Ian Welsh

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

Category: Age of War and Revolution Page 19 of 21

Geopolitics and the Economy After Covid-19

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On April 7, 2020

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Nope, not yet

First the good/bad news. Covid-19 isn’t going to bring down the “system.” It’s not a hard enough shock.

There are things we should learn from it, about what work is actually needed, about the fact that more people will not die because of reduced pollution during isolation periods than from the virus, and so on.

Mostly, we won’t learn those lessons.

One lesson which will be, not exactly learned, but used, is that if you don’t make it in your country, you can’t be sure of having it when it matters. Physical manufacturing matters: It can be designed in the US, but if it’s made in China, well…Trump almost stopped 3m from selling masks to Canada, be sure that the fact that he can has also been noticed.

There were already powerful forces, and not just in the Trump administration, who were unhappy with the current world trade and offshoring system. The more intelligent parts of the American permanent ruling class have noticed that the actual threat to American hegemony is China, and that when China makes things the US needs, China has the US by the balls.

They’ve been wanting to bring as much production back to the US as possible and they’ve been wanting to force the world into two trading blocs. These are the sort people who become livid when a European country chooses Huawei 5G, and start making threats about NATO.

They are, of course, right to be worried. The offshoring of production had catastrophic effects for Britain, when they off-shored to the US in the 19th century. They said the same sort of things Americans say now, “We still design, they just make the stuff.” That didn’t last: Manufacturing produces designers in time, there are things learned best when you’re right next to the plants. It took about three decades, but the design moved to the US, and Britain never recovered, eventually surviving through financialization, a weak shadow of itself, sustained on rents which the rest of the world can easily, one day, decide not to pay.

So Covid-19, which is putting shocks through the trade system anyway, is going to be used to justify bringing production back to various countries, to re-shoring. Trade will go down, not up, the supply chain will be less broken into pieces, and there will be a push towards a new cold war with two trade blocs. There may wind up being three depending on what Europe does, but the plan is to force Europeans into the US bloc.

In general economic terms in the US and UK, what will happen is just what happened after 2008—the big boys will be bailed out, those who have money (or are given trillions by the Fed and Treasury) will then buy up distressed assets. There will be fewer, bigger players again, the general economy will be worse for ordinary people, blah, blah. You know the play.

This won’t lead to revolution or revolutionary change yet, I suspect. I think it’ll take at least one more big shock before people become desperate enough. And, of course, the right play is to pick some part of the poor and have them oppress the other half of the poor in exchange for not-too-shitty a life. Poor white sharecroppers who get to call the equivalent of African Americans “boy.”

That play, given the weakness of the left in America and the UK, may well work. We shall see.

But be sure of this, there will be more shocks. This is a system which has no “give.” It has no surplus capacity to handle shocks, not at the real economy level: All our elites know is politics and printing digital money and giving it to their friends, without insisting on real production. Oh, they’ll try to re-shore production, but they are fundamentally incompetent and will run it badly. Be sure of that.

So this isn’t the big one. But climate change is rumbling, resource shortages are onrushing, and our sclerotic society and incompetent elites will turn what should be shocks that are easily handled into crisis after crisis.

The future is going to be interesting. Be prepared. The old world is dying, the new world has not yet been born, and there will be a great deal of pain and screaming in both the death and birth.

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Should NATO Exist? Will It?

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On September 20, 2019

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One of Trump’s constant cries is that American allies aren’t spending enough on their militaries and that the US is, thus, carrying them.

While there is a temptation to scorn this argument because it was made by Trump, it has a fair bit of truth to it, as Matt Stoller suggested today:

The American military umbrella is a bad deal for America and a good deal for our “allies.” Japan gets protected channels to Middle Eastern oil, for free. Germany gets protection from Russia, for free. They all export to us at terms unfavorable to our own industries/middle class.

The problem with this is that it is, well, true.

And that Europe “needs” America for defense against Russia is absurd:

Let us be clear, the EU’s population is 508 million. When the UK leaves, it will be 447 million.

Russia’s population is 143 million.

The EU minus Britain has a GDP of 18.1 trillion (purchasing power parity), Russia has an economy of 3.5 trillion (ppp). Germany alone has a GDP (ppp) of four trillion.

If Europe “needs” the US, it’s because it can’t be bothered to raise a proper army. That’s all. It is genuinely free-riding.

Chinese and American flags flying together

But then NATO is a large part of why Russia is a “threat”. The expansion of NATO, which Bush Sr. promised Gorbachev would not happen, is a large part of why Russia has armed up.

It’s not clear that NATO should even exist. Its purpose was to resist the Warsaw Pact and the USSR, neither of which exist. Russia has a lot of nukes, and is relatively strong militarily, but it is no USSR and has no grand alliance facing NATO. It is not a threat unless terribly mismanaged. (Which, I suppose, it has been.)

Disband NATO. Let the Europeans take care of their own defense, or lay prostate before the Russians as they choose.

Japan is a trickier proposition. What American military presence there does is simple enough: It prevents Japan from needing its own nuclear weapons. The same is true of American bases in South Korea. Leave and those two countries have to nuclearize or become Chinese satrapies (and Japan will need a much larger navy).

It’s also worth noting that the US didn’t start protecting “Japan’s oil.” The US needed foreign oil too; it is only recently, under Obama, that the US has again reached petrocarbon self-sufficiency and is able to say, “We’re protecting other people’s oil.”

WWII was won by the powers who had access to more oil. Generals and admirals at the time understood the war was, to a large extent, about oil.

America may not need foreign oil now, but it did for decades and that is why it protected maritime oil trade.

In general, however, a US withdrawal from its forward bases will be a good thing. A rebalancing of trade will also be a good thing, though it will hurt as it happens (Trump is not doing it well). Deliberately offshoring and outsourcing the US (and Britain’s) industrial base led, more or less directly, to Trump and other social ills. It created a group of people who have lost for 40 to 50 years. Their parents had better lives. They had better lives. They know it. You cannot lie to them with BS statistics and pretend otherwise.

So they are willing to vote for and support anyone who seems like they will wreck a system which doesn’t serve them. Maybe what happens will be worse, but what’s happening right now is shit.

This is not contradicted by Trump’s support from red-state elites. They are also scared, because they also know their situation is precarious and that power and wealth has flowed away from them. And they rule over Hell. It isn’t always better to reign in Hell.

So the world is changing. It was changing before Trump: The Trans-Pacific Partnership was intended to be a trade bloc AGAINST China.

Note carefully Stoller’s hostility to China. It is constant. The American elite is finally reorienting. They don’t see Russia as a primary threat. They’re moving away from caring about the Middle East as they now have enough oil of their own and see a post-oil future coming. They know the rising great/super power is China.

They want to reorient their alliances against China. The price of keeping NATO will be keeping China OUT. When Germany said they wanted to do more business with China, Stoller was angry and said it was an argument against NATO. No Huawei, no China.

The world is very likely to divide into trade blocs–probably two, maybe three.

China rises. The US moves to protect its position.

Great power politics continue, as they ever have.

There is no end to history, save an end to humans. Only fools ever thought so.

The results of the work I do, like this article, are free, but food isn’t, so if you value my work, please DONATE or SUBSCRIBE.

And the Seas Turned to Blood: 20 Years to Biblical Apocalypse?

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On January 4, 2019

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And the second angel poured out his bowl into the sea, and it turned to blood like that of the dead, and every living thing in the sea died.

— Revelation, 16:3

And so the wise men did proclaim…

The apocalypse has a new date: 2048.

That’s when the world’s oceans will be empty of fish, predicts an international team of ecologists and economists. The cause? The disappearance of species due to overfishing, pollution, habitat loss, and climate change.

…

Already, 29 percent of edible fish and seafood species have declined by 90 percent–a drop that means the collapse of these fisheries.

But the issue isn’t just having seafood on our plates. Ocean species filter toxins from the water. They protect shorelines. And they reduce the risks of algae blooms such as the red tide.

And yet the children of man did not listen. From the Seas they took all they could. From the land they reaped all nature had, and more.

Deliberately, yea, they chose that all that they built should soon break, that it must be replaced. By this “planned obsolescence” they made of the world a desert.

One-third of all food, they threw out, while criminalizing feeding the hungry.

In the great Hegemon of the age, bloated America, there were five empty homes for every homeless person, and the rich feasted, then threw the food away, denying it to the hungry.

Houses were bought, while people died on the street, and deliberately kept empty.

The law of the day was greed. Selfishness was exalted as the greatest virtue. The sophists of the era said that all good things came from the rich. The word of the Son of God was used to promote the idea that God made those he loved wealthy and the eye of the needle was forgotten.

Truly, not even seven men still followed the Son.

Just then, a man came up to Jesus and inquired, “Teacher, what good thing must I do to obtain eternal life?”

“Why do you ask Me about what is good?” Jesus replied, “There is only One who is good. If you want to enter life, keep the commandments.”

“Which ones?” the man asked.

Jesus answered, “‘Do not murder, do not commit adultery, do not steal, do not bear false witness, 19honor your father and mother, and love your neighbor as yourself.’d ”

“All these I have kept,” said the young man. “What do I still lack?”

Jesus told him, “If you want to be perfect, go, sell your possessions and give to the poor, and you will have treasure in heaven. Then come, follow Me.”

When the young man heard this, he went away in sorrow, because he had great wealth.

Then Jesus said to His disciples, “Truly I tell you, it is hard for a rich man to enter the kingdom of heaven.

Again I tell you, it is easier for a camel to pass through the eye of a needle than for a rich man to enter the kingdom of God.”

These men and women had chosen hell. Hell now, hell in the future, hell for their children. All of them had forgotten the most fundamental of the Son’s teachings:

And the King shall answer and say unto them, Verily I say unto you, Inasmuch as ye have done it unto one of the least of these my brethren, ye have done it unto me.

 Then shall he say also unto them on the left hand, Depart from me, ye cursed, into everlasting fire, prepared for the devil and his angels:

For I was hungry, and ye gave me no meat: I was thirsty, and ye gave me no drink:

I was a stranger, and ye took me not in: naked, and ye clothed me not: sick, and in prison, and ye visited me not.

 Then shall they also answer him, saying, Lord, when saw we thee an hungred, or athirst, or a stranger, or naked, or sick, or in prison, and did not minister unto thee?

 Then shall he answer them, saying, Verily I say unto you, Inasmuch as ye did it not to one of the least of these, ye did it not to me.

I don’t follow the Son of God, and I think that a Christian religion worth following would not include the Old Testament, or any part of the Bible that is not about Jesus’s words (including Revelations).

But I respect Jesus, just not most Christians.

And The Bible was right: Humanity shall reap as we have sowed.

The results of the work I do, like this article, are free, but food isn’t, so if you value my work, please DONATE or SUBSCRIBE.

Looking Back at the Year That Was, and Looking Forward to Hell

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On January 1, 2019

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Globe on FireSo, it wasn’t the greatest year for me, personally, though it certainly wasn’t the worst.

It was the second year where the heavy hand of climate change was obvious for all to see, with the endless West coast fires leaving cities wreathed in smoke for weeks at a time. Climate change is now reshaping the environment.

Trump was a nasty piece of work domestically. In foreign affairs, his legacy remains to be seen: If the Syrian and Afghan withdrawals actually occur, if the North Korean peace winds up being worked out, and if he avoids war elsewhere, notably with Iran, he will go down as a great peacemaker–whether those who hate him or not like it.

The economy is about due for another crisis and recession, but I don’t follow economic matters as closely as I did back in 2007/8, so I can’t call it exactly. Still, be wary, and store away fat in the larder when (or if), you can.

Meanwhile, in Europe, the so-called populist right continues to rise, Macron (a heartless, neoliberal technocrat), is running scared of his own protests, and in Britain, despite the Tories being demonstrably incompetent monsters, the Labour and the Conservative parties are running even in polls (which means Labour is almost certainly slightly ahead.) A recent study showed that 75 percent of all news articles about Labour leader Corbyn lie about him, so that explains rather a lot. Much of the rest is explained by the fact that Remain spends most of its time attacking Corbyn and by the fact that a lot of Brits are heartless scum. (There is a reason why neoliberalism started in Britain with Margaret Thatcher.)

Nonetheless, the simple fact is that there obviously has not yet been enough suffering among the comfortable classes, because they still seem to think the status quo is acceptable. They need more people they actually care about to suffer and die as they watch, I guess. That’s unfortunate and not a prescription; it’s just an observation.

The US 2018 mid-term elections mean much less than people make them out to. Nancy Pelosi, hamstrung by an ideology which insists on PayGo and attempts at comity, will do nothing significant. Even if Democrats lurch back into power in 2020 in the face of Trump’s unpopularity (as opposed to their own popularity), it will mean nothing if they continue to run “slightly less nasty policies than the Republicans.”

This is not to say there is no possibility of hope. Despite Democrats deciding to be the war scum party, objecting to Trump actually trying to end wars, it is true that Medicare For All is becoming party orthodoxy. Perhaps we can hope that Americans will be slightly kinder to each other even as they kill foreigners in large numbers.

And perhaps someone like Sanders will win the Presidency.

Still, the Democratic party remains firmly neoliberal and hates people like Sanders.

Despite all the squealing, 2018 wasn’t the worst year ever or anything. There wasn’t a World War, we weren’t in a worldwide depression, and the worst of climate change and environmental collapse has yet to happen. Certainly, for some people, it was the worst year ever, but that’s true of every year.

No matter who wins what, politically, the trend is decidedly to the worse. The Paris accords on the environment will not be met, and if even they were met, they would be insufficient. It is already too late to stop the worst of climate change. Meanwhile, the old political order is staggering, and what will replace it is by no means guaranteed to be better.

Even if it is better, it will come to the scene too late to stop us from hitting a wall. We are, for example, just going to lose a few hundred million in India. Unstoppable. The SouthWest of America is going to run out of water. Unstoppable. And so on.

This is now triage time; if you are wise, you will put less of your effort into “saving the world” (now impossible, by any reasonable definition) and more into choosing who is going to survive. The survivors will determine what the post-catastrophe world is like, so who survives matter.

Grim? Yeah. But this is what is, and denial will just get more people killed.

Meanwhile, there is still beauty in the world, real maple syrup is still sweet, and love still warms. There is plenty of good in the world to celebrate, enjoy, and live in. I suggest doing so; your misery serves only your enemies, not you.

Be well in this New Year to come. Survive your enemies, spit on their mass graves, and write the histories.

The results of the work I do, like this article, are free, but food isn’t, so if you value my work, please DONATE or SUBSCRIBE.

Actual Sovereign Nations and the End of the Unipolar Moment

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On November 3, 2018

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This chart is a “sovereign nation” chart. Spot the only sovereign nation.

Japan could be a great power, but right now it is still an American subject state. South Korea obviously is, and so is India. Of these four, only China is sovereign. The rest have to do what they are told to by the United States.

This period is ending. The US (primary) and European (secondary) stranglehold on the world payments system WILL come to an end, and the world is most likely to split into two primary trade blocks.

Since things like the US-imposed Iranian sanctions are crimes (along with the strangling of various other countries, as is killing people–with reports of Iranians dying from shortages of insulin as a result of the sanctions), the end of the US unipolarity will be a good thing.

Those who abuse their power should lose it.

That does not mean that China is a nice and cuddly power either, but they have more respect for most other countries’ sovereignty than the US does and want a “great power” influence area, not a “superpower” area (i.e., they do not want to control the world).

The process of this split is ongoing. The recent NAFTA renegotiations were about breaking the near-satrapies to American will. Mexico gave in immediately, Canada crumbled under auto export tariff threats. You can tell this is about the split, because the new trade agreement, the USMCA, had in a clause intended to stop Mexico or Canada from having new trade deals with China.

This is the new world being born. It doesn’t have to be better than the old one, and may not be, but that doesn’t mean the old order doesn’t need to die.

The results of the work I do, like this article, are free, but food isn’t, so if you value my work, please DONATE or SUBSCRIBE.

Is Ocasio-Cortez the Start of a Movement?

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On June 30, 2018

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Most of you have, probably, by now, heard of Ocasio-Cortez, the insurgent Democratic Socialist candidate who defeated incumbent Joseph Crowley in a New York House Primary–and by a large margin.

Ocasio-Cortez is, for the US, quite radical: free tuition, true universal health care, re-instating Glass-Steagall and he out-and-out called Israelis shooting Palestinians a massacre when it was, in fact, a massacre.

Ocasio-Cortez is not the only such candidate to win in this cycle, but she is the most visible and Crowley was touted by many as Nancy Pelosi’s likely heir in the House Leadership. The New York Times barely even covered her, they just assumed Crowley would win.

Now it has been observed by many that the reason the Republicans are very right-wing is that they are scared of their base: An incumbent is more likely to lose in a primary than a general.

The Netroots movement that ran from about 2003 to 2010 had as its goal “more and better Democrats,” and tried repeatedly to take down Democrats from the left. By and large it failed and so the Democrats continued to be what they’ve always been; a party which agrees with 80 percent of what Republicans do, but wants to be a little nicer about it.

What matters about Ocasio-Cortez and her small cohort is whether they are precursors of a larger change. Will Democrats challenging from the left win, and win often? Will incumbent Democrats have to move left to try and hold their seats? (Crowley tried, but he wasn’t credible.)

I have long agreed with my friend Stirling Newberry that 2020-24 is the change-point in the US. It is at the point where, simply due to age, Boomer politicians will have to give up power, and younger politicians (Millenials and GenZ or whatever we call it now) will take over. A few leaders may come from GenX, but not many, because we are too few, and anyway, as a generation, we have awful politics.

If this first wave turns out to have what it takes, and have a decent ideology they stick to, then the US stands a chance at a sharp turn towards becoming a kinder, more equal nation which is better to live in. (And Ocasio-Cortez’s plan for environmental change is stunningly good: a massive green build-out which many have suggested for decades.)

I am simultaneously optimistic and pessimistic. While Millenials overall have fairly good politics according to polls, the generation after that is more questionable. Further, as with Boomers, it may not be those with good politics who win most (no, the hippies did not storm Congress in the 70s.)

But this is the early movement of the hinge. The door opens fully between 2020 to 2024 and that will determine the future of the US.

If you wish to see a precursor, watch Corbyn in Britain. Just as Britain preceded the US into neoliberalism with Thatcher, it may precede the US during this turn of the hegemonic sub-ideology.

(Oh, and Ocasio-Cortez? She uses the phrase “For the many, not the few,” which is Labour’s motto under Corbyn.)

The results of the work I do, like this article, are free, but food isn’t, so if you value my work, please DONATE or SUBSCRIBE.

Why Free Trade Isn’t Efficient

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On June 26, 2018

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For the past few weeks, I’ve been reading a raft of literature by lawyers, economists, and bureaucrats involved with the World Trade Organization (WTO) and other free traders. It’s been a fascinating journey into an alternate world, one in which frictionless trade and money flows, and unified regulations and laws are considered to be a good thing.

The reasoning behind this virtually unquestioned acceptance is as follows: If there are no barriers to trade, whether financial or regulatory, goods and services will be created (or done) wherever they cost the least. If they are done in the lowest-cost place, they are being done in the most efficient way, and that means more is created and consumers also pay less.

It is thus a good thing, virtually always, to reduce barriers to trade and services. If it can be done for cheaper somewhere, it should be. Some people may lose, but overall more (or the same) is created for less, and this is good.

This is basically an article of faith in everything I’ve been reading from people who make their living around the WTO.

But you may have caught the error in the thinking: It assumes the lowest cost is equivalent to the most efficient.

But it isn’t. When manufacturing moved from the US to China, it cost less to do in China, yes, but it produced more carbon (climate change); it took more people to produce the same amount of goods, and it generally used more materials, as well.

In other words, it is less efficient in every way except the monetary cost.

The rejoinder to this might be that those people who were manufacturing those goods would be better employed elsewhere; people were being wasted. If it can be done for a few dollars an hour, rather than $20 or more (if labor was unionized), then the higher-paid workers should do something else.

But everyone knows now, and trade advocates admit, that the people who lose the jobs to offshoring and outsourcing were mostly not employed again, or never had as good a job again. People are not fungible, they don’t just fit into any spot.

Moreover, as those jobs moved away, those people earned less money, and local businesses got less money from them as consumers. Everyone’s employees are someone else’s customers: When everyone cuts wage “costs,” they’re also cutting demand.

The core problem with capitalism is that it assumes that money measures benefit: If someone is willing and able to buy something (is in “demand”), then that something is good.

But the cheapest cost and the highest profit don’t take into account actual efficiency or actual good in the world. Producing less climate change gases to produce the same stuff is more important than saving five or ten percent manufacturing cost, or making five percent or ten percent profit. Using less resources that are limited is more important than the lowest cost. And good wages are also important, because they measure good lives. (There is an argument that China’s industrialization required America’s de-industrialization. I don’t think that’s true, but that subject is too large for this piece.)

The core assumptions of capitalism are wrong. They are simply wrong. But that doesn’t mean they don’t create a very effective system, where effective means “good at sustaining itself” and “good at telling people what to do.”

Capitalism is really very simple. It’s an algorithm for directing human behavior, and it works because it makes sure that the people who obey the algorithm are the people who have power.

Until they run the world off a cliff.

More later, but for now the point is simple: Neither the lowest price nor the highest profit automatically equal the most efficient thing to do in any way except with respect to money.

And money, while it’s lovely, is not actually food, water, or a livable environment, nor will it be able to buy those things for everyone (or perhaps anyone) when there just isn’t enough of it to go around.

The results of the work I do, like this article, are free, but food isn’t, so if you value my work, please DONATE or SUBSCRIBE.

The Class War: The Rich Won and the End of NeoLiberal Capitalism

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On June 22, 2018

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Many years ago now, I wrote a post called “There Was a Class War and the Rich Won.”

Ironically, after the financial meltdown of 07/8, and thanks to Bush, Obama, Bernanke, and Geithner both bailing the rich out and immunizing them from their crimes, that victory has accelerated. This chart, from Harvard, tells the story of the last 30 years.

 

What this chart doesn’t show is that the those gains went primarily to the top one percent, and in the top one percent to the top 0.1 percent and in the top 0.1 percent to the top .01 percent.

What happened was a vast centralization of wealth, and therefore of power. This power was used to buy the government: the presidency (Obama acted in the interests of the rich in every important way–so has every President since Carter); congress and definitely the courts, both of which have, ruled, time and time again, in favor of capital and for large and larger concentrations of wealth and power, culminating with “Citizens United,” which classified money as speech and sharply limited government’s power to regulate money in elections. This legislation was the crowning glory of the rich’s victory in the class war.

One of the problems with capitalism is that its benefits rest largely on having competitive (free) markets. But the first thing capitalists do when they “win” the markets is take their profits and use them to buy government so that they can end free markets (our markets are nowhere near competitive or free). Free markets, to anyone who has won, are a threat.

You can see this in the march of so-called “intellectual property.” There is no such thing in anything close to a state of nature: Intellectual property is entirely the product of government. Ideas are free, in nature, and can be used by anyone, and one person using an idea doesn’t mean someone else can’t use it. There is no natural property of ideas.

But we have extended intellectual property well beyond the life, even, of creators. Walt Disney is dead, long dead, and Donald Duck and Mickey Mouse are still the intellectual property of a company.

Competitive markets require that other people be able to compete. They must be able you use your technology, your ideas, etc… to bring down the price of goods. If you want to keep charging a premium, you have to keep coming up with new ideas. But when key technologies and ideas are locked behind patents and copyrights forever, this isn’t possible. (I can’t see any argument for most patents beneficially owned by companies to last more than five years, and even that is questionable. There is an argument for longer copyrights, if they are beneficially owned by individuals, but even in such cases, not long beyond the life of the copyright owner.)

All of this is putting aside other vast barriers to entry and laws and subsidies which benefit incumbents and which push hard towards monopolization.

So we don’t have free markets, and we do have vastly rich rich, and those rich own the government, without question (the events of 2007/2008 proved it).

Capitalism without free markets doesn’t provide most of the benefits of capitalism, and democracy which has been captured by oligarchy doesn’t provide most of the benefits of democracy.

And so both are being discredited, and fascism rises and non-market alternatives become more and more popular. You see it in Corbyn, you see it in the challenge to so-called free trade epitomized by Trump, and you see it in the fact that, for most young Americans, socialism is no longer a four-letter word.

Corbyn’s program includes a vast swathe of straight up de-privatization. It includes rent-controls and a program for the government to just build housing. It isn’t radical from a 60s point of view, but to a neoliberal capitalist, it is terror indeed. And if Corbyn was elected by just those under 40, he’d win in a landslide.

The days of our form of capitalism are nearly over. It is done, and that it is done is concealed by an overhang of older people in the developed world. What will replace it remains to be seen: there are alternatives on the right and left, and the right-wing alternatives are pretty ugly.

But that neoliberal capitalism is nearly done, that is obvious.

The results of the work I do, like this article, are free, but food isn’t, so if you value my work, please DONATE or SUBSCRIBE.

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