The Wrongologist – Page 20 – Geopolitics, Power and Political Economy

Henry Kissinger’s Reputation

The Daily Escape:

Sunset, Flaming Gorge Reservoir Recreation Area, UT – August 2023 photo by Doreen Lawrence. The Gorge is the largest reservoir on the Green River.

Welcome to your Monday wakeup call! Wrongo has lived a long life, but he’s still 20 years younger than Henry Kissinger. Kissinger turned 100 in May. When Wrongo was in his late teens, he was protesting against the war in Vietnam. At that point, Kissinger was already a foreign policy advisor to the failed presidential campaigns of Nelson Rockefeller.

He would go on to become Nixon’s national security adviser and Secretary of State, a crucial figure overseeing the conflicts in Vietnam, Cambodia and Laos, that many say included war crimes. Kissinger was never indicted, but Anthony Bourdain wrote the following about Kissinger in his 2001 book “A Cook’s Tour”:

“Once you’ve been to Cambodia, you’ll never stop wanting to beat Henry Kissinger to death with your bare hands. You will never again be able to open a newspaper and read about that treacherous, prevaricating, murderous scumbag sitting down for a nice chat with Charlie Rose or attending some black-tie affair for a new glossy magazine without choking. Witness what Henry did in Cambodia—the fruits of his genius for statesmanship—and you will never understand why he’s not sitting in the dock at The Hague next to Milošević. While Henry continues to nibble nori rolls and remaki at A-list parties, Cambodia, the neutral nation he secretly and illegally bombed, invaded, undermined, and then threw to the dogs, is still trying to raise itself up on its one remaining leg.”

But unlike other possible US war criminals like Reagan and Nixon, Kissinger has never needed to rehabilitate his reputation. As Rebecca Gordon says:

“….despite his murderous rap sheet, the media and political establishment has always fawned over him.”

Kissinger is remembered for his initiative to open diplomatic relations between the US and China in 1972, though full normalization of relations with China would not occur until 1979.

Kissinger’s second innovation was inventing the for-profit third act of a public service career. Before him, former foreign policy principals usually wrote a memoir, gave the occasional foreign policy speech, and maybe became head of a nonprofit.

But Kissinger pioneered a for-profit third act in 1982 when he and Brent Scowcroft founded Kissinger Associates (with the help of a loan from the international banking firm of E.M. Warburg, Pincus) to offer advisory services to corporate clients. Kissinger’s prime selling point was that he had access to the corridors of power, not only in Washington, but in Beijing and Moscow.

Wrongo started out being a fanboy, having read Kissinger’s 1957 book “Nuclear Weapons and Foreign Policy” while in high school. It criticized the Eisenhower Administration’s “massive retaliation” nuclear doctrine. It also caused much controversy at the time by proposing the use of tactical nuclear weapons on a regular basis to win wars. Once Wrongo was running a tactical nuclear missile base in the mid-1960s, he was no longer a fan.

Wrongo met Kissinger in the mid-1980s at an event hosted by David Rockefeller at his Pocantico Hills estate. HK was walking his dog, a particularly obstreperous Golden Retriever. Wrongo asked “What’s the dog’s name?” Kissinger replied: “Madman”. Could there be a more perfect name for a Kissinger family pet?

Kissinger provided advice, both formal and informal, to every president from Eisenhower to Trump (though apparently, not yet to Biden). His fingers are all over the foreign policies of both major Parties. And in all those years, no “serious” American news outlet ever reminded the world of Kissinger’s long history of bloody intervention in other countries.

In fact, as his hundredth birthday approached, he was fawned over in an interview with PBS NewsHour anchor Judy Woodruff. From Rebecca Gordon:

“Fortunately, other institutions have not been so deferential. In preparation for Kissinger’s 100th, the National Security Archive, a center of investigative journalism, assembled a dossier of some of its most important holdings on his legacy.”

A third thing that Kissinger is associated with is the use of the concept of “Realpolitik” in foreign policy. It means conducting diplomatic policies based primarily on considerations of the reality on the ground, rather than strictly following ideology or moral and ethical premises.

Realpolitik has come to mean something quite different in the US: It is associated not with “what is” but with “what ought to be” on the ground. In Kissinger’s realpolitik, actions are good only when they sustain and advance American strategic power. Any concern for human beings that stand in the way, or for the law and the Constitution, are not legitimate.

The Coming $73 Trillion Wealth Transfer

The Daily Escape:

We’ve been on Cape Cod for a few days visiting daughter Kelly. Here’s a sunset photo taken this week at Campground beach, Cape Cod, MA – August 2023 iPhone photo by Wrongo. Smoke from Canadian wildfires made the sunset colors more vibrant.

Welcome to our Saturday Soother! But first, let’s talk about the coming generational transfer of wealth that’s underway as the wealthiest generation (the boomers) retire. According to Ben Carlson, 10,000 baby boomers will be retiring every day between now and the end of this decade.

The first boomers were born in 1946, meaning they’re 77 and on the fast track to 80 years old. Fortune Magazine pegs the wealth transfer from boomers to their kids at $73 trillion (with another $12 trillion going to charity). That means the boomers have $85 trillion in personal wealth!

That sounds great, since so many in our younger generations really could use a little help right now. But fewer people than you might expect will actually receive a sizable inheritance. This is due to the fact that the top 10% of America’s wealthy own something like 90% of the stock market. The concentration of today’s wealth will lead to fewer people benefiting from the generational handoff.

Here’s a chart from the NYT:

According to the NYT, ultra-high net worth households — people with $5 million to $20 million in liquid net worth — make up 1.5% of the population but will constitute 42% of the money that gets passed down in the years ahead. Many of them are boomers. From the NYT:

“A key reason there are such large soon-to-be-inherited sums is the uneven way boomers superbly benefited from price growth in the financial and housing markets. The average price of a US house has risen about 500% since 1983, when most baby boomers were in their 20s and 30s, prime years for household formation.

As US corporations have grown into global behemoths, those deeply invested in the stock market have found even bigger returns: The stock market, as measured by the benchmark S&P 500 index, is up by more than 2,800% since the beginning of 1983…”

Those rates of growth in financial and real estate assets will probably never be seen again. We’re passing a slow growth economy on to the next generations, while their own salaries and savings are having trouble keeping up with inflation.

Some worry that retiring baby boomers will crash the stock market by spending down their portfolios in retirement, leaving nothing to inherit. While it could happen, it’s unlikely that it will. The inequality of stock ownership means few people in the top 10% will never come close to spending all of their wealth in retirement.

So the wealth transfer will be more of a stream than a tsunami. Given the longevity of the wealthy, the money is going to be passed down slowly over time. A married couple that is retiring today has a 50% chance of at least one spouse living into their 90s.

Wrongo sees more and more people in the younger generations talking about how much they need help from their parents right now rather than decades down the road. The challenge is that parents need to be sure that if they make early transfers of wealth, that they keep enough on hand to maintain themselves securely in their advancing old age.

This can only be done by families having honest discussions around very awkward subjects. Talking about it can be helpful. It may be possible to work something out where some of the inheritance is parsed out slowly so the parents can enjoy seeing the kids (or grandkids) use some of the money while they’re still here.

Enough! It’s time for our Saturday Soother, where we ignore the also-ran candidate show that the Republicans put on in Wisconsin, and where we also ignore the perp walk in Atlanta. Instead, let’s focus on clearing our heads for next week’s outrages.

To help clear your head, grab a comfy chair by a window, and pour a mug of cold brew over ice. Now, watch and listen to Beethoven’s “Septet, op. 20”. It had its first performance in 1800 and was one of Beethoven’s most popular works during his lifetime, much to the composer’s dismay! He ultimately wished he had never written the piece.

Today we listen to the first movement, “Adagio – Allegro con brio” played in 2014 by the WDR Symphony Orchestra in Cologne, Germany. The WDR is a German radio orchestra:

Homeschoolers Want Your Tax Dollars

The Daily Escape:

Rich Mountain Fire Tower, Marshall, NC – August 2023 photo by Michael Morris. This photo has a painterly quality to it.

Americans’ interest in homeschooling has soared in recent years. Migrating from mainstream education to homeschooling tracks with the rising fears among parents that schools are failing their children.

For parents frustrated with their child’s public school education, the pandemic provided another reason to give homeschooling a try. Homeschooling has become a significant element in education in the US. According to the National Home Education Research Institute (NHERI), there are 3.7 million homeschooled students in the US, about 6.7% of the school-age children in K-12. The popularity of homeschooling is growing rapidly, with an annual growth rate of 10.1% between 2016 and 2021.

Home schooling is legal in all 50 states, with the highest number of homeschoolers in North Carolina, Florida, and Georgia. About 10% of states have strict laws regulating homeschooling: New York, Vermont, Rhode Island, Massachusetts, and Pennsylvania. Another 18 states have no to low regulation, while 11 states provide complete freedom to parents regarding homeschooling. In New Jersey, parents do not have to let anyone know about their decision to homeschool their children. They don’t even have to produce any kind of proof at any time, explaining that their kids were homeschooled. Here’s a view of homeschooling regulation in the US:

Source: HSLDA

In many states, there is little oversight of homeschooling. And for many, what regulations do exist were adopted in the 1980s, when homeschooling was almost exclusively provided by a family member at home. Now, with the number of homeschool students soaring, much of the educating is now being provided by third parties.

The WaPo reports that there is an emergence of “microschools” provided by for-profit companies, such as Prenda which provide online courses and syllabi to the microschools. Last year, Prenda served about 2,000 students across several states by connecting homeschool families with microschools that host students, often but not exclusively in homes. The local educator is called a “guide” for students who study math and reading online while depending on the “guide” for other subjects. Families pay Prenda $2,199 per year, plus additional fees set by the guides, which can range from $2,800 to $8,000 per child although there is often a multi-child discount.

Many similar options to Prenda are transforming home schooling in America. More from WaPo:

“Demand is surging: Hundreds of thousands of children have begun homeschooling in the last three years, an unprecedented spike that generated a huge new market. In New Hampshire, for instance, the number of homeschoolers doubled during the pandemic, and even today it remains 40% above pre-covid totals.”

“For many years, homeschooling has conjured images of parents and children working together at the kitchen table. The new world of homeschooling often looks very different: pods, co-ops, microschools and hybrid schools, often outside the home, as well as real-time and recorded virtual instruction. For a growing number of students, education now exists somewhere on a continuum between school and home, in person and online, professional and amateur.”

Still more:

“Microschools sometimes provide all-day supervision, allowing parents to work full time while sending their children to “home school.” Hybrid schools let students split their days between school and home. Co-ops, once entirely parent run, might employ a professional educator.”

All of this is adding to the conundrum of how K-12 education is financed in the US. The WaPo says that about a dozen states allow families to use taxpayer funds for home-school expenses. Education Savings Accounts, or ESAs, direct thousands of dollars to families that opt out of public school, whether the destination is a private school or their own homes.

Nonprofits, including school-choice advocates, are directing millions of dollars in charitable giving toward homeschool organizations, linking two powerful but traditionally separate movements into one interest group that seeks to move taxpayer money away from the local public school system into private hands.

In the past, homeschoolers and school-choice activists didn’t see themselves as aligned. The latter group wanted taxpayer money to pay for charter, private and religious schools, whereas homeschoolers looked to limit any government involvement.

But since the pandemic, they found themselves in common cause. Historically, homeschool advocates have been wary of any government money or involvement, for fear it would lead to rules and regulations.

But many school-choice advocates incorporate support for homeschoolers into their advocacy work, including for school vouchers that give these families tax dollars to pay education costs. Where they used to be a defensive constituency, today they have become partners.

And venture capitalists have invested tens of millions of dollars in new businesses to serve what they see as a growing, and potentially huge market. One entrant is Outschool, an online marketplace for classes, which has raised $255 million since 2015. This year, Outschool has delivered 500,000 live learning sessions to more than 150,000 students globally.

WaPo says Prenda has raised about $45 million. Primer, another microschool company formed to serve homeschoolers, has raised about $19 million, though its campuses are becoming more like tiny private schools, an example of the fuzzy line between traditional and home schooling. WaPo spoke to Michael Moe, founder of GSV, a venture capital firm in the Silicon Valley, who has invested in several education technology start-ups: (brackets by Wrongo)

“The mega trend of [school] choice is wildly important to us…All these shifts create opportunities for companies providing solutions that allow parents and communities to take more control of the learning.”

That’s “venture capitalspeak” for more privatizing of the commons in search of higher financial returns.

Vouchers that once paid only for tuition at private and parochial school can now, in some places, be used for homeschoolers. Most sweeping are Education Savings Accounts, or ESAs, which allow families to claim state tax dollars to use at their own discretion for any education expense.

This increasingly means taxpayer money is following the student out of the public school. It flows to whatever a family chooses. That can include things like Prenda’s fees, online classes or home-school curriculum, as well as tuition at private schools.

In Detroit, a program called Engaged Detroit , is a cooperative that’s part of a network specifically to serve Black families looking for schooling options in response to the pandemic. Among Engaged Detroit’s backers is the VELA Education Fund, which has made more than 2,400 grants totaling more than $28 million since 2019. VELA’s primary funders are longtime advocates for school choice: the Walton Family Foundation and the Charles Koch foundation, Stand Together.

There are pluses and minuses to homeschooling. There are situations where it’s appropriate to homeschool, but the loose oversight and lack of expertise might mean that some homeschooled kids are going to be at risk. When parents say they don’t trust the trained/educated teachers in their public school, but instead want their kids to get the viewpoints of only one or two specific people, the kids are entering a small world. Later in life, they’ll have to adjust to a larger reality.

Wrongo is fully aware of the weaknesses of our public school systems. It’s possible that SOME of these small private schools that they say are “home schools”, are teaching those kids better than some public schools do. So Wrongo is ok if kids learn there. But there should be no problem with requiring these kids to take end-of-year minimum standards tests, proving that they learned the base-level material in each subject.

Without some testing, society has no idea if these kids learned anything. The lack of oversight, particularly in those situations where taxpayer money was diverted to homeschooling, seems well—Wrong.

The literature is clear: Some homeschooled children have attended Ivy League schools and won national spelling bees. Some have also been the victims of child abuse. Some are taught using the classics of ancient Greece, others with Nazi propaganda.

Many parents say home education empowers them to withdraw from schools that fail their children. Or they want to provide instruction that better reflects their personal values. But should the rest of us pay for those individual decisions?

Time to wake up America! Homeschooling may offer certain advantages, but also comes with a set of disadvantages that should also be considered. And it’s clear that those who would privatize K-12 education want to take funding from the public school systems wherever they can.

To help you wake up, listen to Steely Dan’s “My Old School” from their 1973 album “Countdown to Ecstasy”. Steely Dan always used outside musicians, and on the record, they had the late Skunk Baxter on guitar and four (!) saxophones. But Steely Dan didn’t like to tour. Today, we’re going to see a rare video of a Steely Dan live performance on “The Midnight Special” where Skunk had a blistering solo for the song’s finale:

Rural Hospitals Are No Longer Providing Maternity Care

The Daily Escape:

Perseid meteor shower, from Mt. Evans, CO – August 13, 2023 photo by Paul Blais Photography

Welcome to our Saturday Soother, but first, Wrongo intends to spin you up before eventually letting you slow down.

There’s a crisis in rural healthcare in America. Rural hospitals are closing at a rapid rate. Our county (Litchfield) in Connecticut has one of three remaining hospitals that are designated as rural in the state (Sharon Hospital).

A problem for rural hospitals is that many are closing down their labor and delivery services in order to try and remain economically viable. WSHU, a CT-based NPR affiliate, has covered the impact of these closures to Connecticut. They quote Peiyin Hung, a researcher on maternal and rural health at the University of South Carolina:

“My team has been tracking nationwide, hospital-based obstetric unit closures since 2008 up to 2022,…. Almost 300 hospitals closed their OB units.”

WSHU points out that more than 60% of those closures were in rural areas. Why are so many hospital groups moving away from delivering babies in rural locations?

WSHU quotes Dr. Robert Roose, chief medical officer at Johnson Memorial, a hospital in rural Stafford Springs, CT that closed its obstetric unit. He said that it’s a safety issue. Hospitals with fewer than 200 deliveries a year, like Johnson Memorial, are considered low-volume birthing centers:

“There is a clear and critically important correlation between volume and quality of services provided when it pertains to labor and delivery and maternity care…”.

Three years ago, Hartford HealthCare’s Windham Hospital in Willimantic, CT stopped delivering babies, citing the same concern.

Also, malpractice insurance rates go up for low birth-volume hospitals because insurers feel the risk is higher if doctors aren’t getting sufficient practice with birthing. Hung says another problem is the level of reimbursement:

“Medicaid…pays half as much on average [as] private insurance pays for labor and delivery across the country”.

That’s important because about four in 10 of all Connecticut deliveries are covered by Medicaid. Simply put, delivering babies doesn’t pencil out for many rural hospitals.

There are other factors: Rural America’s demographics skew older. Young families in general prefer living in the suburbs or exurban areas. Couple that with America’s lower birth rate and rural hospitals really can’t maintain the birthing volume they need to remain economically viable.

The Center for Healthcare Quality and Payment Reform, (CHQPR) a Pittsburg-based health policy group published “A Crisis in Rural Maternity Care in the United States” which shows the problem:

“Fewer than half (45%) of the rural hospitals in the US currently offer labor and delivery services, and in 9 states, less than one-third do. Over the past decade, more than 200 rural hospitals across the country have stopped delivering babies”.

“Hundreds of additional communities are at risk of losing maternity care because of the financial challenges rural hospitals are facing….More than 1/3 of the rural hospitals that still have labor & delivery services have been losing money on patient services, so their ability to continue delivering maternity care is at risk.”

CHQPR reports that more than half of small rural maternity care hospitals lost money in 2021-22.

They suggest that a primary reason rural hospitals are losing money is that private insurance plans pay them less than what it costs to deliver many of the services they offer patients, not only maternity care. They point out that while rural hospitals are losing money on uninsured patients and Medicaid patients, the losses from private payers have the biggest impact on their overall profit margins.

CHQPR suggests that a potential solution is to require that health insurance payments actually cover the cost of rural maternity care. With more than 40% of births (on average) in rural communities paid for by private health plans, having the private insurers pay more would help keep rural maternity care viable:

“Payment amounts must be higher in communities that have difficulty attracting staff, and payments must also be higher in communities with smaller numbers of births to ensure that revenues cover the fixed costs.”

This means that the fee-for-service model isn’t working in low-volume hospitals. Rural hospitals are only paid when they actually provide a service, but a small hospital has proportionally higher overheads than larger hospitals, since they must be staffed and ready to deliver a baby at all times, even if there are no deliveries at all. Read CHQPR’s report “A Better Way to Pay Rural Hospitals”.

Back to Connecticut, Sharon Hospital has proposed closing its labor and delivery unit. There will be a public hearing to consider the closure later this year. But Sharon is about an hour from its affiliated hospital (Danbury Hospital) that has a fully-staffed labor and delivery facility. Sharon may actually be closer to two other unaffiliated hospitals in New York state than it is to its own parent facility.

It’s now time for our Saturday Soother. Litchfield County is having beautiful weather this weekend. We’re taking advantage of it by going to a live Baroque music concert, and possibly heading off to the annual fair in a local town.

To help you relax and zone out from all of the Trump indictment analysis, grab a chair outside in the shade and watch and listen to “Gortoz a Ran” (I’m Waiting) sung by Denez Prigent and Lisa Gerrard. The language in the song is Breton, spoken in Brittany, France. It is closely related to Cornish and Welsh, and all three are Celtic tongues. When the Angles, Saxons and Jutes invaded Britain in the fifth century (400-500 AD), many of the Britons in Cornwall, Devon, and the West Country fled across the English Channel to France. Because of the influx of Britons, the region became known as Brittany.

Most of the images in the video are of Scotland, England, Wales, and Brittany. Lisa Gerrard isn’t singing in any language; she’s just vocalizing. The Uilleann pipes, an Irish instrument, are heard at 3:50:

Lyrics: English Translation

I was waiting, waiting for a long time
In the dark shadow of grey towers
In the dark shadow of grey towers

In the dark shadow of rain towers
You will see me waiting forever
You will see me waiting forever

One day it will come back
Over the lands, over the seas

The blue wind will return
And take back with it my wounded heart

I will be pulled away by its breath
Far away in the stream, wherever it wishes

Wherever it wishes, far away from this world
Between the sea and the stars

The song describes waiting, possibly forever: Aren’t we all waiting? What are we waiting for? For whom are we waiting? Happy Saturday!

Reshoring The Semiconductor Industry: The Chips Act

The Daily Escape:

Sunset in Yarmouth Port, Cape Cod, MA – July 2023 photo by Cynthia Maciaga

The semiconductor industry is big, complex, and important. Semiconductors are also an important test case for America’s ability to revive its domestic manufacturing base. There’s a lot riding on Biden’s Chips Act that became law one year ago. It is a $50 billion package of subsidies, tax credits and other sweeteners designed to bring advanced chipmaking back to America.

As a result, Taiwan Semiconductor Manufacturing Company (TSMC) is investing $40 billion in Arizona. Samsung is investing $17 billion in Texas. Intel, America’s biggest chipmaker, will spend $40 billion on four semiconductor fabrication plants, or “fabs” in semiconductor parlance, in Arizona and Ohio. Both Democrats and Republicans regard it as a bipartisan legislative triumph.

But, finding highly skilled labor is key to the Act’s success. While America still has world-class semiconductor researchers and designers, we no longer have the kind of skilled labor that turns silicon wafers into electronic circuits. Chief Investment Officer magazine quotes Joseph Quinlan of Bank of America (BOA):

“America’s manufacturing renaissance could either be delayed or derailed by mounting structural headwinds….The US will have graduated only 108,000 technicians (who operate, maintain and fix electronic gear) by 2030, but demand is for 130,000 by then….Similarly, the nation will have produced 42,000 engineers and 21,000 computer scientists at that point, yet will need 69,000 and 34,000, respectively.”

BOA says that the other shortfall is construction workers. Construction of US factories has climbed 80% from a year ago, yet the nation has 374,000 unfilled construction jobs. We’re already seeing the problem. From the Economist:

“…The first of TSMC‘s factories was due to start production next year. But in July it announced that the launch would be put back to 2025 because it could not find enough workers with the expertise to install equipment at such a high-tech facility.”

The problem is during the delicate final phase of installing the most high-end equipment. Mark Liu, TSMC’s chair, said in a July earnings call:

“…there is an insufficient amount of skilled workers with those specialized expertise required for equipment installation in a semiconductor-grade facility.”

As a result, TSMC is sending skilled workers from Taiwan to teach Americans how to do the job. The Commerce Department forecasts that about 100,000 workers may be needed for the construction of these new fabs in the US.

The chip market breaks down into “leading edge” chips, followed by “advanced” chips and “trailing edge” chips, sorted from the smallest chips to the largest. The Economist says that by 2025, American chip factories expect to be churning out 18% of the world’s leading-edge chips (see chart below):

This seems highly optimistic if we can’t get these new plants built or staff them. Leading-edge fabs that are built in America will take longer to build and will be smaller than those in Asia. In China and Taiwan, companies can build out a new fab in 650 days. In America, the average construction time is expected to be 900 days, or 40% longer. Construction costs, therefore, can be 40% more in America than in Asia.

Regarding size, in Arizona, TSMC plans to make 50,000 wafers a month—equivalent to two “mega-fabs”, as the company calls them. In Taiwan, TSMC operates four “giga-fabs”, each producing at least 100,000 wafers a month. Size matters: The more chips a fab makes, the lower the unit cost.

More from the Economist: (emphasis by Wrongo)

“America will produce enough cutting-edge chips to meet only about a third of domestic demand. Apple will keep sourcing high-end processors for its iPhones from Taiwan.”

Overcapacity is a possible threat. The Economist says that in 2019, China made one fifth of “trailing-edge” chips, which go into everything from washing machines to cars and aircraft. But by 2025 it will produce more than a third of them. It’s possible that excess supply from China will put downward pressure on prices. In the long run, this could hurt higher-cost American fabs.

So, while there has been substantial progress in just a year, the US isn’t going to undo 20+ years of offshoring chip manufacturing in the next 24 months. The Commerce Department says it wants companies to collaborate on building up a construction workforce, so that workers trained for one project can move on to other fabs that are being built. In this respect, TSMC’s plan to import Taiwanese trainers is less of a bug than a feature, part of the process of helping to build knowledge.

Once the fabs are built, they’ll need technicians to operate them. Such workers have historically required two years of training at a community college or a vocational school. But companies and educators are experimenting with much shorter courses. Columbus State Community College in Ohio, where Intel is building two fabs, is offering a one-year program. The aim is for students to be job ready for Intel as their fabs come online.

But, will these companies be willing to put candidates with one year’s training anywhere near the multi-million-dollar machinery inside their fabs?

The fabs also need engineers to run them. Universities near some of the fabs under construction, including Arizona State and Ohio State, have expanded their offerings of semiconductor courses as part of degrees in engineering and physical sciences. Leading the charge is Purdue University in Indiana: last year it launched a semiconductor degree program for both undergraduates and graduates.

And the flow of students seems encouraging. Intel expected 100 registrants for its quick-start courses, but 900 showed up. At Purdue enrollment has also been very strong. Handshake, a job platform for recent graduates, reported that applications for full-time jobs at semiconductor companies were up by 79% compared with last year, versus 19% in other sectors.

Returning to having a strong, vibrant high tech manufacturing industry in the US is good, both strategically and economically. But for the immediate future, it remains a gamble: We’re saying that the economic reasoning for moving manufacturing offshore in the past still exists. But it’s important enough strategically that we (and these profit-seeking corporations) will somehow underwrite the cost disadvantages.

Relearning basic skills such as cutting wafers into chips and packaging them in hard plastic casings will take time. The welcome news for these new fabs is that colleges and universities see an opportunity in helping train the new labor force.

But we will still be dependent on other countries. We do not have a secure domestic supply of lithium, nickel, graphite and other minerals needed to expand production of solar panels, wind turbines, semiconductors and electric vehicles. BOA points out that American imports of lithium-ion batteries from China more than doubled in 2022, to $9 billion.

So, while there’s lots going on that may someday be positive, China represents a potentially dangerous choke point given that US-Sino bilateral relations are at a decade’s low. We’re depending on them to continue providing much of the materials crucial to our new manufacturing capacity, while we’re in the middle of a serious rift with them.

Reshoring manufacturing, especially high value manufacturing is America’s dream. But it will take unprecedented cooperation between the government, multinational firms and our higher education system to make it happen.

Four Indictments, 91 Counts

The Daily Escape:

Sunrise at Laite Beach, Camden, ME – August 2023 photo by Daniel F. Dishner

There’s plenty of good reporting and bad punditry out of Georgia. So Wrongo, as in the past, will limit what is said about it here. From the NYT’s Peter Baker: (emphasis by Wrongo)

“…most Americans made up their minds about Mr. Trump long before prosecutors like Fani T. Willis or Jack Smith weighed in, polls have shown. He is, depending on the perspective, a serial lawbreaker finally being brought to justice or a victim of persecution by partisans intent on keeping him out of office.”

Republicans will continue to rationalize Trump’s criminal behavior. Their main talking point today is that the Democratic Party is part of a giant deep state cabal working to take down Trump. It is the Dems, not the Donald who are guilty of election interference. And what about the Biden Family Crime Syndicate?

The courts are finally treating Trump as the career criminal he’s always been. And many pundits are shaking their heads, saying that the shock to the American political system is going to be extreme because Republicans are angry.

What the pundits and the wingnuts don’t understand is that the rest of us are angry too. We’re livid that this cancer of a person has evaded justice after what he did post-the 2020 election. We’re enraged that his goons desecrated the Capitol. Finally, we nearly stroked out once we realized that after trying to overthrow our duly elected government, Trump and cronies seemed to get away with it.

And we plan to vote in historic numbers.

Republicans think they are the only side that feels passionately about Jan 6, but that is a huge mistake. Many Americans are angry that justice hasn’t been done. One foundational tenet of the MAGA movement is its southern anti-DC attitude. But Trump has in essence been saying to Georgians that they screwed up. That Georgians held a fraudulent election. It seems highly unlikely that framing will play well with a Fulton County jury. (Although it will only take one MAGA jury member to create a mistrial.)

A few other thoughts: The sooner journalists stop pretending that Republicans care about holding other Republicans accountable, the quicker we can move on to saving our democracy. Most mainstream journalists miss the moment because of their inbred need to show both sides of an argument. It was Jonathan Foster formerly of Sheffield University who said:

“If one person says it’s raining and another says it’s not, a journalist’s job isn’t to report that disagreement, but rather to look out the window.”

America’s journalists should heed Foster’s advice.

Finally, the importance of the Georgia case is that Trump can never pardon himself if he’s found guilty in Georgia. In fact, Georgia’s governor doesn’t have that authority. From the Atlanta Journal Constitution: (emphasis by Wrongo)

“Unlike the federal cases, which could be dismissed by a future Republican president, Georgia’s pardon process is in the hands of an independent board, not the governor. Under the state’s rules, a person needs to wait five years after they serve any prison sentences before they can be considered for a pardon.”

What kind of person holds on to a lie and builds a scaffold of dishonesty around it? At any point in Trump’s Big Lie, from voter fraud to conspiracy, Trump could have said, “I lost fair and square, and I’ll get him next time”. Many in his Party in Georgia did just that. But Trump pushed on. The Senate could have convicted him at a time when the Capitol was in a damaged hulk. That also could have spared the country where we are today. But most Senate Republicans couldn’t find the courage.

Another tragedy is the enduring distrust of and lost faith in those America’s institutions that still function, if tenuously, today. Whether Trump wins or loses these cases, or whether he wins the White House again, this damage will take decades to undo.

We have zero control over what happens next in the various courtrooms. We have no influence over the juries who will weigh the evidence. Whatever the result, it will be divisive. But we won’t heal unless we lance the boil. Yes that means Wrongo is saying that Trump is a festering abscess poisoning our nation.

We need open, transparent trials, with public records of all witnesses and evidence. No one should argue for pardoning Trump because they’re afraid of his insurrectionist allies.

Trump and America deserve REAL trials, with REAL sentences. And we can move forward from there.

We were wrong to pardon Nixon. We let other Republicans (like Reagan and Bush Sr.) slide based on a wrong-headed sense of respect for the office, setting a bad precedent. It encouraged later Republican presidents to think they could rely on magnanimity when none was deserved.

Nail the crooks, starting with Trump.

The Problems With Childcare

The Daily Escape:

Sunset with Cosmos flowers, Blue Ridge Mountains, Franklin, NC – August 2023 photo by Amy Barr

Monday’s Wake Up Call is that we’re in the middle of a childcare crisis, one that dates back to WWII. Daycare costs too much, daycare workers don’t earn enough, and many daycares don’t make money and are going out of business.

Today, anyone who has tried shopping for day care knows that it’s a tough marketplace. Care.com, an online platform where people can hire housekeepers, pet caretakers, nannies, and more, publishes a yearly Cost of Care Report to help US families understand the cost of childcare. Their June 2023 report found that on average, US parents spend 27% of their household income on childcare expenses:

“Households with children make up 40% of the total US population. And with a national family median household income of $91K, child care costs for the typical American family are even more staggering:

– 45% of families earning less than $100K annually will spend more than $18,000 on childcare in 2023, amounting to 18% of their household income (HHI).

-43% of families earning less than $75K will spend more than $18,000, amounting to 24% of their HHI.

-39% of families earning less than $50K per year will spend more than $18,000, amounting to a whopping 36% of their HHI.”

And increasingly, economists are saying that more women would be working if childcare was available. From Axios:

“In a research note about Friday’s jobs report, the chief economist at consulting firm RSM US did something surprising: Instead of talking about rate hikes or soft landings, he made the case for universal child care.”

Axios quotes RSM’s Joe Brusuelas:

“Childcare for kids under the age of 5 is increasingly an issue for more mainstream economists who are concerned about the prospect of long-term labor shortages in the US. Universal childcare is the most realistic way to help expand the labor force at a time when the economy needs workers the most,”

“The US needs more workers, and there are more women sitting on the sidelines of the labor market than men.

-Right now, close to 86% of working-age men are employed compared with 75% of women. That’s a record for women, but it’s also far below the rates for men — there’s room to grow.

-Substantial childcare investments, like those proposed in the now defunct Build Back Better bill, could increase mothers’ employment by 7 percentage points, with bigger jumps for low-income families, according to estimates in an NBER paper published last year.”

The underlying problem is the economics of childcare. First, it’s difficult to get information about childcare costs either online or over the phone: Daycares often only share their prices after you have visited their facilities. And many daycares have waitlists stretching from six months to a year.

Economists say that long waitlists are a classic sign that something’s wrong with that particular marketplace. In this case, waitlists indicate that daycare prices are too low. But parents say that the price for daycare is actually too high. NPR reports that the median price in daycare for an infant in a large county in the U.S. is $17,000 a year. Also, more than 60% of families can’t afford the full cost of quality day care.

Meanwhile, daycare owners can barely afford to stay open. NPR interviewed a daycare provider in Iowa who said that salaries are 83% of their monthly budget:

“Five percent goes to their loan payment. 4% is operating expenses, cleaning supplies, snow removal, play kitchens, things like that. Three percent is utilities. Another 3% goes to groceries….And 2% is for their insurance and their building insurance and worker’s comp.”

Along with labor, that equals 100%, meaning the center makes no profit. It’s probable that the daycare owner’s pay is in the 83% labor total, but still it means zero profit. The Iowa daycare pays its staff between $12 to $15 an hour, while the local Chick-Fil-A advertises $16.75/hour to start. The Iowa daycare has a census of 72 kids, which requires 25 staff.

Daycares are required by law to hire a ratio of staff/per child, a higher number than other low-wage industries, like fast foods need. In fast food, labor is about 25% of the total costs, and the volume of sales is in the tens of thousands, not the 72 kids that a wage increase would effect in the Iowa daycare.

Since labor costs are such a high percentage of total costs in daycare, increasing wages means prices paid by families of children in daycare have to rise drastically to cover the higher costs. Wrongo did a back of the envelope calculation for the Iowa center. If their base pay was $12/hour and it was raised to $15, the average monthly charge for one of the 72 children already in daycare would increase by $360/month, or about 47%!

The broken system is made worse in the US because we don’t have long maternity and paternity leaves.

Funding for childcare that was put in place during the pandemic is set to run out in September. Once we hit that “childcare cliff,” 3.2 million children will lose federal funding. More centers will either have to raise prices, cut staff or shut their doors.

Universal childcare has a tortured history in the US. During World War II, women replaced men in the domestic workforce. But who would take care of the children? The US government answered by enacting the Lanham Act, the first and only universal child care program in American history. An estimated 550,000 to 600,000 children received care through these facilities, which cost parents 50 to 75 cents per child, per day. The program ended in 1946.

Nixon vetoed a universal childcare bill in 1971 that would have created federally-funded public childcare centers across the US because Conservatives argued that the bill was communist and that it would be the end of the American family. A group called Iowans for Moral Education asked “Whose Children? Yours or the State’s?”

Time to wake up America! If you don’t want society to help take care of kids, you’re an asshole no matter what reason you give for being against funding. These kids didn’t ask to be here and they have done nothing to deserve not having societal support. If you think you can make America great again by making it harder to take care of kids, you’re wrong.

To help you wake up, watch and listen to a scene from the 2003 film “Daddy Daycare”. In this scene, Charlie (Eddie Murphy) and Kim (Regina King) try to find a good preschool for their son Ben, but it turns out to be impossible. Life’s still like this 20 years later:

Have we reached peak MAGA?

The Daily Escape:

Glacier Park Lodge, Glacier NP, MT – August 2023 photo by Jack Bell Photography

Wrongo’s Magic 8 Ball says “yes”. Let’s start with the Ohio Republicans failing to pass a state constitutional amendment that would have required a 60% supermajority to amend their constitution instead of a simple majority. That means the GOP failed to make it more difficult to enshrine abortion as a right in the state.

Ohioans voted 57% against the amendment. It followed similar unexpected defeats in Kansas and Michigan, along with losing the Supreme Court race in Wisconsin. These are Republican losses in very conservative places. From the WaPo: (emphasis by Wrongo)

“A review of six statewide votes since last year, including Ohio’s, shows that in 500 of 510 counties, access to abortion outperformed President Biden’s 2020 results….Across those counties, including a lot of deep-red ones, the margin of support for abortion access topped Biden’s 2020 margin by an average of 26 points, a significant shift to the left….Of the 510 counties included in the analysis, only two counties that voted for Biden in 2020 also opposed access to abortion. Among Trump-voting counties, 81 supported that access.”

These local MAGA stalwarts are getting their clocks cleaned on culture war issues. Republicans have repeatedly shown that their abortion agenda and their authoritarian agenda are really one and the same. And this week’s sweeping pro-choice victory in red Ohio shows once again that a majority of voters find both of those linked agendas repulsive. Politico quotes a national Republican operative:

“It has become quite difficult to rely on state parties….Because people who are involved for the right reasons…are pushed out, and now you’re stuck dealing with fringe characters who don’t know how to win elections, can’t be trusted to manage resources, and play with people’s worst instincts.”

In the Ohio aftermath, it seems that Republican politicians are still thinking that women in America will forget about abortion rights by the time 2024 rolls around. But it turns out most normal people don’t care much for sex-obsessed Republicans peeping through their bedroom keyholes.

And there are other problems for state-level Republican Parties. The National Review reported that in four key states, the state Republican parties are collapsing, either by going broke and devolving into infighting:

“Even worse for the GOP, these aren’t just any states — Arizona, Colorado, Michigan, and Minnesota all rank as either key swing states or once-purple states that would be tantalizing targets in a good year.”

More: (brackets and parenthesis by Wrongo)

“If Republicans [lose]….the 2024 elections…(which would be their fourth straight loss)….a key factor will be the replacement of competent, boring, regular state-party officials with…blustering nutjobs who have little or no interest in the basics of successfully managing a state party or the basic blocking and tackling involved in helping GOP candidates win elections.”

Back to Politico:

“Michigan’s Republican party is broke. Minnesota’s was, until recently, down to $53.81 in the bank. And in Colorado, the GOP is facing eviction from its office this month because it can’t make rent. Around the nation, state Republican party apparatuses — once bastions of competency that helped produce statehouse takeovers — have become shells of their former machines amid infighting and a lack of organization.”

OTOH, there will be plenty of Republican money flowing into these states in 2024 general election via Super PACs. That will largely be directed at turning out Republicans in support of their presidential candidate, but it will also help down ballot Republicans as well.

Democrats see an opening in some swing states and are redoubling their efforts to win more state legislative races, but the national Republicans has given some help to local parties.

In June, the Minnesota State Party received a $160,000 transfer from Protect the House 2024, a fundraising committee backed by House Speaker Kevin McCarthy. Other state parties critical to the fight for the House including Pennsylvania, California and New York also got six-figure checks from the McCarthy-controlled fundraising operation in June.

The conservative youth PAC Turning Point USA has announced it’s expanding efforts in Arizona, Wisconsin and Georgia ahead of 2024. Turning Point plans to spend $108 million in those three states and says it has recruited 3,000 state party precinct leaders around the nation since 2020. They will use this group to influence state parties to replace traditional local GOP leadership.

Finally, two Republicans made moves to join Republican Senate primaries in which they aren’t wanted. In each case, the candidate could win the party’s nomination, but would almost certainly get beaten by a more moderate Democrat in the general election. Toxic cloud Kari Lake appears to be joining the Arizona race, and in Montana, Rep. Matt Rosendale wants to run against Democrat John Tester. Rosendale lost to Tester by 3 points in 2018. The state GOP’s choice is retired Navy SEAL Tim Sheehy.

All of this should be good for Democrats, but as always, turnout will decide the 2024 election. As long as Republicans keep serving up pretend culture war issues that are unpopular with voters, it looks like Dems will do better in 2024 than recent polling predicts.

Happy Saturday! It’s time for our Saturday Soother. Here in the northeast, we’re having temperate weather, with scattered showers later. So quickly grab tall glass of lemonade and a chair outdoors in the shade. Now spend a few minutes thinking about Robbie Robertson of The Band who died last Wednesday. Somehow, this one hurts Wrongo a little more than the deaths of most musical contemporaries. The big irony is Robertson is categorized in “Americana” music despite having been born and raised in Canada.

Wrongo has previously featured Robertson and The Band six times. Here are two tunes to watch. First, a reworking of The Band’s classic tune, “The Weight” written by Robertson and remade in 2019 for the 50^th anniversary of the song.

It was produced by the charity, Playing For Change and features musicians performing together across 5 continents, led by Robertson and Ringo Starr. The musicians are incredible, but whoever mixed and edited the video deserved a Grammy. The shift between vocalists and locations feels seamless. The sound is nicely balanced, and the editor also gives each musician a sufficient share of the limelight. Take a load off and turn it up. Trust Wrongo, you won’t be disappointed:

Second, here’s one from the 1978 epic “The Last Waltz” a documentary film by Martin Scorsese capturing The Band’s last performance. Watch and listen to “Further On Up The Road“, first recorded by Bobby “Blue” Bland. That’s Levon Helm on drums and Robbie Robertson on guitar along with Eric Clapton. A little known fact is that Clapton asked to join The Band in 1968. They said no:

In these two videos, we see Robertson as a young man playing alongside Clapton. And we also see him fifty years later as a 76 year old, reprising a song he had written in 1968. Thanks Robbie!

Ukraine War Reveals Our Broken Military Supply Chain

The Daily Escape:

Archangel Falls, Zion NP, UT – August 2023 photo by Torsten Hartmann Photography

The most important thing we’ve learned from the Ukraine War is that the US isn’t ready for a protracted war. One of the big reasons why, as The Insider says, America no longer builds weapons the way it used to. And we need to start building weapons again at tempo.

The Center for Strategic and International Studies (CSIS) has drawn a similar conclusion about US weapons manufacturing: There is no surge capacity and it will take years to revive it. According to their study, replacing the inventory of the critical items used in Ukraine, like 155 millimeter artillery shells, will take 4-7 years; Javelin missiles will take 8 years to replace; Stinger missiles 18 years. Before the Ukraine War broke out, the US was producing only about 14,000 155mm shells per year, enough for two days of fighting in Ukraine at current usage rates.

This scramble for ammunition reflects how ill-prepared the US and its allies are to sustain an intense and/or protracted land war.

Think back to America’s weapons building capabilities during World War II. We became an industrial powerhouse, cranking out warships and aircraft at a breakneck pace. One example: The Navy built ships in just weeks — its fleet grew from just 700 to over 6,000 over the course of the war.

The US maintained this capacity for decades but, as The Insider reports:

“Nowadays, it might take years to build a US Navy ship. The reasons for this are complex — shifted priorities, increased technology on board…labor costs — but the effect is clear: In a high-intensity conflict, the US would face challenges in not only producing vessels but also repairing any ships damaged in battle.”

These aren’t the only weapons that are in short supply. The Pentagon issued a study in April on the contraction of our Defense Contracting industry, which went from 52 primary contractors in the 1990s down to just six today. (full disclosure: Wrongo owns what is for him, a substantial number of shares in one of the six companies.)

During Clinton’s presidency, following the fall of the Soviet Union, Defense Secretary Bill Perry convened defense industry CEOs (known in the industry as the “last supper”) and told them that they should not assume production contracts would be maintained at Cold War levels, and they needed to diversify to survive. Many of the companies got out of defense production, and those that remained merged to secure market share of what became dwindling orders from the Pentagon.

This insured that US weapons suppliers wouldn’t be ready for a future that included China’s defense spending surge, the Russia-China strategic partnership, or today’s war in Ukraine.

Now, the Pentagon is revisiting whether industry consolidation has gone too far.

The WSJ reports that today, the industrial base of defense vendors is about 55,000 companies, down from 69,000 in 2016, and many of them are small firms. This smaller base has become a choke point as shortages of labor, chips, rocket motors and other components are stymieing efforts to boost arms production. The WSJ quotes Halimah Najieb-Locke, the Pentagon’s deputy assistant secretary of defense in charge of industrial-base issues, that the Pentagon:

“…is increasingly reliant on a smaller number of contractors for these critical capabilities….That impacts everybody’s ability to ramp production.”

These supply chain issues also dog the global arms manufacturing industry. US companies hold the first five spots in the top 10 ranking of arms sales, with China taking another four. The consolidated sales of the top five have fallen since the start of the Ukraine War.

Having this paradoxical slowdown in sales amid an increase in demand speaks to the larger challenges of a defense contractor base that is geared to peacetime production. The Defense Department has a role in this failure, since they rarely award contracts for multiyear procurements beyond current requirements. Air Force Chief of Staff Gen. CQ Brown said that the military hasn’t focused enough on keeping a steady flow of munitions production and procurement:

“In some cases, because you don’t have a threat on your doorstep, munitions aren’t…high on our priority list…”

Making the age-old point that sometimes, “just in time” isn’t. More from the WSJ: (emphasis by Wrongo)

“Lockheed and second-ranked Raytheon Technologies Corp. jointly produce…Javelin antitank missiles, but they expect it will take two years to double output that is now at around 400 a month.”

“Greg Hayes, chief executive at Raytheon, said that Ukraine has burned through five years of Javelin production since February and 13 years’ worth of Stinger antiaircraft missiles.”

Aerojet Rocketdyne is an example of a small but crucial cog in the defense industry. It builds the rocket motors used in the Javelin and Stinger missiles deployed in Ukraine. Labor and supplier issues have delayed its deliveries of rocket motors. Raytheon, who makes the Javelin along with Lockheed, said it will be 2024 before Aerojet catches up with engine orders.

The US is also facing a nearly $19 billion backlog in arms sales to Taiwan. Control of the Pacific would be a crucial part of any war with China, and Beijing has the world’s largest navy. According to a 2022 Pentagon report, the country has about 340 ships and submarines. The US, meanwhile, has fewer than 300 warships. Despite that, the US is committed to growing its fleet. Its number of ships is expected to increase to 350 by the 2040s.

To keep up with China, the US will need to build more ships and submarines more quickly. But it has a smaller number of shipyards and a skilled-labor shortage.

All of this will take money, billions of it. But we’re already first in the world’s defense spending. The worst military equipment is equipment that isn’t unavailable when it’s needed. That is not to say that the Defense Contractors should be given a blank check, but we are in dangerous times.

The US spends more on national defense than the next ten countries combined. Defense spending accounts for 12% of all federal spending and nearly half of US discretionary spending. The Defense Contractors are floating on a sea of profits from their captured Pentagon customer.

But is it better to spend extra dollars to have weapons inventory on hand than pay the much higher political cost of a military failure? Can those dollars be found within the existing defense budget rather than by adding to it? From a strategic viewpoint, shouldn’t we build capacity in peacetime when we don’t yet need it (while hoping never to), so that if the US does need it, the capital assets are in place?

The real issue is the stop/start government procurement process. We saw this in N95 mask sourcing, where domestic suppliers downsized over the years to a point where they couldn’t meet the surge in demand when Covid hit. After they ramped up, the government walked away from them when mask mandates ended.

This is also true in defense. Over the last 25 years, Congress has passed more than 120 Continuing Resolutions to fund the Pentagon instead of annual appropriations bills. With Continuing Resolutions comes chronic uncertainty for companies about when they’ll get paid, or when they can proceed to a new phase of weapons development or production.

Nothing is forcing the DOD to only do business with a small group of contractors (other than no one else bids on the contracts because the DOD won’t award to them). The issue is a shrinking domestic manufacturing base, and a lack of sustained business in the defense sector to support a larger field of competitors.

Market forces require efficiency. Sadly, efficiency comes at the cost of resiliency. National security priorities should deal with the stop/start issues that face our defense industry. In 2020, the National Defense Industrial Association’s report on the readiness of the Defense Industrial Base said 27% of critical defense supplier industries would likely experience shortages in the event of a surge in demand for combat-essential products.

And two years later, it happened in Ukraine.

Over the longer term, the US should develop an industrial reserve policy that pays companies to maintain excess capacity, such as warehousing critical, long lead-time parts. Much of today’s production challenges could be easily resolved by giving selected weapons or weapons systems a “protected” status, making them outside of the usual DOD acquisition and contracting rules that limit the flexibility and commitment needed to ensure a continuous production line.

This strategy would be expensive. But Russia’s war in Ukraine has reinforced the necessity of maintaining a deep inventory of weapons which we no longer have today. And it’s no longer a question of whether the US industrial base is prepared to rapidly surge production. It’s clear that we are not, because the necessary investments have not been made.

(hat tip to Brendan K. for his useful insights for this article)

Bidenomics For The Win

The Daily Escape:

Daicey Pond, Baxter State Park, ME – July 2023 photo by Lily Hurd

And we’re back! Apparently we didn’t miss much, just that July was the hottest month in the Earth’s history, and there was a new Trump indictment to go along with the others. And the Eagles announced that they will be starting their farewell tour. Another farewell tour?

While listening to the BBC, Wrongo heard a pundit say that “indictments are Trump’s big political problem while Biden’s is the economy”.

Really? Lots of Americans still think the economy is doing poorly, and are upset about it. People have already forgotten just how much economic dislocation happened during the pandemic. We’re still in the midst of rebuilding the economy and getting back to normal. The pandemic was a stark reminder of just how fragile America’s supply chains are and why they needed shoring up.

But looking at objective measures, it’s impossible to think the economy is bad. Because from the actual numbers, this economy is doing really well. Noah Smith asks: What do we want from the economy?

We want employment to be high, meaning that as many people as possible who want jobs can get them.
We want inflation to be low, so that people have certainty about how far their paycheck and their savings will go in the future.
We want real incomes to rise, meaning that we’re able to consume more than we could in the past, or save more if we want to.

And all three of these are happening right now, so maybe we’ve been in a “vibesession”, rather than in a recession. Maybe decades of no-to-low inflation left people psychologically unprepared for what a modestly sharp but short inflationary period would feel like.

Also, our political polarization has led to many people wishing for the worst possible economic outcomes. That, more than anything else, is probably driving the narrative. Think of it like this: The average American’s reaction to rapidly rising prices and wages:

1) Wages go up: I did that

2) Prices go up: The economy did this to me

Conclusion? I’m good, but the economy is bad.

Despite that thinking, things really look fine! GDP growth is moderate. Inflation is cooling. The labor market is humming along. From the NYT’s Peter Baker:

“Inflation at long last is down. So are gas prices and Covid deaths and violent crime and illegal immigration. Unemployment remains near record lows. The economy, meanwhile, is growing, wages are climbing, consumer confidence is rising and the stock market is surging.”

Everything is headed in the right direction except for Biden’s approval rating.

Democrats had a major breakthrough in 2020 and 2021 when under Biden, the federal government finally spent at the levels we thought were required to pull the country out of an economic nosedive. The results were terrific. We’ve had positive effects on incomes, poverty, unemployment, and economic growth. However, when inflation really hit, Republicans and the economic establishment launched their counter-offensive: They blamed inflation on Biden’s programs. And that’s partially true.

Two things: Democrats haven’t unified around a program for fighting inflation that could be seen by Americans as an alternative to austerity. And Dems need an elevator pitch for voters that says, “we’re on top of the economy’s problems”.

According to the WaPo, a slide show circulating in June in DC showed that in polling, the Party was losing badly to the GOP on the most important issue of voters: the economy. The recommendation was that Dems shift messaging to “growing the middle class.” It was then that Biden started talking about “Bidenomics”. From Vox:

“Bidenomics is a…way to package some very real things. Legislatively, it entails items such as the American Rescue Plan, the Inflation Reduction Act, the bipartisan infrastructure bill, and the CHIPS Act. On the regulatory front, it tries to boost competition in ways big, such as antitrust enforcement, and small, like eliminating junk fees.”

In contrast to both supply-side economics and neoliberalism, Biden is focused on altering the structure of the economy. Over the past year, manufacturing construction in hi-tech electronics, which the administration has subsidized through the Chips and the Inflation Reduction Act, has quadrupled. Tens of $ billions in infrastructure spending has funneled to the states for roads, water systems and internet upgrades. More clean-energy manufacturing facilities have been announced in the last year than in the previous seven years combined.

Even though polling shows that voters trust Republicans over Democrats on the economy, historically the economy has generally done better under Democrats. There’s no single reason that’s the case, but it’s true that Republicans have a straightforward message on the economy — spend less, slash taxes, weaken government oversight — that’s easy to understand.

Bidenomics is a way to try to change that. The goal of Bidenomics is two-pronged: To get Americans to see all of the good that there is in the economy right now, and to tie it back to Biden.

If Bidenomics continues to alter the structure of the economy in ways that help the vast majority, voters will give Biden another term and possibly reward Democrats with both Houses of Congress.

And if Bidenomics is successful, it will make the American economy stronger and fairer in the future.

Let’s close today by remembering Sinéad O’Connor, who died in July:

This wall art was painted by emmaleneblake in Dublin near The George, a gay bar. Sinéad was right about the Church. Let the memory of her anger be fuel for other battles!