21 November 2016

Betting Against the United States

Very good article on Steve Bannon.  Agree with this wholeheartedly:  "The globalists gutted the American working class and created a middle class in Asia.”  Rings true:  “In sum, the working man was betrayed by the establishment [both R and D], or what he dismisses as the "donor class." But here’s where my cognitive dissonance kicks in.  Trump is most assuredly a globalist and a member of the donor class.  And Steve Bannon is an angry misanthrope.  

A number of years ago, a portfolio manager, an Oxford educated, upper class Brit hired to run international investments for my employer, told us at a quarterly conference that America was pretty much over, that Americans were imbued with a sense of entitlement, were thick and rather clueless, that the smart money, while still based in the US, would increasingly invest in US multinationals or internationally,  because the US’s rotting infrastructure, self-centered view of the world, expensive labor (inclusive of the professions) and lousy schools had already doomed us.  It was just a matter of time. 
This was couched in eloquent verbiage, of course, delivered with an upper class British accent.  His view was shared by the Wall Street breed of New Yorkers in the room.  It was a pessimistic and hopeless message.  Your factories were never coming back, necessary remediation of environmental contamination left behind by departed foundries and manufacturing plants would choke profits and progress, America’s day in the sun was over or about to be. 

A friend at the time, more hopeful, explained the situation to me thus:  “America will be the Kenilworth of the world (Kenilworth being an extremely wealthy suburb of Chicago), the headquarters country, the administrative center.”  And I countered with, “And the rest of the world will be Gary, Indiana?”  But – even he was wrong, because money is fluid, and, see below, there is no loyalty by big business to the United States, per se.

In looking back, I was the only person in the room of about 60 people that hailed from small town Midwest, a manufacturing center, no less.  Many of us thought the Brit was an insufferable snob, but few, if any, had witnessed, as I had (from a distance) the decline and near death of a once thriving town.  To say that I took his insults somewhat personally, well …   (So I organized a bowling outing for the whole group, including the Brit, in nearby Lake Geneva, Wisconsin, which fact did not endear me to company management, until, surprise, the exotic, expensive  Brit had a jolly, good time.) 

Here is where learned that betting against America was actually pretty good business.  And by “America” I mean – sorry – the 99.9%.  There was enough steam in the system to propel us forward for a generation without excessive reminders that the end was fast approaching, so politicians could engage in the usual partisan cant, and the country could retain its steadfast fealty to big business, because jobs, prosperity, retirement security, spreading the wealth.  But big business had no loyalty to the United States or its people (except as consumers, and well-behaved citizens guaranteeing orderly societal interactions and transfer of political power). Cheap labor, and importantly, massive new markets, offered something we cannot.  But in order to perpetuate the fiction that we must give big business everything it asks for, there had to be a few bad guys to blame for continued erosion of big business support for the US:  Taxes, unruly minorities, bad schools, government intrusion …   That’s my conclusion, anyway.

How Steve Bannon and Trump plan on redressing the wounded and substantial middle is still a mystery.  Infrastructure projects likely would be privatized and cherry-picked (much needed water infrastructure and road/bridge repairs are not profitable) and offer temporary, though lucrative, jobs in the construction industry.  Many manufacturing jobs have been replaced by a microchip or robot or simply greater efficiency.  They’re just gone.  Trade constraints will hurt agricultural exports, very big in the flyover region, and given the newly established and emergent middle classes elsewhere, perhaps foreign manufacturers will find other markets for their products.  Pipelines, etc. offer, as well, temporary employment for some, but there is the downside of more environmental degradation. For those of us who believe the scientific consensus that climate change is real and accelerated by CO2 emissions, it’s a rock and hard place solution.  On this point, I would like to be wrong, truly, because the consequences of the consensus being right are so drastic.

For about 25 years I have been pondering what will become of all the excess labor in the US.  Not everyone is endowed with a massive IQ and education to support it, not everyone is an Ivy League wonder kid with all the right social connections, eighty percent or more of startup business fail, and life happens, even to the most fortunate.  We can’t depend on casinos and golf course developments to underpin an economy, real estate development cannot supplant manufacturing as a main source of economic strength and boomer retirement wealth, the fuel for many real estate bonanzas, will run out.  (Hint:  in the short to medium term, health care providers and assisted living facilities will get the lion’s share.) Then what?