Tuesday, August 27, 2019

Resurrecting the American Economy

Donald Trump has recently ordered US corporations to move production out of China and into the US. Easier said than done!—or, rather, undone. Moving production to China (and, in case of IT, to India) allowed US corporations to benefit from the large wage differential and an easier regulatory environment in order to be more profitable. They spent these excess profits by buying back their own stock, paying generous dividends to their shareholders and using their artificially inflated stock prices to justify exorbitant executive salaries and bonuses.

Along the way, they impoverished American workers by depriving them of gainful deployment, eroded the skill base of the American population and, perhaps most importantly, destroyed demand for their products because more and more Americans could no longer afford them. As these trends played out, making China prosperous and the US increasingly distressed and impoverished, with close to 100 million working-age people permanently jobless, US corporations could no longer profit from their offshored production to the same extent, and so they took advantage of low interest rates to borrow huge sums of money and use it to continue buying back their own shares, paying dividends and continuing with the exorbitant executive compensation.

By now, many of the major US corporations are financial zombies, waiting for an uptick in interest rates to drive them into bankruptcy. And it is these zombies that are being tasked with bringing production back to the US. Good luck with that! Which is to say, it is highly unlikely that such an effort could possibly succeed. But even if it could succeed, would it solve the problem—which is that the US is gradually degenerating into a bankrupt third world country? Perhaps not, because, you see, the entire theory of “making America great again” is based on a fallacy—which is that China became the world’s largest economy (by purchasing power) and the world’s factory simply by virtue of the fact that American corporations offshored production to it.

No, China’s stunning success primarily has to do with its superior economic planning and social governance. Call it Stalinism 2.0. Under Stalin, the USSR was able to produce steady double digit growth rates through a combination of central planning and market mechanisms. It also had some 4 million political prisoners, which, for a country of 200 million, seems a bit much, but that’s politics, not economics. When it comes to managing the economy, Stalinism, and especially Stalinism 2.0—its modern, Chinese version—was and is a stunning success. Fundamentally, it is a recipe for building socialism using capitalist (mainly state-capitalist) means with whatever market elements are found to be effective.

Just bringing back production from China would not save the US. To achieve results comparable to China’s, the US would have to make some changes, to bring it more in line with Stalinism 2.0. I will now sketch out a few of these changes, to give you a sense of what would be involved.

Tuesday, August 20, 2019

Going Negative

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The following article was first published three years ago. Since then the US Federal Reserve has raised interest rates above zero, only to start lowering them again. In the meantime, the total amount of negative-yielding debt in the world has reached $13 trillion (USD). This is more than the combined 2019 federal budgets of USA, China, Germany, France, the UK, Japan, Italy, Brazil and Canada (which, incidentally, are nine of the largest, most overdeveloped and most collapse-prone economies on the planet). It may seem surprising that investors are willing to lend money at a negative interest rate, but it's an offer they can't refuse: they would rather lose their money slowly over time than all at once. Some investors (and central banks) have decided that fiat currency reserves are a bad idea and are buying gold instead, but this won't change the overall economic picture. And overall picture is that global financial collapse has been on pause since 2008, but now somebody hit "play" again. In any case, this seems like an opportune moment to dust off this article and once again look at what negative interest rates are, and what they do.

Thursday, August 15, 2019

The Color Revolution Post-Mortem

Over the recent weeks two attempts at color revolution have been proceeding in parallel; one in Moscow and another in Hong Kong. While a casual observer might feel that the connection between the two is tenuous at best, a closer look reveals that the methodology is exactly the same one that had been used successfully during the various regime change exercises in the past—more than once in the case or the Ukraine—but has been misfiring of late.

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Tuesday, August 13, 2019

Hull Assembly Made Easy

Today we ignore all the crazy happenings in the big wide world (since it's all going according to plan anyway) and concentrate on moving the Quidnon project closer to completion.

Tuesday, August 06, 2019

The Technological Revolution Devours its Children

It’s been almost three years since I published my book Shrinking the Technosphere, and an astute critic might observe that it didn’t work as intended because the technosphere hasn’t shrunk. True, it was intended as an only slightly ironic how-to book, but then it isn’t known how many people bothered to read it and actually practice what I preach. It is possible to equivocate a bit on the point that the technosphere isn’t shrinking: for example, heavy truck orders in the US are down 81% from last year. These Class 8 trucks move the vast majority of goods in the US and this collapse signals a major slowdown across the entire economy.

So the technosphere may not be entirely thriving; but then it doesn’t seem to be particularly shrinking either. There is no shortage of techno-optimists on hand talking up newfangled technologies such as nanotechnology, biotechnology, molecular, cellular and nuclear technology, stem cell technology, tissue and organ farming, nanobiotechnology, biomimetics, nanobionics, nanotronics, not to mention the perennial techno-utopian stand-by’s of artificial intelligence, renewable energy, electric driverless cars and the internet of things. “A new technological revolution is at hand!” they exclaim. Fine, I say, but what’s the new, overabundant resource for this new technological revolution?

Thursday, August 01, 2019

Surviving Cultural Collapse

My recent interview with Fr. Robert McTeigue of the Catholic Current can be heard here.

Yes, this is a religious radio program, and although there is only passing mention of religion during the interview, perhaps a quick note on my personal stance on religion is in order. The gift of faith is one that not all people are granted. Faith comes most easily to those who are simple, while hypereducated urbane sophistos like most of my readers tend to find it difficult to believe in immaculate conception, resurrection, tricks with loaves and fishes, ascension unto heaven, the second coming, yadda-yadda. But here's a stunning discovery I've made that you may find useful: if you find that you lack the gift of faith, you don't necessarily have to tell anyone about it. You may also lack perfect pitch but nobody is ever going to demand that you sing a capella. You can still go on and act as if you believe in an all-seeing God who is just but merciful. Living in fear of a God that you believe to exist is functionally equivalent to living in fear of a God whose existence you doubt but cannot disprove, which is the best you can do. (To use Bertrand Russel's famous example, you cannot disprove the existence God just as you cannot disprove the existence of a small porcelain teapot in high elliptical orbit around the Earth). Having looked up some statistics, I can assert that if you live your life as if God exists and abide by His commandments it is statistically likely that numerous benefits will accrue to you more or less automatically: you will suffer fewer psychological problems, your marriage will be stronger, your children better-behaved, you will find yourself keeping better company and, when the time comes, you will rest easier on your deathbed because you've done your homework, unlike W.C. Fields who, when visited by a friend shortly before his death, discovered to be studying the Bible, and asked as to why, responded: "Looking for loopholes."