Thucydides Trap

I recently finished reading one of the scariest books ever, which was discussed at a breakfast group I belong to that debates national issues.  The book is entitled “Destined for War”, and is by Graham Allison, an eminently qualified writer, with extensive experience both in national government and in academia.  In it, he describes what is known as “Thucydides Trap”, from that historian’s account of the Peloponnesian War between ancient Sparta and Athens, and then applies it across history to present times.


The trap is that when a rising power infringes on a more established, status quo power, war may not be inevitable, but it is likely.  He describes 16 of such circumstances in history, from Athens/Sparta, through 15th Century Spain/Portugal, 19th Century Germany/France, both World Wars, the Cold War between USSR/US, and others.  In 12 of the 16 occurrences, war resulted, and in only 4 did the powers involved manage to escape hostilities.


Why did I find it so scary?  Because the circumstances between China, a rising power, and the USA, an established and status quo power, have frightening similarities to many of the prior confrontations, and a war between China and the USA would be devastating to both nations, even if no one used nuclear weapons.  The four that managed to escape war had three with reasons that don’t apply—adjudication by the Pope, changing circumstance bringing the nations involved into alliance, etc.  The only example of escaping the trap that I found was the status quo power having more pressing priorities, and thus allowing the rising power its own sphere of influence.  That one was when 1900 Great Britain, worried about rising German naval power, withdrew its navy from the Caribbean basin, allowing the rising United States to exercise hegemony there.


Is a similar modus vivendi possible between China and the US today?  I believe it is, but neither side seems to have leadership that could exercise restraint without appearing weak, which is not how the leaders of great powers believe they can appear to their people.  The points of contention seem to be economics, culture, military, sphere of hegemony, and alliances, each of which has in the past triggered confrontation between two powers.


I believe war can be averted, but only if each side is willing to negotiate, knows what is truly important to it and to the other side as well, and is willing to cede on issues vital to its opponent, and not so important to it.  We would find that a large percentage of the issues then disappear, making it easier to find solutions to the few that are critical to both.


In order to do this, we need for our part to have leadership that is not dominated by views of the very vocal extremes of either or both parties, leadership that represents the large, center majority that has had no representation in the Executive branch in the recent past or in the present.  We also need to remember as a society that democracy and peace are built on compromise, which is a way forward, and not a betrayal of perfection.

An interesting conjunction of WSJ Editorials

Recent editorials in the Wall Street Journal touched on several points this blog has made in different postings.  One was on difficulties in the measurement of GDP and its disconnects with increases in standard of living (which is what really counts), and the other on anemic growth of GDP over recent years, and what that means for “The American Dream”.

The editorial of Prof. Feldstein on Saturday has interesting points for Sen. Gramm and Mr. Solon, in their editorial of Monday on Finding 3 % growth.  We are not properly accounting for the increase in quality (which includes functionality) of what we buy, so that growth in standard of living does not correlate perfectly with growth in GDP per capita. For example, how much more does your cellphone do today, than did a similarly priced one of 15 years ago? Also, for example, when competition drives down the price of phone and data plans it will have a negative effect on GDP growth, but have we really seen a decrease in standard of living?  All this says our growth rate has been better than the statistics, especially in recent years, as more “free” apps and information appear.

However, there is little doubt that we could do better, and it would improve our standard of living even more.  The dead hand of regulation weighed heavily in the Obama years, and rolling unneeded ones back has many benefits.  First, it reduces business costs.  Second, it makes small and new businesses more able to compete with larger ones who can better afford compliance executives.  Third, it creates a business environment where owners, executives and managers are more willing to take appropriate and intelligent business risk.  Economist John Maynard Keynes recognized this and labeled it “animal spirits”, and never underestimated its importance.  And just the cessation of business-bashing by our nation’s CEO has a beneficial effect.

We have a record number of job openings now in the US, at a time when our labor force participation has declined significantly.  Possible explanations are a mismatch of skills required vs. skills available in the labor force, as well as overly generous transfer payments reducing incentives to work.  GDP growth will get its greatest boost by filling those jobs, and boosting labor force participation.  Government policies can affect both of those.

The Need for a Realignment in American Politics

In an airport bookshop, prior to a flight, I bought a copy of a book by P.J. O’Rourke, entitled “How the Hell Did This Happen?”  It is a very funny laugh-out-loud book about the 2016 national election.  He starts with a paraphrase of the Preamble to the Constitution:

“We the people of the United States, in order to dissolve what unity we have, establish  injustice, insure domestic idiocy, provide for the common offence, promote the general despair, and secure enmity toward ourselves by our posterity, do ordain and establish this obnoxious political spectacle, the election of 2016”.

It is remarkable how close to fulfilling his words the last national election would come.

What does this say about the state of our national politics?  To me, it says several things.  First, the two national parties are unable to field candidates for the Presidency that are exceptionally competent, that want to represent a maximum number of citizens (rather than just their core supporters), and that can provide leadership to a great nation that is in danger of going adrift.

How has this come about, and how likely is it to continue?  Can it reverse itself without outside impetus?  I believe the inability to field the right candidate has come about because the experienced party elders have lost control of the nominating procedure.  Primaries and caucuses have made the national convention a symbolic rubber stamp. Those primaries and caucuses are dominated by the party activists, who, almost by definition, are the folks at the left end of the Democratic party or the right end of the Republican.  People are passionate at the extremes, moderate at the middle.  Most people over the age of 40 remember that communism and socialism don’t work well for people, and many understand that the nanny state and over-regulation has its ill effects.  And most people over 40 realize that laissez-faire capitalism has its drawbacks, too, and that isolation and prejudice aren’t good ideas either.

It is easy for a Progressive Democrat to revile a Mike Huckabee or a Newt Gingrich, just as it is for a Tea Party Republican to revile a Nancy Pelosi or a Bernie Sanders.  In the smoke-filled rooms in days of yore, the party elders chose a candidate who they thought could win, which always meant not only inspiring the faithful to vote, but also attracting a majority of the independent, swing voters, who are typically in the middle.  For better or for worse, those days are gone forever.

This condition is likely to continue, mainly because of the influence of the media, especially the new media.  It is now possible to absorb news, and opinion cloaked as news, 24 hours a day, from sources who will only echo what a person already believes.  Whether it is Fox News or MSNBC, Huffington Post or the Drudge Report, more and more people refuse to listen to the other side of a debate.  And universities are amplifying this tendency, with trigger warnings, safe spaces, and selective outside speaker policies.  It is far easier to “sell newspapers” (remember them?) by highlighting a contest of wills, a competitive winner-take-all contest, than it is by urging compromise, looking for ways of bridging differences.  And the media is in the business of “selling newspapers”.  The more combative and extreme candidates will thus get the free PR.

Can the current state of affairs be altered to a better position?  I think it can only be done by the establishment of a third party, one that represents the large number of Americans who are politically in the center-left, absolute center, and center-right.  Third party Presidential candidates who emerge in election year create a party as an after-thought, and always fail.  Only by forming a party that takes the long view, one of building membership, grass roots support, and financing will the movement have some permanence.  Only a party that fields winning candidates in state legislatures, the House, the Senate, and governors’ mansions, will find it possible to field a viable Presidential third party candidate.  Think 2024.  Remember, the newly created Republican Party was in existence for 7 years before it nominated Abraham Lincoln for the Presidency.  On the way, as third party candidates for lesser office win elections, the two mainstream parties will understand they have to listen to this voice, or die themselves.  Four to six senators can have enormous leverage on the Senate, as 100 senators are usually closely divided, but they will only have that leverage if they are of one party, speak and vote with one voice.

Who can do this?  If not us, the ordinary people of this nation, it will not get done.

Social change



This posting will be a real test.  I am certain some of my readers will react angrily to its content.  The test is whether you read the one after this, the one not yet written.  If you do not like this, and so refuse to read any subsequent posts, you may be a single issue, litmus test person, and probably are more to the extreme wing of your party than you admit.  Okay, on to the content.


Although Technological change poses a far greater real threat to our economy and widespread employment and wellbeing, Social change generates far more emotion, and threatens to tear the fabric of our generally accepted culture.  No one gets as upset about robots replacing assembly workers, as some do about abortion (or anti-abortion), affirmative action, gay marriage, legalization of pot, school prayer, etc.


Why is this so?  Why do people, many of whom have very little at stake personally, get so inflamed about these issues?  I think the sea change in communications brought about by the internet, email, social media, blogs (like this one!) and others are not the root cause, as some say.  I do believe that instant communications amplifies and makes the feelings more intense and immediate.  In the absence of credible and balanced  journalism, people tend to only read and watch messages that echo their prior beliefs.  And credibility ratings on journalists are probably at an all-time low, for good reason.


It is clear that there is a religious divide on many of these issues.  Some of the more progressive tendencies are found in those who have abandoned religion in their lives, or who have at least lessened its influence.  But I think it is more than that, as well.  Traditions and traditional mores have been established, because they worked, at least for some long period in the past.  Whether or not they still work or work as well, depends in part on where a person lives, his/her lifestyle, what friends and neighbors believe.  But many of these are beliefs, and religiously inspired or not, they are beliefs rather than ideas.  The destruction or trashing of one’s beliefs is difficult to accept, and leaves one feeling adrift, unmoored.


Social change requires a change in beliefs, and that takes significant time for many people to process.  In some cases, it can only happen over generations, as children absorb many of their parents’ beliefs.  This argues for the status quo, or at most glacial change.


On the other hand, there are some social issues of basic fairness that cry out for addressing today, rather than allowing slow evolution.  These would include economic or legal discrimination based on race, religion, or sexual orientation.  Not all social issues are equal in importance.


So, what should the role of government be?  Again we find the extreme wings of both parties trying to use government as a weapon to enforce their particular beliefs.  A more centrist position would be to legislate that institutions act in the common good, but to avoid coercion of individuals to agree with a belief.   This is slippery ground, and sometimes a politician’s best position is to fade into the woodwork, and not take a strong stand.  A little less shouting about these issues would be a good thing, even if legislation proceeds slowly, and in a non-punitive way.  We have fifty states which can serve as experimental laboratories, and here is a case when the Federal government can lead from behind.


The recent confrontations in Charlottesville are somewhat instructive.  The Saturday Wall Street Journal had an editorial by Holman Jenkins, Jr., entitled “The Extremist Show is Just Starting”, which was illuminating.  The city grew and prospered for the last 93 years despite the presence of the statue, and, according to Jenkins, there had been no strong calls to remove the statue until recently.   But egged on by extreme progressives, the city decided to remove the statue.  The far right wing, KKK and neo-Nazis, decided to protest.  They did so legally, and within First Amendment rights.  Now I find those groups odious, representing the worst of America and humankind, but they still enjoy First Amendment rights.  The “antifas”, or Anti-Fascists, organized a counter-protest, to protest the protesters right to protest, and had to know there would be violence.


The African-Americans of Charlottesville, of Virginia, of the United States, are in no way better off today than they were two weeks ago, in any meaningful sense of the words “better off”.  Yet the focus of politics on forcing an extreme view on the mostly uncaring center has made us all worse off.  Had the energy expended by protesters, politicians, journalists and the general public been utilized instead to find solutions to serious economic or security issues, we would be better off. No one has more legal rights nor better opportunities because of the dust-up and the general outcry.   I am not equating the morality (or lack thereof) of the KKK and neo-Nazis with the morality of the antifas.  But social change comes more slowly, and the KKK and neo-Nazis have far fewer sympathizers than they had generations ago.  Left alone, they will dwindle.  Focusing on them probably helps their recruitment.


What could have been done by a Centrist philosophy, in the light of agitation to remove the statue?  I’ve seen the suggestion of adding context.  Perhaps a plaque at the statue, saying something like, “General Lee is a part of our history.  We disagree vehemently today with his support of human slavery, but his statue can remind us of who we were, in the cause of fostering human progress towards who we want to become”.


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Coping with Technological Change

In a prior posting, we discussed Technological Change, its incredible and accelerating rate, and the good and the bad it brought us.  The good, we can, of course, embrace, or ignore if we choose.  The personal bad, increased pace of life and anxiety, has no political solution, only personal.  But the societal bad, increased unemployment, decaying cities after factory closures, obsolescence of individuals, can be ameliorated by intelligent policy, created by a centrist party.


Why not by Republicans or Democrats?  The Republicans are wedded to a belief in individual responsibility, which, while reasonable for problems of an individual, is not a good solution for the same problem that hits a mass of individuals.  The Democrats are wedded to the belief that the Government can solve the problem, with only one more bureaucratically managed program.  Are these characterizations unfair?  Somewhat, I’ll admit, but historically we’ve seen them in operation.


What we cannot do, is return to the past.  We cannot abrogate trade treaties to help some of our folks while hurting others.  Trade will go on and liberalize without us, and we will be left in the dust by other nations who take advantage of what it offers.  (I put globalization under technology, because only things like cellphones, the internet, and drones enable its vast scope.)   We cannot put the genies of robotics and artificial intelligence back in the bottle.  They will emerge, one way or the other.  The marketplace may lose a battle, but it will always win the war, and the marketplace demands the best solution.


We can attack the problem from three different angles.  First, we should look to employers.  We know there are a tremendous number of job openings today, that go unfilled because there is a mismatch between the skills of the unemployed and the requirements of the jobs open.  Rather than make government grants to training organizations, why not let the employers, who know best what they need, be incentivized to train applicants without the right experience?  The government could reimburse the cost of training an unqualified candidate who remained on the payroll for one, two, or three years in the skill for which their training was covered.  Not even taxpayers lose money on this deal, because the new employee is now paying his own taxes, and over his employment will more than likely pay back the government’s investment in his training several-fold.


One possible objection to this plan would be the incentive for employers to cheat, to claim funds from the government to which they were not entitled—either because they didn’t provide the appropriate training, or they hired someone who didn’t need training, and claimed the funds anyway.  So, do we have another government organization to monitor the employers?  I don’t think it is necessary.  To claim the funds, let the employer specify and certify the training was done, have the employee agree, co-sign, and attach his resume, and then require the company’s financial auditors to audit the certifications.


On a second front, for the individual, let’s set the right incentives.  Just as we allow a tax deduction for that portion of wages that gets put aside into a retirement account, e.g., a 401(k), where taxes are only paid after retirement as the funds are withdrawn, why not allow an individual to set up his own retraining account? Each employee could contribute 1-3% of his/her wages each year to set up a retraining fund, invested and administered by a third party, and available to him or her in the event of job loss due to plant closure, lack of demand for his/her skill and experience.  We could even include a provision for a working spouse to similarly set aside tax-free funds for retraining for the child-raising partner.


And on the organizational side, why not require unions to set aside a small portion of union dues for a retraining fund for its members in case of skill obsolescence or plant closure?  Employers could also be required to pay a one-time fee of 20% of the year’s pay for individuals affected by plant closure, and require the funds be used for retraining.


All of this is possible, if we can get politicians in office who are not wedded to the extreme positions of the current two parties.


Obviously there are other things we can do.  We can improve K-12 education, so that high school graduates are better prepared to learn the skills needed today.  We can urge teachers to stress the need for life-long learning.  We can improve vocational training, and not make that a dirty word.  We can improve the quality of education provided by community colleges, for those who cannot or should not take a 4-year bachelor’s degree.  And we should investigate the German apprentice program to see if we think it could succeed here.


But the takeaway here is that there are good approaches to alleviating the problem.  Good governance does not ignore the problem, nor try to recreate an impossible past, nor smother us all with well-meaning programs, that are poorly managed, and have unintended consequences.  There is no cure-all, but good governance sets the framework under which employers, employees and organizations can succeed.

Technological Change

Technology is being invented and advanced every day, in countless ways.  I believe that the rate of technological change is greater today than at any time in the history of mankind, and in fact it is not only changing at a high velocity, it is still accelerating.  The future will likely bring more and faster change than we see today.


How can we categorize types of changes, as they affect our lives?  There are changes that make our lives easier.  There are changes that offer us more opportunities to grow and expand our horizons, our understanding.  There are changes that are just fun.  There are changes that improve our health and extend our lives.  There are also changes that make our lives more frenetic and anxiety-filled.  There are changes that can obsolete our skills.  There are changes that can affect our livelihood.


Some examples, so we’re all on the same page.  Cellphones that make communication by voice, texting and email make our lives easier.  Search engines and low cost travel allow us to grow and expand horizons.  Online gaming and streaming movies are just fun.  New medicines and surgical procedure improvements extend our lives.  Some of the same things that can make our lives easier can also make them more frenetic if we let them, e.g., texting and email can force professionals to be on call 24/7.  An example of a change that can obsolete our skills is the use of artificial intelligence to provide financial counselling.  Our livelihood can be changed by a new robotic device that can perform manufacturing tasks cheaper and more reliably than a human.


The beneficial changes we can choose to accept and use, or ignore.  We know the next generation will adopt them, even if we don’t.  But what about the changes with negative consequences?  There is always a temptation to wish they would go away, to protest, to legislate them out of existence.  The lessons of history teach that change can be artificially delayed, but not stopped.  In England, during the Industrial Revolution, a group of people called Luddites tried to destroy machines that were taking away the handicrafts of spinning and weaving.  They succeeded in destroying individual machines, but lost the war.   The French were more recently afraid of job losses to many causes, including automation; they legislated a 35 hour maximum work week, and we see where that got them.


So, is there any solution to mitigating changes that are harmful to some people, or do we give up?  Dealing with those changes that make our lives more frenetic has to be done through policy changes, both by individuals and employers.  But government, in partnership with employers, labor unions, and individuals can have a positive role to play in dealing with changes that result in unemployment due to obsolescence of skills and abilities.  Improvement in K-12 education, fostering a culture of lifelong learning, and most of all, training and retraining programs are the only answers.  Future postings on this blog will deal with those issues.

The Need for Compromise

I’m hoping this doesn’t come as a shock to you, but we don’t all agree on everything.  In fact, it’s a miracle if we all agree on anything.  So how do we get anything done?  The answer is so obvious that it’s silly—it’s called compromise.  We all do this in small ways every day, just to live—with our spouse, with co-workers, with tennis partners, with members of any group we work with.


So why is it so hard for our politicians to understand that and put together compromise legislation that moves us forward?  Even wings of the same party can’t seem to successfully compromise—look at the Republicans inability to produce legislation to either fix or replace the ACA (aka Obamacare).  There have always been ideologues, but somehow in the past, we got unstuck.  In the 19th century, Henry Clay was able to forge compromises between the North’s Daniel Webster and the South’s John Calhoun.  There were compromises in the Constitution; there was a compromise between Hamilton and Jefferson about the assumption of the States’ Revolutionary War debts by the Federal government.  Is anything different today?


I think two major changes have occurred.  First, the ever-increasing amount of gerrymandering of districts has shifted the focus of an elected Congressman (or Congresswoman). Instead of trying to gather centrist votes in his district to beat the opposition party, the focus is now on protecting his flank against someone more extreme in his own party in the primaries.  Most everyone realizes that gerrymandering is a problem, but it is often looked upon as a problem protecting incumbents and hampering challengers.  Not everyone sees this also as a major force preventing compromise on legislation between the two major parties.


Second, the rise of new media because of cable TV and the Internet, has enabled people to listen almost exclusively to people with their own viewpoints, and never hear the opposite side of a debate.  The loudest, shrillest voices are often from those with the most extreme position.  Compromise is only possible when you understand what the other party wants, and why he wants it.  You may still disagree with it, but if you at least hear the rationale, you may be able to think of compromises that will work for both parties, even if not ideally for either.  But if you don’t hear anything but the echo of your own voice, how can you compromise, and indeed, what possible reason is there for compromise?


The first of the above problems, extremes in gerrymandering, is one that the nation should tackle.  But it won’t be raised by either political party, because they are at least satisfied, if not happy, with it.   Without support of either party or of elected officials, it will be a long battle, though certainly one worth fighting.  The second problem has no solution.

But there is a solution to the problem of compromise, besides fixing one of the two abovementioned problems.  Imagine a third, Centrist party that held 6 or 7 seats in the Senate, or 18 or so seats in the House.  That would probably be enough to prevent either Democrats or Republicans from having a majority in its chambers.  Legislation could only be passed by the proposing party by courting the votes of the Centrists.  I can think of no better way of forcing compromise.  The centrists would not have to worry about being outflanked in primaries, either to the right or the left, because the major parties would do that regardless.  They could actually vote in Congress for what is best for the country, not best for their party or for their individual career.


Their presence, and their votes, in Congress, would also force the two parties closer to the center.  If the Republicans proposed a bill, and the Democrats, not liking it, knew that it could pass with Republicans and Centrists ignoring them, they might be more reasonable in presenting their own demands.  And of course it would be equally true in the opposite scenario.


Politics is not football.  Every game does not have to have a winning team and a losing team.  Let’s let the fans win one.

Our Marvelous Constitution

The Constitution of the United States is a marvelous document.  Let’s take a look at what it is, why it is so enduring, and how we can preserve it.

Historically, it is unprecedented.  When it was created, in the late 18th century, nothing like it existed.  A group of men, equal in rank in society (i.e., there were no aristocrats, no royals), got together and discussed what would be the basic law of the land.  All agreed that the country would be established under the rule of law, and not the rule of a man or men.  At its time in history, this alone was amazing.  And then, rather than declaring it in effect, they went to the citizens of this new land and sought their approving vote to ratify and accept its premises.

What, in fact, is the Constitution?  It is many things, but above all, it is a law about how the laws of the nation will be made, how they will be enforced, and how future actions will be  judged to be in conformity with it.  Fearing the rise of tyrants or dictators, the writers set up three branches of the government—the Congress, the Executive, and the Judiciary—with a balance of power, and means and procedures by which each branch can serve as a check on the others.  Although this sometimes makes changes come slowly, it has served us well, and protected our nation from suffering coups, wars over succession, and instability caused by politicians attempting to seize power beyond that granted in the Constitution.

The document is not perfect; it was written by humans, and filled with compromises that were necessary at the time of drafting, but may seem wrong when viewed through a contemporary lens.  Clearly the 3/5 compromise, acknowledging human slavery and therefore condoning it, was not only wrong, but morally bankrupt.  But the Constitution had an overarching principal, which showed the great wisdom of those who drafted it.  It has a law, recognizing that things change over time, which specifies clear procedures for changing the Constitution by way of Amendment.  In fact, there have been 27 such Amendments, the most recent of which was passed in 1992, just 25 years ago.

One of the well -known provisions led to the establishment of a Supreme Court of the United States, a body which rules on the constitutionality of various laws and legal cases brought to trial under those laws.  The Court consists of nine Justices, each of whom is nominated by the President and confirmed by the Senate, and serves for life.  Increasingly, the two political parties, under the influence of their extreme and ideological wings, fight desperately for someone of their ideological persuasion to be the confirmed replacement when a vacancy occurs.  The Republicans want a strict Constitutionalist who views the law as never in need of changing, and Democrats want a progressive, who wants to change the law to meet current thinking when Congress cannot get a law passed which will respond to that thinking.  Clearly times change and laws need to reflect it—in the late 18th century there were no cellphones, no Facebook, no PhotoShop, no genetic engineering, to name a few.  But just as clearly, the Constitution has survived because it does give each branch of government exclusive areas of control, and has an Amendment mechanism requiring broad approval for a change in its provisions.

Why do I bring this up?  It gives one more reason that we need a powerful, centrist force in the country.  The fights over Supreme Court nominees have become an ongoing battle between the two parties. That hurts the chances of getting a Court that balances the need of rule by law without arbitrary change, with an understanding that times do change.

Immigration Reform–redux

In the OpEd section of Wednesday”s (July 5th) Wall  Street Journal, columnist William A. Galston exhorts his fellow Democrats to begin to see the other side’s viewpoint.  This would be a move toward a compromise, something recently unheard of in Washington!  He quotes pollster Stanley Greenberg, who has investigated, for election reasons, why white working class voters went for Trump.  He quotes partisan economist Paul Krugman in 2006 talking about fiscal burden of low-wage immigrants, and the reduction of wages in low skill jobs.  He quotes other Democrats–Robert Kuttner, Peter Beinart, Jeff Colgan, and Robert Keohane who are acknowledging at least some of the points of the other side.

Both sides have some valid points, as well as some positions so offensive to the other side of the debate as to cut off discussion.  A centrist, compromise position appears in some of the early postings on this blog, if you would like to review them.

What we need now in Congress, in the absence of a third party, is some courageous leadership.  We need to have a bill introduced, with bipartisan sponsorship, and the sponsors of the bill need to get out in front of the media and the public, and explain why such  balanced legislation will please everyone a little bit, no one completely, but will allow the issue to be put to rest for a generation or so, and allow the country to move forward.