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

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

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.

Meanwhile Tesla has abandoned its charging station subsidiary, selling it off and had plenty of complaints, while they owned it, of stations being out of service. 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.

You get what you support. If you like my writing, please SUBSCRIBE OR DONATE

Previous

Week-end Wrap – Political Economy – May 12 2024

Next

Using Comparative & Absolute Advantage To Explain China’s Rise

32 Comments

  1. Mary Bennet

    Mr. Welsh, granted all that you have posted this week, which I can hardly dispute, because I live with the results, can you explain why Chinese nationals continue their illegal crossings of our border? Why do they not stay at home?

  2. Bill R

    Thank you.
    Just one typo America overtook the UK not US.

  3. Ian Welsh

    Mary,

    I don’t know. I’d guess that some are dissidents and others think that the US is a better place to get rich. There’s a fair bit of lag time between reality and previous understandings of the world. It is also true that if you’re, say, gay or Uighur or trans you may prefer America for entirely legitimate reasons.

  4. Jan Wiklund

    Concerning the EVs, I feel really sad that the Chinese are buying the private car fad as the Westerners did some generations ago. It will cost them dear.

    As long as a city stay dense, it can compete. The distances will be short, the synergies will be big, and the transaction costs will be negligible. But as soon as the private cars step in, they will crowd out everything. The distances will grow and the economies will crumble.

    It seems that people will never learn from other peoples’ mistakes, they will have to do the same mistakes themselves. I’m sure they will turn neoliberal also, as soon as their billionaires have got powerful enough.

    Let’s give them two generations more. That was what it took us.

  5. Chris West

    Electric cars aren’t here to save the world; they’re here to try to save the car industry

  6. Altandmain

    Unless there is a collapse on the scale of the break-up of the USSR or a major political revolution, the Western rich are collectively too greedy to make these changes.

    Unequal societies tend to grow less. Even IMF research confirms this.

    https://www.caixabankresearch.com/en/economics-markets/activity-growth/how-does-inequality-affect-economic-growth

    Left between a choice of a wealthier society with a more egalitarian wealth distribution and a less wealthy society with a bigger slice of the pie, they chose the latter. The rich would prefer to have global hegemony (and you can see this in their wars with Russia and China), but left on their own, they would choose to be rich in a “Western Banana Republic” versus a “big Scandinavia” (or what Scandinavia used to be anyways – it’s taken a very neoliberal turn with the rest of the West).

    In terms of military power, I’ve noted in the past that the US isn’t as capable. It’s mostly a neocolonial army (and it loses most of its fights there to, like in Afghanistan and can’t win in Yemen too). So that’s why the US needs to act through proxies like Ukraine or Taiwan. They mostly use covert ops (like regime change) and propaganda to mask this declining military power. Nation state war requires a strong industrial base, which as you’ve noted the US doesn’t have anymore.

    Domestically, the Western rich won’t agree to a second New Deal. The neoliberal era was created to come up with a massive propaganda effort to try and break up the New Deal type of Social Democracy in the 1970s and 1980s.

    The unequal system will collapse at some point. You can already see the legitimacy crises coming about. In the short run, the rich can break the protests the way they broke the Occupy Wall Street protests, but that doesn’t cause the anger to go away. Eventually that USSR-like break-up may very well occur. What happens next though is hard to predict.

  7. Barry

    Kevin Phillips tried to warn us.

  8. elkern

    Re: “why Chinese nationals continue their illegal crossings of our border?”

    I’d bet that many/most are Christians seeking a Promised Land where their core beliefs are less marginalized. The Chinese Government “oppresses” Muslims because it fears Jihadi terrorism; Christian groups in China don’t pose the same threat, but they would be viewed (and treated) with suspicion. Monotheism demands that its adherents prioritize “worship” (in thought and action) above material concerns as defined by the larger society. Christian sects in China are a legacy of [failed] Colonialism, and they are likely (and rightly) viewed as fertile ground for Western spies.

    OTOH, China must have massive Bureaucracies to regulate their economy, and Bureaucracies (Governmental or Corporate) tend to promote Assholes into positions of power. Modern China is young enough that this hasn’t yet resulted in the inevitable societal sclerosis, but it’s likely that many Chinese people & families get treated badly by random local functionaries holding personal grudges or just abusing their [petty] power because that’s what Assholes do. Some people will blame the State and imagine that it doesn’t happen in the USA.

  9. Willy

    I saw a Youtube from an Austin realtor, clearly describing how Austin is becoming unpopular because it’s becoming unaffordable.

    Half the commentary responded by proclaiming that it was all the progressives fault, completely oblivious to and/or contradicting the clear explanations which had just been given in the video they were responding to. Everything bad is the woke progs fault, because it just is.

    Zombies. If they kept mostly to themselves, all shuffling around mumbling nonsense, I’d be cool and just stay the hell away. But they’re all so loud and pissed off.

  10. bruce wilder

    China until very recently was a low-cost producer, so the West engaged in labor arbitrage and sent the manufacturing floor there.

    I think it is worth unpacking the sources of China’s “low-cost” position and how that position evolved over time — China’s “industrial policy” was after all aimed precisely at bringing about that orderly, step-by-step evolution. In the West, we cut short any thought about how this works and by “this” I mean the deep development of industrial capabilities and capacities. When I was young, the short-cut was the “low-wage” hypothesis. China or Mexico or wherever paid $1.00/hour while Michigan or Ohio paid $30.00/hour (often with the unexpressed implication that the factory worker in Michigan or Ohio with his high school dropout education didn’t deserve $30.00/hour for his “low-skill” work if some peasant elsewhere could do it for $1/hour or $10/hour or whatever). “Skill” is another one of those conceptual short-circuits: “highly-skilled” and “low-skill” are thrown around as pejoratives or praise without any firm grounding in factual, descriptive analysis. What is lost in the simple-minded comparison of wage rates are all the other risks, disruptions and costs imposed by the chaos of an underdeveloped economy that lacks infrastructure, deep education and deep supply chains. Electric power that stays on and cheap 24/7 and the ability to jump in a truck and go to a hardware supply warehouse for spare parts when a piece of equipment breaks and the ability of “ordinary” workers to follow instructions and figure out and adapt and problem-solve — this is what makes $30/hr “competitive” globally. China took a long time to build that capability and the U.S. took a long time destroying its own.

    Now, when I am old, the “colonial settler” imperialism concept has been adopted and the riches and wealth of the West (and East Asia) are ignored or attributed to theft of raw natural resources. Colonialism is certainly oppressive and part of the motivation and leverage for that oppression is the imbalance of bargaining power and political power created by highly organized production and distribution systems confronting highly chaotic production and distribution in undercapitalized societies.

    China took the unequal bargain neoliberalism offered it and leveraged a society that was highly organized around a minimum level of social welfare. A huge number of people could live at a satisfactory level on wages in local currency trading for goods and services locally which wages at international exchange rates represented a “bargain” for American and Western consumers and most especially Western capitalists. China set and maintained that exchange rate for decades at its short-term disadvantage, accepting the reality that it made several classes of Western globalists money — financial returns that might be at odds with the overall consequences for the general welfare in Western nation-states.

    Ten years or more ago, I would comment on Mark Thoma’s blog that financial and “knowledge worker” capitals like New York and Boston and London were becoming richer at the expense of the de-industrializing American Mid-west or the British Midlands and North and I would be greeted with non-comprehension.

    China’s development on the strength of buying huge quantities of U.S. sovereign debt funded the financialization that made billionaire oligarchy overweaning as well as the transfer of production capabilities as the U.S. dis-invested and China invested.

  11. GrimJim

    For the last 40+ years all “innovation” in the US has been limited to some new iteration of rentier economics:

    1) Finding new ways to squeeze labor (destruction of unions);
    2) Finding new ways to act as an economic intermediary (a la Health Insurance and other gatekeepers of services);
    3) Financial trickery and robbing Peter to pay Paul (Private Equity Firms);
    4) Novel Financial Instruments (outright legalized fraud);
    5) Shell Company Ponzi Schemes.

    That’s it. That’s all we’ve seen in the US as far as “innovation,” merely one form of legalized theft after another.

    But that’s in the core DNA of Capitalism. It started with the Enclosures and it has been all downhill from there…

    Now Capitalism is circling the drain and taking everything else with it…

  12. Mark Level

    I’m going to try to answer Mary’s question in a way that is just facts-based on my own observation traveling across several areas of the world, & that indulges in neither conspiracy thinking nor excessive focus on demographics in China. (I don’t deny that many Chinese Christians may choose the West for that reason, but that is of little interest to me because I don’t have the impression that that is a very large demographic in China.).

    I’m not as well-traveled as some of my wealthier (also older) friends, but I have (as previously shared) spent a year in total living in Mexico & Central America in the 1980s & 90s, having visited 5 countries there: Mexico, Guatemala, Honduras, Nicaragua & Costa Rica. Additionally I spent 10 weeks of one summer early this century in Spain, covering most of the country except Galicia & the northwest. Also I’ve been to Thailand twice for a couple of weeks each time. (And to Canada once as a child, and to Montreal with friends who were living in Vermont around 2006.)

    If you’ve ever been to Asia (& again, my experience there is not extensive, some of my insight is from reading), you’ll know that there are large Chinese populations acting as local traders in very many places, doing importing and exporting. I also understand that this is the case in major parts of Africa, though I’ve never been there.

    I saw plenty of Chinese in Thailand, some fairly integrated with the Thai culture & some not. Across nearly everywhere I visited in Latin America there were Chinese people, some having been there for more than a century, many people nicknamed “Chino” or “China” as is common in Latin America. As in Spain, there were also Chinese restaurants run by people from a Chinese ethnic background, but fluent in Spanish as well. And economic activity by ethnic Chinese was in no way centered on food service alone, from what I could see.

    India is now nearly as large or (after decades of a 1 child policy in China) possibly larger than China in numbers. India does have a tradition of a trader class of people going abroad and opening stores (thus the stereotype of Indians running 7-11s that the likes of Biden has spewed), but I think China, as a Confucian and essentially materialist and practical culture has a far longer and more widely practiced (& respected) out-migration for trading purposes than India has.

    So basically it may be that the US & West did not originate the idea of “globalism.” The Chinese seem to have acted on those principles for most centuries of its existence, first mainly in Asia, but later in Gold Mountain (San Francisco & the West) & elsewhere. Admittedly, there were times when China was challenged by regional wars & out-migration stopped, but to my knowledge it never had the xenophobic self-focus that say, Japan did, nor for the most part was it able to keep the Western Empires out as China achieved for quite awhile (apart from the Dutch).

    I hope that helps. Again, I don’t think it’s sinister. I just think it’s the result of a very large population who are (in some respects) quite cosmopolitan and willing to venture out into the world & trade with others.

  13. Mark Level

    “nor for the most part was it able to keep the Western Empires out as China achieved for quite awhile (apart from the Dutch). — oops, “as JAPAN achieved & practiced” for a couple of centuries if not longer.

  14. GlassHammer

    Ian,

    No, its much worse than what you described.

    Reliability (The ratio of “use” to “maintenance required”.) and Maintainability (How you go about Repairing the thing at all.) were removed under neoliberalism. Just selling the thing once is “success” under neoliberalism.

    For example,, heavy equipment is built in such an unsustainable manner that it can be often cheaper to get another piece of equipment than even attempt a repair.

    Oh and those mechanic skills we had are completely dieing out because of this.

  15. Ian Welsh

    Glasshammer,

    agreed. I’ve mentioned those issues before, and I’ll return to them.

  16. Dan Lynch

    Ian, I just want to say that this is one of your better essays. You have not said anything I did not already know, but you said it much better than I ever have.

    As for why people from _______ immigrate to the U.S., two reasons come to mind: 1) they may have bought into the mythical version of the U.S. portrayed by Hollywood, where everyone is upper middle class and drives a new car and never has to worry about getting laid off. 2) in every economic & political system, there are winners and there are losers. Even if most people are winners, as seems to be the case in China, there’s bound to be some losers, too, who may feel they’d be better off in a different system.

    I was once married to an immigrant from Laos. Her dad had been a chief of police in Laos and was on the CIA payroll. It was a good gig for him while it lasted, and he lived well, had an airplane, multiple houses, multiple wives, etc., even though Laos was at that time a very poor country. But when the Communists rolled in, daddy was sent to re-education camp and his family had to actually work for a living just like ordinary peasants. For that family, they were definitely worse off under communism, not to mention literally fearing for their lives because daddy had worked for the CIA and made a lot of enemies, and so they immigrated to America, where after some initial difficulties they have done well, and their children have done even better. But if you had been a rural peasant in Laos, you might have been better off under communism, or at least no worse off. I imagine there are similar stories in every country, including China.

  17. bruce wilder

    China has a massive population and it has built an industrial economy that can productively employ maybe half? the population and productivity is rising at a rate that means industrial employment is declining even as output increases and population begins to decline. The vast apparatus of construction firms that served the years of rapid saving and investment in infrastructure is obsolete in a country that is largely “built out” — Bill Gates famously observed that China in a few years of the last decade produced more concrete than the U.S. did in the entirety of the 20th century. Overall, the Chinese have surprisingly not achieved especially high levels of education across the whole population, but the highly-educated are still a vast population trapped in a fiercely competitive society and economy.

    The handful of young Chinese expatriates I have met personally seem to have calculated their chances of a good life and personal achievement in the West as being much better than in China. There’s simply less competition for places in the professions.

    The notion that the Chinese are somehow less inclined to chauvinism or imperialism than other nationalities seems naive to me. China is the oldest empire on earth, centuries older than any other. It has never been particularly shy about pressing dubious claims at its furthest frontiers. Manchuria? Tibet? The Spratley Islands? Aksai Chin!?

    As for the great diaspora spread across southeast Asia and much of the rest of the globe — famine and civil war effectively expelled many. The Chinese civil war of the mid-19th century was easily the largest and deadliest conflict anywhere on the globe in that hundred years. Whole provinces and their associated subcultures were wiped out.

  18. VietnamVet

    I agree 100%. China’s civilization is 3,000 years old and as chauvinistic as ever. A Singapore Chinese student over half a century ago pointed out to me that the People’s Liberation Army fought the victors of WWII to a draw in Korea 70 years ago. Still the US is sending 95 billion dollars to Ukraine, Russia and Taiwan to increase the profits for military contractors from the proxy WW3.

    Rather than accept Jimmy Carter’s Malaise, the Oligarchs overthrew the American & European Republics and the Soviet Union for good measure. Simply the West is controlled by crazy mobsters. I’d be more emphatic; ‘they create oligopolies or monopolies so that they can charge more for less value’.

    Once I realized that this year’s US Presidential election will be a repeat of 2020, it is clear that democracy is finished across the globe. It is old age, but I’m sure sooner or later, I’ll be tossed to the wolves. They are literally insane. The Republican Presidential candidate is on trial to get him jailed, no matter that he is an Oligarch. Donald Trump is not too big to fail. The Deep State wants him gone. Senator Lindsey Graham said ‘Nuke Gaza to End War’. A guarantee that the Sunni Atomic Bombs will be used on Israel, not to mention the Gaza beach front lots turned radioactive, or the Shiites making their own atomic bombs to bounce the rubble created by their conventional weapons.

    There has to be a new Reformation or the Earth will be uninhabited after the neo-con-liberals are finished with it.

  19. Thomas Neuburger

    Excellent, Ian. Every word a true one

    Thomas

  20. Europe imperialized the entire world. England killed 100 million people in India alone, and that’s is just before the the 20th century. 3 entire continents of people were wiped out.
    It would be shorter to list the countries America hasn’t bombed, couped, invaded, funded armed groups in, supported genocides in, or waged economic war against then to list the ones it has.

    Yet we are told that China is just as imperialistic because they control “Manchuria, Tibet, The Spratley Islands, and Aksai Chin.”
    ROTFL
    On the next installment of the American military channel we will learn how Russia is an empire because it’s tanks are parading around Saint Petersburg.

  21. Failed Scholar

    An anecdote from around a decade ago: a good friend of my father’s was the owner of a medium sized machine shop, and he told him the Chinese competition to the parts that he made was impossible to beat on price. Some of the quotes he saw for the same bids he was after was half as much as he could make the parts for, and indeed one of the things that he ended up doing was importing those parts himself and just sending it through his Q and A department to make sure they were up to the quality standards required by his customers. Anything that wasn’t, was re-machined by his shop to work. That was their solution to keep the lights on back then.

    I often think back on that when I hear about our ‘plans’ for decoupling or whatever nonsense our elites have thought up of now to combat China. As you say, we are properly cooked, but the morons in charge of us don’t have a f***ing clue – when/if the shooting starts, Western economies are gonna crash and burn.

  22. Gaianne

    Ian–

    Thank you for a very good essay.

    And congratulations: You have been noticed over at Naked Capitalism!

    –Gaianne

  23. Purple Library Guy

    I have long thought that the key difference between capitalism and other systems the world has had is that capitalism has a drive for the leaders to acquire power BUT SHED RESPONSIBILITY. In feudalism, the feudal lord has the power, his subjects owe him fealty, but fealty is a reciprocal relationship in which the lord also has some responsibility for the subject. Various stripes of autocrats, emperors, theocrats and so forth had control over their subjects, and might treat them like crap, but it was clear who was doing what to whom; the overall health of the country was the responsibility of the overlord.

    Capitalism puts the power in PRIVATE hands. Capitalists have power, they have far more wealth than the heads of the actual government, they influence that government so strongly they can usually be said to control it, but they are formally separate; they take no responsibility for the government. Similarly with employees–employees are not serfs or slaves, they are “free”; the capitalist controls as much of their lives as necessary to gain more money and power from them, but takes no responsibility for them. And the more, as it were, intensive the capitalism, the more a society discards “mixed” economy in favour of capitalist dominance, the more the capitalists both gain power and SHED RESPONSIBILITY. Neoliberalism is a particularly intense form of capitalism, with the result that the people really in charge of it take no responsibility for overall outcomes and cannot be made to do so. This causes the kind of policy problem Mr. Welsh is talking about.

    I think it’s one of those “contradiction” thingies Marx was always on about.

  24. Eric Anderson

    “ 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.”

    Nope. But when government and the corporations climb in bed together and sire a bunch of frothing at the mouth little fascists — ya better lookout.

    The U.S.? Fascist.
    The EU? Moving fascist.
    Britain? Need I ask?
    Israel? Whoa! So fascist.
    Russia? Fascist.
    China? Fascist.
    India? Fascist.
    Argentina? Recently fascist.
    I can continue if you like …

    I mean, when you get down to it we need an entirely new language to describe the “new world order.” It’s really about competing “brands” — of fascism.

  25. Eric Anderson

    Purple Library Guy:

    Interesting point. I think you may have just found a variation on the definition of fascism. Fascism exists when the government takes responsibility for private policy.

  26. someofparts

    Recently saw some news clip of a ranking somebody at the US DOD touring shipbuilding facilities in South Korea and speaking with admiration of the Korean work ethic. This is why I consider English language media a health risk, because hearing things so extravagantly offensive to a working class mope like myself is gonna give me a stroke if I don’t tune it out.

    Ian’s post has brought back into the foreground a sad thought that has been popping up in my thinking lately, which is the idea that the US could become like Argentina. By that I mean a nation where the ultra wealthy have never, ever taken their boots off the neck of the citizenry long enough for a proper middle class or any generalized prosperity to emerge. It is tempting, as a citizen of this misbegotten nation, to hope that there will be a new New Deal a generation or two down the road, but maybe I am kidding myself because the hard truth is just too depressing. I’ve lived long enough to understand that I may be very unlucky to speak this language and live in this country.

  27. Jan Wiklund

    Take courage, someofparts. According to Peter Turchin the socalled US elites will go on tearing the eyes out of eachother, and disagreement in the upper crust is the best environment for popular movements.

    It’s all about organizing for the mundane needs!

  28. Gaianne

    Purple Library–

    Thanks for a key point that certainly fits with the theme of the essay.

    –Gaianne

  29. StewartM

    Well said, Ian. Well said. All of it.

    You can’t have a good economy where you deliberately allow people to make easy, paper profits instead of the difficult, tangible ones. Raising corporate taxes even higher than what we had is not a bad thing, for this reason, it’s a good one—it rewards companies that sink money into modernizing infrastructure and plant, doing more R&D, and paying workers (all done with pre-tax $$$), while punishing those that seek profits by stock buybacks, mergers and acquisitions, and the like (all done with post-tax $$$). Likewise, raising individual income taxes, especially those on non-wage income, is a good thing–it disincentivizes short-term profit-taking, and the rich are then resigned to making less money to avoid taxation.

    (Of course, you’d have to re-do retirement in the US, lessening its dependence on artificially inflated asset and stock prices, but doubling SS and making it tax-free and available at younger ages is the solution to that).

    It’s also why those think that Trump’s tariffs are the solution (meanwhile, de-regulating even more the financial markets and lowering taxes on the rich even more) isn’t any solution, but just makes the US a captive market to domestic producers who will turn out even crappier products (and why not? you’ve eliminated foreign competition who actually produced decent quality products for most consumers) will worsen, not better, the trajectory you describe. Tariffs could be part of the solution, but I’d allow an out (the same out that China allows, BTW); foreign competitors who run plants and hire US workers and abide by our labor and environmental laws would pay no tariff.

    Of course such a full-employment economy would be the bane of our economic wise men, especially the libertarian-minded, who are all for the “a worker can always get another job” solution to labor issues but are aghast if that job is actually a better job, and we have a wage-growth economy instead of an economy of Bob Cratchetts and Tiny Tims.

  30. StewartM

    Glasshammer

    Oh and those mechanic skills we had are completely dieing out because of this.

    This is one of the biggest challenges in re-industrializing the US. We’ve had at least a generation, maybe two, who never learned how things work. I think the rise of ‘magical’ popular lore is in part because our technology, for most of the public, IS ‘magic’.

    Contrast that to the servicemen who fought WWII. The US armed forces in WWII were probably the most technologically competent in all of history. When things broke in the field, common soldiers, sailors, and airmen often knew either how to fix them, or jury-rig an improvisation that would work short-time. That’s because they were simply applying what they had already learned on their (technical, industrial) jobs to warfare.

    Nowadays, our people don’t have anything like a similar background–for one, they are usually straight out of high school, instead of being pulled from the shop floor; and two, even if they were pulled from a job they were likely keyboard punchers than builders.

  31. Bruno Ruhland

    Fuck competing I say. Competing is indulging unbecoming childish tendencies that are maybe ok for the playing field but not for a meaningful life. In fact the Chinese are doing things better than us because “competing” has so degraded the quality of life here that we are easy to beat – as you spell out. We are deep in self-consuming dog eat dog land. A good book: No Contest by Alfie Kohn

  32. Dave Demers

    I suppose it is the difference between parasitic and predatory corruption. If we keep the host in the condition whereby we can continue to extract la mordida, society functions… if we just eat the host we may run out of victims to exploit

Powered by WordPress & Theme by Anders Norén