The Imminent Capitalist Reckoning

Have you ever heard of the economist William Baumol? Probably not, because economists are almost always boring and often little more than hacks that rich people invest in to help them save money on taxes. But Baumol appears to be one of the rare economists to stumble upon a genuine insight. One of his ideas is known as Baumol’s cost disease (always name your smart discoveries after yourself), which essentially states that if large capital investments are used to automate the mass production of goods, the price of those goods will fall and the costs of services – i.e., tasks that humans must in large part perform – will rise as a result. Because wages for workers benefiting from increasingly automated, increasingly efficient, mass-production will rise, these workers will be more able and willing to pay higher prices for services. When this happens, prices and wages for service workers will rise. Thus, even though Beethoven’s Fifth remains Beethoven’s Fifth whether it be played in the 18th century or the 23rd, God willing, the players and conductors in the 23rd will be payed much more than the player and conductors were payed in the 18th. And, since the playing of Beethoven’s Fifth can’t be automated the way manufacturing a diaper can be, the cost of the Fifth, relative to the cost of the diaper, will increase.

Put another way, as the ability of capital to mass produce dead objects/goods increases, the relative price of these dead objects will decrease against that which cannot be mass-produced – again, i.e., tasks that humans must in large part perform.

One more try: as people experience income growth and can purchase many goods with less money, they will pay more for things that are less easily automated, aka people-performed work aka services. If you still don’t understand at this point you should probably stop reading and make loud fun of me for being a bad writer and explainer.

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Across the Pond, Part III

What can we say? The news says “President Donald Trump” hundreds of times each day and a neo-fascist and an investment banker are the two choices for president of France. These are the times we live in.

The French election, as with the U.S. election last year, is helpful in that it shows us exactly how scared we should be. And we should be very, very scared. In this corner: Marine Le Pen, A woman who white-washes France’s collaboration with the Nazis in the Holocaust. In the other corner: Emmanuel Macron, an ex-investment banker and ex-minister of the current government with a single-digit approval rating who thinks that the problem with the current oligarchic neo-liberal order is that we have the wrong technocratic manager in charge – instead of the order itself. It’s the 2016 U.S. election with the genders switched and a less mentally ill (scientifically speaking) but more professional rabble-rouser.

Unlike in the U.S., the center-right is not capitulating to its right-wing, which means that the self-styled centrist Macron will most likely win. If he does it will make an interesting case study in political tactics for controlling populism. The center-right’s stampede away from Le Pen, toward Macron, may discredit them even more if Macron proves to be the same abysmal failure that most leaders of his ilk have turned out to be. On the other hand, the French political mainstream may continue to succeed in slamming the door in the reactionary right’s face in perpetuity. Plus, their move, in the moment at least, is much closer to the right thing to do than what Paul Ryan and Mitch McConnell have done in the U.S.

If Macron wins, I wish him the best of luck managing France, as he is the far lesser of two evils compared to Le Pen and her National Front. But make no mistake, Macron is a shithead. And all the luck in the world may have run out for shitheads like him.

If Le Pen wins, then one of the few things I’ll look forward to is Donald Trump shaking her hand.

Across the Pond, Part II

On April 16, the people of Turkey went to the polls for a referendum. The matter under consideration was a broad set of amendments to the country’s constitution. Most notable among other things, the amendments would abolish the office of the Prime Minister and effectively replace Turkey’s parliamentarian government with a presidential system.

Most every presidential system of government needs a strong executive to function effectively, and the proposed amendments did not claim otherwise. In the process of doing away with the government’s Prime Minister, the amendments would endow the president, a largely ceremonial post with little hard power in the previous system, with the powers of chief executive and head of state. And the actual powers that come with these title bumps are far from trivial – new authority to appoint government ministers, select judges, enact laws by decree, declare states of emergency, and dismiss parliament.

Parliament, which would serve at the pleasure of the president, would also be stripped of its authority to scrutinize ministers as part of their appointment proceedings or conduct thorough investigations of the government. It would retain the ability to impeach the president, however, since the president could dismiss parliament at any time it remains to be seen if that capability has any tangible force behind it.

Though a unique issue in a unique country, like Brexit and the Trump victory, the referendum in Turkey won by a tight margin at the polls: 51.4 to 48.59.

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Across the Pond, Part I

After the electoral tumult of 2016, it is tempting to think of 2017 as a down year of comparable insignificance. That’s certainly true to an extent in the U.S., which, save for a few special elections and the Virginia governor’s contest, is shifting from election mode to policymaking mode (a mode that is not without its own drama).

However, the rest of the Western world, specifically Western Europe, has much to offer in the way of electoral drama. In fact, a pivotal vote has already been cast, with more on the way.

In the Netherlands, a self-branded “Dutch Donald Trump” named Geert Wilders drew much concern from mainstream political actors domestically and internationally. Leading up to the election on March 15, fears of another domino in a successive wave of populist results – from Brexit to Trump to now the Netherlands – abounded. Wilders campaigned on skepticism toward the European Union, a hard-right/restrictive immigration stance, and promises to defend traditional Western values and culture against, in his view, the existential threat of Islam. He made these proclamations with consistently xenophobic and combative rhetoric.

Like Brexit and Donald Trump, voters found much to admire in these populist positions, and the general attitude of Wilders and his supporters. The economic crisis of 2008 was a total disaster for many people, particularly those who rely on physical labor to earn a living, and total disasters have aftershocks. Not only did many lose their jobs in the ensuing downturn, but they, correctly, began to understand what they had sensed for some time: their livelihoods are going out of style in the 21st century global economy with its demand for highly educated and technically proficient laborers. The reality that these people face is that today’s world doesn’t need them much at all and it would prefer to lecture them about self-improvement while stifling their political views it considers improper.

Furthermore, Europe faced deep crises before the Great Recession. Birth rates have long been below replacement rates in many countries, a reflection of a general ennui and lack of confidence in a brighter future. American-style capitalism, dominant in the 1990s following its knockout blow against Communism, rode high for some time, but struggles now to form an optimistic narrative during long-term periods in which living standards are not dramatically improving.

Throw in a significant terrorist threat and a massive wave of immigration from a region with a vastly different culture, that’s often viewed with suspicion and fear in Europe, and you have ripe conditions for radical politics.

Much to the relief of those in the center-right and center-left Wilders lost by a solid margin. He came far short of winning, with 13.1 percent of vote to the leading center-right party’s 21.3 percent. The makeup of the ruling coalition remains to be seen, but it will most certainly not include Wilders’ party (that would have been the case regardless of the March 15 outcome) and, because of its relatively strong showing, will have solid legitimacy.

So the center won a temporary reprieve in the Netherlands. Congratulations to them I suppose. It’s odd to think of a party “winning” with 21.3 percent of the overall vote. Yes there are so many parties (seven received over five percent of the vote) and yes coalitions are a very reasonable way to govern, in some ways more stable and representative than our winner-take-all two-party system in the U.S. However, often political causes endure not through winning a majority, but rather by gaining a critical mass of followers that are insanely devoted to the cause. A fractured system, such as the Netherlands and many others in Europe, remains vulnerable to zealots and it doesn’t appear the center has a real counter to them. The solution, for now, seems to be to unite against populism and against its vile creeds and false nostalgia, while vaguely appealing to continue the status quo without offering a compelling vision of the future that is fundamentally different in ways better than where we’re at right now. It remains to be seen whether this lukewarm and unimaginative approach will cool or halt the slow boil. The Netherlands has bought time, which is certainly valuable. France and Germany would be lucky to do the same in the coming months. Perhaps things will get better and not long from now we’ll look at this period as a brief scare on an otherwise smooth path of progress. But if populism rears its head once, which it has done, it will do so again. There will always be another economic crisis, there will continue to be massive and disruptive immigrant and refugee migrations, and the populists of tomorrow may yet be smarter and more numerous of today, having learned lessons from their first bout. The biggest lesson of the past year is that the survival of post-Cold War liberalism, once seemingly unstoppable, is far from assured. Especially if feeble, out-of-touch, and corrupt figures (such as Hillary Clinton in the U.S.) remain its standard-bearers.