Shock and Awe

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It’s odd how people seem surprised at the level of corruption and outright incompetence coming from the Republican party.  We need to remember a bit.

The arrival of George W. Bush was not as traumatic as Trump’s, but then as now we got a new troupe of players (remember the neocons?) who were convinced they were geniuses, and that every other idea represented the stupid old world they were here to transcend.   That affected both the economy (government regulation does nothing good) and international relations (let’s remake the world for freedom and democracy).

It took a little while, but they were a catastrophe on all fronts.  The deregulation movement’s hands-off treatment of the economy produced a new, unregulated banking system (mortgage-backed securities) that ultimately crashed, producing the worst downturn since the great Depression.   $6T of “safe as banking” securities were wiped out.  Only the Democrats’ support of the bank bailouts kept us out of a real depression.

And of course we fought a $2T war that was justified by lies, produced no benefits to the US, and undermined US interests everywhere in the Middle East.  (ISIS was one consequence.)  Even today it’s hard to know what was really behind that war, but it is a fact that the only place in the world where people think it was anything but oil is here!

There are two other important but largely unstated points to be made about that war:

– That fact that it was unbudgeted contributed mightily to the difficulty of recovering from the crash.  In general terms governments need to act countercyclically, i.e. they should save in good times, because they need to spend in bad.   This is not rocket science, but we did exactly the opposite and in a big, untransparent way.   So recovery from the crash had to be all deficit, which made it easier for the Republican balanced-budget hypocrisy to prolong the pain.

– The result of the war was not just what was done, but also what couldn’t get done.  That affected the Middle East, where the greatest opportunity for change was for US money to grease the peace process.   That opportunity was lost forever.  ($2T would have created a true land of milk and honey!)  But that wasn’t the end of it.  That lost money also affected US domestic finances as well.   Post 2008 we find we have money for nothing, not even education.  Part of that problem has been Republican party priorities, but the fact remains we are not the first country to impoverish ourselves with a stupid war.

 

Fast forward to the present.   We’ve got a new bunch of geniuses who have no need for either information or expertise.  They’re smart!

We are now at a stage like the “shock and awe” of the Iraq war.  Reality has not yet had time to intrude on the fantasies.  But we need to remember, it can be that bad!

Where will we go from here?   The picture has a lot in common with the story just told:

– The economy

We seem to have learned nothing from 2008.  With the tax plan we are stimulating the economy at the wrong stage of the business cycle and running a deficit to do it.  Further we are removing Dodd-Frank and everything else enacted to control bad behavior.   There’s also little evidence that these people will do what it takes in case of a crash.

– War

This administration seems even more cavalier about war than Bush people.  We’ve had continuing belligerence with North Korea and Iran and a budget with an untargeted military buildup.  There’s real risk of a crazy war on impulse—with as little planning or understanding of consequences as last time.   We have to hope it won’t be nuclear.

– Russia

Russian is a constant adversary, and our buddy-buddy relationship with Putin is problematical.  Russians are proven experts in cyberwarfare, and the demonstrated impact of viruses points out the threat.  There is even a possible Russia-North Korea connection.  We stop watching them at our peril.

– Climate change

The evidence behind climate change is more than considerable.  As a risk, it is well past the point where any serious business would start paying attention to it.   We have instead decided we’re too smart to have to think.   We are risking our own future, and handcuffing our businesses that would be part of the solution.  The Chinese have taken our place and are running with it, while for us even planning is out of the question.  This is a double whammy—more heat, storms, and drought combined with loss of industrial preeminence.

Those items are not just speculation.   We’re all set to pass the economics into law.  The war rhetoric is if anything more pronounced than with the Bush administration.   For climate change this is stated and active policy.    The Russian case is a little different, but it underlines the seriousness of the dangers.  We just barely escaped with Bush; this time it looks worse.

Again we’re powerless in dealing with geniuses who can’t be bothered with facts, expertise, public opinion or anything else that gets in the way of their greatness.  We can have no confidence, for example, that Trump either understands or takes seriously the fact that a nuclear attack on North Korea will have consequences for the US even without retaliation.  Trump’s statement on deregulating Wall Street, just like his statement on leaving the Paris Accords, acknowledged no risks.

It’s all too easy to forget the past, but we’ve learned that such “genius” has consequences.  The end of this story will not be pretty.

No segment of the population—Republican or Democratic—should believe anything else.

For Sanity on North Korea

This note is in part a response to an article in yesterday’s New York Times pointing out correctly that no one understands what the North Koreans are after.

What is most disturbing about the current situation is that no one seems to be trying to find out.  Two things, however, are clear:

  1. Kim Jong-un is trying very hard to provoke a hysterical response from the US.
  2. We are doing an excellent job of giving him exactly the response he wants.

So the conclusion is that he wants something from us.  Based on past behavior of the North Koreans, it can even be that he wants money (and security to spend it).  There is nothing in Kim’s past that says that he is either suicidal or stupid.  He is undoubtedly happy with our behavior thus far, since he can assume we’re too scared to walk away from the bargaining table.

So we should stop playing his game and cool it.  And above all let’s find out he wants and deal with it.  He gains nothing by an actual attack.  His bargaining position is based 100% on our hysteria.  The longer we postpone this, the better for him.

In the current situation any military action by the US is an unjustifiable atrocity.

The Phony Issue of Globalization

Globalization as a phenomenon is irrefutable.   The world continues to become more interconnected by any measure you can think of.  National economies are so interdependent that it’s hard to untangle the threads.

Globalization as an issue is something else.   There is a long list of globalization problems:  it picks winners and losers economically, it makes some people feel like the country has changed out from under them, it destroys the sense of community.

The trouble is that globalization is responsible for essentially none of that.  Our real problem with globalization is how much we can blame on it.

Let’s start with jobs.  We begin with a frequently-cited quote from Harvard economist Lawrence Katz on automation versus globalization for jobs:  “Over the long haul, clearly automation’s been much more important–it’s not even close.”  That gets us part of the way there.  It’s not primarily globalization.  As many studies have shown, Trump’s core supporters lost their good union jobs for many reasons, not just globalization.  (See recent data this point here.)

However, that’s history.   What matters is now, and the jobs story gets more lopsided all the time.   For today, one can say unequivocally that no set of tariffs is going to bring back those good union jobs.   And the future looks worse.  Self-driving cars and machine translation are key indicators of where things are going.   One article about Artificial Intelligence puts it this way: “the A.I. products that now exist are improving faster than most people realize and promise to radically transform our world, not always for the better …  they will reshape what work means and how wealth is created, leading to unprecedented economic inequalities and even altering the global balance of power.”

There is a growing jobs problem, and it’s not globalization.  We’re moving ever faster into a two-tiered society with participants and (increasingly many) non-participants in the technology-driven economy.  But we would rather futz around with NAFTA, because apparently that plays better.   By continuing to blame globalization as the jobs problem, we end up doing crazy things.  We’re actually skimping on education and research!  One thing we really can do for Trump’s core is make sure their kids have futures, but we’re not even trying.  Instead we’ve got a budget plan that vilifies the unemployed without any notion of what jobs are waiting for them.

That’s jobs.  What about alienation, feeling the country has been overrun with immigrants?  Is that really globalization?  There’s a key to that one too:  no one is talking about Swedes and Germans.   It’s Mexicans and—whether we want to admit it or not—blacks.  Just about any study of the last election talks about the importance of race.   “Immigrants” is a keyword; race was always part of it.  Violence after the election was immediately directed against blacks.  With Obama as President, the Republican party has been deliberately stoking racism for years.  Trump just whipped it up into something more obviously ugly.  Globalization is a smoke screen for deliberately-provoked racial hatred.

How about community?  We now have a whole media wing promoting the idea that cultures can’t mix:  Trump’s Mexican rapists and Bannon’s calls for holy war are just starters.  We’ve always had that sort of stuff in this country (Jews, Italians, Irish…), but we’ve always emerged better for what had been vilified.  Human beings have a built-in fear of strangers.   As they get to know each other they tend to get along.   But they can be whipped into a frenzy by demagogues who choose to exploit that fear for their own advantage.  Trump is certainly not the first to ride scapegoating to power.   Globalization is a convenient bogey man.

So globalization itself is not the issue.  What we really have in this country (and elsewhere)  is demagoguery–self-serving lies under the flag of fighting globalization. And the lies are damaging, as they undermine both national competitiveness and individual well-being.

There are no simple solutions, particularly now that so much has entered the legitimized mainstream.  But there is still a good use for “globalization”–the next time you hear someone talking about shafted workers needing government to fight globalization, you know exactly who has something to win!

The President of China

There has been a lot of talk recently about China’s growing presence on the world stage and how the US as predominant power should react to it.  With that in mind we go to China, just outside the Forbidden City, where the Chinese are planning their strategy…

Xi Jinping: There are many factors we need to consider, economic and political.  Today we are an economic servant to the West, building their iPhones and other toys.  We need to learn to take their place.

Planner: The Americans have many advantages.  They have excellent universities and their pick of talent from all over the world.  They have an interlocking system of university, government, and private research labs.  It’s hard enough to catch up, much less to lead.

Xi: We have to go step by step.  I’ve heard that many of their new companies are led by foreigners.  We can cut into that and certainly lure our own people home–a little xenophobia would help.   As for education and research, we know that government money is critical both in government labs and in the universities.  We have to find a way to slow down that money and then duplicate their system here.

Planner: Sounds like a lot of work, but we’ll start on it.  They’ve been working for decades to get where they are.

Xi: We need to get more specific now.  What are the lead technologies we can use to establish our dominance?

Planner: It’s hard to answer that question.  Software is always there; the particular new twist seems to be Artifical Intelligence.  That ties in with robotics.  Biotech.  Probably the biggest thing is energy–climate change means the whole world will have to convert.

Xi: The Americans are big players in all of those, but progress is very international.  If we can get them to isolate their people we can win.  Energy is too big–we need to limit their role.

Planner: They were a driving force behind the Paris Climate Agreement.  Maybe we can sabotage that.

Xi: Great.  Good first step!

Xi: The next subject is politics.  The Americans have been leading the so-called ‘free world’ forever.  Everybody works with them; no country wants to be left out.  All major international agreements of any kind go through them.  They’ve done very well that way–they are the richest, most dominant country in the world.  Our economy is tiny compared to theirs–how can we match their influence?

Planner: The only way I can think of is to get them just to quit. Get out of our way so we can take over.

Xi: I don’t understand.

Planner: It seems that over the years the Americans have come to believe their own propaganda–that all of their international agreements and institutions were setup out of pure beneficence!  Nothing to do with remaining the richest, most dominant country in the world.  They even think that about foreign aid.

Xi: You’ve got to be kidding.  No one else thinks that.

Planner: All we’ve got to do is push them over the brink:  No international institutions, no foreign aid–all unaffordable charity and a foreign plot.

Xi: You really think you can pull that off??

Planner: Well, just a minute.  We need some kind of slogan.  Something catchy…

Planner: I’ve got it!!  AMERICA FIRST.

Xi: Welcome to the Chinese Century.

 

Terrorist in Chief

What is most remarkable about Trump’s speech exiting the Paris Climate agreement is what he doesn’t say.

There is no actual denial of climate science or of the consequences of doing nothing.  And there is no alternative proposal to address any of it.

Instead there is a bunch of economic nonsense from National Economic Research Associates–who specialize in producing alarmist numbers for the coal industry–and some elaborate misinformation about asserted unfairness of an agreement that was negotiated over years with pluses and minuses for everyone.  (When he ends by talking about “other countries laughing at us”, it’s hard not to think of the Saudis after they snookered him with their sword show and got everything they wanted with no concessions in return.)

Basically all he says is that he is entitled to ignore all consequences of climate change for this country and every other country in the world in order to make good on a campaign promise to the coal industry (it remains to be seen if miners will benefit).   He can’t claim ignorance of the consequences for the earth and the US economy, because he received clear indications of what he was doing from an astonishing collection of major business groups throughout the country.

On that basis Donald Trump stands to be responsible for more death and damage than all other terrorist groups combined.

So Trump has finally earned one of his superlatives–he is Terrorist in Chief.