Between Sweden and Haiti: The truth about immigration

If you are not a regular listener to Michael Barbaro’s “The Daily” podcast, you should be. Today’s podcast turns the President’s racist, hate-filled vulgarity into a question of why any nation might or might not admit immigrants and why nations might set national, educational, or skill-based constraints on these admissions.


I would contend that at least since the 17th century, nations have recognized and sought to build immigration policy around what policy makers feel are the best economic interests if not of the nation, then at least of that portion of the nation capable of making and benefiting from policy. So, to take what is doubtless the worst chapter in North American history, while southern planters were eager to admit African slaves in large numbers because they served the financial interests of southern slave owners, northern merchants, bankers, manufacturers, and farmers preferred formally “free” wage workers for whose care and upkeep they held no responsibility. Both wage earners from Europe and slaves from west Africa served the economic interests of public officials responsible for policy making. I believe that this practice has remained relatively constant over time.

Some readers might object that the 1882 Chinese Exclusion Act had no economic component; that it was racist through and through. All immigration restriction — or nearly all — has without question a racial or ethnic component. Yet, a quick glance through the historical record will show that “earlier,” more “English,” or more “European” — white —workers, even where they might demand and win a higher wage, enjoy an advantage over non-European wage earners, because they are closer to and politically better equipped to shape the policies that govern immigration and its restrictions. Moreover, immigration restriction, from the very beginning, has never been a means of raising the wages of working families; rather has it always been a means of placing downward pressure on the wages of restricted groups. (Imagine, for a moment, if undocumented Mexicans and Central Americans laboring in California’s central valley suddenly enjoyed the same legal protections as any other worker. Not only would their wages soar, but so too would the wages of other non-agricultural workers in the valley. Moreover, rising factor costs would drive innovation to replace now-expensive manual labor with less expensive automation — technology whose management and maintenance would demand higher skilled, higher wage workers.)

Which helps to explain why, after years of opposing the legalization of the United States’ undocumented workforce, organized labor in the US — the AFL-CIO — suddenly saw the light and performed an about-face. The preservation of the illegal status of undocumented workers actually drives wages down, not up.

More broadly speaking, however, how might completely open boarders reshape the economies of the Americas? Economists often talk about efficiencies and about the productivity of labor. When units of output at any given cost increase with the same number (and cost) of labor hours, productivity is said to increase. Or when these remain the same while the number (and/or cost) of labor hours fall; again, productivity increases.

Economists also talk about gains from trade. Two towns next door to one another will nevertheless trade goods with one another because the productivity of workers in one of the towns is greater for some set of goods than the productivity of workers in the other town. The same, of course, is also true of nations. We purchase goods made elsewhere because they are manufactured more efficiently. And people elsewhere purchase our goods for the same reason.

But, what about that good called “labor”? Can we purchase the “labor” of some equally skilled workers more cheaply than the “labor” of others? Of course, the answer is “Yes. We can.” And we do. The Apple computer on which I compose my blog is designed in the US; but it is manufactured in China. Were this labor performed in the US, its cost would rise astronomically — for the same skill level. And were the US to open its boarders indiscriminately to all Apple workers in China, the flood of workers into the US would eventually leave no one willing to work in China for these relatively lower wages. Apple would then either have to raise its wages in China, or, perhaps, if there were no more comparative advantage to manufacturing in China, move its production facilities elsewhere, perhaps the US. Immigration restrictions serve to preserve these comparative advantages. Lifting these barriers also reduces the comparative advantage manufacturers enjoy by locating in one country or another. Here the “efficiency” or “productivity” is won not from labor being more highly skilled or working harder, but simply from geographical location and from policy makers proving able to limit the export and import of this good: i.e., the good we call “labor.”

Finally, economists also talk about the arbitrage opportunities created when any investor is able to restrict the supply, the demand, and hence the price and the value of any good that is in demand. Free market advocates often complain when wages are set by law, when restrictions are placed on safety or health in work places, or when municipalities require investors to restrict the output of noise or pollutants. Public restrictions of any kind are loudly denounced — except, of course, for restrictions on labor. Why?

As always, racism and nationalism undoubtedly plays some role. But let me suggest that racism and nationalism are simply means that investors use to gain arbitrage opportunities within the labor market. We can test this hypothesis, in theory, by considering the consequences that might follow from — as the President apparently wishes — effectively limiting immigration only to high skilled, highly educated wage earners who will only emigrate if they are offered a higher wage than they currently earn in, say, Germany or Holland or Norway. High skilled, highly educated wage earners also live in Haiti and Honduras, of course; which is where racism and nationalism kick in. But, if we examine the production function, where the Marginal Productivity of Labor (MPL) is equal to the change in quantity produced over the change in the capital it costs to produce that quantity, it stands to reason that the MPL will decline with a rise in wages. Moreover, all of the work performed by undocumented immigrants at low wages will now cost much more because performed by workers enjoying legal protections. Under any normal circumstances, this will result in a substitute of human labor with technology and/or the shifting of investments to production — of avocados, peaches, nuts, etc. — in other markets. In other words, all else held equal, effective boarder restrictions to high skilled, highly educated labor will place upward pressures on wages, downward pressures on productivity, both of which normally lead to an economic contraction, higher unemployment, lower returns, etc.

But what happens if we throw the borders open. Historically we can look at the last two decades of the 19th century to see what happens. No surprise here. A flooded labor market leads to huge efficiencies, efficiencies that translated into an unprecedented expansion in productivity, a lowering of prices, and an expansion of the economy overall; which proved great for investors. And, as we neared the peak of growth, full employment, and full productive capacity; again, no surprise, we saw upward pressures on wages and benefits in response to more effective organizing among workers.

In the short run, throwing our borders open today would probably lead to downward pressures on wages across the board; but it would also lead to much greater efficiencies; moreover, as wage earners moved from low wage markets to higher wage markets, the wages and benefits in the regions from which they are moving might be expected to rise in order to attract sufficient workers. In the long run, however, we should expect gains from trade — not gains from arbitrage.

What then is the truth about immigration? The truth is that immigration and more immigration would be good economically for the US; the truth is that legal protections for immigrants would more than counteract downward pressures on wages from this immigration; the truth is that all (or nearly all) investors would benefit from relaxed border restrictions.

So, why are some investors in favor of stricter border restrictions? Consider the slave holder in 1858. What would he lose were his slaves suddenly declared free citizens? Obviously he would lose his “property” for which he might have paid the equivalent today of between $50-100K. But more than that, he would lose a lifetime of labor performed for the cost of upkeep and maintenance. He would lose the efficiencies and productivity won from slave labor. Restrictions on the freedom of this market in human beings won for the slave owner the arbitrage upon which he had built his fortune. A free labor market, by contrast, would ruin this arbitrage opportunity.

Now consider the investor whose marginal profits depend on maintaining lower than market factor costs (i.e., lower than normal labor costs). An employee who enjoys full legal protections would cut deeply into his marginal profits, perhaps even making it no longer profitable to cultivate nuts or avocados or peaches in the United States; or perhaps forcing him to invest in costly technology in order to compensate for higher labor costs. Even more, higher wages for individuals at the bottom of the income hierarchy places upward pressure on wages across the board. Should our hypothetical investor enjoy a diversified portfolio, she can expect higher factor costs in all of the markets in which she has investments. Indeed, it is not unlikely that these higher costs will lead, initially, into an economic slump similar to the slump encountered int he 1970s, when manufacturing, weighed down by costs for private health and private pensions, contracted.

In the long run, however, the US would have to shed its low wage, low benefit jobs; it would have to embrace the efficiencies delivered by efficient public transpiration, universal healthcare, and universal, free post-secondary education; and it would have to replace its low wage, low skill, jobs with high wage, high benefit jobs. Such a shift would be painful, specially for investors perched at the top of the income hierarchy who would be forced to see the efficiencies produced by labor transferred back down the income hierarchy to the working families that produced them in the first place.

No nation has been entirely successful making this transition. But, as my colleague Brad DeLong has written, Germany has been the most successful. By recognizing and distributing the efficiencies from health, transportation, and education, they shed low wage, low skill, large scale manufacturing more elegantly than any other industrialized nation. And by realizing these efficiencies, they also place themselves in a position to welcome lower wage workers to perform the work that many Germans won’t: legally, with full health coverage, and full educational benefits.

So which nation has made this transition least elegantly? Which nation is, in fact, moving in the absolute wrong direction: the US.

Cain, Abel, Enkidu and Gilgamesh

In the Episcopal cycle of readings (if you are not celebrating William Laud, Archbishop of Canterbury, 1645) today we find the story of Cain and Abel, and Abel’s murder of Cain:

And Adam knew Eve his wife; and she conceived, and bare Cain, and said, I have gotten a man from the LORD. And she again bare his brother Abel. And Abel was a keeper of sheep, but Cain was a tiller of the ground. And in process of time it came to pass, that Cain brought of the fruit of the ground an offering unto the LORD. And Abel, he also brought of the firstlings of his flock and of the fat thereof. And the LORD had respect unto Abel and to his offering: But unto Cain and to his offering he had not respect. And Cain was very wroth, and his countenance fell. And the LORD said unto Cain, Why art thou wroth? and why is thy countenance fallen? If thou doest well, shalt thou not be accepted? and if thou doest not well, sin lieth at the door. And unto thee shall be his desire, and thou shalt rule over him. And Cain talked with Abel his brother: and it came to pass, when they were in the field, that Cain rose up against Abel his brother, and slew him. And the LORD said unto Cain, Where is Abel thy brother? And he said, I know not: Am I my brother’s keeper? And he said, What hast thou done? the voice of thy brother’s blood crieth unto me from the ground. And now art thou cursed from the earth, which hath opened her mouth to receive thy brother’s blood from thy hand; When thou tillest the ground, it shall not henceforth yield unto thee her strength; a fugitive and a vagabond shalt thou be in the earth. And Cain said unto the LORD, My punishment is greater than I can bear. Behold, thou hast driven me out this day from the face of the earth; and from thy face shall I be hid; and I shall be a fugitive and a vagabond in the earth; and it shall come to pass, that every one that findeth me shall slay me. And the LORD said unto him, Therefore whosoever slayeth Cain, vengeance shall be taken on him sevenfold. And the LORD set a mark upon Cain, lest any finding him should kill him. And Cain went out from the presence of the LORD, and dwelt in the land of Nod, on the east of Eden (Genesis 4:1-16).

As well it should, the story evokes different interpretations for different communities. No doubt, for rabid meat-eaters, it provides a warning against vegetarians and vegetarianism. (You know that they are trying to seduce your children; right?) For me, however, the Cain and Abel story sends me rushing to my bookshelf for my Penguin edition of the Epic of Gilgamesh.

800px-Tablet_V_of_the_Epic_of_GligameshThe story intrigues me not because of its flood story, which bears such a striking resemblance to the flood story told in Genesis, but because of what these ancient stories tell us about settled and wandering communities. Nearly without exception, Yahweh is unhappy with settled, agricultural, communities. Like the wild man Enkidu, Yahweh prefers the wanderers.

It might seem as though this preference for wanderers arises because of the long sojourn of God’s people in their journey to the promised land. “You shall answer and say before the LORD your God, ‘My father was a wandering Aramean, and he went down to Egypt and sojourned there, few in number; but there he became a great, mighty and populous nation'” (Deuteronomy 26:5); echoed in Hebrews 11:38: “They were stoned, they were sawed in two, they were put to death by the sword. They went around in sheepskins and goatskins, destitute, oppressed, and mistreated. The world was not worthy of them. They wandered in deserts and mountains, and hid in caves and holes in the ground.”

When she created Enkidu, God also made him a wanderer:

The goddess Aruru, she washed her hands,
took a pinch of clay, threw it down in the wild.
In the wild she created Enkidu, the hero,
offspring of silence, knit strong by Ninurta.

All his body is matted with hair,
he bears long tresses like those of a woman:
the hair of his head grows thickly as barley,
he knows not a people, nor even a country.

Coated in hair like the god of the animals,
with the gazelles he grazes on grasses,
joining the throng with the game at the water-hole,
his heart delighting with the beasts in the water.

A hunter, a trapper-man,
did come upon him by the water-hole.
One day, a second and then a third,
he came upon him by the water-hole.

When the hunter saw him, his expression froze,
but he with his herds – he went back to his lair.

Epic of Gilgamesh (Tablet 1, 100-112)

The tyrant and misogynist Gilgamesh, by contrast, is representative of the settled agricultural community.

On the surface, the story tells how the wild man Enkidu is tamed and civilized. In fact, however, it tells how Enkidu tames Gilgamesh. For when Enkidu learns that the tyrant Gilgamesh exercises the so-called droit du seigneur — the right to have sex with soon-to-be wed brides in his realm — it is Enkidu that intervenes on behalf of the people:

Enkidu with his foot blocked the door of the wedding house,
not allowing Gilgamesh to enter.
They seized each other at the door of the wedding house,
in the street they joined combat, in the Square of the Land.

Tablet 2, 110-114

Moreover, it is Enkidu who takes Gilgamesh on a journey, wandering through the wild forests and lands; not subduing or conquering these lands, but learning from them and learning how to live as a wanderer in mutual interdependence on the land.

Back to Cain and Abel. Why did God prefer Abel’s offering over Cain’s? A common diaspora reading of the story finds in God’s preference for Abel evidence of God’s rejection of “works righteousness”; where Cain must plant, water, and cultivate his offering, Abel finds it whole, present, ready to kill and offer without any works. Like the sacrificial animal God provides to Abraham — by faith — in place of Isaac, Abel’s animal offering illustrates faith.

By faith Abel offered to God a better sacrifice than Cain, through which he obtained the testimony that he was righteous, God testifying about his gifts, and through faith, though he is dead, he still speaks. . . . By faith Abraham, when he was tested, offered up Isaac on the altar. He who had received the promises was ready to offer his one and only son, even though God had said to him, “Through Isaac your offspring will be reckoned.” Abraham reasoned that God could raise the dead, and in a sense, he did receive Isaac back from death. (Hebrews 11:4, 17-19).

This common diaspora interpretation of the Cain and Abel story is liable to overlook the underlying theme: wandering in search of a better country.

All these people died in faith, without having received the things they were promised. However, they saw them and welcomed them from afar. And they acknowledged that they were strangers and exiles on the earth. Those who say such things show that they are seeking a country of their own. If they had been thinking of the country they had left, they would have had opportunity to return. Instead, they were longing for a better country, a heavenly one (Hebrews 11:13-16).

We display a neolithic prejudice in our interpretations of ancient stories. I would argue, however, that, like the Epic of Gilgamesh, they instead invite us to admire and emulate our paleolithic forebears: like Abraham, Isaac, and Jacob; and, evidently, like Abel. But why this divine preference for our paleolithic forebears?

If we take King David as a type, he is not altogether different from the emperor Gilgamesh. He takes what he wants. He entertains no debate from his subjects. He rapes whomever he wishes. He commands them to erect monuments, royal palaces, and (as an afterthought) a temple for Yahweh. To which God replies:

Go and tell my servant David, ‘This is what the Lord says: Are you the one to build me a house to dwell in? I have not dwelt in a house from the day I brought the Israelites up out of Egypt to this day. I have been moving from place to place with a tent as my dwelling. Wherever I have moved with all the Israelites, did I ever say to any of their rulers whom I commanded to shepherd my people Israel, “Why have you not built me a house of cedar?”’  (2 Samuel 7:5-7).

David, who, in a challenge from Saul savagely kills and strips the foreskins from two hundred Philistines as trophies. The emperor Gilgamesh has nothing over on King David when it comes to naked brutality.

Leaving us to wonder: what is actually entailed in the neolithic revolution? What is required to settle an area, to plant it, water it, cultivate it, harvest it?

Our neolithic prejudice has it that the wanderers, like Enkidu, are the dangerous, uncivilized, uncultivated ones; that David and Gilgamesh are to be emulated. Yet, that is not at all the story told, either in the Epic of Gilgamesh or, for that matter, in Second Samuel. Indeed, I would argue that all of these ancient stories are seeded with an underlying hostility to the settled, neolithic agricultural communities, precisely on account of the cost entailed securing and maintaining these communities. For 2.5M years, human beings were migratory; only during the last 0.01M years have humans settled in permanent communities and only in the last 0.001M years has urban life become dominant. “My father was a wandering Aramean” could be the core text in Deuteronomy. But might it also supply the interpretive key to the Cain and Abel story?

Settled agriculture communities appear only where a single family proves itself powerful and violent enough to requisition the labor and daughters of the other families with which it is wandering. This is the testimony not simply of Hebrew sacred text, but sacred texts across the globe. The vast majority of families escape into the hills, into the deserts, across the seas, into the icy, inhospitable tundras. In these places, they are safe from the tyrannical domination of the settled, neolithic communities whose kings, princes, and emperors wish only to requisition their labor and care for themselves.

Enkidu, the savage, will have nothing of it. He stands in the doorway to prevent Gilgamesh from raping the betrothed.

As I reread the Cain and Abel story this morning, I am reading it through a lens carved in ancient Mesopotamia, where, as everywhere in the ancient near east, settled communities were at odds with the wandering tribes. Abel, the wanderer, the hunter, the backwoodsman, brings his sacrifice, an animal, that Yahweh finds more acceptable not because God is a carnivore, but because God, too, is suspicious of the settled agricultural communities, represented by Cain’s agricultural offering. God, too, is wandering, seeking a “better country, a heavenly one.”

Oprah: A Sublime Choice

If you have not watched or listened to Oprah Winfrey’s Golden Globes Cecil B DeMille Award acceptance speech, I urge you to do so now. Its the best ten minutes you will spend this week and perhaps this month.

That said, Ms Winfrey’s speech (and the radio chatter generated by the hint that she might make a run for the presidency) left me wondering: what kind of world is it that we live in when celebrities who lack policy making or legislating experience capture our imaginations as potential candidates for the highest office in the land?

I am not unfamiliar with the attraction fame, fortune, and power hold, particularly for individuals who have none: witness the tabloid culture and its audience. For better or worse, the attraction these hold goes as far back, historically, as the eye can see: witness the non-contest between David and Saul; Saul the wise and thoughtful servant, David the flashy, self-made violent, yet talented librettist (he wrote many of our Psalms) and warrior. So I am not saying that our attraction to Ms Winfrey is something new.

And, yet, when I consider the dull and boring legislators and policy makers we have produced over the years — many of them quite brilliant precisely as legislators and policy makers — I have to wonder whether the shift we are witnessing is not something new.

Was it FDR’s fireside chats? Was it JFK’s handsome mug (specially when viewed side-by-side with Nixon’s pale, sweaty face)? Or was it Reagan’s folksy TV-personality that inured us to the notion that legislating and policy making is a function of celebrity?

In fact, however, I believe that our attraction runs much deeper. Our attraction, I believe, touches upon “the sublime.” The sublime is frequently confused with the beautiful. But they are fundamentally different. The sublime holds interest for us in a way fundamentally different from the beautiful. As the 18th century German thinker Immanuel Kant (1724-1804) once noted: “The beautiful prepares us for loving something, even nature, without interest; the sublime, for esteeming it even against our interest” (Critique of Aesthetic Judgment §29). But why might we esteem any thing even though — or perhaps because? — it is against our interest? Why might we prefer Dionysus to Apollo?

It is Kant, again, who may offer insight in this matter. In his Critique of Aesthetic Judgment, he offers the following analysis:

Even in a fully civilized society there remains this superior esteem for the warrior, except that we demand more of him: that he also demonstrate all the virtues of peace — gentleness, sympathy, and even appropriate care for his own person — precisely because they reveal to us that his mind cannot be subdued by danger. Hence, no matter how much people may dispute, when they compare the statesman with the general, as to which one deserves the superior respect, an aesthetic judgment decides in favor of the general. Even war has something sublime about it if it is carried on in an orderly way and with respect for the sanctity of the citizens’ rights. At the same time it makes the way of thinking of a people that carries it on in this way all the more sublime in proportion to the number of dangers in the face of which it courageously stood its ground. A prolonged peace, on the other hand, tends to make prevalent a mere[ly] commercial spirit, and along with it base selfishness, cowardice, and softness, and to debase the way of thinking of that people (I Kant, Critique of Aesthetic Judgment §28).

Here Kant indicates that the sublime, unlike the beautiful, holds out for us the possibility of radical, qualitative, unanticipated transformation. The beautiful is what it is and nothing more. A states person crafts a piece of legislation — the epitome of a boring document, packed with sections and subsections and subsections of subsections. She crafts it in collaboration with women and men who differ with her and who are therefore eager to leave their own imprint on the final document. And when it is complete, each of these sections and subsections fit neatly, rationally, lawfully, not only with one another, but also with the corpus of existing law. Borrrring!

Or take the business person whose dealings are memorialized in contract and subject to existing laws and regulations. No surprises. Again: Borrring!

Now consider the general — or any individual who seems capable of violating, destroying and then creating, law through their very speech and activity. They are, in this limited sense, gods. These magical beings, because they are not subject to the laws that govern most of us, can perform acts the rest of us cannot. They can make America “great” not because they are legislative geniuses, not because they even know the law; nor because they are financial wizards. All of these acts really do require competence and skill. No. These sublime women and men accomplish deeds that defy law and rationality. Even when their leading accomplishments have included violence and destruction on an awful scale, we hold them in esteem even against our interest because they have proved themselves able to break through the bonds that hold and constrain us; they have violated both natural and human law; they are sublime.

And, yet, through it all they have kept their heads: Their minds “cannot be subdued by danger.” Or, rather, their minds are impervious to the violence and destruction of war?

Today, of course, celebrities and warriors are often confused. Warriors are celebrities. Celebrities regularly play warriors. Both defy the rules. But celebrities have something that most warriors do not: glamour, wealth, publicity. But their wealth is not in their person; it is in their personality — their quality of being a person. And so, unlike the soldier, who must actually risk something, the celebrity’s wealth and power and fame is, by definition, ineffable. It is beyond understanding; beyond rationality; beyond law — it is credited to them by us.

And isn’t that what we need in a President; someone not subject to the normal laws of nature, of physics, of rationality, or institutional inertia? Not simply a Washington outsider; but an individual, subject to no constraints whatsoever.

Celebrity attracts us because it appears unaccountable, completely inexplicable. It is that je ne sais quoi — that quality which, unlike legal training or negotiating skills or apprenticeship in a trade, arises from a place not subject to normal laws and processes. Which is why a “merely human” celebrity is an oxymoron.

(Parenthetically, having made acquaintance with many genuine actors, I know how much work and study goes into the trade of acting. Most of these actors are not also celebrities, but some are; and it is the least appealing dimension of their trade, that they must sell themselves as something they are not.)

But this means that the reason that many voters lunged for Trump is not, as Michael Moore famously claimed, that the election of Trump (or Bush, or Reagan) was “the biggest f*ck you ever recorded in history.”

Moore gets it wrong here. Trump is not the middle finger we held up in disgust. Rather was he the middle finger we held up because we believe that holding up middle fingers, or waving magic wands, or storming the Bastille, or [choose your favorite act or symbol of violence and destruction] holds the capacity to bring about fundamental emancipatory change. Like Kant, we prefer the soldier over the statesman; because we actually believe that “even war has something sublime about it if it is carried on in an orderly way and with respect for the sanctity of the citizens’ rights.” And, even more, we believe that “war . . . makes the way of thinking of a people that carries it on in this way all the more sublime in proportion to the number of dangers in the face of which it courageously stood its ground.” Alongside Napoleon, Lenin, Hitler, and Pol Pot, we too believe in the cleansing, redeeming, restorative power of the sublime.

But then we need to ask ourselves why we believe this. Why do we not believe in the cleansing, redeeming, restorative power of — for example — science, scholarship, statesmanship and legislative competence?

Surely part, but only part, of the answer to this question lies in the skill and competence of legislators who have mastered the largest transfer of wealth from working families to the top .09 % in human history. If policy makers and legislators are responsible for our relative poverty, then it stands to reason that their competencies are suspect; never mind that transferring wealth back down the income hierarchy to where it was produced will require extraordinary legislative and policy making skill. In other words, we will not get to where we want to be without the very competencies we are rejecting because of their cynical misuse.

But there is another, far more disturbing, reason we doubt the cleansing, redeeming, restorative power of statesmanship and legislative competence. Deep down, we want a miracle. We want the laws of physics to be suspended. We want good to arise irrespective of legislation, of laws, and of institutions; and irrespective of the arduous, often thankless, work of political organizing and lobbying. We want a miracle. And on a deep level, this reason is far more disturbing to me because it is so completely fantastic and because so many people I love believe that it is so.

It is possible of course that Ms Winfrey is a legislative and policy making genius. In which case, she should show us what she can do in a state house, a state senate or in a Federal seat. This is where two of my heroes — Kamala Harris and Barbara Lee — began their journeys; and what legislative and policy making geniuses they have proven to be! Amazing! I would eagerly support either of them for the highest office.

So, no. My reservations are neither about race nor gender. Although die-hard HRC supporters still argue that she lost because she is a woman and not because she is a neoliberal hawk, I gladly voted for her in the main election. That is not the point. Ms Clinton remains a superb legislator and policy maker — just not for policies or laws about which I am specially fond. In any case, celebrity was not why we supported Ms Clinton. Not. At. All.

So why are many so ready to entertain a run by Ms Winfrey? Is it magic? Or is it magical thinking?

Party like it is 1929!

And I don’t want to hear anyone claiming that “nobody saw this coming.”

Screen Shot 2018-01-05 at 2.25.52 PM

Within the next few weeks — less than a year — the bottom will drop out from under today’s inflated markets, making it likely that Congress will witness one of the largest shifts, from Republican to Democratic control, in modern history.

This is not, as some suspect, because markets cannot survive without aggregate consumer demand, or because transferring wealth to the top of the income hierarchy is inherently destabilizing. If the researches of Thomas Piketty and Emmanuel Saez have taught us nothing else, they have at least taught us that for 99.9 % of human history, wealth was happy to cluster at the top of the income hierarchy. Keep the peasants fed and drunk and you will be fine. A rebellion here and there; but nothing the police cannot handle.

Laws and regulations to ensure that wealth remains where it was produced are a twentieth century novelty. Admittedly, such a massive transfer of wealth from working families to investors as we are witnessing in the United States would, in Germany or France, lead to a general strike, massive protests, and regime change. But in the United States? Here it is the working families themselves to demand that their wealth be transferred to the top. Plutocracy is what they voted for; and its what they got . . . in spades!

And, yet, the peaceful streets and avenues, not to mention the prisons brimming with inmates, that meet us in the United States illustrate how it is possible to sustain an economy in the absence of effective demand. Trickle down actually works so long as enough trickles down. And when working families demand so little, “enough” turns out to be a very small amount indeed.

As I write, unemployment stands at a seventeen year low of roughly 4.5%, a product, almost in its entirety, of policies enacted by President Obama in spite of fierce Republican opposition. However, since current regulations reward investors for investing in speculative, high return instruments and punishes them for investing in high wage, secure jobs, the roughly 124M full-time workers are earning the same aggregate wage as the roughly 117M employed workers at the height of the recession. But that means that any consumption driving growth has arisen not from the effective demand of working families, but from the increasing wealth enjoyed by individuals perched at the top of the income hierarchy. Consumer demand among working families, since it is largely driven by debt (and the willingness and ability of lending institutions to sell debt to consumers), actually counts as an asset to investors, further widening the income gap. And, yet, if consumers fail to complain about their decreasing economic fortunes, or if they complain by electing policy makers from within the plutocracy, there is no reason why policy makers will enact policies that ensure that working families will enjoy the wealth generated by their efficiencies.

Plutocracy is sustainable, however, only so long as the public fails to use its power, or uses its power to elect plutocrats.

And, yet, we might wonder how long the speculative instruments into which investors are being encouraged to pour their wealth will retain their value. How much longer will these instruments offer returns greater than the returns investors might win from investing in secure, high paying jobs for working families?

Part, but only part, of this question rests on the ability of policy makers to craft regulations and laws whose effects are to transfer wealth from working families to investors. So, we can imagine any number of scenarios where revenues received by the IRS will be transferred to investors irrespective of the status of their investments. For example, let us say that I unwisely invest in petroleum simply because of the tax advantages I will enjoy from investing in dirty energy. And let us say that the bottom drops out of the petroleum market. So long as the Federal government will assume my losses and even reward me, irrespective of the performance of my capital, I will continue to bury my capital in dirty energy. The US Congress just passed a tax bill that handsomely rewards investors irrespective of the long-term performance of their investments; and that punishes working families irrespective of the efficiency of their labor. The legal regulatory regime implemented by policy makers thus makes a huge difference.

But then there is the trade deficit, which is currently pegged at roughly $50.5B, which means that we are not making any thing that any one elsewhere wants at the prices they are willing to pay. And it means that we are buying stuff produced elsewhere because it is being sold at a price we are willing to pay. Not to mention the $18.96T deficit to which the Republicans just added another $1.5T.

Remembering that debt is an asset (for those who own debt), it is clear that debt accelerates the transfer of wealth to the top of the income hierarchy — i.e., to creditors. Since this is so, we need to ask whether the debtors are good for their money. Will they pay up? And if not, what then is the value of their debt? A creditor who owns debt owed by a debtor unable to pay back his loan owns debt equal to or less than zero (less in the event that the creditor was relying upon that debt to purchase other assets). And it is this question that fuels speculation over when the bubble will burst; when will investors conclude that “there is nothing there, no value, nothing.”

That there is no value there is not a guess. It is a certainty. When the bubble will burst — tomorrow, next month, next fall — is a guess. But it is coming.

How Empires End?

Without wishing to relieve the idiot of responsibility for his actions, I have been trolling the past to see whether this is always how empires come to an end: troops garrisoned around the globe, the top 1% cashing in at the eleventh hour, rude bellicose (mis)leaders strutting about, knocking everything off the shelves — and then the end.

It was the idiot’s notorious New Year’s Pakistan tweet that got me thinking along these lines.

Image result for pakistan tweet

Irrespective of the merits of the idiot’s claims, a rising power holds the information it enjoys close to its chest; in Teddy Roosevelt’s words, a rising power “walks softly and carries a big stick.” A waning power, by contrast, stumbles, crashes into everything in reach, bellows and then complains loudly as allies scramble for more secure ground.

Pakistan is not the only ally abandoning ship. Turkey’s deal for Russia to supply it with a sophisticated antimissile system is further evidence that former — and even current — allies are growing wary of the US ship of state. All across eastern Europe, the peace dividend squandered since 1989 has yielded no returns. No surprise then that from the Baltics to the Balkans, parties across the region are turning to Russia and to China for arms, development, and trade.

This is how empire ends. Consider how Nicholas II, at the very moment Russia needed to assist its peasants, empower its educated bourgeoisie, and grant organizing rights to workers, instead threw the lion’s share of its wealth into the bank accounts of its aristocracy and into the fantastic strategic plans of its military elite. Or take the pompous Edward VII, whose efforts to make the UK great again included opening the royal pageantry and political theater to public viewing, largely ignoring the military’s open seizure of diplomacy and policy making.

Arguments could be made, in 1902 as in 1905, that, when they reach their zenith, as they enter decline, empires need to find graceful means of shedding the allies they have accumulated during their rise. After it made a mess of the world, the UK needed to retreat and needed to do so without war. In 1905, the Tsar should have recognized where the Russian future lay; not in its military, but in its own rising fledgling democratic and socialist communities.

Even further back, we need to purge ourselves (and our classrooms) of that noxious lie that Rome fell because it was overrun by Goths, Vandals, and Visigoths. Long before its neighbors descended on her to pick apart her carcass, Rome’s far-flung outposts had “gone native” so to speak, abandoned by a Roman elite too busy snapping up cheap real estate and impounding the labor of its former owners to worry itself over the fates of garrisoned troops abroad. Roads, bridges, and aqueducts had long ago fallen into disrepair upon the argument that “every denarius spent on public goods is a denarius stolen from the wealth of Rome’s nobility.” Soldiers stationed in Spain, France, and England were not even given the choice of return, but only the command to make their keep where they were stationed. Which is precisely what they did. They married, built families, and, even before Rome disintegrated, they got on with their lives.

To be sure, the idiot is making the United States’ end of empire far worse than it needs to be. He is scouring the planet for the worst of the worst — Israel’s far right wing, Filipino neo-fascists, extremists in every nation around the world.

But perhaps this is how empires always end, including our own.