War, US Hegemony, and Geopolitics

This article in Foreign Affairs by Robert Kagan addresses the current geopolitical crisis in historical context using the standard analysis of national security and international relations. However, I think Kagan misses the tail that wags the dog that will shape the near future of geopolitics. That would be the hegemonic role played by the US$, and by association with the C5 central banks in the West over the international monetary system.

Finance unleashes centripetal forces on the flows of capital, concentrating capital in the core of the market system, which, in the case of US$ policy, is the US financial system. All those dollars created over the past 30-40 years must flow back to the US in some way to be reinvested in US$ assets. What this does is suck capital from the periphery.

The capital-starved periphery has relied on the cheap cost of labor relative to the developed world, but about 35 years ago that began to be sucked up by China’s liberalized mercantilist trading policies. So the periphery has been starved of both capital and labor income. This leads to political strive and eventually to armed conflict along the borders of these periphery countries. In some cases, like Mexico, Afghanistan, and Columbia, it has led to failed democracies being transformed into narco-trafficking states run by criminal enterprises that control the governments of these countries.

Russia has been on the wrong side of this widening divide between rich and poor. So have countries like Iran, Iraq and North Korea. The continuation of US$ central bank easy credit policies and the CCP labor policies will only aggravate geopolitical conflict across the globe. And some will still wonder why. The global pandemic has merely thrown gasoline on the fire.

It’s also important to note that these two forces operate at the micro as well as national and international levels, causing a growing divide between the asset-rich and the asset-poor within nations as well as between nations. We’ve seen the imbalance grow in our own cities and communities between rich and poor. More billionaires, more poverty, and a hollowing out of the middle class. We can expect more conflict to come as the direct consequence of our misguided monetary, credit, and fiscal policies snd the Ukraine is just another canary in the coal mine.

The Price of Hegemony

Can America Learn to Use Its Power?

By Robert Kagan, May/June 2022

For years, analysts have debated whether the United States incited Russian President Vladimir Putin’s interventions in Ukraine and other neighboring countries or whether Moscow’s actions were simply unprovoked aggressions. That conversation has been temporarily muted by the horrors of Russia’s full-scale invasion of Ukraine. A wave of popular outrage has drowned out those who have long argued that the United States has no vital interests at stake in Ukraine, that it is in Russia’s sphere of interest, and that U.S. policies created the feelings of insecurity that have driven Putin to extreme measures. Just as the attack on Pearl Harbor silenced the anti-interventionists and shut down the debate over whether the United States should have entered World War II, Putin’s invasion has suspended the 2022 version of Americans’ endless argument over their purpose in the world.

The Progressive Paradox

Psychological studies show that people naturally resist change, largely because change is disruptive, increasing uncertainty and the risk of loss. Resisting change is a manifestation of our survival instincts. This individual psychology is reflected at the societal level: all societies naturally favor time-tested traditions that have helped them survive through evolutionary development. This means the natural bias of any society favors the stasis of the status quo.

Thus, we have the Progressive Paradox: the constant need to push against the natural conservative tendency of a free democratic society. Like Sisyphus, progressives must constantly push against the boulder of institutional inertia in an uphill battle. Then, whenever they take a brief respite, the boulder rolls back down to erase most of their gains. It becomes a frantic race against time and the expenditure of energy.

Article on Substack

Article on Medium

The Other

I find this book and its review oddly obtuse. The root cause remains mysterious? Perhaps the fact that these behaviors are documented across time, place, and culture might suggest a root cause in human nature? The author coins this as xenophobia, but that is not the accurate word because it suggests “otherism” is rooted in human psychology, whereas we observe the same behaviors in other species, especially those of pack animals like wolves, hyenas, and apes.

Instead I would attribute “otherism” to a natural survival instinct that sees the other as a possible threat, especially when the invasion involves rivalry over scarce resources. This would apply across many species that exhibit a sense of “insider vs. outsider” groups.

The difference with human society is that we aware of the moral implications of ostracizing or persecuting the “other” as fellow homo sapiens. We also have a multitude of characteristics we can use to differentiate groups, such as skin color, race, ethnicity, language, gender, cultural habits, etc. In fact, this multitude implies that our current obsession with race may not be the most important factor. I would guess that several of these characteristics coalesce around the nuances of cultural antipathy. In other words, it may not be skin color that matters most, it’s just the most obvious.

For example, a black male that attends Ivy League schools and works on Wall St. can assimilate easily into mainstream society and apparently can easily become President, whereas a black rapper who speaks urban dialect, sports tattoos, and sags his pants below his posterior has almost no chance of assimilating into the dominant cultural milieu, no matter how rich he is. This would apply on a less obvious scale to those, say, who cannot speak fluently the dominant language of a society.

The challenge for a diverse society is to manage the cultural conflicts that arise from our differences. These conflicts cannot be managed with platitudes and bromides about tolerance or focusing solely on chosen identities. Unfortunately this is where our author and reviewer end up: quoting polls about how people feel about national identity in Europe and the USA. It’s an odd comparison because the historical definition of being French or German is categorically different than being American. For centuries people’s identities were defined by where they were born into a dominant local culture. The American experiment is a complete departure from that because it is a land of immigrants (and involuntary servitude in the case of slavery). The true differences between indigenous tribes and European settlers is really a matter of when they arrived on the continent. The struggle for power dominance between insiders and outsiders is a global historical phenomenon, not just a North American one.

How can we meet this challenge of the “other” when globalization is turning us all into “others”? First, we must recognize that antipathy of the other is partly driven by fear, and the fear may very well be rational. Fear of Middle Eastern terrorists touting the conquering mission of Islam is not an irrational fear. An invasion of migrants across borders is a rational fear. The point being that rational fears can be overcome, but not by denying or condemning them.

Some have wrongly assumed that because nationalism can engender a negative attitude toward the other, the nation-state must be a detriment to peace and harmony. This is exactly wrong because nation-states with borders and defined governance are exactly what prevents chaos and conflict by defining the rights to scarce resources. It is why the nation-state has been so durable over the last 400 years. In this respect, One Worldism makes no sense and is a dangerous flirtation.

Second, as this idea of the nation-state suggests, we need to understand that a multicultural society can be detrimental to a free, democratic one. All communities develop and maintain cultural norms and values that make it easier to live together in peace. Accepting the dominant values of the society we live in is merely to understand this and not an impediment to celebrating one’s own cultural heritage. America has been more successful than other developed democracies because being American is not defined by skin color, or language, or race, but by the voluntary acceptance of the American credo of individual rights and freedoms. It is truly the melting pot. Anyone from anywhere in the world can adopt this spirit, even if they cannot transplant themselves. But this fact also underscores the importance of assimilation to the dominant values of a society’s culture, and the USA is no exception. In the USA we might classify these values according to constitutional principles of liberty, justice and law as well as according to commonly accepted behavioral norms. It does not mean surrendering to any “other’s” cultural heritage, but merely accepting those attributes easily assimilated without sacrificing our individual identities.

We can see that uncontrolled borders with uncontrolled waves of migrants only undermines the good will people harbor for embracing the other. It creates uncertainty and disruption to the stable societal norms and anxiety over scarce material resources. It also threatens the touchstones of national identity. Unfortunately, the southern border crisis is now something American society will have to manage and it is not helped by wrongly attributing the problem to systemic racism. This is merely a tragic fallacy. A free diverse society can embrace and has embraced a tolerant attitude toward newcomers, but the prudent pace of adaptation is crucial. No society can peacefully absorb a horde of migrants completely unassimilated to the cultural values and norms of that society. It only invites chaos and conflict.

One can only pray that our national leaders in Washington D.C. wake up to these realities.

‘Of Fear and Strangers’ Review: The Others

Many of history’s most nightmarish episodes are rooted in humanity’s propensity for hatred of ‘The Other.’ But the root cause remains mysterious.

wsj.com/articles/of-fear-and-strangers-history-xenophobia-book-review-the-others-11634912374October 22, 2021

By Adam Kuper Oct. 22, 2021 10:20 am ET

George Makari’s concern with xenophobia goes back to a childhood trauma. In 1974, at the age of 13, he was taken on a family visit to his parents’ native Beirut. Suddenly, the travelers found themselves caught in the midst of what would become a civil war. “To me, it was bizarre,” Dr. Makari recalls in “Of Fear and Strangers: A History of Xenophobia.” He continues: “All these bewildering sects were far more alike than different. All were Levantines who spoke the same dialect; all loved the same punning humor, devoured the same cuisine, abided by strict rules of hospitality, and approached any purchase as a three-act play: bargain, stage a walk-out, then settle. They were quick with proverbs and went agog when Fairuz sang. And yet, subtle distinctions in their identities now meant life or death.”

Of Fear and Strangers: A History of Xenophobia

By George Makari

W.W. Norton

Today, Dr. Makari, a psychiatrist, psychoanalyst and the director of Weill Cornell’s DeWitt Wallace Institute of Psychiatry, sees xenophobia as a threat to social peace, not only in the Middle East but also in Europe and North America, where recent political convulsions have been driven by a bristling hostility toward strangers and outsiders. Dr. Makari is clear that a lot of different impulses are often conflated here: “ethnocentrism, ultranationalism, racism, misogyny, sexism, anti-Semitism, homophobia, transphobia, or Islamophobia.” What might they have in common? “Is there any one term specific enough to not be meaningless, while broad enough to allow us to consider whatever common strands exist between these phenomena?” He thinks that there is: xenophobia. And if all these disorders are variants of the same affliction, then perhaps they have the same cause and might be susceptible to the same treatment.

Dr. Makari traces the invention of “xenophobia” to the 1880s, when psychiatrists came up with a variety of “phobias” apparently caused by traumatic experience. “Hydrophobia”—a fear of water—was an old term for rabies. There followed a rash of other phobias, from claustrophobia to my personal favorite, phobophobia—the fear of being frightened. (One commentator remarked that the number of phobias seemed limited only by an Ancient Greek dictionary.) Xenophobia entered a medical dictionary in 1916 as a “morbid dread of meeting strangers.

Like many psychiatric classifications, early definitions of xenophobia covered too much ground. What began as a psychiatric diagnosis would soon be used to describe the fury with which colonized populations often turned on settlers. These settlers, in turn, would be accused of xenophobia by the critics of colonialism, as waves of migrations in the years leading up to World War I provoked fears of a loss of national identity.



In the U.S., three confrontations between different segments of the population proved formative. The first pitted the Puritans, who were themselves refugees from religious persecution, against Native Americans. The second was the forced migration and enslavement of millions of Africans by descendants of the country’s European settlers. The third was provoked by the migrants, first from Europe, then from Asia, who arrived after the Civil War largely for economic reasons.

Dr. Makari notes that in 1860 60% of the white population in the U.S. was of British origin, while 35% were broadly classified as German. By 1914, after 20 million immigrants had passed through American ports, 11% of the white population had British roots, 20% German, 30% Italian and Hispanic, and 34% Slavic. The settled sense of identity enjoyed by established white American Protestants was threatened. There was, in particular, a panic about Chinese immigration, even though the number of arriving Chinese was relatively small. This led to the passage of the Chinese Exclusion Act in 1882, prohibiting the immigration of Chinese laborers. In 1892, 241 lynchings were recorded in America. Two-thirds of the victims were black; the remaining third were mostly Chinese and Italian. In 1908, the Harvard philosopher Josiah Royce asked: “Is it a ‘yellow peril,’ or ‘black peril,’ or perhaps, after all, is it not some form of ‘white peril’ which threatens the future of humanity in this day of great struggles and complex issues?”

Dr. Makari’s whirlwind historical survey tells a compelling story of racial and ethnic animosity, but he might have paid more attention to religious conflicts. Europe in the 16th and 17th centuries was torn by bloody wars between Catholics and Protestants, a feud that still festered in 20th-century Ireland. The Partition of India in 1947 was accompanied by violent Hindu-Muslim confrontations and the displacement of more than 10 million people. When communist Yugoslavia fell apart, Orthodox Christians and Muslims waged war in the Balkans. The Middle East is currently going through another cycle of Shiite-Sunni wars. Are these religious hatreds also to be considered xenophobia?

Then there are sometimes ferocious confrontations between political parties, or fratricidal quarrels between factions within parties. And what about all those brawling sports fans? So many apparently irrational fears and hatreds. Could they all possibly come down to the same psychic or social forces?

One idea is that there is something fundamentally human here. Early human groups competed for territory. All intruders were enemies. The more you feared and hated outsiders, the better your chances of survival. So xenophobia bestowed an evolutionary advantage. Sports fans are simply expressing inherited tribal instincts. Even babies are frightened by a strange face.

This is a popular one-size-fits-all explanation. But it is problematic. For one thing, anthropologists do not agree that constant strife was the norm during the 95% of human history when small nomadic bands lived by hunting and gathering. The Victorian anthropologist Edward Burnett Tylor said that early humans would have had to choose between marrying out or being killed out. When Europeans in the early 19th century made contact with surviving communities of hunter-gatherers, different bands were observed forming marriage alliances and trading partnerships that generally kept feuds from raging out of control.

In the aftermath of World War II and the Holocaust, however, a better explanation of mass hatreds was needed. The orthodox theory in American psychology at the time was behaviorism, which explained habitual attitudes and responses as the products of conditioning: Pavlov’s dogs salivated at the sound of a bell because they had been conditioned to recognize this as a cue for food. In the same sort of way, children are warned against strangers and so conditioned to fear others.

Less orthodox, but more influential in the long run, is the notion of projection. Each of us half-recognizes our shameful desires, infantile fears, aggressive impulses. Instead of dealing with them, we may accuse someone else of harboring those same feelings, cleansing ourselves by shifting the blame onto a scapegoat.

According to yet another analytic theory, the people most susceptible to collective paranoia are the children of strict and demanding fathers whom they feared and adored. Theodor Adorno, the lead author of the classic account “The Authoritarian Personality,” wrote that the typical subject “falls, as it were, negatively in love.” Cowed by the father-figure, he is masochistically submissive to authority and sadistically takes out his anger on the weak.

These psychoanalytic theories all seek to explain the personal traumas and particular pathologies of individuals. But how do whole populations come to share common anxieties and antipathies? In 1928, the sociologist Emory Bogardus published the landmark study “Immigration and Race Attitudes.” One of its disconcerting findings was that the most widely disliked people in the U.S. at the time were “Turks.” Though very few Americans had actually encountered a member of that group, they had heard about them. And what they had heard about was the massacre of Armenians in Turkey after World War I, which was presented in the press as a slaughter of Christians at the hands of Muslims.

It was this power of the media to shape popular sentiment that the journalist Walter Lippmann came to dread. An early supporter of American involvement in World War I, Lippmann had joined the Inter-Allied Propaganda Board in London. In 1922 he published “Public Opinion,” his study of “how public opinion is made.” In it, he borrowed a term from the printing press: stereotype. We all share ready-made ideas that facilitate snap judgments about people and situations. These stereotypes are crude but may be useful in a pinch. They save time and trouble.

Effective propaganda weaponizes stereotypes. Lippmann’s work inspired Sigmund Freud’s American nephew Edward Bernays, who set up the first public relations business. Bernays in turn influenced Joseph Goebbels, who made terrible use of his ideas. Social media now serves up propaganda on steroids.

Yet surely not everyone is gulled—at least not all the time. How then to explain what is going on when strangers are demonized? Dr. Makari suggests that some combination of these psychological and sociological theories may be cobbled together to guide our thinking. This is probably the best that we can manage at present. What then can be done to limit the damage? Here Dr. Makari is less helpful. He suggests that all will be well if society becomes more equal, open and informed. He might as well add that social media should be better regulated, and the public better equipped for critical thought. Failing that, we may have to relive these nightmares of collective hatred again and again for a long time to come.

Yet there are grounds for hope. A study released in May this year by the Pew Research Center reported that conceptions of national identity in the U.S. and Western Europe have recently become more inclusive. Compared with 2016, “fewer people now believe that to truly be American, French, German or British, a person must be born in the country, must be a Christian, has to embrace national customs, or has to speak the dominant language.” This may suggest that xenophobia waxes and wanes with recent events, and that politicians can fan or tamp down outbreaks of public fear and fury. Wise and prudent leaders really might spare us a great deal of trouble.

—Mr. Kuper, a specialist on the ethnography of Southern Africa, has written widely on the history of anthropology.

Copyright ©2021 Dow Jones & Company, Inc. All Rights Reserved. 

Do We Need a Social Welfare State?

One must evalulate all the trade-offs.

The following article in today’s NY Times asks the provocative question of whether we can afford a major shift to a social welfare state. One must also ask if the USA needs such a level of social welfare spending and what trade-offs it might impose. This is a question that must be answered through the democratic political process because the economic trade-offs are real.

See comments in RED.

Can America Afford to Become a Major Social Welfare State?

nytimes.com/2021/09/15/opinion/biden-spending-plan-welfare.html

By N. Gregory Mankiw

September 15, 2021

In the reconciliation package now being debated in Washington, President Biden and many congressional Democrats aim to expand the size and scope of government substantially. Americans should be wary of their plans — not only because of the sizable budgetary cost, but also because of the broader risks to economic prosperity.

The details of the ambitious $3.5 trillion social spending bill are still being discussed, so it is unclear what it will end up including. In many ways, it seems like a grab bag of initiatives assembled from the progressive wish list. And it may be bigger than it sounds: Reports suggest that some provisions will arbitrarily lapse before the end of the 10-year budget window to reduce the bill’s ostensible size, even though lawmakers hope to extend those policies at a later date.

People of all ages are in line to get something: government-funded pre-K for 3- and 4-year-olds, expanded child credits for families with children, two years of tuition-free community college, increased Pell grants for other college students, enhanced health insurance subsidies, paid family and medical leave, and expansions in Medicare for older Americans. A recent Times headline aptly described the plan’s coverage as “cradle to grave.”

If there is a common theme, it is that when you need a helping hand, the government will be there for you. It aims to assist people who are struggling in our rough-and-tumble market economy. On its face, that instinct doesn’t sound bad. Many Western European nations have more generous social safety nets than the United States. The Biden plan takes a big step in that direction.

Can the United States afford to embrace a larger welfare state? From a narrow budgetary standpoint, the answer is yes. But the policy also raises larger questions about American values and aspirations, and about what kind of nation we want to be.

The issue Prof. Mankiw addresses here is the question as to whether the costs of such programs yield the benefits desired. There is a lot of talk on the left that Modern Monetary Theory demonstrates that deficits don’t constrain government spending so that politicians should spend what’s needed to achieve whatever objective they choose. This is a bit of wishful fantasy. What matters economically and financially is whether such spending yields a greater return in terms of freedom and quality of life for society as a whole. If such spending merely increases the deficit but does not invest in the productivity of the economy, then it is a dead weight upon society. It’s not much different than one’s personal desire to choose between buying a new car or instead investing in education. One must compare how each choice will yield in terms of financial freedom and happiness over the longer term.

The Biden administration has promised to pay for the entire plan with higher taxes on corporations and the very wealthy. But there’s good reason to doubt that claim. Budget experts, such as Maya MacGuineas, president of the Committee for a Responsible Federal Budget, are skeptical that the government can raise enough tax revenue from the wealthy to finance Mr. Biden’s ambitious agenda.

The United States could do what Western Europe does — impose higher taxes on everyone. Most countries use a value-added tax, a form of a national sales tax, to raise a lot of revenue efficiently. If Americans really want larger government, we will have to pay for it, and a VAT could be the best way.

The costs of an expanded welfare state, however, extend beyond those reported in the budget. There are also broader economic effects.

Arthur Okun, the former economic adviser to President Lyndon Johnson, addressed this timeless issue in his 1975 book, “Equality and Efficiency: The Big Tradeoff.” According to Mr. Okun, policymakers want to maximize the economic pie while slicing it equally. But these goals often conflict. As policymakers attempt to rectify the market’s outcome by equalizing the slices, the pie tends to shrink.

Mr. Okun explains the trade-off with a metaphor: Providing a social safety net is like using a leaky bucket to redistribute water among people with different amounts. While bringing water to the thirstiest may be noble, it is also costly as some water is lost in transit. 

In the real world, this leakage occurs because higher taxes distort incentives and impede economic growth. And those taxes aren’t just the explicit ones that finance benefits such as public education or health care. They also include implicit taxes baked into the benefits themselves. If these benefits decline when your income rises, people are discouraged from working. This implicit tax distorts incentives just as explicit taxes do. That doesn’t mean there is no point in trying to help those in need, but it does require being mindful of the downsides of doing so.

Yes, we must reconcile the trade-off, but I would also characterize it as freedom and liberty to pursue one’s personal happiness versus the promise of individual economic security promised by the collective. The fulfillment of that promise is often costlier than anticipated and the benefits disappointing.

Which brings us back to Western Europe. Compared with the United States, G.D.P. per person in 2019 was 14 percent lower in Germany, 24 percent lower in France and 26 percent lower in the United Kingdom.

Economists disagree about why European nations are less prosperous than the United States. But a leading hypothesis, advanced by Edward Prescott, a Nobel laureate, in 2003, is that Europeans work less than Americans because they face higher taxes to finance a more generous social safety net.

In other words, most European nations use that leaky bucket more than the United States does and experience greater leakage, resulting in lower incomes. By aiming for more compassionate economies, they have created less prosperous ones. Americans should be careful to avoid that fate.

The point of course, is not that leisure time is undesirable but that people can choose how they invest their time and energy, rather than have state policy reward or penalize that choice arbitrarily. In a free and just society, this choice should be left to the individual. Liberty and security are not mutually exclusive goals.

Compassion is a virtue, but so is respect for those who are talented, hardworking and successful. Most Americans descended from immigrants, who left their homelands to find freedom and forge their own destinies. Because of this history, we are more individualistic than Europeans, and our policies rightly reflect that cultural difference.

That is not to say that the United States has already struck the right balance between compassion and prosperity. It is a continuing tragedy that children are more likely to live in poverty than the overall population. That’s why my favorite provision in the Biden plan is the expanded child credit, which would reduce childhood poverty. (I am also sympathetic to policies aimed at climate change, which is an entirely different problem. Sadly, the Biden plan misses the opportunity to embrace the best solution — a carbon tax.)

But the entire $3.5 trillion package is too big and too risky. The wiser course is to take more incremental steps rather than to try to remake the economy in one fell swoop.

Actually, I would suggest that the choice between liberty and security is a false one and the assumption that security can only be secured for the individual by the state to also be false. The leftist assumption is that the state has to intervene to redistribute wealth after the fact when instead we can design policies that empower citizens to join in the distribution of that wealth by participating in the risk-taking venture before the fact. Then the distribution of resources in society will mostly take care of itself. As it is now, and with this social welfare expansion, we prevent most individuals who need to participate from participating, forcing them to depend on the largesse of the state or the dictates of the market. This is hardly optimal in the search for liberty and justice. In light of my preference to preserve my liberty and take care of my own security, my answer to Prof. Mankiw’s question would be NO.

N. Gregory Mankiw is a professor of economics at Harvard. He was the chairman of the Council of Economic Advisers under President George W. Bush from 2003 to 2005.

Modern Monetary Fantasies 2

The Myth of Big Government Deficits – A TED Talk

This is quite the tale. I’m sure Ms. Kelton studied her economics but here with MMT she takes a few basic truths and spins an elaborate fantasy. Essentially her argument is that debt is no obstacle to economic policy and economic outcomes. You want a Ferrari? No problem, the Fed can write a check and it’s yours, no taxes, no worries. Advocates will hate this simplification but that’s essentially what Ms. Kelton is selling. (You can substitute free healthcare, free college, whatever you want, but I’d go with the Ferrari 365GT.)

MMT is utopian economics. Yes, in theory it can make sense, just don’t go too far down that rabbit hole. Govt debt is not like private debt because it never has to be paid back, only serviced and rolled over. So the debt in $ terms doesn’t matter, but the productivity of that debt matters a lot (the debt to GDP ratio is a good indicator – it looks worse every day).

She lauds the pandemic stimulus because that essentially was an MMT experiment. Look, no recession! But recessions are measured in monetary terms (not value), and if the Fed keeps pumping out money, voila! No recession. But value creation matters and in value terms, we are suffering an extreme recession and stagflation. How many small businesses have closed in the past 2 years? How much price inflation are we experiencing? 5-9%? Have you tried to buy a house lately? 20% price increases. Tried to get a plumber or electrician?

Yes, when the government spends $28 trillion, that money goes somewhere in the private sector. And yes, we’ve seen it skimmed off by the banking industry, the asset-rich who have merely leveraged 3% debt, and the securities markets that have bubbled up even as production has declined. This is what is driving inequality to new heights as the global elites suck up this cheap credit courtesy of the central banks. Check out the number of mega yachts plying the oceans.

Yes, we’ve seen the fantasy of MMT in action and that’s why we’re having a political revolution. Kelton and the handful of economists selling MMT are assuming a utopian political world where everybody always does the right thing. Ultimately, intellectual dishonesty like this is extremely damaging.

Read her book, there’s nothing there that will address these false assumptions. Credit and debt are tools that the market uses to restrain profligacy. Without those restraints, the party will eventually implode.

Afghanistan and the Politics of National Security

To Stop War, American Needs a Third Party

by Matt Taibbi, Substack

For the past few years I haven’t read much from Matt Taibbi to disagree with, as he has done a masterful job exposing the degeneracy of our political and cultural elites. I would agree here with the gist of his criticisms of bipartisan foreign policy and national security policy that has resulted in a long series of futile small war engagements.

However, I do fail to see the connection between war and political party systems he draws out in his title. Perhaps he is a bit unclear himself of the connection as he doesn’t really present the case as a solution, only that our two-party system is part of the problem. Basically he argues our two parties have failed and are corrupt (agreed), but then unconvincingly suggests maybe a third party is the solution. But I can’t find either internal logic or empirical history supporting the case for multiparty systems solving the national security dilemma, even while conceding Eisenhower’s warning concerning the Military Industrial Complex as a real danger. The solution to corrupt politics is to clean out the corruption through the voting process and, if necessary, through the checks of the judicial branch.

To review recent history, no multiparty democracy in the post-war world has satisfactorily solved the security dilemma without becoming dependent on the bipolar great power conflict between the USA and the former USSR. Even after the 1989 demise of the Soviet Bloc, the hegemonic dominance of US continued to provide a convenient security umbrella for European democracies, as well as many developing countries around the world. One must merely offer tacit submission to US global interests to have the US military do all the heavy lifting while the US taxpayer picks up the bill.

This convenient arrangement started to unravel as the global system became unipolar while the rest of the world began to catch up economically during Pax Americana. The cost of hegemony has continued to rise as the US$-centered global monetary system has undermined global trade flows and fundamental prices in asset markets. The liberalization of India and China has also contributed heavily to this transformation of global trade by shifting the global mix of capital and labor. What we have seen in the frequent mismanagement of global conflict by US hegemony has been, as Taibbi notes, an exercise in managing peace rather than decisively ending conflict. As Taibbi notes, one does not wage war for any other reason than to win by vanquishing one’s enemy. There is no polite, dignified way to do this and better not to start a war than to try to manage it over time.

Taibbi’s forlorn hope seems to be like that of Immanuel Kant, who believed democracies do not wage war against each other, so a world characterized by free democracies would ensure everlasting peace. History has proven otherwise as democracies are just less likely to initiate wars, but they are always drawn into them. We have not seen the End of History.

But this brings us to the suggested salve of multiparty systems, which are somewhat analogous to a multipolar international security system. Multipolar systems rely on configurations of alliances and these alliances must be trustworthy. Allies must be willing to commit to the alliance and absorb their share of the costs. This is a radically different dynamic than hegemony, where the big dog takes care of everything in return for obeisance. It is also radically different than bipolarity, which is what a two-party system is.

The USA is no longer the global hegemon because its leaders have not promoted the necessary commitments from the voting populace, and so the American public has moved away from supporting such a role. Remember, President George W. Bush maintained that we could fight the Afghan and Iraq wars without distracting ourselves from shopping at the mall. In other words, zero commitment from anyone, save those who volunteered to be on the front lines. This lack of commitment to assume the costs of global stability permeates US society today, from national politics to the financial sector to our cultural and educational institutions. It was reflected in President Trump’s desire to disengage from the Middle East. What should concern us, and Taibbi, is how global monetary hegemony of the US$ is destabilizing the global economic system, leading to more conflict at the periphery. US monetary policy, in coordination with the 4 other C5 central banks is creating massive inequalities between US$ holders and everyone else. The elite oligarchs of the world benefit from US$ portfolios, but their citizens do not and they will become increasingly restless and combative. There is no global policeman, so the world will become a more dangerous place in the absence of US hegemony.

A third-party in US politics can do nothing to reverse this trend toward irresponsible national policies in a multipolar world. And a multiparty electoral system is just as unstable as a multipolar global security system. It relies on fragile coalitions that give disproportionate power to minority parties that can tip the balance. On the other hand, a two-party system is quite effective in stabilizing a diverse, multi-ethnic, multi-racial pluralistic democratic society, albeit with certain trade-offs. Those trade-offs for stability include resistance to change and political sclerosis. But this is a crucial and deliberate element inherent to the overall design of our constitution to prevent passing populist fads from changing our form of self-government. I would be loathe to throw out national stability for the unwarranted hope of convergence on international comity. Instead, in a multiparty system we would expect the instability of comparable historical cases like post-war Italy, India, Indonesia or Brazil. A global superpower can hardly afford those kinds of risks.

I find Taibbi’s criticisms of our political leaders, our foreign policy bureaucracies, and our military-industrial complex to be on the mark. I sincerely doubt a third party solves any of these problems, but we will never find out because the logic of the two-party electoral system supersedes any argument against it for myriad reasons. Paramount is that national stability is a necessary precondition for good government, continuity, and preservation of the union. We’ve had dozens of third party movements in US history and the only ones that have been successful have been those rare moments when a new party replaces one of the two that has been rejected by the voters. The US electoral system favors reform from within the major parties by holding elected politicians to a higher standard and by removing them from office when necessary. The Republican party accomplished much of this house-cleaning in 2016, but the Democratic party is still conflicted over its future path.

It should be added that to reduce the risks of national politics we should devolve as much power away from the central government back to the states, counties, municipalities and individuals where it belongs. The central government was designed to coordinate democratic self-rule, not overrule.

But what we really need is a much broader understanding of our loss of political and financial integrity. What we need is another Greatest Generation on the horizon that recognizes good and evil and is willing to take a stand.

Journalistic Integrity or Just Plain Dumb?

If the Wuhan lab-leak hypothesis is true, expect a political earthquake

This incredible article is by Thomas Frank, a respected journalist and author (What’s the Matter With Kansas? – an exercise in urban political myopia) who is a well-educated and well-read member of the liberal urban media. Here’s an excerpt of his political touchstones:

Like everyone else I know, I spent the pandemic doing as I was told. A few months ago I even tried to talk a Fox News viewer out of believing in the lab-leak theory of Covid’s origins. The reason I did that is because the newspapers I read and the TV shows I watched had assured me on many occasions that the lab-leak theory wasn’t true, that it was a racist conspiracy theory, that only deluded Trumpists believed it, that it got infinite pants-on-fire ratings from the fact-checkers, and because (despite all my cynicism) I am the sort who has always trusted the mainstream news media.

[Ah, yes, it’s Trump’s fault. LOL.]

If an individual whose entire career and livelihood is wrapped up in ‘getting it right’ is so easily misled by our dominant media sources, what hope is there for the rest of us who have better things to do? Now he’s wondering if he’s gotten it all wrong and the larger consequences.

This is the problem with the urban corporate media that started to seriously degenerate after the 2000 election. But we have also learned how it started long before, as alternative media such as cable news, Talk Radio, and the Internet have presented an existential financial challenge for traditional media outlets, especially print newspapers and broadcast news.

Mr. Frank and his colleagues in corporate media (NYT, WaPo, LAT, Fox) need to undergo a serious bit of soul searching to discover if they have a role as the Fourth Estate in our information economy, or if they should just go pursue a career in real estate somewhere. Journalists today have to understand that nobody is going to hero worship them as the modern-day Woodward and Bernstein. Honest journalism and reputational capital is it’s own reward and can actually be lucrative on platforms like SubStack.

So here is what Frank has discovered:

  •  Lab leaks happen. They aren’t the result of conspiracies: “a lab accident is an accident,” as Nathan Robinson points out; they happen all the time, in this country and in others, and people die from them.
  •  There is evidence that the lab in question, which studies bat coronaviruses, may have been conducting what is called “gain of function” research, a dangerous innovation in which diseases are deliberately made more virulent. By the way, right-wingers didn’t dream up “gain of function”: all the cool virologists have been doing it (in this country and in others) even as the squares have been warning against it for years.
  •  There are strong hints that some of the bat-virus research at the Wuhan lab was funded in part by the American national-medical establishment — which is to say, the lab-leak hypothesis doesn’t implicate China alone.
  •  There seem to have been astonishing conflicts of interest among the people assigned to get to the bottom of it all, and (as we know from Enron and the housing bubble) conflicts of interest are always what trip up the well-credentialed professionals whom liberals insist we must all heed, honor, and obey.
  •  The news media, in its zealous policing of the boundaries of the permissible, insisted that Russiagate was ever so true but that the lab-leak hypothesis was false false false, and woe unto anyone who dared disagree. Reporters gulped down whatever line was most flattering to the experts they were quoting and then insisted that it was 100% right and absolutely incontrovertible — that anything else was only unhinged Trumpist folly, that democracy dies when unbelievers get to speak, and so on.
  •  The social media monopolies actually censored posts about the lab-leak hypothesis. Of course they did! Because we’re at war with misinformation, you know, and people need to be brought back to the true and correct faith — as agreed upon by experts.

With this we get Mr. Frank’s revelation:

If it does indeed turn out that the lab-leak hypothesis is the right explanation for how it began — that the common people of the world have been forced into a real-life lab experiment, at tremendous cost — there is a moral earthquake on the way.

Because if the hypothesis is right, it will soon start to dawn on people that our mistake was not insufficient reverence for scientists, or inadequate respect for expertise, or not enough censorship on Facebook. It was a failure to think critically about all of the above, to understand that there is no such thing as absolute expertise. 

Yeah, no kidding. And that’s a bad thing? It’s doubly ironic that most of the voices haranguing us to “follow the science” were really constraining true science. Critical thinking is merely what real scientists have been telling us all along, as opposed to those succumbing to “political” science. There are no absolutes in science, only skepticism and hypothesis testing – this applies to the pandemic as well as climate change and systemic racism and Modern Monetary Theory. And mea culpas won’t save journalists from the anvils of “I told you so’s” that will rain down upon their heads.

The UnFree

I’ve been watching a bit of the original TV miniseries on Amazon, The Underground Railroad, because I always enjoy learning something new and interesting from historical narratives. Just today I read this article on The Conversation which is a nice review of the motivations and intentions of the writers and director. It also provoked some thoughts I’ll share here.

The Conversation – The Underground Railroad

I was struck by the following quotes about the director’s intention to present “slaves not as objects who were acted upon, but as individuals who maintained identities and agency – however limited – despite their status as property.”

The reviewer goes on to say,

In the past three decades there has been a movement among academics to find suitable terms to replace “slave” and “slavery.”

In the 1990s, a group of scholars asserted that “slave” was too limited a term – to label someone a “slave,” the argument went, emphasized the “thinghood” of all those held in slavery, rendering personal attributes apart from being owned invisible.

This makes perfect sense and should seem obvious. However, I believe the misuse or overuse of the label “slavery” has happened through associating it solely with the African/American experience, whereas enslavement has been inflicted upon many individuals and peoples across the world and across history. For sure, this docudrama is a narrative of the experience of black slaves on the North American continent, but its universalism should not be lost in that singular application.

I have emphasized the ideas of personal “identities and agency” in bold text above because this is really what applies to all people regardless of race or ethnicity. It also struck me that the appropriate term we are looking for is “The Unfree.” Every individual and oppressed group can relate to the idea of being unfree, if not enslaved. When you are unfree, you are deprived of free choice, free will, free agency, and the outward self-dignity imbued in that truest sense of human freedom. Historically and currently this condition is usually the result of a gross imbalance of power and a certain pathology of those who impose their unequal power over others. The history of the unfree applies to the ancient story of Spartacus, as well as any employee today preyed upon by an unreasonable boss.

This status of the unfree also highlights the fundamental condition of human identity, which is freedom. Freedom is what delineates our identities and personal agency in our lives, and it is sufficient in itself. In recent decades this truth has been twisted a bit to suggest that our chosen identities establish and signal our freedom, when actually it is only our freedom that helps guarantee the free and open expression of our identities. For example, one can assert one’s identity as “non-binary,” and the freedom of self-expression under the law defends the right to whatever that might be, but one cannot force others to use the preferred pronoun, that is not within the power of the state or any other entity without violating the basic tenets of freedom.

This is important because politics can intervene with laws and enforcement to guarantee our freedoms, but it cannot define or defend our personal identities or our self-dignity. As The Underground Railroad narrative demonstrates, slavery could not deprive the unfree slaves of their identities and their self-dignity, unless the individual allowed it. The oppressors can take away physical freedom, humiliate, and even impose a death sentence, but they cannot take away the freedom to think freely and the self-dignity of the oppressed. We witness these truths again and again in the stories of Holocaust and Gulag survivors.

It is also interesting to note that ideologically the primacy of freedom as a value tends to delineate today’s liberals and conservatives, as noted by Jonathan Haidt in his studies of political identity. Liberty is the primary moral value to those who identify on the right, while fairness and human caring are the dominant values asserted by many on the left. Leftists might argue that one cannot be free in an unfair society, but that only means we have to focus on freedom as a precondition to fairness. The issue of slavery the unfree, in universal world history as well as African American history, should enlighten us to the primary ordering of moral values: one cannot have fairness without the precondition of freedom, and without the precondition of freedom, fairness has no meaningful relation to our concepts of justice. (Unfortunately, this only hints at another discussion on the differences between fairness and justice, and the unnecessary qualifiers applied to the universal singular idea of moral justice.)

Lastly, this rich portrayal of the unfree escaping the bonds that defined them by preserving and expressing their self-dignity and personal agency provides the correct lesson on the true legacy of the American experiment – not that one group of our fore-bearers oppressed another, but that they both evolved under a constitutional system of laws to continue to progress toward a society of true liberty and justice for all. We have not arrived, but we are on the right track.

Certain Uncertainty

Uncertainty is the nature of the universe. Get used to it.

Change is the only constant.

Those are far more profound statements than they appear to most people. Once we introduce time into the three-dimensional realm of space and matter, change is inevitable and with change we get the unpredictable nature of the future. Mankind is merely a bystander in this universe of uncertain change and it’s really the puzzle that has confounded the most brilliant minds in history: from Ptolemy to Copernicus to Einstein to Hawking.

The puzzle becomes more salient when we realize how uncertainty has shaped natural biology with biodiversity, adaptation, and the survival instincts that help species perpetuate in an uncertain environment of constant change. Humans are different only in that we are cognitively aware of the uncertainty. Together with our naturally endowed survival instincts, this awareness helps determine our behavioral adaptations. It applies to individual behavior and aggregate social behavior.

The social sciences, especially economics and finance, have now started to focus on this uncertain nature of the universe and how it determines how we cohere and interact in social communities characterized by economic exchange and social and political organization.

We can perhaps appreciate the extent that uncertainty infuses our lives by noting its influence on shaping our cultures and institutions. Religion, for example, is a faith-based belief system that not only shapes social behavior through doctrine, but also offers succor through prayer for the fears that uncertainty provokes. Modern democratic government has been called upon to manage the societal and economic risks of uncertainty through social insurance programs for retirement and healthcare, welfare, income maintenance, environmental risk and national defense.

A few authors have explicated a world characterized by uncertainty, most notably Nassim Nicholas Taleb with his compendium of books, including The Black Swan and Antifragile, as well as John Kay and Mervyn King with their collaboration, Radical Uncertainty.

I highly recommend these books, along with Peter Bernstein’s classic, Against the Gods. These frameworks for analysis help us understand the nature of uncertainty, risk and reward, and the imperatives of risk and loss aversion. Then we can decide how best to manage its inevitable effect on our lives.

Link to an excellent podcast of a symposium at the London School of Economics with the two authors of Radical Uncertainty:

https://www.lse.ac.uk/lse-player?id=4867