Diatribes of Jay

This is a blog of essays on public policy. It shuns ideology and applies facts, logic and math to economic, social and political problems. It has a subject-matter index, a list of recent posts, and permalinks at the ends of posts. Comments are moderated and may take time to appear. Note: Profile updated 4/7/12

26 December 2017

Pearl Harbor III


[For analysis of the ultimate arbiters of treason by our nation’s own leaders, click here. For links to popular recent posts, click here.]

Since Pancho Villa’s brief incursion into New Mexico in 1916, no foreign power has dared attack the United States openly and directly. But we have suffered three surprise attacks.

The first occurred when the Japanese bombed Pearl Harbor on December 7, 1941. The second was the terrorist attack on September 11, 2001, which mostly targeted innocent civilians. We are still fighting foreign wars to avenge that attack and prevent recurrences.

But the third surprise attack is current and ongoing. It has been so clandestine and subtle that many of us don’t know about it, and some doubt it’s even going on.

Yesterday the Washington Post gave us all a solemn Christmas present: compelling evidence of this third sneak attack and its consequences. It has been going on for years, and at the explicit order of the president of a foreign power, Vladimir Putin of Russia.

It’s fitting that the Post played this vital warning role. It’s the only major newspaper we have left that (by the grace of Jeff Bezos) is completely independent of both partisan politics and monied venality.

The attack has killed no one yet, at least as far as has been made public. But it has been so subtle, clever and pervasive as to weaken our nation and our society in fundamental ways.

It will take far longer than the four years of our involvement in World War II for us to recover from the damage so far. It will take at least a generation. And if the war becomes open and overt—and doesn’t morph into species’ self-extinction by becoming military and nuclear—it could last a century.

Nevertheless, it’s a war we must fight and win. If we don’t, our values and our unique contributions to human civilization could yield to tribal tyranny for a thousand years. Although far more subtle, this fight is every bit as vital as ours against the Third Reich and Imperial Japanese tyranny.

We have not yet begun to fight. We have been arguing among ourselves about whether we have been attacked, and, if so, what we should do about it and how strongly we should respond. We have been arguing despite that fact that our own intelligence agencies are unanimously confident of the fact of the attack, while refusing to assess the precise extent of the damage.

Two other relevant facts are indisputable. First, Donald Trump is our president. In our entire history, we have never had a president with his inexperience, incompetence and wretched character. Our own intelligence agencies agree unanimously that Putin waged a cyber-disinformation campaign with precisely the aim of electing Trump and diselecting Hillary Clinton.

Cause and effect? We don’t know. But Putin’s aim is clear, and it was achieved. More than that: we have evidence that Putin himself considers this operation one of the most successful and important in the thousand-year history of Russia’s spies and deceivers.

The second relevant fact is that, since our own Civil War, we as a nation have never been so divided on ethnic and racial ground. While our political division has been growing for years, Trump has played a decisive role in exacerbating it. He has pitted Christians against Muslims, Jews against Muslims, conservatives against progressives, Evangelicals against Catholics, Anglos against Hispanics, white against black, rich against poor, and native-born Americans against recent immigrants, both documented and not.

As the Post story reveals, division of this sort has been Putin’s chief objective all along. Electing Trump as president was just one means to that end. Divide and conquer: it’s a goal as old as Caesar.

But Putin is hardly as brilliant a propagandist as Rupert Murdoch and his Fox. Putin could not have succeeded without accomplices and “useful idiots.”

Our President of course has played the role of accomplice-or-idiot in chief. Mitch McConnell is a close second. Seeing transient partisan advantage, Mitch jumped on the Trump bandwagon with both feet, despite his well-justified disdain for Trump. Mitch recently achieved his first-ever notable legislative accomplishment—the GOP tax scam—by so doing.

In exploiting the short-term self-interest of these two men, Putin has been a brilliant tactician. He aimed his arrows directly at the two Achilles’ heels of our society. The first is the growing mindless partisanship against which our Founders warned us in vain, their so-called “faction.” The second is the tendency of our capitalist system, especially when poorly regulated, to produce extremes of wealth and economic inequality.

Whether they acted with design or mere negligence, Trump and McConnell have tried to minimize this very real threat. They would have us ignore it. Both men are far too committed to their own short-term self-interest to mount an effective response. In that respect they are both traitors.

No one today remembers precisely why the Trojans rolled the huge Greek Horse inside their gates. But they did, and Troy is history—an object lesson in fatal human error. We must remove these men from power, ASAP, lest we Americans become victims of a twenty-first-century cyber-Trojan Horse.

As the midterm elections approach, Democrats and progressives must identify Trump and McConnell’s GOP not just as rich men who sold our nation out to the plutocrats for power and money, but as the traitors that they are. These two, and those who follow them, are the greatest threat to our survival as a nation that we have ever encountered, precisely because they are powerful insiders disguised as “normal” pols.

Only after we get rid of them can we begin to fight this war with Putin. Removing them will take at least a year.

As we work on doing that, we must focus on the existential threat that Putin’s disinformation campaign presents. We have come close to refighting our own Civil War in the twenty-first century. We are on the verge of dividing our precious melting pot into blazing fragments of warring clans. This is not the way to fight a secret, subtle war, which requires knowing precisely who the foreign enemy is.

Donald Trump enjoys the fruits of inter-ethnic tolerance and harmony in his marriage with Melania Trump, a Slovenian immigrant. Mitch McConnell enjoys them in his marriage with Asian-immigrant Elaine Chao, Trump’s Secretary of Transportation. Both should burn in Hell for their parts in fostering anti-immigrant hatred, ethnic bigotry, xenophobia, and misogyny for partisan political advantage. How can men with their records ever help resist Putin’s divide-and-conquer strategy?

Besides curing our growing internal division, our counter-warfare must involve three steps. First, we must recruit the best minds and programmers in our private sector for both defense and offense. Amazon and Google should lead the pack because they have the best and most imaginative programmers and the best organizational skills.

In contrast, Facebook and Twitter are scatterbrained sites for the disorganized and superficial. Not surprisingly, they they have been the chief targets and unwitting tools of Russian disinformation warfare, along with Instagram and other quick-hit sites. In the name of national security, they should be subject to as much regulation as our Constitution permits. They should no more be immune from corrective action than isolated warehouses in which nests of spies are living.

Our wartime private-public collaboration should have two objectives: both defense and offense. The goal of defense should be to exclude foreign propaganda from our Internet, period. Our Supreme Court may have to decide whether foreign enemies and foreign intelligence agents have rights under our First Amendment, but the answer should be obvious. Protecting the free speech of our citizens and legal residents cannot leave us defenseless against foreign enemies.

The goal of offense should be full-scale information warfare. It should include massive disinformation and propaganda—a task for which we should recruit Rupert Murdoch, the world’s expert in the field.

As an American citizen by virtue of a private act of Congress, Murdoch should not refuse to help. If he had tried to foist his empire of lies off on Russia, today he would either be a minion and sycophant of Putin or a corpse. He may not be grateful (moguls seldom are), but he should make himself useful, or we should send him back to Australia stripped of his artificial citizenship and without a return visa.

The second level of our cyber-warfare should involve “practical measures”—the control of electronics and machines. Objects should include everything from machine tools and lighting in homes and factories, though communication and transportation infrastructure, to power plants, with the capability of causing everything from economic loss to full-scale social destabilization. There is little doubt that Putin’s minions have developed such measures themselves, and we should work on similar offensive capability even as we harden our own infrastructure in defense.

Third, we should never lose sight of the fact that this cyber warfare might get out of hand. It’s hard to read the Post’s story without believing that President Obama’s caution, late in his own term, stemmed from the constant threat of Russia’s massive nuclear arsenal.

In order to reduce that threat, we must reshape our own nuclear arsenal with small, accurate weapons sufficient to decapitate a nation like Russia or North Korea. Faced with the choices between decapitation, annihilation, or species-self-extinction, such an enemy might be relied on to the make the sensible choice. At least having the option of forcing that choice would be better than not having it. We must not let fear of Armageddon force our guard down and render us defenseless.

The Trojan Horse is the best analogy. The “gift” borne by Greeks seemed so innocent and so non-violent, at least until nighttime, when the soldiers hidden inside emerged. Just so does Russia’s cyber disinformation warfare seem innocuous and (to our useful idiots) even doubtful.

But the Trojan Horse destroyed Troy utterly and completely just the same. Today, the very name of that ancient city-state stands for a foolish victim of simple deceit.

Just imagine what a shadow of ourselves we might be with a man like Trump as president for another three years, let alone seven. Then overlay another several years of setting every ethnic and religious group against every other, with our white supremacists against all, as our infrastructure and relationships with allies and trading partners continue to decay.

Those have been precisely the ends of Vladimir Putin’s disinformation war against us. And whatever the precise effect of his efforts, no one can deny his success so far.

If we don’t reject the Trojan Horse and take countermeasures, the most powerful nation in human history will have been brought down by clever deception and subterfuge. To avoid that sad fate—both for us and for our species—we must get rid of our own useful idiots and begin to treat our present circumstance as the fight for national survival that it is.

The Arbiters of Treason

The men and women who staff our intelligence agencies are true patriots. They spend their lives—at great personal risk and under the constant burden of secrecy and uncertainty—trying to penetrate webs of lies, deceit and disinformation spun by foreigners who wish us ill.

When they tell us we are targets of a massive, secret campaign of disinformation designed to turn us against each other, we had better listen. For we are a nation of immigrants and diverse groups. We are destined to become a majority of minorities at least by 2043, if not before. Already minorities are turning the tide of domestic politics, as they just did in helping Doug Jones secure a senate seat in Alabama.

Our diverse minorities make us the most resilient, resourceful, innovative and creative society in human history. That’s precisely why Putin and his spooks and trolls are trying to turn us against each other. They are assaulting the citadel, our greatest strength. And with a small investment in trolls and Tweets, they are doing it on the cheap.

In denying that any of this is happening, our own President and Senate Majority Leader are committing acts of treason. They are, in effect, urging us to roll the Trojan Horse right through our gates. They are pushing to let inimical foreigners destroy the most diverse and resourceful society our species has yet seen.

Not only that. They are slipping into treachery for the worst possible reasons. Trump wants to salve his wounded childish ego and perpetuate the lie that his victory in last year’s presidential election was overwhelming—a landslide—secured by his own political brilliance, not foreign skulduggery. McConnell has more venal motives: he is trying to maintain his tenuous grip on political power, which he has just used to steal the substance of our nation for corporations and the rich—the only significant legislative achievement in his long and ignoble political career.

We will survive the Trump-McConnell tax scam. It’s a major blow to our national ethos and our finances. But numerically it’s hardly fatal. It will add less than $1.5 trillion to our national debt, which is already well over $20 trillion. That’s less than ten percent.

What Putin’s spooks and trolls are after is much more serious. Harmony and cooperation among our many national minorities, including recent immigrants, are the chief sources of our nation’s strength. Spoiling them by turning us against each other could be an existential threat.

Who will judge these traitors? Our courts are weak and subject to delusion by shiny abstractions. Just so, our Supreme Court decided, in Citizens United, that money is speech. The tax scam is only the most recent and depressing consequence of that delusion.

Congress is split by ideology and lust for power. No one, apparently, can change the GOP’s rush to serve its rich donors, even as the Trojan Horse rolls through our gates.

But in our system, the ultimate arbiter is neither judges nor Congress. It’s our people. They get a vote next November.

That’s why it’s vital that the issue of treason be put before them simply and plainly. They must see the Trojan Horse in all its menace. They must understand the treachery of our own President and Senate Majority Leader denying that reality through direct lies and distraction.

Steven Spielberg understands. It’s no coincidence that the great movie producer’s and director’s newest film, “The Post,” is in release just now. It tells the story of the “Pentagon Papers.” That leaked internal government report revealed, for the first time, how badly and deeply our own president and pols had lied to us about our War in Vietnam.

That war was the most terrible foreign-policy mistake in our nation’s history. It devastated an innocent nation, Vietnam, just trying to secure its post-colonial freedom. It devastated a whole innocent region of Southeast Asia, killing an estimated 3.5 million people (mostly civilians), and setting the stage for the sui-genocidal regime of Pol Pot in Cambodia. It killed over 58,000 of us. And as the Washington Post’s publication of the Pentagon Papers revealed, the whole tragedy was based on lies and deception by our own government.

So we’ve been here before. The same principles apply. Our naked emperor and his reluctant servant McConnell are trying to deny the reality of the Trojan Horse even as it rolls through our gates. Somehow, the patriots in our intelligence services must let the people know how real and threatening the Horse is. Their job is hard: they must avoid spilling our own secrets or revealing sources or methods.

But our people must know. Next November, they must deliver a crushing electoral verdict against our traitors, who would open our gates to our most implacable enemy for their own personal or political reasons. They must reject the Russian Horse and prevent our own Internet, which we invented, from becoming an instrument of our enfeeblement and destruction.

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16 December 2017

Ajit Pai: Taking Big Brother Private


[For a personal view of the propaganda empire that the repeal of net neutrality permits, click here. For links to popular recent posts, click here.]
    “The code is the law.” — Larry Lessig, Professor of Law, Harvard Law School
In all the media discussion of this week’s repeal of net neutrality, I have yet to see a single piece of writing that hits the nail on the head. Nothing I have read accurately previews what we face under the new, legal-rules-free regime of Internet governance. So I wanted to do my part to explain the danger.

Those who wrought the change are doing everything possible to minimize and even ridicule its significance. The bosses’ principal tool is Ajit Pai, Trump’s FCC chairman and former Associate General Counsel for Verizon. He recently released a video clip of one minute and sixteen seconds, in which he makes light of the public’s well-justified fears.

Pai’s clip is titled “7 things you can still do on the Internet after net neutrality.” But the version available on You Tube shows only six, and only five with block titles. The six things you can still do are: (1) “gram” your food, (2) post selfies, (3) post photos of cute animals, (4) shop for all your Christmas presents online, (5) binge watch your favorite shows, and (6) stay part of your “fave fandom.”

In other words, Pai’s clip shows things that kids do for fun. Nowhere does it mention the Internet’s vast political significance as a source of news and information. Nowhere does it hint that, for most people—and especially for our youth—the Internet has become their primary source of news and information, including “fake news.” Nowhere does it discuss the unanimous view of our nation’s intelligence services that Russian operatives used the Internet, including Facebook and Twitter, to sway our 2016 presidential election toward the man who appointed Pai to head the FCC.

The Larry Lessig quote at the head of this post is simple but profoundly practical. What it means is that the computer code by which Internet businesses run is the “law” insofar as concerns the Internet’s practical impact on its users, i.e., the public.

Of course, “real” law—which legislatures and regulators make and courts interpret—can force businesses to change their computer code. But it takes years of legislation, regulation and litigation for “real” law to force a change. Changes in code can be made in hours or days.

Sometimes it can take many changes in code to bring the digital law closer to what human law requires. And each of those changes can involve months or years of delay in legislating, regulating, and litigating.

In the interim, the “law” wrought by computer code doesn’t just prevail. It has no alternative. With mechanical precision, it dictates just how the Internet operates. The dim understanding that legislators, regulators and judges generally have of how code actually works insures that “real” law perpetually lags the digital reality wrought by code.

Now that Pai and his Republican colleagues have abolished the Obama-era regulations imposing net neutrality, there is no “real” law on the Internet, at least insofar as concerns conveying content. As Pai himself claimed at the outset of his clip, there is only “Internet freedom.” The businesses that provide your Internet signal—the so-called “gateways” or Internet Service Providers (ISPs)—can do whatever they want. Insofar as concerns the content that you receive through them, how you get it, and what you pay for it, their code is the law.

Your ISP could, in theory, develop algorithms to asses your political views. It could record and automatically analyze (using artificial intelligence) the websites that you visit, the emails you write to friends and family, your posts on Facebook and Twitter, and what news stories you read and share. Then the algorithms might decide that you are already too progressive for your ISP’s management’s taste and so delete this blog from the list of Google’s Blogger’s offerings that you can access.

There is absolutely no technical impediment to doing so. Now, after the repeal of net neutrality, there is no legal impediment, either. All it would take is good programmers.

Nevertheless, this kind of extreme control over what you read and view appears unlikely. It would cost a lot to write the code to effect it, and where’s the profit in so doing? So while nothing in post-net-neutrality law prevents your ISP from doing this, it’s not something I predict.

The bosses who want to control your life and your thinking and call their control “democracy” and “freedom” are much smarter and more subtle than that. Instead of controlling what you read, see and hear directly, they will use a tried and true ploy that gateways have used for about a century to manipulate and control content. The ploy goes back to the early twentieth-century chains of movie theaters, which controlled what movies were shown, when, and where. It’s called “bundling.”

As the name suggests, “bundling” is forcing a package of content down users’ throats, rather than letting them choose what they want piece by piece. Bundling offers three advantages to the bundler.

First, it increases income by forcing users to buy things they don’t want to get things they do. Examples are a movie “flop” bundled with an Oscar nominee, or a song the artist or promoter wants to hawk on the “flip side” of an old 45 RPM record. But the worst types of bundling are those that are purely contractual, without even a plausible technological excuse (like that flip side). Most if not all bundling on the Internet, which has infinite technological flexibility, is for this purpose: commercial advantage.

The second advantage of bundling is economic coercion of the buyer. By bundling something unwanted with popular content, the content provider can push a new artist, a new and untried product of a popular artist, or an untried or unwanted political point of view. The whole approach of Fox to propaganda is bundling it with the “entertainment” of alpha males shouting at and “chopping” each other.

The third advantage of bundling is exclusion. Sometimes it’s not what’s in the bundle that matters, but what’s not in it. By excluding a competitor’s content from the bundle, the bundler can gain a commercial advantage. By excluding alternative viewpoints, the bundler can advance propaganda objectives. Bundlers have used the ploy for both purposes.

Here’s a simplified picture of how bundling might work on the Internet. It’s “simplified” only because the actual bundles would include more items, both to obfuscate the intrinsic political/social bias and to make more money. But this table illustrates how Internet bundling could work both to extract your dollars and control your access to information at the same time:

Your ISP’s Bundles and Internet Pricing

BundleContentMonthly Rate
AFox News
Amazon shopping, Google search (limited*)
Facebook and Twitter
$10
B Fox News, ABC, CBS
Amazon shopping, Google search (limited*)
Facebook and Twitter
$25
CFox News, ABC, CBS, CNN, MS-NBC, PBS
Amazon shopping, Google search (limited*)
Google Blogger, Facebook, and Twitter
$50
DUnlimited Internet Access, as under net neutrality$100


* A limited Google search would allow you to see all the results but only to “click through” to those search results consistent with your paid bundle.

Note that Fox “News” appears in every bundle but is the only “news” source in the first and cheapest. That is precisely how Rupert Murdoch made his fortune in cable TV. He sold his right-wing “news-as-entertainment” propaganda cheap but made his money in volume. He also bundled his propaganda with sports and entertainment packages from Fox’ other subsidiaries.

Sold this way, his “news” came to dominate the thinking of those who could afford the least. He did not waste time, or money, putting propaganda before a more affluent audience that might be or become resistant to it. He took his “bread and circuses” right to the masses, just like Caesar.

Thus Murdoch’s Fox came to dominate the “news,” becoming the most effective single propaganda organ in human history. It dominated the bundles—and especially the cheapest—of content offered on the newest, highest-tech medium of a generation ago: cable TV.

All that changed with the advent of the Internet, at least under Obama’s rules for net neutrality. A blog like this one could, in theory, compete with Fox and all the rest, if only it could get noticed, because there were no bundles.

Pai’s abolition of net neutrality takes us right back to the bad old days of bundling on cable TV. Our electronic media will snap back into the old oligarchic model like a bunch of rubber bands. The “new” regime won’t even require the old dog Rupert to learn new tricks.

There’s nothing new about bundling. Every single electronic medium of communication has permitted if not fostered it, beginning with silent movies and running through “talkies,” radio, television and cable TV. The net neutrality rules promised something different for the Internet, but now Pai’s FCC has killed that promise.

In the past, the last resort for legal restriction of bundling has been antitrust law (what Europeans, more sensibly, call “competition law”). Maybe that’s why Pai’s FCC, in abolishing net neutrality, punted regulation of the Internet to the Federal Trade Commission (FTC). The FTC shares joint jurisdiction over federal antitrust law with the Antitrust Division of our Department of Justice.

But this feint at regulation is a charade. Antitrust law is a blunt instrument, a weak weapon against the practice of bundling. I know: I taught antitrust law, in various law schools, for nearly two decades. The history of the twentieth century is rife with expensive, years-long antitrust litigation to establish the most rudimentary restraints on content bundling in movie distribution, television, and cable TV.

As it turned out, antitrust law is a particularly weak instrument for ensuring diversity of political and social views. Why? It’s economic law. Its sole focus is on maintaining free competition among businesses. And bundlers have become highly skilled in inventing plausible arguments why forcing the consumer to buy the unwanted with the desired is more efficient or somehow beneficial to the forcee.

More important, antitrust law doesn’t care about the character of content. It cares only whether giant ISP gateways like AT & T, Comcast, Time-Warner, and Verizon are playing fairly, not suppressing competition among themselves, and treating their consumers fairly as consumers. Keeping the Internet a vibrant and diverse sphere of public discussion, as our First Amendment intends, is not even remotely a goal of antitrust law.

When this sort of bundling occurs—and it will—the ISPs will disclaim any intent to slant or bias political views. They will claim, with an absolutely straight face, that all they are doing is bringing content to consumers, according to their ability to afford it, with the greatest speed and bandwidth they can afford.

But Rupert Murdoch will have propagated his successful near-monopoly on right-wing political propaganda from cable TV into the modern Internet. He will have done so by the simple expedient of a 3-2 party-line vote on the FCC, abolishing a poorly understood abstraction called “net neutrality.” Then the Internet will become just another medium controlled by the biggest, toughest, and strongest bosses, those smart enough to push their personal political views and make money at the same time. Can we all say “Rupert”?

In fact, the recently announced sales of large parts of Murdoch’s sports and entertainment empires are likely designed to accumulate a war chest for precisely this purpose. Murdoch is a news-and-propaganda man. He got his start as such. He can see the opportunity to extend his propaganda empire better than I can, and by the same ploys he used in cable TV. And he has two young sons to carry on that empire well into this century after he goes.

It’s too bad that Ajit Pai can’t see this, or is in cahoots. At the end of the day, by helping Murdoch and others like him, Pai will have helped take Big Brother private. Weep for lost democracy, George Orwell!

Endnote: ISP gateways could enforce this sort of bundling in two ways. First, as suggested in the note (*) below the table, they could produce a truncated Internet by rendering inoperative links in Google searches not included in the paid-for bundle. That approach would make each bundle (except the last and most expensive) like the Internet in China, in which certain sites that the Communist party deems too “political” are off limits.

The private gateway operators in our country of course would argue that their system is different from China’s because customers can always buy full access to the Internet at a higher price. But the effect would be to limit full access here to the affluent, as to the Party in China.

The second means of enforcing this bundling would be to allow all links to operate, but just to slow the operation of unbundled links down. For example, clicking on a link not included in the purchased bundle might eventually take you to the linked site, but that site might take an entire minute to load into your computer—or even more time if the site’s page contained complex graphics or video clips. This method would be an even subtler means of controlling access to content: relying on the user’s own impatience and short attention span, which media like Facebook and Twitter cultivate.

Coda: The Power of Rupert’s Propaganda Empire—A Personal View

The foregoing post is theoretical, exploring the likelihood of Rupert Murdoch extending his propaganda empire from Cable TV into the Internet in the absence of net neutrality. But I have also experienced the power of his empire “up close and personal.” That happened to me in two ways.

Once my ex-wife and I were traveling between my full-time teaching job in Akron, Ohio, and our eventual retirement home in Santa Fe, NM. We had chosen to spend the night at a bed-and-breakfast in the ironically named town of Liberal, Kansas, near the border with Colorado.

The B-n-B was on the top floor of a huge, modern house on a corner lot in a new development. The rooms were large and well-furnished, but the owners, who had left us the key or the door code, were nowhere to be seen. As we climbed the stairs to our rented suite, a huge television commanded our attention. Ir was turned on and tuned to Fox “News.”

On another occasion, we took two back-to-back ocean cruises on Oceania, a cruise line known for its relatively small ships (600 passengers) and fine food. Since the two cruises together comprised 51 days, we had to exercise to keep fit. We split our workout time between the jogging track on a top deck and a well-equipped gym.

My preferred exercise was stationary bicycling in the gym. It provided a full view of the rolling waves and passing ships and coastline as I pedaled. But there was one impediment to my enjoyment: the TVs in front of all the exercise machines had been hard wired to Fox “News.” I could not change the channel or turn them off.

So there we were, on a “luxury” cruise on a private ship, paid for with our private money. And there we were, a captive audience of two, exposed to right-wing propaganda against our will as we tried to shed pounds from all the good food.

My mind went back to the brief pre-Putin period of гласность (transparency) and перестройка (reconstruction) in Russian history, during which I had done my Fulbright fellowship in Moscow and had made two other hopeful trips to assist democracy-building in Russia.

I once found myself staying in the Ukraine Hotel, right on the Moscow River, in a room once apparently reserved for Communist-Party functionaries. I had arrived late at night, after some forty hours of travel from Honolulu, where I then taught, and with close to the maximum twelve hours of jet lag.

To my surprise, I awakened suddenly at 6 a.m. with martial music in my ear. It was the Russian national anthem, coming from a speaker in the console near my bed.

News and announcements quickly followed the anthem. I groped for a control knob and found I could turn the radio down, but not off. I was a captive listener to what, in the old Soviet days, must have been Communist Party orders and propaganda.

This was in 1996. My experience with Rupert’s propaganda was much later, well into this century. But wasn’t it much the same?

I and my ex-wife had been a captive audience in Rupert’s propaganda empire. The only difference was that a private fortune, rather than a government, had made us so. But as that private fortune pushes hard to make President Trump immune from impeachment as an accomplice—or a “useful idiot”—of Vladimir Putin’s vast intelligence empire, what’s the difference?

With the advent of a free Internet, there was a window we could have used to escape the tentacles of this private propaganda empire. With the demise of net neutrality, that window will rapidly close.

I have no idea of the private commercial arrangements that made us captives to Rupert’s propaganda in these two unlikely places. But I have every conviction that they were (and could be again!) as effective and more flexible than whatever power the Communist Party had to pump propaganda into the bedrooms of its officials in the bad old Soviet days.

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13 December 2017

The Fall of a Raging Bull


[For links to popular recent posts, click here.]

For a brief update (12/14/17) on Democrats’ need to court minority voters—and help make sure they can vote—click here.
    “[S]omething’s happening here but you don't know what it is, do you, Mr. Jones?” — Bob Dylan, Nobel Laureate
Roy Moore’s failure at the polls—in what may have been the reddest of red states—signifies many things.

So far, the mainstream pundits have identified only two. First, even the deepest of the Deep South is capable of shame. Even Alabama cares what the rest of the nation and the world think about it. Second, the influence our of most alpha of alpha males, The Donald, is limited, even as president.

But the significance and the future implications of this small special election are far wider than that. What we have here is the fall of a man who was a law unto himself. We Americans just saw the rejection—by the narrowest of margins—of a twenty-first century “leader” who had tried to emulate the alpha males who ruled us when we were apes on the African savannah, living in clans of thirty or so.

As an anachronism, Roy Moore is way off our history. Not only did he want to take us back before our Civil War. Not only did he want to precede our Constitution, with its refusal to establish any state religion, including Christianity. He’s also off by most of our species’ social evolution.

Yet there he was, in the sixth millennium of our species’ recorded history and the twenty-first century after Christ, sporting a Texas-sized Stetson—in Alabama!—to show that his ego is bigger than the law or human decency. There he was, blowing off calls for kindness to the “weaker” gender with denials and sheer balls. He and many of his followers appear to have forgotten that Jesus’ most salient characteristic was not the raw exercise of male dominance, but empathy.

From its Founding, our nation has distinguished itself as hewing to the rule of law. Yet Moore was not just recalcitrant, but defiant, in openly and wantonly violating two of our most sacred legal principles.

He broke our sacred First Amendment, which prohibits both the establishment by government and government suppression of religion. He did so by keeping a massive stone monument to the biblical Ten Commandments in front of the state courthouse in which he worked as a judge. And he broke the prime directive of our federal system—our Supremacy Clause—when he refused to remove that monument upon order of a higher court, and later when he refused to respect the decision of our highest court to let gays marry.

If ever there were an American “leader” who felt himself above the law, Roy Moore is it. But he is hardly alone. In this dark beginning of our third millennium after Christ, there are many exemplars of would-be alpha males who do whatever they can get away with.

We can start with our own current president. Then we can read down the dismal list: Putin, Erdogan, El-Sisi, Mohammed bin Sultan, the Philippines’ Duterte, Ayatollah Khomeini, Maduro of Venezuela. Just as soon as we get rid of one like Mugabe, we have to ask ourselves whether his successor Mnangagwa will be better or worse.

The pull of the alpha male is strong in us. It’s part of our biological evolution, which we must overcome with social evolution, aka “civilization.”

So this is where we are, as a species, early in the century following our two most disastrous and bloody wars to “make the world safe for democracy.” We have yet to learn the lessons of civilization completely.

I once learned a bit as a kid on the playground. One day I found myself sitting on top of another kid, bashing his head repeatedly into the asphalt. After the other kids dragged me off, a teacher came up.

She was a woman—a member of our “weaker” sex. But as a full adult she towered over me. Did she hit me? Did she drag me by the collar? Did she use brute force, which she easily could have done? Did she make me stand in the corner and contemplate my sins without adult guidance?

Not at all. Instead, she played to my budding intellect, my childish understanding of human civilization. Right there on the playground, with the other kids still gyrating in play around us, she told me why I had to restrain my darker impulses.

Civilization, this teacher recounted, is the conscious mastery of our darker individual instincts for the common good. At the end of the day, it’s what lets us build airplanes and fly them around the world. It’s what lets us make iPhones and a global network to connect them. It’s what lets us write constitutions to set the rules that no one—no one!—can break. It’s what allows us to be infinitely better fed, richer, happier and more powerful than we ever were as warring individuals or tiny clans led by alpha males.

Over a generation later, at Harvard Law School, I learned how much effort—and how many centuries—had gone into making the legal invulnerability of every individual the foundation of Anglo-American law. As you walk down the street and go about your daily business, your body and your person are free, under the law, from unwanted touching, invasion and intrusion. So is everyone else’s. Your freedom to swing your arm—or to bash a rival—end’s where the other’s nose begins. The law holds you invulnerable by restraining others. The law will even restrain itself.

This is the marvelous thing that makes us Americans nearly unique. We know—or at least we knew—that, as long as we ourselves obey the rules, no one can willingly manhandle or harm us. Freedom makes us untouchable.

Viewed in this light, the current furore over sexual predation is neither anomaly nor coincidence. Just as our species begins slip-sliding down the slope from democracy to alpha-male rule, the more-than-half of us that is our female gender is beginning to wonder why this most basic rule of civilization—bodily invulnerability under the law—doesn’t apply to females. Why must they suffer unwanted intrusions on and into their bodies that no male in a free society ever has to face—all because our biological evolution has made them attractive to males so as to continue the line?

Evolution seldom proceeds in a straight line. Often it takes two steps forward and one step back.

So it is with our species’ social evolution. In the last century, we suffered some seventy million premature deaths in the cause of democracy. That was two big steps forward.

Now, in the twenty-first century, we are retreating, almost in unison, in a backward step toward alpha-male rule. Like old men waxing nostalgic over their childhoods, we yearn for the simplicity of submission to the whim of a single, decisive man.

But that is not our species’ future. Nor is it our recent past. Our destiny lies in ever more subtlety and complexity, as it always has.

This is a truth known by anyone who’s ever tried to fix his iPhone or understand the Tax Code. This is a truth that we Americans will ken, sooner or later, as we discover that taking a meat ax to our tax laws will neither simplify or enrich our lives.

Women instinctually understand this. Brute force never acts in their favor. In the Middle Ages, the social complexities of chivalry protected them. Today, it’s the law, in all its complexity and nuance. And today, more than ever, they want to weave that law, which in the end is only an abstraction, more tightly into the web of social mores and practice that makes the law real.

So no, the push for women to be free from sexual assault, harassment and predation, coming at this delicate time, is absolutely no coincidence. It’s part of our species’ current reconsideration of our social-evolutionary status and direction. It’s a looking forward, along with a looking backward, to assess our collective next step.

As we assess, we might consider that, for the last decade, the world’s most successful leader has been a woman: Chancellor Angela Merkel of Germany. She may have stood on the shoulders of giants, but she has completed the remarkable transformation of what once was Nazi Germany into an exemplar for our species. In genuine contrition for past failings, in openness to helpless refugees, in non-violence in fact and policy, in conversion to sustainable energy and (not coincidentally) in steady prosperity, modern Germany under Angela Merkel is the nation to watch.

Like Vladimir Putin, Rodrigo Duterte and Donald Trump, Roy Moore is a throwback. He’s a good one, in a sense, because his patent extremism—not to mention his Stetson and on-horseback videos—make him easy to spot and to ridicule.

Moore is just a caricature of the many, far more serious alpha-male leaders that we must work through in this century if we are to find our way to Mars and the stars, and maybe someday thence to peace. But however close the margin, a win is a win. And if this raging bull’s fall leads us to question the usefulness of other alpha males, or of alpha-male leadership in general, it could be a portent of a bright new dawn.

Endnote 1: The First Amendment reads in part as follows: “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof . . . .” Decisions of our Supreme Court have applied both prohibitions to the several States.

Endnote 2: The Supremacy Clause, Article VI, Section 2 of our Constitution, reads as follows: “This Constitution, and the laws of the United States which shall be made in pursuance thereof; and all treaties made, or which shall be made, under the authority of the United States, shall be the supreme law of the land; and the judges in every state shall be bound thereby, anything in the Constitution or laws of any State to the contrary notwithstanding.”

Respecting Minority Voters: a 12/14/17 Update. Sometimes this blog is ahead of the game. In a recent post it argued that minority voters in three Southern states could deliver the White House to Democrats in 2020.

Freelance journalist Kashana Cauley expressed a similar view today in an op-ed in the New York Times (paper of Dec. 14, 2017, at A27). She pointed out that African-Americans had helped Doug Jones win in Alabama, despite numerous voter-suppression obstacles put in their way by Republicans. She ended her piece with the following observation: “If Democrats want to win more elections, they have to integrate black voters into the heart and soul of the party.”

By now, that message should be self-evident. It’s especially vital in the South, where black and Hispanic voters together rise to 40% of the population in Florida and North Carolina. The old notion that minorities “have nowhere else to go” and so should be taken for granted, is a recipe for defeat.

Coming after the Dems had assiduously courted black voters, Doug Jones’ win proves the point. If the Dems can win with a new coalition in Alabama, they can win anywhere. All they have to do is remember that, in any coalition, each member group deserves equal respect. Brief pandering won’t do the job, but careful attention and attractive policies will.

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06 December 2017

Inflation: Unanswered Questions


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1. The “money supply” theory
2. The theory’s need for granularity
3. The wage-price spiral
4. The effect of interest rates
5. Money lockboxes
6. Other sources of “easy money”
Conclusion

Where is inflation going and why? If you think our experts know the answers, think again. Outgoing Fed Chair Janet Yellen says her “best guess” is that, as quantitative easing fades to black, inflation will rise to her target range of 2% but may overshoot. When, how and why, she can’t say. Her successor Jerome Powell seems to have no more certainty.

That’s odd, to say the least. The economic models for our national economy are about on a par with scientists’ climate models in sophistication and complexity. They use roughly comparable supercomputers, and presumably they have equally skilled programmers.

The problem is the theory. Climate models are mathematically precise. Based on current knowledge of science and past measurements, they calculate precisely how much global mean temperatures and sea levels will rise, depending on how much carbon dioxide our species’ global burning of fossil fuels puts in the atmosphere and when. They can even provide precise “error bars” that state the probability that each answer they give is right.

So-called “macroeconomic models”—those for our whole economy—are nowhere near that level of precision. They don’t have “error bars” because there’s too much confusion about the basic mathematical relationships among variables and therefore the basic equations. Economists are lucky if they can properly distinguish independent from dependent variables.

Why is this so? Well, climate science is basically physics and chemistry, with a bit of geology, oceanography, meteorology and paleontology thrown in. At its core, it’s all about atoms and molecules and how they behave in crowds.

Economics is about how people behave in crowds, as well as individually. And, notwithstanding the “wild card” of quantum mechanics, people are much more complicated than atoms or molecules.

A guy name Richard Thaler just this year got the Nobel Prize in economics for his work debunking the notion that people always do the rational thing, following strict rules of causation like atoms and molecules in classical physics (in the non-subatomic world, that means most of the time). If nothing else, Brexit and the election Donald Trump as president of the United States have proved Thaler’s point.

So the basic theory underlying much of modern economics is suspect. As it turns out, so are most, if not all, of the traditional theories of what causes inflation. At least they don’t seem to work well at this particular time.

This essay outlines my quick take on traditional theories of what causes inflation and why they are wrong or misleading in today’s world. In the conclusion, you’ll find the reasons for my very tentative and diffident belief that there’s not much we can do—or would want to do—to spark inflation. At least at the moment, bond traders appear to agree with me and disagree with the economists.

1. The “money supply” theory. When all else fails, economists often resort to the law of supply and demand. Why? It may be the only “law” of economics that works reliably and consistently in the real world. As applied to inflation, the law of supply and demand holds that, as the supply of money in circulation rises, it increases demand for an (assumed fixed) quantity of goods and services, so the prices of those goods and services will rise. Voilá! Inflation.

This theory is certainly plausible. The law of supply and demand does work. The problem is what constitutes “money.” Economists have invented several different measures of the money supply, but they always seem to be behind the curve.

If you’re trying to predict general inflation—of all prices for all goods and services—this theory doesn’t work very well. In the run-up to the Crash of 2008, financiers created all kinds of “money” in the form of financial derivatives, in absolutely astronomical face amounts. Estimates of the aggregate extant just before the Crash reached the 600 trillion dollar mark, almost thirty times our current national debt. Yet there was no spike in inflation.

After the Crash, the Fed injected at least four trillion dollars into our economy, by buying toxic assets and bonds to hold interest rates down. Again, there was no general inflation. Instead, we nearly got deflation.

Of course, there are lots of goods and services that business buys. In theory, easy money ought to have increased their prices. But that didn’t happen.

Maybe these facts help refute the “money supply” theory for general inflation. Or maybe they just show how human expectations interfere. They certainly did after the Crash, when businesses were fearful of expanding in a falling economy and so kept their hands in their pockets.

Maybe human expectations also interfered before the Crash. They certainly did for me in late 2007. Then I sold out because, like Diogenes, I couldn’t seem to find anyone telling the truth, whether atop our business or political leadership.

2. The theory’s need for granularity. If the “money supply” theory doesn’t work so well when stated so broadly, it works pretty well with a little more granularity. If we look at the Crash as a real-estate bubble, we can see what happened more clearly.

Much of those derivatives were a vain attempt to remove or shift the risk from securitized “liars’ loans” on real property, i.e., loans that under pre-existing credit standards would never have been made. Those loans—and the derivatives that made them possible—constituted an exogenous injection of liquidity into the national real-property market, with differing consequences in different city markets. But the general effect in those markets was exactly what the theory predicted. Viola! Inflation—big time.

A similar thing happened during the first oil shock, in 1973-74, caused by an Arab Oil Embargo. There, the supply of oil went down, with the same amount of money (demand) chasing it. So the price of oil went up sharply, the more so because our first attempt to increase the fuel efficiency of cars and lights trucks was slow and only partially effective. It didn’t help that the prices of oil and gasoline, as I’ve explained elsewhere, are highly inelastic, i.e., small changes in their supply or demand produce big changes in price.

As it happened, this exogenous oil shock also increased the price of just about everything, because the prices of energy and transportation are significant components of the price of everything. The increased price of transportation alone so stretched consumers’ pocketbooks that, as workers, they demanded higher wages, leading to a so-called wage-price spiral. As workers, consumers could do that, back in the seventies, because their unions gave them bargaining power.

3. The wage-price spiral. And so we come to the next big theory of inflation. The wage-price spiral was first identified in the early 1970s, during the Nixon Administration. When times are good, the theory goes, workers demand higher wages, and businesses grant them, recouping the wages by increasing the prices of their products and services. As prices rise, workers demand yet more raises to maintain their standards of living. This vicious circle of increasing wages and prices causes general inflation, which continues until it burns itself out or until the Fed squashes it.

There’s a big hole in this theory, even for the seventies. Times were not so good, at least after the big oil price shock. It hit workers in their pocketbooks, and they tried to recoup their losses through collective bargaining. Labor unions were big and powerful then, and so workers could do that.

Today this theory doesn’t work so well for at least three reasons. First and foremost, workers have lost their bargaining power due to the decline of unions and globalization. If they demand higher wages, the bosses just say, “Bye, bye. We’ll move our factory to China or Mexico, where workers are not so uppity.” Isn’t that, in a nutshell, why Trump is president?

The wage-price spiral during the Nixon years usually started with negotiation between one of the “Big Three” automakers (Chrysler, Ford and GM) and the United Auto Workers after a contract expiration. Often the negotiation produced a wage raise, sometimes after a government-mandated “cooling off” period under the Taft-Hartley labor law, and sometimes even after a strike. Nowadays none of this happens because globalization has given management the upper hand, and because the auto factories that stayed in America mostly migrated to the American South, where so-called “right to work” laws emasculated unions or even kept them from forming.

Second, the oil-price shock, not unrelated exuberance or workers’ demands, was the underlying cause of much of the inflation in the seventies. The inflation spread to the general economy because energy for transportation figures in the cost of virtually everything. Such a shock is not likely today, with experts predicting that fracking will soon make the US a net exporter of fossil fuels, at least for the next decade.

Finally, the “wage-price spiral” theory of inflation doesn’t work well today because economists, in their infinite wisdom, have removed energy and food from the definition of so-called “core” inflation. Funny thing, that. Energy and food are both things that people can’t do without, and therefore their demand curves are highly inelastic. About the only similar essential now remaining in the inflation calculus is housing. (Clothing and cars you can use until they wear out, and even then you can keep patching them. Just look at the 1950s cars still running in Cuba.)

So if you eliminate the two biggest necessities of life from consideration, and if they are the ones whose demand is most inelastic, how good is your remaining theory anyway? In eliminating food and energy from the standard measure of inflation, economists have been doing what Albert Einstein often accused lesser physicists of doing: drilling where the drilling is easiest.

4. The effect of interest rates. The use of interest rates to control inflation also presents another conundrum. In the seventies and early eighties, the Fed raised interest rates dramatically to curb the general inflation that had started with the exogenous oil shock. I remember that time well. Interest rates for home mortgages were in double digits, increasing the total price (including interest) of buying a home with a mortgage by multiples in the high single digits. As a result, I and many of my generation had to wait about ten years to buy our first houses.

Funny thing, that, too. At the time and for decades afterward, pols and citizens blamed the Fed and Paul Volcker, its then chairman, for the high interest rates and all the economic dislocations that they caused. But, after a few years, the high interest rates seemed to do their trick, and high inflation subsided, along with high interest rates. How much the auto industry’s later crash program of fuel efficiency, plus the discovery of deep-sea drilling and North Sea oil (at about the same time as the oil shock) had to do with that “solution,” no one appears to have calculated.

What’s funny is that now Janet Yellen and her successor both expect higher interest rates to work the other way: to spark inflation, rather than to control it. The theory seems to be that interest rates are the price of money, and if you raise them arbitrarily they will raise the price of everything else because everything costs money.

All I can say about this theory is that I don’t understand it and must bow to the economic priesthood’s special expertise. I do understand the Volcker theory that high interest rates help reduce inflation by making money more expensive and thereby reducing its circulation, i.e., its effective supply.

5. Money lockboxes. If you have read this summary carefully so far, you’ve probably concluded that inflation is beyond the ken of people not admitted to the high priesthood of macroeconomists. But it gets worse.

There several are ways in which vast increases in wealth don’t affect the supply of money available to purchase goods and services at all. The most important, which I’ve described in detail elsewhere, is Baby Boomers’ retirement funds. Trillions of dollars of relatively liquid cash, with more to come, are locked up in Boomers’ retirements. Congress may have raided the so-called “lockbox” of Social Security many times, but the lockboxes of private retirement funds are truly off limits.

Take my retirement, for example. When I retired, my net worth was probably at its peak. Besides my home, my money is mostly in annuities and tax-deferred retirement accounts. I could use the retirement accounts to buy things, but for two reasons, I mostly don’t. First, my parents survived the Great Depression; they taught me to save and never to touch principal. Second, as I get older in an increasingly irrational world, the financial security that money can buy seems far more valuable than any product or service.

So I content myself with the income from Social Security, my annuities, and the annual minimum required distributions from several retirement funds. That makes me quite comfortable but far from rich. And anyway, as age reduces my appetites, I just don’t spend a lot generally. Patronizing restaurants, theaters, concert halls and cruise lines is not going to spark general inflation.

If other Boomers are like me—and I think they are—there are tens of trillions of dollars locked up in private retirement lockboxes that will never be used for much of anything but geezer delights, gifts to relatives, and investment vehicles (stocks and bonds and their derivatives). Collectively, all that money might be helping inflate the prices of securities (stocks, bonds and their derivatives), but it won’t affect the prices of goods or other services, far less the stuff that most poor people buy.

A similar analysis applies to the trillions of dollars untaxed profits that our major corporations have stashed overseas. If our Congress gives them incentives to bring that money home, will they spend it or just sit on it?

If there were really attractive investments that they could make in their own or related businesses, in this globalized world they would probably find them overseas, where the money now sits tax free. The fact that they haven’t done so suggests that the corporations are treating this money much as Boomers treat their private retirement funds: as rainy-day funds and balance-sheet boosters.

If corporations bring this money home, they might use it for dividends to shareholders or stock buybacks, which might “trickle down” to goods and services. But the probability of using it to buy equipment or services directly, which managers haven’t already bought abroad, seems low. So whether kept stashed abroad or brought home, this money seems destined for one lockbox or another, just like Boomer’s private retirement funds.

6. Other sources of “easy money.”. Will the Trump-GOP tax scam now before Congress change this picture? Will giving trillions in tax breaks to corporations and the rich? Probably not so much.

The big tax cuts for the very rich will go right into their pockets. What will they do with them? Probably much the same as any upper-middle-class retiree would do. They’ll invest them in real property or in securities—stocks, bonds and their derivatives—raising their prices but doing nothing to or for the prices of goods and other services (except maybe luxury goods). Economists know, in general, that the rich save far more than the poor, because they have so much more than what’s needed for bare survival. (An investment vehicle available to the rich but not to the rest of us is expensive art. Could that be why a recently discovered painting of Leonardo da Vinci called “Salvator Mundi” sold at an all-time record auction price of $450.3 million?)

Will the big tax cuts for corporations have a different effect? Probably not. They will have much the same effect as allowing corporations, or encouraging them, to bring their foreign tax-free hoards home. Some corporations may use the extra money to buy equipment to expand their operations or make their information technology more efficient. But most will probably sit on the money, give it to shareholders as dividends or stock buybacks, or keep it for a rainy day or to fund new and unforeseeable future investments.

Conclusion. So what are the possible sources of inflation today? There don’t seem to be many.

Governments from ours to China’s have been burned enough by the Crash of 2008 and other real-property bubbles that they are going to use every lever of public, financial and fiscal policy to avoid them. The big money held by retirees and corporations is likely to drift into investment lockboxes and unlikely to flow into binge buying of goods or non-investment services. The present oversupply of oil will keep oil prices in check, as will fracking for the foreseeable future. In addition, electric cars and renewable energy will help keep the lid on oil and gasoline prices. As for a wage-price spiral, the demise of unions and the globalization of labor have made workers’ pressure for raising wages impotent. How can you have a wage-price spiral if workers have no power to demand higher wages?

All this doesn’t preclude minor bubbles in very specific, granular categories of goods and services. For example, repatriation of foreign cash hoards of, or corporate tax relief for, companies like the Silicon Valley Five (Amazon, Apple, Facebook, Google and Microsoft) could cause wage bubbles in esoteric fields like artificial intelligence. A similar bubble might occur for wages among scientific experts in genomic medicine. Likewise, as electric cars go mainstream, a commodity bubble might arise in lithium, the elemental metal that all their batteries now use.

But a general rise in prices of goods and services remains hard to foresee. Most likely, the sole effect of the Fed’s raising interest rates will be to raise the returns on bonds and so, concomitantly, lower the prices of stocks. That may shift money from one part of the securities industry to another. It may also create some winners and losers, even among retirees. But sparking general inflation? I just can’t see how.

The national model we are most likely to follow seems to be Japan. That nation is on the forefront of every demographic curve. It’s had nearly a generation of low inflation, if not deflation, caused by an aging population with a good social safety net and all the economic lockboxes that that implies. Its youth, like ours today, is having trouble finding good jobs and affordable housing. But its youth, unlike ours, is not burdened by unsupportable student debt and so probably has a more lucrative future.

Not only is there little prospect for inflation here. Without significant political changes, there is little prospect for the wider distribution of wealth, which might be a precursor to inflation. The rich, who are getting all the attention, save and invest; only the poor and lower-middle classes spend much.

If current tax plans come to fruition, corporations will hold their tax windfalls in lockboxes or distribute them to shareholders, and therefore largely to the wealthy. The wealthy will hold their windfalls or invest them in more paper. And the lower middle class and heavily indebted students, who would be most likely to spend their windfalls on goods and services, will get the least.

So the rich will get richer, big corporations will thrive, indebted former students will continue to live with their parents and struggle to find affordable housing, and life will go on. The only clear prospects for massive fiscal changes are for new sinks of money: the natural disasters that spooked us all this year and that global warming will make more frequent and more devastating as time goes on. Spending on repairs for those disasters may cause minor bubbles in emergency supplies and construction materials, but general inflation? Probably not.

A simpler way to digest all this information is to return to basic supply-demand analysis, i.e., the so-called “money supply.” At the moment, the effective money supply is quite restricted. Most of it is locked up in specialized financial instruments like the national debt (some $20 trillion), financial derivatives (some $700 trillion), corporate coffers (a few trillion), private retirement lockboxes (probably tens of trillions), prospective tax relief for corporations and the very rich (about two trillion), and emergency relief funds. There is not much left over, in the hands of ordinary workers and poor people likely to spend, to raise the prices of goods and services generally.

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01 December 2017

A Blue White House in 2020


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Democrats are in despair. Republicans own the White House, the Senate, the House and the vast majority of statehouses and governorships.

As if this were not bad enough, the GOP president is an unqualified and incompetent buffoon. Coming after the brilliant, skilled, dignified, warm and empathetic leader who preceded him, Trump is not just a cause of emotional whiplash. He brings embarrassment and shame to every American traveling abroad. His near-daily antics depress every civilized American.

So what should the Dems do? Their troubles didn’t come overnight. They arose over decades. The Dems abandoned many states and whole regions to the party of extremists.

They had what pols call a “weak bench.” As a result, every American is now paying a terrible price. That price will get much steeper as the GOP’s tax scam, which now threatens to become law, begins to chew upon our economy, our health insurance, our body politic and what remains of our safety net.

Of course the Dems must rebuild their party state by state and precinct by precinct. They must return to their progressive roots. They must purge all vestiges of the Clintons, whose rudderless and principle-free “triangulation” destroyed their party, and with it the nation’s global leadership.

But all that takes time. The GOP took two generations, since Reagan, to turn its so-called “ideology” into practical control of every branch of government and lever of power.

Republicans managed this feat with an “ideology” that is nothing but vapid abstractions, devoid of concrete, practical ideas. They tout smaller government, lower taxes, less regulation, more guns, and more power to the rich and powerful. How much smaller, lower, less and more, and to what purpose? They never say. Yet by gerrymandering, suppressing votes, abusing voters and minorities, and packing the courts with so-called “conservatives,” they have turned that vacant ideology into plenary political power.

The Dems can and must reverse this process. Smart ones among them are doing exactly that, starting with the grass roots and city councils.

But that’s a long-run project. As the great economist John Maynard Keynes once said, in the long run we are all dead. What do we do in the interim to keep our American experiment in democracy and community alive and running?

Our best hope is for the Dems to recapture the presidency, as early as 2020. Here’s how.

Hillary Clinton lost in 2016 because she had consistently abandoned Democratic principles for expediency and “triangulation.” Her worst example was voting as a senator for war in Iraq without even reading the National Intelligence Estimate. And there are others. She also took big money from the folks who were busy rigging the economy. (How did the Clintons end up with a reported family fortune of $250 million from careers in “public service”?)

In part for those fundamental errors of judgment and character, and in part due to GOP propaganda and manipulation, the “Rust Belt” states of Iowa, Michigan, Ohio, Pennsylvania, and Wisconsin all dumped Hillary last year and flipped red. No one expected that to happen, so Trump’s win came as a shock.

But in 2020, a Dem can win the White House without winning any of those Rust-Belt states. All the Dems have to do is keep Florida flipped (it went for Obama in both 2008 and 2012 but went for Trump last year), re-flip North Carolina, which Obama won in 2008 but lost in 2012, as Hillary did in 2016, and flip Georgia for the first time.

The tally of electoral votes in this scenario appears below this post. The Dems win 273 electoral votes, three more than needed to secure the presidency. And if the Dems are lucky enough to win any of the Rust-Belt states (except just smaller Iowa), each Rust-Belt state won could compensate for a loss in either Georgia or North Carolina, but not big Florida. If the Dems win even more Rust-Belt states, they could win by an electoral landslide.

The key to this victory is simple demographics. All three of the named Southern states have large minority populations—about 40% in Florida and Georgia, and nearly one-third in North Carolina. By 2020, Trump’s racism and bigotry, plus the GOP’s self-evidently minority- and immigrant-unfriendly policies, will have thoroughly alienated them. If the Dems can just get a few percent more of them to register and vote, they can win without any of the Rust-Belt states that abandoned Hillary in 2016.

In this enterprise, the wind of demographics is at the Dems’ back. Progressive northerners are constantly migrating South for warmer weather as they retire. In addition, the Puerto Rican exodus to Florida after the Hurricane-Maria “aid” fiasco will add a large number of Hispanic voters whom the Trump administration infuriates, and who are not nearly as conservative as the Cubans in Florida. And minorities of all types, inspired by the Obama Presidency, are coming of age politically. The South is therefore ripe for progress that will change America and transform the world.

The key is the commanding percentages of minority voters in these three Southern states. Here are the numbers:

Flipping Key Southern States

State FloridaGeorgiaNorth Carolina
Hillary’s Margin
of Loss (2016)
2%5%4%
Black population15.6%30.7%21.4%
Hispanic population24.1 %9.3%9.0%
Total of Two
Minorites
39.7%40.0%30.4%


All the Dems have to do is give minority voters in these three states enough hope to register and vote, in numbers just a few percentage points more than in 2016. Then these states will flip from red to blue (or re-flip or stay flipped), at least in presidential elections. They will do so just as has Virginia, which went for Obama in both 2008 and 2012 and for Hillary in 2016.

That’s what Florida and North Carolina (all but Georgia) have already done at least once, inspired by the hope of seeing Barack Obama in the White House. In 2008, Obama won both Florida (the biggest prize) and North Carolina, but not Georgia. In 2012, he kept Florida but lost North Carolina.

Some misguided Democratic pundits propose attracting alienated white workers in the Rust Belt. Dems of course can do that in substance with a massive, job-creating infrastructure program. And they should.

But moving beyond substance and good policy to pandering would be a grave mistake. Trump and the GOP won white Rust-Belt workers not just by playing on their legitimate economic insecurities, but also by inflaming their latent bigotry and inveigling them into scapegoating minorities.

GOP propagandists and demagogues, including President Trump himself, have done this so successfully that significant fractions of white Rust-Belt workers may have become irreconcilable. These workers are very angry, often irrationally so. How else could they have voted for a man like Trump and still support him after a year of gaffes, narcissistic Tweets, and no significant accomplishment, let alone any that might change their fates for the better? How else could they believe that Trump’s and the GOP’s bald tax scam would be good for them?

Some of these white voters, especially the so-called “white nationalists,” are like irreconcilable Taliban. They may be won over in the long run, but the nation and the world can’t wait. So if the Dems want to save our country and our democracy, they must find other ways.

The other ways all revolve around neglected and abused minorities, which rise to near-dominant numbers in the South. These minorities know full well which party takes their interests to heart. All they need is good reason to register and vote. All they need is the same kind of hope that Barack Obama gave them in 2008 and 2012.

Obama delivered that hope just by being who he was. The Dems can easily duplicate his feat in 2020—when the demographic trends will be even more favorable for them. All they have to do is support truly progressive candidates who, wherever possible, are members of minority groups themselves. That’s why I’m supporting Stacey Abrams for Governor of Georgia with my money and my time (I’m not a Georgia resident).

In the sixties, when Lyndon Johnson pushed our first post-Reconstruction civil-rights laws through Congress with legendary arm-twisting, he had a sober warning for Dems. Those vital new laws, he said, would lose the South to Democrats for two generations.

Almost three generations have passed since Johnson’s warning. In the meantime, we have elected a half-“black” president—something even more astonishing, and infinitely more positive, than Trump’s anomalous win last fall. During all that time, the Republicans have stood on the wrong side of history: the side of racism, bigotry, division, inequality, oppression and (more recently) assiduous vote suppression.

But Johnson’s generational clock is running out on them. The Dems can secure their place in history (and reclaim national power) by holding to their core values of progressivism and egalitarianism.

If the Dems can’t win in 2020 by doing right by the values they stand for and by their most loyal voters, then they will have lost their way, just as the GOP has. They must not follow Republicans down the path of moral putrefaction by abandoning all goals save power and serving rich donors. Good things come not to the scheming, but to those who hold to principle.

The times also favor the Dems. The moral bankruptcy of Trump and the GOP favors them. Demographics in the South favor them: in-migration will only raise the electoral-vote power of flipped and flippable Southern states. All the Dems have to do is seize this opportunity to forge a New South by giving African-Americans and Hispanics (along with all other voters) reason to hope.

This is the greatest opportunity the Dems have had to create a durable new coalition in almost three generations. They must not let it pass.

Endnote 1: Following is a tally of a winning electoral-vote total that the Dems could receive in 2020 if they win all the states that Hillary won in 2016, plus Florida, Georgia and North Carolina:

Winning the White House without the “Rust Belt”

StateElectoral Votes
California55
Colorado9
Connecticut7
District of Columbia3
Florida*29
Georgia*16
Hawaii4
Illinois20
Maryland10
Massachusetts11
Minnesota10
New Jersey14
New Mexico5
New York29
North Carolina*15
Oregon7
Rhode Island4
Virginia13
Washington12
TOTAL273


NOTE: In 2016, Hillary won all states listed, except the three marked with asterisks, namely, Florida, Georgia and North Carolina.

Endnote 2: Holding to principle does not mean refusing to compromise. It does mean refusing to abandon core principles of party distinction or party history. Three examples might be helpful.

When Bill held his little Oval Office party, with Phil Gramm, to sign the bill that repealed Glass-Steagal and many Depression-era regulatory bulwarks of our economy, he betrayed the core Democratic principle of a regulated economy, the legacy of FDR, and a principal distinction between the two parties, that between regulated and laissez faire capitalism. Another Democrat, Byron Dorgan of North Dakota, took the floor of the Senate to lament the betrayal and correctly predict the Crash of 2008, almost to the year.

When Hillary “played the race card” against Obama in the hot 2008 primary campaign, she betrayed the Democrats’ core principle of equality. She also blurred the distinction between the parties that had subsisted at least since Nixon’s disgraceful “Southern Strategy,” by which he won the presidency in 1968. The fact that Hillary herself was and is not a racist only made this betrayal of principle more disappointing.

In contrast, consider the stance of Republican Bob Corker (R., Tenn.) today. He’s a deficit hawk worried about the huge hit to our budget that the GOP’s current tax scam would cause. If he’s able to command amendments that will reduce the tax cuts automatically in order to cap deficits, his doing so would be consistent with his core principles, assuming that, as a Republican, he doesn’t mind the huge giveaway to corporations and the rich at the expense of other taxpayers.

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