Priorities of national issues

There are lots of national issues that need addressing, many of them urgently. But I got to thinking recently about priorities; what do I think are the very top priority national issues? After some days of pondering this, I have decided that the very top of the list, in my opinion, is dominated by two issues, the economy and national unity.

The economy is obvious. Only a healthy economy can support all the other important goals – social justice, climate change, better education, better health care, etc, etc, etc. A strong economy provides the tax base to support the things governments should do and the capital markets needed to support private business, which in the end (though progressives often seem blind to this) is the source of ALL the income in the nation. This issue has been exacerbated by the COVID shutdown, with all the attendant layoffs and business closings, and so is certainly at the top of the list right now.

The second issue, national unity, may not be so obvious. We are a very large country, spanning an entire continent. By some reckonings we are really 7 or 9 or 11 different nations, with different cultures, different histories, different values and expectations, etc. Certainly it is obvious that the urban coastal regions are sharply different than the rural mid-continent regions. And one can see differences even in the different attitudes toward COVID masks and stay-at-home orders between states.

The problem with any nation as large and diverse as ours is holding it together. We already fought a bloody four-year civil war once to hold the nation together, and the specter of dissolution always lurks at the edges. What holds a diverse nation together is some common understanding among all its inhabitants. That used to be patriotism, a common national pride in being founded on exceptional principles, which, even if we didn’t always achieve them, marked us as a people at least trying to live by high principles. But patriotism has fallen out of favor, at least with large segments of the population, and I don’t see any other unifying force emerging to takes its place as the glue that holds us together as a nation. In fact the opposite seems to be occurring. Political activists right and left are peddling divisive “identity politics” narratives that seek to set us against one another rather than to unify us.

It is even more complex than that. There has emerged a wealthy elite class in America that holds only a tenuous allegiance to the nation. These people think of themselves more as “citizens of the world”, a Davos crowd often with multiple passports and homes spread across the globe. There aren’t that many of them, and under normal circumstances it wouldn’t really matter that much, but they also control the media and the transnational corporations and much of the political machinery of the nation, so it does matter that they really have such a weak allegiance to the nation.

I have no idea how to address either of these issues, and clearly the Trump administration doesn’t either. Whether a Biden administration has any better ideas is not yet clear, and won’t be until/unless they are in power. Indeed, George Friedman in his most recent book predicts a “failed” presidency in 2024 or 2028, “failed” in the sense of a president trying to apply the old remedies to a new situation in which they don’t work (Herbert Hoover, with his failed laissez faire approach to dealing with the depression of the 1930s, was the last such “failed” presidency, in Friedman’s argument). I wouldn’t count Trump’s presidency as the “failed” presidency because, erratic and incompetent as he has been, he has actually followed more or less the current Republican orthodoxy with some limited success. Trump’s election is better seen, I think, as a message that all is not well in the country; that a significant fraction of the nation feels the political system no longer represents their interests, but instead has been captured by an urban elite that neither understand s nor really cares much about their problems. It is always worrisome when the peasants start shaking their pitchforks at the passing carriages of the nobility, and that is, in my opinion, what Trump’s election really was.

Whether a Biden presidency would be the “failed” presidency predicted by Friedman is not clear to me, because I really don’t yet know what his approach to these two issues will be, and I even suspect he doesn’t know yet.

The Supreme Court

Yesterday’s 6 to 3 decision by the Supreme Court supporting Title VII LGBT protections surprised liberals, who assumed conservatives would vote as an ideological block against it. (In fact, it is the liberal block that has voted as an ideological block over the past few years; the five conservatives are much more likely to be independent and occasionally join the liberals). But it shouldn’t have surprised anyone. The conservatives tend to be textualists (ruling on what the law actually says instead of what they think might possibly have been in the mind of the legislators when they wrote the law), and the law’s text was unambiguous, as Justice Gorsuch made brilliantly clear in the first five lines of his opinion. And in fact the three dissents (Alito joined by Thomas, and Kavanaugh in a separate dissent) didn’t question the outcome, just the propriety of unelected judges making the ruling instead of elected representatives (though I don’t find their argument persuasive, since the text was so clear). Kavanaugh in fact went out of his way in his dissent to celebrate the substance of the ruling.

The next step will be interesting. It is always interesting when the Court has to deal with rights in conflict. The next step is to decide how this ruling applies to people who have religious objections to its consequences. On the one hand we are a country founded on the principle of religious freedom. On the other hand, if the Court gives too much weight to this than anyone can avoid any federal law by claiming a religious objection to it. Does the court want to allow sharia law to apply for Muslims (stoning adulterers, killing apostates, as commanded in the Qua’ran)?  Does the court want to allow multiple wives, as commanded by some Mormon sects? If I am a Quaker and opposed to war can I legally refuse to pay the portion of my taxes that supports the military? It is a very, very difficult issue, and it will be fascinating to see how the Court handles it.

When this issue has come up before, as in the Colorado Masterpiece Cake case, the Court has ruled on very narrow grounds to support the religious objection. And I see why - asking an artist to make a creation that offends his religious beliefs seems like a serious intrusion of government power.  Could the government also force a religious artist to make a scatological depiction of Jesus on the same basis? Well, the Court sidestepped the essential issue by making a very narrow ruling. Now they may be forced to face the whole issue. It will be interesting, and however they rule will no doubt outrage one side or the other of the culture wars.

J.K.Rowling's response

For those who might not know, J.K.Rowling, author of the Harry Potter series, has been subject to some extreme abuse online lately over daring to ask perfectly reasonable questions about gender identity. She has today released a long but very good response, which can be read here. I strongly recommend it.

The issue for me is larger than her particular views, however. It is the growing tendency in this nation to adopt the attitude that if someone holds a different view on a subject - social, political, economic, or what have you - they are ipso facto at least dumb, if not woefully ignorant or outright evil. They may indeed be wrong (and then again, perhaps it is just as likely that it is we who are wrong), but they have arrived at their opinion on the basis of their history and experience and training, and if we had the same history, experience and training we would no doubt believe exactly as they do.

The disappearance of tolerance for other views in our society worries me a great deal. Of course social media is partly to blame for this. People will say in the relative anonymity of social media things they would be ashamed to say in person. But I blame the elites for this as well. The growing movement in academia to refuse to listen to alternative views, and to demonize those who disagree with one is providing a very bad model for the younger generation. It is one of the early signs of fascism, and it ought to worry all of us.

Demographics

My general objective is to try to understand the major shifts occurring in the world, the “deep currents” that will shape the future for perhaps the next century or so. This is exceedingly hard, not only because of the distracting “noise” of all the relatively minor near-term effects that consume the media (COVID, the 2020 election, Brexit, Middle East wars, etc), but because there are so many moving parts in the major effects (demographics, climate change, technological advances, cultural shifts, etc), and they all interact in such complex ways with one another.  

Most recently I have been focusing on demographics, and in particular the likely consequences of nations depopulating themselves, as so many are doing. (Good sources for demographic data are here, or Peter Zeihan’s nice demographic charts here.)

It occurs to me that the major political “isms” of the 19^th and 20^th century – capitalism, socialism, fascism, communism – all assume, either explicitly or tacitly, a growing pie. The fundamental argument among them is simply how best to divide the growing pie.  But what if the pie is no longer growing, and in fact is shrinking? None of these potential political systems is prepared for that.

In our Western world, much is based on the assumption of nonstop growth. Both government and business debt is justified fundamentally on the assumption that rising revenues (taxes from a growing tax base or profits from expanded markets) will pay off the debt eventually. Social safety nets are based on the assumption of ever more workers contributing to the pool. Indeed, businesses in our capitalist system seem to feel that they are failing if they are not growing their volume and/or market share, and certainly their investors judge them on that basis.

In the short term, as several economists have pointed out, the U.S. is in relatively good shape. Because we have so many ‘Baby Boomers” in the highly-productive 50-65 year age bracket who are spending less and saving more for retirement, and because there is so much capital flight into the country at the moment, capital is cheap (ie – interest rates are low). But this is about to change in the next few years, as all those people move into retirement and begin drawing down their savings rather than increasing them.

So, for example, the federal government is currently paying about 2.5% on federal debt, so that interest on the debt consumes just under 9% of the federal budget (just under $600 billion in 2019, or about what we spend on the military). But if the interest rate tripled, as might well happen in a few years when capital gets harder to raise, this will have a profound impact on the federal budget. And there won’t be a growing tax base from a growing cohort of workers to provide more government revenues to pay the interest. All because of demographics.

Or consider the social safety net. Look at Social Security. When it was started in 1945 there were 42 workers contributing into the fund for every retiree it was supporting. The assumption (reasonable at the time) was that even as the pool of retirees grew, the pool of workers contributing would grow at least as fast, if not faster. But in fact now there are about 2.5 workers contributing for each retiree being supported, and soon there will be only about 2 workers supporting each retiree, and the system will be in big trouble*.  Demographics again.

Or consider technology. As our work force decreases we will have to do what the Japanese are doing to cope with their falling work force – automate. Great idea, especially since robots don’t need bathroom and coffee breaks, days off or sick days, or benefits. And they don’t join unions! BUT they also don’t pay taxes (yet), so heavy automation decreases the tax base (85% of U.S. federal revenues come from taxes on workers), and governments will have to figure out other ways to get revenue. Demographic effect again.

These are just a very few of the more obvious potential demographics effects just in the U.S. There are no doubt thousands more worldwide, some quite unexpected. And thus far almost no one outside of a few academic experts are paying much attention yet.

- - - - - - - - -

* Actually, it is already in big trouble. In theory the Social Security Trust Fund currently has just under $3 trillion in reserves. The problem is that there isn’t really $3 trillion in dollars or investments there, just $3 trillion in Treasury Bonds, which in effect are just paper IOUs from the federal government. When Social Security needs this money and cashes in the Treasury Bonds, the federal government will have to go out and borrow the same amount from someone else to pay off the Social Security Funds bonds. So really the whole “Trust Fund Reserve” idea is just an accounting trick and political fiction. Social Security is already out of money.)

US Foreign Policy questions

Thinking more about Peter Zeihan’s books - The Accidental Superpower (2014), The Absent Superpower (2017), and Disunited Nations (2020) - I find persuasive his narrative, that the global order founded at the Bretton Woods conference in 1944 no longer serves US interests since the fall of the Soviet Union in 1991, and hence the US voting public is no longer willing to pay the price (outsourced jobs and industries, casualties in overseas wars, massive foreign aid, etc) to support that order. I find it more persuasive than the major alternatives on offer, most of which argue in essence for replacing the Soviet menace with a hypothetical Chinese and/or Russian menace and continuing much the same policies we have followed for the past 75 years, reflecting the inertia and groupthink of the Washington foreign policy establishment.

I find his narrative persuasive for three reasons: (1) he backs up his arguments with extensive historical, geographical, economic, military and demographic data, (2) most of the other major geopolitical strategists I follow seem to more or less agree with him, and (3) world events thus far seem to be confirming his predictions.  

Given that narrative, the next obvious question is this: just what foreign policy should the U.S. follow in this new world environment, in which the world has reverted to more traditional Hobbsian power politics driven by national interests?  It is notable that none of the Democratic presidential contenders for the 2020 election had much if anything to say about foreign policy. They are all tightly focused on domestic issues. If one looks at Joe Biden’s foreign policy positions on his website, they are fairly thin – a little focus on China, some boilerplate on global warming and not much else. Presumably if he wins he will bring back much of the Obama-era neoliberal consensus on globalization and internationalist interventionism (ie – the US as the world’s policeman). Zeihan may be right that President Trump, for all his many faults, will be the most internationalist president we will see for the next decade or so, as the nation turns inward and even somewhat isolationist.

Thinking about the problem, I can think immediately of four key objectives:

1.  Maintain naval control of the Atlantic and Pacific Ocean. These two oceans are (a) the moats that protect the U.S. from foreign invasion, and (b) the key trade routes to some of our major trading partners (Britain, Germany, Japan, South Korea, Australia). This implies continuing to invest in maintaining and upgrading our naval forces to adapt to the growing threat of long-range precision weapons. It also implies investing in control of space, since long-range precision weapons need accurate targeting information to be effective, and that is best acquired from space. The current administration is moving forward on both of these initiatives, though bureaucratic inertia and Congressional fickleness are slowing the effort. It is unclear whether a Biden administration would continue to fund these initiatives adequately.

2. Require Europe to take up more of the costs of its own defense. Since the end of World War II the US has provided a significant proportion of the defense of Europe against the Soviet Union, and born a significant portion of the costs and risks. But Europe actually has as large a GDP as the US, so it ought to be paying for its own defense, especially now that the Soviet threat is gone (the Russian threat is much smaller). The current administration has pressed that issue more forcefully than previous administrations, with some results. Again, it is unclear what a Biden administration might do.

3. Re-establish key domestic industries that have been destroyed by overseas outsourcing under globalization. The CORVID-19 pandemic has made it painfully obvious that overseas supply chains are highly vulnerable to disruption. For example, the US currently depends on overseas supply chains for 95% of its antibiotics, 77% of its steel, 40% of its aluminum, 95% of rare earths, and 80% of its integrated circuits. Rebuilding such industries domestically both reduces our vulnerability and addresses the political problems posed by putting so many US workers out of jobs through outsourcing. The current administration has talked a great deal about this, and even made a few minor symbolic steps toward encouraging such retrenchment. Whether a Biden administration would do anything effective to foster the return of production to the US is unclear.

4. Abandon the neoliberal international interventionist model, in which the U.S attempts to impose American ideals at the point of a gun on any international problem that the U.S. media happens to focus on. Follow instead the highly successful British (and Roman) model of empire. Maintain balances of power in key regions of the world, so that no coalition of forces arises powerful enough to pose an existential threat to the U.S. Avoid putting U.S. troops on the ground unless absolutely necessary, and then only for limited, clearly-defined objectives (see the Colin Powell doctrine). Rely instead on supporting allies to maintain the balance of power in their own neighborhoods.  In particular, avoid getting financially destroyed by getting over-extended, which has been the downfall of many empires. The Obama administration began this in the Middle East and the current administration has continued it (support Turkey, Israel and Saudi Arabia to counterbalance Iran), and the current administration has begun the same thing in Southeast Asia (the Quads initiative – Japan, Australia and India to counterbalance China). One presumes even a neoliberal resurgence under Biden would continue these efforts.

No doubt there are a few other key objectives we ought to be thinking about, and the reader can ponder that question.

Recommended: Prof Antony Davis

I have come across some excellent YouTube presentations by Professor Antony Davis, Professor of Economics at Duquesne University, and the Milton Friedman Distinguished Fellow at the Foundation for Economic Education.

Let me recommend, for example, his 20-minute presentation on the 10 Myths of Government Debt. It certainly disproved some things that I believed. For example, could we help the problem by raising taxes on the rich? Sounds reasonable. I certainly believed so, and lots of politicians make this argument. But the data actually show, from 1950 to the present, that federal revenue as a percentage of GDP has stayed almost flat at about 17% whether the top tax bracket was 91%, as it was in the 1950s, or 30%, as it was in the 1990s. So that belief is simply not supported by the data (not that many would change their mind just because the data didn’t support their belief).

Or try, for example, his 19-minutes presentation 5 Inequality Myths, or his presentation Why Government Fails.

Again, as in my previous post, I am amazed at how much we all think we know that simply isn’t so. It reminds me again of Mark Twain’s comment: It ain't so much the things that people don't know that makes trouble in this world, as it is the things that people know that ain't so

Re-reading Peter Zeihans new book

I’m re-reading Peter Zeihan’s new book Disunited Nations: The Scramble for Power in an Ungoverned World. It takes several readings to really absorb all the data, and the implications of that data, in this book. For those of you who may not have read it yet, I strongly recommend it. His writing style is easy to read, even fun, but his arguments are backed with masses of relevant data. If you would prefer to watch him rather than read him, his hour-long presentations, some available on YouTube, are a good introduction, though there is much, much more supporting data in his books. Try his online presentation here, for example, or a more recent interview here.

What I am particularly aware of during this re-reading is how sharply Zeihan differs from the “common wisdom” expressed in the media and by most of the ubiquitous talking heads and political actors in both parties. The so-called experts obsess over China’s rise - Zeihan argues, with masses of supporting geographic, historical, military, geopolitical, demographic and economic data that far from being a threat, China is on the verge of total collapse, perhaps in a decade, perhaps next year (he admits timing is the hardest part about predictions). The so-called experts obsess over Iran; Zeihan argues, persuasively and with data, that we ought to be more worried about Saudi Arabia. The so-called experts worry about America’s decline; Zeihan argues, again persuasively and with masses of data, that America has another century at least of pre-eminence, not because of any brilliance in our politicians (indeed, despite the best efforts of our political system to screw it up), but simply because of the luck of our geography.

So whom to believe? Since Zeihan bases his arguments on verifiable facts, like demographics and geography and history and existing trade routes, while others seem to have just emotional opinions, I find Zeihan’s arguments more persuasive. And I notice that the other serious geopolitical writers I follow (Robert Kaplan, John Mearsheimer, Stephan Walt, Richard Hass, George Friedman, Stephan Kotkin, Ian Brenner, etc) seem to all more or less agree with him, though there are minor differences in emphasis.

It reinforces Nassim Taleb’s argument that listening/reading the daily news doesn’t make one smarter; it actually makes one dumber because of all the unsupported opinions expressed authoritatively by people who really don’t understand what is going on.