Red Queen’s Race

Here at CK, I’m always thinking about our present dilemma. How did we come to an arrangement between neo-conservatives and neo-liberals to enact neo-feudalism?

Lewis Carroll well described our present milieu years ago in his unequaled--Through The Looking Glass.

“Well, in our country,” said Alice, still panting a little, “you’d generally get to somewhere else — if you run very fast for a long time, as we’ve been doing.”

“A slow sort of country!” said the Queen. “Now, here, you see, it takes all the running you can do, to keep in the same place. If you want to get somewhere else, you must run at least twice as fast as that!”

The best internet writer, you’ve never heard of, Stirling Newberry, lays out the economic policy of the US–running to keep in the same place, and eloquently describes it as the Red Queen’s Race.

“That basis was the paper for oil economy. In this economy the United States generated paper based on development arbitrage and technology, which Arabs bought, and in return they sold us oil for that paper which we were to turn around and use to create more paper.”

“It served, in a way, both interests. First it gave the oil to the old sprawl system, and for the Arabs it provided an umbrella of protection and stability, as well as assets for the time when their oil no longer commanded the same premium that it did then. The internal response in the US was to create a Red Queen’s Race, where it was made harder and harder to own the assets of America, at the same time, the Arab states grew socially conservative, and attempted to thwart the rise of a middle class that would demand imports and capitalization. It was an agreement by the conservative forces in both systems, and in turn both used it to drive their respective political systems to the right, even though underlying technological and social trends were for greater liberalization and freedom.”

“It is this dynamic, and not any of its subsidiary moves, that is important. The implementation of trade, banking deregulation, tax policy are all means by which the United States and the West tried to stay one step ahead of oil. The roots of this crisis are then the demand to keep the sprawlconomy going, the decision to engage in the paper for oil economy, and the de facto result of making it so that the wealthy, rather than the society as a whole, would hold the paper. In short, our rich, had to stay ahead of their rich. This created the most important race to the bottom: of top tax rates. It is impossible to tax our wealthy more than their wealthy taxed themselves.”

“The 1% solution to the Red Queen’s race was to allow our top 1% to pile up asset inflation to match the petro-dollar acquisition of assets. The Iraq war was a recognition that, to keep the Republican base, oil was needed, and to keep control of the top, it had to be in American hands.”

“As with many things, what we got was socialism, protectionism, Keynesianism and liberalism – for the Republican Coalition. This was the practical political realization of the post-Reagan Republican Party. They couldn’t afford to buy landslides any more, but they could afford to buy enough of the cheap states to control Congress and the Presidency. With the occasional assist from the Supreme Court.”

Stirling says the recent financial crisis was anything but accidental.

“These events are not a short term bump on the road, but the culmination of the decision a generation ago to use paper to buy oil, to inflate that paper by allowing those at the very highest reaches of a social elite to engage in a “race to the top” with the suppliers of oil. This system was accepted by both parties, and it created a neo-liberal era where any restriction to creating paper wealth had to be removed. This was not a matter of left or right, everyone was a neo-conservative, and every one was a neo-liberal.”

In another dense, must read in full, post, Stirling Newberry articulates a post-petroleum thesis, with an amazing chart depicting the political forces influencing our country as: Confederates, Moderates and Progressives.

“The present break down of political forces follows three different views of this thesis. The first view is that the land casino merely needs to be allowed to run. This is the “Confederate” wing of American politics. The second view is that the land casino can continue longer, but only if carefully managed, this is the “Moderate” view. The third view is that it requires careful management to transition away from the land casino, or the “Progressive” view.”

Stirling goes on to well describe this fucked-up political economy. And, I really mean fucked-up! Writing this, as I am, with the worst air pollution in the country, wracking our western valley.

“The American economy exists in the “Petroleum Paradigm.” That paradigm is visible in a host of ways, the fundamental idea is that value is created by turning petroleum into consumption, and using petroleum driven transportation to act as a “wind” that expands the size of the suburban land bubble. Think of it like a balloon, with people driving being the pressure that keeps it inflated.”

“This is the first thing that people must realize about the petroleum paradigm: we are paying very high indirect taxes. One form of taxation is the stagnation tax, where governments do not stimulate the economy to full employment, because doing so would radically increase their borrowing costs. Thus ordinary people have much lower wages, much lower job prospects, and much less stability. The millions out of work now, are paying the stagnation tax. Another form of taxation is insurance company profits. These profits go into markets, such as stocks, which raise the prices of stocks, which foreign investors buy. The 30% increase in cost of US health care over what it could be, and the large swathe of uninsured, are a tax that we pay to keep capital flowing in, so that we can turn around and borrow. That borrowing is used for consumption, which seems cheap in the United States, but only because the taxes that pay for it are disembodied. In the rest of the developed world consumption is taxed to pay for education and health care, in the United States, health care and education are taxed to pay for consumption.”

And, we get air pollution– indirect tax. Indirect, my ass! Cough, Cough.

“As long as the possibility of starting up the land casino is there, as long as the present generation can believe that the next generation will pay heavily for access to it, there will be no substantial change in the American political landscape. The question will be between two wings of the political spectrum over which can best maintain the present system.”

That is why we elected Barak Obama as President. Twice.

“Financial elite money and support shifted to the Moderates(Democratic Party), on the proviso that the Moderates did not disturb the Confederate architecture of George W. Bush. No major part of the Bush legacy has been overturned by Obama. None. No major part of the Bush legacy is on the calendar to be overturned. None. Obama’s money mandate is to Do Bush Right.”

What, dear readers, has been the result of doing Bush right? Eww! Typing that felt really dirty.

Another internet writer, Ian Welsh, who like Stirling Newberry, got his start at The Agonist, makes the connection to neo-feudalism.

“The reasons are simple enough. Inheritance taxes have been weakened and progressive taxation has been slashed. The primary education system, funded by local tax dollars, systemically favors people who live in wealthy neighbourhoods, while university tuition has grown far faster than inflation at the same time as student aid has been slashed to the bone. The extremely rich have bought the government and use it to arrogate money to themselves, either through preferential laws—for example, Medicare Part D or the Bush tax cuts; or directly—for example, the 15 trillion spent on the financial crisis, the vast majority of which went in effect to the rich.Power is passed from father and mother to daughter and son, with Congressional seats being passed on like some sort of inheritance and major network spots likewise going to the children of the influential. Perhaps there are no titles, but when, for example, Luke Russert, a man with no meaningful accomplishments of his own save being the offspring of late NBC news anchor Tim Russert, is hired as a national news commentator at age 22 over others who have worked harder, who have done more, and are vastly better qualified, it’s hard to see his inheritance as all that different from a Baron passing his rights, lands and chattel to his son.

All men are created equal. But, as Orwell noted in Animal Farm, some are more equal than others.”

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