Category Archives: Politics

The great Andrew Undershaft explains US politics

To cut through the analytical fog covering our Presidential elections, here is the transcript of a private meeting held in Washington in which a member of the 1% explains the cold realities of our political system. {2nd of 2 posts today.}

Robert Morley as Andrew Undershaft


What is the government of this country?

Remarks to a to senior Senator
by Andrew Undershaft

CEO of the multi-national defense contractor
Undershaft & Lazarus


The government of your country!  I am the government of your country; I, and Lazarus.  Do you suppose that you and half a dozen amateurs like you, sitting in a row in that foolish gabble shop, can govern Undershaft and Lazarus?

No, my friend; you will do what pays us.  You will make war when it suits us, and keep peace when it does not.  You will find out that trade requires certain measures when we have decided on those measures.

When I want anything to keep my dividends up, you will discover that my want is a national need.  When other people want something to keep my dividends down, you will call out the police and military.

And in return you shall have the support and applause of my newspapers, and the delight of imagining that you are a great statesman.

Government of your country!  Be off with you, my boy, and play with your caucuses and leading articles and historic parties and great leaders and burning questions and the rest of your toys.  I am going back to my counting house to pay the piper and call the tune.

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Why the Outer Party hates Trump & will waste this opportunity for reform

Summary: The reaction of our upper classes to the rise of Trump reveals much about 21st century America — a society divided by class, with blinkered elites, and an opportunity to unify and make reforms (which we’ll almost certainly squander). 2016 will be a big year for America, a bad one if we do not try to understand what is happening.

Trump as Hitler

We can only guess at the reaction to Trump by the bourgeois (who own America) and the Inner Party (their senior executives, having less power but are social similar). My guess: they’re probably unhappy that Trump is defeating their apparatchiks and co-opting their political machines. However, Trump is one of them — and a deal-maker. In the unlikely event Trump wins, I suspect they expect to ally with him.

More interesting is the reaction of those in the Outer Party, America’s professionals and managers. They are spitting with rage, so vituperative that discussions about Trump quickly veer from analytical to irrational. Trump has aroused them to an extent I’ve seldom seen — and with good reason.

Our elites are distant to the America people, images on TV and stories in the tabloids. But the Outer Party administers America’s bureaucratic regime, which has been losing legitimacy for decades (e.g., see Gallup’s Confidence in Institutions poll). The rise of Trump shows that this has brought forth a populist revolt (i.e., an attempt to change political authority). It’s a rebellion against them, the faces of the US political regime.

They respond with their most powerful tool: delegimization. People and movements have been destroyed as they use their institutions — the news media, academia, think tanks, etc. — to label reformers and rebels as “Communists”, “racists”, “sexists”, “deniers”, “he’s like Hitler” (applied to both Bush Jr. and Obama), etc. Plus they fire barrages of mockery and funny pictures.

But the regime’s loss of legitimacy renders these ineffective. Much of America no longer considers the upper classes to be our moral arbiters. Worse, to many Americans the upper classes’ hatred of Trump identifies him as their friend. “By their enemies you shall know them”.

The “chattering classes”, especially journalists and academics, are especially hostile to Trump (senior journalists and tenured university professors are of the upper class to the minimum wage – no benefit – no security workers who are so much of America). These are among the least popular of major American institutions. Gallup shows that only 24% of Americans have confidence in newspapers and 21% in TV news. Gallup does not ask about the public’s confidence in professors and universities, but they we have a clue — populist politicians often use them as targets of applause-lines…

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Magnus: China’s leaders must choose: political power for them, or economic growth for China

Summary: Today’s post by A-team economist George Magnus discusses China’s economic challenges, especially the clash between its political and economic transitions. These are among the major unknowns affecting the future of China, that other pole of the world economy, {1st of 2 posts today.}

Globe and China Flag

Will, or can China put change before control?

By George Magnus, 29 January 2016
Reposted from his website with his generous permission

One of John McDonnell’s economic advisory team, David Blanchflower, recently wrote in the New Statesman, “The new Labour leaders are not economists and are going to have to learn fast. They will have to accept the realities of capitalism and modern markets, like it or not.” He makes a fine point, and on reading it, I immediately thought that it could equally be made about China.

The leadership is no longer new, and for them the realities of capitalism and markets are not the same: they are prepared to incorporate market mechanisms and go along with western capitalism only to the extent that they, a) do not compromise the interests and primacy of the Chinese Communist Party; b) help the Party further Chinese economic and political power;  c) bolster the competitiveness and efficiency of state institutions. What the leadership does not want is a central role for markets and prices in the determination of the ownership, allocation and distribution of resources.

This much, if you did not know it before, has become evident to global audience in the seemingly parochial world of finance.

On the one hand, China has taken the initiative to set up the Asian Infrastructure Investment Bank under the umbrella of what President Xi Jinping has called the One Belt, One Road project, or to you and me, a 21st century Silk Road by land and by sea; and most recently won the IMF’s backing to include the Yuan in the so-called Special Drawing Right, the IMF’s accounting unit. We could also point to other initiatives to encourage greater use of the Yuan in the settlement and invoicing of trade, the denomination of international bonds, and the composition of central bank currency swaps; and to encourage foreign capital to come into Chinese financial markets.

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Review of Mike Lofgren’s “The Deep State”, a must-read for 2016

Summary: Today’s post reviews Mike Lofgren’s important new book about The Deep State, the ruling center of the New America. Lofgren’s entertaining but scary book sketches out this institution and how it works. Here’s an explanation of why you should read the book, and its two big limitations.


Review of

The Deep State:
The Fall of the Constitution
and the Rise of a Shadow Government

by Mike Lofgren (2016)


Mike Lofgren has written the definitive account of the Deep State, the “hybrid association of key elements of government and pats of top-level finance and industry that is effectively able to govern the United States with only limited reference to the consent of the governed.”

His has the experience to do so after 28 years as senior budget and national security expert with the Republican staff in Congress. It gives him technical knowledge plus a wealth of observations and vignettes, which he weavers into an entertaining narrative (see the Forward).

The Deep State is the hidden connecting thread to the news in America. It explains the government’s operations run with indifference to their stated goals, its leaders’ unconcern with failure, and the inability of citizens to affect its policies. The quiet growth of the Deep State is the story of modern America’s history.

“Our venerable institutions of government have outwardly remained the same, but they have grown more and more resistant to the popular will as they have become hardwired into a corporate and private influence network with almost unlimited cash to enforce its will.”

Lofgren explains the origins and operations of the Deep State, how it has shaped Washington to its needs and sent its tentacles throughout the American power structure. After reading this book you’ll see the news with a different perspective. It should be required reading for every college student.

Now for the critical part of the review. He goes too far in the middle of the book, almost a list of everything wrong with America — with the Deep State the master explanation. He sometimes conflates the Deep State with conservative forces, when its strength comes from its bipartisan support (everybody loves the F-35, and few are more hawkish than Liberals explaining our Responsibility to Protect).

But these are minor points in a brilliant, thoroughly researched, and well-written book. My disagreements concern two subjects about which we can only speculate.

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It doesn’t matter if Trump wins. 2016 is already a revolutionary election

Summary: The public, and so journalists, focus on the presidential elections as races, reasonable since the political consequences of each party’s victory are large but predictable. The 2016 election is different. Focusing on Trump’s latest outrageous sound-bite conceals the massive change made by his success to date. What if the parties’ control of political money and our political machinery no longer controls election results, and elections become a free-for-all among the power centers of America? This post explores what it means for our future.

USA Revolution: the Logo


Many factors produced the simultaneous insurgencies by Sanders and Trump against the Democratic and Republican establishments. Most obviously, for decades they have ignored vital concerns of their core constituencies, preferring instead to serve unpopular special interests such as Wall Street — and those of the 1% (e.g., favoring mass immigration).

A classic sign of organizations’ senescence is the increasing age of its leaders and their decreasing qualifications for high office. As seen in the candidates offered for President. In the case of John McCain in 2008, the Republicans gave us both — an erratic elderly man (would have been 73 at inauguration) with poor judgment and an unqualified VP (Sarah Palin, chosen with 21 months as Gov of AK).

Now the Boomers are turning over leadership of America, but the Democrats appeal to a new generation with two contenders: Hillary Clinton and Bernie Sanders, who would be 70 and 76 at inauguration.

These events take place in a nation where the people’s confidence in their governing institutions has been eroding away for decades (see Gallup’s Confidence in Institutions polls). Which brings us to this, the key insight about 2016 (although written long ago)…

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Stratfor: How immigration will change German politics, which will change Europe

Summary: Believing that the European Union made them immune to popular opinion, Europe’s elites acted on their class interests by opening the door to massive immigration, providing cheap workers in their business and homes. Now the resulting popular opposition, still in its early stages of arousal, has forced Germany to take steps to limit the inflow — violating the Schengen Agreement for open borders within Europe but probably insufficient to quiet public protests. They have unleashed the wild forces of populism in Europe. Here Stratfor begins to assess the consequences. Much of Stratfor’s value comes from the window it provides into thinking of Western elites, its most-important customers.


How German Politics Will Change Europe

Stratfor, 22 January 2016


  • Conservative voters and politicians, increasingly fearful of the economic, social and political repercussions of the refugee crisis, will continue to pressure the German government.
  • German Chancellor Angela Merkel will survive the political impasse, but her policies will change in the coming months as she toughens Germany’s asylum policies and remains reluctant to support Greek debt relief.
  • Germany, the largest EU economy, will increasingly question fundamental aspects of Continental integration, including the composition of the eurozone and the free movement of people.


As the European Union continues to fracture, debates in Germany could change Berlin’s domestic and foreign policies, reshaping the entire Continent in the process. A group of conservative politicians is questioning German Chancellor Angela Merkel’s ability to address the immigration crisis, with some even threatening to launch a no-confidence vote against her. Merkel will probably survive these attacks, but this is the second rebellion against her leadership in less than a year.

Regardless of whether Merkel keeps her job, German conservatives are, and will continue to be, concerned about the rise of anti-establishment and anti-immigration groups in the country. Even if these emerging forces are still far from accessing power, they will influence mainstream parties. In addition, future challenges such as the integration of asylum seekers into the labor force and the economic impact of the downturn in emerging markets will create fertile ground for anti-establishment sentiments to prevail. If Germany takes a more isolationist stance on EU issues, Europe will only further fragment.

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Europe’s elites use immigration to reshape it

Summary: The West is a small world, as we see our elites simultaneously decide that more immigration will re-shape our societies into forms more pleasing to their needs. Their bold actions risk releasing the dormant forces of populism, with unknown effects. This post provides a playbill to the conflicts, a racing form to help you bet on the winner.

Remaking nations the old-fashioned way

BBC: Number of EU asylu-seekers per nation

Journalists speaking for the powerful

The greatest use of State power is re-shaping a nation to your needs, as a potter shapes the clay. In human affairs the clay must be persuaded to passivity. So we have these wonderfully candid articles discussing Germany, but preparing America for yet another wave of immigrants. First, the LAT says “For Germany, refugees are a demographic blessing as well as a burden.” Comments added in {red}.

The nation’s population is shrinking at an alarming rate, and it desperately needs skilled, motivated and industrious folks like Alkhamran to replenish its workforce and keep its powerhouse economy humming. In other words, helping to alleviate Europe’s refugee crisis could help defuse Germany’s demographic one. “We need people. We need young people. We need immigrants,” Interior Minister Thomas de Maiziere declared recently. “All of you know that, because we have too few children.”

By 2060, Germany’s population could drop from about 81 million today to as low as 68 million, and would most likely be surpassed by Britain and France, potentially changing the balance of power in Europe. {They have not been asked. A Germany of 68 million would still be crowded by historical standards.}

Although taking in millions of refugees might help Germany stave off one demographic crisis, it could create another: A change in the country’s ethnic and cultural makeup that not everyone is prepared to accept. … “There will be conflicts,” Vice Chancellor Sigmar Gabriel warned recently. “The more openly we talk about the fact that people are worried, that there’s fear in the country and that there may be conflicts, will … help us deal with this realistically.” {“Realistically” means to accept what elites decide.}

Second, the WaPo echoes the message: “The refugee crisis could actually be a boon for Germany.”

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