The Chevron Case

Posted on July 3, 2024 by thezman

Imagine if when the Supreme Court decided Brown v. Board of Education of Topeka, they drew a sharp line between public and private discrimination. Maybe in Katzenbach v. McClung they drew a bright line around the Commerce Clause and ruled that as long as you were not conducting business across state lines, the Civil Rights Act of 1964 did not apply to your business. In other words, what if the court said that the principles of discrimination and inclusion apply only to the government?

The answer is we would have a vastly different world. Just consider the Katzenbach case in which the court claimed that the restaurant in question was not doing business across state lines, but it was possible that it could one day buy product from a vendor in another state, so the Commerce Clause applied. If the court had ruled rationally, we would now have a world where private discrimination was still legal, just as long as you did it locally, not nationally.

Of course, if the court had drawn the line between private discrimination and public discrimination, most of our race troubles never would have manifested, because normal life would not contradict official morality. A colorblind state is well within the spirit and sensibility of the American people. The liberty to associate or disassociate with whom you choose, for any reason you choose, is also consistent with the history and sensibilities of the people.

That is not what happened, and we have suffered a half century of demographic collapse as a result of the court imposing a new moral framework. It is a good example of how even small changes in the law can lead to a revolution in how people interact with each other and the government. We may be seeing another revolution brewing with the most recent court rulings in Loper Bright Enterprises v. Raimondo and Corner Post, Inc. v. Board of Governors.

The Loper decision ends what has been called the “Chevron deference” which is the longstanding principle where the courts defer to federal agencies with regards to regulations, interpretation of regulations and enforcement of regulations. Put simply, if a business or industry did not like a federal regulation, they had to convince the regulators to change it or get help from Congress. The courts would defer to the alleged experts in the administrative state.

What the Supreme Court has done in these two cases is continue to dismantle the logic that animated the Chevron deference and much of administrative law. They are going about it in two ways. One is the Court is saying that these agencies only have powers explicitly granted to them by Congress. Second, companies and industries can now go into the courts for redress. They can challenge the expertise of the regulators and the process used by the agencies to make policy.

This may sound arcane and boring, but keep in mind that most of the federal rules that directly impact your life are not passed by Congress. In fact, no one in Congress can tell you how most of the rules come into existence. The reason for that is the federal agencies craft the rules that regulate every nook and cranny of life. Until now, they did so without having to answer to anyone. Technically, Congress oversees these agencies, but Congress is full of simpletons.

What the Court seems to imagine is a new paradigm. If the Gaia worshippers, for example, want to ban gas stoves, they will need to get enough votes in Congress for a ban on gas stoves. Currently, they just have to cajole or bribe people in the administrative state and convince industry that they can profit from the new shenanigans in order to ban your gas stove. You, the citizen, have nowhere to turn to get your gas stove back.

There are now over 200,000 pages in the Code of Federal Regulations and few people have the slightest idea what they mean. This is why large companies have lawyers who interface with the agencies overseeing their industry. It is why small and midsized companies have trade groups. It is why there is a large army of lawyers whose specialty is administrative law. This is because the leviathan, which is the administrative state, has tentacles reaching into your most private matters.

What made this all possible was the habit of Congress, going back to FDR, to grant agencies in the executive branch broad powers to make laws, interpret those laws and enforce those laws. The way they did this is to give an agency a mission and then a budget to set off on that mission, which was used to lobby Congress for more money to expand the scope of the mission and underwrite various schemes that allegedly were in pursuit of their mission.

The direction of the Court is to ignore the vague powers granted by Congress and focus only on the specific powers granted by Congress. If Congress passes the Puppies and Rainbows bill that authorizes the Department of Education to do what they can to promote puppies and rainbows, the Court will not intervene. Once the DoE makes a rule requiring puppies and rainbows in the schools, then a school system can go to court arguing that the DoE was never granted this power.

There is a long road to go and many more court cases to define this new paradigm, but the end of that road is an administrative state that is limited by the specific powers granted to it and one that must defend its rules in court when challenged. For the same reason our coins have ridges, bills coming out of Congress will have to come with specifics, rather than pages of esoteric language designed to give the administrative state unlimited power to craft new rules.

In the short term, it means that every comma in those 200,000 pages of Federal regulations is now open to challenge in the courts. Inevitably, some popular rules will be struck down and that means Congress will be forced to pass actual laws reestablishing those popular rules. On the other hand, it also means there is a chance to get rid of odious rules that serve narrow interests. Getting a light bulb ban through Congress, for example, never would have happened.

It is not all puppies and rainbows. Rich people have been bribing Congress for generations and America presently has the worst class of rich people since the French Revolution, so it means lots of terrible laws from Congress. The difference is that this stuff will be out in the open where now it is in the shadows, allowing both Congress and its wealthy owners to play dumb and pretend to be something other than odious carbuncles strip-mining the middle-class.

Civil rights looked like a small change in private behavior in pursuit of a greater good, but it led to the demographic madness of the present. These rulings in pursuit of reducing the managerial state to mere bureaucracy may not look like much, but they threaten the moral authority of managerialism. Rule by experts no longer make sense when experts can be challenged. This may one day give people room to salvage whatever is left of the American experiment.

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Death In Dollars

Posted on June 12, 2024 by thezman

Without much fanfare and no coverage in Western media, one of the most important agreements of the 20th century was allowed to expire last week. That agreement is the deal made between the United States and Saudi Arabia in 1974 that established what has been known ever since as the petro-dollar. Saudi Arabia would price its oil exports exclusively in U.S. dollars and invest its surplus oil revenues in U.S. Treasury bonds while the U.S. provided military protection to the kingdom.

The importance of this deal cannot be overstated. The demand for dollars has kept the currency strong and thus kept imports cheap. It also allowed the Federal Reserve to “export excess dollars” to developing countries with a need for dollars. The institutional demand for treasuries as a result of this agreement allowed for the low interest rate environment we have seen for decades. This has made it possible for the United States to build up massive debts both publicly and privately.

Another way to think about this deal is by pricing energy in dollars, the dollar became the default global currency because the dollar was a proxy for energy units. This made the Saudis the head of the mint and the Federal Reserve the global bank. The Saudis could control the flow of energy units around the world, a very profitable position, and the United States could skim from every transaction denominated in dollars, which was every transaction across national borders.

The reason for the lack of coverage of this historic event is two-fold. One is the mass media is now populated by zombies with no agency of their own, so until the regime hands them copy, they have nothing to say. The other is the financial world has no idea where this is going. Five years ago, no one imagined this deal would be allowed to expire, but years of mismanagement by the Biden administration has made a hash of things all over the world.

There is speculation that the Saudis are simply bargaining hard knowing that the Biden admin is desperate. Anthony Blinken is supposedly prepared to offer the Saudis a generous nuclear package, in addition to more military support, in order to continue the relationship, but of course it comes with a catch. The Saudis will have to normalize relations with Israel, something they are loath to do. There is no upside to them making a deal with a regime that routinely slaughters Arabs.

Now, the expiry of this deal does not mean much at the present. Half a century of pricing everything important in dollars will not be unraveled quickly. Tens of trillions in assets are priced in dollars, so the dollar remains the default currency, but it does open the door to alternatives. The Saudis will now accept other currencies for their energy products, which means OPEC will follow their lead. China can now buy oil in yuan, rather than swap yuan for dollars.

In the short-term this will not change much of anything, but over time it will result in a decrease in the demand for dollars. For example, if you trade with China for manufactured goods, it makes sense to trade in the yuan for energy products as it simplifies trade with China. The same is true for the Russian ruble, the Indian rupee, and the Brazilian real. Of course, it also means bypassing the American controlled banking system for settling these transactions.

The next shoe to drop in this process is a settlement system that operates outside the control of Washington. Project mBridge is a scheme for creating a digital currency to facilitate cross border transactions. The Saudis have recently joined this project, which is mainly supported by China. The Russians have recently shown interest in the project, despite years of resistance. The trade war launched by Washington has changed opinion in Moscow about dealing with the West.

That is another aspect to this. The Russian economy not only absorbed the sanctions blow, but it has also grown faster than the Western economies. Russia now has the fourth largest economy in the world. Sanctions forced the Russians to do thigs like replace the retail credit card system with their own system. They cleaned up their banking system to root out fraud and corruption. It was an inadvertent test case for creating financial systems outside of Western control.

Again, none of this signal the collapse of the dollar. The people screaming such things have no idea how the world actually works. What we are seeing is the slow decline of the American financial order. The countries that make things, fix things, dig things from the ground and invent things are starting to see that they do not need the countries that merely count things. This is especially true when the people doing the counting have a history of stealing from their customers.

What comes next is the slow decline in the demand for dollars and euros, which will make inflation a feature of Western economies. It will also mean the slow rise in borrowing rates in the West. If the rest of the world needs fewer dollars and euros it means they need fewer bonds denominated in dollars and euros. That leaves Western governments with the choice of cutting spending or printing money, which is the same thing but only less honest.

None of this was inevitable. After the Cold War, the United States could have remained the world’s banker and honest broker. Instead, the economic elites of America allowed the world’s most dishonest people to gain control of foreign policy. They used that power to launch a decades long crusade against their ancient enemies and in the process, they squandered the good name of the American people and destroyed global trust in the United States. Decline is now what must follow.

Blood Sucker Economy

Posted on May 21, 2024 by thezman

Last week brought news that the iconic restaurant chain Red Lobster has filed for bankruptcy protection and has started closing locations. The chain is mostly known for being a cheap night out for people in the suburbs and businessmen stuck near a suburban business park. The people hired to write about business for regime media, people who know nothing about business, have rolled with the usual lines about how casual dining was devastated by the pandemic.

The joke online is that Red Lobster’s all you can eat shrimp deal cost them millions because diversity would sit there for hours eating shrimp. The restaurant admits it was a disaster for them, but the real reason the chain has failed is that it was taken over by gangsters who made it into a bust-out. The gangsters in this case are private equity investors who bought up the chain. This bankruptcy is part of fleecing the dumb money that still remains trapped in the enterprise.

The way these scams work is the private investors swoop in and buy a property that is asset rich but cash poor. That is, they have things of value, but those things are not generating enough revenue to meet expenses. Sometimes the enterprise is profitable but needs cash to expand or maybe reorganize itself to shed poorly performing assets and expand into more profitable areas. Private equity comes in with attractive terms and an army of experts to reshape the enterprise.

In reality, they usually sell the assets in deals that have the buyer lease back the asset to the company in order to raise quick cash. Other times the asset is pledged as collateral in a similar sort of debt arrangement. The result is the enterprise quickly raises cash to pay the investors with a healthy profit but is left stripped of its assets and often holding a lot of debt. This is what happened here. The new investors sold the real estate in lease-back deals that are now expiring.

It is a good example of how so much of our economic output is just moving money around in circles. It is the old joke about a stranger coming into a little town to rent a room for the night. Nothing of value has been created by investors buying up this restaurant chain. It simply became a vehicle for them to lure in new money to pay them a profit for their investment, while all along knowing that the end result would be these new investors getting a haircut in bankruptcy proceedings.

The argument in favor of this sort of dealing is that all of the parties involved are sophisticated enough to know the risks. The real estate investors that bought the properties and then leased them back knew the risks or at least they should have known the risks, as it is their business to know the risks. This is all true, but it obscures the fact that this is not genuine economic activity. This is not how an economy should function, but it is the core of the American economy now.

This is not without consequences. Travelers now have to check out the type of plane they could be boarding, because Boeing planes are falling apart. As with Red Lobster, the blame is placed on diversity, which is not entirely without merit, but the real culprit is the vulture capitalism that has come to define elite economics. Boeing is no longer in the business of building better airplanes. It is in the business of creating financial transactions for the benefit of the investor class.

What we see with Boeing has been happening with the military industrial complex for the last three decades. They are no longer in the business of building practical weapons that can be used by the American military. Instead, they are in the business of creating complex transactions for the benefit of insiders and investors. One result is an F-35 fleet that looks great parked at an air field, but it is too dangerous to fly. Meanwhile, Russia and China make weapons for war, not investor profit.

A root of this growing problem in the American economy is the notion that anything that can be shown to turn a profit is normatively good. The usual suspects are going to ruin the town of Harpers Ferry with a development project that will make them money, but come at the expense of the residents. They can do this because they went to the state and showed it will turn a profit, so everyone fell in line. No doubt promises of insider access to those profits were included in the pitch.

The reason profit is a good thing in an economy is it is supposed to spur innovation that results in new products and greater efficiency. Profit is a means to an end, not an end in itself from a macroeconomic perspective. When profit or the quest for profit results in planes falling from the sky or communities being harvested for their social capital, then profit or the quest for profit is bad for society. It is why we used to hunt down and punish corruption and fraud. Note we no longer do that.

An economy is about making things, fixing things, and inventing things, which is no longer the way to get rich in America. Instead, as Peter Theil explained in his book, the path to wealth is finding a way to game the system. You find a flim-flam like the Red Lobster scam or you game government to let you make electric cars that no one needs or wants. The blood sucker economy is not about making things, fixing things, and inventing things. It is about robbing the people who do those things.

The Politics Of Failure

Posted on May 1, 2024 by thezman

One of the eternal truths of human society is that the people with real power are those with control of the economics of society. Whether the society is ruled by a king or a committee of girl bosses, the people who have the final say on all matters are those who control the wealth of society. The golden rule of human organization is “the man with the gold makes the rules.” Without much fanfare, we may have seen this rule work its magic in the big neocon funding bill.

The first thing to note about the money for Project Ukraine is most of the money will never turn up in Ukraine, at least not in the form of weapons. If you read the text of the bill most of the money is for slush funds the White House can use to replenish weapons taken off the shelf and sent to Ukraine over the last year. It appears the White House has been shipping weapons to Ukraine that were not paid for by Congress, so this created a debt to the Pentagon budget that is now repaid.

The number of actual weapons going to Ukraine as a result of this bill is a fraction of the sixty billion allocated. Ukraine needs advanced air defense systems, artillery tubes and artillery shells, but none of this is coming from Washington. The main reason for this is none of these things exist, at least not in surplus quantities. You cannot send what does not exist, even with billions to spend. Instead, Ukraine is getting what is available which is wheeled vehicles and surplus arms.

It is not all that clear that supplying Ukraine with what they need would make much of a difference, as Ukraine has another problem. The Ukraine army is running out of men and there is no money solution to this problem. It takes time to draft and train men to fight this sort of war. According to Ukraine sources, they need two hundred thousand men right now to be made whole. That deficit grows bigger by about a thousand men a day and there is no way to solve this problem.

The reality on the battlefield raises an important question. If there is no money solution to the problems facing Ukraine on the battlefield, then why spend sixty billion on this project when it must inevitably fail? That money could be used to other foreign policy adventures like the planned war with China over Taiwan. Of course, they could spend the money on Israel. There is always an appetite for that in Washington. Instead, they chose to shovel sixty billion into the Ukraine furnace.

The first clue is all the money allocated to the Pentagon for various undefined things supposedly related to Ukraine. It is clear the administration sent far more to Project Ukraine than Congress authorized. What most likely happened is something like the old arms-for-hostages game played in the Reagan years. Military contractors sent men and material to Ukraine on the promise they would be made whole with interest at some point in the future. The future arrived in that bill.

The other clue is the money being sent to Ukraine for economic support. It is so tangled up in the language of government that it would take years for an outsider to figure out what any of it means. This is how Washington launders trillions of dollars through and for friends of Washington. Billions will go into obscure programs administered by the administrative state and then those funds will end up in grants to NGO’s or contracts to vendors with obscure business models.

Of course, some will go to the Ukraine government, but with very specific instructions on how it is to be spent. There are many friends of Washington that have unpaid bills for services rendered to Ukraine. The vendors must be paid in dollars, not the worthless currency of Ukraine. Some of this money will be directed through Kiev to those friends of Washington. It would be a total coincidence if those vendors just happened to employ friends and family of important people in Congress.

Most likely this was the main reason for the sense of urgency. Over the last two years big players have been making deals with Ukraine for economic development, on the assurance that Ukraine would win the war. BlackRock, for example, made a number of deals with Kiev. BlackRock and JP Morgan have created a bank for rebuilding Ukraine, by which they mean looting Ukraine. Large global operators have been cutting deals with Ukraine since the start of the war.

What this means is heavy weight players have been given exclusive access to Ukraine in exchange for economic assistance now. Much like how the Pentagon “borrowed” from military contractors, the regime has been promising the usual suspects first rights to loot Ukraine after the war, in exchange for “investments” now. This is all done informally, but no one is hiding it. War has always been good for business, especially the banking business.

In other words, another purpose of this bill was to repay economic elites who had been talked into going along with the project. Keep in mind that players like BlackRock and JP Morgan have money in Russia as well. Now that it is clear that Ukraine will lose the war, they need to think about how the world looks after Project Ukraine. As you always see with a failing enterprise, the insiders are getting their money out before it becomes obvious to everyone that the enterprise is doomed.

This is all speculation based on the available data, but the facts on the ground are making it clear to everyone that Ukraine is finished. The text of this spending bill and the announced weapons transfers that are part of it all point to a rush for the exits rather than a new commitment to the project. The smart money just jumped out the window, carrying your tax dollars with them. That means the next phase is finding someone in Washington to blame for the failure of the enterprise.

Taxes & Conservatism

Posted on April 15, 2024 by thezman

Note #1: Behind the green door is a post about the classic comedy, Dr, Strangelove, in which I reveal that I am a humorless dullard, a post about how O. J. Simpson was framed by the Clintons and the Sunday podcast. Subscribe here or here.

Today is Tax Day in America, a day when millions of Americans drop tear-soaked checks into the mail, along with their many tax forms. Of course, for most Americans it is now just another day. Their taxes are simple, and their tax is paid by their employer throughout the year. The resulting decline of Tax Day and the tax issue is a good entry point for examining how our politics have changed over the last decade and a good place to start when thinking about the death of conservatism.

Half a century ago, the run-up to Tax Day was a big party for the people we call conservatives, as it gave them an excuse to go out into the streets, banging their pots and pans about the unfairness of the tax code. Taxes were not only too high, but they were also far too complicated. Rarely said, but often implied, was the claim that a complex tax code allowed special interests to game the system and avoid taxes or bribe their favorite politicians to get special tax breaks.

You never hear this sort of talk now. Taxes were the bread-and-butter issue of so-called conservatives since Barry Goldwater, but no more. One reason for that is tax simplification was passed under Trump. For most Americans taxes are a few clicks on the computer and that is it. Business owners, rich people and the self-employed still have to go through the game of guessing what the IRS says they owe, but the typical suburban peasant is now free of this burden.

Interestingly, a central theme of so-called conservatives in the 1970’s and 1980’s regarding taxes was that if people knew how much they really paid in taxes they would revolt against the welfare state. There were schemes back then to make taxes a quarterly affair, so everyone was always be aware of their tax burden. Instead, they went the other way and made taxes simpler, so that their voters no longer cared about the main issue for the so-called conservatives.

Of course, the main reason so-called conservatives have forgotten about the tax issue is they have done with it what they have done with so many other issues and that is embraced the position of the people they oppose. The fiscal conservative is like a guy wearing a denim leisure suit in Washington. It is so rare to hear anyone talk about the nation’s finances that when it happens it brings back memories of those halcyon days when the Gipper was shaking his fist at the Soviets.

This raises another truth about so-called conservatism. They were sure that if you starved the system of taxes, it would have to cut spending. Despite history saying otherwise, they were certain of it. Instead, they habituated their minds to ever growing deficits and an incomprehensible national debt. Per capita debt is about five times higher than under Reagan and about four times higher as a percentage of the GDP, so it is safe to say they were all wrong about this one.

There is a demographic aspect to this as well. When the baby boomers were in their prime working years, it was good politics to promise them lower taxes and greater returns from their investments. Now that they are retiring in droves, the tax ploy no longer works, so no one discusses it. Instead, it is good politics to create more money from thin air to pay for the entitlement programs. Like everything else about conservatism, taxes were nothing but a good marketing ploy.

This raises another tax-related issue. Tax collections are at record highs, but the deficit is also at all-time highs. The federal deficit in 2023 was $1.7 trillion. The rosiest of rosy scenarios says that federal budget deficits be $20 trillion over the next decade and federal debt held by the public will reach 116 percent of GDP. Given that these projections always turn out wrong, it is not hard to see why no one in Washington is talking about taxes or the state of the budget.

This is why so-called conservatism is headed to the dustbin of history. It was never really a conservative political movement, but more of a money laundering scheme masquerading as a political movement. The response to progressives promising to rob your neighbor and let you have a piece was so-called conservatives promising to rob the progressive and let you have a piece. Taken together we got a half century of systemic looting of their American economy.

For the last half century, the white middle-class has been the kid getting bullied at school for his lunch money. Progressives, representing the financial elites, threatened to shove the suburban peasant into a locker. So-called conservatives kept upping the lunch money they had to pay to avoid the wedgie. Now those suburban peasants are too old for school, so those financial elites are looking to prey on their children and grandchildren to keep the plates spinning.

Another legacy of the so-called conservatives with regards to tax policy is the sacralization of rich people. Part of their sales pitch for tax changes was the claim that our noble rich people were paying more than their fair share in taxes. This was always nonsense, but it convinced most white people that it is immoral to question the motives and behavior of the rich. One result is a perfidious and destructive ruling class that seems hellbent on pulling the roof down on all of us.

In the end, the disappearance of the tax issue from public debate is a good reminder that we are at the end of a long cycle. That means we are about to start on a new political cycle, so the past framing of things is of no use to us. The old ideas and arguments from the last century, things like tax fairness, need to be sent to the dustbin of history along with the people who championed them. In some future Tax Day, no one will have a reason to think of so-called conservatism.

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Bridge Thoughts

Posted on March 26, 2024 by thezman

In the 18th century, planners did not have to worry too much about ships smashing into bridges because ships were small and made of wood, while bridges and seaports were massive and made of stone. If a captain made an error and hit a bridge support, his ship would be damaged, but the bridge would be fine. The worst case is it would take a few days to clear the debris of the ship from the waterway. In other words, the seaways were somewhat error resistant.

The news of the Francis Scott Key bridge collapse is an obvious example of how this is no longer the case in the modern world. That ship is massive, relative to anything that existed a century ago, much less the 18th century. The bridge, in contrast, was a slim wisp of thing compared to bridges in the past. When it was completed half a century ago it was the third longest truss bridge in the world. Now, of course, it is a pile of scrap iron after having been knocked off its moorings.

People will naturally rush forward with their favorite pet theory about how this could have happened. None of these claims are about the accident or why it happened, but rather a way to use the event to promote their favorite theory. Steve Sailer has decided to avoid the usual answers and instead go with an insane theory about bombs being squirrelled away on the ship. No doubt the usual suspects are working on a plot where Putin is responsible for the accident.

For those who know how ports operate, especially an inland port like the Port of Baltimore, the most likely answer is more mundane. These ships are piloted by a harbor pilot in and out of the upper bay. These are men who know every inch of the waterway and rely on a large support staff to pilot the vessel. That means the cause is a failure of that system, most likely the ships navigation systems. It lost power and the crew was unable to restore power before hitting the bridge.

Putting that aside, the port is the ninth largest seaport in the country and has certain specialties like the import of cars, which cannot be easily replaced. Until the bridge debris is cleared from the waterway and the waterway is inspected, the port will remain closed, which will create supply chain problems throughout the year. Of course, the bridge is a vital part of the local ground transportation system. Baltimore is surrounded by a beltway system and this bridge was a key part of it.

Replacing the bridge has been debated over the last ten years, but the will to do it has never been enough to overcome the sclerosis that plagues state politics. A project that will not be done until most of the people voting on it are dead or retired is never going to get a lot of support in the modern age. The things that get pols trending on social media is what gets the support, even if the reason to be trending on social media is the ghetto has just lost track of one of its simpletons.

Now they will have no choice but to replace the bridge, but that will take years to debate and then years to get approval and then more years to build. The people who make the economy work will figure out ways around this new obstacle in the meantime, so there will be no sense of urgency to address the bridge problem. In fact, it is entirely possible that the bridge is never replaced. A generation from now people will look at the remaining pillars the way people look at old Roman aqueducts.

If you want to contextualize this accident into something bigger, the best approach is from the angle of complexity. Like everything else in the American economy, our ports have become extremely complex systems with many points of failure. There are millions of people with the word “logistics” in their job title who make sure that some point of failure does not fail in the complex system of moving goods in and out of the country and around the country to your store.

One reason for that is the berserk quest for efficiency. Every manager in the system dreams the dream of that box of Cheerios arriving on the shelf just at the moment you decide to reach for it. Everything in the economy is now geared to reduce the shelf time, warehouse time and transport time of every item. Every bit of extra is cut from the system to maximize profit, but the result is often fragile systems that work well when there are no problems but fail miserably in a crisis.

The complexity problem is turning up in the Ukraine war. Russia, with its massive industrial base and redundant systems, now outproduces the West in terms of military supplies at a fraction of the cost. Western countries with massive GDP’s are faced with impossibly complex economies that cannot be quickly modified to address the need to make even simple things like artillery shells. Like the now collapsed bridge, solving this problem will probably never happen.

That is the other angle to this accident. That bridge was built in 1976 and was out of capacity twenty-five years ago. A second span should have been started at the turn of the century with a third span or another bridge up stream in the works, but these sorts of projects are not popular with modern politicians. Half a century ago, the political class was not obsessed with media attention, so they could think longer term about projects that would benefit those who followed them.

It is popular to blame “democracy” for our present ills, but our political system has not changed in fifty years. If anything, we are less democratic today. What has changed is the explosion of media. We now live suspended in a media solution. As a result, even the lowest person measures himself by likes, follows and media exposure. This has warped the political class the most, turning them into ridiculous carny acts that do nothing but find ways to get attention in the mass media.

In the end, none of this matters. The bridge story will dominate the news for a few days this week, but then the media will be onto the next thing. By the end of the summer the port will be reopened, and the bridge will be forgotten. The bridge is a symptom of a much larger problem for which no one has any answers, at least not answers that get you trending on Twitter. Maybe the remains of the bridge will one day be a warning that a people that does invest in its future has no future.

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Work Until You Die

Posted on March 21, 2024 by thezman

There seems to be a secret plot to inject the idea of cutting Social Security into the national debate for the looming presidential election. This plot is among the slithering lizard people known as the conservatives. It started with the oleaginous Ben Shapiro demanding that white people work until they die. He then went to Twitter to gin up more talk among the mouth breathers in favor of cutting Social Security. Now the Republican Party is promoting the idea in Congress.

It is an odd coincidence that once Trump secured the nomination, his alleged allies started talking up an idea that has no constituency. No one wants to throw their granny into the street, and no one wants to throw their parents into the streets. More important, the tens of millions of retired white people do not want to be thrown into the streets, especially in the name of sending their last pennies to Israel. It is the third rail of politics for a reason, so why are these reptiles bringing it up now?

The most popular reason is they hope to slime Trump with this issue, thus undermining his general election campaign. They assume, and probably correctly, that the mass media will claim he wants to murder your granny in the promised bloodbath this autumn, no matter what Trump says about the subject. So far, Trump has mostly ignored it, only mentioning the problems of fraud in Medicare. Fraud is a massive problem with Medicare, but fraud is a defining feature of America now.

Another reason for this sudden interest in poisoning their election chances is that idiots run the Republican Party. The reason the party has been called “the stupid party” for generations is it is run by stupid people. They are clever and scheming, necessary skills for democratic politics, but they are not as cynical as the the other side. As a result, Republican leaders are the forever Charlie Brown, sure that this time the Democrats will let them kick the football.

Then there is the fact that the Republican Party and American conservatism evolved in the 20th century as losers. The GOP’s natural role is as the cleanup crew for the Democrats, who run around smashing things. For their part, the so-called conservatives busy themselves racing in front of speeding trains yelling “stop” while the rest boast about how their principles forbid them from winning. Conservatism evolved to be the consolation prize for the politically inept.

You can probably take a little bit from each column and produce a mix that explains the sudden interest in snuffing out granny. There is nothing about any of these possible answers that contradicts the others. Ben Shapiro is a skeevy little hobbit man who hates Trump with the intensity of a thousand suns, but he is also a mediocrity who has a habit of stepping on rakes. There is a reason that his handlers make sure to never expose him to adults during his public appearances.

There is another element to this and that is the desire of many people, no doubt many people from the loser party, to get back to debating issues. The United States does have real problems that could quickly become catastrophic problems if they remain unaddressed by the political class. For example, there is a pre-French Revolution vibe to the government’s finances. This post in Chronicles is a good explainer and a good example of the desire to return to real issues.

Now, “experts” have been predicting doom over the national debt for generations and doom is always twenty years off. It is like the collapse of “fiat money” or affordable solar energy in that it is always twenty years away. Unlike the other two, math says there is a limit to how much debt the government can issue. At some point, the appetite for new debt will decline as everyone will be holding as much debt as they need. At that point, new debt comes with new, much higher costs to the government.

As far as how to avoid this debt cliff, the only answer is the one answer everyone agrees must never be debated. That answer is ending the Global American Empire and returning to normalcy. That means reducing the military budget by ninety percent, deporting the tens of millions of freeloaders, and cracking enough rich people’s heads, maybe even lopping off a few of them, to get the economic elites inline. None of that can be debated, so they talk about killing your granny.

For the most part, Social Security runs reasonably well. The big problem, as far as old people programs, is Medicare, which is riddled with fraud, but Social Security is largely free of fraud and waste. Suring up its finances during the great baby boomer retirement should not be a great challenge. If life expectancy continues to decline, then it will be a self-correcting problem. In other words, if you are worried about the looming debt crisis, there are better places to look for answers.

That is what really gives this topic the French Revolution vibe. A big reason for the revolution was the gordian knot of royal finances. France desperately needed financial reform, but the rich people opposed it because they saw no profit in it. The Global American Empire faces the same problem. All the best people agree that we face a looming financial crisis, and they all agree that they will not sacrifice a hair on their heads to avoid it. Instead, they think you should work until you die.

Death Of The Middle Man

Posted on March 12, 2024 by thezman

Imagine you are a rich guy, maybe a banker working at an investment house, and your neighborhood starts to have a crime problem. Maybe you get mugged on the way to your car or perhaps you start hearing about break-ins in the area. All of a sudden, your safe world is no longer safe. You think that maybe it is time to hire some private security to enforce the rules, but you find that they do not exist. All of a sudden, your cash is not all that important to maintaining your lifestyle.

That is the position of Western political elites as they come to terms with the reality playing out on the Ukraine battlefront. The West has lots of cash. They can literally create what they need from thin air. Sure, it has created inflation for the Dirt People, but only a sucker cares about them. Ukraine is what matters. Even though Congress is slow walking the next pile of cash, there is still plenty to send Ukraine. The EU and now the U.S. are plotting to “loan” Ukraine the money.

The trouble is dollars and euros are not much use on the battlefield. What Ukraine needs is machines, ammunition for the machines and men to run the machines, but that is something the West is struggling to produce. CNN has a story up that reports the Russians now produce three times the number of artillery shells as America and Europe combined, which is probably an understatement. The production numbers cited are more theoretical than actual for the West.

The industrial aspect of this war has been a topic of discussion around here since the war started, but like the rich guys living in their fantasy world of wealth and access, the political class of the West has not thought about it. Making stuff, inventing stuff and fixing stuff is for the Dirt People. Cloud People need their time and energy to think about new ways to describe the glorious future or turn bits of invented money into more bits of invented money so they can underwrite their lifestyle.

What the war in Ukraine is doing is reminding the world that the strength of a country is not magical numbers in reports that no one reads, but the hard cold reality of making stuff, fixing stuff, and inventing new ways to make and fix stuff. You can probably throw in food production, which is a form of making stuff, but a unique form, along with digging stuff out of the ground, like energy products and minerals. Countries good at these things will be strong countries.

The West no longer does these things. America and Europe still grow lots of food but the war on food production, as part of the Gaia cult, is threatening to kill off whole swaths of farm production. The war on digging up the ground is mostly about aesthetics, as the Cloud People hate seeing people do dirty work like farming or digging minerals out of the ground. Manufacturing employment in the U.S. has dropped by half over the last half century, despite the population growing by a third.

This is why the West is losing this proxy war with Russia. Despite having a far smaller population and smaller GDP, Russia still makes things and has the facilities and work force to make more things. If you can grow your own food in vast excess, supply your own energy needs, plus much more for export and you make things that people around the world want to buy, you are going to be immune from the machinations of the money changers in New York and London.

It goes beyond this though. China is the world’s biggest manufacturer and the world’s biggest consumer market. India is the second largest consumer market, and it is emerging as a manufacturing powerhouse. Russia is now the fifth largest economy in the world, despite the sanctions. What is happening here is the places where things are made and dug out of the ground are getting rich, which means they can also buy things, like the stuff they make for Western markets.

What we are seeing here is the death of the middle-man economy. For the last half century, America has positioned itself to be the money lender, the regulator, and the facilitator of economic activity, rather than the producer. To finance this, much of the manufacturing base was auctioned off and the economy became reliant on the production of credit to the global economy. To a lesser degree, the EU has done the same thing, as the junior partner of the United States.

What the war on Russia is revealing is that in a street fight, the banker has no chance against the guy who works on a factory floor. Sure, the banker has a Brazilian Jujitsu trainer and access to the finest steroids, but the working man knows how to fight and win, so it can never be much of a match. Further, in the contest of countries, it is the rules of the street that matter, not the rules of the boardroom. The competition of nations is always a street fight.

Long ago, the paleos made the point that you cannot have an economy based on everyone doing each other’s laundry. The great transition from an industrial economy to a service economy was cheered by the Cloud People but people like Pat Buchanan and Ross Perot warned that it was unsustainable. A generation on and the world is learning that those old guys were right. A country that does not make things, fix things, and invent things is no longer a serious country.

Twenty years ago, Yuri Slezkine observed in his book, The Jewish Century, that the American economy had been transformed into one that primarily served the interests of the facilitators and middle-men. Jews, he argued, were unusually skilled at these tasks and that is why they have been so successful. According to the Atlantic, the golden age of American Jews is ending, and probably taking America with it. It turns out that the middle-man economy is not sustainable.

A Price For Everything

Posted on February 19, 2024 by thezman

Note: Behind the green door is a post about being a jerk, old people sniffing deli meat at the grocery story and the Sunday podcast. Subscribe here or here.

A tenet of the old right was that some things are too important to a society to be subjected to the crucible of reason. Traditions, for example, not only bind people to their ancestors, but to one another in the shared understanding of the past. Treating traditions as mere superstition inevitably leads to their abandonment and the loss of their associated social capital. A society without tradition and history is a temporary, ad hoc collection of deracinated individuals.

Reason is not just questioning and demanding proof. The marketplace is a manifestation of reason in the exchange of goods and services. Sellers compete with one another to attract buyers. Buyers compete with one another through the mechanism of price in order to determine the best good or service. Reason states that if you have a competitive and open market, you end up with the best products and services winning over those of lesser quality or higher price.

The old right would agree to the theory behind open market economies but point out that some things are too important to subject to the market. The moral claims of a society, for example, should not be up for bid. The marketplace would no doubt decide that slavery in certain areas is the superior option, as it has for all of human history, but we have decided that owning other humans is immoral. Therefore, we do not make this moral claim subject to the crucible of the marketplace.

We are getting a real-world glimpse of this with regards to the war in Ukraine which the Western managerial elite insist is a moral crusade. Helping Ukraine, they say, is proof that we worship the god called democracy. The Munich Security Conference just ended and speaker after speaker insisted that the god of democracy demands we empty our wallets to help Ukraine. The Danish prime minister went so far as to say that the West must give all of its weapons to Ukraine.

No one really knows, because the cause is too important to waste time on accounting, but the West has supplied Ukraine with weapons and money in amounts many times more than Russia is committing to the war. Hundreds of billions have been given to Ukraine with hundreds more lent though various contrivances. The sorts of people who perform at events like the Munich Security Conference are fond of talking about how the arsenal of democracy is going to save Ukraine.

The trouble is the weapons supplied to Ukraine have not made much of a difference and in many cases have been worthless. French supplied armored vehicles are nothing more than expensive death traps. British Challenger tanks are great on the parade route but unsuitable for actual combat. The German Leopard tanks were sitting ducks against Russian artillery in the summer offensive. Despite the economic advantages, Western weapons have not made much of a difference.

The reason gets back to the tenet of the old right. There is a story in the German tabloid Bild that takes a look at how Germany is supplying armored vehicles. Instead of producing or selecting vehicles best suited for the war, it is an elaborate financial scam that profits the arms dealers and their foreign suppliers but results in expensive and poorly suited vehicles to Ukraine. The German taxpayer is paying three- and four-times retail for equipment that is useless in the war.

To give some perspective, the Russians probably spend the equivalent of one hundred thousand dollars for an armored vehicle. The Germans are paying six hundred thousand dollars, but for the wrong sort of vehicle. This is a pattern that repeats across the Western supply chain to Ukraine. Either suppliers see a chance to unload useless junk at inflated prices or their top-line equipment, in the case of Western tanks, is proving to be ill-suited for the actual fighting.

The Russians, meanwhile, work from that old right tenet. Some things, like fighting land wars on their border, are too important to be subjected to the marketplace. There is competition within the Russian military industrial base, but the winners are not picked by the invisible hand of the marketplace. They are picked by the demands of the military for the situations they are facing. One reason Russian arms tend to be simple compared to American arms, is the military doctrine of the Russians.

It is tempting to think this old right idea applies only to something narrow like war fighting, but war fighting is a consequence of other factors. After the Cold War, the Russians did not embark on a process to ship their manufacturing base to low-cost countries as happened in the West. One reason for that is the Russians do not make profit the singular goal of their society. They set about modernizing their manufacturing base and now they are reaping the rewards.

This is a pattern we see all over the West. Open borders, like slavery in the ancient world, are profitable for society, but it erodes the social capital. It attacks the customs and habits of the people, the things that bind them together as a people. Once you have monetized the social capital of the people and carried it off to vaults in New York, it is no longer available when the crisis comes. It turns out that national borders should not be subject to the crucible of reason.

The crisis surrounding Ukraine, and make no mistake that crisis is spilling over into the West now, is a microcosm for what awaits the West. The reason for that is Western managerial elites turned their societies into for-profit enterprises. The decision point in every matter is whether it profits the managerial elite. Even the abrogation of ancient rights is merely a defense of the bottom line. It turns out that when everything has a price, nothing has value, not even your society.

Who Does The Measuring

Posted on January 31, 2024 by thezman

In the 1980 campaign, Reagan would regularly say that a recession is when your neighbor loses his job. A depression is when you lose your job. It was a pithy line that got at something that was always missed by the politicians at the time. That is, the economy is not the same for everyone. You can have a good economy but there will be people who are not doing so good. The reverse is also true. Even in the Great Depression, there were people doing fabulously well.

That is the problem facing the political class this year. According to their court wizards, the economy is growing at a blistering pace. The fourth quarter of last year saw growth at over three percent and inflation falling down to two percent for what the wizards call personal items, while overall inflation was under two percent. The definition of “personal items” is one of those things that makes sense to the people doing the counting, but not to anyone who is doing the actual spending

Does it feel like the economy is growing at a blistering pace? Most people do not think the economy is great. In fact, most people think we are in difficult economic times, despite relatively high employment. This was one of the top reasons people voted for Trump in Iowa and New Hampshire. Under Trump, people perceived the economy as strong while under Biden it seems to be weak. The main reason is inflation. Every trip to the store sees prices higher than the last trip.

For the sake of comparison, the last time Americans experienced significant retail inflation was in the 1970’s. The court wizards back then used different rulers for measuring things like inflation, but everyone agrees retail inflation was higher than what we have experienced the last few years. The economy also grew at a faster rate most years during this time. The recession of 1974 was followed annual growth of near five percent the following years.

Five percent growth in 1976 did not keep Gerald Ford from losing to Jimmy Carter and it did not keep Reagan from beating Carter in 1980. The reason is GDP is not a great way to measure the economy. The formula for calculating GDP is Consumption + Government Spending + Investment + Net Exports. If inflation is roaring, consumption and government spending will also be roaring. You can have a growing GDP while people are seeing their budgets ravaged by inflation.

Of course, we live in the managerial age and managers can always be counted on to do one thing very well and that is lie about what they are doing. In the case of the economy, the court wizards keep tinkering with how they measure things like inflation to make the number look smaller. Shadow Stats keeps track of these changes and reframes official economic numbers in the old way of measuring them, so that we can compare today with the past.

When we take an honest look at the economy over the last few years, we see that inflation was comparable to the 1970’s, but not quite as high. People who buy food will tell you that prices are rising again, despite some relief last year. In the end, we could replicate the 1970’s in terms of the pattern and duration, even if overall inflation figures are not quite the same. The reason people think the economy stinks, despite the official numbers, is that is does stink for people who buy things.

That brings us back to that Reagan quip and another key point. The American economy over the last thirty years has transformed into something that is really good for people in finance, government, the academy and corporate governance, but it has not been great for people who make things and fix things. The nurse practitioner, which is really a government job, is doing great, but her patients who work in the honest economy are finding it hard to pay those health insurance bills.

Returning to that magic formula for measuring GDP, if the Investment side grows, but consumption remains flat, then GDP rises. Since government always grows and that growth is fueled by the Fed creating debt through the banking system, GDP is just about guaranteed to grow every year, even if the economy is in recession. Put another way, debt-driven government growth not only corrupts the nation but it corrupts the way in which we can measure the corruption.

This corruption has been highly effective. The typical American has barely noticed that it requires two incomes to have the life that used to be possible on a single income, at least for the middle-class. The baby boomers grew up in one income, intact two-parent homes, but they lived as adults in two income, often broken homes. The relative material prosperity came at the cost of social capital. The new way of measuring things masked the real trade-offs that came with the new economy.

We may be reaching the end of the line with the new way of measuring things, which is why people are not buying the official numbers. Those bulging baby boomer portfolios cannot mask the fact that their kids are saddled with debt and are struggling to maintain a lifestyle the parents took for granted. Of course, the next round of young people will enter adulthood in debt and looking forward to paying the pensions and health care costs of eight million retired people.

What all of this gets to is that measuring is necessary, but it is not how things are measured that matters. It is who does the measuring. That was the subtext of that Reagan quip half a century ago. Americans are pessimistic about the economy because it is not good for them. It may be great for the people doing the measuring, but that does not change the fact the typical American is not experiencing great times. That is because of who is in charge, not how they got there.

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