Streetwise Professor

June 2, 2016

The Smelly Little Orthodoxy of Warmism, Hating Free Intelligence and Free Debate

Filed under: Climate Change,Economics,Energy,Politics,Regulation — The Professor @ 7:01 pm

One of the most disreputable tactics of those who sound alarms about anthropogenic climate change is to conscript any weather-related disaster to advance their cause. Case in point: the recent wildfires in and around Fort MacMurray, Alberta, Canada:

Experts say climate change is contributing to the wildfires raging across Canada, and the increasing frequency of such fires may overwhelm one of Earth’s most important ecosystems, the boreal forest.

In just over a week, an out of control blaze has charred more than 2,290 square kilometers (884 square miles) of land and forced the evacuation of 100,000 people from Fort McMurray in Alberta, Canada.

Dominated by conifers like pine and spruce, the boreal forest sweeps across Canada, Russia, Alaska and Scandinavia making up about 30 percent of the world’s forest cover, and absorbing a big chunk of carbon from the atmosphere.

As crucial as the boreal forest is at reducing the impact of human-driven fossil fuel emissions, it is also increasingly fragile, and expected to become hotter, drier, and more prone to fires in the future.

“Western Canada, including in particular the region in Alberta containing Fort McMurray, has warmed quite a bit more than the global average,” said scientist Michael Mann, author of “Dire Predictions: Understanding Climate Change.”

With the Arctic region warming twice as fast as the rest of the planet, climate model projections place central and western Canada in the “bullseye of enhanced warming,” he told AFP.

Michael Mann. Of course.

The past months have seen a strong El Nino which has caused anomalous weather throughout the world, and in the western hemisphere in particular. It has brought heavier than normal rains to some areas, and drought to others. My immediate suspicion was that El Nino contributed to the warm dry conditions, low snow pack, etc., that set the stage for the Alberta fires. And indeed, that’s the case.

It’s also necessary to put this in perspective. Even in normal years, there are fires in the boreal forests of Canada. Indeed, about 29,000 square kilometers burn in Canada each year. When I looked at the height of the fires, the Fort MacMurray fire had consumed about 2900 square kilometers, or about 10 percent of the annual average in Canada. This also represents about .015 percent of Canadian boreal forest area.

The fire got attention not so much because of its size, but because it occurred in a populated area (something of a rarity in that area), and one that happens to be a major oil producing center.

But the cause is too important to let facts interfere with the narrative. The fires were dramatic, and to the credulous it is plausible that global warming is to blame. So Mann et al could not let this opportunity pass.

Exploiting weather to raise alarms about climate is not the only disreputable tactic these people employ. Another is to attempt to intimidate through the legal process those who dare challenge their orthodoxy. This tactic has reached a new level in California, where a bill with the Orwellian title “California Climate Science Truth and Accountability Act of 2016” has cleared committees in the state Senate:

“This bill explicitly authorizes district attorneys and the Attorney General to pursue UCL [Unfair Competition Law] claims alleging that a business or organization has directly or indirectly engaged in unfair competition with respect to scientific evidence regarding the existence, extent, or current or future impacts of anthropogenic induced climate change,” says the state Senate Rules Committee’s floor analysis.

What does “engage in unfair competition with respect to scientific evidence” even mean? As an industrial organization economist by training, and practice, I know that the concept of “unfair competition” is slippery at best even in a straightforward economic context, and (speaking of Orwellian) that unfair competition laws have been used primarily to stifle competition rather than promote it. How unfair competition concepts would even apply to scientific debate is beyond me.

But that’s not the point, is it? The point of this law is to utilize another law that has proved very convenient at squelching competitors in the name of competition in order to squelch debate about climate change and climate policy. This is antithetical to science yet is done in the name of science: it is also a perfect example of the thuggery that the warmists routinely resort to when they cannot prevail in an open discussion.

When writing about Dickens, Orwell said something that relates to this issue as well:

It is the face of a man who is always fighting against something, but who fights in the open and is not frightened, the face of a man who is generously angry — in other words, of a nineteenth-century liberal, a free intelligence, a type hated with equal hatred by all the smelly little orthodoxies which are now contending for our souls.

The smelly little orthodoxy epitomized by Michael Mann and Kemala Harris (the AG of CA, and soon to be Senator, who is a leader of the movement to prosecute climate change dissenters) indeed hates free intelligence, and free debate. And nineteenth century liberals, for that matter.

Have the progressives (particularly in California) who shriek about Peter Theil using the legal system to go after Gawker uttered a peep of protest against the employment of the far heavier hand of the state to silence debate about climate change? Not that I’ve heard. Free speech for me, but not for thee, is their motto.

Those who claim that science is undeniably on their side should have no fear of debate, and should not feel compelled to use coercion to stifle that debate. That they do means that they lack confidence in the truth of their message and their ability to persuade. It also means that they have a hearty disrespect for the ability of the American people to listen to and evaluate that debate with intelligence and fairness. In other words, what we are seeing in California is another example of a self-anointed elite that heartily disdains the hoi polloi, believing that it is their right and obligation to use any means necessary to impose their beliefs.

This is a recipe for social strife, especially since the climate change debate is by no means the only place where this attitude is regnant. This is precisely why battle is now raging between elitism and populism. Sad to say, that battle is likely to become even more intense in the coming months and years.

 

February 26, 2014

Autocracy, Orthodoxy, and Nationality: Putin Channels Nicholas I

Filed under: Military,Politics,Russia — The Professor @ 10:39 am

The situation in Ukraine continues to be fraught.  The Rada is quite predictably having difficulties forming a government, even though every moment without one delays the country’s ability to deal with a looming economic crisis.  Many in the Euromaidan movement are deeply suspicious that what will emerge from the legislative haggling will be a case of Meet the New Boss, Same as the Old Boss.  Pro-Ukrainian Tatars scuffled and then routed a group of pro-Russian demonstrators in front of the Crimean parliament.

In other words, the typical chaos of a revolution.

Though Putin remains silent, other Russian rhetoric is vituperative and hysterical.  Most notably, the Foreign Ministry-you know, the entity that is supposed to be where suave diplomats craft high sounding language-more resembles  an agitprop outlet.  You really have to read the whole thing to get the full effect.

One thing jumped out at me:

We are deeply concerned about the actions in the Ukrainian Verkhovna Rada in terms of their legitimacy. Actually referring to the “revolutionary appropriateness” only, they are stamping “decisions” and “laws”, including those aimed at deprivation of humanitarian rights of Russians and other national minorities living in Ukraine.

There are calls to prohibition the Russian language almost fully, lustration, liquidation of parties and organisations, closing of undesirable mass media, removal of restrictions for propaganda of Nao-Nazi ideology.

The course is to suppress those, who do not agree to this, in different Ukrainian regions by dictatorship and even terrorist methods.

There are threats to Orthodox sanctities.

Note the assertion that Russians are a national minority group in Ukraine.  This lays the predicate for future Russian government intervention in the country, in a  sort of Sudetenland strategy.  Also note the invocation of “Orthodox sanctities.”

This is right out of the 1830s, the age of Nicholas I, who stood for Autocracy, Orthodoxy, and Nationality.  There it is, all in one MFA statement.

Nicholas I backed his words with bayonets and sabers, notably in Poland and Bessarabia.  Today Russia rattled sabers, putting troops amounting to about one-third of the Russian Army on alert in the western part of the country.  Notably, the troops included “airborne troops and long-range military transport aircraft,” the very units that would be used to intervene in Ukraine.

I don’t believe anything is imminent.  But nor do I believe Defense Minister Shoigu’s risible statement that the alert has nothing to do with Ukraine.  Using alerts and maneuvers is a time-tested way of sending signals about capabilities and intent.  That’s what is happening here.  It is a way of showing that there are forces to back up the Foreign Ministry’s words.

Given the chaos in Ukraine, Putin has many measures short of war that he can use to influence the situation.  Economic pressure: yesterday Russia invoked health fears relating to African swine flu to threaten an embargo on Ukrainian agricultural imports.  The Russians cast doubt on the ability of the Ukrainian government to maintain safety standards in light of the ongoing chaos.  Gas.  Bribery.  Fomenting civil strife in Crimea and other areas with large populations of Russian speakers.  Fomenting conflict within the Rada (never a difficult task: given the prevalence of fisticuffs there Klitschko should feel right at home).

I anticipate that Russia will engage in a full-spectrum campaign using all of these measures to achieve the long term project of bringing Ukraine to heel.  Military action is not imminent, but the creation of the predicate for intervention and the demonstration of the ability to undertake it is clearly intended to intimidate Ukraine, and to keep it from getting too close to the west and to deter it from acting too aggressively in response to other Russian provocations.

Remember that Russia did not roll into South Ossetia or Abkhazi precipitously.  That only followed a long campaign of active measures within these regions, blood curdling rhetoric directed at the Georgian government, political operations within Georgia, and a steady campaign of military measures short of war (e.g., shooting down Georgian drones, building military roads and railroads to the border of the disputed territories).

Anticipate similar pressures here.  Ukraine is in for a long battle against an implacable foe, one who is no doubt all the more determined to avenge the humiliation suffered at the very time he expected to bask in the glory of a successful Olympics.

June 20, 2011

What Will the Russophiles Think of Me Being Called Orthodox?

Filed under: Commodities,Economics,Energy,Politics,Regulation — The Professor @ 9:16 pm

Apparently “orthodox” is the sneer du jour.  A couple of weeks back I noted that IMF candidate Agustin Carstens was being denigrated as orthodox and therefore unfit to head the IMF.  And today, in a story about the Singleton oil market study I blogged about last week, Reuter’s John Kemp dismissed me, Scott Irwin, and Jeff Harris as a cohort of orthodox economists who dismiss the role of financial speculators in affecting commodity prices.

I’m only PO’d because Kemp listed Irwin first.  That wounds me to the quick.

Apparently I’m a member of an “establishment”–when do I get promoted to mastermind of an evil cabal?–that Svengali like, induced the CFTC, IOSCO, the FSA, the OECD, and presumably the IEA (though Kemp doesn’t mention it) to conclude that speculation had not distorted energy prices, or the prices of other commodities.

Who knew the vast influence I wield over official bodies world wide? I certainly didn’t.

Regarding orthodoxy, my views are certainly not considered orthodox, on say, Capitol Hill.  Or on the Champs Elysee.  Or in Brussels.

No, “orthodox” is shorthand for People Who Don’t Agree With John Kemp, whereas those who do are Brave Challengers of the Consensus.

Now to the substance of what Kemp has to say, such as it is.

First, as I made clear in my post on Singleton’s piece last week, I do not deny the possibility that speculation has “influenced prices,” as Kemp insinuates.  In fact, such a contention would be absurd, and Kemp is absurd for insinuating it.  What I have been on about is whether speculation has distorted prices.

Big difference, John.

There have been specific allegations that speculation has led to substantial distortions in commodity prices, particularly energy prices–by 10, 20, hell 50 percent.  That is what I have been responding to, and I stand by my contention that there is no evidence of such an effect.

Nor does anything in Singleton’s piece support such claims.

Variations in measures of speculation can have predictive power over returns–that is, they can influence prices–without implying that speculation has distorted them.  As I noted in my post on Singleton’s piece, limits to arbitrage-type stories predict that shocks to speculator balance sheets or hedger balance sheets can lead to associations between speculative activity and the drift of commodity prices.  This is perfectly consistent with a refinement of Keynes’s normal backwardation theory that Kemp identifies with the dreaded orthodoxy.  (Truth be told, I made an argument along these lines in a presentation at the FMAs in October of 2002.  And I’ve made it year after year in my PhD seminar on derivatives, in my discussions of incomplete markets.)

Insofar as the behavioral stories are concerned, yes,  they can also imply that variation in speculative activity have predictive power over returns.  They also can predict boom and bust cycles.  But it is notoriously difficult to determine whether these sorts of behavioral effects are what explains the predictive power of measures of speculation.

I would also note that purely rational storage models can also generate booms and busts.  Indeed, a rational storage model can match the behavior and time series properties of prices and inventories–I show that in my forthcoming book.  This is true for both pre-2004 and post-2004.  It is just flat wrong to say that the price and quantity movements observed in recent years cannot be reconciled with rational, fundamentals-driven models.  So the existence of commodity booms and busts–which way, way antedate the financialization of commodity markets–does not refute fundamentals-based explanations, or prove the existence of behaviorally driven anomalies.

Singleton points out–and Kemp emphasizes–a series of theoretical possibilities and some evidence that is consistent with theories that generate these possibilities–but which are also consistent with other explanations.  A very weak basis indeed to justify wholesale intervention in the markets.  Especially given the very vital role that speculation plays in achieving an efficient allocation of risk.

The behavioral theories are also not sufficiently well-developed to generate testable predictions about co-movements between prices and quantities and the dynamics of forward curves.  Predictions about quantities are particularly important.  As I’ve stated on numerous occasions, commodities are consumed in the here and now (in contrast to say, internet stocks), so distortions in prices should show up in distortions in quantities (notably inventories).  Do behavioral models predict this?  I haven’t seen any that have even tried.  If they do–the evidence doesn’t support it.  If they don’t–then why should we really care, as this would mean that speculation is not distorting consumption and production decisions?

And how can Kemp seriously say that Singleton’s paper “offers a richer and more realistic view of how real markets operate than the rather stylized formulations that have been popular with the old guard”?  [And who are you call old, boy?]  Has he ever looked at any of these behavioral models?  You want to see stylized?  Case in point–the Hong-Yogo model, which reverse engineers an extremely contrived–actually, artificial–behavioral setup that mimics the empirical result already produced.  Sorry, but that’s not science: model first, then test.  Moreover, as I just noted, these behavioral models don’t make any predictions about quantities, forward curves, and other crucial aspects of commodity markets.  How can you possibly consider models that don’t make predictions about such crucial variables “richer” and “more realistic”?  Especially given that these quantity predictions are what is really relevant in determining the welfare effect of speculation.

Contrast that to my work on commodities.  I take a rigorous model, derive (computationally) its implications for prices, forward curves, quantities, quantity-price comovements, volatilities, and forward price correlations, and take those predictions to the data.  I reject many of the implications of the models, and use those rejections to help understand the true richness of how prices behave.  If I’m orthodox–that’s the sense in which I am orthodox.  I’m not wedded to the models.  As I say in the introduction of the book, I look to break the models and to learn from the pieces.

And as I noted in my post on Singleton’s paper, the policy implications of the behavioral theories are ambiguous–and certainly don’t support a role for position limits on large speculators.  As I noted, if you overlook the cheesy model and believe the Hong-Yogo behavioral interpretation of their empirical evidence, behavioral effects have long been present in these markets–long before financialization.  What’s more, the behavioral models suggest that prices depend crucially on the composition of traders in the marketplace.  Policymakers can’t micromanage that composition to achieve more “rational” pricing through blunt tools like position limits.

So as I predicted in my Singleton post, people would seize on his study to advance their regulatory agenda, even though it provides only flimsy, equivocal support for that agenda.   Not surprisingly, John Kemp is leading that parade, giving further proof to  the aphorism that a little knowledge is a dangerous thing.

July 25, 2021

Anglosphere RIP

Filed under: CoronaCrisis,Politics — cpirrong @ 3:45 pm

Post-911, the idea of the “Anglosphere” gained some traction. The English speaking nations, the UK, US, Australia, Canada, and New Zealand, were held out as the last bulwarks of liberty in the world.

This idea has not aged well. In the Age of Covid, the Anglosphere is now the cutting edge of repression and fascism and active hostility to the ideals of individual freedom that were allegedly its hallmark.

Look at them.

Australia: entire states are locked down–hard–in response to single digit “case” numbers. People who protest are set upon by truncheon and club wielding police.

Canada: adopting a panoply of highly restrictive policies and restrictions on free speech.

New Zealand: locked down hard for months. And recently, the Skeletor-resembling PM instructed the proles that the government was the “sole source of truth.” Oh thank you so much Big Sister! Governments have been so so so omniscient in the past 20 months!

UK. Locked down until just recently. The “Freedom Day” (19 July) is a simulacrum of real freedom because numerous restrictions remain, and even that has freaked out the establishment, including most notably the Orwellian-named “SAGE.” Even though case numbers have declined since the lockdown was eased, SAGE is issuing dire warnings. No doubt because they have been wrong so often that they need to cover their sorry asses by keeping up the scare.

US. There are some bright spots, including Florida and Texas, but the “elite” is panting to reimpose mask mandates (to make us pant) and forced vaccination and lockdowns because Delta variant. Or something.

I’m not anti-vax. I’m vaccinated. But the externality argument is so abused. The costs and benefits of vaccination are almost completely internalized.

(Although ironically I bet dimes to donuts that Jim Carey and Jeff Daniels (a neighbor for several years) would love to mandate vaccines.)

Australia is particularly sad, and almost inexplicable to me. It used to be a bad ass, fuck-it-all kind of place. A similar ethos to Texas. But not now. Incredibly authoritarian, with a largely craven and submissive populace. Crocodile Dundee? Watching that is like Charlton Heston finding an almost completely buried Statue of Liberty. A relic of a dead era.

Continental Europe–the supposed antithesis of the Anglosphere–has actually demonstrated more of the spirit of liberty than any English-speaking country. Check out today’s protests in Paris.

A la Bastille! (And note that in Louis XVI fashion, Macron is doubling down. I hope the past is prophecy.)

No. The vaunted Anglosphere has proved to be ruled by authoritarians and populated by submissive and insanely risk averse cattle. It would be wrong to say that the ideal of freedom is dead. It is more accurate to say that the ideal of freedom is reviled, at least by the elites–and far too many of the non-elite have proved to be ovine in their submissiveness to their soi disant (but not really) betters.

Speaking of things that did not age well. This from a decade ago is a (sick) laugh:

I do not mean that English speakers act any less extravagantly than speakers of other tongues, but rather that English generally acts to tether thought to the empirical world. This is something Bishop Thomas Sprat dilated on in his History of the Royal Society (1667): “The general constitution of the minds of the English,” he wrote, embraces frankness and simplicity of diction, “the middle qualities, between the reserv’d subtle southern, and the rough unhewn Northern people.”

English, Bishop Sprat thought, is conspicuously the friend of empirical truth. It is also conspicuously the friend of liberty. 

If there is one thing that is conspicuous about the events of the past 19 months it is that for all of the strident commands to “follow the science!” public policy has been completely untethered from “the empirical world.” Instead, an arrogant priesthood has imposed a cultish, unscientific, evidence-free orthodoxy and branded as heresy any skepticism–even after the skeptics have been proved right time and again. Empirical reality is not just ignored–it is anathematized.

Perhaps you can explain the collapse of the Anglosphere to its infection by Continental ideas (Derrida, Foucault, etc.). But that is merely by way of a post mortem. The fact is that practically speaking, the Anglosphere is as dead as Hector. Perhaps “palimpsests of freedom” (to use Paul Johnson’s chapter title from Modern Times) still exist in the English speaking world, but they are under siege and definitely not in command. Enemies of freedom–the antitheses of traditional “English liberties”–are in the saddle and wielding the whip.

July 21, 2021

Travis Putin

Filed under: History,Military,Politics,Russia — cpirrong @ 1:28 pm

Vladimir Putin penned–or at least posted–a long disquisition about how Russia and Ukraine really, really, really belong together. They are meant for each other. They are one soul ripped apart in a great historical injustice.

The most charitable way I could characterize it is that it reminds me of Pepe LePew (Putin LePew?) trying to sweet talk a reluctant female feline into falling for his historical charms. But that would trivialize what is really a weird and creepy and threatening missive. More Travis Bickle than Pepe LePew.

Putin portrays Russia and Ukraine as being spiritually connected and wrongly separated by malign Western actors (the Lithuanians, Poles, and Austrians at one time, the EU and US today), and misguided Bolsheviks who dismembered Holy Russia. Thus, they belong together. They need to be together. They are a single soul separated by cruel fate, who need to be reunited. And Putin is just the man for the mission.

But this begs the question: why don’t Ukrainians feel the same way? If the historical and spiritual ties are so deep, so mystical, why aren’t most Ukrainians equally desperate to be reunited with their Russian soulmate?

Putin’s answer, such as it is, is that malign forces–again Western–are conspiring to keep them apart. They have bewitched Ukrainians, or somehow fascistically intimidated them (which seems like a clear case of projection). Moreover, the underlying Western purpose of separating Ukraine from its spiritual kin is to attack Russia itself. And thus, Russia is justified in using force to unite Ukraine and Russia–it is an act of self-defense!

Yes, Putin and Travis Bickle have a lot in common. The paranoia and obsessions and delusions in particular. Except Travis only had Smith & Wessons and Walthers, not tanks, Buks, and nukes.

Putin goes on and on about how history, over a thousand years of it, means that Ukraine and Russia are destined to be as one. This argument is apparently quite persuasive to him, but not to most Ukrainians. Nor is anyone else in the world likely to be persuaded. Such historical arguments–especially ones stretching back to well before the First Millennium–are almost never persuasive or even plausible to those not steeped in that history. What seems self-evident to Putin seems bizarre to anyone who does not already believe in the Third Rome view of history. And especially so to anyone who views Russia as a historically predatory, imperial power.

Which would include Poland. Yes, Poland attempted to exploit Russian (Muscovite, actually) weakness during the Time of Troubles, but examining the sweep of history one must conclude that Poland has been far more the victim of Russia than the victimizer thereof.

Poland comes in for much criticism from Putin, but look at the benign way that he characterizes Russian connivance at the dismemberment of Poland:

After the partitions of the Polish-Lithuanian Commonwealth, the Russian Empire regained the western Old Russian lands, with the exception of Galicia and Transcarpathia, which became part of the Austrian – and later Austro-Hungarian – Empire.

The partitions just happened, I guess. And for someone who emphasizes the importance of language and religion, it is striking how Putin somehow happens to overlook that the partitions brought in Polish-speaking Catholics into the Russian Empire when it “regained the western Old Russian lands.” I would love to hear historian Putin’s explanation of say the January 1863 insurrection in the Polish parts of “Old Russian lands.” Somehow he left that out. Huh.

Indeed, reading this, I would say that not only Ukrainians should be put on notice as to Putin’s ill intent: Poles should be as well.

Another example of Putin’s selective history:

I would like to dwell on the destiny of Carpathian Ruthenia, which became part of Czechoslovakia following the breakup of Austria-Hungary. Rusins made up a considerable share of local population. While this is hardly mentioned any longer, after the liberation of Transcarpathia by Soviet troops the congress of the Orthodox population of the region voted for the inclusion of Carpathian Ruthenia in the RSFSR or, as a separate Carpathian republic, in the USSR proper. Yet the choice of people was ignored. In summer 1945, the historical act of the reunification of Carpathian Ukraine ”with its ancient motherland, Ukraine“ – as The Pravda newspaper put it – was announced.

Yes, elections held in the presence of Soviet tanks and bayonets and NKVD executioners are clearly an expression of the will of the people.

And if we want to go all historical, it is also sickly amusing that Putin’s tract was published 550 years to the month after Muscovy won a decisive victory that culminated it its subjugation of Novgorod the Great, which sort of harshes the entire image of the deep fraternal, linguistic, historical, and spiritual bonds between Russian peoples.

The question is whether Putin intends to reprise Ivan III, this time in Ukraine. The threatening tone surely suggests this. He gives the impression of trying to persuade Ukraine to embrace Russia willingly. But he is abundantly clear that should his advance be rejected, it is due to the fact that the country is ruled by local stooges of malign Western powers who threaten Russia, hence reunification may only be accomplished by force, which is (according to him) fully justified and which he is willing to use.

Empty threat or real? It would be unwise to discount it. Operationally and logistically, it would be difficult, and would likely result in a stalemate and vicious guerrilla warfare (as occurred in the aftermath of World War I during the Russian Civil War, and in the aftermath of WWII) that could well stop any Russian drive well before it reached Kiev/Kyiv. It would sharply increase tensions between Russia and the West, far more than the Crimean anschluss did. Poland and the Baltics–Nato members–would clearly consider such an invasion a mortal threat. This sharply raises the odds of a Russia-Nato confrontation.

But despite these obstacles and risks, Putin is clearly obsessed with Ukraine. He has been throughout his presidency. He clearly views the 2004-2005 Orange Revolution and the 2014 Maidan as devastating personal defeats. Megalomania and the knowledge that he is aging and thus doesn’t have long to achieve what he believes to be a historical mission may push him to act, sooner rather than later.

Ukraine is hard to love. It is the most Sovok of the Soviet successor states–a painful illustration of how decades of Soviet oppression wreaked havoc on psyches and institutions. Some of Putin’s criticisms of it have more than a grain of truth. But that does not mean that it should be consigned to Putin’s tender mercies. Especially since there is no guarantee that Putin’s pining for Russian lands will stop in Ukraine.

The situation is fraught. A man obsessed with a messianic mission, be he Travis Bickle or Vladimir Putin, is not easily deterred.

January 9, 2021

The Tyrannical Reaction to the Blundering “Insurrection” at the Capitol Means That Worse Is to Come

Filed under: Civil War,Politics — cpirrong @ 5:25 pm

My main reaction to Wednesday’s debacle at the Capitol is the same as Fouché’s to the murder of the Duc d’Enghien: It was worse than a crime: it was a blunder. As “insurrections” go, it was rather farcical, with limited instances of real violence the exception, and theater of the absurd the rule. As a result it was utterly ineffectual in achieving any object. And I use the passive tense deliberately, because it is rather hard to identify any actual person with an objective.

But that is a major reason why this was such a colossal blunder. It was utterly aimless and pointless and ineffectual and barren of any result–except for giving the governing class a reason to begin a ruthless purge of anyone in opposition to it. Anyone who is opposed to the governing class (which extends far beyond government, and includes large swathes of corporate America) is equated to those very few who rampaged through Nancy Pelosi’s office, even if they were nowhere near DC at the time. They are deemed seditious insurrectionists and “domestic terrorists” who must be excised from public life–including in particular participation in social media–and whose private employment is at risk.

This is affirming the consequent on steroids, but that fallacy is one of the most useful tools of political propaganda. And the governing class is using that tool with utter ruthlessness. Those who do not express complete fealty are at risk of being destroyed. And to be honest, expressing fealty today is likely to be insufficient, if one is deemed to have committed some sin against orthodoxy in the past.

This has been a judo move that turned Trump’s biggest strength–his ability to engage the passions of millions of people–into his greatest liability. He should have understood the risk, but so consumed was he by his increasingly Quixotic efforts to overturn his election loss that he failed to see it, and in fact fell right into the trap–that is his blunder. And in so doing he has inflicted a grievous harm on his most fervent supporters, and those not so fervent yet broadly aligned with him in their opposition to the governing class.

This is a blunder from which recovery will be nearly impossible, at least for some years–or until the governing class commits a similarly egregious blunder.

The governing class is not going to miss this opportunity to bludgeon its adversaries–and indeed, the campaign to do so ramped into high gear after the Capitol was cleared. It continues to intensify, led by the governing class’s Praetorian Guard: the social media and tech companies.

The most striking–and revealing–phenomenon is the stark contrast between the governing class’s reaction to this spasm of mob violence, even as highly limited in duration and extent as it was, to the epidemic of mob violence that lasted for months from sea to shining sea starting in May. I’m so old that I can remember when public protest–including protest that descended into destruction and death far more extensive than what occurred in DC on 6 January–was the highest expression of patriotism, and the most authentic expression of the discontent of the dispossessed, oppressed, and disenfranchised.

But that’s because those protestors were advancing the interests of the most ruthless part of the governing class, whereas these protestors are expressing their contempt for the governing class.

Who, whom, you know. It’s not the fact or protest or the intensity or violence thereof that matters: it’s who is protesting against whom, and why. The attempted assault on the White House in June, let alone the consummated assault on a Minneapolis police station or the nightly attacks on Federal buildings in Portland, were far more intense and angry and destructive than what happened on Wednesday. But to the governing class, those are legitimate targets. They are not, and since the rampage at the Capitol targeted the governing class, it is beyond the pale.

The reaction is what one would expect from tyrants, and indeed the entire episode is symptomatic of tyranny. Not the tyranny of Trump, but the tyranny of the governing class. As I’ve written for years, Trump is a symptom, not a cause. His victory, and his popularity among a massive number of Americans, stems directly from his opposition to the governing class. Trump cannily recognized the widespread discontent, and tapped into it. His populism reflected the undeniable fact that a large fraction of the people were–and are–mad as hell at those who presume to rule us–with very good reason. Populism is almost always a consequence of government failure–which is why governing classes hate it so much.

This discontent has been stoked to a fever pitch by the unrelenting campaign against covid, which has saved pitifully few (if any) lives, but destroyed many livelihoods and deprived most of us the things that make life worth living. Further, the highly dubious outcome of the election–and perhaps more importantly, the phalanx-like opposition of the governing class (including notably the Republican establishment) to any investigation of this dubiousness–has fueled the fires further.

In sum, there are a large number of desperate and angry people who believe the governing class despises them, and is indeed at war with them. So why should anyone be surprised that this desperation and anger has resulted in mob action? No one–least of all those who rationalized the Floyd protests (and riots) as a natural response to desperation and anger.

And to be frank, I am pretty sure that the ruling class is not surprised. They would never acknowledge it, but they know they hate these people, and are hated back in return. Which is precisely why they are using this opportunity to try and crush those that they hate, both out of a self-defense reflex, and for the pure pleasure of vanquishing one’s foes.

This is what tyrants do. They believe that their power and legitimacy is non-negotiable and indisputable, and that anyone who challenges the one and questions the other is seditious and deserves to be crushed. The left makes a big deal about demonizing “The Other.” Well, to the left and the governing class which is largely left, The Other is, well, probably you. And you are being demonized, and that demonization is used to justify the imposition of coercion on you.

Their expectation, like that of all tyrants, is that if they exert enough force, their opponents will be crushed or cowed into abject submission. Sometimes that is correct. But often it has the exact opposite effect, and exacerbates tension and hostility to such a degree that there is a revolutionary convulsion.

In other words, we are living in pre-revolutionary times, and the reflex of the governing class to double down on coercion when challenged is greatly increasing the odds that soon the prefix “pre-” will be obsolete. So convinced of its righteousness, rectitude, and right to rule, the governing class is failing to ask why so many hate them so much–they just dismiss them as rubes and rednecks and racists and religious freaks. And by failing to ask the question, they greatly increase the odds of getting an unsolicited, and very violent, answer to the question they should ask but haven’t.

In the covid months I’ve let my beard grow out, mainly as a statement about how the restrictions on normal life in 2020 rendered irrelevant certain social conventions. When someone commented rather snarkily about that, I responded “well, if we are headed for a civil war, I thought I should look the part.” If that sardonic response was comprehensible when I made it a few months ago, it is all the more so after the events of the past weeks, and last week in particular.

There are other things about the Capitol catastrophe (catastrophic much less in its direct effects than its fallout) that deserve attention. Such as: why was it even possible that a rather inchoate and spontaneous mob was able to get access to the Capitol? But all that must be based on speculation colored by one’s pre-existing beliefs. The fact is that it did happen, and it will have consequences. It is those consequences that we must focus on, as I’ve tried to do here. And I am increasingly convinced that the most important consequence will be a grave escalation in internecine conflict as the governing class attempts to suppress those millions who already feel oppressed by their rule, with the possible (and indeed, likely) results being frightful to contemplate.

October 11, 2020

Facebook (and Twitter) Delenda Est

Filed under: Economics,Politics,Regulation — cpirrong @ 5:42 pm

I sent to a friend an article describing how WHO–yes, that WHO–is telling governments not to utilize lockdowns as their primary means of combatting Covid-19. I sent it via Facebook Messenger, because my friend lives in a rural area and that is often the only reliable way of transmitting messages: text and email often don’t work. The friend replied that the link didn’t work. I sent it via email, and it did work. Said friend then tried to post it to FB–but FB refused to post it.

So obviously, FB is censoring this information: it is a non-link as far as FB is concerned, consigned to the memory hole.

I’m so old that I remember when Facebook (and Twitter) censored articles that contradicted WHO. Now Facebook is censoring articles that contradict Facebook. Specifically, Facebook’s smelly pro-lockdown orthodoxy–even when that contradiction comes from WHO.

Facebook obviously loves lockdowns, and is going to do its damndest to prevent you from learning anything that might contradict that position.

This episode–and myriad others over the past couple of years–demonstrate that social media as it exists, and specifically as embodied by Facebook and Twitter, need to be subjected to common carrier non-discrimination regulations along the lines of what I advocated over 3.5 years ago.

There are the simplistic minded who claim that since these are private corporations, they should not be regulated. Thereby totally ignoring what I point out in my 2017 post: even in the halcyon days of classical liberalism, market power was understood to provide, under some circumstances, an exception to the general rule that private entities should be permitted to operate without restriction from government.

Some non-simplistic people–notably Richard Epstein, whose writings triggered my idea of applying common carrier regulation to social media–argue that the conditions for the exception do not hold. Even if Facebook and Twitter (and Google/YouTube, etc.) have dominant positions now, those positions are contestable. History suggests that market dominance is ephemeral, and a company that abuses its dominance will be displaced. More broadly, Schumpeterian creative destruction will, before long, consign current social media behemoths to the ash heap of history.

But how long “before long” is matters. It could be that in the long run, we are not just dead, but unfree. Or at least have suffered a grievous blow to our liberties, lost election by election.

In my opinion, Epstein underestimates the enduring impacts of network effects. I have studied exchanges–a classic beneficiary of network effects–for decades. I know how resilient they can be. Maybe Facebook (and Twitter, and Google/YouTube) will indeed be supplanted in 10 years. Hell, even 5. Hell, even 23 days.

What damage can they do in the meantime?

The suppression of information and opinion for days, let alone months or years, can have devastating effects. When the stakes in elections are so high, the distortion of the exchange of ideas and information that result from Facebook’s and Twitter’s and Google/YouTube’s censorship have very real consequences, even if someday, somehow, they will become historical curiosities.

Let’s just do some basic cost-benefit analysis. Lockdowns have caused the losses of trillions of dollars (and euros and yen and rubles and lira and what have you) of economic loss. Actions (such as Facebook’s censorship) that increase the likelihood of re-imposition of these lockdowns by even a small percentage can cause tens of billions, and perhaps trillions in economic harm. (I recall Ronald Coase’s statement that an economist can pay for his lifetime salary by delaying the imposition of a bad regulation by even a day.)

What is the cost of requiring social media platforms to operate on a principle of non-discrimination, and therefore allow supposedly sentient beings to sift through competing claims, rather than substituting their own judgments? Judgments, I might add, that are hardly disinterested. Do you think for a moment that Facebook and the other social media giants have not benefited from having people stuck at home, with little to do?

This issue also speaks to my post from a few hours ago. Yes, Zuckerberg (and other decision makers at Facebook) and Jack (Chase the Dragon) Dorsey and Sundar Pachai are arguably enhancing profits through their censorship policies (by creating a bored group of consumers with too much time on their hands), but they are also indulging their own personal preferences: to the extent that the latter is true, they are violating Friedman’s injunction. Moreover, since they have largely made the state their creatures, they can enhance their power (and wealth) by exercising huge influence over the transmission of information, and hence over public debate, and do so in a way that enhances their power, profits, and the achievement of their ideological goals. (Unpacking all these things is not easy.)

Meaning that actual policy and regulation are likely to deviate grotesquely from any “public interest” standard. Public interest would dictate, at the very least, subjecting Facebook et al to very limited restrictions, such as non-discrimination requirements. Requirements that they operate as open platforms (which could benefit from network effects, btw) and not discriminate or censor on the basis of viewpoint. But for myriad reasons, these social media entities view such restrictions as an anathema, and political economy therefore suggest that such restrictions will never be imposed.

Which makes it tragic, to say the least, that those who claim to advocate liberty shrink from constraining its most deadly enemies.

September 26, 2020

Critical Theories: The Fatal Conceit Redux

Filed under: Economics,Politics — cpirrong @ 1:37 pm

While reading through various things on Critical Race Theory (and Critical Theories generally) I had a flashback to my undergraduate days in the Social Science Core at the University of Chicago. (No, I’ve never done acid, but I think that reading Critical Theory has the same effect on the brain.)

The incident that came to mind was from the week when Emile Durkheim’s Rules of Sociological Method was the assigned reading. The prof assigned an essay that asked the students to critique a statement to the effect that Durkheim’s methodology was flawed because it “reified” society. That is, it made society a thing, that acted independently and autonomously on individuals.

In retrospect, to the extent that I recall it, my essay was (understandably) sophomoric. Only as my education–and particularly my self-education–proceeded did I come to realize a fundamental divide between ways of thinking about society, one of which reified it, one of which did not.

In particular, a couple of years after my Soc Core course, I read Sowell’s Knowledge and Decisions. Then, shortly after, I did a deep dive into Hayek. Both were intensely–and persuasively–critical of the idea of “society” as something real that acted on individuals. Sowell wrote of this use of the word (and concept) of society as metaphorical: it metaphorically anthropomorphized society. More trenchantly, he referred to the “animistic fallacy,” in which all outcomes were willed by some entity, be it a god, or “society.”

In contrast, Hayek–and Sowell–emphasized that social outcomes emerge from the complex interactions of individuals acting to achieve personal, not collective, aims. Society and social norms and collective outcomes generally are an outcome of a process, not an actor in the process, let alone the dictator thereof. Hayek emphasized a quote by the Scottish Enlightenment philosopher, Adam Ferguson: things that are “the result of human action, but not the execution of any human design.” That is, humans acting according to their own lights in pursuit of their own objectives interact in ways that produce collective outcomes that no one intended. This is the idea of “spontaneous order” or “emergent order.”

The alternative view is that orders are the creation of society, or some group in society. That’s reification.

In a nutshell, the divide is between methodological individualism, and methodological collectivism. The methodological divide in many respects reflects a geographical one, between Continental Europe on the one hand, and the British Isles (notably Scotland) on the other. Rousseau’s “popular will,” for example, is a collectivist idea that is the taproot of much continental theorizing that followed. (Durkheim being French, as an example.) In contrast, the Scottish Enlightenment thinkers (not just Ferguson but Hutchinson and Hume and Smith and others) were theorists of spontaneous orders which emerged unintended from the interactions of individuals.

Critical Theories are inherently collectivist, and reify society–or, more often cabals of the powerful within society–that act independently, as a deus ex machina, to determine/dictate social outcomes.

This is best illustrated by the rather monotonous use of the trope that “X [race, gender, etc.] is a social construct.” This implicitly posits an architect or builder (“society”) that actively and intentionally constructs something. In most modern critical theories, this architect/builder is “the powerful” which through some alchemy or mesmerism determines the beliefs of the non-powerful, thereby cementing their power. The theory is explicitly animistic: it says that social outcomes are the product of deliberate human choices and decisions. Someone willed, say, racism into existence, in order to advance that someone’s interests.

To a devotee of Sowell or Hayek, this is a metaphor, an example of the animistic fallacy. But to critical theorists, it is neither metaphor or fallacy: it is reality.

Not surprisingly, the intellectual roots of critical theories are Continental, not British, let alone Scottish. The family tree is tangled, but its roots are on the Continent, and Rousseau and Marx are prominent ancestors. Ferguson and Smith are decidedly not: indeed, they are mortal enemies.

Thinking about this brings to mind an aphorism, which I think I first read from Sowell, but for which I cannot find the exact source. In any event, it’s not original to me, but I think it is on point. My paraphrase: “Economists study how people choose: sociologists believe people have no choices.” Instead, society chooses for them. I would expand this to say that (some) economists explore the implications of individual choices for collective outcomes.

A Monty Python skit (the Dead Bishop on the Landing bit) also comes to mind:

Voice of the Lord: The one in the braces, he done it!

Klaus: It’s a fair cop, but society’s to blame.

Detective: Agreed. We’ll be charging them too.

My strong view is that Critical Theories are fundamentally flawed because they are bad social science. The reification of society–the deeply rooted animistic fallacy–that these theories embody is profoundly wrong, methodologically and empirically. This original sin is amplified by the superstructure of pseudoscience, namely the non-refutable nature of Critical Theory’s claims (something I’ve written about before), that rests upon these faulty methodological foundations.

These fundamental flaws would be of little moment if the smelly orthodoxies of Critical Theory were purely a matter of academic debate. But they are not. Following one of their intellectual ancestors, Marx, Critical Theorists believe “philosophers have only interpreted the world in various ways; the point, however, is to change it.” Critical Theorists want to change the world, in the worst way. Their march through the institutions has been aimed at transforming our lives fundamentally.

This is acutely dangerous because the fundamentally flawed belief that social outcomes are–and hence can be–engineered implies that social coercion by a powerful elite is ubiquitous. The corollary (which is actually an example of another fallacy, namely Hume’s is-ought fallacy) is that they should be the powerful elite that coerces in order to overturn injustices imposed by the powerful to achieve utopian outcomes.

To reprise another Python bit: “Come see the violence inherent in the system”:

Dennis (Michael Palin) is succinctly expressing the essence of Critical Theory. The powerful (personified by Graham Chapman’s King Arthur) rule “the system” (society) through violence. The Critical Theory gnostics believe that they are uniquely endowed with the ability to diagnose this systemic coercion (systemic racism, anyone?), and that they are justified in using violence or subversion or other forms of coercion to overthrow it.

This has been tried many times. It has always–always-ended in misery and death. Often mass death.

Critical Theories are therefore a more modern example of what Hayek called “the fatal conceit.” The problem is that “fatal” is often literal, not merely metaphorical. Since Critical Theorists are not content merely to theorize, but theorize to justify and take action, they must be fought, to the last ditch.

June 11, 2020

Will Miracles Never Cease? A Voice of Sanity–From Berkeley

Filed under: Civil War,History,Politics — cpirrong @ 5:54 pm

Here is a powerful “UC Berkeley History Professor’s Open Letter Against BLM, Police Brutality and Cultural Orthodoxy.” Let that sink in–a letter from a Berkeley history prof against “BLM . . . and Cultural Orthodoxy.”

Powerful, but understandably–and sadly–anonymous. How many times have you been told we have to have a “conversation about race.” That’s a lie. Anybody saying that doesn’t want a conversation. They want to deliver a lecture. A monologue. And for you to listen, nodding in assent, preferably on your knees.

Here is a person who makes a sincere effort at having a thoughtful conversation, but knows that s/he cannot do so openly except at professional and personal peril.

You should read the entire thing, but I will highlight the most important point:

The claim that the difficulties that the black community faces are entirely causally explained by exogenous factors in the form of white systemic racism, white supremacy, and other forms of white discrimination remains a problematic hypothesis that should be vigorously challenged by historians. Instead, it is being treated as an axiomatic and actionable truth without serious consideration of its profound flaws, or its worrying implication of total black impotence. This hypothesis is transforming our institution and our culture, without any space for dissent outside of a tightly policed, narrow discourse.

Exactly right.

I will go further. The theory of systemic racism is quintessential pseudo-science, an unfalsifiable hypothesis, analogous to Marxism (“scientific socialism”). To which it can trace its roots, via the Frankfurt School in particular.

It has all the hallmarks of pseudo-science that Karl Popper identified decades ago. It purports to be a theory of everything. Those who propound this theory invoke it as an explanation of virtually every aspect of society and social relations. Moreover, those who dispute it are not joined factually or logically. Instead, their disagreement is taken as evidence of proof of the theory (“if you dispute the theory it proves how pervasive racism is and that you are a racist”) just as Marxism dismissed opponents as merely representing prevailing production relationships in society, or false class consciousness, or other such drivel. Opponents are guilty of Wrongthink, to be shouted down, ostracized, and marginalized–if they are lucky.

The last thing that its proponents want is that it “should be vigorously challenged by historians.” Or anybody else for that matter. Those who challenge the revealed truth are heretics, and must be treated accordingly.

Of course it is the current fashion in academia, and among the intelligentsia. But, as Orwell trenchantly said, “Some ideas are so stupid that only intellectuals believe them.”  My modification: “Some ideas are so malign that only intellectuals believe them.”

This has become a new secular religion, like Marxism. And like traditional religions, it has saints and heretics, and especially hell.

Because the theory is unfalsifiable, it is a fool’s errand to argue against it, factually or logically, at least to the people who propound it or claim to believe it. I know many people–smart people–who make gallant efforts to do so. Factually and logically they are persuasive. But attempting to falsify factually and logically an unfalsifiable and logically defective theory is futile, and only brings the furies down on your head. As the Berkeley history prof (an assistant prof, I’m guessing) clearly understands.

Further, note that when it comes to concrete policy choices and decisions, the game is rigged. If you buy into “systemic racism”, no mere reform of a police department or voting procedures or what have you is adequate. The frenzy unleashed on hapless Minneapolis Mayor Jacob Frey shows that. If you are not with the Jacobins 100 percent, you are an enemy.

Which means that the only prescription acceptable to those who actually believe this theory (or are smart enough to not believe it, but find it politically useful) is a complete revolution in our social relations, our economy, our government, and every institution public or private. No half measures are acceptable. No 99.9 percent measures are acceptable.

This in part explains the appeal of this theory to intellectuals and academics. They like all encompassing, gnostic theories and explanations. (See Thomas Sowell’s indispensable A Conflict of Visions for a trenchant analysis.) Intellectuals also fantasize about being in power, and deeply resent not having it.

The honest advocates of this theory will have no dispute with that: they forthrightly advocate a complete destruction and then reconstruction of society, from top to bottom. Because they think it is “systemically” rotten.

Because such attempts have always worked out great, right?

The iconoclasm and vandalism we are seeing is testament to the totalitarian, millenarian vision. Every monument has been desecrated (including a monument to black soldiers who fought in the Civil War) or is at risk of desecration, because it is the product of an evil past that lives on in an evil present. Year Zero calls!

The more than passing resemblance between the way that “conversations” are carried out today, and they were under the Red Guards in the Cultural Revolution, is further evidence. You must recant every wrongthought and embrace Newthink, or you will be destroyed.

The perversity of all this is too much. The consequences are utterly foreseeable, and dire. Most importantly, realization of only a trivial portion of this vision would hurt most the people whom are the supposed beneficiaries.

Case in point. The Chicago Police basically abandoned most neighborhoods in Chicago during the last weekend in May in the aftermath of the riots that wracked the city. Aldermen from minority wards were apoplectic. Even a hardcore leftist like Michael Pfleger were appalled:

“On Saturday and particularly Sunday, I heard people saying all over, ‘Hey, there’s no police anywhere, police ain’t doing nothing,’” Pfleger said.

“I sat and watched a store looted for over an hour,” he added. “No police came. I got in my car and drove around to some other places getting looted [and] didn’t see police anywhere.”

And on that weekend had the largest number of murders in Chicago’s recorded history. Given that history, that is a truly appalling statement.

Hopefully this episode is like the Ghost of Christmas Future, that will awaken people to where this is headed so that it can be stopped in its tracks. But hope is not a plan. This has to be fought, and the most important strategic move is to not fight this battle on the ground that the opponents choose–the pseudoscientific theory of systemic racism.

January 25, 2020

Riddle Me This: If All Roads Lead to Putin, Why is the Boot of US Sanctions on the Windpipes of Putin’s Pals?

Filed under: Politics,Russia — cpirrong @ 12:04 pm

If you thought the Trump-Putin narrative was put out of our misery by Robert Mueller’s drooling performance back in May, you’d be wrong. The Democrats try to resuscitate it daily: one of Nancy Pelosi’s mantras is “all roads lead to Putin.”

Adam Schiff and Gerald Nadler brought up Russia repeatedly in their drone strike of an impeachment presentation before the Senate. And by drone strike, I don’t mean something explosive, like blowing up Soleimani: I mean they droned on and on and on.

Schiff demonstrated just how little he and his ilk actually know about Russia and Putin. Schiff drew laughs when he said Trump had made a religious man out of Putin:

“‘Thank God,’ Putin said, ‘Thank God nobody is accusing us anymore of interfering in U.S. elections, now they’re accusing Ukraine,’” Schiff said.

One may question the sincerity of Putin’s public religious displays, but one cannot dispute that he has repeatedly and consistently expressed religious sentiments, utilized religious symbolism, and has attempted to increase the role of the Russian Orthodox Church in Russian life. All long before Donald Trump was even a candidate. But apparently Schiff and the idiots who laughed with him (rather than at him) have a mental image of Putin as a godless commie. But we’re supposed to take their alarums about Trump and Putin seriously.

This continuing attempt to bring the Trump-is-Putin’s-puppet narrative back to life is utterly futile. They would have better luck giving CPR to King Tut’s mummy.

It is futile because it is completely untethered from reality. Trump administration policy towards Russia has been as harsh, or harsher, than Obama administration policy (even after the farcical “Reset”). Nordstream II is one example. Perhaps the best example is the suffocating sanctions that have been imposed on some of Putin’s inner circle and closest friends.

My friend Ivan Tkachev, a journalist at RBC, has been writing about the sanctions issue. This recent piece looks at the implications of the Finnish court decision against one of Putin’s closest friends, his judo buddy Boris Rotenberg.

If you aren’t familiar with it, RBC is one of the last–if not the last–major independent news outlets in Russia. It is definitely not a Kremlin organ, or a monkey to an organ grinding Putin. Putin tolerates it, as many canny authoritarians do, because he wants information that comes from outside the echo chamber. RBC is supposedly at the top of Putin’s reading pile every morning.

As an illustration of Ivan’s independence–and courage–he put idiotic western journalists (who swallowed the Sechin/Rosneft/Putin line) to shame in his coverage of the farcical Rosneft “privatization.” (I made a modest contribution to Ivan’s reporting, but I did it from the safety of Houston–not Moscow.)

So Ivan is not one to carry the Kremlin’s water, or that of oligarchs like Rotenberg, by exaggerating or distorting the severity of the Trump Treasury Department’s sanctions. Read the article, and you see that this sanctions regime places a heavy boot on the windpipe of people like Rotenberg, Deripaska, and Viktor Vekselberg:

2. It turns out that Russian oligarchs blacklisted under the US sanctions regime are cut off from the entire Western financial system, not just the American one. There are many examples of this ‘toxic’ extraterritorial effect of US secondary sanctions. For instance, Vekselberg’s and Oleg Deripaska’s frozen bank accounts in Cyprus; frozen dividends on Bank of Cyprus shares owned by Vekselberg; forced sales of private jets by the Rotenberg brothers and Deripaska. If we take into account that Chinese banks (despite the mythologised Russian-Chinese friendship) are extremely cautious about working with blacklisted Russians (as representatives of Russia’s Central Bank admitted in late 2018), it turns out that Russian oligarchs blacklisted under US sanctions are isolated from virtually the entire global financial system.

3. Moreover, the risk of secondary sanctions does not depend on the currency in which payments to or from SDNs are made; in the context of primary sanctions US dollar payments are a decisive factor, but secondary sanctions can be imposed regardless of the currency. In the case of Rotenberg, attempts were made to transfer payments in euros but the banks refused to execute the transactions.

The gravamen of the article is that banks around the world–even Chinese ones–are petrified by the scourge of secondary sanctions. If you want to do business in the US, or in dollars with anyone, you will not deal with anyone on the sanctions list in dollars–or in dinars or bolivars or . . . in bubblegum cards or wampum.

Indeed, although the sanctions formally restrict only “significant” transactions with those under ban, what counts as “significant” is in the eye of the US Treasury. The risks to a bank are so great that it’s wiser to engage in no transaction at all–even something as trivial as processing payment of a Rotenberg’s electric or trash bills.

Just as one may question the sincerity of Putin’s religiosity, one may question whether this administration’s sanctions on prominent Russians close to Putin reflect Trump’s sincere beliefs. But one cannot question that these sanctions exist, and are extremely punishing to the Putinites that they target.

But people like Pelosi and Schiff don’t even question: they pretend that they don’t exist. And this demonstrates that there is no doubt whatsoever about their insincerity, and fundamental dishonesty.

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