Chinese Saber-Rattling

I promised you saber-rattling and I took all week to get to it, but here it is at last.

China has deployed its first ever aircraft carrier group, the Liaoning, into the Western Pacific for the first time, in what is widely regarded as a response to Donald Trump's posturing, including his Twitter messages.  ("You kids" might not read that sentence and almost laugh, but being in my late 30s the fact the saber-rattling might occur in response to Twitter evinces a grim "LOL".) 

If you don't want to read the article, here's the crux of the matter:

China has been flexing its military muscles and has deployed its aircraft carrier, a symbol of naval power projection in the contested South China Sea.

With US President-designate Donald Trump intensifying his Twitter attacks on China and its aggressive stance in the South China Sea, China seems to be showing the world who is the boss in the neighbourhood.

How seriously should we take this?  Whenever two nuclear powers engage in a pissing match, there's always the possibility that things can go wrong.

That said, I don't get too scared about the Liaoning myself, and that's because I've read the War Nerd on this topic.  You should really read the whole article - it's long(ish), but it's also hilarious and informative.  The crux of what Gary Brecher d/b/a the War Nerd says is that aircraft carriers are cool looking but - hate to break it to you - sort of obsolete.  The new Chinese aircraft carrier isn't really about military strength projection; it's about an image.  It's about pride.

And that’s the point about this Chinese carrier: It’s about national pride, not military usefulness. The Chinese are after both those things, and it’s actually incredibly cool the way they’ve managed to get both. First, since they’re smart, they came up with a real weapon that totally neutralizes the US carrier fleet, a weapon that could sink all 11 of the US carriers in a few minutes, without even having to  bother with all the screening vessels and air cover and other useless “defenses” we’ve stacked around them. It’s not a glamorous weapon, it just works.

He goes on to describe China's DF-21 long-range ballistic missile, and makes a pretty good case that this weapon could take out any American aircraft carrier lickety-split.

In the interest of fairness, here are some people who really don't like Brecher's opinion regarding aircraft carriers going on at some length about it.  Maybe they're right and maybe he's wrong, although they seem awfully quick to defend the armored knight of the Middle Ages, even against the famed longbowmen who pretty decisively opened a can of whupass on the mounted armored knight, so make of their opinions what you will. 

So, it seems quite possible that China's aircraft carrier move is nothing to get worked up about.  However, insofar as this move speaks to a larger deterioration of the US-China relationship, it's troubling.  This thoughtful piece by The National Interest (full disclosure: I know nothing about The National Interest, but this piece sure seems reasonable to me) makes the point that ramped-up tensions in the South China Sea may make bilateral cooperation on North Korea more difficult, and the North Koreans are actually (1) armed with nuclear weapons and (2) fond of firing missiles to and fro, including potentially one day at America.

I'm going to go hang out with my wife and our cats in preparation for the New Year, but let me send this year off with a link to another tremendous (and relatively brief) War Nerd article on Chairman Mao and his relatively massive cojones.  2017 promises to be full of saber-rattling fun in the Pacific, and elsewhere!

Happy New Year everyone!!!

Sprint Jobs and Hospital Troubles

Donald Trump is taking credit for a plan by Sprint to bring 5,000 jobs to the United States.  SoftBank, which owns a controlling stake in Sprint, will also be bringing 3,000 jobs to the United States via another company in which they have a major investment interest, OneWeb.  That's 8,000 jobs Donald Trump can take credit for.  But there's a catch!

Unlike the Carrier deal, plans to bring these jobs to the United States predate Donald Trump's election.  So Donald Trump can take credit for these jobs, but he most certainly does not deserve credit for them:

Sprint later said that the jobs were part of a previously announced commitment by Japan’s SoftBank, which owns a controlling stake in the mobile phone carrier, to invest $50 billion in the United States and create 50,000 positions. That announcement, made by Masayoshi Son, the chief executive of SoftBank, followed a meeting with Mr. Trump this month.

SoftBank is also a major investor in OneWeb, a satellite start-up that Mr. Trump said Wednesday would create an additional 3,000 jobs in the United States.

Although Mr. Trump claimed credit for SoftBank’s $50 billion investment in the United States, those plans predated the election, and Mr. Son has owned a controlling stake in Sprint, among other companies, for several years.

A Sprint spokeswoman, Adrienne Norton, said that the 5,000 jobs are part of the 50,000 increase Mr. Son promised, but that the new positions would be financed by the mobile phone carrier. “It will be a combination of newly created jobs and bringing some existing jobs back to the U.S.,” she said.

(emphasis added mine)

When it comes to the Carrier jobs announcement, Donald Trump was showboating, but there was some truth underlying his words - jobs were coming back in response to his actions.  This time around, Donald Trump is purely showboating, and Masayoshi Son of SoftBank is pumping Mr. Trump up, because what good businessman wouldn't pump up the President-elect?

I believe strongly that Mr. Trump should be given credit for what he accomplishes.  I also believe strongly that when he engages in pure bullshit, he should be called on it.

Engadget goes into greater detail on Sprint's rah-rah cheerleader routine here.  It's a short read and you should read it, but here's the crux of the matter:

The most troubling thing here is that Sprint played along, even though, when pressed, it admitted the [job] claims weren't the result of working with Trump.

What else is new in the world of our pending Trump presidency?  Here's a fine article on how hospitals may be screwed due to the potential repeal of Obamacare.  The major points:

• Hospitals serving poor communities run the risk of insolvency if Obamacare is repealed.
• Hospitals in wealthier communities will not likely shutter if Obamacare is repealed, but the major gains they've made in improving patients results while simultaneously lowering costs will likely evaporate.
• Without Obamacare, hospitals will face an approximate shortfall of $290 billion within the next ten years.
• Hospitals that had once run in the red are now earning money; expect them to run in the red again should Obamacare be repealed.

The article, of course, goes into greater detail, but if you're too busy to read it, the above should suffice.  The poor will get screwed, as they typically do, but even well-off hospitals will become more expensive and less efficient.

I know I promised you the South China Sea saber-rattling today, but this blog is running long yet again and I better save it for tomorrow.  Suffice it to say, along with your Dean Baker and Doug Henwood, you should not neglect your War Nerd.

The "Texas Economic Miracle", Nuclear Tests, and California

I totally forgot another fairy tale I heard from my Republican friend which needs correcting, that of the "Texas Economic Miracle" that allegedly occurred under Rick Perry.  I thought this myth died awhile ago, but I suppose it needs addressing.

The claim of the Texas Economic Miracle under Rick Perry is that Texas, with its combination of low taxes and few regulations, outstripped national economic growth, including job creation.  This was true for awhile!  However:

• The jobs created were almost entirely created in the energy sector or linked directly to the energy sector.  When oil prices were high, employment rose; when oil prices crashed, jobs left the state in large numbers.
• As the economy recovered under the Obama administration, slowly but surely, national job creation growth began to outstrip Texas' job creation growth.
• The jobs created in Texas tended to be low-wage - although, in fairness, this is true nationally as well.
• Texas isn't as famously low tax as you might think:

Taxes, though, are mixed a mixed bag. Employees enjoy the absence of a personal income tax, but the effective tax rate on businesses is above the national average at 5.3 percent. Complying with the franchise tax is expensive, even if a company doesn't have to pay it, and property taxes are punishing.

"We have very high property taxes, and we also are one of only seven states that include business inventories as part of the property tax," Craymer said.

To make up for that, Texas must offer property and sales tax abatements, he added.

"The simple truth is we're not going to be able to compete for those major investment projects if we don't offer some kind of temporary safe harbor from our incredibly high property taxes," Craymer said.

(emphases added mine throughout.)

• Texas is "big, hot and cheap" and has long outperformed other states economically, since 1939 at least (mostly since folks who have air conditioners like to move to big, hot, cheap places).  In other words, there isn't anything all that special per se about what Rick Perry did. 
• Texas has more minimum-wage workers with no health insurance than any other state.

The bête noire of conservatives is, of course, California, famously laden with regulations of all sorts, and a state which is whupping all kinds of ass in comparison with Texas economically.

Both states have diverse economies and despite this fact, both states rely heavily on factors beyond their control (the price of oil and gas in Texas, the price of real estate in California).  But it seems that when California creates jobs, they're high-wage jobs, tied predominantly to Silicon Valley, and when Texas creates jobs, they're low-wage jobs.

Gov. Perry deserves credit for diversifying Texas' economy.  That's no mean feat.  He doesn't, however, deserve credit for a "miracle" driven by high oil prices - a miracle now on the retreat due to low oil prices.

(For more on this issue, read here and here.  Oh, and by the way, whenever the name of famed malarkey-peddler Arthur Laffer pops up, just bear in mind that if your dentist told you you could eat as much candy as you want and it would actually make your teeth stronger, you would get a new dentist, yet for some reason the idea that massive tax reduction will lead to deficit reduction, popularized by Arthur Laffer, is still taken seriously.  His claims that tax reductions are responsible for economic growth are largely bunkum.)

Now how about ol' Rick, incoming Secretary of Energy?  What's new with him?  He may be pressed to resume nuclear tests.  Mr. Perry may not be as dumb as he appears to be at first glance, but if Donald Trump decides he wants nuclear tests, will Rick Perry stand up to him?  And what would be the consequence of nuclear tests?

Since 1998, when India and Pakistan conducted nuclear tests, provoking global condemnation, only North Korea is known to have undertaken tests. Some experts fear that if the United States began testing again, it would risk a new arms race by opening the door to testing for many other countries that want to improve or develop nuclear arsenals.

Maybe those experts' fears are overblown.  Call me naive, but I defer to "experts" on nuclear management issues.  Whatever happens, I'm certainly glad the man who presided over the Texas Economic Miracle is at the helm!

So that's Rick Perry.  How's California doing?  Well, for one thing, it's considering telling the Trump administration to shove it when it comes to environmental issues.  California can arguably afford to do so - it has a GDP of $2.5 trillion and is one of the 10 largest economies in the world (Texas is also on that list, behind California).  

Business leaders - well, some of them - predictably whine that excessive regulation vis-a-vis other states will kill California's growth, but as the above makes clear, that's mostly hot air.  Of course, if the Trump administration wants to make life hard on California, it can do so:

The clean-air initiatives here have become an intricate part of the economy and a source of growth and jobs. Federal cutbacks would no doubt hurt the state to some extent, but analysts say the very energy-efficiency policies that may soon come under attack by the new administration have been a significant factor in California’s economic reversal.

“If the president-elect and his administration work to undermine our climate leadership, they will hurt our economy,” Mr. de Leon said. “They will kill jobs. And ultimately, they will hurt the economy of the United States. We are 13 percent of the overall G.D.P.”

We'll see how California does, but if the past is any indication, California's going to be just fine and might well lead the nation in a cap-and-trade or similar policy.  Even the new host of Celebrity Apprentice is an aggressive environmentalist; it's hard to keep California back in this regard.  (Yes, Schwarzenegger is far from perfect, but neither is Jerry Brown, and has any other Republican in our lifetimes spoken like this?)

There's so much more I wanted to get to today - hospitals bracing for Obamacare repeal and saber-rattling in the South China Sea in particular - but this post is already too long, so that'll have to wait until tomorrow. 

Correcting the Record

Heard a couple interesting misconceptions from a Republican friend of mine over the holidays that I thought might be worth correcting here.

First of all, crime-wise, while 2016 did see an uptick in violent crimes, it wasn't the most violent year in decades.  You have to go back to the Reagan administration for the most violent year in decades.

People do seem largely unaware of that fact, however:

As Pew has reported in recent years, in fact, the American public is "unaware" that the homicide rate in the United States has fallen by 49 percent over the past twenty years. And while Pew doesn't report on it, it's also a safe bet that the public is also unaware that homicide rates have collapsed as total gun ownership in the United States has increased significantly.

(The article linked-to above will displease both the left and right.  Leftists will be unhappy to know that as gun ownership has skyrocketed, violent crime has largely diminished.  Right-wingers will be unhappy to know that crime was at historic lows under the Obama administration.  Turns out black people can be in charge and gang warfare doesn't necessarily flare up.  Sorry!)

Also, there's apparently some talk that Michelle Obama was disbarred, or that she "surrendered" her law license to avoid ethics charges.  This claim is, flatly, bullshit.  And, given that this claim is bullshit, it's possible that the people who originated this claim, or actively circulated it, are bullshit artists.  It seems to have circulated mostly via chain email.

Finally: most African-Americans prefer to be called "black" people these days, not "negroes" or "colored".  It's true that these terms used to refer to African-Americans, but they haven't applied in many decades and shouldn't be used anymore.  I don't really think this point needs a lot of elaboration, but in case you remain baffled, here's a fine article from 1967 discussing the issue.  Speaking as a white man, I have no problem referring to African-Americans by whatever term they prefer be used, and should, within my lifetime, black people no longer prefer to be known as "black people", I will extend very basic human respect, adopt whatever term they prefer for themselves, and not lose a moment of sleep over it. 

Tomorrow I'll return to economics, the ecology, foreign policy, or something along those lines.  For today, I hope this post is helpful to those who are confused.

Financial Scandals and Nuclear Arms Race

It's my last paid "personal day" of the year.  My beloved bride is at work, errands have been done;  I'm going to have a dark beer or two and work on some music.  But before I do that, lest I drop the ball like I did yesterday, imma hit you with some BLOG.

How's Goldman Sachs doing?

Even as Goldman Sachs is gaining a more prominent profile in the administration of Donald J. Trump, the Wall Street investment firm is undergoing scrutiny in an investigation in a sprawling international money laundering and embezzlement scheme.

How's Deutsche Bank doing?

Deutsche Bank announced late on Thursday that it had reached a tentative $7.2 billion deal to resolve a federal investigation into its sale of toxic mortgage securities, capping months of negotiations that weighed heavily on the bank’s stock price and reputation.

(Once they've settled that, they can get back to business helping Russians smuggle money out of their own country.  Russia, led by strong leader!  Much we can learn from them!)

How's Credit Suisse doing?

Credit Suisse said on Friday that it had agreed to pay $5.3 billion to settle an investigation by the United States authorities into the packaging and sale of mortgages ahead of the global financial crisis eight years ago.

How's Wells Fargo doing?

The failure of the bank’s so-called living will test, even as four other big banks passed, kicked off the latest crisis for Wells Fargo, which is still reeling from its sales-tactics scandal. And it poses yet another challenge for [Wells Fargo Chief Timothy] Sloan, who only took the bank’s helm in October after the abrupt retirement of former CEO John Stumpf.

(God, remember this?  Almost certainly, what the finance sector needs is less regulation.)

Um... well, what's the future of our country's nuclear arsenal?

“Let it be an arms race,” Mr. Trump said, according to Ms. Brzezinski, who described her conversation with the president-elect on the morning news program moments later. Mr. Trump added: “We will outmatch them at every pass and outlast them all.”

Great! A nuclear arms race.

Happy holidays everyone!!!

Inflation, Economic Multipliers, and Syria

I was a little distressed to see an anti-war friend of mine posting rhetorical defenses of Bashar al-Assad, essentially arguing that Assad hadn't done anything unjustified in the war on Syria.  I don't want to dwell at that at length.  Suffice it to say: one's opposition to imperial entanglements shouldn't include the enemy of my enemy is my friend moral calculations to let people who authorize this sort of behavior off the hook.  The article linked-to is long but worth a read if you like to be depressed.

Anyways, today I wanted to mostly touch on what Dean Baker and Paul Krugman were saying.  Let's start with Dean Baker, who has an informative take on inflation in which he rips a new one to the Chair of the San Francisco Fed.

The Fed recently voted to raise interest rates, thus increasing borrowing costs in the economy, thus slowing business down, thus fighting inflation.  You're not really supposed to slow the economy down unless you're at near full employment, i.e., everyone who wants a job has got a job.  Emphases added mine throughout:

We have numerous pieces raising serious questions about whether the labor market is really at full employment, noting for example the sharp drop in employment rates (for all groups) from pre-recession levels and the high rate of involuntary part-time employment.

So right off the bat, not everyone who wants a job has got a job (at least not a full-time job).  So how's inflation lookin'?

A close look at the data does not provide much evidence of accelerating inflation. The core PCE deflator, the Fed's main measure of inflation, has risen 1.7 percent over the last year, which is still under the 2.0 percent target. This target is an average, which means that the Fed should be prepared to allow the inflation rate to rise somewhat above 2.0 percent, with the idea that inflation will drop in the next recession.

Anyhow, the 1.7 percent rate is slightly higher than a low of 1.3 percent reached in the third quarter of 2015, but it is exactly the same as the rate we saw in the third quarter of 2014. In other words, there has been zero acceleration in the rate of inflation over the last two years.

Furthermore, even this modest acceleration has been entirely due to the more rapid increase in rent over the last two years. The inflation rate in the core consumer price index, stripped of its shelter component, actually has been falling slightly over the last year. It now stands at 1.1 percent over the last year.

It is reasonable to pull shelter out of the CPI because rents do not follow the same dynamic as most goods and services. In fact, higher interest rates, by reducing construction, are likely to increase the pace of increase in rents rather than reduce them.

Hey! Well! If you're a fan of people being hired and salaries/wages going up, that all sounds... uh, well, kind of bad! 

(And, of course, Baker makes clear that those folks who are likely to be left behind in the job market when the Fed's increase in rates slow the economy are likely to be predominantly African-American and Hispanic.  Who could've guessed?)

But, hey, ok.  Trump is coming into office, and he's got this big infrastructure plan to roll out!  That'll be expansionary, and make up for the hikes in interest rates, surely.  Oh... but what if it resembles previous Republican budgets?

I was able to find matching analyses by the good folks at CBPP of tax and spending cuts in [Speaker of the House] Paul Ryan’s 2014 budget, which may be a useful model of things to come.

If you leave out the magic asterisks — closing of unspecified tax loopholes — that budget was a deficit-hiker: $5.7 trillion in tax cuts over 10 years, versus $5 trillion in spending cuts. The spending cuts involved cuts in discretionary spending plus huge cuts in programs that serve the poor and middle class; the tax cuts were, of course, very targeted on high incomes. 

The pluses and minuses here would have quite different effects on demand. Cutting taxes on high incomes probably has a low multiplier: the wealthy are unlikely to be cash-constrained, and will save a large part of their windfall. Cutting discretionary spending has a large multiplier, because it directly cuts government purchases of goods and services; cutting programs for the poor probably has a pretty high multiplier too, because it reduces the income of many people who are living more or less hand to mouth.

Taking all this into account, that old Ryan plan would almost surely have been contractionary, not expansionary.

Well, rest assured Donald Trump is his own man, will buck GOP orthodoxy and introduce a genuinely expansionary budget that will lift the middle class out of its malaise and Make America Great Again.

Right?

Turkey

Let's delve into Turkey a little bit more today.

First, a little backstory for those who don't know their Russia/Turkey basics: Russia has long coveted a warm-water port on the Mediterranean.  (Yes, they have Vladivostok on the Pacific, but that's not enough to be a truly global power.)  For that reason, Russia has long coveted Istanbul.  Syria and the Ukraine both have warm-water ports - Tartus in Syria, Sevastopol amongst others in the Ukraine.  This brief article is a very good run down on the topic.

Look at a map: Turkey is right in the way of Russia's access to the Mediterranean (even a Russia that includes the Ukraine, as the USSR did).  Throw a little Orthodox Christianity vs. Islam in there for flavor, and you have all the makings of one of the world's oldest and most enduring rivalries.

Now let's look at the present day.  The NY Times has a good summary of the issues.  In a nutshell: when the civil war began in Syria, Prime Minister (and de facto dictator) Erdogan in Turkey saw it as a good opportunity to install a friendly, pro-Turkey regime on its very border - and who can blame him?  A fairly rational national security choice, even if many have to die to attain this end - and as such began aiding anti-Assad rebels, some of whom are democrats but many of whom are not very good people.  (Assad is also a tremendous monster.)

Russia, however, has long stood by the Assad regime, and in order to get access to Tartus and also tweak the nipples of both Turkey and the United States, has been bombing the daylights out of the Syrian rebels, with the end result that Assad is likely to finally win the battle in Aleppo.

So, when a Turkish national shoots the Russian ambassador to Turkey calling for jihad and urging people not to forget Aleppo, it should come as no big surprise to anyone, even when the event itself is quite shocking.

Since it's become clear that Assad is likely not going anywhere in Syria, Erdogan has shifted his aims from dislodging Assad to dealing with those pesky Kurds.  The War Nerd talks about the Kurds a little bit.  It's a good read.  (More here. The War Nerd is a must-read, always.)  The Kurds are hanging tough with no country to call their own, on their own, at the mercy of the powers around them.  The analogy to the Zionists in Palestine before the creation of Israel isn't perfect, but it isn't bad, either.  Assad, Erdogan, and the Iranians would all rather there be no Kurds.  My opinion?  Support the Kurds.

Erdogan is going to quit attacking Assad and instead focus on taking care of his Kurdish problem.  Meanwhile, the Russians don't want the Turks to start backing the Syrian rebels again: they want to mop up in Syria.  So Russia isn't going to make a big stink over one l'il assassination, and Turkey's going to do it's best to play nice, say sorry, and move on.  Russia and  Turkey might even grow closer as a result of the assassination (though we'll see).

Meanwhile, who was the assassin?  Was he a Gulenist?  Boy.  How do I succinctly describe the Gulenists?  Imagine a dictatorship was using the omen of a organized conspiracy directed by one man living abroad as an excuse to round up political opponents and up the level of suppression generally, and it turned out the conspiracy in question was real honest-to-goodness conspiracy.  That's more or less the situation you have with the Gulenists.

Fethullah Gülen, who lives in Pennyslvania, has long spearheaded a movement of Islamists who have attempted to infiltrate the judiciary and other state organs of Turkey and take over the country from within.  Meanwhile, a completely different set of Islamists, operating publicly under Erdogan's leadership, having previously worked alongside the Gulenists to attack the common enemy - the secularists, who have a long history of committing coups themselves - have now turned against them, the Gulenists having dealt the initial blow.  If you have time, just read that New Yorker article.  The fact that the U.S. harbors Fethullah Gülen is a source of tension in the Turkey-U.S. relationship, as you could imagine.

Well, anyhow... I've rambled here, but I hope you have a slightly greater appreciation of what's going on between Turkey, Russia and the others than you did before.  Just be aware that Turkey has a terrorism problem, NATO has a major base for Middle East operations in Turkey, Incirlik, which Turkey could in theory open to Russia, and that... God, there's so much to say.

It's all going to be very interesting to watch unfold.

Assassination in Turkey

I've been so busy I missed blogging two days in a row.  I continue to be very swamped.  I hope that changes soon.

So all I have for now is breaking news: the Russian ambassador to Turkey has been assassinated.

There's a lot to be said here, but for now I leave you simply with that.

If you're bored or disappointed by the lack of insight found in today's post, well, I can't blame you.  Read Dean Baker's contrarian take on the Great Recession instead! It's great food for thought:

In any case, the argument that we would have faced a decade of double-digit unemployment had we not rescued Wall Street rested on a political assessment, not an economic one. There was no economic reason that large amounts of spending following a financial collapse would not have boosted the economy back towards full employment and without the albatross of an incredibly bloated financial sector.

Sounds like socialism to me!

Short Econ Talk

I sure let today slip away from me! I'm just gonna hit you up with some links I think you should read.

First of all, eat your veggies, and read your Dean Baker.  He tells us that everyone is suffering, but whites not especially so, employment-wise, contrary to a NY Times column.  He also knocks the WaPo down a peg by pointing out that neither job openings nor wage growth in manufacturing currently are all that impressive.  Always good to double-check the narrative.

I'd like to know what he has to say about this little wrap-up of the Obama economy by the NY Times.  It's a brief and interesting read that contains one glaring, possibly inaccurate, piece of speculation:

Income inequality is the second weak spot the White House economists identify, arguing that the Obama administration has made progress in spreading the gains from a growing economy more widely but not enough.

...

If Hillary Clinton had won the election, this approach to thinking about inequality would most likely have formed a central role in her economic agenda.

Maaaaaaaybe it would have.  A lot of folks didn't turn out to vote for Clinton precisely because they didn't trust her to emphasize issues such as inequality, the high, seemingly permanent, drop-out rate in the labor force, and so forth.  It's likely that for political reasons she would have had to at least rhetorically address the issue.  Who knows: maybe she would in fact have been a devoted progressive.  We'll never know.  What we do know  is that we've got an incoming GOP administration, and it would be jaw-dropping if it dedicated one iota of effort to income inequality.

The above said, the NY Times article is still worth your time.  Here are the points it makes, summed up:

• Productivity growth has been weak.  This could be caused by a slowing rate of technological advancement, insufficient demand (and subsequently, investment), or what conservatives are always bitching about, excessive regulation, which seems pretty ridiculous when you look at this survey of small business concerns conducted by the NY Fed ("cash flow," "cost of running business" and "credit availability" all outweighing "government regulations").
• Income inequality is getting worse.  This points bears little elaboration here; most of you, conservative or liberal, know that the rich are far richer than they've ever been and that the middle class and (heaven forfend we discuss them) the lower classes and poor are being left behind.
• Labor force participation is down.  Basically, huge swaths of people are so discouraged by the job market that they're not even bothering to look for work.  Kudos in advance to Donald Trump if he can actually solve this problem.
• Economic sustainability still remains a looming threat.  Can our economy cope with spiraling health care costs? Global climate change? The next big market correction (i.e., recession)? Regarding that last point: the Fed normally fights recessions by cutting interest rates, thereby giving people more of an incentive to invest/spend, thus generating economic activity and alleviating the recession.  But rates are pretty close to zero currently.  Should another recession hit, it's on the public sector to step in and spend money.  And will a Republican government do such a thing?  It certain goes against their stated ideology.  Let's not even get started on global climate change.  Who knows, maybe the Trump admin will rise to meet these challenges.  We will see, we will see.

Anyways all three links above are good, short reads.  Read them and then be on your merry way into the weekend.  Sláinte!

Water, The West and Cabinet Appointments

Trump has tapped a Montanan, Ryan Zinke, for Secretary of the Interior.  Of course he has.  Who better to run the agency which regulates our public lands than someone from a region that has chronically abused natural water supplies since it was settled by the white man, all the while suckling from the teat of the federal govenrment?

The best book I read in 2016, and I one I want to recommend to you without any reservations, especially if you grew up or live west of the Mississippi (as I did), is Cadillac Desert by Marc Reisner.  It makes abundantly clear that the way we chose to settle the West over the past century and a half is the worst possible way we could.  Californians in particular, but also Arizonans, Coloradans, Montanans, Idahoans, you name it, all have benefited from unnaturally cheap water - water that is guaranteed to run out sooner or later.

It's an incredibly rich book, but I'll attempt to sum it up in a few bullet points:

• California is the prime culprit of water theft in the West.  There should not be a major metropolis where Los Angeles is, and don't let the greenery of the Embarcadero fool you - San Francisco is, naturally, a wind-swept and rather barren place.  It is thanks to diverting the rivers of the West that these cities have flourished.
• But don't get too mad at your average Los Angelo or San Franciscan - the prime benefactors of water schemes in California have long been farmers, and not the struggling, small-time Ma and Pa farmers of myth, but huge landowners, including several oil companies who own massive farms principally for tax write-off purposes.
• When you hear of the involvement of the Bureau of Reclamation or especially the U.S. Army Corps of Engineers in any given project, your hackles should immediately go up.  Under the benevolent-sounding guise of "flood control," the U.S. Army Corps of Engineers have engineered countless projects solely for the benefit of large landowners, railroading all who stand in their way, especially Native Americans.  Lest you think I am a bleeding-heart liberal who cares more about Native Americans than "real Americans," rest assured that I take a rather cold-hearted view of infrastructure projects in general: if there's to be a net benefit from a given infrastructure project, and some innocent people - Native Americans or otherwise - are going to be injured in the process, I mean I feel bad, but I'm all for it.  Now, when those projects are total bullshit who benefit only the affluent few, then the moral calculus is a little different, isn't it?  Thus has it been with various projects built by the U.S. Army Corps of Engineers.

(Before I continue, let me make it clear that the U.S. Army Corps of Engineers does some fine work overseas, building bridges, sanitation projects, etc.  Its use to enrich large landowners, to my knowledge, it strictly a domestic phenomenon.  Nor do I wish to discredit those individual members of the Corps who signed up to do good work.  It is the use of the Corps at a high level in the United States which should earn our opprobrium.)

• Dams, by and large, are bullshit.  I didn't use to think dams were bullshit.  This book changed my view.  Not only are they ecologically crippling, the use of "cash-register" dams feed the beast of water projects throughout the West.
• The economic benefits of most major water projects in the West are negligible at best.  Agriculture is being cultivated in regions where agriculture was never intended to be.  Better to have wide-spread cattle grazing on public lands and obviate agriculture entirely.  Surely we can get our almonds from somewhere else.  I single almonds out here, but they're far from the worst waste of water in the West: here's looking at you, Central Arizona Project and San Jaoquin Valley generally.
• Generally speaking, people cannot afford to farm in the West without considerable largess from the federal government in particular, because water is hard to come by in the West and the government helps keep water artificially cheap to benefit this strange segment of American political life.

I could go on at great length about this book, but we don't have all day.  Needless to say the West writ large cannot afford any more goddamn dams, nor likely anything constructed by the U.S. Army Corps of Engineers or the Bureau of Reclamation, agriculture should not be practiced the way it is in the West and cannot possibly last, and when you hear Western farmers whining about welfare you should be aware that those people have no perspective and/or no shame.

Read Cadillac Desert.  And don't get swindled by "life is hard for the farmer" whining (especially when the U.S. Army Corps of Engineers actually does the right thing, such as help enforce the Clean Water Act).

Anyways, back to Zinke.  He appears to be less psychotic in his denial of man-made climate change than Scott Pruitt (who hates not only clean air, but also clean water, evidently), but he remains friendly to oil and coal.  Zinke seems to want to have it both ways - publicly defending public lands and accepting the logic of man-made climate change, while also denouncing Washingtonian "red tape" and accepting the "drill, baby, drill" rhetoric of recent years.

Who knows for sure which way he will go?  Let's just consider the stakes for now:

The Department of Interior controls 500 million acres of land ― or roughly 20 percent of the U.S. landmass. It oversees a lot of oil, gas and coal development, both onshore and offshore. The agency also manages the outer continental shelf, a point of tension between the fishing and tourism industries and offshore energy developers, particularly after the 2010 BP oil spill in the Gulf of Mexico. Earlier this year, President Barack Obama paused oil drilling off the Atlantic Coast and halted new coal leases on public lands ― moves Trump seems likely to overturn.

(emphases added mine)

Before I sign off for the day, let's see how the swamp-draining is going!

Hey, what's this?  Is Donald Trump considering John Bolton for Deputy Secretary of State?  Why, yes he is!

A comparison of Donald Trump's words, contrasted with Donald Trump's actions:

Though Mr. Bolton, 68, is admired by conservatives like Mr. Kristol who agreed with the Bush administration that American military intervention was a necessary force for promoting stability throughout the world, there are also many Republicans who want to leave the Bush years in the past.

During the campaign, Mr. Trump professed to be one of them. He called the war in Iraq “a big fat mistake” and accused the Bush administration of lying to the American people about Saddam Hussein’s possession of weapons of mass destruction.

Mr. Trump brought up those faulty intelligence assessments again last week when he said “the same people” in the American intelligence agencies who were wrong about the war in Iraq believed that Russia had intervened to tip the presidential election to him.

That was especially puzzling, said Greg Thielmann, a State Department veteran and Bolton critic, because “Bolton is, of course, one of these ‘same people.’”

It's so refreshing to see that Trump is truly a unique figure in history, his own man all the way, for sure not just another Republican.

More on Rex Tillerson

Happy holidays everyone! Does everyone else have that cold that's going around? I sure do! That's why my blog today is going to be just baaaaarely cogent.

One of our readers pointed me in the direction of this Democracy Now excerpt discussing Tillerson, his involvement in Russia, and what ExxonMobil gets out of his appointment as Secretary of State (assuming it comes to pass).  Joe Romm says the following (emphases added mine):

Sure. Well, Rosneft is the state oil company for Russia, and, under Putin, it has been acquiring more and more power and control over the oil industry. And it is now, you know, I believe, the world’s largest oil entity in the world. ExxonMobil is the world’s largest, you know, privately held oil company in the world. And, you know, we’re entering a period where it’s harder and harder to find oil. And as I write in Climate Progress, you know, ExxonMobil’s prospects for finding easy-to-find oil in this market were pretty dim, until this deal was struck between Tillerson and Putin, basically. And this deal would have created a $500 billion joint effort, you know, the biggest oil deal ever. It’s, you know, $500 billion. We’re talking half a trillion dollars. It’s a staggering amount of money. It was a deal that was perhaps going to ensure the future of a stream of oil for Exxon for decades to come, even, of course, as the world needs to get off of oil. For Putin, you know, this is critical revenue and critical outside investment, because, particularly now, in this era of low oil prices, that seriously hurts Putin. So this was considered to be a game changer. Rachel Maddow said, you know, this was a deal that was considered it might change the historical trajectory of Russia. Now, you know, Putin then invaded Crimea and interfered with Ukraine. As a result, the United States and most other civilized countries put in place sanctions. Those sanctions, in 2014, killed this deal.

And, you know, as I write in the piece, the question of—the intelligence community now says that Russia interfered in the election on behalf of Putin, that through leaks, through hacking private email accounts and releasing them—drip, drip, drip—and also we have reason to believe they’re one of the major promoters, disseminators of fake news. So, you know, one can understand the motivation. You know, some people said, "Hey, Putin has enough motivation just to, you know, cast doubt on the U.S. election." But $500 billion, that is a very big motivation to mess up the U.S. election. So, this—

The NY Times has a piece more or less corroborating the Democracy Now piece above, as well as another nice piece on Tillerson, understandably, putting ExxonMobil's interests ahead of the interests of the United States.  Look, I know it's multiple paragraphs, but just read this:

Western sanctions were first enacted on Russia in March 2014 in response to the Russian annexation of Crimea. Then the United States and its allies, including the Netherlands, implicated Russia in the shooting down of Malaysia Airlines Flight 17 over eastern Ukraine that July. All on board were killed, including 193 Dutch people heading to Asia for vacations and work, flying for a just few moments over a war zone.

That prompted tighter sanctions. A month later, Russian tanks entered eastern Ukraine, turning the tide against the forces of the American-backed Ukrainian central government. Today, about 300 American soldiers rotate through Ukraine as trainers.

After the Russian incursion in 2014, the United States prohibited the transfer of advanced offshore and shale oil technology to Russia. The American government announced on Sept. 12 that year that Exxon was to halt all offshore drilling assistance to Rosneft, the Russian state oil company, by Sept. 26.

But Exxon Mobil’s high-tech rig was already drilling in the Kara Sea, in an unfinished $700 million project that had yet to find oil. It would be worthless if not completed.

Russian executives then told Exxon Mobil that Russia’s security services would fly in a Russian crew — in essence seize the rig — if Exxon Mobil complied with the American law and left without completing the well, according to an oil company executive who had visited the rig in the Arctic.

Exxon relayed the threat to the American government, and the Treasury Department capitulated, granting an extension that stretched the window to work until Oct. 10. In a statement in 2014, the Russian state oil company denied conveying such a threat to Mr. Tillerson’s company.

With the extension in hand, Exxon Mobil discovered a major field with about 750 million barrels of new oil for Russia a few weeks later. Igor I. Sechin, the chief executive of the Russian state oil company, called the newly discovered oil field Pobeda — Russian for victory.

It is one of the Arctic developments that Exxon Mobil has rights to work on should the sanctions be lifted.

Who knows what Tillerson will do as Secretary of State.  No man is wholly slave to their past.  Still, we should all have valid concerns that the Trump administration will team up with a decaying oil state (Russia) to appease the interests of ExxonMobil rather than the strategic interests of the United States of America, and this at a time when the world is awash in oil.

Tillerson has received endorsements from such Republican luminaries as former Secretaries of State James Baker III and Condoleeza Rica and former Secretary of Defense Robert Gates under both W. Bush and Obama.  All three have financial ties to ExxonMobil.  Fancy that!

Anyways... if you'd like to read more about the world of oil, I can't recommend the highly entertaining Oil by Tom Bower enough, which sadly only goes up to 2010.  (I am perplexed by those three star reviews - I give this book two thumbs up.  It's brisk reading, highly informative, and gossipy as hell).  And, of course, if you're serious about learning about the oil industry, you must at some point read the large-but-worth-it The Prize by Daniel Yergin.  Yergin is an industry insider, but rest assured, fellow enemies of "the man," the book is still worth your time.  It is an excellent read, taking you from the the discovery of oil at Titusville, PA in 1859 up through the first Gulf War.  It's an indispensable book, although at 900+ pp. it might be a bit long for some folks.  (Honestly you'll likely walk away from reading The Prize a bit more sympathetic than you used to be to the oil industry - but not sympathetic enough to necessarily want Rex Tillerson as Secretary of State, or Russia as America's new Best Bud.)

I have another book I want to review for all of you, but it deserves a post of its own, so I'll save it for tomorrow.  For now, be well, and if anyone is imposing sanctions on you this holiday season, I hope they are lifted so that you can complete a half-trillion dollar oil deal of your own.

Kisses,

James.

Cabinet Nominees and Pollution Tariffs

I thought it might be fun to do a run-down on Trump's cabinet nominees to date.  But before we get to that, I want to touch on an interesting and infrequently discussed topic: pollution tariffs.

A Trump-supporting friend of mine the other day floated an interesting policy idea: a steep tariff (he quoted 30%) on goods produced in countries with lower environmental standards than our own.  The result would be to shift manufacturing back to the USA while likely reducing carbon emissions and other environmental sins worldwide.

It's such a great idea, I had to see if anyone "serious" had thought of it first.  It seems that in fact this very idea was floated by none other than Nicolas "oh, NOW he thinks climate change is a hoax" Sarkozy of France way back in 2009. 

The question is: would the tariffs work?  Some economists have poo-pooed the idea (see the link above), saying in essence that demand for Chinese manufactured goods is too great and that a tariff would make no difference, but to my mind, the concept is certainly worth a shot.  If we're going to have a trade war with China, it might as well be over something worth fighting for, no?

It is also possible, of course - and again, here, Nicolas Sarkozy is the one doing the proposing - that other countries might place their own environmental tariffs on the Trump-led United States:

Former French President Nicolas Sarkozy is already thinking ahead. Earlier this week, Sarkozy said that Europe ought to consider placing carbon tariffs on U.S. imports if Trump refuses to put a domestic price on carbon pollution. Talk of tariffs is only going to increase as more regions and nations price carbon - while Trump calls for more protectionist trade policies and for tearing up trade deals like NAFTA.

I doubt this idea is likely to come into vogue in a big way globally, but I'd love it if it would, honestly.

And now! Let's take a look at Trump's cabinet nominees to date.  They're all distinguished in their various ways!  The WaPo has a good rundown, and here's my commentary:

• Rex Tillerson, Secretary of State: well, it's an energy company CEO as head of state, so a pretty clear indication, one would think, that oil projects abroad are going to be a focus of the Trump administration, even though the world is currently drowning in oil.  But hey, if Trump really gets the economy going again, there might not be enough oil to go around!  ExxonMobil tends to produce CEOs with the mentality "I'll be around in 40 years, you might not be," which is great for a CEO, and we'll see how it works out for the nation's top diplomat.
• James Mattis, Secretary of Defense: by all accounts a thoughtful and erudite man, with a big grudge with Iran.  The last time a country invaded Iran, they lost 250,000 fighting men and didn't win. 
• John F. Kelly, Department of Homeland Security: not a bad choice, really. A bit of a hardliner on the topic of our border, but hey, it's the DHS.
• Steve Mnuchin, Secretary of Treasury: former Goldman Sachs executive with no government experience.  Drain the swamp! Drain the swamp!
• Wilbur Ross, Secretary of Commerce: more swamp draining, anyone? A man who made his living in private equity - buying bankrupt companies and "flipping" them.  This is a great appointment for rust belt workers who are hoping to keep manufacturing jobs in America, or, rather, the complete opposite.
• Jeff Sessions, Attorney General: this fellow once called a black attorney "boy" and alleged that the NAACP was essentially a communist organization, so, a great pick if you hate black people.
• Andrew Pudzer, Secretary of Labor: a guy who loves automation and hates the minimum wage and unions to lead Labor. Uh...
• Tom Price, Secretary of Health and Human Services: a guy who thinks doctors, not patients, are getting screwed in our current medical system, and wants to change that. Um...
• Scott Pruitt, EPA administrator: a dude who believes man-made climate change is a hoax to head the EPA. Er...
• Betsy DeVos, Secretary of Education: a woman who would like to erect God's Kingdom in the United States. Uh...?
• Ben Caron, Secretary of Housing and Urban Development: hey, throw a black guy in here, right? Housing and Urban Development, that's the ghetto, right?  Bonus points if you can find someone who sounds like he is going to fall asleep at all times.
• Rick Perry, Secretary of Energy: hell, why not at this point?  Why not appoint a man who once said he would abolish the Department of Energy, that is, if he could remember its name.

Then there's Trump's advisors who will not need Senate confirmation:

• Steve Bannon, Chief Strategist: buddy to neo-nazis.
• Reince Preibus, Chief of Staff: your basic default political guy, nothing too provocative about him per se.
• Lt. Gen. Michael Flynn, National Security Advisor: a fine general, but "unbelievably arrogant".
• Donald McGahn, White House Counsel: a sharp-elbowed lawyer, you know the type.

It's going to be good fun to follow these people for the next few years!  Why, I can see the swamp being drained already!  And what's going to happen in the Middle East?  Who knows!

Stay tuned!

Russia and Treason

The rhetorical battle over whether or not Russia overly influenced or even "stole" the election for Donald Trump is heating up.  Even leading Republicans seem to be concerned that Russia may have tampered unduly with our election.

Plenty of Clinton supporters have been quick to blame Russia's tampering for the loss.  They've also blamed millennials, third-party voters, misogyny and Bernie Sanders, more or less everyone but themselves.

There's been a corresponding reaction to these anti-Russian accusations, which, in my opinion, constitute an over-correction: that any criticism of Russia's tampering in the election is itself 100% off-base, purely a red herring, that such thinking is strictly Russophobic, etc.  In fact there's been a strange impulse amongst the Left over the past few years to accuse any critic of Russia of being a pawn of, perhaps, Ukrainian neo-nazis - claims that are not without truth but perhaps miss the point.

(To the point above: I wish I had better written documentation of this phenomenon.  I'm sure someone smart has written an article on this subject, no?  Right now, I'm basing this off my Facebook feed, so you're just going to have to trust me on this one I'm afraid.  If you've got a great piece of writing addressing this subject that I should read, please sock it to me.)

There's been a lot of heated talk about Trump and Hitler.  We'll see how the Trump administration goes; Hitler talk is often quite overblown and let's hope that turns out to be the case under President Trump, eh?

Russia under Putin, however really has lifted a few pages from Hitler's playbook, specifically with regard to the tactic of inciting trouble in ethnic enclaves as a prelude to annexing them.

There's really no reason one has to rush to Russia's defense simply because one thinks that Russian tampering was a less instrumental reason for Clinton's loss than the flawed candidate herself and her over-hyped ground game.  Russia is ruled by an intense homophobe who relies on assassination as a instrument of politics and jails musicians.  Why, Vladimir Putin is such a strong leader than he's afraid of fucking musicians!

I love Russian literature and music, but I wonder what in God's name most liberals find in modern Russia that makes it worth defending?  Liberals have not had a problem taking issue with Saudi Arabia in the past, yet Saudi Arabia provides Americans with a steady supply of cheap oil.  That oil shows up in our cars, our computers, our tennis shoes and so forth.  By contrast: what the fuck does Russia do for us?  Anything?  It's unclear that Russia provides the United States of America with anything other than chagrin.

It appears that America under Trump is in fact going to pivot to Russia - that the pro-Putin talk of Trump and his allies runs deeper than mere rhetoric.  The decision to name Rex Tillerson Secretary of State is strongly indicative of such a pivot.  Appointing the Chairman of ExxonMobil as Sec'y of State isn't an especially crazy move.  In the private sector, you don't get much more well-versed in international affairs than you do the CEO of ExxonMobil.  Still, what he brings to the table mostly appears to be a close relationship with Russia.  I hope Tillerson works out in general, but closer relations with Russia appears to be the main rationale behind nominating him in the first place.

Given that the world is already awash in cheap oil, and that America continues to be on good terms with Saudi Arabia - and, under the Trump administration, is likely to take a harder line against Saudi Arabia's traditional enemy, Iran - what do we need Russia for?  We certainly don't need Russian oil.  From the perspective of oil companies, there is likely too much oil floating around.

Russia's population is in absolute decline.  Think about that!  A nation that is getting smaller population-wise.  That's not easy to find on this here planet Earth.  Russia's economy, roughly the size of Spain's, is a goddamn disaster.  Look at this!

Russians aren’t nearly as productive as they could be. For each hour worked, the average Russian worker contributes $25.90 to Russia’s GDP. The average Greek worker adds $36.20 per hour of work. And Greece is not a country you want to trail in productivity. The average for U.S. workers? $67.40.

In addition, endemic corruption costs the Russian economy between $300 and $500 billion each year, or roughly the cost of three Greek bailout packages combined. This year, Freedom House gave the country a 6.75 on its corruption scale; 7 is “most corrupt.”

It’s no surprise then that well-educated Russians are leaving their country in droves. Between 2012 and 2013, more than 300,000 people left Russia in search of greener economic pastures, and experts believe that number has only risen since Moscow’s annexation of Crimea last year.

(emphases added mine)

Does this sound like a country the United States of America should be in a rush to team up with, or that we should throw out like an old couch?

The nationalist in me is offended.  Of all the empires in the world to be building bridges with, Russia?  Meanwhile, we're getting ready to surrender a shitload of political capital vis-a-vis the actual other superpower in the world, China.  China, the enemy, and Russia, the friend!  Wow.  I really hope that works out for all involved.

I want to close with a Facebook quote from my friend Andrew Sydor, who gave me the OK to quote him.  IMPORTANT CAVEAT:  he did not read my blog in advance! I have no idea if he'd endorse anything I've written here other than his own quote below.  Here it is.  I think it hits the nail square on the head:

Nixon worked with Hanoi to get himself elected. It was treason, but we gave it a pass. Reagan worked with Iran to get elected. It was treason, but we gave it a pass. Are we going to give a Trump a pass too?

Look, you can still hate on Hillary all you want. She was an awful candidate, she blew this election. She sucks. Amen.

But don't give Trump a pass on treason. When we did that with Nixon and Reagan, they fucked up this country in ways we're still suffering from. Don't give Trump a pass.

Whiny Nazis

There's a lot to say on any given day these days, but it's been a long week of moving furniture around and working OT, so for now I'm just going to point out that neo-nazis are whiny little crybabies, and we can call them "alt right", which sounds like a pop music subgenre, or we can call them what they are: Nazi scum, and not even scary like the Nazis of yore, but real honest to goodness dweebs.  Speaking personally, I hope their "movement" ends up winning as big as classic Nazism did.