Wednesday, May 16, 2018

"Perspectives for the United States"

It's been a quiet month in Trotsky-land. I've found rather little to write about. Scraping the bottom of the barrel here, not because John Reimann's article is bad, but just that I've covered this territory many times before.

I've borrowed my post's title from Mr. Reimann's piece over at The North Star. The lede paragraph:
The Marxist method is to start by trying to figure out the main processes – the main forces at work – and get some idea of how they will interact and develop. Only then can we figure out our tasks within that general process. Recently a small group of Marxists – the Workers International Network – held a conference in Britain. Here are some thought on the perspectives for the United States that were submitted to that conference:
It's a fine thought, but then why is the following sentence so spectacularly wrong?
On November 9, 2016, the world awoke to Americans having elected the most right wing and racist president since before the US Civil War.
Surely Presidents Reagan and both Bushes were more "right wing" than Trump, at least if judged against standard Republican principles. They all explicitly tried to shrink the size of government (unsuccessfully), and were eager to use US military force abroad (Grenada, Nicaragua, Kuwait, Iraq). Trump, meanwhile, just signed the biggest deficit-spending bill in history, and apart from two pinprick strikes against Syria has barely used American military force at all.

The "racism" charge is also mostly phony. As Scott Alexander puts it, Trump is no more racist than the average 70-year-old white guy. So that's more "racist" than Obama, but it hardly qualifies him as a member of the Ku Klux Klan. Unlike previous Republican candidates, he actively campaigned in Black neighborhoods and sought out their votes. And while unsuccessful at the time, Trump is slowly winning support from Black men (see, e.g., Kanye West).

What is true is that Trump is spectacularly uninterested in racial politics or issues, about which he knows nothing and cares less. That's why he has such a tin ear on things like Charlottesville, where the media were able to take his remarks completely out of context. (See my comments on that episode here.)

Then we're told that Trump is in cahoots with the Russian mafia. Mr. Reimann's source for this is something called oaklandsocialist.com, which refers us to the equally obscure site WhoWhatWhy.org. These tout conspiracy theories--that Trump has surreptitious ties with Russian oligarchs that not Robert Mueller, nor the otherwise bloodthirsty media has been able to reproducibly uncover. This is just BS.

Finally we get to real substance: Mr. Reimann asserts that American imperialism is in decline. He separates this into two parts: domestic and foreign. He asserts that Trump's slogan, Make America Great Again, is in fact a promise to reverse this decline--a promise he won't be able to keep.

Mr. Reimann does have a point. As a fraction of global output US GDP has declined: from 37% in 1967 to 25% today. This happened (in major part) because China (a very big country) rejoined the world economy in 1980 and global GDP has expanded considerably as a result. But it is a big mistake to interpret this as the decline of America (though in Mr. Reimann's defense, Trump makes the same error). The US has hugely benefited from the industrialization of China, as I have documented in detail here (in response to an article by Marxist Lynn Henderson).

It is an undeniable fact that almost all Americans at all income levels are far richer than they were in 1980. Today we have the Internet, cell phones, 500 channels on cheap, 72" televisions, access to streaming movies, real-time video games, much safer, more reliable, and better cars, cheaper food and much cheaper clothing. Etc. I find it completely incredible that my Trotskyist friends can still claim that we're all getting poorer with a straight face. That is manifestly not true!

Yes, some things have gone awry: Mr. Reimann cites lower home ownership rates. Even there he's cherry-picked his data point, for the quality of housing has increased dramatically over that past 40 years. Even renters are substantially better off than they used to be.

Speaking of cherry-picking, Mr. Reimann cites At Our Own Peril, a report published by the US Army War College, as if it represented the last word in Pentagon thinking. Rest assured--it does not. DoD is a huge organization and publishes a zillion reports annually. Some of them are certifiably stupid, like the one that suggested that climate change is the most important defense priority for the United States.

At Our Own Peril is not silly, but to take it as the last word on global politics is silly. Yes, in many ways US influence has declined since 1945, most precipitously since the demise of the Soviet Union. A multipolar world is intrinsically more complex than a bipolar one. And ever cheaper technology makes weapons of mass destruction more easily obtainable, even by non-state actors. So in that sense Mr. Reimann is correct.

But the US spends 37% of all global defense expenditures, roughly triple what China spends. We are by far the most powerful nation on the planet, a fact that is not likely to change any time soon. It's not even close. When President Trump promises "fire & fury," he is very much in a position to deliver just that.

In an all-out war with North Korea, we win. Easily and hands down. But Mr. Reimann distorts that prospect. He writes
There is the matter of North Korea, for example. Right now, the rhetoric as far as crushing that country seems to have receded. But who knows what’s going on beneath the surface? There have been some reports that some generals are implying they would disobey an order to launch a first strike nuclear attack. But relying on the military, which has always had its crazed Dr. Strangelove wing, is a very weak assurance indeed.
Why would the US launch a first strike nuclear attack? We have no need--we can destroy the Nork's nukes with perfectly conventional weapons. Which (I hope) is what we will do if Mr. Kim cannot be persuaded to give them up otherwise.

Mr. Reimann devotes much of his article to the political responses to Mr. Trump. Given his assumption that Trump is some right-wing, Russia-loving, kooky crackpot, no wonder he gets it all wrong. I remind him that Trump won the 2016 election, and he didn't do that by being a bumbling, incompetent, undisciplined idiot. Quite the contrary--the campaign was spectacularly well run. See, for example, here and here (unfortunately I can't now find the best article on this subject).

The truth is Trump is a masterful politician! He has upended politics in precisely the same way Amazon disrupted bookstores, and Uber has trashed taxicabs. The man is not only disciplined--he's a genius! That doesn't mean he's always right on the issues, but he understands the political pulse in America as no other.

Mr. Reimann, writing back in January, claims Trump only had 32% support. Today it's up to about 50%. But none of those numbers matter. Trump may very well be the most unpopular politician in America--except for all the others. I can't think of a single Democrat who has a chance of beating him.

A lot can change between now and 2020. If nothing else, Trump is getting on in years and his health might fail. Still, Trump is far and away the odds on favorite to win reelection in 2020.

Further Reading:




Tuesday, May 8, 2018

Crypto as a Global Currency

For a beginner's introduction to bitcoin and cryptocurrencies, the folks over at CoinCentral have put up a good resource, here.

If you travel to Japan you need to convert your US dollars into Yen. The currency exchanges at the airport will charge you 7% each way (USD-->JPY-->USD), for round trip vigorish totalling 14%. If you use your credit card the fees are not quite so high, but still outrageous.

It’s like that for every country. You can’t even catch a break in Canada. Yes, greenbacks are widely accepted by our neighbor to the north, but at a price. A store will probably charge you 10% for the privilege. And woe to Canadians travelling to the USA--once you get south of Plattsburgh, NY, or Blaine, WA, your money is practically useless.

So one can sympathize with the euro project. My German friends used to carry bags of coins around with them to use while on day trips across one border or another: not just Marks, but also Francs, Guilders, Kroner, etc. The euro flattened it all out, and for the tourist trade it was a godsend, universally acclaimed by citizens everywhere who could go shopping in Belgium, France, or Germany without any currency headaches at all.

Though the euro has not fared that well. It turns out that a tourist’s convenience is not the primary test of a currency. At the end of the day the balance of payments must balance--that is, a country’s debits and credits have to match up. Greece was spending lots of euros buying German manufactures, and getting those euros back required them to borrow money. Lots of it. Greece is now completely bankrupt.

Without the euro Greece would certainly have big problems, but it likely wouldn’t be in debt up to its eyeballs. Arguably the euro has made the situation in Greece, along with Italy, Spain, and even France, much worse. It looks like Europe will eventually shed the euro and its citizens will go back to paying exorbitant currency exchange fees.

So there are reasons why countries have separate currencies. A currency zone isn’t just a matter of coinage, but depends on culture, language, banking rules, business habits, and comparative advantage.

Is there a way out of this mess? I argue yes, and the answer is cryptocurrencies.

No, I am not suggesting that we all go on bitcoin and expect to live happily ever after. If Europe can’t even support a single currency, then how much less the rest of the world? Germany and Greece use their currencies in different ways.

But we don’t have to divvy it up by national boundaries. Instead, let’s ignore political borders and consider different industries.

I was inspired to think about it this way when I ran across something called bunnyToken. It’s an ICO (initial coin offering) that aspires to be money for the adult entertainment industry. (That this particular ICO is widely believed to be a scam does not affect my larger point.) BunnyToken wants to be the money you will use if you want to buy a porn video, go to a strip club or hire a sex worker, etc. The intention is that you can use it for that purpose anywhere in the world--no exchange fees necessary.

Two points:

1) The adult industry is usually at the leading edge of new technology--witness VHS, internet payments, livestreaming, etc. That’s partly because the customers are not especially price-sensitive, but mostly because the industry is typically excluded from normal financial and distribution channels. So they have to invent their own. The fact that they're experimenting with their own currency is an important milestone.

2) BunnyToken has to guarantee anonymity and reliability. On the other hand, transaction times don’t have to be that fast (10 minutes should suffice), nor do transactions have to be all that cheap. Because transactions will likely be for relatively small amounts of money, super-tight security may not be necessary.

Think how sensible this is. Porn is porn, whether in Thailand or the USA. The prices won’t be the same--the law of comparative advantage still holds--but there is no reason why it has to be exchange rate sensitive, dependent on a nation’s macroeconomic variables. Let the porn industry have its own currency.

I can easily imagine any number of other bespoke currencies. A TouristCoin would be wonderful. Just imagine if I could pay for hotels, airlines and cruise ships around the world using a single coin. The specs on this money will differ from bunnyToken. It definitely should NOT be anonymous--I want to prove that I paid my hotel reservation. Transactions might be large, so security will be more important.

While the Greek economy overall is poorly developed, the country has a world-class tourist industry. Why should that industry be tied down by problems in the rest of the economy? Let them share a currency with tourist businesses across the globe, and let comparative advantage rule.

Similarly, a restaurant token is long overdue. Starbucks has invented a pale reflection of that with their phone app. But a real restaurant token will work anywhere in the world, from any Starbucks, to Alinea in Chicago, to a streetside vendor in Hanoi.

This will not eliminate exchange problems. After all, a pornstar may want to eat in a restaurant some day, where her bunnyTokens won’t buy her a meal. So she’ll have to exchange her bunnies for something that works in a restaurant. That could be fiat currency, which would be a very expensive solution. More likely it will be bitcoin, using exchanges like Binance. Our actress can exchange her bunnies for bitcoin, which can then be used to buy restaurant tokens. These exchanges will cost money, but far less than the 14% charged by fiat exchanges--likely only a couple percent. To be competitive it will have to be cheaper and more transparent than today's bank fees.

Like today’s fiat currencies, this proposed model is not one-size-fits-all. There will be different currencies for different industries, unlike today’s system where currencies correspond to political boundaries. Each currency will be tailored to the industry it serves, but within that industry it will have a global remit.

To make it work there needs to be a currency against which all the others can be traded, like the role of the US dollar today. I suggest that currency will be bitcoin--it has the first mover advantage, and also the largest market cap. Further, it’s stuck with an old-fashioned, slowpoke technology that has the benefit of being ultra-secure. Apps can be built on top of that to allow for more efficient and cheaper trading.

This is how crypto takes over the world. Not with one big whack, but rather with a thousand cuts. Starting with the porn industry.

Further Reading:

Wednesday, April 25, 2018

Teachers' Strikes: The Difference a River Makes

Last month, in a post about the West Virginia teachers' strike, I had this to say.
The union's lack of legal status is important. It can't enforce a closed shop, nor can it negotiate a real contract. All it can do is get a widely publicized agreement from the state. That is actually an appropriate role for a union. I support this kind of "union" activity.
Surprising even myself, I had something positive to say about unions. The West Virginians demanded only a 5% pay raise (which they got), along with lower medical premiums (I don't think they got that). All in all, reasonable requests.

But if you cross the Big Sandy River from West Virginia into Kentucky, the situation is very different, as described in this week's Militant by Susan Lamont. Turns out that Kentucky educators aren't primarily interested in higher wages, but rather in secure pensions.

Can't say as I blame them. The state tried to put one over on them by passing pension reform as part of a sewage bill. It was a very modest reform, not impacting any presently employed teachers. All it would do is put new teachers into a defined-contribution, 401K plan, instead of adding to the hugely underfunded state pension plan (defined benefits).

On its face the new law is unobjectionable. After all, the first rule of holes is, when you're in one, to stop digging. And that's all the state suggested. The fact is the new bill doesn't do anything to solve Kentucky's pension problem, but at least it stops it from getting worse.

The teachers went ballistic. Calling in sick, they skipped school in droves to show up at a huge rally in the state capitol, reminiscent of Wisconsin, 2011.

The reason for the response is obvious: the teachers are screwed, and they know it. They will never see even a fraction of their promised pensions. But they're still in denial, trying desperately hard to defeat the laws of both arithmetic and compound interest.

Turns out, according to Ms. Lamont, that neither the state nor teachers have been paying into Social Security, so they won't even get those benefits. That's gotta be one of the most shortsighted decisions ever! I recall when I was a grad student, for a few years I didn't have to pay social security taxes. I thought I was making out like a bandit. Fortunately it was only temporary, and thank God I've since put in enough that today the benefit covers my house payment. Kentucky teachers, meanwhile, have taken the short term savings and just spent it. Idiots!

Of course that's not the worst of it. According to Troy Vincent over at ZeroHedge, in an article entitled Kentucky Teachers Want a Bailout
The Kentucky state workers’ pension system is by some measures the worst funded pension in the entire country with an estimated $70 billion dollars of unfunded liabilities. A recent audit of the pension system found that the plan has had $6.9 billion in negative cash flows since 2005. 
At $40 billion, Kentucky teachers make up the largest portion of this unfunded liability. But even in the face of impending insolvency, many teachers in Kentucky are still protesting the slightest changes and cuts to their compensation that have been proposed in an effort to prevent catastrophe.
For example, Ms. Lamont interviews a certain Megan Berketis--a teacher with less understanding of economics than most high school students.
“They talk as if there is a giant pie, and if someone gets a bigger slice, then yours gets smaller,” Berketis said. “But there is no pie. We shouldn’t have to pay more taxes. Money for education should come from the companies that make a lot of profit.”
It surely is presumptuous for Ms. Berketis to allocate all corporate profits to teachers' pensions. Even a socialist won't agree with that--surely some money should be reserved for highways, health care, parks, and even prisons. Even if you accept the socialist premise that no profit should go to private individuals, by what right do Kentucky teachers get to claim everything?

To put it in scale, the richest man in Kentucky is not Colonel Sanders or Jack Daniels, but instead B. Wayne Hughes, worth $2.7 Billion. He's the founder of Public Storage, a nationwide storage locker provider. Sounds like he has a lot of money, but it's less than 4% of the state's pension hole. Of course the company operates in all states, not just Kentucky, so our teacher friends can only claim at most about $60 million of his fortune--or far less than 1% of the amount needed.

And that's only if the company is both bankrupted and liquidated, with all of its employees put out on the street and left unemployed, and with no pensions. All that just to bail out a bunch of clueless, very stupid teachers who couldn't even be bothered to pay into social security.

The fact is there simply aren't enough rich people in Kentucky to cover the hole that teachers have dug for themselves. So it will have to come from higher taxes.

Kentucky currently collects about $12 billion annually in tax revenue, or $2655 per person (not per household). If the pension deficit is to be filled over a decade, that means a tax hike of about $7 billion per year, which raises the bill per person to about $4200. Note that citizens wouldn't receive any additional services for all that money--all they'd be doing is reimbursing teachers for excess stupidity.

It will never happen. Kentucky's state pension system is as good as bankrupt, and it is only a matter of time before it fails completely. There is no way that teachers will ever collect what they've been promised. So the logical thing to do is to extricate oneself as gracefully as possible from the system--at least try to recover fifty cents on the dollar. If I were a Kentucky teacher I'd try to negotiate buyout. At least I'd get something before the whole thing goes down.

Of course Kentucky teachers aren't the only ones in this predicament. New Jersey is worst off--their plan is only 30.9% funded. Kentucky is second, with 31.4% in the bank. Illinois, Connecticut, and Colorado round out the bottom five.

But that's not the end of the bad news: percent funded in both New Jersey and Kentucky declined by more than 6% in one year. (For Kentucky, the ratio went from 37.8% in 2015 to 31.4% in 2016.) The reason for the decline is that nearly all state pension plans assume a very high rate of return on their investments--typically 7.5%. A more accurate number is about 5%, but putting that into the arithmetic throws all pension plans far into the red. So even states like New York or California, which nominally are at or near fully funded, arrive at that result only by making unreasonably optimistic assumptions.

The bottom line is that teachers who trusted their kleptocratic politicians and con-artist union officials to manage their retirement portfolios for them are screwed. In only a few states will they come out whole. In Kentucky the likely outcome is something close to zero.

Me, I put my money into a 401K from the very beginning. Can't say as I regret the choice. The state of New York doesn't owe me a dime.

Further Reading:

Wednesday, April 11, 2018

How Low Can Bitcoin Go?

(This post is a bit technical. For a beginner's introduction to bitcoin and cryptocurrencies, the folks over at CoinCentral have put up a good resource, here.)

Zero, of course. Zero is the lower bound on lots of things: stock prices, minimum wages, retirement portfolios, etc.

Yeah, it's easy to imagine extinction events--an asteroid hitting the earth and eliminating humankind, for example. Or the commercialization of quantum computing--which at this point seems a very long way off (a few qubits at near absolute zero temperatures notwithstanding). Etc.

Yet I don't believe bitcoin will go to zero. The world is just not going to forget about cryptocurrencies--the technology will always be there. They may be more or less important in the future, but zero is not a likely outcome.

While many (most) of the so-called alt-coins will in fact go to zero, a few of them will undoubtedly survive and thrive. Bitcoin, if only because it has first-mover advantage, is the oldest and biggest of the bunch. Something substantial will have to happen before it gets displaced--and maybe not even then.

So let's eliminate zero as an option and ask: What is the lowest price bitcoin could fetch and still remain a viable cryptocurrency?

The cost of bitcoin depends on the expense of mining. Mining is the mechanism that cryptocurrencies use to verify each transaction. Transactions are signed cryptographically and put together in a block. Proving that the pass keys are all correct involves finding the solution to a cryptographic puzzle, which can only be done by trial and error--going through the billions and billions of possible solutions one at a time until the correct answer is found.

The miner who finds the correct solution today is rewarded by receiving 12.5 bitcoins, now worth around $85,000. The cost to the miner is the electricity used--on average in the US it costs an average of $4,758 per each bitcoin (in Louisiana the price averages $3,224). In South Korea, on the other hand, the bill runs $26,100--obviously there's no point in mining bitcoins there. The cheapest country for mining is Venezuela ($531), where electricity is highly subsidized.

So let's take Louisiana as representing the cheapest, readily available rate--and round up to $3,500. That cost corresponds to about $44,000 per block (leaving a bit over $20,000 as profit to the miner). So how many transactions are in a block? That depends on the demand for transactions, but if we go back to the "bubble" period last year transactions were at a max. On December 18th, 2017 over 2700 transactions were processed in one block.

That means each transaction cost about $16.30 to process. Note that this is per transaction and is not proportional to the amount transacted. Thus paying $2.50 at Starbucks is going to cost just as much as paying $5,000,000 to buy a NYC condo.

It's obvious that bitcoin makes no sense for small transactions--it adds multiples to the cost of your morning coffee. On the other hand, the overhead cost for the condo is trivial. So bitcoin makes sense for moving large amounts of money around, especially across international borders. No wonder institutions like banks and hedge funds have become really interested in bitcoin, while retail stores are generally not signing up. (Some apps are being developed to dramatically lower transactions costs for small purchases, albeit by sacrificing security.)

The higher the mining cost, the greater the security of the bitcoin blockchain. On the other hand, cheaper mining means saving money, but the miner can more easily cheat and steal your bitcoins. The cheapest possible mine is a database, where one person simply looks up how much bitcoin you have and keeps accounts. As long as that one person is honest everything will be fine. It's a trade-off: money for security. Bitcoin has opted for security--its blockchain has never been hacked.

For the moment, miners do their work for "free"--that is they are paid by creating new bitcoins rather than by charging users. But that will gradually change as fewer and fewer bitcoins remain to be mined. The last bitcoin will be mined in 2144. That's beyond my investment horizon, but in the meantime the rewards of mining gradually shrink. Beginning in 2020 each miner will only receive 6.75 bitcoins per block. Eventually transaction costs will be passed on to users as fees. 

So it's easy to conclude that it costs about $16.30 per transaction--and absent cheaper electricity and/or advances in computer technology that will remain true into the future. But it's not quite so simple. Note that mining is successful when, by trial and error, miners find the true solution from among billions and billions of possible answers. If there are more miners they find the answer quicker, but bitcoin has a mechanism so that a block is solved every 10 minutes. That is, if there are more miners, the difficulty of the puzzle is increased so that solutions are found about 10 minutes apart.

The bottom line is the fewer the number of miners, the cheaper the transaction costs because the mining gets easier. The larger the number of miners, the more expensive the transaction costs. That makes sense--all those miners require more electricity. And it repeats what we said above.

Since miners go into business to earn money, and since more money will be earned when bitcoin is at a high price, a higher cost of bitcoin will effectively raise the transaction cost. Conversely, cheap bitcoins will dissuade miners, lowering transaction costs.

There needs to be a minimum number of miners to guarantee the security of the system. Let's guesstimate that is half of today's number. That implies that bitcoin can sink to approximately $1250 (half of $3500) before it becomes totally uneconomic.

So I suggest the lowest low that bitcoin can go is about $1250. It can't even get that low because all that does is cover the transaction cost--why bother? Still, if it falls below that the next stop is definitely zero.

Further Reading:




Tuesday, April 3, 2018

Black Dispersal from Cities

Glen Ford, executive editor of Black Agenda Report, often has his work reprinted in Socialist Viewpoint. The post that caught my attention today is entitled Great, Bloody Black Dispersal from the Cities. It's typical of Mr. Ford--always one to take the most extreme, radical position possible, facts and logic be damned.

It is true that, since 2000, Blacks are gradually moving away from large cities, reversing a trend from the prior several decades.
The rapidly unfolding dispersal of Blacks from the cities, like the white invasion of the surrounding hinterlands in the previous era, is the result of deliberate state policies, dictated by finance capital. But, this time, the demographic makeover has been effectuated and politically finessed with the active collaboration of a Black misleadership class that, paradoxically, owes its existence to the concentration of Black populations during the Sixties and Seventies.
True to form, Mr. Ford sees it as a giant conspiracy, where some all-powerful racist/capitalist/government yokel has, for mysterious reasons, decided to depopulate America's cities.

He cites no real data, so I'll take data from Chicago, which I have close at hand. According to the Chicago Tribune, the city lost 186,000 Black residents between 2000 and 2010. The same article reports that the Chicagoland area lost 46,000 Black residents since 2010.

Mr. Ford speculates this is due to the destruction of housing projects. He writes
The de-Blackening of urban America is a wrenchingly painful and bloody amputation-in-progress. In a frenzy of demolition, the U.S. has lost a quarter-million units of public housing since the mid-1990s, only a small fraction of which has been replaced with new public housing, according to the Center on Budget and Policy Priorities. Black mayors and heavily Black city councils have, typically, bought into the notion that concentrations of poor Black people are, by definition, vectors of pathology, while concentrations of affluent whites are the indispensable ingredients of urban “renaissance.” It is the logic of apartheid, cloaked in phony economics.
Chicago's Robert Taylor Homes were the infamously inhumane high-rises alongside the Dan Ryan Expressway, containing 4,415 units. They were demolished between 1998 and 2007, replaced by 2,300 low-rise homes and apartments. (Wikipedia) So while Mr. Ford is correct that on net public housing was destroyed, the fraction that was replaced was more than 50%. Not really a "small fraction," especially if you consider that many apartments in the original towers weren't habitable.

Does Mr. Ford really think Chicago's Black citizens were better off living in the Robert Taylor Homes? The crime was building them in the first place--not their destruction.

He claims that Blacks have been forced out of the cities into the suburbs. "No mayor has been more intent on driving Blacks from his city than Chicago’s Rahm Emanuel," he says. But I think he's wrong.

1) Like whites, Black folks are richer than they were 40 years ago--they have more choices. Nobody with any money at all is gonna want to live anywhere close to the Robert Taylor Homes. Much better is a house and yard in the 'burbs. Like whites before them, Blacks want to lead civilized, suburban lives.

2) We're all getting older, and Black demographics are only slightly younger than us white folks. Old people, living on social security, want low prices, low crime, and quiet neighborhoods. One can live in Mississippi or Alabama quite comfortably on social security and a small pension. No wonder folks are leaving Illinois in droves (and not just Blacks).

3) Chicago has the highest sales taxes of any jurisdiction in the nation. And the city is so hard-up for revenue that they've resorted to stupid things, like soda taxes and red-light cameras. Of course these penalize poor people more than rich ones. Again, for people of modest means the suburbs or Mississippi look really good by comparison.

Then Mr. Ford condemns the city for closing 50 public schools. He never tells us about the drop in enrollment, described by the Sun-Times.
Chicago Public Schools on Friday announced another five-figure enrollment drop, counting 371,000 students in the country’s third largest school district. ...
CPS has lost about 21,000 students from its rolls in the last two years and now has just about 26,000 more students than the fourth largest, Miami-Dade County Public Schools in Florida.
Why should schools stay open when the district is losing 10,000+ pupils annually? Mr. Ford gives us a really silly reason.
The result [of school closings--ed] was catastrophic, as students were forced to transit unfamiliar gang turf to attend schools that were often no better than the shuttered ones in the old neighborhoods. Many kids died. “What people don’t understand is that if you are 16 years old and get on a bus, when you get off that bus you are gang-affiliated whether you are gang-affiliated or not,” said activist Jitu Brown.
Mr. Brown is certainly right--we whites don't understand that. I've never been in a gang, nor do I have any friends who have ever been in a gang. Gang membership is just one of those things we white people don't do (mostly). But now Mr. Ford will have the government enforce turf boundaries established by street gangs! Is that supposed to be the job of the school district? Are we taxpayers (people in housing projects don't generally pay taxes) now required to subsidize gang warfare by keeping unnecessary schools open?

Mr. Ford will likely respond by saying that gangs are the result of poverty/racism/capitalism, etc. He's sorta right, but he's got the causal arrow backwards. By coincidence there's an article in The Atlantic about "Brastell Travis, a 21-year-old who lives in the city’s Englewood neighborhood." He did all the things a young man is supposed to do--went to school to learn a trade: welding. But he can't find a job, "...because of where he went to high school, he can’t apply for jobs in certain neighborhoods, because he could become a target of violence if he goes to the wrong areas of town, he said." So in this case gangland crime causes poverty, not the other way round.

Mr. Travis should move to the suburbs. To do that he'd need a car (which he doesn't have) and money for a deposit on an apartment (which he doesn't have). His parents apparently have saved up zero capital to help get him started on life. And that's the real problem--no capital accumulation by Black families. (I'm not talking millions here--a couple thousand dollars would solve a lot of problems.) So he's screwed.

Mr. Ford's real concern is to maintain a majority Black population in large cities, such as St. Louis, where Blacks became a minority this century. He wants to use this majority to enact far-reaching reforms, one of which is the "Right to free education through post-graduate level."

I can't think of a stupider idea. Surely more education is not something that Mr. Travis, for example, actually needs right now. At best it would be a waste of time. And nothing is more a waste of time than "post-graduate" schooling. All it does is postpone becoming an adult until one turns 30. I think we're already waaaay over-invested in education at all levels. But apparently Mr. Ford thinks higher sales taxes and soda taxes are a fair price to pay for yet more silly schoolwork.

Further Reading:

Tuesday, March 27, 2018

Iranian Politics as Group Therapy

It's a very strange article.

Steve Clark pens a piece supposedly about Iran, though I doubt any Iranian will recognize his country by reading it. I tried to make head or tail of it, and all I can muster is that it's not really about Iran at all. Instead it's about the Socialist Workers Party (SWP)--an exercise in group psychotherapy.

The article isn't worth reading unless you're an obsessed Party-phile like me. You'll learn nothing about Iran, and discovering anything about the SWP requires more work than it's probably worth. But here goes.

It begins auspiciously enough with a preface by the editor, including this paragraph [links added by me].
The Militant, echoing bourgeois media coverage, inaccurately presented those actions [unrest in December & January--ed] as largely a response to economic grievances and Tehran’s cutbacks of subsidies and social expenditures. This was captured by headlines in the Jan. 15 and Jan. 22 issues: “Economic Crisis Behind Protests in Iran Cities” and “Working-Class Discontent Continues to Spread in Iran.” While improved coverage appeared in subsequent articles, the failure to publish an explicit correction denies readers the facts and analysis they need to understand the political roots of these events and their significance in the ongoing class struggle and wars in the Middle East and today’s world.
I've read those pieces (both by Terry Evans) and see nothing that needs to be retracted. Mr. Clark is not at all explicit about what in Mr. Evans' articles requires correction, perhaps apart from the headlines.

This paragraph is as explicit as Mr. Clark ever gets.
Two centuries of experience have taught politically conscious workers that neither popular revolutions, nor resistance by working people to the consequences of defeated revolutions, are fueled primarily by “economic discontent.” Much deeper social and political questions of class, sex, sect and race push working people into action in our tens and hundreds of thousands (and, at decisive points, in our millions). Above all, it is the class and social inequities and indignities of capitalist exploitation and oppression that erode the moral legitimacy of the rulers and their state. And nothing propels mounting resistance more than the privileged classes’ military adventures and wars, as the rulers’ nationalist and religious rationalizations (Persian and Shiite, in the case of Iran) begin dissolving in blood.
For the life of me, I read nothing in Mr. Evans' articles that contradicts this at all. Only the word "economics" in the headline slightly diminishes the effects of "class, sex, sect and race." Though forgive me for not having noticed such a glaring error to begin with.

A "Kremlinological" analysis suggests that Comrade Evans is about to become a non-person, whose serious ideological errors make him unfit to be a worker-Bolshevik. I think this is the wrong conclusion--the prefatory remarks explicitly blame "The Militant," not the individual reporter. Nobody is likely to be liquidated.

A second interpretation is that the Party is losing its working class outlook and becoming boringly mainstream. Nobody interested in Iranian politics (or any politics, for that matter) will find the list of "social and political questions" objectionable. To the contrary, they're obvious and uncontroversial. This is Marxist dialectics turned into bland truisms.

But I don't think this is the correct interpretation, either. However banal Mr. Clark's piece might be, the Party is not arguing for banality. Theirs is another agenda.

So that leaves a third interpretation, namely that the Party wants to rewrite history. To wit: it needs to justify its support for the 1979 Iranian Revolution, while at the same time opposing the current Iranian government. This is harder than it sounds: the Party supported the Soviet Union to the very end, yet strongly criticized its Stalinist government as betrayers of the Revolution. The term used to describe this "dialectical" relationship was critical support. That is, within Russian politics the Stalinists had to be opposed at every turn, but vis a vis the United States the Soviet Union had to be defended. The Party upholds that same principle for North Korea (less support and more criticism) and Cuba (more support with less criticism).

But the SWP now wants to withdraw critical support from the Iranian government, and oppose them outright. This is surely the morally correct position: it will allow them to oppose Assad in Syria, Hezbollah in Lebanon, and Hamas in Gaza--murderers all. But it leads to great theological difficulties--somehow revolutionaries in 1979 have to be transformed into counter-revolutionaries who have to be categorically defeated.

And therein lies the rub. Mr. Clark is very clear that the Party supported the 1979 revolution. But sometime and somehow between 1979 and 1982 a counter-revolution occurred. He's not at all forthcoming about what or how this decisive event happened--that's what makes the article so frustrating to read. But mysteriously it has something to do with Farrell Dobbs' book Teamster Bureaucracy (!?), the fight of women to wear the hijab (before 1979), and then not wear the hijab (after 1982). There was no cataclysmic event, no paroxysm of violence, nor any other single marker to signal this fundamental shift in the class line.

Weird. Long time followers of The Militant will recall that the Party viewed the former Soviet Union and Eastern Europe as workers' states, even into the late 1990s. Despite the fall of the Berlin Wall and the reunification of Germany, the East Germans had still fundamentally changed the ownership of the means of production and the relationship of class forces. Despite the collapse of the Stalinist regimes, no counter-revolution had taken place, and therefore social conditions had not fundamentally changed.

It's all described in Jack Barnes' rather silly book entitled US Imperialism Has Lost the Cold War, published in 1998. It's a view they periodically reassert, though I think they've long since given up on calling Eastern Germany a "workers' state."

Yet in Iran, for no discernible reason, a revolutionary government has quietly morphed into a bourgeois, counter-revolutionary government without anybody noticing--at least not until Steve Clark let us in on the secret last week.

Inconsistency aside, I actually applaud the Party for their newfound theory. It does put them on the side of angels, sharing a position not only with me, but also Louis Proyect. The opposite opinion is held by much of the Left, including the execrable Socialist Action, which shills for Bashar al-Assad even to this day. Sort of like supporting Pol Pot.

Further Reading:


Monday, March 19, 2018

Summary Statement of US Strategic Goals for the Coming Period

I've been doing some reading and thinking about geopolitics,* and I think I can express America's foreign policy goals succinctly and clearly:
  • The Eurasian continent consists of four "empires" and several smaller "kingdoms". The empires are China, Russia, South Asia, and Europe. The kingdoms include Japan, Indonesia, Persia, and Turkey. I don't mean these countries within their current political boundaries, but rather their cultural/strategic spheres. For example, for Russia that means the former Soviet Union. Turkey is the old Ottoman Empire, plus much of Central Asia and Xinjiang. Persia includes parts of Central Asia, Kurdistan, and half of Afghanistan. South Asia is the whole subcontinent, from Kabul to Dhaka to Columbo, and maybe also Tibet. Only for China do current borders roughly correspond to empire.
  • None of these empires constitutes an essential threat to the United States in their current form. We can defend against any of them individually.
  • The danger comes if one of these empires makes an alliance with the others (or conquers them). Our vital strategic interest is to prevent that from happening. Therefore, for example, we defended Stalin against Hitler, certainly not for moral reasons, but the combination of Europe and Russia potentially augured an entity that would be a vital threat to the United States. So we helped preserve the Soviet Union.
  • The situation is more complicated because Russia is in terminal demographic decline and will cease to be an empire within a generation or two. Its geographic space will be fought over by Europe, Turkey, China, Japan, and Persia. The US vital interest is that none of these kingdoms should win too big a slice.
So this makes US foreign policy spectacularly clear. In the immediate term it has four major goals:
  1. Retain naval hegemony over the South China Sea. This prevents Chinese aggression/alliance with India, and vice versa. Plus it allows us to trade with SE Asia.
  2. Retain control over Afghanistan, which borders several of the above empires and kingdoms: Persia, South Asia, China, Turkey. Indeed, Afghanistan is probably the most strategic piece of ground on the planet. We don't really care what their internal government is, but we insist that none of its neighbors win control over the place. We're gonna have troops in Afghanistan for decades to come.
  3. Harass terrorist groups sufficiently to deny them control over any territory, and so they never acquire any substantial military capability.
  4. Prevent further nuclear proliferation, most immediately in North Korea.
This has some interesting implications for current conflict zones. Consider Syria.
  • One goal in Syria and Iraq is to deny Iran control over the Fertile Crescent and the Levant. Toward this end Turkey, the Syrian/Sunni rebels, and Israel are our allies.
  • Another goal is to prevent the rise of ISIS, al-Qaeda, or any other terrorist organization that potentially threatens the US. Our allies here are the Kurds and the Assad regime.
  • A third goal is to prevent Turkey and Sunni rebels from destroying Kurdish and Alawite populations. Our allies here are Assad and Iran.
  • A fourth goal is to prevent the mass slaughter and ethnic cleansing of Syria's Sunni population, many of whom have become refugees in Europe. Our enemies here are Assad and Russia. The latter is using this as a lever to destabilize NATO and the EU.
  • The Kurds are a people with divided loyalties. On the one hand they speak a Persian language, unrelated to either Arabic or Turkish (apart from some loan words). On the other hand, they are Sunni and at odds with the Shi'a theocracy in Tehran. Should Iran ever have a secular government then likely the Kurds would become Iranian allies. This is why the Turks are so terribly afraid of them and try very hard to suppress their language.
So it's a very complex battlefield, contrary to what Jeff Mackler, writing in Socialist Action maintains. He posits a mythical creature called "American Imperialism" which for some bizarre and unexplained reason wants to occupy Syria. Thus Mr. Mackler supports the Assad regime, who supposedly represent the progressive future of the human race. For him it's a case of white hats vs. black hats, with Americans wearing black. 

His support for Assad is shameful--sort of like supporting Pol Pot (which my Trotskyist friends also did). But no matter--it's just pseudo-revolutionary grandstanding. By taking a fake radical position, no matter how stupid and inconsequential, Socialist Action burnishes its credential on the American Left.

Nobody should take them seriously.

*Bibliography

Peter Zeihan, The Accidental Superpower (reviewed here)
Peter Zeihan, The Absent Superpower (reviewed here)