Ian Welsh

The horizon is not so far as we can see, but as far as we can imagine

Month: April 2025 Page 1 of 4

Liberal Party Wins Canadian Election

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On April 28, 2025

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Canadian Flag

Canadian Flag

Update: minority Liberal government which will require help from the NDP to survive non confidence motions. Hopefully the NDP will be smart and tough enough to hold out for electoral reform in exchange.

The left-center NDP is being slaughtered and seems likely to lose its official party status.

Five months ago I would have said, and did say, that the Conservatives would form the next government, with Poilievre (a Trump figure) as Prime Minister.

Fortunately, Trump truly is a Christ-like figure, and raised the Liberal party from the dead. Poilievre mishandled Trump’s threats, saying that Trump had a point and so on. Living in an right wing echo chamber he thought that Canadians aren’t patriotic, and most are. This was an unforced error. Ontario Premier Ford did the opposite: he ran against Trump, called a surprise election and won handily. I despise Ford, but he’s a smart politician. Poilievre, on the other hand, is just an attack dog, and a true believer in Trumpist style right wing politics.

This isn’t to say I like the Liberals or Carney. Carney has the dubious honor of haveing beeen in charge of Canada and Britain’s central bank, and is the only central banker to blow housing bubbles in two countries. As for the Liberals, they were a terrible government and the only good things they did were forced on them by the NDP, whose support they needed to stay in government.

Trudeau’s liberals let in record numbers of immigrants and the result was massive increases in rent and a smother of wage gains.

The mistake that Canadian Conservative voters made, which Trump saved Canada from, was the assumption that Poilievre would be better. He would have been far, far worse. There was even talk of creating a Canadian “DOGE.”

Canada, much like America, needs a proportional vote system, so that the two and a half party monopoly can be broken up and a Trump-like figure locked out of government unless they can achieve a genuine majority.

We’ll see how Carney does. Though I don’t like his record, he has said some very sensible things about re-industrialization in Canada, including proper vertical integration. There’s almost no mineral resource Canada doesn’t have, if we want we can easily re-industrialize. He’s also talked some sense about the housing market.

Whether he carries thru remains to be seen. He won’t be fantastically successful, he’s still a neoliberal and committed to policies like low taxes on the rich, but as neoliberals go, he may turn out not too bad.

Fingers crossed.

Update 1: Looking like Poilievre may lose his own riding. For context, Poilievre is an MP in Ottawa, Canada’s capital, where the largest employer is the Federal government. Poilievre said he would gut the civil service and even threatened to DOGE it. Truly in the running for stupidest politician in the world.

 

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How Biz Profs Destroyed Free Markets

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On April 28, 2025

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Economics is largely a worthless discipline. Its axioms, like humans being rational utility maximizers, are simply wrong and everything built on top of them is thus flawed. It reminds me of pre-Copernican astronomy, which was based on the idea that the sun and planets revolved around the Earth. The difference is that pre-Copernican astronomy more or less worked and economics mostly doesn’t.

But there are insights in economics, and there’s a cluster around free, or rather, competitive markets. In order for competitive markets to work:

  1. There must be lots of buyers and sellers, so no one has pricing or buying power.
  2. There must be no significant barriers to entry. If you can’t start a new business doing whatever it is, market incumbents can jack up prices. Barriers to entry are both legal and technical: if there’s no availability of whatever is needed to make the product, that’s a barrier to entry.
  3. Products must be roughly the same. If one producer is able to produce much better products, then people will buy that. This means, in effect, that intellectual property laws must be open, or people won’t be able to produce roughly equal goods.
  4. Collusion in setting prices cannot be allowed, nor can special deals like larger buyers getting better prices. (A large supermarket which pays lower prices will drive smaller ones out of business till there are only a few major supermarket firms left.)

Now the problem with competitive markets, from the point of view of capitalists, is that they keep profits low. If you start jacking up your prices, your competitors will get the business, since the products are about the same and since other firms can easily enter the business.

Competitive markets lead to fast innovation and low prices, with any high profit periods due to innovation lasting only as long as it takes for others to reproduce the new product. If you want high profits over a long time period you have to keep innovating, you can’t make essentially the same product forever and expect to make more than average (low) profits.

But business hate competitive markets, exactly because they do make it almost impossible to make high profits over the long term.

So business profs and consultants read the economic literature and said “if we want to make high profits we have to find or create businesses which are not competitive.

Reverse engineering, high profits come to companies which are oligopolies or monopolies so they have pricing power; to companies in industries where there are significant barriers to entry, whether thru intellectual property laws or vertical integration; to companies that have a better product because no one else is allowed to make that product (pharma is great at this); and to businesses which collude on prices. Right now, for example, a lot of landlords subscribe to a software service which sets prices and even keeps rental properties off the market in order to keep rents high.

There are other tricks, of course. Health providers, in general, have an advantage. When someone’s seriously sick they can’t really comparison shop and they’re desperate, they’ll pay whatever they have to save their life or get well.

Another one is network externalities. If everyone’s on one site or a few, then other sites have a hard time competing. Think of Facebook’s suite of sites, or think of Google’s monopoly on search.

When Private Equity and investors who provide seed capital roll up firms or invest in new firms, they’re either looking to liquidate those they buy (PE likes this) or they’re trying to destroy a competitive market so they can charge much more than a competitive market would normally allow.

One of the things which has made China so dynamic is that it has much more competitive markets than America or Europe. There are dozens of EV firms, for example. Tons of drone makers. Multiple space companies. Absolutely massive supply networks where you can buy anything you need to make whatever it is, or get them to make anything new you’ve thought up. IP laws are weaker, and often not enforced, and so on. Where there is market power, the government often steps in either to regulate what firms can charge (in natural monopolies like power distribution, for example) or to prevent the use of that market power to freeze out competitors.

As the US and the West have financialized, they’ve destroyed most of the laws which were in place to keep markets competitive. Eggs, for example, are not high priced primarily because of Avian bird flu, but because there are only a few oligopoly suppliers in the market, and they’re making more money with shortages than they would by providing as many eggs as people really want to buy at lower prices. Those prices would still be profitable, but they would be obscenely high.

Almost all Western industries are now entrenched behind various barriers designed to give them pricing power: to allow them to charge more than they could in a competitive market.

So China, with competitive markets, produces EVs which cost under 20K in many cases. Everything they produce is cheaper than in the West. This isn’t all about barriers and non-competitive markets, but a lot of it is and most of what seems to not be about competitive markets, like needing to pay American workers more, really is. American workers need more money because of high rent, high health care costs, high tuition, high real estate prices and just, in general, high prices. When Chinese show Americans their grocery bills, Americans are startled and some even cry, they are so much cheaper.

So driving up prices deliberately makes US goods in particular, and Western goods in general non-competitive because it jacks up the cost structure.

Matt Stoller, of course, is the premier thinker and activist around this and his BIG column is worth reading regularly.

But the simple takeaway is that your life sucks and the West can’t compete because of non-competitive markets and the regulations which are bad are those which make it non-competitive: horrific IP laws, non enforcement of anti-trust, allowing huge mergers and so on.

If America and the West are ever to be competitive again, we must make markets competitive and where they can’t be, in natural monopolies like energy and water and so on, we must have regulations that directly control prices, as we did in the 50s and 60s, where utilities were basically guaranteed a 5% profit, and forced to reinvest in infrastructure (no California fires because PG&E would rather pay dividends then replace century old power lines and poles).

This isn’t really a hard problem, conceptually. We know how to create competitive markets, and regulate non-competitive markets. We’ve done it before. It is entirely a political issue, because incumbents with tons of money also have tons of political power.

But don’t let anyone spew nonsense like “it’s complicated” or suggest it’s an unsolvable problem, it isn’t.

 

You get what you pay for. This blog is free to read, but not to produce. If you enjoy the content, donate or subscribe.

Week-end Wrap – Political Economy – April 27, 2025

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On April 27, 2025

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by Tony Wikrent

 

Trump not violating any law

‘He who saves his Country does not violate any Law’

 

‘We’re Not Stopping’: Trump Border Czar Vows to Ignore Judges

[The Daily Beast, via MSN 03-18-2025]

 

Prepared to Return Abrego Garcia—Until Trump Intervened

Malcolm Ferguson, April 25, 2025 [The New Republic]

Some officials in the Trump administration tried to bring back Kilmar Abregoa Garcia just days after he was deported, but the president shut them down.

Since Abrego Garcia was unlawfully deported last month due to an administrative error, the White House has vehemently maintained that it will not try to return him to the United States. But a report in The Atlantic Friday revealed that in the days after Abrego Garcia’s deportation, some officials did in fact try to bring him home.

A lawsuit from Abrego Garcia’s family reportedly “sparked urgent conversations among attorneys at the Departments of State, Justice, and Homeland Security,” and concern about the lack of evidence behind Trump’s claims that Abrego Garcia was part of MS-13, sources told The Atlantic.

The officials floated plans for the father of three’s return and sought ways to protect his safety while he was detained in El Salvador’s notorious megaprison, CECOT. But at the same time, backlash against the administration’s response (or lack thereof) took off, prompting the White House to change course entirely. Abrego Garcia’s case was no longer an “administrative error” but now the justified deportation of a “foreign terrorist” and MS-13 member—an evidenceless story Trump is now using to defend his unlawful deportation efforts as a whole.

“Abrego Garcia’s deportation became far more than just the case of one man; it developed into a measure of whether Donald Trump’s administration can send people—citizens or not—to foreign prisons without due process,” The Atlantic’s Nick Miroff wrote.

 

Trump Makes Alarming Confession on Wrongly Deported Immigrant

Malcolm Ferguson, April 25, 2025 [The New Republic]

Donald Trump is openly admitting his defiance of the Supreme Court on Kilmar Abrego Garcia.

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The End of Anti-Semitism

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On April 25, 2025

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We live in a weird time: the accusation of anti-semitism has never been more common and the consequences have never been more severe, but the accusation has never been more likely to be a compliment.

In most cases today, if someone is accused of anti-semitism, they are being accused of being against genocide. Against the mass murder of ci civilians. Against children being deliberately shot in the head and against prisoners being raped to death

To be sure, real anti-semites exist, but if someone hasn’t been accused to anti-semitism, one knows they have no ethics and are either a wimp, unwilling to even say “genocide is bad” or an evil person who thinks genocide is good.

On the other hand the phrase “pro Israel” means “supporter of mass murder, the deliberate killing of children, and of raping people to death.” If someone describes themselves as pro-Israel they are evil, they have condemned themselves out of their own mouths and no decent person will have anything to do with unless coerced.

The irony, of course, is that by wrapping themselves in Judaism Israel has made the charge of anti-semitism bear no moral weight and has increased real anti-semitism, as many people no longer take the care to distinguish between Zionism and Judaism. This is unfair to the many Jews (almost all outside of Israel, Israel is in the running for sickest society in history) who have opposed Israel’s genocide.

If you ever asked yourself “what would I have done were I alive during the Holocaust and aware of it?”, well, the answer is “whatever you’re doing right now.”

Your soul has been weighed, and many should pray it does not fall under Ma’at’s gaze.

You get what you pay for. This blog is free to read, but not to produce. If you enjoy the content, donate or subscribe.

Trump Has Made It Impossible For America To Resist China

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On April 24, 2025

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Chinese and American flags flying together

For a long time I thought the new world order would be a perverse mirror of the Cold War: two blocs facing off, periphery war, minimal trade between them (There was some trade, mostly in commodities.) The difference this time would be that the US was leading the weaker block, not the stronger.

Trump has made this very unlikely. His tariffs and threats have broken the unanimity of the alliance and vassal circle. The EU is in China right now seeking to cut a trade deal with the possible of end of many sanctions on the table. Canada’s presumptive PM has said the old order is dead. When China cut off US LNG who stepped into the gap? Australia and Canada. Even Japan, the most loyal of vassals, has noted that you can’t make a deal with Trump, because blackmailers always come back for more.

With the EU, Japan, South Korea, and the Anglosphere, the US had a credible trade and military bloc. Without them, there’s no goddamn way. They don’t even have to go over to China’s bloc, they just have to be neutral.

And that’s the way this is tending, economically, with signs that military is to follow. The EU is attempting to remilitarize and it is trying to stay away from American weapons as much as possible. Canada is reconsidering both Aegis and F-35s. And so on. Without allies to buy its weapons, the US mil-industry complex will wither. If Japan isn’t considering getting its own nuclear deterrent, it would be geostrategic malfeasance.

Trump thought that the US was still the essential nation. That if it put the pressure on, everyone else had to buckle. But those days are gone, and Trump’s stupidity is not only going to cost the US its empire, its dollar privilege and inflated standard of living, it is costing the US even its leadership position.

This is likely a good thing for the world, overall, though lack of some sort of secondary great power able to resist China somewhat will have costs.

But Americans will regret it bitterly.

You get what you pay for. This blog is free to read, but not to produce. If you enjoy the content, donate or subscribe.

Fiscal Failure & The French Revolution

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On April 23, 2025

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(Post by Bruce Wilder, Elevated from the Comments)

The French Revolution is in many ways, it is the prime historical example of state failure related to fiscal failure (the inability to tax the rich in particular) leading to revolution (and post-revolution, to the unleashing of state capacity in Napoleonic empire building)

Ancien Régime France at the end of the 18th century had an underdeveloped financial sector, was overpopulated relative to its agricultural productivity, had lost a big chunk of its colonial empire and despite the theoretical advantages of its 17th century legacy of centralizing absolutism, was a litigious society of particularism, privilege, and resentment.

The crisis when it came found many fissures in the fiscal firmament of the state. The privileged often enjoyed exemptions from certain taxes, sometimes purchased with office by some ancestor. The collection of certain taxes was in private hands. At the time of the revolution, an extensive wall around Paris was being built by a consortium of private “tax farmers” expecting to grow rich on their role in colltecting such taxes. So, it wasn’t just that the rich and powerful avoided paying taxes, key figures were also skimming from the tax revenue collected.

The expedients of a fiat money and a central bank had been tainted fatally by John Law and the Mississippi Bubble. The Paris financial sector was entirely in the hands of Swiss and Dutch bankers and speculators. One of these, Necker, followed in the tradition of Colbert, and was quite popular in part because he created a system of State pawn shops, which relieved some of the inconvenience.

The political parallels and contrasts with the UK were stark. The UK had had its own South Sea Bubble at the same time as the Mississippi Bubble, but in the UK, the South Seas Company was folded into the Bank of England and the national debt was serviced ever after at a “risk-free” rate, a floor for other rates. The French Treasury paid rates to the Dutch and Swiss bankers that reflected the increasing risk of default. State finances in France were obscure. Necker would publish the first accounts in what historians now regard as a propaganda exercise. Once the French state was borrowing to meet its obligations to repay earlier loans, it almost didn’t matter how tax revenues were trending, because the debt began to compound and the servicing cost was escalating.

The UK had used its fiscal capacity and central bank to outspend France in a series of wars beginning at the end of the 17th century. There had been a pause, but the rivalry had resumed, culminating in the Seven Years’ War, with Britain subsidizing its continental ally, Prussia.

The inability of the UK to tax their 13 American colonies to finance the war debt caused the American Revolution before the French Revolution. And the example taught the French.

The UK had experienced an agricultural revolution of sorts in the late 17th and early 18th century as Adam Smith’s “improving landlords” began very fine calculations on the advantages of Jethro Tull’s inventions, turnips and forage in crop rotation and the profit from further enclosing the commons, a process underway since the Tudors. The gains in land and labor productivity were small but significant and fed a growing urban population. The population of England nearly doubled in the course of the 18th century.

France was not so fortunate. French agriculture was notoriously backward and resisted the promotional efforts of royal reformers and intendants. Feudal dues were collected in large areas by the church or impoverished nobles with no power to manage or improve the properties.

The nascent “business cycle” of 18th century France was an agrarian cycle of boom and famine: a good harvest could feed an expansion of mercantile and artisanal sectors. A famine would drive France into a business depression. The Physiocrats observed the pattern and made a theory out of it. And, from the Physiocrats came the liberalism of Turgot.

The same Dutch and Swiss bankers took liberalism and fashioned an argument for a laissez faire response to famine: let the price of grain be what the market will bear. Very appealing argument to grain speculators financed by Dutch and Swiss bankers.

Failing to control the price of bread or the distribution of grain stores had a profound effect on the course of the Revolution, motivating the common people of Paris to march and riot and so forth even as their betters debated the Rights of Man.

The Proximate Cause Of Revolutions Is Inability To Tax & The US Is Well Down The Road

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On April 21, 2025

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Top Tax Rates

—And thus, inability to run the state.

In the modern world this causes a great deal of confusion. I guarantee some MMT follower is gleefully planning a comment saying “a state’s ability to spend is not based on taxation.”

Technically true, practically false. A state which uses its own currency can always, in theory, print money.

But taxation is best understood more primaly than “the people send us money, we spend it.” Rather it is the amount of the economy which the government can control.

Every country has an economy. The economy is what the people of the nation actually do. Dig stuff up, refine stuff, grow stuff, manufacture, stuff, take money from idiots as consultants, waste everyone’s time with advertisements, destroy the digital commons, and so on.

Near adjacent to the economy is what it could do if we wanted it to, because we know how to do whatever it is and we can easily get the resources: so we could easily build more homes, for example, or train more doctors or nurses, or hire more Professors or build out more solar power and so on.

The final part of the economy is what you can get from other nations. Call this the external economy. Does someone else make it, will they sell it to you, can  you afford it? Most of the time countries won’t sell other countries nukes, for example, and for much of history countries tried not to sell other countries the knowledge required to make advanced techs. When they didn’t prevent this, they paid big time: Britain was de-facto subjugated by America and America is now losing its Empire.

This is why being the richest King in Africa in 1850, even if you had been richer than England, would have done you very little good. You could not buy what you needed: industry, and even if you could buy a few weapons and machines you couldn’t maintain and repair them.

Taxation is the ability to command the resources of other people. That is all it is.

Now, in the US and the West generally, since some point in the sixties, the state has been increasingly losing the ability to tax the rich. The rich insist on controlling more of the nation’s wealth and economic activity and every decade they have increased that control. Every time something is privatized, that’s the state losing power to tax—to control a piece of the economy. Every tax decrease on the rich is, obviously, a reduction in ability to tax the rich.

The amount of control the State has has been reduced, and amount of control the rich have has been increased. This is an effective loss of the ability to tax.

What is happening right now is that the US is losing the ability to tax the rest of the world. Dollar privilege was “we’ll take American money and make what Americans want for them.” It was the ability of America to direct other people’s economies to do what America wanted. The vast power this implies is mind-boggling.

It is that ability to control other nations’ economies which made the US an Empire, even if it directly militarily occupied few countries. It didn’t need to. It could still tell them what to do.

Since the US didn’t need to make and dig everything, it didn’t: it just made everyone else do that. This was, in many ways a bad idea, but it did mean that the US got the benefits of industry without a lot of the downsides.

So, since JFK and especially since Carter/Reagan, the US has been losing its ability to tax the rich. It has increasingly chosen to tax the rest of the world, moving industry, in particular, to other countries. Those countries made what the US needed, and sold it to them in US dollars, of which they were willing to accept nearly infinite amounts even though, in most cases, they didn’t need nearly as much from the US as the US did from them. (What they did need, in the early and middle years, was capital goods and knowledge, almost infinitely precious, though. Now with China leading in 80% of fields, well, not so much.)

Right now a huge tax cut for the rich is being paid for by cutting 800 billion from Medicaid, even as DOGE savagely cuts a federal civil service which has not grown in nominal numbers in sixty years, and thus has really already been contracting. State capacity is being savaged and services and jobs are being removed from the lower and middle classes.

Now let’s bring this back to the original topic: revolutions happen when states can’t command enough of the internal or external economy. It does not matter how much you can print or tax in nominal terms. In the Weimar Republic people would take a wheelbarrow full of cash to the store: all that matters is what you can actually command/buy with the money. For a long time the US dollar could buy pretty much anything.

But what happens when it doesn’t? What happens when you give it to cops and bureaucrats and soldiers and brown shirts like ICE and it doesn’t buy what they need, or even what they want?

You get what you pay for. This blog is free to read, but not to produce. If you enjoy the content, donate or subscribe.

Week-end Wrap – Political Economy – April 20, 2025

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On April 20, 2025

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by Tony Wikrent

 

Trump not violating any law

‘He who saves his Country does not violate any Law’

 

‘We’re Not Stopping’: Trump Border Czar Vows to Ignore Judges

[The Daily Beast, via MSN 03-18-2025]

 

Trump is Opening The Enemies Briefcase: Congress Paved the Way

Andrew Cockburn, April 19, 2025 [Spoils of War]

We can’t say we weren’t warned. The emergency powers Trump has invoked to impose the largest tariffs in a hundred years, fast track energy and mineral production, and militarize federal lands on portions of the southern border were at least on the public record, authorized by Congress in The National Emergencies Act of 1976. The act permitted a president to unleash 150 statutory powers by declaring a national emergency. Legislators thought they had curbed the possibility of untrameled presidential power by adding the proviso of a “legislative veto” giving Congress the ability to terminate an emergency with a simple majority vote. But in 1983 the supreme court nixed that with a ruling, INS v. Chadha, that declared legislative vetoes unconstitutional. Trump’s first term deployment of the International Emergency Economic Powers Act, passed by Congress in 1975, to build his border wall excited comment and alarm, but no effective action to stop him.

But in March, 2020, Trump cryptically remarked “I have the right to do a lot of things that people don’t even know about.” He was referring to “presidential emergency action documents,” or PEADs, orders that authorize a broad range of mortal assaults on our civil liberties. Kept in a locked safe at the department of justice, these documents, in the words of a rare official description, outline how to “implement extraordinary presidential authority in response to extraordinary situations”

These instruments of dictatorship have not only never been authorized by Congress, they have remained almost totally secret. Elizabeth Goitein, senior director for liberty and security at the Brennan Center, is one of the few to investigate this momentous issue. As she told me when I first covered this topic in Harper’s Magazine, “This really is one of the best-kept secrets in Washington, but though the PEADs are secret from the American public, they’re not secret from the White House and from the executive branch. And the fact that none of them has ever been leaked is really quite extraordinary.”

Thanks to Goitein’s sleuthing, we know that in the past, PEADs have enabled the following: ….

 

American Concentration Camps

Chris Hedges, April 16, 2025

Those who build concentration camps build societies of fear. They issue relentless warnings of mortal danger, whether from immigrants, Muslims, traitors, criminals or terrorists. Fear spreads slowly, like a sulfurous gas, until it infects all social interactions and induces paralysis. It takes time. In the first years of the Third Reich, the Nazis operated ten camps with about 10,000 inmates. But once they managed to crush all competing centers of power — labor unions, political parties, an independent press, universities and the Catholic and Protestant churches — the concentration camp system exploded. By 1939, when World War II broke out, the Nazis were running over 100 concentration camps with some one million inmates. Death camps followed.

Those that create these camps give them wide publicity. They are designed to intimidate. Their brutality is their selling point….

 

‘Open Enemy of the Constitution’: JD Vance Ripped for Defending End of Due Process

Jake Johnson, April 16, 2025 [CommonDreams]

In his post on X, Vance—who has a law degree from Yale University—placed due process in scare quotes and claimed that “what process is due is a function of our resources, the public interest, the status of the accused, the proposed punishment, and so many other factors,” not the U.S. Constitution.

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