Kevin Villani

“A Disease of the Public Mind”

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That is the title of a book about the first US Civil War that resulted in the assassination of President Lincoln. The soldiers in the South hated those in the North and vice versa. Northern soldiers have since been credited with undeserved virtue while Southern rebels were labeled racist enemies of the state, a moniker that still survives in the present day. But neither side was fighting over the abolition of slavery.

 

Trump’s opponents claim he will re-institute Jim Crow oppression, put black people back in chains, end democracy and put people in Hitler’s concentration camps. The continuous character assassinations, legal persecutions, numerous impeachments, unfounded accusations and insinuation caused what has been called Trump Derangement Syndrome (TDS), a disease of the public mind resulting in a recent assassination attempt.

 

Follow the Money
The Constitution the North and South agreed upon in 1788 enshrined the economic principles of Adam Smith’s Wealth of Nations, fostering equality under the law, individual sovereignty and limited government. Slavery was still too contentious an issue to settle. Starting in the next century the British led a moral crusade to eliminate slavery globally. While politically virtuous, Britain could afford to pay off slave owners and generally didn’t face the the vexing question for US plantation owners of whether freed slaves could support themselves and, if not, whether this would lead to murderous riots as had happened elsewhere. Abolition was a contentious issue everywhere slavery was practiced, typically with long drawn out steps to complete. But the long simmering political dispute that came to a head in 1860 wasn’t about abolition, but money. The federal government relied almost exclusively on tariffs raised in Southern ports – most of which went to northern states – on imports financed with the fruits of slavery, cotton exports.

 

Since the Civil War, limited government has given way to big government. The Democratic Party has created many dependent constituencies whose continued prosperity depends upon continuing Democratic power and largess: the bureaucracy, the government at all levels, teachers, labor leaders, academic educators and administrators, trial lawyers, government contractors, social security recipients and what are still euphemistically called journalists, among many others. The current Civil War is also about money. Trump has been in both political parties, fits in neither. But ”you are fired” represents an existential threat to Party members.

 

For contemporary Democratic politicians, almost all trained as lawyers, money beyond what is available by taxing the rich exists in banks, especially the Federal Reserve Banks, to be distributed according to the spoils system. For Republican politicians (but not RINOs), mostly former businessmen, prosperity comes from productive work and from savings productively invested. For those businesses and workers who are not on the receiving end of the spoils system, whose taxes pay for political largess, limited government is the only solution. There is very little middle ground.

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What Happened to Serious Economic Policy Debates?

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Economic policy determines whether economies, and hence citizen real income grows nationally and how that income is distributed. The invisible hand of a market economy guides investment to its most profitable, hence most productive uses. Not so for the heavy hand of the state. The Soviet Union saved and invested five to six times as much as the US, but productivity lagged and the economy eventually collapsed. Taxpayers have some control over “public” investment performance at, e.g., the small private level (condo, coop) but voter influence declines as the distance and size of the governing body increases. Making national investment policy even more difficult is the fact that even highly productive public investment may not pay off until well into the future. While rational economic policy would devolve decision-making and funding to the lowest possible level, the federal government’s lack of a hard budget constraint allows it to fund without accountability. The Constitution’s enumerated powers has proven an insufficient constraint on this perverse political incentive.

 

During President Trump’s term, pre-pandemic, real wages rose steadily at about 2% reflecting the steady real economic growth, but fell under Biden by over 2% due to inflation. Black unemployment and poverty fell under Trump, and continued to fall under Biden. While Trump proposed deep budget cuts, the Congress passed essentially the Democrats’ budget under both Ryan and Pelosi. Trump passed what in the ’60s under Kennedy was called a Keynesian tax cut, now called a “voodoo economics” supply-side tax cut for the rich to spur business investment, that worked essentially as planned.

 

Trump takes undue credit for the good performance during his term, for which the main stream media (MSM) accuse him of lying. Biden does the same, for which the MSM cheers. Independent voters favor Trump over Biden by 45% to 34% on the management of the economy. Numerous Democratic commentators have speculated that voter mistrust of Biden reflects FOX fake news popping up on TV sets uninvited to brainwash unsuspecting viewers.

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The Political Economy of Environmentalism

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“People, like any creature with no natural predator, will continue to spread beyond the capacity of their environment.”

Should I live to 80, the global population will have increased fourfold in my lifetime, more than double the population when the Club of Rome called for zero growth in 1972. For the average non environmental scientist, it is easier to divide the environment into the original Greek elements: fire, water, earth and air. Fires are currently raging, considered (unscientifically) as evidence of “global warming,” modified to “climate change” when the planet started cooling. Land use is also a serious global problem as the run-off into rivers and oceans is unbounded.

People respond to visual cues: when the Cuyahoga River burned in downtown Cleveland for weeks, America cleaned up its rivers. When scientists vividly described a hole in the ozone layer, consumers replaced chlorofluorocarbons in cars and refrigerators in 1987 as part of the Montreal Protocol.

Unlike the Cuyahoga River fire, environmentalism today is rather like the US debt, another intergenerational transfer that also reflects human nature. Current sacrifices can potentially reduce the projected magnitude of sacrifices forced upon future generations, but some economists argue based on UN income forecasts that future generations will be so wealthy that the high costs we would bear today will be relatively painless in the future, the environmental equivalent of “growing out of the debt problem.”

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The Johnstown Flood

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Pennsylvania borrowed more money to build infrastructure supporting canals than any other state to take advantage of the trade opportunities of the Erie Canal. Construction started on the South Fork Dam in 1838 with scheduled completion within a year, but by the time it was finished in 1852 the railroads had made it obsolete. The state wrote it off and it eventually provided a fishing lake for Pittsburgh’s elite. When it burst in 1889, causing the Johnstown flood, the total loss in life and property was probably 100 times the initial construction cost. Pennsylvania, having long since declared bankruptcy in 1841, blamed the rich.

Most every year the Congress metaphorically dances on top of the earthen South Fork Dam looming over Johnstown with the water lapping at their feet. Their solution is always the same: Let’s throw some more dirt on top this year. We’ll drain it when we drain the swamp, after we eliminate the air pollution in Johnstown, the price paid for the industrial revolution raising American living standards in the late 1800s.

The primary issue facing America during the post WW II era was whether its consumerist economy could continue to produce rising living standards for all, the cornerstone of political legitimacy. The leader of America’s competitor Nikita Khrushchev in the Soviet Union put the issue crudely six decades ago: “we will bury you” with a savings and investment rate several multiples of yours. America’s intelligence community and economic elite were shocked by the sudden collapse of the Soviet economy – like a dam bursting – less than three decades later.

Khrushchev, like most of America’s development economists, understood the role of saving and investment but not how important the private capital markets were to the allocation of capital to its highest and best use, politically directed credit being the main cause of their collapse. In Johnstown everyone knew that the valves to lower the water level in the lake had been removed during the last amateurish reconstruction, but fixing or removing it was opposed by rich land owners. The debt ceiling has similarly proven an ineffective mechanism to control America’s flood of debt, with the central bank standing ready to buy it all to the benefit of the wealthy. American politicians, feeling unbound by constitutional constraints, are addicted to issuing debt, the birthing person’s milk of politics. The Biden Build Back Better Plan promises to strengthen the dam, but like the amateurish repairs to the South Fork will weaken the dam’s foundation while causing water levels to rise, possibly to a critical level.

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We Need to Talk About Joe

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The fictional mass murderer Kevin is most often described as a psychopath and his mother Eva a sociopath in book and movie reviews, the latter defined the same as the former, but without the insanity defense, i.e., a physical brain disorder rather than a choice. President Biden isn’t suspected of any such brain disorder (although dementia has long been suspected, common for his age). But Bruce Cannon Gibney argues that Baby Boomers, those born between 1940 and 1964, are A Generation of Sociopaths (2017) based primarily on their over-consuming at the expense of future generations, a massive inter-generational injustice. He allows for exceptions, but not among the Baby Boom political leaders, of which Joe Biden was the first on the national scene.

Sociopaths are defined as narcissists with additional characteristics, among which are: superficial charm, glib, manipulative, self serving, grandiose, pathological lairs, without remorse, self-centered, untrustworthy, physically aggressive, impulsive, blaming others, lacking in empathy, break promises, an ability to avoid persecution for illegal acts, and a belief they deserve to rule the world. As a result of the Obama/Biden “Good War” over half the current population of Afghanistan was born under American protection. These and thousands of those who assisted the American occupation and their families have been left behind by Joe to meet repression, and, for many, death at the hands of his captors and other Islamic radicals. His press conferences revealed almost all these sociopathic tendencies, leaving no doubt as to the applicability of Gibney’s diagnosis.

Like Kevin, Joe is competitive among his sociopathic political peers. For sheer narcissism it would be difficult to top former President Trump, and the Clintons are unlikely to ever be surpassed in the team sociopath competition. But Joe Biden, whose first attempt to rule the world over three decades ago was thwarted by a plagiarism scandal, seeks to exceed FDR, the record holder by size of Mall Monument, as a world leader not on his foreign policy experience, but by spending his way to a risky “fundamental transformation” of the US economy and society. Should we trust in Joe, or is he the “Borax Man” (a soap salesman)?

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