What Does Mexico Do Next?

OK, so Mexican President Enrique Peña Nieto cancelled a meeting with President Trump over the vexing question of who pays for the wall. I get it; he has to stand tall against the Trumpster. National honor and all that.

The problem is, of course, that Mexico needs the US more than the US needs Mexico. NAFTA has been great for Mexico, bringing jobs and manufacturing to backward, rural Mexico.

And, of course, the open-ish border of the last 50 years has been an invaluable safety-valve for Mexico, probably saving it from complete meltdown. The Mexican ruling class basically encouraged poor Mexicans to migrate to the US and its jobs. That way they didn't need to reform their crony economy, and could still live off the revenue from state oil company Pemex.

But right now Mexico is in a bit of a tight spot, as revenues from Pemex are down, and the left is demonstrating against retail gasoline price increases as Mexico tries to shake up its oil industry and partake of the new exploration technology. Then there is the Mexican Peso, down from $0.08 in mid 2014 to $0.047 in recent days.

The thing is that the US has the whip hand with every other country. We are the richest country of any size and everyone wants to trade and to sell to us. Much more than we want to trade and to sell to them.

So what does Mexico do? Do they stick to their principles while their economy goes down the drain, bringing in a leftist dictatorship that takes Mexico the full Venezuela route? Does it allow all its south-of-the-border manufacturing to die on the vine while Trump does trade deals with other countries with less pride?

The truth is that, for 50 years after World War II, the US acted as a benevolent uncle, shepherding its client states along, and giving them invaluable access to the US domestic market, while the US acted as global policeman and hegemon.

I'll bet that in the end Trump puts together a deal that keeps Mexico going economically while "making Mexico pay" for the wall.

But I don't have a clue how he will do it.

Can Trump Cut $1 trillion a Year?

To put it all in perspective, here is Club for Growth chappie Stephen Moore:

All of Washington seems to be in cardiac arrest over news reports late last week that Donald Trump is planning a budget featuring $10 trillion in cuts over the next decade.

This, as they say, is yuuuge. How huge? Well, to do that we should turn to good old usgovernmentspending.com, the go-to-site on government finances. Here are the numbers for FY2017 for federal spending.

Federal Pensions	$1.0 trillion
Federal Health Care	$1.2 trillion
Federal Education	$0.1 trillion
National Defense	$0.9 trillion
Federal Welfare	$0.4 trillion
All Other Spending	$0.6 trillion
Total Federal Spending	$4.1 trillion

You can see that $10 trillion over ten years is big. By the way, total spending in FY 2021, which is the limit of detailed budget forecasts in the budget historical tables, is $5.1 billion.

The thing is, if Social Security ($0.97 trillion) and Medicare ($0.61 trillion) and Medicaid ($0.53 trillion) and Defense are off the table, then there is not much left to cut! All Other Spending is a mere $0.6 trillion, and that includes interest payments.

Of course, there is waste, fraud, and abuse. They say that 10 percent of entitlement spending is waste, fraud and abuse. But a lot of that goes to the white working class, part of Trump's base.

So I don't know where all that money is coming from. But I do know this. All government spending, all of it, from Defense to Pensions to Health Care to Welfare is a weight on the economy, on ordinary working stiffs.

See, if I had my druthers, things would look like this. Pensions? Everyone gets their own, but people who don't have any savings through no fault of their own would be helped by liberal billionaires like George Soros. Health care? Everyone gets their own, but people who cannot afford to pay for health care through no fault of their own are helped by trustafarian liberals. Education? If kids in Ethiopia can learn to hack a tablet in six months from a standing start, then we don't need no public education. Instead of this unpaid child labor in schools, we reinstate child labor for pay. And employers would have an obligation to assist kids' education like they did in the old days of apprenticeship. Welfare? Charities and charitable individuals and liberal foundations get to relieve the poor. And they reintroduce the ABCDEFG system.

The only problem with this would be that there would be no way for politicians to reward their supporters, according to my definition of government:

Government is an armed minority that occupies territory and taxes the inhabitants thereof in order to reward its supporters.

And that would be a crying shame.

Can Trump Change the Political Game?

A week ago I reflected on then President-elect Trump's attack on Civil Rights Icon Rep. John Lewis (D-GA). And I wondered if Trump could change the political game and de-energize America's third rail on race.

Then I got an email from a reader, Brad, who wondered whether we could get the warriors of race politics like the SPLC to stand down and recognize the real terror threat, or whether we are in for a "quiet civil war" that the left has already half won.

Can President Trump change this tune? Well, he is certainly trying.

The whole point about politics is that it is a fight between Us and Them. The only question is, who is to be "Us" and who is to be "Them?" That is all.

For the last few decades, politics in the US has been the identity politics about the privileged white majority versus the underprivileged minorities and women and LGBTs.

Now Trump is proposing to change it into a populist politics of the people versus the powerful. That is what his inaugural speech was about: the many versus the few. Also, he proposed the idea of America First. So he is promoting the idea of the American nation versus the rest of the world: nationalism.

Can it work? Can Trump change the rules like that, just 'cos? Well, I'd say that's the difference between being a world-historical figure and being just another politician. And right now, we don't know.

Think about it. Eight years ago Barack Obama was hailed as a transformational figure and given a Nobel Peace Prize before his administration had got out of the gate. Today? Let us say that our liberal friends are remarkably modest in their applause. Because Barack Obama is a fool and a failure.

Here are three grounds for Trumpian optimism.

First, I believe that leftist politics has always been a reactionary movement against the irresistible tide of the Great Enrichment. Its workers vs. owners politics of 1850 was plausible at the time, but has since been revealed as rubbish. The worker and the business owner need each other; they should be friends, even though the road to the middle class is a hard one. When the left's class politics failed, the left reinvented itself with the identity politics of minorities and women vs. the privileged and oppressive white patriarchy. Again, it was plausible, except that white men are not that interested in power. If you come to the white middle class with a grievance they will listen to you and try to accommodate you. Unlike lefties in the university. So the basic assumption of leftist politics is flawed. The bosses and the patriarchy are not like a political ruling class. They are just not that interested in power.

Second. There is a lot of talk on the right about the inevitable failure of multiculturalism and the mixing of the west with non-western cultures, nearly all of which do not believe in assimilating to the western limited-government, free-market, multi-religious cultural model. But I think there is a counterforce at work. The fact is that the social-economic marketplace of the modern world rewards people who will work with people and trust anyone that is trustworthy. Every barista, every store clerk, every salesperson, every cubicle worker is trained to interact in a friendly and helpful way with everyone else. And the more that each of us is immersed in this world the more that we experience other people as people and not as "other."

I think that the hilarious Case of the Intolerant Liberal on a flight from Baltimore to Seattle makes the point. Who is the nasty liberal? An obviously up-scale white woman. Who is the man she is abusing? An obvious middle-middle-class white Deplorable. Who are the cops that escort the nasty liberal and her husband off the plane? They are African Americans. Never forget that, while elite liberals are beavering away thinking up new ways to divide us by race and gender, ordinary people are just doing their jobs and interacting with other people according to the protocols of modern public politeness. And that changes things.

Third. Ordinary, average people want ordinary things. "Americans want great schools for their children, safe neighborhoods for their families, and good jobs for themselves," said Donald Trump. So it is telling that liberals had a conniption when the new Trump White House took down climate change civil rights and Spanish pages and LGBT from the White House website and substituted meat-and-potatoes economic issues.

This crystallizes, for me, the failure of the whole Obama administration. The Obama liberals spent the whole eight years running down liberal rabbit holes like climate change, LGBT rights, race politics, instead of doing what really matters to Americans, which is jobs, safe neighborhoods, schools. You never know, but it could be that Americans of all stripes could warm to a president that keeps his eye upon the donut, and not upon the hole.

I'm not that taken with the basic Marxist doctrine of the base and superstructure, the materialist notion that the economy determines everything. In the base/superstructure concept the base is the means and the relations of production, and they define the whole society. The superstructure, including art and politics, is derivative of the economic facts on the ground, the means of production and the relations between the various productive actors. But like much of Marx, the base/superstructure concept has a point. The economy matters, and it profoundly affects the rest of society. If people want to wive and thrive, they need to get with the program, and the program is the program of the market economy and its miraculous Great Enrichment.

And that is why I have hope that Trump can change the axis of politics from identity to nation. When you get a president that focuses on the bread-and-butter of life, people just might start to notice. And applaud.

Here Is Exactly Why We Need President Trump, Chuck Schumer

Just before the end of the Obama administration the FHA issued regs lowering the rate paid on mortgage insurance by people taking out low-down mortgages.

"After four straight years of growth and with sufficient reserves on hand to meet future claims, it's time for FHA to pass along some modest savings to working families," said Castro.

"This is a fiscally responsible measure to price our mortgage insurance in a way that protects our insurance fund while preserving the dream of homeownership for credit-qualified borrowers."

First thing the Trump administration did was cancel those regs.

Next thing we have Sen. Chuck Schumer (D-NY) chiming in.

"What a terrible thing to do to American homeowners. President Trump, with the flick of a pen, ended that new policy, making it harder for Americans of modest means to obtain their piece of the rock, the American dream – home ownership," 

No, Chuck. You've got it exactly backwards.

First of all, it might have been a good idea to lower mortgage insurance rates from, say 2009-2016. Because since home prices had taken a big fall, the downside risk on low-down mortgages would not have been very great.

Second, it is clear that in the winter of 2017 the real-estate market is warming up. We really don't need to put fuel on the fire and turn the recovery into a huge real-estate boom. That would set the stage for  another bubble and another crash. Am I right, Chuck, or am I right?

Do you get my meaning, Chuck? By lowering mortgage insurance rates you Democrats were bringing more people into the market. Which means that you would be pushing up home prices. Which means that some time down the line the Fed will have to raise interest rates to stop the bubble. Which means that "working families" and minorities and women with poorly collateralized loans would lose their homes. Again.

Are you still with me, Chuck? Now is the time to reduce government subsidies, now that the housing market has recovered,and interest rates are still low. But you want to raise the subsidies. And you like the idea of scoring a cheap shot on President Trump.

Government mucking around with the mortgage market is the same as government mucking around with the price system with wage and price controls. Wage and price controls wreck the economy by wrecking the price signals that freely contracted wages and prices send to workers, employers, producers and consumers.

When government mucks around with the mortgage market by subsidizing mortgages it basically gives everyone a coupon to add to their income and balance sheet so they can bid with more money in the real-estate market. But all that does is mean that everyone can bid more. It doesn't help low-income people to get homes. It just means that low-income people can compete with each other and raise the price of homes -- and enrich the folks that already have homes.

But of course the damage goes deeper than that because the mortgage market is part of the credit system and the credit system is the very life blood of the economy.

Now, Chuck, are you still with me? If you read Walter Bagehot's classic book on the money market, Lombard Street -- and I am sure you have, being as you are the senator from Wall Street and all -- you will remember that Bagehot lays out two vital principles for the healthy functioning of the credit system.

1. Credit should be properly collateralized so that loans can be fully liquidated if the borrower cannot pay. Otherwise people begin to doubt the soundness of improperly collateralized loans; they lose confidence, and that could lead to a panic.
2. Borrowers need to have the income to service their loans. If a question arises about the borrower's ability to pay, then people begin to lose confidence in the institution holding the borrower's paper, and that could lead to a panic.

In good times, of course, a little bit of shaky loans isn't too much of a problem. But who cares about that? What matters is what happens during a market break when things are not looking so bright. That's when the soundness of the credit system really matters.

So it's all very well to want to help "working families" get their first home. But what's the point, Chuck, if their shaky finances and their badly collateralized loans threaten the whole credit system? As they did in the Crash of 2008. And what's the point if the "working families" lose their homes when the crash comes and they are the first to be laid off?

But here you are in 2017 and it reads like you didn't get the message from the Crash of 2008, because here you are, Chuck, demanding the injection of badly collateralized mortages and borrowers into the financial system.

Look, I get it. You Democrats, willingly assisted by your Democratic operatives with bylines in the media, put out the narrative that the crash was all the fault of greedy bankers.

Well, of course. The bankers wanted to cash in on the torrent of bad paper that government policy hosed upon the credit system. As in Fannie and Freddie. Actually, if they didn't shovel out bad loans to bad borrowers the activists and the congers-critters like you, Chuck, would demand to know the reason why.

The Crash was not the bankers' fault. It was your fault. It was your policy that flooded the world with bad paper. Because you wanted to help "working families" buy that first home.

How bad was your policy? Thanks for asking, Chuck. I just happen to have a page at my usgovernmentdebt.us which shows the growth in "Agency Debt" since World War II. Take a look at Chart D.23f, Chuck. It shows that Agency Debt (i.e., debt from outfits like Fannie and Freddie) went from zero after World War II to 50 percent of GDP just before the Crash.

So we have the official Federal Debt at about 100 percent of GDP, which everyone agrees is a Bad Thing. But then we have the Agency Debt, which is also an obligation of the Federal Government. So, if you add the two together, suddenly the total debt hits 150 percent of GDP.

And that doesn't count the unfunded liabilities of Social Security and Medicare.

Golly, geewillikins, Chuck. Do you think that the growth in Agency Debt just might have had something to do with the Crash of 2008?

Just imagine, Chuck, if you chaps hadn't hosed the economy with your cheap mortgages. Just imagine if the economy had set fair after a little wobble in 2008. Just imagine if you Democrats hadn't lost the House in 2010 and the Senate in 2014. Just imagine if you Dems hadn't run the worst politician in America for president in 2016. Just imagine if you chaps had realized the danger in the rust belt states from the white working class dying of despair.

Why, Chuck, you would be Senate Majority Leader right now and King of the World.

Trump's On-Message Address

Really, it was all out there right before your lying eyes today. Sen. Chuck Schumer (D-NY) said:

Whatever our race, religion, sexual orientation, gender identity, whether we are immigrant or native-born, whether we live with disabilities or do not, in wealth or in poverty, we are all exceptional in our commonly held, yet fierce devotion to our country[.]

He spoke, in other words about a "diverse" America.

In his short inaugural address President Trump talked about "citizens," "forgotten men and women," and the way that he dealt with "diversity" was to speak of the

old wisdom our soldiers will never forget, that whether we are black or brown or white, we all bleed the same red blood of patriots.

We all enjoy the same glorious freedoms and we all salute the same great American flag.

And whether a child is born in the urban sprawl of Detroit or the windswept plains of Nebraska, they look up at the same night sky, they fill their heart with the same dreams and they are infused with the breath of life by the same almighty creator.

See the point? Doesn't matter who you are: when it comes to the crunch we are all Americans. Donald Trump believes in E Pluribus Unum and all Americans united in an American nation state. He's not picking over the embroidery to discover a new victim class that needs special protection status.

As the Obama administration has wound down over the last weeks, I have come to truly wonder about the incredible misdirection of the last eight years -- indeed, of the whole liberal project. And I realize what a self-centered conceit it is.

Who. Cares. About all the intricate mysteries of counting the diversity rosary? For God's sake, let's get back to the meat and potatoes of a decent job for the fathers, decent homes for the mothers, and decent schools for the children. And leave the proctology for the historians.

Think of two of Obama's last acts. He pardons terrorist Oscar López Rivera, who nobody cares about except radical lefties. He commutes the sentence of Army private Bradley Manning, who leaked army secrets to WikiLeaks, and who nobody cares about except radical lefties.

So Obama is clearly doing the diversity two-step, releasing an "activist" and a marginalized transgender. He is putting down a marker to the radical left that he is one of them.

OK. No problem, Barry. Because I should think that Republicans will be running with that for the next 20 years. What do Democrats stand for? They stand for pardoning terrorists and traitors. But don't you dare refuse to cater a gay wedding, pal. No pardon for you.

If you are an ordinary American trying to navigate the complexities of the modern world -- as Chuck Schumer admits is hard -- you do not really think in terms of your diversity category. Because when you show up for your job you will be trained to work and to serve in light of all the modern notions about how to create and maintain an efficient and productive work force. The science is settled on that. The modern economy needs

[To make] of each individual member of the [workplace an associate] who, in character, capability, and knowledge, is self-reliant, self-confident, dedicated, and joyful in taking responsibility [verantwortungsfreudig] as a [person and employee].

Oh. Didn't I mention that it was Gen. von Seeckt that wrote those words -- about the soldiers in the German Army?

The point is that the leaders of all modern organizations (except government) understand that you have got to push responsibility down as far as you can. Otherwise the workers won't be happy, the organization can't do its job and earn a profit.

Business people know this. Generals know it. Trump the businessman knows it. You train your people; you inspire them; you trust them; and then you send them forth into the world to make your company the best it can be.

That is how to understand what President Trump was saying today. He was calling on all Americans to be the best they can be, and Make America Great Again.

He is voicing the one great discovery of the last 200 years of the Great Enrichment. Lashing people to work like peasants or slaves doesn't get the job done. The way you get them to create miracles of productivity of our age is by empowering them.

You know what? Barack Obama and the Democrats and the whole program don't understand this. They don't have a clue.

Trump's Announcement 19 Months Later

When Donald Trump announced for the President of the United States on June 16, 2015, everyone laughed their heads off. Here's a flashback of all the MSMs laughing their heads off.

Hmm. What did I think 19 months ago? The first time I mentioned Trump was on July 8, 2015, when I wondered "Whose Side is Trump On?" I waffled around wondering if he was a Clinton plant. But I shaped up at the end when I wrote:

So, to you folks panicking that Trump is throwing away the Latino vote, and to you Democrats that think that Trump will hand the 2016 election to Hillary, I say: hold your horses.

Let's just say that Donald Trump is a bull in a china shop. And there is no telling whose precious china he will smash.

I finally looked at his speech made at Trump Tower 19 months ago. Here is what I got:

• Trump obviously knew what he was about, because he is still saying the same things today.
• Trump's style of segueing into constant sidebars introduced a new approach to political speech-making. Who knew it was a winner!
• Trump approaches life as a process of negotiations and dealmaking, and that's what he promises as president.
• Trump thinks that the president should be a cheerleader, not just a leader. He thought Obama would be a cheerleader, but "He’s actually a negative force."
• There is not a word about the urban-progressive social agenda: abortion, LGBT, drug legalization, death penalty. Not a word about race: he mentions "Mexico" but not Hispanic. Not a word about gender. In the Obama years we heard about nothing else.
• Unions: "good and some bad." Hmm.

Here is his bullet point list from June 16, 2015:

• I would repeal and replace the big lie, Obamacare.
• I would build a great wall, 
• Nobody would be tougher on ISIS than Donald Trump. Nobody.
• I will find the guy that’s going to take that military and make it really work.
• I will stop Iran from getting nuclear weapons. 
• I will immediately terminate President Obama’s illegal executive order on immigration, immediately.
• Fully support and back up the Second Amendment.
• End Common Core. 
• Rebuild the country’s infrastructure.
• Save Medicare, Medicaid and Social Security without cuts. (But get rid of fraud, waste and abuse.)
• Renegotiate our foreign trade deals.
• Reduce our $18 trillion in debt.
• Strengthen our military and take care of our vets.

All those items that Trump listed in 2015 are still on the list and all are issues that he is going to push,19 months later.

Tomorrow Donald J. Trump gets to be inaugurated the Forty-fifth President of the United States.

It seems to me that Trump's uniqueness is that he has lived and worked and thrived in the incredibly creative and turbulent modern economy, which is light years away from the hoary clichés about workers and employers and the neo-feudal economic assumptions of today's urban liberals. 

Our political class does not have his experience. And our urban hipster class does not. And our left-wing activist community does not. And our media professionals do not. So they really do not have a clue.

Fasten your seatbelts, it's going to be a bumpy ride.

Yay for La La Land!

I didn't really have my hopes up for La La Land, the supposed nostalgic musical that actually has songs, tap-dancing and a Bollywood-style opening production number. 

I heard that the songs kinda petered out in the later part of the movie. And then I heard about the unbearable whiteness of it. 

So it is a special pleasure to say that everyone enjoyed it, from 88-year-old grandma to us baby-boomers.

I liked it because I consider it a truthful exploration of what it means to be serious about being a Person of the Creative Self. See my Three Peoples theory. I particular, I offer my "Which Gods Do the Three Peoples" Believe In,"which talks about the problem of creative people, because their god is the creative self. You can see that making yourself into your god has special problems. I write that:

A Person of the Creative Self must submit to the creative process, and accept that very few people that aspire to works of original creation actually succeed in that Olympian ambition, just as very few aspiring Olympic athletes get to participate in the Olympic Games.

In my view the great question of the age is how should you live as a Person of the Creative Self? One of my items in the bill of indictment against our liberal friends is that they like to think of creative artists as special children of the gods that must be supported in their ethereal pursuits via government grants and exemption from the laws of ordinary folk. So the liberal line is that We are the People of the Creative Self and you will like it.

This liberal conceit is a lie. The truth is that the life of creation is hard and will probably end in failure. Think of it as a start-up company. You may have a good idea, but probably you don't, and it will take years to refine your idea into something that might change the world.

So Damien Chazelle's La La Land gives us Ryan Gosling as Sebastian, a keyboardist and Jazz purist that wants to open his own Jazz club. That ain't gonna be easy, pal, especially with your attitude. It gives us Emma Stone as Mia, a good little middle-class girl from Boulder City, NV, who is working in a coffee shop and doing auditions. Sebastian drives a clapped-out V-8 convertible from the 80s, and Mia drives a Prius.  Hey, there's a Prius joke in this movie!

The question is how these two are going to square the circle of their creative projects, their unrealistic expectations, their endless failures, their desire to stay together, and to maintain the line that each has given the other about their commitment. And where does commitment to the project meet commitment to each other?

At the climactic moment where Gosling has to go back on tour tomorrow and Stone has to fly to Paris to become a movie star they choose their creative careers over each other. But the director does not flinch from showing that they are breaking each others' hearts as they tell each other that "I will always love you."

But both these kids are white kids. That's the whiteness problem raised above. Of course they are. Unless you are a social justice warrior, the central question for nice college-type middle-class kids of any race is do they follow their dream to become videographers, or do they get jobs? So all the lefty memes have nothing to do with the case. The movie could have cast an interracial couple, but that would have foregrounded the race question rather than the creative question. The movie is about the path of the creative life, not about lefty poison politics.

So last weekend La La Land expanded to 1,848 screens and moved up from #5 to #2 movie at boxofficemojo.com. That's really great. It seemed to me that the kids were excitedly discussing the movie in the halls at the Boca Baton multiplex after the show.

There are lots of charming things about La La Land. What do you think a girl does when she changes out of her high heels sitting on a bench up in the Hollywood Hills after a party? She pulls out her tap shoes of course, and then she and the hero can dance some soft-shoe on the asphalt overlooking the valley in the moonlight.