Seven reflections on Trump, Sanders and the crisis of bozo capitalism

pdf_iconFreedom is never more than one generation away from extinction. We didn’t pass it to our children in the bloodstream. It must be fought for, protected, and handed on for them to do the same.
Ronald Reagan

Blogs are funny things. “Seven Deadly Sinsstarted as discussant notes on a perfect storm of a bad ISA paper, and the hapless presenter actually enjoyed the rant because a senior scholar was giving the work such close attention. “Going Feral began as a two-page cri de coeur in my obligatory annual report at Penn State. The two people who should have paid attention to it didn’t, so it gets 27,000 views instead. Go figure.

And this essay started as a 3600-word rant against the inanities of United Airlines discovered during my efforts to get home from Europe following Storm Jonas.[1] But in the process of thrashing about trying to focus that essay, I realized I was onto something much bigger: the problem with United is not merely that they are a greedy incompetent oligopolist, but that greedy incompetent oligopolists dominate the Old Economy generally, and in 2016 this is having profound political effects. Our problem is not capitalism, but bozo capitalism.

So off we go… [2]

Bozo capitalism—you heard it here first!—results from the convergence of six late 20th century phenomenon which have combined to produce a system where the management of large sectors of the economy is under the control of clueless dolts even while other parts of the economy are thriving. The causal chain occurred as follows:

  1. As Adam Smith argued extensively in the 18th century and Mancur Olson argued in the 20th, one of the inherent instabilities of market economies are the outsized rewards which come from using political power to restrict competition. Free market systems are not innately stable but need to be maintained…
  1. An idea lost on the followers of Rand and Reagan by the late 20th century, who happily let the system run amok in the naive belief, owing far more to Jean-Jacques Rousseau than to Smith or Burke (or Hayek), that any political interference with markets led to sub-optimal outcomes. Beliefs that were probably actively encouraged by…
  1. The increasing resources and dominance of finance capital, fueled by the [inter-related] combination of increasing concentration of wealth and the proliferation of computer technology allowing for the development of mind-booglingly complex financial instruments whose [supposed] critical characteristic was removing virtually all links between the returns on the instrument and the performance (and ownership) of the underlying assets. While this had a number of effects—notably financial meltdowns such as the various Third World debt crises of the 1980s, the savings-and-loan crisis of the 1980s and 1990s, some elements of the internet bubble of the late 1990s, and eventually the Great Recession—it encouraged a series of highly lucrative mergers and acquisitions which accelerated the conversion of many sectors of the economy from at least vaguely competitive market systems to thoroughly entrenched oligopolies. While at the same time, generally on the opposite coast of the USA from those financial centers…
  1. The twin technological revolutions of the personal computer and the internet fueled the rise of an entirely new economic ecosystem driven by entrepreneurship which, probably starting about 1990, attracted far and away the best and the brightest of at least two generations to the prospect of creating exciting new companies outside the dull but increasingly politically privileged oligopolies of the old order. A few of these companies succeeded and became huge in their own right—in the 21st century, Amazon, Apple, Facebook, Microsoft and Google—and many more succeeded to the point where they could be purchased (either for their inventions, or—you guessed it—to simply eliminate competition) by the apex predators. But, let us be realistic, most of these start-ups failed, but the individuals who had been involved in them…
  1. Did not go to work for the oligopolies—once one has experienced the freedom of a start-up, becoming a corporate drone has all the attraction of dining on a steaming plate of dog poop mixed with broken glass—but instead embarked on the various routes—again, enabled by the diffusion of computing power and instant communications—to a very comfortable and satisfying life outside of the corporate oligopolies and financial sector (and, for that matter, other large institutions such as, ahem, academia…). Which meant that those institutions were left with…
  1. The losers and psychopaths who were sufficiently privileged from birth and elite (typically legacy) education to function in very large established organizations so long as those were politically protected from the market, but not clever enough to make it in a market-driven new technology start-up. The contemporary poster child would, of course, be Martin Shkreli, but we see this in Jeffery Skilling of Enron, John Sculley at Apple, James Cayne of Bear Sterns [3] and thousands of others. You know the general type: the guys in Ted Cruz’s fraternity who were in charge of waterboarding pledges and procuring cocaine and date-rape drugs and were tolerated mostly because their Daddy’s millions helped pay for the rent and the legal fees. And the cocaine.

In a nutshell, we’ve got way too many Old Economy executives who think they are John Galt or Steve Jobs when in fact they are Charles Montgomery Burns.  


This, of course, has been the New Economy view of the Old Economy from the beginning, though their ire has far too frequently been diverted into a naive libertarianism which blames all ills on the government. A viewpoint encouraged by vast amounts of funding invested in “Look, a squirrel!” efforts by new right-of-center “think tanks.” [4] Granted, government can certainly be a problem [17] but government discretionary spending is less than 8% of the economy and has generally been declining during the period that the New Economy has developed.[19] So government screw-ups, while doubtlessly irritating, necessarily pale in comparison to the influence of the bozos on the commanding heights of the Old Economy, and while many of those in the New Economy have the luxury of indulging themselves in the fantasy world of Rousseauian libertarianism, there is a very significant segment of the population which instead…

  1. Has to cope with a largely dysfunctional system which is not only beyond their control economically, due to stagnating incomes and exponentially increasing inequality, but also politically, thanks to the likes of Tom “Pay-to-play” DeLay and the institutionalization of K-Street corruption culminating, of course, in Citizens United. But as important, the supposedly liberal champions of the masses, the heirs to the Roosevelt/Johnson coalition, think nothing of accepting five-times the median family income to give a single speech to Goldman Sachs. Yes, earning more in a couple hours than the average family would earn in five years. And thinking absolutely nothing of it.

For these people,and there are a very large number of them—damn! democracy! damn, damn, damn, damn! —the system is not merely inaccessible, but incompetent on a day-to-day basis because those in charge simply don’t have the wherewithal behind their foreheads to make it otherwise. [5]

So we experience the entirely predictable sub-prime mortgage collapse—wow, maybe someone should make a movie about that! And then there is your local cable company: You just love your cable company, right, and every month you get a bill that includes fees for the Snake Channel and the Hitler Channel when frankly, you’ve seen enough of both snakes and Hitler, but you thank your lucky stars that you live in America where the local cable franchise is a protected monopoly, and are even more thankful that your service has a fraction of the speed, and multiple of the cost, of what you’d have in Europe or South Korea because, well, if it was faster you’d just have to see more videos of snakes and Hitler.

And United Airlines. But that’s deserves an entire entry itself.

Thus explaining contemporary landscape of American politics in a single sentence “The system is rigged.”  [6] Not just rigged, but rigged to favor and entrench the incompetent. That, ye of the pundit class, who do finally seem to be “getting it”, is what is driving voters to support Trump and Sanders instead of the establishment.

Quod erat demonstrandum

Where do we go from here?

Let me start by noting that not everything in the Old Economy is done incompetently. True bozo capitalism actually requires considerable economic, political and social effort: you must achieve an oligopolistic position, secure it through the purchase of political favors, and then develop a corporate culture that will drive out anyone who might know what they are doing. All that takes a lot of time, and many firms have chosen not to follow this path: Truly, not every company and corporate executive has what it takes to be a bozo.  And there’s the inconvenient fact that if a firm is truly competent in the market, it has little or no incentive to purchase political protection.

But enterprises who do embark on the Path of the Bozo are nearly impossible to avoid unless you have a lot of money. Like the sort of money the political establishments in both parties have: business class or corporate jets, life in gated communities, accountants, and concierge services. For everyone else, it is day after day of small unavoidable insults—the airline that won’t let you change a ticket because of illness or when a relative has died, the insurance company that loses your payment even as it has already been charged to your credit card [7], the endless sessions with some call center in Bangladesh that end with you on hold for fifteen minutes, then with no warning, “Click…” That’s life for most people outside of the upper political and economic strata.

I outlined in a previous essay a strategy on how the Democrats, by taking the reasonable complaints of the Trump voters seriously—and there are many such complaints (and voters)—could lock up both the presidency and the Senate with ease. They could even drive the final nail into the coffin of the Republican Party except that the Republicans have been so busy at this task that it would be hard to find room for another nail.

But that isn’t happening, and I’d postulate it won’t happen because the Democratic establishment is every bit as beholden to the bozo capitalist class as the GOP. And that won’t change: the wealth of the Democratic donor class is particularly dependent on exploiting the lower middle class. Oh, and have you noticed the folks down at the Elks Club aren’t offering $225,000 for a speech?

So where we are at the moment? Going right to left on the political spectrum:

If he can keep his campaign staff out of jail, Mr. Popularity will pick up the not-insignificant social conservative block and those parts of the Tea Party economic conservatives who cannot support Trump’s positions on the welfare state.

All of these offer the third term of George W. Bush, meaning ballooning deficits due to tax cuts for the wealthy, ill-conceived and unfunded wars concocted by wealthy establishment chickenhawks but with the lower middle class doing the fighting and dying, and in the end yet another bubble collapsing with more bailouts going to the bozo capitalists. To the utter horror and surprise of the GOP consultant class, this prospect just isn’t catching on.

The Donald [8] has the advantage that he can go straight to the core issues of his now clearly defined constituency without the constraints of an ideology: his statement in support of Planned Parenthood was brilliant.[9] Insisting on defining the Pope’s job: well, probably less so.[10] Trump continues to triangulate by the day but will almost certainly converge to a welfare state populism which is simply a U.S. variant of contemporary wide-spread and increasingly successful European right-wing populism.

Clinton appropriately promises an Obama-3 administration with tantalizing prospects of the peace and prosperity of the Bill Clinton-3 administration, which is certainly more attractive than Bush-3. Granted, it leaves the financial class and bozo capitalists firmly in control, but since the Clinton and Obama terms saw steady, if gradual, improvements for minorities—look at the data in Case and Deaton—particularly those outside the cohort (apparently now extending down to the age of 12) subject to random extrajudicial executions by police and white vigilantes, there are plenty of votes to be found from that position. But this prospect offers very little to younger voters, and is literally a death sentence for some in the cohort of lower middle class whites identified by Case and Deaton.

He looks, walks and quacks like a democratic socialist, so I’m granting that he is a democratic socialist. And consequently very attractive to the young, who basically have nothing to gain under the current system, who are totally repelled by the racism and misogyny of Trump [11], and who are sufficiently cosmopolitan—either individually or through their social networks—to know that life in the lower quintiles of a European socialist democracy can be pretty darn good. Sander’s problem is that he is trying to be Roosevelt—both of them—in the 21st century and has yet to formulate an economic plan that is even remotely coherent: “cookies, kittens and bunnies, for everyone!” doesn’t cut it.

Add to this mix the likelihood we will be looking at a three—or conceivably even four—person race, with Bloomberg entering if Trump is the GOP candidate (and certainly if Trump is combined with Sanders on the Democratic side), and Trump (and possibly Bloomberg) as an independent candidate if he is not nominated, unless something goes humiliatingly bad for him in the “SEC primaries” of 1 March and he is legitimately eliminated from the GOP race.

And here at mouseCorp? Well, I’d be really happy if some adult supervision, starting with economics and foreign policy, came to Team Sanders. Certainly not too late for that.[12]

But here’s what I really want…

Klobuchar-Castro 2016!

Yeah, 2016, not 2020 or 2024. Because if Trump is elected, there may not be an election in 2020.[13]

We could well be looking at brokered conventions in both parties, so anything is possible.

At least think about it, eh?

Beyond the Snark

Mancur Olson:

Adam Smith, J-J Rousseau, etc.: if you need these references, none of the rest of this essay will be making any sense. Though please note that when I’m associating a position with Rousseau, that’s not meant as a compliment.

In capitalist economies, political institutions still matter:
Baumol, Litan and Schramm:
Acemoglu and Robinson:

The system is rigged:

Earlier rant on how the system is rigged from the perspective of a [really] small business:

Worth looking at: Or just read pretty much any of Ross Douthat’s recent columns.

Yet another op-ed—this time from that cesspool of the far left, the University of Chicago Booth School of Business—on the anti-market proclivities of the GOP:

Sanders’s economic policy needs some work:

Sanders’s foreign policy needs some work:

Millennials have no interest in joining Old Economy corporations:

And some examples of what they are doing instead (along with an extended paean to general aviation):

Another article on life in the hellhole of Nordic democratic socialism (by one of my former Fulbright colleagues!):

Anne Case and Angus Deaton: For the original:

United Airlines, we hates them forever!:–slowly/2016/01/21/a3ce3478-bb07-11e5-829c-26ffb874a18d_story.html

The Koch think tank network:

What happens to people who expose the Koch think tank network:


1. Further provoked by the unsurprising revelation in the Washington Post that making life miserable for its customers has actually been a core business strategy for United.

Granted, having once been stuck in Khartoum not knowing when I’d get out, being stuck in a major European city not knowing when I’d get out wasn’t a terrible hardship. But in a variety of ways, United—the corporation, not the line employees, who apparently fully realize they are working for a bunch of incompetent losers, and periodically engage in job actions at varying levels of subtlety to emphasize this point—did not handle this particularly well. And how come every time I encounter a United employee doing something nice, or even sensible, they are muttering “I’ll probably get in trouble for this…” These experiences, by the way, after paying an amount equivalent to the cost of a really, really nice Apple laptop for the ticket.

Though United: you’re not off the hook yet. Put me on a long flight following an unsatisfactory corporate experience and…blogs happen. Apple was the previous target.

2. Still waiting for the second half of the advice to DARPA program managers?: haven’t forgotten, just busy. Read Kahneman and Superforecasters, throw out anyone in the room who can’t explain the concepts of endogeneity, selection on the dependent variable and standard error, and you’ll be okay.

3. Cayne is now a mere footnote in the sordid history of the 2008 financial collapse, but he’s the guy who focused on international bridge competitions (the card game, not the physical structures: infrastructure is for, oh, yuck, those people) while the corporate house of cards [sic] he’d built—or rather supervised, sort of, while others built it for him—collapsed.

4. tl;dr alert! There’s another essay in waiting that was originally titled “Seven Things Liberals Can Learn from Classical Conservative Thought” but in light of events in the past few weeks, is being retitled  “Seven Things Conservatives Can Learn from Classical Conservative Thought,” as reasoned conservatism has all but disappeared from political discourse, replaced by a combination of bombast, paranoia and, well, liberalism.

Much of the blame for this lies with Fox News and talk radio, which never met a political fantasy so implausible or loathsome as to not attract an elderly white audience. But I think the conservative think tanks have failed miserably as well, particularly given the number of problems which have emerged which had been thoroughly anticipated by the likes of Smith, Mill, Schumpeter and Hayek. Instead, all we get now is some sort of vaguely Randian libertarianism devoid of social conscience, contract or history.

I’m beginning to wonder if, ironically, this lapse was an indulgence—which is finally instantiating the predictions of Karl Marx for godsakes!—made possible by the decline of the existential threat of Communism by the early 1980s [14], which allowed the conservatives in the liberal democracies to let down their guard on the End of History assumption that what remained was stable and unchallengeable. Yeah, End of History: how’s that working out for you?

But whatever the cause, the skepticism of classical conservatism has given way to a giddy combination of “what, me worry?/I got mine, Jack” libertarianism [15], largely on the West Coast and a few other New Economy enclaves, and a nearly clinical paranoid millenarianism pretty much everywhere else. Leaving this observer to wonder if many of these “think tanks” exist mostly to fill the role similar to that of the President of the Galaxy in Douglas Adams’s Hitchhiker’s Guide to the Galaxy: “The role of the office was not to exercise power, for it had none, but rather to distract attention away from where power was actually being exercised.” [16]

Well, more to follow. But meanwhile perhaps one should pay a little more attention to Epictetus, Machiavelli [18], Burke, Smith, Madison, Hayek and Buckley and a bit less to Limbaugh, Beck, Coulter, Norquist and Gingrich. Not holding my breath.

5. Oh, United Airlines [humming] “can’t get you off of my mind…” so I’m sitting over there in snow-imposed if not unduly unpleasant exile trying—quite unsuccessfully—to get anything coherent out of United’s 1980’s era computer system, and I’m thinking “Why is it the case that Google and Amazon can track my every whim—and those of a billion or so people throughout the industrialized world—even when I don’t want them to, and United can’t do so for a few tens of thousands of stranded customers even though we desperately want to be tracked!” Bozos.

In the midst of this, following a Skype conversation while wearing some distinctive glasses, my wife started getting ads for similar glasses on Google sites. Coincidence?—that’s what they want you to think.

Another case in point:The astonishingly successful Amazon Web Services was developed pretty much at the same time and using pretty much the same technology as the original disastrous public/private partnership known as Bozos.

6. Following Greg Sargent’s original exposition, “The system is rigged” is the focus of a jaw-dropping op-ed by no less than Charles Koch. Though for Koch, whose efforts have sucked the oxygen out of legitimately conservative political thought for the past quarter century, to complain about the current state of affairs shows the audacity of a man on trial for murdering his parents appealing to the court for mercy because he is an orphan.

To their credit—a phrase you probably did not expect to see in the same sentence as “Koch”—at least the Kochs use their own money, not that of shareholders. Perhaps a backhanded compliment to the culture of Kansas, the state they’ve done so much to destroy.

7. Welcome to our household’s recent experience…

8. Who has at least succeeded at some things and not always by manipulating the political system, and consequently is not a pure bozo capitalist. Furthermore a great deal of his appeal comes from his widely asserted contention—as with all things Trump, it’s hard to say whether the word “fact” would be appropriate here—that he buys politicians rather than being a politician subservient to the likes of himself.

By the way, Steve Inskeep’s recent NYT op-ed identifying Trump with Andrew Jackson is totally on the mark! Much better than the comparisons with Huey Long or George Wallace, who were also populists but had far more political experience. Though Trump only claims he could get away with killing people: Jackson actually did so.

9. Do you think Chelsea Clinton or Jenna Bush ever crossed the threshold of a Planned Parenthood clinic for an appointment? But a great number of Trump’s supporters certainly have.

10. What?!?: those damn popes need to learn their place! And it’s not just Francis: look at these losers:

Pius XI on “social order”:

Leo VIII on conditions of the working class:

Comfort the afflicted and afflict the comfortable, my ass…

11. This went completely under the radar in subsequent commentary on SuperBowl ads, but the intensely multi-ethnic appeal by PayPal—not exactly a lefty loony company and most certainly a quintessential player in the New Economy—should strike fear given the nearly universal nativism of the GOP frontrunners.

12. Biden?—well, if Biden were a movie, would he be “Terminator 3: Rise of the Machines”, “Transformers: Rise of the Fallen”, “Hangover III” or Star Wars: Episode I”? Your pick, but in all cases he’s a really bad sequel. Stop even thinking about it.

13. Joke, since you couldn’t pull that off without support of the military, and if you’ve been on a military base any time in the past 35 years—that is, since the stabilization of the All Volunteer Force—and of course if you are like most Americans, you haven’t—you will instantly see why Trump is not going to be popular with the military. This ain’t the Weimar Republic and on that dimension in particular, Trump could not be further from Hitler.

And by the way, no soldier is going to drag the mother of some guy he shared a foxhole with in Afghanistan off to some godforsaken detention center in the Arizona desert. Not sure Trump and his supporters have quite assimilated that: keep in mind only 5% of the population has even a family connection with the military. And if orders for doing that go out…well, now maybe the 2020 election might be in question. And not for the reasons Trump had in mind.

14. Communism (as distinct from the Cold War military stockpile of nuclear weapons) arguably ceased to be an existential threat sometime in the early 1980s due to the combination of

  1. Western economies recovering from the oil shocks of the 1970s
  2. China adopting a capitalist economic model under Deng Xiaoping
  3. The Solidarity movement in Poland
  4. Gerontocracy in the Soviet Union
  5. The absence of any significant “domino effect” following the 1975 Communist victory in Vietnam. Ironically, that primarily triggered conflicts between Communist states, with China attempting to invade Vietnam and Vietnam invading Cambodia/Kampuchia.

15. That is, the attitude of : Got a problem with United?—Well, all you economy air travelers are miserable little farts who are getting no more or less than what you deserve from the unfettered marketplace, and you should be happy you don’t just get shoved out the exit door mid-flight. As we learned from Ms. Rand, the only deserving people are those who own airlines—well, actually those airlines are all public corporations so these Giants of Industry, these Masters of the Universe, merely manage those companies, and only that if we aren’t terribly picky about the definition of “manage” but details, details…—and anyone who can’t at least afford to lease NetJets, but preferably have unlimited use of a corporate—or personal—executive jet, why such people don’t really deserve to even be considered human. (And by the way, wait until you discover what’s really in that “Soylent Green” we keep in our offices! Economy class scum, that’s what!)  Why the only reason economy class exists at all is to trim the balance of the aircraft and we should probably just be using our many stacks of gold bars for that!

16. That’s not the exact quote, which I’ve not been able to locate on the web, but close enough. But while we are on the topic of the Hitchhiker’s Guide, it also contains a cosmic origin story for our planet not dissimilar to the bozo capitalism hypothesis. Hanc marginis exiguitas non caperet.;dr alert! The highlight of my past two weeks was receiving a survey from the Pennsylvania Department of Economic Development—I haven’t lived in the state for nearly two years—asking what plans I had for improving my business. I gleefully responded “Moving it out of Pennsylvania.” Which allows me to get away from this: 49 separate tax forms that might apply to an LLC, with no practical guidance to the small business owner which is needed. I digress…

At the small business level, the most insidious efforts of state legislatures over the past couple of decades—particularly those who claim to be conservative—have been to create an ever-expanding India-style license raj of requirements for utterly bogus and never-before-regulated “professions” that have been created for the joint benefit of restricting competition—“going medieval” in precisely the manner that guilds held back the development of modern markets for centuries—and lining the pockets of for-profit “schools” which extract tens of thousands of dollars for astonishingly low quality training in tasks that have traditionally been learned at the side of an experienced and successful practitioner. George Will has recently taken on this issue and The Economist has been going at it for the last couple of years, Florida in particular in its crosshairs.

To see just how absurd this has become in the somewhat business-friendly Commonwealth of Virginia, consult this list. Or even better, this, which provides the disaggregated list of 141 generally working-class “professions”—note that this does not include traditional professions such as medicine, education and law—that the Commonwealth feels necessary to regulate. And it doesn’t include my favorite: Virginia’s regulation of ginseng dealers. I cannot begin to tell you how much better I sleep at night knowing that the Commonwealth protects the innocent citizenry from the scourge of unlicensed ginseng dealers.

But what about those guys who took down the 100-foot tree in front of my house last month, a task that improperly done could have crushed my house or my neighbor’s car or any number of cats?: Nah, they don’t need a license. But they sure the heck had insurance! A long-established market solution to occupations which might do harm…wow, imagine that. Maybe that crafty old bird Fred Hayek thought of that solution as well? But thank heavens those guys don’t sell ginseng!

In all likelihood, the reason we don’t have an obligatory for-profit “Acme School of Tree Trimming” is while anyone who can’t actually make a living doing tree trimming can buy a few state politicians—at the rate bozo capitalism is developing, you’ll soon be able to get these on EBay—and get a law passed to require tree trimmers to first accumulate 2000 hours at their school, in this domain they could quickly end up dead or disabled after some hapless demonstration of tree trimming went awry. Whereas failed realtors, unemployable art history majors, or people without the GPA to get into dental school can open obligatory realtor, interior decorator and tooth-whitening schools with little risk to life or limb.

That’s probably the actual story of why tree trimming has escaped licensing requirements. But the story I’d like to imagine is that every time a state legislature considers the regulation of tree trimming, they are visited by a group of large sweaty individuals with extensive tattoos, carrying chain saws and trailing sawdust on the carpet, individuals who think nothing of tossing 150-lb objects around, and make tasteful little jokes about how easily they could snap the forearms of the legislative assistants. In the wake of these visits, the legislators decide that perhaps the more prudent course of action is allowing the market to continue regulating tree trimming. Before returning to the pressing problem of ginseng dealers, who also generally have tattoos but, alas, don’t have quite the same capacity for snapping forearms.

18. On republicanism, not The Prince. The Prince, like J.S. Bach’s Brandenburg Concertos, was just a failed job application.

19. Nor has it been uniformly obstructionist: notice how much credit conservatives have given to the Obama administration’s EPA for their permissive approach to the expansion of hydraulic fracking, a development with stunning global political and economic implications generally favoring the U.S. Yeah, neither have I.

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One Response to Seven reflections on Trump, Sanders and the crisis of bozo capitalism

  1. Pingback: Feral Plus Three | asecondmouse

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