Yes, Let's Think About the First Principles of Capitalism, Rana Foroohar

Over at Time magazine, one of their managing editors, Rana Foroohar, has penned a long think piece about "American Capitalism's Great Crisis," and ends up with a typical non-ending:

Crises of faith like the one American capitalism is currently suffering can be a good thing if they lead to re-examination and reaffirmation of first principles. The right question here is in fact the simplest one: Are financial institutions doing things that provide a clear, measurable benefit to the real economy? Sadly, the answer at the moment is mostly no. But we can change things. Our system of market capitalism wasn’t handed down, in perfect form, on stone tablets. We wrote the rules. We broke them. And we can fix them.

The article is based, presumably, on Fohoorar's book Makers and Takers: The Rise of Finance and the Fall of American Business. But the article fails to address its subject in the same way that the AP's Seth Borenstein fails to address the question of climate change. When you are a media hack you really can't move too far from the conventional wisdom on your beat. It's not just that journalists are "Democratic operatives with bylines;" it is just a fact of life for a beat reporter that if you move too far from the conventional wisdom you will lose your audience and you will kill your access to powerful people.

So what do we learn from Foroohar?

There is, she writes, a crisis of faith in capitalism. In a poll, only 26% of millennials "considered themselves capitalists." Indeed, "Americans have plenty of concrete reasons to question their system." And it's not just a question of breaking up banks or raising taxes on hedge-funders or more or less regulation. The problem is bigger than that, as Foroohar's book explains.

In the old days from "the late 1790s to the early 1970s, finance took individual and corporate savings and funneled them into productive enterprises, creating new jobs, new wealth and, ultimately, economic growth." But now "only a fraction of all the money washing around the financial markets these days actually makes it to Main Street businesses." And that goes not just for the US but across the world. "Most of the money in the system is being used for lending against existing assets such as housing, stocks and bonds."

America’s economic illness has a name: financialization. It’s an academic term for the trend by which Wall Street and its methods have come to reign supreme in America, permeating not just the financial industry but also much of American business.

We are talking about everything from the size of finance to "debt-fueled speculation" to "risky, selfish thinking," public and private, the "increasing political power of financiers and the CEOs they enrich," and the ideology of "markets know best."

The rot started when post-WWII growth started to slow in the 1970s.

[Instead of making tough decisions] politicians decided to pass that responsibility to the financial markets. Little by little, the Depression-era regulation that had served America so well was rolled back, and finance grew to become the dominant force that it is today. 

So we got the "Carter-era deregulation of interest rates," Reaganomics "that favored Wall Street," then Clinton era deregulation to get out of the late 1980s doldrums, and Greenspan era loose money that led to today's "near-zero interest rates to keep from falling back into recession." We have a financial policy that amounts to "let them eat credit," a "palliative" to medicate the "downward mobility in the middle class" instead of facing the nation's problems.

Of course, there are many reasons for America's "low-growth economy," from "globalization to technology-related job destruction."

But the single biggest unexplored reason for long-term slower growth is that the financial system has stopped serving the real economy and now serves mainly itself. 

And now small business formation is down and big corporations buy back their stock rather than invest in R&D. Apple borrows money so it doesn't have to repatriate profits and pay taxes on it.

But hey, help is on the way.

Remooring finance in the real economy isn’t as simple as splitting up the biggest banks (although that would be a good start). It’s about dismantling the hold of financial-oriented thinking in every corner of corporate America. It’s about reforming business education, which is still permeated with academics who resist challenges to the gospel of efficient markets... It’s about changing a tax system that treats one-year investment gains the same as longer-term ones, and induces financial institutions to push overconsumption and speculation rather than healthy lending to small businesses and job creators. It’s about rethinking retirement, crafting smarter housing policy and restraining a money culture filled with lobbyists who violate America’s essential economic principles.

This is, of course, mainstream conventional wisdom, as it should be, coming from Time magazine. It's full of standard liberal memes, from the good old Depression era regulation to the crazed Reagan era to the greedy banker stuff to short-sighted CEOs. It is the view of someone "in the arena." And it assumes that the answers come from the usual experts "crafting smarter" policies. Oh yeah.

But maybe there is another way to look at Capitalism 2016. Maybe we need a whole new narrative.

The first thing to establish is that government and finance are joined at the hip. To understand that, go and watch The Tudors on Netflix. In an early episode, Henry VIII proudly points out of his window to a warship at anchor. How do you think that warship and its heart of oak got built? On the profits from Henry's royal estates? Or watch Admiral on Netflix, and then go and read up on Dutch national hero Admiral Michiel de Ruyter on La Wik. In the mid 17th century the Dutch merchants had to do something about the Russian and the Brit and the French monarchs mucking about with their trading system. For that they needed a navy to protect their argosies and teach the monarchs a lesson and for that they needed to give money to government to build a navy to make the world safe for capitalism.

That is the story of capitalism from that day to this. Capitalism can't bring us fabulous goods and services unless government keeps the peace. So merchants have provided credit to governments so that governments could finance navies and keep the trade routes open.

But things never stop just there. After inventing the central bank and national debt and financing their war of independence from Spain, the Dutch launched a 500 ship invasion force on the Brits in 1688 and then installed Willem of Oranje as King William III and set up the Bank of England and the National Debt and used Britain as a base for a Second Hundred Years War against the French, won in 1815 at the Battle of Waterloo. British national debt went from nothing in 1688 to 250% GDP in 1815.

National debt won the US Civil War, and World War I and World War II. And probably the Cold War too. The point is that the incredible wealth of capitalism allows government to borrow and spend. On wars, on education, on entitlement programs, on anything that buys votes.

For over a century, from 1848 to 1990, high-minded intellectuals tried to bury capitalism with the romantic idea of socialism and a money-free administrative system, but by the 1980s even socialists realized that a much better system would be to use the wealth of capitalism to finance their agenda rather than replace it with administration and bureaucracy. So now government is busy using the credit system for all sorts of projects. Most notably it subsidized home mortgages, first with the 30-year fixed-rate mortgage, and lately with mortgages for people that couldn't service them. What could go wrong?

According to Walter Bagehot in Lombard Street, the credit system needs two things. It needs loans that are properly collateralized, and it needs borrowers that can be relied upon to make their payments. Looking back at the sub-prime mortgage era, what could go wrong? In fact, looking at everything that government does with borrowed money, what can you expect but mayhem?

You can see that the problem is mission creep. It's one thing to finance old Grandad de Ruyter to teach the absolute monarchs a lesson on the North Sea, or put the French in their place at a little town in Belgium. That is national debt serving the interests of commerce. But when government becomes 35% or more of GDP and the whole economy is riddled with government credit subsidy schemes, then something has to give. And don't forget that all the time the financiers are joined at the hip to the government. That's because, as I read years ago, the most important government program is the selling of the debt to the financiers. It misses the point to talk about breaking up the banks, or jiggling financial regulation. The elephant in the room is the government and its finances, and the various shifts and tricks it uses to get itself out of the latest jam.

It misses the point to complain that the finance industry doesn't finance growth. It never has. Credit and debt are for solid, no worries, ongoing operations, like financing a store's inventory, or lending money to get goods from where they are to where they are wanted. Financing growth is about startups and private equity and mad money.

It misses the point to complain about CEOs shorting R&D for buying back their stock. Big public corporations are usually reaching the end of their growth phase. They are just money machines until the inevitable day when some little startup puts them out of business.

It misses the point completely to write about American Capitalism's Great Crisis. Capitalism never had a crisis and never will. Capitalism uses credit as it is supposed to be used, to finance ongoing operations. And it can supply, from time to time, mad money for startups and other risky ventures which is the real engine that gets us from $3 per capita per day in 1800 to $100 per capita per day in 2016. The problem is the intersection of capitalism and government. When government grabs all the credit to fight a war, it really bollixes up the economy. When government encourages deadbeats to borrow money to buy a house, it leads to a Crash of 2008. And when government goes the easy money route to get out of a jam, the money sluices into all kinds of cracks and corners and encourages financial shenanigans from all sorts of shady characters.

But don't expect a Rana Foroohar to say that. A mainstream journalist has to stay mainstream. Just like Seth Borenstein, the AP's climate change guy. Really, how could an AP reporter on the climate beat do anything but breathlessly retail the latest wizard wheeze from the $1.5 trillion a year global climate community?

And how could a reporter on the finance beat do anything but retail liberal blame-the-bankers scapegoating?

Liberals Don't Bother to Pretend Any More

The great con about welfare state government is that the free stuff is really "social insurance." That was the idea when Bismarck opened the game in the 1880s. And when Social Security was passed in 1935 it was decorated with all the paraphernalia of insurance, with Trust Funds and Boards of Trustees. If you look at the UN's government spending categories, there is a item for "Social Protection."

But when Medicare passed in 1965 only the Hospital Insurance, Part A, was funded by a Trust Fund. The rest of it came out of regular revenue.

Looking back, we can see that the Insurance scam was just a way of hiding the taxes. That FICA tax wasn't a tax; oh no, it was really an insurance premium. Don't believe your lying eyes, and all that.

But Medicare Drug in the Bush administration didn't bother about Trust Funds and such. It was just a new entitlement. And the level of lying ramped into the stratosphere with Obamacare that would let you keep your plan and your doctor. I don't think.

So Mytheos Holt's piece on "ObamaDontCare" about "Andy Slavitt, acting Administrator of the Center for Medicare and Medicaid Studies (CMS), willfully misle[a]d[ing] Congress on the amount of money spent on Obamacare’s exchanges" is par for the course. Who cares what was spent on the exchanges, "the program’s true legacy appears to be nothing less than pure graft and payola for administrations in safe blue states."

Here's Chris Jacobs warning us that Medicare is broke, even as Democrats are proposing an expansion. to 55 year-olds. Well, yes. But Medicare will keep on keeping on until the government runs out of other peoples' money. And then, really, who cares? It's not as if seniors are valuable workers that are integral to the nation's economy, or bringing forth babies to enroll in the next generation of taxpayers. We are just a cost.

Here's George Will worrying about Amtrak. Is is a government entity or a private corporation? The courts can't seem to figure it out. Well, yeah. Amtrak is a shabby racket. Next question.

Let's clear the air here. When the government proposes some new program it may feel the need to talk about insurance, or clearing up the mess on drugs, where surgeries for seniors were covered but drugs were not. Or it may sell an Obamacare that will make things worse for most Americans while benefiting a few. Or it may sell some crackbrained idea of Amtrak as a private corporation that is supposed to make a profit.

But that is all bullshit. In the end it all comes down to betting the nation on the ruling class's wars, which may be wars against communism or wars on poverty or wars on climate. And it comes down to rewarding the government's supporters. So Hillary Clinton is proposing a child-care initiative which will provide that nobody has to pay more than 10% of their income on child care. Golly, I wonder who will like that program?

The bottom line is, of course, at what point the government starts to go Greece, or Argentina, or Venezuela, or Brazil. You can give out all the money in the world, but every dollar that you give out to your supporters reduces the private sector -- the social organism that makes products and services that people are willing to spend their own money to buy -- by a dollar.

Back in the day, liberals used to pretend they were moderates that cared about the middle class and its responsibility culture. These days they don't seem to care; they just propose more free stuff, because that's what they do.

Is this because the American people don't care or because liberals are just going for broke? It is hard to tell in this era of political correctness where you are not allowed to disagree with the ruling class without losing your job.

All we know is that since Obama was elected the opposition has been getting angrier and angrier, to the point where the opposition voters have fired the opposition politicians in the Trump effect!

Nobody knows what will happen. But I suspect that we ain't seen nothin' yet.

Government by Executive Action is Not Just Wrong, It's Evil

If you want a sign that the current era of expert-led top-down administrative government is dying of its own internal contradictions, look no further than France.

The Socialists are going to bypass parliament in order to force through labor reforms administratively. From a BBC report:

The French cabinet has given the go-ahead for Prime Minister Manuel Valls to force through highly controversial labour reforms.

An extraordinary cabinet meeting invoked the French constitution’s rarely used Article 49.3, allowing the government to bypass parliament.

It came after rebel MPs from the governing Socialist party had vowed to vote down the bill.

The reforms will make it easier for employers to hire and fire workers. […]

The government says relaxing workers’ protection will encourage businesses to hire more people and help to combat chronic unemployment.

And, of course, the French are striking and protesting against the government's administrative actions.

Here in the US Hillary Clinton is proposing to go around Congress in order to enact her child care subsidy plan.

Just between you and me, I'd say that this represents a systemic failure. If you can't get to do the right thing through the normal political process, then maybe you shouldn't do anything at all.

Yes, I know. The normal labor law in the West is a foolish mess, because it gives workers property rights in their jobs that cannot be sustained in the market.  Yes, I know, child care costs are a huge burden, especially if you are a single mother.

But I say that if you can't get a majority in parliament to pass a law easing labor law rights and restrictions then you gotta wait until you can persuade the people to support a change. That's the idea of democracy, right? You run for office on a platform and that platform gives you a mandate for change, which you execute in the legislature. Consent of the governed, and all that.

And France got in this mess by pushing the poisonous idea that the woikers was bein' robbed! They got their rights! Actually, they don't, not unless they can force the costs of labor regulation off on consumers or "the rich." And now France is having to pay the piper for giving people rights that would gum up the economy.

You are outraged that families spend too much on child care? Then you run for office and try to persuade Congress to change the law. If Congress won't change it, then too bad. You better get out and persuade the American people to change Congress so you can change the law.

But wait, you say. We can't wait. People are suffering right now! The president needs to act. Well, you should have thought about that when you pushed the sexual revolution, when you made it OK for men to desert the mothers of their children, when you enacted welfare programs that made it easier for women to marry the state than to marry the fathers of their children, when you jacked housing costs into the stratosphere with subsidized mortgages and restrictive zoning.

I don't know how we are going to retreat from the gummed up mess of the big-government administrative state. I suppose that we won't until the whole structure literally freezes up and fails to deliver anything, so that people are forced to look elsewhere for the services that government presently monopolizes.

Of course, the Trump phenomenon feeds into this. Lots of people think that the government doesn't care about people like them; it only cares about out-and-proud liberal activist groups that grab the national bandwidth with their peaceful protesting and their march through the institutions.

But the Trumpers haven't looked around the corner. The problem is that all government is a waste and an injustice. It is pure power play, smashing down the clunking fist, and forcing them to pay for your goodies because you have the power. Don't forget that if you have the power today, you may not have the power tomorrow. If you really want to wive and thrive, then cut loose the government, its taxes and its injustices its administrations and its regulations, get a job, and don't ever think that you've got a job for life.

We Are Not In Kansas Any More

Looking back, it's obvious we were going to get here. At some point the American people were going to rebel against the globalist cultural Marxist insanity. They would eventually reject the rule of the People of the Creative Self, for the People of the Creative Self, by the People of the Creative Self.

See my Three Peoples theory for details.

What do they want, these People of the Creative Self? They want to be creative, and they want the political power to make America a land fit for creatives to live in.

They want All Power to the Creatives, and that means a full-court press against the Bourgeois Ethos of the People of the Responsible Self: work, marriage, family and children.

It is perfectly obvious why this should be so. If you have a job, you don't have much time left to write that great American novel. If you get married, you won't have much time left to create an edgy art installation. If you have children you won't have much time to advocate for global health. And as Henry David Thoreau wrote over a century ago, the mass of men live lives of quiet desperation. They work and breed and don't have the means or the time to pop out of Concord, Massachusetts, a mile and a half to Walden Pond to meditate about life, the universe and everything. Yeah, and you thought Walden Pond was out in the wilderness. Check out Google Maps.

If you are wondering whether the world has gone crazy, arguing about rape cultures, about gender-bender bathrooms, about cops on a rampage against blacks, about the crisis of climate change, the answer lies in the needs of the People of the Creative Self, and their need for what Charles Taylor calls "expressive individualism." Creatives must express themselves. All else doth err.

But there is one little problem with all this. It is simply that unless the mass of men go to work, marry, and have children, there won't be anyone left. For the one thing that the People of the Creative Self don't seem much interested in is creation -- of the next generation. I don't want to be too judgemental here, but if gentry liberals don't get on the stick and produce more little gentry liberals there won't be any gentry liberals any more. This process is already far advanced in countries like Germany, Japan, and Italy.

I wonder if it is just a coincidence that most religions seem to be strongly pro-natal. I wonder if humans have always wanted to wander a mile and a half out of town and contemplate the infinite, and that a strong nudge is required to bring us back to the job at hand, the real job of creation, which is making babies.

Yes, you say, but how come we have got to this crazy place?  The answer, I believe, is told by the blogger Mencius Moldbug in his narrative of The Cathedral, the universities and the press (and also the NGO activists). Then there is the Inner Party of Democrats which get to rule when in power and the Outer Party of Republicans which just gets to govern when elected.

In the culture of the Cathedral conservatives and Republicans only get to object from time to time as the arc of history bends them into pretzels. The agenda of the activists, from feminists to environmentalists to LGBT rolls ever onward. Because history. An example of useless objection is this National Review article by conservative Christian lawyer David French objecting to the arguments put forth by the Obama administration and a couple of Obama judges who are putting the screws on North Carolina about bathroom accommodations for the transgendered. This is a typical lay objection to the holy writ of the Cathedral. What good will it do? None. There may be a hiccup, but LGBT rights are sovereign, because they are engrossed in the Articles of Faith of the People of the Creative Self.

That is why Donald Trump is important. He has run for president by kicking over the established rules of polite society as defined by the Cathedral and the People of the Creative Self. That is why he has rolled over the polite and well-behaved conservative candidates in the Republican primaries. That is why he is drawing multitudes to his rallies. That is why just today a new Quinnipiac poll has Trump dead even with Clinton in three battleground states.

Trump is winning because ordinary people instinctively understand that nice polite conservatism isn't going to get the job done any more. Because the activism culture wins that game every time. Because its votaries sit in the stalls in the Cathedral. Because its people own the Inner Party.

What comes next is anyone's guess. It depends on whether the ruling class of the People of the Creative Self use their powers to crush the Trump Rebellion or whether they realize that they should sit down and negotiate in good faith with the rebels.

The key point to me is something I learned from Michael Mann and his Sources of Social Power. Once the political establishments of the European nation states extended the franchise to the workers in the 19th century, he wrote, the workers stopped rioting in the streets. They didn't need to riot because the political establishment was now taking their grievances seriously and they could negotiate in good faith with the ruling class to start to get what they wanted.

Compare that with today, where we have the Obama administration deliberately advancing its agenda outside the formal channels of political negotiation, the legislature, and pushing things through adminstrative diktats and "Dear Colleague" letters and legal ambushes. It's all tremendously cunning, but it misses the larger point. The point is that politics is civil war by other means. Politics is the means by which we negotiate our differences without going to civil war. When you game the system, as the activism culture does, with its Alinskyite practice, you prevent good faith negotiations and compromises of different world-views and interests.

And that leads to Trump and kicking over the traces because the "rules" imposed by the Cathedral and the Inner Party prevent good faith negotiations and compromise.

If Trump doesn't work, of course, it leads to something worse.

The Problem is Not Just Political Correctness

Writing in Forbes the lion of history Paul Johnson argued recently that Donald Trump is a natural excessive response to the "mental infection" of political correctness.

When dons and professors "show the white feather" to the crybullies, then something has to be done, especially in a nation that got its start in the 17th century "when the clerical discipline the Pilgrim Fathers sought to impose broke down and those who had things to say struck out westward or southward for the freedom to say them."

[So] it’s good news that Donald Trump is doing so well in the American political primaries. He is vulgar, abusive, nasty, rude, boorish and outrageous. He is also saying what he thinks and, more important, teaching Americans how to think for themselves again.

Yeah, and I will believe that Donald Trump is a true foe of political correctness when his Department of Education starts writing Dear Colleague letters to the nation's universities telling them that any university with a speech code or a presumption of guilt in sexual harassment regulation can say sayonara to federal funding.

The problem for me is that pushback against political correctness doesn't really do the job. It is a pushback, not a declaration of independence like this:

We hold these truths to be self-evident, that men and women shall be free to express ideas in the public square without fear or favor, and that the power of government shall not be used to intimidate or to silence unpopular voices.

Of course, in the course of human events, it is very seldom that anything prevails but a crude orthodoxy of the powerful, because the arc of human authority tends towards imposed agreement and stasis.

But the story of humankind over the last two hundred years is that the freedom to think new ideas, and especially to implement useful ideas into concrete products and services, has created a Great Enrichment of all the people on the Earth.

The key factor, according to Deirdre McCloskey in her "Bourgeois Trilogy," is that this enrichment requires one key thing. It requires that the powers-that-be do not strangle the babies of new ideas and new material improvements in their cradles.

But the more power that government has the more that it does exactly that. Because people go to government when their traditional way of life is threatened. And from the point of view of the people, it makes no difference whether the threat is from an army of invaders or from a new technique that puts them out of work. They want it stopped, and they want it stopped by force before it marginalizes them forever.

Therefore, it seems to me that the key objective for people that want to encourage ordinary human flourishing linked to a search for something higher is this: How to limit the natural instinct of humans to use force to prevent their current material advantages from being reduced?

We can see this in the argument over immigration and imports. People want to enjoy their current wage rates without having to compete with an immigrant that will work for less. On the other hand, the US must compete on the world economy, so its wages and prices must compete on the world exchange. Special interests must not have the power to jack US wages and prices out of whack.

It is folly to give workers the power to jack their wages up above market rates; sooner or later their high wages will run their employer out of business. It is folly to give industry, e.g., Florida sugar plantations, subsidies and quotas that allow them to price their product way above world prices. Sooner or later those prices will have to come down to earth.

It is folly to set up government pension plans that make assumptions about the future. Most likely they will make the wrong projections and then expect taxpayers to make up the difference. It is folly to put government in charge of education, for the government lifers in charge will slowly turn the education system into a process that serves the interests of the lifers and not parents and students.

We have seen, in the Obama era, the utter cruelties that political correctness metes out to ordinary Americans, and the absurdities of the agenda of the Democratic coalition of the fringes that deny women the safety of women-only bathrooms and deny the right of police to arrest malefactors. We shouldn't be surprised. That is what power does to people. Give them the power to implement their follies and the power to humiliate and to name and shame, and they will take it.

The challenge for humans as social animals is to turn the instinct to dominate into the kindly sentiment to share and serve. And the challenge only starts with the vice of political correctness. There are people everywhere eager to make the shortcut to solving their problems with the clunking fist of government. The job of people of goodwill everywhere is to turn their twisted swords into cooperative plowshares.

What Trump Has Destroyed

It is pretty clear, now that he is the presumptive nominee of the Republican Party that Donald Trump has destroyed the Republican Party that was.

Of course, he has not destroyed the Republican Party, only the basis on which the Republican Party has operated for the last 30-40 years. I mean the Republican Party informed by a Buckleyite conservatism that declared the John Birch Society beyond the pale and the Republican Party infused with Jewish neoconservatives like Irving Kristol, liberals famously mugged by reality.

The reason was explained by self-proclaimed reactionary Mencius Moldbug in his blog back in 2008-09. It is the fact of the Cathedral, the secular-religious church of secular liberalim in the media, the schools, the foundations, and the universities and the liberal activism culture. Their church orthodoxy defines what you are allowed to say and what you are not allowed to say in America. Further, the two political parties in the US, following George Orwell, are the Democratic Party as Inner Party, that gets to rule when it is in power, and the Republican Party as the Outer Party, which just gets to govern when in office.

I take the rise of Trump as the great Republican unwashed declaring that they just can't take it any more, being silenced, being tame zoo animals of the Outer Party when the Inner Party adherents get to do and say pretty well whatever they want provided it follows Inner Party orthodoxy.

The voters are saying that the politics of accommodation, of going along to get along with the Inner Party and its Cathedral bishops in the media and the academy, is just too humiliating. They just can't take it any more; they just have to break out. They feel, in other words, that they have nothing left to lose.

In this sense it is true to say that President Obama has destroyed the Republican Party. By going full partisan on his signature legislation and by humiliating Republicans in repeated clashes, he has destroyed the faith of the rank-and-file Republicans in their leaders.

In my view, the president made a strategic mistake. The fact is that, over the last century, the left has operated what Margaret Thatcher's associate Keith Joseph called a "ratchet effect." Every leftist reform ratcheted up the size and the power of government, and has never been pushed back to the status quo ante. If this is true, it is never necessary for the left to go flat out as if the next conservative government would repeal and reverse their agenda. The record is that the reverses are temporary and partial, and the left soon gets to turn another click of the ratchet.

President Obama could have implemented his stimulus, his Obamacare, his Dodd-Frank, with Republican votes. He would not have got as much passed, but the next liberal president would come back a generation later and crank the ratchet another step. Instead, he has encouraged his sluggers to hit it out of the ballpark, and humiliate the opposition.

President Obama is a man of the left and its mechanical systems. He ought to know that action and reaction are equal and opposite. And so the powerful thrust of his dominatory politics has created an equal and opposite reaction. The mass of white working class peasants, that were wandering around without a political home for a generation, have swarmed in desperation into the bourgeois citadel of the Republican Party and will probably have changed the Republican Party forever.

Really, we should thank the president. As conservatives we are hesitant to take a wrecking ball to the United States to implement our glorious conservative vision. We know, following Edmund Burke, that at the end of such a road is the gallows. But President Obama, with his narrow leftist world view, has swung the wrecking ball at America, trying to smash the opposition. Instead he got him a Republican House in November 2010, a Republican Senate in 2014 and now a populist rebellion in 2016.

This is folly, because the Democrats are the Inner Party, and liberals are the ruling class. A sensible Inner Party wants to keep things on an even keel. It wants to keep the Outer Party politicians properly docile, but not insulted. A sensible Cathedral wants to make sure that the proles are respectful of their betters, but wants to avoid humiliating them enough to get them angry.

So, provoked by President Obama, Donald Trump has kicked over the old three-legged stool of the Republican Party: national-defense, economic, and social conservatism. The new party will have to fit a new leg in, to represent the needs and the agenda of the much-maligned white working class. Put in terms of my Three Peoples theory, it means that the Republican Party will no longer be a party purely for the People of the Responsible Self. It will have to accommodate the white working class, and appeal more to People of the Subordinate Self.

That will probably force the Republican Party closer to the political center. Republicans dream of dismantling the big government structures of the 20th century, but the great mass of the American people don't. Grandpa wants his Social Security. Grandma wants her Medicare. Young mothers want their baby-sitting service. And so on.

Of course, eventually big government will run out of other peoples' money. But not yet. As Kevin D. Williamson writes, government learns nothing. All it knows is taxing the people to reward its supporters. Until the very moment that the money runs out. Hello Venezuela.

Then, and only then, will we learn. As we have to start over.

Surrender and the "Three Peoples" Theory

I think that the concept of "surrender" is one of the most important human attributes. It applies, I think, to the basic fact of humans as social animals, for I take "social animals" to mean animals that don't settle everything by fight or flight.

On that view, surrender means some sort of genuflection by the individual towards society, some recognition that, without society, we humans are dead ducks.

Of course, ducks are variable in their sociability. Some ducks seem to live only around their mates, like the Bufflehead. While others mass in flocks, like the American Widgeon.

Now, I think that surrender has particular application in my reductive Three Peoples theory.

It is obvious that People of the Subordinate Self surrender to their liege lord, their political boss, their union leader. Presumably this has gone on since the dawn of time when men were subordinate to the tribal Big Man. And all women were subordinate to all men.

What about the People of the Responsible Self, the great global middle class? We surrender not to a physical lord but to an abstract lord. It might be God; it might be the market, it might be an idea. Of course, the People of the Responsible Self also live under governments, in city states and nation states, and so they owe loyalty to physical lords and to national governments, but this loyalty is given provisionally, and the modern myth of society is that the people are sovereign and their magistrates are their servants, not their masters. People of the Responsible Self are citizens, we believe in civility, we measure ourselves not against our standing with some political or corporate boss, but against our own standards that we keep privily in our hearts.

OK, now we get to the real point of this exercise, the People of the Creative Self, and I think it is fair to say that the jury is out on this one. Nobody can tell you what the creative people owe to society. Except me. So try this one on for size.

Strictly speaking, the People of the Creative Self have made a cosmic bet. They have said that life means nothing unless it is creative, bringing forth something new and original into the world, something that comments truly about life, the universe, and everything, or that changes the human condition in some beneficial way. But suppose that you discover that you are not particularly creative, or that your idea is warmed-over nothingness? What then?

It is this conundrum that I believe is at the center of our world crisis. For the truth about life, the universe, and everything is that many are called to be creative, but few are chosen. That is great for the chosen ones, but what about the rest, the not-chosen ones? What are they to do?

The answer is obvious. They must admit their failure and resolve to be merely People of the Responsible Self, living a useful and social life if they discover that their dream of creative genius turns out to be a bridge too far. But many creative failures are unwilling to accept defeat. They turn around and demand that the world acknowledge their unappreciated genius.

The disappointed People of the Creative Self, that thought to be creative and weren't, are the scourge of the planet.

I believe that this Failed Creative syndrome is the truth behind the liberal "activism" culture. The "activism" culture says that we activists know the truth and we will demonstrate and peacefully protest and name and shame until you racist, sexist bigots submit. In other words, the disappointed creative proposes to resort to force.

Here is the great divide between the "for-profit" world of business and start-ups and corporations and the "not-for-profit" world including activist groups, NGOs, foundations and government. The for-profit world offers its ideas upon the market and if the market declines the offer, that's all she wrote. The not-for-profit world operates upon a different principle. Government, of course, operates simply on the force principle. It takes money from people for the right to buy and sell or to just to work, and then gives the money to its regime supporters. Activist groups take money from billionaires and hector and threaten society with shows of force, demanding that society should accept their "non-negotiable demands" or else. Foundations advance ideas irrespective of the acceptance in society at large. Their ideas might be good, such as Bill Gates helping eradicate malaria. Or their ideas might be bad, such as Bill Gates pushing the top down Common Core curriculum.

See, I think that surrender and its consequence are pretty simple. You surrender to your liege lord as People of the Subordinate Self and your life is in his hands, until he uses it up in his power project and you get left by the side of the road. You surrender to God or to the verdict of the market as People of the Responsible Self and rededicate your life every day to divine judgement and the judgement of the market and live a useful and responsible life. You surrender to the original act of creation as People of the Creative Self and if you are called but not chosen as a stand-out genius you accept that you are just an ordinary bourgeois who can at least aspire to a life of responsibility.

This Three Peoples theory is great. It explains everything!