Wednesday, September 21, 2016

Bigger problems emerging with Trump

The gap between barroom and high school debates about Trump, and the actual implications for the
future of our lives, has become greater and greater, making it more difficult to write about such a sensitive issue calling for treatment at multiple levels. But this week, the energy has started to switch again notably away from Trump, and there are important considerations in play which demand to be voiced.

But first should I mention the naive levels?

Many people have said: "We are in such a hole going nowhere that I would sooner vote for a dog than for Clinton. A lot of the Clinton family new age reforms have turned out to be such a Trojan horse for people screwing the average man, and we really need to break the system of corruption which has gone too far in both parties in Washington. Sooner vote for a dog... but what about rabid hyena? What if the rabid hyena is looking at you with hungry eyes and is ready to bite you?"

Trump has made (or echoed) some very important points which need to be taken very seriously.

Hillary Clinton's speech about "bucket of deplorables" has gotten lots of barroom type coverage, but in fact, however fuzzy and politically incorrect her wording, she was trying to make some important points in that speech, and it reflects well on her. Leaving aside the word "half" (which she rightly regrets, and did not intend to mean "50%"), she was emphasizing that there are two sides to Trump's support -- a side based on a dangerous kind of primal scream and destructive anger, and a side based on important legitimate concerns which a new President and a new Congress need to think really hard about. It's a plus for her that she was trying to get others, like big donors, to also pay real attention to those legitimate concerns, as part of re-optimizing the course.

When these games occur... I always remember a special day when I worked in the office of Senator Specter, one of the most honest, capable and balanced people who has ever served in Congress. (Even if he also rated high in the "worst boss" polls, a subject for another time.) Word came from unions in Pennsylvania that unemployment -- jobs -- trumped everything else, and they wanted more (max) to support jobs in Pennsylvania. So two groups emerged in the staff -- one aiming at putting out the most convincing possible propaganda to say that the Senator was already doing the very most that could be done to fight for more jobs in Pennsylvania, with lots of success, and another trying to come up with new creative ideas for how to do better (not forgetting the larger tradeoffs in play).
The need for the first group is obvious, when a Senator may be facing re-election, but I wish we (and others) had been more effective in also empowering the second kind of group in parallel, and making it possible to reduce conflicts. Trump, and the REpublican Party in general, and Bernie Sanders, all did a magnificent job of  making people aware of the huge importance of the long-term trend towards LESS SATISFYING jobs, less security and greater inequality over the past few decades in the US,
a DIFFERENT ISSUE from the overall issues of unemployment rate and productivity growth which people like me (with degrees in mainstream economics) have been putting more attention to.

OOps: I guess I have to justify what I just said about my right to talk about economics. My B.A. in economics from Harvard was only magna, not summa, because I tried to address too ambitious an issue in my undergraduate thesis (an issue which did cry out for SOMEONE to address), but hell,
on the economics GRE's it looks as if I may have gotten the highest score in the whole US.
(I did not even apply to Yale for PhD, but since GRE offered three schools for free I sent to them --
and received an acceptance without having applied.) My M.Sc. from London School of Economics
was emphasizing European institutions -- not exactly a small aspect of rounding out the understanding. While my PhD was in applied math, it included world's first development of an affordable econometric analysis package for "ARMA" style econometric modeling (in TSP);
use of that command later won several people Nobel Prizes in economics. In my nine years at DOE, I developed three of the large official econometric models used to produce the Annual Energy Outlook, including  a model of industrial energy demand which outperformed all others developed for that purpose, featured in the evaluation studies of the Stanford Energy Modeling Forum. In studying industrial energy demand, I learned how crucial the differences are across different sectors of industry, and how unrealistic the models and policies are which do not really account for sectoral shift. To this day, I see economic policy being made all over the world (except Japan!) which are so blind to these effects... that they cause endless pain here and now, even above and beyond the long-term issues Trump is rightly trying to draw attention to.

Trump is also right that excessive political correctness has really gotten in the way of US foreign policy. But that has been a bipartisan problem, and the folks who taught international politics at LSE have long been aware of the Reality TV biases and unrealities of US foreign policy. Morgenthau was required reading even in freshman year when I was at Harvard; whatever the failing of Morgenthau (who talked a lot like Trump), it makes me sad that so many powerful people in the US seem surprised by the truth of a lot of what he said. Or by the huge literature on how difficult it is to create democracy, and on what is required to do so. Again, this is a bipartisan problem; foreign policy under Bush junior and Cheney was perhaps the biggest failure of White Houses in past 40 years, and Trump's call to get out of that hole is a big plus.

As I think back on these problems... and on the need to firmnly clean up the REpubican party...
I worry that I may have made a huge mistake to support Obama over McCain back at the time of that election. If we had had McCain. we might have passed a bipartisan climate bill by now, and forced out the cottage industry of liars and brain-destroyers built on  that issue. Even more important, we might have had a low-cost reusable launch vehicle, giving us more than time times as much presence in space (for all purposes, from missile defense to energy to basic science) per dollar as we can afford now, when corruption in Washington has virtually disarmed us. And yes, we would have had the kind of real competition and pressure for real performance which Trump talked about very briefly in the Republican debates on social security, but no more.  And above all, limits on corruption (legalized or other) in  Washington would have been much more forceful. As a CEO kind of personality, McCain might even have reversed the very dangerous rot within government agencies seeded by Cheney but still growing (and ironically responsible for a lot of Hillary Clinton's personal tribulations!). I voted for Obama in great part because of economics (because of things I read in the Financial Times!), but maybe a bigger recession followed by a new Democratic administration would not have been the worst outcome.

So now... why not bite the bullet, accept the need for balance, and go for the kind of hope and change which really got Trump started... hope to break the cycle of corruption in Washington, and to do what McCain would have done?

Well, hope is one thing... and we need to try to be open-minded... but recent data is overwhelming.

And no, I do not mean Trump's penchant for insulting anyone and everything. To be honest, Specter was not such a gentle soul either; he was actually less gentle than Trump. (I thought had before accepting the job with him for 2009, when much friendlier options, Sanders and Rohrabacher were available, people I felt I really could talk to much more easily. But Luda said: "Don't worry. I have trained you.  You are not like those people in the "worst boss" surveys; you are used to that kind of tough stuff.") No, I mean the now definitive evidence that his personality problems and cognitive gaps really are likely to spell economics disaster (and a few other disasters) too great for a timely recovery four years later, as was possible in 1932.

Above all -- this week, he really laid into the Federal Reserve, fulfilling a pet peeve of the Koch empire whose folks he has come to rely on more and more in recent weeks. I fully support core values of the Koch family in giving FREEDOM a very top priority, and in never forgetting it in any policy decisions -- just as I also never forget basic Quaker principles -- but managing a global economy is even trickier than rocket science or brain development.

When I think about the state of the world economy, a cartoon comes to mind. There is an old car,
sputtering and leaking oil. A group of preschoolers (one with the face of Hillary Clinton) is staring at the car, baffled about what to do with it, full of bright but naive ideas, and folks who want to drive looking on nearly desperate. And running into it from he corner is Trump with a great big sledge hammer saying "Don't worry folks, I have a great sledge hammer and I will make that car into something really great." And yes, the resulting debris would be really Yuge.

More precisely, this week Trump has said, roughly: "That dirty rotten Fed is personally insulting me. By prevent a world depression, they are increasing the chances that Hillary will be elected. If I am elected, I will get my revenge. Interest rates will go 'way up, worldwide, and money supply will go down. And I will restructure that Fed.... (maybe abolish it, as my new friends and advisors urge)."

Reduced money supply, worldwide, plus substantial rise in interest rates worldwide, plus
disassembly of financial structures, all timed to coincide with a reinvention of Smoot-Hawley..
a more perfect recipe for a world depression greater than the 1930's would be hard to imagine. Combine that with his promise to vastly expand defense spending, without serious attention to the needs associated with sequestration... well, it sounds as if he would do for the US economy what he did for his casino in Atlantic City.

It reminds me of a recent commercial, which begins: "The National Debt could crowd out our schools..."   which my mind fills in as "So therefore to cut that debt, we propose a vast preemptive cut in schools NOW." That is already happening, even under Obama -- but really, under Kasich's sequestration bill, which is already a deep crisis both urgent and long-term, which could only be salvaged by intelligent new understanding of how to address the sequestration issue. During the Republican debates, when social security "reform" came up, Trump briefly showed signs of ideas (truthfully, short-lived spiritual inspiration, long since washed away in his brain by other things)
for addressing these problems... but now... well, he seems like those folks who achieve one level of consciousness for about five minutes in church, who then go home and become re-enveloped in their day job with the mafia.

In Trump's case, however, it is truly weird that he is now committed to an economics policy which would substantially cut back BOTH on more justifiable real estate investment and on critical private sector investments. Right this moment, I am trying to explain a really exciting billion dollar private profitable investment opportunity (with exploratory funds already available but not US government)
which would also create lots of serious green jobs... and wish a guy like Trump could exploit serious ways of making private sector money that way... but if he pulls the plug on world availability of private sector capital, that could kill that. I regret that I have to include Trump as a crucial risk factor in that kind of investment, but he is. Being hard to guess is part of his strategy for making deals... but for investments, banks do not like to have to guess. To put it mildly.

When Trump talked about waterboarding, Hayden went on TV to say: "Hey, world, be ready for us not to obey your orders. We won't be pushed around." (And it seems Rogers would support Hayden, and have Congressional backing enough to control the tanks and the commissars.) Could it be that Hayden would actually WANT Trump to be elected that way, to open the door to the more complete scenario depicted in Orson Scott Card's series"Empire"? Do not underestimate the spiritual inspiration of Orson Scott Card (even though bias has led him to shockingly misconstrue Obama!).

Some folks imagine that they know a little history, and that the next great wave forward in American civilization is to get past that unworkable, corrupt old Republic period and create a great empire along the lines of Trajan.

That delusion makes me so sad, on so many levels, and I really hope North America does not fall into the huge, long-lasting pain which that delusion could lead to.

Luda has actually brought me to places like Trajan's old secret society clubhouse in Cordoba,
and to first-hand historical accounts for what happened under Trajan. Modern efficient reformers in those days (very similar in spirit to a certain type of well-heeled narcissistic reformers today) could easily calculate the superior economic efficiency of the slave-based latifundia over the old  Roman free-men system, and moved to spread it, especially effectively in southern Spain, Trajan's home base, with a political action network very similar to some of those now growing in power in the US today. And yes, they expanded the boundaries on the map of the Roman Empire. But -- they just about bankrupted the place in the process, and were simply not able to hold what they had nominally gained. (Memories of Iraq anyone? Actually, Iraq and Syria were part of that story too, and the Syrians and Iraqis remember. We are such idiots to discount what THEY learned!) Rome was saved when desperate people (from plebs to bankers) started to understand how bad their situation was,
and so... they were saved by the Gay Emperor Hadrian (as if Hayden were replaced by Sanders),
whose famous wall was part of a policy shifting from offense to defense, returning to market-based policies which had made Rome strong in the first place. (Is there hope that Koch brothers will support work aimed at MORE market-based competition and freedom, for actual humans, as they see how
the lackeys they have funded are working out even worse than the turncoat lackeys Ayn Rand depicted in Atlas Shrugged? Hey guys, how about you and I both quit politics and move to Michigan and build a new engine, both a near-term one and a way out one, just like in the book? It is quite serious.) But: Hardian saved the empire, but the latifundia system was too strong to save southern Spain; only Greece, which had preserved its old systems (like Germany today?) really was able to recover, and even money from American Gold mainly just flowed into Andalusia and out again elsewhere without bringing much progress to the people in that still-suffering area. I do hope that folks like Hayden do not allow pride to lead us to our own more than thousand year nothingness.
Gross inequality would be even more damaging economically now than it was then, because of the need for complex network-style distributed intelligence to cope with the more complex physical economic realities of the modern world.

So yes, a Trump election might not be followed by an election four years later to reverse the losses..
 and even if it were... well, the 1930's led to other problems which, in a nuclear world, might spell human extinction.

We have now seen what Trump comes up with when he "consults with the best people" on economics.  It leaves little room for hope. Present trends are certainly scary enough, but
a badly aimed sledge hammer suggests less and less possibility for anything worse. Trump has asked: "What have you got to lose?" Well, our lives, for one thing. And whatever is left of hope.

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