Scientist, futurist and best-selling author David Brin shares another excerpt from Polemical Judo, his book about fighting back in a war against both democracy and the very concept of ‘facts,’ which is unfolding before us in real time. Brin asserts that we must start by side-stepping assumptions and clichés that are trivially disproved.
Read the first, second and final chapters of Polemical Judo on David's Blog. We've also featured The War on All Fact People (from Chp. 5), We are Different, Different is Difficult (from Chp. 10) and Economics – No, you don’t get Adam Smith… and Other Rationalizations, the first part of chapter 11. Here's part 2:
More on why OUTCOMES show Republican "economics" betrays markets, fiscal sense and the future (Part 2)
Courtesy of David Brin, Contrary Brin Blog
Last time we did part one of Chapter 11 of Polemical Judo, showing many of the hypocrisies of Republican claims about being the defenders of enterprise and markets and a functionally positive, growing economy. Democrats harp on the unfairness of skyrocketing wealth and power disparities as they should. But this chapter shows that the GOP commits treason against their own declared values.
Now comes part two, in the spirit of contemporaries Adam Smith and Tomas Paine…
Economics –
No, you don’t get Adam Smith… and Other Rationalizations
Part Two NOSTRA CULPA
In May 2018 a petition[1] was sent to the Chairman of the U.S. Senate Committee on Banking, Housing, and Urban Affairs by 36 eminent retired general and field officers in the U. S. Armed Forces, along with retired civilian leaders from the National Security Council; the Departments of State, Treasury, Defense, Justice, Commerce and so on. Were these sage protectors concerned about foreign despots? Terrorists? White and blue collar criminals? Drug lords?
As it happens, all of the above are empowered and enabled by secret-anonymous shell corporations. And surprise, the leading nexus of these dark dens is not Switzerland, or the Cayman Islands. It is the state of Delaware. Followed by many others of these not-so-United States. From that petition:
“The U.S. remains the easiest place in the world to set up an anonymous shell company according to an academic study from the University of Texas and Brigham Young University…. These companies have put Americans at risk and worse – criminals enjoy the benefits of strong investment returns and total secrecy here in the U.S. Drug cartels and human trafficking operations have long understood the benefits of corporate secrecy to launder money from criminal enterprises. More recently, anonymous companies are implicated in terror financing, fraudulent contracting with our military, and even sanctions evasion.”
These eminent leaders added: “As we ratchet up sanctions against hostile nations, it is telling to note that the Iranian Government previously skirted our sanctions for years by utilizing a web of shell companies, including some registered in the United States, to buy a skyscraper on Fifth Avenue in Manhattan.”
Read the letter here, and spread the word.[2] No, this Congress won’t do anything to benefit the nation, humanity or the future. But tracks and seeds can be laid.[3]
We will return again and again in this book to my principal theme, conveyed back in 1997’s The Transparent Society. There is no ingredient to our Enlightenment more absolutely necessary than light.
“Most ‘Wealth’ Isn’t the Result of Hard Work. It Has Been Accumulated by Being Idle and Unproductive. It’s time to call the housing crisis what it really is: the largest transfer of wealth in living memory.” [4]
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LATE NEWS: Since this chapter was written and just before its posting on Philstockworld – and to the amazement of many – the U.S. Congress acted to end (or at least lessen) the travesty described above. The Corporate Transparency Act, which was tacked onto the defense bill that just passed Congress by a veto-resistant margin, would require corporations and limited liability companies established in the United States to disclose their real owners to the Treasury Department, making it harder for criminals to anonymously launder money or evade taxes. I am, frankly, stunned. Astonished. If it is actually allowed to take effect – and ironically those effects will be felt especially in Delaware – it could be a spectacularly important – if insufficient-by-far – move towards transparency and accountability.
This suggests that we are capable of also acting on the further travesties described below.
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OUTCOMES?
LET’S COMPARE ACTUAL OUTCOMES
Should economics be treated like any other science, with confident theories tested by experimental evidence? Comparing predictions with outcomes?[5] Lenin thrashed till his death over contradictions between Marxist theory and actual events. Mao dealt with inconsistencies by killing them. Orwell showed us how tyrants adjust “truth” to match theory. From Goebbels to Murdoch to Trump, the notion has been “repeat something truthy-sounding incessantly and get rallies chanting it. Sheer will can triumph over mere data.” (You can see why the fact professions are inconvenient.)
Earlier in this chapter we dealt with one major modern falsehood – Supply Side so-called “economics,” which has the startling 0% successful forecast rate. But here it’s time to reveal a different a calumny… and a calamity. The calumny – an outright lie that Americans are all taught to believe for all their adult lives – is the Republican claim that they are pragmatic and frugal, while Democrats are wastrels.
Our calamity is the absolute refusal of any Democratic politician or liberal or moderate pundit to hammer that lie, then pound it again, and again until it shatters.
Want that hammer? Okay, buckle up. Here it is: [6] The crucial second derivative of debt [7 ]is the pace at which the rate-of-change of the federal debt is itself changing… either accelerating toward fiscal disaster or braking away from it. That measure was positive (toward accelerating debt) during almost every year of every Republican administration since Eisenhower.
In stark contrast – that crucial metric is always negative (deceleration) every year of every Democratic administration. Let that sink in, because it is diametrically opposite to rhetoric that’s become “truthy” in our minds.
Why is the second derivative of debt more valid than – say – looking at just the size of this year’s budget deficit? Because our fiscal situation carries momentum from actions taken three to five years ago, even a decade. Stepping on the brakes does not instantly stop your hurtling car – it decelerates your rush toward that cliff. Hence, the second derivative tells you – almost instantly – whether an administration is at least trying to be fiscally responsible.
Examine the second derivative of debt in this 2015 chart of the U.S. federal deficit as a fraction of U.S. GDP. Wherever the curve is seen turning, go ahead and guesstimate a rough center to that stretch of curve. Of course there are bumps, so a little subjective smoothing is called for. But if, across any three to five year span, the center point of your curve lies above, then the arc is swinging toward up-vertical and debt is on a worsening track.
If the center of a curve is below, there's an improving trend. Decelerating deficits curve back down, even toward surplus. Think convex versus concave.
Recall: GOP administrations began in 1969, 1981, 1989, 2001 and 2017. Democratic ones in 1977, 1993 and 2009. Now draw your curves. It truly is amazing! Here’s a marked-up version of that chart, as I posted it in 2015.
The illustration above was revealing when I published it, late during the Obama Administration. Let me reiterate. The rate of change of the rate of change of debt was positive (toward reckless deficits) during almost every year of every Republican administration (post Eisenhower). It was negative (building momentum toward prudence) in every year of every democratic administration (post Johnson). Now add in this bald-faced fact – that Bush Administration accounting tricks kept costs of the Afghanistan and Iraq Wars “off the books” for half a decade, letting them slam the formal deficit just when economic mismanagement sent the economy into hell, leaving behind a mess that included hyper-velocity debt. In other words, the 2006-2007 “dip” is a lie.
Okay, for this later update, I just had to insert a stolen cartoon from Saturday Morning Breakfast Cereal, one of the greatest of all web comix:
Here is another way to look at the same fundamental data – the ratio of national debt to GDP – spread over a much longer range showing how it was consensus policy across the Truman, Eisenhower, Kennedy and Johnson administrations (initials HST, DDE, JFK and LBJ) to ask the rich to help pay down debt left over from WWII. That pay-down continued even into the Vietnam quagmire. But this bipartisan consensus ended with the arrival of “Laffer Theory” – the basic juju underlying Supply Side incantations. Starting slowly under Nixon and Ford (RMN, GRF), the cult incantation was “give the already-rich all the money, and they’ll invest it wisely, stimulating an economy that’s spectacular for all.”
Of course that’s being charitable. While there certainly were sincere lafferites, the core catechism became “give the already-rich all the money.” Period.
Take away their claim of "economic pragmatism”
One concocted excuse for why we had budget surpluses under Bill Clinton is that “Congress controls the purse strings.” Okay then, let’s dissect it.
The GOP controlled Congress from 1995 to 2007. That’s for six years before Bill Clinton left office and for 6 years after he departed. Notice that the 2nd Derivative of debt was negative during those first six, then swung sharply positive the very instant that a Republican president replaced him. In other words the decisive switch happened the very moment when Clinton could no longer veto the annual Supply Side Voodoo Economics Bill, opening our arteries to the (non) "job-creator caste." Just one political factor changed, allowing the lightbulb switch from black to red ink. Oh no, credit for those surpluses does not go to the right.
As for Obama, he inherited the mess of Bush’s 2007 economic calamity, so deficits started out huge, not only because of those Bush Supply Side tax cuts, but also as the feds rightfully stepped in with stimulation to prevent a depression.
(Elsewhere I discuss how the Obama/Democratic stimulus actions of 2009-10 demanded payback provisions and collateral, and thus they almost broke even! In the case of Fannie and Freddie, taxpayers made a profit and the auto industry was saved at close to zero net cost. So much for the GOP acting more ‘businesslike.’)
Okay now notice the second derivative… the rate by which the rate of change of deficit changed… is negative. The center of curvature is way below the chart-line during Obama’s terms. Even amid an inherited super-recession, with a GOP Congress refusing to tax the rich, the rate of bleeding was tipping downward again… until…
… till the 2016 election prompted a number of wagers over what would happen when a Republican was back in the White House with a GOP Congress, vowing grandly to get debt under control. Let’s have a look:
Indeed, deficits under Donald Trump skyrocketed past a trillion dollars per year. (Note this chapter was prepared BEFORE CORONAVIRUS! Making a trillion seem quaint.)
Naturally, GOP pundits rave that no fault should go to the one major thing they changed, post-Obama – the latest arterial gusher of largesse flowing to the top 0.001%, under the 2017 and 2019 Tax Cuts. Supply Side voodoo never made a single successful forecast. Even once, ever.
Again, the trend is absolute. Pure. A fact that you can set your watch by. We always see fiscal responsibility and debt deceleration across the span of Democratic administrations. There are always wastrel deficit skyrocketings across GOP presidential terms. Absolutely always.
You have been told a “truthy” lie all your lives – one that Democratic politicians and liberal/moderate pundits have stupidly ceded. Snap out of it!
And forget judo. Use this as a bludgeon.
Footnotes
[1] A petition was sent… https://thefactcoalition.org/wp-content/uploads/2018/05/20180531-National-Security-BOT-Support-Letter-Senate-Final.pdf
[3] This is reminiscent of the “Helvetian War” that I described in my 1989 novel EARTH. Only I never expected “Helvetia” to stand for America.
[4] Evonomics.
[5] The following is from a 2012 blog, linking to other, earlier comparisons of outcomes. “Since 1960, Republicans have controlled the White House 28 years, and the Democrats 24. And in those years, Democratic administrations have created 42 million jobs, and Republican ones 24 million jobs. This, according to a Bloomberg analysis of BLS data, is a devastating set of numbers – and by the way, the stock market has performed better during Democratic tenures as well, as another Bloomberg analysis showed that returns on investment under Democrats have done about nine times better than under Republicans.
“But let’s assume you folks are members of that dying race, wonk-citizens who are moved by facts. Try this explication of economic growth vs. debt under the two parties. Do you still believe (against all evidence) that the GOP is the way to fight the deficit? Or unemployment? In modern times every Democratic presidential administration left office with a lower unemployment rate than when they took office. But only one Republican Administration has managed this accomplishment. That fact is basic. Devastating. Absolutely verified and true. Ask your adamant-ostrich friends to name one unambiguous statistical metric of national health that went up as a direct result of Republican rule. They cannot. So, what is the GOP sales pitch? It amounts to ” Okay we’re terrible! Insane and corrupt. But Democrats are worse! So hire us again, no matter how awful we were!”
[6] Updated from “Do Outcomes Matter More Than Rhetoric?”
[7] In calculus lingo, the first derivative of national debt is the total deficit. The second derivative is how that deficit changes, year to year.
