Taxation, capitalism, free enterprise and fair play

A lot to cover, and yes, politics.  But first ...

== Capitalism, democracy and fair play ==

Evonomics is on a roll. The site has become the central place where serious minds ponder how to revive a mixed economy that served us so well. The miracle that communists never understood and that oligarchs seek to destroy. 

In the lead article, zillionaire entrepreneur Steve Roth writes: “Democracy. Capitalism. Socialism. Choose Any Three of the Above. If you don’t have a big bathtub of oil in the ground, you need all three to deliver widespread economic well-being.” Showing the understanding that has made almost all of the rich folks who got it via innovation democrats, he discusses how each of these three legs supports a stable society.

My own metaphor: 
 . Marx wants me to amputate my right arm of competitive, individual or group ambition. 
 . Ayn Rand demands that I cut off my left arm of great projects we decide to do together, in research, infrastructure, space and making sure all children get to reify their talents in fair competition. 
 . Both simplistic prescriptions are monstrous and spectacularly stupid.  I will not amputate.  I need both arms.

David Graeber, a Professor of Anthropology at the London School of Economics, opines on “Why Capitalism Creates Pointless Jobs. It’s as if someone were out there making up pointless jobs just for the sake of keeping us all working.”  Graeber describes how many “bullshit jobs” there are in critical terms… 

...while I take a different tack: that all the nail salons and other — less than necessary — service jobs out there have been a blessing because people like to work!  They don’t want to live in the world of Kurt Vonnegut’s PLAYER PIANO (set in the Albany area where I just spoke (at GE's Whitney Symposium), wherein the only way most people can get work is via the state’s department of reconstruction. Far better to set up an economy in which people provide each other less-than-necessary services, and feel some pride. 

Still, interesting stuff.

Bob Atkinson, a very smart Washington think-tanker I know, argues that “Complexity and Evolution Need to Play a Foundational Role in the Next Economic Paradigm.”  He suggests that “a key focus for economic policy should be to encourage adaptation, experimentation and risk taking. It means supporting policies to intentionally accelerate economic evolution, especially from technological and institutional innovation. 

This means not only rejecting neo-Ludditism in favor of techno-optimism, it means the embrace of a proactive innovation policy. And it means enabling new experiments in policy, recognizing that many will fail, but that some will succeed and become “dominant species.” Policy and program experimentation will better enable economic policy to support complex adaptive systems.”

== Okay... politics... ==

Warren Buffet demolished Donald Trump's whine that he and other Clinton supporters 'do the same thing' avoiding taxes: " Buffet says, “I have paid federal income tax every year since 1944, when I was 13. (Though, being a slow starter, I owed only $7 in tax that year,)" Buffett wrote. “I have copies of all 72 of my returns and none uses a carry forward”

Buffet, the Greatest Investor and popular for his folksy brilliance, wants success for the middle class that has so benefited him and other democratic billionaires like Bill Gates. All agree that taxes on the rich should go back to pre-Bush levels, when we had surpluses, under another Clinton.  In 2015 alone, Buffet gave away $2.9 billion -- that's more than 75% of Trump's claimed net worth.... and twice what sober analysts figure DT owns...

... and as much as a million times what Donald Trump is estimated to give to charity, most years. (See below.)

 But then, we'd know -- (shouldn't we?) -- if those IRS returns got released. And let's be clear about that.  Those who are screeching about "emails" know that, at their very worst, HC's emails reveal nothing criminal, only a lapse in judgement. They do not compare even remotely to Trump's concealing 30 years of tax returns that (bet on it) would reveal conflicts and torts of towering magnitude.

The Trump Tax Return matter should not leave  anyone's awareness, this week.  Remind your crazy uncle.  It won't change his vote... but your aunt is listening.

== More on taxes ==

Moron taxes? Donald Trump's tax plan offers massive tax relief for the rich, which would add trillions to the national debt. In contrast, Clinton's proposal would increase taxes on the wealthy and lessen the burden on middle-class families, especially those with young children.

"A pair of new analyses published Tuesday afternoon by the nonpartisan Tax Policy Center emphasize the extreme contrasts between the two candidates when it comes to taxes. In a campaign that has been defined by conspiracy theories, racial innuendos and sex scandals from decades past, the new data is a reminder that the election puts serious money at stake for many American households," writes Max Ehrenfreund in The Washington Post.

I will only add that this also distills the difference between confederates and americans. In 1861, a million poor, white southerners marched off to die fighting for a slave-owning aristocracy that had been waging economic war against poor, white southerners for two generations. Why would they do that, then? And why now? Because symbolism and cultural grievances trump self-interest. (Don't think for a minute this is about free enterprise, which always, always does better under democrats.)

America - the blue Union - is a pragmatic place where we fight for incremental reforms that maintain a healthy middle class.

== Don’t you dare claim the ‘high road’  ==

Donald Trump spent more than a quarter-million dollars from his charitable foundation to settle lawsuits that involved the billionaire’s for-profit businesses. Laws against “self-dealing” prohibit nonprofit leaders from using charity money to benefit themselves or their businesses.

Hence the chain of cheats, mafia dealings, bribing public officials (and bragging about it), lying to Trump University students and union workers and small businessmen and leaving them in ruins, and denigrating for 5 years the birth of the twice legitimately elected president of his country… 

...none of those matter to his followers. These merely exemplify his “strength.”  The fact that he’s actually a very poor businessman, who has not meaningfully enlarged his inheritance beyond what an index fund would have done? Shruggable. Racism and sexism are plus-points, as is participation in the War on Science. 

To the fundamentalist hypocrites who – unlike Jimmy Carter’s sincere Christians –pray daily for events that would end freedom, democracy, ambition and - yes - bring to an end the United States of America, there is no limit to the faults they will forgive in this predatory, philandering, twice-divorced, flip-flopping, charity-stealing, truth-spurning gambling lord.  

One trait absolves all of that and it is not having been washed clean by the blood of the lamb. It is sharing the same despised enemies.  All the college-smartypants. Those enemies.

== Hello Breitbart ==

Let's experiment: Compare side by side the very worst (non-tinfoil) allegations against Clinton and those assertions about Trump. 

Assume the very worst about Hillary Clinton and only include the Trumpist behaviors that are open matters of public record. Include none of the anti Trump assertions that we're merely 90% sure about, with tons of supporting evidence, but not absolutely proved.

Hers add up to zero years of actual jail time! At the very most? A few fines, and that is if all of the molehills are 100% true. (They aren't.)

On the other hand, Trump's openly admitted crimes - bribing public officials, lying in sworn testimony, slandering people then shrugging off disproof, fraudulently declaring bankruptcy... amount to potential maximum sentences approaching a thousand years. Sexual assault.

Again, only two 8-year presidencies ended with zero high officials sentenced or even indicted for malfeasance of office. Despite 24 years and up towards a billion $ in relentless investigations. Those two administrations are thus proved to have been the most honest in U.S. history...

...Bill Clinton's and Barack Obama's. 

Screech and howl over that. Summon incantation spells about how they managed to hide all the "proof" that endless hearings and $100 million in Koch-offered "whistleblower rewards" never found. But after 24 years of witch hunts and half a billion in largely taxpayer funds spent 'investigating' the most scrutinized couple in history... you bear the burden of proof for your paranoid ravings.

And that'll do, for a couple a days.

Put Buffett in Charge!

== A side rriff back into politics. (Can’t help it!) ==

Compare these two sets of credibility scores:

1 -  “In my view, derivatives are financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal.” Warren Buffet, in his 2002 report to shareholders. Buffet is now an economics advisor to Barack Obama.

Also (on the same side of credibility), there’s the tale of Freddie Mac's Chief Risk Officer, who expressed concerns in mid-2004, that the company was buying bad loans that "would likely pose an enormous financial and reputational risk to the company and the country...leading to his being fired in 2005."

...as opposed to....

2 - "Hands Off Hedge Funds" by Sebastian Mallaby, a fellow currently in McCain's brain trust, writing in Foreign Affairs, February 2007: "Moreover, hedge funds collectively do not so much create risk, as absorb it…Hedge funds can also reduce the danger that economies will over respond to shocks." Thus…"restrictions on hedge funds are the wrong way to deal with it."

Which isn’t as staggering as what the GOP platform said in 2004. “The most significant barrier to homeownership is the down payment. We support efforts to reduce that barrier, like the American Dream Downpayment Act and Zero Downpayment Mortgages.”

Or take the worst example of all -- the actions of McCain’s chief economics advisor, former Senator Phil Gramm, to forbid and remove all oversight from derivatives market! An act that today’s shame-faced SEC Chairman Christopher Cox now calls directly and clearly responsible (along with rampant greed and failure of “self-policing”) for the mess we are in.

Note, how the right wing bloggers are desperate to shift responsibility... now they are trying to blame a Quadrillion dollars in foolish wagers -- and twenty billions in corrupt commissions -- on a few tens of millions of dollars in loans to poor hispanics... who actually happen to repay at a rate well above the national average!

See the excellent documentary Inside Job, directed by Charles Ferguson with its insightful portrayal of the 2008 financial crisis.


Key point: which of those two groups (above) should have higher credibility scores? 

--Or deserve more of our trust?

--Group number one or group number two?

What can we conclude from all this? Other than the fact that Obama’s economics advisor has been right a lot and McCain’s have wrought only catastrophe?

Well, let me put it quite simply. Since we seem about to have a “bailout package” as a done deal, whether we like it or not.

But there is still time to shout and holler and yell for one last element of sanity, to be inserted into the bill!

Let’s pray that a single senator has the guts to stand up, threaten a filibuster, and make one demand, on our behalf.

Put Warren Buffet is put in charge of picking the securities that the Treasury will buy, with all those tax dollars. That’s Buffet... and not Paulson or anyone else who helped to make this mess.

It is a simple position to take, easy to defend. And an easy modification to make. And the result will be the best possible chance we have of breaking even, instead of this becoming a socialist klepto raid to save the hash of Paulson’s rich friends.

This is an idea that is so simple, so obvious, that even we economics dunces ought to be able to insist on it. Instead of trusting the foxes to save the chicken cook THEY have demolished... let's hire the watchdog who warned us in the first place.

Give “the world's greatest investor" one more chance to buy low and sell high. 

For all of us.

Viral it.


==Hiding from the Truth==

Want a metaphor for the monomaniacal way that our beloved ostrich friends and neighbors hide from the truth? Faced with cognitive dissonance that would make lesser delusions shatter into dust and gas, these stalwarts cling to rationalizations that vector upon the hysterical. Conjuring up incredible stories like “illegal hispanics defaulting on zero-down mortgages caused the collapse of a quadrillion dollar Ponzi scheme.”(Seriously, that fantasy is hitting the rounds!) Oh, and Obama is a marxist-muslim.

Okay, I thought of just the right metaphor! They Live is a 1988 movie directed by John Carpenter, based on Ray Nelson’s Sheckleyish 1963 short story "Eight O’Clock in the Morning". Rent it! It is truly wonderful. And there's this scene that will make you laugh & cry at the same time, in which these two big, decent-but-dumb guys beat the crap out of each other over whether the black dude will simply put on a pair of special sunglasses that will let him see the aliens who are enslaving the Earth.

Oh, but what a perfect metaphor! THAT is how bad it is with ostriches. There are no levels, no criteria under which anyone could rationally defend anything that has in any way been done by the Republican party since the 1995 Welfare Reform Act. Today, they are a wholly owned subsidiary of the S'udiroyal court and every path they have sent America down has led to our further ruination. It is as clear as the twin towers were, out the window of every passenger on those planes.

But how they’ll fight for their illusions! Oh, if only it were as easy as forcing our neighbors to put on some sunglasses.

== Catch a SPORE ==

A couple of years ago, Will Wright asked world renowned tech artist and professor Sheldon Brown - and me - come up and visit Will’s shop in Berkeley, because he heard we were working on a concept somewhat similar to SPORE. He was relieved to learn we had 1/10,000th of his funding! Still, in order to grasp what had him (briefly) worried, see our Exorarium Project Proposal ... (and if you hear of any big money groups that want to compete with SPORE, let us know.;-)

If ever carried to completion, the Exorarium would offer many of the same delights as SPORE -- such as building your own, evolved species and playing interactions with others. Only, with some crucial differences.

1) Wil's concept is classic-patterned game. The player has a budget and "buys" species traits, then earns a bigger budget by winning battles. Yeah, my kids enjoy it (good job Will!) But there are alternatives, and some perhaps just as fun, while being a lot more like nature.

While SPORE starts small, in a droplet of water, the Exorarium asks the player to begin by choosing a star, then a planetary system, a planet, an ecosystem... etc... and letting the chips fall where they may. As you dial in with your choices, the vast forrest of evolutionary pathway-possibilities gets chopped and winnowed, getting narrower with every decision, till you wind up with a slender tree of possible evolved outcomes. Still a matter of “choice” I guess. Only our approach emulates and incorporates and joyfully explores the range of possibilities offered by science.

Because of this (and Will got a chuckle when I said it), the Exorarium is a simulation of evolution, while SPORE is much more like "intelligent design"!

2) Because the Exorarium revolves around real science, there is obvious potential value as an education tool. In fact, the worldwide game would ideally be "anchored" with two or three or four lavish installations in some of the great science museums, like the Hayden or Griffith Planetariums. (See the gorgeous conceptual drawings, created by Sheldon Brown.) Though of course, 99.9% of the players - and revenue - would be generated by home and internet-based players. Both museum kinds of users would have the option (not required) of learning about all the different sciences that helped to make us, from astronomy to chemistry to biology.

3) At the end of the fun process of unleashing (rather than controlling) evolution, each player winds up with his or her own species, just like in SPORE. Only with a surrounding ecosystem and companion/dependent/competitor species, as well as a place on a complex food chain! These can then be played in Phase Two of the game --the "extraterrestrial terrarium" -- in First Contact scenarios that follow some of the methods used at the venerable CONTACT Conferences. Guessing the motives of other species, based on limited knowledge, would make up half the fun. And war is only one of many possible outcomes!

4) Of course, a David Brin design would have to include Uplift!

Ah, well. Of course this would take somebody with deep pockets, who either cared about mass science education or else wanted a “killer” game to compete with this year’s killer game! Ideally.... both.

= = Some interesting alerts! ==

NewsFutures is excited to announce the first Wisdom of Crowds Consulting Workshop, to be held in New York City on October 27th, 2008. It is designed especially for small and medium-size business consultancies who would like to acquire a working knowledge of how to put collective intelligence to work for their clients. A couple of days later I’ll be in Boston (MIT etc) Almost went to this. Anybody in the area, care to go attend and report?

----- Finally accepting the value of transparency and citizen action? The Pentagon this past spring launched its so-called Minerva initiative - a hunt for more information on the Chinese military, ways to marginalize al-Qaida, new anti-terror strategies. Thirty years ago, it might have been top-secret stuff. Today, the military is asking everyone for help - and will post the results in full public view. It's another example of a new world of problem-solving that seeks answers in the public square. Defense Secretary Robert Gates calculates that the transparency of Minerva is also its strength, that by looking to everyone for advice and letting the crowd weigh in on the results, the communal know-how will be that much richer.

----- A fan wrote in: “Joss Whedon’s new TV show, Dollhouse, is very reminiscent of Kiln People sans the kiln. Hope you’re benefiting in some way. If not its great to see original ideas on the tube for a change, just wish the originator gets some kudos.”

----- Here are my latest books available on Kindle.


== More Stuff ==

An extensive article about alternative energy... See the part about Masda City becoming the first carbon-neutral city...

United Solar Ovonic of Auburn Hills, MI, has teamed with Centria, a major roofing company, to create a metal roof system that integrates easy-to-install, flexible thin-film amorphous-silicon photovoltaic modules. (EnergyPeak) The partnership offers seven different prefabricated systems

Google is considering deploying the supercomputers necessary to operate its Internet search engines on barges anchored up to seven miles offshore. The "water-based data centers" would use wave energy to power and cool their computers, reducing Google's costs. Their offshore status would also mean the company would no longer have to pay property tax.

Saudi Arabia plans to build a petascale supercomputer system in two years that could rank among the 10 most powerful systems in the world, and beyond that, an exascale system (1000 times as fast as petascale).

Google, celebrating its 10th birthday this month, today unveiled a $10 million effort to implement ideas that can "change the world by helping as many people as possible." As part of the Project 10^100 (pronounced Project 10 to the 100th), Google plans to ask its users to submit ideas until Oct. 20 for ways to improve people's lives. Google will choose what it feels are the 100 best ideas and then allow its users to vote on which of them should be funded. The users will narrow the results to 20 finalists, and a panel of judges will choose up to five ideas that will receive funding, Google said.

Satellite company O3b Networks has linked up with Google and other investors to bring cheaper high-speed wireless Internet access via 16 satellites to areas unlikely to see investments in fiber infrastructure. O3b stands for "other 3 billion," a reference to the world's population that still can't access the Internet.

Wikileaks has developed an uncensorable Wikipedia for untraceable mass document leaking and analysis. Wikileaks opens leaked documents up to stronger scrutiny than any media organization or intelligence agency can offer and provides a forum for the entire global community to relentlessly examine any document for its credibility, plausibility, veracity and validity. Its primary interest is in exposing oppressive regimes in Asia, the former Soviet bloc, Sub-Saharan Africa and the Middle East, but it also expects to be of assistance to people of all regions who wish to reveal unethical behavior in their governments and corporations. The interface is identical to Wikipedia and usable by all types of people. To date, it has received over 1.2 million documents so far from dissident communities and anonymous sources.

The sun has reached a milestone not seen for nearly 100 years: an entire month has passed without a single visible sunspot being noted. The event is significant as many climatologists now believe solar magnetic activity – which determines the number of sunspots -- is an influencing factor for climate on earth. In the past 1000 years, three previous such events -- the Dalton, Maunder, and Spörer Minimums, have all led to rapid cooling. One was large enough to be called a "mini ice age".

If the 100 largest cities in the world replaced their dark roofs with white shingles and their asphalt-based roads with concrete or other light-colored material, it could offset 44 metric gigatons (billion tons) of greenhouse gases.http://www.kurzweilai.net/email/newsRedirect.html?newsID=9413&m=15453

Intel has reported on "free cooling" using air-side economization. An air-side economizer can draw on outside air to cool the inside a datacenter, then push the hot air that exits the machines back outdoors allowing machines to be cooled by air temperatures as high as 90 degrees Fahrenheit.

Sir Tim Berners-Lee's new World Wide Web Foundation is looking for ways to give websites a label for trustworthiness.

Melbourne-based ExitReality said its application allows users to turn any regular website into a 3D virtual environment, where an avatar representing them can walk around and meet other browsers viewing the same website. Founder Danny Stefanic said that previously only specialized websites such as Second Life and World of Warcraft allowed users to enter a 3D environment. "ExitReality goes far beyond that," he said. "It allows you to view not just one website but the entire World Wide Web in 3D."

==The Endless Universe==

The Doppler technique measures the reflex radial motion of a star induced by the presence of companions and is the most successful method to detect exoplanets. If several planets are present, their signals will appear combined in the radial motion of the star, leading to potential misinterpretations of the data. Specifically, two planets in resonant orbits can mimic very efficiently the signal of a single planet in an eccentric orbit. We quantify the physical implications of this solution degeneracy using the well known harmonic expressions of keplerian motion. We find that a significant fraction of the published eccentric one-planet solutions might instead be multiple planet systems in near circular orbits, and that several planets with masses comparable to Earth could have already been detected.

In a bold move, astronomers have begun a new search to understand and explain the origin, nature and prevalence of intelligent life in the universe. Called which stands for Wait for Extra Terrestrial Intelligence, the institute employs an entirely novel approach to achieve its goals. Instead of actively searching for extraterrestrial intelligence, the idea is to simply wait: Wait until the ETs find us. "Waiting is a notoriously under appreciated method in our efforts to search for extraterrestrial intelligence," says the "It is cheaper and less stressful than any other type of research. The WETI Institute is part of OPEU, the Organization for the Passive Exploration of the Universe.

Patches of matter in the universe seem to be moving at very high speeds and in a uniform direction that can't be explained by any of the known gravitational forces in the observable universe. Astronomers are calling the phenomenon "dark flow." The stuff that's pulling this matter must be outside the observable universe, researchers conclude. (Go ahead, read up and have your mind blown.)

Only, now consider what I can’t get anyone to talk about! Until about 5 years ago, the consensus among physicists appeared to be that our Big Bang cosmos was “all there is” and that the bag did not explode “into” anything at all. Any other universes (and they admitted that, say, black holes might either create or lead into other cosmoses) were “forever detached with different metric and no method of informational contact. In fact, so sure they were that the entire PREMISE of the Big Bang was that it arose out of a fluctuation in the Uncertainty principle... and yet would not entertain discussion of any pre-existing cosmoses within which there was an Uncertainty Principle, which could fluctuate and cause a bang!

Um... right. Only, suddenly, a few years ago, it seemed that everything changed. Suddenly, cosmologists are talking about a vast “Macros Cosmos” within which our Big Bang occurred... sharing the same essential (though vast) background context of extensive space! In other words, even though zones of this macro cosmos are supposedly forever out of contact, because of speed of light limitations, nevertheless, we share the same overall (though unbelievably vast) continuously extending metric of the same general dimensions, and pocket universes like ours exist physically side by side, boundaries touching and all that...

...which means the Bang DID “explode” INTO someplace! And... this article now implies... there are even edges that may feel an external force stronger than we do, here. ANd there may even be beings in our Bangiverse who can see what we cannot... the edge into something else. Another realm. Maybe even weird.

Oy! Which is more boggling. These revelations? Or the blithe way the cosmologists appear to have made this change, without more than a wry shrug and a low-voiced “ooops!”

...Meanwhile -- Respected scientists have proposed a flock of theories to describe what might have happened before the birth of our familiar universe of space and time. The concepts have fanciful names such as "the big bounce," "the multiverse," "the cyclic theory," "parallel worlds," even "soap bubbles." Some propose the existence of multiple universes. Others hold that there's one universe that recycles itself endlessly, rather as Buddhists believe. Judeo-Christian theologians may have difficulty accepting any of these notions. Most of the hypotheses are variations on an older idea that the universe has no beginning and no end, contrary to the big-bang theory, which says that our universe originated at a specific point and will end sometime in the distant future.

"Neither time nor the universe has a beginning or an end," two leading cosmologists, Paul Steinhardt of Princeton University and Neil Turok of Oxford University, wrote in their 2007 book, "Endless Universe: Beyond the Big Bang." "The evolution of the universe is cyclic, with big bangs occurring once every trillion years or so, each one accompanied by the creation of new matter and radiation that forms new galaxies, stars, planets and presumably life," they wrote. "Ours is only the most recent cycle." Some scientists contend that observational evidence may be found to back up the speculation. They say that no scientific theory can be considered valid until it's been tested.

Huhnnnnnn... is Fred Hoyle having the last laugh, after all? And is nobody noticing that all of this is TOTALLY different than just 5 years ago?

Oh, but I did hint at it in some stories!!! ;-)

Look, we’re already in the unlikely side universe in which humans were smart enough not to fry themselves with nuclear weapons. Is luck and karma balancing out now? Oh, to ride the quantum collapse wave, like a character in a Greg Egan novel!

==Congratulations Elon!==

Elon Musk, and his great crew at Space Exploration Technologies, have succeeded in the first privately funded launch of a craft into earth orbit. This history-making effort comes as the fourth launch attempt for the new SpaceX Falcon 1 rocket; the company has launches scheduled going forward for this LEO-oriented satellite launcher, even as it continues development on two versions of the nine-engine Falcon 9.

Congratulations Elon! And to the entire enterprise.

Have a glimpse of the new look at davidbrin.com! (Thanks to our wondrously skilled and creative webmaster, Beverly Price.) Comments and suggestions (and digg etc points) are welcome.

Aside: How the U.S. Saved the World by Buying Vast Amounts of Stuff...

Sorry, here's a topical aside. There's so much in the news.

Of course it all relates to the modernist agenda and its enemies.

Saving the World Through Walmart?...

Every year, Warren Buffett (probably the world’s greatest investor personally writes a letter to the shareholders of the company he controls, Berkshire Hathaway. The following excerpt is from a section that concerns the US trade deficit, in which Buffett explains why he is diversifying into currencies other than the US dollar.

"If the U.S. was running a $.6 trillion current-account surplus, commentators worldwide would violently condemn our policy, viewing it as an extreme form of “mercantilism” – a long discredited economic strategy under which countries fostered exports, discouraged imports, and piled up treasure. I would condemn such a policy as well. But, in effect if not in intent, the rest of the world is practicing mercantilism in respect to the U.S., an act made possible by our vast store of assets and our pristine credit history. Indeed, the world would never let any other country use a credit card denominated in its own currency to the insatiable extent we are employing ours. Presently, most foreign investors are sanguine: they may view us as spending junkies, but they know we are rich junkies as well.

"Our spendthrift behavior won’t, however, be tolerated indefinitely. And though it’s impossible to forecast just when and how the trade problem will be resolved, it’s improbable that the resolution will foster an increase in the value of our currency relative to that of our trading partners. "


While I respect and admire Buffett in many ways, I think that things may be a little more complicated that he portrays them to be.

I have a perspective I'd like to add. It does require "stepping back a bit" and taking in an even wider context, so hold on.

Many periods in history have seen one empire or another achieve enough power to establish and enforce the rules of trade - nearly always to their own advantage. It happened under Pax Romana. Britain did it with the Triangular Trade in 1770s. Ghandi's biggest complaint against the Raj was the way Indian industries were crushed in favor of exports from British mills. As Buffett says, it is called mercantilism.

Only now comes a funny thing that happened in our lifetimes. It is probably the biggest fact about world civilization in the last sixty years, yet I do not know of anyone explicitly or openly discussing it.

After WWII, the United States had an overwhelmingly superior position in the world, with an economy that had benefitted prodigiously from war, rather than suffering from it. By any measure we had become the latest "pax" or imperium, able to set rules and establish patterns that others could only follow.

But something surprising and historically unprecedented happened. For the first time, this kind of power was held by a nation and people whose value system was colored by both satiation and lessons of the Enlightenment. (The two are, of course, related.) Moreover, we were guided at this time - with respect to international matters - by arguably the greatest man of the Twentieth Century, George Marshall, who ensured that the U.S. would use all this power in ways diametrically opposite to any other historical imperium.

Motivated by a strangely pragmatic version of utopianism - called Modernism - we set about the ambitious goal of reshaping the world.

Most people today know Marshall only for his "plan" to rebuild European cities and farms in the immediate aftermath of war. But that was only one small part of a far greater scheme. More significant, in the long run was the establishment of trade policies that reversed mercantilism.

Instead of the Central Kingdom (Chung Kuo) forcing satrapies to buy manufactured goods from the center, the U.S. allowed client states to set up barriers against US manufactures while facing negligible duties to their goods imported to America.

Chief results?

#1 - a huge U.S. balance of payments deficit. This has been discussed relentlessly ever since the sixties - offering grist and nourishment for pessimists, predicting disaster. Indeed, it is becoming hard even for optimists to imagine happy outcomes for America, with the trade deficit now reaching more than half a trillion dollars a year!

Keen observers such as Warren Buffett predict a major reconfiguring of currencies in the near future, with another dolorous outcome -- the U.S. becoming an extreme debtor nation. And they are probably right. This is mismanagement on a collosal scale.

Okay. That's pretty clear. So far. But there is another side. A completely nother side.


#2 - The 60 year anti-mercantilist trade pattern established by America also resulted in the greatest transfer of real wealth in world history. The effects, first in Europe and Japan, then Taiwan and Korea, then the smaller "Asian Tigers" and parts of Latin America, have been staggering.

Out of the world's six billion people, more than two billion have been lifted into some kind of middle class existence - with modest but clean homes, access to water, power, education and hope - as a direct or indirect result of Americans buying trillions of dollars worth of goods we never needed.

Another billion or so appear to be on the same track, only a little behind.

We are told that the world is a devastatingly sad and oppressive place, filled with poverty and hopelessness. And, indeed, the raw numbers of people who suffer malnourishment and/or oppression, can only tear at the heart. Ideally, this awareness will spread and make us feel determined to do better.

But the irony is that only people who are relatively satiated can indulge in empathy and feel the pain of others, for whom satiation is but a dream.

In fact, the percentage of human beings who live in some degree of comfort and safety, with secure hope that their increasingly educated children will do better, has been rising spectacularly for two generations. And the principal driver of this change has been the U.S. consumer, purchasing the output of tens of thousands of foreign factories, wherein the same pattern gets repeated from one country to the next. Workers systematically move from exploited peons to hard-pressed semi-skilled assemblers, to unionized skilled labor... while roads and infrastructure get built all around them and their kids go to school, graduating into the bourgeoisie.

Let me reiterate this point. Far outweighing all "aid" the world ever saw, the greatest force for good in the world has consisted of Americans purchasing megatons of crap we never had to buy in the first place, under trade rules designed to favor those thousand of foreign factories.

Alas, we'll never get a scintilla of credit for this vast beneficence. Because it did not blossom out of motivations like guilt or generosity. To a large part, it flowed out of a childishly spendthrift love of shopping.

Indeed, when viewed from this unusual angle, America looks even more impressive than ever. After single-handedly lifting up Europe and Japan, in the wake of WWII, then hauling Korea and Taiwan into the middle class with the helpful voraciousness of our appetites and wallets, we proceeded thereupon to offer this same bounteous good deed to dozens of other nations and peoples until, today, we are accomplishing what no one would have imagined possible.

We are SIMULTANEOUSLY lifting both China and India toward prosperity. Nations amassing more than two billion people. At the same time.

Now this view may infuriate liberals, who believe that doing good should feel like doing good, ideally motivated by sacrifice, guilt... and maybe some paternalism.)

It also won't please conservatives, who would just hate to picture George Marshall saving the world. (They certainly give Ronald Reagan all the credit for calling the final plays in Marshall's long and patient game.)

It seems to be in nobody's interest, left or right, to acknowledge either that the world is being saved, or that it has been accomplished by good-natured American extravagance. Is this why such a blatant fact is so ignored?

Oh, but it is NOT being ignored... in Beijing.

The Chinese leadership is painfully aware how much they have at stake in continuing the American buying spree. If their present transition were to stall short of the halfway point, with most of the rural population poised at an especially dangerous phase - aware of possibilities that have not yet been realized - then social disruption could wrack the nation on a seismic scale. Beijing needs confident Americans to buy plenty more unneeded goods with strong dollars, for the foreseeable future.

Can this be achieved, while our current accounts deficit shatters all records? Yes, if a sufficient counterflow is maintained. The Chinese and others could buy more American goods, for example. (Unlikely.) Or they could pay for intellectual property (even less likely).

Or they'll buy more American capital. The latter will be done even with complete awareness that US investments must depreciate eventually. They don't have any choice. They must buy our bonds and banks and skyscrapers and golf courses, as the Japanese did, at an expected long term loss.

Shall we derive some small satisfaction from that?

I don't see it as an issue of us-them quite as much as some do. Had we played this as a competitive game on that basis, Marshall would have set up a traditional mercantilist trade pattern and we would right now be not only the richest nation but the Great Creditor, owning debt in every other country... and the world would be a raging storm of rebellion against a genuine American Imperium, with billions more suffering in angry poverty than do now.

As I see it, we ARE getting something. We are getting cheap Asian goods and a better world. High quality Japanese cars and a vast majority of Earth's children going to school. A cornucopia at Walmart, and four billion people rushing toward the middle class.

(With concomitant ecological crises that will challenge the NEXT generation. Don't think for a minute that I've forgotten THAT part of things... or the way we are betraying our role as R&D department for efficient and sustainable growth.)

The ironies pile up higher and higher. If America fades somewhat because of all this, will we be taunted because a great empire let itself slip from the pinnacle through spendthrift ways?

Or will we be given credit we deserve? We spent and spent and spent, and in the long run, what we bought was hope for the world.

For follow-up, see: How Americans Spent Themselves into Ruin, but Saved the World


...next, a return to modernism...