Wednesday, March 21, 2018

Chuck Grassley (IA) vs. Dianne Feinstein (CA): the Peacock & the Self-Restrained

Many Californians--plagued by party conformity across political offices and two Senators in office for decades (Boxer: 1993 to 2017; Feinstein: 1992 to the present)--seem unable to understand issues that ought to be simple. I happen to like Dianne Feinstein, will vote for her again if given the chance, 
and know tenured Senators are not unique to liberal states. For example, Iowa's Charles "Chuck" Grassley, in office since 1981, plays the part of cranky old man very convincingly. 
Would Senator Feinstein ever publicly criticize a female college basketball for insufficient patriotism? Probably not. Feinstein's tenure as one of the longest-serving female Senators in American history has been marked by class, dignity, and the kind of intelligence one wishes Hillary Clinton and Elizabeth Warren had. Unlike Warren and Clinton, Senator Feinstein's job is secure, and such security allows the taking of difficult, controversial positions; in contrast, jostling for higher public office requires more secrecy and more PR, which often favors image curators over truth. We are lucky Senator Feinstein has, more often than not, restrained herself and her staff from using her power to target private citizens, including but not limited to college basketball players--and decided that the title of "Senator" was a comfortable perch for her ambition. 

Senator Grassley also enjoys a secure Senatorial seat. (America's two major political parties utilized data mining and analysis--the foundation of gerrymandering--long before hackers decided to enter politics.) Because of his political security, Grassley can use his power to go after private citizens who disagree with his views--such as female college basketball players in a different state. I am not as old as Senator Grassley, but I come from a time when a powerful man inciting hatred against young female college athletes in any jurisdiction would be considered disrespectful and impolite, but perhaps Iowans--who also elected Steve King aka "Trump before President Trump"--have different views on Midwestern hospitality. 

By now, it should be plain the problem isn't tenure or even gerrymandering, but the concept of power itself. I do not know Senator Feinstein, but I imagine growing up during a time when women were not respected as equals to men professionally gave her a ballast and sense of justice not easily replicated by the kind of man who would go after a college athlete in a different state merely because some Iowans sent him emails after a basketball game. (Clinton and Warren show that environment matters, but not decisively.) At the same time, there is no doubt the same security that allows Senator Feinstein to take substantive, difficult positions without suffering Russ Feingoldian consequences is the same phenomenon that allows Senator Grassley and Representative Steve King to act recklessly. A system that does not actually constrain power will always be at risk of violating the very principles the system was designed to promote. This is true in any time period and under any system, whether it is Thomas Jefferson using the law to own slaves, FDR authorizing Japanese internment camps with the express approval of the Supreme Court, or Senator McCarthy doing one better than Senator Grassley on the issue of insufficient patriotism. 

But why have politics at the ground level become so heated, so divisive? The power of television and images, magnified by greater technological access, plays a part, but the issue is simpler. Politicians who act as political peacocks, flaunting their colors rather than their principles to get elected, eventually need brighter feathers and louder calls to accomplish the same result. Senator Feinstein, a woman of substance, need not raise her voice at the podium--her experience and record speak for themselves. Only a man frightened that opponents may offer better siren songs bellows without thinking, and we can infer from Senator Grassley's behavior that the people of Iowa may be looking for alternatives. And indeed, Senator Grassley's share of votes has been steadily declining: he was elected by a 70% share in 2004; a 64% share in 2010; and a 60% share in 2016. 

I started this article trying to educate liberal-minded readers but ended up lecturing Senator Grassley and praising Senator Feinstein. My intent was to share a thought experiment showing why communities have become fractured. I will end with it below, though the main lesson I had hoped to impart should now be clear: in politics, the exercise of power is key, not the system or party itself. The thought experiment below may impart other lessons, and I leave it to you to determine the content of those lessons.

City 1 has 100 people, including 5 police officers and 5 firefighters. It is 100% white and Christian. 

City 2 has 100 people, including 5 police officers, 5 firefighters, and 5 grant-receiving non-profit organization officers to handle language translation, parks and recreation, and other social issues promoting assimilation and harmony. Its residents are a perfect mix of diversity, and I leave it to the reader to render his or her own demographic utopia. 

City 1 responds to each police call with an investigation. If an investigation does not occur or is not done to the citizen's satisfaction, citizens feel comfortable going to the mayor's office to ask for intervention or greater oversight. 

City 2 investigates only major crimes. Theft under 500 USD is recorded but not investigated due to allegedly insufficient resources. Complaints to the mayor go nowhere at first, but as petty thefts increase, the mayor is forced to take action. She cancels one of the nonprofit's grants and transfers the funds to allow a specialized unit investigating petty crime. The nonprofit lays off 5 people and criticizes the mayor for canceling the grant as well as the police department for not utilizing existing resources efficiently. The police criticize the nonprofit and hire a media manager to defend their conduct. Slogans ("All Thefts Matter") are chanted by both sides, and the city's readers and viewers see angry complaints on television and in print. After the backlog of petty thefts is finally resolved, the mayor reinstates the nonprofit's grant and unemployment returns to 1%. The mayor decides to issue a bond and raise taxes in the future to prevent similar conflict. Unbeknownst to her, some of the city's residents have left to City 1, citing less tension there. 

Even with its new entrants, City 1 realizes many of its young residents are leaving and decides to hire a consultant to create more "culture" to convince them to stay. The consultant recommends issuing grants to nonprofits to promote arts and culture and laying off a police officer to free up funding for the consultant's recommendations. The council accepts the consultant's recommendations. 

To handle the increased workload while maintaining morale, the police department decides it will not investigate thefts under 500 USD. Residents soon complain that outsiders have corrupted the city and say they no longer feel safe. The young and new employees hired by the nonprofits realize their funding may be pulled and criticize the police department's productivity, demanding the mayor look into police officers' schedules and use of time. Soon, residents who experienced petty theft refuse to listen to anyone who supports arts and culture projects and respond to criticism of police productivity with unwavering allegiance to law and order. There is even talk of supporting a new media channel dedicated to conservative values. 

The nonprofits continue to push forward with projects that provide the town with options other than big box stores and strip malls. The mayor wonders why he didn't just issue a bond or raise taxes, but he realizes his city is more conservative and disfavors debt. He asks the police department to change its policy but the police department, encouraged by national police unions, sues him, claiming the mayor's requests violate state law. City 1's lawyers now spend less time responding to day-to-day matters and more time on litigation. Soon, the lawyers request additional headcount, leaving the mayor looking into outside law firms and promising residents such fees will be temporary. Will the mayor keep his job in the next election? What value other than self-restraint appears necessary for sustainable growth? 

Friday, March 16, 2018

Interview with Old Katy Coffee in Texas

I met Derrick when he personally delivered coffee beans to my uncle’s house in Katy, Texas. I came to Texas to visit my uncle, a tea drinker. We were both unfamiliar with specialty coffee in Katy, TX and after a few days, we gave up trying to find my regular cup of java. By chance, I wanted to visit Old Katy and stumbled on Derrick’s business—“Old Katy Coffee”—online. Below is a brief, impromptu interview with Derrick, the husband of the husband-wife team of Old Katy Coffee
Me: Thank you for personally delivering the coffee.

Derrick: I’m glad we resolved the shipping issue. I was able to modify our website to allow free shipping because we’re so close to you. Regular customers allow us to eliminate or reduce shipping costs. 

Me: Why don’t Houston and Katy have more specialty coffee?

Derrick: If you’re in the city, in trendy areas such as the Heights and Montrose, there will be some specialty coffee places. I enjoy coffee so much, but everything here is spread out, so it’s tough for any small or new business to gain market share. Plus, there are so many Starbucks. 

The biggest thing is education. Farmer’s markets are a big thing in Houston, and they’re great because they offer fresh products, and we get a chance to interact with people. Good coffee isn’t rocket science. It needs to be high quality and fresh. Peak flavor is 3 to 14 days after roasting. The key is to get it to people quickly and make sure people taste it during that peak flavor time period. The flavor is still good for 30 days but starts to decline thereafter. Typically, the coffee on the [store] shelf has been sitting there for a while, and that’s what people are used to. New customers often tell me they can drink straight black coffee for the first time. Again, education is the key. Once they drink our coffee, mine is fresher, and customers usually develop a taste for fresher, higher quality products.

Me: I went to the address listed online and in your Facebook page, but I only saw a postal office. 

Derrick: That’s our P.O. box. We don’t have brick and mortar shops yet. We do “pop up” shops at markets, stores, neighborhood amenity centers and corporate locations. We'll even partner with yoga and other wellness studios. 

We also support the March of Dimes and participate in hospital events, where we donate 100% of our profits. Right now, I’m trying to build a brand, and our brand is about using coffee as a means to connect with the community. 

Me: How long have you had this business? 

Derrick: About 5 months. 

Me: Can I ask what you did before?

Derrick: I’m a finance and management guy by trade. It’s similar to law, very transactional, lots of numbers. It feels good to serve and interact with people. As I’ve become older, I’ve found it very rewarding to serve people. Coffee is cool because it’s so universal and so diverse, but also something common that allows you to interact across cultures and cities. I’m trying to build a community, which is the goal of most specialty/craft coffee [sellers]. 

Me: What’s been the most difficult part so far, other than building a brand? 

Derrick: Getting recurring customers. If we get enough volume and demand, we'll open a store but we need to feel comfortable putting up capital. I’m a CFO by trade. I’m still doing part-time CFO work, assisting businesses, helping them get banking relationships in place, accounting, and so on. 

Me: I see you offer coffee beans from many different countries. How do you manage the supply chain and import/export issues? 

Derrick: Houston is of course an amazing port city with easy access to many coffee-producing countries, especially in Latin and Central America. As a result, our suppliers have good selection. We offer seasonal menus based on availability and most importantly, what our customers enjoy. We also like to throw in a few non-standard regions and flavors in order to present customers with some variety. 

Me: Are you originally from Houston? What made you choose Katy? 

Derrick: We've been in Houston and Katy for about 4 years now. I’m from Southern Oklahoma. Katy is a great place for family. You can’t beat the schools and the people here. I’ve got kids. At a certain point, you go where it’s best for the kids. 

Me: What’s it like, working with your wife so closely in this new business? 

Derrick: In certain cases, you have to separate the personal from the business. It’s a challenge but it’s also exciting and rewarding. We’re a good team, and there’s more positives than negatives. She handles sales and marketing while I work on back-end items such as systems, supplier logistics and of course accounting. 

Me: Thank you for your time, and best of luck!

Monday, March 12, 2018

Unintended Consequences and the Difficulty in Understanding the United States

State Statistics

Let's take two states. State "LI" has a pro-government spending bias. It spends much more on public welfare and education than conservative State "NT." Like many Southern states, NT has a history of de jure racism ("In 1870 the state Constitution was amended to prohibit interracial marriage.") and defied Brown vs. Board of Education by increasing privatization of education. As of 2008, 17 of its school districts continued to be under a court-supervised desegregation order

LI is the opposite--it was first to ratify the Thirteenth Amendment to the United States Constitution, which abolished slavery nationally. Other than housing laws, it did not participate in expressly racist legislation. A billionaire philanthropist built several prominent institutions, including a top-ranked private university, in the state. The country's first African-American president came from LI in 2008. 

NT also had a private philanthropist build a major private university, but unlike LI, it has no nationally-recognized public universities. In 2016, while LI voted for liberal presidential candidates, NT voted overwhelmingly for conservative candidates. 

As of 2016-2017, NT's per capita personal income was 44,317 USD annually, and LI's per capita personal income was 51,817 USD annually. NT's population was about 74 to 79% white; LI was more diverse, being 62 to 77% white. LI had higher union membership than NT: "In 2017, union members accounted for 15.0 percent of wage and salary workers in [LI], compared with 14.5 percent in 2016." NT, a right to work state, had union membership of around 5.7% in 2016. In 2013, NT spent 8,208 USD annually on primary and secondary school pupils; LI spent 12,288 USD annually.

You might say it's obvious LI is doing better than NT, but you'd be wrong. In 2015, LI had 863 homicides and 1,220 firearm deaths. Its infant mortality rate in 2016 was worse than the average American state, with some counties alarmingly worse. Although NT's infant mortality rate was actually higher than LI's, it had a lower homicide death rate

LI's pension deficit was the largest of all 50 states; in contrast, NT had one of the highest funding ratios. Even on citywide level, LI's Ogacihc was the worst city in terms of underfunding, while NT's Ellivhsan was one of the best (See pp. 22 and 23). 

Homeownership? NT prevails with 67.2% ownership in 2017 vs. LI's 65.4%. 

Don't count out LI, though: 

LI had a higher average ACT score of 20.7 (or 21.4, depending on which data set you use) compared to NT's 19.8. (Counterpoint: the average nationwide score is 21, and after adjusting for random factors, one could argue there's not much difference between the two states.) 

What about interracial marriage? Some NT cities (Agoonattahc) rank the worst/least on this measure, while one large metro in LI ranks among the best/most. 

Passport issuance? In 2017, LI had 791,802 passports (0.0618 rate) while NT had 242,532 (0.0361 rate). 

Except for pollution, most health statistics, including infant mortality, favor LI. 

What's the point of reviewing these statistics? Well, they don't actually show anything useful if you want to relocate. A person looking to buy a home would probably prefer NT's largest metro area over LI's, but someone interested in price appreciation and public transportation might prefer LI. 

Also, NT might have fewer homicides than LI, but what if it's because of underreporting or a corrupt coroner misclassifying deaths? What about police shootings of civilians? Did anyone think to consider divorce rates or the quality of public schools when factoring in local housing prices? How about the number of public parks and/or development-protected areas? 

We have all heard "there are lies, damn lies, and statistics," but it's important to highlight a mathematical aspect of capitalism few people understand: 1) it is much harder to maintain rising wages and disposable income than to control inflation in essential items; and 2) higher populations, especially if including many new entrants, impact data tremendously. Thus, NT might be a much better place to live today because its wages and wage growth are more likely to allow residents to buy a home than in LI, but no solid evidence indicates higher property taxes or corporate closures will make this true 10 to 15 years from now. In addition, if NT has gained thousands of new residents in the last few years, its supply/demand data will be skewed because there is no guarantee of continued inward-migration, and at some point, taxes or expenditures must rise to meet the increased population demand. 

Finally, although the data indicates NT should be less racially-tolerant than LI, a) it depends on which city you visit; and b) NT's general hospitality may trump any of its residents' underlying opinions about groups in general. More below on b): 

"Sure, up there [New York City] black and white work side by side. But at night the black goes home to his ghetto and the white to his suburb. Here in the South we've been living together for 250 years, talking to each other every day. That gives you something solid to build on." -- Mayor Johnny L. Ford [National Geographic (October 1975), pp. 569] 

"It struck me as notably ironic that Southerners could despise blacks so bitterly and yet live comfortably alongside them, while in the North people by and large did not mind blacks, even respected them as humans and wished them every success, just so long as they didn't have to mingle with them too freely." -- Bill Bryson [The Lost Continent, paperback, pp. 63 (1989)]

The lesson? Statistics do not provide useful guidance in evaluating a state because they are not set up to capture direct, honest feedback even at a local level, which means they cannot reliably predict inward or outward migration patterns. Even if one asks the right questions, experiences vary so much across different cities in the same state, it is difficult to get a clear picture on anything meaningful. Never before have we had so much data; never before has such data been so useless. The older I get, the more I realize economics and sociology need to be merged to be a useful discipline. 

Debt, Debt, Baby

Setting aside social and cultural dynamics, modern American capitalism works by capturing platforms and using debt to continue to gain market share. This model works only if interest rates remain low and if banks are willing to roll over maturing debt or if private equity investors are willing to loan/invest more funds. 

When someone complains Uber or Amazon are not as profitable as other companies, you can safely ignore them on macroeconomic issues--they don't know how the modern economy works. (Even Nokia needed 17 years before it turned a profit on electronics--and that was before any newfangled financial "innovation.") Indeed, every single successful American city has become financially successful because it has carved out some unsustainable federally-linked advantage (security spending, educational loans, ethanol subsidies) or loophole (segregation, lax antitrust enforcement, etc.). Seen this way, "capitalist" America is not much different from "socialist" China, except China's national government has recently become stricter, functioning as a proper check and balance against local corruption--and growth at any cost. 
America or China? From Duncan Clark's Alibaba (2016)

Today, a debt-fueled strategy might be essential in an era where countries from China to Singapore practice a hybrid public-private model, practically picking winners and losers by governmental association. Alibaba infamously transferred Alipay, an online payments business worth at least 1 billion USD into a structure held 100% by a Chinese domestic company "[t]o expedite obtaining an essential regulatory license." [See Duncan Clark's Alibaba (2016), Ch 11.] The payment to international investors was 51 million USD. Alipay--not Alibaba--subsequently "was the first of 27 [Chinese] companies to be issued licenses and was awarded license number 001" by the PBOC. [Id.] 

Seen in a non-ideological light, countries and municipalities that attract capital--especially at lower interest rates--and roll over debt without asset sales will be successful. It has nothing to do with democracy, socialism, or any other "ism." The modern world--from international relations to the smallest city--runs on debt and the perception and confidence such debt will be paid. Public-private partnerships, with their more assured outcomes, are probably the future, and America needs a strategy apart from overspending on military R&D, both domestically and internationally, then trickling down innovations through private companies to the civilian sector. 

In such a convoluted world, numbers and statistics are not as helpful as they should be because every entity, not just ratings agencies, has incentives to optimize the numbers. Given the necessity of a strong banking sector in a debt-fueled economy, America's 2008-2009 banking bailouts should now make sense, except the lack of substantive reform, especially in the "shadow banking" sector, foretells another crisis. Unsurprisingly, debt-fueled economies prioritize economic growth and productivity over all else because growth makes it easier for debts to be paid both directly (newer debtholders maintain the cycle) and indirectly (inflation in assets renders past debts less valuable). It is unclear whether younger generations in developed countries are willing to accept such a paradigm. 
From Marilynne Robinson's What Are We Doing Here? (2018)

More troubling, some states have used lower interest rates and debt to pay off vested interests such as government unions rather than investing in the future. LI's pension issues are one obvious consequence of such an approach as well as an example of unintended consequences. When the Federal Reserve lowered interest rates, making it easier for tech companies to gain national and international market share, it did not intend for some states to handicap future generations by paying off vested or corrupt interests through complex political machinations. It may not have even intended the privatization that eventually came after such methods sapped cash flow from local and state budgets. Regardless of intentions, if growth must be maintained, especially through debt, then we must all "publish or perish," and quality and integrity aren't guaranteed in such single-minded productivity, either in products and people. I have spent much of my life studying numbers only to realize the "optimization bias" I mentioned earlier means any conclusions I've derived from "objective" data is inferior to an in-person daily stroll in an area. 

What's Next?

If a paradigm deficient in quality or meaningfulness is an unintended economic result, how can we create a better one?  "The fundamental problem [of economics] is not our lack of information but our limited ability to process it." (Ha-Joon Chang, 23 Things They Don't Tell You about Capitalism (2010)] I've traveled extensively for two years and I have processed why developed countries are faltering. Their systems--economic, social, and cultural--no longer prioritize justice. As stated above, they prioritize debt and debt repayment, which require deference to banking and military sectors. Security is good, but it does not make the soup taste better. Let me explain more clearly.

Society 1 is able to have as much as it wants--as long as Societies 2 and 3 buy its loans/debt. Society 1 creates systems based on x, y, and z values--and then builds numerous institutions around those purported values. The problem is that Society 1, flush with almost unlimited possibilities because of its ability to issue debt, eventually forgets to cross-check whether its values--democracy, capitalism, meritocracy--are actually reflected in its institutions. As its institutions become larger and more entrenched, they rely on perception to increase numbers, and it becomes easier to use the media--especially visual images--to convince voters to go along. (
For example, even if Society 1's military has lost every non-Grenadian war since Vietnam, most recently in Syria, producers--financed partly by government money--will greenlight another Churchill or WWII movie.) 

Of course such maneuvering has limits. As it becomes more obvious something is wrong, distractions and misinformation are used to maintain debt aka the status quo. In such a world, having multiple layers of complexity becomes useful to survival even if not a single layer benefits non-insiders. 

Over time, a few people start to realize Society 1's true values aren't whatever it claims, such as freedom--it's the opposite. The inability to do certain things--copying IP, threatening harm, silencing speech, invading a private citizen's privacy, etc.--is a free society's foundation. The trick is achieving a balance where citizens don't rely on insurance companies and their lawyers to receive a fair, predictable result while avoiding a nanny state. As of 2018, the balance in America, er Society 1, had gone so far awry, the following disclaimer would arrive from a public university after having paid 450 USD for event tickets: 

For All Ticket Purchases: The Division of Intercollegiate Athletics of the University of Iowa does not guarantee the availability of tickets, and reserves the right to modify or cancel any of the conditions displayed on this website, including ticket pricing or availability, at its discretion and without prior notice. If the University does not fill a ticket order or request, it will refund the purchase price or credit the customer's charge account, and is not responsible for any other damages or fees which might be incurred. By using this website, you agree that any ticket transactions with the University of Iowa are governed by the laws of the State of Iowa, without regard to conflict of laws principle.

Why bother having a website selling tickets if there's no guarantee you'll get the ticket you paid for? The Iowa, er, Awoi, lawyer did a good job for his/her client, but a terrible job for society and America's citizens. Historians will ask whether Americans forgot that all three branches of government, along with the fourth pillar of media, were required for a functioning government. Debt makes a leading appearance here, too, because new lawyers with 100,000 USD in student loans will need to pay off the loans before valuing justice and fairness above personal preservation. Lawyers are fond of saying the law doesn't create justice, only a chance at justice. Yet, as legal fees, one-sided agreements, and complexity (look at the indemnification clause in any online agreement) increase, one can argue such chances have disappeared for most people. 

Without all branches fulfilling their roles, some Americans saw decline as early as 2009: 

“We are watching the decline and fall of the United States as an economic power — not hypothetically, but as we speak,” said Craig R. Barrett, the chairman of Intel.

While traveling, I have wondered what America will leave behind as its economic empire declines, and until now, I have omitted an important detail. China will indeed become the world's economic superpower, but it does not seem able to replicate the ideals America brought the world in just 55 years. A country that jails Liu Xiaobo--author of the words below--will never be admired except grudgingly. 

Throughout all these years that I have lived without freedom, our love was full of bitterness imposed by outside circumstances, but as I savor its aftertaste, it remains boundless. I am serving my sentence in a tangible prison, while you wait in the intangible prison of the heart. Your love is the sunlight that leaps over high walls and penetrates the iron bars of my prison window, stroking every inch of my skin, warming every cell of my body, allowing me to always keep peace, openness, and brightness in my heart, and filling every minute of my time in prison with meaning. My love for you, on the other hand, is so full of remorse and regret that it at times makes me stagger under its weight. I am an insensate stone in the wilderness, whipped by fierce wind and torrential rain, so cold that no one dares touch me. But my love is solid and sharp, capable of piercing through any obstacle. Even if I were crushed into powder, I would still use my ashes to embrace you.

Even Singapore, a healthy blend of American and Chinese influence, jails Jehovah's Witnesses and bans their literature. For all its practicality, Singapore's Chinese elite cannot bring themselves to make an exception to military conscription for a well-established religion--an issue America resolved in 1943: "Those who begin coercive elimination of dissent soon find themselves exterminating dissenters. Compulsory unification of opinion achieves only the unanimity of the graveyard." (Supreme Court Justice Robert Jackson)

It is true that America jailed Martin Luther King and spies on its own people with the same fervor as East Germany's Stasi, but MLK was released and Snowden is still alive. The perpetrators of Abu Ghraib may not all have gone to jail, nor received appropriately lengthy sentences when convicted, but because of American media (and the always delightful Errol Morris), no decent person hears the names Lynndie England, Charles Graner, or Megan M. Ambuhl without feeling pity and outrage. 

You see, every country is the same in the sense all of them lurch towards entropy, with the rate of decline contingent on its people's ability to reverse poor decisions and--apologies for the colloquialism--prevent "full-retard." It's not coincidental that America's decline and China's rise occurred when decisions post-9/11 were not reversed in a timely manner. Even before Abu Ghraib, the overbroad Patriot Act, Guantanamo Bay, and the trillion-dollar illegal invasion of a former allied country, America's failure to ensure a match between its institutions and purported values resulted in a mishmash of unmanageable fiefdoms, none of which were truly free, and--more importantly--none of which could be shut down quickly if on harmful trajectories (such as the cementing of the military-industrial complex). From The Atlantic (September 2016), by Steven Brill

DHS--which has had seven undersecretaries or acting undersecretaries for management--has perennially been on the GAO’s list of agencies whose overall management is considered “at risk.” From the beginning, the agencies thrown into the new superagency fought to keep their turf, often calling on congressional allies to help. “At one meeting early on, I mumbled something about why should the Coast Guard and Customs each have their own helicopters and planes,” Tom Ridge recalls. “Why couldn’t they combine to purchase the same stuff? Within a few days, we had calls from Capitol Hill warning us not to mess with the Coast Guard’s or Customs’ procurements.” (The two agencies still have their own air forces.)

In hindsight, the failure of America's lawyers and journalists to expeditiously reverse the mistakes of the executive and legislative branches was the beginning of the end of America's reputation. No nation can withstand hypocrisy for long; humanity's DNA rejects it like a lethal virus. But--and there was always going to be a "but"--at least America, in purporting to adhere to certain values, gave room for its idealists to reach for them. 

Interestingly, as of 2018, China also prioritizes economic success and uses debt to turbocharge its economy, but as the creditor of over one trillion USD, its export-driven economy has unique advantages as well as risks (currency devaluation, tariffs, etc.). If it does not continue to create jobs, why should anyone with an independent streak stay if they can leave? Countries like the UAE do not do well on the "daily stroll" test despite financial prosperity because they have not assimilated their best talent. Similarly, China's behavior towards nonconformists will rob them of the privilege of being emulated, which will limit its ability to keep its best people. There is a reason a young Jack Ma (Ma Yun) learned more in Australia than in China and does not trust people from Shanghai or Hong Kong. 
From Clark's Alibaba (2016)

In almost every country, the best residents are from somewhere else or have developed their ideas elsewhere, and in any time period, it will always be much easier to steal talent than to create it. Consequently, nations that do not provide the appropriate balance of security and freedom lose automatically because they do not promulgate values to be emulated as long as they silence critical or nonconformist voices. The singular act of silencing people who think different or differently repels the most talented, who are often outsiders. No amount of prosperity can resolve the hypocrisy of telling others they know what is best for them while expelling people who question the status quo. 

America may be in decline, it may have the world's highest incarceration rates, but it continues to uphold values other than financial prosperity. Such values, even if allegedly secondary, allow nonconformists to prosper, who then contribute to art, literature, sports, movies, and other distractions that may eventually provide non-obvious opportunities for cohesion, innovation, or collaboration. China may be on the rise, but as long as it chills nonconformity, it will lose talent to other countries, giving competitors the upper hand. 

One Big Family: Stupidity, Insanity, & Idealism

"I never dreamt that I would get to be / The creature that I always meant to be." -- Pet Shop Boys, "Being Boring." 

I've said before Trump was elected because voters rightfully realized if choosing between stupidity and insanity, at least insanity can provide advantages. (Had Bernie Sanders been the Democratic nominee, the election would have been a fair fight.) The difficulty in understanding the United States is that while it will make mistakes, including incredibly stupid ones, idealism and insanity are fraternal twins. It takes some level of delusion to think you can change the world, to ignore the vested interests already at the door ready to block your efforts. Weak countries tend to see one of the twins and not the other. They cannot see that by censoring one twin, they cause the other--and perhaps a level-headed cousin or two--to flee or opt out of public affairs, leaving a space that will be occupied by authoritarians who do not believe the purpose of security is to create diverse meritocracies with opportunities for all citizens. Humanity never knows in the present tense which fraternal twin it is dealing with, nor which extended family members will make positive contributions, but we do know America has benefitted the most from the world's migration in the 21st century, a migration that would not have occurred without purporting to stand for certain values. In the end, America's lasting contribution to the annals of knowledge might be far more than the fact that meritocracies are aided by "uninhibited, robust, and wide-open [public debate that] may well include vehement, caustic, and sometimes unpleasantly sharp attacks on government and public officials." It might be that without such an approach, the best migrants will not come, or if they come, will not assimilate. 

Any man more right than his neighbors should not constitute a majority in his neighborhood only if he lives by himself in the woods. 


Will Trump's insanity be better than Hillary's stupidity? As long as residents lack free mobility, which requires legal reciprocity, it doesn't matter. "Voting with one's feet" is not possible until immigration laws worldwide are modified, and even then, any reform will be based on subjective factors, an imperfect endeavor. Countries claiming to value human beings must work together to increase mobility, the ultimate check and balance on power's tendency to make mistakes. In the end, one cannot favor freedom without giving credit to its midwife, mobility, and the world's failure to properly resettle refugees makes me pessimistic for the future of freedom and justice. 

I also wanted to share what I've learned from my travels, but as usual, I've wandered far astray. I really only have three lessons: 

1. Living with a member of the opposite gender, even only for one week, changes your body's chemistry. 

2. There is no ideal place. Everywhere has tradeoffs, and the act of traveling makes it easier to determine what you really value. For example, I've known I value clean air since I traveled to India in 2010

3.  Living close to farmers means everything you eat tastes delicious--and is often cheaper because third-party transportation costs are absent. 

My travels are not over. I enjoyed Mexico City 

and Guanajuato city and will be visiting Houston tomorrow, then Iowa City in April. I look forward to touring several Iowa cities (believe it or not, Iowa has America's first mosque), and I'm interested in seeing how the generally conservative state will respond to my penchant for stirring the pot. That's my way of saying if Terry Brands punches me at the World Wrestling Cup, I probably deserved it. I'm still going to yell "Alireza Dabir" if I see him, though. I want to see how Middle America treats its dissidents. 

Tuesday, March 6, 2018

Travel Lessons: Real Resistance is Rebellion

The more I travel outside the U.S., the more I realize how uptight Americans are. In fact, a cursory review of American history--if taught well--will emphasize almost all its accomplishments have come from immigrants and minorities. Most people realize Einstein, a German refugee and minority, along with immigrant Leo Szilard, helped America win WWII. Some even know most major American technology companies were founded by immigrants or minorities. Apple was founded by Steve Jobs, the product of a Syrian refugee and Catholic mother. No Vinod Khosla, no Sun Microsystems, and no hardware-software behemoth Oracle as we know it today. Tesla? Founded by the rich son of a South African, Elon Musk. The list is endless, and I won't bore you by citing all the companies and products Americans would lack without an open approach to immigration. What does any of this have to with being uptight? 

Almost all of America's genuine resistance post-Vietnam comes from immigrants and minorities. As a Muhammad Ali fan, I've realized America lionizes him so much because he's the most genuine American-born product of resistance. Sure, Daniel Ellsberg and Edward Snowden must be placed in the pantheon of resisters, but they were part of the Establishment, and a whistleblower carries a different, softer tune than a rebel. (Ellsberg, by the way, is a "sort-of minority"--he was raised by Jews who converted to Christian Science.) 

Other than Ali and Hunter S. Thompson, modern America lacks native-born rebels. The Beatles? British. The Sex Pistols? British. The famous group who sang, "We don't need no education, we don't need no thought control" and railed against the public education system? Irish. Just kidding. British. The best antiwar campaign? John Lennon, a Brit. David Bowie, who challenged gender stereotypes and married a Somalian Muslim? A Brit. (By the way, the best singer today is Adele... a Brit. Meanwhile, America's most famous Somali is Islamophobe Ayaan Ali, a role model for nothing except psychological transference, even as Canada's honorable Ahmed Hussen takes the spotlight next door.) Joan Baez? Mexican father. Bob Dylan? The product of generations of Russian Empire Jews. 

Ok, so what if the Brits seem to be better at music than Americans? Do you like art, politics, and comedy? Outside George Carlin, the son of an Irish immigrant, the most astute American commentators have been black aka minorities: Chris Rock, Dave Chappelle, and Richard Pryor. As for politics, where would we be without Martin Luther King, Angela Davis, Malcolm X, and the Black Panthers? 

In fact, if you remove minorities and immigrants from America, you are left with law, order, and guns, aka cowboys and tough guys posing as rebels. See Clint Eastwood, John Wayne, Gary Cooper, Charles Bronson, Chuck Norris, Steve McQueen, Arnold Schwarzenegger, and Bruce Willis. America's non-minority heroes are military, police, and cowboys, and once they exile the corrupt sheriff, they take his place--a paean to law and authority if ever there was one. (I've always wondered why Americans are so surprised a television celebrity became president in 2016 when Reagan and Schwarzenegger, both movie celebrities, had already become governors of one of the world's top ten economies in 1967 and 2003.) 

America's cultural schism starts to make sense when we realize the American military may have lost Vietnam--and every war thereafter except for Grenada in 1983--but it won the military-industrial complex. If you have a country founded by sexually repressed Protestants too uptight for Britain that then decides to spend most of its money on the military, why shouldn't the product be sexually-repressed, violent, confused, and bombastic? What else would form the perfect cocktail for a cognitively dissonant schizophrenia that allows most Americans to spend most of their money on the military and war while going to church every week and praying to a pacifist who never led an army or owned a weapon? And why shouldn't most of its innovation--a form of rebelliousness against the established order--and wisdom come from people outside this system? There are no more Frank Capras, Walter Cronkites, Edward Murrows, Bill Wattersons, or General Eisenhowers from America. The soil today is too polluted for them to prosper. 

If America is going through its second midlife crisis, then we should all welcome the experience. Maybe this time, the kids will get it right. 

Tuesday, February 27, 2018

Travel Lessons: Blind Spots and Distractions

One travel benefit is seeing how others view your "home" country. Mexico is particularly interesting because trade agreements and the strong U.S. dollar have made many Mexican cities (León, Irapuato, etc.) into de facto American and European economic satellites. Within one minute of entering any decent-sized Mexican city, even a one-eyed tourist will notice Hilton, Holiday Inn, and Ibis everywhere, usually with an American restaurant attached--and that's before you visit any major shopping mall. 
When shopping malls are legally-approved, only old buildings will be interesting. Wait...
Despite such Americanization, Mexicans tend to have blind spots about fundamental American facts--a revelation that initially seemed strange until I realized most Americans have similar blind spots about other countries, even ones they've visited. For Americans and Europeans, part of this phenomenon involves the desire to be well-liked, and part of it is the writers' need to adapt to average attention spans. For instance, a very smart, well-traveled colleague recently wrote about Cuba's "first class" healthcare system. However, anyone who has actually visited Cuba as an ordinary tourist and ventured into any pharmacy (shelves are almost bare or sell mostly vitamins, though one anti-cholesterol drug seems effective) or seen anyone with hearing aids (they're usually analog, not digital, and similar to ones worn by Americans 25 years ago) will realize there's nothing first-class about any Cuban medical care above a pediatric or basic level. 

Suppose you're an older, affluent traveler and writer. Which is the easier path? An offhand reference to "first class" healthcare or spending vacation time investigating whether a country's healthcare system matches the hype? Not only is one clearly much easier, but the other option risks the ire of immigration officials as well as nationalistic residents and influential expats. Somehow, modern society has created a situation where telling the truth has massive downside with no clear benefit and taking a simplistic and conformist approach has only upside. Humanity's new religion is optimism, and few people seem to mind that controversy is rarely an optimist's preferred bailiwick.

In any case, Mexican history is incredibly complex--two revolutions in one century will do that--but most people agree true democracy hasn't existed in Mexico very long. Indeed, until recently, Mexico was a one-party state where corruption was assumed unless otherwise proven. Yet, most Mexicans are optimistic about their country's future because they argue they've only had democracy for a short while, whereas Americans have had it for centuries. In spite of Trump's election, Mexicans believe true democracy is the way forward, and America's success is based in large part on giving every member of its society a voice in government affairs. This analysis contains numerous blind spots, but it has captured the public's imagination, even though many Americans couldn't vote until 1920, when women finally won the right to vote; minorities were often disenfranchised at the polls (poll taxes, voter registration issues, etc.) until the 1970s; and individual votes are often trumped by groups such as unions, which are more effective at influencing elections as 40+% of Americans have stopped voting, especially in primaries. Such cognitive dissonance got me thinking: what if every single zeitgeist is wrong? What if human beings prefer to eschew simple ideas in favor of delusions of grandeur?

Imagination is a double-edged sword. It allows me to write the previous sentence but also strives towards complexity, even if only to distract ourselves from the ordinary. Mexico's optimism is probably better understood as a function of higher oil prices, currency devaluations making its exports more attractive in an increasingly globalized economy, and family values (who doesn't love Mexican grandmothers or want one?). While no Mexican individual can influence oil prices or force families to stay together, democracy allows everyone to believe and to feel as if they have more choices in creating the future than they actually do. In short, fallacies exist because humanity's need to feel in control allows imagination to run amok, creating distraction after distraction that eventually evolves into something that "pack mentality" picks up on and makes into "truth."

Step back and think about why we are inherently suspicious of artificial intelligence and why we talk about love and souls as if they are the most important elements in our lives. We have or think we can have control over finding love and improving our souls, and our imagination generates these abstractions in ways similar to computer code generating virtual reality, but no human being feels as if artificial intelligence programming has a soul, even if it passes the Turing Test. The reason is simple: every single abstraction generated by humanity's imagination is designed to give us the feeling of more control, even if hijacked in negative ways in the real world. Yet, because humanity cannot strip away its imagination's need to strive for greater control even when interests hostile to the original purpose of an abstraction dominate, humanity's instinct is always to maintain the original idea--at any cost

If the aforementioned hypothesis is true, it explains why outlaws, artists, and rebels are so valued--in the abstract--by human beings: buried deep in our software, our source code knows we need them as check and balances on programming's tendency to build around bugs rather than eliminate them. If humanity's most salient feature is its ability to generate distractions, then everything--phrenology, social media, nonviolence, sports, Nazism, capitalism, socialism, racism, etc.--is our attempt to understand the bugs we've generated in this journey we call life--and to pass time. Remarkably, this process of passing time tends to improve conditions for most, as long as imagination and physical mobility are allowed to prosper, and they usually do, whether in Vaclav Havel's plays under Soviet occupation, in Iranian cinema under express censorship, and in America under military veteran and Democratic Governor George Wallace's cries for segregation. Seen this way, my optimistic friend who called Cuba's healthcare "first class" is as right as I am when I demand accuracy and context. If everything is a distraction, why not turn our mind's eye to the pleasant possibilities--and hope to direct humanity's collective imagination towards resolving the gap between reality and the better angels of our imagination? After all, it's just a matter of time--as long as we balance short-term desires with long-term goals. 

Dedicated to Jim Quillinan, who introduced me to Harold and Maude (1971) and many other wonderful distractions

Friday, February 16, 2018

The Big O in 1958

"We were largely the victims of the tyranny of a few who were beating the drums of fear. There is no protection against that tyranny which the law can provide. 

Charles W. Eliot called it the pressure of a 'concentrated multitudinous public opinion.' ... Each generation must deal with it. The only protection is an enlightened public opinion forged by men [and women] who will stand against the mob. The antidote is more freedom of expression rather than less. The remedy is in making public opinion everybody's business and in encouraging debate and discourse on public issues. To regain the values 'of the age of debate,' as Dr. [Robert] Hutchins put it, is one of the great problems of this generation. To return to Pericles and his funeral oration, 'We alone regard a man who takes no interest in public affairs, not as a harmless but as a useless character.'" -- Justice William O. Douglas (1958) 

Wednesday, February 14, 2018

Simulacrum Society, Part 2

[Part 1 is HERE.] 
Muhammad Ali Museum, Louisville, KY
H3: What were some signs of America's decline in 2018? 

H4: Well, obviously, Americans' ignorance of two essential economic terms: 1) inflation; and 2) interest rates. But even when we analyzed whether Americans understood the most basic functions of government, they all seemed to fail. 

In 2018, a prominent politician, Elizabeth Warren, said, "Budgets aren't just numbers on a page. Budgets are about values. And over the past few months, I've fought tooth and nail for Congress to pass a budget deal that reflects our values." 

Her statement is so obviously wrong, she should have been laughed out of office. Consider 2008-2009. The budget, which incentivizes behavior through taxation, "valued" home ownership. If values were your primary focus, then the budget and tax code already encouraged home ownership--a policy that ended in disaster and numerous foreclosures. That's one clue budgets shouldn't be based on values, but there are so many reasonable objections against government spending promoting subjective values, I couldn't possibly list them all. (What if the government wanted to "value" same-sex, opposite sex, or even no-sex marriages?)

In addition, if budgets were about values rather than sustainably supporting an interlinked ecosystem of jobs, then the primary value America stood for in 2018 was the military-industrial complex. What did Warren--who had family members in the military--want to do with military spending? Increase it. She voted for a military budget higher than what the pro-military president requested

H3: Remind me, Warren was a conservative like America's President in 2018, right?

H4: Actually, she was a Harvard law professor and liberal, and her party sought to nominate her to run against the conservative, pro-military incumbent. 

H3: Wait, what? 

H4: Yes. The military-industrial complex had completely taken over America by 2018. Orwell's Animal Farm, taught in most secondary schools, had come to life: “The creatures outside looked from pig to man, and from man to pig, and from pig to man again; but already it was impossible to say which was which.” 

Worse, the so-called conservative president wasn't conservative with the budget. His proposals required borrowing one trillion dollars

H3: How could people get away with such blatant misrepresentations?

H4: Because all the numbers were wrong.

H3: Huh?

H4: Let me give you an example. Governments, to increase efficiency, began placing certain services for auction. The lowest bid containing the essential scope of services would be chosen

H3: That sounds like a great idea.

H4: It was--if you could count on people being honest about numbers. In reality, firms would make low bids and interpret the 3 to 10 years contract (called a Master Services Agreement) as not covering much of the necessary work. So if something wasn't specifically included in the original bid or proposal, the firm would do a change order or new mini-contract with additional fees. Basically, the original bid was never the final price. Governments and their service providers added contingencies for unexpected work, but as the contracts reached expiration, fewer workers were needed to provide services. In short, the contract envisioned deteriorating customer service and responsiveness over time, coinciding with the service provider's ability to become entrenched.

Complicating matters, the government itself didn't always know the full scope of the projects or its reasonable costs. Some cities would hire outside experts like city managers, but most politicians were lawyers, not construction workers, scientists, electricians, or database managers.

H3: So why privatize? Why not keep the old system?

H4: The catalyst for privatization and outsourcing/insourcing was because government employees had become corrupt under the status quo. They voted themselves benefits unavailable to most private workers and then back-ended their compensation in ways that made balancing a budget unpredictable and more dependent on debt. Every price quoted for any government work, even if completed on time, understated true costs because it failed to include long-term benefit costs. 

No one expected the private sector to become as corrupt and as unaccountable as the public sector. Yet, regardless of who was in charge of infrastructure projects, they always exceeded initial costsIt's like someone once said: everyone was in on it

H4: What does that mean? 

H3: It means things don't get progressively worse unless all resistance is removed. In order to prevent resistance, one can either eliminate or co-opt obstacles. 

By 2018, the media--more specifically investigative journalism--and the American legal system, essential to keeping the executive branch in check, had been completely co-opted by the Establishment. Even renowned reporters like Lara Logan were hoodwinked by intelligence analysts into reporting fake news. With newspaper journalism slowly decaying into irrelevance, and the most respected television news outlet having published fake news, the public tuned out or began entertaining non-mainstream sources. 

As more and more Americans received their news from non-traditional sources, they started realizing something was wrong, but because they didn't understand inflation or interest rates, no one knew where to begin. People started blaming immigrants, foreign interference, Snowden, WikiLeaks, Russia, Facebook, you name it. 

With Russia, the link was tenuous at best. The real goal was to deflect attention from WikiLeaks/Julian Assange, which had received intercepted cables from various hacker outfits, including hackers affiliated with Russia. These classified cables showed U.S. forces firing on ambulances (see 2007 Baghdad massacre, Ethan McCord, "Collateral Murder") while gaming the rules-of-engagement process designed to prevent civilian deaths. (Short version: an Apache pilot under no actual threat could easily receive shoot-to-kill clearance by claiming in comms he saw an RPG even if the RPG had no reasonable chance of being fired or making contact.) 

H4: You're jumping all over the place. 

H3: I'm trying to show that America's strategy in 2018 was to deliberately avoid the truth, which was reasonable in light of the fact that no one really understood the various risks in the interlinked global financial system. 

The key lesson for us is this: everything that happens, even evil actions, are logical results. If Americans didn't or couldn't understand why their medical bills, education bills, etc., were going up every year without any corresponding increase in quality of life, why wouldn't it make sense to blame outsiders? Why wouldn't it make sense to try to disengage from an uncertain global system? 

H4: But America benefited the most from the global system. 

H3: True, from 1945 to 2001, the world was America's oyster. "When the war [WWII] ended, the United States accounted for two-thirds of the world's industrial output. In 1950, 60 percent of the capital stock of the advanced capitalist world was American. That same year, U.S. corporations accounted for one-third of the world's total GNP." Over time, America realized its greatest strength was using its military, especially its Navy, to control world trade through oil exports, which made its currency the de facto unit of exchange worldwide. 

H4: "In debt we trust."

H3: Exactly--as long as that debt was backed by the U.S. dollar.

H4: Something tells me China wasn't too keen on this arrangement. 

H3: Of course not. "He who has the gold makes the rules," except the "gold" changes every so often. In some places, it was cacao beans; in other places, corn; and still in other places it was pieces of paper granting ownership in companies.  Today, it's data. Some pods still use oil, but for the most part, everything today runs on data

H4: I am starting to feel sorry for these Americans. 

H3: I keep trying to tell you--everyone, good, bad, smart, stupid, was in on it. French philosopher Jean Baudrillard summarized America's situation even better than Neil Postman and George Orwell. Imagine a society where everyone could identify Einstein but almost no one could explain anything he discovered and where the lowest gambler to the highest Supreme Court justice needed debt to survive. 

Let me tell you two stories. In the 21st century, an unknown Iranian-British-American writer knew two people very well. One of them used to be his best friend. He saw his friend, from a privileged family, go to law school and then get a government job regulating securities. On the way to the civilian job at the SEC, this friend--very pro-military and whose father saw active combat--signed up for a graduate degree while working as a Navy JAG to avoid being deployed to Iraq. 

He bought his way out of being deployed but you won't find anyone more genuinely pro-military than him. When he received the job at the SEC regulating securities, he may have even benefited from federal laws promoting employment of military servicemembers. The icing on the cake? When he joined the SEC, he had almost zero understanding of securities. He'd never traded a security and couldn't tell you anything about finance in general. 

H4: So a lawyer in charge of regulating the stock market and Wall Street was clueless about both?

H3: Yes, but remember: this was one of the best Americans the country produced. A good father, a good man. You'd want him working for you. And yet, it's easy to trace a line straight from the SEC/DOJ employment process to the 2008 financial crisis. 

[Editor's note: "The grand total of prison sentences that resulted from a decade of S.E.C. referrals was 87... By 2002, only about one thousand white-collar criminals were in federal prison, less than 1 percent of the total federal prison population." -- from The Number (2004 paperback) by Alex Berenson, pp. 145.] 

Another friend was the opposite of the one I just mentioned. His mother left him when he was young, but his father worked hard and eventually became successful. By the time the friend was in his 20s, he'd passed the bar exam but committed an ethical violation that caused his license to be suspended. He was possibly an alcoholic as well. Around 2008-2009, when housing prices collapsed in America, his family helped him buy a home at a below-market price. And just like that, he became affluent. He even managed to reclaim his license to practice law after attending counseling. 

But this friend isn't someone you'd want your son to become. He had little interest in raising his children when they were under 4 years old, and he married an immigrant dependent on him. At one point, when his wife said something he didn't like, he left abruptly without saying where he was going, leaving her with two young children. She called the writer, distraught, asking about the whereabouts of her husband. Note that we are discussing one of the most successful middle managers in a large, well-known software company. I won't even get into the American president's administration at the time, which included Rob PorterSo whether you analyze the private or public sectors, nothing was working very well. Both seemed to promote some kind of incompetence. 

Even nonprofits, unions, and religious institutions were failing. The Catholic Church in America paid billions in settlements after deliberately covering up child abuse and pedophilia. Child abuse! But what do you expect from a materialistic, military-oriented country professing to follow a prophet who never led or joined an army, was a pacifist, and wasn't materialistic? 

H3: I'm starting to understand what you mean when you say, "Everyone was in on it," but surely there were success stories. 

H4: Of course there were, but it wasn't common. When someone managed to do well without an obvious assist, the media lionized that person, using outliers to create and market the image that America was unique in its ability to elevate the poor into riches. 

H3: We learned about this. By 2018, America had become a society of entrenched wealth, with little intergenerational mobility. Bill Gates' father was a successful lawyer. Warren Buffett's father was a 4-term U.S. Representative. Charlie Munger's grandfather was a federal judge. Elon Musk's father, Errol Musk, once said, "We were very wealthy. We had so much money at times we couldn't even close our safe." 

But it wasn't just billionaires. In 1992, economists Daphne Greenwood and Edward Wolff "estimated that 50 to 70% of the wealth of households under age 50 was inherited." Other prominent economists, Lawrence Summers and Laurence Kotlikoff, "using a variety of simulation techniques, estimated that as much as 80% of personal wealth came from direct inheritance or the income on inherited wealth." (See Doug Henwood, Wall Street (1998), pp. 69) 
Galloway's The Four (2017)
H4: What Americans hadn't understood, in addition to interest rates and inflation, was that democracy in an age of television renders marketing agents more powerful than politicians, educators, and logic itself. Whoever is in power becomes dependent on marketing to maintain legitimacy. 

H3: "Image is everything."

H4: Exactly. Now do you see why politicians were blaming Facebook and Russia in 2018 instead of trying to reform fundamental issues? As long as the problem is elsewhere, they don't look like fools being led to irrelevance. 

At the same time, we should remember marketing drove much of America's consumer economy, so image really did count. If I can buy virtually the same shoe, the same t-shirt, etc., from a Chinese or Japanese company online and pay less, why would I buy an American-made product? Fortunately, by 2018, most consumers had caught on to the marketing machine. In other words, it wasn't just fake news that repelled them--everything marketed falsely turned them off.

Smaller companies started to look more attractive by manufacturing less. Thus, self-imposed economic scarcity with higher personalization became the norm, sometimes even with excellent customer service. Consumers realized they could "signal" an image without major corporations, and small businesses realized they couldn't compete with larger corporations' ability to scale, so you had an economy that forked but became even more dependent on image. 

H3: That doesn't seem optimal, especially if one's economy is consumer-driven.  

H4: True. America faced having to create an entirely new business model, but how could it create a new economy when debt still drove every avenue? Technology companies were ahead of the curve--for decades, they had produced the majority of their revenue from overseas. By 2018, small businesses worldwide finally caught on and started using technological advances to also sell and invest overseas. The trillion dollar economic question became, "Which platforms would succeed? Amazon? Alibaba? Etsy?" 

H3: So the platform became the most important economic weapon? 

H4: Yes. It's interesting you use the term, "weapon," because shipping still had to be effectuated properly, which required global cooperation. If a small or large business couldn't deliver its products efficiently, or if a single customs agent was incompetent, a business would decline even if it succeeded in being noticed online. Amazon predicted this development and began its own shipping business. For truly global trade to occur, shipping and logistics became key drivers. 

As shipping became more efficient, people started questioning the global economic system's overseers and rule-makers. Why shouldn't Albanian mountain water or Georgian mineral water be able to compete on the same level playing field as water from Fiji or Iceland? Why should a few trade negotiators and presidents make it easier for one product to enter a country over another? Why shouldn't consumers in America, Cuba, and China have unfettered access to Iranian saffron and Persian pistachios? 

H3: You're suggesting something radical. At the time, the basis for trade agreements and free trade zones--and their lower and preferential tariffs--was military and security cooperation as well as mutually beneficial weapons purchases. Trade was weaponized as a way to force weaker countries not part of a particular framework to adapt or come to the table and negotiate. 

H4: Yes, but why? Why should the global economy be weaponized and based on military spending? 

H3: Because if Country A had fewer security safeguards, its ability to ship containers to Country B increases risks for Country B's citizens. Human trafficking, weapons sales... 

H4: But human trafficking and weapons sales were happening regardless of trade agreements and tariffs. The mafia would pay off the right people, squeeze others, and co-opt whatever security apparatus was in place. Wherever human beings exist, so does the potential for corruption. Isn't that why fully automated systems captured the public's imagination in 2017? If you could remove human beings from the equation, you could increase safety and time. The tradeoffs would be less independence, less individuality, and less personalization--but if it worked for self-driving cars, why not shipping containers? After all, "90% of the world's commercial traffic is transported in containers on the high seas." (McMafia (2008), pp. 339) 

Unfortunately, Americans underestimated the level of institutional corruption. Few people part of the security or global trade apparatus supported legalization of drugs or smoother legal immigration because as long as a mafia or enemy existed, law enforcement and military spending could increase or at least be maintained. On the federal/national level, military spending at some point provided 13.4% of jobs for American men. On the local/city level, at least 50%--and often 70+%--of the budget went to public safety aka police and firefighters. In some cities, even primary school crossing guards were being hired through the city's police budget.

So let's pretend humans in 2019 awoke to a world of peace and fully automated trade systems. How could their governments provide jobs and the taxes that produced the cash flow to maintain trillions of dollars of outstanding debt? How could the military and banking institutions, which had contributed so much to progress from 1945 to 2001, get their due? 

H3: But by 2018, drones and other technological innovations meant that fewer soldiers were needed, and everyone agreed the American-debt-fueled model was unsustainable. 

H4: So what? Don't you remember? Everyone was in on it. Image was everything. So how do you sustain such a model? You make sure everyone gets paid. 

Consider something as simple as tobacco sales. Everyone knows tobacco is terrible for you. Your body rejects it immediately the first time you try it. But if you create a system where everyone from the local pharmacy to the local teacher to the national government gets paid--through sales taxes or direct sale revenue--then why would anyone be against tobacco? To be against tobacco, you'd have to replace the revenue on multiple levels with something else. That "something else" might be unpredictable. 

[Editor's note: "In 1912, the [American] government derived 45% of its revenue from duties imposed on imported goods, and another 42% from excise taxes on alcohol and tobacco. There was no income tax. So tariffs and these two excise taxes accounted for 87% of government receipts. They were a kind of national sales tax, though no one called them that." -- Donald Bartlett & James Steele, The Great American Tax Dodge (2000), hardcover, pp. 6.] 

H3: "The devil you know is better than the devil you don't"? 

H4: Exactly. There's no conspiracy, no evil intent. But slowly everyone buys into an interlinked web of revenue, and once debt gets added in... 

H3: The debt must be paid. Now I understand political pundit James Carville: “I used to think if there was reincarnation, I wanted to come back as the president or the pope or a .400 baseball hitter. But now I want to come back as the bond market. You can intimidate everybody.”

H4: Ha! You know something else? By 2018, Muslims already had the solution for over 1000 years, or at least a mitigation strategy: a partnership investment model rather than a debt-via-slavery one. The followers of Muhammad (PBUH), many of them business-savvy, must have heard of the Christian Jubilee(s) and innovated. Without realizing it, they invented the modern venture capital model, which was perfected by Silicon Valley's Tom Perkins

H3: So the Americans, they figured out the Muslims had the right idea and adapted?

H4: [Sigh.] No. They and their allies killed or tortured as many Muslims as they possibly could. Also, their President actively sought to ban them from entering the country. (See Executive Order 13769.) 

H3: The courts went along with it?

H4: What do I keep telling you? Everyone was in on it. You think judges in Nazi Germany didn't go along with political leadership? (
Jörg Friedrich: "Perhaps there is truly evidence that a constitutional state can stand on a judicial mass grave.") It's the same everywhere, in every time period.

[Editor's Note (February 15, 2018): the day after this post was published, a U.S. Court of Appeals voted 9-4 against revised Executive Order 13769. It has been said but not confirmed that "H4" almost shed tears upon learning of the holding until he realized the decision wasn't unanimous. From Chief Judge Roger L. Gregory

On a human level, the Proclamation’s invisible yet impenetrable barrier denies the possibility of a complete, intact family to tens of thousands of Americans. On an economic level, the Proclamation inhibits the normal flow of information, ideas, resources, and talent between the Designated [Muslim-majority] Countries and our schools, hospitals, and businesses. On a fundamental level, the Proclamation second-guesses our nation’s dedication to religious freedom and tolerance. "The basic purpose of the religion clause of the First Amendment is to promote and assure the fullest possible scope of religious liberty and tolerance for all and to nurture the conditions which secure the best hope of attainment of that end." Schempp, 374 U.S. at 305 (Goldberg, J., concurring). When we compromise our values as to some, we shake the foundation as to all. More here.] 

Here's another quote you might like: "It seems that mankind is too stupid and too greedy to save himself." It was repeated verbatim by Stephen Hawking decades later. I'm no physicist, but inertia is the most powerful force I've studied, especially when the human ego is involved. 

H3: This is getting depressing. It couldn't possibly have been that bad, because otherwise, we wouldn't be here discussing our ancestors, right?

H4: Progress doesn't require happiness. A machine can continue regardless of its emotional state, and the American economy was very much like a machine, with workers in debt having no choice but to be optimistic.

H3: I don't agree with you. I've studied the humans, too, and they produced wonderful art and were capable of great acts of charity. I'll give you a quote now, from Dr. Martin Luther King, Jr.: "The arc of the moral universe is long, but it bends towards justice."

H4: Dr. King didn't invent that quote, but I like his other ones better:  

"A few years ago there was a shining moment in that struggle. It seemed as if there was a real promise of hope for the poor--both black and white--through the poverty program. There were experiments, hopes, new beginnings. Then came the buildup in Vietnam and I watched the program broken and eviscerated as if it were some idle political plaything of a society gone mad on war, and I knew that America would never invest the necessary funds or energies in rehabilitation of its poor so long as adventures like Vietnam continued to draw men and skills and money like some demonic destructive suction tube. So I was increasingly compelled to see the war as an enemy of the poor and to attack it as such... I knew that I could never again raise my voice against the violence of the oppressed in the ghettos without having first spoken clearly to the greatest purveyor of violence in the world today--my own government...

I am convinced that if we are to get on the right side of the world revolution, we as a nation must undergo a radical revolution of values. We must rapidly begin the shift from a 'thing-oriented' society to a 'person-oriented' society. When machines and computers, profit motives and property rights are considered more important than people, the giant triplets of racism, materialism, and militarism are incapable of being conquered... A nation that continues year after year to spend more money on military defense than on programs of social uplift is approaching spiritual death."

Those words were spoken in 1967. If you are an optimist, would you say America heeded Dr. King's words from 1967 to 2018? 

H3: Again, if our human ancestors failed, if they were so stupid, why are you and I here? 

H4: There are several possible answers to your question. You can go with the W.E.B. Dubois's "Talented Tenth," you can claim humanity's perseverance greatly exceeded its compassion and intelligence... 

H3: Why not just look at Kazuo Ishiguro's life? If most of our ancestors were stupid and greedy, how could they recognize and elevate a man like him? Surely you are being selective in your examples. 

H4: I don't think I am being selective in my examples. Didn't I say earlier that human beings used outliers to market and promote certain images? 

H3: But it's not just him, a Japanese-born Brit. Look at Erica Wiebe, a proud Canadian with a German last name. Or Pakistani-American Shahid Khan. How can you look at these individuals and say the entire system was corrupt and everyone was in on it?

H4:  I admit I was being overly general, but are you arguing we should focus on outliers in evaluating a culture? 
Melbourne, Australia (2016)
H3: Not at all, but certainly we must account for them. Perhaps we should continue this conversation later, when we can achieve an understanding that includes the full panoply of humanity, its successes as well as its failures. 

H4: As you wish