U.S. Economic Normality 1946-2015

1. Executive Summary     2. The Economics    3. Presidential Politics    4. Supreme Court

 

1. Executive Summary

Prelude
Underlying the first half of the period was the Cold War, a politicaal battle of nerves with the human race on the line.

Cuban Missile Crisis continued a long Cold War.

Party Control Flip Flops Like a Yoyo but Progress Is Being Made. Republicans were penalized by outrage caused during the summer of 1932 because of Veteran Bonus Army deaths.  It combined with the of Hoover's domestic policies and change was demanded. A similar major change happened with Reagonomics,  See Liberal Richard Wolff's Video On Reaganomics

Democrats promoted American Liberalism. It anchored in a coalition of specific liberal groups, especially ethno-religious constituencies (Catholics, Jews, African Americans). White Southerners, well-organized labor unions, urban political machines, progressive intellectuals, and populist farm groups were also courted.

The Economics
Government went into the helping people by borrowing money.

Post WW II Activity Included Reorganization of Israel resulted in a strong pro-American Middle East democracy.  
Marshall Plan prevented a repeat of the post WW I problems that led to WW II. Germany, Japan and England eventually prospered.  
NATO officially ended Monroe Doctrine isolationism. 

Federal Aid Highway Act created interstate highway system for national defense purposes and allowed the development of suburbia.
A return to Progressivism Economic Opportunity Act of 1964 provided benefits for poor people, education, unemployed and the elderly. 
Civil Rights Act of 1964 finally began the process of moving toward minority equality. It continued with the Voting Rights Act of 1965  designed to assured minority registration and voting and  the Civil Rights Act of 1968 which banned housing discrimination. Social Security Amendments of 1965 created Medicare and Medicaid.

Environmental Protection Agency was created by presidential executive order. It along with the Clean Air Act Amendment of 1990 increased federal regulatory authority. 26th Amendment of 1971 lowered voting age to18 Americans with Disabilities Act of 1990...
5. Taxes dropped benefits increased Economic Recovery Tax Act of 1981 cut most taxes. Tax Reform Act of 1986 lowered taxes on wealthy. Tax Cuts of 2001 lowered rates for many. 2003 tax cut was the first in a time of high war. 2003 Medicare Part D increase drug benefits. 2010 PPACA resulted in more people being insured.

Bailouts began 1975 New York City $1.3b paid back +interest 1979 Chrysler Motors $1.5b paid back +interest 1982 Oklahoma-based Penn Square Bank $65m 1984 Continental Illinois Bank bailout $14b 1980's Savings and Loan $124.6b [2]
2009-10 Great Recession TARP $24b, Detroit $16b

4. Less Regulation Causes Trouble Financial deregulation began in early 1970's and culminated with Gramm–Leach–Bliley Act of 1999 which repealed the Glass–Steagall Act enacted after  the Great Depression.  Commodity Futures Modernization Act of 2000  minimized regulation of financial derivatives 

War
was about protecting the globe ffrom Communism and fostering Business.

The three year Korean War killed 36,574 with 103,284 wounded in action. South Korea remained free. Japan felt safe and used a small defense budget to build industrial capital and rejoined the developed world.

The very long Vietnam War2 killed 58,220 with over 153,303 wounded with few important positive results.

As of 12/31/14 Afghanistan War killed 2,312 with 20,026 wounded with few important positive results. As of 5/29/12 Iraq War killed 4,425 with 32,223  wounded with few important positive results.


 
5. War on Terror1 was named by George Bush II and it finally stuck after six months of constant marketing. Attacks against the U.S. had been going on for many years and while an attack on American soil was terrible, putting this conflict of previous wars catastrophes, calling it a war is questionable.


1949 Wolf v. Colorado unreasonable search and seizure.” allowed in state court enforcing state law reversed 12/17/54
 1954 Brown v. Board of Education see Helped Spark the Civil Rights Movement videos
1958 Crooker v. California  limited right to counsel before trial  creating Miranda rights reversed 6/13/66
 1962 Baker v. Carr  federal courts took control constitutionality of state redistricting plans.
 Other 1960's Redistricting Decisions
1973 Roe v. Wade  created a national law concerning abortion reversed 6/26/22
 1990 Austin v. Michigan Chamber of Commerce allowed state law to ban corporate political contribution reversed   2010
 2010 Citizens United v. FEC protected  corporate interests in election-spending regulations

 

Presidential Politics

Republicans Democrats
Presidential Elections

"And Now the Rest of the Story

Election of 1948 was a major upset as H.S.Truman fooled the pollsters when his whistle stop strategy proved personality had defeated New York Governor John Dewey's political machine.		 Harry S. Truman, a product of the Kansas City Old boy network, made these difficult decisions 1) used "the bomb" to quickly end WW2, 2) quickly recognized the new State of Israel 3) used the Marshall Plan & NATO to prevent a repeat of post WW I type international problems 4) officially ended Monroe Doctrine isolationism with the Truman Doctrine and 5) he relieved from duty popular war hero General Douglas MacArthur who had trouble following Korean War presidential instructions.
Election of 1952 Winning Republican candidate Eisenhower had been courted by Democrats. He campaigned against the Truman policies he labeled as "Korea, Communism and Corruption."
Election 1956 saw a popular unhealthy president easily win the last 48 state election. Ike was the last presidential candidate born in the 19th century .		 Dwight D. Eisenhower quickly ended the Korean War but by helping England's Churchill overthrow the democratically elected Iranian government; he extended U.S. the Middle-East involvement. His accomplishments include enhanced national security with the 1956 Federal Aid Highway Act and increased Patriotism accomplished by making faith a more important part of American politics. Upon leaving office he warned of dangers from the military industrial complex.
Election of 1960 saw Kennedy win by only 112,827 votes though the Electoral College vote was 303 to 219. Nixon was the first loser to win the state battle 26 to 23 while Alabama and Mississippi went for Harry F. Byrd. Oklahoma's "faithless electors" accounted for the missing state. The election of two incumbent U.S. senators (Kennedy and Johnson) was a first that would not be repeated until 2008. John F. Kennedy Our first Roman Catholic president began with poor execution of the Eisenhower designed and Nixon planned Bay of Pigs Invasion. Many conservatives feel he should have drawn a RED LINE in relation to the 1961 Soviet inspired Berlin Wall crisis. Among his major accomplishments during his assassination shortened presidency were the 1963 Partial Nuclear Test Ban Treaty, the Peace Corps, the Space Race to land an American on the moon and some Civil Rights progress.
Election of 1964 saw an unsuccessful bid from Republican conservative Senator Barry Goldwater but his ideas influenced the modern conservative movement and began a long Republican Party realignment. Lyndon B, Johnson was a master politician who put aside animosity from most Kennedys and ushered through congress the 1965 Social Security Amendments which created Medicare and Medicaid. The Voting Rights Act of 1965 began a long-delayed national healing process existing from long before the Civil War. Many feel Johnson's unpopular Vietnam War escalation made for an unhappy end to his presidency.
Election of 1968 was a major realigning election as it permanently disrupted the New Deal Coalition that had dominated presidential politics for 36 years. It centered on restoring law and order to a country torn by riots and crime. A wrenching 1968 campaign was conducted during violence that included the assassination of Martin Luther King Jr. and subsequent race riots plus the assassination of Democratic presidential candidate Robert F. Kennedy. Nixon just beat Hubert Humphrey in the popular vote but easily won the Electoral College while third party candidate George Wallace got almost ten million votes for the far-right American Independent Party.
Election of 1972 was an easy Nixon victory as Senator McGovern's anti-war campaign was hurt by his outsider status, limited party support, perception he was a left-wing extremist and a V.P. nominee T. Eagleton scandal.		 Richard M. Nixon was possibly our most contentious president. He accomplished a nuclear arms control agreements with the Soviet Union, instituted successful diplomatic relations with China and the Nixon Doctrine began the long process of ending the Cold War. Domestically he enforced desegregation, established the Environmental Protection Agency and tried but failed to control inflation with wage and price controls. His desire to maintain U.S. international credibility by extending U.S. Vietnam War involvement eliminated any possibility that liberals would ignore the Watergate Scandal and he was impeached.
Gerald Ford probably doomed his political future with a quick Nixon pardon. Ford lived longer than any other U.S. president, 93 years and 165 days and his 895-day presidency remains the shortest term of all presidents who did not die in office.

Election of 1976 Ford who was not able to secure the nomination over R. Reagan until the Party Convention lost to relatively unknown former Georgia Governor J. Carter. Carter's narrow victory made him the first president elected from the Deep South since Zachary Taylor in 1848.

Jimmy Carter's 1978 Camp David Accords were the high point of recent Middle East peace efforts. Carter inherited  stagflation. The inflation part was solved with the pain of two recessions orchestrated by his FED Chairperson Paul Volker. Economic growth had to wait until after Ronald Regan tax cuts/deficits.

Election of 1980 saw Carter attacked Reagan as a dangerous right-wing radical while Reagan won easily as he pledged to uplift the nation's pessimistic mood. Congressional elections also went Republicans for the first time in 28 years. This began the Reagan Revolution which signified a conservative national political realignment. Election 1984 went Republican as the economic stagflation of low growth with high inflation was over. Reagan joined Nixon (1972) as the only candidate to carry 49 of the 50 states.

Ronald Reagan cut taxes, increased defense spending, ignored federal deficits which today look insignificant because of nominal economic growth. His Supply Side Economics sought economic growth through more efficient production caused by less regulation and low taxes rather than government supported demand. His low taxes and large military spending was Keynesian demand supported growth that soon lowered the relative size of the annual federal deficit and accumulated debt. The later had stayed below 40% of GDP until 1) New Deal and 2) WW2 spending caused it to peak at 120% of GDP. The Penn Square 1982 Bank bailout began a new chapter in the long history of government helping business.

Election of 1988 saw a good economy, a stable international stage, and Reagan's popularity foster the third consecutive presidential victory for the Republican Party. It was the first time that a party had won more than two consecutive presidential elections since the Democrats won five straight elections from 1932-1938.

George H. W. Bush popularity peaked early because his 1990 Coalition of the First Gulf War repelled Iraq's Kuwait invasion. Not always conservative, he signed the Immigration Act of 1990 that led to a 40 percent increase in legal immigration and his temporary ban on certain important semiautomatic rifles cost him a NRA endorsement.

Election 1992 went to Clinton as 1) Bush broke his no new taxes pledge, 2) the economy was in recession 3) Bush's perceived foreign policy strength was less important with the fall of the Soviet Union and Middle East stability after the Gulf War victory. Economic conservative Ross Perrot got 19% of the vote helping Democrat Clinton.
Election of 1996 A strong economy caused a small 49.0% turnout which was lowest since 1924. Clinton beat Republican Bob Dole with help from Reform Party candidate businessman Ross Perot.

Bill Clinton was another contentious president who survived the Lewinsky scandal as twenty-five years of increased education had cultivated a mare tolerant nation. This allowed him to appoint more women and minority federal court judges than white male judges and also to have a very diverse cabinet. The longest economic expansion in American history allowed for increase educational opportunities, lower crime and increased homeownership. The little noticed 1999 Gramm, Leach, Bliley Act initiated by Republicans and signed Democrat  Clinton continued Republican liberalized of financial regulation which added to the many causes of The Great Recession.

Election of 2000 was one of the most contentious in history as it marked the fourth time the winner failed to win a plurality. See 1824, 1876, and 1888). A Florida recount required Supreme Court intervention which followed party lines. The Green Party adversely affected Democratic Al Gore.
Election of 2004 was a G.W. victory over John Kerry.  Bush's popular vote victory was the smallest ever for a reelected incumbent president. Only three states changing side.

George W. Bush reacted to September 9/11 attacks with a War on Terror, a War in Afghanistan and the Iraq War. His major tool was the USA PATRIOT Act which established Department of Homeland Security. He also implemented 1) tax cuts 2) No Child Left Behind 3) Medicare Part D but vetoed State Children's Health Insurance Program legislation 4) government activities to and 5) he promoted the Partial-Birth Abortion Ban and Faith-Based and Community Initiatives.

Supreme Court

Sovereignty of Federal Government Over Sates Governments

1949 Wolf v. Colorado unreasonable search and seizure.” allowed in state court enforcing state law reversed 12/17/54

1954 Brown v. Board of Education see Helped Spark the Civil Rights Movement videos

1958 Crooker v. California  limited right to counsel before trial  creating Miranda rights reversed 6/13/66

1973 Roe v. Wade  created a national law concerning abortion reversed 6/26/22

Supreme Court as "Supreme Constitutional Authority"  

1962 Baker v. Carr  federal courts took control constitutionality of state redistricting plans.

Other 1960's Redistricting Decisions

Protecting Business

1990 Austin v. Michigan Chamber of Commerce allowed state law to ban corporate political contribution reversed   2010

2010 Citizens United v. FEC protected  corporate interests in election-spending regulations

The Economics

 

#1 Rising Income

#2 Foreign Competition, Wage Stagnation

#3 Failing Manufacturing, Less Regulation

#4 Financial Bailouts and Economic Recovery

#5 Poverty Rate Stuck

# 6 Profit Growth Beats Wage Growth

#7 Wellbeing Continuing Growing

# 8 Asian Competition

#9 A New Western Normality Coming?

Please Share 1/10/22

 

#1 Rising Income
WW 2 generated savings, pent-up demand and few foreign few competitors generated 25 years of high profits higher wages and cooperative unions. As if Watergate and the Cold War were not enough, the oil cartel OPEC had the unity to succeeded with a 1973-74 oil embargo. The embargo was targeted at nations perceived as supporting Israel during the recent Yom Kippur War. Trouble was brewing.

Normality ended when Carter appointee FED Chairman Volker found higher interest rates were  not enough so he  lowered commercial bank reserves. This quickly  pushed the Federal Funds Rate to 20%. Banks would not loan. Two recessions followed. The first cost Carter reelection and the second, though severe, was over so Reagan was reelected. The End of the International Liberal Order?  1hr: 28 min video

 

#2 Increased Foreign Competition Began 1970's Wage Stagnation
High Oil prices pushed Japan into more valued added exports like automobiles, machinery and computers. This competition caused a stagnate Rust Belt with lower wages and eventually lower employment. Japan's manufacturers got lucky from increased demand for gas efficient small green cars with catalytic converters. Detroit  protected profit by seeking tariff  protection. Investment needed to  lower cost and increase product quality was ignored. Auto union leaders protected their positions. Current worker protected existing jobs and salaries by accepting a two-tier wage system.  It minimized the need for new workers who would receive lower wages for a similar jobs. Feeling political pressure Japan built many modern U.S. plants often in the nonunion southern states offering the highest tax incentives. see  How the U.S. Squandered Its Steel Superiority

 
   
  #3 1980's Failing Manufacturing and Less Financial Regulation
Events Causing Financial Instability Causes Great Recession
1980's U.S. and England Returned to Conservative Lax Business Regulation because increased regulation and increased welfare provisions had upset many voters. Think Great Society and lax derivative regulation which result in major increases hostile leveraged buyouts plus and over-investing in Real estate caused. They caused  the Savings and Loan Crisis. Think Michael Milken Scandal, Keating Five results from poor Alan Greenspan advise.
1980's Major Investments Banks Went Public creating a need to balance client needs with equity needs. Think expansion of financial industry's share of GDP.
1980's Accounting Standards Declined as accountancy firms struggled to balance commitments to audit standards with the desire to grow their consultancy business. Think off-balance-sheet items and Arthur Anderson Scandal.
 1980's Home Equity Loans Increased Current Consumption and Lowered Savings as they replaced equity building home improvement loans. Think many not prepared for retirement.
1983 Reverse Mortgages Approved for FHA loans. Think less retirement savings.
1986 Big Bang deregulates London's financial services industry, other will follow.
1999 Gramm–Leach–Bliley Act Increased Systemic Financial Risk once limited by the Glass-Steagall Great Depression Act. Initiated by Republicans it was signed by President Clinton.
Think financial industry expansion. See Five Bad Bush/Clinton Policies
 2004 Uptick Short Rule of 1938 rescinded. Think stock market gambling.
2006 FASB requirement that housing assets be mark-to-market decreased financial system collateral. Action resulted from a 1991 Government Accountability Office investigation of the $160,000,000,000 savings and loan bailout. Think moral hazard.

From Financial Crisis to Recession to Great Recession to Recovery
 1. Great Moderation preceded the Great Recession 2. 2007-8 Financial Crisis was tamed by the Federal Reserve. 3. 2008-9 Recession was tamed by both monetary and fiscal policy.
4. European financial instability and world-wide austerity slowed economic recovery and income growth for all but the very, very, very wealthy. Think top 1/10th of one-percent. 
5. Great Recession Recovery Has Varied Around the World

Understanding Balance Sheet Recessions
They are infrequent, severe, and long-lasting. Understanding them is necessary when judging society's efforts to manage The Great Recession. It is like understanding a doctor's attempt to relieve a headache requires knowing the level of difficulty. Was it a Migraine Headache? A balance sheet is caused by high levels of private sector debt. Assets must equal liabilities plus equity. If assets values like housing collateral fall below their associated debt, equity must make up the difference or insolvency results and debt must be repaid. Think 1837, 1873, 1890 & 1929 See Most Severe US Recessions.
 Was Our Great Recession a Balance Sheet Recession?  Economist Paul Krugman feels the financial crisis ..."was one manifestation of a broader problem... associated with a "balance sheet recession." Economist Richard Koo wrote Japan's 1990- ? "Great Recession "was a "balance sheet recession."  


What Led To The Great Recession?
 1. Free Market Capitalism Lowered Regulation.
2. Innovative Expanded Investment Banking.
3. Global Trade Imbalances
4. Finance/Housing Easy Money Bubbles

  

 

 China 2012       
Germany 2012         
Saudi Arabia 2009   
Japan 2011     
Russia 2012 		$214B
208B
150B
119B
81B

 

 

Great Recession Stages
from The Shifts and the Shocks by Martin Wolf

1. A more complex unstable financial/credits system
resulted in extreme optimism in good times and panic in bad times. Think
 derivatives, securitization, credit default swaps all managed by hedge funds.
 2. Savings glut created as emerging countries lowered borrowing and increased trade surpluses after the 1997 Asian Debt Crisis made their foreign dollar dominate debt unsustainable. They expanded trade and kept personal consumption below economic growth. Less consumption and borrowing plus a trade surplus increased Dollar, Euro, and Yen reserves. Like the Petro Dollars in the 1980's this excess savings would be loaned for poor investments (housing).
Think savings from China and Russia and other re.
 3. Aggregate demand stagnated as trade surplus countries didn't spend. Germany's 2005 economic renewal was saved and Japan's private sector saved much more after their 1990's credit bubble exploded. Adding to the demand shortage were companies who maintained profit by decreasing capital investment spending despite historically low interest rates. Globalization and technology also helped them maintain profit as wage increases were limited to most valuable employees. State and local governments, especially those with underfunded pension systems, also cut expenditures.
Think Mercantilism.
 4. Increased current account deficits by wealthy nations balanced world trade. Higher demand for foreign goods was made possible by massive central bank supported low interest loans. The FED's historic monetary expansion was made possible by continued low inflation caused by expanded Flat World competition and low oil prices. Innovative financing and lax financial regulation also fostered expanded financial asset demand. Think excess OPEC savings financed the 1970's Latin American Debt Crisis leading to Savings and Loan Crisis.
5. Real Estate and Stock bubbles came as expected from low long-term real interest rates. New home buyers borrowed surplus savings and investors devoured growing unique debt securities created by an expanding finance industry promising insured difficult to understand almost guaranteed financial instruments. Leverage rose dramatically. Fraud, near fraud and data manipulation exploded as mortgage servicers, banks, and the law firms broke the law to force people out of their homes. See Chain of Title and Brief History of Financial Bubbles.
6. Poor Crisis Management by politicians as their economic advisors believed market capitalism would prevent serious recessions. The Great Moderation solidified this view. Possibility of new financial instrument contagion were not understood. When panic started, political, intellectual and bureaucratic leaders resisted quick action in areas that required cooperation. A US depression was avoided by FED, Treasury and Congressional efforts that were slowed by austerity. Iceland, Ireland, Greece, Spain and Portugal experienced economic depression.
See The Great Recession.
See Bubbles Credit and Their Consequences to see FED analysis of trying to slow down a bubble.

 
  New Normal # 4 History of U.S. Financial Bailouts and Economic Recovery

Bailout History The $700 billion 2008 financial-sector rescue plan is the latest of many bailouts that go back to the Panic of 1792 when the federal government bailed out states over-burdened by their Revolutionary War Debt. Thereafter private banks and investment bankers took over financial bailouts until the Panic of 1907 when the economy was so big that even J.P. Morgan needed U.S. Treasury help. This led to the 1913 Federal Reserve System designed to be the lender of last resort.

Recently the 1987 Savings and Loan Crisis bailout cost about $160 billion. Other recent government private sector bailouts have included: 1970 Penn Central 1971 Lockheed 1980 Chrysler 1984 Continental Illinois 1991 Executive Life Insurance Company by states assessing other insurers and the 1998 Long-Term Capital Management bailout by commercial and investment banks.
See History of U.S. Government Bailouts. Think overcoming greed is difficult. U.S. does better than most! 12/28/15 

Great Recession Cost Was High
But Growth Cured Budget Problems
 Economic Cost of Great Recession Estimated at 12.8 Trillion. Some add home values loss but this is a reach since the housing bubble had inflated values. U.S. FED Profit of $100b in 2014 was up from $47b in 2009. The 2010-14 total was $ 420b.  Source
See Treasury Financial Analysis of Great Recession in Charts
Hear Recession, Stagnation, and Monetary Policy EconTalk Podcast 1/9/17

Source

 

  
 

 

  
   

New Normality #5 Poverty Rate Stuck at 15.5%. After  "...correcting the 2013 poverty rate for noncash food and housing  benefits, refundable tax credits, and the upward bias in the CPI-U ..."the rate drops from 14.5% to 4.8%. War on Poverty-Was It Lost Others believe it should be raised as it doesn't account for geographic and demographics differences. See Poverty Rates How Flawed Measure Drives Policy Other Data 1  Data 2 Think many use true but not necessarily appropriate data to foster their POLITICAL beliefs. Example: With our obesity problem how could anyone have believed that many went to bed hungry during the Great Recession. Calculation ignored food stamps and subsidized school lunches.
 

  
 


New Normal # 6
Profit Beats Wages

Twenty-first century war expenditures helped profit recover after a dot-com bubble recession, then crash with The Great Recession and then grow to new heights. US Companies have competed very well in a flat world using technology, outsourcing to Asia, Mexico...and by keeping wage increases low. Source Total compensation has done better although Obama Care gave companies an opportunity to again lower compensation. Source More Data 1 Data 2 Think Rust Belt then NAFTA and soon TPP?  See How Democratic Failed Workers 11 min Short Term vs. Long Term Returns 52 min

 

Editor's Note: Competition for US Investment dollars meant business located in US had to compete with developing countries whose R was greater than R from US located companies. Just as said competition lower US worker wages except the return on investment overseas avoided taxes and to some extent measuring of R.

 

  
  New Normality #7 Wellbeing Growth Continues


 1. Society's continued stability has resulted in tremendous economic growth which is the key determinate of well-being. Public safety net, child safety, and adjusted poverty rate have all improved dramatically since the Gilded Age. Think economic continued economic distress in Russia, Europe, Japan and China.
2) Scientific achievements have continuously added to citizen well-being. Think cured diseases, smart phones, streaming audio-video, Gillette Stadium ... See Health Problems Solved.
 

 

  
 
3) Personal Income increased continuously if not always rapidly because nature and nurture improved the personal characteristics needed to enhance wellbeing. Think Russia, China, and Europe's really slow recovery from the Great Recession.  Source Is The Country In Trouble, Will Stagnate Income Hurt Our Children and Recent Decades Ranked By Problems. see Crisis of Capitalism 11:10 video is an interesting Marxian view i.e. Bernie Sanders Return to page 1 Send thoughts to antonw@ix.netcom.com


Source #1     Source #2

  
   

 

New Normal # 8 Asian Competition

Automation Will Continue, What Will Displaced Workers Do?

Should We Encourage Apple to Assemble Onshore? How?

 
 

#9 A New Western Normality in the Making?

Prelude: The Power Grab Continues

Supreme Court as "Supreme Constitutional Authority"
1962 Baker v. Carr  federal courts took control constitutionality of state redistricting plans.
 Other 1960's Redistricting Decisions

Protecting Business
2010 Citizens United v. FEC protected  corporate interests in  election-spending regulations

I. Development of Illiberal Democracy   summarized from Francis Fukuyama: Democracy's Failure to Perform
     A. Causes
          1. Foreign Policy Failures of Developed Democracy enhanced by U.S. foreign policy failures i.e. Middle East  wars
          2. Non-Liberal Democracy success, especially China
          3. Poor Liberal Democracy Performance i.e. economic slowness, immigration, wealth accumulation
     B. Definitions, nominal
         1. States are a monopoly on a legitimate use of physical force.[105][106] [107 from Max Weber States are about Power!        
         2. Rule by Law: sovereignty sets the law i.e. China
         3. Rule of Law: sovereignty responsible to same laws as the governed. Laws limit power.
         4. Democratic Accountability requires free multiple political parties with guarantee substantive accounting and a
             government that serves the entire population, not just the elite.
    C. Modern Political System
         1. A modern miracle that generate tremendous power limited by the rule of law and is democratically accountable
         2. Patrimonial state: rulers own political system, resources and distribute gain production Who You Know
         3. Neo-Illiberal States: look like a democracy, limited representation, leaders follow the money

  D. U.S. Failures at State Building
         1. Focus: building a Liberal Democracy
         2. Required focus: moving from Patrimonial State to Modern Political System
             a. Iraq and Afghanistan: got the liberal democracy but did not move from a patriarchal to modern state
                 Both state moved to Oligarchy where a few wealthy people form a  Plutocracy.
                 Neither can protect citizens and provide services to much of the population.
             b. Ukraine: got a liberal democracy from the Orange Revolution of 2004-5, but could not keep it as a
                 second revolution needed to avoid a strong connection to Russia.
             c. India: Very democratic but can't progress to modern state as it can't fix serious problems
                 Elected strong leader but he to is failing.
             d. Greece: got a democracy in 1974 but developed into a Clientelism where every election brings a
                 new set of party connected bureaucratic. Strong unions kept jobs for previous bureaucrats.
                 Eventually, she had seven times the bureaucrats per person as did England.
                 Problem: Greece does not want to change.

 

II. Three main forces are blowing up global politics

Source  by

Summary from author/editor Walter Antoniotti      antonw@ix.netcom.co

A Trio of independent disruptions
Opposition to immigrants, globalization, and establishment leaders/institutions created disruptions.
America's 1990 dissatisfaction recently spread to Europe causing two years of volatile pubic fury.
This spread compounds to an unpredictable degree the possible disruption to Europe and Western Culture.

Status and Social Cultural Apprehensions contributed to these disruptions. 
This caused  effected groups to lash out in a tribal like response.
An end to a post WWII US led moderation is seem by some to be causing
1. Great power conflict returning to early Cold War levels
2  Declining world wide economic prosperity, including the west

All three disruptions could last years Axion reported here, here and here.
Optimistic leaders thought and even hoped Trump, Brexit, or something else
would help moderate our disruptions.

Disruption modification related to Trump, and Brexit, power immigrants are difficult.
 1. No opposing stability force seems forthcoming
2. An aging and shrinking developed world's population reinforces disruptive forces.
3. AI is increasing worker employment anxiety.
3. Climate change is increasing leader constitution.

III. Big Economics Stories over the last decade compiled bu author/editor Walter Antoniotti

Technological advancement, by way of big data and artificial intelligence, has made it easier for companies
to closely monitor workers’ productivity and to break jobs into tasks so that contract work now encompasses
a third of the workforce excluding many from benefits, training, and a career ladder typically offered full-time employees.

Low interest rates have left the Fed backed into a corner David Wessel
 While they makes it possible for the U.S. government to shoulder a larger federal debt and reduces cost of borrowing
for everything from home mortgages to public investments that could raise living standards in the future, they also
makes the Federal Reserve’s job tougher: With interest rates so much closer to zero than has been the case in the past,
the Fed has less room to cut rates to fight the next recession.

Robbing the poor to give to the rich Aaron Klein
The explosion of tax free credit card rewards available only to the well healed, to the incredible costs of a slow
payment system born by those working paycheck to paycheck in overdraft fees, to the rise of payday loans.

The cost of the free market was high for some  Isabel Sawhill
The longest economic recovery on record did not result in public investments, a reduced national debt,
or help for of those left behind—Trump's “the forgotten Americans.”  Some economists question the
free market philosophy leading to poorly designed tax cuts, and ever-growing inequality.

The Affordable Care Act sharply reduced the uninsured Christen Linke Young, Matthew Fiedler
The uninsured rate has fallen by more than 40 percent with almost entirely due to provisions in the ACA that created subsidies,
expanded Medicaid, young adults to remain on a parent’s plan through age 26, and law’s now-repealed individual mandate.

 

 

Growth in health care spending was unusually low C. Young, M. Fiedler
From 2010 through 2018, health care spending rose  from 17.3 percent to 17.7 percent of economy activity
even with a large expansion in health insurance coverage.

Taxing the rich has taken center stage Christen Linke Young William Gale
Our tax system is less progressive. The 400 richest Americans owned 0.93 percent of wealth in 1982, rising to 3.26 percent in 2018;
and the top 1 percent received 7.4 percent of after-tax, after-transfer income in 1979 versus 12.5 percent of income in 2018.
The top 1 percent paid 35% percent of their income in taxes in 1979 compared to 34% percent in 2013.

Proposals to raise taxes on the well-to-do include taxing wealth directly, closing income tax loopholes,
and taxing capital gains as they accrue were too radical to seriously discuss 10 years ago.

Dismal news on life expectancy Louise Sheiner
 Life expectancy,  fueled by increases in drug overdoses, alcoholism, and suicides among working. Americans began falling in 2014.
Widespread adoption of prescription Opioid pain relievers and “deaths of despair” due to increased stress and low opportunity were the cause.
Life expectancy across income levels has been widening sharply. [Those with the gold, live.]

 

Will school and no work becoming the norm for American teens Lauren Bauer
From 2000 to 2018, the labor force participation rate of 16- to 24-year-olds declined 10.2 percentage points during the academic year because of  increasing school enrollment, a decreasing propensity to juggle work and school, and spending more time on education-related activities. This  time spent on education eventually contributes to more working when completing their education.

The promised productivity surge has not materialized Martin Neil Baily
 Productivity growth  has been very slow in recent years. Non-farm business sector recently grew at 1.4 percent .
Business investment has also been weak.

Demographics became a headwind for US economic activity Stephanie Aaronson
The aging of the baby boomers has put downward pressure on labor force participation, causing a  reduction in the productive capacity.
This has reduced labor market fluidity and reduced business formation. But the demographic headwinds facing the US go beyond aging baby boomers.
Fertility rates have fallen dramatically over the past decade, means slower labor force growth and fewer workers per retiree,
both of which will make it more difficult for the US to meet its fiscal responsibilities.

A New Normal is in the Making?

'America First' has won, by Robert Kagan at NYT.

Saving liberal democracy from the extremes, by the FT's Martin Wolf