Friday, May 28, 2010
Then there is the War. Mostly in Afghanistan these days, but it could flare up any minute in Iraq, Somalia, Iran, Korea, etc. There are direct costs to the occupation of Afghanistan, and then there is the ongoing, bone-crushing cost of maintaining the U.S. military establishment as a whole. There is no doubt that U.S. taxpayers are picking up this tab. But taxpayers are a varied lot, and pay or evade a wide variety of taxes.
Yesterday's vote in the U.S. Senate on special funding for the occupation of Afghanistan illustrates some interesting shifts in the tab-picking-up dynamic. Some Senators in the Democratic Party and some Senators in the Republican Party voted against the funding. The Democratic Party naysayers want a timetable for withdrawal set. The Republican Party Nays had voted against the amendment to attach a withdrawal timetable for the bill. They voted against the bill itself because no provision was made to raise the money for it; it would add to the deficit. So they want the meal, They are worried about who will pay the tab.
American taxpayers have run up an enormous tab. It is called the National Debt. There is interest on the national debt, which itself makes up a big part of the Federal budget each year.
Back when the Dems were the outs and wanted to be voted in, they opposed the war as pointless. Now the leadership of the Dems, including the President, sound exactly like the leadership of the Republicans did just a few years ago. Only the Republicans, given their self-inflating, gun-toting constituency, can't oppose the war openly. There are no votes there. What they can do is point to the way the Democratic Majority is taking out a mortgage on America, at variable interest rates, with no ability to pay if either interest rates go up or the economy cycles back into recessionary mode.
Who will pay the tab? With the Democrats in power, the Republicans are worried that taxes on the "rich" will be raised. After all, you can't squeeze tax dollars out of income-less people living in Obama-villes. The rich already pay a lot of the tax burden, but they also get some pretty good breaks, like not paying taxes on capital gains until the capital is sold, which is typically only when they die. I would rather be rich and pay at higher tax rates, but once you are rich you get used to spending your money like anyone else. Higher taxes for the rich could mean waiting a year before buying a new Bentley, or taking a few days less vacation on the French Riviera, or having to fire one of the maids. That is the kind of irritant that makes rich people put pressure on their politicians.
You know how it goes. "Sure Bob, last year I raised $100,000 for your campaign, but then you raised taxes and now Sally Sue's vacation budget is $250,000 short."
In case you have not noticed, in Democratic majority districts the rich have to pick up two tabs. One is for the presumed winners, the Democrats, and the other is for the Republican Party candidates, to keep their hopes alive and the pressure on the Democrats.
Talk about a quagmire. The Democrats can't get out of Afghanistan without a "victory" because that would make them vulnerable to the Republicans. The Republicans are really, really worried about the future tax burden (and everyone should be), and the smarter ones are beginning to realize that the military part of the military-industrial complex has gotten to big compared to the industrial part. Too much industry has left the U.S.A., leaving a service-based economy that can't pay for the industrial goods we import.
Once I was working as a waiter in a pizza joint and a table of customers ran out on me. The restaurant owner, chewed me out thoroughly, but did not carry out his threat to take the tab out of my miniscule wages. He had to pick up the tab.
When taxes get high, evasion becomes commonplace. Some blame the Greek crisis on that phenomena.
Before dining out, which I seldom due since my wife and I both prefer cooking ourselves, I like to negotiate who is going to pay the tab. I don't like surprise. I especially don't like heavy drinkers who suggest that the tab be split "evenly." The federal deficit and national debt are one big surprise waiting to happen. There is absolutely nothing in our legal codes about who exactly is going to pay that tab.
Sunday, May 23, 2010
Meanwhile, in Japan everyone found out this weekend that they are still subjects of the United States. President of the United States Barack Obama ordered Prime Minister Yukio Hatoyama to allow Okinawa to continue to be used as a U.S. military base, and despite a great deal of national indignation, Hatoyama announced yesterday that he was following orders. What can he do? After U.S. gunmen grabbed Japan during World War II, they wrote Japan a constitution that prohibits it from being able to arm itself for defense against the United States. Invading Japan would be easier that invading North Korea or Iraq.
Supposedly in return Japan can hide behind the U.S. military umbrella. That would be the world's most expensive umbrella, and I am not the only one wondering how long the U.S. taxpayer will be willing to pay for it. One of the main aspects of the umbrella was encircling China, a nation U.S. gunmen thought they had grabbed fair and square during World War II. Only Mao & comrades did not play fair, they took their nation from American puppet Chiang Kai-shek. American taxpayers have been paying for the defense of Japan, South Korea, Taiwan, and the Philippines every since.
Which is remarkably stupid, but at the end of World War II the United States was the only nation in the world that had factories that were in running order (everyone else's had been bombed), so for decades we could do stupid things without paying much of a penalty.
China could be a military threat to its neighbors, but it isn't really because that is one very tough neighborhood the Chinese live in. They've got the Russians to the north and west and India to the Southwest, both very capable nations. The Vietnamese are capable of repulsing anyone, as they showed during the 1960s. Taiwan has not been tested in war but is technologically very capable. Japan could be a great military power if only it would break with the U.S. That leaves the Philippines, which U.S. gunmen grabbed at the end of the 19th century. The Philippines China could grab; any major power could grab the Philippines, but only if no other power intervened.
The U.S. could still be leading the world economically because we live in a nice neighborhood. With only Canada and Mexico for neighbors, we should need almost no military spending at all.
My best guess is the U.S. will be defeated in Afghanistan. That is the easy part. The question is, will this cause the U.S. empire to collapse like the Soviet Union did? Like the British Empire did after World War II? And if yes, how quickly?
Be certain that intelligence officers in most nations, but in particular in China, France, Russia, Great Britain, and India are asking themselves this question and outlining scenarios for it. All of them are planning to stab the U.S. in the back as soon as we are weak enough to make it safe, and who's to blame them?
Americans are out of work, which is lost productivity. Defense spending is at a peak, which is wasted productivity. The national debt is a staggering load to carry, which will sap future productivity. The national deficit seems necessary to prevent renewed recession, but is rapidly inflating the national debt. There is no real plan to make American's productive again. There is just hope in free enterprise voodoo mixed with government-subsidized voodoo.
So what I think we should consider is: hard landing, or soft landing? In a hard landing the U.S. economy tanks and military spending has to be cut because people, domestic and foreign, will refuse to lend more money to the United States Treasury. In other words, a sovereign debt crisis like Greece is experiencing will result in a power struggle between the capitalists who are connected to the military and the capitalists who see their own businesses being destroyed by the military budget.
In a soft landing some politicians start severely trimming U.S. military commitments before they lead to economic suicide. I don't know who those politicians would be. That kind of politician is usually filtered out of the American political process long before they get to the U.S. House of Representatives.
So I'm figuring on a hard landing. But I don't think it is going to happen until the next economic down cycle, which may not be until 2015. We should have a relatively long up cycle because we dipped so low in 2009.
See also: Okinawa, Commodore Perry, and the Lew Chew Raid [March 8, 2010]
Friday, May 21, 2010
Most people keep these two historic events in two different bins in their minds. For a while my own tiny mind has been creeping up carefully to the idea that they might be worth comparing and contrasting. Now I'm going to try to show they should actually go in the same bin, as long as we recognize they were both very complex events, occurring in different contexts.
The Great Leap Forward took place in China between 1958 and 1961. Recall that the Chinese Communists had set up areas of China under their control as early as the 1920s. After World War II ended they fought a war against the United States and the Kuomintang war lords that resulted in the communist takeover of all of mainland China (except Hong Kong) in 1949. This ended a century-long period of chaos during which death and starvation were common features of the globalization of China. By 1959 just the fact that China was united under one government, and that it was not prey to Japan, the United States, and Europe, had brought the nation to relative prosperity. I say relative because China had a very low level of industrial development in the 1950s, perhaps comparable to that of the United States in the 1870s. But food was being produced and distributed relatively efficiently; not starving was considered prosperity in China.
China was under a one-party system, and the acknowledged leader of the Communist Party was Mao Zedong (or Mao Tse-tung in older texts). Mao wanted to make China more economically powerful, both for its self-defense and for its greater glory. He decided to do a rapid industrialization, similar both to Stalin's industrialization of the USSR during the 1930's (corresponding to the Great Depression in the West) and to the earlier capitalist industrialization of Germany, Great Britain and the United States. Only he thought he was a communist genius and would do it by expanding steel production with hundreds of thousands of small, "backyard" smelting furnaces.
That was stupid. Making good steel requires high technical skill (read, for instance, the early chapters of The Arms of Krupp by William Manchester). Let's just say that after three years of converting a lot of perfectly good woks to lumps of iron, even Mao had to give up on that plan.
More important, most critics of Mao and communism like to bandy around vast numbers of people who died, mostly of starvation, in the Great Leap Forward. The numbers are typically put at 20 million to 30 million. What happened? In short everyone, from peasants through bureaucrats up to Mao, pretended that food production was booming because communist ideology was like Miracle-Gro when applied to farming. Real food, equivalent to imaginary surpluses, was sent to feed urban Chinese, and so much was left over that large amounts of it were exported to the Soviet Union to repay that nation for military equipment loaned during the Korean War. In reality food production actually declined for a variety of reasons. Left with the imaginary portions of their harvests, a lot of peasants went hungry and even starved to death.
Now think of the Great Depression. We don't see any reports on how many Americans died due to capitalism during the Great Depression. But anecdotal reports, and grim statistics, show that many did. Certainly hundreds of thousands, probably millions. Using the same statistical methods that are used to come up with the thirty million figure in China, we can get figures for the U.S. How fast did the U.S. population grow between the 1920 census and the 1930 census? Take that figure and add it to the 1930 population (take immigration numbers into account, of course). Then look at the counted population in 1940 versus the projection, and the difference is the number of deaths due to capitalist folly. Or, if you won't blame any deaths on capitalism no matter what, blame those deaths on Franklin Delano Roosevelt and his New Deal.
Their are other ways to do the numbers. A lot of the deaths in the U.S. were due to infant mortality. Take as a baseline the infant mortality rates of the capitalist class in the 1920s. Then take the rates of working class people (or use the handy census numbers showing the high death rate of black children). Multiply the difference in the rates by the population and you get an approximation of children murdered by the logic of the capitalist system during the Great Depression. You can even apply that logic to other decades. Since Roosevelt's Democratic Party did nothing about racism (except promote it) until the 1960s, you could pin a lot of black infant deaths on the party.
Those rates would have been lower if the Democratic Party had not blocked (Republican) President Herbert Hoover's attempts to help the American people from 1930 until 1932. And they would have been higher if those same programs, and a bunch of additional ones, had not been adopted by the Democrats (actually, if anyone looked at votes in Congress, by an alliance of liberal Democrats with liberal Republicans) and renamed the New Deal starting around 1933. And they would have been higher still if Adolf Hitler and the Nazis had not revived the German economy starting in 1933, and if later massive rearmament programs had not stimulated the U.S. economy in the late 1930s.
What is most sad about China is that they actually, by admittedly thin margins, had enough food to feed themselves even during the Great Leap forward. What is most sad about the United States is that people were starving during the Great Depression in a nation that was capable of feeding its own people and exporting vast quantities of food as well.
There may be some advantages of pure socialism over pure capitalism, or vice-versa, but most nations have chosen mixed systems after their 20th century experiences. The Great Leap Forward shows socialism at its worst, while the Great Depression shows capitalism at its worst. Smart humans will use all the tools in the social-economic toolbox to build the society they desire.
Manias sometimes affect entire societies, or even the entire globe. The depressive side of manias is illustrated by the Great Depression. Although it was a tragedy, the Great Leap Forward actually more resembles manias like the Tulip Mania, the Internet boom, and the recent housing market bubble.
Socialist theory and Capitalist economic theory both try to describe reality accurately, but both have a tendency to over-generalize. Which reminds me of the story of some third-world theoretical physics students having their first encounter with a real automobile. They drive it around for a while, then it conks out. Not realizing how complicated it actually is, they use their knowledge of thermodynamics to decide it has stopped due to insufficient energy content. To build up its energy again, they build a fire under it ...
Tuesday, May 18, 2010
"We've actually been hurt by medical marijuana and the recession; there is too much supply, and prices are down. Mendocino County is known for its organic farming and banning genetically modified organisms. We are building that brand recognition, but Obama Magic Puff is our bridge to the future," said Ten Miles Ted.
"What distinguishes Obama Magic Puff from other high-quality, Mendocino grown bud?"
"It makes you really, really hopeful. You imagine all sorts of great things are going to happen. Then you come down from the high, and nothing has changed. But you really want the high again," said Ted. "Users don't like the world they come back to, so they light up again. It really sells, and at a premium to other strains."
Which reminds me that this is One Thousand Day. The day over 1000 American soldiers have died fighting in Afghanistan. Note that we don't count our dead allied foreign mercenaries, or the dead police and soldiers of the Afghan war lord Karzai, or dead Taliban, or civilians. That is 100% pure All-American 1000 dead gunmen. Almost half of them have been killed since President Barack Obama took office, even though the U.S. war of aggression against Afghanistan started back in 2002 under now largely forgotten former President George W. Bush.
But there is Hope. President Obama is going to solve the problem by sending even more troops to prop up war lords Karzai & Co. Hopefully all those U.S. troops will force the Taliban (or perhaps we should call them Afghan nationalists) to negotiate. Or to realize that Apple Pie, Christianity and iPhones are superior to their inferior way of life, lay down their weapons, and open Burger King franchises.
I went to a party Saturday which included a sizeable bunch of former Obama supporters. They avoided the topic of politics. They still hate the Republican Party. If George W. Bush were doing the exact same things Obama is doing now — funding nuclear reactors, allowing new areas for drilling for oil offshore, sending more troops to Afghanistan — they would be frothing at the mouth and organizing lame demonstrations at the local post office.
Barack Obama is supposed to be a brilliant politician, and of course he knows if you are going to take hits you want to take them early in your term of office. He doubtless knows that he can get away with almost anything because the economy is bound to improve between now and the 2012 Presidential election.
The one thing he cannot do, politically, is lose a war. Even though most Americans are sick of the war in Afghanistan, there will be a stigma to losing it. If Obama had pulled out the first month he was President, the situation might not be so pregnant with disaster. He would have taken a hit on the right, but would have gained on the left by ending an unpopular war. Now he is married to the war; a divorce would be ugly.
Thus history repeats himself, as I predicted it would in Barack Obama: Will He Dick Nixon Us? [July 8, 2008].
Puff the Magic Dragon [song released in 1963]
Barack, the Magic Negro [right wing parody, allegedly racist]
Monday, May 17, 2010
As the title would indicate, A History of Hong Kong is written in a competent, standard historical manner. It is unappologetically pro-British. Frank Welsh seems to think the package of British civilization and British racism and attrocities is a package any wise country would buy at any point in history. Yet he does not hold back the facts, including the gory details of the Opium Wars, including exactly which British mercantile families and politicians benefitted. For me, the most useful part of the book so far has been the color it has cast on The U.S. War Against Asia. It is obvious that Commander Perry's military expedition against Japan was merely a shadow copy of the British operations against China in the decades that preceded it. That makes sense, but Perry's chronicler only mention's his studies of Japanese history, not his apparently careful study of how the Brits grabbed Hong Kong.
Wild Swans is the more complex and interesting book. If you don't know the history of modern China, it certainly paints a picture by telling of the struggles of the ancestors of the author to make good under the old Empire, under the Kuomintang, and then as communist bureaucrats. In the introduction Chang gushes with a love of modern England and a hatred of Mao, but so far in the book the stories sound authentic enough. No one comes out looking good. Bad as the communists may be painted, the Kuomintang were worse; bad as the Kuomintang might have been, they were better than the Manchus. Some of Jung Chang's ancestors are Manchus, but they are mostly Han. Because the book concentrates on the stories of her mother and grandmother, we see the meaning of modern reforms is particularly compelling for women. On the other hand Chang takes many opportunities to trash the folly of peasants and the incorporation of peasant knowledge into modern communist Chinese practice.
Closer to home, people in this coastal California community are talking about the Gulf oil spill. Good thing we don't allow drilling off our shores. Of course we drive our cars just as much as people in the gulf states. Soon I need to get up from this computer and drive to a meeting in Boonville to try to get an environmentalist elected to office. I tried to get the other organizers to hold these meetings by teleconference, but no, they are old fashinioned, they like in-person meetings. As a result I have missed almost all of the meetings. I am driving today because suddenly our campaign seems to be in trouble; I'm hoping my personal presence will have an impact, but in fact it will probably be one last waste of time and gasoline.
Wild Swans's stories of hunger and physical hardship in 20th century China reminds me of how corrupted by material wealth our American society is. Point Arena like anywhere else. Voters here are mostly apathetic about the primary coming up in June. Those who liked to complain about Bush have been replaced by a far smaller number of people who like to complain about Obama, but mostly politics and economics are just too complicated for Californians to bother their heads with. On the other hand, the turnout for Fishtank was good Saturday at the Arena Theatre. Nothing against Fishtank, they were great. As to democracy, forget about it. The captains of the U.S.S. Ship of State can sink it just fine, without any help from citizens at all.
More about the books at Amazon:
Thursday, May 6, 2010
Industrial workers were not a very important segment of our global society in 1800. People who toiled for an employer at something other farming had been around from at least the beginning of written history. At certain places and times had been significant portions of a local population. But even in Great Britain in 1800 most people had a close connection to agricultural production. Most industrial production had to do with refining agricultural products like milling grain or spinning cotton and wool.
By 1850 Britain was an industrial power and men like Mikhail Bakunin and Carl Marx had worked out ideologies that gave what they called the industrial proletariat a center-stage role. The villains were industrial capitalists, in their view. A series of political revolutions began that, at least ostensibly, tried to put the working class in control of society. There was a limited degree of success, with the Russian communist revolution and Chinese communist revolutions being the best known, and milder forms of socialism (leaving parts of capitalism intact) being much more widely adopted.
A funny thing happened on the way to utopia. The communists tried to out-industrialize the capitalists, and in some ways succeeded. In a sense the state bureaucrats simply became substitutes for the capitalist class.
The biggest threat to capitalism, it seemed in the 20th century, was capitalism itself. The Great Depression caused even our capitalist heartland, the United States of America, to adopt some socialist measures like social security, unemployment insurance, and a progressive income tax structure.
In the 1980s and 1990s the trend was to undo socialism, with Presidents Ronald Reagan and Bill Clinton presiding over the process in the U.S. The economic disasters of the first decade of the 21st century followed.
Capitalism showed its resilience as an economic, political, and social structure in the 20th century. But that does not mean it is indestructible. I don't think it is about to self-destruct, but it is instructive to look at how close it is to self-destruction today.
The economy of Greece is more socialist than capitalist, but not particularly more so than the typical European nation. Usuallytempering capitalism with socialism has made for the most economically vibrant societies (which of course, are also the most ecologically destructive societies). But Greece, in its global context, shows how capitalism and socialism can still be mutually destructive at times. Perhaps more destructive than ever before.
The Greek economy borrowed money from foreign economies. Just like if you or I borrow money, it is not necessarily a bad thing. Whether borrowing is good or bad depends on what you borrow the money for, how much interest you pay on the loan, and your ability to repay the interest and principle. If you borrow from Tony Soprano at 20% per week and put the money on a horse, or up your nose, most people would agree that is bad borrowing. On the other hand, if you get lucky and your horse wins the race, it makes the loan appear to be better in retrospect than it would be considered in general. A good loan example might be borrowing money at 4% a year, resulting in some obvious benefit, like lowering your cost of living if your mortgage payments are less than your old rental payments, or being able to hire more workers and make more profit if the loan is used to buy crucial machinery for your business.
The Greek loans were somewhere in between, but leaning towards the Soprano model. On a national scale the loans allowed civil servants (who make up over a quarter of the work force) to retire early with cushy pensions. That sounds lovely, but the problem is the world is becoming more competitive, not less. Greeks in general, and civil servants in particular, need to work more years, and longer hours, to justify their consumption levels. Those who loaned to Greece were the greater fools.
In politics politicians want to please people. Capitalist and socialist, Republican and Democrat and independent alike. If you don't please enough people, you don't get re-elected, and if you don't allow elections, you may get overthrown. Pleasing people means keeping taxes as low as possible relative to benefits. So almost every government borrows money. If economies grow, the tax base grows, and the loans can be paid off with relatively little pain.
But economies can grow in different ways. If they grow by everyone consuming more without producing more goods or services, they are going to get in trouble, no matter what the socialist to capitalist mix.
Capitalists of the banker sort want to loan money. It is nice clean work. They want to believe that loans will be paid back. It makes everyone happy.
Greece and the United States have much in common. The main difference is not the socialism to capitalism mix, though that should not be discounted. The main difference is that America borrows money mainly for military expenses.
Would you lend money to Tony Soprano? How would you get it back if he decided not to pay? All you could do learn from your folly, and resolve to not loan to him ever again.
Loaning money to the United States, especially to the federal government, is beginning to look suspiciously like loaning money to Tony Soprano. I think the Chinese and Japanese are fools to do it. So are American investors.
I don't think the Greek crisis in itself will kill global capitalism, but it is a warning. Socialism, originally, was supposed to be for all the workers, not just government workers. Capitalism was supposed to be about the wise deployment of capital. But mix the worst of both together, as has happened in the U.S. and in Greece, and you have a truly toxic brew.
Tuesday, May 4, 2010
I'm behind the curve, but slowly working my way through the Weeds TV series. I tried it a couple of years back and found be reminded how stupidly people act when stoned to be only minimally humorous. Having resumed the series recently, I find the later season's showing that being a dealer or a grower is not always all that easy to be a much funnier theme. Here in Mendocino County a lot of growers are not finding the idea of legalizing marijuana in California to be very funny either. The word is that prices dropped the last few years, between the recession and the semi-legal medical marijuana industry. Of course, on a small scale they can grow more and market more easily. There is also an apparently factual story circulating that a large tobacco company has bought up a lot of vacant land in our county.
So evolution rolls along, according to God's will (just kidding, I think God is a confusing concept). But try this one out for shutting up your local religious parasites. Darwin was God's prophet. God revealed to Charles Darwin how He had created the World, and how it works. Religious people can't usually help but argue about God. Once they See that Charles was His Prophet, they might get enough of a grip on reality to stop anthropomorphizing the universe.
Speaking of weeds, good politicians are almost always choked out by bad ones. The process begins at the town council and school board level. By the time you get to Congress, you got almost all Giant Mutant Amaranths. Some have red flowers, some have blue flowers, but they are all crowding out the rest of life on Earth. Or maybe the metaphor works better in reverse. The citizens are amaranths. By the time any get to Congress, they are Monsanto genetically-modified corporate freaks. The only way we can fix things is by becoming Giant Mutant Amaranths ourselves.
Windows and Wind. I almost forgot, and it is tempting to re-write the previous paragraph because of the obvious connection between politicians and wind. But let's take on Windows first.
Glass is everywhere in our society, but that is a recent development. Windows, classically, were just holes in walls. Usually with shutters so they could be closed on cold days. They have given philosophers much to ponder upon. Centuries of philosophic endeavor were spent worrying about whether the eyes and human senses, our windows on the world, could be trusted. (See Questions to the Illusionists). Windows typically are distinguished from their cousins, ports and valves, by the idea that they mainly let in information: a view. In letting in (or out) a view they create their own problems, mainly of a defensive nature. Castles and forts have minimal windows. You want to see the enemy, but don't want arrows or bullets flying in your windows. For those who want to see and be safe, there is bulletproof glass, but that is rapidly being replaced by cameras. Politicians and military men, being camera shy, are masters at the art of smokescreens. Strangely, there are more video cameras spying on us in our supposedly free nation than George Orwell ever imagined in his totalitarian novel 1984.
Windows keep out the wind, but environmentalists are loving wind these days. Why with wind you can have power without pollution. The problem is there are just too many human beings in the world these days, and their individual and collective power expectations are phenomenal. Massive amounts of wind power require massive turbines, which require massive amounts of steel, which requires massive mines, and steel mills, and burning of coke (which produces carbon dioxide). The wind gathering machinery itself is a blight on the land, killing birds and driving away other wildlife.
I love technology and science, but it seems that every time we solve a problem with technology, we create a bigger one. Modern medicine, largely a fruit of Darwin, has led to lower human death rates, giving us an unsupportable population.
There really is only one environmentally friendly technological solution, and that is birth control. World wide, and compulsory.
And because politicians have other concerns, that solution is not going to happen. Voluntary birth control helps, but it has proven to be insufficient.
I am no prophet, but I can see the most likely future: intensifying competition between humans for resources, and for survival itself.
I suspect the new winners will be those who thrive on a diet consisting largely of giant mutant amaranth.