Healthcare Mythologies

First, I will disclose I am no expert on the health care industry, but I am somewhat of an expert on finance theory applied to risk management and insurance pooling. The political healthcare debate is so disconcerting that it’s impossible to sit by and watch without trying to inject some reason. Sorry.

We need health care reform, we’ve needed it for about 20 years now, but it matters what kind of reform we get. Here are two excerpts from recent articles written by Stephen Moore of the Heritage Foundation and Holman Jenkins Jr. of the WSJ that illustrate some of the uncomfortable truths.

First, we need to deal with some reality concerning the Affordable Care Act, aka ObamaCare:

Almost every promise made eight years ago about ObamaCare turned out to be a falsehood. You couldn’t keep your insurance plan, doctor or provider in many cases. It didn’t save $2,500 per family (more like $2,500 more). It didn’t lead to expanded patient choice. And the tax increases badly hurt the economy and jobs market, and the insurance markets really have entered a death spiral that if left unfixed will blow-up the entire insurance market.

The fundamental lie of ObamaCare is revealed in the law’s very title: The Affordable Care Act. Democrats and Barack Obama can sing the praises of this law until the cows come home, but no one with a straight face can say that it has made healthcare more “affordable” — except the millions whom we gave coverage to for free.

So, unless one believes in the “economics of free,” we’ve got a problem here and it’s written into the faulty logic of the plan.

Second, the way out of this quagmire is not going to be led by Bernie Sanders doubling and quadrupling down on “free.” Mr. Jenkins speaks an inconvenient truth:

Down this road [of reform] lies hope that Americans will stop channeling extravagant gobs of their income to the medical-industrial complex. Down this road Medicare could be rethought, perhaps with rational Democrats lending a hand. We know these things will have to happen anyway. Otherwise the country is bankrupt.

P.S. Don’t kid yourself that Democrats have a plan other than blindly defending more and more subsidies for more and more health-care consumers. Single-payer is not a plan. It’s an invitation for the health-care industry—doctors, hospitals, the research establishment—simply to turn their full attention to serving the self-paying rich.

So, as far as I can see, the AHCA is not perfect, but it is a step in the right direction. Do I believe this because I’m partisan? No. A healthcare market can only function to deliver a high-quality, affordable product if there is an abundant supply to meet the desired need/demand. Only a functioning consumer-product market can provide that supply at an efficient price. Yes, we need a safety net for pre-existing conditions and we need to save more for future medical needs. We’ll only be able to do that if we give up the fantasy that health care is a right to be provided “free” from the government.

Lastly, in economics we learn that everything in life is a trade-off. We need to figure out what kinds of trade-offs we want to make, individually and as a society.

The Presumptuousness of Urban Blue America

I had to post this article because it is just too much on the money. There is an historical equilibrium between rural, suburban, and urban life-style preferences in this country – there is no long-term trend in either direction. Our politics mostly reflect that – not the red-blue, sub-cultural civil war nonsense propagated by most of the media.

But for me the truly amusing irony of the self-righteousness of urban blue liberalism is that it turns traditional Marxism on its head. Urban sophisticates who empathize with Bernie/Warren-style socialism now claim that the rural periphery is exploiting the good will of the urban core. “We create all the wealth! We attract all the educated elites! We work and subsidize the ignorant bumpkins!”

This is the exact opposite of how Marx and the neo-Marxists claimed that the capitalist core was exploiting the workers and consumers who lived on the periphery of the capitalist market economy. Today’s neo-Marxist liberal urban sophisticates now claim the opposite to justify their deserved political dominance. Certainly one can see that their presumptuousness is akin to blaming the European colonies for the burdens of their European colonists! Workers of the World, Unite! Well, they have and voted for Trump. Rich.
Now what?

Of course, Marx and the new unwitting anti-Marxists are both half right and half wrong. Periphery and core are co-dependent in a free market economy: imagine Silicon Valley without its Internet users across the 50 states. What is necessary is that the market be free, open, and competitive so that coercive power does NOT determine distributive outcomes. Because humans are power-hungry, that, admittedly, is a persistent challenge.

Outside the Bubble

The Arrogance of Blue America

If you want to see the worst impacts of blue policies, go to those red regions—like upstate New York or inland California—in states they control.

Joel Kotkin

04.29.17 10:00 PM ET

In the wake of the Trumpocalypse, many in the deepest blue cores have turned on those parts of America that supported the president’s election, developing oikophobia—an irrational fear of their fellow citizens.

The rage against red America is so strong that The New York Time’s predictably progressive Nick Kristoff says his calls to understand red voters were “my most unpopular idea.” The essential logic—as laid out in a particularly acerbic piece in The New Republic—is that Trump’s America is not only socially deplorable, but economically moronic as well. The kind-hearted blue staters have sent their industries to the abodes of the unwashed, and taken in their poor, only to see them end up “more bitter, white, and alt-right than ever.”

The red states, by electing Trump, seem to have lost any claim on usually wide-ranging progressive empathy. Frank Rich, theater critic turned pundit, turns up his nose at what he calls “hillbilly chic.” Another leftist author suggests that working-class support for Brexit and Trump means it is time “to dissolve” the “more than 150-year-old alliance between the industrial working class and what one might call the intellectual-cultural Left.”

The fondest hope among the blue bourgeoise lies with the demographic eclipse of their red-state foes. Some clearly hope that the less-educated “dying white America,“ already suffering shorter lifespans, in part due to alcoholism and opioid abuse, is destined to fade from the scene. Then the blue lords can take over a country with which they can identify without embarrassment.

Marie Antoinette Economics

In seeking to tame their political inferiors, the blue bourgeoisie are closer to the Marie Antoinette school of political economy than any traditional notion of progressivism. They might seek to give the unwashed red masses “cake” in the form of free health care and welfare, but they don’t offer more than a future status as serfs of the cognitive aristocracy. The blue bourgeoisie, notes urban analyst Aaron Renn, are primary beneficiaries of “the decoupling of success in America.” In blue America, he notes, the top tiers “no longer need the overall prosperity of the country to personally do well. They can become enriched as a small, albeit sizable, minority.”

Some on the left recognize the hypocrisy of progressives’ abandoning the toiling masses. “Blue state secession is no better an idea than Confederate secession was,” observes one progressive journalist. “The Confederates wanted to draw themselves into a cocoon so they could enslave and exploit people. The blue state secessionists want to draw themselves into a cocoon so they can ignore the exploited people of America.”

Ironically, many of the most exploited people reside in blue states and cities. Both segregation and impoverishment has worsened during the decades-long urban “comeback,” as even longtime urban enthusiast Richard Florida now notes. Chicago, with its soaring crime rates and middle class out-migration, amidst a wave of elite corporate relocations, epitomizes the increasingly unequal tenor of blue societies.

In contrast the most egalitarian places, like Utah, tend to be largely Trump-friendly. Among the 10 states (and D.C.) with the most income inequality, seven supported Clinton in 2016, while seven of the 10 most equal states supported Trump.

If you want to see worst impacts of blue policies, go to those red regions—like upstate New York—controlled by the blue bourgeoise. Backwaters like these tend to be treated at best as a recreational colony that otherwise can depopulate, deindustrialize, and in general fall apart. In California, much of the poorer interior is being left to rot by policies imposed by a Bay Area regime hostile to suburban development, industrial growth, and large scale agriculture. Policies that boost energy prices 50 percent above neighboring states are more deeply felt in regions that compete with Texas or Arizona and are also far more dependent on air conditioning than affluent, temperate San Francisco or Malibu. Six of the 10 highest unemployment rates among the country’s metropolitan areas are in the state’s interior.

Basic Errors in Geography

The blue bourgeoisie’s self-celebration rests on multiple misunderstandings of geography, demography, and economics. To be sure, the deep blue cites are vitally important but it’s increasingly red states, and regions, that provide critical opportunities for upward mobility for middle- and working-class families.

The dominant blue narrative rests on the idea that the 10 largest metropolitan economies represents over one-third of the national GDP. Yet this hardly proves the superiority of Manhattan-like density; the other nine largest metropolitan economies are, notes demographer Wendell Cox, slightly more suburban than the national major metropolitan area average, with 86 percent of their residents inhabiting suburban and exurban areas.

In some of our most dynamic urban regions, such as Phoenix, virtually no part of the region can be made to fit into a Manhattan-, Brooklyn-, or even San Francisco-style definition of urbanity. Since 2010 more than 80 percent of all new jobs in our 53 leading metropolitan regions have been in suburban locations. The San Jose area, the epicenter of the “new economy,” may be congested but it is not traditionally urban—most people there live in single-family houses, and barely 5 percent of commuters take transit. Want to find dense urbanity in San Jose? You’ll miss it if you drive for more than 10 minutes.

Urban Innovation

The argument made by the blue bourgeoisie is simple: Dense core cities, and what goes on there, is infinitely more important, and consequential, than the activities centered in the dumber suburbs and small towns. Yet even in the ultra-blue Bay Area, the suburban Valley’s tech and STEM worker population per capita is twice that of San Francisco. In southern California, suburban Orange County has over 30 percent more STEM workers per capita than far more urban Los Angeles.

And it’s not just California. Seattle’s suburban Bellevue and Redmond are home to substantial IT operations, including the large Microsoft headquarters facility. Much of Portland’s Silicon Forest is located in suburban Washington County. Indeed a recent Forbes study found that the fastest-growing areas for technology jobs outside the Bay Area are all cities without much of an urban core: Charlotte, Raleigh Durham, Dallas-Fort Worth, Phoenix, and Detroit. In contrast most traditionally urban cities such as New York and Chicago have middling tech scenes, with far fewer STEM and tech workers per capita than the national average.

The blue bourgeois tend to see the activities that take place largely in the red states—for example manufacturing and energy—as backward sectors. Yet manufacturers employ most of the nation’s scientists and engineers. Regions in Trump states associated with manufacturing as well as fossil fuels—Houston, Dallas-Fort Worth, Detroit, Salt Lake—enjoy among the heaviest concentrations of STEM workers and engineers in the country, far above New York, Chicago, or Los Angeles.

Besides supplying the bulk of the food, energy, and manufactured goods consumed in blue America, these industries are among the country’s most productive, and still offer better paying options for blue-collar workers. Unlike a monopoly like Microsoft or Google, which can mint money by commanding market share, these sectors face strong domestic and foreign competition. From 1997-2012, labor productivity growth in manufacturing—3.3 percent per year—was a third higher than productivity growth in the private economy overall.

For its part, the innovative American energy sector has essentially changed the balance of power globally, overcoming decades of dependence on such countries as Saudi Arabia, Russia, and Venezuela. Agriculture—almost all food, including in California, is grown in red-oriented areas—continues to outperform competitors around the world.

Exports? In 2015, the U.S. exported $2.23 trillion worth of goods and services combined. Of the total, only $716.4 billion, or about a third, consisted of services. In contrast, manufactured goods accounted for 50 percent of all exports. Intellectual property payments, like royalties to Silicon Valley tech companies and entrepreneurs, amounted to $126.5 billion—just 18 percent of service exports and less than 6 percent of total exports of goods and services combined, barely even with agriculture.

Migration and the American Future

The blue bourgeoisie love to say “everyone” is moving back to the city; a meme amplified by the concentration of media in fewer places and the related collapse of local journalism. Yet in reality, except for a brief period right after the 2008 housing crash, people have continued to move away from dense areas.

Indeed the most recent estimates suggest that last year was the best for suburban areas since the Great Recession. In 2012, the suburbs attracted barely 150,000 more people than core cities but in 2016 the suburban advantage was 556,000. Just 10 of the nation’s 53 largest metropolitan regions (including San Francisco, Boston, and Washington) saw their core counties gain more people than their suburbs and exurbs.

Overall, people are definitively not moving to the most preferred places for cosmopolitan scribblers. Last year, all 10 of the top gainers in domestic migration were Sun Belt cities. The list was topped by Austin, a blue dot in its core county, surrounded by a rapidly growing, largely red Texas sea, followed by Tampa-St. Petersburg, Orlando, and Jacksonville in Florida, Charlotte and Raleigh in North Carolina, Las Vegas, Phoenix, and San Antonio.

Overall, domestic migration trends affirm Trump-friendly locales. In 2016, states that supported Trump gained a net of 400,000 domestic migrants from states that supported Clinton. This includes a somewhat unnoticed resurgence of migration to smaller cities, areas often friendly to Trump and the GOP. Domestic migration has accelerated to cities between with populations between half a million and a million people, while it’s been negative among those with populations over a million. The biggest out-migration now takes place in Los Angeles, Chicago, and New York.

Of course, for the blue cognoscenti, there’s only one explanation for such moves: Those people are losers and idiots. This is part of the new blue snobbery: Bad people, including the poor, are moving out to benighted places like Texas but the talented are flocking in. Yet, like so many comfortable assertions, this one does not stand scrutiny. It’s the middle class, particularly in their childbearing years, who, according to IRS data, are moving out of states like California and into ones like Texas. Since 2000, the Golden State has seen a net outflow of $36 billion dollars from migrants.

Millennials are widely hailed as the generation that will never abandon the deep blue city, but as they reach their thirties, they appear to be following their parents to the suburbs and exurbs, smaller cities, and the Sun Belt. This assures us that the next generation of Americans are far more likely to be raised in Salt Lake City, Atlanta, the four large Texas metropolitan areas, or in suburbs, than in the bluest metropolitan areas like New York, Seattle, or San Francisco—where the number of school-age children trends well below the national average.

This shift is being driven in large part by unsustainable housing costs. In the Bay Area, techies are increasingly looking for jobs outside the tech hub and some companies are even offering cash bonuses to those willing to leave. A recent poll indicated that 46 percent of millennials in the San Francisco Bay Area want to leave. The numbers of the “best and brightest” have been growing mostly in lower-cost regions such as Austin, Orlando, Houston, Nashville, and Charlotte.

Quality of Life: The Eye of the Beholder

Ultimately, in life as well as politics, people make choices of where to live based on economic realities. This may not apply entirely to the blue bourgeoisie, living at the top of the economic food chain or by dint of being the spawn of the wealthy. But for most Americans aspiring to a decent standard of living—most critically, the acquisition of decent living space—the expensive blue city simply is not practicable.

Indeed, when the cost of living is taken into consideration, most blue areas, except for San Jose/Silicon Valley, where high salaries track the prohibitive cost of living, provide a lower standard of living. People in Houston, Dallas, Austin, Atlanta, and Detroit actually made more on their paychecks than those in New York, San Francisco, or Boston. Deep-blue Los Angeles ranked near the bottom among the largest metropolitan areas.

These mundanities suggest that the battlegrounds for the future will not be of the blue bourgeoisie’s choosing but in suburbs, particularly around the booming periphery of major cities in red states. Many are politically contestable, often the last big “purple” areas in an increasingly polarized country. In few of these kinds of areas do you see 80 to 90 percent progressive or conservative electorates; many split their votes and a respectable number went for Trump and the GOP. If the blue bourgeoisie want to wage war in these places, they need to not attack the suburban lifestyles clearly preferred by the clear majority.

Blue America can certainly win the day if this administration continues to falter, proving all the relentless aspersions of its omnipresent critics. But even if Trump fails to bring home the bacon to his supporters, the progressives cannot succeed until they recognize that most Americans cannot, and often do not want to, live the blue bourgeoisie’s preferred lifestyle.

It’s time for progressives to leave their bastions and bubbles, and understand the country that they are determined to rule.

Political Polarization

There’s been good analysis on our polarization out there for more than a decade, but somehow the dominant media narrative refuses to recognize it – I assume it’s because it’s not what they think their readers want to believe.

Barone is correct here – we have merely amplified the New-Old politics of rural vs. city politics (see video below). The urban-rural geographic divide has been with us forever because urban political preferences differ from rural preferences. Barone shows how this is now being confirmed across nations with different political cultures. But societies have managed it for centuries, sometimes peacefully, sometimes not. The point is that it can be managed democratically, if everybody is willing to accept the established electoral rules and forge compromises on policy. The false narrative has told us that this is not possible and one side or the other must be defeated and buried. You can be sure that will never happen.

The New/Old Politics of Capital vs. Countryside

Capital vs. countryside — that’s the new political divide, visible in multiple surprise election results over the past 11 months. It cuts across old partisan lines and replaces traditional divisions — labor vs. management, north vs. south, Catholic vs. Protestant — among voters.

This was apparent last June in Britain’s referendum on whether to leave the European Union. London voted 60 percent to remain, while the rest of England, whether Labour or Conservative, voted 57 percent to leave. It was plain in Colombia’s October referendum on a peace settlement with the FARC guerrillas. Bogota voted 56 percent “si,” the heartland cordillera provinces 58 percent “no.”In both countries, the ethnic and geographic fringe — Scotland and Northern Ireland, the Caribbean provinces — voted with the capital. But in each case, the historic heartland, with the majority of voters, produced a surprise defeat for the capital establishment.

It was a similar story here in November. Coastal America — the Northeast minus Pennsylvania, the Pacific states minus Alaska — favored Hillary Clinton over Donald Trump by a 58-35 percent margin. But the geographic heartland, casting 69 percent of the nation’s votes, favored Trump by a 51-43 percent margin.

The contrast is even starker if you separate out the establishment metro areas — New York, Washington, Los Angeles, San Francisco — that produce most Democratic big-dollar funding. They voted 65-29 percent for Clinton; the rest of the country they feel entitled to rule voted 49-45 percent for Trump.

And on April 23, France voted in a presidential race that scrambled the usual party divisions. Marine Le Pen, shunned by the Paris establishment as a neo-fascist, finished fourth, with 11 percent of the vote, in metro Paris and third, with 15 percent, in 13 other prosperous cities. But she ran first in la France profonde, with 24 percent. She’ll almost certainly lose the May 7 runoff, but she has already topped her National Front’s previous high of 17 percent.

Is there any precedent for this? The Economist’s Bagehot columnist, Adrian Wooldridge, spots one in the 17th century. He quotes historian Hugh Trevor-Roper’s description of the “general crisis” of 1620-60 — a “revolt of the provinces not only against the growing, parasitic Stuart Court, but also against the growing ‘dropsical’ City of London; against the centralised Church … and against the expensive monopoly of higher education by the two great universities.”

The capital vs. the countryside, in other words, much like today. The countryside party, Trevor-Roper writes, vied to “pare down the parasitic fringe” of central government and sought to “protect industry,” “rationalize finance” and “reduce the hatcheries which turned out the superfluous bureaucrats.”

Similar impulses are apparent in Britain, France and America today. In different ways, Brexit, Le Pen and Trump seek to counter the university-trained bureaucratic, financial and cultural elites in London, Paris and NY/DC/LA/SF. They resent overlarge and undercompetent bureaucracies and public employee unions, the paymasters of the Labour and Democratic parties. With blunt, often ill-advised rhetoric, they challenge the pieties of the universities as 17th-century countryside parliamentarians challenged the established church and universities.

Consider the debate over what has become, for many, the religion of global warming. Those with doubts that predicted harm will occur are labeled “deniers,” heretics who must be punished. The science is settled, the elites insist. That’s exactly what the church told Galileo.

Or consider the “speech codes” promulgated by most colleges and universities. We see violent disruption of speakers on campus go unpunished, excused and even praised. We see The New York Times publish an article by a New York University dean arguing for restricting free speech.

We see the deadweight cost of public employee union pensions and unpoliced murders destroying one of the great creations of civilization, Chicago. No wonder the countryside resists; this is how these arrogant bullies govern the precincts of society they control.

In this struggle, the capital has certain advantages — huge supermajorities in its strongholds, inhabited largely by elites and ethnic, racial and religious minorities. It monopolizes most established media. Its claims that opponents are bigots are taken as gospel.

The countryside has serious grievances and majority numbers but doesn’t always find steady leadership. Le Pen’s insalubrious pedigree suggests she’ll lose May 7, though Theresa May’s icy steeliness has British Conservatives headed to a landslide win June 8. Donald Trump instinctively (calculatedly?) reckoned that the countryside was the key to victory; now he has to deliver. The battles of capital vs. countryside will go on.

————————

The Deconstruction of the West

What concerns me most from the following article is the misguided notion that pan-nationalism and global citizenship has displaced the sovereign nation-state international system. The sovereign nation-state is all we have to manage global affairs in a representative democratic, people-centered global society. Without it we are all vulnerable to constellations of power among political elites and authoritarians of all stripes.

Reprinted from The American Interest:

The Deconstruction of the West

ANDREW A. MICHTA

April 12, 2017

The greatest threat to the liberal international order comes not from Russia, China, or jihadist terror but from the self-induced deconstruction of Western culture.

To say that the world has been getting progressively less stable and more dangerous is to state the obvious. But amidst the volumes written on the causes of this ongoing systemic change, one key driver barely gets mentioned: the fracturing of the collective West. And yet the unraveling of the idea of the West has degraded our ability to respond with a clear strategy to protect our regional and global interests. It has weakened the NATO alliance and changed not just the global security calculus but now also the power equilibrium in Europe. If anyone doubts the scope and severity of the problem, he or she should ask why it has been so difficult of late to develop a consensus between the United States and Europe on such key issues as defense, trade, migration, and how to deal with Russia, China, and Islamic jihadists.

The problem confronting the West today stems not from a shortage of power, but rather from the inability to build consensus on the shared goals and interests in whose name that power ought to be applied. The growing instability in the international system is not, as some argue, due to the rise of China as an aspiring global power, the resurgence of Russia as a systemic spoiler, the aspirations of Iran for regional hegemony, or the rogue despotism of a nuclear-armed North Korea; the rise and relative decline of states is nothing new, and it doesn’t necessarily entail instability. The West’s problem today is also not mainly the result of the economic decline of the United States or the European Union, for while both have had to deal with serious economic issues since the 2008 meltdown, they remain the two largest economies in the world, whose combined wealth and technological prowess are unmatched. Nor is the increasing global instability due to a surge in Islamic jihadism across the globe, for despite the horrors the jihadists have wrought upon the peoples of the Middle East and North Africa, and the attendant anxiety now pervading Europe and America, they have nowhere near the capabilities needed to confront great powers.

The problem, rather, is the West’s growing inability to agree on how it should be defined as a civilization. At the core of the deepening dysfunction in the West is the self-induced deconstruction of Western culture and, with it, the glue that for two centuries kept Europe and the United States at the center of the international system. The nation-state has been arguably the most enduring and successful idea that Western culture has produced. It offers a recipe to achieve security, economic growth, and individual freedom at levels unmatched in human history. This concept of a historically anchored and territorially defined national homeland, having absorbed the principles of liberal democracy, the right to private property and liberty bound by the rule of law, has been the core building block of the West’s global success and of whatever “order” has ever existed in the so-called international order. Since 1945 it has been the most successful Western “export” across the globe, with the surge of decolonization driven by the quintessentially American precept of the right to self-determination of peoples, a testimony to its enduring appeal. Though challenged by fascism, Nazism, and communism, the West emerged victorious, for when confronted with existential danger, it defaulted to shared, deeply held values and the fervent belief that what its culture and heritage represented were worth fighting, and if necessary even dying, to preserve. The West prevailed then because it was confident that on balance it offered the best set of ideas, values, and principles for others to emulate.

Today, in the wake of decades of group identity politics and the attendant deconstruction of our heritage through academia, the media, and popular culture, this conviction in the uniqueness of the West is only a pale shadow of what it was a mere half century ago. It has been replaced by elite narratives substituting shame for pride and indifference to one’s own heritage for patriotism. After decades of Gramsci’s proverbial “long march” through the educational and cultural institutions, Western societies have been changed in ways that make social mobilization around the shared idea of a nation increasingly problematic. This ideological hollowing out of the West has been accompanied by a surge in confident and revanchist nationalisms in other parts of the world, as well as religiously inspired totalitarianism.

National communities cannot be built around the idea of collective shame over their past, and yet this is what is increasingly displacing a once confident (perhaps overconfident, at times) Western civilization. The increasing political uncertainty in Europe has been triggered less by the phenomenon of migration than it has by the inability of European governments to set baselines of what they will and will not accept. Over the past two decades Western elites have advocated (or conceded) a so-called “multicultural policy,” whereby immigrants would no longer be asked to become citizens in the true sense of the Western liberal tradition. People who do not speak the national language, do not know the nation’s history, and do not identify with its culture and traditions cannot help but remain visitors. The failure to acculturate immigrants into the liberal Western democracies is arguably at the core of the growing balkanization, and attendant instability, of Western nation-states, in Europe as well as in the United States.

Whether one gives the deconstruction of the Western nation-state the name of postmodernism or globalism, the ideological assault on this very foundation of the Western-led international system has been unrelenting. It is no surprise that a poorly resourced radical Islamic insurgency has been able to make such vast inroads against the West, in the process remaking our societies and redefining our way of life. It is also not surprising that a weak and corrupt Russia has been able to shake the international order by simply applying limited conventional military power. Or that a growing China casts an ever-longer shadow over the West. The greatest threat to the security and survival of the democratic West as the leader and the norm-setter of the international system comes not from the outside but from within. And with each passing year, the deconstruction of Western culture, and with it the nation-state, breeds more internal chaos and makes our international bonds across the West ever more tenuous.

Andrew A. Michta is the dean of the College of International and Security Studies at the George C. Marshall European Center for Security Studies. Views expressed here are his own.

Siren Servers and the Data Age

Google’s commodification of content knowingly, willfully undermined provenance for profit. That was followed by the Facebook stream, with its journalistic jetsam and fake flotsam. Together, the two most powerful news publishers in human history have created an ecosystem that is dysfunctional and socially destructive.

Interesting article below by The News Corp CEO on the challenges of the information age and how it has disrupted content business models. (Siren Servers refers to the FANG – Facebook, Apple, Amazon, Netflix, Google – consortium that pretty much controls the digital world.) This has affected many businesses, especially publishing, music, and video.

We should recognize that these companies thrive on the proliferation of data, no matter how frivolous and inconsequential. This is why they encourage users to post anything – because it translates into higher eyeball metrics and higher ad revenues. This won’t stop until a new data filter model disrupts it. However, the future will be different because this concentration is unsustainable and nobody really likes where it’s headed. In other words, the disrupters will be disrupted.

Reprinted from the WSJ:

Fake News and the Digital Duopoly

Google and Facebook have created a dysfunctional and socially destructive information ecosystem.

By ROBERT THOMSON

WSJ, April 4, 2017 3:44 p.m. ET

‘Fake news” has seemingly, suddenly, become fashionable. In reality, the fake has proliferated for a decade or more, but the faux, the flawed and the fraudulent are now pressing issues because the full scale of the changes wrought upon the integrity of news and advertising by the digital duopoly—Google and Facebook —has become far more obvious.

Google’s commodification of content knowingly, willfully undermined provenance for profit. That was followed by the Facebook stream, with its journalistic jetsam and fake flotsam. Together, the two most powerful news publishers in human history have created an ecosystem that is dysfunctional and socially destructive.

Both companies could have done far more to highlight that there is a hierarchy of content, but instead they have prospered mightily by peddling a flat-earth philosophy that doesn’t distinguish between the fake and the real because they make copious amounts of money from both.

Depending on which source you believe, they have close to two-thirds of the digital advertising market—and let me be clear that we compete with them for that share. The Interactive Advertising Bureau estimates they accounted for more than 90% of the incremental increase in digital advertising over the past year. The only cost of content for these companies has been lucrative contracts for lobbyists and lawyers, but the social cost of that strategy is far more profound.

It is beyond risible that Google and its subsidiary YouTube, which have earned many billions of dollars from other people’s content, should now be lamenting that they can’t possibly be held responsible for monitoring that content. Monetizing yes, monitoring no—but it turns out that free money does come at a price.

We all have to work with these companies, and we are hoping, mostly against hope, that they will finally take meaningful action, not only to allow premium content models that fund premium journalism, but also to purge their sites of the rampant piracy that undermines creativity. Your business model can’t be simultaneously based on both intimate, granular details about users and no clue whatsoever about rather obvious pirate sites.

Another area that urgently needs much attention is the algorithms that Silicon Valley companies, and Amazon, routinely cite as a supposedly objective source of wisdom and insight. These algorithms are obviously set, tuned and repeatedly adjusted to suit their commercial needs. Yet they also blame autonomous, anarchic algorithms and not themselves when neo-fascist content surfaces or when a search leads to obviously biased results in favor of their own products.

Look at how Google games searches. A study reported in The Wall Street Journal found that in 25,000 random Google searches ads for Google products appeared in the most prominent slot 91% of the time. How is that not the unfair leveraging of search dominance and the abuse of algorithm? All 1,000 searches for “laptops” started with an ad for Google’s Chromebook—100% of the time. Kim Jong Un would be envious of results like that at election time.

And then there are the recently launched Google snippets, which stylistically highlight search results as if they were written on stone tablets and carried down from the mountain. Their sheer visual physicality gives them apparent moral force. The word Orwellian is flagrantly abused, but when it comes to the all-powerful algorithms of Google, Amazon and Facebook, Orwellian is underused.

As for news, institutional neglect has left us perched on the edge of the slippery slope of censorship. There is no Silicon Valley tradition, as there is at great newspapers, of each day arguing over rights and wrongs, of fretful, thoughtful agonizing over social responsibility and freedom of speech.

What we now have is a backlash with which these omnipotent companies are uniquely ill-equipped to cope. Their responses tend to be political and politically correct. Regardless of your own views, you should be concerned that we are entering an era in which these immensely influential publishers will routinely and selectively “unpublish” certain views and news.

We stumble into this egregious era at a moment when the political volume in many countries is turned to 10. The echo chamber has never been larger and the reverb room rarely more cacophonous. This is not an entirely new trend, but it has a compounding effect with the combination of “holier than thou” and “louder than thou.”

Curiously, this outcome is, in part, a result of the idealism of the Silicon Valley set, and there’s no doubt about the self-proclaimed ideals. They devoutly believe they are connecting people and informing them, which is true, even though some of the connections become conspiracies and much of the information is skimmed without concern to intellectual property rights.

Ideas aside, we were supposed to be in a magic age of metrics and data. Yet instead of perfect precision we have the cynical arbitraging of ambiguity—particularly in the world of audiences. Some advertising agencies are also clearly at fault because they, too, have been arbitraging and prospering from digital ambiguity as money in the ad business has shifted from actually making ads to aggregating digital audiences and ad tech, better known as fad tech.

And so, as the Times of London has reported, socially aware, image-conscious advertisers find themselves in extremely disreputable places—hardcore porn sites, neo-fascist sites, Islamist sites. The embarrassment for these advertisers juxtaposed with jaundice is understandable, but the situation is far more serious than mere loss of face.

If these sites are getting a cut of the commission, the advertisers are technically funding these nefarious activities. Depending on the type of advertising, it is estimated by the ad industry that a YouTube partner could earn about 55% of the revenue from a video. In recent years, how many millions of dollars have been channeled to organizations or individuals that are an existential threat to our societies?

Provenance is profound, and in this age of augmented reality and virtual reality, actual reality will surely make a comeback. Authenticated authenticity is an asset of increasing value in an age of the artificial—understanding the ebb and flow of humanity will not be based on fake news or ersatz empathy, but on real insight.

Mr. Thomson is the chief executive of News Corp, which owns The Wall Street Journal. This is adapted from a speech he delivered on March 29 to the Asia Society in Hong Kong.

Listen. Time for New Thinking.

One thing I have noticed in this political environment is that people do not listen to political views that diverge from their own. They believe what they believe, and that’s the end of it. Then they project bad intentions on anyone who disagrees. It makes for useless, though necessary, conversations.

This writer makes a good case for some rational reasoning through the imperative of listening to our politics rather than shouting them. We need to chart the correct path forward and it’s not by turning to the recent or distant past. Those mostly provide warning signs for the consequences of foolish mistakes.

History tells us that populist waves can lead to disaster or to reform…So how might we tilt the odds from disaster to reform? First, listen.

It’s Time for New Economic Thinking Based on the Best Science Available, Not Ideology

A new narrative for a complex age

By Eric Beinhocker 

If 2008 was the year of the financial crash, 2016 was the year of the political crash. In that year we witnessed the collapse of the last of the four major economic-political ideologies that dominated the 20th century: nationalism; Keynesian Pragmatism; socialism; and neoliberalism. In the 1970s and 80s the center right in many countries abandoned Keynesianism and adopted neoliberalism. In the 1980s and 90s the center left followed, largely abandoning democratic socialism and adopting a softer version of neoliberalism.

For a few decades we thought the end of history had arrived and political battles in most OECD countries were between centre-right and centre-left parties arguing in a narrow political spectrum, but largely agreeing on issues such as free trade, the benefits of immigration, the need for flexible efficient markets, and the positive role of global finance. This consensus was reinforced by international institutions such as the IMF, World Bank, and OECD, and the Davos political and business elite.

In 2008 that consensus was rocked, last year it crumbled. Some will cling on to the idea that the consensus can be revived. They will say we just need to defend it more vigorously, the facts will eventually prevail, the populist wave is exaggerated, it’s really just about immigration, Brexit will be a compromise, Clinton won more votes than Trump, and so on. But this is wishful thinking. Large swathes of the electorate have lost faith in the neoliberal consensus, the political parties that backed it, and the institutions that promoted it. This has created an ideological vacuum being filled by bad old ideas, most notably a revival of nationalism in the US and a number of European countries, as well as a revival of the hard socialist left in some countries.

History tells us that populist waves can lead to disaster or to reform. Disaster is certainly a realistic scenario now with potential for an unravelling of international cooperation, geopolitical conflict, and very bad economic policy. But we can also look back in history and see how, for example, in the US at the beginning of the 20th century Teddy Roosevelt harnessed populist discontent to create a period of major reform and progress.

So how might we tilt the odds from disaster to reform? First, listen. The populist movements do contain some racists, xenophobes, genuinely crazy people, and others whom we should absolutely condemn. But they also contain many normal people who are fed up with a system that doesn’t work for them. People who have seen their living standards stagnate or decline, who live precarious lives one paycheque at a time, who think their children will do worse than they have. And their issues aren’t just economic, they are also social and psychological. They have lost dignity and respect, and crave a sense of identity and belonging.

They feel – rightly or wrongly – that they played by the rules, but others in society haven’t, and those others have been rewarded. They also feel that their political leaders and institutions are profoundly out of touch, untrustworthy, and self-serving. And finally, they feel at the mercy of big impersonal forces – globalization, technology change, rootless banks and large faceless corporations. The most effective populist slogan has been “take back control”.

After we listen we then have to give new answers. New narratives and policies about how people’s lives can be made better and more secure, how they can fairly share in their nation’s prosperity, how they can have more control over their lives, how they can live with dignity and respect, how everyone will play by the same rules and the social contract will be restored, how openness and international cooperation benefits them not just an elite, and how governments, corporations, and banks will serve their interests, and not the other way around.

This is why we need new economic thinking. This is why the NAEC initiative is so important. The OECD has been taking economic inequality and stagnation seriously for longer than most and has some of the best data and analysis of these issues around. It has done leading work on alternative metrics other than GDP to give insight into how people are really doing, on well-being. It is working hard to articulate new models of growth that are inclusive and environmentally sustainable. It has leading initiatives on education, health, cities, productivity, trade, and numerous other topics that are critical to a new narrative.

But there are gaps too. Rational economic models are of little help on these issues, and a deeper understanding of psychology, sociology, political science, anthropology, and history is required. Likewise, communications is critical – thick reports are important for government ministries, but stories, narratives, visuals, and memes are needed to shift the media and public thinking.

So what might such a new narrative look like? My hope is that even in this post-truth age it will be based on the best facts and science available. I believe it will contain four stories:

  • A new story of growth [see this post]
  • A new story of inclusion [see this post]
  • A new social contract
  • A new idealism

This last point doesn’t get discussed enough. Periods of progress are usually characterized by idealism, common projects we can all aspire to. Populism is a zero-sum mentality – the populist leader will help me get more of a fixed pie. Idealism is a positive-sum mentality – we can do great things together. Idealism is the most powerful antidote to populism.

Finally, economics has painted itself as a detached amoral science, but humans are moral creatures. We must bring morality back into the center of economics in order for people to relate to and trust it. All of the science shows that deeply ingrained, reciprocal moral behaviors are the glue that holds society together. Understanding the economy as not just an amoral machine that provides incentives and distributes resources, but rather as a human moral construct is essential, not just for creating a more just economy, but also for understanding how the economy actually creates prosperity.

In short, it is time to forge a new vision that puts people back at the center of our economy. To paraphrase Abraham Lincoln, it is time to create an economy that is “of the people, by the people, for the people.” We are truly at a fluid point in history. It could be a great step backward or a great step forwards. We must all push forwards together.

Based on remarks originally delivered to the OECD New Approaches to Economic Challenges workshop, December 14, 2016, Paris.

The return of the nation-state

The lesson is that it’s a mistake to predict the inevitable decline of things that give meaning to people’s lives and involve fundamental human attachments. 

Mr. Lowry has got this mostly right. Trump is merely one actor in this play as national sovereignty and national identity is being reasserted in Great Britain, France, Germany, Greece, Russia, etc. across the globe. Some automatically associate nationalism with interstate conflict (i.e, war), but that is not necessarily the path it takes, especially in the liberal western democracies.

Also, people migration is not the most serious challenge facing the modern nation-state, but it’s the easiest to scape-goat. It’s deflected by cultural assimilation.

Samuel Huntington is worth reading.

The return of the nation-state

The first week of the Trump administration has been a vindication of the American nation-state.

Anyone who thought it was a “borderless world,” a category that includes some significant portion of the country’s corporate and intellectual elite, has been disabused of the notion within about the first five days of the Trump years.

Trump’s inaugural address was widely panned, but early polling indicates it was popular, which isn’t surprising since the broadly nationalistic sentiments in the speech were bound to strike people as common sense.

“At the center of this movement is a crucial conviction: that a nation exists to serve its citizens.” Whom else would it serve?

“We are one nation . . . We share one heart, one home, and one glorious destiny.” What’s the alternative — two nations, with two hearts and homes?

“From this moment on, it’s going to be America first.” Why would anything else come first?

“We will seek friendship and goodwill with the nations of the world — but we do so with the understanding that it is the right of all nations to put their own interests first,” Trump said.

Trump’s speech was less poetic, but in one sense more grounded than George W. Bush’s call for universal freedom in 2005 or Barack Obama’s vision of international cooperation leading to a new era of peace in 2009. Trump spoke of “the right of all nations to put their own interests first.”

If Bush was a vindicator of universal freedom, and Obama, in his more soaring moments, a citizen of the world, Trump is a dogged citizen of the United States concerned overwhelmingly with vindicating its interests.

His executive order authorizing the building of the wall is an emphatic affirmation of one of the constituent parts of a nation, namely borders. Trump also began the process of going after sanctuary cities as entrepôts of illegal immigration acting in defiance of the nation’s laws.

In general, immigration is an important focus for Trump’s nationalism because it involves the question of whether the American people have the sovereign authority to decide who gets to live here; whether the interests of American or foreign workers should be paramount; whether we assimilate the immigrants we already have into a common culture before welcoming more.

The Trump phenomenon is pushback against what the late political scientist Samuel Huntington called the “deconstructionist” agenda, whose advocates seek to undermine America’s national identity through mass immigration and hostility to assimilation and opposition to the teaching of US history from a traditional, patriotic perspective, among other things.

Huntington argues that until the late 20th century, these elites promoted national unity, as one would expect. “Then in the 1960s and 1970s,” he writes, “they began to promote measures consciously designed to weaken America’s cultural and creedal identity and to strengthen racial, ethnic, cultural, and other subnational identities. These efforts by a nation’s leaders to deconstruct the nation they governed were, quite possibly, without precedent in human history.”

Trump is a welcome rebuke to this attitude, though caveats are necessary:

A proper US nationalism should express not just an affinity for this country’s people, as Trump did in his address, but for its creed, its institutions and its history. These are absent from Trump’s rhetoric and presumably his worldview, impoverishing both.

Trump’s nationalism has the potential to appeal across racial and ethnic lines, so long as he demonstrates that it isn’t just cover for his loyalty to his preferred subnational group.

If Bush was overly expansive in his international vision, Trump could be overly pinched. Bush’s anti-AIDS program in Africa was unvarnished humanitarianism — and will redound to his credit, and the credit of this nation, for a very long time.

Finally, Trump’s trade agenda is also an expression of his nationalism. Trade deals should be able to pass the national-interest test — we shouldn’t embrace them for the sake of helping other nations, or out of strict libertarian principle. But protectionism is, historically, a special-interest bonanza that delivers benefits to specific industries only at a disproportionate cost to the rest of the economy.

All that said, the nation-state is back, despite all the forecasts of its demise.

The lesson is that it’s a mistake to predict the inevitable decline of things that give meaning to people’s lives and involve fundamental human attachments. The nation is one of them, something that Trump, if he gets nothing else, instinctively understands.

The Reassertion of the Nation-State

My how we live in interesting times. I’m sure they said that at the turn of the 20th century too. Let’s hope our leaders can manage this phase of national sovereignty a bit more successfully.

It’s a mistake to ignore or turn away from this reassertion of national sovereignty with horror. It is a natural communal reaction to rapid change not properly managed. The intention should be to slow down the social impact of those technological and economic changes in order to maintain a stable path to progress. This requires the establishment center to hold, but not by dismissing the real problems faced by significant portions of their populations. Because mismanagement of this complex challenge carries risks for nation-state conflict through trade wars or even hot wars with imperialist intentions.

We should keep in mind that nationalism, patriotism, and national identity are not necessarily expressions of ill-will toward others, but they can be turned into that.

From The New Yorker:

EUROPE’S POPULISTS PREPARE FOR A NATIONALIST SPRING

By Elisabeth Zerofsky   January 25, 2017

A gathering of European far-right leaders in Koblenz, Germany, on the day of Donald Trump’s Inauguration expressed growing confidence in its agenda following his victory and that of Brexit.

On January 20th, as Donald Trump was taking the oath of office, in Washington, populist leaders from across Europe were arriving in a quiet city on the Rhine. Early the next morning, French, German, Italian, Austrian, and Dutch nationalists stood together on a stage in Koblenz, a central German town that has been associated with political countercurrents since it harbored aristocrats during the French Revolution. Their national flags flew behind them as they greeted what they called the “birth of a new world.” “Yesterday, a new America,” Geert Wilders, the leader of the Dutch Party for Freedom, proclaimed to a hall filled with about a thousand attendees, most of them sturdy men in dark suits. “Tomorrow, a new Europe.”

The momentum of the Brexit vote, followed by Trump’s election, has provided European populists with a ready-made argument for their own inevitability. “People thought Trump wouldn’t win and he won; they thought during the two months preceding his Inauguration he would backpedal on all his promises, but he didn’t do it,” Thibaud Gibelin, a parliamentary aide to France’s National Front, told me. “It shows it is possible to achieve victory over the establishment, and for us that’s the most beautiful symbol.” The parties gathered in Koblenz have gained voters over the past few years, as Europeans across the political spectrum have lost confidence in mainstream politicians’ ability to manage the refugee crisis, the threat of terrorism, and, in some cases, high unemployment. Both Wilders and Marine Le Pen, of France’s National Front, will face elections this spring, and both lead in the polls. Le Pen, who could become President of France in May, has called for a Brexit-style referendum, which she claims is the only way to regain control over national borders and put an end to immigration. France and Germany are the nucleus of the European Union, and a “Frexit” would in all likelihood mean its end.

The Koblenz conference was organized by Germany’s Alternative für Deutschland, a four-year-old party that is trying to gain a foothold in a country that is still loath to tolerate the far right. In the fall, the AfD will likely obtain seats in the German parliament for the first time. Much of the French and German press expressed surprise that Frauke Petry, the party’s forty-one-year-old chair, would appear with Le Pen; the National Front presents a particular taboo in Germany because of some of its founders’ ties to the Vichy regime. But of Europe’s populists, Le Pen has the most serious ambitions to become head of state, and she is the clear kingpin of the group.

Le Pen took the stage like the instructor at a populists’ master class, radiating a warm familiarity. She hailed the domino effect that June’s Brexit vote had set in motion. “We have felt it coming, the rebellion of the people of Europe against a non-elected power that has pretended to be based on democracy,” she said. “What a blow to the old order!” The applause at the end was so rapturous that she returned to the stage for a curtain call.

There is something contradictory about a confederation of nationalist parties, but in addition to their shared opposition to the E.U. the parties have a common patron in Moscow. “It’s pretty clear that one of the geopolitical elements bringing these different forces together today is proximity to the Kremlin,” Joël Gombin, a political scientist who studies the National Front, told me. Le Pen’s party has been taking money from Russian banks for years, most recently a nine-million-euro loan, in 2014, from a bank that has since been dissolved. Over the past four years, Le Pen and members of her inner circle have made several trips to Moscow, where they’ve met with officials including the Deputy Prime Minister and the speaker of the Duma; her contacts reportedly include politicians who have been sanctioned by the E.U. in response to the Ukraine crisis. Leaders from the AfD have been guests at Russian government forums, and Austria’s Freedom Party has signed a coöperation agreement with President Vladimir Putin’s party. These connections have coalesced into an informal network connecting Putin’s inner circle and the European far right.

Le Pen presents an alliance between nationalist parties as a source not of bellicosity but of harmony. In Koblenz, she laid out a vision of a flowering of European cultures, and argued that a “diversity” of strong national identities would bring not war but mutual respect. Far-right supporters also believe that new European and American alliances with Russia will bring about a broader détente. In Koblenz, I had coffee with a fifty-four-year-old German attendee who politely refused to tell me his name or profession. “I don’t know what American troops are doing six thousand kilometres away from their country at the Russian border,” he complained. I suggested that they might be responding to Russian provocation. “No, the Americans provoked first, by orchestrating Ukraine,” he said. “The Americans are very big in regime change, very bad in solving problems. Trump will solve Ukraine and concentrate on American interests. Then it’s O.K.”

At the Koblenz conference, the populists made their claims of “rebirth” before an audience of mostly older white men. But the “identitarian” movement, while small—the French chapter claims two thousand paying members—is growing among the young. Gibelin, the National Front aide, is twenty-seven years old and was dressed in a gray wool suit, his hair slicked back in the manner of Donald Trump’s elder sons. As we stood in the café outside the conference hall, the babel of languages thickening around us, I asked whether he agreed with the vision put forth by older party members. His response came in the form of a seamless narrative. “The reality today that European countries are interdependent is clear to everyone,” he told me. “Coöperation is obvious, but it’s a question of what kind of coöperation. The one we have now, which benefits the economic empire and denies identity in submission to globalized interests?” Europeans, he said, share a cultural heritage. “We have our Roman roots, our language, our culture; the cathedrals you see, whether in Cologne or Paris, that are Gothic, that’s transnational; the Renaissance was a European phenomenon; and the great religious moments that marked Europe, the spread of Christianity, the Reformation, those were never isolated to one nation.” The refugee question was simple. Global corporations sought cheap labor, and politicians enabled them. He didn’t mind European governments providing financial aid to refugees, as long as that aid was used to help them stay in their own countries. “We think the dignity of these people can be expressed in their own homeland. Not here.” He shrugged confidently. “We are attacked by the media as being extremist, but for me it’s exactly the opposite,” he said. “It’s global capitalism that is extreme. We are simply defending the interests of the people.”

The refugee question was simple. Global corporations sought cheap labor, and politicians enabled them. He didn’t mind European governments providing financial aid to refugees, as long as that aid was used to help them stay in their own countries. “We think the dignity of these people can be expressed in their own homeland. Not here.” He shrugged confidently. “We are attacked by the media as being extremist, but for me it’s exactly the opposite,” he said. “It’s global capitalism that is extreme. We are simply defending the interests of the people.”

Interesting Money Graphics

08-roman-empire-chart

dollar_devaluation

One cannot take these graphs at face value, for example, the long $ decline from 1933 to the present has also been the Pax Americana where the US has dominated geopolitics. Also, the Roman denarius was a commodity based currency, while the US$ is a fiat currency backed by US government taxing power over US assets.

But the larger issue of the costs of empire over time are instructive. One should dig deeper in analysis, but not be too complacent. Especially in light of the currency manipulations of the current age.