Friday, April 24, 2020

The Evening Years of Empire

The Coronavirus is not going to fulfill the daydreams of anti-imperialist pundits and put an end to the current global order. But it will pack several years worth of ordinary decline into a single year. Then, the normal course of events will resume.
If you’ve looked at the US debt clock anytime in the last month or so, you might have noticed something different about it. Normally, while the debt goes up, the GDP goes up nearly as fast, so that their ratio (the number that really matters) increases by at most two or three percent per year.

I’ve talked before about how this is largely the result of the powers that be inflating the currency to cover up a two-decade-long decline in the size of the real economy. Nevertheless, it gets the job done – the nominal economy grows fast enough to keep the debt from getting out of hand, and the system plods onward.

But now, with the Coronavirus shutdown in full swing, spending is way higher than usual, and GDP is decreasing, so we can expect Washington to close out the year with a debt-to-GDP ratio of about 130 percent (for comparison, it was around 112 percent this January).

Will this crash the global economy? Not by a long shot. (Remember all the people who looked at the trillion-dollar-deficits during Obama’s first term and said that hyperinflation was just around the corner? Well, they were wrong).

What this really means is just that five or six years of ordinary decline have been packed into one year of virus-boosted decline.

To look at another side of America’s rolling crisis, lots of people are predicting that the record-high unemployment rate in America will lead to record numbers of suicides and overdose deaths by the end of the year. But Americans, especially poor whites, already had dreadfully high rates of deaths of despair. That’s what you get in deindustrialized economy where imports are paid for through the exportation of huge amounts of fiat money – there just isn’t a good market for real, honest labor. The Coronavirus is only speeding things up.

At the bottom of all the news that’s coming our way this year is a rather unpleasant fact: declining empires handle crises poorly.

Why is the United States an empire? Because it consumes more resources than it produces. Why do so many people not believe it’s an empire? Because it hasn’t adopted the costly strategy of conquering huge parts of the world and administering their territory directly. The American elite has found it more effective to control the global financial system, hold sole authority to print the global currency, and pull off the occasional coup or invasion in an oil-rich country whose policies don’t favor American interests. (Think Iran in 1953, Iraq in 2003, Libya in 2011, or Syria and Venezuela today).

Remember the Ledeen Doctrine“Every ten years or so, the United States needs to pick up some small crappy little country and throw it against the wall, just to show the world we mean business.”

Well, America’s ability to pick up crappy little countries is melting away these days. The Venezuela coup was indecisive. The Syria war ended with Russia, Turkey, and Hezbollah sitting at the negotiation table. And so forth.

Two days ago, Iran launched its first military satellite. People like Mike Pompeo want to make this look like practice for building a nuclear ICBM; in reality, the satellites themselves will be the last major piece missing from Iran’s defensive armament. The Iranians already have hypersonic cruise missiles, and with the ability to track targets from space, the Americans will have no choice but to clear their navy out of the region whenever tensions flare up.

The ultimate guarantor of American dominance – the global demand for dollars – remains in place for now. But even there, the empire is sawing out its own perch. Trade sanctions (basically, America’s de facto power, as the world’s one sovereign nation, to regulate commerce between all other nations) are easier to enforce when said nations use American money, which is why so many countries are beginning the transition from dollars to Yuan.

It will take a while – two or three decades, mostly likely – before the dollar has been displaced. After that, America will face a steep rise in the cost of imports, and severe inflation as dollars are sent home from every corner of the world. In short, we will have to deal with an economic meltdown like we haven’t seen since the Great Depression.

After another decade or two of turmoil, America or its successor states will clamber their way back to normalcy. Who will benefit from this? The American working man. In a country where imports have to be paid for by an equal value of exports, there is no outsourcing of jobs. The people on top will likely never have it as good as they do now, but the people on the bottom will find that their skills are in much higher demand in a country that isn’t flooded with cheap imports and swarming with foreign laborers.

But it will be a long, rough road between here and there, and we had better get to work preparing for it.
  

Sunday, April 19, 2020

Anetocracy: The Rule of the Comfortable Classes

Support for a yearlong Coronavirus shutdown comes from one source: people who are wealthy enough that they have little to lose by staying in their houses indefinitely. Unfortunately, these people have way too much influence in America these days.
The dominant theme of the last three or four weeks of news in the United State has been the debate over when the country should open back up from the various Coronavirus lockdowns. The debate hasn’t really gotten anywhere, because both sides have something to be upset about. On the one hand, the virus definitely isn’t under control yet. On the other, people are also vaguely aware that staying unemployed indefinitely is probably a bad idea.

As is normal for big news items these days, the Democrats and the media soon found themselves shuffling over to whatever positions looked like suitable high ground from which to cast aspersions on President Trump. (If you had looked at our politics ten years ago, you never would have guessed that “Russian asset” would be the Democrats’ preferred insult, not only for Republicans, but also for each other. But I digress).

So naturally, the media are going to have a heyday with presidential statements like this one:

“Don't forget the doctors,” Trump said. “If it were up to the doctors they may say, ‘Let's keep it shut down, let's shut down the entire world.... And when we shut it down, that'd be wonderful, and let's keep it shut for a couple of years.’”

“A couple of years,” may be an exaggeration, but if you look on the internet you can find plenty of opinion pieces by doctors arguing that the shutdown needs to remain in place until at least the end of 2020. It’s usually presented as a ‘needs to’ thing, without any discussion of costs versus benefits. (Hint: Anytime that one side of a debate acknowledges the existence of trade-offs, and the other side just says, ‘we must do such and such, you’re generally better off listening to the first side).

Back to Trump’s tirade. If you are a (wealthy) Democrat, the meaning is obvious: Donald Trump is an ignorant buffoon with little respect for the expertise of people who have spent decades studying and practicing medicine, and little concern for protecting human life.

But what’s also quite obvious is that Donald Trump didn’t appeal to wealthy Democrats in order to win his election. The new waves of voters that he brought into the Republican party were mostly poor and middle-class workers who were struggling to get by and had come to see that, despite all its social justice cant, the Democratic party didn’t really care about them.

In short, they voted for Trump because they were fed up with the Anetocracy. (If you haven’t heard of that word, it’s because I just invented it. It comes from the Greek ‘anetos,’ meaning ‘comfort.’ I define it as the rule of the comfortable classes).

Who are the comfortable classes? Well, they’re the people who can work from home, or, if they can’t, are at least wealthy enough to go without a paycheck for a few months. They’re the people who don’t have to worry about much beyond what to watch on Netflix and whence to order takeout.

(Note: My entire family is part of the comfortable classes. Thought I am not wealthy, I have wealthy parents. So even though I’m not happy about having to come home from university and give up my job tutoring high school kids in physics, I do not have to worry about what I am going to eat or where I am going to live).

Doctors, obviously, are riding high on the hog and have little to lose from a protracted shutdown. So are nearly all journalists, which explains the bent of the news media (as if their hatred of Donald Trump and his voters wasn’t explanation enough).

What about all the Trump voters who want things to reopen? Do they simply not care about the people who will die if they get their happens?

Well, let’s put things in perspective: the Coronavirus kills about 0.67 percent of the people who get it. (Though you can’t get that figure from dividing number of deaths by number of confirmed cases since most cases are too mild to be reported). If it ran unopposed through the United States and infected 60 percent of the population, we would be looking at about 1.3 million people dying, most but not all of whom would have already been old and sick.

To put that in perspective, in a typical year the US loses 2.8 million people, most of them old and sick.

Obviously, a 45 percent boost to the annual death rate a bad thing. Which is why a shutdown of two or three months, followed by a cautious reopening once the virus is on the decline, is worth attempting – after all, it worked in China.

But try extending that rational to a yearlong economic freeze. ‘Still worth it,’ is the instant verdict of a great many Democrats, like Governor Cuomo, famous for his insistence that he would shut down all of New York to save just one life.

But that perspective only holds within the comfortable classes. Move out to middle America and start mingling with the Deplorables, and things start looking different. For these people, if you can’t go to work, you soon don’t have a job. If you don’t have a job, you soon don’t have health insurance. If you don’t have health insurance, you are more likely to die young – of cancer or any number of preventable causes.

And if you can’t pay rent, you soon don’t have a place to live. Also, for obvious reasons, people who go a long time without finding a job are more likely to die by suicide or overdose.

These aren’t matters that a responsible government can neglect. There is a reason why life expectancy in America has been going down since 2014. And triggering a repeat of the great depression will make life for the working poor even harder than it already is.

There is a segment of American society that will suffer nothing worse than boredom from an extended Coronavirus shutdown, and many of these people are more than willing to pat themselves on the back for doing their part to save the planet. But not everybody is a part of the comfortable classes, and we shouldn’t act as if there  is only one perspective that matters.

In other words, our best option is to reject Anetocracy and listen to the guy who won the White House on a promise to stand up for the forgotten man.