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The Piketty book is often compared to “Das Kapital,” but that isn’t really accurate. Piketty doesn’t believe in anything as woolly and mystical as dialectical materialism. He doesn’t say that mankind is headed for a classless nirvana. He simply generates data which indicate that, under normal conditions, the rate of return on the investments typically held by the wealthy has exceeded the percentage increase in GDP in Western industrial nations. As a result, barring significant policy changes or disasters (wars, depressions, etc.), the trend will be for the affluent to possess an ever-increasing percentage of national wealth.

You could call it something like the iron law of oligarchy, but, as noted above, it can be reversed. Why do I bring this up? Because Bernie Sanders represents Marx in this debate, and Elizabeth Warren stands with Piketty. At some point in time during the campaign, you have to think there will be at least a bit of a debate between the two of them on this point.

If it happens, expect Warren to win it in a landslide–partly because she is the more intelligent of the two candidates, but partly because her position is much easier to defend.

Picture yourself as a pro-democracy protester in Hong Kong. The government has withdrawn the extradition bill. Should you keep demonstrating, or declare victory and go home?

It’s a tough decision. On the one hand, you’re tired, you’re afraid you could wind up in some dreadful black jail on the mainland, and you’re concerned about the level of violence that typically accompanies the protests. On the other hand, you know the ultimate stakes are much higher than the extradition bill, that battle isn’t remotely over, and it will be difficult to coax so many people out on the street at a later date without a serious provocation from the government, which undoubtedly has time on its side.

All I can say is, I’m glad I don’t have to make that choice. It’s the land of no good options.

Bernie Sanders and Elizabeth Warren know that Barack Obama is admired by the vast majority of Democrats, and that attacking him would be electoral suicide, so they don’t. Their surrogates, however, have no such qualms. And so, we have a column in today’s NYT which accuses Obama of being a “neo-liberal” who blew a great opportunity to remake the American economic and political systems. At least it didn’t call him an Uncle Tom; the author is probably leaving that for Ta-Nehisi Coates.

There are three major errors in the column:

1. OBAMA DIDN’T RUN TO BRING US THE “REVOLUTION”: He has been accurately described as a liberal Republican from the 1960’s or the early 1970’s. There was nothing in his campaign which suggested he was trying to reshape our political and economic system any more than Hillary Clinton was.
2. OBAMA HAD TO PRIORITIZE ECONOMIC RECOVERY OVER DEALING WITH INEQUALITY: Bashing bankers and businessmen was not exactly a great way to rebuild confidence in a tottering system during a crisis. If he had focused more on helping the little guy than on keeping the country afloat, the poor would have wound up with a larger slice of a much smaller pie, which would not have improved their lot at all.
3. HE DID EVERYTHING THAT WAS POLITICALLY FEASIBLE: Joe Lieberman was willing to tank Obamacare over the public option. Do you really think he was going to vote for a “revolution?”

I’m happy to say I was wrong about the outcome of yesterday’s election (so shoot me!) Lieberman played his cards better than Bibi, and was the big winner. I suspect Bibi fatigue probably played a part, too. In any event, the most likely coalition at this point would be Lieberman’s party, Blue and White, and Likud without Bibi as PM (oh, darn!)

If my latest prediction is right, the new government will be badly split on the Palestinian issue, and will probably aim to do as little as possible, which, in all likelihood, would suit the majority of Israeli voters just fine. I don’t know if it will be more or less hawkish on Iran. I am certain, however, that its relationship with Trump will be quite different than what we have seen in the last three years.

So how exactly will the election results impact American-Israeli relations? Tune in next Middle East Monday for the answer to that question.

The 45th President Trump

Feared the country would fall in a slump

So he jawboned the Fed.

It’s not easily led.

Would low interest rates give him a bump?

David Brooks maintains that America is sick, and he’s not afraid to identify the culprit. It’s the “meritocracy”: the college-educated professionals who marry each other, live in gated communities, and engage in helicopter parenting in order to perpetuate their ill-gotten entitlements. They have destroyed social mobility in this country. It is they, not the one percent, who are the real problem.

Of course, Brooks has no clue how to deal with this issue, which is really the inevitable product of the evolution from an industrial to a knowledge-based economy. He also disregards the increasing influence and wealth of the one percent. For today’s purposes, however, the importance of his opinion, which is widely held among Republicans, is that it is an implicit shot across the bow of Elizabeth Warren, whose core constituency is the 10 percent. Bernie Sanders, on the other hand, appeals to a less educated audience, and may even agree with some of his critique.

How would Warren respond to this? If I’m Bernie, I would do my best to find out; there are opportunities for him here.

With a big enough sample size, even unpredictability becomes predictable. The Iranians have seen Trump bluster, and then back down, enough times to conclude that he won’t launch anything more than a symbolic strike against them no matter how much they provoke him. As a result, they are opposing his “maximum pressure” with “maximum resistance” without paying any additional price.

This is the dilemma I warned about years ago: if you want to bluster constantly and remain credible, you have to be willing to deliver on your threats in a big way at least once, even if it blows up the economy and threatens your chances of re-election. Bolton may be gone, but MBS is still there, and Bibi probably will be, too; both of them want America at war with Iran, and will be in Trump’s ear constantly. I still say they are more likely than not to get their war, particularly if they keep telling Trump that his reputation as a tough guy is at risk if he doesn’t roll the dice, because it will be true.

We all know the pattern: Trump creates a crisis; exacerbates it by taking extreme positions; then backs down when he gets resistance and claims a “victory” by putting a hold on the issue of his own making. The question for today is, could BoJo, who negotiates in a similar style, reverse course and sell his party and the country on something like the May deal?

It would be very difficult, for two reasons. First, Boris has done his best, and with considerable success, to persuade a majority of his party that the only acceptable outcome is no-deal. Second, Boris has no national mandate to just be Boris. He’s accountable to his party, and completely dependent on it. In addition to being an even more deft and experienced liar, Trump won a national election on his own, so he can reasonably claim that the electorate chose him to be whatever he chooses to be.

It’s not completely impossible, but don’t hold your breath.

When David Cameron was the PM, the Conservative Party was dominated by its versions of the PBPs and CLs. Budget cutting, austerity, deregulation, and social liberalism were the order of the day.

Today, the situation is completely different; Reactionaries are in charge. The script has flipped; George Osborne’s austerity is over, conservative social policies are all the rage, and the interests of business are getting short shrift in the interests of delivering Brexit.

Can a Tory government grounded solely on a single faction–albeit the largest one– survive? In the long run, probably not. You can expect Boris to attempt to reunify the party once Brexit is a done deal. He will have self-interest and Labour extremism as allies, so it will probably work.

The kingdom’s vulnerability to low-tech warfare has been exposed. MBZ is already starting to back away from the ghastly war in Yemen. Will MBS (and Trump, by extension), see the problem, change course, and start looking seriously for a negotiated solution? Or will they double down?

Trump typically doubles down in his never-ending quest for leverage, but he has shown the ability on occasion to retreat and spin it as a victory. I haven’t seen MBS do that. My guess is that he will double down, and the situation will become even more perilous for everyone.

The GOP’s intense antipathy towards unions has always been a potential point of vulnerability for Donald Trump. He needs union votes to win in the swing states in 2020; anything that emphasizes the battle between capital and labor isn’t going to help him, as Scott Walker would be happy to tell you.

On the Democratic side, expect to see all of the candidates lined up to support the union. Don’t be surprised to see Bernie Sanders on a picket line, and he may well have company.

It’s a no-lose situation for the Democrats, even if it emphatically isn’t for the UAW.

Not what we needed.

Like many other right-wing strongmen, but with less excuse, Donald Trump has no understanding of basic economics. Until recently, however, investors have been eager to give him the benefit of the doubt. The theory has always been that the “good” Trump–the one who supports tax cuts and deregulation for business–could always be trusted, while the bad, capricious, tariff-loving Trump would ultimately be restrained by the adults in the room and his own self-interest.

Personally, I never viewed this as a good bet, and the chickens are coming home to roost. The point of this post, however, is that investors aren’t going to give Bernie Sanders the same benefit of the doubt. If they were wrong in thinking Trump was one of them, they aren’t going to have any illusions about Bernie, because he makes no bones about despising them. And so, if you vote for Sanders, you do so with the certain knowledge that he’s going to damage the value of your investments if he wins; it’s only a question of how much, and for how long.

A note to my readers: I will be out of town for a few days rediscovering my roots in Ohio. Regular posting will resume on Monday.

1. Would someone please slap Julian Castro for me?
2. No debate should last more than two hours.
3. This version of Beto was far more compelling, but it’s too late for him.
4. Klobuchar and Mayor Pete are sensible and articulate, but they don’t stand out.
5. Booker had an excellent night. To me, he is the most plausible of the Biden replacement group. I don’t think he made up much ground, however.
6. Sanders did his usual thing, but he looked and sounded old and tired.
7. Warren didn’t impress me. She once again conspicuously avoided the question about raising middle class taxes for Medicare-for-All, when even Bernie admits it is necessary. She used the same kind of simplistic rhetoric about the rigged system and the evils of big (fill in the blank) that Bernie always does. I didn’t hear any reason to prefer her to the real deal.
8. Biden had easily his best night. Sure, he rambled at times, but he will have reassured his donors. He made the realo case quite well, particularly on the question about what happens to wages under Medicare-for-All, which needs to be discussed at some length.

On the whole, I don’t think you will see any dramatic changes in the polls, which is effectively a win for the three front-runners.

There is an ongoing dispute within the Democratic Party as to whether the best way to win in 2020 is by converting swing voters or by mobilizing the base. My position, of course, is that history supports the swing voter approach. The question for today is, what exactly does “base mobilization” mean, in practice?

The term itself is somewhat misleading; the actual “base” consists of ideologically-driven activists who typically vote regardless of the identity of the candidate, and who can be relied upon to vote against Trump under any circumstances. The real unknown is not whether that group will vote, but whether it can be expanded to include people who are potentially sympathetic to the cause, but too apathetic to vote under normal conditions. The question which follows is, who are those people?

Bernie Sanders almost certainly thinks they are poor workers who can be motivated to vote by a program which appeals strongly to their economic self-interest. Elizabeth Warren, on the other hand, undoubtedly believes that her pool of new voters comes from millennials; her program consequently offers them quite a lot. On balance, I think she has the better argument; the poor white workers are frequently moved more by conservative values than by money, and they are more likely to vote for Trump than any Democrat, whereas the millennials have strong economic grievances and far less attachment to traditional social values.