Monthly Archives: July 2022

American Opinion in July 2022.

Posted on by
Reply

            In general, Americans think that the country is headed in the wrong direction.[1]  “In general” means north of 75 percent.  Only about 13 percent think that it is headed in the right direction.[2]  Democrats are reading the tea leaves in hopes of staving off a landslide in November 2022.  On a Congressional level, they are not without hope in mid-July 2022.  A recent poll shows respondents favoring Democrats over Republicans by 41 to 40 percent.  Likely voters favored Republics over Democrats by 44 to 43 percent.  So, pump up the turnout. 

            Beneath that headline, things still look grim.  Black support remains strong, with 78 percent favoring Democrats.  After that, it falls off steeply: 57 percent of white college graduates, 52 percent of those aged 30 to 44 years, 46 percent of those aged 18 to 29, 44 percent of women, 41 percent of Hispanics, and 34 percent of Asians lean Democratic. 

The issues that pre-occupy voters are economic and personal.  Three quarters rated the economy as “extremely important” to them.  Virtually all (93 percent) of working-age people rated the economy as poor or, at best, fair shape.  In particular, “jobs and the economy” ranked first among the issues for 20 percent of those polled; with inflation ranking first with another 15 percent.  Among this group, voters prefer Republican control of Congress over Democratic control by 62 to 25 percent. 

In contrast, the stories that lead the daily news reports are either fading away for the moment or have failed to get traction with most voters.  Only 10 percent ranked “the state of American democracy and political division” as the most important problem.  Only 10 percent ranked gun policies as the most important issue.  Only 5 percent ranked abortion rights as the most important problem.[3]  Even among women, only a tiny share—9 percent—ranked abortion as the most important issue.  About 5 percent of voters ranked either education, or crime, or immigration, or the coronavirus first among issues.  In a perhaps unintentionally brutal aside, one New York Times reporter said that “Democrats are maintaining the loyalty of a crucial sliver of [financially secure,] predominantly liberal and highly educated voters [who]… care more about debates over guns, democracy and the shrinking of abortion rights than the state of the economy.” 

Well, not many people are single-issue voters and political parties are big containers for people with different issues.  Thus it has always been.  Perhaps the Democrats can cobble together a winning coalition out of women, Blacks, young people, and nerds.  They’ve done it before.  Perhaps the Republicans will make one or more unforced errors.  They’ve done it before. 

There doesn’t seem to be much that the Democrats can do about the state of the economy.  Between them, the Trump and Biden administrations ran up the basic money supply from $15 trillion to $22 trillion between 2020 and 2022.  That’s what is causing the inflation, although the supply chain issues and the Ukraine war and the Biden administration’s energy polices have all aggravated matters.  It’s just going to take too much time for the Federal Reserve to fix things. 

[1] Nate Cohn, “Midterm Race Appears Tight, Polling Shows,” NYT, 14 July 2022; Shane Goldmacher, “Democrats Sour on Biden, Citing Age and Economy,” NYT, 11 July 2022. 

[2] One in eight Americans think that high inflation, supply chain problems, bitter partisan politics leading to Congressional gridlock, and an arms-length engagement in a war of attrition with another nuclear power is “moving in the right direction”?  I had no idea that there were so many Satanists. 

[3] At the same time, 65 percent said that abortion should be legal under most or all circumstances.  It just isn’t the most important issue for most of its supporters. 

Half the Story.

Posted on by
Reply

            Mass shootings grab the headlines and alarm Americans.  So they should, we can all agree.  However, events like the massacres at Buffalo and Uvalde form the tip of the iceberg of American gun violence.  Virtually all (95 percent) of gun homicides involve 1-3 victims; are highly concentrated both geographically and socially, and do not involve “assault-style” weapons.[1]  All this has been well known, if not much discussed in public, for a long time. 

            Homicide rates were alarmingly high from the 1960s through the 1990s.  Then they fell from the 1990s until about 2020.  Since then, they have been rising sharply in some areas. 

One common explanation is to point to the particular stressors of recent times: “the Covid pandemic, George Floyd’s murder and its aftermath, and the polarized political atmosphere.”  None of this is very persuasive.  Covid hit every part of the country; the attendant lock-downs hit much of the country; George Floyd’s murder led to the swift conviction of the perpetrator and an intense debate on policing; and—for all the loose talk of a looming civil war–political polarization hasn’t led to much shooting of political opponents.[2]  The stressors are common, but the violence is localized. 

            “There are several factors behind the concentration of violence.  A major one is poverty.” 

            It has been argued that concentrated poverty reduces “social trust” in the affected community.  Eroded social trust, in turn, “hurts communities’ ability to enforce norms against violent behavior.”  However, enforcing norms against violence usually falls to the police, not community members.[3]  Moreover, the poverty rate for all racial groups hit historic lows in 2019.[4] 

Furthermore, “It is difficult to talk about gun violence without talking about race, because Black Americans are most likely to be the victims of shootings.”  Agreed, but what goes unsaid here is that Black Americans also are most likely to be the perpetrators of shootings. 

Homicide type, by race, 1980–2008.[5]

Victims                                      Offenders

All homicides

Total                White    Black    Other           Total    White    Black      Other

100%               50.3%    47.4%    2.3%           100%   45.3%     52.5%      2.2%

Gun homicide

100%               46.5%    51.4%    2.0%           100%   41.2%     56.9%     1.9%

Drug related

100%               36.9       62.1        1.0              100%   33.2        65.6          1.2

            So, do ALL Black Lives Matter or just some?  Because what we’re doing isn’t working. 

[1] German Lopez and Ashley Wu, “What Everyday Shootings Tell Us About Gun Violence,” NYT, 9 July 2022. 

[2] Although see https://www.nbcnews.com/news/us-news/charlottesville-rally-turns-deadly-one-killed-after-car-strikes-crowd-n792116 and https://www.nytimes.com/2020/08/30/us/portland-trump-rally-shooting.html

[3] Unless we’re referring to “Don’t Snitch” T-shirts. 

[4] See: https://www.census.gov/library/stories/2020/09/poverty-rates-for-blacks-and-hispanics-reached-historic-lows-in-2019.html#:~:text=In%202019%2C%20the%20share%20of,23.8%25%20of%20the%20poverty%20population. 

[5] Alexia Cooper and Erica L. Smith, Homicide Trends in the United States, 1980-2008 (Washington, DC: Bureau of Justice Statistics, November 2011). http://www.bjs.gov/content/pub/pdf/htus8008.pdf 

Democracy in the Rear View Mirror.

Posted on by
Reply

            Sometimes foreigners have a clearer view of the strengths and weaknesses of a country than do the natives.[1]  Hence it is interesting that some foreign observers fear for the future of the United States, but for reasons different from those which now preoccupy many Americans.  For six years, Americans have been focused on conjectural threats to democracy.[2]  Some foreign observers, however, perceive a real threat from democracy, at least as it now operates in the United States.  Lee Hsien Loong, prime minister of Singapore, told an American journalist that there exists a widespread perception that “you do not have a bright future because the world is changing too fast for a system like the United States, a democracy with checks and balances.”[3] 

            The checks and balances created by the Constitution divided powers between three co-equal branches of government.  That system seems to have served the United States well for more than two hundred years.  What’s different now? 

            Extreme political polarization lies at the heart of the matter.  The problem is social and human, rather than institutional.  Broadly, the country is split into deeply and unthinkingly distrustful factions that turn any policy issue into a battleground.[4]  The current Congress exemplifies the resulting institutional dead-lock.  Congress has a slight Democratic majority in the House of Representatives and a 50-50 division in the Senate.  The Democrats can pass a small amount of legislation through the process called “reconciliation” because such bills can be passed with the Vice President breaking the tie.  All other bills in the Senate require a 60 vote majority to overcome a “filibuster.”  Use of the filibuster to block legislation has tripled over the last thirty years, with the result that Congress now passes about half as many laws.  Neither party wants to get rid of the filibuster just to pass its wish-list.  The other party will soon be back in power with a narrow majority will then ram through its own wish-list. 

            One solution attempted has been to expand the power of the Executive branch into the vacuum created by the Legislative branch.  After getting shellacked in the 2010 elections, Barack Obama developed a mania for executive agreements in place of treaties and regulations and rules written by bureaucrats in place of legislation.  Donald Trump used the same approach to block illegal immigration from Central America and to plaster China with tariffs.  Now the third branch of government, the Judiciary, has clapped a stopper on such tricks by invalidating the power of the Environmental Protection Agency to impose the Obama-era Clean Power Plan. 

            One example of short-sighted partisanship can be found in a bill intended to enhance competitiveness with China in hi-tech areas.  Senate Republican leader Mitch McConnell threatened to block passage of the bill unless the Democrats drop a much-reduced version of President Biden’s Build Back Better bill.  The Democrats want to pass the latter bill to shore up their chances in the 2022 mid-term elections.  They may find common ground with the Republicans in putting short-term party advantage over long-term national interest. 

[1] Alexis de Tocqueville, Democracy in America (1848-1850) is the classic example. 

[2] For the Democrats, this means Donald Trump and the Deplorables.  For the Republicans, it means the Russia collusion hoax launched by the Clinton campaign and then taken up by an element within the FBI. 

[3] Greg Ip, “Gridlock Hamstrings U.S. on China,” WSJ, 7 July 2022. 

[4] On the futility of trying to craft an institutional solution to such social and human divisions, see Philip Williams, Crisis and Compromise: Politics in the [French] Fourth Republic (1966). 

Debt and the Devil.

Posted on by
Reply

Dan Thornton,[1] a former research economist at and vice president of the Federal Reserve Bank of St. Louis, recently wrote in the Wall Street Journal that “the issue isn’t whether the U.S. will repay its debt, but whether it can service the debt.”[2]

What does it mean to “service the debt”?  According to “Investopedia,” “Debt service is the cash that is required to cover the repayment of interest and principal on a debt for a particular period[3]..… [Individuals and] companies must meet debt service requirements for loans and bonds issued to the public. The ability to service debt is a factor when a company needs to raise additional capital to operate the business.”[4]    

This leads us to the Debt Service Coverage Ratio (DSCR): “the debt-service coverage ratio (DSCR) is a measurement of a firm’s available cash flow to pay current debt obligations. The DSCR shows investors whether a company has enough income to pay its debts.”[5]   

The DSCR is, of a course, an equation.  Debt Service Coverage Ratio = Net Operating Income divided by Total Debt Service. 

“Net operating income is a company’s revenue minus certain operating expenses.” 

“Total debt service refers to current debt obligations, meaning any interest, principal, sinking fund, and lease payments that are due in the coming year. On a balance sheet, this will include short-term debt and the current portion of long-term debt.” 

“Typically, a DSCR greater than 1 means the entity—whether an individual, company, or government—has sufficient income to pay its current debt obligations.” 

So, can the U.S. service its debt, regardless of trying to pay it all back?  Thornton says that the current interest cost of the debt is 1.5 percent of Gross Domestic Product (GDP).  This, he says, is only half of the peak of 3 percent in the post-1945 period.  The Federal Reserve Bank is now raising interest rates to break the current surge of inflation.  We’ve got quite a bit of space before hitting the previous peak of 3 percent.  Thornton says that “I doubt that investors or the public will lose faith in the government’s ability to service the debt at least until debt service exceeds 3 percent of GDP.” 

The United States Government is not quite the same thing as an individual or a private business.  In a pinch, it can take various actions.  It could cut spending.  The Big Three spending categories are Defense, Social Security, and Medicare/Medicaid.  Together, they amount to about 60 percent of federal outlays in a normal year.[6]  In a pinch, it can increase revenue by raising taxes on all or some Americans.  This would run against a well-established political trend in recent decades.  To raise taxes not in pursuit of new spending, but in favor of improving the credit-worthiness of the country seems chancy.  In a pinch, it could reduce the interest rate and perhaps extend the repayment period to cut payments to creditors by fiat.  IDK. 

[1] On Thornton, see: https://www.linkedin.com/in/dan-thornton-9922a06a/ 

[2] Letters to the Editor, WSJ, 6 July 2022.

[3] Basically what I do when I make my mortgage payment. 

[4] https://www.investopedia.com/terms/d/debtservice.asp 

[5] https://www.investopedia.com/terms/d/dscr.asp 

[6] See: https://www.cbo.gov/publication/57170  However, 2020 was not a “normal” year.  There was something like $1.2 trillion in emergency spending on PPL, Recovery Rebates, and suddenly expanded Unemployment compensation. 

Zion Island 34.

Posted on by
Reply

Ringelblum Archive; in private hands. 

                                                                                                DRAFT[1] 

Finding a Home for Zion.

Emanuel Ringelblum.

Memorandum submitted at the request of General Bach-Zelewski. 

            One theme of our modern age is that all the problems of the world could be solved if the Jews would just go away to live in some tropical hell-hole. 

            First it was the German Paul de Lagarde (1827-1891), a great Biblical scholar[2] and anti-Semite.  He wanted to ship the Jews of Germany and Eastern Europe off to Madagascar.  Then it was the Zionists, who wanted to “ascend” to Palestine.  Heat, rocks, dust.  We could all become melon-farmers.  Then it was the British Colonial Secretary Joseph Chamberlain, who offered Herzl the Highlands of Kenya.[3]  In 1928, the Russians came up with the idea of a “Jewish Autonomous Republic” in their—anyone’s–Far East.  Forests, swamps, and an extreme climate on the frontier with China.  Delightful!  Jung[4] tells me that he heard from a colleague in the Foreign Ministry that Mussolini proposed to resettle Europe’s Jews in Ethiopia. 

Beginning in 1933, the Nazis began to harry Germany’s Jews into leaving.  It didn’t matter where, but Palestine would be fine.  The same spirit took hold in Poland.  I remember it well.  It started with that bastard Dmowski.[5]  His National Democrats (NDs) were foaming anti-Semites.  Cultural “Polonization,” economic boycotts, riots.  What to do?  If you want them to go, there has to be somewhere to go.  So, the Poles provided weapons to the Jews in Palestine and ran a training camp for Jewish soldiers in Poland.  Maybe they could fight for a place to go?  In 1937, the NDs passed a resolution that “its main aim and duty must be to remove the Jews from all spheres of social, economic, and cultural life in Poland.”  So the Polish government began talking with the French about forced emigration.  Not to France you understand, but to somewhere in the Empire.  The talks focused on Madagascar and a Polish group went for a look. 

The idea appealed to the French.  The indigenous population of Madagascar had become increasingly restive under French rule during the Twenties.  Settling a lot of European colonists who were overjoyed to be out of the reach of the Nazis might change the situation. 

Nothing came of this Franco-Polish idea at the time.  However, there was a certain amount of public discussion.  So, maybe that’s where the Nazis got the idea?  Kleptomania. 

[1] Hand-written note says “NOT to be shown to B-Z!”

[2] Of the OLD Testament, not the New. 

[3] Maybe it says something that Chamberlain sent his un-loved younger son off to the Bahamas for six years to be a sisal planter? 

[4] Possibly Guido Jung (1876-1949), Italian Fascist Minister of Finance, 1932-1935. 

[5] Roman Dmowski, b: 1864, near Warsaw, Russian Poland, 1864; d: 1939, Drozdowo, Poland.  If you don’t believe me, see: Joel Cang, “The Opposition Parties in Poland and Their Attitude towards the Jews and the Jewish Question,” Jewish Social Studies, Vol. 1, #2, 1939, pp. 241–256.