Several years ago, federal prosecutor indicted Robert Doggart for soliciting others to help destroy a mosque in upstate New York. Among the specific charges was solicitation to commit arson in violation of 18 U.S.C. § 844(i), for which he was convicted in federal court.
In United States v. Doggart, the U.S. Court of Appeals for the Sixth Circuit considered Doggart’s appeal of his conviction for, among other things, exceeding the scope of the federal arson statute, which is limited to the destruction of buildings or property “used in” interstate commerce.”
In an opinion by Judge Jeffrey Sutton, the Sixth Circuit found merit to this aspect of Doggart’s appeal. From Judge Sutton’s opinion:
Doggart objects to his conviction for solicitation to commit federal arson on the ground that the target of the crime—a mosque—is not “used in” interstate commerce or in any activity affecting interstate commerce. 18 U.S.C. §§ 373, 844(i). We agree.
The text of this criminal statute does not create a natural home for the attempted destruction of a mosque. The underlying arson statute says in relevant part: “Whoever maliciously damages or destroys, or attempts to damage or destroy, by means of fire or an explosive, any building, vehicle, or other real or personal property used in interstate or foreign commerce or in any activity affecting interstate or foreign commerce shall be imprisoned.” 18 U.S.C. § 844(i). This encompassing grant of authority (to prosecute the arson of “any” building) comes with a broad limit on that authority (to do so only when the building is “used in interstate [commerce]” or “used … in an activity affecting interstate [commerce]”).
By any conventional measure, these terms do not cover the attempted destruction of a local mosque or for that matter any house of worship. In everyday English, one does not think of a mosque that serves a 200-person local community as a building used in commerce, much less interstate commerce. There may be plenty of good reasons to prosecute Robert Doggart for his deranged plan. But the words of this statute are not one of them.
Precedent backs this up. Arson, the United States Supreme Court has made clear, is “a paradigmatic” state law crime, one usually best left to the States to prosecute. Jones v. United States, 529 U.S. 848, 858, 120 S.Ct. 1904, 146 L.Ed.2d 902 (2000). In an opinion by Justice Ginsburg, Jones determined that Congress did not exercise the full scope of its Commerce Clause powers in enacting § 844(i). Id. at 854–55, 120 S.Ct. 1904. The National Legislature’s decision to cabin the arson statute’s reach to buildings “used in” interstate commerce, the Court reasoned, reflected a decision to regulate less than Congress otherwise might have power to require. Id. It then construed the statute to apply only to the destruction of buildings with an “active employment for commercial purposes, and not merely a passive, passing, or past connection to commerce.” Id. at 855, 120 S.Ct. 1904. Under that approach, Jones unanimously read § 844(i) not to cover the arson of a residence. Otherwise, the Court feared, the statute would transform “virtually every arson in the country [into] a federal offense.” Id. at 859, 120 S.Ct. 1904; United States v. Laton, 352 F.3d 286, 303 (6th Cir. 2003) (Sutton, J., dissenting).
In holding that the federal arson statute does not cover private residences, the Court rejected several alleged connections between homes and interstate commerce. It did not suffice, the Court ruled, that an interstate bank lent the owners money to buy the home, that the building was insured by interstate companies, or that interstate energy companies kept the house warm. Jones, 529 U.S. at 852–57, 120 S.Ct. 1904. In each instance, the interstate activity was perceived as too fleeting and incidental to the conventional use of a home—as a shelter, a place to live, a place to raise a family. Id. at 855–56, 120 S.Ct. 1904. The same presumably would be true for other equally attenuated connections between private homes and interstate commerce: that each home is part of a large interstate commercial market in home buying and selling; that people often cross state lines to buy houses; that the materials to build residences often come from other States; or even that an unsentimental economist might characterize a family as a group of profit-maximizing individuals who live together as a way to keep expenses down.
Three canons of construction reinforced the Court’s conclusion. One was the rule of lenity. Id. at 858, 120 S.Ct. 1904. This is a criminal statute after all. Another was the principle that, unless Congress speaks “clearly,” the federal courts will not assume that it means to change the “federal-state balance in the prosecution of crimes.” Id. (quotation omitted). Arson is a quintessential state law crime, and the power to regulate arson under interstate commerce includes the power to marginalize any local regulation of the topic (by creating higher federal sentences for the same crime) or to preempt it (by barring any local regulation of the topic). The third canon was that, “where a statute is susceptible of two constructions, by one of which grave and doubtful constitutional questions arise and by the other of which such questions are avoided, our duty is to adopt the latter.” Id. at 857–58, 120 S.Ct. 1904 (quotation omitted). The Court relied on the “used in” qualifier to limit the reach of the statute to conventional uses of interstate commerce and to prevent the law from exceeding Congress’s Commerce Clause authority by regulating any and all local arsons. All indicators of meaning considered, the Court ruled that one category of American buildings—private residences—is generally out of bounds when it comes to the federal arson statute.
The same is true, even more true, of houses of worship. Whether it’s a church, a synagogue, or a mosque, they are no more “active[ly]” used for “commercial purposes” than residential homes are. Id. at 855, 120 S.Ct. 1904. A place of worship simply is not the kind of building traditionally used for commercial activities. The structures instead are associated with spiritual and local activities—a place of worship and a source of community and education for people of a shared faith. One could tie aspects of these buildings, we realize, to some commercial activities, just as one could do the same with respect to a family dwelling. Yes, the buildings are often insured. (Faith goes so far.) A house of worship must comply with governmental building and safety codes that apply to commercial buildings. (Give to Caesar what is Caesar’s.) The faith community usually employs and pays the individuals who work in the buildings. (Even servants of God have bills to pay.) And these expenses and the expenses to construct the buildings themselves are paid for through tithes and other contributions—usually money earned through commercial, often interstate commercial, activities. But just as these and comparable activities did not suffice to treat residences as buildings used in interstate commerce, they do not suffice to transform houses of worship into buildings used in interstate commerce. That a “building is a church” or house of worship of any kind, “without more,” does not cut it. . . .
Upon reversing parts of Doggart’s conviction, the Court remanded Doggart’s case to the district court for resentencing.
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In a much-discussed recent blog post, economist Tyler Cowen advocates what he calls “state capacity libertarianism” (which I will call “SCL” for short). He makes two claims: that “state capacity libertarianism” is the view that “the smart classical liberals and libertarians” are already moving towards even as traditional libertarianism is in decline, and that SCL is the right world-view for libertarians to adopt.
In particular, it’s important to emphasize that Tyler’s normative argument is distinct from his positive claim about what libertarians are actually doing. One can be right even if the other is wrong.
Although I’m a big fan of Tyler’s work, I am skeptical about both the normative and the positive aspects of his case for SCL. This post takes up the positive issue. I will cover the normative one in a subsequent piece.
Here’s Tyler’s positive analysis of where libertarians have been headed over the last few years:
Having tracked the libertarian “movement” for much of my life, I believe it is now pretty much hollowed out, at least in terms of flow. One branch split off into Ron Paul-ism and less savory alt right directions, and another, more establishment branch remains out there in force but not really commanding new adherents…. For another, smart people are on the internet, and the internet seems to encourage synthetic and eclectic views, at least among the smart and curious. Unlike the mass culture of the 1970s, it does not tend to breed “capital L Libertarianism.” On top of all that, the out-migration from narrowly libertarian views has been severe, most of all from educated women….
Along the way, I believe the smart classical liberals and libertarians have, as if guided by an invisible hand, evolved into a view that I dub with the entirely non-sticky name of State Capacity Libertarianism.”
Tyler’s definition of state capacity libertarianism is not a simple one. But, in so far as it differs from previous versions of libertarianism, largely boils down to a focus on expanding and improving the quality of government, including performing at least some substantial range of functions that most libertarians have traditionally argued should be left to the private sector.
Both the claim that there is an outmigration from libertarianism and the claim that “smart” libertarians are turning towards SCL strike me as wrong, or at least unsupported by the available evidence. Here’s why:
I. Is there an Outmigration from Libertarianism?
Has libertarianism experienced a large outmigration of “alt right directions?” We can certainly find examples of notorious alt rightists who used to be (or at least used to claim to be) libertarians. But none of them were actually at all prominent within the libertarian movement, and there is no indication they are a large group of people (even relative to the total number of libertarians out there).
It is also fair to point out that there have long been some libertarian-leaning people who are sympathetic to various of right-wing nationalism and have tried to make alliances in that quarter. But this is not a new problem, and such people have long been condemned by the majority of the libertarian intellectual community. The issue actually came to public prominence in 2008 and 2012 during the controversy over Ron Paul’s 1990s racist newsletters, at which time numerous prominent libertarians condemned them.
The genuinely prominent defectors from libertarianism in recent years, have actually gone not to the right, but to the center and left. The most notable are probably Jerry Taylor, Will Wilkinson, and some of their associates at the Niskanen Center. I took issue with Taylor’s rejection of “ideology” here, and Wilkinson’s views on democracy and libertarianism here and here. Taylor and Wilkinson are important figures, and we should take their critiques of libertarianism seriously (as I have tried to do). But, so far at least, their shift has not triggered a more general exodus from libertarianism.
I don’t know of a good measure of the number of libertarians in the intellectual word, such as in academia or policy analysis. Quantitative studies of academic ideology (at least those I am familiar with) fail to differentiate libertarians from other non-left scholars. But my admittedly anecdotal impression is that the percentage is at least as high as a decade or two ago, and perhaps modestly higher. In my own academic field (law), there are more libertarians now than when I started my career in 2003.
Finally, I see no evidence that there has been a “severe” outmigration by “highly educated women.” There is no doubt that self-identified libertarians are disproportionately male, and this is a problem for the movement (by contrast libertarians are much more racially and ethnically diverse than many think). But this is not a new problem, and has not gotten worse in recent years than it was before.
If anything, the percentage of women among younger libertarian intellectuals strikes me as higher than that in my own generation and those that came before. This is another point on which we lack systematic data, so I could be wrong. But the percentage of women in groups such as Students For Liberty (I have spoken at several of their conferences) is much higher than that in libertarian groups I saw when I was a student in the 1990s. Ditto for the percentage of women among younger libertarian academics in law, economics, and political science (the fields I am most familiar with).
It’s also worth noting that virtually all the prominent defectors from libertarianism in recent years have been men, not women (Taylor and Wilkinson are, again, notable examples). Though, in fairness, that’s in substantial part because there were more men in the initial population.
Perhaps Tyler’s claim of an exodus can be defended on the ground that it only applies to “narrow” libertarianism, as he puts it. Much depends on what counts, as “narrow.” But if that term means categorically rejecting all government intervention beyond the most strictly defined minimal state or endorsing absolute property rights that can never be overcome by any other considerations, then most libertarian thinkers already rejected those views a decade or two ago. That was certainly true of nearly all who were at that time prominent in the academic and intellectual worlds. Perhaps even more have rejected that position since then. But if so, it’s not a major trend.
It is, I think, more useful to define libertarianism as the ideology that has a very strong presumption against government intervention in both the “economic” and “social” spheres, and therefore rejects a very high percentage of the activities of modern states. By that definition, there has been no major exodus to speak of.
Thus, Tyler is, I think, wrong to claim that there has been a substantial exodus from libertarianism in recent years. That does not mean libertarians can afford to rest on our (very modest) laurels. Far from it. After all, it is also clear there has been little, if any, significant expansion of the libertarian movement in that time. Our position has also weakened because of the rise of nationalism on the right and “democratic socialism” on the left, both of which are deeply inimical to libertarianism. Even if the number of libertarians has not declined, we face more hostility from adherents of other ideologies than was the case 10-20 years ago.
A group that was a small minority to begin with needs to more than just maintain its position. It badly needs growth. On that point, I very much agree with Nick Gillespie’s response to Tyler’s post.
II. Are “Smart” Libertarians Adopting SCL?
What of Tyler’s claim that “the smart classical liberals and libertarians” have moved towards SCL? A lot here turns on who qualifies as “smart.” If it means those who have the highest IQ or other forms of raw intellectual ability, then we don’t have the evidence we need to figure out the answer. Who knows whether the libertarian intellectuals who agree with Tyler’s position are smarter—in this sense—than those who don’t?
It may be more productive to interpret “smart” as referring to the most prominent and successful libertarian thinkers. The quality and reach of thinkers’ ideas surely matters more than how high their IQs are.
Consider those American libertarian thinkers whose work has had the biggest mainstream impact over the last decade, as measured by both public and academic attention. The three cases that most stand out are Jason Brennan’s work on democratic theory and related issues, Bryan Caplan’s work on education and immigration, and Deirdre McCloskey’s series of books on the nature and history of liberalism. Little if any of their work focuses on enhancing state capacity. To the contrary, all three emphasize the case for limiting and constraining government power, albeit in quite different ways.
The same is true for nearly all the most notable recent libertarian scholarship in my own field: law. Here too, state capacity is mostly notable by its absence. My impression is that the same is true of recently successful libertarian-leaning scholars in economics, philosophy, and political theory, such as John Cochrane, Casey Mulligan, Michael Huemer, and John Tomasi, among others. As David Henderson points out in his response to Tyler, state capacity is also largely absent from the recent research agendas of the most prominent and influential libertarian think tanks and publications, such as the Cato Institute, the Mercatus Center, and Reason.
With the important exception of Tyler himself, I am hard-pressed to name any prominent libertarian thinker who has found success in recent years by focusing on state capacity. The most plausible exception that comes to my mind is Brink Lindsey, who unlike many of his Niskanen Center colleagues, might still be considered a libertarian, at least in some important respects. His excellent and widely discussed 2017 book, The Captured Economy (coauthored with Steve Teles, who is not a libertarian), does indeed advocate a number of state capacity-focused reforms, which are combined with a more traditional libertarian emphasis on deregulation of licensing and zoning (I assessed the book’s arguments here and here). I am not at all sure Lindsey would embrace the SCL label. But he may be the closest thing to an example of the phenomenon of “smart” libertarians moving in an SCL direction.
While I follow libertarian intellectual developments closely and know many people in the movement, I have to admit that Tyler knows more. Perhaps he can point to notable examples of libertarian SCL-ers whom I have missed. I would be happy to post any response to my argument that he cares to make. For the moment, however, the available evidence suggests that there is no significant outmigration from libertarianism, and that very few “smart” libertarians are adopting an SCL perspective.
The fact that SCL seems to have very few adherents—even by comparison with conventional libertarianism—doesn’t mean SCL is wrong. Many, perhaps most, great ideas start out with very few supporters. In my next post on this issue, I will take up the question of whether libertarians should embrace SCL, regardless of whether any significant number have done so already.
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Several years ago, federal prosecutor indicted Robert Doggart for soliciting others to help destroy a mosque in upstate New York. Among the specific charges was solicitation to commit arson in violation of 18 U.S.C. § 844(i), for which he was convicted in federal court.
In United States v. Doggart, the U.S. Court of Appeals for the Sixth Circuit considered Doggart’s appeal of his conviction for, among other things, exceeding the scope of the federal arson statute, which is limited to the destruction of buildings or property “used in” interstate commerce.”
In an opinion by Judge Jeffrey Sutton, the Sixth Circuit found merit to this aspect of Doggart’s appeal. From Judge Sutton’s opinion:
Doggart objects to his conviction for solicitation to commit federal arson on the ground that the target of the crime—a mosque—is not “used in” interstate commerce or in any activity affecting interstate commerce. 18 U.S.C. §§ 373, 844(i). We agree.
The text of this criminal statute does not create a natural home for the attempted destruction of a mosque. The underlying arson statute says in relevant part: “Whoever maliciously damages or destroys, or attempts to damage or destroy, by means of fire or an explosive, any building, vehicle, or other real or personal property used in interstate or foreign commerce or in any activity affecting interstate or foreign commerce shall be imprisoned.” 18 U.S.C. § 844(i). This encompassing grant of authority (to prosecute the arson of “any” building) comes with a broad limit on that authority (to do so only when the building is “used in interstate [commerce]” or “used … in an activity affecting interstate [commerce]”).
By any conventional measure, these terms do not cover the attempted destruction of a local mosque or for that matter any house of worship. In everyday English, one does not think of a mosque that serves a 200-person local community as a building used in commerce, much less interstate commerce. There may be plenty of good reasons to prosecute Robert Doggart for his deranged plan. But the words of this statute are not one of them.
Precedent backs this up. Arson, the United States Supreme Court has made clear, is “a paradigmatic” state law crime, one usually best left to the States to prosecute. Jones v. United States, 529 U.S. 848, 858, 120 S.Ct. 1904, 146 L.Ed.2d 902 (2000). In an opinion by Justice Ginsburg, Jones determined that Congress did not exercise the full scope of its Commerce Clause powers in enacting § 844(i). Id. at 854–55, 120 S.Ct. 1904. The National Legislature’s decision to cabin the arson statute’s reach to buildings “used in” interstate commerce, the Court reasoned, reflected a decision to regulate less than Congress otherwise might have power to require. Id. It then construed the statute to apply only to the destruction of buildings with an “active employment for commercial purposes, and not merely a passive, passing, or past connection to commerce.” Id. at 855, 120 S.Ct. 1904. Under that approach, Jones unanimously read § 844(i) not to cover the arson of a residence. Otherwise, the Court feared, the statute would transform “virtually every arson in the country [into] a federal offense.” Id. at 859, 120 S.Ct. 1904; United States v. Laton, 352 F.3d 286, 303 (6th Cir. 2003) (Sutton, J., dissenting).
In holding that the federal arson statute does not cover private residences, the Court rejected several alleged connections between homes and interstate commerce. It did not suffice, the Court ruled, that an interstate bank lent the owners money to buy the home, that the building was insured by interstate companies, or that interstate energy companies kept the house warm. Jones, 529 U.S. at 852–57, 120 S.Ct. 1904. In each instance, the interstate activity was perceived as too fleeting and incidental to the conventional use of a home—as a shelter, a place to live, a place to raise a family. Id. at 855–56, 120 S.Ct. 1904. The same presumably would be true for other equally attenuated connections between private homes and interstate commerce: that each home is part of a large interstate commercial market in home buying and selling; that people often cross state lines to buy houses; that the materials to build residences often come from other States; or even that an unsentimental economist might characterize a family as a group of profit-maximizing individuals who live together as a way to keep expenses down.
Three canons of construction reinforced the Court’s conclusion. One was the rule of lenity. Id. at 858, 120 S.Ct. 1904. This is a criminal statute after all. Another was the principle that, unless Congress speaks “clearly,” the federal courts will not assume that it means to change the “federal-state balance in the prosecution of crimes.” Id. (quotation omitted). Arson is a quintessential state law crime, and the power to regulate arson under interstate commerce includes the power to marginalize any local regulation of the topic (by creating higher federal sentences for the same crime) or to preempt it (by barring any local regulation of the topic). The third canon was that, “where a statute is susceptible of two constructions, by one of which grave and doubtful constitutional questions arise and by the other of which such questions are avoided, our duty is to adopt the latter.” Id. at 857–58, 120 S.Ct. 1904 (quotation omitted). The Court relied on the “used in” qualifier to limit the reach of the statute to conventional uses of interstate commerce and to prevent the law from exceeding Congress’s Commerce Clause authority by regulating any and all local arsons. All indicators of meaning considered, the Court ruled that one category of American buildings—private residences—is generally out of bounds when it comes to the federal arson statute.
The same is true, even more true, of houses of worship. Whether it’s a church, a synagogue, or a mosque, they are no more “active[ly]” used for “commercial purposes” than residential homes are. Id. at 855, 120 S.Ct. 1904. A place of worship simply is not the kind of building traditionally used for commercial activities. The structures instead are associated with spiritual and local activities—a place of worship and a source of community and education for people of a shared faith. One could tie aspects of these buildings, we realize, to some commercial activities, just as one could do the same with respect to a family dwelling. Yes, the buildings are often insured. (Faith goes so far.) A house of worship must comply with governmental building and safety codes that apply to commercial buildings. (Give to Caesar what is Caesar’s.) The faith community usually employs and pays the individuals who work in the buildings. (Even servants of God have bills to pay.) And these expenses and the expenses to construct the buildings themselves are paid for through tithes and other contributions—usually money earned through commercial, often interstate commercial, activities. But just as these and comparable activities did not suffice to treat residences as buildings used in interstate commerce, they do not suffice to transform houses of worship into buildings used in interstate commerce. That a “building is a church” or house of worship of any kind, “without more,” does not cut it. . . .
Upon reversing parts of Doggart’s conviction, the Court remanded Doggart’s case to the district court for resentencing.
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In a much-discussed recent blog post, economist Tyler Cowen advocates what he calls “state capacity libertarianism” (which I will call “SCL” for short). He makes two claims: that “state capacity libertarianism” is the view that “the smart classical liberals and libertarians” are already moving towards even as traditional libertarianism is in decline, and that SCL is the right world-view for libertarians to adopt.
In particular, it’s important to emphasize that Tyler’s normative argument is distinct from his positive claim about what libertarians are actually doing. One can be right even if the other is wrong.
Although I’m a big fan of Tyler’s work, I am skeptical about both the normative and the positive aspects of his case for SCL. This post takes up the positive issue. I will cover the normative one in a subsequent piece.
Here’s Tyler’s positive analysis of where libertarians have been headed over the last few years:
Having tracked the libertarian “movement” for much of my life, I believe it is now pretty much hollowed out, at least in terms of flow. One branch split off into Ron Paul-ism and less savory alt right directions, and another, more establishment branch remains out there in force but not really commanding new adherents…. For another, smart people are on the internet, and the internet seems to encourage synthetic and eclectic views, at least among the smart and curious. Unlike the mass culture of the 1970s, it does not tend to breed “capital L Libertarianism.” On top of all that, the out-migration from narrowly libertarian views has been severe, most of all from educated women….
Along the way, I believe the smart classical liberals and libertarians have, as if guided by an invisible hand, evolved into a view that I dub with the entirely non-sticky name of State Capacity Libertarianism.”
Tyler’s definition of state capacity libertarianism is not a simple one. But, in so far as it differs from previous versions of libertarianism, largely boils down to a focus on expanding and improving the quality of government, including performing at least some substantial range of functions that most libertarians have traditionally argued should be left to the private sector.
Both the claim that there is an outmigration from libertarianism and the claim that “smart” libertarians are turning towards SCL strike me as wrong, or at least unsupported by the available evidence. Here’s why:
I. Is there an Outmigration from Libertarianism?
Has libertarianism experienced a large outmigration of “alt right directions?” We can certainly find examples of notorious alt rightists who used to be (or at least used to claim to be) libertarians. But none of them were actually at all prominent within the libertarian movement, and there is no indication they are a large group of people (even relative to the total number of libertarians out there).
It is also fair to point out that there have long been some libertarian-leaning people who are sympathetic to various of right-wing nationalism and have tried to make alliances in that quarter. But this is not a new problem, and such people have long been condemned by the majority of the libertarian intellectual community. The issue actually came to public prominence in 2008 and 2012 during the controversy over Ron Paul’s 1990s racist newsletters, at which time numerous prominent libertarians condemned them.
The genuinely prominent defectors from libertarianism in recent years, have actually gone not to the right, but to the center and left. The most notable are probably Jerry Taylor, Will Wilkinson, and some of their associates at the Niskanen Center. I took issue with Taylor’s rejection of “ideology” here, and Wilkinson’s views on democracy and libertarianism here and here. Taylor and Wilkinson are important figures, and we should take their critiques of libertarianism seriously (as I have tried to do). But, so far at least, their shift has not triggered a more general exodus from libertarianism.
I don’t know of a good measure of the number of libertarians in the intellectual word, such as in academia or policy analysis. Quantitative studies of academic ideology (at least those I am familiar with) fail to differentiate libertarians from other non-left scholars. But my admittedly anecdotal impression is that the percentage is at least as high as a decade or two ago, and perhaps modestly higher. In my own academic field (law), there are more libertarians now than when I started my career in 2003.
Finally, I see no evidence that there has been a “severe” outmigration by “highly educated women.” There is no doubt that self-identified libertarians are disproportionately male, and this is a problem for the movement (by contrast libertarians are much more racially and ethnically diverse than many think). But this is not a new problem, and has not gotten worse in recent years than it was before.
If anything, the percentage of women among younger libertarian intellectuals strikes me as higher than that in my own generation and those that came before. This is another point on which we lack systematic data, so I could be wrong. But the percentage of women in groups such as Students For Liberty (I have spoken at several of their conferences) is much higher than that in libertarian groups I saw when I was a student in the 1990s. Ditto for the percentage of women among younger libertarian academics in law, economics, and political science (the fields I am most familiar with).
It’s also worth noting that virtually all the prominent defectors from libertarianism in recent years have been men, not women (Taylor and Wilkinson are, again, notable examples). Though, in fairness, that’s in substantial part because there were more men in the initial population.
Perhaps Tyler’s claim of an exodus can be defended on the ground that it only applies to “narrow” libertarianism, as he puts it. Much depends on what counts, as “narrow.” But if that term means categorically rejecting all government intervention beyond the most strictly defined minimal state or endorsing absolute property rights that can never be overcome by any other considerations, then most libertarian thinkers already rejected those views a decade or two ago. That was certainly true of nearly all who were at that time prominent in the academic and intellectual worlds. Perhaps even more have rejected that position since then. But if so, it’s not a major trend.
It is, I think, more useful to define libertarianism as the ideology that has a very strong presumption against government intervention in both the “economic” and “social” spheres, and therefore rejects a very high percentage of the activities of modern states. By that definition, there has been no major exodus to speak of.
Thus, Tyler is, I think, wrong to claim that there has been a substantial exodus from libertarianism in recent years. That does not mean libertarians can afford to rest on our (very modest) laurels. Far from it. After all, it is also clear there has been little, if any, significant expansion of the libertarian movement in that time. Our position has also weakened because of the rise of nationalism on the right and “democratic socialism” on the left, both of which are deeply inimical to libertarianism. Even if the number of libertarians has not declined, we face more hostility from adherents of other ideologies than was the case 10-20 years ago.
A group that was a small minority to begin with needs to more than just maintain its position. It badly needs growth. On that point, I very much agree with Nick Gillespie’s response to Tyler’s post.
II. Are “Smart” Libertarians Adopting SCL?
What of Tyler’s claim that “the smart classical liberals and libertarians” have moved towards SCL? A lot here turns on who qualifies as “smart.” If it means those who have the highest IQ or other forms of raw intellectual ability, then we don’t have the evidence we need to figure out the answer. Who knows whether the libertarian intellectuals who agree with Tyler’s position are smarter—in this sense—than those who don’t?
It may be more productive to interpret “smart” as referring to the most prominent and successful libertarian thinkers. The quality and reach of thinkers’ ideas surely matters more than how high their IQs are.
Consider those American libertarian thinkers whose work has had the biggest mainstream impact over the last decade, as measured by both public and academic attention. The three cases that most stand out are Jason Brennan’s work on democratic theory and related issues, Bryan Caplan’s work on education and immigration, and Deirdre McCloskey’s series of books on the nature and history of liberalism. Little if any of their work focuses on enhancing state capacity. To the contrary, all three emphasize the case for limiting and constraining government power, albeit in quite different ways.
The same is true for nearly all the most notable recent libertarian scholarship in my own field: law. Here too, state capacity is mostly notable by its absence. My impression is that the same is true of recently successful libertarian-leaning scholars in economics, philosophy, and political theory, such as John Cochrane, Casey Mulligan, Michael Huemer, and John Tomasi, among others. As David Henderson points out in his response to Tyler, state capacity is also largely absent from the recent research agendas of the most prominent and influential libertarian think tanks and publications, such as the Cato Institute, the Mercatus Center, and Reason.
With the important exception of Tyler himself, I am hard-pressed to name any prominent libertarian thinker who has found success in recent years by focusing on state capacity. The most plausible exception that comes to my mind is Brink Lindsey, who unlike many of his Niskanen Center colleagues, might still be considered a libertarian, at least in some important respects. His excellent and widely discussed 2017 book, The Captured Economy (coauthored with Steve Teles, who is not a libertarian), does indeed advocate a number of state capacity-focused reforms, which are combined with a more traditional libertarian emphasis on deregulation of licensing and zoning (I assessed the book’s arguments here and here). I am not at all sure Lindsey would embrace the SCL label. But he may be the closest thing to an example of the phenomenon of “smart” libertarians moving in an SCL direction.
While I follow libertarian intellectual developments closely and know many people in the movement, I have to admit that Tyler knows more. Perhaps he can point to notable examples of libertarian SCL-ers whom I have missed. I would be happy to post any response to my argument that he cares to make. For the moment, however, the available evidence suggests that there is no significant outmigration from libertarianism, and that very few “smart” libertarians are adopting an SCL perspective.
The fact that SCL seems to have very few adherents—even by comparison with conventional libertarianism—doesn’t mean SCL is wrong. Many, perhaps most, great ideas start out with very few supporters. In my next post on this issue, I will take up the question of whether libertarians should embrace SCL, regardless of whether any significant number have done so already.
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A 45-year-old man caught with child pornography had a novel defense in court; he claimed he identified as an 8-year-old girl.
Facing up to 20 years in prison, Joseph Gobrick told a judge in Michigan that he had a First Amendment right to view child porn on his computer and that he was in fact an 8-year-old girl, so it didn’t matter anyway.
“I’ve always been an 8-year-old girl, and even in my drawings and fantasies I’m always an 8-year-old girl,” said Gobrick.
After his claim that he was in fact a child and therefore immune from prosecution didn’t impress the judge, Gobrick resorted to implying that his oppressors were behaving like Nazis.
“Under the law, Auschwitz was legal,” he said, arguing, “What you’re doing here is wrong, just as Auschwitz was.”
Joseph Gobrick is a 45-year-old male sex offender in Grand Rapids, Michigan who claims that he has “always been an 8-year-old girl.” So on top of being a female child, he also doesn’t age. He has self-ID’d himself into immortality. pic.twitter.com/jssVzkhvFN
“If Gobrick can identify as a female, why can’t he identify as a female of whatever age he chooses?”asks Matt Walsh.
“At least a man who “feels like a child” can rightly point out that he was once a child, so he has some frame of reference for judging these feelings. And at least it does make sense, in the case of certain mental disabilities, to say that an adult “has the brain of a child.”
“None of this vindicates Gobrick to any extent at all, but my point is that transageism is actually more credible and makes more sense than transgenderism. It’s still bogus, but slightly less so. Age does change, after all. I will not be a 33-year-old man forever. But I will be a man forever. If my sex is a fluid characteristic, how much more fluid must my age be?”
Who knows, the way western society is heading, Gobrick’s excuse may well be accepted by courts in 5-10 years.
If Rachel Dolezal can identify as black and Caitlyn Jenner can identify as a woman having been a man for over 50 years, why not?
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“The World Is Watching”: Five Countries Demand Iran Pay Reparations To Crash Victims’ Families
Perhaps this is why some Iranian sources tried to do an about-face and blame the crash of UIA Flight 752 on an American cyberattack: Canada and four other nations whose nationals died in the crash are demanding that Iran accept responsibility and – more importantly – compensate the victims’ families.
According to Reuters, Canada, Ukraine, Sweden, Afghanistan and Britain said Iran should hold a “thorough, independent and transparent international investigation open to grieving nations” in a joint statement released following a meeting in London between officials from the various countries.
Canada’s Minister of Foreign Affairs Francois-Philippe Champagne
The Boeing 737-800 was struck by two missiles on Jan. 8 just minutes after taking off from the international airport in Tehran, en route to Kiev. Iran admitted on Saturday that a military missile operator fired on the plane in error, believing it might be a cruise missile (the plane was notably shot down just hours after Iran launched a counterattack on an American base). All 176 passengers & crew on board the plane, including 57 Canadians, were killed.
To be sure, ost of those traveling on the flight were Iranian students headed back to school abroad, hence the theme of the public outrage that followed Iran’s admission of guilt.
Iran has arrested those it says were responsible for the mistake.
The five countries have also asked Iran to identify victims with “dignity and transparency” and work with domestic officials and victims’ families as they seek the return of their loved ones’ remains.
“The eyes of the international community are on Iran today. I think that Iran has a choice, and the world is watching,” Canadian foreign minister Francois-Philippe Champagne said at a news conference in London.
Ministers from all five countries gathered before the presser to light candles commemorating the victims at the Canadian High Commission in London.
Of course, such a settlement would likely stretch into the 100s of millions of dollars, which would seriously cut into Iran’s budget for financing Shiite militias across the region (thanks to President Trump’s sanctions, the country is once again struggling to find buyers for its oil, limiting revenue).
Iran is not done. General Hajizadeh, Commander of the IRGC Aerospace Force, said in a briefing yesterday that the strike “was the starting point of a great operation”. He also underlined that “the strikes were not meant to cause fatalities: We intended [rather] to deliver a blow to the enemy’s military machine”. And the Pentagon is saying, too, that Iran intentionally missed US troops at the bases. This is tantamount to the Pentagon admitting that Iran can land missiles with extreme accuracy over a distance of several hundred miles – and further, this occurred with not one missile being intercepted by the US forces. To completely avoid targeting soldiers at a large military base is no mean feat – it suggests an accuracy within a meter or two – not ten meters – for Iranian missiles.
Isn’t this the point? It suggests that advances in Iran’s guidance systems can land missiles with extreme precision. Haven’t we seen something similar happen recently in Saudi Arabia (Abqaiq)? And was it not clear from Abqaiq that highly expensive US air defence systems do not work? The IRGC satisfactorily have demonstrated that they and their allies can penetrate US manufactured air defence systems, using domestically produced ‘smart’ missiles, and by using their electronic warfare systems.
The US bases around the region – in short – now represent vulnerable US infrastructure – and not strength. Ditto for those expensive carrier battle fleets. The Iranian message was clear and very pertinent to those who understand (or want to understand). To others, less strategically aware, it might seem that Iran pulled its military punch, and showed weakness. Actually, when you have just demonstrated the ability to upend the military status quo, there is no need for a hail of trumpets. The landing of the message itself is the ‘blow’ to a ‘military machine’. Neatly calibrated: it avoided head to head-on war. Trump stood down (and claimed success).
So then, is it all over – all done and dusted? Finished with? Not at all. Both the Supreme Leader and Gen. Hajizadeh said (effectively) that the strike represented an outset – ‘a beginning’. But much of the MSM – both in the West and some in Israel – lend a cultural ‘tin ear’ towards how Iran manages asymmetric war – even when it is spelled out explicitly.
Asymmetric warfare is not a ‘dick swinging’ exercise. It is more David and Goliath. Goliath can crush David with a blow from his clenched fist, but the latter is nimble; quick on his feet, dancing around the giant – just out of his reach. David has stamina, but the giant lumbers heavily around, and is easily angered and exhausted. Eventually, even a well-aimed pebble – not even a Howitzer – brings him down.
Listen closely to the Iranian message: Should the US withdraw from Iraq, as requested by the Iraqi Parliament, and in accordance with its agreement with the government of Baghdad, and then ‘go’ from the region, the military situation will ease. However, should US insist on staying in Iraq, US forces will come under political and military pressure to quit – but not from the state of Iran. It will come from the inhabitants of those states in which the US forces presently are deployed. At this point, US soldiers may be killed (though not by Iranian missiles).It is America’s choice. Iran holds the initiative.
Iranian leaders have been very explicit: The ‘slap’ of the strike at the Ain al-Assad base is not the pay-back for General Soleimani’s targeted assassination. Rather, it is the campaign consisting of the amorphous, quasi-political, quasi-military, asymmetrical war on America’s presence in the Middle East that has been dedicated as fitting to his memory.
This is David dancing around Goliath. Soleimani’s assassination has energised and mobilised millions in a new fervour of resistance (and not just the Shi’a, by the way). And the trashing of Iraq’s sovereignty by President Trump’s response to the vote in the Iraqi parliament (calling for foreign forces to leave Iraq), has created a new political paradigm which even the most pro-American of Iraqis cannot easily ignore. It is – notably – a non-sectarian mission (removing foreign forces).
And Israel, after initial self-congratulation (amongst the Netanyahuists) has understood that Iran has ‘stepped-up’, and not ‘stepped back’. Veteran Israeli security corresponded Ben Caspit writes:
“The letter of Gen. William H. Sili, commander of US military operations in Iraq, was leaked and then rapidly disseminated among Israel’s most senior security figures on Jan 6 … The content of the letter — that the Americans were preparing to withdraw from Iraq immediately — turned on all the alarm systems throughout the Defense Ministry in Tel Aviv. More so, the publication was about to set in motion an Israeli “nightmare scenario” in which ahead of the upcoming US elections, President Donald Trump would rapidly evacuate all US forces from Iraq and Syria.
“Simultaneously, Iran announced that it is immediately halting its various commitments regarding its nuclear agreement with the superpowers, returning to high-level uranium enrichment of unlimited amounts and renewing its accelerated push for achieving military nuclear abilities. “Under such circumstances,” a senior Israeli defense source told [Caspit], “We truly remain alone at this most critical period. There is no worse scenario than this, for Israel’s national security … It is not clear how this letter was written, it is not clear why it was leaked, it is not clear why it was ever written to begin with. In general, nothing is clear with regard to American conduct in the Middle East. We get up every morning to new uncertainty.””
The impeachment of the US President launched by the House, has left Trump very vulnerable to the Zionist and Evangelical rump in the US Senate, whose votes nonetheless will be essential to Trump’s bid to remain in office when the articles of impeachment move to the Senate. And to a trial where Trump must block the Democrats allying with any Republican rebels in order to achieve a two-thirds ‘guilty’ vote. The Impeachment leverage has been used several times to push Trump to act in the Middle-East directly contrary to his electoral interest – which remains contingent on keeping soaring markets – and in talk of a China Trade deal.
What Trump needs most now (in electoral campaign terms) is a de-escalation with Iran – one that would mitigate political pressure from the neo-con and Evangelical quarters, and allow him to show-case the inflated asset markets.
But this is precisely what he will not get.
Trumps’ attempts to contain the Iranian response to the Soleimani killing were unreservedly rebuffed by Tehran. The missives were never opened, nor allowed for them to be spoken by the mediators. There is no room for talks, unless Trump lifts sanctions and the US re-commits to the JCPOA. This will never happen. There will now be immense pressure from all the Israel lobbies for America to remain in Iraq and Syria (pace Caspit’s comments). And the ghost of Soleimani’s ‘revenge’ will haunt America’s forces in the region for months, if not years, to come.
Iran – wisely – has eschewed direct, state-to-state military conflict, for a more subtle, and pernicious war on the US presence in the Middle East – a war, which if successful, will re-cast the region.
No, it’s not over. Its set to escalate (but in an asymmetrical way). Trump will remain squeezed in the rogue Senators’ vice.
Lebanese ‘Week Of Wrath’ Sees Banks Physically Attacked On Large Scale
Lebanese banks are limiting account holders to withdrawing a mere $100 of their own money at a time (and just $200 total a week) after the country’s banking crisis due to eroding liquidity and central bank’s looming default have been at the center of mass anti-corruption street protests since October of last year.
“There is a lot of anger,” one Lebanese protester told the AFP on Thursday. “You have to go to the bank twice to withdraw just $200.”
Banks and ATMs are now being targeted for vandalism and destruction by demonstrators who have declared a “week of wrath”— specifically in major cities like Beirut. It’s now been two months since commercial banks have enacted severe controls preventing large money transfers abroad and restricting clients’ access to their deposits.
Banks across Beirut have been targeted for physical attack this week. Image source: AFP
These latest imposed capital controls now include limiting withdrawals to less than $200 a week, according to Lebanon’s Daily Star.
Violent clashes between mostly young protesters and policed have raged in the upscale commercial hub of Hamra district in Beirut over the last two nights. Local reports described the scene as looking like a war zone, with burning tires in debris and glass strewn streets — much of that glass from smashed bank windows.
Several bank fronts attacked by enraged protesters prevented from accessing their accounts amid a broader political and financial crisis:
The Daily Star reports the crowd attempted to storm the Central Bank building in the district:
After a month of rain, Tuesday’s protests saw the highest turnout in weeks. Following an extended stand-off in front of the headquarters of the Central Bank, protesters came into conflict with security forces that resulted in at least seven wounded.
…Several people attempted to storm the Central Bank building, breaking through the outer fence and calling for “the fall of the rule of the bank” and the resignation of Central Bank Governor Riad Salameh.
A reported 59 were arrested during the mayhem, which is likely set to continue, and has for months witnessed frustrated Lebanese physically attacking bank fronts in their efforts to get their own money out.
#Lebanon‘s protesters can no longer be called peaceful. They block vital roads & highways. They destroy bank windows & ATMs as well as throw rocks & firecrackers at security forces. And then when they get arrested, their friends are rioting in front of the police station. pic.twitter.com/oEqz78GLEN
Protest leaders have consistently accused the national and commercial banks of “theft” while the bankers attempt to defend against a massive run on currency, especially the dollar.
“What happened yesterday was a response from people who are hungry, whose money is being stolen, and economic policies that have directly led us to this crisis for years now,” Ayman, a 27-year old present for the Hamra protests told the Lebanese Daily Star.
Riots in Beirut #Lebanon tonight targeting Banks and Central Bank. Financial situation in decline and state bankruptcy nears.
Adding to the the explosive situation is that Lebanon has been without a government since the prime minister resigned in late October amid protests so large (some 1 million people) that it brought the small country to a standstill.
Compounding the situation, debt-burdened Lebanon has been without a government since Saad Hariri resigned as prime minister on October 29 under pressure from the anti-government protests.
Its under-fire politicians have yet to agree on a new cabinet despite the designation last month of Hassan Diab, a professor and former education minister, to replace Hariri.
Smashed Window Fronts, Destroyed ATMs, Graffiti-Covered Walls: Public Anger Against Cash-Strapped Banks Boils Over In Crisis-Hit #Lebanon Over Capital Controls That Have Trapped The Savings Of Ordinary Depositors. pic.twitter.com/GwRRUPT8Jl
In some cases it appears local security forces have held back or simply ignored instances of mob destruction of bank fronts (after all, the police and their families can’t access their accounts either).
One of the possibilities to help Lebanon’s finances is to take a slice of the deposits individuals and firms hold at Lebanese banks.
The controversial measure was used in Cyprus at the height of the euro zone debt crisis. James McCormack, head of Fitch’s sovereign rating team, said that move didn’t actually trigger a default as the definition of a default is more narrowly focused on the non-payment of debt.
Though certainly the people in the streets will have something to say about taking “a slice of the deposits” held by individuals and firms.
Staying on the subject of #Lebanon‘s BoP, how is the current account deficit (25% of GDP) financed? Well, not surprisingly, the $ outflows have traditionally been covered by nonresident FX deposit inflows, portfolio inflows, and banking flows. All of which have dried up now. pic.twitter.com/jDBa04AzQG
“One of the most heavily indebted countries in the world, Lebanon has $2.5 billion in Eurobonds due this year including a $1.2 billion bond set to mature in March,” Reuters notes.
“But its dire finances and political crisis mean it is running out of options to avoid a default.”
There is no hiding anymore, the United States has become an oligarch owned banana republic with nukes, and with a monopoly currency which has allowed it to rig the markets for half a century. But now we are only a couple of hours from curtain – Midnight in America.
With the stock market at all-time highs, virtually no unemployment (or so they say), and brisk GDP growth (supposedly) in the last decade, economic analysts would declare that the US economy is in excellent shape. But, it isn’t. The stock market is a central bank inflated asset bubble, and what GDP growth there has been, is an illusion brought about by the very same financial bubble and by pumping the economy up with record federal borrowings to finance the deficits that America cannot afford. Rigged statistics showing artificially low inflation serve to hold together the Trumped-up American economic narrative. (About the rigged inflation statistics, see this report). And the low unemployment figure is nothing but a chimera based on misleading statistics.
In reality, the US economy is failing – and the country with it. At least two-thirds of the population has seen dramatic declines in living standards and half are back to levels of developing nations – without the development.
The big story covered up by all the happy macroeconomic figures repeated by rote by the US establishment – everybody from the president to cable television pundits and Trump fanboys – is the gradual impoverishment of the American worker. That’s an inconvenient truth increasingly difficult to hide as the American dream has turned into a nightmare for huge swathes of the population. As the figures we present below show, the rich are really getting richer, the middle class has been decimated, and half of Americans are poor and destitute of any financial wealth. The super-rich are gobbling up an ever-increasing slice of the American pie at the cost of all the rest who get nothing but table scraps on one side and leftover crumbs on the other, if anything. The resulting stratification of society has brought back a medieval servant economy, where the have-nots are doing odd jobs, cleaning houses, fetching groceries, running errands and deliveries for the feudal rich and the remaining shrinking middle class.
Thanks to the Fed (the American oligarch owned central bank) pushing easy money into the hands of the privileged elite, the super-rich Dismal Decimal – the top 0.1% – have by now amassed as much wealth as they had just before the Great Depression that started with the stock market crash in 1929. A lesson not learned. Back to square one. How will it end this time?
BTW all the data in this report is derived from official US government sources and American experts analyzing them.
During the last decades, the financial rewards from the rigged markets first flew exclusively into the pockets of Top 10%, but later it was increasingly Top 1%, which pocketed most, perfectly illustrated by below charts.
1. The income of Top 1% has grown five times as fast as that of Bottom 90% income since 1970, who now earn double the amount of income than 160 million poor of the lower 50% stratum.
The fortunes of Top 1% and Bottom 50% are now reversed.
2. Top 1% now holds as much wealth as Bottom 50% combined.
Income inequality obviously leads to wealth inequality, but here the figures are yet more striking in showing the magnitudes of the grab at the top. Since 1989, Top 1% captured $21 trillion in wealth, while Bottom 50% lost $900 billion, actually pushing them down to negative wealth, meaning they have more debt than they have assets. On a net analysis, half of Americans own nothing of real value.
3. Until the creeping coup under Reagan, income equality was improving
It was bad enough in 1995 when Top 1% earned as much as Bottom 50%, but today the richest 1% already take 20% of all income leaving the bottom half with only 12%. As the chart shows, back in 1978 – before the neoliberal creeping coup really got going – the trends were reversed. Below chart compares income growth since 1920 of Top 1% to Bottom 90% (that is, all the rest except Top 10%). We see that right after Ronald Reagan entered the presidency with his Chicago School snake oil influenced backers, the income growth of the 1% started its dizzying growth, which is continuing to this date.
4. Back in 1962, the share of Top 1% of America’s wealth at 33% was equal to that of Bottom 90%, but in the early 1980s the share of Bottom 90% started a steep descent and by 2016 their share had dwindled down to 21%. Especially after the Federal Reserve shifted its market rigging low-interest-rate money-pumping policy into high gear from the beginning of 2000s, the superrich have experienced a massive rise in their fortunes, as illustrated by below chart.
But by today Top 1% are losers compared with Top 0.1% – the Dismal Decimal – who are where the music plays.
5. Top 0.1% now holds as much wealth as Bottom 90% combined.
A recent study revealed that the concentration on the top is yet much more pernicious. It’s not any more a question of Top 10%, and not even Top 1%, as it is the Top 0.1% – the Dismal Decimal – that has now concentrated the wealth of the nation (and half the world) in their greedy hands. Top 0.1% now holds as much wealth as Bottom 90% combined. As the below chart shows, we are essentially back to the Roaring Twenties…a lesson not learned. Actually, in the aftermath of the Great Depression, America entered an unprecedented era of four decades of prosperity with a more equal distribution of wealth as Bottom 90% recovered strongly in distribution of wealth at the expense of Top 0.1% parasites.
6. Top 0.1% earnings grew 347% between 1979 and 2017, while Top 1% “only” gained 157% – the rest gained nothing
7. The next chart takes a longer perspective – while widening the sample to Top 10% – and shows their share of the total income since 1910 to 2010. The Roaring Twenties – the period before the 1929 stock market crash and the ensuing Great Depression – experienced the same level of glaring inequality as today’s America. With Franklin D. Roosevelt’s reforms the egregious average income inequality was tamed and stayed relatively low until Reagan’s fatal presidency. And it’s been downhill ever since – or uphill, if we look at it from the perspective of the rich.
8. The only economic figure that has managed to look good is the GDP, but that is so only until you bother to find out where it comes from – from the Federal Reserved fueled asset bubble and massive federal budget deficits financed by record national debts. For an excellent exposé of how rigged and debt-ridden the US economy is, I refer to my earlier report published on the Saker blog: The Oligarch Takeover of US Pharma and Healthcare – And the Resulting Human Crisis. Shortly: The US economy must be seen as a giant Ponzi scheme, which will implode sooner or later. And we are getting to that sooner part now.
Trump habitually and regularly brags about the stock market reaching another all-time high. But that’s really being out of touch with the electorate. Stock market gains exclusively flow to the rich increasing inequality and the cost of living for the rest. Thing is that, beyond the richest 10% very few Americans have a stake in the stock market. In 2016, the richest one percent held more than half of all outstanding stock, financial securities, and all other sorts of equity. The remainder of those asset categories were held by the rest of Top 10%, who owned over 93% of all stock and mutual fund ownership. What wealth the remaining 90% may own is largely residential housing, the homes where they live. According to Jonathan Tepper, the wealthiest 1% own nearly 50% of stock and the top 10% more than 81%. The so-called middle class owns only 8% of all stock.
This also kills the myth that record highs on the stock market would be good for American retirement savings – with the richest few holding all the shares there’s nothing in it for the overwhelming majority.
A recent report also showed that only 10% of Americans are invested in pension plans. That is down from 60% in 1980. And those who are, are traditionally more weighted towards bonds and money-market instruments, which suffer from the rigged markets with the artificially low interest rates. The pension savers are hence literally paying for the super gains flowing into the pockets of Top 1%. On the other hand the super low interest rates are out of grasp for the all but Top 1% who gobble up the wealth of the nation with that largesse delivered to them by their Federal Reserve. At the same time the common household is paying double-digit rates on their credit card debt traps.
9. Below Top 10% wages and total household income have been stagnant, at best.
10. Average income of the bottom 50% has stagnated at around $16,000 since 1980, while the income of the top 1% has skyrocketed by 300% to approximately $1,340,000 in 2014
11. 45% of Americans earn annually only 18,000 or less. A recent study found that 53 million Americans or 44% of the working age population earn a median average annual salary of only $18,000. Basically then, at least half of the Americans are working-poor.
12. Middle-class households had in 2015 basically the same income as they had in 1979
13. In the two decades from 1997 to 2017, only Top 5% of households saw their income increase
14. For most American workers, real wages have barely budged in decades. By end of 2018, the real inflation-adjusted average wage had about the same purchasing power it did 40 years ago.
15. As the below chart illustrates, the real average hourly wage which was $20.27 in 1964 had only inched up to $22.27. David Stockman calculated that the real hourly worker’s wage was in 2019 still at 1972 levels.
16. For full-time employed men real wages have fallen 4.4% since 1973, according to economist Paul Craig Roberts.
The total average income of men at $51,212 in 2015, was lower in real terms than it had been in 1974.
17. As of 2014, the average hours worked per week had fallen from around 39 hours in 1970s to under 34 hours. Economist Mike Shedlock calculated that the actual hours worked and the average hourly earnings would deliver a weekly income of $690, well below its $825 peak back in the early 1970s. If we multiply the hypothetical weekly earnings by 50, we get an annual figure of $35,497. That would in 2014 have translated to a 16.4% decline from its peak in October 1972.
18. All labor productivity growth since the 1970s have gone to the robber capitalists. From 1973 to 2013, hourly compensation of a typical (production/nonsupervisory) worker rose just 9% percent while productivity increased 74%.
19. Nowhere is income inequality and the egregious worsening trend as manifest as in the case of CEO pay. In the 1970s, CEOs made 30 times what typical workers made, but by 2017 the CEOs made 361 times the workers’ pay. According to the Economic Policy Institute CEO compensation has grown 940% since 1978, while typical worker compensation has risen only 12% during that time.
The Fed fueled financial market orgy is the main cause for the windfall riches of CEOs as stock options and the accompanying share buybacks make up a huge part of CEO pay packages. This rising pay of executives was the main factor in Top 0.1%’s super grab of household income
20. A 2017 study found that 40% of US adults struggle to pay for basic necessities like food, healthcare, housing, and utilities.
21. Most Americans have depleted all their spare resources as a staggering 78% of full-time workers are reported to live from paycheck to paycheck.
22. Nearly 70% of Americans have virtually no savings. Bottom 55% have zero savings, while the following 24% – the core of the former middle class – have only $1,000 stashed away.
23. Correspondingly Bottom 70% of Americans don’t own any real wealth (beyond rapidly depreciating durables).
24. The other side of the (non-existent) coin is that the same 50% of Americans would obviously struggle to come up with $400 for an unexpected expense. By extension, the former middle class – those with the miserly savings of $1,000 – would also have real troubles in coping with any kind of bill for medical treatment without dipping into more debt. Considering the above reported findings (see the chart) only the Top 10% would be financially secure in a medical emergency.
25. According to shocking findings by the American Cancer Society, 137.1 million US residents suffered medical financial hardship in 2018. Americans had to resort to borrow a total of $88 billion in 2018 only to cover for essential medical treatment.
26. A third of young adults, or 24 million of those aged 18 to 34, lived with in their parents’ home because they cannot afford a home of their own.
27. The income and wealth gap pictures get worse yet when we look at the age distribution of wealth. Younger generations are earning less and own next to nothing (that is, if you are not the golden youth of the 10%). Baby Boomers born between the end of the Second World War and 1964 currently hold wealth that is 11 times higher than that of millennials.
Median Income for Younger and Older Families in Inflation-Adjusted Dollars
28. The number of full-time jobs with life-sustaining wages – what economist David Stockman calls breadwinner jobs – have not been growing since 2000, by 2014 their number was still 3.5 million or 5% lower than it was at the peak in early 2001. In the same period 4 million part-time and gig jobs were created.
While the official unemployment figure is presently near historical lows – and at levels what some economists would like to call full employment – there are some big problems with it.
1. Problems with the official unemployment statistics. The officially touted unemployment figure (so-called U3 unemployment) record only those who have been looking for a job during the last 4 weeks, while discouraged long-term unemployed are cleansed from the statistics and left unrecorded as if they would not be in the workforce at all – makes stats look beautiful for the powers that shouldn’t be.
2. The labor participation rate has been falling.
3. New job creation has amounted to only a third of the annual increase in working age population.
4. Part-time and gig jobs count as full-time employment. Any person who takes a part-time or gig job for just a few hours a month is recorded among the employed, although they would rightly be considered unemployed merely clutching at straws.
5. Connected with the previous point, there is also a more general problem with the quality of jobs created. Most jobs created in the last two decades are low-paid low-skill jobs that do not provide a life-sustaining income considering the cost of living in the United States.
More than one third (36%) of U.S. workers are in the gig economy, doing part-time work or side hustles for companies like Uber, Lyft, Etsy, Amazon Mechanical Turk, Freelancer.com, Ebay or just any odd job they can get from time to time.
29. To make up for the shrinking earnings, the regime is pushing the American population into 21st century debt peonage. Ensnared in the debt trap, US households had nearly $14 trillion in outstanding debt at the end of the third quarter 2019. That debt load now equals 73% of GDP. By end of 2019, consumption debt alone (not including asset acquiring mortgages) was up by $2 trillion since 2014.
Since 2004, the weight of the student loan millstone has gone up fivefold from only $250 billion to today’s $1.5 trillion.
That’s due to the huge price inflation in higher education. The cost of both public and private college escalated by 40% over the general consumer price inflation between 2005 and 2015.
30. Because of the huge rise in the last few decades in cost of living in the US, in Russia, you get the same standard of living for a fraction of the American cost. A Moscow average monthly salary equal to $1,600 (annual $19,200) gives the same purchasing power as a monthly salary of $6,000 in Chicago (annual $72,000). Meaning, you live in Moscow (at least as well for a monthly paycheck of $1,600 as you live in Chicago for a paycheck of $6,000. For details, see this report.
31. The present oligarch controlled rigged crony capitalist system has killed the American dream, the belief that anyone, regardless of parents’ social status and incomes can attain success and wealth by hard work and ingenuity. The gates for upward mobility have been shut for the overwhelming majority. The monopolization of practically all sectors of the economy, the ever increasing bureaucratic restrictions on doing business, the extreme concentration of ownership, and the rigged financial markets have made it increasingly hard for people outside the top echelon of penetrating the financial membrane protecting the elites. A 2017 study by the Federal Reserve Bank of Cleveland found that the probability that a household outside the top 10% made it into the highest tier within 10 years was twice as high during 1984-1994 as it was during 2003-2013.
The United States is an oligarchy
This concentration of the income and wealth on the top, proves that the United States is an oligarchy. A 2014, study by Princeton University demonstrated how the US is a political oligarchy. With this report showing the insanely widening income and wealth inequality, my aim is to show, that the country is an economic oligarchy, too. In fact, economic super riches are the precondition for their political power, too. In America, as always, the oligarchy has achieved their uncontested power in a hermeneutical feedback loop, where the initial wealth of the superrich has bought them increased political power, which has given them increased riches, which has bought them more political power, and so on, until today, when they own practically the whole economy and the entire government. Clearly the source of higher inequality has been Fed policies, which has pushed cheap money into the pockets of the already rich, who have exclusively then benefited from soaring stock and real estate prices.
Fittingly, we got end of 2019 a report revealing that the world’s richest people increased their wealth in the year by $1.2 trillion, a staggering 25%, most of which belong to the oligarchs of the United States.
The question – which I have set to explore in my series of Capitalism in America – is whether there has been a game plan, a long-term strategy or whether intermittent achievements have just spurred the oligarchs on to new economic and political power grabs in the course of establishing their totalitarian rule. I tend to think, there has been a long-term plan ever since the establishment of the Federal Reserve. The economic and political history of the United States provide so much circumstantial evidence, which supports the view that there has been a conspiracy of the Wall Street elite. I shall return to this hypothesis in further installments to this series of Capitalism in America. It is however clear – whether through a long-term plan or by a series of ad hoc interventions – the US financial elite has by now completed a creeping coup, which have delivered them absolute economic and political power.
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In my investigation of the oligarchization of America – the creeping neoliberal oligarch coop, which set in full force since Reagan – I have so far completed these instalments:
The first installment was a study showing how all corporate ownership has been concentrated in the hands of the oligarchy, titled Extreme concentration of ownership in the United States
The second part was a study revealing how the oligarchy has totally taken over US media, titled The Oligarch Takeover of US Media
The third installment was a report published on the Saker blog titled New World Order in Meltdown, But Russia Stronger Than Ever
The fourth installment, The Oligarch Takeover of US Pharma and Healthcare was also on the Saker blog.
Next due is a report showing how from point of view of political science the oligarchy has destroyed the social fabric of the US economy and deliberately enacted laws that favor the few over the people. Of particular interest here is how the oligarchy has rigged the political system by institutionally solidifying the mendacious Janus- faced two-party system in order to remove any potential challenge to their rule.
China Growth Slows To 29 Year Low In 2019 Despite Q4 Rebound
With phase-one talks completed in October (and signed this week), tonight’s Q4 GDP and December smorgasbord of data is being keenly watched by the market for any signs that China’s massive credit stimulus has actually done any good at all.
“We were upbeat about China’s power demand five years ago because the economy was still robust and 7 or 8 percent GDP growth was the bottom line,” the official said. “No one expected growth to decelerate so sharply.” He warned that 4% growth by 2024 was the utility’s worst-case scenario.
And despite a YoY rise in China’s credit impulse, shadow financing continues to contract, while loans in the banking sector expanded, but not enough, expectations are for 6.0% GDP growth in Q4, the same as Q3…
Source: Bloomberg
The jump in credit is a year-end headfake however, and thus is not expected to be sustained…
Source: Bloomberg
But expectations for the rest of the China data is to slide from impressive November data (that lifted the ECO surprise index)…
Source: Bloomberg
Despite plenty of volatility, Q4’s average for offshore yuan was modestly weaker than Q3…
Source: Bloomberg
But the Chinese stock market refuses to play along with the credit impulse…
Source: Bloomberg
Ahead of the print, we note that the two manufacturing purchasing-manager indexes indicated that activity was picking up that month; and exports and imports also both gained.
So, with the trade-deal finally signed (whatever that means), are tonight’s December (and Q4 data) signaling optimism?
China Q4 GDP YoY MEET +6.0% vs +6.0% exp and +6.0% prior.
China Dec Industrial Production YoY BEAT +5.7% vs +5.6% exp and +5.6% prior.
China Dec Retail Sales YoY BEAT +8.0% vs +7.9% exp and +8.0% prior.
China Dec Fixed Asset Investment YoY BEAT +5.4% vs +5.2% exp and +5.2% prior.
China Dec Property Investment FELL YoY +9.9% vs +10.2% prior.
China Dec Surveyed Jobless Rate WORSENED 5.2% vs 5.1% prior.
Source: Bloomberg
Dec. industrial output grew faster than all 41 estimates (with grain output reached a record high in 2019 as pork output fell 21.3% last year).
Bloomberg notes that within retail sales, “daily use” items saw weaker gains, while tobacco and alcohol accelerated. Jewelry spending saw its best gain since June, so it seems like Chinese consumers were opening up their wallets for non-necessities last month.
Amongst all data releases today what caught ANZ Chief Economist Raymond Yeung’s attention is surveyed jobless rate which rose to 5.2% from 5.1%. For such a big country with more than 400m urban employment workforce, a small change in jobless rate means a lot.
As a reminder, the official target range for China GDP growth for the year was 6.0-6.5%, with tonight’s slightly disappointing data (vs +6.2%) confirming 2019’s +6.1% is the weakest annual expansion since 1990…
Source: Bloomberg
So, is bad news good news? (more non-economically-catalytic stimulus?)
How Chinese GDP is ‘created’ – We’re gonna need moar M2…
Source: Bloomberg
But even that is not working as even though M2 has been rising since 2017, GDP continues to slide, which means efficiency of debt is collapsing.
Seems like nothing really matters though as we note that 10Y Taiwan debt traded down to a 60bps yield – a record low – as the Taiwan stock market hit new record highs…
Source: Bloomberg
Congrats global central bankers.
Additional data released tonight shows that China’s birth rate dropped to a new record low (Birth rate fell to 10.48 births per 1,000 population in 2019 ). The shrinking working-age population and ageing society threaten to hurt growth in the long term.
