In an op-ed in the Wall Street Journal Senate Majority Leader Mitch McConnell rises in support of the people of Hong Kong:

China’s trading partners, including the U.S., should make it clear that any crackdown would have real and painful costs. I wrote the Hong Kong Policy Act of 1992, which extended special privileges to the region because of its unique status. This special access to the U.S. and other nations helped drive the investment and modernization that have enriched Hong Kong, and Beijing by extension. Beijing must know the Senate will reconsider that special relationship, among other steps, if Hong Kong’s autonomy is eroded.

I support extending and expanding the law’s reporting requirements to illuminate Beijing’s interference in Hong Kong. And the Senate will do more. I have asked Jim Risch, chairman of the Foreign Relations Committee, to examine Beijing’s actions in Hong Kong and its efforts to expand the Communist Party’s influence and surveillance across China and beyond. I am working with Lindsey Graham, chairman of the Appropriations Subcommittee for State and Foreign Operations, to fund democracy and human-rights programs across Asia. I will maintain our strong focus on rebuilding and modernizing the military, continuing the huge strides of the past 2½ years, so that our ability to project power and defend American interests keeps pace with this major competitor.

But it is not America’s task alone to address these threats. The world is awakening to China’s abusive and aggressive practices, from unfair trade actions to intellectual-property theft to offshore expansion. Now Hong Kong has plastered front pages with yet another cautionary tale about how the Chinese regime treats those within its envisioned sphere of influence and disregards international agreements that govern them.

Every trading nation and democracy that values individual liberty and privacy has a stake here. Their choice is not between the U.S. and China but between a free, fair international system and the internal oppression, surveillance and modern vassal system China seeks to impose.

The U.S., for its own interests, seeks international peace, a good relationship with China, and a mutually prosperous future for our peoples. Hong Kong is only one piece of the complex set of interests that makes up the U.S.-China relationship. But China’s treatment of the people of Hong Kong will shape how the U.S. approaches other key aspects of our relationship.

While I support the sentiments he expresses I am uncomfortable with his expressing them. His is too high a profile. Hong Kong is a part of China. The protests and the Chinese authorities’ response to them are a Chinese internal matter. U. S. government support of the protesters lends credence to those authorities’ claims that American agents provocateurs are fomenting discord.

IMO the best thing both for the United States and the people of Hong Kong is to maintain a low profile. What we then do if the Chinese authorities do, indeed, take action against the protesters is up to us.

The editors of the Wall Street Journal take note of the discrepancy between what was anticipated and what has actually happened with student loans over the years:

Defaults have fallen for most forms of consumer debt as the economic expansion continues. Mortgage delinquencies last quarter hit a historic low. But severely delinquent student loans have soared since 2012 and are now 35% of “severe derogatories”—more than credit cards (23%), auto loans (21%) and mortgages (11%).

About 10% of the $1.5 trillion federal student-loan portfolio is 30 days or more past due. Another 20% is in deferment or forbearance, and about 30% is in income-based repayment plans that allow most borrowers to cap monthly payments at 10% of discretionary income and discharge the remaining balance after 20 years or 10 for folks in “public service.”

Note that the effective expansion of the loan program was not written into the legislation. It was created by executive action.

The inability of recent graduates to repay their loans is not tremendously surprising. Underemployment, i.e. a job that pays a lot less than would be expected for a college grad, is widespread and persistent among today’s college grads.

The discrepancy has budgetary implications:

Many borrowers in income-based repayment plans aren’t repaying principal, so their balances are growing as they accrue more interest. By 2012 a majority of new borrowers had bigger balances after two years of making payments.

Yet during the Obama years CBO scored student loans as a government profit center by underestimating the growth in income-based repayment plans. CBO has slowly scaled back its 10-year revenue projections for student loans to a $31.4 billion government cost in this year’s forecast from a $219 billion 10-year revenue gain in 2012.

The nearby chart tells the story. Using fair-market accounting that prevails in the private economy, CBO now projects a $306.7 billion cost to taxpayers over the next 10 years. The red ink will be far worse beyond that 10-year budget window.

Another non-surprise: The government is spending more to administer student loans than the Obama crowd forecast. In 2010 the government spent $800 million on “administrative costs,” which CBO projected would increase to $1.2 billion in 2019. The government’s overhead tab this year was $2.9 billion.

This entire student loan arrangement is a scam; it’s a racket:

Income-based repayment plans have also encouraged schools to raise prices and enroll students who probably won’t earn enough to pay off their loans. Someone with a master’s degree in dance from New York University shoulders on average $96,000 in debt, according to government data. Imagine if the government created income-based repayment plans for mortgages.

Capping student-loan monthly payments has also enabled more borrowing since most lenders review a customer’s total monthly debt payments when underwriting loans. Americans who borrow more than they can repay typically default first on student loans. Cars and homes can be repossessed if borrowers don’t make payments. Past-due credit card bills incur late fees and hefty interest payments. Borrowers who default on student loans, on the other hand, are encouraged by loan servicers to enroll in income-based repayment plans.

The results make it clear that some serious reform is necessary in our system of higher education and how we finance it. Federal loan programs should be much more tightly tailored to help people pursue gainful employment in the private sector. A tax dollar to higher education to underemployment or government employment is a vicious circle that will inevitably fail.

Olivia Giovetti’s Washington Post op-ed urging the de-emphasis of the present common repertory which consists largely of 19th century Italian opera in favor something more relevant to modern audiences is one of the dumbest I have read recently. There is a reason that 19th century Italian operas are performed again and again and again. People like them. Meanwhile, 21st century operas largely play to empty houses. Do you know who in particular doesn’t attend modern operas? Young people.

I don’t know what Met productions are like and I don’t much care. Chicago’s Lyric Opera has produced some great re-imaginings of old operas. It has also produced some awful ones. The reason that it has produced Harold Prince’s production of Madama Butterfly year after year after year is that it’s an interesting and effective way of telling the story blending traditional production with modern technology.

Here’s the reality. It’s not just opera that’s dying. Live performance is dying. Jazz is dying. Broadway musicals are dying. Live theater is dying. Pop music concerts are dying. They’re all dying. Attendance at pop music concerts is increasing far more slowly than the population. There are many reasons for that but they include a lot of people who would rather sit in their living rooms watching something pre-recorded streaming than get up, go out, and attend a live performance.

If you have any doubts about my claim that it will be hard if not impossible for any president to withdraw our troops from Afghanistan, you have only to consider this editorial at the Washington Post to understand my reasoning:

Though most Americans wish to end the Afghan mission, there is little reason to abandon the country in haste. Of the more than 2,300 Americans killed in Afghanistan since 2001, 15 had died through July this year, and 53 since the drawdown in 2014. If the result of a quick withdrawal is the collapse of the government and the reestablishment of sanctuaries for terrorists, the United States could be dragged back into the conflict at a far greater cost — as happened in Iraq three years after the pullout. That’s not to mention the loss of all that this country has invested, in lives and treasure, in helping to build Afghanistan’s democratic political system and extend basic rights to women.

An acceptable agreement with the Taliban would condition the final withdrawal of U.S. troops on a settlement between the insurgents and the Afghan government. It would also provide for a continuing presence of U.S. counterterrorism forces to strike the Islamic State and other emerging terrorist threats. If Mr. Trump agrees to a pullout that omits such requirements, he will risk turning what could still be a successful outcome for the United States in Afghanistan into a shameful failure.

Another 15-20 years tops is all that would be needed to secure victory. Counter-insurgency is and always has been a strategy doomed to fail in Afghanistan. All the Taliban needs to do is wait us out. We have no strategic interest in Afghanistan as long as the country is not serving as a staging area for attacks against us. That points to a counter-terrorism strategy rather than counter-insurgency. The editors of the WP continue to support CI despite its abject failure.

I’m uncertain as to whether I agree with the editors of the New York Times’s advice that we should be using more diplomacy and less military intervention or not:

While the United States needs a strong defense, it also needs to develop a national security strategy that doesn’t rely on limitless, sometimes wanton, military spending — the Pentagon failed its first audit last year — and that calls for restraint in deploying forces overseas. Such a strategy would also invest far more in diplomacy, development, economic justice, free and fair trade, nuclear nonproliferation and a reversal of climate change.

Such rethinking is gaining traction among some Democratic presidential candidates. Senators Elizabeth Warren and Bernie Sanders have called for an end to America’s endless wars. Ms. Warren has proposed doubling the Foreign Service and the Peace Corps and opening new posts in underserved areas around the world, an approach worth considering. Mayor Pete Buttigieg of South Bend, Ind., a military veteran, has rejected conflicts with ill-defined missions, and former Vice President Joe Biden has said the “use of force should be our last resort, not our first — used only to defend our vital interests, when the objective is clear and achievable and with the informed consent of the American people.”

There’s no reason these could not be bipartisan goals.

Maybe I should see it as a sign of growth on their part. They have, after all, supported a lot of military interventions over the years, e.g. they supported our bombing of Libya that led to the fall of Qaddaffi and the present chaos there.

I guess a lot depend on what they mean by “diplomacy”. If they mean leaving it to the professional diplomats, I disagree. I don’t think anything in American government instantiates Robert Conquest’s Third Law of Bureaucracies more than our State Department. If they mean initiatives like the Obama Administration’s support for the Syrian rebels, I disagree. It should be obvious that we shouldn’t be providing aid to Al Qaeda which is exactly what we were doing in Syria. It may be somewhat less obvious that the reason we have gained a reputation for supporting rebels, even anti-American rebels against the legitimate governments of other countries is that we have been supporting rebels against the legitimate governments of other countries.

For the last 50 years our best diplomats have been the American people. Maybe we should leave diplomacy to the amateurs for a change.

One of my college profs used to say that he ignored every undergraduate paper until the first “however”. Here’s the “however” in Paul Krugman’s most recent New York Times column:

The problem, instead, is that the Europeans, and the Germans in particular, treat themselves badly, with a ruinous obsession over public debt. And the costs of that obsession are spilling over to the world as a whole.

Some background: Around 2010, politicians and pundits on both sides of the Atlantic caught a bad case of austerity fever. Somehow they lost interest in fighting unemployment, even though it remained catastrophically high, and demanded spending cuts instead. And these spending cuts, unprecedented in a weak economy, slowed the recovery and delayed the return to full employment.

While debt alarmism ruled both here and in Europe, however, it eventually became clear that there was a crucial difference in underlying motivation. Our deficit hawks were, in fact, hypocrites, who suddenly lost all interest in debt as soon as a Republican was in the White House. The Germans, on the other hand, really meant it.

True, Germany forced debt-troubled nations in southern Europe into punishing, society-destroying spending cuts; but it also imposed a lot of austerity on itself. Textbook economics says that governments should run deficits in times of high unemployment, but Germany basically eliminated its deficit in 2012, when euro area unemployment was more than 11 percent, and then began to run ever-growing surpluses.

Why is this a problem? Europe suffers from a chronic shortfall in private demand: Consumers and corporations don’t seem to want to spend enough to maintain full employment. The causes of this shortfall are the subject of a lot of debate, although the most likely culprit is demography: low fertility has left Europe with a declining number of adults in their prime working years, which translates into low demand for new housing, office buildings, and so on.

He is being far too kind. If Germany were still using the mark, the massive trade imbalances that Germany maintains with its European trading partners would resolve themselves. Either the Germans would continue to accept decreasingly valuable lira, drachma, and pesos, it would need to import more from Italy, Greece, and Spain, or Germans would need to purchase more and more (highly inflated) Italian, Greek, and Spanish assets. As it is they just accept the euros and go merrily on their way. The increasing debts of their trading partners are largely held by German banks so they have the debt service working to their advantage as well as long as nobody defaults.

That’s what the German attitude towards debt is based on: preserving German banks.

I found the reports of Twitter and Facebook’s responses to China’s using their platforms to spread disinformation about Hong Kong interesting. From CNBC:

Twitter and Facebook have suspended numerous accounts that they say are tied to a Chinese disinformation campaign against pro-democracy protesters in Hong Kong.

Twitter said Monday it suspended 936 accounts likely related to the activity. The company said the disinformation campaign was designed to “sow political discord in Hong Kong, including undermining the legitimacy and political protest movement on the ground.”

Twitter’s statement is here. Facebook’s is here.

They have taken the steps on the grounds that the accounts in question have violated their terms of service, in particular, as Facebook worded it, “inauthentic behavior”. Perhaps my cynicism is showing but I suspect that inauthentic behavior constitutes 90% of their traffic. I wonder if the social media sites recognize how inadequate their response is. It’s the proverbial shutting the barn door after the horses have bolted.

I also wonder who the target audience of the disinformation campaign is. Twitter is banned in China but widely accessed via proxy servers and VPNs. Using Facebook and Twitter to mount a diinformation campaign whose target audience is people who are notionally blocked from using it is a bit of triple Lindy. The target audience is presumably within Hong Kong. How effective could that be? The demonstrators and riot police aren’t exactly hiding. It all seems terribly byzantine to me.

In his latest Washington Post column Robert Samuelson warns about the potential consequences of the trade war between China and the United States:

The name that comes to mind is Charles Kindleberger, an eminent economic historian of the post-World War II era who taught for years at the Massachusetts Institute of Technology and was a prolific author of books and articles. One of his masterpieces was “The World in Depression, 1929-1939.”

The crux of Kindleberger’s thesis was that the underlying cause of the Depression was a vacuum of leadership. By this, he meant that Britain — which had provided that leadership in the 19th century — had been so weakened by World War I that it could no longer perform that function in the 1920s and early 1930s. Meanwhile, the United States — which would fill that role after World War II — was not ready to do so.

In this context, the dominant country would keep its markets open to imports, so the trading system would not collapse under the weight of mounting protectionism. Another requirement was that the leading country (the “hegemon”) had to have the financial strength so it could lend to banks and other needy borrowers during a crisis so that the financial system, the repository of much wealth, would not self-destruct.

In the recent foreword of the latest version of Kindleberger’s book, economists J. Bradford DeLong and Barry Eichengreen of the University of California at Berkeley put it this way:

“The root of Europe’s and the world’s problems was the absence of a benevolent hegemon: a dominant economic power able and willing to take the interests of smaller powers and the operation of the larger international system into account by stabilizing the flow of spending through the global [economy] . . . by acting as a lender and consumer of last resort.”

I’m unhappy with the present situation, too. It didn’t have to be this way. The United States didn’t have to lose millions of manufacturing jobs in the space of just a few years in the early Aughts. The same number might have been lost over a period of decades rather than a period of years. We didn’t need to see the wealthiest prospering so mightily while the rest of the people struggled along. We didn’t need to have personal consumption expenditures approaching three-quarters of the economy.

We are a country not a benevolent organization. Rather than governing by slogan or sound bite (or tweet) policies must be carefully constructed, monitored, and managed so that they benefit the great bulk of the people rather than just the Walton family or a handful of other billionaires. It’s the results that matter, we have seen the results, and they have not been particularly good.

I’m in favor of free trade but, make no mistake, a free trade agreement can be written on the back of a napkin. When an agreement runs to thousands of pages it is not a free trade agreement. It is managing trade to pick winners and losers and such a process is inevitably political.

Had the situation been managed patiently and prudently from the beginning the necessary correction would have been less painful. But a correction is, indeed, necessary. We can’t survive economically as a country with just retail and health care. We can’t continue to have U. S. companies finance the world’s R&D while the Chinese reap the benefits through theft or illegal forced technology-sharing agreements.

It’s still a bit early for predictions about the 2020 presidential elections but they’re starting to appear. As of today the econometric models without exception (at least to my knowledge) predict that Trump will be re-elected. That is, presumably, why all of the breathless anticipation on the part of the media at each hint of a recession.

However, I thought you might be interested in this interview at Salon by Paul Rosenberg of a political scientist who called the results of the 2018 midterms on the nose. Her position is that we’re in the midst of a “political realignment” and that Trump’s defeat is very nearly a foregone conclusion:

The good news is that so long as Trump is in office, negative partisanship gives Democrats an edge, as electoral realignment continues. Rather than fearing Trump’s ability to repeat his 2016 upset, on July 1 of this year Bitecofer released her 2020 projection, which shows Democrats winning 278 electoral votes versus 197 for Trump, with several swing states too close to call. Bitecofer also isn’t worried about the Democrats losing their House majority. On Aug. 6, Bitecofer released a preliminary list of 18 House seats the Democrats could flip in 2020, nine of them in Texas. The most significant threats that concern Democrats are actually golden opportunities, according to her model.

In essence her position is that the 2018 midterms did not turn out as they did because voters who had voted for Trump in 2016 voted Democratic in 2018 but because the Democrats were better able to get their base out in 2018 than they had been in 2016.

I do not know who will win the 2020 presidential election. Like Dr. Bitecofer I think that turnout is important but unlike her I think it matters who the Democratic presidential candidate is for just that reason. I’m also uncertain I agree with her on just who the Democratic base is.

All that I have to add is that the political landscape is littered with the corpses of the political ambitions of people who underestimated Donald Trump. Historically, presidents have tended to be re-elected and whether the incumbent or not the winning candidate has been the candidate who painted the brightest picture of the American people and the country’s future. Maybe that’s changed. If Dr. Bitecofer is right, all the more reason to be more concerned about the Democrats than the Republicans.