The Pecker solution. Plus debt, growth, and the top excuse offered by Wall Street parasites.

Lots of brief topics on debt and society and politics, this time, and if you make it to the end I promise something deeply thought-provoking for you economics wonks...but first a comment on the Bezos-Pecker imbroglio.

Jeff Bezos brought to life my decadal proposal that someone torch the foundation of all mafia empires - blackmail. I've long held that today's world is only explicable if hundreds, maybe thousands of powerful people are being blackmailed, each thinking he or she is all alone. (It's a top Kremlin tactic, going back to the czars.) I portrayed a gutsy politician shattering the dam (in a started novel) unleashing a flood of confession-revelations that save civilization. But sure, a rocket-building, SF-loving, unafraid zillionaire makes sense.
(The classic line: "You say you have negatives? Great! Print me some glossies please?)

Jeff should follow this fantastic essay with another, urging more of the blackmailed to come forth. As I describe here.

In fact, my old idea of a "Henchman's Prize" might lure out even more. Notice how this path doesn't just mean escape from the blackmailer's clutches. In Jeff's case, it leads to a kind of elevation and redemption. As I point out in an open letter to every new Latin American president who claims to want to end the cycles of graft, one speech - one declaration - could lift the monstrous cloud. Indeed, just a few weeks after I published my appeal to the new president of Mexico, Andres Manuel Lopez Obrador hinted at something similar, without providing (alas) details.

Ah well, if no one will listen to me, well then perhaps the world will listen to the richest man in the planet. And yes, we do have (and desperately need) friends in Cloud City.

== Saving civilization from high debt and slow growth? ==

I confess an ulterior motive for praising this cogent article by Tim Morgan. It begins with daunting news -- it's not only in the developed world that prosperity growth has stalled. The fast-rising upper half of the developing world has been the engine of the world economy for 20+ years, but that boiler is apparently cooling. And when you lack growth, then the fast-rising rate of debt - fueling rentier asset bubbles and braking money velocity - becomes more than just a problem. It becomes a poison.

  

(To be clear, the Republican Party raved that Supply Side ("voodoo") tax gifts to the rich would both stimulate growth and reduce public debt. How many times must you prove 100% diametrically wrong before you lose credibility?)

Morgan is not without hope. There are ways to fix this, and they are rooted in what's worked ever-better for 200 years... entrepreneurial enterprise that is kept truly competitive by thoughtful-adaptive regulation that limits inevitable oligarchic cheating, of the sort that Adam Smith denounced and that our parents in the Greatest Generation wisely outlawed. And so we get to my favorite paragraph:

"The good news is that we’re not going into this new era wholly lacking in knowledge. The trick is to understand what that knowledge really is. Keynes teaches us how to manage demand – or can teach us this, so long as we don’t turn him into a cheerleader for ever bigger public spending. Likewise – if we can refrain from caricaturing him as a rabid advocate of unregulated and unscrupulous greed – Adam Smith tells us that competition, freely, fairly and transparently conducted, is the great engine of innovation. More humbly, or perhaps less theoretically, but surely more pertinently, experience tells us that the “mixed economy” of optimised private and public provision works far better than any extreme."

Several members of my blog community have linked to this, asking if I wrote it originally, so consistent is it with my own drums -- the study of Adam Smith and fiscally responsible Keynsianism, along with the spectacular success story of public investment in research, education, health and infrastructure, which can only be denied by the hysterically delusional.

No I didn't ghost write that -- (I lived in Britain for a couple of years, but would never spell "optimised" that way; shudder.) But I do recommend having a look. Tim Morgan continues:

"Going forward, we should anticipate the collapse of the “everything bubble” in asset prices, and should hope that we don’t, this time, go so far into economic denial as to think we can cure this with a purely financial “fix”. I’m fond of saying that “trying to fix an energy-based economy with financial fixes is like trying to cure an ailing pot-plant with a spanner”. We should understand popular concerns, which seem to point unequivocally towards a mixed economy, extensive redistribution and an economic nationalism that needs to be channelled, not simply vilified."

None of this will happen unless the last remaining Knowledge Castes who cling to the mad right finally acknowledge what the scientists, teachers, journalists, civil servants, skilled workers, and almost every fact-using profession - including the maligned "deep state" protectors - all know. That the worldwide mafia-commie-oligarchy axis is no friend of anything we value. They are the Olde Feudal Enemy of every type of freedom and progress. And it will take all of us to achieve what the Greatest Generation did, a whole human lifetime ago.

 Save civilization.

== Again, the greatest judo move Pelosi could pull... ==

While the reform package that will be passed by Democrats in the U.S. House of Representatives consists of all good things that will help improve ethics, efficiency and fairness, it's still fairly minor stuff. Democrats should pass rules that really change the dynamic, like permanently giving some power to the minority! 

Why do this, when that minority party is Republican? Because Democrats will be out again, sooner or later, silenced and impotent... unless they set precedents now!

 My top proposal? Give every member of the House one subpoena per term, that can compel anyone to testify for 2 hours before a committee.

Sure, some GOPpers will use such a power to irritate and pursue grudges (virtually the only use to which they put subpoenas and hearings, when they were majority!) So? That means they'll be approving this minority right, institutionalizing it. (Maybe make that vow a necessary part of using their subpoenas.) But other Republican legislators will wait, hoping to use their one subpoena to benefit the home district. And why not? Pulling them away from their caucus is bad?

We've seen how the lack of such a minority power kept Congress from meaningfully exercising any meaningful oversight, when the only grownups (Democrats) had zero power to investigate anything at all. Envision how just 200 hours of such testimony, this last term, would have empowered Dems to apply accountability, even from a minority.

The crux: letting goppers vent blowhard-steam when they are in minority is a small price for letting demmies apply real accountability, when they have their minority turn.

It would also vest individual members with a measure of autonomy that might possibly lift their gaze from pure partisanship. 

It's one of several proposals in my FACT Act.

== The most fundamental lie of Wall Street Parasitism ==

Among the dumbest but most effective religious dogmas is the rationalization that Wall Street parasites provide a ‘valuable service’ in the “creation of liquidity, raising capital for growing businesses and determining proper price levels.” 

These are utter and diametrically-opposite-to-true lies, as shown in this article on the Evonomics site (where Adam Smith would be publishing, today.) But the essay doesn’t go far enough. The whole justification for Wall Street's “proper price arbitrage” excuse is actually insane on a basis of physics and biology… thermodynamics, in particular.

Dig it. All living things exist by creating pools of reduced entropy (their living bodies) by tapping a high quality energy flow to create order inside the body and export more entropy into the environment. Eventually that entropy departs as infrared that flows into space. (Idiotically blocking that outward drainage with greenhouse gas is a related-but-separate topic.) 

Now focus: it is energy GRADIENTS or downhill FLOWS of energy — the steeper the better — that living creatures use, the way differences in height power a water mill, or differences in heat propel a steam engine.

Plants turn the steep gradient of high quality sunlight into carbohydrates. Herbivores take the high concentrations in plant carbs and turn them into more herbivores. That packs-in concentrations carnivores can then access. Health comes when there are only a few such gradients, letting each one be steep enough for the plants-herbivores-carnivores to each thrive.

Oh, but sometimes parasites wedge in and tap these gradients, by sucking sap or blood, in effect making the flow more shallow. Look at a plant or animal afflicted by parasites and tell me it is healthy!  And yes, you are having the "aha!" moment right now. Because that's exactly what “proper-price-seeking” arbitrage or micro-trading of equities does to the “value” of a stock or commodity, making a million nibbles or cuts in order to flatten the slopes! While the parasite (trader/broker/HFT-program) sucks a little value each trade, the company or pension fund loses the gradient or value difference that its life depends upon.

Oh, but the parasites croon “see how the price differences (energy gradients) are flattening? It’s a gooood thing! A goood thing!” 

Surely you've seen how some wasps implant parasite eggs that make the cricket ignore its victimization? These are parasitic wasps. You are the cricket.

Maybe some of you have heard or seen this argument elsewhere… I never have, even though it utterly disproves the “proper price discovery” rationalization of Wall Street parasites. What I’ve described is a “contradiction of capitalism” far more deadly than any described by Marx. It’s why - in the words of Douglas Adams - these guys will be “first against the wall” when the revolution comes.

Oh, do you want to prevent a violent, French-Russian style Revolution? Want an American style generational reform instead? One that re-invigorates a flat-fair-competitive market economy? 

Well then these guys should be First Against The Wall.

== Finally... the China Dilemma ==

This is BY FAR the most important article you can read about China's leadership caste, by an Australian diplomat/journalist of immense insight. Join the site (free) in order to read it.

Follow this with my own insights, which dovetail with Garnaut's, but bring in Chinese PRC mythologies about central planning and AI.

What's missing from both analyses is the context of Xi's uneasy alliance with the other major, anti-western player... the Putinist-Mafia front, the arc that Vladimir Putin has built for a new Warsaw Pact, stretching from Moscow to Crimea, Ankara, Lataika, Beirut, Damascus, Baghdad to Tehran. It is a despotic swathe whose connecting tissue is not ideology -- the Russians are embryonic-czarist, Erdogan is Sunni, Assad is Alawite, and the Muktadists+Ayatollahs are Shiite. What's the connective tissue then?

The Saudis -- did you see Putin's gleeful high-five with Mohammed bin Salman, a few months ago? -- may be genuinely terrified of Iran... though I am starting to doubt it. They have every reason to join Putin. Why?

Because the common thread is an affiliation of mafia clans with wholly-owned national sovereignties. Ideology is not as important as snuffing out the rule of law. And especially a unified-shared loathing of one particular western innovation -- the non-governmental NGO.

In this context, the position of the Chinese clarifies. They share an allied goal of demolishing constitutionalism and rule of law and western confident individualism. 

At the same time, the Chinese do have an ideology and a Confucian sense of order. Moreover, they know that eventually they will have to confront these mafias. Moreover, the West is the source of all good things. It must be bled at a careful rate that keeps us too weak to interfere, but still laying golden eggs.

The Chinese also feel time is on their side. It is not on the side of the Mafias, who know they have this one decade to wreck us, or else all (for them) will be lost.