The electorate is — and I’m searching for an imaginative euphemism — malcontent, let’s call it, with the political center in Western democracies.
The problem, in a nutshell, is that outcomes are sh-t for too many people.
I realize that’s the furthest thing from obvious to a lot of you. If it weren’t for my extensive first-hand experience with the “other half,” so to speak, as well as my habit of goal-seeking dismay via statistics about inequality, I’d be oblivious too thanks to my accidentally fortuitous circumstances. But it’s reality. Outcomes, all sorts of them, but particularly economic outcomes, are awful for far too many people in rich nations.
I tend to distrust surveys which claim that XYZ share of the American public couldn’t fund a $500 emergency expense out of cash on hand. But I don’t distrust the overarching message from those surveys, which is simply this: Somewhere around four in 10 households in America are vexed on a regular basis by the cost of necessities. That shouldn’t be the case. Yes, at least four in 10 Americans are lazy and stupid, but they aren’t that lazy and stupid. The system, which intersects and is in many ways synonymous with, the political center, is failing the public.
So, what do you get? Well, you get Donald Trump. And people like Trump. Populists. And demagogues. Grifters. Charlatans. And so on. “They’re eating the dawwwgs. The people that came in. They’re eating the cats.”
Have a look at the chart below. You might’ve seen it before. I have. It’s from BofA’s Michael Hartnett, who does what I do when he runs out of new charts: He recycles old ones.
That’s the share of voters in the UK and France who support mainstream parties. It’s low. The lowest since 1918 in the UK, in fact, and the lowest in France since World War II.
Why? What accounts for that, and for the analogue in America, where mainstream Democrats are being pulled leftward and where the old guard GOP has gone virtually extinct?
Well, have you seen your cat lately? Where’s Miss Sassy? Simmerin’ in a Haitian voodoo cauldron?! Or maybe just hunting mice in your own basement.
Even if sundry Sassys and Lassies aren’t actually being rotisserie’d (which is to say even if immigration fear-mongering is by now a caricature of a caricature such that even Pat Buchanan might occasionally blush), the economic outcomes are still sh-t for huge swathes of the electorate, and they want someone to hang. Figuratively. Or even literally.
Maybe Baptiste didn’t barbecue Fido, but he might’ve taken that sweet gig drivin’ a school bus you wanted, and somebody’s gotta answer for that. Baptiste can’t. He doesn’t have any answers, or at least none you can understand, because he doesn’t speak English and you’re only bilingual if “poor redneck” counts as a separate language. So you’ll move on to scapegoating the “real” bad people: Establishment politicians. If it weren’t for them, Baptiste and his family would be where God decreed it: Back in Haiti, buried under earthquake debris.
What does all of this mean for us? For the fortunate? For traders and investors? In due time, it means the downtrodden masses will come for what we have. They’ll take our property and kill our families (not me, though, I don’t have a family) and there won’t be anything we can do about it because there are 100 or 200 or 500 of them for every one of us. But that’s probably a very long way off.
Between now and the bloody peasant revolt, it means the abandonment of fiscal rectitude, vigilantism in the bond market and, perhaps, the co-opting of monetary policy to cap interest costs in the face of a buyers’ strike.
The figures above are also from BofA’s Hartnett. He likes those. A lot. This week marked at least the third time I’ve seen them this year.
Conceptually, the US government’s the third-largest economy on Earth, at $6.8 trillion. That figure (the spending figure) is up 50% this decade, Hartnett despaired, noting that annual interest payments on America’s debt are headed higher, Fed cuts or no Fed cuts.
“Electoral disinterest in mainstream parties is mirrored by investor skepticism that mainstream fiscal and monetary policies [will] be enacted in the 2020s,” he went on. That accounts for the “‘buyers’ strike’ in government bonds” which he reckons will “only reverse” if the US election produces “iron-clad political and fiscal gridlock” inside the Beltway.
Pray for gridlock I guess? Because nothing says “trust your government” like a frozen legislature that can’t get anything done.
Perhaps we can just print our way out of this?! I used to work with a guy who grew up in Beirut during the 70’s war. He told me that it was cheaper to wipe his butt with local currency than it was to buy toilet paper. Aahhh – the good ‘ol days!….
When did Lebanon issue the world’s reserve currency? I must’ve missed that era.
You’ve heard of shekels? Of course you have. That said, it’s been a long time since the Phoenicians minted any.
Your twelfth paragraph hit the bulls-eye.
I fantasize about master planning and building Gaza into a world class Mediterranean global resort. It could be done in a decade.
For the Gazans, and to be run by the Gazans.
I think we all know what’s more likely to happen to Gaza: Israel’s going to (re)occupy it and eventually (re)settle it.
The West Bank, too.
There are times-occasionally- that the rich/powerful figure it out before the tar, feathers, and pitchforks. It’s even happen here! Read “End Times” by Peter Turchin. I’m hoping this is one of them.
As I tell my daughter, who hates it, it’s good to be old now. They won’t get around to me any time soon. My daughter, sadly, is exposed, and isn’t paying attention to the quicksand she is inhabiting. Que sera.
I for one try to distance myself from believing in extreme outcomes or rather, I’m a reformed believer in extreme outcomes. Even the extreme things that have happened in history were not sudden. The German’s gradually became the horrible people that they are remembered for now, it wasn’t over night and it could have been checked if western democracies were willing to ignore Hitler and look at reality. Things are not now worse than they were at the end of the Gilded age, poor has taken on a new meaning in the modern prosperous version of America. Inequality in that time was far worse than it is today. You had entire towns owned by the firm that ran the factory, owned the houses, and owned the stores. Every penny earned was put back into that owner’s pocket. If the people didn’t revolt then and take everything, in an age when weapons were far less efficient than they are now, I doubt highly the narrative that the poor are coming for us in this age of inequality. But, I agree that this current economic scenario is not tenable. Something has to be a change agent other than dopes falling for despots and pledging their soul to a political cult. What changed things before? Usually something catastrophic or earth moving, not a person or a political party, but an event. I believe we are due for another surprise event, something we can’t predict nor prevent, in the times when things are the worst do people find reasons to put aside old grievances and work together, not because it’s convenient and nice or the “Christian thing to do”. But because that’s what you better damn well do if you want to keep on living. The assumption for decades has been that climate change would be that catalyst, and maybe it eventually will. We all see the impacts of it now, whether or not we want to admit through our narcisism that we were wrong or that the thing we are seeing is what the people we disagreed with said would come. But the adaptable human race is pushing through that catastrophe and normalizing it, so it goes. Economic is certainly another disaster that again, people have been saying will come for decades. Again, it has, we adaptable humans figured out a way through it, clever little buggers that we are. So what will it be? I don’t honestly know, but here is what I do know. Humans are not even close to peak growth as a species. The geniuses who do that kind of math have that pegged for 2080 or so, not in my life time. So what’s the point in looking for the next disaster, the thing that will bring us humans to our knees and have us living in bomb shelters killing a zombified version of ourselves incessantly? If peak growth of the human population isn’t in your life time then why not be optimistic? If a super virus that was projected to wipe out a 3rd of us and take a decade to solve is over in a couple of years, shouldn’t we be more optimistic? If humans keep solving the problems that “experts” claim will destroy society, why pay attention to them? The future is bright (brighter with less atmosphere!) stop worrying about what will go wrong and focus on how to make what is going right work better for everyone. And then maybe we can stop being marks who get played into monetizing fear and anger for some 1%er who is such a nihilist that he doesn’t care at anyone but himself and his family.
Any idea whether the markedly higher gov interest payments are likely to materially increase m2’s growth rate going forward?
I’ve been rolling the idea around in my mind that, Yes. So-called centrist policies have been a failure. We can’t keep favoring the super wealthy with tax breaks, subsidies, contracts and power and expect the deficit to go away. Once upon a time, the US had a progressive tax code. That has largely been eliminated. And now the super wealthy would prefer to take their chances with an autocrat, than to ‘foot the bill’ for anti-crime policies like social security and welfare. You want to see a real gang and mafia problem? Strip the desperate of any financial help at all. Ignore their pleas in court and policy, and force them to go to Don Vito. The super wealthy will keep partying behind tall walls with armed guards and bullet proof buses and think very well of themselves and how the poor just need to work harder for less. I try, but I’m running dry on fixes.
The solution here seems fairly obvious: I need to pick out a signature costume and lead a revolution. Every great revolutionary had a costume, I feel like.
If there is one lesson history teaches which has proven infallibly true, it’s this: if you’re leading a revolution, you can’t go wrong with a tricorn hat.
Very funny comment!
I don’t believe the sky is falling and I tell my grandkids that the world is slowly getting better for everybody.
This is a great read, if you are looking for optimism:
https://www.amazon.com/Factfulness-Reasons-World-Things-Better/dp/1250107814?dplnkId=2638f98b-2036-4b8c-bc1e-99cbf0e7e21b&nodl=1