Saturday, December 28, 2013

Book Review: Changing Face Of US Politics

This book, by Jack Barnes, is apparently one of the two most important books of the 20th Century:
The struggle to build any revolutionary working-class party must be rooted in continuity with the political conquests of the communist movement won in the course of struggles from those led by Marx and Engels to the Russian and Cuban revolutions. The major lessons of two key turning points in the fight for such a party in the U.S. are codified in The Struggle for a Proletarian Party, first published in 1943, and The Changing Face of U.S. Politics: Working-Class Politics and the Trade Unions, first published in 1981.
The book is a documentary history of The Turn, an initiative the Socialist Workers Party (SWP) began in 1975, when I was still in the Party. The Turn had begun in incipient form as the Party moved away from campus work. The end of the Vietnam war made such a shift inevitable, and as a result we opened up numerous small branches in working class communities. And so it was that I spent my final years as a comrade in Chicago's Hyde Park branch.

By 1978 (with me no longer a member) the Party had sharply defined The Turn as a concerted effort to get comrades into basic industry. This implied not only a move away from campuses, but also from the public employee unions where many comrades were employed, such as AFSCME or the teachers' unions. Basic industry are those unions who have their pulse on the essential core of the economy--the steelworkers, the autoworkers, coal miners, oil, chemical & atomic workers, etc. By 1990 the Party lists nine unions in which they had substantial fractions.

To implement The Turn, comrades were urged to get jobs in basic industry if at all possible. Accordingly civil servants were asked to quit their jobs in favor of new employment on the factory floor. Comrades employed in non-union situations were likewise so pressured. While not stated in the book, my understanding is that comrades who for no good reason resisted this effort were gradually purged from the Party. This eventually led to the split with Socialist Action.

The Turn had three purposes:

  • To "proletarianize" the Party. This goal is denied in one of the early documents, but later on it becomes a major theme. Students are frequently from petty bourgeois backgrounds, a status that will lead to all sorts of trouble for a working class party.
  • To take advantage of the combined nature of the coming American revolution. While Black nationalism, feminism, and environmentalism, etc., were all important parts of the struggle, the ultimate driver of revolutionary change is the proletariat. Thus the Party saw itself participating in these other movements as members of unions rather than from campuses.
  • To position the Party such that it can be effective in the coming class battles. The documents state this in the most mealy-mouthed ways possible, for example, 
"We have entered the initial stages of a preparatory period, which will lead in coming decades to a prerevolutionary upheaval marked by revolutionary struggles of a kind that workers and farmers in the United States have not waged in more than a century."
Initial stages of a preparatory period to a pre-revolutionary upheaval? Not a very confident prediction, yet on this thin reed the Party forecasts that it will increasingly start recruiting young union members to its ranks, and hence grow the Party.

The prediction was based partly on the end of the Vietnam war and the defeat of world imperialism, but more often on what the documents refer to as the 1974-75 "depression." The Party's view was that capitalism could never recover from this economic setback, and this would force the ruling class to put increasing pressure on workers everywhere, leading to a continuing mass radicalization.

The goal (especially in later documents) was to create a cadre of worker-bolsheviks. These comrades would be unionized workers, to be sure, but they would be Party comrades first and foremost. Union work was never to take precedence over Party discipline. To enforce this, comrades were constantly being moved from job to job and from place to place. They were never allowed to develop a social or personal life separate from the Party. Critics have called this practice cult-like. I think that's too strong, but there is no question it made Party membership much harder and less effective than it had to be. After all, the first task of recruitment is establishing trust and friendship. These are earned not just in the work place, but also at the VFW Hall, the church basement, and the local bowling alley. Comrades, by never showing up at any of those venues, essentially forfeited the match.

The net result is that The Turn has been a total failure. Party membership has declined from a high of maybe two thousand to probably 300 today. Worse, comrades are now mostly retired and are in no position to engage in basic industry. Their hope of recruiting "young workers" is today completely hopeless.

And then the Party's political approach was just flat-out wrong. For example, nowhere in the book is Nixon's visit to China mentioned. Yet this was the key watershed event that has led to the collapse of the union movement. The participation of Chinese labor in global production has rendered the American industrial worker simply unimportant. The Sparrows Point steel mill in Baltimore was once a jewel in The Turn's crown--they had a large fraction there. Today the mill is closed and the Baltimore SWP branch no longer exists. Ed Sadlowski, in the mid 1970s, led Steelworkers Fight Back out of Chicago's SouthWorks mill. That mill is now closed, and Sadlowski's District 31 no longer exists. Party branches in such industrial centers as Detroit, Cleveland, and Pittsburgh are all gone.

There is no union in the US that today has the ability to shut down an entire industry. A General Motors strike would bankrupt GM, but there would be nary a hiccup in global auto production--there are plenty of people around the world who'd be happy to take over GM's market share. Accordingly, an autoworkers strike is essentially impossible. The industrial working class toward which the Party turned 40 years ago simply does not exist anymore.

I think the Party is finally reevaluating The Turn. One indication is the previously linked article, which casts closure on the episode in a way that makes it sound successful.
The key accomplishments in building a communist party rooted in the working class in the late 1970s, as laid out in The Changing Face of U.S. Politics, are not registered primarily in the colonization of basic industry carried out universally by the party cadre at the time, but in the political conquests recorded there.
It then goes on to announce an unusual call for a Party Convention to be held in March, 2014.

The second hint comes from an article about Ukraine.
Since then [1990s], the remnants of the ruling bureaucracies in Ukraine and the rest of the Soviet bloc have moved to reimpose capitalist exploitation on the working class. The social crisis resulting from this course is today exacerbated by the deepening crisis of capitalism on a world scale.
This is the first time I recall reading that the former Soviet Union was restoring capitalism. Up until now the Party held to the dogma of secret socialism, i.e., the countries were socialist even though their own populations were completely unaware of that fact.

These two bits of evidence lead me to believe that changes are afoot in the Socialist Workers Party.

Further Reading:

Monday, December 23, 2013

Dusty's Ducks

A fellow named Dusty has posted a video on the Duck Dynasty kerfuffle (h/t Louis Proyect). Mr. Proyect offers it without comment, but he labels it under humor, among other categories. That does seem apt.

A more vituperative, angry response to a TV show is hard to imagine. That said, there are a couple of points where Dusty and I agree.

1) This is not a free speech issue. A&E certainly has the right to schedule its programming as it wishes.

2) It's not actually a reality show. The Robertsons are actors playing a cartoon version of themselves. Like actors the world over, they get into costume before appearing on camera. Dusty calls that "fake," but it's no more fake than any other TV show.

Beyond this, ironies abound.

The duck gang has expressed irritation with A&E for bleeping the soundtrack, as if there were profanity. They deny that they ever use profanity, and I'm inclined to believe them. Devoutly religious people don't use swear words.

Contrast that with Dusty, whose vocabulary consists mostly of profanity. A&E would have to bleep his entire speech! His favorite word is douchebag--that's the term he uses to describe Phil Robertson, all his kin, and Christians in general. This is an odd term: it's related to douche, which refers to "the cleansing product for vaginas." It's hard to know who's being insulted here: Christians because they're like dirty vaginas, or women because they're like Christians.

So Dusty claims that "nothing brings out the Christian love like hating us gay people." That's the felony, but for good measure he adds two misdemeanors: Christians (in the person of Phil Robertson) are ignorant and bigoted. Now I agree with him--Phil Robertson is ignorant. He's poorly educated and not widely traveled. And he's probably bigoted as well.

But he's not hateful. Phil does not threaten violence against gays, or even their civil rights. He just thinks that gays are tempted by their unique version of sin. As I said in my last post, "[i]f a gay man were to encounter a Robertson, the worst that could happen is he'd get an earful about the need for repentance and the saving power of Jesus Christ. And then he'd be invited over for dinner..."

Dusty is the man who is hateful, as the language, anger, and vitriol he directs against the Robertsons demonstrates.

A second irony is that Dusty sports a Darwin fish tee-shirt. I assume he refers to Phil's creationist views. As I said, Phil is not an educated man. He is an entertainer, and not an intellectual or political leader. In this he is similar to any number of other Hollywood airheads, like George Clooney or Prince Charles. You can't take them too seriously.

The irony arises because Dusty ignores the consequences of his own professed belief. As readers of this blog know, there aren't many people who can out-Darwin me, so let me school Dusty.

We live in an environment where birth control is cheap and widely available. It appears that people who use birth control have fewer children and grandchildren than people who don't use birth control. Thus any combination of genes and memes that inhibit using birth control will be favored. On the other hand, more permissive gene/meme combos will be less fecund.

My observation is that devoutly religious people tend not to use birth control. This includes not only fundamentalists Christians, but Mormons, devout Muslims, Amish, orthodox Jews, etc. The Robertson family is a case in point: Phil, at age 67, has thirteen grandchildren, and his parents have around 50 great-grandchildren. (Reproducing the species requires an average of four grandchildren.)

Compare this with a secular crowd. Take elderly Trotskyists for example, and even include some elderly ex-Trotskyists, such as Mr. Proyect or me. Put a random sample of such folks in a room until they, collectively, accumulate thirteen grandchildren (to rival Phil). How many Trotskyists would it take? I'll hazard more than thirteen. The median Trotskyist likely doesn't have any grandchildren, much less thirteen.

Phil Robertson's religion is crackpot--Dusty and I agree--but it is very successful in the Darwinian sense, measured by how many grandchildren you've got. I anticipate getting a few, but from what I know, Dusty's prognosis is not good. I think that's why he's so mad. If present trends continue, religious people will win the demographic culture war.

Duck Dynasty is not popular because of Phil's views about gays or creationism. That might be important to Phil, but its not what makes the show tick. It appeals to middle-aged women because it represents an aspirational ideal for them. Women want 1) a stable marriage with a faithful husband, who 2) is wealthy and has 3) earned his money in a He-Man profession. And while he engages many man-child hijinks, when in the presence of the ladies he 4) behaves like a gentleman.

And on the fourth point, Phil Robertson and I agree. No gentleman would ever call anybody a douchebag.

Further Reading:

Saturday, December 21, 2013

Duck Soup

I'd never heard of Phil Robertson until the kerfuffle.

The kerfuffle happened when the Duck Dynasty star made some uncomplimentary remarks about gays in an interview for GQ Magazine, and that got him in hot water with the suits at A&E. The folks at GLAAD are pretty upset about it, with spokesman Rich Ferraro also claiming that Robertson is a racist. On the other hand, the show's supporters have come out strongly defending their TV star, and Duck Dynasty paraphernalia has sold out of stores.

So I've read the GQ piece (written by Drew Magary), along with much else, and even watched an episode (the first one) of Duck Dynasty over at A&E online. I don't share Mr. Robertson's religiosity, and I don't agree with his attitude toward gays. At the same time, the GQ article is a total hit piece--you'd have to believe the guy is a real idiot. Whatever else you want to say about Mr. Robertson, he is not a stupid man. Nor is he hateful, belligerent, or racist.

Still, A&E is right to filter most of the religion out of the show, for otherwise it would reach only a narrow audience. As is, it's A&E's most popular program, and some articles claim it is highest rated show on cable television. That's not because of Mr. Robertson's overt religiosity.

I vaguely recall reading a piece about Duck Dynasty when the show first came out. It was one of those how far have we fallen articles, describing Duck Dynasty as the pathetic successor to Jersey Shore--a hook-up, stupid-guy-stuff, reality show transplanted to the Louisiana swamps. I resolved never to watch the program, a promise I kept until the kerfuffle.

So who watches Duck Dynasty and why is it so popular?

The Robertsons are a large, Scots-Irish family in Northern Louisiana. Phil is one of seven siblings, including his co-star, Si. Phil and his wife, Kay, have four children. The two on the show are Willie and Jason, who are the lead characters. Willie's wife, Korie, plays a role, but none of their five children are involved. In other words, of the very large clan, only a small fraction of them participate in the show. A scene has them assembled around the dinner table--there are no children present. So it's not a very real "reality" program.

The family is apparently worth about $400 million--the proceeds of their Duck Commander franchise, founded by Phil and now run by Willie. Four or five guys lackadaisically sitting around a table making duck calls (as the TV unrealistically depicts) is not the source of that fortune. The Robertson family has been accumulating capital for three generations now. By comparison, Snooki--the most successful Jersey Shore character--is worth $4 million.

Another difference is that all the leading men on Duck Dynasty have been married to their wives for at least 20 years. Phil & Kay got hitched in 1966. These guys are loyal, unlike the ne'er-do-wells over at Jersey Shore. Snooki is recently married and has a son--we'll see how that goes.

So what's with the stupid guy stuff? First, it's not stupid--these fellows are expert outdoorsmen. They can literally live off the land. When you're expert, you can show off and make it look easy or dramatic or funny. But don't be fooled--this part is real. What you're watching is a lifetime of experience hunting, fishing, camping, and living.

I find Phil and his gang intimidating--I couldn't survive a week in their world. That's obviously the way Mr Magary (the GQ author) felt. So far removed from his native habitat, and so far out of his comfort zone, his article is a panic-stricken attempt to cut the Robertsons down to size. They're not really bigger than life--instead they're just a bunch of nutcases. Never mind that, by age 67, Phil has 13 grandchildren, is worth $400 million, and owns 20,000 acres of Louisiana swampland that he "lives off of." Some nutcase.

So the episode I watched showed Phil eviscerating some frogs while giving advice to one of his grandsons. "I've got these grandkids now, a whole passel of them. My task is to teach them to live off the land. It's a good thing, clean and honorable. Frog killing." He goes on with some marriage advice: "Find you a meek, gentle, spirited, country girl. If she knows how to cook, and she carries her Bible close by, and she loves to eat bullfrogs, then there's a woman. ...See, the first prerequisite for marrying a woman, in my opinion, is  can  she  cook? ... She doesn't have to be a pretty girl. If she looks a little homey, that's all right. It's hard to get a pretty one to cook and carry a Bible anymore."

So whose going to live by this totally retro advice? Not me, for sure. Nor any of my children. None of my friends live that way. I grew up in a petty bourgeois milieu that put a lot of emphasis on individuality and personal choice. There's no loyalty in my clan. You don't marry somebody just because she knows how to cook--how gauche. We all grew up in the undisciplined, divorce culture, where children are a burden and not a blessing.

Even on-line, A&E makes sure you watch some commercials. The ones they fed to me were for sanitary napkins--obviously Big Data has failed. But it's an indication of who they think their audience is--women in the 30 to 50 age bracket. How many of these ladies would love to be loved for her cooking? What number would want a handsome, loyal, rich husband like Phil Robertson? How many divorcees aspire to a husband who is an expert outdoorsman?

It's a very conservative show, but not in any political way. Instead, it is aspirationally conservative--it's a dream for women to live up to. Even though few people can actually live the Robertson dream, the aspiration is a good thing. A couple years ago, Charles Murray wrote a book entitled Coming Apart: The State Of White America, 1960-2010. In it he laments the decline of the family among working class and lower class whites. He sees that as the source of much of our current economic dysfunction.

But the popularity of Duck Dynasty proves him at least partially wrong. The fact that millions of lower-class Americans aspire to live a better life cannot be a bad thing.

Mr. Ferraro of GLAAD suggests that Mr. Robertson should spend more time with gay people so that he might learn something. If a gay man were to encounter a Robertson, the worst that could happen is he'd get an earful about the need for repentance and the saving power of Jesus Christ. And then he'd be invited over for dinner (though I'm not sure I'd want to eat that food). Nothing hateful or untoward would occur.

He should just be grateful that he's not a duck.

Note: Louis Proyect posted a video about Duck Dynasty. Unfortunately I didn't see it until after this post was written.

Further Reading:

Saturday, December 14, 2013

Why New York Is Different

Joel Kotkin and his colleagues over at New Geography have invested many millions of pixels making the case that the suburbs are not dead. Their argument is solid: the so-called back to the city movement is very small scale, Millennials show every sign of wanting to live in single-family, detached houses, and the most thriving locations are suburban-like places, such as Houston, Dallas, or Oklahoma City. New technology looks to strengthen the suburban trend, as telecommuting and driverless cars reduce the pain and expense of commuting.

I totally agree with New Geography on the general trend. The effort to force people into higher density housing is doomed to fail. More mass transit is mostly a waste of money (the Second Avenue subway line being a rare exception). But within that larger trend, there are eddies and countercurrents that flow backwards. The larger movement to the suburbs notwithstanding, there are a handful of cities that will do very well as traditional cities. They are the obvious suspects: San Francisco, Boston, Washington, possibly Chicago. Maybe a few more.

And within that handful, New York City will excel. Unlike as is sometimes implied over at New Geography, New York is a lot more than just a "luxury city." Instead, it has a unique niche in both America and the world that no other city can fill. 

My argument has three parts: The beginning of New York in the 17th Century, the people who live in New York today, and the uniquely incredible value New York adds to the economy.

The Dutch founded New York in 1624. Unlike the British, French, and Spanish, the Dutch had no desire to extract resources from the land. Not for them was taming the wilderness, mining for gold, or raising cattle. Unlike other colonists, the Dutch settled accounts with the Indians as quickly as possible, in legend buying Manhattan for $24. A few of their number got as far up the Hudson as Albany, but beyond that, early Dutch influence on American settlement was negligible.

Unlike any other colony in the Americas, New York was founded from Day One as a commercial center. Think of it as a 17th Century version of Hong Kong. Lower Manhattan--even in 1624--was a shipping, trading, and financial center. It was never a farming or manufacturing town.

That legacy holds to the present day. Colin Woodard has published a now famous map showing the eleven nations of North America. By far the smallest geographically, but unmistakably distinctive, is New Netherlands, a region that doesn't even include all of New York's modern suburbs. How can this be? The Dutch lost their colony to the Brits in 1664--they were only there for 40 years. A negligible fraction of New York's current residents are descended from those original Dutch settlers. And yet that crucial heritage persists.

Today New York is known for having the largest Jewish population outside of Israel. Most of these people came over through Ellis Island, along with a much larger number of other immigrants from other places. Those other folks didn't stick around long--the Swedes headed for Minnesota, the Irish moved to Chicago, and so on. The Jews stayed in New York, and not just because they're lazy. The Jews have been a commercial people since Medieval times, and it made sense for them to settle in a place founded on commerce. The Dutch had built them a congenial home.

The other prominent commercial class in the US are the overseas Chinese. These settled first in California, where today they are disproportionately dominant in Silicon Valley. But by far the largest Chinese community in the Americas is in New York--initially along East Canal Street. Today there are multiple Chinatowns throughout the metropolitan area, nine in the City alone. They deal in everything from rags to restaurants. The formerly slum-like Lower East Side is now a suburb of Chinatown, full of back-office businesses, run by an increasingly wealthy population.

Jews and Chinese--these are Peter Stuyvesant's descendants. They compete with each other. The diamond trade has long been a Jewish business, but recently Chinese traders are gaining market share.

Other cities have ethnic commercial classes. I've mentioned the Chinese in Silicon Valley. Hollywood's studio moguls tend to be Jewish. Mormons play that role in thriving Salt Lake City. But as far as I know, New York is the only city in the country (and likely the world) that has two, large immigrant communities that both bring substantial commercial expertise. Of course there are Jews and Chinese in places like Los Angeles and Houston, but the numbers are vastly smaller, both in absolute terms and as a fraction of the population. Indeed, it is surprising how few Chinese live in Los Angeles.

So why are these ethnic communities so valuable to the cities in which they settle? In particular, the Jews bring an attribute uniquely relevant to Mr. Kotkin's thesis. Observant Jews are not allowed to drive or take the bus to synagogue on the Sabbath--they have to walk. That means they all have to live within walking distance of each other. This enforced close living, augmented by shared religious practice and intermarriage, breeds trust and very high levels of social capital. Trust is a marketable commodity--people will do business with banks where the employees are trustworthy.

Famously, among New York's diamond traders, million dollar deals are sealed with a handshake. So is it any wonder that the money center banks are all headquartered in New York? You can move the buildings and the computer services to North Carolina or South Dakota or wherever. But you can't move the community. Ultimately, banking is about trust, and that is something that close-knit, ethnic communities have in spades.

There are other industries where New York has a lock. The rag trade is one. Perhaps partly because Jews have to walk, New York is a densely settled, very walkable city. The women (and men) are out in public, showing off their duds. Because they're on the street, in public, going about they're daily business, fashion trends happen in New York. Accordingly, New York hosts thousands of blogs like this one. That's how people dress in New York City.

There are three fashion capitals in the world--New York, Paris, and Tokyo. New York and Paris are beautiful cities, adding a marvelous backdrop to any photo shoot. Tokyo, while not beautiful, is nevertheless glamorous. All three cities are built for walking and public transport--it's one big fashion show. Compare that to Houston, where stylish people drive around in cars with tinted windows. How can you model clothes in a car? Houston will never be a fashion center--and neither will Los Angeles, Chicago, or Sioux Falls.

A second industry is food. Yes, they grow the goods in Kansas, package it in Illinois, and eat it around the world. But where do they invent the stuff?

Tyler Cowen says that the best ethnic food is found in suburban strip malls. I think he's probably right. But that's not the food that most people eat most of the time. What most people eat is some creative combination of ethnic and comfort food, tasty and cleverly made. Few are going to eat the oddball dishes they serve at Cantonese restaurants. 

But lots of people patronize a New York fast food chain called Happy Taco. Forget Tex-Mex; think Mexiasian. Or JapoItalian. Or Peruvithai. Or whatever combinations of cuisines you can think of. People like ethnic food, but they like it modified, synthesized, palatable, and recognizable. Creating this nouvelle cuisine requires business acumen, lots of fresh ingredients, educated consumers willing to try, and a labor force with sufficient expertise. And ideally, all the restaurants are within walking distance of each other.

I've just described New York City. What you'll eat at Applebee's tomorrow, they're cooking up in New York City today.

Further Reading:

Saturday, December 7, 2013

All About Me

It's time for that annual, self-indulgent post celebrating the first anniversary of this blog. On December 6th, 2012 I posted About This Blog, where I laid out my mission. Short, civil, critical pieces about American Trotskyism were what I promised, with columns appearing every week or so. I use the word column advisedly, because that's the model I'm emulating. These aren't tweets, but neither are they books. If Paul Krugman and Tom Friedman can live with a 1200 word limit, then so can I. Brevity is clarity.

I promised that my blog would be exclusively about Trotskyism. This is a promise I have not been able to keep--instead half my posts are about other topics altogether. There are several reasons for this. First, I'm interested in other things, and since I can't support multiple blogs, it all ends up here. 

Second, the Trotskyist newspapers are explicitly designed as political propaganda. Trotskyists are out to change the world, and not interpret it. Their papers read more like press releases, unlike most publications that are a forum for ideas and discussion. That means they tend to be repetitive and not very substantive. There just isn't that much to write about.

I started by covering four publications all produced by some of my former comrades in the Socialist Workers Party. These are The Militant, Socialist Action, Socialist Viewpoint, and Solidarity (links all on right). Of these, the best by far is The Militant. This is a bit surprising given the supposed insanity of Jack Barnes, along with accusations of cult-like behavior. But in terms of writing quality, reporting, cogency and professionalism, The Militant has them all beat.

Socialist Action, by comparison, is shrill and bombastic. The writing is much more uneven. There is less original reporting, and they believe anything vaguely Leftish, no matter how outlandish. At its worst, it reads like something printed up in the middle of the night by the Occupy movement.

Socialist Viewpoint isn't really a newspaper, but rather a bi-monthly magazine. It's edited rather than reported, and so isn't really in the same league as the other two. I usually find something interesting here, though I gotta say the November-December issue has let me down.

Solidarity is not really Trotskyist any more (I'll have to post a column about that). Not that that's a sin--I'm not much of a Trotskyist myself--but they've evolved into something that is just not that interesting to me. Still, they are doing a superb job covering Detroit. I'll keep them on my blogroll.

To keep myself busy, I've added two other publications. One is Louis Proyect's Unrepentant Marxist. Like me, Mr. Proyect is a former comrade who has left the Trotskyist movement. But he remains a Marxist, at least in name. His interests are mostly orthogonal to mine--he writes about the arts, history, and Marxist theological philosophical debates. My concerns are more economics, science, politics, and higher education. Still, his blog is my aspirational goal--I one day hope to have a site that is as widely read as his.

Most recently I've added Counterpunch, which looks to be a bigger, better funded version of Socialist Viewpoint. I'm still learning about them.

I do have some people to thank. First and foremost is Mr. Proyect, who has very graciously and generously let me advertise my blog in his comment section. My first readers were from among his audience, and at least on relevant posts, they remain readers today.

Similarly, Joel Kotkin at New Geography and Walter Russell Mead at via Meadia have extended the same courtesy. I am similarly appreciative, and in all cases I have tried not to abuse the privilege.

Looking back of the past year, I think these are my three best posts:
  • My most imaginative post was entitled Food Network And The New Normal. Not many people can turn Chopped into political commentary. 
  • The best explication of a complex idea is Getting Richer While Feeling Poorer. It's my optimistic take on the new economy. Admittedly, it's a bit longer than 1200 words.
  • The best written article is Viva Poverty! If I could produce writing like that twice a week, then I'd have a job at the New York Times.
When my son was in kindergarten, he'd ask preschooler questions like "Daddy, what's the tallest mountain in the world?" That was easy. But then would come the stumper: "What's the shortest mountain in the world?" So, in deference to your inner child, here are a few of the worst things I've posted over the last year. These are the reasons why I definitely am not working at the New York Times.
  • I did read David Leonhardt's book, Here's the Deal. But if this review makes any sense, please let me know what it is.
  • This one is just incoherent. Combining Zimmerman and Syria into one post is dumb.
  • Canaries in the Coal Mine is a great headline. Unfortunately, the article isn't really about that. It's true bait and switch. Click here and you will be--bored to tears.
These, and maybe a few more notwithstanding, I'm generally happy with the quality of my output. I have a day job and other demands on my time--it is impossible for me to produce consistently tightly-crafted work. For an amateur I'm doing OK. Obviously, I find the topics I write about intensely interesting, and it appears there are a few readers out there who share some of those interests. If you're reading this, you're probably one of them. Thank you.

Further Reading:

Thursday, December 5, 2013

The Race To The Bottom

One of the benefits of covering Counterpunch is that I get to read articles by Jack Rasmus, a Leftist economist whose work I (critically) admire. The piece in question is entitled Race to the Bottom, a phrase widely used by Leftists opposed to conservative government.

Mr. Rasmus puts the problem this way.
While the official state corporate tax rates range from 5% to 10%, states in aggregate are averaging only about 2% effectively in corporate tax payments. States across the US have been in a ‘race to the bottom’ to grant more and more corporate tax loopholes and exceptions in order to lure corporations from other states to their state.
In his view, this is a terrible, no-good phenomenon that cheats workers out of their legitimate wages and benefits. It is the major factor in the current difficulties facing state budgets and pension plans. He offers many suggestions about how to remedy this unfortunate state of affairs.

At least as interesting is the question he doesn't address. If the consequences of corporate tax breaks are so unremittingly bad, then why do states offer them? I can think of three overlapping answers he might offer.

First is corruption--the fix is in. The corporations own the politicians, who then pass out the goodies. Even Tea Party types like me will agree with this to some extent, for this describes crony capitalism. It fits Ayn Rand's account of big business in Atlas Shrugged to a tee.

But empirically, this cannot be the reason for the race to the bottom. If true, the most corrupt states would be the fastest racers. Thus we'd conclude that Texas (generous with the corporate candy) is more corrupt than Illinois (chintzy)--obviously not true. Corruption abounds, to be sure, but in this country it is thankfully still a sideshow.

Second, the relatively few people who get jobs from these schemes are visible and vocal, while the much larger number whose benefits are endangered are disenfranchised. While superficially plausible, this argument can't withstand scrutiny. The people who most profit from a bailout of Detroit, for example, are the disproportionately white, retired city workers, whose pensions have been stiffed. Meanwhile, the chief beneficiaries of Detroit's bankruptcy are the current residents, who certainly fit the description of disenfranchised. Far from reducing inequality, Mr. Rasmus' proposal to top off state and local budgets with corporate dollars will effectively transfer wealth from poor people in need of city services to the suburban middle class.

Finally is the Marxist rationale, which claims that We're poor because the rich people stole all the money. In this view, wealth is a zero-sum game, and the role of the State is to extort money from the working class by force, accomplished in part by lowering corporate tax rates. The dirty truth is hidden by the fig leaf of giving a few people some jobs. But then you'd expect every state to be liberal with the corporate discounts. How can a Marxist explain the difference between New York's high, effective tax rates, vs. Texas' low rates? Are New York's capitalists just a bunch of wimps?

The truth is these corporate tax breaks are popular with voters. When phrased in terms of jobs, voters understand that the private economy is vastly more productive than anything government can do. In this context, it becomes obviously clear that raising taxes hurts the economy and lowering taxes helps the economy. Even poor people--who don't generally pay much in taxes--realize that money paid by private business ultimately comes out of their pocket.

But I don't like the beggar-thy-neighbor approach anymore than Mr. Rasmus, albeit for different reasons. The selective tax breaks for footloose companies is grossly unfair to existing businesses (and their employees). Much better would be an across-the-board decrease in corporate taxes, with no loopholes. That way everybody pays the same low amount. (Ideally, we'd go the full Sweden on this, and abolish corporate taxes altogether.)

Taxes ultimately transfer wealth from productive enterprises to unproductive enterprises. Welfare may be necessary, but it is not a good thing. Likewise with healthcare--disease is a cost, not a benefit. Minimizing government expenditure for these items is essential. Rather than minimizing them, Mr. Rasmus supposes that not a penny of current expenditures is wasted, and every last nickel must be extorted out of the productive economy to pay for them.

Accordingly, his solution comes straight from Ayn Rand.
To avoid the state-state ‘race to the bottom’, an ‘Interstate Corporate Equalization Tax’ should be implemented. Corporations that move their (taxable) headquarters from one state to another should be required to pay the ‘losing’ state a fee equal to the difference in the two states’ corporate income tax for a period of three years into a special fund.
This sounds just like the anti-dog-eat-dog-rule from Atlas Shrugged.
The Anti-dog-eat-dog Rule is passed by the National Alliance of Railroads in section 145, allegedly to prevent "destructive competition" between railroads. The rule gives the Alliance the authority to forbid competition between railroads in certain parts of the country. It was crafted by Orren Boyle as a favor for James Taggart, with the purpose of driving the Phoenix-Durango out of Colorado.
As Ayn Rand effectively describes, eliminating competition just makes everybody poorer. An excellent example is found in the history of the shipping container, where the Interstate Commerce Commission successfully lowered everybody's standard of living for half a century. Obamacare will do the same thing for health care.

By preventing competition between the states, Mr. Rasmus' plan enables government to steal more and more money from their citizens with impunity. His scheme permits any state to raise taxes, and then collect even more revenue from other states via the equalization tax. Folks in Texas will be subsidizing New Yorkers even more than they do today. (Today's subsidy comes from the Federal deduction for state income taxes, from which residents of no-tax states derive no benefit.)

Allowing competition, on the other hand, forces states to grapple with the real issue--what is the optimal size of government? In a competitive environment it's hard to get it wrong: if you have too little government (high crime, homeless people on the streets), or too much government (limited opportunity, high unemployment, low wages) people will vote with their feet and their bank accounts. They'll leave.

Productive enterprises produce wealth. Mr. Rasmus and I both agree that some of that wealth has to be shared with people who, for whatever reason, are unable to support themselves. But Mr. Rasmus goes much further than that--he wants to punish productivity. Anybody who makes any profit, or who earns even a penny more than he does, needs to be beaten down and put out of business.

Mr. Rasmus may not describe himself as pro-poverty, but that is exactly what he is.

Further Reading:

Saturday, November 30, 2013

Peace, Peace, War, War

It is a truism among Republicans that President Obama is incompetent.

And so he is. Obamacare--an incompetent program incompetently delivered--is proof enough. And also on foreign policy, with red lines here and thundering ultimatums there, none of which amount to anything. Speak loudly and leave your stick at home seems to be the motto.

And yet it's easy to overdo this. Listening to Charles Krauthammer, for example, you'd think that both the Pentagon and Foggy Bottom have taken leave of their senses just because we have a nincompoop in the White House. My Trotskyist friends will have no truck for such analysis, what with everything having a Deep Historical Dependence on the Dialectical Relationship of Forces. In their view, individuals have little or no impact on history.

For once, I'm going to side with the Trotskyists. Mr. Obama is a very poor spokesman for American foreign policy, and his bumbling pronouncements have caused considerable difficulties. Occasionally, such as his precipitous withdrawal from Iraq, he has done serious damage. But he's not running the show, partly because he's neither interested nor knowledgeable, and mostly because institutional inertia is the real driver.

Instead, our rapprochement with Iran represents neither appeasement nor cowardice. It is, instead, the result of a new geopolitical situation. I am informed on this by two articles by George Friedman, of Stratfor, here and here.

A nuclear weapon is not in Iran's best interest. It will make it impossible for them to pursue their policy objectives, specifically rescuing their economy, and preserving their gains in Iraq and Syria. The mullahs have realized this, and are thus using the nuclear arsenal as a bargaining chip. While the Iranians have perfected the art of enriching uranium, it is a long way from there to a tested, usable weapon ready to launch. These they could not produce in secret, and hence the US has a way of verifying any agreement. There is, accordingly, no immediate, existential threat to Israel. According to Friedman, the Israeli military understands that.

The Arab states are no longer reliable allies. Egypt will be fighting a low-level civil war for a long time, and will not soon become a regional power. Iraq, Jordan, Syria, and Saudi Arabia are all unstable in varying degrees. These countries no longer have anything to offer the US in terms of security. Further, they present no threat to Israel (beyond turning into failed states).

Thanks to fracking, the US is increasingly self-sufficient in fossil fuels. The Arab Middle East is no longer essential to our national security. It is now something that Europe and China can worry about.

Iran, meanwhile, is a stable polity, the insanity of the present government notwithstanding. And the government is becoming less insane--it has little to gain with an endless propaganda war against the US. Between instability in neighboring Arab states (a threat as much as an opportunity), along with a failing, nuclear-armed Pakistan on its Eastern flank, Iran has much to gain from a strategic alliance with the United States. Further, with investment in its oil industry, it can partially replace Saudi Arabia if that country should ever go off-line.

So who are the losers in this new arrangement? Certainly the Arab states, notably Saudi Arabia, come off poorly. While the US is not abandoning them, clearly we are diversifying our investment. We're not going to bail out the Saudis from their own internal political turmoil. We will protect them from external threats, e.g., from Iran.

Turkey is a loser. That country has been the linchpin of American security since the beginning of the Cold War. But the demise of Russia as even a regional power, the fading significance of Turkey to the EU, and Turkey's own political instability make it a less reliable partner for the US.

Israel is a loser, but not a very big one. The country remains a strong cultural and economic ally, but it loses its strategic importance. None of its neighbors possess any military capabilities that threaten Israel. The Palestinians have proven themselves completely incompetent. Israel becomes a stable backwater, sort of like Luxembourg. The US will continue to protect the country from existential threats, but none are on the horizon. Accordingly, relations between Israel and the US will fray.

The biggest losers are the Syrian rebels. The US is now tacitly on Assad's side, who represents relative stability. The rebels (at least some of them) may occupy the moral high ground, but they're too weak to be allies. Iran's influence will grow, with US approval, but the quid pro quo is that they keep Hezbollah on a short leash.

A US-Iran alliance is good for both sides. Iran wins new economic opportunities, enhanced security vis a vis Russia, China, and Pakistan, and a free pass to expand its influence across the Middle East. The US gets a stabilizing strategic partner whom it can (hopefully) count on to respect limits (e.g., don't invade Saudi Arabia; restrict Hezbollah, etc.).

It's all pretty mind-bending. I confess, I never imagined any of this.

Neither did President Obama.

Further Reading:

Wednesday, November 27, 2013

Book Review: The Everything Store

The Everything Store, by Brad Stone, is an account of Amazon's first twenty years. Included, of course, is a biography of the company's founder and guiding spirit, Jeff Bezos. Mr. Stone is a journalist for Bloomberg/Business Week, and has long covered Amazon as a reporter. He interviewed many people for this book, but did not score an interview with Mr. Bezos. For this, and also because he has worked hard to make the book readable, he is criticized by some for not writing an accurate, scholarly account. Scholarly it may not be, but I certainly enjoyed reading it.

Mr. Bezos was born of teenage parents, who divorced soon after his birth. He was adopted by his mother's second husband and took his name. For all that, his was a close family to whom he remains intensely loyal. His maternal grandfather, a West Texas rancher, played an especially important role in his life. Accordingly, today he owns 260,000 acres in the Lone Star state--the home of his Blue Origin space travel enterprise.

Typical of great entrepreneurs, Mr. Bezos is a driven, obsessive guy. Like many children, he wanted to be an astronaut when he grew up, and space travel was his abiding interest as a youngster. But, unlike most he never outgrew that passion. Indeed, as I read Mr. Stone's book, my sense is that Blue Origin is even now Bezos' primary passion, with Amazon simply a way to finance it. He spends one day a week on the rocket business--a lot of time for a mere hobby. It's not just a hobby.

Founded in 1994, rode the dot-com bubble to the top, powered by Bezos' intelligence, energy and drive. He had two principles, both borrowed unapologetically from Walmart--the customer is king, and frugality rules. Like Sam Walton, he was brutal on his partners and employees. Shel Kaphan--arguably a co-founder--was sidelined when it became clear that his management skills were not up to the challenge. Mr. Bezos always hired the right people for the job, and as the job changed, the people changed with it. He's an incredibly demanding boss.

Mr. Stone reports that the company survived the dot-com bust only by a lucky break. They'd made some ill-advised acquisitions in the late 1990s and burned through a lot of cash. Mr Bezos had already demonstrated his aversion to making a profit. By fortuitous timing, the company scored a generous line of credit just months before the crash. Had that not been available, chances are Amazon would have gone bankrupt.

After the bust, to restore credibility with investors Amazon had to turn a profit. And so they did, for a few years, just long enough to be convincing. But as soon as investors were pacified, Amazon reverted to old habits, reinvesting revenues into the business. The company has gone from being a bookstore to an everything store, to a manufacturer of Kindle, to hosting the Amazon Web Services cloud.

Today Jeff Bezos is worth $27 billion, money that is being invested in Blue Origin. It doesn't come from customers, who are offered the lowest possible prices. Amazon competes with Walmart and Best Buy--margins are tiny. It doesn't come from workers. As a profit-free company, there is no way that workers are exploited in the Marxist sense. They are certainly ill-treated and probably relatively poorly paid, but the proceeds all go to customers, not to Mr. Bezos.

So who's the patsy?

Investors believe Mr. Bezos when he says that Amazon could make a profit if only it wanted to. And maybe that's true. Then again... Either way, they've bid the shares up to almost $400, and that is what funds Blue Origin.

I wouldn't want to work at Amazon. I'm probably too old and I never had the energy level. I certainly will never buy stock in the company--if I want to invest in rocket ships I'll do that directly. The only relationship I want with Amazon is to be a customer.

Because then I get to tell Jeff Bezos what to do.

Further Reading:

Thursday, November 21, 2013

Punching Counterpunch

At Louis Proyect's suggestion, I have added Counterpunch to the list of journals I regularly cover. They are now listed on This Blog's Beat blogroll. The narrowly defined Trotskyist papers already in my stable are not keeping me busy. Counterpunch provides a lot of material, and it certainly does come well-recommended.

To inaugurate this new effort I more or less randomly picked three articles from the November 15th Weekend Edition. I hope they are reasonably typical. I am pleased to note that they are mostly short--often shorter than my posts. This is a pleasant surprise coming from Marxists. Second, they are not relentlessly academic, which means they're not boring. And finally, Counterpunch casts a longer shadow than The Militant or Socialist Action. There's more to talk about.

The first article is by Chris Gilbert, entitled Refrigerator Wars In Venezuela. Mr. Gilbert is identified as a professor of political science at the Universidad Bolivariana de Venezuela. Unlike the Chavismo sycophants at US universities, this guy at least gets paid for it. He reports on the Venezuelan government's forced sale of televisions and refrigerators, using the military to occupy stores and to distribute the goods at very low prices.
The core decision is to limit the markup on certain products imported with subsidized dollars. Importers in Venezuela bring in goods with cheap dollars that they obtain through the state – dollars that come from the petroleum rent. They then mark up the goods 200% to 1000%. The government’s idea is to limit the markup to 30%. For this reason, state institutions such as INDEPABIS are now revising these importers’ books, while the army maintains order.
Why are there "cheap" dollars in Venezuela to begin with? If there was no black market in dollars, none of this would have happened. Supposedly the excess dollars come from oil sales, which have been rapidly declining as the government continues to defer maintenance. Megan McArdle suggests that Venezuela is descending into hyperinflation. Chavez and Maduro both graduated from the top of the class at the Zimbabwe School of Economics.

One thing is certain: no new refrigerators or television sets will be arriving in Venezuela any time soon.

The second article is entitled The Takedown of the Silk Road Drug Market, by Ryan Calhoun. Silk Road, for those of you who live clean lives, was (until the Feds busted it) a very successful, on-line market for illegal drugs. I followed it because it used bitcoin as its payment medium, and I've been interested in bitcoin. (This video argues that the take down of Silk Road is good for the currency. I agree.)

Mr. Calhoun is more interested in the drugs than the bitcoin, and from the article he sounds like an avid customer of Silk Road. Now I'm vaguely libertarian in my views about legalization (no strong opinions really), but I don't have much respect for people who actually use drugs. After all, I'm an alum of the Socialist Workers Party (SWP)--the drug discipline is the best thing they ever did for me. I put drug users and casino patrons in the same category--losers.

Mr. Calhoun admits to being a loser in another respect--he's a PhD student at the University at Buffalo. That stunningly useless endeavor marks him as unemployable for any productive profession. So Mr. Calhoun models the conservative archetype of what a liberal looks like--somebody who wants us to bail him out of all the bad decisions he's made in life. We'll have to pay for his so-called "education," the welfare benefits he'll need because he can't earn a living, and then his medical care because of drug-induced health problems. What a guy!

Most interesting is the article by Ann Garrison, entitled Why is DRC “Negotiating” With M23, Not Rwanda and Uganda? It is an interview with Jean-Mobert N'Senga, a Congolese partisan in the recent defeat of M23, a guerrilla proxy for the Ugandan and Rwandan governments.

When I was living in Uganda in 1996, President Yoweri Museveni (he's still president) announced an inspiring dream to build a highway from Kisangani to the sea. That would make it possible to transport people and freight from Mombasa on the Indian Ocean, via Kampala to the Congo river port at Kisangani. From there one could travel by ship to Kinshasa, and thence by the 200-mile long road that circumvents Livingstone Falls to the Atlantic Ocean port of Matadi. The economic opportunities this would unlock are enormous--such a road would hugely enhance the standard of living for millions of people.

So the Rwandan and Ugandan militaries invaded Eastern Congo ostensibly to make that happen. But rather than build the road to Kisangani, instead the two had a falling out and destroyed the town in their battle for control.

It all derives from the Rwandan genocide in 1994. Whether motivated by revenge or paranoia, Rwandan Tutsi guerrillas emptied out Congo villages, chased the residents to the ends of the earth, and when they finally caught up with them massacred them all. The other side engaged in similar cruelty--five million Congolese died. You can read all about it in the horrifyingly depressing book, Dancing in the Glory of Monsters.

Thanks to Ann Garrison, Mr. N'Senga gives one side of the story. It's worth reading.

So how does Counterpunch stack up? As a fellow SWP veteran, I can see why Mr. Proyect likes it. He rightly dings the Party for its brittle sectarianism, compared to which Counterpunch is a breath of fresh air. But the magazine has also lost some of the good things about traditional Trotskyism, namely efforts at intellectual consistency and self-discipline.

The Militant, for example, sees the world through its Theory of Everything, otherwise known as Marxism-Leninism. Now it's an unreasonably narrow and wrong theory, but it does enforce rigor. They can't just spout off at the mouth. Counterpunch, meanwhile, publishes a Bolivarian brown-noser and an anarchist druggie in the same issue, deluding themselves that these people are somehow on the same page.

On the other hand, The Militant has almost nothing to say about Congo. That's because events there don't fit into the Grand Synthesis, and are therefore best left ignored. At most they will complain about US or UN intervention, blaming the problem on "imperialists." So Counterpunch does us all a favor by reporting on Africa. It is a more eclectic, interesting, and informative read. But it is not in any way recognizable as Trotskyist.

The lack of both intellectual and personal discipline means that Counterpunch fades into feel-good Leftism. Trotskyists will correctly accuse it of not being serious. Both my Trotskyist friends and Counterpunch advocate free unicorns for all, but Trotskyists imagine that they have a practical way of accomplishing that.

As for me, I'm against poverty. I strongly support the highway to Kisangani. Mr. Museveni has let me down big time. This opinion puts me at odds with pro-poverty Leftists of all stripes--none of the publications I cover will support the road. They'd all find some excuse to oppose it--environmentalism, oppression, imperialism, or whatever gobbledy-gook term you can think of. That's why I'm a Republican.

Down With Poverty!

Further Reading:

Thursday, November 14, 2013

Post Office Blues

If nobody reads what you write, you can say anything you want. So it is with a recent article by Marty Goodman in Socialist Action entitled Corporate Raiders Target Post Offices. The article is so sloppy and so poorly argued that it is obviously not intended to be read seriously. Mr. Goodman is writing a feel-good piece for his own psychological amusement.

It is certainly possible to write an intelligent article about the post office from a Socialist/Leftist point of view. The Militant, for example, has done an excellent job covering coal miners' struggles at Patriot Coal. Accordingly, I've favorably commented on their coverage here, here, and here. That doesn't mean I agree with The Militant any more than I agree with Socialist Action. It just means they're careful with the facts, are honest reporters, and therefore earn respect.

Not so with Socialist Action. This article is so full of whoppers and leaps of logic that it isn't worth your attention. So I do them a favor by reading and commenting critically--with luck they'll be more careful next time.

The first problem is a value judgement--anything corporate is bad, while anything run by the government is good. Of course that comes with the Socialist territory, but it really requires a little bit of caution. For they assume that any asset transferred to private hands will automatically show up as bottom line profit in some greedy, capitalist's pocket. For example,
A sinister part of the privatization drive is the over 50 post offices nationally that are up for sale or already sold as of February of this year. Corporate hustlers are hoping to convert post offices into restaurants, malls, and condos. Many post offices up for sale have been designed National Landmarks for their architectural beauty and/or the works of art they contain.
Mr. Goodman refers specifically to a post office building in The Bronx, most of which is unused since the mail processing facility has been moved out. The building, which contains some New Deal era murals, and has been declared a historical landmark. For Mr. Goodman it's not enough to deliver mail. The USPS should also get into the museum business and maintain historical landmarks.

While a few people still enjoy a visit to the post office, wouldn't it be better if the main lobby (with murals) were a successful restaurant serving hundreds of patrons daily? And couldn't the upper floors--ill-suited for modern mail processing--be turned into shops or condos? No, according to Mr. Goodman. In his view, maintaining the building as a post office in perpetuity is the only option. Evil entrepreneurs, upon buying the building, will have nothing better to do than tear it down and build a parking lot.

In the long run, the preservation of history depends on finding a suitable use for the old building.

Here's another whopper:
Behind the corporate privatization drive are forces like “The Coalition for a 21st Century Postal Service,” created in 2004 as the stealthy name for the large mailer association whose industry is estimated at $1 trillion. Members include Time Warner (People Magazine, Sports Illustrated, CNN, etc.), Bank of America, American Express, Pitney Bowes, and AT&T.
This makes no sense. Where does the $1 trillion figure come from when the total 2012 revenue for the USPS was only $65 billion? Even Walmart (with four times as many employees) only generates $500 billion. Pitney-Bowes--one of the evil capitalists on the list--claims a mere $6 billion and 28,000 employees. I don't know how Mr. Goodman comes up with a figure equal to 7% of GDP just from second and third class mail. I think he assumes that nobody will read his article.

Mr. Goodman mentions the Internet.
The public hears only that the USPS is going broke because it is being replaced by the internet. While the internet has decreased first-class mail, internet-driven USPS parcel deliveries are way up because the postal service is less expensive than private carriers like UPS and Fed-X.
These statements are true. First-class mail has declined by 28% from 2002 to 2012. For a few years many thought that meant the death of the post office. But then, as Mr. Goodman indicates, parcel deliveries are way up. I'm surprised that Mr. Goodman thinks this is a good trend. recently made a deal to use USPS facilities to deliver packages seven days per week. This is a lifeline for the post office and its employees, and represents a turn-around from canceling Saturday service. But since Mr. Goodman hates all of the post office's customers (bulk mailers, retailers, large corporations), surely he has to see this as bad news. In his world, if the mailman delivers anything more commercial than a Christmas card, he's engaging in great evil.

Indeed, some have suggested that Amazon should buy the post office outright. The company wants to institute same-day delivery in major metropolitan areas, and the USPS has all the requisite infrastructure at hand. This would provide jobs for at least some of today's postal employees, and is far better than the thing going bankrupt.

Mr. Goodman states (correctly, I believe) that the post office is making an operating profit, but suffers because of the very high payments it has to make into its benefit programs. These secure the employee pensions and benefits for 75 years, and also help fund benefits for other federal employees. Perhaps these payments are over the top, but as a taxpayer I'm quite grateful. Would that other government agencies, e.g., the City of Detroit, had been as solicitous of their employees' futures. Unless future politicians simply confiscate the accounts (sadly, entirely possible), both taxpayers and USPS employees are well protected. This is as it should be.

I used to think the post office was a poorly run, government agency on the verge of extinction. Three things have changed my mind.

  1. The growth in on-line shopping provides a substantial new business where the post office is very competitive. Instead of cutting back on deliveries, they are now augmenting them.
  2. Living in a rural area, I decided that a PO box is more convenient for me. Hence I go to the local post office every day. The box service is very good--it saves me hassle and it saves the post office money. So I live in post office heaven--there are four little post offices within five miles of my home. I thought three of them should be shut down. But now that I use a box, I'm less convinced that's a good idea--nobody is going to drive much out of their way to use a PO box.
  3. Mr. Goodman's point--that the post office runs an operating profit--is convincing. But it needs to be privatized so that it is no longer supervised by Congress, and can allocate its resources for economic gain rather than for political points.
My Trotskyist friends will disagree with that last point. That's fine--disagreement is the spice of life. But Mr. Goodman still needs to be careful with his facts if he wants to preach to anybody outside of the choir.

Further Reading:

Thursday, November 7, 2013

The Death Of The Humanities Is Greatly Exaggerated

Hey, Hey, Ho, Ho. Western Civ has got to go!

And so the humanities--especially English departments--descended into idiocy. The result is stifling political correctness, nihilistic postmodernism, an absurd version of feminism, a bizarre fetish with race, class and gender, all guided by an anti-rational, anti-intellectual world view. This is how academics of my generation--baby boomers--spent the first half of their careers.

So it is with some serious schadenfreude that I read Tamar Lewin's piece As Interest Fades in the Humanities, Colleges Worry (h/t Edububble). She writes,
They have generous compensation, stunning surroundings and access to the latest technology and techniques of scholarship. The only thing they lack is students: Some 45 percent of the faculty members in Stanford’s main undergraduate division are clustered in the humanities — but only 15 percent of the students.
A paragraph later the real problem emerges:
“We have 11 humanities departments that are quite extraordinary, and we want to provide for that faculty,” said Richard Shaw, Stanford’s dean of admission and financial aid.
Those poor, unprovided-for professors. Why should they suffer because they were unapologetically stupid for twenty-five years? If 18-year-olds can still be suckered into paying exorbitant tuition to listen to some ultra-feminist adjunct try to brainwash them, then what's to worry.

So I have no sympathy at all for humanities faculty--they deserve to be unemployed. Yet two issues are being conflated--the fate of the faculty (good riddance), and the fate of the humanities (as necessary as ever). That's the subject I want to address.

There are three parts to the argument: 1) The continuing importance of the humanities. 2) The economic role for the humanities. And 3) the problem with the faculty.

The humanities remain crucially important because they address three essential questions: Who are we? Why are we here? What should we do? I do not agree with Stephen Pinker, who claims that science offers much help for these questions. Science says that we are merely little bits of randomly assembled dust in a vast universe. Incredibly, he then claims this leads to a humanistic outlook. Science may be true, but it is not helpful. People who believe that God loves us will lead happier, healthier lives than any nihilistic scientist.

Accordingly, science isn't much help in deciding important questions. I'll use gay rights as an illustrative example.

Science has shown that homosexuality is a biological phenomenon--people are born with the tendency and cannot change it. So science precludes the medieval notion that homosexuality is per se a sin deserving of punishment. But that still leaves at least two possible attitudes:

  1. Homosexuality is just another manifestation of human nature, and the rest of society needs to accommodate itself to that fact. The discussion revolves around whether civil unions or gay marriage is the best way to do that.
  2. Homosexuality is a handicap, like blindness. Society needs to help gays overcome their disability as much as possible, but otherwise to lead as normal (heterosexual) lives as possible.
This choice does not depend on any scientific fact, but instead on answers to the humanities' three questions. It's all about values. Most social, political, and economic questions are like that--science really doesn't get us very far. Art, literature, philosophy and history are more fruitful methods of inquiry.

The humanities play an essential role in the modern economy. It is surprising that the professoriate doesn't really recognize that. They think it's all about well-rounded individuals or critical thinking skills (whatever those are). They tacitly concede that STEM disciplines are where it's at career-wise. But STEM subjects are the most readily computerized, and so the number of people employed in STEM disciplines will per force decline. I've written about that here. To paraphrase myself, regarding STEM skills, whatever you can do, a computer can do better.

If, like Tyler Cowen, you're stuck in the STEM silo, then you consign people to that small but shrinking space in freestyle chess where a human/machine combination can still beat a machine. In a word, most people will be unemployed. But computers can't do humanistic stuff. They can't make something beautiful, nor can they choose the good life, nor can the make ethical judgments. Ultimately, they can't make people happy. Accordingly, I think more people than ever will be employed as writers, entertainers, waitresses, musicians, chefs, prostitutes, preachers, and artists, than as scientists and engineers. The 20th Century was the age of STEM. The 21st Century will be the era of the Arts & Humanities.

Finally, the humanities are being radically democratized. Academics still delude themselves in believing that obscure, unread and unreadable monographs are the coin of the realm. But they're wrong. The true humanities happens in the blogosphere, on Kindle, on YouTube, and other places where people can create and use art and ideas. There will still be teachers and classrooms, and books and seminars, and ideas and conversation. But the job of professor is over. The PhD will disappear. The monographs will sink back into the medieval mud from which they emerged.

The age of the paid scholar is over. Art will be created because it's fun and beautiful, not because somebody has tenure. Literature will be studied as a labor of love, not because of a paycheck. The professor of the humanities is a dying breed.

Long live the humanities.

Further Reading:

Sunday, November 3, 2013


There is a fine line between erudition and incoherence.

Even world-class thinkers have trouble with that--just try reading Marx or Lenin. We lesser lights are usually even less successful, especially when writing outside of school.

The excerpt from one of Jack Barnes' books published in the latest Militant is a case in point. Mr. Barnes--a man of some erudition--clearly knows nothing about economics. The result is pure gibberish. Now I also am not a professional economist--what I know is self-taught--but at least I'm interested enough in the subject to learn something new, as Mr. Barnes is not.

For The Militant, progress in economic thought ended in 1924 when Lenin died. As Trotsky himself had little interest in the subject, and since no "Marxist" in the Stalinist tradition can be trusted, there has been no new thinking. Accordingly, any analysis of macroeconomic trends usually reduces to a rehash of something Lenin said a century ago. The current article is no exception.

The article in question is a reprint from one of Mr. Barnes' periodic books, this one published in 1999. (You can buy a used copy for a penny.) Of course any 14-year old article will fail on some predictions, but this one is so wrong that they should be ashamed to republish it.

Consider the lede paragraph:
No Third World country can or will develop today into an economically advanced industrial power with the class structure of the United States, Canada, the countries of Western Europe, Japan, Australia, or New Zealand. No new centers of world finance capital are going to emerge. That has been settled by history. That is one of the great lessons of the twentieth century. It hasn’t changed since Bolshevik leader V. I. Lenin summed up the scientific conclusion of the communist workers movement seventy-five years ago. The imperialist world, Lenin said, has been “divided into a large number of oppressed nations and an insignificant number of oppressor nations, the latter possessing colossal wealth and powerful armed forces."...
Since that was written, Hong Kong has become a world financial center. Singapore is the world's leading trading entrepot. Both cities boast a per capita income larger than the US (though not larger than comparable geographic regions, such as metro New York or San Francisco). South Korea has become a leading industrial and technological power, on par with most countries in Europe. Taiwan, Israel, and Silicon Valley play essential roles in the tech industry.

Quoting again from Mr. Barnes:
As I was leaving to catch the plane to come out here this morning, a comrade in New York handed me a copy of Lenin’s Imperialism. He urged me to reread it during the flight. Given what had begun happening in Mexico, he said, I was bound to find something useful in preparing for this meeting. He was right.   
Imperialism, Lenin explained, is the final stage of capitalism. He described its features. Reading Imperialism, I discovered once again, is well worth the effort. The chapter that struck me in a new way this time is the one entitled “The Parasitism and Decay of Capitalism.”
So I have gone back and skimmed Lenin's Imperialism, especially that last chapter. Regarding our modern economy it is completely irrelevant. He makes statements about the way things were in 1916--I am not enough of a historian to disagree with him, but somehow I can't regard Lenin as a reliable reporter. The book is simply not worth reading except as a historical artifact.

Still, to explain the utter silliness of Mr. Barnes' thesis I need to summarize Lenin's theory in bullet points.

  • The world economy is increasingly the province of monopoly capital.
  • Since monopolies can arbitrarily set prices, they reap profits beyond market rates.
  • The European countries were colonial (imperialist) powers, and they could lend money to their colonies at usurious rates.
  • This enabled the rise of a rentier (parasite) class in England that simply lived off coupon clipping from money extorted from the colonies. The imperialist powers depended on keeping the colonies in debt.
  • Some of these rent checks were used to buy off the British proletariat, which is why there was no Marxist revolution in England. A similar argument holds for Germany.
  • The proof of the argument was that the income from bondholders was multiples the income of trade (so says Lenin).
Lenin was clearly talking about the old fashioned imperialism--the word neo-imperialism had never occurred to him. But if imperialism depends on keeping the colonies in debt, then we've failed miserably. Unlike in Lenin's day, the biggest debtor nation today is not China, not India, and nowhere in Africa, but instead the United States. So whatever applicability Lenin's model may have had in 1916, it clearly means nothing now.

But that doesn't stop Mr. Barnes, who apparently doesn't know how to read. He writes that Orange County (in 1999) owed lots of money to bondholders. Since Lenin called bondholders rentiers and parasites, Mr. Barnes assumes that they must have exactly the same role today as they supposedly did in 1916. That is the sum total of his argument--it's stupid.

It is that kind of absurd reasoning that leads Marxists to claim that finance is just a casino. They are completely wrong. Finance makes things cheaper for consumers. This is obviously true, since financial crises have huge implications for the real economy. The bankruptcy of a Las Vegas casino is nowhere near as important. Without finance, nobody could get mortgages, farm prices would be much, much higher, businesses couldn't borrow money, etc. Indeed, without finance, we'd pretty much be reduced to a barter economy. So to suggest that bondholders are no more than rentiers and parasites is just ignorant.

I'm not much of one for calling people stupid--it's an ad hominem attack that is beneath my dignity. Accordingly, I try to take The Militant seriously. Frequently they deserve that--their reporting on the labor movement has been stellar. But on macroeconomic issues they are--I'll say it again--dumb.

Further Reading:

Thursday, October 31, 2013

Those Nattering Nabobs of Negativism

I am an optimist. 

My secretary once nicknamed me "Pollyanna," and not entirely as a compliment. It's a personality disorder I share with people like Matt Ridley.

My optimism was dented a few years back when my career took a tumble. Then I fell in with the ZeroHedge (ZH) crowd and folks like Marc Faber. In response I bought a few hundred shares of GLD, managing to time the very top of the market. That's what pessimism will get you. I've since recovered and am back to my old self--see here, for example.

It is possible to be pessimistic in the short term while being a long-term optimist. Trotskyists are like that, though for them the short term extends indefinitely into the future. They believe that capitalism will eventually self-destruct, and until then will be a time of wars, crises, and poverty. But long term (assuming there is a revolutionary Party with the precisely correct political perspective) future generations will live happily ever after. Idealistic young people (i.e., 18-year-olds who think they will live forever) became Trotskyists precisely because of this naive optimism. 

For true pessimism you need to turn to Mark Steyn. He forecasts the demographic and intellectual decline of civilization as we know it, assuming a) that civilized people will never have enough babies, and b) that people who have lots of babies will never be civilized. I think he's probably wrong on both counts, but there is no denying that demographic decline will have a major effect on the economy. That, along with persistent deflation, are probably the signal trends of our age.

A more insidious pessimism--because it is more reasonable--is propounded by Tyler Cowen in his books The Great Stagnation and Average is Over. I've commented extensively on his opinions here and here.

So that brings us to a recent paper by Brink Lindsey entitled Why Growth Is Getting Harder (pdf). He is almost apologetic about his pessimism, practically inviting readers to respond tell me it ain't so. I'll oblige: Mr. Lindsey is too pessimistic by half (but only by half).

His argument is that the four major drivers of GDP growth are all showing signs of long-term, secular decline. Each of them has declined in the past, but this is the first time in the last century that all four have gone down simultaneously. The four components are labor force participation, labor force skill level, capital appreciation, and "total factor productivity," otherwise sort of known as innovation.

The first item largely echoes Mr. Steyn's arguments--we baby boomers didn't have enough babies, and as we retire the labor force is going to shrink. This is happening full force in places like Japan and Italy, and is gathering pace in the US as well. Put more colloquially, the Millennial generation is getting screwed. Unfortunately, I can't argue with this prognosis.

His second point is that we've extended education to point of diminishing returns. In the 20th Century there were huge productivity gains achieved by dramatically increasing the number of people who went to college. There will be no similar gains in the future. Beyond that, I argue that we've passed the point of diminishing returns, and instead today's marginal investment in education is a dead weight loss.

So there is hope on the horizon. Our current college system is hopelessly inefficient and ripe for change. It will become much cheaper in the future--indeed, even trending toward free. One of the ways it gets cheaper is by becoming shorter--there is now a growing trend toward three-year bachelors degrees. Many students can productively use the senior year of high school taking on-line college classes, possibly shortening the time to degree even more. Yes, kids will still want to live on campus in dorms, but for a shorter time than they do today. Beyond this, graduate programs are a complete and total waste of time & money for almost everybody. In particular, the PhD is a recipe for a lifetime of underemployment.

Mr. Lindsey's third point is that less capital is being accumulated and invested. His modest claim is that at very least it does not auger for strong economic growth. And true enough, but I will argue that the point is largely irrelevant. Stuff is just cheaper these days. It requires little up-front investment to launch an international ad campaign on Google. A desktop, 3D printer can be had for a few thousand dollars. Arts & crafts people can set up shop on eBay in a jiffy. Frankly, it just doesn't take a lot of capital to start a business. The days of huge automobile factories is coming to a close. Therefore I suggest there isn't a strong correlation between capital investment and economic growth.

The last factor on Mr. Lindsey's list is innovation. There are reasons to think that the rate of innovation is increasing. Not only are capital and labor both cheaper than they ever have been, less labor and capital are needed to bring an idea to market. More people can start more companies with less money--the cost of innovation has declined dramatically. Individuals can start colleges. People can publish their own books on Kindle for free. 3D printing will allow all sorts of small time entrepreneurs to get into business making stuff. And so on. Of course most of these efforts will fail, but throw the dice enough and you'll get lucky. Resources are so cheap that we'll be throwing the dice a lot more often than we used to.

So I'm not as pessimistic as Mr. Lindsey. I admit his point about the declining labor force, but I don't see any commensurate increase in salaries. So this can't be harming the economy. I acknowledge that our education system is dysfunctional, but that presents an opportunity for growth. Lack of capital investment may be a problem, but with interest rates so low it's hard to see how it makes much difference. And finally, the cost of innovation is dramatically cheaper than it ever has been. We should be getting more of it.

So Mr. Lindsey is wrong. The glass is half full!

Note: The title is borrowed from a speech written by William Safire for Spiro Agnew. Does anybody remember Spiro Agnew?

Further Reading: