Geopolitics and Trump

If you are experienced in the board game Risk, you know that it is for a maximum of 6 players, and you know that one player will disappear from the game quite quickly, and that two more will follow soon enough. Then the game is down to three players, and this usually leads to 2 ganging up on 1, both throwing all their forces against the 1 until that one is gone. 

The world has gone something like that. We are down to three players: the USA, Russia, and China. The EU doesn’t count because it is not a warrior entity and because it is disintegrating where it stands. Japan doesn’t count because it has no military power and Risk is a wargame.

Russia and China have played the game differently than the USA. I think that to some U.S. leaders, and particularly President Obama, the nation state is an inconvenience to be endured until we all come to unity of non-democratic transnational organizations. Russia and China are very keen on their national interests. Their leaders are not willing to sacrifice their national interests to those of globalism.  One tactic used in this 2 against 1 game may have been the Russian hacking that led to the Clinton emails being leaked.

And they are collaborating in undermining the U.S. dollar as the world’s reserve currency. The creation of the SDR as the new world currency is a step away from the paramountcy of the dollar. The SDR is a basket of currencies, of which China’s yuan is a significant part. This is not some vague concept. Even Air Canada limits your claims to 17 SDRs per kilo of lost luggage (http://www.aircanada.com/en/travelinfo/before/contract.html).

The dollar has been doing well lately. It seems that the Trump victory (IF he even becomes President) has boosted confidence in the dollar. I say IF because the electoral college still hasn’t cast their vote. There is talk now that a number of the 307 members that the public thinks are committed to voting for Mr. Trump are wavering. Something similar happened in 1824 (http://gordonfeil.blogspot.ca/2016/10/donald-trump-is-right-game-is-rigged.html). If even 37 of them change their minds, then he fails to get the requisite 270 votes for victory, and then the decision goes to the House of Representatives.  It’s republican controlled, but who knows how many disaffected republicans are in that assembly and who would like nothing better than to “throw the bum out on his ass”?

The Corporation Curse

Here is a short quiz to find out your political leanings: http://www.theadvocates.org/quizp/index.html. Apparently I am all libertarian. I’m not active politically, but I do have opinions (http://gordonfeil.blogspot.ca/2016/11/normal-0-false-false-false-en-ca-x-none.html).

Some people lament the gap between rich and poor that seems to be perpetuated multi-generationally within a free market economy.   This does happen, but in an economy that has the illusion of being a free market.  It is, in fact, government intervention that facilitates this phenomenon, and it is in the form of laws allowing the set-up and protection of trusts and limited liability companies.  The limited liability company is a fiction, a holdover from the Babylonian system of Rome, that allows someone to shelter his assets from his actions.  Trust law arose in England I think and provides a mechanism which, together with the corporation, allow someone to receive the rewards of doing business without the normal and natural risks. 
The natural life cycle of family wealth seems to be that one generation makes it, the next generation maintains it and the third generation loses it.  Not so with effective corporation and trust planning.  This is only possible because governments have intervened to prevent natural consequences. 
No, the market is not as free as our illusions of it portray.   We still suffer from feudalism.  Briefly (I hope): civilization developed feudally, and this involved powerful men (in Nimrod style) exercising their whims upon their "inferiors", but the trend (politically at least) is for feudalism to disappear.  As a young man, while the western world shivered at what they thought was the spread of communism, I was not concerned because I saw (courtesy of Howard Katz) that communism was feudalism by another name and that when a country went communist, thus creating the impression of  a spread, it was not an advance at all but simply feudalism putting on a new garment, and I knew that since feudalism was on the wane, communism would have to disappear (unless the centuries old trend somehow reversed, which was unlikely because a trend in motion continues until it stops).  We have many families who have held their wealth because of feudalistic holdovers.  For example, the Windsors of England.  Could their matriarch really own all the swans in that nation in a truly free market? 

Corporations should not be allowed limited liability. People should be responsible for their mistakes and to their creditors. We rightly have bankruptcy laws to wipe the slate clean when needed. Eliminating limited liability would close the wealth gap by a long way.

Powerful Parasites

As a race, we humans have this seemingly self-defeating characteristic of facilitating wealthy parasites. These are people who are wealthy way beyond their contribution to the good of others. It is one thing to be providing someone with something of value and to be rewarded for that, but it is quite another to be ganging up to rape an economy through use of the coercive power of the state. History seems full of this latter situation. Today we have super-elites benefiting from huge government handouts while pressing matters of the common good go unattended.

Why should ANY bank be deemed too big to fail? Why should managerial ineptness be rewarded? Capitalism is decried by liberals who see the failings of the current western system, and they extend that failure to the free market philosophy. This philosophy is along the lines of what is described at http://gordonfeil.blogspot.ca/2016/11/why-and-how-free-markets-work.html. People see the excesses and immoral transfer of wealth from poor to rich that is occasioned by our system, and they think that this is a flaw in laissez-faire economic thinking. But the fact is that we do not have such a system. Instead we have governments interceding in the economy, with the threat of force, to bring about the new paper aristocracy. (see also http://gordonfeil.blogspot.ca/2016/11/normal-0-false-false-false-en-ca-x-none.html)

In a truly free market, anyone who does not provide what people want will ultimately fail to stay in business. Survival depends on producing what people want and distributing it to where it is most wanted. That produces the profits necessary for growth and continued existence as a business. And well it should because then the rewards are going to those who are most carefully converting resources into what people want. But now we have large corporations who obviously aren’t doing that efficiently. And rather than being allowed to die so that the resources they control could be released to others who would better convert these resources into solutions for people, they are assisted in perpetuating their ineffectiveness. Further, this assistance comes by coercive demands on the relatively poor to pay into the pot that feeds the folly. This is NOT laissez-faire economic policy.

People are frustrated and are now showing that frustration through referendums such as the recent one in Italy and the Brexit vote. People are demanding change. They are letting the super-elites know that they are no longer following the script. I think we are seeing the European Union unravel. I suspect it will end up being just Germany and a few east European countries that will economically be German colonies. Germany will peacefully accomplish much of what it tried 75 years ago to do militarily. I suspect that the Euro (which this week did as was suggested at http://gordonfeil.blogspot.ca/2016/11/dollars-dollarettes-and-interest-rates.html) is ultimately going to Zero, being replaced by new national currencies.