Month: July 2021

On the issue of future inflation, every respectable economist agrees on the following two points:

1. A big part of the current problem is created by supply bottlenecks resulting from the pandemic which will be resolved in a short period of time; and
2. The real question, in the long run, revolves around the long term public expectations regarding the inflation rate.

The next questions, then, should focus on who will create the public expectations, and how it will be done.

Inertia, demographics, and globalization are on the side of those who predict low inflation rates. On the other hand, the people who stand to lose from inflation–creditors, employers, investors, and retirees–are disproportionately Republicans, and have plenty of access to popular media outlets. They have a powerful vested interest in screaming about inflation. You can count on them to do so.

Will the inflation chorus on Fox News and in the WSJ translate into ongoing worker demands for higher wages, and thus higher prices and interest rates? I’m guessing not, and the bond market currently agrees with me. It is early days, however.

In a cynical, opportunistic effort to win black voters in spite of his overt racism, Trump frequently talked about the criminal justice reform bill he signed during the campaign. This was a mixed message, however; his predominant narrative was that Black Lives Matter is an evil, racist organization, and that the police should be unleashed, not defunded, to put an end to the spike in crime that supposedly threatened virtuous white people in the suburbs.

It is very likely that we will be hearing plenty of the pro-police, anti-BLM part of the message in the next few years. That is unfortunate, because the police can’t operate effectively without community support, which will be lacking if they present themselves as a self-interested army of occupation, not public servants.

There is plenty of middle ground between “Defund the Police” and “Blue Lives Matter.” Reformers need to understand that the police have a difficult job that requires tough choices, and to show some empathy; the pro-police crowd, on the other hand, needs to grasp that gratuitous displays of violence, particularly against minorities, ultimately backfire. Beating heads versus budget cutting is a false choice.

George Packer, in a much-noted article in The Atlantic, divides America into four ideological groups: Free America; Smart America; Real America; and Just America. Does this scheme have merit?

Some, but not as much as he thinks. Here are my observations:

1. “Free America” roughly corresponds to my CL and PBP factions, and “Real America” is an appropriate description of Reactionaries, so his GOP categories are consistent with mine.
2. However, Packer doesn’t seem to realize that the supposedly freedom-loving January 6 rioters have little in common with regulation-hating businessmen; they are really Reactionaries who hate this government, but not governments they can control. Their libertarianism is purely opportunistic and situational.
3. Packer’s “Smart America” and “Just America” categories omit two large groups of Democratic voters. The first is Sanders supporters whose votes were motivated, not by identity, but by class considerations; the second is the large mass of moderate Biden voters–largely elderly and black–who just want as much positive incremental change as they think is reasonably possible without trying to overturn the system. The primaries show that these people represent a majority of the Democratic Party.
4. It is of no little importance that not a single Democratic presidential candidate ran as a pure and passionate “Just American,” because there aren’t many voters in that category–just Twitter activists.
5. Packer appears to buy into the notion that “Smart America” consists of a self-satisfied, self-perpetuating elite that has no interest in assisting struggling “Real Americans.” That is not only a caricature–it isn’t even true. “Smart America” consistently votes for politicians who support programs designed to help “Real America” even though the money for those programs will come out of their pockets. Part of the problem is that these programs haven’t worked consistently; the other part is that “Free America” has persuaded “Real America” to prefer nostalgia and culture wars over its economic self-interest.
6. The numbers don’t lie; the 10 percent of “Smart America” has only broken even in the knowledge-based economy. The real beneficiaries have been the one percent, who are mostly “Free Americans.”

You can make a strong case that Cuba is the only remaining genuine communist state in the world today. North Korea is a monarchy, obsessed with nuclear weapons and self-sufficiency, not world revolution and the plight of workers; China and Vietnam are run by the Communist Party, but have largely capitalist economies. Who else is there?

This obviously suggests that the tide of history is running strongly against communism in Cuba. It does not, however, indicate that the Communist Party will lose its grip on the island any time soon. Without the charisma of Fidel Castro as a backstop, the party will gravitate towards the Chinese model in order to survive. It will have no choice.

The case is sometimes made, including in today’s NYT, that the Fed is largely responsible for increasing inequality in this country. Is that accurate?

Not really. It is true that low interest rates result in higher asset values, which primarily benefits the wealthy. It is also true, however, that low interest rates are an essential part of the Biden/Powell plan to run the economy hot and so to increase wages. If the Fed jacks up interest rates in a quixotic effort to fight inflation, the plan will run aground, and everyone will lose, including workers.

In short, the idea is not to create a desert and call it equality; it is to provide benefits for everyone. If the wealthy also profit from a system which substantially increases wages, so be it. The best way to deal with inequality is through taxing and spending, not interest rates.

Germany’s defeat in World War I was due to the failures of its military, not the treachery of the politicians back in Berlin. The “stab in the back” was thus a lie, and the military knew it. You can forgive the regular citizens who believed it, however; the Allies never reached German soil, and wartime censorship prevented them from knowing the truth. As far as they could tell, Germany was winning the war. They had no reason to believe otherwise until the armistice was signed.

The “rigged election” lie, like the “stab in the back,” was designed to save face. The difference is that the truth was readily available to the public; it played out in real time. Trump’s supporters refused to believe it simply because they think, based on history and God’s will, they are entitled to rule this country. When the evidence conflicts with the narrative, they go with the narrative every time.

Will the “rigged election” ultimately be as pernicious as the “stab in the back?” Quite possibly. A majority of Republicans have chosen to believe it. It will be a factor in 2022 and 2024. After that, who knows?

Saturday’s post was written with America in mind, but it occurred to me thereafter that it also applied to Iran. The regime believes it has a divine right to rule, but has little public support, so it cut off any possibility of peaceful change through the system by disqualifying any plausible moderate candidates in the recent election. The only conceivable means for the millions of dissatisfied Iranians of modifying the (obviously failed) system is through widespread violence. B x H = D.

What this shows is that there is a degree of functional commonality between the Christian nationalist right in America and the ayatollahs. If you’re a GOP supporter, and the analogy makes you uncomfortable, too bad for you.

The great would-be emperor Xi

Tried to bring Xinjiang to its knees.

Now he’s crushing Hong Kong.

You could say that it’s wrong

But the government doesn’t agree.

The best thing about Trump, from my perspective, is that the overwhelming shortcomings of his personality discredited his ideology and divisive rhetoric, at least in the short run. We’re not likely to be so lucky the next time.

Ron DeSantis believes in using his bully pulpit to divide his constituents and own the libs almost as much as Trump does, but in all other respects, he is a more respectable face for reactionary thought than the man on golf cart. He’s qualified for the job; he’s capable of embracing popular causes on the left if it helps him politically; he isn’t corrupt; and he is unlikely to lead an insurrection if he loses.

Running against Trump in 2024 would be simple–make him and his administration the issue, sit back, and watch him self-destruct again. Beating DeSantis would be far more difficult. Trump is obviously a greater danger to liberal democracy; DeSantis is a threat to the Democratic Party. Which is worse? You decide.

Michelle Goldberg has a column in today’s NYT on the dangers presented by the declining Christian right. I have posted on this subject countless times, and the column doesn’t add anything to what I have said in the past, but she’s correct.

It occurred to me this morning that the problem can be expressed in the following formula: B x H=D. B is the belief in the righteousness of your cause and a divine right to rule; H is hopelessness resulting from an awareness of decline; and D is, of course, disaster.

So how can the disaster be averted? The white Christian nationalists can only be crushed or appeased. Crushing them is impossible at this time; they are too numerous and well-connected, and they have guns. The only other, if unheroic, alternative is appeasement: bathe them in prosperity; constantly assure them of their value to the country; and don’t complain too much about the Christian carve-outs that we know are coming from the Supreme Court. After all, in the long run, they are all dead.

The Chinese government is determined to repress religious and ethnic minorities. In India, the battle is between Hindus and Muslims. Sunnis and Shiites are at war all over the Middle East. The EU as a whole has huge problems with Muslim immigrants. Ethnic and religious minorities have always been viewed with suspicion in Russia. The Polish and Hungarian regimes win elections by targeting LGBTQ people. The English are split between cosmopolitans and Brexit supporters. In Ireland, Protestants and Catholics have been fighting each other for centuries.

In short, culture wars are not an element of American exceptionalism. They are, in fact, the norm around the world.

As we have seen, DeSantis’ record on the pandemic has hardly been beyond reproach. What are his other vulnerabilities?

From the perspective of a GOP primary challenger, here they are:

1. FOSSIL FUELS: DeSantis has been at least somewhat responsive to the concerns of his Florida constituents on environmental issues, including offshore drilling. That isn’t going to play well with people to whom fealty to fossil fuels is practically a religion, of whom there are a large number in the GOP. Expect this to come up early and often.
2. BUDGET CUTTING: Instead of using the pandemic as a welcome excuse to cut state spending, as Rick Scott would have done, DeSantis has been happy to take federal money to avoid such cuts. Reactionaries don’t really care about spending, as long as they get what they see as their fair share, but CLs do.
3. RELATIONS WITH BUSINESS: DeSantis is a pure reactionary. He cares about cultural issues and the base more than tax cuts and deregulation. He has interfered with business interests to appease the base on vaccinations and the wearing of masks. The WSJ will not be impressed, and will probably promote other, more business-friendly GOP candidates in the primaries.

Does any of this mean DeSantis can’t win? Not at all! The reactionaries are the largest faction in the GOP, and he hasn’t burned his bridges with business, as Josh Hawley, another prominent pure reactionary, probably has. He should start as the favorite if Trump doesn’t run.

I’ve got those dirty, lowdown, insurrection blues.

You have to be aware of it; it’s all over the news.

A riot hit the Capitol, and Trump sure lit the fuse.

It damaged our democracy; for that, there’s no excuse.

______

Our party hasn’t figured out just how to deal with Trump.

If you criticize the guy, he turns into a grump.

Some people in the party say he really should be dumped.

But if we cut him loose, our winning chances surely slump.

__________

I’ve got the blues.

The Trump-in-exile blues.

We have to find the answer

Or we’re really going to lose.

We have to stick together;

The right has to unite.

Things are looking pretty grim

But I won’t give up the fight.

Right-wing commentators have lionized DeSantis for his allegedly outstanding pandemic record. Well, in the immortal words of Rasheed Wallace, “Ball don’t lie.” What does the ball tell us about Florida over the last year or so?

I have examined three key statistics: deaths per 1,000 population; the unemployment rate; and the vaccination rate. Florida is squarely in the middle of the range for each of these items. On its face, the state’s performance has been mediocre, from both an economic and a public health perspective.

The reality, however, is that Florida, as a tourist destination with a more relaxed regime than most, probably exported thousands of cases to other states. In addition, Florida’s recent performance on hospitalizations and deaths has been very poor relative to other areas of the country. In all likelihood, this is due to DeSantis’ greater interest in protecting the rights of the unvaccinated (most of them, members of his base) than in maximizing vaccinations.

The verdict, therefore, is that the DeSantis record is nothing to boast about. It is a potential liability in 2024. As to other possible points of vulnerability, see my next DeSantistan post.

Peter Thiel is a CL. He believes that everything good produced by society is created by visionary entrepreneurs like himself, who should consequently be freed from taxes and regulations to the maximum extent possible. The rest of us are just along for the ride. J.D. Vance is running for the Senate in Ohio as a reactionary populist; he argues that the common people of this country have been betrayed by our cultural, governmental, and business elites, and promises to shake up the system for the benefit of struggling workers in dying industries.

Thiel has contributed $10 million to the Vance campaign. This is an apparent mismatch. Either Thiel is making a terrible investment, or Vance is misrepresenting his actual views. My guess is that it is (b); you can expect to see Vance advocating for tax cuts for big business if he gets elected.