Ian Welsh

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

Category: Class Warfare Page 1 of 39

US Spends Way More On R&D Than China

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On October 30, 2026

14 Comments

The difference is huge:

Europe’s share of global tech R&D has collapsed from 23% in 2005 to just 8% today, while the US has climbed to 62% and China has risen from near zero to 15%. South Korea now outspends Germany, France, the UK, and Italy combined in tech R&D. Yep, you read that right.

The funny thing is that China’s ahead in over 80% of techs, and has 8 of the top 10 research universities as measured by papers.

Tech:

It’s grim.

New research from the Australian Strategic Policy Institute (ASPI) shows that China is now leading the way in 57 out of the 64 technologies assessed by its Critical Technology Tracker, which has now been updated to cover the last 20 years.

But the point here is that America is spending four times as much as China, and China’s so far in the lead they’ve essentially lapped America. (Europe is irrelevant, the other tech leaders are Korea and Japan.)

 

It’s my annual fundraiser. This allows us to cover the changeover of hegemony from America to China, environmental collapse, internal US fascism, what a better society would look like, Gaza, AI, the coming stock market crash and various other issues. As of this writing we’ve raised about $5,120 out of a $14,500 goal, from 58 people. It’d be great if you can help out (please don’t donate if your financial situation is dire.) You can Subscribe or Donate here or contact me at admin-at-ianwelsh-dot-net if you need another way to donate (mail, usually. A lot of cash apps don’t work in Canada.)

It’s probably a bit tiresome for regular readers, but I bring this all up to emphasize a few points.

First: GDP means nothing. Nothing. Everything in the US is way more expensive, inefficient and unless it’s a luxury sector serving the wealthy, of low quality.

Second: there is NO possibility of the West catching up with China without reducing costs and increasing efficiency. It just can’t be done. That means health care, real-estate, food costs: practically everything.

Third, though not obvious in the above data, much of the efficiency comes from the fact that China has a massive ecosystem of tech firms, including huge clusters of small and middle sized businesses. You want to prototype in China, you can walk right into a factory in Shenzen and have it days to weeks. In the US it takes months or years.

Once you lose this ecosystem, and the US has lost much of theirs, getting it back is unbelievably hard. You’ve got to control costs, and so on, but it also takes decades of industrial policy. There’s no quick cure for what ails the West, too much is gone already, and that is compounded by the scarcity of rare resources and key manufacturing, like machine goods, basic electronics (including things like magnets) and so on.

And since the West sanctioned the hell out of China, they’re now returning the favor. Their sanctions on Japan are likely to destroy multiple market leading tech companies. US and European companies can’t get what they need for many advanced technologies. It’s… well, not hopeless, but pretty damn close.

AI is the last big US tech advance, and my bet is that China, with its open source models that are up to thirty times cheaper (and can run on local systems) are going to win that race where it matters: in adoption. It’s just safer to use Chinese models, which, at least so far, also tend to have a lot less usage restrictions.

If the West didn’t want this to happen we had to act decades ago. The tech lead ALWAYS goes to where the manufacturing floor is, that was true for Britain to America and it’s true for America to China.

But cheer up, America being weak is one reason why Iran can win. America’s weakness is the best hope for Palestinians, since without America, Israel is toast. And, as an added bonus, America has lots and lots of billionaires. That’s what American policy was meant to do, and it succeeded. Chinese policy was meant to lift hundreds of millions of people out of poverty and to make China strong, and it succeeded.

The West got what it wanted: impoverished weak workers and the richest rich the world has ever known

Don’t Talk Human Welfare With Elites, Talk Money (Hospital Edition)

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On October 28, 2026

22 Comments

Once a year I do a fundraiser. The blog has always been free to read. Nothing is behind a subscription wall. But the blog is also not viable without reader support. At most I’d keep it up and write an article or two a week. Donations allow us to cover the changeover of hegemony from America to China, environmental collapse, internal US fascism, what a better society would look like, Gaza, AI, the coming stock market crash and various other issues.

As of this writing we’ve raised about $4,120 out of a $14,500 goal, from 52 people. If you value what we do, please give (but also don’t donate if your financial situation is dire.) You can Subscribe or Donate here or contact me at admin-at-ianwelsh-dot-net if you need another way to donate (mail, usually. A lot of cash apps don’t work in Canada.)

Regular readers will know that I’ve spent years pushing for cleaning the air in hospitals and schools. Every time I do so some (censored) says “but it’ll cost a lot of money.”

Well, it looks like Canada might be moving towards this in hospitals. Why?

Roughly one in ten hospital inpatients acquires an infection during their stay. A patient who would have stayed one week may stay two or three. As a result, as many as one in five hospital beds can be occupied by someone who was infected in hospital. Those blocked beds back up emergency departments and delay care for everyone else.

“Allowing 10% of our patients to get infected is unsustainable,” said Hunt. “The cost is simply too high. Billions of dollars are spent on treatment, and many billions more are lost to the inefficiency of blocked beds.”

Each new hospital bed costs about $1 million to build – and another $500K to $1 million annually to staff and operate. Protecting a bed with upper-air UV costs about $5,000 initially and a few hundred dollars a year to maintain and operate.

Between 10,000 and 20,000 Canadian hospital beds are blocked on any given day, and CHAIR believes universal airborne protection could cut that number in half. The pilot is designed to test that hypothesis with measured data.

It’s only a two hospital trial for now, but still a good thing.

But they’re not doing the right thing because they care about people dying.

They’re not doing the right thing because they don’t want people to get infections which may cripple them.

They’re not doing the right thing because they don’t want people to suffer.

Oh no. It’s because sick people are expensive and they want to save money.

This is the universal issue in the West. Nothing is done unless you can make a money argument (and often even not then.)

Let’s be clear: it was always obvious that letting people get sick was more expensive than cleaning the air. Always. Letting people get disabled by long Covid is even more expensive (though much of the West is cutting support for disabled people, to try and make this less true.)

In Ontario, where I live, the Premier decided to get rid of safe drug injection sites. People argued with him, “people will die!” Stupid. That’s OK by him. But he gets a lot of heat for packed emergency rooms and he wants lower hospital costs so he can spend government money on his cronies (I could sky write this over the provincial legislature and not be sued, because his actions prove me right.) So the correct argument was “this will cost money and piss off voters.” That he might (might) have listened to.

But the problem is that in addition to our elites being greedy, they’re also stupid. Again, not treating air in hospitals (and schools) was obviously going to be more expensive than doing so.

The other issues are perceived opportunity cost and agency problems.

Back in the 90s an important book called “Natural Capitalism” came out. It’s still worth reading. Its basic thesis (well supported) was that there were a lot of environmentally friendly things business could do that would cut costs for businesses massively.

Didn’t happen. Even when they would pitch companies with we can reduce your energy/building/whatever by 30%, most businesses wouldn’t go for it. After all executives could spend that money instead to juice quarterly returns, which would juice the stock price, which would make their stock options and grants worth more. Doesn’t matter how much you could save by making your buildings more energy efficient: that doesn’t immediately drop money into the pockets of executives.

So if you want an elite to do something, remember, the question is always “what’s in it for the elite?” No other reason has any weight at all, you might as well be trying to convince Trump that gilding is tacky.

We’re ruled (in the West) by psychopaths. Nothing that wouldn’t convince a psychopath will convince a member of the Western elites to do anything, talking about “do it because it’s good” is like trying to convince the Devil that he should promote kindness, compassion, charity and peace.

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There Aren’t Actually A Lot Of Places For Billionaires To Run

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On October 22, 2026

10 Comments

So, the news comes in that Mark Zuckerberg is not going to leave California even if the 5% wealth tax passes. Jensen Huang of Nvidia isn’t moving either. Some billionaires have, most notably Thiel to Argentina, and a few to Texas, but overall, most are staying in place.

A just-released SEC filing makes an extraordinary revelation: Mark Zuckerberg is getting ready to pay California’s 5% billionaire wealth tax and has signed an agreement to remain in California for 8 years.

Here’s the thing, there aren’t a lot of world class cities, and there are even fewer industrial and tech centers, for smart leaders who want to be where things are happening.

In the US there’s L.A, San Fran, New York and if you’re very political, DC. Chicago, Miami, Austin and Dallas are second tier options, but can be made to work. Boston seems to have fallen out of the great US cities, except for academia, but that’s under heavy assault.

In Europe there’s a few, but basically Paris and London are the main spots.

Japan has Tokyo, Dubai isn’t an option any more.

And that’s about it. Most billionaires aren’t willing to live in some regional city. As for moving tax domicile, it’s certainly possible, but only because Europe and the US allow it: it’s simple enough to tax all domestic income and go after foreign hidden money: when Switzerland tried to resist the IRS, the IRS broke them. You simply have to have the political will.

It’s my annual fundraiser. This allows us to cover the changeover of hegemony from America to China, environmental collapse, internal US fascism, what a better society would look like, Gaza, AI, the coming stock market crash and various other issues. As of this writing we’ve raised about $3,145 out of a $14,500 goal, from 38 people. It’d be great if you can help out (please don’t donate if your financial situation is dire.) You can Subscribe or Donate here or contact me at admin-at-ianwelsh-dot-net if you need another way to donate (mail, usually. A lot of cash apps don’t work in Canada.)

If we want to tax billionaires it’s not hard. Where are they going to go? China won’t take most of them, and if it does, it’s damn well going to tax them, and might even execute them if they pull the sort of fraud they routinely commit in the West. Russia isn’t an option any more. Tax havens exist only because they are allowed to exist.

There’s always an excuse for why we can’t tax the rich, but the most bogus one is that they’ll “just move”. That’s only true IF tax laws are set up to allow it and there’s no cooperation between countries. But basically any time the US and Europe get serious, it ends.

Of course it won’t end, yet, because billionaires own the governments of most countries. But nothing lasts forever, and the tide is turning.

 

A Billionaire Has A Psychotic Religious Break With Reality

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On October 15, 2026

22 Comments

Billionaires are powerful. Peter Thiel isn’t the richest billionaire in the world, but he is an American billionaire who runs the most important intelligence firm in the world, Palantir.

Thiel’s gay, a protestant, and appears to have gone stark raving mad. You’ve probably heard about his Antichrist lectures. A simple summary is:

Thiel has previously written and lectured on the subject, arguing that the Antichrist is not necessarily a person but could come as a global government system. It would take control, he has argued, by exploiting people’s fears around artificial intelligence, climate change or nuclear war.

Exploiting fears? Like the insane 72% of Americans who thought Iraq was involved in 9/11? The massive scare campaign around Iran?

No–actual legitimate issues. Climate change is real, nuclear war is possible and the very founders of AI constantly publicly worry about AI ending humanity. (Well perhaps the AI bit is bullshit.)

Now it’s possible that Thiel is just running an op–that he doesn’t believe any of this and is simply trying to whip up religious folks, especially Evangelicals (a religion that is reversal of much of what Jesus preached) against policies he hates. Being kind, perhaps he genuinely thinks that the world is in danger of world government and it will be achieved thru fear.

But I think it’s more likely he’s had a religious psychotic break, confusing his own desires and prejudices with religious teachings.

And the generous reading fades the more one knows:

He describes the ICC as part of the emerging ideological architecture of the Antichrist, likening language on the ICC’s website to the antichristic talk of peace and safety in 1 Thessalonians. Thiel notes that the ICC’s arrest warrants for Israeli PM Benjamin Netanyahu and former Defense Minister Yoav Gallant have limited where they can travel.

The ICC warrant meant Netanyahu couldn’t visit Poland on the 80th anniversary of the liberation of Auschwitz concentration camp; though Poland’s president said he wouldn’t enforce it, Poland’s authority to defy the ICC wasn’t clear, and so the Israeli PM didn’t come.

Hungary, which belong to the ICC, allowed Netanyahu to travel to their country, with zero consequences, so this is false.

But the bigger point is that he’s weaponizing the Bible to say that doing good is bad. Netanyahu has lead a genocide, there isn’t a single human rights org in the world that I know of that has concluded anything else, and anyone who two brain cells to rub together knows it is true, because it’s been livestreamed and Israeli politicians are very clear that they want to get rid of all Palestinians, and a super-majority of Israelis agree.

Thiel’s been very dedicated to this message. He repeats it over and over again.

And what he’s saying is batshit insane. He’s either gone crazy or is acting crazy and to some extent it doesn’t matter which.

But because he’s a billionaire, and an important one (the US Vice President is his creature, plus he’s shown a vicious willingness to use his power to destroy his enemies), no one has pointed that what he’s saying is crazy.

Being good at making money doesn’t mean you’re smart or wise about anything else. We hang on the words of billionaires as if they’re pearls of wisdom, but the more billionaires we have minted, the worse the economy has become for a super-majority of the population.

If you want a Bible quote, here’s one for you: “by their fruits you shall judge them.”

By the fruits of Western billionaires, they’re terrible people and any advice they give, whether they’re having a break with reality or not, are meant to benefit them and their class, and not anyone else.

Google made search worse to juice profits. Facebook knew scammers were on their site, knew who many of them were, and did nothing, because they were making money off them. We now have online gambling and prediction markets which make casinos look like a good deal. Enshitification is word, and a thing, and it’s driven by billionaires caring only about themselves and their profits.

Anyone who listens to them without running what they say through “this person only cares about themselves” is a fool.

But Thiel’s gone a step further. The Antichrist?

Come on.

This worship of wealth as meaning someone is wise and smart is foolish. Most of them are only good at making money and buying political power. But beyond that foolishness, a sane society would look at Thiel’s Antichrist claims and laugh him out of the public sphere as a lunatic. That we don’t shows how far our societies have fallen into “The Emperor’s New Clothes” territory.

Until we purge the entire oligarchic class in the West, we will never have widespread prosperity or an information commons which is useful. It’s that simple. In the meantime, can we at least not pretend that religious mania is worth listening to?

What I write here is for the benefit of everyone, but alas, I live in capitalism and I, and the site, take money to keep running. If you value the writing here and can, please subscribe or donate.

Buy, Borrow, Die—Another Way the Rich Avoid Taxes

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On October 8, 2026

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One of the long term themes of my writing is that the rich have engineered a system in the West which insures they will continue to get richer, generally in a way which simultaneously impoverishes everyone else.

Buy, borrow, die is another example. The idea is simple enough: rich people

  1. Buy or otherwise obtain assets. Ideally these are assets which produce income or capital gains, but if you have a millions of dollars of stocks that works. This is one main reason for stock and option grants: they don’t register as income per se, and thus aren’t taxed as income but as capital, which means they aren’t taxed until you sell them, no matter how much they appreciate.
  2. Borrow is the next step: use your assets as collateral. Loan rates for the rich are usually 1.5 to 2% higher than short term treasury rates (which means that from 2008 to 2020 they were rarely more than 3%, they’re higher now, especially due to Trump’s insane war with Iran and its consequences for treasury rates. This rate of interest is far lower than you would pay for capital gains taxes, let alone income
  3. Die. When you die the price of your assets for estate tax purposes are reset to how much you bought them for. So your heirs pay taxes as if there had been no appreciation in asset prices.

This has been going on for a long time, but only become the default for “high net worth individuals” after 2008. It’s viable somewhere between ten and 30 million dollars of wealth.

In order for this to work, of course, you need to know that asset prices and returns on income producing assets will be higher than borrowing costs. Fortunately ever since Greenspan and his infamous Greenspan’s Put, the Federal Reserve has always insured that the stock market and asset prices in general, always rise fast. This has broken down a bit with real estate assets since 2020, but the stock market is reaching unseen highs regularly, and unlike in the pre-Reagan era, there are no sustained bear markets.

This is, again, a policy choice. It doesn’t have to be this way. Doing this in China would not work even if the law allowed it, because the stock market isn’t juiced and doesn’t provide essentially automatic increases. It does work in most, perhaps all Western nations, though in general other countries aren’t quite so permissive. The “die” part also required some significant changes to estate taxes for it to be viable for the merely rich (tens of millions) as opposed to the really rich with hundreds of millions or more.

As a result of this the rich often pay far less in taxes, as a percentage, than the upper middle class, especially highly paid professionals who still mostly get their money from wages.

I’m going to return to this later, but for now the important thing is simply to understand that the economy, which includes the tax system, is set up structurally to favor the rich. Yes, they still wind up paying a lot of taxes in absolute terms, but in proportional terms they often pay less than ordinary citizens. Warren Buffet famously noted that he paid a lower percentage of his income than his secretary did.

This is also organized to keep wealth together over generations, creating an oligarchic aristocracy, which is something America’s founders were very much opposed to. Along with permission for oligopoly, monopoly, price fixing and the structure of monetary production (many rich people are connected to banks and other financial firms which are allowed to create money out of thin air), plus law changes like Citizen’s United (money is speech so restrictions on election spending are illegal) this is a structural preference for oligarchy.

The only way to end this requires significant legislative changes, along with changes to the Supreme Court makeup, since as it stands right now the Supremes would strike down any laws intended to challenge oligarchy.

Since oligarchs own the politicians and the supreme court, this won’t happen unless the rich lose their power in a Great Crash that even the Fed and Treasury can’t bail them out from, and since they can print as much money as they want, that means it isn’t going to happen short of some sort of revolution. The money as speech decision makes it unlikely this will be an electoral revolution (though not entirely impossible), so it will likely require a full revolution.

If that doesn’t happen America’s decline will continue until it is just a larger version of Brazil or India: lots of poor people, a small but prosperous upper middle class who are direct retainers of the rich and a mass of poor people.

It’s quite clever really, the only downside is that this sort of financialization and rentierism weakens America as a whole since returns on manufacturing can’t match financial returns under this sort of economic engineering, and industrial power is effectively military power in the post-industrial revolution world.

America’s oligarchs have thus chosen American decline in exchange for what they hope is permanent oligarch status.

What I write here is for the benefit of everyone, but alas, I live in capitalism and I, and the site, take money to keep running. If you value the writing here and can, please subscribe or donate.

The Psychology Of Elite Depravity

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On September 26, 2026

16 Comments

So, why are so many members of the elite pedophiles?

It starts with the fact that money or power gets you pretty much anything you want that’s legal. If you’ve wanted to do something, you can and you do. Hedonic adjustment sets in: if you can have all the boy toys and booze and fine homes and massages and trips and fine cuisine you want, after a while you get bored of it.

It comes second from “elite impunity”, the fact that in most countries a lot of laws aren’t enforced against rich or powerful people. Do crack, go to prison? Have a pricey cocaine habit, like half of American elites in the 80s, and you’re not touched. (Leaving aside immunities like being able to steal employees wages without usually being called on it, and when you are, not going to jail.)

The general observation is true: elites go to prison only when they prey on other elites.

The third bit is how sensual pleasures work. If something is forbidden, if it has powerful taboos around it, like pedophilia, or cannibalism or incest or rape or sacrilege, then when you perform those actions you get much more of a rush from it — powerful emotions are released when violate strong emotional prohibitions.

So you get wealth or power, you use it to enjoy all the things you wanted which are legal, and hedonic adjustment sets in.

All that is left are forbidden pleasures, and as a bonus, those forbidden pleasures come with an extra hedonic boost as long as you’re impaired in your guilt function. But if you’re rich and powerful, over time, your compassion and empathy die (this is well attested to in the literature). You’re used to having your way and to using other people as means to ends which benefit you, not them.

So–extra enjoyment from breaking taboos and unlike ordinary people, no guilt because you can’t feel compassion or empathy for your victims.

And you’re still basically immune. Oh Epstein eventually went to prison and was suicided, but we’ve all seen how those who partook of his services have been protected: how the Epstein files were redacted and no one was indicted.

All the taboo breaking hedonic highs with almost zero likelihood of going to prison.

Then there’s the simple fact that if you’ve got power, other people with power like to have blackmail on you. (Mossad says “hi”, but they are hardly the only panderering blackmailers.) After all, if you’ve got power, you might decide to do something that isn’t good for other elites: blackmail (and remember, Epstein’s properties had hidden cameras everywhere) takes that option off the table.

Elites thus are always at far more risk of engaging in egregious behaviour than ordinary people. It doesn’t show up in stats because elites are in charge and don’t arrest each other. Even those who don’t partake, either because they have some vestige of ethics left, or because they’re smart and don’t want to open themselves to blackmail rarely go after other elites because once there are enough corrupt evil blackmailed elites, there’s no way to get through that vanguard and if you threaten them they’ll band together and destroy you. (See Thomas Massie, the Representative who has pushed releasing the Epstein files the hardest and who lost his primary to a massive influx of outside money.)

Wealth and power are deeply corrupting. They don’t corrupt everyone, but they can corrupt a plurality, and once the threshold where a plurality have been corrupted by evil acts, the system becomes self-sustaining: impossible to stop.

This is the sort of thing that Xi headed off. The Communist party and wealthy oligarchs were becoming corrupt, though as far as I know not yet to the level of pedophile rings. He headed it off with a savage crackdown.

Eventually some future leader will fail to do so, and China’s elites too will become corrupted: it’s a virtually universal experience.

And once you hit that point it generally requires revolution of one sort or another to clean up the mess.

What I write here is for the benefit of everyone, but alas, I live in capitalism and I, and the site, take money to keep running. If you value the writing here and can, please subscribe or donate.

Conditions for Revolutionary Change In The West: Fiscal

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On September 24, 2026

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The traditional revolutionary change requirements are:

  1. An inability to pay military, police and functionaries.
  2. A split in the elite.
  3. Popular revolt.

As a rule, all three are necessary.

In the Russian revolution, the military was noticeably absent, or in the case of the Navy, actually revolted. Near the end, with the old government in the Winter Palace and protestors outside, the cadets being used as guards refused to fight, the Cossacks which the government expected to come rescue them never showed up, and navy sailors helped organize the crowds outside and storm the Palace.

There’s a lot of confusion around this issue, and a fair bit of comes from the idea that money doesn’t matter, because you can always print more.

Sure.

How’d that work for the Weimar Republic?

The bottom line is that money is only good for buying what exists or what is close to existing.

What we’ve been seeing for about 60 years now is:

  1. price increases higher than wage increases.
  2. Deindustrialization.

This means the West is making less of what its own populations need, and the populations can afford less of what does exist. Internal capacity is collapsing. (Ignore CPI, it’s not just a lie, it’s a damned lie. Expenses have risen far faster than it suggests.)

The solution to this, such as it was, was to trade: buy what is needed from other countries. The West was almost the sole supplier of goods that other countries wanted: planes, cars, advanced electronics, weapons and so on. For a while the USSR was an alternative, but as time went by that alternative became less and less viable, until the collapse of the USSR, at which point the West was pretty much the only game in town.

But Western elites were drinking their own kool-aid. They wanted reduced wages and environmental protection costs, so they decided to move production overseas, especially to China. Now China can make almost everything that any country might want: they don’t have to buy from America, and as the technical ability to avoid the dollar payment system increases, that means they don’t need the West.

Recently, what we’ve seen is a reduction in Western coercive ability. Not a complete loss of it (yet), as Venezuela and Cuba and Greenland show, but a serious loss in power. In fact the pivot to coercing weak nearby states and vassals is due to the weakness: the US can’t win far from its territory, but it’s still scary to Latin America and Europe.

This isn’t just about the US though, France had its own sphere of African interests, with military bases throughout multiple ex-colonies. It essentially ran multiple countries. Almost all of them have now run the French out. The French nuclear system, for example, used heavily discounted uranium from African vassals.

Trump seized Venezuela’s oil and has locked down Greenland’s resources, but he’s lost the Middle East. (Yes the war continue. Yes the US has lost and the American Middle Eastern Raj is dying and will not be saved.) Africa would far rather do business with China.

So would Latin America, but American military might, “NGOs”, diplomats and intelligence services have so far mostly been able to keep Latin America in the American sphere. So far. As the ability to use naval forces to project forces declines (and it is and will) this will end, though the process may take a couple decades and a lot of pain.

All of this is a roundabout way of saying that the US is becoming much more poor and will continue to do so. Its coercive abilities are low, it has lost Africa and is losing the Middle East. Even Asian countries which have disputes with China (Vietnam, for example) are integrating with China’s economy.

Can’t make it. Can’t force as many countries to sell to the US for cheap. Has much less to sell to the world that it wants at a reasonable price, since China sells all the same things for less.

At this point the system’s only remaining pillar is dollar privilege. Everything is bought and sold in dollars, the US can print dollars, and the US can thus keep buying what it needs.

Except when it can’t, as with rare earths, industrial magnets, and other resources and goods China has decided to stop selling to America, which it can’t make itself and for which there is no adequate alternative supply. These goods, by the way, are necessary for American weapons, and without them the US military will keep becoming weaker and unable to rebuild its arsenal. (On the other hand, Russia and Iran and North Korea all get as much of these goods from China as they need.)

And dollar privilege is ending. Oh it goes back and forth, the US is fighting tooth and nail to keep it going, but the trend is clear. Abuse of sanctions, in particular, has made it clear to everyone outside the West, and even to some inside the West, that being in the dollar system: settling trades in dollars, is a huge vulnerability.

I assume the picture is clear: America can’t make as much, can’t force other countries to sell for cheap, has less to trade that can’t be bought for less somewhere else, and soon won’t just be able to print dollars and buy it anyway.

This brings us back to the enforcer class. Police in America are paid VERY well.

With overtime it’s not unusual for police salaries to hit the mid hundred thousands.

Cops are, generally, pretty well paid.

The military is less so, with salaries in the mid 30K range being common for non-NCO enlisted members.

Cops are well paid because they enforce the laws.

“Duh,” you say, but the point I’m making is that they break strikes, intimidate protesters, enforce property laws and steal more money from people than burglars do–but not from elites. Laws are set up to favor elites and cops are how laws that are unfair are enforced.

They’re frontline against the possibility of change. During the American revolution, those unhappy with officials would gather in large groups and go “have a talk” with their representatives. That sort of thing is basically impossible now.

It should be obvious why it’s necessary for the enforcer class: military and cops, to break from the elites for a revolution to succeed. They don’t all have to, but either you need some on the side of the new order, or you need them to refuse to do their jobs: as was the case with the Cossacks in the Russian Revolution.

A lot of people think that the first requirement of revolution: being unable to pay cops, military and functionaries (someone does need to keep things running) is impossible now in the US.

They’re right.

Now

But as the US becomes poorer and as prices continue to rise faster than wages, even police wages, and especially as actual shortages occur (sorry, we just don’t have any) that will change. You could pay them 10 billion dollars, but if it won’t buy the food, medicine, housing, internet and so on that they need or want, it amounts to “not being able to pay”.

And that’s where the US is in danger of heading. Can’t make a lot of stuff. Can force fewer and fewer countries to sell or “give” resources to them, can’t earn an honest buck in trade because China’s good are cheaper, and soon can’t just print dollars.

(I also expect that a lot of US copyright laws may be overthrown in other countries in about a decade to two decades. No reason to pay that ransom if you aren’t buying from the US, and it’s better to have domestic industry or your own internet companies.)

Every great nation thinks “it can’t happen here” till it does. For the US the endgame grows closer.

What I write here is for the benefit of everyone, but alas, I live in capitalism and I, and the site, take money to keep running. If you value the writing here and can, please subscribe or donate.

If You Want Companies To Behave Well You Have To Punish Decision Makers

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On August 25, 2026

22 Comments

Regular readers will know that China has been going after billionaires hard. So much so, in fact, that the number of billionaires is dropping in China.

Back after the financial collapse executives did very very well. They had been lying repeatedly, had engaged in wide-scale fraud and to the extent that there was any punishment it was fines on the companies involved.

Not only were the fines less than the companies had made, but even in the rare case that the company went bankrupt, the executives involved still got to keep all the money they had made. Dick Fuld, CEO of Lehman Brothers wound up with a net worth of over 500 million — after his company was bankrupt.

The saying at the time when bad deals were made was IBGYBG. “I”ll be gone, you’ll be gone.”

So if you want to dis-incentivize bad executive behaviour, you have to really go after the execs. Here’s an example of China doing it the right way:

Notice that all his personal assets were seized. I’d also track down any family member he made rich and take that money away.

The only way to restrain capitalists is real prison sentences or execution (Vietnam is fond of executing corrupt execs) and taking their money, and thus power, away. The idea of corporations being used to shield decision makers and beneficiaries of illegal or evil behaviour from liability has to go away. Corporate personhood has to end, as well, or they have to be given the disadvantages of personhood. “Committed a serious crime? OK, the corporation is dissolved.”

Psychologically the most important thing here is for government officials to not identify with business leaders. Chinese CCP bureaucrats do not think of themselves as part of the same class as executives at companies. Organizationally there can be no revolving door between business and government. You can move from biz to government, but not vice versa. There can be no route for payoffs, including the old “I”ll hire or give your wife or kid a sweetheart deal.”

For most of Western history bureaucrats – aka. civil servants, were considered morally superior to businessmen, because they were working for the common good and by doing so earning less than they could if they were in the private sector. Business was what you did if you were morally inferior: a person who was concerned about yourself and not others.

That ethos produced some very competent and high powered government bureaucracies which were well respected, especially when combined with civil service examinations.

Government and business are two different things. There has to be some understanding between them, since government must regulate business, but government’s job is to make the people better off, not to make businesses richer.

When government operates this way it can control private enterprise so that markets work to the benefit of society. When it doesn’t, usually because it’s been corrupted by capitalists, it enables monopolies and oligopolies and exploitative practices and when there are crises, it bails out the rich, not the people.

All of this is well understood, really, it’s just that there’s a lot of money to pay for scummy intellectuals and journalists and experts to obscure the fact and pretend that there’s a trickle down effect or that what’s good for rich is good for society. (Hello Milton Friedman, you corrupt hack.)

Markets are a lot like nuclear energy. Great if you do it right, but if you don’t, it’ll blow up in your face, and the first rule is that the more money a capitalist has the more harshly they should be treated if they break the law or hurt the public. In China, that’s how it is. In the West, the rich skate and the poor go to prison for life or have their homes and savings and livelihood stolen.

 

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