Capitalism, corruption, civil war...

Well, your RASR uncle (residually adult-sane Republican) has a week of gloating and joy. Let him wallow in Attorney Gen. Barr's summary no-collusion conclusion...even though its negative about Trump-Russia collusion specifically concerns only Russian 2016 election interference during the 2016 election (always the weakest link to Trump), and has nothing to do with the blatant collusion that's manifested since then, in demolishing our alliances, sciences, intel-services and every other U.S. fact based profession.

Consider: Six essential cons that Define Trump's success: This article by Jonah Greenberg (except for the last (silly) paragraph) cogently dissects six ways that Donald Trump has “succeeded” by cheating. 
By lying his net worth vastly upward to get loans…

…by lying it vastly downward to evade taxes…

…by ripping off contractors and lenders till only Deutsche bank would work with him, laundering Russian mobster money…

…by assaulting the very existence of things called (facts).
…by portraying perpetrators as victims.

Never mind all that. Right now, just one U.S. citizen matters. Chief Justice John Roberts. If he swing the decision to decide in favor of basic justice and the American Experiment, political gerrymandering will be banished. If he is a hack - or a blackmail victim - then we will have no easy path out of this phase of the American Civil War. It could wind up pretty harsh.

== Essences of Capitalism ==

As I’ve long predicted, some of the RASRs and saner libertarians are gradually realizing that oligarchy is no friend to open-accountable-competitive-creative market enterprise.  Investment guru John Mauldin is one I’ve long been urging to end his ostrich denial. Now, in his influential newsletter, Mauldin quotes from Jonathan Tepper’s new book The Myth of Capitalism: Monopolies and the Death of Competition

In industry after industry, (Americans) can only purchase from local monopolies or oligopolies that can tacitly collude. The US now has many industries with only three or four competitors controlling entire markets. Since the early 1980s, market concentration has increased severely. We’ve already described the airline industry. Here are other examples:

·       Two corporations control 90 percent of the beer Americans drink.
·       Five banks control about half of the nation’s banking assets.
·       Many states have health insurance markets where the top two insurers have an 80 percent to 90 percent market share. For example, in Alabama one company, Blue Cross Blue Shield, has an 84 percent market share and in Hawaii it has 65 percent market share.
·       When it comes to high-speed internet access, almost all markets are local monopolies; over 75 percent of households have no choice with only one provider.
·       Four players control the entire US beef market and have carved up the country.
·       After two mergers this year, three companies will control 70 percent of the world’s pesticide market and 80 percent of the US corn-seed market.

The list of industries with dominant players is endless. It gets even worse when you look at the world of technology….  The federal government has done little to prevent this concentration, and in fact has done much to encourage it. Broken markets create broken politics. Economic and political power is becoming concentrated in the hands of distant monopolists.

Mauldin avows that some industries require such massive scale that they can only support a small number of producers. Passenger aircraft, for instance. 

In turn, I have pointed out examples where capitalism is clearly working, when steered by enlightened regulation. One example is the burgeoning of solar and wind power. Another is surprising, till you think on it… automobiles. 

With twenty major players, worldwide, competition is fierce, with the result that every year auto showrooms feature better cars that last longer, are built sturdier, offer spectacular standard features and safety, all at declining inflation-adjusted prices. Spurred by regulations, auto-makers deliver vastly improved efficiency, saving consumers billions at the pump, and -- after prodding by some geniuses -- are shifting to electric at a rapid pace.

So the problem is not what young sophomores are reciting on campus, capitalism at its competitive, AdamSmithian basic. No, the problem is that markets have always been distorted by cheaters!  

It’s what humans do, when they get the power to do so. And hence, as Smith himself said, we need governments to transparently and carefully regulate, especially in ways that keep the playing field flat and fair.

And yes, that includes investing heavily in R&D that’s beyond any corporate ROI horizon. And it especially means investing in all children! Because what is a competitive playing field if it is biased to handicap most players, from the very start? 

Most liberal programs – those that aim to uplift all kids out of poverty – are defensible in strictly capitalist terms! And those who deny this aren’t actually Smithians at all. They are oligarchists. They are feudalists.

== Short takes ==

Right now, Democrats still retain a monopoly on expertise and evidence-based policy. They should not relinquish it easily.

Nearly 400 Southern Baptist church leaders and volunteers have faced sexual misconduct allegations in the past two decades, two newspapers found, with as many as 700 victims — some as young as 3. And this is just one section of the evangelical Baptist movement.  There are reports of over a thousand such cases among “independent” Baptist pastorages… among the most fire-breathing and radically anti-modernist. Oh, do preach to us.

Poseidon: Russia's New Doomsday Machine describes Moscow's unmanned automated drone submarine designed to deliver a 100-megaton warhead to inundate U.S. coasts with nuclear tsunamis, leaving the most populous parts of America drenched-radioactive wastelands. Author Dr. Peter Vincent Pry is one of the nation's foremost experts on nuclear weapons and strategy, director of two Congressional Advisory Boards.

There’s an aspect to this that’s scarier. Throughout the Cold War, we got a stream of defectors who blew the whistle on crazy Soviet plots. Kremlin muscovite craziness hasn’t gone away, but Putin (raised in the KGB) has made it his highest priority to make sure we get few defectors this round, despite planning such horrifically heinous weapons. 

How? Our inflow of defectors in the Cold War depended on our ability to: (1) protect them, (2) offer decent prospects living in the West, and (3) maintaining the moral high ground. Consider how Putin and his agents have undermined each of these systematically.

== Short takes ==

WODI = “What If Obama Did It?”  Latest example, emerging news that Donald Trump used threats and money and oligarchic favors to get not one, or two, but all of his high school, military academy, college and SAT records secured and hidden forever. Now why would he do that? “Former officials of the military academy that President Trump attended say wealthy alumni directed them in 2011 to remove and hide Trump’s academic records.”  

The same fellow who demanded Obama’s birth certificate, then refused to believe it (nor dozens of 1962 copies of the Honolulu Advertiser birth announcement, found in garages all over the islands) and has lied about the IRS audit of his tax returns, and who allows no US officials anywhere near his secret debriefings with communist and “ex” communist dictators, now want us to have no way to verify his “stable genius.”

WODI

And finally....

From the Axios China report: The ideological tightening inside China has contributed to a more rigid and shrill group of PRC diplomats. Earlier this week Bloomberg reported on this trend... “[F]oreign diplomats in Beijing say that the behavior of Chinese officials has become far more aggressive and assertive in private meetings in recent years. Their discussions have become more ideological, according to one senior foreign envoy, who described the behavior as a strong sense of grievance combined with increasing entitlement about China’s international role and rights.

If you want to understand how the top officials at the PRC rationalize their fierce determination to centralize power over their people and the world, I go into it here. They are very smart. Maybe a quarter as smart as they think they are. And therein lies danger for us all.

Cryptocurrencies, stock buybacks, regulations... they are counting on you being bored!

== Cryptocurrencies ==

Coin mining (prime number factoring) operations are now using as much electricity as the Republic of Ireland.

In the last 5 months I’ve joined the advisory boards of FIVE ICOs, or Initial Coin Offerings, learning far more about blockchain and “tokens” than I ever really wanted to know. I’ve had to point out things that some of these bright fellow never thought-of. Like some important ways to stay out of jail.

Oh, then there’s this: Bitcoin “tape-washing” by the top 1000 Bitcoin owners (40%) of all coins) lets them boost price simply by selling to each other, luring in suckers.

Do I believe in Adam Smith and the power of flat-fair-open-competitive-creative markets?  You bet! 

Has the magic ever, ever, ever - even once - happened on this planet without regulatory frameworks to stymie cheating? Not once. Ever. 

Lefties are fools to ignore the creative power of competition. Righties are jibbering insane to ignore 6000 years of history wrought by market-ruining cheaters. 

Adam Smith would be a moderate, pro-enterprise democrat, today.

== Stock Buybacks ==

Under the Greatest Generation (when America was 'great') this was illegal. Almost a $trillion will be spent on Stock Buybacks in 2018, rewarding the top 1% but especially the CEO caste, who thus trivially get their stock-price-tied incentive bonuses, without increasing actual value of the company one cent. The tax cut's shills said this would stimulate investment in R&D, productive capital, infrastructure and new jobs. Those could have been incentivized in the bill. But as in all previous Supply Side scams, it never happens. Instead we get:

1. Shortened ROI (Return on Investment) horizons, from the traditional 5 years down now to 5 weeks!

2. Less investment in R&D, productive capital, infrastructure and new jobs. Yes, these go down every single time the GOP has its way.

3. Steeply falling Money Velocity. (Exactly what Adam Smith said happens, when the rentier aristocracy hogs all the money. More on this, in a future posting.)

4. Skyrocketing wealth disparity.

5. Decisions on our economic destiny made by an ever-narrowing caste of delusional, conniving, incestuously conspiratorial, secretive oligarchs, demolishing any hint of the flat-fair-open-creative competition that both Hayek and Keynes agreed to be the core essential of market enterprise.

An interesting aspect to this! John Mauldin points out that there are some LIBERAL constituencies who benefit. Pension funds do great in this environment, and they certainly qualify as "rent-seeking" centers of money-slowing investment. Pension funds are indeed, fellow culprits in almost-zeroing money velocity. Only, unlike oligarchs, they cannot cash-out when the market has peaked. Their benefit is brief.

Note also that a minority of those investors benefiting from all of this hate what's happening. Warren Buffett and Bill Gates and most of the tech zillionaires will take this free money being shoved at them. But they vote and demand better policies that might actually no good for civilization and the republic. They know this is how feudalism returns, and the renaissance (that made them successful) ends.

== On Regulation ==

Ironic that Friedrich Hayek is generally dismissed as an apologist for elimination of all market regulation, yet the liberal (leaning-Keynesian) economics site - Evonomics - explores Hayek’s views on both market theory and evolution with considerable respect. (Evonomics is also the one place, online, that most often studies and lauds Adam Smith!)

In this conversation, several leaders in both economic theory and evolution start by praising Hayek’s revelations that markets are about information and how over-regulation is inherently fraught with errors that stymie the crowd- and open-sourced wisdom of markets.

Alas, Hayek thereupon was lured to the opposite extreme, as his arguments were used to justify elimination of regulations that kept markets flat-open-fair and competitive. If 500,000 civil servants are too narrow a clade to allocate economic resources well, then how is an incestuous, conniving-secretive and conspiratorially greedy CEO caste of golf buddies supposed to be more wise?

Hayek’s criticisms of socialism applied cogently to Leninist regimes, but as these scholars point out, they’re much less meaningful when aimed at Norway. Hayek’s greatest failing? His inability to refer to the other great enemy of market enterprise, feudalism, which wrecked far more nations and economies than poor, dumb socialism could ever dream of.

A flawed and stupid system that wrought hell in 99% of past cultures, feudalism is rooted in human temptation to cheat, and it appears to be roaring back. And the shills who work for the lords are - alas - really good at oversimplifying and misquoting Friedrich Hayek.

== Rising Corporate Profits ==

Why have corporate profits (and hence dividends to the owner caste) skyrocketed and stayed high across 25 years, while wages stagnate? Economist Jonathan Tapper makes it clear in an appraisal that’s circulated widely by John Mauldin, a conservative newsletter guy who knows something’s gone wrong with the branch that has taken over U.S. conservatism. 

“Something has indeed gone very wrong with capitalism. In a competitive market, if a company is making a lot of money, other companies will get excited by the prospects of high profits and will enter the industry and compete. Eventually margins decline as more competitors fight each other. That is how dynamic, capitalist economies should be. Something is profoundly broken with capitalism if corporate profit margins do not revert to the historical mean. 

“Rising industrial concentration is a powerful reason why profits don’t mean revert and a powerful explanation for the imbalance between corporations and workers. Workers in many industries have fewer choices of employer, and when industries are monopolists or oligopolists, they have significant market power versus their employees…. The Economist found that over the fifteen-year period from 1997 to 2012 two-thirds of American industries were more concentrated in the hands of a few firms.” 

Let me add that monopoly or duopoly is a reason most profits aren’t plowed back into R&D and production (as Supply Siders always promised.) Because these CEOs don’t fear new rivals, so they might as well grab the profits for themselves, rather than invest.

Tapper continues: “In a monopoly, there is only one seller, while in a monopsony, there is only one buyer. The extreme example of a monopsony is a coal town in West Virginia, where the only buyer of labor is the coal company. Large parts of America are dominated by monopsonies.” 

The trend is far worse in rural America, which puts a real fear into the confederate masters, because at any moment the voters in those areas might start to see through the propaganda that “liberals, unions, scientists and government” are responsible for all your problems; so never, ever look over here at plutocrats!” This plan is anchored in the notion that folks will reliably and always forget their own parents were union men and women, who supported anti-trust laws and whose favorite living person was Franklin Roosevelt.

Tapper continues: “In the U.S. CEO pay has exploded. From 1978 to 2013, CEO compensation adjusted for inflation increased 937%. By contrast, the average worker’s income grew by a pathetic 10% over the same period.”  He documents the plummet in union strength, even as the right’s media portrays unions as villains against poor, virtuous CEOs.

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