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Fillon was initially portrayed by the press as a French version of Mrs. Thatcher, but it appears to me that his brand of conservatism really has much deeper roots that go all the way back to the opposition to the French Revolution. Selecting him will have the following results:

1.  The French left will rise again.  The Socialists were demoralized by Hollande’s vacillations, but Fillon’s antipathy to organized labor and to the welfare state gives them a compelling reason to go out and vote.  I doubt that it will be enough to get their candidate into the second round, but it means they should have at least a respectable showing.

2.  Le Pen will be running as the left-wing candidate in the runoff.   She makes the case that the welfare state is a French traditional value.  There is no obvious reason why a French worker would prefer Fillon to her.

3.  There is an American analogy to a Fillon/Le Pen race.  Imagine if the entire American electorate ultimately had to choose between Trump and Ted Cruz. Ugh!

The bottom line is that politics in France are about to get really interesting, and really ugly.  Expect lots of action out on the street in 2017 regardless of who wins.

It isn’t easy to find a single word to define Social Security.  It isn’t exactly “insurance,” because the recipients don’t have property rights in the assets in the trust fund, but it isn’t completely “welfare,” either, because there is a correlation between the funds each recipient pays in and takes out of the system.  I guess you could call it a hybrid, which sounds a lot better than “Ponzi scheme,” Trump’s description of it in years past.

The following facts about Social Security cannot be disputed:

1.  The system is popular.  There is no groundswell of support for privatization, or for massive cuts, even among GOP voters.

2.  Social Security makes up a large proportion of the incomes of the elderly; that proportion is likely to rise in the future.  This is due to inadequate savings, which in turn was largely caused by stagnating wages.

3.  While the system has chronic funding problems, it is in no danger of “going broke.”  The Reagan era modifications to the system were designed to address future deficits caused by demographic problems by creating a large surplus in the Social Security Trust Fund.  The system is now running deficits, which will get worse as the baby boomers retire.  As a result, the assets in the Trust Fund will be exhausted sometime after 2030, and taxes will fund only about 80 percent of projected benefits.  If no action is taken to address the deficit by that time, beneficiaries will be looking at a 20 percent cut.

4.  Previous efforts to guarantee the solvency of the system had bipartisan support in Congress.  That is unlikely to be true today.

The partial privatization of the system was suggested by the Bush Administration, partly due to its ideological affinity for solutions involving the private sector, and partly in the hope that higher returns from the market would fill in the funding gap.  Leaving aside the serious possibility that beneficiaries could lose, rather than gain, by making more speculative investments, the problem with privatization is that it blows an even bigger fiscal hole in the system, because it results in less money being available to pay the current beneficiaries.  In light of that, and the previous Bush political debacle, I don’t think privatization will be pushed seriously in the next administration.

There are a number of ways available to address the funding gap.  These include:

1.  Raise the earnings cap.  As it stands today, people with incomes above the cap pay a lower marginal tax rate than people below it, which makes no sense. The down side to this approach is that, unless you also increase the payouts to rich people, it diminishes the “insurance” part of the hybrid scheme.

2.  Increase the retirement age.  Business interests prefer this approach, because it increases the size of their worker pool and thus keeps wages down. For demographic reasons, increasing the retirement age makes some sense, but it is unfair to blue collar workers, who are frequently in no physical condition to work longer.

3.  Change the cost-of-living formula.  Obama was open to this as part of a “grand bargain,” but it never happened.

4.  Raise the tax rate.  Do we really want to make labor even more expensive than it is today?

5.  Let the default cuts kick in.  Seniors rely on Social Security for their retirement income.  Doing nothing will tear huge holes in their financial plans.

Realistically, the most politically palatable way of dealing with the funding gap would be to employ several of these tools in moderation.  That would require the cooperation of both parties, however.

My prognosis:  Trump campaigned against Social Security cuts, and the GOP has shown less interest in the subject since the failure of the Bush plan.  There will be some talk about Social Security reform, but the GOP will look to the Democrats for political cover, and will not get it.  The issue will be kicked to 2020.

Bernie Sanders argued throughout his campaign that the system was “rigged” because rich people and institutions enjoyed undue influence by making disproportionately large campaign contributions.  Donald Trump proved him wrong by winning in spite of being substantially outspent, first in the primaries, and later in the general election.

As it turns out, however, there is a better argument that the system is “rigged;” that is the product of the geographic distribution of Democratic voters and the Electoral College.  And so, for the second time in 16 years, the Democratic candidate was won the popular vote and lost the election.

It is an article of faith among many Republicans that the Democratic Party supports increased spending on social programs in a cynical effort to ensnare hapless voters in a web of dependency.  If that is, in fact, the case, the tactic has been a miserable failure;  the elderly, who rely heavily on transfer payments, are among the most reliable GOP voters, and the poorest states in the country are among the deepest red.

How do we account for this apparent paradox?  It all comes down to the illusion of entitlement;  there is widespread public support for spending on “entitlement” programs that appear to be tied to work.  Tariffs and minimum wages are effectively government redistribution programs, just like, say, food stamps, but the average voter does not perceive them in the same way, because the benefits have to be “earned” through labor.  In the same vein, Social Security and Medicare are essential parts of the welfare state, not private insurance programs, but because the elderly have paid into the system for years, they feel entitled to payments that are typically in excess of what they would have earned from an insurance program even though, from a legal perspective, they have no property rights to any of the funds in the system.

So the key to creating a politically successful welfare state program is to hide its true nature.  That is where Obamacare failed;  the public correctly viewed it as an attempt to redistribute wealth.

            Social Insecurity

Social insecurity

You want to quit your job.

But Ryan says it’s not time yet.

Don’t be a lazy slob.

 

Social insecurity

You woke up feeling ill.

Obamacare has come and gone.

You can’t afford your pills.

 

Social insecurity

Your food stamps help you eat.

It’s time to leave your hammock now

And stand on your two feet.

 

Social insecurity

Big changes lie ahead.

A safety net that’s full of holes

The menders have no thread.

 

Social insecurity

Don’t call me to complain.

You think you won, but when it’s done

You just got fooled again.

Who could it be but the peasant with a pitchfork?  All I can say is, be careful what you wish for, because you might get it.

Prime Minister Modi is another pro-business nationalist who would be expected to get along well with Trump but for India’s protectionism and trade surplus.  On the other hand, India has never been as dependent on the US for its security as, say, Japan, so Trump won’t have any reason to view Modi as a moocher.

Expect the slow improvement of relations to continue in response to increasing Chinese assertiveness in the area regardless of Trump’s mercantilism.

The most important book of 2016, in terms of its impact on American politics, was probably “Hillbilly Elegy,” by a man named J.D. Vance.  I haven’t read the book, but I’ve seen several reviews of it, and I’ve also read several of his op-ed columns in the NYT, so I’m reasonably confident that I understand his point.

By all accounts, Vance paints a fairly harrowing view of life in Appalachia after the exodus of mining jobs, including rampant drug and domestic abuse.  In spite of the odds, he managed to get out and thrive, but he empathizes with those who remain, and he anticipated Trump’s victory over the allegedly insensitive cosmopolitan elites.

At the risk of tooting my own horn, I’ve been writing on this subject since I started this blog in the middle of 2015.  The Republicans offer people in Appalachia genuine cultural respect and b.s. about getting their mining jobs back; the Democrats only propose government spending.  As I’ve said before, it is no surprise that the people prefer the GOP package; the issue that the Democrats are confronting now is how to win the votes of people like this without losing a greater number of minority supporters.

Three observations are pertinent:

1.  There really isn’t any hope here until the GOP discredits itself by failing to bring the old mining jobs back.   If and when (well, when) Trump’s faux populism doesn’t deliver the goods, the public should be more accepting of the real thing.
2. We know from the campaign that there are lots of establishment Republicans who view Vance’s hillbillies as losers:  period.  The Democratic Party actually wants to help them, but hasn’t figured out how to do it yet.
3.  There is plenty of room in the Democratic vision of a mosaic America for the white people in Appalachia.  For their own good and the good of the country, the Democrats need to make a genuine and sustained effort to show that they respect the culture of rural white Christian America.  What they cannot do, for both moral and electoral reasons, is accept the Palinesque notion that rural white Christian America is America,  and everyone else is, at best, an interloper. Vance’s hillbillies are going to have to get over that idea before progress is possible.

As I noted months ago, the GOP establishment was appalled by Trump, and, even worse, thought he would lose.  As a result, they treated him, not as a real Republican, but as a de facto third party candidate with whom they had a temporary tactical alliance.  In this way, they thought they could limit the damage to their brand after the inevitable Clinton landslide.

Today, of course, the shoe is on the other foot;  Trump is a free agent relative to the establishment.  Will he quietly renounce his idiosyncratic positions on trade, entitlement spending, and foreign policy and become a mainstream Republican, or will he make overtures to the Democrats on selected issues in order to maintain his freedom of action and keep his favorability ratings up?  I’m guessing the latter, and the Democrats will have to decide how to respond on an issue-by-issue basis.

A successful, intensely nationalistic, right-wing politician with an unconventional economic policy, Prime Minister Abe should be a role model of sorts for President Trump.  Unfortunately for Abe, his country is almost completely reliant on the US for defense and runs a large trade surplus.  In other words, Japan is precisely the kind of nation that Trump hates.

It was with good reason that Abe made the pilgrimage to Trump Tower within days of the election.  If the US won’t defend Japan, the Japanese have only two long-term choices:  remake their country so it can resist Chinese aggression without help, or enter into a dignified surrender on the best available terms.

Today is the day we give thanks.

For what?  You can fill in the blanks.

We know we’ve been blessed

But this year’s been a mess.

I’ll be glad when it’s gone, to be frank.

I can’t say I know how much of the EU will be left, or what it will look like, during the Trump Administration.  That will depend to some extent on the outcome of December’s Italian referendum, and more on the French election next year.

Assuming, for purposes of argument, that the EU soldiers on pretty much as before, its relations with the US are likely to be pretty frosty, because Trump will perceive it as a weak talking shop that preaches too much about human rights, does little to control terrorists, and runs a huge trade surplus with the US.  My guess is that Turkey will be the first flash point (Trump will support Erdogan’s crackdown, but the EU won’t), and things will just deteriorate from there.

The ultimate beneficiary of this, of course, will be Putin.

As the story goes, during the height of the French Revolution, the local revolutionaries were hopelessly split over what to do with the cathedral.  One faction wanted to desecrate it, while the other favored demolition.  A committee was set up to mediate the issue.  The arguments dragged on and on, until conditions changed and everybody moved on to other issues.  As a result, the cathedral stands proudly, undesecrated, today.

Something similar may be the best hope for Obamacare.  Can the GOP unite around a plan that doesn’t destroy the markets and doesn’t represent political suicide?  That remains to be seen.  One thing is for certain:  the Democrats struggled mightily to pass Obamacare with more votes in the Senate than the GOP has now, so this isn’t going to be easy.

Trump expressed far more moderate views in the interview than he did on the campaign trail.  Are you surprised?  I can pretty well guarantee you that he will say the exact opposite the next time he meets with a group of right-wing supporters.  That is partly due to his belief that being unpredictable is good tactics, partly to his desire to be admired by whomever is in the room at the time, and partly to the fact that he knows very little about policy, and cares even less. If the truth is a casualty in this process, well, truth is just power in a tuxedo.

The “Real Trump” truly believes that he can run the country the way he runs his businesses.  His mercantilist opinions are genuine;  he has held them for decades. He thinks that businessmen like himself know best, and will do whatever he can to unleash them.  He will react violently to affronts to American (or his own) self-esteem, and he has an intense belief in his own ability to negotiate.  Everything else will be on the table, and failure, or at least the perception of it, will not be tolerated, even if the law is on the other side.

The roller coaster starts running in 58 days.

A few thoughts on the “special relationship” under President Trump:

1.  Obviously, someone needs to explain to Trump that Theresa May speaks for the UK, not Nigel Farage.  You would think that would be a fairly simple concept for him to grasp, but apparently not.
2.  Trump’s property interests in the UK are going to be an ongoing problem.
3.  The British government is going to want to start discussing a trade agreement as soon as possible in order to create some leverage in its EU negotiations and to prove to skeptics that Brexit won’t be a disaster.  As I understand it, the Obama Administration takes the position that the Brexit negotiations have to be resolved first.  Given Trump’s feelings about trade, don’t expect that position to change.
4.  The UK doesn’t run a big trade surplus with the US, and it carries its share of the load within NATO.  That will help.
5.  Don’t be surprised if Trump reacts strongly if, as I anticipate, the British press has plenty of nasty things to say about him.

Expect the “special relationship” to stagger on, with some major hiccups along the road.