Of Trade Wars and Hot Mess

As I listen to U.S. Senator Mike Rounds, Republican of South Dakota, discuss with Bloomberg Television U.S. trade action against Canada and Mexico as inappropriate because of their statuses as allies to the United States, I have to ask myself, if they are allies and given the increase in costs consumers face because of tariffs, why not remove tariffs from all items imported?

The reality is that trade is war, no matter a country’s cultural or political affinity with its neighbor. Tariffs are barriers to markets. Canada and Mexico, just like China, are telling the U.S. to stay out of their markets unless invited to deliver a particular set of services or products. There are no allies in trade.

So why is the term “ally” used during these discussions? Ally is a term used to keep the “pawns” i.e. the electorate on board with destructive policies; to make voters feel like they are a part of something bigger than themselves; that they are somehow a part of the decision making process.

In reality, the only “skin in the game” the electorate has is the skin, limbs, and lives they lose when a trade war becomes a live fire war

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.

Immigrants coming from the Caribbean and Latin America to the United States over the next two years should prepare for a rough patch thereafter.

The International Monetary Fund today released a report describing a robust 2017 and 2018 U.S. economy, but 2019 and 2020 may be brutal for Americans as the economy is expected to taper off during those two years.

First the good news. Growth in gross domestic product was 2.3% in 2017 and is expected to climb by 2.9% in 2018. In 2019, the United States will see a slight tapering off in GDP growth at a growth rate of 2.7%.

Now, the bad news.  By 2020, the next presidential election year, growth will fall off almost abysmally when Americans see a GDP growth rate of 1.9%. It won’t get better in 2021, 2022, or 2023 as the growth rate continues to decline with growth rates projected at 1.7%, 1.5%, and 1.4% respectively.

At first blush the unemployment rates may look good during those periods. For example, by the end of 2017, the unemployment rate was 4.1% which is considered an indicator of an economy at full employment. The numbers, at least on the surface get better. In 2018, unemployment is expected to be at 3.5%, under the historical full employment mark. The U.S. will continue to see low unemployment in 2019(3.5%), 2020(3.4%), 2021(3.5%), 2022(3.7%), and 2023(3.8%); all figures again reflecting full employment.

Now we have to reconcile the low unemployment rate with low GDP growth. I suspect that more members of the tail end of the Baby Boom will contemplate retirement and may opt for leaving the workforce. As more people leave the workforce, all other things remaining equal, the number treated as unemployed also falls. Also, as the population ages, people on fixed incomes will adjust their budgets to reflect their new spending realities. Reduced spending by Baby Boomers will contribute will contribute to the slowdown in growth.

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.

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.

While the economy will be in a sluggish mode, immigrants should be mindful of the social mood. A lot of the animosity toward undocumented immigrants has been tossed at immigrants from Mexico and Central America. Today, media is honing in on the Trump administration’s preferred policy to separate parents attempting to enter the U.S. across its border with Mexico without visas from their children.  I suspect this treatment will be carried out at all points and ports of entry. But given the animosity hurled at immigrants during booming years of an American economy, the social fabric may be a bit worn and the welcome less warm during a sluggish one.

Dear United States. Get Out of the Korean Peninsular. You Lost the War

Watching the press conference being held by President Trump regarding his summit with Chairman Kim. The questions from the press corp are pretty empty. Questions like, “Can we trust North Korea?” “How can you call Mr Kim a talented leader given North Korea’s human rights abuses?” “How will you verify that North Korea has completely denuclearized?” The usual, arrogant blah, blah from empty headed journalists chasing ratings, Emmys, and Peabody awards.

From my view, the real issue is why has the United States not reconciled the current scenario with the fact that its reason for inserting itself into a civil war was bogus? None of these reporters has posed the question, “Why are we here in the first place?” Statists on the left have lobbed criticism at Mr Trump, either in traditional or social media, but none have educated the American public on the underlying flawed philosophy of American faux imperialism. To do so would require Americans to take another look at themselves in the mirror and come to grips with a the idea of taking a foreign policy path that says, “America will keep its nose out of another country’s business.”

The United States lost the Korean War. Let me repeat that. The United States lost the Korean War. It failed at its objective. It should not now be in any position to dictate terms to the winner. It should leave … now. The premise that intervening in the war between North and South Korea was necessary in order to stop the domino effect of communism throughout Asia was bogus to begin with. As your own Robert F. Kennedy surmised, communism eventually feeds on itself. Time proved him right.

Today, you have a state-based capitalist political economy in China poised to take over the space held by the market-based capitalist political economy of the United States. Soon, a number of you will be holding yuan as your own personal reserve currency because Asia and Africa would have switched to it.

America looks like a sleeping drunk old man who has been startled to consciousness. Its influence in Asia is slipping away. It can only buy influence in Africa by selling weapons. Europe laughs at it and is resolved to go its own way. America’s self-righteous sounding commentary on human rights abuses is empty rhetoric given its level of police brutality toward blacks. As we say in the Virgin Islands, “Ah you need to go sid down and shut up.”

Bottom line, America. You lost. Unless you are selling goods and services to a country, you shouldn’t be there. Get out of the Korean peninsular….

The individual should aim to make competition law inconsequential

This morning between games of racquetball, a conversation among the racquetball posse came up regarding parsing out trophies for non-winners. We expressed our concern that giving trophies to children that finish dead last may be creating a society of slackers; a community of individuals that see no rewards from winning.  In the 21st century, Millennials is the group that has been taking much heat for expressing a value of entitlement based on just showing up. “Your mommy got you to the soccer game. Yeah me!” “We’re giving you an award for good citizenship because you tell everyone good morning while your grades are shitty. Yeah, me!” “You got an award for fourth place because the other guys in your bracket forfeited. Yeah, me!” Where does this attitude come from and should Millennials take the brunt of the criticism?

To the latter part of the question, I would argue that Millennials should not bear any part of the criticism. They are only reacting to a world that older grumps created and playing by the rules the older generation promulgated for getting along in this society.  I see this as a world created by the State and those who control the majority of private capital.  The attitude of these monopolists is that there is only so much of the spoils to share and if society is to maintain any validity, then the masses must believe that their participation in traditions and institutions and compliance with the rules will result in some type of reward, even if that reward cannot be tied to winning the actual prize.

It goes back to the “Logan’s Run Paradox” where if you want to continue life past age 30, you have to grab the crystal ball before being disintegrated by multi-colored lasers. Your aspirations must be encouraged, delusions fed, and your eye distracted from the reality that there is, at least under this current paradigm, only so much spoils to share. For over a century now, America’s paradigm of competition has been built on this lie and it is increasingly reflected in our political economy.

Americans argue that a competitive market structure is good for the economy; good for growth in jobs; good for the spread of economic opportunity. The United States over the past 120 years has crafted a regulatory framework that favors multiple participants in an industry driven by the premise that multiple providers are good for consumer choice and where prices are regulated by the ability of multiple firms to participate, the better. Actions by firms designed to keep other firms out of a market, whether those actions involve predatory pricing, vertical or horizontal mergers, or agreements between firms i.e. collusion, are prohibited by anti-trust law.  American government tries to regulate and create competition but is government’s attempt organic or an ill-fated effort to replace real competition with an artificial construct? In other words, is the State simply trying to make all soccer moms and their kids happy?

What the State refers to as anti-trust law is simply trade regulation law; regulating otherwise voluntary agreements between individuals to combine as an association that extracts and organizes resources for the purpose and creating and distributing goods and services. The State exercises its monopoly over a jurisdiction by regulating trade thus hoping to ensure that currency flowing through its payment system and the activities that generate tax revenue are left unimpeded. “Protection of the consumer” is a narrative expressed to the masses in order to garner their support for legislation that is onerous to trade.

The individual doesn’t need these laws once he understands self-reliance. The individual producing their own electricity with today’s technology need not worry about a utility’s monopoly. She does need to worry about the State’s invalid argument for helping to maintain it.  The individual using 3-D printing- technology to design and create tools and clothing need not worry about price gouging unless a so- called consumer protection agency extends its jurisdiction by promulgating rules that prohibits said production. The individual that generates valuable information and data for sale and transmits the value of that data via her own cryptocurrency need not worry about fiat currency created and issued by a central bank, unless that central bank and her ally, the treasury, promulgate rules that challenges the issue of an individual’s currency.

The individual, recognizing how inorganic consumer law is, should pursue personal policy that makes that public policy inconsequential.

Abandoning the philosophy of inclusion

Inclusion as a social or public policy goal is a decrepit substitute that favors blacks that already have university educations or networks to the white majority. As political philosophy it transmits a false signal that the best way to construct and manage society in the United States is to ensure that all citizens, no matter their lineage or creed, are integrated into the American social fabric and that this integration will trickle down into economic opportunities and infrastructure that transports and connects commercial activities.

Many in the black populace take the position that government is some guarantor of equal treatment and that government is needed to enforce equity and justice. But is that government’s prime mission or are attempts at enforcing equity, justice, and equality merely ancillary to a more basic objective: the day-to-day maintenance of a tax and customs jurisdiction that calls for effective management of the jurisdiction’s human occupants.

The inclusion narrative may be just that, a doggy bone that keeps blacks at bay so that the conduits of commerce are protected from attack. The last 55 years have seen the doggy bone effectively tossed at blacks in the form of civil rights legislation, an increased number of political appointments, and greater access to government jobs. The black middle class saw improvements in its income status between the mid-1960s into the mid-1980s, but for decades this collective has been facing increased competition from other marginalized groups, i.e., gays, women, Latinos, Asians.

There are only so many inclusion slots to go around which means continued entry requires compliance with rules and standards of entry that remain in flux, making entry more difficult and the cost of entry higher in price.  The pursuit of inclusion also keeps blacks in “begging mode”, using every opportunity to ask government agencies and large corporations to throw another doggie bone or two toward the black community.

Unfortunately, these doggie bone requests are made by the black elite on behalf of their black elite partners. Last month I watched a congressional hearing where a leading black congressman asked the CEO of a social media company what efforts were being made to add more blacks to the board of directors of his company. The CEO gave the standard canned response, that they were looking diligently for the opportunities within which to plug any potential black directors. I was not phased by the answer. I expected it. I was more phased by audacity to ask the question, one seemingly unrelated to the topic of the hearing. But that is what happens when a group is in constant begging mode. It can’t see beyond the short term.

In addition, the average black person doesn’t have the credentials to sit on a corporate board of directors. The average black person, with real wealth hovering close to zero, is balancing the day-to-day needs of family and does not have the experience, education, or time to sit on a corporate board of directors. This is not the average black person’s definition of inclusion.

The black elite understand that their constituents are a different breed of barbarian at the gate. They leverage the past pain of slavery (a pain no living black has endured but it makes good theater) and the pain of job and housing discrimination into a narrative that says dependence on government and more inclusion in society should do the trick.

But this narrative has done nothing for blacks. It requires coming back to the trough every two years and threatening political parties to appease a narrative of weakness in exchange for votes.

The Russian attack on democracy was ineffective because they don’t understand democracy.

American democracy is about the creation of a political marketplace where the taxpayer receives certain protective services in exchange for her vote. These services include police services, fire services, transportation services, commercial trade platforms, cultural services, legal and regulatory frameworks, and education services, to name a few. They are delivered by local, state, and federal governments and their costs are recovered by government in the form of property, sales, and income taxes and other fees.

Politicians squabble before, during, and after the election season on how best these services should be delivered, how much the government should pay to deliver them, and how much of the bill the taxpayer should foot for the government’s efforts. Classical liberal, progressive, and conservative philosophies collide during these debates and the clash of perspective is most apparent during election season when more people are paying attention. To secure the majority of voter approval for position and philosophy, politicians engage in the blood sport of electioneering, a blood sport that includes embellishments, character assassinations, and a lot of misinformation.

Reports abound of how a Russian firm, the Internet Research Agency, entered the political fray between 2014 and 2016 and used social media posts, tweets, and blogs to upset the elections. Their activity during an election year would have been business as usual were it not for their status as foreign agents conducting these activities. Whether or not they upset the political markets with their activity will be hard to determine.

For example, will investigators be able to say that the cost of the exchange of the vote for services increased due to Russian interference? I see no data that describes politicians seeking higher taxes for government spending as a result of any information provided by Russian trolls.

Did any information introduced into the political markets by the Internet Research Agency cause voters to leave the market? I have heard one argument that black voter participation fell because of Russian disinformation about Hillary Clinton. Hillary Clinton has drawn the ire of some blacks as a result of her description of black teenagers as “predators” and her Clinton Foundation taking financial advantage of earthquake relief efforts in Haiti. It is questionable whether any additional misinformation by the Russians could have created any further negative view of Mrs Clinton by blacks. She may have done enough on her own.

American democracy bases societal cohesion on the vote, the ability of the masses to elect its leaders. Leaders promise, as I laid out before, protective services. But what would happen to the democratically-based cohesion if the dependence of Americans on protective services were drastically reduced or eliminated? What if more Americans had 3-D printers and could manufacture their own tools or furniture? What if more Americans grew their own vegetables in their own apartments? What if more Americans were able to take advantage of devices that use unlicensed spectrum in order to form their own local communications networks and reduce their communications expenses? What if more Americans used solar or wind to energize their homes? What if engineers could design apartment buildings such that each unit could take advantage of solar energy?

A true attack on American democracy would be a demonstration of how to live independent of the political elites that thrive on the electorate’s unwillingness to be or ignorance of independence. Whether a democracy or an authoritarian regime, nation-states are about centralizing power. When they attack each other, destroying the core is all that is needed for the knockout punch. Given the Russian Federation’s history of allowing true freedom, an attack on democracy based on independent sovereignty would be thinking way outside the box.

No, American democracy was never really attacked by the Russians. It simply got poked by a player who didn’t have the legal credentials to enter the ring.