Category Archives: Current Affairs

Our Post Industrial Economy

Economics professors have always agreed about what comes after an industrial economy: a knowledge-based economy. Service industries would rise up to push around the money we made, inventing and utilizing new technologies. Workers would be data crunchers. They would be accountants, economists, health care workers and computer scientists. Great – no problem we all said. Just stay ahead of the (education) curve and don’t expect to get rich as a steel or car plant worker.

There is, however, another path. What if our remaining industrial base becomes so denuded that it (virtually) no longer produces goods. We won’t need as many engineers to improve productivity or to build robots to replace workers. We won’t need accountants or investment professionals to manage the wealth created by these industries. We won’t need scientists to do R&D since that always takes place near the production facility. (Why do R&D anyway in a world of rampant global IP theft?)

China has replaced us as the new industrial behemoth. They need raw materials for their factories and food for their army of peasant labor. Yes, they need services too but those markets are completely closed to foreign providers. (Just ask Google and Microsoft). Who shall feed the beast?

The Future: Our industrial capacity is shrinking towards irrelevance and our service sector is stalled out. We are the global consumer and without any trade barriers, everyone is just chewing on our flesh. We can still buy their goods but it’s all paid for with borrowed money. So now we are to go back to what we used to do – before the 2nd industrial revolution. We will produce food, minerals, and fuel and sell them to China and Japan just like Africa, Australia, and the Middle East. There are no import barriers on oil or wheat. This is economic development in reverse. It is, of course, a path to poverty and massive income inequality. The whole idea behind trade barriers was to protect young industries (and countries) until they have improved efficiency and become innovative. We have been doing the opposite for 20 years and it’s killing us.

Am I  being too cynical? Let’s look at the data. In 2017 6/10 of the top exports (by category) to China were commodity goods. Only three of the top ten were commodity sectors in 2007. ” In 2007, the U.S. manufacturing trade deficit … accounted for 76.99 percent of the overall merchandise deficit on a Census basis. The 2017 figure? 116.50 percent.”

The race to the bottom that began when China got MFN status is in its final stages. To sustain 2.5% growth we are bankrupting the state.  We have manufactured the illusion of increased wealth by virtue of massive debt increases. The robotics wave will have a greater effect on Chinese and German productivity since that is where global manufacturing now resides. We must get it back. Mercantilism can save us just like it made us in the 19th century but we’ll need a new mindset and new leadership.

Let’s dig up Alexander Hamilton.

 

Why do you hate the idea of a wall?

Let me guess your answer – “… because I can’t stand Donald Trump so I want to deny him anything he asks for.” If he wants something, it must be for some malevolent reason – right?. There is some merit to the argument but it frequently goes along with an effort to justify the anti-Trump position with a legitimate reason. That has lead us back to identity politics. Suddenly a wall is bad because all illegal aliens coming from Mexico and Central America are flawless perfect immigrants who just happen to be “undocumented“. In fact, it’s better for us to get these people (“who do all those horrible jobs we won’t do”) than it is to get migrants from anywhere else – even educated ones that speak English.

This leads directly to an open borders position. If you can’t articulate how you’re going to keep out some people then you must be in favor of letting everyone in.

Let the deluge begin.

This would be fairer to those unfortunates born in s(*&hole countries but then we must set a new rule. You are never allowed to whine about lousy income distribution. Your open borders policy will guarantee the suffering of our ever increasing underclass. You can never lament the poor economic position of the African American community or those less educated souls who failed to get a CS degree. There is pure Darwinian hell at the very bottom of the labor force and open borders guarantee its survival. (Let’s say it together class – Opioid Crisis)

Maybe you prefer feudalism…

I am not a heartless person – really. I do understand the luck of being born in the west and (in my case) getting entry to America legally. I don’t want to break up families or condemn teenagers to gang warfare in Central America. For that matter, I’m sure we could find an infinite number of Senegalese, Syrians, and Ivory Coasters who just want safety and justice. The problem is a simple one of supply and demand. A limitless number of destitute workers will (is) suppress wages for the unskilled. There’s a reason “no one will do those jobs” – the pay is terrible. What do you call a country with no borders?

So get on with it Chuck – get protection for DACA people and let’s build a southern border wall. Do the deal. And please, NPR and all the writers at the NewYorker,  stop interviewing members of the huddled masses who are either here illegally or sitting offshore waiting for plane-fare. You must tell me how you would stop the deluge before you make an argument in favor of letting in every person you profile.

Personalizing policy is the worst way to make it.

Is Trump an exception or a new paradigm?

We could argue that new media and its omnipresence have produced a new celebrity-rules condition. People don’t necessarily believe that politicians are ineffectual, they’re just bored by them. Why not make politics more exciting? No one can tell the difference between real policy ideas and absurd demagoguery anyway. Does history tell us anything? We have gone this way in the past – three times:

  • Andrew Jackson was not a politician- he was a former general who had a little bit of crazy in him. He shut down the US central bank and produced a 12-year recession. The country moved on quickly and went straight back to “normal “ cowardly politicians.
  • In 1904 the country (re-)elected a charismatic iconoclast (TR) who had become a great public celebrity. He spoke to huge crowds and produced policy that both liberals and conservatives could (and can) champion. After he left we saw a list of dullards – Taft, Wilson, Coolidge, and Hoover.
  • In 1964 the Republicans nominated Barry Goldwater – an iconoclast from the libertarian wing of the party. Was it a breakthrough for right-wing populism? Hardly, but at least they sort of stuck to the theme by later picking an actor but they also chose Nixon and GHW Bush – yawn.

None of these temporary excursions represented a significant change in voter preference. Everyone likes a change now and then but the majority of candidate offerings seem to mean-revert, back to a selection of Senators and ex-governors. Such men are rarely exciting or unconventional. Even though there are more ways today to enter the fray, there are fewer reasons to do so. The stalemate in Washington means you won’t get anything done unless you throw in your lot with one party or the other, in which case you are no different from the other mainstream choices. Oprah would be owned by the Democrats just like Mark Cuban would be controlled by Mitch McConnel et al.

We are left to ask from a policy point of view- would a Mike Pence administration be any different than the current one? Can Trump get substantive immigration and trade reform through Congress? If the answer is no then there will be little reason to champion another rogue candidate. It will be evident (again) that parties rule so you might as well go along with one of the mainstream dullards. Most Americans see the Trump choice as a disaster and that will set back any argument to choose another celebrity.

Even if he weren’t, history implies he is probably just a one-off.

Are all these policy changes targeted at me?

That’s how it feels. It’s not just Trump who is after me,  it’s the entire Republican party. I have a few basic issues that excite me and it seems that someone in Congress is singularly devoted to doing the exact opposite of what I believe in:

  1. All steps closer to universal coverage and subsidies for the poor are being undone – as though Republicans want the working poor and the nearly old – to die, literally.
  2. Net Neutrality is being revoked. I have (like most people) no choice regarding my internet provider. Now, if they want to jack up my rates because I use Netflix then they can and will.
  3. At every turn, the government seems devoted to anti-science. I seem to waste my time learning about such things as climate change as though my advocacy for clean energy production matters.
  4. Corporate taxation ranks right at the bottom of my priorities. Why? .. because profits as a share of GDP have never been higher! How does anyone defend lower corporate taxes in this context? Are many head offices moving to Switzerland? Have all those profits produced fabulous wage increases for workers?
  5. I seem to be the only person left in this country who cares about the US budget deficit. Why? I have to accept that neither party cares and the the Republicans are unfazed about jacking the deficit to $1 trillion/year. If there’s a new recession then maybe we’ll see $1.5 trn!
  6. Eliminating the estate tax moves us precisely to where the founding fathers said they didn’t want us to be. An up and coming business will be moat construction.
  7. The elimination of state and local tax deductiblity, is a perfect way for the Republican Party to hurt Democrats including yours truly. Let’s say it together -Double Taxation for all!

We have finally arrived at irrefutable proof that this is not a democracy. Gerrymandering had already pretty much accomplished this. A  new tax bill that raises personal taxes on non-millionaires in order to pay for a reduction of corporate taxes tells us that voters are irrelevant. This is precisely the kind of policy you would expect to see in a corrupt third world autocracy.

What surprises me is how this all contrasts wits other western democracies. They’re not taking the same anti-science anti-democratic bus to  insolvency town. They all have universal heath care – our House speaker wants to cancel Medicare!

I emigrated to the USA 31 years ago – I never felt as foreign as I do today.

Military Form Over Substance

No matter what people say about John Kelly’s remarks regarding Robert E. Lee – we all sort of understand him. We always default toward a feeling of respect regarding military men. They have great posture and perfect manners – always calling people ma’am and sir. Their uniforms are attractive and perfectly pressed not to mention the colorful medals that often accompany them. They march well in large powerful groups with shiny swords or rifles. When we see them at ceremonial events – parades or burials they are taciturn, appearing respectful of the flag or the coffin. The Germans in the 1930’s grew intoxicated by their glory.

We (too) are suckers for their appearance and countenance.

They may have spent the day torturing prisoners at Abu Graib prison or murdering innocent villagers at My Lai (Vietnam). Every culture forgives them of their stupidity and war crimes as soon as they see them up close looking pristine and noble. How dare we question the good intentions of a man on a horse looking dignified and proud even if it’s just a statue? To doubt the majestic warrior on his horse is to doubt all marching men with clean uniforms. We’re taught to revere all these people.

General Kelly got caught up in this unavoidable attraction to the military form just like the press secretary who, in defending him said – we should never question the intent or veracity of a general. Of course not – not with all those beautiful medals and impeccably clean shoes. Her reverence for Kelly is no different than Kelly’s reverence for Lee. Lee was famously dressed to the nines in his fanciest uniform when he surrendered to Grant. Even Grant who had known him for years and hated slavery found him to be irresistible.

The civil war should have taught us that we must consider what these people do rather than just how they look. If that didn’t teach you then maybe you want to question your judgment by looking at this guy:

He must have been a smooth operator. I’m sure he had a clean gun and called all his superiors sir. Jochen Peiper was a field officer in the Wafffen SS. He received the Knights Cross of the Iron Cross (a big deal). He was later imprisoned for 12 years for war crimes.

How about this guy?

Look at that immaculate uniform. Who wouldn’t applaud him for his service if he appeared at a football game? If you didn’t you’d be seen as unpatriotic. He is currently on trial for desertion.

Let’s face it the US is the least patriotic country in the world. People are just as happy to employ a foreigner as long as he costs less. They are just as happy to buy a foreign made product. They abhor mandatory military service and they would riot in the streets if their taxes were increased to pay for a military engagement. It seems that to make up for it we all wave flags and stand for the anthem at football games.

Form over substance wins every time.

Sundry Musings

Isn’t this exactly what the supreme court was created for?

Gerrymandering is a clear violation of the democratic principles that define a representative democracy. Both political parties are logically driven to use it when they can to gain an electoral advantage so neither will ever vote to stop it. As the 3rd branch of government, intended to be objective, it falls on these nine people to correct this. They shouldn’t throw up their hands and say it’s all too complicated. They should demand a serious quantitative measure to judge these districts. If the first solution doesn’t work well then they can accept another case and rework it. Our republic depends on them having the grit to fix this problem – not ruling on gay wedding cakes.

Should (Free) Health Care Be a Right?

No! You can’t have rights that demand other people’s labor. My right to freedom requires people to leave me alone. My right to happiness requires others to NOT hurt me. Health care requires medical professionals to work on my behalf. I can’t command them to do so so it can never be right – a privilege, maybe.

The INS Must Hire (virtually) Illiterate Agents.

We need to enhance our sense of community rather than divide it as we are doing with identity politics. How about this: Part of the inadvertent success of Ellis Island was its use of unilingual processing agents. If you gave them a hard to spell Polish or Italian name they butchered it into an anglo version that English speakers could pronounce and spell.  This inadvertently served to give people a new American identity – Katarzyna  Kowalewicz became Cassie Cowel. When Cassie gave up her old Polish name she truly felt more American. (I don’t doubt she was somewhat aggravated.) Everyone got on the same page without foreign names and impossible spelling that creates distance between people. What if every Middle Eastern person emigrating to Belgium was forced to change their name to a generic french one? Mohammed Hussein would become Hubert Fournier. A new British (former Afghani) would be renamed, Bob Pence. This would immediately reduce the distance between people that exists simply because of their names. It would also help people avoid bias and get work in a world of electronic resume applications. (See this Freakonomics podcast)

Authoritarians Who Love Well Armed Police 

The federal government (The Homeland Security Dept.) has provided local police departments with high powered weapons and war vehicles. Republicans applaud all these tools since they love such toys and they support “aggressive policing. But don’t these weaponized police geld private militias and private gun fanatics/owners? How can one be in favor of the former while obsessing over the second amendment?

Stop saying – The 2008 Crisis had nothing to do with banks.

This is becoming a common trope thanks to the statements of Hillary on her book tour and those of Lawrence Summers. Yes, the firms that went under were AIG (an insurance company) and 2 investment banks (Bear Stearns and Lehman Bros.) but that doesn’t prove the point. If the problem was localized to them then the government wouldn’t have had to get involved. The fear was that their obligations to commercial banks and the impact on those banks holdings, would destroy the institutions that hold our savings. Have they forgotten that Citibank was propped up with a $20bn cash infusion and a $300bn guarantee of its obligations? Financial crises are always about retail banks.

Originalists must strictly follow the text.

If you are a firm believer in the sacred writings of the bible then you must be forced to follow everything in it. You must stone your children when they are insolent, cut your hair precisely as Paul advocated (very short), eat strictly ancient middle eastern food and spend a lot of time washing other people’s feet. Supreme court justices who believe in the infallibility of the constitution may enforce the right of militias to own muskets but not AK-47s.

Where have you gone Walter Cronkite?

As President a Trump creates fake news with his lies, he tries to gain political advantage by denouncing accurate news reporting. This is straight from the totalitarianism playbook. I once met an older man in LA who had moved to the US in 2003 from Spain. He said “I spent most of my life (under Franco) digging for the truth, fighting through the ubiquitous state media which polluted everyone’s heads with lies. Now that I have arrived here I find that a form of Pravda (Fox News) has begun to infect people’s heads with lies and people are happy to watch!”

Is this split in the media a cause or an effect of our national political divides?

Some historians like to tell us how our political divisions were just as bad during the Vietnam war. There are differences that make the comparison useless. The political split in the 60’s was essentially a generational one – baby boomers with “modern” values vs their parents who were holding on to (largely) out of date beliefs.

Today’s divisions are more heterogeneous. The problems of the 60’s evaporated as baby boomers aged and got jobs. They became more conservative and much of their once-radical agenda – women’s rights, civil rights, greater government transparency, became accepted as indisputable truths. This time the split is based on irreconcilable views about the purpose and role of government, immigration, and income distribution. There is no demographic shift that will settle (or explain) these issues.

The severity of these divisions has led us to such a polarized state that there are almost no swing voters left. We have no authorized media that pull us together like say Walter Cronkite once did. Don’t tell me I’m mired in the past. Most other countries still have a government assisted TV station that the citizenry watch and trust. England has the BBC, France has RFI, and Germany has ARD.  A modern national voice need not have a political view but it would help settle  issues using facts like:

  • Climate change is real.
  • Russia really did interfere in our election.
  • The massacre in Newtown CT was real.
  • Al Quaeda was solely responsible for the destruction of the twin towers.
  • Barak Obama was born in the United States.

Wouldn’t it be nice if such things were indisputable? A common sense fact-based national voice would push InfoWars et al to political irrelevance. It could also provide the people with a common entertainment experience. It’s part of being French to listen to RFI. The BBC has comedy shows, human interest stories, international coverage and economic reports. It’s the first choice of news searchers in the UK.

Americans don’t share a common set of facts and this a huge problem. We’ve lost all our 60 Minutes heavyweights who spoke with authority. NPR is denounced as socialist. We desperately need a new Walter Cronkite – not the staid dull one, the one that denounced the Vietnam war after visiting the front. Opinions can and must be changed by new knowledge. Myths and conspiracy theories now take up as much space as the truth. Who would have thought that in an internet world so many lies could survive? Media leadership (and commonality) is desperately needed. Most other democracies have such national voices. We suffer every day by not having any.

Google alone isn’t getting the job done.

 

Nukes versus iPhones

President Trump proposed the idea that in order to stop North Korea we should stop enabling it by trading with any country that trades with it. This is necessary because US sanctions are worthless since we don’t trade with Nort Korea. The biggest impact would be on China since they are N. Korea’s biggest (only) trading partner and a large part of the Chinese economy depends on western (US) buyers so we have leverage.

We can argue about the efficacy of such a policy. If Europe doesn’t go along then China could just reroute exports to other countries which are not being sanctioned. We can worry about the time it would take to replace critical imports with locally produced substitutes. There are some goods that would become more expensive since you can’t really replace a billion peasant laborers. Inflation would rise as would wages. Finally, we could discuss the impact on raw material suppliers (to China) that would lose business by virtue of a big decline in Chinese economic activity.

What I hear instead is a lot of contempt and outrage over the idea simply because it would affect our supply of cheap stuff. The idea that we would use a powerful stick like trade as an incentive to get countries to behave appalls people. Is it not reasonable to ask: Why do we trade with Russia (or Turkey or Azerbaijan or…) at all? These are totalitarian states engaged in global crime, sometimes devoted to wrecking our elections. How many more reasons do you need to cut them off?

China keeps North Korea functioning and North Korea is considering nuking Los Angeles!

We have seemed to reach the ultimate victory of consumerism over sovereignty and safety. How many tainted elections can you accept to keep Russian oil flowing? How many lives are you willing to spend in LA to keep your iPhone below $35/month? The one weapon we wield is the power of the US consumer to buy foreign stuff. Every country in the world sets policy and obsesses over us. Yet when we need something, they are utterly indifferent. Their nerve makes me crazy.  When our own press and corporate lobby facilitate it, we become our own worst enemy.

The artificiality of social media tells us that such real, bad things, can’t actually occur – not at least while we’re taking a selfie with our beautiful dinner salad. What’s real is Facebook updates, Twitter attacks, and Instagram bikinis. In that world, a real nuclear attack is only something you might see on an old youtube video. Politicians don’t want to disturb those people from their virtual world…

It would be bad for business.

Am I losing my sense of humor?

I particularly enjoy political satire especially the Malcolm Gladwell type where there is a bite. I prefer Jon Stewart to Trevor Noah. I like the edginess of John Oliver compared to the softer lighter style of the network late night shows. I don’t want it to be unclear who we are laughing at and who should be offended. If someone’s not offended then why bother? Trump’s presidency produces daily fodder for the likes of Bill Maher like manna from heaven. He can mock his hair, the moronic behavior of Sean Spicer, the infighting, the Russia scandal, the lies about voter fraud, inauguration crowds etc. I can and do laugh at all of it but there are some subjects that are simply not funny.

  1. Trump’s desire to destroy Obamacare and remove health care from 17-33 million people is just not amusing in any way. The Senate’s failure to repeal and Trump’s continued demands for it to get back and vote some more, are scary and (potentially) massively injurious.
  2. This week Trump has been taunting a crazed dictator asking him to “make my day”. Our quick descent to the verge of nuclear war is, to me, not funny at all. Stephen Colbert uses it in his nightly monologue and tries to laugh at Trump’s spontaneous outburst. If his bit had been about Trump calling the White House a dump – then that could be funny. If it’s an outburst that could destroy Los Angeles, I can’t find anything to laugh at.

Sometimes a satirist must stop making jokes and soberly express his outrage and sadness over a situation. They do this after a national tragedy. They should do it before a prospective national tragedy too.

Smart Republicans vs. Stupid Democrats

Friends of mine from Arizona recently made a coherent argument to me as to why they are registered independents. When I lived there, I too was an independent. Their argument is: We are pro-choice, we believe in science over superstition and we don’t want to destroy Medicare … but the Democratic party candidate was an idiot. We met her and she was completely uninformed about the issues. In fact, some of her positions were crazy!  

I get it. Let’s stay in AZ for a minute. Jeff Flake sounds like a reasonable man. He has a new book out where he talks at length about how Repubs must work with Dems to pass good laws. He thinks Trump is a buffoon. He is in favor of “free” trade and more immigration. Many Dems would see this well-mannered man as a better Senator than the Democratic party alternative.

Jeff Flake wins and off he goes to Washington and … Does he vote as an independent thinker? Does he question the leadership and work with Dems to write new bills? Not even close. Flake votes with Trump and Mitch McConnell every time (97%).  Yes, I understand that there is a lot of party pressure on all politicians and there are of course many demanding donors but what about the views of the candidate? Their views may get them “primaried” but with regard to their performance in Washington –

They don’t matter.

This new partisan world has set up loyalty as mandatory and the only people who can veer off the path are the famous senior party leaders or independents. Frankly, the opinions and intelligence of your senator or congressman mean absolutely nothing. Your moronic Democratic member in the house will always vote for the ACA. Your Republican renaissance man will vote against expanding the debt ceiling if Ryan tells him to. Unless the world changes dramatically, there is no role for the informed voter to cross over party lines and vote for someone in the other party. Do you believe in climate change and evolution? If you do then you don’t have the luxury of picking the smart Republican candidate, unless you want Texas style school books where Intelligent Design is given equal time.

Every politician has become a silent player on a team – following orders. The only direction he can go is further to the right (if he is a Repub) or to the left to join Bernie (if he is a Dem). Reasonableness and intelligence that bring someone to the center are features to be stripped away by Rush Limbaugh or the Freedom Caucus. You can be a maverick but you’ll only last one term.

Studying candidates carefully – expecting them to vote rationally and independently is a way to empower the leadership of the other party.