Category: Economics Page 1 of 92

First economic: The US dollar is down 5% over the last six months against a basket of currencies. And over the past year, it’s lost 9.6%. The biggest winner against a dollar has been the euro which has gone up 13% however, which truly is a win for Europe because it makes their natural gas imports from the US less expensive. But their natural gas imports are still a poison chalice. Expect the dollar to continue its slide, perhaps precipitously at some point in the New Year.

There were large moves out of US equities in the spring confirming the adage “sell in May and go away.” What September will look like is anyone’s guess, especially as Israel is more than likely to start the second phase of its war against Iran? Or October—that worst of months for Wall Street? What happens if Iran closes the Straits of Hormuz and oil goes above 100 dollars a barrel? That would be great for oil producers, but it would be terrible for markets across the globe, even China, possibly leading to a worldwide recession, especially with Chinese growth being somewhere between 4% and 5% at present.

Regardless of what happens in September or October—both always being bad month’s economically for the US economy, America’s bond market and the value of the dollar will continue its downward trajectory because America’s lenders are now demanding gold for loans instead of treasuries. This smells to me like the beginning of the end of dollar hegemony.

It makes me wonder what kind of “store of value” the BRICS will adopt to support their currency? Will it be a basket of their currencies? Will it be backed by gold and petroleum? That would be truly hard-core, because it would mean we were in for a long era of tight money. Our entire lives, actually, the entire history has been based on easy money. And as you know money creation is only possible when using a fiat currency.

There are many ways to imagine what they’ll do. Maybe blockchain? Who really knows? But there are other commodities that do have a store value, silver among them, maybe even rare earths and others they could use. It certainly is an interesting time to live.

Second domestic political: Niall Ferguson in his interview by Charlie Rose posted a week ago on the Internet was asked about Trump‘s challenges of outright ignoring the constitution with the following question: are we the Roman Republic, is this or are we witnessing the collapse of the constitutional order like the Roman republic. Rose asks if Trump is Augustus. He clearly is not. I would say that Trump is more like Marius and the Kennedys were more like the brothers Gracchi. In fact, I made this argument on a graduate school paper that I got a very good grade on, but in which my professor seriously disagreed with my analogies. Regardless I would say that we are at the beginning of the end of our constitutional order, and that we are looking down the barrel of Caesarism. It’s on the way. Maybe two years, maybe four years but it’s coming. Will it be a general? Will it be a politician? Those are questions we simply can’t answer. But as Ian Welsh has consistently predicted America is heading for a collapse, be it constitutional or economic or both it’s gonna happen and there isn’t anything anyone of us can do about it. Besides, Ferguson, while whip-smart, is kind of a tool.

Third is about some weaknessess the SCO currently must contend with if they are to become the anti-NATO military block. Here they are in no particular order of importance: One, the nations that make up the SCO are too diverse and often times their interests do not align with everyone in the SCO. For example, China and India have serious border issues. Pakistan and India have serious issues in Kashmir. Those are just two examples of several potential conflicts between members of a block, supposedly to oppose NATO. The issues between Pakistan and India make the intra-NATO issues between Greece and Turkey look like a family arguement on Thanksgiving.

Second, as the former director general of Russian international affairs Council said in a recent interview, “ the mandate of the SCO is too general.” The SCO can focus on security, development, or terrorism. Not all three.

Third, China is by far the most powerful member of the SCO and that creates a dangerous asymmetry in the organization. Much like the United States dominated NATO for so long and skewed it’s purpose after the Cold War for its own unfathomable means.

Fourth: This essay on the relative merits of “Superradiance,”. Is well worth the three minutes it will take to read, plus it is comprehensible to the layman. The essay describes Superradiance as “a collective quantum optical effect in which a group of emitters, such as atoms or molecules, emit light in a highly coherent and amplified manner. In the context of mammalian neural systems, superradiance occurs when a group of neurons collectively emit photons, resulting in a stronger and more coherent signal compared to individual neuron emissions. This coordinated emission of photons across vast networks of microtubules within neurons could potentially achieve the long-range coherence necessary for the emergence of consciousness.”

The essay stands as a correction of sorts to Sir Roger Penrose’s “Orchestrated objective reduction (Orch OR)” theory of human consciousness, which Wikipedia describes thusly: Orch Or “is a controversial theory postulating that consciousness originates at the quantum level inside neurons (rather than being a product of neural connections).” In short, says Penrose, “Consciousness does not collapse the wave function; instead it is the collapse of the wave function that produces consciousness.”

One thing we do know is that consciouness is decidely not computational and most likely occurs in the quantum realm.

As you can tell, I dig this kind of stuff.

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Follow Up and And Reply On My “How to Lose Allies” Post

By Sean Paul Kelley

On September 10, 2025

Comments

First, I want to follow up on this: “I am due to have a conversation with a friend that lives in Denmark tomorrow and I’m going to ask him about energy prices.”

His reply, and I paraphrase as I did not record it or take notes: “if we still had to make our house payment, we would be totally screwed. The amount of money that we pay for energy now is about equal to what our house payment used to be. It’s about five times higher than it normally is, but what’s even worse is the high cost of energy filters out into everything in the Danish economy. A simple item like bread is three times higher than it used to be. Specialty items are three or four times higher than they used to be. Fish from fisherman that we go to the docks to buy from because we live on an island is four times more expensive because they’re paying four times more for the energy they’re using to go out and fish. It’s brutal and it’s all because the United States or somebody allied with it blew up the Nord stream pipeline. I try to keep my mouth shut about this because most people have drank the Kool-Aid, but I really hope Russia wins because I’m sick of all this global elite bullshit.”

These words were spoken by a well educated American married to a Dane with two teen-aged Danish children. If the Danish economy is suffering like this Germany must be fucked.

Where does Europe get its energy now? From the US, now exporting LNG (liquid natural gas) to Europe for 4x the price of Russian and Turkmen natural gas. Here is my question as a Texan: why haven’t natural gas prices risen in tandem with the export of the commodity? People I have asked who recieve natural gas royalties are pissed because there is no price increase pass through. So, owners of the wells are getting screwed and so are the buyers of the product. Welcome to Oligarchical America.

Next I want to address a handful of commenters in my post, best reprersented by Mark Level. He writes, in a very gracious and polite comment that he takes issue with my outline of American Grand Strategy. He notes, “This insane hobby-horse (or idee fixe, choose your metaphor) dates back far more than 120 years, probably 3x that long, and originates in British Colonial phobias about Russia and “the East” generally. Halford John Mackinder developed this lunacy & published it almost exactly 120 years ago, but it had a long pre-natal development among arrogant Imperial gits in Asia. (Gits and twits, upper-class British twits, like the Monty Python sketch.) See here, and the delightful childish fantasy of being Alexander Magnus from this Mackinder thought bubble . . . .”

Please note, first and foremost, I used the word hostile power or hostile coalition. Hostile being the primary variable.

I’ve read Mackinder’s works. Anyone who has traveled across the Silk Road pretty much has to read them. His idea is not necessarily original. It’s more a fusion of ideas that came out of the late 18th century and 19th century Western European dominance of the world that began, as I previously mentioned, with the defeat of Venice in 1509, Portugal’s conquest of a Spice Empire, and its desrtuction of the Ottoman Navy in the Indian Ocean, thus having no rivals, and of course Spain’s rapacious theft of New World gold and silver.

During the 17th and 18th century, a new idea developed with the growth of the British Navy, who outstripped the Dutch and pretty much took over their empire. New York City was, after all, New Amsterdam. What these developments presaged was an idea that centered around the ascendancy of the Littoral powers over the Continental Empires that had ruled Eurasia for millenia. Gunpowder, boats, better firearms, better steel and in the New World, devastating disease leading to genocide in many cases up and down North and South America. The Littoral is defined by strategists “as those land areas (and their adjacent areas and associated air space) that are susceptible to engagement and influence from the sea.” Thus the emphasis on a strong navy by Alfred Thayer Mahan who proved just how dominant Littoral Powers could be. For a time, that is, only for a time, as I see it.

Add to this ascendancy the wars of the Western European powers of the United Kingdom, Spain, France, and the Holy Roman Empire primarily fought during the 18th century for two strategic reasons, primarily by two very different nations with very different vital national interests at stake.

One, was the United Kingdom’s insistence that no power could dominate the Low Lands of the Netherlands and later Belgium because if they could, it would threaten an invasion of the British Isles, plus their massive exports of wool textiles, fueling the nascent industrial revolution. Smart, if ruthless policy.

Second, we must understand France‘s main goal during the wars of this time (and for several centruies prior) was to ensure a divided Germany. So long as the German states were littered into 100 different little principalities France had nothing to worry about. Thus France could go on dominating the continent. The first seismic change to this was the War of the Sixth Coalition which saw for the first time Russia flex its true potential when Russian troops occupied Paris. France’s cataclysm occured not in 1941 but in 1870 with her defeat in the Franco-Prussian war. The result of which was Prussia unifying all of Germany into one empire, adding insult to injury by having the Kaiser crowned in Versailles and taking Alsace Lorraine away as its prize.

Fuse those two strategies together and it is not too far an intellectual leap, considering the Great Game going on at the time between the UK and the Russian Empire, for Mackinder to conjure up his ideas. Were his ideas taken up by the United Kingdom? You bet, but by 1917 when it was clear that the United Kingdom could no longer maintain the balance of power in Europe and the United States had to intervene, (everyone should read AJP Taylor’s magnum opus, The Struggle For Mastery in Europe, to understand the balance of power and its collapse in 1917) US foreign policy intellectuals adopted it. And rightly so.

I think it’s the correct idea. But my reasons for thinking it’s the correct idea are not gonna make many of you happy. You might have to face some hard truths. Oh yeah, I did tell you I was a Realist in the old school manner of the word? In fact there have been a few times when Ian has chastened me pretty seriously for my realism. With that admisssion I will make another one: I don’t mind the criticism from Ian or from others. Ian is probably the smartest person I’ve ever met in my life and I listen to what he has to say. And when I say listen to him, I mean, I consider his words deeply. A man who cannot change his mind will never change anything. Nevertheless, I digress.

Here are my reasons for why I believe the prevention of a single hostile power or coalition of hostile powers from dominating the Eurasian landmass is smart policy. Please, if you take anything away from this sentence, take the meaning hostile.

Number one: the Monroe Doctrine. Oh, I hear you screaming already. But the fact is that if this were not “our” hemisphere, not a one of us would have the standard of living we do today. Our hegemony of the Western Hemisphere is the primary foundation of our wealth and our power. You might not like it. I grimace frequently at the crimes we comitt to protect it. But, the Westphalian System is not built on justice. It is built on the acceptance of international anarchy. Each nation to its own. There is no single sovereign power governing planet Earth. Thus, violence is the supreme authority from which all other authority is derived. Is this a grim Hobbesian outlook? Yes. I don’t like it and I’m pretty sure you don’t either. But as a realist, I take the world as it is, not as I desire it to be. A hostile power or coalition of hostile powers that dominate Eurasia can take that hegemony away. You might not like it but trust me when I say you don’t want that to happen.

Second, a hostile power or coalition of hostile powers that dominate Eurasia can take more than our hegemony away, it/they can invade us. We don’t want that either. Thus we have a powerful navy that projects power to keep Eurasia divided–for the time being, because I think if we get into a war with China, their indirect way of war–read your Sun Tzu–will probably outwit us on the high seas. I’ve spent a great deal of time in China and have a healthy fear of their capabilities. However, my greatest fear is that in our arrogance we will engender the very hostility we must prevent and by our own devices bring about the doom we should seek to avoid. We have lost our edge, our generosity of spirit and our understanding of power. We have become a mean spirited, two-bit, cheap and vulgar people. And sadly, because so many of us are beaten down economically by rich elites who are delusional, we’re going to lose a big war in a painful way. A war that could be avoided, but probably won’t be. I hope I’m wrong, but don’t think I am.

That said, these very wise words, written by Robert D. Kaplan recently, convey the gravity of our present predicament, “There is no prediction. It is only through coming to terms with the past and vividly, realizing the present that we can have premonitions about the future.” Moreover, as a wise woman wrote about history, “the more I study history, the more I learn the art of prophecy.” Deeply contradictory statements, yet both true in their essence.

Are we any more perceptive now about what awaits our planet than were the Russians of 1917, or all of Europe in 1914, and, for that matter, the Germans of the 1920s and the early 30s?

Do we honestly think we know better than they did? With all of our gadgets and our technological triumphalism I bet you there are a handful of you out there that think we do know better than they did. I hate to disappoint you, but we don’t. History is the story of contingency and human agency, not inevtiablity.

So, there it is. Rip me to shreds if you wish. I’ve suffered enough Shakespearean arrows of outrageous fortune in my 54 years to handle it. In fact, I welcome your ideas and if you got this far I’m grateful for your time.

Nominal GDP or Purchasing Power Parity

By Sean Paul Kelley

On September 5, 2025

Comments

Serious question. In your opinions, dear readers, which is a more accurate measure of an economy: nominal GDP or purchasing power parity? I lean towards PPP myself, as I’ve traveled so much (65 nations and counting) I’ve internalized what the local value of a currency can buy versus what a dollar can by at home. So, I can mentally compare. It just makes more sense than this amorphous nominal GDP. Am I wrong?

Nota bene: Measured by nominal GDP the USA is 25% of the global economy. But, measured by PPP it is 15%. PPP makes more sense.

Trump’s Budget & The NATO 5% Of GDP Requirement Have The Same Effect

By Ian Welsh

On August 18, 2025

Comments

Despite all the flakiness and back and forth Trump’s actions have a unified purpose. Like the Democrats, but even more so, they disproportionately benefit the rich. (We’ll leave aside the pandemic response, which is complicated and an emergency.)

This table is older, and based on the House version of Trump’s budget and tariffs, but should be substantially correct:

Tariffs effect the rich less, because they spend less of their income on goods. The biggest companies often get exceptions to the tariffs as well. Currently that includes Apple, Coca-Cola, Stellantis and GM.

We are also seeing signs of “Greedflation”, using the tariffs as an excuse to raise prices faster than costs. This was huge during the pandemic,and it will be huge this time. Overall the really reach will benefit from tariffs, not be hurt by them. Trump talked a good game about making sure companies wouldn’t use tariffs as an excuse to raise prices, but that’s all it was, talk. For tariffs to improve the lives of the working and middle class, they would have to translate into well paid jobs, and there is no effective mechanism for that in America.

Let us turn then to the “NATO nations must spend 5% of GDP on their military.” That’s a lot, and it means that either taxes must be raised (they won’t be except for consumption taxes on the poor) or other priorities must be slashed. So the poor and middle class in those countries will get it in the neck.

Now, if that 5% was spent on domestically produced weapons and on hiring more soldiers and support staff, at least it would get back into recirculation. Indeed, there’ll be some of it, but most countries have agreed to buy Americans weapons and equipment.

And who will that benefit the most? The American rich.

In some cases buying American is so foolish it boggles the mind. Canada’s only real active military threat is America, and American weapon systems these days are mostly online and can’t be used if America doesn’t want them to be, even leaving aside the possibility of simply bricking them with an update.

But in general, increased military spending was an opportunity for industrial policy and to cut the aprons to the US, and actual statesmen would smile at Trump, make the promises and use the 5% in ways that would benefit their own country. Instead most of the benefits will flow to America.

As for the idea that America is a reliable security partner, well, they couped Ukraine, built its army up massively, encouraged it not make peace when easy and favorable terms were offered and is now cutting a deal with Russia after extorting mineral concessions from Ukraine.

Never ally with America if there is any other option.

But the core point here is simply that the “does it make the rich even richer” metric, which works for American politicians as a group, is even more predictive of Trump. Oh sure, he’ll throw the hoi polloi some social policy red meat, and yes, some of the moderately rich are being hurt by his policies, but the real rich, they’ll mostly make out like bandits.

Until China eats their lunch, which they are and will.

Right now America’s policies appear to be “loot the satrapies and form a non-Chinese bloc which is smaller, weaker and poorer than the China bloc.”

Smells like the USSR to me, except the USSR started out very strong and with higher economic growth than the West. America is trying the strategy as its in terminal decline.

***

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Autarky Sure Looks Good

By Ian Welsh

On August 7, 2025

Comments

So, Trump has decided to raise tariffs on India to 50% (who knows if he actually will), over their imports of Russian oil. Meanwhile:

Senators Lindsey Graham, a South Carolina Republican, and Connecticut Democrat Richard Blumenthal are the lead sponsors of a bipartisan bill which would impose primary and secondary sanctions against Russia and entities supporting Putin’s aggression if Moscow does not engage in peace talks or undermines Ukraine’s sovereignty.

The bill includes imposing 500-percent tariffs on imported goods from countries that buy Russian oil, gas, uranium and other products.

At this point all smart nations and blocs should be doing their best to reduce vulnerability to the US, to route around it and to move towards as much autarky as possible.

It’s notable that while China remains a huge trading power, the #1 economic priority over the last eight years has been making all major industrial stacks domestic: ending their need for industrial goods from other countries and reducing their need for imports of resources. Where that’s not possible, they have shifted to reliable partners like Russia and Iran and various other nations in Asia, Africa and South America.

John Maynard Keynes was of the opinion that anything a country needed, it should make or grow at home if at all feasible. Price arguments are largely ludicrous, because if you don’t have vast exposure to trade or need to buy important goods overseas and you don’t allow significant currency movements outside your border, prices are largely a domestic matter. That is to say, they are a matter of policy. Government actions largely determine the price of goods and services produced in the country IF the country is capable of producing those goods and services itself.

Or, again, as Keynes said, “anything we can do, we can afford.” (The corollary is that anything you can’t do, you can’t afford.)

Trade dependency is foolish. It may be necessary in some cases, and certain policy choices require it, like export driven industrialization. But once you’ve got an industrial base, it becomes a choice.

If a country produces everything it needs, including reasonable luxuries, questions of employment become ludicrous. Just reduce working hours to 30 hours a week, or even 20, or institute an annual income. The idea that resources must be distributed thru jobs is, again, ludicrous. Once a society produces enough why not increase leisure? Why not encourage citizens to do art, write, study or even sun-bathe? Most people don’t have jobs they’d keep doing if they were independently wealthy. There is NO virtue to work that is not actually needed.

A trade structure which creates a vast web of interdependency doesn’t decrease the likelihood of war. The Europeans found that out in WWI: the pre-Great War world had vast amounts of trade, and it was argued that war between the Great Powers was obsolete: they would all lose massively. It was true that they’d all lose massively, and they still went to war.

All that too much interdependence does is restrain nation decision making ability, and, in democratic countries, the ability of politicians to actually do what their constituents want. (They often don’t consider this a bug, mind you. It’s nice to be able to say “we have to reduce taxes on rich people and corporations to be competitive”.)

Free trade is a bad idea for any country that isn’t postage stamp sized. If you can’t make it yourself, learn how. Trade for what you can’t grow or dig up yourself, and actually need. Eat seasonally.

This doesn’t mean “no trade”, it simply means managed trade and an emphasis on making as much as you can yourself.

Certainly no country which can avoid it should need to import food, and likewise and deep need to import energy is a huge weakness which can easily be used against you and which can lead to war. (This is the proximate cause of Japan attacking the US in WWII: America cut Japan off from oil, and they had to have it.)

This also leads back to our previous discussions on population levels and birth rates. A China with 1.4 billion people needs more imports than one with 600 billion people. An American with 150 million people is far freer than one with over 300 million.

As for defense, well, all real countries should have nukes and advanced missiles. It’s that simple. If you do, you’re a real country. If you don’t, you aren’t and are subject to easy blackmail by any great power.

Moving towards autarky is a worthwhile goal. In most cases it will never be achieved and full autarky is rarely a good idea, but getting close is.

(See also, “Ricardo’s Caveat”, because economists are wrong about comparative advantage in free capital flow systems.)

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Europe Affirms Its Vassalage In Trade Deal With the US

By Ian Welsh

On July 28, 2025

Comments

This is a complete capitulation:

15% tariffs on EU goods, 0% on US goods
EU to buy 750 billion dollars in LNG over the next 3 years (US LNG is more expensive than alternatives)
600 billion EU investment in the US
50% tariff on steel and aluminum to the US stays in place
A commitment to purchase huge amounts of US armaments

Japan has similarly capitulated, after previously standing firm.

Pathetic.

Ironically this leaves Canada as one of the only holdouts among America’s vassals. China, of course, has told the US to take a long flying leap off a short pier.

As I have noted before, the US has been cannibalizing its allies as it declines. This was true under Biden. Trump is only super-charging it. This cannibalization won’t change the trajectory, the US is DONE, but other countries accepting it means they will go down with the US

The EU was always in a hard place: it does export much more to the US than vice-versa. But it did have options, it just refused to take them. Cheaper energy from Russia is available, even during the war, Putin has been clear about that and it would mean much slower de-industrialization. Germany’s loss of industry has been, in particular, driven by high energy prices since the Ukraine war and the destruction of Nord Stream. German businesses which shut down in Germany have often moved to the US for the cheaper oil prices.

The way to strike back against the US was to hit America services: internet companies and break various copyright and patent laws. Hit the tax havens and take the money. (Ireland will squeal, but so what). This is where America really makes its money and it’s completely vulnerable. Meanwhile cut a deal with China, they’re the rising power.

The same is true for Japan, as it happens.

As Trump has shown, no deal is final. When politics change in Europe (and they will) this deal can be repudiated as the garbage it is. If that doesn’t happen soon, Europe’s decline will be much faster than it has to be.

What’s particularly interesting to me is the psychology of this. European elites are just so used to being vassals, and so completely without any pride (though they have plenty of vanity) that they are unable to stand up to America no matter what the humiliation. Russia was able to withstand far worse than what the US was doing, and even flourish, but Europeans can think of no way out but to capitulate. (To be sure, Russia had certain advantages the EU doesn’t have, but the reverse is true as well. The real issue is a lack of imagination and guts.)

Europe needs to get rid of its elite class, entirely, and find new leadership. Unfortunately it seems likely that they’re going to choose the idiot right, who will simply overcharge decline. After those morons fail, they may finally turn to decent leaders, but by then it will be too late to “save the garden” in most nations.

This capitulation has closed off one option: the third bloc. What could have happened is Europe, Canada, Mexico, Japan and other affected nations forming a unified trade bloc of their own, and taking unified steps against America. Such a coalition would have won the ensuing trade war and could have cannibalized the US rather than the other way around.

It is a pity, but unlike many historical vassals who resent their status, our current leadership seems to enjoy being house slaves. So all of this will be done the hard and ugly way.

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Uber’s Finally Profitable & Workers and Customers Will Pay Back Its Losses Fast

By Ian Welsh

On July 25, 2025

Comments

Uber started in 2009. It incurred losses every year until 2023 except for a profit in 2019 which was due to selling subsidiaries in various countries. Numbers before the IPO are difficult to obtain, but it lost 31.5 billion from 2016 to 2022. Let’s assume a loss of equal to funding during the pre-IPO period, so 24.7 billion. This seems reasonable, since Uber never made a profit during the period.

So we’ll estimate Uber’s total losses at 86.2 billion from 2009-2022.

In 2023 Uber made a profit of 1.9 billion and in 2024 it made a profit of a little under ten billion. Prices for rides on Uber are between ten to twenty percent higher than taxi rides, rising to as much as 50% higher during surge pricing periods (when there’s the most demand.) Driver’s on average, get paid less than taxi drivers used to.

So–the workers get less, the customers pay more.

The strategy, as many people noted, including myself, was for Uber and Lyft to drive taxis out of business by undercutting their prices. Uber and Lyft didn’t need to make a profit, while taxi companies did. Once they had gained dominant market share, they raised prices and took oligopoly profits.

Everyone knew this was the play, and that people were getting subsidized rides now (Uber was much cheaper than taxis in the early years) in exchange for getting fucked over later. Well we’re now in the sandpaper condom period of “ride sharing”, where investors earn back their investment by hurting everyone else.

This should never have been allowed. Uber and Lyft violated massive numbers of laws and were just allowed to do so thru non-enforcement. The end result was obvious and it’s here now: worse wages, higher prices and less ability to regulate the industry.

This sort of stupid is why everything keeps getting worse. Every part of the “sharing economy” (which is no such thing) has made the lives of ordinary people worse. AirBnB in particular helped drive the rise in rental prices in hundreds of cities.

All that most tech-bro firms do is find a place where there isn’t market power, and try to add it. Same with Private Equity, which buys up entire industries in order to form oligopolies and monopolies, as it’s doing in the housing market now.

Market power always means more money for a few rich people and higher prices and worse income for everyone else involved in any given industry.

Welcome to the tech-bro future and remember, Soylent Green is people and so are high profits, always.

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Ending Resource Separatism in Alberta and Canada

By Ian Welsh

On July 24, 2025

Comments

Alberta is a province in Canada with a lot of oil and a moderate but not yet dangerous separatism problem that polls a little below 30%. That’s far less than needed to win a referendum, but enough to support an insurrection or a large campaign of civil disobedience. It’s also a sufficient level of support for America to take advantage of in one of their patented color revolutions.

Though the level is higher than in the past, it’s nowhere near new. Growing up in the 70s and 80s in British Columbia I remember the anger.

Because there’s a lot of resentment in Alberta and out West in general it also gums up the works politically: the Premier of Alberta has been truculent and unwilling to join in on national efforts to resist Trump’s trade war, for example.

Alberta has oil. Lots of it. Most of it is crap, tar sands oil. It is because of Alberta oil that Canada has a trade surplus with America, in fact, we have a goods and services deficit.

Like all resource rich areas Alberta lives from boom to boom, and the good jobs are in the resource sector. At one time that resource sector was heavily taxed, but that’s far in the past and it is now heavily subsidized. So anything that seems to hurt the resource sector which the Federal government does, like environmental regulations or even renewable energy initiatives is resented. A lot of Albertans identify with oil company interests.

So, this issue needs to be dealt with. Its legs need to be cut out from under it.

The approach which will work is simple enough.

The federal government should either nationalize the oil industry or tax it at high levels when oil prices are high and take the money and just give checks to people in resource rich areas. (Not just Alberta, but also Saskatchewan in particular.)

Put 50% of profits or taxes into a sovereign development fund which invests in new non-resource businesses in resource areas in proportion to the income it receives from them (because resources always run out and one doesn’t want the West to turn into the Maritimes economically), and simply cut checks for the other 50% directly to people who live in the areas.

Make it so that the people of Alberta, Saskatchewan and other resource rich areas see the federal government as the one responsible for their prosperity and personal income, not oil barons.

Of course there are more steps which should be taken, but this is the first and fundamental one: reverse the underlying issue.

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The horizon is not so far as we can see, but as far as we can imagine

Category: Economics Page 1 of 92

Four Randon Econonic, Political, Geopolitical and Scientific Musings

Follow Up and And Reply On My “How to Lose Allies” Post

Nominal GDP or Purchasing Power Parity

Trump’s Budget & The NATO 5% Of GDP Requirement Have The Same Effect

Autarky Sure Looks Good

Europe Affirms Its Vassalage In Trade Deal With the US

Ending Resource Separatism in Alberta and Canada