What should a "wealth tax" look like?

The topic of a wealth tax has come up quite a bit over the last couple of years. Certainly the writings of Thomas Piketty and concerns about wealth inequality and income inequality have raised the topic of a wealth tax, along with the presidential campaigns of Bernie Sanders and Elizabeth Warren. Recently, Bloomberg's Leonid Bershidsky (who was born and raised under communism in the Soviet Union) wrote on the topic, raising Bill Gates' tepid endorsement to the the title of his column.

It is important to note, Gates' recent tepid support for a wealth tax is very different from his prior position which was to increase the rate of taxation of capital. Gates correctly noted many of the super-wealthy generate income from capital gains, and taxing capital gains at the ordinary income rate would go a long way towards tax fairness. In fact, it is the lower rate of taxation for long-term capital gains that is leveraged in many forms of executive compensation. It is not even stock options any more, where the executive has "skin in the game", now it is direct stock grants.

Another potential form of wealth tax long supported by Gates is the inheritance or estate tax. This is another idea which comes up from time to time, today more focused on very large estates. The estate tax of the 20th century had very low thresholds and was very destructive to small businesses and family farms. It was deeply immoral in how it was implemented. The estate tax was far more destructive to those with small fortunes than those with large fortunes, so it was understandable that the super wealthy like Gates and Warren Buffett favored it--It had the effect of destroying potential rising competitors to large businesses. Gates' lawyer father could afford to send Gates to Harvard. The son of a family farmer who loses his parents farm to the estate tax when his parents dies cannot afford to send his son to Harvard. While generational wealth can create generational plutocrats, generational wealth can also create generational middle classedness, free of the need of government support, and that is something we should strive for.

The last idea for a wealth tax is an expatriation tax applied to those who renounce U.S. citizenship. I am not sure this represents a huge revenue opportunity.

Most of the time, a wealth tax is presented either as a direct or indirect solution to wealth inequality. At the very least, it is presented as an alternative to wealth inequality.  But what is wealth inequality? Equality and inequality suggest two sides of an equation. In the case of inequality, one side of the equation has more, the other side has less. The problem is, taxing those with large amounts of wealth only addresses one side of the equation, and it addresses the less urgent one. It is those without wealth who are believed to be the victims of inequality.

Interestingly, Bershidsky column presents the single biggest argument against a wealth tax: The open-ended nature of what to do with the proceeds. He speaks of "clean energy subsidies" and "useful government programs". What makes these more worthy? Why not use the proceeds from a wealth tax to recapitalize the military? Fund higher education? Or 1,000 other pet projects? One can see the obvious problem with this. It is to politicians what the Sears Wish Book was to children of my generation, or what lottery winnings are hoped for for some.

This raises a more important question: What is wealth? To put it simply, wealth is savings and investments. Wealth is a form of deferred income. How is wealth created? Msot often, it starts with some form of income. Ordinary income saved. Income from a gift or a sale of something. What is wealth used for? Usually, the intent of wealth is to use it in the future as a form of cash flow, or income, if you will. To use wealth, one has to liquidate it and turn it back into cash. What is the most common form of wealth today, and where is it? Most wealth today is directly or indirectly owned by the upper middle class, if the form of capital stock, most often in retirement accounts or in insurance reserves backing up life and property policies owned by those in the upper middle class, or in the pension reserves of middle class pensioners.

What is the intended use for most wealth? Given most of the wealth is in retirement savings and pension funds, the obvious use for wealth is for retirement income, along with insurance to provide financial protection in the case of a lost home or life.

What are the downsides of not having this kind of wealth? What do those in the lower class and lower middle class not have due to their lack of wealth? First, they face financial insecurity in old age, either in the form of underfunded retirement, a lack of ability to purchase supplemental health insurance, and perhaps a need to work far into old age. It also means a likely lack of life insurance in middle age.

So treating the effects of wealth inequality means treating the above. Not with "clean energy subsidies" but with things like addressing the underfunded Social Security and Medicare trust funds. Perhaps increasing Social Security payments for those at the bottom of the Social Security scale. Perhaps broadening Medicare coverage to better handle things like the Medicare Part D "doughnut hole" and to better support Medicaid funding of long-term care. It also means funding SSI and Medicaid for those aged who do not qualify for Social Security and Medicare.

Those would be a moral use for the proceeds of a wealth tax. The only moral use case I can think of. It would directly address wealth inequality, because it would directly address the effects of wealth inequality.

Now what to tax? I personally believe our current tax system is deeply immoral. I do support taxing capital gains at the ordinary income rate. I can support an estate tax with a very generous exemption ($5-10 million), a very graduated scale (starting at about 10%), and a very reasonable top-end rate limit--more like 40% instead of Piketty's insane 90%. One can make the argument the estate tax is simply a form of capital gains tax, since the gains are not yet realized. The idea of the estate tax being earmarked to the Social Security and Medicare trust funds makes considerable sense, and it keeps the politicians hands off of the proceeds for their pet projects.

There are better alternatives to Social Security, and better ways to fund Social Security and Medicare. But they are beyond the scope of this post.

What should a “free” tuition and “student loan forgiveness” program look like?

The idea of offering free tuition to all students, regardless of major or GPA is an invitation for moral hazard. A more reasonable approach is to only offer free tuition to the following:

Needed majors – for example, elementary and secondary education. The payback being the graduate will benefit society.

High-income majors – for example, engineering. The payback being the higher taxes paid by the graduate’s higher lifetime earnings will offset the tuition.

Students who agree to take a government service commitment – for example, students who agree to work for a civilian government organization, such as a nurse agreeing to work for four years for a state public health service. The payback being the service gained.

GPA should matter. Most scholarships require the student maintain a certain GPA. The same should apply to a federally funded tuition program.

Caps. The value should be capped at the in-state tuition of the state the student graduated high school in. In most cases today that is about $45,000 ($11,250 per year).

A beneficiary surtax. Why not require everyone who benefits from this program to pay an additional few percent of income tax, say 2.5%, for 10 years – no exceptions. This is skin in the game.

For community colleges, there would be a similar program based on two years at the average community college tuition, selected fields of study, and a 5-year surtax.

What does this mean? It means the in-state engineering student with a 3.5 GPA at State Tech gets 100% of their tuition paid, while the Intersectional Grievance Studies major at Private U has to self-fund.

The same concept could be applied to loan forgiveness, with one important additional requirement: Is the graduate current on their loan payments?

The engineer with $75,000 of outstanding student debt, who graduated with a GPA above the cutoff would be eligible for $45,000 of loan forgiveness, despite the fact he or she earns $75,000 per year. The teacher could take a qualifying job at a qualifying school and get $45,000 of loan forgiveness. The Intersectional Grievance Studies major at Private U with a middling GPA who has $200,000 in debt and earns $20,000 as a barista will need to get a second job.

The point is, we (the taxpayers) deserve to get something back for our money. And we (society) deserve a societal benefit. A good teacher at an inner-city school, a good nurse at a public health clinic, and yes a software developer making $100,000 and paying substantially more in taxes than the average person his or her age are all benefiting society.

The government, between the Department of Education and the Department of Labor has a ton of data. This actually is not hard.

But there is still a problem, and it is the elephant in the room. The exploding costs of college education. Because of this, any participation by any university must be tied to dramatic cost controls. Again, the government has a ton of data. Government economists can extrapolate what a college education should cost in 2019 based on historic data. The actual cost is well above that. I am not speaking of an incremental decrease in the rate of increase of tuition, but a freeze at an immediate minimum, followed by bending the cost curve down to produce year over year inflation adjusted tuition, fee, and book reductions. Imagine the impact if suddenly 50% of the student bodies of every university were eligible for massive amounts of financial aid, dependent on the university going on a the financial equivalent of Keto. Imagine the prospect of a university losing a significant percentage of its incoming class to the cross-state college who is better managed.

And this is the part that makes the cost of such a program worthwhile. If the universities do not do their part, the cost of the program is limited. Imagine the impact if the loan forgiveness were not immediate, but was phased, and loan forgiveness was tied to the university making progress on cost reductions. Can you imagine the impact to alumni donations and alumni pressure?

Yes, this would be a costly program. But the idea of tying it to outcomes, such as societal needs and a direct incentive to universities to reduce costs makes it far more worthwhile than simply raining hundred dollar bills onto each and every incoming GenZ college student and every Millennial college graduate with outstanding loans.

Another key idea behind this is the government could start with a more limited program, and scale it up or scale it down as funding permits. By varying the qualified majors, and the qualifying GPAs, qualifying jobs, etc., the program could be controlled. Of course it could also be abused, but the key would be a system which can be scaled up or down. The scaling could even be hard coded into the law based on the appropriated funds. More funds appropriated, scale it up. Fewer funds appropriated, automatic scale down in accordance with the law, not the whims of Congress.

In an Insane Society the Sane Man Must Appear Insane

[4/5: Updated to add Tim Ryan's candidacy]
[4/15: Updated to add Eric Swalwell's candidacy
[4/15: Updated to add comments on Pete Buttigieg]
[4/15: Updated to add comments on Andrew Yang]
[4/22: Updated to add Seth Moulton's candidacy]
[5/15: Updated to add Steve Bullock's and Michael Bennet's candidacies]
[5/16: Updated to add Bill de Blasio's candidacy]

Back in 1980, an excellent comedy on Marin County California, starring Martin Mull was released. It was called “Serial”, based on the original novel which was serialized in a Marin County alternative weekly newspaper before being published as a book.

The movie was not successful in theatrical release, but found more following once it made its way to premium cable channels such as HBO.

Near the end of the move, one of the secondary characters, Stokeley, a young teenage boy, checks on Martin Mull’s character, protagonist Harvey Holroyd, who is recovering from a nervous breakdown.

Stokeley says to Harvey: "In an insane society the sane man must appear insane" to point out that Harvey was indeed the sane person in the insane society that was Marin County. Harvey asked Stokeley where he got that from, and Stokeley replies “Star Trek”. However, like Jules Winnfield’s infamous bible quote in Pulp Fiction, Stokeley’s Star Trek quote was not real. That line was never said in any Star Trek episode.

I recently divided the list of Democrat presidential candidates into a “Sane” and “Insane” group. Nothing against Democrats, one could do the same for the Republican party. The thing is, right now, like the GOP in 2016, the Democrats have a lot of presidential primary candidates.

By “Sane”, I mean center-left candidates who are careful to avoid being tagged as “extremist” or “radical” and are avoiding wholesale endorsement of popular, but hard to implement, proposals. By “Insane”, I mean progressive-left candidates who are eager to claim the progressive mantle, and are either offering, or endorsement popular, but hard to implement proposals.

The Green New Deal, Medicare for All, Free College for All, $15 Minimum Wage, UBI, Jobs Guarantee, etc., endorsing multiple of these policies qualifies a candidate for the “Insane” tag. Distancing oneself from multiple of these policies qualifies a candidate for the “Sane” tag.

To dive deeper on this, consider Medicare for All. Medicare today comprises several parts. The original Medicare, Part A, is hospitalization only. What today we would call “catastrophic coverage”. Part A is either “earned” by working the equivalent of at least 10 years full time (or through a spouse who has done so). Otherwise, one must pay a premium to be insured under Part A. Everyone must pay a premium for Part B, which covers non-hospital physician visits. The premium is automatically deducted from Social Security pension payments. Everyone must pay a premium for Part D, which covers non-hospital prescription drugs. All three parts have deductibles and copays, which can be partially covered by enrolling in private Medicare supplement plans.

However, when most people hear “Medicare for All”, and indeed when most politicians promote “Medicare for All”, they are not speaking of a program of basic hospitalization insurance with additional premiums required for doctors’ visits, and optional private supplements. Instead, they are speaking of a program with no earned eligibility requirements and no premiums. While Medicare requires one to work and be a taxpayer, Medicare for All would cover all regardless of work status. Additionally, during the debate over the Affordable Care Act (ACA), Nancy Pelosi publicly stated her desire to get rid of copays, deductibles, and coinsurance. In addition, many progressive politicians are demanding coverage for vision, dental, and long-term care be included. Indeed, the current Medicare for All bill from Representative Pramila Jayapal would cover standard health care along with vision, dental, and substance-abuse care, and would not charge patients copays, or have deductibles.

Part of the problem with the original ACA was it was larded up with additional coverages, which increased the price for policies. But the lessons of why the ACA has failed to deliver have not been learned. Indeed, they have not even been investigated.

Some have proposed a universal, government paid for catastrophic coverage, similar to Medicare Part A, and then leverage employers and the ACA Exchange for general health insurance, which would solve the “Medical Bankruptcy” problem, but this flies against the demands of progressives.

The cost of a “Medicare for All” with full coverage at no cost to the patient is Insanely high. Bernie Sanders proposal of a few years ago was estimated to cost $32 trillion over 10 years. Those candidates who are looking at something less are trying to be Sane.

Likewise, the cost of the “Green New Deal” is Insanely high. One group estimated it at $93 trillion over ten years. This included $32 trillion for Medicare for All, which is included with the Green New Deal proposal, so the rest would be about $60 trillion. Others have discounted that estimate, but I did a simple estimate and came up with over $30 trillion just for changes to electrical power generation and changes needed convert homes to all-electric fuel, with no consideration to changes to commercial building, mass transit, or long-distance travel. When one adds in proposals like college loan debt forgiveness, and broader health care coverage beyond Sanders original plan, one can easily begin to approach $100 trillion over 10 years. The 2019 U.S. federal budget is $4.4 trillion. Even with the savings some of these programs would produce, it is not unreasonable to suggest it would require a doubling of the current annual budget, which is fiscally impossible. Or, to put it another way, it is Insane.

Then there is the Insane idea of amending the Constitution to eliminate the Electoral College. First, that would never pass. An amendment requires a two-thirds majority vote in both the House of Representatives and the Senate and ratification by three-fourths of the states, the very states which would lose their clout in such a change. Never mind the organizational nightmare a single national vote to a single national standard would create compared to 51 discrete federal votes under 51 state and district standards.

And the Insane idea of amending the Constitution to allow 16 year olds to vote. Many of the Democrats advocating for a 16 year old vote also advocated for 26 year old "children" to be covered by their parent's health insurance, and "children" under 21 to be restricted from purchasing tobacco and firearms. These same people have trotted out evidence a young man's brain has not completed development until age 25 to advocate for lesser criminal sentencing for those under the age of 25. If someone is responsible enough vote at age 16, one would think they are responsible enough to own a firearm--after all, government has access armed to force: police, military, etc.

Here is my list of Democrat candidates for president, and where they rate. I will explain some of my ratings after this list.

Sane (Generally Avoiding Full Support of the Most Controversial Policies)

Michael Bennet
Joe Biden
John Delaney
Amy Klobuchar
Seth Moulton
Tim Ryan

In Between Sane and Insane

Pete Buttigieg (Publicly Sane, Policy both Sane and Insane)
John Hickenlooper (Publicly Insane, Policy Sane)
Jay Inslee (Single-Issue, Policy Conflicted)

Insane (Supporting Multiple Controversial Policies)

Cory Booker
Steve Bullock
Julian Castro
Bill de Blasio
Tulsi Gabbard
Kirsten Gillibrand
Mike Gravel
Kamala Harris
Wayne Messam
Beto O'Rourke
Bernie Sanders
Eric Swalwell
Elizabeth Warren
Marianne Williamson
Andrew Yang

The reality is, as the Democrats’ Overton Window has shifted left, the center-left “Sane” candidates look increasingly like outsiders, or “Insane”. While the more radical, or “Insane” candidates, look “Sane”.

The same thing happened in 2016, as Trump began as clearly an “Insane” candidate, and by the end John Kasich looked positively nuts, refusing to drop out and babbling about his mailman father like Commander Queeg talking about strawberries. Indeed other “Sane” candidates, like Marco Rubio, tried to do the same “Insane” stunts as Trump, like making comparisons about hand size, or making insults. Bobby Jindal, arguably a “Sane” candidate, and the son of immigrants, stated “Immigration without assimilation is an invasion” to boost his strong border bona fides.

I expect we will see similar for the Democrats this time. Joe Biden, who in polling has the strongest chance to beat Trump, in large part because of his moderate history, is tacking left, and trying to position himself as “Woke”, to the point of disparaging the entire concept of British Common Law, in large part because it was created by “White Men”. British Common Law, along with Roman/Germanic/Napoleonic Civil Law (also created by “White Men”), undergirds the vast majority of the world’s legal system. Also, Biden is under coordinated attack to paint him as a sexual predator in order to bring down his candidacy.

Pete Buttigieg’s intersectional identity politic credentials are being debated. And he has tacked increasingly left. Buttigieg arguably is using his midwestern small-city mayor credentials to stake a claim in the “Sane” camp. Just this morning, on a local radio station, I heard a talk show host comment on Buttigieg and she said: “He sounds sane. He sounds moderate.” In other words, she also sees the Sane vs. Insane stratification, and considers “moderate” to be synonymous with “sane”. In other words, it is not just my opinion.

Update 4/15: Pete Buttigieg's position on college financial aid and college debt is Sane, very similar to Amy Klobuchar's proposals. This is a really big deal because Buttigieg announced it at the same time as he announced his official candidacy, and it represents a visible and significant shift away from the progressive edge. However, I would note, no Democrat nor Republican candidate has proposed any policy which would actually reduce the costs of college. The reality is the Educational-Political Complex has subsumed higher education, and has enormous political power to prevent such policies. Instead it rent-seeks via government grants and government guaranteed loans. Despite Buttigieg's Saneness on college funding, he continues to advocate for the quixotic idea of eliminating the Electoral College. For this reason, he remains in the "In Between Sane and Insane" camp.

Andrew Yang can sanely defend his UBI proposal, and indeed a UBI may be necessary at some point in the future, but in a period of historic low U3 unemployment and rising wages, now is clearly not the time. Yang increasingly is promoting his UBI in a way that seems less a serious national economic proposal, and more a tactical vote buying strategy. In addition, Yang has weighed in on the infant circumcision debate, which seems unpresidential. Just today Yang announced a new, critical policy position: Make Daylight Savings Time permanent. This is not serious.

Update 4/15: Andrew Yang has made some very Sane proposals along with his many Insane proposals. He may shift in the future to the "In Between Sane and Insane" group not because he is moderate in most positions, but because of the balance between his various positions. Yang appears to be courting controversy to gain publicity. A kind of "Trump from the Mirror Universe" approach (staying with the Star Trek theme of this post).

Jay Inslee is running on the single issue of Climate Change, and has endorsed the Green New Deal. One should always be cautious of single-issue candidates. Inslee is the governor of Washington state, which is home to Boeing, manufacturer of half of the jetliners used on planet Earth, and jet aircraft are one of the largest contributors to greenhouse gasses. Inslee has ushered tax deals to Boeing, and defended Boeing’s Washington jobs from loss to South Carolina and Kansas. Beyond the Green New Deal, Inslee’s book on battling Climate Change is dismissive of nuclear energy and puts too much confidence in solar and wind power. Other than his single-issue push Inslee is making a point to sound moderate by staking a claim against certain popular Democrat policy positions. However, Inslee’s simultaneous support the Green New Deal and the jetliner industry means Inslee is either a hypocrite or insane.

John Hickenlooper’s bizarre story about taking his mother to see “Deep Throat” puts his carefully crafted “Sane” credentials at risk.

Update 4/15: Eric Swalwell has announced his candidacy. He has a single-issue focus, in his case, on gun control. Based on Swalwell's Insane Twitter comments about attacking legal gun owners with nuclear weapons, he starts solidly in the Insane camp.

Update 4/22: Seth Moulton has announced his candidacy. Moulton has expressed full support for the Green New Deal, but is not in the Medicare for All camp, instead he only proposes to add a "Public Option" to the current Affordable Care Act. He also has not endorsed free college for all or student loan debt forgiveness. He is mostly Sane, and he should provide more detail on what his support of the Green New Deal actually means. Because he is avoiding Insane positions on health care and education, he starts in the Sane camp.

Update 5/15: Steve Bullock and Michael Bennet have announced their candidacies. Bullock is running as a single-issue candidate on campaign finance reform. I automatically put quixotic single-issue candidates in the Insane column because they are not serious candidates. Bennet is positioning himself as a rational centrist, albeit a milquetoast, undifferentiated centrist with no marque proposals. Bennet begins in the Sane camp.

Update 5/16: Bill de Blasio has announced his candidacy. This needs no explanation. Insane.

Big Money and Small Money, and how it tracks to Sane and Insane

In presidential politics, there are two sources of money: Big Money and Small Money. Big money is the large donors, corporations, PACs, etc. Small money is the grass roots individual donations. Generally, big money flows to “Sane” candidates. In 2016, the Democrats’ big money went to Clinton, while Sanders was the champion of small money. For the Republicans, the big money was split, and Trump was the beneficiary of small money. I believe the attacks on Biden are because he is seen as a threat in the big money space. Small money continues to be dominated by Sanders, although Beto O’Rourke had initial success with grass roots fundraising. If he can sustain it is another question. If Biden’s entry is blocked by sexual assault claims, the likely big money beneficiaries are Harris and Klobuchar. While I categorize Harris among the “Insane” for her public policy positions, she is likely to be seen as another Obama, a candidate with one public persona, and a different private persona. If any of the “old white men” (Biden, Delaney, Hickenlooper, or Inslee) gain traction, expect big money to flow their way.  However, as soon as Harris is seen cavorting with big money donors, the progressive small donors will reject her.

Tack to the Left/Right in the Primary, Tack to the Center in the General Election

The ideas a Democrat primary candidate can run as a progressive in the primary and then run as a centrist in the general election, and a Republican primary candidate can run as a conservative in the primary and then a centrist in the general election, are long-proven paths. However, in the era of social media, that path may be obsolete. Part of the reason Hillary lost the general election to Trump is many of Sanders’ supporters refused to support Hillary. Some stayed home, some voted for the Green Party candidate Jill Stein, and some voted for Trump. Don’t forget Stein offered to step aside if Sanders would run as the Green Party candidate.

The first important point to consider is the Green New Deal is not a new concept. It began in 2006 in Europe, and was adopted as a platform position by the Green Party in both their 2012 and 2016 campaigns. The Green New Deal, having been endorsed by many of the prospective 2020 Democrat candidates now must be considered “mainstream policy” for the Democrat party. The same can be said for Medicare for All. Single-Payer health care used to be a policy of the progressive left. It was part of the Green Party's 2008 platform. Now it is fair to say it is also Democrat "mainstream policy". In 2006, after the Iraq War, but before the financial crisis, the progressive left at DailyKos declared themselves to be the "New Mainstream". It took over a decade, but it is fair to say the once fringe positions of the progressive left are increasingly mainstream policy of the Democrat party. With each broad endorsement of a formerly progressive left policy position, the Democrats' Overton Window shifts further left, opening the party up for evolution further left on policies such as "Abolish ICE."

The second important point to consider is it is the activist wing of a party who writes the official party platform. While a candidate does not need to run on the platform specifics, the platform specifics can be used a cudgel to keep candidates true to the party, or by the opposing party to paint the candidate as out of touch.

The third issue is the activist wing of the Democrat party is made up of the progressive left. Those who will volunteer to make phone calls and canvass door to door come from the activist left wing of the party. But even the non-active progressives can have an impact in the era of social media. A Biden or a Kobuchar will not get the same level of support in a general election a Sanders or Warren will. But there is a difference between holding one’s nose to support their candidate and feeling betrayed. Sanders supporters in 2016 felt Clinton and the DNC had wronged them. They would likely feel the same way about any Democrat who endorses the concept of “Medicare for All” and then retreats to anything less than full coverage at no cost to the patient.

That means the pressure on a progressive nominee to run a progressive general election campaign will be strong. However, that opens up erosion of some of the Democrat base to hard-left third party or independent candidates like Ralph Nader in 2000 and Jill Stein in 2016, but instead erosion to more centrist third-party or independent candidates like Howard Schultz. A very progressive nominee, like Sanders, would likely motivate Shultz to go ahead with his campaign. A Biden or Klobuchar nominee would likely cause Shultz to sit 2020 out. This is why I think Bill Weld made a serious error jumping from the Libertarian Party back to the GOP to try to primary Trump. If he does not want Trump to be reelected, primarying Trump is not the way to stop him. Also, a Bill Weld at the top of an arguably centrist third party with 50-state ballot access could have gained significant Democrat votes if the Democrats nominate a very progressive nominee. Instead, the LP is likely to return to sub 1% returns. A Sanders nomination could be another 1972 George McGovern lost cause. Mainstream Democrats might endorse Shultz in hopes he wins at least one state and there is no Electoral College majority, throwing the election to the House of Representatives. This is the same strategy Evan McMullin served to some on the right in 2016. But to those hard-left progressives, represented by the Democratic Socialists of America, the Justice Democrats, and Brand New Congress, anyone who strays from the fold will be seen as misguided, a traitor, or insane. In their insane society, the sane person appears insane.

This is the Democrats’ Dilemma: Nominate a centrist, and end up with another Hillary 2016 problem of lack of core support; nominate a progressive, have them shift to the center, and end up with another Hillary 2016 problem of lack of core support; or nominate a progressive, have them run as a progressive, gain core support, but risk being tarred as an out of touch extremist and invite a third-party or independent centrist run.

Much will come down to the general sanity of the electorate in 2020, as well as the sanity of the individual voter groups. It is fair to say, many saw themselves as Sane in 2016, and saw Trump and his strongest supporters as Insane. Likewise, many of Trump's strongest supporters saw themselves and Trump as the Sane ones, and the GOP establishment and the Democrats each as Insane in their own way. The difference is now the Insane, or the fringe, whichever you choose to call them, have much bigger megaphones than they have had in the past. You may think you are the Sane one, and the voices on Twitter and Facebook are the Insane ones. But they think they are the Sane ones, and you are the Insane one.

Welcome to Harvey Holroyd's world. We are all in 1979 Marin County now.

Humility

I recently saw the new documentary, “Apollo 11”. As the film approached its conclusion there were two scenes that stood out. The first was the last television broadcast from Apollo 11 prior to its reentry. 

But rewind a moment. Neil Armstrong was the coolest of cucumbers. A quiet, introverted man, he barely even smiled in candid photographs. Look at this picture of him. This is Neil Armstrong upon his return from his historic walk on the moon:

Look at the radiance, the glow emanating from him. The weight of a nation, the world, lifted off of his shoulders. This was the first time the man had relaxed in years. What should be elation was mere satisfaction. The man had made history to a level beyond any human being in modern history. The gravity of the moment was much more than 1/6th G.

Keep that in mind as we leap forward two days to that final broadcast. You can see the original video here:

The film really cleaned up the video, but the content comes through well on the YouTube video.

Listen to Mike Collins. List to how me makes his role, as Command Module Pilot, seem small compared to the complexity of the Apollo Command Module. Collins, as a Command Module Pilot, knew every inch of the Apollo Command and Service Modules—none of it which he had any role in designing or building:

“All of it made possible, by the blood, sweat, and tears of a number of people. The American workman, who put these pieces of machinery together in the factory.”

Collins goes on to thank many others including all of the people in Mission Control.

A side note. As I continue to reflect on Apollo (which I have done for 47 odd years), I have come to respect the Command Module Pilots immensely. Rendezvous and docking is one of the most difficult spacecraft maneuvers, and it was critical to the Lunar Orbit Rendezvous technique of Apollo. The CM pilots were the unsung heroes of Apollo.

Buzz Aldrin speaks next, with his undeniably way of seeing the profoundness of larger picture:

“We have come to the conclusion that this has been far more than three men, on a voyage to the moon. More still, than the efforts of a government and industry team. More even than the efforts of one nation. We feel, this stands as a symbol, of the insatiable curiosity of all mankind to explore the unknown.”

Aldrin at the time was deeply religious, and celebrated Holy Communion, complete with wine and wafer, on the moon after the landing.

Finally Neil speaks. He looks different now. He has shaved, his hair looks well combed even in Zero G. The euphoria is gone now, and he is almost somber in his reflection. But it does not change the fact he is not headed for splashdown, he is headed for the history books.

Neil knows he is standing on the shoulders of giants. Galileo, Newton. Then he thanks the American people, not for paying for this whole thing, but for “their will”. Neil specifically calls out the spacesuit manufacturer. If you know the story of the Apollo EVA spacesuit, you know it was sewn by seamstresses from the same company that made Playtex girdles and bras.

In the film, the filmmakers interpose the broadcast with pictures of the many workers who were associated with Apollo. It damn near brought me to tears.

But they didn’t stop there. When the Apollo 11 crew was finally released from quarantine, they left the Airstream trailer to applauding crowds of NASA workers. The film catches Neil stopping, and taking a step back to a microphone. He thanks those workers for all they did. Neil had to celebrate his 39th birthday as the “boy in the bubble”, but he stopped to thank those NASA folks for keeping him prisoner. That is just outstanding leadership. And a key component to outstanding leadership is humility.

Neil Armstrong, Michael Collins, and Buzz Armstrong might be the most humble people in American history. They had every right to not be humble, but they were, and have been.

Which brings me to my larger point. Humility used to be a core value of being a human being in modern society. Bragging, or being audacious was seen as bad behavior. At one time, young people knew and understood their place: they may have youthful ambition but they lacked experience and wisdom so they deferred to their elders. This was an important component of the mentor/apprentice relationship which defined work for centuries. This deference to humility, this idea the young or the new are in an apprentice role, a probationary position, has changed in modern society. Instead the young and the new demand and are expected to be full members of an organization, complete with the right their opinions and ideas have equal weight to those from more experienced members. In some case the young and the new are granted veto authority. This philosophy now pervades politics.

It is interesting to watch an amazing IMAX documentary, where people who literally wrote their names into the history of the human race show incredible humility, and in the same week watch freshman members of Congress act with zero humility. Congress , like most legislative and parliamentary systems, operates under the ultimate seniority system. If you have ever known anyone who has served on a city council to U.S. Senate you understand this. Senator  Ben Sasse of Nebraska famously waited 10 months before he even made a speech to the Senate. To watch these freshman members of Congress act with arrogance was simply, disturbing. One was born in 1976, one in 1981, and one in 1989. One is a “Xennial”, the other two are Millennials. Unlike those born before them, they do not have respect for authority or elders. They do not have respect for experience. They do not have respect for wisdom. They do not have humility in any form whatsoever--in a role where humility should be paramount.

Humility is like empathy. It is necessary. A person devoid of empathy has a term to describe them: sociopath. A person devoid of humility has a term to describe them: narcissist.

This is bad. There can be no good that comes from someone devoid of humility.

But instead, this lack of humility is being championed by some.

Humility used to be “table stakes” of polite society. No more. This should be a worry. This should be a concern. This should be frightening.

If anyone earned the right to be braggadocios, it was the crew of Apollo 11. There is a lesson there. We all can all learn from it.

Appeal to Modernity

I read a great article by Michael Shellenberger at Forbes, later posted to Quillette, on the subject of renewable energy. In it Shellenberger raises the "Appeal to Nature Fallacy".

I would actually go further than Shellenberger and say the trust in wind and solar energy is a form of neo-paganism, Sun worship, the return of "Ra", as well as wind worship.

That got met thinking. We see the Appeal to Nature fallacy again and again. Distrust of GMOs, to include insane opposition to Golden Rice. Better third world kids go blind than give in to GMOs.

"Organics", to the insane point of organic bananas and oranges, fruits with such thick skins "organic" farming techniques provide no benefit, and despite numerous e coli outbreaks from "organic" bagged salads.

Opposition to the "industrial scale farming", the basis of the Green Revolution, which rendered Paul Ehrlich's fears of mass starvation moot.

Insane anti-vaccination people. Most anti-vaxxers are white, highly educated, high-income, upper middle class individuals. The anti-vax movement is an Appeal to Nature Fallacy based movement. Many of the same people seek homeopathic treatments--faith healing for the faithless.

And then there is this: "Jaguar attacks woman trying to take selfie at zoo". This is what happens when the Appeal to Nature Fallacy conflates "nature" and "natural" with "benign".

We see it with the opposition to fish farming. I recall seeing a placard at a company cafeteria claiming they only served wild caught salmon, and extolling every negative issue with farmed salmon. Then last month in Costco's monthly magazine there was an excellent article on their farmed salmon. This, along with Jordan Peterson's concern about overfishing, changed my mind. I now fully support farmed fishing and will choose farm raised fish.

With all of the concern about bovine flatulence impacting the environment, being a pescetarian might be a good compromise for those who do not want to go lacto ovo vegetarian or full scale vegan.

Those embracing the Appeal to Nature Fallacy used to be a fringe group. Organics were the domain of "health food stores" and hippies in the 1970s. Tiny, convenience store sized health food stores gave way to supermarket sized organic and "natural" foods stores starting in the 1980s. And in 1989 the Alar Apple Scare occurred. Kids eat apples. You are putting your kids in danger letting them eat apples.

Peak Appeal to Nature Fallacy occurred with the Obamas, with Barack lamenting the price of arugula at Whole Foods and Michelle lamenting the struggle to feed her daughters organic food. That latter comment represents an inflection point, where organics went from being considered a luxury product to being considered a child safety product, like a smoke detector, fire-retardant pajamas,  or a car seat. Non-organic food is dangerous. The conclusion is if you are not feeding your children only organic fruits and vegetables, you are harming them. You may as well let them play with gasoline and matches.

The same Appeal to Nature fallacy caused a concerted effort to demonize the timber industry starting about 20 years ago. I am not talking about eco-terrorism like "Earth First!". I am talking about elementary and secondary school curricula that suggested cutting a tree down was immoral. Nowhere was a mature fallen tree rotting in the woods and releasing its carbon dioxide back into the atmosphere compared to the carbon dioxide sequestration board lumber provides when used in construction and furniture. The truth is, fast-growing southern loblolly pines are the single best natural carbon dioxide sink available, and pressure-treated pine is the lowest cost lumber available. The Appeal to Nature says "love nature, love the tree", and associates using the tree as abuse. The truth is farming trees, harvesting them, and turning them into wood products sequesters carbon dioxide and helps the Earth.

Which brings us back to the original point: Shellenberger's advocacy of nuclear power. In the 1950s, modernity was good. We all wanted modernity. We wanted "Atomic Energy". We wanted TV dinners. We wanted fortified breakfast cereal which looks nothing like the source grain it was derived from. We wanted plastics. Walt Disney pushed a Tomorrowland with a TWA Moonliner. His original concept of EPCOT was an appeal to modernity. Werner von Braun along with artist Chesley Bonestell published amazing visions in Colliers. In the late 1970s and early 1980s we wanted microwave ovens, Mister Coffee machines, and VCRs.

Then at some point it all changed. "Steel cut" oatmeal was somehow better than ... oatmeal. Really? How is better? Steel? These used to be called "Irish oats", but somehow "steel-cut" sounds rougher, more austere, like they were hand chopped with an axe. Never mind there is no nutritional difference what so ever between steel-cut and rolled oats. The next thing you will tell me is steel-cut oats have electrolytes.

Yes, Chernobyl was a disaster, but Chernobyl was 1940s technology which failed in 1986. It was not 1986 technology which failed in 1986. That the Soviet Union in the early 1970s built a power plant based on "ancient" technology does not condemn then current state of the art. How about this: The Soviets were pathetic and backwards and do not rate to be considered the standard for deploying nuclear power.

I simply do not understand how we can go forward with a simultaneous Appeal to Nature, an appeal to the past, and a future with everything from AI to artificial wombs to 3D printed organs. It has to collide at some point, or worse, people will move forward with a duality of truth.

So here is where I am at. As a child of the 60s, as an early GenX person, I am re-dedicating myself to modernity. I am doubling down on modernity. I may hate white bread, but I will feed my kids fortified white bread. I will let my kids eat artificially colored foods, and weird breakfast cereals. I will eat farmed fish and industrial farmed vegetables, even those grown with aid of (gasp!) artificial fertilizers and pesticides. I will even eat GMOs. I will leverage modern medicine when I am sick. I will support nuclear power, even in my own backyard. I will vaccinate my kids. I will harvest my timber farm and plant more.

Instead of an Appeal to Nature, I suggest like Walt Disney and Werner von Braun, we need an Appeal to Modernity. I want for my kids the same belief that anything was possible ... no ... everything was possible, that I grew up with.

This is not a solution.

There are two U.S. industries who's products have increased in cost at a rate far outpacing standard inflation: Healthcare and Higher Education.

Both of these are information based industries. The cost of reproducing and transmitting information has dropped dramatically over the last few decades. Both of these industries should be seeing dramatic efficiency improvements from the Information Age, but they have not.

At the same time, the demand for both industries has increased dramatically. The Bachelor's degree is now considered the entry point for a reasonable job. An aging population has increased the demand for healthcare, as has the technological advancements of healthcare--better detection and improved treatments means more opportunities for treatment.

The final problem is the "Third-Party Payer" issue which pervades both of these industries. Insurance is the payer for healthcare, and student loans are the payer for higher education.

The inability of people to cope with such increasing costs had led many to look at just giving up, and demanding the government pay for it. Medicare for All/Single-Payer is offered as the solution to high healthcare prices. Free college and student loan forgiveness is offered as the solution to high higher education prices.

The problem is, neither of these are solutions to the high cost of the product. If we are going to depend on government to solve the the high cost problem, we need a solution that focuses on cost.

We need to identify the source of high costs in these industries.

We need to identify where entrenched organizations are preventing competition which could lower costs.

We need to actively invest in research which holds the potential for an order of magnitude decrease in specific health care areas (i.e., AI). Disruption of the status-quo must be the goal.

We need to actively subsidize higher education inversely to the cost of the product: more grants for students taking low-cost distance learning living at home, fewer grants for students taking high-cost courses at expensive campuses. Disruption of the status-quo must be the goal.

We need a Secretary of Health and Human Services who is a tyrant to all of the embedded interests in the health care industry.

We need a Secretary of Education who is a tyrant to all do the embedded interests in the higher education industry.

An Atomic New Deal

There is plenty of debate between those who believe Solar and Wind alone can replace not only all carbon dioxide emitting electrical power generating sources (Coal, Natural Gas, Biomass, etc.), but also existing nuclear power capacity.

The "Green New Deal" proposes to upgrade or replace every building and home to improve its energy efficiency. Part of this includes replacing fossil fuel based heating and cooking appliances with electric models, but obviously a big part also is improving insulation, etc.

Likewise, many who have proposed "Green" programs promote densification as part of the solution. Move people to the urban center. End suburbs and exurbs. After all, a 2,000 square foot high rise apartment can be insulated, heated, and cooled at a much lower energy cost than a stand-alone 2,000 square foot detached single-family house. And if people are moved into the urban center, they have easy access to energy efficient mass transit.

There is a common assumption across these proposals: Scarcity. They assume zero CO2 energy is scarce, and attempt to manage scarcity by managing demand.

However, what if we took a different approach? What if instead of assuming scarcity and managing demand, we assumed abundance and manged supply?

We know what happens when energy is abundant, as we saw that during the post-WWII era. There was an initial recession caused by the WWII demobilization, but then the post-war boom really took off. This basically continued until the 1970s Energy Crisis which started in 1973. The quarter-century period from 1948 to 1973 was when the family automobile, the suburban single family home, and air travel replacing train travel occurred. Abundant energy also powered the agricultural Green Revolution, which is a by-product of industrial scale agriculture. Something that took a quarter of a century to create, and then has lasted despite energy crises and multiple recessions will be very hard to unwind. The desire to move everyone towards plant-based diets to reduce the impact of animal agriculture on the environment is likely impossible without industrial scale plant agriculture.

The decade which followed the 1973 Energy Crisis saw fundamental changes to reduce demand. Smaller cars became the norm. The 55 mph speed limit was introduced. Home insulation became a serious consideration. People turned down thermostats in the winter, and turned them up in the summer. People wore heavier clothes indoors in the winter, and fans became popular again, even in air conditioned buildings.

There are experts in transportation who looking at the looming convergence of electric powered passenger vehicles and self-driving autonomous passenger vehicles and see a revolution in local transportation. "An 80% reduction in required vehicles and a corresponding 80% reduction in traffic." Think about that. If rush hour traffic drops by 80%, if owning a private vehicle is no longer the cost of entry for living in the suburbs, the real and opportunity costs of living in the suburbs drops dramatically. So the need for densification dies with it.

Improvements to home efficiency and transition to all-electric appliances have potential. But some improvements are easier than others. A drop-in range, a direct water heater replacement, these are simple. Replacing a furnace with a heat pump in moderate climates is straightforward. But in colder climates, there will be a heavy dependence on auxiliary heating. Electric heating requires significant power. So mass electrification will require abundant, inexpensive, electric power. More and cheaper electricity makes all of this easier. Scarce electricity makes all of this harder. Adding attic insulation and updating weather stripping is easy. Installing new windows is harder. Improving wall insulation or vaulted ceiling insulation in existing homes is almost impossible. During housing growth bubbles, many cheaply designed and constructed houses were built. There is a limit to improving insulation of an existing home.

Bill Gates' push for Traveling Wave Reactors (TWRs) with his startup TerraPower is worth considering. TWRs would burn available Uranium-238 and existing nuclear waste. Other advanced reactor concepts, such as Molten Salt Reactor (MSRs) and other Generation IV Reactor designs are also worth considering. The point is, we could produce enough electricity to cover the demand of a fully electrified society (all-electric homes, even in cold climates, electric cars, electric trucks, etc.) with the demand of things like electric heating and the hard to overcome lack of energy efficiency of older homes.

To me, this is a no-brainer. If the goal is to rid the grid of CO2 producing power plants, and to grow the grid to support a massive increase in electrification, it will take much more than Solar and Wind. Solar and Wind have a place. Solar can be decentralized, and works great as a summer augmenting generation source. Wind makes the most sense in an off-shore implementation. But it is not enough.

You have to ask the question: Is the Green New Deal designed to solve our future energy requirements, or is it to herd us into dense cities where Carter-Era savings programs manage demand down to meet a lower output?

An abundant energy program combined with autonomous, electric vehicles and improved telecommunications technology as the potential to lead to a second suburban revolution, with kids playing in backyard tree houses, neighborhood playgrounds, and cul de sacs, with abundant energy allowing easy, high definition teleconferencing from home offices. It even could allow knowledge workers to live and work in rural areas, with all of the benefits of space and nature.

Autonomous electric tractors could tend industrial scale farms, and autonomous electric semi-trucks could deliver produce (including plant-based artificial "meat" indistinguishable from beef) from the industrial farms to supermarkets.

Improved telecommunications and zero emissions transportation could make "place" much less relevant in the future.

Are these bad things? Are these things to be avoided?

No. they are not.

Bring on the Atomic New Deal.

The Connundrum Continued

A thought came to mind on my previous post, and it is this: Does a stake need to be put in the ground?

Was Ross Perot's 1992 run a "stake in the ground" against NAFTA and globalism which only bore it fruit in 2016 after more people came to his views?

Would a third-party or independent candidate with traditional, centrist, mainstream views of economic classical liberalism, realism in foreign policy, and a balanced view on immigration put a "stake in the ground" against a Democratic nominee embracing Democratic Socialist economic policies, non-interventionist foreign policies, and amnesty for illegal immigrants, and a GOP incumbent embracing protectionist economic policies, non-interventionist foreign policies, and restrictionist immigration policies?

Such a candidate may be destined to lose in 2020, and may swing the election in a way that is undesirable for the populist Democratic Socialist left or the populist paleoconservative right, but would stand as a stark contrast to both the populist  Democratic Socialist left and populist paleoconservative right. That candidate would likely be burned by the objection of one side's extremists, but the positions they espouse could be a starting point for more mainstream 2024 or 2028 candidates from either or both parties.

The risk is, if there is no centrist "stake in the ground", there may be no rallying point for those future mainstream candidates. How could a mainstream Republican run against populist paleoconservatism without being able to point to the votes lost by the paleoconservative populists to the mainstream centrist independent candidate? How could a mainstream Democrat run against populist Democratic Socialisism without being able to point to the votes lost by the Democratic Socialist populists to the mainstream centrist independent candidate?

The zero-sum politics of both sides is a problem, because while it seeks to preserve the next election, it may poison more elections further in the future.

This "stake in the ground" concept is why I supported the Libertarian Party ticket in 2016. I thought Trump would lose and the GOP would be left picking up the pieces. But I also thought the LP ticket would get more than the 3.3% it received. If a major candidate loses, and there is a minor candidate who draws from only one side and gets about 8% of the vote, they represent about 15% of that side, which is fairly significant. The candidate may be seen as a spoiler, but chances are their key supporters and staffers will emerge as power brokers, and a similar candidate will emerge under the official party banner.

The last issue is who would emerge as the "similar candidate" on each side in the future if a centrist mainstream independent spoils the 2020 election? There are a number of potential candidates on the GOP side, but it is less clear on the Democrat side.

The "Third Party" Conundrum

The United States has historically had two large coalition parties. On one side were the Democratic-Republicans which later became the Democrats. On the other side there were the Federalists, National Republicans, Whigs, and Republicans. During all of the turmoil as the parties realigned, they always realigned as two, large, coalition parties.

In the lead up to the Civil War, the Democrats split, which led to the election of Abraham Lincoln and the rise of the Republican party. This split reemerged in the middle of the the 20th Century. However, neither split was permanent, and the spun off third parties never succeeded.

This political centripetal force which pulls candidates into one of only two coalition parties seems to be a component of the U.S. political system. As a result, third parties in the U.S. are not coalition parties, but small, single-issue or ideological purist parties. And as ideological purist parties they are subject to political centrifugal force driving them apart. This has been seen with the many iterations of socialist parties throughout the 20th Century, and also led to the effective dissolution of the Reform Party after Ross Perot left an active role.

Looking at the history of presidential third-party and independent campaigns which gained over 1% of the popular vote, one can see low single digit success of the Socialist Party in the early 1900s (peaking at 6% in 1912) and 1% to 2% for the Prohibition Party in the same era. There seems to be about a 5% third party vote during first 20 years of the 20th Century, with the exception of the 1912 election.

The largest third-party and independent successes were candidates who had split from their main party. Theodore Roosevelt's Progressive "Bull Moose" party run outperformed the Republicans in 1912, with 27.4% of the popular vote and 88 electoral votes, the largest third-party performance ever. Twelve years later, Robert La Follette, who also split from the Republicans and ran under a second iteration of the Progressive Party, won 16.6% of the popular vote and his home state of Minnesota's 13 electoral votes. The 1948 election featured two former Democrats who split from their party: Strom Thurmond with his "Dixiecrat" segregationist party and Henry Wallace who ran on the 1948 version of the Progressive Party. Each got 2.4% of the popular vote, and Thurmond won 39 electoral votes. In 1968, George Wallace split from the Democrats with his American Independent Party, winning 13.5% of the popular vote and 46 electoral votes. This would be the last time a third-party candidate won any electoral votes. In 1980, John Anderson split from the GOP for an independent run, getting 6.6% of the popular vote. In the same election, the Libertarian Party got 1.1% of the popular vote.

The 1992 election featured an independent run by non-politician Ross Perot, who got 18.9% of the popular vote, but was unable to get any electoral votes. In 1996 he ran again under his Reform Party banner and got 8.4% of the popular vote. The fact Perot was not a politician who split from a party meant he drew from both parties voter bases. This prevented him from getting enough critical mass to get any electoral votes. Perot's politics could best be described as populist and centrist. While he did have some social conservative leanings, it was not enough to either gain critical mass from the Republican base, or to turn off the Democrat base. His populist views on trade and taxation likely gained support from Midwest Democrat voters. The Perot/Reform Party of 1992-1996 was probably the biggest opportunity for a third coalition party to form.

Since Ross Perot's runs, the largest third-party results were Ralph Nader's Green Party run in 2000, which got 2.7% of the popular vote, and likely swung the electoral college to Bush, and the Libertarian Party's 3.3% of the popular vote in 2016. Also in 2016, the Green Party got 1.1% of the popular vote.

There are dynamics now which could cause change. Under Trump, the GOP has become a populist, paleoconservative party, very similar ideologically to Pat Buchannon's 1992 GOP primary challenge to George H.W. Bush, and his 2000 Reform Party run. There is no doubt the GOP is suffering an identity crisis. At the same time, the Democrat Party has been in turmoil between its neoliberal interventionist wing and the emerging Democratic Socialists driven by Bernie Sander's primary run in 2016, and Alexandria Ocasio-Cortez's insurgent House primary run and ultimate election. This has caused a trust split between the two groups.

Some of Trump's positions align nearly identically with Bernie Sanders. Some polls suggested 5% of the general election vote for Trump represented former Bernie Sanders supporters. This would translate to about 10% of the Democrat primary voters. Add to that many mainstream Republicans supported Hillary Clinton, who they felt was generally aligned with their views on economics and foreign policy.

A political realignment may be before us. But as both parties are coalition parties, and these coalitions are comprised of components, what becomes of the components neither major party wants?

If a populist-paleoconservative GOP is non-interventionist, and populist-democratic-socialist Democrat Party is non-interventionist, does that open the opportunity for a third party to pick up the muscular, interventionist foreign policy banner? If a populist-paleoconservative GOP favors more restricted trade, and populist-democratic-socialist Democrat Party favors more restricted trade, does that open the opportunity for a third party to pick up the free trade banner? If a populist-paleoconservative GOP favors more business regulation, and populist-democratic-socialist Democrat Party favors more business regulation, does that open the opportunity for a third party to pick up the low regulation banner?

While there are a number of areas where the Libertarian Party could gain, the issue of interventionism would likely be a show-stopper for traditional Republicans. At the same time, a majority of the population is exhausted by three decades of interventionism, and a party holding the banner of Realpolitik may gain some interest. Would a moderate middle on trade and immigration be a winning platform, or is immigration now a "third rail" issue?

My personal opinion is our current tax structure at the federal, state, and municipal levels is immoral. Too many politicians want to tinker with the edges to "fix" our economic ills--a tax cut here, a tax increase there. Instead serious foundational structural change will be required, however only a handful of politicians have proposed this: Herman Cain, Rand Paul, Ted Cruz, Mike Lee, and Marco Rubio. Only a few politicians have spoken to how emerging technology is going to radically reshape our future over the next two decades: Ben Sasse and Marco Rubio. You might notice all of these intellectuals or policy wonks I mention are Republicans. There are a small handful of Democrats as well. But futurism, innovation, and business acumen are not qualifiers for political office for Democrats of late. Also, some of these Republicans have polar opposite views on some policies.

My conclusion is the only way a third party will "save us" is if one of the two major parties has a major split, on par with the 1912 GOP/Bull Moose split or the 1948 and 1968 Democrat/Southern Democrat split. Note in both cases, the splits were short lived. A split between the neoliberal and democratic socialist wings of the Democrat party seems possible. Those fault lines are fairly clear. On the GOP side, would the split be between the neoliberals and the economic populists, or between the interventionists and the non-interventionists? Those fault lines are not as clear.

Buckle your seat belts. It is going to be a wild ride over the next 14 years.

What's Missing?

Over the course of 2018 several times I have been surprised by what I would call a lack of what I would call wisdom on the part of many middle-aged, highly educated people.

My definition of wisdom is the ability to synthesize or infer new knowledge with a high degree of probability/accuracy, based on a combination of general intelligence, education, knowledge, and experience.

What tends to happen with people who have a low ability to synthesize or infer new knowledge is they over-rely on education, or the views of highly educated, highly credentialed, highly positioned, high authority, or well known people. These people have no "B.S. Detector", and no "B.S. Flags" to throw. They are often accused of "living in a bubble".

Another related factor is a lack of breadth of vision, having blinders, or a lack of intellectual curiosity. I have seen people who should have a broad basis of life experiences who apparently have ignored many of them. They can't see that 2+2=4, not because they can't add, but because they so not see one of the components of the equation. Certainly political polarization, news/media polarization, and self-curated news feeds from social media exacerbate this problem.

This article by Jonah Goldberg explains the origins of "neoconservatism", and that it originated with former New Deal liberals who became dissatisfied with the Welfare State when they saw the unintended consequences it caused. In other words, these original "neocons" had wisdom (the ability to synthesize or infer new knowledge), and a breadth of vision (seeing the outcomes, not just the intent of the welfare programs), and as a result, were able to draw net-new conclusions of the efficacy of these programs.

This is a good example of a bubble being burst, or of blinders being ripped off:

At the 16 minutes, 38 seconds point, comedian Jeff Foxworthy explains meeting a 21 year old homeless man. Foxworthy, originally seeing a capable 21 year old thinks the young man should just "get a job", and go on his way. Then Foxworthy learned how the man became homeless as a result of drug abuse, and how the man became a drug abuser. The man's mother, brother, and father all committed suicide, and the man said he "got tired of hurting, and I just started getting high." To which Foxworthy comments: "And I'm looking at this kid and I'm thinking, I would have got high too."

In other words, before this event, Foxworthy saw the first "2" in the "2+2=4" equation (homelessness), but never saw the other "2" (drug abuse), and certainly not the other components of the equation (multiple family member loss). Granted, much of this is hard to see, so this is an extreme case.

But there are many times people don't notice things, don't pick up on things, or are just unware of facts.

The first example I saw in 2018 was a comment about the perceived need/requirement for a college degree. A friend posted on Facebook an article about some educational alternatives to traditional 4-year college, and a raft of comments ensued. Someone posted how it was impossible to get a job without a bachelor's degree, which was the antithesis of the original posted article. A debate ensued about people without degrees who had done well, and there were responses these people without 4-year degrees were the rare exception, and most people without 4-year degrees are working minimum wage service jobs. To which someone posted actual data showing only 39.4% of current working Americans have a 4-year degree or greater. The commenter had to pick their jaw up off of the floor--they had no idea. Apparently they did not have the wisdom to infer how many jobs there were out there that did not require a 4-year college degree (auto mechanic, electrician, plumber, HVAC technician, etc.), despite the fact they probably got their car serviced, had services done on their house by electricians, plumbers, HVAC technicians, etc. They probably had such blinders on they did not know people who were reliably middle class who did not have a 4-year degree, such as sales people, computer administrators, etc.

The second example were responses to a recent article about a 25 year old entrepreneur who managed his money very well. As many tech industry 20-somethings do today, he and four others rented a large house and split the rent, instead of individually renting apartments. To me, this was not unusual, because I had read articles about people who work for Amazon and Microsoft in the Seattle area doing this. Housing costs in Seattle are high, and it is much cheaper for four or five people to share a rental house, than it is for each to rent their own apartment. It is even cheaper than two people sharing a two-bedroom apartment. I also know people who do this in Metro Atlanta because they cannot afford to rent an apartment. It is fairly common. But apparently it is completely alien to many, who assume the only available housing option for 20-somethign with a 4-year college degree is a one-bedroom apartment. What is even more crazy is many of those commenting were likely in their mid-40s to mid-50s, and either were likely in a position to have considered sharing a two-bedroom apartment with a roommate, or were likely to have known someone who shared a two-bedroom apartment with a roommate.

Granted, the trend of two 20-somethings sharing a two-bedroom apartment was a 1980s thing. My college educated brother shared a two-bedroom apartment with a mechanical engineer who was a coworker when both were in their 20s, until the engineer got engaged. It was normal. It was in the booming 1990s economy when every college educated 20-something started getting their own private apartment.

I once wrote if Mike Judge's "Office Space" had been made in 1989 rather than 1999, instead of being Peter Gibbons next door neighbor, Lawrence would have been Peter’s roommate. Instead of both Peter and Lawrence each having their own, individual, one-bedroom apartments, they would have likely shared one two-bedroom apartment.

But still. Did these people not know somebody? Did they know people in high school who did not go to college, or did not get lucrative jobs out of college? Do they have current friends who have kids who maybe share an apartment or a house? Did they have a black-sheep cousin who is a blue-collar type? They probably did, but they have blinders on. They live in a bubble. Chances are, these are people who bought the home they are in by the debt-to-income ratio to what the mortgage lender said they would lend them. Or they are the empty nesters who if they relocate to a less expensive city buy a 6-bedroom house because they can roll the equity of their old house into the new house and take out a mortgage for the rest, based on the size of the loan the mortgage agent said "they could afford", despite the fact they could have bought a nice condo or townhome which would meet their needs and which they could have owned free and clear. These are probably people who lease rather than buy their automobiles. They are overconfident in their job security. And they probably are not saving nearly enough for retirement, but have every intention of retiring at age 62.

These people are going to get absolutely blind-sided by the wave of technology based disruption coming over the next dozen years. They are trusting "authorities", celebrities, and their own small circle of "friends". They are dismissing contrarians as cranks.

I once said I probably would rather be very poor, than very rich, because I know how to be very poor, but I have no idea how to be very rich. Many of the people I knew in high school came from lower socio-economic backgrounds, most of the people I knew in college were middle class at best. When the 2008 mortgage collapse happened, I remember talking with people from my generation in my military reserve unit. The prospect of another Great Depression was real, with possibility of many of use being thrown into poverty. In that discussion, we talked about who had grown up at some point in our lives, without certain things, such as no central air conditioning (all of us), no central heat (several of us), no cable television (all of us), no color TV (all of us). Sure, part of that was age. We were all born in the late 1960s. But much of it had to do with growing up in lower middle class or poor environments. And we all knew we would survive the looming economic armageddon, because we knew how to be poor.

Sidebar: I remember in college sitting on the stoop of my mobile home because it was so hot in that trailer in the afternoon when I got home from class, and I could not afford to run the one window unit air conditioner.

I really think everyone should experiment in being poor for a while. See how low you can get your electric usage one summer month. See how low you can get your grocery bill one month. Try living with your thermostat set for 65 degrees for the whole month of January. Think of it like a fire drill. You might lose your blinders. You might become wiser. You might find what is missing.