Ian Welsh

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

Category: Economics Page 21 of 92

The Canadian Economy Under US Hegemony and Neoliberalism

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On July 19, 2021

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Canada’s economy is substantially resource based: minerals, wood, agriculture, and, before the collapse, fish. (The Maritimes were originally colonized largely to harvest trees for masts, which Britain had run out of at home.)

Resource economies are boom and bust economies; resource prices are cyclical, and sometimes resources get replaced. Brazil had a huge rubber plantation industry at one point, before chemists figured out how to make synthetic rubber.

Resource economies tend towards corruption because the profits are so high during good times, and they tend to not develop industry for the same reason, but also because the currency rate tends to be too high to  allow exports of manufactured goods during boom periods — so any industry gets destroyed during the boom.

For about a hundred years, Canada had a simple solution to these problems. We had a manufacturing sector, and during boom resource times, when the Canadian dollar’s strength made manufactured goods too expensive, we just subsidized the manufacturing and slapped on tariffs.

This was a fair deal, because when resource prices went bust and the dollar went low, manufacturing would boom and the taxes from that would be used to support people who worked in resource extraction.

Combined with some simple industrial policy along the lines of “don’t export raw logs or raw fish,” this created a nicely self-balancing economy, and it did so from about 1880 until the 1980s.

Neoliberalism and idiotic trade deals like NAFTA and the WTO put paid to that. It became very difficult to subsidize industries or to insist that processing be done in Canada; we started shipping raw logs and fish to the US, and we stopped subsidizing manufacturing during resource booms, so Canadian manufacturing got gutted.

This was, well, stupid, and a lot of blame is on Canada, Canadians, and the Canadian system, though, to be fair, most Canadians voted for parties opposed to the Free Trade Agreement (which later became NAFTA), but because of vote splitting in a third-party first past the post system, it went through anyway.

But it’s also because the US is, well, powerful. Canada’s economy is a little smaller than California’s, and Canada is a satrapy. Back in the 50s, Canada had a world-leading aviation industry and created the best fighter jet in the world: the Avro Arrow. The US government put on the pressure, and Avro (the company) was put out of business. The prototypes were sunk in a lake.

The threat was that if Canada didn’t give up its aviation industry, the US would take away auto manufacturing, and that was a much larger industry.

If the US wants Canada to do something, Canada generally does it. There have been exceptions, especially under Pierre Trudeau in the 70s, and in the early 2000s Prime Minister Chretien did refuse to invade Iraq, but they are exceptions.

Anyway, Canada’s economy is now much more fragile than it used to be, because it’s much more integrated into the world economy and much less able to adjust cyclically or insist on keeping a significant manufacturing sector.

This isn’t unique, or anything. It’s the shape of the world economy overall, where countries, especially under neoliberalism, mostly aren’t allowed to have an independent economic policy. Canada was never autarchic; we were always a trading state, but we were able to more or less run our own affairs and insist that resources mined, chopped, or fished here be at least primarily processed here.

Nations which do not make what they need are at the mercy of those who do. The US got around this by maintaining control of making, growing, and digging things without keeping them in the US, until they made the mistake of letting China industrialize.

That has lead to the rise of China/US tensions, and a realization that neoliberalism is a two-edged sword.

More on that later. In the meantime, the reason most of the world’s nations are poor and have to do what the US wants when push comes to shove, is exactly because they were not, and are not, allowed separate industrial and economic policies.

Canada, the near neighbour and satrapy, actually still has a pretty good deal, better, in fact, than is given to American peasants.

But all of that will be changing over the next couple decades.

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Siphon the System Thinking Doesn’t Work Against Nature

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On July 5, 2021

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We live in a very, very rich society.

Oh, many people are poor, and real poverty, whether in the “Global South” or first-world backwaters, but our society throws off vast wealth. We could, essentially trivially, feed, house, and clothe everyone and give them a decent life. We have that sort of surplus, and far, far more.

In healthy societies, or societies where elites are scared of outside forces (whether human or natural), the emphasis is on growing the pie, on making the society stronger and richer so that it can survive the forces of which the elites and the population (perhaps) are wary. Unproductive use of resources is frowned on, something you can find even in English common law, where if land or property wasn’t being used, after a time it could be taken by someone who would use it productively.

In fantastically wealthy ages, where elites are sure they are secure from all enemies, they concentrate on fighting over the wealth, or, the pie.

The Gilded Age is a good example. The Americans and Brits of the early to mid 1800s were concerned with growing the pie; they didn’t feel invincible or untouchable. But after Britain had secured its second Empire, and painted more of the map than any other nation in history, and after the US had its civil war, broke the natives, and crushed the Spanish and Mexicans, the US and Britain felt they had it made. There were no real threats left.

So, the countries turned inside. They concentrated on taking from others, on amassing wealth. Rockefeller’s Standard Oil empire was created by by buying out (often at terrible prices) the existing oil industry. It wasn’t creation of something new; it was consolidation in one man’s hands, of what was already there, so that he could reap the benefits.

England’s middle class in 1850 was the envy of the world. By World War I, the average Englishman had been so impoverished that huge swathes of potential soldiers had to be turned away from service in the armed forces. The rich imtiserated the middle class, crushed the farmers as best they could, and fought amongst each other to see who would rule the roost. (In this, they were less collegial than our rich are — far more willing to throw former members of the elite out entirely.)

To put it simply, there was far more money and power to be gained by grabbing a bigger slice of the pie than by growing it.

In the US, this wasn’t fatal; there was a lot of stolen land, and there was still plenty of room for elites to grow new things, even if it wasn’t the emphasis.

In Britain, it led to a fatal decline which is still ongoing; we can see now that Britain probably won’t even stay the “United Kingdom” —- odds are good Scotland will leave, and to add insult to injury, they’ll lose Northern Ireland as well. It is even possible, in the next 40 years or so, that Wales might leave.

From the behemoth astride the world, to a pathetic country that can’t even keep its heartland together.

For our purposes, however, the point is simpler: If you want to rule over other people, you must, in the words of Lois McMaster Bujold, rule their imagination. The greatest of men and women could lose everything tomorrow if their subjects simply stopped believing in their subjugation — and who has how much is entirely a matter of convincing other people to give it to you and let you keep it. Even when it’s a matter of force, you must convince the enforcing class to do what you say and to point the guns and use the prisons on the “right’ people.

It is true that growing the pie requires a fair bit of ruling over other people’s imaginations, but real increases in societal wealth require actually dealing with the world as it is; conquering people who resist, inventing and building steam engines, figuring out how to grow more food on the same land, and so on.

Just getting people to give you more of what already exists, what was created by other people and is produced by a system created by humans of the past, however, is pure imagination work. If people believe it is true, it is. You’re only dealing with human psychology and mass psychology.

Of course, a real world still exists; sometimes its people who don’t buy into your story. This is why China and the US are going to cold war and maybe real war, because neither is willing to live in the world created by the others fictions and ideals.

Then there is nature. It doesn’t matter if you believe that carbon and methane heat up the planet. They do and they will. It doesn’t matter what you think about Covid, if you un-mask and don’t quarantine people who have it, or came in contact with those who do, and if you don’t contact trace, and so on and so forth, then it will act like any other pandemic disease and keep mutating and spreading.

You can’t just manipulate other people’s beliefs about Covid and expect it to go away.

And so, people who have spent their entire lives doing nothing but manipulating other people’s beliefs are incapable of dealing with Covid or climate change. Covid doesn’t “listen to them.” Covid doesn’t care what they say.

Same with climate change. The forest will burn, regardless of what you say to the trees or to the weather.

Our elites, trained only to manipulate other people, are incapable of dealing with real-world events that can’t be controlled simply by controlling other people’s beliefs.

And so we will burn, and cough, and Covid will become endemic as the world slides towards collapse.

(My writing helps pay my rent and buys me food. So please consider subscribing or donating if you like my writing.)

The Lords of Hell (and Their Slaves)

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On June 14, 2021

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Most people spend their entire childhoods and adult lives until they are really too old to work, doing shit they don’t want to do and would never do absent coercion.

This is the ur-fact about capitalism. You cannot leave. If you do not submit to slavery, you will wind up homeless and eventually dead, and suffer a lot along the way.

This is built into the system: The “whip of hunger” is used to make people work. The threat of homelessness.

Homelessness, despair, and so on are required; without them people would not bother working at bad jobs. Indeed, without them many people would not work any more than required to feed and house themselves.

Now, understand clearly, rip a hole in your skull, and put this in: There is more food than needed and way more homes than homeless people in all of the developed countries and more food than needed to feed everyone in the world. We could easily feed and house everyone in the world. It is almost a trivial problem. We simply have to do it.

Industrialization, plus modern agriculture, produces easily more than we need. Automation should mean that less and less hours need working. We should be living in a paradise of free-time and choice.

We do not because a small minority has captured power and enslaved the rest of us.

These people are monsters on every possible level, including in their depraved indifference to what will happen to their children and grandchildren under environmental collapse and climate change.

We have a surplus, but it is generated in the stupidest ways possible — with planned obsolesence, soil degradation, and pollution causing environmental collapse.

If we had built everything without planned obsolesence, we wouldn’t be where we are. If we had not degraded the soil and dumped so much pollution into the air we would not be where we are. We made a bunch of choices to do things the fast, “profitable” way that actually led to people being sicker (all that pollution and soil degradation means you are undernourished and full of unhealthy chemicals) and having to work longer.

We had the knowledge to have a manageable, sustainable cornucopia by just looking at the effects on people, animals, and plants, and the environment in general and correcting. We did not.

School, if you will put aside your prejudices for a couple minutes and look at it coldly, is a process whereby you are made to sit still, talk only when teacher allows, piss only when teacher allows, stand only when teacher allows, and do all sorts of things you don’t want in the way that pleases teacher or you get bad grades, and if you get enough bad grades, you will almost certainly never have a good job or any power in society.

You were trained to be a slave by school then you went to work and acted like a good slave. Some few proved themselves psychopathic enough to ascend to the elites (though the few open routes are rapidly closing down), though most elites come from the already-elite (check out who Bill Gates father was).

Since creating a utopia in which people don’t have to obey their masters is no fun for psychopaths or functional psychopaths and narcissists (our ruling class), keeping the majority of the population firmly in a form of slavery they could tell themselves was freedom, “I get to CHOOSE MY MASTER who tells me what to do! I am free!” is what our master-class has done.

We run around on treadmills, working for them to get what we need, and the various drugs (including entertainment) we use to ease ourselves and pretend it’s all worth it. The internet, which looked like it might increase freedom, has simply set up more hedonic treadmills, optimized for us to tell our masters everything about ourselves, so they can sell us our next drug, and continue their removal from us of all real assets. (Private equity is now buying up single family homes, the middle class’s last real asset.)

If you work at a normal job, you are a slave. If you have ascended to the ranks of high executive, CEO, or board member, you are Lord of Hell. There are some other seats, rather nice places: the independent best-selling author or musician, for example. The high paid consultant, the big Twitch streamer and so on. They are rare, and like becoming a pro-sports player, they exist for the majority of the population more as a way to blame themselves for not “making it” than as a real possibility.

This is our society: A society which had the technology to create a near utopia without destroying the world (yes, some people will argue this was always impossible; let us say that we never even tried) and which chooses instead to run a master/slave society which is so advanced it convinces most of the slaves they are free.

You WISH you had “Brave New World” because at least then you’d think you were happy.

It is odd, and sad, that this world will end because the masters, abetted by their slaves (who, remember, have not revolted in any meaningful way and have chosen the master-class through voting), have mismanaged the environment so badly.

When that happens, the powerful are betting they will become even more powerful, so that they can use their resources to be masters in an even greater hell.

Let me suggest, that as you or your children are scrabbling for survival in the world to come, you take the time to ensure that the masters don’t “win” by destroying the environment.

The hell they will create in a collapsing environment will make the present hell look wonderful by comparison, and they will never stop creating hells unless it is made clear to them that their perpetual hell creation will soon become unprofitable for them as well; even if it has to be with their lives.

(My writing helps pay my rent and buys me food. So please consider subscribing or donating if you like my writing.)

Way Past Time to Leave America

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On June 10, 2021

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I wrote this article in January of 2010. I’m re-posting it because, alas, it is STILL important. I had some hope Biden could at least put through a good economic package; I was wrong.

My errors are far more often on the side of “hope” and optimism than pessimism, which is something people who consider me a pessimist get wrong.

I have updated commentary after the piece.

The Unvarnished Truth About the US

I’ve been meaning to write this post for some time and in light of yesterday’s Supreme Court decision allowing unlimited corporate money into the political system, I think it’s time.

Yesterday’s decision makes the US a soft fascist state. Roosevelt’s definition of fascism was control of government by corporate interests. Unlimited money means that private interests can dump billions into elections if they choose. Given that the government can, will, and has rewarded them with trillions, as in the bailouts, or is thinking about doing so in HCR, by forcing millions of Americans to buy their products, the return on investment is so good that I would argue that corporations have a fiduciary duty to their shareholders to buy out government – after all, if you pay a million to get a billion, or a billion to get a trillion, that’s far far better returns than are available anywhere else.

And no politician, no political party, can reasonably expect to win when billions are arrayed against it.

The one faint hope is that politicians in the Senate will panic, know they have ten months to do something and ram something through. Of course, that will only be a stopgap measure, until the Supremes overthrow it, but in the meantime, maybe Dems will get serious about the Supreme Court and not rubber-stamp radical right-wingers like Alito and Roberts.

That is, however, a faint hope.

Add to this the US’s complete inability to manage its economic affairs, and its refusal to fix its profound structural problems, whether in the financial system, the education system, the military, concrete infrastructure, technology, or anything else, and I cannot see a likely scenario where the US turns things around. The US’s problems in almost every area amount to “monied interests are making a killing on business as usual, along with ologopolistic markets, and will do anything they can to make sure the problem isn’t fixed.”

Even before they had the ability to dump unlimited money into the political system, they virtually controlled Washington. This will put their influence on steroids. Any congressperson who goes against their interests can be threatened by what amounts to unlimited money. And any one who does their bidding can be rewarded with so much money their reelection is virtually secure.

This decision makes the US’s recovery from its decline even more unlikely than before -— and even then, it was still very unlikely. Absolute catastrophe will have to occur before people are angry enough, and corporations weak enough, for there to even be a chance.

So, my advice to my readers is this:

If you can leave the US, do. Most of the world is going to suffer over the next decades, but there are places which will suffer less than the US, places that have not settled for soft fascism and a refusal to fix their economic problems. Fighting to the very end is very romantic, and all, but when you’re outnumbered, outgunned, and your odds of winning are miniscule, sometimes the smartest thing to do is book out. Those who came to to the US understood this, they left countries which were less free or had less economic hope than the US, and they came to a place where they thought freedom and opportunity reigned.

That place, that time, is coming to an end. For your own sake, and especially for the sake of your children, I tell you now -— it is time to get out.

I am not the only person thinking this. Even before the decisions, two of my savviest American friends, people with impeccable records at predicting the US meltdown, told me that within the next few years they would be leaving.

There’s always hope, and those who choose to stay might stop this terminal decline.

But you need to ask yourself, seriously, if you are willing to pay the price of failure, if you are willing to have your children pay the price of failure. Because it will be very, very steep.

I understand that not everyone can leave the US. Look within the US for places that will be least affected. I don’t know what those are. I suggest being willing to adopt “protective” coloring; if you aren’t, and things go really south, understand that the right (and a big chunk of what passes for the center in the US) is itching to do a purge of left-wingers and, indeed, of a lot of centrists (the Clintons, for example).

Next, I’m Canadian, and despite our image, things aren’t going great in Canada. We are badly infected by US-style politics, but even if we happen to win against them (not a sure bet at all — and remember my comment about my errors being errors of optimism), we are a US satrapy which the US may decide to take direct control of. Even if they don’t, Canada cannot realistically resist most US demands if the US is serious; well, not without steps Canada has refused to take, like getting a credible deterrent.

Smart Jews fled Germany to other European nations, and wound up in the camps anyway.

Canada and Mexico (a completely failing state) may well not be far enough away.

Next: Understand that the world IS moving towards a new cold war. It looks like China/Russia + allies vs. America/Europe plus allies, at least so far. There is some chance that Europe will try to go third-path, but so far it is choosing to go with the US, despite misgivings. You can see this in its rejection of Huawei 5G, after a great deal of wavering. Some countries even started to deploy 5G, and are now dismantling it.

There are some other considerations, like China now competing with Germany more than being a customer, but overall Europe seems to be choosing the current hegemon over the new rising one. This is a startling failure on the part of Jingping (who is incompetent at almost everything except controlling the Party). Other countries should be falling into China’s arms, but China now wants to be a bully, too; to reap the rights of being powerful.

So, where you settle will have a lot to do with your future mobility; which part of the walled internet you’re in and so on. Look at countries and consider which side they’ll be on, or if or how they might manage the neutrality dance. This will matter for extradition, visiting the relatives, what technology you use and much more (Russia, for example, is where people in the US really want go, not because Russia is great (it’s a mafia state) but because Russia won’t extradite).

It is, of course, possible that I am wrong, and the US will pull it out. Every great nation (“great” is not a synonym for “good”) pulls it out over and over again until they don’t. England lost an empire then created another, for example, but Britain seems unlikely to exist soon: Both Northern Ireland and Scotland will likely go, and it’ll just be England and Wales again (and even Wales may go in 20 to 30 years, which would be losing a possession conquered 800 years ago).

So, it’s always possible that the US will pull it out. History goes in waves: There was a Gilded Age before, and it ended. That may happen again this time, either by force or luck of disaster.

That said, I don’t think that’s where the smart money is, and you’ll be gambling with more than your life.

If you do stay, remember that you have two defenses: (1) Other people who care for you and will fight with you (fight is not entirely a metaphor here), and; (2) Anonymity: Sliding along with no one really knowing anything about you and your beliefs (far harder than it once was).

All of this is complicated by climate change and environmental collapse putting pressure on systems never designed to withstand shocks.

Be well and be safe, whatever you do.

(The more people subscribe or donate the more I write. So please consider subscribing if you like my writing.)

How Finance Sharks Destroy Industries: Chicago Tribune Edition

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On May 27, 2021

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This isn’t going to be a long one. The way today’s private-equity and other takeover artists work is simple: They buy up a company, and then load it up with debt to pay for having bought it. They generally take healthy companies (ToysRUs was running a profit), then once it’s taken over, they slash and cut. The business will often go bankrupt — if it doesn’t, it operates as a shadow of its former self; its products are worse, it has fewer employees, and so on.

This is now being done to the Chicago Tribune Newspaper.

I don’t think a lot of commentary is necessary. This should be illegal. You should not be able to stiff the company you bought with a huge loan to pay off the expenses you incurred buying it out (while you also pay yourself bonuses in the tens of millions).

Just make it illegal. It has destroyed innumerable companies, and the overall affect is to reduce employment and economic activity. It’s nothing but damage to the economy at this point. Private equity doesn’t take over badly-run companies and make them better now (if it ever did, which is questionable), it just damages or destroys companies so that the people who take them over can have a third super-yacht and a tenth vacation home, and in many cases, be invited to the island run by whoever has replaced Epstein.

These people literally act as parasites. Make what they do illegal, and find a way to take back their stolen wealth.

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CDC Decides to Just Not Count All Covid Cases

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On May 25, 2021

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If you’re vaccinated, you can still get Covid, but… (courtesy of my favorite Dalek.)

Now, the Center for Disease Control and Prevention has stopped investigating breakthrough infections among fully vaccinated people unless they become so sick that they are hospitalized or die.

Now, this may seem reasonable, but people with breakthrough Covid can give it to other people, and they can get Long Covid from it.

And, yeah, you can still die.

Earlier this year, the agency was monitoring all cases. Through the end of April, when some 101 million Americans had been vaccinated, the CDC had received 10,262 reports of breakthrough infections from 46 states and territories, a number that was very likely “a substantial undercount,” according to a CDC report issued on Tuesday….(my emphasis)

Some 995 people were known to have been hospitalized, and 160 had died, though not always because of Covid-19, the new study said. The median age of those who died was 82.

So, we’re not going to count cases unless they wind up in the hospital, but the people with Covid are still infectious and can still die (looks like about a 1.5 percent chance, based on the numbers above).

This, along with the decision to stop recommending masks for people who are fully vaccinated (which, yeah, people who don’t believe in vaccination will lie about) smacks of “the pandemic is all but over, nothing to see here.”

“If we don’t measure it, it doesn’t exist!”

Neither the CDC, nor the WHO have covered themselves in glory during this pandemic. In fact, they have burned credibility like it’s ten cent oil, and they want to set the world on fire. They said masks didn’t help, then they changed their minds. They resisted evidence that the virus was airborne vigorously, and as a result, didn’t emphasize proper ventilation. They were wrong about schools, where, yes, children and teachers do get infected and pass it on.

What should have be a disease we stomped into the ground is now likely to become chronic (also because of refusal to share vaccine manufacturing information), which will, it must be admitted, earn Pharma tens of billions of dollars every year, so I guess that’s a win. And who really needed old people, or people who are immune-compromised? Think of all the saved money on pensions and healthcare for people who are mostly worth more dead than alive to governments and corporations. (Especially since the kids of old people can spend their money. It doesn’t require mom or dad or grandpa or grandma to be alive.)

Back in the Bush era, a joke I liked was: “Stupid or evil?”

“Why not both?”

It sure is fun to be ruled by incompetent psychopaths.

Over in Britain, the government is now trying to deny that they started off with a herd immunity strategy: “Let almost everyone get it and who cares if grandma dies?” But anyone with a memory span of more than year remembers that they did.

Psychopaths. The rich get richer if Covid isn’t stopped. The richest people in the world have seen massive increases in their wealth and income because of Covid. Life is fucking marvelous and Covid has been a blessing.

Understand this in your bones. The people making decisions not only don’t care if you die, if you dying will make them richer or more powerful, they’ll go with the decision path that leads to you or your mum or your best friend dying or winding up homeless. You are nothing to them, you’re meat. A prey animal.

Welcome to late-stage capitalism.

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Neoliberalism in India and Covid Deaths

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On May 18, 2021

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I’ve had my eye on India ever since I found out that calories per capita had dropped in India over the last 30 years.

That’s not what happens when things are going well, unless a huge number of people have moved to sedentary jobs, which they had not.

Neoliberalism is about production and supply trains. They’re very complicated, and the parts for a finished good may be made in a dozen countries and shipped to a plant which does the final assembly. The IP holder often skims ten to 30 percent profit off of this.

Most countries currently industrialized didn not industrialize under neoliberalism. They ran protectionist trade policies and exported their way to mature economies. That was generally allowed because they were a military ally or satrapy. Japan was first Britain’s ally, then for the US. Taiwan and South Korea were American satrapies, etc.

China used a hybrid model. They got themselves into the supply chains by offering high profits to Westerners, generally through simple wage arbitrage (“our workers cost less”). They put heavy pressure on people who took those profits to give them their technological secrets (IP) in exchange. And for much of the early period, they also ran a protectionist policy, keeping their currency low against the US dollar. They turned neoliberalization into mercantalism, and because less than five countries have EVER industrialized under any system but mercantalism, they succeeded.

They were able to do this because they made it very worth the while for greedy Western elites to ship jobs to them; they made a lot of Western elites rich. They knew exactly the deal they were offering.

India was socialist for a long time. They felt it didn’t work, so they decided to try neoliberalism.

But, they ran into the fact that it made more sense to offshore to China, and they didn’t do neoliberalism smart — they didn’t control their currency properly or find another way to turn neoliberalism into mercantalism. China kept large parts of their economy state-controlled, and used those companies actively. Yes, state-controlled companies were less efficient, but they gave the State power, and they provided ways of spreading welfare to people that the private companies weren’t taking care of. Not immiserating too many people meant making sure that Chinese citizens saw the new industrial and trade policies as good for them.

India, on the other hand, got in mostly on service jobs. “We speak English, so we can do service center stuff,” and a fair bit of IT outsourcing and offshoring.

But they neoliberalized as if they were already a first world nation; they sold off public enterprise and gutted state control over the economy as if there were a huge surplus created by decades of good growth which could be cannibalized to create a rich class.

India did create a small new middle class and rich, yes, but they did so without creating widespread prosperity.

Because of the way human psychology works (we have a strategy, it has not worked, we must do it harder because we are always right until we are overthrown), when the old elites couldn’t really make this work, a toxic mix of neoliberalism and Hindu Nativism took control of the country, with the face of Modi.

Modi’s a right-wing nationalist, verging-on-fascist (some would take out the word “verging”). But he’s also a neoliberal’s neoliberal. Practically, his first act was to de-monitize: removing large bills from circulation and forcing poor people to use electronic money. This was sold as crushing corruption, but what it did was make sure that the government and financial elites could grab more money from more transactions, while crushing the informal economy most Indians live in.

Recently, he’s passed a law which allows farms to be bought more easily. And so they will be (farmers, not being idiots, have opposed this law).

So Modi’s run the same play you can see in right-wing parties around the world: He’s offered nativism and feel-good, right-wing identity politics (Hindus are the best, Muslims are scum, get rid of them, no Hindu girl should marry a Muslim, etc.), and then run policies which will, over time, hurt the poor and create more rich.

But these general policies were running long before Modi.

One of those policies that has now been brought to light by Covid is that the public health care sector was gutted under neoliberal governments, so that private healthcare could make more money. So now, when it’s needed, there isn’t enough public (or private) care around.

This is how neoliberalism works: It looks for a public good and then it gets rid of it. This can be a regulation which, if removed, allows profit (making it hard to buy farms means they can’t be bought up and turned into large cash farms; cutting pollution rules means someone makes more money, etc.) or it can be by making public services shitty, or selling them off to the private sector, or other variations.

Again, in a developed country with a large prosperity cushion like the US, France, or Canada, you can do this for a while, and it doesn’t look so bad.

If, on the other hand, you do this to a country which had never hit developed status in the first place, well, people eat less calories, and when a pandemic happens, hospitals turns away patients in droves.

Neoliberalism doesn’t work when trying develop or industrialize countries, unless you game it so it turns into protectionist trade. China did that, India didn’t, and Indians are now paying the price.

Neoliberalism is designed to create rich elites while crushing ordinary people. In India’s case, it also created a small middle class (because that’s rich, really, in India, as anyone who’s spent much time there knows. Middle class means you have servants, for example. It’s not middle class like in The US or Europe.)

Neoliberalism is not designed to help anyone but the rich, except temporarily. Some asset holders will win (say, if you owned a house in 1980 in the US and didn’t sell until retirement, then moved somewhere cheap.)

But no other groups win for any length of time, because neoliberalism is the policy of looting, of pumping asset prices and of crushing wages. That’s the policy regime. It does what it’s meant to: It creates a rich class and, for a while, it keeps enough people supporting it who won’t win the end (unless they die soon enough) by giving them large, unearned asset price increases that are much greater than inflation.

India needs a new strategy. The overwhelming of its medical infrastructure is exactly the result of the neoliberal policies it has followed for decades. Modi is only the latest and worst, not the first.

I wish the Indians well. They have a very challenging few decades ahead of them, perhaps the most challenging of any non-African large country in the world. I hope they get their act together, ASAP, or a lot more Indians than Covid is killing will die, and die ugly, as climate change, ecological collapse, and water shortages hit.

(The more people subscribe or donate the more I write and the happier I am. So please consider doing so if you like my writing.)

The Inflation Spike: What it Will Do & How to Take Advantage

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On May 11, 2021

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So, many people have noticed there’s been a lot of inflation. Timber is up about three times. There is an international chip shortage (thank you Crypto). The price of everyday goods has risen significantly.

First: No, this isn’t a precursor to hyperinflation in core countries.

Second: Yes, higher inflation is here to stay, beyond what can be concealed by statistical tricks like hedonics. (Assuming the Fed doesn’t hammer the economy into the ground, which I don’t think they will.)

The temporary effect is pandemic driven. A lot of capacity was shuttered during the pandemic, and it will take time for it to ramp up. Once it’s back up, prices will stabilize.

The permanent effect is driven by increased consolidation. A lot of small and medium businesses went out of business during the pandemic, and they aren’t all coming back. They were replaced by larger businesses. Those larger businesses (who, for example, bought up a lot of rental housing) will use their market power to raise prices and they will keep raising prices as long as they have little effective competition (a.k.a., as long as they are oligopolies). In industries like rental properties, they will keep properties off the market to increase prices, because capital is cheap and they can afford to do so.

Right now, this is being mitigated by pandemic government spending, like the additional $300/week for UI benefits. It is also being mitigated, on the low end, by the fact that a decent chunk of the bottom-end died. (Line cooks had the highest pandemic fatality rate of any job class.)

Remember that what matters is not what inflation is, but whether your wages are rising faster than your expenses. If companies are forced to raise wages more than they raise prices, you are better off.

This is why Republican governors removing UI benefits are hurting people. They’ll still get price inflation, without wage inflation, leading to people who are, overall, worse off.

The test here is if Biden, through his fiscal package, can pour money to the poor fast enough to keep the labor market tight. If he does, people’s wages will rise because businesses will have to raise wages to get workers.

If Biden pulls this off, he gets re-elected. He might even win the 2022 midterms. If he doesn’t, he becomes a lame duck President in 2022.

So, if anyone from the administration or Democrats in Congress are reading this, remember: Re-election and keeping power requires flooding poor people with money and good paying jobs like the jobs refitting buildings in the stimulus. Do that, and wage inflation will out-pace price inflation; people will feel great, and you and Biden will soar to re-election and do so with a larger majority which will allow you to do even more — win more seats and create a semi-permanent majority.

It really is that simple and that hard.

For readers, there is still a boom coming, there will be a period where the market is tight (there is already, as I predicted). Get your vaccines, and if you need a job, get one while the getting is good. Consider trading up: See if  you can get a better paying job than the one you have right now.

There is no guarantee Biden and Congress won’t fuck this up and let this turn into price inflation higher than wage inflation, so make while the making is good.

(The more people subscribe or donate the more I write and the happier I am. So please consider doing so if you like my writing.)

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