I was disappointed but not particularly surprised by the reaction of the editors of the Wall Street Journal to President Trump’s attack on Venezuela and removal of its president:

Mr. Trump said Mr. Maduro and his wife were headed to New York, where they will face trial for narco-trafficking. But Mr. Maduro’s damage goes well beyond the drug trade. His socialist and authoritarian policies burdened the region with millions of refugees. He flooded the U.S. with migrants in an effort to sow political discord.

The dictator was also part of the axis of U.S. adversaries that includes Russia, China, Cuba and Iran. All were helping to keep Mr. Maduro in power. His capture is a demonstration of Mr. Trump’s declaration to keep America’s enemies from spreading chaos in the Western Hemisphere. It’s the “Trump corollary” to the Monroe Doctrine.

All of this makes the military action justified, despite cries from the left that it is illegal under international law.

I have no idea how they arrive at that conclusion. They certainly can’t mean “legally justified”. Had President Biden acted immediately to remove Maduro there would have been a figleaf of legality but under the circumstances there is none. That Maduro is vile is not a legal justification.

I was similarly disappointed by the editors’ of the Washington Post’s phlegmatic reaction:

In my opinion what should happen next is that President Trump should be impeached for abuse of power and turned over to the International Criminal Court. It would be an excellent opportunity for the Congress to assume its responsibilities. I am under no illusions. That will not happen.

What I think will happen is clumsy attempts at ruling Venezuela eventually followed by an even clumsier turnover of power to a Venezuelan who won’t last long but will be replaced by another Bolivarian dictator. Concurrently with that American oil companies will do their level best to loot Venezuela of its oil. All of the foregoing will further diminish the U. S.’s repute in the Western Hemisphere and probably the world.

So, what will happen next?

In the past I have sketched an outline of the structure of the present Democratic Party. In this post I plan to show why my outline is demonstrably correct and its implications.

The three factions I have identified are the technocrats, the elected officials, bureaucrats, and consultants who see politics as a career and/or a path to riches and power; the clients, those who want to receive benefits from government; and the reformers, those who want to accomplish specific goals that can only be accomplished using the lever of government.

That’s more than just an opinion. It’s a testable hypothesis. The following would confirm my hypothesis. For the technocrat faction if

1. There is a high rotation among government, consulting, lobbying, think tanks, the media, and back to government
2. Designed policies tend to increase administrative complexity, requiring credentialed intermediaries and
3. There is an emphasis on “process virtue”, e.g. “expert-led”, “evidence-based”, “stakeholder engagement”, over measurable outcomes

If senior Democratic officials disproportionately end their careers wealthier than when they entered without comparable private-sector innovation or risk-taking, it supports the technocrat hypothesis.

On the other hand if a significant number of leaders voluntarily leave power without monetizing access, return to private sector roles unrelated to influence, or advocate reforms that shrink their own institutional relevance or discretion, it would contradict the hypothesis.

For the client faction if

1. Programs are designed to be permanent rather than transitional
2. Rhetoric frames benefits as rights rather than temporary assistance
3. There is a strong resistance against means testing, program consolidation, or exit ramps tied to economic improvement

it would confirm the existence of the faction while if there were a large-scale willingness to eliminate or sharply reduce programs once they had succeeded, tie benefits explicitly to time limits, skills acquisition, or labor market absorption it would contradict the hypothesis.

For the reformer faction it would confirm my hypothesis if

1. There is a focus on reforms that require centralized enforcement, produce symbolic wins even when outcomes are ambiguous, and persist even after there is evidence of limited effectiveness
2. There is a willingness to redefine success metrics midstream and
3. Language shifts rather than abandoning initiatives

while frequent abandonment of high-profile reforms once evidence turns negative or a preference for decentralized, voluntary, or market-based mechanisms when they outperform bureaucratic ones contraindicate it.

Based on the above my conclusion is that this structure has already been confirmed as real as rigorously as can be expected of anything in human affairs.

The implication of this analysis is that these factions are mutually reinforcing. The technocrats design programs, clients depend on them, and reformers justify their expansion. It predicts that preserving power takes precedence over resolving problems.

This explanation is not partisan or ideological. It is institutional analysis. It considers career trajectories, program lifecycle behavior, and the willingness to declare problems as solved. The bottom line is that Democratic Party behavior is better explained by incentives and coalition maintenance than by stated moral or policy goals.

In the future I plan to post a similar analysis of the factions that comprise the Republican Party, a comparison between the two, and why the two together bode badly for our future.

I wanted to call your attention to the remarks of Venezuelan Quico Toro at the Persuasion Substack:

Maduro is gone. It’s tempting to think that, without him, the regime will implode. But Maduro’s was never the kind of personalist system that depends on a single leader. It was always more of a team effort, with a constellation of influential figures like Rodríguez and Cabello teaming up with Cuban intelligence to keep dissent at bay. In other words, the kind of regime that could very well survive decapitation. And if it does, Venezuelans will get the worst of it.

For three decades, the most trustworthy principle for interpreting Venezuelan affairs has been a simple heuristic: whatever outcome makes Venezuelans’ lives most miserable is always to be treated as the odds-on-favorite. If, as Secretary of State Marco Rubio apparently told Senator Mike Lee, the United States really isn’t planning any follow-on actions against the rump regime, then for Venezuelans on the ground nothing may change. Things could get even worse: you can easily imagine a wounded and humiliated Chavista successor ratcheting up state repression to rebuild the regime’s now tattered aura of invincibility.

Maduro’s abduction could easily become an all-purpose excuse to crack down on any and every sign of dissent: any expression of dissatisfaction will surely be used as evidence of connivance with the American enemy. Trump’s stunning one-day win could be remembered for heralding an even darker stage in Venezuela’s path towards totalitarianism.

At the same time, as the post-9/11 era showed, if the United States did attempt to install a democratic government, that too could go wrong in a million ways. This is not to mention the fact that the operation was carried out illegally, with no Congressional authorization, and that the precedent of superpowers deciding which foreign leaders to capture may not always lead to the downfall of people as evil as Maduro.

All through this latest round of American pressure, the specter of half-measures has loomed large over Venezuela’s future. The Bolivarian regime is always at its most vicious when it feels most threatened, and, right now, it must feel enormously threatened. Time and again, when the regime feels threatened, it’s ordinary Venezuelans who pay the price.

or, in other words, what I’ve been saying.

This morning I woke to claims that the U. S. had invaded Venezuela, captured its president, and flown him out of the country.

I don’t know much more about it. The primary source seems to be a Truth Social post from President Trump. Here is its text:

The United States of America has successfully carried out a large scale strike against Venezuela and its leader, President Nicolas Maduro, who has been, along with his wife, captured and flown out of the Country. This operation was done in conjunction with U.S. Law Enforcement. Details to follow. There will be a News Conference today at 11 A.M., at Mar-a-Lago. Thank you for your attention to this matter! President DONALD J. TRUMP

The statement is notable both for its scale and for the absence of any corroboration.

The only source for it is, apparently, President Trump’s post. Assuming it’s true, I oppose such extrajudicial action. It would be illegal under international law, immoral, and a strategic mistake, substituting spectacle for policy.

I doubt it will solve much, because Venezuela’s collapse is institutional and social, not personal. Unless it is President Trump’s intention to rule Venezuela from Mar-a-Lago, the problem there is not a single individual or even a regime.

In that regard it is similar to Burma, Iran, Russia, and China or any other state whose problems are embedded in durable institutions rather than removable leaders. We cannot solve our foreign policy problems with military force. We need to learn, even uncomfortably, to live with them without pretending every problem has a kinetic solution.

Update

The Associated Press has confirmed the strikes with photographs taken by onsite photographers. Meanwhile, although I was getting a haircut when it took place, President Trump has given a press conference in which he repeated the statements from his Truth Social post above, said the U. S. would “run” Venezuela until a peaceful transition could take place, and that U. S. oil companies would work to restore Venezuela’s oil infrastructure.

I wonder if he’s aware of how bad our track record on those last two things have been.

So, what’s next? How do we “run” Venezuela?

For our first dinner of the New Year I made red beans and rice. I adapted my recipe to use Carolina red peas rather than red beans on the theory that something like those may have been what were originally used in the dish.

My recipe is pretty simple. Cajum Holy Trinity (onions, celery, bell pepper), red beans, ham stock, Worchestershire sauce, dash of bitters, hot sauce, black pepper. I threw in some chopped ham to up the protein level a bit.

It was delicious.

As I read Scott Sumner’s most recent Substack post, I couldn’t help but think that the worries he talked about were about the wrong things. Here’s a snippet:

There’s a great deal of recent discussion about how AI will affect the economy. Too often, the debate centers around the issue of who will profit from AI. I am much more interested in the question of what AI will do to output.

Suppose you are applying for a job at Google, and they ask you to estimate the number of washing machines in America. You might think to yourself that the vast majority of American households have one washing machine, a much smaller number have either zero or more than one. So perhaps the number of washing machines is similar to the total number of households. You might recall that America has 340 million people, and guesstimate that we have somewhere around 130 million households, assuming an average of 2.6 people per household. (AI Overview says 132.5 million households and an unknown number of washing machines.)

He continues by citing examples of calorie consumption and big yachts. He closes in on this point:

The key to higher living standards for average people is to produce lots more output, which requires more automation. When I was born back in 1955, there were about 300,000 people working as telephone operators. At the same time, the restaurant industry was fairly small, people tended to eat at home. Many of the telephone operator jobs were done by single women. Was that demographic hurt by the automation of phone switching? I’d say no, as the decline in operator positions was offset by rapid growth of waitressing jobs in the restaurant industry. Indeed, the decline in jobs working as telephone operators actually enabled the growth of the restaurant industry, by freeing up labor.

Now I tend to agree with him. I think we need to increase production considerably and I don’t mean nominal production I mean real production. That’s one of the challenges of a transition to a “service economy”. Raising the prices you charge for your services doesn’t mean that you can provide more services. It may even motivate you to provide fewer services. And for many services it won’t impel the market to produce more service-providers. For some services the cost of entry and lead times are just too great to respond that way and there are regulatory barriers as well. And I think that removing all regulatory barriers on providing services is a very bad idea. Some regulations exist to protect quality, safety, or trust, and eliminating them may increase nominal output while degrading real welfare much like standardized food.

I did a little research and found that there was no clear, easy way to determine whether his comparison between telephone operators and waitresses actual stood up to scrutiny. I did learn that the average pay for a telephone operator in 1960 (not 1955) was $1.46 while most waitresses earned minimum wage of $1.00 per hour plus tips. Whether or not the analogy holds, it illustrates how easy it is to assume that labor reallocation preserves job quality.

What struck me was several things he talked about. I thought I’d arrange it into some Do’s and Don’ts.

Don’t worry: about AI taking all of the jobs. Do worry: about Fortune 500 CEOs believing that they can reduce payrolls and improve bottom lines with AI. The former won’t happen. The latter is already happening.

Don’t worry: about not enough affordability. Do worry: about administrative capacity. The former is manageable. The latter is unmanageable and renders any attempt at planning for the future impossible. Not only will it make housing unaffordable it will have serious effects on transportation, public health, healthcare, and education, just to name a few. Building roads, sewers, etc. requires a considerable lead time.

Don’t worry: about too many rich people with “mega-yachts”. Do worry: about the U. S. not being able to build “mega-yachts”. Jeff Bezos went to the Netherlands to get his yacht built. Our not being able to build such vessels on a timely basis has run-on effects on our military, shipping, etc.

Don’t worry: about too many ultra-rich people. Do worry: about state and federal governments becoming too dependent on ultra-rich people.

I welcome your own do’s and don’ts in a similar vein.

In conclusion there’s one thing in Dr. Sumner’s post with which I’d like to take exception. I don’t believe that restaurant meals are better quality today than they were in 1955. I ate in restaurants in 1955 and remember. Fast food burgers today do not taste as good as burgers from a diner in 1955. What is true is they are more uniform. Practically everything everywhere is made from mixes today. That wasn’t true 70 years ago.

I realize that old ladies have always claimed that strawberries tasted sweeter when they were girls but there’s another reason that bananas, strawberries, and many other fruits and vegetables don’t taste as good today as they did 70 years ago. The varieties of bananas, strawberries, etc. we ate then really tasted better. Nowadays they ship better and have a longer shelf-life. Furthermore, fresh produce came from truck farms not from thousands of miles away.

I hope all of us and our families have a better year this year than last, however good 2025 was for you and yours.

The good news for 2025 includes

we are not in a major war
AFAICT no new major wars have started
our southern border appears to be under control
gas prices are down which will have run-on effects throughout the economy
the rate of inflation is holding fairly steady

Unfortunately, each piece of good news is accompanied by bad news

the war in Ukraine continues and shows little sign of ending
we are using military force far too frequently and casually
immigration enforcement has been harsh
electricity prices continue to rise which will also have run-on effects
asset prices are continuing to rise faster than inflation

One of the predictions for 2026 I’m running into fairly frequently is for a baby boomlet (possibly in 2027) among Swifties spurred by Taylor Swift becoming pregnant. Considering that I don’t frequent gossip sites or popular music sites running into that prediction so frequently is surprising.

As we near the end of the year I’m seeing quite a few predictions for next year, many of them either unremarkable or preposterous. This morning on a lark I asked ChatGPT what its predictions were for 2026. Here are the results:

1. AI spending hits a credibility wall in the form of pushback from boards of directors and CFOs for immediate measurable results from adopting AI.
2. A visible tiering of AI users emerges among power users, occasional users, or institutional avoiders including government, regulated professions, and unions.
3. White-collar hiring freezes spread, not layoffs
4. One major AI firm retreats from “frontier” scaling away from ever-larger models toward efficiency, specialization, or verticalization.
5. Electricity becomes a binding constraint. It should be noted that will give an edge to China in the adoption of AI.
6. Courts quietly restrict AI use in legal proceedings
7. Medical AI stalls at the liability boundary
8. A backlash against “AI fluency” hiring language
9. The first serious AI-driven outsourcing reversal appears. Work previously offshored will be reshored not to human workers but to AI.
10. Public discourse shifts from “Can AI do X?” to “Who is responsible?”

Some of those are verbatim. Some are paraphrases. If you asked the same question I suspect the answer would vary considerably. After several years of regular use on my part ChatGPT has a pretty fair sampling of how to respond to me. YMMV.

I asked several follow-up questions. I may report on those in the coming year.

There’s a commentary about the direction of the Democratic Party from Democratic political consultant Brendan Frasier at The Hill:

For years, there has been a debate about where the Democratic Party should go. One side is the wants the party to embrace democratic socialism; the other side supports the neoliberal framework that helped destroy America’s middle class, weakened unions and left rural America feeling abandoned.

What both sides consistently don’t see is that the Democratic Party succeeds when it roots itself in New Dealism.

In America, the term “democratic socialism” has lost its meaning. In Europe, it describes an economic system in which major industries and production are collectively or socially owned, and private capital is reduced, transformed or replaced through democratic processes rather than authoritarian ones.

This matters because saying “democratic socialism” terrifies entire blocs of voters that Democrats desperately need to win back.

and

During my time with the Ohio Progressive Caucus, I had heated arguments with members of the Democratic Socialists of America. Many believed in replacing capitalism and placing major industries under social ownership. Some even support a candidate running for Senate in Ohio named Greg Levy, who said that companies like Kroger or Procter & Gamble should be nationalized.

But these positions have almost no support among rural voters, suburban moderates, small-business owners or the very union families the party once counted as its backbone.

Does anyone else notice how nostalgic his remarks are? Perhaps more seriously, I think that Mr. Frasier is making a category error.

I wonder how Mr. Frasier reconciles his views with the modern American economy and the modern Democratic Party?

I’ll just provide a few examples of that. In 1930 trade constituted about 6% of U. S. GDP. Now it’s around 30%. We produced almost all of what we consumed. U. S. population was around 123 million when the New Deal was first announced. Now it’s nearly three times that high. Estimating household income 90 years ago is a bit tricky but most sources say it was around $2,000. Now it’s around $80,000.

The structure of the U. S. economy was different then, too. The largest economic sectors were agriculture, manufacturing, and services. Now finance, insurance, real estate, and leasing along with professional and business services and government constitute about 50% of the economy with manufacturing, education and healthcare, and other sectors trailing far behind, mostly in single digits.

The ratio of public debt to GDP was around 16% then; now it’s nearly 100%.

These are not merely quantitative changes; they imply a different political economy with different leverage points, constraints, and failure modes.

I think I have a pretty good idea of what the New Deal meant when Franklin Delano Roosevelt proposed it in his acceptance speech for the Democratic nomination for the presidency in 1932. I have no idea what it would mean now or how it could be effected and Mr. Frasier does little to enlighten me in his piece.