, the term “tech-neutral clean energy” is used for the 48E Clean Electricity Investment credit and the 45Y Clean Electricity Production credit. This is to distinguish them within the larger group of clean energy credits. In this interview, the terms “Clean Electricity credits” and “technology-neutral credits” are synonymous. And the expectation is that if these are weakened significantly, these producers will make up the difference in higher prices to ratepayers. Solar, in particular, is the cheapest form of power to put onto the grid right now, while natural gas prices are increasing and order books for natural gas turbines are filled for multiple years into the future. We are already deploying natural gas as fast as we know how; it is simply not a realistic option to substitute accelerated gas deployment for solar and wind deployment and continue to meet demand. So the utility companies are quite concerned about the prospect of surging electricity prices, which could happen more or less instantaneously.3As the Senate has taken up the House proposal, a group of Texas electricity-generating companies calling themselves the Texas Advanced Energy Business Alliance sent (<)a href='https://advancedenergyunited.org/hubfs/2025%20Folder/TX%20Tax%20Policy%20Sign-on%20Ltr%20June%2025.pdf'(>)a letter(<)/a(>) to John Cornyn asking the Senator to “preserve these key tax credits,” referring to 45Y, 48E, 25D, and 45X. “We believe it is possible to advance deficit reduction without sacrificing the cutting-edge power solutions that advanced energy businesses in Texas provide,” the association wrote, alluding presumably to deeper cuts to social insurance.

   There’s a whole suite of existing and new manufacturers in both solar and EV components.  Batteries and their supply chains have accounted for the biggest share of manufacturing investment tied to the IRA. And of course, there are dozens of massive developers and energy businesses utilizing the credits. Consider a company like Entergy—a massive player in the energy space that is by no means a pure-play clean-energy developer. Entergy operates across the range of electricity generation technologies. They have been aggressive utilizers of the credits and have been defending them politically. 

   Then there’s a broader set of players connected to all of this by way of procurement who have been less vocal, but who do not want the Clean Electricity tax credits or the Commercial Clean Vehicle Credits to go away. Big tech companies’ net-zero commitments, for example, are very much tied to procurement of clean energy. At a time when data centers are straining grids everywhere, making electricity more expensive is not something that they see as being in their interest. Amazon’s corporate climate commitments include hundreds of thousands of electric vehicle delivery vans. The House bill had carved out special treatment for corporate customers that signed contracts for commercial vehicles, ordered but not yet delivered before the end of this year. The Senate bill does not include any such provision, which will raise costs for corporate clean vehicles delivered in 2026 and beyond.

   All of these interests have lobbied for the preservation of most or all of the tax credits. As a result, their repeal has been anything but a given, and their fate has been one of the biggest and thorniest questions the Republicans have been grappling with as they try to assemble a bill that can pass both Houses.

   JG: There was some debate in the last year of the Biden administration over the degree to which renewables growth followed preexisting trends or was directly stimulated by the IRA. You’ve already demonstrated the significance of investment figures downstream of the IRA, but I wonder if you could comment on this non-IRA counterfactual, and its relationship to the political economy question.

   TF: Companies are reluctant to say publicly that their business model depends on a regime of tax credits, and that their investment decisions are tied to them. So we are forced to speculate on this question. But clearly they criticize the prospect of repeal, which is all about certainty in business. You frequently hear the expression “pulling the rug out from under businesses”—meaning businesses were told that these credits were going to be in place for ten years, and so made investment decisions based on those expectations. 

   More investment capital and jobs are connected to these provisions of the tax code than there were in 2022. If you look at any chart, you will see the rate of change notches significantly upward after 2022 in all of the targeted technologies. What does that mean politically? It means there are more actors in the system that want to see these measures preserved—companies with capital invested, labor unions with members in these industries, mayors, local chambers of commerce in towns and counties where capital is flowing, who don’t want to see that economic revitalization reversed. 

   

   JG: On May 22, the House passed the One Big Beautiful Bill Act by a margin of one. How did that bill compare to some of the earlier committee text that had been released, what does it mean for the IRA, and what does it tell us about the governing coalition?

   TF: What the Ways and Means Committee voted out on May 20 was a considerably more draconian set of changes to the IRA tax credits than many were anticipating—probably tantamount to full repeal. Between the Ways and Means Committee markup and the final bill passage on the House floor, the text actually got worse. 

   Earlier expiration is the simplest way of reducing the credits. The House terminated the 30D Clean Vehicles credit for consumers, with a tiny carve out for OEMs that have not yet sold 200,000 qualified vehicles—they got one more year of eligibility. The Senate has since closed this, which will affect OEMs like Honda and Rivian. The 45W Commercial Clean Vehicle credit is gone. The 30C Alternative Fuel Vehicle Refueling Property credit, which is most prominently charging stations, is gone at the end of this year. The tax credit for homeowners who install clean energy technologies in their home, the 25D Residential Clean Energy credit, and the 45V Hydrogen Production credit will be fully repealed at the end of this year. Along with earlier expiration is the abruptness of the phaseout: the House bill used a “placed in service” rather than a “commence construction” standard, so projects would have to be finished before expiration to receive the credit.

   Another way is increasing restrictions on “Foreign Entities of Concern” (FEOC)—provisions primarily designed to exclude Chinese companies from US clean energy subsidies. The IRA included these provisions on the 30D New Vehicle credit, but the House extended them, in ways that appear far more stringent, to the 48E and 45Y Clean Electricity and the 45X Advanced Manufacturing credits. The Senate has proposed something very similar. These will require far more extensive supply chain due diligence, and will likely reduce usage.

   AE: What are the other relevant committees and players that have held sway over the budget making process? How do they relate to each other, in terms of rules and procedures, but also power politics?

   TF: Let’s talk about the big picture of what the Republican Party is trying to do, because I think that’s the way to answer this question. In order to lower the headline cost of their 2017 tax bill, Republicans had a number of provisions sunset in 2025, especially the reduction in individual income tax rates. So if Congress were to do nothing, next year there would be a tax increase—1 to 3 percent across the different brackets, and around $7,000 in the standard deductions resetting. 

   So first of all they want to extend the expiring Tax Cuts and Jobs Act (TCJA) provisions. They also want to reinstate several provisions of the TCJA that have already expired. They want to accomplish a whole bunch of Trump’s campaign commitments, which include eliminating taxes on tips, on overtime, and on social security. They want to satisfy a new Trump demand, which came in the wake of the auto tariffs, for being able to deduct interest payments on auto loans. They want to, in their way, expand the Child Tax Credit. They also want to meet one more of Trump’s promises, which is to at least partly reverse the $10,000 cap that they placed on the State and Local Tax (SALT) deduction, which raises a couple of hundred billion dollars a year and is part of how they paid for the TCJA in 2017. The Trump specific provisions are being designed to sunset when Trump leaves office—they are reducing their notional price tag the same way they did in 2017. They want a massive increase in funding for immigration enforcement and defense. And they want to enact all of these tax cuts and spending increases while also reducing overall deficits, which means they’re eyeing gigantic spending cuts elsewhere.

   What we saw between the Ways and Means Committee bill and final passage in the House was two open threats to tanking the thing, which came from two different parts of the Republican coalition. The SALT caucus—five Republicans from affluent districts in New York, New Jersey, and California, and several more quietly backing them—threatened to tank it because the deductions on state and local taxes were too low. Meanwhile, the hardliners threatened to tank it because it didn’t cut Medicaid severely enough and left some of the IRA standing, sort of. The hardliners’ unofficial leader in the fiscal fight is Chip Roy, who is on the Budget and Rules Committees. As we saw in the last Congress, the Rules Committee killed several bills that Johnson was trying to bring to the floor.

   Party leadership in the House Rules Committee ended up accommodating both of those revolts in significant measure. That is where the SALT deduction allowance expanded from what had been in the Ways and Means Committee bill. That is where they sped up when the Medicaid work requirements were to kick in, from 2029 to 2026. If Republicans had a forty seat majority, the SALT members would have been out of luck. The reason the SALT cap is there in the first place is their 2017 majority was larger. In 2025, the party could lose only three votes. That was the leverage the SALT caucus needed to get an outcome favorable to them.

   As a result, the final product was even worse on IRA tax credits than what the Ways and Means reported. That’s how leadership quelled their rebellion from the hardliners.

   AE: Just to put these parts in perspective: the revenue gain from repealing the energy credits is about equal to the revenue lost from the higher SALT deduction, and both are about one-tenth the revenue lost to tax cuts old and new.4According to the JCT’s estimates of the House bill, the changes to tax rates, exemptions, and deductions amount approximately to $600 billion a year in less revenue. The SALT deduction reduces revenue by about $30–$40 billion a year. Revenue raised by repealing the energy credits is about $40–$50 billion each year in 2027 and 2028.

   TF: By far the biggest chunk of the House bill’s projected deficits is the cost of simply extending the 2017 tax cuts that are set to expire. $350 billion a year in lost revenue from extending the TCJA is where the majority of the One Big Beautiful Bill’s deficits are coming from. The Republicans essentially decided that since extending the existing tax cuts doesn’t increase the deficit from its present level, they can ignore that cost when evaluating whether their bill is reducing the deficit. So they only tried to find savings to match the new tax cuts and spending, at roughly $1.5 trillion over 10 years. The big question throughout this saga has been, where are they going to find $1.5 trillion in budget savings?

   The GOP debates about where to find savings to offset this massive fiscal cost is revealing a very interesting set of developments in American political history. Cutting federally funded and federally subsidized healthcare—once one of the most unifying ideas within the Republican party—has now become meaningfully contentious. It’s really novel that the Republican Party nationally can no longer frame Medicaid cuts as red meat. They are contrite about it, and they are trying to hide it. Nevertheless, they’re doing it. Where the House arrived involves cutting the following over ten years: $560 billion from IRA clean energy credits, $860 billion from shrinking Medicaid, another $300 billion from SNAP, and another $100 billion and change from curtailing subsidies for the Affordable Care Act. The upshot, as the CBO estimated, is upwards of 12 million people losing their health insurance (plus another 4 million from the GOP’s refusal to extend additional ACA subsidies); and about 3 million people expected to lose food stamps eligibility. Medicaid cuts are the biggest source of savings, and repealing clean energy tax credits is in second place.

   In a sign that the politics around the clean energy tax credits are in fact contentious, almost immediately after the House bill passed, we saw an unusual development. Thirteen House Republicans—all of whom voted for the bill—wrote to their Senate colleagues asking them to fix the House’s work. They focused on three specific things relating to the energy credits: transferability, FEOC, and the abruptness of phaseouts. These correspond to the most urgent demands of clean energy developers and companies connected to clean energy supply chains, including in manufacturing. At the same time, these companies also undertook a very significant lobbying effort, focused on the Senate Finance Committee in particular. 

   The Finance Committee’s draft reflects this. For zero-emissions technologies other than solar and wind—battery storage, geothermal, nuclear—the clean electricity credits remain in place and transferable, not only for the full period the IRA had given but with an additional two year phaseout. The Senate removed the House’s sixty-day “begin construction” requirement. 

   But in other ways the Senate bill is actually even more draconian than the House bill was: the extension of the clean energy credits specifically excludes wind and solar, which are rapidly phased out during 2026 and 2027; consumer credits for any clean vehicles are completely gone. To offset the cost of some of the restored IRA credits, Senate Finance left the lower SALT allowance in place and took an even more aggressive approach to Medicaid.

   Our assessment is that the net effect of the Senate changes would be not only a significant slowdown in the rollout of clean energy technologies across the US economy, but a loss of jobs in construction, a loss of jobs in manufacturing, a pull back of investments and a significantly degraded economic picture relative to what we were looking at in 2024.

   JG: What has this reconciliation struggle revealed about the GOP coalition and leadership?

   TF: The bill that passed the House shows that some number of Republican members of Congress were willing to court the ire of their leadership and of Trump by publicly threatening to derail the bill in the closing stages—whether on SALT or spending cuts. But the members who had spoken out publicly about preserving the clean energy tax credits did not mount a similar revolt. Twenty House Republicans, a mix of members from swing districts and solidly partisan districts but with major investments in IRA-related industries, had publicly signed on to a couple of different letters. Some of these people were among the more outspoken on Medicaid, including Don Bacon from Nebraska and David Valadao from California. But as a group these politicians did not threaten to vote no and they did not vote no in the House. 

   On the Senate side, the counterpart to House Ways and Means is the Senate Finance Committee. The chair of that committee is Mike Crapo from Idaho. Majority Leader Thune of South Dakota is an important player. And Josh Hawley has emerged in a very interesting position as someone who has become extremely vocal in opposition to cuts to Medicaid, making the argument that “these are our voters.” Lisa Murkowski, playing her traditional role of the all-purpose Senate moderate in the GOP, has pushed back on both Medicaid and the energy credits.5With respect to fiscal policy, Murkowski sits on the Energy and Natural Resources Committee and the Health, Education, Labor and Pensions (HELP) Committee, as well as the Appropriations Committee. Hawely also sits on the HELP Committee, as well as on the Homeland Security and Governmental Affairs Committee and the Small Business and Entrepreneurship Committee. On the other end you have Rand Paul, who the Republicans consider a definite no vote, because he’s a genuine libertarian fiscal hawk who doesn’t consider the House bill remotely serious from a fiscal reform point of view. So functionally, Senate Republicans have fifty-two votes, not fifty-three.

   What the fight in the Senate reflects is that we’re not at the end point of them threading that needle. One popular framing that GOP leadership prefers is Hawley’s: “I don’t know why we would defund rural hospitals in order to pay for Chinese solar panels.” They want to pit the energy transition and healthcare for low-income people against each other. (Domestic manufacturing incentives in the IRA are the biggest factor in what onshoring we have seen in industries like solar manufacturing. In contrast to Hawley, the Solar Energy Manufacturers for America calls the Senate cuts “a massive gift to Chinese manufacturers” that will “end any hope of onshoring domestic manufacturing.”) 

   Whatever the Senate votes on, however, will have to go back to the House. There Chip Roy is already saying the Senate’s changes are too big of a concession to clean energy producers. And while the Senate bill specifically excludes solar and wind from its extension of the clean electricity credits, it hasn’t restored any Medicaid funding. And because no Republican senator is in favor of a higher SALT deduction—because there are no Republican senators from places where SALT matters—the SALT Republicans in the House immediately rejected what Senate Finance produced. 

   Numerically, there were enough Republican IRA members in the House to play a similar role as the SALT caucus. But they were not willing, individually or collectively, to exercise that leverage. This has been one of the challenges for the clean energy industries and advocates throughout the tax fight. Public red lines on SALT forced a direct negotiation with House leadership and significant concessions, but there have been no public red lines on clean energy credits and no negotiations resulting in concessions. This is in part because the clean energy Republicans are part of a larger group in the House that also includes all of the SALT caucus Republicans. For these Republicans from affluent districts in coastal states, it was SALT or IRA, and they chose SALT. But if any of the larger group of IRA Republicans are willing to trade SALT deductions for keeping the IRA credits, they haven’t come out publicly calling for that. For them to do so would threaten to cleave SALT out of their coalition. 

   It would be wrong to say the political economy coalition for clean energy development isn’t there. We have witnessed the emergence and partial maturation of a clean energy coalition that does have power. What we’re seeing is how powerful it is relative to other political economic coalitions, as well as the ability of certain groups within the Republic conference to build majorities. Under these conditions, it is not an all-powerful actor in the decision-making of the key players in Washington.

   AE: Even with all the other spending cuts—on agriculture, K-12, and higher education, federal employee pensions—federal borrowing under H.R.1 would be $2.4 billion over ten years according to the CBO. At the risk of sounding naive, has this level of borrowing been the plan all along, or aren’t there any chamber rules about deficit spending in play?

   TF: What they can’t do is increase the deficit by more than they said they were going to increase the deficit in the initial budget resolutions. 

   It becomes very challenging for them if the CBO scores on the proposed changes don’t fall within the instructions that the budget resolutions gave to the respective committees of jurisdiction. If the CBO scores don’t match up, then when it comes to the Senate there can be a point of order. And the Senate parliamentarian will say that this does not comply with the rules for budget reconciliation. To move forward in that situation, in the face of such a ruling from the parliamentarian, the Senate will have to overrule its parliamentarian. That’s generally considered to be equivalent to eliminating the filibuster altogether. This is a step that the GOP is very reluctant to take. 

   So they have been quite serious about writing legislation that will meet the instructions that they set for themselves. The cuts to IRA, Medicaid, and food stamps are absolutely real cuts. Because, as it stands, they don’t have fifty senators at yes, they are giving themselves a little bit of flexibility on the timeline. Previously they planned to pass the bill and have it on the President’s desk by July 4, but now that’s been pushed—the Senate needs to pass the bill by July 4 and the House and Senate need to agree to have it on the president’s desk by August recess. But if any of the fractures within the Republican Party persist, or can’t resolve, then they do risk hitting the debt ceiling clock, which strikes midnight some time in August. Then they have to negotiate with the Democrats—over the debt ceiling increase or over the TCJA extension. They might dare the Democrats to cause a default, but they probably don’t want to. Thune hopes to get a bill to the floor by the last week of June. We have no idea if they’ll actually resolve all their issues by then, or if they’ll get snagged by the parliamentarian. And if they do find consensus we don’t know what it will look like on those core questions of Medicaid, IRA, and SALT.

   AE: Let’s end with an extremely broad and speculative question: how do you see this fight over fiscal policy in its longer sweep? We’ve seen versions of this three times: Reagan came in and exploded the deficit by cutting taxes on top incomes and corporations. It was very controversial at the time, and the Democrats responded by becoming a party of fiscal hawks. George W. Bush came in and did his tax cuts on capital gains and top individual incomes, again exploding the deficit, and introduced this forecasting fiction of the cuts expiring in the future. And then Donald Trump in his first administration in 2017 did the same thing, for corporations mostly. One could argue “oh, this is just the pattern, and all of the drama that we’re witnessing right now is myopic and forgetful of the fact that we’ve done this before.”

   But at the same time, the American economy and America’s place in the world have changed since the 1980s. The strategy back then of funding huge fiscal deficits with sky-high interest rates, of using a strong dollar to preserve American power, seems to be in direct conflict with the administration’s professed trade policy and its relationship to the Federal Reserve. The brief, six-hour run on the dollar on Liberation Day and the increase in US bond yields seem to indicate a real resistance from the banks, hedge funds, and other large-scale holders of US debt to Trump’s planned budget deficits—whether they lead to $2.4 or $4.5 trillion in new debt. Is the ability of the United States to borrow becoming constrained by the other elements of the coalition?

   TF: From my current perch, I’m not positioned to offer a verdict on the credit worthiness of the US government. But here is one thing I can say. The bulk of this fight inside the GOP is because of the commitment to preserving the 2017 changes to tax rates, whose benefits overwhelmingly flowed to the richest Americans. Any departure from this has proved to be a complete non-starter. It was an absolute priority of the GOP to not only extend, but also expand, the estate tax exemption: for the holders of very large fortunes to not have to pay any tax. This legislation enshrines the GOP’s commitment to tax breaks for billionaires as a core part of their approach to governing. The world has changed in many ways, but that remains, unalterably, a truth about how the world works.

10. Closing the Extractive Frontier

    June 13, 2025 5:20 pm Comments Off on Closing the Extractive Frontier

    Today, more than half of Colombia’s export revenues come from coal and fossil fuels. The industry employs roughly 100,000 people, a quarter of which are unionized through the Unión Sindical Obrera (USO). In this context, Colombian President Gustavo Petro’s plan to end domestic fossil fuel production is profoundly ambitious. It will require not only replacing the revenues generated by the industry, but securing financing for green energy infrastructure and production. The latter is especially difficult for a country strapped by strict fiscal rules mandating the preservation of balanced budgets. The transition also presents an enormous political challenge: beyond the mobilization by the country’s largest business associations, Petro’s plans have already faced pushback from allies in the USO who have expressed concern for preserving worker livelihoods.

    Managing this complex effort is the Ministry of Mines and Energy. On March 19, we met with the former Minister of Mines and Energy, Omar Andrés Camacho Morales. Camacho is a lifelong activist—from the student movement for public education in the early 2000s, to the Movement for Peace of the following decades. From July 2023 to February 2025, Camacho contributed to the development of the Petro government’s energy transition agenda.

    In the following, Minister Camacho reflects on Colombia’s decarbonization plans, the progress made thus far, and the core obstacles these efforts have faced. We discuss the ban on new contracts for oil and gas exploration, alternative sectors to promote future growth, and the ongoing (but to date, unsuccessful) effort to create a “green fiscal rule” that would allow more flexibility concerning the financing of renewable energy. And we consider the social foundations required to successfully manage the transition and give communities a stake in the production, commercialization, and decision-making processes surrounding renewable energy. These movements, Camacho notes, are crucial to facilitating regional unity that extends beyond the boundaries of nation-states.

    An interview with Andrés Camacho

    Gabriel Hetland: What was your vision for the energy transition in Colombia as Minister of Mines and Energy?

    andrés camacho: We work close to the extractive frontier. We are not prohibiting the exploitation or exploration of hydrocarbons in Colombia. But we’re not increasing it. So we decided against signing additional, new contracts in hydrocarbon exploitation and exploration. 

    At this moment, there are about 308 exploration and exploitation contracts, and 300 of these contracts are in force, with 16 million hectares dedicated toward exploitation and exploration. The current scale should be enough to fulfill the tasks of the energy transition and decarbonization. Critics in Colombia say that we don’t want to continue oil exploitation. But this isn’t true—we’re committed to exploiting what currently exists.

    Our starting point was that Colombia is not an oil country like Venezuela. We are a country that depends on oil, but we do not have the large deposits that other countries have, and that makes our economy very dependent on fossil fuels. We can’t increase our dependence without large deposits. Our country has a lot of heavy crude oil, but the market conditions for this type of oil are more difficult. This puts us in a difficult spot. 

    When we came to the ministry, we utilized data, science, and engineering to develop a road map, which measured how to achieve a green transition in Colombia without putting the country’s energy security and sovereignty at risk. Usually, governments hire consultants to conduct these studies, but we wanted a sovereign exercise to recover state capacity. We organized an energy transition team within the ministry made up of Colombian professionals and those with technical expertise. This road map includes the analysis of many components: hydrocarbons, oil, gas, coal, electric energy, as well as an analysis of both supply and demand. It defines the medium and long term measures that we would have to adopt to reach the goal of decarbonization. 

    The Ministry published the findings in a document titled, “Energy transition scenarios for Colombia,” which considers the environmental and social dimensions needed to guarantee a just energy transition. 

    An energy transition has to be, in a country like Colombia, a just transition. This implies several elements: climate, environment, energy, and social justice. In a country with enormous inequalities, the transition should not only help to overcome dependence on hydrocarbons and reduce greenhouse gases, but it should also help us to overcome energy poverty. This is the basis on which we built the policies and programs that are currently being pursued by our government.

    GH: What have been the achievements of developing this road map? 

    ac: One of the main achievements is to develop the country’s greatest renewable potential. Colombia is a privileged country because it is in the equatorial zone and has abundant access to water, sun, and wind. One of the plan’s goals, still in progress, is to install 6 gigawatts of renewable energy in the country. Today we have 2 gigawatts installed that are delivering energy, especially solar, to the grid.

    When we arrived there were only 0.2 gigawatts of renewable energy. In other words, in these two and a half years we have multiplied by ten Colombia’s solar energy capacity. This was achieved with projects that were behind schedule, which we took on the task of putting into operation. This year, the plan is to incorporate another gigawatt. Next year, the big bet is getting the first wind projects into operation. If the projected six gigawatts come on line, the country’s energy matrix will be 85 percent clean.1 Currently, the country’s energy matrix is considered mostly clean. By 2023, the installed generation capacity was 17,771 MW of energy, about 70 percent of which is produced from hydro technology (11,942 MW).

    The other great achievement, especially when it comes to environmental justice, has been our Energy Communities program. These are consumer groups that manage, administer, and efficiently use energy from renewable sources, such as solar and wind. When we arrived in the government, many sectors said that implementing this program would be impossible. But this program allows us to bring the most economical energy we have—solar—to vulnerable communities. With solar solutions we solve problems of access and energy poverty in many areas of the country.

    When we registered the communities that wanted to receive government support to build their own solar generation, we received more than 14,000 applications. We already have the communities identified, and 300 energy communities have been built and are operating. A thousand more are under construction. The Energy Communities program is unprecedented in Latin America—it is the most successful transition initiative in the continent. 

    Most of these energy communities are in territories that have been victims of the armed conflict. The program has demonstrated several things. The energy transition can be used to overcome poverty, but it can also help develop a rural electrification plan. Electrification is still centralized and 16 percent of Colombia remains with little to no electricity access. 

    We’ve also made progress with new energy sources. We’re developing three geothermal energy projects with Ecopetrol, the state oil company. There’s also an auction to take advantage of offshore wind energy. In addition, we’re building the ecosystem and the legal framework for Colombia to start developing hydrogen. Ecopetrol will soon build the largest green hydrogen production plant on the continent, producing some 800 tons per year.

    There is also what we call hydrocarbon management, which is to guarantee stability in the sector. We have not had a single second of gas shortage, even in the difficult conditions of declining gas production in Colombia. Today we face the challenge of rising gas costs. We have managed, even through Ecopetrol, to maintain the country’s reserves, demonstrating that with the same contracts we can achieve efficiency in hydrocarbons.

    GH: Colombia is a peripheral country that lacks access to credit at sufficient levels, and it’s also limited by a narrow fiscal rule that restricts financing possibilities. There are also other constraints, such as the fact that Ecopetrol cannot generate renewable energy on a large scale. Can you speak to these financial challenges? 

    ac: We are economically dependent on hydrocarbons. Around 50 percent of the country’s income from exports comes from coal and oil. This means that we must pursue an economic transition at the same time as the energy transition. How do we replace those foreign currencies? How do we replace those revenues from oil and coal? 

    One achievement is that tourism now exceeds coal revenues in the country. This is very important, as it shows that the country can indeed move towards decarbonization, emphasizing that Colombia is a country of biodiversity rather than oil or coal. We are also building a green fiscal framework, which aims to answer the question of how to decarbonize the economy by overcoming this resource dependence. 

    But the fiscal space we have to pursue these measures is severely restricted. That is why President Petro has entered a global discussion about the tools that countries like ours can deploy to make the transition. Colombia has quite an ambitious goal, and we need international support, which can come from exchanging debt for climate action. That would open a fiscal space for countries like ours to have different loan conditions. But this is a discussion with international capital that is not so simple—green loan options involve global interests that are out of our hands. For the time being, we continue to pursue a decarbonization agenda with the resources we have available. 

    GH: And what are main challenges when it comes to Ecopetrol and legal prohibitions on renewable energy generation?

    ac: Ecopetrol, due to past laws and the way the country was conceived economically, has been part of the neoliberal model in Colombia. During its inception, the energy sector was divided into different branches, such that Ecopetrol is still currently prohibited from generating electricity. 

    It is a restriction that exists by law, and we have led a discussion in Congress to change it. If a new law is approved, Ecopetrol can begin with electricity generation this year. We have been able to issue a self-generation decree, where Ecopetrol can generate its own energy. Thus far, we have inaugurated about five Ecopetrol solar parks as an initial start. 

    Ultimately, Ecopetrol has to be the first company to make the transition. It is the largest company in the country and the company that provides the most resources (11 percent of the national budget). So, if we manage to make the transition of Ecopetrol, this will have a positive impact across the country. 

    Solar energy is already being produced in many of the refineries—in the Cartagena refinery, in Barrancabermeja, and in production fields. If we resolve this restriction on Ecopetrol, we can first accomplish an energy transition within Ecopetrol, and then we can take the possibility of Ecopetrol’s energy generation to the rest of the country. 

    GH: You are trying to pursue an energy transition under the framework of a representative democracy, with enormous difficulties due to the sectors that oppose it. What would you say about the possibilities and limits of being a leftist government in a democracy like Colombia?

    ac: Our approach to the energy transition is unprecedented, even among the Latin American left. Brazil, Venezuela, and Ecuador have different positions. The other countries, even those with progressive governments, maintained fossil fuel production and furthering exploitation, refusing to restrict the extractive frontier. 

    This puts us in an even more challenging situation, because not only are we going against the world, but even within the Latin American left, there is a major debate on how to address the energy transition. For us, the only way to prove that our plan is possible is to show that the country has not gone bankrupt, that Ecopetrol continues to be the most important company in the country. Ecopetrol continues to give dividends, and our transition proposal is possible, sustainable, and could even be more ambitious. 

    lala peñaranda: Many neoliberal countries have pursued the energy transition through a market, with private actors, favoring some elites. The Ministry, on the other hand, repositioned the role of the working class and put the unions and social movements at the center of the transition. 

    ac: When we entered the Ministry we asked ourselves that question: How can we create a movement capable of defending against these conquests of the just energy transition? That is why we set ourselves the task of identifying the social subjects of the energy transition. We are pursuing broad change in Colombia. The subject of the agrarian reform, for example, is the peasantry. But we ask ourselves: who is defending the energy transition? First, there is the consumer movement, the citizens who are affected by poor quality public services, or by the non-existence of public services. We took on the task of helping to organize a movement of energy consumers. This culminated in MODEN, which is the national constituent movement for energy democracy. This movement is beginning to center public participation in issues of just transition.

    There are instances of other groups that are already organized, such as the unions, though they have not always worked on these issues. We are helping to create a tool—which is the movement for energy democracy, but that movement has already been growing at the national level through energy communities, where communities that directly manage their energy can participate, give their opinion, and be subjects of this change. 

    Another issue that cannot be left aside is mining. In Colombia, there is a mining model that privileged multinationals and large economic groups and has left out small traditional miners. We also took on the task of helping organize mining workers, including female mining workers, and this has led to the emergence of efforts to organize small miners. These social forces within the mining and energy sector are for us what we could call the movement of democratic transformation for the green transition. At the Ministry, we helped develop these movements and guarantee popular participation. 

    Julian Gómez Delgado: What did you learn about the state from your experience at the Ministry? Has it changed your understanding of the state?

    Ac: Yes, the first thing was to come up against the reality of a phrase that one is taught in one’s political militancy, which is that governing is one thing and power is another. The reality is that we are exercising the powers of the government, but the economic power in many of these sectors is held by financial conglomerates, unions, and companies—products of neoliberalism that transferred state capacity to the private sector. We came to assume a government of change within a state that has been reduced, where state capacity has been reduced, which has made it more difficult to deliver on our proposals. 

    We have also managed to take a step toward recovering state capacity. For example, the roadmap I mentioned on energy transition was drafted directly by the government itself instead of consulting firms. So what is the lesson I have learned? That there is still a lot that needs to be changed. Being in government is still not enough to make the transformations we need. This process requires greater continuity. In four years, we cannot transform what has been in place for decades, what is behind the apparatus of those who really hold power across economic sectors. This is a long term process. 

    From here on, I believe that we’re beginning a new agenda which was not in the orbit of the left and other progressive forces. In general, the left in our country has focused on health, labor, and pensions. But now, the climate and green transition agenda has become central. Now that I am out of the government, I will work on growing this agenda from within social movements.

    gh: Can you explain to us how consumers, citizens, and workers participate in energy decisions? Some say that in these matters, the technical criteria should have the last word.

    ac: That was a prejudice that we constantly faced in Colombia. They have tried to judge us by calling us activists, saying that we don’t have technical expertise. But I believe that it is precisely more activism that is needed. People must become politically active and have an opinion, otherwise the energy transition becomes a transition written from the desk in the ministry. For us, participation is fundamental. Last year, we held fifty energy and mining assemblies where we asked people from the different regions how they were seeing the transition, what their needs were, and explained our proposals. There cannot be a just transition if we restrict democracy.

    For example, in the process of creating an energy community, there is an energy training school. But we are not going to impose an engineering design from the center of the country onto Indigenous peoples, when there are uses and customs in the way things are built. We need to incorporate knowledge from the territories themselves. 

    gh: How should the left approach the challenges of the energy transition at this time? Should it focus on gaining representation in Congress, strengthening the trade union movement, or action at the international level? 

    ac: It is most important that we strengthen the social organization around the energy transition. Only if we maintain that network will we be able to defend what has been achieved so far, and also promote the transition in the terms we have set. Then we can take this agenda to Congress, but it must be from the basis of a movement for energy democracy. 

    We are organizing energy democracy committees throughout the country, and anyone can participate in these committees, but we especially want to reach unorganized people, those who live in areas where there is no union and who need access to energy. The idea is to tell them what the transition is about and why it is important to them. 

    Our priorities are as follows: (1) growing the energy communities in the remaining years of Petro’s term; (2) developing transmission lines, especially when energy generation capacity is already there—the transmission line in Guajira, the Colectora line, will enable large generation projects using renewable energy; and (3) managing gas to guarantee efficient prices and prevent shortages.

    Lp: What steps should be taken towards international cooperation? Who are our allies in the just transition?

    ac: We need cooperation between peoples rather than between countries. Governments will always be in the sway of a political debate, but we have to push forward a Latin American movement. For example, we are already coordinating with energy communities in Brazil, with communities interested in public services in Argentina, and we must begin to organize a continental movement. 

    We want the Colombian experience to be instructive across the continent, showing how social movements can shape the government agenda. There’s also the  challenge of Latin American energy integration, which would require transmission lines between our countries to share energy. 

    gh: Many are wondering about President Petro’s strategy given all the changes in the cabinet. Being one of the ministers who have left office, what is your reading of the direction of the Petro government?

    ac: I have a very personal opinion of what the changes mean. The President is giving the opportunity to new leaders to be part of the government. 

    I am part of a new progressive generation in Colombia. If the President had not given us the opportunity to participate, to govern, we would not have been there. I believe that part of the rotation has to do with the possibility that more people can try the exercise of governing. 

    On the other hand, the President is developing a strategy to reconfigure the government to face the 2026 election. We are already nearing the end of his term, and he has to guarantee that our political project can continue in 2026. This means restructuring the cabinet and bringing in other political forces that were not present earlier. 

    This also requires some people leaving in order to work on other tasks. One of those people is me. I spoke to the President, and he asked me what I wanted to do. I told him I wanted to go out to work on this cause of the energy transition and consolidate the social movement. The same thing always befalls our governments: if we all enter the government, the social movements are sometimes left without leadership, or with restricted leadership. We also need to leave the government to work from the outside.