The Old Way and the New Way.

Once upon a time, the United States briefly (1945-1965) stood unchallenged atop the world economy.  “What America makes, the world takes.”  A handful of giant companies dominated the American economy.  They were capital-intensive mass production and mass employment manufacturers.  They paid good wages and many offered generous defined-benefit pension plans.[1]  The companies had been created by ruthless, visionary entrepreneurs.  By the Forties, Fifties, and Sixties, they were owned by mere heirs and by a great many upper middle-class stockholders.  Salaried managers with B-School degrees actually ran the increasingly bureaucratized companies.  No one much objected to punitive taxation of the well-off.  This is today’s Democratic Party idea of a “normal” economy.  It has been in decline for 50 years.[2]

Then change happened.  Part of the change came from abroad.  Foreign countries became serious competitors with American industry.  Then the “oil shocks” of the Seventies set off an inflation that disordered many areas of the American economy.  Part of the change was domestic.  New generations of ruthless entrepreneurs pushing new products rose up.  These people weren’t heirs to someone else’s work.  They had built their own businesses and fortunes.  Many of these people got rich without getting stupendously rich.  Therefore, many of them rejected the existing social consensus on soaking the rich.[3]  Reaganism followed and continues to this day.[4]  These changes sent shock waves through America’s economy, society, and politics.

For example, dying old industries and growing new industries faced the same problem of employee compensation.  (For that matter, so did many states and cities that had fobbed off public employee unions by promising them generous benefits in what the Brits call the “Never-Never”).  Neither corporate profits nor the stock market could guarantee adequate returns to support the defined benefit promises.  First, beginning in 1978, the private sector began to shift from “defined benefit” to “defined contribution” retirement plans.  Second, employers shifted a large share of medical insurance costs to employees as a way of holding down labor costs.  Since 1999, inflation has raised prices by 47 percent, but average contributions by workers to individual health insurance premiums have risen 281 percent.

The future well-being of employees came to depend upon their wisdom in choosing suitable retirement plans and on their willingness to divert income into savings.  Other factors also shaped their behavior.  First, we’ve been living with low interest rates for quite a while now.  This both encouraged people to pick up “cheap debt” and—through the magic of compound interest—slowed the rise in value of what people did save.  Second, many people had never thought much about saving and investing because the company’s pension and Social Security allowed them to not learn about it.  People often opted out of savings plans or made poor investment decisions when they opted in.

The median personal income of people aged 55 to 69 leveled off from 2000 (before the Great Recession) to the present.  This did not stop people from spending more.  On average, people approaching retirement these days have heavy debts (some for college for their kids, but also for other stuff).[5]  They also have been mining their savings, rather than building them.  The Great Recession both reduced contributions to 401k plans and caused many people to withdraw from them to make ends meet.

The long-term results of this huge change in the social contract are just now beginning to be felt.[6]  More than 40 percent of households headed by people aged 55 to 70 will not have the resources to maintain the standard of living they enjoyed while working once they hit retirement.  Households with at least one worker aged 55 to 64 had a median savings of $135,000 in their 401k plans.   The median annual income from their 401K plans is $8,000.  This should yield a paltry $675 a month in income.

Worse still, the Social Security Trust Fund will have to reduce payments at some point in the future as it is depleted or exhausted.

Undoubtedly, the disaster that is emerging renders a severe judgement on many of the “Baby Boomers.”  Not all of the human-interest stories included in journalists’ stories arouse the same degree of sympathy.  Faced with the need to save for the future and to be self-reliant, many of them delayed saving, stinted saving in favor of consumption[7] until too late, and then did too little.

Still, as a matter of public policy, there are going to be powerful and compelling arguments made in favor of a government response.  If the government expands benefits to the worst off retirees, then either taxes or deficits will rise or benefits for the better-off will be decreased.  Perhaps all three will form the basis of a compromise.

[1] By the 1980s, almost half (46 percent) of workers belonged to an employer pension plan.

[2] Without Democrats being willing to notice the changes.  JMO.

[3] Warren Buffett is in no sense a representative figure among this group.

[4] To the Democratic slogan of “tax, spend, elect,” the Republican learned to reply “tax-cut, spend, elect.”  See: William Shakespeare, Romeo and Juliet, Act 3, Scene 1.

[5] The per capita student loan debt of people aged 60 to 69 rose from about $300 to about $1,800 between 2004 and 2017.  Per capita debt for cars for the same group of people rose from about $3,000 to about $4,000 between 2004 and 2017.  It looks like people chose not to choose between guns and butter.

[6] Heather Gillers, Anne Tergesen, and Leslie Scism, “Time Bomb Looms for Aging America,” WSJ, 23-24 June 2018.

[7] Sales of HD televisions soared during the Great Recession.  The graph is for global sales, but may offer an approximation of American behavior.  See: https://www.statista.com/statistics/461114/full-hd-tv-shipments-worldwide/

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Halloween on the Border 2.

Entering the United States illegally is a crime, a misdemeanor on the first offense and a felony on any subsequent offense.[1]  The courts have held that people who enter the United States illegally are entitled to due process before they can be deported.[2]  The courts have also held that Congress may determine what constitutes due process.  In 1996 Congress passed the “Illegal Immigration Reform and Immigrant Responsibility Act.”  Among other provisions, this law allows illegal immigrants to be deported without any hearing, lawyer, or right of appeal.  This is called “expedited removal.”[3]

For their part, illegal immigrants can try to dodge expedited removal by claiming asylum.  To gain asylum, the immigrants must demonstrate a credible fear of persecution if they remain in their home country.  What constitutes “persecution” is itself contested.  Most of the people now showing up at the border are trying to escape endemic poverty, violent crime, and ineffective and corrupt government in Central American so-called countries.[4]  Liberals regard these conditions as legitimate grounds for claiming asylum; conservatives want to restrict asylum to the traditional definition of people fleeing political or religious persecution by national governments.

Different administrations have applied the law in different ways.  Although the 1996 law sets no geographic boundaries to where the law may be applied, the current policy has been to apply it to illegal immigrants found within 100 miles of the border and within two weeks after they entered the United States.[5]  Furthermore, the government can either treat illegal immigration as a civil matter or as a criminal matter.

The Obama administration largely treated illegal immigrants as a civil matter.  This allowed illegal immigrants to work through the process of the immigration courts, to be represented by a lawyer, to appeal decisions of immigration judges multiple times.  This could extend the time to deportation to a year or more.  While the civil procedures dragged on, the illegal immigrants were paroled, rather than detained in custody.

Recently, the Trump administration broke with the policy of the previous administration.  It adopted a policy of “zero tolerance” for illegal immigration and it chose to treat illegal immigration as a criminal, rather than civil, matter.  Thus, illegal immigrants, even when claiming asylum, were arrested.  The government is legally-obligated to separate children from arrested parents within 20 days of arrest, then to place them in a suitable child care facility or foster family.  During the Obama administration, all but one family detention facility were closed.  This had the unpleasant knock-on effect that has garnered so much attention.[6]

[1] “In the United States, the federal government generally considers a crime punishable with incarceration for one year or less to be a misdemeanor. All other crimes are considered felonies.”—Wikipedia.

[2] Katie Benner and Charlie Savage, “Migrants to the U.S. Are Entitled to Due Process, With Some Exceptions,” NYT, 26 June 2018.

[3] Which is like calling illegal immigrants “undocumented.”  See George Orwell, “Politics and the English Language.”

[4] Ryan Duee, “Migrants Risk U.S. Crackdown to Flee Crime and Poverty,” WSJ, 26 June 2018.

[5] Obviously, there is some wiggle room here for the government.  It can be pretty difficult for migrants to prove when they entered the country.

[6] On the background to the “Flores Settlement” case, see: https://www.humanrightsfirst.org/resource/flores-settlement-brief-history-and-next-steps

S— My President Says.

The following is excerpted word for word from a Lonely Planet guidebook.

US currency is used for all transactions over a few dollars. The official currency, the Liberian dollar, only used for small items costing less than US$5

Pavement is generally uneven or nonexistent.

Stay at upmarket hotels if you require a lift or reliable electricity.

Homosexual acts in Liberia are punishable by one year in jail, and the government has floated the idea of making a same-sex relationship a felony crime (punishable with a 10-year prison sentence). LGBT campaigners in the country have also been targets of violence. Needless to say, gay travellers need to be extremely cautious travelling here.

Malaria is endemic and prophylactics are recommended. Typhoid is also relatively common, so get vaccinated and always take care to wash your hands before eating. You will need a valid yellow-fever vaccination certificate in order to enter Liberia. Other vaccinations to look into include hepatitis A, hepatitis B, meningococcal meningitis and boosters for tetanus, diphtheria and measles.

The tap water in Liberia is not safe to drink. Buy bottled water and use it for everything including brushing your teeth.

Take: Insect repellent; Water filter;

Wear lightweight, breathable clothing, in particular clothing that covers arms and legs to the ankles.

The security situation is somewhat stable, although it’s wise not to walk in Monrovia after dark and be vigilant about staying in secure lodging.

Electric shocks are common in badly wired buildings; wear shoes before plugging in appliances.

Public toilets range from standard toilets (often with a bucket to flush) and squat toilets to holes in the ground, with the latter being more common in rural areas. Always carry toilet paper. Upmarket hotels and restaurants will have Western-style toilets where you may or may not be allowed to flush the paper.

In Monrovia, adequate hospitals are available, but in rural areas you may need to travel for at least a day to the nearest doctor.

Be sure to obtain reliable travel insurance before arrival, including insurance that covers emergency evacuation.

Among the recommended attractions is Monkey Island.  This small archipelago is home to chimpanzees that were evacuated from a hepatitis research lab during the war.

Letting the Grime Settle.

Center Square in Easton, Pennsylvania is home to a particularly fine monument to the men who fought for the Union during the Civil War (1861-1865).[1]  The monument was erected in 1888, and formally dedicated in 1900.  Herein lies a puzzle (for me).  Does the monument commemorate the men who fought in the war (1861-1865) or does it commemorate the ideas of 1888-1900?

During the 1850s, the Whig Party disintegrated and the Republican Party rose up to rally under its umbrella all the opponents of slavery and of the expansion of slavery into previously “free” lands.  “And the war came.”  The Civil War ended with the North’s concept of nationalism victorious over the South’s concept of nationalism.[2]  During “Reconstruction”[3] the victors enforced a policy of racial equality and the political enfranchisement of African-Americans on unwilling Southern whites.  This led to the election of Republican state governments in many Southern states.  Southern resistance often took the form of the Ku Klux Klan, but it did not limit itself to either clandestine violence or fraud at the polling place.

Then the election of 1876 ended with dispute and contest.[4]  The Democrat, Samuel Tilden, and the Republican, Rutherford B. Hayes, both claimed victory.  In brief compass, the Democrats agreed to accept the Republican as president if the last federal troops were withdrawn from the remaining Southern States and (while never formally stated) the abandonment of the freed people to the rule of the former traitors.  This “Compromise of 1877” consolidated the rule of the Southern Democrats (backed by the Northern Democrats) in the South.

African-Americans were disfranchised and lost political representation.  Excluded from the voter rolls, they were excluded from juries recruited from those rolls.  Extra-legal violence terrorized African-Americans.  Separate institutions served blacks and whites, with the black institutions being gravely under-funded by white elected officials.  .Twenty years later, in 1896, the Supreme Court upheld the doctrine of “separate but equal” in its decision on “Plessy v. Ferguson.”

So, what do the Northern Civil War memorials of this era represent except the abandonment of the Freedmen to Southern “justice”?

Should they not come down too?

[1] NB: my great-great-grandfather, Sylvester G. Hill, was killed leading his troops at Nashville in December 1864.

[2] “You can’t leave” versus “We can leave.”  Essentially, Otto von Bismarck’s concept of nationalism triumphed.

[3] See: https://en.wikipedia.org/wiki/Reconstruction_Era

[4] See: https://en.wikipedia.org/wiki/United_States_presidential_election,_1876#Electoral_disputes

Ground Up in Iraq.

Iraq is a weak country that is being ground up in the struggles of other, stronger countries.  In 1979, the Iranian Revolution created an anti-American Shi’ite republic that soon was at daggers drawn with both the United States and with the Sunni monarchies on the Arabian peninsula.  Saddam Hussein attacked Iran.  His regime survived this misjudgment in large part because Saudi Arabia and Kuwait bankrolled Iraq’s war effort with loans.  When Saudi Arabia and Kuwait refused to forgive the debt—“they hired the money didn’t they?”—Hussein sent his army into Kuwait to exert pressure on the Saudis.  Much to Hussein’s discomfort, the Americans pounded his army to bits in the “Hundred Hours War.”  However, the George H. W. Bush administration pulled itself up short of invading the country, but Iran remained implacably hostile.  In 2003, the George W. Bush administration abandoned prudence.  The Americans invaded Iraq and overthrew Saddam Hussein.

Whatever—tyrannical—system for maintaining social cohesion created by Saddam Hussein fell with him after the American invasion in 2003.  Shi’te fell out with Sunni, and both fell out with the Americans.  Eventually, a kind of peace returned, the American left, and Iraq’s Shi’ite-dominated government went to oppressing the Sunni minority while stealing everything officials could get their hands on, from oil earnings to soldiers’ pay.

Meanwhile, civil war fractured Syria.  Iran offered its support to the Assad regime against the Sunni rebels.  Then ISIS invaded Iraq from its base in eastern Syria.  Many Iraqi Shi’ites turned to Iran for support, while the American shouldered their way back in, mostly by supporting Kurdish fighters in both Iraq and Syria.  The government of Haider al-Abadi leaned rather more away from Iran and toward the Saudis and the Americans.  The Obama administration—sensibly determined to slow Iran’s pursuit of nuclear weapons and recognizing that the American people didn’t want to participate in another large war in the Middle East—refused to choose sides in the Sunni-Shi’ite split.  The Russians had no such obstacles: forged an alliance of convenience with Iran in order to aid their Syrian client, Assad.

Now ISIS is beaten.  People are looking around at the aftermath of the storm.  It is an ugly sight.  Recent elections toppled Abadi’s party from first place to third.[1]  The anti-Iranian and anti-American party of Moqtada al-Sadr came first, followed by an anti-American, pro-Iranian party.  Sadr quickly began plastering over these cracks by issuing emollient statements and forging a coalition with the anti-American, pro-Iranian second place finishers.  “We believe in setting up an Iraqi government in the way that protects Iraq from all regional and international conflicts, making it immune from the hostility between the U.S. and Iran, or between Iran and Saudi Arabia,” announced one Iraqi politician.  More than that, they profess to want to end the sharing-out of government ministries on a party basis.  This played a role in the patronage and corruption that undermined both public support for the government and economic progress.

This sounds like a good plan, if a very ambitious one.  It also would have sounded like a good plan in 2003 or 2012.  Have the minds of Iraqis changed enough to make it possible?  Beyond that, will Iran, Saudi Arabia, and the United States be content to stand down from their own rivalries in Iraq?

[1] Yaroslav Trofimov, “Iraq Faces Diplomatic Balancing Act,” WSJ, 15 June 2018.

My Weekly Reader 14 June 2018.

Well before the arrival of Europeans on the Eastern seaboard of North America, the Native Americans had advanced far beyond simple bands of wandering hunters-and-gatherers.  They had become settled hunters-and-farmers; their communities had grown from bands to confederations of tribes.  It would be easy to portray their situation as an Eden and the Europeans as the snake in the Garden.  This over-simplifies things.

First, the Native Americans were Stone Age people whose lives could be very hard.  Europeans were an Iron Age people whose axes, knives, cooking pots, and muskets could ease those hard lives.  Second, many tribes disputed with others.  Trading with Europeans gave them access to European technology, but alliances could give them the bulge on rivals.  Cooperation co-existed with conflict between .Europeans and Native Americans.

Yet conflict became endemic.  The two different peoples despised one another.  The Europeans—Spanish, French, Dutch, and English—were all monotheists, believing themselves to be in the left lane of the highway to Heaven and everyone else to be taking the off-ramp to Hell.  Endlessly busy in pursuit of gain, the Europeans found the Native Americans to be an idle lot.  The Native Americans were commonly animists, believing that each living thing possessed a spirit.  Lacking much material wealth, the Native Americans couldn’t comprehend the acquisitiveness of the Europeans.

The imbalance in real strength between the two sides doomed the Native Americans.  Certainly, the Europeans possessed an immense technological advantage over the Native Americans.  Sailing ships, firearms, and iron tools all surpassed anything Native Americans could produce.  More importantly, there were just a lot more Europeans who wanted to live in North America than there were Native Americans who might want to keep them out.  The spread of European diseases compounded, but did not cause, the imbalance.

The first American “way of war” rested on the English understanding of the Native Americans.  The Native Americans could not stand and fight against heavily armed and armored Europeans.  They faded away into the forest at the English approach.  So march to a stockaded village, burn it down along with stored food and crops in the field, then go home.  On occasion, the English could trap the enemy inside their stockade.  Then they applied fire and sword.

An early war in New England illustrates these realities.[1]  Before 1600, the Narragansett confederacy had dominated southern New England.  Then the Pequot tribe intruded itself into the Connecticut River valley.  In 1622, they had expanded their territory by defeating the Narragansett.  In 1630, the Puritan settlers began to arrive in Massachusetts Bay.   Conflicts arose between the Narragansett and the English from time to tie, but the Narragansett understood the danger to themselves.  In 1636, they palmed off the murder of a rough-around-the-edges merchant ship captain by some of their own allies as the handiwork of the Pequot.  Then they sent a bunch of warriors to fight with the English against the Pequot.  The war ended with a gory massacre of many Pequot trapped inside their own stockade at Mystic.  Some of the survivors became slaves of the Narragansett.  Forty years later it would be the turn of the Narragansett in King Philip’s War (1675-1678).

[1] James A. Warren, God, War, and Providence (2018).

Public Opinion on Donald Trump.

It has been a good six months for President Donald Trump.  He has transitioned from an insurgent Republican to the un-contested face of the party.  Public opinion polls suggests that his base represents about a third of the electorate.  Thus, a little over a quarter (27 percent) of Americans are proud to have Trump as president and think (29 percent) that Trump is “a good role model for children.”[1]  Just under a third (31 percent) approve his handling of the Russia investigation.[2]  Almost a third (32 percent) found Trump more credible than James Comey on Comey’s allegations.[3]  More than a third (36 percent) of all voters would vote for Trump over a Democrat.[4]  More than a third (37 percent) of Americans think that Trump is a better president than was Barack Obama.[5]  More than a third (37 percent) believe that Trump is competent to deal with North Korea’s Kim Jong Un in a summit meeting.[6]  Half of Republicans don’t want another Republican candidate to stage a primary challenge to President Donald Trump in 2020.[7]  Two thirds (67 percent) of Republicans approve his handling of the Russia investigation.  Almost all (86 percent) Republicans approve his performance as president.[8]  It looks like Trump has a lock on re-nomination.

But could he be re-elected?  At least for the moment, Trump’s potential for re-election extends well beyond his narrow base.  Americans are pretty evenly divided—and on partisan lines–on some of Trump’s policies.  On policy toward Israel: 41 percent approve and 43 percent disapprove.  Some 80 percent of Republicans approve, while 72 percent of Democrats disapprove.[9]  On his suggestion to arm teachers: 44 percent approve and 50 percent disapprove.  Some 68 percent of Republicans approve and 74 percent of Democrats disapprove.[10]

Two thirds of Americans approved his decision to meet Kim Jong Un, despite misgivings about his abilities as a diplomat.[11]  Over half (52 percent) approve his management of the economy.[12]  Well over half (57 percent) of Americans believe that the country is on the right track.[13]  That is the highest figure since 2007.  In all these cases, his appeal extends beyond his core base and wins over some Democrats.  Whether that is true in a general election might well depend upon which Democrat gets the nomination.  No Hillary or Obama look-alike?

[1] “Poll Watch,” The Week, 9 February 2018, p. 17.  Almost three-quarters (72 percent) of Republicans think him a good role model.

[2] “Poll Watch,” The Week, 23 March 2018, p. 17.

[3] “Poll Watch,” The Week, 27 April 2018, p. 17.

[4] “Poll Watch,” The Week, 8 June 2018, p. 17.

[5] In a different poll, 21 percent ranked Obama as the worst president to serve since 1945.  “Poll Watch,” The Week, 23 March 2018, p. 17.

[6] “Poll Watch,” The Week, 11 May 2018, p. 17.

[7] On the other hand, 38 percent of Republicans do want someone to challenge Trump, which means that 12 percent aren’t sure.  There remains a hard core of “Never Trump” Republicans who remain unpersuaded as well as a good number of doubters.  John McCain will not run against Trump in a primary, but Jeff Flake might well run.

[8] “Poll Watch,” The Week, 6 April 2018, p. 17.

[9] “Poll Watch,” The Week, 25 May 2018, p. 17.  So 28 percent of Democrats either approve or aren’t sure.

[10] “Poll Watch,” The Week, 9 March 2018, p. 17.  So, 26 percent of Democrats either approve or aren’t sure.

[11] “Poll Watch,” The Week, 11 May 2018, p. 17.

[12] “Poll Watch,” The Week, 18 May 2018, p. 17.  A halt to new regulations and a big tax cut for those who shoulder a disproportionate share of the burden, especially business.

[13] “Poll Watch,” The Week, 18 May 2018, p. 17.