Delusions

Dave Davis Commentary, Policy, The Future Party, The Long Journey to "More", Uncategorized , , , ,

“If the Republicans win the House of Representatives and the United States Senate, both of them,” President Donald Trump said at his midterm convention, “I will issue a dividend to every adult citizen in the United States of America for $5,000.” As the New York Times (NYT) tells us, in 2020, Democrats in Georgia pointed to $2,000 coronavirus relief checks if their party took control of the Senate. Politicians always promise more cash or other monetary benefits if you’ll vote their way:

The Socialist Party of America (DSA), which exerts more and more influence on the Democratic Party, promises either lots of free stuff or more cash in your pocket through things like greatly expanding the minimum wage. All these promises come against the backdrop of “The Affordability Crisis.”

The crisis is just a way of saying prices are rising faster than our ability to pay them. Both parties point to putting more dollars in everyone’s pockets as the answer. But does this make sense? Say ten people are in line to buy one of the ten parcels of necessities needed to survive. Each has $100; the necessities, to no one’s surprise, cost $100. Now President Trump, or Mayor Mandami, comes along and gives each $50. Everyone has more money in their pockets, but now the price of necessities has risen to $150. Unless supply increases, this is the only outcome.

Donald’s or Zohan’s largesse runs aground because of the Law of Supply and Demand. It still rules, as it has through the ages. Simply put, if Demand exceeds supply, prices will rise. Increasing Demand without more supply keeps prices rising.

Increasing supply to meet or exceed Demand stops inflation. However, this solution requires capital investment. Planting more acreage, building a factory, drilling wells, ships to bring in imported goods, or opening a mine- whatever is needed to increase supply demands capital.

Capital is forgone consumption, or put another way, savings, and the positive returns on them. If you lend at interest or invest directly in assets that grow in value, you have more capital, but you also face the risk of loss. Not every well finds oil, gas, or even water.

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What’s Radical

Dave Davis Commentary, Policy, The Future Party, Uncategorized , , , ,

When I talk with young people, I’m struck by how, whether they’re talking about Make America Great Again (MAGA) or Democratic Socialists of America (DSA) ideas, they’re sure they’re taking Radical, Revolutionary positions. Further, these ideas will pull a moribund America out of the morass.

They’re certain about tariffs, government control of or ownership of industry and commerce, severe restrictions on immigration or law enforcement, and that those in government know best. How we get our healthcare, or are educated, is best left to government determination.

Often, both extremes of the two dominant political parties are very close in their reasoning. They attack constitutional speed bumps or procedural impediments, such as courts or the Senate’s rules. Belittling or chastising judges at the highest levels is common to both. Even the makeup of the Supreme Court is on the table: change the number of Justices, or force some into retirement.

Get rid of the Senate’s filibuster rule, or the Senate altogether. Both say that when they’re the majority, nothing should stand in the way of their desires. Subsidies to those they favor seem never-ending—we see antisemitism in both.

People engaging in unfettered commerce can create wealth disparity or run counter to national aims. Government must regulate, or even own or control, the means of production, or any other part of the economy, for the public good. Markets are inherently unfair.

This coalescing of the parties has given rise to the horseshoe theory of politics; at the extremes, the parties are actually close together. Some people might see this as a good thing; the dynamic parts of each party are coming together in a new system that will improve humanity’s future. This idea seems to give some people a sense of purpose.

To those with more than a passing interest in history, this means a top-down government of rule by edict, avoiding imports in favor of domestic producers, the native over others, people are dealt primarily by their class, and acquiescence to government and its religious counterparts, as the font of knowledge; all this seems a throwback to another era. In fact, it could be any era before 1776. For thousands of years, agrarian-based societies worldwide were organized along these lines.

For all those years, human progress was glacial. Those in the lower classes rarely rose above subsistence, while those in the top educated class garnered most of the available goods. Those involved in commerce did so at the sufferance of the rulers.

As none of these younger people in the U.S. ever fully lived under such systems, it can’t be nostalgia, but they may long for some romanticized version. Somewhere in their education and their other sources of information, they formed conceptions at odds with reality. Unaware of their history, the bromides they espouse feel fresh and revolutionary, rather than reactionary to the modern world.

The most radical revolution able to complement and foster a rapidly changing world, breaking with the past’s near stagnation, is our own. I strongly suggest Gordon S. Wood’s Pulitzer Prize-winning “Radicalism of the American Revolution” to understand the radical break with the past our revolution wrought.

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The Roots of Failure Become Visible

Dave Davis Commentary, Policy, The Middle East, Uncategorized , , , ,

Marc Thiessen, the Washington Post columnist and Fox News contributor, went apoplectic in a recent column over a Wall Street Journal article that pointed out President Trump was warned before he started the Iran War that it wouldn’t go well. The idea that someone leaked that the then-DNI Tulsi Gabbard and others cautioned against the move, without a plan to overcome the likely closure of the Strait of Hormuz, a limited stockpile of essential munitions, and limited capabilities, is near treasonous.

Thiessen argues that this was done to undermine Trump’s courageous move to stop Iran from gaining a nuclear weapon, and to take down its terrorist Regime. This spilling of confidential information by “MAGA disloyalists” undercut the President’s ability to prevent the dangers the Iranian Regime clearly tells us are their main goals: nuclear weapons and regional domination.

Thiessen’s ire, to my mind, is misplaced. The President wasn’t alone in thinking this might be a good time to consider taking down the Regime and putting the Iranian people in power. Israel had laid waste to Iran’s air defenses, and its economic mismanagement led to high inflation and water shortages, resulting in people protesting in the streets. We had already bombed and buried much of their nuclear project. The Regime had never been weaker. I readily admit. I also thought this might be the time to move.

The problem wasn’t that we shouldn’t have considered strong action against a weakened adversary; it was the inability to come up with a workable plan. Gabbard and others would’ve failed at their jobs if they hadn’t pointed out Iran’s likely response and where we were deficient. The objective was worthy, but execution is appalling:

Image of the U.S.S. Stark after being struck by 2 Exocet missiles

Thiessen might be better off asking how we ended up with our only card left to play being to put maximum pressure on the Iranian people in hopes the Regime might collapse. Silly me, I thought we were supposed to have their back, not reduce them to misery. The idea that unarmed people can overthrow their armed-to-the-teeth rulers is a fantasy. Possibly 30,000 or more unarmed Iranians recently lost their lives trying.

In any case, if these sanctions could bring the Regime to its knees, why did we go to war and expend so much of our munitions? Just use sanctions.

We’ve sanctioned Cuba and Venezuela, and millions of people left those nations to survive. Those remaining mostly live at subsistence level. The exception is those in, or close to, the ruling Regime. If there are any goodies to have, they get them. The rest are expendable.

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Of Data Centers & Democracy

Dave Davis Commentary, Policy, Uncategorized , , , ,

The current hysteria over AI data centers highlights how smart the Founding Fathers were to put hurdles in the way of popular Democracy. Rash actions were discouraged, while individual and minority rights were protected against the tyranny of the majority. Historically, momentary popularity of leaders or positions has too often been a fad. However, it has still led to the rule of tyrants. Whipping up the populace to demand moratoria on centers already in the works, as well as future ones, could do the Nation irreparable harm if implemented.

Not long ago, politicians such as Texas Governor Greg Abbott and Pennsylvania Governor Robert Shapiro were touting their states as data center friendly. Many local governments competed for them, often offering incentives. Thousands were built without much notice. All of a sudden, we were hearing horror stories about skyrocketing energy bills, water shortages, and a mind-numbing hum. So much agricultural land is taken out of production; we may starve:

Now Abbott and Shapiro have joined the moratorium chorus. Politicians across the Nation are running over each other to get out in front of the “no AI data centers in my backyard” army. Polls show a wide majority are against the centers.

This revolt against the “monster centers” came home to me over dinner with some Utahns. Somehow our conversation turned to a Mega AI data center development north of the Great Salt Lake. Situated in Box Elder County, the Kevin O’Leary-organized project is truly a mega project on 40,000 acres, consuming 9 gigawatts of power at completion.

The Shark Tank “Mr. Wonderful” investor group secured support from the County, landowners, and the Military Installation Development Authority (MIDA), which fast-tracks Utah developments. How did the celebrity businessman put this energy- and water-consuming Monster over on the good people of Utah? Get ready for skyrocketing energy bills, and say goodbye to the Great Salt Lake. Get ready for the hum. The Oligarchs strike again.

The Stratos Proposal isn’t hard to find. It shows O’Leary and Company are well aware of the problems of putting data centers in the water-deficient West, in a state not known for abundant energy. They make a case that this is a great location for the Mega Centers.

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Crisis, What Crisis?

Dave Davis Commentary, Policy, The Middle East, Uncategorized , , , ,

We’re entering the mid-term election home stretch, and it looks as if it will come down to which we hate more: Trump or Socialism. Polls show a majority of Americans dislike both. Younger voters abhor Trump. At the same time, older Americans feel the same way about socialism. Each party is expending resources to convince the populace which is more terrifying.

This state of affairs makes it easy to follow the campaigns. Thank goodness there are no other concerns we need to discuss before they become a crisis. After all, our exploding national debt is a long-term worry. Our losing the Iran war only confirms that foreign adventures always turn bad. Just stay at home. Like, that’s a possibility in an ever-shrinking world.

I don’t want to be a wet blanket, but there are signs that the debt crisis may be closer than we think. Are you aware that the U.S. government is about to sell 30-year bonds at the highest interest rate in a quarter of a century? Don’t feel bad; most people aren’t:

The current rate on the long Treasury bond yields more now than at the height of Quantitative Easing (QE) coming out of the Great Recession. It’s higher than when we had 9% inflation under Biden.

This is true even though the Treasury issues far fewer of these long bonds than short-term obligations. Generally, there is a ready market for long bonds from insurance and pension funds that need to match long time frames and commitments, and the Treasury accommodates them, but refrains from issuing more for fear it will raise rates the Federal Reserve has little or no control over.

The Federal Reserve can no longer affect longer-term interest rates because of the masses of longer-term bonds bought under QE to keep rates down in the past. Those bonds are now held at a loss. That’s right, our central bank is losing money. The new Fed chairman, Kevin Warsh, was no fan of the QE program that resulted in the first loss since the Fed’s first year in 1915, so it’s unlikely to repeat it.

The climbing long rate seems to signal future inflation problems. We are already paying more interest on our debt than we do for national defense. With the impending insolvency of Social Security and Medicare just a few years out, spending looks like it has nowhere to go but up. With most of the debt short-term, any further interest rate rise is reflected almost immediately in much higher payments.

Japan, with debt two and a half times its GDP, is further along a crisis path. Its currency came under attack, meaning a possible inflationary devaluation. In the past, nations under similar attacks either raised interest rates or sold reserves to buy and bolster their currency.

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