Archive for the 'Big Government' Category

Presidential candidates are talking about every issue except the one that matters most for America’s future: “American Exceptionalism.”

President Obama, a former professor of constitutional law, rejected the notion of American exceptionalism. Conservative writer Jonah Goldberg in Suicide of the West (2018) argues that the political abandonment of American Exceptionalism is eroding liberty, society and prosperity. Parenthetically, Taleb, Skin in the Game (2018) concludes (pg. 86) ”the west is currently in the process of committing suicide” by tolerating the intolerant. The “mass suicide” metaphor became a reality when religious cult leader Jim Jones told his followers in 1975  “I love socialism, and I’m willing to die to bring it about, but if I did, I’d take a thousand with me” which he did in Jamestown, Guyana three years later. “He wanted the world to think this was some uniform decision, that they willingly killed themselves for socialism to protest the inhumanity of capitalism” but armed guards made sure the reluctant chose the Kool Aid and exited the Johnstown dystopia for the promised socialist utopia in the next life.

Suicide of the West

Goldberg’s history of politics and human nature begins with humans first walking upright, concluding in 2017 with U.S. domestic political choices. Ideas promoted by John Locke and bequeathed by the British that the state is the servant of the people, are the core of American exceptionalism as opposed to the opposite ideas of the Frenchman Rousseau that individuals are the servant of the state, the governing principle of authoritarian socialist economies and in practice social democracies as well. What’s exceptional in the U.S. political system bequeathed by the Founders are the strict limits on federal powers in the two written documents, the Declaration of Independence and the U.S. Constitution. This is the cornerstone that allowed the many secular and religious institutions of civil society to deepen as a pre-requisite for and complement to entrepreneurial market capitalism, the source of virtually all human economic progress.

In the American version the state guarantees “life, liberty and the pursuit of happiness,” whereas the French national motto “liberty, equality, and fraternity” is an oxymoron. Individual liberty erodes at each stage as decisions are elevated from the marketplace to private, local, state, federal and ultimately international governing bodies. Competitive market capitalism’s “creative destruction” and entrepreneurial innovation produces relative winners but benefits all, whereas political favoritism comes at the expense of the typically poorer less politically favored.

The Deep State is Sovereign in a Democracy

In a recent Wall Street Journal article, political theorist Francis Fukuyama argues that “American Democracy Depends on the ‘Deep State’” run by professionals protected from politicians. Progressive President Wilson used entry into the war as the means to create the “modern” sovereign state” to which Fukuyama refers under the motto to “make the world safe for democracy,” never mentioned in the Founding documents. What took a Revolution to produce was protected only by the willingness to adhere to paper documents that Wilson basically ignored.

Individual dependence on the modern pater welfare state corrodes the institutions of civil society and inevitably leads to identity politics, tribalism and cronyism. With the state the master, many democracies evolve into one party rule, e.g., the communist “peoples’ democracy” of China, North Korea, East Germany or in capitalist countries the PRI in Mexico (in spite of a Constitution modeled after that in the U.S.) and Peronism in Argentina where the party is the master of the state. The rightist regime in Chile brought in the Chicago Boys to help implement free market reforms that produced a growth miracle, but that proved difficult to sustain as subsequent socialist governments burst that bubble.

The 2016 Presidential Election

In 2016 candidate Trump promised to drain the swamp and “end America’s endless wars” – both direct attacks on the deep state, particularly the military-industrial-congressional complex (Eisenhower’s original censored version) that manages the economy as well as foreign policy and military adventure. Reagan promised to roll back the deep state but failed. Clinton declared “the era of big government is over” but it barely paused. The Tea Party, composed of older more conservative voters tired of Republican false promises of limited government, launched a grass roots political campaign to limit government, which also failed. Once the state (or the Party of the state) is sovereign, the process has proven irreversible through political means.

That leaves the Supreme Court. Candidate Trump committed to nominating conservative Supreme Court Justices who would stay within the original intent of constitutional limits, the primary issue cited by his supporters. The abortion issue is a ruse, a litmus test for progressive precedents to trump constitutional intent.

The U.S. deep state is immune to accountability. A recent docudrama The Report tells the story of CIA torture after 911. The Agency lied to two Presidents, lied and stonewalled Congress over 8 years, violated the separation of powers and squashed the biggest seven thousand page Congressional oversight investigation in history. Only the stature of Senators Feinstein and McCain eventually got the Report released, but no one was held accountable, sending a clear signal that the deep state was immune. When President Trump alleged (later proven by the Mueller and Inspector General Reports – in spite of deep state resistance) that the intelligence community was involved in election rigging in 2016 and a subsequent coup attempt to remove him from office when that failed, Senator Schumer warned him: “Let me tell you, you take on the intelligence community, they have six ways from Sunday at getting back at you.” Impeachment is (only) one way.

The 2020 Presidential Election

On domestic policy, progressives arguably fared better under the Trump Administration than they would have from any of the other Republican candidate (e.g., victories on the budget and trade protectionism) and better than conservatives during the Obama Administration. Many conservatives (including Goldberg) join progressives in abhorring Trump’s personality and attacking his character (questionable, as is that of his political antagonists, e.g., Congressman Schiff). His lies and exaggerations may stretch the limits of political discourse, but the main stream media has regressed to Infamous Scribblers. The biggest cause of Trump derangement syndrome – and his source of political support – is likely his politically incorrect speech.

But Supreme Court appointments remain the existential issue for progressives and conservatives alike (as the Kavanaugh Hearings demonstrated), although limiting the power of federal government leaves progressives with free reign at the state and local level where they have had substantial success. Even “popular democracy” in big states like California is rigged by the state, forcing the oppressed to ‘vote with their feet’ leaving progressive states like California and New York with deficits, which then seek federal bailouts.

The electorate is divided along generational lines, with democrats appealing to younger liberal voters and republicans to older conservative voters. Lowering the voting age to 18 dramatically increased this demographic (why Democratic Speaker of the House Nancy Pelosi proposed lowering it to 16). Yet current Democratic candidates are divided among the ”electable”“moderate” 78 year old (by inauguration) Joe Biden campaigning as the former VP of a decidedly immoderate administration, authoritarian Michael Bloomberg who is almost a year older that Biden, socialist Bernie Sanders who is more than a year older than Biden, and Progressive Elizabeth Warren who would be 70 by inauguration. The young intolerant radical anti-capitalist progressives/socialists will undoubtedly be in control should victory be achieved by any of these elders following Taleb’s thesis (pg 69) that in a democracy the intolerant dominate.

What explains the strong Democratic appeal of 18-29 year old voters? Goldberg (pg. 340) quotes theologian Eugene Peterson: “humans try to find transcendence-apart from God – through the ecstasy of alcohol and drugs, recreational sex, or … crowds (i.e., mobs or cults).” Millenials are less religious than older voters and sex has declined relative to past generations. Non-college graduates have turned to drugs – 70,000 deaths annually.

Promises of debt forgiveness and free stuff by Socialist Sanders – and Warren – obviously appeal to the typically deeply indebted college educated. But so does their attack on business. Once taboo, socialism is now chic on college campuses as anti-business progressive ideas pervade college professorial ranks, particularly among historians and economists. This goes back to the early days of progressivism as socialist/communist historical myth makers accused business leaders of being “Robber Barons,” vastly over-stating the extent of American cronyism. Economists have generally under-appreciate the fragility and benefits of capitalism focusing instead on “market failures” real or imagined requiring government intervention, to be expected by a profession started by a German educated progressive to train Americans in the visible hand (fist) of state economic management

So millenials may be lured to join the cult and drink the Kool Aid: as an aging baby boomer, I’ll cling to religion and, Inshallah, sex and alcohol (bourbon, of course).

Kevin Villani

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Kevin Villani was chief economist at Freddie Mac from 1982 to 1985. He has held senior government positions, has been affiliated with nine universities, and served as CFO and director of several companies. He recently published Occupy Pennsylvania Avenue on the political origins of the sub-prime lending bubble and aftermath.

…into that server!

Joe Biden gave coal miners facing possible unemployment some advice:  learn to code.

In reality, of course, programming/coding is a skill that can exist on multiple levels.  Someone writing a simple spreadsheet model for some kind of repetitive tracking problem is working at a different level from someone writing a well-defined module within a large system for a bank, who is in turn working at a different level from someone writing interrupt-level hardware drivers for an operating system, or for someone creating the idea and user interface, as well as the code, for a new consumer-facing product.  Some of these tasks will usually pay less than what a skilled coal miner is paid, some of them will pay considerably more.

And also, programming is not an infinite reservoir of job demand. Much work that previously required considerable high-skill programming has now been largely automated by software tools and/or by complete application systems, and considerable programming work is being offshored–see my post telemigration.

Biden also asserted that:  “Anybody who can throw coal into a furnace can learn how to program, for God’s sake!”

Ignoring the inherent ridiculousness of this claim as a factual assertion…does Biden actually think that manual stoking of coal furnaces is a thing in today’s economy?  Does the Bureau of Labor Statistics show a large count of people employed as stokers?

In reality, the mechanical stoker was invented well over a century ago.  They were common in high-horsepower steam locomotives by 1900, and were and are used in coal-fired power plants.  I doubt if there was much manual stoking going on by 1940, except on steamships…and coal as a fuel for ships was rapidly on its way out by that point, as it was being displaced by oil

Plus, Biden was talking about coal miners.  Does he think that there are coal-fired furnaces in coal mines?  If there were, you would likely get a massive explosion from igniting of any gas in the mine.

Biden clearly understands as little about the software industry as he does about the energy industry.

This is the man who says he was Obama’s point man on a “jobs of the future” initiative.

Can you imagine what these people would do to the economy if they ever achieved the degree of power that they so avidly seek?

On Friday night Jan 3, 2020, President Trump directed a successful strike killing IRGC Commander Gen. Qassem Soleiman at the Baghdad International Airport.  Four AGM-114N Metal Augmented Charge (MAC) Thermobaric Hellfire missiles launched from an General Atomics MQ-9 Reaper turned Soleiman’s SUV and his accompanying  security SUV into funeral pyres. [1]

IRGC Commander Gen. Qassem Soleiman meets three AGM-114N Metal Augmented Charge (MAC) Thermobaric Hellfire missiles launched from an MQ-9 Reaper Drone.  Graphic Source: UK Daily Mail

See full story at this Daily Mail link:

https://www.dailymail.co.uk/news/article-7848729/Trump-taunts-Iran-saying-never-won-war-ordering-strike-killed-Soleimani.html

Some in the media have compared this strike to Operation Vengeance, the American military operation to kill Admiral Isoroku Yamamoto of the Imperial Japanese Navy on April 18, 1943.

The Trump Administration drone strike was in fact far more consequential than Operation Vengeance. If only because of how much more of the IRGC Quds force senior chain of command were eliminated compared to the Admiral Isoroku Yamamoto strike.  And how much more important Gen. Qassem Soleiman was to Iran than Yamamoto was to Imperial Japan.

Also killed in the strike were Abu Mahdi al-Muhandis also known as Jamal Jafaar Mohammed Ali Āl Ebrahim, the commander of the Iraqi Shia Kata’ib Hezbollah militia and mastermind behind the December 1983 bomb attacks on U.S. and French embassies in Kuwait.

In additional to Soleiman and al-Muhandis/Āl Ebrahim, also killed were IRGC Brigadier General Hussein Jafari Nia, Major-General Hadi Taremi, LTC. Shahroud Mozaffari Nia and Captain Waheed Zamanian. Nor does the list end there as senior pro-Iranian Iraqi Shia PMF militia leaders Heydar Ali, Muhammed Reza al-Jaberi and Hassan Abdul Hadi, were in the second SUV struck by one of four AGM-114N Hellfire guided missiles fired by the MQ-9 Reaper.

IRAN’S RED NAPOLEON

IRGC Commander Gen. Qassem Soleiman was to Iran what Heinrich Himmler, Gen Oberst Kurt Daluege, Gen Ernst Kaltenbrunner and Gen Sepp Dietrich were to Nazi Germany, all rolled into one.

In many ways Gen. Qassem Soleiman ran Iran’s foreign policy and strategy as principal adviser to the theocratic leadership. Soleiman made his bones in the 1990’s suppressing Iranian student riots in the style of Belisarius and the Nika riots. Post 9/11/2001, he has been orchestrating the killings of US service personnel, is the architect Iran’s proxy forces in Iraq, Lebanon, Syria and Yeman and ran covert ops forces world wide.

In fact, Gen. Qassem Soleiman was Iran’s “Red Napoleon.”

The idea of “The Red Napoleon” came from the 1929 novel of that name by Floyd Gibbons predicting a Soviet conquest of Europe and invasion of America by The Red Napoleon’s massive multi-racial army. Written as a screed against white racial supremacy, the concept in the Western Left of a 3rd World military leader who could routinely defeat the West over and over again the same way that General and later French Emperor Bonaparte Napoleon did to the leaders of Western Europe in the late 18th and early 19th century has hung on in the Left’s Noosphere [2] in the decades since.

If anyone was a “Red Napoleon” in the 21st century,  Gen. Qassem Soleiman was that man.

On January 12, 2016, two United States Navy riverine command boats were seized by Iran’s Islamic Revolutionary Guard Corps (IRGC) Navy after they entered Iranian territorial waters near Iran’s Farsi Island in the Persian Gulf. The subsequent release was hailed by the Obama administration as an unintended benefit of the new diplomatic relationship. Source: https://en.wikipedia.org/wiki/2016_U.S.%E2%80%93Iran_naval_incident

Gen. Qassem Soleiman was a man from the 3rd World. One who had created and lead a team in the form of the Quds Force that had killed American servicemen in their hundreds, for decades, got a pair of US Navy riverine command boat crews to surrender in humiliation to support Pres. Obama’s “Opening to Iran” and executed  both the Benghazi, Libya and Baghdad, Iraq embassy assaults.

And Pres. Trump just sent Iran’s “Red Napoleon” to “…meet the Reaper.”

IRGC Quds Force Commander Qassem Soleimani. He was the Iranian government’s “Red Napoleon” and was killed by a thermobaric Hellfire missile launched from a MQ-9 Reaper at the orders of President Trump on 3 Jan 2020.

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Free speech…free expression generally…is under attack in America and throughout the Western world to a degree not seen in a long time. I think there are some specific phenomena and (partially-overlapping) categories of people which are largely driving this attack–I’ve written about this subject previously, here, but the situation has gotten even more serious since that post, and some of the important factors were underemphasized.  Here are the current fronts, as I see it, in the war (not too strong a word, I’m afraid) on free speech.

The Thugs. As I pointed out in my post The United States of Weimar?, illegal actions against political opponents, ranging from theft of newspapers to direct assault and battery, have in recent decades become increasingly common on university campuses, and now are well on track to being normalized as aspects of American politics. Incidents of political thuggery are reported almost daily: just the other day, pro-Trump women at an upscale DC hotel were verbally attacked and apparently physically assaulted by members of a wedding party that was heavy on Democrat attendees; including, reportedly, some top officials from the DNC. A pro-free-speech film was reportedly interrupted by two men wearing masks. Interruption of movies they didn’t like was a tactic used by the Nazis prior to their obtaining official censorship powers. The film “All Quiet on the Western Front” was plagued by Nazi disruptions when released in Germany in 1930. And attempts to shut down dissident speakers on college campuses, such as this, have become so common as to now be almost the default expectation.

The Assassins. These individuals go beyond the level of violence practiced by the Thugs, and make credible death threats they attempt to carry out against those whose actions or believe they view as unacceptable. The majority of threats and attacks falling in this category have certainly been the doing of radical Muslims; however, some of the more extreme ‘environmentalist’ and ‘animal rights’ groups have also demonstrated Assassin tendencies. At present, however, it is those Assassins who are radical Muslims who have been most successful in inhibiting free expression. Four years in hiding for an American cartoonist. But see also Ecofascism: The Climate Debate Turns Violent, how long until this justification and practice of violence reaches the level of justifying and carrying out actual murders?

The Enclosure of the Speech Commons. Whereas the Internet and especially the blogosphere offered the prospect of political expression and discussion unfiltered by the traditional media, the primary social-media providers have taken various levels of controlling attitudes toward free speech; Twitter, in my opinion, is especially bad. Partly this is ideological; partly, it probably reflects their ideas about protecting their brands. Yes, there are plenty of ways to communicate online outside of the social media platforms, but their growth has been so rapid that a large proportion of the potential audience is not easily reached outside their domains. Note also that conversations that one would have been private friends talking at home, or over the telephone are now semi-public and sometimes made fully public. Plus, they become part of an individual’s Permanent Record, to use the phrase with which school officials once threatened students.

The Online Mobs. The concerns of the social media providers about providing online “safe spaces” does not seem to have in the least inhibited the formation of online mobs which can quickly make life unpleasant for their targeted individuals, and even destroy the careers of those individuals. Decades ago, Marshall McLuhan referred to the technology-enabled Global Village; unfortunately, it turns out that this virtual village, especially as mediated through the social media platforms, has some of the most toxic characteristics of the real, traditional village. See my post Freedom, the Village, and the Internet.

And the mobs do not limit themselves to attacks on the target individual: they frequently attack other individuals who fail to participate in the shunning of that target person. As an example:

A few weeks ago, shortly after I left my magazine gig, I had breakfast with a well-known Toronto man of letters. He told me his week had been rough, in part because it had been discovered that he was still connected on social media with a colleague who’d fallen into disfavour with Stupid Twitter-Land. “You know that we all can see that you are still friends with him,” read one of the emails my friend had received. “So. What are you going to do about that?”

“So I folded,” he told me with a sad, defeated air. “I know I’m supposed to stick to my principles. That’s what we tell ourselves. Free association and all that. It’s part of the romance of our profession. But I can’t afford to actually do that. These people control who gets jobs. I’m broke. So now I just go numb and say whatever they need me to say.”

Increasingly, it’s not just a matter of limiting what a person can say, it’s also a matter of edicting what they must say.

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December 7th 2019 is the 78th anniversary of the Imperial Japanese Navy’s surprise Pearl Harbor attack on the capitol ship battle line of the US Pacific Fleet.  After that attack there was a round of American elite political and military leaders a collective swearing of “Never Again.”  That is, “Never again will the USA be so surprised by a foreign enemy.”

This is what Pearl Harbor looked like through Imperial Japanese Naval Air Force (IJNAF) bomb sights on December 7th 1941.

Yet despite that, America has indeed been “surprised” in exactly the way of Pearl Harbor repeatedly since 1941.  The Korean war is one example five years after WW2 ended.  The Soviet Invasions of both Czechoslovakia and Afghanistan in 1968 and 1979 are two others   It was certainly an intelligence surprise on 9/11/2001 with the attacks on the World Trade Center in NY City and the Pentagon in Washington D.C.,  and the “surprise” of there being few/no Weapons of Mass destruction in post 2003 Iraq, and Iran’s recent drone and cruise missile attack on Saudi Arabian oil refining facilities.

The reason for this pattern of failure boils down to the forgotten and unlearned  — frankly impossible for American elites to learn —  intelligence lessons of Pearl Harbor.  Those unlearned lessons being that the interlocking  patron-client political relations inside the American federal civil government, military and intelligence organizations lead to narrow self-interested group think over the concerns of outside reality.  And that this tendency towards self-interested group think is at its absolute worse when facing a foreign enemy with a police state internal security system that is running a campaign of strategic deception and denial.

If that “worst case” foreign enemy sounds a lot like Imperial Japan, the People’s Republic of North Korea, China, the Soviet Union, Iraq and Iran. It means you have paid attention to both American history since Pearl Harbor and to current events.

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I was going through my routine at Planet Fitness this morning, as is our habit – three times weekly, usually around 8 of the clock; half-past at latest, for an hour on the elliptical and the stair-step with a cool-down on the recumbent. There is a bank of television screens across the middle of the gym, offering all the alphabet networks, plus CNN, Univision, the Planet Fitness channel, and something that has Friends and Seinfeld on rotation during the time that I am not watching any of them. (I have perfected the art of reading my Kindle while stepping and pedaling; after all, being able to read makes the whole exercise thing bearable.)

All the news feeds – four or five of the screens had the same damn unending Schiff show; which is to say that interminable search for solid grounds upon which to impeach a sitting and duly elected president of the USA. Read the rest of this entry »

It is deeply, solidly ironic that at almost the very hour that US forces were bagging Abu Bakr al-Baghdadi, fearless leader of the ISIL/ISIS-established caliphate in the Middle East, that the catastrophically-unfunny cast of Saturday Night Live had just finished ragging on President Trump for supposedly coddling ISIS by pulling out of Syria. There hasn’t been a case of timing this bad since 70ies Weatherman terrorist-turned-educator Bill Ayres launched his memoir of bomb-building and social mayhem the very week that Osama Bin Laden’s merry crew of jihadis murdered nearly 3,000 Americans and others in a single day, on September 11th, 2001. Read the rest of this entry »

For some peculiar reason, the political commentariat this week are bending their bulging brains towards the question of which one of the progressive Democrats currently angling for a presidential bid next year will catch the brass ring. We have a year and a few days to go until Election Day, 2020, and nine months until the Democrat Party convention when the final decision on a candidate will be made; I speculate that the fierce urgency of defeating Orange Man Bad has a lot to do with so many hopefuls running early and often, and the overwhelming media interest in their assorted prospects.

I can’t claim ownership of a finely-tuned predictive crystal ball, or have any informants within the inner party, but I have been following the political scene as reflected in the crazy-house mirror of the internet since about 2002, and before that through a variety of print publications, and over time one does develop a sense of how things may develop with regard to next years’ presidential campaign.
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Little Man, What Now?

(edited, with updates)

I’ve often seen this 1932 book footnoted in histories touching on Weimar Germany; not having previously read it I had been under the vague impression that it was some sort of political screed. Actually it is a novel, and a good one. The political implications are indeed significant, but they’re mostly implicit rather than explicit.

Johannes and Emma, known to one another as Sonny and Lammchen, are a young couple who marry when Lammchen unexpectedly becomes pregnant. Their world is not the world of Weimar’s avant-garde artists and writers, or of its risque-to-outright-degenerate cabaret scene. It is far from the world of a young middle-class intellectual like Sebastian Haffner, whose invaluable memoir I reviewed here. Theirs is the world of people at the absolute bottom of anything that could be considered as even lower-middle-class, struggling to hold on by their fingernails.

When we first meet our protagonists, Sonny is working as a bookkeeper–he was previously a reasonably-successful salesman of men’s clothing, working for the kindly Jewish merchant Mr. Bergmann, but a pointless quarrel with Bergmann’s wife, coupled with a job offer from the local grain merchant (Kleinholz) led to a career change. Sonny soon finds that as a condition of continued employment he is expected to marry Kleinholz’s ugly and unpleasant daughter, never an appealing proposition and one which his marriage to Lammchen clearly makes impossible. Lammchen is from a working-class family: her father is a strong union man and Social Democrat who sees himself as superior to lower-tier white-collar men like Sonny.

When Sonny and Lammchen set up housekeeping, their economic situation continually borders on desperate. Purchasing a stew pot, or indulging in the extravagance of a few bites of salmon for dinner, represents a major financial decision. An impulsive decision on Sonny’s part to please Lammchen by acquiring the dressing table she admires will have long-lasting consequences for their budget.

The great inflation of Weimar has come and gone; the psychological damage lingers. Sonny and Lammchen’s landlady cannot comprehend what happened to her savings:

Young people, before the war, we had a comfortable fifty thousand marks. And now that money’s all gone. How can it all be gone?…I sit here reckoning it up. I’ve written it all down. I sit here, reckoning. Here it says: a pound of butter, three thousand marks…can a pound of butter cost three thousand marks?…I now know that my money’s been stolen. Someone who rented here stole it…he falsified my housekeeping book so I wouldn’t notice. He turned three into three thousand without me realizing…how can fifty thousand have all gone?

Inflation is no longer the problem, unemployment is. There are millions of unemployed, and those who do hold jobs are desperately afraid of losing them and will do anything to keep them.

Both Sonny and Lammchen are limited and flawed people with many redeeming and even lovable attributes. Sonny, possibly as a result of upbringing by his cold and sleazy mother, is lacking in a sense of worth and in self-confidence–when he returns to the business of selling menswear, the store’s establishment of a quota system (apparently a radical innovation at the time) is so stressful to him as to greatly harm his sales performance. His devotion to Lammchen and to the coming baby (“the Shrimp”) is unshakable and keeps him going. Lammchen herself, despite her generally sweet nature, can on occasion be a irrational, unrealistic, and very unfair to Sonny, although these episodes are of short duration.

In pursuit of possible employment for Sonny, they move to Berlin, where life definitely does not get any better. Germany’s vaunted social-welfare system does provide a certain amount of help for the couple, but there is a psychic cost. When they apply for the nursing-mother allowance to which Lammchen is clearly entitled when Shrimp is born, they find themselves enmeshed in a bureaucratic paperwork nightmare. They finally do get the money, but Lammchen is so upset by the experience that she resolves to vote Communist in the next election. (Yeah, that’ll help.) Sonny does receive compensation during his periods of unemployment, but this does little to ease his feeling of uselessness and fears for the future. After finally getting hired by Mandel’s Department Store, he passes a group of still-unemployed men:

Pinneberg had the feeling, despite the fact that he was about to become a wage-earner again, that he was much closer to those non-earners than to people who earned a great deal. He was one of them, any day he could find himself standing here among them, and there was nothing he could do about it. He had no protection. He was one of millions.

Despite the social safety net, despite a few helpful friends and acquaintances, the dominant feeling of Sonny and Lammchen is that they are utterly alone in the world, like children in a dark wood or like American pioneers on the great plains–but without the hope.

Neither Sonny nor Lammchen is a very political person, but they have the strong feeling that “the system” is rigged against them. While Lammchen does make an anti-Semitic remark early in the book (“I’m not too keen on Jews”), neither she nor Sonny seems to be among the growing number who blame Germany’s Jews for their economic difficulties–indeed, Sonny is appalled when a Jewish businesswoman tells him of her mistreatment at the hands of Jew-haters. The couple’s (rather vague) political leanings are to the Left, and they attribute the source of their problems to the rich and the powerful generically. They have no faith in the political system or leadership.

Ministers made speeches to him, enjoined him to tighten his belt, to make sacrifices, to feel German, to put his money in the savings-bank and to vote for the constitutional party. Sometimes he did, sometimes he didn’t, according to the circumstances, but he didn’t believe what they said. Not in the least. His innermost conviction was: they all want something from me, but not for me.

Of Lammchen’s political views, the author says:

She had a few simple ideas: that most people are only bad because they have been made bad, that you shouldn’t judge anybody because you never know what you would do yourself, that the rich and powerful think ordinary people don’t have the same feelings as they do–that’s what Lammchen instinctively believed, though she hadn’t thought it out.

Sonny is resolved to succeed in his sales job at Mandel’s department store, and is greatly helped by an older salesman, the very dignified Mr. Heilbutt, who possesses both practical sales skills and general life skills that Sonny has not yet developed. For the most part, though, the relationship among store employees is of a dog-eat-dog, knife-in-the-back nature, and some of the customers are very difficult–like the man who comes into the store accompanied by his wife AND his sister AND his mother-in-law, with vociferous opinions about each item from the first two women and a constant repetition of the complaint we-should-have-gone-to-a-different-store from the mother-in-law.

When Sonny again becomes unemployed, this time for a protracted period, Lammchen is able to bring in a little money by doing sewing for more-affluent families, while Sonny takes on the role of a house-husband. The author implies that this situation has become common in Germany, as Lammchen asks:

What d’you think, Mr Jachmann? D’you think it’s going to be like this from now on with the men at home doing the housework while the women work? It’s impossible.

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Roger Kimball was struck by a news story noting that while Bernie Sanders spent his honeymoon in the Soviet Union, he never made any attempt to visit the dissident Alexander Solzhenitsyn in Vermont.

“Some comments about that story attribute Mr. Sanders’s negligence to ideology, as if he, being a fan of the Soviet Union, made a silent protest by ignoring the famous anti-Soviet figure in his midst. But I think the deeper reason for his neglect was a quality of the socialist or communist or revolutionary sensibility that is too little remarked. I mean its ingrained, indeed its programmatic, lack of curiosity about other people.

The philosopher Sir Roger Scruton, in a thoughtful anatomy of the French Revolution, is one of the few people to underscore this feature of the totalitarian habit of mind. “This absence of curiosity,” Mr. Scruton notes, “is a permanent characteristic of the revolutionary consciousness.””

Read the whole thing.

Richard Fernandez has related thoughts dealing with uncertainty and the future.

“From the point of view of information theory, the future is an alien signal. But unlike the characters in the movie, the Chinese, Russian, European, and American elites are unwilling to start at a point of maximum entropy. Rather, they want to control the future and load the dice by constraining it with their legacy theories. That is because the Woke, EU, Chinese Communist Party, and the Kremlin are convinced they already know the future and the only difficulty is in getting the recalcitrant deplorables to go along.”

Fernandez makes the important point that “Real discovery consists not in what is forgotten or predicted, but in coming upon the never imagined.”

There is no place for the watchmaker among the gears of the watch.

King George III and Lord North have been blamed for botching negotiations with the American colonies. Now, the same Conservative Party seems determined to botch another negotiation; with the EU. In both cases, the party and negotiators were determined to keep the relationship intact, no matter how unequal.
An excellent piece in the claremont Review explains.

Many statesmen warned from the outset that British ideas of liberty would not survive a merger with the E.U. The most eloquent early diagnoses came from the Labour Party, not the Tories. That is because the fundamental disposition of the E.U. is to favor technocratic expertise over representative government, and the Tories have not generally been the British party that placed the highest priority on the passions of the masses. In 1962, as Tory Prime Minister Harold Macmillan was eying EEC membership, Labour leader Hugh Gaitskell warned, “[I]t does mean the end of Britain as an independent nation state…. It means the end of a thousand years of history. You may say ‘Let it end’ but, my goodness, it is a decision that needs a little care and thought.”

Interesting that Labour saw the danger first. In the US, the party of the Administrative State is the Democrats although both parties are heavily invested as Angelo Codevilla has pointed out.

Eventually even the reliably anti-Brexit Economist came to see that some of Britain’s major problems had arisen from constitutional meddling. David Cameron’s 2011 Fixed-Term Parliaments Act, in particular, made it much more difficult to call the general elections that would ordinarily have been provoked by the resounding repudiation of Theresa May’s withdrawal package. Blair and Cameron, the magazine noted, “came to power when history was said to have come to an end. They saw no need to take particular care of the constitution.” E.U. membership hid these problems—if Britain wasn’t paying attention to its constitution at the time, it was partly because it had been using someone else’s.

I had not realized that “Judicial Review” of laws was an American phenomenon. John Marshall has reached far into the future with his ruling in Marbury vs Madison.

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(Seems appropriate for a rerun, giving the present growth of positive feelings about Socialism in this country)

J B S Haldane was an eminent British scientist (population genetics) and a Marxist. C S Lewis was…well, you probably already know who C S Lewis was.

In 1946, Haldane published an article critiquing a series of novels by Lewis known as the Ransom Trilogy, and particularly the last book of the series, That Hideous Strength. Lewis responded in a letter which remained unpublished for many of years. All this may sound ancient and estoteric, but I believe the Lewis/Haldane controversy is very relevant to our current political and philosophical landscape.

To briefly summarize That Hideous Strength, which is the only book of the trilogy that I’ve read: Mark, a young sociologist, is hired by a government agency called NICE–the National Institute for Coordinated Experimentation–having as its stated mission the application of science to social problems. (Unbelievably, today the real-life British agency which establishes rationing policies for healthcare is also called NICE.) In the novel, NICE turns out to be a conspiracy devoted to very diabolical purposes, as Mark gradually discovers. It also turns out that the main reason NICE wanted to hire Mark is to get control of his wife, Jane (maiden name: Tudor) who has clairvoyant powers. The NICE officials want to use Jane’s abilities to get in touch with the magician Merlin and to effect a junction between modern scientific power and the ancient powers of magic, thereby bringing about the enslavement of mankind and worse. Jane, though, becomes involved with a group which represents the polar opposite of NICE, led by a philology professor named Ransom, who is clearly intended as a Christ-figure. The conflict between NICE and the Ransom group will determine the future of humanity.

A brilliantly written and thought-provoking book, which I highly recommend, even if, like me, you’re not generally a fan of fantasy novels.  I reviewed it here.

With context established, here are some of the highlights of the Lewis/Haldane controversy:

1)Money and Power. In his article, Haldane attacks Lewis for the latter’s refusal to absolutely condemn usury, and celebrates the fact that “Mammon has been cleared off a sixth of our planet’s surface”…clearly referring to the Soviet Union. Here’s part of Lewis’s response:

The difference between us is that the Professor sees the ‘World’ purely in terms of those threats and those allurements which depend on
money. I do not. The most ‘worldly’ society I have ever lived in is
that of schoolboys: most worldly in the cruelty and arrogance of
the strong, the toadyism and mutual treachery of the weak, and
the unqualified snobbery of both. Nothing was so base that most
members of the school proletariat would not do it, or suffer it, to
win the favour of the school aristocracy: hardly any injustice too
bad for the aristocracy to practise. But the class system did not in
the least depend on the amount of pocket money. Who needs to
care about money if most of the things he wants will be offered by
cringing servility and the remainder can be taken by force? This
lesson has remained with me all my life. That is one of the reasons
why I cannot share Professor Haldane’s exaltation at the banishment
of Mammon from ‘a sixth of our planet’s surface’. I have
already lived in a world from which Mammon was banished: it
was the most wicked and miserable I have yet known. If
Mammon were the only devil, it would be another matter. But
where Mammon vacates the throne, how if Moloch takes his
place? As Aristotle said, ‘Men do not become tyrants in order to
keep warm’. All men, of course, desire pleasure and safety. But all
men also desire power and all men desire the mere sense of being ‘in
the know’ or the ‘inner ring’, of not being ‘outsiders’: a passion
insufficiently studied and the chief theme of my story. When the
state of society is such that money is the passport to all these
prizes, then of course money will be the prime temptation. But
when the passport changes, the desires will remain.

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(This post is now an August perennial, in honor of the beginning of the new school year–indeed, many kids have already been in school for 2 or 3 weeks)

Peter Orszag, who was Obama’s budget director and is now at Lazard, thinks it would be a good idea to cut back on summer school vacations for kids, arguing that this would both improve academics and reduce obesity.

I’m with Jeremy Lott: But to look at the vast wasteland that is American public education — the poor teaching, the awful curriculum, the low standards, the anemic achievement, the institutional resistance to needed reform — and say that the real problem is summer vacation takes a special sort of mind.

I wrote about the war on summer vacation back in 2006, after stopping at a store in Georgia on the first day of August and discovering that this was the first day of school for the local children.

The truth is, most public K-12 schools make very poor use of the time of their students. They waste huge proportions of the millions of hours which have been entrusted to them–waste them through the mindless implementation of fads and theories, waste them through inappropriate teacher-credentialing processes, waste them through refusal to maintain high standards of performance and behavior.

When an organization or institution proves itself to be a poor steward of the resources that have been entrusted to it, the right answer is not to give it more resources to waste.

Orszag and similar thinkers seem to have no concept that good things can happen to children’s development outside of an institutional setting. Plenty of kids develop and pursue interests in science, literature, art, music…plus, there is plenty to be learned simply by interacting with friends in an unstructured environment.

Would the world be better off if Steve Wozniak and Jeri Ellsworth..to name only two of many, many examples..had their noses held constantly to the school grindstone rather than having time to develop their interests in electronics?

Lewis E Lawes, who was warden of Sing Sing prison from 1915 to 1941, wrote an interesting book titled Twenty Thousand Years in Sing Sing. The title refers to the aggregate lengths of the sentences of the men in the prison at a typical particular point in time.

Lawes:

The announced “death by suicide” of Pedo-Pimp to the Powerful Jeffrey Epstein in Federal government custody while;

1. On a 24/7 suicide watch,
2. After his first “suicide attempt,”  in late July, and
3. Before there was any time for a real autopsy…

…is such utter horse manure as to utterly destroy any shred of credibility of the Federal government.

That Federal Attorney General Barr first called for an FBI investigation of Epstein’s death — to deafening loud round of public rasp-berry’s.

Then he followed that credibility destroying knee jerk response near seconds later by saying the Department of Justice Inspector General would conduct the investigation — given the non-prosecution of so many in the DoJ & FBI after the IG caught them red handed leaking FISA surveillance sources and methods to the press — amounts to an “Eff-U” slap in the face to the General Public.

This is pure “Pravda Reporting on Chernobyl” territory.  It’s all about elite posturing and “Face” while the radioactive pile burns.

America functions on the consent of the governed.  This requires the government be credible through elite replacement by elections as well as the fair administration and enforcement of justice for both the powerful as well as the least of us.

The circumstances of Mr Epstein’s death are such that I’ve completely lost any faith in the concept of “Justice” that in any way involves the institutional FBI or Department of Justice.

I hate saying that because it leaves us here:

“Those who make peaceful change impossible make violent change inevitable.”

That Rubicon has now been crossed. G-d help the people of these United States.

Please comment and tell me I’m wrong.  I’m in the mood to be lied too.

Bitter Waters: Life And Work In Stalin’s Russia by Gennady Andreev-Khomiakov

A fascinating look at the Soviet economic system in the 1930s, as viewed from the front lines of that system.

Gennady Andreev-Khomiakov was released from a labor camp in 1935, and was fortunate to find a job as a book-keeper in a sawmill. When the factory manager, Grigory Neposedov (a pseudonym) was assigned to run a larger and more modern factory (also a sawmill), he took Gennady with him.

Although he had almost no formal education, Neposedov was an excellent plant manager. As Gennady describes him:

He was unable to move quietly. Skinny and short, he moved around the plant so quickly that he seemed to be running, not walking. Keeping pace with the director, the fat chief mechanic would be steeped in perspiration…He rarely sat in his office, and if he needed to sign some paper or other, you had to look for him in the mechanic’s office, in the shops, or in the basement under the shops, where the transmission belts and motors that powered the work stations were located…This enthusiasm of his, this ability to lose himself completely in a genuine creative exertion, to give his all selflessly, was contagious. It was impossible to be around Neposedov without being infected by his energy; he roused everyone, set them on fire. And if he did not succeed in shaking someone up, it could unmistakely be said that such a person was dead or a complete blob.

With his enthusiasm and dedication to his factory, Neposedov comes across almost as a Soviet version of Hank Reardon (the steel mill owner in Ayn Rand’s Atlas Shrugged), with this difference–Nepodesov could throw himself as enthusiastically into bureaucratic manipulation as into his technical and leadership work. All of his skills would be needed to make this factory a success.

Although the sawmill had modern equipment, it was producing at only a fraction of its design capacity. One of the problems was energy: the plant was powered by a 200HP steam engine, and whoever had built the place had spent almost all of the budget on other equipment, leaving very little for the boiler. The original boiler that came with the plant turned out to be useless, and was replaced with a salvaged boiler..this worked, but was not in good shape and produced only about half the steam needed to run the engine–and the plant–at full power.

At this point in history, and in this particular corner of the Soviet economy, the amount that was available to be paid to workers was strongly related to the output of a plant. And workers at this sawmill were becoming increasingly desperate, on the point of actual starvation. Neposedov, aided by Gennady, pusued a three-part program of improvement: (1)fix the boiler, (2)improve the workflow (as we would now call it) within the plant, and (3)put in place an incentive system for the workers.

New “pipes” for the boiler were somehow obtained (I think “pipes” in this context refers to boiler flues) and the workflow was continuously analyzed and improved. The most interesting part of the story, though, deals with the incentive program. The plant manager apparently had discretion to put such programs in place as long as he could pay for them out of increased output. (As the book describes it, there were extensive accounting systems in place throughout the Soviet economy–indeed, Lenin had once gone so far as to say “Socialism is accounting.” The accounting seems a bit similar to what you would find in a multidivisional American company with extensive intracompany transactions.) The incentive system that Gennady designed for this sawmill was based on very sharp pay increases for the workers when production exceeded target–so that, for example, you could double your pay by producing only 25% over target. (Actually, the plan paid collectively by group and by shift, rather than on an individual basis.)

The incentive plan, together with the repaired steam boiler, resulted in very high production–140%, then 160% of target–and correspondingly high pay for the workers. Gennady had some nervous moments when he feared he had made a mistake in the calculations and the cost of the additional wages would exceed the amount generated by the new production….a mistake like this could easily have landed him back in Siberia, or worse. But it turned out that the new system was indeed sustainable.

The local Communist Party leadership, while pleased with the increased production, was disturbed that the propaganda buzzwords of the day were not being implemented. “Socialist competition” was hot at the time, and the Party organizer insisted on competition at the individual worker levels, not just the group and shift level.

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Yes, the great science fiction visionary, Robert A. Heinlein (PBUH) an Annapolis grad and serving naval officer who was discharged for reasons of health early on in what might have been a promising naval career at the right time and in the right generation to have made a significant command mark in WWII, generated the concept of the crazy years. But I wonder if he had the slightest clue of the far-frozen limits of bug-house, chewing-at-the-restraints, raving-at-the-moon crazy that current political figures, media personalities, self-styled internet stars, and academic t*ats would achieve … and just in the last week or so. Really, under the old rules of civility, the ones that I grew to adulthood honoring, decent citizens would have just looked away, murmuring polite demurrals and excuses under their breath, while deleting the offending party from their address book and never inviting them to their neighborhood potlucks any more … but now the crazy has got to such an extent that one can hardly keep up.
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The Mueller hearings were a huge disappointment to the Democrats, who were counting on scandal and impeachment to substitute for governing. Two leaders, Schiff and Nadler, seem unwilling to give up and try legislating. Schiff, who seems to most devoted to the Russia Hoax, has a darker side.

Schiff is the first Democrat since 1932 to represent the region.

(Limiting expenditures is a point Colbert needled him on. Colbert: “Isn’t that the equivalent of sleeping with a prostitute and then strangling her to hide your shame?” Schiff: “Well … I wouldn’t want to say it like that.”)

Rogan, of course was the target of massive Democrat fund raising to punish the House prosecutor for the Clinton impeachment.

That fawning “The Hill” tongue bath did not provide much for the “darker side.”

Nadler, another Clinton defender, has shed 60 pounds since his gastric bypass but he still looks about 100 pounds overweight. He is a little less strident than Schiff in public.

Where do they go from here ?

They get no help from Andrew McCarthy who demolishes their arguments.

Mueller’s anti-Trump staffers knew they were never going to be able to drive Trump from office by indicting him. The only plausible way to drive him from office was to prioritize, over all else, making the report public. Then, perhaps Congress would use it to impeach. At the very least, the 448 pages of uncharged conduct would wound Trump politically, helping lead to his defeat in 2020 — an enticing thought for someone who had, say, attended the Hillary Clinton “victory” party and expressed adulatory “awe” for acting AG (and fellow Obama holdover) Sally Yates when she insubordinately refused to enforce Trump’s border security order.

Of course, it wouldn’t be enough to get the report to Congress. The challenge was to get it there with the obstruction case still viable even though prosecutors knew they couldn’t get away with recommending an obstruction indictment. How to accomplish this? By pretending that the OLC guidance prevented prosecutors from even making a charging decision.

This resulted in the Ted Lieu question and Mueller’s answer which he had to retract after the break.

It is becoming more and more apparent that Mueller’s ‘assistant” prosecutor, Andrew Weissmann is the lead conspirator in the coup.

Weissmann is distinguished by his abysmal record as a corrupt prosecutor in several cases.

A lawyer representing whistleblowers referred Andrew Weissman to the Department of Justice’s Inspector General (IG) for “corrupt legal practices”.

The judge described AUSA Weissmann’s conduct as the “myopic withholding of information” and “reprehensible and subject, perhaps, to appropriate disciplinary measures,” according to the opinion obtained by investigative reporter Sara Carter.

He further distinguished himself with a rare Unanimous Supreme Court decision reversing his conviction of Arthur Anderson in the Enron case.

With a brief, pointed and unanimous opinion, the Supreme Court on Tuesday overturned Arthur Andersen’s conviction for shredding Enron accounting documents as that company was collapsing in one of the nation’s biggest corporate scandals.

But the decision represents little more than a Pyrrhic victory for Andersen, which lost its clients after being indicted on obstruction of justice charges and has no chance of returning as a viable enterprise. The accounting firm has shrunk from 28,000 employees in the United States to a skeleton crew of 200, who are attending to the final details of closing down the partnership.

28,000 people lost their jobs. The prosecutor who hid evidence was Weissmann.

In the interview with Devin Nunes, Maria Bartiromo asks the ultimate question: “who was the mastermind” behind all of these intelligence operations?

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Haven’t posted one of these for while, so here are a few links I found interesting…

Tom Wolfe on the space race as a combat of individual champions in the ancient style.

Zoning rules as an enemy of shade.

Sarah Hoyt on the human tendency to assume that the conditions of the past still apply.  (Even the purely imagined and stereotypical conditions of the past, in some cases, I’d add)

Interesting ‘blog’ by Holly (Maths Geek).  (Actually a Twitter feed…people who are on Twitter would IMO do well to mirror all content onto a traditional blog unless they are willing to have their work at the mercy of Jack Dorsey and his minions)

Despite all the concern and hype about Russian hacking, China’s spying and influence within our borders are rising.  See also this case of a former GE engineer and a businessman charged with stealing turbine technology, with the “financial and other support” of the Chinese government.  Additionally, see my post So, really want to talk about foreign intervention?

Privatization reform of Fannie Mae and Freddie Mac, a hot topic on and off since their founding eight and five decades ago respectively, is heating up once again after more than a decade of temporary conservatorship. All past reform efforts have failed. What should we have learned?

• Private markets operate on one set of incentives and accountability, government on an entirely different set. Each has its problems and imperfect solutions.
• Private markets may inappropriately discriminate against qualified borrowers, for example, whereas public programs may fail to adequately discriminate.
• Public enterprises created to jump-start or complement private markets often miss the mark, with unintended consequences.
• Politicians much prefer to deliver subsidies through taxes (in this case tax exempt debt substituting for taxable equity) rather than expenditures – especially since the Budget Control Act of 1974 – and implicit off-budget credit guarantees that delay the reckoning.
• In spite of good intentions and design to get the best of both, privatized hybrid public-private systems inevitably embody the worst: public risk for private profit. Lacking both market and public discipline, they cause systemic failure that “nobody could have seen coming.”
• Political reform reflexively blames private market failure, doubling down on unaccountable and ineffective bureaucratic methods while providing opaque bailouts through greater tax and credit subsidies.
• Political reform starts with what is, not what should be, repeating the cycle.

U.S. secondary markets evolved entirely in response to anachronistic political forces. FHA was created in 1936 to stimulate new construction jobs subsequent to a huge housing construction boom. Fannie Mae was created two years later to prop up flagging demand for FHA mortgages. Ginnie Mae was created in 1968 to liquidate Fannie Mae after prior privatization attempts failed to reduce official government debt, but the residual $1 billion secondary market facility with minimal shares outstanding as a result of a mandatory user purchase program was instead privatized. When that entity turned down tax exempt pass-through securitization to circumvent the myriad laws and regulations preventing the development of a national securities market, Ginnie Mae stepped in. Rather than liquidate, the privatized Fannie turned to funding conventional mortgages for their mortgage banker clients. To protect their turf, portfolio lending savings and loans then demanded their own secondary market facility, Freddie Mac. It later privatized mainly to provide management incentives comparable to Fannie, particularly stock options.

They then morphed into massive public directed credit institutions, with profits from government subsidies privatized but otherwise lacking the benefits of market efficiency and discipline. About half of F&F subsidies were captured by shareholders, managers and politicians (my estimates), an invitation to affordable housing proponents to share in this booty. Several 2018 Democratic presidential candidates have proposed upping these goals.

U.S. mortgage markets were characterized by cut-throat competition decades before the advent of government sponsored enterprises (GSEs): the indiscriminant lending and private market securitization during the sub-prime lending bubble of 2004 to 2007 suggests that is still the case.

What the private market can’t deliver are the tax and credit subsidies – worth tens of billions annually – that result from federal backing to support fixed rate mortgage interest rate and affordable housing credit risks. Any re-privatized hybrid system that promises to mimic the market, e.g., by requiring that it actuarially price a government credit guarantee as the market oriented Milken Institute and others recommend and to impose market capital requirements and risk regulations directly conflicts with these goals and is doomed to failure. Regulatory restrictions will remain malleable because politics has and will continue to trump bureaucracy. Nor will the market discipline this regulated too-big-to-fail public mission duopoly, having correctly inferred an implicit guarantee in the past for the GSEs, disclosures, regulations and legislation notwithstanding.

There is a better “public/private” policy option to deliver these subsidies. Long term fixed rate FHA insured mortgage loans have since 1970 been funded almost exclusively with Ginnie Mae securities. Investors take the interest rate risk, HUD takes the credit risks and all ancillary functions are delegated to a competitive private marketplace. FHA, a government sponsored mutual insurance fund with de facto public backing since incorporated into and regulated by HUD insures each mortgage. The un-capitalized Ginnie Mae de jure security guarantee covers only timeliness of FHA payments, but de facto acts as a guarantor of FHA mortgage securities.

While FHA has failed actuarially – in part due to overly ambitious political goals and its focus on borrowers who may not have qualified for a conventional loan – bailouts have been opaque with minimal or no budget transfers, investor losses or market disruption. It survived the sub-prime lending debacle relatively unscathed. This system hasn’t failed systemically because it separates the private and public functions into different entities, minimizing public risk for private profit incentive conflicts.

A federal guarantor for conventional mortgage securities modeled after Ginnie Mae (something Ginnie Mae proposed in the late 1970s but I opposed on grounds that it would displace the private savings and loan system of the time) should replace F&F, with the existing infrastructure auctioned to the highest bidder .

Properly designed, a federal guarantor wouldn’t experience any loss except in catastrophic circumstances. The original Fannie Mae and particularly Freddie Mac secondary market system that left credit risk primarily with multiple state regulated private mortgage insurer’s (pmi’s), experienced negligible credit losses until the market collapse of 2008, after which F&F credit losses of about $300 billion were ten times total pmi industry losses, due to loss severity far exceeding insurance limits. A federal guarantor should be limited to pools of fixed rate mortgages with deeper pmi coverage to reduce exposure, and ideally partially re-insured with private mortgage pool insurers to further capitalize and diversify risk.

The tax and credit subsidies all go to uniformly lower rates. Deeper affordability subsidies in pursuit of federal home ownership affordability goals were previously provided by HUD’s Section 235 homeowner program targeted to individual FHA mortgage borrower needs, the right approach for achieving this goal. But after years of default losses, Congress shut it down in 1989 rather than increase the budget to reflect the true cost. Following the law of unintended consequences, the affordable housing goals were then dramatically expanded in the Federal Housing Enterprises Regulatory Reform Act of 1992, a precursor to their subsequent failure.

The debate over the desirability and magnitude of homeownership subsidies remains unresolved. This proposal shifts it to the political arena.

Kevin Villani

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Kevin Villani, chief economist of HUD during the Carter and Reagan Administrations and Freddie Mac from 1982 to 1985, is the author of Occupy Pennsylvania Avenue on the political origins of the sub-prime lending bubble and aftermath.

Stuart Schneiderman links to an article by a therapist who has a lot of experience working with millennials…

On any given day, a handful of millennials will come into my office and express their most pressing concerns: “I’m worried I’ll never make enough money to retire.” “I feel like a failure.” “I don’t know if I’m setting up my adult life the right way.”

But the complaint they bring up the most? “I have too many choices and I can’t decide what to do. What if I make the wrong choice?”

Now, I think that ‘generational’ explanations of social phenomena should be taken with multiple carloads of salt:  individual differences are IMO much more significant than generational differences.  And the people this therapist has been working with are not just millennials, but San Francisco area millennials.  Still, this pushback against having too many choices is unpleasantly reminiscent of the young German who was quoted as saying, shortly before the outbreak of World War II: “We Germans are so happy.  We are free of freedom.”

To the extent that this phenomenon is real and is general, I would suspect several factors of being implicated. Specifically:

***The focus on “self-esteem building”, which seems to have the effect of producing people whose self-esteem is brittle and cannot withstand failure or contradiction.

***The trend toward child-raising in organized group settings…usually for-profit organized group settings…which may tend to create more orientation toward group conformity and less individuality than the more traditional “artisanal” at-home child raising.

***Increasing years of schooling, which can delay growing up.  Peter Drucker observed that when you’re in school, it’s all about you, unlike the working world where it’s all about doing things that are of value to others.  (FWIW, Drucker also said he observed striking levels of immaturity in many medical students because of this factor.)

Anecdotal evidence only, but I have observed that people with many years of education–specifically, people with graduate degrees–are often reluctant to try new approaches to things.  Whether it’s an MBA or a Masters in Computer Science, they often want to stick close to the paradigms they were given in the classroom.  It would be interesting for someone to systematically study the relationship between education and mental rigidity.

***Finally, there is general social change and disorganization.  Stuart writes:  “Back in the day, when society was organized and where people understood their duties and obligations, these decisions were far less difficult and far less onerous”…the decisions were less onerous, but of course many people felt constrained–and often were constrained–in ways they did not want to be.

Someone writing in an aviation magazine observed that “if you do anything with your airplane that is not consistent with the Pilot’s Operating Handbook, then you are a test pilot.”  In a society, the equivalent of the POH is the aggregate of laws, customs, and implicit expectations that guide behavior.  There is no doubt that any society’s POH needs constant updating, and sometime major changes–but when major changes do occur, they will be disorienting to many people, and it seems that a nontrivial number of them will react by wishing for more constraints.

Some people thrive as test pilots–either of aircraft or in a societal setting–but many do not, including many people who would be perfectly adequate or even excellent pilots in a more-defined setting.

One of the major problems we have in America today is that so many of the people who have taken it upon themselves to totally rewrite the societal POH are people who are lacking in practical experience, historical knowledge, and ‘skin in the game.’  To continue the aviation analogy, it is as if a POH was rewritten by people who had no background in aeronautical engineering, no experience or minimal experience in flying aircraft, and (in many cases) absolutely no intent of either flying or flying in those aircraft being operated in conformity with their documents.

What proportion of the people in a society can lose belief in the value of individual freedom before they destroy that freedom for everyone, including those who do value it, and how close are we to that point?

(WSJ: Bernie Sanders Won the Debate)
 
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The 20 candidates in the Democratic debates on June 26 & 27 accepted Sanders’s fundamental vision of Democratic Socialism.

Bernie Sanders’s June 12 speech at George Washington University proposing “a 21st Century Economic Bill of Rights (EBR)” to “a decent job that pays a living wage; quality health care; complete (higher) education; affordable housing; a clean environment; and a secure retirement” all “regardless of his or her income” started a competition among the current democratic candidates for the 2020 Democratic nomination with promises of free stuff. This new Democratic socialism makes two promises:

“It is free to the masses.”

“If you like your democratic system of government, you can keep it.”

This isn’t new and isn’t true.

The ideological Cold War between the socialist totalitarian countries and the capitalist social democracies ended with the economic and political bankruptcy of virtually all of the former. The latter expanded their welfare states by taxing the economic fruits of capitalism, contracting when going too far, with symptoms including declining investment and innovation and rising public deficits and debt burdens. The proposed EBR to expand the welfare state to socialist extremes while maintaining democracy will erode both living standards and liberty.

The Unintended Consequences of the Economic Bill of Rights

The market system is based upon individuals responding to incentives, mostly embodied in market prices. Contemporary economists have done Nobel-worthy research demonstrating that individuals don’t always respond rationally. But the EBR promising free or cheap stuff well below cost with wages and income determined well above productivity is incompatible with a market economy and individual liberty. It would severely distort work and consumption incentives: already declining labor force participation would collapse and productivity stagnation would worsen. Costs of health care, education and housing would rise. The Green New Deal environmental proposal would cost up to $100 trillion while providing negligible environmental benefit. Private household saving would shrink further with the right to a secure retirement.

States that raise income taxes on high net worth businesses and/or firms face an exodus of both. Individuals and firms similarly shift their tax residence outside the U.S. reducing U.S. domestic innovation. Trade deficits widen. The cost of the EBR exceeds the revenue from these types of taxes by orders of magnitude. The progressive states are already voting themselves into bankruptcy, anticipating a federal bailout.

Modern Monetary Theory: Old Fashioned Money Printing

To avoid the political consequences of massive middle class taxation, the Modern Monetary Theory (MMT) promoted by a Sanders campaign economic advisor proposes debt financing. Wall Street prognosticators forecast the end of the debt supercycle in 2011 and the collapse of the international monetary system in 2014, going code red. But the debt supercycle has continued, so proponents of the MMT assume that interest rates will remain low indefinitely so the cost can be financed with no long term consequence, whether bought by domestic or foreign creditors or the Federal Reserve.

They may be right about America’s creditors continuing to accept debt in the near term, but excessive debt always ends, suddenly and badly: the longer it goes on the bigger the bust. As the world’s reserve currency the debt can’t simply be inflated away. The consequences of a U.S. international default, no matter how delivered, would be catastrophic.

Democratic Socialism and Individual Freedom

The socialist EBR is the responsibility of the administrative state, which requires totalitarian political power to deliver. What, then, do democratic socialists mean by “democracy”?

The ancient Greek city-states began experimenting with democracy (literally, “people power” in Greek) about 2500 years ago, limited to males selected on merit. After about a century of experimentation, Greek philosophers concluded that democracy was a form of mob tyranny that undermined individual freedom and the rule of law. United States exceptionalism is rooted in the U.S. Constitution, an experiment in a representative federal republic held in check by a limited list of enumerated powers to protect individual freedoms and prevent mob rule.

The extension of voting rights to former slaves – and over a half century later to women– was overdue. The 14^th Amendment was necessary to restrict the ability of Southern states from inhibiting their voting rights but has since been interpreted to give the federal government virtual total supremacy. The direct election of Senators in the 17^th Amendment of 1912 further expanded populist democracy.

Marx promised democracy and universal suffrage. Trotsky promised a peoples democracy, as did Mao. The current progressive platform on voting rights; opposing voter registration, supporting immigration of dependents with voting rights rather than working rights, eliminating the Electoral College, reducing the voting age to 16 years old, registering prisoners, and drive-by voter registration would complete the transition from a representative republic to a peoples democracy.

Kevin Villani

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Kevin Villani, chief economist at Freddie Mac from 1982 to 1985, is a principal of University Financial Associates. He has held senior government positions, has been affiliated with nine universities, and served as CFO and director of several companies. He recently published Occupy Pennsylvania Avenue on the political origins of the sub-prime lending bubble and aftermath.

In a discussion of ‘alternative energy’ at a social media site, someone raised the practical issue of the difficulties involved in high-volume energy storage.  Someone else came back at him with a comment to the effect that “climate-solution deniers are as bad a climate change deniers.”

This is probably just the leading edge of a new insult-meme:  I expect to see a lot more of the climate-solution-denier accusations being made.  We are getting uncomfortably close to a pervasive climate of Lysenkoism.

In Arthur Koestler’s novel Darkness at Noon, set in the Soviet Union, his character Rubashov (an old Bolshevik who is now on trial for his life) muses:

“A short time ago, our leading agriculturist, B., was shot with thirty of his collaborators because he maintained the opinion that nitrate artificial manure was superior to potash. No. 1 is all for potash; therefore B. and the thirty had to be liquidated as saboteurs. In a NATIONALLY CENTRALIZED AGRICULTURE, the alternative of nitrate or potash is of enormous importance: it can decide the issue of the next war. If No. I was in the right, history will absolve him, and the execution of the thirty-one men will be a mere bagatelle. If he was wrong …”

and

“We know that virtue does not matter to history, and that crimes remain unpunished; but that every error had its consequences and venges itself unto the seventh generation. Therefore we concentrated all our efforts on preventing error and destroying the very seeds of it. Never in history has so much power over the future of humanity been concentrated in so few hands as in our case. Each wrong idea we follow is a crime committed against future generations. Therefore we have to punish wrong ideas as others punish crimes: with death. We were held for madmen because we followed every thought down to its final consequence and acted accordingly. We were compared to the inquisition because, like them, we constantly felt in ourselves the whole weight of responsibility for the super-individual life to come. We resembled the great Inquisitors in that we persecuted the seeds of evil not only in men’s deeds, but in their thoughts. We admitted no private sphere, not even inside a man’s skull. We lived under the compulsion of working things out to their final conclusions. Our minds were so tensely charged that the slightest collision caused a mortal short-circuit. Thus we were fated to mutual destruction.” (emphasis added)

The assertions now being made that anyone who challenges catastrophic CO2-caused climate change is complicit in the deaths of thousands/hundreds of thousands/millions parallel the above rather closesly.

Koestler’s Rubashov also observed that it had become “necessity to drill every sentence into the masses by vulgarization and endless repetition; what was presented as right must shine like gold, what was presented as wrong must be as black as pitch; political statements had to be coloured like ginger-bread figures at a fair.”  

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Arnade, Chris. Dignity: Seeking Respect in Back Row America. Penguin Publishing Group, 2019.

Chris Arnade certainly seems to have been called, and may well have been chosen, to help mitigate one of the great divisions of our time. Dignity complements, among others, Charles Murray’s Coming Apart with interviews and photos from what Murray would call “Fishtown,” or rather its extreme margin, whose inhabitants are simultaneously transient and rooted, strategizing to survive in ways often incomprehensible to the more cognitively gifted and emotionally stable. Learning to extend compassion and respect rather than mere pity (in its more negative variant), glib political “solutions,” and outright contempt is a challenge far too few Americans are willing to undertake. Matthew 22:14 seems unnervingly relevant in this context, and while the church as it is depicted among the people Dignity portrays is an overwhelmingly positive influence, more “front row” believers might take a moment to consider just how much better than the vast majority of us Arnade, a secular liberal, has done at reaching out to desperate communities. My advice to them is to buy and read this book, pray over it, maybe lend it out to others for discussion, and—without reinventing the wheel—do the Tocquevillian thing and organize/volunteer, with an eye to Luke 15. Because if the parables in that chapter aren’t about “back row” people, they don’t mean a damned thing.

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In my last post — President Trump’s ‘Xanatos Gambit’ Trade Policy — I spoke to how President Trump has set up his political strategy on trade policy to make any outcome on the USMCA Trade agreement that he negotiated to replace the NAFTA agreement would be to his advantage over House Democrats and the “purchased by the multi-national corporation China Lobby” GOP Senators.  In this post I am going to lay out President Trump’s “Global  Energy Dominance” export policy’s “Xanatos Gambit” strategy tree vis-à-vis the 2020 presidential elections.

To start with, I’m going to refer you back to this passage from my last post on how the Trump Administration is “gaming” economic growth measurements:

This is where Pres. Trump’s ‘Xanatos Gambit’ strategy tree kicks in via a macroeconomic and trade policy manipulation of the very simple economic equation of gross domestic product:

GDP = US ECONOMIC ACTIVITY + EXPORTS + FOREIGN INVESTMENT – IMPORTS – EXTERNAL INVESTMENT

The American economy just grew 3.2% in the 1st quarter of 2019.  It would have grown another 0.3% but for the 30-odd day federal government shut down.  The “markets” were expecting 2.5% GDP growth.  The huge half-percent GDP “miss” boiled down to:

1. The USA exported more.

2. The USA imported less and

3. There was more external foreign investment than expected.

All three were the result of a combination of Trump administration policies on oil/LNG fracking, tax & regulatory cuts and trade/tariffs.

The Trump Administration upon coming into office in January 2017 had a huge windfall of energy projects that the Obama Administration had held up approval of in the Federal Energy Regulatory Commission.   This windfall neither began nor ended with the  Keystone XL oil pipeline.  There was a whole cornucopia of oil and natural gas energy infrastructure projects that Democratic Party interests, only some of them environmental, that the Obama Administration was using the FERC to sit on for a whole lot of reasons that I refer to as “The Economic Cold Civil War.”

While the media was spending a great deal of time talking about things like the Congressional votes to open the Arctic Wildlife Refuge in the early days of the Trump Administration’s energy policy implementation.  President Trump spent a great deal of his early political capital on getting his earliest political appointments through the Senate to the FERC to get those projects turned loose as a part of President Trump’s “Global  Energy Dominance” export policy.  The first fruit of this export infrastructure energy policy focus started paying off with the  Louisiana Offshore Oil Port (LOOP) coming on-line in 2018.  See this Apr 16, 2019 article by Julianne Geiger at Oilprice.com:

U.S. Doubles Oil Exports In 2018

The United States nearly doubled its oil exports in 2018, the Energy Information Administration reporting on Monday, from 1.2 million barrels per day in 2017.

The 2.0 million barrels of oil per day exported in 2018 was in line with increased oil production, which averaged 10.9 million barrels per day last year, and was made possible by changes to the Louisiana Offshore Oil Port (LOOP) which allowed it to load VLCCs (Trent Note: Very Large Crude Carriers) .

The changes to LOOP and to the sheer volume of exports were not the only changes for the US crude oil industry. The destination of this oil shifted in 2018 as well, and even shifted within the year as the trade row between China and the United States took hold.

Overall, Canada remained the largest buyer of US oil in 2018, at 19% of all oil exports, according to EIA data. During the first half of 2018, the largest buyer of US crude oil was China, averaging 376,000 barrels per day. Due to the trade row, however, US oil exports to China fell to an average of just 83,000 barrels per day in the second half, after seeing zero exports to China in the months of August, September, and October.**

[**Please note above the nice thing about energy exports is how futile a energy user embargo is against it.  China’s economic embargo of US crude products only hurt itself.]

The impact of the Trump Administration’s energy export policies from those early days of his administration in terms of liquefied natural gas (LNG) export facilities are now impacting the American economy. A large part of the extra 0.7% GDP growth achieved over the 2.5% Wall Street forecasts in the first quarter of 2019 came from the Corpus Christ 1 and Sabine 5 LNG export facilities coming on-line in late 2018 and making their first full export capacity quarter in Jan – Mar 2019.  The Cameroon 1 and Elba Island 1-6 LNG export facilities were also scheduled to come on-line in Late Feb-Early March 2019, and were very likely large contributors to LNG export surge.

This is how CNBC described 2019’s 1st quarter:

Robust demand for Texas oil and gas in the first two months of 2019 pushed the state’s export activity into high gear, strongly outpacing the national rate and contrasting with a slight decline by California.

Texas represented nearly 20% of all U.S. exports in the January-February period while California accounted for roughly an 11% share.

California has seen its share of total U.S. exports fall in recent years while Texas has been growing its share due mainly to the new oil boom.

CNBC table of US Exports in the 1st Quarter of 2019  Source: https://www.cnbc.com/2019/04/25/texas-exports-boosted-by-oil-rise-3-times-faster-than-us-increase.html

And this is only the beginning for the US economy in 2019. See the following text and LNG export facility graphic from a Dec 10, 2018 report by the US Federal government’s Energy Information Administration:

U.S. liquefied natural gas export capacity to more than double by the end of 2019

U.S. LNG exports continue to increase with the growing export capacity. EIA’s latest Short-Term Energy Outlook forecasts U.S. LNG exports to average 2.9 Bcf/d in 2018 and 5.2 Bcf/d in 2019 as the new liquefaction trains are gradually commissioned and ramp up LNG production to operate at full capacity. The latest information on the status of U.S. liquefaction facilities, including expected online dates and capacities, is available in EIA’s database of U.S. LNG export facilities.

EIA projection of U.S. Liquefied Natural Gas Export Capacity from 2016 – 2021. Date of projection, Dec 2018.

Given the above information, barring a war or serious election year intervention to kill the economy by the Federal Reserve, the cascade of LNG export infrastructure coming on-line in the 2nd and 4th quarters of 2019  will mean something on the order of a full percentage increase in GDP growth (in a range of 4.0% to 4.5%) in Jan – Mar 2020 over Jan – Mar 2019.  That is what going from 3.6 billion cubic feet per day (Bcf/d) of natural gas export capacity to to 8.9  Bcf/d in Dec 2019 does for you.

This extra 1% GDP will be happening just in time for the Iowa caucuses and New Hampshire primary.

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