Our Fascist Age

One the stranger things about the Nazis was their opposition to chain and department stores. Anti-capitalist elements of the party pushed through special taxes on department stores and organized boycotts against the larger retail stores. It was not just Jewish business which came in for these assaults. Large industrial concerns were also attacked by elements in the party who wanted a return to the guild system of their imaginary past.

The Nazis had a lot of nutty ideas about all sorts of things, but they figured out that letting the populists run wild would result in economic chaos so they eventually adopted the ideas of other fascists, namely corporatism. The Nazis were never an intellectually rigorous bunch so it is no surprise that they were not very coherent when it came to economics, but they eventually fell into corporatism, which had been kicking around Europe since the 19th century.

The interesting thing is the Nazis had a romantic view of small business that was integral to their worldview. Yet, once they embraced corporatism, they turned on small business quickly. In 1936 they closed 36,000 small businesses and in 1937 they closed another 63,000. The reason was simply that they thought there were too many small businesses and that complicated their larger economic plans. In other words, the corporate state transcended everything, even ideology.

It’s something to keep in mind as America embraces the corporate state, combining it with the technological state. This interesting piece in 538 a while back provides some useful numbers to understand how this is unfolding.

Talk to anyone in Silicon Valley these days, and it’s hard to go more than two minutes without hearing about “disruption.” Uber is disrupting the taxi business. Airbnb is disrupting the hotel business. Apple’s iTunes disrupted the music industry, but now risks being disrupted by Spotify. Listen long enough, and it’s hard not to conclude that existing companies, no matter how big and powerful, are all but doomed, marking time until their inevitable overthrow by hoodie-wearing innovators.

In fact, the opposite is true. By a wide range of measures, the advantages of incumbency in corporate America have never been greater. “The business sector of the United States,” economists Ian Hathaway and Robert Litan wrote in a recent Brookings Institution paper, “appears to be getting ‘old and fat.’”1

Hathaway and Litan say the trend is worrisome, and other economists who have studied the issue agree. Entrepreneurship is a critical source of jobs in the economy. Perhaps even more importantly, it is a major driver of productivity growth. New companies, after all, often arise from an idea about how to do something better, whether it’s making cars or brewing coffee. Many of those ideas fail to pan out, but the ones that work can change entire industries — can be, in other words, “disruptive.”2

But recent research suggests that established businesses have less and less to fear from would-be disruptors. This is partly because, as I noted this spring, fewer Americans are launching businesses. In the late 1970s, according to data from the Census Bureau, 15 percent of all U.S. businesses were startups, meaning they had been founded in the past year. In 2011, the latest data available, the so-called startup rate had fallen to 8 percent. Measured in terms of employment, the drop has been even steeper.

But the issue isn’t just that there are fewer startups. It’s also that fewer of them are succeeding. In 2011, more than 27 percent of new companies went out of business in their first year, up from about 20 percent two decades earlier.3 Even companies that do make it to their first birthday are failing at higher rates than in the past, though that trend is more recent and hasn’t been as steady. The only groups of companies that haven’t seen their failure rate rise meaningfully, Hathaway and Litan found, were ones that had been in business more than 15 years.

Part of what’s happening is driven by ultra-low interest rates. Big companies can raise enormous amounts of cheap capital. That lowers risk so big business can be hyper aggressive with pricing to wipe out small competitors. It also means they can buy up small competitors. When money costs 10 points you have to buy companies at below market. When money costs two points you can buy above market.

There’s also the matter of access. Not far from where I live WalMart opened a giant store near a busy retail area. The state widened the road, put in some lights and added an extra lane for traffic entering the store parking area. A few clicks down the road a local business has been fighting zoning battles for a year trying to expand into the vacant lot next door. So far it has taken him more time to fight the zoning board than it took Walmart to built their store.

WalMart has an army of lawyers and lobbyists. They can grease all the palms that need to be greased and do so with a sophistication the local guy cannot match. The local guy pays more in taxes than WalMart, but he can’t offer no show jobs and other perks pols can hand out to their people. In the corporate state, the small business man is a nuisance, not an asset.

Something new to our time is the technological revolution. In Nazi Germany and Soviet Russia, surveillance meant following people around and wiretapping their apartments. Today, the government has their corporate partners archive your e-mail, cell phone calls and internet habits. One can’t help but wonder if the erratic behavior of GOP legislators and judges of late has something to do with what the White House knows about their personal lives.

The sad irony of modern America is the technological revolution was kicked off at the same time the culture began to reminisce about the “greatest generation” and how they whipped the Nazis. Just as that generation is fading away, we are adopting the economics of the people they defeated in the war. Even more ironic is the fact that if you believe the things that generation believed, you are called a Nazi.

The Alien Future

One of the fun things about reading history is you occasionally bump into names or places that still resonate today. For instance, I was recently reading about the English Civil War, the Roundheads versus the Cavaliers. Names like Richard Lee, John Washington and George Mason were Royalists on the side of the king. They were also ancestors of Robert E. Lee, George Washington and George Mason.

Americans are raised to think of the Founders as fierce republican patriots who detested monarchy on principle. In reality that was never the case. America was a hodgepodge of people and cultures from Europe with all sorts of weird ideas about how to best organize their societies. Events, however, helped change their thinking and their subsequent deeds shaped the new country to this day.

It’s a reminder that human societies are run by men with a long past and they shape their world for subsequent generations. Modern scholars dismiss the great man theory of history, but modern scholars are deeply marinated in all sorts of lunacy. The claim that men are merely the product of their environment misses the forest for the trees. Men are a product of and a shaper of their environment.

Learning about the great men of history is a great starting point. Study Washington, Jefferson, Mason and Randolph and you learn about the Tidewater region of America that produced them. From there you learn the history of the colony and its cultural ties to the Royalists of England. That helps explain why the Tidewater region joined the Yankee colonies in revolt, despite having very different views on liberty.

That’s the thing. Every society has its ruling elite and they are people who respond to events. They can change their minds and go off in a direction that history says is at odds with the tide of history. In modern America, for example, we now have gay marriage in spite of the fact most Americans think it is ridiculous. The people in charge want it, so they make it so, despite being opposed to it not so long ago.

History is, in many respects, the study of the shifting culture through the lens of the great men who shaped it. The ruling elite in the first half of the 20th century were men of the industrial age. Many were not that far removed from the shop floor or the plant offices. Those who inherited their wealth often served in the military with the same men who worked in their father’s plants. The men running the war against Hitler were men of their age even as they were fighting to reshape their age.

This brings me to the central question of our time. What sort of men run the world today?

The West has just gone through one the great revolutions in human history. The technological revolution has and is altering the basic relationships of human civilization. Europe and the Euro are not possible in an analog age. The growing surveillance state is a direct result of the technological revolution. The people who made this revolution and have risen to the elite in this age are also products of this new and different age.

This interesting post on the nature of this new ruling elite is both interesting and unsettling.

This post is a graphic summary of an upcoming data-driven book on Silicon Valley’s political end game: the path toward overhauling the Democratic Party and orienting our lives toward innovation.

At its core, the book argues that changes in the economy also changes the political ideology in power; some personalities and value systems thrive in different occupations and industries. The growth of the knowledge economy has empowered a novelty-seeking personality that places an extreme faith in the power of information to solve the world’s problems.

A growing demographic of highly-skilled college-educated liberals will transform government’s role to be about directly investing in citizens, funding them to become as entrepreneurial, civic, and healthy as possible.

The ultimate goal is to make life as close to the college experience as possible: a life dedicated to research, exploration, and creativity, while automation ensures that everyone has enough food and leisure time to pursue their unique contribution to the world.

The first thing to understand about this emerging ruling elite is they are nothing like normal people. Most grew up in upper middle-class homes, went to private schools and finished up in elite universities. These are folks who lived in a parallel America. They drove the same streets and ingested the same popular culture, but did so from an entirely alien perspective.

It’s tempting to think of this new elite as just an Apple version of the old elites, but that’s a mistake. Consider the media. In the industrial age, news reporters and columnists were jobs filled by men of the working classes who had high literacy. They lived in the same neighborhoods as their readers. Their kids played with the plumber’s kids. Many served in the same roles in the military as their readers. Today, the typical media person is a graduate of an elite school and only knows the sons of toil as servants.

The men and women running the technological age are people used to winning because they have known nothing else. They were sent to good private schools where they got good grades, which led them to excellent private colleges. Ellen Pao captured the imagination of our rulers because she was such an outlier. Her biography was supposed to end with her running a fortune 1000 firm, not as a disgraced grifter.

Pao is a good transition to others who grew up outside of America. Barak Obama is so wildly popular in Silicon Valley because he is a lot like many of these people. He was born somewhere, raised in various places by parents who were citizens of the world, if “citizen” was a real thing, which it is not. That’s the view of the technological elite. They may or may not be Americans (or British or Europeans or whatever), but that’s the accident of birth. They are citizens of their class, first and foremost.

This alienation of the ruling class is not new to history. It’s probably been the norm, at least in Eurasia. It is a departure from what most of us grew up understanding about our world. People used to getting their way and unprepared for failure are going to be different types of rulers than those who rose up through the ranks. It’s the difference between the man who built the business and the man or inherited it.

Not surprisingly, the companies of Silicon Valley look more like a college student union than the old fogey businesses of the past. You can’t really blame them for wanting to maintain this perpetual adolescence. The best of times, particularly for males is late teens through late 20’s. The college campus is now an idyllic playground of perpetual youth, where everyone’s primary duty is to wait on the special little snowflakes.

The trouble is “a life dedicated to research, exploration, and creativity” only works as long as someone is doing the hard work of civilization. Yale is a wonderful campus full of high-IQ, self-actualizing people, but it is guarded on the perimeter by hard men with guns. You don’t want to wander too far from campus as the neighborhoods get ugly very quick. Automation may be the solution, but it brings new problems.

That’s where the alienation is most obvious. Walk around a place like Yale or even a Georgetown and it feels synthetic. A normal person feels like an intruder because they are an outsider. They have responsibilities, struggles and all the petty hassles of life. They face failure, which is something wiped clean from the life of elite colleges. If you want to know why John the Savage hung himself, spend a few days on an Ivy League campus.

The world our new rulers imagine for us will be an alien place compared to what we are used to. We will all be strangers in our own lands, assuming it gets that far. I’m fond of pointing out that Huxley got most things right while Orwell got most things wrong. At the dawn of the technological age, most people would have said the opposite. Maybe as the technological age creeps forward, some third option will reveal itself.

Ghetto Pride Day

One of the stranger things you see in the ghetto is the summer festival, which is always run by the civil authorities and called something that feels more like wishful thinking than reality. The “neighborhood block party” is really just a free event for the locals, who were thrown together mostly because of public housing or Section 8.

The social workers who organize these things think a day of face painting and free hot dogs will build community spirit. It says something about the organizer who call these neighborhoods “communities.” Typically the word “pride” is shoehorned in somewhere as if you can sprinkle it on the heads of the natives like fairy dust and they will suddenly be proud.

The “community pride” events in the ghetto are about what you would expect. There are loads of single mothers with kids, along with the people from the government to make sure it does not turn into a riot. That means the fire department, ostensibly to entertain the kids, and the cops, often on horseback or maybe motorcycles. Of course, the people are there for free stuff. Community groups that are trying in vain to build community are on always hand, working on their next grant application by taking pictures of kids at their booth.

The pride thing always makes me laugh as the locals haven’t the slightest clue what pride means. How could they? Pride is something you give yourself, through your accomplishments. People in the ghetto are mostly killing time. What they do understand is respect. They are willing to kill over it. The middle-class social workers would get better results if they called these things “community respect” parties, but that sounds scary to the nice white ladies in charge of organizing.

My little slice of heaven had their summer block party yesterday. The authorities setup some games for the kids and they had pony rides and face painting. A church that I did not recognize was giving away hot dogs and sodas. There was some sort of ticket scheme involved to keep the “community” from taking unlimited drinks and hot dogs. The one thing people in the ghetto do well is take free stuff.

Walking around, I was reminded of something that no one discusses today for fear of being called a racist. That’s the slow blending of the races in the underclass. I saw a lot of fat white women with caramel colored kids. You never see black women with caramel kids, of course, but I do see a lot of white women with them. They always have nose rings for some reason too. This is so common, I just assume a white women with a nose ring is down with the swirl.

The other thing I always notice about these things is they schedule them to start mid-morning and be done with by mid-afternoon. You don’t see a lot of males so I guess the timing is deliberate. They know the males roll out of bed closer to sundown, like vampires. If they let the block party roll into dusk it would be a ghetto version of True Blood, where the vampires walk around with their pants falling down, playing with themselves and looking for trouble.

There’s a substantial immigrant community adjacent to the ghetto, mostly people from the subcontinental but there are some Arabs in the mix. The Arabs kit out their women in burkas, which creeps the locals out when they see them. There’s nothing better than seeing the culture clash between the American underclass and immigrants from Asia or Arabia. I always imagine the immigrants wondering how in the hell they keep losing to us.

Looking out at the multicultural paradise today, I’m thinking we’re headed for a bad end. The women in burkas were clustered together and their men were clearly making sure they stayed that way. The subcontinentals seemed to be enjoying themselves, but they made no effort to fit in with the natives. The blacks and the whites in the underclass may be ready to create a new breed of ghetto rat, but the newcomers have other ideas. At some point, that’s going to be a problem.

That’s going to be the Hispanics. I did not see any of them at this thing today. Instead they were down at the soccer field doing their own cookout. I noticed only because I was riding my bike and a guy I know waved me over. For reasons I’ll never know, immigrants like me. Custodio is not afraid to offer his opinion of the natives and he is not wrong in his opinions. Hispanic immigrants may not be rocket scientists, but they’re not idiots either.

That’s another thing no one discusses. Hispanics don’t like blacks and they are not shy about it. Whites have been whipped into submission, but the people flowing over the southern border are not going to sign onto the same program. The Left imagines millions of brown guys lining up to vote for a nice white lady from the university, but I suspect it does not end up that way. Hispanics prefer leaders who sport a thick mustache.

But, maybe it will all workout well.