Let's Talk About International Relations! China Invades India Again

“Tensions between China and India over their Himalayan border have escalated, with China accused of moving thousands of troops into disputed territory and expanding a military airbase in the region.” – Hannah Ellis-Petersen, The Guardian, China and India move troops as border tensions escalate

I wonder if China isn't here taking advantage of the COVID-19 epidemic, which they claim to have controlled. If their troops are healthy while India's are sick, they are in a good position to press their advantage.

I Read the News Today, Oh Boy

The CDC is cooking its published testing data.

Amazon warehouses are COVID-19 hotspots.

And China is cracking down on Hong Kong.

What Would Governmental and Social Forms Adapted To Change Be Like?

At the end of my post “The End Of 20th Century Democratic Capitalism” I commented that “Our system is not equipped to handle revolutionary change, but the history of the USA has been a story of nothing but. It demands a quick, disciplined response. Instead, we have panic and proposals of revolutionary change and reaction” and it has been this way for over two centuries.

What would institutional forms that responded to change look like?

There is a paradox at the heart of that question: creating lasting institutions that respond to change means to conserve as well as change.

What do we want to conserve? What changes can we allow in order to conserve it?

And here this post ends, at least for the moment because I have no idea how to finish it. In US governmental forms, we have the Executive, which can react quickly, but is autocratic in form, and the Legislative, which is democratic in form and has operated too slowly since the foundation of the Union. What might we reasonably put in place of this system?

Libertarian Capitalism is Brittle

(A repost of part of my “The End Of 20th Century Democratic Capitalism” post. I wanted this piece separate to link to.)

The claim underlying libertarian capitalism: that it is the best way to reliably satisfy human needs and desires in a way which maximizes liberty, has failed. It cannot reliably feed, shelter, or care for a population and it has left the entire world to the mercy of the very wealthy.

During the build-up of libertarian capitalism, when it was accepted dogma, there were all these arguments made that, despite a lack of law and regulation, despite the whole thing working like a bucket of fiddler crabs, each one striving to climb to the top of the heap over the bodies of all the others, the goal of making a profit would result in a emergent stable and productive economic order with unprecedented personal liberties for all.

Oh, sweet naïve capitalists.

Just as grades in a grading system where the stakes are high and there is no discipline, self or imposed, go to the cheaters, profit went to those who cheated. Instead of a stable, productive economic order we got one in which the majority of actors did the minimum work for the maximum profit, and quality and safety be damned. The very wealthy determined that the best way to extract the most profit from workers was to move the work to places where workers had the worst negotiating positions. Profit-seeking business owners each specialized in what they felt they could make the most profit at, resulting in long supply chains. One shock: widespread systemic financial fraud, a change in trade policy by a major actor like the USA, a rise or fall of a major input like petroleum, an epidemic, a panic, and the whole thing breaks.

If this has failed – and it has – what do we put in its place?

Part of an answer has to be the creation of stable, well-funded social institutions which are not primarily based on making a profit. At the same time, checks and balances are required. Focusing all power in a single organization – a single branch of government – is a path to corruption.

Passivity or, Why Doesn't Anyone Do Anything?

In a neighborhood not far from my usual roost, there is a bar with a big old neon sign, proclaiming to one and all that it was once a country music bar. I stopped by one night, to find if it still was. Nope. Just a bar. People in the neighborhood used to go dancing there. What happened?

In Sioux Falls North Dakota, there is a meatpacking plant, owned by Smithfield. It is a coronavirus hotspot, yet people were working there until the CDC shut them down. Why was there no strike?

All over the USA, Amazon endangers people’s lives. Why are there no strikes, no protests. Why?

In Minnesota, Vice President Michael Pence is visited the Mayo Clinic and refused to wear a mask, in defiance of the hospital's “everyone masks” policy. No-one at the clinic is required to obey his orders yet they do not protest. Why?

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On the other hand, tiny numbers of people are protesting against coronavirus quarantine measures, brandishing battlefield weapons. The police do nothing. The press reports this as though it were a major movement. Why?

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It is like a disease, an epidemic of depression. Somehow, this people that once conquered a continent have turned passive. Only the worst are willing to act.

Why?

The End Of 20th Century Democratic Capitalism

The COVID-19 epidemic, by revealing the incompetence of most western Democratic governments, has marked the end of 20^th century democratic capitalism. Broadly, the post-World War II deal between capitalists and socialists was “you stay loyal, allow the wealthy to be wealthy, and the wealthy will treat you right.” It was a pretty good deal, better than the brutal failures of revolutionary socialism. But the western system won and the capitalists, having decided they did not need the loyalty of a broad public anymore, started undermining it. It took a generation, but the wealth of the broad middle class of the 1960s was looted.

And now the virus. It has become clear that the democratic west is incompetent at picking and leaders and cannot not feed its people, shelter its people, or protect them from an epidemic.

Character, Capitalism, and Business Failure

(This little post has been sitting in my files for about half a year. It does not, I think, make any new points, but it still strikes me as worth publishing, if only as a matter of adding my small contribution to an ongoing movement)

Maureen Tkacik at The New Republic offers “Crash Course ,” an extensive article on the managerial failures at Boeing that led to two crashes and 346 deaths. Shameful, of course. Horrible, of course. There’s an economic lesson here. In capitalist economics it is assumed, usually without question, that businessmen will act at least in the interest of their business, of preserving their capital. But that is exactly what the Boeing executives and managers did not do. I don’t know how this will work out. It is possible that Boeing will simply go bankrupt, which would be a shame – all that knowledge, all that history, all those skills and so many jobs lost.

The Economic Lesson

Conservative economists consistently argue that businessmen (and it is almost always businessmen) will do the “rational” thing, conserving capital and making their business grow. But this is exactly what the Boeing executives did not do. For them, managing Boeing became an exercise in applying abstract theories of wealth creation rather than the concrete practices of engineering and making of aircraft, leading to the abysmal failure of the Boeing 737 Max. A second claim is made that not only are businessmen rational in this narrow sense, but also that most businessmen are brilliant, and will seek out or create the best business ideas. And, finally, conservative economists claim that rational businessmen will produce optimal (in some sense) businesses.

Conservative economists went on to imagine the economy as a network of these optimal business organizations, which would lead, though market processes, to an optimal economy. Keynes delivered the death blow to that idea that an economy would invariably converge to an optimum state, pointing out that the observed economy around him (his major macroeconomic work, The General Theory of Employment, Interest and Money , was written during the depression of the 1930s) did not match the theoretical predictions of conservative economics. The kind of arrogance we saw from Boeing executives and managers, the belief that they knew better than people who had been doing the job for their entire careers, the arrogance that led Boeing to produce an unsafe aircraft itself destroys the idea that businessmen are in any sense the superior men (why is it always men?) of conservative fantasy. There is nothing that requires capitalists to act in the interests of, even, preserving their own capital and often they do not.

What are the policy implications?

Which leaves us where? If the lawless capitalism that conservative macroeconomists have been advocating since before their position was even called conservative, let alone libertarian, is not to govern our economy, what is? On the other side of the argument, there is a whole line of socialist thinking which argues for minutely detailed control of the economy. This, equally, has failed. I will mention some of the problems here as well.

Critique of Lawless Capitalism

1. Governance is not an economic activity and attempts to make it so are inherently corrupting.
2. Regulation is our friend. It prevents some of the worst outcomes possible in an unregulated economy. Without it, finance turns instantly corrupt.
3. Sometimes government intervention is the only way to proceed. Some activities like providing health care cannot be done equitably and efficiently without either intense regulation of private enterprise or government provision of service.
4. Monopoly and oligopoly are corrupting. The holders of such large “private” fortunes must be kept from buying the government they want.
5. Letting a wealthy minority govern invariably leaves the vast majority impoverished.

Critique of the Planned Socialist Economy

1. It is corrupt. This is not only so in Communist countries, but also within large businesses and the military. There is always, in planned economies, an underground economy of scroungers and their customers.
2. It is totalitarian: it makes every interaction which might even possibly be economic subject to the intervention of the state.
3. It is inefficient, requiring the creation of a vast bureaucracy which promptly proceeds to work to maintain and expand itself.
4. It is unnecessarily conservative, leaving one dealing with the bureaucracy to get permission to do anything new. This is the experience of anyone dealing with a complex grant application or one of the old European government telecommunication monopolies, which kept European telecommunications back for many years.
5. All attempts to produce minutely planned civilian economies have failed.

Conclusion

The separation of governance and day-to-day economic activity is a valuable check on both economic and government overreach.

Implementing Policy

I return, finally, to something that political conservatives often advocate when they are not shilling for vast wealth and entrenched privilege: attention to the character of people in positions of both governmental and economic power. An economy where most of the actors are grifters will produce little of value. A government where most officials are corrupt will extort the wealth of the vast majority and produce tyranny.

The bulk of this essay was written before the COVID-19 pandemic, which underscores the above. Somehow we must begin to pick officials of good character, or all our theorizing will be in vain.