Ian Welsh

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

Category: The Twilight of Neoliberalism Page 2 of 14

Trump Is Running the Standard Purge and Control Playbook To Install Decline

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On August 27, 2025

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Some years ago I wrote an article about how to run a real left wing government.

Seven Rules for running a real left-wing government

Of course, it was really a guide for how to change the ruling ideology of a society. Because, yes, elites, apparatchniks and what as might be called a deep state state exist. These aren’t all the same thing. There is plenty of private support for whatever the status quo is, especially at the highest levels, since whatever the ideology is, it put them in charge and benefited them. There are also a lot of mid level enforcers, bureaucrats (both private and public) and professionals who benefit from the status quo.

Anyway, two of the seven rules were specific to the problem of running a left wing government in a neoliberal world (it was 2016.) But here are the other five

  • Your First Act Must Be a Media Law
  • Take Control of the Banking Sector
  • Who Is Your Administrative Class?
  • Take Control of Distribution and Utilities
  • Reduce Your Vulnerability to the World Trade System

Control the Media: Now the wording isn’t always the best, but Trump has been on a constant attack against the media. He’s changed who is allowed to be part of the White House press pool and he’s made the media pay blackmail money. He’s now talking about removing NBC and ABC’s licenses. He may, he may not, but the threat makes them change.

Take Control of the Banking Sector: for the first time in its history, a Federal Reserve governor has been fired the President has always had this authority in theory (except over the Chair), but has never used it in practice. Ironically I once advised Obama to use this power to stop the Fed bailouts in 2009. Control over the banking sector is really control over the permission system: whoever is given money or the ability to create money can do things. Once you have your hands on the money-artery, nothing significant can happen without your permission.

Who is Your Administrative class: All systems have a class of people which run the bureaucracies. We have come to know ours as the PMC. Trump is replacing them, firing them in huge piles, and replacing them with right wing, often religious, fanatics. These are people who will give him his military parade (denied in his first term), who will extradite his enemies, who will break laws for him knowing that the Supreme Court (carefully packed during decades of preparation for this moment) will make what they do legal, and that in any case, the enforcer class is under Trump’s control.

Indeed, Trump has been purging the enforcer class and replacing them with people who would not have been considered qualified by the previous system. This is true of the military, the FBI and indeed of all the three letter agencies. Since ICE are his loyal brownshirts, needing no purging, they are being massively enlarged and given far greater powers.

Reduce vulnerability to the World Trade System: Let’s state this simply: the US had been losing the trade game badly for about fifteen years. China was coming on hard, Africa is lost, South America is almost lost, Russia is no longer complacent and America has lost the lead in over 80% of technologies. It can’t build ships, its planes fall out of the sky, most electronics are made elsewhere, it can’t even make magnets. It’s a joke.

So Trump is creating a two bloc system, there’s the US and its vassals (calling them allies amounts to lying) Europe, Japan, Australia, Canada, New Zealand, and South Korea. On the other side China, Russia, Iran, and their friends, which includes most of Africa and Asia and a good chunk of South America.

The US has slapped 100% tariffs on Chinese EVs, and tariffs on almost everyone else. Why? Well, simply enough, the US can’t compete. If there is free trade, or anything approximating it, the US’s economy will be further cannibalized. Since they can’t sell overseas, except for chips, food and a few other goods, it’s time to stop competing. The US can’t win, so it’s not going to play.

The problem, of course, is that unless the US takes this time behind trade barriers to become competitive, it’ll just keep falling behind, and there’s only so much it can cannibalize its vassals. Given the massive slashing of research and universities, with no sign of a new system to replace them, it’s clear that the US has chosen semi-permanent decline.

Trump is Changing the US ruling ideology to Controlled un-development

It’s still about making the rich richer, but Trump’s choice is controlled decline. The US and the West will fall further and further behind, living conditions will get worse and worse, but the rich will become relatively richer in relation to everyone else in society. Think India in the post-war period. Fantastically wealthy elites, everyone else is a peon. Oh, there’s lots of ruin in countries, but this is the direction of the arrow and it only changes if a different ideology takes over.

Competition in the US between all groups will become far more savage, because there is no net. You get you hands on a position which commands resources or you become homeless or techno-peasant.

The vassals, who mostly have social welfare systems, will be forced to liquidate them, buy US military goods (which are useless against the US, given the software driven nature of them) and sell off all their public goods to continue the enrichment of elites. Any who try to avoid this fate will be coerced as necessary, first by their own internal elites.

This is the future in America and its allies. The only way to avoid it is to figure out how to defect.

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Trump Takes Share Of US Company Profits & Pentagon Guarantees Rare Earth Prices

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On August 25, 2025

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The US government is to take a 15% cut of Nvidia and AMD chip sale profits to China. There are also discussion of taking a 10% stock share in Intel.

Meanwhile the Pentagon has taken a hundred million dollar stake in a rare earth miner, and guaranteed minimum prices.

As Albert Pinto notes, this isn’t neoliberalism. Neoliberalism is dying, if not dead, in the US, though the Euros are clinging to it. Everyone’s noticed that China’s hybrid model absolutely trounced the West, and, hey, it’s a chance to get even richer. Pinto thinks that Trump is trying to change the nature of the oligarchy:

8/ Winters’ model of oligarchy:

1 Warring: armed oligarchs defend property claims separately

2 Ruling: oligarchs institutionalise defence

3 Sultanistic: 1 oligarch monopolises armed wealth and defence

4 Civil: state defends property regime Trump: US from 4->3?

Now I don’t think America’s oligarchy going to go Sultanistic, in the sense of one ruling oligarch. The only way that happens is if Trump manages to turn the Presidency into a Trump family matter, and that seems unlikely. But a rotating sultantic Presidency until, perhaps, someone manages to make it permanent: that’s possible.

But the days of laissez-faire are clearly over. Now this isn’t entirely stupid, I’ve been calling for what Trump did for rare earths for twenty years. It’s the obvious thing to do. Likewise, ensuring stable domestic production of necessary resources is sane and necessary and if one has to pay a little bit more, so be it.

Owning shares in US companies isn’t necessarily a bad thing. The truth is that every fundamental innovation which made the internet and smart phones possible was government funded. Tesla doesn’t exist without a massive government loan back when it was nothing. But the government doesn’t share in the upside nearly as much as it should, because large corporations pay almost no taxes. The government takes the risks (Solyndra was given about the same amount of money as Tesla at the same time, and went bankrupt) but doesn’t share in the upside. Tesla just paid back the loan, but if the US had an equity share, it’d have made out very well.

Golden shares, a 10% ownership in large or important firms used to be quite common. It’s not a new policy, but it used to be associated with the left wing. What’s going on now is a right wing version of the same thing.

The President is the strong man who runs the government. Everything private companies do they do because he allows it, therefore government has a right to a share of the profits and to exercise control when it chooses to. The President picks winners and losers, determines the effect of court decisions, and so on.

It’s the logical extension of the tendency to Imperial Presidency. Every other power in society is weakened, the President is above all. An elected dictator, as it were. (Similar to parliamentary democracies in that sense, but very un-American and without the protections of Westminister government, where new parties are possible and governments can fall easily.)

Right now the scramble is to see which faction will control the Presidency after Trump. The best bet is probably the tech-bro faction, since Vance is Peter Thiel, the Palantir surveillance state magnate’s creature. (Though puppets have a tendency to cut their strings when they attain supreme power.)

All of this entails a vast misunderstanding of how the Chinese public/private system works, by the way. For one, China probably has the most competitive (free) markets in the world in those sectors which are private. For another, the system is not run to maximize profit, but to produce certain social and policy outcomes, including a good life for the majority of the population. China has both deliberately reduced housing and rent prices, crashing the housing market and costing owners a huge amount of money, and it has been deliberately reducing the number of billionaires.

These aren’t incidental matters, and just saying “well, we’ll move to a mixed model” misses what makes China’s economy work so well.

But no society run by a financial oligarchy is capable of understanding that “more profit” isn’t the way to win economically, so America will continue to learn the wrong lessons from China. As for Europe, they aren’t even learning the wrong lessons, they’re just doubling down on austerity and increasing military spending in a way which will make some Americans rich and hardly help them at all. Not even in the game.

More on all this later.

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Yeah, America’s Gone Fascist

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On August 25, 2025

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I think we can put a peg in this. For years everyone’s being “we’re going fascist.”

It’s done. It’s over. The US has gone fascist.

  • Purges of the military, intelligence and law enforcement agencies to install personal loyalists;
  • Troops in the capital, armed, with law enforcement rights, and a promise to do the same in other cities;
  • Vast personal corruption by the man at the top, including blackmailing companies into personal bribes;
  • Masked men who often don’t show badges or warrants roaming the lands, forcing people to prove their citizenship (and often ignoring proof) and seizing people and throwing them into unmarked vans;
  • Full executive immunity;
  • A supreme court which has or appears poised to legalize all of the above; and,
  • Threatening ABC and NBCs broadcast licenses.
  • Yada, yada (add your examples in comments)

There isn’t much point in dancing around this. Perhaps there’s a technical case that this isn’t fascism, but some other form of nasty right wing government ideology, but whatever it is, the constitution and the important pieces of the constitution and bill of rights are dead or dying, including habeas corpus, the principle that no one’s above the law, the idea that troops shouldn’t be used domestically, etc, etc.

This has been coming for a loooonnnnngggg time, and plenty of people have warned about it. The fascism experts from Harvard who fled the country, much as many sneered at them, weren’t wrong in their diagnosis. Remember, a lot of people who left it too late to flee Germany (or Pinochet’s Chile, or your choice of example) got a permanent plot of land, a long government paid for stay in a small room or in Argentina a helicopter trip ending with a spectacular fall

(Pinochet is notable for training dogs to rape the wives of his opponents. Hopefully Trump won’t sink quite that low.)

I would suggest that the UK is almost there, and so is Germany. The EU as a whole, with its growing habit of just making protest and unwelcome parties illegal is trending hard. (Or, if you’re lucky, they’ll just make you a non-person, making it illegal for any bank or credit company to do business with you, or anyone to give you money.)

I don’t expect to spend a lot of time on this, though I’ll keep covering it. It’s been coming for a long time, it’s not a surprise and in some ways it’s not news. But a lot of people with suffer as a result.

For those who say “but Kamala” I note only that to win she had to either:

  1. Not say that she wouldn’t have done anything different than Biden; or,
  2. Come out against genocide.

Apparently supporting genocide was a red line for her, and fascism in the US a secondary issue. Neoliberals will always choose fascism over anything remotely left wing, including the left wing value of opposing a new Holocaust.

This is where we are.

 

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The End of America as the Essential Consumer Nation

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On May 26, 2025

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For ages, everyone needed access to the American market. I used to call the US, “the consumer of last resort.” If you wanted to get rich, if you wanted to industrialize, if you wanted to scale, you needed the American market. Europe sold to the US, Japan sold to the US, South Korean and China sold to the US. This requirement is why Japan was forced to sign the Plaza Accords, which basically destroyed their future. Oh, life in Japan is fine now, but it’s no longer the roaring Tiger of the 80s.

But the US has lost its place, which is why China was able to laugh in its face when Trump tried to use tariffs against it. His assumption was that China needed the American market. This was true 20 years ago, maybe true ten years ago, but it’s not true now.

But wait… there’s more!

Not so pretty, is it? And unlike America, Chinese consumers aren’t in debt. Their market isn’t based on a deck of cards or predatory lending meant to lock consumers into never ending debt payments.

Looks a lot like America in the 50s and 60s, actually.

China’s growing fast, and certain respects, they’re growing smart.

China is building nuclear plants 2 to 4 times faster than the West and 3 to 7 times cheaper”

Further, China is building far more renewable energy than anyone else, and MAGidiots beliefs aside, it’s working out just fine for them. Ninety percent of new power in China is renewable.

You can see this on this lovely map:

Indeed, for the first time ever, China’s increasing energy demand happened at the same time as a reduction in CO2 production. If there’s a hope for us on climate change (there really isn’t, but still) it’s that China is the primary industrial power AND its leaders and population aren’t idiots who think climate change is a hoax or that it’s real but ignoring it is good for the economy.

Now this isn’t to say that China’s all wonderful or anything. They have high speed trains and they’re electrifying based on renewable energy and to a much lesser extent nuclear fast, but they still have an insane car-centric society.

Still, they’re more sane than any other major country, by a fair margin.

China is now the world’s largest consumer, industrial producer, ship builder, drone maker, auto manufacturer, leads in about 80% of tech fields, produces more scientific papers and patents than any other country, has 8 of the world’s top 10 research universities (Harvard is the only American university on the list, at , but…. recent events are not promising), the most electricity production and the cleanest energy mix of any major country.

The idea that China and the US have a serious rivalry is laughable. The US has lost. It’s like Britain in 1920. It’s all over, except, possibly, for the shooting.

 

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Canada’s Future & The New Carney Government

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On April 29, 2025

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Mark Carney

Carney has won a minority government. He will have to govern with the support of the NDP. The NDP was slaughtered in this election, and there were a few ridings where people strategically voting for the Liberals actually led to the Conservatives winning. Iit’s worth pointing out that the Conservatives increased their seat count, which is why Poilievre is sticking around as leader, despite losing the election and his own seat. (A loyal MP will stand down and let him run in a by-election in a safe riding.)

The NDP lost their official party status in this election and their vote percentage was cut in about half by strategic voting. They need to bargain hard with Carney in exchange for support and be willing to walk away. The most important thing, for them and Canada, is to change the voting system. Proportional would be ideal, but it’s unlikely the Liberals would go for it. They would probably go for ranked ballots, assuming, probably correctly, that they’ll be the most common second choice.

But it would also benefit the NDP and make it less likely for radical conservatives of the current variety to get into power.

If I were the NDP, I’d go to the wall for this. There’s likely to be more polarized elections in the future, because the Conservatives remain a Trumpist style party and a lot of natural NDP voters will keep going Liberal to try and block them. If they want to get back up to near 20% of the vote, this is necessary.

Now as to Canada’s future: it’s going to depend on whether Carney can actually deliver. If he can make Canadians better off and win another election, Poilievre is toast and Trump style conservatism will be discredited in Canada. If he doesn’t deliver: if effective wages don’t rise and if rent and housing prices don’t go down, then Poilievre or his successor’s Conservative party WILL win the next election, just based on disgruntled voters.

Carney’s talked a fair bit of sense: doubling building housing, pivoting to new trade partners and creating vertically integrated industries within Canada. If he can pull it off, he’ll go down as one of Canada’s greatest Prime Ministers. But, at the end of the day, Carney is a neoliberal, and his impulse to always cut taxes on the rich and so on is going to hold him back.

He also needs a full term to pull it off. A lot of pain is coming down the pike and the next couple years will be ugly.

And that means he needs to keep the NDP happy. If they stop supporting him before he turns things around (assuming he can) he’s toast, and the Conservatives are in. So the NDP may as well force him to do some other things: pharmacare and universal dental, probably.

It’s going to be an interesting few years for everyone. Carney was right when he said:

America wants our land, our resources, our water, our country. But these are not idle threats. President Trump is trying to break us so that America can own us. That will never, that will never ever happen...

…

Our old relationship with the United States, a relationship based on steadily increasing integration, is over. The system of open global trade anchored by the United States, a system that Canada has relied on since the Second World War, a system that well not perfect has helped deliver prosperity for a country for decades, is over. 

But it’s also our new reality.

We are over the shock of the American betrayal, but we should never forget the lessons. We have to look out for ourselves and above all we have to take care of each other.

The old system is over. Carney’s problem is that he doesn’t see that for a ton of Canadians the old system hasn’t been delivering for a long time.

Every country in the world will have to adapt to the new economic landscape. Some will succeed, others like Britain, will fail. It remains to be seen if Canada is one which adapts well. What is certain is that if Poilievre gets in, he will usher in a new era even worse than the old neoliberal one. He will be prostrate before the US, will slash the civil service, healthcare and so on and will turbocharge the oligarchy.

So Carney’s it. He wouldn’t have been my first choice, but if he doesn’t pull it off, no one will.

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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?

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Trump’s Liberation Day: This Boy Could Fuck Up Boiling Water

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On April 3, 2025

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So, Trump’s tariffs are out. He claims they’re half of what each country tariffs the US, but in fact they appear to have been determined by dividing how much the US sells to a country by how much that country sells to the US.

In other words, the more your trade surplus is, proportionally, the higher the tariffs.

This isn’t, on the face of it, necessarily stupid. But… it’s being done very stupidly.

The first problem is the most fundamental: much of what the US buys it can’t make or grow or dig up itself. New capacity takes time, so in cases where the US could in theory make whatever it is, tariffs should either be phased in, or there should be a delay “in two years the tariff will be X%.” As it stands, in a lot of cases, all this is going to do is make Americans pay a lot more.

Then there are things that the US can’t produce itself, or produce enough of. Potash from Canada, for example. The US can’t produce enough. Period. And farmers MUST have it.

So this means that there’s going to be a massive economic shock: prices will go up and/or profits will go down and the US government will need to provide massive subsidies to some industries at the same time as Trump’s budget plan massively cuts revenue due to tax cuts for the rich.

The tariffs on each country should have been individually determined based on what America buys from them, and what America sells to them. If it’s something the US can’t make, or given opportunity costs shouldn’t make (do you want to build more power plants for AI, or use it for aluminum?) then those things shouldn’t be tariffed. And if you’re buying what you really need from them, and can’t make yourself or shouldn’t (Canadian potash and aluminum, for example) then why are you tariffing? The Canadian example is a good one: Canada imports more manufactured goods from the US than it exports to America. Tariffs encourage Canada to buy less goods and re-industrialize, reducing demand for American goods and encouraging American de-industrialization.

Instead of selling goods to Canada, made using Canadian primary and secondary resources like wood and aluminum and hydro power, America is encouraging Canada to use its own resources to make its own goods. I mean, as a Canadian I think this is great and I’m very grateful to Trump, but this is stupid, really stupid, of Trump for America.

The second issue is that that one goal is to get foreign companies to buy American goods. But most American goods aren’t price competitive, especially not with China. Add on top of that the retaliatory tariffs which most countries are going to respond with, and the likely end result of this isn’t countries buying more American goods, it’s them buying less.

Now some countries are in a different situation. The EU, for example, is very vulnerable here. They have a massive trade surplus with the US, and it’s in goods and their goods are more expensive than Chinese goods, so they’re fucked: who are they going to sell to if they won’t sell to America?

The EU trade surplus is about 600 billion. America sells the EU more services than vice versa, by about 100 billion, however, so the combined services and trade surplus is around 500 billion. Yet if you drill down to balance of payments overall, it’s closer to 200 billion: the US gets a lot of investment income and other streams from Europe, for example, all those patent and copyright payments, 30% at app stores, etc, etc…

A 200 billion dollar balance of payments deficit is about 1.2% of the EU’s GDP. The correct action for the EU is to hit the US hard on services and income: tax the hell out of that and just get rid of it it in some places. Break the DMCA and set up their own app stores, for example. The screams from Silicon Valley would set off Richter 7 earthquakes.

Let’s look at another country. Japan, has a 68 billion goods trade surplus, about a 25 billion services deficit, and actually gets about 50 billion in misc payments from the US. They’re rolling in it and actually much more vulnerable than the EU because of all that payment income, which is easily disrupted. It’s hard for them to retaliate and not come out hurting bad. But there are reports they’re coordinating their response with South Korea and China, and if true, it makes sense, since they have little leverage alone.

China’s trade surplus with the US is now about 1.8% of GDP. Most Americans think it’s still 2008. It’s not. China will be fine and that’s why their official response has been, in essence, “if you want a trade war, let’s have a trade war.”

Generally speaking the correct response for most countries (but not Japan!) is going to be to go after payments: copyright, patents, app stores  and so on, and to tax services.

And this leads to third issue: hitting everyone at once. This allows coordination. If the US had just hit a few countries, everyone else would keep their heads down and hope to be ignored. One country, alone, breaking patents say, or getting rid of DMCA compliance and breaking US app stores, would be crushed. But if it’s done in a coordinated fashion, the US is toast. They can’t sanction everyone, the US financial system will just be treated as damaged and routed around. A universal clearing currency is NOT needed. In fact, for a variety of reasons, it’s one of the worst things possible. Make the deals in local currencies. Done.

Additional add-ons to all of this include the probability of a lot of free capital flows going away. Countries that want to re-industrialize with domestically controlled supply chains, and many now will, need to keep capital at home and the retaliation against the US is going to be against a capital flow/investment system which has, with a few exceptions like Japan, mostly favored the US.

I can’t even imagine how much US property in other countries is likely to wind up forced to sell to locals, or even nationalized outright.

All of this leads to the fact that this will speed up the loss of dollar privilege, and with the loss of dollar privilege and everyone reluctant to sell to America, well, there’s no way that the US standard of living doesn’t get hit hard.

There’s a lot more to say on this. The US is counting on countries needing to sell to it. The Chinese have far more manufacturing capacity than anyone else and a cheaper cost structure. This leaves places like the EU fucked, hard. They can’t really sell to the US profitably. They can’t sell to China because their goods are too expensive. They don’t have a lot of resources to sell except food.

The correct response is to move to internal demand and collapse the cost structure (rent, housing prizes, all monopoly pricing, etc…) but neoliberal policies don’t allow that, so they’re going to try military Keynesianism, but that won’t work well either.

Truly screwed if they don’t get their heads out of their asses and ditch neoliberal bullshit, start taxing the rich, and figure out their energy situation.

But, they, they have it coming.

Long story short: the US is going to be hit by a huge inflationary shock, a decline in standard of living and, unless other countries are stupid, lose most of its overseas rentier monopoly income. The EU is in for a world of hurt, but has options. China will feel it, but they’ll be fine, they don’t need the US as a market any more.

In the longer term this might lead to improvements in the US economy: it will force reshoring, it’s just doing it in the stupidest way possible. But the US risks winding up in semi-autarchy, with an oligarch controlled economy, authoritarian but ineffective politics (think Yeltsin) amid a huge collapse of standards of living, even as it destroys its scientific and academic communities.

The road back will be a hard one and the suffering in between will be massive. And all this assumes that the political problems in America don’t boil over into civil or serious foreign wars.

Americans aren’t going to take a one-third reduction in their standard of living well, especially when so many of them are just a few hundred dollars a month away from homelessness.

Welcome to the end of the American century.

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Trump’s Negotiating Is Failing

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On March 31, 2025

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If you want to call it negotiating. Iran refuses to even talk, unless America removes sanctions first. Putin will talk, but he clearly doesn’t intend to end the Ukraine war except on his terms, and certainly won’t agree to a ceasefire without massive concessions. China isn’t panicking over tariffs, but simply counter-tariffing. Europe’s getting uppity. Even midgets like Canada are standing up for themselves. Oh, and Ukraine still hasn’t signed that mineral “deal.”

Trump has said that if Iran doesn’t give up their nuclear program “there will be bombing like they’ve never seen.” He’s threatening Russia with secondary sanctions on oil, and he’s talking about tariffing everyone.

Apparently America doesn’t want any allies, or friends, and soon it won’t have any. This is batshit crazy, loop-de-loop nuts. The way to do this sort of thing is to single out one or two targets at most, and make everyone else think they’re safe, then move on. Trump’s acting like it’s 1991 or 1950, with the US at the top of the world, not like America’s in serious decline.

Oh it may seem like a response to America’s decline, an attempt to reshore industry, withdraw from Imperial over-reach and so on. Superficially it looks like that, but he’s just picking too many fights all once, his tariff threats are incoherent and unplanned, he’s defunding research and forcing brilliant scientists and engineers and scholars out of the US, has no industrial policy worth speaking of and is destroying America’s governing capacity with capricious cuts to the federal bureaucracy.

More to the point, he’s giving everyone else reason to route around America like it’s damage: to stop using the US dollar, to move to using local currencies for trade and to stop buying American goods and services, and yes, to stop selling to the US. The smart move, and it’s going to happen if he keeps this up, will be stop enforcing US intellectual property, end the DMCA clones and the prohibition on breaking digital locks, and to stop paying American internet giants their usurious fees.

The US isn’t agreement capable: you can’t trust them to keep their deals. This was true before Trump, but he’s super-charged them. Iran is right to say “well, we’ll talk after you keep the last deal we signed with you” and everyone else is coming to the same conclusion. If he won’t keep America’s deals, or even his own (the USMCA trade deal with Mexico and Canada is his) what’s the point of even talking? Just stop doing business with the US, period.

Smart policy isn’t to do this in one huge crash, because the US is very reliant on goods, resources and money from everyone else. You boil the frog, make things predictable and ease out of the problem. This isn’t Russia, which had China and India to backstop it when sanctions hit and which wasn’t massively in real trade deficit, making it up with non trade fees from its vassals and from countries which wanted to sell to it.

If you can’t sell to the US, why do business with it? What does it have that you can’t get from someone else? The obvious answer is food, oddly, but if even China is willing to put tariffs on both US and Canadian food, that dog won’t hunt.

It’s not that the US can’t do autarchy. It’s still a continental power, it’s still high tech, it still has plenty of scientists and engineers. But all that was true of Russia after the USSR collapsed, and the first decade and a half were ugly, and only got better because of Putin and the secret police taking charge—and they were able to do so thru a huge economic campaign to sell resources to the rest of the world.

And that’s where the US looks likely to wind up, after a period of chaos and deprivation: its’ behind in 80% of tech, it’s cost structure is too high, so it’ll have to sell food and natural gas: if anyone else is willing to buy. (The Euros may have no choice, everyone else does, because they aren’t blinded by insane fear and hatred of Russia.)

This sure is speed-running imperial decline. An accelerationist’s dream.

And if there’s a real war, what happens if Iran is able to sink an aircraft carrier? What happens when the US campaign against Yemen fails, as it will? What’s left of America if people aren’t scared of it? Nukes and complete pariah status and a massive nuclear proliferation scramble?

Likewise the whole sanctions regime bullshit is possible because almost everyone trades with the US and goes thru American and European banks. If they stop trading, they don’t need the banks and if European banks opt out, well, shit. So the fear of sanctions and the fear of military force goes way down.

Nothing to sell, no fear, and no one wanting to do business with the US, including buying its weapons.

This appears to be Trump’s endgame.

 

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