Why the Young Reject Capitalism

I know, it's been a while since I posted anything. My problem has been that the news cycle seems to be 100% Trump, and that means I find it 100% uninteresting to write about. I will leave that subject alone, since (almost) literally every single other post on the internet seems to be about him. Why pile on with obvious rebuttals and pointless fist shaking?

Fortunately, today I read an article in the Wall Street Journal (WSJ), HERE, about the apparent disconnect between the young's idolization of the silicon valley types (the Elon Musks of the world) and their vilification of capitalism. Now, the first thing I would like to point out here is that this is a terrible stereotype. The young, like the middle aged and old, hold a multiplicity of political and social opinions. So attempts to pigeonhole them into one particular view is, at best, misleading. Still, even if we accept the premise that the young or "millennials" all hold silicon valley types up as icons while hating capitalism, why should this come as such a surprise to the Wall Street types who the WSJ typically appeals to? Can they really think of NO reasons why the young would mistrust free enterprise and big business? It all seems very disingenuous.

Firstly, if we are going to stereotype millennials, we can at least do so a bit more accurately by saying they are far more tech savvy than the older generations, given they grew up on the internet and with smart phones. But even here, I admit, we are painting with a broad brush. Secondly, that they have lived through multiple economic down turns with both the tech bubble bursting and the great recession occurring during their lifetimes. Lastly, their generation has been saddled with more debt than any previous generation, due largely to the cost of college spiking during their lifetime. So, even without bothering to put up any more examples (of which their are plenty) of the apparent failure of capitalism to provide them with an improving quality of life, it should be obvious why the young distrust capitalism. They have seen the worst aspects of it without reaping any of the benefits, or that's at least how it appears to them. Obviously, modern America and our high standard of living exists, at least partially, because of capitalism, so we all (arguably) reap the benefits. But the point is, the defining moments of their lifetimes have not been ones in which capitalism has had much to crow about.

Now compare this with silicon valley. We have young dynamic companies creating billions of dollars seemingly overnight using the very technologies that this generation grew up with. More over, these companies are anxious to hire millennials and make use of their tech knowledge (one of the few areas of the economy that is all that interested in this generation).  More over, they have seen the Bill and Melinda Gates foundation use money earned in tech to do real good in the world. Similarly, they have seen Elon Musk create new companies and vast fortunes on technologies designed to ween the world from our reliance on fossil fuels that are (at the very least) partially responsible for our current global warming trend. Is it really a surprise that the young think highly of these actions?

The point of the article in the WSJ is really that we should be calling attention to all the good that capitalism has wrought (and the wrong government has caused through excessive regulation) and proselytizing this to the masses. And I do not disagree with this point. What I do disagree with is the facile notion that all millenials think a certain way, and that the benefits of capitalism should be obvious to the younger generations given our recent history. If we are to make a convincing argument for free enterprise and capitalism free of government interference, we should start by being honest with ourselves that the case for this is not nearly as obvious as we would like it to be. And from this point of mutual understanding, we can then build a case (using tech companies, if that seems the most likely example to keep our audiences' attention) that capitalism and free enterprise are things worth preserving.

In the Age of Trump, the Left Needs to Rethink Its Tactics

There were two very important editorials in today's Wall Street Journal that I'm sure most of its loyal readers glossed over. The first is a piece about how Liberals need to have a long look in the mirror about who is really at fault for the rise of Trump in the USA and ultra-nationalism in the EU and elsewhere. Here's the link. The second is a piece about how Liberals are going to have to rethink how they treat ever utterance and Tweet by Trump, as exhaustion will quickly overtake the wave of outrage they have been riding since he was elected. Here's the link to that piece. These are important opinion pieces about how the Left needs to change in order to be an effective force against these new political movements. If you have access to the WSJ, I highly recommend you read them. Because, as far as I can see, the Liberal political movements of the world are getting their asses kicked in local elections, and one party rule, regardless of the party, is never healthy for any country. Even though I dislike many of the policies of the left, I want them to be an effective fighting force against the worst deprivations of the right.

The problem in the USA currently is that the Democrats spent the last 6 years running this country through executive fiat after they lost their super-majorities in the first mid-term election of the Obama White House. They ran the country this way because they felt they had to, but also because they could not conceive of a future where they were not in charge of the executive branch of the US government. I get the feeling that both France and Germany in the EU have been doing much the same things, and are now perilously close to seeing Mrs. Merkel in Germany lose her re-election and see Marine Le Pen in France, if not take over the government there, continue to gain political power. The reason for this is because the left all around the globe have been in power for so long, and have isolated themselves from the people they supposedly represented for so long, that they are unable to truly understand the backlash they are facing. With that level of isolation, and policy making in an echo-chamber, they now find themselves unable to fight off the advances of their rivals. That very echo-chamber has sowed the seeds of their own defeat, and I fear a world where ultra-nationalism controls the helms of all of the world's super powers.

So, for any Liberal who truly doesn't understand how Trump beat Hillary, who truly doesn't get why Brexit won a majority of the vote, and who can't understand who would possibly vote for ultra-right leaning politicians, read these articles. They, better than I, will explain how your smarmy self congratulations over policies that did real harm to real people have rankled with the electorate. How every time you fought a battle for political correctness to the point of ruining someone's life that they and their friends took notice and began to hate you. How every time your politicians showed up in a limo to a $1000 a plate fundraiser to talk about how more needs to be done for the less fortunate, while doing little but expanding the well-fare state, infuriated many of the people you were supposedly trying to help. Basically, read those articles and understand, truly, how you all became the morally repugnant elite of the first world, and why your asses are getting kicked by people you think of as abhorrent. You've allowed previous successes to turn you into Marie Antoinettes saying "let them eat cake" as the revolution comes to your doors (I realize this is apocryphal, but it's a good analogy). You've become the limousine liberals that you likely once vowed you would never become. Please, for the sake of the world, do a better job. Because the rise of nationalism has, historically, signaled the beginning of a rough patch in human history.

Thank God That Awful Election is Over

"Welcome back," I say to myself as I sit down to write my first post in a few months. The reason for my absence is that the US election has been dominating the news for so long that there hasn't been much substantive news for me to be angry about. See, when I need inspiration for posting here, I go to my favorite news sites and wait for the idiocy and pig-ignorance to wash over me until I'm hopping mad about something. It usually takes the form of some article pontificating on a problem whose solution or answer seems obvious to me. Favorites have been why birthrates have been falling, why our economies have been stagnating and similar topics. The problem I have during an election cycle is that there is so much low hanging fruit (of the ignorance and stupidity variety) and so much hyperbole and histrionics that it isn't fun to point out how dumb most of it is. In case you haven't noticed, politicians lie, cheat and steal in order to get into office and then ignore all the promises they made (at least to the voting public, if not their donors list) while trying to get into office. This makes every debate, every speech and all that political spectacle pointless. Your best bet, as a voter, is to do a little research ahead of time about party affiliation and candidates' stated positions on the issues and then hope for the best. But watching the two year presidential election cycle like some sort of god-awful reality tv show is just an exercise in masochism. So, now that it's over, I will try to find more substantive stories in the news to be angry about so that I can write illuminating posts.

If you are at all wondering about my personal politics, I didn't like either of the two mainstream candidates and didn't vote for either of them. If it wasn't for my state and local elections, I wouldn't have bothered going to the polls. But state and local elections matter and have far greater impact on our daily lives than their low voter turnout implies they do, so I felt it was important to put in my two cents despite the garbage headliners. But beyond that, I wont waste any space on the internet adding to the plethora of articles pooping on Hillary and the Donald. It's been done to absolute death and at this point I'm not sure there's much more to say. I'll leave the continuing idiocy to other news sources who are far more experienced with histrionics than yours truly.

I don't know about you, but I am truly looking forward to the day that I open the front page of a newspaper and see that it contains no new stories about either of the candidates for president. It will be a small breath of fresh air in a stale and tired news cycle.

The Federal Reserve Failure

Today marks the beginning of the annual meeting of central bankers in Jackson Hole Wyoming. The central bankers of the world meet annually here to discuss their shared mission of ensuring that the world's financial markets continue to fuel economic growth around the world. Unfortunately, they are confronted with the same problem they have all faced since the great recession "ended", namely that they are seemingly incapable of achieving their missions. With persistently low inflation, low labor participation rates and slow economic growth from the entire first world, it is undeniable that the central banks of the world have failed to achieve their shared goal of persistent economic growth. Numerous newspapers around the world have taken the opportunity this meeting presents to opine on why this is and what should be done about it. Once article in particular struck me though; it's an opinion piece in the Wall Street Journal by a former member of the Federal Reserve board who has turned academic. Here's the Link . I encourage you to read the piece because I think it has some very prescient ideas about how the US Fed system needs to change.

What got a bee in my bonnet about the above linked article though was the repetition of the sentiment that academics and central bankers are confused as to why we have slow growth in the first world. Now, I've talked about this before Link , but the reason we have slow growth is anything but a mystery. We have strangled growth with high taxes, vast and expensive regulatory states, vast debts (both at a government level and at an individual level) and laws that encourage multinationals invest in the developing world while stymieing growth of small business back home. At this point, the continued complaint feels a lot like the famous Simpsons quote: "We've tried nothing and we're all out of ideas!" Link . The real problem here is that the Fed's mandate is to control unemployment and inflation by manipulating the federal funds rate and doing asset purchases and sales through the treasury. But, to solve the problem of persistently low growth, we need comprehensive regulatory reform to change the incentive structures that encourage businesses to move elsewhere and not reinvest their earnings at home. This means that the required reform literally is not within the Fed's powers. All the Fed can do is reactively adjust the interest rate and buy and sell assets, essentially manipulating the money supply, to try an get businesses to invest in labor and capital. There's nothing the Fed can do about the fact that international businesses are taking the cheap money, looking at the regulatory landscape, and are using that money to buy back their stocks, buy out competitors and move operations overseas to cheaper locales. The only way to fix this incentive problem is for the legislatures of the first world to undertake massive reform. Instead, what we have is infighting and regulatory sclerosis.

So where does that leave us? I predict that the results of the Jackson Hole meeting of central bankers will be a lot of hand wringing and a lot of doubling down on the same failed strategies. Until the governments of the world put on their big boy and girl pants and sit down and actually do some legislative reform, the first world is going to continue to follow in Japan's footsteps of ever increasing national debts and persistently slow or negative growth. So, to quote another internet meme, to the governments of the first world: "Your policies are bad and you should feel bad!" Link .

What's Going On in American Politics

Hello once again dear readers. As you may have noticed, I've been avoiding talking about the current election in the USA. This has left me with little to blog about recently, as the news here is still pretty much all election all the time. My not writing about the campaign is mostly because of my complete disdain for the process and my antipathy towards the candidates. The primary process is a joke, the rules are skewed to favor establishment candidates, and it has become so expensive to run that only shills for their party's well heeled interests can afford to run. Well, them or bombastic billionaires who don't care about wasting a few hundred million here or there. So I've avoided the subject like the poison it is.

During this time I have noticed that the powers that be in this election cycle constantly wonder why it is someone like an avowed socialist, or a bombastic billionaire, can be viewed by so many as viable candidates. To me it's never been that difficult to figure out, it's because both parties have betrayed their voters. What do I mean by this? That the left leaning democratic voters have seen election after election where their candidates have pledged to tame corporate interests and help the middle and working classes, and then failed completely to do so. Then, instead of owning up to their complete failure and acknowledging that most of their biggest donors are the corporate interests that they had pledged to tame, they blame the other party despite having controlled the presidency for 7+ years and majorities in the legislature on and off during this time. And don't think I'm letting the republicans off the hook either. They get elected by pledging to uphold "traditional" values, taming big government, and allowing the free market to prosper and create jobs for the middle and working classes, and have also completely failed in accomplishing any of it. They, however, at least are honest about being shills for their corporate overlords, not that this is all that much better than lying about it like their opponents do. Both parties are like children standing over the broken lamp of America and pointing at the other saying "He did it!" It's disgraceful. Meanwhile, wages have shrunk or stagnated, the labor participation rate has bounced around historic lows, and millions have fallen into virtual poverty, even if they aren't in poverty statistically. It baffles me how these fools can't see this and don't recognize that their positions of power have never, in their lifetimes, been on shakier ground. If they can't see socialist candidates and populist blowhards as canaries in the coal mines, then they deserve to be tarred and feathered. And if they continue to be so oblivious, they risk the proverbial tar and feathering becoming actual violent social unrest. This country was founded on revolution, and they would be fools to think another one isn't possible. But then, we already established their foolishness.

To go along with this sentiment, I read a poignant piece in the Wall Street Journal by Peggy Noonan. The premise of the article is having a "2016 Moment", or to realize this election will be historic, and not necessarily in a good way. She reports one of her long time friends, in stumping for a candidate in New Hampshire observed that:
"I was struck as I walked along a neighborhood using the app that described the voters in each house. So many multi-generational families of odd collections of ages in houses with missing roof shingles or shutters askew or paint peeling. Cars needing repair... It was easy to see a collective loss of hope in a once-thriving town... years of neglect and sadness. Something is brewing."
http://www.wsj.com/articles/that-moment-when-2016-hits-you-1461281849
This, I believe, hits it on the head; this is exactly what's going on in this country. Years of political neglect and kowtowing to special interests and the elite of both political persuasions has created a hollow shell of the America that was. An America which flees to the welcoming and reassuring arms of socialism, or into the bombastic fury of populism. Years of pursuing trade deals that export jobs and import profits for the elites, years of increasing taxation and decreasing return on those taxes, years of abject neglect, have destroyed the credibility of both parties. And if they don't make an about face soon, they may very well get crushed by the electorate they condescendingly pander to during elections, then ignore while in power.

If the politicians don't watch out, they may find the smell of freshly boiled tar visiting their neighborhoods. It may be time to invest in feather pillow manufacturers.

The Myth About Less-Skilled Millennials

I saw an article today that really pissed me off. It commits two sins I see constantly in modern journalism, namely it panders to its audience (in this case, baby boomers) without referencing any facts directly, and it ignores easily Googled facts that directly disprove its point. It's not that it addresses the facts and argues that they aren't important, I mean it just flat out ignores them. Instead, it references someone else's study without using any of the facts or figures the study used to make its conclusions. Moreover, it was printed in the Economics section of the Wall Street Journal. I expect a certain lack of facts or research in less respected news organizations, but the Wall Street Journal and The New York Times are supposed to be better than that. This article lets down the paper badly.

Well, enough preface, here's the link: http://blogs.wsj.com/economics/2016/02/29/how-a-less-skilled-american-workforce-may-be-holding-back-growth/ . You can see by its very title what its editorial viewpoint is, that the workforce is getting less skilled and that's what's wrong with the economy. Here's what really bothered me, it states that: "Well-educated baby boomers are retiring, and many laid-off older Americans who want to work have struggled to find jobs following the recession, bringing the overall experience level of the workforce down. College enrollment is on the decline after peaking in 2011, as the economic expansion creates job opportunities for less-skilled workers." The implication here is clear, workers not in the baby boom generation are less skilled. If it were just a question of experience, this wouldn't be an interesting statement at all. Obviously retirees are more experienced than those of working age, they're older. No matter what time in history we look at, this should be a true statement. The older are always more experienced by sheer dint of living longer and having had more experiences. This is so blisteringly obvious a statement that I refuse to believe that's the point of the article. The actual editorial perspective of the article is made clearer by the college enrollment statement. By saying baby boomers are well-educated and college enrollment is in decline, it’s using two, at least arguably, true statements to imply something that isn't true. Namely, that younger generations are poorly educated. Here's a Wikipedia graph on educational attainment over time: https://en.wikipedia.org/wiki/Educational_attainment_in_the_United_States#/media/File:Educational_Attainment_in_the_United_States_2009.png . The percentage of people 25 and older with a college degree has increased fairly steadily for the last 70 years. The article concludes by saying: "...there (i)s one obvious policy solution: more skills and more education." Well, we know that educational attainment has been increasing, so either we have a skills mismatch that the current educational system isn't meeting (so more education won’t cure the problem), or there are simply not enough jobs for skilled college educated workers. But implying that younger workers are poorly educated and unskilled is just pandering to the prejudices of older generations and not supported by basic facts.

And now we get to the crux of our economic doldrums. Even if we choose to ignore a global economic slowdown, wars across the middle east that have ravaged regional economies and trade partners, or the huge asset bubbles created by central banks desperately expanding the monetary supply in an attempt to cover for bad government policies that harm economic growth; the problem isn't that the fundamental makeup of the workforce is changing, it’s that the so called "recovery" is only creating low skilled, low paying, temporary jobs. The article even admits that in the above quote. College enrollment doesn't change where the demand for labor comes from, except possibly in higher education. In all likelihood, if we see continued declines in college education, it will be because employers have stopped valuing college degrees. Or, at least, that employers don't value them enough to pay a high enough wage to make the investment in a four year degree worth it. So let's stop bemoaning the bursting of the education bubble and let’s stop blaming a retiring baby boomer generation for a loss in workforce participation and productivity. Let's instead put blame where it is due. Namely, lets blame bad government policies that have created perverse incentives for companies to move as many jobs as humanly possible out of the first world. Policies that mean the only jobs created are low level service jobs that can't easily be outsourced overseas.

So what's the solution? First, we need to re-examine the benefits of free trade treaties with second and third world countries. If a country has a large net loss of jobs as a result of a trade deal, and can only point to cheaper goods and profits shared between corporate insiders and global investors, then the deal is a failure. A population of unemployed and underemployed workers can't afford to spend big on consumer goods, they rely much more heavily on welfare programs, and their lost taxable wages takes away the tax revenues governments need to pay welfare benefits. Cheap consumer goods mean nothing when a family is struggling to pay the bills and feed itself. Secondly, we need to rewrite the tax code so that big multinationals are paying at least as much in taxes on local revenue as the local start-ups that try to compete with them. The small business used to be the biggest employer of labor in the USA. But with a tax code that hamstrings them, small businesses have been failing and employing less people. Lastly, we need to intervene and cut the red tape that prevents small businesses from being created. This needs to be done at a local level, and solutions to these problems will necessarily be unique to each region.

And on a final note, I expect better of the Wall Street Journal. Don't just quote someone else's study to libel younger workers. Do some investigative reporting. Test the numbers in the study against other data sets to see if their conclusions make any sense. Moreover, when the world is at war, foreign economies are crumbling, and the Euro zone falling apart, blaming a dip in college enrollment and the retirement of baby boomers for our economic stagnation is just asinine. It's a symptom of much greater problems in the world, and ignoring those problems just makes it easier for lazy governments to do nothing about them. Lastly, stop blaming millennials for problems created by the policy decisions of the "greatest" generation and "baby boomers". No one should get a free pass for their poor leadership and economic stewardship.

State of the World at the End of 2015

Hello, everyone. As many of you have noticed my blogging fell off a bit this year. Part of this is that real life concerns and work that either earns me money, or might earn me money in the future, has taken precedence. But part of it is that so much of what annoys me on a day to day basis are things that I have already blogged about. If you've perused my posts, you've seen my complaints about the incompetence of government. So you'd think I'd have more to write about during a US Presidential campaign. But the reality is that the positions of most of the candidates are so banal, so pandering and so obviously lacking any sincerity, that I haven't felt much need to attack any of them. It feels too much like mocking toddlers or fighting with cripples. So I'll wait till the general election before I start pointing out why various political positions are stupid. And frankly, no matter who gets nominated, there will be a plethora of possible content on this front.

At the end of 2015, we're still sitting in the middle of the same terrible economy that we've had since the great recession. I've hit on the causes of this many times, but it's still disconcerting to hear the government crow about all the success its had getting people back to work. If you really think living in a part time, no-benefits gig economy is progress, you deserve a heap of scorn. Bragging about a low unemployment rate when the participation rate is bobbing around all time lows is willful ignorance. It's as if politicians don't realize that they are damning themselves with their own faint praise. There's a reason why Trump and Sanders are popular, its because the populace of the USA has realized the emperors have no clothes and no idea that their ugly nakedness is flapping in the breeze of their own hot air for all to see.

I find that I don't have a lot to be thankful for on the global economic and political fronts either. Terrorism has become a global issue and, if we aren't careful, a world war. Politicians seem torn between sticking their heads in the sand or wanting to nuke whole regions of the world. Like mass murder ever made people less violent and vindictive. Of course, ignoring problems usually isn't an effective solution either. Still, the lack of intelligent well thought out solutions is depressing. This reality doesn't leave me with much to write about, as I'm not one for hand wringing histrionics or stating the obvious. Suffice it to say that we're going to need targeted solutions to a multiplicity of problems and some global stability before we're going to be able to handle this issue.

I guess, when it comes down to it, the point of this post is to say so long to 2015 and good riddance. Also, with so few things in the public sphere to be thankful for, that we should all focus on ourselves, our friends, and our families, for things to be happy about. When the world looks like crap, I guess you need to go home and hug the ones you love. Find happiness in the personal. And lastly, here's a virtual ogre hug, from me to you, for reading my blog. I wasn't sure who'd read my posts when I decided to vent my spleen on the internet, but a few thousand of you have. And for that, I am grateful.