Republican presidential nominee Donald Trump (photo: Mark Lyons/Getty Images)
Mick Jagger and the Rolling Stones in “You Can’t Always Get What You Want”, first verse:
“I saw her today at the reception
A glass of wine in her hand
I knew she would meet her connection
At her feet was a foot-loose man
No, you can’t always get what you want
You can’t always get what you want
You can’t always get what you want
But if you try sometime, you’ll find
You get what you need”
Needs and wants, there’s a difference. Mick Jagger knew it. Needs are fundamental; wants are desires, the things that we would like. In normal times, the two are mangled beyond recognition, doubly so in election season.
Both parties – one a neo-Marxist enterprise, the other a personality cult – are in a mad dash to pander to the so-called middle and working classes, non-college educated. By so doing, the two parties in this time of voting advocate a command economy for the benefit of this general mass of people who work by the clock, do contract labor, and own small businesses. Here’s a splash of cold water: command economies don’t work, no matter their alleged beneficiary. Why? They’re commanded by the government, it’s employees and politicians. Any goodies granted one group come at the expense of the others, not just the rich, and will include many in the middling ranks of the socioeconomic pyramid. It’s the philosophy of beggar-thy-neighbor. That’s all that governments can do. Any bennies for blue collars – or the middle class – will come at the expense of the gradual negation of their own jobs and the futures of their children as future growth is diminished by “fair share” demagoguery against the rich. We’ll pay in more ways than one, not just at the checkout counter. The economic math is inexorable.
Though, to be real, today, the college-educated aren’t any more cognitively advantaged than the non-college educated. Many BAs, maybe most, are just proofs of indoctrination in claptrap. Indoctrination is not education.
The claptrap may help explain the broad acceptance of economic nonsense. A belief is deeply embedded that our specie of unionization is good, that you can wall off the country from foreign competition, hike taxes on the rich, and ignore the rest of the world, and everything will be hunky-dory. That isn’t a realistic game plan. It’s merciless, incremental national suicide.
Anyway, such is the political fashion of the time. Warning: fashionable politics and economic good sense don’t mix, like drinking and driving.
Profoundly galling is the demagogic blue-collar suck-up from both parties in the form of a love affair with “coerced” unionization, for that’s what we’re talking about, coerced. Of course, “coerced” is a yucky word, so they want to leave it at simple “unionization”. But honesty demands that we realize that the NEA, AFL-CIO, SEIU, the Teamsters, the entire litany of labor monopolists, actually demand “compulsory” (coerced) membership for everyone in the workplace. These folks aren’t into “voluntary”.
Their political word play doesn’t clarify squat. More of the word play clouds the picture even more. Coerced unionization comes in something referred to as “collective bargaining”. The question is, for them and everybody else, how to make a “collective” out of an inchoate mass of workers of divergent individual interests and beliefs? Answer: set up a system of legal protocols to force everyone into the thing, that’s how. A monopoly of labor under one set of masters, that’s how. Use the power of the state to impose one man, one vote, one time, since it’s harder than hell to decertify the labor monopoly once it’s established. After the initial certification vote to create the thing, you might be able to opt out, but you’re still going to have to pay for the thing (in California, “agency fees”). And don’t underestimate the organization’s creative bookkeeping to vacuum as much as possible out of every employee’s paycheck into the union treasury.
And guess what the dues-fueled slush fund goes for? Politics and more politics. These unions realize that their very existence is dependent on the power of the state to create and enforce the protocols that create them. Their existence and power are dependent on the state. Limited government, on the other hand, by definition, leaves little opportunity to hobnob with politicians to make law to squash dissenters at the workplace. That’s the reason for the unions’ hearty distaste for our constitutional republic. By definition, a constitution limits government power to what’s written. Big Labor demands what’s not written and therefore legally impermissible, and progressivism obliges. Progressives (in today’s parlance, neo-Marxists), as the unions’ chief political benefactors, simply interpret The Constitution out of the way by calling it a “living constitution”. How convenient.
In the end, these politically privileged labor monopolies cannibalize their own industries and morph into pillars of radical cultural revolution, ready to join their lefty comrades at the parapets. Industries flee their self-destructive grip; opportunities decay for upward mobility; many of its members discover their daughters sharing bathrooms and locker rooms with XY “girls”; and their schools, streets, parks, and downtowns are dangerous pits of despair. So much for “look for the union label”. This ain’t your grandpa’s UAW.
In fact, the UAW eyes richer fields to plow in organizing tomorrow’s cultural revolutionaries in the growing cadres of college teaching assistants. Imagine it, your son or daughter might be taught or their papers graded by a Hamas-loving activist who can’t be removed due to the protective political and legal force field provided by the UAW. It’s happening in California. The UAW has jumped on board the organizing gravy train of public employment, the very thing that has rendered California irredeemably ungovernable. California’s one-party state has turned itself into a clone of the Islamic Republic of Iran or the CCP with the guardians of the revolution, like the mullahs or the Party politburo, being the cabal of labor mandarins who were empowered by the very same state government that they now dominate. For the worker bees, they mostly approve of this arrangement so long as the pipeline of bennies keeps flowing, a glaring example of stage one thinking.
“Most thinking stops at stage one.” — Thomas Sowell in Applied Economics
Thomas Sowell
Stage-one thinking? Sowell defines stage one as a myopic concern with only the immediate consequence of a proposal or action. Then a sharper mind, in response, forces the person to address, “Then what?” After a series of then-whats, the person quickly realizes that their great idea is buffoonery. But don’t expect much stage two or three among most of those without a BA, and many of those walking around with one. According to a Pew survey from 2019, those with less than a college degree are four-and-a-half times more likely to view our participation in the global economy as a bad thing (see #1 and #2 below). Blue collar support for a wide range of foreign engagements has been waning for years. But then what, after the tariffs and abandonment of Ukraine?
You see, a stage-one buzzword of the Left has entered the lexicon of the Right: industrial policy, which basically translates into raising the economic drawbridge in international trade. It parallels Lenin’s infamous “central planning”. In central planning, the government manages, or directs, the economy to mold the “better society”. Whose better society? Of course, it’s the one in the mind of those perpetual obsessives who’ve spent their adult lives in fevered hatred of the existing patterns of life. The mental pathology infects the Left, and now the virus has come to the Right.
The scheme runs four-square into Hayek’s “knowledge problem”. Their end state of bliss – America First – demands great power in the form of more government interventions to direct the lives of millions of economic actors acting both as buyers and sellers, consumers and producers, taxpayers and beneficiaries, in the whole range of possible economic activities available to each one of these participants. Such knowledge and wisdom are beyond human capacity, let alone the people manning the controls of the massive administrative state, the Fed, congressional committee staff, local planning commissions and boards of supervisors, a state’s Dept. of Fish and Game, Coastal Commissions, or the U.S. Customs and Border Protection, the people who’ll enforce Trump’s tariffs. It’s a fool’s errand, but one, today, the Right seems anxious to pursue. Read J.D. Vance’s or Donald Trump’s speeches.
The people who don’t like you driving a Toyota are the same people who see no reason for NATO, an independent Ukraine, protecting Taiwan and its Taiwan Semiconductor, or preventing the oil-rich Middle East from becoming the playground of the mullahs. For stage-one thinkers, anything beyond our borders places an out-of-sight second to the extortionate goodies made possible by a cozy relationship with accommodating politicians. Don’t expect stage-one thinkers to have a grasp of the world war stage-setting in the 1938 Munich Agreement. Aggression was rewarded and soon we were embroiled in a total war of 80 million deaths, civilian and military.
Scene from the Battle for Iwo Jima, Feb.-March 1945
We could have stayed out as the first edition of America First in 1940 demanded. It took a brazen surprise attack to shock stage-one thinkers into realizing that events an ocean away can lead to Americans dying in large numbers.
“Hard times create strong men, strong men create good times, good times create weak men, and weak men create hard times.” — G. Michael Hopf in his novel Those Who Remain
Though, are we the same kind of people who could tolerate the bloody storming of the beaches of Iwo Jima and D-Day’s Omaha, or show persistence in the horrid conditions of Okinawa, the Hürtgen Forest, or the Battle of the Bulge? One has to wonder. Our elections are a barometer of the public psyche. Look at the pitches, now from both sides. Our elections are looting expeditions. Republicans promise not to touch our bankrupting entitlements while delivering on all manner of goodies to the middle class and blue collars. Ditto for the donkey party, only by a factor of ten. It’s all billed as fair-share justice when in reality it’s just targeting the successful to bankroll their pet social engineering schemes. Being spoon fed from the public treasury isn’t a promising approach in preserving a hardy people.
The Democrats used to be the party of government command and control. Not any longer. The Republicans offer a similar farce.
Think about it. What’ll happen in this command economy of the Right is a replay of the 1986 Immigration Reform and Control Act (Simpson-Mazzoli) signed by Reagan. We got the amnesty but little of the other component: enforcement. Trump will get his tariffs – something the Democrats are already giddy about – but won’t get much regulatory relief, the very thing that makes us uncompetitive with the rest of the world. The blue-collar suck-up in the form of compulsory unionization also awaits. We might get some reprieve from the greenie totalitarianism, but NIMBYism remains a populist obsession. Republicans have no stomach to fight hikes in the minimum wage, nor the other humungous host of mandates that raise the cost of doing business in the U.S. The tariff wall goes up and we will wallow in our own petri dish of fiscal and regulatory incontinence.
Prices will rise, and we may not even notice it. Higher prices only become apparent if there is a point of comparison. Where’s the comparison after walling off the competition? However, we will see an economy frozen in amber, limping along, with accountability and the essential force of creative destruction limited to those smaller firms without an intimate relationship with powerful politicos. The big government of the command economy necessitates big business. Big government and big business are Tweedle-dee and Tweedle-dum.
Welcome to the cesspool of the blue-collar command economy and an electoral choice between detestables. That’s our choice this time around in the presidential sweepstakes: a California totalitarian with a velvet glove or a self-absorbed panderer. Oh, the panderer is “tough”, but only tough on foreigners and not to some within his own ranks who unwittingly demand undeserved and extortionate privileges. Which one of the offerings do you dislike the most?
For me, I’ll put on the hazmat suit and vote for the bombastic panderer. Somehow, a cultural revolution of porn to grade schoolers, teenage genital mutilation, XY “girls” everywhere in women’s spaces, eat the rich, carte blanche abortion inclusive of pedicide (killing of children), and greenie totalitarianism seems to be more Orwellian than the tariff buffoonery and blue-collar suck-up. There, I made my choice.
RogerG
Sources:
1. “6. Views of foreign policy”, Pew Research Center, 12/19/2019, at https://www.pewresearch.org/politics/2019/12/17/6-views-of-foreign-policy/
2. “Majority of Americans take a dim view of increased trade with other countries”, Pew Research Center, 7/29/2024, at https://www.pewresearch.org/short-reads/2024/07/29/majority-of-americans-take-a-dim-view-of-increased-trade-with-other-countries/
(Schmuck: a foolish or contemptable person; origin in the Yiddish schmok, i.e. penis)
NIMBYs, schmucks
The chant “Save our democracy”, it’s flung like so many shotgun pellets at anyone viewed as an opponent. What about the people, the people doing the flinging? The reality is that we have more “democracy” than ever before, and the dissatisfaction with our plight has never been greater. How does that compute: more democracy equals more discontent? Can the collective, also known as “the people”, act in the manner of schmucks, harming themselves? Democracy, schmuckocracy?
The level of discontent is palpable in polls. Here’s one: Gallup’s recent survey of public confidence in major institutions ranging from the governmental to the social and economic, public and private (see #1 and #2 below). 11 of the 16 measured entities experienced declines; not one turned in a sterling performance. Much of the public’s lackluster assessment of our institutions can be attributed to their current conduct. Biden’s infirmity, an engineered chaos at the border, the embarrassing bugout from Kabul, the highly destructive endeavor to shut down nearly all human activity during a viral episode, inflation, the unaffordability of shelter, the unaffordability of energy, crime, nothing seems to work, boys in girls’ locker rooms and bathrooms, etc., goes a long way to heaping scorn on government, on “our democracy”, on any of our institutions that had a hand in the degeneracy.
eople running alongside a U.S. Air Force C-17 transport plane as it moved down a runway of the international airport, in Kabul, Afghanistan, in August, in 2021. (photo: Associated Press)An alleged transgender boxer consoles Italian boxer who quit after 46 seconds in Olympic female boxing match.
It doesn’t end there. Many private ones – “big business”, big tech, the media – get slammed, and maybe deservedly so.
The Supreme Court takes a hit as well. That might be due to another feature of a democracy: the people’s tendency to be acclimated to bunk. Since 1973 when the Court imperiously invented a provision in the Constitution that established a national right to take unborn life, “the people” grew accustomed to it. A 51-year odyssey ensued to do it. So, by today, people crave their newly minted national license to end the life of people who haven’t exited the womb. The Court’s Dobbs decision just struck the word “national” from the license, not the license itself. But don’t expect “the people” to understand such subtlety.
Combine this with the habit of the public to be persuaded by jargon, such as “assault rifle”, and therefore unwittingly consign the Second Amendment to the mercy of demagogues, and we have another journey down Alice’s rabbit hole. The Constitution stands in the way of the passion of the moment so “the people” turn on it and the Court in demanding a shortcut around the cumbersome task of properly amending it. Understanding isn’t a feature of the mob, which sadly is another trait of democracy.
We’ve injected so much unrestrained democracy into our system that our founders’ original design seems strange to anyone born after the Great Depression. Reading the Constitution must seem like a bizarre experience for a population raised on a steady diet of democracy this and democracy that. An example would be the abuse heaped on the Electoral College. Once a powerful faction loses the presidency by it, but wins the popular vote, they agitate to dismantle it and make the head of the executive branch conform to the wishes of the crowds on the two coasts and every urban center with a college campus. It’s not enough that a form of direct democracy is the operative principle of the lower house of Congress in the Constitution. The will of the mob must be made to dominate throughout.
Lest we forget, checking democracy and its mobs was an important goal of the founders. Here’s a sampling of their views:
“Democracies have been found incompatible with personal security or the rights of property; and in general been as short in their lives as they have been violent in their death.” – James Madison
“It has been observed that a pure democracy if it were practicable would be the most perfect government. Experience has proved that no position is more false than this. The ancient democracies in which the people themselves deliberated never possessed one good feature of government. Their very character was tyranny; their figure deformity.” – Alexander Hamilton
“Remember, democracy never lasts long. It soon wastes, exhausts, and murders itself. There never was a democracy yet that did not commit suicide.” – John Adams
“It is one of the evils of democratical governments, that the people, not always seeing and frequently misled, must often feel before they can act.” – George Washington
There was never a more searing indictment of democracy than that of Ambrose Bierce when he wrote toward the end of the 19th century, “Democracy is four wolves and a lamb voting on what to have for lunch.”
“The people” aren’t cognizant of our already mammoth strides away from the founders’ restraints on the lustful will of “the people”. Even for the House of Representatives, that bastion of the popular will in the original framing, a state’s representation became determined by single-district direct elections and not by the state legislatures by the late 19th to early 20th centuries. That was only the beginning of the state legislatures’ attempt to neuter themselves in a mad dash away the founders’ wisdom.
The state legislatures were further taken out of the picture with the 17th Amendment: the direct election of senators. They would no longer have any say in the selection of the state’s two senators. Then came the initiative, referendum, and recall – “the people” make law, reject law, and reverse elections. These ideas were championed by 19th century progressives who were more intent on removing the obstacles to their rise to power. Smoke-filled back rooms were replaced by the big-government, neo-Marxist lunatics of the faculty lounge, the so-called “experts”, the constituency of our modern progressive gang, the people mostly responsible for our discontents when you think about it.
In the irony of all ironies, like the state legislatures, “the people” chose people who then took strides to remove “the people” from self-government, and thus enunciated the rise of the massive and unaccountable administrative state. This new Leviathan can make law (regulations), execute their law, and adjudicate on their law without much input of an electorate. Where’s the democracy? It’s here: “the people” elect progressives, and continue to elect progressives particularly in the populous blue jurisdictions, who then heap more layers on the mountainous administrative state like the many bands piling upward in a mature stratovolcano.
No wonder we’re in a hell of a mess. Pressure will build, and it’ll blow like a proverbial Vesuvius, but make sure that you’re not in the path of the political pyroclastic flow that follows. In 2020, a cop-beating video clip went viral and progressives seized the opportunity to dismantle law enforcement, elect DAs who won’t prosecute, decriminalize criminality, riots erupted, people and property were torched, and many cities descend into the dysfunction and lawlessness where they lie today. The only real export of LA and New York City are people as they flee the pyroclastic flow.
Seattle police at scene of riots in 2020 (photo: KOMO News, Seattle)Seattle the day after the occupation by so-called anarchists and Antifa, 2020 (photo: KTTH 770, Seattle)
One word describes the hidden potential of the “our democracy” chant: California. The taxes, the crime, the sordidness, the inner-city dysfunction, and the pervading sense of overall decay envelop the state and its “democracy”. “The people” in the state chose it, and continue to choose it. California’s “our democracy” is a Democratic one-party state.
Unfortunately, the state’s Democratic Party dominates the national Democratic Party. The socialism of the state’s ruling Dems is the guiding philosophy of the national Dems. The state’s Dems wreck the state’s economy and the national Dems work to imitate the wreckage everywhere else. Quite a tag-team duo.
The state’s Dems lay waste to social life in making a mockery of nature’s male and female. Boys rhetorically become girls and the next thing we see is that they’re in the girls’ locker rooms, bathrooms, and on their swim, track, volleyball teams, etc. The state’s public schools are required to disseminate the gender confusion in the curriculum. Taking his cues from California, Biden announces changes to Title IX of the Civil Rights Act to include the transgendered as a protected class thereby codifying rhetorical girls and boys into everywhere (see #3 below).
The not-so-golden state’s administrative state is imperial thanks to the ruling party’s zeal for upending an entire way of life in a senseless and manic effort to modulate the earth’s atmosphere. That’s right, one state of 39 million people (and declining) is gung-ho about sacrificing its people’s standard of living on the altar of climate-change ideology, acting like they hold the thermostat to the global atmosphere. They’d like to take the suicide attempt national, and Biden is accommodating. In May of this year, the EPA issued new power plant regulations that’ll function as a death warrant to reliable, affordable electricity by mandating expensive efforts (carbon capture, etc.) to reduce emissions in fossil fuel plants (see #4-6 below). It’s death by regulation, parroting California’s lunacy, and Europe’s. However, Europe backed away, not so for the zealots in California and D.C.
Do “the people’s” government in America care? Do “the people” even have enough of a pulse to care? As for the first question, no, they don’t care a lick about your plight. As for the second, no sé. These activists in power are true-believers, with all the heart of a Bergen-Belsen commandant. They are coming to get more than your sedan. They sneer at your air conditioner, which is a lifesaver for anyone not living in Malibu (see #7 below). This is totalitarianism pure and simple. Like a rabid Marxist, their ultimate goal is to reengineer humanity, making the new man, woman, whatever. You’ll be forced to live in the world that they have created for you. And, like previous crusades for heaven on earth, it’ll be the opposite.
Watch as we relive the travel from hubris to nemesis in Greek tragedy. The hubris hides ignorance and arrogance which leads to the disaster of nemesis. Welcome to the base of the Democratic Party and the EPA.
We are living the nemesis that arose out of the hubristic arrogance and ignorance of a clan of firebrands, firebrands that we elected. Don’t like Trump, voted for Biden, maybe vote for Harris in 2024? Reality sets in: you avoid the ogre but get the greenie neo-Marxists and ruination.
Both sides decry the escalating cost of housing, the loss of the “American dream”. The problem can’t be laid at the feet of high interest rates or inflation since it predated Biden’s spiking of the money supply in trillions of new spending. No, speaking of supply, it’s a supply problem. It’s been building for decades. Look around you and you’ll hear hostility to housing construction: “The new people crowd my streets and schools”; “I’ve lost my small town”; “The new developments spoiled the scenery; they’re ugly”; “It’s destroying my property values”; “My property taxes have jumped to pay for their infrastructure and public services.” Who’s there to speak for the young’s access to the “American dream”? Nobody. The only ones filling the hearing rooms and filing the lawsuits are NIMBYs galore and eco-revolutionaries.
This method of governance was pioneered by California. Growth control incubated in northern California (Petaluma, 1961). In that instance, “the people” elected county and city officials to freeze in amber the “character” of the place. What do you think happened to the housing supply? Regulations and delays only added to the cost of whatever survives the local gauntlet.
In fact, the brutal gauntlet was extended. “The people” of California gave to the world the California Coastal Commission (CCC) in approving Prop 20 in 1972, providing more avenues to block, impede, and knock out new housing, or make it so expensive that nobody in their right mind would want to pour a foundation in the “coastal zone”, which is another one of those politically fungible concepts that prove useful to all eco-utopians and would-be social engineers statewide.
The CCC is one of many regulatory behemoths that “the people” of the state have created with their own hand in propositions or through their elected representatives to make it difficult to get the nod to nail two studs together. Eco-obsessions reign supreme. The California Environmental Quality Act (CEQA) is the mother of all hoops to jump. It empowers the California Department of Fish and Game, the various Air Quality Management Districts, anything conservation oriented, anything eco-utopian, who can only be pacified by project defeat, endless delays, and burdensome costs. It’s a veritable goat rope.
In a microcosm of the state’s protracted assault on housing, a small 4-lot housing development in Los Osos, San Louis Obispo County, was approved as per the state and the CCC-ratified Local Coastal Program (LCP) of the county. Later, the CCC discovered a sand dune on the property, declared it to be in an Environmentally Sensitive Habitat Area (ESHA), and repealed the permits (see #8 below). The developers are fighting back in the California Supreme Court. I’m pessimistic because the state’s courts reflect the longstanding and overweening one-party state.
Gauntlets bedevil the entire state. It’s so prevalent, according to the California Association of Realtor’s (C.A.R.) Housing Affordability Index, only one in five home buyers can afford a median-priced house in the state (see #9 below). According to Zillow, of those prospective home buyers, 70% are married and 44% have children (see #10 below). Where do the underhoused with kids go instead of just another rental in a cramped apartment complex? Good question. Possibly, a U-Haul barreling east on Interstate 10 might be their best option.
But do the powerful really care? Do they understand supply and demand or possess even a rudimentary grasp of trade-offs? Eco-purity is expensive, very expensive. So-called saving the coastal zone or preserving the habitat of the blunt-nosed leopard lizard, the gnat catcher, kangaroo rat, mountain lion, or whatever happens to dance across the screen of the hawkers of biodiversity, comes at the price of more than a house or rent. The price tag shows as lost opportunities for the young and generations to come. Their “American dream” will be stillborn. But who shows up at the hearings or has an army of “public interest” law firms ready to file suit in court? It’s the current homeowner who already has their slice of the dream and the eco-zealot who doesn’t care about the dream and would be quite happy with a repeal of the Industrial Revolution and upward mobility. They’d be overjoyed with the return of the Middle Ages.
All of this can be traced back to “the people”, to “our democracy”, to the four wolves deciding the fate of the lamb. The people chose societal collapse. It didn’t magically appear out of the ether. And it shows in the names on the ballot. The parties gave them to us, or, more accurately, the party bases. The political parties are more democratic than ever before, and their choices are miserable for anyone outside the “bases”. For that is what democracy led to: the rise of the “base”. Think of the “base” as a mob, an assemblage animated by jive. For the Democrats, they’re enraptured by Marx and his ideological cousins in the Frankfurt School and faculty lounges everywhere. All of this is unstated, mostly unknown to them since their beliefs never came with source footnotes. They deny it while implementing it. Anybody reaching the top of their slimy pole must sacrifice their good sense at the altar of the base’s groupthink.
Prominent Marxists – “critical theorists” (CRT, being woke) – of the Frankfurt School, who would be influential in the West. From top-left; Oskar Negt, Jurgen Habermas, Axel Honneth, Max Horkheimer, Theodor Adorno, and Claus Offe
The Republicans have discovered their own inner mob, or “base”. It’s a cult around Donald J. Trump. People were right to admire his policy successes but they were a product of Reaganism and not anything that might be construed as Trumpism. Social conservatives and free marketeers populated his administration giving the country border control, tax cuts, deterrence, a burgeoning economy, and a Supreme Court that acts like a court and not a legislature – the very essence of Reaganism.
The socialist Bernie Sanders in 2020AOC and powerful Dems announcing their Green New DealMAGA from 2023 (?)
What would a second Trump term bring? I suspect that it’ll be more like Trump and less like Reagan. In economic policy, he’ll pursue his own form of central planning which is called industrial policy with a flurry of tariffs and taxpayer-funded benefits to his own favorites. Right-to-work – freedom from coerced unionization – may take a back seat in a bid for the union vote. Trade protectionism will be combined with a new isolationism, which is nothing more than America alone. We might even see an abandonment of Ukraine. Would any of this be popular among the general public? It’s hard to say, but it sells with the “base”.
How did we get saddled with an inevitable neo-Marxist and Donald Trump when both are detested? Trump in a good week never rises above the upper 40’s in his favorability. The popularity of the Dems’ neo-Marxism is hard to gauge since it’s never exposed as such. People probably wouldn’t embrace the public pronouncements of Kamala Harris and the Democratic Party platform if saw the line-by-line plagiarism from the writings of the neo-Marxist Frankfurt School or the eugenics of Margaret Sanger.
As of today (8/3/2024), Trump’s favorability stands at 43.3% and is viewed unfavorably by a whopping 51.7% (according to FiveThirtyEight, see #10 below). He’s a consistent stinker. In the same poll aggregation, Kamala Harris’s standing isn’t much better with 42.4 favorable and 49.1% unfavorable. She’s about the same in the pungency factor, even with a honeymoon of media praise, near worship, after her rise to donkey-party heir apparent.
The Dems’ neo-Marxism and its espousal by its candidates is joined by the GOP’s transformation into a personality cult. For both parties, it’s the culmination of a century and a half of the democratization of their operations, and like the injection of direct democracy into more of our politics, dissatisfaction increases with the results.
Political extremists love the democracy rhetoric, aiming to recreate the Paris mob of the French Revolution. Late 19th century progressives – many of whom were socialists (ex.: John Dewey) – pushed for the direct primary to replace party caucuses. Primaries to choose delegates became routine starting in the 1970s for the Democrats and 1980s for the GOP. It resulted in mass fealty to a person or to a groupthink among the base, thus the rise of the Dems’ Bernie Bros and the woke and the Republicans’ MAGA (see #11 below), with a corresponding rise in public disillusionment.
Democratization means rule by the base, not by the franchise. Interparty rivalries get stamped out by a normally radical groupthink that captures the imagination of the party’s activist base. For Dems, the groupthink is an enthusiasm for a campaign to ferret out white/heteronormative/male privilege, to expand the unacknowledged footprint of the neo-Marxist Frankfurt School’s principal creed. They’ll hide it because they have to. The stench of the “socialist” label still pervades.
It’s so widespread that party big wheels – long-in-the-tooth politicos and big donors – had to step into the breech in 2020 to sidestep the frenzy for the Bernie Bros by resurrecting the doddering Biden, and later to swap the infirmed Biden for the younger-but-babbling Kamala Harris. At least the Democrats have some adult guardrails which is a backhanded admission that too much democracy can get you into trouble.
Guardrails don’t seem evident in the GOP. Trump romped from primary to primary despite the fact that he’s the weakest candidate in a general election matchup. Trump is popular with the base, unpopular to the those outside of it. An infirm Biden managed to keep it close with Trump, and now the dullard Kamala Harris has drawn even with the man from Mar-a-Lago. Ironically, with Trump in the picture, execrable socialism is still in play, thanks to mob rule in both parties and a broad apathy compounded by ignorance.
It must be hard to admit that schmucks exist in more places than among elites. Look around you, maybe take a long hard look in the mirror. Me too! More direct democracy exposed the likelihood that schmucks have a broader presence than we’ve been willing to admit. Party bases can be full of them. The general public too. “The people” can desire things that they ought not get. The demands of half-witted utopians and adults who’ve already got theirs trample the prospects of the young and those yet to be born. The adults of today confiscate the opportunities of those too young to vote and future generations.
It’s disgusting, and brought to you by . . . democracy. Democracy, schmuckocracy.
RogerG
Sources:
1. “Historically Low Faith in U.S. Institutions Continues”, Lydia Saad, Gallup, 7/6/2024, at https://news.gallup.com/poll/508169/historically-low-faith-institutions-continues.aspx
2. “Confidence in U.S. Institutions Down; Average at New Low”, Jeffrey M. Jones, Gallup, 7/5/2024, at https://news.gallup.com/poll/394283/confidence-institutions-down-average-new-low.aspx
3. “Biden Administration: Title IX Protections Extend to Transgender Students”, Lauren Camera, US News and World Report, 6/16/2021, at https://www.usnews.com/news/education-news/articles/2021-06-16/biden-administration-title-ix-protections-extend-to-transgender-students
4. “Greenhouse Gas Standards and Guidelines for Fossil Fuel-Fired Power Plants”, EPA, at https://www.epa.gov/stationary-sources-air-pollution/greenhouse-gas-standards-and-guidelines-fossil-fuel-fired-power
5. “4 Things to Know About US EPA’s New Power Plant Rules”, Dan Lashof, Lori Bird, and Jennifer Rennicks, World Resources Institute, 5/3/2024, at https://www.wri.org/insights/epa-power-plant-rules-explained
6. Much thanks to Gordon Hughes of the National Center for Energy Analytics in “The EPA’s Proposals for Power Plants Satisfy the Definition of Insanity”, National Review, 5/13/2024, at https://www.nationalreview.com/2024/05/the-epas-proposals-for-power-plants-satisfy-the-definition-of-insanity/
7. “It’s time to rethink air conditioning”, Rebecca Leber, Vox, 8/26/2021, at https://www.vox.com/22638093/air-conditioning-worsens-climate-change-ac
8. “California Coastal Commission unlawfully blocks home construction”, Pacific Legal Foundation, describing their lawsuit against the CCC in Shear Development Co., LLC v. California Coastal Commission, at https://pacificlegal.org/case/shear-california-coastal-commission/
9. “2nd Quarter California housing affordability”, California Association of Realtors, 8/11/2023, at https://www.car.org/en/aboutus/mediacenter/newsreleases/2023-News-Releases/2qtr2023hai#:~:text=Fewer%20than%20one%20in%20five%20%2816%20percent%29%20home,according%20to%20C.A.R.%E2%80%99s%20Traditional%20Housing%20Affordability%20Index%20%28HAI%29.
10. FiveThirtyEight’s Aug. 3, 2024 poll aggregation at https://projects.fivethirtyeight.com/polls/favorability/donald-trump/
11. “10.1 History of American Political Parties”, Open Library, at https://open.lib.umn.edu/americangovernment/chapter/10-1-history-of-american-political-parties/
Republicans are bedeviled by the spawn of Trump and Democrats are enthralled by neo-Marxism in their combination of rank socialism and malignant identity pandering. While Democrats engage in a headlong rush into college-campus extremism, many Republicans seem intent on adopting the philosophy of Smoot-Hawley, ignoring Adam Smith’s lessons on the inherent foolishness of politicians managing trade or the general economy, shunting Hayek’s knowledge problem to the corner, and an emulation of Soviet Gosplan (central planning) only with them in the catbird seat. As a Republican in the Buckley-Reagan tradition, it’s galling. Trump is responsible for unloading this hash of blustery claptrap on the sole remaining party that should know better.
The steamy love affair with government by some of today’s Republicans shouldn’t catch anyone by surprise. Every politician loves to bring home the bacon, so politics can make hypocrites of us all. Yet, this is different. An orthodoxy developed around Trump’s buffoonery. Suddenly, Republicans and others on the Right started walking around proclaiming the evils of the free market.
It’s not surprising that Trump should be their spiritual leader. Here’s a man who made fame and fortune in real estate, the economic sector most debased by politics and government at every level. Government can help you make millions, indeed billions. Government is a partner for a big developer who needs local potentates to eliminate competitors, get approvals, and steamroll recalcitrant homeowners. Trump happened to have a career in an industry that found government not necessarily an obstacle but just another factor of production. The transition from Big Government Developer to Big Government Republican is easy in that matrix. Add a little 60’s Queens street tuff to the public persona and you too can have people walk over broken glass to attend your rallies.
The Republican slide into incoherence came to the fore at the conservative Intercollegiate Studies Institute’s American Economic Forum on July 29. Billed as the antidote to Davos’s left-leaning World Economic Forum, it interestingly emulated Davos. Both confabs provided ample grist for government control of the economy. The only difference is the targeted beneficiaries.
A defensible role for government as referee against brute force and monopoly in the market is one thing. It’s quite another to play Karl Marx in distorting economic activity to the advantage of one class. For Rick Santorum, it’s blue-collar workers – not much different from Marx’s Cinderella class of the proletariat. Subsidies, the tax code, and regulatory powers should be geared to cementing the working class to the GOP in Santorum’s grand design – admirable as a political goal, but lousy economic advice. Did it ever grace his mind that blue-collar workers need blue-collar industries? And blue-collar industries need investment, i.e., capital, i.e., Wall Street. The economy is a synergistic whole. The only answer from Santorum and company is to grease the skids for manufacturing, mindless of the effect on the rest of the economic web.
Rick Santorum
It doesn’t work. Thomas Sowell’s famous dictum cannot be repealed: “There are no solutions. There are only trade-offs.” The reality is that some manufacturers get favored treatment over others. Some get the resources that are sucked away from others.
And what of those labor unions who turned themselves into the false champions of those blue collars? Remember, the same unions that drove two of the big three automakers into the arms of a government bailout in 2008-9 are manifestations of the one currently aggravating the supply-chain crisis at west coast ports, the featherbedding International Longshoreman and Warehouse Union. Anchored cargo ships are visible over the horizon. A blue-collar organization meant to benefit blue-collars does so at the expense of every other facet of economic life, and other workers. Government has a congenital habit of only turning its gaze to the squeaky wheel and to heck with the other three. Try driving a car with three flat tires. Trade-offs anyone, aggravated by government winner-picking?
How do tariffs fit into Santorum’s quest for the blue-collar vote? Good question, but another participant at the talkfest, Trump’s trade czar Robert Lighthizer, is a fanboy of them. He is a practitioner of economic snake oil, just like his patron, Donald J. Trump. With “balanced trade” as code for tariffs, he proclaimed that they wrought “astonishing results”. Really? I hear “post hoc, ergo propter hoc fallacy” (two events happening chronologically with the earliest one mistakenly assumed to be the cause) in the bombast. So many reforms were swirling around in 2017-2018, thanks to a Republican Congress, to overwhelm the impact of the tariff silliness.
Robert Lighthizer
Thus, attributing the so-called “Trump economy”, pre-COVID, to the orange man’s tariffs is demagogic self-puffery. Take the “Trump” tax cuts. They were really the Paul Ryan/Republican-caucus tax cuts, a distillation of ideas running around Republican policy circles since at least the 1990’s. Trump just happened to be in office to put his signature to something that was mostly the work of others. The business tax reductions were testosterone for economic muscle growth. And it showed according to AEI’s James Pethokoukis. Let’s just call the “Trump” tax cuts what they really were: the “Paul Ryan/Republican” tax cuts.
Oftentimes, cutting regulations can act like tax cuts. Remember the Congressional Review Act (CRA) of 1996? It codified a Congressional veto power over the administrative state’s rule-making juggernaut. Keep in mind that the Democrats love the administrative state going back to Woodrow Wilson so don’t expect them to exploit the power. Thus, Congress’s successful use of the CRA is dependent on the vagaries of presidential elections. A repeal requires a president’s signature like any bill. From 1996 to 2001, a repeal succeeded only once when a Republican, George W. Bush, was in the Oval Office. We’d have to wait another 16 years for a Republican-controlled Congress to remind itself of its power. Paul Ryan and Mitch McConnell in 2017 jumped at the chance and sent to Trump’s desk 14 veto resolutions bringing to heel the federal eco-agencies, FCC, Department of Labor, SEC, the Ed Department, etc., of our community-organizer-in-chief, Barack Obama. Trump simply put his signature to a political impetus that began elsewhere by other people.
For Lighthizer to bully his way to the podium at the American Economic Forum to take credit brings braggadocio to new heights, like his mentor, the prince of Mar-a-Lago.
The tax cuts, reining-in the pit bulls of the Left’s administrative state, and unleashing American energy production have long been Republican talking points and planks in the party platform, and not the lab creatures of Trump, Robert Lighthizer, or Peter Navarro (by the way, a former SoCal Dem no-growther). The GOP has long been a booster of opening up ANWAR, fracking, horizontal drilling, pipelines, refineries, offshore platforms, things that would incite conniptions in Silicon Valley lunchrooms. Trump just happened to be the sympathetic warm body to not stand in the way of affordable energy.
As for Trump’s beloved tariffs, they are sand tossed into the economy’s gears. They are a drag since tariffs are taxes. Surprise! Impose them and you just increased the burden on consumers and businesses. The Trump 25% tariff on imported steel slabs is a case in point. American steel producers remanufacture these slabs into sheet metal for fenders and appliance housings among other American-made desirables. Well, guess what? Since March 2020, the price of steel ballooned by 215%. While Biden’s eco-craziness and socialism has a role, Trump’s contribution to our current travails is his mindless worship at the altar of “balanced trade”, i.e., tariffs. If business tax cuts are testosterone, then tariffs are a flesh-eating virus. Give ‘em a little time before we end up in intensive care. The Republican Smoot-Hawley Tariff of 1930 showed the way.
Smoot-Hawley Tariff in the newspaper, June 17, 1930
Not only that, tariffs needlessly make enemies, especially at a time when you need allies, unless, of course, you want America First to be America Alone. Red China has discovered its inner hegemon. Many Pacific countries are fearful of entering the maw of the CCP and are turning to the US as the only counterforce. The relationship between trade ties and military ones is well known. Just as we were about to draw much of the Pacific rim into a closer cooperation with us, 2016, a presidential election year, came upon us. The Dems practiced their usual fealty to the AFL-CIO and Hillary trashed the Trans-Pacific Partnership (TPP), something negotiated across multiple administrations. Not to be outdone, Trump in his usual bombast blasted the deal as “a continuing rape of our country”.
Well, what is this “rape”? The pact would slash tariffs all around the Pacific rim from the US to Brunei to Chile. For an America First/Alone enthusiast like Trump, the TPP is the perfect whipping boy. He torpedoed the deal and then boasted about it, repeatedly. But he made it harder to begin a “pivot to Asia” by initiating a trade war with our natural allies. His economic advisors must have been aghast and suggested their own pivot from “rape” to “bilateral”. The rhetorical gimmick was to disparage the adjective “multilateral” (TPP) and substitute “bilateral” in agreements. So, Trump’s people scrambled around the region to cement a smorgasbord of individual pacts to substitute for the omnibus one, all to save face from admitting to the slander.
One way to prevent the much-hated “forever wars” and bankruptcy of the US treasury is to have many allies. Their contributions may be small but together think of them as forcing upon Red China a weakening by a thousand cuts. We provide the biggest military piece but it’s better than having to pay for the whole piece which would be the consequence of the America Aloners.
The Aloner evangelists such as Tucker Carlson or Tulsi Gabbard, or even the conservative Tom McClintock (R, Ca.), stray into the logical dead end of more-allies-means-more-wars. Actually, that is only one possibility, and the least likely one. More allies mean more deterrence. A worse buzzsaw cannot be imagined for Putin’s Russia and Xi’s CCP for them to venture into an attempted reconstitution of the USSR and a Red Chinese-led Greater East Asia Co-Prosperity Sphere. The addition of Sweden and Finland to NATO intensify deterrence on Russia and trade pacts with miliary cooperation in the Pacific rim makes Xi’s Middle Kingdom dream seem more like a nightmare.
Coups are frequently associated with costly adventurism by despots. Everyone does cost-benefit analysis, unless they’re crazy. Even then, deterrence raises the costs to prohibitive levels for any compadres-of-convenience in the regime to continue to follow the lunatics. Still, anyway, if the crazy should practice a Nigh of the Long Knives (Hitler’s 1934 elimination of his rivals), you’ll definitely need those allies more than ever.
Foreign relations and a nation’s economy are intricately connected. Our national prosperity cannot survive a world with the renminbi as the world’s reserve currency, the World Bank headquartered in Beijing, the world’s shipping lanes policed by the PLA Navy, a NATO decaying in its nearly vacant Brussels headquarters, and a new USSR bullying its way westward and southward. Then we will be really alone. And it begins when we start to mangle economics and our recent history to fit the ambitions of narcissists and the hucksters of economic nostrums. I am worried that we are seeing too many of both among the people who should know better.
PLA Navy on maneuvers 2022
Specifically, the golden years, pre-COVID, from 2017 to early 2020 should not be referred to as the Trump economy. It was the Republican economy, all of it emanating from the Republican “establishment”. Anyone but Tucker Carlson fanboys should realize it.
RogerG
Sources:
*“Did the Trump Tax Cuts Work? The Answer May Not Be What You Think”, James Pethokoukis, American Enterprise Institute, at https://www.aei.org/economics/did-the-trump-tax-cuts-work-the-answer-may-not-be-what-you-think/
*” Trump’s Steel Tariffs Still Harming Producers and Consumers”, Bob Luddy, Brownstone Institute, at https://brownstone.org/articles/trumps-steel-tariffs-still-harming-producers-and-consumers/
*”Congressional Review Act”, Ballotpedia, at https://ballotpedia.org/Congressional_Review_Act
*”Where Hillary Clinton and Donald Trump stand on Obama’s legacy trade deal”, Business Insider, at https://www.businessinsider.com/what-is-tpp-2016-9
*” Central Planning with Conservative Characteristics”, Dominic Pino, National Review Online, at https://www.nationalreview.com/2022/08/central-planning-with-conservative-characteristics/
*Tom McClintock’s vote against support for adding Finland and Sweden to NATO in “One California congressman voted against Finland and Sweden joining NATO. Here’s why”, in the Sacramento Bee, at https://www.sacbee.com/news/politics-government/capitol-alert/article263626043.html
Progressive/left protesters crowd and shout into Rep. Chris Stewart’s (R, Utah) townhall in Salt Lake City, March 31, 2017. George Frey/Getty Images
Our times seem to be especially fraught with some of the worst invective, character assassination, and outbursts of anger bordering on rage. Disruptive chants and slogans have replaced reasoned discourse. I’ve complained about this often. Astonishingly, it has taken place at a time when we are spending trillions on education. As it turns out, mass education hasn’t produced mass wisdom. The situation raises serious questions about our educational system. Are we educating citizens or producing close-minded activists?
Watch this episode of young climate-change activists making demands at a recent (August 22) DNC meeting in San Francisco. The Sunrise Movement is most certainly the Sundown Movement, the sundown of reasoned discourse.
Very little intelligent dialogue takes place, nor is there any evidence of its presence in the short cognitive histories of these young people. They jump from rash conclusion to street activism with nothing prior or between.
The same is true in much of our political landscape. Brusque knee-jerk reactions take the place of thoughtful discussion and civil discourse. I doubt if the groundwork in the form of sufficient knowledge has been made in order to make it possible. So, it’s back to chants, slogans, disruptions, and hectoring. I cringe just thinking about what will happen if Pres. Trump gets the chance to fill another Supreme Court vacancy.
In the case of the above video, the instigator is the previously-mentioned Sunrise Movement. When I look into the faces of these young people, I slump into depression thinking of what our media and schools have done to their minds. All is not lost though. There are still a few golden and older voices in the wilderness, even if they’re no longer with us. Two of those voices belong to the late Milton and Rose Friedman. Their legacy continues in the Free to Choose Network. Airing this month on Amazon Prime Video are “The Real Adam Smith: Ideas That Changed the World” and “Sweden: Lessons for America?”. I viewed both recently.
The first should be a must-see for Pres. Trump and some of the hosts on Fox News. Are you listening Tucker? The second one should be required viewing for – wait, it’s a list – Alexandria Ocasio-Cortez, her political soul mates, the activist base of the Democratic Party, Bernie Sanders, much of the rest of Democratic Party’s wannabee presidents, and those protesters pushing their way into the DNC’s meeting in San Francisco.
Pres. Trump reacts to trade issues in the same way as a developer dealing with his project’s immediate circumstances and the relevant people before him. Tariffs for him are like the rent charged in Trump Tower. It adds to his bottom line. The “trade deficit” is treated as a debt or loss in his books. It isn’t quite that simple. Tariffs are taxes paid by consumers in one way or another. Call it a value-added tax on imports, and operates in like manner. As for the “trade deficit”, it is just one component in the balance of payments. A shortfall in it will lead to surpluses in the other two components: the financial and capital accounts. The importer gets dollars and we get their goods. The dollars end up in financial instruments (bonds, government debt for example) and foreign direct investment.
For Trump, the dollars flow in the pockets of foreign fat cats as they live in, get this, a non-dollar society. How does that work? It doesn’t. The fat cat must translate his dollars into his country’s currency to buy that swank penthouse in Shanghai or keep the Benjamins to spend them on a Montecito mansion. He’ll need renminbis in the PRC or hand over the dollars to the old-moneyed seller in posh Montecito. Another option is parking the money in our government debt. Whichever way, dollars eventually come back here.
Dollars or renminbi (yuan).
Could trade deficits have downsides? Yes, they could. Some regions could fall into depression as they lose out in the international competition. The social effects of economic decline aren’t pretty. Shuttered factories and businesses, distressed neighborhoods, family breakdown, substance abuse, people locked into a cycle of life with few prospects, and welfare dependency are symptoms of the malaise.
Abandoned and dilapidated factory complex in Detroit, Mi.Injecting opioids.
This is one weak spot in the film. Free trade has a ying and yang quality. It works best among countries with free economies, more or less. The role of similar social expectations and norms among nations can’t be counted out. I suspect that the PRC sees trade as another weapon in the long twilight struggle for national and ideological dominance. If their people get richer in the process, that’s icing on the cake. The country is certainly one for us to be very leery.
Nonetheless, the first film – “The Real Adam Smith” – lays out a useful primer for the value of free trade, one that Trump and his courtiers should understand. It might restrain them in their enthusiasm for punishing our literal and natural allies with tariffs. But we can hold two ideas at the same time (per Hillary’s iteration, and true). President-for-life Xi may be Trump’s friend, but he isn’t ours.
The second film – “Sweden: Lessons for America?” – is a necessary corrective to a popular urban myth for self-styled urban sophisticates. They pride themselves in being smarter, more intelligent, and better informed than the rubes. For them, the right side of the political spectrum is populated with Morlocks.
The Morlocks in the 1960 movie, “The Time Machine”.
The prejudice was on full display when Paul McCartney accepted the Library of Congress Gershwin Prize for Popular Song in 2010 and bellowed this insult at ex-President George W. Bush while President Obama and wife were in attendance: “After the last eight years, it’s great to have a president who knows what a library is.”
McCartney and Pres. Obama at the award ceremony, June 2010.
Ironically, the rank condescension of an accomplished pop music star is rooted in a profound ignorance that is common in places like bein pensant circles in Georgetown. For the beautiful people, all the smart people are on the left side of the spectrum. In reality, they’ve adopted John C. Calhoun’s outlook, but the target isn’t African-Americans. It’s anyone who might wear a tool belt, pay a mortgage, attend a Bible-believing church, and just might register Republican. Johan Norberg, the documentary’s host, unwittingly presents proof of the presence in chic quarters of the “Ignorant” stamp on the forehead with a frequency equivalent to tattoos in the crowd of heavy metal concertgoers. Norberg does it by shattering their fantasies about Swedish socialism.
Bernie Sanders has frequently tried to distinguish himself from the brutal socialism in the Soviet Union and Mao’s China. He does it by attaching his socialist vision to Scandinavian “social democracy”, not Pol Pot. Alexandria Ocasio-Cortez , a younger Bernie Sanders with different genitalia, imitates him. Both invoke the experience of “democratic socialism” in Scandinavia.
CNN quotes Bernie Sanders as follows: “I think we should look to countries like Denmark, like Sweden and Norway and learn what they have accomplished for their working people.” The Danes recoil from the “socialist” label. Danish Prime Minister Lars Lokke Rasmussen responded in a speech at Harvard’s Kennedy School of Government, “I would like to make one thing clear. Denmark is far from a socialist planned economy. Denmark is a market economy.”
Danish Prime Minister Lars Lokke Rasmussen at Harvard’s Kennedy School of Government, October 30, 2017.
Bernie and AOC continue to maintain that these countries are working examples of a successful socialism. They try to do so, in spite of the Scandinavian leaders’ rejection of the “socialism” label, by emphasizing “democracy”. It’s rhetorical sleight of hand. The fact of the matter is that the scheme is all about government control. It matters little if the control is exercised through a small claque of ideological oligarchs or a mob of 50% plus one. Private property becomes meaningless if it is at the mercy of any assemblage of 50%-plus-one. “Democracy” is the cover for all sorts of sins.
To say it is “democratic”, also, doesn’t mean the administrative state goes away. Rules to avoid chaos and give direction will have to be promulgated by a commissariat approaching the size of the Soviet Gosplan. The likes of Bernie and AOC have all kinds of social and eco “justice” to pursue. AOC helped author one incoherent version of the Green New Deal and Bernie later came up with his own monstrosity. Whichever of the two routes you take, you’ll end up in the same place: central planning!
Rep. Alexandria Ocasio-Cortez and Sen. Ed Markey (right) speak during a press conference to announce Green New Deal legislation on Feb. 7. Saul Loeb/AFP/Getty Images
Plus, the two carnival barkers act as if nothing has happened since the heyday of Scandinavian socialism in the 1970’s. It’s here that the Swede, Johan Norberg, and “Sweden: Lessons for America?” clears away much of the verbal smog. To make it simple for Bernie and Alexandria, Sweden had a free market economy, lost it, then gained it back. How did they do it? They reined in their “social democracy”. Business taxes were lowered; pensions became contribution-based rather than benefit-based; universal school vouchers were implemented to the point of private high schools becoming half of all high schools; unions became cooperative rather than combative; the vaunted universal health care system is remarkably decentralized with vouchers and a growing number of private healthcare providers; and on and on and on. In many ways they are freer than us.
Bernie wishes that we could be more like Sweden. Oh really, Bernie? I don’t think so. There is one area that should especially draw the ire of Bernie and much of the Dem Party. Sweden makes everyone pay taxes. If you will receive government benefits, you will pay. They don’t have a tax structure that attempts to shoulder the burden of government on the pocketbooks of the wealthy and the businesses who are the engine of jobs. They tried that in the 1970’s and saw their economy slump and businesses flee. Don’t doubt for a moment that Bernie and AOC won’t try to inflict the horrible history on us.
Really, the amazing part of the story is the abject ignorance of the story. Bernie, AOC, and the like, stop history in the 1970’s. Democratic socialism’s failures are deleted from the record so they can ignore Scandinavia’s movement toward free markets. Our democratic socialist icons take the system of its heyday, pretend the failures and reforms didn’t happen, and attribute the successes of its reforms to the socialism of the earlier misbegotten period. This is circularity with a huge bite out of its circumference. It’s nonsense.
In Scandinavia, particularly Sweden, Adam Smith has made a comeback … out of necessity. Socialism failed. In America, especially among the Democratic Party base and millennials, Marx is making a comeback. Go figure. AOC tries to distance herself from Marx to be more politically palatable. So does Bernie. Yet, do they really understand Marx? I kinda doubt it. Marx is socialism with an eschatology. Strip the violent eschatology and you still have socialism. Our lefty politicos want socialism to be elected into power. But does the means of implementation matter? Socialism is socialism and it doesn’t work. Isn’t the emphasis on 50%-plus-one just another attempt at putting lipstick on a pig?
A return to a sound understanding of human nature and the modes of social organization that are attuned to it would be huge step forward in removing needless chatter and destructive venting. I doubt, though, that it will ever get a hearing in today’s toxic climate. Too many people just don’t know a damn thing. Many of them are on the left, but that won”t stop them from being oh so confident. There is nothing more dangerous than an over-confident ignoramus.
Trump speaks at his Sept. 2018 West Virginia rally.
Trump may be a great real estate developer but his understanding of trade stops at the water’s edge. It’s almost childlike, as it probably is for most people.
In recent rallies, Trump talks like a Democrat in his boasts of the prospect of $100 billion for the US treasury from his tariffs. The Dems do the same when trying to jack you with tax increases. It’s advertised as more money for “investment” – i.e., government spending out the wazoo.
The reality is different. If you want less of something, tax it. So, the Dems get less money to transform America into the image of their frenzied imaginations as people scurry about to escape Bernie-bro policies. Trump gets less money from his tariffs as they drive up prices which leads to less imports, fewer sales, and less dough for Uncle Sam. It’s elementary.
Of course, Trump might be guilty of good ol’ hucksterism. He’s been known to do that. Remember his crowing about his inaugural crowds.
He routinely bellows about the “trade deficit” sucking out the life blood of the nation. Each quarterly $124-billion hole is treated by him as a debt. It ain’t that simple.
In fact, it’s not the whole trade enchilada. The thing hawked by Trump is one third of the “balance of payments” super stat. Add the capital and financial accounts to the mix. Jury-rig one of the trio and you unexpectedly alter the other two. Anyway, ignoring the other two makes them as optional as sight for a driver’s license test. There’s a good chance in both instances that you’ll end up in a bad place.
The trade hole isn’t even a good barometer of the health of the economy. It’s ups and downs appear to be mostly irrelevant. Of the 120 months of the 1930’s and the Great Depression, 102 were trade surpluses. Being in the black in trade didn’t make a dent in industrial collapse and 25% unemployment. (See here)
Good times and trade surpluses don’t necessarily correlate. Policies intended to create trade surpluses can backfire. No best-laid-plans are immune. A blowback can erupt with nearly all policies, including globalization.
Globalization isn’t a golden brick road either. Nothing is. Costs and benefits aren’t evenly distributed in whatever economic tack is taken. The rich do get richer despite the Lenin-style attacks of Bernie and the congresswoman from the Bronx. There’s just a greater likelihood that enough of the blessings spillover to everyone else.
Socialism isn’t a prettier alternative. It lodges benefits in the growing numbers of meddlesome government workers while the costs show up as everybody else descending into a worsening mediocrity.
Take your pick: richer government workers and malaise for the masses, or the filthy rich getting filthier and the masses living marginally better. My money is on the latter.
With socialism, either of the national or international variety, a nation’s vitality is smothered. With globalization, the financial centers of megalopolis USA ride a wave as flyover country sinks into depopulation and a meth epidemic. Bernie bros bewail an inequality of wealth in the vertical dimension. They’re blind to an inequality of the geographical, horizontal dimension. It’s real and troublesome. It’s the only justification for Trump’s trade demagoguery.
This goes to show that cocooned knowledge in real estate doth not translate into hyper-wisdom on everything any more than an inside-the-beltway existence ensures good sense. The crooked timber of humanity is evident everywhere from the administrative state to party hacks to zealots of the left, right, and center.
A classical understanding of economics would help. Is anyone delivering it? Kudos to the few who are trying.
Please watch the video clip juxtaposing Milton Friedman and President Trump on the issue of trade.
I can’t resist, however, throwing my 2 cents worth into the debate. On the whole: “free” trade good, “fair” trade bad. Friedman is right in bringing to light the skulduggery done in the name of “fair”. You may as well find room for “fair” in the seven deadly sins. It belongs there. “Fair” becomes the weapon for one group to gain power to unjustly extract benefits from another. For you policy nerds, it’s called “rent seeking”. Look it up.
Does Trump understand this? My guess: No. Or maybe he does but doesn’t care. Either way, the rhetorical “fair” fits into a grand misunderstanding that roils around in his head. He sees the “trade deficit” as a checking account. It ain’t! This trade balance (or imbalance) is only one part of a larger thing called the “balance of payments”. The reality boils down to the simple concept of exchange. For instance, the Chinese get dollars for what they export to us. Those pieces of paper roll around but always come back to us. We get stuff, they get paper. Simple.
The Yangshan Deep Water Port in Shanghai. Credit Aly Song/Reuters
Where Trump may be onto something is the uneven effects of “free” trade on the country. It benefits the coasts and cosmopolitan financial centers. Taking the brunt will be manufacturing areas. Politically speaking, the blue dots get to roll around in filthy lucre as the vast red stretches in middle America see businesses shudder and wallow in an opioid epidemic.
West Virginia opioid addicts. Daily Mail, UK
And let’s not forget the danger of “free” trade with Red China. I have a problem with doing business with empire-building totalitarian kleptocracies. This ain’t normal business. For the totalitarian goon, the normal interplay of cost/benefit plays second fiddle to the ultimate end of domination at home AND abroad. Our national security is at stake. We should act like it.
“Free” trade has a social cost; “fair” trade is a moral monstrosity. When in doubt about PRC trade, let the safety and security of our people be the decider. With the free and open democracies, we should incline to “free”.
I’ve been watching the trade war talk heat up as our president pursues something mystically called “fair” trade. I’m all in favor of free and fair trade. Furthermore, I agree with the president that trade deals should be “reciprocal”. But, in a sense, on trade, Trump gets it and doesn’t get it.
Certainly, the broad general benefits of our free trade agreements are real. Yet, those very real gains aren’t evenly distributed. The negative repercussions seem to be concentrated in the industrial middle part of the country. Even though, to be honest, the problem had been building long before NAFTA and WTO. It’s the coastal urban financial centers, though, who have garnered most of the dough. That’s the “gets it” part, if we can construe his comments to be some roundabout recognition of free trade’s spotty effects.
FILE – In this Dec. 11, 2008 file photo, pedestrians walk by the abandoned Packard plant in Detroit. Dominic Cristini, who claims ownership of the Packard plant through Bioresource Inc., is awaiting demolition permits. He says he wants to start demolition within a month. He estimates it will cost $6 million to raze the plant. The plant closed in the mid 1950s. (AP Photo/Carlos Osorio, File)
As for the “doesn’t get it” part, he talks about $500 billion trade deficits as if the money is lost from our country. Really? No, it isn’t lost. For instance, China gets dollars for its exports to us. What are they going to do with the dollars? They can’t use them as currency in China or any other foreign country for that matter. They have to either spend them in the US or park the dollars in US financial assets. I suppose that they could hunt around on the international money markets to unload them but that just shifts the problem to somebody else. No, Mr. President, the money isn’t lost from us. Really, the things never left.
Now, here’s where it gets tricky. Most of the dollars end up in our financial centers. Read: mostly our coastal urban cores and Chicago. This does much to explain the bull market in California coastal real estate despite its Venezuela-type government. Trendy blue dots, with their lefty culture in tow, prosper.
Trendy Laguna Beach, Ca.
Ironically, as recent events will attest, free international markets end up feeding the places that are busy destroying them. The dem-socialist darling of the Dem Party, Alexandria Ocasio-Cortez, could only get elected in one of those pampered locales.
She’s proof that an economics degree did her no more good than Trump’s self-taught trade “wisdom” did for him. It’s the age of gibberish.
Trump is a businessman. He’s not exactly a mental titan on matters outside his penchant for licensing his name onto buildings. The poverty of understanding shows in hastily formed opinions. Could this be the root when Sarah Jones of The New Republic writes, “Donald Trump has no strategy, no beliefs, and no principles“? (3) She is mistaken. Rather than a rudderless moral inner sactum, Trump could simply be a poorly informed autodidact. Faced with an issue, a combustible crowd, or incident du jour, he resorts to the first thing to come to mind. It’s government by impulse, till others step forward to whisper the what-ifs.
Yes, A Poorly Informed Autodidact
The examples tumble forth as we get more exposure to Trump on the national stage. His conception of the Constitution is, to put it delicately … odd. Shortly after meeting with the aggrieved from last February’s Parkland mayhem, he announced a call for gun seizures first, and then resort to the courts to seek permission. The only problem for Pres. Trump is the Constitution and something called “due process”. If he knew better, he would have reacted with less bravado.
The run up to the November 2016 election was replete with rhetorical burps. Remember his earlier foray into birtherism (Obama’s mythical foreign birth), or his abundant “I will”, “I will”, “I will” incantations. Granted, it’s the normal stuff of modern presidential campaigning ever since TR, Woodrow Wilson, and FDR introduced Caesarism into our structure of government. Still, the last time I checked, much legislation emanates from elsewhere (Congress) and the courts retain the power to adjudicate. I would expect some concession to separation of powers, checks and balances, and other rudiments of high school Civics.
And then there is the real stumpers like “triad”, as in “nuclear triad”. It might help to know, before placing your finger on the nuclear button, that a person is about to unleash mega-bombs from land, air, and sea to obliterate half of humanity. Rudimentary facts were obviously missing in Trump’s response to a simple debate question. Please review the following exchange between Hugh Hewitt and Donald Trump during one of the debates — please ignore the clichéd editorial added to the end of the clip.
He had to be schooled by Marco Rubio moments later.
One does not have to be a walking encyclopedia to be president. Seemingly knowledgeable people have gotten the country into a lot of trouble. Robert McNamara and the 1930s Federal Reserve Board come to mind.
Yet, some inkling of understanding about basic concepts would indicate a seriousness of mind of someone who expended the effort to know something. Apparently, not true with Donald Trump. He has plenty of opinions, and maybe some knowledge here and there, but many of them are not fertilized with much insight.
Don’t think for a moment that the Dems offered a competent alternative, though. They are proof that a lightly or richly-stuffed brain is inconsequential to the presence of twaddle in the same place. Attempting to replicate the old radical left’s SDS platform will not produce policy winners.
The choice in 2016 was between a poorly informed autodiact and the darling of fatuous didacts. Just saying.
Towards Balance-of-Trade Bliss, Or …?
Now we are careening toward the swamp of trade manipulation with our president in the bow of the boat pointing the way. Right now, he’s enthusiastic for washing machine, solar panel, steel, and aluminum tariffs, with more on the way directed at China, and actually thinks that he’ll usher in an American manufacturing renaissance. Is it really matter of “foreign goods bad, our stuff good”? Here’s where he gets into trouble. The issue is fraught with all sorts of unintended consequences, the bane of all industrial planners from Louis XIV’s Jean Baptiste Colbert to communotopia’s Five-Year Plans.
Portrait of Jean-Baptiste ColbertGleb Krzhizhanovsky, first head of Gosplan, as he appeared on a 1972 Soviet postage stamp.Moscow – Building of The Soviet State Planning Commission (Gosplan) in 1981.
If a government office magically transforms a government employee into a genius, then the Soviet Union’s Potemkin village would have a reverse meaning. It would be real. It would refer to the entire country, instead of a phony tour for visiting western socialists anxious to see Uncle Joe’s (Stalin) “paradise”.
The government’s meat-ax approach to economic control doesn’t fit the multitude of fine arrangements in commerce across borders. Milton Friedman’s lesson in the production of a pencil would be an excellent starting for our president. Take a look.
Commerce does not equate with the trans-Alaska pipeline whose operation can be controlled from a single switchboard in Anchorage. It’s more like the multitudinous fine tentacles of our body’s nervous system. Alteration of one microscopic area will ripple through the system in sometimes unexpected ways. However, when government is the physician, crudity and a mess are frequently the result. If death is excluded as an acceptable cure, back pain will not be cured by Conan the Barbarian – or the Senate-approved director of … – in the operating room.
Tariffs and their kin are the equivalent of Conan’s broadsword. Literally, the weapon is useful in dispatching those bent on killing us. Figuratively, it is the yin (no no) of the yin/yang duopoly when employed for managing the delicacies of commerce.
Unsheathing the sword is easy when people get excited. A good motivator in sports is the scoreboard. In trade numerology, the score is kept in the “balance of trade” number. Its quarterly and annual figures are similar to the runs-by-inning at Fenway. However, the Red Sox score is real; the trade balance figures are … who knows?
One question baffles me: If trade deficits are bad and surpluses good, should every nation strive – and could they succeed – at being on the positive side of the ledger? I doubt it. Locked into the deficit/surplus mode of thought, interactions become zero-sum with nations divided into either the “winner”, “balanced”, or “loser” categories. There’s only the three. Losers make winners possible according to the logic. As such, the rationale has no room for all countries to be in surplus nirvana since some have to be losers to make for the winners.
If all nations had the equivalent of a competently staffed MITI (Japan’s Ministry of International Trade and Industry) with god-like powers to manage trade, we would still end up with clusters of “winners”, “balanced”, and “losers”. A global laser-beam focus on the avoidance of trade deficits can not succeed once surpluses appear anywhere. The logic will not allow for it. Could there be a problem with this balance-of-trade notion? It certainly appears to have the characteristics of a contrivance.
But some freshman in their Econ 101 class, upon first exposure to GDP, would jump up and say, “Look at the GDP formula. It shows imports subtracting from our country’s economy. They hurt the economy.” A precocious 18-year old will not be a stand-in for Adam Smith. The equation is a stab at measuring all the economic activity of everyone in a country: personal consumption (C) + government spending (G) + private investment (I) + net exports (exports – imports). “See”, Peter Navarro (Trump’s trade guru) would say as I put words in his mouth, “imports are a millstone around our neck.”
Peter Navarro, Assistant to the President, Director of Trade and Industrial Policy
Not so fast, Pete … and our cocky kid. The calculation removes imports to evade double counting them. They are embedded in all that other consumption: C, G, and I. We buy imports; government buys imports; and businesses buy imports. I’m sitting in front of my computer with an ASUS monitor, Dell tower, and numerous peripherals. How much of this stuff is an import or composed of imports? God knows. I suspect that the amount is mind-boggling as we course our way down the supply chain.
Besides, the whole computation was meant to measure our economy, not cloud the issue with measures of other nations’ production. The formula deletes imports to purify GDP of foreign things. Extracting imports simplifies things if we are to get at some accounting of the state of our ecnomy.
Simplifying things has its advantages, and considered by many to be a hallmark of genius. Einstein was good at it. Simplification, though, without recognition of the complexities is foolishness. It would be like granting PhD’s in nuclear physics after the introduction to Bohr’s model of the atom in 6th grade. There’s a whole lot missing.
People Trade, Nations Don’t
Some of what is missing stems from the bollixing of the meaning of commerce. “Commerce” is the word that we use to cover the millions and billions of interactions of individuals as they buy and sell. They, as distinct persons, are trading. It is about individuals doing something.
Conversely, we are left with the lump-sum legacy of John Maynard Keynes. He gave us macroeconomics and thinking in terms of aggregates and unitary blocks, such as GDP. He reduced the necessity of having to come to grips with the motives and interests of particular buyers and sellers. All the buying and selling of individuals is cemented into “C”, “G”, and “I”. The numbers take a life of their own. No need to worry, we are told, about personal calculations of mutual advantage, just look at the sum totals.
From there, it is easy to homogenize all human activity within U.S. borders into a single stat. Thus, the trade of individuals easily becomes the trade of nations.
Voilà! “Commerce” has been shoe-horned into something nations do, instead of individuals. Now we are in Peter Navarro and Donald Trump territory. The thought process makes it easier, for instance, to ignore why an American individual would want to buy something from a Taiwanese individual. Considerations like this are dismissed. Yet, how does a foreign seller overcome 7,000 miles and still remain a viable choice for an American buyer?
What does this say about the foreigner’s American competitors?
Honest and hard questions can lead to discomforting answers, which often means that the questions won’t be asked, so we can continue to complain about cheap peasant labor. It is a common human failing to bypass uncomfortable thoughts and go right to generalization. We can now avoid self-examination, like taking a look at what we are doing to ourselves.
Our Schools as a Source of Much Aggravation
Much of what we are doing to ourselves could be damaging and contributing to some weakness in the marketplace. There are many suspects for our shaky condition, but a likely one is our schools.
Are our schools more of a jobs program than a societal effort to raise an enlightened citizenry? The introduction of collective bargaining to public employment has muddied the waters. A union sees the interests of the workers as a matter of pay, job security, and perks. The profession of teaching morphs into something resembling a job in an AF of L-affiliated trade as teachers become unionized. As a consequence, for many in education today, the position is almost solely seen as a collection of skills, like the skilled trades, rather than beginning, and being infused with, high academic interests.
High academic interests are different from skills. The interests of the academy are what they have always been since ancient times. Certain fundamental questions about our existence takes center stage. What is the nature of our world? Who are we? What is our nature? These questions are shunted aside as the teacher is expected to be the equivalent of a carpenter.
The emphasis on skills attracts a skills-oriented person, and employers increasingly seek such persons. The assumption is made that, of course, the candidate will possess the high academic training. After all, he or she has a degree. The degree, though, may mean no such thing.
The college-for-all mania of recent times has thrown wide open the gates of academia. In the process, the flinging gates have injured standards. We have coaxed the marginal student – the student with less interest and aptitude for high academic work – into the student body. The faculty and course catalog, as a matter of course, must adapt to the situation by altering what the school teaches and how the faculty teaches it. Expectations take a downward spiral. But that won’t stop the march to graduation as many get degrees with minimal exposure to the high-minded material that would elevate their understanding. It is particularly true of the classical humanities (History, Literature, et al), a field grossly plagued with political correctness.
Littered through the course catalog are offerings whose raison d’être (reason for existence) is partisan, ideological passions. Opinionated fancies now count as credit to graduation. Identity politics has spawned mutants like the offspring coming out of Women Studies nests. This is not dispassionate academics, but is the inculcation of highly debatable opinions disguised in arcane hogwash. It is a great way to train political activists. It is a poor way to produce competent teachers.
Let’s bring this full circle to the current reality of gigantic and ubiquitous economic ignorance, a kind of ignorance that can make a tariff fetish popular. As an almost 30-year teaching veteran in high school and college, and Social Science Department chair, I was struck by the dearth of teacher candidates enthused with the prospect of teaching Economics. All were certified or tested to teach it but few wanted to — in fact, none wanted to. As it turned out, many avoided the courses in college or took just enough to meet minimal qualification requirements. The subject is a demanding one because it comes as close to being a hard science as you will find in the broader Social Sciences.
A question occurred to me: What else did these teacher aspirants avoid in their path to a baccalaureate? I began to examine myself. My academic preparation was less than stellar, but weaknesses were addressed by protracted study over a lifetime. Can we expect, though, life-long learners from a talent pool increasingly composed of marginal college matriculates, poorly prepared hopefuls, and people who see the profession as almost solely the mastery of a set of trade skills?
What happens to the scholar in the rush to staff the schools? If you will notice, true scholarship just became an afterthought.
And it shows in aptitude batteries given to the crowds entering our colleges and universities. The lowest marks, consistent over many decades, were for “Education” majors. This field is populated with sufficient numbers of people who score low enough to pull down the down the overall scores. Remember, as undergrads and graduate students, they will eventually filter into our elementary and secondary schools.
First, the SAT figures for the college bound by intended major (6):
The top is the bottom in the graphic.
The Graduate Record Examination captures those “Education” majors entering grad school for certification purposes. Apparently, 4 years of schooling did not improve matters. (6)
How can we expect teachers to elevate students when they weren’t elevated? Students are not prepared to analyze and critique their world, and neither were many of their teachers. It is easier for such a population to be yanked in the direction of the popular winds. It is easier for a poorly informed auto-didact, whether in the White House or media, to pay heed to unrecognized but popular inanities. There’s not much coursing through the head to force a pause.
The Ripple Effect and Foot Shooting
One code line missing from the mental software from the previously mentioned, and neglected, field of Economics is an unawareness of “side-effects” and the “margin”.
Economics is the application of reason and the principles of human nature to the study of our efforts to materially make our way in the world. The rules are not suspended because we are juiced- up about a news flash or a well-heeled halfwit’s campaign to press his ideological hobby horse. More commonly, such folk are the town criers for more government, and the sperm donor par excellence of unintended side-effects – many of them of the harmful variety.
Normally, the repercussions (side-effects) ripple through the society leaving people to scramble for silver bullets to save the day, like tariffs. Unknowingly, tariffs are rife with the potential for driving unseen other people into financial dire straights. A duty on steel or aluminum will tip over dominoes reaching back to Whirlpool, Hershey’s, and price tags.
Prices will rise thereby introducing to an ill-informed public that other economic concept: the margin. The action-space in an economy is the “margin”. It defines whether our personal or national economy is up or down. The margin is all about the decision to do one more, or less, thing. If enough people decide to produce or purchase one less thing, we will call the situation a “recession”, or maybe a “depression”.
The Great Depression was characterized by 75%-85% of the workforce still employed. Of course, cut hours and stagnant or reduced wages didn’t help. The sad condition was a result of producers deciding to reduce their payrolls a few positions or hours at a time, and enough consumers putting off that house or coat purchase. It snowballed from there.
The driver is prices. Paying more is not a preferred circumstance for businesses or customers. Tariffs will pry up prices which will set in motion the calculation to produce less stuff and buy fewer things at the margin. It’s simple: watch anybody at the gas pump or produce counter after a glance at the price.
I’m always tickled by the politician selling us on a new government program. On cue, they say that it will cost a Big Mac a year. No big deal, eh? They are just small cuts to the family budget. Au contraire, we are cutting ourselves to death as the cuts begin to pile, and some people roll into bankruptcy because they have become the financial equivalent of hemophiliacs. Marginal cuts to the blood supply can add up to shock.
What the politicians miss, as they misguide us, is the effect on the buyer or producer who is sensitive to the price increase, at the margin. Not everyone is, though most certainly some are. These are the people who would not have been affected if our politicians had not felt someone’s pain.
The tariff was targeted on a distressed fraction of the population. Instead, the target became our foot as we damaged the silent, more numerous, but unforeseen others.
They Have Our Paper; We Have Their Stuff
We seem to be loading the pistol and cocking the trigger before somebody has a chance to step forward to tell us that the chair, desk, pistol and ammunition were made in China. What do the Chinese have in return? They’ve got loads of our paper, i.e. dollars. We get their stuff; they get our paper.
Is that such a bad arrangement for us?
In this case, the “we”, of course, are American individuals and organizations. The “they”, of course, is well-connected Chinese persons and the Chinese government for instance. Remember, they still have this socialist thing happening in the country so very little doesn’t pass through the fingers of the state’s henchman.
The last time that I checked, the Chinese currency is the “yuan”. It ain’t “dollars”. What are they going to do with all that foreign currency (dollars)? Their choices are obvious: (1) find someone else who’ll take the things in trade; (2) use them to buy our stuff; (3) finance the Democrats’ love of spending by buying our government debt; and (4) just hold onto the things and watch them depreciate from inflation. Fumbling through the options isn’t Calculus for anyone with boatloads of our paper.
Option #1 requires someone to want the dollars more than the Chinese see any advantage in keeping them. The Chinese can peddle the paper so long as the U.S. and local governments appear to be economically honorable – granted, an occasionally iffy proposition. Since most of the global political marketplace consists of poverty-stricken kleptocracies, the U.S. shines in comparison. Thus our dollars shine and the Chinese can still hock the things.
Furthermore, the rush to the currency markets to get rid of them merely shifts the burden to someone else. Nothing has changed. To borrow from our own Jeremiah Wright, the dollars will nevertheless “come home to roost”.
Option #2 means that the foreigners holding our currency will have to do something with them. I don’t think that piling them up and burning them is a viable alternative. “Coming home to roost” is quite an apt description.
They will have to buy our “stuff” – either goods and services or assets. As for assets, that means that they will add to our capital account (the other half of the balance of payments equation) by buying our stocks, bonds, our government debt. Of course, the investments will spur both more domestic consumption and production. Once again, those dollars come back in one way or another. (8)
Option #3 is reflected in Option #2. Those dollars in the possession of foreign producers will be put to use. A good chunk of those dollars will bankroll the Democrats’ fetish for mommy government. Our governments’ budget deficits will be sold as government bonds and Treasuries. They are great place to park the dollars without the importers running the risk of losing their shirt through compound inflation.
Option #4 is a non-starter, period. One can rest assured that the Chinese trade surplus won’t end up as billions of dollars in tens of thousands of shoe boxes under tens of thousands of Chinese beds. The idea won’t have resonance with the Chinese, but may seem reasonable to the beneficiaries of American public education.
“But holy Moses”, today’s Cassandras will cry, “all those trade deficits, mostly denominated as our government debt, will place us at the mercy of the ChiComs.” Calm down and think it through. They are at our mercy, not the other way around. The threat to call in the debt is as hollow as the empty threats of a spineless teacher. Through what court? Our government could repudiate the debt and piss off some foreigners, play hell with our international respectability, but still walk away without facing a repo man. In other words, we could be Greece.
The ChiComs could ready the huge People’s Liberation Army as repo man to occupy Wall Street or DC. Honestly, they could even take DC and U.S. respectability might climb a few notches. But getting the hordes across 7,000 miles of ocean and through 11 aircraft carrier battle groups and an entire U.S. Air Force with round-the-clock refueling might be a bit daunting, even for the ChiComs.
Sucking thumbs and suicide over destroyed fortunes is a likelier outcome in the Great Hall of the People if we renounce our public debt.
The Social and National Security
The possibility of ruined fortunes will not be limited to foreign kleptocrats. Also, on the other side of the trade balance ledger, we must be aware of the effects of years of trade imbalances on the ruined personal estates of vast swaths of America. This is the dark underbelly of the libertarians’ free trade dream. It must be recognized.
The profusion of foreign products has assisted in creating the American “rust belt”. It’s a happenstance that is hard to ignore. The social ill-effects are profound, even if their demise makes economic sense.
DetroitAbandoned Packard Motor Company plant in Detroit
How would the rise of a rusting belt of America make economic sense, and be not surprising as well? One obvious contributing factor might be the frenzy of regulation starting around the 1970s. By legislative and administrative fiat, the old product lines of the American auto companies were placed on a treadmill to obsolescence. Additionally, energy uses and sources came under increasing suspicion. Industrial processes producing industrial waste spurred even more dictats like the Clean Water Act of 1972.
Self-inflicted nightmares like the Cuyahoga River catching fire in 1952 was poor PR for American manufacturing.
The Cuyahoga River was once one of the most polluted rivers in the United States. It has caught fire a total of 13 times dating back to 1868, including this blaze in 1952 which caused over $1.3 million in damages. Photo: Cleveland State University Library
Environmentalism was on the march. The Clean Air Act, the National Environmental Policy Act (led to the creation of the EPA), and assorted spinoffs (CAFE, emission standards, etc.) set loose a tidal wave of regulation. In so many ways, it became more expensive for Americans to produce American goods, justified or not.
Imperial unionism in the industrial sector did not help. Pay scales, perks, work rules, and job protections ran square into the vise of soaring costs and greater foreign competition. And I let’s not forget the 70’s tax monstrosity.
Indeed, foreign competition became more of a competitive threat as many countries no longer found themselves living in the dirt and among rubble. Many entered the rich nation club, with a more up-to-date production culture, at the same time as America discovered the unaccountable administrative state.
Many of Trump’s, and his protectionist friends’, calls for a manufacturing renaissance are allusions to the 1950s, a time when Europe and Japan were nowhere near their pre-WWII economic zenith. Berlin was still clearing the debris. Tokyo’s fires were still smoldering beneath the surface. As for the third world, many of those nations were hovering around hunter-gatherer status. America came out of the war unscathed and humming on all eight cylinders. Of course it was an American golden age, and one lacking of any broad foreign competition.
Today, we no longer have the playing field to ourselves. Our competitors would benefit from building on a clean slate, one that was either blown to smithereens or didn’t exist. They were more in a position to adopt the newest, best, brightest, and not be encumbered by processes and habits dating back to the 19th century.
They were free to be like Chicago after the 1871 fire: start over with the latest and best. The Chicago maelstrom freed the city of its accumulated past. The fire wiped the slate clean for modern architecture, transport, communication, electricity, a whole new physical urban plant.
The fire:
Chicago in flames, October 8-10, 1871. Currier and Ives.Chicago 1871, immediately after the fire.
After the rebuilding:
Chicago’s State Street, 1900.The Chicago lakefront, 1901.
British and American 1940s bombing did the same thing for Germany.
The aftermath:
Tokyo, 1945.Berlin, 1945.Cologne, 1945.
After the rebuilding, thanks to Europe’s enterprising culture and the Marshall Plan:
Frankfurt today.
Having a clean canvas to paint on can be an advantage. For us, our canvas is riddled with the stains of entrenched and permissive corporate cultures, out-of-step industrial processes, and autocratic unions.
Much of American manufacturing conveyed a sense of sclerosis. Not all, though. Joseph Schumpeter’s harbinger of innovation, “creative destruction”, was alive and well. Old-style manufacturing was left to languish as new avenues of enterprise opened up. High tech and the internet-of-things was invented here. GM was eclipsed by Microsoft and Microsoft by FAANG (Facebook, Apple, Amazon, Netflix, Google).
The glittering new tech was something other nations sought to imitate, and if not duplicate, steal. Many nations developed their own high tech spheres while others sought to overcome their own self-imposed limitations through theft. I’m thinking of the web of organized terror-killers and the reflexive national adversaries of the US. Does Russia and the PRC (Red China) come to mind?
It doesn’t take Mensa membership to understand the military applications of silicon chips. What began as simple data processing has morphed into giving Beijing’s Party Central Committee the capability to precisely target Vandenberg AFB and develop a blue-water navy, thanks to the heist of the proprietary secrets of Americans. Don’t think that Iran’s mullahs and Kim Jong-un haven’t noticed.
PLA Navy ships.
Trade in goods and students opens up the spigot. The PRC is particularly egregious. We train; they spy; and they extort tradecraft from America’s lords of high tech who are giddy at the prospect of 1 billion Chinese consumers. Lenin’s “rope sellers” – as in the rumored pronouncement that the capitalists would sell the revolutionaries the rope to hang them – takes on a modern and pressing relevance.
America shouldn’t take the prospect of dangling from the end of a rope too lightly. Trade with China is fraught with threats to national security. China isn’t a normal nation. It’s a communist one. If everything in the country isn’t state-controlled, it’s not that they haven’t tried. Even the “special economic zones” of looser controls has only changed governmental interference, not eliminated it. Partnerships with Chinese “firms” and sharing of sensitive intellectual property is required of foreign firms in key industries such as telecommunications, autos, and aerospace. The pattern appears too often for it to be an accidental happenstance. State policies and powerful Chinese political actors dictate the terms of trade and foreign entry into China’s markets. (12)
The PRC, and countries like it, presents a conundrum for America’s free trade advocates, of which I am one: How are we to trade with adversarial countries? With an eye to avoiding the rope-seller profession, self-preservation and restraint should be our watchwords. To put it succinctly, national security trumps (pun intended) Adam Smith. We need to act like trade has both a yin and yang.
Free trade, like free speech, has limits. But before we talk about the curbs, we ought to know the reasons for their existence. Free speech is easy to fathom since most people enjoy and practice the art of blathering. Economics falls into that category with the clichéd “rocket science”: many make frequent reference to it but few understand it.
Our schools are the chief suspects deserving of a perp walk for their negligence in the teaching of Economics. The vacuum is filled with a form of idiosyncratic economics. Each person thinks they know it, but they are limited to the one thing they do know: their immediate experience. What makes sense in that small cloister is erroneously applied universally. The situation is rife for the poorly informed autodidact acting in the role of a wannabe Socrates and national savior.
RogerG
Bibliography and references:
“Trump’s NAFTA Focus Is In The Wrong Place: Trade Deficits Are Irrelevant”, John Brinkley, Forbes, Oct. 10,2017, https://www.forbes.com/sites/johnbrinkley/2017/10/10/trade-deficits-are-irrelevant/#750392057d8c
“Deficits Are a Flawed Guide to Unfair Trade”, Gregg Ip, Wall Street Journal, March 15, 2017, https://www.wsj.com/articles/deficits-are-a-flawed-guide-to-unfair-trade-1489594137
“Minutes: News and Notes”, Sarah Jones, The New Republic, a year ago, https://newrepublic.com/minutes/141930/donald-trump-no-strategy-no-beliefs-no-principles
“The ‘Made in China’ Fallacy: Our trade deficit with China is vastly exaggerated—and it skews how we see the entire economy”, Zachary Karabell, Slate, 3/11/2014, http://www.slate.com/articles/business/the_edgy_optimist/2014/03/u_s_china_trade_deficit_it_s_not_what_you_think_it_is.html
“No, the sky is not falling: Interpreting the latest SAT scores”, Tom Loveless, Brookings, 10/1/2015, https://www.brookings.edu/blog/brown-center-chalkboard/2015/10/01/no-the-sky-is-not-falling-interpreting-the-latest-sat-scores/
“Your college major is a pretty good indication of how smart you are”, Jonathan Wai, Researcher, Duke University, Quartz, 2/3/2015, https://qz.com/334926/your-college-major-is-a-pretty-good-indication-of-how-smart-you-are/
“Here’s The Average SAT Score For Every College Major”, Natasha Bertrand, Business Insider, 10/24/2014, http://www.businessinsider.com/heres-the-average-sat-score-for-every-college-major-2014-10
Testimony before Subcommittee on International Economic Policy and Trade
Committee on International Relations, United States House of Representatives, on 7/22/1998: “America’s Misunderstood Trade Deficit”, Daniel Griswold, CATO Institute, https://www.cato.org/publications/congressional-testimony/americas-misunderstood-trade-deficit
“41 Straight Years Of Trade Deficits Yet America Still Stands Strong”, Dan Ikenson, Forbes, 8/23/2016, https://www.forbes.com/sites/danikenson/2016/08/23/41-straight-years-of-trade-deficits-yet-america-still-stands-strong/#7628a3282d4c
“The Recent U.S. Trade Deficit — No Cause for Panic”, GEOFFREY E. WOOD and DOUGLAS R. MUDD, St. Louis Federal Reserve Board, April 1978, https://files.stlouisfed.org/files/htdocs/publications/review/78/04/Trade_Apr1978.pdf
“If Trade Surpluses are So Great, the 1930s Should Have Been a Booming Decade”, DON BOUDREAUX, Cafe Hayek, 12/21/2006, http://cafehayek.com/2006/12/if_trade_surplu.html
“China and Technology: Tortoise and Hare Again”, James Andrew Lewis, Senior Vice President, Center for Strategic and International Studies, August 2, 2017, https://www.csis.org/analysis/china-and-technology-tortoise-and-hare-again
Demagoguing high pharmaceutical prices by our president and lefties of all stripes obscures the fact that foreigners are given a free ride on American R & D. Exercising gangsterism in a manner to make Scarface blush, foreign governments threaten the production of cheap knock-offs if our companies don’t cave on prices.
It’s easy for them to do: buy a pill and take it apart in the lab. Don’t worry, the theft is protected by these governments. Trump, yes, bash China for their unfair trade practices, but also let’s put some muscle behind a campaign to end this extortion racket.
Joining the economic-kiss-of-death crowd led by Bernie Sanders, et al, is hardly an adult response to high prices. It typically takes 12 years and $2.4 billion to bring a new medicine to market. Industrialized methods brings down production costs, but what about recouping the $2.4 billion? If not countered, Trump and lefties, alongside the international extortion racket, will become coffin-makers for an entire American industry. Now, what about all those tweets about “Jobs!, Jobs!, Jobs!”?
Appeals to economic illiteracy and popular venality should be rejected in favor of a little common sense.
** Thanks to Steve Forbes, “Great Medicine for Trade”, Forbes, March 31, 2018, p. 15.
