Some thoughts on how I model the economy

This is still a work in progress. The old saying is money makes the world go ‘round. Spoken from a consumerist view, the conclusion I can understand. You want to eat, sleep, and shit in relative peace and safety you need coin. Lately I have been taken a harder look at my role in this political-economic ecosystem. I have concluded that we are merely extraction points for tax and sales revenues with intravenous tubing going into one side of our bodies and coming out of the other.

This may sound cynical but I suspect most heads of households feel this way as they try to balance their budgets with increasing expenses.  Will I be able to send my son to college? Can I pay that medical bill?  Will I meet my mortgage?  The frustration stemming from increasing difficulty to obtain the basics is like a stroke, sneaking up on Americans.  In a credit-driven economy, that heart attack may be on the horizon.

Forty-five economists surveyed by the National Association for Business Economics today have a less rosy outlook on the 2018 economy versus three months ago. Although expected growth in gross domestic product is still positive at 2.8%, the forecast is down from a previous forecast of 2.9%.  Current trade policies, according to economists surveyed, will have a drag on future growth with 82% of economists expecting a recession by 2019.

As I discussed in an earlier blog post, data from the Federal Reserve and the International Monetary Fund are not holding out the sunniest expectations for the economy over the next two years.  Inflation is expected to peak at 2.8% in 2018 but fall to 2.4% and 2.0% in 2019 and 2020, respectively. The years 2021 and 2022 will see inflation at 1.9% climbing slightly to 2.0% in 2023.

Also constraining spending will be the rise in interest rates as the Federal Reserve exceeds its targeted 2% federal funds rate goal. America runs on credit and the more expensive is to purchase, the less of it Americans have to spend.  According to IMF data, the ten-year bond rate ended at 2.4% in 2017. The rate on a ten-year note sets the interest rates for lending in the United States. By the end of 2018, the rate on the ten year is expected to climb to 3.2%; in 2019, 3.7%; and in 2020, 3.8%.  The rate will then level off to 3.6% in 2021 and 2022; and hit 3.7% in 2023.

If the last decade is any indication of how well household incomes keep up with inflation, then many American households are in trouble. Average annual growth in household incomes for the lower (.70%); second (.64%); third (.29%), and fourth (.90%) quantile of household income are all growing at rates lower than expected inflation. The top quantile is seeing growth in annual income at a rate exceeding inflation (2.8%).

Many Americans would be upset with this scenario. Why can’t we get ahead? Why this gap in wealth and income? As I mentioned earlier, we are extraction points. We sit, along with natural resources, at the start point of a conveyor belt. At the other end of the conveyor belt is capital made up of coin and credit.  The conveyor belt is fueled or supported by a transportation, communications, and energy infrastructure. Riding on top of the belt are the components trade, government rules, markets, and money. They are to the conveyor belt as application programming interface is to a computer network; a go-between that enables work and income to be extracted from human resources and transported to the eventual owners of capital.

For example, human resources enter markets in order to sell labor or buy goods. Government rules determine the level of tax revenue that will be extracted from human resources.  The amount of money held by a human resource transmits information about that resources economic and financial value; her spending power.

Communications networks provide the conduits for transmitting information about a human resources value. Transportation networks move human resources to areas of employment where human resources convert natural and other resources into goods and services. Transportation networks also move the goods and services produced to end users. The facilities that create goods and services and the vehicles that transport goods and services run on various forms and sources of energy, including coal, nuclear, oil, electricity, solar, wind, and geothermal.

The top 20 percent occupy the capital side of the belt. Social justice warriors who argue the use of politics in order to close the gap between the top 20 percent and everyone else are making a losing argument. Politics is ineffective as a wealth and income gap closer because of the grasp that capital has on the conveyor belt. Central bankers and treasury ministers derive their influence and prestige from ensuring the conveyor belt (which we can also call a tax and payments system) operates at optimal to deliver returns (income) to the conveyor belt’s bond holders. Capital invests resources in lobbying, advocating, and the electoral process to ensure there are politicians in place that will make rules that do not impede the conveyor belt.

Those who are fed up with being extraction points want to stay off of the conveyor belt. We want to limit or eliminate our use of the communications, energy, and transportation networks that power the conveyor belt. Use of unlicensed spectrum to create our own networks; use of renewable energy sources in order to remain off grid; avoiding the purchase of vehicles in order to avoid the taxes and surveillance that are attached to them should be a goal.

I do not endorse living like a hermit (although I have no problem with prolonged peace and quiet), but we should pursue self-sustainability in order to minimize the consumerism that pulls us into unnecessary trade and market engagement.  We will free ourselves to accumulate more capital while starving the beast that created the imbalance in wealth and income in the first place.

Would independence make the U.S. Virgin Islands more Caribbean? Yes, I think so.

One evening after finishing a jog, I spied a young lady walking through the graduate residence I lived at during grad school. I walked up to her and introduced myself. Upon hearing her accent, I asked her where she was from. She told me Guyana. I responded enthusiastically and by saying that I was from the U.S. Virgin Islands. A sour look came across her face. She went on to tell me that I was American and not Caribbean.  I became indignant, wondering why she would draw that conclusion and told her that I was just as Caribbean as anyone from the region. She walked off with a look on her face as if she had stepped into a hornet’s nest.

I entered my apartment still pissed at what I perceived as an insult, but as I calmed down and started to process her observation, I saw, reluctantly, where she was coming from. Independence, it sounded like, was prerequisite for claims to being from the Caribbean region. Whether you came from an independent nation determined where you stood on the region’s totem pole.

For a number of reasons, I may have put this consideration out of my head. At the time of my encounter with the young Guyanese woman I had been on the U.S. mainland for roughly 15 years. I had become increasingly immersed in American, especially Black American, culture.  One of my saving graces had been the remnants of my accent. The other, closely related now I realize, was the company I kept while in Tallahassee. Most of my friends were either West Indian, descendants of West Indians, or preferred the company of West Indians. The few Black Americans I hung out with were some of the most open-minded people you could meet. Although I had received that type of treatment, albeit a lot less subtle, from the time I moved to the mainland, it had via that encounter become more pronounced.

Island nations had been going their own way since the early 1960s. The British Empire was in decolonization mode after the end of the second world war and the Caribbean was benefiting from it. Great Britain and Europe determined to take another route that would see them still exercise economic influence while dumping political responsibility on to their former colonies.  The United States got into the colonizer game pretty late in the Caribbean.

In 1898 the United States put the island of Puerto Rico into their portfolio. In August 1916, the U.S. entered an agreement to purchase the Danish West Indies from Denmark for a cool $25 million and renamed the territory the Virgin Islands of the United States. The purchase and eventual transfer in March 1917 were just in time for the territory to play a role in the protection of the Panama Canal via the establishment of a submarine base and other military facilities.

I will have to post on the legal uncertainty surrounding citizenship for the descendants of slaves in the territory but for now bear in mind that American citizenship became a crown for jewel for islanders and through the years, especially post World War II, the United States Virgin Islands (less of a mouthful nomenclature) would attract Caribbean people especially from the other islands in the Lesser Antilles.  Among those people would be my parents who met and married in St. Kitts and moved to St. Thomas in 1962.  I would enter this physical realm a year later, one foot in a Caribbean still under the direct rule of Great Britain, the other foot in a culture increasingly tainted in Americanism.

From childhood especially when traveling “home” to St Kitts, I was conscious of being in two different Caribbean realities. One night I am sitting in my great aunt’s house listening to the BBC. The next night I am in my living room in St. Thomas watching a one-week delayed television broadcast of “Mannix.”  Visiting cousins in New York, yes, I was from “the islands”, speaking with the funny accent, but I would have no qualms slipping into my best version of a Brooklyn accent just to fit in.  I was an American after all, wasn’t I?

And it is this attitude, that we are Americans versus Caribbean, that pervades the Virgin Islands’ culture.  The separateness from the rest of the Caribbean because of American citizenship is expressed with pride, so much pride that for the native-born Virgin Islanders, they look down on immigrants from St.  Kitts and other islands.  When I look back at my family’s network back in the USVI, it was primarily made up of people from St Kitts, Nevis, Anguilla, and Antigua. Even today the Virgin Islanders I socialize with are either from St Kitts-Nevis or, as in my case, our parents were from St Kitts-Nevis. But whether you were born in St Thomas or an immigrant who became a naturalized citizen, your Americanism was viewed as a sign of superiority over the other island nations.

The irony, for it is for that reason that island nations look down on us and it is not coming from a place of jealousy.  I believe that they view a people who exercise little self-determination as second rate.  While I disagree with the description of my homies from the USVI as second-rate, I would agree that given our brain power and deep-water port, if we leveraged today’s technology to create our own economy, an independent Virgin Islands could be a force to reckon with in a Caribbean that needs to be led by a example of a dynamic fellow island nation. I would like to see that happen.

Courts and regulatory agencies as markets

For most of us every day folk, courts are places where we want a judgment that says, “We are right.” But courts are also “rules markets.” Rules markets are where frameworks for how we engage each other going forward are produced and depending on how broad the issue is defined, those rules may be forcibly consumed by others who were not a party to the conflict that brought the original rule producers together in the first place.

The recent U.S. Supreme Court ruling in Masterpiece Cakeshop v. Colorado Civil Rights Commission provides an example. While the issue in that case focused on whether Colorado’s equal rights agency applied its civil rights rules in a neutral manner where civil rights violations were alleged, some Americans questioned why the consequences of that case should spill outside of Colorado and impact citizens and businesses in other states. The short answer is that externalities, whether positive or negative, from a court ruling enter society because of the structure of our legal system. The legal structure is centralized and the ripple effect of legal decisions spreads out to more citizens the higher up the legal rule production hierarchy you go. The interpretation as to what the rule should be for governing a relationship or conflict becomes the “law of the land” where the highest court becomes the market for producing legal rules.

I heard some of this concern from every day folk during a CSPAN session the day after the Masterpiece Cakeshop ruling. “Why did this conflict have to escalate?” some asked. It escalated because a centralized legal system provides opportunities for individuals occupying a minority class to extend its views on how society should work to the rest of America by accessing and participating in the rule making process.

Conflict is a high cost for entering this “centralized rules” market, but a higher price is paid by the rest of society where we are subjected to rules produced by a small number of participants seeking to produce rules that favor their behavior and the detriment of limiting or modifying everyone else’s.

In my opinion, the limitation of the behavior of others as a result of rules produced in a centralized market is a negative externality or negative benefit. No matter the noble intent of the rule producers, where the rule produced impacts my behavior, it impacts my liberty.

One way to limit the negative externalities of centralized rulemaking is for parties to enter into voluntary agreements, agreements limited to the parties resolving the immediate conflict. It would be a lot cheaper for parties in actual conflict or anticipating conflict if the rules were produced as a result of voluntary engagement designed to head off conflict versus the other way around. It would also be less expensive for members of society who are not direct parties to the conflict since they would not be subject to rules that they did not produce.

Collectivism dampens your ability to be a high-value individual

As a libation-centered population, members of the African Diaspora tend to call on memories of those who have passed on when assessing our reality. Lineage is important because it helps identify and locate family members that can contribute to the economic and financial needs of individuals or households under duress. Blacks, in my opinion, take the story of Jesus’ sermon on the mountain more seriously than other ethnic groups; probably too seriously. Collectivism is so incorporated into the DNA of blacks in America that blacks focus too much on what they can allegedly do as a group versus as individuals.

For the person with mouths to feed, can she say that enough economic and financial benefits have flowed through the black population to the extent that she can say that collective political and economic action has created wealth or opportunities to pursue wealth?

Collectivism is a political or economic theory advocating collective control especially over the means of production and distribution.  Emphasis is placed on the collective versus individual action or identity. In the black population, the framework for collectivism has been passed down by ancestors through a prism of historical pain and economic and political suffering. This view of the world lays at the base of black group reliance with the nuclear family at the core of this reliance.  It is a view that has sustained us but is it a view upon which blacks can thrive? Given the historical wealth position of the black population, the answer is no. We may have a people sharing collective pain and suffering but we are not a people optimizing a collected resource.

One solution may be for the individual to use lineage as a backbone or spine for a network where each individual along the spine is a plugged-in, high-value information node. Rather than sit at the family table drawing down limited resources by virtue of your last name, each family member is expected to learn a trade or skill, develop and plug into additional networks and labor markets, use income and information garnered to sustain herself, and share excess income and information with her lineage.

This may sound like collectivism, but the difference is the emphasis on each node being individualistic. Each node follows it own value system and manages its resources as it sees fit without interference from other family members. The goal should be to avoid being monolithic in thinking and approach to political, economic, and social events. By attaining true diversity in thought and action, each node along the lineage conduit helps bring true diversity to their populations.

As new information is brought into the population, and individuals increase their social, political, economic wealth, there is greater incentive to procure more knowledge and create resources around which a real community can be built.  As I shared in an earlier blog, blacks are part of a population, not a community. Blacks have no resource or substantive economic activity that they control that provides residuals off of which they can survive and thrive. To attain community status, more members of the population must engage in outside-the-box thinking and this involves encouraging more free thought which is better derived via more individuality.

Free thought and individuality creates the high-value information human nodes that the black population needs.

Roseanne Barr, Valerie Jarrett, the Deplorables, and Safety Pins

Roseanne Barr made some unflattering remarks about Valerie Jarrett, a former aide to former President Barack Obama. The actress, best known for the ABC production, Roseanne, tweeted that Ms Jarrett was the spawn of an Egyptian political group, the Muslim Brotherhood, and “the planet of the apes.”  ABC’s response was swift, a cancellation of the reboot of the popular 1990s situation comedy. Ms Barr went the apology route but it was a path taken too late as far as ABC was concerned.

Social media and traditional media have been on fire all day as some people expressed how they were offended by the remarks while others came to Ms Barr’s defense. The posturing was to be expected. What I also expected was that no one in the press has so far addressed three political questions. One, what is racism? Two, must blacks always have liberal whites come to their rescue with safety pins? Three, how will rural deplorables react?

The definition of racism has gone through a simpleton devolution over the past four decades. Once upon a time, racism referred to a systemic and systematic application of rules and conduct designed to deprive a class of people of social, economic, and political standing based on a narrative that their race was inferior to the race of the ruling class. While name calling and insults are expected to swirl around the social and institutional constructs that put discriminatory rules in place, name calling and insults alone did not necessarily translate into racism. Not only do you need hate, you also need emotional, legal, and physical power to deploy an infrastructure that relegates people to a second or third-class position. You need the power of the state, a state action to implement a racist infrastructure. I would argue that Ms Barr’s actions never arose to racism and no state action was present.

To be Muslim is to be an adherent of Islam, a religion, not a race. As for the phrase, “planet of the apes”, blacks in America have been referred to as monkeys for centuries. Neither Ms Jarrett, myself, or the almost one billion people who refer to themselves as black consider ourselves monkeys; therefore, the insult remains with Ms Barr. So why would the name calling arise above just that, name calling? It arises in part because liberal whites need to push the “safety pin” issue.

In the U.S., liberal whites started a safety pin campaign in 2016 where the pin symbolized a safe place for people afraid of President-elect Donald Trump. Mr Trump has come to represent for some Americans a resurgence of American racism and intolerance. Today’s reaction on social media by liberal whites indicates that they are willing and ready to incorporate Ms Barr’s comments in their overall campaign to paint the current economic and political climate as so toxic that nothing less than extinguishing Republican control of Congress, state legislatures, and governorships will be accepted.

Ms Barr’s support of Mr Trump probably didn’t help her cause with her critics or ABC.  I am not a fan of Ms Barr or either itineration of her show but based on television ratings for the Roseanne reboot cited in published reports, Ms Barr seems to have made a connection with low-income conservative middle America. And that leads to my third question, how will the “Trump Deplorables” react?

Scott D. Pierce argues that one cannot say definitively that Ms Barr’s TV character is truly conservative but Ms Barr is another story. How well do low-income white conservative viewers relate to the show, I do not know. There is the potential for Ms Barr to really go rogue and use her celebrity and social media platform to spread her arguably radical conservative narrative.

ABC may have let the genie loose.

From Facebook to Factbook: It is tough to determine what values drive new information

Somewhere along the timeline between its inception and now, Facebook determined that the mundane answers to the question, “What’s on your mind?” were too mundane to hold the attention of its users so it allowed information vendors to post or promote news items into our news feeds. Concerns about user privacy, the sale of personal information to third-party vendors, and alleged manipulation of voter opinion by Russia-backed social media trolls now has Facebook asking itself the “tough” questions about how to mitigate the problem of false news.

Facebook has an 11-minute documentary, “Facing Facts”, out there where a bunch of its privacy staff (who, I opined on Twitter, look like they are all from Cowlick, Indiana) waxing philosophical about how they have to make the best efforts to discern false news from legitimate news for the protection of the platform’s users. It is up to the few to protect the members of the collective. These intrepid people are trust with the task of applying their value judgment to discern whether the expressions of the 2.1 billion value judgments from around the globe are appropriate.

I am no apostle of “diversity” and “inclusion.” Those concepts have not paid any political or social dividends for black people, but the irony cannot be overlooked here: mostly white people with a few Asians sprinkled in will determine whether rants on race by Dr Boyce Watkins or Dr Claud Anderson have any place in a person’s timeline. That would make me suspect as a user; that a bunch of white boys are telling me what is appropriate and of value socially and culturally.

I have not gotten from Facebook any indication that they understand the importance of values when crafting and disseminating political information. Benjamin Ginsberg, Theodore J. Lowi, and Margaret Weir in their text, We the People, define values as basic principles that shape a person’s opinions about political issues and events.  Basic principles that shape opinions flow from a number of sources including family, friends, civic organizations, the media, and simple personal observation. Values are personal to each Facebook user. Does Facebook want to be in the position of discriminating against each user’s perception of the world based on whether a user’s published or shared information that promotes the individual’s values is done at the cost of disparaging another point of view?

This is what political media is all about. In the ideal world debaters would give equal acknowledgment to the other side’s view, but in political theater where resources and time are tight, debaters do not have that luxury. Once you understand politics, you realize that you can’t put a third-party value judgment on information exchanged by opposing parties. Facebook has to start assuming that all political information exchanged by users is designed to move opinion, sometimes into places you don’t think opinion should go.

If Facebook is afraid to play the pure information exchange platform game, then it has two options. First, it can go from Facebook to Factbook, providing its 2.2 billion users a platform where they come and find objective, unbiased data.

The second option is that Facebook can choose a political side. It can become the Fox News or the MSNBC of social networks, being a platform for partisan dribble.

The individualist, of course, should mind remain neutral on the political question and avoid feeding the State which thrives on factious debate.

For Blacks, government is god

Every Monday and Wednesday night I allow myself a little political entertainment by tuning into YouTube and watching Yvette Carnell, founder and editor of Breaking Brown.com. Ms Carnell brings a passion and data driven analysis to political and social events impacting descendants of slaves brought to the United States from Africa. Ms Carnell “keeps it real” about the economic plight of black Americans and is especially scathing of those who fail to view politics as an avenue for obtaining resources, particularly capital, as reparations for the kidnapping and enslavement of Africans and the lingering effects that slavery has on the present members of the African Diaspora brought to America.

Where Ms Carnell loses me is when she proposes that government is the only option for righting wrongs perpetrated by the holders of capital on slaves imported from Africa. Government, as I interpret Ms Carnell, should bear the burden of providing the descendants of African slaves with treatment equal to those received by whites who have certain privileges available to them as a result of their lineage. Ms Carnell rejects talk of black American self-reliance arguing cogently that black American descendant of slaves brought from Africa are at a severe disadvantage because it was never the intent of government to extend sufficient capital in the direction of blacks so that they could thrive in America.

Ms Carnell’s 43,000 YouTube subscribers for the most part agree with her and I know plenty of people, some of them friends, who would sympathize with her position. Government has been the source of oppressive tactics and strategies against blacks in America for centuries. Some blacks also consider government the source of positive change in American society, from the banning of the separate but equal doctrine for schools, common carriers, and other public facilities, to extending universal suffrage to black voters in the South. So while blacks in America perceive the real world as one of pain and suffering, government, the entity that has and still does keep a boot on the throats of blacks, is also viewed as a very present help in trouble.

But rather than god, what if blacks treated government as a protection agency option? I came across this phrase when I read The Sovereign Individual by James Dale Davidson and Lord William Rees-Mogg.  The authors, proponents of a movement from onerous customs and tax districts like the United States, described various governance structures for occupied territories and how modern digital communications technology could enable individuals to either live outside of the barriers of traditional governments or carve out their own sovereign niches within them.

Admittedly the problem with the approach of The Sovereign Individual is the level of capital that one would need in order to exercise the type of autonomy described in the book. It takes a great degree of capital to negotiate the occupancy of a physical space where the individual doesn’t pay traditional taxes; where within carved out areas the individual provides for their own police services and can exercise the right to legally exclude anyone who does not fit their criteria of community.

The biggest problem I believe is mindset. There is a malaise within the black population; a narrative that any attempts at freedom would be met by actions similar to those that took place in Tulsa, Oklahoma in 1921. Between 31 May and 1 June 1921, a white mob attacked the black American community of Greenwood, a thriving community within Tulsa known as “The Black Wall Street.” Where conversations arise about furthering black economic empowerment, naysayers raise their heads citing the egregious state actions that occurred in Tulsa that Memorial Day weekend.  Almost 100 years after the military and terrorist attack on Greenwood, the survivors of the attack have not been compensated. Petitions to the government have resulted in dedication of a park and some scholarships for descendants. Can anyone say that the State has dome right by its black American parishioners? Can blacks afford to use the memories of these behaviors to prohibit them from getting out of State-sponsored hell?

For blacks, government is god. This god is not benevolent and sooner or later, the church service has to end.