I suspect that Will Marshall is barking up the wrong tree in his piece at The Hill urging Democrats to formulate their own plan for making government more effective and efficient:

But before Democrats dismiss the DOGE as just more MAGA trollery, it’s fair to ask — where’s their plan for making government more efficient and effective?

Inexplicably, that plank is missing from the platform of the party that believes in active government.

It’s not exactly breaking news that Americans have very low confidence in the government’s problem-solving abilities. Such low esteem grows out of a myriad of frustrating citizen interactions with public institutions of all kinds — schools, social service providers, public health systems; police and courts; local licensing and permitting boards as well as distant federal bureaucracies.

Especially skeptical are non-college voters. They believe Washington serves the interests and ideological passions of highly educated elites, not ordinary working people like them.

This helps to explain why Bidenomics failed to land with working Americans. In fact, White House bragging about “delivering” big spending bills likely intensified their skepticism, since tangible benefits were slow to materialize while soaring prices cut deeply into family budgets.

Democrats would be wise to resurrect one of Bill Clinton’s best ideas — reinventing government — and make it a centerpiece of a new strategy for winning back working Americans.

I doubt that the Democratic leadership will rise to Mr. Marshall’s challenge for a simple reason: they don’t see government in the same way as he does.

There are lots of different ways of viewing the role of government. You can see it through a Keynesian prism—the spender of last resort or you can see it as a device for accomplishing things that the private sector can’t or won’t do—my preferred outlook.

I think the Democratic leadership sees government as an employer. Consider the Government Accounting Office’s (GAO) assessment of grant recipients under Biden:

The numbers of federal contractors and federal employees have similarly soared. Further evidence is the way the average federal wage has outstripped the average private sector wage.

Judged by that yardstick the Biden presidency has been a roaring success.

You might be interested in Thomas P. M. Barnett’s new piece at Politico. In the piece Dr. Barnett finds a connecting thread in President-Elect Trump’s remarks on Greenland, Canada, and Panama. Here’s a snippet:

Three key trends animate the globe right now: (a) an East-West decoupling dynamic, (b) a re-regionalization imperative along North-South lines that brings “near-shoring” production close to home markets, and (c) a growing superpower clash animating all these “races” — namely, adapting to climate change, winning the energy transition, achieving AI supremacy, etc.

Trump, love him or loath him, sees just enough of this world and the fear it generates to know the right plan of attack.

Trump’s approach to international affairs reflects Americans’ judgment that we are done building a world order — which we’ve overseen from 1954 to 2008 —and now must vigorously embrace an aggressively competitive approach to this multipolar world; in other words, be less the generous market-maker and more the selfish market-player.

I haven’t followed Dr. Barnett much since reading his book, The Pentagon’s New Map. My remarks on it are in this twenty year old post. I think that my observations have aged better than his.

Quite a bit has changed over that twenty years. Russia, clearly, is no longer “New Core” to use Dr. Barnett’s terminology. Or is there a Core 2? Is China still “New Core”? I think the slug provided by Politico is notable:

Do you want a future in which Canada defects to the EU, Russia rules the Arctic and China runs Latin America? That’s the default outcome of non-action.

I listened to President Biden’s farewell address last night. I think he should be allowed his moment in the sun so I won’t fisk it.

I did want to remark on his warning about the growing power of an oligarchy in the U. S. It isn’t a new phenomenon. The Founding Fathers were a bunch of rich guys. There were exceptions, of course. Sam Adams was not rich but by and large they were rich.

What is different about the new oligarchy is how dependent they are on the federal government. In effect, most are creatures of the government in one way or another. Some depend on expansive intellectual property law. For some it is within Congress’s power to wipe out the business model on which their wealth depends overnight. Some became wealthy as a consequence of the tax reforms of the early Clinton presidency. For some a financial transaction tax (FTT) would greatly curtail their incomes. Some depend on direct government subsidies of the products made by their companies.

The irony, of course, is that although he may not realize it Joe Biden’s fingerprints are all over this growth in wealth. As senator he voted for many of the laws that resulted in the growth in wealth of the ultra-wealthy. As president some of his

In the 18th century the wealthy largely derived their wealth from physical assets. Today much of the wealth of the ultra-wealthy is derived from financial assets.

Consider the graph at the top of the page. As should be clear over the last nearly 20 years any relationship between stock prices and corporate earnings has become a thing of the past. Stock prices are now in a world completely distinct from the real economy. Over the last five years a major contributing factor to skyrocketing stock prices has been inflation and inflation has been the foreseeable outcome of extending credit to ourselves to pay for additional spending rather than paying for the additional spending via taxation and one of the side effects of that process has been causing the prices of financial assets and, consequently, the wealth of those whose wealth depends on financial asset to rise.

Takahiro Mori, the vice chairman of Nippon Steel, has an op-ed in the Wall Street Journal explaining why they are taking President Biden to court to get the court to block the president’s ban on Nippon Steel’s purchase of U. S. Steel. Here’s the conclusion:

Nippon Steel and U.S. Steel will do whatever it takes to close this transaction. It is the only viable deal that will keep U.S. Steel intact, keep unionized blast furnaces running, and protect jobs. We remain interested in exploring possible partnerships with the new administration to invest in and grow U.S. Steel to benefit American workers, customers, and national security.

We still have confidence in the justice and fairness of the U.S. and its legal system. We believe our case is strong, and we look forward to our day in court.

I don’t have any inside information on this matter but my meager understanding is that

1. U. S. Steel is for sale
2. A number of bids have been received including at least one U. S.-based company
3. Nippon Steel has made the highest bid
4. Nippon Steel has pledged to make substantial investments in U. S. Steel mills to bring them up-to-date
5. No U. S.-based company is likely to be able to come up with the money to a) buy U. S. Steel and b) modernize the facilities

Mr. Mori thinks the president’s motivation for blocking the sale is not security but domestic politics:

During Mr. Biden’s re-election campaign, the leadership of the United Steelworkers union announced in February that the president had personally assured them that he had their backs as they opposed our deal. He publicly announced his opposition to our partnership in March—before Cfius began its formal review—and received the USW’s endorsement days later.

Cfius, meanwhile, barely engaged with us. After receiving a letter from the committee last September—filled with USW leadership’s talking points—our companies submitted four draft National Security Agreements throughout the fall and winter to address purported concerns.

We don’t believe there was any national-security concern to begin with; Japan is one of America’s staunchest allies. Cfius didn’t send us a single written comment on or serious question about our proposals before referring the transaction to the president.

We doubt the feedback from the committee contributed to Mr. Biden’s decision. His mind seemed made up early last year, judging from his campaigning. The political pressure from his public statements, we think, also tainted the Cfius review, resulting in a no-consensus decision from the committee that allowed the president to deliver on his promise to USW leadership.

My offhand guess it that the USW believes, incorrectly, that a U. S. buyer will maximize the number of union jobs retained. I strongly suspect that if U. S. Steel is bought by a U. S. buyer the Gary facility will be closed or, at the very least, substantially downsized. That would be a disaster for Gary to say the least.

My question is what’s the objective? Since President-Elect Trump has expressed opposition to Nippon Steel’s acquisition, that question is all the more important. If it’s to ensure that more steel is produced in the U. S., letting Nippon Steel buy U. S. Steel is probably the best way to achieve that.

In his Wall Street Journal column William Galston warns the the United States is about to “leave Europe on its own”:

Europe is beset by troubles, and the policies of the incoming Trump administration will deepen them.

During his first term, Donald Trump insisted that the North Atlantic Treaty Organization’s European members pay more for their own defense. While 23 NATO nations are now in compliance with the target of spending 2% of gross domestic product on defense, they remain far short of what it would take to defend themselves without America’s security guarantee.

This is very interesting:

Europe wasn’t always this weak. In 1988, West Germany’s army had nearly half a million soldiers; today, Germany’s active-duty army numbers only about 180,000. The army in the 1980s was equipped with more than 2,000 battle-ready tanks; today, only a few hundred are operational. After the fall of the Berlin Wall and the collapse of the Soviet Union, reunified Germany largely disarmed. So did countries throughout Western Europe. Governments gave priority to social programs over defense.

Consider the graph at the top of the page. In 2024 Germany’s defense spending rose to 2% of GDP for the first time since the collapse of the Soviet Union. But just barely. The Germans have been freeriding on the United States for a long time; they consider it a law of nature.

This, too, is an intersting observation:

In recent decades, Western European nations have made a series of bets that haven’t paid off. They assumed that they could remain economically competitive while government spending and regulatory burdens increased. They assumed that relations with Russia would remain manageable and that the flow of cheap Russian energy would continue. They assumed that they could absorb a record flow of immigrants from the Middle East and North Africa without disrupting social stability. Above all, they assumed that the trans-Atlantic alliance would endure indefinitely and that the U.S. would never tire of bearing a disproportionate burden for Europe’s defense.

As these bets failed, Europe’s citizens became dissatisfied with the dominant parties of the center left and center right and turned to right-wing populist-nationalists. For different reasons, voters in the U.K. and U.S. did as well.

As I’ve said any number of times before, I have no insight in what Trump will or will not do. I suspect that despite threats he’ll continue to backstop Europe. Whether that’s the right thing to do or not I’ll leave to your judgment. I think that our interests in Asia are greater than our interests in Europe.

The Israelis have reached a ceasefire agreement with Hamas. Andrew Mills, Nidal Al-Mughrabi and Maayan Lubell report at Reuters:

DOHA/CAIRO/JERUSALEM, Jan 15 (Reuters) – Negotiators reached a phased deal on Wednesday to end the war in Gaza between Israel and Hamas, an official briefed on the negotiations said, after 15 months of bloodshed that has killed tens of thousands of Palestinians and inflamed the Middle East.
The complex accord, which has not yet been formally announced, outlines a six-week initial ceasefire phase and includes the gradual withdrawal of Israeli forces from the Gaza Strip and release of hostages taken by Hamas in exchange for Palestinian prisoners held by Israel, the official told Reuters.

U.S. President Joe Biden later confirmed a deal had been struck, and the prime minister of Qatar, one of the key mediators, said the ceasefire would take effect on Jan. 19.

Palestinians celebrated in streets across Israeli-besieged Gaza – where they have faced an acute humanitarian crisis with severe shortages of food, water and fuel – as explosions from new Israeli air strikes continued.

I have little opinion on this. It’s Israel’s war and Israel’s problem.

I doubt that “ceasefire” will mean much. Not only is Hamas not the only terrorist organization at work in Gaza and the West Bank, whatever authority Hamas had over the other terrorists must surely be gone by now. And changing from a Hamas fighter to an Islamic Jihad fighter is simpler than changing your knickers.

I will be interested to learn how many hostages actually remain alive. Based on the description we may not know after the conclusion of “Phase 1”.

I also think we have been somewhat passive in this whole matter. Apparently, holding dual Israeli-U. S. citizenship doesn’t mean a great deal.

As of today the Southern California fires have destroyed 17,000 structures and driven more than 100,000 people from their homes. In the Great Chicago Fire 17,500 structures were destroyed and 150,000 people were made homeless.

I wanted to bring an interesting interactive map to your attention. I’m not embedding it because I expect it to change rapidly. Here’s the description from KTLA:

LOS ANGELES (KTLA) – The Los Angeles County Fire Department has provided the following maps of the thousands of structures, primarily homes, that were damaged or destroyed in the Palisades and Eaton wildfires.

The map icons reflect the current known status of each structure. Red indicates a structure was destroyed. Orange indicates “major” damage. Yellow indicates “minor” damage. Green indicates a low level of impact. Black indicates a structure not damaged. Grey indicates “inaccessible.”

Incident commanders say field damage inspections are ongoing and may change as new information is gathered and verified.

This post originally began as a reaction or riff on a post I saw at Substack but which I’ve lost track of. I wanted to make several points about the artificial intelligence craze that is presently under way.

My first is that, yes, we are in an artificial intelligence mania, rather similar to the Tulip Mania of the 17th century. Microsoft, Alphabet, Meta, and Amazon spent hundreds of billions of dollars on generative AI (GAI) in 2024. That certainly qualifies as a “mania”.

And it’s just getting started. You can reckon the beginning of the bubble from the launch of ChatGPT in 2022. Based on previous experience with bubbles, they typically last around five years. Like previous bubbles this one is propelled more by “fear of missing out” (FOMO) than it is by actual benefits.

It’s interesting to consider the changes wrought by the last major technological shift, the shift to mobile devices. When it began with the introduction of the iPhone, the largest companies in the S&P 500 were (in descending order) ExxonMobil, General Electric, Microsoft, Citigroup, and AT&T. By the launch of ChatGPT they were Apple, Microsoft, Alphabet, Amazon, and Berkshire Hathaway. At five times the market capitalization of their predecessors. Don’t be surprised if the leaders have changed just as much by 2030. Hence, FOMO.

Just as the infrastructure investments of the iPhone revolution were borne by telecommunications companies but other companies realized most of the benefits, again don’t be surprised if the same thing happens with the implementation of GAI.

One of the ways in which GAI will provide different improvements in automation from those of the 20th century is that rather than reducing the number of unskilled workers required for tasks it will provide the opportunity to increase the productivity of skilled activities that rely heavily on memory and adhering to certain guidelines.

The big question will be who captures the economic surplus realized from such efficiencies? Capital? Skilled workers? Consumers? Considering the entrenched interests and their power, I anticipate an enormous political battle over who benefits.

A final intriguing aspect of this shift is that it will go on primarily in the United States for political, social, and economic reasons. The U. S. is already very different from our European cousins in important ways (there are no trillion dollar European companies) and I suspect this shift will make the differences even more pronounced.

When I read Douglas Mackinnon’s post at The Hill proposing additional countries beyond Greenland and Panama to add to President Trump’s “shopping list”, my immediate reaction was to wonder why he hated the United States so much as to propose adding Haiti to the list of countries that President Trump should want to add to United States possessions.

My second reaction was to hope that his post was something on the order of Jonathan Swift’s A Modest Proposal, something so outrageous it was obviously satire. Can you think of an act more likely to start World War III (assuming, that is, that it hasn’t already started) than claiming Taiwan?