December 20, 2017

After GOP tax cuts, Dems at Fed poised to pop stock bubble and tank Trump

I warned about this back in June, after hearing warnings from Nassim Taleb and Peter Schiff, while adding insights from my analysis of the Dems vs. GOP battle being between the Wall Street party and the Pentagon party.

The signs that the stock market is a bubble are only clearer six months later -- a record number of record numbers, as we close out the year. Number of days with record-high closings, number of months of stock market growth (all 12), absolute level of the peaks (now 25,000), probably a record in the percent growth in a single year (about 25%), etc.

That is the subjective speculation about what the value is of these companies, largely driven by internet and tech companies. The objective reality is that so many still don't earn anything, and the valuations compared to their sales is at a record high (outta-whack).

There has been no observable revolution in our economy -- we would see it, and feel it, like the Industrial Revolution planting factories all over the landscape, and newfound wealth pouring into our households as we left behind poor-paying agriculture. The holdovers from the real economy are being shuttered and swept aside also at a record pace, especially retail.

But trade deficits are growing at a rate and to a level they haven't seen since before the Great Recession -- another sign that the real economy, like manufacturing, is being even more vigorously shipped out of our country and into China, Mexico, Vietnam, etc., while we are left with servant jobs at Starbucks and imaginary wealth from tech start-ups (for the few who even land a job in that sector).

Debt, even compared to GDP, is still rising -- and may go back to skyrocketing after the $1 trillion tax cut, War on Terror 2.0 against Iran, etc.

All of this phony activity is being fueled by cheap money, driven by low interest rates that make borrowing easy, particularly for large entities.

At some point, the Federal Reserve, which sets these interest rates, has to deliver a day of reckoning -- but not when their own party is in the White House! That's the big piece of the puzzle that observers like Schiff missed during the Great Recession: the finance sector controls the Democrat party, so like hell they're going to pop a bubble when a Democrat is President.

But now that their rival party is in power -- indeed, in control of the entire government -- the finance sector can deliver the day of reckoning, when it can pin the blame on the other side of the great big struggle between elite factions.

Here is a graph showing interest rates, along with recessions in shaded columns. Notice how a spike in interest rates precedes a recession:

There is one major exception, when they raised rates in 1994 without triggering a recession. That's because the growth in debt (to GDP) had plateaued and even declined starting in 1993:

A spike in interest rates is the spark, and soaring debt is the gas. Since the major economic players were not projecting soaring debt during the mid-1990s, the spike in interest rates did not set off a cascade of bankruptcies or threats to bring down the whole economy unless they were bailed out.

And notice who was President then -- a Democrat! Generally, debt has been growing since around 1980, and every time the Fed has raised interest rates and then triggered a recession, it has been under Republican Presidents. They held rates comically low, around 0, for all 8 years of Obama. But once Trump got elected, they raised it for the first time in a long while, and have raised it three more times this year. They're clearly on track to jack them up even more next year.

What will be their rationale for raising interest rates to tighten the ease of borrowing money, and of paying back the money you already owe? That the economy seems to be doing better, so there's no need to flood it with so much cheap money anymore.

Trump, the GOP Congress, the RNC messaging department, and retarded conservative pundits all over the media keep touting how well the GDP growth has been (bubble, only benefitting top 1%), how astronomically the stock market has risen, how low unemployment has fallen (stopped looking for work, since labor participation is also falling), and now how turbo-charged it's going to get after passing massive tax cuts supposedly for corporations and wealthy people to do more hiring, pay higher wages, etc.

Naturally, these tax cuts will go right back into the pockets of the wealthy, as they always have. But the promises from the GOP have been consistently about how much better the economy and job creation is going to be because of the cuts.

"OK then," the Fed will respond. "It sounds like it's the perfect time to raise interest rates!"

And then blammo, the massive debt floating around -- made even worse by the $1 trillion tax cut -- is going to cost 10 times as much to pay back, and everyone's going to declare bankruptcy unless they can get bailed out (too big to fail is even worse after eight years of constant bail-outs).

The Republicans are too dumb to try to blame the Fed for raising interest rates, because they are too weak to attack the main power faction of their rival party, the finance sector. A party in decline does not attack the strongest part of its rival coalition, only the weakest part like labor unions. They probably would not even name the enemy by pointing out how the finance sector controls the Democrats in the same way that the military controls the GOP.

And even if they did try to explain how rising interest rates from the Democrats at the Fed have blown up the stock market, they would have to concede having lied about the state of the economy before the blow-up -- they gloated over and over about how awesome it had become under full GOP rule, and how even awesomer it was going to be with these gigantic tax cuts.

The Democrats will appear to have no blood on their hands, with Republicans taking all of the blame. The GOP will suffer in the mid-term elections if the Fed pulls the trigger with enough lead time for round-the-clock media coverage of the blown-up economy to seep into voters' brains by November.

The only time this didn't kill the Republicans' electoral prospects was during the Dot-com Bust, but that was only because Americans were rallying around the pro-military party after September 11th. Absent another 9/11 before the 2018 mid-terms, the GOP will have nothing to fall back on if the Fed has pulled the trigger by then.

Trump himself, who began as a de facto third party candidate and President, has by 2018 chosen to align himself 100% with the GOP's corporate agenda and the tax cuts and stock market growth specifically. It may be too late to shove McConnell and Ryan away and back-pedal on all those comments about how awesome the stock market bubble is.

Trump promised to become "the greatest jobs-producing President that God ever created," but by clinging to the GOP agenda and refusing to decry the stock market bubble, he could become remembered as the President who oversaw the mother of all economic blow-ups.

He did not help himself by bending over backward for the finance sector by appointing a Yellen clone to chair the Fed. He was pleading with them not to raise interest rates, in exchange for his appointing a chairman of their choice. But he's going to find out what brutal vicious killers the leading faction of the Democrat coalition is. They're going to raise rates and pop the bubble, regardless of the favor he did them by appointing a Yellen clone.

If the GOP factions like the military are willing to totally subvert and sabotage the positions he campaigned on, why would the Democrat factions be any less willing to stab him in the back?

"You knew damn well I was a snake before you took me in!"

If someone can sneak some advice around the Iron Curtain that General Kelly from the Pentagon junta has erected around the President -- during Christmas parole? -- it would be for Trump to distance himself as far as possible from these phony economic indicators.

Reiterate his famous phrase, "Folks, I inherited a big fat ugly mess," and return to attacking GOP saboteurs and Democrat opportunists alike. The GOP passed a massive tax cut that they knew would just be pocketed by corporate stockholders, and the Democrats kept interest rates near 0 under Obama for partisan reasons, and are only going to raise them now in order to destroy their rival party, and Trump personally.

Call out the widening trade deficits as a sign that the GOP is not bringing him his tariffs in order to return manufacturing, and that the real economy is only getting worse. "I never should have trusted the puppets of the Chamber of Commerce, folks, and I'm going to make it up by steering the boat in an entirely new direction."

And if somehow The Powers That Be get him -- assassination, impeachment, whatever -- at least he will have gone down fighting against them and clearing his reputation. If things continue in the current direction, he's going to be remembered as someone who surrendered to the elites' agenda and got blamed for their colossal fuck-ups in the economy.


  1. everyone seems to have forgotten a few of the words from that announcement speech trump made when he came down the escalator in 2015: "the stock market is too high and the interest rates are too low" one else seems to remember those words...curious...

  2. His exact words:

    "Reduce our $18 trillion in debt, because, believe me, we’re in a bubble. We have artificially low interest rates. We have a stock market that, frankly, has been good to me, but I still hate to see what’s happening. We have a stock market that is so bloated.

    "Be careful of a bubble because what you’ve seen in the past might be small potatoes compared to what happens. So be very, very careful."

  3. Another oldie but a goodie, Trump in Indiana with Coach Knight, April 2016:

    Knight gets the audience warmed up by saying I'm not here for the Republican party, frankly I don't give a damn about the Republicans (applause), and I don't give a damn about the Democrats either (lighter applause). I'm just here to support the right man for the job, and Donald Trump is not a Republican, not a Democrat, just an American.

    Back when Trump's allies weren't a bunch of goofy cuckservatives grinning about how tax cuts must really be triggering the liberal snowflakes, amirite kids?

    Trump ridicules the trickle-down idea of providing "tax incentives" or "low-interest loans" which "they might not pay back" to keep companies here in America. We're going to slam them with a 35% tariff, and it won't make sense for them to leave the country anymore.

    He barely talked about immigration, except to say we want it, but we want it legally. Build the wall, Mexico will pay if we threaten to cut off trade with them, which they benefit from more than we do ($58 billion trade deficit back then).

    Most of it was about punishing the sociopathic corporations like Carrier who heartlessly fire all their workers, send the factory to Mexico, and expect to sell their off-shored product back into the lucrative American market tax-free.

    The major theme is punishment for corporations, since they've been behaving so badly for so long -- not to reward them in advance for something they will not deliver on anyway.

    More stick, less carrot.

  4. How well is the populist "re-alignment" of the GOP going when zero Republicans said, "Gee, this corporate tax bill is a little too heavy on unconditional up-front rewards, and a little too light on penalties for anti-American behavior"?

    That's Republicans in the government, in the media, and in the electorate, including supposed Trump super-fans -- who it turns out are more turned on by his persona, like he's just their favorite character in a cable serial drama that they passively binge-watch all day every day, rather than wanting him to be an agent of economic and political change in the real world.

    1. I hate to say it but Trump fans are acting an awful lot like Obama fans did. They are into the cult of personality more than any specific issues.

  5. I agree this stock market bubble is very worrisome (by many valuation measures it's the most overvalued it's ever been, even worse than 2000) and Trump is playing with fire by citing it as proof of his economic policies working. It's disturbingly plausible that the Fed et al are trying to tempt him into doing that so they can sandbag him in an election year by cutting off the liquidity firehose and triggering a flight out of the markets. Should become clear pretty soon if that's the plan.

  6. Entirely off topic, but I think this might interest you (

  7. "How well is the populist "re-alignment" of the GOP going when zero Republicans said, "Gee, this corporate tax bill is a little too heavy on unconditional up-front rewards, and a little too light on penalties for anti-American behavior"?

    That's Republicans in the government, in the media, and in the electorate, including supposed Trump super-fans -- who it turns out are more turned on by his persona, like he's just their favorite character in a cable serial drama that they passively binge-watch all day every day, rather than wanting him to be an agent of economic and political change in the real world."

    I never wanted to live amid a period of elites (and wannabe elites) being total idiots, but here we are. Ideologues and moralists......But where are the populist rabble rousers (sorry, but Lolbertarians, fundies, and SJW radicals are in a status arms race based upon elevation from not just the masses, but other climbers)?

    None other than Steve Bannon, the supposed Svengali of Peak Trump, went all in on Roy Moore, a crusty bible basher who's none too perturbed by anything, being that he knows that once he dies, he'll be in a better place (in other words, his earthly legacy doesn't mean squat). Where are the valiant champions who don't take shit from obviously corrupt interests? Dennis Kucinich and Ron Paul would do far more to guide us along the right way than anyone currently in the elite zeitgeist.

    I'm not purity testing here; that's moralistic. Rather, I'm judging people for their willingness and ability to get in there and scrap....For most of us.....Not for ideology, or for reasons of sport fan level mindless competitiveness. People who one or two years ago I thought might be coming around to a needed wake up call (that elites of all sectors have been fucking us over and need to be called out) are retreating into the shell of touchdown celebrations over victories that are a bonus for some elites and partisans but of no long-term value to the masses. Admitting that you're a sell-out, and that you bring gifts to just 1/5 of the population (at best) would spoil the fun and bruise the ego that comes with being a "winner" (but over whom have you won?)

    Being in a state that hasn't gone for a Republican since Nixon (and he by any "recent" standard is no true Republican), I know as well as anyone that the GOP is content to appeal to ascetics, war mongers, and Christian ID fruitloops while doing it's damndest to insure that not one more union job exists here.

  8. Speculation....

    Trump is a hyper competitive guy currently playing for team GOP. He knows he's got very little chance at surviving two terms if he goes off the reservation too often. He also knows that far too many of the people with a Voice, usually born before circa 1970, are hopelessly trapped in exhausting and self/other-destructive ideological and moral battles. Proles and most younger people are dying for an end to the "in your face, BITCH" era of the mid-70's-2010, but way too many elderly and middle aged people of any discernible status are still trying to run up the score for Team Cultural Marxist, Team Wall Street, Team Christian, etc. instead of questioning the rules of the game and who's coaching each team.

    Millennials are too young and too broke to have much of a say in any of this (and indeed, they were the biggest opponents of the status quo in either party). Given that late X-ers and Millennials have nothing to show for what older generations have condoned, it looks like the full reset button won't be hit for a long time to come. After all, it's 1960's born white people who are primarily responsible for turning huge swaths of America red, even though the GOP has seldom done a damn thing to deserve those votes (in the eyes of this fed-up observer). Those born later don't vote in non-presidential elections, although in the recent losses in Virgina and Alabama, plenty of people under 40 turned out to give the boot to fundie moron Roy Moore. Earth to the GOP:people under 40 can't be fooled that easily by appeals to things that just don't matter that much these days.

  9. Word from the street......

    Having some thick accented burly white guys do some work around the house....Not a damn thing said about politics, even in jest or out of frustration. The Midwest has been treated like an after thought for 40 years. If neither party can bother to remember that prole Midwesterners even exist, let alone help them, than why care about the status games of elites? We'll just hunker down for another winter, watch the sun get lower and lower....Than get higher and higher, for the 20th or 30th or 40th or 50th time in our lives.....With no evident progress on the populist front. Garbage in, garbage out. Then repeat, ad nauseum, to the frustration and eventual boredom of us.

  10. Serial posting, I know. But wrt Star Wars, maybe there's a status zombie angle to the thing. Ya know, there's recently been scuttlebutt that "a lot" of people adore the movie (set to be an all-time grosser, doncha know?), with Mstream critics loving it. But "fan" ratings on a lot of sites are "suspiciously" low. Most status whores are becoming epoxied to the post-Lucas Star Wars brand because it pushes the right buttons for modern status LARPers, while old-school fans and the vast majority of proles either dislike the move or just don't give a shit about either the movie or the response to it,one way or another.

    Meanwhile, the ever dwindling number of conservative status minded people worry that it's not sending the right message, that it's "too popular" (even though the average person has no idea what the new characters names are, nor can they tell you anything about the plot, whereas Star Wars '77 and Empire had characters and plot points that more than 75% of the under 30 population were aware of), or that it has something smart to say about modern culture.

    These thoughts occur to me because what was regarded as simple minded escapism in the late 70's, 80's, and 90's is now becoming this hotly debated thing that is treated with the utmost reverence. Back in the 70's and 80's, only nerds were supposed to put any importance into pop culture; people were supposed to have better things to do. But being that so many people have become acutely aware of status, they now pore over anything with any kind of status association (be it a big budget movie or whatever) obsessively, instead of letting it speak for itself or getting on with their life.

    There's a striving angle here, since back in the 40's and 50's GIs and strivers didn't have "hot-button" (there's a word from the 90's for ya) debates about Flash Gordon serials. Striving and cocooning, the worst of both worlds.

  11. Typo: it should be GIs and Silents (Freudian slip, ha ha)

  12. Nice find on the "investment theory of party competition" -- not off-topic at all. Comes pretty close to what I arrived at, although he seems to prioritize getting information -- it's too expensive for commoners to do it, and cheap for elites to do it.

    Except that during the 2016 election, commoners didn't need to spend a red cent to learn about all sorts of topics they might never have heard of, let alone that there were pro-American positions on those issues, and which candidate was promising to represent the commoners' interests.

    And Trump's campaign was not funded or enabled in any non-financial way by the elites -- exactly the opposite!

    I'd prioritize power, in the sense of control over some key domain of society -- like the military's control over the use of force, the finance sector's control over the flow of money, and so on.

    Trump didn't have any powerful faction backing him, so once he took office, it got taken over by the power factions who back the party that he nominally ran under.

    Good reference for the history of party re-alignments, too -- I'll definitely have to read more into that. That's what I mentioned off-hand before, that party re-alignments are due to re-alignments among elite power factions rather than among voters per se.

    Anyone in the "elite-driven" rather than "commoner-driven" approach to politics is worth reading, especially if they have a collective rather than individualist view of political behavior, which he does.

    It's become very rare in our individualist age, where we also blame voters for everything (we're all guilty at some time).

    Thomas Ferguson -- with a Scottish name like that, he has to use common sense over clever-silly abstractions.

  13. First off a minor quibble. I only just ran across this myself, but when Ferguson says that it's 'expensive' for voters to get information, I take it as meaning expensive in the economic sense of the word. It doesn't cost money for a voter to become informed about the world, but it does take time. And that is time that a random voter might want to spend doing something else other than reading up on political candidates in detail. In comparison, and again this is very much likely a surface level reading based off of Wikipedia (at least until I pick up some of his books), elites are in a position where politics necessarily impacts their lives on a regular basis. So whereas a voter might not be necessarily exposed to, for example, tax policy beyond when they have to file taxes, a CEO/business owner/whatever is constantly exposed to such, has a whole network of experts on the company dime to advise him, etc. And of these circumstances, on any number of issues beyond taxes by the way, make it far easier for a member of the elite to obtain the information necessary to be able to know where to pour their considerable monetary resources for their own self interest.

  14. Second, and this is probably a far more major quibble, as I think about it I've got to question your definitions of the Dems as the finance party and the GOP as the Pentagon Party. For the Dems it's easy enough to point out that while the FIRE sector did donate more money to Hillary than to Trump, likewise they also donated more overall to Republicans than Democrats. Including Congressional Races, according to, the only year where Democrats got more money from FIRE than the Republican Party was in 2008. Otherwise, at worst it might be even, like in the early 90s. Now this might be an expression of a difference between the Congressional Republican and Democratic Party's and their respective Presidential Parties, but even then, at least in 2004 and 2012 the Republican candidate got more money from FIRE than the Democratic candidate. So ultimately, that being the case, what exactly is the definition of a 'Democratic' or 'Republican' elite faction if not for what is expressed in campaign donations?

    Furthermore, I question heavily the idea that Obama was restraining the Pentagon abroad and thus preventing a Pentagon bubble from occurring. Frankly, it doesn't take much digging to figure out that the Pentagon was far more skeptical of the military actions the Obama administration engaged in than other parts of the Executive Branch. For example, in a profile of Hillary Clinton in the NYT dealing with our intervention in Libya(, then Secretary of Defense Robert Gates' views are described as :

    "“I think at one point I said, ‘Can I finish the two wars I’m already in before you guys go looking for a third one?’” Mr. Gates recalled. Colonel Qaddafi, he said, “was not a threat to us anywhere. He was a threat to his own people, and that was about it.""

    Additionally, while those arguing in favor of intervention routinely at the time claimed that 'Gaddaffi was bombing his own people', three weeks prior to the intevention both Robert Gates and Michael McMullin, the Secretary of Defense and the Chairman of the Joint Chiefs of Staff at the time, categorically stated on March 1, 2011 that the U.S. military saw no evidence that Gaddaffi was engaged in air attacks on civilians( Compare this with then UN Ambassador Susan Rice telling the UN Security Council the utterly laughable line that Gaddaffi was providing his troops with Viagra so they could rape more(, something that turned out to be a complete load of bullshit. There are more examples, like Seymour Hersh's article (possibly sourced by then LTG Michael Flynn) that the Pentagon was providing intelligence to Assad to fight ISIS, Nusra, etc.), but from what I've seen I don't think it's accurate in the past eight years to say that the Pentagon was in favor of the conflicts we found ourselves in in Libya and Syria. Instead, it was the State Department, CIA, think tanks, etc. that were consistently in favor of our involvement and arguing in favor of escalation, especially in Syria. There might be something there, in conflicts that the State Department favors vs. the Pentagon, but still I think that raises questions about the idea that Obama restrained the desires of elite factions that were represented by the opposite party.

    So, I guess what I'm asking is both a more definite delineation of what the various elite factions are, which parties they align with, and most importantly what is defined as support for a given Party. Because while I think this is a very revealing way of understanding the American politics intuitively, absent a more concrete and objective way of understanding the behavior of elite factions politically, this view of the world is of questionable utility, to put it bluntly.

  15. I see what he means by "expensive" information. I'm saying I don't buy information as the key factor.

    Commoners got all the info in the world dumped right in their laps in 2016 -- on the source of our bloated military budget (serving as the military for Germany, South Korea, and Japan), on the effects of free trade deals, on how easy it would be to use trade deficits to compel Mexico to pay for a $10 billion border wall, that birthright citizenship is not in the 14th Amendment... just all kinds of relevant information that they could have ever needed. And that, crucially, went against the interests of both major parties (their investor blocs, in Ferguson's terms).

    Ferguson would have us believe that commoners simply don't know all the myriad, or at least the major, effects of free trade deals, open borders, and imperial expansion uber alles. Or, which politicians stand where on these issues.

    In 2016, they learned everything they needed to on the issues, and they learned with no uncertainty who their guy was to vote for.

    So that's why I say that access to information is not the main thing going on. They learned about policy X, what position reflected their own interests on X, and which candidate was alone in promising to push for their interests on X. And it took no time, money, or effort -- all beamed into their TV or computer.

    Those commoners are not seeing these positions pursued by the resulting government because they lack collective power to use as leverage over the "investor blocs" like the military, banks, etc., when it comes time to implementing policy.

    1. I was so excited for that brief moment on election night when the stock market plunged. Little did I know the stuck market bubble would blow to obscene levels.

  16. Here are two overview posts on who I think are the factions behind the Dems vs. GOP:

    The first post goes through more of the history of Democrat rule benefiting the informational sectors, and of GOP rule benefiting the material sectors.

    The second post zooms out a little more.

    There's also a category tag for all posts on the topic:

    Support for a party doesn't mean financial contributions to campaigns, though that's important. Under whose presidency were interest rates kept near 0 for eight years, and banks bailed out by the trillions non-stop? Obama. Under which Pres was Glass-Steagall destroyed, allowing investment banks to take over the whole economy? Clinton.

    Whose politicians consistently hail from the finance sector? Clinton, Schumer, Booker, Biden, whoever the new Governor of NJ is -- I just heard Goldman Sachs alum, and said, yup, typical Democrat politician. As typical as hearing that a Republican has a background in the military, energy, or agribusiness.

    And the flip-side of support is sabotage -- who does the Fed sabotage? Republicans, by spiking interest rates to set of a recession that gets blamed on the GOP. It stands to reason that the Fed and the related institutions it looks out for, do not support the GOP but the Democrats.

    I prefer to say these elite factions "control" their respective parties, rather than just "support". The banks, media, and tech companies employ Democrat politicians as managers of the elite sectors' interests. This management is done via government policy. And they don't "employ" directly -- they have to support them to get elected, but politicians really are just puppets who sometimes do or don't get the job that their master is seeking for them to get.

  17. Yes, Obama oversaw some imperial expansion, too, despite not belonging to the Pentagon party (metonymy). The miliary and the finance sector are powerful enough that even under opposition rule, they will at least get some action -- but not nearly as much as they would have if their own party were in power.

    Obama toppled Qaddafi, threatened but didn't bomb Assad, and helped Saudi in Yemen. They screwed up as always, but did not get the U.S. bogged down in these three countries.

    Meanwhile his predecessor launched two major unending wars in Iraq and Afghanistan, where we're still at after all these years. Obama drew down the presence in Iraq, and after a yuge surge in Afghanistan during his first term, drew it down there as well in his second term.

    And Obama's successor has already bombed Syria, stepped up the US troop count there to between 2,000 to 5,000 so far (they keep fudging and evading), and declared that the US will remain there indefinitely *even after ISIS is gone*.

    That's all in the first year, forget what's coming next -- something against Iran, vs. the Dems wanting peace with Iran (in order for the finance sector to invest there -- wrote a post on that earlier). Giving North Korea a bloody nose. Etc.

    There's no way we can look at the Obama years and say it was more militaristic or imperialist than the Bush or the coming "Trump" years (under control of three Generals from the Pentagon, who are undoing everything Trump campaigned on regarding foreign policy, NATO, and shrinking the military budget while making it more efficient).

    Just like, despite the giveaways to the banks under Bush and soon under Trump, nobody will be the whores of Wall Street like Clinton and Obama.

  18. J.S. -- don't worry, you're going to see a far bigger plunge in the stock market sometime during the Trump administration.

    It only depends on which election the Dems at the Fed want to blow up -- 2018 in order to take back the Congress ASAP, or write off Congress and wait till 2020 to make sure they take back the executive branch.

    At least this endless phony mania in the meantime will make the schadenfreude all the more epic when it does blow up. Maybe it will finally shock people out of their worship of the stock market -- which they don't even share in the profits of!

    Hell, the crypto currencies are already getting hit by a major correction, around 35% in just a few days!

    Fry, you greedy pigs, fry!

  19. stock schmock, who cares if the 1% profit and the WAGECUCKS suffer, as long as we can MINE LEFTY SALT, doesn't it feel good to BTFO DEMOCRATS?

    and we can't have ORANGE HITLER use his executive powers to break up monopolies and force our economy to reorganize, don't you know that's FASCISM #Resist #LearnYourHistory

    somehow the Corporate Mafia has everybody by the balls in one way or another and plays us like pawns

    that's also where I couldn't get behind the Moldbug-variety "Reaction" - and there's a lot that I like in there - but the idea of tech-utopia-corporatism is ridiculous

  20. By the way, it's a little lighter on the purely institutional analysis than say anything written by the aforementioned Ferguson, but have you by any chance read Listen Liberal by Thomas Frank?

  21. Haven't read, but did see his interview with Nomiki Konst for TYT, as well as Peter Turchin's post about it during the election season. And was familiar with his arguments from What's Wrong With Kansas?

    He's wrong about cultural politics supplanting class politics in red states. That was shown by Andrew Gelman et al in Red State Blue State Rich State Poor State. The working class in all states votes Democrat.

    But among the middle and especially elite class, there is a split between conservative states and liberal states. That is what makes Kansas red -- middle-class and above voting GOP for conservative reasons.

    They attribute this to post-materialism: if your basic needs are already taken care of, then you will concern yourself with issues that are higher up on Maslow's Hierarchy of Needs, like social and cultural matters.

    That leads to what makes some places conservative and others liberal, which I attribute to how abundant or stretched-thin the resources are per capita, drawing on "r/K" theory from ecology. Conservatives are from the r-selected niches where resources are abundant, liberals from K-selected niches where they're stretched thin.

    In the interview that Frank had with Konst this year, he didn't show any awareness of how the split is at the middle class and above, and was still talking as though the working class of Kansas had been bamboozled by the Cultural Right.

    But the main solution he points to is correct -- dropping identity politics and making it about class and economics again, and from a populist / New Deal perspective.

    He doesn't go far enough, IMO. He should be saying that Democrats must openly declare a truce on social and cultural issues if they want to win the middle class in conservative areas.

    They don't have to switch sides and loudly champion the conservative position -- they just have to STFU about social issues and let the chips fall where they may on those topics.

    A lot of folks on the Left are adamant about "not compromising" on social issues, which means they're going to lose. Just keeping quiet is tantamount to liberal treason, in their minds.

    But that's where the Trump people come in -- if we act as the cavalry for the Bernie wing, we can say what a lot of Dems are already thinking. Just shut up about social issues, let them play out however they're going to play out. Too emotional, too taboo, too little of a pay-off, and a whole lot of wasted time, money, and effort -- when no one gets convinced to switch sides anyway.

    We can appeal more to the folks that the Bernie wing is trying to win back. So step aside and let us do our thing, or at least learn from our example.

  22. From the sounds of it, I think you'd find Listen Liberal at least an interesting read. Best description I can provide is that's it Frank trying to explain the changes the Democratic Party has undergone in terms of professional, managerial types taking over the Party and reorienting it from a working class institution into one that's oriented towards trying to win over fellow middle and upper class people and detailing the consequences of that shift on Democratic philosophy and policy.

    So for example, Dems try to be the Party of finance because upper level Democratic political leaders went to the same Ivy League schools as the Wall Streeters and know they must be really bright and know what their doing, etc. As I think about it, it might be a little weak on material considerations outside the Democratic Party, but I do think it at least provides some useful datapoints and analysis.

    Additionally, I think you and a lot of other people misread what Frank was saying in 'What's the Matter With Kansas'. It's way more developed in Listen Liberal, but the issue isn't that people's basic needs are taken care of thus politics revolves around culture. It's more that Democrats chose to adopt Republican lite positions on a whole host of material issues, meaning that voters didn't really have a choice on those issues, meaning that cultural issues came to the forefront.

    So for example, with NAFTA an industrial worker in Wichita can figure out that whether they vote for a Democrat or a Republican, their going to get free trade that'll see their job being outsourced, it's just a question of how 'nice' the process will be. So since they don't really have a vote on material issues, politics revolves around culture because that's the only thing they have a vote on and they vote Republican because the Republicans stand for more traditional values, which are closer to their cultural values.

    Granted, like I said this analysis ignores the why of it. Why did voters only get a choice between free trade with job training and free trade without for example. And while again Frank focuses on the elites in terms of the effect of elite culture on political parties and their philosophies, I do think, again, that he still has managed to write some very good analysis, keeping in mind it's limitations.

  23. It's not true that the working-class votes Republican in red states. They vote Democrat. Frank does not look at data, and makes up stories that sound plausible to him.

    Working-class red staters don't shrug their shoulders about there being "no difference" on class between Dems and GOPs, and resign themselves to voting on secondary cultural differences instead. They know the Dems are better on class than the GOP, regardless of that gap having gotten smaller over time, and they continue to vote Democrat, albeit not as highly as before.

    Working-class voters vote Democrat, and they're much closer to each other across states from the red - purple - blue spectrum.

    It is elites who are highly polarized by geography -- elites in blue states vote very Democrat (putting them close to the working class in their states), while elites in red states vote very Republican (putting them far away from their local working class).

    Party polarization reflects conflict among the elites, as rival economic factions try to control the economy for their own benefit (informational vs. material sectors). It does not reflect polarization further down the class pyramid.

    Another way in which politics is primarily elite-driven rather than commoner-driven.

    Frank's initial gripe is why do certain states vote so staunchly Republican, when the working class should be turning every state blue?

    He's attributing the red-blue pattern of states to differences further down the class pyramid, albeit in a sympathetic way (workers voting on culture, when the two parties are supposedly identical on class).

    But it is what material sectors the state's elites rely on that determines whether it's red or blue. A state with large military bases, plantations, and oil fields -- will never vote blue, during the period when blue represents the informational sectors.

  24. That's the main weakness in Frank's analysis -- it is commoner-driven, and the solution is trying to persuade the commoners to start voting Democrat again.

    The reality is that politics is elite-driven, so the Democrats true weakness has been in putting together enough elite factions to hold together enough states and electoral votes. Their party has shut out the elite factions of the Rust Belt.

    The Republicans also have a weak ability to draw enough elite factions to win the White House, also unable to win the elite factions of the Rust Belt. Except when Trump flipped the script. Then they thought, "Maybe we'll be part of the GOP's gravy train for once."

    Since both parties shut out the industrial elites, that left the modern elites. And there are more banks, insurance companies, and wannabe tech hubs in the Great Lakes, as opposed to agriculture, energy, and military bases. Not a giant gap, but clearly resembling an economy where Democrat factions would come from.

    The solution is to put the old industrial elites front-and-center in a new coalition of elite factions. It looked like Trump was going to bring factories roaring back to life, and bringing back more from abroad, which would open up opportunities for Rust Belt elites to oversee even more workers and profits.

    Since the electorate is much higher status than the population overall, you're pitching more to high-status than to low-status people.

    And for once, the elites or aspiring elites of the Rust Belt felt like they were going to be part of a major party's patronage network. Turns out not to have worked, and I don't see the aspiring managers and professionals of the Great Lakes wanting to stay Republican for longer than there high-risk gamble on the GOP-if-aligned-with-Trump.

  25. To complete the view, the shift toward the GOP (for President anyway) among working class and union members in the Rust Belt also reflects their belief that they would be part of the GOP gravy train, if that party was going to become the champion of industry and manufacturing.

    Whether commoner or elite, the voter is asking which party is most likely to cut him into the patronage network controlled by the party.

    If the party is mulling an expansion or acquisition of a new economic sector, the elites and commoners who depend on that sector may decide to give the acquiring party a shot.

    If the party backs off from cutting that sector into their patronage network, the commoners and elites from that sector will also cool off from supporting that party.

    By mid-terms, let alone 2020, the working class as well as the professional and managerial class of the Rust Belt aren't going to give two shits about "electing Republicans," after the GOP has backed away from including manufacturing and industry in their gravy train.

  26. To issue my final defense of Frank, let me say this. His problem is not so much that he is too focused on commoners. Again, his most recent book focuses nearly exclusively on the character of the elites who support the Democratic Party and whose support the Democratic Party has been courting for the past several decades. The fundamental weakness in my opinion, after reading you're responses, is that he focuses too heavily on an ideological analysis rather than a material one. So, while if one is paying attention, at least in his latest work, one can find quite a bit of interesting things about the modern Democratic Party if one connects some dots.

    For example, reading the Listen Liberal it's clear that the sectors that the Obama Administration tried to most represent were finance, health care, and technology. Frank ties this to them being sectors where the professional-managerial class predominates, with this being the class that the modern Democratic Party has tried to build it's base on. However, he doesn't tie it to the material realities of those sectors that would make those sectors align more with the Democratic than Republican Party (i.e. relatively small payrolls, the way monopolies in tech and health care end up working, etc.)

    So again, Frank's latest book is useful, and a lot more developed in many ways than 'What's the Matter With Kansas'. The basic problem remains that Frank focuses too much of his analysis of causes on the personal rather than the material. Again, he figures that finance supports Democrats primarily because Democrats and Financiers graduate from Ivy League schools, rather than an analysis of what material realities would make finance prefer the Democratic Party to the Republican Party. His analysis of the effects of these policies I think is spot on, and the intellectual history while being of questionable utility is still useful for explaining individual motivations within the Democratic Party. But again, having read what you've written I agree that the lack of any material analysis on Frank's part is a weakness.

  27. What are his main solutions from Listen Liberal? If he's focused on personal motives, like going to the same elite schools, does he say the solution is for Dem politicians and activists to reach out more to the working class?

    Nothing wrong with that, but you need to cut some group of elites or aspiring elites in on the gravy train as well.

    Rather than, "Reach out to the working-class," it should be "Reach out to economic sectors not already in your coalition." Take steps to cut the industrial and manufacturing sectors in on the Democrat gravy train.

    That brings the owners, managers, and workers of the new sector on board as a gestalt whole.

    Right now, the Democrats are only reacting negatively to free trade deals, which is not the same as a positive alternative. Promote re-industrialization, rather than offer more trade adjustment assistance when the factories leave.

  28. There is an element of a solution presented in the book. But it's more along the lines of 'FDR's braintrust was smart, but not all were Ivy educated and they came from across the country, copy that' rather than 'reach out to other elite sectors in the economy', but it's been a while since I read the book, so I'd have to read it again to give a more accurate answer. So in certain ways the message is there, to the degree that a Wall Street bank has different interests than a local bank for example. But for the most part it is focused predominately on analysis rather than solutions per se, and analysis of cultural trends within the Democratic elite as a whole. This excerpt is a sample of some of the tendencies within the book (,_the_inequality_sweepstakes/), such as identifying the senior members of the Democratic coalition at the very end and not making the next leap from there.

    On a related note, something that just came to me. Earlier you referenced the whole 'Red State Blue State' study, that poor people haven't abandoned the Democratic Party and that changing patterns in the electorate are the consequence of elite reshuffling. While the more I think about it, the more that it makes sense, and while I'll have to go look into it myself, I'd like ask what you think about this hypothesis. That while poor people vote heavily Democratic in states that are Red and poor, we also know that usually voter turnout nationwide hangs at around 55% or lower of all registered voters. We also know that wealthier voters are more likely to show up to vote than poorer ones.

    To what degree do you think it's possible that the Frank thesis would be right if modified to 'voters don't show up to vote for parties that don't represent their interests?'. Honestly I'm just spit-balling with this idea, and it does't really have much to do with the more important questions of how intra-elite fighting and polarization occurs and shapes what the parties offer, but given the large number of people who don't show up to vote, it does make me wonder to what degree those tendencies would have an effect on electoral outcomes.

  29. First off, Merry Christmas. Second off, a question for when you're done with the festivities. Under a theory that the most important aspect explaining the behavior of political parties are the wishes of the elite factions that are the senior partners, presumably that gives the senior partners a large amount of power in choosing and vetoing candidates for office (as Nate Silver was so fond of reminding prior to Trump clinching the nomination, The Party Decides).

    If that is the case, within the Republican Party what is your belief as to how Trump managed to win the nomination in 2016 when Republican elites appeared to be so against him? Was it actually the case that he had managed to create an elite coalition that simply was ignored, or is it, as I suspect, that we're entering into an era politically where the influence of coalitions of elites is eroded to such a degree that a single elite can wield disproportionate influence as well as a more 'crowdfunded' candidate or movement?

  30. Merry Christmas. More accurate is: "The people decide, the party governs".

    How closely the party's governance matches the people's decision, reflects how much leverage the people have over the party itself or its elite power factions, as well as how responsive those two groups are to the low-level voters.

    The party's elite power factions try to restrict the range of debate by funding candidates lying within the allowable range. But strictly speaking, a Ross Perot or a Donald Trump can sneak through by being independently wealthy, and garner a lot of votes.

    I think the mere fact that the Democrats let Bernie Sanders run, shows how relatively more hopeful their side is for voter-driven candidates ("twenty-seven dollahs") and voter-driven policies.

    Sure, they rigged the primary in all sorts of ways, but so did the Republicans. The functionaries of the Democrat party, as well as their elite power factions, let all sorts of things slide in their attempt to bump off Bernie.

    With Trump, Fox News was just 24/7 hysterical anti-Trump propaganda from fall 2015 right through early spring 2016. Every major Republican figure came out and loudly denounced Trump in the most puritanical moralistic terms -- not just as a well-meaning but pie-in-the-sky idealist who could not win a general election, which were sympathetic and pragmatic criticisms.

    Democrats are a relatively healthier party, and are willing to at least hear a candidate out -- as a way of letting that group of their voters express their wishes -- even if they're plotting to have the superdelegates swing the nomination at the end.

    The Republicans didn't even want to wait for a delegate theft, altered convention rules, or contested convention (their version of superdelegates). They went immediately and overtly into "torpedo Trump" mode. It was so brazen, pathetic, and damning.

    But that's the theatrics during campaign season -- much more important is what happens once a candidate gets into office and starts governing. That's when the elite power factions and the party can really over-rule the people's decision during the election.

  31. As for turnout changing over time, let's look at the General Social Survey ("race" is whites; "educ" is years of education 0-12, 13-16, 17-20; "voteYY" where YY is year).

    Among post-grads (17-20 years of education), turnout is constant, roughly 85-90% from 1968 through 2012 (data not in yet on 2016).

    Among college grads (13-16 years), turnout is also fairly constant in the 70-75% range.

    Among non-college grads (0-12 years), turnout is also fairly constant in the 55-60% range, although '68 saw a peak of 64% and '12 saw a low of 50%. Still, hard to see a clear downward trend.

    You could argue that after '68, it stopped being such a working-man's party, especially with Carter being the first mover in the de-regulation trend and running as an evangelical Christian. We'd have to see good data from the New Deal era to get a better sense.

  32. Well, until I figure out how to use the GSS data, I'd have to reserve judgment on that. Off the top of my head, I'd assume there's going to be some effect from the decay of unions in the private sector, with as you've noted previously union households voting heavily Democratic. Combine that with the fact that non-college degree does not necessarily mean working class, and I honestly have to ask what a finer analysis of the GSS data would reveal. Are there any good places to read a 'how to' guide for the GSS data? I only ask because as a really shitty engineer at the moment, I never took a class that even touched on GSS data. Again, Merry Christmas and I hope, if you don't get any good presents, you have a good time with family and friends tomorrow. By the way, a little old and questionable on certain assertions, but overall I think Thomas Ferguson's commentary would be appreciated around here (


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