Monday, June 26, 2017

The Ugly Side of Anarchy

Conservatives are alternately disgusted and worried about young "anarchists" throwing rocks at cops in Berkeley and Portland. That's small potatoes, not a big problem.

The narcotics threat is infinitely worse. It took a strike force of 600 Feds and local crime units to round up 60 hard guys who were paid-up members of the East Coast Crips network, most of them wanted for serious felonies, connected to a NY prison gang. Multiply that by 20 states minimum, thousands of killers still at large, coast to coast. Add MS-13 and five or six Mexican cartels. There may be as many as 100,000 dangerous men on our streets, armed to the teeth, cash flow positive from drug dealing. They have a million retail customers, each of whom has to commit petty crime to fix an addict's craving to get high, or at least stave off the nightmare of withdrawl another day or two. Maybe another million are involved in the meth scene and widely-prescribed pharmaceutical opiates, some reckless morons using both.

It's difficult to estimate the number of Americans who smoke pot, maybe 20 million. These geriatric gentlefolk are easy meat for the DEA, but harder to find and not much of a public threat. Ditto millions of drunks, most of whom are employed, driving buzzed and texting a pal for laughs. Add them all together -- hardened gangsters and addled dopes -- it's perhaps 33 million (10% of U.S. population) on the wrong side of criminal law and sobriety. The impact on women and children is horrible. They suffer grievous harm financially, psychologically, and often physically. Many are destined to become permanent wards of the state.

That's not the BIG problem -- however awful drug and alcohol abuse are.

We're dumbing down the next generation at an alarming rate, a combination of "education" in American schools and endless waves of obscenity in mass media, digital connectivity, and propaganda emanating from public servants and political operatives. Many tens of millions have been hosed with hate. Their children are being raised with the conviction that America is fundamentally evil, by reason of our (somewhat) free market in finance and (somewhat) splendid military strength. Folks are apt to over-estimate how strong we are in reality. Seven of our ten aircraft carrier strike groups are in port for repairs. The Air Force is flying antique fighters and tankers. We need replacement equipment and new recruits for a U.S. Army that did too much with too little money. There are never enough Marines.

Americans are confused about who's doing what to who, specifically with respect to politics and retail democracy. Foreign powers have little impact on us. Hollywood and New York are homegrown threats to the general welfare and domestic tranquility, broadcasting evil day and night, 24/7/365. It doesn't matter whether the sauce de jour is Donald Trump, or a college sport gab fest, or the latest excuse to get high on big screen "entertainment," or crime news, sanitized to conceal a one-sided race war that's decidedly obvious and that no one wants to discuss. Much easier to feel wronged by law enforcement, courageous people who put their lives on the line to defend us, an increasingly impossible duty. It escapes notice that cops are hamstrung by paperwork and due process, spend much of their time testifying in court after a lonely shift answering calls for domestic battery, directing traffic around a car accident, while deeply worried about stopping a stolen car because odds are they'll have to kill or be killed. The life of an LEO is nonstop horror and boredom, dealing with drunks and dead babies, gang wars, raving lunatics, theft, shoplifting, fistfights, stabbings, and noise complaints.

It's important to understand that cops and U.S. military are few, about two million -- vastly outnumbered by bureaucrats, government contractors, public school teachers, doctors and nurses poorly compensated by Medicaid, Medicare, and VA appropriations. We have more postal workers than cops, a larger army of municipal garbage collectors and janitors than soldiers and sailors and airmen. Public service comprises about 40% of economic activity, if you count all the IT people involved in making government more complicated and expensive than it otherwise might be.

Does all this government achieve anything?

Yes and no. Compliance with regulations and tax accounting kills American jobs, makes us dependent on China for cheap goods, reliant on imported oil and foreign bondholders. It's nice to be "the cleanest dirty shirt" of global finance, to cover our endless stream of public borrowing and government largesse. As goofy as it sounds, U.S. Treasury instruments are considered good collateral that can be rehypothecated and leveraged, employing thousands of traders who get to skim a nice seven-figure annual income, come what may, from "dark pools" of derivatives estimated at $1 quadrillion in notional value. Hard to grasp that it's all built on Treasury debt that cannot be retired and keeps growing in size, not including our unfunded entitlement problem and a hopelessly bloated Federal Reserve balance sheet.

The positive aspect of fat U.S. federal, state, and local spending is an illusion of Normalcy, some success in assuring the American people that cops and firemen will respond when you need them to clean up a relatively small tragedy. National Guard part-time citizen soldiers can be deployed to deal with big problems, hurricane, flood, or race riots. The government is ready to handle a lot of pain, albeit too little too late to save anyone's life or property.

Does it make sense to spend 40% of our productive output on government?  Oops, that's the wrong question. It's a fiction of economic theory that government spending is a component of notional Gross Domestic Product. In reality, the private sector (60% of GDP) is 100% of our productive output -- and even that's exaggerated by incomes paid to finance, insurance, and real estate scalpers. So, productive work struggles to carry the "sterile" half of GDP -- and fails to cover the total cost of lavish bureaucracy and entitlement payola. That's why government has to be deficit financed, issuing more and more debt each fiscal year. States and localities are caught in the same trap. Higher taxes kill job creation, put more people out of work.

All perfectly dire, no way to turn back the clock and put government on a diet -- however, that's not the worst of our troubles. American liberty (anarchy) is a widely spread fabric of American culture, shared by federal, state, and local government workers, because they too are private citizens just like us, determined to be as free as possible in the direction of their lives, who to marry, which home to buy, how to feed and clothe and amuse their kids. They get sick, visit the doctor, attend churches and support charities, mow the lawn, no different than anyone else. Working for a government agency doesn't make someone less anarchist or more responsible at home. They drink. They watch TV and binge on chili cheese nachos.

THE UGLY TRUTH

The fundamental problem with American anarchy, all of it, from career criminals to the cops who try to stop bad guys, is our universal displeasure in facing facts. We became addicted to flattery, brainless amusements, and sleepy indifference to American history.

Let's discuss flattery first. DId you invent iron smelting, steelmaking, internal combustion, interchangeable parts, mass production, fractional distillation, and ten thousand other ideas that put an affordable vehicle in your driveway? -- nope. Did you invent radio, television, semiconductors, digital processors, packet switching, or liquid crystals?  -- nope. Most of the stuff we use in daily life was an international effort involving basic science and industrial technology that evolved over centuries of trial and error, capitalism, competition, and wars for possession of raw material, especially oil, rubber, copper, bauxite, magnesium, nickel, zinc, titanium, etc. Wars were fought over food and water, fruit, transportation corridors, religions, and something as stupid as animal pelts. You stand on the shoulders and buried corpses of hundreds of millions of warriors, thousands of scientists, tens of thousands of crackpot inventors and ruthless stock market frauds. It's still happening today, stock market manipulation in particular. Pensions and individual investors are going to be kneecapped again, depend on it. There is a quiet trade war underway for scarce rare earth metals. Your individual contribution to prosperity is zero, no matter what your job, and the purchasing power of a buck is subject to change without notice. Not that long ago a "buck" was the skin of a male deer. Doe skins were "half a buck." Could you feed yourself without the grocery store supply chain, mechanized agriculture, and imported oil? Don't flatter yourself.

Brainless amusements are so thoroughly familiar and comfy that it's almost impossible to imagine life without pro sports, movies, TV, digital games, smart phones, and social media. None of it is necessary (like food and water and sanitation are). None of it makes you any smarter or wiser. Without advertising, it all collapses, and advertising is the first thing to go in a deep recession. Same thing with higher education. A degree in sociology or urban planning is worthless if the public purse snaps shut. Folks have lost sight of what the "business cycle" and "reversion to the mean" imply for discretionary spending on Star Trek conventions, binge viewing, multiplayer fantasy warfare, gay nightclubs, and elective cosmetic surgery. You are one paycheck from losing that leased Camaro or F-150. Government jobs have a little more security, but fun and games vanish for everybody in a deep recession.

That's why American history matters. We're living in an era very similar to the Roaring 20s, or rather at the end of it, fantastically inflated market values. Uber has never made a penny of profit, and they burned through $4 billion. Same thing with Amazon, microscopic margin and loaded with unpayable debt. Ditto shale drillers, automobile manufacturers, airlines, casual dining, department stores, malls and specialty retailers. Most gas stations are independently owned no matter what the sign says in front, and they squeak by on convenience store sales of cold beer, overpriced potato chips, cigarettes, lottery tickets, and watery fountain drinks. A big dip in sales (or a flash mob of looters) would be enough to shut their doors and turn off the gas pumps, lay off the minimum wage staff. Same thing at McDonald's and Burger King, barely profitable with bargain menus during boom times, unsustainable in a crash.

The last time we had a serious recession was NOT in living memory, unless you're 100 years old, which means you were 11 or 12 years old when the market crashed in 1929, old enough to understand and remember. For the rest of us, it's a question of American history. The crash was an overture to ten years of truly awful widespread poverty and hunger. Maybe we're in a different situation today? -- okay, maybe -- but I'll remind you that the Great Depression was the cause of worldwide war, which sounds particular terrifying today because so many nutso dictatorships have (or can easily obtain) nuclear weapons.

So. The ugly side of anarchy is not so much what might happen next, but rather how we got ourselves into this mess. Americans voted for bread and circuses. No one forced it on you. We became accustomed to the best of everything, available for the asking. You don't even have to work at a job. Crime pays. Social Security pays and Medicare pays. SNAP and welfare benefits pay. I hope you know that 2/3 of federal spending is mandatory "entitlements" that can't be cut without public outrage, instantly voting into office a socialist Congress to spend and borrow our way back to the American Daydream in defiance of reality -- because a bad recession at home means economic disasters abroad. Foreign bondholders will cash in their enormous stack of Treasury bonds, while we're trying to sell more. It's a solid concrete barrier to sustained or increased domestic spending to fend off pain during a recession.

What to do about it is simple. Use your liberty to prepare, and for heaven's sake please stop watching television and bitching about Donald Trump. He had nothing to do with LBJ's Great Society, Carter's Community Redevelopment Act, or Obamacare and expanded Medicaid. It is undeniably likely that a crisis will bring another silver-tongued FDR to power, so watch out for bank holidays and public works programs, defunding military strength and readiness.

And worse, the 1930s multiplied gangsters, armed with machine guns, paying graft to cops and Democrat political bosses. Bad idea to relocate to Chicago or Philadelphia now. Detroit is already destroyed. Baltimore is next, no crisis required, and I worry about Newark, Queens, Brooklyn, and Los Angeles.

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