Streetwise Professor

Martin Wolf has waddled into the lists again to take another tilt at Milton Friedman. Since Milton is alas not with us to accept the challenge (luckily for Martin) I will again try to serve as his trusty second and defend his honor.

I will start at the end:

There are many arguments to be had over how corporations should change. But the biggest issue by far is how to create good rules of the game on competition, labour, the environment, taxation and so forth. Friedman assumed either that none of this mattered or that a working democracy would survive prolonged attack by people who thought as he did. Neither assumption proved correct. The challenge is to create good rules of the game, via politics. Today, we cannot.

This is a lie and a slander–in particular the italicized part. To start with. Friedman’s social responsibility piece was an oped, not a weighty tome or even an academic journal article. (I snorted when some idiot in Bloomberg referred to it as Friedman’s magnus opus. Er, no, that would be A Monetary History of the United States or A Theory of the Consumption Function. But this illustrates the level of intellect of those challenging Friedman’s article.). As a result, it was not a comprehensive analysis. It focused on a basic premise and argued that premise within the constraints of the form, which are severe. So many of the criticisms are bashing straw men–issues that Friedman could not address except tersely, if at all.

With regards to the lie and the slander, this relates to my criticism of one of Wolf’s earlier sorties. Specifically, Friedman “assumed” nothing of the sort. If you look at his broader body of work–something that Wolf betrays absolutely no sign of doing–you will know that his main objection to government, big government in particular, and government regulation is that legislatures, the executive, and regulators would be influenced and corrupted by the regulated, and by corporations in particular. This is why he argued vociferously against big government and against most government regulation: the power thus accrued would be manipulated by private interests, most notably corporations.

Friedman’s solution was to reduce the stakes in the game by reducing the power of government and relying on competition in the marketplace. Again, Friedman was an advocate of free markets, not of corporations, and he opposed regulation primarily because it allowed corporations to undermine markets.

One particular illustration of this relates to an issue that Wolf raises: market power. Along with Stigler, Friedman argued that government regulation was frequently, and indeed overwhelmingly, antithetical to competition and supported market power.

With respect to creating “good rules of the game,” Friedman also argued that giving government more power was inimical to the creation of good rules.

That is, Wolf is arguing that we have a political problem–which was exactly Friedman’s point throughout the 1950s-1980s. You may disagree with Friedman on these issues. But you cannot–as Wolf slanderously states–say that he did not think about them seriously, or that he assumed them away. Might I suggest that Marty read, oh, Capitalism and Freedom? Or is an oped all he can handle? Maybe there’s a market for Milton Friedman for Dummies.

Now to the beginning. Wolf quotes Luigi Zingales, the Director of the Stigler Center. (George is probably spinning in his grave.)

In an excellent concluding article, Luigi Zingales, who promoted the debate, tries to give a balanced assessment. Yet, in my view, his analysis is devastating. He asks a simple question: “Under what conditions is it socially efficient for managers to focus only on maximising shareholder value?”

His answer is threefold: “First, companies should operate in a competitive environment, which I will define as firms being both price- and rule-takers. Second, there should not be externalities (or the government should be able to address perfectly these externalities through regulation and taxation). Third, contracts are complete, in the sense that we can specify in a contract all relevant contingencies at no cost.”

Needless to say, none of these conditions holds. Indeed, the existence of the corporation shows that they do not hold. 

This is nonsense on stilts, and represents a return of the hoary Nirvana Fallacy that another late, great economist, Harold Demsetz, pointed out over 50 years ago. Yes, the conditions of the First and Second Welfare Theorems don’t hold. Who knew? That says jack about what are the best arrangements for our fallen world. That requires a comprehensive comparative institutional analysis, an analysis that is conspicuously lacking in the debate over Friedman’s article.

So what does Wolf say corporations should do (or not do)? Here’s a list:

My contribution to the ebook emphasises this last point by asking what a good “game” would look like. “It is one,” I argue, “in which companies would not promote junk science on climate and the environment; it is one in which companies would not kill hundreds of thousands of people, by promoting addiction to opiates; it is one in which companies would not lobby for tax systems that let them park vast proportions of their profits in tax havens; it is one in which the financial sector would not lobby for the inadequate capitalisation that causes huge crises; it is one in which copyright would not be extended and extended and extended; it is one in which companies would not seek to neuter an effective competition policy; it is one in which companies would not lobby hard against efforts to limit the adverse social consequences of precarious work; and so on and so forth.”

Let me give a pithier version: “Be good.”

As public policy advice, this ranks right up there with Mr. Mackey:

Completely absent from Wolf’s articles on Friedman is any discussion of how to implement the incentives to “be good” (by Wolf’s lights), or how corporations will acquire the information to know how to be good.

Incentives and information are the foundational concepts of modern economics. It’s beyond bizarre that the FT’s “Chief Economics Commentator” couldn’t be bothered even to mention them.

Wolf’s article is a sermon, not an economic analysis, or even a pedestrian analysis of an economics issue. The world is fallen, and you sinners must repent, and promise never to sin again! Well, as a song I like (and no it’s not autobiographical!) says, “I used to pray every night for God to wash away my sins, but I just get up and do ’em all over again.”

You can have a serious discussion about Milton Friedman’s slender piece, especially within the context of his much broader work. But the jeremiads directed against it by Wolf and others are not serious. They are intellectually vapid, and devoid of any meaningful policy prescriptions.

Hell, maybe Stigler was wrong–at least about Martin Wolf. Maybe he can’t win an argument with Milton, even when Milton isn’t around.

Saturday evening I watched Hillbilly Elegy, a Netflix original. I watched because I had read the J. D. Vance book by the same title, and it resonated deeply–for reasons I will detail below. I also watched because of the hailstorm of negative reactions directed at the film (as had been directed at the book and at Vance personally)–I wanted to see what triggered these adverse reactions.

The book and film resonate because there are strong parallels between Vance’s experiences, and those of my grandfather, in place particularly, although not so much in time. My grandfather’s story occurs in southeastern Ohio in the first two decades of the 20th century (he was born 8 months before the Wright Brothers’ first flight), and Vance’s in central Ohio and Kentucky in the 1980s-2000s. But in some ways, the difference in time makes the other similarities all the more remarkable. La plus ca change.

Most notably, the central character in Elegy, J.D.’s grandmother Mamaw (played by Glen Close) is eerily reminiscent of my grandfather’s mother, Laura D. Hatfield. (Mark the last name.) Both were fiery hellcats, with checkered and often tragic lives.

One scene made my jaw drop. Early in the movie, J.D.’s mother Becky is in a hurry to drive home from a family reunion in Kentucky. She yells at her mother to hurry up, and Mamaw responds by flipping her the bird and uttering a vulgar retort.

My grandfather was an avid amateur photographer, and was making home movies from nearly the time that hand-held cameras first became available. Blessedly, my uncle still has the movies, and we put them on DVD. In one clip, my grandfather impishly waited outside the outhouse at my grandmother’s farm (note that this was in the 1930s, and there was no running water). When she emerged from the privy, she saw him filming, and flipped him the bird. Just like Mamaw flipping off her daughter, right down to the same bad ass look on their faces. They even looked somewhat alike–there is an Appalachian look, you know.

Like Mamaw, my GGM had man issues and kid issues. No, she wasn’t knocked up at 13, but hers was not a romantic story. She worked as a waitress at a diner at a railroad depot (in Gloucester, Ohio, if memory serves), and was swept off her feet by a railroad man. They married–and then he promptly abandoned her.

He came back a year later for her father’s funeral. W. H. Hatfield had died from a ruptured spleen suffered at a 4th of July picnic held by his employer, the New Straitsville Coal Company, for which he cut roofing timbers. In a strength contest at the picnic, the 55 year old man successfully lifted a 6′ long green roofing timber (about as thick as a railroad tie) over his head–and then his spleen ruptured. (Try lifting a railroad tie sometime.)

In any event Laura and her husband reconnected after the funeral, my grandfather was conceived–and then Laura’s husband split again, never to return. My grandfather never even saw him until one of his cousins pointed him out on the street when my grandfather was 11 or 12. So like J.D., my grandfather was fatherless.

Single motherhood not being a thing at the time, out of desperation Laura married an older man (Bill Wilcox) who was financially secure (owning a farm and a business “shooting” oil wells with nitroglycerine)–but who was also a raging alcoholic. My grandfather suffered the fate of many stepchildren of that era–a life of beatings. (So although drugs weren’t a thing in 1910s Ohio as in 1990s Ohio, alcohol was. BTW, Bill ran moonshine in his “shooting wagon,” knowing people weren’t too anxious to go poking around a wagon full of nitro.) (J.D.’s mother also entered horrible marriages in attempts to provide a home for her children.)

My grandfather had to work both on the farm and off from a young age, including working in coal mines as early as 12 years old. To give you an idea of how tough things were, he suffered abuse at the hands of one of the miners. He complained to his uncle Frank (Laura’s brother) who was a foreman at the mine. Frank told him he had to take care of himself. Frank said he had a pick and an acetylene lamp on his helmet, didn’t he? So use them. So when next beset by his tormenter, my grandfather turned the flame on his helmet into a torch, pointed it right in the guy’s face, and while he screamed in pain, hit him in the kneecap with the pick handle.

Problem solved. But he had to solve it himself. (He told me this story years later to illustrate a point, which I will return to below.)

In another parallel with the J.D. Vance story, my grandfather escaped this dysfunctional family life by joining the military. The Navy, in my grandfather’s case, the Marines in Vance’s. He was trained as an electrician, and served on subs (back when subs were scary AF). After leaving the service he tried to work his way through Marietta College by selling vacuum cleaners door-to-door and working in a shoe store. But there were no student loans in those days, and he couldn’t make it work, so he set out first to Detroit, where he worked for Ford Motor–and hated it. He then went to Chicago, got a job with Illinois Bell, where he worked for 40 years, eventually becoming the head of North Division in Chicago (i.e., he managed Illinois Bell’s operations north of Madison Street). After retiring from Bell, he became the president of a rural telephone company (DeKalb-Ogle Telephone: he arranged the sale of the company to Continental Telephone, and eventually it was absorbed into what is now Verizon.)

So J.D. Vance’s story and my grandfather’s stories aren’t the same, but they rhyme. Similarly, Mamaw and Laura D. lives were not identical, but bore strong parallels, as did their characters and personalities. So I have deep empathy for the characters and the stories.

But it is beyond obvious that many people don’t. In particular, our better-thans on the coasts and in particular in the media loathe the book, the movie, and J.D. Vance personally. So to my second issue: why this hatred?

I think the answer is overdetermined, but in a nutshell, it is a testament to modern American culture, and political culture in particular.

One part of the story that is deeply dangerous to our better-thans is that it is an utter refutation of the narrative du jour–white privilege. This is an organizing principle, and a fixed belief, on the left today.

Yeah. Watch Hillbilly Elegy, and you’ll just be amazed at all that white privilege. Similarly, look at my grandfather’s family’s life. Dang but whitey got it made, even in 1990s Middletown or 1910s Burr Oak! (My grandfather’s family’s farm is now many feet under the waters of Burr Oak Lake, by the way.)

Such an in-your-face refutation of a cultural “elite’s” treasured myth is a sure-fire trigger to its deepest antipathy.

Relatedly, Vance’s story–like my grandfather’s–is about how it is possible to escape hellish situations in America, and achieve a good life. J.D.’s and my grandfather’s lives were American Hells, but in the end illustrated the American Dream. In both cases, the military and crucially family–even dysfunctional ones–provided a way out. Mamaw impressed on J.D. the importance of family and helped him straighten out and escape. My great-grandmother also gave my grandfather a chance, first by marrying at great cost to herself, but then by telling my grandfather to run away and join the Navy–even accompanying him to the recruiting office to swear that he was 18 (he was barely 17). (He had no birth certificate, but that’s a story for another day. His grave marker, provided by the US government, dates his birth to 1902, not 1903, based on his service record.) And J.D. and my grandfather both repaid their debt, by helping out their families to the extent of their abilities.

Although they had help, J.D. and my grandfather also had to have the self–reliance and grit to want to escape, and put in the effort to escape. The torch and the pick handle are an extreme example: you have to look out for yourself, and never let yourself be a victim. That’s why my grandfather told me the story, although I am sure that it was deeply disturbing to him on some level, even 60 years after the fact.

The refusal to be a victim is also deeply threatening to the prevailing culture. Today, there seems to be a competition to be a victim. “I’m a victim! NOOOO! I’m a bigger victim than you!!! Uh-uh!” We live in a culture that celebrates victimhood. J.D. Vance rejected it. Hillbilly Elegy rejects it. My grandfather rejected it. These are deeply transgressive offenses against the culture.

Then there is the current political environment. The characters of Elegy–and my remaining family members in southeastern Ohio and West Virginia–and millions like them are one of the main bedrocks of Trump support. The Ohio steel industry died. The coal mines died. A hollow shell has been left. When it wasn’t ignoring it, the political elite in the US was sneering at it. Those people have pride–something that comes through in Elegy–and they resent the disdain and condescension.

Trump did not sneer at them. He did not dismiss them as bitter clingers. He embraced them, treated them as valuable individuals, and they love him for it.

And those who hate Trump therefore hate them, and everything that tries to portray them in an even moderately sympathetic light–like Hillbilly Elegy.

In sum, Hillbilly Elegy is a Rorschach Test. Show it to me, and it evokes the attributes and deep flaws and great struggles of my family–struggles that made it possible for me to have an unbelievable blessed life that has been able to grab the boundless opportunities America offers. Show it to the coastal “elite” and it triggers all they hate about America, and many who live in it.

Want to understand the deep fault lines in America today? Watch the movie, and mark the reactions. They speak volumes.

The biggest intellectual defect of modern environmentalism–and there are many–is its monomania. The obsession with greenhouse gases has led it to advocate drastic changes in the production and consumption of energy without regard for the non-GHG-related consequences of these changes, including in particular the environmental consequences.

Fossil-fuels are carbon intensive, but the alternatives to fossil fuels and fossil-fueled vehicles, heaters, appliances, etc.–electricity generated by wind and solar, batteries, vastly expanded transmission networks, electric cars and appliances–are incredibly material intensive.

Many–most–of these materials need to be mined. Electric vehicles and batteries utilize massive amounts of metals and minerals, e.g., copper, nickel, cobalt, lithium. The mining of these things generates massive amounts of pollution of the air and water and the ground.

Just a few examples. Many of the largest Superfund sites in the US are defunct copper mines, like the Berkeley Pit in Montana, where decades after its retirement the country’s largest earthen dam holds back–hopefully!, as I’ll discuss in a moment–6.5 trillion gallons of toxic sludge. And the mine itself is now a 900 foot deep, mile long, toxic lake.

What did I mean about “hopefully!”? Well, there have recently been massive failures of containment dams at mines in Canada, Brazil (at least two) and Australia, which have cost hundreds of lives and massive ecological and economic damage.

Even when there are not such catastrophic failures, the accumulation of toxic tailings is hardly green.

And tailings are not the only issue. Let’s talk about air pollution, shall we? Specifically with a mineral that will be crucial to the production of massive batteries–nickel.

Riddle me this: what city has the worst air pollution in Russia, and among the 10 most polluted in the world? If you answer “Norilsk”, you’re a winner. Why? Nickel production. The world’s largest nickel mine and processing facility located there spews out “four million tons of cadmium, copper, lead, nickel, arsenic, selenium and zinc” per year. And the river runs a beautiful красный for good measure. Not very зеленый!

The “green” electrification of the entire world will require massive amounts of rare earths. The vast bulk of rare earths are produced in China. Not because it is uniquely endowed with them–they are actually quite common. Because only the Chinese are willing to accept the pernicious environmental impacts of rare earths mining.

And it’s not just environmental impact. It is historical impact as well. Rio Tinto obliterated a 40,000 year old archeological site to expand an iron ore mine. The “Sacred Valley” in Peru is also being mined extensively.

These things are happening at current scale, and they are an inevitable consequence of industrialization. But the question is whether the benefit of reducing GHG emissions justifies increasing commensurately these impacts. For you multiply these environmental consequences by many times when you consider the impact of multiplying electrical vehicles and appliances and batteries by many, many times.

Wind and solar generation facilities also consume massive amounts of material. Many of these are mined, or involve polluting production processes (including not immaterially–pun intended–concrete, which is a major GHG producer).

But there’s also the land. I’m so old that I can remember (though I was very young at the time–so I’m not THAT old!) Lady Bird Johnson campaigning against the visual blight of highway billboards. Quaint, really: they were a ribbon of eyesores, at most. In contrast, the amount of wind and solar facilities required to achieve the grandiose objectives of the Green New Deal or its proposed counterparts around the world (ya I’m looking at you Boris) would create square mile after square mile of eyesores.

Not to mention (a) displacing land from other productive uses, and (b) creating large risks for fauna, especially birds. Wind farms are collections of bird blenders, and solar farms bird fryers.

The lack of thought to environmental consequences behind grandiose “carbon neutral” visions is also apparent in the failure to consider the substantial diseconomies of scale in wind and solar. Meaning that costs will rise disproportionately to increases in renewables generation.

You can expand wind output on an intensive margin–siting windmills closer together. But this cannibalizes the wind, leading to output per turbine decline with density, and hence rising costs. You can expand wind output on an extensive margin–devoting more land to wind farms. But this also reduces average and marginal productivity because it requires expanding into progressively less windy places. Moreover, it results in higher average and marginal costs, because even holding windiness constant, the marginal value of the displaced land in alternative uses increases (because holding windiness constant, you’ll develop on the cheapest, least productive land first).

Solar is hard to expand on the intensive margin, but expansion on the extensive margin faces the same sources of rising cost as wind.

Meaning that these plans to substitute wind and solar for existing fossil fueled generation at the same time as dramatically substituting electricity for other forms of energy (e.g., electric cars instead of ICEs, electric appliances instead of gas) will inherently result in steeply rising costs.

Steeply.

If you look at countries (or states like California) that have even been able to get a mere ~20 percent of their electricity generation from renewables, you will see they are also the countries where electricity is most expensive. Usually by a factor of 2 or 3 or more than those that rely on conventional generation. Given the inherent increasing cost nature of renewable production, think of how much more expensive it will be to produce close to 100 percent of total energy consumption from renewables.

Rational people take into account trade-offs. Drastic reductions in GHGs involve massive costs. Many of these costs are environmental. The environmental pollution–real pollution, not the sort-of-pollution of say CO2–that will result from the massive production of materials necessary for electric vehicles, electric appliances, large scale storage batteries, transmission lines, wind turbines, and solar installations is staggering. Staggering. The consumption of natural resources–not just those buried in the earth, but the earth’s surface–will be prodigious. The cost of energy will rise, which will make people poorer: and the poorest will be hardest hit.

I often use Jefferson Davis’ proposed epitaph for the Confederacy–“Died of a Theory”–to illustrate the destructive tendencies of those wedded to a single principle, to the exclusion of other considerations. Unfortunately, it is too early to use it as an epitaph for modern environmentalism, because that is all too alive. But the idea fits. Monomaniacally wedded to theories of climate change and GHGs, modern environmentalists are pursuing a course that will, paradoxically and perversely, wreak massive environmental destruction.

How green is my valley? After the greens get done with it–not very green at all.

From 911 through the early days of the invasion of Iraq, there were some on the right who argued that the Anglosphere–the US, UK, Australia, Canada, and New Zealand–would save the world from a dark future. I was always skeptical, because it was evident that the Commonwealth countries in particular were already hurtling down the road to serfdom: from the earliest days of this blog, I referred to the UK as the “Ghost of Christmas Future,” because its embrace of collectivism and political correctness bode ill for the US.

Recent events have validated that skepticism–and how. I could cite many verses in many chapters, but two recent developments make the point.

The first is covid. The allegedly doughty Anglosphere has been as been as much of a collectivist collection of bedwetters and repressers as any country or group of countries in the world. The panic and consequent lockdown policies are largely attributable to the hysterical predictions of University College London’s crack–as in crackpot–epidemiological modelers. And the government’s panicked response thereto. The UK locked down once–to little effect. It is now locked down again, with progressively more draconian restrictions on normal life.

The evidentiary basis for this: zip, zilch, nada. There is no evidence that lockdowns improve public health outcomes, and there is considerable evidence that they don’t. There is evidence beyond counting that the economic and health consequences of lockdowns is severe. All pain. No gain.

Parts of Australia have also imposed draconian lockdowns, complete with police state enforcement methods and limitations on individual freedom. Ditto New Zealand. Canada has also been highly restrictive.

These efforts have been statist and collectivist in the extreme, with the smattering of protests about liberty being screeched down by the better thans who have proven themselves utterly impotent, not to mention incompetent. But we’re supposed to obey them. Because they give incantations to SCIENCE!

The other telling indicator of the intellectual and moral bankruptcy of the Anglosphere elites is climate policy. The UK, Australia, Canada, and New Zealand are all hard core worshippers in the Church of Climate Change (while the pews of the Church of England are empty, notably).

Australia has implemented policies intended to displace totally fossil fuels within a short time frame, substituting renewables in their place. This has had a too small to measure impact on global climate, but has blessed Australia with more expensive and less reliable electricity.

Not to be outdone, “Conservative” British PM Boris Johnson said “hold my ale,” and has just announced a grandiose “green industrial revolution.”

Note to Boris: the original industrial revolution was an endogenous, self-generated process that massively improved living standards; your proposed “industrial revolution” is a government-driven, centrally planned process that will produce penury in exchange for trivial environmental benefits (and indeed, may involve serious environmental harm, when the consequences of mining, distorted land usage, etc., are considered). To compare what happened in the 18th and 19th centuries to what you propose for the 21st is an abuse of language that staggers the imagination.

So what is Boris’ Big Plan? This:

“My ten point plan will create, support and protect hundreds of thousands of green jobs, whilst making strides towards net zero by 2050.

“Our green industrial revolution will be powered by the wind turbines of Scotland and the North East, propelled by the electric vehicles made in the Midlands and advanced by the latest technologies developed in Wales, so we can look ahead to a more prosperous, greener future.”

The push forms part of the UK’s pledge to go carbon neutral by 2050, and comes ahead of the COP26 climate summit in Glasgow next year.

The plans include producing enough offshore wind to power every home, quadrupling how much Britain produces to 40GW by 2030, which would support up to 60,000 jobs.

It also aims to generate 5GW of low carbon hydrogen production capacity by 2030, and develop the first town heated entirely by hydrogen by the end of the decade.

The UK Government also wants to advance nuclear as a clean energy source to help support 10,000 jobs.

Then there are wider plans for electric vehicles, public transport and well as an expansion of cycle and walk routes.

Mr Johnson will also discuss making homes more energy efficient, creating 50,000 jobs by 2030 and installing 600,000 heat pumps every year by 2028.

In other words, like California, except with crappy weather.

The key word is “plan.” It’s Boris’ 10 Year Plan. Maybe Boris can borrow from Lenin and promote it with a slogan: “Utopia is Tory government combined with green electrification of the entire country.”

It bears all of the intellectual defects of such grandiose schemes. The reliance on centralized decision making. The focus on dictating technological means for achieving an objective–and relying on technologies that are either unproven, or extremely unlikely to be scalable (wind energy in particular). Further, the monomaniacal agenda: reducing CO2 emissions, to the exclusion of any consideration. Putting aside that CO2 is what makes things green, there is apparently no consideration of the environmental consequences (e.g., from mining) of large scale wind power and battery usage (in autos and to make intermittent wind a reasonable power source). Nor is there consideration of other trade-offs: what are the costs, in terms of foregone output and opportunities, of pursuing this single goal? What are the benefits that will be achieved?

Further, the entire agenda is profoundly anti-freedom. The private automobile was the greatest liberating force of the 20th century–which is why the left hates it with such a passion. Boris’ (not so) green electric machines will be far more costly, and far more limiting, making them more expensive and less useful to the hoi polloi. The policy obviously aims to push the proles onto public transport. Yeah. I’m sure British train service will get so much better. And even if it does, it is inherently more regimented and limiting than autonomous personal transport.

I guarantee that this effort will be a bacchanal of rent seeking, incompetence, and failure. If you doubt this, contemplate the multiple failures of the UK government’s covid responses like testing and test-and-trace. But sure, they will totally nail a complete re-engineering of the entire energy system!

If Boris et al really believe that CO2 is a deadly menace, then tax it and get the hell out of the way. Let individuals figure out the most efficient way to trade-off carbon vs. other human wants. This centrally planned approach is doomed to failure. Which means that the green industrial revolution may spark a real revolution when Britain sinks into penury. While sitting in the dark and cold.

Again, climate policy is merely an example. I could go on. But it illustrates the Anglosphere’s descent into collectivism and statism and corporatism: and alas, the US–at least about half of it–want to follow them all the way down.

The beginning of this descent can be dated to the end of WWII. Churchill’s loss in 1945 is probably a good starting point. The pace of decline has varied over time: things were so dire by the late-1970s in the UK that Thatcher came to power and slowed, and in some cases reversed the decline. But it has resumed apace, and the adoption of green energy lunacy by an ostensibly conservative government suggests that the decline is now irreversible.

In some ways, Australia’s decline is the most depressing. Once upon a time Oz was more individualist, and disdainful of the pommy bastards. There was a kinship between Australia and the American west, a frontier kinship as it were. But that seems largely a thing of the past.

This came home to me when I re-watched the Mad Max trilogy last week. Watching those paeans to rugged individualism (personified by Mel Gibson’s Max), then reading about Australia today (especially the lockdowns in Victoria and the dysfunctional energy policies), I said to myself: “What the hell happened to you?”

Well, whatever happened to them has happened to the Anglosphere as a whole. (Don’t even get me started on Canada, ex Alberta.)

And it is happening to the US too. The recent election results, and many other political developments, suggest that at most half the country resists joining the UK et al on the road to serfdom. And that half is politically marginalized–perhaps by electoral manipulations engineered by the other half.

My post on the depravity of the Deep State fell rather short of the mark, I fear. In the sense that it underestimated that depravity.

Case in point, “retiring diplomat James Jeffrey” admits that “his team routinely misled senior leaders about troop levels in Syria”:

“We were always playing shell games to not make clear to our leadership how many troops we had there,” Jeffrey said in an interview. The actual number of troops in northeast Syria is “a lot more than” the roughly two hundred troops Trump initially agreed to leave there in 2019. 

. . . .

Officially, Trump last year agreed to keep several hundred U.S. troops — somewhere between 200 and 400, according to varying reports at the time — stationed in northeast Syria to “secure” oil fields held by the United States’ Kurdish allies in the fight against ISIS. It is generally accepted that the actual number is now higher than that — anonymous officials put the number at about 900 today — but the precise figure is classified and remains unknown even, it appears, to members of Trump’s administration keen to end the so-called “forever wars.” 

Jeffrey justifies his deception (and that of every deceiver) as “ultimately a success story” because it denied Assad a victory.

Remind me again why Americans should care about what murderer rules Syria. Because only murderers are on offer, and Assad may actually be the best of the lot.

But this end does not justify the means, even if you think Assad is the worst of a bad lot. Not by a long shot. It contravenes the chain of command. It rationalizes lying to the commander in chief in order to substitute subordinates’ judgment to his. It undermines trust within the government. It is a totally poisonous precedent.

For Syria. The bunghole of the Middle East. We have much bigger fish to fry than that, and a national security establishment that is so corrupt that it believes that such duplicity is justified, and presidents who know that they believe that, will be much less able to deal with such greater threats and issues than one in which honesty and trust were honored in the performance, rather than the promise.

When I was in the Naval Academy, the Honor Code was drilled into our heads. Although a lot of the drilling was just peremptory–thou shalt not lie!–there were attempts to explain why it is so important. The one thing that stuck with me was a constant refrain of one of my Plebe Summer firsties, Midshipman Dubberly. Over and over he would go through scenarios–some admittedly corny–in which people died because somebody lied.

Commanders who must make decisions on which lives hang must know the truth. Lies are corrosive directly and indirectly. A commander who is told falsehoods may make decisions that he wouldn’t if he knew the truth. Indirectly, a commander who knows that his subordinates may well be lying routinely will distrust everyone, and will as a result often discount truthful information–and again make misinformed decisions that cost lives.

Yes. You may think that your superior is an idiot, and will not use the information properly. But that is not your call to make. Because you may be the idiot.

I’m not naive. I know lying and dissembling occur. Hell, at the Academy (all Academies, actually) Honor Code violations happen all the time. But that’s no excuse for doing it, let alone for doing it and bragging about it.

Everyone involved in this should be subject to stern discipline. (Yes: I’m not naive: I know that is and ought are different.) Jeffreys is retiring. Fine. Yank his pension.

Those in the military who participated in this deception should be subjected to UCMJ proceedings.

In many ways, this episode (and others that have occurred in recent years) emphasizes the endemic corruption in the upper ranks of the military. It has become an increasingly acute problem, starting (roughly) about 30 years ago and accelerating in particular under Obama. Many current flag officers (who were promoted or primed for such ranks under Obama) clearly believe that they can substitute their judgment for the CinC.

Some of this rot is rooted in politics. But it is also directly traceable to the decades of futile wars in Afghanistan and Iraq. In the absence of victories, lies became the substitute. There is no substitute for victory? As if: lies do in a pinch.

Everyone in the military knew and knows about the lies. The fact that they were, and are propagated from the highest ranks validates lying right down the chain of command, and produces cynicism. It also causes a sort of Gresham’s Law effect–the bad/corrupt officers drive out the good.

Something similar happened in Vietnam. Then too lies replaced truth in order to camouflage an inconclusive conflict and the inability–likely due to incompetence–of the leadership to devise a winning strategy. And the lies corrupted the entire military, which was only restored (to a large degree) after painstaking efforts in the 1980s.

And the rock has rolled back down the hill. Further than it was in 1973.

Truth be told, one of the reasons I decided to leave the Navy in 1979 was precisely because I saw a dispirited and dysfunctional service.

It could well be the case that the situation is worse now than it was in say, 1973, when the US left Vietnam. We have been involved in Afghanistan and Iraq for far longer. The strategic rationales are far thinner now than they were in the 60s and 70s. The military has been even more politicized.

So when the likes of James Jeffrey is proud of lying, and brags about it because in his unelected, unaccountable mind the ends justify the means, you know that we are in dire straits.

But some people think it’s hilarious. Better than N20!:

US officials have been lying to Trump – and the American people – about the true number of US troops in Syria in order to deter him from withdrawing them, according to the outgoing Syria envoy. Trump thinks it’s 200 ??. By @KatieBoWill https://t.co/P6W9s3Qwvs

— Liz Sly (@LizSly) November 13, 2020

Oh yeah. I’m just doubled over with laughter.

The egregious Mz. Shy–not even an American, mind you–later backtracked, claiming it was all a big misunderstanding!, and besides, anyways, it’s Trump’s fault (of course!):

To be clear, I am not implying this is actually funny. I used the weeping laugh because it is tragicomic. The joke is on Trump, who told so many lies, for being so easily lied to by his officials. It’s a tragedy that they think it’s OK to lie to Americans….

— Liz Sly (@LizSly) November 13, 2020

I called bullshit. She got caught, but won’t own it.

But that’s apropos. She’s lying. She thinks lying is great–as long as they own Trump.

I don’t think it’s great. It’s a sign of how degraded the entire establishment–the worst elite ever, civilian and military–has become.

When contemplating the likely (though not definite) waning days of the Trump administration, this quote from Stalin came to mind:

A cadre must know how to carry out instructions, must understand them, adopt them as his own. attach the greatest importance to them, and make them part of his very existence. Otherwise, politics loses its meaning and consists merely of gesticulating. Hence the decisive importance of the cadres department in the apparatus of the Central Committee. Every functionary must be closely studied, from every angle and in the most minute detail.

Stalin, in other words, understood agency problems. He also had thoughts on how to deal with them!

The quote highlights the biggest structural weakness of Trump’s presidency: the lack of reliable cadres, at every level.

This is an inherent feature of Trump’s entire candidacy and presidency. He was an outsider, and a renegade one at that. That was his message, his appeal, and what made him appealing. He tapped into a deep disgust with the establishment–a disgust that is likely more intense today, in large part because of the despicable way that the establishment treated Trump, and by extension, his admirers and supporters.

But that renegade, insurgent approach to winning office brought huge difficulties in governing. Trump had no loyal cadres to turn to, and the material he had to work with was either similarly lacking in personal connections, or actively hostile.

The biggest problem has been in the national security establishment, AKA The Deep State: the Pentagon, State Department, the CIA, and the FBI. It is a problem that Trump has grappled with, but utterly failed to dent.

As illustrated by his recent unceremonious (but still too respectful) termination of his fourth defense secretary, Mike Esper. The fact that the average tenure of a Trump SecDef is a year tells you all you need to know. And the causes (plural) of his defenestration are tiresomely familiar. In a nutshell: insubordination. Trump has assiduously attempted to get the US out of Afghanistan, where we have been pointlessly engaged at a substantial cost in blood and treasure for just over 19 years. (The Rangers went into Afghanistan in October, 2001.) And Esper, like his predecessors, has fought a grueling rearguard action to stymie the president.

Further, Esper has publicly disagreed with Trump on renaming bases named for Confederate generals, and on other matters near and dear to the Woken SS, but an anathema to Trump supporters.

Given all this, firing is too good for him.

Indeed, perhaps the most distressing thing to contemplate about a Biden-Harris administration is that Trump’s reticence about ceaseless and futile foreign military adventures will leave office with him (some warmonger!), and the neocon resurgence will keep the US stuck in old conflicts and embroil them in new ones. This is a waste of good American lives, and a disastrous strategic miscalculation.

Trump has of course also been thwarted at every turn by the CIA and the FBI. Would that Haspel and Wray be unceremoniously booted too. Followed by a massive declassification of what they have been hiding, probably to cover their own compromised asses. (E.g., Haspel was London station chief when the machinations against Trump incubated there in 2016.)

And of course there are the seemingly numberless bureaucratic cockroaches at these entities, such as the execrable Alexander Vindman, who is only a representative example of thousands in the “cadres” who substituted their own policy preferences for those of the elected Commander-in-Chief, and who believed (and believe) that any means of thwarting him is justified, and indeed, righteous.

Trump has had some good servants. Mnuchin at the Treasury has done a yeoman’s job, with little controversy. After the unfortunate Tillerson Experiment (which, alas, I initially supported), Pompeo has been a loyal and successful Secretary of State.

Bill Barr has rescued a disastrous situation at the Justice Department, where a feckless and then castrated Jeff Sessions flopped around like a gaffed marlin on the deck of a fishing boat while his deputy, uber-weasel Ron Rosenstein aided and abetted the lawfare against Trump. Barr has certainly talked a good game on the outrageous conduct of the FBI, CIA, and others in their actions against Trump the candidate, the president elect, and president. The lack of concrete action against those conspirators does raise questions (and no doubt Trump is furious about it), but one has to consider the obstacles, legal and political, that Barr faces in bringing that lot to justice.

But the cadre difficulties have not been limited to cabinet ranks. Trump also had no network of people to tap for mid-level posts. He certainly did not have the time to study closely “every functionary . . . from every angle and in the most minute detail.” He didn’t even have people who could do this for him.

Moreover, the Democrats fought day in and day out to prevent or at least delay those he did nominate from assuming their positions. This had direct effects–it delayed the filling of posts for months on end–but also indirect ones: what capable person in his or her right mind would want to put up with that bullshit?

So when the Democrats now appeal for unity, there’s only one answer: Fuck. You. Turnabout is fair play, bitches.

Thinking about this turned my mind to Trump’s closest parallel in US political history: Andrew Jackson. Jackson, like Trump, was a political insurgent who swept into office on a wave of populist disdain for a corrupt establishment. But Jackson succeeded where Trump has apparently failed. Why?

The answer is overdetermined.

The institutions are so different. Jackson couldn’t utilize Stalin’s means of addressing agency problems, but he had much more effective cudgels than aa modern president. He couldn’t kill the underperforming, or consign them to the Gulag, but he could fire them wholesale, peremptorily. Federal employees did not have civil service protection, and the spoils system allowed him to choose and reward loyal supporters, rather than have to lay down with the civil service serpents.

Moreover, government is so much larger now. Even absent a deliberate “resistance” within the bureaucracy, its massive size and control over information flow makes it virtually possible to control.

Relatedly, the urban-centered establishment is far larger and more powerful in the 2020s than in the 1820s. Jackson had to tame the Second Bank of the US–and not much else. Corporate power, so inextricably linked with government power, is vastly greater now.

The media and information structures are far different too. In Jackson’s day, the media was vicious, but reflected a diversity of viewpoints more in line with the diversity within the population. Now, the media is monolithic, and deeply enmeshed with the state. It is part of the same establishment. Moreover, it is acutely vulnerable to manipulation, especially by the Deep State, via everything ranging from leaks, to more systematic manipulation and disinformation campaigns being waged out of Langley and elsewhere.

In sum, the correlation of forces has been far more adverse for Trump than for Jackson. Indeed, given the daunting odds, it is remarkable that he has achieved as much as he has.

In these post-election days, the Trump administration gives off a sort of Lost Cause vibe–without the negative slavery connections, of course. Trump has waged an insurrection against tremendous odds. He survived and at times seemed at the verge of victory, only to succumb in the end to the overwhelming forces arrayed against him. Was victory ever really possible? Probably not. But there were times when it looked in reach.

A major difference could be that whereas the South lost fair and square on the battlefield, there is a high likelihood that Trump has lost by foul means at the ballot box. Or, perhaps more accurately, at the mailbox and the counting station.

Even in losing by test of arms, the South seethed in resentment for decades, and waged a relentless political, and at times guerrilla, war against those who had vanquished it. The widespread perception that Trump lost due to fraud and corruption–a well-founded perception, as the intense fight against efforts to prove it suggest–will trigger similar resentment that will similarly poison American politics for decades to come.

Trump was not a fluke. He was the product of deep dismay among a large swath of Americans, Americans who are not and who will never be in the cadres. That dismay will not go away, and indeed, given the triumphalism of the Democrats and Never Trumpers, will in fact intensify.

The “resistance” has never acknowledged the roots of the Trump phenomenon. As a result, they underestimated it. They underestimate it still. And they will think it is behind them. They are wrong, and their misjudgment–their willful ignorance alloyed with arrogance–will keep American politics on a high boil for years and years to come.

Or would it be the 4th?

Today, November 5th, is Guy Fawkes day. A commemoration of an attempt to overthrow England’s constitutional order by force. It was the inspiration for the ditty: “Remember, remember the Fifth of November, gunpowder, treason and plot.”

There was no gunpowder to speak of on 3 November, 2020. Plot, tantamount to treason, however, cannot be precluded.

Or maybe I should say on 4 November. When I went to bed late on the night of the 3rd, Trump was comfortably ahead, with a large fraction of the vote counted, in Michigan, Wisconsin, Pennsylvania, and Georgia. When I awoke less than 6 hours later, the leads had disappeared in Michigan and Wisconsin, and narrowed dramatically in the other two.

The flips in Michigan and Wisconsin were highly irregular, to say the least. Michigan updated its results around 0400 EST by adding 128K votes–100 percent for Biden. At almost the same time, Wisconsin added similarly lopsided totals.

Indeed, “lopsided” is not the right word. Wildly improbably imbalanced is closer to the mark.

In Wisconsin, turnout is allegedly approximately 90 percent. Something that has never happened in that state, or in any other state.

What, because Joe “Calling a Lid” Biden is such an inspiring candidate?

Those are Soviet- or Nork-style turnout numbers. Not even remotely credible.

Indeed, the whole exercise appears Soviet (or Russian). Some parts of these states allegedly had near 100 percent (over 100 percent in some Milwaukee areas!), with 100 percent votes for one candidate. Hell, even Stalin would accept 99 percent.

So which is it? Are they so incompetent that they can’t commit a convincing fraud? Or was the gap so large that they had to go for the gusto and produce large numbers of votes in favor of a single candidate, and fight to defend them in the courts? Or maybe this is just an in-your-face act: yeah, we’re faking it, and we know you know we’re faking it, but you can’t do anything about it, chumps.

It’s also odd that whereas Trump overperformed relative to other states in 2016, he underperformed in these two states–which just happened to be the closest then and now. (You leverage fraud by concentrating on the states with the narrowest margins. Who cares about national election fraud in California?)

These results are facially implausible. Farcically implausible too. So what’s the recourse?

I don’t know the ins and outs of election law. Who has standing to sue? On what grounds? What are the remedies?

Recounts are pointless. Recounting fraudulent ballots just would validate a fraudulent result. The ballots would have to be challenged. How that would work, legally, I don’t know.

What I do know is that social media and the media are censoring anyone who raises these concerns, and moreover, is painting anyone who raises them as a “conspiracy theorist,” and hence to be disregarded. (Censored, actually.)

I note in passing this video which provides a very provocative explanation of the origin of “conspiracy theory” as a term in modern political discourse. In a nutshell, the Deep State, with the connivance of the media, uses these allegations to discredit those who question the government.

When thinking about these things, I’m reminded of Nirvana. The band, not the place: “Just because you’re paranoid, Don’t mean they aren’t after you.”

All of this is oh so Russian. The voting irregularities. The relentless propaganda demonizing and censoring anyone who dares question those irregularities.

And of course, the Deep State chimes in. The execrable head of the FBI, Christopher Wray, stated: “the agency has “not seen, historically, any kind of coordinated national voter fraud effort in a major election, whether it’s by mail or otherwise.” Not the weasel’s weasel words: “historically”; “coordinated”; “national.” Straw men. These things have not been alleged, or don’t matter (we’re talking about now, not history): but Wray knows knocking down straw men will provide Democrats with an allegedly authoritative endorsement of their view “move along, nothing to see here.”

That’s pretty Russian too.

I note in passing that Wray would be fired if Trump wins.

We are in the worst scenario that I painted in my pre-election post. A close, contested outcome that will wend its way through the courts.

Regardless of the outcome, half the country will believe that the outcome is illegitimate. This will exacerbate the national divide, and move the country from a pre-revolutionary situation to a revolutionary one.

The only way in a close election to avoid such a terrible outcome is for election officials to make every endeavor to ensure that the outcome was fair, and that the process adhered to the law–and in particular, ensured that only legitimate ballots were counted, and counted correctly. Not just ensure these outcomes, but ensure that these outcomes were perceived by the voting public.

The transparently absurd results in Michigan and Wisconsin, the suspicious interruptions of the counting process in other states, and the potential for abuse with mail-in voting all mean that this definitely did not happen. Instead, we have a concatenation of curious coincidences that support a conclusion of corruption. All of the “coincidences” going one way, of course. All of the coincidences occurring in Democrat-controlled jurisdictions. Which, of course, cuts against a theory of random errors, due, say, to mere incompetence. It instead supports a theory of deliberate partisan action.

On January 20, half of America will believe an illegitimate president is being inaugurated. If Biden assumes the office, 50 percent will believe he did so as the result of fraud. If Trump does, 50 percent will believe that he used the courts to override a democratic outcome.

Meaning that there will be civil war. The only question is: how will it be waged?

At least that’s the takeaway from this provocative video. A very post-modern president, and anti-politician, whose niche was created by the devolution of American politics. An implication: what he is most widely criticized for, he does on purpose, for effect–and to effect.

You can view it as a criticism of Trump. Or of the establishment that Trump confronts. Or both.

Worth watching.

https://youtu.be/KqJ5lRa_bj4

H/T–wouldn’t you like to know!

Tomorrow is, of course, election day. I have no firm predictions about the outcome, due primarily to the unprecedented lack of reliable information in an alleged information age. This being due to the hyperpartisanship of the media, and the social media prisms through which its content is refracted–or blocked. This also pertains to the polls. National polls are next to useless in the Electoral College system. Moreover, many polls seem more like partisan information operations: remember pollsters have many degrees of freedom to twiddle with to produce pretty much any conclusion they wish. And if you think they wish a Donald Trump victory, Google “rehab.”

The election is a pivotal one. “Most important of my lifetime” seems to be a phrase uttered every election, but I think that is true rather than a truism today. A left-Deep State axis is pitted against its nemesis, Donald Trump. The vision of the left-Deep State axis is profoundly opposed to what I believe in, and to the pre-progressive political values that I champion. It is viciously anti-freedom–particularly anti-freedom of speech and thought, but also anti-freedom of contract and association. Its giddy embrace of myriad coercive powers during the covid panicdemic presents a frightening glimpse behind the mask. I value liberty first and foremost. So I zealously oppose them, because they are enemies of liberty.

Trump is reputed to be an authoritarian. Yes, he exhibits the bombast of the stereotypical jefe, but many of his policies have focused on reducing state power, especially in the realm of economic regulation. Moreover, myriad malign governors (and lesser lights such as county judges, as in Houston) have demonstrated, covid has presented the perfect pretext for the seizure of untrammeled executive power, without legislative or judicial check. Yet the alleged authoritarian Trump conspicuously failed to do so. Curious thing for an authoritarian to do, ain’t it?

Trump has also been castigated as a warmonger–another feature characteristic of authoritarian rulers. But he is the only president in my lifetime who didn’t start a war, and has been assiduously attempting to reduce America’s military involvement in Afghanistan and Iraq–against the vehement protests and obstruction of the Deep State part of the axis. He conspicuously limited US involvement in Syria. Again–weirdest warmonger I’ve ever seen.

I’m not much for giving presidents too much credit or blame for the performance of the economy during their time in office, but growth in the pre-covid Trump years defied the sneering prognostications of Obama and his minions. Further, that growth did well by minorities and middle-to-low income workers.

And I guarantee you that a left-Deep State win would crush future growth prospects.

The jury is still out on trade policy. Abstracting from strategic gamesmanship, I oppose protectionism. But one can’t abstract from that here, especially with respect to China. Free trade is a very powerful theory, and which is a good guide to policy in most circumstances. But I always keep the phrase “died of a theory” in mind.

Trump has also recognized the geopolitical and ideological threat posed by China, and responded accordingly–and promisingly. He is reorienting the US military away from regional “small wars” (small, but not cheap) towards peer competition with global rivals, most notably China. Interestingly, he has waged asymmetric warfare against China. The campaign against Huawei, for example, has been clever, creative, and highly effective.

And he did this despite (a) having virtually no reliable cadre of subordinates to rely on (and indeed, having to “rely on” a cadre of slithering Beltway snakes who routinely sunk their fangs into him), (b) facing the inveterate hostility of the bureaucracy/Deep State, and its media handmaidens, and (c) confronting an unending onslaught of slanderous allegations and investigations, culminating in a farcical impeachment. Most men would have crumbled. Instead, he raged. Yes, the rage was sometimes uncomfortable to witness, but I can understand it. And I am reminded of the phrase: “I can’t spare this man. He fights!”

Of course he made mistakes, and some pretty bad ones. But that can be said of any president. Given the hand he was dealt, and the crooked dealers in the game, he has played it very well.

His opponent, Joe Biden, is a husk of a man. His mental unfitness for the job is manifest, and becomes more so by the day. Even a languorous campaign schedule clearly taxed him beyond his limits. Some of his appearances over the weekend were beyond farcical. Like when Obama had to call him to the stage three times; and after he had finished speaking, had to lead him off the stage like I used to shepherd my stroke-stricken father. Or when he said: “Hello, Minnesota!” When he was in Florida. Florida. Who the hell mistakes Florida for Minnesota?

But maybe a mentally unfit Joe Biden is an improvement on the original. The revelations from Hunter Biden’s laptop, and his former business partner, make it abundantly clear that Joe Biden in full control of his faculties is an exceptionally corrupt man. Hunter’s utter depravity provides overwhelming circumstantial evidence of Joe’s corruption: but for his ability to secure Joe’s influence, such a wreck of a man was unemployable, let alone capable of attracting billions of dollars in investments.

And more than circumstantial evidence exists. That as yet unrefuted documents found on Hunter’s computer (that it is his also undisputed), and the extensive statements of the former partner, point directly to Biden Sr.’s selling influence and access. (A neighbor in Houston has a huge sign on his fence facing Westpark: “10 Percent For the Big Guy.”)

Of course, the media has done yeoman work in suppressing this story, even playing along with the farcical “it’s Russian disinformation” bullshit. Bullshit that is so transparently bullshit that it does not warrant wasting pixels on, let alone my precious time.

If Biden does win, what stories that the media is spiking now will emerge?

And maybe that’s the plan. Hide in the husk that is Joe Biden, win election, then dispose of him via scandal or the 25th Amendment, so that the left-Deep State axis can assume power, by false and deceptive means.

My gravest fear right now is civil unrest. It is not exaggeration to say that the nation is in a pre-revolutionary state. Many scenarios come to mind.

It is almost certain that whatever the outcome tomorrow, or in the days following, that the loser will contest the result. The left’s paramilitaries have already announced their plans for violence in the event that Trump declares victory–and prudent business people and shopkeepers in urban locations (ruled by leftists, ironically) are taking the precaution of boarding up their businesses.

A possible scenario is something along the lines of the 1876 election, in which the Democrat won a national popular majority, but the votes in two states were contested. That took months to resolve, and that resolution was deeply unsatisfactory, resulting in a cruel bargain in which African Americans in the ex-Confederacy were sacrificed.

Although febrile, that episode was largely peaceful. I doubt a months-long election dispute in the US would be peaceful in 2020-21. What corrupt bargain awaits us in December or January? What social explosion might that bargain spark?

Another scenario that could lead to massive unrest, albeit somewhat delayed–a disposal of Biden after an indecently short interval, which would reveal the election to be a fraud. This is a dark horse to bet on. Or is it a pale one?

The left-Deep State axis represents the most dire internal threat that the Republic has faced, with the exception of the Confederacy–and even that is a close call. In the battle against this axis, conventional politicians, and conventional politics, would have caved. Trump is not a conventional politician, and he hasn’t caved. Despite overwhelming odds he has battled incessantly and furiously. The very faults that even those on the right tut-tut about are arguably virtues for someone engaged in the fight that he is waging, and against the enemies he is fighting. His combination of bombast and insult and showmanship and humor is a giant FUCK YOU to a deeply corrupt system. And they hate him for it.

But it is also why Trump generates such intense enthusiasm among the great unwashed whom our “elites” (who are the worst elite ever) sneer at: look at the miles-long car and boat rallies, the campaign rallies with as many as 60,000 in attendance. Why? Trump tells the people the unwashed want to fuck off to fuck off. And he does it with gusto, and at every opportunity. At the end of the day, that intense enthusiasm spurred by a man who fights against whom they loathe–something the “elites” cannot comprehend, or are unwilling to comprehend–may be the thing that allows Donald Trump to defy the odds–and the establishment–a second time.

Raghuran Rajan is a smart guy who has done excellent and rigorus work, and is a gentleman to boot. But even such as he are capable of saying dodgy things, as in his comments to the FT on Friedman’s social responsibility article, in which he said the covid pandemic has exposed flaws in Friedman’s argument:

First, Covid-19 has threatened some companies with the extinction of shareholder value, subjecting businesses to a shock that, despite government intervention, has put their existence in question. “At this point,” Prof Rajan told me, “the best thing [a company with thin resources] could do is focus those resources on survival, because in surviving, it provides a decent job for its workers, it continues making that widget which people buy. It lives for the future.

Not all companies came into the crisis with thin resources. For the tech companies, nursing war chests replenished by tech-hungry consumers in lockdown, this should be a chance to go beyond bare Friedmanite requirements

Amazon, for instance, could “do more for its various suppliers, some of whom may be struggling small and medium business units”, said Prof Rajan. “It could find ways to provide them more credit to last through the pandemic that will get it more loyalty, because people will know it can be a source of insurance, rather than just a platform.”

. . .

This sort of action exposes the “missing part” of Friedman’s thesis, said Prof Rajan. He failed to recognise that “implicit equity stakes” — such as the commitment of a company to the partnership with its workers, suppliers or customers — are “as important, sometimes, as the explicit equity stake”

These things are missing how, exactly? Essentially Rajan is arguing that there are gains from trade to be realized to a corporation from adjusting explicit and implicit contractual terms with “stakeholders” such as workers, suppliers, and customers, in response to an economic shock like covid. But note: such adjustments would enhance the corporation’s profits, by allowing it to capture some of those gains from trade.

Indeed, according to the Friedman norm, such companies, acting as profit maximizers, would benefit not just themselves, but their workers, suppliers, and customers. Thus, rather than being some lacuna in Friedman’s framework, what Rajan emphasizes is precisely why profit maximization in the price system should be encouraged, as Friedman did. It provides an incentive for corporations to engage in mutually beneficial transactions, regardless of the underlying circumstances. That is, profit maximization guides optimal responses to circumstances, even crappy circumstances. Nay, especially crappy circumstances.

Or perhaps I should say “in the contractual system.” For what is involved here is negotiating contracts that maximize joint surplus. As Coase tells us, absent transactions costs, firms and their counterparties will do just that, and profit maximization (or utility maximization by workers, say) is exactly the engine that powers that result.

So the only way to make this critique coherent is to argue that transactions costs could somehow be reduced by reshuffling organizational forms or control rights. This Rajan does not do. Nor has anyone who burps up the term “stakeholders” and proclaims “QED!” Not that I have seen anyways.

As I said in my earlier post: if you are so smart, why aren’t you rich? Why haven’t you–or anyone else–come up with an alternative organizational form that allows the creation and capture of gains from trade that corporations leave on the table?

Indeed, the most coherent restatement of the “stakeholder” argument is that corporations have failed because they aren’t maximizing profits because they are failing to structure transactions with stakeholders that exhaust all gains from trade.

I’m tempted to cut Raghuran some slack because his remarks are impromptu statements made to reporter, rather than in an academic article–or even a blog post. But the fact that something in an FT article is far more likely to resonate than a weighty academic tome or even a not-so-weighty academic blog post arguably cuts the other way: one should be on particular guard against expressing flabby thoughts, when said thoughts may be read by millions–and hence mislead millions. And, to be honest, Raghuran’s thoughts about the errors of Friedman’s thought during times of pandemic are very flabby indeed.

In reading all these critiques of Friedman, 50 years on, I’m reminded of something George Stigler said. “It’s easy to win an argument against Milton when he isn’t there.”