Louis Proyect on "Radical Professors"

Louis Proyect pens a piece entitled Radical professors and the hazards of social media that cites four examples of leftist academics who have gotten themselves in trouble by intemperate tweeting: Steven Salaita, George Cicciarello-Maher, Johnny Eric Williams, and James Livingston.

The most egregious case is that of George C-M, a former professor at Drexel University, who was somehow inspired to tweet "All I Want for Christmas is White Genocide." Mr. Proyect offers some background. The tweet was

...prompted by the racist backlash against State Farm Insurance for purportedly advancing “white genocide” through a commercial featuring an interracial couple. This trope of “white genocide” is ubiquitous to the alt-right, including the business about white farmers in South Africa being killed off. After the fuckwit Tucker Carlson claimed that this was taking place, Trump followed up with a tweet even though it had no factual basis. Unlike the University of Illinois, Drexel University defended his free speech rights but George resigned eventually because the death threats and other forms of harassment became intolerable. Like Salaita, he was guilty of nothing except using Swiftian satire that might have been acceptable among leftists but not to Fox News’s audience.

Mr. Proyect claims some context of which I was unaware, e.g., that State Farm Insurance somehow advocated "white genocide" in a commercial. I find this hard to believe. He further maintains that we rightists are somehow fixated on said supposed genocide--I, for one, live in no fear of such an event, however disturbing recent events in South Africa might be.

The upshot of this is that we're supposed to excuse George's tweet as "Swiftian satire," i.e., just harmless fun that only a dedicated right-winger could take out of context.

Of course tweets come without context--almost by definition--and if George is foolish enough to proclaim his ardent desire for "white genocide" via that medium, then who am I to disbelieve him? Even after reading Mr. Proyect's explanation, I can't understand the tweet in any way besides literally.

I don't fear "white genocide," but at the same time I don't believe anybody who advocates it deserves to work as a professor. George has, whether purposely or foolishly, disqualified himself from the academic profession.

As an aside, if some right-wing professor (there are a few) had posted a similar tweet about African-Americans or LGBTQ people, the "Swiftian satire" excuse wouldn't have passed the laugh test. Such a person would have been fired before sundown--and rightly so.

As a second aside, the tweet can possibly be interpreted as a threat, in which case it is not protected speech. Of the four cases Mr. Proyect cites, this is the only one where I'm not sure First Amendment rights apply.

Now lets turn to the sorry case of Mr. Salaita, who opined that "At this point, if Netanyahu appeared on TV with a necklace made from the teeth of Palestinian children, would anybody be surprised?" among many other things. Mr. Salaita had been offered a tenured professorship at the University of Illinois, but because of antisemitic tweeting the offer was withdrawn before he could start work. Mr. Proyect writes "It should have been obvious that this was Swiftian satire but the board preferred to placate wealthy Jewish donors rather than uphold academic freedom."

For the life of me I can't see anything satirical in Mr. Salaita's tweets, Swiftian or otherwise. I have no trouble calling him an anti-Semite. That said, he does not directly threaten or libel anybody, so despite being hate speech it is clearly protected under the First Amendment. But he does not have a right to work at the University of Illinois as a professor, and the school was right to rescind the offer.

Mr. Proyect blames "wealthy Jewish donors" for the outcome. I don't know if that's true, but let's suppose it is. The University of Illinois--faculty and students alike--are dependent on donations, especially in Illinois where state funding has been cut to the bone. Mr. Proyect will put that all at risk just so that some clueless little twerp can run off at the mouth with his vile hate speech. Hiring Mr. Salaita would have severely damaged the institution, and the Board had no choice but to let him go.

So why do these people post such career-ending tweets? Are they really that stupid? Well, yes they are, but there is also a larger story to tell. They are all academics and as such they live in an echo chamber. Status in academia is achieved by loudly touting one's anti-racist, anti-homophobic, anti-misogynist, anti-Israel (Jewish) credentials. It's an arms race--the more and better your virtue-signalling, the higher your status within the community (and the more likely you are to get published, funding, tenure, etc.).

We recently endured such an episode on my campus. A long-time political science professor--often interviewed by The Economist and the New York Times--made the rather obvious observation that the Republican John Faso will likely win the congressional seat over the Democrat Antonio Delgado. He also had the temerity to criticize hip-hop music, leading to a faculty piling-on that lasted for several weeks, ended only by the offending professor's abject apology, though he had said nothing he needed to apologize for.

It's nothing but virtue-signalling all the way down. And sometimes this internecine, academic competition escapes its bounds, leading to tweets that, to people in the real world, are correctly interpreted as hate speech.

That brings us to the sad case of James Livingston, who tweeted

OK, officially, I now hate white people. I am a white people, for God’s sake, but can we keep them — us — us out of my neighborhood? I just went to Harlem Shake on 124 and Lenox for a Classic burger to go, that would my dinner, and the place is overrun with little Caucasian assholes who know their parents will approve of anything they do. Slide around on the floor, you little shithead, sing loudly you unlikely moron. Do what you want, nobody here is gonna restrict your right to be white.

I hereby resign from my race. Fuck these people. Yeah, I know it's about access to my dinner. Fuck you too. 

As Mr. Proyect points out, this isn't even political. It definitely is protected, and further, it's not hate speech, even though it sounds that way. There is no way that Mr. Livingston should lose his job at Rutgers University because of it.

But it is pathetic. This guy is so insecure about his own moral virtue that he has to condemn other restaurant patrons for their lack of "woke-ness." Most people visit restaurants for the food--not to demonstrate their political bonafides. Harlem Shake gets pretty good reviews on Yelp. How would the management and employees feel if all of a sudden white customers stayed away because they weren't "woke" enough?

He's definitely got a chip on his shoulder. Maybe he needs to visit a psychiatrist?

I'll take issue with Mr. Proyect's description of these professors as "radical." A radical implies somebody of independent thought. These people, far from being radical, simply can't control themselves, be it from some psychological defect or too much academic peer pressure. Instead, they are the slaves of a virtue-signalling mob.

Further Reading:

• If Everybody is a Racist, Then Nobody is a Racist
• Sex and the Alpha Male
• Louis "Lyndon LaRouche" Proyect

Three From The Militant

I'm failing at my job.

My job is to criticize the Trotskyist movement from the Right. I'm tasked with keeping my remarks civil, serious and friendly, but critical it still should be.

Unfortunately the recent issue of The Militant makes that very difficult. It contains three articles that I mostly agree with--it's hard to criticize something agreeable. Still, I'll try.

The first, by Bob Carter, is entitled Protests hit Quebec festival move to shut musical revue. It concerns a theater production about slavery that was shut down by critics who accused it of "cultural appropriation."

On June 26, about 100 protesters organized by the self-named SLAV Resistance Collective protested in front of the theater doors on opening night. The protesters, both Black and Caucasian, shouted, chanted and waved placards accusing internationally renowned Quebecois producer Robert Lepage and lead singer Betty Bonifassi of being “racists” and of appropriating Black history because they are “white” and the show didn’t have a majority Black cast. 

On July 4, Montreal Jazz Festival officials cancelled the production after only two of the scheduled 16 shows. More than 8,000 tickets had already been sold. Officials apologized to anyone who they said might have been offended by the performance.

The Militant quotes producer Robert Lepage:

“Everything that led to this cancellation is a direct blow to artistic freedom,” Lepage said in a widely circulated statement. “When we are no longer allowed to step into someone else’s shoes, when it is forbidden to identify with someone else, theatre is denied its very nature … and is thus rendered meaningless.”

Of course this is absolutely correct. Unfortunately many of my other Trotskyist friends (along with the entire academic Left) will side with the censors. The Militant is right to call them to task.

The second, by Terry Evans, is headlined US, EU rulers clash over trade, spending for NATO. It centers attention on President Trump's recent meeting EU president Jean-Claude Juncker. I actually disagree with much of this article, but Mr. Evans gets one thing very right.

Much of what is reported in the liberal media about the clashes between Washington and Berlin aims to hide this reality. It seeks to reinforce the notion that Trump’s actions are endangering Washington’s interests by threatening to tear up the decades-long “world order” through which the U.S. rulers have collaborated with their “traditional allies” that make up the EU.

While it is likely true that Mr. Trump is needlessly undiplomatic in his dealings with the Europeans, The Militant is quite right when they suggest the media and critics are hyperventilating a bit. The fact is that the world has changed since 1991, and even more so since 2010, after which fracking came fully on line. Americans simply don't need that old alliance anymore.

But many people--not just in government but also in the media, academia, the military-industrial complex, and think tanks--have built their careers around those old verities. They've learned to negotiate the halls of NATO, the catacombs of the EU, the byzantine rules of the WTO, along with the elaborate protocols of the United Nations. Seventy years of collective expertise are now threatened with irrelevance--whole PhD programs are about to go out of business.

Call it the Deep State if you will, but it's actually something much more mundane than that. It's a heartfelt plea for job security--a plea that will ultimately fail. As individuals I feel sorry for them, but for the rest of us the demise of this world is probably all for the best.

Mr. Evans appears to agree with me.

Workers face a world today where a series of historic shifts are unfolding in the “order” the U.S. rulers imposed after the second imperialist world war — in Korea, the Mideast, Asia and in Europe. Trump is working within these developments to put together alliances and arrangements that favor the U.S. rulers. Many of those involve steps that can tamp down wars and conflicts that have existed for decades. These are good for working people. They open political space for us to act and learn how to fight for our class interests.

As the above paragraph indicates, the article occasionally devolves into boilerplate Trotsky-talk. Ignore that, however, and most of what it says is very agreeable.

The third article is by Roger Calero--Venezuela: Workers, farmers face effects of capitalist crisis. The Militant never bought into the whole Chavez charade, for reasons explained by Mr. Calero.

The leaders of the Bolivarian Revolution never mobilized working people to take control of production and the land and replace the bourgeois government with a workers and farmers government on the road to expropriating the capitalist class. They rejected the revolutionary example set by workers and farmers in Cuba. That is the only road that offers working people the chance to confront the problems they face.

 I think this is pretty lame--especially since Mr. Calero admits elsewhere that Venezuela did expropriate foreign owners (boldface mine).

A U.S. federal court judge ruled Aug. 9 in favor of Canadian gold mining company Crystallex, saying it can collect $1.4 billion it claims to have lost when late President Hugo Chávez nationalized the gold-mining firm in 2009. This could result in the company taking control and selling U.S.-based oil refineries owned by Citgo, which is part of Venezuela’s state-owned oil company PDVSA.

Still, The Militant thinks it's off the hook and can now criticize the Venezuelan regime with "I told you so" impunity. And its criticisms are right on the money, e.g.,

“I am better off selling empanadas than working as a nurse,” said Ana Rosario Contreras, president of Caracas College of Nurses, during a July 6 protest demanding higher wages. “An empanada costs 500,000 bolivars and I get paid 600,000 every two weeks.”

The problem with Venezuela is not that they didn't utter the correct magic words, nor that they failed to completely implement the exact policy prescribed Jack Barnes from his Manhattan penthouse. No--the problem with Venezuela is socialism.

Socialism has failed always and everywhere. And however much I agree with The Militant on any individual point--for that reason alone my job still needs to be done.

Further Reading:

• Oberlin, 2018
• Summary Statement of US Strategic Goals for the Coming Period
• Viva Poverty!

Solidarity on Trump & Trade

I'm way behind on following Solidarity, which a month ago published an article by Luke Pretz and Bill Resnick (P&R), entitled Trump's Trade Folly and the Virtues of Organizing for a Radical "Fair Trade". It's a good piece, worth analyzing in detail.

They get off on the wrong foot--at least by my lights--by completely misunderstanding Donald Trump. The lede:

While Trump has been careening between policy positions on near everything (China, the Koreas, Syria, NATO, DACA, and health care policy among others), he has in his public statements and tweets remained dedicated to the economic nationalism that was a central plank in his campaign platform. In recent weeks he has kept himself in the headlines announcing aggressive tariffs on steel and aluminum imports from Canada, Mexico, the European Union, also his blunderbuss tariffs on Chinese manufacture perhaps igniting a mini-trade war, his obsession with combating the US trade deficit, and his tantrum at the G-7 conference snubbing his European counterparts and especially attacking Canada.

          ...the media accepted Trump’s economic nationalist theatrics as the real Trump, ...

They view Mr. Trump as an ignorant bozo, not conscious of his own policy and incapable of forming a coherent strategy. I think this is precisely wrong--Mr. Trump knows exactly what he is doing, and why.

But if you don't understand the president's method, then you can interpret his supposed madness any number of ways. P&R suggest that Trump's rhetoric notwithstanding, his underlings are sticking with the "neoliberal" agenda of free trade, for which the failed Trans Pacific Partnership (TPP) treaty is a proxy. P&R infer this conspiracy because they can't imagine that the "ruling class" can be against free trade, and therefore it's Trump who doesn't know what he's doing.

At some level they're right. The business community--from the Chamber of Commerce to Main Street to Wall Street have all come out vociferously against tariffs. Even Whirlpool (the appliance manufacturer), which had long demanded protection from South Korean competitors, is now complaining loudly that the steel and aluminum tariffs raise their costs far beyond any benefit from tariffs against LG and Samsung. So even they are now suggesting all tariffs be abandoned.

How different this is from 1930, when the business class broadly supported the Smoot-Hawley duties. Supply chains today are so complex and so global that nobody profits from tariffs anymore. The near universal opinion is that tariffs are bad and will lower everybody's standard of living. Even the very language--"trade war"--suggests as much. No war ever made people better off.

Only a few people proclaim protectionism as a solution to our economic woes. The lead voice is Pat Buchanan, who claims that tariffs are what made this country rich to begin with. Despite being a Buchanan fan, I disagree with every word of this piece, including most of his cited "facts."

Mr. Buchanan is a voice in the wilderness.

I don't believe Trump is against free trade. Like P&R, he claims to only want "fair" trade, though the interpretations of "fair" do not correspond. And the president does have point: the days when the US can afford to run persistent trade deficits--year after year, decade after decade--are over. There were reasons we did that during the Cold War, but the world has changed. The US is no longer willing to subsidize global commerce.

I've written about these topics elsewhere, including at some of the links below.

Getting back to P&R--they claim to have discovered a third way that's neither protectionism nor free trade. They call it "fair trade", which they think is somehow radically different from Trump's version of "fair trade." I think they're wrong--no matter how you slice or dice it, "fair" trade is just a form of protectionism. The only (very slight) difference between P&R and Trump is who gets protected.

In P&R's scheme, Americans should be allowed to buy products from Mexico only if Mexican workers are paid on an American scale and receive American-quality benefits (including things like environmental protections). Let's count the ways this won't work.

1. Workers in Mexico are less skilled than American workers. That shows up today as only low-end vehicles are manufactured in Mexico, e.g., the Chevy Cruze. The important, high-end cars, e.g., F-150 pickup trucks, are all assembled in the USA. This is partly a function of skill level.
2. Infrastructure in Mexico is way below the American standard. Electricity and water are much more expensive. Transportation costs way more--the country has a poor highway system and nearly no rail network. (One can blame geography for that deficit.)
3. The infrastructure to provide workers with American-style benefits does not exist. The medical facilities do not exist because the population is too poor to afford them. The financial markets necessary to provide reliable pension plans also don't exist.
4. The reason Mexico is poor is because there are too few rich people in Mexico. The number of Mexicans who can afford an F-150 pickup is negligible compared to, say, New Jersey. Ciudad Juarez is a thousand miles further from New Jersey than Michigan or Tennessee. Manufacturing of large, heavy objects (cars) is always cheaper near the marketplace.

Mexicans can compete with American labor only by reducing their prices, which is what they do. P&R want to prohibit them from doing that, which will put Mexican manufacturing completely out of business. P&R's solution is the same as a very huge tariff.

Beyond this, P&R miss some important distinctions. First is the difference between tradable and non-tradable goods. Tradable goods can easily cross borders--things like cars, textiles, airplanes. Non-tradable goods are not easily exported, e.g., food service, plumbing repair, medical care, education. By far the bulk of the US economy is in the non-tradable sector--workers there do NOT benefit from tariffs at all.

But they are hurt. As tariffs (or P&R's substitute) raise the cost of imports, non-tradable workers will be forced to pay higher prices and their standard of living will suffer. So P&R's proposal will (very hypothetically) aid Mexican workers (assuming they still have a job) at the expense of Americans employed in the non-tradable sector--i.e., the majority of workers.

One last point. It turns out that open borders and free trade are approximately the same thing (at least in the tradable sector). With open borders (which I assume P&R support), jobs are kept in the USA and workers are imported to fill them. With free trade, the workers stay in their home countries, but the jobs are exported so they have work. Either way there is labor arbitrage.

So P&R are proposing something completely ridiculous. They want to prevent Mexican workers from having jobs in Mexico, but at the same time welcome them to the US to take the same jobs here. I don't understand the justification for this weird and politically unpopular procedure. Indeed, I don't think P&R have thought their proposal through very carefully.

I appreciate P&R's good intentions. They want to improve the lives of Mexican workers at what they believe will be no cost to American workers. But they believe in a free lunch--and it will end in catastrophe. Good intentions notwithstanding, our two friends need to think through how it would all come down in practice.

Note: Mrs. Trotsky and I will be celebrating our anniversary by spending next week in Mexico City. Who knows--I might even visit the Old Man's fortress? Sadly, I don't read or speak Spanish, so I doubt I'll learn very much about politics. Though if I do you'll be the first to hear about it. However, I won't be getting anything posted next week--I'm leaving my laptop at home.

Further Reading:

• Trade Wars
• China & the United States
• Tradable vs. Non-Tradable Goods

The "Bureau" on Immigration

The Fourth International Bureau (also known as the Bureau of the Fourth International) issued a statement entitled Stop inhumane policies against immigrants (cross-posted in Socialist Action). As with most articles written by a committee it tends toward the inarticulate--full of emotion and short on common sense.

The lede paragraph, however, is mostly true. (Ellipses in original.)

Children separated from their families and caged in Trump’s USA, thousands drowning as they cross the Mediterranean, boats transporting migrants refused the right to dock by Salvini’s Italy, Orban’s Hungary declaring that helping refugees is a crime, 370 thousand Rohingya fleeing from [Myanmar] to Bangladesh after another military raid and massacres by Myanmar government, tens of thousands of economic refugees from Haiti and Venezuela spreading throughout South American countries, more than five million Syrian refugees outside the country and even more internally displaced .… Those who hold power in Old Europe and the Americas are joined in a holy witch hunt against the spectre of “migrants”: a wide ranging alliance embracing the populists of the right and what remains of the traditional Social Democrats. Salvini and Macron, Putin and Trump – chauvinists from the east and the west, French liberals and German police…

The Bureau leaves out other examples, e.g., the Banyamulenge of Eastern Congo. They're a Tutsi tribe who migrated to the region in the 16th Century. Their citizenship is hotly disputed by their neighbors to this very day--and that was the proximate cause of the Congo civil war that left five million dead before it was over.

Or the immigration of Jews into Palestine, which unlike the other cases the Bureau opposes, calling it an "occupation." They side instead with Hamas, demanding the extermination of the Jews. So much for free migration of all peoples!

There is such a thing as culture, and immigration beyond a certain point is just an invasion. Ask the native Slavs about the mass immigration of Magyars in year 850, or Native Americans about the immigration of Europeans. Some warn that Sweden will become a majority-Muslim country by 2040--after which the several thousand year old Scandinavian culture will simply disappear.

The Bureau-crats

...demand the right to migrate: freedom of movement and settlement. As internationalists we believe it is a fundamental right of every person to be able to live with dignity and enjoy all the political and social rights of the country where they reside.

This is just silly. No human society--capitalist or otherwise--has ever agreed to such a program.

The problem is most acute in Europe, adjacent to both Africa and South Asia--the only bits of the world where human populations are still rapidly growing. European fertility rates are so low that native populations are shrinking. The Bureau opines that "[t]he numbers arriving in the North – representing there between 0.5 and 1.5 per cent of the population – could easily be assimilated." They don't say as a percent of what, but I assume it's of the native population. Over twenty years, coupled with high immigrant birth rates, leads to the pickle that Sweden finds itself in right now. And no, these new immigrants cannot be easily assimilated.

The situation in the US is less dire, partly because we're such a big country, and mostly because fertility rates in most of Latin America are barely above the US average (if that high). Further, migration from Mexico is now reversing, with many returning to their home country. This is in part because of the significant improvement in the Mexican economy over the past 20 years.

To clarify the Bureau's errors, let's pick a hypothetical example. A certain Mrs. Wetback arrives illegally in Los Angeles with her six year old son. I pick that name not merely to pull the Bureau's chain (though that, too), but because it symbolizes a lot about her. She is from El Salvador, about 40 years old, illiterate, does not speak English, and has endured great hardships to come to the United States.

Mrs. Wetback's motives were not just economic, but also to avoid violence. The basic political unit in El Salvador is the street gang--and her neighborhood had become a battleground between rivals. The result was it became harder and harder for her to keep her $3/day job--she took her life in her hands just going to work.

In Los Angeles she gets a job as a nanny, caring for the children of Mr. & Mrs. Johnson. It's not a live-in position--she spends 90 minutes on the bus getting to work each morning. She is paid $7/hour in cash, weekly, but with no benefits. Her daily pay is $42, or 14x what she was earning in El Salvador!

About which the Bureau remarks:

As often in the past, migrants suffer a double exploitation, especially in some “exemplary” sectors like agriculture, logistics or social care.

By their lights Mrs. Wetback should be paid at least $15/hour with full benefits. Or better yet, she shouldn't have to work at all, but instead depend on welfare and free public housing.

Mr. Johnson is a truck driver, and is often away from home several days at a time. Mrs. Johnson is a nurse, and while she makes good money, she works overtime as often as she can. Between the two of them the couple bring home about $120K annually before taxes.

Mrs. Johnson is paid $30/hour, which after paycheck deductions yields her $20/hour. From that she has to pay Mrs. Wetback $7, leaving her $13/hour as a net profit from her labors. That's less than the Bureau's minimum wage.

If the Bureau gets its way, Mrs. Wetback will need $15/hour, plus benefits, which means that Mrs. Johnson takes a net loss. Obviously she would then stay home and take care of her own kids. Mrs. Wetback will be unemployed. The net effect of the Bureau's demands is to make everybody poorer.

So here is an interesting question: Why does Mrs. Wetback get a 1400% raise just for crossing the border? The standard answer is because American productivity is much higher than Salvadoran. Certainly Mrs. Wetback isn't any more productive--she still can't speak English, nor can she read or write. But her employers are more productive, which means they can afford to hire her (unless the Bureau succeeds in reducing everybody to poverty). In El Salvador very few people can afford nursing care or fresh fruits from foreign countries--so there's less need for nurses or truck drivers. Which means that Mrs. Wetback earns less money. Much less.

Mrs. Wetback benefits from being around rich people because rich people can afford to pay her money. The Bureau's solution is to confiscate the wealth of all the rich people, after which Mrs. Wetback's only option will be to go on welfare and become a slave of the state.

Meanwhile, Mrs. Wetback and her son settle in a Salvadoran neighborhood. As with all such neighborhoods the political unit is the street gang. As a teenager her son does what he has to do--he joins a gang, meaning in all likelihood he'll get killed or end up in prison.

So much for assimilation.

Further Reading:

• Venezuela
• If You Really Care About the Poor
• Immigration? Si!

A Pessimistic View

Here are some pessimistic thoughts about our economic future, slightly inspired by The Militant's article on collapsing pension plans. I'm not courageous enough to actually predict the future, but it could end up badly. This is one possible bad scenario.

I'm a fan of Ray Dalio's Debt Cycle Theory (excellent video here--31 minutes long). Mr. Dalio's describes three economic trends that have dominated capitalist economies since the 16th Century.

First is long-term economic growth, driven by technological progress along with the population increase that enables. This has been pretty much straight line up for centuries, and shows no signs of slowing down in the foreseeable future (though population growth seems to be going into reverse).

The second trend is the short-term debt cycle, also known as the business cycle. People like to buy things and capitalists like to sell things. As long as people have jobs they will buy as much as they can, and since they always want to buy more, they'll borrow money. Capitalists (specifically, banks) are happy to lend it to them. More and more buying takes place, production grows, employment grows, and everybody is happy.

Until, of course, the loans have to be paid back. That reduces consumers' purchasing power, forcing production to decline, and leading to higher unemployment. That exacerbates the problem. The result is a recession. Recessions occur every six to twelve years.

Eventually the loans are repaid and the cycle can repeat--at a higher level since underlying productivity has continued to increase.

But not all of the debt is repaid during a recession--some of it is long-term debt, such as home mortgages. This long-term debt continues to grow, even during recessions. But eventually it, too, becomes unsustainable. This leads to the long-term debt cycle, which repeats every 80 to 100 years.

The accumulated long-term debt is too big for consumers to ever pay back, so ultimately it results in a deleveraging, otherwise known as bankruptcy. A vast amount of debt is simply wiped off the books--debtors are spared the worst of their sins, while creditors end up taking big haircuts. After which the process can begin anew--again at a higher level because of underlying productivity growth.

The last great deleveraging was during the Great Depression, during which creditors famously jumped out of buildings. (Some debtors did too, since bankruptcy wipes you out.) That was about 90 years ago--we're due for another great deleveraging!

Some suggest that the financial crisis of 2008 was a deleveraging, and to some extent it was. After all, mortgage debt had become unsustainable and it was obvious it would never be paid back. Home "owners" were defaulting left and right.

And to some extent it really did deleverage--a lot of underwater people lost their houses, after which their debts were wiped clean and they received rather generous tax subsidies. The problem is the creditors never took a haircut--the debt was merely transferred from the banks to the government, i.e., taxpayers. In macroeconomic terms that solved nothing.

In a word, we got bailed out and the deleveraging never happened. Politically that was very convenient--Obama and Bernanke took credit for "saving" the economy. In practice, they didn't save anything--all they did was store up a bigger disaster for the future.

So where is all that mortgage debt hiding? Some of it is student loan debt--now over a trillion dollars, much of which was used to finance consumption. The government has now taken over the student loan program, and there is considerable political pressure to simply forgive those debts. That will likely happen--leaving taxpayers to take the haircut. Beyond this, both auto loan and credit card debt are both over a trillion dollars each. Indeed, total consumer debt (including home mortgages) stands at about $13 trillion, or about 60% of our $19 Trillion GDP.

The bulk of the debt is in entitlements and pensions. The current federal debt is $19 Trillion, to which one needs to add $3.5 Trillion owed by state & local governments, but those numbers surely understate the problem. This article claims the government really owes about $210 Trillion in entitlements. That figure is controversial--it depends on how long you extend the timeline into the future (I confess I don't understand the calculation).

By comparison, the total mortgage debt in 2007--that precipitated the Financial Crisis--was about $14 Trillion. But much of that was collateralized (the banks could repossess and sell the houses), while pension debt is not. So the numbers are not comparable.

In other words, all those pensions will never get paid. Some pensions will simply go bankrupt. Social security benefits will be cut, as will Medicaid and Medicare payments. (The latter may affect doctors and hospitals more than consumers.) The welfare state will shrink.

When does the house of cards collapse? Who knows--could be tomorrow; might not be for thirty years. It depends on when bondholders lose confidence. Bondholders have every reason not to acknowledge reality--it's tantamount to a bank run. They'll do it only when they're forced to. It's noteworthy that the bankruptcy of Puerto Rico has not had much effect. We'll see if the impending implosion of Illinois will be similarly received. If so, then what about Kentucky, New Jersey, Connecticut...?

At some point bondholders run for the hills. States will not be able to refinance their debt and they'll default. The government will not be able to bail them out without causing massive inflation. Bitcoin will be worth millions!

So will it be like the Great Depression all over again? I think not, and here's why.

• We are much richer today than in the 1930s. Food & clothing cost only a fraction of what it cost then. Housing is also cheaper. There will not be the mass destitution that occurred in the '30s.
• The population is shrinking, which means we increasingly have a labor shortage. During the Depression unemployment spiked to over 20%. During the Recession it went up to 12%. I think the labor shortage is with us for a long time, so I expect unemployment will remain relatively low--especially for skilled workers. But wages will decline and benefits will go to zero.
• There will be no bailout, which in the short term will make things much worse. But long run the economy will do much better. The reason the Great Depression lasted so long was because of misguided government meddling during the recovery, i.e., the New Deal.

The "creditors" in this case will be anybody owed a pension, welfare, or social security. They won't be wiped out, but they'll definitely feel the pain. The "borrowers" will be governments, who will no longer be on the hook for benefits they can't afford to pay. Over time taxes will go down and government services will improve. The welfare state will gradually be reinstated at a more modest level.

After deleveraging comes dawn. The economy will recover smartly! There will be zero debt, so everybody will start borrowing again, and consumption will grow like gangbusters. It will be similar to what happened just after World War II, except better.

And that brings me to the private pensions described in The Militant's article, mostly covering coal miners and teamsters. These plans were mostly Ponzi schemes, where today's workers pay benefits to today's retirees (like social security). That works as long as the active workforce keeps growing. But as The Militant points out, "[t]he UMW 1974 Pension Plan is expected to go bust by 2022, sooner if the capitalist economy goes south. It covers 87,000 retired and 20,000 working miners." Clearly the plan is in trouble when the ratio between workers and retirees becomes so lopsided.

So the unions had a demonstration in Columbus, Ohio. Not sure what good that does--they're marching against arithmetic. I feel sorry for them--they put their life savings into a fraud perpetrated by both their unions and the companies they worked for.

Further Reading:

• Trade Wars
• What Marxists Don't Understand About Economics
• Where Have All The Workers Gone?

Populism

Among many interesting articles in the current issue of Solidarity is this piece by Cyryl Ryzak, entitled Populism: What it is and what it is not. The post is a riff on a long article by John Judis, with which Mr. Ryzak ultimately disagrees.

The lead paragraph states the problem.

“Populism” is a magical word. Its mysterious power unites the Erdogan and Putin governments, Latin American leftists like Evo Morales and the late Hugo Chavez, the resurgent Right in Europe and the United States, Hungarian and Polish anti-communist parties, Podemos, the Eurocommunism of the tragic Syriza, the revitalizers of social democracy Bernie Sanders and Jeremy Corbyn – all under the same umbrella.

One infers that the word is nearly meaningless, and that only the most milquetoast centrist could escape the label (think John Kasich). Indeed, Mr. Ryzak's objection to Judis' piece is that it lumps too many people together; if Bernie Sanders and Donald Trump are both populists, then at very least there is a semantic problem.

But its use is not innocent, as Mr. Ryzak explains.

“Populism” has become a useful shroud for political opportunists. Every player gains from its obscurations except the Left. The so-called “center” can present itself as a necessary bulwark against the Right, while the Right itself can cloak its pathological character in either the righteousness of championing “the people” or the rebelliousness of opposing “the establishment”.

Thus the effort to resurrect populism as a meaningful term. He summarizes Mr. Judis' opinion succinctly.

“Populism” has both a left-wing and a right-wing variant. The former, represented today by Bernie Sanders and Podemos, organizes the “bottom” and the “middle” of society against the “top”, while the latter, represented by Trump and Le Pen, opposes both the “top” and “bottom” from the middle.

Which he then also criticizes.

Judis treats Left and Right as simply window dressing for the underlying “populism”. This has some superficial truth to it, yet it seems to me to quite a leap to say both are expressions of the same phenomenon. The character of “populists” on the Left and the Right differ fundamentally. They play completely different roles. They relate to the rest of society in different ways. We need go beyond their apparent similarities and grasp what they really stand for.

Mr. Ryzak distinguishes populism from two other ideologies. While populism champions the cause of some romanticized "people," Marxism is very clear about who those people are--namely the working class. Thus Marxism replaces a vague, moral (Ryzak's term) concept with a rigorous, socio-economic category. Therefore Marxists are not populists--we can exclude the latest leftist du jour, Alexandria Ocasio-Cortez, from the category.

Similarly, Mr. Ryzak doesn't count "organized chauvinism" as populist. He believes right-wing movements claiming to be populist will always betray their followers. Using George Wallace's movement as an example, he writes

When the ­­Wallace supporter became the Reagan Democrat, the union members among them got what they wanted against the deadbeats and welfare mothers, but in the process they surrendered true solidarity. They were powerless against Reagan’s anti-labor onslaught. “Right-wing populism” always ends in the betrayal of its popular constituencies. This betrayal is nothing more than the logical conclusion of a politics which emphasizes indifference to deprivation and oppression: the real masters find it easier to deprive and oppress everyone.

Presumably he'd class Donald Trump's populism in this category--Mr. Trump's followers are being betrayed, and really they're just plain stupid for supporting Trump. Or, as the modern phrase has it, they're deplorable.

Finally, Mr. Ryzak concludes with a definition of populism that is really very clever.

Populism has a moralistic character which tries to awaken the pre-existing egalitarianism of the “people”. While it can have tremendous power, morality is often not enough to forge a durable politics which can construct a better social order.

On the one hand, populism is defined by its vagueness--accordingly Marxism is not populist. On the other hand, populism has a moral claim--overt racism is immoral, and therefore is not populist. I like and agree with Mr. Ryzak's definition, and nothing I say here contradicts it.

Populism's "people" need further elaboration. I suggest that populism always champions the middle class--not in the Marxist sense of being petty bourgeois, but rather as upholding righteous, American values. We all know what those are: work hard, support your family, pay your debts, save money. Your reward will be a chicken in your pot, two cars in your driveway, a house in the suburbs (with a pool if you want it), all located in a neat, clean, crime-free neighborhood where you can trust your neighbors. In a word, the American Dream.

Restoring that vision is what Trump means by "Make America Great Again."

The vision certainly has racial implications--the American Dream applies disproportionately to white people (and Asians). But it's not racist: my neighborhood fits that description to a tee--and most of my neighbors are Black. A friend of mine is a recent immigrant from India--he is so determined to have his daughters inherit the American Dream that he refuses to serve Indian food in his house. He's more Trumpian than even I am!

Trump's populism opposes the "elites," or at least those who want to regulate the middle class out of existence. Be it through higher taxes, or "climate mitigation", or zoning laws, or raising gas or electricity prices (one of Obama's goals), the elites are the economic enemy of the middle class. They are also often a cultural enemy, promoting "politically correct" values that do not lead to a middle class lifestyle.

Likewise, Trumpians also distrust the lower class--people who don't support their families, engage in petty crime, have a negative net worth, vandalize public property, or live off taxpayers' largesse. The lower class (in Trump's world view) are not defined by income as much as by values--call them lumpen values. Trump is very much against lumpen values.

And that informs his attitude towards immigrants. He wants to admit people "who love us," as opposed to those who come from "shit-hole countries." The language could be more civil, but the sentiment is widely shared. Do we really want a large influx of dirt-poor, illiterate, traumatized single mothers from El Salvador? Are those people who are going to Make America Great Again? Yes, sympathy and charity are important--everybody feels sorry for those Salvadoran women. And in small numbers it's alright to help them out. But as a nation we can't routinely allow the large-scale immigration from such a population.

On the other hand, immigrants like my Indian friend are warmly received. He really loves us (maybe too much so).

Some politicians are champions of the lumpen class: Al Sharpton, Louis Farrakhan, Maxine Waters.  Many others campaign on their behalf--Hillary Clinton foremost among them. After all, the Dems can't win without Lumpen support. Those candidates, by undermining middle-class values, are definitely not populist.

Mr. Ryzak places Bernie Sanders in that same class, saving his best line for last:

To remain on a level where Bernie Sanders and Donald Trump can both be described as “populist” is along the lines of saying a person is experiencing emotion without specifying whether they are feeling love or hatred.

And it is true: Bernie campaigned hard on a Lumpen platform--that all problems should be laid upon the government, and personal responsibility counts not at all. But his supporters? Maybe not so much. Yes, they certainly thrilled to Bernie's message, but it seems it was only virtue-signaling. For the Bernie Bros were academics, grad students, their hangers-on, and other people from the upper middle class. In reality it's hard to imagine a more middle-class audience. Beyond which Bernie never pretended to be a Marxist.

So message notwithstanding, Bernie's campaign was as populist as Donald's, though much less successful.

Further Reading:

• Affirmative Action
• Black Dispersal From Cities
• Subway Values

The North Star Ceases Publication

The North Star has apparently ceased publication. At least their URL (https://thenorthstar.info/) no longer works. Founded in order to reinvigorate Trotskyism by the lights of Bert Cochrane, it sought a non-sectarian Left. If anybody knows if they've moved someplace else, please let me know. Meanwhile, I've removed them from This Blog's Beat.

Further Reading:

• Classy
• Labor Strategy for the Coming Period
• The North Star