Saturday, March 12, 2016

Bernie's Brownshirts & The American Left

Trigger Warning: This post contains the f------ word.

According to last night's news a group of about a thousand Bernie supporters protested and disrupted a Donald Trump rally in Chicago. Their goal was to get the event canceled, and in this they succeeded.

So people have thrown accusations of fascism toward The Donald. As evidence they cite his occasional quote from Mussolini, the rapturous cheering from his audiences at what seem to be content-free statements, his cult of personality, a perceived authoritarianism, and (most tellingly) occasionally roughing up some protesters who attend his meetings.

It's all Mr. Trump's fault, so claim his critics on both the Left and the Right. "A campaign bears responsibility for creating an environment when the candidate urges supporters to engage in physical violence," Ted Cruz is quoted telling Megyn Kelly.

So I'm not going to defend the actions of every last supporter at every Trump rally, some of which have tens of thousands of people. Of course some of them went over the top. I'll even stipulate that Trump himself has encouraged them occasionally. But what happened in Chicago last night is in an entirely different league and has nothing to do with the Trumpers misbehavior.

What Bernie's supporters did last night was to actively disrupt and eventually prevent a rival candidate from holding a perfectly legal and appropriate rally. This is not a minor misdemeanor or error of judgement--this is a felony against the very spirit of the Constitution and the American way of life. For we in these United States (supposedly) value free speech. "I may not agree with what you say, but I will defend to the death your right to say it" (attributed to Voltaire). Ted Cruz, in particular, who claims to value the Constitution above all else, should be very ashamed of himself.

Now I will not accuse Mr. Sanders himself of being a fascist, but some of his supporters certainly are. Those proud of disrupting Donald's rally last night are undeniably fascists. In prior eras they would have been described as brownshirts.

My shorthand definition of fascism is a belief that we're poor because the foreigners stole all the money. Foreigners usually refers to an ethnic group, though not always. The Bernie crowd sees Rednecks, Hillbillies, Yokels, Uneducated people, Religious fanatics, etc. as unacceptable strangers who need to be shut up and are undeserving of Constitutional rights. For the record, it is worth noting that Bernie's supporters are more White than any other campaign.

The American Left is increasingly infested with fascist grouplets. First among them is the explicitly racial group Black Lives Matter. Those folks are more catholic in their choice of targets, extorting groveling obeisance from whatever candidate they choose to disrupt. This is a fascist gang pure and simple.

Similarly, the Boycott, Divest, Sanction group is a viciously antisemitic group targeting "Zionists." Their trademark tactic is to disrupt any speech by any Israeli citizen, whatever that person's point of view might be. These people are fascists in the old-fashioned, Hitlerian sense of the word.

Jonah Goldberg, in his book Liberal Fascism, argues that Hillary Clinton is a fascist. I think he makes a convincing case, but she's not a danger to civil liberties in the way these other examples are.

My Trotskyist friends are mostly not fascists, though they do have tendencies in that direction. In particular, Socialist Action and Solidarity ardently support Hamas, which is an avowed fascist organization. But let's consider that an anomaly and not typical of Trotskyism.

Trotskyists subscribe to a politics that I regard as pro-poverty. For them global ideals are much more important than the welfare of any group of people. For example, saving us all from climate change is sufficient reason to drive a billion people back into subsistence farming. Or similarly, changing the legal ownership of the means of production is cause to completely destroy the world's economy.

Solidarity, for example, is quite explicitly Luddite.
The fact is that ecosocialism simply does not need everyone to have her/his own private automobile (we do not, in fact, need for anyone to have a private automobile) nor a big screen TV in every room of the house, private swimming pools, meat three times a day, and much else.
Not only will the Rednecks be deprived of their pleasures, but workers around the world will be deprived of their livelihoods. This is a semi-fascist doctrine, but to their credit our comrades in Solidarity don't engage in brownshirt tactics.

Similarly, Socialist Action and Louis Proyect are avid, pro-poverty campaigners. While I've argued often against Mr. Proyect's viewpoint, there is no way the man is a fascist. And to his credit he's against Bernie almost as much as I am (albeit for different reasons).

So that brings us finally to the Socialist Workers Party (SWP). They are also not fascist, though like the other grouplets they support fascist-like governments. They are, for example, keen on Castro's Cuba and Kim Jong-un's North Korea. The latter seems to me to be indistinguishable from fascism, based as it is on an ethnocentric ideology. (Kim Il-sung, apparently, has ascended into heaven.)

But the SWP distinguishes itself for the better in that they do not support Hamas, and they have come down foursquare in favor of preserving Constitutional rights for citizens. More, they see Trump's followers as potential recruits rather than class enemies. Instead of disrupting the rally they'd rather be part of it (though not in support of the rally's program).

So there is no way the SWP is fascist in any sense that we've been discussing. They're not even consistently pro-poverty (e.g., they have not signed on to the Climate Crusade).

Trotskyists believe in something called the Transitional Program, a route by which Socialist Revolution can be achieved. By this guide today's activists fight for seemingly obvious demands (e.g., "free college tuition for all"), secure in the knowledge that capitalism will not be able to satisfy those demands without bringing itself to collapse.

The SWP's gamble is that American capitalists will not be able to grant workers their Constitutional rights and still remain in power. So they demand the rigorous implementation of the Constitution supposedly knowing full well that such will ultimately bring down the system. After which we can all live in a North Korea-style utopia.

But for the moment it puts them on the side of Donald Trump.

It is very odd to think of Donald Trump as the defender of free speech and Constitutional liberty. But by some odd sequence of events, and by no design of himself, that is exactly where we are.

For that reason this blog endorses Donald Trump for President.

Down with fascism!
Down with poverty!

Further Reading:

Monday, February 29, 2016

Whither the SWP?

In the former incarnation of this blog I frequently dubbed the SWP (Socialist Workers Party) as the Stupid Workers Party. The title seemed to fit at the time (late 1990s). I have since sworn off such language because it is uncivil and precludes conversation.

Beyond that, it simply isn't true. The SWP is wrong and often incoherent, but they are not stupid. Quite the contrary.

For example, their 2016 presidential candidate, Alyson Kennedy, has filed excellent reports in The Militant on the mine workers' struggles in the coal fields (see, e.g., here,  here, and here). This is because she has actually worked as a coal miner and knows something about it. And then she's honest. Which doesn't mean I agree with her. Likewise Brian Williams, The Militant's economics reporter, is at least competent, avoiding the jargon and the howlers that afflict most far-Left publications (though he's often mistaken).

So they're not stupid, but they have been singularly unsuccessful. The Party's Boston branch was recently closed, likely for lack of comrades. And similarly for branches in Houston and Des Moines. The hall in Omaha is no more--the branch has either been closed or merged with the whatever-exists in nearby Lincoln. Not counting Lincoln there are now only 10 branches--the fewest number in my memory. Supposing 15 comrades per branch, and then adding another 20 for the national office, one gets a grand total of 170 comrades, most of whom are over 60. And this is a vanguard Party?

So clearly something has to change. I think the Party has been looking for a new role--something distinctive and important that's in tune with the times. This searching is what often renders them incoherent. They run new ideas up the flagpole to see how well they fly.

I discern three emerging themes:

1. They take their paper's masthead very seriously: "published in the interests of working people." This has a number of counter-intuitive consequences.
  • They rightly dismiss environmentalism as not in the interests of workers. And they are correct to do so--the Greenies ultimately claim that everybody will have to lower their standard of living in order to save the planet. The Solidarity grouplet has gone furthest with this, adopting an explicitly Luddite program. Socialist Action is also flying the Green banner, similarly demanding Poverty for Everybody Now! I summarize a lot of this here. The SWP consistently rejects any pro-poverty platform.
  • The Party has come out in support of Israel. There is no doubt that workers in that state--both Jewish and Palestinian--are better off as Israeli citizens. Indeed, even Palestinian workers in the territories are better off because of the existence of Israel--it's an obvious market for their products.
  • Finally and most recently, the Party understands the importance of the rule of law. In response to Justice Scalia's death, they wrote  
    Scalia was hated by most liberals and leftists for his socially conservative views, but more importantly because he argued the court should base its rulings strictly on the Constitution, rejecting “outcome-driven” decisions that amount to decreeing laws from the bench. 
    But it’s in the interest of the working class that the court uphold the Constitution, especially the Bill of Rights and subsequent amendments won in struggle that are protections of the people against the government. 
    In his dissent on last year’s ruling legalizing gay marriage, Scalia pointed to the narrowness of the class background of the justices, writing they are “only nine men and women, all of them successful lawyers who studied at Harvard or Yale Law School.” 
    The justices are all Catholic or Jewish, he pointed out. “Not a single evangelical Christian (a group that comprises about one quarter of Americans), or even a Protestant of any denomination. … Eight of them grew up in east- and west-coast States.”
However much The Militant sounds like Republicans, there is no question but that the Constitution protects the rights of working people against the depredations of any elite. I think The Militant has made the case very eloquently, and I agree with them totally. Consistency with their masthead demands that they say no less.
2. An abiding hatred of the Democratic Party. I came by my own anti-Democrat credentials as a member of the SWP, despite growing up in an upper-middle class, liberal household. (My mother lionized FDR.) I'm remain as proud today as ever that I've never voted for a Democrat (beyond some municipal elections). In that sense I'm still a "Trotskyist."

But the SWP is realizing that the Democrats are no longer their primary competitor. More and more workers are gravitating toward the Republican Party. Or as I think of it, productive people (workers and capitalists alike) tend to be Republicans, while the parasites (dependent on government largesse) remain with the Democrats. Accordingly, the Party has to address workers where they are at.

That explains why the Party is adopting some positions similar to Republicans, though in no way are they becoming Republicans. Other grouplets, meanwhile, are talking to the Sanders crowd, made up almost exclusively of parasites. They're still defining themselves relative to the Democrats.

3. The Party remains committed to socialism; how could it be otherwise for the Socialist Workers Party. In particular they're avid supporters of the Cuban "revolution." But this is where the incoherence starts: how can you champion the rule of law on the one hand, and yet support the semi-feudal, nepotistic, ridiculous government in Havana? Scalia and Castro don't mix very well.

Even worse, the Party is still carrying water for the Democratic People's Republic of Korea, aka North Korea. They defend them even in their most recent issue. And in April, 2015, the Party continued it's annual practice of sending fraternal greetings.
The Socialist Workers Party and Young Socialists send internationalist greetings on the occasion of the Democratic People’s Republic of Korea’s April 15 national holiday. We pledge our unconditional solidarity with the struggle to reunify Korea, partitioned in 1945 at the hands of Washington and Moscow.
So much for constitutional rights. And so much for those who claim that Jack Barnes is becoming a Republican. However much it leavens the loaf with a few Republican issues, at the end of the day the Party remains committed to its totalitarian principles.

So will any of this result in an organizational turnaround? Count me skeptical, and not only because the masses aren't going to march for Kim Jong-Un. But if you take socialism out of the mix, then they become no different from any other Republican interest group. So they are condemned to eternal and self-limiting incoherence.

That aside, the Party has gotten too small and too old to be effective anymore. Gram and Gramps will not be able to recruit a younger generation of activists. They've already aged into retirement, and soon they will pass from the scene entirely.

Further Reading:

Saturday, February 13, 2016

Trump & Trotsky

Like many others (including me, I'm ashamed to say), my Trotskyist friends took to calling Donald Trump a fascist. He was, in their view, a nativist, racist, homophobic, "stupid," ignorant, lewd and crude Republican.

As it turns out Trump is not a fascist, but rather something nearly as bad: he's a Democrat. I've made that case (I think convincingly) here, and it's an opinion shared by most of his competitors for the Republican nomination. Donald Trump, far from being a "true conservative," is a big-government liberal long associated with the Clintons. ABC News (h/t HotAir) quotes Ted Cruz claiming Trump supports "touchback amnesty." See also Ted Cruz's (marvelous!) attack ad against him. Despite coming from the Cruz camp, I believe this is factually accurate.

But Mr. Trump is certainly more than just another Democrat. However transient his own political career may or may not be, he represents a significant rearrangement of America's political furniture. Both Democrats and Republicans are fading away, to be replaced by different parties having different agendas (though perhaps they'll keep the same names). I described that in a previous post.

A global realignment of political movements will inevitably have an effect on Trotskyism. Indeed, they'd be deeply insulted if big changes happened without them, believing themselves to be responsive to the "class struggle." While their lodestar supposedly remains unchanged, the tactics must adjust with circumstances.

But Donald Trump drives a wedge right through the middle of Trotskyism. He makes it impossible for them to continue business as usual.

There are two bits to Trotskyist dogma that until recently seemed inseparable. The first is announced on the masthead of The Militant: "A socialist newsweekly published in the interests of working people."

Trump's campaign clarifies what is meant by "working people." There is, indeed, a class conflict in Trump World, but it isn't primarily between the bourgeoisie and the proletariat. Instead it's between the Producer Class and the Parasite Class. The former are people who build stuff--not just the workers, but also the engineers, architects, financiers and marketers. In response to Elizabeth Warren's infamous charge, "You didn't build that," the Trumpers loudly proclaim "we sure as hell did build that, asshole. Just who do you think you are?" Mr. Trump proudly puts himself on the side of his employees and workers generally, sharing credit with them for manufacturing all the stuff that makes Americans rich.

Of course he's quite right, and workers across the country thrill to his banner.

The Parasites, on the other hand, are personified by Mr. Trump as "the Establishment," or just as often "the Republican Establishment." (His frequent vilification of Republicans is another reason to suppose he's a Democrat in disguise.) These are people who live off of tax dollars. They include all politicians for sure (that's what makes politicians evil), but also most civil servants. Trumpers will regard professors, teachers, federal officials, zoning enforcers, etc., as Parasites, along with welfare and food stamp recipients.

So that makes it sound like Trump is a small-government Republican. But he's not--he just thinks government should spend it's money differently. Social Security needs to be defended and expanded. Obamacare should be "repealed and replaced" so that affordable health care is available to all. (In his previous life Trump supported single-payer.) We need to help our vets. None of this is cheap, but all of it is money that's supposed to go to Producers rather than Parasites. On the other hand, Donald is not a fan of expanding the education or regulatory bureaucracies--they're all Parasites.

Never mind that none of this is ever going to work.

But Trotskyists have a problem. They have to meet the "working class" where they're at, and those folks understand that "workers" are not just factory laborers. The Producing Class even includes some billionaires--people like Steve Jobs, Sam Walton, and Donald Trump. At the same time workers don't generally count public employees among their numbers--those folks tend to be Parasites who deserve to be fired.

So Trotskyists are going to have to address Donald Trump. A commenter on this site (John B.) reports that "the SWP has taken to selling The Militant at Donald Trump rallies lately!" Now The Militant may not agree with Donald (they most probably do not), but they can't simply discount his argument or ignore his audience. On the other hand, other grouplets such as Socialist Action and Solidarity are still dismissing Mr. Trump as a fascist. He isn't.

The other problem Trotskyists have with Donald Trump is political correctness. I think Trotskyists actually invented the concept back in the 1970s, or at very least they took it to unheard of lengths. But the Trumpers understand what PC is really about. It is a tool of the Parasite class to divide and conquer the Producers. After all, property taxes are so high because teachers need generous pension plans, which is all about racial equality dontchyano. If you even bring up the subject you're a racist, sexist, homophobic, knuckledragging, Redneck idiot.

And likewise with the distinction between "people of color" and "colored people," a subtlety that normal people can't comprehend. Or the abolition of "Miss" and "Mrs.", or the ridiculous ban on any synonym for "woman." Or the prohibition on words like "queer" or "fag," even when no insult is intended.

Working people, i.e., "Producers," talk the way normal people talk. They're not privy to the code words that Parasites use to send secret messages to each other. Non-PC language is not usually intended to be insulting, but it is honest. There is, after all, nothing either insulting or dishonest about referring to an unmarried woman as "Miss."

The use of PC language establishes you as a member of the Parasite class. It means you're a politician or a professor or a half-wit bureaucrat or a welfare caseworker or a police officer or some other clown or jerk or asshole. Is that the crowd Trotskyists want to hang out with?

For some, apparently yes. Socialist Action and Solidarity are all-in going after Bernie Sanders supporters. Bernie is the archetypal Parasite, strongly advocating Parasite-friendly policies.

So Trotskyists have a choice. They can either put their chips on PC, abandon the working class and double down with the Parasites. Environmentalism is the classic Parasite issue--it puts Producers out of a job and transfers money to bureaucrats' pockets. It's no surprise that Socialist Action and Solidarity are gradually going from Red to Green.

The Militant on the other hand, is standing true to its masthead. How they deal with political correctness remains to be seen.

Saturday, January 30, 2016

Taxi Troubles

A headline on today's Drudge Report reads "UBER Drivers Protest Over Lowered Fares In NYC..." But the linked article doesn't claim that: instead it reports that primarily Yellow Cab drivers were protesting Uber's lowered fares. And for good reason--the move potentially puts them out of business.

Uber announced that it is lowering it's fares for UberX and UberXL by 15%. Of course given the decrease in gas prices that makes some sense (though that's unmentioned in the article).

But it's driving the medallioned Yellow Cabs crazy. "Beleaguered yellow cabbies say they can’t compete with the lower fare since their rates are determined by the Taxi and Limousine Commission." Hoist on their own petard, I'd say, since until now the cabbies have been hiding behind the medallion to protect their monopoly. But now they've woken up on the wrong side of the issue.

A few Uber drivers joined the protest, claiming that the reduced fares would hurt their income. Not true, claims the company. "Uber is guaranteeing drivers who work the minimum will make more, and if they don’t, Uber will pay the difference. Spokesman Josh Mohrer adds that the ultimate goal is to reduce the use of personal cars."

Put another way, the lower fares will reduce the profit per trip, but the difference will be made up on increased volume. But only full-time drivers will generate the volume necessary to increase revenue. So Uber calculates that it will a) generate more total revenue for the firm, much of which will be shared with the drivers, and b) professionalize its workforce by discouraging part-time and casual drivers.

It sounds like a win on all counts. But it will put the Yellows out of business, and maybe sooner than anybody thinks.

For recently the Yellow Cab companies in San Francisco and Chicago have both declared bankruptcy. In both cases it's because they lost liability lawsuits because of accidents. The Chicago firm (my employer for about a year in the 1970s) is on the hook for about $26 million. The much smaller San Francisco company owes $8 million.

Two points can be made. First, these sound like one-off events. But liability is something all cab companies have to deal with. The sums involved are relatively paltry--a company with a strong balance sheet or good insurance should be able to survive this.

Second, it illustrates an Achilles heel for the medallion companies--they can't keep their workforce. Good, professional drivers will make more money with Uber, and that's where they're going. The Yellows, meanwhile, are left with the dregs--part-timers with spotty driving records. Indeed, the photo below can hardly inspire confidence in cab safety.


Chicago Yellow Cab, pictured with victims
Chicago Yellow cab and victims
(Clifford Law Offices via Chicago Tribune)

It completely negates the long-standing taxi argument that the medallion somehow equates with safety.

Bill Onasch, over at Socialist Action, points me to an article at LaborNotes.org, a useful site reporting on labor news. There Sonia Singh authors a piece about an attempt to unionize Uber drivers in Seattle.

The drivers, who are mostly Somali and Eritrean immigrants, have gone to the city council and gotten a resolution allowing them to unionize. Uber has taken the issue to court, where it will likely languish for several years.

Nevertheless, Teamsters Local 117, which already organizes cab drivers, has set up the App-Based Drivers Association. During my stint at Chicago's Yellow Cab I was a member of the International Seafarers' Union, a mob-run outfit if there ever was one. It's doubtful the Teamsters will be more honest, for if they're successful they will generate a permanent revenue stream from Uber drivers. The temptation to skim off the top will be hard to resist.

Ms. Singh asks "will drivers sign up? Ajema is confident this will be the easiest part, even though he expects Uber will try to dissuade them." Count me skeptical. I think this whole effort is a non-starter.

So the taxi industry is changing faster than anybody predicted. I think that medallion cabs will be out of business across the country within the next five years.

Further Reading:

Saturday, January 16, 2016

Good Trump, Bad Trump

The biggest problem with Donald Trump is that nobody knows just what he will really do after he becomes president. The man speaks with heart, but not with precision. Indeed, rhetoric notwithstanding, his statements are remarkably ambiguous.

Take the most famous one first:
Donald J. Trump is calling for a total and complete shutdown of Muslims entering the United States until our country's representatives can figure out what is going on.
The implication (since clarified) is that the ban is temporary, but he's never specified for how long. It could be for 30 minutes or 30 years. Either way it sounds cataclysmic, though the reality may be much less so.

So what the hell does this guy have in mind?

The Bad Trump is an unreconstructed nativist who really hates Muslims. Any serious effort to ban their entry into the US will wreak havoc with our foreign policy, as Jeb! made clear during last night's debate. If consistently enforced it would damage our friends more than our enemies.

For the Good Trump, on the other hand, the plea is just a ruse. The total ban (if enforced at all) will operate only for a few weeks and then be relaxed after we've figured it out. What we'll end up with is something very much like what all the other candidates agreed to, namely a moratorium on war refugees from Syria, Iraq, and Libya. Trump's bombast merely serves to open the Overton window for this rather reasonable outcome.

Though I have no clue what he really intends.

His initial comments about Mexican immigrants was even more over the top:
When Mexico sends its people, they're not sending their best. They're not sending you. They're not sending you. They're sending people that have lots of problems, and they're bringing those problems with us. They're bringing drugs. They're bringing crime. They're rapists. And some, I assume, are good people.
Of course that's a slander. I don't think there's any evidence that Mexican immigrants (illegal or otherwise) are more prone to criminality than anybody else. And they're not sent by the government. On the other hand, he may have a stronger case about immigrants from Central America, especially El Salvador.

Asked by Univision's Jorge Ramos how he would deport 11 million people, Trump said,
We’re going to do it in a very humane fashion. Believe me. I have a bigger heart than you do. We’re going to do it in a very humane fashion. 
You know what it’s called? Management … I’m a great manager. I know how to manage things. I hire unbelievable people. What we’re doing here will work great. 
Once I win, you’re gonna see things happen.
The Bad Trump really believes this. Of course it's impossible--there is no way one could "humanely" deport millions at a low cost.

But the Good Trump isn't so sure. In the same exchange with Mr. Ramos he backs down a bit. Acknowledging that many Mexicans were "good people", he adds "and they're hopefully gonna come back in very soon."

The end result may be sensible immigration reform of the sort Mitt Romney and Marco Rubio have long advocated. This combines greater enforcement at the border with a big, beautiful gate for legal immigrants. As before, by expanding the Overton window he makes a practical solution possible. Though again I have absolutely no clue what his real intentions are.

Finally, this is what Mr. Trump has to say about tariffs on Chinese imports: "I would do a tax. And the tax, let me tell you what the tax should be … the tax should be 45%," But during last night's debate he claims he was misquoted about the 45% figure. But,
"They can't believe how stupid the American leadership is," Trump said of China. "I'm totally open to a tariff. If they don't treat us fairly — hey, their whole trade thing is tariff. You can't deal with China without tariff. They do it to us. We don't do it. It's not fair trade."
The Bad Trump is a devout protectionist--something that will destroy the American economy. The whole "fair trade" wheeze is just an argument for crony capitalism.

But the Good Trump...

Here I am unable to find the Good Trump. I have no quotes where he substantially backs down from this position. So I am afraid that on trade Mr. Trump means exactly what he says. Perhaps this isn't surprising--that a billionaire favors crony capitalism doesn't shock. But it does disappoint, and to my mind nearly disqualifies Mr. Trump from the presidency.

Nearly is the key word. Of course I much prefer either Christie or Rubio as candidates. Even Bush, Carson, or Kasich are better choices (though I'd hold my nose).

But compared to Ted Cruz? Sorry, but in that case I'll vote for Trump. Mr. Trump is a deal-maker. He can negotiate with people. It seems to me his instincts (except on trade) are mostly in the right place. So I can trust him--I think, at least sort of.

Donald Trump reminds me most of FDR. Like Roosevelt, he's not a man of principal. But he has an ability to communicate with the American public that can actually accomplish something. Like FDR, Trump cares not a whit about the Constitution or any other high-minded principal. For him it's all about the Deal. So it will depend on Congress and the courts to keep him in check.

A Trump/Roosevelt presidency is a very big risk. But perhaps we're in a place where such a risk is justified.

Further Reading:

Sunday, January 10, 2016

The Political Report: 2016

Here is a rundown of Conventional Wisdom (CW):
  1. Donald Trump can't win the nomination.
  2. Ted Cruz can't win the general election.
  3. Hillary will win the Democratic nomination.
  4. Marco Rubio is most likely our next president.
  5. Jeb Bush is finished.
  6. There is a split in the Republican Party.
  7. CW is always wrong.
Oh alright--that last item is a joke. Indeed, quite the contrary: when CW is right it's a dog bites man story.

I used to agree with #1, but now I'm not so sure. Donald is not running on an economic or political platform. He doesn't give a rat's patoot about tax policy or ISIS or trade agreements. He is campaigning to defend civilization.
  • He's against political correctness, which is a direct attack on the American way of life.
  • He is against immigration, especially of uncivilized people. He doesn't understand the economics of the issue at all, but he's got the 'civilization' thing down. Especially after the Rape Fest in Germany the point has come into sharp relief.
  • He's against free trade because he wants Americans to have jobs. Here he's just wrong. Restricting trade neither preserves jobs nor does it defend civilization.
  • Donald understands the importance of the military and the police.
  • He calls other politicians stupid. Obviously he's wrong in the IQ sense (nobody's smarter than Rand Paul), but in a cultural sense he's absolutely right. Our politicos have forgotten what civilization is.
So I'm not a Trump supporter--he is not Libertarian enough for me. But I no longer think he's a f***ist. I have accordingly revised my estimate of his chances. I think he could win the nomination, and more, I think he could be our next president. Let's call it 20%.

I can't stand Ted Cruz. He's a smarmy, slimy, unlikable bastard. I prefer any other Republican over him. I am pleased to say that I am not alone in my opinion. While I do think it's possible (unlikely) for him to win the nomination, I don't see how he takes it home in November. He's a niche candidate for angry evangelicals. 5%

If she doesn't get arrested then Hillary will win the nomination. But her chances in November are much worse, for three reasons: 1) she's a crook; 2) It's a Republican year, especially if we enter a recession (increasingly likely) or there's another dramatic terrorist attack; 3) Ted Cruz is not the Republican nominee. 30%

Everybody says Marco is such a talented politician. Maybe. But he's running a terrible campaign. Or maybe it's an excellent campaign in the wrong year. Whatever, I find it increasingly improbable that he can carry the nomination. He's gonna lose in Iowa, New Hampshire, South Carolina, and Nevada. So he's toast. 10%

The alternative "establishment" candidate is Chris Christie. His chances will improve if the economy goes south or there's another attack. Also, Black Lives Matter and campus unrest plays into his corner. He has to surprise in New Hampshire, but if he does then I think he goes all the way. 25%

Jeb Bush is a loser. 3%

There is no split in the Republican Party. Donald Trump is a Democrat thinly disguised as a Republican, so if anything there's a split in the Democratic Party. He and Bernie Sanders are going after disaffected White voters with approximately the same program (differing only on immigration). Bernie's chances: 5%

Martin O'Malley: 0.001% (I include that just to be mean.) All other candidates put together: 2%

That adds up to 100%.

A word about my Trotskyist friends:

The Socialist Workers Party (SWP) always runs candidates, and they will do so this year. The candidates will be announced in July at the Oberlin conference. They will be on the ballot in 10 states. Unusually, I predict that one member of the ticket will be a white male, to win solidarity from Trump supporters. The other half of the ticket will be "disadvantaged minority," likely Hispanic. 0.000001%

Most other grouplets will support the Green Party candidate. This is especially true of Solidarity, whose banner has long since faded from Red to Green. Louis Proyect will also support the Greens and for similar reasons. All of the grouplets will vigorously oppose the Democratic nominee, whoever he/she is.

Interesting will be the response of Socialist Action (SA), which is also moving in the Green direction, though not yet as far along as Solidarity. In the past SA has always offered "critical support" to the SWP ticket, but the latter is increasingly skeptical of environmentalism. That, along with the SWP's newfound support for Israel, will render them class enemies in the eyes of SA. But the latter can't support the Green Party either, long since condemned as a petty-bourgeois excrescence. So I think they'll just abstain--a typically Trotskyist thing to do.

Bottom line: I think Chris Christie will be our next president. That may be wishful thinking on my part (since I will happily vote for him), but it is my prediction.

Further Reading:

Wednesday, January 6, 2016

Economic Predictions for the Coming Period

Our economic future will be determined by the Double-Ds: Deflation and Debt.

Or, put another way, Main Street is doing just fine, but Wall Street has some serious problems. Unfortunately the two are interlinked.

We are experiencing deflation (not disinflation) and have been for some years now. I base this opinion on these facts:
  • Commodity prices (especially gold and energy) have fallen dramatically. 
  • Our major trading partners (China, Brazil, and probably Canada) are exporting deflation.
  • The cost of labor is going down. Yes, there has been some increase in individual wages, but there is a decline in labor force participation, meaning that total wages are likely declining. And, as Thomas Piketty famously claimed, the fraction of GDP going to labor is getting smaller.
  • Technology is making stuff cheaper.
  • My anecdotal opinion is that the prices of things I buy are declining, or failing that the quality of what I get is increasing.
  • Nominal interest rates have remained very low for a very long time. This is not because of Fed manipulation
I understand that government statistics indicate merely disinflation, but I think they're wrong. First, I doubt they can properly correct for quality issues. Dinner at a decent restaurant still costs $17, but you get a much better meal today than you did a few years ago. Health care, admittedly more expensive, is also much improved over the past. (Higher education, on the other hand, is increasingly just a dead-weight loss.)

And second, deflation is bad for governments, and especially for the Fed. The latter is trying to raise inflation by changing expectations, that is, trying to convince the public that it's just around the corner. But I think that's propaganda. There is no inflation on the horizon.

Many pundits, along with my friends over at ZeroHedge, argue that there was massive monetary stimulus during the Great Recession bailouts, along with the subsequent quantitative easing (QE). But George Selgin argues convincingly (here and here) that this isn't true. The base money supply has remained mostly constant over the last decade. For example, QE was accompanied by paying interest on reserves. The former added liquidity, while the latter took it away again. The net money supply remained unchanged. Mr. Selgin describes the entire decade as a process of removing liquidity from solvent enterprises and transferring it to insolvent enterprises.

Not good. But also not something that will lead to inflation.

So is deflation good or bad? To answer that question we need to invoke Scott Sumner's dictum: Never reason from a price change. For deflation can have two causes: demand side or supply side.

Demand-side deflation happens when consumers get poorer and can no longer buy as much. This occurred during the Great Depression, and also what might be happening in China today. Because there is less demand prices must fall. Demand-side deflation is unambiguously bad, and to the extent we have that the Fed is absolutely right to resist it.

Supply-side deflation happens when producers get better, either through new technology or because of cheaper inputs. Widgets used to cost $10 to make, but because of new technology now they only cost $2. Thus the cost of widgets goes down dramatically. This kind of deflation, while often disruptive, is a very good thing. Our standard of living goes up, not because of higher wages, but rather because of cheaper prices.

I argue that our current deflation is mostly supply-side. The big new technology is fracking, which has reduced the cost of energy by 50% or more. Computer-aided improvements in logistics (see, e.g., Amazon) have reduced the costs of retailing--not even Walmart can make money anymore. And then other countries are exporting deflation, which from a US standpoint simply means lower costs for similar or better products--i.e., supply-side deflation.

Of course there are some demand-side issues as well, slowing population growth being key among them. But the fact is that at least in the US deflation is mostly supply-side. That means American consumers are getting richer because they're paying lower prices for the things they want to buy. I argued as much in a post a couple of years ago, here.

So if the goal of an economy is to make consumers (i.e., everybody) richer, then we are undoubtedly succeeding. Or speaking metaphorically, Main Street is on a roll.

Financially, however, things are not so rosy.

The other big D is debt. "Debt is cheap," or so they say, what with interest rates at "historic" lows. And people sure have piled it on: student loan debt is over a trillion dollars, and auto loan debt is not far behind. Many cognoscenti (e.g., Paul Krugman) argue that we should massively invest in infrastructure--finance has never cost less.

Even on the Right pundits agree: the Fed, so they maintain, has arbitrarily kept interest rates low making it cheap to borrow, with the collateral damage of screwing grandma out of her savings.

But I think both the cognoscenti and the pundits are wrong. Real interest rates are precisely not cheap--indeed, they're quite high. Suppose, optimistically, that we have 2% deflation, which mean Americans are getting richer at 2% annually even without a pay raise. Then the 10-year Treasury, nominally at 2.2%, is actually paying a real rate of 4.2%. That's not cheap! Grandma is doing just fine.

So who is hurt by deflation? Anybody in debt. If you owe money on a student loan (nominally at 4.29%) you are paying real interest at 6.29%. There is no way that's a good deal, and only the very top students will make enough to earn that back. A car loan these days (if you have good credit) costs 2.6%. In real terms that's 4.6%, again hardly a bargain. Fortunately for homeowners, a lot of the housing debt was liquidated during the last recession.

So who is the biggest debtor today? Governments, both in the US and abroad. China, for example, has borrowed billions to build useless infrastructure, including whole ghost cities. Japan has splurged on bridges to nowhere in a futile attempt to "jumpstart" its economy. Puerto Rico is in default. Illinois stiffed its lottery winners (giving the IOUs, since redeemed), and is bankrupt in everything except name. National and sub-national entities around the globe are hopelessly in debt.

The State of New York, for example, owes an amount equal to 23.6% of state gross product, or approximately $370 Billion. Of this, $140 Billion is owed by the state, while $230 Billion are owed by local governments. It comes out to $18,600 in debt per person, even for every newborn baby. Remember that upstate New York (where a lot of these local governments are located) is losing population and has a declining economy.

This won't end well, and it will end suddenly.

One of these days creditors will refuse to lend money to New York to roll over its bonds. This may be because of something that happens in New York, or more likely it may be because of a credit crisis in China or Japan or Portugal or wherever. However it happens, it means that New York will default--suddenly, dramatically, catastrophically. There will be no warning. One day life is normal. The next day retired state employees won't receive their pensions.

Deflation brings the day of reckoning closer. States, especially Blue states like New York, are losing their tax base, both by population loss and by declining prices. I don't know if New York is one recession away from default, or if it will take two or three. But I certainly wouldn't want to be part of the public employee retirement system right now. (I'm not, thank God, despite my status as a state college professor.)

So we have too much debt. Private debt has been (slightly) paid down since the last recession, but government debt has grown. The most dangerous sort is owed by municipalities and school districts. Many of them are doomed.

The Great Liquidation is still in front of us. It will happen eventually. I don't know when, but deflation brings it closer. It will wipe a huge amount of wealth off the table.

So here's my advice to you young-uns out there: Worry less about your salary and more about your savings. Stay out of debt. Don't buy real estate in New York.

Further Reading: