Trade War Without Ammo

The trade war is definitely on, no matter how Wall Street wants to deny it. Serious investors have downplayed recent events as part of a grand strategy, a negotiating tool that will all work out in the end. The reality, that there isn’t really a good strategy in place here but simply petty tactics, has not sunk in yet, at least in America. But the rest of the world knows better.

For the purposes of this discussion, the European Union will be diminished to Germany. After all, this is the economic engine that powers the continent right now, and Merkel’s leadership is critical. Where is Germany going? The long and short of it, the strategic and the tactical, is to the east. This response is proof enough that there is no US strategy which makes any sense.

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When Economics Fails

I have been working on this, now what feels like a year overdue.  Look for more this week.

Economics is nothing more nor less than the study of the primary way in which people connect with society and get on with their lives.

In everyday life, you may interact with a few people – family, colleagues, and friends. But through the process of eating and paying the mortgage you interact, at some distance, with hundreds more. Because this interaction is entirely through something called “money,” a way of keeping score, it’s very tempting to look at it entirely through numbers. The dizzying details of tens of millions of exchanges every day makes a top-view in bulk the most desired method of analyzing how things are going.

Yet this process has proven wrong over and over again. The failure of economics, particularly macro-economics, is the primary reason why the only true study of an economy has to be a People’s Economics.

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US vs The World

The Bureau of Labor Statistics (BLS) announced the addition of 223k jobs in May, bringing the unemployment rate down to 3.8 percent. Labor markets are tighter than they have been since the Managed Depression started in 2000, and there is upward pressure on wages. What could possibly screw it all up?

How about a global trade war pitting the US against every other nation on the planet?

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Unlimited Credit

This post from November 2015 is becoming more important as the federal deficit ratchets up and private credit is turning back up.  I am leaving in the references to Sanders and progressive counters because they may well be current again.

If you’re like most people, you probably think that you can never have too much access to credit. After all, you never know what might go horribly wrong or when an opportunity to really follow your dream might come up. A little scratch ready in the background might be the difference between the good life and something much less.

Then again, a lot of credit has a corrosive effect. In a world saturated with borrowing everything is judged against the expected return if the money was simply loaned out at market rates. It seems reasonable that where a little credit is a good thing a lot of credit, defining everything in the world, is the biggest enemy of both long-term thinking and a society looking to maximize happiness and human potential.

Logic says that where a little credit is good a lot could be bad, meaning there is an optimal point. Where is that? Where are we with respect to a good level of credit? It turns out that train left the station a very long time ago – and this may explain a lot of the problems in this economy.

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Moving Beyond the US

The United States is typically a very self-absorbed nation. As the largest economy in the world, and separated by two oceans, US based news and the opinions it shapes have always been centered on domestic concerns projected out into the world. This has only been exacerbated by the a pathologically self-absorbed president.

Because of this problem, the simple fact that the world is fleeing away has escaped many Americans. What has been a growing practical reality as the US share of the world economy slips is becoming a necessity thanks to severe foreign policy mistakes, all of which cater to a domestic audience. “All politics is local” remains true, even though it clearly should not be.

The two biggest foreign policy areas, a trade war with China and sanctions against Iran, appear to be two different situations with the US at the center of both. They are not, and increasingly will become less and less about the US. This simple fact is going right past us, too – making our policies even more ridiculous and harmful to our own interests.

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Globalism Isn’t Failing. Industrialism Is.

The process of the world coming together has been irregular at best. It seems reasonable that through it all there would be winners and losers, as we have seen. What is remarkable is how globalism, as a concept and a reality, has divided the developed world. Working people with less access not only feel left behind, in many cases their standard of living is actually slipping.

It seems as though there is a fundamental flaw in globalism. Yet the flaw may be in how we approach not just globalism, but the forces which created it in the first place. What if the process of the world coming together, driven by market forces, is fatally flawed because of our inadequate understanding of marketism?

In short, what if the transition from an industrial world to a market based world is not as seamless as we want to believe?

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Worker’s Paradise

This piece, from 2015, is a good one to mark the 200th birthday of Karl Marx. His analysis of history, and where it appeared that we were going, was remarkable in many ways, mostly in how badly it was misinterpreted.  As we move ahead to a market driven economy that is remarkably distinct from an industrial economy, an understanding of Marx (along with Adam Smith, John Maynard Keynes, and Milton Friedman) seems more essential every day – assuming it’s done properly, that is.

Imagine for a moment that you live in the most fair and equitable economy you can dream up.  There are some very specific things that most people in the developed world, especially Americans, would think would be a part of this.

There would be upward mobility, where family circumstances do not determine the kids’ future.  People could find their own way according to their own talents and choices as to what makes a good life.  Money would rarely limit dreams, as a free-flowing capital market would provide funding for good ideas at reasonable rates.  Most would own their own homes and have control over their own destiny.  Workers would own the company they work for, banking their retirement at a reasonable age on the place that they helped build.  Basics like food and access to health care would not be expensive.

Such a place is the embodiment of pieces of both the Democratic and Republican parties in odd turns.  This place of the imagination has also been  pretty close to the perfect state envisioned by Karl Marx, although it may be descending into an oligarchy (which I prefer to call “gangster state”).

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