Sunday, May 31, 2020

Inequality - Economics 101

In the long term an economy should be in equilibrium. That is: in every part of it as much money should go in as goes out.

The present Western economies obviously aren't in equilibrium: inequality is increasing. As the rich spend less and differently that means falling demand for many products. To repair that we have quantative easing - the cowardly cop-out by politicians afraid to raise the taxes on the rich. The problem is that it is not a real solution: after some time all the extra money will leak away towards the rich and the next stimulus is needed.

The world has faced a similar situation in the 1930s. Roosevelt too faced the problem that he needed to keep stimulating the economy. As soon as he relaxed the depression came back. Things only changed structurally after the war had led to a huge increase in the taxes for the rich.

Of course it is possible to imagine a country that is stable at a larger inequality. Piketty described 19th centrury's Jane Austen society. And at the moment Latin America still has a very similar society. But such a society as a whole is by definition poorer. Inequality is primarily about driving the poor in a more dependent position. They will get worse education, spend more time unemployed and their economic position will be more unstable. There needs to be a permanent "labor reserve" in order to keep the wages down. As a consequence their contributions to the economy will decrease. The contributions of the rich - on the other hand - will not increase: they will just get a bigger part of the national wealth at the expense of the poor.

So the road towards a more unequal society is a road with a shrinking economy. And that also means a shrinking tax base. This at a time when the demands on the system will increase due to an increase in the number of poor. that will cause demands for government budget cuts, resulting in more poverty. So there is self reinforcing process going on here.

The corona crisis has a very bad effect. Many people saw their wages suspended. But income from capital went nearly untouched. Hardly anyone saw his rent reduced. So the net effect is a huge transfer towards the wealthy.

Saturday, March 14, 2020

The two approaches to the Corona virus

The Western approach to Covid-19 is fundamentally different from that of China.

China treats Covid-19 as a kind of serious disease that must be eradicated. Just like you do with SARS or Ebola. Everyone who is contaminated is isolated - even when he doesn't have symptoms. And when you do that long enough the last patient will recover and the epidemic is stopped.

The West sees Covid-19 more as a kind of flue. It is impossible to stop the flue: it is too contagious and too many people who are contaminated don't show symptoms. Every year sees a new kind of flue. And in some years it is more lethal as in others. This happens usually when a new strain of virus appears. The Spanish Fever of 1918 and the Hong Kong flu of 1968 are good examples. Covid-19 is not some kind of Influenza virus. However, there are several Corona viruses that cause some kind of innocent cold.

So the Western assumption is that "everyone" will get it. Think of Merkel saying 70% of the population will get it and Rutte talking about 50%. The main issue in this vision is to slow down the epidemic so that the health care system doesn't get overwhelmed - as happened in Italy. So unlike in China the goal is not to stop the epidemic but to slow it down.

Both approaches have their risks.

In the case of China the main risk is that the epidemic will start again once the country restarts to function normally. Or that it will start again in the autumn if like the cold it is connected to the season. Officially less than 100,000 people were contaminated until now so the overwhelming majority of the population didn't build any resistance. When the virus reappears the 6 week lock-down would have been almost for nothing. What might change the picture is a vaccine. But until now this isn't available.

The Western approach takes it for granted that there will be casualties. But the number of casualties can be limited with good care. And there is a problem as it is very hard to predict how quick things will go. Nobody foretold the quick escalation in Italy. Many Western governments take a wait-and-see approach rather than being pro-active. Yet there are quite a few things a government can do:
- make testing easy and make the threshold low. Make it also quick. In some countries you need to wait a week for the results. That is not good.
- tell anyone who tested positive to self-isolate. Provide services for those for whom self-isolation is problematic.
- test anyone coming from high risk countries and tell them to self isolate for some time.
- take care that you have enough of everything you might need when the epidemic strikes in full force. Hospitals should be well stocked and its staff well-trained.
- things can get out of hand like in Italy. People who get Covid-19 in combination with pneumonia need two to three weeks of intensive care. So plan where you could put extra IC beds, how you could mobilize extra staff and what other things you could do.
- there will always be bureaucratic obstacles. It has been widely published how Chinese officials initially tried to suppress the news. But similar bureaucratic obstacles happen in Western countries too. In the US Trump's obstruction is well known. But there was also the case of the CDC that had problems creating its own test yet blocked the use of other tests. In fact the decentralized nature of Western medicine makes it more likely that bureaucratic problems will arise. It takes planning and effort to overcome such obstacles in the fight against the virus. This should be addressed before a crisis arises.

Apart from the fact that it requires serious preparation the success of the Western approach depends on how aggressive the virus really is. At some point the number of new cases exploded in China and Italy. Within days it went from tens to hundreds. But in both cases it is suspected that the virus had been around for weeks or even months. The problem with a severe Covid-19 infection is that the weakening of the patient causes other illnesses like pneumonia. So it is easy to label the illness just as pneumonia and overlook the virus. In the meantime nobody knows how many people have the virus but show no symptoms.

Here is the most extensive description I found of the treatment of Covid-19.

Wednesday, January 29, 2020

Why the "moderate" strategy won't work for the Democrats

Ezra Klein recently wrote an opinion article ("Why Democrats Still Have to Appeal to the Center, but Republicans Don’t") that argued that conservatives form a monolithic block and the US that is favored by the electoral system in a number of ways. And that to deal with that the Democrats should take a position a bit right from the center to cover enough people.

There is a lot wrong with this position. First of all, the right isn't monolithic. Look at other countries and you will see conservative parties that get nearly half of the vote only in two-party systems like the US. Conservatives have their own divisions. It is a kind of wonder that deeply religious evangelicals vote for such an immoral man as Trump. It is because they feel cornered. Do remember that case of the baker who refused to make a wedding cake for a gay couple and got in trouble for that? It crosses the boundary of live-and-let-live. It dehumanizes people who believe that gay marriage is not a good thing - until very recently a wide majority of the US population.

Any European politician who has had a look at the US will confirm that what in the US is called "moderate" would inside Europe be considered extreme right. The Democrats have already been following Klein's advice for many decades. And the results don't confirm the claim. Obama was to the left of Clinton. Yet he won elections and she lost. And the fact that many poor Democrats have voted for Trump while they might have voted for Sanders is he had been a candidate belies the claim that politics can be explained with a simple left-right continuum.

Politics is about ideas. But "moderate" Democrats don't have ideas. Their economic and defense policies are almost indiscernible from those of the Republicans. They are in fact a light version of the Republicans. And when people get a choice between a light version and real thing many choose the real thing - specially in times of discontent like we have now.

Many of the ideas of Sanders aren't that radical. If they would have been proposed by someone like Biden they would be widely embraced. But where someone like Sanders is focused on ideas on how to make the life of the common voter better Biden is primarily focused on pleasing his sponsors and not rocking the boat.

Many Democrats are amazed that Trump is getting away with so much immoral acts and lies. But what people like is that he is someone who stands for something - even when he faces criticism. That is what they like about Sanders too. And that was were Warren made a big mistake when she adapted her Medicare plan after criticism. Sure, if Sanders wins the elections he will have to negotiate with Congress to get his plans adopted and he might very well end with the kind of plan that Warren is proposing now. But that doesn't take away the fact that his present proposal is sound and defensible. Warren is ceding ground before the fight has even started.

What are Democrats like Biden really standing for? They like to spend a bit on social issues to keep people happy but they are afraid to make any structural changes that might get criticized. They like to criticize countries like Russia. But that looks suspiciously like yet another type of foreigner bashing - not that different from racism. They like also to go to extreme lengths to defend gays and transgender rights. But result looks a lot like the bashing of "deplorable" poor whites and evangelicals.

Parties that don't have plans to make people enthusiastic for are bound to focus on demonizing people instead. The Democratic Party has been falling in that trap. Unfortunately its leadership still seems to be unaware of the problem.

Thursday, December 19, 2019

The final OAS report on the Bolivian elections

As it proved to be rather difficult to find the final OAS report - that was published on 4 december - on the Bolivian elections here the link. Note that unlike the preliminary report and its annexes the final report is only in Spanish and only available as pdf. Obviously they are trying to restrict the distribution of the report. The report contains 95 pages and is accompanied by 9 appendixes that contain about 400 pages in total.

To help those who want to read it I hosted a machine translated (in English) copy of the main report. Note that the first page is mostly white.

An article on FAIR is the best rebuttal of the OAS claims that I have seen thus far.

Thursday, October 24, 2019

The US is not in Syria to fight ISIS

One often hears defenders of the US presence in Syria claiming that the US is there to fight ISIS. In contrast some opponents claim that the US created ISIS.

I won't enter the question whether the US was involved with the creation of ISIS here. Those claims are based on quotes from US official reports and some statements by US politicians. Instead I will discuss here the timeline of US involvement in Syria and what it actually did (and didn't do).

 - The US got involved after ISIS had made great advances in Syria and threatened the Kurds in Kobani. If the actions of the US had been purely logical it would have gotten involved earlier. It would have given some arms to the Kurds and dropped some bombs on ISIS and that would have been enough to turn the chances on the battle field. Instead it waited until there was an international uproar that gave it an excuse to enter Syria and a Congress resolution within the US. Without such an excuse its entrance would have been hardcore illegal.

 - After the US got involved they and their Kurdish allies conquered much of Northeastern Syria. After that they stopped. The Turks occupied Jarabulus and blocked the road to the West and further south there lived hardly any Kurds so the SDF wasn't enthusiastic about spilling blood to conquer those areas.

 - Then ISIS conquered Palmyra in May 2015. To come there it had to cross 200 km of desert. Yet the US didn't drop a single bomb to stop them. Shortly afterwards pro-Russian media reported that American diplomats were preparing Western capitals for the fall of Damascus to ISIS.

 - After Russia got involved one of its first actions was to go after the oil trade of ISIS that provided much of its income. A few bombs did a lot to stop that trade. The US had never bothered to do so.

 - In September 2016 the US - allegedly by mistake but many people don't believe that - bombed Syrian government troops in Deir Ezzor. This almost led to the fall of this government held enclave to ISIS.

 - Some time after Russia had become involved and the chances on the battlefield had changed the Syrian government started an offensive from Aleppo eastwards towards Raqqa. Suddenly the US felt the need to go south towards Raqqa too - at the end of 2016. Obviously preventing that Raqqa came in the hands of the government was more important as getting ISIS out of Raqqa.

 - The first thing the US/SDF coalition did near Raqqa was to cross the Euphrates and occupy Tabqa and its dam and surroundings. The obvious goal was block all the roads so that Syrian Army offensive couldn't go further south (further from the river there was desert). In the end the Syrian Army outsmarted them. But there were some very tense moments.

 - The attack on Raqqa lasted many months and completely destroyed the city. No other city in Syria is so destroyed. According to the Kurds the US refused to give them advanced weapons that would have made them more effective against ISIS.

 - The Syrian Army moved further south and conquered Deir Ezzor. Shortly south of the city it crossed the Euphrates in an effort to conquer the oil and gas fields there. However, they encountered fierce resistance from ISIS and didn't come far. The US - that still was stuck near Raqqa some 120 north - suddenly felt the need to move to the area too. In contrast to the Syrian Army they hardly faced any resistance from ISIS and could move tens of kilometers a day. It was the SDF/US coalition that ended up controlling the oil and gas fields - thanks to ISIS.

 - The Syrian Army moved still further south and ended up controlling the whole west bank of the Euphrates. However, the US forbade it to attack ISIS on the other bank of the river and threatened to bomb them if they tried. This alone delayed the defeat of ISIS in Syria by many months.


I don't know what the official mission of the US Army in Syria was but it doesn't look like defeating ISIS was the top priority.

Saturday, July 20, 2019

Why painting Trump as a racist won't work

As Russiagate is losing more and more of its credibility the Democratic leadership in the US has found a new issue to demonize Trump: racism.

There can be little doubt that Trump is playing on the racist instinct of some people. But many politicians have done so in the past. Even much of the appeal of the capital punishment is based on racism.

racism


Racism is a complex issue. Even many very liberal white people will initially be shocked when they find that their new neighbors are black or that their daughter is dating a black boy. Only after this initial shock their rational brain will take over and consider that there are good black people and bad white people too and that they shouldn't judge people just on the color of their skin. There are many psychological tests that explore this subject.


While this instinctual sentiment is repressed in much of society it has its refuges such as some birthday parties and some pubs. And there are people who just indulge their instincts wherever they are and who just the rest of society just has learned to live with. But such people marginalize themselves and aren't taken too seriously. Ku Klux Klan type open racists are rare nowadays.

More problematic nowadays is the more civilized type of person that shows lip service to the societal norms while at the same time he or she "understands" the racists worries. Mass incarceration was a recent symptom of this attitude.

Much of this happens unconscious. We are happy to see that specific guy incarcerated and we don't like that boyfriend of our daughter. But we never realize that if exactly the same guy had had a white instead of a black skin we would have judged differently.


Trump

Trump is primarily a bully: someone who shows his "strength" by humiliating other people. Of course people against whom other people have prejudices too are easy targets.

Trump is also very egocentric. His discrimination against black tenants and employees may well have business reasons. He might be able to charge more for an apartment when there are no black neighbors and black employees might deter some guests in his casino's and hotels. I am not sure whether this really works. But I can understand that he might reason this way.

Trump isn't a hard core racist. He doesn't have inner convictions that white people are superior and should be on top. I doubt whether he has any convictions whatever except for a greed for power, wealth and recognition. He is just playing on widespread sentiments.

Trump has an image as taboo breaker. So he can go further than most of us without losing the respect of society. But there are limits for him too and he knows them and respects them. This is the reason that I don't expect that this new Democratic campaign will have any effect. Of course one day he might make a miscalculation and go too far even for his supporters. But don't count on that.

Trump's racist exploits are harmful and disgusting. But it would be naive to assume that that will result in falling polls. There are too many examples from the past of politicians who thrived despite (or thanks to) similar behavior.

This doesn't mean that that the Democrats shouldn't criticize Trump for his statements. But they shouldn't pretend that these are the most important issues of the country. Other issues are much more important. By ignoring the issues that people really care about - as the Democrats have done too long because of Russiagate - they are actually strengthening Trump. 

Fighting Trump

Both Clinton and Obama were presidents of the opinion polls. Every measure they took was polled extensively. This worked for them in the sense that they won elections.

But ruling by the poll means ruling without a big vision. And that has consequences. One consequence was visible with Obamacare. The lack of vision meant that the project became vulnerable to demonization by the Republicans. And the multitude of interested parties caused complications that nearly got the project cancelled.

Another problem is that many people don't have an opinion about many subjects. In those cases both Clinton and Obama tended to listen to big business and other interest groups. And so the neocons got their wars and the finance sector its deregulation. And when the peanuts that those presidents gave to the common people were finished the big presents for the interest groups remained.

It may not appear in opinion polls because it is too abstract but people do notice that their interests are ignored in many cases. And it is the resulting discontent that has resulted in the election of Trump. For all his faults Trump is a man who at least suggests that he will ignore the special interests and listen to the common people.

In order to get the trust of the voters back the Democrats need once again to embrace ideas and visions. Unfortunately at the moment the party is held hostage by a leadership that is wedded to special interests. It preaches "moderation" but that is just a code word for maintaining the status quo and not rocking the boat.


This doesn't necessarily mean that Sanders and AOC are the future of the Democratic Party. They are so influential at the moment because they are the most visible ones offering an alternative vision. Since the last presidential elections the enthusiasm that Sanders raised has already caused a shift in the party towards more vision. Once the party leadership is changed this could turn in a real change of how the party works.

Some of the left wing program points - such as universal health care and free college - make sense. Other countries have similar things and that works well. Other points - such as the New Green Deal and abolishing ICE - are not only radical: they are also ill-considered. Every country in the world has some kind of immigration service - although most aren't as vile as the ICE. And the New Green Deal is a random package of proposals for environmental policy. But environmental policy is a matter of improvisation and experimentation. Ten years from now the New Green Deal will very likely look hopelessly outdated. The voters don't want or need this kind of ideological rigidity. They just want to be convinced that their politicians take those issues seriously.

No longer pandering to special interests will also mean a different way of fund raising. But as Sanders showed in the last elections: that is possible.


Vision is an abstract thing. It is not so much in the specific program points as in the way choices are made. It means politicians who see themselves as representatives of the people who voted for them instead of as political entrepreneurs who can win power with the rights mix of program points and marketing.

Campaigning on a vision will also decrease the polarization in American politics. An important reason for this polarization is that there are almost no real differences between the parties. Republicans have always had strong ties with special interests. That leaves both parties without ideals. So neither has something to profile itself on. Neither has good arguments against the other. And neither has real reasons to want power other than the benefits of power itself for the politicians involved. So instead both resort to demonization. Obama's birth certificate, the mendacious campaign against Obamacare, Russiagate and (the denunciation of) Trump's foul mouth and racism: what all these campaigns have in common is a distortion of reality and - most importantly - a lack of relevance for what voters really want. As both parties have wedded themselves to special interests they don't want to discuss real issues. So they keep alternating between bringing up phony issues (or marginal issues like toilet rights for transgenders) and just obstructing the other side.

Once the Democrats make this switch the appeal of Trump's behavior will diminish. Racism is feel-good policy. It can capture the attention of people only for a short time. Sooner or later they will realize that you cannot eat hatred and they will start to see Trump as a salesman of hot air. The trigger to such a realization is usually that another politician offers something real.

Sunday, June 30, 2019

How not to present Democratic campaign points

The recent campaign debates among the Democratic candidates for the primaries showed mainly how not to present proposals. The proposals seemed made for the East Coast elite, the Democratic Party leadership and the Liberal press. Everyone seemed to compete to win their favors. Not those of Joe Sixpack with a low income.

Let's look at some proposals:

Universal health insurance
What would work: you will pay less for the same service, you will have a wider choice of gp's and you no longer risk to lose your insurance when you are laid off.

Considerations: Setting such goals turns universal health insurance into a "means" instead of an end. It shows that you are open to other solutions as long as you can achieve your goals. That way it takes the dogmatic stigma away.

Immigration
What would work: Illegal immigration is caused by a bad economy in some countries. We can do something about that. We can give them better conditions of trade. We can stop trying to overthrow their governments and instead focus on real cooperation.
But we should treat the people that do arrive decently - even when send them back. After all we are a decent country with strong values.

Considerations: America obviously cannot allow billions of people to enter the country. So don't make remarks that can be interpreted as such. Instead offer a solution that matches your values with the desired outcome of abetting the fear of being inundated by immigrants.
Of course many of the Democratic candidates won't do this because in their hearts they do want wars in other countries.

The environment
What would work: We need to do more to save energy. We need to do more to promote alternative sources. We need to do more to force the industry to become cleaner. And guess what: it will hardly cost us anything when we do it smart. A cleaner environment will make us healthier. And alternative energy is increasingly become cost effective.

Considerations: Environmental policies too often embrace fads that turn out badly. Biofuel, carbon tax, electric cars: there is an endless stream of proposals that turn out bad.

The New Green Deal is exactly the kind of formula that tries to lock people into defending such proposals.
In this area there are quite a few subjects on which there is almost universal agreement. Focus on those and don't waste your credibility on defending more controversial proposals. Even if you might personally agree with them it is just bad strategy.

Reparations for slavery
What would work: It is obvious that there are still remaining effects of slavery such as discrimination, segregation and low income. We need policies to address that. In some situations that can be positive discrimination. In other situations that can be the raising of aware that discrimination is taking place when for example a big corporation is all-white. And sometimes it can mean establishing services and building infrastructure that focus on predominantly black communities.

Considerations:There is no need for some study of the effects of slavery. Every can see them. And everyone can see how hard it has been to get rid of them.
Reparations won't fix anything. Suppose that you would give every black person 30,000 dollar - what in total would amount to one trillion. Then the black community will live better for a few years. And after that it will in mostly the same position. In fact worse as people will start to claim that they already have been compensated and that they have nothing to show for it.


Tuesday, January 22, 2019

Bernie Sanders is not a populist

Populist translates as a politician who tells the people what they want to hear. Of course every politician tells people what they want to hear. You won't win elections by insulting your audience and telling them that you will increase taxes, raise the retirement age and offer nothing in return.

What discerns discerns populists in the usual definition from other politicians is opportunism. "Normal" politicians follow to a considerable extent their convictions. They may discard some of their more extreme beliefs as unfeasible and they may highlight the attractive parts of their plans while hiding the less attractive parts, but for the most part they follow their convictions.

Populists on the other hand have few fixed ideas about what they want to do. They will promise people whatever they want to hear. Only when they are in power will they bother to look how to implement their ideas. Many of their promises will vaporize at the moment they are chosen. As long as they deliver a few and organize good pr around it their supporters will be happy.

Trump is a typical populist. Very likely he wouldn't care about a wall at all if it wasn't so popular with his audience. His promises about infrastructure have long been forgotten. And his trade wars to protect America's industry have become a bit messy as he is shooting from the hip and has no idea what how such things work.

Sanders on the other hand has a clear idea what he wants. His ideas are not mainstream and if he might rise to power he certainly would encounter situations that he hadn't thought through. But his promises derive from his ideas about society and not from opportunism. So it would be wrong to call him a populist.

Wednesday, January 16, 2019

Trump can still win the next elections

It is striking how little has changed since the elections. The liberal press and most Democratic politicians are still talking about Trump in the same way: he is incompetent and outrageous, his tweets are ridiculous, he has no program and he is a friend of Russia.

In fact Trump has a program. In fact he was called a populist by many of the people who didn't like that program. They forget that "populist" means listening to the common people and telling them what they want to hear. Of course there can be an element of insincerity in this and many populists act very different from what they promised. But that still means that there was a program. Trump's program contains issues like immigration (for which he wants to build his wall) and America's decaying industries (for which he has started all his trade wars).

Of course you can argue that Trump's analysis of those problems and his solutions are wrong (I do think so). But that doesn't distract from the fact that as long as you don't provide an alternative solution Trump is the only one who has a solution for those problems. And that makes him an attractive candidate for many.

As for all those other points (Trump's incompetence, tweets and Russiagate), they are primarily tools to distract the public from the fact that those Democratic politicians don't have alternative solutions to the problems Trump addresses. But unfortunately for them only Trump's adversaries are impressed by those points. His supporters overwhelmingly see them for what they: efforts by people who don't have an argument to change the subject.