The Bubble Economy

This is where the easy credit goes. A slush fund for Wall St. and Silicon Valley…

Full article here.

Money, money, money: Silicon Valley speculation recalls dotcom mania

Venture capitalists and private equity investors keep the bubble going with their millions

by Rana Foroohar

Financial Times
July 17, 2017

…It’s a bubble that is different — but the same — as the last time. In 2000, start-ups like pets.com were able to go public and jack up share prices even as they were losing hundreds of millions of dollars. The digital ecosystem has since grown, changed and deepened. Today it is harder for companies to receive funding just by sticking “.com” behind their names.

But now, as then, you do not necessarily need profits or paying customers to draw investor interest but rather “users” in a hot market niche. Compelling narratives develop around these sectors (wearables, electric cars, the “sharing” economy). Companies send market signals about their own “value” with announcements that play off these narratives, for example, Uber’s $680m purchase of self-driving truck firm Otto).

Venture capitalists and private equity investors keep the bubble going by buying into it at higher and higher valuations. The smartest ones guarantee their own success by taking rich advisory fees along the way and exiting before disaster via the secondary market for private shares. And this is, as behavioural economist Peter Atwater recently pointed out to me, unusually liquid thanks in part to central bank-enabled easy money.

The virtual money, generated by valuations that are based as much on narrative as fact, is used to salaries: it can cost upward of $2m in cash and stock options to recruit a driverless-car engineer in the Valley. These then distort the price of property, services and labour. You’ll weep when you see the prices of depressing ranch-style homes off Highway 101, which runs through Silicon Valley. The whole cycle is straight-up “madness of crowds”, as described by Charles Mackay in 1841.

UBI, or Something Better?

What’s odd about this discussion on Universal Basic Income below is that nobody successful in Silicon Valley participates in a UBI scheme, nor would they. They rely on risk-taking, equity, and reward. Not sure why they don’t advocate this for everybody – after all, because of the way risk is assigned to asset ownership, labor ends up taking all kinds of risk, yet almost never participates in the rewards to that risk. Instead they get a one-time bonus or profit-sharing.

But Zuckerberg would never accept those terms, either now or before he made his first dollar. It looks to me that Silicon valley tech supports redistribution in order to make their outsized gains from network effects more politically palatable.

Unfortunately, this critic of Zuckerberg and Silicon Valley in general wants to double down on failed tax and redistribution schemes instead of empowering people to participate in the risks and rewards of capitalist entrepreneurial success.

“He (or She) who is without capital in a capitalist society is little more than a wage slave and a captive consumer.” 

Another truism about the future: In a world run by robots, he who owns and controls the robots is king. Make sure you own your robot!

Original article here.

What Mark Zuckerberg Gets Wrong About UBI

New Republic, July 7, 2017

By Clio Chang

It’s no secret that tech bros love universal basic income. Sam Altman of Y Combinator is funding a UBI pilot program in Oakland, California, in part because he was inspired by Star Trek. Tesla’s Elon Musk supports the policy because he realizes that the aggressive automation caused by the tech industry will make UBI “necessary.” This week, as part of his “I’m-not-running-for-president” tour around the country, Mark Zuckerberg visited Homer, Alaska, which resulted in him writing a Facebook post lauding the merits of the state’s Permanent Fund as a model for a national form of basic income.

UBI, a concept that dates back centuries, is the idea that every person should receive some amount of money so that no one dips beneath a basic standard of living. For those on the left, it’s seen as an alternative to our country’s woefully limited cash welfare system. For libertarians, a basic income is lauded as a slimmer, less intrusive way to deliver government benefits. It is the rare utopian idea that people of different political stripes can agree on—Zuckerberg himself made sure to note the “bipartisan” appeal of the policy in his post.

But Zuckerberg reveals exactly why the left should be alarmed that Silicon Valley is taking the lead on this issue.

First, the idea that UBI has bipartisan appeal is disingenuous. The left would have a policy that redistributes wealth by funding UBI through a more progressive tax scheme or the diverting of capital income. But libertarians like Charles Murray argue for a UBI that completely scraps our existing welfare state, including programs like Medicare, Medicaid, and housing subsidies. This would be extremely regressive, since money currently directed towards the poor would instead be spread out for a basic income for all. And certain benefits like health insurance can’t effectively be replaced with cash.

Second, Zuckerberg asserts that Alaska’s Permanent Fund—which uses the state’s oil resources to pay a dividend to each Alaskan and is seen as one of the few examples of an actual UBI-like policy—is advantageous because it “comes from conservative principles of smaller government, rather than progressive principles of a larger safety net.” But a UBI policy can only reflect small government principles if one envisions it eating into the country’s existing welfare state, rather than coming on top of it. In this respect, Zuckerberg’s advocacy of UBI “bipartisanship” starts to look more like a veiled libertarian agenda.

This attitude echoes other pro-UBI tech lords like Altman, who sees basic income as providing a “floor” but not a ceiling. In his ideal scheme, no one will be very poor, but people like Altman will still be free to get “as rich as they fucking want.” The tech vision of the world is one where it can wash its hands of the rising joblessness it will generate through automation, but where those at the top can still wallow in extreme wealth. As Altman told Business Insider, “We need to be ready for a world with trillionaires in it, and that’s always going to feel deeply unfair. It feels unfair to me. But to drive society forward, you’ve got to let that happen.”

This is deeply telling of the tech UBI mentality: driving society forward doesn’t mean reducing inequality, but rather fostering more entrepreneurship. The former is viewed as unnecessary and the latter as an inherent good.

Zuckerberg also compares Alaska’s Permanent Fund to running a business—a very specific one:

Seeing how Alaska put this dividend in place reminded me of a lesson I learned early at Facebook: organizations think profoundly differently when they’re profitable than when they’re in debt. When you’re losing money, your mentality is largely about survival. But when you’re profitable, you’re confident about your future and you look for opportunities to invest and grow further. Alaska’s economy has historically created this winning mentality, which has led to this basic income. That may be a lesson for the rest of the country as well.

The idea that a “winning mentality” is what is going to lead to a basic income in the United States reveals how little Zuckerberg understands about politics. This is a pervasive ideology among tech leaders, who believe the lessons that they have gleaned from their own industry are applicable to all of the country’s problems. But remember the last time a disrupter said he was going to step into the political arena and run our country like a business?

For moguls like Zuckerberg, there is never any deep consideration of, say, the fact that racism, sexism, and classism are deeply intertwined with our country’s policies and are some of the biggest obstacles to implementing a highly redistributive policy like a UBI. Nor is there any attempt to consult with lifelong organizers and activists on the issue.

At the end of his post, Zuckerberg states that the “most effective safety net programs create an incentive or need to work rather than just giving a handout.” This echoes the “personal responsibility” rhetoric that drove workfare policies in the 1990s, which ended up kicking millions of people off of welfare rolls, leaving them in extreme poverty. The line also directly undermines the push for a UBI, which is quite literally a handout that can help liberate people from the “need to work.”

It would appear that Silicon Valley’s support for a basic income comes from self-interest. As Jathan Sadowski writes in the Guardian, “the trouble comes when UBI is used as a way of merely making techno-capitalism more tolerable for people, when it is administered like a painkiller that numbs the pain and masks the symptoms of economic injustice without addressing the root causes of exploitation and inequality.”

Tech moguls may seem like tempting allies for UBI advocates, but their vision of an ideal social safety net does not look anything like the left’s. If it did, they wouldn’t be pushing just for a basic income, but also for things like universal health care, free public education (not just for engineers!), and strong labor unions. For Silicon Valley, UBI is a sleek technological means to a very different end.

Trumpism. What’s Normal Now?

I reprint this article because it discusses a perspective of our current politics that goes far beyond politics. Basically, what’s not normal is the anti-humanism of postmodern culture. The problem I see is that those complaining about our current political dysfunction are the same ones who have embraced postmodernism in all its forms, even if in dismay.

I think the Romans used to call this “bread and circuses,” but the masses have turned and taken over the Republic, which I suppose is their right.

America’s First Postmodern President

By Jeet Heer

The nature of reality is an open question in the age of Donald Trump. As the president regularly decries “the Fake News Media” and journalists catalogue his many lies, the battles of our time seem not just political but philosophical, indeed epistemological: What is real? How do we reach a consensus on the truth? These questions cut deeper than mere attempts to gauge the accuracy of Trump’s own words, or those of the White House staff. Trump’s ascension to leader of the free world still feels deeply strange, hence the common refrain that “this is not normal.” Trump himself sometimes seems seems surprised by his position. “I’m president!” he declared in a May ceremony celebrating the House passage of the American Health Care Act. “Hey, I’m president! Can you believe it?”

In an attempt to make sense of Trump’s vertiginous presidency, critics have made comparisons to contemporary autocrats like Vladimir Putin and Recep Tayyip Erdoğan, or pillaged the history books for analogies ranging from Mussolini to Nixon. Others have looked at imagined futures, as Trump has fostered a vogue in dystopias such as George Orwell’s 1984 and Margaret Atwood’s The Handmaid’s Tale. However illuminating these parallels might be, they ultimately fall short by failing to consider Trump in his immediate context. The president is best understood not as a figure who harkens back to the distant past, evokes other lands, or foreshadows the future, but one who is representative of this very moment in America, where media overload is destroying the sense of a shared public reality.

In examining Trump as a product of our unique epoch, one of the sharpest analytical tools available is the theory of postmodernism, developed in the 1970s and 1980s by a host of theorists—perhaps most famously by Fredric Jameson, the polymathic Duke University literary scholar. In a famous 1984 essay, later expanded into the book Postmodernism, or, The Cultural Logic of Late Capitalism, Jameson synthesized the work of scholars from many fields—philosopher Jean-Francois Lyotard, economist Ernest Mandel, architect Robert Venturi, filmmaker Guy Debord, sociologist Jean Baudrillard—in arguing that the triumph of economic globalism, which he dates to the early 1970s, inaugurated a new cultural era marked by the triumph of populist images over the strenuous elite art that had characterized modernism.

For Jameson, postmodernism meant the birth of “a society of the image or the simulacrum and a transformation of the ‘real’ into so many pseudoevents.” Befitting the “postliteracy of the late capitalist world,” the culture of postmodernism would be characterized by “a new kind of flatness or depthlessness, a new kind of superficiality in the most literal sense” where “depth is replaced by surface.” Postmodernism was especially visible in the field of architecture, where it manifested itself as a “populist” revolt “against the elite (and Utopian) austerities of the great architectural modernisms: It is generally affirmed, in other words, that these newer buildings are popular works, on the one hand, and that they respect the vernacular of the American city fabric, on the other; that is to say, they no longer attempt, as did the masterworks and monuments of high modernism, to insert a different, a distinct, an elevated, a new Utopian language into the tawdry and commercial sign system of the surrounding city, but rather they seek to speak that very language, using its lexicon and syntax as that has been emblematically ‘learned from Las Vegas.’”

That final phrase is a reference to Learning From Vegas, a 1972 book by Venturi, Denise Scott Brown, and Steven Izenour that critiqued “heroic” modern architecture and instead sought to “gain insight from the commonplace,” specifically by analyzing the Las Vegas Strip. Trump, as a real estate developer, was certainly willing to “learn from Las Vegas,” as he proved with his vulgar, now-shuttered Taj Mahal casino. But there’s a deeper symmetry between Trump and the account of postmodern society found in Jameson’s work (not just Postmodernism but subsequent volumes like The Seeds of Time and A Singular Modernity) and in the work of his fellow travelers, like Baudrillard and Debord. These writers describe a world where the visual has triumphed over the literary, where fragmented sound bites have replaced linear thinking, where nostalgia (“Make America Great Again”) has replaced historical consciousness or felt experiences of the past, where simulacra is indistinguishable from reality, where an aesthetic of pastiche and kitsch (Trump Tower) replaces modernism’s striving for purity and elitism, and where a shared plebeian culture of vulgarity papers over intensifying class disparities. In virtually every detail, Trump seems like the perfect manifestation of postmodernism.

For Baudrillard, “the perfect crime” was the murder of reality, which has been covered up with decoys (“virtual reality” and “reality shows”) that are mistaken for what has been destroyed. “Our culture of meaning is collapsing beneath our excess of meaning, the culture of reality collapsing beneath the excess of reality, the information culture collapsing beneath the excess of information—the sign and reality sharing a single shroud,” Baudrillard wrote in The Perfect Crime (1995). The Trump era is rich in such unreality. The president is not only a former reality-show star, but one whose fame is based more on performance than reality—on the idea that he’s a successful businessman. Although his real estate and gambling empire suffered massive losses in the early 1990s, and Trump’s “finances went into a tailspin,” he survived thanks to the superficial value of his brand, which he propped up though media manipulation.

In Baudrillard’s terms, Trump is a simulacra businessman, a copy of a reality that has no real existence. All sorts of simulacrum and decoy realities now flourish. Consider the popularity of conspiracy theories, evidence of a culture where it’s easy for fictional and semi-fictional narratives to spread like wildfire through social media. Trump loves spreading conspiracy theories about his enemies, and his enemies love spreading conspiracy theories about him. This propagation of fictions makes it difficult to build a convincing case against him. MSNBC host Rachel Maddow revealed Thursday that a supposedly classified document containing bombshells about Russia was sent anonymously to her show’s tipline. Her team eventually determined the document was fake. “Somebody out there is shopping carefully forged documents to try to discredit news agencies reporting on the Russian attack on our election,” she said, “and specifically on the possibility that the Trump campaign coordinated with the Russians in mounting that attack.”

Another recent example shows how easy it is to fall into a farrago of absurdity when reporting on Trump. Last weekend, the president tweeted a wrestling video showing him pummeling a man who had a CNN logo superimposed on his face. A Reddit user named HanAssholeSolo, who has a history of racist and anti-Semitic posts, took credit for the clip. CNN discovered the user’s true identity, but decided not to name him, though added, “CNN reserves the right to publish his identity.” This sentence gave the false impression of blackmail, and HanAssholeSolo suddenly became a free speech martyr to the right. As often happens in political battles of the Trump era, his supporters took a few random facts at the margins of the story and constructed an alternative reality, so that the story became not about the president’s endorsement of a threatening video created by a political extremist, but about a powerful news network harassing a private citizen. The entire spectacle shows we’re living in a Baudrillardian funhouse where the firm ground of reality has slipped away.

Postmodernism brings with it the erasure of older distinctions not just between reality and fiction, but between elite and popular culture. In his 1998 book The Origins of Postmodernity, the historian Perry Anderson called attention to the theme of plebeianization first developed by Jameson: the collapse of old bourgeois norms among the rich and powerful, even as class hierarchy remained strong (if not more entrenched than ever). “More widely, in the public sphere democratization of manners and disinhibition of mores advanced together,” Anderson argued, citing the antics of Princess Diana and President Bill Clinton. “For long, sociologists had debated the embourgeoisement of the working-class in the West—never a very happy term for the processes at issue. By the nineties, however, the more striking phenomenon was a general encanaillement”—or slumming—“of the possessing classes—as it were: starlet princesses and sleazeball presidents, beds for rent in the official residence and bribes for killer ads, disneyfication of protocols and tarantinization of practices, the avid corteges of the nocturnal underpass or the gubernatorial troop. In scenes like these lies much of the social backdrop of the postmodern.” Trump, the wealthy president who brags about grabbing women by the genitals and tweets out abuse of female journalists, embodies this “encanaillement of the possessing classes” even better than Diana or Clinton.

The virtue of theories of postmodernism, as developed by Jameson and his peers, is that they link cultural changes with deeper economic transformations. The waves that carried a ridiculous TV celebrity to the presidency are being propelled by a deeper current of globalization: the triumph of the unreality industries, the move of manufacturing jobs out of the developed world, and the proliferation of technologies that saturate us with media.

This analysis suggests that Trump is the product not just of a fluke election or a racist and sexist backlash, but the culmination of late capitalism [This goes far beyond who controls the means of production. Commercialism? Trump is a commercial brander]. This has profound implications for how we see Trump—and how we oppose him. We have to focus less on Trump’s personal flaws and more on the world that has enabled him. His habitual prevarications aren’t simply the result of his defective character, but an effective tactic. In a world where commerce and media (including social media) reward performance above truth telling, it’s not surprising that a figure like Trump rises to the top. Any moralistic condemnation of Trump is incomplete without acknowledging the institutions (notably the media) that both created him and allowed him to thrive.

The danger of a sweeping theory like postmodernism is that it can produce despair. After all, fighting something so pervasive as “late capitalism” is much harder than winning elections. For the Trump resistance, seeing him as a postmodern president opens up the dilemma that the best way to fight him in the short term might be to borrow some of his tactics. (It’s no surprise that another savvy performer-politician, Senator Al Franken, has emerged as a major resistance leader.) The danger is that by imitating Trump, we’ll only create a world where future Trumps will emerge.

But there’s a different way to look at Trump as a postmodern president. Paradoxically, even as Trump exploits today’s media, his politics of nostalgia show that his own followers want to escape the postmodern world [I’d say they want to preserve, not escape]. Trump’s appeal is based on his promise to return to an earlier, simpler era, where jobs were rooted in physical activity (manufacturing, coal mining) and the economy was governed by the imperatives of nationalist solidarity (“America First”) and not globalization. There is a genuinely utopian dimension to Trumpism, suggesting a widespread desire to reverse late capitalism. So the logical response to Trumpism is to counter him with someone who can truly challenge the economic status quo, rather than being a mere avatar for such hopes. [Good luck with that, since the intellectual class is mired in an obsolete political-economic paradigm of 20th century class conflict and laborism. The solution they’ve come up with? Cheap credit fueled by the promises of a fiat money governing regime.]

Michael Ramirez / Daily Signal

Michael Ramirez / Daily Signal

Leviathan State

From the point of view of political economy and policy, this is the best and most relevant essay I’ve read in awhile. The Administrative State (or Deep State), no matter how much good it does, is antithetical to individual liberty, justice, and, I would argue, long-term economic and political security and stability. Be careful what you wish for with free health care or an imperial POTUS!

Reprinted from the WSJ:

The Tyranny of the Administrative State

Government by unelected experts isn’t all that different from the ‘royal prerogative’ of 17th-century England, argues constitutional scholar Philip Hamburger.

New York

What’s the greatest threat to liberty in America? Liberals rail at Donald Trump’s executive orders on immigration and his hostility toward the press, while conservatives vow to reverse Barack Obama’s regulatory assault on religion, education and business. Philip Hamburger says both sides are thinking too small.

Like the blind men in the fable who try to describe an elephant by feeling different parts of its body, they’re not perceiving the whole problem: the enormous rogue beast known as the administrative state.

Sometimes called the regulatory state or the deep state, it is a government within the government, run by the president and the dozens of federal agencies that assume powers once claimed only by kings. In place of royal decrees, they issue rules and send out “guidance” letters like the one from an Education Department official in 2011 that stripped college students of due process when accused of sexual misconduct.

Unelected bureaucrats not only write their own laws, they also interpret these laws and enforce them in their own courts with their own judges. All this is in blatant violation of the Constitution, says Mr. Hamburger, 60, a constitutional scholar and winner of the Manhattan Institute’s Hayek Prize last year for his scholarly 2014 book, “Is Administrative Law Unlawful?” (Spoiler alert: Yes.)

“Essentially, much of the Bill of Rights has been gutted,” he says, sitting in his office at Columbia Law School. “The government can choose to proceed against you in a trial in court with constitutional processes, or it can use an administrative proceeding where you don’t have the right to be heard by a real judge or a jury and you don’t have the full due process of law. Our fundamental procedural freedoms, which once were guarantees, have become mere options.” ​

In volume and complexity, the edicts from federal agencies exceed the laws passed by Congress by orders of magnitude. “The administrative state has become the government’s predominant mode of contact with citizens,” Mr. Hamburger says. “Ultimately this is not about the politics of left or right. Unlawful government power should worry everybody.”

Defenders of agencies like the Securities and Exchange Commission or the Environmental Protection Agency often describe them as the only practical way to regulate today’s complex world. The Founding Fathers, they argue, could not have imagined the challenges that face a large and technologically advanced society, so Congress and the judiciary have wisely delegated their duties by giving new powers to experts in executive-branch agencies.

Mr. Hamburger doesn’t buy it. In his view, not only is such delegation unconstitutional, it’s nothing new. The founders, far from being naive about the need for expert guidance, limited executive powers precisely because of the abuses of 17th-century kings like James I.

James, who reigned in England from 1603 through 1625, claimed that divinely granted “absolute power” authorized him to suspend laws enacted by Parliament or dispense with them for any favored person. Mr. Hamburger likens this royal “dispensing” power to modern agency “waivers,” like the ones from the Obama administration exempting McDonald’s and other corporations from complying with provisions of the Affordable Care Act.

James also made his own laws, bypassing Parliament and the courts by issuing proclamations and using his “royal prerogative” to establish commissions and tribunals. He exploited the infamous Star Chamber, a court that got its name from the gilded stars on its ceiling.

“The Hollywood version of the Star Chamber is a torture chamber where the walls were speckled with blood,” Mr. Hamburger says. “But torture was a very minor part of its business. It was very bureaucratic. Like modern administrative agencies, it commissioned expert reports, issued decrees and enforced them. It had regulations controlling the press, and it issued rules for urban development, environmental matters and various industries.”

James’s claims were rebuffed by England’s chief justice, Edward Coke, who in 1610 declared that the king “by his proclamation cannot create any offense which was not an offense before.” The king eventually dismissed Coke, and expansive royal powers continued to be exercised by James and his successor, Charles I. The angry backlash ultimately prompted Parliament to abolish the Star Chamber and helped provoke a civil war that ended with the beheading of Charles in 1649.

A subsequent king, James II, took the throne in 1685 and tried to reassert the prerogative power. But he was dethroned in the Glorious Revolution in 1688, which was followed by Parliament’s adoption of a bill of rights limiting the monarch and reasserting the primacy of Parliament and the courts. That history inspired the American Constitution’s limits on the executive branch, which James Madison explained as a protection against “the danger to liberty from the overgrown and all-grasping prerogative of an hereditary magistrate.”

“The framers of the Constitution were very clear about this,” Mr. Hamburger says, rummaging in a drawer for a pocket edition. He opens to the first page, featuring the Preamble and Article 1, which begins: “All legislative Powers herein granted shall be vested in a Congress.”

“That first word is crucial,” he says. “The very first substantive word of the Constitution is ‘all.’ That makes it an exclusive vesting of the legislative powers in an elected legislature. Congress cannot delegate the legislative powers to an agency, just as judges cannot delegate their power to an agency.”

Those restrictions on executive power have been disappearing since the late 19th century, starting with the creation of the Interstate Commerce Commission in 1887. Centralized power appealed to big business—railroads found commissioners easier to manipulate than legislators—as well as to American intellectuals who’d studied public policy at German universities. Unlike Britain, Germany had rejected constitutional restraints in favor of a Prussian model that gave administrative agencies the prerogative powers of the king.

Mr. Hamburger believes it’s no coincidence that the growth of America’s administrative state coincided with the addition to the electorate of Catholic immigrants, blacks and other minorities. WASP progressives like Woodrow Wilson considered these groups an obstacle to reform.

“The bulk of mankind is rigidly unphilosophical, and nowadays the bulk of mankind votes,” Wilson complained, noting in particular the difficulty of winning over the minds “of Irishmen, of Germans, of Negroes.” His solution was to push his agenda using federal agencies staffed by experts of his own caste—what Mr. Hamburger calls the “knowledge class.” Wilson was the only president ever to hold a doctorate.

“There’s been something of a bait and switch,” Mr. Hamburger says. “We talk about the importance of expanding voting rights, but behind the scenes there’s been a transfer of power from voters to members of the knowledge class. A large part of the knowledge class, Republicans as well as Democrats, went out of their way to make the administrative state work.”

Mr. Hamburger was born into the knowledge class. He grew up in a book-filled house near New Haven, Conn. His father was a Yale law professor and his mother a researcher in economics and intellectual history. During his father’s sabbaticals in London, Philip acquired a passion for 17th-century English history and spent long hours studying manuscripts at the British Museum. That’s where he learned about the royal prerogative.

He went to Princeton and then Yale Law School, where he avoided courses on administrative law, which struck him as “tedious beyond belief.” He became slightly more interested during a stint as a corporate lawyer specializing in taxes—he could see the sweeping powers wielded by the Internal Revenue Service—but the topic didn’t engage him until midway through his academic career.

While at the University of Chicago, he heard of a colleague’s inability to publish a research paper because the study had not been approved ahead of time by a federally mandated institutional review board. That sounded like an unconstitutional suppression of free speech, and it reminded Mr. Hamburger of those manuscripts at the British Museum.

Why the return of the royal prerogative? “The answer rests ultimately on human nature,” Mr. Hamburger writes in “The Administrative Threat,” a new short book aimed at a general readership. “Ever tempted to exert more power with less effort, rulers are rarely content to govern merely through the law.”

Instead, presidents govern by interpreting statutes in ways lawmakers never imagined. Barack Obama openly boasted of his intention to bypass Congress: “I’ve got a pen and I’ve got a phone.” Unable to persuade a Congress controlled by his own party to regulate carbon dioxide, Mr. Obama did it himself in 2009 by having the EPA declare it a pollutant covered by a decades-old law. (In 2007 the Supreme Court had affirmed the EPA’s authority to do so.)

Similarly, the Title IX legislation passed in 1972 was intended mainly to protect women in higher education from employment discrimination. Under Mr. Obama, Education Department bureaucrats used it to issue orders about bathrooms for transgender students at public schools and to mandate campus tribunals to adjudicate sexual misconduct—including “verbal misconduct,” or speech—that are in many ways less fair to the accused than the Star Chamber.

At this point, the idea of restraining the executive branch may seem quixotic, but Mr. Hamburger says there are practical ways to do so. One would be to make government officials financially accountable for their excesses, as they were in the 18th and 19th centuries, when they could be sued individually for damages. Today they’re protected thanks to “qualified immunity,” a doctrine Mr. Hamburger thinks should be narrowed.

“One does have to worry about frivolous lawsuits against government officers who have to make quick decisions in the field, like police officers,” he says. “But someone sitting behind a desk at the EPA or the SEC has plenty of time to consult lawyers before acting. There’s no reason to give them qualified immunity. They’ll be more careful not to exceed their constitutional authority if they have to weigh the risk of losing their own money.”

Another way of restraining agencies—one President Trump could adopt on his own—would be to require them to submit new rules to Congress for approval instead of imposing them by fiat. The president could also order at least some agencies to resolve disputes in regular courts instead of using administrative judges, who are departmental employees. Meanwhile, Congress could reclaim its legislative power by going through regulations, agency by agency, and deciding which ones to enact into law.

Mr. Hamburger’s chief hope for reform lies in the courts, which in earlier eras rebuffed the executive branch’s power grabs. Those rulings so frustrated both Theodore Roosevelt and Franklin D. Roosevelt that they threatened retaliation—such as FDR’s plan to pack the Supreme Court by expanding its size. Eventually judges surrendered and validated sweeping executive powers. Mr. Hamburger calls it “one of the most shameful episodes in the history of the federal judiciary.”

The Supreme Court capitulated further in decisions like Chevron v. Natural Resources Defense Council (1984), which requires judges to defer to any “reasonable interpretation” of an ambiguous statute by a federal agency. “Chevron deference should be called Chevron bias,” Mr. Hamburger says. “It requires judges to abandon due process and independent judgment. The courts have corrupted their processes by saying that when the government is a party in case, they will be systematically biased—they will favor the more powerful party.”

Mr. Hamburger sees a good chance that the high court will limit and eventually abandon the Chevron doctrine, and he expects other litigation giving the judiciary a chance to reassert its powers and protect constitutional rights. “Slowly, step by step, we can persuade judges to recognize the risks of what they’ve done so far and to grapple with this very dangerous type of power,” he says. The judiciary, like academia, has many liberals who have been sympathetic to the growth of executive power, but their perspective may be changing.

“Administrative power is like off-road driving,” Mr. Hamburger continues. “It’s exhilarating to operate off-road when you’re in the driver’s seat, but it’s a little unnerving for everyone else.”

He says he observed this effect during a recent conversation with a prominent legal scholar. The colleague, a longtime defender of administrative law, was discussing the topic shortly after Mr. Trump’s inauguration.

The colleague told Mr. Hamburger: “I am beginning to see the merit of your ideas.”

Blogger’s Note: I’m a member of the knowledge class and trust me, nobody really knows anything!

Culture Wars or Something Else?

Well, not really. See comments below. From London’s The Economist:

Bagehot

The culture wars arrive in Britain

The election reveals astonishing changes in the political landscape

Jun 9th 2017

BREXIT was supposed to let Britain be Britain. Disentangled from the European Union, its island race would rediscover its native genius and embrace a unique mixture of nationalism and globalism. In fact this election suggests that something different is happening: divided and stunned by Brexit, Britain is turning into America.

Over the past 30 years American politics has been transformed from the politics of class into the politics of values. [No. Not really, that’s the media and party narrative.] In the 1970s the Republicans were broadly the party of the rich and rising and the Democrats were the party of blue-collar workers. Thereafter, values edged out class. Ronald Reagan brought blue-collar Democrats into the Republican Party by emphasising traditional values. George H.W. Bush used the “three Gs”—God, guns and gays—to strengthen his hold on blue-collar voters. Under George W. Bush America descended into a full-scale culture war: the Republicans put together a coalition of Evangelicals, working-class conservatives and business people and the Democrats responded with a coalition of knowledge workers, ethnic minorities and social liberals. [Blogger’s Note: No, the Democrats put together their Great Society rainbow coalition after the 1968 Convention in Chicago and in 1972 chose George McGovern as their candidate. Nixon responded with his Southern strategy.]

The cultural division has fed into a generational division: younger voters, particularly unmarried women, have gravitated to the Democrats. It has also fed into a regional division. The Republican Party thrived in the provinces (the suburbs, exurbs and rural America) while the Democratic Party thrived in the cities. There was also a growing division between the Democratic coasts and the Republican heartland and between the Republican South and the more Democratic north-east.

This election suggests that Britain is moving rapidly in the same direction. Look at the electoral map through the prism of class and the picture looks confused. The Tory party has held onto its wealthy heartlands in the rural shires. It has lost other rich areas in the cities, such as Battersea in London. It has also increased its vote share in some working-class areas, and taken some traditional Labour seats such as Derbyshire North-East and Stoke-on-Trent South. The Labour Party has made striking advances in some wealthy places: London and several other cities, particularly university towns. It has had a more mixed performance in working-class areas.

Look at it through the prism of values and the election makes sense. The Tories have been the party of old-fashioned British values: patriotism, self-determination and suspicion of foreigners—especially when they are trying to tell them what to do. These values have united middle-class people in the shires with older working-class people in the post-industrial north. Labour, meanwhile, has been the party of cosmopolitan values: multiculturalism, compassion, dislike of Brexit. These values have united people who might otherwise have little in common: devout Muslims in Perry Barr, Birmingham; struggling students in Newcastle; millionaire human-rights lawyers in Islington; train drivers in Dagenham.

The value division is also a regional division. The Labour Party has thrived in big cities. Jeremy Corbyn’s Labour Party is above all the party of London: Mr Corbyn represents Islington North, Emily Thornberry, his shadow foreign secretary, represents the next-door seat. At the same time the Conservatives have retreated: Justine Greening, the education secretary, saw her majority in Putney slashed from 10,000 to 1,000 and Jane Ellison, the financial secretary to the treasury, lost her Battersea seat. But even as they retreated in the metropolis, the Conservatives have taken some unexpected seats in post-industrial Britain.

The rise of values politics is rife with paradoxes. The Tory party calculated that this new type of politics would favour the right—Theresa May deliberately stirred the pot by telling the 2016 Conservative Party conference that “If you believe you’re a citizen of the world, you’re a citizen of nowhere. You don’t understand what the very word ‘citizenship’ means”. Nicholas Timothy, her co-chief-of-staff and policy guru, believed that the Tories could win over working-class voters by talking about traditional values and patriotism. But the Party failed to recognise that talking about “citizens of nowhere” might do more to repel middle-class voters than to attract working-class ones. The Labour Party is led by two Marxists: Mr Corbyn and John McDonnell, his shadow chancellor, who believe in the materialist interpretation of history. Yet they now preside over a coalition of voters defined overwhelmingly by their shared values.

The value of nothing
The fact that this was a values election is underlined by one of the many oddities of the contest: the absence of any role for business. Business has traditionally been one of the Conservative Party’s most loyal constituencies. The Tory party touts itself as the party of business, boasting of its record of low taxes, job creation and light-touch regulation, and the business community responds by strongly backing it. Not this time. The Tories borrowed most of Ed Miliband’s “business-bashing” ideas from Labour’s 2015 manifesto, including putting caps on energy prices, workers on boards and a ceiling on executive pay. Mrs May’s stinging dismissal of “citizens of nowhere” was directed as much at the Davos crowd as anybody. Business remained more or less silent—partly, no doubt, because nobody likes being bashed by their former allies but, more importantly, because British business is profoundly worried about Brexit. Mrs May’s insistence that immigration can be reduced to the tens of thousands and that no deal is better than a bad deal threatens to drive a wedge between the Tory party and its most loyal constituency.

The politics of values can be exciting. Values stir up emotions in ways that technocratic issues never do. But it can also be dangerous. The example of American politics over the past few decades is depressing. The culture wars have divided the country into tribes that won’t speak to each other. It has made it much more difficult—and sometimes impossible—to address pressing issues such as the Budget. And it has led to a decline in the quality of political life: the Republican Party’s enthusiasm for using cultural issues to recruit downscale voters has led inexorably to Donald Trump, a president who thrives on dividing the country and indulging in cheap demagoguery. Britain is taking its first steps down a dangerous path. [Blogger’s Note: No, these trends are the inevitable result of identity politics practiced by both parties but at the heart of the Left/Liberal parties.There is no compromise at the end of the road of identity politics and that is the tragedy for democracy we are witnessing today.]

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My comment:

First, the American “culture war” is a bit of a sideshow that started back in the 1960s, politically with the Great Society programs and the anti-war McGovernites redirecting the Democrat party of JFK. The thrust of this movement was to define the Democrats as a coalition of diverse identity groups: by race, ethnicity, gender, and sexual preference. Nixon’s targeting of the traditional South came after Johnson targeted urban minorities, promising that if they were going to vote, he wanted to be sure they voted Democrat despite the party’s “apartheid” history.

Second, what we see today is not really the inevitable extension of this “culture war,” but a bifurcation of democracy based on policy preferences associated with geography and household formation. This bifurcation is actually dividing us over the disparate effects of globalization, migration, and technology that is loosely associated with where one lives and how one fits into the digital information economy. Most obviously the division is between urban vs. rural/suburban communities and one can see this in the national voting patterns from 2000 onward.

Third, to perceive this accurately one must analyze voting at the county and congressional district level and compare it to demographic variables. What one finds is that 2/3s of the results can be explained by population density and household formation (married vs. not married). But classifying these differences as cultural often becomes a self-fulfilling prophecy and the urban media and political parties have promoted this divide-and-conquer narrative to gain eyeballs and win elections.

Finally, average citizens are starting to see through this charade and are voting against “politics as usual,” by registering their protests with the likes of Bernie Sanders, Donald Trump, Marine Le Pen, and James Corbyn. These candidates are not a cause, but a symptom of the deeper fissures mentioned above, which result from the malicious application of identity politics to a changing world. There is no compromise at the end of the road of identity politics and that is the tragedy for democracy we are witnessing today.

National Identity as a Force for Peace

The following is an excellent essay that gets to the heart of the current geopolitical turmoil. The basic conflict is between globalism and democratic national identity. Mr. Scruton puts it better than anyone else as to why we live under nation-state sovereignty and why it is a force for global peace. If peace and freedom depend on inclusion and democracy, then democracy depends on national identity and pride of country based on geography (and such patriotism is distinctly different from ‘nationalism.)

Since the article was not behind the WSJ’s pay-wall, I reprint it here in full:

The Case for Nations

The ‘we’ of the nation-state binds people together, builds an important legacy of social trust and blunts the sharp edges of globalization

By Roger Scruton

There is a respectable opinion among educated people that nations are no longer relevant. Their reasoning runs roughly as follows:

We live in an interconnected world. Globalization and the internet have created new networks of belonging and new forms of social trust, by which borders are erased and old attachments vaporized. Yes, we have seen the growth of nationalism in Europe, the Brexit vote in the U.K. and the election of the populist Donald Trump, but these are signs of reactionary sentiments that we should all have outgrown. The nation-state was useful while it lasted and gave us a handle on our social and political obligations. But it was dangerous too, when inflamed against real or imaginary enemies.

In any case, the nation-state belongs in the past, to a society in which family, job, religion and way of life stay put in a single place and are insulated against global developments. Our world is no longer like that, and we must change in step with it if we wish to belong.

The argument is a powerful one and was highly influential among those who voted in the U.K. referendum to remain in the European Union. But it overlooks the most important fact, which is that democratic politics requires a demos. Democracy means rule by the people and requires us to know who the people are, what unites them and how they can form a government.

Government in turn requires a “we,” a prepolitical loyalty that causes neighbors who voted in opposing ways to treat each other as fellow citizens, for whom the government is not “mine” or “yours” but “ours,” whether or not we approve of it. This first person plural varies in strength, from fierce attachment in wartime to casual acceptance on a Monday morning at work, but at some level, it must be assumed if we are to adopt a shared rule of law.

A country’s stability is enhanced by economic growth, but it depends far more upon this sense that we belong together and that we will stand by each other in the real emergencies. In short, it depends on a legacy of social trust. Trust of this kind depends on a common territory, resolution in the face of external threat and institutions that foster collective decisions in response to the problems of the day. It is the sine qua non of enduring peace and the greatest asset of any people that possesses it, as the Americans and the British have possessed it throughout the enormous changes that gave rise to the modern world.

Urban elites build trust through career moves, joint projects and cooperation across borders. Like the aristocrats of old, they often form networks without reference to national boundaries. They do not, on the whole, depend upon a particular place, a particular faith or a particular routine for their sense of membership, and in the immediate circumstances of modern life, they can adapt to globalization without too much difficulty. They will identify with transnational networks since they see those things as assets, which amplify their power.

We are in need of an inclusive identity that will hold us together as a people.

However, even in modern conditions, this urban elite depends upon others who do not belong to it: the farmers, manufacturers, factory workers, builders, clothiers, mechanics, nurses, cleaners, cooks, police officers and soldiers for whom attachment to a place and its customs is implicit in all that they do. In a question that touches on identity, these people will very likely vote in another way from the urban elite, on whom they depend in turn for government.

We are therefore in need of an inclusive identity that will hold us together as a people. The identities of earlier times—dynasty, faith, family, tribe—were already weakening when the Enlightenment consigned them to oblivion. And the substitutes of modern times—the ideologies and “isms” of the totalitarian states—have transparently failed to provide an alternative. We need an identity that leads to citizenship, which is the relation between the state and the individual in which each is accountable to the other. That, for ordinary people, is what the nation provides.

National loyalty marginalizes loyalties of family, tribe and faith, and places before the citizens’ eyes, as the focus of their patriotic feeling, not a person or a religion but a place. This place is defined by the history, culture and law through which we, the people, have claimed it as our own. The nationalist art and literature of the 19th century is characterized by the emergence of territory from behind religion, tribe and dynasty as the primary objects of love.

The national anthems of the self-identifying nations were conceived as invocations of home, in the manner of Sibelius’s “Finlandia” or the unofficial national anthem of England, “Land of Hope and Glory.” Even a militant anthem like “The Star-Spangled Banner” will take land and home as its motto: “the land of the free and the home of the brave.” It is our home that we fight for, and our freedom is the freedom of self-government in the place that is ours.

Liberals warn repeatedly against populism and nationalism, suggesting that even to raise the question of national identity is to take a step away from civilization. And it is true that there are dangers here. However, we in the Anglosphere have a language with which to discuss nationality that is not tainted by the bellicose rhetoric of the 19th- and 20th-century nationalists. When we wish to summon the “we” of political identity, we do not use grand and ideologically tainted idioms, like la patrie or das Vaterland. We refer simply to the country, this spot of earth, which belongs to us because we belong to it, have loved it, lived in it, defended it and established peace and prosperity within its borders.

Patriotism involves a love of home and a preparedness to defend it; nationalism, by contrast, is an ideology, which uses national symbols to conscript the people to war. When the Abbé Sieyès declared the aims of the French Revolution, it was in the language of nationalism: “The nation is prior to everything. It is the source of everything. Its will is always legal…. The manner in which a nation exercises its will does not matter; the point is that it does exercise it; any procedure is adequate, and its will is always the supreme law.” Those inflammatory words launched France on the path to the Reign of Terror, as the “enemies of the nation” were discovered hiding behind every chair.

But those who dismiss the national idea simply because people have threatened their neighbors in its name are victims of the very narrow-mindedness that they condemn. A small dose of evolutionary psychology would remind them that human communities are primed for warfare, and that when they fight, they fight as a group. Of course they don’t put it like that; the group appears in their exhortations as something transcendent and sublime—otherwise why should they fight for it? It goes by many names: the people, the king, the nation, God, even the Socialist International. But its meaning is always the same: “us” as opposed to “them.”

Divide a classroom of children into those wearing red pullovers and those wearing green and then make a few significant discriminations between them. You will soon have war between the reds and the greens. Within days, there will be heroes on each side and acts of stirring self-sacrifice, maybe in the long run a red anthem and a green. Red and Green will become symbols of the virtues and sacrifices of their followers, and—like national flags—they will acquire a spiritual quality, leading some to revere a cloth of red, others to burn that cloth in an act of ritual vengeance. That is not a reason for abolishing the color red or the color green.

Given this genetic narrative, should we not concede that war in defense of the homeland is more likely than most to end in a stable compromise? When the boundaries are secure and the intruder expelled, fighting can stop. Hence, when central Europe was divided into nation-states at the Peace of Westphalia in 1648, the European people breathed a great sigh of relief. Religion, they had discovered, far outperformed nationality when it came to the body count.

In the world as it is today, the principal threat to national identity remains religion, and in particular Islam, which offers to its most ardent subscribers a complete way of life, based on submission to the will of God. Americans find it hard to understand that a religion could offer an alternative to secular government and not just a way of living within its bounds. The First Amendment to the Constitution, they think, removed religion from the political equation.

But they forget that religions do not easily tolerate their competitors and might have to be policed from outside. That is why the First Amendment was necessary, and it is why we are fortunate that we define our membership in national rather than religious terms.

In states like Iran and Saudi Arabia, founded on religious rather than territorial obedience, freedom of conscience is a scarce and threatened asset. We, by contrast, enjoy not merely the freedom publicly to disagree with others about matters of faith and private life but also the freedom to satirize solemnity and to ridicule nonsense, including solemnity and nonsense of the religious kind. All such freedoms are precious to us, though we are losing the habit of defending them.

On the foundation of national attachment it has been possible to build a kind of civic patriotism, which acknowledges institutions and laws as shared possessions and which can extend a welcome to those who have entered the social contract from outside. You cannot immigrate into a tribe, a family or a faith, but you can immigrate into a country, provided you are prepared to obey the rules that make that country into a home. That is why the many migrants in the world today are fleeing from countries where faith, tribe or family are the principles of cohesion to the countries where nationality is the sole and sufficient step to social membership.

The “clash of civilizations,” which, according to the late political scientist Samuel Huntington, is the successor to the Cold War is, in my view, no such thing. It is a conflict between two forms of membership—the national, which tolerates difference, and the religious, which does not. It is this toleration of difference that opens the way to democracy.

Ordinary patriotism comes about because people have ways of resolving their disputes, ways of getting together, ways of cooperating, ways of celebrating and worshiping that seal the bond between them without ever making that bond explicit as a doctrine. This is surely how ordinary people live, and it is at the root of all that is best in human society—namely, that we are attached to what goes on around us, grow together with it, and learn the ways of peaceful association as our ways, which are right because they are ours and because they unite us with those who came before us and those who will replace us in our turn.

Seen in that way, patriotic feelings are not just natural, they are essentially legitimizing. They call upon the sources of social affection and bestow that affection on customs that have proved their worth over time, by enabling a community to settle its disputes and achieve equilibrium in the changing circumstances of life.

All of this was expressed by the French historian and philosopher Ernest Renan in a celebrated 1882 essay, “What Is a Nation?” For Renan, a nation is not constituted by racial or religious conformity but by a “daily plebiscite,” expressing the collective memory of its members and their present consent to live together. It is precisely for these reasons that national sentiments open the way to democratic politics.

It would be the height of folly to reject the “we” of nationality in favor of some global alternative or some fluctuating community in cyberspace. The task is not to surrender to globalization but to manage it, to soften its sharp edges, so that our attachments and loyalties can still guide us in exercising the thing that defines us, which is the sovereignty of the people, in a place of their own.

Mr. Scruton is a British writer and philosopher. His many books include, most recently, “Confessions of a Heretic” and “Fools, Frauds and Firebrands: Thinkers of the New Left.”

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.

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