The plain, unvarnished truth about why our economy sucks

The inimitable Karl Denninger has (IMHO) hit another one out of the park.  I think his article is so important I’m going to quote it in full, to preserve it for future readers (because his links usually expire within a few weeks).  Please take the time to read it.  I concur with his reasoning.

You knew it would come, right?

The attempt to blame all on…. liberalism.

Of those governments, perhaps the most salient fact to the objective political scientist, tasked with anatomizing the failed system, would be that both governments have long effectively functioned as one-party systems. Baltimore last had a Republican mayor, Theodore M. McKeldin, in 1967. (A wire photograph from April 1966 captured McKeldin, a bear of a man, chatting amiably with Dr. King in Baltimore, two years before the civil rights leader’s assassination in Memphis.) Maryland elected its incumbent Republican governor, Larry Hogan, in November – but that made Hogan only the second GOP governor in the Old Line State since 1969.

Incumbent mayor Stephanie Rawlings-Blake, a Democrat, deals with a city council comprised 100 percent of fellow Democrats. Other important power blocs in the political and civic life of Baltimore are likewise controlled by Democrats, such as educational institutions and public-sector unions.

See, that’s easy.  Just blame “one party” rule, as if the Republicans have “better ideas” without demonstrating how their ideas are better or even providing examples of alleged ideas to be implemented.

Nobody, of course, wants to ask the salient question: Exactly how did these cities become one-party political machines?

That, of course, is because if you were to go there you’d expose the soft underbelly of corruption in the political process — the making of political promises that the maker knows cannot be fulfilled but doesn’t care as he or she is buying votes, not results.

In the meantime behind the scenes even more-perverse and outrageous corruption is taking place; the selling of America, literally, to the highest bidder.  And rather than perform its job as a guardian at the gate the press fawns over such people and their espousing of various programs without a single critical examination of the issues at hand or a question being raised.

Let us put reality out there for everyone: No, not everyone is exceptional.  In fact most of us are downright ordinary and even there, if we’re in the middle of the bell curve somewhere instead of out on the ends, fully half of us are on the wrong side of it!

The question to ask becomes simply this: What are you going to do about that fact given that we all must somehow manage to find our way in the world?

This is a cancer that we invited into our nation with so-called “free trade” and the exporting of our manufacturing base.  It is the one we refuse to discuss and debate, yet we must.  We instead try to placate and paper over it while at the same time destroying the programs and structures that led individuals in that situation to have productive, happy lives.

We then wring our hands when despair turns to crime and rioting.

Baltimore was a thriving industrial community that produced, among other things, a huge amount of steel.

But Baltimore lost over 100,000 manufacturing jobs by 1995, all due to foreign imports produced under near or actual slave labor conditions with zero regard for environmental impact.  One third of the residents of Baltimore fled the city.  Worse, 90% of the jobs in Baltimore today are low-paying and often part-time service-sector jobs.

Did liberals promote all the so-called “free trade” that led to this manufacturing displacement?  Hardly; that charge is equally leveled against conservatives; that is, Republicans.

At the same time deficit spending, which both political parties consider sacrosanct, has destroyed the ability to accumulate wealth for anyone that is in the lower economic classes.  Adding to this was outright and documented predatory behavior by financial institutions toward city residents, especially black city residents, in the 2000s via subprime lending.

Where is the debate on these topics?  It’s missing from the political sphere for a very good reason: To address this you must address facts — such as the fact that if the “average” IQ is 100 then half of the people will be above and half below; unless you’re willing to literally murder the lower half of the population you need a social, employment and political system that provides opportunity for all.  That in turn means you cannot export your lower-wage and lower-ability-required manufacturing jobs to places like Vietnam and China as they must be retained so your citizens have gainful employment available to them.

At the same time you cannot deficit spend because for the person in the lower economic and intellectual quantum there is no defensive move available to them to mitigate the damage done to their financial security by such policies.

Finally, accountability for every dollar spent is far more important when you have few dollars to contribute to government programs in the form of taxation.  In this regard both Democrat and Republicans fail; our current so-called “educational” system is an utter and complete joke when looked at in terms of return-on-investment.

Are you ready to have a debate on these topics yet, America?

Or will you wring your hands and point fingers, as is often the case, at this bogeyman or that while ignoring the elephant in the room — the intentional destruction of working-class jobs in this nation over the last 40+ years, and our utter refusal to put a stop to the abusive and outrageous “trade policies” that enable it.

Please pass the link along to your friends (or, if that link goes dead, provide the link to this article instead).  This needs to be more widely discussed – particularly because he points out, as I’ve been saying for years, that both major political parties are responsible for this mess, and neither of them can be trusted to solve it.

Only when Americans demand accountability from their politicians for these policies will we see any improvement.  I fear greatly that our refusal to demand that accountability means that we’re all going to suffer when our economic house of cards comes crashing down.  Allow me to quote from a 2005 article in the Wall Street Journal by Peggy Noonan.

It is not so hard and can be a pleasure to tell people what you see. It’s harder to speak of what you think you see, what you think is going on and can’t prove or defend with data or numbers. That can get tricky. It involves hunches. But here goes.

I think there is an unspoken subtext in our national political culture right now. In fact I think it’s a subtext to our society. I think that a lot of people are carrying around in their heads, unarticulated and even in some cases unnoticed, a sense that the wheels are coming off the trolley and the trolley off the tracks. That in some deep and fundamental way things have broken down and can’t be fixed, or won’t be fixed any time soon. That our pollsters are preoccupied with “right track” and “wrong track” but missing the number of people who think the answer to “How are things going in America?” is “Off the tracks and hurtling forward, toward an unknown destination.”

. . .

Roiling history, daily dangers, big demands; a government that is itself too big and rolling in too much money and ever needing more to do the latest important, necessary, crucial thing.

It’s beyond, “The president is overwhelmed.” The presidency is overwhelmed. The whole government is. And people sense when an institution is overwhelmed. Citizens know. If we had a major terrorist event tomorrow half the country–more than half–would not trust the federal government to do what it has to do, would not trust it to tell the truth, would not trust it, period.

. . .

Do people fear the wheels are coming off the trolley? Is this fear widespread? A few weeks ago I was reading Christopher Lawford’s lovely, candid and affectionate remembrance of growing up in a particular time and place with a particular family, the Kennedys, circa roughly 1950-2000. It’s called “Symptoms of Withdrawal“. At the end he quotes his Uncle Teddy. Christopher, Ted Kennedy and a few family members had gathered one night and were having a drink in Mr. Lawford’s mother’s apartment in Manhattan. Teddy was expansive. If he hadn’t gone into politics he would have been an opera singer, he told them, and visited small Italian villages and had pasta every day for lunch. “Singing at la Scala in front of three thousand people throwing flowers at you. Then going out for dinner and having more pasta.” Everyone was laughing. Then, writes Mr. Lawford, Teddy “took a long, slow gulp of his vodka and tonic, thought for a moment, and changed tack. ‘I’m glad I’m not going to be around when you guys are my age.’ I asked him why, and he said, ‘Because when you guys are my age, the whole thing is going to fall apart.’ “

Mr. Lawford continued, “The statement hung there, suspended in the realm of ‘maybe we shouldn’t go there.’ Nobody wanted to touch it. After a few moments of heavy silence, my uncle moved on.”

Lawford thought his uncle might be referring to their family–that it might “fall apart.” But reading, one gets the strong impression Teddy Kennedy was not talking about his family but about . . . the whole ball of wax, the impossible nature of everything, the realities so daunting it seems the very system is off the tracks.

There’s more at the link.  Highly recommended reading.

Ms. Noonan’s article was written a decade ago, but it might as well have been written yesterday, because it’s dealing with the same tomorrows.  They’re going to be our tomorrows, soon enough . . . and that frightens the hell out of me.



  1. That is a reality check. The problem is no one wants to actually FACE the issue. Not the media, not the pols, not the captains of industry… We're so screwed…

  2. BLAH- BLAH- BLAH- The once Republic of the USA is long D-E-A-D. No peaceful method can fix-revive it. I have no Idea what comes next, but to believe that "there is something we can do" , that does not involve killing everyone connected with DC in even the slightest way, is fantasy driven wish fulfillment. Right now the real Amerika is a bazar cross of Hitler's Germany, Stalin's Russia, Mao's China and Monty Python. Short of everyone getting pissed next Monday and burning it all down. All we can do is ride out whatever "they" decide to call this "purge".(the great leap forward is taken) No matter what you want to call the Communist dictatorship in Amerika. We have used up our options for peaceful change. I am truly amazed at how many really "smart" people are so stupid about this—Ray

  3. So, essentially instead of decades of monolithic Dem leadership, Denninger wants also to blame free trade and the GOP? Seriously? Economic protectionism, in case Carl wants to notice, is run by gov't. With all it's efficiencies and benefits. Not. What he's arguing for is economic protectionism which is barely disguised trade-based welfare–nothing more and nothing less. And the tariffs are not socked to the foreigners, rather passed on to US citizens in the form of higher costs, direct and indirect, for goods. For once the GOP comes down on a decent libertarian principle, and the fact that the rust belt that had gotten totally dependent on trade welfare didn't adjust is not the problem. Sheesh.

  4. I'm with anon 5:30PM. I'm under no illusions that we have a working two party system, but to blame Baltimore's problems on free trade agreements is going too far. Given a choice between free trade and protectionism, I'll come down on the side of freedom.

    As the saying goes, "our mouths have made promises that our bodies just can't keep" (or in this case, reword that so political systems just can't keep them). They've promised everything to everyone and there just aren't enough resources around to provide it. As someone else said (in a comment here?) jobs left Baltimore because the kids coming out of school were so simultaneously ill-prepared yet entitled-feeling that no one in their right mind would hire them.

    By the way, that quote from Teddy Kennedy via Peggy Noonan was in my first blog post, over five years ago.

  5. A one party system will fail, Democrat, Republican, National Socialist, Communist or Slightly Silly, it probably make no difference in the long term. The biggest issue is that they all tend to manage against something and not for the better good. Every time there is a problem, rather than make the hard choice, they find a scape goat.

    I do agree with Anon that protectionism is a poor excuse. Baltimore had a very busy port but labor cost and fees made it much less attractive to shippers. Those products still arrive but just not there. McCormick Spice is the latest business to pull out because of taxes. Other major cities in the country are still growing.


  6. I live in a region of Texas (extreme south, hard up against the border of Mexico) that traditionally votes about 80% Democrat / 20% Republican. Been that way for YEARS. So it has been said that we doom ourselves to little help from the State of Texas for two reasons.

    1) Democrats already know the way the vote will be so no need to spend any money here – better to spend in battleground locations.

    2) Republicans already know it is a lost cause and will not gain any votes from any funding sent here – so why bother.

    For quite a while now, Texas has been a Red (Republican) state. The recent immigration 'invasion' is supposed to help change that, it is claimed. But these immigrants are encouraged to move higher into Texas so as to take advantage of the numbers – no need to skew local numbers even higher.

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