Current situation

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The current situation.

Apocalypse we have to say,  is not coming – we are already in it. Climate, finance, impact of robots, health, population. and more.

Post election we have the majority, angry at

  • Losing out
  •  Fear of losing what they have

These two are quite different, but both support Trump (as a voice of anger, not as a voice of policies). The Sanders supporters are part of that.

But we are in a phase where the anti-establishment progressives and the pro Clinton mainstreams appear to both share a common anti-trump agenda but are to be torn apart by the difference between anti-establishment (anti-Clinton)and pro-establishment (pro-Clinton) perspectives within the democratic storm-tossed “tent’,

So we have, going forward

  1. Trump supporters
  2. Third party supporters
  3. Democratic party supporters.

In the fight over cabinet, inauguration and the spring, we will see  much incivility. The progressives will do what they had feared the right would do post a Clinton election:take to the streets with violence and name calling. In short trying to making governance impossible and providing an excuse for repression (very dangerous)

The problem is, we cannot have a civil discussion because the real problem is wealth concentration and the stuff that goes with it: class and race disdain. An open discussion about capitalism, representative democracy, the media – all in the context of weak government, population increase, and near unavoidable climate change – seems to be beyond us, but we must try.

 

 

 

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1741. Three Trump scenarios

1. Kleptocracy, turn the world into a corporation he owns.

2. Autocracy. A monarchy except in name. Glitzy kingdom of donald. authoritarian rule, military, policy, security. Read Mussolini.

3. Fail to govern, too complex, pieces come apart and control is futile. Mafias or Democracies?

A hesitant 4th. The boy grows up. Henry the fifth from Hal. He is too impulsive and lacks self reflection enoughto do this I think, but could be wrong.

1740. Larry summers self and cohort congratulations

Need to quote this

http://www.nytimes.com/2016/12/05/opinion/its-time-for-a-reset.html?smprod=nytcore-ipad&smid=nytcore-ipad-share

Turning Point: World leaders confront rising anti-globalization sentiment.
In statistical terms, 2016 was a year of continuity for the world economy, as performance was quite similar to that of recent years. The big changes were political, as a widespread anti-globalization movement signaled a breakdown in a consensus among most political leaders that had held since the end of the World War II. It used to be generally accepted that reducing trade barriers increases prosperity and promotes peace, benefiting investing and recipient countries and promoting international cooperation in solving problems around the world. Almost all of this was called into question in 2016.

dc. The setup here is that everything is going well.
Both major party presidential candidates in the United States professed to be staunchly opposed to the Trans-Pacific Partnership trade agreement, and Donald J. Trump called for ripping up existing trade treaties like Nafta. Across the Atlantic, British voters opted to leave the European Union, while the ruling Conservative Party challenged the rights of foreign workers and the head of the Labour Party embraced socialism and expressed skepticism of Britain’s NATO membership. A trade deal between the European Union and hardly threatening Canada was almost scuppered by a recalcitrant Belgian province concerned about the effects of globalization on local workers. Movements hostile to the longstanding vision of an ever more united Europe gained strength in every major country.

dc. Fails to mention that the destruction of Greece and the lack of a political structure to the EU, had generated severe criticism.
Resistance to globalization was not confined to the West, nor to the industrialized world. Leaders including Recep Tayyip Erdogan in Turkey, Vladimir Putin in Russia, Xi Jinping in China and Narendra Modi in India all appealed to national pride, core values and strength, each placing uncomfortable emphasis on some variant of ethnic purity. In all four cases, any interest in universal values of openness or human rights is very much secondary to the reassertion of national strength.

dc. Fails to note that globalization wa creating inequalities and environmental destruction.
This renaissance of nationalism and resistance to globalization appears to be universal, and not the exclusive preserve of either the left or right. It seems to stem from a profound sense on the part of many groups that their lives are buffeted by forces beyond their control. As people’s distance increases in a geographic sense, in a cultural sense, and in the sense of a lack of shared identity, they lose confidence in their leaders’ abilities to protect them. Insecurity is begetting atavism.
These trends pose dangers. For all the problems and challenges, the past 70 years have been a period of unprecedented progress in increasing human emancipation, prosperity, life expectancy and in reducing violence. All of this would be at risk.

dc. This is a sanitized view. Third world incomes up for a solid percentage but their living costs have risen faster as many have been forced off land and into high rise living.
We need to redirect the global economic dialogue to the promotion of “responsible nationalism” rather than on international integration for its own sake. A classic example of a misguided initiative is the effort to promote a bilateral investment treaty between the United States and China. Even in the unlikely event that such a treaty could be negotiated, its effect would be to trade a reduction in America’s ability to control the behavior of Chinese companies in the United States for increased security for American global companies when they locate production facilities or otherwise invest in China. From the point of view of a typical middle-class American voter, the deal is lose-lose.
To enable the international community to engage in this dialogue, global cooperation is key, with the focus of economic diplomacy on measures that increase the range of policies that governments can pursue to support middle-class workers domestically.
When the Allied nations met in 1944 at Bretton Woods to negotiate the rules and procedures of a new international monetary system, the economist John Maynard Keynes recognized that a global economy will have a systematic bias toward contraction if countries that have borrowed heavily are forced to cut back spending while no pressure is applied to countries that are running large surpluses.
While economic growth continued in 2016 for the United States, the European Union and Japan, it did so at rates that would have seemed unacceptably low a decade ago. In these three economies, inflation remained below the 2 percent target that central banks aim for, and market indicators suggest that it might well remain so for the next decade. And most interest rates continued their downward trend, reflecting the diminished inflation expectations and a high level of saving relative to investment.
These and other statistics indicate that the United States and Europe are just one recessionary shock away from being caught in a deflationary trap.

Dc. Inflation js also a trap but of a different kind, being part of rich richer and climate destroyed.

Japan has been stuck in one for more than a decade, with expectations of decreasing prices prompting consumers to delay spending and save money. Assuring adequate pressure for stimulus needs to become a priority for the Group of 20, to precaution against deflation.

Dc. stimulus, whom dies ut give money to?
Given figures on the hundreds of billions of dollars lost annually because of tax sheltering, the gains from a global effort to prevent capital income from escaping taxation are at least comparable to those from highly controversial trade agreements. And such measures would make possible more support for the middle class.

dc. How would that support emerge?
In recent ….
The events of 2016 will be remembered either as a point at which we began to turn away from globalization or the one at which the strategies of globalization began to be reoriented away from elite and toward mass interests. As we make our choices over the next few years, the stakes are very high.

Dc. The ending is good but  his argument is..

everything was going well till nationalist populism interfered. Give the authority back to the people who managed the inequality (better called impoverishment on the margins) and dangerous overheating if the globe. And oh this time lets us manage the down sides.

 

 

1738. Equilibrium and wealth concentration.

Provocation # 60 equilibrium.

Here is a possibly naive question.

The equilibrium we have in our economy now is produced by a number if factors, forces, arrangements, that determine where the equilibrium is going. A moving point.

If we take simply the understanding that every cycle in markets moves wealth upward.. The rich have better information and can buy early at a lower price and with cheaper interest, and sell earlier at a higher price as the market starts downward.  Each cycle shifts the difference upward, making the rich richer.

Hence capitalism self-destructs. The hope is that regulation can keep the equilibrium point lower, but the pressure from within capitalism is always toward increasing profit, and narrowing the scope of the enterprise to what can be controlled or externalized. Things like the good of others is pushed aside. Climate is ignored by most business because it can only interfere with sales. The exception is business aimed at climate, but then the game is to use that business to make s profit by ignoring things like inequality and jobless automation.

So the question is, does not equilibrium dynamics lead to inequality? The equilibrium point of the dynamic is monopoly ownership?

The problem is, how else can we incentivize? The great agricultural empires did it with authoritarian control and hereditary class positions – roles. What is the future for new economic/political arrangements that are holistic and can cope with systemic problems?

1737. Entrepreneurship

I am all for entrepreneurship. We need  it to get to a greener sustainable and attractive  world.

But we are frozen in the current matrix of corporations and expectations. These require customers for new services. But the reality is, most people do not have any money to spend.  And wealth concentration (do the arithmetic) is making this worse.

Going  greener and sustainable is blocked by the desire to keep the current money machine going (even though it is not doing well).   The hopes for replacing non-green with green opportunities are limited to investments that that will continue the up escalator for money payoff to investors. If not by direct investment then by government (taxpayer) guarantees that make investment not only risk free but risk prone with no cost to investors.

Going green and sustainable  can’t work under these conditions.

If we start with the problems: debt, warming, wealth concentration, weakness of government, increasing likelihood of war..  you know the rest… any approach which maintains capitalism as deep inequality will not work.

So we need to free entrepreneurship from the need to make money to a desire to cope with the whole system.

 

This will be very hard. As one exec said to me “would you rather we continue as we are for fifteen yeas, and then collapse, or try to change now and collapse now?

 

I think this is a fairly common belief, especially among people with serious power.

 

We need entrepreneurs but we need entrepreneurs who are seriously interested in the good of all of society, not just the already rich and their professional support.

 

Drucker also wrote The End of Economic Man, showing how the despair of the lower large portion of society leads to fascism. Why don’t we read that?

1737. Who are the elites?

Provocation 59. Elites = professionals

Who are the “elites”? We tend to think they are they, not us. But lets take for the moment the idea that the elites are the owners of big capital and the supporting professional staffs of lawyers, accountants, pr firms, spouses and children, and all the people who have used licensing or selection, such as college admissions, to get a place in society. Residue of the old craft guilds.

The reality is that the game is quite fixed with prepared paths to neighborhood, school, college, and first “jobs” that follow from parental influence, outright interventions, and values. Some are supported by regulations that allow quasi monopolization of their small business such that the owner of a hardware store, a chain restaurant, can have an annual income in the neighborhood of a million. Other regulations create preferred paths to colleges and graduate degree, all protected by thousands of “procedures”, like the GRE, the grade system, grants and licensing that define and protect the professionals, making them part of the one percent, and being a target of the Trump voters. This would be tolerated if the income of the top 10% were reduced by 10%, the top one percent by half, the top .1% by 90%

The point is that the nexus of relationships is seriously hard to modify. This means, among other things that climate warming will proceed till the under 30 generation pulls governance apart, and inequality will continue to generate multiple social pathologies. We need to take responsibility that it was us, not the Trump supports who benefitted by and helped legitimate, if not create, the dysfunction we currently live in.

Our current mess highlights that the chief output of an economy is not the society of the spectacle as Guy DeBord brilliantly has it, but the society of power. We need to take seriously the idea that the power established is an economic outcome of the economy we have and participate in, as earners and spenders. Change must break habits. In order for economics to play a role in such changes we have to break out of the cocoon of economic formalism into the messy reality of the humanities and social sciences. From archeology through political thought to post modern novels.
PS.

Is this mere coincidence?

The first-move advantage in chess is the inherent advantage of the player (White) who makes the first move in chess. Chess players and theorists generally agree that White begins the game with some advantage.
First-move advantage in chess – Wikipedia
Wikipedia › wiki › First-move_advantag…

The white first rule seems to have been established in the 1860-1880 period.

1736. Wealth and climate

we can’t get very far on changing rules or goals so long as the system that makes the rich richer remains in place. Political forces from the powerful will resist any change that takes away power and wealth from the group, including the growth path.

We need growth, they say, to pay off the interest on the debt, and because so many broker types only make a living when there is growth. Breaking apart that system in some socially acceptable way, is key.