Ian Welsh

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

Category: Economics Page 9 of 93

You Can’t Run Industrial Policy OR A War Economy Under Neoliberalism

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On May 13, 2024

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Washington spent 7.5 billion dollars on charging stations. The result?

Seven stations.

China has subsidized charging station as well. I can’t find reliable figures, though one source says around 10 billion dollars. How many charging stations does China have? Over seven million, 2.2 million of which are public units. The US has 186,200.

Bottom line Chinese EVs sell for about eleven to twelve thousand dollars, though when sent to the West the companies charge multiples of that and take the profits, so if you want a cheap EV you’ll have to figure out how to buy in China and import it yourself, which most Western countries make very difficult.

What’s amusing is that the US is planning on a 100% tariff on Chinese EVs—but even so, they’d still be cheaper and sell at a profit for Chinese EV makers. (As a practical matter, it’s very hard to get Chinese EVs in America.)

A western journalist specializing in EVs went to China recently and drove their cars. The article is long and worth reading, but the summary is that they’re better cars on top of being far cheaper. And this is an American journalist who went in expecting otherwise.

So, let’s fish and cut bait: as the title said, you can’t run industrial policy or a war economy under neoliberalism. It’s impossible. Russia easily and massively increased its production of weapons and ammunition during the Ukrainian war. The West? Hardly at all.

Washington spends 7.5 billion for 7 charging stations. This isn’t just incompetence, this is corruption. Yes, China and Russia have corruption. Lots of it. It is nothing compared to American and European corruption, not even on the same scale. In China, especially, most corruption is “honest corruption” — you can take a slice, but you have to actually deliver. If X number of homes or charging stations are to be produced, you’ve got to produce them.

This is a feature of neoliberalism. Neoliberalism is about unearned profits. This is seen most clearly in the stock market and in real estate. During the post-war period the stock market traded sideways. The indices basically didn’t go up at all. Under neoliberalism they went up inexorably. What is odd about this is that during the post-war period GDP growth was higher, so stock prices haven’t been rising since 1980 because of better economic performance, but rather because it’s government policy run mostly thru the Federal Reserve.

But this isn’t just true of housing and stock prices, it’s true of almost everything. Profit margins have soared during the neoliberal era. Our companies don’t compete on price or quality, they try to create oligpolies or monopolies so that they can charge more without having to provide significantly more value. The way they took advantage of Covid to raise prices far faster than their costs were rising is instructive.

Simply put, neoliberalism is about unearned money: about capital gains; PE plays where you buy a company with debt, load it with the debt and then dump it; monopolies and oligopolies and getting government to juice asset prices or pay you far more than you deserve for shoddy goods (see mil-industrial complex.)

There are, of course, partial exceptions, but even in those tend to be partial. Apple produced some real new products, but they also seek to receive monopoly prices for them. Almost all of the internet, built as a commons, has been turned into walled gardens and the small producers marginalized even as their product was stolen. AI is little more than an IP theft machine against small producers—writers and artists.

But let’s move back to “can’t run industrial policy.” Neoliberalism was very explicitly against tariffs and for free capital flows. Money flowed to the highest returns, no matter from which country. Capital goods and expertise were exported. China until very recently was a low-cost producer, so the West engaged in labor arbitrage and sent the manufacturing floor there. Take Apple, for example. They designed the iPhones and iPads and so on, but they were almost entirely produced in China, because it was cheaper.

Problems is that the best way for engineers to learn is on the manufacturing floor. So as the West sent most of its manufacturing to China, the Chinese learned. After all, they were the ones actually making the goods.

And now Huawei’s phones are out-competing Apple and Samsung. They’ve created their own OS. Their chips aren’t quite as good yet, but they’re moving fast.

As I’ve said repeatedly, wherever the world’s manufacturing floor is, is where innovation will inevitably move. There is a delay. It was about forty years when America overtook the UK. In the China/US case it seems to have been about twenty years. Which is to say, it’s already happened.

Now it’s important to note that this is no longer just about the manufacturing floor. The West’s costs are genuinely higher than China’s even now that China is no longer a low-cost labor market.  This is a feature of neoliberalism: we deliberately produced high housing and rent costs. In America, high health care costs are a deliberate matter of government policy. High living and real-estate costs mean American firms couldn’t compete with Chinese even if they wanted to and still had the capability, not even with subsidies, of which there are far more than people believe.

For about six years, I’ve heard constant complaints from Chinese that it was no longer possible to buy a home. Their housing market, like ours, was being bought up by investors, pricing out young people.

What was the Chinese response? They crashed their housing market and the government has stepped in. (From the Economist. Since it’s behind a paywall, I’m using a tweet with a screenshot):

We can’t compete with this. It’s impossible. Not because it’s impossible in theory, but because we don’t believe in doing such things and to pursue such policies we would have to hurt rich people, a lot, and they own Congress and the Presidency and our politicians in other countries.

China has repeatedly shown that if a policy is good for the majority, but hurts the rich, they’ll do it anyway. We’ve repeatedly shown the opposite.

And you can’t run industrial policy or a war economy if you want fake profits based on not actually producing good new goods at cheap prices. It can’t be done. If an entire society is based around “give me money for the least possible effort”, you’re cooked

China’s government, while not without serious flaws, works, and ours doesn’t, and that’s because China has refused to let private interests take over the government.

China is a capitalist country, there is no question about it. But the sort of capitalism they practice is the type we practiced in the 50s and 60s. You can get rich, but you have to actually produce and incomes are expected to rise faster than the cost of goods. Ordinary people’s lives are expected to get better. So much so that one Chinese I know said that many of the problems of China were essentially those of a paperclip optimizer which was intended to reduce poverty.

The West is toast. We can’t compete. It’s that simple. To compete we will have to change significantly, and while putting up tariffs isn’t actually a bad idea, it’s not enough alone. Without changing our fundamental governing and economic policies and ideology so that to get rich and stay rich you have to actually make good cheap new products in a way that improves the majority’s lives, we will never be able to compete.

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America Flails, Resorting To Ineffective Sanctions Over and Over

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On May 3, 2024

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This has been a theme, but let’s keep nailing it shut.

My favorite recent news was this beauty:

Russia would struggle to sustain its assault on Ukraine without China’s support, Blinken said. “If China does not address this problem, we will,” he added, in a possible reference to sanctions against Chinese businesses involved in the trade with Russia.

China wants Russia to win, or at least not lose the war and needs Russia as a secure ally so that it can’t be encircled or blockaded. Russia has the food, minerals and fuel that China needs, and naval power can’t embargo supplies.

As for the effect of sanctions, well, what’s the line? “Don’t threaten me with a good time?” The effect of sanctions on China has been to make China stronger in almost every way.

Back in 2015 Xi decided on a ten year plan “made in China 2025.” The US hated it and sanctioned large chunks.

The results?

the analysis confirms that more than 86 per cent of these goals have been achieved, with some others likely to be completed later this year or next. Meanwhile some of the targets, such as electric vehicles (EV) and renewable energy production, have been well surpassed.

We all know that the Huawei and anti-chip sanctions have backfired completely. China now owns the legacy chip market and is making rapid progress in advanced chips. It created its own OS, bypassing Google, and has put out phones as advanced as those made by US and South Korean companies. The iPhone market share in China, one of its most important markets, is cratering.

Chinese EVs are crushing: they cost far less than Western ones (though when sold in Europe, they are marked up hundreds of percent) and the car market in China is now dominated by Chinese vehicles, where in 2015 foreign autos were preferred.

As for Blinken’s threats, the Chinese ignored them, and the US did, indeed, sanction.

Boo hoo.

Meanwhile, China has been selling Treasuries at a record clip.

China has decreased its Treasuries holdings from $849 billion to $775 billion between the beginning of Q2 2023 and Q2 2024, reaching its lowest holdings since 2009.

Can you say “reduction of exposure?” Sure you can.

At the same time, a number of African countries have removed their gold stockpiles from America. It seems that stealing Russia’s reserves for geopolitical reasons has consequences.

The largest economies in Africa and the Middle East are withdrawing their gold reserves from the United States.
Starting in 2024, Egypt, South Africa, Nigeria, Ghana, Cameroon, Senegal, Algeria and Saudi Arabia have decided to withdraw their gold reserves from the United States.
It should be noted that South Africa, Egypt and Nigeria are the largest economies in Africa.

Huh.

Let’s circle back to the “sanction China for trading with Russia” imbroglio. Russian foreign minister Lavrov had something to say about that:

“Russian-Chinese trade and economic cooperation are actively developing, despite the persistent attempts of the states of the collective West to put a spoke in the wheels,” Lavrov said. “There has been an almost complete de-dollarization of bilateral economic relations. Today, more than 90% of mutual payments have been transferred to national currency,” he added.

“Interaction in the energy sector is steadily advancing. The supply of our agricultural products to the Chinese market is growing. Joint projects are being implemented in the investment and industrial areas. The mutual benefit from such cooperation is clearly felt on both sides of the Russian-Chinese border,” Lavrov concluded.

Are sanctions working outside of China/Russia? Not in the near region. Lavrov again:

Despite the threats that our partners have received from the US and the European Union not to cooperate with the Russian Federation and the Republic of Belarus under pain of so-called secondary sanctions and other penalties, trade flows across the CIS are growing. [Trade] edged up by more than six percent last year, amounting to over $100 billion.”

Now let’s talk more generally. Every sanction is an imposition of geopolitical risk. Everyone in the world understand this: cross the US or Europe, in any way, and they will sanction you. If you use the US/European financial system, these sanctions can hurt. The way out is to move away from that system—to create another one, where transfers never touch the US or Europe.

So every sanction increase the incentives to create that system and move to it. Parts are already created, more will be and in the end there will be two major financial networks: one Western, one for the rest of the world. The effect on Western prosperity will be significant, though there will be advantages to Westerners not in the elite, as it will crush rent extraction by financial elites. (Though no doubt they’ll simple double down on domestic rent extraction.)

We are living thru the end of the Euro-American era. The end of centuries of dominance. It’s fascinating, but the consequences will be vast. Understand that it’s happening.

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EU Delusion on Sanctions and Europe’s Future

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On April 22, 2024

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While the EU was considering more sanctions against Iran because it attacked Israel in retaliation for Israel bombing its embassy, Russia is sending Iran:

Meanwhile America is threatening China that if they don’t stop sending Russia “dual use” goods, the US will slap on more sanctions.

Boo hoo.

Let us remember the results of chip sanctions. China now owns the legacy part of the industry, and is making progress western “experts” said would take decades in years. Huawei has recovered from the sanctions and created its own OS. It is now a massive electric vehicle manufacturer in addition to everything else. BYD will soon become the largest EV manufacturer in the world, eclipsing Tesla. Something about its cars being cheaper, and Tesla gave up on building a cheap version of their cars. Maybe Tesla will survive because the US keeps all Chinese EVs out, but my guess is that if Musk stays CEO, Tesla’s best possible future is as a luxury EV manufacturer. Their “Cyber Truck” is a disaster.

Iran has built a formidable military with hypersonic missiles while under sanctions, sanctions which started at the same time the Islamic Republic was created. But now, what I’m sure happens, is that China sells Russia goods and Russia trans-ships them to Iran. That hasn’t undone the sanctions completely, but as the world moves away from using the dollar as the medium of trade and routes around US, EU and anglosphere banks, the effects of the sanctions will continue to diminish.

There’s very little that Iran needs (though still some) that China and Russia don’t make. And anything sold to Russia by, say, India, can also make its way to Iran. Cutting Russia off almost entirely gives it no reason to play by Western rules, and it doesn’t.

This is especially true now that America has taken Russian reserves and will be giving them to Ukraine. Anyone who trusts the US with their money who isn’t a complete ally, or satrapy, is a fool. There’s a reason why money used to be frozen before, but not actually taken. There’s a big difference between the two.

But let’s move back to Europe. This article from FT is to the point, German gas prices are two-thirds higher, structurally, than they were before the Ukraine war.

That’s after prices dropped massively. The simple fact is that US natural gas costs a lot more. Russia was selling Europe and Germany oil and gas for bargain prices. Russia’s still willing to sell, but Europe has its head up its ass.

The recent history of European industry is simple. When the Euro came into effect, it raised everyone’s prices except Germany’s, pretty much. Industry in all of Europe except Germany was badly damaged (this was especially bad in Italy which was more of an industrial power than most realized.) Germany, in effect, received a subsidy: the Euro was worth less than the German Mark.

Germany has (had) a lot of heavy industry: a lot of energy intensive industry. To get energy for this, Germany got cheap, below market Russia oil and natural gas. Russia got bulk sales of one of the few things it had to sell and Germany kept its industry competitive.

Those days are over, essentially permanently.

And the problem is that Germany’s dominance was in legacy heavy industry and automobiles. They aren’t creating a lot of new tech and science. They don’t have large new industries developing. They don’t have scale costs like China does. They relied on being very efficient and already dominating industries.

But those industries are leaving. A lot of them are going to America, the actual company facilities, but the production is, effectively, also moving to China and other countries.

I know I’m a bit of a stuck record on this (do youngs understand that simile?) but Europe is walking into its decline with its leaders acting as if it’s no big deal, indeed as if they are, to use my father’s crude insult still “King shit of turd island.” Sanctioning Iran, lecturing Africans and acting as if they are superior in every way: the only truly civilized people in the world.

Even as they do, the foundations of their prosperity, their “garden” are eroding out from under them at the speed of soil blowing away during the Dust Bowl.

They’re insane. Completely detached from reality, and some of the stupidest elites in the world, even exceeding America’s very high bar.

The Sun always sets. European leaders seem determined to make it set as soon as possible.

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How To Know When The US Deficit Is Actually A Problem

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On April 11, 2024

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There’s been a lot of hysteria over the ballooning US deficit lately. Is it worth worrying about? Let’s learn how you can tell for yourself, rather than relying on others to tell you.

This is the sort of chart which is going around:

Scary, eh?

So, here’s the debt long term, as a percentage of GDP:

Still pretty scary. US debt it is running higher than WWII debt.

In the short run, most of this is caused by interest payments:

So, what changed? Prime.

If you take a look at these charts you’ll see the rise in rate of increase is mostly due to interest.

Now, when governments who can print money default, it is because people don’t want their money, or the money can’t buy what what they need. US debt is entirely in US dollars. Treasury can mint as many bonds as it likes, and the Federal Reserve can buy them. It is impossible for the US federal government to run out of money, per se.

Rule: Debt is a problem for a government with the power of the printing press when money can’t buy what is needed.

Regular readers will know I am fond of Keynes maxim: “Anything we can do, we can afford.”

The corollary is “Anything we can’t do, we can’t afford.”

It doesn’t matter how much money you have. You can’t build a nuclear bomb in 1900. You can’t build a nuclear bomb if you are Nicaragua. For ages no one but the US and Europe could, effectively, build commercial airliners. You can’t buy what you can’t produce.

In 1945 the US debt did not matter. The US was half the world’s economy, and everything it needed to produce, including oil, it produced itself. It also had the power of taxation: the top marginal rate was 94%.

Rule 2: Money can’t buy what you need when you can’t produce it and those who can produce it won’t sell it to you.

Right now the US cannot produce much of what it needs. It does have a food surplus and can survive on its own domestic food production and it has a surplus of petrochemicals BUT much of the goods it genuinely needs, like basic electronics and production equipment are no longer made in America.

Let’s look at three charts. First the trade deficit in goods and services:

Now, let’s look at the trade balance in services:

So, the US has a trade surplus in services. Crap like intellectual property and management consulting. Stuff people can do without if they must or can ignore if they choose.

Now, trade balance in goods:

The trade balance in goods is what the US doesn’t make itself that it wants or needs. Some of it is crap: you don’t need summer vegetables in the winter. Nice to have, but not needed. But a lot of it is important: those basic electronic and mechanical goods, including production goods which the US no longer makes and in many cases no longer knows how to make.

The overall trade balance doesn’t look so bad, but it is made to look way better than it is by the US trade surplus in services, which are far less important than goods.

When the US can’t make or buy what it needs using US dollars the deficit matters.

That means the key point is when other countries stop taking US dollars as default. When the dollar is no longer the medium of trade. Right now almost everything can be bought in dollars, which the US can print. If and when that changes, the US is up shit creek without a paddle.

But there is another set of issues: domestic ability to pay.

Specifically, when you can’t pay the enforcer class. Cops and military and judges and prosecutors and prison guards and all that security crap.

America is a vastly unequal society, seething with latent unrest. If the people who protect the status quo won’t fire, then the government and the peace is at great risk. We say this during the January 6th insurrection: most of the capital cops were not willing to fire. This was an ideological issue: they were sympathetic to right wing protesters, just as cops tend to protect Nazis and beat down socialists and blacks.

But it can also become a financial issue. You can print as much as you want, but if people can’t buy what they need with it, it’s worthless. See Weimar Germany hyper-inflation. Or you can refuse to pay, because part of the ruling coalition wants too much of the money and won’t give it to others. Most of the policing in the country is local: it is financed by states and municipalities which do not have the power of the printing press and which do not have a great deal of effective taxation ability: people and business can leave the state or the municipality, in addition to the normal elite capture rule.

When the Bolsheviks took over Russia, most of the enforcer class was not being paid, or couldn’t buy what they needed with the money they were being paid. So when push came to shove, they didn’t fight for the government, and many (especially the navy), switched sides.

Likewise, as Lenin observed, ordinary people are genuinely willing to violently revolt when the risk of doing so is less than the risk of not doing so.

The key question, then, is inflation. Unfortunately, in the US and the West in general, actual inflation is impossible to tell thru official stats. You have to judge buy your own grocery bill; your own fuel bill and your own expenses, and those of people you know. Do you and others have excess money to spend?

Inflation spikes when there isn’t enough to go around. It’s that simple. If a country can’t produce what it needs or wants, and others start raising their prices or refusing to sell, inflation becomes a problem.

Even without inflation, decreasing surplus income is a problem. This is why inequality matters: if a large chunk of the population can’t buy what they need, well, Lenin’s maxim comes into play.

China is at risk of deflation (not significant risk, yet, but that’s their danger.) The US and Europe and the Anglosphere are at risk of inflation.

That inflation will happen when others won’t or can’t sell us what we need and we can’t make it or grow it or mine it.

It is at that point where the US deficit will matter.

If you want to know when the US deficit will matter, it’s simple: when China and other countries stop using dollars as the default trade currency. That process is early yet, but underway. It used to be unthinkable to sell oil in anything but dollars: did not happen. Now it does. China and Russia, China and India, and Iran and everyone now trade without dollars. African countries are in the midst of throwing out French and American military bases and do the majority of their trade with China, not America or Europe. They are increasingly trading with Russia, as well, and relying on it for military aid.

Everything those countries need except for some medicine they can get from Russia and China: food, goods, and fuel. China gives them better debt terms and doesn’t interfere in most countries internal politics nearly as much as America does.

This is the actual threat: the West not being able produce what it needs and other countries no longer willing to accept dollars. Track this by watching actual inflation, and observing the process of global de-dollarization.

The deficit and the debt don’t matter much, yet.

But they will.

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Why China Is Wise Not To Sanction The West

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On March 27, 2024

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The West has sanctioned China repeatedly, most notably in chip production technologies, but not just in those.

It has backfired, with China quickly building its own chip manufacturing capacity, though they still have a ways to go to entirely catch up. Huawei has also created their own phone OS, cutting the Google/Apple duopoly, and Apple sales are crashing, while the government is telling all government departments not to use Intel or AMD chips.

But China has largely not replied with its own sanctions. The reason is obvious: as long as they don’t, the US remains dependent on China for a vast swathe of goods. The reason chips were sanctioned is that it was one of the only areas where the West was ahead of China (the others are biotech and arguably aviation, though given Boeing’s problems, that’s an arguably.)

If China sanctioned the West, the West would have to re-shore a vast swathe of manufacturing: if not back to Europe and the US, at least to reliable allies. It would become stronger, as Russia did under sanctions.

It would also be in a far better position to wage war. Right now, in a US/China war, the US would be swiftly be crippled by its need for manufactured goods it can only get from China.

To put it simply, the US is far more dependent on China than vice-versa, and China wants to keep it that way.

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In A Crisis We Can Only Afford What We Can Already Do

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On March 26, 2024

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I’ve written, prescriptively, that money shouldn’t buy anything that matters: not healthcare or education, for example.

Anything we can do, we can afford

But at the top level money can’t buy anything you couldn’t do anyway. Anything we can’t do, we can only buy from others. The Britian of the thirties was still, despite all its problems, a great industrial power. They could do most things, and it was ridiculous to pretend they didn’t have the money. They could build ships and buildings and refine medicines and so on.

There we some things they couldn’t do: they couldn’t produce as much food as they wanted: they bad to buy that from others. But since other people wanted what they could do, they would accept British pounds.

And there were things no one could do, and money wouldn’t buy those things: go to the moon, for example.

Today, for all our money and science, we still can’t just buy an end to cancer.

There’s a little, largely bullshit “law” in economics called the “law of comparative advantage.” If we all do what we’re best at, we’ll produce the most stuff, including services and we’ll all be best off. There’s a certain technical truth to this law.

But if you can’t produce something yourself, you can only buy/do it if those who produce it are willing to sell to you, and if you must have it, they can charge very high prices if they sell at all.

Britain couldn’t produce enough Destroyers in WWII, so they had to go begging to America to get them, and the price the Americans charged was extremely, extremely high. (The book “That Man” by Justice Jackson goes into this.)

Ukraine wants a lot more missiles and artillery shells, but Europe and America don’t make enough or won’t sell large chunks of their reserves.

When you don’t have or, or lose the ability to produce something yourself you lose the ability to buy it with your own currency without other countries having a veto. Produce can mean many things, for the Japanese and Germans in WWII, it meant not having enough oil production of their own.

When America and the West in general shipped their productive capacity overseas they assumed that it didn’t matter: that in the world of free trade, they’d always be able to buy what they needed, and that they’d have effectively infinite money.

It doesn’t work like that. If we produce less, in time our standards of living will decline and in times of crisis, others will keep what matters for themselves first. (Covid vaccines illustrated this, and even if you think they didn’t work, well, at the time the vast majority didn’t believe that.)

As climate change, ecological collapse and civilization collapse continue, we will also find our ability to buy what we need constrained: not enough water in large areas. Not enough fertile farmland. It isn’t that there is nothing we can do: we can try varieties of indoor farming and we can de-salinize water and so on, but we won’t be able to buy enough of what we need. We won’t be able to easily buy insects or bees, or fish in the ocean or low CO2 in the air.

Anything we can do, we can buy. But if we can’t do it, we can’t buy it.

People forget this, both ways. Both in learned helplessness, as if we couldn’t easily house everyone and feed everyone (the absolute food shortages are in the future): we have massive food subsidies and enough ability to build homes, after all.

Anyone saying ‘we can’t afford’ is either a fool, or feeding you bullshit.

But there are some things we can’t afford, and the number of those things will increase over time.

 

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Principles Of The Green Age After The Collapse: #1

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On March 7, 2024

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Do as thou will, so long as you increase biodiversity and biomass, reduce pollution and heat, and replace any resources used.

Want to live in the howling wilderness? OK. But only if you can increase the number and amount of lifeforms, and reduce pollution by being there. If you can’t do all three, you don’t get to live in the wilderness.

Freedom today is based on money. If you have enough money, you can do what you want, if you obey the law. The more money you have, the fewer laws apply to you: either they are laws which if violated are punished with fines, which you don’t care about, or they are laws which are effectively not enforced against the rich.

The Green Age, instead of having a zero tolerance policy for minor infractions, will have no tolerance for people who damage the ecosphere or the climate.

Likewise, you will need to replace the resources you’re using if you’re using them beyond any natural replacement rate. If you’re taking water from a river or an aquifer, you’ll have an amount you can use that is equal to natural replenishment. If you use any more, you’ll need to replace it. Chop trees, plant them, and since you also need to maintain biomass and biodiversity, that won’t mean tree farms and will require you to keep doing it and, most likely, to have done it in the past. (This will make clear-cutting very rare.)

This also means that you don’t get to do what you want if you use non-renewable resources. Mining and other forms of permanent extraction will be something that society has a strict limit on. Much will be assigned by government, and much will likely be divided and given to each member of society and when they buy something which uses a non-renewable resource, that account will be debited, with no credit except in life-saving emergencies.

The principle is simple: replace what you use if it can be replaced, make the ecology and the environment better because of your existence and use limited amounts of non-renewable resources. This is how we fix the environment and make an environment is healthier and far more enjoyable to live in. (Just as almost everyone wants to live on a street with lots of trees.)

Long term, if you want to use a lot of non-renewable resources, we will have to go into space, but taking masses from Earth will be verboeten.

These rules will apply to individuals and groups, including whatever replaces corporations as our primary private economic vehicle and to households. This will lead to the end of suburbs and exurbs as we know them. Most people will either be rural (working on food production and environmental projects) or will live in dense cities. If we want the privilege of living in low population density areas, we will have to earn it by figuring out how to do so in a way that doesn’t decrease biodiversity, biomass or renewable resources, and instead of those who make more money being allowed to do more, those who will be allowed to do more will be those who increase those environmental variables the most.

This is only the first of the Green Age articles, we’ll dive into the rest of the principles and some of the details of how such a society must be run as the series continues.

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More Statistical Manipulation In Real Time (Top 1% Wealth)

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On February 20, 2024

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Rudy Haverstein noticed this one. It used to be that the top 1% wealth exceeded the wealth of the 50-90th percent (the middle class) about ten years ago. Here’s that old chart:

Then some statistical changes were made:

“The Fed attributes the changes to “Distributional Financial Accounts models updated for the 2023Q3 release.” I’ll note that – as with CPI – I’ve never seen data revisions that made the situation look worse, always better. ”

Now the top 1% only recently surpassed the middle class:

I bring this up because too many people believe that economic stats aren’t fiddled. They’re heavily, heavily fiddled. I consider CPI essentially worthless.

This has turned into a massive debate: most Americans think the economy sucks, but if you look at economic stats Biden is the greatest economic president since FDR. But that’s based on CPI being what the BLS says it is. And the CPI, after decades of manipulation, is garbage.

So, let’s skip the bullshit. Every once in a while a study (not a regularly collected statistic) slips and lets some truth thru:

A Federal Reserve study on household finances found that Americans outside the wealthiest quintile have depleted the extra savings generated early in the pandemic and now have less cash on hand than they did when the pandemic began.

If manipulating a statistic is useful to those in power, it is manipulated. When I first started blogging, I used to cover Bureau of Labour Statistic releases every month. I had spreadsheets full of stats. Now I don’t, because Garbage In, Garbage Out. (GIGO.) In truth, even back in the early 2000s the stats were terrible, but it took me some time to figure out how divorced they were from reality, and that divorce has widened since.

Instead I try and look at real numbers: reported retail prices and wholesale prices and actual rents and so on. There’s some unavoidable use of official statistics, but they’re only really useful comparatively, and even then one has to be careful, due to constant revisions, including backwards revisions.

One recent stat is that Russia has been growing faster than the G7. Is this true? Well, I think so, for a variety of reasons, but it’s only a probability. China definitely is, because I see vastly expanding industries all over the place, enough to make up for the deliberately engineered real-estate collapse.

Don’t believe internal numbers. Cross check your personal experience with the experience of other people and believe that. Even if you get it wrong, in a sense you’ll get it right: are prices much higher for you and those you know than they were pre-pandemic, or not? Has your income and those you know risen faster than those prices?

That’s your personal economy.

I have often thought that if I were suddenly in charge of any major country, practically the first thing I’d do would be to form my own corp of auditors, reporting only to me, and the first thing they’d do is savagely audit the statistical agencies, followed by mass firings and re-formation.

Because if your statistics are bullshit, it means you can’t really know what’s happening. And if you don’t know that, well, you can’t make good decisions.

Under our current regime that isn’t a problem: they don’t want to make good decisions, they just want statistical support for pre-determined neo-liberal decisions.

And that’s why they’ve spent 50 years running the economies off the West into the ground.

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