One of the big issues for conservatives in recent years has been the size of government, at least when Democrats are in power. Grover Norquist summed it up in his stated desire to “shrink government to the size where we can drown it in the bathtub.” Conservatives are not entirely wrong in their concern with the problems of big government, but the emphasis should be more on “big” and less specifically on “government.”
Organizations become large by delivering value. Without any moderating influences, however, these large entities grow to dominate their respective fields, suppressing competition, and eventually constricting change and innovation.
Conservatives who really want to do something good for America and free us from onerous government regulations would do well to target the excesses of large corporations in equal measure. Given the perverse incentives for bad behavior and lack of legal or cultural accountability for the typical large corporate executive, the regulatory function of government is often the only thing standing in the way of corporate pillaging, and the only mechanism to balance out the excesses of large corporations.
The first hopeful sign I have seen on this front is the recent FTC application of anti-trust law to slow down the wave of hospital mergers. See the article “FTC Wary of Mergers by Hospitals” by Robert Spear in the 9/17 New York Times.
Corporations themselves are beginning to recognize that size can be an impediment to their own profitability. Hewlett Packard recently announced plans to split into two companies, separating its printing and personal computer business from corporate hardware and services operations. The companies will now be known as HP Inc. and Hewlett-Packard Enterprises.
We might all benefit by some downsizing across the board.
The U.S. has been exhibiting schizophrenic behavior on the global front. On the one hand, we continue to follow an expansionist foreign policy that is generating conflict with both Russia and China by failing to acknowledge their legitimate regional concerns. On the other hand, the Obama administration has been trying to distance the U.S. from the chaos in the Middle East, much of it the direct result of previous U.S. actions in the region.
The American public is receiving a rather narrow view of the dynamics contributing to the increasing global tensions and conflicts. Russia and China, for example, have been portrayed in our media as “unprovoked aggressors.” Certainly neither nation is without fault, but the media portrayal is incomplete at best.
For those interested in an expanded perspective on the conflict with Russia, John Mearsheimer recently published an article in Foreign Affairs entitled “Why the Ukraine Crisis is the West’s Fault” relating the policies and actions by the U.S. and the European Union that precipitated the crisis in Ukraine.
And for those interested in a broader perspective of the growing conflict with China this article in Global Research by Yoichi Shimatsu helps to illuminate the historical context and complexities of territorial issues in the South China Sea.
In the Middle East the U.S. is increasingly irrelevant, waffling on its commitment to Israel and uncertain who to back in the free for all ignited by the ironically named Arab Spring. The sudden rise of ISIS has brought some temporary focus into U.S. policy in the region, but the policy response continues to be confused, dependent on an air campaign to support fragmented “moderate” Syrian rebels to fight both ISIS and Assad. Our engagement against ISIS has brought us into literal, if not formal, alliance with Iran, Syria and even Al Queda in opposing them. How’s that for irony?
All of this conflict and warfare has studiously avoided dealing with the primary source of chaos throughout the Muslim world — Salafi jihadism — sponsored by our good friends at the House of Saud. See the New York Times op-ed “Saudis Must Stop Exporting Extremism” by Ed Husain for illumination on the source of inspiration and financial support for ISIS, Al Queda, Boco Haram and global jihadi culture. Also, see this insightful and unusually clear assessment of the trajectory of political Islam, “Let’s Talk About How Islam Has Been Hijacked” by Aly Salem in the Wall Street Journal.
Obama has been trying to withdraw from Pax Americana gracefully, an historical inevitability, but like market operators who corner a market, imperial nations pay a price when they try to withdraw from their increasingly burdensome commitments. Read the rather stunning and probably prescient article, “Are We Ready for the Fall of Baghdad?” by Ron Holland at the Daily Bell predicting a replay of the fall of Saigon.
America has weakened itself with 10 years of misguided and futile military engagements in Muslim countries. This relentless warfare has fueled the fire of the Salafi movement, creating chaos from Libya to Pakistan, threatening to morph into a generational war between Islam and the West.
They say if you want to know the true source of any conflict, follow the money. At the top of the military industrial heap: Lockheed Martin, Boeing, Northrop Grumman, General Dynamics and Raytheon account for $142 billion in annual sales to the Pentagon and approximately $12 billion in annual profits. Here are the top 25 beneficiaries of endless war from Business Insider.
Ever since Ronald Reagan was successful selling voodoo economics to America, Republicans have simply been repeating the winning formula over and over…keep saying it long enough, with great certainty and righteousness, along with diversionary smears against the “liberal press” and divisive campaigns on social wedge issues, and the people will follow. Why bother doing real analysis and offering honest solutions when a con is so easy to pull off?
Rick Perlstein published an excellent piece at The Nation entitled “There Are No More Honest Conservatives, So Stop Looking For One,” expressing his frustration with liberal editors looking for honest conservatives to debate, and pleading for public recognition that 21st Century conservatism is an outright fraud…right down the line.
Meanwhile, our President makes excellent speeches, but he often seems disconnected, conflicted and confused by the real world. Despite occupying the most powerful office in the world he doesn’t seem to have much appetite for wielding power, especially when it comes to the hands-on political leadership required to advance an agenda. By abdicating his duty to lead, he has effectively given us 8 more years of the disastrous Bush era policies, and has allowed the most extreme elements both domestically and globally to control the agenda.
President Obama seems to be the embodiment of a collective American denial of the consequences of our political dysfunction. Jedidiah Purdy has published an insightful article entitled “Time Bomb” in the 7/3/14 edition of Politico Magazine, stating that America has been consumed and systematically degraded by “cultural vitriol stirred up by cynical posturing.” Purdy suggests that we may need a period of even more intense conflict to resolve the political degradation that is threatening our future. I encourage all of my readers to read this important article.
According to Nate Silver the latest polls on the mid-term election indicate that Republicans will retain control of the House, and take over the Senate. Princeton’s Sam Wang gives calls the Senate race a toss-up and gives a slight edge to Democrats in the Gubernatorial races.
Markets & Economy
Markets have been trending over the last few months. At press time, the stock market is testing its all-time highs. Metals and commodities have been trending lower, reflecting cyclical deflation flowing from fiscal austerity and troubles in Europe. Bonds have been rallying in response to the soft economic numbers and the assumption that the Fed will continue to maintain a low interest rate environment regardless of what they say.
At the same time the real economy continues to struggle. The total number of jobs has recovered to 2008 levels, but the economic value of present day jobs lags far behind the value of 2008 jobs. A recent report from the Pew Research Center demonstrates that real wages peaked in 1973, and today’s wages have the same purchasing power as in 1979.
The employment numbers relative to the population have barely moved off the recessionary bottom. See the 9/9/14 Wall Street Examiner article posted at Yves Smith’s NakedCapitalism.
There is no question but that there will eventually be a big price to pay for all the money printing. In fact we have already been paying, but it’s more like the drip, drip, drip of a leaky faucet instead of the sudden breach of the dam that many, including this author, expected. See the Futures Magazine interview with the always insightful Jim Rogers.
The Fed learned something from Alan “keep it slow and no-one will know” Greenspan. The purchasing value of the dollar is draining away, just more slowly than one would expect, with the biggest impact cleverly offset into the future.
Paul Krugman’s assurances to the contrary notwithstanding, there will eventually be a grand finale to the dollar devaluation, but when that will be, and what it will look like, is not possible to know at this time.
“There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and it does it in a manner which not one man in a million is able to diagnose.” John Maynard Keynes
Opportunity is scarce these days. Assets are overvalued, reflecting Fed liquidity operations; demand is generally soft, reflecting fiscal austerity and the difficulties of American consumers generally. For the most part any opportunities are narrow, one-off situations, demanding specialty knowledge. General themes will continue to be security, alternative energy, local agriculture and servicing the growing tide of boomer retirees…10,000 a day…75 million over the next 15 years.
Some are finding opportunities offshore. Eastern Europe and Southeast Asia offer strong growth and attractive opportunities, but these are far away lands for Americans. Latin America offers similar opportunities, and is much closer to home. The cost of living there is generally 1/3rd or even less than in the states. Real estate is a bargain and development is proceeding. Careful due diligence is required, however. Latin America presents a wide variety of local conditions. Panama is especially attractive for Americans due to its political stability, first world infrastructure and healthcare, and healthy dollar based economy. Soon there will likely be opportunities in Cuba. See the October 11th New York Times editorial, “End the U.S. Embargo on Cuba.”
A wealth of information regarding offshore opportunities can be found at Kathleen Peddicord’s Live and Invest Overseas website.
The world is an increasingly fragile place. Conflicts have broken out around the globe and the economic malaise is not showing any signs of lifting. The Fed dream of “escape velocity” that was supposed to be generated by quantitative easing is nowhere on the horizon, and in fact the Fed is gradually reducing its growth projections.
Meanwhile, China is flexing its geopolitical muscle, the jihadi movement that spawned Al Queda is metastasizing, and the transatlantic alliance that has for so long been the foundation of global stability and economic growth is experiencing unprecedented distress. As Henry Kissinger put it, “The concept of order that has underpinned the modern era is in crisis.” See Kissinger’s new book “World Order.”
In the global world of Realpolitik Obama is seen as a weak and indecisive leader, so I expect that both Russia and China will push hard over the next two years to maximize their advantage while he is in office, as will the growing array of our enemies in the Middle East. It is not lost on them that whomever will come after Obama will likely be more decisive.
No-one knows how this is going to play out; whether the world will settle down and re-order itself peacefully, or whether the downward spiral into increasing chaos and conflict will continue. War cycles are not encouraging…predicting increased conflict until 2020.
For the time being, capital is flowing to the U.S. and into the dollar for safety.