A top down Virgin Islands economy cannot survive further into the 21st century

An area populated by roughly 105,000 people should not run its economy based on a model designed to hoard capital while generating returns to that capital in as many markets as possible. Given the reliance on government and tourism as its economy’s drivers, can the Virgin Islands of the United States afford to have a fraction of its community limit the distribution of capital and the opportunities that are spawned from capital deployment? In other words, where a small number of farmers control most of the seed, should they be allowed to only spread seed on a small portion of the land while most of the plot lays fallow? The answer is no.

I can understand the marginalization that a significant number of Virgin Islanders feel. My father moved from St. Kitts to the Virgin Islands in the early 1960s. He married my mother in St. Kitts in 1962 and I, their first born, came along the following year. He worked in the hotel industry which was booming at that period in large part to Fidel Castro taking Cuba offline as a tourist stop resulting in the Virgin Islands and Puerto Rico emerging as alternative vacation destinations. A large number of “down islanders” moved to the Virgin Islands during that period and while we added to the vibrancy of the economy, particularly in the tourist industry, we were always outsiders, having not being born in the territory.

That outsider status as immigrants of course spilled over into the other industry: government. Being non-citizens, my parents could only watch from the sidelines and cheer for a candidate that they thought represented their values. During the early 1960s through the late 1970s that candidate was Cyril E. King. So enamored with the late governor was my mother that she thought it a good idea that I share Governor King’s middle name. Quite a few parents shared that sentiment during that time as well.

But not only was there marginalization in terms of origin or employment by or representation in government, there was marginalization in terms of ownership in the private sector. Yes, locals owned small retail outlets, trade shops, small bars, and restaurants, but larger institutions such as the banks, hotels, and jewelry stores remained in the hands of American and European corporations. Corporations and banks represent not only non-ownership on the part of locals, but a flow of capital and income out of the territory. A community with a high level of poverty needs to see capital and income recycled through the local population, searching out and funding the opportunities that have laid dormant or unseen because current hoarders of capital are biased against local people, preferring to keep us marginalized.

What type of opportunities should re-cycled capital and income search out? They should seek out opportunities that create the ability for each household to have productive capacity within their own hands. Capital and income need to stay within the territory and provide households the ability to practice “decentralized home economics”; where a household can produce their own energy, network their own communications needs; and access alternative modes of logistics that not only transport citizens quickly to any destination, but brings goods, services, and information from distant points to the household. Instead of enjoying fewer economic benefits because they have been forced to live on the edge, households can maximize returns on their resources i.e. income and capital, by making the most from living on the edge.

Marginalization no longer has to be equated with poverty. It can now be, through the use of technology, be equated with wealth.

Is America a socialist country? And if it is, so what?

Lawrence O’Donnell, host of MSNBC’s The Last Word appeared on C-SPAN’s Washington Journal this morning. One of the callers chastised him and Alexandria Ocasio-Cortez for supporting socialism. Ms. Ocasio-Cortez last week defeated Representative Joseph Crowley in the primaries for the 14th district. The 14th district is heavily Democratic, having favored Democratic presidential candidates all the way back to William J. Clinton. Sixty-one percent of the 14th district’s voter population is black or Latino. Ms. Ocasio-Cortez is favored to win and Establishment Democrats are not too excited about a Bernie Sanders supporter (Ms. Ocasio-Cortez worked on Senator Sanders’ campaign) infiltrating the halls of Congress.

Republicans may see this single win as a virus that is about to spread through the Democratic Party and may position themselves as the cure. While Nancy Pelosi may express outwardly a lack of concern about a democratic socialist win in a single district, democratic socialism has attracted more attention since the November 2016 election as an alternative to a Democratic Party that has been enjoying a quarter of a century of corporatization.

No doubt Establishment Republicans are enjoying the schism being caused by a socialist insurgency, but I sense run-of-the mill conservatives within and outside the Republican Party like the C-SPAN caller are concerned that a seemingly increasing number of young people are moving toward socialist philosophy. Mr. O’Donnell adroitly addressed the caller’s vitriol arguing that the United States has a political economy that mixes certain aspects of market and centrally planned economies. Conservatives tend to focus on the anti-freedom approaches of socialism such as limited speech, and a lack of universal suffrage at the voting booth. They focus on the brutality of a socialist State toward dissidents, currency manipulation, and closed access to economic markets. They assume that socialism is the only top-down, lock down system on the planet.

They are wrong.

Just one look at America’s monetary system alone should tell a critical thinker that the economy of the United States is top-down and centrally planned. Most people do not issue their own currency. That job is for America’s central bank, the Federal Reserve. See mortgage rates going up and you can reasonably tie some action by the Fed to your pain. And while Republican members of Congress scream about free markets and alleviating the tax burdens of entrepreneurs, they add to the entrepreneur’s burdens by increasing budget deficits creating spending gaps that have to be filled by more borrowing which increases demand for loanable funds which leads to higher interest rates which leads to businesses facing increased barriers to entry into the credit markets. This is top down, centrally planned, oppressive economics in American form.

And let’s not forget our tax system. Talk about centrally planned. Have you ever been asked to give direct insight and opinion on whether your marginal tax rate or effective tax rate should be increased? Of course not. America’s version of the National People’s Congress does that, with the only difference between China’s legislative body and America’s is the frequency of meetings and the amount of checks they place on their executive.

Conservatives would argue that the American electoral system is indicative of an open democracy. That fallacy has been exposed twice in the past eighteen years where the “people’s choice” lost because a small body of unknown electors decided five weeks after a presidential election who the winner was and had that decision certified three weeks later by members of Congress. Top-down. Centrally planned.

Lastly, if Obamacare didn’t convince you that your healthcare finance system is centrally planned, then the history of Medicare should inform you as to the impact and influence the federal government has on the insurance industry. Medicare opened up two markets for the private insurance industry: the administrative services market, where private insurers invested in and provided the administrative infrastructure for serving an influx of newer patients, and underserved market of people over the age of 65 and medical insurance supplemental market, where insurance services gaps in Medicare are filled by private insurers. It is hard for conservatives to argue that the free market met these needs when on the contrary government action created the markets and the opportunity for private insurers to increase revenues.

You can probably find more examples, but the point here is that too many Americans express their lack of economic literacy when wailing about the ills of central planning. While I don’t want to give liberals credit for much, they do make a point when clarifying that the United States’ economy is a mixed one and expose the irony that many critics are likely enjoying some of these socialist programs themselves.

When asked to choose an “ism”, my response is either one, whether socialism or capitalism, represents top down suppression of individual choice because government exercises an inordinate amount of influence under either paradigm. The individual has no say in the crafting of policy in either framework. It is a take it or leave it scenario either way. The questions conservatives should be asking themselves is, can I create a better benefit for myself on my own terms?

What Woodrow Wilson left out of the definition of public administration: capital

Back in 1887, Woodrow Wilson wrote an essay on the importance of the study of administration of government. Mr. Wilson, who would go on to become president of the United States, is usually referred to as the father of public administration. By his definition:

“Administration is the most obvious part of government; it is government in action; it is he executive, the operative, the most visible side of government, and is of course as old as government itself. It is the object of administrative study to discover, first, what government can properly and successfully do, and secondly, how it can do these things with the utmost efficiency and the least possible cost either of money or of energy.”
Other scholars have offered their tweaks on the definition. Charles H. Levine, B. Guy Peters, and Frank J. Thompson define public administration as:

“[T]he implementation of government policy and an academic discipline that studies this implementation and that prepares civil servants for this work.” It is “centrally concerned with the organization of government policies and programs as well as the behavior of officials (usually non-elected) formally responsible for their conduct.”

George J. Gordon and Michael E. Milakovich define public administration as:

“… all processes, organizations, and individuals (the latter acting in official positions and roles) associated with carrying out laws and other rules adopted or issued by legislatures, executives, and courts.”

And Melvin J. Dubnick and Barbara S. Romzek provide the following take on this branch of political science:

“The practice of public administration involves the dynamic reconciliation of various forces in government’s efforts to manage public policies and programs.”

Looking back on my public administration studies and my time as a practitioner, I can say that the above definitions capture the various facets of the discipline; that academics and practitioners do not vary much from these definitions when either studying the administration of public policy or carrying out public policy and managing institutional systems. The problem, however, with the study and practice of public administration in a market-oriented political economy is that the study of public administration rarely if ever addresses public administration’s impact on private capital, specifically, how management of public capital positively impacts returns to private capital.

In getting to his description of public versus private capital, Thomas Piketty first describes national capital “as the total market value of everything owned by the residents and government of a given country at a given point in time, provided it can be traded on some market.” National wealth includes land, dwellings, commercial inventory, other buildings, machinery, infrastructure, patents, bank accounts, mutual funds, stocks, bonds. Mr Piketty found that public capital or public wealth are assets and liabilities held by government and other social entities including towns and other social insurance agencies while private capital or wealth is made up of assets and liabilities held by individuals.

One question that public administration does not address is how best to deploy public capital to boost returns to private capital. While there is literature discussing how public sector spending can boost gross domestic product or even productivity, the study of public administration silos itself by discussing fiscal policy, infrastructure, and public goods, and leaving the discussion of private capital to the markets.

Why is this discussion necessary? Public sector spending needs discipline. How many of us have asked the federal government to provide a cost analysis of each tax dollar we spend and then provide some data on returns on that tax dollar? I wager none. But if public spending on the public goods that act as inputs for private sector production was done at low cost to the tax payer while providing a low cost input for the private sector, could public administration play a more meaningful role in the production of returns on private capital?

It is a question worth pursuing.

There is too much “we” in our mindless political analyses

Recently I saw a meme on my Facebook feed that asked, “How did my freedom end up in Afghanistan?” As July 4th approaches I cringe at the thought of all the patriotic messages that will be spewed especially by Blacks born here in the United States. Their thoughtless blithering on “freedoms” and “blessings” form the basis for the observation in the Afghan meme.

Thoughtless because it is beyond me how a small Central Asian country that has poppy as its main crop could pose any danger to my ability to walk around my neighborhood; eat my turkey sub; write this blog post; apply for a job; or watch a movie.  Yes, the Afghans are notorious for rightfully kicking the asses of imperialist British and Russian invaders, but if anyone’s freedom is being threatened, it is that of the Afghans who have a 150 year of more long history of battling uninvited guests.

Blacks in America should be especially mindful of latching on to the “we” word.  A group of people who only saw their rights as citizens fully incorporated by law within the past 60 years should be pulling back from the assimilation rhetoric of current misguided or disingenuous political leaders.  So quick to be accepted are blacks that it is easy to spout the mindless adages that will flow more freely than beer during July 4th.

It is too easy for blacks to scream that the Russians attacked “our” election process.  Really? How so? Did the Russians stop 20 million eligible black voters from going to the polls and choosing Hillary Clinton?  How is it “our” process when diverse voices within the black population can nary get support from fellow blacks?

The second problem with “we” is that it reinforces the myth that the black population is a political monolith.  Black over-indexing in support for the Democrats creates group speak and gives the Democratic Party the emotional, Pavlovian responses that make good sound bites for television talking heads and thirty-second video clips for MSNBC.

The appropriate unit of analysis for reflection should be “I”. Democracy and the partisan politics that flow from it have made Americans fearful of sounding selfish or anti-social. Avoiding the “we” is painted as anti-collective and creating disharmony.  Focusing on the “I” fears collectivists, especially the collectivists on the Left because the “I” means operating in an environment of mental and emotional discipline, and when operating in the space raises the chance that the individuals says, “Hey. Not so fast, collective. That’s not where I want to go.”

It is time to pursue more independent thinking. Time to stop fearing the “I”.

A Black political strategy for debt markets. Stay out of them.

You cannot resolve poverty within the black population by attempting to put more blacks into credit markets. Poverty is a function of capital: the less capital you have, the greater the likelihood that you that you will be poor.  Specifically, the more income-generating capital you own, the less likely that you will be poor.  The black political elite believe that if more middle income and poor blacks can borrow money, they would be able to purchase homes, cars, appliances, and the other trappings of consumer life; thus, living the American dream while claiming a stake in assets.  This approach is wrong because it fails to properly address the first act that was necessary for capital acquisition in America and also fails to reconcile the original acts of acquisition with the current barriers to capital acquisition and the alternatives available especially to non-affluent blacks.

Original capital acquisition in America was the result of theft.  This may sound cynical unless you have looked at the history of capital acquisition in America from the beginning of its colonization by European countries.  Take for example the language used by U.S. Supreme Court chief justice Marshall in Johnson v. McIntosh when discussing the principle of acquisition of discovery:

“While the different nations of Europe respected the right of the natives, as occupants, they asserted the ultimate dominion to be in themselves; and claimed and exercised, as a consequence of this ultimate dominion, a power to grant the soil, while yet in the possession of the natives.  These grants have been understood by all, to convey a title to the grantees, subject only to the Indian right of occupancy. The history of America, from its discovery to the present day, proves, we think, the universal recognition of these principles.”

Chief Justice Marshall then goes on to describe how England went about implementing this universal law:

“So early as the year 1496, her monarch granted a commission to the Cabots, to discover countries then unknown to Christian people, and to take possession of them in the name of the king of England. In this first effort made by the English government to acquire territory on this continent, we perceive a complete recognition of the principle which has been mentioned. The right of discovery given by this commission, is confined to countries ‘then unknown to all Christian people’; and of these countries Cabot was empowered to take possession in the name of the king of England.  Thus, asserting a right to take possession, notwithstanding the occupancy of the natives, who were heathens, and at the same time, admitting the prior title of any Christian people who may have made a previous discovery.”

In short, we came and discovered the place. The natural capital lying above and below the land is ours and you leave when we say so.  Chief Justice Marshall said as much when he continued:

“Discovery gave an exclusive right to extinguish the Indian title of occupancy, either by purchase or by conquest … The title by conquest is acquired and maintained by force.  The conqueror prescribes its limits.”

This acquisition by discovery drove, in my opinion, the philosophy of manifest destiny; that white America was destined to spread western civilization and republican democracy to unoccupied territories from whence Native Americans had either been eliminated or removed. The Homestead Act of 1862 and resulting grants of land, this time from the American government, put into the hands of people of European descent more natural resources including land and access to minerals and fuel sources for little or nothing.

Americans of European descent had a considerable head start. But other than establishing that original land acquisition in America is mostly the result of theft, what does this have to do with capital and credit markets? Because land and other natural resources are the anchors for debt markets. They serve as the collateral that backs up loans that are invested into the debt markets. In other words, they create the funding used to underwrite consumer and other debt.  Make the wrong bet and you could lose the family farm. Make the right bet and you have expanded your commercial enterprise from farming into other lines of business.  Occupying the credit generator/underwriter portion of the debt market is where the wealth creation takes place. Asking blacks to occupy the consumer portion of this market, especially when blacks do not have substantial land or mineral resources ownership is the same as putting blacks back on the plantation.

The black political elite cannot take the black population back in time where blacks can set up their own system of original theft in North America.  The black political elite could discourage blacks from entering a credit system that charges them an interest rate on loans that exceeds those as whites, that treats a black couple looking for a mortgage as a credit risk even when that couple has more than sufficient income to qualify for a loan.

One policy recommendation is that while blacks pursue as many income opportunities as possible that they avoid credit markets.  Blacks do not have the political power nor does the rest of America have the political will to offer up another “Oklahoma land rush” specifically tailored for black Americans.  Blacks do have more control over their spending. Paying off debt (much easier said than done) and not purchasing any more money not only leaves more money in the pocketbooks of black people, but sends a message to the bond markets and eventually the U.S. government that if either the markets or the government want blacks to get back into the consumption game, then there will have to be major changes in capital allocation policy.

The Sarah Sanders fiasco challenges the notion of free exchange of ideas and nation-state.

America’s hypocrisy when it comes to the freedom to exchange ideas was further exposed last weekend when Sarah Huckabee Sanders, press secretary for the White House, was asked to leave the Red Hen, a restaurant in Lexington, Virginia. According to The Hill.com, Mrs. Sanders along with seven members of her family, was asked by Stephanie Wilkinson, the co-owner of the restaurant, to leave the establishment because she took issue with the Trump administration’s policy toward transgender members of the military.  Listening to calls this morning to C-SPAN on the issue is giving me the sense of how increasingly polarized the United States is politically. It has me asking, “Are Americans really serious about the free exchange of ideas or is that just some Madison Avenue hype designed to maintain an artificial society?”

The first three words in the Constitution of the United States of America, “We the People”, seem farcical given this latest event. Yes, humans are expected to disagree, but the United States has been transmitting a message to the world that the choice to disassociate based on the groups you want to disassociate away from is somehow a bad thing and that real strength lies in diversity of people and ideas.  The Sanders event is an example that this creed is built on shaky ground. It seems more likely that Americans rather not share space with people who do not share their political beliefs or political lineage. “We the People” means, “We, a Particular People Who Have Taken Charge.” Inclusive means only including those who share your beliefs.

The State had to sell the notion that the disenfranchised were allowed to come to the party. The last thing the United States needed to see was its own version of Bastille Day on American soil. To keep the barbarians at bay the political elite needed a doggy bone and democracy has been that bone since the country’s inception.  But as the guise of democracy and its phony noble intent falls away, are the disenfranchised ready for a world that is not inclusive?

If Americans are serious about freedom of association and the freedom to exchange ideas, they must accept the freedom to disassociate and go one’s own way. The Left is afraid of such a mindset because disassociation means fewer people across which to spread the costs of unnecessary programs and fewer people towing their party line.  The Left has been historically aligned with freedom of thought, but their support for the co-owner of The Red Hen demonstrates to me that even they do not understand their equality standards and the artificial nature of those standards are coming back to harm them.

The co-owner of the Red Hen, again, took issue with transgender policy of the Trump administration and given the lack of anonymity that Mrs. Sanders could not avoid were able to single her out and direct a protest against Mr. Trump by asking her to leave.  Would the Left take issue with a restaurant owner who does not support the Democratic Party because of the party’s support for gay marriage but because she is aware that 90% of blacks support the Democratic Party decides to not serve them? The answer is yes and not because the Left would think the owner is wrong, but the loss of black votes stemming from any Democratic support for the restaurant owner’s free speech would cost Democrats at the polls.

I don’t believe the discussion on free association will ever end. Quite frankly it needs to continue and get louder.

Anonymity in broadband and cryptocurrency

The U.S. Supreme Court issued an opinion in Timothy Carter v. United States (No. 16-4012) on the question of whether there was a reasonable expectation of privacy where cellphone information stored by a wireless carrier is shared with the government without a warrant issued on the basis of probable cause. The court ruled last Friday that using third-party cell storage location information to track the physical movements of a citizen requires a warrant less the Fourth Amendment of the U.S. Constitution be violated. The Fourth Amendment provides the following:

“The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no warrants shall issue, but upon probable cause, supported by the oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.”

This opinion is pretty narrow and by that, I mean that the court’s holding in this case may not hold when the issue does not involve seizing information documenting an individual’s movement over a long period of time or the involuntary sharing of such information with a third party.

I admit that on the surface, this case may have nothing to do with the transmission of digital information in the form of currency given its narrow meaning. Cryptocurrency is still in its infant stage. Unlike a cellphone that generates continuous cell site location information, I doubt at this stage of crypto growth that you will have a consumer making 127 straight days of transactions such that miners are continuously verifying a consumer’s transaction blocks. It may be another matter for vendors that accept cryptocurrencies that are accepting crypto every day.

What cryptocurrency does have in common with the case is the threat to anonymity. While the general description of cryptocurrency includes anonymity, anonymity is, like the information transmitted by a cellphone, not guaranteed.  In a piece for CoinDesk.com, writer Adam Ludwin describes how cryptocurrency transactions can be “deanonymized.”  While anonymous, Bitcoin transactions, for example, are not private. Transactions are recorded in a distributed ledger called a blockchain. Anonymity is more a function of the Bitcoin protocol, but during a user loses anonymity when their identities are linked to their initial Bitcoin currency purchases, whether done via a digital wallet or via an exchange.

Mr. Ludwin describes how anonymity can be gained by buying Bitcoin from a private holder or buying from an exchange.  But just like a mobile broadband communications network can betray a subscriber’s identity, so to can a cryptocurrency network, whether via the public nature of Bitcoin’s transactions ledger or via the IP addresses of the computers originating Bitcoin transactions.

 

Of Congressional factions, disruptive economy, and Donald Trump

The Goodlatte-McCaul Immigration & Border Security bill, HR 4760, failed to pass a few minutes ago.  I believe that Mr. Trump will gain more traction from the failure of both bills to pass and from the further weakened position of congressional Republicans as their majority starts looking like the majority that former president Barack Obama had in the first two years of his first term in office.  I would go further and argue that the sweet spot for Donald Trump would be the finish the second half of his first term with at least one chamber of Congress under the control of Democrats.

While on the surface the disruption may seem abnormal or undesirable, disruption, as represented in a split Congress, disruption is what Americans should expect. A majority of interests cannot exist without a minority of interests.  There is no such thing as congressional harmony.  There cannot be harmony given the political goal of a party: to persuade the electorate that the party should have a monopoly on the power and prominence that comes with office.  Mr. Trump, I believe, already had a sense of this going into office and the dysfunction of his party may have strengthened the rationale for his findings.

For example, take Obamacare. The premature consensus was that with majorities in both chambers, Mr. Trump would be able to move a repeal of the controversial Affordable Care Act through a friendly Congress. Pundits and constituents were wrong. The Affordable Care Act is still on the books thanks primarily to its provisions that extend care to children up to age 26 and its protection of consumers with pre-existing conditions.  Mr. Obama put a bomb in the ACA that Republicans are now afraid to detonate.

Another example: tax reform. While the GOP was able to pass some measure of tax reform, the level of difficulty in getting a bill to Mr. Trump to sign caught Congress watchers off guard.  Did Republicans doubt their chances so much in November 2016 that they started a new Administration and entered the 115th Congress with no coordinated plan?

It doesn’t help that the electorate does not look favorably on Congress. The average approval rating for Congress is 17%, according to a May 2018 Gallop poll.  Among Democrats the approval rating is approximately 12% while Republicans hold Congress in slightly higher regard at 22%.  The President’s approval rating is another matter.

According to Gallop, Mr. Trump’s current approval rating is approximately 45%, up from a low of 35% back in December 2017.  While his overall approval rating gives him some cushion against the low view of his colleagues in Congress, what is being overlooked is his performance among independents and Democrats.

Mr. Trump’s approval rating among Republicans is 90%. No surprises there. Among independents, Mr. Trump’s current approval rating among independents is 45%. At the low point the approval rating among independents was 29% but has been hovering in the thirties throughout 2017 and 2018. Meanwhile, a small number of Democrats are flirting with the idea of liking Mr. Trump. While his favorable rating among Democrats has mostly been in the single digits, since his inauguration his weekly average favorable rating has been in the double digits twelve times. It is currently at 10%.

I see Mr. Trump having room to maneuver away from the congressional Republicans and while moving away from the party may seem disruptive, disruptive is the modus operandi in today’s economy. We hail disruptors like Elon Musk, Brian Chesky, and Garrett Camp for using technology to upend the electricity, hotel, and transportation industries. Mr. Trump is doing the same thing, albeit not with the smooth intellect of an Elon Musk.

He has shown no fear in governing as an executive, using the executive order option with no hesitation. And while his ability to transfer his deal making skills from the world of real estate to the game of thrones has taken heat, his negotiations with Kim Jong-Un could move him toward silencing critics.

Politics is about creating the political packages that win over the pawns necessary for winning the throne. Mr. Trump, so far, is beating the Democrats.

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.

If you needed the internet that bad, you would have created it yourself

Monday 11 June 2018. We will see a repeat of the weeping and wailing that Hillary Clinton’s supporters did as they witnessed what they thought was impossible: an electoral loss to Donald Trump. Advocates for the treatment of broadband access as a telecommunications service will weep and wail not because of the loss of internet service, but because they will be out of bullets when the scare tactics imposed on millions of consumers do not come to fruition. As June goes into July into August into election season into Kwanzaa, another argument for attracting anti-Trump voters will fade away.  As the tyrannical Fake Left jump onto social media and create new forums and hashtags for the next rally, they will soon take for granted that the internet still works after all.

What I find disconcerting is the emotion attached to internet access. “If everyone is not connected, we will all sink into the pits of Hades.” “If I am not online, I am inconsequential.” “The internet is crucial to our daily living and well-being.”  None of this is true. Unlike water and energy, internet access is not a necessity for the continuation of life. Approximately 11% of Americans do not use the internet, according to data from Pew Research. More than likely, these individuals are getting information they determine as pertinent to their lives from old tried and true sources: first hand observation, published news sources, direct contact with government agencies, family and friends. These data sources are not as fast or as glitzy, but they have worked for centuries and more than likely were used by the individuals who built this digital world.

I expect the percentage of Americans not using the internet to fall over time when you consider that in 2000 approximately 48% of Americans were not online.  Our children are already internet savvy and this use of online services will only continue as they get older. As we on the tail end of the Baby Boom enter retirement, we may find ourselves using it more to connect with fellow Boomers who, unfortunately, may not be up to travel for various reasons.

What we need to avoid is allowing political factions such as the Fake Left to play on the emotions stemming from the belief that without net neutrality rules, consumers won’t be able to get to the websites of their choice, see speeds from their favorite websites slow down, or have their data sold to third parties they did not approve.  This narrative should be seen for what it is; another way to get votes.

If the Fake Left were really concerned about protecting your privacy and the speed at which you access data, they would tell you that you are responsible for reading the fine print of every service agreement for every information service provider you access. Arguing that terms and conditions are written in “legalese” is no excuse for skipping over disclosures and subjecting your privacy to abuse.  If, as the Fake Left argues, the internet is that crucial to everyday living, so crucial that it should be treated like a utility, then equal fervor should be applied to the consumer who decides to use online services.  In other words, the Fake Left should stop encouraging people who can’t fly to buy an airplane and attempt to fly it without bearing the consequences.

If you can’t get what your want from an information service provider in terms of privacy or speed, then maybe you should invest in consumer encryption services such as a virtual private network, or using a heavily encrypted network or browser such as TOR.

There are also the old methods of information gathering: a telephone (landline) and a newspaper, from which you can access by paying cash, the ultimate form of encrypted currency. Bottom line, there are ways to protect your individual privacy without implementing more onerous rules on society.