Thursday, October 31, 2019
Elizabeth Warren: Fiscal Fraud
October 25, 2019 by Dan Mitchell @ International Liberty
In a recent interview, I was asked whether all the new spending schemes proposed by Democratic candidates would lead (as has been the case in Europe) to enormous tax increases on the middle class.
The answer is yes, of course.
But most of the candidates are not honest on this issues (with the partial exception of Crazy Bernie). They’re promising – literally – trillions of dollars in added handouts, but their proposed tax increases only cover a tiny fraction of the cost.
Elizabeth Warren may be the most extreme example of this phenomenon.
She’s embraced every possible tax on higher-income taxpayers, including a sure-to-backfire wealth tax. But all of those tax increases wouldn’t come close to financing her spending agenda – even if one makes the heroic assumption that there’s no adverse economic impact and negative revenue feedback.
The Wall Street Journal opined on her absurd approach.
Even writers at Vox find it difficult to rationalize Sen. Warren’s evasive math.
Here are some excerpts from a report in today’s Washington Post, including some of the horrifying tax increases that her advisers are contemplating.
Let’s close with a chart from Brian Riedl of the Manhattan Institute.
As you can see, even if you combine all of the class-warfare taxes, they don’t come close to paying the $30 trillion price tag of Medicare for All.
The only good news, so to speak, is that Sen. Warren is a politician. She’s first and foremost interested in winning office and probably isn’t totally serious about actually creating all sorts of new entitlement schemes (just like I don’t particularly believe Republicans who put forth election-year plans for tax reform).
But that’s hardly a comforting observation since there would be “public choice” pressures to adopt at least some bad policy if she got to the White House.
In a recent interview, I was asked whether all the new spending schemes proposed by Democratic candidates would lead (as has been the case in Europe) to enormous tax increases on the middle class.
The answer is yes, of course.
But most of the candidates are not honest on this issues (with the partial exception of Crazy Bernie). They’re promising – literally – trillions of dollars in added handouts, but their proposed tax increases only cover a tiny fraction of the cost.
Elizabeth Warren may be the most extreme example of this phenomenon.
She’s embraced every possible tax on higher-income taxpayers, including a sure-to-backfire wealth tax. But all of those tax increases wouldn’t come close to financing her spending agenda – even if one makes the heroic assumption that there’s no adverse economic impact and negative revenue feedback.
The Wall Street Journal opined on her absurd approach.
But it’s not just the pro-market crowd at the Wall Street Journal that is raising the issue.Tuesday’s Democratic debate…most important news was Senator Elizabeth Warren’s determined refusal to say if her plans would require taxes to increase on the middle class. …South Bend mayor Pete Buttigieg…added, accurately, that “no plan has been laid out to explain how a multi-trillion-dollar hole in this Medicare for All plan that Senator Warren is putting forward is supposed to get filled in.” …Senator Klobuchar…said “at least Bernie’s being honest here and saying how he’s going to pay for this and that taxes are going to go up. And I’m sorry, Elizabeth, but you have not said that, and I think we owe it to the American people to tell them where we’re going to send the invoice.” …this illuminates a problem with Ms. Warren’s agenda and her political character. On Medicare for All, everyone agrees that the cost will be at least $32 trillion over 10 years. Ms. Warren could impose her wealth tax, her higher taxes on capital gains, her higher income taxes on the affluent, and she still wouldn’t come close to paying for Medicare for All. And that’s before her plans for new spending entitlements on child care, pre-K education, free college and so much more. The only way to pay for this is to raise taxes on the middle class, which is where the real money is. That’s how government health care is financed in Europe.
Even writers at Vox find it difficult to rationalize Sen. Warren’s evasive math.
It’s gotten to the point that some left-leaning economists are scrambling to help square Warren’s circle.Bernie Sanders…acknowledged that…middle-class taxes would have to go up… It was a rare moment when someone running for the Democratic presidential nomination admitted that their spending ambitions would have to be paid for by taxes that touch not just the wealthiest Americans but taxpayers further down the bracket. …Trying to sell a big progessive agenda on the backs of the rich may be popular. But the admission that middle-class taxes may have to go up is an admission that there may not be enough rich people in America to pay for it all. …Warren…indicated last week that she supports…Medicare-for-All… Such a plan would overhaul the entirety of the US health care system with a single-payer system funded through general revenue and debt. Here the promise of a vast welfare state solely funded by new taxes on the rich runs aground.
Here are some excerpts from a report in today’s Washington Post, including some of the horrifying tax increases that her advisers are contemplating.
Wow, a smorgasbord of French-style tax ideas.Internal and external economic policy advisers are trying to help Sen. Elizabeth Warren (D-Mass.) design a way to finance a single-payer Medicare-for-all health-care system…her team faces a challenge in crafting a plan that would bring in large amounts of revenue while not scaring off voters with big middle-class tax increases. The proposal could cost more than $30 trillion over 10 years. Complicating matters, she has already committed all of the money she would raise from a new wealth tax, close to $3 trillion over 10 years, to several other ideas… Robert Pollin, a left-leaning economist at the University of Massachusetts at Amherst who has worked with the Warren and Sen. Bernie Sanders (I-Vt.) teams, …suggests…a $600 billion annual “gross receipts” tax on businesses, …a 3.75 percent sales tax on “nonnecessities” that exempts low-income households, to raise an additional $200 billion; and a 0.38 percent tax on wealth above $1 million, which he says would raise the remaining $200 billion. Robert C. Hockett, a Cornell University professor who has also advised Warren and Sanders, said he has urged Warren’s team to propose financing Medicare-for-all in part with a “public premium” that would function similarly to a tax. …Warren’s team has also received recommendations to adopt a “progressive consumption tax”… This plan would raise trillions of dollars.
Let’s close with a chart from Brian Riedl of the Manhattan Institute.
As you can see, even if you combine all of the class-warfare taxes, they don’t come close to paying the $30 trillion price tag of Medicare for All.
The only good news, so to speak, is that Sen. Warren is a politician. She’s first and foremost interested in winning office and probably isn’t totally serious about actually creating all sorts of new entitlement schemes (just like I don’t particularly believe Republicans who put forth election-year plans for tax reform).
But that’s hardly a comforting observation since there would be “public choice” pressures to adopt at least some bad policy if she got to the White House.
Wednesday, October 30, 2019
Quote of the Day
Contrariwise, many in the West's politically correct, materialist, and now aggressively atheist constitutional democracies are unhappy, addicted and suicidal, belligerent and frenzied. They suffer a crippling spiritual malaise, prominently evoked in so-called "modern art."
By Diana Mary Sitek
Eco-imperialists impose a biomess on Africa
Instead of cutting forests and burning dung and, shouldn’t Africa have cheap electricity?
Duggan Flanakin
China, India, Vietnam and other nations are using more and more oil, natural gas and coal every year to electrify and modernize their nations, create jobs, and improve their people’s health, living standards and life spans. Why in this day and age are the World Bank and other international institutions demanding widespread use of charcoal for heating and cooking in sub-Saharan Africa (SSA)? Why are African countries, the United States and human rights groups tolerating these lethal policies?
During the recent 2019 “climate week,” the United Nations Intergovernmental Panel on Climate Change touted increased reliance on biomass – which already comprises 60% of European “renewable” energy – as a tool in fighting climate change and stabilizing Earth’s never-stable climate.
(Europe’s “renewable” energy includes England’s Drax Power Plant, which is fueled by wood from millions of trees from thousands of acres of American and Canadian forest habitats. The trees are turned into wood pellets, which are hauled by truck to coastal ports and transported to North Yorkshire on oil-fueled cargo ships. From there the pellets are taken by train to the Drax Power Plant and burned in place of coal, to generate electricity – so that the UK can “meet its renewable fuel targets,” even though the overall process generates more carbon dioxide than coal or gas plants on a total life-cycle basis, and the trees are cut and burned much faster than new ones can grow. This is hardly sustainable.)
The Dogwood Alliance objected to the IPCC report, claiming that biomass (largely charcoal) contributes to deforestation. Dogwood’s arguments reflect the views of Norimitsu Onishi, whose 2016 New York Times article pointed out that burning charcoal not only poses human health concerns, but also constitutes a massive threat to the environment and numerous plant and animal species whose habitats are being destroyed by people using their trees to make charcoal.
The UN Environment Programme predicts that Africa’s demand for charcoal – currently 23 million tons a year – is likely to double or triple by 2050. Africa’s charcoal production doubled in the past two decades and now accounts for more than 60% of the world’s total, according to the UN Food and Agriculture Organization. Rapid urbanization increased demand for charcoal, the preferred way to cook in SSA cities.
Onishi acknowledged that charcoal is cleaner and easier to use than firewood, and cheaper and more readily available in much of Africa than gas or electricity. As a result, 80% of SSA families use charcoal as their primary energy source.
The World Health Organization reports that worldwide over 4.3 million people a year die prematurely from illnesses attributable to household air pollution resulting from burning charcoal and other solid fuels in open fires and leaky stoves. That’s more deaths than from AIDS, malaria and tuberculosis combined.
The WHO also noted that the lack of access to electricity for at least 1.2 billion people around the world exposes families to very high levels of fine particulate matter and other toxic materials in smoke – and to many intestinal diseases from spoiled food and unsafe drinking water. Lack of electricity also results in other health risks, such as burns, injuries and poisonings.
The lack of plentiful, reliable, affordable electricity also restricts opportunities to read and study at night, enjoy access to computers and the internet, engage in small crafts and trades, develop larger businesses and industries, create jobs, build modern homes, hospitals, schools and infrastructure, and take other steps that greatly improve people’s living standards, health and nutrition.
Why, in heaven’s name, more than century after affordable electricity began to transform Western society, is over half of Africa still not connected to any electric grid? Can any American, European, Australian or Canadian imagine life without abundant, reliable, affordable, 24/7/365 electricity?
The World Bank points out that SSA’s household electrification rate averaged a mere 42% in 2016 – with Rwanda at 80% and Guinea-Bissau at an abysmal 30% – leaving hundreds of millions of Africans with no electricity or only very limited, totally unpredictable access to this vital energy source.
ZimbabweSituation.com says three factors hinder demand for electric power in much of Africa. First, many firms and households that are already connected to the grid in SSA face regular blackouts, due to insufficient electricity and poor grid reliability. That means continued reliance on charcoal, forcing connected households and businesses to pay for two energy sources.
Next, where electricity bills take up a large share of household income, access to electricity is very low. Countries with poor grid penetration typically use high tariffs to finance infrastructure to improve their electric grids. But high tariffs translate into high energy bills that deter consumers and make it very hard for to launch and sustain businesses that create jobs and enable people to afford electricity.
Third, the cost and complexity of the connection process further hampers electrification. Where generation capacity is insufficient, utilities may delay new connections until infrastructure investments catch up with consumer demand. The Catch-22 is that these administrative barriers, red tape and connection costs drive down demand, postponing electrification almost forever.
In most places, says Patrick Conners, The Energy Guy, wood competes dollar for dollar with natural gas but pollutes much more and requires far more work: hauling and stacking the wood, stoking and tending the fire, and cleaning out the ashes afterward. A modern furnace gives much more uniform heat without the smoke and draft issues, but even these are unavailable and unaffordable in Africa.
African electricity costs and reliability will only come with modernization and expansion of the electric grid. The late Steven Lyazi, who worked with the Congress of Racial Equality Uganda, acknowledged that the availability of solar energy is good news to millions of Africans who rely on firewood, dung and charcoal for cooking. However, he added, solar and wind are at best stopgap solutions on the way to energy security – which UN, World Bank and other policies all but ensure will never arrive.
“Many people,” said Lyazi, “don’t know that Africa has some big dreams.” Just one – the proposed 466-mile Trans East Africa electric railway – would require much more energy than wind and solar can provide. Much of Africa has great potential for nuclear energy, coal, oil and natural gas, he explained – but powerful (largely European) environmentalists (including the World Bank) have opposed funding such projects.
Lyazi, who died in a bus accident in 2017, urged Africans to use their abundant natural resources. He challenged Africans to defy European environmentalists, who have stymied fossil fuel, hydroelectric and nuclear power projects in Africa. He said Uganda and other SSA countries should build natural gas pipelines to power plants, to generate affordable electricity for millions. Today, African oilfields mostly burn and waste the gas, while exporting the oil is mostly exported, benefitting elites while leaving millions energy-deprived, impoverished and desperate.
Why not also build nuclear and coal power plants and hydroelectric projects? Why not indeed? Why should Africans continue to barely survive at the hands of eco-imperialist, neo-colonialist, environmentally destructive organizations policies that ignore the most basic human rights: the rights to energy, modern health and living standards, and decent lives?
As South African nuclear engineer, energy consultant and activist Kelvin Kemm has noted, no single energy source will work for all of Africa. All have shortcomings in various regions, for a wide variety of reasons – except that small pebble bed modular nuclear reactors could probably be employed anywhere.
But Africa, and individual African countries and regions, should be the ones making those decisions – not outsiders, and not based on disinformation, pressure and bullying from those outsiders. They should not be forced to accept biomess energy imposed on them by global eco-imperialists.
Duggan Flanakin is director of policy research at the Committee For A Constructive Tomorrow. He has a Master's in public policy from Regent University and has studied environmental regulation for decades.
Duggan Flanakin
China, India, Vietnam and other nations are using more and more oil, natural gas and coal every year to electrify and modernize their nations, create jobs, and improve their people’s health, living standards and life spans. Why in this day and age are the World Bank and other international institutions demanding widespread use of charcoal for heating and cooking in sub-Saharan Africa (SSA)? Why are African countries, the United States and human rights groups tolerating these lethal policies?
During the recent 2019 “climate week,” the United Nations Intergovernmental Panel on Climate Change touted increased reliance on biomass – which already comprises 60% of European “renewable” energy – as a tool in fighting climate change and stabilizing Earth’s never-stable climate.
(Europe’s “renewable” energy includes England’s Drax Power Plant, which is fueled by wood from millions of trees from thousands of acres of American and Canadian forest habitats. The trees are turned into wood pellets, which are hauled by truck to coastal ports and transported to North Yorkshire on oil-fueled cargo ships. From there the pellets are taken by train to the Drax Power Plant and burned in place of coal, to generate electricity – so that the UK can “meet its renewable fuel targets,” even though the overall process generates more carbon dioxide than coal or gas plants on a total life-cycle basis, and the trees are cut and burned much faster than new ones can grow. This is hardly sustainable.)
The Dogwood Alliance objected to the IPCC report, claiming that biomass (largely charcoal) contributes to deforestation. Dogwood’s arguments reflect the views of Norimitsu Onishi, whose 2016 New York Times article pointed out that burning charcoal not only poses human health concerns, but also constitutes a massive threat to the environment and numerous plant and animal species whose habitats are being destroyed by people using their trees to make charcoal.
The UN Environment Programme predicts that Africa’s demand for charcoal – currently 23 million tons a year – is likely to double or triple by 2050. Africa’s charcoal production doubled in the past two decades and now accounts for more than 60% of the world’s total, according to the UN Food and Agriculture Organization. Rapid urbanization increased demand for charcoal, the preferred way to cook in SSA cities.
Onishi acknowledged that charcoal is cleaner and easier to use than firewood, and cheaper and more readily available in much of Africa than gas or electricity. As a result, 80% of SSA families use charcoal as their primary energy source.
The World Health Organization reports that worldwide over 4.3 million people a year die prematurely from illnesses attributable to household air pollution resulting from burning charcoal and other solid fuels in open fires and leaky stoves. That’s more deaths than from AIDS, malaria and tuberculosis combined.
The WHO also noted that the lack of access to electricity for at least 1.2 billion people around the world exposes families to very high levels of fine particulate matter and other toxic materials in smoke – and to many intestinal diseases from spoiled food and unsafe drinking water. Lack of electricity also results in other health risks, such as burns, injuries and poisonings.
The lack of plentiful, reliable, affordable electricity also restricts opportunities to read and study at night, enjoy access to computers and the internet, engage in small crafts and trades, develop larger businesses and industries, create jobs, build modern homes, hospitals, schools and infrastructure, and take other steps that greatly improve people’s living standards, health and nutrition.
Why, in heaven’s name, more than century after affordable electricity began to transform Western society, is over half of Africa still not connected to any electric grid? Can any American, European, Australian or Canadian imagine life without abundant, reliable, affordable, 24/7/365 electricity?
The World Bank points out that SSA’s household electrification rate averaged a mere 42% in 2016 – with Rwanda at 80% and Guinea-Bissau at an abysmal 30% – leaving hundreds of millions of Africans with no electricity or only very limited, totally unpredictable access to this vital energy source.
ZimbabweSituation.com says three factors hinder demand for electric power in much of Africa. First, many firms and households that are already connected to the grid in SSA face regular blackouts, due to insufficient electricity and poor grid reliability. That means continued reliance on charcoal, forcing connected households and businesses to pay for two energy sources.
Next, where electricity bills take up a large share of household income, access to electricity is very low. Countries with poor grid penetration typically use high tariffs to finance infrastructure to improve their electric grids. But high tariffs translate into high energy bills that deter consumers and make it very hard for to launch and sustain businesses that create jobs and enable people to afford electricity.
Third, the cost and complexity of the connection process further hampers electrification. Where generation capacity is insufficient, utilities may delay new connections until infrastructure investments catch up with consumer demand. The Catch-22 is that these administrative barriers, red tape and connection costs drive down demand, postponing electrification almost forever.
In most places, says Patrick Conners, The Energy Guy, wood competes dollar for dollar with natural gas but pollutes much more and requires far more work: hauling and stacking the wood, stoking and tending the fire, and cleaning out the ashes afterward. A modern furnace gives much more uniform heat without the smoke and draft issues, but even these are unavailable and unaffordable in Africa.
African electricity costs and reliability will only come with modernization and expansion of the electric grid. The late Steven Lyazi, who worked with the Congress of Racial Equality Uganda, acknowledged that the availability of solar energy is good news to millions of Africans who rely on firewood, dung and charcoal for cooking. However, he added, solar and wind are at best stopgap solutions on the way to energy security – which UN, World Bank and other policies all but ensure will never arrive.
“Many people,” said Lyazi, “don’t know that Africa has some big dreams.” Just one – the proposed 466-mile Trans East Africa electric railway – would require much more energy than wind and solar can provide. Much of Africa has great potential for nuclear energy, coal, oil and natural gas, he explained – but powerful (largely European) environmentalists (including the World Bank) have opposed funding such projects.
Lyazi, who died in a bus accident in 2017, urged Africans to use their abundant natural resources. He challenged Africans to defy European environmentalists, who have stymied fossil fuel, hydroelectric and nuclear power projects in Africa. He said Uganda and other SSA countries should build natural gas pipelines to power plants, to generate affordable electricity for millions. Today, African oilfields mostly burn and waste the gas, while exporting the oil is mostly exported, benefitting elites while leaving millions energy-deprived, impoverished and desperate.
Why not also build nuclear and coal power plants and hydroelectric projects? Why not indeed? Why should Africans continue to barely survive at the hands of eco-imperialist, neo-colonialist, environmentally destructive organizations policies that ignore the most basic human rights: the rights to energy, modern health and living standards, and decent lives?
As South African nuclear engineer, energy consultant and activist Kelvin Kemm has noted, no single energy source will work for all of Africa. All have shortcomings in various regions, for a wide variety of reasons – except that small pebble bed modular nuclear reactors could probably be employed anywhere.
But Africa, and individual African countries and regions, should be the ones making those decisions – not outsiders, and not based on disinformation, pressure and bullying from those outsiders. They should not be forced to accept biomess energy imposed on them by global eco-imperialists.
Duggan Flanakin is director of policy research at the Committee For A Constructive Tomorrow. He has a Master's in public policy from Regent University and has studied environmental regulation for decades.
The Real Motive for Class-Warfare Taxation
October 9, 2019 by Dan Mitchell @ International Liberty
In addition to being a contest over expanding the burden of government spending, the Democratic primary also is a contest to see who wants the biggest tax increases. Bernie Sanders and Elizabeth Warren have made class-warfare taxation an integral part of their campaigns, but even some of the supposedly reasonable Democrats are pushing big increases in tax rates.
James Pethokoukis of the American Enterprise Institute opines about the anti-growth effect of these proposed tax hikes, particularly with regard to entrepreneurship and successful new firms.
He starts by explaining why it’s important to measure how sensitive taxpayers are (the “elasticity of taxable income”) to changes in tax rates.
Alan’s article extensively discusses how high-income taxpayers are especially sensitive to high tax rates, in part because they have considerable control over the timing, level, and composition of their income.
He also reviews the empirical evidence from major shifts in tax rates last century.
All told, his article is a devastating take-down of the left-of-center economists who have tried to justify extortionary tax rates. Simply stated, high tax rates hinder the economy, create deadweight loss, and don’t produce revenue windfalls.
That being said, I wonder whether his article will have any impact. As Kevin Williamson points out is a column for National Review, the left isn’t primarily motivated by a desire for more tax money.
Is is that they’re overflowing with compassion and concern for the poor?
Hardly.
Writing for the Federalist, Emily Ekins shares some in-depth polling data that discovers that envy is the real motive.
These numbers are quite depressing.
They suggest that no amount of factual analysis or hard data will have any effect on the debate.
And there is polling data to back up Emily’s statistical analysis. Heck, some folks on the left openly assert that envy should be the basis for tax policy.
In other words, Deroy Murdock and Margaret Thatcher weren’t creating imaginary enemies.
P.S. If you think Kevin Williamson was somehow mischaracterizing or exaggerating Obama’s spiteful position on tax policy, just watch this video.
In addition to being a contest over expanding the burden of government spending, the Democratic primary also is a contest to see who wants the biggest tax increases. Bernie Sanders and Elizabeth Warren have made class-warfare taxation an integral part of their campaigns, but even some of the supposedly reasonable Democrats are pushing big increases in tax rates.
James Pethokoukis of the American Enterprise Institute opines about the anti-growth effect of these proposed tax hikes, particularly with regard to entrepreneurship and successful new firms.
If you want a substantive economic critique of class-warfare tax policy, Alan Reynolds has a must-read article on the topic.The Democratic presidential candidates have plenty of ideas about taxes. Wealth taxes. Wall Street taxes. Inequality taxes. And probably more to come. So lots of creative thinking about wealth redistribution. Wealth creation? Not so much. …one way to look at boosting GDP growth is thinking about specific policies to boost labor force and productivity growth. But there’s another way of approaching the issue: How many fast-growing growing new firms would need to be generated each year to lift the economy-wide growth rate each year by one percent? …a rough calculation by analyst Robert Litan figures there about 15 billion-dollar (in sales) companies formed every year. But what if the American entrepreneurial ecosystem were so vibrant that it produced 60 such companies annually? …The big point here is that the American private sector is key to growth. No other large economy is as proficient as the US in creating high-impact startups. But it doesn’t appear that the Democratic enthusiasm for big and bold tax plans is matched by concern about unwanted trade-offs.
He starts by explaining why it’s important to measure how sensitive taxpayers are (the “elasticity of taxable income”) to changes in tax rates.
Alan then looks at some of the ETI estimates and what they imply for tax rates, though he notes that the revenue-maximizing rate is not the optimal rate.Elasticity of taxable income estimates are simply a relatively new summary statistic used to illustrate observed behavioral responses to past variations in marginal tax rates. They do so by examining what happened to the amount of income reported on individual tax returns, in total and at different levels of income, before and after major tax changes. …For example, if a reduced marginal tax rate produces a substantial increase in the amount of taxable income reported to the IRS, the elasticity of taxable income is high. If not, the elasticity is low. ETI incorporates effects of tax avoidance as well as effects on incentives for productive activity such as work effort, research, new business start-ups, and investment in physical and human capital.
Diamond and Saez claim that, if the relevant ETI is 0.25, then the revenue-maximizing top tax rate is 73 percent. Such estimates, however, do not refer to the top federal income tax rate, …but to the combined marginal rate on income, payrolls, and sales at the federal, state, and local level. …with empirically credible changes in parameters, the Diamond-Saez formula can more easily be used to show that top U.S. federal, state, and local tax rates are already too high rather than too low. By also incorporating dynamic effects — such as incentives to invest in human capital and new ideas — more recent models estimate that the long-term revenue-maximizing top tax rate is between 22 and 49 percent… Elasticity of taxable, or perhaps gross income…can be “a sufficient statistic to approximate the deadweight loss” from tax disincentives and distortions. Although recent studies define revenue-maximization as “optimal,” Goolsbee…rightly emphasizes, “The fact that efficiency costs rise with the square of the tax rate are likely to make the optimal rate well below the revenue-maximizing rate.”These excerpts only scratch the surface.
Alan’s article extensively discusses how high-income taxpayers are especially sensitive to high tax rates, in part because they have considerable control over the timing, level, and composition of their income.
He also reviews the empirical evidence from major shifts in tax rates last century.
All told, his article is a devastating take-down of the left-of-center economists who have tried to justify extortionary tax rates. Simply stated, high tax rates hinder the economy, create deadweight loss, and don’t produce revenue windfalls.
That being said, I wonder whether his article will have any impact. As Kevin Williamson points out is a column for National Review, the left isn’t primarily motivated by a desire for more tax money.
So what leads our friends on the left to pursue such misguided policies? What drives their support for punitive taxation?Perhaps the strangest utterance of Barack Obama’s career in public office…was his 2008 claim that raising taxes on the wealthy is a moral imperative, even if the tax increase in question ended up reducing overall federal revenue. Which is to say, Obama argued that it did not matter whether a tax increase hurt the Treasury, so long as it also hurt, at least in theory and on paper, certain wealthy people. …ideally, you want a tax system with low transaction costs (meaning a low cost of compliance) and one that doesn’t distort a lot of economic activity. You want to get enough money to fund your government programs with as little disruption to life as possible. …Punitive taxes aren’t about the taxes — they’re about the punishment. That taxation should have been converted from a technical question into a moral crusade speaks to the basic failure of the progressive enterprise in the United States…the progressive demand for a Scandinavian welfare state at no cost to anybody they care about…ends up being a very difficult equation to balance, probably an impossible one. And when the numbers don’t work, there’s always cheap moralistic histrionics.
Is is that they’re overflowing with compassion and concern for the poor?
Hardly.
Writing for the Federalist, Emily Ekins shares some in-depth polling data that discovers that envy is the real motive.
Here’s one of her charts, showing that resentment is far and away the biggest driver of support for class-warfare proposals.Supporters often contend their motivation is compassion for the dispossessed… In a new study, I examine…competing explanations and ask whether envy and resentment of the successful or compassion for the needy better explain support for socialism, raising taxes on the rich, redistribution, and the like. …Statistical tests reveal resentment of the successful has about twice the effect of compassion in predicting support for increasing top marginal tax rates, wealth redistribution, hostility to capitalism, and believing billionaires should not exist. …people who agree that “very successful people sometimes need to be brought down a peg or two even if they’ve done nothing wrong” were more likely to want to raise taxes on the rich than people who agree that “I suffer from others’ sorrows.” …I ran another series of statistical tests to investigate the motivations behind the following beliefs: 1) It’s immoral for our system to allow the creation of billionaires, 2) billionaires threaten democracy, and 3) the distribution of wealth in the United States is “unjust.” Again, the statistical tests find that resentment against successful people is more influential than compassion in predicting each of these three beliefs. In fact, not only is resentment more impactful, but compassionate people are significantly less likely to agree that it’s immoral for our system to allow people to become billionaires.
They suggest that no amount of factual analysis or hard data will have any effect on the debate.
And there is polling data to back up Emily’s statistical analysis. Heck, some folks on the left openly assert that envy should be the basis for tax policy.
In other words, Deroy Murdock and Margaret Thatcher weren’t creating imaginary enemies.
P.S. If you think Kevin Williamson was somehow mischaracterizing or exaggerating Obama’s spiteful position on tax policy, just watch this video.
Monday, October 28, 2019
To My Readers
Other than some commentaries that are sent to me, I'm not going to be posting nearly as much as I've been. I won't have time to do my normal searches. I've two projects I've put off for some time and now time has caught up to me. This will be a partial hiatus, probably until January.
Best wishes to everyone,
Rich Kozlovich
Best wishes to everyone,
Rich Kozlovich
Is It Climate Socialism – or Eco-Fascism?
Green New Deal climate alarm socialism is really intolerant, totalitarian eco-fascism
Paul Driessen
Green New Dealers have convinced themselves that our planet faces an imminent, existential, manmade climate cataclysm – that can be prevented solely and simply by replacing fossil fuels with biofuel, wind, solar and battery energy. They achieve this state of absolute certainty largely by propagating constant scare stories while ignoring and suppressing contradictory evidence and viewpoints.
Paul Driessen
Green New Dealers have convinced themselves that our planet faces an imminent, existential, manmade climate cataclysm – that can be prevented solely and simply by replacing fossil fuels with biofuel, wind, solar and battery energy. They achieve this state of absolute certainty largely by propagating constant scare stories while ignoring and suppressing contradictory evidence and viewpoints.
They deliberately and deceptively talk about “carbon
pollution.” Carbon is soot – what our cars, factories and power plants now emit
in very small quantities. The honest, accurate term is carbon dioxide: the
colorless, odorless, invisible gas that we exhale and plants need to grow, by
using the tiny but growing 0.04% of Earth’s atmosphere that is CO2 to grow
faster, better and with greater resistance to droughts.
They are climate change deniers, who claim Earth’s climate
is stable and can be kept that way by controlling one minor factor – carbon
dioxide and other “greenhouse gases” – and ignoring fluctuations in solar
energy, cosmic rays, clouds, oceanic circulation, volcanoes, planetary orbits
and dozens of other powerful natural causes of climate changes that have
buffeted our planet throughout its history.
They insist that even another half-degree increase in
planetary temperatures since Earth emerged from the Little Ice Age (1350-1850)
would be cataclysmic. That’s absurd. They also rely on computer models that
project rapidly soaring temperatures – but already claim average global
temperatures should be 0.9 degrees F higher than they actually are, according
to satellite and weather balloon measurements.
Climate Crisis True Believers say tornadoes and hurricanes are
becoming more frequent and intense. In reality, from 1950-1984, the US averaged
55 violent (F4 to F5) tornadoes every year; but over the next 33 years
(1985-2018) only 35 per year. And in 2018, for the first time in recorded
history, not one F4-F5 tornado touched down anywhere in the United
States. (Is this due to rising atmospheric CO2 levels?)
Similarly, from 1920 through 2005, fifty-two Category 3 to 5
hurricanes made US landfall (1.6/year on average). And then, from October 2005
until August 2017 – a record twelve years – not one Category 3 to 5 ’cane
struck the US mainland. Harvey and Irma ended that hurricane drought in 2017, but were hardly
unprecedented in their intensity or rainfall. (Was that drought due to rising
atmospheric CO2 levels?)
The Washington Post reported that “the Arctic Ocean is warming up... and in some places seals are
finding the water too hot.” That was in 1922, and explorers wrote about Arctic
ice cycles long before that. “We were astonished by the total absence of ice in Barrow Strait,” Sir Francis McClintock
wrote in 1860, whereas at this time in 1854 it was “still frozen up.” As to
continental USA weather, a commentator said “Snows are less frequent and less deep, and the rivers scarcely
ever [freeze over] now.” That was Thomas Jefferson, in 1799. The 1970s
manmade global cooling scare was replaced by today’s warming crisis.
After rising some 400 feet since the last ice age ended
about 12,000 years ago, oceans are rising at 7 to 10 inches per
century. That’s a minimal threat to coastal communities, some of which are more
seriously threatened by land subsidence – including Chesapeake Bay lands
(Maryland), Hampton Roads (Virginia), Houston and Miami. There has been no
increase in the rate of sea level rise in more than a century.
Seawaters cannot become “more acidic.” They are slightly
alkaline. They may be getting slightly less alkaline, depending on where and
when pH levels are measured. But they are not becoming acidic.
Coral bleaching can result from pollution but is mostly
natural, caused by coral animals ejecting their symbiotic zooxanthellae single-celled
dinoflagellates, when seawaters become warmer or colder. Corals replace them
with new species better adapted to the new temperatures – and then recover
their former color and glory, as they have in Australia’s Great Barrier Reef,
Hawaii’s reefs and elsewhere. Corals also grow as seas rise, just as they have
since the last Pleistocene Ice Age, creating today’s splendid reefs.
Polar bears are at their highest population levels in memory:
as many as 31,000 of them. They’ve survived multiple ice ages, interglacial
periods and warming episodes. They are hardly endangered.
We face no climate crisis, no unprecedented warming, climate or extreme weather threat –
manmade or natural. Equally important, proposals to replace fossil fuels with
biofuel, wind, solar and battery power would be far more ecologically
destructive than their climate crisis – and would severely harm food supplies,
nutrition, jobs, living standards, health and life spans, in rich and poor
countries alike.
For the United States alone, replacing 100% of US gasoline
and petrochemical feed stocks with ethanol would require some 700 million acres of biotech
corn. That’s four times the land area of Texas turned into biofuel corn
plantations – or soy/canola farms for biodiesel – leaving little land for food
and wildlife.
Let’s suppose we’re going to use wind power to replace: the 3.9 billion megawatt-hours of
electricity that Americans consumed in 2018, coal and gas-fired backup power
plants, natural gas for home heating, coal and gas for factories, and
gasoline-powered vehicles. We’ll also use wind turbines to generate enough
extra electricity, every windy day, to charge batteries for just seven straight
windless days.
We’ll also account for electricity loss along lengthy
transmission lines, and every time we charge and discharge batteries. As we
erect turbines in steadily lower quality wind locations, instead of generating
full nameplate power maybe 33% of the year, on average, they will do so only
16% of the year.
Instead of the 58,000 we have now, the United States would
need some14 million 400-foot-tall turbines, each one capable of generating 1.8
megawatts at full capacity, when the wind is blowing at the proper speed. Each
turbine would need about 120 acres of open space and access roads, as at BP’s
50,000-acre Fowler Ridge wind energy factory in Indiana. That would total 1.7
billion acres – ten times the area of Texas ... or most of the Lower 48 United
States! Plus thousands of miles of new transmission lines!
Their bird-butchering blades would wipe out raptors, other
birds and bats across much of America. Would Extinction Rebellion go apoplectic? or not give a spotted owl
hoot, since wind turbines are “eco-friendly”?
Manufacturing those wind turbines would require something on
the order of15 billion tons of steel, copper, rare earth metals, concrete,
petroleum-based composites, gravel and other raw materials. Extracting them
would require a hundredfold increase in global mining: removing hundreds of
billions of tons of earth and rock overburden, and crushing and processing tens
of billions of tons of ore.
Imagine the cumulative land use, eminent domain, property
rights, environmental and wildlife impacts.
Using batteries to replace coal and gas-fired backup power
plants for intermittent, weather-dependent wind facilities would require some
one billion 100-kilowatt-hour, 1,000-pound lithium and cobalt-based Tesla
battery packs – and still more mining and raw materials. And that doesn’t
include extra battery storage for the cars, trucks and buses that Green New
Dealers want to replace with electric vehicles.
Climate Crisis True Believers proudly call themselves
concerned environmental socialists, while they obstinately ignore and suppress
these climate and energy realities. They certainly promote a political-economic
system under which central government controls the means of production, while
limiting private property rights or replacing them with communal ownership:
classic socialism.
Actually, they want eco-fascism: an even more extreme
and intolerant system under which an authoritarian national or international
government does not own businesses and industries outright, but dictates what
they can make, do, sell and say – while controlling citizens’ thoughts and
speech by employing laws, intimidation, threats of being fired or jailed, and
even physical Antifa-style violence.
Along with Google, FaceBook, YouTube, Twitter, Wikipedia, universities and the “mainstream” media – they try to censor,
marginalize, ostracize, disinvite, shadow-ban, electronic book burn, and
algorithm-eradicate differing, alternative, contrarian evidence, analyses and
viewpoints on energy and climate.
They got Dr. Peter Ridd fired for exposing fabrications about the Great
Barrier Reef’s demise – and Dr. Susan Crockford cashiered for daring to challenge bogus
claims about polar bears. Robert Kennedy Jr., Senator Sheldon Whitehouse and others even want climate and
energy dissenters prosecuted and jailed.
We must keep speaking truth to power – to ensure that our
future is not compromised by climate lies.
Paul Driessen is senior policy advisor for the Committee For
A Constructive Tomorrow (www.CFACT.org)
and author of many books, reports and articles on energy, climate and
environmental issues.
Sunday, October 27, 2019
Vatican: The Shadow Islamic State
By IQ al-Rassooli, Scholar and Terrorism AnalystOctober 21st, 2019
In today’s 21st century, the Catholic leaders starting with Pope Francis are again siding with Muslims against the welfare of all Christians. This most certainly sounds outrageous BUT let me ask the readers the following questions to prove my point:
Has pope Francis even bothered to read Muhammad’s Quran?
Has anyone else among the hundreds of thousands of his prelates?
Al Tauba 9:29“Fight [qatiloo] those who believe not in Allah nor the Last Day nor hold that forbidden which hath been forbidden by Allah and His apostle [Muhammad] nor acknowledge the religion of truth [ISLAM] (even if they are) of the People of the Book [Christians & Jews] until they pay the Jizya [onerous penalty for not being a Muslim] with willing submission and feel themselves humiliated”
To Read More...
In today’s 21st century, the Catholic leaders starting with Pope Francis are again siding with Muslims against the welfare of all Christians. This most certainly sounds outrageous BUT let me ask the readers the following questions to prove my point:
Why is pope Francis so much ‘in love’ with Islam that he declared in Paragraph 252 of EG [Evangelii gaudium]: “The sacred writings of Islam have retained some Christian teachings; Jesus and Mary receive profound veneration and it is admirable to see how Muslims both young and old, men and women, make time for daily prayer and faithfully take part in religious services.”Really? Which Christian teachings? The Muslim ones that DENY the divinity of BOTH Jesus and Mary?
Has pope Francis even bothered to read Muhammad’s Quran?
Has anyone else among the hundreds of thousands of his prelates?
Al Tauba 9:29“Fight [qatiloo] those who believe not in Allah nor the Last Day nor hold that forbidden which hath been forbidden by Allah and His apostle [Muhammad] nor acknowledge the religion of truth [ISLAM] (even if they are) of the People of the Book [Christians & Jews] until they pay the Jizya [onerous penalty for not being a Muslim] with willing submission and feel themselves humiliated”
To Read More...
The Cutting Room Files, Part 3: The Future of Canada
by Peter Zeihan and Michael N. Nayebi-Oskoui on October 21, 2019 Visit the archives to re-read and share
This piece is part of the Cutting Room Files, portions of the upcoming Disunited Nations text that were cut for length. Disunited Nations is available for pre-Order now on Amazon.com, Harper Collins, and IndieBound.
Canada is… not a normal place.
Everything from its settlement patterns to its defense strategy to its national politics to its economic structure is wildly different not just from the United States, but from every other country on the globe. Until now that has not had an overly negative impact upon Canadian-American relations, but times are changing (and from the Canadian point of view, not for the better). To really understand recent shifts, we need to start not in Canada, but in Mexico.
It comes down to demography.
Mexico has a more-or-less standard demographic profile. Lots of children, a good number of young workers, fewer mature workers and very few retirees. Chart it out, children on the bottom and retirees on the top, and courtesy of simple mortality you get a pyramid.
This piece is part of the Cutting Room Files, portions of the upcoming Disunited Nations text that were cut for length. Disunited Nations is available for pre-Order now on Amazon.com, Harper Collins, and IndieBound.
Canada is… not a normal place.
Everything from its settlement patterns to its defense strategy to its national politics to its economic structure is wildly different not just from the United States, but from every other country on the globe. Until now that has not had an overly negative impact upon Canadian-American relations, but times are changing (and from the Canadian point of view, not for the better). To really understand recent shifts, we need to start not in Canada, but in Mexico.
It comes down to demography.
Mexico has a more-or-less standard demographic profile. Lots of children, a good number of young workers, fewer mature workers and very few retirees. Chart it out, children on the bottom and retirees on the top, and courtesy of simple mortality you get a pyramid.
| For the Americans, this makes Mexico the perfect complement. Its people are ravenous for American exports, the Mexican work force meshes nicely America’s more high-value-added workers, and for the most part the two countries do not compete head-to head. No wonder that Trump’s rhetoric on Mexico has evolved so strongly over the course of the past two years from issues of trade to issues of identity and migration. Simply put, from American point of view, the Mexican demography is the demography of the perfect partner. Canada’s is not.  Even worse, the lack of 20- and 30-something Canadians means Canada cannot even consume its own production. It must dump that production on foreign markets, and proximity alone means that some 75% of it goes to the United States. Economically, Canada isn’t a partner. It is a competitor, and that’s before one considers the Canadian tendency to subsidize industries as unrelated as dairy and aerospace and timber and electricity. In a time when the Americans are pulling back from the global system and rewriting all their trade relationships, this alone would be cause for great concern in the Great White North. But the Canadian-American economic mismatch is only the first problem. The second problem in Canadian-American relations is the Americans are having a change of heart about their northern neighbor not simply in economic terms, but overall. When the Trump administration started its whole the-world-is-screwing-us-and-we’re-going-to-forcibly-renegotiate-all-trade-deals campaign, the Canadians took it as an opportunity to make demands of the United States. That clearly didn’t fit with TeamTrump’s understanding of what was supposed to be going on. Why in the world would the Canadians believe they have leverage over the government who controls the only market that matters to Canada, and global finance, energy and sea lanes to boot? Canada’s confidence dates back to the Cold War. The flight path for the feared Soviet nuclear missile strike on the United States would have been over Canada. There was no version of American security that would not by default also guarantee Canadian security. The Canadians could have been security free-riders if they had chosen to, but to their credit they have fought and died alongside American soldiers in nearly every overseas endeavor the U.S. military has undertaken. That does not mean the Canadians did not use their leverage, they just used it on issues of trade rather than security, leveraging their strategic position to gain concessions on market access for their products. The Canadians had a strong hand and they played it well. Repeatedly. Those trade victories were all folded into the original NAFTA accord back in the early 1990s. It all fit with the times. The whole concept of the American-led global Order was that the Americans would create and subsidize a security and trade rubric to induce countries to join them in the fight against the Soviets. Guns-for-butter was the rule of the era. Canada’s position meant it had more to offer, and granting Ottawa some extra trade concessions for its cooperation was a price the Americans were eager to pay. Times change. Canadian negotiators resisted the Trump administration’s trade goals, thinking Canada’s leverage still existed. But with the Cold War over, the Americans no longer fear Russian attack. Canada is now just another country. Once the Americans had finalized NAFTA2 with Mexico, they turned to Canada and issued a simple ultimatum: Mexico’s market is growing. Yours is not. Your market is protected. Mexico’s is not. The Mexican labor force is complementary to ours. Yours is not. We have a deal with the country that matters, and that isn’t you. We are leaving NAFTA. You know our terms. Take them or leave them. We are moving on. In a single searing moment of revelation, everything that had guaranteed Canada leverage over America, everything that granted Canada a place in the world, everything that had generated any meaningful international influence, had evaporated. Canada capitulated within days and signed on for NAFTA2. All things considered, as emotionally crushing and economically damaging as a forced rejiggering of Canadian-American relations will be, it could be (a lot) worse. Canada is very close to the top of a very short list of countries that the Americans have positive feelings for. Will the Canadian ego and economy suffer under NAFTA2? You betcha. But Canada will still enjoy privileged, security-risk-free access to the American market. In a post-Order world precious few countries can claim the same. Canada may limp, but it will still be able to walk. Unless the third issue completely overturns the Canadian system from the inside. Again, Canada is not a normal place. Unlike the United States where the states and federal government exercise roughly equal amounts of power, in Canada the provinces are preeminent and often have the ability to block federal policies they do not like. The country didn’t even get its first comprehensive internal free trade agreement until 2017. As such, the provinces of Canada function less like components of a common country, and more like a loose clutch of independent countries which compete – oftentimes furiously. That would be problematic enough if the provinces shared a common demographic base. That, they do not. Quebec is as vitriolically Francophone as the Maritimes are Anglophone. A huge chunk of the population of Toronto is South Asian, while East Asians tend to be overrepresented in Vancouver. The Prairies are as white bread as America’s upper-Midwest. These splits at least partially explain the seemingly never-ending drama of Quebecois separatism, but it is the intersection of demography and economics where the real problems erupt: The Maritimes’ economies crashed decades ago and its subsequent “recovery” has been anemic at best. Now those provinces have all aged into mass retirement making them de facto wards of the national government. Mighty Quebec is only a few years behind, and is making the transition to demographic basket case right now. Both British Colombia and Ontario are no more than five years behind Quebec. A big piece of the BC economy is serving as the gateway to Asia, and the Trump administration’s trade war is likely to enervate those links. Even worse, the NAFTA-integrated manufacturing and agriculture that makes Ontario and Quebec hum were sectors that specifically benefited from NAFTA1, and which now face far steeper competition from the United States and Mexico under NAFTA2. More specifically, Quebec’s aerospace company, Bombardier, is both one of the most heavily subsidized in the world and is linked into Airbus – a firm that is both the target of extensive American tariffs and one whose fate is locked up in the Brexit drama. Functionally, that restricts economic dynamism to the demographically young provinces of Alberta and Saskatchewan, a pair of entities whose economies depend upon old-school oil and natural gas production. For years now, funds transfers from the pair – quintuply so from Alberta – to the center is what has enabled Canada to enjoy its much-lauded social welfare state. That’s not the end of the story, but instead just the beginning. Canada’s leader is one Justin Trudeau, a scion of a powerful family. Justin’s father, Pierre, was a force of nature. Love him or hate him, everyone acknowledged that Trudeau the Senior was a commensurate politician. Dude could work a room, and it isn’t much of a surprise that he served as Canada’s prime minister for 16 years. Justin, in comparison, isn’t a particularly smooth operator. His rise to the prime minister’s chair five years ago largely occurred because of circumstance. Many Canadians had tired of a decade of conservative minority rule under the somewhat curmudgeonly Stephen Harper. A coalition of liberal players banded together around the Trudeau name and managed to carry an election. In that environment, Trudeau the Younger fit the bill. He isn’t very bright, his French is on the weak side, his past work experience was at best mediocre, but he is young and so very very pretty. In a world of social media and an increasing split between modern liberal values and traditional economic sectors, that proved enough. Under Justin Trudeau’s rule Canada has… gotten by. There have been no disasters, but few serious new policies. Really, Justin Trudeau’s administration has only shifted two things. First, it has steadily centralized power in Ottawa, making it easier to drain cash from Alberta and Saskatchewan both to balance out the slipping economic performance of the rest of the country, and to push this or that pet policy. Second, the pet policy of the moment is a fairly aggressive environmental program that has proven popular with Justin Trudeau’s base. That program has put ever-more-stringent restrictions on the economies of Alberta and Saskatchewan – specifically on the sectors that make the Canadian national budget possible. Justin Trudeau’s lackluster performance has cost him. His Liberal Party has been ejected from parliaments in Alberta, Saskatchewan, Ontario and some of the Maritimes in favor of the conservatives; in BC in favor of the left-leaning NDP and Greens; and in Quebec in favor of more nationalist sentiments who are furious with his capitulation to the Americans in NAFTA2. Within the Liberals, the future isn’t all that bright either. Aside from the Trudeau name, the one characteristic that Justin inherited from his father is the charisma necessary to suck all the air out of the room. Justin is such a big presence that there is no next-generation of young leaders working their way up through the Liberal Party ranks. When Justin falls, so too will the party. Fast forward to this week. The Canadians voted in national elections October 21. Justin Trudeau’s Liberals were not exactly gutted, but they lost a lot of seats ending up with just 157, thirteen shy of what’s necessary to form a majority government. That will force the Liberals to rely upon support from the Greens (whose primary concerns are climate change policies) and the NDP (who are like a more math-challenged version of the Greens). For Canada as a whole, this courts disaster. Political sentiment in Alberta and Saskatchewan turned sharply anti-Green and anti-Trudeau years ago. The Albertans and Saskatchewanians assert the Greens, the NDP and the Trudeau government are actively conspiring to stymie any and all efforts to get Albertan and Saskatchewan energy exports to the wider world. The Greens and NDP openly say they do, with anti-Albertan policies in the one province they control – British Colombia – having reached the point that BC and Alberta have a hot little inter-provincial trade war going. The Trudeau government attempts to be at least a bit circumspect on the issue, but under Justin Trudeau’s rule construction has yet to begin on a single cross-province pipeline. Legally, there is an excruciatingly painful route forward. Quebec’s on-again, off-again independence spasms firmly established that Canadian provinces have the right to leave Canada. Paths to secession have been approved – at least in theory – by both the Canadian parliament and the Canadian Supreme Court. We are approaching the witching hour. There is no modern Canada without Albertan and Saskatchewan financial strength, and there is no Albertan and Saskatchewan financial strength without the two provinces’ energy sectors. Now, with the Liberals needing Green/NDP support to rule, the already-deep political split is taking on more ideological, more hostile overtones. The vote breakdown is not encouraging. In Monday’s elections the Liberals lost every seat they previously held in both Alberta and Saskatchewan. In an echo of America’s 2016 presidential elections, the opposition Conservatives actually won the popular vote, but because of Canada’s equivalent of America’s electoral college they earned 25 fewer seats than the Liberals. Further mirroring America’s more recent political evolutions, Justin Trudeau claimed a “clear mandate” for stricter climate-change-related policies – an assertion positively Trumpian in its ability to creatively reinterpret the facts on the ground. We are likely to see two things over the course of 2020. First, the new federal political alignments are the absolute worst-case scenario for Alberta and Saskatchewan. They have already tried and failed – horribly – to renegotiate their financial relationship with Ottawa, and now they can look forward to ever harsher restrictions on their economic capacity paired with ever more robust siphoning of their wealth to the Canadian center. The formal, open, public debate on secession begins now. Second, the Americans are likely to take both notice and action. In the War of 1812 Canadian colonials burned down the American capital. In the war’s aftermath, realizing the Americans would be jonesing for revenge, the Canadians carried out what has arguably been the most successful rebranding effort in history, from trigger-happy arsonists to polite, cuddly socialists. That effort enabled Canada to avoid American wrath. Later, Canada maintained a bit of protection due to its status as part of the British Empire. In the interwar period the U.S. had bigger fish to fry at home, what with the Great Depression and all. Post-World War II the Americans’ need to maintain the global Order meant that Canada, for all its inconsistencies, was under American protection – which included protection from America. The Canadian system is splitting along provincial, economic, demographic and ideological lines, and there is no one in the Trump administration who likes Justin Trudeau personally, ideologically or politically. Add in a now-unrestrained America, an America who sees Canada as a competitor, an America who sees the Canadian government as a mix of annoying and ungrateful and self-righteous, and a complete role-reversal is fully in play. Unless the Canadians can get their shit together, it will be eeeeeeasy for Washington to start cutting deals with individual Canadian provinces to hammer preexisting wedges ever-deeper into the Canadian system. Alberta has the means and motive to destroy Canada. Washington has the means and motive to destroy Canada. And the likely format of the new Trudeau government is providing the opportunity.
|
Why the 'Woke' Corporations Back China
By Daniel Greenfield October, 22, 2019 @ Sultan Knish Blog 7 Comments
Think there’s a contradiction between ‘woke’ corporate titans like Apple and Disney silencing anyone opposed to China’s crackdown on protesters in Hong Kong?
It’s not hypocrisy, it’s synergy.
The same forces that made the major brands scattered around your kitchen, living room and garage broadcast their support for gun control, gay marriage and illegal immigration are fueling their support for the People’s Republic of China pulling another Tiananmen Square in Hong Kong.
The lefties in Beijing and Berkeley used the same set of ideological tools to force companies to toe the party line. They roped off access to an appealing customer base, the population of mainland China, urban millennials with huge amounts of disposable income, in exchange for ideological compliance.
Communist China is one entangled oligarchy which mingles political party and company. Sound familiar?
The CEO of Nike sits on the board of Disney. The CEO of Disney until recently sat on the board of Apple. The CEO of Apple sits on the board of Nike. Good thing we have a “free market economy” isn’t it?
Disney, Apple and all the rest have no problem understanding their Chinese Communist counterparts.
ESPN smears democracy protesters in Hong Kong for the same reason that it celebrated Colin Kaepernick. There’s a fundamental contradiction in principles between supporting a Communist police state and denouncing American police officers, but a perfect synergy of political expediency.
Disney, ESPN’s parent company, has embraced identity politics from the top down, even as its head honcho, Bob Iger, remains whiter than vanilla ice cream, not because it really believes in this stuff. The Chinese Communist Party believes in One China. Its American counterparts believe in A Thousand Genders. Lefty power in China is built on unity and solidarity. Lefty power in America is built on divisive minority coalitions. But it’s only a difference if you focus on the means rather than the ends.
And the Mouse didn’t eat the entire entertainment industry by being unable to see the endgame. Avengers Endgame brought in $612 million in China. That’s the real endgame that it cares about.
In America and China, a lefty political elite controls the culture. Chinese and American lefties interlock cultural, economic and political power. Disney, once seen as a square family friendly studio, can rule the box offices in America and China because it advances the cultural goals of their political elites.
American corporations went ‘woke’ because their ideal customer base, wealthy millennials, were reprogrammed by academia. Getting access to young people with lots of money required ritual virtue signaling, first by cultural industries, which didn’t need much encouraging to function as gatekeepers, censors and reeducators, and then by all the other industries which bowed to the culture.
If Disney didn’t advance the party line, its comic book movies would be ridiculed, dismissed and denounced, and its cartoon remakes would be accused of racism in America. And in China, where the loci of political control are even simpler, they would never be released in the country’s movies theaters.
China’s Commies control the entire economy. America’s lefties control the cultural economy. And our few real exports to China are either agricultural or cultural. And soybean farmers aren’t tweeting about Hong Kong. The ‘wokest’ parts of our economy, entertainment and tech, are that way because they depend on the cultural sanction of the same political movement that killed millions in China.
If you’re going to sell thousand-dollar phones made by slave labor in some dusty factory town where the air is poison, you need the sanction of the Communist Party of China and the culture industry of California. And if you’re going to dump your cultural garbage in American and Chinese movie theaters, both owned by the same Chinese corporations, you’ll need to run the stuff by cultural censors.
Chinese censors are concerned about portraying their leaders as powerful and discouraging insurrection. American censors want to push their identity politics. That’s how you end up with ESPN cheering Colin and booing Hong Kong protesters. Chinese and American commies both get what they want and ESPN gets a foothold in the Chinese market and among the Ivy League’s wealthy woke grads.
The Hong Kong protesters won’t be too happy, but how many Avengers movies do they watch? How many iPhones can they buy? How many copies of Battlefield do they play? That’s the real question.
The ‘enemies of the people’ in Hong Kong are free market Christians who don’t want a police state controlling their lives. Funny coincidence, those are also the ‘enemies of the people’ in America.
Giant multinational monopolies don’t like free markets. They encourage competition.
The last thing the NBA, Disney, Apple, Nike and the rest of the ‘megas’ want is competition. What they want is a walled garden tended by a kindly Zen-Communist tyrant who will give them a virgin territory in exchange for a huge slice of the pie to be shared with local political partners. And, of course, slavish devotion to the tyranny of whatever it is the locals believe in, dialectical materialism, the transcendence of gender, which is a small price to pay by people who don’t have any principles or believe in anything.
It doesn’t really matter if this walled garden is in China or California. Either way, the ideal outcome is a totalitarian leftist state and the enemies are Christians who believe in a free market economy.
Can you think of anything a soulless ‘woke’ monopoly would hate and fear more than religious believers who also believe in personal freedom? That’s why Disney, Apple and the ChiComs are on the same page.
Apple, Disney and all the rest are about brands. A brand is a form of identity.
Brands don’t make good products. Instead they churn out overpriced junk and use advertising to fuse consumer loyalty to their brand. And that brand, a sports team, an Apple logo, becomes part of the identity of the people who are brainwashed into identifying with it even to their own detriment.
That’s why ad agencies have gone gaga for identity politics. And why every other ad you see is virtue signaling so hard that it would make Mao roll his eyes. They’re all in the manufactured identity business.
Identity politics manufactures identities and then convinces its dupes that their lives are hopeless and incomplete until they also implement open borders, gun control, and a ban on fossil fuels.
Sound familiar? Buy into the revolution now. Organizers are standing by to take your call.
That’s also why religious believers are the enemy. They don’t make ideal consumers.
People who have a form of meaning in their lives that isn’t for sale on Black Friday aren’t good consumers. Lefties with thirty genders and a hole the size of Cleveland where meaning should be, are.
So are Communist drones in a society drifting away from Communism while suppressing religion.
That’s why California and Communist China are the capitals of ‘Capitamunism’. And why free market Christians are the enemies in both of the capitals where identity politics are their own religion.
In China, it’s nationalism. In America, it’s anti-nationalism. But those are just different identities. And advertising is in the business of monetizing identities. The militant Chinese nationalist vocally insisting that everything in Asia belongs to Beijing and the furious Black Lives Matter activist demanding that we build Wakanda in Oklahoma are two sides of the same coin and ESPN will market to both of them.
And if a few protesters in Hong Kong or police officers in Dallas get shot, that’s also the same coin.
What really matters is the next game, the next movie, the next phone and the next crackdown. What matters is that you can buy governments, shut down protests and suppress the truth. What matters is that more people, in China and America, are realizing that what they want isn’t a sale: it’s freedom.
Daniel Greenfield is a Shillman Journalism Fellow at the David Horowitz Freedom Center. This article previously appeared at the Center's Front Page Magazine.
Click here to subscribe to my articles. And click here to support my work with a donation.
Thank you for reading.
It’s not hypocrisy, it’s synergy.
The same forces that made the major brands scattered around your kitchen, living room and garage broadcast their support for gun control, gay marriage and illegal immigration are fueling their support for the People’s Republic of China pulling another Tiananmen Square in Hong Kong.
The lefties in Beijing and Berkeley used the same set of ideological tools to force companies to toe the party line. They roped off access to an appealing customer base, the population of mainland China, urban millennials with huge amounts of disposable income, in exchange for ideological compliance.
Communist China is one entangled oligarchy which mingles political party and company. Sound familiar?
The CEO of Nike sits on the board of Disney. The CEO of Disney until recently sat on the board of Apple. The CEO of Apple sits on the board of Nike. Good thing we have a “free market economy” isn’t it?
Disney, Apple and all the rest have no problem understanding their Chinese Communist counterparts.
ESPN smears democracy protesters in Hong Kong for the same reason that it celebrated Colin Kaepernick. There’s a fundamental contradiction in principles between supporting a Communist police state and denouncing American police officers, but a perfect synergy of political expediency.
Disney, ESPN’s parent company, has embraced identity politics from the top down, even as its head honcho, Bob Iger, remains whiter than vanilla ice cream, not because it really believes in this stuff. The Chinese Communist Party believes in One China. Its American counterparts believe in A Thousand Genders. Lefty power in China is built on unity and solidarity. Lefty power in America is built on divisive minority coalitions. But it’s only a difference if you focus on the means rather than the ends.
And the Mouse didn’t eat the entire entertainment industry by being unable to see the endgame. Avengers Endgame brought in $612 million in China. That’s the real endgame that it cares about.
In America and China, a lefty political elite controls the culture. Chinese and American lefties interlock cultural, economic and political power. Disney, once seen as a square family friendly studio, can rule the box offices in America and China because it advances the cultural goals of their political elites.
American corporations went ‘woke’ because their ideal customer base, wealthy millennials, were reprogrammed by academia. Getting access to young people with lots of money required ritual virtue signaling, first by cultural industries, which didn’t need much encouraging to function as gatekeepers, censors and reeducators, and then by all the other industries which bowed to the culture.
If Disney didn’t advance the party line, its comic book movies would be ridiculed, dismissed and denounced, and its cartoon remakes would be accused of racism in America. And in China, where the loci of political control are even simpler, they would never be released in the country’s movies theaters.
China’s Commies control the entire economy. America’s lefties control the cultural economy. And our few real exports to China are either agricultural or cultural. And soybean farmers aren’t tweeting about Hong Kong. The ‘wokest’ parts of our economy, entertainment and tech, are that way because they depend on the cultural sanction of the same political movement that killed millions in China.
If you’re going to sell thousand-dollar phones made by slave labor in some dusty factory town where the air is poison, you need the sanction of the Communist Party of China and the culture industry of California. And if you’re going to dump your cultural garbage in American and Chinese movie theaters, both owned by the same Chinese corporations, you’ll need to run the stuff by cultural censors.
Chinese censors are concerned about portraying their leaders as powerful and discouraging insurrection. American censors want to push their identity politics. That’s how you end up with ESPN cheering Colin and booing Hong Kong protesters. Chinese and American commies both get what they want and ESPN gets a foothold in the Chinese market and among the Ivy League’s wealthy woke grads.
The Hong Kong protesters won’t be too happy, but how many Avengers movies do they watch? How many iPhones can they buy? How many copies of Battlefield do they play? That’s the real question.
The ‘enemies of the people’ in Hong Kong are free market Christians who don’t want a police state controlling their lives. Funny coincidence, those are also the ‘enemies of the people’ in America.
Giant multinational monopolies don’t like free markets. They encourage competition.
The last thing the NBA, Disney, Apple, Nike and the rest of the ‘megas’ want is competition. What they want is a walled garden tended by a kindly Zen-Communist tyrant who will give them a virgin territory in exchange for a huge slice of the pie to be shared with local political partners. And, of course, slavish devotion to the tyranny of whatever it is the locals believe in, dialectical materialism, the transcendence of gender, which is a small price to pay by people who don’t have any principles or believe in anything.
It doesn’t really matter if this walled garden is in China or California. Either way, the ideal outcome is a totalitarian leftist state and the enemies are Christians who believe in a free market economy.
Can you think of anything a soulless ‘woke’ monopoly would hate and fear more than religious believers who also believe in personal freedom? That’s why Disney, Apple and the ChiComs are on the same page.
Apple, Disney and all the rest are about brands. A brand is a form of identity.
Brands don’t make good products. Instead they churn out overpriced junk and use advertising to fuse consumer loyalty to their brand. And that brand, a sports team, an Apple logo, becomes part of the identity of the people who are brainwashed into identifying with it even to their own detriment.
That’s why ad agencies have gone gaga for identity politics. And why every other ad you see is virtue signaling so hard that it would make Mao roll his eyes. They’re all in the manufactured identity business.
Identity politics manufactures identities and then convinces its dupes that their lives are hopeless and incomplete until they also implement open borders, gun control, and a ban on fossil fuels.
Sound familiar? Buy into the revolution now. Organizers are standing by to take your call.
That’s also why religious believers are the enemy. They don’t make ideal consumers.
People who have a form of meaning in their lives that isn’t for sale on Black Friday aren’t good consumers. Lefties with thirty genders and a hole the size of Cleveland where meaning should be, are.
So are Communist drones in a society drifting away from Communism while suppressing religion.
That’s why California and Communist China are the capitals of ‘Capitamunism’. And why free market Christians are the enemies in both of the capitals where identity politics are their own religion.
In China, it’s nationalism. In America, it’s anti-nationalism. But those are just different identities. And advertising is in the business of monetizing identities. The militant Chinese nationalist vocally insisting that everything in Asia belongs to Beijing and the furious Black Lives Matter activist demanding that we build Wakanda in Oklahoma are two sides of the same coin and ESPN will market to both of them.
And if a few protesters in Hong Kong or police officers in Dallas get shot, that’s also the same coin.
What really matters is the next game, the next movie, the next phone and the next crackdown. What matters is that you can buy governments, shut down protests and suppress the truth. What matters is that more people, in China and America, are realizing that what they want isn’t a sale: it’s freedom.
Daniel Greenfield is a Shillman Journalism Fellow at the David Horowitz Freedom Center. This article previously appeared at the Center's Front Page Magazine.
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Thank you for reading.
To Help the Poor, Focus on Poverty Reduction Rather than Inequality
September 21, 2019 by Dan Mitchell @ International Liberty
Here’s a simple quiz to determine whether you should support a candidate like Bernie Sanders or Elizabeth Warren: Would you embrace a policy that increased income for poor Americans by 10 percent if it also happened to increase income for rich Americans by 15 percent?
Normal people automatically say yes. After all, they don’t resent rich people and they want lower-income people to enjoy better living standards.
Some of our left-leaning friends (including at the IMF!), however, are so fixated on inequality that they are willing to deprive the poor so long as higher-income people have even larger losses (Margaret Thatcher nailed them on this issue).
Let’s look at some analysis of this issue.
The Wall Street Journal has an editorial that starts by highlighting some good economic news.
P.S. This data from China is the most powerful and persuasive that I’ve seen on why growth matters far more than inequality.
P.P.S. This bit of satire also illustrates why inequality numbers are grossly misleading.
Here’s a simple quiz to determine whether you should support a candidate like Bernie Sanders or Elizabeth Warren: Would you embrace a policy that increased income for poor Americans by 10 percent if it also happened to increase income for rich Americans by 15 percent?
Normal people automatically say yes. After all, they don’t resent rich people and they want lower-income people to enjoy better living standards.Let’s look at some analysis of this issue.
The Wall Street Journal has an editorial that starts by highlighting some good economic news.
It then makes to all-important point that policy makers should fixate on growth rather than inequality if the goal is to help he less fortunate.…low- and middle-income folks are reaping more economic benefits than during the Obama years. …Worker earnings increased by 3.4% while the poverty rate declined 0.5 percentage points to 11.8%, the lowest level since 2001. Benefit rolls are shrinking as low-income workers earn more. …the number of full-time, year-round workers increased by 2.3 million in 2018, and employment gains were biggest among minority female-led households. The share of workers in female-led households who worked full-time year-round increased by 4.2 percentage points among blacks and 3.6 percentage points among Hispanics. …The jobless rate for black women last month fell to a historic low of 4.4% and neared a nadir for Hispanic women at 4.2%. …The share of households making less than $35,000 in inflation-adjusted dollars has fallen 1.2 percentage points since 2016 while those earning between $50,000 and $150,000 and more than $200,000 have both increased by 0.8 percentage points.
Democrats focus on income inequality… What really matters for a healthy democratic society, however, are economic opportunity and income mobility. …The Obama policy mix, which Democrats want to return to only more so, put a priority on reducing inequality rather than increasing economic growth. But higher taxes, hyper-regulation and income redistribution resulted in slower growth and more inequality during the Obama Presidency. …This is a lesson for the left and those on the big-government right who want to use tax policy and subsidies to redistribute income to reduce inequality. Policies that hurt growth hurt lower-income workers the most.José Ponce, in a column for FEE, sagely observes that “Gini” numbers can be very misleading because they tell us nothing about a society’s overall prosperity.
Let’s close with a chart from Mark Perry showing that ever-greater numbers of Americans are climbing the income ladder.…inequality on its own is insufficient for any means of understanding. By definition, it measures the level of income or wealth that a group of people receive or own relative to another group of people within a society. The key word here is relative. That means it provides no information in regards to whether the bottom quintile has a low or high level of income or about the quality of life… For instance, Cuba, with a Gini index of 0.38 and Liberia with 0.32 have much less inequality than the highly-developed Singapore and Hong Kong, with Gini coefficients of 0.45 and 0.53, respectively. Citizens in a poor country with low inequality are equitably poor. …Elaborating on this point, rising inequality may not necessarily be a negative outcome just as declining inequality may not necessarily be positive. A developing society where both the rich and the poor have growing incomes, but the rich are rising faster than the poor, will experience a surge in inequality. However, since both the rich and the poor have increased incomes, everyone is better off than before.
P.P.S. This bit of satire also illustrates why inequality numbers are grossly misleading.
Wednesday, October 23, 2019
Geller Report For October 22, 2019
Today's Headlines
- Trump blasts Nervous Nancy Pelosi for ‘taking too long’ on Mexico, Canada trade pact
- “Ecumenical” Turkish Islam: Billboards Feature Koranic Verse (5:51) Admonishing Muslims Not To Befriend Jews And Christians
- Expansive RUSSIA HOAX INVESTIGATION will give Trump ammo to expose “impeachment” lynching
- TRUMP EFFECT: Iran BANNED indefinitely from world judo over racist refusal to face Jews
- CNN: Mexico Has Built Trump’s Wall and Is Paying for It
- Muslims’ DEADLY RIOT kills 4, injures 50 over Facebook post about Mohammad
- CAR RAMMING NORTH CAROLINA: Driver Ibrahim Alshabani ‘intentionally’ runs over, KILLS 79 year-old woman at
The Cutting Room Files, Part 2: The Future of Mexico
by Peter Zeihan and Michael N. Nayebi-Oskoui on October 21, 2019 @ Peter Zeihan on Geopolitics
Visit the archives to re-read and share
This piece is part of the Cutting Room Files, portions of the upcoming Disunited Nations text that were cut for length. Disunited Nations is available for pre-Order now on Amazon.com, Harper Collins, and IndieBound
American-Mexican relations have been…colorful of late. American President Donald Trump has threatened Mexico with a rising tariff system that would constitute the greatest tariff effort in dollar terms by Americans in their history. Mexican President Andres Manuel Lopez Obrador (AMLO) is pushing a change to tax law that would more or less treat businesspeople like money launderers which would throw trade relations into the freezer. Threats and counterthreats on migration and trade and law enforcement and energy and water rights have ratcheted up to near-crisis levels.
This is actually… really good. Ever since Mexican independence in the early 19th century, American-Mexican relations have oscillated between cold-shoulders and American invasions. Today, really for the first time in both countries’ histories, the Americans and Mexicans are not talking past one another, but instead speaking with each other. The process is loud and messy, yes, but it is actually a conversation. The United States and Mexico are working out deals, making functional compromises, and finding common ground. What’s been happening the past two years are the sorts of interactions one would expect between two countries who find themselves increasingly intermingled both economically and demographically. We all fight most vociferously with our families.
That hardly means it is all well thought out. One of the most frustrating things about working in the geopolitical forecasting space is that sometimes luck plays a role, and that has most certainly been the case of late.
Consider the individuals helming both countries.
In the United States, Donald Trump rose to power on a wave unapologetic nativism, which expressly included a harsh campaign against Mexico on economic, political, security and racist grounds. On the other side of the border is AMLO, a guy who combined Trump’s disdain of foreigners, Elizabeth Warren’s enthusiasm for dressing down corporate interests, Ted Cruz’s penchant for blind obedience to ideological dogma, a Clinton-esque love-affair with political corruption, and Bernie Sanders’ pathological refusal to engage in basic mathematics. It’s difficult to imagine a set-up that would be less constructive to functional bilateral relations.
And yet, here we are, with the Americans and Mexicans enjoying the most positive bilateral relationship ever br />
The unexpected outcome largely has to do with an olive branch from AMLO. After his election in mid-2018, but before his inauguration in late-2018, AMLO apparently had an epiphany. He realized that if he and Trump engaged in a binational pissing contest over who was more populist, the bad blood would consume his entire presidency. As he had put together a laundry list of tasks to remake Mexico in his own image, that simply would not do. So he reached out to both his predecessor and Trump, and indicated that if they could complete the renegotiation of NAFTA2 before he took office, he would not seek to reopen talks and would ensure the new deal would be ratified in a timely manner.
AMLO has since proven to be a man of his word. Mexican ratification occurred on June 19 of this year.
While there are obviously portions of NAFTA2 the Mexicans are less than enthused about and the new deal will disrupt a great many industrial patterns across the length and breadth of Mexico, for the most part the new deal is as much a win for Mexico as it is for the United States.
Among the Trump administration’s biggest goals in the NAFTA renegotiations was to make sure goods that benefitted from the low tariffs of the NAFTA system were mostly produced inside of it. These “rules of origin” quotas were increased and ensure that a certain percentage of the product’s value was produced within Mexico, Canada, and the United States rather than outside of it. As Mexican manufacturing capacity is both less expensive and more efficient than most manufacturing in both China and Canada, Mexico will certainly pick up a disproportionate share of whatever relocates to the North American market. Add in the general breakdown of the global Order, and Mexico’s now-even-more-privileged access to the American market, and Mexico’s economic future looks brighter and brighter.
Merchandise trade is only one of several aspects of a tightening, more constructive, relationship between the two North American powers.
But even then, not all DTOs were created equal because not all DTO leaders were created equal. Today’s story involves a 5’ 6” dude by the name of Joaquín Guzmán, aka El Chapo (which roughly translates as “shorty”), who ran his drug group less like the Sopranos or a street gang, and more like a Korean chaebol.
Under his hand, the Sinaloa alliance focused on three general themes:
El Chapo’s strategies were so successful the Sinaloa grew to become the most powerful organized crime group not simply in Mexico, but the world. As the Sinaloa alliance expanded and deepened, violence among its constituent components plummeted. After all, they were all on the same side, and El Chapo did not tolerate infighting. Mexico’s murder rate fell.
Which brings us to the fourth and arguably most important outcome. El Chapo’s business diversification efforts combined with the breakdown in the “peaceful” nature of the Sinaloa’s management strategy combined with the rapidly deepening economic integration between the American and Mexican markets means that the cartels are now becoming part of the North American economic picture and they are bringing their violence levels with them.
At present this expansion has not penetrated manufacturing – that’s an industry that’s simply too high value-add and too finance-heavy for easy links with DTOs. But nearly everything else is game: transport, trucking, energy, agriculture, construction, tourism, real estate. All these sectors and more now have DTO threads woven throughout, particularly in the Sinaloa heartland of northwest Mexico. And it doesn’t take a big leap to link these Mexican sectors with their American peers. First landfall of Mexican DTOs in these veins will be U.S. regions just across the border from Sinaloa strongholds: Tucson, Phoenix, El Paso, San Diego, Los Angeles and the California Central Valley.
It is worth remembering that while the collapse of the global Order has consequences for everyone, and in many cases those consequences will be the determining factor in a country’s future, regional and local factors don’t simple fade away. Countries’ local geographies and local economic trends and local histories remain relevant. Global shifts are likely to favor Mexico more than any other country, but it can still get tripped up on issues closer to home.
And the same goes for the third NAFTA partner…
This piece is part of the Cutting Room Files, portions of the upcoming Disunited Nations text that were cut for length. Disunited Nations is available for pre-Order now on Amazon.com, Harper Collins, and IndieBound
American-Mexican relations have been…colorful of late. American President Donald Trump has threatened Mexico with a rising tariff system that would constitute the greatest tariff effort in dollar terms by Americans in their history. Mexican President Andres Manuel Lopez Obrador (AMLO) is pushing a change to tax law that would more or less treat businesspeople like money launderers which would throw trade relations into the freezer. Threats and counterthreats on migration and trade and law enforcement and energy and water rights have ratcheted up to near-crisis levels.
This is actually… really good. Ever since Mexican independence in the early 19th century, American-Mexican relations have oscillated between cold-shoulders and American invasions. Today, really for the first time in both countries’ histories, the Americans and Mexicans are not talking past one another, but instead speaking with each other. The process is loud and messy, yes, but it is actually a conversation. The United States and Mexico are working out deals, making functional compromises, and finding common ground. What’s been happening the past two years are the sorts of interactions one would expect between two countries who find themselves increasingly intermingled both economically and demographically. We all fight most vociferously with our families.
That hardly means it is all well thought out. One of the most frustrating things about working in the geopolitical forecasting space is that sometimes luck plays a role, and that has most certainly been the case of late.
Consider the individuals helming both countries.
In the United States, Donald Trump rose to power on a wave unapologetic nativism, which expressly included a harsh campaign against Mexico on economic, political, security and racist grounds. On the other side of the border is AMLO, a guy who combined Trump’s disdain of foreigners, Elizabeth Warren’s enthusiasm for dressing down corporate interests, Ted Cruz’s penchant for blind obedience to ideological dogma, a Clinton-esque love-affair with political corruption, and Bernie Sanders’ pathological refusal to engage in basic mathematics. It’s difficult to imagine a set-up that would be less constructive to functional bilateral relations.
And yet, here we are, with the Americans and Mexicans enjoying the most positive bilateral relationship ever br />
The unexpected outcome largely has to do with an olive branch from AMLO. After his election in mid-2018, but before his inauguration in late-2018, AMLO apparently had an epiphany. He realized that if he and Trump engaged in a binational pissing contest over who was more populist, the bad blood would consume his entire presidency. As he had put together a laundry list of tasks to remake Mexico in his own image, that simply would not do. So he reached out to both his predecessor and Trump, and indicated that if they could complete the renegotiation of NAFTA2 before he took office, he would not seek to reopen talks and would ensure the new deal would be ratified in a timely manner.
AMLO has since proven to be a man of his word. Mexican ratification occurred on June 19 of this year.
While there are obviously portions of NAFTA2 the Mexicans are less than enthused about and the new deal will disrupt a great many industrial patterns across the length and breadth of Mexico, for the most part the new deal is as much a win for Mexico as it is for the United States.
Among the Trump administration’s biggest goals in the NAFTA renegotiations was to make sure goods that benefitted from the low tariffs of the NAFTA system were mostly produced inside of it. These “rules of origin” quotas were increased and ensure that a certain percentage of the product’s value was produced within Mexico, Canada, and the United States rather than outside of it. As Mexican manufacturing capacity is both less expensive and more efficient than most manufacturing in both China and Canada, Mexico will certainly pick up a disproportionate share of whatever relocates to the North American market. Add in the general breakdown of the global Order, and Mexico’s now-even-more-privileged access to the American market, and Mexico’s economic future looks brighter and brighter.
Merchandise trade is only one of several aspects of a tightening, more constructive, relationship between the two North American powers.
- One of the many aspects of America’s shale revolution is an accidental, incidental oversupply of natural gas prices in the U.S. market. American natural gas prices are now the lowest (unsubsidized) in the world, and a dozen major pipeline networks have been laid down to connect that supply to Mexican demand. All the pipes are now completed and soon about half of the electricity consumed in Mexico will be sourced from American natural gas.
- One of AMLO’s less-functional plans is an overhaul of Mexico’s state energy monopoly Pemex, a company so badly run and a process so ill-conceived that it would probably be better for Mexico to burn the entire company to the ground, shoot everyone involved, and start over from scratch. The more dysfunctional Pemex is, the less able Pemex will be able to meet Mexico’s growing energy needs… and so the more reliable a customer Mexico is for American energy product exports.
- Mexico has rapidly developed since the implementation of the first NAFTA accords back in the early 1990s. That has shifted millions of Mexicans off subsistence farms and into urban environments, even as the standard of living of the average Mexican has surged. Less agricultural production plus more disposable income makes Mexico a premier destination for American agricultural products. In particular, when Mexicans get a bit of extra scratch, the first food product they reach for is beef – American beef.
- Higher living standards within Mexico have gutted immigration from Mexico to the United States – it has been negative for ten straight years. That gives both countries a vested political interest in regulating Central American migration through Mexico to the United States. One of the dirty secrets of the immigration debate in North America is that Mexicans are even more opposed to Central American migration than Americans. Trump has provided the Mexicans with the perfect excuse to crack down on the through-migration, while enabling the Mexican government to rack up a public relations win.
- While Mexican migration to the United States peaked years ago, past migration has made Americans of Mexican extraction the second-largest minority in the United States. Even if the economic mingling were not occurring – and it has already surpassed that of any other American co-mingling in history – the demographic co-mingling easily puts Mexican cultural influences in third place behind German and British culture.
Taken together, Mexico is now America’s second-largest partner in energy, trade, agriculture and security, and is on the cusp of taking the top spot in all categories.
So… that’s the good news.
Understanding the bad news requires a bit of a step back.
Roughly a decade ago Mexican and American authorities were tracking hundreds of small groups involved in moving cocaine and marijuana through Mexico to America’s southern border. Just as mountainous regions help fracture regions among several competing countries, Mexico’s mountainous geography meant no single drug trafficking organization (DTO) could command all that much territory. A small DTO might control a single stretch of highway, or a single city or a local shake-down racket. Violence between these groups and Mexican law enforcement was horrific, but that carnage was nothing compared the violence among the various drug trafficking groups as they battled to expand their role in the drug trade or defend their patches from one another. In that environment, Mexico’s murder rate soared.
So… that’s the good news.
Understanding the bad news requires a bit of a step back.
Roughly a decade ago Mexican and American authorities were tracking hundreds of small groups involved in moving cocaine and marijuana through Mexico to America’s southern border. Just as mountainous regions help fracture regions among several competing countries, Mexico’s mountainous geography meant no single drug trafficking organization (DTO) could command all that much territory. A small DTO might control a single stretch of highway, or a single city or a local shake-down racket. Violence between these groups and Mexican law enforcement was horrific, but that carnage was nothing compared the violence among the various drug trafficking groups as they battled to expand their role in the drug trade or defend their patches from one another. In that environment, Mexico’s murder rate soared.
But even then, not all DTOs were created equal because not all DTO leaders were created equal. Today’s story involves a 5’ 6” dude by the name of Joaquín Guzmán, aka El Chapo (which roughly translates as “shorty”), who ran his drug group less like the Sopranos or a street gang, and more like a Korean chaebol.
Under his hand, the Sinaloa alliance focused on three general themes:
- First, the bread and butter of drug smuggling to the United States. Violence within the alliance was snuffed out, while the sort of petty violence – assaults, rapes and robberies – that characterized other DTOs was frowned upon. Regular Mexican citizens living in Sinaloa territory were not terrorized by the cartel, so they tended to not resist its efforts.
- Second, experimentation with new business lines that would enable the Sinaloa to deepen and expand its business. Cocaine never went out of fashion, but the cartel also commercialized heroin and methamphetamines. Selling counterfeit pills to profit from Americans’ opiate addition was an easy add. Cash-heavy businesses found favor as a means of assisting in the drug-money-laundering effort: limes, beef, avocados, real estate, tourism. More business lines mean more and more stable profits.
- Third, oblique cooperation with the Mexican government to help weaken the competition. Officially, the Sinaloa would provide the Mexican government with scads of intel on their competitors’ operations. Unofficially, the Mexican government would turn a blind eye to the Sinaloa’s operations because Mexico City could only prosecute raids on so many targets at a time. The Gulf and Zeta cartels tended to suffer the most from this de facto alliance.
El Chapo’s strategies were so successful the Sinaloa grew to become the most powerful organized crime group not simply in Mexico, but the world. As the Sinaloa alliance expanded and deepened, violence among its constituent components plummeted. After all, they were all on the same side, and El Chapo did not tolerate infighting. Mexico’s murder rate fell.
Which brings us to the fourth and arguably most important outcome. El Chapo’s business diversification efforts combined with the breakdown in the “peaceful” nature of the Sinaloa’s management strategy combined with the rapidly deepening economic integration between the American and Mexican markets means that the cartels are now becoming part of the North American economic picture and they are bringing their violence levels with them.
At present this expansion has not penetrated manufacturing – that’s an industry that’s simply too high value-add and too finance-heavy for easy links with DTOs. But nearly everything else is game: transport, trucking, energy, agriculture, construction, tourism, real estate. All these sectors and more now have DTO threads woven throughout, particularly in the Sinaloa heartland of northwest Mexico. And it doesn’t take a big leap to link these Mexican sectors with their American peers. First landfall of Mexican DTOs in these veins will be U.S. regions just across the border from Sinaloa strongholds: Tucson, Phoenix, El Paso, San Diego, Los Angeles and the California Central Valley.
It is worth remembering that while the collapse of the global Order has consequences for everyone, and in many cases those consequences will be the determining factor in a country’s future, regional and local factors don’t simple fade away. Countries’ local geographies and local economic trends and local histories remain relevant. Global shifts are likely to favor Mexico more than any other country, but it can still get tripped up on issues closer to home.
And the same goes for the third NAFTA partner…
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