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The Wrongologist

Geopolitics, Power and Political Economy

We’re In Uncharted Territory

The Daily Escape:

Sunset, Factory Butte, UT – photo by goat_chop56

Blog reader David K. emailed:

“Now, what do we common folk do?  Start our “victory gardens” and shelter in place?  Volunteer to help our local farmers raise food? Hoard?  Wish I had a great idea, because I agree that our leaders don’t have a clue how to respond.”

That gave Wrongo pause. What do those of us who aren’t part of the “smart money” crowd supposed to do, particularly if what we’re facing is a worldwide depression? John Pavlovitz frames the existential issues quite clearly:

What happens if the stores run out of essentials for good?
What if you run out of money to stockpile them?
What if your neighbors stop sharing with you?
What if the government won’t help you?
What might you do then?

Politicians say we’re at war, but as Kunstler says: “At least in wartime, the bars stay open. That’s how you know this is a different thing altogether from whatever else you’ve seen in your lifetime.”

We’re attacked by a novel virus that’s created a completely novel social and economic situation. By definition, we aren’t prepared for an abrupt crash of both our social fabric, and our economic well-being.

Our politicians have no answers, despite most of them having been around for the 2007-2008 Great Recession. The Fed hasn’t done us any favors since then, either.

Last Saturday, Wrongo said that we’re crossing a threshold between what we know and an unseen future. Our traditional systems are no longer capable of keeping society and the economy on an even keel. Nobody really knows how deep and how harsh this will get, but the situation presents two questions:

  • How much disorder will we have to endure?
  • What does the world look like when this thing is over?

All this is happening in an election year, when the entire government and the political parties’ power structures are vulnerable, and could change. We are facing a new reality, for which no one has any answers.

Politics being what it is, the White House and the Congress are trying to work together to come up with solutions. On Monday, Trump gave another press conference on COVID-19. During his talk, the stock market dropped nearly 3,000 points. It was the market’s worst day since Black Monday in 1987.

The smart money was behind Trump in order to get its corporate tax cuts, but now, they’ve voted with their money. And Trump’s starting to look a little bit like Herbert Hoover.

Sen. Mitt Romney (R-UT) floated Democrat Andrew Yang’s idea of giving every American $1,000. He was joined in principle by Sen. Tom Cotton (R-AK). We’ll see if this is just more Republican grandstanding, or if they actually back a real plan of support for working people.

With Trump, you can expect to see bailouts for several industries, including banks, airlines, casinos and cruise lines. Imagine: Casinos are asking for help from the guy who only knows how to bankrupt casinos.

Reuters reports that the US airline industry said that it needs $50 billion in grants and loans to survive the dramatic falloff in travel demand from the COVID-19 outbreak. This is just more socialism for America’s corporations.

Two thoughts: First, $50 billion is higher than the book value of all the airlines combined. Why should they have any of our money? Either Republicans are for free market capitalism, or they should just shut up. Most of these airlines have implemented stock buyback programs when they should have been building contingency funds instead.

Second, this $50 billion should be added to whatever Congress spends on small businesses that are forced to close due to quarantine, or on parents forced to stay home to take care of kids who aren’t going to school anymore. They’re the ones who are really hurting.

We’ve lived through a time of unprecedented affluence. We’ve told ourselves we deserved it all, that we were entitled to all that our country has provided.

But that’s most likely over, and it might not return in Wrongo’s lifetime.

We have to think about what must change if we are to have a functioning society and economy in the decades to come.

The list of all the things that we need to change is far too long to enumerate here. At a minimum, we need to reform capitalism, make health insurance universal and strengthen worker’s rights.

We have to do a better job of sharing the wealth. It we don’t do that voluntarily, our children’s children’s generation will come and fight us for what we have.

To protect our families and their future, we need to become even more active politically in order to make these and other changes happen.

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Can the Economy Endure a Two-Month Shutdown?

The Daily Escape:

Cannon Beach, OR – 2020 photo by franks28

The short answer to the question above is no, not without outright financial support for individuals by the government. That support if it comes, is likely to be too little, too late.

But the Fed tried something. On Sunday, it announced that it slashed its federal funds rate by a full percentage point, to a target range between 0% and 0.25%. In addition, they launched a new Quantitative Easing program for another $700 billion.

Investors threw up all over the Fed’s Sunday moves, because we’re looking at a “demand shock”, the state-enforced loss of consumer sales,something that can’t be stimulated away. The S&P futures immediately plunged 5% to hit its downside limit. That made for an interesting Monday, with the Dow ending down nearly 3,000 points, or another 13%. In the past month, the market has lost nearly a third of its value.

All these efforts to provide stability actually showed the market that our leaders have no idea what they’re doing. It’s the exact opposite of inspiring confidence.

Did the Fed panic? Fed Chair Jay Powell lowered rates right after Trump said he had the authority to remove Powell. That makes it seem, true or not, like the Fed is now in Trump’s pocket. No confidence-builder there.

Looking through a wider lens, Mr. Market has decided that the Fed is pushing on a string. Rates were already so low that there was little gain from the interest rate reduction, and little else that the Fed could do. Mostly, the Fed signaled that it is very frightened about the prospect of a global recession.

In addition, the market understood that the stimulus bill working its way through the House and Senate is inadequate to the task ahead. For one thing, Pelosi’s bill promises paid sick leave, but as written it only covers about 20% of all workers.

Again through that wide-angle lens, the growing COVID-19 business lockdown strategy will have an economic impact similar to a natural disaster, like a hurricane, but played out over a longer time frame. FEMA has found that 40% of businesses close in a natural disaster. And of the businesses that reopen, only 29% survive the after the following two years.

Since our economy is 70% services, many industries facing the lockdown, like tourism, casinos, restaurants, and hotels, will soon be in meltdown mode. The Fed has no answer to a massive drop in consumer spending, only the president and Congress can solve that.

We know that 40% of Americans don’t have enough cash on hand or room on a credit card to handle a $400 emergency. Many service industry workers will be hit with either cutbacks in their hours, or outright job losses. Without financial assistance, we’ll quickly see defaults on rent or mortgages, and delinquencies on credit cards and car payments.

So the Fed creates some more money. But just like in 2008, rather than distributing it to every citizen, they’re giving it to the banks. Somehow, all that money is going to people who already have plenty, while those who need it get nada.

Why is the answer always to give more to the supposed “job creators” when we get basically nothing in return? Why not just send a check to the actual people who need it?

Finally, what will this interest rate cut do for the economy?

  • Are restaurants going to start hiring workers that can’t actually come to work just because loans are cheap?
  • Are workers not collecting a paycheck going to go out and buy a new car/TV/house because interest rates dropped a bit?
  • Are banks going to lend cheap money to airlines, restaurants, and cruise lines when we have no idea how long this will last?

Every company on the planet has simultaneously realized that it is in an existential cash-flow crisis due to COVID-19. The big and smart companies already have drawn down their unused loan facilities to ride through the slowdown.

The slower and the smaller firms are staring at an economic nuclear-winter scenario where their revenue plunges for months, and they can’t pay their staff, or make their fixed payments.

The speed and comprehensiveness of the lockdowns, and their drastic impact make what’s going to happen very clear. Our leaders are in a fog of denial. They don’t see that much of what was the traditional mode of operating our system is crumbling.

During the 2008 financial crisis, we learned that events can move too quickly for anyone to intervene and limit the damage. Our business environment’s drive for highly efficient systems, from just-in-time inventory sourcing to reducing the number of hospital beds per capita, have created fragile systems that are now being stress-tested.

We may be learning, to our collective detriment, that all of these systems along with our leaders, have failed us.

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The Health Crisis Now Coincides With a Financial Crisis

The Daily Escape:

Sunrise, St. Augustine Beach, FL – March 2020 photo by Carl Gill

The WaPo reported that a Coronavirus-sparked oil war sent crude prices down on Sunday by 32.3%. That triggered a forced temporary halt of stock trading on Monday, when the S&P 500 index sank 7% shortly after the market’s opening.

This occurred on the 11thanniversary of the current bull market. But, as Greg McBride, chief financial analyst at Bankrate.com, wrote:

“The uncertain economic impact of coronavirus continues to grip markets, with stocks, commodities and interest rates all dropping sharply. Markets hate uncertainty and there is a ton of it currently in play.”

There is no question that there will be more angry Americans now that a health crisis coincides with a financial crisis. Who they focus their anger on remains to be seen. Trump took credit for each rise in the stock market, so will he take ownership now that it’s tanking?

He’s not a broadly popular president, and this will make him less popular, so fewer people will believe him when he tries to lay the blame on others.

The oil price plunge was triggered when Russia announced on Friday that it would no longer stay within the OPEC+ quotas after April 1st. Saudi Arabia then said it would slash prices for its customers in April. In addition, they hinted at increasing production from the current level of 9.7 million barrels per day to 10 million barrels per day.

This is the start of an oil price war between Saudi Arabia and Russia over market share. But the real target for both may just be the US shale oil sector. US banks and other investors have been fueling the shale oil sector’s growth with hundreds of billions of dollars of loans over the years. And the shale oil producers keep ramping up production, despite it being largely unprofitable. They continue to burn through cash.

Brian Sullivan at CNBC warns us: The US oil industry valued its oil reserves, as collateral for its loans, at $60 a barrel. Today’s price is now about $30/barrel.

By sending some of these shale-oil companies into bankruptcy, Saudi Arabia and Russia are hoping that new money will refuse to support the US shale oil sector. Then production in the US will decline and take some oversupply out of the oil market.

Their timing is impeccable. Oil demand is down due in part to the Coronavirus. Chinese manufacturers are producing less and airlines in particular have less need for jet fuel. If OPEC and Russia increase production, and assuming US production still increases while demand globally is in steep decline, then global markets will be awash in oil.

And what does an oil glut do for Iran, already fighting a severe Coronavirus outbreak, and needing higher oil prices for their own economy?

But no worries! We can count on the competent leadership in the White House. And if that doesn’t make you comfortable, you might ask yourself, “Is this 1929 all over again?”

Maybe not, but if it is, who will be our FDR? In the 1930s and 1940s, FDR spent money on America’s democratic infrastructure. That money gave jobs to people. He created a social safety net, and allowed industry to again flourish.

But in the past 30 years, all the money has gone to our industrial infrastructure and to the rich, through tax cuts and subsidies. The easy money party has helped to pump up both stock prices and asset prices, giving us an ever-growing income and wealth gap.

What happens to the health of the people and to the health of economy between now and November is going to be a huge political concern. There’s always a tension between the best health policy, and the best economic policy.

Trump wants economic policy to win out, but the primary beneficiary of that is industry and the rich.

We should remember that when leaders are seen to be incompetent and/or ARE truly incompetent, they try to divert the voters’ attention. What Trump attempts to do in order to divert our attention, is worthy of discussion.

As of today, the fuse is lit. It’s an election year, and we know that Trump won’t go away quietly.

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Monday Wake Up Call – March 2, 2020

The Daily Escape:

St. Augustine, FL – photo by Wrongo

Hot takes:

First to politics: Joe Biden rolled to a big win in South Carolina, and billionaire Tom Steyer and former mayor Pete Buttigieg both folded their tents. Some in the media say that Biden is once again the front runner, but Sanders’s win in Nevada remains significant, and he remains on track to pick up a lot of delegates in California and Texas.

The real news from South Carolina is that Biden has become the Not-Sanders candidate. For Super Tuesday, Bloomberg essentially replaces Steyer as the billionaire in the race. Super Tuesday results are less than 48 hours away, and after that, we’ll have a real idea of who really remains a viable candidate.

Second, peace in Afghanistan: After 18 years of war, we signed an agreement with the Taliban. The deal does not end the civil war, but it has placed the outcome of the conflict in the hands of the Afghan people. Heather Cox Richardson quotes Laurel Miller, the former deputy and then acting Special Representative for Afghanistan and Pakistan from 2013 to 2017 for the State Department: (emphasis by Wrongo)

 “There’s nothing new in the Joint Declaration signed in Kabul today. It reaffirms existing commitments and it re-states some of US-Taliban agreement. Its purpose is evidently political symbolism.”

She explained: It includes the Afghan government and its opposition in future discussions. It draws down US troops to 8600 people—the number who were there when Trump took office, and promises “all” will be gone within 14 months. The 8600 drawdown has long been planned. In exchange, the Taliban will “not allow any of its members, other individuals or groups, including al-Qa’ida, to use the soil of Afghanistan to threaten the security of the United States and its allies.”

Miller’s conclusion:

“The Taliban got a lot. It got its main goal—a clear timeline for US withdrawal—and fast removal of sanctions and prisoner releases. The US got the power to decide whether “vaguely-stated conditions are met, so that in reality can withdraw when it chooses—will be political not military decision.” The Afghan government didn’t get much, but “this deal wasn’t really about the Afghan government.”

Trump, America’s Man of Peace. This looks a lot like what he did in North Korea, a PR moment that resembles a deal, but turns out not to be much of a deal.

Finally, the WaPo features a new report published by the Manhattan Institute, a conservative think tank, that clearly demonstrates the disconnect between the “great” economy described by economists, and the economy experienced by regular people. This chart shows the problem:

 

From the article (emphasis by Wrongo)

“In 1985, the typical male worker could cover a family of four’s major expenditures (housing, health care, transportation, education) on 30 weeks of salary….By 2018 it took 53 weeks. Which is a problem, there being 52 weeks in a year.”

Lead study author Oren Cass (formerly Mitt Romney’s domestic policy director) calls this calculation the Cost-of-Thriving Index. It measures the median male annual salary against four major household expenditures:

  • Housing: the annual rent for a three-bedroom house in the 40th percentile of the local housing market
  • Health care: the annual premium on a typical family health insurance policy
  • Transportation: the average cost of owning and operating a car driven 15,000 miles per year
  • Education: the average cost of tuition, fees, and room and board at a four-year public college

In 1985, the typical male breadwinner could cover those costs, and still have 22 weeks of pay left for other family needs, such as food, clothing, entertainment and savings. Today, the typical salary doesn’t even cover the four basics.

They also looked at female earners. The typical woman needed to work 45 weeks to cover the four big annual expenses in 1985. Today she needs 66 weeks. The most astonishing conclusion is that it was easier for a female breadwinner to provide for her family in 1985 than it is for a lone male earner today.

Remember that the study comes from a conservative-leaning institute. Here’s Cass:

“You can have a rising GDP….but if it’s in the context of collapsing families and people no longer getting married and declining fertility rates and so on and so forth, you haven’t necessarily enhanced well-being.”

Wake up America! The GOP has undone 50 years of economic gains that produced a robust middle class and vastly more economic and social justice than the country had ever known before, or since.

They have chosen candidates whose real agenda was to assist the corporatocracy in fleecing the very people who voted for them. Their candidates ran on issues like the Second Amendment, abortion, gay marriage and immigration. And then, the GOP shifted the tax burden onto the middle class. They deregulated industry and socialized corporate losses, eliminating any downside risk for banks.

We can begin undoing these things by electing Democratic majorities in the  House and Senate in November.

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Monday Cartoon Blogging – Iowa Caucuses Edition, February 2, 2020

We had a very consequential week, followed by a consequential weekend. Sunday was both the Super Bowl and Groundhog Day. It was also a very rare eight-digit palindrome when written as 02/02/2020, the first since 11/11/1111.

We had the “deal of the century” that isn’t, and the Chiefs won the Super Bowl. But the Constitution died.

And so did Kobe Bryant and his daughter, along with seven others. It doesn’t take a basketball fan to feel shocked and saddened when a Dad and his 13-year old daughter are suddenly killed. Of course we know about Kobe Bryant, a basketball genius who, in his retirement, helped young people and championed women’s basketball. His life story was complicated, but if you think that people can work hard and redeem themselves, Kobe Bryant is your prime example:

The movie that’s always on repeat:

Peace? Or pieces?

Brexit happened, the UK is now going it alone:

Failing to call witnesses shows that the GOP’s loyalties have shifted:

Beauty is in the eye of the beholder:

Brown paper bags have replaced the MAGA hats for GOP Senators:

With Iowa voting tomorrow, it’s important to know your enemies:

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Saturday Soother – Brexit Edition, February 1, 2020

The Daily Escape:

Sunrise, Castle Mountain, Banff, Alberta, CN – 2019 photo by anitajwani

(Sunday Cartoons will appear on Monday)

Yesterday, Brexit became official. The UK is no longer part of the European Union.

The decision to stay or go consumed the UK to the exclusion of all else for four years. But listening to the BBC, they now are barely talking about it. For all the arguing about “Leave” or “Remain”, nothing much was really said about what would happen once things got concrete.

It may be hard for Americans to understand, since we are seduced by British accents, but the Tories are dumber than Republicans. One example of what changed on Friday, as the UK Independent observed:

“Brexit day is here, so let us celebrate our biggest victory – the freedom to drink very bad wine.”

So now comes the hard part. Britain has until the end of this year to make a new trade deal with Europe, the US, and with other non-EU countries. The EU is the UK’s largest trading partner. In 2018, UK exports to the EU were £291 billion (45% of all UK exports). UK imports from the EU were £357 billion (53% of all UK imports).

Services accounted for 41% of the UK’s exports to the EU in 2018. Financial services and other business services (including legal, accounting, advertising, research and development, architectural, and engineering) are important categories of services exports to the EU. They made up just over half of UK service exports to the EU in 2018.

Because of the EU’s structure, the parliaments of 27 countries will have to agree to any new deal. Imagine what a “No Deal” would mean starting in 2021: Both Britain and the EU would stand to lose a big chunk of their trade revenue.

It will be fascinating to see which side has the greater negotiating power. For example, the UK only accounts for just 6% of German exports of goods. It accounts for 6.8% of French exports.

The US needs a new trade deal with Britain as well. That deal will have to be approved by the US Congress. The US will want open access to the British markets for its agricultural and healthcare industries. That will conflict with Britain’s own farmers, food regulations and its National Health Service.

Britain will be negotiating these two large, and very complicated deals under severe time pressure. The EU might offer to extend the deadline, but Prime Minister Boris Johnson has said there will be no extensions. Despite Johnson’s promise, comprehensive trade deals take several years to complete, averaging 7-8 years. So there will be little deals announced in steps, with the simplest to agree areas finished first.

There are also the national issues: North Ireland will be integrated economically with Ireland. Having a customs border in the North Sea may prove unwieldy. Scotland preferred to remain with the EU, and voted “Remain”. After Parliament finally voted to Leave, Scotland asked to hold a referendum on leaving the UK, but were turned down by the Tories. They may try again to secede over the Prime Minister’s objections.

These new trade deals may be on less favorable terms than what the Tories told the voters. As an example, one argument for Brexit was that the UK would regain exclusive fishing rights within its economic zone. But some EU countries will likely ask for additional fishing rights in British waters in exchange for something Britain urgently needs.

We won’t know the outcome for five to ten years from now, but it’s likely that Great Britain will be less great than it is today.

What with the impeachment show drawing to a conclusion without calling witnesses, and the impending food fest of Super Bowl Sunday, it’s time for our Saturday Soother.

Our one oasis of calm in a week of crisis.

Let’s start by brewing up a big mug of Ethiopia Shaskiso Natural ($18/12oz.) roasted by Michigan’s own Battlecreek Coffee Roasters. The roaster says it tastes of strawberry and cocoa supported by spice-toned florals.

Now, settle back by the fire and listen to Telemann’s Concerto in D major for Violin, Cello, Trumpet and Strings, played live by the Bremer Barockorchester, in 2015:

Those who read the Wrongologist in email can view the video here.

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The Future: Will It Be Just More of The Past?

The Daily Escape:

Wrongo said he wouldn’t look back, but has reconsidered. It’s time to declare war on those who refuse to use facts or science. Think about what these true believers in either faith or ideology have brought us:

Will we continue on this road, or will we make a turn for the better? Will 2020 usher in a better decade than the one we just closed? Doubtful, unless each of us stand up and do what we can to make a difference.

Those who think Trumpism is so new and novel should remember that Norman Lear made a hit TV show about it in the early 1970s. Since then, many American white people have taken a dark turn: They would rather have Trump’s government enforce a whites only voting policy than put in the work required to make our system benefit everyone equally, while decreasing the cut taken by the corporate class.

Building this better society requires hard cognitive work. So far, Americans aren’t up to thinking about solutions beyond “Build that wall!”

Another example: 50% of white people are actively against government bureaucrats making their health care decisions. They insist that something that important should only be decided by employer HR departments and multinational insurance companies.

They’re perfectly fine casting their fates with insurance bureaucrats. Even if those corporate bureaucrats deny their care most of the time. Worse, they’re told by the media that they shouldn’t pay any more damn TAXES for health care when they could be paying twice as much in premiums to insurance corporations.

Remember the song In the year 2525? “If man is still alive…”

That’s 505 years from now. What do you think the odds are that we’re still here?

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Monday Wake Up Call – November 25, 2019

The Daily Escape:

Delicate Arch, Arches NP, Moab UT – 2019 photo by rallymachine

Wrongo learned last week that the GOP thinks he’s just another agent of Soros, like most other non-Republicans. Sadly, the mailbox didn’t contain his weekly globalist payoff check, so we’re still stuck writing this blog.

We should be framing the debate about 2020 not in terms of policies, but by asking the question Ronald Regan asked: “Are you better off today than you were four years ago?” For the Evangelicals who wished for a right-wing Supreme Court, the answer is “yes”. For the 1%, and corporations who were awarded a gigantic tax cut, their answer is a strong “yes”.

But for most Americans, after four years, the answer isn’t yes, it’s a hard “no”.

Yes, the unemployment rate in the US is the lowest it’s been in 50 years. More Americans have jobs than ever before. Wages are climbing, but people tell a different story: Of long job hunts, trouble finding work with decent pay, or predictable hours.

How do we square the record-long economic expansion and robust labor market with the anecdotal stories we all hear? Quartz reports on a new jobs index that shows a way to make sense of both stories. Researchers at Cornell, the University of Missouri, Kansas City, the Coalition for a Prosperous America and the Global Institute for Sustainable Prosperity, working together:

“…..unveiled the US Private Sector Job Quality Index (or JQI for short), a new monthly indicator that aims to track the quality of jobs instead of just the quantity. The JQI measures the ratio of what the researchers call “high-quality” versus “low-quality” jobs….”

They developed a ratio of higher-wage/higher-hour jobs versus lower-wage/lower-hour jobs, and tracked it back in time using federal data. The Index reveals that job quality in the US has deteriorated substantially since 1990, and even more so since 2006.

Overall, the JQI found a shift from US high-wage/high-hour jobs to low-wage/low-hour positions. Since 1990, the US has been creating an overabundance of lower-quality service jobs. The JQI reveals that 63% of the production and non-supervisory jobs created over the past 30 years have been in low-wage and low-hour positions. That’s a marked change from the early 1990s, when nearly half of these jobs (47%) were high-wage.

Since 1990, America has cumulatively added some 20 million low-quality jobs, versus around 12 million high-quality ones. We now create more bad jobs than good. This helps explain why our GDP growth isn’t nearly what economists say we should expect from a full-employment economy.

Also, the poor jobs come with fewer hours worked. People in low-quality jobs clock 30 hours a week. Compare that to an average 38 hours a week for high-quality jobs. That seven-hour gap doesn’t sound like a lot, but it adds up to about 480 million hours per year.

Those unworked hours represents the equivalent of about 12 million jobs forgone each year. A key reason is that employers limit worker’s hours to keep from having to pay benefits.

Overall, the growing total of jobs that offer lower-than-average incomes means that job growth, as reflected by a super-low unemployment rate, provides less spending power than in the past. The economy is getting a lot less bang for its buck.

Maybe the Democrats’ presidential candidates should base the campaign on asking the Ronald Regan question again in 2020.

Time to wake up America! Look behind the headlines. Ask the candidates what they plan to do about the fact that our economy isn’t providing quality jobs. The $15/hour wage, although useful, isn’t enough to grow the economy.

To help you wake up, listen to Tones and I, a 19 year-old Australian singer-songwriter who has the number one global hit “Dance Monkey”. Today we’re featuring her song called “The Kids are Coming”. This song is sending an important message and portrays the reality of our time, that young people believe we’ve been poor stewards of their futures:

Those who read the Wrongologist in email can view the video here.

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Monday Wake Up Call – September 9, 2019

The Daily Escape:

Cape of Good Hope, 6:00pm, South Africa – September 2006 photo by Wrongo

Last week, the NYT’s Thomas Edsall discussed an award-winning academic study focused on the nihilism of the Trump GOP’s hardcore supporters. The paper illustrates that among this slice of the American electorate, the temptation to cause or support chaos may be overwhelming. Edsall says the study argues that a segment of the American electorate that was once peripheral is drawn to “chaos incitement” and that this segment has gained decisive influence through the rise of social media:

“The rise of social media provides the public with unprecedented power to craft and share new information with each other….this technological transformation allows the transmission of a type of information that portrays….political candidates or groups negatively…and has a low evidential basis.”

The study says that the chaos-inducing information transmitted on social media includes conspiracy theories, fake news, discussions of political scandals and negative campaigns.

The study’s authors, Michael Bang Petersen and Mathias Osmundsen, both from Aarhus University in Denmark, and Kevin Arceneaux, a political scientist at Temple, conducted six surveys, four in the US, interviewing 5,157 participants, and two in Denmark, interviewing 1,336. They identified those who are “drawn to chaos” through their affirmative responses to the following statements:

  • I fantasize about a natural disaster wiping out most of humanity such that a small group of people can start all over.
  • I think society should be burned to the ground.
  • When I think about our political and social institutions, I cannot help thinking “just let them all burn.”
  • We cannot fix the problems in our social institutions, we need to tear them down and start over.
  • Sometimes I just feel like destroying beautiful things.

The responses of individuals to three of the statements are horrifying:

  • 24% agreed that society should be burned to the ground;
  • 40% concurred with the thought that “When it comes to our political and social institutions, I cannot help thinking ‘just let them all burn”;
  • 40% also agreed that “we cannot fix the problems in our social institutions, we need to tear them down and start over.”

Despite interviewing 5,000+ Americans the study doesn’t conclude if the results represent the actual percentage of Americans who share this view. They did use a YouGov nationally representative survey of Americans. They say the data are weighted to achieve national representations on gender, age, education and geography.

As bad as this sounds, what if we reframed the “need for chaos” as “a need for things to change in ways that work for everyday people“? Instead of casting them as evil or as deplorables who wish to destroy nice things, we could see them as people who have been left out, or cheated by the system.

In that light, it might be reasonable for the marginalized on the left and right to wish for major changes in our system. So, let’s treat this study as an example of one dead canary in a coal mine. At this point, it’s a potentially terrifying glimpse of what may be America’s (and the entire developed world’s) future.

Nihilism is a symptom of needs not being met. Our current neoliberal capitalism is a prime cause behind this nihilism. Our system must change to be more inclusive, to create more “winners”.  We won’t blunt nihilism with more trickle down policies.

Time to wake up America! Our society has to change, or die.

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Saturday Soother – Dorian Edition, September 7, 2019

The Daily Escape:

Garden of the Gods, Colorado Springs, CO – 2019 photo by ForkMan. Cheyenne Mountain is in background.

(There will be no Sunday Cartoons this week.)

Trump’s decision to change our posture toward China from free trade to trade war is one of the most significant policy shifts in recent American history. And despite the hand-wringing by corporations and politicians, there’s a grain of value in what Trump is attempting to do.

For sure, it’s unclear if he really knows what he’s doing, but it highlights whether we have a strategy for our trade relations with China. American policy makers must look at and answer a few questions:

  • Why is our industrial supply chain located within our economic adversary?
  • Doesn’t our military readiness therefore depend on that adversary?
  • Why are American companies allowed to transfer critical technologies to China in exchange for short-term market access?
  • Why is Tesla building self-driving cars in Shanghai?
  • Why should Google be running an Artificial Intelligence (AI) lab in Beijing after canceling an AI contract with the Pentagon?

Our corporate overlords’ answer? Because the market wills it.

But markets choose one global power over another only for narrow financial reasons. The market will happily move its business to a surveillance state if it means bigger CEO bonuses and higher profits. In this competition, Corporate America’s ideological commitment to free trade is as big a handicap to us as the Soviet Union’s commitment to central planning was during the Cold War.

Republicans and their corporate partners reject the idea of America having an industrial-policy to support key strategic economic sectors. China has an industrial policy. It’s focused largely on AI, integrated circuits, telecom, and steel. We no longer have high end manufacturing, and we’re losing other strategic industries.

This means that Beijing is likely to pick our “winners” for us. Corporations use the old Ricardian comparative advantage to organize their supply chains. This means that we will watch helplessly as American innovations are transformed into economic engines in China, while our corporations will reap efficiency gains by locating their engineering and management operations next to their Chinese manufacturing.

Inevitably, the innovation in which we pride ourselves will depart as well.

A recent survey of 369 manufacturers found that American firms are moving their R&D operations to China not just to take advantage of lower costs, but to be in close proximity to their supply chains. About 50% of foreign R&D centers in China are now run by American companies. This has helped China achieve first place in market share for manufacturing R&D.

If we remain neutral regarding where our supply chains are located, “we innovate, they build” will become “they innovate, they build.”

So, an unintended consequence of Trump’s tariff war is that maybe American politicians will wake up to the strategic battle underway with China, and realize how our American corporations are lining up on the side of our competitor and economic adversary.

Enough of the outside world, time for a rainy Saturday Soother if you are on the east coast of the US. Wrongo is sitting on Cape Cod, and the weather service here has announced tropical storm warnings for Saturday. So, settle back and watch the Weather Channel!

Now brew up a mug of Panama Finca San Sebastian ($12/12 oz.) with its deep chocolate notes supported by subtle but persistent sweet floral tones. It comes from the brewers at Thermopolis, Wisconsin’s Jack Rabbit Java.

Now, as you watch Dorian news over and over until your mind is numb, listen to the great 1980’s hit from the Eurythmics, “Here Comes the Rain Again”:

Those who read the Wrongologist in email can view Annie Lennox here.

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